April 26, 2022
City Manager's Office
DATE: April 26, 2022
TO: Mayor Butt and Members of the City Council
FROM:
Shasa Curl, City Manager
LaShonda White, Interim Director of Library and
Community Services
Samantha Carr, Environmental Manager
SUBJECT:
Update on Cost Recovery and Revenue Enhancement
and Options for Long-Term Fiscal Sustainability
FINANCIAL IMPACT: There is no financial impact from receiving this presentation; however, implementation of strategies
would generate revenue for the City.
PREVIOUS COUNCIL
ACTION:
December 17, 2019
February 4, 2020
June 7, 2021
June 27, 2021
STATEMENT OF THE
ISSUE:
City staff members are providing an update regarding
revenue enhancement options to City Council and the
community on progress to date and receiving input from
City Council.
RECOMMENDED ACTION: RECEIVE an update on the Cost Recovery and Revenue Enhancement tracking document and Options for Long-
term Fiscal Sustainability; and PROVIDE input to City
staff – City Manager’s Office (Shasa Curl/LaShonda
White 620-6512).
DISCUSSION:
In recent years, many budget decisions were made to meet the primary goal of preservation which necessitated the deferral of investments in staff, capital maintenance needs, long-term liabilities, and other outstanding needs. As the City of Richmond works towards the goal of fiscal sustainability and health, a list has been compiled of Cost Recovery and Revenue Enhancement opportunities. City staff reviewed past City AGENDA
REPORT
April 26, 2022
Council meetings and documents to develop a list of proposed revenue enhancement and cost-recovery measures to explore. The list is comprised of recommendations from the Mayor, Councilmembers, Adopted Strategic Priorities, Management Partners, and the California Municipal Revenue Sources Handbook. In early 2020, a document was created to clearly outline and track the staff members assigned to the measures, estimated implementation time, feasibility, and progress of the proposed measures. The document is updated quarterly, and new strategies are added as opportunities become available such as the CARES Act and the American Rescue Plan Act (Attachment 1).
Options to Create Long-Term Fiscal Sustainability
In November 2020, the City Council authorized an agreement for outside specialists, Management Partners, to review Richmond-specific circumstances and gather best practices from around the country that might be good options for Richmond to consider.
On June 27, 2021, Management Partners presented a list of budget strategies incorporating a mix of revenue enhancements, expenditure controls and cost shifts, service delivery alternatives, and service level reductions typically considered by other communities in addressing a fiscal gap and which were estimated to be reasonable options for Richmond (Attachment 2).
During that meeting, City staff presented a sample evaluation methodology that the City Council could consider using to evaluate the impact and potential success that each identified strategy might have in Richmond. The model considered potential fiscal impact, ease of implementation factors, and personal preference as criteria in assisting each councilmember in evaluating strategies. For various reasons, the evaluation method was not utilized by Councilmembers; however, City staff did receive informative feedback and questions regarding revenue and expenditure-related items.
The purpose of the feedback was to aid Management Partners in the development of a Fiscal Sustainability Plan (Plan). The Plan will identify the following information for each strategy: description and rationale, estimated fiscal impact, potential for success using an evaluation matrix based on fiscal impact and implementation factors, implementation schedule (short- vs. long-term), and any one-time costs for implementation.
In an effort to complete the draft Plan, it was determined that: (1) the focus would be placed on just the revenue generation items listed in Table A below; (2) City staff would incorporate those revenue items into the Cost Recovery and Revenue Generation Tracking document; and (3) each department director would analyze and rank each revenue option based on factors such as potential fiscal impact and ease of implementation. Table A below not only lists the twelve (12) revenue options recommended by Management Partners, but also lists them in order of priority based on cumulative scoring by department directors for the City Council’s consideration.
April 26, 2022
Table A
Revenue Enhancement Options
(Per Management Partners)
Estimates
(Per Management
Partners)
Overall Ranking
(Per City
Directors)
Implement a vacant parcel tax High ($2 million) 1
Institute parcel tax for library services High ($5.6 million) 2 Raise the utility users tax rates by 1% High ($4 million) 3 Increase transient occupancy tax to 10% Low ($300,000) 4 Renegotiate ECIA with Chevron High ($9 million) 5
Increase real property transfer tax by 20% High ($1.6 million) 6 Conduct an asset inventory and lease surplus
properties High ($1 million) 7
Increase cost recovery on planning, building
services Medium ($700,000) 8
Redevelop Port Land for alternative revenue-
generating uses High ($1 million) 9
Create neighborhood improvement
district/community facilities district High ($1 million) 10 Increase cost recovery on recreation services High ($1 million) 11 Use surplus properties to provide open spaces
for development opportunities Low ($100,000) 12
The expenditure-related strategies presented on June 27, 2021, as part of Management Partners presentation are also listed in Attachment 2. However, these items were not ranked by City staff members and will require an additional deeper discussion with City Council, City staff members, and stakeholders before determining proposed next steps.
City staff members are providing an update to City Council and the community on progress to date and receiving input from City Council.
Next Steps
Richmond City staff members will continue to pursue feasible measures listed in the tracking document and incorporate input from City Council. Management Partners will incorporate the feedback received from tonight’s meeting, as well as feedback from other stakeholders including City unions, and will perform a detailed analysis of strategies offering the greatest potential for reducing the City’s fiscal challenges in the form of a memorandum that will serve as the basis for a draft Plan. The draft Plan will be presented to City Council and City staff in June 2022, to provide an opportunity for additional feedback prior to presenting a final Plan for adoption in or before July 2022.
DOCUMENTS ATTACHED:
Attachment 1 – Cost Recovery and Revenue Enhancement Tracking Document Attachment 2 – Options for Fiscal Sustainability (Management Partners)