AgdaPkt 2012-04-23 - Laserfiche WebLink

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6.1. F. - Page 1 RE PO RT To the Honorable Mayor and City Council From the Cit Mana er April 23, 2012 SUBJECT Third Addendum to Agreement Between the County of San Mateo and the City of Redwood City to Toll Statutes of Limitations for Claims Regarding Property Tax Administration Fees RECOMMENDATION By Motion Authorize City Attorney to Execute Third Addendum to Agreement Between the County of San Mateo and the City of Redwood City to Toll Statutes of Limitations for Claims Regarding Property Tax Administration Fees. BACKGROUND The County assesses and collects all of the property taxes in the County. It then allocates these taxes to the various governmental entities in the County — cities, school districts, special districts, the Educational Revenue Augmentation Fund (ERAF), and the County. The County is allowed to charge each entity that receives property taxes that entity's share of the costs the County incurs in assessing, collecting, and allocating these taxes. This is called the Property Tax Administration Fee or PTAF. The amount of PTAF an entity is charged is directly proportional to the amount of property taxes the County collects for it. In the 2003-2004 fiscal years, the state legislature implemented the Triple Flip and the VLF Swap. Under the Triple Flip, a quarter point of the sales tax a city would normally receive went to the state and the state then promised to make cities whole by diverting property tax into the Sales and Use Tax Compensation Fund to reimburse the cities. The state also backfilled the VLF (vehicle license fee) in a similar manner -- it diverted property taxes from ERAF to the Vehicle License Fee property Tax Compensation Fund, again to reimburse cities. In authorizing these actions, the state legislature recognized the increased administrative costs to the counties associated with implementing the Triple Flip and LVF Swap and authorized counties to charge cities for the incremental costs of shifting these funds. But the increased costs that counties have been charging reflect more than just the cost of implementing the Triple Flip and the VLF swap. The counties charged the cost of assessing, collecting, and allocating property taxes that are collected for ERAF and then diverted to other funds. The legal question is whether the counties are charging too much.