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HomeMy WebLinkAbout11-09-1993 CITY COUNCIL AGENDAEXECUTIVE SUMMARY NO. SARATOGA CITY COUNCIL S E4 AGENDA ITEM MEETING DATE: NOVEMBER 9, 1993 CITY MGR. ORIGINATING DEPT. FINANCE DEPARTMENT SUBJECT: ADOPTION OF TEETER PLAN RESOLUTION Recommended Motion(s): Adopt the Resolution opting for the Teeter Plan for Secured Property Tax Distribution by the County of Santa Clara, Tax Collector. Report Summary: The County of Santa Clara Tax Collector has elected to adopt the Teeter Plan Method of Property Tax Distribution. The County has offered the Cities the option to decide on participation. Under the Teeter Plan Secured Property Taxes (1 %) are distributed on an accrual basis -- distributed as levied in accordance with tax allocation formulas. Each taxing authority receives its full portion of the 1% in the year levied. Under the current distribution method cities receive their allocated share of collected taxes in the collection year. As delinquent taxes are collected, cities receive their share of the taxes collected plus interest and penalties collected. What the cities gain under the Teeter Plan is assurance that the budgeted amount for taxes will be received in the budget year. Cities will sustain no losses on delinquent taxes. The property tax shift from cities will be reduced by this one -time payout to schools for the accounting basis change. However, the tax shift to the schools will not suffer since the schools will also receive the benefit of the one -time distribution change. What the cities lose under the Teeter Plan is future interest and penalties on the delinquent share of the taxes levied, in return for tax levies distributed in whole during the year levied. What the County gains is an Investment in Delinquent Taxes of $70 million on which they will issue taxable Bonds (investment income), a simple and readily determined distribution obligation to the taxing authorities (simplification), and the annual interest and penalties on Delinquent Taxes (investment income) . The County accepts the full risk of bankruptcy losses - -a reality in this economy. Their loss reserve will be $3.5 million. 54 of the 58 Counties are considering adoption of the Teeter Plan in response to loss of Property Tax Revenues due to the Tax Shift. This is a one -time opportunity to benefit from an accounting basis change. .� Which is the better value? Take the money now and, invest it at 4% (or use it for expenditures). Continue to "invest" Delinquent Taxes at the rate of 6 - 10% (prox) and carry the risk of bankruptcy losses. In Fiscal 1992/93 the City of Saratoga's General Fund share of the tax levy was $884,151. We received $828,362 in distributed tax collections and $5,602 in penalties and interest. The County will buy out the current delinquencies at $54,306 (5% goes to the Loss Reserve) and begin distributing the current year levy at full value, if the Teeter Plan is adopted by the City. The County estimates that 61% of property taxes are collected in the year levied. Another 22% are collected in the 2nd year. By the 3rd year all but 3% of the levy is collected. Current tax delinquencies are estimated at $70 million countywide. While current theory has it that all property taxes are ultimately collected there has been a trend in the Bankruptcy Courts to waive the liability for property taxes. The Finance Director recommends, and the Finance Advisory Committee concurs, that the City of Saratoga should adopt the Teeter Plan for distribution of Property Taxes. Fiscal Impacts: Neutral. Follow Up Actions: Mail a copy of the approved Resolution adopting the Teeter Plan to the County of Santa Clara. Consequences of Not Acting on the Recommended Motions: TEETER PLAN BASIS FOR ASSUMPTIONS County Delinquency Rate is 3.13 %. Since both Taxes Collected and Delinquencies are shared on the basis of the AB -8 Tax Allocation factors all Cities share in the Delinquent Taxes at the same rate., Why only 4 Counties since inception? Contra Costa has distributed taxes under the Teeter Plan since its inception. There has.never been a "Carrot ". With the Tax Shift Counties see a way of preserving Property Tax Revenues by ."purchasing" Delinquent Taxes from the Cities. Cities will be reimbursed for Delinquent Taxes on this year's AB -8 Allocation Rate which is believed to be higher than future year's