DATE: October 16, 2023
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT: Measure C Debt Analysis and Annual Review
RECOMMENDATION
That the Committee reviews and receives the City’s Measure C (District Sales Tax) FY 2023 annual report.
SUMMARY
In 2014, the voters of the City of Hayward approved a ½ cent District Sales Tax (Measure C), which is a general tax that can pay for any services within the City’s General Fund. However, when the Council placed the measure on the ballot in 2014, they identified several priorities for the use of these funds based on issues identified by the community: police and public safety services; illegal dumping; litter control; graffiti abatement; and capital infrastructure projects. The prioritized capital projects included: the construction of the City’s 21st Century Library and Community Learning Center; completion of fire station retrofits and improvements; rehabilitation and expansion of the existing fire training center located at Fire Station 6; as well as extensive street improvements. As of October 2023, the fire station retrofit and street improvement projects have been completed, the 21st Century Library and Community Learning Center project opened to the Community in September 2019, and a ribbon cutting was held on June 21, 2023, for the regional fire training center at Fire Station 6. This report provides an overview of Measure C projects to date as well as current financial projections for the funds.
BACKGROUND
On June 3, 2014, the voters of the City of Hayward passed Measure C to create a District Sales Tax and to increase the City’s Sales and Use Tax by half a percent for twenty years. Attachments II and III provide background information on Measure C and the ballot posed to Hayward voters. Since that time, staff has focused on the completion of current and future capital improvement projects funded by Measure C, and has looked for ways to utilize revenues to achieve the promises of Measure C. Using Measure C funds, the City completed its largest road improvement project in history, reduced graffiti around the City, built a state of the art 21st Century Library and Community Learning Center, retrofitted five of the City’s fire stations, and built a comprehensive regional fire training center that will be used by agencies and educational institutions from around the western United States.
DISCUSSION
Measure C Performance
With the passing of Measure C, the City developed a 20-Year Financial Forecast to project Measure C revenue over time and develop budgets for capital improvement projects and ongoing operational costs that support the Council’s priorities for Measure C as outlined above. The following graph illustrates the use of Measure C related funds through FY 2025.
Detailed expenditures of Measure C in FY 2023, estimated expenditures in FY 2024, and projected expenditures for FY 2025 are provided in Table 1. The table shows projected revenue and expenditure activity as it relates to Measure C, including a breakdown of capital and operating expenditures.
Table 1:
Measure C - FY 2023 Actual (Unaudited), FY 2024 Estimated, and FY 2025 Projected FY 2023 Actual
(unaudited)
FY 2024 Estimated
FY 2025 Projected
Revenues
Measure C District Sales Tax
23,035,112
21,850,493
22,335,762
Other Partnering Contributors
4,808,351
-
Total Revenues
27,843,463
21,850,493
22,335,762
Expenditures
Capital
Library/Learning Center
210,814
649,238
-
Fire Facilities Design
-
12,585
-
Fire Station 1
-
-
-
Fire Station 2
-
-
-
Fire Station 3
-
-
-
Fire Station 4
-
-
-
Fire Station 5
-
-
-
Fire Station 6
2,377,717
4,016,816
-
Fire Training Academy
14,467,717
1,393,555
-
Street Rehabilitation
-
2,000,000
-
EBRCS Radios
-
571,000
582,000
HPD Locker Room
-
6,100,000
1,200,000
Jackson & Tennyson Corridor Median Improvement
319,592
329,475
150,000
Debt Service
5,418,813
5,407,938
5,425,488
Operating
Police Services
3,445,418
4,418,338
4,727,622
Maintenance Services
1,442,478
1,902,221
2,035,376
Other Department Services
524,407
213,843
228,812
Total Expenditures
28,206,955
27,015,009
14,349,298
Beginning Fund Balance
6,565,129
6,201,638
1,037,122
Annual Surplus/(Shortfall)
(363,492)
(5,164,516)
7,986,464
Ending Fund Balance
6,201,638
1,037,122
9,023,587
As shown in Table 1 above, there is minimal change in the total expenditures from FY 2023 to FY 2024; however, there are several projects that will be completed with new capital improvement projects coming online in FY 2024. It is anticipated that the Regional Fire Training Center and Fire Station 6 will be complete in FY 2024, with efforts shifting to projects that support roadway improvements, improvements at the Hayward Police facility, as well as landscape and city entrance improvements along the Tennyson and Jackson corridors.
Street Rehabilitation:
Every year, the City improves stretches of roadway throughout Hayward as part of its annual Pavement Improvement Program. The effort involves a combination of pavement rehabilitation and preventive maintenance. In FY 2024, the total project budget is $14.5 million, with $2.0 million of Measure C funding allocated to support this project.
Hayward Police Locker Room Improvements:
The Hayward Police Department (HPD) is in need of a new locker room for separated use by both male and female police officers, other employees, and visitors. The existing facilities that are housed inside the HPD building are inadequate in terms of both space and amenities. The HPD Locker Room Projects will involve designing and constructing an approximately 6,910 square foot addition to the existing HPD building to accommodate these necessary improvements. The total project budget is $7.3 million and will occur over two fiscal years.
Tennyson and Jackson Corridor Improvements:
In alignment with the City's Strategic Roadmap "Enhance Community Safety & Quality of Life" Priority, the City is currently beautifying the Tennyson and Jackson Corridors with median improvements, including new trees, plants, bark chips, pavers, as well as a new gateway sign along the Jackson corridor.
In addition to several new capital improvement projects planned for FY 2024, the City has expanded its Measure C funded programmatic services. This expanation includes the addition of eight (8.0 FTE) positions that directly support Measure C funded programs.
As part of a recent dispatch center assessment, it was determined that the expansion of the City’s dispatch center was recommended to continue providing appropriate service levels. The addition of the 6.0 FTE Communications Operators will allow the City to expand its dipatch center to better serve the community. Additionally, to address the increasing landscape maintenance needs throughout the community, the FY 2024 budget includes one (1.0 FTE) Tree Trimmer, and (1.0 FTE) Groundskeeper.
Measure C Funded Capital Improvement Projects
Fire Station 6 and Regional Fire Training Center Improvement This project will replace the existing Fire Station 6 with a new fire station and create a regional fire training center that will include: Classroom Buildings; Fire Station 6/Classroom Building; Apparatus Building; Training Tower; Burn Building; Storage Building; Hangar Building; Underground Search and Rescue Structure/BART Structure; Covered Outdoor Classroom; Entry Structure; and Parking Lot. The final design of Fire Station 6 and Regional Fire Training Center was completed in April 2020. Council awarded the construction contract to SJ Amoroso on July 7, 2020. Construction started on August 17, 2020, with site grading, soil off-haul and underground work. The Fire Station/Classroom Building is the most complex building with the longest construction duration. All structural steel, concrete walls and roof are completed at this building and continues with interior walls, mechanical, electrical, plumbing work and interior finishes. The ribbon cutting was held on June 21, 2023. The estimated total project cost is $76.9 million.
A partnership for the Regional Fire Training Center between the City of Hayward and the Chabot-Las Positas Community College District (District) will serve as a mutual benefit. The Regional Fire Training Center is a joint center and training program with dedicated classroom space, offices, and shared use of the grounds for City of Hayward fire personnel, as well as Chabot College’s Fire Technology Program. Chabot College’s Fire Technology Program is an Accredited Regional Fire Academy that will offer training opportunities for entry-level and active-duty fire service professionals from around the region. 21st Century Library and Community Learning Center
The 21st Century Library and Community Learning Center is an invaluable asset to the Hayward community. Work on the 21st Century Library and Community Learning Center began with the selection of an architect in 2007, and construction began in January 2016. The estimated final project cost is $63.2 million.
