CITY OF MURRIETA
DRAFT
GENERAL FUND ANALYSIS
NOVEMBER 2023
General Fund Analysis Page | 1
City of Murrieta
General Fund Analysis
Background
The City of Murrieta (City) incorporated July 1, 1991. Imme diately following incorporation, the Riverside County (County) Transportation department continued to approve tract maps that were already submitted for approval. During the following two years the County transitioned the development approval process to the City. As a function of approving various land use, zone changes, or specific plan amendments submitted by development applicants the City must evaluate the impacts of these changes. One type of impact that needs consideration is any fiscal impacts to the City’s general fund for services associated with these changes. Consequently, developers will submit Fiscal Impact Analyses (FIAs) that include the proposed development, estimated revenues, and estimated costs that may occur because of the proposed development. These FIAs present various assumptions and statements which analyze pr oposed development impacts to the City. Typically, these assumptions include using the City’s approved Budget, plan of services, and financial constraints. These budgets are required to be balanced at the time of adoption by the City Council. This is appropriate for the near-term prediction or forecasting as it relates to the overall financial condition of the City’s General Fund. However, for long-term planning other factors need to also be considered. These factors include the City’s policies related to service levels for each City service department, including public safety, remaining development within the City, population growth, property tax valuation, sales tax estimates, and increases in service costs. It is necessary to evaluate these to provide sustainable services for growth.
Approach
Spicer Consulting Group (SCG) was engaged to evaluate the City’s General Fund for future development impacts. SCG obtained information germane to the analysis including: the FY 2020-21 Comprehensive Annual Financial Report; the Unaudited FY 2021-22 Actuals; the FY 2022-23 Budget; the General Plan; the City’s Long-Term Financial Projection; data from City Departments; and line item budget detail data. From this in formation a line item detailed database was prepared determining the eligible budget items relevant to providing services to t he community. Our analysis included information planned for FY 2022-23 and determined the appropriate set of General Fund revenues and expenditures on a per capita basis. We evaluate this cost per capita assuming a full build-out scenario and determine the proportionate share associated with the development of new residential properties. After evaluating the proportionate share of costs, an analysis of revenues from new development is prepared including Property Tax, Sales Tax, and Franchise Fees and Charges.
Future Growth
Based upon the City’s approved General Plan we determined and evaluated the estimated build-out horizon for the City, the land use categories, and specific plans for residential development, and confirmed the estimated people per household factors available from the State Department of Fina nce. However, we utilized the estimated people per household the City provided.
Additionally, we obtained estimated assessed value information for new single-family and multi-family residential dwelling units.
The current population for the City is 114,541 and is anticipated to grow to 150,806 in the year 2039, approximately 31.7%.
That is an annual growth rate of 1.86%. The current number of people per household is 3.10 for a single-family residence, 2.50 for a multi-family residential property, and 1.79 for an affordable housing unit. This means that an estimated 3,379 single-family units, 9,600 multi-family units, and 1,000 affordable housing un its will need to be built to support that population increase.
Currently, the City’s new residential development activity includes 3,251 single-family residential, 8,283 multi-family residen tial properties, and 1,000 residential affordable housing units.
Expenditures
The analysis consists of five primary general fund expenditur e categories. These categories include: General Government, Community Development, Public Works/Engineering, Community Services, and Public Safety. General Government consists of the basic functions of running the City’s day-to-day operations and includes; Administrative Services, Building and Safety, City Attorney, City Clerk, City Council, City Manager, Emergency Operations, and Finance. Community Development consists of Community Development/Planning and Economic Development. Community Services and Public Works/Engineering encompass only those functions. Public Safety includes Police, Fire, and Animal Control. Below are the FY 2022-23 expenditures by category:
General Fund Analysis Page | 2
City of Murrieta
General Fund Analysis
General Fund Expenditures FY 2022-23
Description Amount
General Government $9,466,982
Community Development $6,551,129
Public Works/Engineering $4,684,321
Community Services $603,395
Public Safety $56,192,003
Total Direct Costs $77,497,830
These expenditures represent the true costs realized in the daily operations (basic level of services approved by the City Council) and exclude any one-time costs and capital projects. The anticipated increase in service costs was estimated at 3.0% annually for all services except Public Safety. According to the City’s Annual Budget, Public Safety costs are based upon the City’s Long- Term Financial Plan and includes projected increases for salaries and benefits, including projected CalPers retirement costs from actuarial calculations and range from 3% to 7.8%.
