1 CITY OF FORTUNA - MEMORANDUM
TO: Honorable Mayor and City Council Members
FROM: Measure E Oversight Committee
SUBJECT: Annual Report to the City Council
DATE: January 18, 2022
Introduction
Measure “E” is a 3/4% sales tax measure that was approved by the voters of the City of Fortuna on November 8, 2016. Measure E was set to terminate on March 31st, 2025. However, on November 3, 2020 the voters of the City approved Measure “G”. Measure G extended Measure E 8 additional years. Measure E is now set to terminate on March 31st, 2033.
Measure E is a general tax. The City is committed to primarily using these general tax dollars to protect and maintain essential City services, including increasing and restoring police officers and programs, repairing aging/deteriorating streets and potholes, parks maintenance, and programs for youth and seniors.
The Measure E committee was set up by the City Council in order to assist the Council in taking public input and review staff recommendations on the expenditure of funds derived from Measure E.
The primary duties of the Measure E Oversight Committee are as follows:
a. Review requests for funding from City departments.
b. Conduct public hearings to examine the requests and weigh the value of the various proposals. c. Make recommendations based on the proposals received, for the expenditures that should be funded given the projected amount of revenue to be derived from the local sales tax to the City Council for inclusion in the annual budget.
d. Become familiar with current and projected City revenues and expenditures. e. First meeting of every calendar year, provide a forum for public expression of desires regarding expenditure of funds derived from the local sales tax.
Committee Members
The City Council made the appointments to the committee with staggered terms as follows:
a. Two (2) members at two (2) years
b. Three (3) members at three (3) years
c. Two (2) members at four (4) years
Members serve at the pleasure of the City Council. There are no restrictions on reappointment of members for successive terms. Currently, the Measure E Oversight Committee is composed of the following seven members:
2 Term
Expires
Walt Wilson, Chair 12/31/24
Joseph Hardcastle 12/31/22
Christina Mobley 12/31/23
Donald Ingram 12/31/22
Debi August 12/31/22
Martin Morris 12/31/23
Tina Taylor 12/31/24
Staff Liaison: Aaron Felmlee, Finance Director
The Committee holds regular meetings the third month of each quarter (March, June, September, December), plus January, on the third Tuesday of the chosen months. Meetings commence at 5:30 pm as agreed upon by the committee. Special meetings are held as needed.
Transactions & Use Tax (Measure E) Revenue
Effective April 1, 2017, the total sales tax rate in the City of Fortuna is 8.50 percent. Of this amount, the State receives 6.00 percent, the County Transportation Fund receives 0.25 percent, the County receives 0.50 percent (with the passage of the County’s Measure “Z”) and the City of Fortuna receives 1.0 percent (Bradley-Burns). The City’s Measure E transaction and use tax adds another 0.75 percent, which brings the total sales tax rate to 8.50 percent.
Graph 1: Sales Tax Rate Distribution Comparison
70%
3%
12%
9%
6%
6.00%, State of
California
0.25%, County
Transportation
Funds
1.00%, City of
Fortuna
0.75%, City of
Fortuna (Measure E)
0.50%, County of
Humboldt (Measure
Z)
3 During fiscal year (FY) 2020-21, the City of Fortuna received $2,025,426 (net of administration costs of $8,920) from the City’s transactions and use tax. This represents receipts received for the period of July 2020 through June 2021. These revenues represent approximately 23 percent of the City’s total general fund revenue.
The following data summarizes and compares the revenue generated by Measure E (0.75%) transaction and use tax to the Bradley Burns (1.00%) sales tax by business type for fiscal year 2020-21.
Table 1: Tax Revenue by Business Type
Measure “E” Transactions and Use Tax
Compared to Sales Tax Revenue
1 Cent
Sales Tax
Revenue
0.75 Cent
Measure
“E”
Revenue
75% of
Sales Tax
Revenue
Favorable
(Unfavorable)
Variance
Ratio of Measure
"E" to Sales Tax
Autos & Transportation $230,399 $440,934 $172,799 $268,135 191.4% Building & Construction
303,474
254,299
227,606 26,694 83.8%
Business & Industry
307,974
312,916
230,981 81,936 101.6%
Food & Drugs
262,594
198,405
196,946 1,460 75.6%
Fuel & Service Stations
298,050
266,552
223,538 43,015 89.4%
General Consumer Goods
185,141
349,351
138,856 210,495 188.7%
Restaurants & Hotels
240,934
191,473
180,701 10,773 79.5%
Transfers & Unidentified
2,256
20,416
1,692 18,724 905.0%
Gross Revenue
1,830,822
2,034,346
1,373,117 661,230 111.1%
County/State Pool
456,248
State Board of Equalization
Admin Fees
(16,782)
(8,920)
Net Revenue
2,270,288
2,025,426
4 Graph 2: Comparison of Transactions and Use Tax as Percentage of Sales Tax The Transactions and Use Tax (Measure E) rate is 75 percent of the City’s portion of the sales tax rate (1% Bradley Burns). Due to this, one would expect the percentage of Transactions and Use Tax revenue to sales tax revenue to be 75 percent. However, for fiscal year 2020-21, the City’s Transactions and Use Tax generated approximately 111.1 percent of the revenue received from sales tax before other adjustments.
