mammothtowncouncil7 2Back into a special meeting Wednesday, the Mammoth Town Council will continue to “Discuss, review, and potentially approve the use of Measure U funds to provide air service subsidy funding.” (See entire Agenda Bill below)

The meeting starts at 5pm Wednesday in Suite Z.  The agenda says the first item is a workshop with the Measure U Applications Committee regarding the Town’s application for air service subsidy money. That item is followed by potential action by the Council on use of utility users taxes on air service subsidy.

The Council first brought up this issue in a special meeting on July 4th.  Some citizens strongly opposed the use of utility users tax money on an air service subsidy.  Others said they felt it was critical to do what it takes to keep air service going for the sake of the resort community.

Just two days after the Town Council had voted to seek bankruptcy protection for the Town, they brought up the expenditure of $400,000 on air service subsidy.  The timing irritated a number of people.  Last week, Mayor Matthew Lehman said that the Council had just received information that Alaska Airlines might drop service if there weren’t a full commitment to subsidize service. Last week, Mayor Lehman said that air service is a priority in the Town’s General Plan and that “Mammoth wants to be competitive with other resorts.”
At that time, Lehman said that the Town would “probably submit an application for Measure U funds.”  He said Town officials were also trying to meet with and talk to Mammoth Mountain Ski Area officials about this issue.

Back at it in a special meeting Wednesday, the Town Council will continue to discuss and consider use of Measure U dollars on air service.  The Town staff said, “The obligation to subsidize air service is a cooperative effort of Mammoth Mountain Ski Area, supported by the Town of Mammoth Lakes, Mammoth Lakes Tourism, the Eastern Air Service Alliance, and potentially the County of Mono.”

The staff continues to recommend a resolution that would appropriate some $84,000 from last fiscal year and encumber future Measure U revenues to “subsidize air service this fall from Los Angeles to Mammoth Lakes by Alaska Airlines. The Town Council agenda bill lists Mammoth’s share as $400,000.

TOWN’S AGENDA BILL FOR JULY 11 SPECIAL MEETING –

Agenda Item_______ July 4, 2012 File No.____________
Provide direction to staff on the appropriation of Measure U funds to subsidize 2012 fall air service provided by Alaska Airlines
Mayor Lehman and Councilmember Raimondo
Town Manager David Wilbrecht Recreation Manager Stuart Brown

AGENDA BILL

INTRODUCTION The purpose of this agenda item is for the Town Council to review and provide direction to staff on appropriating unallocated FY 2011/12 Measure U funds, and encumber future Measure U funds to subsidize air service this fall from Los Angeles (LAX) to Mammoth Lakes (MMH) by Alaska Airlines. It is estimated that an annual amount of $300,000 to $400,000 is required to subsidize fall air service.

BACKGROUND It has come to the attention of the Town that there is a significant risk of losing year-round air service provided by Alaska Airlines if funding to subsidize the proposed 4 days/week air service this fall is not secured.

The Town and its air service partners have built significant momentum in developing air service to the community over the last few years. The loss of year-round air service would severely impact the Town and community’s ability to generate visitation and subsequent Transient Occupancy Tax (TOT), critical to the Town’s general fund in providing a level of service comparable to a resort destination from multiple regional and international destinations. It would also put at risk the FAA enplanement reimbursement estimated at $1 million annually, crucial to growing air-service, the future expansion of the Mammoth Yosemite Airport, and providing a stable economy for the Town of Mammoth Lakes.
Proposed funding for the air service subsidy this fall is a cooperative between Mammoth Lakes Tourism: $150,000, Mammoth Mountain Ski Area: $300,000, and the Town of Mammoth Lakes: $400,000.

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ANALYSIS & DISCUSSION Town staff has identified Measure U funds as a potential source of funding for the fall air service subsidy.

Measure U Ordinance The Measure U or “Mammoth Lakes Mobility, Recreation, and Arts & Culture Utility Users Tax Ordinance” was adopted by the Mammoth Lakes Town Council on March 17, 2010, and approved by the voters of the Town of Mammoth Lakes on June 8, 2010.

