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Home My WebLink AboutItem 8.2 RevenueOptions1993-94 (2) . . .] .' . . CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: March 22, 1~ SUBJECT: 1993-94 Revenue Options (Prepared by: Richard C. Ambrose, city Manager) EXHIBITS ATTACHED: Revenue options Report and Attachments 1.~ Memorandum from Assistant City Manager Regarding Unimproved Civic Center Office /space dated February 19, 1993 2. Real Documentary Transfer Tax survey 3. Receive Staff presentation Identify which revenues Staff should pursue to offset a cut in revenues by the state. Identify which revenues should be pursued irrespective of the state legislature's action. RECOMMENDATION: \Z{v ;: FINANCIAL STATEMENT: See below DESCRIPTION: On February 8, 1993, the City council was presented with a report on the 1993-94 City Budget shortfall in the event that the Governor's Budget proposal is enacted. Staff estimated that this shortfall would exceed $1 million. The City council gave Staff direction that, in preparing the 1993-94 Budget, 50% of the shortfall should come from expenditure reductions and 50% of the shortfall should come from revenue enhancements. Staff was also directed to prepare a report which provided the city council with more information regarding the various revenue raising options available to the city. Staff has prepared the attached Revenue options Report for the purpose of SOliciting council direction on which revenues should be pursued by Staff for the purpose of offsetting anticipated 1993-94 revenue shortfalls. Of those revenue options identified in the report, all options could be implemented to take effect in Fiscal Year 1993-94 with the exception of: 1) Fireworks Permits 2) EMS Assessments 3) Fire Assessments (?) 4) Library Funding The City Council should consider that the City may not know how much local revenue will be taken by the state until after the City Budget is adopted. In order that the city is prepared for 1993-94 for both local revenue shortfalls and the possible State revenue take, the City council may wish to take a two-tiered approach in which it identifies those revenues which should be pursued immediately, and those revenues which should be pursued once the impact of the State Budget on the city is known. Based upon the City Council's earlier discussion, it would be prudent to identify revenue sources that would generate at least another $500,000 in revenue. a: 322RevOp.agenda#12 ~~~~-~---~-----------------~~~~-~~---------------~--~~----~------------ ITEM NO. 8..2 COPIES TO: t' . . REVENUE OPTIONS REPORT REVENUE TYPE A. FEES FOR SERVICE 1. BUILDING PERMIT FEES - Additional Revenue $93,000 a. Description: The City currently accordance with the are associated with Inspection. The fee 1982. charges a building permit fee in Uniform Building Code. These fees Plan Checking, permit Issuance and schedule has not been revised since b. Cost of Service vs. Revenue Bldg & Safety Cost (1) Building Permit Fees surplus (Deficit) Fiscal Year 1992-93 1991-92 1990-91 1989-90 1988-89 1987-88 $ 254,801(2) 261,827 352,439 325,858 300,454 320,056 152,000(2) 173,666 180,720 302,818 282,014 513,550 (102,801) (88,161) (171,719) (23,040) (18,440) 193,494 (1) These costs do not include general overhead, i.e. building, utilities, insurance, administration, etc., or Planning review time associated with Building Permits. (2) These amounts are those budgeted in 1992-93. All other amounts ere actual. As shown above, Building Permit fees for service have not covered the direct cost for service for the last several years. c. Revenue Generated bv Increasina Fees For most types of permits issued by the Building Department, the city of Dublin's fee is lower than other Valley Cities and Alameda County. If the city had raised its fees to be comparable to fees charged by neighboring cities in 1992-93, the city would have generated an additional $93,000 in Building Permit fees in Fiscal Year 1992-93. Total 1992-93 revenues would have been slightly less (approximately $9,500) than the 1992-93 Building & safety Department Budget, excluding General Overhead. . . d. Implementation To increase these fees, the city council would need to modify the city's fee resolution after conducting a public hearing with at least 10 days advanced published notice. This increase would be effective immediately thereafter. 