General Fund Expenditures FY 2038-39
Description Amount
General Government $14,678,678
Community Development $10,157,610
Public Works/Engineering $7,263,100
Community Services $935,572
Public Safety $112,044,381
Total Direct Costs $145,079,341
General Fund Revenues FY 2022-23
Description Amount
Property Taxes $21,912,928
Real Property Transfer Tax $660,800
Sales Tax $20,600,000
Charges for Services $3,509,485
Permit Fees $1,393,857
Franchise Fees $3,918,420
Misc Fines & Fees $324,000
VLF $9,301,070
Business Licenses $730,330
Other taxes $2,784,085
Other revenues $4,288,900
Transfer In $307,010
Total Direct Revenues $69,730,885
Property Tax - Property Taxes are derived from the assessed values of all properties within the City of Murrieta. The Riverside County Auditor-Controller-County Clerk levies a 1% tax on the assessed valuation of all parcels within the County of Riverside.
By state statue, under Proposition 13 pa ssed in 1978, under Article XIII, it was es tablished that the maximum increase in assessed values in one year is the lesser of 2% or the Consumer Price Index (CPI). Of this 1% Ad Valorem tax, the City of Murrieta receives a weighted average of 12.89% of the one perce nt levy Property Tax revenues consisting of $9.1 M of base property tax and $12.8 M of fire protection property tax representing the City’s single largest General Fund revenue source that account for 31.4% of the City’s total General Fund revenues of $69,730,885.
General Fund Analysis Page | 3
City of Murrieta
General Fund Analysis
Sales Tax - The Bradley-Burns Sales Tax revenue is derived from 1% of all taxable sales within the City of Murrieta. The District Sales Tax (Measure T) revenue is derived from 1% of all taxable sales within the City of Murrieta. California's state-wide sale s tax rate is 6.25%, with an additional 0.5% sales tax in Ri verside County, which is dedicated for road maintenance and construction.
Franchise Fees - Franchise Fees are the fifth largest revenue so urce for the City’s General Fund. Currently, the City has six franchise agreements consisting of two public utilities, three cable TV companies, and solid waste hauler. The franchise fees associated with the solid waste hauler is anticipated to increase proportionally with the increase in the number of new homes.
Franchise fee revenues are projected to total $3.9 Million for FY 2022-23.
Other Revenues – Other revenues include charges for services, fines & forfeitures, business licenses, recreation program income, and VLF that were recently restored by the State Legisl ature. Of the $23.3 million, $9.3 million is derived from VLF, and the balance for other sources noted.
Findings
According to the City’s General Plan, the City population is estimated to grow by approximately 31.7% as previously stated.
This means that on a per capita basis, the new development would be responsible for approximately $34.9M of the total expenditures by FY 2038-39. Taking into consideration revenues that could be generated through Property Tax, Sales and Use Tax, and Other Revenues the City Net General Fund Impacts would be negative by approximately $6.8M in FY 2038-39. This translates to $580 for each newly developed detached single family residential, $468 per each multi-family residential unit, an d $250 per each affordable housing unit.
Recommendations
Given the net negative impact new residential development has on the City’s General Fund each approved project should either participate in establishing or annexing into a Public Safety Services CFD or pay an equal amount to mitigate their impacts for safety services. In establishing a Public Safety Services CFD tax the City will be able to stabilize revenues and build in the flexibility to potentially not need to levy the full amount wh en the economy is performing well. However, when there is a recession or specific challenges to the City’s revenues, the special tax will be able to contribute to providing public safety when these services are more vital.
Upon establishment of the Public Safety Services CFD it would be prudent to periodically review the projected tax amount to insure the tax stays in line with projected public safety costs. Finally, the City should evaluate the stability of the Public Safety Services CFD (if adopted) and may need to establish a new CFD with higher rates in the future.
