v . 0 0 4 P a g e | 1
June 25, 2024
ITEM TITLE
Ballot Initiative: Place a Measure on the November 5, 2024 Ballot to Continue the One-Half Cent General Sales Tax for 10 Years, Carry Out Necessary Election Procedures, Approve Related Ordinance Amending CVMC 3.33, and Authorize Other Necessary Actions
Report Number: 24-0191
Location: No specific geographic location
Department: City Manager
G.C. § 84308: No
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Notwithstanding the foregoing, the activity qualifies for an Exemption pursuant to Section 15061(b)(3) of the California Environmental Quality Act State Guidelines.
Recommended Action
Adopt the following:
A. Ordinance of the City of Chula Vista amending Title 3, Chapter 3.33 of the Chula Vista Municipal Code to continue a temporary one -half cent general transactions and use tax to be administered by the California Department of Tax and Fee Administration. (First Reading) (4/5 vote required) B. Resolution of the City Council of the City of Chula Vista 1) amending Resolution No. 2024-054 calling a general municipal election to be held on Tuesday, November 5, 2024; 2) ordering submission to the qualified voters of the city, a proposed ordinance relating to the extension of a one-half cent general transactions and use tax; 3) authorizing the Mayor to submit ballot arguments in favor of the measure; and 4) directing the City Attorney to prepare an impartial analysis of the measure . (4/5 vote required)
SUMMARY
The City of Chula Vista, like many cities throughout the country, struggles to repair and/or replace its aging infrastructure. In 2016, Chula Vista voters approved Measure P which is anticipated to provide $245 million to repair or replace critically needed city-owned infrastructure. This item presents a formal ballot measure for City Council consideration for placement on the November 5, 2024 statewide election ballot to allow the City to continue to address additional high priority needs. The measure is for the continuation of a one-half cent transactions and use tax measure (the "Measure") for 10 years. Although the City's most pressing need is infrastructure improvement, repair and maintenance, the tax is a general tax which can be spent for any lawful purpose of the City.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment.
Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
In addition, notwithstanding the foregoing, the Director of Development Services has also determined that the activity qualifies for an Exemption pursuant to Section 15061(b)(3) of the California Environmen tal Quality Act State Guidelines. Thus, no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
At the April 25, 2024 meeting of the Measure P Citizen Oversight Committee , the Committee recommended approving funding to place this item on the November 5, 2024 ballot.
DISCUSSION
In 2016, the City Council placed a temporary one -half cent general transactions and use tax, Measure P, on the November ballot for voter consideration. Measure P was overwhelmingly approved by the voters , receiving a 68.43% yes vote.
During the tenure of this Measure, major infrastructure projects delivered include:
7,700 sidewalk segments were repaired or replaced to alleviate trip hazards. 330 residential street segments rehabilitated and repaired. 138 public safety vehicles replaced.
150 storm drain locations and 20,000 linear feet of corrugated metal pipe repaired or replaced to prevent sinkholes.
13 City buildings and public facilities renovated.
Two fire stations relocated to improve response times. Construction of a new Loma Verde Community Center.
Reconstruction of basketball courts, bleachers, picnic benches, drinking fountains, expanded ADA access and new restrooms at Rohr Park.
ADA, roof and electrical upgrades to the Civic Center Library. 9 Energy efficient HVAC upgrades at City facilities.
1 citywide water efficient irrigation system installed.
Staff is recommending continuation of the existing one-half cent general transactions and use (sales) tax for an additional ten years , without raising taxes, to allow the City to address items that were identified as greatest importance based on public outreach. In May 2024 a survey was distributed to all 92,000 residences in the City. The survey responses ranked the following items of highest importance to the community:
Fixing potholes and paving and maintaining local streets. Keeping existing parks and recreation facilities safe, clean and well-maintained. Addressing homeless encampments and increasing cleanup efforts. Repairing or replacing aging underground stormwater pipes that are at risk of collapse and creating sinkholes.
Repairing infrastructure including sidewalks, curbs, and storm drains. Cleaning up trash and litter along streets, sidewalks and in other public areas. Making improvements to roads and intersections to better manage traffic congestion on City streets.
Adding sidewalks in priority areas.
While a general use tax cannot approve a specific list of projects, community feedback has provided types of critical and emerging needs that could be addressed with such a measure. As a general tax, the approval requirement is a simple majority (50%+1) of voters. It is recommended that the current Citizen Oversight Committee continue its role to ensure public confidence in the use of the funds.
The Citizen Oversight Committee is an effective way to guide the expenditure of the funds throughout the life of the Measure. The Citizen Oversight Committee would continue to serve in an advisory capacity. In particular, the Committee will continue to review the Measure's annual spending plan and state whether or not it is consistent with the City Council Infrastructure, Facilities and Equipment Expenditure Plan. The Committee will continue to review the Independent Auditors' Report on revenues and expenditures and present an annual report to the City Council with findings relative to the use of Measure's funds. The Mayor and City Council shall continue to appoint all members of the Committee. It is highly desirable that members of the Committee have accounting, finance, engineering or experience in a related discipline (including construction), but not required. The members will continue to be residents or representatives of businesses located within the City of Chula Vista and shall not be elected officials or current City employees. While the Citizen Oversight Committee does not have budget authority, it is a public body governed by the Brown Act, which requires open public meetings, properly noticed and posted agendas, and reports and minutes.
The clear accounting of additional revenue and resulting expenditures is key to transparency. Revenue from the sales tax Measure is a general tax and shall be realized in the General Fund in a separate line item (i.e.
