HomeMy WebLinkAbout06-30-2020 REOC Agenda PacketCity of San Luis Obispo, Agenda, Planning Commission
Agenda
REVENUE ENHANCEMENT OVERSIGHT COMMISSION
Tuesday June 30, 2020
Based on the threat of COVID-19 as reflected in the Proclamations of Emergency issued by both the Governor of
the State of California, the San Luis Obispo County Emergency Services Director and the City Council of the City
of San Luis Obispo as well as the Governor’s Executive Order N-29-20 issued on March 17, 2020, relating to the
convening of public meetings in response to the COVID-19 pandemic, the City of San Luis Obispo will be holding
all public meetings via teleconference. There will be no physical location for the Public to view the meeting.
Below are instructions on how to view the meeting remotely and how to leave public comment.
Additionally, members of the Revenue Enhancement Oversight Commissioners are allowed to attend the meeting
via teleconference and to participate in the meeting to the same extent as if they were present.
Using the most rapid means of communication available at this time, members of the public are encouraged
to participate in Commission meetings in the following ways:
1. Remote Viewing - Members of the public who wish to watch the meeting can view:
View the Webinar (recommended for the best viewing quality):
Registration URL:
https://attendee.gotowebinar.com/register/8832817118393495822
Webinar ID 662-450-155
Telephone Attendee: (415) 655-0060; Audio Access Code: 451-688-327
2. Public Comment - The City Council will still be accepting public comment. Public comment can be
submitted in the following ways:
Mail or Email Public Comment
Received by 3:00 PM on the day of meeting - Can be submitted via email to
advisorybodies@slocity.org or U.S. Mail to City Clerk at 990 Palm St. San Luis Obispo, CA 93401.
All emails will be sent to Commissioners and saved as agenda correspondence however we cannot
guarantee emails received after 3:00 PM on the day of the meeting we be sent out to Commission or
uploaded to the website prior to the meeting starting.
Verbal Public Comment
In Advance of the Meeting - Call (805) 781-7164; state and spell your name, the agenda item
number you are calling about and leave your comment. The verbal comments must be limited to 3
minutes. All voicemails will be forwarded to the Council Members and saved as Agenda
Correspondence. Voicemails will not be played during the meeting.
During the meeting – Joining the webinar (instructions above). Once the meeting has started
please put your name and the item # you would like to speak on in the questions box. During public
comment for the item your name will be called, and your mic will be unmuted. Contact the office
of the City Clerk at cityclerk@slocity.org for more information.
All Comments/Correspondence received will be saved as part of the record for the meeting.
Revenue Enhancement Oversight Commission Agenda for June 30, 2020 Page 2
Tuesday June 30, 2020
5:30 p.m. REGULAR MEETING Teleconference
CALL TO ORDER Chair Chris Coates
ROLL CALL: Commissioners Jeannette McClure, Vice-Chair Ken Kienow, Michael
Multari, and Jim Hamari
PUBLIC COMMENT: At this time, people may address the Commission about items not on
the agenda. Persons wishing to speak should come forward and state their name and address.
Comments are limited to three minutes per person. Items raised at this time are generally referred
to staff and, if action by the Commission is necessary, may be scheduled for a future meeting.
CONSIDERATION OF MINUTES
1. Draft Minutes of the Revenue Enhancement Oversight Commission of May 14, 2020
BUSINESS ITEMS
2. Consideration of a Potential General Sales Tax Renewal Measure.
Recommendation: Receive a report on the results of public engagement and outreach efforts
regarding SLO Forward, a plan to support community investment and economic recovery by
maintaining and enhancing community services and facilities, and to consider making a
recommendation to the City Council regarding a potential ballot measure on the November
2020 ballot to extend the existing .5¢ general sales tax with a 1¢ increase, until ended by
voters. (Greg Hermann and Ryan Betz).
COMMENT AND DISCUSSION
3. Staff Updates
4. Commission Communications
Revenue Enhancement Oversight Commission Agenda for June 30, 2020 Page 3
ADJOURNMENT
The next Regular Meeting of the Revenue Enhancement Oversight Commission has yet to
be determined.
