Staff Report
PREPARED BY: ARN ANDREWS
Assistant Town Manager
Reviewed by: Town Manager, Chief of Police, Director of Community Development, Director of Parks
and Public Works, Director of Finance, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/18/2019
ITEM NO: 17
ITEM NO: 11
DATE: JUNE 11, 2019
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN
THE TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS
56757 AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
RECOMMENDATION:
Adopt a Resolution (Attachment 1) making determinations and ordering annexation of certain
urban unincorporated islands within the Tow of Los Gatos Urban Service Area pursuant to
sections 56757 and 56375.3 of the California Government Code .
BACKGROUND:
On February 5, 2019, the Los Gatos Town Council through unanimous vote directed staff to
proceed with the implementation of the State legislated streamlined annexation process for
multiple urban unincorporated islands. An urban unincorporated island (or pocket) is
unincorporated land that is located within a city/town Urban Service Area (USA) and
substantially, or completely, surrounded by the city/town.
On June 4, 2019, the Los Gatos Town Council held a public hearing, considered public
testimony, and unanimously voted to approve a resolution (Attachment 2) initiating the
annexation of 308 unincorporated parcels within 24 unincorporated urban islands. In addition,
the Town Council set June 18, 2019 as the public hearing date for final consideration of
annexation.
PAGE 2 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
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BACKGROUND (continued):
As detailed in the June 4, 2019 staff report, the Town has conducted extensive public outreach
since the February 5, 2019 Council direction. In addition to the mandated public outreach, staff
implemented a multitude of additional outreach measures. The outreach to the
unincorporated County pocket residents and the Los Gatos community at large has included the
following to date:
• Mailed a courtesy letter to all 308 island households informing them of the Council’s
initial February 5 direction;
• Launched an annexation webpage, including frequently asked questions and maps of
the islands being considered;
• Held a courtesy community meeting for island residents to answer questions and
provide annexation information;
• Published hearing notices in both the San Jose Mercury News and the Los Gatos Weekly;
• Sent public hearing notification postcards to island residents, registered voters residing
within islands, residents within a 300-foot buffer zone of the islands, and registered
voters within a 300-foot buffer zone of an island;
o 2,643 cards were sent for the June 4, 2019 Public Hearing
o 2,643 cards were sent for the June 18, 2019 Public Hearing
• Publicized these Town Council public hearings in the Town’s “What’s New” email
notification blast;
• Responded to individual resident phone calls and e-mails;
• Held the first required Town Council public hearing on June 4, 2019; and
• Conduct the second required Town Council public hearing on June 18, 2019.
During the June 4, 2019 Town Council meeting, several speakers questioned if all residents
received the initial courtesy annexation letter and other noticing. Of the initial 308 individual
letters mailed to island residents, the Postal Service returned four as undeliverable. This
equates to a 1.3% return rate which is consistent with bulk mailings. In addition, island
residents identified that 14 addresses did not receive the initial courtesy notice and staff has
verified that all 14 addresses were included in the original 308 resident mailing.
The two larger mailings to island residents, registered voters residing within islands, residents
within a 300-foot buffer zone of islands, and registered voters within a 300-foot buffer zone of
an island had an undeliverable return rate of 2.4% out of 5,286 mailings. The undeliverable
return rate of 2.4% is also consistent with bulk mailings especially given the inclusion of voter
role data.
PAGE 3 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
S:\COUNCIL REPORTS\2019\06-18-19\17 Pocket Annexations\Staff Report.FINAL.docx 6/13/2019 1:20 PM
BACKGROUND (continued):
As of the posting date of this staff report, the Town has received additional communication
from four of the pocket residents in attendance on June 4, 2019 and four new communications
from pocket residents. Staff continues to respond to calls and email inquiries. Attachment 3
contains public comments.
DISCUSSION:
The approval of the proposed resolution is the final step in the streamlined annexation process.
In addition to some of the aforementioned streamlined requirements, the annexation process
under Government Code Section 56375.3 must also take into consideration certain other
criteria and comply with all conditions imposed by the Santa Clara Local Agency Formation
Commission (LAFCO). The criteria are:
• The islands are 150 acres or less and are surrounded or substantially surrounded by the
Town.
• The islands are not gated communities where services are provided by a Community
Services District.
• The islands are substantially developed.
• The islands are not considered prime agricultural land.
• The annexation is consistent with the adopted General Plan of the Town.
• The island is receiving benefits from the annexing city/town or will receive benefits from
the annexing city/town after annexation.
The 24 islands under consideration for annexation meet all of these criteria. Provided below is
additional information as it relates to certain of the criteria.
