Council Approves City-County Tax-Sharing Agreement on Nishi, WDAAC

Dan Carson

Last night after brief discussion the Davis City Council voted 5-0 to approve the agreed to tax-sharing agreement between the city and council related to the Nishi Residential Development and West Davis Active Adult Center projects.

According to a joint statement on Tuesday, the framework was “recommended for approval by staff for both agencies and a committee of elected officials comprised of city councilmembers Dan Carson and Will Arnold and county supervisors Jim Provenza and Don Saylor.”

The Board of Supervisors still must ratify it from their end at their December 11 meeting.

“This agreement would pave the way for annexation of two badly needed housing projects approved by the voters to the City of Davis,” said Davis City Councilmember Dan Carson in a statement on Tuesday.  “It represents yet another important step in improving our collaboration with the county through the fair sharing of tax revenues and a renewed commitment to long-term planning.”

A tax-sharing, or tax exchange agreement, allocates property taxes consistent with each entity’s municipal service responsibilities following annexation.

Under Proposition 13, property tax is 1% of assessed value which is then divided among the different taxing entities that provide services to an area.

The proposed agreement provides the following major terms following annexation:

  • The current county share of property taxes for the annexed properties allocated to the county’s General and Accumulated Capital Outlay funds will be allocated 50% to the county and 50% to the city.
  • Property tax revenue currently allocated to County Road Fund #2 will be 100% allocated to the city.
  • The county will receive 15% of the city’s Bradley Burns Sales and Use Tax revenue from sales made inside the annexed areas.
  • The city will receive all property tax currently allocated to the Springlake Fire Protection District from the annexed area.
  • For the West Davis Active Adult Center only, the city will provide a $12,000 annual contribution to the county for use in emergency services planning and operations, adjusted annually up or down by changes in consumer price index, not to exceed 5%.
  • The developments will pay the county’s Facilities Impact Fee.
  • The city and county will partner and cooperate on the following issues:
  • Improving drainage at the access to the water tank at John Jones Road
  • A traffic calming analysis to determine the need for, and effectuate traffic calming for John Jones Road/County Road 99 from Covell to County Road 29
  • The city and county will collaboratively address shared interests including agriculture/urban interface, public health, infrastructure and public services.  These discussions will include land use planning issues, such as future city or county General Plan updates for areas on the periphery of the city, particularly regarding the northwest quadrant.

Councilmember Carson, who sat in on the subcommittee with Councilmember Will Arnold, told his colleagues, “I think this is important and I urge my colleagues to support it.”

“I think it’s another important step towards regional and local collaboration,” he said noting that “we have been on a bit of a roll here.”  He said, “This is another step down that path.”

The councilmember added, “The dollars that will come out of these two projects that we badly need – we need student housing, we need senior citizen housing, the dollars that will come out of it are very much in line with the projections that city staff did and that we scrubbed very carefully.”

Councilmember Carson also noted that there is another agreement that the city is not a party to, whereby the county gets additional benefits “that could also be of help to Davis.”  Namely, the developer of WDAAC has agreed to fund an Adult Day Health Center that could be housed on the WDAAC property or could simply be an expansion of the existing facility in Woodland.

Either way, he said, it would benefit this community.

Councilmember Arnold noted, “There was originally a bit of a delta between what we wanted and we have these negotiations and I think we reached an agreement that is beneficial to all involved.”

He added, “I would reiterated, I think that one of the most important points is that this agreement, according to our projections, does put us squarely in line with fiscal projections that we had for these projects.  This does nothing to undermine the promises that were made to the voters when considering these projects.  That was frankly the bottom line for us, we wanted to ensure the integrity of the entirety the process.”

In considering the tax exchange agreement on December 11, the Board of Supervisors will also consider approval of a separate agreement negotiated by the county with developer David Taormino in connection with the WDAAC Project.

The agreement provides additional public benefits voluntarily offered by Mr. Taormino to the county, including “a contribution of $1.25 million toward development of a new or expanded Adult Day Health Center to enhance services for the aging population in Yolo County; and Construction and dedication of a 10-foot wide bike path connecting the Binning Tract to the West Davis Active Adult Center development.”

The agreement also affirms the county’s commitment to facilitate consideration of WDAAC project site annexation by LAFCO, as well as county assistance with bike path construction permitting and habitat mitigation for the project.

“These agreements are the result of careful collaborations between the City of Davis, Yolo County and the project applicants,” said Yolo County Supervisor Don Saylor in a release by the county.

The Supervisor added, “All parties worked in good faith driven by the broader interests of our shared community.  I am pleased with the tax sharing framework, commitments to local bike projects and future traffic mitigations, and housing and services for our growing senior population.  Like our recent agreements between the City and UC Davis, this agreement shows what we can do when we work together.”

