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HomeMy WebLinkAboutMINUTES - 05241994 - FC.1 ,BOARD OF SUPERVISORS To: G°i .: rs ` °� contra _ o FROM: VSta Finance Committee, Tom Torlakson fl; County Gayle Bishop H DATE: f�sr^I-cbviy'�cT' May 24, 1994 SUBJECT: PERMANENT FINANCING OPTIONS FOR THE COUNTY LIBRARY SPECIFIC REQUEST{S}OR RECOMMENDATION{S}&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. Consider recommending one or more permanent financing sources for the Library to the Board of Supervisors from the list below. a. A parcel assessment to be placed on the November Election ballot, similar to Measure B, which will require a 213 affirmative vote. b. A Utility User tax, either for the unincorporated area or the unincorporated and incorporated areas, to be adopted by the legislative bodies of the respective jurisdictions. As an alternative, the tax could be placed on the November election ballot as an advisory measure. C. If pending legislation becomes law, a benefit assessment to be placed on the November Election ballot which will require a majority affirmative vote. d. The establishment of a County Service Area for the Library which will have the authority to levy fees, and which is currently being planned in Santa Clara County. 2. In considering a recommendation for a permanent financing source for the Library, adopt the following selection criteria: a. likelihood of support among the cities and the County; b. capability of generating sufficient amounts of revenue; CONTINUED ON ATTACHMENT: YES SIGNATURE: r RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE - APPROVE OTHER SIGNATURE(S): Tom T rlakson Gayle Bishop ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE VUNANIMOUS{ABSENT } AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED Contact: Tony Enea, 646-4094 PHIL BATCHEL09 CLERK OF THE BOARD OF cc: Library SUPERVISORS AND COUNTY ADMINISTRATOR BY ��,ill O a DEPUTY Page 2 C. adequate flexibility to utilize new revenues to resolve service demand concerns; d. relative importance of adopting a solution during fiscal 1994-95, which may not be the most desirable and delaying action so as to select a more desirable alternative in the long term. 3. Request the County Librarian to discuss with Senator Roberti, or his staff, an amendment to SB 1448 which would allow agencies to conduct an assessment engineering study, public hearing and placement of a benefit assessment on the November ballot prior to SB 1448 becoming law. 4. Direct the County Administrator and County Counsel to initiate the necessary steps to prepare a library finance ballot measure for the November election. 5. Direct the County Counsel to review the steps required and legal implications of utilizing the County Service Area as a vehicle for library financing. 6. Direct the County Librarian to prepare a plan identifying how and where new resources will be allocated if a new source of financing is secured. 7. Refer this item to the Finance Committee for further study and recommendation at the June 13 meeting. BACKGROUND: On May 9, the Finance Committee reviewed pending legislation related to Library financing and explored other financing options. The Committee requested that this referral be placed on the May 23 Committee agenda for reconsideration after the staff has researched the financing options in more detail. Parcel Assessment In November, 1992, the voters of the County nearly approved a $20 parcel assessment which would` have financed Library services as well as law enforcement, criminal prosecution and programs to protect family and children. Measure B garnered 64.5% of the needed 66.6% votes, and would have generated $6.7 million annually. A similar measure could be placed on the ballot for November, 1994. The elections office advises that the last day to place the item on the ballot is August 12. Measure B involved taxable parcels in the County which numbered 285,607 in November, 1992. However, the Library does not include the City of Richmond and therefore would have an eligible parcel count of approximately 266,000 in 1994. Using the appropriate Library parcel count and applying the same assessment as in Measure B, a parcel assessment could generate $5,900,000, after an estimated $90,000 in billing costs are subtracted from the total. It should be pointed out that the Measure B Assessment Schedule included a number of $1-00 assessments on commercial parcels and some $200 assessments on some large commercial/industrial properties. (See schedule attached) The Board appointed a Revenue Task Force of business, labor and public leaders in 1993 to study revenue options for the County. Attached are the Task Force findings for the parcel assessment. Page 3 Utility User Tax The Board of Supervisors has the authority, without voter approval, of imposing a utility user tax in the unincorporated area. The tax could be placed on electricity and gas, telephone, water and cable TV. The Board of Supervisors does not have the authority to impose a utility user tax within a city, only cities have that authority under current law. Currently, six cities have such a tax and those cities, the tax rates and revenue generated are listed below. 