South City has $10.9M surplus

With the city’s three primary sources of income on the rise, alongside additional revenue generated by a separate sales tax and development fees, officials celebrated the boom times seen in South City.

“We are fortunate,” said Councilwoman Karyl Matsumoto, regarding the variety of revenue sources available to city officials in their efforts to improve the quality of life for residents.

Before transfers out, the general fund’s operating surplus reached $31.3 million when considering the $12.6 million generated by Measure W, the city’s half-cent sales tax hike approved in 2016.

After accounting for transfers worth $6.3 million and meeting the city’s 20% reserve policy, the unassigned surplus hit $10.9 million, according to the report summarizing the 2018-2019 fiscal year. A majority of the income generated by Measure W paid toward construction of the city’s new civic campus, while some is set aside for road improvements.

Finance Director Janet Salisbury cited surging land values, increasing tourism and an improving local economy for the additional income filling the city’s coffers.

Property taxes generated $38.6 million for the city last year, said Salisbury, who showed a chart illustrating land values increasing almost annually since 2002. The city saw limited land tax income growth during the Great Recession, but great gains as the economy has rebounded.

Sales tax income jumped to $32.2 million in the last fiscal year, up from $28.7 million in the previous year. A report detailing the city’s economic position framed the gains as marginal, compared to previous years.

“While a healthy increase of 12.3%, reflective of the city’s strong economy, it was a slight softening versus prior year’s increase of 17.4%,” said the report.

Transient occupancy taxes, or money generated when a visitor stayed overnight in a South San Francisco hotel, raised $17 million, according to the report. For her part, Salisbury framed the income as a signifier of the city’s fortunate positioning at a gateway to a booming Bay Area and as a destination for the life sciences industry.

“That is reflective of the general strength of the area and the increased demand for hotels, driven both by tourism and the biotech sector that we have within South San Francisco,” she said.

Regarding the local biotechnology industry, sustained growth and expansion of the businesses east of Highway 101 generated substantial income in development fees, or payments required by builders constructing new projects.

To that end, $8.8 million was collected by the fund dedicated to addressing traffic issues in the area east of Highway 101; $3.5 million was generated to address capital projects at the highway interchange with Oyster Point Boulevard; $1.9 million was paid to sewer improvements east of Highway 101; and $900,000 went to the fund addressing child care. Permitting fees increased as well, as officials approved significant residential and commercial developments over the last year.

For her part, Matsumoto said the money received is a benefit of the sustained development and growth which has been an ongoing concern for some residents and community members.

“There are pluses with this,” she said, referring to the impact fees and other sources of income to the city.

Not all financial news is good in South City, as the city maintains a hefty set of unfunded liabilities worth $243.2 million, said the report. Ultimately though, the report detailed a city with an enviable financial position.

“The fiscal year 2018-19 financials reflect the continuation of a robust economy and development climate in South San Francisco,” said the report.

austin@smdailyjournal.com

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