Council to Discuss Revenue Measures for June

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Pothole-Sky

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

The Vanguard Needs to Raise $1400 to Meet Its Financial Obligations This Month



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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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55 thoughts on “Council to Discuss Revenue Measures for June”

  1. Keith O

    I want our city council to explain how they plan to distribute these taxes so that everyone has skin in the game, not just homeowners.  Has the council figured in their numbers a per unit amount that apartments would have to pay or are their numbers just based only on homeowner taxes? For instance, the $125 parcel tax for parks, how much will each unit of an apartment complex be charged?  The $125 transportation tax, what will apartment units be levied?  Same for the $50 social tax.

    1. David Greenwald Post author

      The parcel tax for the city has worked differently than for DJUSD. Currently the parcel taxes are paid per unit. The staff report is assuming that would continue.

        1. Keith O

          So you’re telling me that the city is going to charge each apartment unit $300 in parcel taxes.  So in a 100 unit apartment complex every single apartment will be charged $300 adding up to $30,000/year for the apartment complex?

        2. Keith O

          So I hope apartment renters realize that these new parcel taxes are going to raise their already high rents by another $25 per month.

          The word needs to get out on this so renters know exactly the costs involved.

        3. Keith O

          First of all we don’t need to be starting new programs with new taxes like Social Services when the citizens are already overtaxed and the city is in the hole.

          Secondly as Mark West pointed out there are ways to do much more cost cutting.  I don’t agree with everything Mark West puts out but his budget cut ideas alone will probably get him my vote.

          Thirdly we need to take a much harder stance on employee compensation.

          And finally, for now, we need to stop designating funds (siloing as David put it) for programs and projects that aren’t necessary when we have other much more dire needs.  Example, $181,500 for a bike pump track.

           

        4. David Greenwald

          I think you’re wrong here Keith.  We have additional needs to do something about the homeless (seems like a big problem based on the public discussions I have attended) and affordable housing (another big problem).

          what you’re missing on the impact fees is those are one time monies, and we made a one-time expenditure.  I don’t see a problem with that.

          taxes on the other hand, generate on-going revenue which are needed for ongoing annual expenses.

      1. Cathy

        Keith O, I expect the apartment owners to increase rents even more than $25 per month (as the one I live in blamed increased water rates a few years back and raised the unit rental price around $80/month)…but they have been raising by that amount each year anyway, to get these 47-year-old apartments to “market rate”…but I am now off-topic and this is not a rent control discussion

        Cathy A

        1. Keith O

          Cathy, and however much they decide to raise rents you can tack on another $25 for the proposed parcel taxes if they pass and if the city is indeed going to charge per apartment unit.

  2. David Greenwald

    Keith:  Are you aware that you are being completely inconsistent here?  On the one hand, you are railing to make sure that the tax effects each person equally and then you turn around and complain about it when you find out it does.  You cannot have it both ways.

    1. Keith O

      I’m not complaining that renters have to pay their fair share, I just want them to realize it when they vote.

      I don’t think many of them realize it when they vote, they think it’s going to fall mainly on homeowners.

      When they do vote they need to know that they’ll also be hit $25/month in extra rent on top of whatever monthly rise they might see in future rent increases.

  3. Tia Will

    Keith

    First of all we don’t need to be starting new programs with new taxes like Social Services”


    Do you not believe that we have a problem with the homeless ?  Or with affordable housing ? Is the status quo alright with you ?  If you do believe these are problematic, your solution for addressing them would be?

    they think it’s going to fall mainly on homeowners.”

    First, I don’t think it can accurately be determined what others are thinking. But for the moment let’s suppose you are right. Might that be due in part to your ongoing erroneous implication that this is the case?

     

    1. Keith O

      We do know that apartment renters aren’t charged per unit for the DJUSD parcel taxes because of the Granda lawsuit so it wasn’t illogical that might be the case for any future city taxes.  Also sometimes apartment unit taxes are lower than single dwelling homeowner taxes.

      All I ask for is that it’s clarified and spelled out so everyone knows what they’re voting for.

  4. Ron

    Keith:  “So you’re telling me that the city is going to charge each apartment unit $300 in parcel taxes.  So in a 100 unit apartment complex every single apartment will be charged $300 adding up to $30,000/year for the apartment complex?”

    David:  “That’s what the city does. It’s like $25 per tenant, per month.”

    Can someone explain the discrepancy between these two statements?  (For example, is it a comparison between existing, vs. planned taxes?)

    Where does the $25 figure come from?

     

    1. Keith O

      It’s planned new taxes, $300 per unit per year, or $25/month according to David.

      I guess one could lower the cost slightly because the new $125 park parcel tax replaces the $49 current park tax.

    2. Howard P

      Thanks for giving me my laugh/smile of the day!  From an “auditor” no less!

      $25/mo = $300/year

      In Davis, the occupancy (people per unit) of MF and SF units, on average, has been nearly the same, for, like 40 years.

      I suspect David misspoke in writing ‘tenant’ rather than ‘unit’…

      I know of no ‘per capita’ taxes, ever, in Davis.

      1. Ron

        Yeah, I was distracted as I skimmed the article, and didn’t notice the “monthly” vs. “yearly” amounts.  Thought about it on my own, after I stepped away.  But, glad to make you laugh.

