COUNCIL: Funding needed to deal with crumbling roads

2024 ballot.

Even then, however, any project would be on very tight timeline, given the required environmental review, commission analysis and public hearings, and the need for the City Council to place the project on the ballot by June 2024.

In fact, George Phillips, representing the Shriners proposal, told the council Tuesday that “none of these projects will make a November 2024 ballot. None of them will be done by June unless shortcuts are taken.

“That was our goal,” he said, “but sitting here today … that’s simply not going to happen.”

Meanwhile, the subcommittee of Arnold and Vaitla is still in the early stages of laying out criteria for evaluating peripheral developments and they provided preliminary guiding principles on Tuesday that focus on availability of lowincome housing, traffic impacts, open space and agricultural mitigation and climate considerations.

Vaitla said Tuesday that he is open to all four of the peripheral proposals, but said, “I do not think November 2024 is right for any of them.”

Rather, he said, he would propose having a subcommittee focus first on examining what options there are for optimizing infill and engaging the community on peripheral planning after that.

Doing so, noted Arnold, also gives the community a break from another divisive Measure J/R/D vote.

“One piece of this that hasn’t been brought up is what these … elections do to our community,” Arnold said. “They are flashpoints. They are causes of schisms.

“And there is something to be said for the community having at least one election cycle off from these fights.”

The mayor added that the worst outcome would be trying to fast track one of the proposals for November 2024 “and in part because we fast tracked it, it fails after a long fight …

“That is an unacceptable outcome as far as I’m concerned,” Arnold said.

Like Vaitla, as well as Vice Mayor Josh Chapman and Councilwoman Gloria Partida, the mayor said there are things to like about each of the proposals.

“And I think eventually these are the most logical places in our community for added development outside of our current city limits,” he said. “So this is a longterm process that we will be participating in that will hopefully culminate in at least one of these passing and being built and then another one and another one.”

But for now, the council agreed, that won’t be happening in November 2024.

Meanwhile, a separate subcommittee of Vaitla and Partida, along with city staff, presented options for a possible revenue measure for the November 2024 ballot.

Along with road and path maintenance, funding levels are falling short in other areas, according to city staff, including for city facilities, support for affordable housing and services to low-income households, urban forestry and more.

“The council has discussed priorities in roads/ bike paths and urban forestry that alone would require an additional $10 (million) to $15 million per year,” the staff report prepared for Tuesday’s meeting noted.

Partida said Tuesday that, “as we have had many discussions about roads and staffing and other issues that we need revenue for, and we’ve gone through a very difficult period with COVID… I think it’s brought us to this place where we’re having to make this decision about how we’re going to continue to fund things … that keep our quality of life here. So that our housing values are maintained and we have the services that we require for all of our citizens.”

The key, though, Partida said, is public engagement — reaching out to residents to get their thoughts on not only how to raise revenue, but where that revenue should be spent.

Vaitla added that “the fiscal needs are large and they’re also fundamental.”

“When we look at bike paths and roads, the cost of deferring maintenance on infrastructure balloons very quickly. So these feel like very pressing shortterm needs. I think a lot of the things that all of us care about, around affordable housing for the workforce, the missing middle, that’s also going to require… a consistent stream that is sizable going into the Housing Trust Fund every year, especially as development proposals reach our doorstep.”

Additionally, he noted, there are a lot of ambitious ideas in the Climate Action and Adaptation Plan, “a powerful response to a global emergency,” but that “also will require investment.”

“I, as a new council member, was quite surprised to see how much fat we’ve cut out of the budget. And it’s a credit to previous councils and this council, too, about going line-by-line and making sure we’re not wasting money, and really, we’re not. And yet we have these needs that remain unmet.”

Arnold noted that years ago the city focused on ways to diversify the city’s revenue portfolio and came up with options for economic development, particularly through innovation centers.

“And one by one those projects came off the table and now our opportunities to diversify our revenue portfolio have been limited. And that’s been by action of the voters of Davis,” he said. “So this is a logical next step, in my opinion… continuing that conversation on the need to diversify our revenue portfolio in the community.”

Among the options staff and the subcommittee laid out for raising more revenue: n Parcel tax. The city currently has two parcel taxes, one for open space and one for parks maintenance. The open space tax is $24 per parcel and generates $675,000 annually, while the parks maintenance tax is currently $53, with an annual inflator, and generates $1.5 million annually. A parcel tax requires a two-thirds vote to pass. n Utility User Tax. A utility user tax charges a certain amount or percentage on select utilities used by residents and businesses, including electricity, gas, cable, phone, water, sewer and solid waste. A utility user tax requires a majority vote for passage. n Sales Tax. The base sales tax amount statewide is 7.25 percent, which applies to purchases made in Davis. Most of the tax goes to the state and other jurisdictions, but 1 percent of the purchase price is automatically allocated to the city of Davis. Additionally, Davis has a separate local sales tax measure, renewed in 2020, that adds another 1 percent to the tax, for a total of 8.25 percent tax in most cases. n Transient Occupancy Tax. The TOT, as it’s known, is a charge on the price of a hotel or motel room per night. The city’s TOT is currently 12 percent of the cost of a room night and collected by the hotel at the time of the stay. It generates approximately $2.75 million per year for the city’s general fund. n Other options including raising the cannabis and business licenses taxes.

The most common utilities taxed are gas, electric and telephones. Regionally, Sacramento, Winters, Rancho Cordova and Citrus Heights all have utility user taxes ranging from 2.5 percent to 9.5 percent. The amount of revenue that could be generated from a utility user tax varies greatly depending on which utilities are taxed and at what rate “and more analysis would need to occur to fine tune any estimates,” staff reported.

A lower rate of 2.5 percent across all utilities is likely to generate approximately $2 million, while a higher rate of 11 percent may generate over $12 million.

“The entirety of this 1 percent stays in Davis and supports the general fund,” the staff report noted.

Although the amount of these taxes fluctuates each year, the annual amount of sales and use tax generated is approximately $17.5 million.

The city can increase its local tax a maximum of an additional 1 percent, for a total rate of 9.25 percent and an estimated $10 million in additional revenue. A sales tax increase would require a majority vote for passage.

An additional 1 percent increase in the TOT is roughly equivalent to $230,000.

According to Assistant City Manager Kelly Stachowicz, a general tax, such as a sale tax increase, would have to go on a municipal ballot, the next one being the November 2024 election.

Should the council favor a parcel tax, there could be a special election before then.

The council on Tuesday directed staff to return with additional information in advance of a possible November 2024 ballot measure, including more details on unmet fiscal needs, revenue options and a timeline for community engagement.