HomeMy WebLinkAbout02-05-2019 Item 15 - Funding the Future next steps Department Name: Public
Works/Administration
Cost Center: 5010/1001
For Agenda of: February 5, 2018
Placement: Business Item
Estimated Time: 60 minutes
FROM: Daryl Grigsby, Public Works Director
Greg Hermann, Interim Deputy City Manager
SUBJECT: POTENTIAL NEXT STEPS REGARDING THE FUNDING THE FUTURE
INITIATIVE
RECOMMENDATION
1. Accept report on the status of the Funding the Future initiative; and
2. Direct staff to continue with further review and analysis of the projects in Funding the
Future; and
3. Direct staff to proceed with further public engagement regarding community priorities and
perspectives regarding the Funding the Future initiative including the selection of the two
Council Members to serve on an ad hoc subcommittee.
REPORT IN BRIEF
The Fiscal Sustainability and Responsibility Major City Goal in the 2017 -19 Financial Plan
included an effort to explore various infrastructure financing plans and options for Council
consideration. Staff completed initial public outreach on the Funding the Fut ure initiative in
spring 2018 along with a survey of registered voters. Ultimately, the Council opted to not pursue
a ballot measure for the November 2018 election, but to continue analysis of the projects and
public engagement. Staff is currently seeking to provide an update on projects and benefits,
receive direction on a draft community outreach plan and discuss other items of consideration.
DISCUSSION
A part of the work plan for the Fiscal Sustainability and Responsibility Major City Goal in the
2017-19 Financial Plan was to explore infrastructure financing plans and options for Council
consideration and implementation as directed. On April 17, 2018, the City Council received a
report on the initiative titled, Funding the Future (Attachment A) related to that research on
funding options for infrastructure needs. At that meeting, the Council reviewed details on the
specific projects, the community engagement process to date (including a survey) and potential
funding options. Council gave direction at t hat time to not proceed with a potential ballot
measure for the 2018 election, but to continue analysis and public engagement on the issue.
Packet Pg. 426
Item 15
The survey included t wo different issues for evaluation. One involved a Cannabis Business Tax
as a potential revenue source for addressing the City’s rising pension costs. Based on the level of
support indicated by the survey, the Council directed for that measure to be included on the 2018
ballot and was subsequently approved 80% of voters. In addition, the survey asked about
infrastructure funding measures. Respondents were also supportive of that measure, but that
support dropped if it was included on the same ballot as the cannabis measure. The survey also
indicated varied support for some of the projects included in Funding the Future.
The Council did, however, provide direction to include, as part of the 2019-21 Financial Plan,
the following elements for the Funding the Future initiative:
1. An outreach and engagement plan for the community.
2. A prioritized project list.
3. Funding recommendations for future Council consideration.
The following information provides the status of and recommendations for regarding each of the
three directions noted above.
1. Draft Community Engagement Plan
Community engagement will be a critical part of the process in evaluating options for the
Funding the Future initiative. Staff is recommending the following draft approach based on
information gathered through previous community engagement on this topic, past experience
with similar initiatives and information provided from other jurisdictions. Given the amount of
work required, staff is recommending that this process begin in advance of the 2019-21 Financial
Plan. Also, this plan outline is intended to be a draft and will be finalized based on input from
professional consultants retained for the project and the ad hoc Council subcommittee.
Phase 1: Community Discussion and Feedback (February through September 2019)
The intent of this phase is to provide an opportunity for continued engagement with the
community on this topic. An abbreviated engagement process was completed in spring 2018 and
this phase would provide a longer time period to have an in-depth discussion with the
community on the current funding limitations, types of projects and options and levels of support
for different funding mechanisms. The phase could consist of the following steps:
1. Establish an ad hoc Council subcommittee
o Staff recommends that the Council establish an ad hoc subcommittee to guide Phase 1 of
the initiative and participate in community outreach. This would allow the Council to
provide direct guidance on the development of informational materials, refinements to
the engagement plan, selection of consultants and an opportunity to hear directly from the
community on this topic through community outreach presentations. The committee
would be supported by staff in developing materials, scheduling presentations and other
logistics, however, it is estimated to be a moderate time commitment of approximately 1-
2 hours per week through this phase. This approach was used by the City of Santa
Barbara in their successful passage of a similar measure in 2017.
Packet Pg. 427
Item 15
2. Retain communications and survey/research consultants
o It is recommended to retain the services of a profess ional communications firm
that specializes in these types of initiatives and a survey/research company to
provide focus group and survey services. A key success factor for these types of
initiatives is the development of clear and consistent informational materials.
Another best practice is the use of survey/research professionals to provide
qualitative and quantitative data to support decision making.
3. Conduct focus groups
o The use of focus groups allows for qualitative feedback to be provided by a
random sample of residents. This can be a helpful reference for comparison with
feedback received through other means to ensure a complete picture of public
opinion on the issue to inform communications.
4. Present at stakeholder groups
o A variety of informational materials will be developed through the guidance of
the ad hoc subcommittee and consultants to be presented to stakeholder groups in
the community. The City will seek out opportunities to present at various groups
as well as respond to invitations. The information and presentations developed
will also be available on the City’s website through the Open City Hall tool to
allow any member of the public to review and provide input.
5. Host facility tours and information sessions
o Another best practice is the use of facility tours to provide a hands-on experience
for the public to visit facilities proposed to be replaced or significantly improved.
These events would be open to the public and would include the same
presentation and opportunity to provide feedback as the stakeholder group
presentations.
6. Return to the City Council with summarized results and options for additional
direction
o Staff would return to the City Council in September 2019 with a complete
summary of the feedback received through phase 1. Staff would also seek
additional direction from the Council on whether to continue to move forward and
will present options for doing so for consideration.
Phase 2: Additional Analysis and Review (September 2019 through January 2020)
The exact steps of Phase 2 would be informed by the feedback received in Phase 1 and by
direction of the Council. If the Council cho oses to move forward, t he intent of this phase would
be to perform additional, detailed analysis of options for potential ballot measures based on the
feedback received in Phase 1 and/or allow for further review of issues and questions raised in
Phase 1. That could include:
1. Conduct a voter survey
o The Council could choose to move forward with a voter survey to gauge support
for specific ballot measure options as informed by Phase 1. This would allow the
Council to effectively test the feedback received in Phase 1 with voters in a
statistically valid way to determine levels of support. There is also the option to
conduct the survey during Phase 1 as a follow up to the focus groups.