The Ordinance states: “On or after July 1, 2011 all proceeds of the tax and imposed hereunder shall be accounted for and paid into a special fund designated for use by the Town of Mammoth Lakes, and used only for the following purposes: Planning, construction, operation, maintenance, prograrruning and admUtistration offacilities and projects for Mobility, Recreation, and Arts & Culture.    Such tax proceeds shall not supplant existing funds used for the purposes setforth above.”
According to the ordinance, air service subsidy may be considered for funding under the “mobility” programming and projects categories.

Supplanting – In regards to supplanting, the Town Council adopted BB&K Memo (Attachment A), which on page 4 states that “    supplant” means that Measure R and Measure Ufunding cannot “take the place of” or “substitute for” existingfunding. Therefore, the Town Council could not simply substitute Measure R or Measure U funding for existing general fund spending on recreation, trails, and parks or on mobility, recreation, and arts & culture while redirecting that general fund spending to other programs.    Essentially, Measure R and Measure U provide new or additionalfunding for these purposes.”
Town Council also adopted the Measure U supplanting policy on February 15, 2012 that states: “In addition to funding new projects and programs….
1. Measure U funds can be used to enhance and improve existing efforts including    planning,    construction,    operations,    maintenance, programming, and administration of facilities and projects for mobility, recreation, and arts & culture.
2. Measure U proceeds are not intended to be used for any purpose where they replace municipal sources that were lost or removed as a direct or indirect result of Town of Mammoth Lakes actions.
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3. The date of the Measure U initiative (June 8, 2010) approved by voters serves as the baseline date for determining supplanting.”
In reviewing the supplanting language, the intent of the Measure U Steering Committee who drafted the policy language was to use Measure U funds to enhance and improve existing efforts towards the stated funding categories, but not replace municipal sources that were lost or removed as a direct or indirect result of Town of Mammoth Lakes actions. (See Attachment C to review the Measure U Supplanting Decision Making Flow Chart created by the Measure U Steering Committee).

The Town of Mammoth Lakes has previously expended general fund monies for air service subsidy in FY 2010/11. In FY 2011/12, the Town Council directed that Mammoth Lakes Tourism (MLT) pay the air service subsidy in the amount of $215,000 from Measure A funds. For the previous two years, the Town has not directly subsidized air service. Therefore, a determination would have to be made by the Town Council if air service subsidy funds previously expended by MLT are considered “municipal” funds/sources, and constitute supplanting. It should also be noted that this program funding request is to “augment” and “enhance” existing service, not to just “replace” or “substitute” general fund monies as no general fund monies were budgeted in FY 2012/13.

This issue of supplanting is similar to the May 16, 2012 Town Council Measure U award to the Mammoth Lakes Events Coalition (MLEC) for special event and supplemental trolley support. It was determined by the Measure U Steering/Application Committee that the applications for Measure U funding did not represent a replacement or ‘substitute for’ municipal funding, but rather, funds will be used to enhance and improve existing special events.

2012 Measure U Available Funds – On May 16, 2012, Town Council approved the Measure U Steering/Application Committee’s 2012 Measure U Spring “Test” funding recommendations in the amount of $653,215. Town Council also directed staff to convene the Measure U Steering/Application Committee to consider funding any 2012 Measure U Spring “Test” applications that were not fully funded using the balance of FY 2011/12 Measure U funds.

On June 20, 2012, Town Council adopted a resolution appropriating $70,385 of additional FY 2011/12 Measure U funds to benefit the Mammoth Lakes Events Coalition and the Mammoth Lakes Foundation.

As of June 30, 2012, the unallocated Measure U fund balance is $84,401 (Attachment B). For fiscal year 2012/13 the Town of Mammoth Lakes is
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budgeting to receive $922,853 of user utility tax (gas, phone, electricity) revenue. Of this budgeted amount, no funds have been encumbered by Town Council. Therefore, a balance of $84,401 currently resides in Measure U, with up to $922,853 of Measure U funds available for Town Council appropriation this fiscal year.

Depending on Town Council direction, other subsequent actions and agreements between the parties are likely to be required. As directed, staff will return to the Town Council at a future time.
OPTIONS ANALYSIS
Option 1:
Option 2:
Option 3

Direct staff to draft a resolution appropriating unallocated FY 2011/12 Measure U funds, and encumber future Measure U funds to subsidize air service this fall from Los Angeles (LAX) to Mammoth Lakes (MMH) by Alaska Airlines.

