Approve Engineer’s Report, Declare
Intent to Levy & Collect Assessment and Set Public Hearing Date Pursuant to the ITEM 7.a.Landscape & Lighting Act of 1972 and May 10, 2022 Proposition 218 (Right to Vote Taxes Act)
City Council/RSA Agenda 1139 Tuesday, May 10, 2022
LLAD RENEWAL: THREE-STEP PROCESS
2 Step 1: April 12, 2022 MeetingInitiate Proceedings to Levy and Collect Assessments for Landscape and Lighting District (LLAD) No. 3 for FY 2022/23Step 2: May 10, 2022 Meeting Approve Engineer’s Report, Declare Intent to Levy and
Collect Assessments and Set June 28, 2022 as the date for Public Hearing for LLAD No. 3 for FY 2022/23Step 3: June 28, 2022 Meeting – Public Hearing for LLAD No. 3 for FY 2022/23 City Council/RSA Agenda 1140 Tuesday, May 10, 2022
ENGINEERS REPORT – COST ESTIMATE
3 City Council/RSA Agenda 1141 Tuesday, May 10, 2022
ENGINEERS REPORT 4
City’s contribution to make up for the net shortfall in the assessed amount is:
$ 1,932,511
City Council/RSA Agenda 1142 Tuesday, May 10, 2022
RECOMMENDATION 5
Staff recommends that the City Council, pursuant to the Lighting & Landscape Act of 1972, adopt a resolution to:1. Approve the Annual Engineer’s Report for Landscape and Lighting District No. 3 for FY 2022/23
2. Declare its Intention to Levy and Collect Assessments for Landscape and Lighting District No. 3 for FY 2022/23
3. Set June 28, 2022 Council Meeting as the date for the Public Hearing for LLAD No. 3 for FY 2022/23
City Council/RSA Agenda 1143 Tuesday, May 10, 2022
Agenda Item
DATE: 5/10/2022
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: JOAN MALLOY, CITY MANAGER
SUBJECT: PROVIDE DIRECTION REGARDING FURTHER STAFF AND CONSULTANT INFORMATIONAL
EFFORTS REGARDING THE PROPOSED BALLOT MEASURE FOR VOTER CONSIDERATION
OF EXTENSION OF THE EXISTING SALES TAX AND FURTHER DIRECTION RELATED TO
PROPOSED BALLOT MEASURE FOR VOTER CONSIDERATION OF THE EXTENSION OF
EXISTING SALES TAX EXTENSION
Staff is seeking direction from the City Councilas to whether staff and the consultant, TBWBH Props and Measures, should proceed with public informationalefforts for the proposed ballot measure to extend the one-half cent sales tax. Additionally, staff requests further direction including whether to proceed on preparation of a ballot measure for the November 2022 election.
STRATEGIC PLAN ALIGNMENT
GoalA. Financial Stability and Sustainability Foster fiscal health through disciplined long-term planning, cost control, heightened efficiency, increased revenue and cost recovery
Strategy 1. Study and prepare for placement of a revenue measure for the November 2022 election that addresses the expiration of the half-cent sales tax; or, prepare for $6 million in service cuts
BACKGROUND
At the April 26, 2022, City Council meeting, the City Council received the survey results from the Ad Hoc Subcommittee that worked with Godbe Research and TBWBH Props and Measures to conduct a community survey on voters’ attitudes to extend the existing local one-half cent sales tax. A link to the staff report can be found here: April 26, 2022 Staff Report on Community Survey. The March 2022 survey concluded that there was strong support (64.1%) to extend the one-half cent sales tax to fund public safety, street repairs, senior and youth programs, parks, and general government services. The survey results also concluded that there was greater support for extension of the existing local sales tax ‘untilended by voters’ then the alterative time limited, twelve-year extension,, though both had strong support. The Councilalso considered the next steps that would include a public information effort and Councilaction to place the a measure for voter consideration on the November 2022 ballot.
The Council discussed each of their perspectives at the April 26 meeting regarding the community survey results and whether to proceed with placing a measure on the ballot for voter consideration of the local sales tax extension, which will otherwise expire on April 1, 2025.
After Council discussion, it was clear that there was not support from four Councilmembers, at that time, to proceed placing an extension of the existing local sales tax on the ballot for voter consideration. A supermajority (four votes) is required to place an general tax measure on the ballot for voter consideration.
The Mayor directed staff to place on the May 10 City Councilagenda an item to consider terminating the consultant’s contract and eliminate informationalefforts, which would stop the process to place the ballot measure for voters consideration at the November 2022 election. Without a supermajority support of the Council, the Mayor wanted the Council to have an opportunity to reconsider expenditure of significant funds associated with educational outreach and preparation of a ballot measure for this election cycle.
City Council/RSA Agenda 1144 Tuesday, May 10, 2022
DISCUSSION
To help inform the discussion, staff prepared an exhibit, Projections of Known Revenues and Expiration of Revenues, to identify swings in the City’s budget that can be anticipated in the long-term. Staff prepared this exhibit to help inform the City Councilabout election cycles (as general sales tax measures can only be considered at a generalelection), the termination of voter approved measures, as wellas the retirement of bonds (pension obligation bond and the redevelopment agency bonds). See Attachment A.
