City Council Presentation | December 9, 2024
City of San Pablo
General Fund Revenue
Enhancement
Presented by
Sara Mares
Director
2 City of San Pablo
Overview of Prior Analysis
Revenue Options Overview
Recommended Revenue Options
1. 2.
3. Agenda
3 City of San Pablo
Overview of
Prior Analysis
4 City of San Pablo
Identified Revenue Shortfall of ~$4M Annually
1. Casino revenue has flattened
2. Personnel costs increasing
3. Need to diversify revenue portfolio
PFM Financial Analysis
5 City of San Pablo
Identified Support for
1. Cannabis business license tax (Measure M)
2. Public safety services
3. Streets and storm drains
4. Citywide LLAD assessment
increase
SRI San Pablo Community Survey
6 City of San Pablo
Revenue
Options
Overview
7 City of San Pablo
Context
Proposition
13 1
A Voter approved
initiative 1978
B
Assessed Value
increase limited to
2% a year
C 1% rate cap on ad
valorem property tax
D CA Constitution
Article XIII A
8 City of San Pablo
Context
Proposition
218
2 A Voter approved
initiative 1996
B
Strict rules on benefit
assessments,
Engineer’s Report
C Government owned
property not exempt
D Protest Ballot
Proceeding
E CA Constitution
Article XIII C & D
9 City of San Pablo
Context
3 A Voter approved initiative 2010
B Adds definition of “tax” to CA
Constitution
C
“Tax” excludes various charges,
including fees and assessments
D
General Tax requires majority
vote, Special Tax requires 2/3
vote
E CA Constitution Article XIII C & D
Proposition
26 10
City of San Pablo
Property Related Fee & Other Fees
COST BASED
• May not exceed cost
of service
APPROVAL
MECHANISM
• Water/Sewer/ Trash
– Noticed Public
Hearing
• Storm Drain –
Noticed Public
Hearing PLUS
Election
• DIF/User Fees –
Noticed Public
Hearing
SAMPLE FEES
• Water/Sewer/ Trash
Rates
• Storm Drain Fee
• Development Impact
Fees
• User Fees (Rec
Classes)
• Regulatory Fees
(Building Permits)
11 City of San Pablo
Special Assessments
Examples: Landscape and Lighting Districts, PBIDs
ARE BENEFIT-
BASED
• General benefit
•Special benefit
proportionality
•Rigor of
assessment
engineering
APPROVAL
MECHANISM
• Property-owner
• Protest ballot
• Weighted ballots
SAMPLE
PROJECTS
• Maintenance
services
• Infrastructure
financing (less
common)
12 City of San Pablo
Taxes – Special and General
NOT BENEFIT-
BASED
•Reasonable metrics
•Achieves policy
goals
APPROVAL
MECHANISM
• Registered voters
• 2/3 approval
special taxes
• Majority approval
general taxes
• CFD landowner
vote
SAMPLE
PROJECTS
• Infrastructure
financing
• Public safety
services
• Maintenance
services
Examples: Parcel Taxes, Community Facilities District
13 City of San Pablo
Recommended
Revenue Options
14 City of San Pablo
Recommended Fees
Master
Fee
Schedule
Update
Cost Allocation Plan then
update user and regulatory
fees
15 City of San Pablo
Recommended Fees
Storm
Drain Fee
Property related
fee for storm drain
utility, funding
infrastructure and
ongoing
operations and
maintenance,
Revenue ~$250k
16 City of San Pablo
Recommended Assessments
Requires updated Engineer’s
Report including general and
special benefit analysis, Revenue
to be determined for desired
level of service
LLAD Assessment Increase
17 City of San Pablo
Recommended Taxes
Business License Tax
• Measure M tax on cannabis businesses
• Revenue ~$1.5-2.2M
18 City of San Pablo
Recommended Taxes
Sales Tax
• Additional half-cent or one-cent sales tax
• Revenue ~$2M (1/2 cent) or ~$4M (1 cent)
Agency Current Rate
Richmond/Pinole 9.75%
Hercules 9.25%
El Cerrito 10.25%
19 City of San Pablo
Recommended Taxes
Documentary Transfer Tax
• Requires City to become Charter City
• Revenue ~$100k per $1 increase to rate
Agency Current Rate
Richmond $7.00 per $1,000
El Cerrito $12.00 per $1,000
San Pablo $0.55 per $1,000
20 City of San Pablo
Recommended Taxes
Utility User Tax
• Reduced in 2004 to 7%
• Revenue ~$436k per 1% increase to rate
Agency Current Rate
Richmond 9.5% average
El Cerrito/Pinole/Hercules 8%
San Pablo 7%
21 City of San Pablo
Questions &
Comments.