Do not direct staff to draft a resolution appropriating unallocated FY 2011/12 Measure U funds, and encumber future Measure U funds to subsidize air service this fall from Los Angeles (LAX) to Mammoth Lakes (MMH) by Alaska Airlines, but provide staff with an alternative funding source.

Do nothing at this time. Take no action.

VISION CONSIDERATIONS The Mammoth Yosemite Airport is located within the Town’s Urban Growth Boundary and is subject to the Town’s General Plan. The General Plan includes goals and policies related to the Airport:
Community Vision •    “Being a premier, year-round resort community based on diverse outdoor
recreation, multi-day events, and an ambiance that attracts visitors.”
•    “Offering a variety of transportation options that emphasize connectivity, convenience, and alternatives to use of personal vehicles with a strong pedestrian emphasis.”
Economy Element

Intent —    “The challenge.. .is to increase visitor occupancy midweek and shoulder seasons. The strategy is to provide air service, additional amenities, and attractive meeting facilities.”
o    Policy E. 1 .E. —    Re-establish year-round scheduled air service and continue charter air service at Mammoth Yosemite Airport.
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o    Policy    E. 1 .F.    —    Establish    and    maintain    air    service    connecting    the Mammoth Lakes area with destination visitor markets.
o    Policy    E. 1 .G.    —    Develop    facilities    that    support    commercial    and charter air carrier service.

Mobility Element Intent —    “Overall, mobility will be improved through measures such as: increasing and improving available transportation options [and] upgrade the Mammoth Yosemite Airport terminal to allow for regional air service.”
o Goal M.3. —    “Emphasize feet first, public transportation second, and car last in planning the community transportation system while still meeting Level of Service standards.”
o Policy M.2.F. — Establish convenient and energy efficient access to the Mammoth Yosemite Airport.
Destination Resort and Economic Development Strategy (DRCEDS) • Key Resort Goal —    Annually increase Town visitation and occupancy
rates. • Key Strategic Initiative —    Tourism: Filling beds during midweek and
shoulder seasons. •    Key Strategic Initiative —    Air Service: Providing commercial air service.

STAFFING CONSIDERATIONS The obligation to subsidize air service is a cooperative effort of Mammoth Mountain Ski Area, supported by the Town of Mammoth Lakes, Mammoth Lakes Tourism, the Eastern Air Service Alliance, and potentially the County of Mono.

FINANCIAL CONSIDERATIONS As of June 30, 2012, the unallocated Measure U fund balance is $84,401
(Attachment B). For fiscal year 2012/13 the Town of Mammoth Lakes is budgeting to receive $922,853 of user utility tax (gas, phone, electricity) revenue. Of this budgeted amount, no funds have been encumbered by Town Council. Therefore, a balance of $84,401 currently resides in Measure U, with up to $922,853 of Measure U funds available for Town Council appropriation this fiscal year.

ENVIRONMENTAL CONSIDERATIONS None at this time.

LEGAL CONSIDERATIONS The Town of Mammoth Lakes has previously expended general fund monies for air service subsidy in FY 2010/11. In FY 2011/12 the Town Council directed that Mammoth Lakes Tourism (MLT) pay the air service subsidy in the amount
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of $215,000 from Measure A funds. For the previous two years, the Town has not directly subsidized air service. Therefore, a determination would have to be made by Town Council if air service subsidy funds previously expended by MLT are considered “municipal” funds/sources, and constitute supplanting. It should also be noted that this program funding request is to “augment” and “enhance” existing service, not to just “replace” or “substitute” general fund monies as no general fund monies were budgeted in FY20 12/13.

RECOMMENDATION Therefore, it is recommended that the Town Council approve Option 1.
Direct staff to draft a resolution appropriating unallocated FY 2011/12 Measure U funds, and encumber future Measure U funds to subsidize air service this fall from Los Angeles (LAX) to Mammoth Lakes (MMH) by Alaska Airlines.

