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7A AB 1602 from page 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Page 23 such a case, the city only loses the effect of the incorporated cities have historically been allocated low AV of undeveloped land and growth after the a greater share of VLF revenues during their first first year provides increases to the city's property start-up years. Previously this has been accom- tax in lieu of VLF sufficient to compensate for the pUshed by using three-times the number of lower VLF revenues. registered voters at the time of Incorporation as a proxy for the city's population for a limited number of years. Thus, a city incorporating after 2004 would thus also loose this "bump. on the lost property tax in lieu ofVLF. However, in the case of areas that are already developed with residential uses, the increased land value from the development occurs prior to annexation. This higher AV is to be ignored for the purpose of calculating the city's property tax in lieu of VLF. In such a case, the city garners less than 10 percent of the VLF allocation that would have come prior to 2004 from the annexation, but reaUzes virtually no compensation in property tax in Ueu of VLE The negative impact on the city's budget from such an annexation compared to the pre 2004 conditions is substantial. The VLF for Property Tax Swap of 2004 and New Incorporations Nothing in the 2004 law directly alters past or Mure property tax sharing agreements or formu- las among local governments. Neither county nor city VLF has been the subject of property tax sharing in the past and neither must its successor revenues: the Property Tax in Ueu of VLF (or "VLF adjustment amountj. However, the 2004 swap substantially reduced the amount of VLF revenue available to new cities and provides no property tax in "eu ofVLF as compensation. Moreover, a new city would not receive a "new city bump. on these lost revenues. No Property Tax in Lieu of VLF. To calculate the annual VLF Adjustment Amount (Property Tax in Ueu ofVLF) for each agency. county auditors generally calculate and transfer to each city and county an allocation based on each agency's FY 2004-05 revenues increased in proportion to the change in each agency's gross taxable assessed valuation. A city that was not in existence in FY 2004-05 has no VlF adjustment amount (properly tax in lieu of VLF) and the new law provides no procedure to establish one. No VLF Bump on the Lost Revenue. Newly For I'r1OI9 inlbmJation on the VLF for Property Tax Swap of 2004, the Fiscal Effects of the Swap on Annexations and Incorporations and other city finance issues see www.caIifomiacitvfinance.com Looking for California's Best to Fill a Position in Your City? Western City magazine's job opportunity section is the source for job seekers looking for positions in local government. According to our reader survey, the job opportunity section is the best read section of our magazine! When you place an ad in Western City magazine, it will be posted at no addi- tional charge on our website, which receives over 80,000 hits per month. Call to place your reauitment ad today! We Have What You Need (800) 262-1801 or visit our website at www.westerncitv.com PAGE 4 - PRIORITY FOCUS October 20, 7006 - Issue 141 VISit the League's OfficIal Website-www.cacities.org