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HomeMy WebLinkAboutMinutes - City Council - 2005-05-24 - Special Meeting 113 City Council, Special Meeting Council Chambers 777 Cypress Avenue Redding, California May 24, 2005, 10:30 a.m. The meeting was called to order by Mayor Mathena with the following Council Members present: Dickerson, Murray, Pohlmeyer and Stegall. I Also present were City Manager Warren, Assistant City Manager Perry, Assistant City Manager Starman, City Attorney Duvernay, City Clerk Strohmayer and Assistant City Clerk Sherman. COOPERA TNE PLANNING WITH SHASTA COUNTY (T -010- 700/T -010-600/ A-050-060) As City Council liaison to the Fact-Finding Committee, Council Member Murray reported that in an effort to fully understand the tax sharing agreement proposed by the Shasta County (County) Board of Supervisors, he and Assistant City Manager Starman met with Shasta County Supervisor Trish Clark and Shasta County Resource Management Director Russ Mull on May 11, 2005, to discuss the issue. I Assistant City Manager Starman recalled that the original tax sharing proposal from the County suggested that all Sales Tax Revenue (STR) and Transient Occupancy Tax (TOT) generated in the City and in the unincorporated area of the County (approximately $27 million) be combined and then redistributed as follows: . 1. The County would received 15% of the combined revenue in year one; 2. The County would received 25% ofthe combined revenue in year two; and, 3. The county would received 35% of the combined revenue in year three and each year thereafter. Mr. Starman pointed out that the STR and TOT generated in the unincorporated area of the County accounts for approximately 13% of the $27 million total referenced above. He said that analyses of this proposal revealed that the City stands to lose approximately $60 million in revenue over a ten-year period and approximately $8 million each year thereafter~ I Mr. Starman provided a detailed overview of the Report to Council dated May 20, 2005, which included information gathered at the Fact-Finding Meeting referenced by Council Member Murray. He stated that during the May 11, 2005, meeting, Council Member Murray, Shasta County Supervisor Clark, Shasta County Director of Resource Management Mull and he discussed the County's proposed tax sharing agreement in depth and explored alternative scenarios. During this informal meeting, Mr. Starman reported that a Revised Tax Sharing Scenario was discussed wherein 1) all STR and most of TOT revenue (one-half of the City-generated TOT would be withheld by the City for the promotion of tourism) from the County and the City would be combined into a common fund and redistributed, 2) the County would initially receive 14% of the combined revenue, and each time revenue increased by 5%, the 'County's share would increase by an additional 2% and the City's would decrease by 2%, 3) These adjustments would continue until the County's share reached 25% of the combined revenue and the City's share decreased to 75%. Under this scenario, Mr. Starman explained that the City would stand to lose $29 million initially and then $4 million each year thereafter; substantially less than the first tax sharing proposal but still significant. Mr. Starman pointed out that while the second scenario has only been discussed at stafflevel thus far, the Board of Supervisors met early this morning and, according to Shasta County Director of Resource Management Mull, this scenario was unanimously approved by the Board as a tax sharing agreement. Mayor Mathena read a letter from Shasta County Board of Supervisors Chair Kehoe confirming that the Board approved a proposed Global Tax Sharing Agreement and thanked the City Council and members of staff for their hard work and for the opportunity to expand cooperative relationships with the City. OS/24/05 114 Mr. Starman emphasized that during the Fact-Finding Meeting and subsequent meetings between senior staff members from the City and County, it was made quite clear that discussions would focus on various tax sharing scenarios, not agreement negotiations. Mayor Mathena concurred stating that the focus of these informal meetings was for information-gathering purposes. In response to Council Member Stegall, Mr. Starman explained that various responsibilities of each agency were explored but County representatives were not interested in a formal survey delineating responsibilities, services and costs believing it would be too costly and could delay the process. Mr. Starman related that the County made clear its intent to retain 100% of all base property tax associated with annexations, but would split the growth- generated property tax with the City after annexation occurred. Mr. Starman noted that under the present arrangement, the County retains 100% of the base tax and the City gets 100% of the tax growth. I Mr. Starman said that when asked what value the ta~ proposal held for the City, County representatives responded that the City and County would no longer be forced to debate fiscal issues when considering annexations, the additional tax revenue would enable the County to enhance services utilized by City and County residents alike, the County would have no fiscal incentive to allow intense commercial development in the unincorporated areas of the community which would result in better land use planning, the City would not lose a full $2 million in sales tax revenue when/if an Auto Mall is developed in the Chum Creek Bottom area, and it would be easier to solve other problems such as development impact fees, regional detention issues, etc. Mayor Mathena disagreed with the County's contention that additional tax monies would result in more County services for all. He pointed out that City residents pay the lion's share of sales and other taxes County-wide, yet the significant population increase in Redding over the last few years (which translates into more tax dollars) has not spawned anymore services. Mr. Starman related that with a tax sharing agreement in place, the County would not be concerned whether a big retail store located in the City or the County because the tax money would be combined and reallocated to both agencies based on a pre-determined formula. In fact, Mr. Starman observed that the County would most likely prefer that new business locate in the City where they would receive City services. I Council Member Dickerson expressed disappointment at the County's single-focused willingness to discuss tax sharing issues only while refusing to d.iscuss more global community issues such as good land use planning and growth-related issues. Mr. Starman outlined potential ramifications to the City in terms of revenue and loss of revenue over the next ten years based on scenarios that included an auto mall, no auto mall, and a comparison of the County's original tax sharing proposal in juxtaposition to the revised proposal. . He pointed out that even if every car dealership moved outside the City limits today, the City would fare better financially than to accept either tax sharing proposal. I Redding resident Richard Paz, who attended the Board of Supervisors meeting this morning, expressed concern at the Board's unwillingness to discuss a proposal to implement a bed tax on the house-boating industry at Shasta Lake. He