2018 Apr 03 - CC PACKET REV AGENDA REVISED
r EL SEOUNDO CITY COUNCIL
4 COUNCIL CHAMBERS - 350 Main Street
The City Council, with certain statutory exceptions, can only take action upon properly posted and listed
agenda items. Any writings or documents given to a majority of the City Council regarding any matter on
this agenda that the City received after issuing the agenda packet, are available for public inspection in
the City Clerk's office during normal business hours. Such Documents may also be posted on the City's
website at www.elsegundo.org and additional copies will be available at the City Council meeting.
Unless otherwise noted in the Agenda, the Public can only comment on City-related business that is
within the jurisdiction of the City Council and/or items listed on the Agenda during the Public
Communications portions of the Meeting. Additionally, the Public can comment on any Public Hearing
item on the Agenda during the Public Hearing portion of such item. The time limit for comments is five (5)
minutes per person.
Before speaking to the City Council, please come to the podium and state: Your name and residence
and the organization you represent, if desired. Please respect the time limits.
Members of the Public may place items on the Agenda by submitting a Written Request to the City Clerk
or City Manager's Office at least six days prior to the City Council Meeting (by 2:00 p.m. the prior
Tuesday). The request must include a brief general description of the business to be transacted or
discussed at the meeting. Playing of video tapes or use of visual aids may be permitted during meetings if
they are submitted to the City Clerk two (2) working days prior to the meeting and they do not exceed five
(5) minutes in length.
In compliance with the Americans with Disabilities Act, if you need special assistance to
participate in this meeting, please contact City Clerk, 524-2305. Notification 48 hours prior to the
meeting will enable the City to make reasonable arrangements to ensure accessibility to this
meeting.
REGULAR MEETING OF THE EL SEGUNDO CITY COUNCIL
TUESDAY, APRIL 3, 2018 - 7:00 P.M.
REVISED
(ADDED ITEM NO. 10 UNDER REPORTS MAYOR PRO TEM BOYLES)
7:00 P.M. SESSION
CALL TO ORDER
INVOCATION — Pastor George Lopez, The Bridge Church
4
PLEDGE OF ALLEGIANCE — Mayor Pro Tem Boyles
PRESENTATIONS
a) Proclamation — April 2018 as "Sexual Assault Awareness Month".
Designating April 25, 2018 as Denim Day.
b) Proclamation — April 2018 as "DMV/Donate Life California Month."
c) Presentation — The Police and Firefighter Associations, along with the
Lakers Organization, would like to present a check for $3,500 to the EI
Segundo Ed! Foundation.
d) Presentation —West Basin Desalinization Plant
ROLL CALL
PUBLIC COMMUNICATIONS — (Related to Citi Business Only — 5 minute limit per
person, 30 minute limit total) Individuals who have received value of$50 or more to communicate
to the City Council on behalf of another, and employees speaking on behalf of their employer, must so
identify themselves prior to addressing the City Council. Failure to do so shall be a misdemeanor and
punishable by a fine of$250. While all comments are welcome, the Brown Act does not allow Council to
take action on any item not on the agenda. The Council will respond to comments after Public
Communications is closed.
CITY COUNCIL COMMENTS — (Related to Public Communications)
A. PROCEDURAL MOTIONS
Consideration of a motion to read all ordinances and resolutions on the
Agenda by title only.
Recommendation —Approval.
B. SPECIAL ORDERS OF BUSINESS (PUBLIC HEARING)
C. UNFINISHED BUSINESS
D. REPORTS OF COMMITTEES, COMMISSIONS AND BOARDS
5
1. Consideration and possible action to approve Request for Proposal #18-02
for The Lakes at EI Segundo Site (400 S. Sepulveda Blvd.).
(Fiscal Impact: None)
Recommendation — 1) Review and approve Request for Proposals #18-02 for
The Lakes at EI Segundo Site; 2) Alternatively, discuss and take other possible
action related to this item.
2. Consideration and possible action to approve the EI Segundo Senior
Housing Board Corporation (Park Vista) proposed reserve fund policy.
(Fiscal Impact: None)
Recommendation — 1) Approve the proposed Reserve Fund Policies; 2)
Alternatively, discuss and take other possible action related to this item.
3. Consideration and possible action to announce the appointments to the
Technology Committee.
(Fiscal Impact: None)
Recommendation — 1) Announce the appointees to the Technology Committee;
2) Alternatively, discuss and take other possible action related to this item.
E. CONSENT AGENDA
All items listed are to be adopted by one motion without discussion and passed unanimously. If a call for
discussion of an item is made, the item(s) will be considered individually under the next heading of
business.
4. Warrant Numbers 3020470 through 3020651 and 9000325 through 9000327
on Register No. 12 in the total amount of $1,072,028.67 and Wire Transfers
from 3/12/18 through 3/25/18 in the total amount of $2,496,097.77.
Recommendation — Approve Warrant; Demand Register and authorize staff to
release. Ratify Payroll and Employee Benefit checks; checks released early due
to contracts or agreement; emergency disbursements and/or adjustments; and
wire transfers.
5. Consideration and possible action to approve Final Vesting Parcel Map No.
73879 to subdivide the properties into 10 new residential condominium
units at 135-139 Virginia St. and 412 West Franklin Ave.