Packet Pg. 428
Item 15
2. Establish an ad hoc Community Advisory Committee
o The Council may wish to establish an ad hoc Community Advisory Committee to
provide additional analysis and review of questions or issues raised in Phase 1.
This group would be determined by the Council in September 2019 and would
work with staff support to provide recommendations to the Council by January
2020.
3. Return to the City Council with summarized results and options for additional
direction
o Staff would return to the City Council in January 2020 with a complete summary
of the feedback received through Phase 2. Staff would also seek additional
direction from the Council on whether to continue to move forward and would
present options for doing so including determining a selected ballot measure
option.
Phase 3: Concluding Analysis and Engagement (January through June 2020)
The exact steps of Phase 3 would be informed by the information received in Phase 2 and by
direction of the Council. If the Council cho oses to move forward, the intent of this phase would
be to provide an opportunity for any additional engagement and analysis to allow the Council to
make a determination on whether to place a measure on the November 2020 ballot. That could
include:
1. Additional public outreach and engagement
o The Council may wish to conduct additional outreach and engagement on a
selected option or options.
2. Conduct a voter survey
o It would be recommended to conduct another voter survey to ensure the use of the
most recent data for decision making.
3. Review draft ballot language
o Staff recommends that the Council review draft ballot language no later than
April 2020 to allow sufficient time for modifications.
4. Final determination on a ballot measure
o The Council would be required to make a final determination o n placing a
measure on the November 2020 ballot by the end of June 2020.
2. Prioritized Project List
In April 2018, Council reviewed the overall project list. That list was developed by a staff review
of all completed and approved planning documents, including; Land Use and Circulation
Element , Bicycle Master Plan, Open Space Master Plan, Mission Plaza Concept Plan, Downtown
Concept Plan, area specific plans. The list also provided estimates for plans to be adopted in the
future, including the Parks and Recreation Element, the Facilities Master Plan, and the ADA
Transition Plan. The April 17, 2018 City Council agenda report, including the list of projects, is
found in Attachment A.
Packet Pg. 429
Item 15
As an overall reminder, the project list currently totals approximately $418 million over the next
20 years. Also, none of the projects in Funding the Future are enterprise fund projects. Each
enterprise fund; Sewer, Water, Parking and Transit includes a long -term Capital Plan that
assumes that fund is responsible for capital cost s. Finally, since the Local Revenue Measure
(Measure G) and SB 1 funds are primarily used for maintaining existing infrastructure, there are
currently no additional funds allocated for those needs in Funding the Future.
There are 73 distinct projects in the following categories:
• Transportation 41
• Community Improvement 19
• Public Facilities (mostly public safety and recreation) 13
In addition, 46 of the 73 projects are considered “Partnership Projects” meaning there is a
funding partnership with private parties, including direct developer contributions or Impact Fees
for Transportation, Parks or General Government .
The Council also conceptually approved the following prioritization of City capital projects:
• 1st – Annual Asset Maintenance (funded primarily through Local Revenue Measure and,
as of 2017, SB 1)
• 2nd – Asset Replacement
• 3rd – New Assets
The second and third categories are largely unfunded unless funds are redirected from Annual
Asset Maintenance. Redirection of funds from Annual Asset Mainte nance could result in
deterioration of existing City assets and increased maintenance cost s to repair the deteriorated
assets at a later date. Essentially, the majority of projects classified as Asset Replacement and
New Assets have been included in the Funding the Future initiative.
One of the lessons learned from the previous public outreach was that while projects were
recommended and approved through the various processes of adopting the plans – it is important
to be able to clearly describe the public benefit of each particular project and the nexus to
realizing the vision for our City as outlined in the General Plan. Therefore, staff has reviewed the
project list and is developing a list of public benefits derived from the current projects in Funding
the Future to inform future communication efforts. The goal is to identify the need and public
benefit of the projects, rather than simply list projects from the City’s various planning efforts.
Packet Pg. 430
Item 15
This following is a draft list of public benefits from projects with Funding the Future, but is
subject to change through the process:
• Create a downtown cultural district
• Enhance downtown experience for residents and visitors
• Revitalize entertainment and cultural center of Mission Plaza
• Provide safe and separated bike facilities throughout the city
• Improve public safety and emergency response times and services
• Build safe and reliable transportation corridors connecting residences with educational,
business and cultural resources
• Reduce congestion in important cit y corridors and to enhance economic vitality and
residential quality of life
• Improve traffic safety and reduce vehicle collisions
• Implement Vision Zero to eliminate fatalities and serious injury collisions
• Provide transit, bike and safe vehicle connections for affordable housing developments
• Enhance recreational and open space opportunities
• Assist with economic development to help the community prepare for the planned closure
of Diablo Nuclear Power Plant in 2024-2025.
In addition, t he project list that the City Council reviewed at the April 17, 2018 is still being
refined by City staff to accomplish the following:
1. Aligning projects with specific public benefits (as described above)
2. Developing a preliminary prioritization of projects in the event future funding does not
match the current total cost
3. Refining the project costs
4. Refining the project list based on findings from the Facilities Master Plan reviewed by
Council on January 8, 2019
5. Refining the project list based on future input from the Parks and Recreation Master Plan
3. Funding Recommendations
Council may recall that the public outreach and survey compiled in spring 2018 generally
concluded that a Property Tax was not supported by the public. In addition, financial consultants
reported at the April 17, 2018 Council meeting that a sales tax was the most viable funding
mechanism for Funding the Future. A parallel analysis also showed the sales tax rate that was
required to fund different levels of capital programs. All of these documents are included in
Attachment A.
Ultimately, funding recommendations will be determined based on community outreach, but key
areas for discussion could be:
1. Should the City proceed with a General Tax (majority vote) or Specific Tax
(Supermajority of 2/3)?