1992 Rate Richmond $1,716,000 6% EI Cerrito 600,000 8% Pinole 260,000 7% Pleasant Hill 13,000 1% San Pablo 320,000 8% Hercules 150,000 5% In 1993, the Revenue Task Force estimated that a 1% tax in the unincorporated area would generate $1.4 annually. The Task Force estimate is presented below and assumed a $25,000 cap on the annual tax and exemptions for low income residents. The estimate was calculated as shown below. Components 1% Rate P G & E $1,005,000 Telephone 324,000 Cable TV 77,000 Water 0 $1,406,000 The Task Force findings on the utility user tax for the unincorporated area are attached. In addition to'these findings, there are several important staff concerns with this financing approach. 1. Implementation of the tax will require approximately 3 months for P G & E and much longer for the Telephone Company. Cable TV is not normally taxed by other jurisdictions and will require follow-up. 2. Proceeds from the tax may not be easily applied to the service problems of the Library since the bulk of the service is in the incorporated area and the tax is imposed in the unincorporated area. The Task Force also reviewed the utility user tax countywide, including the cities (see attached). However, each city must agree to such a tax under current law. A Task Force estimate of a 1% tax for all households for P G & E only, using a $25,000 cap on the tax, would generate $5,000,000. One problem in implementing a countywide tax is how to treat the cities which currently have a utility user tax versus those cities which do not have a tax. BENEFIT ASSESSMENT SB 1448 SB 1448 would authorize local agencies which operate public libraries to use benefit assessment financing for library services subject to the approval of the voters. The bill includes a full landowner protest process as well as a mandatory simple majority election before the assessment can be imposed. Under the terms of the bill, the County could Page 4 establish the library services district to include all territory served by the County Library, including incorporated areas, without the consent of the cities served. In addition to the establishment of a district encompassing all territory served by the County Library, zones could also be established by the County within the district to provide a different level of assessment from the district-wide assessment. For cities that want a higher level of service than that provided by the countywide assessment, this would provide a means to establish a zone-specific assessment, subject to voter approval, that would provide revenues for library services only within that zone. The cities in the county are all aware of the bill and the Mayor's Conference will be discussing it at their next meeting. Legislative Timeline SB 1448 has passed the Senate and is awaiting hearing in the Assembly Local Government Committee. Tentatively the hearing may be scheduled for Wednesday, May 25. If it is successfully passed out of committee on that date, it could be scheduled for a floor vote as early as the following week. After passage by the Assembly and assuming no changes from the Senate version, it will go to the Governor who will have 10 days to sign or veto the bill. Because the bill has an urgency clause in it, it will take effect immediately upon the Governor's signing of it. At the very fastest time line, the legislation could be ready for use by mid-June. More likely if it continues on the fast track in the legislature it could be out by the time that the legislature takes their summer recess starting July 8, 1994. The legislature does not come back into session until August 8, 1994. If the bill has not gone to the Governor before the recess it may once again get caught up in the end of session business and not be passed out until the end of the legislative session on September 9, 1994. In that case, the Governor would have 30 days to sign or veto the bill. Ballot Timeline In order to qualify for the November 1994 ballot the Board would have to place the assessment on the ballot by Friday, August 12, 1994. It could then remove the assessment, if it so chose, at its meeting on August 16, 1994. Establishment of Assessment Amount The bill requires that the resolution to form the assessment district and determine and levy the initial annual assessment shall establish a method for apportioning the annual assessment among the properties within the assessment district on the basis of the