(Fiscal Impact: N/A)
Recommendation — 1) Adopt the proposed resolution, approving a Final Vesting
Map No. 73879, and authorizing the Director of Planning & Building Safety and
6
the City Clerk to sign and record said Map; 2) Alternatively, discuss and take
other possible action related to this item.
6. Consideration and possible action to adopt a resolution awarding a public
works contract to Westnet, Inc. without the need for formal bidding and
authorizing the City Manager to execute such a contract with Westnet, Inc.
for the purchase and installation of a new Fire Station Alerting System for
Fire Station 1 and Fire Station 2.
(Fiscal Impact: $220,000.00)
Recommendation — 1) Adopt a resolution awarding a public works contract with
Westnet, Inc. without the need for formal bidding; 2) Authorize the City Manager
to execute an agreement, in a form approved by the City Attorney, to purchase a
Westnet First-In Fire Station Alerting System (FSA) for Fire Station 1 and Fire
Station 2; 3) Alternatively, discuss and take other possible action related to this
item.
7. Consideration and possible action to adopt a Resolution approving the
Plans and Specifications for the Storm Drain Pipe Abandonment on
Eucalyptus Drive Project, Project No. PW18-11.
(Fiscal Impact: To Be Determined)
Recommendation — 1) Adopt the attached Resolution approving Plans and
Specifications for Storm Drain Pipe Abandonment on Eucalyptus Drive Project
(Project No. PW 18-11) and authorize advertising for bids; 2) Alternatively,
discuss and take other possible action related to this item.
8. Consideration and possible action to accept Fiber Optics Network
Expansion by Elecnor Belco Electric, Inc. as complete, Project No. PW 16-
33.
(Fiscal Impact: $536,104.23)
Recommendation — 1) Accept the work as complete; 2) Authorize the transfer of
$43,219.23 from Emergency Facilities Maintenance account #001-400-2601-
6281 to account 301-400-8201-8497 (1 Net Fiber Optic Connections) and
authorize the City Manager to amend a Public Works contract with Elecnor Belco
Electric, Inc. in a form approved by City Attorney to increase the contract amount
to $536,104.23; 3) Authorize the City Clerk to ,file a Notice of Completion in the
County Recorder's Office; 4) Alternatively, discuss and take other possible action
related to this item.
7
9. Consideration and possible action regarding authorization to enter into an
agreement with CPS HR Consulting to provide a City-wide employee salary
survey services, except employees of the Fire Fighters' Association and
the Police Management Association, which are being completed under a
separate contract with CPS HR Consulting.
(Fiscal Impact: $54,500.00)
Recommendation — 1) Authorize the City Manager to enter into an Agreement
with CPS HR Consulting, approved as to form by the City Attorney; 2)
Alternatively, discuss and take other possible action related to this item.
F. NEW BUSINESS
G. REPORTS — CITY MANAGER
H. REPORTS — CITY ATTORNEY
I. REPORTS — CITY CLERK
J. REPORTS — CITY TREASURER
K. REPORTS — CITY COUNCIL MEMBERS
Council Member Brann —
Council Member Pirsztuk—
Council Member Dugan —
8
Mayor Pro Tem Boyles —
10.Consideration and possible action to authorize two City Council Members
to develop strategies and options to increase the City of EI Segundo's
allocation of Local Property Tax
(Fiscal Impact: None)
Recommendation — 1) Authorize two City Council members to develop options
and strategies to address the City's property tax allocation; and/or 2)
Alternatively, discuss and take other action related to this item.
Mayor Fuentes —
PUBLIC COMMUNICATIONS — (Related to Cltv Business Only — 5 minute limit per
person, 30 minute limit total) Individuals who have receive value of$50 or more to communicate
to the City Council on behalf of another, and employees speaking on behalf of their employer, must so
identify themselves prior to addressing the City Council. Failure to do so shall be a misdemeanor and
punishable by a fine of$250. While all comments are welcome, the Brown Act does not allow Council to
take action on any item not on the agenda. The Council will respond to comments after Public
Communications is closed.
MEMORIALS —
CLOSED SESSION
The City Council may move into a closed session pursuant to applicable law, including the Brown Act
(Government Code Section §54960, et sem.) for the purposes of conferring with the City's Real Property
Negotiator; and/or conferring with the City Attorney on potential and/or existing litigation; and/or
discussing matters covered under Government Code Section §54957 (Personnel); and/or conferring with
the City's Labor Negotiators.
REPORT OF ACTION TAKEN IN CLOSED SESSION (if required)
ADJOURNMENT
POSTED:
DATE:
TIME: v� > Aro
NAME:'
9
EL SEGUNDO CITY COUNCIL MEETING DATE: April 3, 2018
AGENDA ITEM STATEMENT AGENDA HEADING: Mayor Pro Tem Boyles
AGENDA DESCRIPTION:
Consideration and possible action to authorize two City Council Members to develop strategies and
options to increase the City of El Segundo's allocation of Local Property Tax(Fiscal Impact:None)
RECOMMENDED COUNCIL ACTION:
1. Authorize two City Council members to develop options and strategies to address the City's
property tax allocation.
