Agenda Item AGENDA STAFF REPORT ASR Control 11-001377
MEETING DATE:	09/13/11
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	Auditor-Controller (Approved)
Department contact person(s):	Frank Davies, 834-3015
	Jan Grimes, 834-2470

Subject: Adoption of FY 2011-12 Property Tax Rates

ceo Concur	County Counsel Review		Clerk of the Board
Concur	Approved Resolution to Form		Consent Calendar
			3 Votes Board Majority
Budgeted: N/A		Current Year Cost: N/A		Annual Cost: N/A
Staffing Impact: No		# of Positions:		Sole Source: N/A
Current Fiscal Year Revenue: N/A
Funding Source: N/A
Prior Board Action: Board Resolution No. 10-174 Dated September 21, 2010

RECOMMENDED ACTION(S):

Adopt the Fiscal Year 2011-12 property tax rates, delinquency/roll change/refund factors, and reserve of disputed values as set forth in the attached Resolution and in Attachment I to the Resolution.

SUMMARY:

Pursuant to Government Code Section 29100, the Auditor-Controller recommends adoption of the Fiscal Year 2011-12 property tax rates for school districts and special districts with general obligation bond debt tax rates required to be adopted by the County Board of Supervisors, and approval of the delinquency, roll change, and refund factors, and the reserved disputed values used in computing the property tax rates.

BACKGROUND INFORMATION:

Property Tax Rates

Government Code Section 29100, Education Code Section 15250, and various special district enabling statutes require that the Board of Supervisors adopt property tax rates for the County, all school districts, and certain locally governed special districts. These property tax rates consist of the one percent (1%) basic levy tax rate allowed under Proposition 13 (Article XIIIA of the State Constitution and Revenue and Taxation Code Section 93(b)), which is distributed to all property-tax-receiving entities in accordance with the provisions of Revenue and Taxation Code Sections 96 through 98.1, and property tax rates to cover voter-approved general obligation bonded indebtedness, authorized by Revenue and Taxation Code Sections 93(a) and (c) and 96.31, and by the elections in the applicable districts.

The voter-approved bonded debt property tax rates for the school districts and certain special districts are computed by taking the bond debt service principal and interest payments due during the year plus a reserve for principal and interest payments due in the following fiscal years, subtracting conservative estimates of non-tax revenues available to the debt service funds such as interest and carryover fund balances, and dividing by the districts' assessed value. The computations are adjusted to compensate for estimated property tax payment delinquencies, roll changes, and refunds. For certain school districts adjustments are also made to reserve disputed assessed valuations of property due to assessment appeals.

The attached Resolution contains the following information:

1. The Fiscal Year 2011-12 Property Tax Rates (detailed in Attachment I to the Resolution).

2. The delinquency, roll change, and refund factors used in computing the tax rates.

3. The reserve of disputed assessed values for certain school districts used in computing the tax rates.

Delinquency/Roll Change/Refund Factors

In calculating the property tax rates, allowances need to be made for estimated unpaid property taxes (delinquencies), for anticipated corrections to the assessed value rolls due to assessment appeals and other changes (roll changes), and for estimated refunds of property taxes to taxpayers resulting from successful assessment appeals and other changes (refunds). These allowances are necessary to insure that the property taxes collected will provide sufficient funds to meet bond debt service payments.

All of the school districts, and some special districts, are allocated secured property taxes under the Teeter Plan alternative method of tax apportionment. The Teeter Plan results in the allocation of the total secured property taxes billed, rather than actual collections. There is not a need to adjust for unpaid property taxes. Therefore, the computation of the property tax rates for these districts does not require an allowance for a property tax delinquency factor. Only an allowance for estimated tax roll changes and refunds is included in the computation. For those districts that are not on the Teeter Plan, an allowance for estimated property tax delinquencies is included in computing the property tax rates because these districts are allocated actual tax collections, which is net of unpaid delinquent taxes.

For the unsecured tax roll, which includes the assessed valuation of business equipment, boats, and other similar non-secured types of property, the Teeter Plan does not apply. Therefore, property tax rates are computed utilizing a factor that incorporates estimated delinquencies, roll changes, and refunds on the unsecured tax roll.

The following table summarizes the delinquency, roll change, and refund factors on the secured and unsecured tax rolls the County has experienced during the past five fiscal years:

	Secured Roll Change/Refund Factor for	Secured Delinquency/ Roll Change/Refund Factor for	Unsecured Delinquency/ Roll Change/Refund Factor for
Fiscal Year	Teeter Funds	Non-Teeter Funds	All Funds
2010-11	1.36%	2.86%	9.60%
2009-10 2008-09 2007-08	1.13% 0.56% 0.45%	3.32% 4.05% 4.17%	8.57% 9.12% 6.30%
2006-07	0.97%	3.65%	14.77%

Based on this history, and current economic conditions, factors for use in computing the property tax rates for Fiscal Year 2011-12 for school districts and locally governed special districts are estimated. The estimated factors as listed in the Resolution will allow for possible increases in delinquencies, roll changes, and refunds.

Reserve of Disputed Assessed Values

In addition to providing for estimated delinquencies, roll changes, and refunds in computing the property tax rates, allowance must be made for large assessment appeals currently in process. If those appeals were to be decided in favor of the taxpayers, the tax collections in areas where certain school district bond debt property tax rates are levied could be adversely affected. Consequently, we have taken the additional precaution of reserving, or excluding, these values in computing certain school district tax rates. The reserved values are listed by school district in the Resolution.

FINANCIAL IMPACT:

N/A

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Resolution Adopting FY 2011-12 Property Tax Rates, and Attachment I " Property Tax Rates For 2011-12 for Taxing Agencies in Orange County".