HomeMy WebLinkAboutAction to Not Initiate Application for Annexation Number 03- got
Council/Agency Meeting Held: / a3
Deferred/Continued to:
Approved ❑ Conditionally Approved ❑ Denied City Clerk's Signa re
Council Meeting Date: September 15, 2003 Department ID Number: PL03-19
CITY OF HUNTINGTON BEACH
REQUEST FOR ACTION
o �
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, City Administrator aA?
LV ^c'
PREPARED BY: HOWARD ZELEFSKY, Director of Planning � Y�
SUBJECT: APPROVE RECOMMENDATION TO NOT INITIATE APPL ATION--
FOR ANNEXATION NO. 03-01(COUNTY ISLAND) � a
Statement of issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Transmitted for your consideration is a proposal by the Local Agency Formation Commission
(LAFCO) for the City of Huntington Beach to consider the annexation of 41 acres of
unincorporated land located at the northwest corner of McFadden Avenue and Beach
Boulevard. The annexation area contains approximately 289 single-family housing units and
three commercial businesses. Staff has completed an analysis of the possible annexation
and recommends that the City not initiate an annexation application with LAFCO because of
the costs to provide services and maintain infrastructure in the area. Not initiating the
application at this time would still allow the City to consider annexation of the 41 acres or a
portion thereof at a future date.
Funding Source: Not applicable.
Recommended Action:
STAFF RECOMMENDATION:
Motion to:
"Do not initiate an application for Annexation No. 03-01 related to the annexation of 41 acres
of unincorporated land into the City of Huntington Beach proposed by the Local Agency
Formation Commission."
Alternative Action(s):
The City Council may make the following alternative motion:
"Continue consideration of Annexation No. 03-01 and direct staff to conduct further
analysis of the issues identified by the City Council."
REQUEST FOR ACTION
MEETING DATE: September 15, 2003 DEPARTMENT ID NUMBER: PL03-19
Analysis:
A. PROJECT PROPOSAL:
Applicant: City of Huntington Beach
Location: County Island located at the Northwest corner of McFadden Avenue and
Beach Boulevard and bordered to the west by the City of Huntington Beach,
and to the north, south and east by City of Westminster.
Annexation No. 03-01 represents a request by the Local Agency Formation Commission
(LAFCO) that the City of Huntington Beach consider the initiation of an annexation
application for a 41 acre unincorporated area. The area contains predominately single-
family residential properties with minimal commercial development; three commercial
properties front Beach Boulevard and McFadden Avenue and include a motel, auto repair
and automobile sales uses (Attachment No.1).
In order for LAFCO to commence the annexation process, a formal application and
resolution approving the pre-general plan and pre-zoning must be approved by the City
Council. LAFCO would incur their standard annexation processing fees of approximately
$15,000. However, the City would incur the costs associated with staff processing an
annexation application, environmental review, General Plan Amendment, and Zoning Map
Amendment totaling over $28,000.
B. BACKGROUND
In April of this year, City staff was contacted by LAFCO to discuss the possibility of annexing
the subject 41 acres. LAFCO provided City staff with a Draft Annexation Feasibility Fiscal
Report dated March 2003, which provides information on potential costs and revenues
(Attachment No. 4).
The annexation is being requested as part of LAFCO's Small Islands Annexation Program.
This program was established through a joint commitment of LAFCO, the County of Orange
and the League of California Cities to address the unincorporated islands located throughout
the county, recognizing that cities are the logical service providers for municipal-level
services for unincorporated county islands. Their goal was to have various cities annex 50
small, unincorporated islands within a three-year period. In addition to other criteria, county
islands not annexed before January 1, 2000 would be eligible to participate in the annexation
program. This annexation program is a result of the following related issues:
1. The County's determination that surrounding cities could provide more efficient local
services to the County islands.
2. Identification of the Small Islands Program by both LAFCO and the League of Cities
as a priority project (Attachment No. 2).
PL03-19 -2- 8/21/2003 10:32 AM
REQUEST FOR ACTION
MEETING DATE: September 15, 2003 DEPARTMENT ID NUMBER: PL03-19
3. Passage of AB 1555 (Government Code 56375.3) which assists cities and LAFCO in
significantly streamlining the procedural requirements for island annexations that meet
specific criteria. This bill authorizes LAFCO to approve an island annexation without
protest or election (Attachment No. 3).
C. STAFF ANALYSIS AND RECOMMENDATION:
The subject area is being offered to the City of Huntington Beach for annexation due to its
location within the City's Sphere of Influence (Attachment No. 5). LAFCO developed their
Sphere of Influence maps in the 1970's, identifying the relationship of county islands to
adjacent cities.
LAFCO's Feasibility Fiscal Report concludes that upon annexation of the subject area a
projected revenue surplus of $252,112 would be received annually by the City of Huntington
Beach. However, the revenue projections included in this report fail to take into
consideration the loss of Measure M funding in 2010, the increase in staffing and
infrastructure costs associated with services, and the responsibility of maintaining aging
infrastructure. The following subsections provide City department findings and
recommendations in response to the annexation proposal.
Police Department
The Police Department reports that the physical location of this county island is isolated from
the rest of the City of Huntington Beach and is relatively difficult and awkward to access from
other areas of Huntington Beach. 'Due to the isolated location, the Police Department has
expressed concerns that high priority calls for service may result in longer than acceptable
response times.
LAFCO's Fiscal Report states that the annexation would not have an adverse impact on
Police Department resources and no new officers would be needed. Upon review of the
calls for service from the Sheriff's Department regarding the existing motel located within the
area, the Huntington Beach Police Department believes that the extraordinarily high level of
police response that has occurred could result in the need for additional officers and at the
very least would tax the City's available resources. As an example, the Sheriffs Department
responded to 203 calls for service in 2002. The calls for service were for a wide variety of
problems, including drug overdoses, assaults, thefts and disturbances.
The Police Department further stated that it would be reasonable to assume that the
surrounding residential area is affected by the criminal and nuisance activity generated by
the patrons of the motel. These types of criminal activities typically result in an additional
demand on police as well as other city services. The addition of this type of business would
increase the demand for the already overtaxed Community Bureau, with the need to address
and deal with long term, difficult social problems in the neighborhood.
PL03-19 -3- 8/21/2003 10:32 AM
REQUEST FOR ACTION
MEETING DATE: September 15, 2003 DEPARTMENT ID NUMBER: PL03-19
The Police Department therefore believes that based on the anticipated increase in the
demand for police services for the area that it would not be in the best interest of the City of
Huntington Beach to annex the county island at this time.
Public Works Department
The Public Works Department has indicated that the LAFCO's Fiscal Report provides
estimated revenue projections to the City of over $8,000 annually from "Measure M" voter
approved sales tax revenue. The Orange County Transportation Authority distributes
Measure M monies annually. However, the funding source for these monies is scheduled to
sunset in the year 2010, which would increase the road fund deficit to over$14,000 annually.
Furthermore, Public Works concludes that no allocation for alley pavement maintenance,
street tree maintenance (including infill planting), landscape maintenance, graffiti removal,
traffic signs (including the installation of new street name signs) and traffic markings
maintenance were accounted for in LAFCO's Fiscal Report. Staff did not generate cost
projections on these items due to time constraints.
