Property Tax Exchanges

State law specifies all change of organization proposals filed with Marin LAFCO requires property tax exchange agreements be preapproved before the associated action – i.e., annexation, detachment, etc. – is considered by the Commission.   Approval of an exchange is made either by LAFCO or the subject local agencies depending on the proposal type.   The exchange ultimately identifies the allocation of future property taxes associated with the affected territory among the subject agencies going forward should LAFCO approve the associated proposal.  The explicit legislative intent of the property tax exchange process is to provide for the reasonable and fair distribution of related monies in step with altering municipal service responsibilities among governmental agencies.   Most typically – although not always – this involves counties agreeing to transfer portions of their existing property tax allocation generated within affected territories to annexing cities, towns, or special districts in which general and non-enterprise services are involved, such as community development, roads, fire protection, and public recreation.  
A flow chart of the property tax exchange process is provided by the document below.

Property Tax Exchanges Flowchart 


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