2. What amount of tax generates the highest level of public support?
Packet Pg. 431
Item 15
Other Issues for Consideration
Local Revenue Measure
The Local Revenue Measure (Measure G) was renewed for 8 years by voters in 2014 and is
critical in providing the funding for maintaining essential services and existing infrastructure in
the City. An approach used by some jurisdictions exploring additional revenue measures is to
add on to existing measures. In addition, results from the survey conduct ed in spring 2018
indicated that voters have an interest in both supporting new infrastructure and maintaining what
is existing. Voters also favored a mix of both projects and services. As a result , staff is
recommending researching the feasibility of an add on to the existing Local Revenue Measure
during Phase 1 of community engagement . The feedback would then help to inform the Council
as to whether this would be beneficial or not and would be included in the Phase 1 summary
report and presentation.
It should be noted that the work effort for this initiative will increase significantly should the
Council desire to have Funding the Future included with a renewal of the Local Revenue
Measure. Additional phases or actions may be required along with additional resources.
Transportation Self Help Measure
Another issue to be considered in the future by the Council is, to what extent does Funding the
Future align or conflict with regional and County discussions for the Transportation Self-Help
measure which failed in 2017. Staff has already begun discussions w ith local and regional
officials and will continue those to provide more information to Council at future discussions on
Funding the Future.
Previous Council or Advisory Body Action
1. December 12, 2017 - Budget Foundation: Fiscal Health Response Plan
2. January 16, 2018 - Council review of 10-Year Capital Improvement Plan and funding options
3. April 17, 2018 - Future SLO Capital Improvement Program
Policy Context
Section B of the 2017-19 Financial Plan includes Budget and Fiscal Policies and a chapter
specifically on Capital Financing that provides policy direction on capital project financing.
Major City Goals for the 2017-19 Financial Plan include the Fiscal Sustainability and
Responsibility goal. The work plan section on Infrastructure Financing notes: “develop a creative
financing plan for development of critical public safety facilities,” and, “develop creative
infrastructure financ ing options (grants, land-based funding, local revenues) for Council
consideration and implement as directed.”
Packet Pg. 432
Item 15
City General Plan, Land Use Element Policy 1.13.19. Costs of Growth, notes, “The City shall
require the costs of public facilities and services needed for new development to be borne by the
new development, unless the community chooses to help pay for the costs for certain
development to obtain community-wide benefits.” This was affirmed during the April 3, 2018,
City Council meeting discussion of AB 1600 Public Facility Financing Plan projects to insure
increased affordable housing in the City.
Public Engagement
Public engagement on this topic will use the City’s Public Engagement Manual and follow a
“collaborate” model (as previously described) whereby the public will be involved in developing
the options for consideration in future phases of the project and ultimate ly by the City Council.
ENVIRONMENTAL REVIEW
The review of the Funding the Future of SLO for potential funding options or public engagement
process is exempt from environmental review as a Statutory Exemption under Section 15262 of
the CEQA Guidelines, feasibility and planning studies. Each project listed as part of the 10 Year
CIP and Funding the Future of SLO will need future authorization and environmental review
prior to actual funding or construction.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2018-19
Funding Identified: Yes
Fiscal Analysis:
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund $100,000 $100,000
State
Federal
Fees
Other:
Total $100,000 $100,000
Funding for the work effort currently identified is included in the current fiscal year ’s budget
appropriation. This funding is intended for support of a communications firm and
survey/research consultant. These funds are intended to be carried into the next fiscal year via
contracts to support efforts after the current fiscal year ends.
Packet Pg. 433
Item 15
ALTERNATIVES
• The Council may direct staff to not proceed with community outreach for the Funding the
Future initiative and defer to a later time
• The Council may direct staff cease efforts related to the Funding the Future initiative.
Attachments:
a - 4-17-18 Council Report on Funding the Future of SLO
Packet Pg. 434
Item 15
Counci I Agenda Report
FROM: Daryl Grigsby, Public Works Director
Meeting Date: 4/17/2018
SUBJECT: COUNCIL DIRECTION REGARDING FUNDING THE FUTURE OF SLO
RECOMMENDATION
1.Receive a Report on the projects, community feedback, and funding sources for Funding
the Future of SLO; and
2.Direct Staff to return to Council as part of the 2019-2021 Financial Plan with an outreach
and engagement plan, a prioritized project list, and recommendations to fund Capital
Projects within the Funding the Future of SLO initiative.
REPORT-IN-BRIEF
Funding the Future of SLO represents the first time in the City's recent history that staff has
taken a comprehensive review of the specific projects that create the vision as articulated in
various planning documents. These documents were not completed in isolation -but rather are
the result of extensive public engagement, advisory body review and public hearings. In total, the
projects that implement these plans fulfil the vision and social, environmental and economic
goals of the City and the community. The planning documents therefore, are the expression of
public and Council desires for the future of San Luis Obispo. Funding the Future of SLO takes
the city's preferred future as described in the Land Use and Circulation Element, the Bicycle
Transportation Plan, the Downtown and Mission Plaza Concept Plans, and other documents -
and summarizes the projects required to implement the described visions. In addition, it is
significant to note that Measure G and the Council's priority to maintain existing infrastructure -
enable the City to look to the future. Without the current healthy investments toward maintaining
the City's existing infrastructure -it would be difficult to justify plans to build additional
infrastructure.
This report includes three related but distinct sections. The first section summarizes the capital
projects that constitute the Funding the Future of SLO proposal. The second section provides the
Council with a summary of the outreach to date -including community meetings, Open City
Hall, phone an on-line survey, and a Community Forum. The third and final section summarizes
the potential funding options for consideration.
DISCUSSION
On December 12, 2017, and January 16, 2018, the City Council reviewed the proposed projects
included in what was then called the "10 Year CIP." Since the January meeting, staff has
completed the following:
1.Continued to refine the projects included on the list;
2.Expanded the implementation time frame to 20 years;
Packet Pg. 435
Item 15
3.Ensured projects in Capital Facilities Fee Program are appropriately reflected in Funding
the Future of SLO;
4.Began work with a consulting firm on analyzing various funding options; and
5.Met with community groups, conducted a survey, hosted a community forum.
This report is crafted into three distinct sections as follows; Projects, Community Outreach and
Funding Sources.
Section 1: Projects
There were three primary factors that led to a comprehensive analysis of the City's Long-term
Capital needs. They are as follows:
1.City Council Major Council Goal on Financial Sustainability and Responsibility included
a particular task to develop a plan to finance the City's long-term capital needs. The due
date for this task is Spring of 2018.