2. ENCROACHMENT PERMITS - Additional Revenue $8,000 a. Description The city currently charges fees to individuals and agencies (i.e. DSRSD, Pacific Bell, PG&E, etc.) that do work in the street right-of-way and easements. The services provided include: plan review, inspection, marking city-owned underground facilities, and permit issuance. The fees charged are those charged by the County prior to the cityfs incorporation in 1982. b. Cost of service vs. Revenue During calendar year 1992, the city issued a total of 127 encroachment permits at an estimated cost of $10,086. The actual fees received totalled $6,023. Approximately 75% of the encroachment permit costs are generated by utility companies. c. Revenue Generated bv Increasing Fees To recover the city's costs of administering encroachment permits, permit fees would need to be increased approximately 67%. In addition, since trenching by utility companies reduces the life of city streets, a slurry seal surcharge should be considered on encroachment permits that involve trenching. The 67% fee increase and slurry surcharge would generate an additional $8,000jyear in revenue. d. Implementation To increase these fees, the city council would need to modify the cityfs fee resolution after conducting a public hearing with at least 10 days advanced published notice. The increase would be effective immediately thereafter. 3. PRE-PLANNING ApPLICATIONS FOR DEVELOPMENT PROJECTS - Additional Revenue $3,000 a. Description The city currently issues approvals for various types of land use applications. For most major planning applications, the city charges actual cost of providing planning service once an application has been submitted; however, city personnel are often asked to consult with Page 2 " . . private landowners/developers to review a preliminary plan before a planning application is submitted or not submitted. The landowner/developer is not currently charged for this preliminary consultation. b. Cost of Service vs. Revenue The estimated cost of providing this service last year was $3,000. No revenue was collected for this service. c. Revenue Generated from Increasinq Fees Based on last year's activity, it is estimated that a $350 fee would have generated approximately $3,OOO/year. If the demand for service grows, so would this revenue. d. Implementation To increase these fees, the city Council would need to modify the City's fee resolution after conducting a public hearing with at "least 10 days advanced published notice. The increase would be effective immediately thereafter. 4. MINOR PLANNING ApPLICATIONS - Additional Revenue $43,000 a. Description For other types of planning applications, i.e. Variances, Conditional Use permits, Administrative conditional Use permits, Appeals, etc., the city charges a flat fee which ranges from $25 to $130 per application for Staff processing costs. b. Cost of Service vs. Revenue The flat fees charged for minor planning applications currently do not cover the costs of permit processing. For example, the average Conditional Use Permit costs the City approximately $1,200 to process, the City collects a flat fee of $130. c. Revenue Generated from Increasina Fees If the City charged a fee to cover the actual cost of processing minor planning applications (not including general city overhead), the city would generate an additional $43,000/year in revenue based upon the current level of activity. d. Implementation To increase these fees, the city council would need to modify the city's fee resolution after conducting a public hearing with at 'least 10 days advanced published notice. This increase would be effective immediately thereafter. Page 3 .' . . 5. FIX-IT TICKET SIGN-OFFS - Additional Revenue $1900-$5000 a. Description The Police Department signs off tickets for vehicle owners who were cited for vehicle mechanical/equipment violations. The Police Department estimates that a total of 500 citations were signed off last year, of which 381 were signed off during business hours at the civic Center. These sign-offs usually require that an officer leave his/her duty in the field to inspect the vehicle and sign off the ticket. b. Cost of service vs. Revenue The real cost of this service is lost patrol time. The actual cost varies depending upon whether the citation is signed off in the field or the officer comes to the civic Center. It is estimated that approximately one-half of the citations signed off are issued by other law enforcement agencies. c. Revenue Generated from Establishinq Fee Presently, none of the other Cities in the valley charge for signing off equipment citations. Depending upon whether the City charged for signing off only citations issued by other agencies or all citations, the revenue generated may range from $1,900 to $5,000 per year. d. Implementation To establish this fee, the city council would need to modify the city's fee resolution after conducting a public hearing with at least 10 days advanced published notice. This increase would be effective immediately thereafter. 