Mulheren’s Tax Sharing Agreement/Ukiah Annexation About To Collapse Of Its Own Weight

Last June the Supervisors approved a tax sharing agreement with the incorporated cities in the County, notably including Ukiah, that was prepared in secret ad hoc meetings between former Ukiah Councilperson Maureen Mulheren, several Ukiah City officials, and who knows who else? The vote was 4-1 with Supervisor John Haschak the lone dissenter, saying his colleagues were flying blind.

Supervisor Ted Williams, after first expressing some discomfort with the deal, was ultimately persuaded by Mulheren’s happy talk, despite acknowledging that there had been no public review, no agency or department analysis, and no idea what the financial impact of the deal might be. After the vote Mulheren thanked all but one of her easily duped colleagues “for your optimism.”

At the time it was not clear why Mulheren was so excited by the deal. She and her former Ukiah city officials offered only vague promises that the deal would magically ramp up development in the Ukiah Valley benefitting everybody.

Last month, Ukiah took advantage of the very Ukiah-friendly terms of Mulheren’s agreement by proposing to annex about 2600 parcels north and south of Ukiah, which would almost triple the size of Ukiah.

Last Tuesday, almost a year AFTER the agreement was approved, newly seated First District Supervisor Madeline Cline, from whose district most of the County parcels would be drawn, came back to the Board after being assigned to an ex post facto ad hoc committee with Supervisor Bernie Norvell, with a collection of background materials related to Ukiah’s Tax/Parcel Grab.

One of those materials, not previously made public, gives the public a glimpse of how flimsy and shallow Mulheren’s reasons for promoting the tax sharing agreement were. Mulheren’s grossly oversimplified view of the tax sharing agreement, after almost two years of secret meetings, was on full display in a chart prepared by Mulheren laughably entitled “cost benefit analysis.”

According to Mulheren’s “Cost-Benefits Analysis,” the County would somehow benefit by having less area to “service,” shifting housing production to cities in areas the County has been unable to develop, “minimizing” urban sprawl (even though Ukiah is proposing the exact opposite, urban sprawl being restricted in the 2600 parcels now by being under undevelopable county authority), and providing “enhanced long-term revenue growth.”

All these wonderful “benefits” would accrue for a “temporary revenue reduction in sales tax” (i.e., permanent loss for the County) “combined with reduced services.” Mulheren didn't even mention the loss of property taxes to the County for the 2600 parcels.

Not only did Mulheren not provide any numbers in her “cost-benefit analysis,” she didn’t even identify which services would be reduced or how.

Amazingly, despite this pathetic dearth of information, Supervisors Williams, McGourty, Gjerde and Mulheren voted for it. Haschak, as noted above, was the only no vote.

Last Tuesday, Cline invited various County officials to belatedly comment on Ukiah’s parcel grab proposal.

It quickly became obvious that there is no quantifiable “benefit” to the County at all. In fact, there are three separate and substantial layers of cost to the County: 1. The cost of trying to figure out what the impact on the County would be. 2. The cost of running the large annexation through a number of time-consuming bureaucratic hoops. 3. The substantial loss of sales and property tax revenue over time as the City takes larger and larger shares.

Just trying to figure out what would be involved in the annexation process would require a costly analysis itself. Who would/should pay for that?

There was some casual talk about asking the City to pay for the County’s analysis since the County is broke and will probably go broker if Ukiah’s proposal takes effect.

