HomeMy WebLinkAboutItem 7 - Consider placing a General Sales Tax Measure on the November 3, 2020 BallotItem 7
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Council Agenda•
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Department Name: City Administration
Cost Center:
1001
For Agenda of:
July 21, 2020
Placement:
Business
Estimated Time:
60 minutes
FROM: Derek Johnson, City Manager
Prepared By: Greg Hermann, Deputy City Manager
Ryan Betz, Assistant to the City Manager
SUBJECT: RESULTS OF PUBLIC ENGAGEMENT AND OUTREACH EFFORTS AND
CONSIDERATION OF SUBMITTING TO THE VOTERS A COMMUNITY
SERVICES/INVESTMENT MEASURE; AND AN INTRODUCTION OF AN
ORDINANCE AMENDING EXISTING CHAPTER 3.15 ESSENTIAL
SERVICES TRANSACTIONS (SALES) AND USE TAX AND REENACT IN
FULL AMENDED CHAPTER 3.15 COMMUNITY SERVICES AND
INVESTMENT IMPOSING A LOCAL TRANSACTIONS AND USE TAX
RECOMMENDATION
1. Receive a report on the results of public engagement and outreach efforts regarding SLO
Forward, an effort to support community investment and economic recovery by maintaining
and improving the type of City services and infrastructure the community values most; and
2. As recommended by Council Members Pease, and Stewart and the Revenue Enhancement
Oversight Commission, adopt a resolution (Attachment A) placing for submission to the
voters a ballot question whether to amend Chapter 3.15 of the Municipal Code with a
Community Services and Investment Local Transactions (Sales) and Use Tax that extends the
existing, voter -approved funding at a 1.5-cent rate, until ended by voters; and
3. Introduce an ordinance (Attachment B), subject to voter approval in the November 2020
general election, to approve the Community Services/Investment Measure until ended by
voters: and
4. Adopt resolutions (Attachments D and E) directing the City Attorney to prepare the impartial
analysis for the ballot measure, setting priorities for filing written arguments, providing for
the filing of rebuttal arguments.
REPORT -IN -BRIEF
SLO Forward is a comprehensive effort to engage with the community about the current and
long-range City services, maintenance and infrastructure needs to maintain and improve San
Luis Obispo's unique character and quality of life. As part of the Fiscal Sustainability and
Responsibility Major City Goal in the 2017-19 Financial Plan to explore various infrastructure
financial plans and options for the City Council, the City conducted a top to bottom review of
infrastructure needs informed by hours of community input during the adoption of various City
plans. The review also showed a financial gap between the type of infrastructure community
members indicated were important and the City's financial ability to deliver those projects.
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After considering several infrastructure financing options including a general sales tax, general
obligation bond and community facilities districts, the City Council directed staff to conduct
public engagement efforts with the community regarding the potential extension and an increase
of the existing Local Revenue Measure (LRM) to support the community's priorities and needs.
The existing LRM is a half (.5)-cent local general sales tax approved by City voters in November
2006 and renewed by City voters in 2014. It protects and maintains essential services and
facilities and is subject to voter extension by 2023. The City Council also appointed Council
Members Pease and Stewart to serve on an ad -hoc subcommittee to help guide the public
engagement efforts. Through these efforts, including two focus groups and two statistically valid
surveys, residents identified their top priorities, a need to maintain and increase the level of City
services and a need to maintain and improve infrastructure.
With the social and economic impacts of the COVID-19 pandemic, the financial gap between
community demand and available resources has only increased. The City is facing a revenue
shortfall of $8.6 million in its General Fund in 2020-21 and is projecting not to return to 2018-19
revenue levels until 2023-24. As part of the adopted 2020-21 Supplemental Budget, the City's
top priority is San Luis Obispo's economic stability, recovery and resiliency. SLO Forward, a
conversation with residents about community priorities, investment and economic recovery, is a
key component of that effort. Based upon recent input from the community about the types of
services, maintenance and infrastructure they value most, the recommendation by the Revenue
Enhancement Oversight Commission (REOC), the results of a recently conducted statistically
relevant survey, the ad hoc subcommittee is recommending to the City Council to submit to the
voters a ballot question on the November 2020 ballot on whether to extend the existing, voter -
approved funding (one-half cent sales and use tax) with an increase of one (I) -cent rate, until
ended by voters.
DISCUSSION
Background
A task of the work plan for the Fiscal Sustainability and Responsibility Major City Goal in the
2017-19 Financial Plan was to explore infrastructure financing options and present those to the
Council for consideration and implementation. On April 17, 2018, the Council received a report
which identified over 70 infrastructure projects anticipated over twenty years as identified in
various approved planning documents.
These documents were adopted through extensive public engagement, advisory body review and
public hearings. The documents included the 1) City's General Plan, 2) Bicycle Transportation
Plan, 3) Downtown Concept Plan and 4) Mission Plaza Concept Plan and other plans and
policies that represent the community' s interest in maintaining the City' s character and quality
of life into the future.
On February 5, 2019, Council received an update on this effort and directed staff to conduct
further public engagement efforts including resident focus groups and a statistically relevant
community survey. Council also directed staff to return to the Council with the results for
consideration. Council appointed an ad hoc subcommittee of Council Members Pease and
Stewart to guide and assist with these efforts.
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An additional item for consideration and direction by Council was to explore the feasibility of
extending and enhancing the existing LRM. The LRM was extended for eight years by voters in
2014, at a .5-cent rate and will expire in 2023 if not renewed by voters. The LRM is critical in
providing the funding for basic levels of service and maintenance of existing infrastructure in the
City.
On December 3, 2019, the Council received a report on the results of the focus groups and
statistically relevant survey and directed staff to continue public education and outreach efforts.
An independent research firm, FM3, conducted two registered voter focus groups in June 2019
and a statistically relevant survey in September 2019.
The following is a summary of the survey results in September 2019:
1. Almost six in ten survey respondents perceive the City needs additional funds to provide the
level of services and infrastructure residents need and want.
2. A majority of survey respondents initially support a conceptual local ballot measure at 63
percent.
3. No statistical difference in support between an extension of the current voter approved Local
Revenue Measure at a 1.5-cent rate or at a 1-cent rate.
Council directed staff to proceed with further public engagement efforts on funding priorities for
the City, including the potential extension of the Local Revenue Measure (Measure G) with an
increase of one (I) -cent with ongoing citizen oversight by the Revenue Enhancement Oversight
Commission. The Council also directed staff to provide an update to the Revenue Enhancement
Oversight Commission and discuss potential roles to support and participate in public
engagement and outreach efforts.
Public Engagement and Outreach Efforts and Impacts of the COVID-19 Pandemic
In January 2020, SLO Forward, a comprehensive effort to engage with the community about the
current and long-range City services, maintenance and infrastructure needs to maintain and
improve San Luis Obispo's unique character and quality of life was launched. The public
engagement efforts included presentations to community groups, advisory bodies, and an online
survey. The results of the online survey (678 responses representing approximately 33 hours of
public comment) showed the following top priorities ranked (1 being the highest priority):
1. Address homelessness
2. Keep public areas safe and clean
3. Preserve open space and natural areas
4. Maintain police, fire/emergency response
5. Protecting long-term fiscal stability
6. Repair streets and potholes
7. Protect creeks from pollution
8. Prepare for wildfires and other natural disasters
9. Help ensure children have safe places to play
IO.Require all funds be used locally to benefit the community
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Public engagement and outreach efforts were put on pause and the online survey was suspended
in late March as the City focused entirely on the response to the COVID-19 pandemic and
continued delivery of essential services to protect the health and safety of the community.
Impacts of the COVID-19 Pandemic
Over the past four months, the world has faced a health and fiscal crisis brought on by the
COVID-19 pandemic that lead to a "shelter at home" order and other mandates that have
significantly reduced most economic activity. For most of that time, all but essential businesses
remained closed. The impacts to businesses and the community have been unprecedented.
The City experienced steep revenue declines in the third and fourth quarter of the FY 2019-20
and projections assume continued declines into FY 2020-21 and beyond as the economy
gradually reopens while local governments prepare for continued in cases and additional surges.
This situation remains dynamic, as the current cases in the community have increased and the
City will continue to take action to slow the spread of the virus. As soon as the City announced
the County's `shelter -at-home" directive, it enacted the Fiscal Health Contingency Plan that
immediately placed a hiring, purchasing and travel chill on all non -essential City operations.
As part of the adoption of the FY 2020-21 Supplemental Budget, the City reduced the General
Fund by $4.7M in operations and revised the planned number of LRM funded projects from 102
to 86, a total reduction of $1.8M. Recognizing the impacts of COVID-19 on the community and
the long -road to recovery, the City Council consolidated the five current Major City Goals into a
single, overarching goal: San Luis Obispo's economic stability, recovery and resiliency. SLO
Forward is an important component of this new goal. With the economic impacts of COVID-19
on City revenues continuing to be analyzed, staff will be returning to the City Council with an
updated, long-term financial outlook and potentially additional service and capital project
reductions in October 2020. The impacts of COVID-19 on City revenues, including the LRM,
increases the importance of SLO Forward with a focus on investment and economic recovery.
To continue that conversation, the City relaunched an updated online survey in June 2020 to
determine if the community's top priorities had changed based upon COVID-19. Due to the
service and economic impacts of COVID-19 on the businesses and community
organizations/non-profits that serve the community's most vulnerable, both of these categories
were added to the updated online survey. Currently, there have been 353 responses, representing
an additional 18 hours of public comment. In total, both online surveys had more than 1,000
responses, representing 51 hours of public comment.
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Below is a comparison of the results from the two online surveys.
Current Online Survey Results
(June 1, 2020 —June] 7, 2020)
1. Keep public areas safe and clean
2. Protecting long-term fiscal stability
3. Preserve open space and natural areas
Previous Online Survey Results
(December 27, 2019 —April 15, 2020)
1. Address homelessness
2. Keep public areas safe and clean
3. Preserve open space and natural areas
4. Programs that support economic recovery 4. Maintain police, fire/emergency response
5. Maintain public safety, fire and emergency 5. Protecting long-term fiscal stability
response
6. Address homelessness
6. Repair streets and potholes
7. Protect creeks from pollution
7. Support community organizations and non- 8 prepare for wildfires and other natural
profits that serve the community's most disasters
vulnerable
8. Prepare for wildfires and other natural 9. Help ensure children have safe places to
disasters play
9. Requiring all funds used locally to benefit 10. Requiring all funds used locally to
the community benefit the community
10. Protect creeks from pollution
11. Repair streets and potholes
12. Help ensure children have safe places to
play
The results of the current online survey show that four of the top five priorities, with the
exception of addressing homelessness, are consistent with the previous online survey results.
Again, the online survey is not statistically relevant, but does provide another opportunity to
gather input on community members' highest priorities related to City services, maintenance and
infrastructure that could be supported through an extension and increase of the current revenue
measure.
To gather a more precise perspective of community members' priorities and the viability of
extending and increasing the LRM, a statistically relevant follow-up survey was conducted in
June 2020. The purpose of the follow-up survey is to measure if the sentiment of registered
voters who live in the City has changed since the previous survey conducted in September 2019.
The following is a summary of the survey completed in June 2020:
June 2020 Statistically Valid Survey
1. Need for Additional Funds for Services and Infrastructure
In 2020, almost seven -in -ten think the City had a great or some need for additional funds to
provide the level of City services and infrastructure that residents need and want, an overall
increase of 10 percentage points since 2019.
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2019
Great need = 21% Great/
Some Need
Some need 39% 59%
Little need 13% Little/
No Real Need
No real need M 20% 33%
Don't know, 8%
2020 J
31% Great/
Some Need
38% 69%
11°lo Little/
No Real Need
■ 11fo 22%
9%
2. Tested Draft Ballot title and Summary
Based upon public input from the focus groups, the statistically relevant survey completed in
2019, the ad hoc subcommittee, and in accordance with elections regulations limiting the
wording of the ballot statement to 75 words ("City of San Luis Obispo" as one word), the
following ballot was tested in June, 2020.
City of San Luis Obispo Community Services/Investment - Shall an ordinance to provide
funding to protect City of San Luis Obispo's long-term financial stability; maintain fire,
public safety, health emergency, disaster preparedness response; address homelessness; keep
public areas clean/safe; help local businesses; repair streets; protect creeks from pollution;
maintain youth/senior services, open space, parks/other general services by extending
Measure G at a 1.50 rate, providing approximately $21,600,000 annually until ended by
voters; requiring audits/all funds used locally, be adopted?
3. Having read or heard the potential ballot title and summary, a majority of survey respondents
initially supported the local ballot measure at 71 %. This is an increase from the previous survey
conducted in September 2019 which had an initial support of 63%, though the language used in
2019 was slightly different.
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Definitely yes
Probablyyes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
2%
38% Total
26% 64% Yes
71%
7%
5%
6%
Total
N
23 %
15%
4. Voter Priorities
High percentages rated maintain fire, public safety, and emergency health response, disaster
preparedness, protecting creeks from pollution, preserving open space and natural areas, helping
fund homeless prevention as the most important features to be included in a possible measure.
Potential Features of the Measure
Rating by
ExtremelyNery
Important
Maintaining fire, public safety and emergency health response
79%
Maintaining disaster preparedness response
75%
Protecting creeks from pollution
74%
Preserving open space and natural areas
73%
Retaining local businesses
73%
Helping fund homeless prevention programs
71 %
Providing support to local non -profits in the City that help those in need of
food
71 %
Keeping ublic areas clean and safe
70%
Providing support to local non -profits in the City that help prevent domestic
violence
66%
Maintaining youth services
64%
Protecting the Ci 's long-term financial stability
64%
Existing Local Revenue Measure (LRM) and Citizen Oversight
The existing LRM was passed by 70 percent of voters in November 2014. The LRM was a
renewal of the City's half -cent sales tax approved in 2006 that focused on the protection and
maintenance of essential services and facilities in the following priorities:
1. Open Space Preservation
2. Bicycle and Pedestrian Improvements
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3. Traffic Congestion Relief/ Safety Improvements
4. Public Safety
5. Neighborhood Street Paving
6. Code Enforcement
7. Flood Protection
8. Parks and Recreation/Senior Programs and Facilities.
9. Other Vital Services and Capital Projects
The funding is generally split with 70 percent supporting capital projects and 30 percent
supporting operations. The LRM has an eight -year sunset, scheduled to expire in spring of 2023.
In 2014, the Council established a citizen advisory body, the Revenue Enhancement Oversight
Commission, to review the half -cent sales tax revenues and expenditures, report on the City's
stewardship of this general purpose tax and provide recommendations directly to the City
Council regarding expenditures of these tax revenues as an integral part of the budget process.
As an advisory body, comprising of five residents, the REOC provides important citizen
oversight of local sales tax revenues and expenditures and serves as a venue for citizen
engagement on the highest priority for the use of the funds. Annual reports showing the audited
expenditures for the Local Revenue Measure since 2014 can be found at
www.slocity.org/budget.
At the June 30, 2020 REOC meeting, staff presented a summary of the results from the public
engagement and outreach efforts. Based upon the results from those efforts, the REOC
recommended that the City Council authorize placing a ballot measure on the November 3, 2020
ballot to extend the existing general sales tax with a one -cent (1) increase, until ended by voters,
provided that there is support shown for the tax in the statistically relevant survey. (Attachment
F) The results of the statistically relevant survey show a majority (71%) of residents support the
measure. As contemplated and if adopted Attachment B, the Revenue Enhancement Oversight
Commission would continue its role of citizen oversight, reporting annually to the community on
the City's use of the revenue, fiscal accountability, receiving public input on the future use of the
revenue and making recommendations to the City Council.
Fiscal Health Response Plan
Similar to other member agencies in Ca1PERS, the City was faced with significant financial
challenges due to increased pension costs. To address these challenges, the City adopted and
implemented the Fiscal Health Response Plan (FHRP) in 2018. The FHRP contained several
components including employees paying more of their retirement costs, operational reductions/
new ways of doing business and revenue options. This has resulted in approximately $8.9M of
annual savings. If the FHRP had not been implemented, the City's financial situation would
have been worse due to the economic impacts of COVID-19 on City revenues.
Benchmark Study
In June 2020, the City published the 2020 Benchmark Study (Attachment G). A benchmark
study helps illustrate how the City of San Luis Obispo is performing compared to similar cities
across a number of performance measures. The benchmark study evaluates the most current data
on financial performance such as revenue diversity, expense allocation, staffing costs, and debt
management.
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Service costs do not always reflect service levels or efficiency, so the study also compares
service outcomes like crime rates, fire response and pavement condition. To ensure consistency
with previous completed benchmark studies, the following eight cities were chosen for
comparison to San Luis Obispo (46,800 residents, General Fund 72AM). The results indicate
that San Luis Obispo is close to the median on most comparisons.
1. Davis (68,700, $69M)
2. Monterey (28,600, $78M)
3. Napa (79,300, $89M)
4. Palm Springs (48,700, $95M)
5. Santa Barbara (94,800, $131M)
6. Santa Cruz (65,800, $104M)
7. Santa Maria (106,600, $72M)
8. Paso Robles (31,200, $37M)
The minimum general sales tax in California is 7.25%, while the average sales tax rate for cities
in the state is 8.66%. All eight benchmark cities have add -on local sales tax measures, and the
remaining five cities in San Luis Obispo County do as well. Of the other six cities in San Luis
Obispo County, five are considering placing an additional, add -on local sales tax ballot measure
on the November 2020 ballot. The City of Pismo Beach has already voted to place a Transient
Occupancy Tax (TOT) measure for November 2020 (a TOT increase would yield roughly the
same amount of revenue as a sales tax would in Pismo Beach given the sales tax base).
CITY
LOCAL SALES TAX RATE
San Luis Obispo
7.75%
Benchmark Cities
Napa
7.75%
Paso Robles
7.75%
Davis
8.25%
Monterey
8.75%
Santa Barbara
8.75%
Santa Maria
8.75%
Pahn Springs
9.25%
Santa Cruz
9.25%
Other Cities in SLO Coun Non -Benchmark
Atascadero
7.75%
Arroyo Grande
7.75%
Grover Beach
7.75%
Morro Bay
7.75%
Pismo Beach
7.75%
Retail Sales Analysis
According to a 2019 sales tax study, approximately 70% of every dollar the City collects in sales
tax is paid by non-residents (Attachment H). Sales tax is the City's top revenue source; about
one-third of total General Fund revenues. San Luis Obispo's strong sales tax revenues are due to
its regional sales draw, tourism, commuters and nearby student shoppers. The additional revenue
paid by the sales tax helps maintain a high level of service for City residents, but also helps the
City mitigate the impacts created by tourists and regional shoppers in the form of more miles
traveled on our roadways, more use of City open space, increased calls for public safety and
medical response, and other associated impacts.
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Procedures Regarding the Adoption of a Community Services/Investment Measure
1. Ballot Measure Language
The following proposed language (Attachment A), as recommended by the Council ad hoc
subcommittee and is similar to the language that was tested in the statistically relevant survey in
June 2020, is being recommended for the ballot measure.
City of San Luis Obispo Community Services/Investment.
Shall an ordinance to provide funding to protect City of San Luis Obispo's financial stability;
maintain fire/community safety, health emergency/disaster preparedness; protect creeks from
pollution; address homelessness; keep public areas clean/safe; retain local businesses;
maintain youth/senior services, streets, open space/natural areas, and other general services,
by extending voter -approved funding at a 1.50 rate, providing approximately $21,600,000
annually until ended by voters; requiring audits/all funds used locally, be adopted?
2. Complete Ordinance and Election Related Resolutions (Attachments A, B, D & E)
The current half -cent general sales tax, referred in the City's Municipal Code as the Essential
Services Measure, is codified as Chapter 3.15. The ballot measure ordinance submitted to the
voters (Attachment B), if approved, will amend the existing chapter with an extension of the
existing, voter -approved half (.5)-cent general sales tax and an increase of the local transactions
(sales) and use tax to one (1) cent for a combined rate at one and half (1.5)-cent rate, until ended
by voters. The previous language in the ordinance, including the establishment of citizen
oversight and independent annual financial audits, remains intact.
Also, attached to this report are election related resolutions for Council's consideration.
Attachment D directs the City Attorney to prepare an impartial analysis of the revenue measure
and sets priorities for arguments. Attachment E is a resolution that establishes the procedures for
rebuttal arguments.
Priorities for Written Arguments
Elections Code Section 9282 sets priorities for filing written arguments and states:
(b) For measures placed on the ballot by the legislative body, the legislative body, or any
member or members of the legislative body authorized by that body, or any individual voter
who is eligible to vote on the measure, or bona fide association of citizens, or any
combination of voters and associations, may file a written argument for or against any city
measure.
Based on dates established by State election law, primary ballot arguments would have to be
submitted to the City Clerk no later than 5:00 p.m. on Tuesday, July 31, 2020. The Elections
Code establishes a 300-word limit for primary arguments and also establishes priorities for
selecting arguments. The public examination period for these arguments would be from August 7
through August 17, 2020.
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It is recommended that the Council appoint an ad hoc subcommittee consisting of two of its
members to prepare and submit ballot arguments and rebuttal arguments, if warranted. (Note:
public funds may not be used for these purposes. These committee members will meet on their
own time and not utilize City resources.
The Elections Code allows the City Council to adopt provisions to permit rebuttal arguments to
be filed. These provisions must be adopted at the same meeting at which the election is called.
The deadline for submitting rebuttal arguments is dictated by State election law and would be
5:00 p.m. on Thursday, August 6, 2020.
Public Review Period and Deadlines
Election Code Section 9295 provides that the Election Official shall allow a 10-calendar day
public examination period immediately following the filing deadline for submission of specified
official election materials (i.e., arguments, rebuttals, analysis). During that 10-calendar day
period, any voter of the City or the Election Official may seek court action to require any or all
such materials be amended or deleted.
Deadlines for Filing the Impartial Analysis and Arguments
The following deadlines have been established by the City Clerk for the submission of the
impartial analysis, primary arguments in favor and against, and rebuttal arguments:
July 23, 2020 at 5:00 p.m. — Final Impartial Analysis Due
July 31, 2020 at 5:00 p.m. — Primary Arguments For or Against a Measure Due
August 6, 2020 at 5:00 p.m. — Last day to file Rebuttal Arguments For or Against a Measure
August 17, 2020 — Final Day of Ten Day Public Review Period
Education and Outreach
If the Council places this measure on the ballot, staff intends to conduct education and outreach
consistent with what is allowed by law. Staff intends to continue to publish materials such as
answers to frequently asked questions, provide mail by vote information given likely voting
conditions with the pandemic, place informational content on the City's website, and respond to
requests for presentations and additional information. Should the Council wish staff to approach
this measure in a different manner, further direction should be provided.
Previous Council or Advisory Body Action
1. June 30, 2020 — Revenue Enhancement Oversight Commission
2. December 3, 2019 — Resident Focus Groups and Survey Results Regarding Funding
Priorities and Potential Local Revenue Options
3. June 18, 2019 - Adoption of the 2019- 21 Financial Plan and the Major City Goal: Fiscal
4. Sustainability and Responsibility
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5. February 5, 2019 - Potential Next Steps Regarding the Funding the Future Initiative
6. April 17, 2018 - Future SLO Capital Improvement Program
7. January 16, 2018 - Council review of 10-Year Capital Improvement Plan and funding options
8. December 12, 2017 - Budget Foundation: Fiscal Health Response Plan
Policy Context
The Major City Goals for the 2017-19 and 2019-21 Financial Plans include the Fiscal
Sustainability and Responsibility goal. Specifically, the 2019-21 goal states to `Continue to
implement the City's Fiscal Responsibility Philosophy with a focus on efficiencies, strategic
economic development, unfunded liabilities, and infrastructure financing (Funding the Future).'
Should the ballot question be approved by the voters in the November 2020 election, Chapter
3.15 would be amended with the Community Services and Investment Local Transactions
(Sales) and Use Tax.
Public Engagement
Public engagement with the community was completed through several means, including 22
presentations to residents, community groups and advisory bodies, focus groups, two statistically
valid surveys, and two online surveys. The statistically valid surveys were completed by 976
San Luis Obispo registered voters. The online surveys received 1,011 responses, representing
approximately 33 hours of public comment. Prior to the COVID-19 pandemic, the presentations
were conducted in person with the presentations transitioning to virtual meetings during the
pandemic. In addition, the presentation was recorded and provided both on the online survey
and the City's website. To gain additional awareness about the online surveys, the City placed
advertisements in local newspapers, radio, and on its social media channels.
CONCURRENCE
The City Attorney's Office has reviewed the resolutions and ordinance and concurs with the
language provided.
ENVIRONMENTAL REVIEW
The resolutions and ordinance have been reviewed for compliance with the California
Environmental Quality Act (CEQA), and the CEQA guidelines and have been found to be
exempt pursuant to Sec. 15801(b)(3)(general rule) and Sec. 15378(b)(4) of the CEQA guidelines.
The transactions (sales) and use tax proposed by the resolutions and ordinance is a general tax
that can be for any legitimate governmental purpose and is not a commitment to any particular
action. The passage of the resolution and ordinance will not have a significant physical impact
on the environment.
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FISCAL IMPACT
Budgeted: Yes Budget Year: 2020-21
Funding Identified: Yes
Fiscal Analysis:
Funding Sources
Current FY Cost
Annualized
On -going Cost
Total Project
Cost
General Fund
$10,000
$10,000
State
Federal
Fees
Other:
Total
10,000
$10,000
The cost to place this revenue measure on the ballot is estimated to be $10,000, however, due to
the County Clerk -Recorder formula for sharing election costs among the cities in the County, the
actual cost will not be known until after the election. Should the cost of the election exceed the
budgeted amount, staff may bring forth a budget request as part of the 2020-21 Mid -Year
Budget.
ALTERNATIVES
The Council may choose to not place the ballot measure before the voters. Staff does not
recommend this based upon results of the public engagement and outreach efforts with the
community regarding their priorities, focus groups, and two statistically relevant surveys that
show a majority of support for the proposed revenue measure. If new revenues are not
identified, it is clear that the City will have a significant and unavoidable gap to fund
infrastructure and services and may otherwise will need to 1) reduce service levels 2) reduce
planned infrastructure and 3) adjust maintenance levels.
The Council has full discretion over the decision to move forward with the recommended action.
If the Council would like to make changes, staff will work with Council and respond to any
changes needed to move the item forward. Council should be aware that the deadline for placing
a new measure on the ballot is August 7, 2020.
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Attachments:
a - Draft Resolution - Extension of the Local Transactions & Use Tax
b - Draft Ordinance - Amending Municipal Code Chapter 3.15 (Essential Services
Trasaction & Use Tax)
c - Legislative Draft of Proposed Amendments to SLOW Chapter 3.15
d - Draft Resolution - Impartial Anaylsis and Priorities for Arguments
e - Draft Resolution - Enabling Rebuttal Arguments
f - REOC Draft Minutes of June 30, 2020
g - 2020 Benchmark Study
It - San Luis Obispo Retail Analysis
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RESOLUTION NO. (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, CALLING AND GIVING NOTICE OF THE
HOLDING OF A GENERAL MUNICIPAL ELECTION TO BE HELD
TUESDAY, NOVEMBER 3, 2020, FOR SUBMITTING TO THE VOTERS
A QUESTION WHETHER TO EXTEND THE EXISTING, VOTER -
APPROVED LOCAL TRANSACTION (SALES) AND USE TAX AT A 1.5¢
RATE, UNTIL ENDED BY VOTERS AND CONTINUE THE VITAL ROLE
OF THE CITIZENS REVENUE ENHANCEMENT COMMISSION TO
ENSURE FUNDS ARE SPENT CONSISTENT WITH COMMUNITY
PRIORITIES
WHEREAS, a General Municipal Election on November 3, 2020, has been called for the
purpose of the election of officers by Resolution No. 11143 (2020 Series), adopted on July 7, 2020;
and
WHEREAS, the Elections Code and applicable local law provide the Council with the
authority to submit a ballot measure to the electorate; and
WHEREAS, the City Council desires to request the voters of San Luis Obispo to extend
and enhance Measure G (2014) locally -controlled funding by enacting an additional one (I) -cent
Local Transactions and Use Tax (Sales Tax) for a combined rate of one and half (1.5)-cent to
remain in effect until ended by voters; and
WHEREAS, in 2014, over 70% of San Luis Obispo voters approved a renewal of a local
transaction (sales) and use tax funding measure known as Measure G, providing a reliable source
of locally controlled funding that cannot be taken away by the state; and
WHEREAS, this voter -approved local funding has provided essential services and
maintained City facilities, including preserving open space, fire and community safety, street and
pothole repairs and other vital services and capital improvement projects that protect our local
quality of life; and
WHEREAS, approximately 70% of sales tax revenue collected by San Luis Obispo is
generated by tourists and visitors to our City, ensuring that visitors are paying their fair share to
use our community resources and infrastructure; and
WHEREAS, over the past year, City staff have engaged and received input from over a
thousand community members on their top priorities and needs; and
WHEREAS, the overwhelming majority of residents expressed a desire to maintain and
extend Measure G's locally -controlled funding; and
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WHEREAS, one in every two calls to the San Luis Obispo Fire Department are requests
to respond to medical emergencies or rescues, and locally -controlled funding is critical to continue
to maintain firefighter -paramedic staffing, infrastructure, life-saving/personal protective
equipment, and communications technology to save lives in any type of natural disaster or
emergency; and
WHEREAS, the impacts of coronavirus (COVID-19) on the local economy, including loss
of jobs and closure of businesses, may take years to recover from. A reliable, local funding source
will help invest in the businesses in our city and our downtown area through economic recovery
programs like Shop Local and local business financing, to make it easier to help businesses thrive
and retain and hire more local employees; and
WHEREAS, homelessness is a growing problem in San Luis Obispo and this measure will
allow the City to provide ongoing and new resources, for which the City does not receive any
significant direct county, state, or federal funding, to assist residents and families who are
experiencing homelessness or are on the verge of being homeless, while ensuring our public areas
are clean, safe and secure for everyone; and
WHEREAS, maintaining and protecting creeks from pollution, preserving and
maintaining open space, parks and other natural areas; providing youth and senior services and
helping local businesses will support San Luis Obispo's economic recovery, stability and
resiliency efforts; and
WHEREAS, any extension and enhancement of existing, voter -approved funding will
continue to require a citizen revenue enhancement oversight commission, mandatory financial
audits, and yearly reports to the community to ensure that funds are spent consistent with
community priorities, and this type of sales tax is not applied to prescription medication or food
purchased as groceries.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo, as follows:
SECTION 1. That the City Council, pursuant to its right and authority, does order
submission to the voters at the General Municipal Election on Tuesday, November 3, 2020, the
following question:
City of San Luis Obispo Community Services/Investment.
Shall an ordinance to provide funding to protect City of San Luis
Obispo's financial stability; maintain fire/community safety, health YES
emergency/disaster preparedness; protect creeks from pollution;
address homelessness; keep public areas clean/safe; retain local
businesses; maintain youth/senior services, streets, open space/natural
areas, and other general services, by extending voter -approved funding NO
at a 1.5¢ rate, providing approximately $21,600,000 annually until
ended by voters; requiring audits/all funds used locally, be adopted?
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SECTION 2. That the proposed complete text of the ordinance submitted to the voters is
attached as Exhibit A to this resolution, and a summary shall be published as part of the ballot
materials, and a complete copy shall be made available for public review in the office of the City
Clerk.
SECTION 3. In all particulars not recited in this resolution, the election shall be held and
conducted as provided by state law, governing the conduct of municipal elections, unless provided
otherwise by local Charter or ordinance.
SECTION 4. Notice of the time and place of holding the election is hereby given and the
City Clerk is authorized, instructed and directed to give further notice or additional notice of the
election, in time, form and manner as required by law.
SECTION 5. That the ballots to be used at the election shall be in form and content as
required by law.
SECTION 6. The City Clerk is hereby directed to file a certified copy of this resolution
with the San Luis Obispo County Board of Supervisors and Clerk -Recorder.
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SECTION 7. That the City Clerk shall certify to the passage and adoption of this
resolution.
Upon motion of Council Member , seconded by Council
Member , and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2020.
Mayor Heidi Harmon
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on
Teresa Purrington, City Clerk
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EXHIBIT A
ORDINANCE NO. (2020 SERIES)
AN ORDINANCE OF THE CITY COUNCIL AND THE PEOPLE OF THE
CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING EXISTING
CHAPTER 3.15 (ESSENTIAL SERVICES TRANSACTIONS (SALES) AND
USE TAX OF THE SAN LUIS OBISPO MUNICIPAL CODE AND
REENACTING IN FULL AMENDED CHAPTER 3.15 (COMMUNITY
SERVICES AND INVESTMENT) IMPOSING A TRANSACTIONS (SALES)
AND USE TAX TO BE ADMINISTERED BY THE CALIFORNIA
DEPARTMENT OF TAX AND FEE ADMINISTRATION
WHEREAS, in 2006, the voters of San Luis Obispo approved the San Luis Obispo
Essential Services Measure (also commonly known as Measure Y, its 2006 ballot designation)
with 64.77% of the vote, establishing a half -cent per dollar local transaction (sales) and use tax to
address fiscal challenges including State takeaways totaling more than $22 million over the prior
15 years, and ongoing State funding reductions of $3 million annually; and
WHEREAS, in 2014, the voters of San Luis Obispo approved the San Luis Obispo
Essential Services Measure (also commonly known as Measure G, its 2014 ballot designation)
with 70.32% of the vote, renewing the half -cent per dollar local transaction (sales) and use tax to
continue protecting and maintaining essential services and facilities, to end March 31, 2023 unless
renewed by voters; and
WHEREAS, the revenue from Measure G has funded approximately 30% of essential
services and 70% of maintaining City facilities but has not been sufficient to fund the level of
services, maintenance, and infrastructure improvements the community has identified as priorities;
and
WHEREAS, one in every two calls to the San Luis Obispo Fire Department are responses
to medical emergencies or rescues, and locally -controlled funding is critical to maintain firefighter -
paramedic staffing, infrastructure, life-saving/personal protective equipment, and communications
technology to save lives in any type of natural disaster or emergency; and
WHEREAS, the impacts of coronavirus on the City's local economy, including loss of
jobs and business closures, may take years to recover from and a reliable source of local funding
will assist in businesses and downtown investment through economic recovery programs like Shop
Local; and
WHEREAS, the City's Essential Services Transaction (Sales) and Use Tax includes
substantial accountability measures including: requirements for independent annual financial
audits; integration of use of funds into the City's budget and goal -setting process; annual
community reports; and annual citizen engagement meetings; and
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WHEREAS, the City's Essential Services Transaction (Sales) and Use Tax also includes
an additional accountability measure, a Citizen's Revenue Enhancement Oversight Commission,
to increase transparency and accountability and to ensure the expenditure of revenue measure
funds in alignment with evolving community priorities, as defined through citizen engagement and
City Council direction; and
WHEREAS, approximately 70% of sales tax revenue collected by San Luis Obispo is
generated by tourists, visitors, and commuters ensuring that visitors are paying their fair share to
use the City's community resources and infrastructure; and
WHEREAS, the City's existing Essential Services Transactions (Sales) and Use Tax
Ordinance is found in Chapter 3.15 of the City's Municipal Code; and
WHEREAS, Section 3.15.030 of this Chapter sets forth an expiration date of March 31,
2023, at which time Chapter 3.15 will expire, unless extended by the voters of the City at an
election called for that purpose; and
WHEREAS, this proposed Measure G extension and enhancement will continue to require
substantial accountability measures including: requirements for independent annual financial
audits; integration of use of funds into the City's budget and goal -setting process; annual
community reports; annual citizen engagement meetings; and the oversight role of the Citizen's
Revenue Enhancement Oversight Commission; and
WHEREAS, the COVID-19 pandemic's economic impacts on the community, local
businesses, and City finances is unprecedented and an extension of Measure G and enhancement
of the existing local transactions (sales) and use tax by an additional one (I) -cent per dollar for a
total rate at one and half (1.5)-cents per dollar will protect and improve the level of City services,
and maintenance and improvements to infrastructure the community values most; and
WHEREAS, the funding will support San Luis Obispo's economic recovery, stability and
resiliency to protect and maintain residents' quality of life.