6. FIREWORKS PERMITS - Additional Revenue $3,300 a. Description The Municipal Code currently allows the city to issue permits for the sale of fireworks. The permit process is currently administered for the city by the Dougherty Regional Fire Authority. Fire Personnel currently review the qualifications of the applicant, hold a lottery, issue permit, increase fire patrol on July 4th, and inspect fireworks booth clean-up. b. Cost of Service vs. Revenue All applicants currently pay a $150 permit fee; those applicants who are not successful in obtaining a permit receive a $75 refund. This fee currently does not cover the cost associated with administering the Fireworks Page 4 " . . Permit process and providing additional patrol. Last year, the estimated cost of administering the Fireworks Program was approximately $6,100. Total revenues for last year's program were $1,275. c. Revenue Generated bv Increasinq Fees If fees were increased to recover the actual cost, a fee of $900 per application would be necessary. It is estimated that this fee would generate approximately $7,000 for the Fire Authority due to the increased number of booths anticipated due to population growth. Of that amount, the city of Dublin would realize approximately a net $3,300 in reduced fire costs. d. Implementation In order to increase the Fireworks Permit fees, the city council would have to modify the existing ordinance. This would require 10 days advanced published notice and 2 public hearings. The change in fees would become effective 30 days after the ordinance was adopted. The current ordinance requires applications to be submitted between April 1 and April 30; therefore, this fee increase could not be accomplished until Fiscal Year 1993-94. 7. FIRE INSPECTION SERVICES REOUIRED BY OTHER AGENCIES - Additional Revenue $3,335. a. Description The Fire Department currently inspects childcare and health care facilities. These facilities cannot receive permits/licenses from the State of California without these fire inspections. These inspections are currently performed at no cost to the applicant. b. Cost of service vs. Revenue The Fire Department currently conducts approximately 115 of these inspections each year. Although the costs are unknown, Staff believes the cost would exceed the $50 maximum inspection fee currently allowed under state law. c. Revenue Generated bv Establishinq Fee If DRFA charged $50 per inspection, the Fire Authority would generate an additional $5,750 per year in revenue. This would result in an estimated $3,335 reduction in fire costs to the city of Dublin. d. Implementation The City would need to request that the Fire Authority implement this fee by resolution. Page 5 . . 8. RECREATION FEES - Additional Revenue $51,325 a. Description The Recreation Department currently offers a number of recreational opportunities for all ages in the City. Fees are charged for programs, as well as facility use in most cases. b. Cost of Service vs. Revenues As shown below, the city does not fully recover the cost of those programs provided in the Recreation Department. Recreation Admin. Playgrounds Shannon Center Preschool Classes Teen Program Adult Sports Program Youth Sports Program Special Events Senior Center Recreation Classes Aquatics TOTAL Budget 1992-93 $180,239 82,443 112,161 36,224 28,382 112,417 24,879 29,680 104,784 86,428 194,219 $991,856 Estimated Revenue 1992-93 $ 0 33,120 49,000 36,105 3,957 133,890 13,335 10,075 19,521 63,105 65,650 $427,758 c. Revenue Generated bv Increasinq Fees Net Program Cost $180,239 49,323 63,161 119 24,425 -21,473 11,544 19,605 85,263 23,323 128.569 $564,098 Since the City Council adopted the 1992-93 Budget in June 1992, the Council has increased Facility Use Rental fees for the Shannon Community Center and civic Center, and admission fees for the Dublin Swim Center. It is estimated that these will generate $7,350 and $10,180 in Fiscal Year 1993-94 respectively. The Recreation Staff has also identified those fees that could be raised in the following areas in 1993-94 without significantly impacting participation in Recreation programs: Playgrounds Preschool Senior Center Recreation Classes Aquatics Classes TOTAL $20,890 2,435 4,185 8,915 14,900 $51,325 These possible increases in fees have not yet been reviewed by the Park and Recreation Commission. Page 6 . . d. Implementation A proposed increase in these fees should be reviewed by the Park and Recreation commission. The city council would then need to modify the city's fee resolution after conducting a public hearing with at least 10 days advanced published notice. The increase would be effective immediately thereafter. 9. TOWED AND STORED VEHICLE RELEASE FEE - Additional Revenue $2,130 to $4,260 a. Description Dublin Police Services is often called upon to tow vehicles from the city streets and order them stored by contract towing and storage companies. The vehicles are towed and stored for a variety of reasons such as being abandoned, having current fees outstanding, being unsafe on a roadway, and when the driver is arrested. After the vehicle has been towed and stored, Dublin Police services notifies the registered owner by mail of this fact, where the vehicle is stored, and of the registered owner's responsibility to respond to Dublin Police services to obtain a Police Department release for the vehicle. This release is necessary so that the Police Department can be satisfied that the registered owner has corrected the problem or problems that led to the vehicle being towed and stored. In calendar year 1992, one hundred forty-two (142) notifications