DATE: September 18, 2024
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT: Measure C Debt Analysis and Review
RECOMMENDATION
That the Committee reviews and receives the City’s Measure C (District Sales Tax) FY 2024 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 Fire Station 6 and development of a regional fire training center; as well as extensive street improvements. Through Measure C funding, the City has not only completed several key capital infrastructure projects, but also allowed for continued support ongoing operational needs of the community.
This report provides an overview of Measure C revenue and expenses in FY 2024, 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 increase the City’s Sales and Use Tax by half a percent for twenty years. 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 established 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 (Attachment II) to project Measure C revenue over time and develop budgets for capital improvement projects and ongoing operational costs that support the Council’s priorities. The following graph illustrates the use of Measure C related funds through FY 2025.
Detailed revenue and expenditures of Measure C in FY 2024 and estimated revenue and expenditures in FY 2025 are provided in Table 1. The table shows a breakdown of capital and operating expenditures.
Table 1: Measure C - FY 2024 Actual and FY 2025 Estimated FY 2024
Actual (unaudited)
FY 2025 Estimated
Revenues
Measure C District Sales Tax
23,810,760
22,764,000
Other Partnering Contributors
Total Revenues
23,810,760
22,764,000
Expenditures
Capital
Library/ Learning Center
286,187
400,813
Fire Facilities Design
208,000
Fire Station 1
Fire Station 2
Fire Station 3
Fire Station 4
Fire Station 5
Fire Station 6
3,750,950
340,050
Fire Training Academy
1,099,352
700,648
Street Rehabilitation
373,290
1,626,710
HPD Locker Room
32,309
8,117,691
Stack Center
6,000,000
Debt Service
5,226,391
4,446,750
Other Projects
396,243
765,232
Operating
Police Services
3,484,897
4,684,717
Maintenance Services
1,848,993
2,360,055
Other Department Services
529,164
756,258
Total Expenditures
17,027,775
30,406,924
Beginning Fund Balance
8,506,648
15,289,633
Annual Surplus/(Shortfall)
6,782,985
(7,642,924)
Ending Fund Balance
15,289,633
7,646,709
Measure C Funded Capital Improvement Projects
Fire Station 6 and Regional Fire Training Center Improvement This project replaced the existing Fire Station 6 with a new fire station and create a regional fire training center that includes: 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. City 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 undergrounding work. The Fire Station/Classroom Building is the most complex building with the longest construction duration. The ribbon cutting was held on June 21, 2023. The estimated total project cost is $77.4 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 offering 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. Due to the impacts of the pandemic, the 21st Century Library was temporarily closed, and resumed pre-pandemic open hours in October 2021 and resumed pre-pandemic operations and services in May 2022.
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 approximately $12 million from Measure C to complete the City’s largest road improvement project to date.
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.
Jackson Corridor Median Improvement
Maintenance Services continues beautification efforts along the Jackson Corridor. The Jackson Median Corridor Improvement Project supports Council's Strategic Priority, Cultivate Vibrant Neighborhoods, Project NP6. The project beautifies the Jackson Corridor with median improvements, including new trees, plants, bark chips, and pavers. The project is expanding to include a new gateway monument sign along the Jackson Corridor. The gateway monument sign is not funded through Measure C. An additional $200k in Capital General Fund is supporting this project, which has a total project budget of $950k. The project is targeted to be completed in December 2024.
HPD Locker Room Construction
The Hayward Police Department (HPD) Locker Room Projects involves designing and constructing an approximately 6,910 square feet building to accommodate necessary improvements. Improvements include expansion of space and amenities. The project is expected to be complete by December 2025 and is fully funded by Measure C.
Staffing
The following table lists the positions that are authorized and budgeted in Measure C fund in FY 2025, as well as the status of each position. Staffing has remained consistent with FY 2024 creating a total of 31 authorized FTEs. The green shading depicts the positions budgeted within the Maintenance Services Department; while the blue shading denotes the positions budgeted in the Police Department.
TABLE 2: FY 2025 Measure C Funded FTE’s:
Positions
Authorized
Budgeted
Filled
Vacant
Groundskeeper I
2.0 2.0
2.0 0.0
Groundskeeper / Laborer
4.0 4.0
4.0 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
Tree Trimmer
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
13.0 13.0
7.0 6.0
TOTAL FTE
31.0 31.0
25.0 6.0
Potential District Sales Tax Extension
Having reached the halfway point in the 20-year authorization of the district sales tax, Council directed staff to explore the potential for addressing remaining and emerging infrastructure and operational needs through an extension of the district sales tax beyond the current sunset date of 2034. At the May 21, 2024 Council meeting, staff presented the results of a community listening and polling, which showed that 66% of sampled voters supported a 30-year extension, and 72% of sampled voters supported a 20-year extension. On June 18, 2024, Council adopted a resolution to place a ballot measure to extend without increasing the City’s half-cent district sales tax for an additional 20-years at the November 5, 2024 election, potentially extending the sunset of the half-cent district sales tax to 2054.
Refunding Certificate of Participation (COP) (Debt Service) In early 2023, the City presented Council with a recommendation of refund (refinance) its existing debt service that was issued to fund several Measure C supported capital infrastructure projects, including the 21st Century Library and Learning Center. At its June 20, 2023 meeting, the City authorized delivery and sale of the 2023 Refunding COPs to refinance the City’s 2015 COPs as long as the refinancing resulted in (1) an aggregate minimum net present value savings to the City of at least 3% of the principal component of the 2014 Lease Payments and the 2015 Lease Payments and (2) positive net present value savings for each of the 2014 Lease Payments and the 2015 Lease Payments (when calculated separately), as such savings shall be verified and conclusively determined by the City’s municipal advisor (the “Savings Requirements”). In September 2023, Council authorized the preliminary official statement and purchase agreement for the 2023 Refunding COPs to finalize the transaction. The refunding of the COPs estimated net present value savings of $1.7 million and the aggregate cash flow savings estimated at $10 million.
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 Cultivate Vibrant Neighborhoods. Specifically, this item relates to the implementation of the following project(s):
Police Operating Costs
Enhance Community Safety, Project SM1: # of Police incidents and types Enhance Community Safety, Project SM2: Police response time Enhance Community Safety, Project SP2: Implement Emergency Medical Dispatch Maintenance Operating Costs
Cultivate Vibrant Neighborhoods, Project NM1: % of Access Hayward illegal dumping, graffiti, unhoused abatement, and landscaping requests are responded to within 48 hours Capital Projects
Enhance Community Safety, Project SP1: Expand physical dispatch space Invest in Infrastructure, Project FM3: # of miles of repaving completed Cultivate Vibrant Neighborhoods, Project NP6: Complete Jackson Corridor landscape beautification Invest in Infrastructure, Project FP6: Complete Phase I construction of the Stack Center and continue fundraising, with the goal of beginning Phase II in FY 2025
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 Christina Crosby, Deputy Director of Finance
Nicole Gonzales, Director of Finance
Recommended by: Nicole Gonzales, Director of Finance
Approved by:
____________________________________________
Dustin Claussen, Interim City Manager
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