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Tax split impasse looms over Eagle Ranch 

The fate of a proposed 3,430-acre housing development southwest of Atascadero may depend on the city and county coming to terms on the split of property tax revenue generated by the new homes. Then again, it’s possible the issue is a straw man.

The Eagle Ranch plans that the Atascadero City Council sent forward on Feb. 26 for state-mandated environmental review can only become reality if the city applies for annexation. Atascadero officials have expressed concern that the two-thirds property tax share requested by the county would end up costing the city money on services provided to Eagle Ranch homeowners.

“That is something that is going to have to be resolved before we’re interested,” Mayor Tom O’Malley said in February. “Something that’s a very big concern to me and all of the council is any potential of cost shifting onto existing residents.”

The standard comes from a 1996 tax sharing agreement between the county and its cities.

However, according to figures recently furnished by the county, the entire sum generated by Eagle Ranch property taxes may not even crack seven figures per year, and most of that would go straight to the school district. The agreement means the county would be bringing in a rate of 0.16 percent on the housing development’s total assessed value, or $363,000 per year if every Eagle Ranch home sold for the current county median price.

County Administrator Dan Buckshi explained that Atascadero would get to keep 100 percent of the local sales and hotel taxes generated by the project’s commercial developments.

“Frankly, that is much more lucrative than the property tax revenues,” he said.

A prolonged impasse over tax receipts between the two governments would wipe the current Eagle Ranch proposal off the board. Yet, the developers have made it clear that their plans to build some manner of housing development on the present cattle ranch in no way depends on annexation.

The Eagle Ranch site contains 452 build-ready county lots of record with guaranteed shares in the Atascadero water utility. But if the city eventually needs a development-friendly reason to deny project approval—for instance, if the effort doesn’t seem to be financially feasible—the tax split issue could fill that role.

Plans for Eagle Ranch call for the conversion of agricultural land into a low-density development containing 494 single-family and 93 multifamily residences. Eagle Ranch would also include a 15,000-square-foot retail center, a 10.7-acre public park, a 200-room hotel, and an equestrian resort. Another several thousand acres would remain open space protected by conservation easement.

Developers Greg and Jeff Smith, who have already invested a large sum in the current proposal, would rather make Eagle Ranch a part of Atascadero. The brothers have looked into the possibility of expanding an existing community facilities district to relieve Atascadero of some projected costs.

“We believed there are ways to make it revenue neutral to the city,” Greg Smith said.

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