2.The City's Capital Facilities Fee Program (CFFP) update, adopted by Council on April 3,
2018, included a detailed look at projects to be included in the impact fee program.
3.The City has concluded, or has in process, several important planning documents,
including the updated General Plan Land Use and Circulation Element, Bicycle
Transportation Plan, Open Space Master Plan, Downtown Concept Plan, Mission Plaza
Concept Plan, Facilities Master Plan, and several other documents. Each of these
documents include a list of projects which reflect community needs and interests for the
future.
Fundamental assumptions in the development of the Funding the Future of SLO include the
following:
1.This list only includes projects supported all or in part by the City's General Fund.
Enterprise Fund projects will be considered in future Financial Plans as part of the fund
review of each individual Enterprise Fund.
2.The project list will differ from the CFFP project list in that the CFFP list extends to full
build-out in 30 years. The Future of SLO includes projects that can be completed in 20
years.
3.Project costs are in various stages of definition. Some projects, like Prado Road
Interchange, are in the engineering and environmental phase, and others, such as
Ludwick Center has undergone a general Needs Assessment. Given the 20-year time
horizon, there could be changes in scope which could modify individual costs as the
project gets closer to construction.
After continued analysis of the project list provided to the Council in January, Chart 1 below
summarizes the General Fund contribution to all funded and unfunded projects over the next
twenty years.
Packet Pg. 436
Item 15
Chart 1
Maintenance of Enhancement of New Total
Existing Infrastructure Existing Infrastructure Projects Unfunded
Total projects 43 57 16 73
Total Cost $150 M $322M $ 96M $418 M
Funding Status Funded primarily Unfunded Unfunded
through Measure G and
SB 1 (state Gas Tax
increase)
The above chart emphasizes a very important point. That is, Measure G and the Council's
priority, reinforced by the Revenue Enhancement Oversight Committee, enables the City to
maintain existing city assets. This focus on maintaining and replacing existing streets, storm
drains, parks play equipment, urban forest, sidewalks, bike facilities and other infrastructure
enables the city to look to the future. Since priority goes toward maintaining existing
infrastructure, there are no current projected revenues available sufficient to fund projects in
Funding the Future of SLO. Therefore, significant enhancements of existing infrastructure (such
as replacement of Police Headquarters) and new projects (such as Prado Road Overpass), are
currently not funded given the City's General Fund future assumed capital contributions.
While much of the discussion regarding Funding the Future of SLO has been on project lists and
total costs, the focus of the initiative is to create the city that was envisioned by the community
as reflected in numerous public processes and forums. Specifically, the list of projects:
1.enhances the quality of life for current and future generations,
2.provides safer and less circuitous transportation options,
3.provides safer facilities for biking and walking,
4.improves police and fire services and emergency response, and
5.enhances cultural, artistic, recreation, entertainment and economic activities.
The projects are not ends in themselves -they are a means to the end of a better quality of life
for San Luis Obispo residents and visitors.
To better understand the types of projects in the two unfunded categories of 1) Enhancement of
Existing, and 2) New Projects -staff grouped all the unfunded projects into Service Areas of 1)
Transportation, 2) Community Improvement and 3) Public Facilities. In addition, within each of
those Service Areas, staff prioritized the projects by decade. In other words, the higher priority
was placed in the 1-10 Year time horizon, and the second priority were placed within the 11-20
Year time horizon.
As noted above, there are 73 projects in the three Service Areas of Community Improvement,
Transportation and Public Facilities. In each of those Service Areas, a critical few projects
represent a large share of the total costs. In addition, they represent the public benefits and
service provided to city residents, businesses and visitors. In the list below, only those projects in
the 1-10-year time frame are considered. Each project includes public benefits, General Fund
costs, and total costs if different from the General Fund contribution.
Packet Pg. 437
Item 15
Transportation
The projects discussed below are approximately 48% of the total General Fund cost of all
projects within in the Transportation Service Area's 1-10-year priority list.
1.Prado Road Interchange
•New cross city connection, local and regional link to jobs, housing, recreation and
commerce
•$35 M project, General Fund $4 M
2.Prado Road extension; Higuera to Broad
•New cross city connection, reduced travel times in critical east-west corridor
•$ 25 M project, General Fund $7.7 M
3.Tank Farm Widening, Horizon to Santa Fe
•Improved cross-city connection, reduced travel times, improved safety, improved
safety and access for bicycles and pedestrians
•$ 22 M project, General Fund $12.6 M
4.Railroad Safety Trail Completion
•Completion of Class 1 bike path (separated bike facility) that links northern and
southern sections of the city and improves safety for all levels of bike users
•$ 11 M project. General Fund $10 M
5.Bob Jones Trail Completion
•Completion of Class 1 bike path (separated bike facility) that links to County trail
and provides access for southern parts of the city and improves safety for all
levels of bike users
•$11 M project, General Fund $10 M
Community Improvements
The projects below are approximately 82% of the total General Fund costs of all projects in the
Community Improvement Service Area's 1-10-year priority list
1.Mission Plaza Revitalization and Restroom Improvements
•Cultural center and gathering space
•$ 9 M General Fund
2.Laguna Lake Improvements
•Protect vital natural resource
•$ 14 M General Fund
3.Downtown Street Conversions -Monterey and Monterey/Broad streetscape
•Enhanced downtown safety, vitality and cultural, artistic and historic town center
•$ 15 M General Fund
Packet Pg. 438
Item 15
4.Implement Parks Master Plan
•The Parks and Recreation Element and Master Plan are in the process of being
updated. At this time, community needs are just starting to be assessed. At the
end of this major work effort, anticipated in late 2019 early 2020 the City will
have a prioritized list of future parks and recreation projects that have b been
costed over their lifecycles and prioritized by the community through a robust
engagement process. The results will be a focused effort for the future to use
limited funds wisely and enhance public parks and recreational resources.
•$ 26 M project, $23 M General Fund
Public Facilities
The projects below are approximately 91 % of the total General Fund costs of projects in the
Public Facilities Service Area in the 1-10 Year priority list
1.New Police Headquarters
•Enhanced public safety, improved response times and investigation capability
•$ 47 M total project cost. $43 M General Fund
2.Rebuild Fire Station 2
•Enhanced emergency response, increased emergency service reliability during
disaster
•$ 7.5 M General Fund
3.Fire Vehicle Maintenance Building and Emergency Operations Center
•Improved city-wide emergency response capability, and increased vehicle
maintenance capability to insure ongoing reliable emergency response
•$ 8 M General Fund
A complete project list is included as Attachment A. All the projects within each theme are
included on that list.
