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File Number: 16-523 <br />General Fund Revenue <br />In total, year-end actuals for General Fund revenues indicate a positive variance of $8.8 <br />million over adjusted revenue projections for FY 2015-16. This is primarily due to the receipt <br />of an additional $2.1 million in sales tax (including a full year of Measure HH sales tax <br />add-on), $1.0 million in property taxes, $612,000 in licenses and permits, $606,000 in interest <br />and property income, and $1.9 million in document property transfer tax. These are slightly <br />offset by a $530,000 decrease in other revenues due to decreases in reimbursements and <br />interdepartmental charges. Please refer to Table 1 in the attachment. <br />Sales Tax (+$2,058,000) Sales tax represents San Leandro’s largest General Fund revenue <br />source. This increase has been led by a full year of Measure HH revenues and across the <br />board increases in most all sales tax categories with the construction sector, department <br />stores, auto sales - new, heavy industry, building materials - wholesale, building materials - <br />retail, and office equipment showing the largest increases. These gains are slightly offset by <br />decreases in auto parts/repair, service stations, and light industry. Per the last quarterly <br />report (Q1 2016) from the City’s sales tax consultants, San Leandro’s business to construction <br />sector increased by 12.2% when compared to Quarter 1 (Q1) of 2015. Over the same time <br />period, department stores rose 7.0%, auto sales - new rose 16.9%, heavy industry rose <br />19.9%, building materials - wholesale rose 16.6%, building materials - retail rose 6.2%, and <br />office equipment rose 17.2%. Auto parts/repair decreased 6.5%, service stations decreased <br />9.4%, and light industry decreased 15.8%. <br />Property Tax (+$1,010,000) Property Tax continues to improve as properties are resold for <br />higher values and Proposition 8 exemptions are removed due to an improving economy. Staff <br />expects this upward trend to continue into the near future, but is susceptible to erosion should <br />another recession occur. Proposition 13 allows for up to 2% annual growth on assessed <br />valuations if a property remains with the same owner and staff will continue to be cautious <br />when projecting property tax. <br />Licenses and Permits (+$612,000) Licenses and Permits are heavily influenced by the <br />economy and the willingness of homeowners and contractors to build. In this revenue <br />category, Building Permits saw a $552,000 increase when compared to FY 2014-15. And <br />Long Range Planning Fees rose by $164,000. <br />Interest and Property Income (+$606,000) Since the City’s Investment Policy attempts to <br />meet the goals of safety, liquidity, and return, in that order, staff invests heavily in fixed <br />income instruments and the Local Agency Investment Fund (LAIF). Nevertheless, the City has <br />been able to increase its returns on assets over the past year and has also seen an increase <br />in interest income collected from loans and rent to community centers. <br />Document Property Transfer Tax (+$1,943,000) Document Property Transfer Tax is <br />received by the City each time property within San Leandro changes ownership. A positive <br />increase demonstrates an active housing market. Nevertheless, the revenue source can be <br />highly volatile and mirrors the general state of the economy. Thus, staff typically is <br />conservative in its projection of it and cautions against using it as a reliable source to fund <br />ongoing operations or increase appropriations. <br />Page 2 City of San Leandro Printed on 11/1/2016