Item B: Funding Strategies for Transportation System Operations, Maintenance, and Preservation

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Transportation System Funding Project Overview of Individual Funding Options Local Option Levy A local option levy is a property tax that is paid by all property owners within the City Brief Description limits. The City could impose a local option levy for capital projects for up to 10 years, of Funding or for other purposes for a maximum of five years. Option Property taxes are used extensively by local governments across the United States. The Precedence (prior City currently imposes a four-year local option levy, for library service improvements. Council history, Voters recently approved a two-year local option levy for recreation services. The City other has not proposed any capital local option levies in the past. Since the passage of jurisdictions? Measure 50, there do not appear to have been any local governments that have used practice, etc.) local option levies for transportation projects. The amount of a local option levy depends on the desired spending for the program to Calculation Base be funded with the levy. The levy calculation will take into account discounts and and Typical delinquencies in property tax payments, interest earnings on fund balances, costs for Rates interfund loans, and a provision for a 2-month Unappropriated Ending Fund Balance for operations. The rate will be based on the total levy amount divided by the total taxable assessed value for real and personal property in the City. Individual taxpayers will pay the tax rate times their individual assessed value. There are two types of local option levies. Under a tax rate levy, the City would impose a pre-determined tax rate each year of the levy and receive whatever amount of revenue that generated by the assessed value within the City each year. Under a uniform amount levy, the City would impose the same amount each year over the term of the levy. The tax rate would change from year to year, based on the amount of total assessed value in the City. To fund $10 million of projects with a 10-year capital local option levy, the City would Estimated need to levy approximately $1.1 million per year. This would cost on average Revenue Yield, approximately $0.10/$1000 of assessed value, or an average of $16 per year to the Administration/ average taxpayer over the 10-year period. Enforcement Costs To fund $500,000 of operating costs with a four-year local option levy, the City would have to levy approximately $650,000 per year. This would cost on average approximately $0.7/$1000 of AV, or an average of $10 per year to the average taxpayer over the four-year period. Local option levies are subject to the $10/$1000 of real market value tax rate cap for all general governments under Measure 5. Under Measure 50, local option levies are the first to be reduced in the event of tax rate compression. This means that if the combined total levies for the overlapping general governments exceeds the Measure 5 cap, any local option levies would be proportionally reduced until the tax rate limit is satisfied. Property taxes are administered by the County. They prepare the tax bills, collect the funds, and remit the appropriate amount to the City on a regular basis. Enforcement is done by both the County and the City in the foreclosure process. I7