NOW, THEREFORE, BE IT ORDAINED by the Council and the People of the City of
San Luis Obispo, as follows:
SECTION 1. Chapter 3.15 of the City's Municipal Code is hereby amended and re-enacted
in full to read as follows:
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Chapter 3.15
COMMUNITY SERVICES AND INVESTMENT TRANSACTIONS (SALES) AND USE
TAX
3.15.010 Title.
This chapter shall be known as the "City of San Luis Obispo community services and investment
transactions (sales) and use tax ordinance." The City of San Luis Obispo hereinafter shall be called
the "City." This chapter shall be applicable in the incorporated territory of the City.
3.15.020 Purpose.
This chapter is adopted to achieve the following, among other general municipal purposes, and
directs that the provisions hereof be interpreted in order to accomplish those purposes:
A. To provide funding to protect City of San Luis Obispo's financial stability; maintain fire,
community safety, health emergency, disaster preparedness; protect creeks from pollution, address
homelessness; keep public areas clean/safe; retain local businesses; repair streets; maintain
youth/senior services, streets, open space/natural areas, and other general services by extending an
existing, voter -approved, general purpose retail transactions (sales) and use tax of one-half (.5)
cent per dollar and enhancing the local transactions (sales) and use tax by an additional one (1)
cent per dollar; at a total rate of one and one half (1.5) cent per dollar (1.50% of the gross receipts)
in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of
the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2, which authorizes
the City to adopt this general purpose tax chapter, which shall be operative if two-thirds of the
council and a majority vote of the electors voting on the measure vote to approve the extension
and enhancement of this general purpose revenue source at an election called for that purpose.
B. To adopt a retail transactions and use tax chapter that incorporates provisions identical to those
of the transactions and use tax law of the state of California insofar as those provisions are not
inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the
Revenue and Taxation Code.
C. To adopt a retail transactions and use tax chapter that imposes a tax and provides a measure
therefor that can be administered and collected by the California Department of Tax and Fee
Administration in a manner that adapts itself as fully as practicable to, and requires the least
possible deviation from, the existing statutory and administrative procedures followed by the
California Department of Tax and Fee Administration in administering and collecting the
California State sales and use taxes.
D. To adopt a retail transactions and use tax chapter that can be administered in a manner that
will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of
the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes,
and at the same time minimize the burden of recordkeeping upon persons subject to taxation under
the provisions of this chapter.
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3.15.030 Termination Date.
The authority to levy the tax imposed by this chapter shall expire when ended by the voters of the
City.
3.15.040 Fiscal accountability provisions —Citizen oversight and independent annual
financial audits.
Along with the City's ongoing commitment to citizen involvement as a fundamental principle of
good government, specific citizen oversight and fiscal accountability provisions are hereby
established as follows:
A. Revenue Enhancement Oversight Commission. A citizen's commission will be established to
provide transparency and maximize city accountability. The commission will be responsible for
reviewing and making budget recommendations directly to the city council regarding expenditures
from the essential services transactions (sales) and use tax and reporting annually to the community
on the City's use of these tax revenues.
B. Accounting and Tracking Expenditures. The funds collected through the City of San Luis
Obispo essential services transactions (sales) and use tax ordinance shall be accounted for and
tracked by the City treasurer separately to facilitate citizen oversight.
C. Independent Annual Financial Audit. The amount generated by this general-purpose revenue
source and how it was used shall be included in the annual audit of the City's financial operations
by an independent certified public accountant.
D. Integration of the Use of Funds into the City's Budget and Goal -Setting Process. The
estimated revenue and proposed use of funds generated by this measure shall be an integral part of
the City's budget and goal -setting process, and significant opportunities will be provided for
meaningful participation by citizens in determining priority uses of these funds.
E. Annual Community Report. A written report shall be reviewed at a public meeting by the
revenue enhancement oversight commission, and a summary will be provided annually to every
household in the community detailing how much revenue is being generated by the measure and
how funds are being spent.
F. Annual Citizen Oversight Meeting. An invitation will be extended each year to the entire
community inviting them to participate in a forum to review and discuss the use of the revenue
generated by this measure. City staff will also be available to meet with any group that requests a
specific briefing with their members to discuss and answer questions about the revenues generated
by the measure and their uses.
3.15.050 Transactions (sales) tax rate.
For the privilege of selling tangible personal property (physical merchandise) at retail, a tax is
hereby imposed upon all retailers in the incorporated territory of the City at the total rate of one
and one half percent (1.5%) of the gross receipts of any retailer from the sale of all tangible
personal property sold at retail in said territory on and after the operative date of this chapter, prior
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to which the tax rate shall be as previously imposed by voter approval of Measure G (November
2014).
3.15.060 Use tax rate.
An excise tax is hereby imposed on the storage, use or other consumption in the City of tangible
personal property (physical merchandise) purchased from any retailer for storage, use or other
consumption in said territory at the rate of one and one half percent (1.5%) of the sales price of
the property on and after the operative date of this chapter, prior to which the tax rate shall be as
previously imposed by voter approval of Measure G (November 2014). The sales price shall
include delivery charges when such charges are subject to state sales or use tax, regardless of the
place to which delivery is made
3.15.070 Operative date.
"Operative date" means the first day of the first calendar quarter commencing more than one
hundred ten days after the adoption of the ordinance codified in this chapter.
3.15.080 Contract with state.
Prior to the operative date, the City shall contract with the California Department of Tax and Fee
Administration to perform all functions incident to the administration and operation of this
transactions and use tax chapter; provided, that if the City shall not have contracted with the
California Department of Tax and Fee Administration prior to the operative date, it shall
nevertheless so contract and, in such a case, the operative date shall be the first day of the first
calendar quarter following the execution of such a contract.
3.15.090 Place of sale.
For the purposes of this chapter, all retail sales are consummated at the place of business of the
retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-
of-state destination or to a common carrier for delivery to an out-of-state destination. The gross
receipts from such sales shall include delivery charges, when such charges are subject to the state
sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no
permanent place of business in the state or has more than one place of business, the place or places
at which the retail sales are consummated shall be determined under rules and regulations to be
prescribed and adopted by the California Department of Tax and Fee Administration.
3.15.100 Adoption of provisions of state law.
Except as otherwise provided in this chapter and except insofar as they are inconsistent with the
provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of
Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are
hereby adopted and made a part of this chapter as though fully set forth herein.
3.15.110 Limitations on adoption of state law and collection of use taxes.
In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
A. Wherever the state of California is named or referred to as the taxing agency, the name of this
City shall be substituted therefor. However, the substitution shall not be made when:
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1. The word "state" is used as a part of the title of the State Controller, State Treasurer,
State Board of Control, California Department of Tax and Fee Administration, State
Treasury, or the Constitution of the State of California.
2. The result of that substitution would require action to be taken by or against this City
or any agency, officer, or employee thereof rather than by or against the California
Department of Tax and Fee Administration, in performing the functions incident to the
administration or operation of this chapter.
3. In those sections, including, but not necessarily limited to, sections referring to the
exterior boundaries of the state of California, where the result of the substitution would be
to:
a. Provide an exemption from this tax with respect to certain sales, storage, use or
other consumption of tangible personal property which would not otherwise be
exempt from this tax while such sales, storage, use or other consumption remain
subject to tax by the state under the provisions of Part 1 of Division 2 of the
Revenue and Taxation Code; or
b. Impose this tax with respect to certain sales, storage, use or other consumption
of tangible personal property, which would not be subject to tax by the state under
the said provision of that code.
4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or
6828 of the Revenue and Taxation Code.
B. The word "City" shall be substituted for the word "state" in the phrase "retailer engaged in
business in this state" in Section 6203 and in the definition of that phrase in Section 6203.
3.15.120 Permit not required.
If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation
Code, an additional transactor's permit shall not be required by this chapter.
3.15.130 Exemptions and exclusions.
The following transactions shall be exempted and excluded:
A. There shall be excluded from the measure of the transactions tax and the use tax the amount
of any sales tax or use tax imposed by the state of California or by any City, City and county, or
county pursuant to the Bradley -Burns Uniform Local Sales and Use Tax Law or the amount of any
state -administered transactions or use tax.
B. There are exempted from the computation of the amount of transactions tax the gross receipts
from:
1. Sales of tangible personal property, other than fuel or petroleum products, to operators
of aircraft to be used or consumed principally outside the county in which the sale is made
and directly and exclusively in the use of such aircraft as common carriers of persons or
property under the authority of the laws of this state, the United States, or any foreign
government.
2. Sales of property to be used outside the City which is shipped to a point outside the
City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent,
or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the
purposes of this section, delivery to a point outside the City shall be satisfied:
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a. With respect to vehicles (other than commercial vehicles) subject to registration
pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle
Code, aircraft licensed in compliance with Section 21411 of the Public Utilities
Code, and undocumented vessels registered under Division 3.5 (commencing with
Section 9840) of the Vehicle Code by registration to an out -of -City address and by
a declaration under penalty of perjury, signed by the buyer, stating that such address
is, in fact, his or her principal place of residence; and
b. With respect to commercial vehicles, by registration to a place of business out -
of -City and declaration under penalty of perjury, signed by the buyer, that the
vehicle will be operated from that address.
3. The sale of tangible personal property if the seller is obligated to furnish the property
for a fixed price pursuant to a contract entered into prior to the operative date of this
chapter.
4. A lease of tangible personal property, which is a continuing sale of such property, for
any period of time for which the lessor is obligated to lease the property for an amount
fixed by the lease prior to the operative date of this chapter.
5. For the purposes of subsections (13)(3) and (4) of this section, the sale or lease of
tangible personal property shall be deemed not to be obligated pursuant to a contract or
lease for any period of time for which any parry to the contract or lease has the
unconditional right to terminate the contract or lease upon notice, whether or not such right
is exercised.
C. There are exempted from the use tax imposed by this chapter the storage, use or other
consumption in this City of tangible personal property:
1. The gross receipts from the sale of which have been subject to a transactions tax under
any state -administered transactions and use tax ordinance.
2. Other than fuel or petroleum products purchased by operators of aircraft and used or
consumed by such operators directly and exclusively in the use of such aircraft as common
carriers of persons or property for hire or compensation under a certificate of public
convenience and necessity issued pursuant to the laws of this state, the United States, or
any foreign government. This exemption is in addition to the exemptions provided in
Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California.
3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a
contract entered into prior to the operative date of this chapter.
4. If the possession of, or the exercise of any right or power over, the tangible personal
property arises under a lease which is a continuing purchase of such property for any period
of time for which the lessee is obligated to lease the property for an amount fixed by a lease
prior to the operative date of this chapter.
5. For the purposes of subsections (C)(3) and (4) of this section, storage, use, or other
consumption, or possession of, or exercise of any right or power over, tangible personal
property shall be deemed not to be obligated pursuant to a contract or lease for any period
of time for which any party to the contract or lease has the unconditional right to terminate
the contract or lease upon notice, whether or not such right is exercised.
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6. Except as provided in subsection (C)(7) of this section, a retailer engaged in business
in the City shall not be required to collect use tax from the purchaser of tangible personal
property, unless the retailer ships or delivers the property into the City or participates within
the City in making the sale of the property, including, but not limited to, soliciting or
receiving the order, either directly or indirectly, at a place of business of the retailer in the
City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the
City under the authority of the retailer.
7. A retailer engaged in business in the City shall also include any retailer of any of the
following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section
4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section
21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5
(commencing with Section 9840) of the Vehicle Code. That retailer shall be required to
collect use tax from any purchaser who registers or licenses the vehicle, vessel or aircraft
at an address in the City.
D. Any person subject to use tax under this chapter may credit against that tax any transactions
tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for, a
transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect
to the sale to the person of the property the storage, use or other consumption of which is subject
to the use tax.
3.15.140 Amendments.
All amendments subsequent to the effective date of this chapter to Part 1 of Division 2 of the
Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with
Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part
1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a
part of this chapter; provided, however, that no such amendment shall operate so as to affect the
rate of tax imposed by this chapter.
3.15.150 Enjoining collection forbidden.
No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action
or proceeding in any court against the state or the City, or against any officer of the state or the
City, to prevent or enjoin the collection under this chapter, or Part 1.6 of Division 2 of the Revenue
and Taxation Code, of any tax or any amount of tax required to be collected.
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SECTION 2. A summary of this ordinance, together with the names of Council members
voting for and against, shall be published at least five (5) days prior to its final passage, in The
New Times, a newspaper published and circulated in this City. This ordinance shall go into effect
upon adoption by the voters.
INTRODUCED on the 21 st day of July 2020 by the Council of the City of San Luis Obispo
on the following vote:
AYES:
NOES:
ABSENT:
PASSED AND ADOPTED by the Voters of the City of San Luis Obispo on November 3,
2020 by the following vote tally:
AYES:
NOES:
FINALLY ADOPTED following declaration of the vote by the City Council on December
'2020
Mayor Heidi Harmon
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on
Teresa Purrington, City Clerk
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San Luis Obispo Municipal Code Chapter 3.15 — Draft Amendments
Chapter 3.15
ESSE-NTrrrIAL SERVICES COMMUNITY SERVICES AND INVESTMENT
TRANSACTIONS (SALES) AND USE TAX
Sections:
3.15.010 Title.
3.15.020 Purpose.
3.15.030 Eight -year sunset.
3.15.040 Fiscal accountability provisions —Citizen oversight and independent annual financial audits.
3.15.050 Transactions (sales) tax rate.
3.15.060
Use tax rate.
3.15.070
Operative date.
3.15.080
Contract with state.
3.15.090
Place of sale.
3.15.100
Adoption of provisions of state law.
3.15.110
Limitations on adoption of state law and collection of use taxes.
3.15.120
Permit not required.
3.15.130
Exemptions and exclusions.
3.15.140
Amendments.
3.15.150
Enjoining collection forbidden.
3.15.010 Title.
This chapter shall be known as the "City of San Luis Obispo osse-PA a se -v community services and
investment transactions (sales) and use tax ordinance." The City of San Luis Obispo hereinafter shall be called
the "City." This chapter shall be applicable in the incorporated territory of the city.
3.15.020 Purpose.
This chapter is adopted to achieve the following, among other general municipal purposes, and directs that the
provisions hereof be interpreted in order to accomplish those purposes:
A.
,
ineluding
and Aeflities;
sen,iees and
other- vital
general
The San Luis Obispo Municipal Code is current through Ordinance 1681, and legislation passed throug...
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San Luis Obispo Municipal Code Chapter 3.15 — Draft Amendments
tax of one half pe o .* To provide funding to protect City of San Luis Obispo's financial stability; maintain
fire/community safety, health emergency/disaster preparedness; protect creeks from pollution; address
homelessness; keep public areas clean/safe; retain local businesses; maintain youth/senior services, streets,
open space/natural areas, and other general services, by extending an existing, voter -approved, general purpose
retail transactions (sales) and use tax of one-half (.5) cent per dollar and enhancing the local transactions
(sales) and use tax by an additional one (1) cent per dollar; at a total rate of one and one half (1.5,) cent per
dollar (1.50% of the gross receipts), in accordance with the provisions of Part 1.6 (commencing with Section
7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2, which
authorizes the city to adopt this general purpose tax chapter, which shall be operative if two-thirds of the
council and a majority vote of the electors voting on the measure vote to approve the extension and
enhancement of this general purpose revenue source at an election called for that purpose.
B. To adopt a retail transactions and use tax chapter that incorporates provisions identical to those of the
transactions sales and use tax law of the state of California insofar as those provisions are not inconsistent with
the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.
C. To adopt a retail transactions and use tax chapter that imposes a tax and provides a measure therefor that
can be administered and collected by the State Board of E,,, alizatie , California Department of Tax and Fee
Administration in a manner that adapts itself as fully as practicable to, and requires the least possible deviation
from, the existing statutory and administrative procedures followed by the State Board of Equalization
California Department of Tax and Fee Administration in administering and collecting the California State
sales and use taxes.
D. To adopt a retail transactions and use tax chapter that can be administered in a manner that will be, to the
greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation
Code, minimize the cost of collecting the transactions and use taxes, and at the same time minimize the burden
of recordkeeping upon persons subject to taxation under the provisions of this chapter.
3.15.030 Eigh4 yeaf stmset Termination Date.
The authority to levy the tax imposed by this chapter shall expire when ended by voters of the city in eight
years, o amh 31, 2023, tmiessextended by voters.
3.15.040 Fiscal accountability provisions —Citizen oversight and independent
annual financial audits.
