Projecting Property Tax Revenue

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

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 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

13. Residential vs. Non-Residential

14. Residential vs. Non-Residential

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