The Pajaro Valley Health Care District was created by Senate Bill 418, on February 4, 2022. The District was formed to acquire the Watsonville Community Hospital and encompasses approximately 25,000 parcels within the Counties of Santa Cruz and Monterey.

On March 5, 2024, voters within the District approved Measure N, which allowed the District to issue up to $116 million in bonds. These bonds are to be repaid through property taxes on all parcels located within the District.

Due to a software error, approximately 5,000 parcels were not correctly included in the District when the tax rates were calculated. As a result:

  • About 5,000 parcels were not charged at all, even though they should have been.
  • About 19,000 parcels were charged too much, because the total bond cost was spread over too few parcels.

The County Auditor-Controller’s Office calculates the bond repayment tax rates. A bond repayment tax rate calculation error occurred where the tax rate was applied to only a portion of the parcels with the District boundaries due to the tax software not recognizing new tax rate areas that around 5,000 were located within. Due to this error, the PVHCD bond tax rate was not levied in the districtwide area for Fiscal Year 2025-26 for approximately 5,000 parcels. This resulted in approximately 19,000 parcels charged a higher rate resulting in a net over-levy.

To correct this, bond repayment tax rates for the impacted districtwide have been recalculated. The County ACO is working with the County Tax Collector Office to issue bills for approximately 25,000 parcels.

California Education Code, section 15250 requires the collection of voter-approved bond taxes and that the actual tax levied be sufficient to pay principal and interest of the bonds as they come due.

The County understands the importance of accuracy, especially public assessments and financial matters, and apologizes for the challenges and inconvenience caused by this tax rate calculation error. To prevent similar mistakes, we have implemented several improvement measures including a more thorough review of the parcel count within the District boundaries, the bond tax rate calculations and reconciliation processes, enhancing coordination with school districts and bond consultants during the tax levy process, and retraining staff on comprehensive bond review procedures.

The bonds were issued in 2024. They will be paid off in 2054.

For additional information and questions on the bond repayment tax rate correction, please contact:
County Auditor-Controller’s Office
Property Tax Section
Email: auditortaxdivision@santacruzcountyca.gov
Phone: (831) 454-2009