were made to registered owners regarding towed and stored vehicles. It is estimated that a similar number will be towed and stored in 1993. Of the one hundred forty-two (142) vehicles towed and stored, approximately 50% are recovered by the registered owners. The remaining vehicles are usually classified as "junk" and are disposed of by the various towing and storage companies. b. Cost of Service vs. Revenue The cost of this service is in lost clerical time, and the possibility of lost patrol time, as an officer must be involved to formally authorize the release of the vehicle. It is estimated that each vehicle release takes approximately twenty (20) minutes of clerical records staff time, as a letter must be generated, and the subsequent personal contact. Lost patrol time is estimated to be approximately twenty (20) minutes, as the officer must be detailed from patrol duties and respond to the Police Department. In addition, there is a cost factor incurred by the city of Dublin cashier or finance personnel to process the incoming receipts. Page 7 . . No revenue is currently collected for this service. c. Revenue Generated bv Establishinq Fee Based on the time required from both clerical and badge personnel to process each vehicle release, it is proposed that the City of Dublin establish a $30.00 fee, per vehicle release. Currently, the city of oakland charges $35.00 per vehicle release, the city of Fremont charges $43.00 per vehicle release, and the city of Pleasanton charges $12.00 per vehicle release. All of these agencies indicate that they will be reevaluating these fees with the object of increasing them in the future. Based on the proposed $30.00 fee per vehicle release, it is estimated that this would generate between $2,130 (low end estimate for 71 vehicles released) and $4,260 (high end estimate for 142 vehicles released) of additional revenue per year. d. Implementation To establish this fee, the city council would need to modify the city's fee resolution after conducting a public hearing with a least 10 days advanced published notice. This increase would be effective immediately thereafter. 10. CRIMINAL BACKGROUND CHECK FEE - Additional Revenue $3,000 a. Description Dublin Police Services routinely processes requests from various government agencies to conduct local criminal background checks on subjects being considered for employment wi thin that agency. The Police Department estimates that a total of 300 requests are processed annually by the Records Section. These requests are received both at the front counter during regular business hours, and by mail. b. Cost of Service The cost of this service is in lost clerical time from regular assigned duties for the clerks in the records section. When the requesting party comes in person to the office, it is estimated that each records check takes an average of five (5) minutes to complete. When records checks are received by mail, it is estimated that these checks require an average of ten (10) minutes to complete, as a letter must be generated. Dublin Police services estimates that an averaae of seven (7) minutes for all individual background checks is indicated. In addition, there is a cost factor incurred by the City of Dublin cashier or finance personnel to process the incoming receipts. Page 8 . . c. Revenue Generated from Establishinq Fee No other city in the County currently charges fees for conducting background checks for governmental agencies. Alameda County Consolidated Criminal Records charges a fee of $2.00 per name with $.50 per alias, with an additional fee of $25.00 per criminal history printout. It is proposed that the City of Dublin establish a $10.00 fee, per name, for each background check requested. It is estimated that this would generate approximately $3,000 in additional revenue per year. d. Implementation To establish this fee, the city Council would need to modify the city's fee resolution after conducting a pUblic hearing with at least 10 days advanced published notice. This increase would be effective immediately thereafter. B. POLICY CHANGES - TRANSFER COST OF SERVICE TO PROPERTY OWNERS 1. SAFETY REPAIR OF SIDEWALKS - Revenue/Avoided Cost $50,000 a. Description State Law currently requires property owners to maintain sidewalks abutting' their property in safe condition. Since incorporation, the City has annually agreed to provide these repairs, provided adequate City funding is available. The city Council could change this policy and require property owners to assume responsibility for sidewalk repair. b. Cost of Service vs. Revenue The City has historically spent $50,000 a year for sidewalk safety repair. The City currently receives no revenue for this program. c. Avoided Cost/Increased Revenue for Chanqe in policv It is anticipated that the sidewalks, thus performing the work. would rely on the City some property owners would repair reducing the ci ty' s cost of The majority of property owners to perform the work. The City would save an