asserted that such a tax could generate up to $1 million each year in new revenue. Mr. Paz contended that it is inappropriate for the County to share in the City's revenue stream when the County is unwilling to explore other avenues for generating additional money within the County. Council Member Murray pointed out that the financial problems in the County are the result of the state placing mandates on local government services and then raiding local coffers to balance the state budget. Mr. Murray believed, however, that this is a community issue; and, as a jurisdiction, the. City of Redding is obligated to assist the County in resolving these financial problems. He said that the County and City should agree on issues that are of interest and have benefit to the entire community, and that includes development of the Stillwater Business Park, storm water detention, spheres of influence, etc. The proposed tax sharing scenarios are too costly to the City and Mr. Murray believed that the County should be willing to formally commit to not allow unbridled development to occur in unincorporated areas. I OS/24/05 115 Mayor Mathena suggested that a cooperative agreement include planning and land use issues for the entire valley, not just the Redding area, and include the Cities of Anderson and Shasta Lake; nor should such an agreement have a price tag attached. I Council Member Stegall was willing to continue exploring proposals with the County but she maintained that tax sharing agreements are not a suitable way to plan a community. She said that a cooperative agreement should benefit all parties involved and she saw no benefit to the City in the County's proposal. She related that the City has just completed its biennial budget process in preparation of an' anticipated $2 million hit from the state, and City departments have had to cut their budgets by 5% as a result of this hit Ms. Stegall further emphasized that the City is not in a position to entertain any agreement that will affect the General Fund. Council Member Pohlmeyer concurred with Mayor Mathena and Council Members Murray and Stegall and shared their concerns. He was also concerned about the County's unwillingness to discuss other issues that need consideration and community involvement before getting down to numbers. While cooperation is important, Mr. Pohlmeyer concurred that it should not carry a price tag. He reiterated his stance that the Stillwater Business Park is the single-most important development to the entire community at this time, and it behooves both agencies to work collaboratively to guarantee its reality. I Council Member Dickerson maintained that in order to develop a comprehensive tax sharing or cooperative agreement, the City and County must know what services are delivered to the citizens, who delivers those services and what they cost He pointed out that the cost of County services cannot be placed on the back of the City of Redding alone; Anderson and the City of Shasta Lake contribute to the cost of the County services and they should help fund those services. Mr. Dickerson emphasized that ifthe County's contention that growth will take care of all the problems is true, an agreement should be developed that places the emphasis on growth. He also believed that the County is sincere in its desire to plan the community properly; therefore, the County should be willing to formalize that intent Mr. Dickerson would like to see better cooperation between the two entities, but he said any agreement must benefit everyone, and the County must be willing to enter into open discussion of all the issues. Mayor Mathena suggested that the Council send a letter to the County indicating the City's willingness to discuss issues and form a committee, but added that more information and research is needed. I Russ Mull, Shasta County Director of Resource Management insisted that the County is not interested in an agreement for money and the City would not be giving the County $1.5 million. The analyses assume that the car dealers will move to the Chum Creek bottom and not sell one car. It falls short of predicting future sales and growth over ten years. Mr. Mull contended that the City would make, not lose money. The City's interest in the Stillwater Business Park and the California Horse Park, both in the unincorporated area, confirmed the County's belief that an agreement between the two entities would soon be necessary. The Board of Supervisors insistence that land use not be discussed is because the only way land use is impacted is with money. The County believes that responsible growth is important and the Supervisors have demonstrated their commitment by keeping the Chum Creek Bottom area rural for twenty years. He stressed that this tax sharing agreement prohibits unbridled retail growth. Mr. Mull added that County staff has been talking about a tax exchange agreement for many years and significant work and effort have gone into this proposal. While the County is willing to adjust the tax sharing figures ifthe City believes it necessary, he said there will be little incentive to the County to discuss this issue further if it cannot be resolved within the year. While the Board of Supervisors currently has a consensus on this issue, Mr. Mull related that their support is starting to waiver. In response to Council Member Dickerson, Mr. Mull indicated that similar agreements have been applied in the City of Fresno and in Stanislaus County. Council Members Stegall and Dickerson maintained that the County should be willing to sit down and discuss good land use planning issues, and they were skepticalthat a tax sharing proposal could solve land use problems. OS/24/05 116 Mr. Mull countered that ifthere are no incentives, growth will not occur in the County and the absence of incentives will also discourage sprawl. When asked by Council Member Stegall if the County was willing to discuss its philosophy and commitment to good planning, Mr. Mull suggested that both parties sign the agreement and then craft language into a resolution that provides for a review of the agreement within two to three years to evaluate its impact on land-use planning. lfthe common goals for good planning and land use have been met, he said that both parties should ratify the agreement. Mr. Mull was convinced that this tax sharing proposal will solve land use issues without hindering growth when the City wants to look to the unincorporated areas for development. Mayor Mathena suggested that the City Council move forward in a timely manner to develop a cooperative agreement with the County, but he emphasized that additional information is necessary prior to taking the next step. I MOTION: Made by Council Member Stegall, seconded by Council Member Pohlmeyer not accepting Shasta County's Global Tax Sharing proposal, but agreeing to maintain open communication with Shasta County regarding some type of cooperative agreement, and directing staff to locate existing agreements being used by other jurisdictions that include land-use planning issues for City Council information and review. The Vote: Unanimous Ayes. ADJOURNMENT There being no further business, at the hour of 12:02 p.m., Mayor Mathena declared the meeting adjourned. APPROVED I ATTEST: J~ / I . {~.L-t.. ~ CIty Clerk . I ~'" . ...;.-~. ' OS/24/05