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SARATOGA CITY COUNCIL
MEETING DATE: December 1, 2010 AGENDA ITEM:
DEPARTMENT: City Manager’s Office CITY MANAGER: Dave Anderson
PREPARED BY: Dave Anderson DIRECTOR:
City Manager
SUBJECT: Tax Equity Allocation (TEA) Cost Sharing Agreement
RECOMMENDED ACTION:
Approve cost sharing formula with the City of Cupertino for TEA legislative expenses, and an
appropriation from the Council’s Discretionary Fund in the amount of $6,825 for the period
covering November 15, 2010 to June 30, 2011.
BACKGROUND
Saratoga, Monte Sereno, Cupertino, and Los Altos Hills are considered “low/no tax cities” whose
low property tax bases were locked in by Proposition 13. Legislation was passed subsequently to
equalize the minimum property tax base for such cities to 7 percent. Special legislation was passed
reducing this allocation for the four cities. Therefore they received a substantially smaller share of
TEA funds than all other cities in California. The shortfall was partially reduced by Assembly Bill
117 in 2006. The bill assured the affected cities a higher percentage of property tax revenues. In
2007 this increased funding to the City by roughly $830,000. Assembly Bill 117 was passed largely
as a result of a strong and coordinated effort of the four affected cities working with the legislative
affairs firm of Joe Gonsalves and Sons in Sacramento.
While the TEA legislation brought greater equity to property tax allocations, it required the cities to
share with the State a greater portion of their property tax revenues than other jurisdictions. If
legislation were enacted to remedy this situation, Saratoga’s property tax base would increase by
$517,286 annually.
REPORT SUMMARY:
On September 21, 2010 the Cupertino City Council considered a report from its Fiscal Strategic Plan
Committee as a result of the Hewlett Packard relocation to Palo Alto. One of the recommendations
approved by Cupertino was direction to its City Manager to explore legislation to revisit the TEA
issue.
Subsequently, on October 6, 2010 the Saratoga City Council authorized the Mayor to appoint two
council members to an ad hoc committee to work with the other three affected jurisdictions to
support legislation to put the cities’ TEA property tax allocations on an equal footing with
comparable California cities, and directed staff to prepare a budget amendment authorizing funding
to support the legislative effort. The two Saratoga council members appointed to the ad hoc
committee are Howard Miller and Manny Cappello.
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FISCAL IMPACTS:
The TEA funding formula is based upon the proportionate share of the expected increase in TEA
revenue to be derived by each city:
Cupertino 56%
Saratoga 26%
Los Altos Hills 9%
Monte Sereno 9%
The Cost for the legislative consultant in Sacramento is $3,500/month, to engage in efforts during the
fall preceding the legislative session and continuing through the end of the next legislative session.
Costs on the attached letter from Cupertino have been calculated for the first three month period
starting in November prorated from November 15th through the month of January. The total monthly
pro-rata share of legislative expenses for Saratoga is $910/month. Given past experience with
legislative efforts of this kind it would be prudent to allocate funding from mid-November 2010 to
June 30, 2011. In this case the allocation of funds would be $6,825. (7 months @ $910 and one
month at $455)
CONSEQUENCES OF NOT FOLLOWING THE RECOMMENDED ACTIONS:
N/A
ALTERNATIVE ACTION(S):
N/A
FOLLOW UP ACTION(S):
None
ADVERTISING, NOTICING AND PUBLIC CONTACT:
This item was posted as a City Council agenda item and was included in the packet made available on the
City’s web site in advance of the meeting. A copy of the agenda packet is also made available at the
Saratoga Branch Library each Monday in advance of the Council meeting and residents may subscribe to
the agenda on-line by opting in at www.saratoga.ca.us.
ATTACHMENTS:
Legislative consultant costs