HomeMy WebLinkAbout- PH-4 - Second Reading for the Pre-Zoning - 7/15/2014CITY COUNCIL AGENDA REPORT
MEETING DATE: JULY 16, 2014 ITEM NUMBER: PH -4
SUBJECT: SECOND READING FOR THE PRE -ZONING AND PROPERTY TAX EXCHANGE
AGREEMENT FOR THE SANTA ANAICOLLEEN ISLAND ANNEXATION
(AMENDED)
DATE: JULY 14, 2014
FROM: CHIEF EXECUTIVE OFFICE
PRESENTATION MARGARET CHANG, MANAGEMENT ANALYST
BY:
FOR FURTHER INFORMATION CONTACT: MARGARET CHANG (714) 754-5618
margaret.chang@costamesaca.gov
RECOMMENDATION:
The Mayor recommends and staff concurs that the City Council should continue the
second reading for the pre -zoning and property tax exchange agreement in order to
allow time for the property owner of the vacant parcel to meet with the residents of the
Santa Ana/Colleen Island to discuss zoning. If the item is continued, staff will bring the
item back to Council at a later date.
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CITY COUNCIL AGENDA REPORT
MEETING DATE: JULY 15, 2014 ITEM NUMBER:
SUBJECT: SECOND READING FOR THE PRE -ZONING AND PROPERTY TAX EXCHANGE
AGREEMENT FOR THE SANTA ANA/COLLEEN ISLAND ANNEXATION
DATE: JULY 2, 2014
FROM: CHIEF EXECUTIVE OFFICE
PRESENTATION MARGARET CHANG, MANAGEMENT ANALYST
BY:
FOR FURTHER INFORMATION CONTACT: MARGARET CHANG (714) 754-5618
margaret.chang@costamesaca.gov
RECOMMENDATION:
Staff recommends that the City Council give second reading to Ordinance 14-_,
regarding pre -zoning of the Santa Ana/Colleen Annexation Area, and adopt the
resolution for the Property Tax Exchange Agreement between the City of Costa Mesa
and the County of Orange.
BACKGROUND:
Starting in 1996, the City Council has provided direction and support relating to the
annexation of County islands located within the City's Sphere of Influence ("SOI") near
the City's easterly border with the City of Newport Beach. Seven Eastside County
areas were originally identified for annexation into the City at the on -set of the Eastside
annexation efforts. In 2003, Annexation Areas 1, 2, 3, 4 & 6 were annexed by OC
LAFCO under the Small Island Annexation provisions of Government Code Section
56375.3. Annexation Areas 5A, 5B, and 5C were also proposed for annexation in 2003
under the same small island proviso. Areas 5B and 5C have already been approved by
OC LAFCO, however, a legal challenge by a property owner in Area 5A (the subject
County island referred to as Santa Ana/Colleen Island) placed the annexation on hold
pending resolution of the lawsuit. The annexation of Area 5A may now move forward
due to the resolution of the legal challenge by a former property owner in the Santa
Ana/Colleen Island.
ANALYSIS:
Annexation Process
The Unincorporated Islands Program (Government Code Section 56375.3) was
established through a joint commitment of LAFCO, the County, and the League of
California Cities with a goal to annex 50 small, unincorporated islands within a three-
year period. Government Code Section 56375.3 streamlines the procedural
requirements for small island annexations provided that the annexation meets specific
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criteria such as size (less than 150 acres), availability of public utilities, and presence of
public improvements. The annexed area must also be surrounded or substantially
surrounded by the City to which annexation is proposed, and further, the annexed area
must be found to benefit from annexation to the City.
The Santa Ana/Colleen Island is identified as one of the small islands within the County
at approximately 14 acres in an area that already contains public utilities and public
improvements. The City of Costa Mesa borders more than 50% of the Santa
Ana/Colleen Island's total boundary, with borders on a portion of the northerly border
and the entire westerly and southerly borders.
The Santa Ana/Colleen Island is nearly built -out and is primarily developed with single-
family residential structures and also currently contains several undeveloped parcels
south of Colleen Place, northeast of the intersection of Santa Ana Avenue and 22nd
Street. Since it is within the City's Sphere of Influence (SOI), the City currently provides
emergency response services to the Santa Ana/Colleen Island. In addition to the
emergency services already provided by the City, annexation will allow the City to
provide more efficient municipal services including building, planning, and community
recreational services. The annexation is also anticipated to improve and simplify
service delivery and governance. The subject area also shares the same Postal Zip
Code as Eastside Costa Mesa.
In order for the City to make an application to OC LAFCO under the small island
provisions, the City must provide an approved resolution that requests OC LAFCO
initiates proceedings for the annexation of the Island, which was approved by City
Council on November 5, 2013 (Attachment 8). On May 12, 2014, the Planning
Commission found that the project is exempt from CEQA under Section 15319(a) —
Annexation of Existing Facilities, approved GPA -14-02 by adoption of PC Resolution
14-25 (Attachment 7), and recommended that City Council give first reading to
ordinance approving rezone R-14-02. On June 17, 2014, the City Council found that
the project is exempt from CEQA under Section 15319(a) — Annexation of Existing
Facilities, adopted General Plan Amendment GP -14-02 (Attachment 5) which
designates the area as Low Density Residential (LDR), and gave first reading to the
ordinance pre -zoning the area to R-1 — 6,600 (Single Family Residential District, 6,600
Square Foot Minimum Lot Size). The next step in the process is for the City Council to
give second reading to the ordinance approving Rezone R-14-02 (Attachment 1) and
approve the property tax agreement with the County of Orange (Attachment 3). All of
these items must be provided to OC LAFCO before the OC LAFCO Commission may
approve the annexation.