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) 781-7100 at least 48 hours before the meeting, if possible. Telecommunications
Device for the Deaf (805) 781-7107.
Meeting audio recordings can be found at the following web address:
http://opengov.slocity.org/weblink/1/fol/61028/Row1.aspx
DRAFT Minutes – Revenue Enhancement Oversight Commission Meeting of May 14, 2020 Page 1
Minutes - DRAFT
REVENUE ENHANCEMENT OVERSIGHT COMMISSION
Thursday, May 14, 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 Thursday, May 14, 2020 at 5:42 p.m., by Chair Coates via webinar.
ROLL CALL
Present: Commissioners Jim Hamari, Jeannette McClure, Michael Multari, Vice Chair Ken
Kienow, and Chair Chris Coates
Absent: None
Staff: Greg Hermann Deputy City Manager and Ryan Betz Assistant to the City Manager
and City Clerk Teresa Purrington
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 April 30, 2020:
ACTION: UPON MOTION BY COMMISSIONER MULTARI SECONDED BY CHAIR
COATES, CARRIED 5-0-0, to approve the Minutes of the Regular Revenue Enhancement
Oversight Commission Meeting of April 30, 2020, with the correction that only one seat was
vacant.
BUSINESS ITEMS
2. Annual Community Report Review/Annual Citizen Oversight Meeting
Assistant to the City Manager Ryan Betz provided a PowerPoint presentation and responded
to Commissioner inquiries.
DRAFT Minutes – Revenue Enhancement Oversight Commission Meeting of May 14, 2020 Page 2
Public Comment
None
--End of Public Comment--
ACTION: UPON MOTION BY COMMITTEE MEMBER MULTARI, SECONDED BY
COMMISSIONER MCCLURE, CARRIED 5-0-0 to accept the 2019 Annual Community
Report.
3. 2020-21 Supplement Budget
Deputy City Manager Greg Hermann, Assistant to the City Manager Ryan Betz, Finance
Director Brigitte Elke, Deputy Director Public Works Matt Horn, Supervising Civil Engineer
Brian Nelson provided a PowerPoint presentation and responded to Commissioner inquiries.
Public Comment
None
--End of Public Comment--
ACTION: UPON MOTION BY COMMITTEE MEMBER MULTARI, SECONDED BY
COMMISSIONER COATES, CARRIED 5-0-0 to recommend to the City Council the
proposed use of Local Revenue Measure funds for operating and capital expenditures as part
of the 2020-21 Supplemental Budget and to recommend to the City Council the authorization
of the City Manager to use available, but not yet appropriated, funding from the Local Revenue
Measure to protect essential services and facilities under the Council-adopted priorities for the
use of the Local Revenue Measure related to the City declared COVID-19 emergency.
COMMENT AND DISCUSSION
4. Staff Updates
5. Commission Communications
ADJOURNMENT
The meeting was adjourned at 7:36 p.m.
APPROVED BY THE REVENUE ENHANCEMENT OVERSIGHT COMMISSION: XX/XX/2020
Revenue Enhancement Oversight Commission
March 10, 2016
Revenue Enhancement Oversight Commission
Agenda Report Meeting Date: 6/30/20
Item Number: 2
FROM: Greg Hermann, Deputy City Manager
Prepared By: Ryan Betz, Assistant to the City Manager
SUBJECT: CONSIDERATION OF A POTENTIAL GENERAL SALES TAX RENEWAL
MEASURE
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 enhancing community services and facilities.
2. Consider to making a recommendation to the City Council City Council regarding a potential
ballot measure on the November 2020 ballot to extend the existing .5¢ general sales tax with
1¢ increase, until ended by voters.