estimated $50,000 annually. d. Implementation City Council would need to pass a resolution revising the Sidewalk Repair POlicy. staff would need to notify property owners of their responsibility for defecti ve sidewalks. If the property owner did not perform work, City would perform work and bill property owner. If the Page 9 . . bill was not paid, the city would need to place a lien on the property subsequent to conducting a public hearing. C. ASSESSMENTS 1. EMERGENCY MEDICAL SERVICE FIRST RESPONDER SERVICE - Revenue generated - approximately $25,000 a. Description In Alameda County, the Emergency Medical Services (EMS) District is primarily responsible for providing basic and advanced life support services throughout most of Alameda County, including the City of Dublin. The Emergency Medical Services District currently charges county residents an assessment in order that these services can be provided. The EMS District also currently allows Cities to request a supplemental assessment to be charged to City residents to cover those services provided by the fire departments which support the Emergency Medical System response. b. Cost of Service vs, Revenue Fire Services are currently provided to the city of Dublin by the Dougherty Regional Fire Authority (DRFA). Those training costs incurred by DRFA which are associated with the EMS system are eligible expenses to be covered by a supplemental assessment. It is currently estimated that uncovered training costs are approximately $25,000 per year. c. Revenues Generated from Assessments The EMS District currently uses a formula to develop District Assessments which are based upon the number of benefit units in each service area. One benefit unit is assigned to each single family resident. The formula varies for non-residential property. The City of Dublin is currently assigned 8,315 benefit units. DRFA could charge approximately $3. OO/benefit unit/year to recover EMS related training costs. This would reduce the city of Dublin's contribution to DRFA by approximately $25,000/year. d. Implementation The city of DUblin would need to request DRFA to consider the matter by holding a public hearing. If the DRFA Board concurred, it would adopt a resolution requesting that the Alameda County Board of Supervisors consider levying a supplemental EMS assessment in the city of Dublin. The Board of Supervisors could adopt, reject, or modify the supplemental assessment. The request would have to be submitted to the Board of supervisors prior to April 15 in order to be effective for the following fiscal year. page 10 . . 2. ASSESSMENT FOR FIRE SUPPRESSION SERVICES - Revenue Generated would vary depending upon assessment. a. Description Government Code section 50078 authorizes a city or Fire Authority to impose an assessment for fire suppression services, including acquisition and maintenance of equipment or apparatus and payment of salaries on all or certain parcels of property. b. Cost of Service vs. Revenue Fire Service is provided to the city of Dublin and the southern half of the city of San Ramon by the Dougherty Regional Fire Authority. The cities of Dublin and San Ramon contribute from their respective General Funds approximately 96% of the total Fire Authority Budget. The city of Dublin's contribution to the Fire Authority is shown below: Fiscal Year Actual Amount % Inc. 1998-89 $1,808,323 1989-90 2,010,041 11.1% 1990-91 2,233,302 11. 1% 1991-92 2,416,709 8.2% 1992-93 2,672,950* 9.6% * Amount Budgeted C. Revenue Generated from Assessments Staff has not evaluated the most appropriate structure for a fire suppression assessment; however, if the same structure was used as is used for EMS, $8,315 would be generated for each $1.00 per benefit unit. d. Implementation Ei ther the City or DRFA could impose an assessment for fire suppression services. To impose an assessment, the city Councilor DRFA must hold two noticed public hearings. At least 45 days pUblic notice must be given of the pUblic hearing at which the City Council proposes to enact the assessment. The notice must be sent to all property owners. If property owners representing 5%, but less one third of the expected revenue from the proposed assessment, protest the assessment, an election is required, or the assessment must be abandoned. If an election is required, two thirds vote is required to approve the assessment. If less than a 5% protest is received, the legislative body can impose the assessment. If more than one third of the property owners protest, the assessment Page 11 " . . must be abandoned. In order to collect the assessment, the County Auditor would need to be notified by August of each year. 3. street Liqhting & Landscape Assessment District - Revenue Generated Varies upon Amount of Assessment a. Description The city currently has the authority to form assessment districts under the 1972 street Lighting & Landscape Assessment District for the purpose of acquiring, installing, and maintaining landscaping, fountains, pUblic lighting