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HomeMy WebLinkAboutItem 7a - Local Roads First Proposed Ballot Measure - Resolution of Support6a Item 7a Department: Public Works Cost Center: 9501 For Agenda of: 3/17/2026 Placement: Public Hearing Estimated Time: 30 Minutes FROM: Aaron Floyd, Public Works & Utilities Director Prepared By: Jennifer Rice, Deputy Director of Public Works for Mobility Services SUBJECT: LOCAL ROADS FIRST PROPOSED BALLOT MEASURE – CONSIDER RESOLUTION OF SUPPORT RECOMMENDATION Consider adoption of a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, supporting the San Luis Obispo County Transportation Expenditure Plan and in support of the proposed countywide 0.5% transportation sales tax measure being placed on the November 3, 2026 ballot”(Attachment A) POLICY CONTEXT The City’s current Legislative Action Platform, adopted by City Council Resolution No. 11554 (2025 Series), includes policies supporting the pursuit of additional, locally controlled transportation funding sources to address deferred maintenance, roadway safety, congestion relief, active transportation, transit services, and climate action goals. Advancing the Local Roads First transportation sales tax measure to the November 2026 ballot would enable the voters to determine whether to enact a new 0.5% sales tax dedicated to countywide transportation needs that would also supply funding to the City for roadway maintenance, safety, congestion relief, active transportation, and transit services. DISCUSSION Background On January 20, 2026, the City Council received a presentation from representatives of the San Luis Obispo Council of Governments (SLOCOG) regarding a proposed countywide 0.5% transportation sales tax measure being considered for the November 2026 ballot. The proposed measure responds to a projected $3 billion funding shortfall in SLOCOG’s Regional Transportation Plan and is intended to allow San Luis Obispo County to become a self-help county1, improving the region’s competitiveness for state 1 A self-help county refers to a local California jurisdiction that has voted to pass a local sales tax measure to fund its own transportation projects, such as highway improvements, public transit, and road repairs. Page 103 of 219 Item 7a and federal transportation funding and capturing an estimated $1 billion over 30 years in funding opportunities that would otherwise be unavailable. Following direction from the SLOCOG Board at its December 10, 2025 meeting, SLOCOG staff conducted outreach to cities, the County, and regional partners to review and refine the Draft Transportation Expenditure Plan. An updated final draft plan, draft ordinance and a summary of agency feedback were presented to the SLOCOG Board on February 4, 2026.2 The Board voted in support of the San Luis Obispo County Local Transportation Investment Ordinance and advanced the Transportation Expenditure Plan for consideration by the cities and the County in advance of final SLOCOG Board action recommending the County Board of Supervisors place the measure on the ballot. During the February 4, 2026 SLOCOG Board meeting, one modification was made to the draft Plan, Section VII.E “Taxpayer Safeguards” to retain the commitment of a performance assessment but that it be conducted every 5 years rather than every 3 years. The Final Transportation Expenditure Plan included in this Council staff report as Attachment B represents the final version. City of SLO Council Feedback on Draft Transportation Expenditure Plan At its January 20, 2026 meeting, the San Luis Obispo City Council generally expressed support for advancing a sales tax measure, noting the increased ability to leverage funding compared to what is possible without self -help county status. Council members also provided feedback to SLOCOG staff on the Draft Transportation Expenditure Plan. A summary of that feedback and how it was conveyed to the SLOCOG Board3 and their response, is provided below. Distribution By Population Council members raised concerns regarding the use of resident population as the sole metric for allocating local subregional funds, noting that the City of San Luis Obispo experiences disproportionate transportation impacts due to its higher daytime population, employment base, visitor activit y, and regional serving facilities. Council members asked whether alternative or supplemental metrics such as vehicle miles traveled, roadway miles, point of sale activity, or sales tax generation were considered. 2 SLOCOG had originally planned to conduct a second round of polling in January 2026, with results scheduled for presentation to the Board in February. However, given the limited time available, the small sample size, and budget constraints, it was determ ined that additional polling would offer minimal value. As a result, the second polling effort was not completed. 