Agenda Item No. 6
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: January 10, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Deanne Purcell, Administrative Services Director SUBJECT: FY 2020-21 Citizens Oversight Committee Report for City Revenue Measures including K-14 Street Repair Bond, X-06 Transaction and Use Tax, and Measure F-20 Transaction and Use Tax
RECOMMENDATION
Receive and file the FY 2020-21 Citizens Oversight Committee Report for City Revenue Measures
BACKGROUND
On November 10, 2021, the Citizens Oversight Committee for City Revenue Measures held its annual meeting, which was continued by the Committee to a future date given additional information requested by the Committee and held again on December 15, 2021. The Council previously expanded this committee from three to five members and includes reporting revenue and expenditures for Measure K-14 Street Bonds, Measure X-06 half cent Transaction and Use Tax and Measure F-20 one cent Transaction and Use Tax and submitting an annual report to the Council. In attendance at the meetings were all five committee members (Anne Holden, Donna De La Rosa, Karen Kass, Jonathon Reynolds, and Paula Tripp). Mr. Reynolds was selected by the Committee on November 10 as Chair with Ms. Holden selected as Vice Chair. Staff in attendance included City Manager Bronson, Administrative Services Director Purcell, and Public Works Capital Improvement Project Manager Erin Wiggins, who was unable to attend the December 15th meeting. City Attorney Hale was also present at both meetings and a representative from the City’s independent outside auditor attended the December 15th meeting.
During the first committee meeting, staff provided a review of Measure K-14 completed projects and projects currently underway along with the audited revenues and expenditures related to Measure K-14 and both sales tax measures including Measure X-06 and Measure F-20. To date, 240 blocks of roadway or 60% of all local streets have been completed since the beginning of the Measure K-14 street rehabilitation program. Total revenue for Measure K-14 includes three bonds issued for a total of $28,000,000 and interest revenue of $106,000, or a total project fund of $28,106,000. Expenditures through June 30, 2021 totaled $23,968,000 leaving a net balance of $4,138,000 in project funds. For comparison, there was a net balance of $7,047,000 in project funds as of June 30, 2020 as approximately $2.9 million was expended on Measure K-14 street repairs during FY 2020-21.
The City now has two transaction and use tax measures (X-06 and F-20). Measure X-06, half cent sales tax revenue generated $1,185,000 in FY 2020-21 compared to $1,018,000 in the prior FY 2019-20 or an increase of 16%. This significant increase can mainly be attributed to the introduction of cannabis sales, which added an additional $2,400,000 in cannabis tax revenue for the City in FY 2020-21. In November 2020, voters approved Measure F-20, a one cent sales tax, Staff Report: FY 2020-21 Citizen Oversight Committee Report Page 2 January 10, 2022
which became effective April 1, 2021, and generated $573,000 for the last quarter of FY 2020-21.
Measure F-20 is projected to bring the City an additional $2,200,000 in sales tax revenue in FY 2021-22. Both sales tax measures are general revenue used to support City services and projects.
Consistent with previous years, staff prepared a draft Citizen Oversight Committee Annual Report which was reviewed and approved without changes by the Committee at the December 15th meeting for Council acceptance on a 4-1 vote (Chair Reynolds voted no). One point of discussion was the wording of the Measure K-14 street repair fund in the City’s financial statements that did not match the specific wording in Measure K-14. Staff and the independent outside auditor will add a footnote in future financial statements to better link this separate funding category in the financial statement to this wording. The financial information cited in the report includes previously audited expenditures along with the audited FY 2020-21 financial information consistent with the Annual Comprehensive Financial Report also on the January 10th agenda.
The final report is attached and will be placed on the City’s website pending Council acceptance.
The report includes a message from the committee members, a message from the City Manager, financial information regarding the status of Measure X-06 and Measure F-20 revenues from inception to date, Measure K-14 street projects to June 30, 2021, and a map of the completed street projects.
FISCAL IMPACT
There is no fiscal impact from this report.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Receive and file the FY 2020-21 Citizens Oversight Committee Report for the City Revenue Measures; or
2. Provide staff with additional direction
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
ATTACHMENTS
1. Citizen Oversight Committee Annual Report
Citizen Oversight Committee
Measures X-06 and F-20 Transactions and Use Tax
& K-14 Street Bonds
Report to City Council as of June 30, 2021
Attachment 1
Anne Holden
Paula Tripp
Donna De La Rosa
Karen Kass
Jonathon Reynolds
Matthew Bronson
City Manager
Deanne Purcell
Administrative Services Director
Greg Ray
Public Works Director/City Engineer
Public Works Dept
154 South 8th Street
Grover Beach, CA 93433
Phone: 805-473-4520
Fax: 805-489-9657
[email protected]
Citizen Oversight
Committee Members
Measures X-06, F-20 & K-14
S TA F F
Please visit
www.groverbeach.org
for more information
regarding these
Measures
A Message from the City Manager
Thank you for your interest in the report of the Citizen Oversight Committee for City Revenue Measures. This oversight committee is tasked by the City Council with reviewing revenues and expenditures for Measure X-06 and Measure K-14 and now Measure F-20. Measure X-06 is a transactions and use tax approved by voters that established a half-cent sales tax as a general revenue to fund City services and projects. Measure K-14 was authorization approved by voters to issue up to $48 million in general obligation bond funding to repair local streets and roads. The City has funded important City services through annual revenue from Measure X-06 and has successfully completed nine street rehabilitation projects as of June 30, 2021 with repair of over 200 blocks representing approximately 50% of local city streets. Measure F-20 is a one cent transactions and use tax also as general revenue to fund City services and projects. This report provides the taxpayers a summary of how these voter-approved revenues are being spent consistent with the parameters of each measure.
