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Home My WebLink Aboutstewardship councilMarch 16, 2011 Honorable Members of the Board Members of the Butte County Board of Supervisors 25 County Center Drive Qroville, CA 95965 Dear Honorable Members of the Board , i90ARp OF St3At:RVtSORS MAC ~ ~' ZO~~ OROV~LLE, CALIFORNIA 0 Stewardship. Caunctl Thank you for your comments on the draft guidelines for achieving property tax neutrality that were posted and distributed for public comment in December 2010. All of the comments received were provided to our Watershed Planning Committee (Committee) on March 8, 2011. The Committee considered all comments received and has made the following changes to the guidelines. The Committee is recommending that the Board of Directors adopt the revised guidelines (enclosed) at its March 30 public board meeting in Sacramento. Safrsfaction of Tax Neutrality When LandsareTran;#erred taCounties Several counties objected to the requirement that the value of lands received by a county via a donation be considered an in-lieu payment for the county's share of property taxes. The Committee is recommending that the draft guidelines be revised to provide that the Stewardship Council will pay 100% of property tax neutrality related to counties, special districts, and other "non county" recipients when lands are transferred to counties. Satisfaction of Tax Neutrality When LandsareTransferred to StateAgenaes The Regional Council of Rural Counties (RCRC) expressed concern about the Stewardship Council's exception to making property tax neutrality payments when lands are transferred to a state agency which is "expressly obligated to pay property taxes by law and has a history. of making such payments." The RCRC cited as an example one state agency which it reported had failed to make several years' worth of in-lieu payments. The California Department of Forestry and Fire Protection (CAL F1RE) is the only state agency that has applied to be a donee of fee title whose statutory obligation to make tax payments is funded through operating (i.e. timber harvest) revenues. The Committee is recommending that the guidelines be revised to state that the Stewardship Council will make property tax neutrality payments far lands transferred to any state agency other than CAL FIRE. Furthermore, a significant portion of PG&E's forested watershed lands are not currently designated Timber Production Zone (TPZ) lands. Under CAL FiRE's current payment methodology, the transfer of non-TPZ lands to CAL FIRE could result in lower future annual tax payments to the counties. The Committee is recommending that the guidelines be revised to state that the Stewardship Council, ar CAL FIRE, will make property tax payments to compensate counties, special districts and other "non- county" recipients for any shortfall caused by the transfer of non-TPZ lands. 15 N. Ellsworth Avenuu Phor:e 1650} 3Q4 9072 5uire 0 ~ fox {650} 46! 2140 S a! 0 9 www.srewasdahi~cauncll,nrg C' ~~`~~ ~~ Siewar~hip Coundl lV,~~ 16, Zt711 P~2~26 Feel free to contact us if you have additional questions or concerns. The Stewardship Council will be accepting additions! public comments:on.the~reuis.~d~draft guidelines in advance of, or at, the March 30 board meeting. Again, we appreciate your attention to this matter and value your participation in the work of the S#ewardship Council. .,: '; ; ~; ~.'~: Sincerely, ,. «~ ~ ~. ~~ Joel Wagner Director of Finance 'Enclosure ~~ Stewardship Cour,~il GUID~JNES FORACFiE11rNG PFiOPERTYTAX TY -[1:~~ f • The Settlement Agreement' and Stipulation2 that established the LandConservation Commitment requi re that the Land Conservation PI an being devel open by tFi'e ~e~vardshi p Council provide property tax revenue, other equivalent revenue source,_or alump sum payment, so that thetot~ity of dispositions in each affected county will ,E~e"tax.r~eutr~" for each county. Section 4.3 of Vol ume I of the Lamed Conservation Plan (LGP)'adopted by the Stewardship Counci I i n November 2007 described the Ste~vardshi p Couna {;' s'potenti al str..ategi es and anticipated approach to achieving property tax neutrality at a programmatic IEV.d`. M ore rec~ntl y, on September 17, 2009, the Stevvardshi I' CouncE I adopted a f undi ng policy. Thi s pal i cY f urther cl arif i ed the Stewardshi p Counci I' s approach to propa#y tax neutrality aid i dentifi ed the fol I