Monday, June 14, 2021

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Tax share agreement reached for CIP annexation

The Colusa City Council and Colusa County Board of Supervisors entered into a new tax share agreement last week for the proposed annexation of territory known as Colusa Industrial Properties.

A Colusa ad hoc committee, comprised of Councilmen Dave Markss and Greg Ponciano, a County ad hoc committee, comprised of Supervisors Gary Evans and Kent Boes, along with city and county administrative staff had been negotiating the exchange of tax revenue since December of 2018, in order for the City of Colusa to successfully annex approximately 663 acres of land into the Colusa City limits.

The property includes the industrial park located off Highway 20, south of the current city limits, and the Colusa County Airport.

The annexation will allow the city to reap the rewards of industrial development, without having to locate projects – such as cannabis manufacturing – in the city’s downtown.

“Not only would it give them an opportunity to move development outside the city core, but it would give CIP the ability to have access to city wastewater treatment,” said Colusa County Chief Administrative Officer, Wendy Tyler. “So this proposal to provide (the city) industrial zoned lands out around CIP seemed to really make sense.”

Colusa County will continue to own and operate the airport, although the airport itself will be located within the city limits. Under the agreement, the county would continue to receive 50 percent of the secured and unsecured property taxes from the airport.

The city will be responsible for fire services for the area (likely contracting with Sacramento River Fire Protection District), officials said.

In terms of splitting the property tax revenue, the agreement provides a 60-40 split, with the City of Colusa receiving 60 percent, and County of Colusa receiving 40 percent of base revenue and increments. The city, however, will get 100 percent of any new development on property after the annexation occurs.

“In my opinion, I think the city reached a pretty good deal for the county and the city,” said Colusa City Manager, Jesse Cain, on Aug. 4, when he first brought the agreement before the City Council.

The agreement includes a tiered approach to the sharing of sales and use tax, which starts out at 90 percent for the County beginning in 2021/22 and 10 percent for the city. Sales tax revenue is currently negligible, but the city will attain 100 percent of sales and use taxes by 2025-26.

The city has also agreed to collect development impact fees for services Colusa does not provide, including the Sheriff (Jail), District Attorney, Probation, Library, Health and Human Services, and Behavior Health, and remit them to the county.

The city and county approved the tax share agreement on Aug. 18 by joint resolution at each of their regularly scheduled meetings.

The revenue loss to the county from the agreement is about $43,000, Tyler said.

“While it is a loss to the county’s general fund, we certainly believe economic development, whether it is in the city – either city, quite frankly – is good to the community and the county as a whole,” she added.

Officials involved in the negotiations said the process was often contentious, and that the city and county started out far apart on agreement points.

“It was quite an undertaking, but I think it will help everyone in the long run,” Evans said.

Ed Hulbert, chief executive officer at CIP, agreed that the process was long, but said he was glad an agreement was reached.

“Hopefully, we can keep everything moving out there and get good projects,” Hulbert said.

Now that a tax share agreement has been reached, the Local Agency Formation Commission will have final approval of the CIP annexation.

Cain said it was unknown what the current impact would be on Colusa’s general fund, but that a tax share agreement is required for a mutually agreeable reorganization of territory from county to city.

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