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CA 400 Upper Toyon Detachment____________________________________________________________________________________ FOR CITY CLERK ONLY File Number: 5-7-8 Council Meeting: 05/06/2019 Disposition: Resolution14665 Agenda Item No: 4.c Meeting Date: May 6, 2019 TOPIC: 400 UPPER TOYON DRIVE DETACHMENT REQUEST AND RESOLUTION APPROVING PROPOSED TAX SHARING AGREEMENT SUBJECT: CONSIDERATION OF A RESOLUTION APPROVING AND AUTHORIZING THE CITY MANAGER TO ENTER INTO A TAX EXCHANGE AGREEMENT WITH THE TOWN OF ROSS IN CONNECTION WITH THE PROPOSED DETACHMENT OF 400 UPPER TOYON DRIVE (ASSESSOR’S PARCEL NO. 012-121-28) FROM THE CITY OF SAN RAFAEL AND ITS ANNEXATION TO THE TOWN OF ROSS, IN ADDITION TO THE PROPERTY OWNER’S OFFER OF PAYMENT EXECUTIVE SUMMARY: The owner of the property at 400 Upper Toyon Drive has applied to the Marin Local Agency Formation Commission (LAFCO) to detach his property from the City of San Rafael and annex it to the Town of Ross. Under State law, a pre-requisite to LAFCO’s approval of the application is that the City and Ross enter into a “tax exchange agreement” establishing how they will share the property taxes collected from the property after the boundary reorganization. After extensive negotiation, staff from the City and Ross have come to an agreement on a tax share proposal pursuant to which the property tax collected from the property would be allocated 25% to San Rafael and 75% to Ross in perpetuity following the reorganization. Staff is presenting this tax share proposal to the City Council for consideration in light of an offer by the property owner to make a one-time payment to the City in the amount of $95,000 to offset the City’s loss of future tax revenue from this property. Staff recommends that the City Council adopt the resolution accepting and approving both the property owner’s offer and the tax exchange agreement. Staff finds that together they offset the negative fiscal impact to the City from the proposed reorganization. RECOMMENDATION: Staff recommends adopting the attached resolution approving the tax share agreement and the property owner’s proposed monetary payment in connection with the detachment of 400 Upper Toyon Drive from the City and its annexation to Ross. SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: City Manager Prepared by: Lisa Goldfien Asst. City Attorney City Manager Approval: ______________ SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 BACKGROUND: In March 2017, the owner of the property at 400 Upper Toyon Drive applied to LAFCO to detach the property from San Rafael and annex it into Ross. The property is currently developed with a single- family home and a privately-maintained road connects the property to Upper Toyon Drive. The site is surrounded by Ross along the entire southern boundary of the site. There are two small properties that are also within the City’s jurisdiction and border Ross that are not currently part of this request. (See Attachment 5). Those two properties are owned by Marin Municipal Water District (MMWD) and are improved with a water tower. LAFCO's oversight includes the following duties: • To review and approve or disapprove proposals for changes in the boundaries or organization of cities and special districts in the county (including annexations to or detachments from cities and districts, incorporation of cities, formation of districts, and the dissolution, consolidation or merger of special districts), applications for activation of special district latent powers, and applications to provide service outside of a city or district boundary; • To establish and periodically update the sphere of influence or planned service area boundary for each city and special district; • To initiate and assist in studies of existing local government agencies with the goal of improving the efficiency and reducing the costs of providing urban services; and • To provide assistance to other governmental agencies and the public concerning changes in local government organization and boundaries. A detachment from a city is considered a “change of organization” within LAFCO’s purview and LAFCO has broad discretion in such matters. The request for detachment for 400 Upper Toyon Drive is an individual request and according to LAFCO would not be tied or linked to a greater study or assessment of other unincorporated pockets in San Rafael. Any assessment of other unincorporated areas would need to be processed through a separate application, initiated by either the City or the property owners in that area. LAFCO has indicated that if an application was received, they would be willing to consider the detachment of other lots on Upper Toyon Drive that are part of San Rafael, such as the water tower properties, to determine whether they should also be included in the detachment request. However, an assessment of parcels not adjacent to this individual request is not appropriate at this time and would not be considered by LAFCO as part of the 400 Upper Toyon request. For this individual request for detachment, State law requires that the City of San Rafael and the Town of Ross must negotiate in good faith on an exchange of property tax revenues, although there is no statutory duty to reach agreement. If a property tax share agreement is reached, it must be approved by the legislative body of both cities before LAFCO may proceed with processing the reorganization. (Rev. & Tax. Code § 99(b), Greenwood Addition Homeowners Assn. v. City of San Marino (1993) 14 Cal. App. 4th 1360). City staff met with representatives of the Town of Ross in June 2017 to discuss a tax sharing agreement for the property taxes from 400 Upper Toyon Drive, and discussed a tax share agreement on the following terms: • For the 1st five years following reorganization, San Rafael and Ross would split the property tax revenue 50% - 50%. This would allow San Rafael to maintain a larger portion of property tax for a period of time after detachment. • After year five, the draft agreement proposed to change the sharing of property tax revenue to 25% (San Rafael) / 75% (Ross). SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 City staff presented this proposal to the Finance Subcommittee on July 6, 2017 and again on March 12, 2018. On both occasions the Subcommittee rejected the proposal, questioning the need for the detachment and concerned with the loss of City tax revenues given that the City’s Fire, Police and Public Works departments would all still respond to the residence in an emergency and that the City will continue to maintain Upper Toyon Drive, the public street leading to the property. At the March 12, 2018 Finance Subcommittee meeting, the property owner attended along with his attorney Riley Hurd and a representative of LAFCO. At that meeting, the property owner provided several reasons for seeking detachment, primarily that confusion about jurisdiction has resulted in difficulty in receiving prompt assistance from San Rafael Police and Fire. Additional bases for seeking detachment are presented in a letter to the Mayor dated November 27, 2017 (Attachment 4). Assistant City Manager Cristine Alilovich investigated the property owner’s concerns presented at the March 12, 2018 Finance Committee meeting and found the following: • 400 Upper Toyon Drive is within the jurisdiction of San Rafael but has a Kentfield mailing address. The City’s GIS system recognizes the property as within San Rafael’s jurisdictional borders. • The San Rafael Police Department (SRPD) confirmed that 400 Upper Toyon Drive is in the City’s dispatch system as a San Rafael residence. In addition, in approximately March 2018, SRPD tested the 911 system from the property owner’s cell phone to ensure that 911 calls come directly to SRPD dispatch. SRPD also provided the property owner with SRPD’s 7-digit emergency line as an alternative to 911. Public Works responds to calls at this property, but the limit of San Rafael’s maintenance responsibility generally ends at the intersection of Upper Toyon and Makin Grade. • 400 Upper Toyon Drive shares a long private driveway with other properties on Upper Toyon Drive beyond the intersection of Upper Toyon Drive and Makin