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Attachment 4 PREPARED BY: ARN ANDREWS ASSISTANT TOWN MANAGER Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832 www.losgatosca.gov TOWN OF LOS GATOS FINANCE COMMITTEE REPORT MEETING DATE: 2/12/2018 ITEM NO: 5 ITEM NO: 11 DATE: FEBRUARY 7, 2018 TO: COUNCIL FINANCE COMMITTEE FROM: LAUREL PREVETTI, TOWN MANAGER SUBJECT: RECOMMEND TO THE TOWN COUNCIL POTENTIAL BALLOT LANGUAGE FOR A 1/8 CENT SALES TAX MEASURE FOR THE NOVEMBER 2018 BALLOT RECOMMENDATION: Recommend to the Town Council potential ballot language for a 1/8 cent sales tax measure for the November 2018 ballot. BACKGROUND: On November 7, 2017, the Town Council reviewed the recommendation of the Council Finance Committee to proceed with preparing a ballot measure to place a 1/8 cent general sales tax on the November 2018 ballot for Los Gatos priorities. At the conclusion of the Council discussion and public testimony, the Town Council directed staff to have the Council Finance Committee review and discuss both the option of a general sales tax and a special sales tax. On December 4, 2017, the Council Finance Committee received a staff report (Attachment 1) which provided information on the six Sales Tax measures conducted in Santa Clara County since 2008. The staff report identified the type of measure, ballot language for each, percentage of pass/fail and type of sunset provision. In addition, the report provided a chronology of essential administrative and Council steps necessary to place a measure on the November ballot. This staff report provides sample ballot language for three general sales tax measures and three special sales tax measures for Finance Committee consideration and ultimate referral and recommendation to the full Town Council. PAGE 2 OF 5 SUBJECT: RECOMMEND TO THE TOWN COUNCIL POTENTIAL BALLOT LANGUAGE FOR A 1/8 CENT SALES TAX MEASURE FOR THE NOVEMBER 2018 BALLOT DATE: FEBRUARY 5, 2018 N:\MGR\AdminWorkFiles\Council Committee - FINANCE\2018\2-12-2018\Item 5 Sales Tax Ballot Language.docx 2/9/2018 4:39 PM DISCUSSION: On March 15, 2016, the Town Council approved the Ad Hoc Citizen Committee recommendation to hire a public opinion research agency to conduct polling for a potential sales tax measure. The Committee was formed to work with Town staff to study proposed revenue measures, seek public input through a community survey, and report back to the Council. While the Council ultimately chose not to pursue a sales tax measure, the polling data from 2016 is still relevant today. In May of 2016, the firm of Godbe Research presented the results of the Community Priorities Survey. The sample size of the survey was 471 respondents with a margin of error of 4.45%. The survey was structured around the following research objectives:  Gauge the public’s perceptions of whether the Town is doing a good job providing services and managing public funds;  Gauge the residents’ interest in creating a dedicated revenue source for the Town;  Assess potential voter support for a general sales tax measure to maintain the quality of life and small town character with funding that cannot be taken by the State; and  Identify respondent service and facility priorities. Key findings from the survey include the following:  Residents with favorable views of the job the Town is doing to provide services was five times that of unfavorable views;  Residents with favorable views of the job the Town is doing to effectively manage taxpayer dollars was more than double that of unfavorable views;  Informed support for a half-cent sales tax measure was 64.4%;  Support for an alternative quarter-cent sales tax measure was 64.9%; and  A general purpose half-cent sales tax measure with a 25 year sunset was deemed viable. In addition to the aforementioned findings the survey identified the following community priorities as those which resonated most with respondents:  Improve traffic flow to reduce traffic congestion  Maintain 9-1-1 response times  Fix potholes and repair town and neighborhood streets  Maintain and repair the neighborhood streets  Repair the Town’s 112 miles of streets and roads PAGE 3 OF 5 SUBJECT: RECOMMEND TO THE TOWN COUNCIL POTENTIAL BALLOT LANGUAGE FOR A 1/8 CENT SALES TAX MEASURE FOR THE NOVEMBER 2018 BALLOT DATE: FEBRUARY 5, 2018 N:\MGR\AdminWorkFiles\Council Committee - FINANCE\2018\2-12-2018\Item 5 Sales Tax Ballot Language.docx 2/9/2018 4:39 PM DISCUSSION (Continued):  Maintain neighborhood police patrols  Reconstruct and resurface neighborhood streets The survey results have been used extensively to inform the sample ballot language provided in the tables below. The sample ballot examples are intended to be illustrative for discussion purposes and not necessarily the final ballot language that the Town Council would potentially adopt. If the Council chooses to direct staff to move forward with a general or special sales tax , staff will return to Council with recommended ballot language, ordinance, and resolution. Sample General Sales Tax Ballot Language General Sales Tax Measure Sample Ballot Question Sample #1 Informed Support Los Gatos Ballot Language Lew Edwards Group May 2016 “To maintain the quality of life and small town character in the Town of Los Gatos by:  Fixing potholes, sidewalks and repairing neighborhood and major Town streets;  Upgrading Town parks, playground equipment and restrooms;  Upgrading walking, hiking and bike trails;  Beautifying downtown,  Maintaining Town facilities, and  Other essential Town facilities and services; Shall the Town of Los Gatos enact an one-half cent sales tax, providing $4 million dollars annually, for 25 years, with annual audits, independent citizens’ oversight, and all funds spent locally?” Thesis