CC 2020-07-14_10a Proposed Ballot Measure_Nov 2020 Election_PPCONSIDERATION OF PLACING A LOCAL TRANSACTION AND USE TAX (“SALES TAX”) MEASURE ON THE NOVEMBER 3, 2020 BALLOT
1
It is recommended the City Council:
adopt the proposed Resolution ordering the submission to the qualified electors of the City a measure relating to the establishment of a local transactions and use tax (hereinafter referred
to as a "sales tax") at the General Municipal Election to be held on Tuesday, November 3, 2020, as called by Resolution No. 4994;
introduce the proposed Ordinance adding Chapter 3.23 to Title 3 of the AGMC regarding a transactions and use tax;
adopt the proposed Resolution setting priorities for filing a written argument regarding a City measure and directing the City Attorney to prepare an impartial analysis of the measure;
adopt the proposed Resolution providing for the filing of rebuttal arguments for City measures submitted at municipal elections; and
approve the argument to be submitted in favor of the measure.
2
3
July 14 1) Adopt Resolution ordering the submission to the qualified electors of the city of a certain measure relating to Transaction and Use Tax at the General
Municipal Election to be held on Tuesday, November 3, 2020, as called by Resolution No. 4994; and, 2) Introduce Ordinance – Transaction and Use Tax
Adopt Resolution setting priorities for filing written arguments regarding measure and directing the City Attorney to prepare an impartial analysis
Adopt Resolution providing for the filing of rebuttal arguments
Next Steps and Schedule
4
July 28 Adopt Ordinance – Transaction and Use Tax (Required by State Dept of Tax & Administration, but subject to voter approval)
July 15 Post Notice of Deadline for Filing Arguments
July 28 Last Day to File Primary Arguments For or Against Measure
July 28 Impartial Analysis for measure due from City Attorney
July 29 – Aug 7 Public Examination Period for Primary Arguments, Impartial Analysis
Aug 7 Last Day to File Rebuttal Arguments For or Against Measure
Aug 8 – Aug 17 Public Examination Period for Rebuttal Arguments
Aug 7 (E-88) Submit ballot measure documents (Arguments, Impartial Analysis, with County Clerk/ROV for inclusion in the voter guide)
5
Staff’s Recommendation is :
To direct staff to prepare an action item to place a local transaction and use tax (“sales tax”) measure on the November 2020 ballot.
If a 1% increase from 7.75% to 8.75% local sales tax is approved by voters, this will result in…
an estimated generation of approximately $4,000,000 annually.
6
The main goals of the proposed sales tax revenue measure are:
To fund and implement Capital Projects that directly benefit all citizens, business owners and visitors in the City of Arroyo Grande
A Capital Project is a project that helps maintain or improve a City asset/ infrastructure, such as:
streets, sidewalks, storm water/drainage systems, parks and open space public buildings
To save tax payer money by repairing and maintaining our public infrastructure before conditions require full replacement
7
Revenue from the proposed sales tax measure may also be used to provide small/locally owned business recovery support
Low interest loans or financial support for rent payments, marketing and advertising…
Administration, fund management and reporting by a local bank
Collaboration with SCCC and feedback from business community
Provide additional funding for community nonprofit groups
8
To ensure accountability and transparency:
Public review by the City Council every five (5) years to determine whether the sales tax is necessary to remain in effect.
Provision requiring the City to publish and distribute an annual report to each household on the revenues and expenditures from the sales tax proceeds.
Since the City has an established Local Sales Tax fund which is tracked separately from the General Fund, it is recommended that funds resulting from a new successful local sales tax
measure be accounted for and tracked in this fund.
9
Base Sales Tax Distribution
10
Potential Sales Tax Distribution
11
Some consideration points:
It has been 14 years since our last Sales Tax Measure (Measure O-06)
New sales tax funding is intended as a long term solution to our infrastructure needs
Address differed maintenance costs that are accumulating
Many economists are predicting a W shaped recovery over a 4 year period = recession with recovery, then recession and recovery again
Many others are predicting a 2 to 5 year recession with slow recovery
State is predicting reductions in revenues and demands for reforms
12
Approximately 40 to 50% of sales tax is paid by visitors to our city
88.3% of cities in the state have a higher tax rate than Arroyo Grande
Morro Bay, Paso Robles and San Luis Obispo are currently considering similar sales tax measures 7.75% to 8.75%
Atascadero’s and Grover Beach’s City Councils approved the placement of a sales tax ballot measure on the November 2020 ballot
Pismo Beach’s Council approved the placement of a ballot measure increasing their TOT/hotel tax on the November 2020 ballot
13
Current Tax Rates in the Region
14
The January 2020 survey the results showed Voters were most interested in using the money to:
Maintain local streets and repair potholes
Repair and maintain public building, sidewalks an storm drains
Maintain parks – Soto Sports Complex, courts, Community Center
Fire and Police response service, 9-1-1 emergency response
Address homelessness
Childcare and senior programs
15
This matches the CIP programs that are intended to be funded by this measure:
Annual Street Repairs Program
Annual Concrete (sidewalks) Repairs Program
Maintenance of Parks and Open Space (Fire Hazard and Fuel Suppression)
Maintenance of Storm Water and Drainage Systems
Maintenance of Public Facilities (roof and structural repairs)
Savings plan for a new Recreation/Childcare Center
16
2017 Infrastructure Assessment – detailed evaluation of the condition of our assets:
Pavement (roads and parking lots)
Sidewalks
Parks & Open Space
Storm water/drainage systems
Public Buildings.