22 City of San Pablo
Policy
Recommendation
to City Council
23 City of San Pablo
CASINO REVENUE SHORTFALL IMPACT:
FY 2022-23 FY 2023-24 FY 2024-25
($355,432) ($1,243,028) ???
• Casino Revenue is a UNIQUE revenue source- NOT A TRADITIONAL REVENUE SOURCE for local cities; Subject to fluctuation and market changes (i.e. Mega Casino Threats)
• Must await until Historic Casino Revenue Trend Re-Bounds in 2-3 years • The City DOES NOT CONTROL amount of Casino Revenue generated annually • Casino San Pablo provides nearly 65% of City’s Annual GF Revenue Must explore other GF Revenue Sources over next 2 - 3 year period 24 City of San Pablo
Adopted City Council Policy: (City Council)
FY 2023-25 CITY COUNCIL PRIORITY WORKPLAN: (Amendment #4 adopted on 12/13/23 per Reso. #2023-167)
Adopted Policy No. #414: NEW STRATEGIC BUDGET INITIATIVES (#1-8) TO ADDRESS NEW STRUCTURAL DEFICITS FORECASTED FOR FY 2025-2027 PERIOD Remaining Strategic Budget Initiatives for Policy Implementation include:
#2. ELIMINATE OR SUBSTANTIALLYREDUCE ALL ANNUAL GF OPERATING SUBSIDIES. #3. IDENTIFY NEW GENERAL FUND ANNUAL REVENUE SOURCES
#8. EXPLORE ADDITIONAL FISCAL MEASURES USING FORECAST MODEL TO REVERSE
FORECASTED STRUCTURAL DEFICITS AS RECOMMENDED BY THE CITY
MANAGER
25 City of San Pablo
MAJOR REVENUE GOALS & OUTCOMES FOR 2025-2027:
(1) Support projects to return to Historic Casino Revenue Trends in 2 – 3 years:
• Casino Commercial Building Improvement Plan (In-construction) • Future Casino Class II Expansion (TBD)
(2) Create Economic Diversification Opportunities to Increase Private Investment:
• Implement Economic Development Strategy (EDS) Plan recommendations (Adopted June 2024) (i.e. Hire a New Marketing and Branding Economic Consultant (In-progress)
• Legally permit Commercial Cannabis Retail Operators (Post-Measure M) (In- progress)
(3) Explore feasibility of four (4) City-owned properties for formal disposition for potential sale or future mixed–use development (i.e. CEQA; SLA) – (In-progress) (4) Must explore other GF Revenue Mechanisms over next 2-year period thru 06/30/27 (i.e. New Fees; Property-Related Taxes; Special Tax Measures) 26 City of San Pablo
BFLSC Recommendation (Approved 12/02/24):
Proceed with a proposed Policy Amendment No. #10 to FY 2023-25 City Council Priority Workplan to include the following new policy amendments as follows:
UNDER MAJOR POLICY GOAL: FOCUS ON ECONOMIC DEVELOPMENT AND FISCAL
DIVERSIFICATION
Adopted Policy No. #405: EXPLORE AND SUSTAIN NEW REVENUE ENHANCEMENTS TO THE CITY’S GENERAL FUND
#405.1: REDUCE GF SUBSIDIES
_________________________________________________________ (1) P
olicy No. #405.2: Adopt a new fiscal discipline and financial practice to restrict new General Fund spending on any new program or service and maintain existing budgeted FTE staffing levels in the adopted FY 2024-25 Class and Comp Plan until June 30, 2027, or until the City generates a total of $2,000,000 in new, net increase in annual General Fund revenue whichever occurs first; and
27 City of San Pablo
BFLSC Recommendation (continued)
(2) Add Policy No. #405.3: Explore feasibility and implementation of new General Fund revenue mechanisms by:
• Gather and conduct polling and survey analysis for a future City Council approval process during 2025-2027 period under a proposed Tier I, II, and III implementation plan with necessary data, as follows:
TIER I Implementation: (Administrative – Related)
• Master Fee Schedule Update (with Cost Allocation Plan) TIER II Implementation: (Property Related – 2025-26 Property Protest Process) • City wide LLAD Assessment Increase
• Stormwater Drain Fee
TIER III Implementation: (Electorate vote – 2026 Election Cycles) • City Charter Amendment (Majority Vote Req.)
• Real Estate Transfer Tax (Majority Vote Req.)
• ½ cent or 1 cent Sales Tax (Majority Vote Req.)
• Utility User Tax Increase (Prop. 218 Special Purpose Req.) 28 City of San Pablo
Sara Mares
Director | [email protected]
800.676.7516