Attachments:
A. 2012 Town Council adopted BB&K Memo: “Measures R and U: Ability to “Supplant” Funding.
B. FY 2011/12 Measure U Fund Balance C. Measure U Supplanting Decision-Making Flow Chart
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B~sT BEST &KRIEGER~ ATTORNEYS AT LAW
ATTORNEY WORK PRODUCT ATTORNEY-CLIENT PRIVILEGE
To: From: Date: Re:
Memorandum
Honorable Mayor and Town Council Members Best Best & Krieger LLP September 16, 2011 Measures R and U: Ability to “Supplant” Funding
BACKGROUND
In 2008, the voters of Mammoth Lakes approved a .05% transaction and use tax (i.e., sales tax) increase ordinance, which appeared on the ballot as Measure R.    Based on section 15 of the ordinance (now codified as MLMC § 3.48.150), all revenues received from the increase must be used for “recreation, trails and parks funding.” Measure R also included an expenditure plan. Under this plan, all Measure R revenues are placed in a special fund that may be used for recreation programs and cannot “supplant” existing Town parks and recreation facility maintenance funding.
In 2010, the voters approved another ordinance extending the Town’s utility users tax at therateof2.5%,whichappearedontheballotasMeasureU. MeasureUrevenuemustbeused for “[p]lanning, construction, operation, maintenance, programming and administration of facilities and projects for mobility, recreation, and arts & culture. Such tax proceeds shall not supplant existing funds used for the purposes set forth above.” (MLMC § 3.44.190.)
In light of the Town’s current budget difficulties, the Town Council is evaluating different funding and budget options.    As part of this, some have questioned whether the Town can reduce general fund funding for projects currently receiving Measure R or Measure U funding. They question whether reducing funding or service levels would violate the requirement that Measure R and Measure U funding not “supplant” existing funding.
QUESTIONS PRESENTED
1)    Do either Measure R or Measure U establish a minimum spending level the Town must meet?
2)    In light of the absence of a required minimum spending level, what does “supplant” mean in Measure R and Measure U?
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3) Does Measure R prohibit the Town Council from reducing recreation, trails and parks funding or services?
4) Does Measure U prohibit the Town Council from reducing mobility, recreation, and arts and culture funding or services?
SHORT ANSWERS
1) No. California law does not allow voters to establish minimum general fund spending requirements. This point has important implications for the “supplant” issue and for the meaning of Measure R and Measure U generally.
2) “Supplant” is not defined in either Measure R or Measure U. The plain language definition of this term is “to take the place of’ or “substitute for.” Accordingly, Measures R and U prevent the Town from simply substituting Measure R and Measure U revenues for general fund spending on (1) recreation, trails and parks and (2) mobility, recreation, and arts & culture. These measures do not impose a minimum general fund spending floor or otherwise guarantee a minimum level of service.
3) No. Measure R does not impose a minimum general fund spending floor or otherwise guarantee a minimum level of service for recreation, trails and parks. As described above, an initiative that attempted to do that would be invalid.    In addition, Measure R specifically permits the Town Council to amend Measure R’s expenditure plan to remove references to supplanting current funding.
4) No. Measure U does not impose a minimum spending floor or otherwise guarantee a minimum level of service for mobility, recreation and arts & culture. As described above, an initiative that attempted to do that would be invalid.
ANALYSIS A.    VOTERS CANNOT IMPAIR THE TowN CouNcIL’s AuThoRITY OVER FISCAL MANAGEMENT
As we will describe below, we do not believe that the plain language of Measures R and U limits the Town’s ability to reduce general fund spending. However, some may argue that these initiatives are actually ambiguous on this point. For example, one may point to the use of thephrase“existing… funds”inMeasureRand“existingfunds”inMeasureUasevidenceof the voters’ intent to impose a spending floor. However, even assuming these measures are ambiguous, Measures R and U do not set minimum spending floors. Interpreting Measure R and U in this way would impair essential government functions, which the law does not allow.
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While the voters’ ability to adopt initiatives and conduct referenda it very broad, it is not absolute. One limitation on this authority is where an initiative or referendum will impair “essential” government functions. (See Simpson v. Hite (1950) 36 Cal.2d 125, 134.) Courts have recognized that one of the most essential government functions is fiscal management.    (See Rossi v. Brown (1995) 9 Cal.4th 688, 703.) For example, courts do not permit referenda on tax measures because a referendum on a tax measure prevents a local legislative body from accurately estimating revenues and therefore from administrating the agency’s finances.    (Rossi, atp. 703.)
