Fee Deferral
The Paso Robles Housing Authority and the Affordable Housing Development Corporation (Applicant) have indicated its intent to seek Federal Low-Income Housing Credit financing for the proposed project.
This financing requires that all units be restricted to households earning no more than 60 percent of the Area Median Income, at affordable rents, for a period of 55 years.
The Applicant team has a proven track record of delivering affordable housing in Paso Robles, including Oak Park Phases 2 and 3, Sunrise Villas in the Vinedo Specific Plan Area, and Riverwalk Terrace in the Woodlands Plaza. Each of these projects utilized a fee deferral agreement. The use of fee deferrals by the City, in combination with other financing sources secured by the Applicant, has been a critical tool in making these projects financially feasible while delivering much-needed affordable housing to the community. The Applicant is requesting that the City enter into a similar fee deferral agreement for the proposed project.
The requested agreement would allow deferral of payment of the following City fees and does not include pass-through costs including payments to external consultants the City may employ, nor does it include School Impact Fees, which are due to the Paso Robles Joint Unified School District. The actual deferred amount will be determined when all the financing for the Project has been obtained and building permits issued.
City Fee
Approximate Fee
Amount
Water connection fee $ 120,688
Sewer connection fee 45,634
Development impact fees 267,590
Building permit fees 72,971
Building permit fees (external consultant) (24,445)
TOTAL ESTIMATE: $ 482,438
The proposed Fee Deferral Agreement provides for repayment of the City fees over a 30-year period, with interest at the rate of 3.75%. City Fees will be repaid from a portion of the residual receipts available from the project, and the outstanding amount due under the Note may be repaid without penalty at any time.
Fiscal Impact
Community Development permits, development impact fees, and related charges for service are established so that new development pays its fair share of the costs associated with growth. These fees are intended to offset community impacts such as increased demand on transportation networks, utilities, public safety, parks, and other public infrastructure. While certain projects may receive approval to defer payment of fees for 30 years, the deferral of fees does not defer or eliminate the community impacts themselves. Infrastructure needs, staff time, and public service demands are incurred as development proceeds.
For projects that provide a clear public benefit—such as low-income or age-restricted housing—use of General Fund resources to cover deferred or reduced development costs can be fiscally appropriate.
These projects address community priorities including housing affordability, senior housing availability, and overall quality of life, which may not otherwise be achievable through market-rate development
alone. In such cases, the City may elect to use General Fund resources to pay development-related fees on behalf of the project, effectively supporting a community objective endorsed by Council.
When General Fund dollars are used in this manner, unrestricted resources are converted into restricted development impact fee revenues. Once paid into fee accounts, those funds are legally limited to capital improvements that expand or maintain public infrastructure capacity consistent with the purpose of the fees. This approach allows needed infrastructure to be funded while advancing community-benefit housing projects.
However, this conversion of General Fund resources reduces available reserves. Based on current projections, General Fund reserves are projected to be $15 million, approximately 30% of revenues. As a result, this fee deferral will lower the City’s General Fund reserve level below the Council’s 30% reserve policy target.
CEQA
The City finds that this fee deferral action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section 15060, subd. (c)(2)-(3) because the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment, and the activity is not a Project as defined by Section 15378.
Development Plan 25-15 (P25-0106) for the development project is exempt from CEQA as a Class 32 exemption for infill development.
Recommendation (Option 2)
Approve Resolution 26-XXX, authorizing the deferral of water connection, sewer connection, development impact, and building permit fees and authorize the City Attorney to prepare a final Fee Deferral Agreement for execution by the Paso Robles Housing Authority and the City of Paso Robles.
