Wednesday, May 21, 2025
5:30 PM
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
Conference Room 4A & Virtual Platform (Zoom)
Council Budget and Finance Committee
Agenda
May 21, 2025Council Budget and Finance
Committee
Agenda
NOTICE: The Council Budget and Finance Committee will hold a hybrid meeting in Conference Room 4A and virtually via Zoom.
How to submit written Public Comment:
Send an email to [email protected] by 2:00 p.m. the day of the meeting. Please identify the Agenda Item Number in the subject line of your email. Emails will be compiled into one file, distributed to the Council Budget and Finance Committee and City staff, and published on the City's Meeting & Agenda Center under Documents Received After Published Agenda. https://hayward.legistar.com/Calendar.aspx When submitting written comments, indicate in the email if you want your comment read into the record.
Requests will be allowed provided the reading will not exceed three (3) minutes consistent with the time limit for speakers at Council Committee meetings. Email comments will become part of the record of Council Committee meetings.The Chair can limit the time for reading written comments.
CALL TO ORDER
AB 2449 TELECONFERENCE NOTIFICATIONS AND CONSIDERATION
ROLL CALL
PUBLIC COMMENTS:
Limited Only to Items on the Agenda and Submitted Prior to the Meeting.
APPROVAL OF MINUTES
Review and Approve of the Council Budget and Finance
Committee April 16, 2025, Meeting Minutes
MIN 25-0661.
Attachments: Attachment I Minutes
REPORTS/ACTION ITEMS
Transient Occupancy Tax (TOT) ReviewACT 25-0362.
Attachments: Attachment I Staff Report
3. FY 2025-26 Budget Work Session Debrief (Oral Presentation)
FUTURE AGENDA ITEMS
May 21, 2025Council Budget and Finance
Committee
Agenda
Review and Approve the 2025 Agenda Planning CalendarACT 25-0354.
Attachments: Attachment I Planning Agenda
COMMITTEE MEMBER/STAFF ANNOUNCEMENTS
ADJOURNMENT
Next Meeting - 5:30 p.m., Wednesday, June 18, 2025
The City of Hayward's Open Data Portal was designed to allow the public to explore, visualize, and download publicly accessible data. The Open Data Portal allows a clear view of the City's financial performance. Access to the portal may be found at https://haywardca.opengov.com/CITY
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: MIN 25-066
DATE: May 21, 2025
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Review and Approve of the Council Budget and Finance Committee April 16, 2025, Meeting Minutes
RECOMMENDATION
That the Council Budget and Finance Committee (CBFC) reviews and approves the April 16, 2025, CBFC meeting minutes.
SUMMARY
The CBFC held a meeting on April 16, 2025, and the draft minutes are attached for the CBFC’s review and approval.
ATTACHMENTS
Attachment I 04/16/2025 CBFC Meeting Minutes
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ATT ACHMENT I
COUNCIL BUDGET & FINANCE COMMITTEE MEETING
Meeting Minutes of April 16, 2025
Call to Order: 5:32 p.m.
Members Present: Mayor Salinas, Councilmember Syrop, and Councilmember Bonilla Jr.
Members Absent: None
Staff: Dr. Ana Alvarez, Sharif Etman, Christina Crosby, Franchesca Hatfield, Nicholas Mullins, Crissy Mello
Guests: None
Public Comments: None
1. Approval of Meeting Minutes from March 19, 2025
Action: Minutes reviewed and unanimously approved.
2. FY 2026 Proposed Budget Discussion (Oral Report)
Interim Finance Director Etman presented
Councilmember Syrop Questions:
1) Is there a change in practice regarding vacancy savings utilization? a) Yes, we’ve put in a 5% vacancy savings rate. Historically, vacancy savings were utilized by departments to be able to keep intact operations, which is not good practice. This created an opportunity to discuss good public financing. The allocation of the savings belongs to the elected officials. We are doing a course correction. Moving forward we will be putting the control measures to realize the savings.
2) Is it necessary to utilize language regarding recession? a) This is the best-case scenario. We want to be mindful of what the future holds.
3) Is it possible to manage the overtime per person for good policy? a) Depending on the work unit and kind of work, there are control measures we can put in place to manage overtime. We are legally required to pay people for overtime worked and we are required to manage the overtime and how it is distributed. It depends on each work unit. There are other control measures we can look at. Councilmember Bonilla Jr. Questions:
1) What and when are we having a discussion on the approach to minimize this deficit? Is it before July?