Attachment B includes a summary of the Plans and Concept Plans reviewed, discussed and
conceptually approved; with the applicable projects recommended in that Plan. It should be
noted the Facilities Master Plan and Parks and Recreation Master Plan are currently ongoing.
Chart 2 below is a summary of that Attachment, with the additional inclusion of the plans that
constitute the Maintenance of Existing Infrastructure. All the costs below are costs over twenty
years.
Packet Pg. 439
Item 15
Chart 2
Plan title (Maintenance of Existin,:) Funded proiects and source
1. Pavement Management Plan Measure G and Capital Outlay
2.Storm Drain Master Plan Measure G and Capital Outlay
3.Waterways Master Plan Measure G and Capital Outlay
4.Specific Infrastructure Asset Plans (parks,Measure G and Capital Outlay
streets, park facilities, sidewalks, urban forest)
5.Fleet, facilities and IT needs Measure G and Capital Outlay
Total $150M
Plan Title (from Attachment B) Unfunded Projects
1.Facilities Master Plan $127 M
2.Downtown Concept Plan $92M
3.Bicycle Transportation Plan $70M
4.General Plan Circulation Element $ 51 M
5.Parks Master Plan $23 M
6 .. General Plan $15 M
7 .. Laguna Lake Natural Resource $14M
Conservation Plan
8.IT Strategic Plan $7M
9.Other $7M
10.South Broad Street Plan $5M
11.ADA Plan $2M
12.Parks Strategic Plan $1 M
13.Conservation and Open Space Element $1 M
Total $418M
The chart below is intended to provide Council with a general sense of the number and costs of
projects within the three Service Areas and within the 1-10 and 11-20-year time frame. In
addition, the list summarizes the projects which have a nexus with and funding source from the
CFFP the Council heard on April 3. These projects are called 'Partnership Projects' in that they
are a partnership between existing residents and future residents.
The purpose of the chart below is to provide the Council with information on the relative cost
differences of projects within each Service Area, the magnitude of the Partnership Projects in
comparison with the General Fund only projects, and information total project costs on the
projects in the 1-10 Year and 11-20 Year time horizon.
Packet Pg. 440
Item 15
Chart 3
Year 1-10
Transportation Community Public Totals -All
Improvement Facilities Categories
Partnership Projects 27 1 3 31
General Fund contributions $112M $24M $64M $200M
Grants and other sources $112 M $5M $4M $121 M
Total Project costs $224M $29M $68M $321 M
General Fund pro_jects 0 15 3 18
General Fund contributions 0 $50.5 M $3.5M $54M
Grants and other sources 0 $8M 0 $8M
Total Project costs 0 $58.5 M $3.5 M $62M
All projects 27 16 6 49
Total General Fund $112M $74.5 M $68M $254M
contributions
Total project costs $224M $ 87M $72M $383 M
Year 11-20
Transportation Community Public Totals -All
Improvement Facilities Categories
Partnership Projects 11 0 4 15
General Fund $36M 0 $47M $83M
Grants and other sources $28 M 0 $3M $31 M
Total Project costs $64M 0 $50M $114M
General Fund Projects 3 3 3 9
General Fund $18 M $26M $37M $81 M
Total Project costs $18 M $26M $37M $81 M
All pro_jects 14 3 7 24
General Fund $54M $26M $84M $164M
Total Project costs $83 M $26M $86M $1954 M
Grand Totals Years 1-20
Total Projects -20 Years 41 19 13 73
Total General Fund-20 $166M $100.5 M $152M $418.5 M
years
Total Project Costs -20 $307M $113 $158 M $578M
Years
Packet Pg. 441
Item 15
Project Prioritization Options
If Council wants to proceed with the Funding the Future of SLO but with a smaller project list,
below are potential options for refining the list. Any of the options could include various
methods of public and advisory body involvement. Should Council direct staff to return with this
initiative as part of the 2019-21 Financial Plan, staff could include a process on project
prioritization.
1.Partnership Projects only
a.1-10 years
b.1-20 years
2.Pa rtnership Projects and
publicly endorsed projects
Refined Project
List
3.All projects in 1-10 year
time frame
4.Prioritize projects in
selected plans, Service
Areas, or other criteria
Section 2: Community Outreach and Public Engagement
To provide Council with a sense of citizen interest in the benefits of future projects, and, citizen
perspectives on various funding sources, city staff engaged in an intensive public outreach in the
last few weeks. To accomplish this the City used a variety of tools and approached to engage the
community (in accordance with the Public Engagement and Noticing Manual) which included:
Press releases, website news items, e-notifications and social media posts to inform the
community about the infrastructure needs and various funding options. There were two
television interviews and two newspaper interviews.
Stakeholder presentations to various groups and associations. Presentations were made to
groups such as city Committees and Commission such as Parks and Recreation Board,
Mass Transit Committee, Planning Commission, Architectural Review Commission,
Active Transportation Committee. In addition, presentations were made to the Downtown
Association Board, Chamber of Commerce Economic Development Committee,
Developers Roundtable and other organizations. During the month of March there were
seventeen separate presentations to various public bodies.
The City also hosted a community forum at the Police Department on March 26 to
provide the same outreach presentation. The event also included a tour of the building
and opportunity for Q&A.
For members of the public who are not a part of a stakeholder group or were unable to
attend the community forum, the City posted the outreach presentation on the City's
website through the Open City Hall tool. This tool allows individuals to review the same
information from in-person presentations and provide feedback. In total, the Open City
Hall topic had 304 visitors and 80 statements or the equivalent of 4 hours of public
comment. All statements received are included in Attachment D.
Packet Pg. 442
Item 15
The City also engaged a firm to complete a statistical survey of residents' preferences on
identified projects and various funding options. The survey had 846 responses and +/-4.9
margin of error. The results of the survey are included as Attachment E and are
summarized below:
o A majority supports a sales tax measure at one cent or one-half cent at 57% and
61 % respectfully to improve City infrastructure, but support is soft and falls short
of the threshold needed for a special tax.
