Staff recommends that the City Council adopt a Resolution authorizing the City Manager to enter into an agreement in an amount not-to-exceed $160,000 with TBWBH Props and Measures, including public polling with Godbe Research, to provide professional services regarding the consideration of future tax measures that require voter approval.  The purpose of considering tax measures would be to maintain core City services, including police; fire; maintenance of City facilities; parks and roads; and provide recreational and social service programs for our youth, families and seniors.

Goal A. Financial Stability and Sustainability

Strategy: Study and prepare for placement of a revenue measure for November 2022 election that addresses the expiration of the half-cent sales tax; or, prepare for a $6 million in service cuts.   

Strategy: Study the benefits and opportunities to update the City's business license tax for voter consideration. 

Goal C. Economic, Community Development and Public Safety

Strategy: Analyze the feasibility of transforming warehouses to attract high-value industrial and commercial uses for the benefit of community.

Union City adopted a five-year strategic plan in September 2019 to establish goals and strategies to guide the City Council's agenda.  The primary goal of the plan is to “foster fiscal health through long-term planning, cost control, heightened efficiency, increased revenue and cost recovery." The City has taken several steps to improve its fiscal health over the past three years, including legalizing and taxing cannabis sales and reducing contract costs with Alameda County Fire Department.  Additionally, a majority of Union City voters passed the utility user tax (UUT) after the extension of the public safety parcel tax failed to receive 2/3 voter support.  Without the passage of the UUT, the general fund would have incurred over $4.2 million dollars in losses to public safety (police and fire) and the youth violence prevention programs. 

Union City voters adopted a 1/2 cent sales tax in 2010 (Measure AA) and renewed the measure in 2014 (Measure JJ) for 10 years that has helped the City achieve fiscal stability.  The sales tax measure will expire April 2025 unless it is extended by voters at a general election in 2022 or 2024. Union City has relied upon voter approved measures to provide fundamental services in the community, including, but not limited to, public safety, street and park maintenance, senior services, and youth violence prevention programs.  With the expiration of the 1/2 cent tax on the horizon, staff have regularly shared with the Council that the general fund will lose more than $6 million in revenues.  In acknowledgement of this future funding gap, as part of the strategic plan the Council adopted a strategy to study and prepare for placement of a revenue measure for November 2022 election that addresses the expiration of the half-cent sales tax; or, prepare for a $6 million in service cuts.  While the 1/2 cent sales tax will not expire until early 2025, to delay consideration of a ballot measure until 2024 will leave the Council with only one opportunity to engage the voters on the possible extension of the tax measure and create a great deal of fiscal uncertainty for employees. 

On October 26, 2021, the Council received a briefing from the Economic Development Advisory Team (EDAT) and strategy recommendations to support the transformation of warehouses to higher-end uses. Several strategies were considered, among which, was a strategy to update the business license tax structure and authorize staff to engage consultants to address polling and strategies to determine timing of future ballot initiatives. The purpose of this strategy is to shift the business license tax burden from small businesses to large, warehouse uses that often do not provide much tax revenue to the general fund or many jobs in the community.  The Council unanimously supported this strategy to explore increasing the business license tax. Similar to the 1/2 cent sales tax extension, increasing the business license tax would need to be brought before the voters at a general election. 

In consideration of planning for the long-term fiscal health of the community, staff has engaged TBWBH Props and Measures and Godbe Research to assist the City in evaluation of possible ballot measures for the 2022 election.

Staff has engaged Charles Heath, TBWBH Props and Measures and Brian Godbe, Godbe Research to prepare a comprehensive proposal that includes feasibility assessment and polling of up to two ballot measures, including the extension of the ½ cent sales tax and the business license tax increase; ballot measure development; and public information. The proposal and timeline are attached to the resolution.  

This agreement is coming before the City Council because there are several important milestones in the next several months, including:

•  February - Study session on the possible fiscal impacts of increasing business license tax;
• February/March - Final direction and ballot language on the business license tax;
• March 2022- Public polling for the extension of the ½ cent sales tax and the business license tax;
• April 2022 - Polling results reported to Council; Council provides direction on ballot measures;
• May/June 2022 – Public information and outreach and drafting of election resolutions, ordinances and final ballot question;
• July/August 2022 – Council acts to place possibly measures on ballot;
• August 12, 2022 – Deadline for Registrar of Voters to receive measure for November 2022 ballot.  See Attachment 1 for a detailed timeline.

The proposal includes both the work of TBWBH Props and Measures and Godbe Research.  Both consultants have extensive experience working in Union City and have provided professional services on past ballot measures and the 2021 citywide community survey.  See Attachment 2 for the proposed scope of service.

Funds for this Consultant Services Agreement were included in the FY 2021-2022 Adopted Budget in Account Number 1110-1201-11041-54218 (Community Relations-Community Promotions) in anticipation of a need to communicate with residents about the future expiration of the 1/2 cent sales tax.  No funds were budgeted for the consideration of a business license tax increase.  However, there are sufficient salary savings available in the City Manager’s Office – Community Relations Division budget to cover the proportional cost of analyzing the possible proposal to increase the business license tax.  The not-to-exceed cost of the TBWBH Props and Measures contract is $160,000 and includes the scope of services for both TBWBH Props and Measures and Godbe Research.

Staff recommends that the City Council adopt a Resolution authorizing the City Manager to enter into an agreement in an amount not-to-exceed $160,000 with TBWBH Props and Measures, including public polling with Godbe Research, to provide professional services regarding the consideration of future tax measures.