City may consider annexing harbor

Jurisdictions might study the possibility

Crescent City and harbor leaders have agreed to discuss the possible annexation of the harbor by the city.

The move could create more revenue and jobs, officials for both jurisdictions believe.

The issue will be raised at the next meetings of the City Council and the Harbor Commission. The council meets 6 p.m. Monday in the Board of Supervisors room at the Flynn Center, 981 H St.; and the Commission meets 6:30 p.m. Tuesday at the same location.

“Annexation at first brush is a win-win situation for both the city and the harbor,” Harbor Commissioner Scott Feller said. “If this works, there could be a lot of revenue for everybody in the future.”

Unless one of the boards rejects the proposal outright at its next meeting, the city and harbor would form a joint committee to examine the possible annexation.

If it occurred — and the process would probably take a couple of years — the harbor would become a special district within the city and would still be governed by a Harbor Commission and a harbormaster.

Ultimately, the annexation would also involve Del Norte County, said Crescent City and Harbor District attorney Bob Black.

“If the city initiates the process, it is mandatory that it sits down with the county and forms a profit-sharing agreement,” Black said.

The county currently receives all the revenue that the harbor generates in the form of property and sales tax.

The property taxes are placed in a pool with all other county property taxes. The county then distributes the property tax revenues to special districts. 

Like other special districts in both the county and city, the harbor receives a percentage of the countywide property tax amount. That percentage is currently $270,000 to $280,000 a year. This would not change if the harbor were to be annexed. 

What would change with annexation is that the city would start receiving a percentage of the harbor property taxes, and a percentage of the harbor sales tax. These percentages would have to be arrived at through negotiations between city and county.

Despite the possible change in which jurisdiction gets what tax revenue, Black said “the county has always said that they support the concept of annexation.”

“The harbor is currently treading water financially,” Black said. “For this to work out to everyone’s benefit, the harbor would have to be part of the revenue-sharing agreement.”

Having a financially viable harbor increases the economic health of the community as a whole, he noted.

“The county would benefit from annexation because increasing the economic viability of the community ultimately saves the county money in social services,” Black said.

“Whether fixing the inner boat basin, sidewalks or potholes in the roads, a more attractive and viable harbor will definitely attract more business and tourist dollars to the community as a whole,” Black said.

Harbormaster Richard Young agreed with Black’s assertion that the harbor creates revenue for the surrounding community.

“We have the unfortunate situation of generating revenue, whether from our employee’s paychecks, or tourists attracted by the harbor, that gets spent in the surrounding community and not the harbor,” Young said. “This leaves us without the funds necessary to do the types of repairs and upgrades that attract more businesses and more tourists.”

What the annexation would mean for businesses already in the harbor is that taxes would increase because the city has a transient occupancy tax (TOT) and unlike the county, levies it on RV parks.

At this point there is not a TOT tax currently being levied in the harbor, Black said.

But Black feels that some of the tax increase would be offset by the fact that city water bills are 30 percent less than those paid outside city limits.

The city stands to gain in at least two ways, Black said.

“There would definitely be an immediate increase in revenue into city coffers because the city would start receiving a percentage of the tax revenue generated by the harbor,” Black said.

“We truly believe that the harbor is an important part of the economic future of Crescent City,” said Mayor Kelly Schellong. “That is why we are trying to work to come up with creative solutions.”

If you go

WHAT: City Council meeting

WHEN: 6 p.m. Monday

WHERE: Board of Supervisors rooom, Flynn Administration Center, 981 H St.

WHAT: Harbor Commission meeting

WHEN: 6:30 p.m. Tuesday

WHERE: Board of Supervisors room, Flynn Administration Center 981 H St.