The implementation of water service to this geographic area is estimated to cost an
additional $52,000, excluding the cost for the installation of fire hydrants of which the exact
number of hydrants has not yet been determined. The Public Works Department states that
a full assessment of water systems should be completed, including meters, hydrants and
pipe conditions. Finally, a complete review of the sewer conveyance system should be
made to determine the integrity of the sewer lines as well as determine the means of
conveyance to the Orange County Sanitation District.
The Public Works Department is also recommending against annexing this island due to the
lack of adequate funding for the repair and maintenance of infrastructure inventories within
the annexation area. Adding these inventories will only exacerbate the ability of the Public
Works Department to upgrade the condition of the City's existing infrastructure.
Economic Development Department
The Economic Development Department's review of the Draft Annexation Feasibility Fiscal
Report focused primarily on the issues associated with this area being part of a County
Redevelopment Project Area. At the request of the Economic Development Department,
Rosenow Spevacek Group (RSG) conducted a preliminary investigation of the County of
Orange's Neighborhood Development and Preservation Project Area to analyze the
redevelopment related issues within the project area (Attachment No. 6). Additional
supplemental information was requested by the Economic Development Department from
RSG to discuss the primary limits in the redevelopment plan covering the annexation area
(Attachment No. 7).
The Economic Development Department determined that should the City pursue annexation,
there are statutory provisions available to facilitate the City assuming management and
PL03-19 -4- 8/21/2003 10:32 AM
REQUEST FOR ACTION
MEETING DATE: September 15, 2003 DEPARTMENT ID NUMBER: PL03-19
control over this portion of a larger Redevelopment Project Area. It was further concluded
that the commercial components of the annexation area are not high-quality revenue
generators. In particular, the motel located in the project area seems to have a high
percentage of longer-term residents, thereby limiting the amount of transit occupancy tax
generated by the use. An analysis would need to be conducted to determine if
redevelopment would present any opportunity to upgrade these uses. Therefore, the
Economic Development Department recommends that no significant annexation discussions
or negotiations should take place without these factors being addressed.
Planning Department
The City's Neighborhood Preservation/Code Enforcement Division conducted a windshield
survey of the proposed annexation area to evaluate the neighborhood for compliance with
the City's Municipal Codes and Property Maintenance Ordinance. Their survey revealed that
approximately 25 of the 289 properties contained visible code violations, indicating 10
properties with multiple violations, and 15 with at least one violation. Violations observed
included lawn parking; in-operable vehicles in public view, discarded furniture on driveway
areas, rubbish accumulation; overgrown vegetation; auto repair in a residential zone,
chipped and peeling paint on fascia boards, and trash cans stored in public view.
Additionally, this area would be assigned to a code enforcement officer and given the
amount of violations observed in this area, annexation could negatively impact the Division's
staffing resources.
General Plan Requirements
The City of Huntington Beach General Plan requires that the City conduct an "annexation
feasibility study" addressing the five issues summarized below.
1. Is the proposed annexation adjacent to corporate boundaries?
Yes. The county island property is located adjacent to the west city boundary line. It is
located north of the 405 Freeway.
2. Does (or will) the annexation contain land uses that are compatible with City land uses?
Yes. Although the 41-acre county island area has not received a pre-general plan
approval from City Council, it is predominantly residential with minimal commercial land
uses. The land uses within the annexation area would be compatible with adjacent low
density residential properties located within the City.
3. Does (or will) the annexation area contain land uses that have the ability to provide
economic benefit to the City?
No. The Economic Development Department has concluded that the existing commercial
uses are not high quality revenue generators. Furthermore, it is unknown if
PL03-19 -5- 8/21/2003 10:32 AM
REQUEST FOR ACTION
MEETING DATE: September 15, 2003 DEPARTMENT ID NUMBER: PL03-19
Redevelopment would present any opportunities to upgrade these uses. The Fiscal
Report estimates that revenue from the annexation of this entire area could be $252,112
per year. However, the analysis of the various City departments has concluded that this
could potentially be reduced considerably due to the service and infrastructure costs
associated with the annexation area.
4. Would the annexation place an undue or excessive burden on the City's or other service
provider's ability to provide service?
Yes. As described above, the Police Department, Public Works Department and Code
Enforcement Division have concluded the annexation would place a burden on City costs
and staffing resources.
5. Would the annexation place an undue burden on school and other public services?
Staff has no recommendation on the impacts to schools and other public services at this
time. Upon the approval of the pre-general and pre-zoning portions of the annexation
application, the application would be forwarded to LAFCO. LAFCO would then forward
the application to other agencies for their review and comment on the proposal. Since
neither of the above actions has occurred, staff is not able to determine the impact of the
annexation on those resources.
D. SUMMARY
Annexation No. 03-01 represents a request by the Local Agency Formation Commission that
the City of Huntington Beach consider the initiation of an annexation application for a 41 acre
unincorporated area. Staff recommends that the City not proceed with the application due to
the costs to provide services and maintain infrastructure in the area.
Environmental Status:
Should the City proceed with the annexation application, City staff would prepare the
environmental analysis required by the California Environmental Quality Act. Based on
preliminary analysis, it is expected that a mitigated negative declaration would be required
for the project.
PL03-19 -6- 8/21/2003 10:32 AM
REQUEST FOR ACTION
MEETING DATE: September 15, 2003 DEPARTMENT ID NUMBER: PL03-19
Attachment(s):
City Clerk's
Page Number No. Description
1 Annexation Area Maps
2 LAFCO Small Islands Annexation Policy dated November 19, 2001
3 Overview of AB 1555, Government Code 56375.3
4 Annexation Feasibility Fiscal Report dated March 2003
5 LAFCO-Huntington Beach Sphere of Influence Map
6 Economic Development letter dated June 18, 2003
7 Economic Development letter dated July 2, 2003
RCA Author: SH/M88/RM
PL03-19 -7- 8/21/2003 10:32 AM
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ANNEXATION AREA-BEACH AND MCFADDEN
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Scale: V= 234t Location Map
ATTACHMENT 2
ORANGE COUNTY
LOCAL AGENCY FORMATION COMMISSION
SMALL ISLANDS ANNEXATION POLICY
(Government Code §56375.3)
(Adopted November 19, 2001)
BACKGROUND
The Unincorporated Islands Program was established through a joint commitment
of LAFCO, the County of Orange and the League of Cities. Its goal is to annex
50 small, unincorporated islands within a three-year period. The Islands Program
is an outgrowth of several interrelated issues:
• The County's determination that municipal, city-level services to
unincorporated islands can be more efficiently provided by surrounding
cities.
• Identification of the Islands Annexation Program by LAFCO and the
League of Cities as a priority project.
• The passage of AB 1555 (Government Code §56375.3) which assists cities
and LAFCO in significantly streamlining the procedural requirements for
island annexations that meet specific criteria.
The Cortese-Knox-Hertzberg Act of 2000 sets forth specific requirements for
waiving protest hearing proceedings when approving island annexations.
Government Code §56375.3 states that a commission may approve an annexation
to a city after notice and hearing, and order annexation of the territory without an
election, if the commission finds the territory contained in the annexation
proposal meets six specific criteria. Government Code §56375.3 does not,
however, clearly define: (1) the size of the island eligible for streamlined
processing, and(2) what is meant by"substantially surrounded."
PURPOSE
To establish (1) clear objectives with respect to small island annexations, and (2)
to provide clear and consistent guidelines for processing small island annexations
under Government Code §56375.3.