Along with the city's ongoing commitment to citizen involvement as a fundamental principle of good
government, specific citizen oversight and fiscal accountability provisions are hereby established as follows:
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A. Revenue Enhancement Oversight Commission. A citizen's commission will be established to provide
transparency and maximize city accountability. The commission will be responsible for reviewing and making
budget recommendations directly to the city council regarding expenditures from the essential services
transactions (sales) and use tax and reporting annually to the community on the city's use of these tax
revenues.
B. Accounting and Tracking Expenditures. The funds collected through the city of San Luis Obispo essential
services transactions (sales) and use tax ordinance shall be accounted for and tracked by the city treasurer
separately to facilitate citizen oversight.
C. Independent Annual Financial Audit. The amount generated by this general purpose revenue source and
how it was used shall be included in the annual audit of the city's financial operations by an independent
certified public accountant.
D. Integration of the Use of Funds into the City's Budget and Goal -Setting Process. The estimated revenue
and proposed use of funds generated by this measure shall be an integral part of the city's budget and goal -
setting process, and significant opportunities will be provided for meaningful participation by citizens in
determining priority uses of these funds.
E. Annual Community Report. A written report shall be reviewed at a public meeting hearing by the revenue
enhancement oversight commission, and a summary will be provided annually to every household in the
community detailing how much revenue is being generated by the measure and how funds are being spent.
F. Annual Citizen Oversight Meeting. An invitation will be extended each year to the entire community
inviting them to participate in a forum to review and discuss the use of the revenue generated by this measure.
City staff will also be available to meet with any group that requests a specific briefing with their members to
discuss and answer questions about the revenues generated by the measure and their uses.
3.15.050 Transactions (sales) tax rate.
For the privilege of selling tangible personal property at (physical merchandise) retail, a tax is hereby imposed
upon all retailers in the incorporated territory of the city at the total rate of one half peee t of the gross
reeds one and one half (1.5%, of the gross receipts of any retailer from the sale of all tangible personal
property sold at retail in said territory on and after the operative date of this chapter, prior to which the tax rate
shall be as previously imposed by voter approval of Measure G (November 20
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3.15.060 Use tax rate.
An excise tax is hereby imposed on the storage, use or other consumption in the city of tangible personal
property (phvsical merchandiselpurchased from any retailer for
storage, use or other consumption in said territory at the rate of one half pereent one and one half (1.5%)of the
sales price of the property on and after the operative date of this chapter, prior to which the tax rate shall be as
previously imposed by voter approval of Measure G (November 2014). The sales price shall include delivery
charges when such charges are subject to state sales or use tax regardless of the place to which delivery is
made.
3.15.070 Operative date.
"Operative date" means the first day of the first calendar quarter commencing more than one hundred ten days
after the adoption of the ordinance codified in this chapter.
3.15.080 Contract with state.
Prior to the operative date, the city shall contract with the State Board of Equalization California Department
of Tax and Fee Administration to perform all functions incident to the administration and operation of this
transactions and use tax chapter; provided, that if the city shall not have contracted with the State Board of
Equalization California Department of Tax and Fee Administration prior to the operative date, it shall
nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter
following the execution of such a contract.
3.15.090 Place of sale.
For the purposes of this chapter, all retail sales are consummated at the place of business of the retailer unless
the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a
common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include
delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which
delivery is made. In the event a retailer has no permanent place of business in the state or has more than one
place of business, the place or places at which the retail sales are consummated shall be determined under rules
and regulations to be prescribed and adopted by the of Equaliza4io California Department of Tax
and Fee Administration.
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3.15.100 Adoption of provisions of state law.
Except as otherwise provided in this chapter and except insofar as they are inconsistent with the provisions of
Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with
Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this
chapter as though fully set forth herein.
3.15.110 Limitations on adoption of state law and collection of use taxes.
In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
A. Wherever the state of California is named or referred to as the taxing agency, the name of this city shall be
substituted therefor. However, the substitution shall not be made when:
1. The word "state" is used as a part of the title of the State Controller, State Treasurer, State Board of
Control, State BoaFd ofE,,ualizatio California Department of Tax and Fee Administration, State
Treasury, or the Constitution of the State of California.
2. The result of that substitution would require action to be taken by or against this city or any agency,
officer, or employee thereof rather than by or against the State Board of Equalization California
Department of Tax and Fee Administration, in performing the functions incident to the administration or
operation of this chapter.
3. In those sections, including, but not necessarily limited to, sections referring to the exterior boundaries
of the state of California, where the result of the substitution would be to:
a. Provide an exemption from this tax with respect to certain sales, storage, use or other
consumption of tangible personal property which would not otherwise be exempt from this tax while
such sales, storage, use or other consumption remain subject to tax by the state under the provisions
of Part 1 of Division 2 of the Revenue and Taxation Code; or
b. Impose this tax with respect to certain sales, storage, use or other consumption of tangible
personal property, which would not be subject to tax by the state under the said provision of that
code.
4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the
Revenue and Taxation Code.
B. The word "city" shall be substituted for the word "state" in the phrase "retailer engaged in business in this
state" in Section 6203 and in the definition of that phrase in Section 6203.
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3.15.120 Permit not required.
If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an
additional transactor's permit shall not be required by this chapter.
3.15.130 Exemptions and exclusions.
The following transactions shall be exempted and excluded:
A. There shall be excluded from the measure of the transactions tax and the use tax the amount of any sales
tax or use tax imposed by the state of California or by any city, city and county, or county pursuant to the
Bradley -Burns Uniform Local Sales and Use Tax Law or the amount of any state -administered transactions or
use tax.
B. There are exempted from the computation of the amount of transactions tax the gross receipts from:
1. Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be
used or consumed principally outside the county in which the sale is made and directly and exclusively in
the use of such aircraft as common carriers of persons or property under the authority of the laws of this
state, the United States, or any foreign government.
2. Sales of property to be used outside the city which is shipped to a point outside the city, pursuant to
the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a
carrier for shipment to a consignee at such point. For the purposes of this section, delivery to a point
outside the city shall be satisfied:
a. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to
Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in
compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered
under Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out -
of -city address and by a declaration under penalty of perjury, signed by the buyer, stating that such
address is, in fact, his or her principal place of residence; and
b. With respect to commercial vehicles, by registration to a place of business out -of -city and
declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that
address.
3. The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price
pursuant to a contract entered into prior to the operative date of this chapter.
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4. A lease of tangible personal property, which is a continuing sale of such property, for any period of
time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the
operative date of this chapter.
5. For the purposes of subsections (13)(3) and (4) of this section, the sale or lease of tangible personal
property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for
which any party to the contract or lease has the unconditional right to terminate the contract or lease upon
notice, whether or not such right is exercised.
C. There are exempted from the use tax imposed by this chapter the storage, use or other consumption in this
city of tangible personal property:
1. The gross receipts from the sale of which have been subject to a transactions tax under any state -
administered transactions and use tax ordinance.
2. Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by
such operators directly and exclusively in the use of such aircraft as common carriers of persons or
property for hire or compensation under a certificate of public convenience and necessity issued pursuant
to the laws of this state, the United States, or any foreign government. This exemption is in addition to the
exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of
California.
3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered
into prior to the operative date of this chapter.
4. If the possession of, or the exercise of any right or power over, the tangible personal property arises
under a lease which is a continuing purchase of such property for any period of time for which the lessee
is obligated to lease the property for an amount fixed by a lease prior to the operative date of this chapter.
5. For the purposes of subsections (C)(3) and (4) of this section, storage, use, or other consumption, or
possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be
obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease
has the unconditional right to terminate the contract or lease upon notice, whether or not such right is
exercised.
6. Except as provided in subsection (C)(7) of this section, a retailer engaged in business in the city shall
not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships
or delivers the property into the city or participates within the city in making the sale of the property,
including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of
business of the retailer in the city or through any representative, agent, canvasser, solicitor, subsidiary, or
person in the city under the authority of the retailer.
7. A retailer engaged in business in the city shall also include any retailer of any of the following:
vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of
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the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or
undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle
Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the
vehicle, vessel or aircraft at an address in the city.
D. Any person subject to use tax under this chapter may credit against that tax any transactions tax or
reimbursement for transactions tax paid to a district imposing, or retailer liable for, a transactions tax pursuant
to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the
property the storage, use or other consumption of which is subject to the use tax.
3.15.140 Amendments.
All amendments subsequent to the effective date of this chapter to Part 1 of Division 2 of the Revenue and
Taxation Code relating to sales and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of
Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the
Revenue and Taxation Code, shall automatically become a part of this chapter; provided, however, that no
such amendment shall operate so as to affect the rate of tax imposed by this chapter.
3.15.150 Enjoining collection forbidden.
No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding
in any court against the state or the city, or against any officer of the state or the city, to prevent or enjoin the
collection under this chapter, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any
amount of tax required to be collected.
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RESOLUTION NO. (2020 SERIES)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, SETTING PRIORITIES FOR FILING WRITTEN
ARGUMENTS REGARDING A CITY MEASURE AND DIRECTING THE
CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS
WHEREAS, a General Municipal Election is to be held in the City of San Luis Obispo,
California, on November 3, 2020, at which time there will be submitted to the voters the following
measure:
City of San Luis Obispo Community Services/Investment.
Shall an ordinance to provide funding to protect City of San Luis
Obispo's financial stability; maintain fire/community safety, health YES
emergency/disaster preparedness; protect creeks from pollution;
address homelessness; keep public areas clean/safe; retain local
businesses; maintain youth/senior services, streets, open space/natural
areas, and other general services, by extending voter -approved funding NO
at a 1.50 rate, providing approximately $21,600,000 annually until
ended by voters; requiring audits/all funds used locally, be adopted?
WHEREAS, Section 9282 of the Election Code of the State of California authorize the
filing of arguments for and against the adoption of said measures and for the City Elections Official
to enclose a printed copy of such arguments with the sample ballot provided to the electors of the
City.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo, as follows:
SECTION 1. That the City Council authorizes (i) all or any members of the City Council,
(ii) a bona fide association of such citizens, (iii) any individual voter eligible to vote on the above
measure or (iv) any combination thereof to file written arguments not exceeding 300 words
regarding the City measure specified above, accompanied by the printed names and signatures of
the authors submitting it, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code
of the State of California and to change the arguments until and including the date fixed by the
City Clerk after which no arguments for or against the City measure may be submitted to the City
Clerk. The arguments shall be accompanied by a "Form of Statement to be Filed by the Authors
of the Argument."
(Council Member in Favor)
(Council Member in Favor)
(Council Member in Favor)
(Council Member in Favor)
(Council Member in Favor)
(Council Member in Against)
(Council Member in Against)
(Council Member in Against)
(Council Member in Against)
(Council Member in Against)
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SECTION 2. All arguments shall be filed with the City Clerk, signed with the printed
name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization,
the name of the organization, and the printed name and signature of at least one of its principal
officers who is the author of the argument. An argument may not be signed by more than five
authors. In case any argument is signed by more than five authors, the signatures of the first five
shall be printed.
SECTION 3. Pursuant to Election Code 9287, in the event more than one argument for or
more than one argument against the ballot measure is submitted to the City Clerk within the time
prescribed, the City Clerk shall select one of the arguments in favor and one of the arguments
against each measure for printing and distribution to the voters. In selecting the argument, the City
Clerk shall give preference and priority, in the order named, to the arguments of the following:
(a) The legislative body, or member or members of the legislative body authorized by
that body;
(b) The individual voter, or bona fide association of citizens, or combination of voters
and associations, who are the bona fide sponsors or proponents of the measure;
(c) Bona fide associations of citizens; and
(d) Individual voters who are eligible to vote on the measure.
SECTION 3. That the City Council directs the City Clerk to transmit a copy of the measure
to the City Attorney who shall prepare an impartial analysis of the measure not exceeding 500
words showing the effect of the measure on the existing law and the operation of the measure. The
analysis shall include a statement indicating whether the measure was placed on the ballot by a
petition signed by the requisite number of voters or by the governing body of the City. The
impartial analysis shall be filed by the date set by the City Clerk for the filing of primary
arguments.
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Resolution No. (2020 Series) Page 3
SECTION 4. That the City Clerk shall certify to the passage and adoption of this resolution
and enter it into the book of original resolutions.
Upon motion of Council Member, seconded by Council Member, and on the following roll
call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of , 2020.
Mayor Heidi Harmon
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on
Teresa Purrington, City Clerk
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RESOLUTION NO. (2020 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, PROVIDING FOR THE FILING OF REBUTTAL
ARGUMENTS FOR CITY MEASURES SUBMITTED AT MUNICIPAL
ELECTIONS
WHEREAS, a General Municipal Election is to be held in the City of San Luis Obispo,
California, on November 3, 2020, at which time there will be submitted to the voters the following
measure:
City of San Luis Obispo Community Services/Investment.
Shall an ordinance to provide funding to protect City of San Luis
Obispo's financial stability; maintain fire/community safety, health YES
emergency/disaster preparedness; protect creeks from pollution;
address homelessness; keep public areas clean/safe; retain local
businesses; maintain youth/senior services, streets, open space/natural
areas, and other general services, by extending voter -approved funding NO
at a 1.50 rate, providing approximately $21,600,000 annually until
ended by voters; requiring audits/all funds used locally, be adopted?
WHEREAS, Section 9285 of the Elections Code of the State of California authorizes the
City Council, by majority vote, to adopt provisions to provide for the filing of rebuttal arguments
for City measures submitted at municipal elections.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo, as follows:
SECTION 1. That pursuant to Sections 9285 of the Elections Code of the State of
California, when the Elections Official has selected the arguments for and against the measure
which will be printed and distributed to the voters, the Elections Official shall send copies of the
argument in favor of the measure to the authors of the argument against, and copies of the argument
against to the authors of the argument in favor immediately upon receiving the arguments.
The author or a majority of the authors of an argument related to a City measure may
prepare and submit a rebuttal argument not exceeding 250 words or may authorize in writing any
other person or persons to prepare, submit, or sign the rebuttal argument.
A rebuttal argument may not be signed by more than five authors. In case any argument is
signed by more than five authors, the signatures of the first five shall be printed.
The rebuttal arguments shall be filed with the City Clerk, signed, with the printed name(s)
and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the
name of the organization, and the printed name and signature of at least one of its principal officers,
not more than 10 days after the final date for filing direct arguments. The rebuttal arguments shall
be accompanied by a "Form of Statement to be Filed by Authors of Argument."
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Resolution No. (2020 Series) Page 2
Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal
argument shall immediately follow the direct argument which it seeks to rebut.
SECTION 2. That all previous resolutions providing for the filing of rebuttal arguments
for city measures are repealed.
SECTION 3. That the provisions of Section 1 shall apply at the next ensuing municipal
election and at each municipal election after that time.
SECTION 4. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original Resolutions.
Upon motion of Council Member , seconded by Council Member
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2020.
Mayor Heidi Harmon
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on
Teresa Purrington, City Clerk
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Item 7
cuxk -0
REVENUE ENHANCEMENT OVERSIGHT COMMISSION
Minutes - DRAFT
Tuesday, June 30, 2020
Regular Meeting of the Revenue Enhancement Oversight Commission
CALL TO ORDER
A Regular Meeting of the San Luis Obispo Revenue Enhancement Oversight Commission was
called to order on Tuesday, June 30, 2020 at 5:32 p.m., by Chair Coates via webinar.
ROLL CALL
Present: Commissioners Jim Haman, Jeannette McClure, Michael Multari, and Chair Chris
Coates
Absent: Vice Chair Ken Kienow
Staff: Deputy City Manager Greg Hermann, Assistant to the City Manager Ryan Betz, and
Deputy City Clerk Kevin Christian
PUBLIC COMMENT ITEMS NOT ON THE AGENDA
None.
--End of Public Comment --
APPROVAL OF MINUTES
1. Consideration of Minutes of the Regular Revenue Enhancement Oversight Commission
Meeting of May 14, 2020:
ACTION: UPON MOTION BY CHAIR COATES SECONDED BY COMMISSIONER
MULTARI, CARRIED 4-0-1, to approve the Minutes of the Regular Revenue Enhancement
Oversight Commission Meeting of May 14, 2020.
DRAFT Minutes Revenue Enhancement Oversight Commission Meeting of June 30, 2020 Page 1
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Item 7
BUSINESS ITEMS
2. Consideration of a Potential General Sales Tax Renewal Measure
Deputy City Manager Greg Hermann and Assistant to the City Manager Ryan Betz provided
a PowerPoint presentation and responded to Commissioner inquiries.
Public Comment
Ken Kienow
--End of Public Comment --
ACTION: UPON MOTION BY COMMISSIONER MULTARI, SECONDED BY
COMMISSIONER McCLURE, CARRIED 4-0-1 to recommend to the City Council that they
authorize placing a ballot measure on the November 3, 2020 ballot to extend the existing half
cent ($0.005) general sales tax with a one cent ($0.01) increase, until ended by voters, provided
that there is support shown for the tax in the survey currently being conducted.
COMMENT AND DISCUSSION
3. Staff Updates
Deputy City Manager Greg Hermann recognized Commissioners Multari and Kienow for their
service on the Commission since its inception.
4. Commission Communications
ADJOURNMENT
The meeting was adjourned at 6:58 p.m.
