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ELF Financing Strategy San Mateo County ELF Study‐2016 February 21, 2017 Prepared by Brion Economics Team Final Report 13 PUBLIC IMPROVEMENT FUNDING SOURCES The following describes some possible public funding sources that could be used to fund child care facilities. These could be adopted countywide or by jurisdiction. Parcel Taxes Parcel taxes are excise taxes on real property based on either a flat per‐parcel rate or a varying rate depending on use, size, and/or number of units on each parcel. Parcel taxes can be used for any municipal purpose, and the majority of those proposed in California have been for public safety or medical services.7 In California, increasing or extending a parcel tax, which is imposed for a special purpose, requires a two‐thirds approval by voters, based on Proposition 218 which was passed by voters in 1996.8 In a study by the California Local Government Finance Almanac of the 396 parcel tax ballot measures in California between 2002 and 2013, 108 or 45% of them passed. Another 103, or 26%, passed with over 55% of the “yes” vote but failed to achieve the two‐thirds majority. The remaining 113, or 29%, received less than 55% of the “yes” vote.9 The review also found that the most successful parcel tax measures were broad‐based public safety measures that allowed funds to be used for police, fire, and medical. Parcel tax rates are normally weighted in some capacity, such as by size of parcel, density of parcel, or demographics of parcels. Rates also often vary by land use depending on the nature of the services to be funded. Parcel taxes are often used to finance bonds that are sold to fund either school projects or new parks and open space. The annual revenues are used to make annual debt service payments and cover administration costs and required reserves. Assessment districts are similar to parcel taxes, and may be created to impose assessments or special taxes that require majority approval. However, a civil engineer’s report is required to clearly demonstrate the special benefit being conferred to the parcels being assessed. Assessment districts are commonly used for infrastructure whose cost can be directly apportioned to individual properties; these types of assessment districts are not well‐suited to facilities such as childcare that provide a general benefit. Sales Tax Add‐Ons Special add‐on sales taxes are usually proposed and used for a specific purpose and require a two‐ thirds approval by voters. Countywide transportation is the most common purpose, but add‐on sales taxes can also be for general fund purposes, which only require majority approval. Frequently, add‐on sales taxes are dedicated to law enforcement, fire, or emergency medical services. 7 An Overview of Local Revenue Measures in California Since 2001, The California Local Government Finance Almanac. Updated March 10, 2014. www.CaliforniaCityFinance.com 8 https://www.californiataxdata.com/pdf/Proposition218.pdf 9 An Overview of Local Revenue Measures in California Since 2001, The California Local Government Finance Almanac. Updated March 10, 2014. http://www.californiacityfinance.com/LocalMeasuresSince01.pdf 8.C. - Page 32