SMALL ISLAND ANNEXATION POLICY
Recognizing that cities are the logical service providers for municipal-level
services, and that unincorporated islands can be more effectively and efficiently
served by surrounding cities, Orange County LAFCO is committed to the
annexation of small, unincorporated islands.
Policy for Processing Small Island Annexations
Page 2
SMALL ISLAND POLICY AND PROCEDURAL GUIDELINES
The following shall serve as procedural guidelines for processing small island
annexations pursuant to Government Code §56375.3. The Commission may
approve small island annexations, and order the annexation of territory without
protest or an election, if it determines that all of the following conditions apply:
1. The annexation is proposed by resolution of the affected city.
2. The annexation territory is 75 acres or less in size and includes the entire
island, or the annexation territory is 75 acres or less in size and is part of a
larger island that does not exceed 100 acres in size.
3. The territory may constitute a reorganization containing a number of
individual unincorporated islands.
4. The territory is surrounded in either of the following ways: surrounded, or
substantially surrounded, by the city to which annexation is proposed or by
the city and a county boundary or the Pacific Ocean, or surrounded by a city
to which annexation is proposed and adjacent cities. An unincorporated island
is "substantially surrounded" if: (1) more than 50 percent of the island's
boundary is contiguous to the annexing city, or (2) more than 50 percent of
the island's boundary is contiguous to the annexing city and the Pacific
Ocean.
5. The territory is not located within a gated community where services are
currently provided by a community services district.
6. The territory is substantially developed or developing based upon one or more
factors, including, but not limited to, the following:
• The availability of public utilities
• The presence of public improvements
• The presence of physical improvements upon the parcel or parcels in
the area
7. It is not prime agricultural land.
8. The territory will benefit from the annexing city.
ATTACHME NT 3
OVERVIEW OF AB 1555 (LONGVILLE)
(CHAPTER 921, STATUTES OF 1999)
GOVERNMENT CODE W375.3
✓ AUTHORIZES ISLAND ANNEXATIONS WITHOUT PROTEST AND
ELECTION
AB 1555 authorizes LAFCO to approve an island annexation without protest and
election if the annexation proposal meets specified requirements (§56375.3).
✓ THE REQUIREMENTS OF AN ISLAND ANNEXATION UNDER AB 1555
LAFCO may approve an island annexation without protest or election if all of the
following requirements are met(§56375.3).
PROPOSAL: The annexation is proposed by resolution of the annexing city. The
proposal may consist of a single island, a group of islands, and a portion
of a larger unincorporated area.
SIZE: The acreage of the island, or cumulative acreage of the group of islands,
is 75 acres or less. If the annexation is for a portion of a larger
unincorporated area, that unincorporated area is 100 acres or less.
ISLAND: The territory is surrounded, or substantially surrounded, by: (a) the
annexing city; (b) the annexing city and the county boundary; (c) the
annexing city and the Pacific Ocean; or (d) the annexing city and
adjacent cities.
GATED: The island is not a gated community served by a community services
district.
DEVELOPED: The island is substantially developed or developing based on specified
factors: (a) availability of public utility services, (b) presence of public
improvements, and (c)presence of physical improvements.
AG LAND: The territory is not"prime agricultural land," as defined in §56064.
BENEFIT: The territory will benefit from annexation, or is already receiving
benefits from the city.
CREATION: The island was not created after January 1, 2000 (§56746(a)).
✓. PORTIONS OF THE BILL SUNSET IN 2007
Not all of AB 1555's provisions will sunset after January 1, 2007. After January 1, 2007,
protest proceedings will be required for island annexations initiated under AB 1555.
However, if a majority protest is not received to defeat the annexation proposal, the
annexation is ordered without an election (§57080(b)(1)).
ATTACHMENT 4
DR E C ra 1 F 10MAY 12 2003
1._..
Orange County Local Agency Formation Commission
LOCAL AGENCY F0Rj AT-ZR co-m ISSION,
City of Huntinng' n Beach ®ram
Anne� ion F' 1 ibil'
Report
March 2003
LAFCO
12 Civic Center Plaza, Room 235
Santa Ana, Califomia 92701
(714) 834-2556
Rosenow Spevacek Group, Inc.
217 North Main Street, Suite 300
Santa Ana, Califomia 92701-4822
Phone: (714) 541-4585
Fax: (714) 836-1748
E-Mail: info@webrsg.com
Table of Contents
I. BACKGROUND .............................................................................................1
A. STUDY AREA DESCRIPTION..................................................................................I
B. STUDY AREA SERVICE PROVIDERS....................................................................2
C. ASSUMPTIONS ..........................................................................................................2
II. REVENUES.....................................................................................................3
A. GENERAL FUND......................................................................................................3
1. Taxes.....................................................................................................................3
a. Property Taxes.............................................................................................3
b. Sales Tax...............................:......................................................................3
C. Library Services...........................................................................................4
d. Fire Protection..............................................................................................4
e. Transient Occupancy Taxes.........................................................................4
f. Property Transfer Taxes...............................................................................4
g. Utility User Tax...........................................................................................5
h. Homeowners Property Tax Relief................................................................5
2. State Subventions(Motor Vehicle Fees)..............................................................5
3. Franchise Fees.......................................................................................................5
4. Business License Fee............................................................................................5
5. Development Related Fees ...................................................................................6
a. Land Use Planning and Regulation Fees.....................................................6
b. Building Inspection and Permit Fees...........................................................6
C. Engineering Fees..................:.......................................................................6
6. Other Revenues.....................................................................................................6
a. Fines and Forfeitures....................................................................................6
b. Miscellaneous Revenues..............................................................................7
B. ROAD FUND..............................................................................................................7
Rosenow Spevacek Group,Inc Annexation Fiscal Feasibility Report
March,2003 i LAFCO
III. EXPENDITURES ...........................................................................................7
A. GENERAL FUND EXPENDITURES......................................................................7
1. General Government ..............................................................................................7
a. Administration.............................................................................................7
b. County Property Tax Collection Charges....................................................8
2. Public Safety...........................................................................................................8
a. Law Enforcement.........................................................................................8
b. Fire Protection..............................................................................................8
C. Animal Control............................................................................................8
3. Community Development......................................................................................8
4. Public Works..........................................................................................................9
a. Street Lighting .............................................................................................9
B. ROAD FUND EXPENDITURES..............................................................................9
1. Street Maintenance................................................................................................9
2. Street Sweeping ....................................................................................................9
3. Traffic Signals.......................................................................................................9
IV. SUMMARY OF FINDINGS..........................................................................9
APPENDIX 1
Table A-1 —General Fund Revenues and Expenditures
Table A-2—Road Fund Revenues and Expenditures
Table A-3—General Fund and Road Fund Summary
Table A-4—County Island Details
APPENDIX 2
County Unincorporated Island Maps
Rosenow Spevacek Group,Inc. Annexation Fiscal Feasibility Report
March,2003 11 LAFCO
ANNEXATION FISCAL FEASIBILITY REPORT
I. BACKGROUND
The Orange County Local Agency Formation Commission ("LAFCO") has requested the Rosenow
Spevacek Group, Inc. ("RSG") to prepare a fiscal feasibility analysis ("Report" or "Study")
pertaining to the annexation of one County island located within the City of Huntington Beach's
Sphere of Influence ("Study Area"). This Report can be used to meet certain applicable
requirements of the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, if and
when the City of Huntington Beach ("City") desires to pursue annexation of all or a portion of the
Study Area. This Report will focus on what City services will be provided within this area, the
forecasted cost of those services, and what revenues could reasonably be expected to be available to
fund those services. This Report will focus on a compilation of the estimated revenues and
expenditures of the annexation Study Area based on 2001-02 fiscal year data. It should be
understood that there usually are differences between the estimated and actual results because events
and circumstances frequently do not occur as expected, and those differences may be material.
