Agenda packet — Concord City Council, March 1, 2025

1 COUNCILMEMBERS
Carlyn S. Obringer, Mayor
Laura M. Nakamura, Vice Mayor
Dominic D. Aliano
Pablo Benavente
Laura M. Hoffmeister
Civic Center
1950 Parkside Drive
Concord, CA 94519
www.cityofconcord.org
Special Meeting of the
Concord City Council
Saturday
March 1, 2025
9:00 a.m. - Open Session/Workshop Concord Senior Center Garden Rooms
2727 Parkside Circle
Concord, CA
This meeting is being held in-person only.

Members of the public are invited to attend and participate at: Concord Senior Center, 2727 Parkside Circle, Concord, CA.

Public comment may be provided in-person or via email, as set forth below. Members of the public desiring to provide comments as a part of the meeting are encouraged to either submit written comments before 3:00 p.m. the day before the meeting or to attend the meeting in person.

Under California law, public comments at special meetings are limited to subjects on the agenda only. Therefore, public comment will only be taken on Agenda Item No. 2.a.

HOW TO PARTICIPATE
The public is invited to participate in the Special City Council meeting using any of the following methods:

In-Person Comments: Welcome to the Special City Council meeting. To assist the Mayor in allowing all speakers to be heard, we ask you to fill out a blue Speaker’s Card if you wish to address an item.

Please complete the Speaker’s Card and give it to the City Clerk before the agenda item is called, and preferably before the meeting begins. When the Mayor recognizes you to speak, come forward, give your name, and direct your remarks to the Council. Please limit your comments to three minutes, or less if so directed by the Mayor.

2 Written Comments: Please note that emailed comments will not be read aloud by staff. a.Public comments can also be submitted via email to [email protected]. Please note that emailed comments will not be read aloud by staff. Any public comments received before 3:00 p.m. the day before the meeting will be:

1. distributed to the Council before the meeting,

2. posted online for public inspection at
https://stream.ci.concord.ca.us/OnBaseAgendaOnline/Meetings/Search, and

3. inserted into the meeting record.
b.As emails containing public meeting comments are part of the official record, note that personal contact information may be published if it is included with your email.

OPEN SESSION

1. OPENING
Roll Call

2. CITY COUNCIL CONSIDERATION ITEM
The public is entitled to address the City Council on items appearing on the agenda before or during the City Council’s consideration of that item. Each speaker will be limited to approximately three minutes. Please see “How to Submit Public Comments” above. a. Council Workshop on Long Range General Fund Projections and Unfunded Infrastructure Needs.

3. ADJOURNMENT
Next Meeting: Regular Meeting
Date: 3/4/2025 6:30 PM

NOTICE TO THE PUBLIC
There is a 90-day limit for the filing of a challenge in the Superior Court to certain City administrative decisions and orders which require a hearing by law, the receipt of evidence, and the exercise of discretion. The 90-day limit begins on the date the decision is final (Code of Civil Procedure §1094.6). Further, if you challenge an action taken by the City Council in court, you may be limited by California law to raising only those issues you or someone else raised in the hearing or in a written correspondence delivered to the City Council prior to or at the hearing.

In accordance with the Americans with Disabilities Act and California Law, it is the policy of the City of Concord to offer its public programs, services and meetings in a manner that is readily accessible to everyone, including those with disabilities. If you are disabled and require a copy 3 of a public hearing notice, or an agenda and/or agenda packet in an appropriate alternative format; or if you require other accommodation, please contact the ADA Coordinator Tianjun Cao at (925) 671-3243 or [email protected], at least 24 hours in advance of the meeting. Advance notification within this guideline will enable the City to make reasonable arrangements to ensure accessibility.

CITY OF CONCORD MEMORANDUM
Office of the City Manager

Date: March 1, 2025

TO: Mayor Obringer and City Council Members

FROM: Valerie Barone, City Manager

SUBJECT: Council Workshop on Long Range General Fund Projections and Unfunded Infrastructure Needs

Workshop Basics
This workshop is scheduled for Saturday, March 1 in the Concord Senior Center’s Garden Rooms. A continental breakfast will be available for Council starting at 8:30 a.m. The meeting will begin at 9:00 a.m. Lunch will be provided for Council and staff. Attire is casual.

The Mayor, Councilmembers, Executive Team, and Steve Toler of Baker Tilley will be attending. The meeting is open to the public. The meeting will be facilitated by City Manager Valerie Barone.

The goals of the workshop are as follows:

1. Continue strengthening the teamwork amongst Council and amongst the Council and Executive Team;

2. Present updated long-range fiscal projections for Concord’s general fund operating budget and discuss how this forecast impacts the development of the next two-year budget;

3. Begin development of a Strategic Infrastructure Investment Plan by sharing a summary of the City’s unfunded infrastructure needs, information on various methods available to cities to fund infrastructure investment and begin development of guiding principles for use in preparing an infrastructure investment strategy.

