ACTION CALENDAR May 29, 2012 To - City of Berkeley

42 Office of the City Manager

ACTION CALENDAR May 29, 2012 To:

Honorable Mayor and Members of the City Council

From:

Christine Daniel, Interim City Manager

Submitted by: William Rogers, Interim Deputy City Manager Subject:

Presentation and Discussion of Second Community Survey Results and Direction Regarding Next Steps for Possible Ballot Measure Development

RECOMMENDATION Discuss results of the second community survey and provide direction to the City Manager about the drafting of possible revenue measures for inclusion on the November 2012 ballot. SUMMARY At its May 1 meeting, the Council discussed possible ballot measures for inclusion in a second community survey. The results of that survey, conducted May 10-14 by Lake Research Partners, are included in this report. In general, there continues to be resident support for some ballot measures, especially those funding streets and watershed improvements. However, even preferred projects only approached the 2/3 threshold for passage after the respondents were given additional information about the possible measures. For other proposed projects in the survey, considerable margins of uncertainty remained even after respondents received the additional information. If Council wishes to move forward with placing a revenue measure (or measures) on the ballot in the fall, staff will need direction on the specifics of the measure(s) tonight to allow adequate time for staff to draft final ballot measure language for Council consideration on June 12th and to meet County Registrar of Voters deadlines for the November 2012 ballot. FISCAL IMPACTS OF RECOMMENDATION The cost to place a measure on the November 2012 ballot is approximately $26,000 per measure. CURRENT SITUATION AND ITS EFFECTS As part of the FY 2012 & FY 2013 biennial budget, Council discussed the possibility of placing a revenue measure on the November 2012 ballot to address the City’s aging infrastructure needs. An initial community survey was conducted March 14-19, 2012, which was designed to provide a broad picture of the community’s general priorities and their willingness to support possible ballot measures to fund those priorities. Based on

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Presentation and Discussion of Second Community Survey Results

ACTION CALENDAR May 29, 2012

the results of that survey and Council’s subsequent discussion at the May 1 Council meeting, a second community survey was planned. Second Community Survey The second survey of 400 likely voters in the November 2012 election was conducted by Lake Research Partners from May 10-14. This 15 minute survey was designed to assess how residents would respond to potential local revenue measures in the context of three State and County measures anticipated to be on the ballot in the fall. Berkeley respondents were given a summary of the general purpose and costs of those three non-City measures. Because those measures would appear on the November ballot before any City measures, they were asked first on the survey. The survey’s margin of error is +/- 4.9 percent. At the May 1 meeting, the Council asked the City Manager to include the following possible local ballot measures on the second survey: 1. Sales tax increase of .25% for streets and watershed improvements 2. Gross receipts tax of 2% on property owners with five units or more on a single site; tax revenue to be used to support affordable housing. 3. Bond measure ($50 million) for streets and watershed improvements. 4. Bond measure ($13 million) for construction of a new Warm Water Pool with a parcel tax ($13.61 per 1900 sq. ft.) to fund ongoing operations. 5. Bond measure to renovate Willard Pool (approximately $6.4 million) with a parcel tax to fund ongoing operations. The survey included screening questions in the beginning and demographic information at the end (Attachment 1). Additionally, the following information is provided as context for understanding both the survey and the resultant data:  



While the City’s potential ballot measures are presented here in a certain order for organizational purposes, they were randomly rotated during the survey. The bond costs for all the proposed measures were updated and confirmed prior to the survey. Therefore, in some cases, the stated cost to homeowners differs slightly from previous Council reports. The general format of the questions was the same for all potential ballot measures: Respondents were first given the general details of the proposed measure, using the neutral ballot measure language that the law requires. Then they were provided with some additional information about the measure, of the general type and detail that a resident might encounter in a newspaper story. They were then asked if that information made them more or less likely to support the original measure.


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Lake Research calculated the “Potential Yes” vote, which reflects a combination of those who initially vote Yes on the ballot measure and those who do not initially vote Yes, but say the additional information makes them more likely to support the measure.” This is captured in the tables below under the heading “Additional Information.” For the specific language used, see Attachment 1.