This occurs because the City’s TUT is assessed and allocated to the district where goods are delivered or placed into use rather than where the sale was negotiated like general sales tax (aka Bradley Burns) is. This means that the City is capturing TUT tax on the sale of automobiles and other registered modes of transportation, like boats, motorcycles and airplanes that occur outside of the City’s taxing district and on business and industry items that are brought into the district from outside (online) suppliers. $0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Autos &
Transportation
Building &
Construction
Business &
Industry
Food & Drugs Fuel & Service
Stations
General
Consumer
Goods
Restaurants &
Hotels
1 Cent Sales Tax Revenue 0.75 Cent Measure “E” Revenue 75% of Sales Tax Revenue 5 Fiscal Year 2020-21 Expenditures
Graph 3: Expenditures by Department
As stated before the City committed to primarily using Measure E general tax dollars to protect and maintain essential City services, including increasing and restoring police officers and programs, repairing aging/deteriorating streets and potholes, parks maintenance, and programs for youth and seniors. The above chart demonstrates the use of Measure E monies by department. As you can see from the chart the Police Department accounted for 63% of expenditures, Public Works 12%, Parks and Recreation 14%, and the remaining 11% going to Administrative/City Hall general fund deficit expenses, intended for covering the structural General Fund deficit. Funds that went to the General Fund reserves that were not needed to cover the General Fund deficit will be expended in future fiscal years. Below are individual department reports on the funds derived from Measure E and expended in FY2020-21.
Public Works Expenditures
Rohner Creek Floodplain Remapping and Permit Extension
Following the completion of the Hillside Creek Project in 2019, the City was able to begin the floodplain remapping effort for Rohner and Hillside Creeks, which took approximately 150+ homes out of the FEMA regulatory floodplain (which became official on September 3rd 2021). During the 2020-21 FY, staff used $8,865 of Measure E funding to complete the remapping effort, which primarily included engineering consultant costs to develop and submit the final Letter of Map Revision (LOMR) package to FEMA. 12 Street Integrated Stormwater Enhancement Project
In the 2020-21 FY, the Measure E Committee approved a $50,000 allocation for the 12th Street Integrated Stormwater Enhancement Project (CIP 9101). This project will include installing a number of LID raingardens and new stormdrain pipe along 12th Street in between Loni Drive and K Streets, which will help address gutter flooding issues along 12th Street as well as future state board permit trash capture $814,307
Police
63%
$152,263
Public Works
12%
$144,644
Cover General
Fund Deficit -
Admin/City Hall
11%
$187,909
Parks and
Recreation
14%
6 requirements. This funding allocation will be used as grant match for the project, which received an approximately $950,000 grant from the State Water Resources Control Board (Prop 1). City staff are currently working with the State to execute a grant agreement, and staff believe that the project will begin design in early 2022.
Stormwater Infrastructure Hazard Identification Project In the 2020-21 FY, the Measure E Committee approved a $37,500 allocation for the City’s Stormwater Infrastructure Hazard Identification Project. This project will be an engineering and field reconnaissance study that will include physical inspections of various City stormdrain facilities, resulting in a prioritized list of stormdrain replacement and upgrade projects. This project is also partially funded by a grant from FEMA in the amount of $112,500, and the Measure E funds allocated to this project will act as the project’s required local match. Currently staff are working on selecting and contracting with an engineering consultant to complete the work, and staff anticipate the project to begin in early 2022.
Street Maintenance Projects
In FY 2020-21, the City budgeted $50,000 towards street maintenance projects from Measure E. With this funding (in addition to various other funding sources) the City was able to complete several large paving and striping projects including the following locations:
56,030 square feet of paving on Newburg Road extending from 12th Street to South Fortuna Boulevard. The total cost for this project was $205,343.50, of which $5,343.50 was Measure E funded.
Pavement striping on Newburg Road following the paving project was funded by Measure E in the amount of $5,286.00.
Combined 17,800 square feet of paving on Shady Lane and Hillside Drive. These projects came to a total of $71,700, of which $21,700.00 was funded by Measure E. Combined total of 17,600 square feet of paving on 9th Street, Angel Heights, Vancil, and 9th Street extension (Picnic Avenue). The total cost for this project was $82,838.00, of which $17,670.50 was funded by Measure E.