Attachments
1. Vicinity Map
2. Resolution 26-XXX – Highland’s Senior Affordable Apartments Fee Deferral a. Exhibit A - Draft Fee Deferral Commitment Letter
b. Exhibit B - Estimate of City Fees
Attachment 1
Vicinity Map
Attachment 2
RESOLUTION 26-XXX
A RESOLUTION OF THE CITY COUNCIL OF EL PASO DE ROBLES
APPROVING A DEFERRAL OF WATER CONNECTION, SEWER CONNECTION, DEVELOPMENT IMPACT, AND BUILDING PERMIT FEES TO ASSIST THE DEVELOPMENT OF AFFORDABLE HOUSING AT 298 NIBLICK ROAD (P25-0106)
WHEREAS, on January 27, 2026, on a vote of 7-0, the Paso Robles Planning Commission approved Development Plan 25-15 for the Highlands Senior Affordable Apartments, a 30-unit 100% affordable senior residential development (the “Project”) proposed by the Paso Robles Housing Authority and the Affordable Housing Development Corporation (the “Applicant”); and WHEREAS, the project is located at 298 Niblick Road (APN 009-814-044); and WHEREAS, the Applicant will seek Federal Low Income Housing Tax Credit financing for the Project, which will require that occupancy of all units be restricted to households earning 60 percent or less of the Area (County) Median Income; and
WHEREAS, the Applicant has requested the City of Paso Robles (“City”) enter into an agreement to defer payment of City water and sewer connection fees, development impact fees, and building permit fees (hereafter collectively referred to as “City Fees”) for the Project; and WHEREAS, the estimated total cost of the City Fees to be deferred is $482,438, with the actual amount to be determined when all the financing for the Project has been obtained and building permits issued; and WHEREAS, the deferral of City Fees would be evidenced by a loan agreement, with a 30-year note in principal amount of the deferred City Fees, bearing simple interest of 3.75% annually, with payments from residual receipts from the Project, and secured by a deed of trust to be recorded against the Project; and WHEREAS, the development of the Project would help the City meet its low-income housing needs, as set forth in the 2021-2028 Housing Element of the General Plan and the City’s initiative to accelerate multifamily housing production as outlined in the 2024 Economic Development Strategic Plan; and WHEREAS, the Applicant will be required to enter into and record an Affordability Covenant against the Project to ensure the units are affordable to lower income households, as defined by Health and Safety Code Section 50079.5, for a term of fifty-five (55) years; and WHEREAS, the Applicant intends to apply for an allocation of Federal Low Income Housing Tax Credit Financing, and the City’s commitment to the deferral of City Fees will enable the Applicant to submit a more competitive application.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. All of the above recitals are true and correct and are hereby incorporated herein by reference.
Section 2. Based on the entire record before the City Council, and all written and oral evidence provided, the City Council finds that there is a demand for affordable housing,
Attachment 2
and specifically senior affordable housing, within the City. The City Council further finds that the use of fee deferrals has been a critical tool in the development of affordable housing in the City, as it improves the financial feasibility of below-market-rate projects while delivering much-needed affordable housing to the community. Fee deferrals have supported other successful affordable housing projects in the City, including Oak Park Phases 2 and 3, Sunrise Villas in the Vinedo Specific Plan Area, and Riverwalk Terrace in the Woodlands Plaza. Affordable projects address community priorities including housing affordability, senior housing availability, and overall quality of life, which may not otherwise be achievable through market-rate development alone. The City Council finds that affordable development projects provide a clear public benefit to City residents and granting a deferral of City Fees for the Project is within and in furtherance of the public interest.
Section 3. The City Council hereby approves a deferral of City Fees for the Project, to be repaid over a period of 30 years from the date of issuance of a Building Permit for construction of the Project subject to the terms and conditions described below, allowing dwelling units in the Project to be occupied prior to full payment of said fees.
A. The deferral shall be provided in the form of a loan, which shall be structured as follows:
1) The principal amount shall be set as the amount of City Sewer Connection Fees, Water Connection Fees, Development Impact Fees, and Building Permit Fees in effect at the time of issuance of a Building Permit for the Project, acknowledging that certain fees are not due to be paid until the time of issuance of a Certificate of Occupancy.
That amount is currently estimated to be $482,438.
2) The loan shall accrue simple interest at the rate of 3.75 percent annually. 3) The term of the loan shall be 30 years, which shall commence on the date of issuance of a building permit for construction of dwelling units in the Project.
Payments shall be made annually from residual receipts from the Project, to the extent residual receipts are available to make such payments; payments shall be credited first to interest, then to principal; the entire remaining unpaid balance of principal and accrued interest shall be due at the end of the 30-year term. The Applicant may pre-pay the loan at any time without penalty, subject only to the amount of interest that has accrued to the date of payment.