2. Alternatively, discuss and take other action related to this item.
ATTACHED SUPPORTING DOCUMENTS:
1. City Council staff report and attachments, dated July 16, 2013
2. Legislative Analyst's Department Report, Property Taxes: Why Some Local Governments Get
More Than Others
FISCAL IMPACT: $
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s):
STRATEGIC PLAN:
Goal: 5 Champion Economic Development and Fiscal Sustainability
Objective:
PREPARED BY: Greg Carpenter, City Manager
REVIEWED BY: Drew Boyles, Mayor Pro Tem
APPROVED BY:
BACKGROUND & DISCUSSION:
In comparison to most cities throughout the State of California,the City of El Segundo receives a lower,
and arguably unfair share of local property tax. This is primarily due to the provisions of Proposition 13
which was passed by the voters in 1978. The attached staff report provides additional background detail
on the topic.
I understand that the City has engaged in efforts in the past to address this inequity without success.
Due to the seriousness of the issue and the inherent inequity, I don't believe we should discontinue
efforts to correct the situation. I would like to revisit the issue, better understand any options and
solutions that the City may have to address this moving forward. I recommend that two City Council
members be authorized to begin framing a strategy with assistance from staff. I would expect that this
effort could expand in the future to include other cities, the County of Los Angeles and organizations
like the League of California Cities, Independent and Contract City Associations and the South Bay
Council of Governments. I would also ask that the selected Council members report back to the full
City Council as appropriate to keep the public informed of their efforts.
10
EL SEGUNDO CITY COUNCIL MEETING DATE: July 16,2013
AGENDA STATEMENT AGENDA HEADING: New Business
AGENDA DESCRIPTION:
Consideration and possible action regarding the history of property tax for the City of El
Segundo (Fiscal Impact: none)
RECOMMENDED COUNCIL ACTION:
1. Receive and file the history of property tax for the City of El Segundo.
2. Alternatively discuss and take other action related to this item.
ATTACHED SUPPORTING DOCUMENTS:
1. Los Angeles County Representative General Levy Share Estimate.
2. Breakdown of Each $1 Paid in Property Tax.
3. Property Tax Breakdown Example.
FISCAL IMPACT: None
Amount Budgeted: $0
Additional Appropriation: N/A
Account Number(s): None
ORIGINATED BY: Steve Jones, Business Services vl<in guj
REVIEWED BY: Deborah Cullen, Director of I"itKV]CC/I[11131-11) I6rsoIt
APPROVED BY: Greg Carpenter, City Manager.
BACKGROUND AND DISCUSSION:
Prior to Proposition 13, each local jurisdiction authorized to levy a property tax set its own tax
rate. Under this system, each local jurisdiction made a determination every year as to the amount
of revenue necessary to finance the desired level of services. Local residents could influence the
level of both services and taxes in their community through their voting decisions. The product
of this system was a set of local government services that generally reflected the individual
preferences of each community in the state.
In FY 1977-78, the property tax rate established by City Council was 15 cents per $100 of
assessed valuation. The City Council determined this rate based on additional revenue needed
for its City services. The tax rate had been reduced by 82 percent from 1974 through 1978 by
the City Council.
On June 6th, 1978, nearly two-thirds of California's voters passed Proposition 13, reducing
property tax rates on homes and businesses by about 57%. It was declared constitutional by the
United States supreme Court and is found in Article 13A of the Constitution of the State of
California.
14
68
Prior to Proposition 13, the property tax rate throughout California averaged a little less than 3%
of market value. Additionally, there were no limits on increases for the tax rate or on individual
ad valorem(taxes based on the assessed value of property) charges.
During the seventies, the real estate market experienced dramatic growth and everybody
witnessed the rapid escalation in the value of homes. Because assessors were required to keep
assessed values current, property taxes were skyrocketing at a substantial rate. However,
increases in the assessed value were not made annually, resulting in a major tax jolt for
homeowners every few years.
Under Proposition 13 tax reform, property tax value was rolled back and frozen at the 1976
assessed value level. Property tax increases on any given property were limited to no more than
2%per year as long as the property was not sold. Once sold, the property was reassessed at I%
of the sale price, and the 2% yearly cap became applicable to future years. This allowed
property owners to finally be able to estimate the amount of future property taxes, and determine
the maximum amount taxes could increase as long as he or she owned the property.
The primary changes of Proposition 13 are explained below:
1. One Percent Rate Cap. Proposition 13 capped, with limited exceptions, ad valorem
property tax rates at one percent of full cash value at the time of acquisition. Prior to
Proposition 13, local jurisdictions independently established their tax rates and the total
property tax rate was the composite of the individual rates, with few limitations.
2. Assessment Rollback. Proposition 13 rolled back property values for tax purposes to
their 1976 level.
3. Responsibility for Allocating Property Tax Transferred to State. Proposition 13 gave
state lawmakers responsibility for allocating property tax revenues among local
jurisdictions. Prior to Proposition 13, jurisdictions established their tax rates
independently and property tax revenues depended solely on the rate levied and the
assessed value of the land within the agency's boundaries.
4. Reassessment Upon Change of Ownership. Proposition 13 replaced the practice of
annually reassessing property at market value with a system based on cost at acquisition.
Prior to Proposition 13, if homes in a neighborhood sold for higher prices, neighboring
properties might have been reassessed for tax purposes only when it changes ownership.
As long as the property is not sold, future increases in assessed value are limited to an
annual inflation factor of no more than 2%.