In the next six years, Attachment A identifies an expected loss of up to $7.5 million with the expiration of the one-half cent sales tax in April 2025. The Utility Users Tax (UUT), which is expected to contribute $5.5 million to the general fund, willexpire in December 2028.
There will be a positive impact when the pension obligation bond is retired in 2026, adding $3 million to the general fund in 2027.
However, the $3 million will not cover the gap of the $13 million generated by the voter-approved measures of the sales tax and the UUT.
The long-range budget forecast, prepared by Management Partners, illustrates the fiscal uncertainty without the revenue from the voterapproved measures. In FY 2024-25 when the sales tax expires, the City will see a downturn in revenues and require significant cuts to maintain reserves absent an alternative revenue source. This information has been previously shared with the City Counciland the Ad Hoc Subcommittee.
City Council/RSA Agenda 1145 Tuesday, May 10, 2022
To address these losses in revenue and to maintain fiscal stability, the Council should consider placing for voter consideration an extension of the one-half cent sales tax now and the UUT in 2026. To wait until 2024 for the one-half cent tax and 2028 for the UUT, willcreate a fiscalcliff with tremendous uncertainty. Lack of certainty in revenue sources could slow the implementation of the Strategic Plan because of ongoing low staffing levels and the lack of financial resources. Unpredictability in the City’s revenue stream impacts long-range City Council/RSA Agenda 1146 Tuesday, May 10, 2022
because of ongoing low staffing levels and the lack of financial resources. Unpredictability in the City’s revenue stream impacts long-range planning for the City and creates staff uncertainty.
Staff’s recommendation is to place for voter consideration the decision to extend the sales tax untilended by voters. This received the most support in the community survey and would provide more long-term fiscal stability for the City. The survey also tested 12 years because it extended beyond the ten-year planning horizon that the City has been using for financial modeling. It is also far enough in the future to allow the Council to consider the UUT in the 2026 timeframe prior to its expiration in 2028. The City Councilcould place a measure on the ballot for a shorter extension period, though if the time frame is too short it will hamper long-range financial planning and possibly interfere with other potential ballot measures.
In 2034 and 2039, the City will see an uptick in property taxes because the redevelopment agency bonds will be retired. In 2022 dollars, the additional property taxes would be valued at about $3 million.
At the April 26 City Council meeting, it was also suggested to extend the sales tax at a lower rate. Staff does not recommend this approach because it reduces revenues without a known source of replacement funds and would create financial instability.
The Council has expressed concern about burdening local resident with the additional one-half cent sales tax. However, when looking at the data, much of the sales tax is paid by patrons outside of Union City. The attached trade area map for Union Landing (Attachment 2) illustrates this point. As a subregional shopping destination, Union Landing is one of the City’s largest sales tax generators. The trade area map shows that 80 percent of Union Landing shoppers are pulled from Oakland to South Fremont. Forty percent of the shoppers come from Union City and South Hayward combined. The proportion of solely Union City residents would be less than forty percent. This map illustrates how the half-cent sales tax is collected from shoppers from the surrounding region, outside of Union City.
Additionally, the sales tax does not apply to groceries and prescriptions.
As a result of the divergent views expressed by the City Council, there was no consensus on a path forward for the November 2022 election.
Any public outreach effort should begin immediately with the confidence that a corresponding ballot measure will move forward. Without clear consensus and direction, it will be difficult to create an informational program. Staff is now seeking direction on whether to move forward with the informationalefforts regarding the one-half cent sales tax extension and to begin preparing the resolution and ordinance that is necessary to place the measure on the ballot.
FISCAL IMPACT
There is no fiscal impact to the general fund.
RECOMMENDATION
Staff is seeking direction from the City Councilas to whether staff and the consultant, TBWBH Props and Measures, should proceed with public informationalefforts for the proposed ballot measure to extend the one-half cent sales tax. Additionally, staff requests further direction including whether to proceed on preparation of a ballot measure for the November 2022 election.
Prepared by:
Joan Malloy, City Manager
Submitted by:
Joan Malloy, City Manager
ATTACHMENTS:
Description Type
Attachment 1 - Revenues and Election Cycles Attachment
Attachment 2 - TradeArea Union Landing Attachment
Power Point Attachment
City Council/RSA Agenda 1147 Tuesday, May 10, 2022
Attachment A
Projections of Known Revenues and Expiration of Revenues 5/10/2022
Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Known Revenues and
Expiration of Revenues
1/2 cent
sales tax
expires
(April) POB retires
UUT Expires
(Dec.)
Additional
property tax
with RDA
Bonds Retired
in Oct 2033
(2022 dollars)
Additional
property tax
with RDA
Bonds
Retired in
Oct 2038
(2022 dollars)
Revenue or Deficit -$7,500,000 $3,000,000 -$5,500,000 $1,200,000 $1,800,000 District 2, 3, 4, X X X X X
Mayor, District 1 X X X X
Consider
Sales Tax
Extension
Consider
Bus. Lic.