Support for a One-Cent Sales Tax Versus a Yi-Cent Sales Tax
[ Initial One-Cent ] [ Half-Cent
Definitelyyes -29% l Total -37%Total
Probablyyes -22% Yes -17%Yes
57% 61%
Undecided, lean yes 6% 7%
Undecided, lean no 4% Total 4% Total
Probably no 1111%No 18% No
Definitelyno -25%
40% -22%34%
Undecided 13% Is%
o A majority would oppose the measure if the funding mechanism were a parcel tax
instead of a sales tax.
o Voters favor a mix of projects that focus on both infrastructure and City services.
•Addressing Homelessness (67% extremely or very important; 37%
extremely important);•Keeping public areas safe and clean (66%; 25%);•Upgrading fire stations that have been determined by structural engineers
to not meet current seismic earthquake standards (61 %; 25%);•Retaining and attracting local businesses (61 %; 22%);•Improving traffic circulation across town (60%; 28%);•Improving traffic flow (59%; 26%);•Preparing for natural disasters and other related threats (59%; 22%);•Improving safe routes to school (57%; 27%);•Ensuring City buildings are earthquake retrofitted to meet the current
California Seismic Safety Act standards (57%; 21 %);•Improving pedestrian and bike safety (55%; 28%);•Improving traffic safety (55%; 18%); and•Helping ensure safe places to play ( 51 %; 17%)
o Voters prefer funding projects that maintain current City services and
infrastructure over projects that would improve them.
Packet Pg. 443
Item 15
"Maintaining" Versus "Improving" Services and Infrastructure
•Extremely/Very Important • Somewhat/Not Too Important/ Don't Know
Maintaining police and fire services
Maintaining essential City services
Maintaining City infrastructure
Improving City infrastructure
Improving police and fire services
Improving essential city services
68%
64%
58%
47%
43%
42%
32%
37%
43%
53%
57%
58%
o The infrastructure measure was asked in conjunction with a potential cannabis tax
measure and the infrastructure measure loses support when respondents are
informed that both measures could be on the same ballot.
Total Support for One-Cent Sales Tax and Cannabis Tax Measures
When Both are on the Ballot
One-Cent Sales Tax ) [ Cannabis Action Tax
Total Yes 62%
Total No 28%
Undecided 10%
Section 3: Potential Funding Sources
The City monitors its financial condition on a continuous basis through long-term forecasting.
The Capital Improvement Program is an important element of long-term fiscal health.
Maintenance of the City's facilities as well as building infrastructure to facilitate planned growth
are part of the City's long term fiscal sustainability.
Even though, the City's long-term forecasts include assumptions to fund maintenance of existing
facilities, primarily funded by the existing Local Revenue Measure (Measure G), the current
revenue sources are not sufficient to pay for the Capital Improvement Program envisioned for the
Packet Pg. 444
Item 15
future of San Luis Obispo as described in various Council approved planning documents. To
fully fund the program, a $418 million dollars budget gap has been identified. Due to existing
General Fund debt expiring between 2019 and 2048, approximately $46 million could be
diverted to this need over time as the existing revenue bond debt is paid off.
A new revenue source will be required to fund the projects. The City has contracted with the
City's debt advisor, Professional Financial Management (PFM) consulting firm, to analyze the
top three financing and funding mechanisms that can generate required dollars to fully fund the
program. The three options are an increase in sales tax, issuance of a General Obligation Bond
(GOB), and formation of a citywide Community Facilities District (CFD). All the above options
would require voter approval.
The full analysis of funding options provided by PFM is in Attachment C.
In summary, the City has the following options to fully fund the identified needs:
One Cent Special or General Sales Tax:
A one cent sales tax for the duration of 25 to 30 years would be required to be approved by the
voters to fully fund the program. It is estimated that one cent over the 30 years, would generate
approximately $616 million dollars and a one cent for the duration of 25 years would generate
approximately $486 million.
A 25-year one cent sales tax measure most closely aligns with the total funding needed to fully
fund the identified projects; however, it is the most expensive sales tax option in terms of costs
of debt, which is estimated at $107 million.
A 20-year one cent sales tax measure does not generate enough revenue to fully fund the
program and the 30-year one cent sales tax option allows for more projects to be funded on pay
as you go basis. One-half cent measures do not generate sufficient revenue to fully fund the
program as proposed.
The City's current sales tax rate is 7.75 percent which includes a half cent Local Revenue
Measure. This level of taxation is aligned with the median sales tax across the State of
California; however, the average sales tax is slightly higher at approximately 8%. 1 This is
because rural cities tend to have lower sales tax base than major metropolitan areas. The highest
level of sales tax in California is the City of Long Beach at 10.25 percent, which is equivalent to
the rate in Chicago, Illinois. One cent sales tax would raise the City's sales tax to 8.75 percent.
Based on a study completed in 2013 by Strategiceconmics Inc. which showed that approximately
72% of total sales tax is generated by non-residents. Based on general assumptions, Bureau of
Labor Statistics data on consumer spending, United States Census Statistics for San Luis Obispo
average income, and application of local sales tax to taxable goods, the average annual tax
burden per household is roughly estimated at $135 per year.
I Analysis is based on information from California Department of Tax and Fee Administration.
http://www.cdtfa.ca.gov/taxes-and-fees/sales-use-tax-rates.htm
Packet Pg. 445
Item 15
The Council has the following options in consideration of placing a sales tax measure for the
November 2018 ballot measure:
1.General Tax: General sales tax requires simple majority vote of 50 percent plus one
voter approval. General sales tax is not legally restricted to a specific purpose.
Pros: Requires only majority voter approval, lowest aggregate cost of debt
Cons: Transportation projects debt financing would not be allowed to be used to finance
the projects themselves as collateral and would require pledge of City owned properties.
2.Special Tax: Special sales tax requires super majority vote of 66.67 percent Special sales
tax is dedicated to a specific purpose as proposed in the ballot measure. Special sales tax
would allow for the use of sales tax revenue bond financing mechanism which can be
used to finance transportation type projects.
Pros: Allows for financing of transportation type projects
Cons: According to data from 2001 to 2012, only half of special tax measures have
passed in the State of California due to higher level of approval required.
