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Page 12 of 18 County. This allocation is consistent with the County’s tax-sharing policy (adopted in 1995), the County’s model tax sharing agreement (adopted in 2000), and recent tax sharing agreements between the City of Livermore and the County. The City is currently negotiating a property tax-sharing agreement with Alameda County for the Merritt project, which staff expects will also match these prior agreements. As discussed above, the fiscal impact analysis finds that the Arroyo Lago and Pleasanton Lakes projects would have a positive fiscal impact for the City. For this reason, staff anticipates it would be appropriate to use the standard property-tax sharing agreements for these projects; in other words, because the fiscal outcome to the City is positive, there is no “gap” that needs to be made up through a more aggressive tax-sharing agreement. While the City Council could direct staff to explore an alternative agreement with terms that are more favorable to the City (i.e., more than the 25 percent of 1 percent share), given County policy and past agreements, staff expects the County would be resistant to such an agreement. A property tax-sharing agreement for the Arroyo Lago and East Pleasanton projects would be established after City approval of project entitlements; the County Board of Supervisors would also need to approve the agreement. After the Alameda County Local Area Formation Commission (LAFCO) approves the annexation, the properties would be incorporated into the City's tax rate area. Regional Housing Needs Allocation (RHNA) If the Arroyo Lago and East Lakes properties are annexed into Pleasanton, the City will be required to negotiate an agreement with Alameda County to transfer a portion of the County’s regional housing needs allocation (RHNA) to Pleasanton. The "City" Arroyo Lago project includes 189 market-rate homes and 49 accessory dwelling units (ADUs). If approved by the City as proposed, staff expects a RHNA transfer agreement with the County would increase the City’s RHNA by 189 above moderate units because these units are included in the County’s Housing Element sites inventory. The City would then “count” these units in future years’ Annual Planning Reports (APRs) to HCD, as building permits are issued for them. As the 49 ADUs are not in the County sites inventory, staff expects the RHNA transfer agreement would not increase the City’s RHNA for these ADUs. If there is no RHNA increase for the ADUs, the City can report these units in its APR without a corresponding increase to the City’s RHNA. This outcome would benefit Pleasanton with a surplus of units to help meet the City’s RHNA for the 6th Cycle (2023-2031) Housing Element. For the East Lakes project, staff anticipates a more involved or complex RHNA transfer negotiation with the County. As described above, the County’s now adopted and certified Housing Element includes 445 “pipeline” units in its inventory for the East Lakes project, of which 20 percent (89) would be lower-income units. The City provided comments to the County expressing concern about including all East Lakes units in its inventory, and requested the County limit the East Lakes units to 178 above moderate units and 45 very low/low units (223 units total), or half of the proposed total (see Attachment 5). This change would benefit Pleasanton by enabling the City to report units in excess of 223 in its annual progress report without a corresponding increase to the City’s RHNA. County staff considered City comments but elected to not modify the inventory. County staff has indicated they remain open to considering the City’s request again as part of inventory- Page 211 of 749