Results of Second Community Survey Demographics: The demographic profile of the respondents in the second survey is slightly younger than respondents of the first survey. City of Berkeley -- Right Track or Wrong Track? Although the second survey includes fewer questions about general attitudes, the number of respondents who believe the City is on the “right track” increased in the second survey. The first survey found 51 percent believe the City is on the right track while the second survey found 58 percent believe that to be true. The number of respondents who believe that the City is on the “wrong track” decreased from 24 to 19 percent. State and County Measures: In order to simulate the context of an actual ballot, specific measures that are expected to be on the November 2012 ballot were included in the survey: two state-level measures (which were rotated) and the County’s transportation sales tax measure. The following were the results:  The Governor’s “Temporary Tax to Fund Education. Guaranteed Local Public Safety Funding. Initiative Constitutional Amendment” received 73 percent support in the Berkeley survey;  Attorney Molly Munger’s “Tax to Fund Education, Preschools and Child Care. Initiative Statute” received 59 percent support;  Alameda County’s proposed reauthorization and expansion of Measure B received 61 percent support in the Berkeley survey. Without any of the introductory information that was presented in the first survey, the questions about the proposed local ballot measures began immediately after those of the state and county measures. The results are as follows: 1. Sales Tax Increase: Dedicated to Streets and Watershed (2/3 support required) The current sales tax in Berkeley is 8.75 percent. If voters were to approve an increase in the Berkeley sales tax of .25% (one-quarter of one percent), Berkeley’s sales tax would increase to 9% and the revenue increase would be approximately $3.3 million. If approved by the voters, the State and County sales tax measures will increase the local sales tax as well.


Project Question 6: .25% Sales Tax for Streets and Green Infrastructure

Question 7: Additional Information Potential Yes (after additional information)


Support Oppose

Undecided + Don’t Know

51

30

19

More Likely 61 67

Less Likely 12

Don’t Know/ No Difference 271

2. Affordable Housing Tax: Two Percent Tax on Annual Gross Rent of a Building with 5 or More Units. (2/3 support required) At its May 1 meeting, Council asked staff to include an affordable housing tax measure on the survey, with the revenue to be deposited into the Housing Trust Fund and dedicated to increasing affordable housing in Berkeley. This measure would establish a 2 percent tax on the annual gross rent of a building with five or more units. The item proposes to exempt the revenue received from individual units where the rent is “substantially below” market rate, including “long-term rent controlled tenants and non-profit affordable housing and inclusionary units.” This would be in addition to the business license tax paid by this class of business, which is currently $10.80 per $1,000. Project

Support

Oppose

Question 8: 2% Affordable Housing Tax on Rental Property Owners

46

34

Undecided + Don’t Know 19

More Likely 52 56

Less Likely 17

31


3. $50 Million Bond: Dedicated to Streets and Watershed (2/3 support required) Council requested that the survey include a $50 million bond dedicated to street repaving and repair as well as green-infrastructure improvements that could be completed as part of streets projects. For example, green infrastructure enhancements such as rain gardens, bioswales, and permeable paving, could be incorporated as part of regularly planned street repair and reconstruction projects where appropriate. 1

This number includes respondents whose opinion did not change as a result of the new information they were provided.



Cost: A $50 million bond would cost the average Berkeley homeowner approximately $95 for the first year after the bonds are issued, and an average of $73 per year over 30 years. Project

Support

Question 10: $50M Bond for Streets and Watershed


Oppose

Undecided + Don’t Know

45

31

24

More Likely 61 66

Less Likely 12

27

Pools Council asked staff to include questions in the survey about two possible pools projects: the Warm Water Pool and Willard Pool. In addition to the capital costs that would be secured with the passage of a bond measure, the City would need new revenue to operate either pool. That new revenue would be secured by the passage of a parcel tax measure. Because the capital and operations cost would need separate measures, they were asked as separate questions. 4. Warm Water Pool (2/3 support required for both bond and parcel tax measures) Warm Water Pool Capital Project Scope ($13,000,000 Bond): Construction of a warm water pool at West Campus, including locker room renovation and repairs to the existing outdoor pool. This estimate assumes that construction will begin in 2014. Warm Water Pool Hours: A $558,000 parcel/property tax would allow the Warm Water Pool to be open 36 hours a week, with additional hours for rentals.