Grade. The 2017 slide referenced in Attachment 4 was along that private driveway, not a City street. Additionally, the 2017 storm resulted in many emergency calls to the City’s Public Works department whose staff were responding to more critical requests at the time the Upper Toyon call for service came in. Staff prioritized the demand for services and followed up with the property owner, even though the slide was not on a City maintained street, however it did take several days to respond due to the volume of calls during that particular storm. In October 2018, the property owner sent a request via his attorney for the City to continue to negotiate a tax-share agreement with the Town of Ross and to re-agendize the matter. (Attachment 8) 1 In response to that request, in January 2019, the City Manager reached out to the Ross Town Manager to further negotiate a tax share agreement that would result in a smaller ongoing loss of taxes for the City of San Rafael. On March 8, 2019, the City Manager wrote to Ross Town Manager Joe Chinn, providing a more detailed explanation of the City’s fiscal concerns related to detachment and making a counter offer to the original tax share proposal. (Attachment 6.) The City’s proposal was to split the property taxes from 400 Upper Toyon Drive with 95% of the property tax to be attributed to San Rafael and 5% to Ross, in perpetuity. The primary consideration to San Rafael in these negotiations was the ongoing tax loss, particularly in view of the continuing costs that will be incurred by the City related to this property regardless whether it is located in Ross or San Rafael. For example, there will be continued costs to maintain the only access road to the property (Upper Toyon), as well as the loss of additional City taxes 1 The City agreed with the property owner’s request to re-agendize the matter and has therefore scheduled it for a full Council meeting to allow public comment and a full discussion. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 such as the Library and Paramedic Special Tax, despite the property owner still having access to these services. On March 15, 2019 the property owner’s attorney submitted a letter to the City Council proposing a potential resolution of the matter. In response to the City’s fiscal concerns, the property owner offered “a one-time supplementary tax payment in the amount of $20,000.00 to offset any perceived losses by the City from this de-annexation.” (Attachment 7). Staff concluded that the offer did not offset the City’s fiscal concerns, and with Ross’s rejection of the City’s counter tax share proposal on April 8, 2019 the matter was set for the April 15, 2019 City Council meeting with a staff recommendation to reject tax sharing agreement. The matter was continued from the April 15 date at the request of the property owner, who has now offered a larger one-time supplementary tax payment of $95,000 to offset the City’s tax loss concerns. In consideration of the property’s owner’s offer, staff from the City and Ross held further discussions about the property tax exchange and agreed to present to their respective city/town councils a proposal that Ross will receive 75% of the property tax and San Rafael will receive 25% in perpetuity after the boundary reorganization. Staff now brings the revised property tax share proposal and the property owner’s revised offer to full Council for consideration. ANALYSIS: An evaluation of revenue and services related to 400 Upper Toyon Drive (hereafter, the “Property”) conducted by the City Manager’s and Finance departments revealed that loss of tax income from detachment of the Property would ultimately result in an approximate $4,300 annual loss, including $183 in library parcel taxes, storm run-off fees and paramedic service taxes. In spite of this revenue loss, the City would continue to maintain Upper Toyon Drive, the public street leading to the Property, even after detachment. The City of San Rafael Fire Department (e.g., both fire and paramedic service) would still respond to the Property as part of mutual aid responses between Ross and San Rafael and, given the traffic patterns and location of the street leading to Upper Toyon, it is extremely likely that it would be a San Rafael fire engine or ambulance responding to any 911 call at that address. Because San Rafael will continue to provide services to the Property after the proposed reorganization, the City Council subcommittee and staff have concluded that the loss of property tax revenue from the Property would have a negative fiscal impact on San Rafael. However, on April 11, 2019, the property owner’s attorney contacted the Mayor and conveyed the property owner’s offer to increase the amount of the one-time supplemental tax payment. Further discussions between staff and the property owner’s attorney have resulted in a new offer of $95,000 by the property owner. As a result of this offer, City staff renewed negotiations with staff from the Town of Ross in regard to a proposed tax exchange agreement and came to an agreement to present to their respective councils a proposal that from and after the reorganization, the property taxes collected from the Property would be allocated 75% to Ross and 25% to San Rafael, in perpetuity. Staff has concluded that the property owner’s increased payment of $95,000 to San Rafael, along with San Rafael’s receipt in perpetuity of 25% of property tax revenues as proposed, would resolve staff’s concerns about a negative fiscal impact to the City as a result of the reorganization. Therefore, staff recommends that the City Council adopt the attached resolution (Attachment 1) accepting the property owner’s offer and approving the proposed tax exchange agreement with Ross and authorizing the City Manager to execute agreements on those terms (Attachments 2 and 3 respectively). SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 It should be noted that the attached draft tax exchange agreement (Attachment 3) has not yet been reviewed or approved by Ross, although the terms are consistent with the understanding between the two cities. The resolution authorizes the City Attorney, prior to the City Manager’s execution of the tax exchange agreement, to approve nonsubstantive changes as to form should Ross request minor wording changes. Staff has determined that approval of the proposed agreements is exempt from environmental review under the “common sense exemption” of the California Environmental Quality Act (14 Cal. Code Regs. §15061 (a), (b)(3)) as they are purely monetary matters and it can be seen with certainty that they will not have a significant effect on the environment. FISCAL IMPACT: The City currently receives $5,776.59 annually in taxes from 400 Upper Toyon Drive, including property taxes, storm run-off fees, library parcel taxes, and paramedic services taxes. Under the revised property tax share proposal, the shared amount only includes the base property tax and that amount would be reduced to approximately $1398.21 annually after the detachment. The City permanently loses storm run-off fees, library parcel taxes, and paramedic services taxes after the detachment. The City does not anticipate a reduction in cost of service delivery if this property were to detach. It is difficult to fully quantify the specific service cost for this property because the City does not discriminate in its tax structure (residents in isolated areas do not pay more even though it may cost more to provide them services), and we don't have a cost model that would quantify the difference in providing services to hillside versus flat land. The tax sharing agreement and the property owner’s offer to make a one-time payment to the City of $95,000 is intended to fully compensate the City for this loss of property taxes, fees, and special taxes, and staff has concluded that it will adequately do so. OPTIONS: The City Council has the following options to consider on this matter: 1. Adopt the Resolution accepting and approving the property owner’s offer and the proposed tax- exchange agreement with Ross and authorizing the City Manager to execute the agreements. 