3 A video recording of the SLOCOG Board February 4, 2026, meeting can be viewed here: https://slo- span.org/meeting/slocog_20260204/. Agenda Item G-1 Supplemental Funding begins at approximately 1:54. Page 104 of 219 Item 7a SLOCOG Staff Response: SLOCOG staff evaluated alternative distribution methodologies and noted that while other metrics were considered, the decision was to retain population as the allocation metric due to its simplicity, transparency, and perceived fairness, as well as its importance in achieving the two thirds voter approval required for passage. The City of San Luis Obispo’s comments were formally shared with the SLOCOG Board at its February 4, 2026 meeting (reference Slide 15 of the staff presentation). The final Draft Transportation Expenditure Plan continues to allocate local funds based on population. Cal Poly Population Council members asked why Cal Poly’s on campus population is included within the unincorporated area allocation rather than the City of San Luis Obispo allocation for the local funds, noting that the campus relies heavily on City streets, transit services, utilities, and transportation infrastructure. SLOCOG Staff Response: The City of San Luis Obispo’s concerns regarding the treatment of the Cal Poly population were shared with the SLOCOG Board on February 4, 2026 for its consideration (reference Slide 15 of the staff presentation). No additional action was taken to amend this distribution. Subregion Mapping Council members commented on the delineation of subregions, noting that the boundaries do not align with other commonly used regional divisions such as supervisorial districts or school districts. In particular, Council members questioned why Los Osos or Morro Bay was not grouped within the same subregion as the City of San Luis Obispo, citing strong functional and transportation connections between these communities. SLOCOG Staff Response: SLOCOG staff noted that the subregional map included in the Draft Transportation Expenditure Plan reflects a framework that has been used by SLOCOG for more than thirty years. The City’s feedback was shared with the SLOCOG Board at its February 4, 2026 meeting (reference Slide 15 of the staff presentation). No changes were made to the subregional boundaries in the final draft. List of Potential Projects Council members noted that providing examples of eligible types of projects would be helpful in communicating the measures benefits to the public. SLOCOG Staff Response: SLOCOG staff shared this feedback with the SLOCOG Board on February 4, 2026 and are working to expand public facing materials, including the Local Roads First website, to clearly describe eligible project types consistent with the adopted Expenditure Plan. Because the majority of funds are allocated for local control, publishing a collective list of projects could be misleading, as delivery ultimately depends on each jurisdiction’s Page 105 of 219 Item 7a discretion. For this reason, SLOCOG is considering providing a list of eligible project types rather than a specific project list. Primary Revisions in the Final Transportation Expenditure Plan Since the City Council’s January 20, 2026 review, SLOCOG has made several refinements to the Draft Transportation Expenditure Plan in response to comments received from the various cities and County. Attachment B includes the final draft, with revisions highlighted. Key changes include the following. Clarification of Maintenance of Effort (MOE) The final draft clarifies that revenues from general or special tax measures are excluded from the General Fund baseline used to calculate Maintenance of Effort (MOE). This clarification confirms that the City of SLO’s Local Revenue Measure expenditures are excluded from the MOE baseline calculation. In addition, the number of years used to calculate average transportation expenditures was expanded from three to five, covering Fiscal Years 2022 through 2026. Expanding the calculation period to five years helps smooth out anomalies, ensuring that jurisdictions are not disproportionately impacted by a single year of unusually high transportation spending following multiple years of savings, or lower average expenditures. Amendment of Three-Year to Five-Year Performance Assessment Section VII.E of the Final Plan was updated to require a performance assessment every five-years, rather than every three. While deletion of this section was considered, since annual reporting requirements are described in Section VII.F, there was consensus that a broader assessment of program effectiveness is valuable, and a longer interval between evaluations is more appropriate. Assurances of Spending in Unincorporated Areas The distribution of local funding for unincorporated areas was revised from a single countywide allocation to equal distributions by Supervisorial District. It should be noted that distribution by unincorporated population within the Supervisorial Districts was also considered, but ultimately, when the County Board of Supervisors reviewed the draft Transportation Expenditure Plan during its January 26, 2026 meeting, the Board moved that it be split equally. New Implementation Guidelines Section The Final Plan includes a new Implementation Guidelines section, which outlines structured steps and key components for adopting and administering a local self -help transportation sales tax measure. As with many Self -Help County measures, the guidelines are not fully developed at the time of the vote but are identified in the Measure materials as “to be developed” following voter approval. These guidelines are intended to operationalize the Measure and do not modify the uses or commitments approved by voters. Flexibility for Timing of Regional Funds Additionally, the Final Plan includes language to align funding with the proposed Page 106 of 219 Item 7a distribution over the life of the measure, as monitored and reported by the Oversight Committee. This change provides flexibility to