Attachment
Presentation Slides

2.a

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City Council
Study Session
March 1, 2025 • Concord Senior Center • 9:00 a.m.
1 Introduction and
Valerie Barone, City Manager
Agenda
Comments
2 1
2

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Mission
Statement
Our mission is to join with our
community to make Concord a city
of the highest quality. We do this by
providing responsive, cost-effective,
and innovative government services.
3 Study
Session Goals
Receive long-range fiscal projection update of
Concord’s General Fund Operating Budget
Receive updated summary of the City’s
unfunded infrastructure needs and discuss
what near term and long-term options Council
wants to explore further
Team building among Council and ET
3 2
1 4
3 4

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Team Building
5 Part 1

DONNA LEE, BUDGET AND TREASURY OFFICER

STEVE TOLER, BAKER TILLY
- Review of this year’s operating budget
- Long Range Financial Forecast (FYs 2025-27)
6 5
6

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FY 2024-25 Operating Budget Adjustments
On February 11 the City Council authorized adjustments to the FY 2024-25 General Fund Operating Budget forecasts:
• Sales tax decrease of $3.5 million (ongoing)
• Franchise fee increase of $1.3 million (ongoing)
• Business license fee increase of $0.4 million (ongoing) • Interest earning increase of $0.4 million (ongoing)
• CalPERS expense increase of $2.5 million (ongoing)
Net Negative Impact: $3.9 million ongoing
7 General Fund Reserves
To sustain General Fund Operating Budget Reserves at target of 30% at Fiscal Year end:
• The General fund requires $11.2 million from the Fiscal Stability Fund
• This action fully depletes the Fiscal Stability Fund. 8 7
8

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FY 2024-25 Measure V Appropriations
Fiscal Year 2024-25 Measure V revenues supporting
operating fund and other vital services and functions:
• $14.9 million allocated for General Fund operating expenses • $7.5 million payment toward $114 million infrastructure debt • $7.9 million used for Capital Improvement Program
• $2.7 million for other essential City services
Total Measure V Revenue $33.0 million
9 Anticipated Challenges for Next Biennial Budget
• Fiscal Stability Fund fully depleted
• Flattening sales tax growth
• Increased CalPERS costs
• Federal funding uncertainties
• Upcoming labor contract negotiations (all contracts expire 6/2026) 10 9
10

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Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms.

City of Concord
Fiscal Model
Update FY 2025
City Council Study Session
3/1/2025
12 “A financial forecast is a
tool. It is basically math.

What makes it powerful is:
 Accurate baseline data
 Realistic assumptions
 The ability to tell a story
about the fiscal health of
an agency
But remember, the
numbers never sleep.”
Financial
Forecasting
11 12

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13 Financial Forecasting in Local Government
CITY OF CONCORD FISC AL MODEL UPDATE 2025
• Tool to inform decision making
• Identify historical performance and future trendsPurpose • Credible
• Understandable
• Linked to sound fiscal practices
Usefulness
• Within the agency’s control (setting fees, services,
service levels)
• Outside the agency’s control (tax measures, private
investment, economic trends)
Discerning
controllability
14 Executive Summary of Concord’s Fiscal Situation
CITY OF CONCORD FISC AL MODEL UPDATE 2025
Post-pandemic sales tax
and property tax growth
rebounded faster than
cost for service delivery
ARPA funding provided
$13 million in one-time
resources to restore
revenue depletion
Recent “lower than
expected” sales tax and
franchise fee revenues,
and higher
personnel/pension costs,
are creating a fiscal gap
Long-range forecast
indicates fiscal gap
growing to $10 million by
FY2030 reducing
reserves below minimum
threshold by FY 2029 if
not addressed
13 14

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15 Foundational Assumptions in the Forecast
CITY OF CONCORD FISC AL MODEL UPDATE 2025
Tariffs, federal payments
and monetary policy
No assumptions influenced by new Administration’s
actions pending shakeout of recent actions
Capital project funding No assumptions related to funding any capital projects out of General Fund resources
Economy and inflation
Mild recessionary impacts in 2030 (every seven years)
Long-term inflation in SF Bay Area region no greater
than 3% per year
Debt service
Service existing debt
No new debt service obligations
16 Summary of Key Revenue and Reserve
Assumptions
CITY OF CONCORD FISC AL MODEL UPDATE 2025
Property tax – Annual growth rate of 4.0%;
no significant development assumptions in
baseline forecast; former RDA still in effect
Sales tax – Long-term growth rate of 3%
based on HdL 2025 projections
Measure V Sales Tax – Assumes
continued ~ 50% residual split to General
Fund; grows by 3% per year
Franchise fees – 3% long-term growth
based on gax/electric cost increases offset
by “cut the cord” for video services
Development fees – Average annual growth
of 3% based on historical averages excluding
significant one-time development projects
Investment income – Investment return rate
reduced from 4% in 2026 to 3% by 2028 and
thereafter based on long-term bond yield
markets
Minimum reserves – Minimum reserve policy
of two months (~17%) of annual budgeted
operating expenditures plus recurring
transfers; reserve goal of 30%
Recession – Moderate recession impacting
primarily sales tax, TOT and business license
tax starting in 2030; recovery in 3 years;
average recessionary cycle every 7 years
15 16

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17 Summary of Key Expenditure Assumptions
CITY OF CONCORD FISC AL MODEL UPDATE 2025
Service levels – maintain existing service
levels; no new staff positions; maintain
existing contracted services
Salaries – Placeholder assumption of 2%
per year for all positions; additional
vacancy savings assumption of 2% per
year; no new staff positions
Healthcare costs– Annual growth rate of

4.5% based on historical trends and
anticipated cost sharing
CalPERS and CCRS Pension – CalPERS based
on Pension Outlook Tool; discount rate remains
at 6.8%; PEPRA phased at 15 years; no ADP;
CCRS closed pool phase out by 7.5% per year to
2050
Services, supplies, utilities – Long-term
growth rate of 3% per year mirroring
inflation assumptions; expenditure savings
of 5% per year from FY 2026 on
Debt service – Service existing debt, no
new debt service
Capital outlay – No funding of capital
projects from General Fund resources;
continued Downtown maintenance at 2025
levels
18 Long-Range Forecast Results
CITY OF CONCORD FISC AL MODEL UPDATE 2025
• Including recessionary assumptions, annual fiscal gap through 2032 averages $5.6 million per year (without corrective action), but surpluses may exist in following years that rebuild reserves. • Reserves start at minimum reserve goal in FY 2025 and below the minimum reserve threshold by FY 2029 without corrective action
17 18