(i) Part of the discussion is happening now regarding this year’s budget.
Dr. Alvarez is currently reviewing everything against our budget such as recruitment. A TOT increase recommendation is also coming to Council in May for review for potential revenue increase. In addition, there are other things we can do that needs to be timed correctly.
Structural change will take years. It involves policies, practices, and rightsizing through program evaluation.
Mayor Salinas Questions:
A. What is our OPEB right now? Where does our OPEB fall in this equation? a. The last few years we have been overpaying our ARC about 3 million above our PayGo. Interim Director Etman recommends lowering our additional contribution by half from 3 million to 1.5 million to lower the deficit. We can revisit increasing our additional contribution during Midyear or Fall revision. Even though we’ve lowered it by half, we reviewed it against our actuarial and we still have our implicit subsidy benefit.
Action: The Committee received the oral report and provided feedback.
3. Review and Approve the FY 2024-25 Agenda Planning Calendar When we discuss debt service in May, Councilmember Syrop would like to see how the debt service would look if we moved forward with potential loans.
Action: The Committee reviewed the calendar and provided feedback.
Committee Members/Staff Announcements: None.
Adjournment: The meeting was adjourned at 6:23 p.m.
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: ACT 25-036
DATE: May 21, 2025
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Transient Occupancy Tax (TOT) Review
RECOMMENDATION
That the Committee provides feedback on this analysis and provides a recommendation to present to City Council to adjust the City’s Transient Occupancy Tax (TOT) rate that the Hayward voters approved with the passing of Measure NN in November 2020 for a rate up to 14 percent.
SUMMARY
This report provides a review of the City’s current TOT rate, and consideration for increasing the TOT rate in accordance with Measure NN, a voter approved ballot measure, which authorized Council to adjust the TOT rate from 8.5 percent up to 14 percent. In November 2020, the City continued to balance the impacts related to the economic uncertainties around the pandemic. At that time, Council directed staff to keep the TOT rate at its current rate of 8.5 percent to allow hoteliers time to recover from the pandemic. Council requested that an adjustment to the TOT rate be reviewed and considered when the economy has recovered from the impacts of the pandemic.
The report provides an overview of the TOT rate, and consideration for adjusting the TOT rate from 8.5 percent to 12 percent in FY 2025-26 and to review raising TOT from 12% to 14% effective FY 2027-28 should the current 2% Excise Tax terminate December 31, 2027.
ATTACHMENTS
Attachment I Staff Report
CITY OF HAYWARD Printed on 5/17/2025Page 1 of 1
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DATE: May 21, 2025
TO: Council Budget and Finance Committee
FROM: Interim Director of Finance
SUBJECT: Transient Occupancy Tax (TOT) Review
RECOMMENDATION
That the Committee provides feedback on this analysis and provides a recommendation to present to City Council to adjust the City’s Transient Occupancy Tax (TOT) rate that the Hayward voters approved with the passing of Measure NN in November 2020 for a rate up to 14 percent.
SUMMARY
This report provides a review of the City’s current TOT rate, and consideration for increasing the TOT rate in accordance with Measure NN, a voter approved ballot measure, which authorized Council to adjust the TOT rate from 8.5 percent up to 14 percent. In November 2020, the City continued to balance the impacts related to the economic uncertainties around the pandemic. At that time, Council directed staff to keep the TOT rate at its current rate of 8.5 percent to allow hoteliers time to recover from the pandemic. Council requested that an adjustment to the TOT rate be reviewed and considered when the economy has recovered from the impacts of the pandemic.
The report provides an overview of the TOT rate, and consideration for adjusting the TOT rate from 8.5 percent to 12 percent in FY 2025-26 and to review raising TOT from 12% to 14% effective FY 2027-28 should the current 2% Excise Tax terminate December 31, 2027.
BACKGROUND
In June 20201, Council was presented with a comparative analysis of TOT rates and revenues in neighboring agencies, as well as the presentation of the results of 2017 voter polling in comparison with election results from Bay Area cities that had previously placed ballot measures to voters. The analysis found that Hayward had the lowest TOT rate and ranks eleventh in per-capita TOT revenues of the sixteen Bay Area cities with populations over
1 CITY OF HAYWARD - File #: LB 20-030 (legistar.com)
100,000. At the time, past polling found that an increase to TOT was supported by approximately two-thirds of registered Hayward voters.
