1. Projecting Property Tax Revenue Drew Corbett Budget Manager City of Sunnyvale

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

3. 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

4. The Basics – Revenue Components

5. 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

6. 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

7. 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

8. Projecting Future Revenues Current Assessor’s AV estimates are valuable starting point CAWF (2011-2012 roll in progress)$21.5B CTR (2010-2011 roll with roll corrections) $21.2B Roll (2010-2011 at roll close without any changes)$21.3B Change (to the 2010-2011 roll due to corrections)($0.1B) Percent change (to the 2010-2011 roll due to corrections)-0.45% Growth (2011-2012 roll growth since 2010-2011 roll close)$0.2B Percent growth (2011-2012 roll growth since 2010-11 roll close) 0.91%

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

10. Current AV Distribution

11. Residential vs. Non-Residential

12. 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

13. Residential vs. Non-Residential Actual 08-09 Current 09-10 Plan 10-11 Plan 11-12 Plan 12-13 Plan 13-14 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

14. Residential vs. Non-Residential Actual 08-09 Current 09-10 Plan 10-11 Plan 11-12 Plan 12-13 Plan 13-14 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%

15. 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

16. 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

17. 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