Storm Drain Maintenance Projects
The City also designated $50,000 to the City Wide Storm Drain Maintenance Project (CIP 9373). The City spent $69,488.00 to replace a storm drain culvert on 9
th Street and Christian Ridge and on Hillside Drive.
The failing culverts had been causing sinkholes to form along private property and adjacent to the road.
Illegal Camp Cleanup
The Illegal Camp Cleanup for FY 2020-21 was primarily for funding efforts by River Life Foundation. The majority of the funding was for professional services for Sean Swanson of River Life Foundation, and another person to scout, locate and inform the transients of illegal camping in the City limits. River Life Foundation would also get calls from Fortuna PD to help clean an area and Mr. Swanson would bill the City for the work. $10,000 was budgeted for this activity from Measure E and $9,825.90 was spent in FY 2020-21.
Parks and Recreation Expenditures
Parks & Recreation Director
Measure E continued to fund the Parks & Recreation Director position, with Cameron Mull serving in his fourth year performing the duties of management, direction, and growth of the City’s park and facilities system, recreation activities and programs, the Depot Museum, the River Lodge and Monday Club, and operation of the Fortuna Transit bus service. Of the $104,650 adopted for this position in FY 2020-21, $108,053 needed to be utilized.
Prop 68 Per Capita Grant Match
Prior to the guidelines being released by California State Parks on their Proposition 68 Per Capita grant program, the City anticipated requiring a 20% grant match for an anticipated maximum of a $200,000 allocation. With the City partnering with the Rohner Community Recreation and Park District (who was 7 also to receive the anticipated maximum of $200,000 in funding), $80,000 (20% of combined $400,000 of anticipated funding) was allocated for this grant match. Once the grant guidelines were released, it was determined that a grant match was not necessary, due to the project area identified being considered an underserved community. Thus, those funds were not spent in FY 2020-21, but are anticipated to be rolledover into Measure E FY 2021-22 for other Parks projects (to be identified).
Park & Trail Expansion Funds
For the general purpose of pursuing expansion of park spaces and trail projects within the City, a $7,500 allocation was dedicated, with $2,301 being spent on surveying and engineering costs associated with the John Campbell Greenway Memorial Trail project, as well as securing easements with a potential future river-front park along Riverwalk Drive and the Eel River.
RCRPD Assistance for Aquatic Facility Planning
The Rohner Community Recreation and Park District has very limited annual funding, so the City assists them, when possible, to pursue their general mission of planning for a future aquatic center in Fortuna, thus $5,000 of Measure E funding was allocated for the district. Since the RCRPD expended all of their annual budget for Professional Services, only $540 was spent out of the Measure E fund to pay for the remaining balance on a consultant hired to perform an Annexation and Revenue Generation Analysis.
Replacement of Roller Skates
$7,500 was allocated for phase/year 2 of the replacement older rental roller skates. 55 pairs of remaining skates and a multitude of replacement skate parts were purchased using these funds, with $1,247 going unspent. There are 186 total pairs of new skates currently in stock, with $7,500 of FY 2019-20 Measure E funds being utilized to allow for the purchase of the first order of 131 rental skates the previous year.
Staffing to provide more Gym Times
The Recreation Department’s plan was to continue to offer more recreational opportunities to the public, as was done in FY 2019-20 using Measure E funding, to continue to pay for staffing costs associated with these programs. $2,500 was allocated for this same purpose, however, due to the COVID-19 pandemic and public health mandates, the City was not able to offer any of these opportunities due to indoor closures.
Provide Transit to Eureka for Medical Appointments
In its fourth year funded by Measure E, Fortuna Transit continued to provide weekly service to persons with a disability and/or senior citizens with rides to Eureka for medical appointments, since the majority of care providers still exist in Eureka. These funds supported the full cost of the service; including fuel, vehicle maintenance, and staff hours for transporting 2-6 riders per week every Tuesday. In previous years of being funded by Measure E, $10,000 was allocated, though it was determined those funds were not being fully expended for three of the years this program was offered, so funding was reduced to $5,000 for FY 2020-
21. Of this $5,000, $4,431 was spent, with only $569 not being utilized.
Police Department Expenditures
Police Detectives
The Fortuna Police Department received Measure E funds allowing for two full-time police Detectives.
These positions continue to provide much needed additional services to the Fortuna Police Department and our community. Detectives are a valuable resource, allowing for focused investigations and the ability to proactively address major crimes and circumstances which negatively affect our community. The following are just a few examples of the impact the Detectives have had addressing crime in our community during FY 2020-21.
Detectives successfully negotiated the peaceful surrender of a barricaded suspect at a local motel.
The suspect was threatening violence, including threats to detonate explosive devices. It was the experience of our Detective that ultimately brought the standoff to a peaceful resolution through negotiations.
Detectives investigated the shooting of a juvenile in the Campton Heights area and they were instrumental in the successful investigation and arrest of the suspect. 8 Detectives working alongside the School Resource Officer investigated the repeated sexual assault of a local middle school student that occurred between 2017 and 2018. As a result of the investigation the suspect was taken into custody.