3.General Tax with Continuation of Measure G: The City financial long-term fiscal
forecasts assume continuation of Local Revenue Measure. The Local Revenue Measure
(Measure G) will sunset in April of 2023. The Council may consider placing an extension
of Measure G with the ballot measure for the proposed one cent increase.
Pros: Ensures continuation of the funding source to fund existing capital improvement
program
Cons: Voters may or may not be favorable to extension which could impact the voter
rating approval for overall measure
4.Duration of Sales Tax Measure: The City may consider various options for the duration
of the sales tax measure including no sunset date with periodic review and approval by
the City Council, 30-year sales tax, 25-year sales tax, and 20-year sales tax.
No sunset date:
This option would fully fund the need and would secure the City's future ability to
continue to invest in its infrastructure post the 20-year period. This option would also
minimize the cost of debt issuance by allowing for more projects to be funded on pay as
you go basis and leave flexibility for how the City may elect to issue debt.
30-Year Sales Tax:
This option would fully fund the need within the 20-year period, plus leave a balance of
additional $184 million, which could be used to fund projects beyond the 20-year horizon
or other services. This option provides with flexibility for the City to use pay as you go or
debt financing options.
Packet Pg. 446
Item 15
25-Year Sales Tax
This option would fully fund the need leaving a surplus of $46 million, which could be
used to fund projects beyond the 20-year horizon or other services. This option would
require the highest amount of debt issuance due to the limited duration.
20-Year Sales Tax
This option would not fully fund the entire identified need with a budget gap of
approximately $42 million unfunded. Thus, this option does not fully fund the Capital
Improvement Program as proposed.
Based on citizen survey summarized in Attachment D, voters are much less supportive if
the sales tax measure includes a sunset clause and favor a shorter period of 20 years over
30 years.
5.Level of Taxation: The City may consider a half-cent tax as opposed to one cent tax.
Half-cent tax is not sufficient to fund the entire identified need within the identified time
frame.
The following table illustrates the level of taxation and the amount that can be funded for each
option.
Duration Tax Rate Amount Generated Existing Debt Service Projects Funded* Surplus/Unfunded
Offsetting Funds Projects
30years 1 cent $615.9 million $45.8 million $418.5 million 183.6 million
30years 1/2 cent $307.9 million $45.8 million $267.3 million (151.2 million)
25 years 1 cent $486.2 million $36million $418.5 million $45.8 million
25 years 1/2 cent $243.1 million $36million $236.2 million {$182.3 million)
20years 1 cent $368.9 million $25.3 million $376.7 million ($41.8 million)
20years 1/2 cent $184.4 million $25.3 million $200.1 million {$218.3 million)
* Projects funded maybe less than the amount generated due to interest and finance charges.
It should be noted that the sales tax revenue assumes a long-term growth of 2% and the interest
on debt is assumed at 5%. These assumptions are based on long-term averages and may fluctuate
over this long-term horizon. Sales tax is a volatile source of revenue and is impacted by
economic fluctuations.
General Obligation Bond:
The General Obligation Bond option would fully fund the identified Capital Improvement
Program as proposed with required bonding in the amount of $390.9 million ($418.5 million less
$27.6 offsetting funds) at an aggregate cost of debt issuance to the city estimated at $378.4
million. Thus, the actual dollars collected from the residents almost double for this option. The
proposed debt issuance structure assumes seven distinct 30-year General Obligation Bonds at
three-year intervals to align the need for the funds with the projects schedule and minimize
interest paid to extent possible. Even though General Obligation Bonds are considered the most
secured type of debt and the assumption is that the cost of debt would be at 4.9% as opposed to
Packet Pg. 447
Item 15
5% assumption for other debt, because all proceeds must be derived through borrowing, the
overall cost of debt under this option is the highest.
General Obligation Bonds are secured by ad valorem property tax based on the property's
assessed value. Thus, similar properties with varying assessed values, may be paying different
amounts. The assessed value is assessed at the time of sale (unless the property value falls below
the purchase price and is de-valued) in the State of California (Proposition 13) and the annual
increase (if property value is growing) is limited to 2% annually. The model assumes issuance of
the bonds starting in 2019 with the last issuance fully expiring in 2069. The tax burden per parcel
varies and picks at approximately $200 dollars per $100,000 of assessed valuation for a duration
of approximately 12 years as is shown in Figure 6 of Attachment C. If only half the proposed
Capital Improvement Program was to be funded, the tax burden would fall to approximately
$100 dollars per $100,000 of assessed valuation in the peak years. The PFM analysis assumes a
continuous property tax annual growth of 2%, which could be lower in the unlikely event of
devaluation or higher if the overall City tax growth exceeds 2%.
The following table shows an example of what the tax burden would be during highest taxation
years for a home assessed at $500,000 or a $700,000. The tax rate progression over-time can be
seen in Figure 6 of the Attachment C.
Property Value
$500,000
$700,000
Tax Burden All CIP Funded
($390.9 Bonds)
$1,000
$1,400 t Tax Burden 1/2 CIP Funded
($200 Bonds)
$500
$700
General Obligation Bond requires super majority voter approval (66.67 percent).
Pros: fully funds the proposed program
Cons: total dollar amount paid by the city and its citizens is significantly higher than any sales
tax option and all costs are derived from city residents with relative high burden per household;
high burden of debt which may negatively impact credit agency ratings
Capital Facilities Improvement District
A citywide Capital Facilities Improvement District (CFD) is another option that can fully fund
the proposed Capital Improvement Program. Super majority or 66.67 percent voter approval is
required to form the district to assess parcel tax that can be used to secure debt issuance or pay as
you go. Unlike General Obligation Bond, parcel tax rates via a CFD can vary by type, size, and
property. It is estimated that required parcel tax to fully fund the program would be $1,400 per
parcel for the duration of 30 years. This is a special tax and requires super majority or 66.67
percent voter approval.
Pros: fully funds the proposed program;
unlike the General Obligation bond, allows for pay-as you go option which lowers overall cost of
debt; ability to overcome perceived equity concerns
Cons: all costs are derived from city residents and high burden per household.
Packet Pg. 448
Item 15
Focus Questions
There are several factors for the Council to consider in choosing policy direction. If Council is
inclined to take immediate steps to Fund the Future, the following factors should be taken into
consideration and discussed:
1.Should the tax be general or special in nature? General tax is for general purposes while
special tax is designated for a specific purpose, in this case capital improvements?
