HomeMy WebLinkAboutOB 1 INC. NO. TUSTIN 11-04-91OLD BUSINESS NO. 1
11-4-91
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NOVEMBER 41 1991
TO: WILLIAM A. HUSTON, CITY MANAGER /
t -1;L. COMMUNITY DEVELOPMENT DEPARTMENT
3 G f: REVIEW OF STATE CONTROLLER'S REPORT ON THE COMPREHENSIVE
FISCAL ANALYSIS FOR INCORPORATION OF NORTH TUSTIN
RECOMMENDATION
Pleasure of the City Council.
BACKGROUND
As you may be aware, the State Controller's office has completed
their audit of the Comprehensive Fiscal Analysis For Incorporation
of North Tustin. The report concludes that incorporation can only
be fiscally feasible based on imposition of a utility user's tax of
between 6.5 to 6.8% in the first operating year rather than a 3%
utility tax in the ninth year as originally recommended by
Christensen & Wallace.
The Community Development Department asked selected City
departments to review the findings and conclusions of the report in
the areas in which each of the departments was most knowledgeable.
Based upon this review, staff believe that it is quite possible
that a higher utility tax may be necessary (above the maximum tax
of 6.8% in the first year) for the proposed annexation to be
fiscally feasible. The following is a synopsis of major city staff
comments or the report.
1. Liability of Self Insured Retel2tion
Staff agrees that the $50,000 self insured retention projected
by Christensen & Wallace in their original report was too low.
The State Auditor recommends that the retention should be
$100,000. Our "be.lief is that this figure should be between
$100,000 - $150,000.
2. Law Enforcement
To properly evaluate and validate the cost of law enforcement
recommended by the auditor, from a statistical standpoint, the
City would have to be able to analyze cost based upon calls
for service, total workload, number of cases represented for
prosecution, cases prosecuted, court time, etc. None of this
- City Council Report
Incorporation of North Tustin
November 4, 1991
Page 2
information was documented by the auditor. While the report
indicated that costs were based on existing levels of service,
staff questions if in fact they were. It appears as if costs
were based upon the assumption that radio cars would be
permanently assigned to the North Tustin area. From a
practical standpoint, this is not currently the case.
The Sheriff's Department does not presently assign the number
of cars that require in excess of $1,000,000 per year. The
North Tustin area is merely one of several unincorporated
areas covered by one or more patrol units. Cost f igures also
appear to be based on population projections and not service
demands. As a rule of thumb, more of f luent areas require less
"real" time to respond to service demands; however, police -
defined service demands do not necessarily correlate with
citizen -def ined demands. These citizen demands, often require
more employee time and costs. Response to these community
demands often require a city/policing policy that has no
relation to service demands based upon crime statistics and
which results in higher costs.
Since the auditor did not provide a data base or apparently
have access to Sheriff Department contracts with recently
incorporated cities in Orange County, staff also believes that
costs may be significantly underestimated for law enforcement
services. There has been a continuing dispute in recently
incorporated cities in South County over pricing of contracts
with the Sheriff Department for law enforcement services.
3. Cigarette Tax (page 11-12)
Based on the 1991-92 Budget and State legislative action, the
projected cigarette tax would be reduced by 47% for a net of
$41,262.
4. Section 2107.51 Streets & Highways Code (page 16)
The population'f igure for apportionment purposes is 55,158.
The population for the proposed incorporation area should be
utilized. Based on City information, we believe the 30,940
estimated incorporation population f igure should be closer to
26,000.
5. Measure M Funding, (page 16)
The proposed incorporation population of 30,940 should be
closer to 26,000.
City Council Report
Incorporation of North Tustin
November 4, 1991
Page 3
6. Fees, Funds & Forfeitures
Based on the 1991-92 State budget, one-half of non -parking
vehicle code fees are turned back to State. This would
necessitate reducing the auditor's fee estimate.
7. Motor Vehicle Fuel Tax, Section 2105 (page 23)
Staff believes that per capita motor vehicle fuel tax is $4.30
plus an additional consideration is the Measure of Effort
(MOE) required. Without additional documented MOE, funds
cannot be received.
8. Property Tax Administration Fee (page 39)
Staff totally disagrees with the auditor's assumption that no
property tax administration gees would be initially required
because of the new town. To expect the County to let a new
city off the hook, is a gross assumption. Staff believes that
at least a $8,012 cost should be shown.
9. Other Issues (page 39)
Under other issues, the auditor discusses the potential cost
of fire protection. Their analysis states that there should
be 'adequate funding to cover fire service fees in the f irst
year. They also lightly indicate that if funding changes,
then there may need to be an increased utility user's tax.
At minimum, the implication of the Auditor's initial
assessment is that other agencies must make up a shortfall
amount which is unknown. This can be a big unknown,
particularly for the new city since the recent fire study
completed by the County indicates that one city alone is
overpaying in excess of $5 million annually. This means that
all other cities may very likely be underpaying, including
unincorporated:.areas.
With the City of Tustin annexations proposals tentatively scheduled
for a LAFCO continued public hearing on November 6, 1991, the City
Council should provide direction as to whether they wish any
comments on the State Controller's report transmitted to LAFCO.
Christine A. Shinglet
Assistant City Manager
CAS:nm\incorp.rpt