facilities, traffic signals, and park and recreational facilities, The city currently has an assessment district for citywide street Lighting, and two development specific assessment districts for landscaping. b. cost of services vs. Revenue The amount of general fund monies budgeted by the City for eligible services are as follows: Traffic signals street Tree Maintenance street Landscape Maintenance Park Maintenance $ 63,116 60,000 222,880 598,910 TOTAL $944,906 c. Revenue Generated from Assessments The amount of revenue that the city could generate from this type of assessment district would be dependent upon the amount of assessment levied each year. The assessment would need to be based upon benefit. Assuming the same benefit structure as the city's current street Lighting Assessment District, a $36/year assessment would generate an amount sufficient to fund street Tree and street Landscaping Maintenance costs presently incurred by the General Fund (approximately $263,000). d. Implementation The city Council would direct staff to prepare an Engineer's Report including a boundary map, cost estimate, method of spread and proposed assessment. Once those documents were presented to the city council, the Council would need to pass a resolution approving the Preliminary Engineer's Report and set two public hearings. Notices are sent out to all propertv owners wi thin the proposed district (in this case, the whole City). These notices must be sent out at least 45 days in advance of the first hearing. The council would hold two protest hearings. If a majority protest occurs (property owners owning more than 50% of the area of page 12 " . . assessable lands submitting written protests), then the district is abandoned. If there is no majority protest, the council adopts a resolution approving the formation of the district and the levy of assessments. staff prepares computer tape of the assessments on each parcel and delivers to Alameda County Auditor prior to the third week of August. D. UTILIZE CITY ASSETS TO GENERATE ADDITIONAL INCOME 1. LEASE CIVIC CENTER OFFICE SPACE (See Assistant City Manager Memorandum dated February 19, 1993, Attachment 1.) 2. SELL/LEASE UNIMPROVED CIVIC CENTER PROPERTY Approximately 4 acres of the civic Center site is currently unimproved. Approximately 60% of this site was purchased with the proceeds of the civic Center certificates of participation. Before this site could be sold or leased, the city would have to hire bond counsel to render an opinion as to whether this property must continue to be held as security for civic Center Certificate holders. E. TAXES 1. TRANSIENT OCCUPANCY TAX - Additional Revenue approximately $11,850 for Each 1% Increase a. Description The Transient occupancy Tax is imposed on the room charges of hotels, motels, and other lodging facilities, unless such occupancy is for more than 30 days (Revenue and Taxation Code section 7280 & 7281). Rates are set at the City's discretion (Dublin's is currently 8%; neighboring cities range from 6% to 8%). b. Use of Tax Proceeds May be used for any General Fund purpose. c. potential Revenue Projected revenue for FY 1992/93 is currently estimated at $86,700. (FY 1991/92 was $94,000.) If we estimate FY 1993/94 revenue at $90,000 using the 8% rate, each additional 1% would generate $11,250. There is no maximum rate. d. Implementation The city council must hold two noticed public hearings. At least 45 days public notice must be given of the public hearings. The Notice must be published in a newspaper of general circulation pursuant to Government Page 13 . . Code section 6063. The city's current Ordinance would require modification. 2. UTILITY USERS TAXES - Additional Revenue varies depending upon utilities taxed and amount of tax a. Description The Utility User's Tax can be imposed on the consumer (residential and/or business) of any combination of utility (electric, gas, cable television, water and telephone services). The city's authority comes from section 37100.5 of the Government Code. The tax is based on a percentage of the net charges by the utility companies and is collected by them as a part of their monthly billing. b. Use of Tax Proceeds The tax proceeds can be used for any General Fund purpose. c. Potential Revenue The Utility Users Tax has been used by numerous cities throughout the state. Tax rates range from 1% to 11%, but in most cases the rate is 5.5%. Alameda county and eight north county cities have adopted such a tax. staff has obtained gross major utilities (gas telephone services) and estimates: receipt information on the two & electric, and intra-state submits the following revenue GAS & ELECTRICITY Gross Receipts 1% Tax 5.5% Tax $10,394,000 $103,940 $ 571,670 3,516,000 35,160 193,380 9,793,000 97,930 538,615 $23,703,000 $237,030 $1,303,665 Commercial/Industrial Government/Schools Residential TOTAL TELEPHONE SERVICES TOTAL $10,300,000 $103,000 $ 566.500 Potential Taxes, $340,030 $1,870,165 A variety of exemptions and maximum tax