owl ng potenti ~ vehi cl es to achieving thi s requirement: • V of untary payment of property taxes by the new I andowner . • Lump-sum payment i n sati sfacti an ~of f~:rture:#~c revenues • Establishment of ~ endowment to fund a negoti ~e~. share of annual payments • Other i n-lieu compensation as negot~ ated by".the part~:es • Payment by PG& E per tYi'e~terms arts cal ated i n the StE pal ati on - Other consideration or ben~Et as negotEa~ed by the parties BACKGROtJ[~D Thewatersf~ed lands iefentfied in the-L~d,Canservation Commitment are subject to av~uation process-conducted by the Cal i forni a'State Board of Equ~ i zati on (SBE}, rather than I oc~ county assessors. The SB E sets the~ta~ati on y~ ue of all property owned or used by publ i c uti I iti es. Utility owned property i s rimed by the SB E every four yews; themore, the I ands owned by PG& E are general I y at or near; thei r current market vat ue s n Cal i forni a property taxes are ~ 1 orated among several different agencies and districts acoordi ng to the subj ecE':property' s Tax Rarte A r~ (TRA). Typi c~ 1 y, onl y a porn on of the ~nu~ tax payments go to the county general fund, with the maj on ty of taoces di stri bated to the county' s Opinion Modifying the Proposed Seitlematt Agreement of Pacific Gas & Electric Corr~oany, PG&E Corporation and fhe Corr~nrsson gaff, and Approving the Modilted ~ttl arnent Agreement, DeoemUer' '[ 8, 2003: htt ~//wwwstewardshipcouncil.orcl/dacuments/5ettlement ArLreern~ent.pdf s ~ipulation I~lving lssueskbgarding theLand Conservation Comrnitmenf, September 25, 2003: htt ://www.stewardshi uncil.or /documents~3~i elation A resrrae~at. df s Stewardship Counal Land Conservation Plan, November 28, 2007 DR4Fl-C~rtirlelines Far,4daieving . R~perty Tax llk~utralify Page 1 of 6 OC3N8~2017 ~® Stewardship Council special districts (e.g., water and fire districts, school districts, libraries, and resource conservation districts). The SBE classifies red propa#y owned by public utilitiesaseither "unitary" or "non unitary." Unitary property isdefined asproperty nay for ~ assessee's primary function. Non- unitary property is property owned by the asses~see, but not used as part of its primary function. The SBE gener~Iy ~ both unitary and non-unitart' land using typical appr~s~ methods, such as comparabl a s~ es. PG& E i s expected to retai n the maj ority of 1 ands and i mprovements necessary for the future generation of power (i.e., unitary property). However, in somelnstanoes, PG&E may donate lands classified as unitary.Tablet belowliststheacre~eandannu~~taxesforthewatershed I ands by county as presented i n Vol ume I of the L CP. The estl mated tots' tax. I i obi I ity that woof d be subj ect to tax neutrality will depend upon the tats acreage transferred, and the types of organization reeei vi ng I ands. Table 1 -Property Taxes From Land A~aiilable for Donation ~` County Viands Available for donation; Unitary;. Taxes AnnuaG Non-Unitary Taxes. Annual Total Taxes. (Annual) Af ine 1,028 $21;000 ff $11,300 `'' _ $32,300 Amadar 2,851 $'E';8,DDD $23100 _ $41,100 Butte fi,843 $41;:700 $23-:700',' ~' $65,400 Calaveras 1 $1,9:00` $3:00 $2,200 1=i Dorado ;:,9 $1,100 $0 $1,100 Fresno ~ 33:5 $17,2D0 :, $8,300 $25,500 Kern ~ 4.43 . $1,5D0 $D . $1,5D0 Lake 3;39 0 $37,000„ ~ $2,500 $39,500 Lassen ~ 1 $33;800 $0 $33,800 Madera ° ~ 70.4 $62,500 $116,600 $179,100 Mariposa , ._ ..._ ~ _ ~ ;, _~ $100 $D $100 (Mendocino ~ 1,823 ,~ $25,000 $200 $25,200 Merced 0 ~ ' $400 $0 $400 Nevada: ~ 4,095 $34,800 $41,600 $76,400 Placer ~ 4,693 $106,600 $176,800 $283,400 Plumas ~ ~ 5,329 $278,200 $98,300 $376,500 San Luis Obis o ~ ~ ~ 654 $0 $2,800 $2,800 Shasta 37,127 $107,900 $138,500 $246,400 Tehama 1,412 $3,300 $7,600 $10,900 Tulare 29 $500 $2,000 $2,500 Tuolumne 1,337 $4,800 $16,900 $21,700 Yuba 59 $0 $200 $200 Others 2,431 Total 74,593 $797,300 $670,700 $1,468,fl00 a This acreage includes lands within parcels that cross county boundaries DrRAFT C~ia~lir~s ForAahievirx,~ R~nerfy Tax 11~utrality Page 2 ~ 6 0.3/082017 ~~ Stewardship Council PlJHP06E OF PROPO~ GUIDEU~F.