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Home My WebLink About05-08-2025 REOC Agenda Packet Revenue Enhancement Oversight Commission AGENDA Thursday, May 8, 2025, 5:00 p.m. City Hall, 990 Palm Street, San Luis Obispo The Revenue Enhancement Oversight Commission holds in-person meetings. Zoom participation will not be supported. Attendees of City Council or Advisory Body meetings are eligible to receive one hour of complimentary parking; restrictions apply, visit Parking for Public Meetings for more details. INSTRUCTIONS FOR PUBLIC COMMENT: Public Comment prior to the meeting (must be received 3 hours in advance of the meeting): Mail - Delivered by the U.S. Postal Service. Address letters to the City Clerk's Office at 990 Palm Street, San Luis Obispo, California, 93401. Email - Submit Public Comments via email to advisorybodies@slocity.org. In the body of your email, please include the date of the meeting and the item number (if applicable). Emails will not be read aloud during the meeting. Voicemail - Call (805) 781-7164 and leave a voicemail. Please state and spell your name, the agenda item number you are calling about, and leave your comment. Verbal comments must be limited to 3 minutes. Voicemails will not be played during the meeting. *All correspondence will be archived and distributed to members, however, submissions received after the deadline may not be processed until the following day. Public Comment during the meeting: Meetings are held in-person. To provide public comment during the meeting, you must be present at the meeting location. Electronic Visual Aid Presentation. To conform with the City's Network Access and Use Policy, Chapter 1.3.8 of the Council Policies & Procedures Manual, members of the public who desire to utilize electronic visual aids to supplement their oral presentation must provide display-ready material to the City Clerk by 12:00 p.m. on the day of the meeting. Contact the City Clerk's Office at cityclerk@slocity.org or (805) 781-7114. Pages 1.CALL TO ORDER City Clerk, Teresa Purrington, will administer the Oath of Office to new commissioner, Trent Johnson. Chair Bozzano will call the Regular Meeting of the Revenue Enhancement Oversight Commission to order. 2.PUBLIC COMMENT FOR ITEMS NOT ON THE AGENDA The public is encouraged to submit comments on any subject within the jurisdiction of the Revenue Enhancement Oversight Commission that does not appear on this agenda. Although the Commission will not take action on items presented during the Public Comment Period, the Chair may direct staff to place an item on a future agenda for discussion. 3.CONSENT Matters appearing on the Consent Calendar are expected to be non- controversial and will be acted upon at one time. A member of the public may request the Revenue Enhancement Oversight Commission to pull an item for discussion. The public may comment on any and all items on the Consent Agenda within the three-minute time limit. 3.a CONSIDERATION OF MINUTES - MARCH 20, 2025 REVENUE ENHANCEMENT OVERSIGHT COMMISSION MINUTES 5 Recommendation: To approve the Revenue Enhancement Oversight Commission Minutes of March 20, 2025. 4.BUSINESS ITEMS 4.a FINAL BUDGET ADOPTION 7 Recommendation: In preparation for the 2025-27 Financial Plan adoption, recommend to the City Council the proposed use of Local Revenue Measure funds as referenced in the report and consistent with approved priorities of the Local Revenue Measure. 5.STAFF AND COMMISSIONER ANNOUNCEMENTS 5.a STAFF UPDATES 5.b COMMISSIONER UPDATES 6.ADJOURNMENT The next Regular Meeting of the Revenue Enhancement Oversight Commission will be scheduled in Fall, 2025 in the Council Hearing Room at City Hall, 990 Palm Street, San Luis Obispo. LISTENING ASSISTIVE DEVICES are available -- see the Clerk The City of San Luis Obispo wishes to make all of its public meetings accessible to the public. Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities. Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to the City Clerk’s Office at (805) 781-7114 at least 48 hours before the meeting, if possible. Telecommunications Device for the Deaf (805) 781-7410. Agenda related writings or documents provided to the Revenue Enhancement Oversight Commission are available for public inspection on the City’s website, under the Public Meeting Agendas web page: https://www.slocity.org/government/mayor-and-city-council/agendas-and- minutes. Meeting video recordings can be found on the City’s website: http://opengov.slocity.org/WebLink/Browse.aspx?id=61028&dbid=0&repo=CityCl erk Page 4 of 17 1 Revenue Enhancement Oversight Commission Minutes March 20, 2025, 5:00 p.m. City Hall, 990 Palm Street, San Luis Obispo REOC Commissioners Present: Absent Chair Bozzano, Vice Chair Skapinsky, Commissioners Gardner, Hamari Commissioner McCarthy _____________________________________________________________________ 1. CALL TO ORDER A Regular Meeting of the San Luis Obispo Revenue Enhancement Oversight Commission was called to order on March 20, 2025 at 5:00 p.m. in the Finance & IT Conference Room at City Hall, 990 Palm Street, San Luis Obispo, by Chair Bozzano. 