In order to decrease the burden on cities that received no or a low share of property taxes, AB
1197 (Tax Equity Allocation) was passed in 1989/90. AB 1197 phased in a shift of property tax
revenue to no and low property tax cities from counties at one cent a year over a time to a
maximum of 7 cents. In 1992/93 the City's share went from 5 cents up to a little more than 6
cents. An additional 1 cent was phased in 1993/94 which is the same year the county adjusted
the shares to account for ERAF (Educational Revenue Augmentation Fund). The final number
for the City of El Segundo ends up at 6.33 cents.
69
Unlike local communities in other states, California residents and local officials have virtually no
control over the distribution of property tax revenue to local governments. Instead, all major
decisions regarding property tax allocation are controlled by the state. Accordingly, if residents
desire an enhanced level of a particular service, there is no local forum or mechanism to allow
property taxes to be reallocated among local governments to finance this improvement.
Local officials have no power to raise or lower their property tax share on an annual basis to
reflect the changing needs of their communities. The only option would be to request the
Legislature to enact a new law — approved by two-thirds of the members of both houses —
requiring the change in the property tax distribution. As a result, if residents wish to increase or
maintain overall services, they would need to finance this improvement by raising funds through
a different mechanism such as an assessment or special tax.
70
HdL $� LOS ANGELES COUNTY - 2012/13
REPRESENTATIVE GENERAL LEVY SHARE ESTIMATE
COREN&CONE
Esltmate of Average Clty Represent4ve Share of the General Levy
City Other cKy CftR
Cft Rada" Rates' Total � { C1ty Rate' Rates' Total
Los Angeles 0.2629 0.2529 Hawthorne 0.0948 0,0948
South Pasadena 0,2400 0.2400 Le Mirada 0.0671 0.0276 0,0947
San Marino 0,2364 0,2364 Rosemead 0.0668 0.0271 0.0939
Pomona 0.2335 0.2335 Temple City 0.0888 0..0271 0.0937
Sierra Madre 0,2191 0,2191 Norwalk 0.0883 0.0263 0.0923
Long Beach 0.2188 02166 Duarte 0.0689 0.0233 0,0922
Pazzoens 0.2109 0,2109 Bell Gardens 0.0920 0.0920
Hermosa Beach 0.2030 0,2030 Pico Rivera 0.0867 0,0225 0.0892
Burbank 0.1847 0.1847 Wealiake Village 0.0639 0,0240 0,0879
LaVeme 0.18110 0.1816 Cerritos 0,0880 0,0193 0,0873
West Hollywood 0.1639 0.0148 0,1787 Industry 0.0794 0,0794
Monrovia 0,1744 0,1744 Huntington Park 0.0738 0,07855
Beverly Hula 0.1742 0.1742 Vernon 0.0728 0.0728
Avalon 0.1668 0,1885 V"Wer 0,0717 0,0717
Redondo Beach 0.1684 0.1654 Malibu 0.0704 Q0704
Alhambra 0,1443 0,0199 0,1843 Commerce 0,0679 0.0679
Monterey Park 011578 0,15/8 Signal Hill 0.0878 010078
Covina 0.1641 0,1841 Carson 0,0674 0,0674
Azuss 0.1492 0,1492 Paramount 0,0672 0,0672
Manhattan Beach 0.1462 0.1982 La Canada Flintridge 0,0671 0,0671
San Fernando 011456 0.1466 Rolling Hills Estates 0.0849 0,0669
Inglewood 0.1409 0.1400 South EI Monte 0.0887 0,0667
Downey 0,1397 0,1397 Bellflower 010668 0.0696
Santa Monica 0.1393 0,1393 Artesia 010888 010885
West Covina 0.1351 0,0031 0,1382 Palmdale 010883 0.0883
Glendale 0,1357 0,1357 Lawndale 0,002 010662
Calabasas 0,0417 0.0820 0,1237 Lancaster 0.0661 0,01081
Santa Clarlts 0,0073 0,0654 0.1228 Cudahy 0.0659 010659
Torrance 0.1220 0.1220 La Puente 010888 0,0886
Baldwin Park 0,0962 0.0254 0,1205 Rolling HMIs 0.0649 010649
Claremont 0,1142 0,1142 Rancho Palos Verdes 0,0637 0,0637
Palos Verdes Estates 0,1130 0,1130 El Segundo 0,0632 0;0632
Lynwood 011130 0.1130 Santa Fe Springs 010825 010628
Gardens 0.1116 0,1196 South Gate 0.0615 0.0615
Maywood 0.1081 0,1081 Bradbury 0.0614 0.0614
San Gabriel 0,1064 0,1064 Hidden Hills 0.0888 0.0588
Culver City 0,1043 0.1043 Agoura Mills 0.0586 0.0585
LWOW 0.0666 0.0361 0,1028 Lakewood 0.0484 010584
Irwindale 0,1009 0.1009 Hawaiian Gardens 0.0560 0.4150
Compton 0,1004 0.1004 Bell 0.0037 0.0537
Le Habra Heights 0,1004 0:1004 V*Inut 0.0820 O,O520
San Lhm" 0.0658 010338 0.0993 Diamond Bar 0.0619 010619
Monlebalk+ 0.0986 0,0986 County Avsrnae. 0.1059 0,0044 0,1114
El Malta 0,0984 0.0984 f
Glendora 0.09'32 0,0982
Arcadia O.OW 0.0980
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Property Taxes: Why Some Local Governments Get More Than Others Page 1 of 10
Legislative Analyst's Office,August 20, 1996
Property Taxes:
loll Why Some Local Governments
LAO Get More Than Others
ftl secmQr';er�ri�e
Summary
Some cities, counties, schools and other local governments receive more property taxes than others.
