The council has until February 6 of next year to figure out what it wants to put on the June ballot, but Tuesday figures to be a critical discussion moving forward to their ultimate decision.
Staff notes that in July and October, the council discussed the expiration of the current $49 parks tax, along with an interest in placing potentially multiple revenue measures on the ballot for June. “The Council has reviewed both cost saving measures as well as potential revenue options, such as parcel taxes, sales tax, utility users tax, bond measures, etc.,” the staff report states.
On October 17, the council directed staff to review three parcel taxes: $125 for parks, $125 for transportation, and $50 for social services.
Council indicated the interest in a 10-year term with an annual inflator of around two percent to keep up with inflation.
If all three parcel taxes were placed on the ballot and passed, they would generate around $8.6 million. That is close to what budget experts believe could be the city’s annual shortfall in real needs.
“At the time of the discussion in October, a flat parcel tax was the preferred funding mechanism because of its familiarity in the community,” staff notes. “The Council did, however, request follow up on charging a parcel tax by unit or lot square footage. The Council has the ability to levy parcel taxes based on the size of the unit or lot being taxed, provided that there is a rational basis for differentiation in parcel tax rates.”
Staff does address the issue of cost containment, noting that “the City has taken a variety of measures over the last several years to contain costs and to make effective use of existing resources.
“While this is an ongoing effort, we have identified opportunities to increase revenue through grants and a revised investment strategy; used funds more efficiently through targeted contract services accreditation work, and organizational reviews; quantified needs through efforts such as the NCE and Kitchell studies and the long-range forecasting provided by Bob Leland; and made cuts,
particularly during the economic downturn.”
However, staff concludes: “These efforts alone will not be enough without having noticeable impacts on facilities and services.”
The current parks maintenance tax is $49 per parcel and generates $1.4 million in annual revenue. The measure was passed in 2002 and renewed in 2006 and 2012.
However, the current tax pays for only 18 percent of overall parks maintenance costs. It also does not have an annual inflator. Staff calculates that the original $49 tax would be equal to $70 in today’s dollars, “so the overall purchasing power of the tax continues to decrease over time.”
Council has directed staff to look at a $125 parcel tax. The city had commissioned the Kitchell report to look at the needs for parks maintenance and other needs over the next 20 years.
Staff notes that the city has revised the costs “to reflect standard practice of ongoing maintenance of renewable resources such as turf through aeration, fertilization and overseeding, rather than full replacement. This practice has been proven equally effective and is a fraction of the cost originally proposed in the first Kitchell report.”
The report now finds the average delta is $664,000 annually over the next ten years for facilities and maintenance costs, with another $285,000 annually for capital replacement costs.
With a $125 parcel tax, staff estimates covering the following needs: $1.4 million (39 percent) for continued maintenance, $925,000 (26 percent) for new maintenance efforts, $570,000 (16 percent) for urban forestry, $410,000 (11 percent) for new IPM policy (chemical free weed abatement) and $250,000 (7 percent) for special parks projects and grant matches (varies yearly).
The second $125 parcel tax would be a transportation tax. Staff writes: “The city does not currently have a transportation-specific tax, but instead allocates nearly $4 million in the annual budget for road paving.”
This money coupled with an estimated $1.25 million in new state road maintenance and repair contributions “will allow Davis to continue to make strides to narrow its annual funding gap for transportation infrastructure.”
Staff continues: “The resultant unfunded amount for pavement and pathways in the 2016 Nichols Consulting Engineers report is approximately $3.5 million, plus an estimated $4.5 million per year for other transportation related infrastructure.”
Here is the priority that staff has put for potential revenues. They note: “This would all be net new funding; it would not replace existing expenditures.”
Staff writes: “A tax at the $125 level covers almost half of the identified unfunded annual need above the current baseline; a tax at the $50 level covers slightly less than one-fifth of the need.”
City Councilmember Will Arnold this week told the Vanguard, “We need to renew the parks tax at absolute minimum. I believe a doubling of the current $49 tax would be prudent.”
Councilmember Arnold added, “I also believe a similar-sized measure dedicated to transportation infrastructure is desirable. So as I said at the last meeting in which this came up, $99 for parks and $99 for roads (or “potholes” to be alliterative).”
Finally there is a proposed social services tax.
Staff writes: “Although not historically a service provided by the city, the City Council has identified a number of social service needs in the community that do not have adequate sources of funding.”
The Social Services Strategic Plan identifies three primary areas of concern: homelessness, affordable housing and adult day health care.
Staff writes: “Homelessness is a growing problem, not just in Davis, but across the state, without an adequate local infrastructure in place. City staff and the city’s social services consultant have been working with local service providers, members of the business community and others to create a network of programming to address homelessness.”
Here is what a social services tax of $50 could cover:
- Homeless Services. Specifically, providing enhanced operational funding for a homeless shelter and resource center, continuing the Pathways to Employment program to place homeless individuals into jobs and housing, and funding the Getting to Zero case voucher and case management program together is estimated to cost approximately $550,000 per year.
- Affordable Housing. Although recent state legislation will provide an ongoing funding source for affordable housing, there is still a need for funding to assist with new affordable housing projects and to rehabilitate existing affordable housing. The continued uncertainty and decline of the federal HOME program (along with the significant requirements to accept the funding) mean that the city’s only other ongoing source of affordable housing dollars is not reliable for the long term. Staff recommends an annual allocation of $500,000 – $750,000 to the city’s Housing Trust Fund.
- Local Public Service Programs. Every year, the city receives worthy applications as part of the Community Development Block Grant program from local public service providers assisting low-income individuals and households with basic needs. There is never enough funding to go around, so staff recommends using the balance of the tax ($100,000 – $350,000) to fund programs similar to those that apply for CDBG funding.
Mayor Robb Davis told the Vanguard, “When the RDA [Redevelopment Agency] ended, the City lost over $2 million per year for its affordable housing programs. A $50/year parcel tax would bring in about $1.5 million per year, and while that does not fill the gap, it provides critical resources for affordable housing and services for homeless and vulnerable individuals.”
He believes, “The revenue from this tax will provide a predictable revenue stream for programs that have had to rely on uncertain or one-time grants. That stream will enable us to expand the pathways to employment program. It will enable us to expand services for (the) emergency shelter year round, add critical physical and mental health services to the Interfaith Rotating Winter Shelter, and enable us to continue and expand bridge housing vouchers or create a housing voucher program of our own. Such voucher programs allow us to place formerly homeless individuals into already existing units.”
Mayor Davis added that “the revenue can support our housing trust fund to help maintain existing affordable housing stock in the city. The trust fund can also be leveraged to build new affordable units if and when land dedication sites come forward. Finally, this revenue can contribute to expanding support to agencies that provide critical services via our existing Community Development Block Grants (CDBG).
“The fact that this tax can provide for such varied services and infrastructure is because these services are delivered largely through non-profits and with the strong support of Yolo County Housing. It will enable us to significantly expand existing services provided via County support, leveraging those resources for greater impact,” he said.
Finally, the mayor added that “the revenue comes at a time when the City is developing critical impact assessment metrics and progress tracking systems to assure that all expenditures are done in an accountable way, with a focus on outcomes and impacts, not merely outputs.”
The council doesn’t have to make their final decision this week, however, As City Manager Mike Webb noted, “For a June ballot the Council will need to make a final decision on what to put on the ballot by their first meeting in February, which leaves the January meetings to allow for further follow-up with Council as needed.”
—David M. Greenwald reporting