City of Piedmont
COUNCIL AGENDA REPORT
DATE: November 6, 2023
TO: Mayor and Council
FROM: Rosanna Bayon Moore, City Administrator
SUBJECT: Introduction and First Reading of Ord.771 N.S. Regarding Renewal of the Municipal Services Special Tax Effective July 1, 2025
RECOMMENDATION
Approve the 1st reading of Ord. 771 N.S. regarding renewal of the Municipal Services Special Tax, effective July 1, 2025.
BACKGROUND
In 1981, 1984, and every four years since, the City Council has placed a measure before the voters of Piedmont to approve the Municipal Services Special Tax (“Parcel Tax”), which provides approximately 7% of the City’s General Fund budget. The Parcel Tax is levied against all improved lots in the City, with a rate based upon the use, and in most cases, parcel size. The current tax, approved by the voters on March 3, 2020, expires on June 30, 2025.
On October 16, 2023, the Budget Advisory and Financial Planning Committee (BAFP) presented its conclusions and recommendations on the Parcel Tax based on their review of the City’s tenyear General Fund financial projections.1
The BAFP advanced a number of conclusions including, but not limited to, the following:
• The City continues to do a commendable job of implementing prior recommendations to control costs and improve the long-term financial health of the City. • There is a reasonable path forward to address operating costs. However, the City’s ability to allocate sufficient resources to maintain City infrastructure and meet deferred maintenance needs has been successful only due to favorable economic trends. 1 The BAFP’s report is available on the City’s website at https://piedmont.ca.gov/cms/One.aspx?portalId=13659823&pageId=14121767. • Significant capital projects will be necessary to provide the services Piedmont citizens expect and the need for these projects will grow more pronounced in the coming years. • A healthy General Fund Reserve balance has been maintained and City services have been continuously delivered at the cost of many longer-term maintenance needs. • The City is challenged to balance basic operational demands with the aspirational desires of the public for improved public facilities, including public safety, parks, and recreation facilities. Some of these projects require significant public investments, adding to the burden on Piedmont taxpayers.
Consistent with its 2019 report, the BAFP noted that a duration of four years for the Parcel Tax is insufficient to address the City’s operational and maintenance needs, as well as long term planning.
The BAFP also determined that cost increases beyond the City’s control, capital needs and public expectations for higher services justify continuance and potential increase.
On October 16, 2023, the City Council directed staff to prepare an ordinance for renewal of the Municipal Services Special Tax for the March 5, 2024, ballot with the following features:
• Funding for two additional full time Dispatchers
• Resources to invest in public safety technology and equipment • A twelve-year term with potential for an annual Consumer Price Index (CPI) adjustment Potential address of the City’s Paramedic Tax was also noted but is not incorporated at this time.
For the last two weeks, staff has worked closely with the City Attorney and two Council Member liaisons to prepare the proposed ballot language and the associated ordinance for the Council’s consideration. An ordinance that implements a twelve-year renewal of the Municipal Services Special Tax is presented with a maximum 20% increase and annual CPI adjustment or 4%, whichever is less.
Under the provisions of the new ordinance, while the tax is in force, the City Council will determine the actual levy amount as a part of the process of approving the City’s budget. The proposed maximum rates for FY 25-26 are shown in the table below:
Agenda Report Page 2
Per Parcel According
to Size
Single Family
Residence
Developed
Commercial
Properties
MultiFamily
Residence
Parcels Divided
by Tax Code
Area Line
0 to 4,999 sq. ft. $743
5,000 to 9,999 sq. ft. $835
10,000 to 14,999 sq. ft. $963
15,000 to 20,000 sq. ft. $1,101
Over 20,000 sq. ft. $1,254
0 to 10,000 sq. ft. $1,254
Over 10,000 sq. ft. $1,882
Per Dwelling Unit $515
Per Parcel $761
The Municipal Services Special Tax is assessed on the basis that parcels of higher intensity use or parcels of greater size produce higher demands for service. This assumption is wholly consistent with the City’s historic approach.
If the Council wishes to place this matter before the voters at the Presidential Primary Election of March 5, 2024, the first reading can be approved at this meeting or a special meeting more than five days before the second reading, which would take place on November 20, 2023. State law requires that this ordinance be passed by a 4/5ths vote of the City Council. Because it is parcel based, a two thirds majority of voters is required to approve the tax.
The attached ordinance has been reviewed and approved as to form by the City Attorney.
Attachment: Ordinance 771 N.S.