The extent of this local government revenue variation is consider able, whether measured on the basis
of dollars per resident or as a percent of property taxes collected in a community. Lately, this
variation in property tax receipts has been the subject of legislative interest.
Why do some local governments receive more property tax revenues than others?Four factors
account for most of this variation. Specifically,property tax revenues tend to be higher for those local
governments where:
• Land is extensively developed.
• Few services are provided through special districts.
• Redevelopment is not used extensively.
• The government's property tax rate in the 1970s was relatively high.
This policy brief examines the variation in property tax receipts of local govern ments. It then reviews
the four principal factors underlying this revenue variation, including "AB 8"(Chapter 282, Statutes
of 1979)--the state law governing the distribu tion of property taxes. The policy brief concludes with a
discussion of the concept of"equalizing"local property tax receipts.
Introduction
California property owners pay about $19 billion in property taxes each year. As a source of revenue,
the property tax annually raises about as much as the state's income tax or the combined state and
local sales tax. Unlike the income and sales taxes, however,property taxes are used exclusively for
local purposes. All property taxes are allocated to local governments within the county in which the
tax is collected. Specifically, property tax revenues are distributed to K-12 schools and community
colleges, counties, cities, special districts, and redevelopment agencies as shown in Figure 1.
http://www.lao.ca.gov/1996/082196—Prop_taxes/property_tax_differences_pb82196.html 3/29/2018
Property Taxes: Why Some Local Governments Get More Than Others Page 2 of 10
Which Local Governments Receive
Property Tax Revenues?
Total$19 61111on
r?!ic ar•1 ob 3rnart
A�n•loco►
-_. SpedalOstrids
r Galles
fichmis aid
C"nmmu^ilty
Colic o w
Countlaa
We:Values shcvw are Oar 199495 and exlWe deb#lefies.
While Figure 1 shows how property taxes are distributed statewide, there is considerable variation
among communities. Some local governments receive far more property taxes than others,regardless
of whether the tax allocation is measured on the basis of dollars per resident, or as a percentage of
total property taxes collected in the area. For this reason,there is currently considerable interest in the
concept of"equalizing" local property tax receipts.
This policy brief examines the variation in property tax receipts by providing information on revenues
to a variety of local governments. It then discusses the four principal factors underlying this property
tax variation. The policy brief concludes with a discussion of the merits of reducing the variation in
property tax receipts among local governments.
How Much Do Local
Governments' Property
Tax Receipts Vary?
While the property tax rate and assessment practices are uniform statewide, there is considerable
variation in the distribution of property taxes among local govern ments. Specifically, (1)the amount
of property taxes and (2)the share of property taxes a local government receives differ significantly
throughout the state. Counties, for example, receive between 65 percent (Alpine) and 10 percent
(Yolo) of the property taxes collected within the county lines. Measured in terms of property tax
revenues per resident, Butte County receives about$45 per resident, while eight counties receive
http://wwwlao.ca.gov/1996/0 82196_prop_taxes/property_tax_difference s_pb82196.html 3/29/2018
Property Taxes: Why Some Local Governments Get More Than Others Page 3 of 10
more than$200 per resident: Alpine ($1,068), Amador($208), Colusa($232), Inyo ($394), Mono
($537), Plumas ($212), San Francisco ($476), and Sierra($563).
As Figure 2 shows, there is even greater variation in the amount of property taxes received by cities.
While the average city receives about$75 per resident in property taxes, some receive more than$200
per resident and many receive less than $25 per resident. (Cities incorporated after 1978 commonly
receive very low property tax revenues for reasons discussed later in this policy brief.)
Figure 2
How Much Property Taxes Do Local Governments Get?
Property Tax Receipts for Selected Local Govern ments
� A
Property Property Property
Taxes Taxes Taxes
per per per
Cities Resident Counties Resident Schools Student
I h E II tE IE �
Industry $2,792 Sierra �1 $563 11 Inyo 1 $3,9931
San
Beverly Hills 467 Francisco' 476 Mono 3,454
Los Angeles 1 137 I Inyo 11 394 II Marin 3,428
Oakland 11 11811 Colusa 1 232 II San Mateo II 3,194
San Luis San
Long Beach 105 Obispo 197 Francisco 2,558
Los
Vallejo 79 Angeles 136 San Diego 1,769
State State State
Average 75 Average 115 Average 1,510
Santa Los
Barbara 70 Alameda 102 Angeles 1,319
1 Stockton I1 641 Sacramento k 94 II Stanislaus I� 1.192
San Jose II 60 II Riverside 1 78 II Fresno II 913
San
Anaheim 54 Orange 69 Bernardino 862
f
Compton1 21 �1 Fresno 1 5911 Merced 11 811
Bellflower -- 11 Butte 45 1l Kings 1 687
I II II 1!
Note: All values shown are for 1994-95 and exclude debt levies.
http://www.lao.ca.gov/1996/082196—Prop_taxes/property_tax_differences_pb82196.html 3/29/2018
Property Taxes: Why Some Local Governments Get More Than Others Page 4 of 10
a San Francisco is a city and county.