2. Reject the property owner’s offer and the tax share agreement 3. Direct staff to return with more information. RECOMMENDED ACTION: Adopt the resolution. ATTACHMENTS: 1. Resolution Authorizing the City Manager to Enter into the Proposed Tax Share Agreement with Ross 2. Exhibit 1 to Resolution – Draft Pre-Detachment Agreement with Raphael de Balmann 3. Exhibit 2 to Resolution – Draft Tax Exchange Agreement with Town of Ross (w/o Exhibits A and B) 4. November 27, 2017 Letter to Mayor from Riley Hurd 5. Parcel Maps of relevant area 6. March 8, 2019 Letter from City Manager to Town of Ross 7. March 15, 2019 Letter from Riley Hurd to City Council 8. October 26, 2018 Letter from Riley Hurd to City Council 1 RESOLUTION NO. 14665 A RESOLUTION OF THE SAN RAFAEL CITY COUNCIL APPROVING AND AUTHORIZING THE CITY MANAGER TO ENTER INTO A TAX EXCHANGE AGREEMENT WITH THE TOWN OF ROSS IN CONNECTION WITH THE PROPOSED DETACHMENT OF 400 UPPER TOYON DRIVE (ASSESSOR’S PARCEL NO. 012-121-28) FROM THE CITY OF SAN RAFAEL AND ITS ANNEXATION TO THE TOWN OF ROSS, IN ADDITION TO THE PROPERTY OWNER’S OFFER OF PAYMENT THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESOLVES AS FOLLOWS: WHEREAS, Raphael de Balmann (“Owner”) is the owner of the property situated within the San Rafael city limits and commonly known as 400 Upper Toyon Drive, California (Assessor’s Parcel No. 012-121-28) (the “Property”); and WHEREAS, Owner has applied to the Marin Local Agency Formation Commission (LAFCO) for approval of a reorganization of boundary lines to detach the Property from the City of San Rafael and annex it to the Town of Ross (the “Reorganization”); and WHEREAS, pursuant to California Revenue & Taxation Code section 99, before the LAFCO may act on the proposed Reorganization, the City of San Rafael (“City”) and the Town of Ross (“Ross”) must approve and enter into an agreement concerning the exchange of property taxes derived from the Property; and WHEREAS, the City Council has determined that even after the proposed Reorganization, the City will continue to incur costs for providing services, including street maintenance, police and fire services, to the Property, and is concerned with the negative fiscal impact to the City from the loss of property tax revenues from the Property in view of such ongoing service needs; and WHEREAS, Owner has offered a one-time $95,000 payment to the City towards the ongoing loss of tax revenue resulting from the Reorganization; and 2 WHEREAS, the City and Ross have negotiated a tax exchange agreement specifying that if the Reorganization is approved, property tax revenues derived from the Property will be allocated 25% to the City and 75% to Ross in perpetuity; and WHEREAS, the tax-exchange agreement was negotiated with respect only to the Property, and in reliance on the fiscal offset offered by Owner; and WHEREAS, approval of the Owner’s offer and the tax-exchange agreement with Ross are purely monetary matters that can be seen with certainty will not have a significant effect on the environment and are therefore exempt from environmental review under the “common sense exemption” of the California Environmental Quality Act (14 Cal. Code Regs. §15061 (a), (b)(3)); NOW THEREFORE BE IT RESOLVED by the San Rafael City Council as follows: SECTION 1. Acceptance of Property Owner Offer. The City Council hereby accepts the offer from Owner Raphael de Balmann to pay the City of San Rafael the sum of $95,000 towards the fiscal effect of the loss of property taxes derived from the Property after it is detached from the City and annexed to Ross, and the City Manager is hereby authorized to execute a pre-detachment agreement with the Owner in the form attached hereto as Exhibit 1, subject to final approval as to form by the City Attorney. SECTION 2. Approval of Tax Exchange Agreement. In reliance upon the Property Owner’s agreement and payment to the City, the City Council hereby approves a tax exchange agreement between the City and Ross for the proposed exchange of annual property tax revenues from the Property based on a 25% share to the City and a 75% share to Ross, in perpetuity after the proposed Reorganization. Upon receipt of the Owner’s agreed payment, the City Manager is 3 authorized to execute the tax exchange agreement attached as Exhibit 2, subject to final approval as to form by the City Attorney. SECTION 3. Attachments. Exhibit 1, “Pre-Detachment Agreement” and Exhibit 2, “Tax Exchange Agreement” (with attached Exhibits A, Legal Description of 400 Upper Toyon Drive Detachment Area and B, Map of 400 Upper Toyon Drive Detachment Area) SECTION 4. Effective Date. This Resolution shall be effective immediately upon its adoption. I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the San Rafael City Council held on the 6th day of May 2019, by the following vote to wit: AYES: Councilmembers: Bushey, Colin, Gamblin, McCullough & Mayor Phillips NOES: Councilmembers: None ABSENT: Councilmembers: None LINDSAY LARA, City Clerk DocuSign Envelope ID: 92E535DD-AB46-47A7-AC5D-OA2255C4988A PRE -DETACHMENT AGREEMENT This Pre -detachment Agreement ("Agreement") is entered into on M &y 2 L_ 2019 by and between the Cl FY OF SAN RAFAEL (`'City"), a municipal corporation, and RAPHAEL DE BALMANN ("Mr. de Balmann"), owner of the real property located at 400 Upper Toyon in San Rafael. RECITALS 1. Mr. de Balmann has submitted an application to the Marin Local Agency Formation Commission seeking to detach his property located in the State of California, in the County of Marin, as depicted on Exhibit A, described in Exhibit B, and referred to in this Agreement as the "Property," from the City and annex the Property to the Town of Ross ("Application for Reorganization"). ?. City is empowered by the Cortese-Knox-llertzberg Local Government Reorganization Act. Government Code section 56000 et seq. ("the Act") to consent to or to oppose Mr. de Balmamr's Application for Reorganization. 3. City finds it to be in the public interest to detach the Property under the terms of this Agreement and to support Mr. de Balmann's Application for Reorganization, as the Property is located on the boundary with Ross, the closest surrounding residential parcels and adjacent unoccupied parcels are in Ross, and the Property is located within the Ross School District. 4. City and the Town of Ross have negotiated in good faith to reach a property tax revenue exchange agreement ("Tax Share Agreement"), which will be supplemented by a one- time payment by Mr. de Balmann to City to mitigate its costs of providing Fire, Police, and street maintenance services following detachment of the Property. 5. City has considered this Agreement at a noticed public meeting, and has found it to be fair. just and reasonable. Each party has had opportunity to consult legal counsel with respect to it. NOW, THEREFORE, in consideration of the above recitals and of the following mutual covenants, benefits and burdens, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1 of 5 (5-1-S DocuSign Envelope ID: 92E535DD-AB46-47A7-AC5D-OA2255C4988A COVENANTS 1. BASIC PURPOSES. The purposes of this Agreement are to (a) facilitate Mr. de Balmann's pursuit of the Application for Reorganization, and (b) provide for Mr. de Balma ni's supplemental payment of property tax revenue to offset the provision of Fire, Police, and street maintenance services by City following detachment of the Property. 2. DEFINITIONS. Terms used in this Agreement shall have the following meanings unless the context otherwise requires: (1) "Agreement" means this Pre -detachment Agreement, including Exhibit A attached hereto and incorporated into this Agreement by this reference. (2) `'Application for Reorganization" means Mr. de Balmann's proposed detachment of the Property from City and annexation to the Town of Ross. (3) "Mr. de Balmann" means Mr. de Balmann and his successors in the Property and permitted assigns in this Agreement. (4) "City" means the City of San Rafael. (5) "Effective Date" means the date this Agreement is signed by the later of the Parties to do so. (6) '`L.AFCo" means the Marin County Local Agency Formation Commission. (7) "Parties" means Mr. de Balmann and City and `'Party" means either of them. (8) "Property" means the real property described in Exhibit A. (9) "Reorganization" means the approval by LAFCo, and the recordation of a notice of completion with respect to that approval, of the Application for Reorganisation. (10) "Town" means the Town of Ross. 3. TERM. This Agreement shall commence on the Effective Date and shall expire three years thereafter, unless extended or amended in writing or when it is billy performed, ifsooner. 