Tax
Update
Consider
UUT
Extension
*All figures are estimates in 2022 dollars
Sources:
Sales Tax - HdL Revenue Projections, April 2022
Property Tax - HdL estimates of additional property tax without the Successor Agency obligations, April 2022 UUT Revenue - City of Union City, Estimates of 2021-22
Pension Obligation Bond - City of Union City
City Council/RSA Agenda 1148 Tuesday, May 10, 2022
Attachment 2
Source: Placer.ai, Retail Foot Traffic Analytics, April 2021-March 2022 City Council/RSA Agenda 1149 Tuesday, May 10, 2022
Agenda Item 7b.
May 10, 2022
Direction Regarding Voter Consideration of Proposed
Extension of One-Half Cent Sales Tax:
Informational Efforts and Proposed Ballot Measure
City Council/RSA Agenda 1150 Tuesday, May 10, 2022
Background
• October 2021, Adopted Revised Strategic Plan
• Goal A: Fiscal Stability and Sustainability • Strategy 2, Study and prepare for placement of a revenue measure on the November 2022 election that addresses the expiration of the one-half cent sales tax; or prepare for $6 million in service cuts City Council/RSA Agenda 1151 Tuesday, May 10, 2022
Background
• January 11: City Council resolution authorized
agreement with consultants to assess the feasibility of a revenue measure or measures • January 25: City Council resolution authorized
Mayor to appoint subcommittee to evaluate and provide recommendations • February 22: Ad Hoc Subcommittee presented
findings to proceed with ½ cent sales tax and
continue studying BLT
City Council/RSA Agenda 1152 Tuesday, May 10, 2022
Background
• April 26, 2022: City Council reviewed Community
Survey results to extend one-half cent sales tax
• 64.1% support extension• Time: Until ended by voters and 12 years • Council discussion:
• Ballot measures need 4/5 support of the
Council
• No consensus on next steps
• May 10: Agendized to:
• Consider ending contract• Stopping process to place ballot measure before voters, November 2022 election, including elimination of informational efforts City Council/RSA Agenda 1153 Tuesday, May 10, 2022
Discussion
• Key Dates - Expiration of Revenue Measures and
Retirement of Bonds:
Date Measure/Bond + Revenue - RevenueApril 2025 ½ Cent Sales Tax $7,500,0002027(Retires July 2026) Pension Obligation Bond
$3,000,000
Dec 2028 UUT $5,500,0002034(Retires Oct 2033)
RDA Bond Retires(UC share)
$1,200,000
2039(Retires Oct 2038
RDA Bond Retires(UC share)
$1,800,000
• In 2022 dollars• Sources: HdL, Union City
City Council/RSA Agenda 1154 Tuesday, May 10, 2022
Discussion
• Key Points
• Voter approved measures must be consider at
general elections
• Renewing in advance creates fiscal certainty to
implement the Strategic Plan and maintain staffing
• Plan ahead, avoid fiscal cliff
• Retirement of bonds helps, but does not cover
the revenue generated by voter-approved measures
City Council/RSA Agenda 1155 Tuesday, May 10, 2022
Discussion
Long-term Budget Projections• Ten-year
forecast
• Without renewal
there is deficit spending or cuts
• Survey tested
12-year extension; covers forecast model
*Prepared byManagement Partners
City Council/RSA Agenda 1156 Tuesday, May 10, 2022
Discussion
• Sales Tax Draws
from Region
• 80% - Oakland to
Fremont, and Peninsula
• 40% from Union City
and So. Hayward
• Groceries and
prescriptions are not taxed Union Landing Trade
Area
City Council/RSA Agenda 1157 Tuesday, May 10, 2022
Conclusion
• 64.1% of voters supports extension of the half-cent
sales tax
• Survey: Extend until ended by voters or 12 years • Best to place on ballot now rather than wait until 2024• Without extension, new revenues or permanent cuts will be required
• Sales tax draws from region• Not assessed on groceries or prescriptions City Council/RSA Agenda 1158 Tuesday, May 10, 2022
Next Steps and Key Deadlines
• Implement informational communication plan• Initiate stakeholder outreach• Distribute informational messaging via direct mail, social media, email, websites and other communication channels • Develop draft election resolution and sales tax
ordinance
• June 28 Council Meeting: Council input on draft
resolution and ordinance
• July 12 Council Meeting: Council action on resolution and ordinance
• August 12, 2022: Deadline to qualify for November
2022 ballot
City Council/RSA Agenda 1159 Tuesday, May 10, 2022
Recommendation
• Provide direction to staff
• Proceed with informational efforts for a proposed
ballot measure
• Proceed with preparation of a ballot measure
• Supermajority – 4/5 vote – required to place ballot
measure
City Council/RSA Agenda 1160 Tuesday, May 10, 2022