benefit to individual parcels or classes of property. In order to establish such a nexus an assessment engineering study needs to be completed which includes preparation of a parcel and property owner database for assessment identification, identification of the benefits and costs associated with library services, recommendations for benefit assessment methodology and estimation of the revenue potential. Last year, at the point that it appeared possible that SB 566 would become law, the library had a meeting with a benefit assessment engineering firm, BSI Consultants Inc. At that time, BSI provided an estimated timeline for this phase of work at approximately 60 days. However, it may be possible to compact that timeline somewhat depending on the availability of useful parcel and property owner data. However, the development of a nexus between the benefits and costs of a library assessment is a very new area of study. There in only one existing study from EI Dorado County that has been implemented at this time. Therefore, this part of the process could take a significant amount of time. It would be potentially difficult to conduct an adequate study within the time constraints necessary for a November 1994 ballot. While no specific assessment study has been done, it is likely that a similar amount could be generated by an assessment as by a parcel tax, e.g. $5.9 million on an assessment of approximately $20 per parcel. Page 5 Mailed Notice and Public Hearing Requirement The bill requires certain mailed notice and public hearing requirements before any assessment can be placed on the ballot. For hearings on the ordinance or resolution to establish the district and levy the proposed assessment that are held before August 12, 1994, there is only a requirement to mail the notice 21 days before the hearing. All approximately 270,000 property owners in the area served by the County Library would need to be sent mailed notice of the public hearing on the establishment of the district and the proposed assessment amount. Assuming that the Board would want to conduct the public hearing on at least two dates prior to August 12, 1994, those dates could be the preceding two Tuesday meetings -August 2 and August 9. The mailed notice would have to be mailed 21 days prior to the August 2 hearing or by July 12, 1994. In order for the notice to be mailed by July 12, 1994 the Board would need to receive the assessment engineering report and set a date for the hearing prior to July 12, 1994. Since the Board is not meeting on July 5, it would have to set the date for the hearing at its meeting on June 28, 1994. However, if the legislation has not yet been signed by the Governor, it is questionable as to whether the Board has the legal authority to set a date to conduct such a hearing. POTENTIAL TIMELINE FOR NOVEMBER 1994 ASSESSMENT ELECTION May - June 1994: Library conducts assessment study Mid-June 1994: Legislature approves bill and sends it to Governor for signature Friday, June 23, 1994: Last date for Governor to sign bill Tuesday, June 28, 1994: Board of Supervisors receives assessment report and sets date for public hearing. Tuesday, July 12, 1994: 21 day mailed notice to all property owners in proposed assessment district including date Tuesday, August 2, 1994 Board of Supervisors conducts public hearing Tuesday, August 9, 1994 Board approves establishment of assessment district and proposed assessment amount and places measure on November 1994 ballot COUNTY SERVICE AREA ASSESSMENT County Service Area Law Certain counties have recently interpreted current County Service Area law as allowing the Board of Supervisors to establish a benefit assessment district for the County Library. The law requires a standard landowner protest process, but does not have a mandatory vote unless the protests go over a certain percentage. However, the Board can only implement such an assessment district with their own authority for unincorporated areas of the county. In order to establish such a district that includes any city, the city council of that city would have to approve the creation of the service area. A recent California Supreme Court decision City of Orland vs. William F. Knox affirmed the right to establish assessments for library services. Page 6 EI Dorado County EI Dorado County established such a district in an unincorporated area of the county in 1993 and is currently collecting an assessment for the library. The assessment did utilize the landowner protest process, but did not receive a high enough protest to require an election. As a result, the Board established the district and levied the assessment by ordinance. BSI Incorporated did the assessment engineering study for the county. The assessment was to provide funds for operating costs for a new branch library in an