rates. "One time Windfall ". Last year's Penalties and Interest totalled $5,602. County accepts the non - collection risk associated with bankruptcy in return for annual interest and penalties. Which Counties: 54 of 58 are considering / County Agenda Item. Saratoga's Assessed Year 1983 -84 1984 -85 1985 -86 1986 -87 1987 -88 1988 -89 1989 -90 1990 -91 1991 -92 1992 -93 1993 -94 Valuation: Amount $1,291,850,721 $1,411,396,684 $1,556,619,154 $1,716,871,937 $1,890,322,547 $2,063,351,515 $2,359,279,626 $2,623,305,289 $2,,809,614,703 $2,996,971,420 $3,181,662,768 Growth of A.V. 9.2 14.3 11.2 7.1 6.7 6.2 1% Collected Del & Redemptions Growth of 1985 -86 $ 577,588 Collections 1986-87 $ 570,798 $ 14,563 9.9 1987-88 $ 657,620 $ 33,738 15.2 1988 -89 $ 710,229 $ 41,172 8.0 1989 -90 $ 829,953 $ 49,679 16.6 1990 -91 $ 967,434 $ 64,063 16.6 1991 -92 $1,064,177 $ 40,318 10.0 1992 -93 $ 828,362(1) $ 82,015 (21.2) 3 YEAR AVERAGE DEL & REDEMP $ 62,132 (1) Unaudited $884,151 apportionment @ .000817391 +Growth -Admin Costs = $892,165 FILENAME: O: \TEETER.PLN SARATOGA CITY COUNCIL EXECUTIVE SUMMARY N0. MEETING DATE: October 26, 1993 ORIGINATING DEPT: City Manager's AGENDA ITEM CITY MGR. APPROVAL SUBJECT: Alternative Method of Tax Apportionment (Property Taxes) Recommended Motion: Adopt the Resolution Background: On September 28, 1993, the Board of Supervisors adopted a Resolution which implements an accrual rather than a cash basis for apportionment of property taxes and seeks agreement from cities to the use of this method. In a memo to the City -Iftnager dated September 22nd (attached), County Director of Finance William Parsons requests such action by the City of Saratoga. Mr. Parsons estimates that in so doing Saratoga would receive a e ti increase of property tax revenue for this fiscal year f $54,306. n future years property taxes would be apportioned on t the City's assessed value and its AB8 share of the property tax. Any delinquent payments, penalties and interest would then stay with the County once they are collected. Currently Saratoga receives only its share of the taxes actually paid, whether delinquent or not. In my conversations with other city managers whether this alternate method results in a net increase or decrease in revenue, it appears to be situational. For example, Cupertino and Monte Sereno feel it is to their advantage while Campbell and Los Gatos believe they will lose a slight amount of revenue each year by agreeing to switch. The two factors which seem to impact the result are delinquency rates and the percentage of tax apportionment. Cupertino and Monte Sereno, like Saratoga, are low property tax cities. Further, Saratoga's delinquency rate is relatively small. Given the small amount of delinquency holdback and the fact that delinquencies are based on previous years assessed values while accrual distribution will always be based on the latest assessed value (Saratoga's has grown historically by an average of 7% over the past 10 plus years), it is staff's view that Saratoga ,would be no worse off and perhaps better off using the alternative method. No analysis can be absolutely certain of a future outcome but we feel that that will be the case. A question which we will seek to get answered by the 26th is whether the City can decline to participate in future years. The resolution proposed for your consideration is worded so as to only commit the City for one year, fiscal 1994 -95. Fiscal Impacts: A one time increase in revenue of $54,306. Follow Up Actions: City Clerk to send a certified copy of the resolution to the Clerk of the Board before November 12th. Consequences of Not Acting on the Recommended Motions: Property tax allocation method would remain unchanged. Attachments: Resolution ___9/22/93 letter from County Director of Finance :8. RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA AGREEING TO A DISTRIBUTION OF PROPERTY TAB REVENUE UNDER THE ALTERNATIVE METHOD OF DISTRIBUTION OF PROPERTY TAXILEVIES AND ASSESSMENTS PROVIDED FOR'IN SECTION 4715 OF THE REVENUE AND TAXATION CODE FOR FISCAL YEAR 1994 -95 WHEREAS, the Santa Clara County Board of Supervisors has adopted a resolution which elects an alternative method of distribution of property tax levies and assessments in accordance with'Chapter 3 of Part 8 of Division 1 of the California Revenue and�Taxation Code and WHEREAS, in said resolution the Director