2. PUBLIC COMMENT FOR ITEMS NOT ON THE AGENDA Public Comment: No Public Comment 3. CONSENT 3.a CONSIDERATION OF MINUTES – DECEMBER 5, 2024 REVENUE ENHANCEMENT OVERSIGHT COMMISSION MINUTES Motion By Commissioner Hamari Second By Commissioner Gardner To approve the Revenue Enhancement Oversight Commission Minutes of December 5, 2024. Ayes (4): Chair Bozzano, Commissioners Gardner, Hamari, Skapinsky CARRIED (4 to 0) Page 5 of 17 2 4. BUSINESS ITEMS 4.a Financial Review & Proposed 2025-27 Local Revenue Measure Allocations Staff presented and responded to commissioner questions. Motion By Commissioner Skapinsky Second By Commissioner Gardner 1. To elect Anthony Bozzano as Chair and Tony Skapinsky as Vice Chair for the remainder of the fiscal year Ayes (4): Chair Hamari, Commissioners Gardner, McCarthy, Skapinsky CARRIED (4 to 0) 5. STAFF AND COMMISSIONER UPDATES 5.a STAFF UPDATES 1. Next steps for 2025-27 Financial Plan 2. Annual report development 3. Annual Advisory Body Recognition event reminder 4. Commissioner recruitment update 5.b COMMISSIONER UPDATES 2. No updates 6. ADJOURNMENT The meeting was adjourned at 7:25 p.m. The next Regular Meeting of the Revenue Enhancement Oversight Commission will be scheduled May 1st, 2025 at 5:00 p.m. in the Council Hearing Room at City Hall, 990 Palm Street, San Luis Obispo. _________________________ APPROVED BY REVENUE ENHANCEMENT OVERSIGHT COMMISSION: XX/XX/202X Page 6 of 17 Revenue Enhancement Oversight Commission Agenda Report For Agenda of: 5/8/2025 Item Number: 4a FROM: Riley Kuhn, Principal Budget Analyst rtkuhn@slocity.org SUBJECT: MAY 8TH REGULAR MEETING OF THE REVENUE ENHANCEMENT OVERSIGHT COMMISSION RECOMMENDATION In preparation for the 2025-27 Financial Plan adoption, recommend to the City Council the proposed use of Local Revenue Measure funds as referenced in the report and consistent with approved priorities of the Local Revenue Measure. DISCUSSION The City’s Municipal Code Section 3.15.040 Fiscal Accountability Provisions calls for specific citizen oversight and fiscal accountability provisions including an independent annual financial audit. The results of the Citywide audit are generally presented to the City Council in January each year and include a discussion of the Local Revenue Measure. The Municipal Code also requires staff to prepare revenue estimates when developing proposed use of funds. These revenue estimates take into consideration the prior year audited results, current year receipts, and industry trends provided by consultants. Audited Financial Results Audited financial statements for the Local Revenue Measure are contained in the citywide Annual Comprehensive Financial Report (ACFR), which can be found on the City’s website at the following address: https://www.slocity.org/home/showpublisheddocument/36938/638706380931200000 The ACFR details the revenues, expenditures, and fund balance for the Local Revenue Measure: Page 7 of 17 Item 4a Revenue Projections When the budget for FY 2024-25 was developed, optimism abounded about the Federal Reserve’s monetary policy and the impact it would have on consumer spending and sales tax revenue. Specifically, markets expected that interest rates would be lowered drastically and this was expected to unleash pent up demand for automobiles, home construction and renovations, and other interest rate sensitive categories which generate sales tax revenue. This expectation of increased consumer spending has not come to fruition. On the advice of HdL, the City’s sales tax consultant, expectations for the local revenue measure have been reduced by just over $1M annually for the current fiscal year and going forward. A comparison of the last forecast with current expectations can be found below: Because the Local Revenue Measure ended FY 2023 -24 with just under $1.8M in fund balance, there will be no impact to budgets or operations in the current Fiscal Year. The FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Last Forecast 30.6M 31.9M 32.7M 33.7M Current Forecast 30.6M 30.6M 31.6M 32.5M Variance - (1.3M) (1.1M) (1.2M) Page 8 of 17 Item 4a 2025-27 Financial Plan has been developed based on these latest assumptions and less funding will be available. Notably absent from these projections is any impact of tariffs, which staff believe to be impossible to forecast. Should actual results differ materially from projections, staff will amend the budget mid-year as needed. Community Identified Priorities In developing the 2025-27 Financial Plan, the City conducted rigorous public outreach to better understand the community’s priorities generally and for use of Local Revenue Measure funds specifically. The 2025-27 Community Priorities Survey was conducted via the City’s online engagement platform, Open City Hall, and was open for one month from November 12, 2024 to December 13, 2024. The City utilizes several outreach methods and distribution channels for the survey including: 1. Utility invoice inserts 