APPROVED BY THE REVENUE ENHANCEMENT OVERSIGHT COMMISSION: XX/XX/2020
DRAFT Minutes — Revenue Enhancement Oversight Commission Meeting of June 30, 2020 Page 2
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Item 7
CITY OF SHIR LUIS OBISPO
MEASURING OUR
PERFORMANCE
A Fiscal Comparison with
Selected Benchmark Cities
June 2020
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Item 7
Measuring Our Performance
A Fiscal Comparison with Selected Benchmark Cities
PROJECT MANAGER
Ryan Betz, Assistant to the City Manager
CITY STAFF
Derek Johnson, City Manager
Greg Hermann, Deputy City Manager
Jeff Smith, Police Captain
Matt Horn, Public Works Director
Luke Schwartz, Transportation Manager
Jennifer Rice, Transportation Planner/Engineer
Devin Hyfield, Recreation Manager
Miguel Guardado, Information Technology Manager
Shawna Scott, Senior Planner
James Blattler, Administrative Analyst, Fire
Robert Hill, Sustainability & Natural Resources Official
Victoria Tonikian, Interim Executive Assistant to the City Manager /
Fiscal Officer
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TABLE OF CONTENTS
Contents
INTRODUCTION.......................................................................................................................... 1
Factors that Affect Benchmark Comparisons............................................................................. 1
FINANCIAL BENCHMARKS: RESOURCE COMPARISON ................................................... 3
Chart 1: General Fund per Capita............................................................................................... 3
Chart 2: Sales Tax, Property Tax & Transient Occupancy Tax: Percent of Total General Fund
Revenues..................................................................................................................................... 3
Chart 3: Sales Tax Revenues per Capita..................................................................................... 3
Chart 4: Property Tax Revenues per Capita................................................................................ 4
Chart 5: Transient Occupancy Tax (TOT) Revenues per Capita ................................................ 4
Chart 6: Ratio of Fees to Total General Fund Revenues............................................................. 4
FINANCIAL BENCHMARKS: COST COMPARISON.............................................................. 5
Chart 7: Governmental Costs per Capita..................................................................................... 5
Chart 8: General Fund Operating Costs per Capita..................................................................... 5
Chart 9: Percent of Governmental Costs that are Interest Payments .......................................... 5
Chart 10: General Fund Allocations to Public Safety................................................................. 6
Chart 11: General Fund Public Safety Costs per Capita............................................................. 6
Chart 12: General Fund Allocations for General Government ................................................... 6
FINANCIAL BENCHMARKS: STAFFING COMPARISON..................................................... 7
Chart 13: Staffing from General Fund (per 1,000 residents)...................................................... 7
Chart 14: Sworn Police Staff (per 1,000 residents)..................................................................... 7
Chart 15: Sworn Fire Staff (per 1,000 residents served)............................................................. 7
OTHER BENCHMARKS: SERVICE OUTCOMES.................................................................... 8
Chart 16: Violent Crimes (Per 1,000 Residents)......................................................................... 8
Chart 17: Fire Calls for Service (per 1,000 residents)................................................................. 8
Chart 18: Pavement Condition Index.......................................................................................... 8
CONCLUSION............................................................................................................................... 9
BEST MANAGEMENT PRACTICES..................................................................................... 10
SOURCEDATA....................................................................................................................... 10
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The City Council of San Luis Obispo adopted a Major City Goal for Fiscal Sustainability and Responsibility with
a focus on efficiencies, strategic economic development, unfunded liabilities and infrastructure financing.
Developing a benchmark study helps illustrate how the City of San Luis Obispo is performing compared to similar
cities across a number of performance measures. The City is committed to delivering the services, maintenance
and infrastructure improvements the community values most.
This benchmark study evaluates the most current data on financial performance such as revenue diversity, expense
allocation, staffing costs, and debt management. Service costs do not always reflect service levels or efficiency,
so the study also compares service outcomes like crime rates, fire response and pavement condition. The results
indicate that San Luis Obispo is close to the median on most comparisons. To ensure consistency with the 2014
Benchmark Study, the same eight cities were chosen for comparison to San Luis Obispo (population 46,800,
General Fund $72AM).
1. Davis (68,700, $69M)
2. Monterey (28,600, $78M)
3. Napa (79,300, $89M)
4. Palm Springs (48,700, $95M)
5. Santa Barbara (94,800, $131M)
6. Santa Cruz (65,800, $104M)
7. Santa Maria (106,600, $72M)
8. Paso Robles (31,200, $37M)
Each selected city shares many characteristics, including:
1. Full -service city that provides a wide range of core services directly, including police, fire, street
maintenance, planning, and parks and recreation.
2. County seat or largest city in the nearby vicinity.
3. Distinct regional identity separate from a large metropolitan area.
4. Major employment, commercial, cultural and government urban center.
5. Quality of life community.
6. Mid -size city, with populations ranging from 28,000 to 107,000.
7. Implemented or re -authorized a sales tax measure during the past 10 years.
8. College community and/or major tourism.
9. Slow growth: between -0.5% and 1.5% population change from 2018 to 2019.
The objective is to provide a snapshot of how San Luis Obispo measures up to similar cities in California. The
study also provides the opportunity to evaluate San Luis Obispo's revenue sources in comparison with costs,
services and community priorities.
FACTORS THAT AFFECT BENCHMARK COMPARISONS
Accurately measuring benchmarks between San Luis Obispo and the selected cities can be a difficult task.
Comparisons do not tell the entire story because every city differs on a variety of issues, including but not limited
to geography, daytime versus resident population, accounting methods, and fund management.
Introduction Packet Page 90 page 1
Item 7
Geography
Fire service in San Luis Obispo is impacted by mountains, freeways, railroad tracks and other unique
topographical features. To meet the ideal four minute fire response time, the City's Fire Department has to
maintain and staff four separate fire stations, which can inflate costs when compared to other cities with less
challenging geography and/or less fire stations.
Daytime Population
San Luis Obispo's resident population is approximately 46,800, but the City realizes a peak population of 75,000-
90,000 citizens expecting services during "normal business hours." In addition, the peak daytime population of
nearby Cal Poly is 25,000 citizens that are also covered by contract City services, including Fire Department
emergency response service 24 hours a day, seven days a week.
Accounting Methods
Every city budgets and accounts for service costs differently. For example, some cities account for internal
services like printing, fleet maintenance, insurance and information technology using "internal service funds",
which charge user departments for their services. Other cities (like San Luis Obispo) account for internal service
costs in the General Fund and use a cost allocation plan in distributing costs to other departments and funds. For
public services like paving, street lighting, or storm drain maintenance, some cities account for these services in
separate special revenue or enterprise funds, while others account for them solely in their General Fund. The
"General Fund" can be a relative term, and those cities that use separate funds to account for services that others
account for in their General Fund may appear to have lower General Fund costs.
Fund Management
The services that cities provide can be divided into two major groups: governmental and enterprise. Governmental
activities include: police, fire, capital projects, planning and building inspections, street maintenance, recreation
and park maintenance. Governmental activities costs and cash balances are typically tracked using the General
Fund, Capital Outlay Fund, and other miscellaneous funds like Debt Service or Special Revenue Funds.
Enterprise activities are fee -for -service operations ranging from water services to international airports. Enterprise
Funds vary widely which makes them difficult to compare statistically. The majority of financial comparisons
provided in this benchmark study focus on governmental activities since they are more uniform across the sample
cities and consistently reported in a city's Comprehensive Annual Financial Report (CAFR).
Comparison of Enterprise Services provided by Benchmark Cities
Service
San Luis
Obispo
Davis
Monterey
Napa
Palm
Springs
Santa
Cruz
Santa
Barbara
Santa
Maria
Paso
Robles
Water
X
X
X
X
X
X
X
Sewer
X
X
X
X
X
X
X
Parking
X
X
X
X
Transit
X
X
X
X
Golf
X
X
X
X
Solid
Waste
X
X
X
X
X
X
Stormwater
X
X
Marina
X
X
Airport
X
X
Cemetery
X
Presidio
X
Housing
X
X
Introduction Packet Page 91 page 2
Item 7
CHART 1: GENERAL FUND PER CAPITA
Santa Maria
Davis
Napa
Paso Robles
San Luis Obispo
Santa Barbara
Santa Cruz
Monterey
Palm Springs
$500 $1,500 $2,500 $3,500 $4,500
Cities typically have two major governmental funds:
the General Fund and Capital Outlay Fund. Other
minor governmental funds can include Special
Revenue Funds, like a Business Improvement
District, or Debt Service Funds.
The size of San Luis Obispo's General Fund per
capita is the median among benchmark cities. It is
primarily used for operating programs (84%), debt
service (5%), and capital improvement plan (8%)
expenditures.
CHART 2: SALES TAX, PROPERTY TAX & TRANSIENT OCCUPANCY TAX: PERCENT OF TOTAL
GENERAL FUND REVENUES
Davis
Monterey
Santa Cruz
Palm Springs
San Luis Obispo
Santa Barbara
Napa
Paso Robles
Santa Maria
40% 50% 60% 70% 80% 90% 100%
CHART 3: SALES TAX REVENUES PER CAPITA
Davis
Napa
Monterey
Santa Cruz
Santa Maria
Paso Robles
Santa Barbara
San Luis Obispo
Palm Springs
$200 $300 $400 $500 $600 $700 $800 $900
Sales tax, property tax and transient occupancy tax
(TOT) account for at least 40% of total General Fund
revenues in all benchmark cities. These top three
revenues account for only 62% of San Luis Obispo's
General Fund revenues, which implies that there is a
diverse revenue base. This financial risk
management tool allows San Luis Obispo to weather
changes in the economy better than other
municipalities that rely on only a few revenues to
make up most of the total revenue base.
San Luis Obispo has the 2nd strongest sales tax
revenues per capita. It is the City's top revenue
source; about one-third of total General Fund
revenues. The majority of cities have a local add -on
sales tax (Measure G in San Luis Obispo) that
generates local revenue (ranging 0.25% to 2% per
dollar). San Luis Obispo's strong sales tax revenues
are due to its regional sales draw, tourism, and
nearby student shoppers. According to a recent sales
tax study, approximately 70% of every dollar the
City collects in sales tax is paid by non-residents.
Financial Benchmarks Resource Comparison
Packet Page 92 Page 3
Item 7
CHART 4: PROPERTY TAX REVENUES PER CAPITA
Santa Maria
Davis
San Luis Obispo
Monterey
Santa Cruz
Santa Barbara
Paso Robles
Napa
Palm Springs
$100 $200 $300 $400 $500 $600 $700
San Luis Obispo's property tax revenues per capita
are in the lower percentile of benchmark cities.
Proposition 13, adopted by California voters in
1978, limits the amount of annual growth in
assessed values to a maximum of 2% per year. This
makes property tax a relatively static revenue
source that grows slowly as ownerships change and
new property values are assessed.
CHART 5: TRANSIENT OCCUPANCY TAX (TOT) REVENUES PER CAPITA
Davis
Santa Maria
Santa Cruz
San Luis Obispo
Paso Robles
Santa Barbara
Napa
Palm Springs
Monterey
$- $200 $400 $600 $800
TOT revenue is largely generated by visitors staying
in hotels, which can indicate which cities have strong
tourist economies.
TOT is specialized because it focuses on one part of
a local economy: tourism. It is not as broad -based as
sales tax. Significant TOT rate increases would be
needed to generate the same amount of revenue as a
general sales tax; San Luis Obispo's TOT rate would
have to go from 10% to 21.9% to equal revenue from
Measure G. Significant increases to TOT could
create a competitive disadvantage in the local
market.
CHART 6: RATIO OF FEES TO TOTAL GENERAL FUND REVENUES
Palm Springs
Paso Robles
Monterey
Santa Maria
Santa Barbara
San Luis Obispo
Napa
Davis
Santa Cruz
0% 5% 10% 15% 20%
Financial Benchmarks Resource Comparison
This chart shows the comparison of how much
General Fund revenue is generated by service fees
like building permits and business licenses.
Increasing cost recovery through service charges is a
local City Council decision and has historically been
part of San Luis Obispo's budget -balancing strategy.
However, fees should never exceed the actual total
cost of providing services.
Packet Page 93 page 4
Item 7
CHART 7: GOVERNMENTAL COSTS PER CAPITA
Santa Maria
Davis
Paso Robles
Napa
San Luis Obispo
Santa Cruz
Santa Barbara
Palm Springs
Monterey
$200 $700 $1,200 $1,700 $2,200 $2,700
Governmental activities include costs for police, fire,
planning, building inspections, capital projects,
recreation and parks maintenance, and general
government. All of the benchmark cities provide
these essential services.
Enterprise operations (fee for service) costs are not
included in this comparison. What cities choose to
include in enterprise operations varies widely
making it a difficult cost category to evaluate.
CHART 8: GENERAL FUND OPERATING COSTS PER CAPITA
Santa Maria
Davis
Napa
Paso Robles
Santa Barbara
San Luis Obispo
Santa Cruz
Palm Springs
Monterey
$500 $1,000 $1,500 $2,000 $2,500 $3,000
The General Fund is the primary operating fund for
most cities. It is used for essential services (e.g.
public safety, maintenance), but does not include
other governmental activities like capital purchases
and construction projects. Most cities maintain a
separate Capital Outlay Fund for these costs.
CHART 9: PERCENT OF GOVERNMENTAL COSTS THAT ARE INTEREST PAYMENTS
Santa Barbara*
Davis
Santa Maria
Napa
San Luis Obispo
Santa Cruz
Monterey
Paso Robles
Palm Springs
0% 1% 2% 3% 4% 5%
This chart shows a comparison of how much
interest benchmark cities pay on long-term debt.
Cities use debt financing for long-term investments
such as a fire station. Costs for debt obligations
constrain available resources.
Less than 1 % of San Luis Obispo's governmental
costs are interest payments on long-term debt,
which is below the median, and about 3.6% below
benchmark cities on the high end of the spending
range.
*Santa Barbara did not record any interest payments in 2018-19
Financial Benchmarks Cost Comparison Packet Page 94 page 5
CHART 10: GENERAL FUND ALLOCATIONS TO PUBLIC SAFETY
Item 7
Palm Springs
Davis
San Luis Obispo
Paso Robles
Santa Barbara
Santa Cruz
Napa
Monterey
Santa Maria
30% 40% 50% 60% 70%
Public safety costs for police and fire services are the
most significant General Fund allocations in San
Luis Obispo, accounting for about 43% of general
operating costs. When compared to the eight
benchmark cities, San Luis Obispo is below the
median (47%).
San Luis Obispo's public safety allocation is 24%
Police and 19% Fire. This allocation ratio is
consistent with most benchmark cities. The
exceptions are Santa Maria (larger allocation to
police).
CHART 11: GENERAL FUND PUBLIC SAFETY COSTS PER CAPITA
Santa Maria
Paso Robles
San Luis Obispo
Napa
Santa Barbara
Santa Cruz
Palm Springs
Davis
Monterey
$- $500 $1,000 $1,500
San Luis Obispo's police service and fire service
cost per capita is $666. This is below the median.
San Luis Obispo's Fire Department is unique
because it is under contract to serve an area beyond
the City boundaries, the Cal Poly campus. The total
"per capita" number for fire service costs was
increased in Chart 11 by the number of beds on
campus (8,000) to present a more accurate ratio of
public safety costs per total residents served.
CHART 12: GENERAL FUND ALLOCATIONS FOR GENERAL GOVERNMENT
Monterey
Davis
Santa Maria
Santa Barbara
San Luis Obispo
Napa
Palm Springs
Paso Robles
Santa Cruz
5% 10% 15% 20%
Financial Benchmarks Cost Comparison
General government costs include staffing and
resources that support all governmental activities
including City Administration, Attorney's Office,
City Clerk, Information Technology, Finance, and
Human Resources.
General government costs may also support
enterprise activities. San Luis Obispo adopted a cost
allocation plan that reimburses General Fund
from Enterprise Funds for administrative support
costs. The numbers shown in this chart for San Luis
Obispo are net totals after reimbursements.
Packet Page 95 page 6
Item 7
CHART 13: STAFFING FROM GENERAL FUND (PER 1,000 RESIDENTS)
Paso Robles
Napa
Santa Maria
Davis
San Luis Obispo
Santa Barbara
Palm Springs
Santa Cruz
Monterey
2 4 6 8 10 12 14 16 18
Chart 13 compares the number of regular
authorized General Fund staff positions, per
1,000 residents, across all benchmark cities.
San Luis Obispo is below the median
compared to the benchmark cities.
CHART 14: SWORN POLICE STAFF (PER 1,000 RESIDENTS)
Davis
Napa
Paso Robles
Santa Maria
San Luis Obispo
Santa Cruz
Santa Barbara
Monterey
Palm Springs
0.0 0.5 1.0 1.5 2.0
Police staff are a subset of General Fund staffing.
According to the Bureau of Justice Statistics, local
police departments serving populations of 50,000-
99,999 residents employed an average of 1.7
officers per 1,000 residents. San Luis Obispo has
approximately 1.3 officers per 1,000 residents (and
has an even lower ratio if daytime population is
considered).
CHART 15: SWORN FIRE STAFF (PER 1,000 RESIDENTS SERVED)
Santa Maria
Davis
Napa
Santa Cruz
San Luis Obispo
Santa Barbara
Paso Robles
Palm Springs
Monterey
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Fire staff are also a subset of General Fund
staffing. San Luis Obispo Fire Department is
unique because it is under contract to serve an area
beyond the City boundaries, the Cal Poly Campus.
The total number of "residents" was increased in
Chart 15 by the number of beds on campus (8,000)
to present a more accurate ratio of sworn fire staff
per total residents served.
Financial Benchmarks Staffing Comparison Packet Page 96 page 7
Item 7
CHART 16: VIOLENT CRIMES (PER 1,000 RESIDENTS)
Paso Robles
Davis
Napa
Monterey
San Luis Obispo
Santa Barbara
Santa Maria
Palm Springs
Santa Cruz
1.0 2.0 3.0 4.0 5.0 6.0 7.0
According to the FBI, San Luis Obispo is within
the middle range of benchmark cities in terms of
violent crime (murder, manslaughter, rape,
robbery, and aggravated assault. The FBI also
reports that incidences of property crime in San
Luis Obispo are the fifth highest of all benchmark
cities (Santa Maria, Palm Springs, Santa Barbara,
and Santa Cruz are higher).