Courts have also held that initiatives that impose minimum spending floors impair fiscal management. In Totten v. Board of Supervisors (2006) 139 Cal.App.4th 826, 830, the court struck down an initiative that prescribed minimum future annual budgets for county public safety agencies.    In part, the court did so because the initiative impaired the exercise of essential governmentfunctions.Specifically,thecourtnotedthattheinitiative“…seriouslyimpair[ed] the exercise of appellant’s essential governmental function of managing the county’s financial affairs.” (Totten, at p. 839.) It explained that under the ordinance the county”… would have no discretion to decrease public safety funding below this [minimum] level if the crime rate plummeted, if improved efficiency or innovations reduced public safety costs, or if the required level of public safety funding prevented the county from adequately funding state-mandated programs unrelated to public safety.” (Totten, at p. 839.)
Here, if Measures R and U set minimum general fund spending floors, they would impair the essential government function of fiscal management.    Similar to Totten, imposing a general fund spending floor for (1) recreation, trails and parks and (2) mobility, recreation, and arts & culture would eliminate the Town Council’s discretion to reduce spending if these costs decreased or, more importantly, if the required level of spending prevented the Council from fundingotherimportantandnecessaryprograms. Accordingly,MeasuresRandUdonotimpose a minimum general fund spending floor because interpreting these measures in this way would impair essential government functions and would invalidate the initiatives.
B.    “SUPPLANT” PREVENTS THE TowN FROM SIMPLY SUBSTITUTING SPECIAL TAx FUNDs FOR FUNDS FROM THE GENERAL FuND
Wheninterpretingstatutesandordinances,courts“… mustlookfirsttothewordsofthe statute, giving to the language its usual, ordinary import and giving significance to every word, phrase and sentence if possible.” (Lawrence v. Kuperman (2006) 137 Cal.App.4th 918, 928.) If a term is not ambiguous, the court will simply apply the plain meaning of the word.
However, if the term is open to multiple interpretations, the court will apply a fundamental rule of construction applied to all legal documents.    The objective of interpretation is to ascertain the intent of those who drafted the instrument and to give that intent full effect consistent with applicable legal provisions. (Armstrong v. County of San Mateo (1983) 146 Cal.App.3d 597, 617 [case using voter pamphlets as extrinsic aid to discern voter intent].) In
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addition, “[w]ords must be construed in context, and statutes must be harmonized, both internally and with each other, to the extent possible. Interpretive constructions which render some words surplusage, defy common sense, or lead to mischief or absurdity are to be avoided.” (Cal~fornia Manufacturers Association v. Public Utilities Commission (1979) 24 Cal.3d 836, 844.)
Applying this to the present case, there are a few helpful rules. First, if possible, courts simply apply the plain meaning of terms.    Second, if a term is ambiguous, courts will seek to effectuate the intent of the voters (i.e., the “drafters” of an initiative) and apply an interpretation that does not lead to absurd or inconsistent results. For the first rule, “supplant” is not defined in Measure R or Measure U. However, it is generally defined as “to take the place of;” “oust from a position and serve as a substitute for …;“ or “to completely remove from a situation and replace.” (See Webster’s Third New International Dictionary, p. 2296.)
Applying this plain language definition, “supplant” means that Measure R and Measure U funding cannot “take the place of’ or “substitute for” existing funding. Therefore, the Town Council could not simply substitute Measure R or Measure U funding for existing general fund spending on recreation, trails and parks or on mobility, recreation, and arts & culture while redirecting that general fund spending to other programs. Essentially, Measure R and Measure U provide new or additional funding for these purposes.
Based on this interpretation, Measure R and Measure U simply require that the Town Council not use special tax funding in place of or as a substitute for general fund revenue that will simply be redirected to other expenditures. However, if the Town needs to scale back general fund spending, the Town can certainly cut spending in areas covered by Measure R and Measure U, just as it can for every program and expenditure type. For the reasons described above, the Town cannot be obligated to provide a minimum level of general fund spending on (1) recreation, trails and parks or (2) mobility, recreation, and arts & culture.
