Projecting Property Tax Revenue Drew Corbett Budget Manager City of Sunnyvale

Agenda City of Sunnyvale Overview The Basics Projection Timeline Setting the Baseline Projecting for Future Years

City of Sunnyvale Overview City of approximately 140,000 Second largest city in Santa Clara County Full-service city Significant technology sector presence Home to Yahoo!, Network Appliance, Juniper Networks Property Tax is top General Fund revenue source 37% of total

The Basics – Revenue Components

Projection Timeline July – December: Monitor monthly AV information from County Meet quarterly with County Assessor’s Office, Treasurer-Controller Receive CCPI January – April: Develop projections Update current year projection Develop short- and long-term forecasts

Setting the Baseline Update current year projection Year-to-date remittances Information from Treasurer-Controller Provides estimate for all Property Tax sources Estimates roll corrections impacting totals Collaborative effort between cities and County Sets baseline for future years’ projections

Projecting Future Revenues Focus on largest sources Secured, VLF in lieu, Unsecured, Supplemental Consider the following factors: Current Assessor’s AV growth (or decline) estimate Factoring in CCPI Mix of residential vs. non-residential Economic conditions Pending appeals valuation

Projecting Future Revenues Current Assessor’s AV estimates are valuable starting point CAWF ( roll in progress)$21.5B CTR ( roll with roll corrections) $21.2B Roll ( at roll close without any changes)$21.3B Change (to the roll due to corrections)($0.1B) Percent change (to the roll due to corrections)-0.45% Growth ( roll growth since roll close)$0.2B Percent growth ( roll growth since roll close) 0.91%

Projecting Future Revenues Separate residential vs. non-residential Different trends Different factors impacting valuations Different timing of changes to assessment roll

Current AV Distribution

Residential vs. Non-Residential

Residential Stable historical AV growth High % of pre-Prop 13 properties Desirable high school district Prop 8 reductions incorporated in current roll Non-residential Historical AV growth but more volatile Quick rebounds from drops in AV Lag in assessment appeals Impact of recession has not fully hit yet

Residential vs. Non-Residential Actual Current Plan Plan Plan Plan Residential % of AV 62.0%61.2% 62.9%64.9%64.2% Growth/ Decline 3.1%0.25%2.0%4.0% Total Residential Revenue $16.7M$17.2M$17.3M$17.7M$18.4M$19.1M

Residential vs. Non-Residential Actual Current Plan Plan Plan Plan Non- Residential % of AV 38.0%38.8% 37.1%35.1%35.8% Growth/ Decline 6.9%0.25%-5.0% 7.7% Total Non- Residential Revenue $10.3M$11.0M $10.4M$9.9M$10.7M Total Secured Revenue $27.0M$28.2M$28.3M$28.1M$28.3M$29.8M Total Change4.56%0.25%-0.72%0.66%5.28%

Economic Conditions General economic indicators Unemployment, GDP growth, consumer confidence Local economic conditions Foreclosures, commercial vacancies, development activity, business conditions May impact segments differently Need to consider conditions beyond jurisdiction Supplemental Tax

Pending Assessment Appeals Understanding potential exposure important Total valuation of pending appeals Appeal years Past appeals = County pool Reduced valuation = City responsibility Historical success rate Use with caution; recent recession may reset baseline Most difficult to incorporate into projections

Other Considerations Sunnyvale projects for 20 years Methodology past years 3 or 4 more broad Utilize long-term historical AV growth Still segregate commercial and residential Do not attempt to project future downturns Instead temper growth projections Utilize for planning purposes