APPENDICES
City of Murrieta DRAFT Population as of 2021 114,541
General Fund Fiscal Impact Analysis Estimated Population Growth (thru 2039) 36,265 Residential Population Growth Population at Build‐out (2039) 150,806 FY 2022‐232
Projected Build‐Out 2039
General Fund Expenditures Service Unit1 Per Service Unit Build‐Out LOS General Fund Expenditures Operating
Budget
$ Per
Capita % of Total Escalator
Operating
Budget
$ Per
Capita % of Total
General Government 150,80 6 $97.33 $14,678,67 8 General Government $9,466,98 2 $83 12% 155% $14,678,67 8 $97 10% Community Development 150,80 6 $67.36 $10,157,61 0 Community Development $6,551,12 9 $57 8% 155% $10,157,61 0 $67 7% Public Works/Engineering 150,80 6 $48.16 $7,263,10 0 Public Works/Engineering $4,684,32 1 $41 6% 155% $7,263,10 0 $48 5% Community Services 150,80 6 $6.20 $935,572 Community Services $603,395 $5 1% 155% $935,572 $6 1% Public Safety Public Safety
Police Services 150,80 6 $506.31 $76,354,96 4 Police Services $34,513,824 $301 221% $76,354,964 $506 Fire Services 150,80 6 $232.20 $35,016,758 Fire Services $21,244,349 $185 165% $35,016,758 $232 Animal Control Services 150,80 6 $4.46 $672,65 9 Animal Control Services $433,830 $4 155% $672,659 $4 Total Public Safety 150,80 6 $742.97 $112,044,381 Total Public Safety $56,192,00 3 $491 73 % $112,044,381 $743 77 % Total General Fund Expenditures $962.03 $145,079,34 1 Total General Fund Expenditures $77,497,830 $677 100% 187% $145,079,34 1 $962 100% Total Service Units at Build‐out 150,80 6
New Residential Service Units 36,265 Notes:
% of Build‐out Service Units 24%
1Service Unit defined as estimated residential population 2FY22‐23 Expenditure totals are budget totals from City Annual Operating Budget Fiscal Year 2022‐23 Allocable Share of General Fund Expenditures $34,887,811 3Sales and Use Tax estimated using FY22‐23 budget per capita rate ($1,102.70) applied to estimated population growth.
General Fund Revenues ‐ New Development New Homes Per New Home Totals Tax Revenues
Property Tax 13,979 $603.04 $8,429,834
Property Transfer Tax 13,979 $35.00 $489,33 1 Sales and Use Tax3 13,979 $1,102.70 $15,414,576 Subtotal Tax Revenues $1,740.7 4 $24,333,741
Franchise Fee 13,979 $104.87 $1,466,03 8
Fire Special Assessment 13,979 $40.84 $570,902 Fines & Forfeiture 13,979 $8.67 $121,19 8
Misc. Revenues 13,979 $114.79 $1,604,64 9
Subtotal Other Revenues $269.1 7 $3,762,788
Total General Fund Revenues $2,009.91 $28,096,52 9
General Fund Impact Service Unit1 Per Service Unit Totals Revenues 36,265 $774.76 $28,096,52 9
Less: Expenditures 36,265 ($962.03) ($34,887,811 ) Shortfall 36,265 ($187.27) ($6,791,282 )
CFD Tax Rates Factor Per Service Unit Tax Rate
Single Family Residential 3.10 $187.27 $580 Multi‐Family Residential 2.50 $187.27 $468 Affordable Housing Residential (75% MFR) 1.33 $187.27 $250 City of Murrieta DRAFT
General Fund Fiscal Impact Analysis
Tax Detail
Residential Development Factor Total Population Estimation Total Cumulative SFR Units 3,379 2021 Actual 114,541 Total Cumulative Residents 3.10 10,475 Estimated Growth 36,265 Constructed SFR Assessed Values $645,000 $2,179,455,000 2039 Total Population 150,806 Total Cumulative Multi‐Family Units 9,600 24% SFR Growth 10,475 Total Cumulative Residents 2.50 24,000 69% MFR Growth 24,000 Constructed MFR Assessed Values $444,000 $4,262,400,000 7% AHU Growth 1,790 Total Cumulative Affordable Units 1,000
Total Cumulative Residents 1.79 1,790 Constructed AHU Assessed Values $100,000 $100,000,000
Total Cumulative Residents 36,265
Residential Property Tax Factor Total
Constructed Assessed Values $6,541,855,000
