CC 2020-06-23_11a Proposed Revenue Measure 2020_PP PresentationCITY COUNCIL
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.
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
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
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.
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
•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
Current Tax Rates in the Region
The January 2020 survey the results showed Voters were most interested
in using the money to:
1.Maintain local streets and repair potholes
2.Repair and maintain public building,sidewalks an storm drains
3.Maintain parks –Soto Sports Complex,courts,Community Center
4.Fire and Police response service,9-1-1 emergency response
5.Address homelessness
6.Childcare and senior programs
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
•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.
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.
62 overall
Potential CIP budget
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.
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+
Price Per S.F.
65-70%
30-35%
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
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)
Walmart In-N-OutWest Branch St.
Completed May
15th 2020
Former PCI 43
to 57
Now 71
•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:
Equestrian
Way
Equestrian Way
PCI 22PCI 11
Virginia
and
Woodland
Woodland Dr.
PCI 49 and 37
Estimate of Total Improvements $ 34,912,500
Annual Depreciation / Set-Aside $ 232,750
FY 2018-19 Funding $ 110,000
Additional Funding Needed $ 122,750
Berry Gardens
area
Halcyon Rd.Huasna Rd.
Estimate of Total Improvements $32,161,707
Annual Depreciation / Set-Aside $ 238,107
FY 2018-19 Funding $ 392,500
Additional Funding Needed $ 154,393
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
Estimate of Total Improvements $4,881,775
Annual Depreciation / Set-Aside $ 209,907
FY 2018-19 Funding $ 86,000
Additional Funding Needed $ 123,907
Park and Open Space Maintenance
•Turf renovations
•Irrigation
•Hardscape and BBQ pits
•Tree trimming
•Fire/fuel management around our open spaces
Ocean Oaks
Condos
Priority areas to address –interface between homes and open space vegetation
Leisure Gardens
Estimate of Total Improvements $4,684,874
Annual Depreciation / Set-Aside $ 121,588
FY 2018-19 Funding $ 0
Additional Funding Needed $ 121,588
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.
2005 2020
Staffing Efficiencies
Next Steps and Key Dates if Council directs staff to move
forward with a sales tax revenue measure: