Attachment 1
REVENUES
The FY 2024/25 Mid-Year Budget projected Total Property Tax Revenue at $16,084,471 – an increase over projected revenues by $279,886.
• Secured and Unsecured Property
Tax increased $279,886 for the
fiscal year.
• Property Tax in lieu of VLF for
FY 2024/25 is consistent with
the adopted budget projections.
Staff budgeted VLF In Lieu
based on anticipated shortfalls
projected by the State for FY
2024/25. The revenue projection
for VLF In Lieu that was
included in the Adopted Budget
for FY 2024/25 is $1,433,225.
The VLF shortfall is still a major
concern for the County and local
agencies. Every year agencies lobby the State Legislature to include these funds in the State Budget. There is still a remaining shortfall for the Town of $1,455,425. This is made up of FY 2023/24 shortfall of $704,985 and FY 2024/25 shortfall of $750,440. The Town continues to use our legislative lobbyist Joe A. Gonsalves and team to assist with legislative efforts to lobby on the Town’s behalf for backfill funding.
Mid-Year Budget adjustments were made in the amount of $183,900. These were identified as one-time expenditures primarily due to one-time expenditures for operations and maintenance needs that included Laserfiche imaging project phase II, Police overtime and technology upgrades, Building contract services, and park event management services. • FY 2024/25 General Fund revenues are projected at $26.3m (inclusive of ERAF $2.71m). • FY 2024/25 General Fund expenditures are projected at $21.2m. • Net mid-year adjustments included $183,900.
• Transfers Out of $5.311m for CIP ($4.45m) and Annual COP Debt Service $861k.
The projected year-end fund balance for FY 2024/25 is $11,997,543, well above the Town’s reserve requirements for FY 2024/25.
Attachment 1
Projected FY 2024/25 Ending Fund Balance $12,400,555
Required 15% Emergency Reserve ($3,180,536)
Required 20% Contingency Reserve ($3,180,536)
TOTAL RESERVE REQUIREMENT ($6,361,072)
General Fund Unallocated Balance $6,039,483
Major Revenue Sources and 5-Year Forecasts
Property Tax Revenue
Property Taxes comprise about 70% of the total General Fund Revenues. Since FY 2011/12, the Town has seen an Assessed Property Value growth of ~7.55% per year. It dropped from 7.63%.
The highest growth year was FY 2021/13 at 9.3% and the lowest growth year of FY 2021/22 at
5.68%. In 2024 there were 48 full-value sales in Atherton, whereas in 2023, the Town saw 92 fullvalue sales. The median price for homes is down 21.72% from the previous year to $6.54m. This is an important statistic as an indicator of future property tax revenues.
Tax Year Assessed Property Value Growth Year over Year
2011/12 $6,373,832,577
2012/13 $6,949,217,818 9.03%
2013/14 $7,575,935,532 9.02%
2014/15 $8,068,565,397 6.50%
2015/16 $8,791,201,962 9.00%
2016/17 $9,512,555,665 8.21%
2017/18 $10,220,091,841 7.44%
2018/19 $10,941,160,453 7.06%
2019/20 $11,664,530,505 6.61%
2020/21 $12,376,059,220 6.10%
2021/22 $13,078,821,692 5.68%
2022/23 $14,227,857,062 8.79%
2023/24 $15,386,937,386 8.15%
2024/25 $16,386,551,372 6.50%
Atherton’s changes in property values are based mainly on CPI growth, prior year transfer of ownership, residential remodels, and new construction on razed properties. The Town’s Property Tax Consultant HdL Companies suggests that the Town uses a conservative projection of 4.0%-
5.5% increase in Property Tax revenues. This is a combination of the projected CPI growth plus a review of sales, and construction activity that will come online in the next assessment period.
For the 5-year forecast, staff projected a 4.5% increase in FY 2025/26 and FY 2026/27 and a 5.5% increase in FY 2027/28 through FY 2028/29. These are projections that can be adjusted year over year based assessed value growth. The Council may wish to discuss a reduction in those out year projections of 5.5% as they are on the top end of HdL’s projections.
