Item 3: An Ordinance Concerning Transportation System Maintenance Fees

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at least a portion of the capital preservation needs, they do not provide a comprehensive solution that addresses O&M needs. Debt Policies: The City’s debt management guidelines, which were last reviewed and approved by the budget committee in February 2004, limit net direct debt to 1% of real market value. At the current time, the City has about $130 million of additional capacity for debt issuance within policy limits. The recently passed $27.5 million PROS bond measure will reduce this capacity. The proposed City Hall project is likely to be funded in large part through G.O. bonds. The draft CIP also includes a range of projects for which G.O. debt may provide full or partial funding. Any discussion of the use of G.O. bonds to finance transportation capital preservation must also address other, competing uses of available G.O. debt capacity. Estimated Cost to Taxpayers: An early, rough estimate is that a $10 million bond issue would cost a median-value home about $12 a year for 15 years. If $100 million worth of debt were issued to address the existing backlog of needed street repairs, the median value homeowner would see additional property taxes of about $125 per year. Potential Motion 5: Move to direct the city manager to bring back for discussion after the first of the year a proposal to refer to the voters a general obligation bond measure to generate additional funding to offset the amount that would otherwise be generated from a TSMF for pavement preservation capital funding needs. Providing Assistance for Non-Profit Agencies Concerns over the impact of the proposed TSMF on non-profit agencies have been raised through public outreach efforts, public hearing comments and council discussion. The primary concern is that a possible effect of the TSMF on non-profit agencies would be to reduce available funding for delivery of social services that benefit the community. While it is critical to the community to address transportation funding needs, social services to the community provided by non-profit agencies are also of vital importance. The council may wish to consider a mechanism to offset or mitigate impacts to non-profit agencies while preserving the integrity of the TSMF as a funding source. A waiver or exemption of the TSM fee for a selected class of customers could undermine the integrity and legal defensibility of the fee. A more appropriate mechanism would be to create a credit program to offset or reduce fee payments for non- profits from another funding source. Establishing a funding source to wholly offset non-profit TSM fees is estimated to require $150,000 annually. This could be accomplished within the proposed ordinance framework via the annual budget process and administrative rule-making authority of the city manager. Potential Motion 6: Direct the city manager to bring back options in the FY08 budget committee discussions for funding a TSMF offset program to reduce or eliminate TSM fee charges to non-profit organizations that are providing social services to the community. Attachment A for TSMF AIS/Council Action 112706 - 4