CHART 17: FIRE CALLS FOR SERVICE (PER 1,000 RESIDENTS)
Davis
Santa Barbara
Santa Cruz
Paso Robles
Napa
San Luis Obispo
Santa Maria
Palm Springs
Monterey
0 50 100 150 200 250 300
CHART 18: PAVEMENT CONDITION INDEX
Napa
Santa Barbara
Davis
Paso Robles
Monterey
Santa Cruz
San Luis Obispo
Santa Maria
40 50 60 70 80 90 100
Fire responses includes hazardous material spills,
vehicle and vegetation fires, heavy rescues,
structure fires and medical emergencies. San Luis
Obispo's low number of responses indicates that
proactive fire prevention activities are working
well. San Luis Obispo's Fire Department is unique
because it serves an area beyond the City
boundaries, the Cal Poly campus.
The Pavement Condition Index (PCI) is a National
standard on a 0-100 scale that indicates the quality
of a city's pavement. Generally, the scale is: 100-
70 Good/Excellent; 50-70 At Risk; 0-50
Poor/Failed. The 2018 California Statewide Local
Roads Needs Assessment concludes the average
California road PCI is 66 (San Luis Obispo was
73). San Luis Obispo's "Good/Excellent" rating is
directly related to the annual average pavement
investment from Measure G sales tax revenues.
Other Benchmarks Service Outcomes Packet Page 97
Item 7
The 2020 Benchmark Study was developed using data primarily from FY 2018-19 and before the COVID-19
pandemic. Despite the social and financial impacts of the pandemic, the City continues to deliver essential
services and maintain facilities. The City's financial operations is at the average operating costs and debt levels.
In some categories, such as fire service, being below average on costs is especially significant given service level
differences among benchmark cities. Santa Maria does not provide advanced life support (paramedic) services,
and Santa Barbara, Santa Cruz, and Napa do not provide advanced life support by all emergency response crews.
Only San Luis Obispo and Paso Robles provide this service by all emergency response crews. The provision of
advanced life support services increases costs related to personnel, training, administration, and equipment, and
approximately 70% of San Luis Obispo's fire emergency response activities are for medical emergencies.
Comparison of service outcomes reveals that San Luis Obispo is among the safest communities in terms of violent
crime and fire emergencies. San Luis Obispo's pavement condition index, an indicator of street quality, is slightly
above the median compared to the benchmark cities. Staffing levels are consistent with benchmark cities as well,
with San Luis Obispo hitting the median in the staffing areas selected for comparison. San Luis Obispo was near
the top of the benchmark range on one item: Sales Tax Revenue per Capita. This result indicates that sales tax is
vital for delivering quality levels of service to the community. According to the 2019-21 City of San Luis Obispo
Financial Plan, 4 1 % of total General Fund revenue comes from sales tax, 28% from property tax, and 13% from
TOT. Approximately 30% of sales tax comes from the local revenue measure (Measure G) that adds a half -percent
to the County sales tax rate. Measure G generates $7-8 million annually or about 12% of total in General Fund
revenue in San Luis Obispo.
All eight benchmark cities have add -on local sales tax measures, and the remaining five cities in San Luis Obispo
County do as well. Six of the eight benchmark cities generate more revenue from property tax and TOT than San
Luis Obispo. As a comparison, the average sales tax rate for cities in the state is 8.66%. The Local Revenue
Measure has been in effect for fourteen years and is set to expire in March 2023. More information on Local
Revenue Measure, including expenditures, public feedback, and timelines, is available at slocity.org_
CITY
ILOCAL SALES TAX RATE
San Luis Obispo
17.75%
Benchmark Cities
Napa
7.75%
Paso Robles
7.75%
Davis
8.25%
Monterey
8.75%
Santa Barbara
8.75%
Santa Maria
8.75%
Palm Springs
9.25%
Santa Cruz
9.25%
Other Cities in SLO Coun (Non -Benchmark)
Atascadero
7.75%
Arroyo Grande
7.75%
Grover Beach
7.75%
Morro Bay
7.75%
Pismo Beach
7.75%
Conclusion
Packet Page 98 Page 9
Item 7
BEST MANAGEMENT PRACTICES
Beyond benchmark comparisons, it is prudent to evaluate whether San Luis Obispo is implementing general
best management practices (BMPs) for local governments. The City has adopted and implemented many BMPs
for financial management, including:
1. Multi -year budgeting
2. Long-term fiscal forecasts
3. Integration of goal -setting into the budget process
4. Development of fiscal contingency plans
5. Use of generally accepted accounting principles and audits by independent certified public accountants
6. Effective ongoing monitoring of our financial condition
7. Long-term capital improvement plans
8. Use of comprehensive fiscal policies as the foundation for decision -making
Many of these BMPs come from Fitch Ratings (one of the "big three" national credit rating agencies), who has
formally integrated them into their rating systems. The City recently received affirmation from the nationally
recognized statistical rating organization Standard & Poor's Ratings (S&P) that City bond ratings remain "AA"
and the rating outlook is stable. S&P's long-term credit ratings are assigned on an alphabetic scale from AAA to
C. The bond rating AA means that the City's investment grade is "quality". The City's 2018 Lease Revenue
Bonds are rated AA, and the City's implied General Obligation bond rating is AA+. Currently, the City of San
Luis Obispo has no general obligation debt.
In reaching its decision, S&P's analysts lauded the City's "excellent financial management." The analysis noted
factors that led to their conclusion including (1) active budget monitoring by the City Council and staff, (2)
comprehensive financial policies, and (3) the use of long-term budget planning to provide a solid framework for
managing financial resources through unexpected budgetary challenges during the economic downturn. S&P
analysts noted that the City has robust fiscal management and recovered quickly from the Great Recession.
SOURCE DATA
• Department of Justice Federal Bureau of Investigation. 2018 Crime in the United States Report.
• California Polytechnic State University. 2014. Cal Poly Quick Facts. http://calpol.
• Cities of Davis, Monterey, Napa, Palm Springs, El Paso de Robles, Santa Barbara, Santa Cruz, Santa Maria,
San Luis Obispo. June 2019. Comprehensive Annual Financial Reports and Budget Documents.
• Strategic Economics. 2020. San Luis Obispo Retail Sales Analysis.
For questions or comments on this benchmark study, please contact Ryan Betz, City of San Luis Obispo
Administration, (805) 781-7589 or rbetz(a�,slocity.org
Conclusion
Packet Page 99Page 10
Item 7
At 6
STRATEGIC EC0N0MIIC5
MEMORANDUM
To: Georgina Bailey, Management Fellow, City of San Luis Obispo
From: Derek W. Braun, Senior Associate
Jesse Brown, Associate
Date: March 18, 2020
Subject: Retail Sales and Leakage Analysis
INTRODUCTION
The City of San Luis Obispo retained Strategic Economics to prepare a retail sales analysis to estimate
the share of retail spending attributable to city residents compared to non-residents. The City
commissioned this analysis in order to inform discussion of renewing or amending the existing, voter -
approved Local Revenue Measure (Measure G) as part of City Council's "SLO Forward" effort.
This memorandum describes the methodology and results of the retail sales analysis for both San Luis
Obispo as a whole and in five subareas of the city. The first section provides a summary of key findings,
and the second describes the retail analysis methodology.
SUMMARY OF FINDINGS
Citywide Findings
Shoppers in San Luis Obispo spent a total of $1.47 billion on taxable and non-taxable retail sales in
2018. Retail sales in the Auto Dealers and Suppliers category accounted for the largest share of sales
(22 percent), followed by Eating and Drinking Places (13 percent) and General Merchandise (13
percent).
Non-resident spending contributed the largest share of retail sales in San Luis Obispo, accounting for
an estimated $1 billion dollars in 2018. As an employment center, tourist destination, and major city
within the region, San Luis Obispo attracts a wide variety of non-residents who purchase goods at retail
establishments within the city. This analysis indicates that 69 percent of retail sales can be attributed
to those living outside the city. Tourists, regional shoppers, and other non-residents generate 54
percent of total retail sales. Those who are employed in the city but do not live in the city account for
a smaller but still notable 15 percent of total spending.
STRATEGIC ECONOMICS 1 2991 SHATTUCK AVE. BERKELEY, CA. 94705 1 510.647.5291
Packet Page 100
Item 7
San Luis Obispo Retail Sales Analysis
FIGURE 1: ESTIMATED SHARE OF RETAIL SPENDING BY GROUP, CITY OF SAN LUIS OBISPO, 2018 (2018 DOLLARS)
Spending Group Annual Retail Share
Spending
Visitors, Regional Shoppers and Other Non -Residents $802,165,751 54%
Residents
Non -Resident Workers
Total
$456,363,155 31%
$217,988,809 15%
$1,476,517,715
Source: HdL, 2018; City of San Luis Obispo, 2018; Strategic Economics, 2020.
FIGURE 2: ESTIMATED SHARE OF RETAIL SPENDING BY GROUP, CITY OF SAN LUIS OBISPO, 2018
Source: HdL, 2018; City of San Luis Obispo, 2018; Strategic Economics, 2020.
Subarea Analysis Findings
Downtown San Luis Obispo is a regional destination that serves city residents, workers, regional
shoppers, and out-of-town visitors. Downtown generated 13 percent of all retail sales in the city in
2018, making it the second largest source of sales among the subareas. 41 percent of the area's
retail sales were generated by Eating and Drinking Places and 24 percent from Apparel Stores. While
the citywide estimate suggests that about half of the spending in these categories comes from visitors,
the share of visitor spending may be higher in Downtown due to its regional draw.
The Los Osos Valley Road Corridor generates the largest share of sales among subareas in the city (36
percent in 2018) and is likely a major source of non-resident spending. 43 percent of retail sales in
the LOVR Corridor came from Auto Dealers and Supplies, a category likely to attract a high share of
spending from non-residents since dealerships draw shoppers from a large regional trade area.
Additionally, the large chain and big box stores in the LOVR Corridor, such as Costco, Target, and Home
Depot, draw from a large trade area and are likely to capture a high share of non-resident spending.
The Madonna Road Area's diverse range of establishments in Furniture and Appliances, Eating and
Drinking Places, Other Retail Stores, and General Merchandise likely serves a mix of both local and
2
Packet Page 101
Item 7
San Luis Obispo Retail Sales Analysis
regional shoppers. The Madonna Road Area is the third largest subarea in terms of retail sales,
generating seven percent of citywide retail sales in 2018.
The Foothill Area's businesses likely serve both resident and non-resident shoppers, including non-
residents passingthrough via Highway 1 and living, working, or visiting at the nearby Cal Poly campus.
The area contains mostly smaller retail businesses located along Foothill Boulevard and within the
University Square Shopping Center. The Foothill Area accounted for three percent of citywide retail
sales in 2018.
Since the Airport Area largely consists of light industrial uses accommodating a wide range of business
types, the area's retail sales are a relatively small share of the area's total sales. The subarea largely
consists of light industrial uses accommodating production, distribution, and repair service
businesses, and airport -related uses such as car rental agencies. While the Airport Area generated
four percent of citywide retail sales in 2018, the exact mix of the area's resident versus non-resident
spending is less certain since the types of businesses vary widely. Retail sales also represent a
relatively small portion of total sales in the Airport Area since 44 percent of the area's 2018 sales tax
revenue was generated in business -to -business sales categories.
3
Packet Page 102
Item 7
San Luis Obispo Retail Sales Analysis
RETAIL SALES ANALYSIS
To estimate the share of retail spending within the City of San Luis Obispo that is attributable to city
residents compared to non-residents, Strategic Economics prepared a retail leakage analysis that
measured the difference between the buying power (demand) of the household population in San Luis
Obispo and the actual sales (supply) in the city limits. This type of analysis allows for an evaluation of
how much local spending is attributable to residents. The following sections describe the methodology
and results of the retail sales analysis, including citywide retail sales, resident spending and non-
resident spending.
Citywide Retail Sales
An estimate of annual citywide retail sales was calculated using data on sales tax revenues in the City
of San Luis Obispo, provided by HdL. The HdL data reflected the local one percent share of total taxable
sales received by the City under the "Bradley -Burns" state sales tax allocation formula.' Therefore,
total taxable sales were estimated by dividing sales tax revenues by one percent. However, not all
items sold are taxable, such as groceries and prescription drugs. To convert taxable sales to total
sales, certain categories were adjusted based on assumptions about the share of non-taxable sales
in those categories.
The estimated retail sales in 2018 for the City of San Luis Obispo total over $1.47 billion. Shoppers
spent the most on Auto Dealers and Supplies, about 22 percent of total sales. Eating and Drinking
Places and General Merchandise represented the next largest categories, followed by Building
Materials and Food stores.
FIGURE 3: CITY OF SAN LUIS OBISPO RETAIL SALES, 2018 (2018 DOLLARS)
Type of Business
Sales Tax
Estimated Sales
Share of Sales
Apparel Stores
$727,348
$72,734,800
5%
Auto Dealers and Supplies
$3,232,724
$323,272,400
22%
Building Materials
$1,622,945
$162,294,500
11%
Drug Stores
$161,988
$24,543,636
2%
Eating and Drinking Places
$1,849,090
$184,909,000
13%
Food Stores
$471,375
$157,125,000
11%
Furniture and Appliances
$1,057,352
$105,735,200
7%
General Merchandise
$1,793,534
$188,793,053
13%
Packaged Liquor
$152,896
$15,289,600
1%
Service Stations
$943,203
$99,284,526
7%
Other Retail Stores
$1,425,360
$142,536,000
10%
Total $13,437,815 $1,476,517,715
Note: The growing popularity of online shopping has negatively impacted sales in traditional retail stores across the nation, while
spending is typically increasing at restaurants, bars, and entertainment venues that provide experiences that cannot be replicated
online.
Source: HdL, 2018; City of San Luis Obispo, 2018; Bureau of Labor Statistics, 2018; Strategic Economics, 2020.
For an explanation of the Bradley -Burns formula, see https://www.cdtfa.ca.00v/taxes-and-fees/local-and-district-taxes.htm
0
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Item 7
San Luis Obispo Retail Sales Analysis
Resident Spending Analysis
This section describes the methodology used to estimate the annual retail spending of residents within
the City of San Luis Obispo. According to U.S. Census American Community Survey 2012-2017
estimates, there are 18,728 households located within the City of San Luis Obispo. These households
were assumed to conduct most of their spending within city limits, including both convenience goods
(daily needs such as food and personal care items) and comparison goods (larger items that are
purchased infrequently, such as furniture, appliances, and clothing).
METHODOLOGY
Retail spending by San Luis Obispo households was calculated by estimating average annual
household spending in the city and multiplying this by the number of households. The methodology,
data sources, and estimated revenues are described below and shown in Figure 4.
• Average annual household spending: The average amount a household spends in each retail
category was estimated using data from the U.S. Bureau of Labor Statistics (BLS) 2017-2018
Consumer Expenditure (CE) Survey. To best approximate household spending patterns in the
City of San Luis Obispo, the analysis used data for the "Western" region and for households
earning between $70,000 to $99,999.
• City capture rate: A city sales capture rate was applied to account for the proportion of
spending that may take place outside San Luis Obispo. The share of spending within the city
was assumed to vary for different retail categories. For example, nearly all of spending on Drug
and Food Stores was assumed to take place within the city, while some spending at Eating and
Drinking Places and Service Stations was assumed to be distributed outside the city due to
travel and vacations.
• Annual spendingfrom households in the city: The total amount of resident spending within the
city was calculated by multiplying the average household spending within the city by the
number of households in the city.
RESULTS: TOTAL RESIDENT SPENDING
San Luis Obispo households were estimated to spend a total of $456 million each year on retail in the
city, with average household spending of $24,368 annually.2 Residents spend the most locally at
grocery and other food retail businesses for preparing food at home, with one -fifth of household
spending in the Food Stores category. Households in San Luis Obispo also spend a significant share
of their total retail spending in the city at businesses in the Eating and Drinking Places (16 percent)
and Auto Dealers and Suppliers categories (15 percent).
2 This does not represent the total amount households spend each year, as housing, healthcare and insurance costs are not included
and can account for a significant share of annual household spending.
5
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Item 7
San Luis Obispo Retail Sales Analysis
FIGURE 4: ESTIMATED HOUSEHOLD SPENDING, CITY OF SAN LUIS OBISPO (2018 DOLLARS)
Type of Business
Average
Spending Per
Household
City Capture
Rate
Average Spending
Per Household in
the City
Annual Spending
Households in
the City
Apparel Stores
$2,213
85%
$1,881
$35,228,304
Auto Dealers and Supplies
$3,926
95%
$3,730
$69,849,822
Building Materials
$619
95%
$588
$11,009,442
Drug Stores
$667
95%
$634
$11,866,997
Eating and Drinking Places
$4,504
85%
$3,828
$71,698,275
Food Stores
$5,431
95%
$5,159
$96,626,180
Furniture and Appliances
$3,198
85%
$2,718
$50,908,322
General Merchandise
$794
85%
$675
$12,639,527
Packaged Liquor
$806
95%
$766
$14,340,030
Service Stations
$2,750
75%
$2,063
$38,626,500
Other Retail Stores
$2,737
85%
$2,326
$43,569,756
Total
$27,645
$24,368
$456,363,155
Source: Bureau of Labor Statistics, 2018; Strategic Economics, 2020.
Note: Total retail household spending does not fully represent total household spending, as housing, healthcare and insurance costs
are not included.
Non -Resident Spending Analysis
Non-resident shoppers include tourists, those who work in San Luis Obispo but do not live in the city,
and residents of the surrounding region. Those residents include students, staff, and faculty of
California Polytechnic State University (Cal Poly) who live on campus or elsewhere outside the city. This
section describes the methodology used to estimate the annual retail spending of non-residents within
the City of San Luis Obispo.