School districts also report widely different amounts of property taxes per enrolled student,ranging
from around $4,000 to less than$1,000. The state "tops off' school district property tax revenues with
state funds, however, to bring most schools to a comparable spending level for general purposes.
Finally, special districts and redevelopment agencies also receive widely varying amounts of property
taxes. Data limitations, however, preclude us from summarizing this variation on a statewide basis.
Why Do Local Governments' Property Tax Receipts Vary?
Four factors account for most of this variation in local government property tax receipts. These factors
are the:
• Number and Value of Homes and Businesses in the Area. Generally, high property values
yield high property tax revenues.
• Extent to Which a Local Government Provides Municipal Ser vices. Local governments that
provide a full range of municipal services- -rather than relying upon special districts or other
local entities--typically receive more property taxes than governments that provide fewer
services.
• Extent to Which Land Is Included in a "Redevelopment"Area. Redevelopment activities may
reduce property taxes to cities, counties, special districts, and schools in the area.
• State Laws Governing the Sharing of Property Taxes by Local Governments Serving a
Community. Generally,the jurisdictions that had a relatively high property tax rate in the 1970s
get a larger share of tax revenues today.
We discuss each factor separately below. This document also contains a detailed addendum on the
state laws governing the sharing of property taxes.
High Property Values
Yield High Property Taxes
Market forces, government infrastructure investments, natural geography, and local land use choices
have acted together to create a diverse array of California communities. Some of these communities
are extensively developed and have many high-value homes and businesses. Others have few land
developments, or few high- value developments. These differences in the extent and value of land
developments affect the amount of property taxes a community receives.
Because property taxes are levied in proportion to the assessed value of property, communities with
more land developments and higher-value land developments receive more property taxes than
communities with fewer developments. (Assessed value is generally the market value of a property at
the time of purchase adjusted annually by a maximum of 2 percent for inflation.)
This relationship between the extent of land development and a community's property tax revenues is
common throughout the United States. Typically, local communities with more land developments
require more public services, such as streets, water systems, and police and fire protection.
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All Local Governments
Are Not the Same
Not all California cities, counties, and special districts have the same responsibili ties. Some cities and
counties provide a full array of government services, including fire protection, park and recreation
programs, and water service. Other cities and counties rely upon special districts to provide some or
all of these services. Statewide, for example, there are 557 special districts providing fire protection
services and 293 special districts providing park and recreation services. Figure 3 highlights this
variation in governmental responsibilities for three cities.
1 Figure 3
All Cities Do Not Provide the Same Services
I �
Los
Service Angeles Mission Viejo Concord
I Police II x II x �I x
Fire II x 11
Emergency Medical �I x II II
SewersI x o
Parks and recreation x I x II x
Libraries x x II -
1 Water I x `
Ix City provides service or pays others to provide service.
o City is partly responsible for providing or paying for service.
- Service provided by a special district or county. l
I !k it II I
In addition to this variation in program responsibilities, county governments also vary in the extent to
which their residents live in cities. In some counties, such as Los Angeles and Alameda, the vast
majority of residents live in cities and receive some municipal services from their city government.
Other counties have few or no cities--or function as both a city and a county. These counties have
relatively more responsibilities.
How do these differences in responsibilities affect local government property tax receipts?If all other
factors are the same, a local government providing more services generally requires more tax
revenues to pay for these services. In the past, most local and state decision making regarding the
allocation of the property tax has reflected this relationship. Thus, local governments with wider
responsibilities typically receive more property taxes than governments with fewer responsibilities.
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Use of Redevelopment Influences
Property Tax Receipts
The use of redevelopment also influences the amount of property taxes local governments receive.
This is because when a local government creates a "redevelop ment project area," most of the growth
in property taxes from this area goes to the redevelopment agency, rather than other local
jurisdictions, such as the schools, county, city, and special districts. Redevelopment agencies use
these property tax revenues to finance improvements to revitalize the project area. After the redevelop
ment work is complete (typically, 30 to 40 years later), the redevelopment agency's property tax
revenues are reallocated to the other local governments in the area. To date, however, only a very
small percentage of all redevelopment projects have been completed.
As shown in Figure 1, nearly 8 percent, or $1.4 billion, of property taxes is allocated to
redevelopment agencies statewide. Some of these property tax revenues otherwise would have been
allocated to other local governments in the community. The use of redevelopment varies extensively
throughout the state. Some cities have placed most of their developed land in redevelopment project
areas. Other communi ties do not have any redevelopment project areas.
State Determines How
Property Taxes Are Shared
Finally, the amount of property taxes allocated to local jurisdictions is also a function of state property
tax allocation laws,principally AB 8 (Chapter 282, Statutes of 1979). The responsibility for allocating
the property tax was assigned to the state by Proposition 13 which stated that property taxes were to
be allocated "according to law." Assembly Bill 8 allocated property taxes among the local
governments within a county and provided fiscal relief to partially make up for property tax losses
result ing from Proposition 13's tax limitation provisions.
