Revenue Enhancement
Options
City Council Study Session
August 18, 2025
Agenda
Introduction
Potential Revenue Enhancement Options
• Sales Tax
• Parcel Tax
• Utility Users Tax (UUT)
• Assessment
• General Obligation Bonds
• Citizen Initiative Option
Summary
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
General Fund Challenges
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Unfunded Projects
Unfunded Project Totals:
• Approximately $352 million
Priority Unfunded Projects:
• Central Park (Phases 2 -4): $50 million
• MLK Resiliency Ctr/Pool: $20 million
• Joinville Pool TBD
• Fire Station # 27: $11 million
• Corporation Yard: $26 million
• 2nd and El Camino Garage: $20 million
• Bike Master Plan projects: $13 million
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
GENERAL
OBLIGATION
BONDS
SALES TAX
PARCEL TAX
Summary
UUT
ASSESSMENT
FEE
Fiscal Sustainability Plan
Grant
Opportunities
Expenditure
Control
Cost Recovery &
Cost Allocation
Revenue
Enhancements
Economic
Development
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Question for the City Council
• Which revenue enhancement options would
you recommend the City consider for
additional review?
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Considerations
• Adequacy (financial impact):
o Whether the measure could raise sufficient and sustainable revenue • Consistency (volatility):
o Projected revenues are not expected to significantly fluctuate • Equity (who bears tax burden) & Competitiveness
o Fiscal burden appropriately spread
o Maintain regional competitiveness
• Voter Approval:
o Historical likelihood of passage
• Legal
o Likelihood of legal challenges to ballot measure
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Current
Sales Tax
Rate 9.625%
Measure S
0.25%
Transactions and Use Tax (Sales Tax)
• Definition: An additional sales tax levied on top of the local sales and use tax enacted by individual cities or counties.
• Methodology: Percent tax can be approved by City and added to the combined state and local sales tax rate.
• Voter Approval: Requires majority of voters.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Sales Tax – Current Tax Rate
San Mateo
State SUT & Local TUT Rate
State Sales Tax 6.00% --
Bradley-Burns Local Share
County for Transportation 0.25% --
City General Fund 1.00% --
Local/Regional TUT (2.0% total cap)
SM County Transportation Authority (1989)
Measure A 0.50% December 2033
SM County Transit District (2002) Measure A 0.50% --
San Mateo County (2013) Measure K 0.50% March 2043
City of San Mateo (2015) Measure S 0.25% March 2048
Special Legislation
SM County Transit District Authority (2019)
Measure W 0.50% June 2049
Peninsula Corridor JPA Retail Transactions and
Use Tax (2020) Measure RR 0.13% June 2051
9.625% ExpirationINTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
9.875%
• Belmont
• Brisbane
• Colma
• Daly City
• East Palo Alto
• Half Moon Bay
• Pacifica
• Redwood City
• San Bruno
• S. San Francisco
9.625%
• Burlingame
• San Mateo
9.375%
• Atherton
• Foster City
• Hillsborough
• Menlo Park
• Millbrae
• Portola Valley
• San Carlos
• Woodside
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Current Sales Tax Rate = 9.625%
Special Considerations
• City of San Mateo still has 0.25%
capacity under the state cap.
• Other Sales Tax Measures
Estimated Additional Annual Revenue
@ 0.25% = $7 million
If approved, New Rate = 9.875%
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Remaining
Capacity
• 0.25%
Additional
Revenue
• $7 million
annually
Council
Approval
• 4/5ths
Voter Approval
• > 50%
79% 21%
Pass
Fail
*Based on election results statewide from
2002 to 2024 for new or increased TUT.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Pros Cons
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Parcel Tax
• Definition: Non-ad valorem (non-value based) tax levied on parcels of property.
• Methodology: Either a flat amount on every parcel, or a fixed amount or fixed rate in which amount paid by each parcel varies depending on the size, use, or number of units on the parcel.
• Voter Approval: Parcel taxes considered special taxes requiring 2/3 voter approval (Govt. Code s. 50077).
