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HomeMy WebLinkAbout1/20/2026 Item 7c, Floyd and Rice - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum City of San Luis Obispo Council Agenda Correspondence DATE: January 20, 2026 TO: Mayor and Council FROM: Aaron Floyd, Public Works and Utilities Director Prepared By: Jennifer Rice, Public Works Deputy Director for Mobility Services VIA: Whitney McDonald, City Manager SUBJECT: ITEM #7c – SAN LUIS OBISPO COUNCIL OF GOVERNMENTS PRESENTATION ON LOCAL ROADS FIRST PROPOSED BALLOT MEASURE – DRAFT TRANSPORTATION EXPENDITURE PLAN Following the publication of the January 20, 2026 Council Agenda Packet, an updated version of the Draft Expenditure Plan has been provided by the San Luis Obispo Council of Governments (SLOCOG). Attachment A to this agenda correspondence includes the revised Draft Expenditure Plan with changes highlighted. Additionally, Attachment B is the draft Ordinance. Overall, the revisions focus on clarification, particularly providing greater clarity regarding the Governing Board, organizational structure, and the role of the Local Transportation Authority (referred to as the Authority), as well as proposed split of the unincorporated County local funds to be distributed equally by Supervisorial District for their respective unincorporated populations. Additionally, staff became aware that the link provided within the Council Agenda Report for the polling results was not publicly accessible. Those results are included in the correspondence as Attachment C. Further, it was brought to staff’s attention of two transposed numbers within Table 1: 1- Year Distribution of $35M. Below is the updated table with the amended data shown in red bold. ITEM 7c – SLOCOG Presentation on Local Roads 1st Proposed Ballot Measure – Draft Transportation Expenditure Plan Page 2 Attachments A – Draft Transportation Expenditure Plan – Rev. 1.16.26 B – Draft Ordinance – Rev. 1.16.26 C – Polling Results Population*%Distribution Arroyo Grande 18,441 6.5%1,256,955$ Atascadero 29,773 10.5%2,029,354$ Grover Beach 12,701 4.5%865,712$ Morro Bay 10,757 3.8%733,207$ Paso Robles 31,490 11.2%2,146,387$ Pismo Beach 8,072 2.9%550,195$ San Luis Obispo 47,063 16.7%3,207,856$ Unincorporated**124,123 43.9%8,460,335$ 282,420 100.0%19,250,000$ North County 99,329 35.2%4,923,893$ South County 80,716 28.6%4,001,218$ Central County 62,250 22.0%3,085,830$ North Coast 40,125 14.2%1,989,059$ 282,420 100.0%14,000,000$ 1,400,000$ 350,000$ 35,000,000$ *Based on 2020 Census **Unincorporated local funds to be distributed equally by Supervisorial District TOTAL 55% for Local Control: Local Road Repair, Safety and Improvements 40% for Regional Corridor Improvements Total Total 4% for Senior/Disabled/Veterans' Mobility Improvements 1% Administration Costs (Maximum) January 16, 2026 Attachment 1 to G-1 1 San Luis Obispo County Transportation Expenditure Plan I. Introduction San Luis Obispo County’s transportation system is essential to the safety, mobility, and economic vitality of its residents, businesses, and visitors. Yet existing state and federal revenues are inadequate to maintain local streets and roads, operate reliable transit, and deliver major regional improvements. This Transportation Expenditure Plan establishes a dedicated local funding source — a voter-approved ½-cent transactions and use tax — projected to generate approximately $35 million per year. All revenues will remain in San Luis Obispo County and may only be used for transportation purposes. The Plan emphasizes geographic equitable distribution of funds, fairness, transparency, and strong taxpayer safeguards while ensuring flexibility to leverage state and federal funds. II. Revenue Distribution Revenues shall be allocated as follows: A. 55% Local Road Repairs and Improvements distributed by population to each city and the County. (Reviewed every ten years based on census data 1). B. 40% Regional Corridor Improvements distributed by subregion population within the areas defined as shown. C. 4% Mobility Services for Seniors, Veterans and Mobility Challenged D. 1% Administration 1 Should a new city become incorporated, the percentages would be adjusted to reflect the updated population distribution. January 16, 2026 Attachment 1 to G-1 2 III. Eligible Uses of Funds Local Road Repairs and Improvements (55%) Funds are distributed by population to the cities and the County. County funds shall be distributed equally by Supervisorial District. Funds may be used for: A. Local road maintenance, rehabilitation, and repair. B. Safe Routes to School and Safe Routes to College programs. C. Local intersections, operational and traffic safety improvements. D. Bridge safety and seismic retrofits. E. Bicycle and pedestrian improvements (sidewalks, crosswalks, multi-use paths). F. Community enhancements tied to transportation (streetscape, lighting, landscaping, wayfinding). G. Traffic signal improvements and synchronization. H. Piers, walkways and other pedestrian or bike paths in and around waterfront and river areas. I. Transit services including local trolley services may be funded if desired by a City. Regional Corridor Improvements (40%) Regional project funds shall be distributed by population among subregions over the life of the measure and used for: A. Highway and major corridor congestion relief such as van or carpool lanes or other congestion relief measures. B. Safety and interchange improvements. C. Regional bicycle and pedestrian connectors between communities like the Bob Jones Trail. D. Interagency Transit Access. E. Mitigation impacts for proposed improvements. F. Other projects consistent with the adopted Regional Transportation Plan (RTP). Mobility Services for Seniors, Veterans and Mobility Challenged (4%) Funds shall support improvements to mobility programs that prioritize services for seniors, veterans, and mobility challenged. Administration (1%) No more than 1% of annual revenues shall be allocated by the Authority for administration, reporting, auditing, and program oversight. January 16, 2026 Attachment 1 to G-1 3 IV. Governing Board and Organizational Structure The San Luis Obispo Council of Governments (SLOCOG) serves as the designated Local Transportation Authority for San Luis Obispo County and is responsible for administering the Transportation Measure in compliance with Public Utilities Code (PUC) 180000 et seq. Upon voter approval of the Transportation Measure, the Board of Directors of SLOCOG will serve as the Authority Board, hereafter the Authority, and will oversee its implementation in accordance with the plans and programs detailed in this and future updates of the Expenditure Plan. This Expenditure Plan provides for the creation of a Citizens’ Oversight Committee to ensure transparency and accountability. Details regarding the Committee are contained in this plan (Section XIV). The Biennial Implementation Plan will be prepared and updated by SLOCOG staff and approved by the Authority Board as per the Ordinance Section 14. Per PUC 180000, the Authority’s governing board will