REVENUE AND EXPENDITURE ASSUMPTIONS
UTILITY USERS TAX
Description Utility users tax (UUT) is a 1.5 percent charge on all commercial utility activity in Irvine. The tax is assessed on electricity, natural gas and telephone charges, with the option of prepaying a $5,000 maximum payment. Residential utility use is not taxed. Trend Over the long-term, UUT revenues have been stable and consistent, increasing with the City’s commercial growth and business activity. Revenues are also impacted by changes in gas and electric pricing. Cushman & Wakefield reports that the vacancy rate for Irvine office space for the fourth quarter 2018 is 14.1 percent, up from 12.8 percent for fourth quarter 2017. This decreased occupancy corresponds to a similar decrease in utility usage. Outlook For FY 2019-20 and 2020-21, UUT tax revenue is estimated at $4.6 and $4.8 million, respectively. As trends are expected to continue, UUT revenue is projected to remain relatively stable. Voit Real Estate Services forecasts strong market fundamentals for the Orange County office sector and has a positive outlook for office space in 2019. Cushman &Wakefield reports that growth in Orange County rental rates, which have risen by 26.9 percent over that past two years, will begin to slow as existing landlords compete against newly constructed buildings. Absorption is projected to regain momentum in 2019 with tenants occupying new space.
FY 2019-21 Proposed Budget
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