The Lotus Ranch property on which new homes are now being built south of Interstate 8 and west of La Brucherie Road in El Centro is an example of land being annexed into city limits and some of the tax and fee negotiation that must go on between the county of Imperial and a city. All future annexations in the county are on hold right now until a master tax-sharing agreement between the county and the seven incorporated cities is in place. | CAMILO GARCIA JR. PHOTO
Annexations in Imperial County are on hold until the county and cities in Imperial Valley agree on a new master tax-sharing agreement.
Such tax agreements delineate how tax revenues generated by a property are shared between the county and the cities to which developments are annexed.
Imperial County’s tax-sharing agreement with the seven incorporated cities expired in June 2009, according to an emailed statement from the county’s Public Information Officer, Gil Rebollar.
“Following the term expiration, the county began negotiating each subsequent tax sharing agreement individually with each city, generally based on each project’s specific development timeline,” Rebollar said.
But the board of Imperial County’s Local Area Formation Commission — which over sees property annexations and special districts in a county — put an end to the practice until a new agreement is put in place.
City, county, and LAFCO officials met and agreed to hire a consultant to study such agreements in other counties and draft an agreement that can be used locally. Fees for such work is estimated $200,000.
It’s to a city’s benefit to annex a project because of potential tax revenues. The city of Imperial has been experiencing a consistent and prolonged growth spurt over two decades, as it positioned itself as the Valley’s bedroom community with the development of tract homes and subdivisions along the Aten Road corridor and other areas of sprawl in all directions.
Holtville, on the other hand, lost nearly 6 percent of its population, according to the 2020 Census Redistricting Data Summary File.
The Holtville City Council on Monday, Sept. 13, approved a resolution to pay a share of a consultant’s fees to study and prepare a master tax-sharing agreement for future annexations within the county. Similar resolutions was on the Calexico City Council agenda on Wednesday, Sept. 15. Holtville’s share of the fees are $4,446. Calexico’s share is about $36,000.
“You want a master tax-sharing agreement with the county, as a city, so a developer has certainty of knowing it has been worked out, so you know the parameters of annexations,” said Marcella Piedra, El Centro’s city manager.
The payment of development impact fees for fire, law enforcement, sewage and other services is generally not an issue when a piece of property is under the jurisdiction of the county. But when that piece of property is annexed into city limits, some of the economic impacts of that development shift to the city, Piedra said.
The county agreed to lower its fees and charge only fees for the Sheriff’s Office when the city of El Centro annexed the Lotus Ranch development on La Brucherie Road, south of Interstate 8, Piedra said.
All parties try to increase their share of tax revenues when negotiating tax-sharing agreements. Dollars are needed to furnish services, and unforeseen fees are virtually guaranteed.
Fortunately, “The county understands our position and we understand their position. We’re trying to encourage and support development, but when you add fees that are difficult to justify, that’s hard,” Piedra said.
All pending annexations have been negotiated, according to Rebollar.
“The expired 2006 Master Tax Sharing is used as a template for all subsequently negotiated individual Tax Sharing Agreements. This includes the same terms, format, and fiscal impact fee schedule as the county’s standards for all negotiations, although there may be non-substantive changed based upon the individual project components,” Rebollar wrote.
As well, the county is still using the tax apportionments under the 2007 Fiscal Impact Fee Schedule.
A message seeking comment from Calexico’s city manager was not answered by publication of this story.