include representation as follows: • Five (5) members of the San Luis Obispo County Board of Supervisors • One (1) member representing each incorporated city within San Luis Obispo County—Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, and San Luis Obispo—appointed by their respective city councils. Alternates to the regular members may participate in accordance with SLOCOG bylaws. Should another city become incorporated, it will have one seat on the Authority Board. V. Maintenance of Effort (MOE) The enabling legislation in Public Utilities Code PUC 180001(e) states: It is the intent of the Legislature that funds generated pursuant to this division be used to supplement and not replace existing local revenues used for transportation purposes. Each Agency receiving revenues for “Local Projects” shall annually maintain, at a minimum, the same level of local fully discretionary general fund revenues that were expended on average for fiscal years 2023/24, 2024/25 and 2025/26, for transportation purposes. Dedicated funds for transportation such as gas tax revenues are not counted as general fund revenues. Transfers into the general fund will not be counted as general fund revenues. Grant awards and general fund revenues used as matching funds for grant awards will not be counted as general fund revenues. January 16, 2026 Attachment 1 to G-1 4 Unusual one-time general fund allocations that have been expended for transportation purposes may be exempted prior to determining the Agency’s average expenditure for the three fiscal years noted above at the discretion of the Authority. An agency petitioning for an exception under this provision must supply evidence of the need for special consideration, and the petition must be approved by a majority vote of the Authority Board. The Authority shall not allocate any Net Revenues to any jurisdiction for any fiscal year until that jurisdiction has certified to the Authority that it has included in its budget for that fiscal year an amount of local discretionary funds for streets and roads purposes at least equal to the level of its maintenance of effort requirement. An annual independent audit will be conducted by the Authority to verify that the maintenance of effort requirements are being met by the jurisdiction. Any Net Revenues not allocated pursuant to the maintenance of effort requirement shall jurisdictions be allocated to the remaining eligible jurisdictions according to the formula described in the Section III. Exceptions Subject to Authority approval, if any local jurisdiction had extraordinary local discretionary fund expenditures during any fiscal year it may determine that year’s minimum expenditure base level of local discretionary funds by: (a) subtracting those extraordinary expenses funding, assessment district contributions, development impact funds, redevelopment agency contributions, or other non-recurring contributions) from its total expenditures; or (b) petitioning the Authority for special consideration. It is possible that a local jurisdiction may need to revise its minimum expenditure base beyond the subtraction of extraordinary expenses. In this instance, the Authority may allow the establishment of a new base for that jurisdiction's Maintenance of Effort requirement. A local jurisdiction petitioning the Authority under this provision must supply evidence of the need for special consideration and the petition must be approved by a majority vote of the Authority. VI. Requirements for Eligible Jurisdictions To be eligible to receive Net Revenues, a jurisdiction shall satisfy and continue to satisfy the following requirements. January 16, 2026 Attachment 1 to G-1 5 A. Mitigation Fee Program. Assess traffic impacts of new development and require new development to pay a fair share of necessary transportation improvements attributable to the new development. B. Circulation Element. Adopt and comply with its Circulation Element as part of the jurisdiction’s General Plan, C. Capital Improvement Program. Adopt and update a minimum Five-Year Capital Improvement Program (CIP). The CIP shall include all capital transportation projects, including projects funded by Net Revenues, and shall include transportation projects required to demonstrate compliance with pavement management requirements. D. Pavement Management Plan. Adopt and update a Pavement Management Plan and provide regular reporting on the status of road pavement conditions and implementation of the Pavement Management Plan. E. Expenditure Report. Adopt an Expenditure Report to account for Net Revenues, developer/traffic impact fees, and funds expended by the Eligible Jurisdiction which satisfy the Maintenance of Effort requirements. The Expenditure Report shall be submitted by the end of six (6) months following the end of the jurisdiction’s fiscal year and include the following: 1. All Net Revenue fund balances and interest earned. 2. Expenditures identified by type (i.e., capital, operations, administration, etc.), and program or project. F. Project Final Report. Provide Authority with a Project Final Report for regional projects within six months following completion of a project funded with Net Revenues. G. Time Limits for Use of Net Revenues for Regional Projects. 1. Agree that Net Revenues for Regional Projects shall be expended or encumbered no later than the end of the fiscal year for which the Net Revenues are programmed. A request for extension of the encumbrance deadline for no more than thirty-six months may be submitted to the Authority no less than ninety days prior to the deadline. The Authority may approve one or more requests for extension of the encumbrance deadline. 2. In the event the time limits for use of Net Revenues for Regional Projects are not satisfied then any retained Net Revenues that were allocated to an Eligible Jurisdiction and interest earned thereon shall be returned to the January 16, 2026 Attachment 1 to G-1 6 Authority and these Net Revenues and interest earned thereon shall be available for allocation to any project within the same source program. H. No Supplanting of Funds. Agree that Net Revenues shall not be used to supplant developer funding which has been or will likely be committed for any transportation project. I. Public Notice of Use of Measure Funds. Member agencies will provide the public with planned use of measure funding as part of its annual or biennial budget process. This includes each City and Community Advisory Council will receive at a minimum, twice per programming year presentations from jurisdictional staff to review proposed investments prior to annual allocations. Determination of Non-Eligibility A determination of non-eligibility of a jurisdiction shall be made only after a hearing has been conducted and a determination has been made by the Authority that the jurisdiction is not an Eligible Jurisdiction as provided hereinabove. VII. Taxpayer Safeguards A. A transportation special revenue fund (the “Local Transportation Authority Special Revenue Fund”) shall be established to maintain all Revenues. B. Accounting