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The Portola Valley Finance Committee met on Oct. 15 to discuss possible short-term and long-term avenues the town can take to take pressure off of the current financial crisis. In preparation for the Oct. 23 Town Council meeting, the committee prepared a pros and cons list of different approaches for the council to consider.
During the Finance Committee meeting, committee members proposed charging housing element expenses to the affordable housing fund, charging open space maintenance to the open space fund for short term opportunities. Long-term opportunities include private fundraising, renegotiating the San Mateo County Sheriff’s Office contract and renegotiating property taxes with the county.
The Town Council has already been presented with three options during the meeting early this month to consider a 2% user utility tax, a parcel tax or to become a charter city.
Short-term methods: Affordable housing funds, open space funds, UUT
The Finance Committee emphasized that to create a balanced budget, services will need to be cut and revenue must be redirected. Short-term opportunities will help the town’s finances for about three to 12 months until long term methods can take effect.
Finance Committee Chair George Savage discussed the use of the town’s $4.5 million affordable housing funds to offset the accumulated housing element costs. Over the past few years, the town has spent about $1.2 million on consultants and legal fees related to the housing element.
In the town staff report, the committee writes that this option would double the general fund reserve but the committee is unclear on whether this is “legally appropriate.”
“I also emphasize my prime recommendation which is to consider charging back the housing element-related expenditures if legally acceptable to the affordable housing fund since all those activities that we’re required to comply with are related to creating affordable housing,” said Savage during the committee meeting.
Finance committee member Chris Rittler supported Savage’s recommendations along with the UUT which will allocate money for open space maintenance from the general funds to the open space fund.
The open space fund currently has $8 million and grows annually by $400,000. The 2% tax would annually redirect a UUT of $400,000 every year. This would “avoid increasing maintenance obligations on [the] general fund.” The cons to this include public dissatisfaction on using open space funds for other town expenditures, according to the staff report.
Long-term methods
Savage also recommended that the Town Council fund an attorney to work with San Mateo County to renegotiate the Sheriff’s Office contract and the town’s percentage of property tax revenue from the county.
The staff report explains that negotiating with the county on property tax rates would allow more of the residents tax dollars to be directed to the town. The county currently pays Portola Valley 7% of its property tax payments to the county. “The county may be underpaying the town by as much as $210,000, the report states.
“Go back and renegotiate all of those long-term service contracts because I believe there’s some lack of affordability,” said Town Council candidate Carter Warr during public comment.
The committee also received a new idea from town resident Ronnie Krashinsky who proposed a fundraising campaign as a method to raise revenue.
“If you look at the Portola Valley School Foundation, they raise about $1.2 million per year from 300 families. I think it’s possible that with the right campaign that we could raise significant funds,” Krashinsky said to the committee.
Upcoming discussions
The Town Council will be discussing these opportunities in the Town Council meeting on Wednesday, Oct. 23.