of Finance of'said county was directed to seek the approval of cities in the county to the implementation of the alternative method authorized by the Law and WHEREAS, such a request has been directed to the City of Saratoga and WHEREAS, said Director of Finance estimates that the City of Saratoga would receive a one -time increase in revenue from delinquent secured property taxes of $54,306 in fiscal year 1993 -1994, and WHEREAS, the approval of this alternate method would make the annual allocation of property taxes to the City of Saratoga more certain, thereby increasing the accuracy of its revenue forecasting and WHEREAS, .it is the opinion of the City's Finance Director that the net future property tax revenue and income from the investment of proceeds will at least equal the annual revenue expected under the current method of distribution in subsequent fiscal years. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Saratoga that the City of Saratoga agrees to the implementation of the alternative- method for the City of Saratoga, and BE IT FURTHER RESOLVED, that the City Clerk shall cause a certified copy of this resolution to be filed with the Clerk of the Board of Supervisors. The above and foregoing resolution was passed and adopted by the Saratoga City Council at a regular adjourned meeting held on the 26th day of October, 1993, by the following vote: AYES: NOES: ABSENT: ATTEST: Deputy City Clerk Mayor. County of Santa Clara Department of Finance Contro0er- Treasurer Division County Government Center. East wing 70 West Hedding Street San Jose. California 951 I o (408)299.2541 September 22, 1993 Harry R. Peacock, City Manager City of Saratoga 13777 Fruitvale Avenue Saratoga, CA 95070 SUBJECT: Alternative Method of -Tax Apportionment (Teeter Plan) Dear Mr. Peacock: On August 19, 1993 1 attended the monthly City Finance Directors meeting and discussed An Alternative Method of Tax Apportionment (Teeter Plan) -which the County was considering. The alternative method is applicable to all property tax levies and assessments made by the County on behalf of public districts except those for which the County Treasury is not the legal depository and which do not agree by resolution to participate in such an altemadve method. The purpose of this letter is to inform those entities that I am recommending to the Board of Supervisors the County adopt An Attemative Method of Tax Apportionment pursuant to Revenue and Taxation Code Sections 4701 (et seq.) The Board of Supervisors will be considering my recommendation at it's regularly scheduled board meeting on Tuesday, September 28, 1993. 1 have enclosed with this letter a copy of my board transmittal and resolution which will provide you with some background information on the Teeter Plan and give you some information on how the plan will operate. Assuming the Board of Supervisors adopts the resolution to implement. the Teeter Plan, I am asking each public district, for which the County Treasury is not the legal depository (other than Mello-Roos districts), and cities to decide if they want to ci ate in the Teeter Plan tax apportionment method. The estimated amount of one timm—e—tekquent secured property taxes which would be distributed to your entity is ,306 is amount does not include any delinquent special assessments, if app ica e, nor adjustments for Mello-Roos. These amounts are currently being determined for each entity. Entities would be paid 95% of the delinquent amount with 5% being transferred to the Tax Losses Reserve Fund. I would anticipate the following secured property tax distribution schedule: o As soon as the financing process has been completed for the buy out of the June 30, 1993 delinquent secured property taxes, the cash will be distributed to all entities. I am'expecting this to take from 60 to 90 days Board of Supervisors: Michael M. Honda. Zoe Lofgren. Ron Gonzales. Rod Diridon. Dianne McKenna County Executive: Salle R. Reed before the financing will be complete. o The apportionment of the current secured property taxes will be distributed based on the attached apportionment schedule. I would expect entities to receive approximately 55% of their current secured property taxes by January 21st, and would receive 100% of their current secured taxes by June 6th. The apportionment of Mello-Roos taxes would also follow the attached schedule, but would only