Sales Tax - Measure P). In order to provide greater transparency, these funds will then be transferred to a fund established for the Measure where all transactions will be accounted for in accordance with generally accepted accounting principles (GAAP).
If the Measure is approved by the voters, prior to the City Council consideration of the City's annual budget, staff will continue to prepare and present to the Citizen Oversight Committee a spending plan for the Measures revenues. Such plan shall include specific proposals for near term expenditures, a plan for expenditures throughout the 10 -year term of the tax, and finance options for larger scale projects. After review by the Committee, the spending plan will be incorporated into the City Manager's proposed budget for consideration as part of the City's annual budget process.
The sales tax rate currently applied in the City of Chula Vista is 8.75%. This includes a combined statewide amount of 7. 25%, a San Diego County district tax of 0.50% for the TransNet program , Measure A , a local
0.50% general sales tax that is being used for public safety, and Measure P, a local temporary 10-year 0.50% general sales tax being used for infrastructure. Of the total 8.75% collected, the City receives 2%. Pursuant to California Revenue and Taxation Code Section 7251.1, the combined rate of all taxes imposed in any county (above the statewide tax rate) may not exceed 2%. Continuing a general-purpose tax of one -half percent (0.50%) for 10 years after the current measure expires is projected to generate an estimated $373 million in additional revenues over the life of the Measure; with actual revenues determined by economic conditions. Also pursuant to California Revenue and Taxation Code, food items (groceries), prescriptions, certain medical devices, and other "Necessities of Life" items are exempt from sales tax (see Sections 6006, 6010, 6016, 6018, 6353, 6358, 6359, 6363, 6364, 6365, 6366, 6370, 6371, 6373, 6408, and 6409). If approved by the voters, the current tax would remain in effect until March 31, 2037.
The ballot language to be presented to the voters is as follows:
Shall the measure to continue funding City of Chula Vista services including fixing potholes; keeping streets, sidewalk s, infrastructure, parks, public facilities safe, clean, well -maintained; repairing aging storm drains; managing traffic congestion; and removing trash/graffiti from public spaces, by renewing City of Chula Vista’s half -cent transactions and use tax at the current rate (no increase), continuing an estimated $37,000,000 annually for general government use for 10 years, with citizen oversight, independent audits, and all money locally controlled, be adopted?
The revenue from this Measure would continue to be paid in addition to the existing sales tax and would be collected at the same time and in the same manner as the existing sales tax except as to vehicle sales, which are taxed based on where the vehicle will be used, rather than where it is sold. This avo ids creating a competitive disadvantage for car and other vehicle dealers in cities with local sales taxes. As with the existing tax, the new revenue would be collected by the State Board of Equalization, however all revenue generated would be dedicated to Chula Vista and could not be diverted to the state or other agencies.
Because the Measure is a proposed "general tax", the revenues would go into the City's General Fund and could be used for any legal municipal purpose. City staff recommends a general us e sales tax measure to address general asset management needs, including infrastructure and associated staffing to maintain a safe and clean community.
PROCESS
The California Revenue and Taxation code authorizes the levy of a transactions and use tax (a sales tax or 'district' tax) by any county, city, city and county, or any other governmental agency.
In order to proceed, pursuant to California Revenue and Taxation Code Section 7285.9 and other applicable state law, the City Council must first enact an ordinance amending Title 3, Chapter 3.33, of the Chula Vista Municipal Code entitled "Chula Vista Temporary Half -Cent Sales Tax," extending the temporary one-half cent general transactions and use tax.
The next step is adoption of a resolution amending Resolution No. 2024-054 calling a general municipal
election to be held on Tuesday, November 5, 2024, and ordering the submission of a proposition to the voters at said election, to consider approval of the ordinance. If approved, the ordinance would extend the current transactions and use (sales) tax at the rate of one-half percent (0.50%) of the gross receipts of any retailer from the sale of all tangible personal property sold in the City through March 31, 2037.
Ballot Arguments
California Elections Code Section 9282, and Municipal Code section 2.50.150, allow the legislative body, any member or members of the legislative body authorized by that body, any individual voter who is eligible to vote on the Measure, or bona fide association of citizens, or any combination of voters and associations, to submit an argument for or against a measure placed on the ballot by the legislative body. Arguments may not exceed 300 words in length and must be submitted to the City Clerk no later than August 15, 2024. The action tonight would authorize the Mayor to submit arguments in favor of the Measure, on behalf of the City Council.
Pursuant to a resolution previously adopted by the Council allowing rebuttal arguments, rebuttal arguments will be allowed, in accordance with Elections Code Section 9285. Rebuttal arguments ma y not exceed 250 words and must be submitted to the City Clerk no later than August 20, 2024.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real pro perty holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any Councilmember, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no fiscal impact in the current fiscal year.
ONGOING FISCAL IMPACT
The fiscal year 2024 -25 adopted budget includes funding to place the measure on the November 5, 2024 ballot.
If the ballot measure is approved by the voters, it is projected to generate an estimated $373 million over a 10-year period, with the actual revenues determined by econom ic conditions. As stated in the proposed ballot question, the estimated tax revenues are based on current revenues and include an inflation escalator.
As is in place now, following review by the Citizen Oversight Committee, the spending plan will be included in the City Manager's proposed budget for Council consideration as part of the normal budget process.
ATTACHMENTS
None.
Staff Contact: Courtney Chase, Deputy City Manager