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19 What is Leading to the Fiscal Gap?
CITY OF CONCORD FISCAL MODEL 2025
Softening revenue sources
Property tax
Sales tax
Increased pension costs
Unfunded actuarial liability growth
• FY 2021 (6.1% loss)
• FY 2022 (5.8% gain)
Salary growth higher than PERS’ 2.8% assumption
O&M Costs Contracted services increases
20 Sales Tax Declines
CITY OF CONCORD FISC AL MODEL UPDATE 2025
(5.00%)
(4.20%)
(9.30%)
(9.20%)
(4.20%)
(14.50%)
(6.20%)

1.00%

0.00%
(20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0%
Overall
Autos
Building/Construction
Business/Industry
Food/Drugs
Fuel/Service stations
General consumer goods
Restaurants/hotels
County pool
Concord Sales Tax Trends 3Q 2023 to
3Q 2024 Autos
• Dealership sales
Building/Construction
• Building materials
• Garden supplies
Business/Industry
• Contractors
• Medical/biotech
Fuel/Service stations
• Gas sales (price; quantity)
• Auto repairs
Source: HdL Contra Costa County 3Q 2023 to 3Q 2024 Receipts 19 20

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21 Why does Fiscal Gap Correct Itself?
CITY OF CONCORD FISC AL MODEL UPDATE 2025
• Unfunded actuarial liability (UAL)
payment reduces starting FY 2032
• Conversion to PEPRA employees
CalPERS
CalPERS
• Annual funding ($2.2M) reduces

7.5% per year throughout forecast
CCRS
Pension
CCRS
Pension
• Revenue growth is projected to
outpace expenditure growth
Growth
trends
Growth
trends
22 Addressing the Fiscal Gap
CITY OF CONCORD FISC AL MODEL UPDATE 2025
• Reserves start at minimum reserve goal in FY 2025 and below the minimum reserve threshold by FY 2029 without corrective action
• Requires $3.4 million in expenditure reductions in FY 2026 to maintain reserves above minimum reserve threshold
• Reserve draw down totaling $14.7 million through FY 2031 would still be necessary to stave off further expenditure reductions
21 22

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Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. The name Baker Tilly and its associated logo is used under license from Baker Tilly International limited. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. © 2025 Baker Tilly Advisory Group, LP Steve Toler

DIRECTOR
M: +1 (650) 740-7007
E: [email protected]
Key
Takeaways
• Revenue and cost headwinds the City
faces this year will influence our long
range forecast and the next two-year
operating budget, which will be presented
as a draft to Council in May.
• The Fiscal Stability Fund is anticipated to
be depleted by the end of this fiscal year.
• To retain a reserve level that does not
drop below 17% in the long-range
forecast, staff will identify approximately
$3.4 million of budget reductions (2.5%) in
the next two-year budget.
24 23
24

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Historical Budget Reductions
◦ Reduced 2019-20 GF operating expenses by $2.2 million (mostly temporary actions—like freezing vacancies, decreasing training and travel)
◦ Reduced 2020-21 GF operating expenses by $10.7 million (mix of temporary and permanent reductions)
• Temporary Reductions: Furloughs, wage increases paused, suspended benefits for unrepresented employees
• Permanent Reductions: Miscellaneous operational cost reductions & eliminated full and part-time positions (37 FTE cut)
From 2003 to 2025 the City reduced FTE by 104 positions (529>425) 25 Public Comment
26 25
26

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Council Questions and
Feedback on Operating Budget
Part 1
27 Break
28 27
28

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Part 2

JUSTIN EZELL, ASSISTANT CITY MANAGER

STEVE TOLER, BAKER TILLY
- Unfunded Infrastructure Needs
- Funding Options Overview
29 City of Concord Assets = $1.3 billion
Facilities 750,000 sf
Parks 379 acres
Streetlights 8,379
Sewer Miles 389
Street Miles 310
Traffic Signals 194
Sports Courts 27
Athletic Fields 26
30 29
30

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Available Information
Parks and medians backlog assessment:
• Worked with consultants to identify needs in 2014-15
• Needs include refurbished athletic fields, irrigation systems, plant material replacement, etc.

Facilities backlog assessment:
• Worked with consultants to identify needs in 2020
• Needs include HVAC, roofing, painting, lighting, courts, etc., for existing City facilities, etc.