The new 21st Century Library and Community Learning Center is a three-story, 58,000 square foot building. As a planned net-zero energy facility, the building will be 100% self-sufficient in use of electricity once fully functional and is expected to receive a LEED certified rating of Platinum from the U.S. Green Building Council. In addition to its LEED certification, the library houses 50% more library materials, including books and multi-media for all ages, 53 additional computers made available for public use, and a Makerspace featuring 3D printers, robotics, and textiles. It includes multiple community meeting rooms, a Homework Support Center within the Children’s Library, and offers additional services to the Hayward community. The 21st Century Library opened to the public on September 14, 2019.
Heritage Plaza
The Heritage Plaza project is Phase II of the 21st Century Library and Community Learning Center. The Plaza is substantially complete and open to the public as of July 17, 2021. Work for Phase II has included the demolition of the prior Library facility, the construction of an underground rainwater catchment system, and installation of landscaping features. Demolition of the Main Library structure took place in July 2018. This was followed by the construction of the underground catchment, filtration, and storage system. When complete, this system will recycle rainwater for irrigation and graywater uses in the 21st Century Library and Heritage Plaza and will be a major component of the project’s expected LEED certification. Landscaping features are expected to include an event space, an arboretum housing 40 rare and mature trees, and a Children’s Garden. Final project completion and acceptance is expected in the near future.
Fire Stations 1 through 5 Improvements
This project involved considerable renovations of Fire Stations 1-5. Substantial improvements included seismic retrofits, energy efficient enhancements, and accessibility upgrades. Seismic retrofits at all stations will allow for immediate occupancy following a 7.0 earthquake, facilitating a smooth transition into emergency response following a natural disaster. Traffic Pre-Emption systems were installed to speed response times and minimize negative effects of Code 3 responses on traffic patterns. Energy efficiency improvements were completed at each fire station, including the installation of solar panels on Stations 2-5, which are designed to offset 70% of electricity consumption of the old buildings. However, the solar panels are projected to offset more, as the building upgrades included new energy efficient lighting and windows. Improvements were completed in August 2018. A celebration and thank you to the community were held in October 2018.
Roads / Street Improvements
Measure C funds were used in the FY 2016 Pavement Preventive Maintenance and Resurfacing Project. This was a two-year project that was completed in February 2018. The City leveraged funds from a combination of funding sources (i.e., Gas Tax, Measure B & BB), including $12 million from Measure C to complete the City’s largest road improvement project to date. In FY 2024, $2 million is allocated to fund street rehabilitation improvements.
The project provided new asphalt surfaces, and both intensive and minor roadway repairs on 312 street segments. These projects also included new and upgraded curb ramps, new striping for lane delineation, crosswalks, and bike lanes. With the completion of this project, the City’s average Pavement Condition Index (PCI) increased from 66 to 70 in two years. Measure C funds may be used in future pavement preventive maintenance and resurfacing projects to expand the number of roadway segments treated by the City.
Staffing
The following table lists the positions that are authorized and budgeted in Measure C fund in FY 2023, as well as the status of each position. The green shading depicts the positions budgeted within the Maintenance Services Department; while the blue shading denotes the positions budgeted in the Police Department.
In FY 2024, eight (8.0 FTE) additional Measure C-funded positions were approved during the annual budget process. As part of the recommendations outlined in the dispatch center assessment, six (6.0 FTE) Communications Operators were approved. Additionally, one (1.0 FTE) Tree Trimmer, and one (1.0 FTE) Groundskeeper were added to the budget to address increasing landscape maintenance needs throughout the community.