A. STUDY AREA DESCRIPTION
The Study Area is approximately 41 acres in size and comprised of 289 residential
units and three commercially zoned properties. Of these three commercially zoned
properties, one is a Midas brake shop, another is a very small used car dealership with
approximately. 8-10 cars on its lot and the other is a motel, with approximately 50
units. Please see Appendix 2 for maps of the Study Area.
Rosenow Spevacek Group,Ina Annexation Fiscal Feasibility Report
March,2003 1 LAFCO
FARSOLAFCOUsland AnnexUMuntington Beach\Reputt\ennxfearepmDOC
B. CURRENT AND POST ANNEXATION SERVICE PROVIDERS
Current Post Annexation
Service Provider Provider
General Government
Governing Board County Board of Supervisors City Council of Huntington Beach
Management County of Orange City of Huntington Beach
Attorney County of Orange City of Huntington Beach
Admin.Services/Finance/Clerk County of Orange City of Huntington Beach
Public Safety
Law Enforcement Orange County Sheriffs Department City of Huntington Beach Police Department
Fire Protection Orange County Fire Authority,Huntington Beach City of Huntington Beach Fire Department
Animal Control County of Orange County of Orange
Community Development
Planning County of Orange City of Huntington Beach
Building County of Orange City of Huntington Beach
Code Enforcement Couny of Orange City of Huntington Beach
Community Services
Library County of Orange City of Huntington Beach
ublic Works
Public Works Administration County of Orange City of Huntington Beach
Road Maintenance County of Orange City of Huntington Beach
Street Lighting County of Orange City of Huntington Beach
Street Sweeping County of Orange(California Street Maintenance) City of Huntington Beach
Other Services
Electric Service Southern California Edison Southern California Edison
Gas Southern California Gas Southern California Gas Company
Cable Time Warner Time Warner
Solid Waste Disposal Rainbow Disposal Rainbow Disposal
Domestic Water City of Westminister w/13%surcharge City of Huntington Beach
Sewer Midway City Sanitation District City of Huntington Beach
C. ASSUMPTIONS
The assumptions used in this analysis were based on documentation and data
provided by the County, City budget data and case study methodology. While RSG
has taken precautions to assure the accuracy of the data used in the formulation of this
analysis, we cannot ensure that these current estimates are an accurate method to.
project future events. This analysis assumes, if annexation is successful, that the
City's utility user tax ("UUT") will apply to all Study Area residents. In addition,
this analysis does not consider any potential impacts that Proposition 218 ("Right to
Vote on Tax Act") may have on revenue forecasts.
This Report does not take into account state, federal or CDBG monies that may be
available or capital improvement projects that may be necessary if annexation were to
occur. RSG performed a windshield survey of the Study Area. However, an in-depth
Rosenow Spevacek Group,Ina Annexation Fiscal Feasibility Report
March,2003 2 LAFCO
F:RMLAFCOUsland Anne\Hunt ngwn Beach\Repart\annxfe=pmDOC
analysis p.._.aining to infrastructure needs was no. �.erformed. Such a level of detail
would require a separate engineer's analysis. .Infrastructure needs could include the
installation of streets, streetlights, sidewalks, curbs, gutters and storm drains.
Consequently, this Report is a fiscal analysis that accounts for recurring general and
road fund revenues and expenditures and does not contain cost estimates related to
capital expenditures associated with the design and installation of infrastructure
improvements. In addition,this Report does not take into account the costs associated
with the placement of island properties on the City's water and sewer systems.
II. REVENUES
RSG has applied data from the City in calculating anticipated revenues to be generated by the Study
Area where possible. When such methodologies were not available, revenues were calculated based
upon a per capita basis using City budget data or case study methodology. This information was
utilized to calculate certain revenue and cost factors presented below.
A. GENERAL FUND
The primary sources of General Fund revenues are noted below and shown on Table
A-1:
1. Taxes:
a. Property Taxes:
Based on information obtained from the Orange County Auditor-
Controller, the City's property tax revenue is based on a property tax
ration of 55.96/44.04% to be split between the City and County,
respectively. It is assumed that the City will also receive the
aforementioned split associated with the dissolved Orange County
Street Lighting Assessment District. Because the Study Area is in a
Redevelopment Project Area, property tax revenue is not based on
increases in assessed value of property, but rather on the value of
assessed property established in the base year, or the year that the
Redevelopment Project was adopted. The base year assessed value for
the Study Area and the estimated General Fund property tax is detailed
in Table A-1.
b. Sales Tax
RSG performed a windshield survey to identify sales tax generating
businesses located in the Study Area. Due to the proprietary nature of
sales tax information, RSG has estimated sales tax generated in the
Study Area. Sales tax estimates were calculated based on building
square feet multiplied by a sales tax per building square foot of$100.
However, sales tax estimates for the used car dealership was
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conservatively estimated based on L . car sale per month at an average
sales price of$8,500. Sales tax estimates to the City were estimated at
1% of the total sales volume. Please see Table A-4 for a listing of
sales tax generating businesses located in the Study Area.
C. Library Services:
The County of Orange currently provides library services to the Study
Area on a property tax basis. Upon annexation the City will assume
responsibility for library services and shall receive the property tax
share previously collected by the County.
d. Fire Protection:
The Orange County Fire Authority ("OCFA") currently provides fire
protection services to the Study Area on a property tax basis. Upon
annexation, the Huntington Beach Fire Department will assume
responsibility for providing fire protection services to the Study Area.
The City, after annexation, will receive the property tax share
previously collected by OCFA.
e. Transient Occupancy Taxes:
There is one hotel/motel located in the Study Area, A Westminster
Beach West Inn. The County provided revenue estimates of transient
occupancy tax for the Westminster Beach West Inn from 1998/99 to
2002-03. The revenue projections include the tax increment revenue
collected for 2001-02. After annexation the City will receive the
transient occupancy tax share previously collected by the County.
f. Property Transfer Taxes:
Property transfer taxes are generated at the time a newly developed
property is sold or an existing property is resold. The property transfer
taxes shown on Table A-1 are derived from the sale of existing
property in the Study Area. A property transfer tax of $1.10 per
$1,000 of transferred value is levied on the sale of real property and is
divided between the County and the City. The amount of property
transfer tax received will depend upon the level of resale activity
within the Study Area. Based on case study methodology, these
revenues have been estimated for residential properties using a 4%
assessed value turnover rate annually at the rate of$.55 per $1,000 of
assessed value.
