While much of the focus has been on the soda tax, the council on a 3-2 vote moved to go forward with consideration of both a parcel tax and transient occupancy tax (TOT) increase, in addition to asking staff for more information on a potential soda tax.
On the other hand, the council’s vote effectively killed the potential utility user tax (UUT).
Staff analysis on the TOT, which would largely be a tax on people from outside of the area, showed that Davis has about a 10 percent tax at the moment, but other communities have between an 11 and 14 percent tax.
According to staff, “Each one-percent increase in the TOT currently amounts to approximately $130,000, and with the addition of new hotel rooms and a conference center in the future could increase in the future.”
Councilmember Brett Lee was among the councilmembers voting in the majority on Tuesday. He has been outspoken against the UUT and spoke with the Vanguard on Thursday to provide clarity on his views.
Councilmember Lee acknowledged, “Yes, there is a shortfall of revenue.” However, he wants to know more about what the revenue potential is for the innovation parks. For instance, he believes the $2 million in projected revenue at MRIC (Mace Ranch Innovation Center) “seems too low.” He said, “That seems like a drop in the bucket. I’d like to better understand how conservative of a number that is.”
He noted that in the past there were discussions about a square footage assessment. He said, “I’d like to know the feasibility of such a thing because the way the innovation parks were sold to use during (Former City Manager Steve) Pinkerton’s time is that these were going to be a big source of revenue to the city.” Based on that, he said, “I’m not going to just take as a given, it’s just two million and the developer cries poor and it can’t be any higher than that.”
When the $2 million number came out, Councilmember Lee called it “a big letdown.”
“Two hundred acres in play with the associated risks involved, when I can go and the city council can approve a hotel on two acres and get $500,000 a year pretty much guaranteed,” he said. “What’s wrong with this picture?” He said, “I need to know more about that.”
Still, he stated that “our infrastructure needs are huge.”
On taxes in general, Brett Lee acknowledged, “One of the problems of Davis is that it’s an expensive place to live.” Given that, one of his goals is to keep Davis more affordable.
What he said is appealing to him about the soda tax is “if you don’t want to pay it – you don’t have to. Don’t buy soda or buy your soda elsewhere. In effect, it’s something that people can avoid.”
Councilmember Lee said that, had the city gone in the direction of the UUT, he would have been more in favor of taxing cable and other more discretionary costs. He noted that people can choose whether or not to get the premium $200 cable package, he said, “if you have that sort of money, then paying a percent on that, I’m not too troubled by it. If you’re getting basic cable paying $30 a month, 3 percent on that is essentially 50 cents, it’s a very small fee. Something like that wouldn’t make Davis less affordable.”
On the other hand, he noted that people “do not have the ability to not have electricity, they do not have the ability to not use water, they don’t have the ability to not pay sewer fees.” He said, “So those fees were problematic. I was hoping to have the ability to have a tax that ideally was more discretionary.”
He said he was intrigued by the soda tax, but needed more information on what the small business exemption is. He noted that many small business owners “are worried that the soda tax is going to kill their business.” However, he said, “there’s a small business exemption that is designed to minimize impacts on businesses like that.”
He hopes to get answers from staff or the soda tax proponents as to how it works in Berkeley. “Once I get those answers I’ll be able to better sense whether I’m supportive of a soda tax,” he said.
Staff has also looked into a potential parcel tax that could be targeted to address “infrastructure needs for streets and roads; recreation amenity needs like repairs and/or enhancements to existing pools; irrigation expenditures in the parks; road and bike path maintenance and rehabilitation; or other potential enhancements to the community.”
One idea that has been floated is a $50 parcel tax that staff projects would yield about $1.4 million which, on top of the current $4 million budgeted for roads, could get the city closer to projected $6 to $7 million per year revised roads needs.
Staff recently downwardly revised the projected inflation from 8 percent down to 4 or 5 percent, which reduced the projected roads needs downwards from $10 million a year. On Tuesday, council expressed the hope that state roads money would eventually become available.
These issues will presumably come back to council prior to their need to act on them in February.
—David M. Greenwald reporting