Roadways assessment:
• Detailed analysis conducted in 2024
31 Annual Funding Shortfall
Total annual funding shortfall estimated at an average of $17.4 million over the next five years:
• $10.7 million annually to maintain roadways at a PCI of 54 • $6.7 million annually for parks, medians, and facility needs • Estimate does not include needs of other key infrastructure such as storm drain and traffic signal systems, street lighting, etc. 32 31
32

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Roadway Funding
Roadway investments are primarily funded through debt,
Measure V, Measure J and Gas Tax
• Debt: $114 million of funding for roadways over five years, repaid over 20-years with Measure V revenue, in year 4 of the 5 investment years.
• Annual funding will decrease to $11.5 million once borrowed funds are exhausted in FY 2025-26
• Current PCI = 54 (good) projected to drop to 48 in next five years if funding levels are not increased (PCI ranging from 25–50 = Poor) 33 Anticipated Infrastructure Funding Challenges
• Measure V is already supporting infrastructure to the extent possible without redirecting from General Fund (i.e., cutting services)
• Federal infrastructure funding remains uncertain
• Backlog of investment needs, and costs to address them will only grow the longer we delay
34 33
34

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City of Concord
Infrastructure Funding
and Other Revenues
Opportunities
Presented by: Steve Toler, Director
March 1, 2025
36 Today’s Presentation

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Proposition 218/26 Primer
Choosing the Right Revenue Strategy
Tax Revenue options
CFD, EFIDs, Parcel taxes and Benefit assessments
Fees/Charges/Rates and Cost Recovery Strategies
Financing Capital Assets
Next Steps
California cities have several options to provide or increase the financial resources available to address community infrastructure and services needs California cities have several options to provide or increase the financial resources available to address community infrastructure and services needs 35 36

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Proposition
218/26
Primer
38 Proposition 26 – Defining a Tax by What it is NOT

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • zoning permits, parking permitsSpecific benefit
• recreation classes, utilitiesGovernment service or product • building permits, police background checksPermits and inspections • facility rentals, park rentals, franchise feesLocal government property • parking fines, code enforcement feesPenalty for illegal activity • planning fees, grading permits, development impact feesProperty development • fees imposed on a property owner, fees for property related serviceProposition 218 exceptions 37 38

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39 Proposition 218 – When is a Tax Imposed,
Increased or Extended

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Imposed
• When a local
tax ordinance is
adopted
Extended
• A decision to
extend the
effective period
for the tax
Increased
• Increase the
rate of the tax
• Revising the
methodology by
which the tax is
calculated
40 Taxes Require Voter Approval

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Special TaxGeneral Tax
• Specific purpose• UnrestrictedUse of Revenues
• Majority of Councilmembers• General law cities – 2 /3 of Councilmembers
• Transactions and use tax – 2/3 of
Councilmembers
Governing Body
Approval
• 2/3 of the voters voting on the measure• Majority of voters voting on the measureVoter Approval • Must be deposited into a separate fund
• Must publish an annual report including
•T a x r a t e
• Amounts collected and expended
• Status of projects funded by the tax
• Must be consolidated with a regularly
scheduled general election of member of
the governing body, unless a fiscal
emergency is declared by unanimous vote
Other Rules
• None (but there are assessment districts)• Business license tax • Local transactions and use (sales) tax
(Measure V)
• Transient occupancy tax
Concord Examples
Source: The California Municipal Revenue Sources Handbook (5th Edition), Michael Coleman 39 40

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Choosing the
Right
Revenue
Strategy
42 Factors for Evaluating Revenue Strategies

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Factors
Potential for
community resistance
Technical and
operational difficulties
of implementation
Timing necessary for
implementation
Disruptive impact on
service delivery
Disruptive impact
within City
organization
Potential Annual Fiscal Impact
High
(e.g., > $3M)
Medium
(e.g., $1-$3M)
Low
(e.g., < $1M)
HighModerate-
High
Low-
ModerateMinimal difficulty
Difficulty of
Implementation
Moderate-
HighModerateLow-
ModerateModerate difficulty
ModerateLow-
ModerateLow/NoSignificant difficulty
Revenue Strategies
Analysis
41 42

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Tax Revenue
Options
44 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES New Fiscal
Impact1
Existing in
ConcordDescriptionOption
HighImposed on transfer of ownership in real estate;
requires the city to be/enact a city charter
Real property
transfer tax
Low
(at Cap)
Local sales tax on retail goods; maximum local rate
of 1% and overlapping rate of 2% unless legislative
approval given
Local
transactions and
use (sales tax)
Medium
Imposed on businesses for the privilege of
conducting business in the city; flat or variable rate
based on type of business, employee-base vs.
gross receipts-base
Business license
tax
High
Imposed on use of utility services. May be imposed
on electricity, gas, telephony, cable, water, sewer
and garbage
Utility users tax
1 High = > $3 million; Medium = Between $1 million and $3 million; Low = < $1 million 43 44

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45 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES New Fiscal
Impact
Existing in
ConcordDescriptionOption
MediumTax on consumer for the privilege of attending a show, performance, or use of sports/recreation amenitiesAdmissions tax Low-MediumExcise tax imposed on the privilege or activity of development
Construction/
development tax
LowImposed on overnight guests for hotels, motels, inns or private residences through online booking services
Transient
occupancy (hotel)
tax
LowImposed on occupant of off-street parking spaceParking tax Low-MediumImposed on vacant commercial propertiesCommercial vacant parcel tax
* - Court decisions pending that limit collection based on cost of service 1 High = > $3 million; Medium = Between $1 million and $3 million; Low = < $1 million 46 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Yes, but shared through CountyExisting in
Concord Today?
• State law (Documentary Transfer Tax Act; Cal. Const. Art XI §5)
Legal Authority
Generate revenues for general or specific purposes based on:
• General Law city – county collects tax, shared 50% with local jurisdiction
• Charter city – establishes it own rate subject to voter approval Purpose/How it
Works
• General law city - $1.10 per $1,000 of sales price, split equally ($0.55) between city and county
• Charter city – city establishes rate; county continues to collect the full $1.10 per $1,000
Taxing rates
• Negotiated between buyer and seller at close of escrow (typically seller)
Who pays
Real Property Transfer Tax
Real Property Transfer Tax
• Concord would
need to enact a
city charter
requiring a
separate vote (but
can be done at
same time as tax)
• Range of options
in taxing rates
(flat; tiered;
differentiate
property types)
• Concord would
need to enact a
city charter
requiring a
separate vote (but
can be done at
same time as tax)
• Range of options
in taxing rates
(flat; tiered;
differentiate
property types)
45 46