By: Sheri Hartz, Interim City Clerk
Michael Szczech, Finance Director
Agenda Report Page 3
1 ORDINANCE NO. 771 N.S.
AN ORDINANCE AMENDING CHAPTER 20B
OF THE PIEDMONT CITY CODE PROVIDING FOR A SPECIAL
MUNICIPAL SERVICES TAX
The City Council of the City of Piedmont hereby ordains as follows:
SECTION 1
It is the intent of the City Council of the City of Piedmont in adopting this Ordinance to provide for the continuation of a special tax, specifically a non-ad valorem parcel tax to ensure the availability and provision of municipal services in Piedmont. Further, the availability and provision of City services and the demand for City services is closely tied to the uses and occupancies of property within the City, and it is logical to base such tax on use and occupancy of improved real property.
SECTION 2
Chapter 20B of the Piedmont City Code is hereby amended in its entirety to read as follows. Language additions are shown as underlined, and deletions are shown as strikethrough:
“CHAPTER 20B
MUNICIPAL SERVICES SPECIAL TAX
SECTION 20B.1 AUTHORITY TO ADOPT MEASURE
This Ordinance and the tax authorized herein is adopted pursuant to the provisions of Article 3.7 of Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code (Sections 53720-53730) and the California Constitution Articles XI, Section 5, XIII A, Section 4 and XIII D, Section 3(a)(2). The tax authorized herein is based on use and occupancy of improved real property.
SECTION 20B.2 AUTHORIZATION TO LEVY SPECIAL MUNICIPAL TAX If in any fiscal year commencing on or after July 1, 2021,2025 the City Council shall determine that municipal services, which may include, but are not limited to, police and fire protection, paramedic services, public safety technology, equipment and emergency communications staffing, street maintenance, building regulations, library services, recreation, parks maintenance, planning and public works and similar services, are necessary for the public good, welfare and safety, and that the cost of making available such services will exceed the amount of funds generated through other revenue and income of the City for such services, then it may levy a special tax for such fiscal year on each parcel of real property within the City in a manner provided herein. This is a non-ad valorem parcel tax which, pursuant to California Constitution Article XIII D, Section 3, shall be deemed a special tax as defined pursuant to Section 53721 of the California Government Code.
Attachment Agenda Report Page 4
2 SECTION 20B.3 DETERMINATION OF AMOUNT TO BE RAISED
Each year cConcurrent with the adoption of the annual budget, the City Council will determine the total amount of expenditures necessary to provide adequate levels of municipal services as defined in Section 20B.2 and deduct therefrom the projected revenue to be collected from sources other than this special tax. The difference, if any, shall be the maximum amount of funds to be derived from the tax authorized by this Ordinance for such a given year.
SECTION 20B.4 MAXIMUM TAX RATE/METHOD OF ASSESSMENT
After determining the amount of tax to be raised under Section 20B.3, the City Council shall apportion said amount among the parcels of real property within the City not exempted by law or exempted pursuant to Section 20B.12, as follows:
BASIC MUNICIPAL SERVICES TAX MAXIMUM RATE SCHEDULE
Per Parcel
According to Size
Single
Family
Residence
Developed
Commercial
Properties
Multi-Family
Residence
Parcels
Divided by
Tax Code
Area Line
0 to 4,999 sq. ft. $743
5,000 to 9,999 sq. ft. $835
10,000 to 14,999 sq. ft. $963
15,000 to 20,000 sq. ft. $1,101
Over 20,000 sq. ft. $1,254
0 to 10,000 sq. ft. $1,254
Over 10,000 sq. ft. $1,882
Per Dwelling Unit $515
Per Parcel $761
Attachment Agenda Report Page 5
3 The foregoing tax rate schedule shall apply for the 20215/20226 tax year commencing July 1, 20215, and ending on June 30, 20222037. For each tax year thereafter commencing with the 2026/20237 tax year, the foregoing tax rate schedule shall be adjusted as follows:
An amount equal to the percentage increase or decrease in the Consumer Price Index (CPI) for all Urban Consumers (All items) (Base Year 1984 = 100) (Not Seasonally Adjusted) for the San Francisco-Oakland-San JoseHayward, California area, as published by the United States Department of Labor, Bureau of Labor Statistics, for the period from December 2016 2023 to December of the fiscal year immediately prior to the year in which the percentage adjustment will apply, multiplied by the specific tax rate in the foregoing Maximum Municipal Services Tax Maximum Rate schedule. Notwithstanding the foregoing, the maximum percentage increase of this tax as compared to the same tax in the prior fiscal year shall be 4%.