be for the actual taxes collected. There would be no change in the distribution of unsecured taxes. If your entity would like to participate in the Teeter'Plan tax apportionment method, the County will need to have your city council or board adopt a resolution agreeing to so participate. The County will need your resolution no later than October 29, 1993. If your entity decides not to join in the Teeter Plan concept, we would also appreciate knowing that as soon as possible. If you have any questions on the Teeter Plan or need any additional information, please feel free to give me or Rich Atkinson a call at (408) 299 -2541. Sincerely, William L Parsons Director of Finance Attachments cc: Patricia Shriver, Finance Director ,r SANTA CLARA COUNTY FISCAL YEAR 1993 -94 PROPERTY TAX AND TAX SUBVENTION APPORTIONMENT SCHEDULE Current Secured Prooertv Tax November 15 The percentage of total levy collected as of this date shall be determined. Each agency maintenance account shall receive a sum equal to such percentage applied to its share of the one per levy. November 30 The percentage of total levy collected as of this date shall be-determined. Each agency.maintenance account shall receive a sum equal to such percentage applied to its share of the one per cent levy, less prior apportionments. December 16 Apportionment equivalent-to fort -- - annual one per cent tax levy less prioreapportionments. January 4 Apportionment to maintenance accounts equivalent to fift cent (50 %) of annual y per one per cent tax levy less prior apportionments. January 21 Apportionment of all remaining first half oner'per cent •- (December 10) collections together with first half debt service and Public Improvements /Direct Assessment collections. March 15 The percentage of total levy collected as of this date shall be determined. Each agency maintenance account shall receive a sum equal to such percentage applied to its share of the one per cent levy, less prior apportionments. March 31 The percentage of total levy collected as of this date shall be determined. Each,agency maintenance account shall receive a sum equal to such percentage applied to its share of the one per cent levy, less prior apportionments. April 18 Apportionment equivalent to eighty -five per cent (85 %) of annual one per cent tax levy less prior apportionments. - April 29 Apportionment equivalent to ninety per cent (90 %` of a nnual one per cent tax levy less prior apportionments. June 6 Apportionment of all remaining second half one per cent collections together serviceandpril with second half debt Public Improvements /Direct Assessments collections. July 27 Apportionment of all delinquent current secured tax collections received during the period of April 11 through June 30. ,r Page 2 Unsecured (Current and Delinquent) October 1 Col lections. postmarked August 31 or before. April 1 Collections through February 28. August 2 Collections through June 30. Prior Year Secured (Redpmptionsl February 2 Collections through December 31. August 2 Collections through June 30 Homeowner Exemption Three working days after receipt from State. Approximately December 6, 1993 (15 %); January 6, 1994 (35 %); May 5, 1994 (35% June 6, 1994 (15 %) ) as /PT912108 r County of Santa Clara Derk- Inment of Finance Controller- ncasurer Division Count% Government Ccnter. Fast wing ?n West Hedding Street San .kose, califomia 05110 110111299.2541 September 22, 1993 TO: Board of Supervisors FROM: William L Parsons t�j4 K Director of Finance Prepared by: &A �� Rich Atkinson SUBJECT: Resolution to Adopt An Alternative Method of Tax Ap Plan) portionment (Teeter RECOMMENDED A ON Approve the attached Resolution authorizing the Director of Finance to adopt an Alternative Method of Tax Apportionment (Teeter Plan) pursuit to Revenue & Taxation Code Section 4701. REASONS FOR RECOMMENDATION AND BACKGROUND 1) Back-around An Alternative Method of Tax Apportionment has been permitted by Revenue & Taxation Code Section 4701 (et seq.) since 1949. Under this method of apportionment, sometimes referred to as the "Teeter Plan" (referencing the author of X the concept), it allows the Auditor - Controller to apportion 100% of the secured ta roll (including the supplemental 17011) to the various taxing entities, including the County, if certain conditions are met Some taxes would be apportioned before collection of the tax by the