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47 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Yes, Measure VExisting in Concord
Today?
• Bradley-Burns Uniform Local Sales and Use Tax
Law (Cal. Rev and Taxation Code §7251-7273)
Legal Authority
• Funds general services or specific projects
• Collected by business based on value of goods
and services sold, remitted to state, distributed to
local agency
Purpose/How it
Works
• Limited to 1% locally, and 2% combined overlay
of all other taxing agencies, unless legislative
relief is provided
Taxing rates
• Consumers of taxable goods and services,
collected by business, remitted to state,
disbursed to local agency and counties
Who pays
Local Transactions and Use (Sales) Tax
Local Transactions and Use (Sales) Tax
• Concord required
legislative relief to
implement
Measure V to
exceed the 2%
cap
• A dditional
revenue
opportunities
would require
state legislature
approval and
Governor’s
signature
• Concord required
legislative relief to
implement
Measure V to
exceed the 2%
cap
• A dditional
revenue
opportunities
would require
state legislature
approval and
Governor’s
signature
48 Sales Taxes in Concord

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES CA General Fund

3.9375%
CA Local Public Safety

0.50%
CA Local Health/Social
Services

0.50%
CA Local Revenue Fund
2011

1.0625%
Local - County
Transportation Fund

0.25% Concord - Base
(Bradley-Burns) Rate

1.00%
Concord - Local
TUT (Measure V),

1.00%

BART TUT

0.50%
Contra Costa Transp
Auth

0.50%
Contra Costa County
TUT

0.50%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%
Total Sales Tax in Concord
Sales Tax that
stays in
Concord:

2.00%
Sales Tax that
stays in
Concord:

2.00%
Total Local Transaction
and Use (Sales) Tax:

2.50%
Statutory Limit:

2.00%
Total Tax Rate:

9.75%
Total Tax Rate:

9.75%
47 48

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49 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Yes, hybrid model (flat; per employee and gross
receipts)
Existing in
Concord Today?
• Cal. Govt Code §37101 (revenue purpose); Business
and Professional Code §16000 et. Seq.(regulatory
purpose)
Legal Authority
• Typically posed as tax for revenue purposes for
businesses conducting operations in jurisdiction
• May be a regulatory fee but w ould be subject to cost of regulatory programs
Purpose/How it
Works
• Up to local jurisdiction to determine type of businesses, rate type (flat, employee-based, gross receipts, square footage), rate structure (flat, tiered), minimum/maximum Taxing rates
• Business owner, remitted to local agency directlyWho pays Business License Tax
Business License Tax
• Agencies will
typically consider
regional rates in
other jurisdictions
competing for
local businesses
• Design of the
taxing structure
must consider
administrative
impacts and
fairness/equity
among
businesses
• Agencies will
typically consider
regional rates in
other jurisdictions
competing for
local businesses
• Design of the
taxing structure
must consider
administrative
impacts and
fairness/equity
among
businesses
50 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES •N oExisting in
Concord Today?
• Cal. Govt Code § 37100.5Legal Authority
• Imposed on the consumption of utility services
including electricity, gas, water, sewer,
telephone, cable television, and sanitation (solid
waste)
Purpose/How it
Works
• Determined by city
• Statewide range of 1% to 11%; median is 5%
Taxing rates
• Utility customer, collected by utility, remitted to
local agency
Who pays
Utility Users Tax
Utility Users Tax
• On average, UUT
provides 12% of
General Fund revenues
for cities that levy it
• Determination of wh ich
utilities to include for a
new measure will be
based on local utility
composition and
potential voter
acceptance
• Provides more
diversified (less volatile)
revenue stream
• On average, UUT
provides 12% of
General Fund revenues
for cities that levy it
• Determination of wh ich
utilities to include for a
new measure will be
based on local utility
composition and
potential voter
acceptance
• Provides more
diversified (less volatile)
revenue stream
49 50

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51 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES •N oExisting in Concord
Today?
• Cal. Govt. Code §37100.5Legal Authority
• Levied on consumer for privilege of attending a
show, performance, display or exhibition
• Typical venues include movies, concerts,
sporting events, circuses, museums, skate
center and other exhibitions/performances
Purpose/How it Works
• Flat rate (amount per ticket) or percent of ticket
value
Taxing rates
• Ticket buyer, collected by seller, remitted to local
agency
Who pays
Admissions Tax
Admissions Tax
• Potential sources
could include
Concord Pavilion,
theaters, rock
gyms, bowling
alleys, escape
rooms, and
private sports
facilities
• Must not impinge
activities
protected by the
First Amendment
• Potential sources
could include
Concord Pavilion,
theaters, rock
gyms, bowling
alleys, escape
rooms, and
private sports
facilities
• Must not impinge
activities
protected by the
First Amendment
52 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • NoneExisting in Concord
Today?
• Cal. Govt. Code §37100.5Legal Authority
• Excise tax on privilege or activity of development
and/or the availability or use of municipal services
• Imposed on new construction; no relationship to
cost of new construction impacts (different from
development impact fees; AB1600 does not apply)
Purpose/How it Works
• Generally based on number of units, number of
bedrooms or square footage
Taxing rates
• Developer/builder of projectWho pays
Construction/Development Tax
Construction/Development Tax
• Since these
revenues are paid
by a project one-
time, they are
typically best spent
on non-recurring
programs and
services rather than
ongoing operations
• Infrequently used,
but there are
examples in NorCal
(e.g., San Rafael,
Sacramento, San
Jose, Vallejo)
• Since these
revenues are paid
by a project one-
time, they are
typically best spent
on non-recurring
programs and
services rather than
ongoing operations
• Infrequently used,
but there are
examples in NorCal
(e.g., San Rafael,
Sacramento, San
Jose, Vallejo)
51 52