Apparently, none of Ms. Cline’s colleagues read the Ukiah City Council agenda item from last month which Supervisor Cline conveniently included in her collection of background materials:

“For over five years, the City has had and has acted upon a policy of coordinating growth, improving services, and ensuring thoughtful long-term planning in the Ukiah Valley. Those efforts have been successful not only in achieving these ends, but also in improving the City’s relationships with our sister agencies and our neighbors currently outside the City Limits. [i.e., Mendocino County and a bunch of special districts] Building on these successes, Staff have developed a proposed reorganization (the “Proposed Reorganization”) that encompasses territory around the City and aligns with existing urban-type development. Applications for amending the City's Sphere of Influence and for reorganization are subject to Mendocino LAFCo approval. [Not mentioning the County’s role at all.] Here, the City Council will consider providing direction to Staff to prepare applications for reorganization and sphere of influence update, to prezone those areas subject to the reorganization and make relevant amendments to the 2040 General Plan, and to conduct any required analyses, including any analyses required by CEQA, in support of the applications, prezoning, and General Plan Amendment, and to bring these documents to the Council for consideration.”

The City of Ukiah has already effectively volunteered to pay the cost of whatever analysis may be required, presumably including the County’s cost.

Next question: How much will the County’s analysis cost?

Nobody knows that either. Just estimating that cost is another cost.

Judging by remarks from Assessor Clerk Recorder Katrina Bartolomie and Auditor-Controller/Treasurer Tax Collector Chamise Cubbison, even that cost will be substantial.

In fact, if a majority of the Board wanted to retroactively kill the deal that shouldn’t have been approved in the first place, they could simply give the City a price tag — the sticker shock for that alone might send City officials back to the drawing board.

Cline, who was assigned to an ad hoc committee with Supervisor Bernie Norvell to deal with Ukiah’s giant parcel grab last month, said she was bringing the question back to the Board because she wanted to know what County staff would have to do to process the proposal. She said this question should have been discussed before the Board approved the tax sharing agreement last year.

Supervisor Williams, having naively voted in favor the agreement last year, suddenly said he agreed with Cline.

Supervisor Haschak basically agreed saying, “If they [Ukiah] expect a benefit, then the city should pay to figure it out.”

For various reasons, all the County officials who spoke had significant problems with the agreement and Ukiah’s proposal.

Assessor-Clerk-Recorder Katrina Bartolomie said there were all kinds of complications with the proposal and the process including the preparation of detailed, complete and accurate descriptions of each parcel proposed to be annexed or not annexed. Plus there would have to be an election in each affected district (water, sewer, fire, etc.) with each parcel owner allowed to protest annexation. And that election would require an analysis to provide parcel owners with detailed information on which to base their votes.

Auditor Controller/Treasurer-Tax Collector Chamise Cubbison told the Board that Ukiah’s proposal would be hard to implement with the County’s current property tax system. “It has some very challenging wording,” said Cubbison, such as the “effective date. What does that mean? It needs clarification,” since the agreement spans up to 15 or 20 years of transition. Cubbison said her office doesn’t go by parcels but by “Tax Rate Areas” and Ukiah’s proposal covers “dozens” of Tax Rate Areas because of the various special districts involved plus having to be recalculated each year. Cubbison added that they may have to contract with the County’s property tax computer software vendor to try configure it to make the revised tax calculations. There is no such provision now.

Sheriff Matt Kendall was even more blunt, saying that the agreement was made “by the beneficiaries [the cities], and not by those who will suffer the consequences” (the County). Kendall said his office would still have time-consuming responsibility for major crimes in the annexed areas, adding that the proposal was “biting off more than we can chew.” “Everyone should agree that this is a win-win,” concluded Kendall. “But at the moment it looks like a lose-lose.” “This has to be good for everyone,” said Kendall, “not just the beneficiaries.”

Williams, admitting that he was surprised by the size of Ukiah’s parcel grab, added, “There are some areas on the edges [of city limits], but this?”

Supervisor Norvell said he was for the agreement when he was on the Fort Bragg City Council, but now as a Supervisor he had to agree that “it is not a good deal for the County.”

At every turn until the final vote, Mulheren tried to insist that all these questions should be addressed in the ad hoc committe, not in public by the Board, offering to “share some information I have” and insisting that “we came up with a fair and reasonable deal for all.” But in the end even Mulheren voted with her colleagues to ask staff for a preliminary analysis of what would be involved for the County to even respond to Ukiah’s huge proposal.