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1. What type of measure is being considered?

The City Council is considering placing a
three-quarter cent local sales tax increase (also known as a “transactions and
use tax”) measure on the November 3, 2020 ballot for consideration by the
voters. The measure, which requires a majority vote of the Diamond Bar voters,
would provide a reliable, ongoing source of local revenue to fund essential
city services like public safety, parks and recreation facilities and programs,
and street maintenance. 

2. Why have local revenue trends slowed?

The City is experiencing concerning revenue trends as the cost of doing business continues to rise. There are a number of contributing factors, including:

• Limited local property tax return – Of 88 Los Angeles County cities, Diamond Bar was incorporated with the lowest general levy share of property tax revenue return. The City receives just 5.19 cents per dollar of property tax generated – the rest goes to the County and other regional agencies.  
• Limited local sales tax return - The current countywide sales tax rate is 9.5% – or 9.5 cents per dollar. Only one cent of the 9.5 cents is dedicated to Diamond Bar for local use. 
• Original Community Design & Land Use Character – When Diamond Bar was conceptualized in the late-1960s, the vision was to build a predominantly residential community with limited commercial and retail uses. The thought was that future residents would turn to their nearest shopping center for basic goods and services, and commute elsewhere for appliances and other major purchases. This concept drove the design of the City’s retail areas which still today largely operate as neighborhood shopping centers with relatively low sales tax generators such as anchor grocery stores, small goods-and service-oriented tenants and quick-service restaurants.  Absent are high sales tax generators such as auto dealerships and those found in regional shopping malls with big-box stores, entertainment and dining establishments.  
• Changing retail markets - The rise of e-commerce and the convenience of online shopping have impacted local sales tax revenues in both Diamond Bar and cities across the state. People simply aren’t shopping locally as much as they used to. 
• Increasing Maintenance & Operational Costs – As the City’s facilities age, maintenance and operation becomes more expensive. The City is now 30 years old, much of its infrastructure even older.  As these facilities age more resources are necessary to ensure that Diamond Bar’s streets and facilities like the Diamond Bar Center and City Hall building, which also houses the Diamond Bar Library, remain safe, reliable and of high quality.
• Increasing Public Safety Costs – The City’s Law enforcement contract with the Los Angeles County Sheriff’s Department has increased about 5.2% annually since fiscal year 2015-16, from $5.7 million to an estimated $6.9 million in fiscal year 2019-2020. Costs are expected to exceed approximately $7.2 million annually beginning in fiscal year 2020-21. 
• Pension Costs - The City participates in the CalPERS pension plan and has a current estimated unfunded liability of approximately $6.8 million. CalPERS has implemented a mandatory 30-year payment plan similar to a mortgage to pay off the unfunded liability. The City’s estimated FY 2019-20 payment is approximately $600,000. The City Council directed that the City reduce the long-term interest costs associated with the 30-year payment plan by paying off the unfunded liability in 15 years.  While this increased the annual cost to approximately $600,000 for FY 2019-20, it is anticipated that it will ultimately save the City approximately $1.9 million in the long term.

3. How much would the measure generate?

A three-quarter cent sales tax increase is
estimated to generate approximately $3.8 million annually. 

4. How would the funding be used?

The sales tax revenues could be used to address any community priority, including but not limited to:

• Maintenance and augmentation of emergency response, special suppression patrols, and law enforcement personnel that reduce property crimes and keep neighborhoods safe.
• Investment in preventative maintenance of core infrastructure, streets, and facilities such as the Diamond Bar Center.
• Development and improvement of recreational spaces like the construction of a new park on Sunset Crossing Road, renovation of Heritage Park and Community Center, and access to open spaces via the City’s trail network.
• Long-term fiscal sustainability via investments in reserve accounts including the Park and Facility Development Fund, Building Facility Maintenance Fund, and General Fund Reserve and reduction in pension liability costs.

5. Can the State or County divert the funds from Diamond Bar?

No. Absent a Statewide legislative change, all
revenues generated by the sales tax measure remain under the control of the
City and used only for local needs and priorities.

6. If Diamond Bar voters were to not approve a City sales tax measure, could the sales tax rate in Diamond Bar increase anyway?

Yes.  As they have done recently with Measure M (transportation) and Measure H (homelessness), the County or other regional agency could place a sales tax measure on the ballot to increase the sales tax in the City.  That money would go to the County or other regional agency and potentially none of it spent to directly benefit Diamond Bar.  A County sales tax measure could be imposed in Diamond Bar even if a majority of Diamond Bar voters voted against it.

Generally, state law caps sales tax rates at 10.25 percent in the City. The current City rate is 9.5 percent. If Diamond Bar voters were to enact the local 0.75 percent sales tax increase, the local rate would be capped and no further local sales tax increases could be applied to Diamond Bar.

7. Would there be accountability/transparency protections in place for this measure?

Yes.  All funds generated from the measure would be subject to the City’s annual independent audit to verify proper expenditure.  Regular reports evidencing the expenditures would be publicly available.

8. Have other local Cities adopted a sales tax increase?

Yes. Voters in many Southern California cities voted in favor of enacting local sales tax increases in recent years, including, but not limited to:

• Arcadia
• Covina
• Fountain Valley
• Monrovia
• Placentia
• Seal Beach
• Sierra Madre
• South Pasadena

9. What has the City done to proactively manage costs?

The City has historically spent within its means, approving balanced operating budgets and using banked reserves to complete capital projects like the Diamond Bar Center, City Hall & Library, and various maintenance projects throughout town. The City’s decision to operate with a contract services model keeps staffing levels modest (less than one city employee per 1,000 residents) and associated pension costs down. The City has also taken proactive steps to reduce pension liability through additional annual payments and contributions to a Section 115 Trust to reduce Other Post Employment Benefits (OPEB) liability.