CALIFORNIA CALIFORNIA
CALIFORNIA
CALIFORNIA
M E M O R A N D U M
DATE:
June 21, 2022
TO:
Christine Daniel, City Manager
FROM:
Sheri Hartz, City Clerk
SUBJECT:
City Council Consideration of Survey Results And Direction Concerning Placing A Revenue Measure On The November Ballot
RECOMMENDATION
Staff recommends that the City Council:
Review and discuss results of a community survey assessing placement of a local tax measure before the voters in November 2022; and, Provide direction on the content of legislation, for approval at a future City Council meeting, to place a ballot measure and ordinance before the voters of the City of Emeryville in November 2022 to modify the real property transfer tax.
BACKGROUND
At the May 3, 2022, City Council meeting, the City Council adopted a Resolution authorizing the City Manager to execute a contract amendment with Clifford Moss to assist the City in assessing and developing possible revenue measures for the November 2022 election. A survey was conducted in late May/early June and the results will be presented at the June 21, 2022, meeting by representatives of FM3, the subconsultant that conducted the research.
The City has seen General Fund revenue shift and decrease over time due to changes in the economy, and more recently because of the economic slowdown associated with the global pandemic. The City’s primary revenue sources are Transient Occupancy Tax (TOT), Sales Tax and Business License tax. All of these are uniquely vulnerable to economic fluctuations. At the same time as revenue has declined, the City is projecting increasing operational and personnel costs, including the funding of existing Unfunded Actuarial Liabilities, thus leading to projected budget deficits.
The City is projecting a structural deficit in the next fiscal year, 2022-2023, as it has in the past two fiscal years. Addressing these required the use of one-time funds and deferral of capital projects to bridge the gap between revenues and expenditures. In spring 2021, the Budget and Governance Committee requested that staff analyze some options for the City to increase revenue, including possible revenue measures to be placed on the ballot in the 2022 election cycle. Since that time, staff has worked with consultants to assess various revenue measure options, conduct a community engagement process and undertake two community surveys. Results have been reported to the City Council throughout the process.
DISCUSSION
At its May 17, 2022, meeting, based on feedback obtained through a community engagement process, the City Council discussed assessing voter support for a modification to the City’s real property transfer tax. The modification would provide for increased tax rates for the sales of higher value properties. This would be a general tax that could appear on the November 2022 ballot requiring a simple majority to pass. The City Council directed staff to move forward with a voter survey assessing that measure.
Results of Recent Polling
The services of Clifford Moss were engaged to assist the City Council in assessing possible ballot measures for 2022. Clifford Moss subcontracted with FM3 to conduct surveys of likely voters. The first survey was conducted in December 2021 and results were presented to the City Council on January 18, 2022. A follow up survey was conducted in May/June 2022. A representative from FM3 will be available at the June 21, 2022, Council meeting to discuss the results of the survey.
FM3 conducted a statistically valid and representative survey, using a hybrid telephone/email/texting methodology, of registered voters in the City of Emeryville.
At the time of publication of this report, FM3 had not yet concluded its analysis of the survey results. An overview of the specific results will be provided when the agenda packet is republished on June 16, 2022. Nevertheless, FM3 has provided preliminary informal results of voters’ receptivity to a real property transfer tax measure.
Voters are generally supportive of the measure to modify the real property transfer tax. The modifications to the transfer tax would be a general tax and thus require a simple majority threshold (50% +1 support) to pass. That level of voter support appears to be likely for November 2022. A general tax may only appear at a general election, which would be the November election.
Real Property Transfer Tax Modification
In 2014 the voters of Emeryville approved Measure V, a tax on the sale and transfer of real property. The tax rate established by Measure V is $12 per $1,000 of sale or transfer value. In recent years both Berkeley and Oakland among others have approved tiered rate structures for their transfer taxes. These tiered structures increase the rate of the tax as the sale or transfer value increases. The City Council discussed a structure for the real property transfer tax that would hold the tax rate flat at $12 per $1,000 for sales or transfers valued below $1 million, increases the rate to $15 per $1,000 for sales/transfers between $1 million and $2 million, and then to $25 per $1,000 for sales/transfers above $2 million.
The following ballot question was tested in the City’s May/June voter survey to inform the Council’s discussion about whether to place this type of general tax measure on the ballot in November 2022, “Shall the measure to fund general City services including fire/ emergency response/police; street/ sidewalk/ park maintenance; water pollution prevention; disaster preparedness; affordable housing; senior/ childcare/ recreation services, by increasing the City of Emeryville Real Property Transfer Tax to $15 per thousand for property sales between $1,000,000 and $2,000,000 and $25 per thousand for property sales above $2,000,000, raising $5,000,000 annually until ended by voters, with citizen oversight, audits, and public disclosure of all spending be adopted?” The transfer tax can be a sizeable revenue source for the City. However, it is a volatile revenue stream due its dependence on the volume of property sales in any given year. The estimate of $5 million per year in revenue from this source is based on historical averages, but again, this is a relatively unpredictable revenue stream. Accordingly, the City Council’s current fiscal policy sets aside commercial transfer tax revenue for one-time expenditures such as capital projects or paying down accumulated pension obligations. Should the City Council wish to place this type of measure on the November ballot, it would need to take action to do so in July 2022.
Next Steps; Direction on Ballot Measure
Whether to place the measure on the ballot: Following the presentation of the survey results, staff requests that the City Council discuss the possible ballot measure to modify the real property transfer tax and provide direction as to whether to place the measure on the ballot for November 2022.
Feedback on ballot question: Should the City Council choose to place the measure on the ballot, staff requests that the Council review the ballot question above, that was tested in the recent survey, and provide any additional feedback on the question.
Modification of the real property transfer tax requires voter approval of an ordinance amending the Emeryville Municipal Code. Should the Council wish to proceed, the City Attorney’s office will prepare the necessary ordinance amendment and accompanying Resolution placing the matter on the ballot. Those pieces of legislation would be presented to the City Council at its July 5, 2022, meeting for consideration.
FISCAL IMPACT
The cost of placing a measure on the November 2022 ballot is estimated to be approximately $50,000. Funds are available in the Elections account 010-11-031 for this purpose.
STAFF COMMUNICATION WITH THE PUBLIC
Staff provided a report at the May 17, 2022, City Council meeting describing feedback obtained through the community engage process conducted in spring 2022. This included presentations at Community Advisory Committee meetings and a survey posted on the City’s website. Also, as noted above, FM3 conducted the follow-up community survey in May/June 2022.
PREPARED BY: Sheri Hartz, City Clerk
APPROVED AND FORWARDED TO THE
CITY COUNCIL OF THE CITY OF EMERYVILLE:
Christine Daniel, City Manager Christine Daniel, City Manager Christine Daniel,
City Manager
Christine Daniel,
City Manager
Council Consideration of a Sales Tax Ballot Measure/March 2020 Election City Council Special Meeting | October 29, 2019
Council Consideration of Survey Results and Revenue Measure Direction City Council Meeting | June 21, 2022