17
The Results of the Assessment:
An additional $2.4 million annually to maintain facilities already owned by and currently serving the community.
And an additional $1.16 million would be needed to keep the Streets PCI at 69-70 in order to avoid significantly costlier maintenance in the future.
Total = over $3.5 million in unfunded annual infrastructure maintenance.
18
62 overall
19
Potential CIP budget
20
Currently our Street Saver software shows :
65-70% of our City’s streets are in “very good/good” condition
That leaves about 30% of our streets in “poor/very poor“ condition
With about 5% at the point of moving down into the poor condition index.
21
66 miles of streets
30 to 35% or 23 miles of street in a poor condition
23 miles at a PCI of 45 or lower
Much higher cost to repair versus PCI at around 45+
22
Price Per S.F.
65-70%
30-35%
23
PREVIOUS 2017 INFRASTRUCTURE ASSESSMENT REPORT
ROADS
Estimate of Total Improvements $ 180,000,000
Annual Depreciation / Set-Aside $ 3,023,584
FY 2018-19 Funding $ 1,164,500
Additional Funding Needed $ 1,859,084
Our most valuable asset
24
Extensive Dig outs on Traffic Way and
Striping
Former PCI
at 17, 30 to 50
Now 70
$1,200,000 project
Traffic Way and W.
Branch (1.5 miles)
25
Walmart
In-N-Out
West Branch St.
Completed May 15th 2020
Former PCI 43 to 57
Now 71
26
Engineering, material and labor costs have increased about 5% each year (over the 14 year period) resulting in smaller streets rehabilitation projects and less sidewalk replacement
Our strategy is to double the “arterial "streets (Halcyon, Elm St. Fair Oaks, Grand Ave, Oak Park)
And add Residential streets at a very poor PCI 20-40
-About 30 residential streets at this PCI level
Points to consider:
27
Equestrian Way
Equestrian Way
PCI 22
PCI 11
28
Virginia and Woodland
Woodland Dr.
PCI 49 and 37
29
Infrastructure Assessment Reports - Sidewalks
Estimate of Total Improvements $ 34,912,500
Annual Depreciation / Set-Aside $ 232,750
FY 2018-19 Funding $ 110,000
Additional Funding Needed $ 122,750
30
Berry Gardens area
31
Halcyon Rd.
Huasna Rd.
32
PREVIOUS INFRASTRUCTURE ASSESSMENT REPORT
DRAINAGE FACILITES
Estimate of Total Improvements $32,161,707
Annual Depreciation / Set-Aside $ 238,107
FY 2018-19 Funding $ 392,500
Additional Funding Needed $ 154,393
33
7/16/2020
Storm drain lining projects
Increase our video evaluations
Proactive rehabilitation our old Corrugated Metal Pipe (CMP) systems
Avoids much more costly critical failures
Ex. Oak Park and El Camino Real sinkhole
34
PREVIOUS INFRASTRUCTURE ASSESSMENT REPORT
PARKS AND OPEN SPACE
Estimate of Total Improvements $4,881,775
Annual Depreciation / Set-Aside $ 209,907
FY 2018-19 Funding $ 86,000
Additional Funding Needed $ 123,907
35
7/16/2020
Park and Open Space Maintenance
Turf renovations
Irrigation
Hardscape and BBQ pits
Tree trimming
Fire/fuel management around our open spaces
36
Ocean Oaks Condos
37
Priority areas to address – interface between homes and open space vegetation
Leisure Gardens
James Way Open Space
38
PREVIOUS INFRASTRUCTURE ASSESSMENT REPORT
GOVERNMENT BUILDINGS
Estimate of Total Improvements $4,684,874
Annual Depreciation / Set-Aside $ 121,588
FY 2018-19 Funding $ 0
Additional Funding Needed $ 121,588
39
7/16/2020
City has taken numerous actions to ensure the City’s financial position including:
instituting a postponement of filling vacant positions,
tightening operational costs
freeze travel expenses, and delaying one-time infrastructure improvements and putting other items on hold.
The City’s fiscal outlook is relatively stable for the short term and the budget for next year maintains existing a prudent ending reserves in the General Fund to protect the City’s
finances during these uncertain economic times.
40
2005
2020
Staffing Efficiencies
41
Community Outreach/Education – through November
July 14, 2020 - Adopt a Resolution placing a local transaction and use tax (“sales tax”) measure on the ballot for November 2020.
July 14, 2020 - Introduce an Ordinance adding a Chapter to the Arroyo Grande Municipal Code related to a transactions and use tax (subject to voter approval)
July 28, 2020 – Adopt the Ordinance described above
Next Steps and Key Dates if Council directs staff to move forward with a sales tax revenue measure:
42
Conclusion
Without intervention, expenditures will continue to exceed revenues
Solutions are: reduce expenses, increase revenues or some combination of the two
6/9/20
43