The Dana Reserve moved one step closer to breaking ground after the Nipomo Community Services District (NCSD) voted in favor of splitting the development’s future property taxes with SLO County and annexing the project into its service area.
More than 100 community members were present at the NCSD’s Aug. 28 board meeting to show their support for or their disdain of the housing development. Members of the Nipomo Action Committee used the meeting as one of their last attempts to halt the project.
Action Committee Executive Director Alison Martinez provided the Sun with a seven-page letter that the group’s lawyer, Babak Naficy, wrote to the NCSD board urging it not to accept the annexation agreement.
“The annexation of Dana Reserve would … undermine the long-term reliability of NCSD’s water supplies and be grossly unfair to the current NCSD customers, whose sacrifices and water-saving efforts has directly enabled the district to reduce groundwater pumping,” the letter reads. “These reductions in water use were undoubtedly intended to promote the health of the groundwater basin and to combat the negative effects of prolonged droughts, which are only expected to worsen as a result of climate change.”
A presentation from Dana Reserve developer Nick Tompkins’ team showed that there is projected to be sufficient water supply to serve future demands during multiple dry years, based on the NCSD’s 2020 Urban Water Management Plan.
“In the fifth dry year of five successive dry years, in 2045, NCSD’s water supply will exceed water demand by 415 [acre feet],” the presentation stated.
NCSD General Manager Ray Dienzo told directors that agreeing to annex this project and receive the agreed upon property tax percentage split with the county would provide funds that would go to much needed wastewater infrastructure improvements.
“When we presented the negotiation idea that, at build-out, the 2.36973 percent would increase the district property tax share from this proposed annexation by 20 to 30 percent, this correlates with the increase in population that this annexation would add,” Dienzo said during the Aug. 28 meeting. “It’s also important to note that the additional property tax funds would go to the county.”
Property tax negotiations between the NCSD and the county weren’t exactly smooth. After the SLO County Board of Supervisors gave Tompkins the go-ahead to move forward with his 288-acre housing development, the Dana Reserve returned to the board on June 18 seeking approval for annexation into the NCSD’s service area for water and wastewater services.
It sparked a lengthy negotiation process between the county and the NCSD over where the development’s property taxes would go. The county Assessor’s Office provided data that the housing development would generate an extra 3.7 percent in property taxes and both government entities felt entitled to the revenue.
Having conflicting annexation policies, the two parties met on two different occasions to find a common ground, which resulted in the NCSD receiving approximately 2.4 percent of the “extra” property tax and the county receiving the remainder.
“I am disappointed, as I told the negotiators that I would support a 3.7 percent share, but I would not be enthusiastic as low as 2.7 percent,” NCSD President Ed Eby said during Aug. 28 meeting. “What is now being asked is less than 2.4 percent.”
The county’s annexation policy states that independent special districts, like the NCSD, are autonomous government agencies fully independent of the county in governance, the provision of services, and funding. It adds that the county shall not subsidize an independent special district with the county general fund monies nor should any property tax exchange result in a net fiscal loss to the county.
Therefore, the county first offered the NCSD zero percent of the property tax as the county already allocates 27 percent of its Post Educational Revenue Augmentation Fund to the district. This goes against the NCSD’s policy, which states that the amount of property tax revenue exchange in future years should remain consistent with historic property tax revenue sharing agreements.
A comprise was met and the Board of Supervisors voted in favor of it on July 9, with 1st District Supervisor John Peschong claiming that the project was too important to lose.
“I’m a little confused because we do have … a board rule that does say that from a budgeting standpoint we don’t want to share the tax revenue,” he said. “The problem is, this is what I’m afraid of, is that this will be used an an excuse to not build this project, and this project is very needed in the community.”
The NCSD followed suit and voted in favor of both the annexation into their district and splitting the property tax. Now the Dana Reserve is waiting for annexation approval from the Local Agency Formation Commission (LAFCO), which will hold a study session on the issue on Sept. 19.
