The purpose of this staff report is to brief the City Council on the services funded by the Public Safety Parcel Tax since the adoption of the first Public Safety Parcel Tax in March 2004, and to provide a brief summary for each of the four tax measure placed before the voters.  Three measures were passed by the voters and one measure was rejected.    

After presentation of the staff report, the City Council is asked to provide direction on:

• The tax rate:  Either to continue the current tax rate of $158 (2% above the prior year), or establish an increased tax rate of $175 for a 5,000 sq. ft. residential parcel, which is the most common type of residential parcel;

• The duration of the tax: four years or eight years; and
• The inflation formula for the tax: Continue with a two percent annual escalation or index future increases to CPI.

Upon receiving direction from the City Council, the City Attorney will draft an ordinance for the renewal of the Public Safety Parcel Tax and return to the City Council November 26, 2019 for the City Council to adopt the ordinance for placement on the March 2019 ballot. 

For sixteen years voters have approved a dedicated source of local funding to keep Union City safe. The first Public Safety Parcel Tax was approved by voters in March 2004. Union City voters continued to support this local public safety funding in two additional municipal elections – 2008 and 2016. Altogether, voters have approved the Public Safety Parcel Tax three times by a two-thirds margin each election. The Public Safety Parcel Tax has raised approximately $50 million since 2004 to support Police, Fire and Youth and Family Services. 

The current Public Safety Parcel Tax passed by voters in 2016 was approved for a four-year term and is set to expire at the conclusion of Tax Year 20/21, which ends June 30, 2021.

The table below summarizes each ballot measure considered by Union City voters:  the percentage outcome, the numeric voting totals, the tax rate per 5,000 sq. ft. residential parcel, inflationary adjustment, and tax term.  For ease of comparison the tax rate for a 5,000 sq. ft. lot covers the range of parcels from 5,000 square feet up to 9,999 square feet.  This is the most common single-family lot size in Union City.   Ninety-three percent of the parcels in Union City are single family units, town houses, and condominiums.  

Public Safety Parcel Tax Ballot Measure Historical Summary:

Measure   Date         Percent     Percent    Total   Total     Rate         Term          Inflation         

                                  Yes            No             Yes      No        5,000 sf.

A detailed schedule of the tax rate for each of the seven different types of residential parcels and for each of the six types of commercial parcels, for each tax year, for each of the measures placed before the voters is attached as Exhibit 1.

The passage rate for the Public Safety Parcel Tax increased each election, with the exception of the failed measure in June 2008.  Higher voter turnout in an election correlates with higher percentage of ‘yes’ votes.  The first Measure K adopted in March 2004 had 9,518 total votes cast on the measure with 68.9 percent support.  The November 2016 Measure QQ had 23,977 total votes cast on the measure with 78.16 percent support. 

• Measure K, June 2008 was the only measure to fail.  Measure K considered by the voters in June 2008 had the lowest voter turnout.  The Measure proposed to increase the tax rate 64 percent and would have been a 20 year tax.

The original Measure K (2004) was indexed to CPI.  Measure UU and QQ had a two percent cap on annual increases.  Other relevant points  regarding the various tax measures include:

• The first two Measure Ks had local citizen organized advocacy campaigns.

• Measure UU in November 2008 had an earmarked $500,000 increase to specifically fund Youth and Family Services. Youth advocates were committed to the passage of Measure UU.  A private donor provided the organization COR funding to hire a professional campaign consultant to organize the Measure UU campaign.  

• With the assistance of an independent consultant, the City organized an educational program on Measure QQ in November 2016.

The three successful Public Safety Parcel Taxes cumulatively generated $50 million since the first tax was placed on the FY 2004/2005 tax roll.  Funding generated by the Public Safety Parcel Tax has served local needs contributing to:

• Maintaining 911 emergency response, paramedic services and neighborhood police patrols provided by the Union City Police Department;

• Maintaining fire prevention and protection provided through a contract with the Alameda County Fire Department;

• Maintaining youth violence prevention and gang intervention programs provided by Youth and Family Services;

• The City has witnessed a 30 percent reduction in youth violence and property crimes; and

• Increasing the local high school graduation rates.

The tax roll for FY 19/20 is projected to generate $4.3 million allocated to Union City Police Department, fire services and Youth and Family Services specifically to fund:

• $1.9 million for the Police Department.  This funds the equivalent of eight to nine police officers, which cover three shifts (day, swing, and nights) on Monday, Tuesday, and Wednesday of police patrols responding to an average of 118 calls for service in a 24 hour period.

• $1.8 million for the Alameda County Fire Department. This funds the equivalent of slightly more than one-half a fire station annually.  

• $0.6 million for Youth and Family Services (YFS).  This funds 10 staff positions that provide services to approximately 300 clients a year in the form of youth and family counseling; crisis support; youth outreach and intervention; case management; life skills and support services; mentoring programs for youth at the School District; and, parent workshops. In addition, the funds from the Public Safety Parcel Tax help to leverage multi-year grant funding from Alameda County Probation and other agencies generating approximately $319,000 annually.  