Receipt, maintenance and expenditure of Net Revenues shall be distinguishable in each jurisdiction’s accounting records from other funding sources, and expenditures of Net Revenues shall be distinguishable by program or project. Interest earned on Net Revenues allocated pursuant to the Ordinance shall be expended only for those purposes for which the Net Revenues were allocated. C. No Net Revenues shall be used by a jurisdiction for other than transportation purposes authorized by the Ordinance. Any jurisdiction which violates this provision must fully reimburse the Authority for the Net Revenues misspent and shall be deemed ineligible to receive Net Revenues for a period of five (5) years. D. A Citizens Oversight Committee (“Committee”) shall be established to provide an enhanced level of accountability for expenditure of Revenues under the Ordinance. The Committee will help to ensure that all voter mandates are carried out as required. The roles and responsibilities of the Committee, the selection process for Committee members and related administrative procedures shall be carried out as described in the Section XIII below and Ordinance Section 15. E. A performance assessment shall be conducted at least once every three years to evaluate the efficiency, effectiveness, economy and program results of the Authority in satisfying the provisions and requirements of the Investment Summary January 16, 2026 Attachment 1 to G-1 7 of the Plan, the Plan and the Ordinance. A copy of the performance assessment shall be provided to the Committee. F. Annual status reports regarding the regional corridor projects and improvements shall be brought before the Authority by local agencies and Authority staff at least annually in public meetings. G. Annual Report Annually the Authority shall publish a report on how all Revenues have been spent and on progress in implementing projects in the Plan and shall publicly report on the findings and posted on the agency website. VIII. Ten-Year Comprehensive Program Review At least every ten years the Authority shall conduct a comprehensive review of all projects and programs implemented under the Plan to evaluate the performance of the overall program and may revise the Plan to improve its performance. The review shall include consideration of changes to local, state and federal transportation plans and policies; changes in land use, travel and growth projections; changes in project cost estimates and revenue projections; right-of-way constraints and other project constraints; level of public support for the Plan; and the progress of the Authority and jurisdictions in implementing the Plan. The Authority may amend the Plan based on its comprehensive review, subject to the requirements of Section IX: Reporting, Implementation and Amendments. IX. Reporting, Implementation and Amendments Administration In compliance with state and federal requirements, SLOCOG regularly prepares a Regional Transportation Plan (RTP)that identifies priority projects across all transportation modes, including highways, local roads, public transit, bikeways, and aviation. All updates to the Expenditure Plan will undergo public review and hearings. Candidate projects and priorities may evolve, but the county’s extensive transportation needs will ensure robust use of all available funding, including sales tax revenues. During each update, the Authority will review investments across multiple transportation modes to ensure efficiency and equity in addressing mobility needs throughout San Luis Obispo County. Annual Report Each year, the Citizens’ Oversight Committee (Section XIV) reviews expenditures and communicates results to the public through an Annual Report. January 16, 2026 Attachment 1 to G-1 8 Amendment Process As specified in PUC Section 180207: (a) Once per calendar year, the Authority may review and propose amendments to the county’s transportation expenditure plan to incorporate additional revenues, account for unanticipated funds, or respond to unforeseen circumstances. Amendments adopted late in the year will not preclude additional amendments in the following year. (b) The Authority must notify the County Board of Supervisors and each city council, providing copies of proposed amendments for their review. (c) Amendments become effective 45 days after notification. Voter approval (2/3 majority) is required for changes to funding categories or overall allocation formulas as per Ordinance Section 10. Biennial Implementation Plan At least once every two years, the Authority will prepare and adopt a Measure XXX Implementation Plan. This plan will include a financial component consistent with both the SLOCOG Regional Transportation Improvement Program (RTIP) and the STIP. Process steps include: A. SLOCOG staff, working with member agencies and stakeholders, will draft and update the Implementation Plan biennially. B. The Authority Board will review the Draft Implementation Plan, hold public hearings, and incorporate feedback. C. Following review, the Authority formally adopts the Implementation Plan. Implementation Guidelines Following voter approval of this Measure, the Authority shall adopt Implementation Guidelines to administer and implement the Expenditure Plan in a manner consistent with the voter-approved purposes of this Measure. The Implementation Guidelines shall establish procedures for project programming and delivery, eligibility requirements, fund distribution, accountability and reporting, audits, amendments, and other administrative matters necessary to ensure effective and transparent use of Measure revenues. The Implementation Guidelines shall not expand or alter the uses of funds authorized by this Measure and shall be adopted by the governing board at a public meeting following a noticed public process. January 16, 2026 Attachment 1 to G-1 9 X. Bonding Authority To reduce overall costs by advancing construction timelines, the Authority shall have the option to sell or issue, at any time, and from time to time, including on or before the collection of the taxes authorized by the Ordinance Section 16, bonds, notes or other evidences of indebtedness, including capital appreciation bonds, payable from and secured by the proceeds from the sales taxes authorized by this Ordinance and from the proceeds of the existing Measure (TBD) sales taxes, in order to finance and refinance the transportation projects identified in the Transportation Expenditure Plan. Bonding indebtedness shall be limited to 35% of net sales measured at the end of the 30-year program. An additional bonds test (ABT) no lower than 1.5x Maximum Annual Debt Service will be measured against projected revenues for any consecutive 12-month period in the prior 18 months. Should the tax be ended by voter action, the obligation to repay the bond debt remains with the agency, in this case the Authority and its member agencies. XI. Independent Financial Audits If the Transportation Measure is approved by the voters, the Authority will conduct independent financial audits of all revenues and expenditures