4. PRE -DETACHMENT OBLIGATIONS AND COMMITMENTS. a. Consistently with and subject to this Agreement, Mr. do Balmann will pursue his petition under the Act, or its successor, to detach the Property from the City and annex the Property to the Town, and take such further actions as may be reasonably required to complete 2 of 5 DocuSign Envelope ID: 92E535DD-AB46-47A7-AC5D-OA2255C4988A the Reorganization of the Property under such conditions as LAFCo may impose and are reasonably acceptable to Mr. de Balmann and City. b. Upon execution of this Agreement, Mr. de Balmann shall pay $95,000 to City in mitigation for City's provision of Fire, Police, and Street services to the Property following detachment. The City will refund the mitigation payment to Mr. de Balmann in its entirety within 30 -days if the City Council decides not to appro,,e a tax exchange agreement with the Town or the Reorganization is not accomplished within the term set forth in Paragraph 3 above for any other reason. 5. NON -OBLIGATION. Nothing in this Agreement obligates the City to approve a tax share agreement with the Town or eliminates any rights the City possesses regarding Mr. de Bahnann's Application for Reorganization. 6. NIISCELLANEOUS PROVISIONS. a. SEVERABILITY, It is the intent of the Parties that the remaining terms, provisions, covenants and conditions of this Agreement be in effect, valid, and enforceable should any term, provision, covenant or condition of this Agreement be determined invalid, void or unenforceable. 'I he City Council for the City and Mr. de Balmann each declares it would have adopted this Agreement and each section, subsection, sentence, clause, phrase, part or portion thereof: irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, parts or portions be declared invalid or unconstitutional. b. IN l ERPRFTATION AND GOVERNING Law. This Agreement and any dispute arising hereunder shall be governed and interpreted pursuant to the laws of the State of California, and it shall be deemed to have been executed in Marin County, California. This Agreement shall be construed as a whole according to its fair language and common meanings to achieve the objectives and purposes of the parties and shall be interpreted as if mutually drafted by the parties, all parties having been represented by counsel in its negotiation and preparation. C. SECTION I IEADINGs. All section headings and subheadings are inserted for convenience only and steal I not affect construction of this Agreement. d. CONSiRUCfION. AS used herein, the singular of any word includes the plural and the masculine, feminine and neutral include the other genders as the context may require. e. WAlvElt. Failure of either Party to insist upon the strict performance of any term, covenant, condition, or provision of this Agreement by the other, or the failure of a Party to exercise its rights upon the default of the other, shall not Constitute waiver of such Party's right to demand strict compliance by the other Party with that particular term, covenant, condition, provision, or with any other part of this Agreement thereafter. 3 of 5 DocuSign Envelope ID: 92E535DD-AB46-47A7-AC5D-OA2255C4988A f. No 11 IIRD PARTY BENEFICIARIES; No ASSIGNMENT. This Agreement is made and entered into for the sole protection and benefit of the Parties and their successors and permitted assigns. No other person shall have any right of action based on this Agreement. Mr. de Bahnann shall not assign any interest in this Agreement other than by transfer of title to the Property without the prior written consent of City, which City may grant or deny in its unfettered discretion. Any attempt to transfer an interest in this Agreement without such consent shall be null and void and confer no right on any third party. g. MU I UAE COVENANTS. The covenants contained in this Agreement are mutual and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby cif the covenants to be performed by such benefited Party. h. SUCCESSORS IN INTtRFS F. The burdens of this Agreement shall be binding upon, and its benefits shall inure to all successors in interest to the Parties to this Agreement and successors to Mr. de Balmann in title to the Property. City may record the Agreement or a memorandum of it against the Property. J. FUR rHI_R ACTIONS AND INSTRUNIFNTS. Each of the Parties shall cooperate and provide reasonable assistance to the other as allowed by applicable law in the performance of this Agreement and the satisfaction of its conditions. On the request of either Party at any time, and as allowed by applicable law, the other Party shall promptly execute, with acknowledgement or affidavit, if reasonably required, and file or record such required instruments and writing and take any action as may be reasonably necessary to carry out the intent and to fulfill the provisions of this Agreement or to evidence or consummate the transactions it contemplates. l:. AMEND IEN I'S IN WRrrING. phis Agreement may be amended, including to extend its term. only by written consent of both Parties. 1. WARRANT Y of AUTHORITY. The persons signing this Agreement below hereby warrant for the benefit of the Party for which they do not sign that they have actual authority to bind their principals to this Agreement. IN Wl 1 NESS WHEREOF, the Parties hereto have executed this Agreement on the day and year first set forth above, by and between: CITY: CITY OF SAN RAFAEL, a municipal corporation duly organized and existing wider the laws of the State of California By: Attest: Nam : Jim Schutz A Name: Lindsay Lara Title: it) lanager Title: City Clerk 4 of' DocuSign Envelope ID: 92E535DD-AB4647A7-AC5D-OA2255C4988A APPROVED AS 10 I-ORVI: Robert I-. Fpstein, C it) ttorn NIR. DL BAL.IVIANN. OocuSigned by: �b"mV" EAfi8WEURC Rtlphael (ic Ballllatill 5 of 5 TAX EXCHANGE AGREEMENT BETWEEN THE CITY OF SAN RAFAEL AND THE TOWN OF ROSS RELATING TO THE APPLICATION TO LAFCO FOR DETACHMENT OF 400 UPPER TOYON DRIVE FROM THE CITY OF SAN RAFAEL AND ITS ANNEXATION TO THE TOWN OF ROSS (Assessor's Parcel NOS. 012-121-28, 012-121-04, 012-121-05, 012-121-22) THIS TAX EXCHANGE AGREEMENT ("Agreement") is made and executed in duplicate this 1 day of A-vl A S t , 2019 by and between the CITY OF SAN RAFAEL, a California charter city ("SAN RA AEL"), and the TOWN OF ROSS, a California municipal corporation ("ROSS"). RECITALS A. Raphael de Balmann, the owner of the real property situated within the city limits of SAN RAFAEL commonly known as 400 Upper Toyon Drive, Kentfield, California, and bearing Assessor's Parcel No. 012-121-28 (the "PROPERTY") has filed an application with the Marin Local Agency Formation Commission requesting its approval of the detachment of the PROPERTY from SAN RAFAEL and its annexation to ROSS (hereafter, the "Reorganization"). B The PROPERTY is more particularly described in Exhibit A attached hereto and shown on the map attached as Exhibit B hereto, improved with a single-family residence, which is situated on the border between SAN RAFAEL and ROSS and is served by Upper Toyon Drive, a SAN RAFAEL public street. C. Between the Property and ROSS Town Limits, there are three exempt parcels idenitified as Assessor's Parcels Nos. 012-121-04, 012-121-05, 012-121-22, currently owned by the Marin Municipal Water District ("MMWD Properties"). The MMWD Properties will need to be annexed to ROSS as part of annexation of the Property to ROSS. Currently, the MMWD Properties are exempt from ad valorem real property taxes being assessed. However, should the MMWD Properties be subject to any ad valorem real property taxes in the future, this Agreement shall govern the allocation of any sharing of the real property ad valorem taxes. D. On June 6, 1978, the voters of the State of California amended the California Constitution by adding Article XIIIA thereto which limited the total amount of property taxes which could be