Had the Public Safety Parcel Tax rate been indexed to CPI since FY 09/10, rather than a two percent cap, an additional $1.8 million would have been generated.  City expenses for Police, Fire, and Youth and Family Services have increased more than two percent a year.  For example, the Union City Police Department had 81 sworn officers in July 2009, and today has 77 sworn positions.  

If the Public Safety Parcel Tax is not approved by voters in March 2020, the City Council could reshape the measure and place it on the November 2020 ballot.  If voters rejected extending the Public Safety Parcel Tax in November 2020, the City Council would need to make budget cuts in excess of an additional $4.4 million in FY 21/22.  Additional budget cuts of $4.4 million per year would impact all City departments, including the Police Department, Youth and Family Services and the fire service contract. 

Considerations for Renewing the Public Safety Parcel Tax

The City Council is asked to provide direction on the new tax that will be collected in FY 21/22 if approved by voters:

• Rate:  1) Continue the existing tax rate, which will be $157.89 in 21/22 tax year; or 2) Establish a new tax rate of $175. 
• Term: four years or eight years; 
• Inflation formula: Continue with a 2 percent annual escalation or index future increases to CPI;

Setting a new tax rate at $175 for a typical 5,000 sq. ft. lot is equivalent to an increase of $17.11 per year, or about 11 percent.  Cumulatively, the new tax rate would generate $20.6 million in four years, or an approximate $500,000 more annually. For illustrative purposes, the increase in funding could restore two sworn police officer positions that have been cut.

Staff prepared tax rates per parcel and income projections on each of the rate options the City Council is asked to consider.  The tables below summarize the tax rate for a single family unit on a 5,000 sq. ft. lot and income projection after four years and eight years for each of the rate options for the City Council to consider.  Exhibits 2 through 5 provide more detail on tax rate for each type of parcel and annual income per year.

I.  Continue Existing Tax Rate Indexed to Two Percent

    (See Exhibit 2 for Detail)

Four Year Tax

• $157.89  Tax rate 5,000 sq. ft. parcel single family unit in FY 21/22

Equivalent to $4.52 million in FY 21/22

• $167.56   Tax rate 5,000 sq. ft. single parcel family unit in FY 24/25

Equivalent to $4.79 million in FY 24/25

These projections exclude new parcels coming onto tax role, which are not anticipated to be significant in the next four years

Eight Year Tax

• $170.91  Tax rate 5,000 sq. ft. parcel single family unit in FY 25/26

Equivalent to $4.89 million in FY 25/26

• $181.37   Tax rate 5,000 sq. ft. parcel single family unit in FY 28/29

Equivalent to $5.19 million in FY 28/29

These projections exclude new parcels that may be added to tax role, which could be significant with the buildout of Integral, Caltrans, Windflower 2, and Woodstock 1.2. 

II.  Continue Existing Tax Rate Indexed to CPI

     CPI indexed to three percent annually  

     (See Exhibit 3 for Detail)

Four Year Tax

• $159.44  Tax rate 5,000 sq. ft. parcel single family unit in FY 21/22

Equivalent to $4.56 million in FY 21/22

• $174.22 Tax rate 5,000 sq. ft. single parcel family unit in FY 24/25 

Equivalent to $4.98 million in FY 24/25

These projections exclude new parcels coming onto tax role in the next four fiscal years which are not projected to be significant

Eight Year Tax

• $179.45  Tax rate 5,000 sq. ft. parcel single family unit in FY 25/26

Equivalent to $5.14 million in FY 25/26

• $196.09  Tax rate 5,000 sq. ft. parcel single family unit in FY 28/29

Equivalent to $5.61 million in FY 28/29

These projections exclude new parcels added to tax role, which could be significant with the buildout of Integral, Caltrans, Windflower 2, and Woodstock 1.2. 

III.  Set New Base Tax $175 for 5,000 sq. ft. Residential Parcel Indexed to Two Percent

       (See Exhibit 4 for Detail)

Four Year Tax

• $175.00   Tax rate 5,000 sq. ft. parcel single family unit in FY 21/22

Equivalent to $5.01 million in FY 21/22

• $185.71   Tax rate 5,000 sq. ft. single parcel family unit in FY 24/25

Equivalent to $5.31 million in FY 24/25

These projections exclude new parcels coming onto tax role, which are not projected to be significant in the next four years.

Eight Year Tax

• $189.43  Tax rate 5,000 sq. ft. parcel single family unit in FY 25/26

Equivalent to $5.42 million in FY 25/26

• $201.02  Tax rate 5,000 sq. ft. parcel single family unit in FY 28/29

Equivalent to $5.75 million in FY 28/29

These projections exclude new parcels added to tax role, which could be significant with the buildout of Integral, Caltrans, Windflower 2, and Woodstock 1.2

. 