B. Prior to issuance of a Building Permit for construction of dwelling units in the Project, the Applicant (or an entity created by the Applicant) shall enter into a Loan Agreement with the City, to be prepared by the City Attorney, which shall set forth the terms and conditions for the loan. The Loan Agreement shall include a promissory note to be executed by the Applicant, and a deed of trust and Affordability Covenant to be recorded against the Project.
C. The Loan Agreement shall provide, and the Affordability Covenant shall ensure, that the units shall be rented to “Lower Income Households”, as defined by Health and Safety Code Section 50079.5, whose incomes do not exceed sixty percent (60%) of Area Median Income, at an affordable rent, for a period of at fifty-five (55) years.
D. As a condition to the loan:
Attachment 2
1) Applicants shall submit to City evidence that full financing for construction of the Project has been approved by the appropriate authorities for each source of financing.
2) Applicants shall execute and deliver the note, deed of trust and Affordability Covenant; and the deed of trust and Affordability Covenant shall be recorded against the Project.
Section 4. The commitment to defer City Fees authorized by this resolution shall expire eighteen (18) months from the date set forth below, unless the Loan Agreement has been executed and construction of the Project commenced.
Section 5. The action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section 15060, subd. (c)(2)-(3) because the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment, and the activity is not a Project as defined by Section 15378.
APPROVED this 3
rd day of March, 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
John R. Hamon, Jr., Mayor
ATTEST:
Melissa Martin, City Clerk
Exhibit A – Draft Commitment Letter
Exhibit B – Fee Estimate
Exhibit A
Commitment Letter Draft
Highlands Senior Affordable Apartments Project
March X, 2026
Nick Rasmussen, Executive Director
Paso Robles Housing Authority
901 30th Street
Paso Robles, CA 93446
Re: Commitment of Financing
Highlands Senior Affordable Apartments Project (P25-0106), Paso Robles, CA Dear Mr. Rasmussen:
I am pleased to confirm that the City of El Paso de Robles commits to providing construction and permanent financing for the Highlands Senior Affordable Apartments project. The terms of the financing are as follows:
Lender: City of Paso Robles
Borrower: A limited partnership to be formed with Affordable Housing Paso Robles, a nonprofit public benefit corporation affiliated with the Paso Robles Housing Authority, serving as Managing General Partner
Loan Amount: $1,769,182.37
Interest Rate: 3.75%, simple
Payment Schedule: Interest and then principal to be paid from residual receipts Term: 30 years
Property Location: 198 Niblick Road, Paso Robles, CA 93446 (APN 009-814-044) A copy of Resolution 26-XXX of the City Council of the City of El Paso de Robles approving this financing commitment is also attached for your reference.
Please provide your acceptance of the foregoing by signing in the space provided below and returning a signed original copy of this letter to us.
Exhibit A
Sincerely,
Warren Frace
Community Development Director
Borrower:
I hereby accept the proposed financing terms on behalf of the Paso Robles Housing Authority and its affiliated nonprofit public benefit corporation, Affordable Housing Paso Robles.
By: __ Date:________________________
Nick Rasmussen
Executive Director, Paso Robles Housing Authority
President, Affordable Housing Paso Robles
Enc.
Total Units: 30
(1) 3/4" LS Meter
Individual permits are attached for a further breakdown.