levied on property by local taxing agencies having such property within their territorial jurisdiction to one percent (1%) of full cash value E. Subsequently, the California Legislature added Section 99 to the California Revenue and Taxation Code, which requires a city seeking to annex property to its incorporated territory and a city from which such property will be detached to agree upon an exchange of property taxes derived from such property and available to each city following the reorganization. F. In order to support the request of the PROPERTY's owner, SAN RAFAEL and ROSS wish to work together to develop a fair and equitable approach to the sharing of real property ad valorem taxes imposed and collected as authorized by the Revenue and Taxation Code in order to encourage sound urban development and economic growth. Lj --I — (& G. Close cooperation between SAN RAFAEL and ROSS is necessary to maintain and improve the quality of life throughout both cities and the County of Marin and deliver needed or desirable services in the most timely and cost-efficient manner to all SAN RAFAEL and ROSS residents. H. SAN RAFAEL and ROSS have, after negotiations, reached an understanding as to a rate of exchange of property tax revenues to be made pursuant to Section 99 of the California Revenue and Taxation Code. I. This Agreement memorializes the understanding between SAN RAFAEL and ROSS and constitutes an enforceable property tax transfer agreement, under Section 99 of the California Revenue and Taxation Code. NOW, THEREFORE, in consideration of the exchange of tax revenue, as provided for in this Agreement, and for other good and valuable consideration, the sufficiency of which is acknowledged by the parties, SAN RAFAEL and ROSS agree as follows: AGREEMENT Section 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below: (a) "Property Tax Revenue" shall mean revenue in the form of "ad valorem real property taxes on real property", as said term is used in Section 1 of Article XIIIA of the California Constitution and more particularly defined in subsection (c) of Section 95 of the California Revenue and Taxation Code, that is collected from the PROPERTY and the MMWD Properties and is available for allocation to SAN RAFAEL and/or ROSS. (b) "Reorganization Date" shall mean the date specified by the Marin Local Agency Formation Commission consistent with the Cortese -Knox -Hertzberg Local Governmental Reorganization Act of 2000 (California Government Code § 56000 et seq.) as the effective date of the detachment of the PROPERTY and the MMWD Properties from SAN RAFAEL and its annexation to ROSS. Section 2 General Purpose of Agreement. The general purpose of this Agreement is to devise an equitable exchange between SAN RAFAEL and ROSS of the Property Tax Revenue derived from the PROPERTY and MMWD Properties, as required by Section 99 of the Revenue and Taxation Code Section 3. Exchange of Tax Revenues. On and after the Annexation Date, SAN RAFAEL and ROSS shall share the current allocated SAN RAFAEL Property Tax Revenue collected from the PROPERTY and MMWD Properties in perpetuity as follows: ROSS share = 75% SAN RAFAEL share = 25% Section 4. Exchange by County Auditor, SAN RAFAEL and ROSS further agree that all of the exchanges of Property Tax Revenue from the PROPERTY and MMWD Properties required by this Agreement shall be made by the County Department of Finance, and both SAN RAFAEL and ROSS agree to mutually work with the County to effectuate the allocation agreed to herein. Section 5. No Opposition. In consideration of the exchange of tax revenue provided for in this Agreement, as well as the pre -detachment agreement between SAN RAFAEL and the PROPERTY owner, SAN RAFAEL and ROSS agree not to oppose the PROPERTY owner's application before the Marin Local Agency Formation Commission to detach the PROPERTY and the MMWD Properties from SAN RAFAEL and to annex it to ROSS. Section 6. Dispute Resolution. In the event of any dispute arising out of or relating to this Agreement, the parties shall attempt, in good faith to promptly resolve the dispute mutually between themselves. If the dispute cannot be resolved within 30 calendar days of initiating such negotiations or such other time period as may be mutually agreed to by the parties in writing, either party may pursue its available legal and equitable remedies, pursuant to the laws of the State of California. Section 7 Third -party Beneficiary_ There are no third -party beneficiaries to this Agreement, and no third -party will have any right to enforce any provision of this Agreement. Section B. Modification. This Agreement and all of the covenants and conditions set forth herein may be modified or amended only by a writing duly authorized and executed by both SAN RAFAEL and ROSS Section 9. Reformation SAN RAFAEL and ROSS understand and agree that this Agreement is based upon existing law, and that such law may be substantially amended in the future. In the event of an amendment of state law which renders this Agreement invalid or inoperable or which denies any party thereto the full benefit of this Agreement as set forth herein, in whole or in part, then SAN RAFAEL and ROSS agree to renegotiate the Agreement in good faith. Section 11. Effect of Tax Exchange Agreement. This Agreement shall be applicable solely to the PROPERTY and MMWD Properties and does not constitute either a master tax sharing agreement or an agreement on property tax exchanges which may be required for any other reorganization of the boundaries of either SAN RAFAEL or ROSS. Section 12. Entire Agreement. With respect to the subject matter hereof only, this Agreement supersedes any and all previous negotiations, proposals, commitments, writings, and understandings of any nature whatsoever between SAN RAFAEL and ROSS except as otherwise provided herein. Section 13. Notices. All notices, requests, certifications or other correspondence required to be provided by the parties to this Agreement shall be in writing and shall be personally delivered or delivered by first class mail to the respective parties at the following addresses: TO SAN RAFAEL: Jim Schutz, City Manager 1400 Fifth Avenue San Rafael, CA 94901 TO ROSS Joe Chinn, Town Manager P.O. Box 320 31 Sir Francis Drake Boulevard Ross, CA 94957 Notice by personal delivery shall be effective immediately upon delivery. Notice by mail shall be effective upon receipt or three days after mailing, whichever is earlier. Section 14. Approval. Consent. and Agreement. Wherever this Agreement requires a party's approval, consent, or agreement, the party shall make its decision to give or withhold such approval, consent or agreement in good faith, and shall not withhold such approval, consent or agreement unreasonably or without good cause Section 15 Construction of Captions. Captions of the sections of this Agreement are for convenience and reference only. The words in the captions in no way explain modify. amplify, or interpret this Agreement Section 16. Incorporation by Reference. Exhibits A and B, attached hereto, are incorporated into this Agreement by this reference. Section 17. Authority. The undersigned acknowledge that they are duly authorized to execute this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date set forth above. CITY OF SAN RAFAEL By: �. M SC IJTZ, Cit Man ger ATTEST: t LINDSAY LARA, City Clerk APPROVED AS TO FORM: LaI -,- L� Q7 ROBERT F. EPSTEN, Citytorney TOWN OF ROSS By: _�cq.:.