provision have been used by taxing cities on their policies, e. g. low income consumers, etc. , which could lower these projections if the council made such exemptions. d. Implementation Page 14 . . The city Council must adopt an ordinance (preferably based on a model worked out between the League of California cities and the utility companies.) The process for adopting a utility users tax is similar to the process identified above for the Transient Occupancy Tax. Additionally, once the tax ordinance is adopted, the utility company requires 60 days to establish the tax in their billing process. Another 45 days should be allowed before the first month's billings and collections are paid to the city. 3. REAL DOCUMENTARY TRANSFER TAX - Additional Revenue varies upon amount of tax increase a. Description The City currently has an ordinance which imposes a tax of $0.27 per $500 ($0.55 per $1,000) value on the transfer of real property in the city. Nine of the cities in Alameda County have Real Documentary Transfer Taxes which vary from $1.10 per $1,000 value to $15.00 per $1,000 value (See Attachment #2). b. Use of Tax Proceeds The tax proceeds .can be used for any General Fund purpose. c. Potential Revenue Additional revenue from an increase in this tax depends upon the number and the amount of transactions. The slump in housing sales reflects the decrease experienced by the city in recent years. Fiscal Year Actual Revenue 1991-92 1990-91 1989-90 1988-89 1987-88 $ 62,319 $ 67,577 $ 70,935 $104,766 $ 99,480 If the city were to increase its real property transfer tax rate equal to the Cities of Livermore and Pleasanton ($1.10/$1,000 of value), an additional $60,000 to $100,000 per year in revenue could be generated depending upon the state of real estate sales. d. Implementation The city council would need to amend its current Ordinance in the same manner as described above under the Transient Occupancy Tax. page 15 . . F . OTHER L LIBRARY SERVICE FUNDING - Revenue Generated - The city's current subsidy could be covered a. Description Library service is currently provided to the city of Dublin by the county Library System; however, the city of Dublin subsidizes the county in order that the Library can remain open 19 hours more than the County can fund. b. Cost of Service The cost to the city of Dublin of sUbsidizing the County Library system is $164,870 in Fiscal Year 1992-93. c. Revenue options The County is currently exploring with those cities that are served by the County Library System the possibility of implementing a special tax, which is currently permitted under State law, or Library Benefit Assessment, which is being considered by the state legislature. d. Implementation Depending on the outcome to indicate to the county should take in funding Dublin. of SB 566, the city would need what action, if any, the County additional library hours in 2. ENHANCE COLLECTIONS - Revenue Generated - Up to $8,650 a. Description The City has ninety-one outstanding accounts receivable as of February 28, 1993, which are unresponsive to staff correspondence and are less than two years old, totalling $23,188. These billings relate to damage to City property (average billing $1,189) and DUI arrest costs (average billing $126). Two forms of professional collection assistance are available: One is a letter series which would handle up to 100 accounts for approximately $1,000; the second is a more aggressive collection agency which would receive up to 50% of collections generated. b. Use of Revenue Any collections on the above accounts, net of collection costs, would be General Fund revenue available for appropriation. Page 16 " . . c. Potential Revenue Our best estimate of revenue (net of collection costs) are as follows: 1) Letter Series: 20 (of 80) accounts x $126 4 (of 11) accounts x $1,189 Less - cost of service $ 2,520 $ 4,756 $(1.000) NET TO CITY $ 6,276 2) Collection Agency: 4 (of 11) accounts x $1,189 Less - cost of service (50%) $ 4,756 $(2,378) NET TO CITY $ 2,378 TOTAL RECOVERED BY CITY $ 8,654 d. Implementation staff would recommend specific firms for the services described above. The city Attorney would coordinate an appropriate contract with the firms. The city Council would approve these and authorize the overall collection program. e:Revnoptn.doc.rca#9 Page 17 . CITY OF DUBLIN . MEMORANDUM TO: n\~jRiChard c. Ambrose, City Manager FROM:~- Paul S. Rankin, Assistant City Manager SUBJECT: Unimproved Civic Center Office Space DATE: February 19, 1993 INTERIOR The interior of the City Office wing currently has approximately 4,580 square feet of vacant shell space. This is split up in the following sections: 1st Floor - 2,650 2nd Floor - 1,930 TYPES OF TENANT IMPROVEMENTS I consulted with Bill Hoffmann, George Miers & Associates, regarding the cost of tenant improvements. Mr. Hoffmann also reviewed the rough estimate with their Cost Estimate Consultant, Basically, there are three grades of improvements which 'could be considered: Grade A - This would