Building Fees $22,450.00
External Plan Check (Bldg./Eng.) $24,445.00 *
Water Connection $120,688.00
Wastewater Connection $43,134.00
Water Meters (1) 2" & (1) 3/4" Meters $2,500.00
SMIP Fees $1,260.00
SB No. 1473 $180.00
AB 717 $240.00
Automation Fee $1,908.90
General Plan Maintenance $1,145.56
Nexus $76.88
Record Management $45.00
Eng/Plan Check/Grading $6,162.00
Eng/Plan Check/Encroachment $6,214.00
Fire Review $1,008.00
Utilities Water Review $422.00
Stormwater Review $422.00
Wastewater Review $422.00
Planning Review (Includes Est. of Entitlement Process) $6,570.00 TOTAL BUILDING FEES $239,293.34
Law Enforcement 25 @ $97 $1,925.00
Fire Protection 25 @ $1,128 $20,800.00
Transportation 25 @ 1,448 $36,200.00
General Govt. Fac. 25 @3,268 $60,275.00
Library 25 @ $1,054 $19,425.00
Park 25 @ 3,195 $58,925.00
$197,550.00
Law Enforcement 5 @ $127 $635.00
Fire Protection 5 @ $1,476 $7,380.00
Transportation 5 @ 2,568 $12,840.00
General Govt. Fac. 5 @ 4,276 $21,380.00
Library 5 @ $1,380 $6,900.00
Park 5 @ 4,181 $20,905.00
$70,040.00
TOTAL CITY FEES $506,883.34
SCHOOL DISTRICT FEES (Senior Res) $0.84 X 27,794 sqft $23,346.96 * $530,230.30
$482,438.34
HIGHLANDS APTS - FEE OVERVIEW
TOTAL DEVELOPMENT IMPACT FEES (1-Bedroom Unit)
Amount Requested for Deferral Agreement (Does not include school fee or external PC):
Total of all fees for 30 units
*School District fees, external plan check fees, legal fees are not part of the deferral agreement.
Total Square Feet (Res): 27,794 (1) 2" Domestic Water Meter These fees cover 1 - 3 Story residential building with 30 units (25-1 Bedrm, 5-2 Bedrm), grading, site improvements, Planning review.
TOTAL DEVELOPMENT IMPACT FEES (MULTI FAM)
Exhibit B
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Council Agenda Report
From: Chris Huot, City Manager
Subject: San Luis Obispo Council of Governments Final Transportation Expenditure Plan for Potential Transportation Sales Tax Measure
CEQA Determination: The City finds that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.
Date: March 3, 2026
Facts
1. The San Luis Obispo Council of Governments (SLOCOG) is the regional transportation planning agency (RTPA), metropolitan planning organization (MPO), and council of governments for San Luis Obispo County. SLOCOG is responsible for long-range regional transportation planning, funding allocation, and coordination among the County and the seven incorporated cities, including Paso Robles
2. SLOCOG is evaluating a potential ½-cent countywide transportation sales tax measure for placement on the November 2026 ballot to establish a long-term, locally controlled revenue source dedicated to transportation improvements.
3. On December 16, 2025, SLOCOG presented its Draft Transportation Expenditure Plan and Implementation Guidelines to the City Council.
4. On February 4, 2026, the SLOCOG Board approved the Final Transportation Expenditure Plan (Plan), which reflects input from the seven cities, Community Services Districts, the County Board of Supervisors, and regional public outreach efforts.
5. The Plan must be approved by a majority of the cities representing a majority of the incorporated population, as well as the County Board of Supervisors, prior to further action by the SLOCOG Board at its April 1, 2026 meeting.
6. If approved by voters, the measure is projected to generate approximately $35 million annually (2024 estimate) over a 30-year term.
7. Under the Plan’s Local Road Repairs, Safety, and Improvements category (55%), Paso Robles is estimated to receive approximately $2,146,387 annually, subject to actual sales tax revenues Options
1. Take no action;
2. Approve Resolution 26-XXX approving the SLOCOG Final Transportation Expenditure Plan for a potential transportation sales tax measure; or
3. Provide alternative direction to staff.
Analysis and Conclusions
On December 16, 2025, the Paso Robles City Council reviewed and provided input on the San Luis Obispo Council of Governments Draft Transportation Expenditure Plan (Plan) for a potential transportation sales tax measure. SLOCOG is the regional transportation planning agency responsible for long-range regional
transportation planning, funding allocation, and coordination among San Luis Obispo County and its seven incorporated cities, including the City of Paso Robles.
SLOCOG is evaluating a potential one-half cent (½¢) transportation sales tax measure for the November 2026 ballot to establish a long-term, locally controlled revenue source dedicated to transportation improvements. The absence of a dedicated, locally controlled transportation revenue source places San Luis Obispo County at a disadvantage relative to the 25 “self-help” counties in California that have voterapproved transportation sales taxes. These counties leverage their local funding to secure substantially more State and Federal competitive grants for highways, corridors, local streets, and mobility programs.