— JOliCHINN, Town Manager ATTEST: Attachments: Exhibit A -Legal Description of Property Exhibit B - Map of Property LINDA LOPEZ, Town berfV BENJAMIN L. ST CK, Town Attorney EXHIBIT "A" Legal Description For APNIParcel ID(s): 012-121-28 THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN RAFAEL COUNTY OF MARIN STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS: LOT 24, AS SHOWN UPON THAT CERTAIN MAP ENTITLED, "MAP OF OAKWOOD UNIT NO T: FILED FOR RECORD ON APRIL 11, 1984 IN VOLUME 19 OF MAPS, AT PAGE 12, MARIN COUNTY RECORDS APN. 012-121-28 g� n Exhibit "B" Riley F. Hurd III rhurd@rflawllp.com Attorneys at Law 1101 5th Avenue, Suite 100 San Rafael, CA 94901 telephone 415.453.9433 facsimile 415.453.8269 www.rflawllp.com November 27, 2017 Via E-Mail Only Mayor Gary Phillips Gary.Phillips@cityofsanrafael.org Re: 400 Upper Toyon Drive – Annexation Dear Mayor Phillips: Thank you for taking the time to meet with Gary Ragghianti and myself prior to the Thanksgiving break. As we discussed, I am providing you with some additional information regarding the proposed annexation of 400 Upper Toyon Drive from San Rafael to Ross. After reading the information herein, it is my hope that you will agree that this annexation is the proper step to take from a land-use planning perspective, as well as to ensure the efficient provision of municipal services. After speaking at length with my client, I can state that this was never a pre-planned or financially motivated request, it is one born out of necessity. Also, after a detailed analysis, this annexation is fully recommended by LAFCO. Background 400 Upper Toyon Drive is the northernmost occupied parcel on Upper Toyon Drive. The lot is entirely surrounded by open space and the Town of Ross. All residential parcels within a quarter mile drive in either direction are in Ross (the empty 404 and 440 Upper Toyon, as well as 341, 337, and 325 Upper Toyon). One of the reasons for this layout is that the unoccupied parcels adjacent to 400 Upper Toyon, which are now 404 and 440 Upper Toyon, were detached and annexed to Ross between 2004 and 2008. Importantly, 400 Upper Toyon has a Kentfield mailing address and zip code (94904), and is located in the Ross School District. In nearly all aspects, this parcel is generally not categorized as if it were in San Rafael. Page 2 of 4 Issues with Municipal Services The location of 400 Upper Toyon in an area that appears to be Ross, but is actually San Rafael, has created confusion in the provision of municipal services, including police and fire response, which is a serious life/safety issue. At our meeting, you requested specific examples of this confusion, so I am providing 4 examples, and have carefully chosen ones than can be fully corroborated by the public records: 1. January 22, 2016 - The owners noticed several bicycles chained to the gate on the fire trail that bisects 400 Upper Toyon. They then discovered a camp stove and pots and pans next to the PG&E transformer on the east end of their property. This was quite alarming; the winter of 2016 was dry, and someone cooking with flame next to electrical utility equipment could cause a disaster. They called the Ross Police Department, and they responded promptly. However, when the Ross police arrived, they determined that the bicycles and stove were across the city line into San Rafael, and they were unwilling to cross the line and remove them. They said they would call the San Rafael police department to expedite a response. a. After hearing nothing, my clients called the San Rafael police department, and the dispatcher initially stated that there is no such thing as a 400 block of Upper Toyon, insisting that everything past 320 Upper Toyon is in the Town of Ross. San Rafael police eventually responded 5 days later. 2. September 19, 2016 - A suspicious man parked in front of 400 Upper Toyon and began to walk around. The Ross police responded, as the man and his car were in Ross (all of Toyon is actually in Ross Town limits). However, when the Ross police arrived, they had a disagreement regarding jurisdiction. The officers were not aware that the road is entirely in Ross, and felt it should be a San Rafael matter, even though the subject of the complaint was in Ross. 3. January 11, 2017 – A mudslide closed Upper Toyon Drive in the morning. My clients were therefore entirely cut off, as there is only one exit from their property. They called 911 at 8:50am, and were routed through a variety of dispatchers – San Rafael, Central Marin fire, etc. At 1:56pm, having seen no action, they again tried San Rafael, and were put through to the public works department and left a message. Still stuck, they tried the fire department at 1:59pm, and was told they or public works would return the call later. Page 3 of 4 a. After tracking down a private contractor who cut a path through the mud that night, they received a return call from San Rafael 7 days later on January 18, asking if they still needed help. 4. March 19, 2017 - A tree that had been weakened by the January mudslide fell into Upper Toyon, closing the road again. After some debate about which jurisdiction had the tree, the Ross fire department sawed it and removed it. The isolated, island-like, nature of this property is causing serious, and dangerous delays in police, fire, and municipal responses. All other homes up there are in Ross, the street is in Ross, and many City staffers believe it to be in Ross. Annexation will address this issue before something even more serious occurs. Money At our meeting, we had a frank discussion about money, property taxes, and the motivations for this request. Prior to the issues recited above, my clients had never even heard of annexation or LAFCO. It was a process suggested to them due to the issues they were having, not something intended to add value. Their home was marketed and sold as a Kentfield address, which it is, and as being in the Ross School District, which it is. Only an incredibly informed buyer would be able to ascertain that the APN prefix means it is in San Rafael. This is not a financially driven request, it is one of safety. If annexed to Ross, San Rafael would no longer be responsible for servicing this single home, at the end of a winding road, on top of a hill, separate from all other San Rafael homes. The cost to the City of San Rafael of serving this home far exceeds the property tax revenue generated from its value. For these reasons, LAFCO strongly believes annexation is proper here. Conclusion With these facts in mind, we would request that this matter be brought back to the San Rafael finance committee and reconsidered. LAFCO staff is prepared to attend this meeting and further explain their position. It makes sense for all parties involved, including the City of San Rafael, to reconcile the misclassification of this detached lot. Thank you for taking the time to reconsider this important matter. Page 4 of 4 Very Truly Yours, Riley F. Hurd III March 08 , 2019 Joe Chinn Town Manager Phone : 453-1453 ext. 107 Re : Tax Share Dear Joe: Thank you for your continued effort regarding 400 Upper Toyon's request for detachment. As you know, the City of San Rafael's February 19, 2019 Staff Report on the matter was continued to a future meeting . The attorney for the property owner requested continuance and we are currently targeting the City Council meeting of April 2, 2019 if that date is satisfactory to all parties. Prior to the City Council 's involvement in the matter, city staff from both Ross and San Rafael met in June 2017 and discussed a potential property tax share proposal that would have included a 50/50 tax share split between our two cities for the first five years after detachment and then a 25/75 San Rafael/Ross tax share after year five . Under that proposal, the shared amount would only have included the base property tax . The City would permanently have lost access to its storm run-off, library parcel, and paramedic taxes after the detachment. That initial staff proposal was not supported by our Council Finance Subcommittee due to concerns about the loss of City tax revenue combined with the fact that the City of San Rafael would continue to provide services to this property by maintaining roads , providing shared fire and paramedic services, and continuing to provide access to other City services such as the Library. At various junctures, the property owner has expressed reasons for seeking detachment, primarily that confusion about jurisdiction has resulted in difficulty in receiving prompt assistance from San Rafael Police and Fire. Staff investigated the property owner's concerns and determined the following : • 400 Upper Toyon Drive is within the jurisdiction of San Rafael but has a Kentfield mailing address. The City's GIS system recognizes the property as within San Rafael's jurisdictional borders. CITY OF SAN RAFAEL j 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0 . Phillips, Mayor• Andrew Cuyugan McCullough, Vice Mayor• Maribeth