The formulas contained in AB 8 (for more detail see the addendum on page 10) were designed to
allocate property taxes in proportion to the share of property taxes received by a local entity prior to
Proposition 13. In general, each local government that provided services within a community was
awarded a share of total property taxes collected within that community. Over time, as assessed
values grow, the amount of property taxes received by a local government also grows. However,the
share of property taxes does not change. For example, if a county, city, special district, and school
district each receive 25 percent of property taxes collected within a community under AB 8,they will
continue to receive 25 percent of taxes collected regardless of how much property taxes grow. These
"AB 8 shares" were developed based on the historical share of property taxes received by local
jurisdic tions prior to Proposition 13. Local jurisdictions that had received a large share of property
taxes prior to 1978 received a relatively large share of property taxes under AB 8. Thus, the variation
in property tax receipts in effect at the time was continued.
Since 1979, as discussed in more detail in the addendum, there have been just two significant changes
to the original property tax shares contained in AB 8: legislation designed to aid cities that receive no,
or very low,property taxes and the property tax shifts of 1992-93 and 1993-94. Despite these
changes, however, the state property tax allocation system developed in 1979 in response to
Proposition 13 continues to be the basis for the property tax allocation among local governments.
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Which Factor Is
Most Important?
The four factors discussed above account for most of the variation in local government property tax
receipts. Our review indicates that the relative importance of each factor differs on a community-by-
community basis.
In some cases, the state's property tax allocation law--AB 8--is the major factor determining the
amount of property taxes a local entity receives. Specifically, two local governments that are very
similar today may receive very dissimilar amounts of property taxes because AB 8 continues the tax
sharing ratios of the 1970s.
In other cases, however, the amount of local development, the reliance upon special districts, or the
use of redevelopment is more determinant than AB 8. School districts in Alpine County, for example,
receive a lower share of the property taxes under AB 8 than do most other school districts in the state,
and school districts in Stanislaus County receive a higher share.Nevertheless, school districts in
Alpine County receive nearly twice as much property taxes per student than do schools in Stanislaus
County. The difference is due to Alpine County's high property values relative to the number of
students.
Similarly, cities in Riverside County and the county itself,tend to receive rela tively low amounts of
property taxes per resident. These lower amounts of property taxes reflect, in part, Riverside
communities' higher reliance upon redevelopment and special districts. Specifically, Riverside
communities have placed large land areas under redevelopment, with the result that 19 percent of all
property taxes in the county are allocated to redevelopment agencies. In addition, special districts
provide some services to Riverside communities that elsewhere are provided by cities or counties.
Should the Legislature Equalize Property Taxes?
Over the years, various proposals for reducing the variation in local govern ment property tax receipts
have been advanced. In considering these proposals, we recommend the Legislature first consider the
causes for local government property tax revenue variation. In some cases, this variation appears to
serve important policy objectives. For example:
• Allocating more property taxes to extensively developed communities helps these communities
pay for services to the land developments and to the people who live and work in them. The
higher tax receipts also provide an incentive for commu nities to promote economic
development.
• Providing more property taxes to local governments with more municipal program
responsibilities helps the jurisdictions pay for these services.
• Allowing redevelopment agencies to keep most of the growth in property taxes in
economically-distressed neighborhoods helps facilitate economic develop ment and the
eradication of urban blight.
It is less clear, on the other hand, whether property tax variation caused by the AB 8 property tax
sharing methodology continues to serve important policy objec tives. While this sharing methodology
originally was designed to closely approximate Californian's preferences for local services,this
methodology has not been updated for nearly 20 years. Since that time, California's population has
grown by nearly 50 percent and the needs and preferences of local voters have surely changed. In
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some cases, local residents may prefer to have a special district's share of property tax revenues
reduced and their city's share expanded--or the other way around.
In considering ways to update the AB 8 methodology, however, the Legislature faces major
difficulties. Specifically, several thousand local governments-- including over 1,000 school districts--
receive a share of local property taxes. Updating the AB 8 methodology to reflect local preferences
would require the Legislature to ascertain the needs and priorities of each California community and
each local government. This is a task which, in our view, cannot be undertaken in a centralized
manner.
For this reason, we believe that ultimately the control over allocating the property tax--or at least the
nonschool portion of the property tax--should be decentralized. Decentralization would allow the
debate regarding the appropriate distribution of local revenues to be carried out locally, rather than in
Sacramento, and offers Californians the best chance of aligning tax revenues with local needs and
preferences.
s
Addendum:
How Property Taxes
Are Shared By Local Governments:
The History of SB 154 and AB S
The current system for allocating property taxes in the state is governed to a large extent by two bills
developed by the Legislature nearly 20 years ago. Following the passage of Proposition 13,the voter
approved property tax limitation measure, the Legislature enacted two property tax allocation and
fiscal relief bills, SB 154 (Chapter 292, Statutes of 1978) and then AB 8 (Chapter 282, Statutes of
1979). This addendum provides background information relating to the formulation of these two bills
which have influenced state-local fiscal interactions for nearly two decades.
Before Proposition 13--Tax Allocation Determined Locally
Prior to the 1978 passage of Proposition 13, each local jurisdiction authorized to levy a property tax
set its own tax rate (within certain statutory restrictions). The rate set by each local government was
independent of the rates set by other jurisdictions. A property owner's total property tax bill reflected
the sum of the individual rates set by each taxing entity. A given piece of property might, for
example, be subject to a separate tax rate for the city, county, and local school district as well as any
special districts that provided services to the property.
Under this system, each local jurisdiction made a determination every year as to the amount of
revenue necessary to finance the desired level of services. Based on this determination, each local
entity set its property tax rate so as to collect the necessary revenue. Local residents could influence
the level of both services and taxes in their community through their voting decisions. The product of
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this system was a set of local government services that generally reflected the individual preferences
of each community in the state.