REPORT-IN-BRIEF
SLO Forward is a comprehensive effort to engage with the commun ity 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 identified and the City’s financial ability to deliver those projects. 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 and the viability of renewing and amending the existing Local Revenue
Measure (LRM) to support these needs. The LRM is a .5¢ local general sales tax approved by
City voters in November 2006 and renewed in 2014. It protects and maintains essential services
and facilities and is subject to voter extension in 2023. The City Council also appointed Council
Members Pease and Stewart to help guide the public engagement efforts. Through these efforts,
including two focus groups and a statistically relevant survey, 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, that financial gap has only
increased. The City is facing a revenue shortfall of $8.6 million in its General Fund in 2020-21
and is projecting to not 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 investment
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 2
and economic recovery, is a key component of that effort. Based upon these factors, including
recent input from the community about the types of services, maintenance and infrastructure they
value most, staff is recommending the Revenue Enhancement Oversight Commission (REOC)
consider recommending to the City Council regarding a potential ballot measure on the November
2020 ballot to extend the existing .5¢ general sales tax with 1¢ increase, until ended by voters.
DISCUSSION
Background
On April 30, 2020, staff presented an update on SLO Forward to the REOC, including public
engagement and education efforts completed prior to the COVID-19 pandemic. That update
included presentations to sixteen community groups and advisory bodies. In addition, the results
of an online survey (678 responses representing approximately 40 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
10. Requiring all funds used locally to benefit the community
Prior to this update, staff presented the results of two focus groups and a statistically relevant
survey conducted by an independent research firm to the REOC on December 12, 2019. The focus
groups, held in June 2019, included 18 city residents who provided community perspectives and
helpful insight on drafting the statistically relevant survey. The results of the focus groups
included:
1) General View of the City
a) Overall, most had favorable opinions of living in the City.
b) Like many California cities, there were concerns about maintaining the City’ s character
and quality of life into the future.
2) Perceived Additional Funding Needs and Support for a Proposed Measure
a) There is a general sense that the City has a need for additional funds.
b) A general-purpose measure that could fund City services as well as infrastructure
projects was principally supported in the groups.
c) Participants primarily focused on the need for additional, locally controlled revenue for
City services and some infrastructure projects.
d) Support for a 1-cent general purpose, simple majority sales tax was slightly lower than
support for a 1 ½- cent sales tax. This may be attributed to the 1-cent sales tax focusing on
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 3
infrastructure only while the 1 ½ cent sales tax includes services, maintenance, and
infrastructure.
e) Most participants agreed that the City did need to ensure there was enough funding to
provide the services, maintenance, and infrastructure they value and rely on.
3) Perceived Funding Priorities
a) Maintaining the City’s quality of life, character, and the need for road improvements,
safety upgrades and cross-town connections were the leading reasons the participants
would consider additional, locally controlled funding.
Statistically Relevant Survey
Following the results of the focus groups, a statistically relevant survey of registered voters took
place in September 2019 and included 442 individual responses with an overall margin of error of
+/- 4.9%. The survey asked residents’ preferences on a variety of topics including services,
maintenance of existing infrastructure, replacement/upgrades of infrastructure and overall
spending priorities. The survey asked participates to respond to a sample ballot measure that
renewed the existing LRM at a 1.5¢ rate that focused on essential services, maintenance and
infrastructure. The results of the survey included:
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, though only about two in
ten indicate there is a great need.
2) A majority of survey respondents initially support a conceptual local ballot measure, renewing
and amending the existing LRM at a 1.5-cent rate, at 63 percent. This is an increase from a previous
survey conducted in April 2018 which had an initial support of 57 percent. The language in the
2018 survey focused solely on upgrades to infrastructure. Based on the input from the focus groups
regarding the importance of services and maintenance, the 2019 survey was broadened to include
City services, maintenance, and infrastructure.
3) The survey asked respondents if they would support the potential ballot measure at a 1-cent rate.
The results show there is no statistical difference in support between an extension of the current
voter approved LRM at a 1½-cent rate or at a 1-cent rate. 63 percent of respondents would vote
yes on an LRM at a 1 ½-cent rate while 60 percent of respondents would vote yes on a 1-cent rate.
