The West Hollywood City Council last night approved an update to the WeHo’s budget for the 2017-2018 fiscal year that projects $125 million in operating revenue, $121 million in operating expenditures and $6 million in capital project spending. The General Fund portion of that budget, which is made of revenue not tied to particular projects, totals $95.1 million in revenue, a projected $92.7 million in expenses and $2.4 million for capital projects.
The 230-page budget document states that while the city’s economy is still growing, “the pace of growth appears to be moderating, and we anticipate that revenues will stabilize as we reach the end of this two-year budget cycle and several major, multi-year development projects open and reach stabilized operations.
A quick look at the budget in a video produced by the City of West Hollywood is above. Highlights of the budget, published verbatim, are as follows:
• Transient occupancy tax (TOT), or hotel room tax, is the city’s top single source of revenue. Tourism in the Los Angeles region and the city itself is at record levels, which has led to high average daily room rates ($290+) and occupancy (84%) in the city. Several new luxury hotel properties are nearing completion and are expected to open in calendar years 2017 and 2018. The James, which is scheduled to open on the Sunset Strip in June 2017, will be the largest hotel in the city. The proposed budget projects $25.75 million in TOT revenues in fiscal year 2017-18, an increase of 12% over the prior year.
• Property tax revenue continues to show strong and steady gains due to a combination of factors, including rising property values, higher volume of sales transactions, and the addition of new buildings to the city’s property tax roll; including the Sunset/La Cienega Project and several new mixed-use projects on the east side of the city. In fact, the city had the second largest percentage growth rate in Los Angeles County at 9.6% in 2017 (the city had the largest percentage growth in the county in 2016 at 10%). During fiscal year 2017-18 the city anticipates a 10.6% increase in property tax revenue for a total budgeted amount of $17.25 million.
• Sales and use tax revenue has shown reliable growth in recent years and is expected to increase by 8.1 % in the next fiscal year. The city’s sales tax base is diversified and benefits from evolving consumer tastes toward customer experiences over discount consumer goods. In fact, many of the city’s most popular restaurants and bars are at or above pre-recession revenue peaks. The city expects to receive approximately $16.0 million in sales tax revenue in fiscal year 2017-18.
• The city’s budgeted revenue for parking fines for the violation of state and local parking laws is projected to be approximately $7.2 million in fiscal year 2017-18, a 20% decrease over the prior year. This significant decline is primarily attributed to an increased number of available parking spaces in the city, which resulted from extending meter operating hours in commercial areas (which generates space turnover), more people using ride-sharing apps instead of driving, and new public parking lots. These factors allow individuals to easily find legal parking and thus reduce the amount of illegal parking in permit only residential neighborhoods.
• For fiscal year 2017-18, the Ccty has budgeted revenue from parking meters at $5.9 million. This is an increase of 14.6% over budgeted revenues in the prior year. Actual parking meter receipts for the past several years have increased by approximately 2.5% per year. The increase to the parking meter revenue budget in fiscal year 2017-18 will more closely align the budget with actual receipts received.
• Motor vehicle in-lieu tax revenue is also a significant revenue source for the city. This revenue initiated in fiscal year 2004-05 when cities and counties received an additional share of property tax to compensate for the elimination of the vehicle license fee (VLF) backfill and change in allocation formulas from 2% to 0.65%; this “VLF Swap” is property tax that grows in proportion to the growth in assessed valuation. For fiscal year 2017-18 the city has budgeted $4.85 million in motor vehicle in-lieu tax revenue, an increase of 20% over the prior year. Similar to parking meter revenues, the percentage increase in the budget for motor vehicle in- lieu tax revenue is meant to more closely align it with actual receipts received.
• Community Development permit revenue is budgeted at approximately $4.1 million for fiscal year 2017-18, a decrease of approximately 15% from the prior year. With the wind-down of major construction activity at several projects, the city anticipates a decline in permit revenue, especially from Building & Safety and Planning permits. However, the city typically budgets these revenues conservatively, because they can fluctuate significantly based on the timing of construction activity.
• Most of the city’s other revenue sources such as business license tax, franchise fees, and various fees for services are expected to remain fairly flat or grow modestly (between 1 and 3%). Of particular note, rent stabilization registration fee revenue will increase this year due to the first increase in the fees since 1993. This fee increase was adopted by the City Council as part of the 2016-17 Fee Resolution; implementation was delayed until 2017. The increased revenue will help offset the costs associated with administering the city’s rent stabilization ordinance
While revenue has grown, the cost of doing business has also increased. It is typical that the cost of providing the same level of services increases from year to year based on increases in the price of external goods and services, improved technologies, cost of living adjustments, and premiums for benefits. This is reflected in several increases to city’s base expenditure budget, particularly with costs for providing protective services and security during regular day- and night-time activities as well as during special events, along with regular inflationary increases for our contract services.
As a contract city, West Hollywood uses the services of the Los Angeles County Sheriff’s Department to provide police and protective services to our community. This year, staffing costs for regular Sheriff services increased by 3.8%, or more than $750,000 compared to the prior year. Liability premiums for the Sheriff’s contract have been steadily increasing, and in the coming year will be charged to the city at a rate of 10%, for a total cost of nearly $1.5 million. This rate is a half-percent higher than last year, and an increase from 6% only two years ago (fiscal year 2015-16).
The second increase in the cost of security is related to the city’s use of trained bicycle security personnel to supplement the services provided by the Sheriff’s Department. The city plans to spend more than $1.5 million for security ambassadors to provide day and evening patrols in residential neighborhoods and along major commercial corridors including Sunset and Santa Monica Boulevards. The security ambassador program along Santa Monica Blvd was implemented in calendar year 2012 and represents a significant increase in the city’s base security budget over the past five years.
A third substantial increase in the basic cost of security is related to the city’s two large special events, the Halloween Carnaval and Los Angeles Pride/Christopher Street West. The anticipated cost to provide police, fire, and other protective services for these two events is increasing in the next fiscal year, along with the costs for barricades and other temporary security measures. Last year, the city also began providing onsite emergency medical response services at both events via medical tents and trained emergency personnel, which has added $150,000 in costs to the base budget.
The change in the consumer price index (CPI) for the Los Angeles region over the last year was approximately 1.9%. A majority of the city’s routine operating and maintenance contracts include cost of living adjustments, which have been included in the base operating costs presented in the budget. In addition, staff received cost of living adjustments commensurate with the CPI as part of their negotiated contractual benefits.
The new right on red photo light tickets of $490 each is on the agenda for discussion going forward. Thats $490 folks for rolling past a red light when its Sunday morning and no one else is around. Big brother watching is on this item is a bit too much I think.