A Message from the Citizen Oversight Committee
The Citizen Oversight Committee is pleased to forward its 2021 report on Measures X-06 and F-20 Transactions and Use Tax revenue and the progress of the $48 Million Measure K-14 Street Bond Program. The committee’s job is to carry out the principal duties of ensuring that revenues from these measures have been expended for the purposes set forth in the ballot language, reporting progress annually to the public, and providing a compliance statement.
The funding provided by Measures X-06 and F-20 Transactions and Use Tax is used to support general city services including police, fire, public works, parks and recreation and general city administration. The committee’s task is to review the annual summary of revenues generated from the supplemental sales tax and budgeted expenditures for the upcoming fiscal year. The committee reviewed this information, which disclosed no issues or concerns.
The City to date has issued $28 million of the $48 million in approved bonds.
The funding provided by Measure K-14 is a community investment in improving local streets in Grover Beach. The improvements are essential to improve roadway conditions, maintain emergency response times, enhance safety for pedestrians, bicyclists, drivers, and promote economic growth in the City.
The committee reviewed a summary of the FY 2020-21 independent auditors report related to revenues for both measures which disclosed no instances of non-compliance. The committee wishes to report that, to the best of its knowledge, the City is in full compliance with the parameters of Measures X-06 and F-20 in generating general revenues to support general city services and Measure K-14 which states that “The object and specific single purpose of issuing the Bonds is the acquisition, construction and improvement of street improvements throughout the City” (the “Street Improvements”), and the proceeds of the Bonds may only be applied to that purpose.
Summary
In 2006, voters approved Measure X-06, a
transactions and use tax at the rate of one
-half percent (0.5%) to be administered by
the State Board of Equalization as a general revenue to support City services and projects.
The trend continues to show consistent increases in the Measure X-06 sales tax with a two-year average increase of 15.8% and
five-year average increase of 9.9%. The
larger increases in 2019-2021 can be
attributed to the introduction of cannabis
sales, which added an additional $2.4 million in cannabis tax revenue for the City in FY 2020-21.
Measure X-06 Status Report
Summary
In November 2020, voters approved
Measure F-20, a transactions and
use tax at the rate of one percent
(1.0%) to be administered by the
State Board of Equalization as a
general revenue to support City services and projects.
This new tax measure became effective April 1, 2021 or the fourth quarter of FY 2020-21. Total Measure F-20 sales tax revenue collected for 3 months (April, May & June)
was $572,799 and it is projected to
bring the City an additional $2.2
million in tax revenue for FY 2021-
22. Measure F-20 Status Report
C o m b i n e d R e p o r t
Revenues
History of Issuance
March 2015 Bond Sale $ 5,000,000
April 2016 Bond Sale 8,000,000
December 2017 Bond Sale 15,000.000
Interest 106,401
Total Revenues $ 28,106,401
Capital Expenditures
Prior Capital Expenditures $ 19,643,135
FY 2020-21 Expenditures:
Project #2295-4 $ 295
Project #2295-6 16,039
Project #2295-10 334,589
Project #2295-11 2,074,464
Project #2295-12 260,304
Project #2295-13 31,220
FY 2020-21 Expenditures $ 2,716,911
Total Capital Expenditures $ 22,360,046
Non Capital Expenditures
Prior Non-Capital Expend. $ 1,411,488
FY 2020-21 197,225
Total Non-Capital Expend. $ 1,608,713
Total Expenditures $ 23,968,759
Fund Balance June 30, 2021 $ 4,137,642
(After Accruals)
Summary
Through funds provided by the Measure K-14
Street Bond, the City of Grover Beach has completed eleven street projects, two (outlined below) that are currently under construction and the fourteenth project is expected to begin before the end of FY 2021-22. These projects, outlined in the attached map, provided maintenance and repair of 240 blocks, representing about 60%
of all local streets.
Project 2295-10 was approved for construction in
May 2021. This project will provide maintenance
and repair of 21 city blocks. The project is expected to be completed in Fall 2021.
Design efforts for project 2295-13 are complete.
The construction contract is expected to be approved in November 2021, with construction beginning in December 2021. This project will provide maintenance and repair of 19 city blocks.
Measure K-14 Status Report
City of Grover Beach Street
Rehabilitation & Repair Program