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

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ATTACHMENT B Transportation System Funding Overview of Property Tax Options General Obligation Bonds Brief Description General Obligation (GO) bonds are a borrowing or issuance of debt, the repayment of A@ of Funding which is backed by a property tax levied upon all taxable property in the City. GO Option bonds must be approved by the voters. Precedence General Obligation bonded debt is used extensively by local governments across the (prior Council United States for a variety of purposes. The City currently has outstanding GO bonds history, other issued for parks and open space projects, the airport expansion project and several jurisdictions public safety facility projects. The City last issued GO bonds for transportation projects = in 1974, with the issuance of $3.3 million of Street and Sewer Project bonds. Examples practice, etc.) of Oregon cities that have used GO bonds for transportation projects are the City of Salem, City of Lake Oswego and the City of Corvallis. Calculation Base The amount of a property tax levy for GO bonds depends on the annual payments on and Typical the bonds. The levy calculation would be done annually during the budget process and Ratesit would take into account discounts and delinquencies in property tax payments, interest earnings on fund balances, and an Unappropriated Ending Fund Balance to cover any debt payments due during July through November. The rate would be based on the total levy amount divided by the total taxable assessed value for real and personal property in the City. Individual taxpayers would pay the tax rate times their individual assessed value. Estimated For each $10 million of pavement preservation projects funded with 15-year GO bonds, Revenue Yield, the City would need to levy an average of $1 million per year. The cost would average Administration/ approximately $.07 per $1000 of assessed value over the 15 year period, or about $12 Enforcement per year for the average taxpayer ($180 total over 15 years). Costs Property tax levies for GO bonds are exempt from the $10 per $1000 of real market value tax rate cap for all general governments under Measure 5. Property tax collections 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. Legal Authority New or additional property taxes must be approved by a majority of the people voting and Restrictions in an election in November of an even-numbered year. In any other election, there must on Usealso be at least a 50% turnout of voters (the double-majority requirement). GO bonds may only be used for capital construction and capital improvements but A@A@ not for maintenance and repairs, the need for which could be reasonably anticipated. A@ The definition of maintenance and repairs includes an exception for street and highway A construction, overlay and reconstruction. @ 1