The annexation is consistent with the adopted General Plan of the Town.
The Town’s adopted General Plan 2020 contains the following Goal and Policy.
Goal LU-3 To coordinate with surrounding jurisdictions and other local and regional
agencies that may affect Los Gatos’s future development patterns and character.
Policy LU-3.1 Cooperate with the County of Santa Clara to encourage the annexation of
unincorporated islands into the Town. The Town will not require the installation of
curbs, gutters, sidewalks, or street lights as a condition of annexation nor will the se
improvements be imposed on annexed areas unless the residents of the area request
PAGE 4 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
S:\COUNCIL REPORTS\2019\06-18-19\17 Pocket Annexations\Staff Report.FINAL.docx 6/13/2019 1:20 PM
DISCUSSION (continued):
such improvements and are willing to participate in the cost of such improvements.
This does not prevent the Town from requiring such improvements as a condition of
approval of any zoning or subdivision approval if such conditions are normally made on
those items and the improvements would be in keeping with the neighborhood.
The consideration and annexation of these islands would meet this stated Goal and Policy of
the General Plan.
The island is receiving benefits from the annexing city/town or will receive benefits from the
annexing city/town after annexation.
As noted in staff’s informational materials provided to island residents and the L os Gatos
community at large, residents of urban pockets generally receive fewer urban services and
reduced infrastructure maintenance compared to the Town residents in neighborhoods
surrounding them; however, pocket residents pay about the same amount in taxes and fees as
their Town neighbors.
URBAN SERVICES
Service Town Comments
Property Tax &
Assessed Valuations
No change Annexation would not increase property taxes nor
assessed valuations.
Police Services Increased Service Los Gatos maintains an independent Police
Department with higher service level coverage
than currently provided.
Schools No Change School District boundaries are unaffected by
annexation. Children will continue to attend the
same schools they currently attend.
Fire Protection No Change The Santa Clara County Fire Department provides
service to the Town and the County islands.
Road Maintenance Increased Service In general, the Town has more resources to
maintain roads.
PAGE 5 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
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Service Town Comments
Library Increased Service Los Gatos maintains a state-of-the-art Town
Library.
Annexation Costs Fee Elimination Currently, homeowners proposing renovations or
new construction would need to annex into the
Town and pay the required annexation fees. The
streamlined annexation process takes care of this
requirement, saving property owners time and
money.
By annexing into the Town, unincorporated pocket residents will receive increased urban
services at little or no increase in cost. In general, total Parcel Tax and Special Assessment tax
bills are anticipated to be slightly lower after annexation. The tables below represent a typical
property tax bill from a pocket resident as compared to a Los Gatos resident.
TAXES and FEES
Taxing Agency Santa Clara County Rate Town of Los Gatos Rate
Land, Improvements, Personal Property
Property Tax 1% of assessed value 1% of assessed value
County Retirement Levy .03880 .03880
CO Bond 2008 Hospital Facility .0072 .0072
CO Housing Bond 2016 .0105 .0105
Community College Bonds .0198 .0198
Elementary or Unified School Bonds .0486 .0486
High School Bonds .0304 .0304
Mid-Peninsula Open Space 2014 .0018 .0018
CO Library Retirement .0024 NA
Total Assessed Rates 1.1595 1.1571
Taxing Agency Santa Clara County Rate Town of Los Gatos Rate
Land and Improvements
SCVWD-State Water Project .0042 .0042
Total Assessed Rates .0042 .0042
PAGE 6 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
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DISCUSSION (continued):
TAXES and FEES
Parcel Tax/Special Assessments
Taxing Agency Santa Clara County Rate Town of Los Gatos Rate
Los Gatos-Saratoga High SD -Parcel
Tax 2016
$49.00 $49.00
Santa Clara Valley Water Dist – Safe,
Clean Water
$66.26 $66.26
Santa Clara County –Vector Control $5.08 $5.08
Santa Clara County – Mosquito
Assessment #2
$8.36 $8.36
Santa Clara County – Library JPA $33.66 NA
Los Gatos Union School Dist –
Measure B
$290.00 $290.00
Santa Clara Valley Water Dist – Flood
Control Debt
$21.20 $21.20
West Valley Sanitation Dist – Sewer
Sanitary/Storm
$555.00 $575.38
SF Bay Restoration Auth – Measure
AA
$12.00 $12.00
Total Parcel Tax/Special Assessments $1,040.56 $1,027.28
In addition to the expectation of enhanced services after annexation, pocket residents already
receive benefits from the Town. The following diagrams illustrate that most island residents
must travel on Town streets to leave their neighborhoods to go to schools, parks, freeways,
businesses, and other services. In other words, pocket residents are almost entirely dependent
on accessing Town infrastructure to enter or exit their homes.