Project Question 11: Warm Water Pool Bond Question 12: Warm Water Pool Tax


Support

Oppose

39 36 More Likely 55 60

39 11 Less Likely 14

Undecided + Don’t Know 23 25 31



5. Willard Pool (2/3 support required for both bond and parcel tax measures) Willard Pool Capital Project Scope ($5,150,000 Bond): Renovation of the existing outdoor pools, locker rooms and associated facilities at Willard Middle School. This estimate assumes that construction will begin in 2014. Willard Pool Hours: A $426,000 parcel tax would allow Willard to be open on a schedule similar to King Pool: During the school year (September to mid-June), the pool would be open 74 hours a week, and in the summer (mid-June to August), it would be open 95 hours a week. Project Question 14: Willard Pool Bond Question 15: Willard Pool Parcel Tax

Support

Opposed

46 43

33 33 Less Likely 17

More Likely Question 16: Additional Information Potential Yes (after additional information)

50 58

Undecided + Don’t Know 21 24 33

Ballot Measure Development If Council wishes to place a revenue measure on the November 2012 ballot, staff will need Council direction on those measures at the May 29th meeting so that there is adequate time for staff to draft ballot language for Council consideration at the June 12 meeting. The possible revenue measures are summarized below, with any points that need Council direction articulated below. 1. .25% Sales Tax for Roads and Watershed Improvements A quarter cent sales tax is projected to generate $3.3 million for streets and watershed improvements. The increased revenue would be dedicated to projects identified in the Five-Year Streets Plan (reviewed and approved by Council annually) and in the Watershed Management Plan. 2. $50 M Bond for Roads and Watershed Improvements A $50 million bond dedicated to street repaving and repair as well as greeninfrastructure improvements that could be completed as part of streets projects.



3. Warm Water Pool Bond: $13 Million Bond A $13 million bond to build an indoor warm water pool at West Campus. Council considerations:  Council can make the capital bond and operations tax measures mutually dependent; in other words, they would have to pass together or neither tax would become effective. 4. Warm Water Pool Operations Parcel Tax: $558,000 Annually Provide 36 hours a week (year-round) of public access to the warm water pool at West Campus. Other considerations:  Council can choose/decide to make the capital bond measure for the Warm Water Pool and the parcel tax for operations of the pool measures mutually dependent on each other; in other words, they would both need to pass before either tax was be put in place. 5. Willard Pool Bond: $5.15 Million Bond A $5,150,000 million bond to rebuild the swimming pool at Willard Middle School Council considerations:  Council can choose/decide to make the capital bond and operations tax measures mutually dependent on each other; in other words, that they would have to pass together or neither tax would be put in place. 6. Willard Pool Operations Parcel Tax: $426,000 Annually $426,000 is the annual cost for the pool to be open year-round. During the school year, the pool would be open 74 hours a week, and during the summer, 95 hours a week. Council Considerations:  Council can choose/decide to make the capital bond and operations tax measures mutually dependent on each other. 7. Affordable Housing Tax on Rental Property Owners This measure would establish a 2 percent tax on the annual gross rent of a building with five or more units. The item proposes to exempt the revenue received from individual units where the rent is “substantially below” market rate. This would be in addition to the