METHODOLOGY
The total amount of spending by non-residents was calculated by subtracting resident spending from
the citywide retail sales as shown in Figure 5.
Total non-resident spending was further segmented to determine the share of non-resident worker
spending. The City of San Luis Obispo is a regional employment center with three-quarters of the
workforce living outside the city limits.3 Based on U.S. Census Longitudinal Employer -Household
Dynamics data for 2017, of the 32,696 individual jobs in San Luis Obispo, 24,831 of associated
workers do not live in the city. These employees likely purchase a variety of goods and services within
the city during their workday.
The estimated amount of retail spending attributable to non-resident workers was calculated using
employee spending patterns data from a national survey conducted in 2011 by the International
Council of Shopping Centers (ICSC).4 Average weekly spending per employee was adjusted to an
annual basis and to 2018 dollars and then multiplied by the number of non-resident workers.
a U.S. Census Bureau, Longitudinal Employer -Household Dynamics (LEND), 2017.
4 Michael P. Niemera and John Connolly, "Office -Worker Retail Spending in a Digital Age," International Council of Shopping Centers,
2012, http://www.icsc.org/srch/rsrch/wp/USSC_Class_091305.pdf
6
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San Luis Obispo Retail Sales Analysis
RESULTS: TOTAL NON-RESIDENT SPENDING
In 2018, non-residents spent over $1 billion in the City of San Luis Obispo. This accounts for 69 percent
of the city's total retail sales. A high share of sales in the Building Materials and General Merchandise
categories are generated by non-residents, as well as over three-quarters of Auto Dealers and Supplies
sales. Non-residents were also estimated to account for a significant share of the spending in Eating
and Drinking Places and Other Retail Stores. Local -serving businesses, such as Food Stores and Drug
Stores, are less dependent on non-resident spending.
FIGURE 5: ESTIMATED NON-RESIDENT SPENDING, CITY OF SAN LUIS OBISPO (2018 DOLLARS)
Type of Business
Citywide Sales
Resident Spending
Non -Resident
Spending
Non -Resident
Share
Apparel Stores
$72,734,800
$35,228,304
$37,506,496
52%
Auto Dealers and Supplies
$323,272,400
$69,849,822
$253,422,578
78%
Building Materials
$162,294,500
$11,009,442
$151,285,058
93%
Drug Stores
$24,543,636
$11,866,997
$12,676,639
52%
Eating and Drinking Places
$184,909,000
$71,698,275
$113,210,725
61%
Food Stores
$157,125,000
$96,626,180
$60,498,820
39%
Furniture and Appliances
$105,735,200
$50,908,322
$54,826,878
52%
General Merchandise
$188,793,053
$12,639,527
$176,153,525
93%
Packaged Liquor
$15,289,600
$14,340,030
$949,570
6%
Service Stations
$99,284,526
$38,626,500
$60,658,026
61%
Other Retail Stores
$142,536,000
$43,569,756
$98,966,244
69%
Total
$1,476,517,715
$456,363,155
$1,020,154,560
69%
Source: HdL, 2018; City of San Luis Obispo, 2018; Strategic Economics, 2020
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San Luis Obispo Retail Sales Analysis
WORKER SPENDING
Those who work in the City of San Luis Obispo but live outside the city limits spent nearly $218 million
in the city in 2018. Non-resident worker spending represents 15 percent of total retail spending in San
Luis Obispo and 21 percent of total non-resident spending in the City.
FIGURE 6: ESTIMATED NON-RESIDENT WORKER SPENDING, CITY OF SAN LUIS OBISPO (2018 DOLLARS)
Annual Per Total Non -Resident
Type of Business Capita Worker Spending
Spending
Apparel Stores
$636
$15,787,547
Auto Dealers and Supplies
$0
$0
Building Materials
$0
$0
Drug Stores
$417
$10,361,430
Eating and Drinking Places
$1,585
$39,346,167
Food Stores
$1,185
$29,421,008
Furniture and Appliances
$490
$12,174,680
General Merchandise
$2,517
$62,509,417
Packaged Liquor
$0
$0
Service Stations
$1,551
$38,517,934
Other Retail Stores
$398
$9,870,625
Total
$8,779
$217,988,809
Source: ICSC, "Office Worker Retail Spending in a Digital Age," 2012; Strategic Economics, 2020
OTHER NON-RESIDENT SPENDING
Visitors, regional shoppers, and other non-residents make up the remainder of non-resident spending,
totaling an estimated $802 million for 2018.
Due to the proximity of Cal Poly, a significant share of this spending is likely attributable to students,
staff, and faculty who live outside the city. The student population includes nearly 22,000 students.
Of this total, approximately 7,744 students live on campus, which is outside of the city limitS.5
Visitors from outside of the region and other tourists constitute another large share of non-resident
shopping. Specific data about tourist spending in the city was not available; however, information on
countywide visitor spending provides some insight. In 2018, retail spending by visitors to San Luis
Obispo County was estimated at more than $1 billion (See Figure 6). Since the City of San Luis Obispo
is a major destination in the region, a significant share of the total visitor spending is likely occurring
in the city.6
5 https://caIpolynews.caIpoly.edu/quickfacts.htm1
6 The City of San Luis Obispo accounted for approximately 23 percent of countywide travel spending impacts in 2007. Source:
Economic Vitality Corporation, San Luis Obispo County Tourism Analysis Report 2008, prepared by Strategic Marketing Associates
and Dean Runyan Associates.
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Item 7
San Luis Obispo Retail Sales Analysis
FIGURE 7: VISITOR RETAIL SPENDING BY CATEGORY, SAN LUIS OBISPO COUNTY, 2018
Category
Visitor Spending (millions)
Food Service
$513.2
Food Stores
$72.7
Local Transportation & Gas
$207.8
Retail Sales
$281.0
Total
$1,074.7
Source: California Travel Impacts 2010-2018, prepared by Dean Runyan Associates; Strategic Economics, 2020.
Finally, a significant portion of non-resident spending in the City of San Luis Obispo is likely attributable
to regional shoppers. These shoppers are non-residents who live outside of the city but are attracted
to the quantity and variety of the city's shops and restaurants.
SUBAREA ANALYSIS
In addition to estimating the citywide share of retail spending that is attributable to non-residents,
Strategic Economics conducted an evaluation of five subareas of the city. The five subareas that
were analyzed include: the Downtown area, the Los Osos Valley Road (LOVR) Corridor, the Madonna
Road area, the Foothill area, and the Airport area (Figure 8). Together the subareas accounted for 62
percent of the total retail sales in the City in 2018 (Figure 9 and Figure 10).
FIGURE 8: RETAIL SUBAREAS IN THE CITY OF SAN LUIS OBISPO
Source: City of San Luis Obispo, "Sales Tax Newsletter," 2012.
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Item 7
San Luis Obispo Retail Sales Analysis
FIGURE 9: ANNUAL RETAIL SALES BY SUBAREA, 2018
Subarea
Retail Spending
Share of City's
Retail Spending
Los Osos Valley Road Corridor
$527,615,100
36%
Downtown
$195,333,200
13%
Madonna Road Area
$96,319,537
7%
Airport
$58,063,100
4%
Foothill
$43,465,700
3%
Other
$555,721,078
38%
Citywide Total
$1,476,517,715
100%
Source: Strategic Economics, 2020.
FIGURE 10: SHARE OF ANNUAL RETAIL SALES BY SUBAREA, 2018
G
Airport
4% Madonna Road Area
7%
Source: Strategic Economics, 2020
Strategic Economics estimated retail sales in each of the subareas based on sales tax revenue data
provided by HdL and by applying the same methodology used to estimate citywide sales. Figure 11
provides a breakdown of retail sales for the top categories in each subarea. The share of non-resident
spending in the subareas was not calculated since this would require sidewalk surveys or other data
on the residency of individual customers. However, the composition of sales within each subarea
provides insight on resident versus non-resident spending based on the findings of the citywide
analysis and general trade area sizes typically associated with different retail categories.
DOWNTOWN AREA
Downtown San Luis Obispo is a regional destination that serves city residents, workers, regional
shoppers, and out-of-town visitors. Downtown generated 13 percent of all retail sales in the city in
2018, making it the second largest source of sales among the subareas. Downtown attracts shoppers
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Item 7
San Luis Obispo Retail Sales Analysis
from around the region to its concentration of restaurants and clothing stores. 41 percent of the area's
retail sales were generated by Eating and Drinking Places and 24 percent from Apparel Stores. While
the citywide estimate suggests that about half of the spending in these categories comes from visitors,
the share of visitor spending may be higher in Downtown due to its regional draw.
LOS OSOS VALLEY ROAD CORRIDOR (LOVR)
The LOVR Corridor consists of big box and automobile sales retailers in the southern part of the city.
The LOVR Corridor generates the largest share of sales among subareas in the city (36 percent in
2018) and is likely a major source of non-resident spending. 43 percent of retail sales in the LOVR
Corridor came from Auto Dealers and Supplies, a category likely to attract a high share of spending
from non-residents since dealerships draw shoppers from a large regional trade area (78 percent of
citywide spending in Auto Dealers and Supplies is estimated to come from non-residents). Additionally,
the large chain and big box stores in the LOVR Corridor, such as Costco, Target, and Home Depot, are
represented in the Other Retail category. These stores also draw from a large trade area and are likely
to capture a high amount of non-resident spending.?
MADONNA ROAD AREA
The Madonna Road Area is located along Highway 101, south of the Downtown and adjacent to the
LOVR Corridor. It is the third largest subarea in terms of retail sales, generating seven percent of
citywide retail sales in 2018. The subarea includes several large chain stores that are mostly located
within the Madonna Plaza Shopping Center. The Madonna Road Area's diverse range of
establishments in Furniture and Appliances, Eating and Drinking Places, Other Retail Stores, and
General Merchandise, likely serves a mix of both local and regional shoppers, with General
Merchandise stores most likely to attract non-residents.
FOOTHILL AREA
The Foothill Area is a collection of retail located off Highway 1 in the northern part of the city. The area
contains mostly smaller retail businesses located along Foothill Boulevard and within the University
Square Shopping Center. These businesses likely serve both resident and non-resident shoppers,
including non-residents passingthrough via Highway 1 and living, working, or visiting at the nearby Cal
Poly campus. Apparel Stores generated 37 percent of sales in the subarea in 2018, while sales in all
other retail categories accounted for 63 percent of spending.
AIRPORT AREA
The Airport Area includes commercial and industrial spaces surrounding the San Luis Obispo County
Regional Airport west of Broad Street and south of Rockview Place. The subarea largely consists of
light industrial uses accommodating production, distribution, and repair service businesses, and
airport -related uses such as car rental agencies. Nearly a quarter of 2018 retail sales were in the
Building Materials category, 10 percent in Auto Dealers and Supplies, and the remainder in all other
categories. Based on the citywide analysis, a high share of sales in these categories are likely
generated by non-resident spending. However, the exact mix of resident versus non-resident spending
The Other Retail Stores category includes sales in the pet products, toys, hobbies, and other miscellaneous items categories, and a
varying mix of other categories that were aggregated due to confidentiality requirements. The categories aggregated in Other Retail
Stores varies by subarea since each subarea's business mix triggers unique confidentiality suppression requirements.
11
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Item 7
San Luis Obispo Retail Sales Analysis
is less certain for the Airport Area since the types of businesses vary widely. Notably, retail sales likely
represent a relatively small portion of total sales in the Airport Area. Only 56 percent of the Airport
Area's 2018 sales tax revenue was generated in retail sales categories; the remainder was instead
generated in business -to -business sales categories.
FIGURE 11: TOP RETAIL CATEGORIES BY SUBAREA, 2018
Total Sales
% of Total
Subarea Sales
Citywide Non -Resident
Share of Spending in
Category
Downtown Area
Apparel Stores
$47,431,600
24%
52%
Eating and Drinking Places
$80,155,000
41%
61%
Furniture and Appliances
$26,676,200
14%
52%
Other Retail Stores*
$41,070,400
21%
69%
Total Retail Sales
$195,333,200
100%
69%
Los Osos Valley Road Corridor
Auto Dealers and Supplies
$226,632,500
43%
78%
Eating and Drinking Places
$13,210,000
3%
61%
Furniture and Appliances
$11,859,400
2%
52%
Other Retail Stores*
$275,913,200
52%
69%
Total Retail Sales
$527,615,100
100%
69%
Madonna Road Area
Apparel Stores
$10,067,400
10%
52%
Eating and Drinking Places
$15,343,300
16%
61%
Furniture and Appliances
$36,555,800
38%
52%
General Merchandise
$10,098,737
10%
93%
Other Retail Stores*
$24,254,300
25%
69%
Total Retail Sales
$96,319,537
100%
69%
Footh i I I
Apparel Stores
$15,876,200
37%
52%
Other Retail Stores*
$27,589,500
63%
69%
Total Retail Sales
$43,465, 700
100%
69%
Airport
Auto Dealers and Supplies
$5,791,300
10%
78%
Building Materials
$14,075,600
24%
93%
Other Retail Stores*
$38,196,200
66%
69%
Total Retail Sales
$58,063,100
100%
69%
*Certain retail categories were aggregated under "Other Categories" in order to preserve merchant confidentiality. The
aggregated categories vary by subarea since each subarea's business mix triggers unique confidentiality suppression
requirements.
Source: City of San Luis Obispo, 2018; Strategic Economics, 2020.
12
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Item 7
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blank.
Packet Page 112
Results of Public Engagement & a
Potential Community Services
and Investment Measure
City Council — July 21, 2020
Recommendations
1. Receive a report on the results of public engagement and
outreach efforts regarding SLO Forward, an effort to support
community investment and economic recovery by
maintaining and improving the type of City services and
infrastructure the community values most; and
2. As recommended by Council Members Pease, and Stewart
and the Revenue Enhancement Oversight Commission,
adopt a resolution (Attachment A) placing for submission
to the voters a ballot question whether to amend Chapter
3.15 of the Municipal Code with a Community
Services/Investment Transactions (Sales) and Use Tax that
extends the existing, voter -approved funding at a 1.5-cent
rate, until ended by voters; and
Recommendations
3. Introduce an ordinance (Attachment B), subject to
voter approval in the November 2020 general election,
to approve the Community Services/Investment
Measure until ended by voters; and
4. Adopt resolutions directing the City Attorney to prepare
the impartial analysis (Attachment D) for the ballot
measure, setting priorities for filing written arguments,
providing for the filing of rebuttal arguments
(Attachment E).
Background
December 3, 2019
Resident Focus Groups and Survey Results Regarding
Funding Priorities and Potential Local Revenue Options
June 18, 2019
2019- 21 Financial Plan and the Major City Goal: Fiscal
Sustainability and Responsibility
April 17, 2018
Future SLO Capital Improvement Program
December 12, 2017
Budget Foundation: Fiscal
Health Response Plan
June 30, 2020
Revenue Enhancement
Oversight Commission
February 5, 2019
Potential Next Steps
Regarding the Funding
the Future Initiative
January 16, 2018
Capital Improvement Plan
and funding options
2015-17 Financial Plan
gr--- "�-
Protecting
Essential City
Services
Maintaining
Infrastructure
GAT Y O.h
CITY OF SHII DELIS OBISPO
L�rs o�
F�Owvm
I I ATITNO
Maintaining
San Luis
Obispo's
Unique
Character &
Quality of Life
1
Addressing Recent Issues
Pension Reform & Fiscal Health Response Plan
Increase in
Pension Cost
5
Employees
Paying +
Pension Costs
KA
Efficiency &
Effectiveness
+Cannabis
Business Tax
NO
$8.9M of annual
savings in
interest
Summary of the 2019 Statistically Valid Survey
■Almost six in ten survey respondents perceive the
City needs additional funds to provide the level of
services and infrastructure residents need and want.
■A majority of survey respondents initially support a
conceptual local ballot measure at 63 percent.
■ No statistical difference in support between an
extension of the current voter approved Local
Revenue Measure at a 1.5-cent rate or at a 1-cent
rate.
Public Engagement &
Outreach Efforts
■ Presentations to over 23 community groups and
advisory bodies
SLOForward
O U R C I T Y • O U R FUT U RE
■ Online Survey Results (1,036 responses representing approximately
52 hours of public comment)
Z'Ai
Q o
Economic recovery & Maintaining public Addressing Repairing streets, Keeping public
protecting long-term safety, fire/emergency homelessness sidewalks & areas safe & clean
fiscal stability response potholes
Preserving open Helping ensure Preparing for Protecting creeks Requiring all funds
space & natural children have safe wildfires & other from pollution used locally to
areas places to play natural disasters benefit the
community
Impacts of COVID=19 Pandemic
$ b,wu
$8a,WO •
r-
-
$82A00 r —
r
r r
I r
WON r
—
r
r
r
578,000
N r �
T
b
$ 76,000
Y �r
$2.1M
sn•°°° � $5.9M
$6.5M �8.6M
$ 70,000
$68,wo
$66,000 1
2019 (Actual) 2020 2022 2023 2024 2025
Expenditures ---Original Revenue Projection—COVID19 Revised Projection
Public Engagement &
Outreach Efforts Continued
Current Online Survey Results
(June 1, 2020 — July 21, 2020)
1. Preserve open space and natural areas
2. Keep public areas safe and clean
3. Protecting long-term fiscal stability
4. Programs that support economic recovery
5. Maintain public safety, fire and emergency
Previous Online Survey Results
(December 27, 2019 —April 15, 2020)
1. Address homelessness
2. Keep public areas safe and clean
3.
4.
5.
response 6.
6. Address homelessness 7.
7. Support community organizations and non- 8.
profits that serve the community's most
vulnerable 9.