be consistent with the types of finishes found in the existing building and particularly the City Manager Office Area. It would assume provision of several individual offices. Range Average = $40 - $50 per square foot $45 = Grade B - This would continue to provide finishes typical of a Class A Office Building. The primary difference is that it would rely more on "open office area" and partitions provided by the tenant. Range Average = $30 - $40 per square foot $35 = Grade C - This would be a situation where the improvements were of a low quality (i.e. carpet/ceiling system/etc,). The estimate assumes that the tenant would supply mostly partitions. Range = $20 - $25 per square foot For the purpose of this analysis, it would appear appropriate to assume that the cost of improvements would range between $35 and $45 per square foot. ATTACHMENT 1 . . CAPITAL COST TO OUTFIT TENANT AREA Based upon the total area available, the construction cost of improvements would be $160,300 - $206,100. In addition, there would be design costs incurred to construct the improvements. Assuming that design services were in the range of 10%, this would add between $16,030 and $20,610 to the cost. This would need to be considered since the tenant space would be serviced by electrical and mechanical systems serving the remainder of the building. The other area affecting the city would be administrative costs associated with coordinating the lease as well as any construction agreements. A rough estimate of the staff time required would be $10,000 - $15,000. This is only an estimate and is based upon discussions with the Public Works Director. To summarize, the estimated capital Expense consists of: construction Cost: Design Costs: Project Coordination: $160,300 - $206,100 $ 16,030 - $ 20,610 $ 10.000 - $ 15,000 Total Estimate $186,330 $241,710 ooeratinq Cost It is typical in most office leases of a portion of a large building, for the Building Owner to provide utilities and maintenance. At the time that Congressman Baker's lease was negotiated, I estimated these costs at approximately 38 cents per square foot per month. This included: . utilities (Electric/Gas/water & sewer) . contract Cleaning and Maintenance . Maintenance Supplies . Contract Mechanical (Elevator/Fire Alarms) . Property Insurance Based upon this estimate, the annual cost for the entire 4,580 square feet would be: $.38 x 12 = $4.56 x 4,580 sq. ft. = $20,885/year POTENTIAL FOR COST RECOVERY It is assumed that the figures indicated in this report are conservative. For example, no consideration is given to the cost of money. Also, the assumed operating costs have not been escalated for inflation. If you assume only 3% inflation per year, the operating costs in the 5th year of an agreement would be 12.5% greater than in year 1. For the purpose of this analysis, no inflation factor has been imposed. . . year 1. For the purpose of this analysis, no inflation factor has been imposed. The following summarizes the potential cost recovery in a 5-year lease scenario: Total Square Footage: 4,580 square feet Projected Monthly Rent Revenue: $1.00/sq. ft. - $1.20/sq. ft. Annual Rent Revenue: $54,960 - $65,950 Total Costs 5-year Expense Subtotal $186,330 - $241,710 $104,425 - $104,425 $290,755 - $346,135 Improvements Operating Costs @ $20,885 x 5 straight Line Recovery @ $1.00/square foot 5.3 years - 6.3 years Straight Line Recovery @ $1.20/square foot 4.4 years - 5.3 years As you can see, this type of project is unlikely to generate a revenue stream for the City, especially once inflationary costs are calculated in the operating cost factors, As a public entity, there are not any tax incentives in the form of depreciation or other factors to make this a profitable undertaking. Also, typically, the type of tenant which would be the most compatible would be a public or quasi-public agency. The interest of providing public services usually impacts the pricing of this type of use and avoids achieving true market rates, CONCLUSION It is my conclusion that the internal expansion space should be viewed as an investment by the City to accommodate future growth or new services at the time that it becomes necessary. PSR/lss a:218Expan.doc.psr -3- . . REAL DOCUMENTARY TRANSFER TAX SURVEY Property Transfer Tax - 1990/91 Per $1,000 Revenue Total County Cities CIties Class Collected Rate Amount Amount Alameda Chartered 1 012533 5,50 1,10 4.40 Albanv Chartered 212978 7,50 1,10 8.40 Ber1l;eleY Chartered 2.318.010 16,10 1.10 15.00 Dublin General Law 67.577 1,10 0.55 0.55 Emervville General Law 28.012 1,10 0.55 0.55 , Fremont General Law 597 548 1,10 0.55 0,55 Havward Chartered 285 809 5.80 1.10 4,50 Livermore General Law 219,969 2.20 1.10 1.10 Ne.wa r 1<.- '2",~~".1 /....6...' /./0 ~.~s D,S$ Oakland Chartered 10.242 526 13.60 1.10 12.50 Piedmont Chartered 364,494 7.60 1.10 8.50 Pleasanton General Law 263.933 2,20 1.10 1,10 ; San Leandro Chartered 402,611 3.10 1.10 2.00 UnIon City General Law 103 018 1.10 0.55 0.55 A'ITACHMENT 2