associated with the measure in accordance with Public Utilities Code 180000 et seq. These audits will ensure full transparency and accountability in the use of voter-approved sales tax revenues. The results of the audits will be presented annually to the Authority Board and made available to the public, reinforcing confidence in the administration of the Transportation Measure. Findings will also be shared with the Citizens’ Oversight Committee to support their independent review of expenditures and compliance with the Expenditure Plan. XII. Administration Program – 1% of Measure Revenues To effectively manage and implement the Transportation Measure, the Authority will cap administration costs at no more than 1% of annual sales tax revenues to administrative activities. This allocation supports the necessary planning, oversight, and program development functions required for successful execution of the measure. Key administrative responsibilities of the Authority include: A. Annual Work Program and Budget Prepare and adopt an annual work program and budget outlining planned expenditures, oversight activities, and administrative costs. January 16, 2026 Attachment 1 to G-1 10 B. Allocation Program Requirements and Focused Studies Develop requirements for each funding program established by the Regional Programs allowed in the Expenditure Plan and undertake specialized studies needed to implement those programs effectively. C. Biennial Implementation Plan Prepare and update the Transportation Measure Implementation Plan every two years, aligning it with the Regional Transportation Improvement Program (RTIP) and State Transportation Improvement Program (STIP). D. Regional Project Prioritization Establish and update priority lists for regional projects and rehabilitation projects, in coordination with member jurisdictions and consistent with Expenditure Plan goals. E. Independent Annual Audit Conduct an independent audit of all Transportation Measure funds to ensure compliance, fiscal integrity, and accountability to the public. F. Public Outreach and Communication Carry out ongoing outreach and public education efforts to keep residents informed about project progress, financial performance, and planned updates. G. Bond Issuance for Accelerated Delivery Issue bonds when appropriate to expedite project delivery, reducing overall project costs by leveraging future revenues for near-term improvements. H. Revenue Allocation to Local Jurisdictions Distribute Transportation Measure proceeds to incorporated cities and the county in accordance with the formulas and criteria established in the Expenditure Plan. I. Support for Oversight Committees and Related Technical Assistance Provide staff support to advisory committees and furnish technical assistance to member jurisdictions to ensure consistent, equitable, and effective program implementation. XIII. Citizens’ Oversight Committee Committee Purpose A. To provide fiscal oversight on the implementation of the Transportation Expenditure Plan ensuring that funds are spent in accordance with the approved Plan. B. To inform the public and confirm that revenues and expenditures from the Transportation Measure are spent as promised to San Luis Obispo County voters. January 16, 2026 Attachment 1 to G-1 11 Committee Formation A. The Committee will be formed within six (6) months following voter approval of the Transportation Measure in San Luis Obispo County. B. The Committee shall be a permanent component of the Expenditure Plan and cannot be eliminated by amendment. C. Meetings will begin when Transportation Measure revenues are recommended for expenditure, including Implementation Plan updates. Selection and Duties of Committee Chair and Vice Chair A. The Committee will select a Chair and Vice Chair from among its members, each serving a one-year term. B. Chair Duties: Call meetings, set agendas, and preside over meetings. C. Vice Chair Duties: Perform the Chair’s duties in the Chair’s absence. Committee Meetings A. The Committee will hold at least two formal meetings annually, with additional meetings scheduled as needed. B. All meetings will comply with the Brown Act (open meeting requirements). C. Meetings will be conducted in accordance with Robert’s Rules of Order. Subcommittee Requirements A. The Committee may form subcommittees to address specific tasks or focus areas. B. All subcommittees will consist of an odd number of members to ensure clear decision-making. The Committee will reflect the geographic and demographic diversity of San Luis Obispo County and consist of 12 members. Each represented organization will nominate its representative, with final appointments approved by the Authority Board. Membership Composition: A. One resident representative appointed by each incorporated city (Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, San Luis Obispo) and one member from each of San Luis Obispo County’s Supervisorial District’s within the unincorporated areas. January 16, 2026 Attachment 1 to G-1 12 B. The Authority Board will review and appoint these members. If any jurisdiction is unable to appoint a representative, THE AUTHORITY may fill the position through an open application process. Should a new City become incorporated, a representative from that jurisdiction shall be appointed by the City. Quorum A. A quorum will consist of no fewer than seven (7) members. B. Actions may be approved by a simple majority of members present, provided the quorum is met. Term of Membership A. Members serve two-year terms, with a maximum of eight consecutive years of service. B. To establish staggered terms, the initial appointments will be divided so that half serve one-year terms and half serve two-year terms, determined by random selection. C. Proxy voting is not permitted. Eligibility A. Must be a U.S. citizen, 18 years or older, and a resident of San Luis Obispo County. B. Cannot be an elected official of San Luis Obispo County or its cities. C. Cannot be an employee of state, county, or city government agencies within San Luis Obispo County (except employees of educational institutions). Staffing A. SLOCOG staff will provide technical and administrative support, including preparation of agendas, meeting materials, and public communications. B. Administrative costs for staffing will be funded through the Transportation Measure’s administrative allocation. C. Expert staff and consultants may be invited to present information or analyses as needed. Responsibilities A. Reviewing and commenting on independent financial and performance audits of Measure funds. January 16, 2026 Attachment 1 to G-1 13 B. Reviewing periodic reports, studies, and plans related to Measure revenues and expenditures. C. Ensuring that expenditures are consistent with the Expenditure Plan. D. Conducting an annual review of sales tax revenue use and publicly reporting findings. E. Presenting recommendations and findings in a formal annual report to the public and Authority Board. F. Accessing information from the Authority’s independent auditor and requesting additional information