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FARSO LAFCOVshmd Annax'Jinntingwn Bach\Rgmr%\anra eaceprtDOC
g. Utility User Tax:
The City currently charges a 5% UUT on water, gas, telephone,
electric and cable TV usage. This analysis assumes that the City's
UUT will apply to all Study Area residents. The UUT has been
estimated at $261.00 per household using 2001-02 budget figures from
the City.
h. Homeowners Property Tax Relief:
Revenue estimates generated from the Homeowner's Property Tax
Relief were not specifically projected because this analysis bases the
Property Tax Apportionment on assessed valuation gross of the
Homeowners Exemption. Therefore, revenue from the Homeowner's
Property Tax Relief is included in the Property Tax Apportionment.
2. State Subventions (Motor Vehicle Fees):
Upon annexation, the City will be eligible to receive Motor Vehicle In-Lieu
taxes. These taxes are collected by the State's Department of Motor Vehicles
and allocated to cities on a per capita basis. Off-road Vehicle taxes are also
allocated to cities by the State on a per capita basis. Both subventions are
based on the estimated population for the Study Area.
The per capita figure of$54.23 used in the revenue summary was provided by
the State Controller's office for the 2001-02 fiscal year, and includes both on
and off-highway fees.
3. Franchise Fees:
Existing franchise agreements currently applied to properties within the Study
Area will need to be assigned to the City. Upon annexation and the
assignment or creation of the appropriate contractual agreements, the City will
then receive the franchise fees currently paid to the County for gas, electric
and cable franchises. In addition, it is assumed that the City's refuse
collection franchise fee will apply to the Study Area after annexation. Again,
the appropriate franchise fee agreements will need to be put in place in favor
of the City. The collective fees for the aforementioned franchises have been
estimated at$47.52 per household using current budget figures from the City.
4. Business License Fees:
RSG performed a windshield survey to identify business located within the
Study Area. Businesses located in the Study Area consisted of a motel, a
Midas brake shop and a used car dealership. Business license fees for the
motel were estimated based on the flat annual rate of$32.00, plus $7.00 per
room, $14 per vending machine and $75.00 for the first three employees and
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$4...j per employee thereafter. RSG estim._-d that the motel had 50 rooms, 2
vending machines and 4 employees. Business license fees for the Midas were
based on the formula of$14.00 per vending machine and the aforementioned
per employee rate, with an estimated 2 vending machines and 5 employees.
Business license fees for the used car dealership were based on the same
formula as the Midas with an estimated 2 vending machines and 3 employees.
The flat annual fee applicable to the motel is not applicable to the Midas or the
used car dealership. A more detailed summary of these calculations can be
found in Table A-4.
5. Development Related Fees:
The fees described below are not included in Table A-1 because these fees
specifically offset costs of development related services.
a. Land Use Planning and Regulation Fees:
The City is authorized to charge fees for all land use planning and
regulation services. The City would utilize their existing fee schedule.
These fees should offset most of the City's cost in providing these
services.
b. Building Inspection and Permit Fees:
The fees collected for these building and permit inspection services
should, in most cases,totally offset the cost of these services.
C. Engineering Fees:
The City is also authorized to charge fees for plan checking, public
works inspection, pen-nit issuance and review and other engineering
services. The fees collected for these services should, in most cases,
offset the cost of these services.
6. Other Revenues:
a. Fines and Forfeitures:
This represents Motor Vehicle Code fines and municipal code
violations. Fines and forfeitures were estimated at $19.86 per capita
using current budget figures from the City.
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b. Miscellaneous Revenues:
Miscellaneous revenues include the sale of real and personal property,
special events and the sale of maps and publications. This revenue has
been estimated at$1.20 per capita using case study methodology.
B. ROAD FUND
All Road Fund subventions are calculated and allocated to the cities on a per capita
basis, with the exception of Section 2107.5. These revenues are derived by a per
gallon tax on gasoline and allocated to cities, primarily on a per capita basis. The
State Subvention Section 2107.5 is allocated to the cities based upon total population
size. It is estimated that the proposed annexation of the entire Study Area would add
approximately 742 people to the City's population. According to State data, this
added population would not place the City's population status into the next revenue
threshold. As such, no revenue is reflected relative to Section 2107.5. Road Fund
revenue per capita estimates were obtained from the State Controller's Office and are
estimated at$6.30, $3.83 and$8.27 for Sections 2105, 2106 and 2107,respectively.
Other Road Fund revenues include the voter-approved Measure "M" sales tax
distributed by the Orange County Transportation Authority. The Measure "M"
revenue per capita estimate of $11.65 was obtained from the Orange County
Transportation Authority. Please see Table A-2 for the primary sources of Road Fund
revenues.
Revenues attributed to these gasoline taxes are restricted for use on road related
maintenance expenditures.
III. EXPENDITURES
A. GENERAL FUND EXPENDITURES
Expenditures have been categorized by departments within the City's organizational
structure and are estimated as follows:
1. General Government:
a. Administration:
The analysis assumes no new staff, equipment or major operating costs
would be incurred as a result of the annexation. Minimal expenditures
were estimated including a per capita expense of $1.50 for elections
and $2.00 for General Government, which includes legal costs,
advertising,postage, and other selected services and supplies.
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FARMLAFCOUsland AnneMundngton Heach\Report\=WeueprLDOC
a County Property Tax Collection .arges:
Beginning in 1992-93, the County Auditor-Controller's Office charged
cities and local districts receiving property tax revenue for incidental
administrative costs. These charges are estimated at .25% of all
property tax revenues.
2. Public Safety:
a. Law Enforcement:
Although the Orange County Sheriffs Department currently provides
police services to the Study Area, the Huntington Beach Police
Department will assume responsibility for such services upon
annexation. Based on the size and land use of the Study Area, RSG
estimates that no new officers will be needed, and the annexation can
be accomplished immediately with existing department resources.
b. Fire Protection:
OCFA currently provides fire protection to the Study Area. Such
responsibility will be transferred to the City upon annexation. Based
on the size of the Study Area, RSG estimates that no new staff
members or equipment will be required as a result of this annexation,
and the annexation can be accomplished immediately with existing
department resources.
C. Animal Control:
The City currently contracts with the County for animal control
services. The City will continue to do so upon annexation and these
services will apply to the Study Area. Costs for animal control
services has been estimated at $2.20 per capita based on the current
contract between the City and County Animal Control.
3. Community Development:
Upon annexation of the Study Area, the Community Development
Department will assume the processing of all land use related services. Fees
will offset these services, in most cases.
This Report assumes that the Study Area will not substantially add to the
demands on resources allocated to code enforcement. Existing staffing Ievels
can absorb the impacts associated with the annexation.
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4. PuL ,Works:
For purposes of this Report, it is assumed that the current level of service of
maintenance programs is sufficient for the Study Area's needs.
a. Street Lighting:
Southern California Edison currently owns and maintains the street
light system within the City and the Study Area. Therefore, there is no
expense incurred by the City for street lighting.
B. ROAD FUND EXPENDITURES
1. Street Maintenance:
The County of Orange currently provides street maintenance services within
the Study Area. After annexation, this responsibility will be transferred to the
City. Utilizing recent case study methodology, RSG has estimated annual
street maintenance costs to-be $8,000. Based on information provided by the
County, there are approximately 3.46 lane miles in the Study Area.
2. Street Sweeping:
The County of Orange currently provides street sweeping services to the
Study Area. The City will, following annexation, provide street sweeping
services. The City Public Works Department estimates the cost of street
sweeping at$20 per curb mile, and provides the service twice a month.
