By: Libi Uremovic | Original Article at patch.com
“Riverside County retains a significant part of that property tax (75%) even when the property is developed later on.”
County Retains 75% of Annexed Land’s 1% Property Tax Revenue
During Beaumont’s Special Session Michael Busch of Urban Futures spoke about Riverside County’s Master Annexation Agreement in which the County retains approximately 75% of the land’s 1% Property Tax.
I spoke to LAFCO and they confirmed that it’s about a 75/25 split. LAFCO stated that the County has agreements in place with every city and all of the agreements are basically the same.
Property taxes are collected to provide services to the property owners. When land is annexed from the county to the city the responsibility to provide services such as police and fire are shifted from the county to the city.
Riverside County continues to receive 75% of the 1% property tax on all land in that is annexed into a city limits. This leaves the cities with only 25% of the 1% tax paid by the property owners to provide needed services.
And what does Riverside County do with 75% of property taxes that they no longer provide services to?
Beaumont Special Session July 28, 2015 Transcript: http://podcast.ci.beaumont.ca.us/CC_2015-07-28_agenda.htm
19:00 Busch: Most of your new development is occurring on annexed land from the County. You are subject to the Master Annexation Plan for the County of Riverside whereby for each annexation that’s been approved the County retains a significant part of that property tax (75%) even when the property is developed later on.
20:00 Busch: For each residential unit your build it’s likely costing you some money for service that you may not be receiving in property taxes. That means that you have to have other revenue sources to support that. So I think that some of them have CFD’s for Services is a typical way to do that, but other organizations make sure for each Area zoned for residential there’s enough commercial or industrial development that developed area.
67:00 Busch: It’s pretty common in Riverside County mostly because of that Master Annexation Agreement. What we’re finding is that most of the cities that have structural deficits have a lot of annexed land – a lot of houses, and the tax base doesn’t support police or fire.
Lara: You talked about the master community annexation that the County has, which is roughly 25% of the property tax. Is that in perpetuity?
Busch: Yes. Those agreements were developed in the 70’s. Most agencies signed off, we confirmed it. Your Planning Director found the agreement, it’s been in effect for 30 years.
Lara: Can we renegotiate it?
Busch: I don’t think anyone has ever asked. I don’t know what the incentive for the County would be.
Knight: We have an annexation in process right now, can we look at that? Are we good?
Busch: Part of the agreement is that you have to prove the availability to provide services. That’s the area where you need to pay a lot of attention to what the financial costs are; can you actually provide them and what will you have to do. It’s not uncommon to require certain levels of service to agree upon the annexation. It’s usually public safety driven, they want you to maintain the same level of service that you’re already providing for annexed areas.