as necessary to fulfill oversight responsibilities. G. Remaining informed of advancements in transportation planning and finance to ensure oversight remains relevant and effective through the duration of the Measure. XIV. Measure Duration This Transportation Expenditure Plan shall remain in effect for 30 years as approved by San Luis Obispo County voters. January 16, 2026 Attachment 2 to G-1 1 SAN LUIS OBISPO COUNCIL OF GOVERNMENTS / LOCAL TRANSPORTATION AUTHORITY RESOLUTION NO. ____ RESOLUTION REQUESTING A CALL FOR A SPECIAL ELECTION BY THE BOARD OF SUPERVISORS ON A RETAIL TRANSACTION AND USE TAX ORDINANCE, CONSOLIDATION OF THE ELECTION WITH THE STATEWIDE GENERAL ELECTION TO BE HELD ON NOVEMBER 3, 2026, WHEREAS, the streets, roads, highways, transit systems, bicycle and pedestrian facilities within the incorporated and unincorporated areas of San Luis Obispo County are of regional concern and are essential to the safety, mobility, economic vitality, environmental sustainability, and quality of life of residents, businesses, visitors, seniors, veterans, and persons with mobility challenges; and WHEREAS, existing federal, state, and local transportation revenues are insufficient to adequately maintain, operate, and improve the County’s and Cities’ transportation system; and WHEREAS, the Legislature of the State of California has authorized counties to establish voter- approved local transportation sales taxes pursuant to Public Utilities Code Division 19 (commencing with Section 180000) and Revenue and Taxation Code Part 1.6 (commencing with Section 7251); and WHEREAS, the San Luis Obispo Council of Governments (SLOCOG) has been designated as the Local Transportation Authority for San Luis Obispo County; and WHEREAS, keeping roads and highways in good condition and enhancing mobility helps protect public safety by allowing police, firefighters, and ambulances to respond quickly to emergencies and ensuring first responders are not stuck in traffic or slowed down by failing infrastructure; and WHEREAS, San Luis Obispo County’s transportation system is the backbone of our regional economy, allowing local farmers and businesses to move produce and products to market, creating jobs for local residents; and WHEREAS, essential purchases like food and groceries are exempt from the ½ cent sales tax, helping to ensure the cost is not a burden to those on fixed or limited incomes; and WHEREAS, the ½ cent sales tax is paid by both residents and visitors shopping in San Luis Obispo County, including visitors, to ensure all users of local roads and transportation infrastructure contribute; and WHEREAS, by law, all of the money must stay in San Luis Obispo County for local transportation improvements only and cannot be taken away by the State or used for other purposes; and WHEREAS, pursuant to Public Utilities Code Section 180206, and through extensive public engagement and coordination with all incorporated cities and the County of San Luis Obispo, SLOCOG has prepared a countywide Transportation Expenditure Plan which guides the investment of revenues generated by this Ordinance, provides for locally controlled funding for transportation repairs and improvements, and requires strict fiscal accountability protections, including a Citizen's Oversight Committee, annual independent audits, and public disclosure of all spending; and WHEREAS, Ordinance No. 2016-__(including the Expenditure Plan) was introduced by the governing body of the SLOCOG/the Authority on February 4, 2026; and WHEREAS, the Expenditure Plan was approved by the Board of Supervisors on March 24, 2026 and approved by a majority of the city councils representing a majority of the population residing January 16, 2026 Attachment 2 to G-1 2 within the incorporated areas of the County pursuant to Public Utilities Code Division 19 (commencing with Section 180206; and WHEREAS, it is the intent of the voters and the Authority/SLOCOG that revenues generated by this Ordinance supplement, and not supplant, existing transportation funding; and NOW, THEREFORE, the governing board of the San Luis Obispo Council Of Governments, acting as the local transportation authority, does hereby adopt the San Luis Obispo County Transportation Expenditure Plan: BE IT FURTHER RESOLVED, that the San Luis Obispo Council of Governments, acting as the Local Transportation Authority, does herby adopt Ordinance No. 2026-__ - San Luis Obispo County Transportation Expenditure Plan as introduced by the San Luis Obispo Council of Governments on February 4, 2026, and attached hereto. BE IT FURTHER RESOLVED, that SLOCOG/Authority does hereby request that the San Luis Obispo County Board of Supervisors call a special election to place on the ballot the San Luis Obispo County Transportation Expenditure Plan and transportation sales tax measure which election shall be held on November 3, 2026 and consolidated with other elections to be held on the same date. The ballot language shall read as follows: San Luis Obispo County Local Pothole Repair, Traffic Relief, Road Safety Measure To keep streets/roads/highways in good condition throughout San Luis Obispo County; fixing potholes; reinforcing/replacing aging, deficient bridges/overpasses; improving traffic flow/safety; maintaining 911 emergency vehicle access; creating local jobs; keeping bus fares low for students/seniors/disabled/veterans; shall San Luis Obispo County’s measure establishing a ½¢ locally-controlled transportation sales tax be adopted, providing approximately $35,000,000 annually for 30 years, requiring spending disclosure, citizens oversight, and audits? (75 words) Yes ___ No____ BE IT FURTHER RESOLVED, that SLOCOG / Authority requests the County’s election official, pursuant to California Public Utilities Code Section 180203(c), to print in the sample ballot, immediately below the full proposition, and in the voter information guide, in no less than 10-point bold type, text substantially as follows: “The adopted San Luis Obispo County Transportation Expenditure Plan may be viewed electronically at www.localROADSfirst.com .” January 16, 2026 Attachment 2 to G-1 3 BE IT FURTHER RESOLVED, that the Secretary and the Authority’s counsel are authorized to make any typographical, clerical, non-substantive corrections to this resolution as may be deemed necessary by the San Luis Obispo County Registrar of Voters or election official. On motion by Board Member __________, seconded by Board Member___________, and on the following roll call vote, to wit; AYES : NOES: ABSTAIN: ABSENT: The foregoing resolution is hereby adopted on this second day of February 4, 2026. ______________________________________ Carla Wixom, President San Luis Obispo Council of Governments ATTEST: _______________________________________ Peter Rodgers, Executive Director San Luis Obispo Council of Governments APPROVED AS TO FORM AND LEGAL EFFECT: BY: ____________________________________ Jenna Morton SLOCOG Counsel DATE:__________________ January 16, 2026 Attachment 2 to G-1 4 The San Luis Obispo Council of Governments Ordinance No. 2026-__ San Luis Obispo County Transportation Expenditure Plan Guiding Principles and Preamble The Governing Board of the San Luis Obispo Council of Governments (“SLOCOG”), acting as the Local Transportation Authority, hereby finds and declares as follows: 1. A safe, efficient, and well-maintained transportation system is essential to the public health, safety, welfare, and economic vitality of San Luis Obispo County and its cities and communities. 