Since the failure of Measure J in 2016, the San Luis Obispo region has likely missed $600–$700 million in combined local revenue and competitive grant awards that could otherwise have been secured and invested in local and regional transportation improvements The final Transportation Expenditure Plan (Attachment #2) reflects extensive regional engagement, including presentations, focus groups, workshops, online surveys, website engagement, and input from local jurisdictions and the San Luis Obispo County Board of Supervisors.
The Plan was amended and approved by the SLOCOG Board on February 4, 2026. The Plan must now be presented to and approved by a majority of the seven cities representing a majority of the incorporated population, as well as the County Board of Supervisors, prior to the SLOCOG Board meeting on April 1, 2026. At that meeting, the SLOCOG Board would consider adoption of an ordinance and related ballot materials and, if approved, recommend that the County Board of Supervisors place the transportation sales tax measure on the November 2026 ballot.
As a special tax under California law, the measure would require approval by two-thirds (⅔) of voters to pass.
The Plan is projected to generate approximately $35 million annually (2024 estimate), with revenues expected to increase over the proposed 30-year term. Funds would be distributed among four primary categories:
Category Allocation Distribution Method
Local Road Repairs, Safety, and
Improvements 55% Allocated to each jurisdiction based on population Regional Corridor Improvements 40% Allocated to four subregions based on population share
Senior, Disabled, and Veterans’
Mobility Improvements 4% Program-specific allocation
Administrative Costs (maximum) 1% Administrative expenses (capped at 1%)
Under the Plan, the City of Paso Robles would receive an estimated annual allocation from the Local Road Repairs category based on its population share. In addition, North County regional projects would receive dedicated funding through the Regional Corridor Improvements category.
For the City of Paso Robles, the local road repair allocation of funds would supplement the City’s existing local road repair and maintenance programs, which are primarily supported by locally approved Measure J-20 and Measure I-24 sales tax measures, allowing for accelerated local road repairs and expanded roadway improvements. The regional corridor funding could potentially support major projects such as
the SR 46 East/Union Road grade separation and improvements to the US 101 and SR 46 West and East interchanges, which address key safety and congestion challenges in the region.
Local Road Repairs Allocation Table (55%)
The following table provides the estimated annual allocations for Local Road Repairs, Safety, and Improvements distributed to each jurisdiction based on population.
Jurisdiction Annual Allocation
Arroyo Grande $1,256,955
Atascadero $2,029,354
Grover Beach $865,712
Morro Bay $733,207
Paso Robles $2,146,387
Pismo Beach $550,195
San Luis Obispo $3,207,856
Unincorporated County $8,460,335
Total (55% Category) $19,250,000
Regional Corridor Improvements Allocation Table (40%)
The following table outlines the estimated annual funding amounts dedicated to Regional Corridor Improvements, allocated among the four subregions based on population share.
Subregion Annual Allocation
North County $4,923,893
South County $4,001,218
Central County $3,085,830
North Coast $1,989,059
Total (40% Category) $14,000,000
The Plan includes accountability measures such as:
Oversight by an Authority Board comprised of elected officials from each city and the County; A Citizens Oversight Committee;
Independent performance assessments at least every five years; Maintenance of Effort requirements to ensure local funding levels are maintained; Adoption of Implementation Guidelines following voter approval to govern programming, eligibility, reporting, and auditing procedures.
Approval of the Plan by the City does not place the measure on the ballot but allows SLOCOG to proceed with consideration of ballot materials and ordinance adoption. SLOCOG staff will provide an overview of the final Plan and are seeking City Council approval.
The following table summarizes the anticipated timeline and key decision points associated with consideration and potential placement of the transportation sales tax measure on the November 2026 ballot.
Date Milestone / Action
March 3, 2026 City Council considers approval of the San Luis Obispo Council of Governments Final Transportation Expenditure Plan for a potential transportation sales tax measure
February / March 2026 Other cities and the County consider approval of the final Plan April 1, 2026 SLOCOG Board Meeting – Consider adoption of ordinance and tax measure materials
TBD, 2026 San Luis Obispo County Board of Supervisors considers placement of a transportation sales tax measure on the November 2026 ballot Fiscal Impact
There is no immediate fiscal impact associated with the City Council’s approval of this resolution.