business license tax paid by this class of business, which is currently $10.80 per $1,000. The measure is projected to generate $3.5 million annually, before exemptions and administrative costs are factored in. Council Considerations: The other potential ballot measures have an existing administrative infrastructure for collection. Because this is a new tax, there are organizational and administrative issues that would need to be addressed. To the extent the Council can provide direction on these now, that direction could be included in an ordinance for the voters’ consideration. Multi-Use Buildings: When this tax was considered for the second community survey on May 1, staff calculated the yield by combining the total business license tax revenue paid by apartment buildings with 5 or more units. That tax rate is $10.80 per $1000 gross revenue, and in FY 2012, the City collected $1,925,000. Based on those properties, staff calculated that an additional 2 percent tax would raise approximately $3.5 million. However, that estimate does not include revenue from multi-use buildings. Those owners have a different business classification and pay their business license tax on the combination of their housing and commercial revenues. It would be helpful if the Council clarified whether this new tax would require those property owners to separately report those two revenue streams. Exemptions: A process will need to be developed to define, identify and verify the units paying “substantially below-market rate rent.” The Health, Housing and Community Services Department maintains databases of inclusionary and density bonus units, as well as non-profit housing that was included in the proposal. The Rent Stabilization Board generally defines “long-term rent controlled units” as those units that have not been vacancy decontrolled since January 1999, and estimates that number at approximately 3,400. However, not all buildings or units are legally required to register with the Rent Board, and so a process for identifying non-rent controlled units that are substantially below market rate would have to be developed. The measure could specify that owners will be required to report them. It would be helpful if the Council would provide direction regarding the criteria defining “substantially below market rate rent.” Expenditure: The revenue from this measure could be directed to the Housing Trust Fund to be used for the development and renovation of affordable housing Council may wish to consider whether an expenditure plan for the tax measure should also include the administrative costs of managing the development of, and then monitoring, the projects funded by the measure.



Ballot Measure Development Next Steps In order to meet the deadlines for both the County Registrar of Voters and the City’s Open Government Ordinance, the following timeline has been developed: Meeting Dates and Agenda Deadlines May 29: Work Session June 12: Action Calendar June 14 June 26: Action Calendar July 5 July 17: Action Calendar

Event Survey results presented; discuss possible ballot measures Provide direction on ballot language Agenda is published for June 26 meeting Review final ballot measure language Agenda is published for July 17 meeting Final action on ballot measure(s) for Nov. 2012

BACKGROUND The City of Berkeley is 134 years old and its infrastructure is aging. The City’s infrastructure includes roads, buildings, parks and open spaces, community centers, storm drains and sewers, and information technology systems. Infrastructure is central to the City’s ability to effectively deliver valued community services. The economic conditions of the last several years, disappearing state and federal funding, and increasing costs have limited the City of Berkeley’s ability to make necessary improvements to our infrastructure. During Fall 2011, Council considered the City’s complete infrastructure needs in a series of focused work sessions that included Parks, Pools, Recreation, Watersheds, Streets, City Buildings and Information Technology. On February 28, 2012, the Council discussed a community survey to assess resident’s priorities with respect to various infrastructure improvements and programs. This survey was conducted in March, the results of which were presented at the April 3 Work Session. As part of the process of considering and developing fall 2012 ballot measures, a community survey was conducted in March 2012. The purpose of the first survey was to gauge the community’s service and infrastructure priorities, and their willingness to support revenue measures that would increase funding for those priorities. The survey indicated that while residents were supportive of infrastructure investments (especially streets and storm drains), and other programs (homeless services and affordable housing), none of the measures in the survey received the required two-thirds (2/3) voter support necessary for approval. RATIONALE FOR RECOMMENDATION If Council would like to put a measure or measures on the ballot in the fall, staff will need direction at the May 29th meeting in order to ensure adequate time to write ballot language for council consideration on June 12th and to meet County Registrar of Voters deadlines for the November 2012 ballot.



ALTERNATIVE ACTIONS CONSIDERED Council could decide not to put a revenue measure on the November 2012 ballot and instead continue discussions of infrastructure and service funding needs in the context of the annual budget. CONTACT PERSON Mary Kay Clunies-Ross, Senior Management Analyst, City Manager’s Office, 981-7008 Attachments: 1: Community Survey Results, Lake Research Partners 2: Updated List of Possible State and County Ballot Measures 3: Media story about Zoo http://www.insidebayarea.com/ci_20584594/oakland-zooplans-ask-alameda-county-voters