3. Traffic Signals:
The County currently maintains one half of one signal located in the Study
Area. Upon annexation, the City will assume responsibility for traffic signal
maintenance. Annual costs for traffic signal maintenance were derived from.
the City Public Works Department and are estimated to be $250 per signal.
IV. SUMMARY OF FINDINGS
The following chart, also depicted in Table A-3, details the financial information for the
Study Area.
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FARSGU.AFCOUslend AnnexUHwtington 8=hULeponlemodearepn DW
1-HE-1
General Fund
General Fund Revenues 262,612
General Fund Expenditures 4,285
General Fund Surplus/(Deficit) $ 258,328
Road Fund
Road Fund Revenues 22,300
Road Fund Expenditures 28,515
Road Fund Surplus/(Deficit) $ (6,215)
Total All Revenues 284,912
Total All Expenditures 32,800
Revenue Surplus/(Deficit) $ 252,112
Based upon this fiscal analysis of annexirig the Study Area, estimated General Fund revenues
exceed estimated expenditures by $258,328. However, Road Fund expenditures exceed
revenues by $6,215 for a total revenue surplus of an estimated $252,112. Please see Table
A-4 for details associated with the calculation of the aforementioned revenues and
expenditures.
Rosenow Spevacek Group,Inc. Annexation Fiscal Feasibility Report
March,2003 10 LAFCO.
FARMLAFCOVslsnd AnnexlHundngtun Beneh\Report\annx emprt DOC
APPENDIX 1
Rosenow Spevacek Group,Inc Annexation Fiscal Feasibility Report
March,2003 LAFCO
Table A-1
2001-02 Estimated General Fund Revenues and Expenditures
City of Huntington Beach Annexation Analysis
1-HB-1
General Fund Revenues
General Fund Property Tax 4,198
OCSLAD Property Tax 2,592
Sales Tax 5,520
Library Tax 2,015
OCFA Tax 13,585
Transient Occupancy Tax 89,097
Property Transfer Tax 282
Business License Tax 707
Motor Vehicle In-Lieu 40,235
Franchise Fees 13,735
Utility Users Tax 75,398
Fines & Forfeitures 14,358
Miscellaneous Revenues 890
Total Revenues 2629612
General Fund Expenditures
General Government 2,597
County Property Tax Collection Fee 56
Animal Control 1,632
Total Expenditures 49285
General Fund Operating Surplus/(Deficit) 2589328
a, H.B. CFA Template-Fire Operating Only / (GF)
Table A-2
2001-02 Estimated Road Fund Revenues and Expenditures
City of Huntington Beach Annexation Analysis
1-HB-1
Road Fund Revenues
Section 2105 4,673
Section 2106 2,842
Section 2107 6,137
Measure "M" 8,647
Total Road Fund Revenues 22,300
Road Fund Expenditures
Street Maintenance 27,680
Street Sweeping 710
Traffic Signal 125
Total Road Fund Expenditure 28,515
Road Fund Surplus/(Deficit) (6,215)
of, H.B. CFA Template-Fire Operating Only/ (RF)
Table A-3
2001-02 Summary of Revenues and Expenditures
City of Huntington Beach Annexation Analysis
1-BB-1
General Fund
General Fund Revenues 262,612
General Fund Expenditures 4,285
General Fund Surplus/(Deficit) $ 258,328
Road Fund
Road Fund Revenues 22,300
Road Fund Expenditures 28,515
Road Fund Surplus/(Deficit) $ (69215)
Total All Revenues 2849912
Total All Expenditures 32,800
Revenue Surplus/(Deficit) S 2529112
,,f, H.B. CFA Template-Fire Operating Only / Summary
Table A-4
County Island Details
City of Huntington Beach Annexation Analysis
Item 1-HB-1 Information Obtained From
General Fund Revenues
Property Taxes
Base Year Secured Assessed-TRA 91012 4,263,047 OC Auditor/Controller
Base Year Unsecured Assessed-TRA 91012 44,929 OC Auditor/Controller
Base Year Secured Assessed-TRA 91018 8,577,432 OC Auditor/Controller
Base Year Unsecured Assessed-TRA 91018 908,191 OC Auditor/Controller
Total Base Year Assessed Value 13,793,399 OC Auditor/Controller
Total Assessed Value X.01 137,936
Orange County General Fund Tax Rate 5.44% Orange County Auditor/Controller
Huntington Beach Master Property Tax Rate 55.96% Orange County LAFCO
General Fund Property Tax 4,198
OCSLAD Property Tax Rate 3.36% Orange County Auditor/Controller
OCSLAD Property Tax 2,592
Sales Tax(1)
Midas RSG Survey
Building square feet 4,500
Annual sales per square feet 100
Sales tax of 1%going to the City 4,500
Cash-4-Cars RSG Survey
Average price per car sold 8,500
Number of cars sold annually 12
Sales tax of 1%going to the City 1,020 RSG Estimate
Total Sales Tax 5,520
Library Tax
Library Tax Rate TRA 91012 0.01499023250 Orange County Auditor/Controller
Library Tax Rate TRA 91018 0.01443639782
Library Tax 2,015
OCFA Tax
OCFA-TRA 91012 0.10105264069 Orange County Auditor/Controller
OCFA-TRA 91018 0.09731830131
Fire Tax 13,585
Transient Occupancy Tax
Beach West Inn $ 89,097.10 Orange County estimate
Property Transfer Tax -
Property Transfer Rate 4.00% RSG estimate
AV*Property Transfer Rate 513,619
$.55 per 1,000 of value 282
Business License Fee(2)
Midas Brakes City business license fee schedule and RSGs estimates
Per Employee Fee(6 employees) 87
Per Vending Machine Fee(2 machines) 28
Total 115
Cash-4-Cars City business license fee schedule and RSGs estimates
Per Employee Fee(3 employees) 75
Per Vending Machine Fee(2 machines) 28
Total 103
1 of 3 H.B.CFA Template-Fie Opera ft Only/Demib
Table A-4
County Island Details
City of Huntington Beach Annexation Analysis
Item 1-HB-1 Information Obtained From
Westminister Beach West Inn City business license fee schedule and RSGs estimates
Annual License Fee 32
Per Employee Fee(4 employees) 79
Per Room Fee(50 rooms) 350
Per Vending Machine Fee(2 machines) 28
Total 489
Total Business License Fee 707
Motor Vehicle Fees
Per Capita 54.23 State Controller's Office(2001-02 information)
Motor Vehicle Fees 40,235
Franchise Fees
Per Household 47.52 City Budget
Total Franchise Fees 13,735
Utility Users Tax
Per Household 261 City Finance Department Revenue Detail Report
Total Utility Users Tax 75,398
Fines&Forfeitures
Per Capita 19.35 City budget
Total fines&forfeitures 14,358
Miscellaneous Revenues
Per Capita 1.20 RSG estimate
Miscellaneous Revenue 890
General Fund Expenditures
General Government
Per Capita 3.50 RSG estimate
General Government Costs 2,597
County Property Tax Collection Fee 0.25% Orange County Auditor/Controller
County Property Tax Collection Fee 56
Animal Control
Net Per Capita 2.20 Contract between City and Animal Control Services.
Animal Control Costs 1,632
Road Fund Revenues
2105(Per Capita) 6.30 State Controller's Office 2001-02 information.
Total 2105 4,673
2106(Per Capita) 3.83 State Controller's Office 2001-02 information.