“The agreements balance the needs of both the city and the county to ensure adequate funding for critical services,” said Yolo County Supervisors Jim Provenza.

The Supervisor added, “We appreciate developer’s commitment to provide funding for a new or expanded adult day health care center.  The current facility is inadequate to serve the growing number of seniors and dependent adults who can remain in their homes with the assistance of a facility for medically needy adults.  A new or expanded facility will double the number of persons we are able to serve.  This commitment is consistent with the mutual goal of the county, the City of Davis and the developer to provide improved services to our aging population.”

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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24 thoughts on “Council Approves City-County Tax-Sharing Agreement on Nishi, WDAAC”

  1. Ron

    Based upon prior communications on the Vanguard, I recall that there’s generally a simple overall percentage that the city receives for each dollar paid in property taxes, depending upon the area of the city.  And, that it averages around 20% of each dollar paid.

    Is there such a percentage, in the case of WDAAC and Nishi?

    1. Howard P

      I recall that there’s generally a simple overall percentage that the city receives for each dollar paid in property taxes, depending upon the area of the city

      You recall incorrectly.

      1. Ron

        I don’t think so.  I’m certain that I saw something about this on the Vanguard, and that the 20% percentage is not far off. 

        And, those areas are already in the city (and not subject to this type of tax-sharing agreement, between the city and county).

        Of course, this gross revenue doesn’t account for costs to the city. Which is the same reason that the city isn’t taking in enough tax revenue to cover costs.

        If you’re going to state that something is incorrect, it’s up to you to state how. Otherwise, it’s meaningless (and is likely misleading).

        edited

        1. Howard P

          I don’t think soI’m certain that I saw something about this on the Vanguard, and that the 20% percentage is not far off.

          Do not dispute that the ~20%, in aggregate, is not far off… however you also said (as quoted earlier),

          I recall that there’s generally a simple overall percentage that the city receives for each dollar paid in property taxes, depending upon the area of the city

          and,

          I don’t think soI’m certain that I saw something about this on the Vanguard

          Now you say,.

          If you’re going to state that something is incorrect, it’s up to you to state how. Otherwise, it’s meaningless (and is likely misleading).

          Let’s see… you had no cites, so (your logic) to refute your earlier statement, I have to state where you err, where you are wrong, presumably with cites… hmmmmmm…

          To quote the Atre Johnson character on Laugh-In, “Verrrrrry interesting… but ….”

          edited

    2. Rik Keller

      Yeah, the share that the City of Davis gets out of the total property tax assessment for a property is about 20%. It would vary a little bit in the area of the city depending on special assessment boundaries and so forth.  I’m sure someone can dig up some updated numbers, but as stated in this article (my emphasis), “The same West Sacramento story can be seen in how much each city in Yolo County keeps of the property taxes its residents paid in 2012-13. Davis retained 20.04 percent, Woodland 20.77 percent and Winters 24.75 percent. By contrast, the city of West Sacramento kept 47.89 percent. https://www.davisenterprise.com/forum/opinion-columns/why-yolo-county-is-poor-look-to-the-east-2/

      1. Ron

        Rik:  Wow, what a difference regarding West Sacramento.  With a difference like that, development is going to be much more appealing, to them.  (To the point of bending over backwards.)  Yeap, that’s what Davis has to “compete” with.

        Regarding Rich Rifkin, I find his articles pretty interesting, at times – especially regarding fiscal concerns.  I believe that he used to comment on here, but stopped doing so.

  2. Matt Williams

    Slow news day.

    The only thing noteworthy about last night’s item is that it only pertained to the two parcels … and did not put forward the terms of a master agreement between the County and the City covering all the peripheral parcels.

      1. Matt Williams

        Search in agreement?

        Do you mean “such an agreement?

        If so … one covering all the tax districts in the Sphere of Influence. It is really pretty straightforward

  3. Rik Keller

    For some context: what are the projections for the City’s share of annual tax revenue for each of these projects? And what are the projections for the annual net City budget impacts for each?

    Then we can do some quick back-of-the envelope calculations for how many “Nishi/WDAAC Unit” equivalents would be needed to build our way out of the City’s $8 million budgetary shortfall. Anybody want to place bets? 10? 50?

    1. Jeff M

      There was work done when the earlier innovation parks were being proposed by developers and killed by residents that a fully populated park in aggregate will return about $700M per year in net tax revenue for every 100 acres of commercial development.   So Davis needs about 1200 acres of commercial development.

      And as this causes my semi-anonymous friends Ron and Keith to hyperventilate, note that this is 1.875 square miles added to Davis’s existing 10 square miles and the resulting 11.875 square miles would continue to give Davis the distinction of being oddly highly population dense… more so than any other population-similar city in the nation.

