HomeMy WebLinkAboutCA 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
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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
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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
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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:
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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
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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.
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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
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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
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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.)
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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