Proposition 13 Required Legislature To Design New System
Proposition 13 fundamentally changed local government finance. Property tax receipts to local
governments fell by more than 50 percent as the average statewide property tax rate fell from 2.67
percent to a constitutional maximum of 1 percent. Moreover, voters required the state, rather than
local government, to allocate these revenues between competing jurisdictions within a county.
The First Allocation System--SB 154
Immediately following the passage of Proposition 13, the Legislature approved SB 154 in an effort to
avoid local government service diminutions and significant fiscal distress. Senate Bill 154 allocated
the property taxes collected at the 1 percent rate to counties, cities, special districts, redevelopment
agencies, and schools. Under SB 154, a local government's share of the property tax was based on the
share of the property tax going to that local government before Proposition 13. For example, if a
county government received 10 percent of the property taxes collected by all local jurisdic tions in
that county prior to the passage of Proposition 13, the county government would receive 10 percent of
the property taxes collected at the 1 percent rate. This allocation system became the foundation of the
property tax distribution mechanism subsequently enacted in AB 8.
Senate Bill 154 also relieved counties of a portion of their obligation to pay for certain health and
welfare programs and provided "bailout" block grants to partially offset the revenue loss resulting
from the reduction in property tax revenues. Specifically, SB 154 provided $250 million in block
grant funds for cities and $436 million for counties. These funds were allocated based on each local
jurisdiction's property tax loss (adjusted for surplus local revenues and the value to counties of the
state health and welfare "buyout") as compared to the total property tax loss for all cities and counties
statewide. Special districts also received $125 million in fiscal relief from SB 154 as well as $68
million from related legislation.
The Current Property Tax Allocation System--AB 8
A year after enacting SB 154 the Legislature adopted AB 8, a long-term policy to reallocate property
taxes and provide fiscal relief to local governments. A primary objective of AB 8 was to provide local
governments with a property tax base that would increase over time as assessed value grew,thereby
providing a financing mechanism for growing communities. The base property tax allocation
contained in AB 8 was essentially the same as that provided for in SB 154. However, rather than
provide block grants, AB 8 increased the share of the property taxes allocated to counties,cities, and
special districts while reducing the share of the property tax going to schools. School losses were in
turn made up with increased state funds for education.
The amount of the increased property tax allocation in AB 8 was based on the block grant amount
provided in SB 154. Specifically, cities received increased property taxes equivalent to 82.91 percent
and special districts 95.24 percent of their SB 154 block grant amount. Under the provisions of AB 8,
counties received a combination of increased property taxes, reduced expenditure obligations, and a
state block grant for indigent health programs. The major components of the expenditure reductions
included complete state assumption of the costs for Medi-Cal and the State Supplementary Program
(SSP)portion of SSI/SSP, as well as an increased state share of the costs for the Aid to Families with
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Dependent Children(AFDC) program. In addition, AB 8 provided counties with a block grant to
provide health services for the indigent. The increased share of the property tax going to counties
under AB 8 was calculated as the value of the SB 154 block grant plus a small adjustment for AFDC
costs less the amount of the indigent health block grant.
What are "Negative Bailout"Counties?Under the provisions of AB 8, six counties (Alpine,Lassen,
Mariposa, Plumas, Stanislaus, and Trinity) were not awarded additional property taxes. The same
calculations were applied to these counties as were applied to all others, however the value of the
indigent health block grant was so great in these counties that it exceeded the value of the adjusted SB
154 block grant. (Generally, this was the case when a county had very low property tax losses from
Proposition 13 and/or when a county benefitted disproportionately from the health and welfare fiscal
relief components of AB 8.) In order for these counties to be treated in the same way as all other
counties, the amount of property taxes allocated to these counties was reduced. Because these
counties received a smaller percentage of total property taxes collected after imple mentation of AB 8
relative to their pre-Proposition 13 shares,these counties are termed "negative bailout counties."
Two Changes to the AB 8 System
The state property tax allocation system developed in 1979 in response to Proposi tion 13 continues to
be the basis for the property tax allocation among local govern ments today. Since 1979,there have
been just two significant changes to the original property tax shares contained in AB 8. The first
relates to the so-called "no and low property tax cities." Certain cities that did not levy a property tax,
levied only a very low property tax, or were not incorporated as cities prior to the passage of
Proposition 13 were not allocated a significant share of the property tax under AB 8. The Legislature
has acted to gradually increase the share of property taxes going to these cities.
The second significant legislative action that affected property tax allocations was the property tax
shifts of 1992-93 and 1993-94. In response to severe budget deficits,the state shifted $3.6 billion in
property taxes from counties, cities, and special districts to schools. This action reduced the state's
General Fund contribution by an equivalent amount. The property taxes were shifted roughly in
proportion to the benefit received by local agencies from AB 8. Thus, the property tax shifts did not
fundamentally alter the property tax allocation system developed by the Legislature in 1979.
This report was prepared by Matt Newman and Marianne O'Malley, under
the supervision of Mac Taylor.
To request publications call (916) 445-2375.
This report and others are available on the LAO's World Wide Web page at
http://www.lao.ca.gov.
The Legislative Analyst's Office is located at 925 L Street, Suite 1000,
Sacramento, CA 95814.
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