Tax Collector. At its inception, it was characterized as a means to simplify the tax allocation process. However, the primary focus has now changed due to the shift in county property tax revenue to the schools. as required by the State's FY 1993- 94 budget. By adopting the Teeter Plan concept counties, cities, schools, and special districts would have the opportunity to recognize significant one time property tax revenues in FY 1993 -94. Under new legislation (SB 742) if a county adopts the Teeter Coup, of Supervisors: Michael fit. H�>ttckl- Zoe Lotgren. Eton t-,aMies. Rexi Diridon, nianne McKenna County Executive: Sall%- it. it(-ad Ea Plan by October 15, 1993 the amount of windfall delinquent property taxes allocated to non basic aid schools can be offset against the county's required property tax shift to schools. In order to realize this benefit the County would have to take some risks involving the distribution formula of the new sales tax and there are some potential problems involving bankruptcies. Only five small counties have implemented the Teeter Plan since it's passage in 1949. However due to the revenue potential that can now be realized, most major counties are now evaluating the Teeter Plan. 2) How the Plan oerates Normally, taxing agencies receive a proportionate share of tax receipts at the time the property tax money is actually collected. Under the provisions of the Teeter Plan, taxing agencies would receive the full amount of the tax levy as if there were no delinquencies.. The difference between the tax levy and the actual collections is paid by the County. In return, the County receives all future delinquent tax payments, including penalties (10% in the initial pear) and interest (18% per annum after the initial year) on delinquent secured property taxes. A county could adopt the Teeter Plan concept for only -one year in order to take advantage of the one tir.+.e revenue windfall, and then go back to the current method of tax allocation. If a county chooses this approach, it is our belief the administrative impact of dealing with a dual tax allocation process would be significant until all of the Teeter Plan delinquencies were satisfied. If the County adopts the Teeter P: jn concept, the County would distribute all delinquent secured taxes as of June 30, 1993, which totals approximately $74.8 million. The law requires in the initial plan year the first 5% of the total delinquencies be deposited into a Tax Losses Reserve Fund distributed to entities using the prior year A138 factors. � and Itn s expected the rCounty would need to do an internal borrowing from the commingled investment pool in order to make the initial distribution. of delinquencies. This approach is consistent with most other counties methodology. All counties going onto the Teeter Plan will have to establish and maintain a TLRF. The funding requirement for the TLRF is 50% of the outstanding delinquent amount It is currently estimated the size of the'TLRF for Santa Clara County would be approximately $37.4 million. Once the TLRF is fully funded, the County would receive all delinquent collections. I would recommend the County use part of the one time revenue received from this process to fully fund the TLRF. By funding the TLRF now, the County would be preserving the future years revenue flow received from the delinquency process. This approach is consistent with the other counties we have contacted who are planning n implementing the Teeter Plan. It should be noted if in future years the amount of the delinquent roll grows, the TLRF would have to be increased by 50% of that growth. IMPACT ON THE GENERAL FUND 1) Benefits to the Cou believe the prim � '` primary considerations for the County in moving forward with the Teeter Plan are as follows: o There is a one time revenue windfall to all taxing jurisdictions in the distribution of the delinquencies. a s s are of the initial delinquency distribution is estimated at a net of $13 milron. The total County share is estimated at $15 million, but approximWew $2 million was accrued at June 30th and included in FY 1992 -93 revenue. o There is new legislation (SB 742) which allows counties, which implement the Teeter Plan this year, to offset. the amounts distributed to schools against the County General Fund erty tax shift amount, I wou estimate the County will be able to reduce the property