For purposes of example only, if the maximum tax rate in the 20215/20226 fiscal year for a single-family resident parcel of 5,000 square feet is $620835.00, and the Consumer Price Index for December 202034 is 100 and for December 202145 is 103, the increase of 3 is a 3% increase, meaning an additional maximum tax of $18.6024.0925.05 for the 20226-20237 fiscal year or a total maximum tax of $638.86827.09860.05 for such fiscal year.
The records of the Alameda County Assessor as of March 1 of the fiscal year immediately preceding the fiscal year in which the special taxes are payable shall determine whether or not any particular parcel is unimproved for purposes of this Ordinance. All improved parcels which are located entirely within the City of Piedmont shall be subject to the special taxes assessed pursuant to Chapter 20B. In addition, on improved parcels which are located partially within the City of Piedmont, all such parcels whose residents are eligible to register to vote in Piedmont and/or all such parcels which are eligible to receive services from the City of Piedmont pursuant to the 911 Emergency System as of March 1 of the fiscal year immediately preceding the fiscal year in which the special taxes are payable shall be subject to the special taxes assessed pursuant to Chapter 20B. Each parcel shall be taxed pursuant to this Section 20B.4 according to its actual use as of March 1 of the fiscal year immediately preceding the fiscal year in which any such special tax is payable.
SECTION 20B.5 HEARING, TAX LIEN AND INCLUSION IN CITY TAXES Prior to levying a tax under this Ordinance in any fiscal year, the City Council shall conduct a public hearing on the proposed tax. Such hearing may be conducted simultaneously with a hearing relating to the annual budget for the fiscal year in which the special tax is to apply. Notice of such hearing shall be posted on the official bulletin board at City Hall at least 10 days prior to the hearing. All of the information and material which the City Council intends to consider at such hearing and the proposed amount of tax to be raised shall be made available to the public by being on file in the office of the City Clerk for at least 10 days prior to said hearing.
Following said hearing, the Council may adopt a resolution fixing the amount of tax to be raised.
Attachment Agenda Report Page 6
4 SECTION 20B.6 COLLECTION
Pursuant to Government Code section 53087.4, any special tax authorized under this chapter shall be collected by the Tax Collector of the County of Alameda. Any charges made by such Tax Collector shall be paid out of funds deducted from the gross proceeds of the tax.
SECTION 20B.7 INCREASE APPROPRIATIONS LIMIT
Pursuant to California Constitution Article XIIIB, the appropriations limit for the City of Piedmont will be increased by the aggregate sum collected by levy of this special tax in each of the years covered by this Ordinance.
SECTION 20B.8 FUNDING AND EXPENDING PROCEEDS
Proceeds of any tax levied under this Ordinance shall be deposited into the General Fund of the City.
SECTION 20B.9 UNEXPENDED RESIDUE
To the extent it has actually determined by an audit of the City’s finances that there is an unexpended residue (as defined hereafter) of any money raised by the City under this Ordinance for a particular fiscal year, then the City Council shall use such residue in the next fiscal year for which the tax under this Ordinance has not been established, and shall reduce the amount of the tax for such subsequent fiscal year by the amount of the unexpended residue. Unexpended residue of any money raised by the City under this Ordinance may only be used in the succeeding year for the purposes stated in this Ordinance or and to the extent there is an unexpended residue for the 20204-20215 fiscal year ending June 30, 20215, such unexpended residue shall be returned to the taxpayer on the same pro rata basis as originally levied by a refund or by a reduction in subsequent taxes. “Unexpended residue” as used in this Section 20B.9 shall mean the amount the General Fund Reserve of the City exceeds twenty-five percent (25%) of the actual general operating expenses of the City in the fiscal year in question. “General Fund Reserve” as used in this Section 20B.9 is defined as the unencumbered balance maintained in the general fund for the purpose of meeting unforeseen expenses, unrealized revenue estimates, or other emergencies of the City.
SECTION 20B.10 SEVERABILITY
If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect any other provisions or applications, and to this end the provisions this Ordinance are declared to be severable.
SECTION 20B.11 DURATION, AMENDMENT OR REPEAL
The authorization to levy a tax under this Ordinance shall expire with the fiscal year 203624- 2025 2037 ending June 30, 202537. This Ordinance, or any provision thereof, may only be amended or repealed by approval of a two-thirds majority of the voters voting on the proposition at any initiative or referendum election.