adjust the timing of funding, including allowing funds to be directed to projects that are ready to proceed when other agencies are not prepared to expend funds. Next Steps During February and March 2026, all Cities within the region as well as the County Boad of Supervisors will consider approval of the Final Expenditure Plan. To move forward, the ordinance must be approved by a majority of the cities, and those approving cities must collectively represent a majority of the region’s population. If this majority approval is reached, the SLOCOG Board will receive the final poll results at its April 1, 2026 meeting and may take final action to submit the measure to the County Board of Supervisors for placement on a future ballot, the earliest option being November 2026. If voters approve the tax, it would be applied countywide, regardless of whether an individual city supported the measure. It should be noted that a separate citizen‑led initiative is also gathering signatures to place its own transportation‑funding measure on the ballot. This initiative seeks to secure revenue for safe roads, reliable travel options, and transportation systems that support daily life, emergency access, and the local economy for people of all ages and abilities. A key distinction between a citizen‑led initiative and a government‑proposed special tax is the voter threshold required for approval. A government‑imposed special tax must receive a two‑thirds supermajority. In contrast, a citizen‑initiated special tax requires only a simple majority. Courts have ruled that the supermajority requirement applies only when a tax is placed on the ballot by a local government , in this case, as recommended by the area jurisdictions, the SLOCOG Board and ultimately approved by the County Board of Supervisors. When voters themselves place a special tax on the ballot through the initiative process, the simple‑majority standard applies. Ultimately, only one measure addressing the same purpose would a ppear on the ballot. If the citizen initiative qualifies by collecting the required number of signatures, the government‑proposed measure would likely be withdrawn. Previous Council or Advisory Body Action On January 20, 2026, the City Council received a presentation from SLOCOG on the Draft Transportation Expenditure Plan. The Council generally supported advancing the sales tax measure and provided additional input for SLOCOG’s consideration. Public Engagement This item is scheduled for the City Council meeting on March 3, 2026. Staff will complete all required postings and notifications. The public will have the opportunity to provide comments at and/or before the meeting. Additionally, SLOCOG staff have been presenting at public and community meetings across the region since the summer of 2025. A more detailed list of events is included in Page 107 of 219 Item 7a the January 20, 2026 staff report. Public input remains encouraged through the Local Roads First website and survey at www.localroadsfirst.com. CONCURRENCE This staff report was reviewed and approved by the City Public Works and Utilities Department, Finance Department, City Attorney and City Administration. ENVIRONMENTAL REVIEW The recommended action in this report involves the review and consideration of the Draft Transportation Expenditure Plan and does not directly authorize or implement any physical project and therefore, is not a project pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15378. Any future projects funded through a local transportation sales tax will be subject to all applicable environmental review requirements, including compliance with CEQA. FISCAL IMPACT Budgeted: N/A Budget Year: N/A Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ N/A $0 $0 $0 State Federal Fees Other: Total $N/A $0 $0 $0 There are no immediate fiscal impacts to the City from supporting the Draft Transportation Expenditure Plan. Additionally, there would be no direct costs to the City associated with placing this measure on the November ballot, as all ballot costs would be funded by SLOCOG. The measure is projected to generate approximately $35 million per year countywide, or roughly $1 billion over 30 years, assuming no cost escalation. Revenues would be allocated between local and regional projects. The City of San Luis Obispo is estimated to receive approximately $3.2 million per year directly, totaling about $96 million over the 30-year life of the measure. These funds would support eligible local projects, including Page 108 of 219 Item 7a road maintenance, congestion relief, active transportation, and safety improvements. In addition, the City would benefit indirectly from Central County regional investments in road safety, public transportation, and active transportation improvements. If the measure is approved by voters, the City would be required to maintain, at a minimum, the same level of local General Fund revenues for transportation purposes as the average expended in Fiscal Years 2022 through 2026, per the Draft Transportation Expenditure Plan’s Maintenance of Effort provisions. (This baseline includes General Fund revenues only and excludes other funding sources such as grants, gas tax, or the City’s Local Revenue Measure.) While internal staff will work closely with SLOCOG staff to calculate this number if the measure is successful, a high -level review of recent transportation General Fund expenses averages around $1M