4) Respondents continued to rate with greater importance maintaining (68 percent) rather than
improving (42 percent) essential City services. This is consistent with the 2018 survey,
when voters rated maintaining (64 percent) rather than improving (42 percent) essential
City services. This was consistent with the rating of maintaining rather than improving City
infrastructure, with 61 percent ranking maintaining City infrastructure as extremely/very important
rather than 48 percent ranking improving City infrastructure.
5) Respondents were also asked to rate their preferences on a variety of spending priorities. Below
are the results of those preferences:
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 4
Rating by Extremely/Very Important
Requiring all funds used locally 79%
Protecting creeks from pollution 73%
Addressing Homelessness 71%
Maintaining police, fire/emergency response 71%
Keeping public areas safe and clean 67%
Helping ensure children have safe places to play 67%
Preserving open space and natural areas 66%
Requiring all funds to benefit the community 66%
Protecting long-term fiscal stability 65%
Preparing for wildfires and other natural disasters 62%
Repairing streets and potholes 62%
Increasing affordable housing supplies 59%
Replacing fire stations that have been determined by structural engineers to not meet
current seismic earthquake standards 59%
Retaining and attracting local businesses 55%
Maintaining and improving parks 55%
Expanding open space and natural areas 54%
These spending priorities helped inform the online survey noted earlier in the report.
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 physical distancing mandates that have
significantly reduced most economic activity. For most of this time, all but essential businesses
remained closed. The impacts to businesses and the community have been unprecedented. The
City faced 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 or a resurgence in cases. 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 as a conversation with the community about what type
of investment and economic recovery they value most.
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
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 5
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 321 responses, representing an additional 16
hours of public comment. In total, both online surveys have almost 1,000 responses, representing
56 hours of public comment.
Here is a comparison of the results from the two online surveys.
Current Online Survey Results
1. Keep public areas safe and clean
2. Protecting long-term fiscal stability
3. Preserve open space and natural areas
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. Requiring all funds used locally to benefit
the community
10. Protect creeks from pollution
11. Repair streets and potholes
12. Help ensure children have safe places to
play
Previous Online Survey Results
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
10. Requiring all funds used locally to benefit
the community
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
renewing and amending the LRM, a statistically relevant follow-up survey is currently being
conducted and the results will be presented to the City Council on July 21, 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. Staff will also provide the REOC
with a summary of those results once they are available and in advance of the July 21, 2020 City
Council meeting. In addition, public engagement and education efforts will continue with
community and businesses organizations leading up to the July 21, 2020 City Council meeting.
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 6
Existing Local Revenue Measure
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
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. The LRM continues to remain a vital funding source to maintain essential
services and maintaining existing infrastructure. Staff will be recommending to the City Council
that the REOC continue its oversight role of the LRM should a ballot measure be placed and
approved by the voters on the November 2020 ballot.
Copies of previous annual reports from the REOC to the community on spending of the LRM can
be found at slocity.org/budget.
Fiscal Health Response Plan
Similar to other member agencies in CalPERS, 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.
2020 Benchmark Study
In June 2020, the City published the 2020 Benchmark Study (Attachment 1). 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. 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
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 7
for comparison to San Luis Obispo (46,800 residents, General Fund 72.4M). 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)
As shown in Chart 1, the benchmark study shows 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. 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 (Attachment 2).
Chart 1: Sales Tax Revenues Per Capita
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 is considering placing an increase to
Transient Occupancy Tax).
SLO Forward – Consideration of a Potential General Sales Tax Renewal Measure Page 8
ATTACHMENTS
1. 2020 Benchmark Study
2. 2020 Retail Sales Analysis
A Fiscal Comparison with
Selected Benchmark Cities
June 2020
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
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
SOURCE DATA ....................................................................................................................... 10
Introduction Page 1
INTRODUCTION
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 $72.4M).
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 Page 2
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
Financial Benchmarks Resource Comparison Page 3
FINANCIAL BENCHMARKS: RESOURCE COMPARISON
CHART 1: GENERAL FUND PER CAPITA
CHART 2: SALES TAX, PROPERTY TAX & TRANSIENT OCCUPANCY TAX: PERCENT OF TOTAL
GENERAL FUND REVENUES
CHART 3: SALES TAX REVENUES PER CAPITA
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.