Ad‐Valorem 1.00% $65,418,550
Residential Tax Rate 12.89%
Total Residential Tax $8,429,834
Residential Property Tax In‐Lieu of Sales Tax $0
Residential Property Transfer Tax Factor Total
Residential Property Tax Turnover Rate 13.60%
Transfer Tax Rate 0.055%
Total Residential Property Transfer Tax $489,331
Off‐Site Sales Tax Factor Total
Sales and Use Tax $34.05 $1,234,820
Less: % Captured at Onsite Retail 20.00% ($246,964)
Offsite Sales Tax Revenue $987,856
Less: 25% Reclassified to Property Tax 0.00% $0
Total Off‐Site Sales Tax Revenue $987,856
Total Tax Revenues $9,907,021
City of Murrieta DRAFT
General Fund Fiscal Impact Analysis
Tax Detail
CITY OF MURRIETA, CALIFORNIA ‐ EXPENDITURE TABLE
FIRE DISTRICT GENERAL FUND
( A )( B )( A + B ) * 10%
General Fund & Fire
District Fund Expenditures FY 2023 FY 2023
Salaries and Benefits
(NEW)
Ancillary Costs
(Direct)
Indirect Costs
10% Subtotal Totals
General Government ‐$ 9,466,982$ ‐$ 9,466,982$ Community Development ‐ 6,551,129 ‐ 6,551,129 Public Works/Engineering ‐ 4,684,321 ‐ 4,684,321 Community Services ‐ 603,395 ‐ 603,395 Public Safety
Police Services ‐ 34,513,824 ‐ ‐ ‐ ‐ 34,513,824 Fire Services 21,244,349 ‐ ‐ ‐ ‐ 21,244,349 Animal Control Services ‐ 433,830 433,830 Total Public Safety 21,244,349 34,947,654 ‐ ‐ ‐ ‐ 56,192,003 Total General Fund & Fire
District Fund Expenditures 21,244,349$ 56,253,481$ ‐ $ ‐ $ ‐ $ ‐ $ 77,497,830$ CITY OF MURRIETA, CALIFORNIA ‐ EXPENDITURE TABLE
FIRE DISTRICT GENERAL FUND
( A )( B )( A + B ) * 10%
General Fund & Fire
District Fund Expenditures FY 2039 FY 2039
Salaries and Benefits
(NEW)
Ancillary Costs
(Direct)
Indirect Costs
10% Subtotal Totals
General Government ‐$ 14,678,678$ ‐$ 14,678,678$ Community Development ‐ 10,157,610 ‐ 10,157,610 Public Works/Engineering ‐ 7,263,100 ‐ 7,263,100 Community Services ‐ 935,572 ‐ 935,572 Public Safety
Police Services ‐ 53,514,130 18,886,010 1,878,385 2,076,439 22,840,834 76,354,964 Fire Services 27,423,866 5,854,841 1,047,788 690,263 7,592,892 35,016,758 Animal Control Services ‐ 672,659 672,659 Total Public Safety 27,423,866 54,186,789 24,740,850 2,926,173 2,766,702 30,433,726 112,044,381 Total General Fund & Fire
District Fund Expenditures 27,423,866$ 87,221,750$ 24,740,850$ 2,926,173$ 2,766,702$ 30,433,726$ 145,079,341$ PROJECTED GROWTH ESTIMATED COSTS
PROJECTED GROWTH ESTIMATED COSTS
FY 2023
FY 2039
Police Services
Salaries and Benefits (NEW)
Captain 576,152 $
Lieutenants 995,403
Sergeants 3,118,835
Officers 3,013,073
Corporals 3,322,639
Detectives 3,405,705
Dispatchers 2,348,945
Professional Staff 2,105,257
SUBTOTAL 18,886,010$
Ancillary Costs (Direct)
VEHICLE ‐$
UNIFORM ‐ SWORN 120,467.24
UNIFORM ‐ DISPATCH 19,588.17
TRAINING ‐ 1 194,058.00
TRAINING ‐ 2 15,925.18
MEMBERSHIP ‐ 1 1,050.74
MEMBERSHIP ‐ 2 19,472.11
FUEL COST 133,046.02
VEHICLE MAINTENANCE 137,965.10
EQUIPMENT 669,262.43
BWC & SUBSCRIPTION 105,408.83
Data Storage 49,786.60
Phone‐ IT 79,658.55
Mobile devices 64,249.19
Radios ‐ handheld 109,825.96
BPV 46,848.37
Office Suite 9,957.32
Adobe Pro 9,957.32
Telestaff‐ IT 2,391.75
Guardian 9,957.32
Lexipol‐ IT 6,692.62
Office Furniture & Cubicle ‐
SWAT 22,888.78
Safety 49,926.98
SUBTOTAL 1,878,385 $
Fire Services
Salaries and Benefits (NEW)
Extended Costs ‐ Salaries and Benefits
Fire Engineer 1,125,962 $
Paramedic/Firefighter 1,706,003 $
Battalion Chief 463,870$
Add Engine 6 2,559,005 $
SUBTOTAL 5,854,841$
Ancillary Costs (Direct)
Annual costs 211,424$
One‐time costs 836,364 $
Vehicle ‐ Battalion Chief ‐$
Vehicle ‐ Medic Patrol Unit ‐$
New Fire Engine (Capital) ‐$
SUBTOTAL 1,047,788 $
SCHEDULE OF PROJECTED GROWTH ESTIMATED COSTS