Whether the Council elects to pursue a General tax requiring majority vote approval or a
Special tax requiring super majority vote approval, the Council can fully allocate the
revenue derived to the capital improvement program.
2.Should the funding source be derived from a sales tax or a property-based tax? The
important factors in this consideration is the burden placed on the city residents.
According to a study done in 2013 for the City, approximately 72% of sales tax is paid by
visitors to the City; whereas the full burden of parcel tax would be paid by the owners of
the parcels.
If sales tax option is chosen, should it be for unlimited duration with periodic Council
approval, 30, 25 or 20 years??
3.If the sales tax option is chosen, should it be one cent to fund the entire CIP program as
proposed or should it be half cent funding approximately half of the program?
4.If parcel tax is chosen, should it be property tax via General Obligation Bond which is
assessed based on assessed valuation or a Citywide Capital Facilities District with an
assessment of a arcel tax which can var b t e and size of the ert ?
'''' dill H·#!H:F H·#!H:F '"'"' Lower level?
30 years! 25 years! 20 years! 30 years! 25 years! 20 years!
Extend Measure G? Extend Measure G?
� H@iiiii Lower level?
5.Another option is to provide direction which explores more than one solution. For
example, Council could a), direct staff to refine the list and remove some projects, b)
direct staff to explore the implications of directing existing funds and then prepare a
Packet Pg. 449
Item 15
scenario where staff redirects funds from existing CIP priorities and utilizes the freed-up
debt obligations described above, and c) returns to Council with a reduced project list and
total cost obligation -therefore requiring a smaller long-term new revenue solution.
There could of course be variations of this theme.
CONCURRENCES
All City Departments participated in the process to inform Council of projects and options for
Funding the Future.
ENVIRONMENTAL REVIEW
The review of the 10-Year Capital Improvement Plan (CIP) and consideration of potential
funding options is exempt from environmental review as a Statutory Exemption under Section
15262, Feasibility and Planning Studies (CEQA Guidelines). Each project list as part of the 10-
y ear CIP will need future authorization and environmental review prior to actual funding and
construction.
FISCAL IMPACT
Council direction on which alternative to pursue does not have fiscal impact at this time. Any
direction to pursue further analysis will require staff time already within the existing City budget.
It should be noted that the City long-term fiscal models do not assume the required levels of
revenue sources to fund the identified Capital Improvement Program and a new funding source
or significant reallocation of existing resources will be required to achieve the objectives.
Attachments:
a -Project List
b -Project Source
c -PFM San Luis Obispo CIP Planning Memo
d -Funding the Future Open City Hall Public Comment
e -FM3 Survey Results
Packet Pg. 450
Item 15
Page intentionally left
blank.
Packet Pg. 451
Item 15
2/5/2019 Item 15, Staff Presentation
1
Funding the Future
City Council – February 5, 2019
1
Recommendations
Accept report on the status of the Funding the Future
initiative; and
Direct staff to continue with further review and
analysis of the projects in Funding the Future; and
Direct staff to proceed with further public engagement
regarding community priorities and perspectives
regarding the Funding the Future initiative including
the selection of the two Council Members to serve on
an ad hoc subcommittee.
2/5/2019 Item 15, Staff Presentation
2
Background
2017-19 Fiscal Responsibility and Sustainability Major
City Goal
Long-term CIP analysis
Initial public engagement
April 17, 2018 Council meeting
Key Elements
A draft community engagement plan.
A prioritized project list.
Funding recommendations for future Council
consideration.
2/5/2019 Item 15, Staff Presentation
3
Draft Community Engagement Plan
5
Community
Discussion &
Feedback
(Feb. – Sept. 2019)
Additional
Analysis &
Review
(Sept. 2019 – Jan.
2020)
Concluding
Analysis &
Engagement
(Jan. – June 2020)
Phase 1:
Community Discussion and Feedback
February through September 2019
Establish an ad hoc Council subcommittee
Retain communications and survey/research
consultants
Conduct focus groups
Present at stakeholder groups
Host facility tours and information sessions
Return to the City Council
2/5/2019 Item 15, Staff Presentation
4
Phase 2:
Additional Analysis and Review
September 2019 through January 2020
Conduct a voter survey
Establish an ad hoc Community Advisory Committee
Return to the City Council
Phase 3:
Concluding Analysis and Engagement
January through June 2020
Additional public outreach and engagement
Conduct a voter survey
Review draft ballot language
Final determination on a ballot measure
2/5/2019 Item 15, Staff Presentation
5
Overview of San Luis Obispo’s
20 Year Capital Needs
160
322
96
Annual Asset Maintenance Asset Replacement New Assets
$418M
Project Types
166
100
152
Transportation Community Enhancement Public Facilties
2/5/2019 Item 15, Staff Presentation
6
Partnership Projects
283
135
Partnership Projects General Fund Only Projects
Project Source
0
20
40
60
80
100
120
140
Facilities
Plan
DT
concept
Bike Plan LUCE Parks Area
Plans
Laguna
Lake Plan
Other
2/5/2019 Item 15, Staff Presentation
7
Summary of Public Benefits
PUBLIC
BENEFITS
Enhanced
Public Safety
Vibrant
downtown
core and arts
district
Improved
crosstown
travel corridors
Safer Bicycle
and
Pedestrian
Paths
Neighborhood
Improvements
Improved
recreation
facilities
Project List next steps
Continue to refine
project list
Align projects with
specific public benefits
Complete in-progress
planning efforts
2/5/2019 Item 15, Staff Presentation
8
Funding Recommendations
To be determined by the City Council through the
engagement process
Sales tax
General tax (simple majority)
Specific tax (2/3 super majority)
Level of tax
Other Considerations
Local Revenue Measure
Transportation Self Help Measure
Other Measures
2/5/2019 Item 15, Staff Presentation
9
Recommendations
Accept report on the status of the Funding the Future
initiative; and
Direct staff to continue with further review and analysis
of the projects in Funding the Future; and
Direct staff to proceed with further public engagement
regarding community priorities and perspectives
regarding the Funding the Future initiative including the
selection of the two Council Members to serve on an ad
hoc subcommittee.
17