For example, it would not be proper for the Town to shift $1 million from recreation, trails, parks, transit, and arts to other programs, keeping overall general fund spending constant. However, if the Town needs to cut general fund spending by $1 million, we believe some or all of this amount could come from recreation, trails, parks, transit, and arts. By analogy, Measure R and Measure U do not prevent the Town from shrinking the general fund “pie.” They only prevent the Town from taking the existing slices of the general fund pie for (1) recreation, trails and parks and (2) mobility, recreation, and arts & culture and using them to pay for other things (i.e., keeping the overall pie the same size but cutting out the slices for these purposes).    If the Town cuts general fund spending and some of the cuts come from these categories, Measure R and Measure U revenues will still be used to enhance programs and services to levels beyond what the general fund can provide.
The upshot is that the plain language of Measures R and U does not (1) obligate the Town to provide a minimum level of service or a fixed level of general fund spending or (2)
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otherwise prevent the Town from reducing or eliminating general fund spending or service levels. They only prevent the Town from using Measures R and U revenues as a substitute for general fund spending that will be redirected elsewhere.
C.    MEASURE R PERMITS THE TowN COUNCIL TO AMEND ITS EXPENDITURE PLAN
It is also worth noting that Measure R does not impose a minimum funding floor for an alternative reason.    The language of this initiative permits the Town Council to determine how to use Measure R revenues as long as they are used for recreation, trails and parks. Measure R actually oniy uses the term “supplant” in its expenditure plan. The plan provides that “[a]ll proceeds of the tax levied and imposed hereunder shall be accounted for and paid into a special fund designated for use by the Town of Mammoth Lakes only for the planning, construction, operation, maintenance, programming and administration of all trails, parks and recreation facilities managed by the Town of Mammoth Lakes without supplanting existing parks and recreation facility maintenance funds.” (MLMC § 3.48.150.)
Measure R specifically permits the Town Council to amend this expenditure plan. “The expenditure plan may be amended from time to time by a majority vote of the city council, so long as the funds are utilized for recreation, trails and parks funding.    For the purposes of this chapter, ‘recreation, trails and parks funding’ means planning, construction, operation, maintenance, programming, and administration of all town recreation facilities and programs, trails and parks managed by the town.” (MLMC § 3.48.150.) Therefore, to avoid any concerns, the Town Council can amend the expenditure plan to eliminate references to supplanting existing funding and remove this restriction. The only limitation is that Measure R funds must continue to be used for recreation, trails and parks funding.
D.
SUMMARY OF CONCLUSIONS
Below is a bullet-point summary of our conclusions:
•    Measures R and U do not impose general fund spending floors because doing so is beyond the scope of the voters’ initiative power. Any initiative that attempted to impose a spending floor would be invalid as it would impair the essential government function of fiscal management. Initiatives cannot eliminate the Town Council’s discretion to increase or decrease general fund spending.
•    For purposes of Measures R and U, “supplant” means to substitute for or be used in the place of. Accordingly, these measures require that the Town Council not simply replace general fund spending on (1) recreation, trails and parks and (2) mobility, recreation, and arts & culture with Measure R or U revenues, while redirecting the general fund dollars to other programs and services. These measures do not (1) guarantee continued service at existing levels or (2) otherwise prohibit the Town Council from reducing general fund spending.
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• The Town Council could eliminate “supplant” from Measure R. This term is only used in the expenditure plan of Measure R.    Measure R expressly permits the Town Council to amend this plan.
CONCLUSION
We hope this memorandum has been helpful in explaining the issues associated with Measures R and U and future general fund spending on (1) recreation, trails and parks and (2) mobility, recreation, and arts & culture. Please do not hesitate to contact us for more information.
ANDY MORRIS JOSH NELSON
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2012 Measure U Fund Balance Amount Remitted
Revenue UUT (phone/electricity/gas)
Expenses 5MG Facilitation Process
Administration Encumbered & Used funds
Total Funds Available: 6/30/2012
$ 832,301.18 Awarded/Expended
$ $ $
$ $
15,000.00 9,300.00 723,600.00
747,900.00 84,401.18
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Measure U Supplanting Decision-Making Flow Chart
Program or Facility Existed on June 8 2010
Program or Facility Uses or has used TOML$$
Not Supplanting
,~
Program or Facility Augments or enhances an existing facility or service
No
Funding request replaces prior TML funding source or is for deferred maintenance
Yes
Supplanting

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