County Supervisors will split Dana Reserve property tax revenue with Nipomo Community Services District 

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Voting against their own policy that states that funding for independent special districts should not result in a net fiscal loss to the county, the Board of Supervisors has set a new precedent for community services districts. 

“I’m a little confused because we do have … a board rule that does say that from a budgeting standpoint that we don’t want to share the tax revenue,” said 1st District Supervisor John Peschong, during the July 9 Board of Supervisors meeting. “The problem is this is what I’m afraid of, is that this will be used as an excuse to not build this project and this project is very needed in the community.” 

His expressed concerns arose after a first round of negotiations between county staff and the Nipomo Community Services District (NCSD) came to a stalemate over potential tax revenue from the Dana Reserve, a 288-acre housing development. The supervisors ultimately voted 3-2 to share property taxes with the NCSD, with 2nd District Supervisor Bruce Gibson and 4th District Supervisor Jimmy Paulding dissenting.

During negotiations, the county Assessor’s Office provided data that said the recently approved Dana Reserve development would generate an extra 3.7 percent in property taxes, money that the NCSD said belongs to it due to a change in its annexation policy back in March of 2023. 

The NCSD’s new policy states that the amount of property tax revenue exchange in future years should remain consistent with historic property tax revenue sharing agreements with regard to the percentage allocated to the district. 

However, the county has its own policy stating that “independent special districts are autonomous government agencies fully independent of the county in governance, the provision of services, and funding, the county shall not subsidize an independent special district with county general fund monies nor should any property tax exchange result in a net fiscal loss to the county.” 

This policy resulted in the county offering the NCSD zero percent of the property tax, as they said they already allocate 27 percent of its Post Educational Revenue Augmentation Fund to that district. But the NCSD didn’t think this was fair. 

During its June 18 meeting, the Board of Supervisors directed staff to continue negotiating with the NCSD and return during the supervisors’ July 9 meeting with new recommendations. Staff said they reached a deal with the NCSD and recommended that the board agree to split the property tax and give approximately 2.4 percent to the community services district. 

However, this split would generate a loss to the county general fund in the range of $139,707 to $882,518 per year.

County Administrator Officer Matt Pontes said negotiations between the county and the NCSD were difficult since both boards have different policies. 

“We have this board policy that the board set not too long ago that kind of gave direction and that’s what we shared with the Nipomo CSD at that time, and you know they also have their own board policy as well and are attempting to really capture as much tax money as possible,” he said. 

While the board was split, 3rd District Supervisor Dawn Ortiz-Legg was in favor of breaking the county policy because she claims the county needs this housing and any other area in California would welcome this project with open arms. 

“I think that as good neighbors we really need to work together with the NCSD and try to help them address their needs,” she said. “I really appreciate staff for going back after and working really hard at finding an agreement on this, and while there could be some missing revenues, not extensive, I think that the overall benefit of this project [is] for the entire county.” 

The Dana Reserve development plans to build 1,370 residential units with 156 being deed restricted to very low- and low-income affordable housing, according to previous New Times reporting. 

“This kind of investment is what we needed in this county,” Ortiz-Legg said. “We’ve never had a planned community for so many years, which can house both seniors, individuals, families, ... the higher end, executives, etc. 

“And that I think that’s why we need to take a special look at this, a separate look, because I haven’t seen any other services district come to us and say, ‘We’re providing this to you, now help us a little,’” she said. 

However, 4th District Supervisor Jimmy Paulding and 2nd District Supervisor Gibson felt differently. 

Gibson said while he feels like this project is beneficial, he doesn’t think it’s worth giving up property tax. 

“Let’s remember that the NCSD is a service provider whose revenues depend on rates and changes, and again that’s why there’s no rationale for moving an increment of property tax, even 2-plus percent over to them,” he said. “The only argument that they advanced to me was one of equity: ‘Well, you used to do this in the past, and now you’re not going to do it.’ 

“Well we have, and we’ve found out and we established the policy when we engaged the dissolution of the Cayucos Fire Protection District that was seeking a supplement from this board,” he said. 

The supervisors realized that this was a precedent-setting decision and that they can’t afford to supplement these service districts, Gibson said. 

“If these service districts are to continue, then they are going to have to produce the revenue that causes them to be able to provide the service,” he said.

According to previous New Times reporting, on Nov. 1, 2018, the Board of Supervisors voted 2-1 to dissolve the Cayucos Fire Department, take over fire protection responsibilities, and replace the current firefighters at the department with county’s first responders. This was due to the town not being able to fund the department alone. 

Gibson said this Nipomo vote will set precedent for community services districts that are watching this decision and will expect the same treatment. 

First District Supervisor Peschong said some community services districts in his area will be approaching the board soon with their own property projects. 

“Just remember that San Miguel is coming back here pretty quickly because they have some housing in the works,” he said. 

San Miguel Community Services District General Manager Kelly Dodds told New Times that there are quite a few housing developments in the works in the community. 

The biggest one, Dodds said, is the River’s Edge on Indian Valley Road. 

“Right now, that project is designed for 185 units and ... either 3 or 5 acres of commercial space,” he said. “It’s a pretty big project for San Miguel.” 

While the Board of Supervisors passed the staff recommendation of giving the NCSD 2.4 percent of the property tax and take a loss to the county general fund, the NCSD still has to vote on the deal. 

NCSD General Manager Raymond Dienzo told New Times that he can’t comment until his board of directors votes on it. 

“Our staff will be present the property tax exchange negotiated terms to our NCSD Board on Aug. 14,” he said via email. “I will be recommending that the board accept the percentage that the county approved.” ∆

Reach Staff Writer Samantha Herrera at [email protected].