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53 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Yes – 10%; imposed on hotels primarilyExisting in Concord Today?
• Cal. Revenue and Tax Code §7280-7281Legal Authority
• Imposed based on “rental” rate of persons staying
30 days or less in lodging facility
• Typically considered a general tax, but some
agencies have enacted special taxes dedicated to
tourism/travel (different from tourism business
improvement district taxes)
Purpose/How it Works
• Percentage of rental/room rate; typically ranges
from 7% to 20%
Taxing rates
• Transient (guest) pays tax; collected by operator of lodging facility
Who pays
Transient Occupancy Tax
Transient Occupancy Tax
• Establishing rate
typically considers
rates in adjacent or
“competing”
jurisdictions
• High voter approval
success rates are
typical
• Establishing rate
typically considers
rates in adjacent or
“competing”
jurisdictions
• High voter approval
success rates are
typical
54 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • NoneExisting in Concord
Today?
• Cal. Govt. Code §37100.5Legal Authority
• Imposed on off-street parki ng space for privilege of using space in the City; different than parking
meters or parking fees in City-owned lots
• Primarily used by larger cities or where there are
several parking lots where customers pay
daily/weekly/monthly rates
Purpose/How it Works
• Typically percentage of parking rateTaxing rates
• Paid by individual parking vehicle in lot
• Collected by owner/operator of off-street parking
facilities and remitted to City
Who pays
Parking Tax
Parking Tax
• Private parking
lots could be
subject to the
parking tax
• BART lots in
Oakland, Berkeley
and San
Francisco are the
only lots currently
subject to local
parking taxes
• Private parking
lots could be
subject to the
parking tax
• BART lots in
Oakland, Berkeley
and San
Francisco are the
only lots currently
subject to local
parking taxes
53 54

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55 Tax Revenue Options

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • NoneExisting in
Concord Today?
• Cal. Govt. Code §37100.5Legal Authority
• Parcel tax on vacant pr operty that is developed and
vacant, or undeveloped, for a certain length of time
during the year (e.g., 50 days)
• Usually focused on addressing specific community
issues (e.g., blight, homelessness)
Purpose/How it
Works
• Tax rates established by city as a flat annual amount, subject to exemptions (e.g., low income, active
construction, natural disaster)
Taxing rates
• Assessed by city based on knowledge/experience of
property being vacant
• Collected by county on property tax bills and remitted to city
Who pays
Commercial Vacant Parcel Tax
Commercial Vacant Parcel Tax
• Voters approved
taxes in several
Bay Area cities
(e.g., Oakland,
San Francisco,
Richmond,
Berkeley)
• Successful
measures are
typically based on
blight or vacancy
that is posing
health and safety
concerns
• Voters approved
taxes in several
Bay Area cities
(e.g., Oakland,
San Francisco,
Richmond,
Berkeley)
• Successful
measures are
typically based on
blight or vacancy
that is posing
health and safety
concerns
Parcel taxes, CFDs,
BADs and EFIDs
55 56

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57 CFDs, EFIDs, and Parcel Taxes

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES New Fiscal
Impact
Existing in
ConcordDescriptionOption
Medium
Special tax imposed on property owners to finance
public capital facilities and/or services (e.g., parks, street lighting, wildfire protection,
recreation/cultural programs, libraries, emergency
services); requires 2/3 vote of voters within district
Community
facilities district
tax
Medium
Tax increment financing (TIF) tool that allows local
governments in California to fund infrastructure
and economic development projects without
raising taxes.

Enhanced
infrastructure
facilities districts
Medium
Special tax on parcels of property based on flat
per-parcel or variable rate (size, use, number of
units); requires 2/3 vote whether general or
specific purpose
Parcel tax
1 High = > $3 million; Medium = Between $1 million and $3 million; Low = < $1 million 58 Benefit Assessments

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Special assessments levied to pay for specifically identified public improvements or service that directly benefit properties or businesses New Fiscal
Impact
Existing in
ConcordDescriptionOption
High
Formation of assessment district; requires engineer’s
report (formation and annually); examples include lighting, parks/landscaping, stormwater/flood control; property
owner must receive a special benefit not subsidized by
general public
Assessments on
property owners
Low
Typically imposed on businesses in form of business
improvement district (e.g., tourism improvement districts, downtown business improvements districts); intended to
specifically benefit businesses to improve opportunities for local commerce and joint facilities/services
Assessments on
businesses or
persons
1 High = > $3 million; Medium = Between $1 million and $3 million; Low = < $1 million 57 58

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59 New Option – Climate Resilience Districts (CRD)

