HomeMy WebLinkAboutCA 400 Upper Toyon____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: 2/19/2019
Disposition: Continued to a future City Council meeting
Agenda Item No: 6.a
Meeting Date: February 19, 2019
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: City Attorney
Prepared by: Lauren Monson,
Deputy City Attorney
City Manager Approval: ______________
TOPIC: Detachment Request and Proposed Tax Sharing Agreement with Town of Ross for
400 Upper Toyon Drive
SUBJECT: PRESENTATION OF PROPOSED TAX SHARING AGREEMENT WITH TOWN OF
ROSS
EXECUTIVE SUMMARY:
The property owner for 400 Upper Toyon Drive submitted an application to the Marin Local Agency
Formation Commission (LAFCO) to detach from the City of San Rafael (City) and annex into the Town
of Ross (Ross). The issue for the Council to consider is related to a tax sharing agreement. When
there is a reorganization of city boundaries, both agencies are required to negotiate and agree upon a
tax sharing agreement. LAFCO and reorganization rules require the two entities to negotiate in good
faith and attempt to come to an agreement on a fair plan for sharing property tax in the future . The City
and Ross have been unable to come to an agreement and are at impasse in the negotiations for a tax
share agreement. The City presents to Council the last offer from Ross for consideration, acceptance
or rejection. Staff has reviewed this offer. While staff acknowledges and appreciates Ross’ staff efforts
to reach a fair agreement with the City, City staff finds that absorbing the lost tax revenue from this
property is not fiscally responsible for San Rafael.
RECOMMENDATION:
Staff recommends rejecting the tax share agreement and directs staff to inform LAFCO of Council
decision.
BACKGROUND:
In March 2017, the property owner for 400 Upper Toyon Drive submitted an application to LAFCO to
detach from the City and annex into Ross. The property is currently developed with a single-family
home and a privately-maintained road leading to the home site. 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. (Exhibit B). Those two properties
are owned by Marin Municipal Water District (MMWD) and are improved with a water tower.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
In June 2017, the City met with representatives of the Town of Ross to discuss the following tax sharing
agreement.
• For the 1st five years following reorganization, the City and Town of Ross would split the
property tax revenue 50% - 50%. This would allow the city to maintain 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).
This proposal was recommended to the Finance Subcommittee on two occasions. Once on July 6,
2017 and again on March 12, 2018. On both occasions the Sub-committee rejected the proposal,
questioning the need for the detachment and loss of City tax revenue, given that the City of San Rafael
Departments of Fire, Police and Public Works would all still respond to the residence in an emergency
to provide services to this 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 attached here as Exhibit
A.
Assistant City Manager Cristine Alilovich investigated the property owner’s concerns presented at the
March 12 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 Exhibit A 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 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 in did take a number
of days 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 agendize the matter for a future City Council
meeting. 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 resulting in less ongoing loss of taxes for the City
of San Rafael. 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
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
maintain the only 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.
The Town of Ross was unable to provide an increased tax share agreement that would alleviate City
Staff’s financial concerns and reached impasse on the tax share agreement as of January 25, 2019.
Staff now brings the June 2017 proposal from the Town of Ross to the full Council for consideration.
ANALYSIS:
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 to determine “changes of organization”. The request for detachment for 400 Upper
Toyon Drive is an individual request for detachment 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, the Town of Ross and San Rafael must negotiate in good
faith on an exchange of property tax revenues. This piece of the law limits LAFCO’s ability to move
forward unless or until a tax share agreement is reached. LAFCO may not continue processing an
application for detachment unless the affected local agencies reach a property tax agreement.
However, the City has a statutory duty to enter into genuine and vigorous negotiations with the Town of
Ross concerning the property tax revenue exchange agreement, even though there is no statutory duty
to reach agreement. (Rev. & Tax. Code § 99(b), Greenwood Addition Homeowners Assn. v. City of San
Marino, 14 Cal. App. 4th 1360 (1993)). When / If a property tax agreement is reached, that agreement
would need to be approved by resolution and then LAFCO can proceed with processing the
detachment.1
1 Revenue and Taxation code section 99, subdivision (b)(6) provides that “Notwithstanding any other provision of
law, the [LAFCO] shall not issue a certificate of filing pursuant to Section 56828 of the Government Code until the
local agencies included in the property tax revenue exchange negotiation, within the 30–day negotiation period,
present resolutions adopted by each such county and city whereby each county and city agrees to accept the
exchange of property tax revenues.” Greenwood Addition Homeowners Assn. v. City of San Marino, 14 Cal. App.
4th 1360, 1364 (1993).
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
An evaluation of revenue and services related to this property conducted by the City Manager and
Finance departments shows that loss of tax income from detachment of this property would ultimately
result in an approximate $4,300 annual loss, including $183 in library parcel, storm run-off and
paramedic tax. However, the City would continue to maintain the road (Upper Toyon) leading to this
property and would continue to maintain it even after detachment. 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 extremely likely that it would be a San Rafael fire engine or ambulance responding
to any 911 call at that address.
