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Wednesday, Mar 27 2013 11:00 PM

DOUG McISAAC: Kern's action on property taxes poses threat to regional growth

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    Doug McIsaac

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Last year, I was hired by the city of Bakersfield to head the city's newly created Community Development Department, which oversees all of the city's development-related services, including economic development. I was attracted to this job both by the challenge of leading the city forward in the area of economic development in a new era when the state had ended redevelopment funding, and also by the promising opportunity of building upon a local economy that seemed primed for new growth and expansion.

Unfortunately, my initial excitement has more recently turned to discouragement and doubt about the city's ability to grow jobs and the economy of both the city and the region due to an administrative action by Kern County officials that will stifle new growth and development for the foreseeable future.

The county of Kern has recently "reinterpreted" a 1995 contract with the city of Bakersfield regarding how property taxes are to be divided between the city and county when new land is annexed into the city. Its new interpretation of one sentence from an agreement that has been in place for 18 years takes 40 percent of the revenue the city normally receives when properties are annexed and shifts it to Kern County. The city believes the issue is nothing more than a money grab. Many efforts to resolve the issue have failed, and, unfortunately, it is likely headed to court.

The worst part is that the result is the very definition of "lose-lose." After several years of stagnant growth and development due to the down economy, activity and optimism are improving at a growing rate. Property owners and developers that were sitting on the sidelines are starting to build again and talking to the city about even bigger projects.

But these projects require land, and more specifically land that has water, sewer and other municipal services available. In the large majority of cases, developers won't develop unless their land is annexed into the city where they have access to the services they need and desire to make their projects successful. Due to Kern County's actions, this can't and won't happen.

As much as the city welcomes and encourages growth and development, we simply can't afford to annex new land into the city without sufficient tax revenue to support the cost of providing services. The 40 percent reduction in property tax revenue being foisted upon the city by Kern County makes this impossible to achieve.

What makes this seem even less logical is that even under the historical tax split rate, annexation and development of property in the city earns the county a tremendous increase in tax revenue. Developed property is assessed at much higher rates than vacant land. For example, consider a 2001 case where 40 acres of land were annexed into the city. After the land was fully developed with new homes the share of combined property tax revenue to the county's general and fire fund increased 300 percent from the pre-annexation level.

I am new to Bakersfield and Kern County, but I have worked my entire career in public administration and I am used to a certain degree of give and take between different levels of government. Of course you look out for the best interests of the entity you work for. But responsible government also requires looking out for the welfare of all. It is disappointing that, from my view, Kern County has staked out what I can only characterize as a selfish and very shortsighted position in this matter that is much more significant than just the tax revenue at stake.

The economic growth potential of Kern County, particularly at this strategic time when the economy is finally beginning to rebound, is tremendous. I moved to Bakersfield because I realized that and I was excited to be a part of it. Our economic growth should be firing on all cylinders for the prosperity and betterment of Bakersfield, Kern County and all of its residents. Unfortunately, it's not and it won't as long as Kern County continues to insist on only granting the city property tax revenue that can't support new development on annexed land.

Douglas McIsaac is community development director for the city of Bakersfield. Community Voices is an expanded commentary of 650 to 700 words. The Californian reserves the right to edit all submissions for length and clarity.

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