Sample #1 provides the exact same ballot language that was crafted by the Lew Edwards Group (campaign consultant) based on the survey results provided by Godbe Research. This ballot language provided had informed support of 64.4%. Sample #2 Los Gatos Ballot Language Sample 2018 General “To fund essential Town services such as maintaining neighborhood police patrols; improving traffic flow to reduce traffic congestion ; repairing potholes and fixing neighborhood streets; and maintaining the Town’s long-term financial stability, shall the Town of Los Gatos enact a 1/8 percent sales tax for 20 years, providing about $800,000 annually, requiring Independent Citizens Oversight with public review of spending, and all revenues controlled locally?” Thesis Sample #2 is based on a ballot language format used by the City of San Jose for their 2016 Measure B quarter-cent general sales tax measure. Measure B passed with 61.4% and included a 15 year sunset. PAGE 4 OF 5 SUBJECT: RECOMMEND TO THE TOWN COUNCIL POTENTIAL BALLOT LANGUAGE FOR A 1/8 CENT SALES TAX MEASURE FOR THE NOVEMBER 2018 BALLOT DATE: FEBRUARY 5, 2018 N:\MGR\AdminWorkFiles\Council Committee - FINANCE\2018\2-12-2018\Item 5 Sales Tax Ballot Language.docx 2/9/2018 4:39 PM Sample #3 Los Gatos Sample Ballot Language Sample 2018 General "In order to maintain and protect Los Gatos services and facilities, including but not limited to Town streets and pothole repair, police patrols, and traffic relief measures, shall the Town of Los Gatos be authorized to enact a one-eighth cent sales tax for 20 years, with all proceeds placed in the Town's General Fund providing about $800,000 annually, requiring Independent Citizens Oversight with public review of spending and independent annual financial audits, and all funds spent locally?” Thesis Sample #3 is based on a ballot language format used by the City of Campbell for their 2008 Measure O quarter-cent general sales tax measure. Measure O passed with 70.5% and included no sunset clause. Sample Special Sales Tax Ballot Language Special Sales Tax Measure Sample Ballot Question Sample #1 Infrastructure Improvements “To reduce traffic congestion and maintain community parks and open space, shall the Town of Los Gatos enact a 20 year one-eighth sales tax to generate about $800,000 annually to:  Fix potholes and sidewalks;  Reconstruct and resurface Town streets;  Improve traffic flow;  Make traffic signal improvements;  Maintain parks and open space;  Mandate annual audits, independent citizens’ oversight, and all funds spent locally?” Thesis Sample #1 is based on a ballot language format used by the Santa Clara Valley Transportation Authority for their 2016 Measure B half-cent special sales tax measure. Measure B passed with 71.7% and included a 30 year sunset clause. In addition, the bullets above represent 7 of the top 10 priorities identified in the Godbe Research survey. Sample #2 Public Safety “To maintain the quality of life and small town character of our Town, shall the Town of Los Gatos enact a 20 year one-eighth sales tax to generate about $800,000 annually to:  Maintain neighborhood police patrols;  Maintain 9-1-1 response times;  Improve traffic flow to reduce traffic congestion;  Mandate annual audits, independent citizens’ oversight, and all funds spent locally?” Thesis Sample #2 is based on a ballot language format used by the Santa Clara Valley Transportation Authority for their 2016 Measure B half-cent special sales tax measure. Measure B passed with 71.7% and included a 30 year sunset clause. In addition, the bullets PAGE 5 OF 5 SUBJECT: RECOMMEND TO THE TOWN COUNCIL POTENTIAL BALLOT LANGUAGE FOR A 1/8 CENT SALES TAX MEASURE FOR THE NOVEMBER 2018 BALLOT DATE: FEBRUARY 5, 2018 N:\MGR\AdminWorkFiles\Council Committee - FINANCE\2018\2-12-2018\Item 5 Sales Tax Ballot Language.docx 2/9/2018 4:39 PM above represent 3 of the top 7 priorities identified in the Godbe Research survey. Sample #3 Parking Garage “To maintain the vitality of downtown, reduce congestion , enhance economic vitality, and maintain the quality of life of our Town, shall the Town of Los Gatos enact a 20 year one- eighth sales tax to generate about $800,000 annually to construct a new parking facility and other downtown improvements mandating annual audits, independent citizens’ oversight, and all funds spent locally?” Thesis The downtown parking project has never been polled , however, there appears to be sentiment that a parking garage could help alleviate parking congestion and help strengthen the downtown business district. It should be noted that community vitality concepts were two of the Council Strategic Priorities recently embraced. CONCLUSION: Per Council direction, the Finance Committee should determine whether to refer a general sales tax or special sales tax proposal for full Council consideration . In addition the Committee should determine its preferred ballot language approach for recommendation to the full Council. COORDINATION: This report was coordinated with the Town Manager’s Office, the Town Attorney’s Office, and the Finance Department. FISCAL IMPACT: Total election costs for the Town for three Council seats and on e ballot measure are yet to be determined, however, the cost for two seats and one ballot measure in 2016 was approximately $120,000. In addition under the Revenue and Taxation Code section 7272, the Board of Equalization (BOE) will bill a new special taxing jurisdiction for preparatory charges to administer the new district tax based on actual costs after the tax has been submitted by the various BOE units’ actual charges. The statutory maximum amount of preparatory costs shall not exceed $175,000. Attachment: 1. December 2017 Sales Tax Report to the Finance Committee