IV.  Set New Base Tax $175 for 5,000 sq. ft. Residential Parcel Indexed to CPI

      CPI indexed to three percent annually

      (See Exhibit 5 for Detail)

Four Year Tax

• $175 Tax rate 5,000 sq. ft. parcel single family unit in FY 21/22

Equivalent to $5.01 million in FY 21/22

• $191.23   Tax rate 5,000 sq. ft. single parcel family unit in FY 24/25

Equivalent to $5.47 million in FY 24/25

These projections exclude new parcels coming onto tax role which are not projected to be significant

Eight Year Tax

• $196.96  Tax rate 5,000 sq. ft. parcel single family unit in FY 25/26

Equivalent to $5.63 million in FY 25/26

• $215.23  Tax rate 5,000 sq. ft. parcel single family unit in FY 28/29

Equivalent to $6.16 million in FY 28/29

These projections exclude new parcels added to tax role, which could be significant with the buildout of Integral, Caltrans, Windflower 2, and Woodstock 1.2. 

Polling Results Summary

To help inform the Council’s decisions related to a ballot measure to renew the Public Safety Parcel Tax, the City commissioned Godbe Research to conduct a statistically reliable opinion poll of local voters to measure local attitudes and opinions. The survey was conducted by telephone interviewing (landline and cell phone) as well as text message invitation to a web survey and email invitation to a web survey. Through these outreach methods, a representative sample of 521 Union City voters likely to participate in the upcoming 2020 elections was obtained, which results in a statistical margin of error due to sampling of +/- 4.25%. The survey was conducted between July 29, 2019 and August 8, 2019. The key findings from the survey are as follows:

• A strong majority of voters have a favorable opinion of the job Union City does providing community services (63% favorable; 22% unfavorable). By comparison to similar research in other cities, Union City voters hold favorable opinions of the City.

• When presented with a mockup of a potential measure to renew the Public Safety Parcel Tax at a rate of $175 for the most common category of residential parcels, 62% of voters indicated support, 26% indicated opposition and 10% were undecided. While this initial support level is just below the 66.7% threshold required for passage, it is within the statistical margin of error of the passage threshold and indicates potential viability for this proposal.

• Lower tax rates tested received lower levels of support, indicating that voters are comfortable with the $175 rate for most residential property owners.

• Voters ranked the following priorities as the most important use of funds from the Public Safety Parcel Tax:

 

• Maintaining 9-1-1 emergency response times and paramedic services
• Enhancing safety at public schools
• Maintaining fire protection services
• Maintaining emergency and disaster preparedness programs
• Maintaining neighborhood police patrols
• Maintaining youth violence prevention and gang intervention programs

• After hearing more information about the Public Safety Parcel Tax, how the funds are spent and the potential impact of the funds expiring, support rose to 72%, surpassing the 66.7% passage threshold. With information, lower tax rates continued to receive lower levels of support. 

• Voters indicated support for a duration of up to 8 years. Voter support above the two-thirds threshold was also measured for a duration of 4 years.

 Based on their analysis of these results, the City’s consultants concluded that placing a Public Safety Parcel Tax renewal measure on the March 2020 ballot at a rate up to $175 for the most common category of residential parcels for a period of up to 8 years is viable. The consultants also concluded that having the measure adjust annually for actual inflation based on a common index such as CPI rather than a fixed annual two percent adjustment factor will not have a meaningful impact on viability. Inflation adjustments tied to CPI are very common for California and Bay Area cities. Finally, the renewal measure should continue to include accountability protections from the existing measure, including an independent citizens' oversight committee.

Renewal of the Public Safety Parcel Tax could generate:

• $18.6 million for FY 21/22 – FY 24/25 if renewed at the existing rate, indexed to a two percent annual escalation for four years (ranging between $4.52 million and $4.79 million annually)
  
  
• $20.6 million for FY 21/22 – FY 24/25 if a new base rate of $175 is set for 5,000 sq. ft. single family parcels and indexed to two percent annual escalation (ranging between $5.01 million and $5.31 million annually)

Adjusting the tax rate term from four to eight years would increase the yield to between $38.8 million and $44.6 million depending on the initial tax rate and whether or not the escalation is two percent or indexed to CPI. 

If the Public Safety Parcel Tax is not renewed, approximately $4.4 million would need to be cut from the City's budget in FY 21/22.  This would be a significant budget cut that would likely impact all City departments. 

Staff recommends that the City Council provide direction on the renewal of the Public Safety Parcel Tax:

• The tax rate: 

1. Current annual tax rate which equates to $157.89 per 5,000 sq. ft. residential parcel; or

2. Set new base rate of $175 per 5,000 sq. ft. residential parcel.  

• The duration of the tax: four years or eight years;

• The inflation formula for of the tax: continue with a two percent annual escalation or index future increases to CPI.