Bushey, Councilmember • Kate Colin , Councilmember • John Gamblin , Councilmember 2 • The San Rafael Police Department (SRPD) confirmed that 400 Upper Toyon Drive is in the City's dispatch system as a San Rafael residence . In addition, in or about March 2018, SRPD tested the 911 system from the property owner's cell phone to ensure that 911 calls come directly to SRPD dispatch. SRPD also provided the property owner with SRPD's 7-digit emergency line as an alternative to 911 . • 400 Upper Toyon Drive shares a long private driveway with other properties on Upper Toyon Drive beyond the intersection of Upper Toyon Drive and Makin Grade . Public Works responds to calls at this property, but the limit of San Rafael's maintenance responsibility generally ends at the intersection of Upper Toyon and Makin Grade. • A 2017 slide referenced by the property owner was along that private driveway, not a City street. Additionally, the 2017 storm resulted in many emergency calls to the City's Public Works departments who were responding to other critical requests at the time the Upper Toyon call for service came in. Staff prioritized the demand for services and eventually followed up with the property owner, even though the slide was not on a City maintained street. The response did take a number of days due to the volume of calls received during that.particular storm. After the Council committee reacted negatively to the proposed tax share agreement, staff concluded that the City clearly wanted to retain the tax revenue from this property. However, in response to requests by the property owner's attorney that San Rafael continue to negotiate a tax-share agreement with the Town of Ross and to agendize the matter for a future City Council meeting, I reached out to you in January of this year to continue to discuss the matter. We were not able to reach agreement and I am following up with you now to attempt to finalize the discussion . For this individual request for detachment, Ross and San Rafael are required to negotiate in good faith on an exchange of property tax revenues. The primary concerns for San Rafael continue to be the ongoing tax loss, particularly in view of the continuing costs that will be incurred by the City related to this property regardless whether it is located in Ross or San Rafael. For example, there will be continued costs to maintain the access road to the property, as well as the loss of additional City taxes such as the Library and Paramedic Special Tax, despite the property owner still having access to these services. Furthermore, the City of San Rafael Fire Department (e.g., both fire and paramedic service) would still respond to this property as part of mutual aid responses between the two entities and given the traffic patterns and location of the street leading to Upper Toyon, it is very likely that it would be a San Rafael fire engine or ambulance responding to any 911 call at that address. Given the City's inability to reduce its services in proportion to the estimated loss of tax revenue, the City is only able in good faith to concede a small portion of tax revenue for this property on an ongoing basis. The City proposes the following : CITY OF SAN RAFAEL i 1400 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901 I CITYOFSANRAFAEL.ORG Gary 0 . Phillips, Mayor• Andrew Cuyugan McCullough, Vice Mayor• Kate Colin , Councilmember • Maribeth Bushey, Councilmember • John Gamblin , Councilmember 3 A property tax share that includes a 95/5 tax share split between our two cities, with 95% of the property tax for 400 Upper Tayan attributed to San Rafael and 5% to Ross, in perpetuity. Please know that this negotiation and counter is not personally directed at Ross in any way. The City enjoys its relationship with Ross and hopes to continue working collaboratively on shared issues. This counter proposal is merely in response to the City's economic needs coupled with ongoing service demands that would not diminish with the detachment of this one parcel. I am happy to discuss this with you further if you like and look forward to your response. As mentioned above, the property owner's attorney has requested this matter be continued to the April 2nd San Rafael City Council meeting. We are tentatively holding that date but will not proceed until these negotiations are complete. Sincere! ~tz Al'V\o,V -, City Manager CITY OF SAN RAFAEL I 1400 FIFTH AVENUE. SAN RAFAEL, CALIFORNIA 94901 i CITYOFSANRAFAEL.ORG Gary 0. Phillips, Mayor• Andrew Cuyugan McCullough , Vice Mayor• Kate Colin, Councilmember • Maribeth Bushey , Councilmember • John Gamblin, Councilmember Riley F. Hurd III rhurd@rflawllp.com Attorneys at Law 1101 5th Avenue, Suite 100 San Rafael, CA 94901 telephone 415.453.9433 facsimile 415.453.8269 www.rflawllp.com March 15, 2019 Via E-Mail Only City Council City of San Rafael 1400 Fifth Avenue, Room 203 San Rafael, CA 94901 Re: De-Annexation of 400 Upper Toyon Drive, San Rafael Dear Members of the City Council: Our office continues to represent Raphael de Balmann, the owner of 400 Upper Toyon in San Rafael. The staff report released in advance of the Council’s consideration of our de-annexation request focused nearly exclusively on the potential fiscal impacts. Very little mention was made about the numerous times the confusion about the jurisdiction over the subject property has had serious, inconvenient, and sometimes dangerous impacts on the owners. Because the City’s focus appears to be on money, and because the owners are so concerned about the ongoing confusion, the owners are prepared to offer a one -time supplementary tax payment in the amount of $20,000.00 to offset any perceived losses by the City from this de-annexation. The Town of Ross has agreed to an unbelievable deal for the City of San Rafael – 50/50 tax sharing for the first 5 years, and 75/25 in perpetuity. The City is poised to collect taxes on a house it doesn’t have to service….forever. The offer of the additional $20,000 tax payment as part of the de-annexation moves this deal from a great one for the City, to one that is objectively, financially, spectacular. By the City’s math, the foregone revenue - not taking into account any cost of servicing the house - is $2,980 per year. Accordingly, the $20,000 would be a 6.7x multiplier on the lost revenue, not even considering the additional ongoing revenue from the tax split. We would ask that the City please move forward with the de-annexation on these terms such that our clients can align their delivery of municipal services, avoid the issues of the past, and still contribute to San Rafael in perpetuity. Thank you. Page 2 of 2 Very Truly Yours, Riley F. Hurd III CC: Client Riley F. Hurd III rhurd@rflawllp.com Attorneys at Law 1101 5th Avenue, Suite 100 San Rafael, CA 94901 telephone 415.453.9433 facsimile 415.453.8269 www.rflawllp.com October 26, 2018 Via E-Mail City Council City of San Rafael 1400 Fifth Avenue, Room 203 San Rafael, CA 94901 Re: De-Annexation of 400 Upper Toyon Drive, San Rafael Dear Members of the City Council: Our office continues to represent Raphael de Balmann, the owner of 400 Upper Toyon in San Rafael (APN 012-121-28, “Property”), where he lives with his wife and two young children. Background The Property is at the end of a long road. To access the Property from downtown San Rafael, one must leave the City of San Rafael, enter unincorporated Marin County, enter the Town of Ross, then re-enter the City of San Rafael. This location, and constant confusion about jurisdiction, has led to a whole host of issues for the de Balmann family. Their mail is often returned to sender. Their children attend the Ross School District, and will attend the Tamalpais Union High School distr ict. Most significantly though, is that, while their property taxes fund San Rafael services, on multiple occasions when they have requested services in cases of emergencies, they have been told that their property is not in San Rafael and therefore would not be served by San Rafael Police or Fire. A thorough explanation of the issues faced by the de Balmann family was set forth in our November 27, 2018 letter to Mayor Phillips. As the jurisdictional issues progressed, Mr. de Balmann started communicating with