No Current Parcel Taxes in the City of San Mateo
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Parcel tax measures in Santa Clara &
San Mateo counties
• Since 2008, 20 non -school parcel
taxes on ballot with 80% approved
(16 of 20).
• All for special purposes:
libraries, roads, police/fire,
water , and open space.
• Since 2018, 40 school parcel taxes on
ballot with 73% approved (29 of 40).
*Rates as of April 2025.
**Not renewed in 2017.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
FIXED/FLAT AMOUNT PER PARCEL
Parcel Type # of Parcels 1 Per Parcel Tax Annual Revenues (est.) Single-Family Residential (SFR) 2 25,162 484$ 12,183,724$ Multi-Family (2 units or more) 3 2,340 484 1,133,054 Commerical/Industrial/Other 1,411 484 683,222 TOTAL 14,000,000
FIXED/FLAT AMOUNT PER PARCEL - TIERED BY LAND USE & AVG. PARCEL SIZE Parcel Type Avg. Parcel Size # of Parcels 1 Per Parcel Tax 4 Annual Revenues (est.) Single-Family Residential (SFR) 2 4,875 25,162 366$ 9,198,347$ Multi-Family (2 units or more) 3 11,346 2,340 851 1,990,869 Commerical/Industrial/Other 26,570 1,411 1,992 2,811,383 TOTAL 14,000,598
FIXED RATE PER SQUARE FOOT (SF) OF PARCEL SIZE (@ $0.075 PER SF) Parcel Type Avg. Parcel Size Total Acerage 1 Avg. Parcel Tax Annual Revenues (est.) Condominium 992 165 74$ 537,970$ SFR1 - up to 5,000 sf 4,246 542 318 1,770,076 SFR2 - 5,000 to 10,000 sf 6,403 1,594 480 5,205,312 SFR3 - 10,000 to 20,000 sf 12,548 379 941 1,238,279 SFR4 - over 20,000 sf 27,813 137 2,086 446,316 Multi-Family (up to 4 units or under 1/2 acre) 3 7,480 379 561 1,239,488 Multi-Family (5 units or more) 77,071 230 5,779 751,297 Commerical/Industrial/Other (1/2 acre or less) 7,568 195 568 637,888 Commerical/Industrial/Other (over 1/2 acre) 100,989 665 7,573 2,173,374 TOTAL 14,000,000
(1) Excludes parcels owned by public entities/utilities, parcels with no acreage & less than $1,000 value, parcels designated underwater/marsh. (2) Includes residential condominiums.
(3) Includes SFR converted to 2 or more units.
(4) Tiered amounts based on average parcel size in each land use for "rough proportionality" between tax amount and use/demand on service.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Methodology
• Fixed/Flat
• Fixed Tiered
• Per SF Rate
Additional
Revenue
• $7 mil.~$14 mil.
annually
depending on
the model
selected.
Council
Approval
• Majority
Voter
Approval
• 2/3rds
80% 20%
Pass
Fail
*Based on elections results in San Mateo & Santa
Clara counties since 2008 for Parcel Taxes.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Pros Cons
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Utility Users Tax (UUT)
• Definition: A percentage tax on the consumption of utility services such as electricity, gas, water, sewer, refuse, telecommunications, and cable television.
• Methodology: Cities can establish tax rates for residential and commercial users. Tax is collected by utility and transmitted to city. • Voter Approval: Requires majority of voters. Most of the cities with UUTs adopted the taxes prior to 1986 by vote of the city council.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
INTRODUCTION
GENERAL
OBLIGATION
BONDS
$-
$2
$4
$6
$8
$10
$12
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Millions
Daly City East Palo Alto Menlo Park Pacifica Portola Valley Redwod City
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Utility Type UUT % UUT $ Estimate
(in millions)
Electric 5% $3.4
Gas 5% $1.5
Telecommunication 4% $0.2
Cable TV 4% $0.8
TOTAL $5.9
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
32% 68%
Pass
Fail
*Based on election results statewide
since 2002 for new or increased UUT.