2. Existing state and federal transportation revenues are insufficient, unreliable, and increasingly restricted, and are no longer adequate to maintain existing transportation infrastructure or to meet current and future transportation needs. Declining fuel tax revenues, changes in travel behavior, rising construction and maintenance costs, and limitations on the use of state and federal funds have contributed to the deterioration of local streets, roads, highways, transit systems, and active transportation facilities. 3. Inadequate transportation funding adversely affects public safety, mobility, and economic competitiveness, and disproportionately impacts seniors, children, veterans, persons with disabilities, and other transportation-dependent populations. 4. SLOCOG is the designated regional transportation planning agency for San Luis Obispo County and is governed by a Board consisting of one elected official from each of the seven incorporated cities within the County and all five members of the County Board of Supervisors. 5. While SLOCOG actively pursues state and federal transportation funding, such funds are increasingly awarded on a competitive basis and favor regions that have established voter-approved, locally dedicated transportation-specific revenues. Without a similar local funding source, San Luis Obispo County is disadvantaged in competing for these funds. 6. To address these deficiencies and to provide a reliable local funding source for transportation improvements, it is necessary and appropriate to submit to the voters a proposal to enact a one-half of one percent (0.5%) retail transactions and use tax, the proceeds of which shall be used solely for transportation purposes within San Luis Obispo County. January 16, 2026 Attachment 2 to G-1 5 7. SLOCOG has adopted a Transportation Safety & Investment Plan (the “Transportation Expenditure Plan”) that identifies transportation improvements and programs of countywide and local significance to be funded by the proposed tax, including: o Maintenance and repair of streets, roads, and highways, including pothole repair and safety improvements; o Traffic congestion relief, safety and operational improvements; o Public transportation services and facilities, including service enhancements; o Mobility improvements for seniors, veterans, and persons with disabilities; o Safe Routes to School projects in each city and community; o Bicycle and pedestrian safety and connectivity improvements; and o Use of funds to leverage and secure additional state and federal transportation funding. 8. The Transportation Expenditure Plan establishes a clear nexus between the proposed tax and the transportation improvements and programs to be funded and reflects the highest priority transportation needs of the County’s cities and communities. 9. It is the intent of the Governing Board and the voters that all revenues derived from the retail transactions and use tax be expended solely in accordance with the Transportation Expenditure Plan and applicable law. 10. To ensure accountability, transparency, and compliance with voter intent, this Ordinance establishes the following safeguards: o A voter-approved Transportation Expenditure Plan governing all expenditures; o Spending assurances, safeguards, and local control of revenues; o Maintenance of effort requirements; o Limitation of administrative costs to no more than one percent (1%) of annual revenues; o Annual independent financial and performance audits; o Annual public reporting on revenues, expenditures, and project delivery; and o An independent taxpayer oversight committee to review audits and report findings to the public. Now, therefore, the Governing Board of the San Luis Obispo Council of Governments, acting as the Local Transportation Authority, does hereby ordain as follows: January 16, 2026 Attachment 2 to G-1 6 SECTION 1. TITLE This Ordinance shall be known and may be cited as the San Luis Obispo County Local Transportation Investment Ordinance (“Ordinance”). SECTION 2. DEFINITIONS For purposes of this Ordinance: • “Authority” means the San Luis Obispo Council of Governments (SLOCOG), acting as the Local Transportation Authority as designated byt the San Luis Obispo County Board of Supervisors, pursuant to the Local Transportation Authority and Improvement Act set forth at California Public Utilities Code Section 180000 et seq. • “County” means the County of San Luis Obispo. • “District” means all incorporated and unincorporated territory within San Luis Obispo County. • “Expenditure Plan” means the San Luis Obispo County Transportation Expenditure Plan attached hereto as Attachment A and incorporated by reference. • “Gross Revenues” means all proceeds of the tax imposed by this Ordinance, including interest earnings. • “Net Revenues” means Gross Revenues remaining after payment of CDTFA administration costs and authorized administrative expenses. • “Measure” means the ballot proposition submitted to the voters pursuant to this Ordinance. “Operative Date” means the first day of the first calendar quarter commencing more than 110 days after the adoption of the ordinance. If the Ordinance is approved by the requisite vote of the electors voting on this Ordinance at the election held on November 3, 2026, the Operative Date shall be April 1, 2027. SECTION 3. PURPOSE This Ordinance is adopted to: 1. Establish a dedicated local funding source for transportation purposes within San Luis Obispo County. 2. Implement the voter-approved Transportation Expenditure Plan. January 16, 2026 Attachment 2 to G-1 7 3. Impose a retail transaction and use tax pursuant to State law, subject to two-thirds voter approval. 4. Ensure transparency, accountability, geographic equity, and strong taxpayer protections. SECTION 4. IMPOSITION OF TRANSACTIONS AND USE TAX (CDTFA -COMPLIANT) A. Transactions Tax Rate For the privilege of selling tangible personal property at retail, a transactions tax is hereby imposed upon all retailers in the District at the rate of one-half of one percent (0.5%) of the gross receipts from the sale of all tangible personal property sold at retail in the District on and after the Operative Date. B. Place of Sale For purposes of this Ordinance, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or its agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the state or has more than one place of business, the place or places at which the retail sales are consummated for the purpose of a transaction tax imposed by this Ordinance shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration (CDTFA). C. Use Tax Rate An excise tax is hereby imposed on the storage, use, or other consumption in the District of tangible personal property purchased from any retailer at the rate of 0.5% of the sales price, effective on and after the Operative Date. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made. D. Contract with the State (CDTFA) Prior to the Operative Date, the Authority shall contract with the CDTFA to perform all functions incident to the administration and operation of the transactions and use tax imposed by this Ordinance; provided, that if the Authority shall not have contracted with the Department prior to the Operative Date, it shall nevertheless so contract and in such a January 16, 2026 Attachment 2 to G-1 8 case the operative date shall be the first day of the first calendar quarter following the execution of such a contract. SECTION 5. ADOPTION OF PROVISIONS OF STATE LAW Except as otherwise provided in this Ordinance and except insofar as they are inconsistent with Public Utilities Code Division 19 and Revenue and Taxation Code Part 1.6, all provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and incorporated by reference as though fully set forth herein. SECTION 6. LIMITATIONS ON ADOPTION OF STATE LAW In adopting the provisions of State law: 1. Wherever the State of California is named as the taxing agency, the Authority shall be substituted, except where administration is reserved to the CDTFA. 2. No provision shall be interpreted to create exemptions or impose taxes beyond those authorized under State law. SECTION 7. PERMIT NOT REQUIRED If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor's permit shall not be required by this ordinance. SECTION 8. EXEMPTIONS, EXCLUSIONS, AND CREDITS All exemptions, exclusions, and credits applicable to the State sales and use tax shall apply to the tax imposed by this Ordinance to the same extent and in the same manner. SECTION 9. TERM AND OPERATIVE DATE A. The tax authorized by this Ordinance shall become operative on April 1, 2027, or as otherwise provided herein. B. The tax shall remain in effect for thirty (30) years, expiring on March 31, 2057, unless otherwise terminated by voter approval. SECTION 10. USE AND ALLOCATION OF REVENUES All Net Revenues shall be deposited into a Local Transportation Authority Special Revenue Fund and used solely for transportation purposes authorized by this Ordinance and the Expenditure Plan. January 16, 2026 Attachment 2 to G-1 9 Allocation of Net Revenues • 55% – Local Streets and Roads • 40% – Regional Transportation Projects • 4% – Seniors, Veterans, and Mobility-Challenged Transportation Services • 1% – Administration SECTION 11. ELIGIBLE USES Eligible uses include, but are not limited to, those identified in the Expenditure Plan, including planning, design, construction, operations, maintenance, transit, bicycle and pedestrian facilities, and specialized mobility services. SECTION 12. MAINTENANCE OF EFFORT (MOE) Each jurisdiction receiving Local Streets and Roads funds shall maintain, at a minimum, the average level of discretionary general fund expenditures for transportation purposes over Fiscal Years 2023-24, 2024-25, and 2025-26, consistent with the Expenditure Plan. SECTION 13. JURISDICTIONAL ELIGIBILITY REQUIREMENTS Jurisdictions must maintain required planning, fee, reporting, and capital improvement programs as set forth in the Expenditure Plan to remain eligible for funding. SECTION 14. TAXPAYER SAFEGUARDS Safeguards include local-use restrictions, anti-supplantation provisions, annual audits, annual public reporting, and performance assessments. SECTION 15. CITIZENS’ OVERSIGHT COMMITTEE A Citizens’ Oversight Committee shall be established within six (6) months of voter approval in accordance with Attachment A. SECTION 16. BONDING AUTHORITY The Authority may issue bonds payable from Measure revenues subject to limitations and coverage requirements set forth in the Expenditure Plan. SECTION 17. CREATION OF SPECIAL FUND All Measure revenues and interest shall be deposited in a segregated special fund administered by the Authority. January 16, 2026 Attachment 2 to G-1 10 SECTION 18. APPROPRIATIONS LIMIT Pursuant to Article XIII B of the California Constitution and PUC §180202, the initial appropriations limit is hereby established at $[TO BE INSERTED] for Fiscal Year 2027-28 and shall be adjusted annually as provided by law. SECTION 19. CEQA COMPLIANCE Adoption of this Ordinance and the Expenditure Plan is not a project subject to CEQA pursuant to CEQA Guidelines §§15276 and 15378(b)(4). SECTION 20. CALL FOR ELECTION The Authority hereby requests the San Luis Obispo County Board of Supervisors to call an election to be held on November 3, 2026, consolidated with other elections, for voter approval of the Measure. Approval shall require a two-thirds (2/3) vote. The revenues received by the Authority from this Ordinance, after deduction of the required Department costs for performing the functions specified in section 180204 of the Public Utilities Code, reimbursing the County of San Luis Obispo for its costs in conducting the election if the measure is approved in accordance with section 180203(a) of the Public Utilities Code, and after deduction for the administration of the Expenditure Plan pursuant to the provisions of the Public Utilities Code commencing with section 180200. INSERT BALLOT LANGUAGE after Feb. 4, 2026 Board meeting. SECTION 21. EFFECTIVE DATE This Ordinance shall take effect immediately upon voter approval, subject to the Operative Date specified herein. SECTION 22. SEVERABILITY If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby. 220-7617 Opinions on a San Luis Obispo County Transportation Funding Measure Highlights of a Survey of Likely Voters 2 Survey Methodology (Note: Not All Results Will Sum to 100% Due to Rounding) Dates October 11-19, 2025 Research Population Likely November 2026 Voters in San Luis Obispo County Total Interviews 1,031 Margin of Sampling Error (Full Sample) ±3.1% at the 95% Confidence Level (Half Sample) ±4.4% at the 95% Confidence Level Contact Methods Data Collection Modes Survey Tracking March 2024 Languages English and Spanish Text Invitations Telephone Calls Email Invitations Telephone Interviews Online Interviews 3 Regional Sample Sizes and Margins of Error Subregions Communities % of Total Likely 2026 Voters Sample Size Margin of Error North County Atascadero, Paso Robles, and Unincorporated Area 35%361 ±5.2% North Coast Morro Bay and Unincorporated Area 15%155 ±8.0% Central San Luis Obispo and Unincorporated Area 20%206 ±6.9% South Arroyo Grande, Grover Beach, Pismo Beach, and Unincorporated Area 30%309 ±5.6% 4 37% 39% 9% 10% 4% Great need Some need A little need No real need Don’t know/No answer 41% 33% 12% 11% 3% Great/Some Need 76% A Little/No Real Need23% Great/Some Need 74% A Little/No Real Need20% There is a high, but somewhat soft sense that the transportation systems Countywide and in voters’ own areas have a need for additional funding. Generally speaking, would you say that San Luis Obispo County has a great need, some need, a little need or no real need for additional funding for the County’s transportation system, including US101, highways, local streets, bike lanes, sidewalks and public transit? Do you think your area has a great need, some need,a little need or no real need for additional funding forthe transportation system, including US101, highways, local streets, bike lanes, sidewalks and public transit? 