City of Woodland and Yolo County have for about seven years been discussing the notion of negotiating a new property tax (and perhaps, sales tax) split to accommodate future annexations.

Three proposed annexations are now being moved forward by the city, in conjunction with its new General Plan (2015-35), two in its industrial area, alongside a pivotal, ~350 acre business-park and mixed-use development on the city’s southern border (north of County Road 25A and east of Highway 113, potentially drawing ~5,500 employees and ~4000 residents).

“We are waiting for a proposal from the city. It can be as expansive or as restrictive as they want. But we need a proposal to consider. It is that easy,” indicates Yolo County Board of Supervisors’ Chairperson, Matt Rexroad.

Supervisor Rexroad continues, “The city is attempting to do whatever they want to do to carry out their vision for the growth of Woodland. That process will be determined by the Woodland City Council with the general plan and other land use decisions/documents.

“The county believes that the way these tax sharing agreements have taken place in the past are not adequate to fund the desired level of service. In the past 6-7 years we have attempted to document the desired level of service, funding plans, and nexus studies to prepare for thoughtful negotiations when an annexation opportunity came up. Winters, Davis and Woodland all seem to have possible annexation in the future.

“The county is not wed to a specific formula but certainly knows what needs to be funded and we will work with the municipalities on what the formula looks like.

“Until we get a proposal from one of the cities . . . , we wait.”

Dramatic New Woodland Tax Sharing Proposal On The Way

Spectacularly, City of Woodland’s new property tax sharing proposal will suddenly request an increase of between ~50% and ~67% above its existing tax share.

Jointly, county and city property-tax shares are only 24.87% of total property tax, the rest (~75%) going to the state and related local districts.

Since 1980 (over thirty-five years), such a tax-sharing agreement has remained constant, 51.6% to the city and 48.4% to the county, roughly an equal, ~12% share.  Several times, the county has negotiated marginal increases to its share, based upon other aspects of local taxation.

Annexations tied to the new city General Plan (2015-35) looming, the city has recently produced expert studies revealing that it must receive a very sharp increase of tax share (~50% to ~67%), in order to afford basic public services related to new development.

Instead of ~12%, the city abruptly says it needs (a) between ~18% and ~20% of new property tax money (leaving ~5% or ~7% for the county), plus (b) a renegotiation of several past tax sharing agreements.

Spring Lake  Was Hugely Unaffordable For City, Apart Great Recession

Woodland City Manager, Paul Navazio, explains that, on the subject of addressing costs of public service deficiencies — “Woodland is dealing with that in Spring Lake, as we speak,” because of the inadequate (even in 2002) ~12% property tax share received by the City.

This ~12% city property tax share “is one of the main reasons why the residents in the Spring Lake area are burdened with additional landscape and lighting assessment district, community facility district and maintenance costs,” says Navazio.

The city has “a very disparate and varied array of property tax shares,” throughout the city, describes Navazio.

“Diluted” tax share, over the years, has left the city with average of about 20% overall.

“Recent annexation,” though, at ~12%  of property tax, expresses Navazio to the city council at its recent meeting, “makes it very difficult for the city to adequately provide the full array of municipal services that we’re responsible for, without necessitating adding supplemental taxes, supplemental assessments, supplemental revenue sources in order for those projects to not be a financial drain on the city.”

“Our goal going forward . . . is to approach” annexations and tax sharing “such that we’re comfortable that the city is in the best possible position to be able to provide the services without undue burden on new development” or on the existing city, and without negatively impacting the county.

A Matter Of Fiscal & Services Balance, With Several Key Side-Items

“The whole exercise is how to balance the city’s needs to provide services, the county’s needs for their ongoing responsibilities with . . a shrinking pot of revenues,”says Navazio.

“[W]e believe that there is an opportunity and maybe a need to also engage the county in revisiting some of the agreements that had been reached in the past.”

For one example, to move forward the Gibson Ranch annexation in 1992 (site of the city’s Southeast Area Specific Plan), the city agreed to give the county 20% of its citywide, hotel-motel tax revenue.

Navazio characterizes this sort of negotiation tactic as “fairly unique,” and it now represents almost $200,000 to the city, annually.  Since the city has new plans for a downtown hotel, he wants to bring that matter back to the table.

Other pithy items related to past tax sharing agreements will likely also find their way back onto this key negotiation table, for such a fundamental realignment of local property tax shares.

Navazio indicates that the city believes the county has almost no public-service burden exposure for industrial zoning, even proposing on one scenario, to zero-out the county tax take for any new such city zoning.

“[D]ifferent revenue generating potential[s] and [ ] very different cost of service characteristic[s]” clearly exist between distinct uses (residential, commercial, industrial, mixed-use), offers Navazio.

The County Fair Mall “Expansion Area,” a 40 acre, vacant parcel between the Mall and the city Community Center Complex, was annexed for commercial use in 1999, on the historical (~12% / ~12%) tax split.

Now, this key parcel is being considered for residential uses (a more expensive developmental category); thus, this previous tax sharing agreement also seems quite ripe for renegotiation.