Mountain View City Council members unanimously approved extending an agreement that shares property tax revenue from the Shoreline area with the Mountain View Whisman and Mountain View Los Altos Union High school districts for three more years, as negotiations over a longer term agreement remain ongoing.

The council members – acting at the Shoreline Regional Park Community Board of Directors – voted 7-0 at a Tuesday, Oct. 10, meeting to amend an agreement that currently expires next summer so that payments continue through June 30, 2027.

The move came at the request of the Mountain View Whisman School District. When the district submitted its 2023-24 budget to the Santa Clara County Office of Education for approval, the county signed off on the document, but raised concerns about its inclusion of Shoreline tax revenue in future years.

In a letter to the school district, county Superintendent of Schools Mary Ann Dewan instructed Mountain View Whisman to either provide a finalized agreement concerning Shoreline tax revenue or a letter of assurance from the city that the district will receive the money. Otherwise, Dewan told the district to exclude the money from its multi-year projection.

The district then sent a letter to the City Council asking for this assurance. School board President Laura Ramirez Berman thanked the council on Tuesday for considering the request.

"I just want to reiterate my appreciation for you including this amendment to the (agreement) on the agenda tonight," Berman said. "These annual payments benefit our students and provide crucial programs and services. … We appreciate your support so that MVWSD can avoid any negative budget consequences."

While the council uniformly agreed to the extension, some members also made clear that they wanted to see similar cooperation from the school district.

"I'm happy to support this, but I do want to identify it as an act of good faith and to say that all of the parties need to be carrying out acts of good faith," Pat Showalter said.

Showalter said that it seemed the city was "on the giving end" in a lot of interactions with the school district and that she wanted the city to be appreciated for its assistance.

Council member Lisa Matichak said she was hopeful that a long-term agreement could be reached on Shoreline tax revenue that works well for everyone, but criticized the school district's rhetoric on the topic.

"The sky is falling strategy that the school district is using just really cannot continue," Matichak said. "The sky is not falling."

Tensions have been high between the city and Mountain View Whisman in recent months, with both parties describing a damaged relationship and lack of trust in the other.

Negotiations over how to divvy up tax money from the Shoreline area has been one area of dispute. Mountain View Whisman and MVLA are both largely funded by property taxes and typically get a set portion of the tax revenue collected within their attendance boundaries. The Shoreline area is different.

The Shoreline Regional Park Community is a special tax district that was created in 1969 and covers much of the city north of Highway 101. Property tax revenue from within the Shoreline Community's boundaries isn't distributed according to the typical system, but is instead set aside for the maintenance and improvement of that area.

For over 15 years, the city – which serves as a steward of Shoreline tax funds – has agreed to share some of the money with the school districts, though less than what they would receive if the tax district didn't exist.

The city and school districts have been trying to negotiate a long-term agreement. In May, the parties agreed to a one-year deal to buy themselves more time.

Under that agreement, which expires on June 30, 2024, the amount the districts receive is based on three components: a minimum payment of roughly $5.7 million for Mountain View Whisman and $3.6 million for MVLA, an adjustment payment based on the percent change in property tax revenue, and a one-time payment that's 10% of the adjustment payment.

The council approved extending the minimum payment and adjustment payment for three more years, but not the 10% one-time payment. Under the extension, the districts will annually receive the sum of the prior year's minimum and adjustment payment, adjusted to account for property tax growth.

If property taxes grow by 7% annually, the districts can expect to receive a combined $11.3 million in the first year of the extension, climbing to $13 million in the third year, according to a city staff report.

While city staff supported extending the current tax revenue sharing agreement for three years, staff also drew attention to Mountain View Whisman's conservative property tax assumptions. Mountain View Whisman's budgets typically assume a lower rate of property tax growth than MVLA and the city. According to staff, that means that "potential projected impacts of MVWSD not being able to include future (Shoreline) payments in its revenue forecasts may not come to pass."

Berman responded in a letter to the city that Mountain View Whisman has a different tax base than MVLA, which includes parts of Los Altos and Los Altos Hills, and that without the Shoreline money, property taxes would need to grow at an unrealistic rate to make up the gap.

Despite the disagreement over tax rate calculations, the council voted to support extending the Shoreline agreement. City staff will now prepare an amended agreement to review with the districts, before bringing it back for final approval. City staff told the council that they expect this process to be completed by the end of the calendar year.

Negotiations over a long term agreement will also continue, according to a city staff report.