20-Year Resource Allocation Plan - City of Sunnyvale

Franchise Fee revenue. The PG&E franchise rate is 1% of
gross receipts; statewide, franchise rates range from .5% to
2%. The City’s other main franchise agreements are with our
cable television providers and Specialty Solid Waste. For
FY 2011/2012 Franchise Fees are projected to increase by
approximately 1.4% over the current FY 2010/2011 projection.
This represents a slight increase in revenues from nearly all of
the companies with which the City has a franchise agreement.
Projections for future years include moderate year-over-year
increases for this aggregate revenue source.
Transient Occupancy Tax
Transient Occupancy Tax (TOT) represents the fourth largest
revenue source of the General Fund, constituting about 5.5%
of the total for FY 2011/2012.
TOT revenue is expected to fi nish at approximately $6.4
million in FY 2010/2011. This represents a 16% increase over
FY 2009/2010 and mirrors the accelerated recovery we are
seeing in Sales Tax revenues. This increase in TOT revenue
is primarily the result of an increase in business-related travel,
which is the core business of Sunnyvale’s hotels. As the
economic recovery has gotten underway, business travel is
increasing, as demonstrated by increasing occupancy rates at
the City’s hotels.
Projections for future years consider steady increases in both
room and occupancy rates, with growth in the 4% to 5.5%
range annually over the next fi ve years, including 4.2% growth
projected for FY 2011/2012. After FY 2015/2016, projections
refl ect steady, yet more modest growth predominantly driven
by expected increases in room rates and fl at occupancy rates.
Despite the expected growth that has been incorporated into
future TOT projections, there are still areas of vulnerability
with respect to this revenue source. One such threat is the age
of the Sunnyvale hotel stock. Many of Sunnyvale’s hotels
and motels are older and in need of renovation to maintain
competitiveness. Without such renovation, it is expected that
the occupancy and room rates of these hotels and motels may
decline over the years.
Construction-Related Revenue
Construction-related revenues are the fi fth largest source
of General Fund revenues, constituting approximately 5%
of the total for FY 2011/2012. Included in this category are
Construction Tax, Building Permits, and development-related
fees and charges. For FY 2011/2012 construction-related
revenues are expected to be approximately $6.8 million,
which is an increase of approximately 2% over expected FY
2010/2011 revenues. Development-related revenues have
been highly volatile over the past several years, peaking at
$14 million in FY 2007/2008 as the result of the downtown
redevelopment and then plunging to $5.2 million in FY
2009/2010 as development ground to a halt after the global
economic meltdown. Similar to Sales Tax and TOT, recovery
in this area has been swift. Revenues in FY 2010/2011 are
expected to $6.7 million, which is a 29% increase over FY
2009/2010. This is the result of a general increase in activity
as well as several large-scale projects. Going forward, FY