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Purpose
• Climate-related
challenges
• Sea level rise
• Extreme heat/cold
• Wildfire risks
• Drought conditions
• Flooding
Formation and
Governance
• Single city, county
or special district
• Partnership among
multiple agencies
• Governing body
appointed by
forming agency(ies)
• Plan, fund, oversee
projects
Funding Sources
• Existing local
funding streams
• State and federal
grants
• Private investments
• Same taxing
options as EIFDs
(e.g., tax increment
financing)
• Existing or new
benefits
assessment
Project
Implementation
• Infrastructure
improvements
• Ecosystem
restoration
• Cooling centers
• Wildfire prevention
measures
• Water conservation
initiatives
SB 852 (2021) – Formation of collaborative units dedicated to climate adaptation and mitigation efforts SB 852 (2021) – Formation of collaborative units dedicated to climate adaptation and mitigation efforts 60 Differences between CFDs, EFIDs, Parcel Taxes
BADs and CRDs

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Climate Resilience DistrictBenefits AssessmentParcel TaxEnhanced Infrastructure Financing District
Community Facilities
District Tax
Attributes
SB 852 (2021)Various laws (e.g., Landscaping
and Lighting Act 1972, Benefit
Assessment Act of 1982, Prop 218)
CA Govt Code §50075SB 628 (2014)Mello-Roos Act (1982)Legal Authority
Funds climate adaptation and
resilience projects
Funds specific property-related
improvements
Funds local services (not
infrastructure)
Funds public infrastructure,
economic development and
affordable housing
Funds infrastructure and
services
Purpose
EFID tools plus benefits
assessments, special taxes, etc.

Special assessment based on
benefit received
Flat-rate charge per
parcel
No new tax; captures future
property tax growth
Tax based on property type,
size or other formula
How It’s
Levied
Depends on which tool is selected
(e.g., special tax 2/3 approval;
benefits assessment majority protest)
Majority protest process (i.e., can
be approved if <50% protest);
weighted ballot processed typically
used
2/3 approval of voters
citywide
No voter approval needed, but
bonds require 55% voter
approval
2/3 approval of either 1)
voters (if more than 12), or 2)
landowners (if less than 12
voters)
Approval
Process
Depends on funding toolBased on level of benefit per
property
Typically same for all
parcels (may have
exemptions; e.g., seniors)
No direct charge; revenue
depends on growth in property
values
Can vary by property type,
square footage or other
factors
Flexibility in
rates
Ongoing, aligned with climate
resilience initiatives
Typically ongoing subject to
periodic review
Permanent or for a set
number of years
Up to 45 yearsCan last decades (e.g., until
bonds issued for
infrastructure are paid off)
Duration
Depends on funding toolOnly property that directly
benefits, levied on property tax
bill
All parcel owners in the
jurisdiction, levied on
property tax bill
No charge to property owners
directly; dedicates increased tax
revenues for express purposes
Only properties within CFD,
levied on property tax bill
Who Pays
Wildfire prevention, sea-level rise
mitigation, drought management, heat
resilience
Landscaping, lighting, drainage,
street maintenance
General city servicesMajor public infrastructure,
economic development,
affordable housing
New developments needing
infrastructure, public safety,
parks
Common
Uses
59 60

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61 Key Takeaways on CFDs, EIFDS, Parcel taxes and
Benefits Assessments

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Best for new development needing long-term
funding for infrastructure and servicesCFDs
• Best for large-scale development and associated
infrastructure projects using tax increment financing
without imposing new taxes
EIFDs
• Best for citywide services but requires high voter
approvalParcel taxes
• Best for ongoing maintenance where property
owners receive a direct benefitBenefits assessments
Fees/Charges/
Rates and
Cost Recovery
Strategies
61 62

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63 Fees, Charges and Rates

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES • Utility rates
• Service and program fees
• Property-related fees
User fees
• Development impact fees
• Regulatory program feesRegulatory fees
• Franchises
• Facility use feesRents
Subject to definitions in Proposition 218 and Proposition 26 Subject to definitions in Proposition 218 and Proposition 26 64 User Fees

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Prop 218
Notice?Other Possible Fees
Existing Fees in
ConcordDescription
Yes• Stormwater fees (if
formed as utility)• Wastewater ratesFees paid for utilities services receivedUtility Rates
No
• None of
significance (based
on current services)
• Planning
• Plan check
• Building
• Recreation
• Golf course
Fees for various
services provided to
persons or
businesses
Service and
program
fees
No
• N one of
significance (based
on current services)
• S ewer connection
fees
Levy imposed on
parcel incident to
property ownership
Property
related fees
Based on costs to provide service, subject to cost recovery goals Based on costs to provide service, subject to cost recovery goals 63 64

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65 Regulatory Fees

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Prop
218
Notice?Other Possible FeesExisting Fees in ConcordDescription No
• City facilities (e .g.,
city hall, police
station, recreation
center)
• Inclusionary housing
• Parking in-lieu
• Traffic mitigation
• Storm drain/drainage acreage
• Parkland dedication in-lieu
Fees charged to compensate
for new demands on public
resources resulting from
development of land or property
Development
impact fees
No
• Heavy vehicle
impact fees
• Peddler and vendor
fees
• Zoning variances
• Building/safety inspections
• Map applications
• Abandoned vehicle
• Cannabis licensing
• DUI cost recovery
• Roadway impact fees
Charge for cost of public
programs or facilities to
regulate a business or activity
Regulatory
program fees
Based on underlying costs of impacts/regulatory oversight Based on underlying costs of impacts/regulatory oversight Financing
Capital Assets
65 66

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67 Financing Capital Assets

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Typical Financing
Sources
Existing in
ConcordTypical Projects/UsesDescription
Financing
Option
• General Fund
resources