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.
$500 $1,500 $2,500 $3,500 $4,500
Palm Springs
Monterey
Santa Cruz
Santa Barbara
San Luis Obispo
Paso Robles
Napa
Davis
Santa Maria
40%50%60%70%80%90%100%
Santa Maria
Paso Robles
Napa
Santa Barbara
San Luis Obispo
Palm Springs
Santa Cruz
Monterey
Davis
$200 $300 $400 $500 $600 $700 $800 $900
Palm Springs
San Luis Obispo
Santa Barbara
Paso Robles
Santa Maria
Santa Cruz
Monterey
Napa
Davis
Financial Benchmarks Resource Comparison Page 4
CHART 4: PROPERTY TAX REVENUES PER CAPITA
CHART 5: TRANSIENT OCCUPANCY TAX (TOT) REVENUES PER CAPITA
CHART 6: RATIO OF FEES TO TOTAL GENERAL FUND REVENUES
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.
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.
$100 $200 $300 $400 $500 $600 $700
Palm Springs
Napa
Paso Robles
Santa Barbara
Santa Cruz
Monterey
San Luis Obispo
Davis
Santa Maria
$- $200 $400 $600 $800
Monterey
Palm Springs
Napa
Santa Barbara
Paso Robles
San Luis Obispo
Santa Cruz
Santa Maria
Davis
0%5%10%15%20%
Santa Cruz
Davis
Napa
San Luis Obispo
Santa Barbara
Santa Maria
Monterey
Paso Robles
Palm Springs 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.
Financial Benchmarks Cost Comparison Page 5
FINANCIAL BENCHMARKS: COST COMPARISON
CHART 7: GOVERNMENTAL COSTS PER CAPITA
CHART 8: GENERAL FUND OPERATING COSTS PER CAPITA
CHART 9: PERCENT OF GOVERNMENTAL COSTS THAT ARE INTEREST PAYMENTS
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.
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.
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
$200 $700 $1,200 $1,700 $2,200 $2,700
Monterey
Palm Springs
Santa Barbara
Santa Cruz
San Luis Obispo
Napa
Paso Robles
Davis
Santa Maria
$500 $1,000 $1,500 $2,000 $2,500 $3,000
Monterey
Palm Springs
Santa Cruz
San Luis Obispo
Santa Barbara
Paso Robles
Napa
Davis
Santa Maria
0%1%2%3%4%5%
Palm Springs
Paso Robles
Monterey
Santa Cruz
San Luis Obispo
Napa
Santa Maria
Davis
Santa Barbara*
Financial Benchmarks Cost Comparison Page 6
CHART 10: GENERAL FUND ALLOCATIONS TO PUBLIC SAFETY
CHART 11: GENERAL FUND PUBLIC SAFETY COSTS PER CAPITA
CHART 12: GENERAL FUND ALLOCATIONS FOR GENERAL GOVERNMENT
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).
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.
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.
30%40%50%60%70%
Santa Maria
Monterey
Napa
Santa Cruz
Santa Barbara
Paso Robles
San Luis Obispo
Davis
Palm Springs
$- $500 $1,000 $1,500
Monterey
Davis
Palm Springs
Santa Cruz
Santa Barbara
Napa
San Luis Obispo
Paso Robles
Santa Maria
5%10%15%20%
Santa Cruz
Paso Robles
Palm Springs
Napa
San Luis Obispo
Santa Barbara
Santa Maria
Davis
Monterey
Financial Benchmarks Staffing Comparison Page 7
FINANCIAL BENCHMARKS: STAFFING COMPARISON
CHART 13: STAFFING FROM GENERAL FUND (PER 1,000 RESIDENTS)
CHART 14: SWORN POLICE STAFF (PER 1,000 RESIDENTS)
CHART 15: SWORN FIRE STAFF (PER 1,000 RESIDENTS SERVED)
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.