Although the current tax share agreement proposed by the Town of Ross provides some
reimbursement to the City, staff is concerned with maintaining fiscal responsibility and has concluded
that the City cannot afford to lose any property tax revenue.
FISCAL IMPACT:
Below is an overview of the total tax loss from the detachment of this property from the City. The City
currently receives approximately $5,700 annually in taxes from 400 Upper Toyon Road, including
property tax, storm run-off, library parcel tax, and paramedic tax. Under the proposed tax share
agreement, the shared amount only includes the base property tax and that amount would be reduced
to approximately $2,796 annually for the first five years and starting the sixth year be reduced to
approximately $1,398. The City permanently loses access to the storm run-off, library parcel, and
paramedic tax after the detachment.
OPTIONS:
The City Council has the following options to consider on this matter:
1. Staff recommends rejecting the tax share agreement.
2. Accept the proposed tax share agreement, and direct staff to return with a resolution for the tax
share agreement.
3. Direct staff to return with more information.
18/19 Tax Roll
Current San
Rafael
Revenue
Scenario:
50/50
Scenario:
25/75
BASE TAX 5,592.85 2,796.43 1,398.21
SCHOOL BONDS - - -
HEALTH BONDS - - -
MS MOSQUITO #1 - - -
ROSS ESD SCH PRCLTX - - -
SAN RAFAEL SANI - - -
SAN RAFAEL-RUNOFF 28.00 - -
MARINEMERGENCY RADIO - - -
MMWD-FIREFLOW - - -
S.F. BAY RESTOR AUTH - - -
SAN RAFAEL LIBRARY 60.74 - -
SR PARAMEDIC-CITY 95.00 - -
Total Tax:5,776.59 2,796.43 1,398.21
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
RECOMMENDED ACTION:
By motion, staff recommends rejecting the tax share agreement and directs staff to inform LAFCO of
Council decision.
ATTACHMENTS:
1. Exhibit A - November 27, 2017 Letter to Mayor from Riley Hurd
2. Exhibit B – Parcel Maps of relevant area
3. Exhibit C – List of properties within San Rafael accessed and served by Upper Toyon
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
Properties within the City of San Rafael Accessed and Served by Upper Toyon
Exhibit D to Staff Report - February 19, 2019
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A B C D E F G H
Jurisdiction Number Address APN Sewer Schools Police Fire
San Rafael 1 400 Upper Toyon 012-121-28 SRSD Ross Valley San Rafael San Rafael
San Rafael 2 320 Upper Toyon 012-121-29 SRSD Ross Valley San Rafael San Rafael
San Rafael 3 302 Upper Toyon 012-121-45 SRSD Ross Valley San Rafael San Rafael
San Rafael 4 293 Makin Grade 012-241-28 SRSD Ross Valley San Rafael San Rafael
San Rafael 5 281 Makin Grade 012-241-29 SRSD Ross Valley San Rafael San Rafael
San Rafael 6 285 Makin Grade 012-241-30 SRSD Ross Valley San Rafael San Rafael
San Rafael 7 287 Makin Grade 012-241-39 SRSD Ross Valley San Rafael San Rafael
San Rafael 8 289 Makin Grade 012-241-40 SRSD Ross Valley San Rafael San Rafael
San Rafael 9 230 Upper Toyon 012-241-26 RVSD Ross Valley San Rafael San Rafael
San Rafael 10 221 Upper Toyon 012-261-01 RVSD Ross Valley San Rafael San Rafael
San Rafael 11 --- Upper Toyon 012-261-02 Ross Valley San Rafael San Rafael
San Rafael 12 120 Toyon Way 012-261-09 RVSD Ross Valley San Rafael San Rafael
San Rafael 13 100 Toyon Way 012-261-10 RVSD Ross Valley San Rafael San Rafael
San Rafael 14 200 Toyon Way 012-263- 09 RVSD Ross Valley San Rafael San Rafael
San Rafael 15 177 Toyon Way 012-263-10 RVSD Ross Valley San Rafael San Rafael
San Rafael 16 101 Toyon Way 012-263-11 RVSD Ross Valley San Rafael San Rafael
San Rafael 17 90 Upper Toyon 012-261-07 RVSD Ross Valley San Rafael San Rafael
San Rafael 18 80 Upper Toyon 012-261-08 Ross Valley San Rafael San Rafael
San Rafael 19 --- Upper Toyon 012-261-07 RVSD Ross Valley San Rafael San Rafael
San Rafael 20 66 Upper Toyon 012-272-08 RVSD Ross Valley San Rafael San Rafael
San Rafael 21 60 Upper Toyon 012-272-07 RVSD Ross Valley San Rafael San Rafael
San Rafael 22 61 Upper Toyon 012-273-03 SRSD Ross Valley San Rafael San Rafael
San Rafael 23 20 Upper Toyon 012-272-04 SRSD SRCSD San Rafael San Rafael
San Rafael 24 22 Upper Toyon 012-272-03 SRSD SRCSD San Rafael San Rafael