• City halls
• Public safety buildings
• Park improvements
• Libraries
• Public works projects
Pledge General Funds and “full faith and
credit” as security of payment; requires 2/3
vote for new issuances for specific projects
General
obligation
bonds
• Tax assessment to
properties in CFD
area
• City facilities
• Parks facilities
• Infrastructure
improvements
• Libraries
Issued under Community Facilities District
(CFD); requires 2/3 vote of affected property
owners
Mello-Roos
Bonds
• Pledged future
revenues
• Utilities infrastructure
• Golf courses
• Parking facilities
Pledges specific revenues to address financing
needs
Revenue
bonds
• General Fund
resources
• Utility revenues

• City facilities
• Utility infrastructure
• Recreation facilities
Financing through lease/installment sale
agreement (not technically “indebtedness” that
impacts debt limits)
Certificates of
Participation
68 Financial Capital Assets

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Typical Financing
Sources
Existing in
Concord
Typical Projects/UsesDescriptionFinancing
Option
• Tax assessment to
properties
benefitting
• Streets, sidewalks, curbs,
traffic safety
• Water/wastewater
• Storm drain
• Street lighting
Issued to finance projects which convey a
special benefit to an identifiable group of
properties; requires majority vote of weighted
average assessments
Special
Assessment
Bonds
• Tax increment
revenues
• Property acquisition and
improvements
• Affordable housing/mixed
use development
Relatively new tax-increment financing option;
requires 55% approval of “qualified electors”; no
direct tie to property owners, but must have
demonstrated benefit
Enhanced
Infrastructure
Financing
District
• Long-term financing
proceeds
• One-time revenue
sources
• All projects listed hereinShort- to mid-term financing to bridge long-term financing or anticipated one-time revenue
options (e.g., grants, property sales); examples
include state revolving loan funding, bank lines-
of-credit, tax revenue anticipation notes less
than one year
Tranche
financing
tools
• Federal grants
• State grants
• Infrastructure improvementsVariety of funding options for one-time projects (e.g., Federal Inflation Reduction Act of 2022*,
CalDOT STIP grants)
Federal/state
grants
* - Subject to possible suspension under the current federal administration, subject to court rulings 67 68

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Where does
Concord go
from here?
70 Near-Term Options to Fund Infrastructure Needs

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Pavilion Fund
• Redirect pavilion
loan repayments
after Housing Fund
paid off in FY 2026
• Designate portion of
ticket fee revenue to
infrastructure
• Estimated Annual
Revenue: $900,000
ESCO Lease Payments
• Redirect to
infrastructure when
paid off in FY 2026
• Estimated Annual
Revenue: $330,000
Unanticipated Residual - $
• Dedicate annual
General
Fund/Measure V
unanticipated
positive revenue
variances to
infrastructure
• Estimated Annual
Revenue: Varies
depending on
experience
69 70

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71 Factors for Evaluating Revenue Strategies (Reprise)

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Utility users tax Up to $12 million annually
Real property transfer tax
(Charter creation)
Up to $5 million annually
Community facilities district Depends on magnitude of infrastructure and debt requirements
71 72

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73 Key Takeaways

CITY OF CONCORD INFRASTRUCTURE FUNDI NG AND OTHER REVENUE OPPORTUNITIES Potential for highest fiscal
impact (e.g., utility users
taxes, real property
transfer taxes, CFDs,
benefits assessments) will
require a heavy lift
Concord is already at the
ceiling for local sales tax
as an option (that is,
without legislative relief)
Consider implementing
less-volatile revenue
sources to mitigate wide
swings during economic
volatility
Ongoing maintenance
funding of new/improved
infrastructure must be
considered
Questions?
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. The name Baker Tilly and its associated logo is used under license from Baker Tilly International limited. The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. © 2024 Baker Tilly Advisory Group, LP 73 74

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DIRECTOR
M: +1 (650) 740-7007
E: [email protected]
Key
Takeaways
• PCI will drop to 48 within five years unless
funding is increased
• Additional $10.7 million needed annually
to maintain PCI of 54
• Additional $6.7 million needed annually
for Parks and Facilities
• Key infrastructure such as storm drain and
traffic signal systems not assessed
• Measure V revenue can’t be used further
for infrastructure unless diverting from
Operating Budget
• Infrastructure investment costs continue
to grow the longer we delay
76 75
76

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What's Next?
Staff will develop an infrastructure
investment strategy for Council to consider
before the end of the Fiscal Year.
77 Guiding Principles for Council to Consider
Sustainability: Seek revenue streams that are stable, long-term.

Public Benefit: Seek revenues that improve infrastructure, and quality of life, reinforcing the City’s Mission, Vision, and Values.

Feasibility: Weigh implementation complexity against public benefit.

Diversification: Increase the diversity of the City’s revenue sources.

Transparency: Clearly communicate with the public about the need for, use, and oversight of proposed new revenue sources. 78 77
78

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Other Factors to Consider
Amount: What portion of the unfunded challenge does the Council want the Strategic Plan to address?
Tolerance for Debt: Is Council open to considering debt to address some of the unfunded infrastructure needs?
79 Public Comment
80 79
80

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Questions to Consider

1. What stands out to you in the Baker Tilly presentation today? Is there something that resonates strongly with you in terms of addressing our infrastructure needs?

2. What additional information regarding one or more of the options discussed today will be helpful to you in informing your decisions on this matter?

3. Thinking about the guiding principles, what principles are missing? Do you have any feedback on the principles discussed?

4. Are there any principles that should be prioritized over others? 81 What's Next?
Staff will develop an infrastructure
investment strategy for Council to consider
before the end of the Fiscal Year.
82 81
82

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Meeting Ends
83 83

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Concord City CouncilMarch 1, 2025

Concord City Council
March 1, 2025