Building Permit & Planning Revenues
Attachment 1
Building permit revenue is another major revenue source for the Town. Total revenue includes the basic building permit fee (calculated based a valuation per square foot); various flat fees for plumbing, mechanical and electrical permits; grading and drainage permits; and plan check fees.
Building Permit and Plan Check Fees are valuation-driven fees. Valuation-driven fees, such as Building Permit fees and Plan Check fees are based on building construction activity.
The Town is approaching its full first year of updates to its Master Fee Schedule. The new fees were effective March 23, 2024. This was done via comprehensive fee study. Most of the fee adjustments impacted fees within Building, Planning and Public Works. It had been approximately twelve years since the prior increase in building valuation fees. Most of the fees were set at full cost recovery; however, some fees were set lower based on policy direction of the City Council.
Revenue projections in the FY 2024/25 budget were based on the new Master Fee Schedule and projected work volume.
With the increase in fees and projected building activity slowing, the forecast is set at 4% for FY 2025/26; 3% in FY 2026/27 and FY 2027/28; with 2% in FY 2028/29 and FY 2029/30. Planning revenue is also projected lower in 2025/26 and FY 2026/27 as there is a projected slow down in applications for future construction permits. The Planning revenue forecast is set at 3% in FY 2027/28 and 2% in FY 2028/29 and FY 2029/30.
Educational Revenue Augmentation Fund (ERAF)
The Town uses ERAF revenue to help reduce long-term liabilities and fund one-time capital project needs. It is not included as operational revenue. In previous years, ERAF has been used for the Town Center Project, debt service, the reduction of other long-term pension obligations.
Recently, there was also an allocation to the Town’s Capital Improvement programs. The use of ERAF revenue is a year-to-year decision by the City Council as part of the budget process.
From FYs 2013/14 to FY 2015/16, the Town allocated $3,211,958 of ERAF funds toward Council priorities related to retiree healthcare and pension liabilities. ERAF revenues received from FYs 2016/17 to FY 2021/22 were directed to the Town Center Project – a total of $10,002,346.
Fiscal Year Budget Amount Actual Amount Use of Funds
FY 2013/14 $700,000 $1,020,000 OPEB Liabilities
FY 2014/15 $700,000 $1,125,000 $680,684 – OPEB Liabilities $444,316 – Workers’ Comp
FY 2015/16 $1,200,000 $1,066,958 $112,998- WC Equity
$548,950- CalPERS UAL
$405,010- Additional CIP
FY 2016/17 $1,033,000 $1,103,185 Town Center
FY 2017/18 $1,066,958 $1,280,172 Town Center
FY 2018/19 $1,025,000 $1,691,772 Town Center
FY 2019/20 $1,300,000 $1,784,091 Town Center
Attachment 1
FY 2020/21 $1,312,500 $1,863,658 Town Center
FY 2021/22 $1,100,000 $2,279,468 Town Center
FY 2022/23 $2,316,000 $2,339,064 Additional allocation CIP FY 2023/24 $2,300,000 $2,633,605 Additional allocation CIP ERAF revenue for FY 2024/25 was $2,771,578. This is an increase of $271,578 over the budget amount of $2,500,000. This is now the highest ERAF amount that the Town has ever received. In FY 2024/25 budget we increased the ERAF projection from $2.3m to $2.5m. Staff recommends maintaining ERAF at $2.5m in the upcoming budget.
ERAF is a product of State legislative tax shifts (related to property tax and school guaranteed revenue levels) and is directly affected by VLF Shortfalls. The State Legislature continues reviewing the methodology and changing the minimum guaranteed funding level for schools.
There is an expectation that the State will introduce legislation that requires jurisdictions to backfill the State’s VLF obligations using Excess ERAF. If the State is successful in this shift, schools will be made whole with VLF obligated funds, the State will reimburse the VLF shortfall with ERAF funds and the Excess ERAF funds will ultimately be reduced or eliminated. The Town is due its share of VLF and Excess ERAF. If the State uses Excess ERAF to shore up the VLF shortfall, the State would essentially be reimbursing the Town using the Town’s own expected revenue.
These three major revenues represent the primary revenues for the Town. Below is a table that reflects 5-year projections for these three revenue sources.