2. City website (Open City Hall) 3. City news & e-notification 4. Press releases 5. Social media 6. Outreach to over 100 community groups A total of 1,629 survey responses identified the following priorities for the City as a whole: Page 9 of 17 Item 4a Community members in attendance at the Community Forum on January 23rd, 2025 ranked the Local Revenue Measure priorities in the following order: How would you prioritize LRM funding? Total Votes 128 Poll Option Count Street Maintenance and Transportation 92 Address Homelessness 85 Open Space/Natural Areas Preservation and Maintenance 83 Safe and Clean Public Spaces 81 Community Safety and Emergency Preparedness 75 Youth/Senior Services & Recreation Facilities 74 Economic Development and Business Retention 69 Creek and Flood Protection 68 Protection of Financial Stability 54 Other Services and Projects 48 Page 10 of 17 Item 4a 2025-27 Financial Plan Proposed Local Revenue Measure Allocations In the next two years, the City will need to constrain planned expenditures to match the reductions in available funding. The Local Revenue Measure, as a cyclical revenue stream, will need to be re-allocated each year based on funding availability, identified need, the ballot measure priorities approved by voters, and the priorities expressed by community members during the early stages of the financial planning process. Community members have consistently ranked the services provided to address homelessness, maintain infrastructure, support downtown vitality, and improve housing supply and affordability as top priorities overall and for use of the Local Revenue Measure. In order to preserve these valued services for the commu nity, staff recommend a reduction in Capital Expenditures funded by the Local Revenue Measure and an increased allocation to fund the services the community wants. This re -allocation will also preserve funding to maintain many of the newly acquired assets, like the North Broad Street Park, the currently under construction Laguna Lake Dog Park, and the vehicles recently added to the City’s fleet. This reduction in Capital Expenditures has been developed with an eye for the operational impact that these projects can have. Staff is carefully evaluating construction of new assets understanding that they can create additional maintenance needs. Maintenance projects often reduce operating costs and save money for the City over time and should be preserved. High priority projects that the City has already committed to, like Righetti Park, will move forward, and may create additional pressures on City finances. The table below shows the percentage of Local Revenue Measure funds typically budgeted for capital expenditures (the “Capital Ratio”): Staff’s recommended allocation of Local Revenue Measure funds results in a modest reduction to capital expenditures as a percentage of revenue as seen in the table below: Page 11 of 17 Item 4a As economic conditions and community priorities evolve in future financial plans, staff will reconsider the appropriate capital funding levels. Capital Improvement Plan The Draft Capital Improvement Plan, as approved by the Revenue Enhancement Oversight Commission on March 20th, 2025, was presented to the City Council for consideration on April 15th. No changes were requested during that hearing. The Capital Projects to be funded by the Local Revenue Measure are shown on the following table: Page 12 of 17 Item 4a Page 13 of 17 Item 4a Page 14 of 17 Item 4a Negative numbers in the tables above represent re-allocations of previously appropriated funds. The 2025-27 Financial Plan recommendations include reallocation of $306k in funding from projects completed under budget and $273k in funding from projects that are not ready to begin construction during the financial plan period. Operating Expenditures The Local Revenue Measure funds various positions and the supplies and services they need to fulfill their missions. The tables below detail those costs by funding priority. Position budgets are fully burdened including healthcare and retirement but do not include additional costs like unfunded pension liabilities or overtime. Operating costs shown here are not comprehensive and are often supplemented by other funding sources. Page 15 of 17 Item 4a Page 16 of 17 Item 4a Total Funding by Priority The total funding by priority, including both capital and operating expenditures, is detailed below: Total Budget FY 2025-26 FY 2026-27 Youth/Senior Services and Recreational Facilities 8,584,621 2,676,539 Street Maintenance and Transportation 7,623,547 7,892,703 Community Safety and Emergency Preparedness 5,501,353 7,085,023 Protect Financial Stability 4,635,346 4,695,532 Open Space/Natural Areas Preservation and Maintenance 1,620,420 1,859,512 Other Services and Projects 1,040,084 1,154,192 Address Homelessness 934,256 994,834 Safe and Clean Public Areas 666,433 586,329 Creek and Flood Protection 556,016 5,120,335 Economic Development and Business Retention 409,922 440,000 Total 31,572,000 32,505,000 Page 17 of 17