TABLE 2:
FY 2023 Measure C Funded FTE’s:
Positions
Authorized
Budgeted
Filled
Vacant
Groundskeeper I
5.0 5.0
5.0 0.0
Groundskeeper II
1.0 1.0
1.0 0.0
Maintenance Worker
2.0 2.0
2.0 0.0
Maintenance Lead
1.0 1.0
1.0 0.0
Police Officer
3.0 3.0
3.0 0.0
Police Lieutenant
1.0 1.0
1.0 0.0
Crime & Intelligence Analyst
1.0 1.0
1.0 0.0
Certified Latent Print Examiner
1.0 1.0
1.0 0.0
Communications Supervisor
1.0 1.0
1.0 0.0
Communications Operator
7.0 7.0
7.0 0.0
TOTAL FTE
23.0 23.0
23.0 0.0
2015 Certificates of Participation (COP) Refunding
In June 2023, staff presented the Council with an analysis of refunding the 2015 Certificates of Participation (COP). At the time, it was estimated that refunding could yield potential savings of approximately $720,000 per year. Council authorized staff to move forward with the process of refunding the COPs.
In September, staff returned to Council with updated analysis and requested authorized to it issue a preliminary official statement (“POS”) and purchase agreement for the Refunding Certificates of Participation (“2023 Refunding COPs”). The POS serves as the offering document to investors and provides details about the terms of the 2023 Refunding COPs, the City’s financial condition, how the funds will be used, potential risks, and other relevant information. Council authorized staff to enter the market with the POS under the conditions outlined in the purchase agreement. Staff continue to work closely with its financial investment consultants and underwriters to identify the most opportune time to access the capital market to achieve the utmost savings for the City.
ECONOMIC IMPACT
There is no economic impact associated with this report as it is informational only.
FISCAL IMPACT
There is no fiscal impact associated with this report; however, staff will continue to manage the Measure C 20-Year Financial Forecast to identify opportunities for City capital improvement projects, and other costs to fulfill the promises of Measure C.
STRATEGIC ROADMAP
Measure C funding directly supports the Strategic Priorities of Invest in Infrastructure, Enhance Community Safety and Quality of Life, Grow the Economy, Confront Climate Crisis & Champion Environmental Justice. Specifically, this item relates to the implementation of the following project(s):
Invest in Infrastructure, Project N11: Complete Jackson Corridor landscape beautification. Replace and relocate the existing monument gateway sign located on Jackson Street and Silva Avenue.
Invest in Infrastructure, Project N17: Provide CIC a needs assessment/preliminary feasibility report on a new Police Building, including a funding mechanism.
Enhance Community Safety and Quality of Life, Project Q2: Implement the recommendations from the Dispatch Assessment.
Enhance Community Safety and Quality of Life, Project Q3: Conduct an assessment of the Jail and other Community Services Officer functions. Convene quarterly meetings with residents and the Police Department to foster better communication.
Enhance Community Safety and Quality of Life, Project Q11: Roll out a permanent illegal dumping prevention program.
Grow the Economy, Project E9: Continue the Fire Career Pathway Program with ROP and Chabot, and host 17 student fire fighters annually.
Confront Climate Crisis & Champion Environmental Justice, Project C10: Plant 1,500 trees annually, directly and in partnership with community groups.
SUSTAINABILITY FEATURES
The 21st Century Library and Community Learning Center is a net-zero energy facility, which is expected to qualify for LEED Platinum Certification. The Regional Fire Training Center Improvement Project will include the installation of Bay-friendly landscaping, storm water treatment devices, LED lighting, and solar PV panels. The new facilities are planned to achieve LEED Silver, and the habitable buildings are being designed to achieve Net Zero Energy. Additional energy efficiency improvements, such as LED lighting improvements and energy efficient windows, were completed as part of the retrofits at Fire Stations 1-5.
PUBLIC CONTACT
The agenda for this item was posted in compliance with the California Brown Act.
NEXT STEPS
Staff will continue to prioritize the completion of current and future Capital Improvement Projects, and look for ways to utilize revenues to achieve the promises of Measure C and remain exemplary stewards of the funds available through Measure C.
Prepared by: Franchesca Hatfield, Management Analyst I Recommended by: Nicole Gonzales, Director of Finance
Approved by:
_________________________________________
Kelly McAdoo, City Manager