tax shift to schools for FY 1993 -94 by approximately $28 million. o The one time revenue impact from implementing the Teeter Plan for the General Fund is computed as fonows: Total delinquencies to be allocated (Schedule A) 7 74,850,000 General Fund shy �e of deliinquencies $ Less: FY 1992 -93 accrual 2 $ 15,114,386 Net additional revenue to General Fund $ $ 13,114,386 Property taxes not shifted to schools (SB742) $ $ 27,954,000 Total available revenue $ $ 41,068,386 Less: Net reserve fund requirement (Schedule B) T e me revenue available after fully funding the TLRF. 7 385 886 This one time revenue estimate is calculated based on the assumption all of the cities and the water district agree to the Teeter Plan concept To the extent that any of those entities decides not to join in the Teeter Plan concept, the reserve fund requirement would be decreased and County's one time revenue would increase. Earlier analysis estimated the one time revenue to be $15.7 million. This amount was reduced because of a decision to recommend that delinquent special assessments be included in the plan which increases the TLRF requirement and therefore reduces the net one time revenue by $4 million but increases ongoing revenues. The one time revenue was also reduced for delinquencies apportioned to basic aid school districts since there is no ERAF transfer to such districts to offset Attached are various schedules which detail the different Teeter Plan calculations. 0 Schedule A shows the calculation of the delinquent amount to be distributed o Schedule B shows the calculation of the TLRF requirements. The increase in future years revenue flow to the County from penalties and interest on delinquent taxes, less the net cost of money borrowed, is estimated to be $3.1 million per year and is computed as follows: (This revenue estimate does not take into account any growth in the size of the delinquent roll) Estimated annual collections from delinquent penalties and interest (Redemptions Only) . $ 6,450,000 Estimated cost of borrowing related to funding of delinquencies - $74.8 million C� 4.5% $ 3,366,000 Less: estimated earnings on the TLRF $37.4 million @ 3.95% (pool earnings rate) 47 Net cost 01- borrov�ng . 8 0 Estimated gross rev nue Less: Current revenue from redemptions 4,562,000 Net ongoing revenue increase 33 060 This increase though could be partially or fully offset by increased TLRF requirements as the delinquent roll changes. The change in the delinquent roll over the past 4 years has had significant fluctuations ranging from a $2.4 million increase at July 1, 1990, to a $16.2 million increase at July 1, 1991, a $13.9 million increase at July 1, 1992, and a $5 million increase at July 1, 1993. The chap a in the delinquent roll is very much influenced by the state of the economy. g 3) Risk F_ Implementation of the Teeter Plan is not without risk to the County. The risk factors are: 0 A major consideration is the amount of any delinquencies which are the subject of bankruptcy proceedings. Until recently, the conventional assumption was that all taxes ultimately are collected, even if some are only collected upon a tax sale. Federal bankruptcy law supported this thinking by providing -protection' for property tax liens by reactivating the liens, thus enforcing full collection of taxes and penalties through a Tax Collector's sale. However, a recent 9th Circuit Court ruling gives protection instead-t0--the debtor by retaining property tax liens within the automatic stay. Thus, property tax. may "escape' collection for all periods in which'the bankruptcy protection is in force. Although the above risks are present concerning bankruptcy proceedings, so far our bankruptcies with Redemption charges have,a relatively high distribution priority. To date, there has only been one bankruptcy case in which the tax charge was affected by a ruling of the Bankruptcy Court. Based on the court's order, the entire tax charge was transferred to the Unsecured Tax Roll. In all other bankruptcy cases, the County has received full payment. of the tax charge; however, the accumulated penalties are often adjusted downward or eliminated entirely. Unfortunately we are unable to identify all Secured or Redemption charges upon which a claim for bankruptcy has been filed. The bankruptcy provisions are being further evaluated by County Counsel. The County does