5 Initial Ballot Measure Opinions 6 Hypothetical Ballot Question Tested in Survey Q. Do you think you would vote yes or no on this measure? San Luis Obispo County Local Pothole Repair, Traffic Relief, Road Safety Measure To fix potholes, pave/maintain streets/roads/highways in all San Luis Obispo County communities; improve traffic flow/safety; fix bottlenecks on highways/major roads; reinforce/replace aging, structurally-deficient bridges/overpasses; keep seniors/ students/disabled/veterans bus fares low; provide safer routes to school; shall San Luis Obispo County’s measure establishing a ½¢ locally-controlled transportation sales tax be adopted, providing approximately $35,000,000 annually for 30 years, requiring spending disclosure, citizens oversight, audits? 7 35% 20% 6% 3% 7% 26% 4% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes61% Q. Do you think you would vote yes or no on this measure? 55% Total No35% About six-in-ten voters initially favor the potential transportation ballot measure on the first reading. (M.O.E. = ±3.1%) 8 55% 69% 59%62%61% 42% 26% 38%33%35% 3%5%3%5%4% District 1 (Peschong) District 2 (Gibson) District 3 (Ortiz-Legg) District 4 (Paulding) District 5 (Moreno) Total Yes Total No Undecided There is majority support for the measure in each Supervisorial District. Q. Do you think you would vote yes or no on this measure? (% of Sample)(19%)(19%)(20%)(19%) Initial Vote by Supervisorial District (23%) 9 57% 69%65%60% 40% 27%32%35% 4%4%3%5% North County Region North Coast Region Central Region South Region Total Yes Total No Undecided Similarly, voters in all regions favor the measure with the strongest support in the North Coast and Central regions. (% of Sample)(35%)(15%)(20%) Initial Vote by Region (30%) Q. Do you think you would vote yes or no on this measure? 10 Funding Priorities 11 76% 74% 74% 71% 68% 67% 66% 66% 66% 9% 13% 10% 12% 15% 14% 16% 11% 14% 6% 7% 6% 6% 9% 8% 8% 10% 7% 8% 6% 9% 7% 7% 9% 8% 9% 12% 5% ^Maintaining 911 emergency vehicle access Keeping roads and highways in good condition Keeping roads and highways in good condition in allSan Luis Obispo County communities ^Requiring a public review of the measure’sfunding priorities every 10 years Paving and maintaining streets, roads and highwaysin all San Luis Obispo County communities Reinforcing and replacing aging, structurally-deficient bridges and overpasses ^Fixing potholes Qualifying for state and federal transportationmatching funds that would otherwise go to other counties Paving and maintaining streets, roads and highways 6-7 (Very Important)5 (Somewhat Important)4 (Neutral)1-3 (Not Too/Not at All Important)Don't Know Q. Please consider the following list of features and provisions that could be included in the potential San Luis Obispo County Local Pothole Repair, Traffic Relief, Road Safety Measure you just considered. Please indicate how important it is to you that each feature or provision be included as part of the measure. Please use a scale of one to seven, where one means NOT AT ALL IMPORTANT to you that the feature or provision is included in the measure and seven means it would be VERY IMPORTANT. ^Not Part of Split Sample Mean Score 6.1 6.0 5.9 6.0 5.9 5.8 5.8 5.8 5.7 Voters’ top priorities for the measure include maintaining 911 emergency vehicle access, keeping roads/highways in good condition, and reinforcing aging structurally-deficient bridges and overpasses. (Ranked by 6-7 (Very Important)) 12 65% 63% 63% 62% 61% 59% 59% 58% 56% 56% 10% 13% 12% 16% 18% 13% 17% 18% 16% 14% 9% 10% 6% 6% 7% 11% 10% 9% 12% 11% 14% 12% 18% 10% 12% 16% 12% 13% 13% 17% 6% ^Ensuring all communities get their fair shareof local transportation funding ^Creating local jobs Keeping bus fares low for students, seniors,the disabled and veterans Reinforcing and replacing aging bridges and overpasses Improving safety for pedestrians ^Fixing bottlenecks on highways and major roads ^Improving traffic flow and safety Protecting roads and bridges from coastal erosion ^Improving gutters and storm drains to keep trash out of local creeks and coastal water and off beaches 6-7 (Very Important)5 (Somewhat Important)4 (Neutral)1-3 (Not Too/Not at All Important)Don't Know Q. Please consider the following list of features and provisions that could be included in the potential San Luis Obispo County Local Pothole Repair, Traffic Relief, Road Safety Measure you just considered. Please indicate how important it is to you that each feature or provision be included as part of the measure. Please use a scale of one to seven, where one means NOT AT ALL IMPORTANT to you that the feature or provision is included in the measure and seven means it would be VERY IMPORTANT. ^Not Part of Split Sample Mean Score 5.6 5.6 5.5 5.8 5.6 5.4 5.6 5.5 5.5 5.4 Continued (Ranked by 6-7 (Very Important)) Qualifying for hundreds of millions of dollars in state and federal transportation matching funds that would otherwise go to other counties 13 40% 18% 6% 4% 5% 23% 4% Q. Do you think you would vote yes or no on this measure? Initial Vote After Information 35% 20% 6% 3% 7% 26% 4% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes61% Total Yes65%55%58% Total No 35% Total No 32% After information, support for the measure nearly reaches the two-thirds threshold. (M.O.E. = ±3.1%) 14 36% 14% 6% 5% 7% 27% 5% 40% 18% 6% 4% 5% 23% 4% 35% 20% 6% 3% 7% 26% 4% Definitely yes Probably yes Undecided, lean yes Undecided, lean no Probably no Definitely no Undecided Total Yes61%55% Initial Vote After Information Total Yes65% Total Yes56%58%50% Q. Do you think you would vote yes or no on this measure? Total No35% Total No32% Total No38% Support drops after opposition, with a majority of voters continuing to support the measure. After Opposition (M.O.E. = ±3.1%) 15 Conclusions 16 Conclusions •A ½-cent transportation sales tax for SLO County initially has majority support that reaches a high point of 65% after simulating informational outreach and settles at 56% after simulating opposition. •Nearly three-quarters of voters recognize the need for funding for the transportation system countywide and in their own area. •Voters’ top priorities for the measure for funding from the measure are largely related to streets and road improvements including maintaining 911 emergency vehicle access, keeping roads/highways in good condition and reinforcing aging structurally-deficient bridges and overpasses. In addition, voters think the idea of a 10-year review is important. Among non-vehicular priorities, keeping bus fares low for targeted groups and improving pedestrian safety are higher priorities. 220-7617 Opinions on a San Luis Obispo County Transportation Funding Measure Highlights of a Survey of Likely Voters