A draft timeline for the annexation is as follows:
Santa Ana/Colleen Island Annexation
(Draft Timeline)
Agency
Items for Consideration
Date
City of Costa Mesa (City Council
Pre -zoning and Property Tax Agreement
July 15, 2014
County of Orange
Property Tax Agreement
July 22, 2014
OC LAFCO Commission
Annexation
Au ust 13, 2014
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Rezone R-14-02
The Santa Ana/Colleen Island is currently zoned by the County as R-1 zone with a
minimum lot size of 7,200 Square Feet. On June 17, 2014, the City Council approved
Rezone R-14-02, designating the area as R-1 (Single -Family Residential District) and
changing only the minimum lot size to 6,600 square feet (Attachment 1).
Property Tax Exchange Agreement
California Revenue and Taxation Code Section 99 allows cities and counties to adopt
and approve property tax exchange agreements to set forth the exchange of such
revenues following a city's annexation of an unincorporated territory. In October 1980,
the City and County entered into a Master Property Tax Agreement 80-1969
(Attachment 4) with an allocation of 50.9527% to the City and 49.073% to the County.
This property tax allocation was intended for use in future annexations. During
negotiations with the County of Orange, City staff was informed that the Santa
Ana/Colleen Island is located within the County's former Neighborhood Development
and Preservation Project (NDAPP) redevelopment area. The County had incurred debt
regarding the NDAPP area and NDAPP bonds were secured by a pledge of tax
increment revenues. An increment of the property tax revenues for properties in the
Santa Ana/Colleen Island are pledged to debt repayment, with last payment in FY 23-
24.
Assuming the annexation is approved by the OC LAFCO Commission at its August 13,
2014 meeting, the City will begin receiving its share of the property tax in FY 15-16. The
property tax subject to negotiation, according to the January 1, 2013 assessed value by
the County, is $45,605.25 for the Santa Ana/Colleen Island. That amount is made up of
the redevelopment tax increment and base amount. The base amount remains the
same each year, $3,107.91 for property tax and $5,668.76 for Structural Fire Fund, for a
total of $8,776.67, excluding the redevelopment increment. The property tax increment
is pledged to debt repayment, from FY 15-16 thru FY 23-24. Therefore, in order to
compensate the City, the County has agreed to provide the City with annual payments
of $8,776.67 (100% of the base revenue) for the nine (9) years. (Using the old Master
Agreement, the City would have been provided only $7,252.32 annually.) Beginning FY
24-25, upon payment in full of the County's bond indebtedness, the property tax transfer
will revert to the ratio specified in Master Property Tax Agreement 80-1969 (Attachment
4) of 50.9527% to the City and 49.073% to the County. At this time, 100% of the
Structural Fire Fund generated from the annexation area will also be transferred to the
City, since the City has its own Fire Department. The total is expected to be at least
$37,684.45 per year including Fire.
ALTERNATIVES CONSIDERED:
The City Council can consider the following alternatives:
1. Continue the item to allow additional time for further analysis or revisions to the
project.
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2. Choose not to move forward with the annexation of the Santa Ana/Colleen Island
at this time.
FISCAL REVIEW:
OC LAFCO currently provides a fee waiver for small island annexations, so this project
is exempt of both the administrative fee ($1,600) and the initial deposit ($3,000).
The Santa Ana/Colleen Island annexation will have minor financial impacts. The Public
Services Department estimates that the total first-year expenditures (including start-up
and recurring annual costs) would total approximately $12,895.00 with an annual
recurring cost of approximately $10,181.00 (Attachment 9). The costs are related to
items such as parkway and median maintenance, storm drain maintenance, signs and
markings, street sweeping (City already provides this service on adjacent streets), and
street maintenance costs. Due to the County's pledge of property tax revenue for
NDAPP debt repayment, the City will receive annual payments of $8,776.67 from FY
15-16 to FY 23-24. Beginning FY 24-25, the City will receive 50.9527% of the property
tax revenue and 100% of the Structural Fire Fund.
LEGAL REVIEW:
The City Attorney has reviewed and approved this report and its attachments.
CONCLUSION:
The proposed Rezone and Property Tax Exchange Agreement will support the City's
efforts to annex the Santa Ana/Colleen Island.
MARGARET CHANG
Management Analyst
GARY ARMSTRONG, AICP
Director of Economic & Development/
Deputy CEO
THOMAS DUARTE
City Attorney
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THOMAS R. HATCH
Chief Executive Officer
STEPHEN G. DUNIVENT
Interim Director of Finance
ATTACHMENTS: 1 Rezone Ordinance (R1 - 6,600)
2 Rezone Ordinance (R1 - 6,600) — Redline
3 Resolution - Property Tax Exchange Agreement
4 Master Property Tax Transfer Agreement Resolution 80-1969
5 General Plan Amendment and Rezone Resolution
6 Minutes of the May 12, 2014 Planning Commission Meeting
7 Planning Commission Resolution
8 Annexation Initiation Resolution
9 Estimate of Fiscal Impact Memo
10 Santa Ana/Colleen Island Detailed Leaal Description
cc: Chief Executive Officer
Assistant Chief Executive Officer
Director of Economic & Development / Deputy CEO
City Attorney
Public Services Director
Transportation Services Manager
City Engineer
City Clerk
Staff (4)
File (2)
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