Methodology
• All utilities
• Could include
streaming
services
Revenue
• $6 million
annually
Council
Approval
• Majority
Voter Approval
• Majority
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Pros Cons
Equity
Voter
Approval
Consistency
Adequacy
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Benefit Assessment
• Definition: A charge levied on real property to fund specific public improvements or expanded/newpublic services benefiting the properties assessed.
• Methodology: Agency develops an assessment amount based on property’s proportionate share of “special benefit” . An Engineer’s Report is needed to determine the assessment and subject properties. • Voter Approval: A special assessment is approved through the Proposition 218 process.
• Ballots mailed to each assessed parcel owner .
• Weighted Voting.
• Protest Ballot.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Examples of Citywide Special Assessments in Surrounding Communities:
• New fire prevention or mitigation services (e.g., brush removal). • New open space acquisition or restoration.
• Construction of new or expanded library.
• Storm water system construction or expansion.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
General Obligation (GO) Bonds
• Definition: Municipal bonds backed by property tax revenue levied until the bonds mature.
• Methodology: The maximum bond issuance amount and use of proceeds are approved by voters, not a tax rate or annual payment. • Voter Approval: State law requires 2/3 approval by electorate for non- school GO Bonds
• Restrictions: Revenues cannot be used for operating expenses; only for approved infrastructure projects.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
General Obligation (GO) Bonds
• Assuming a $30 per $100K of assessed value tax rate and 3.0% assessed value growth rate, the City of San Mateo can generate an estimated $325 million in bond proceeds.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Median Assessed Value (AV) for
Single-Family Residence in San Mateo:
$751,478*
Calculation Estimated
FY25 Tax Levy
$15 per $100,000 AV $751,478 / $100,000 x $15 = $112
$20 per $100,000 AV $751,478 / $100,000 x $20 = $150
$30 per $100,000 AV $751,478 / $100,000 x $30 = $225
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
*Median Assessed Value based on FY 24-25 Assessed Valuations for San Mateo Pass Pass Rate Fail Total
2024 5 63% 3 8
2022 2 50% 2 4
2020 5 71% 2 7
2018 6 67% 3 9
Totals 18 64% 10 28
Non-School GO Bonds in Bay Area
Election Results (2018-2024)
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
64% 36%
Pass
Fail
Credit Rating
• Currently
AAA
Capacity
• $160 mil. to
$325 mil. for
infrastructure
Council
Approval
• 4/5ths
Voter Approval
• 2/3rds
*Based on elections results in Bay Area
since 2018 for GO Bonds.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Pros Cons
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
VOTE
Citizen Propose
initiative
Gather
required
signatures
>50% Voter
Approval
Citizen Initiative Option
Transform Supermajority (>2/3) to Majority (>50%) Voter Approval.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Key Steps in Citizen Initiative Process (see Elections & Government Code):
Initiative Proposed by Citizen
• The initiative is proposed by citizen, not by the City.
Notice & Publication
• Ballot title and summary are requested from and prepared by the City. Proponents must publish in local newspaper .
Petition Signatures
• Proponents have 180 days to obtain the signatures of 10% of all registered city voters. For City of San Mateo, approximately 6,000 signatures are required.
City Clerk Review and Council Action
• If the City Clerk certifies the sufficiency and timeliness of the signatures, City Council is required to submit the measure to the voters and call for the election.
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Consistency
Equity
Voter
Approval
Legal
Sales Tax
+
+ -
+
+
Parcel Tax
+
+
+ -
UUT
+ -
Assessment
+
-
+ -
GO Bond
+ -
-
-
Adequacy
+
+
+ -
+
+ -
+ -
+ -
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
+
+
+ -
+
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
City Council
Study
Session –
11/3
• Review Polling
Results
Conduct
Ballot
Measure
Polling
Next Steps
Questions for the City Council
• Which revenue enhancement options would
you recommend the City consider for
additional review?
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT
Ad Hoc Committee Recommendations
• Study Sales Tax Increase for 2026
• Study Interest in GO Bond
Discussion
INTRODUCTION
SALES TAX
PARCEL TAX
UUT
SUMMARY
GENERAL
OBLIGATION
BONDS
CITIZEN
INITIATIVE
ASSESSMENT