PRESENTER: Presenter
Jared Werner, Assistant City Manager
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SUBJECT: Title
Approval of an interlocal agreement for the allocation of sales tax revenue for the development of fire and emergency services by the City of New Braunfels and Comal County Emergency Services District No. 7
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DEPARTMENT: N/A
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COUNCIL DISTRICTS IMPACTED: N/A
BACKGROUND INFORMATION:
The Development Agreements for the Veramendi and Mayfair Water Control and Improvement Districts included Strategic Partnership Agreements (SPA). The SPA was primarily to establish the process of collecting city sales taxes in certain portions of the district as well as the methodology for sharing sales taxes with both Veramendi and Mayfair.
The sales taxes collected within the districts would be limited to both commercial and mixed commercial properties. Texas local government code allows sales taxes to be levied within adjacent water districts through a process called limited purpose annexation. The SPA with Veramendi and Mayfair allows the City to perform limited purpose annexation on commercial and mixed commercial properties, collect the full 1.5% sales tax levy (1.125% - City and .375% NBEDC), and share the total taxes collected with the districts in accordance with the SPA. This arrangement would remain in effect until the property is fully annexed into the City of New Braunfels.
Emergency Services District 7 (ESD7) Sales Tax: In an effort to diversify revenue sources and better serve constituents. ESD7 held an election in November 2021 to levy a 1.5% sales tax within their entire service territory, which includes both Veramendi and Mayfair. As a reminder, NBFD provides all emergency services to ESD 7.
While the SPA documents were approved before the ESD7 sales tax election, the local sales and use taxes are no longer collectable as contemplated due to the existing ESD7 sales tax election.
Interlocal Agreement: The City’s legal team has been working with legal representatives from ESD7 as well as Veramendi and Mayfair to develop a solution for how to ensure the sales taxes from commercial and mixed commercial properties are distributed as the development agreements and SPA originally intended them to do so.
The attached interlocal agreement provides that the commercial and mixed commercial sales and use taxes from both Veramendi and Mayfair will be allocated to the City (from the ESD) and dedicated specifically to fire and emergency services operating costs. By doing so, it will generate capacity in the General Fund to distribute the sales taxes as the SPA originally intended ESD7 will be able to retain sales taxes from residential properties in Veramendi and Mayfair as well as the remaining portions of their territory.
If this agreement is approved by the City Council and ESD7’s board, a subsequent agreement and/or modification of the existing SPA among the City, Veramendi, and Mayfair will be brought forward to memorialize the new process for which the sales and use taxes in the commercial and mixed commercial area within Veramendi and Mayfair will be collected and distributed until full purpose annexation occurs.
ISSUE:
N/A
FISCAL IMPACT:
There is no direct fiscal impact from the approval. However, the agreement allows for the collection and distribution of sales taxes as intended by the SPA agreements with both Veramendi and Mayfair.
Recommendation
RECOMMENDATION:
Staff recommends approval