In addition, pocket residents benefit from shared facilities such as Blossom Hill Park. The recent
improvements provided in the maps identify that the Town has invested $2.34 million in capital
improvements in neighborhoods either in or around the unincorporated pockets. However, as
described in greater detail in the “Fiscal Impact” section of the report, unlike all other Los Gatos
residents, the local share of property tax from unincorporated pocket residents does not come
to the Town to help support the maintenance and beautification of the assets they utilize.
PAGE 7 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
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DISCUSSION (continued):
PAGE 8 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
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DISCUSSION (continued):
PAGE 9 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
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DISCUSSION (continued):
CONCLUSION:
The Town Council should conduct a public hearing, consider public testimony, and adopt a
Resolution making determinations and the required findings, and ordering the annexation of
certain urban unincorporated islands within the Town of Los Gatos Urban Service Area pursuant
to sections 56757 and 56375.3 of the California Government Code.
PAGE 10 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
S:\COUNCIL REPORTS\2019\06-18-19\17 Pocket Annexations\Staff Report.FINAL.docx 6/13/2019 1:20 PM
COORDINATION:
This report was coordinated with the Town Manager’s Office, the Town Attorney’s Office,
Community Development Department, Police Department, Department of Parks and Public
Works, and the Finance Department.
FISCAL IMPACT:
The Town of Los Gatos currently has 30 urban islands of various sizes within the valley floor and
hillsides of the Town. Of the 30 urban islands, three of them are greater than 150 acres in size
and the remaining 27 are smaller than 150 acres. This annexation includes 24 of the 27 urban
islands under 150 acres. The majority of these islands are on the valley floor and six are
adjacent, or near, to Blossom Hill Road (technically hillsides). All of these urban islands are
either completely or substantially surrounded by the Town. The remaining six are in periphery,
hillside locations. The 24 urban islands consist of approximately 116.1 acres of which the
largest island is 40 acres and the smallest island is 0.1 acres.
Since 2001 when the streamlined State legislation was adopted, the Town has opted not to
utilize the streamlined annexation process and thereby forego collection of property tax for
residential parcels that are entirely within the Town’s borders. Among other things, annexation
of the islands will end the diversion of property tax revenue to the County for these parcels.
While the County does provide basic provision of services (garbage, recycling, etc.) to these
residents, pocket residents utilize the core infrastructure of the Town to same degree as
existing Los Gatans. Pocket residents use Town arterial streets as they commute to and from
work, schools, and other venues. However, unlike all other Los Gatos residents, their local
property tax share does not help to support the maintenance and enhancement of the Town
even though they are Los Gatans for all intents and purposes.
If the Town proceeds to annex the 24 proposed pockets, the Town would end the diversion of
property tax and receive the property tax revenue from these parcel s. The urban islands under
consideration are comprised of approximately 308 single-family residential parcels, with an
approximate assessed valuation of $389,874,550 or an average of $1.26 million per parcel.
Based on the Town’s current percentage of property tax distribution, the pocket properties
would equate to approximately $1.0 million in annual property tax revenue for the Town.
It should be noted, that the Town would have responsibility for providing municipal services to
the additional areas, including the long-term maintenance of the annexed streets after the
County completes repairs as negotiated with the Town. Considering that the properties are
either substantially or completely surrounded by the Town, service provision can be provided i n
an efficient manner with existing service cycles and staffing levels. However, staff will monitor
PAGE 11 OF 11
SUBJECT: ADOPT A RESOLUTION MAKING DETERMINATIONS AND ORDERING
ANNEXATION OF CERTAIN URBAN UNINCORPORATED ISLANDS WITHIN THE
TOWN OF LOS GATOS URBAN SERVICE AREA PURSUANT TO SECTIONS 56757
AND 56375.3 OF THE CALIFORNIA GOVERNMENT CODE
DATE: JUNE 11, 2019
S:\COUNCIL REPORTS\2019\06-18-19\17 Pocket Annexations\Staff Report.FINAL.docx 6/13/2019 1:20 PM
the provision of services and if an incremental increase in future staffing is needed to maintain
service levels, proposals will be submitted as part of the regular annual budgetary process.
Attachments:
1. Resolution Adopting Annexation
2. June 4, 2019 Resolution Initiating Annexation
3. Public Comments received before 1100 a.m., Thursday, June 13, 2019