not, however assume the full risk that assessments will be reduced through appeal, etc. The Teeter Plan allows the loss to be spread to all taxing agencies. o How will gso County finance the initial allocation of delinquencies and the ongoing allocation 041he current taxes. We are in contact with bond counsel to investigate various financing alternatives. We have contacted other counties to see what type of financing they are planning. Most of the counties are planning a formal internal borrowing from the commingled treasury pool. Sacramento County has already signed a loan agreement with their treasury pool to borrow the money. However bond counsel is requiring a comprehensive validation of both the "authority to sell" and °authority to borrow" issues. Although most counties are looking at doing an internal borrowing it should be noted that an outside borrowing may be possible, but with a likely taxable debt service and certain validation actions required. o Another issue is the impact of the Teeter Plan on the distribution of the new half cent sales tax to the County and cities. The law states the allocation is to be based on the relative share of the cities and county's. contribution to the Educational Revenue Augmentation Fund (ERAF). If this contribution is determined after the offset to schools from the Teeter Plan method, the County share of sales taxes would be reduced by $3.6 million. This reduction would be an ongoing loss of revenue to the County. It is our understanding is that it was not the legislative intent to have the Teeter Plan monies impact the sales tax distribution formula. Corrective legislation will be required. 0 The County can elect to implement the Teeter Plan concept without specific approval from the cities or school districts. Preliminary discussions with the various cities resulted in a, mixed reaction to the concept. -it is our plan to give each entity (cities and Santa Clara Valley Water District) to whom the County distributes property taxes and the entity's bank account is outside the County Treasury the option of participating in the Teeter Plan concept If the County does adopt the Teeter Plan concept, it has been suggested our plan should have a validation hearing by the court. A validation action would be of significant benefit in the event of future litigation involving the Teeter Plan concept. We will pursue tt.is concept with bond counsel. 0 There is the risk of entering into long term debt obligations where the return to the County (18% per annum) could be reduced by legislative action. CONSEQUENCE OF NFGATNE ACTION If the attached Resolution is not adopted by October 15, 1993, the County will not be able to implement the Altemate Method of Tax Apportionment for 'Hiscal Year 1993 -94, and the County would lose approximately $7.3 million in additional one time revenue net of the TLRF funding. STEPS FOLLOWING APPROVAL 1. Notify the cities and water district and give them the opportunity to participate in the Teeter Plan concept 2. Continue to work with bond counsel to structure the documents relative to an . internal borrowing. 3. Prepare an Appropriation Modification (F85) based on the outcome of th e following events: After it is known which cities and if the water district are interested in participating in the Teeter, Plan. • After the November sales tax election results are known. Attachments rza \93- 25BAOOC • County of Santa Clara Analysis of Delinquent Taxes Schedule A Total Delinquencies $ 75,650,000 Est. Add. Moved to Unsecured Roll (800,000) Sub Total 74.85-0-1000 Amount to be transfered to TLRF (5 %) (3,742,500) Amount to be Apportioned 71 107 500 I-► County of Santa Clara Teeter Plan Reserve Analysis Schedule B Delinquent Amount to be Allocated Reserve 50% of Delinquent Amount Transfered to TL RF (5% of Delinquent Amount) Remaining Amount to be Funded 1 $ 74 .850000 37,425,000 3,742.500) 33,682.500 RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY.OF SANTA CLARA ELECTING THE ALTERNATIVE METHOD OF DISTRIBtTrION OF PROPERTY TAX LEVIES AND ASSESSMENTS WHEREAS, Chapter 3 (commencing with Section 4701) of Part a of Division l of the California Revenue and Taxation Code (hereinafter called "the Law ") authorizes a county to elect by resolution to :adopt an alternative method of distribution of property tax levies and assessments on the secured roll made by a county