San Bruno has had a revenue problem for many years. In 2019, the city council approved the “Comprehensive Fiscal Sustainability Project”, a multi-year approach to address the historical funding issue. This project identified Revenue Enhancements (Voter approvals, Developer Impact Fees, and Community Benefits), Expenditure Controls, and Cost Shifts from the General Fund.
The council also addressed the Covid revenue impacts which required Budget Reductions involving freezing vacant positions and defunding Capital Projects. We have weathered this financial storm and have refilled all of the safety positions in this last budget.
The City Council approved a Cost Allocation Plan (CAP) in 2019 that ensures costs associated central service departments are appropriately allocated to respective City operating functions. In essence it is a tool that formulates an equitable methodology to identify and allocate indirect costs to direct cost programs. This takes into account how allocations should represent how operating departments use and benefit from central support services. It is also used in the formation of personnel rates, budgeting and cost reimbursement.
The City Council approved a User Fee Study to determine the “reasonable” full cost of providing services. Each fee or service’s cost is calculated individually, or at the program level. The intent is to determine the actual costs of service compared to fees recovered.
Although the full cost could be recovered, the City Council set fees lower than full cost and subsidized portions of the fees.
The largest new revenue generating component is the implementation of Development Impact Fees. This requires development projects to fully or partially offset the costs of public facilities and infrastructure that is needed to serve new demand created by development projects.
Essentially this assures that developers pay their fair share for their impact to our community. Note these fees adjust with inflation to stay aligned with increasing costs.
YouTube’s expansion via the Bayhill Specific Plan will soon be contributing revenue to the city through the permitting of Phase 1 and Phase 2. San Bruno is expected to receive an estimated $56 million in fees and community benefits in the next months.
With council approval, staff identified an opportunity to negotiate a sales tax participation agreement with Walmart.com that provides an estimated additional $3.6 million per year. Additionally a $4.5 million development agreement extension was negotiated with YouTube for the 1400/1450 BayHill Drive project. Recently staff renegotiated a tax agreement with Artichoke Joe’s that provides an additional increase of $900,000 per year.
Measure G. Thank you San Bruno voters for approving Measure G in 2019. The City Council asked San Bruno voters to decide whether to increase the sales tax by a half percent. We have repeatedly heard the complaints regarding the condition of our streets. We have not had the funds to maintain them over the years.
Passing Measure G was a huge step in filling the revenue shortages for street improvements. This essential $2.5 – 4 million a year of San Bruno-controlled funding will enable the largest road maintenance projects in recent memory ($6 million in 2022-23).
Click here to learn more about Measure G.
Hotel tax – Transient Occupancy Tax (TOT) and Cannabis. The council allowed the voters to decide whether to increase the TOT rate from 12 to 14% and to tax Cannabis a maximum of 10%. Thank you voters for passing Measures S and X in November 2020. The TOT increase is projected to generate up to $500,000 annually without raising taxes on local residents or their property.
AirBnB – Short Term Rental (STR). The council voted to require property owners to pay fees when they have short term rentals at their property. This new revenue stream is scheduled for implementation later this year.
Charter City – I voted in favor of allowing our residents to vote on San Bruno becoming a charter city so that a 1% transfer tax could be collected upon the sale of commercial property and residential properties with 5 units and more. Unfortunately this item required a 4-1 council vote per state law and it failed 3-2. Its passage would have provided an estimated $1 million of recurring revenue for the General Fund. For more information on this item, click here.