the City of San Rafael, the Town of Ross, and the Marin LAFCO seeking a resolution to the confusing boundary issue. He was greeted with support by LAFCO for detaching Page 2 of 6 from the City of San Rafael and concurrently annexing into the Town of Ross. Also, staff members from each of the municipalities met and agreed on tax sharing agreement in support of the annexation. Specifically, The Town of Ross suggested a 50% property tax split for the first five years, then a 25% San Rafael and 75% Town of Ross split forever. In other words, the City of San Rafael could collect, in perpetuity, 25% of the tax revenue for a property it doesn’t even have to serve. In November 2017, we met with Mayor Phillips to discuss this issue. We followed that meeting with a formal request for the proposed reorganization to be brought to the City of San Rafael Finance Committee. On March 12, 2018, we attended the Finance Committee meeting (“Finance Meeting”) with our client. The meeting included the Mayor and Vice Mayor and City staff. At the Finance Meeting, with the presence and support of the Interim Executive Officer of LAFCO, Rachel Jones, and the oral support of a representative from the Town of Ross, we requested that the City reorganize the Property so that it would become part of the Town of Ross. The Finance Committee did not meaningfully discuss the merits of the request, refused to make a formal recommendation, and suggested we reconvene at a later date. We have just learned that after this first meeting, a second Finance Committee meeting was held, with no notice to us or our client as required by law, and action was taken formally deferring the request. We hereby request reconsideration by the Finance Committee and that the City of San Rafael take steps to de -annex the Property, beginning with an agreement for property tax exchange. Legal Standard In a letter to Mayor Phillips dated March 8, 2018 (“March LAFCO Letter”), Interim Executive Officer Rachel Jones stated that before reorganization, the Town of Ross and City of San Rafael need to adopt a property tax exchange agreement under Revenue and Taxation Code section 99(b). Marin LAFCO requested, both at the Finance Meeting and in the March LAFCO Letter, that the “agencies act in good faith and determine if the existing master tax agreement shall apply or commence a 60 -day negotiation period to determine the amount – if any – of property tax revenue to be exchanged . . . .” As alluded to in the Marin LAFCO Letter, upon receiving an application for reorganization, the County auditor must estimate the property tax impacts and report them to the affected governing bodies who must then commence negotiations. Page 3 of 6 (Revenue and Taxation Code section(b)(1-4).) LAFCO may not approve the reorganization until the local agencies agree to accept the exchange in property tax revenues. (Revenue and Taxation Code section 99(b)(6).) The controlling case on this subject is Greenwood Addition Homeowners Assn. v. City of San Marino (1994)(14 Cal.App.4th 1360). While Greenwood does not mandate that the cities reach an agreement, it does impose a duty to “enter into genuine and vigorous negotiations” and the negotiations must be “in good faith.” (Greenwood, 360-61.) The City has utterly failed to meet this legal standard in this particular matter. No attempt to negotiate in good faith was made, and the proposal was dismissed while our clients were accused of simply “wanting to live in Ross.” The letter attached hereto explains the actual impetus for the request. Logical Jurisdictional Divide At the first Finance Committee meeting, there was brief discussion regarding a fear that this annexation would lead to other properties leaving the City. This fear is unfounded, as LAFCO has opined that other annexations would not be appropriate. Upper Toyon Drive and Makin Grade create a quadrant that acts as dividing lines for three jurisdictions – San Rafael, Ross, and the County. The homes in the two quadrants northeast of Upper Toyon Drive are all in San Rafael. The homes southwest of Upper Toyon Drive are in either the Town of Ross or unincorporated Marin County, not the City of San Rafael - homes below Makin Grade are in the unincorporated County; homes above Makin Grade are in the Town of Ross, except for this one. The requested annexation fits and continues a clear jurisdictional divide. 400 Upper Toyon Drive Is Unique All the properties along Upper Toyon are on one side of the road or another except number 400. 400 Upper Toyon is the road, and falls on both sides of the road. The Property is designated to be served by the San Rafael Sanitation District, San Rafael Fire District, and the Ross Elementary School District, and Tamalpais Union High School District. The three closest homes (341, 337, and 325 Upper Toyon Drive), the only homes within 1/4 mile, are all in the Town of Ross - they are southwest of Upper Toyon Drive and above Makin Grade. They are each served by the Sanitary District Number 1, rather than the San Rafael Sanitation District. They are each served by the Ross Fire Page 4 of 6 Department, rather than the San Rafael Fire Department. The next closest home, more than 1/4 mile away, is 320 Upper Toyon Drive. It is on the northeast side of Upper Toyon Drive, and is in the City of San Rafael for that reason. Each of the properties beyond that are below Makin Grade, and if they were not in San Rafael, they would be in the unincorporated County. These properties can be differentiated. Each fits a logical category, except this Property, which is hanging more than 1/4 mile up the road from the next San Rafael home, requiring San Rafael police and fire services to leave their jurisdiction before re-entering it to serve this Property. Brown Act Violation It has only recently come to our attention that on April 26, 2018, the City Council Finance Committee met a second time regarding the request to de-annex the Property. No notice was given to this office or the Property owner as required by law. Also, the agenda for the meeting was severely deficient in its description of the item. Attached as Exhibit A is the agenda for the April 26, 2018, Finance Committee meeting. Item 5(b) is listed as “Deannexation Request” under “Future Topics.” No address was given, thereby giving no indication what property this was about, and the topic of discussion was definitely not that of a “future” item. Instead, we are only now informed that a substantive discussion was held about this particular request, for this particular property, and it was decided that the issue would be referred to the LAFCO for inclusion on its work plan. The Brown Act requires a brief general description of each item of business to be discussed. (Gov’t Code 54954.2(a)(1).) Many cases have interpreted this standard , and these interpretations make it clear that description here was woefully inadequate. Agenda drafters must give the public a fair chance to participate in matters of particular or general concern by providing the public with more than mere clues from which t hey must then guess or surmise the essential nature of the business to be considered by a local agency. (San Diegans for Open Government v. City of Oceanside (App. 4 Dist. 2016) 209. Cal.Rptr.3d 305.) (See also Moreno v. City of King (App. 6 Dist. 2005) 25 Cal.Rptr.3d 29.) Page 5 of 6 In lieu of a formal Cease and Desist letter at this time, which can be brought under the delayed discovery rule, we simply request that the City reconsider the action taken in the April 26, 2018 Finance Committee meeting, and provide us with written notice of the agenda item in advance. (Govt Code 54960.2(a)(1); 54960.2(b); 54960.2(c)(1-2).) Conclusion In conclusion, we ask that you meaningfully consider the Town of Ross’ proposed property tax split. If this is not agreeable, we ask that you have vigorous negotiation to determine a property tax split that would be acceptable. We also ask that you remedy the Brown Act violation by re-agendizing this matter. We look forward to moving forward with annexing 400 Upper Toyon Drive into the Town of Ross in a way that has minimal impact on both the City and the Town. Thank you. Very Truly Yours, Riley F. Hurd III CC: Client Page 6 of 6 Exhibit A