each year. ALTERNATIVES The Council may choose not to approve the Resolution. In order for the ballot measure to move forward, the ordinance must be approved by a majority of the cities, and those approving cities must collectively represent a majority of the region’s population. If this majority approval is not reached, or if the SLOCOG Board or Board of Supervisors chooses not to support the proposed sales tax measure, the measure would not move forward for placement on a future ballot. Initial financial estimates of the 2027 Regional Transportation Plan anticipate transportation funding shortfalls topping $3 billion. W ithout a new, locally controlled funding source, many planned local and regional transportation maintenance and improvement projects may not be achievable. ATTACHMENTS A - Draft Resolution in Support of the San Luis Obispo County Transportation Expenditure Plan B - Final Transportation Expenditure Plan Page 109 of 219 Page 110 of 219 R ______ RESOLUTION NO. _____ (2026 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, SUPPORTING THE SAN LUIS OBISPO COUNTY TRANSPORTATION EXPENDITURE PLAN AND IN SUPPORT OF THE PROPOSED COUNTYWIDE 0.5% TRANSPORTATION SALES TAX MEASURE BEING PLACED ON THE NOVEMBER 3, 2026 BALLOT 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 keeping roads and highways in good condition and enhancing mobility helps protect public safety; and WHEREAS, the San Luis Obispo Council of Governments has developed a proposal for a 0.5% sales tax measure to support transportation infrastructure and services, enabling the County of San Luis Obispo to become a self‑help county, increase access to federal and state transportation funding, and strengthen local and regional investment in critical transportation needs. WHEREAS, the San Luis Obispo Council of Governments Board has developed the San Luis Obispo County Transportation Expenditure Plan pursuant to the authority of Public Utilities Code Section 180206; and WHEREAS, the Transportation Expenditure Plan guides the investment of revenues generated, 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, the San Luis Obispo County Transportation Expenditure Plan and Ordinance was introduced by the governing body of the San Luis Obispo Council of Governments on February 4, 2026; and WHEREAS, the interests of San Luis Obispo County and its residents and businesses will benefit by the implementation of a San Luis Obispo County Transportation Expenditure Plan through a proposed new half -cent sales tax for transportation in San Luis Obispo County. Page 111 of 219 Resolution No. _____ (2026 Series) Page 2 R ______ NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Action. The Council of the City of San Luis Obispo hereby approves the San Luis Obispo County Transportation Expenditure Plan introduced by the San Luis Obispo Council of Governments on February 4, 2026. SECTION 2. Action. The City Council of the City of San Luis Obispo recommends that the San Luis Obispo County Board of Supervisors place the San Luis Obispo County Transportation Expenditure Plan on the November 3, 2026 ballot together with a transportation sales tax measure. Upon motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _______________ 202X. ___________________________ Mayor Erica A. Stewart ATTEST: ______________________ Teresa Purrington City Clerk APPROVED AS TO FORM: ______________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk Page 112 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 113 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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 over the life of the measure as monitored and reported by the Citizens Oversight Committee. 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 as monitored and reported by the Citizens Oversight Committee 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. Page 114 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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 2021/22, 2022/23, 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. Revenue from general or special tax measures over and above the agency’s baseline tax of 1 ½% will not be counted as part of general fund revenues for the purposes of MOE. Page 115 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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 five 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. Page 116 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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 Page 117 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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 five years to evaluate the efficiency, effectiveness, economy and program results of the Authority in satisfying the provisions and requirements of the Investment Summary Page 118 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 119 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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 TBD 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. Page 120 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 121 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 122 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 123 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 124 of 219 February 5, 2026 SLO County Transportation Expenditure Plan 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. Page 125 of 219 Page 126 of 219