      1. Don Shor

        will return about $700M per year in net tax revenue for every 100 acres

        I feel that you’ve slipped a decimal there. The total budget for the City of Davis is only a fraction of $700 million.

      2. Ron

        I don’t recall the $700K number (at full build-out, decades from now) for the proposals that were withdrawn.

        But, it will be interesting to see what a realistic net revenue (“profit”) for the city would be, with the inclusion of housing – including Affordable housing. And, what it would be over time, due to the impacts of Proposition 13.

        I suspect that a lot of the “ju$tification” for a peripheral, semi-residential development will disappear, if that’s honestly examined.

    2. Rik Keller

      For the Nishi property, we don’t have to look any farther than Matt Williams’ excellent analysis from this spring: “the City’s 15-year financial model for Nishi presented to the FBC, which shows annual Property Tax revenues that range from a low of $187,451 to a high of $228,502.” https://www.davisvanguard.org/2018/04/nishi-numbers-dont-add-honesty-transparency-missing/

      Let’s not forget that Council member Dan Carson irresponsibly pushed for an estimate using a “cash-accounting” approach that did not account for full life-cycle costs, and the the ballot measure itself moved forward with these unrealistic projections: “The $2.5 million of additional Property Taxes to the City argument ignores the City’s 15-year financial model for Nishi presented to the FBC.”

      So, at the average of the FBC/EPS projection (and assuming that there actually ends up being being positive net revenue),  to get to $8 million in net revenue, we’d “only” need about 38.5 “Nishi Units” at 47-acres each for a total 1,800 acres.  That would be just 27,000 more apartment units (at 700 units for each Nishi Unit). NO BIG DEAL.

      Now who has the numbers for WDAAC? (good ones, not the pie-in the-sky stuff pushed by the developers)

       

      1. Ron

        Rik:  Ray Salomon (who is on the Finance and Budget Committee with Matt) performed some analyses for both Nishi and WDAAC (see link, below).  I recall that unlike the unsupported 75% “across-the-board” allocation (which originated with staff), Ray’s analysis included support for the allocations.  I believe that most of the allocations were greater than 75%, but less than 100%. (Some may have been less than 75%, as well.)

        Ray’s analyses paints a much less rosy picture than the ones that the city ultimately adopted.  I witnessed some of the meetings in which these analyses were discussed, and recall that Dan Carson did not seem very interested in discussing these allocations, and simply wanted to quickly move toward adoption of the 75% “across-the-board” allocation. (Dan was the chairperson of the committee, at that time.)

        I recall that Dan also disagreed with the EPS analysis, for Nishi 1.0 (and created memos to that effect).  (There was no external analysis for Nishi 2.0.)

        http://documents.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/Finance-And-Budget-Commission/Agendas/20180312/07C-Solomon-Updated-Fiscal-Models.pdf

        &

         

        1. Rik Keller

          Ron: with a cynical eye it’s probably safe to say that the EPS/FBC projections are still on the “best case” side and still a bit rosy. When has a project in the vast history of projects produced more revenue for a city than expected?

        2. Ron

          Ya got me!

          I’d encourage you to attend the finance and budget committee meetings.  You have the skill and patience to fully understand the numbers and projections, and question them as needed. (Actually, I’d like to see you on that committee, as a member.)

          Note that there are “summary” pages for both Nishi and WDAAC, in the Salomon analyses (link above). I don’t remember if they showed long-term deficits (and I’m too lazy to search through them again to find those pages, at the moment). 🙂 Not sure if you’ve seen these, already.

    3. David Greenwald Post author

      “Then we can do some quick back-of-the envelope calculations for how many “Nishi/WDAAC Unit” equivalents would be needed to build our way out of the City’s $8 million budgetary shortfall. Anybody want to place bets? 10? 50?”

      That’s largely a waste of time, as the purpose of those projects are not revenue generators but rather to provide residences. For a residential project, the goal is fiscal neutrality.

      1. Rik Keller

        It’s “largely a waste of time” to look st the financial details and impacts of projects? Was it also largely a waste of time to do that for Nishi 1.0 that wax presumably the type of project that is intended to be a “revenue generator” with a large tech incubator/R&D component? (Spoiler alert: the EPS analysis showed it was City revenue-negative. Oops).

  4. Howard P

    Nerdish comment (me being the nerd)…

    … CR 99 lines up with Lake Boulevard… John Jones Road and CR 99-D have the same alignment.   CR 99 and CR 99-D are just short of being 1 mile apart.  SR 113 ~= old CR 100.

    Words (and terms) have meaning.  The fact that the article says “John Jones/99” makes the intent clear, but I hope the actual agreement gets the terms right.  For ‘rigor’, if nothing else.

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