unincorporated area of the county. Santa Clara Countv Santa Clara County is in the process of establishing such a district in conjunction with forming a Joint Powers agreement with the cities served by the library which will create a new form of governance and financing for the County Library. All cities served by the County Library have been requested to approve the formation of the service area and the approval of the joint powers agreement. Once approved the JPA Board will serve as the governing authority for the library. Assuming approval by all the cities and the county, the assessment will be placed on the November 1994 ballot for an adviso vote. Assuming a successful vote, both the JPA and the CSA will be implemented in July 1995. The assessment engineering study has been drafted by one of the cities served by the County Library. The assessment will provide funding for a minimum level of service for all branches with the remaining funds divided up for each branch by an agreed upon distribution formula. 10% of the assessment is set aside for support services provided by the County Library to all branches. Potential for Contra Costa County The possibility of forming a CSA to provide additional funding for library services has great potential in this county. However, since only 10% of the population served by the county library is in the unincorporated area, in order to have significant impact any CSA would have to include incorporated areas. If the Board choose to enact the assessment only in the unincorporated areas, the issue of the use of the proceeds would be the same as with the utility user tax only in the unincorporated area. In order to include incorporated areas it is likely that the cities involved would require some involvement in the governance of the library. The formation of a JPA with the cities will necessarily involve extensive discussion with the cities as well as LAFCO approval. It is unlikely that such discussions and approvals could be completed in order to affect the 1994-95 budget or to be placed on the November 1994 ballot, if necessary. While there has been some discussion about this option with the cities and the City- County Relations Committee there has not been any indepth discussion or study of the option. The dollar amount generated by a CSA assessment on a county library service area wide basis would likely follow the same pattern as the parcel tax or library services assessment. TE:cm Attachments ATTACHMENT 1 PROPOSED PARCEL ASSESSMENT SCHEDULE BY PROPERTY USE Parcel Parcel Number of Assessment Estimated Code Description Parcels Per Parcel Revenue Residential 10 Residential (vacant, unbuildable) 2,034 $0 $0 11 Single fam, 1 res on 1 site&duets 173,108 $20 $3,462,160 12 Single fam, 1 res on 2+ sites .1,450 $20 $29,000 13 Single fam, 2+ res on 1 or more sites 2,186 $20 $43,720 14 Single fam, other than sngle fam land 9,327 $20 $186,540 15 Misc improvements, 1 site 671 $20 $13,420 16 Misc impry on 2+ sites 34 $20 $680 17 Vacant, 1 site (incl PUD sites) 12,238 $20 $244,760 18 Vacant, 2 or more sites 600 $20 $12,000 19 SFR; det w/common area 22,797 $20 $455,940 Multiple 20 Vacant 514 $20 $10,280 21 Duplex 3,215 $20 $64,300 22 Triplex 472 $20 $9,440 23 Fourplex 1,623 $20 $32,460 24 Combinations(single &double) 458 $20 $9,160 25 Apartments(5-12 unts, inclusive) 1,071 $20 $21,420 26 Apartments (13-24 unts, inclusive) 247 $100 $24,700 27 Apartments (25-59 unts, inclusive) 199 $200 $39,800 28 Apartments, 60 unts or more 187 $200 $37,400 29 Attached PUDs 37,277 $20 $745,540 Commercial 30 Vacant 1,099 $20 $21,980 31 Stores (not supermarkets) 1,840 $100 $184,000 32 Small grocery stores(Quick Stop) 97 $20 $1,940 33 Office Buildings 1,325 $100 $132,500 34 Medical: Dental 427 $100 $42,700 35 Service stations, car washes 319 $100 $31,900 36 Garages 547 $100 $54,700 37 Community fac,swimming pool 107 $100 $10,700 38 Golf courses 138 $100 $13,800 39 Bowling alleys 13 $100 $1,300 40 Boat harbors 186 $100 $18,600 41 Supermarkets(not in centers) 49 $100 $4,900 42 Shopping centers 549 $200 $109,800 43 Financial bldgs(ins,title, banks) 170 $100 $17,000 44 Motels, hotels, mobilehome parks 184 $100 $18,400 45 Theatres 23 $100 $2,300 46 Drive-in restaurants 157 $100 $15,700 47 Restaurants(not drive-in) 201 $100 $20,100 48 Multiple&Commercial 401 $100 $40,100 49 New car auto agencies 111 $100 $11,100 50 Vacant land 837 $20 $16,740 51 Industrial park 487 $200 $97,400 52 Research&development 15 $100 $1,500 Pagel ATTACHMENT 1 PROPOSED PARCEL ASSESSMENT SCHEDULE BY PROPERTY USE Parcel Parcel Number of Assessment Estimated Code Description Parcels Per Parcel Revenue Commercial -continued 53 Light industrial 692 $200 $138,400 54 Heavy industrial 189 $200 $37,800 55 Mini-warehouse 50 $100 $5,000 56 Misc impry on light or heavy industd 236 $100 $23,600 57 Unassigned $0 $0 58 Unassigned $0 $0 59 Unassigned $0 $0 I Land 1 60 Unassigned $0 $0- 61 Rural, res imprvd 1A- 10A 801 $20 $16,020 62 Rural w/without misc structr 1 A-1 OA 700 $20 $14,000 63 Urban acreage 10A-40A I 375 $20 $7,500 64 Urban acreage 40A and over 186 $20 $3,720 65 Orchards, vineyards past 10A-40A 510 $20 $10,200 66 Orchards, vineyards 40A and over j 196 $20 $3,920 67 Dry farming, grazing 10A-40A 280 $20 $5,600 68 Dry farming, grazing 40A and over 363 $20 $7,260 69 Agricultural preserves 515 $20 $10,300 Institutional 70 Convalescent hosp& rest homes 64 $20 $1,280 71 Churches 697 $20 $13,940 72 Schools, public or private 479 $20 $9,580 73 Hospitals w/without imprvmnts 35 $20 - $700 74 Cemeteries, mortuaries 62 $20 $1,240 75 Fraternal &svc organizations 90 $20 $1,800 76 Retirement housing complex 30 $20 $600 77 Cultural uses(libraries) 10 $20 $200 78 Parks&playgrounds 283 $20 $5,660 79 Gov't-owned (fed, state,city) bldgs 5,167 $0 $0 Miscellaneous 80 Mineral rights(prod/non-productive) 1,164 $0 $0 81 Private roads 214 $0 $0 82 Pipelines&canals 37 $20 $740 83 State board assessed parcels 11 $0 $0 84 Utilities w/without bldgs 9 $20 $180 85 Public&private parking 334 $20 $6,680 86 Taxable muni-owned property 161 $20 $3,220 87 Common areas in PUDs, open spc 3,864 $0 $0 88 Mobilehome 1,262 $20 $25,240 89 Other,split parcels 151 $0 $0 99 Awaiting assignment 5 $20 $100 TOTAL 298,2121 $6,666,360 Page 2 ATTACHMENT 2 PARCEL TAX BENEFITS Large amounts of revenue can be collected at a small cost to the taxpayer Property owners pay it. Parcel taxes, if constructed like Measure B, are "kinder" to business in comparison to other taxes Electorate can vote for this tax Political support for parcel taxes exist. After all, Measure B was almost approved. Collection of the tax is relatively simple RISK/DISADVANTAGES Parcel taxes if constructed like Measure B are inequitably distributed within residential categories (apartments versus condominiums) Only property owners pay for it initially and not renters Parcel taxes have been levied at a higher rate on industry parcels Small parcel owners are discriminated against, because the size of the parcel is not considered Increases cost of home ownership Requires 2/3 vote of populace ATTACHMENT 3 UNINCORPORATED UTILITY USER TAX BENEFITS Lower rate is possible if all utilities are included in the base (water, cable, sewer, garbage, gas, electricity, and telephone). County 5% tax is still lower than Southern California and East Coast utility user taxes Flexible tax. For example, different rates may be applied for different types of utility services, such as a city with pre-existing utility user tax. Also caps limiting the amount of tax paid can vary according to the type of user and/or amount of utility charges paid. Legislation is not required to implement the tax County implementation of a utility user tax is inexpensive and requires little to no new staff RISKS/DISADVANTAGES Regressive tax Tax burden is borne disproportionally by Industry and Business Manufacturing industry, an already stressed sector, is particularly hard hit Encourage business flight to other jurisdictions without the tax Industry and others may also bear the cost of a federal energy tax Electorate does not vote to implement the tax ATTACHMENT 4 COUNTYWIDE UTILITY USER TAX BENEFITS Lower rate is possible if all utilities are included in the base (gas, electricity, telephone, water, cable, sewer, garbage) County 5% tax is still lower than Southern California and East Coast utility user taxes Taxation Countywide is more equitable. Reminder - County spending is both in unincorporated incorporated portions of County. Flexible tax. For example, different rates may be applied for different types of utility services and for different geographical locales, such as a city with pre- existing utility user tax. Also caps limiting the amount of tax paid can vary according to the type of user and/or amount of utility charges paid. Businesses will pay less taxes in the County, than in cities with both a city and County utility user tax. Therefore; less flight of businesses out of the County. County implementation of a utility user tax is inexpensive and requires little to no new staff RISK/DISADVANTAGES Regressive tax borne disproportionally by Industry and Business Encourage business flight to other jurisdictions without the tax Industry and others may also bear the cost of a federal energy tax Cities may feel the County is interfering with their financial autonomy. For example, the decision to exempt and place caps on a utility user tax is eliminated. Legislation needs to be enacted Additional work for PG&E to bill customers for both a city and County tax, eg. finding physical space on their bill and making computer alterations to their billing system.