Detectives executed or served multiple search warrants and investigations involving the possession and sales of narcotics, recovery of stolen property, and possession of firearms. Detectives conducted problem oriented policing, addressing several illegal Cannabis cultivation operations.
Detectives assisted local partner/allied agencies throughout the county and the Eel River Valley with investigations and arrests of wanted subjects, including sex offender registrant compliance operations.
Detectives participated in community outreach and education during local community meetings.
Community Service Officer
The Fortuna Police Department received Measure E funds allowing for one full-time Community Service Officer. The Community Service Officer handles lower level misdemeanor type crimes, parking complaints/violations and animal control issues, freeing up our sworn officer staff to focus on more serious violations. The Community Service Officer is a non-sworn position and is assigned to handle property and evidence. Having this non-sworn position is vital to the department.
Code Compliance Officer
The Fortuna Police Department receives Measure E funds allowing for a part-time Code Compliance Officer. This position addressed property abetment and municipal code violations. Almost always, these properties have associated criminal activity ranging from illicit drug crimes to violent crime. Addressing the abatement issues and municipal code violations resulted in the elimination and/or reduction of criminal activity associated with these properties. In FY 2020-21 code enforcement has worked many investigations and made a profound impact on our community. The following are a few highlights:
14 standard abatement case investigations, all of which resulted in voluntary compliance and were successfully resolved.
1 additional abatement case investigation, which resulted from an arson investigation. In this investigation Code Compliance Officer’s efforts resulted in the successful abatement of the property.
Approximately 40 properties with existing fire hazards were addressed and neutralized, the majority of these abatement processes were accomplished through self-initiated / proactive contacts. Of these properties approximately 90% were resolved with the initial notice and the rest were resolved with additional follow up from the Code Compliance Officer. Code Compliance Officer assisted in educating businesses on COVID related complaints when the County EOC transferred responsibilities to municipalities. Code Compliance Officer was trained in addressing abandoned vehicles on our roadways and has taken a proactive approach in addressing abandoned vehicles.
K-9 Program
During FY 2020-21, the Fortuna Police Department utilized Measure E funding to re-establish the department’s K-9 Program. In February of 2021, “Cain”, a 22 month-old Belgian Malinois was procured from Witmer Tyson Imports. Grant funding from the American Kennel Club was also utilized in the purchase in order to better maximize funding provided by Measure E. Cain and K-9 Officer Dennis Stevens attended and completed dual certifications in both patrol apprehension and narcotic detection during FY 2020-21.
The K-9 program provides an important element to crime deterrence and a significant de-escalation tool.
The Fortuna Police K-9 program is a vital department resource already being utilized within Fortuna and throughout the Humboldt County region. Officer Stevens and Cain also provide an important community policing tool. The Fortuna Police Department is committed to an organizational culture which promotes approachability and community involvement. During FY 2020-21, Cain and Officer Stevens attended a significant number of public events which provided the platform and opportunity to visit with children and 9 families in attendance. The Fortuna Police have also received support in the form of contributions from both public and private donors to augment the Measure E program funding. This support is reflective of the value the community places on this program.
PD Facility Construction
The remodel of the police facility at 2600 Rohnerville Road is budgeted for $55,000 in FY 2021-2022 with $25,000 coming from Measure E funds and $30,000 coming from City General Funds. The total spent to date is $24,187. The project is approximately 50% complete. Staff expects to submit the project for a building permit in early spring (March/April) and bid the project once a building permit is issued.
Committee Recommendation of Future General Fund Expenditures There are several points the committee wants to be sure the Council pays attention to:
1. The ongoing Measure E Fund Support of streets will optimistically rise in coming years.
2. Police Department funded positions will be funded throughout the term of Measure E.
3. The committee is dedicated to upping reserves by earmarking any unspent monies generated from Measure E to go towards General Fund Reserves at the end of the year. For fiscal year 2020-21, revenues in excess of expenditures totaled approximately $629,921. This is largely attributed to actual revenue receipts coming in higher than originally budgeted. Due to this significant surplus City Staff will be bringing forward funding recommendations to utilize these funds from reserves for the committee to consider as part of the FY 2021-22 budget process.
Conclusion
In light of the continuing adverse economic conditions and instability at the state level, the funds derived from Measure E have had a significant and positive effect on the financial stability of the City. The City receives almost the same amount of revenue from Measure E as it does from the General Sales Tax allocation. Without Measure E the City and public would be exposed to much greater risk City wide. Three additional police staff help protect and serve both public members and public property, storm drain funds help mitigate the risk of far greater catastrophes occurring by keeping up on maintenance and grant match funds help the City take on projects that would otherwise be unattainable with local City revenues.