Attachment Agenda Report Page 7
5 This Ordinance shall be adopted, if approved by a two-thirds majority of the voters voting on the proposition at an election to be held on Tuesday, March 35, 20204, and shall be effective commencing with the fiscal year that begins on July 1, 20215; provided that the provisions of Chapter 20B in effect on March 35, 20204 shall remain in effect for all purposes relating to the taxes provided thereunder through the fiscal year ending June 30, 20251.
SECTION 20B.12 EXEMPTIONS
The City Council may from time to time by Council resolution adopt exemptions to the tax measures set further herein.”
SECTION 3
This Ordinance shall require passage by a 4/5ths vote of the City Council in compliance with the provisions of Section 53724(b) of the California Government Code, shall be posted at City Hall after its second reading by the City Council for at least 30 days, and shall not become effective unless approved by a two-thirds majority of the voters voting on the proposition at an election to be held on Tuesday, March 35, 20204.
[END OF ORDINANCE]
Attachment Agenda Report Page 8
From:
To: City Council
Cc: Barner, Cassie, Grand Jury, DA; Dan Borenstein
Subject: Tax Item November 6, 2023 City Council mtg
Date: Thursday, November 2, 2023 6:30:50 PM
[EXTERNAL] This email originated from an external source. Please use judgment and caution when opening attachments, clicking links, or responding.
Dear Mayor and Council
I see that Items 5, 6 and 7 relate to an upcoming public vote on the renewal of a municipal tax.
All but possibly the newest council members should know that the Alameda County Civil Grand Jury did a thorough investigation of local government election practices in the county in 2021 and found that there was a consistent proponent bias found in the 75 word ballot question presented to voters. Piedmont was specifically called out for a 2020 measure (TT) containing extraneous language apparently included to prejudice a voter to support the measure. It was also called out for listing public benefits which were not actually assured because the proposed measure was a General Tax not a Special Tax.
The Alameda County Civil Grand Jury Association is monitoring all future local government ballot language for compliance.
I hope the city will be cognizant of the future review and not embarrass itself again in this regard.
Sincerely,
Michael Henn
Sent from AOL on Android
From: RICK SCHILLER
To: City Council
Cc: Rosanna Bayon Moore
Subject: Nov 6 Item 7: Parcel Tax
Date: Saturday, November 4, 2023 9:05:32 PM
[EXTERNAL] This email originated from an external source. Please use judgment and caution when opening attachments, clicking links, or responding.
Piedmont City Council
re: Nov 6, 2023 Item VII Parcel Tax
Dear Mayor Cavenaugh and City Council,
Staff report: “The Municipal Services Special Tax is assessed on the basis that parcels of higher intensity use or parcels of greater size produce higher demands for service.”
Density of use and higher demand for services is tied to the size of a residence rather than the size of the parcel. A larger home is equivalent to a larger household with more cars and more family members using a variety of City services and a larger requirement for Police and other City services over a smaller home. If a fire, a larger building will potentially require more Fire services.
The School District understood this as the recent School District supplemental tax is based on square foot of dwelling size. If legally permitted, I suggest Council consider basing the tax on the more relevant dwelling size so that the tax burden is progressively shared by larger homes.
Additionally with inflation most severely hurting seniors on limited fixed incomes, the ever increasing Piedmont Parcel Tax may force some longtime resident seniors to leave the town they love. With 20% over 65, essentially the remaining taxpayers would by 20% more. That seems excessive and I suspect that a Senior Exemption based on age 75 would be a much smaller percentage.
Respectfully,
Rick Schiller
From: <
Sent: Thursday, November 2, 2023 6:31 PM
To: [email protected]
Cc: Barner, Cassie, DA < Dan Borenstein
<[email protected]>
Subject: Tax Item November 6, 2023 City Council mtg
Dear Mayor and Council
I see that Items 5, 6 and 7 relate to an upcoming public vote on the renewal of a municipal tax. All but possibly the newest council members should know that the Alameda County Civil Grand Jury did a thorough investigation of local government election practices in the county in 2021 and found that there was a consistent proponent bias found in the 75 word ballot question presented to voters.
Piedmont was specifically called out for a 2020 measure (TT) containing extraneous language apparently included to prejudice a voter to support the measure. It was also called out for listing public benefits which were not actually assured because the proposed measure was a General Tax not a Special Tax.
The Alameda County Civil Grand Jury Association is monitoring all future local government ballot language for compliance.
I hope the city will be cognizant of the future review and not embarrass itself again in this regard.
Sincerely,
Michael Henn
Sent from AOL on Android
** This email was sent from an external source. If you do not know the sender, do not click on links or attachments. **