Attachment 2 May 1 Update November 2012 Ballot Information County Measures: Ballot measures are being considered at the county level as well as the City level. The Oakland Zoo is asking the Alameda County Board of Supervisors to consider placing a county-wide parcel tax on the November ballot to support zoo operations. The county transportation sales tax (Measure B) reauthorization and increase is also likely to be on the Fall ballot. The Alameda County Transportation Commission proposal is to increase it to a 1 cent sales tax. Visit www.alamedactc.org for more details. State Measures: In addition to the national, state and local candidates on the November 2012 ballot, there will also be a number of state propositions and initiatives. The “Cleared For Circulation” list has been abridged for space. The full list is available: www.sos.ca.gov/elections. Ballot Measure Status State of California: Qualified for Ballot (as of May 17) Safe, Clean, and Reliable Drinking Water Supply Act of 2012 Qualified for Ballot Prohibits Political Contributions by Payroll Deduction. Qualified for Ballot Prohibitions on Contributions to Candidates. Changes Law to Allow Auto Insurance Companies to Set Prices Qualified for Ballot Based on a Driver's History of Insurance Coverage. Redistricting. State Senate Districts. Referendum Qualified for Ballot Death Penalty Repeal. Initiative Statute. Qualified for Ballot Prohibition on Human Trafficking Qualified for Ballot State of California: Cleared for Circulation Political Contributions and Expenditures by Corporations. Shareholder Approval. Government Spending Limits. Part-Time Legislature. Two-Year State Budget. Tax to Benefit Public Schools, Social Services, Public Safety, and Road Maintenance. Undocumented Immigrants. State Income Taxes. Undocumented Immigrants. Requires State Law Enforcement Officers to Enforce Federal Immigration Law. Denies Driver's Licenses to Undocumented Immigrants. Education. Repeals Non-Discrimination Requirements for School Instruction. Requires Assessment of Most Commercial Property Every Three Years. Provides Tax Reduction for Homeowners, Renters, and Businesses. Initiative Constitutional Amendment and Statute. Tax to Pay Tuition and Fees at California Public Universities. Initiative Constitutional Amendment and Statute. Elimination of California High Speed Rail Authority. Limits on Hospital Charges. Nonprofit Hospitals. Required Minimum Charity Care. Voting Requirement. Polluter Fees. Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding.

Education. Repeals Non-Discrimination Requirements for School Instruction. Education. Permits Parents to Excuse Children from Instruction in Social Sciences and Family Life. Tax Treatment for Multistate Businesses. Clean Energy and Energy Efficiency Funding. Prohibits Abortions for Females Under 18 Without Parental Notification and Waiting Period. Reduces Pension Benefits for Public Employees. Genetically Engineered Foods. Mandatory Labeling. Approval of Healthcare Insurance Rate Changes. Legislature Expansion. Legislative Process. Online K-12 Education. College Preparatory Courses. State Funding to Local Governments. Criminal Justice. Social Services. State Budget. State and Local Government. Equal Male/Female Membership of Legislature. Elimination of Benefits for Part-Time Local Officials. Health Insurance. Human Trafficking. Penalties. Sex Offender Registration. Regulation of Corporations. Three Strikes Law. Sentencing for Repeat Felony Offenders. Reinstates Right of Same-Sex Couples to Marry. Concealed Firearms. State Bank. Tax on California Oil and Gas. Marijuana Legalization. Tax on Controlled Substances. Tax on California Oil and Natural Gas. Revenues to Education. Elimination of Environmental Protection Laws and Agencies. Nuclear Power. Constitutional Definition of a Person. Reduced Marijuana Penalties. Tax on California Oil and Natural Gas. Revenues to Education. Death Penalty Repeal. State and Local Government Officials. Personal Liability. Gifts to State and Local Government Officials. Disqualification. State and Local Legislation and Policies. State and Local Government Purchasing. Made in United States. Reduces Pension Benefits for Public Employees. Creates a New State Retirement System for Private Sector Employees. Increases Retirement Age for Teachers, Peace Officers, and Other Public Employees. Increases Income Taxes on Teachers, Nurses, Police Officers, Firefighters, and Other Public Employees for Pension Income. Eliminates Collective Bargaining Rights for Teachers, Nurses, Police Officers, Firefighters, and Other Public Employees. Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding. Initiative Constitutional Amendment. Prevents Issuance of Future High-Speed Rail Bonds. Initiative Statute