AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 19-000979
MEETING DATE:	09/24/19
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	1
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Jessica Witt (714) 834-7250
	Lala Oca Ragen (714) 834-7219

Subject: 17th and Tustin Island Annexation Cooperative and Property Tax Agreements

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement(s) and Resolution(s)

Discussion

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: See Financial Impact Section

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: OC Road Fund 115: 100%	County Audit in last 3 years: No

Prior Board Action: N/A

RECOMMENDED ACTION(S):

Approve Cooperative Agreement with City of Santa Ana for the annexation of the 17th and Tustin unincorporated island within the sphere of influence of the City of Santa Ana.

Adopt Resolution approving property tax exchange between the City of Santa Ana and the County of Orange for the annexation of the 17th and Tustin unincorporated island within the sphere of influence of the City of Santa Ana.

Upon final approval by the Orange County Local Agency Formation Commission of the annexation of the 17th and Tustin unincorporated island, dissolve the annexation area with the City of Santa Ana assuming the services for the area, and the City of Santa Ana receiving a transfer of a one-time compensation in the amount of $711,814.

SUMMARY:

Annexation to the City of Santa Ana of the 17th and Tustin island within its sphere of influence will allow the City of Santa Ana to provide municipal services to that unincorporated area of the County.

BACKGROUND INFORMATION:

In October 1980 the City of Santa Ana (City) and the County of Orange (County) entered into the "Master Property Tax Transfer Agreement Between the County of Orange and the City of Santa Ana to Provide for Property Tax Exchange in Areas Annexed by the City" (1980 Master Property Tax Agreement). The 1980 Master Property Tax Agreement determined the property tax allocation between the parties for existing and future annexations of County islands to the City.

In June 2018, the City initiated the process to annex a 24.78 acre unincorporated County island referred to as the 17th and Tustin Unincorporated Island (Annexation Area) within the City's sphere of influence. The Annexation Area is generally located north of East 17th Street, east of North Tustin Avenue and Ponderosa Street, south of Catalina Avenue and west of the SR-55 Costa Mesa freeway. The Annexation Area consists of 49 single-family residential parcels, three commercial parcels, two multi-family residential parcels, and three vacant parcels of land.

Following direction from its City Council, the City initiated and continued discussions with the County and the Orange County Local Agency Formation Commission (OC LAFCO) regarding the annexation. On September 14, 2018, the City held a community workshop regarding the proposed annexation, with participation from the County and OC LAFCO, and subsequently conducted public hearings to consider testimony related to the annexation. In addition, the City reviewed and concurred with the findings of the draft negative declaration that the County has prepared pursuant to the California Environmental Quality Act (CEQA) relating to the proposed In-N-Out Burger and Chick-Fil-A commercial developments in the Annexation Area. These development projects are still under review by OC Development Services. The Cooperative Agreement allows the County to continue processing these projects.

The collaboration among City, County and OC LAFCO culminated in the completion of some key pre-annexation documents that the City Council approved on September 3, 2019:

Adoption of a resolution approving the annexation and authorizing the submittal of an annexation application to OC LAFCO.

Authorization to execute a Cooperative Agreement with the County and to allow the County to continue to process active development projects in the Annexation Area (including the above referenced In-N-Out Burger and Chick-Fil-A projects that are still under County review).

Adoption of a resolution approving a Property Tax Exchange Agreement with the County for the properties to be annexed.

The County Executive Office (CEO) recommends approval of the Cooperative Agreement between the City of Santa Ana and the County of Orange for the Reorganization of the 17th and Tustin Unincorporated Island to the City of Santa Ana and Municipal Water District of Orange County (RO19-07) ("Cooperative Agreement"). The Cooperative Agreement contains the following significant provisions:

1.	Pursuant to the 1980 Master Property Tax Agreement, the 1% basic levy property tax generated within the Annexation Area will be allocated 58.5285% to the City and 41.4715% to the County.
2.	The City will receive a one-time compensation of $711,814 to construct betterments in the Annexation Area, including street improvements ($397,314), storm drain improvements ($187,500) and general construction costs ($127,000).
3.	The City is a member of the Orange County Fire Authority. As such, the Structural Fire Fund will remain unchanged.
4.	The City operates its own library system, and thus will receive 100% of the Orange County Public Library Fund generated from the Annexation Area.

The CEO also recommends adoption of the proposed "Resolution of the Board of Supervisors of the County of Orange Approving Property Tax Exchange Agreement Between the City of Santa Ana and the County of Orange Regarding the 17th Street and Tustin Island Annexation to the City of Santa Ana". Upon annexation of the Annexation Area to the City and assumption of municipal services by the City, the specified proportional shares will remain as the allocation of tax revenues between the City and the County for all future years, unless the parties agree by written Resolution to adjust the allocation proportions.

FINANCIAL IMPACT:

The terms of the Cooperative Agreement include a one-time compensation from the County to the City in the amount of $711,814, from OC Road, Fund 115.

STAFFING IMPACT:

N/A

REVIEWING AGENCIES:

OC Public Works

ATTACHMENT(S):

Attachment A - Cooperative Agreement
Attachment B - Property Tax Resolution