On July 14, 20202, Council authorized actions to place an increase in the City’s TOT from 8.5 percent to up to 14 percent before the voters of Hayward at the November 3, 2020 election. In November 2020, the voters of Hayward passed Measure NN, which increased the TOT from
8.5 percent to no more than 14 percent.
On November 16, 20223, Council Budget and Finance Committee was presented with a review of the City’s current TOT rate and collected revenue. During the presentation, the Committee received comparisons of current TOT rates in neighboring cities and TOT revenue under different rate scenarios. The Committee recommended maintaining the current 8.5 percent rate and discussed potential rate adjustments after further analysis and continued economic recovery.
On January 15, 20254, Council Budget and Finance Committee was presented with a review of the City’s current TOT rate and collected revenue. During the presentation, the Committee received comparisons of current TOT rates in neighboring cities and TOT revenue under different rate scenarios. The Committee recommended presenting City Council with the option to raise TOT from 10 to 12 percent.
After internal discussions and ongoing budget discussions regarding the City’s structural deficit, staff recommended to City Council to raise TOT to the maximum amount of 14%5. City Council asked for additional research to be conducted and for the Council Budget and Finance Committee to review a proposed increase of 12% with the additional research.
DISCUSSION
Staff compared the City’s TOT rate of 8.5 percent to that of twelve other cities in the Bay Area with populations over 100,000 with the exception of Castro Valley, Union City, and San Leandro.
In 2020, when Measure NN was approved by the Hayward voters, Council directed staff to hold the rate at 8.5 percent to allow local hoteliers to recover from the impacts of the pandemic.
While some cities apply only a base TOT rate, others impose additional taxes and fees such as tourism assessments, business improvement district charges, and community facility district levies which increases the total cost to hotel guests. Table 1 details the total effective rates, distinguishing between the base TOT and any additional charges layered on top.
2 CITY OF HAYWARD - File #: LB 20-038 (legistar.com)
3 CITY OF HAYWARD - File #: ACT 22-120 (legistar.com)
4 CITY OF HAYWARD - File #: ACT 24-091
5 CITY OF HAYWARD - File #: LB 25-012
Should Council choose to increase Hayward’s TOT rate up to the 12 percent allowed under Measure NN, the City’s overall lodging cost to guests would fall near the middle range when factoring in the total rates including additional fees charged by neighboring cities. An increase to the full 14 percent would position Hayward in the fourth highest in the comparison group.
However, even at that level, the City would remain well below the total lodging costs seen in cities that apply significant additional surcharges beyond their base TOT rates.
Table 1: Comparison of Current TOT Rates
City TOT Rate Additional Taxes/Fees Total Rate
San Francisco 14.00%
5.96% Destination fee tax, Tourism District
assessment based on zoning between 2-2.25%,
Moscone Assessment fee based on location
between 1-1.25% 23.46% Max
Oakland 14.00%
2% Oakland Tourism Tax, 3.83% Destination fee
tax 19.83%
Santa Clara 13.50%
2% Community Facilities District Tax, 2%
Tourism Improvement District assessment 17.50%
San Leandro 14.00% 14.00%
San Mateo 14.00% 14.00%
Union City 13.86% 13.86%
Berkeley 12.00%
1% Berkeley Tourism Business Improvement
District assessment 13.00%
Concord 10.00% 3% Tourism Business Improvement District tax 13.00% San Jose 10.00%
Hotel Business Improvement District fee based
on zoning between $1-$2.50/room per night 10% + Fee
Hayward 8.50% 2% Emergency Services Facilities Tax 10.50% Fremont 10.00% 10.00%
Antioch 10.00% 10.00%
Castro Valley 10.00% 10.00%
In FY 2022-23, TOT revenue began to show signs of recovery with an increase of approximately $0.5 million over FY 2020-21 in actual revenue collected. Table 2, below, provides updated projections for the last three fiscal years along with the current fiscal year and projected fiscal year, since Measure NN was approved by the Hayward-voters. The table illustrates the fiscal impacts to the revenue source had higher TOT rates been adopted.