        Some other questions:

        Could this money simply be used to pay off unfunded liabilities (without providing any actual services)?

        Why can’t the school district charge “by unit”?

        1. Ron

          Thanks, Keith.  I had heard of it, but this summary helps.

          The summary states that it ” . . . violated a 1986 law that said parcel taxes must “apply uniformly to all taxpayers or all real property within the particular district.”

          So, I’ll assume that (for some reason), the 1986 law does not apply to parcel taxes administered by the city.

        2. Keith O

          Could this money simply be used to pay off unfunded liabilities (without providing any actual services)?

          It’s my understanding that if it’s a 2/3’s parcel tax vote the money has to be designated for what it’s voted for.

          But here’s my question, we’re being told that our parks are totally underfunded and the new park tax will take up that slack.  But where’s the money been coming from all these years to keep up our parks?  The general fund?  So if our parks get 100% funded what will happen to the general fund money that was supplementing the parks?  How will that be spent in the future?

        3. Ron

           Keith:  “So if our parks get 100% funded what will happen to the general fund money that was supplementing the parks?  How will that be spent in the future?”

          Unfunded retirement/medical cost liabilities?  🙂

        4. Mark West

          “How will that be spent in the future?”

          If you believe in history repeating itself, you can rest assured that the money will end up going for increased compensation. All you need to do is compare the tax and fee increases that have been implemented in the past 10-15 years with the subsequent increases in compensation voted on by the CC to understand this arrangement.

        5. Howard P

          Could this money simply be used to pay off unfunded liabilities (without providing any actual services)?

          At the end of the day, since the City is already paying down those, does it matter?  It’ll free up the money that is used to pay those down.

          But back to your point, as I understand it, good question… but, actual services costs, at least on the HR side could compound the unfunded liabilities… chicken/egg thing…

          This is where the expenditure side comes in… a topic unto itself… Mark points out the ‘rocks and shoals’…

          This is not simple… but is very important, moving forward…

        6. Ron

          Howard:  “At the end of the day, since the City is already paying down those, does it matter?  It’ll free up the money that is used to pay those down.”

          It could matter, by enabling the city to continue to avoid making necessary cuts regarding unfunded liabilities. (Not sure how much flexibility they have to do so.)

          I believe that unfunded liabilities are the “elephant in the room” for cities across California. Ultimately, the size and scope of the problem will probably force changes, statewide. (Not necessarily on a “city-by-city” basis.)

          Might essentially require a collapse of the current system, first. (Perhaps triggered by a downturn/recession.)

  5. Ron

    As a side note (regarding the Granda settlement):

    The summary states that it ” . . . violated a 1986 law that said parcel taxes must “apply uniformly to all taxpayers or all real property within the particular district.”

    Not sure that I’d read into this statement that there is no ability to structure the tax in a more fair manner.

    I’m curious as to how the 1986 law arose, in the first place.  School districts aren’t “doing themselves any favor”, regarding that law (and subsequent interpretation).

        1. Ron

          But Keith, you want parks and roads maintained, right?  It’s as simple as that!

          Did you not see the photo of the large potholes, above? (Assuming they haven’t been repaired, by now.)

          (Just kidding.) 🙂

          Thanks for bringing up the point regarding how existing funds might potentially be (mis)used, if parcel taxes are approved.

        2. Ron

          Sloppy reading and writing from me, today.  (I wasn’t kidding about the possibility that those particular potholes might have been paved by now.)

          I was kidding about how the city might present the issues, as well as the possiblity of failing to address the point that Keith brought up.

        3. Howard P

          Ron… that pothole picture does not come from Davis… think “clip art”… might be proved wrong, but I say that at a 99.4% confidence level… size and shape tells me somewhere where there is deep frost/frost heave… my guess (and only a guess) is Minnesota…

          In Davis, usually PH’s are generally formed near ‘seams’ in the original construction, or near gutter lips… the latter usually due to being a bus stop…

        4. Howard P

          Like a stopped clock, I try to be right twice a day…

          And I’m pretty darn good on pavement evaluation, even if I say so myself…

          Thanks Ron & Keith for the affirmation… sure sign that the apocalypse is at hand…

  6. Ron

    Just wondering:

    How have been parcel taxes allocated (to date) between single-family dwellings, vs. units in apartment complexes?

    Also wondering if the city has some general/guiding policy, regarding this.

        1. Howard P

          Clarification… for all…

          City ‘parcel taxes’ may be assessed by unit… DJUSD ones are not… others have also clarified that… it bears repeating…

      1. Howard P

        But, a real analysis would include reduced costs of individual drop-off costs, value of reducing GHG, etc.

        Just saying that some costs would be displaced if we had school buses for those who can’t or won’t bike/walk… national averages include a lot of rural communities…

        1. Todd Edelman

          I’m a right-tool-for-the-job-that-doesn’t-hurt-others advocate.

          I would love for everyone to get to school by foot or bike BUT since Davis schools don’t only use geographical catchment it’s unrealistic to expect everyone to get to school that way. So the third option is driving a car, and that’s a bad choice.  The solution is electric-powered buses.

        2. Howard P

          Not everyone Todd… always exceptions… what do you think /believe a reasonable length of path of travel is for kids to walk/bike?  Meant as a semi-loaded, yet, honest question…

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