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).
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.
2 4 6 8 10 12 14 16 18
Monterey
Santa Cruz
Palm Springs
Santa Barbara
San Luis Obispo
Davis
Santa Maria
Napa
Paso Robles
0.0 0.5 1.0 1.5 2.0 2.5 3.0
Monterey
Palm Springs
Paso Robles
Santa Barbara
San Luis Obispo
Santa Cruz
Napa
Davis
Santa Maria
0.0 0.5 1.0 1.5 2.0
Palm Springs
Monterey
Santa Barbara
Santa Cruz
San Luis Obispo
Santa Maria
Paso Robles
Napa
Davis
Other Benchmarks Service Outcomes
OTHER BENCHMARKS: SERVICE OUTCOMES
CHART 16: VIOLENT CRIMES (PER 1,000 RESIDENTS)
CHART 17: FIRE CALLS FOR SERVICE (PER 1,000 RESIDENTS)
CHART 18: PAVEMENT CONDITION INDEX
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).
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.
1.0 2.0 3.0 4.0 5.0 6.0 7.0
Santa Cruz
Palm Springs
Santa Maria
Santa Barbara
San Luis Obispo
Monterey
Napa
Davis
Paso Robles
40 50 60 70 80 90 100
Santa Maria
San Luis Obispo
Santa Cruz
Monterey
Paso Robles
Davis
Santa Barbara
Napa
0 50 100 150 200 250 300
Monterey
Palm Springs
Santa Maria
San Luis Obispo
Napa
Paso Robles
Santa Cruz
Santa Barbara
Davis
Conclusion
Page 9
CONCLUSION
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, 41% 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 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%
Palm Springs 9.25%
Santa Cruz 9.25%
Other Cities in SLO County (Non-Benchmark)
Atascadero 7.75%
Arroyo Grande 7.75%
Grover Beach 7.75%
Morro Bay 7.75%
Pismo Beach 7.75%
Conclusion
Page 10
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://calpoly.edu
• 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@slocity.org
STRATEGIC ECONOMICS | 2991 SHATTUCK AVE. BERKELEY, CA. 94705 | 510.647.5291
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.
San Luis Obispo Retail Sales Analysis
2
FIGURE 1: ESTIMATED SHARE OF RETAIL SPENDING BY GROUP, CITY OF SAN LUIS OBISPO, 2018 (2018 DOLLARS)
Spending Group Annual Retail
Spending Share
Visitors, Regional Shoppers and Other Non-Residents $802,165,751 54%
Residents $456,363,155 31%
Non-Resident Workers $217,988,809 15%
Total $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
Visitors,
Regional
Shoppers and
Other Non-
Residents
54%
Residents
31%
Non-
Resident
Workers
15%
San Luis Obispo Retail Sales Analysis
3
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 passing through 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.
San Luis Obispo Retail Sales Analysis
4
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.1 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.
1 For an explanation of the Bradley-Burns formula, see https://www.cdtfa.ca.gov/taxes-and-fees/local-and-district-taxes.htm
San Luis Obispo Retail Sales Analysis
5
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 spending from 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.
San Luis Obispo Retail Sales Analysis
6
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.
3 U.S. Census Bureau, Longitudinal Employer-Household Dynamics (LEHD), 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
San Luis Obispo Retail Sales Analysis
7
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.
San Luis Obispo Retail Sales Analysis
8
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)
Type of Business
Annual Per
Capita
Spending
Total Non-Resident
Worker 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://calpolynews.calpoly.edu/quickfacts.html
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.
San Luis Obispo Retail Sales Analysis
9
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.
San Luis Obispo Retail Sales Analysis
10
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
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
Los Osos Valley
Road Corridor
36%
Downtown
13%
Madonna Road Area
7%
Airport
4%
Foothill
3%
Other
38%
San Luis Obispo Retail Sales Analysis
11
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.7
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 passing through 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
7 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.
San Luis Obispo Retail Sales Analysis
12
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%
Foothill
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.