~S The purpose of these gui del i nes i s to establ i sh a standard methodol ogy for addressing property tax neutrality on l ands I orated across 22 affected cour~ti es that are subj ect to the Land Conservation Commitment; and to communi rate the genera principles and approach regarding the achievement of property tax neutr~ity. Fol I owi ng the adoption of these gui del i nes, the Stewardshi p C,ouna l' wi I l devel op a more specifi c methodal ogy conoerni ng other el ements of property tax neutral ity such as: • De#ermination of aliocationsbetween counties and speGal`'districts • Disbursement of funds after settlement amounts are calculated • Subsequent changes i n property ta~c ~ I ocati ans and'effects on :the Stervardshi p .Counci I' s tax neutra! ity payments • Effects of i of [ ati on and f uture appreci ~i an of vat ue on<property tax neutrality payments ONERARCI~NG ASSll~11P`nONS These gui del i nes are based an the fol I owi ng three ouc•~archi ng assumptions: 1. C,orr;~r~sat5ion liar' pr+o~-ty taxes will be based on the ccarratt pro~eriy taxes as peidby PC~&E at the time al frar~iei:~ ~- The Stewardshi p Counci l wi I I address property tax neutr~ ity based upon the mast current property taxes p~ d by PG& E on the,lends bei ng tra~sfierred at.tlie ti me of the actin transfer of fee title from PG& E to the sal acted donee. Due totlleuncertain nature:af timber harvestsand similar activities, the Stewardship Council's comr~rtrriat to the achievernertt of property tax neutrality does not extend to timber yield taoc or any other taxes associ ated with- the conversi on of nature resources to revenues by the f uture landowner. Il. Plrgperfy iax rae~nraftyirad[rc~s aU property taxes assessedby the she Board of Ec~~iratiort andaistribul~edbewee?rt the ~dcoc~ntyandspecial districts The property taxes pa'd to oounti es are di stri bated among multi pl a agenci es, i ncl udi ng County Genera[ Funds, School and FireDistricts, Regions Conservation and Water Districts, and other special districts. The Stewardshi p Counci I' s achi evement of property tax neutr~ ity app! i es to ~ I property taxes that woul d be di stri bated di real y to County Genera Funds, School and Fi re Di stri cts, Regi one Conservation and Water Districts, std any other sped ~ di stri cts as deli ned by the appl i cab! a Taoc Rate Area U4~41-7 Guidelines For Achieving f3nperty Tax ll~utiality Pie 3 of 6 0,3/OS/Z011 p,® Stewardship Council 111 The S"tewar~shrp Cocm~cil's tax netrtr~ify caonrrrblaertt exire-x1s only to Ixgperiy tax revenues thatre~in ~ locallyconh~alled en(rtrees: The Settl ement and Stipulation direst the Stewardshi p Counci I to ensure that the effects of di stri buts ons be made tax neutral for the affected counties. Therefore, the Stewardshi p Counci I' s property tax neutr~ sty commi tment wi I I not appl y to ~,y portion of property taa payments that are subj ect to apportionment by the State of Cad iforni a OPTtON5 FOR FU~DIIING PROPERTY TAX ~EUTRAI.ITY PAYNEM~ The Stewardshi p Counci I i s currents y consi deri ng two options for making tax neutral sty payments: { 1) a one,ti me I ump-sum payment; or (2) funds ng ~of?~ i ndepa~tdent trustee to Conti nue annum payments i n I i eu of taxes. I f 1 ands are transl•erret~ to enti ti ~ whi ch make annul tax or i n-lieu ayments consi scent with any apps i cabl a>req~l at ons; that anti fy;`ivi:i.! be responsi bl e for making t~oc payments, and its payment methodology would-su~sedeeither~o~tion.descri bed below. ~~~ Lump-sum payments i n sots sfacti on of property tax neutr~ sty wool d be cal col aced based upon the net present v~ ue of the current taxes as pas d by PG& E at the ti me that I ands are removed from the property tax rolls. The lump-sum payment would be t~culateal'based upon the most current assessed va! ue and tax rate at the ti me,of property #ransf er. The di scount rate woof d be based upon reasonabl a rates of i nterest for I orig-term assets arid; l;i'abi I its es. Lump-sum payments wool d-be ai I:arated based 'upon the appf i`cabl a Tax Rate A rea at the ti me of payment. The StEwardslni p Caunci 1: anus si ons making these I ump-sum payments as unrestri cted payments i n I i eu of<pr~perfy taxes. 