Table 2: TOT Revenue Under Different Rate Scenarios in FY 2021 through FY 2026
Fiscal Year 8.5% (Actual) 10% 12% 14%
FY 2021-22 $1,978,905 $2,328,124 $2,963,928 $3,259,373
FY 2022-23 $2,358,670 $2,774,906 $2,103,617 $3,884,868
FY 2023-24 $2,359,000 $2,775,294 $2,681,998 $3,885,412
FY 2024-25
(adopted) $2,125,000 $2,500,000 $3,196,692 $3,500,000
FY 2025-26
(projected) $2,380,000 $2,800,000 $2,771,979 $3,920,000 Average $2,240,315 $2,635,665 $2,743,643 $3,689,931
As illustrated in Table 2, if a 12 percent TOT had been in place since FY 2020-21, it would have generated an average of $2.7 million per year; an average increase of about $0.5 million in annual revenue.
FISCAL IMPACT
Prior to the pandemic and passage of Measure NN, the TOT rate was set at 8.5 percent and generated approximately $2.2 million in General Fund revenue per year in the three fiscal years proceeding FY 2024-25.
TOT revenue has continued to improve and progress toward pre-pandemic levels. Should the City Council choose to exercise its authority to adjust the TOT rate to 12 percent, the increase would result in positive impacts to the General Fund. If a 12 percent TOT rate was approved, using the TOT annual average revenue, shown in Table 2, the City could potentially realize an increase of approximately $0.5 million annually in General Fund revenue.
In FY 2027-28, should City Council approve a 12% rate beginning FY 2025-26 and choose to raise the TOT rate to 14% when the 2% Excise Tax sunsets on December 31, 2027 for FY 2027-28, the City could potentially realize approximately $0.9 million annually based on current projections.
STRATEGIC ROADMAP
This agenda item supports the Strategic Priority of Improve Organizational Health.
Specifically, this item relates to the implementation of the following project(s):
Project 1, Part 1.a: Maintain and Expand Fiscal Sustainability: Evaluate an increase in the Transient Occupancy Tax.
NEXT STEPS
If the Committee supports the consideration of adjusting the TOT rate in accordance with the voter-approved Measure NN, staff will provide the full City Council with an update and review of the TOT rate and analysis for consideration.
Prepared by: Franchesca Hatfield, Management Analyst
Nicholas Mullins, Senior Management Analyst
Recommended by: Sharif Etman, Interim Director of Finance
Approved by:
___________________________________
Dr. Ana Alvarez, City Manager
CITY OF HAYWARD
Hayward City Hall
777 B Street
Hayward, CA 94541
www.Hayward-CA.gov
File #: ACT 25-035
DATE: May 21, 2025
TO: Council Budget and Finance Committee
FROM: Director of Finance
SUBJECT
Review and Approve the 2025 Agenda Planning Calendar
RECOMMENDATION
That the Council Budget and Finance Committee reviews and approves the 2025 Agenda Planning Calendar.
SUMMARY
The 2025 Agenda Planning Calendar suggests agenda topics for the year for the Committee’s consideration.
ATTACHMENTS
Attachment I 2025 Agenda Planning Calendar
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ATTACHMENT I
COUNCIL BUDGET AND FINANCE COMMITTEE
2025 Agenda Planning Calendar
May 21, 2025
Meeting Location: Conference Room 4A/Zoom Platform
Meeting Time: 5:30 p.m.
Meeting Dates: The Council Budget & Finance Committee generally meets monthly on the 3rd Wednesday of the month, except for July and at times August, due to City Council Recess. Special meetings will be scheduled as determined necessary by the Committee or the City Manager.
DATE SUGGESTED TOPICS (subject to change)
June 18, 2025 Annual Review of City Issued Debt
July 16, 2025 Council Recess
August 20, 2025 TBD
September 17, 2025 Annual City Benefit Liabilities and Funding Plan Review Measure C Annual Report
Hayward Community Foundation Update
October 15, 2025 TBD
November 19, 2025 Investment Portfolio Review and FY 2026 Statement of Investment Policy and Delegation Authority (Oral Presentation by External Investment Manager)
FY 2025 Annual Audit Process (Oral Presentation by External Auditor) December 17, 2025 TBD
January 21, 2026 FY 2027 Budget Process and Calendar Review February 18, 2026 FY 2026 Mid-Year Budget Review and General Fund Long-Range Financial Model Update
March 18, 2026 FY 2027 Budget Update
April 15, 2026 Discussion on Mayor & City Council FY 2027 Budget FY 2027 Proposed Budget Discussion
May 20, 2026 Annual Review of City Issued Debt
Annual City Benefit Liabilities and Funding Plan Review
Non-scheduled future agenda topics:
- Additional Payment OPEB Trust
- 238 Parcel Sales Update (pending)