on its behalf or as the tax- levying and tax- collecting agency for other political subdivisions; and WHEREAS, upon election, the alternative method is applicable to all property tax levies and assessments made by the County on behalf of public districts except those for which the-County treasury is not the legal depositary and which do not agree by resolution to participate in-such an alternative method; and WHEREAS, the Law requires that the County establish a tax losses reserve fund which shall be used exclusively to cover losses which may occur in the amount of tax liens as a result of special sales of tax- defaulted property; and WHEREAS, th6- .Boarq of Supervisors of the County of Santa Clara desires to implement the alternative method authorized by the Law. 1 NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of Santa Clara that the Board hereby elects, pursuant to Section 4702 of the Revenue and Taxation Code, to place into effect in the County the alternative method of distribution of property tax levies authorized by the Law for the 1993/1994 fiscal Year and for all following years unless and until discontinued Pursuant to the provisions of the Law. BE IT FURTHER RESOLVED, that the Board of Supervisors of the County of Santa Clara elects, pursuant to Section 4702.5 of the Revenue and Taxation Code, to extend the procedures provided by the Law to assessments that are entered on the secured tax roll for the current year. -1- Resolution Electing Alt. Method of Dist. of Prop. Tax Levies & Assmts. September, 1993 Page Two BE IT FURTHER RESOLVED, J1Jy the Board of Supervisors of County of Santa Clara that th the e County shall establish and maintain a tax losses reserve fund in accordance with the provisions of Section.4703 of the Revenue and Taxation Code. BE IT FURTHER RESOLVED, that the Auditor - Controller and Treasurer shall comply with the provisions of the Law necessary to carry out --the purpose and intent of this Resolution. BE IT FURTHER RESOLVED, by the Board of Supervisors of the County of Santa Clara that-this alternative method.of distribution shall not be applicable, pursuant to Section 4715, to tax levies on behalf of any public district for which the County treasury is not the legal depositary unless agreed to by a resolution of the governing board of such.public district and this Board of Supervisors, in accordance with Section 4702 for the fiscal year in which the alternative method is to apply to such district. This Resolution ,hall Pe deemed the agreement of this Board of Supervisors to the appli�ation of levies pursuant to the 1a'w for each rand reverax and assessment which (a) is not a community facilities district blic Mello -Roos Community Facilities Act of 1982, as amended from time to time, or an assessment district organized under a law which provides for - judicial foreclosure as a remedy, and b Section 4715 of the Law, agrees that the Law shall havepursuant to application, and upon the adoption of a resolution of the governing board of each such public district, there shall be deemed to be the agreement thereto on behalf of this Board of Supervisors. BE IT FURTHER RESOLVED, by the Board of Supervisors of the County of Santa Clara that the Director of Finance is authorized and directed to seek the approval of the cities in the County to the implementation of the alternative method authorized by the Law. BE IT FURTHER RESOLVED, by the Board of Supervisors of the County of Santa Clara that the Director of Finance is authorized -2- Resolution Electing Alt. Method of Dist. of Prop. Tax Levies & Assmt's. September, 1993 Page Three and directed to review alternative financing methods for the funding of the alternate procedure authorized including the tax losses reserve fund required the law, and Taxation Code section .4703, and an Pursuant to Revenue that may be required. The Director shall preport nhis sfindi�ngsaand recommendations regarding such funding to this Board within go days. PASSED AND ADOPTED by the Santa Clara County Board of Supervisors State of California, on by the following vote: AYES: Supervisors DIRIDON NOES: Supervisors GONZALES HONDA LOFGREN MCKENNA ABSENT: Supervisors l ATTEST: Phyllis A. Perez, Clerk Board of Supervisors APPROVED AS TO FORM AND LEGALITY: KEVIN D. ALLMAND Deputy County Counsel KDA:smw :TL3 /305:63 -65 r -3- RON GONZALES, Chairperson Board of Supervisors