Major Revenues
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Property Taxes $17,145,791 $17,917,352 $18,902,806 $19,942,460 $21,039,296 Building Fees $2,446,931 $2,519,979 $2,593,219 $2,644,883 $2,697,581 Excess ERAF $2,500,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Total Revenues $22,092,722 $22,937,331 $23,996,025 $25,087,343 $26,236,877 During the budget process staff reviews and projects other significant revenues to ensure there is adequate funding to meet operational service levels. These revenues reflect increases of 1% to 2%; and/or projections based on historical amounts received in the 5-year forecast. The following table reflects the projections of other significant revenue sources.
Other Significant Revenues
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Sales & Use Tax $527,748 $538,303 $549,069 $560,050 $571,251 Franchise Fees $904,176 $928,408 $950,259 $970,340 $988,432 Business License $295,800 $300,237 $303,239 $306,272 $309,334 Planning Revenue $520,312 $620,321 $638,931 $651,710 $664,744 DPW Revenue $689,660 $709,129 $729,182 $742,951 $756,996 Park Revenue $86,700 $88,001 $88,881 $89,769 $90,667
Other Revenue $1,704,956 $1,722,203 $1,739,549 $1,757,302 $1,775,470 Total Revenues $4,729,352 $4,906,602 $4,999,110 $5,078,394 $5,156,894 Franchise Fees
Attachment 1
In November 2024, the City Council amended the Franchise Agreement between the Town and refuse hauler GreenWaste. This amendment adjusted the Franchise Fee the Town receives from GreenWaste for its exclusive franchise for refuse. The amendment adjusted the Franchise Fee from 10% to 5% of the Franchisee’s monthly gross billings. This was done to support the ratepayer impact of the annual rate adjustments for the refuse contract and thus will remain in effect until otherwise amended. The prior annual Franchise Fee totaled $430,000. With the reduction of the fee to 5%, the new projected amount is approximately $237,000 in FY 2025/26 and is projected at $290,830 in FY 2029/30. This projects a $190,000 reduction in franchise fee per fiscal year.
OTHER REVENUE FUNDS
Library Funds
The Town is a member of the San Mateo County Library (SMCL) JPA system. The Atherton Library is funded through property taxes that are collected and allocated to library services. Under the JPA, jurisdictions are permitted to retain excess funds generated from the local property taxes if the basic library services are met. The Town most recent use of all excess funds have been for the Town Center Project – Library – as well as extended library hours of daily operation, utilities, and maintenance costs. The San Mateo County Libraries holds all future excess funds.
For the Construction of the Atheron Library, SMCL advanced the Town $5,391,725 for completion of the project. With the completion of the new Atherton Library, annual excess funds minus the amounts needed for yearly operation of the library are retained by the Library JPA until the total advancement amount is reimbursed. During the agreement on advancement of Library funds, it was estimated that the projected Library Fund Revenue would be in the range of approximately $1,600,000 per year.
For FY 2023/24 the Atherton Library property tax received and held by San Mateo County Library was $1,791,379 and included interest of $85,173 for a total amount of $1,876,552. Of this amount, the Town applied $1,350,468 toward the current SMCL JPA advancement of funds balance of $2,508,377. This leaves a projected remaining balance of $1,157,909 on the advancement of funds used for the library construction. The Town anticipates that with the estimated yearly Library Property Tax revenue of $1.7m, that the debt for advancement of funds will be eliminated by the end of FY 2025/26.
The Library Budget for FY 2024/25 and FY 2025/26 will include the Children’s Nature Garden Project at $528k and Library Operations at $857k.
Once the advancement of funds is reimbursed, any remaining funds after Library Operations and CIP are evenly split between the Library and the Town for library-related activities. This estimates that the Town would receive approximately $850,000 in tax revenue for Library operations use.
These funds must be maintained separate from the Town’s General Fund and can only be used for Library services, programs and capital projects.
Attachment 1
Grant Funds
The Town receives grants through application for certain operational or capital projects. In addition, the Town receives grant funds through regional applications and other JPA agencies for use on studies, augmentation of project expenditures, or to enhance state mandated programs.
Grants are only budgeted if they have been authorized and approved by the granting agency. The Town does not budget for grants not yet awarded. There are several grants that the Town has received or for which we have award.
