The city of American Canyon may eliminate up to $1.5 million worth of expenses as it faces record losses in property and sales tax revenues.

The city is sifting through a series of options, including postponing the replacement of aging city vehicles, reducing hours at its swimming pool, cutting back on street sweeping or turning the city planning commission’s responsibilities over to the city council, according to American Canyon Finance Director Barry Whitley.

The city, which will  borrow $450,000 from its reserves this year, also may tax its tourists more by hiking the city’s transient occupancy tax — the charge tacked onto the price of a hotel room — from 10 percent to 12 percent.

So people can understand the city’s position, American Canyon City Manager Rich Ramirez has laid out different scenarios to groups of residents, businesses and city employees.  He has scheduled about 20 private meetings over the next few weeks.

“We have to do something this year,” Ramirez said recently. “You are not going to grow out of the problem on near term.”

Both property tax revenues and sales tax projections are lower than officials expected this summer, when the city approved its budget for the coming year. 

John Tuteur, Napa County’s assessor, explained to the City Council on Oct. 20 that American Canyon’s overall property values dropped 11 percent this year.  “Nobody has seen anything like this,” Tuteur told the city officials.

According to Whitley, the city’s finance director, the lower assessments mean $578,000 less in property tax revenues for the city.

In addition, the city projects a retail sales tax shortfall of $200,000 this year. A number of new sales tax generators the city expected over the next few years, including Walgreens on American Canyon Road and the third phase of Napa Junction retail project, won’t open soon, Ramirez said.

Tuteur, who also addressed the North Bay Association of Realtors said nonresidential construction in American Canyon is slowing down. Nonresidential construction was worth $28.3 million in 2008. “That probably won’t happen this year,” Tuteur said after the meeting.

The owners of at least one hotel and two commercial centers have requested their property assessments be lowered because of lower revenues, he said.

Yet compared to most other counties, particularly those in the Central Valley, Napa County is in good shape, Tuteur said. “We’re still doing OK,” he told the Realtors’ group.

Gerrett Snedaker, CEO and/broker of Frank Howard Allen Realtors’ Wine Country Group, said he remains hopeful the residential real estate market is stabilizing.

While foreclosed homes and pre-foreclosures known in the real estate world as “distressed properties” have dominated the market and driven prices down, in American Canyon buyers have been quick to snap up homes, agents said.

David Barker, an agent with Frank Howard Allen who has worked in American Canyon for years, said most listings in American Canyon these days receive as many as nine offers.

“I’m very busy,” he said.