If the regional transportation sales tax measure proceeds and is approved by voters in November 2026, the City of Paso Robles would receive a significant and stable multi-decade revenue stream to support local road repairs and infrastructure improvements. These funds would help reduce the City’s reliance on the General Fund for transportation-related expenses and increase the City’s capacity to leverage matching funds for external grants.
Based on current estimates, Paso Robles could receive approximately $2.1 million annually from the Local Road Repairs category, providing a substantial boost to the City’s ability to maintain streets, improve safety, and enhance mobility throughout the community.
If approved, the measure would increase the total sales tax rate on taxable items within the City of Paso Robles to 9.25 percent.
CEQA
The City finds that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.
Recommendation (Option 2)
Approve a Resolution 26-XXX approving the SLOCOG Final Transportation Expenditure Plan for a potential transportation sales tax measure
Attachments
1. Resolution 26-XXX – SLOCOG Final Transportation Expenditure Plan
2. SLOCOG Final Expenditure Plan
Attachment 1
RESOLUTION 26-XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PASO ROBLES,
APPROVING THE SAN LUIS OBISPO COUNTY TRANSPORTATION
EXPENDITURE PLAN
WHEREAS, available revenues, including funding from local, state, and federal governments, are not adequate to support needed maintenance, upgrades, or safety improvements to existing infrastructure, or the construction of new infrastructure necessary to meet future transportation demands within the City of Paso Robles and throughout San Luis Obispo County; and 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, the Legislature of the State of California has authorized counties to establish voterapproved local transportation sales taxes pursuant to Public Utilities Code Division 19 (commencing with Section 180000) and Revenue and Taxation Code Part 1.6 (commencing with Section 7251); and WHEREAS, the San Luis Obispo Council of Governments (SLOCOG) has been designated as the Local Transportation Authority for San Luis Obispo County; and WHEREAS, maintaining roads and highways in good condition and enhancing mobility protects public safety by allowing law enforcement, fire, and emergency medical personnel to respond quickly to emergencies and ensuring first responders are not delayed by congestion or deteriorating infrastructure; and
WHEREAS, San Luis Obispo County’s transportation system serves as a backbone of the regional economy, enabling agricultural producers, local businesses, and service providers to move goods and services efficiently, supporting job creation and economic stability; and WHEREAS, essential purchases such as groceries are exempt from the proposed one-half cent (½¢) sales tax, helping to minimize impacts on residents with fixed or limited incomes; and WHEREAS, the proposed one-half cent (½¢) sales tax would be paid by both residents and visitors making taxable purchases within San Luis Obispo County, ensuring that all users of the transportation system contribute to its maintenance and improvement; and WHEREAS, by law, all revenue generated by the measure must remain within San Luis Obispo County for local transportation improvements and may not be taken by the State or used for purposes other than those identified in the voter-approved expenditure plan; and WHEREAS, pursuant to Public Utilities Code Section 180206, and following extensive public engagement and coordination with all incorporated cities and the County of San Luis Obispo, SLOCOG has prepared a countywide Transportation Expenditure Plan that establishes a framework for the investment of revenues, provides locally controlled funding for transportation maintenance and improvements, and includes strict fiscal accountability measures such as the creation of a Citizens’ Oversight Committee, annual independent audits, and public reporting of expenditures.
Attachment 1
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The above recitals are true and correct.
Section 2. The City Council hereby approves the San Luis Obispo County Transportation Expenditure Plan that was approved by SLOCOG on February 4, 2026.
Section 3. The City finds that the approval of this resolution is not a project subject to CEQA. In the alternative, the approval of this resolution is exempt from CEQA because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment (State CEQA Guidelines, section 15061, subd. (b)(3).) APPROVED this 3rd day of March, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
John R. Hamon, Jr., Mayor
ATTEST:
Melissa Martin, City Clerk
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 data1
).
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2
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 Attachment 2
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 Attachment 2
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2
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.
Attachment 2