Total 2106 2,842
2107(Per Capita) 8.27 State Controller's Office 2001-02 information.
Total 2107 6,137
2 of 3 H.B.CFA Templme-Fire operating Only/Deuirs
Table A-4
County Island Details
City of Huntington Beach Annexation Analysis
Item 1-BIB-1 Information Obtained From
Measure M(Per Capita) 11.65 State Controller's Office 2001-02 information.
Total Measure M 8,647
Road Fund Expenditures
Street Maintenance
Per Lane Mile Cost 8,000 RSG Estimate
Street Maintenance Costs 27,680
Street Sweeping(3)
Per Curb Mile Cost(Twice per month) 20.00 City Staff
Street Sweeping Costs 710
Traffic Signals
Annual Per Signal Cost(Average) 250 City Staff estimate
Traffic Signal Costs 125
Demographic/Inventory Information-Study Area
Census 2000 Housing Units 289 Census 2000
Census 2000 Population 742 Census 2000
Street Lights 0 ..Orange County LAFCO
Lane Miles 3.46 Orange County LAFCO
Curb Miles 1.48 Orange County LAFCO
Traffic Signals(4) 0.5 Orange County LAFCO
Acres 40.78 Orange County LAFCO
Demographic Information-City
2002 Housing Units 76,410 State Department of Finance
2002Population 194,584 State Department of Finance
Not":
(1)Fe"for Mid"ara baud an sales per square feel Fees for Cash-Cars uo based on tales of can at a rate of I per mouth at S8,SD0 each
(2)Employee fee schedule is S75.00 for first 3 and S4.00 per employee for next 9.Vending machines an charged at$14.00 for each machine.Motels ore assessed a$7.00 per room fee.
(3)Street sweeping is performed an a biweekly basis.
(4)conjoint signal between State and County
3 of 3 H.B.CFA Templmm Fim Operating Only/Demils
APPENDIX 2
Rosenow Spevacek Group,Inc Annexation Fiscal Feasibility Report
March,2003 LAFCO
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Sphere of Influence '
HUNTINGTO N BEACH City Boundary
COUNTY OF ORANGE _
Local Agency Formation Commission NORTH
SPHERE OF INFLUENCE Scale: l"=7000'
ATTACHMENT 6
70 o I y
R 0 S E N 0 W S P E V A C E K G R 0 U P 1 N C
REAL FSTA,rr ccoNomics
GOVERNMENT SERVICES
ECONOMIC DEVI'LOPMEN7
217 NORTH MAIN STREET TEL: 714 541-4583 REDEVELOPMENT PLANNING
SUITE 300 FAX: 714 836-1748 110USING
REAL ESTATE ACOUISITION
SANTA ANA, CALIFORNIA EMAIL: INFOoWEBRSG.COM FINANCING
92701-4822 NVWW.WEBRSG.CO,',t
June 18, 2003 R v , Via Fax/First Class Mail
?0 0
David Biggs, Economic Development Director
CITY OF HUNTINGTON BEACH
2000 Main Street, 5th Floor
Huntington Beach, CA 92648--2702
ANNEXATION OF COUNTY ISLAND IN NEIGHBORHOOD DEVELOPMENT AND PRESERVATION
PROJECT AREA
Dear Mr. Biggs:
At your request, RSG has undertaken a preliminary investigation of the County of Orange's Neighborhood
Development and Preservation Project Area that lies within the Huntington Beach sphere of influence. The
following information is intended to assist staff in determining the opportunities and potential barriers to
obtaining local control over the redevelopment of this area.
PROJECT AREA BACKGROUND
In July 1986, the Orange County Development Agency ("OCDA") adopted the Redevelopment Plan for the
Neighborhood Development and Preservation Project ("NDAPP"). At its inception, NDAPP Project Area
consists of 13 noncontiguous unincorporated islands located throughout the County. The total area of the
NDAPP Project Area was 1,078 acres at the time of its creation.
Since 1986, the County began to relinquish control of portions of the NDAPP Project Area, partially in response
to incorporations and annexations that have occurred in the County. Special legislation contained in Section
33216.1 of the California Community Redevelopment Law, Heath and Safety Code Section 33000, et seq.
("Law") provides the County of Orange the ability to detach portions of the NDAPP area due to annexation and
incorporation. Under the provisions contained in Section 33216 of the Law, the City of Lake Forest negotiated
with the County to obtain control over the portion of NDAPP that lies within its jurisdiction. The specific
requirements and procedures of the jurisdictional transfer are discussed on page 2.
According to the County Assessor's office, a relatively small portion of the Midway City subarea of the NDAPP
Project Area lies within the sphere of influence of the City of Huntington Beach. This area is located northwest
of the intersection of Beach Boulevard and McFadden Avenue, and is approximately 29 acres in size,
exclusive of public right-of-way. The majority of the area consists of single-family homes. There is also a
motel and two commercial properties located along Beach Boulevard in this area. The attached map presents
the boundaries of the Midway City subarea, including the Huntington Beach and Westminster sphere of
influence within this area.
Of the 29 acres, the portion of the NDAPP Project Area that is within the Huntington Beach'sphere of influence
is relatively small. The table on the following page demonstrates the size, assessed and incremental value of
the subject property in context of both the entire Midway City subarea and the entire NDAPP Project Area.
FAHUNTEICHftmema.doc
David Biggs, Economic Developi._.i Director
CITY OF HUNTINGTON BEACH
June 18, 2003
Page 2
NDAPPHuntington
Beach
Portion of
•
Project Area Subarea Subarea
Approximate 7,447/(100%) 266/(4%) 29/(0.4%)
Area(Acres)
2002-03 $1,917,722,467/(100%) $228,333,731/(12%) $22,124,782/(1%)
Secured
Assessed
Value
2002-03 $9,854,878/(100%) $1,185,295/(12%) $92,252/(0.9%)
Gross Tax
Increment
Revenue
(Secured
Only)
PROVISIONS OF SECTION 33216.1
Section 33216.1 of the Law provides a vehicle to facilitate local control over NDAPP territory annexed or
incorporated by a city. This Section allows the territorial jurisdiction for a subarea, or a portion of a subarea, to
be transferred to a city if the area in question is within the city boundaries. Section 33216.1 states that the
procedures and requirements in Section 33216 of the Law are to be followed to accomplish a territorial
jurisdiction transfer, with the following exceptions:
• The City ordinance adopting the NDAPP Redevelopment Plan may include an amendment to the Plan,
and any public noticing required for the amendment shall apply only to the portion of the Project Area
within the City's jurisdiction. Thus, at the time of adoption, the Huntington Beach City Council could
modify the Plan like any other redevelopment plan.
• Subsequent amendments to the Redevelopment Plan do not require the approval of the OCDA or
Board of Supervisors, unless the amendment would violate any agreement entered into by the OCDA,
as determined by the Board of Supervisors, prior to the effective date of the transfer of territorial
jurisdiction.