'Gounti es aid special di sari cts wool d be free to determi ne the best use of the funds pursuant to the needs, of the county or special district. Arux~al payrnei~s The Stewardshi p Courra t i s researchi ng the feasi bi I sty of establ i shi ng a thi rd-party managed endowment account to make annual payments to affected counties and special districts i n l ieu of property taxes an donated I ands. The endowment amount wool d be c~ col aced based upon the net present v~ ue of the current taxes as p~ d by PG& E at the ti me that I ands are removed f rom the property tax rolls, net of the trustee's management and admi nistrative fees. As envisioned, annual payments out of the endowment aocount would bec~c~laced as a percentage of the account' s v~ ue based upon a ral l i ng average to be determi Heel upon the selection of an endowment manager. Please note, under this approach annul payments may be hi gher than the on gi na! tax payments i n some years, and l ower i n others. A nnu~ payments f rpm the trustee wool d be unrestri cted. G1 R,4F1' C~ic~lines Fcr Ac~ievir~g Y Tax Il~ubality Page 4 0l•6 GCi~082019 p® Stewardship Council ACCEPTANCE OF PROP~iTY TAX NEUTRALJTY PAYNENfS Pri or to the di sbursement of f undi ng of property tax neutr~ ity the Stewardshi p Counci ! wi I I ask affected caunti e, and sped ~ di stri cts to execute an agreement sti pul ati ng that the Stewardshi p Council's property tax neutral ity has been fulfi fled for each transaction. The Stewardship Counts 1 wi I I work with affected counties and sped ~ di stri cts to d~ermi ne the exact form of acx~eptance that i s aoceptabl a to both parti es. PROPOSED C;i.111DE7.111~5 I~ DONAnau scl~o The proposed gui del i nes descri bed below are organi zed and presented under f our different I and donation scenarios: donation of landsto counties, state ~encies,ffederai_agenaes, and Native Ameri can tri bes and other ta~c-exempt organizations. The Stewardshi p Counci I expects that any i ntended payments far property tax.~neutral i ty wi I I be a consi derati on i n the sel ecti on of donees for I ands and i n the devel opment of transa~i ortia~ terms related to the preservati on and enhancement of benefi a al , publ i c ~~ ues. SAl1SFAC110N OF TAX REUTRAL.I'IYVIII-EN I_AI~DS ARE TFt~i~fSFER~ED TO COUV'nES • ~ThP ~ra-varrlchi n C;nunr~i I recoan~ zes-that the firansfer of i ands to counti es wi I I__resuf t i n a on of annum property zax reu es, it is preferablefor the rev_ ds, rather than for sati sfacti o~ nrP_ the Stewardship Counci l aced related to of when I counties. ~ 0 1[ 11 ~~ 1[' 11 1 ZW\W ' 1 SI f1 L1414FT C~idelines Far,4d~revrng Plajoerty Tax 11~rali(y Page 5 of fi Q3/082019 ~~ Stewardship Council SAl1SFAC110N OF TAX hEU'R~ALITY VIrFEN LANDS ARE TRANSFERR®TO STATE AGEN(~ES 0 rr » '-11=1f-'I F1'lr` ~ hicl~nn~ of m .~Esi nn cr rnh n~iman+~ .... ~•................,.~vr y yr r ~ ~~.r r i- On Of states encies. • Landstransfer and other " be subi ect Resources Code. which repui r~ on si mi larl situated 1 ands. • il_f _the transfer of I ands to CA L and other " of Forestry aRd~l=i;re Protection (CAL f property taac neutral,~ity rel„aced to ' rec"~i ents when I andsare transferred ~. Sear ori~4654 of the Cal i forni a Pub[ i c equ~valert~_to taxes levied i n the coun~ eddc~ed>==property tax ass~srr~ent, the ~o of the cl'ifferencerelsted to counties :s. SATISFACTION OF TAX I~EUTRAlJTY WFEN LADS ARE TRANSFERRED TG FEDERAL.,AGENCIES '. j%. • The Stewardshi p Counci l recognizes thaf~iands transferred to federat agencies are typi cal I y subj eit to vari ous'rEVenue Shari ng programs i ntended to het p compensate I oc~ governments f or the,provi si on of servi ces on feder~ I ands. The Stewardshi p Counci I' s and ysi s of these programs' i ndi cartes that the~annu~ payments under these programs r,. wouldyi~eld3only afraction of theamour"oour~tiesand special districts currently receive i n property taoces from PG& E. • Therefore, the Stewa-dship Council>will pay 100% of property taX neutr~ity related to cour-rti es, speci ~ di stti cts, and other "non-county" reci pi eats when 1 ands are transferred to federal~;agencaes. SATISFAC'i'IQN OF TAX hEUTRAIJTYVI~••EN LANDS ARE TRANSF~ TO NATIVE ANE]~ICAN TRIBES AN]TAX-E)®V~T OR'GANZATIONS OTFER THAN COL1~fIlES AN] STATE OR ~4L AGENCIES • The Stewardshi"p Counci I wi I I pay 100% of property tax neutral i #y re! aced to counties, spera ~ districts, and other "non-county" reci pi ants when 1 ands are transferred totax- exempt organizati ons other the counties and state or feder~ agencies, • With respect to Nati ve Ameri ~ tri bas that would have been abl a to pl ace I ands i nto trust but for the terms of the donation transaction, the Stewardshi p Counci I wi I I pay 100% of property tax neutra# ity rel aked to counties, special districts, and. other "non-county" recipients. DIRAFT C~idelines FcrAd7feving ~ rax n-ty Page 6 of 6 a3ro~s~z019