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As has been previously discussed with the council, the exercise of estimating sample monthly fees for a TSMF is a complex one. The annual target revenue to be generated by a TSMF would be controlled through the annual budget process and would be largely dependent on the level of other, offsetting revenues available for pavement preservation projects in a given budget year. Under the rate methodology and with a hypothetical target TSMF revenue level of $3.6 million per year, the average monthly fee which might be imposed on a single-family residential household would be slightly under $3.00. In the non-residential categories, the monthly fee might range from about $9 for a 5,000-sq. ft. office building in a low-use category to about $500 per month for a 35,000-sq. ft. supermarket in the highest system usage category. Staff has prepared a memorandum outlining the principal provisions of the ordinance and the essential elements of the current rate methodology (Attachment B). The decision before the council today is the policy choice of whether or not to proceed to a public hearing on the ordinance as proposed. Bonding Alternatives As part of the work of the Citizen Budget Subcommittee on Transportation System Funding, the members of the subcommittee reviewed a broad-based list of over 20 potential funding sources, from which they selected six for further staff analysis. One of those alternatives was for the use of property taxes to back the issuance of general obligation bonds. The staff analysis of this funding option as presented to the subcommittee, as well as excerpts from the subcommittee's interim report to the council outlining its discussion and conclusions regarding this alternative, are included as Attachment D. Additionally, Attachment E contains information on the bonding alternatives raised by the council at the September 27 work session. This attachment outlines the tax levy needed to support a G.O. bond measure which could supplant the proposed TSMF at a level of $3.6 million per year and also analyzes the financial feasibility of using revenue bonds to "buy down" on the backlog of preservation projects at an accelerated rate, in order to reduce the overall growth trend in the backlog of preservation projects. RELATED CITY POLICIES The council' s Vision and Goals Statement with respect to Fair, Stable and Adequate Financial Resources reaffirms its commitment to "a local government whose ongoing financial resources are based on a fair and equitable system of taxation and other revenue sources and are adequate to main and deliver municipal services." The 2001-2002 City Council Work Plan Item 1 under this goal called for an effort to "Identify and implement funding sources (including possible reallocation of existing sources) for operation, maintenance and preservation of the transportation system." It was based on this charge that the Citizen Budget Subcommittee on Transportation System Funding began meeting in September of 2000 to study this issue and develop its report and recommendation. Additionally, the City's FinancialManagement Goals andPoficy, A. 4, states that the City's municipal service priority Level 2 (second only to the preservation of the public safety system) is to "maintain and replace the City' s fixed assets, which includes.., infrastructure.., so as to optimize their life." L:\CMO\2004 Council Agendas\M041027\S041027B.doc