PROCESS TO PURSUE LOCAL CONTROL OF NDAPP ISLAND
Provided the City desires to annex the subject NDAPP property, the City Council would need to undertake the
actions specified under Section 33216 of the Law. More specifically, this Section allows the transfer of
territorial jurisdiction of non-contiguous redevelopment project area territory upon annexation to a city, with the
following requirements:
David Biggs, Economic Developn,..,.c Director
CITY OF HUNTINGTON BEACH
June 18, 2003
Page 3
1) The creating agency (OCDA) and the receiving agency (Redevelopment Agency of the City of Huntington
Beach) must enter into an agreement, adopted by resolution by both the OCDA and Agency with the
following provisions:
a) Identify the portions of the project area over which each agency will have territorial jurisdiction.
b) Identify the method of allocating tax increment between the Agency and the OCDA. The Law requires
that this allocation be reasonably related to the following:
i) Costs that the OCDA and the Agency expect to incur in carrying out the redevelopment plan.
ii) Outstanding indebtedness that the OCDA has preciously incurred. That indebtedness shall include
repayment of expenditures to, or on behalf of, the project area from other resources or borrowing of
the OCDA.
iii) The allocation of taxes can be different than that calculated by assuming that the OCDA's portion
and the Agency's portion had been separate project areas.
c) Requirement that all tax increment allocated to the Agency shall be available if needed to pay any
indebtedness incurred by the OCDA prior to the effective date of the transfer of jurisdiction, if that
indebtedness was secured with tax increment.
d) Any other terms and conditions that the OCDA or the Agency mutually determined to be necessary or
desirable to facilitate the transfer of territorial jurisdiction.
2) The City Council adopts an ordinance adopting the Redevelopment Plan for NDAPP. Under Section
33216.1(b)(1), this ordinance may include an amendment to the Redevelopment Plan and any required
public notice pursuant to the amendment shall only apply to the portion jurisdictionally transferred from
OCDA to the Agency.
The effective date of the transfer would be the first day of the fiscal year following the effective date of the
resolution adopting the agreement (#1 above), or the effective date of the ordinance (#2 above), which ever is
later. After this effective date, the following provisions will apply:
• The City and Agency shall have all the rights, powers and responsibilities pursuant to the Law in
their separate portion of NDAPP.
• The debts and other obligations of the OCDA for that portion of the project area transferred shall be
assumed by the Agency.
• Pursuant to the Law, the date of the Redevelopment Plan for the NDAPP Project Area was
originally adopted by the Board of Supervisors (i.e., July 1986) will be considered the date the City
Council adopted the redevelopment plan for that portion of NDAPP that is transferred to the City.
David Biggs, Economic Developn. .it Director
CITY OF HUNTINGTON BEACH
June 18, 2003
Page 4
Any amendment adopted by the Huntington Beach City Council will not require the approval of the
Board of Supervisors unless the amendment would violate any agreement entered into by the
OCDA or the Board of Supervisors. The Board of Supervisors would make this determination.
The first step in this process should be a meeting with OCDA staff to discuss the potential annexation and
formulation of an agreement between the OCDA and the Huntington Beach Redevelopment Agency. Contact
staff at OCDA is William Mahoney (714-834-2307) and Paul Lanning (714-824-3967). Information regarding a
model territorial jurisdiction transfer agreement is provided below.
TERRITORIAL JURISDICTION TRANSFER AGREEMENT
OCDA has entered into an agreement with the City of Lake Forest regarding the territorial jurisdiction transfer
of the El Toro subarea of the NDAPP Project Area. It is my understanding that this is the model the County
utilizes when considering any future jurisdiction transfers with other municipalities. Under the Lake Forest
agreement, the County retains tax increment revenues to pay existing debt service as of a particular date
(typically the fiscal year of the effective date of the agreement). From that point forward, the County continues
to collect that same amount of tax increment and transfers all tax increment above that amount to the
municipality. It is important to note that pursuant to the Lake Forest agreement, the County sets aside low and
moderate income funds (20% of gross tax increment) from its share, while a city would be responsible for its
own share of set-aside monies (also 20% of gross tax increment). In addition, a city would be responsible for
the payment of all existing pass through payments for the term of the Redevelopment Plan, as indicated in the
Lake Forest agreement. The payment of tax increment to the Lake Forest Redevelopment Agency is
subordinate to the payment of pre-existing debts.
We thank you for the opportunity to provide this information to the City. Please do not hesitate to contact me
with any questions or comments.
Sincerely,
ROSENOW SPEVACEK GROUP, INC.
James C. Simon
Principal
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ATTACHMENT 7
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R0SENOW S P E V A C E K GROUP INC .
RECEIVED REA',E SN MENTCGOV SERVICES
217 NORTH MAIN STREET TEL: 714 541-4585 ECONOMIC DEVELOPMENT
SUITE300 FAX: 714 836.1748 JUL 3 2003 REDEVELOPMENT PLANNING
Ji HOUSING
SANTA ANA. CALIFORNIA EMAIL: 1NF09WEBRSG.COM REAL ESTATE ACOUISITION
92701.4822 WWW.WEBRSG.COM DEPARTAOFEvT OF FINANCING
ECONOMIC, DE I.E_OPMEN 3
July 2, 2003 Via First Class Mail
Mr. David Biggs
CITY OF HUNTINGTON BEACH
2000 Main Street, Fifth Floor
Huntington Beach, California 92648-2702
PLAN LIMITS —COUNTY OF ORANGE'S NDAPP REDEVELOPMENT PLAN
Dear Mr. Biggs:
As a follow-up to our letter dated June 18, 2003, this letter provides supplemental information
regarding the plan limitations in the County of Orange's Neighborhood Development and
Preservation Project ("NDAPP") Redevelopment Plan.
The Plan was adopted by the Board of Supervisors on June 27, 1988, and therefore, maintains
financial and time limitations that were required of redevelopment plans at that time. It is
notable that the County never had eminent domain authority; the Redevelopment Plan
essentially states that the goals of the Plan could be achieved without condemnation authority.
The financial limits apply to the entire Project Area, of which a portion of the Midway City
subarea is a part of.
Cumulative Limit on the Amount of Tax Increment:....... $1.6 billion, plus inflationary adjustments
Limit on Amount of Bonded Debt Outstanding at One Time:......................................$500 million
Eminent Domain Authority: .....................................................................Never had this authority
Time Limit to Incur New Debt: ............................................................................... June 27, 2008
Duration of Plan Effectiveness:.............................................................................. June 27, 2028
Time Limit to Collect Tax Increment Revenue: ....................................................... June 27 2038
Please let us know if you have any questions.
Sincerely,
ROSENOW SPEVACEK GROUP, INC.
Jim Simon
Principal
JS:Imi
F:IHUNTBCH\County Island\plan limits.doc
6
RCA ROUTING SHEET
INITIATING DEPARTMENT: Planning
SUBJECT: Annexation No. 03-01
COUNCIL MEETING DATE: September 15, 2003
RCA ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable Not Applicable
Resolution (w/exhibits & legislative draft if applicable) Not Applicable
Tract Map, Location Map and/or other Exhibits Attached
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attome Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attome Not Applicable
Certificates of Insurance (Approved by the City Attome Not Applicable
Financial Impact Statement Unbudget, over $5,000 Not Applicable
Bonds If applicable) Not Applicable
Staff Report If applicable) Attached
Commission, Board or Committee Report If applicable) Not Applicable
Findings/Conditions for Approval and/or Denial Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED RETURNED FORWARDED
Administrative Staff
Assistant City Administrator Initial
City Administrator Initial re
rCity Clerk
EXPLANATION FOR RETURN OF ITEM:
Only)(Below Space For City Clerk's Use
RCA Author: SH/MBB/RM