Following the voters of our County passing a 3/8-percent sales tax increase in November 2016, the City of Salinas explored how to leverage this new tax to fund $30+ million in street improvements.

The City’s share of the new sales tax funds were estimated at the time to be $3 million per year. After considering several options to maximize this revenue stream, one option that quickly rose to the top was the TRIP program provided by the CSCDA. It was a perfect fit and just what we needed. While it was already a well-developed model across California and had several funding and capital advantages, a critical resource to our already stretched Finance team was the “ready-to-go” team of professionals and document templates it also came with.

The California Statewide Communities Development Association (CSCDA) is a joint powers authority that offers low cost, tax-exempt financing programs. The CSCDA Total Road Improvement Program (TRIP) financing program was created in 2007 to enable cities and counties the ability to finance street projects by issuing Certificates of Participation (COPs) through CSCDA. Features of the program include:

• Only secured by Local Transportation Sales Tax revenues
• Installment Sale Structure
• Legal validation required (3-month process)

At the time, the TRIP COPs had been issued for over 15 California cities and had been used in LA, Riverside, Orange, and San Bernardino Counties.

With this program and updated modeling, our initial funding estimate of $33.8 million was increased to $41.5 million for critical street improvements throughout our City. Bonds will be paid back with the 30-year, 3/8-percent sales tax passed by voters (Measure X). Here are some additional details about our County-wide Measure X. It was led by the Transportation Agency for Monterey County (“TAMC”) and after it was approved, TAMC began collecting sales tax in Spring 2017 and 60% of the revenue is allocated to incorporated cities and the county. These funds were allocated based on a weighted formula: Road mileage (50%) and Population (50%).

As mentioned, the TRIP program was perfect for what we needed. Here are some of the noteworthy features.

1. The TRIP program financing can be done individually or as part of a pooled issue, making it easier for small agencies.
2. No collateral was required. Typical COP’s require the City to identify a leased asset of sufficient value compared to the financed amount (i.e.: City Hall, Police Station, etc.). No leased asset is required for this program.
3. City General Fund revenues are not pledged.
4.  Interest rates are very competitive. Because the investment community is familiar with the program, low rates are attainable.
5.  The consultant team that works with this program are top professionals in their field. Our transactional cost was low because the process is so efficient. Furthermore, the impact on our staff time was minimal.

For Salinas, the TRIP program was the right fit for us. We certainly recommend looking into it if you have transportation related funding gaps and are looking to long-term financing.