8. Prepare for wildfires and other natural 10.
disasters
9. Protect creeks from pollution
10. Requiring all funds used locally to benefit the
community
11. Repair streets and potholes
12. Help ensure children have safe places to play
Preserve open space and natural areas
Maintain police, fire/emergency response
Protecting long-term fiscal stability
Repair streets and potholes
Protect creeks from pollution
Prepare for wildfires and other natural
disasters
Help ensure children have safe places to play
Requiring all funds used locally to benefit
the community
Survey Conducted June 18-25, 2020
FM3
RESEARCH
OPINION
RESEARCH
& STRATEGY
220-5733
Conducted a dual -mode survey, online, by cell, and
landline June 18-25, 2020
Surveys were completed using a random sample of
534 City of San Luis Obispo registered voters likely
e® to vote in the November 2020 General Election
MW
o _
Overall margin of error: +/-4.9%full sample;
+/-6.9% for half sample
Some percentages may not sum to 100%
due to rounding
Results are tracked with the 2019 survey
PQIFQQ ID O Oho oh a n QQ (:o ITE @
13
Voters are more optimistic that the coronavirus will
be under control in 12 months than in 6 months,
though only slightly less than half are optimistic
about it being under control in a year's time.
Pandemic Under Control in 6 Months? Pandemic Under Control in 12 Months?
Under control
Not under control
Don't know
6 Months
20%
M..
62%
[12 Months
17%
46%
37%
FM 3 Q. Looking ahead (SPLIT SAMPLE A: "6 months") (SPLIT SAMPLE 8: "12 months'), do you think the coronavirus pandemic will generally be under control
or not?
RESEARCH 14
A majority perceives the City's
economy will not have recovered
in either six or twelve months.
Economy Recovered in 6 Months? Economy Recovered in 12 Months?
Recovered
Not recovered
Don't know
6 Months
20%
64%
12 Months
29%
16% 18%
54%
FM 3 Q. Looking ahead (SPLIT SAMPLER: "6 months') (SPLIT SAMPLE 8: "12 months'), do you think the City of San Luis Obispo's economy will have
recovered or not?
RESEARCH 15
Slightly more than one -quarter are
extremely or very concerned about the
impact the coronavirus is having on
their personal financial situation.
Extremely concerned
Very concerned
Somewhat concerned
Not too concerned
12% Ext./Very
Concerned
14% 27%
38%
35%
FM 3 Q. How concerned are you about the impact the coronavirus is having on your personal financial situation? Are you extremely concerned, very
concerned, somewhat concerned or not too concerned?
RESEARCH 16
Almost seven -in -ten think the City had a great or some
need for additional funds to provide the level of City
services and infrastructure that residents need and want --
an overall increase of 10 percentage points since 2019.
2019
Great need MIQ
Some need
Little need
No real need
Great/
Some Need
38% 59%
2020
31 % Great/
Some Need
38% 69%
13% Little/ 11% Little/
No Real Need No Real Need
20% 33% 11% 22%
Don't know 8%
9%
FM 3 Q. In your personal opinion, do you think there is a great need, some need, a little need, or no real need for additional funds to provide the level of city
services and infrastructure that San Luis Obispo residents need and want?
RESEARCH 17
Mm (D) H@ loulr(:m
IM
Ballot Title and Summary
City of San Luis Obispo Community Services/Investment.
Shall an ordinance to provide funding to protect City of
San Luis Obispo's long-term financial stability; maintain fire,
public safety, health emergency, disaster preparedness
response; address homelessness; keep public areas
clean/safe; help local businesses; repair streets; protect
creeks from pollution; maintain youth/senior services, open
space, parks/other general services by extending
Measure G at a 1.5C rate, providing approximately
$21,600,000 annually until ended by voters; requiring
audits/all funds used locally, be adopted?
FM 3 Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
19
Initially, roughly seven -in -ten would
on a measure to extend Measure G at
rate, with close to four -in -ten having
would definitely vote yes.
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
2%
7%
5%
6%
Total
No
23%
15%
FM V Q Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
26%
vote yes
a 1.5-cent
said they
38 % Total
64% Yes
71%
20
High percentages support the measure regardless
of whether one thinks the local economy will
recover in the next 6 months or year.
Initial Vote on Extending Measure G at a 1.5-Cent Rate by Economy Recovered
Recovered
(% of
Sample) (10%)
■ Total Yes ■ Total No Undecided
6 Months :1
o\°
°\o
LO
12 Month
° °o
° °o
^\ N
O ^o o\o
Not Don't Recovered
Recovered Know
(32%) (8%) (14%)
FM 3 Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
Not
Recovered
(27%)
o\°
°\o
N
o\°
Don't
Know
(9%)
21
°\o
LO
12 Month
° °o
° °o
^\ N
O ^o o\o
Not Don't Recovered
Recovered Know
(32%) (8%) (14%)
FM 3 Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
Not
Recovered
(27%)
o\°
°\o
N
o\°
Don't
Know
(9%)
21
Regardless of how concerned one is about the impact
of the coronavi rus on their financial situation, roughly
two-thirds or more said they would vote yes.
Initial Vote on Extending Measure G at a 1.5-Cent Rate by Financial Situation
74%
9%
■ Total Yes ■ Total No Undecided
72 %
4%
Extremely/Very Concerned Somewhat Concerned
(% of
Sample) (27%) (38%)
FM 3 Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
69%
5%
Not Too Concerned
(35%)
22
The more one perceives the City needs additional
funds to provide services and infrastructure,
the more one is likely to vote yes.
Initial Vote on Extending Measure G at a 1.5-Cent Rate by Need for Funding
87%
26%
Great Need
(% of
Sample) (31%)
■ Def. Yes
78%
45%
Prob./Undec., Lean Yes ■ Total No Undecided
Some Need
(38%)
Little/No Real Need
FM 3 Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
(22%)
60%
30%
17%
Don't Know
(9%)
23
h -�w
@ _qa� ]OUTS
24
There is no statistically significant difference
in support for the extension of Measure G at a
1.5-cent rate and a new one -cent sales tax.
Extending Measure G Establishing a
at a 1.5-Cent Rate 1-Cent Sales Tax
(MOE=+/-4.9%) (MOE=+/-6.9%)
Definitely yes 38%
Probably yes
Undecided, lean yes 7%
26% 64%
Total
Yes
71% 9%
436%
24% 60%
Undecided, lean no 2% Total 2% Total
Probably no 5% No 5% No
Definitely no =
15/ 23% 24%
17%
Undecided 6%
7%
F Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
Q. What if the proposed measure I just described established a 1-cent sales tax raising $14.4 million, instead of a 1.5-cent sales tax raising
RESEARCH $21.6 million, do you think you would: vote "yes" in favor of this measure or "no" to oppose it? Split Sample
Total
Yes
69%
25
Overall support for the measure
declines significantly when a
30-year sunset clause is introduced.
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Until Ended by Voters
(M O E=+/-4.9%)
38%
26% 64%
7%
2% Total
5% No
-
23%
15%
6%
30-Year Sunset
(MOE=+/-6.9%)
Total M19% Total
Yes 19% 38% Yes
71% 12% 51%
3% Total
13% No
= 23% 40
10%
F Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
Q. What if the extension of Measure G at a 1.5C rate that 1 described to you was written so that it would be in effect for 30 years and would then be
RESEARCH legally required to end at that time? If that were the case, would you vote yes in favor of it or no to oppose it? Split Sample
26
W(:o @IF PTO�((D[F'E nso
27
Maintaining fire, public safety and emergency health response;
maintaining disaster preparedness response; protecting creeks
from pollution; preserving open space and natural areas; and
retaining local businesses are among the features considered
extremely or very important to be included in the measure.
(Ranked by Extremely/Very Important)
■ Ext. Impt.
Maintaining fire, public safety and
emergency health response
Maintaining disaster preparedness
response
Protecting creeks from pollution
Preserving open space and
natural areas
Retaining local businesses
Helping fund homeless prevention
programs
Providing support to local
non -profits in the City that help
those in need of food
Very Impt. Smwt. Impt. ■ Not Too Impt./Don't Know Ext./Very
Impt.
29%
40% 15 % ' • 79%
45% 22% 75%
37% 20% ' • 74%
36% 20% ' . 73%
41% 19% :' 73%
34% 18% 71%
42% 21% M 71%
F Q. I am going to read you a list of possible services and community investments that could be funded by a potential new City revenue measure. Regardless of
how you feel about a revenue measure, please tell me how important it is to you personally that each of the following infrastructure projects or services is
included in the measure: extremely important very important, somewhat important or not too important. Split Sample
RESEARCH 28
Continued
(Ranked by Extremely/Very Important)
■ Ext. Impt.
^Keeping public areas clean and safe
Addressing homelessness
Preserving open space
Providing support to local non-
profits in the City that help prevent
domestic violence
Very Impt. Smwt. Impt. ■ Not Too Impt./Don't Know Ext./Very
Impt.
Maintaining youth services . •,
Helping fund meals for home bound
seniors
^Protecting the City's long-term
financial stability
44% 25% 70%
34% 21% 68%
34% 24% M 66%
38% 23% 66%
38% 26% M 64%
39% 27% M 64%
45% 26% •'. 64%
F Q. I am going to read you a list of possible services and community investments that could be funded by a potential new City revenue measure. Regardless of
how you feel about a revenue measure, please tell me how important it is to you personally that each of the following infrastructure projects or services is
included in the measure: extremely important very important, somewhat important or not too important. ^Not Part of Split Sample
RESEARCH 29
After critical statements, overall support decreases
eight percentage points to 67 percent - above the
margin of error for this simple majority measure;
however, those having said they would definitely vote
yes also decreases by four percentage points.
Initial Vote Vote after Vote after Critical
Education L Statements
Definitely yes I 38%
Probably yes I 26% 64%
Undecided, lean yes 7%
Total
Yes
71%
Total _=
Yes 23% 63%
75%
4%
Undecided, lean no 2% Total 1% Total 3% Total
Probably no 5% No 5% No 8% No
Definitely no ■ 15% 23% . 13% 20% M 17% 27%
Undecided 6%
5%
FM 3 Q. Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
5%
Total
Yes
67%
30
Vote Progression line graph
September 2019 and dune 2020
September 2019
June 2020
Vote after
Vote after
Initial Vote after Critical
Initial Vote after Critical
Vote Education Statements i
i
Vote Education Statements
i
75%
71%
Total Yes 63 % 65 i
67 o
60 / o �
Total No 32% 30/ 32% i
27%
i
23% 20%
Undecided 5% 5% 8% i
i
6% 5% 5%
FM 3 Q Based on this description, would you vote yes in favor of the measure or no to oppose it?
RESEARCH
31
c(D)HQ mo�'(D)Ho
32
Conclusions
✓Only two -in -ten expect the pandemic will be under
control in six -months; more than double (46%) expect it
will be in control within a year.
✓Majorities
do not
expect the local
economy to have
recovered
within
the
next
6 or
12
months.
✓About one -quarter are extremely or very concerned
about their personal financial situation as a result of the
coronavirus.
FM3
RESEARCH
33
Conclusions; Continued
✓Almost seven -in -ten perceive that the City has a great or
some need for additional funds to provide the level of
City services and infrastructure that residents need and
want — up ten percentage points from 2019.
✓Initially, about seven -in -ten support extending Measure G
at a 1.5-cent rate, with slightly less than four -in -ten
having said definitely yes.
✓ Maintaining fire, public safety and emergency health
response; maintaining disaster preparedness response;
and protecting creeks from pollution are among a long
list of voter priorities for this measure.
FM3
RESEARCH 34
Conclusions; Continued
✓ After education,
overall
support
increases to 75 percent
with
44
percent
having
said
they
would
definitely
vote
yes.
✓ After critical statements, support declines eight
percentage points to two-thirds (67%), with four in ten
having said definitely yes —statistically above the margin
of error for this simple majority measure.
FM3
RESEARCH
35
Survey Conducted June 18-25, 2020
FM3
RESEARCH
OPINION
RESEARCH
& STRATEGY
220-5733
w
•
Protects essentials services
and maintains City
facilities
Revenue Enhancement
Oversight Commission
(REOC)
w
2006:
64 %
of the
voters
2014:
70%
of the
voters
0.50 Local General
Sales Tax
GAT Y O.h
CITY OF SH111 DELIS OBISPO 37
r �
Fiscal Health Response, Benchmark Study
and Retail Sales Analysis
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SAN LDIS OBISPO IS
CDMMITTED TO...
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nalyzetl include' Ne �owntnwn area the L� 6sas Valley Road (LOVR] Oorttlm, the Matlnnw
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FWOFE & RUAL51.61PLB NWC M NSUI L A0111 Pa
OMEASURING OUR
IN PERFORMANCE
O FiscalComparison with - -
Selected Benchmark Cities
NJune 2020
aw,a-. cir�rsw��o�a�siara �: mtx
Procedures Regarding the Adoption of aam
Community Services and Investment Measure
1. Ballot Measure Language (Attachment A)
2. Complete Ordinance and Election Related
Resolutions (Attachment B)
1. Impartial Analysis and Priorities for Written
Arguments (Attachment D)
2. Enabling rebuttal arguments (Attachment E)
3. Public Review Period and Deadlines
3. Education and Outreach
1. Ballot Measure Language
City of San Luis Obispo Community Services/Investment.
Shall an ordinance to provide funding to protect City of San
Luis Obispo's financial stability; maintain fire/community safety,
health emergency/disaster preparedness; protect creeks from
pollution; address homelessness; keep public areas
clean/safe; retain local businesses; maintain youth/senior
services, streets, open space/natural areas, and other general
services, by extending voter -approved funding at a 1.50 rate,
providing approximately $21,600,000 annually until ended by
voters; requiring audits/all funds used locally, be adopted?
wrl ---MEMO
2. Complete Ordinance and Election Related
Resolutions
Ordinance amending Chapter 3.15 of the City's
Municipal Code
■ Extend existing the .5¢ general transactions (sales) tax
■Increases the general transactions (sales) and use tax
by 10
■ Combined rate of 1.5¢ rate, until ended by voters.
Resolution directing the City Attorney to prepare an
impartial analysis and sets priorities for arguments
■ Resolution - Enabling Rebuttal Arguments
Public Review Period and Deadlines
■July 23, 2020 at 5:00 p.m. — Final Impartial Analysis
Due
July 31, 2020 at 5:00 p.m. — Primary Arguments For
or Against a Measure Due
■August 7, 2020 at 5:00 p.m. — Last day to file
Rebuttal Arguments For or Against a Measure
■August 17, 2020 — Final Day of Ten -Day Public
Review Period
3. Education and Outreach
■Should the Council place a measure on the ballot,
staff intends to conduct education and outreach,
consistent with what is allowed by law
■ Continue to provide public information materials
■ Develop Frequently Asked Questions
■Provide mail by vote information
■Information on the City's website
■ Respond to requests for presentations and additional
information
Recommendations
1. Receive a report on the results of public engagement and
outreach efforts regarding SLO Forward, an effort to support
community investment and economic recovery by maintaining
and improving the type of City services and infrastructure the
community values most; and
2. As recommended by Council Members Pease, and Stewart and
the Revenue Enhancement Oversight Commission, adopt a
resolution (Attachment A) placing for submission to the voters a
ballot question whether to amend Chapter 3.15 of the Municipal
Code with a Community Services/Investment Transactions
(Sales) and Use Tax that extends the existing, voter -approved
funding at a 1.5-cent rate, until ended by voters; and
Recommendations
3. Introduce an ordinance (Attachment B), subject to voter approval
in the November 2020 general election, to approve the
Community Services/Investment Measure until ended by voters;
and
4. Adopt resolutions directing the City Attorney to prepare the
impartial analysis (Attachment D) for the ballot measure, setting
priorities for filing written arguments, providing for the filing of
rebuttal arguments (Attachment E).
P:-
�rl Y -r--m
IriD
�I
-tS
a
•
c kl Y 0
'° CITY 4F S�IIl LUIS OBISPO 46
0A
LEI S O�
Council Agenda Correspondence
1. Updated Online Community Survey Results (June 1, 2020— July 21,
2020)
1. Preserve open space and natural areas
2. Keep public areas safe and clean
3. Protecting long-term fiscal stability
4. Programs that support economic recovery
5. Maintain public safety, fire and emergency response
6. Address homelessness
7. Support community organizations and non -profits that serve
the community's most vulnerable
8. Prepare for wildfires and other natural disasters
9. Protect creeks from pollution
10. Requiring all funds used locally to benefit the community
11. Repair streets and potholes
12. Help ensure children have safe places to play
Council Agenda Correspondence
2. Proposed Changes to the Draft Ordinance (Attachment B)
a. Update Ordinance Title - GENERAL TRANSACTIONS (SALES) AND USE TAX
b. Update subparagraph 3.15.020 - ... majority of the electors voting on the measure vote
to approve the extension...
c. Update 3.15.070 Operative Date - "Operative date" for purposes of the one percent and one
half percent (1.5%) Transaction (Sales) and Use Tax (TUT) rate means the first day of the
first calendar quarter commencing more than one hundred ten days after the adoption of the
ordinance codified in this chapter. Until the Operative Date, the TUT shall continue to be
levied and collected at a rate of one-half (.5%), as previously approved by San Luis Obispo
vntPrS_
d. Add the following subparagraph to section 3.15.110 - 1. A retailer engaged in business in the
District" shall also include any retailer that, in the preceding calendar year or the current
calendar year, has total combined sales of tangible personal property in this state or for
delivery in the state by the retailer and all persons related to the retailer that exceeds five
hundred thousand dollars ($500,000). For purposes of this section, a person is related to
another person if both persons are related to each other pursuant to Section 267(b) of Title
26 of the United States Code and the regulations thereunder.