The Peninsula Clean Energy (PCE) grant $182,000. PCE has a one-time program geared to community reinvestment. There is currently $11.5 million available for member agency grants.
This is a fixed allocation for each agency based on load share or customer accounts at the end of the year 2023. The Town has an allocated shared amount of the PCE Grant for $182K. The grant is flexible funding to be used to reduce local greenhouse gas emissions. The grant application is due by June 30,2025. The Town’s application is for the installation of EV charging stations within the Police Department secured parking lot for the current two electric vehicles (EV) and for future transition of the fleet. The grant also covers the installation of EV stations at Holbrook Palmer Park entry lot.
Atherton Culvert and Detention $1.3m (Eshoo Grant) – The Town received grant funding approval for Upper Channel Flood mitigation project through a Community Project Funding Grant (Federal). This project is flood mitigation at Alameda de las Pulgas associated with the Upper Atherton Channel. The project is in collaboration with Las Lomitas Elementary School. This grant is administered through FEMA. Federal funds have not yet been allocated, and staff is working with FEMA to address information requests. It is likely that additional funding will be necessary to complete the project.
ADLP Traffic & Safety Project $2m (Eshoo Grant) – The Town has received a $325,000 Federal Funds grant through the State of California Department of Transportation for design funding for Alameda De Las Pulgas traffic improvements. This portion is for traffic calming and pedestrian measures along Alameda De Las Pulgas from Mills Avenue to Stockbridge. The Town is currently working on updating the improvement funds to increase the design funding to $560,000 and $1.675m available for construction.
Beverage Container Grant of $5,000 (CalRecycle Grant) – The CalRecycle grant is an annual grant received via the State. The Town recently installed water bottle filling station fountain at the Park by the Tennis Courts and Baseball field. In previous years staff has used this grant for recycling containers around the Park and Town Center facilities.
Housing Element $65,000 (LEAP grant) – The Town applied and received one-time grant funds for assistance to the update of the Town’s 6th Cycle of the Housing Element. These funds were used to augment planning and other consulting services to deliver the various portions of the Housing element update. This included the Housing Element review update, zoning update, and objective design standards.
Attachment 1
State COPS Grant of $165,000-This yearly State for Community Oriented Policing Programs is sent to local entities for use to advance community policing in jurisdictions of all sizes across the nation. Community policing focuses on crime and social disorder through the delivery of police services that includes aspects of traditional law enforcement, as well as prevention, problemsolving, community engagement, and partnerships.
Donation Funds
Police Department Wellness Program Donation of $200,000- This is for the continuation of a fulltime contract police wellness program coordinator to be shared by Atherton, Menlo Park and East Palo Alto. The regionally supportive wellness initiative gives the employees confidence that their department cares for their well-being. This donation investment helps with employee physical and mental wellness, assists in delivering benefits for officer health, morale, and operational efficiency.
The anonymous donor indicates they plan to continue to fund the wellness program on an annual basis.
Police Department K9 Vest Donation of $4,000- This donation was for a new K-9 vest to outfit our K9 “Maverick” for his service to the Town as one of our police dogs. Our police K-9 units are a vital part of our service and protection of residents and the police department.
Police Department Perishable Skills Training & Nutrition Support Program Donation of $40,000 – This program is in its second year of five and funds overtime for annual police training and funding for a nutritional support for the department. This works in tandem with our wellness program. Police training is critical for officers/staff to maintain important perishable skills, increasing team readiness and officer safety. This donation for overtime helps support a second annual training enhancing team building, morale, and maintaining perishable skills. The nutritional support program provides healthy meals, snacks, and drinks to APD staff daily.
Town Center Donation of $45,000- This was the final grant donation from the Lisa and Douglas Goldman Fund toward the Atherton Town Center project. This was part of $225,000 grant payable over five years for the construction of the Town Center. This grant is in addition to the grant awarded by the Goldman Fund in 2016 to Atherton Now for the project for a total contribution of $250,000 towards the project.
Park Beautification Donation of $1,000 from Atherton Garden Guild- The Town received the donation for the cost of labels to identify trees and provide horticulture education at the Atherton Town Center campus for trees that flourish in our Town.