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80% complete and expected to be operational by the end of the year. Once it is fully operational, Pleasanton and Livermore will be authorized to begin utilizing the system. The full system is targeted to be functional and available to all system users prior to January 1, 2013. DISCUSSION At this time, staff has identified four specific cost areas that will need to be addressed as part of the conversion to the EBRSCA: (1) system financing, (2) annual system maintenance/ replacement reserve, (3) purchase of radios that are compatible with the new system, and (4) enhancements that may be needed to address specific radio coverage deficiencies resulting from Pleasanton's unique topography that interrupts communication transmissions. A summary of these areas are as follows: System Financing EBRCSA has been working with Alameda and Contra Costa Counties on a financing strategy that incorporates a combination of grants and debt financing to fund the remaining $30,987,000 needed to complete the system. Grants in the amount of $13,987,000 are anticipated over the next 4 years, leaving a total of $17 million that will require financing. Both counties, on behalf of the EBRCSA, are preparing to issue new debt to fund projects related to the EBRCSA, but must do so prior to the end of 2010 to take advantage of the American Recovery and Reinvestment Act bonds. Based on the distribution of system users, Alameda County will increase their issuance by $10,200,000 and Contra Costa County will increase their issuance by $6,800,000. EBRCSA will agree to repay the counties' debts using the fees collected from system users by issuing "bonds" to the two counties. Partnering with the two counties, in lieu of EBRCSA independently undertaking the financing of $17 million, offers significant advantages to the joint powers authority because the creditworthiness of the two counties and the size of their issuance will result in a much lower interest rate and reduced issuance costs. In addition to the lower costs for all participants, the need for a rating process is eliminated thus expediting the process. The first debt payment is scheduled for 2013 when the entire system is operational, and will continue through the 15 year financing period, to 2028. While it assumed that the majority of EBRSCA member cities will participate in ongoing debt payments, cities have the option to make a one time payment in lieu of long term debt payments. The amount of the one time payment option is $1,545 per radio (or "subscriber ") which for Pleasanton is estimated at $512,940 ($1,545 /radio X 332 radios = $512,940). Cost to participate in the debt service for the full 15 year term is approximately $935,244 ($15.65 per month X 332 radios X 180 months = $935,244). Because Pleasanton has funded a replacement reserve for the current 800 MHz radio system, it is in position to choose the one time payment option without impacting ongoing operating costs. As a result, due to the cost differential and the concerns regarding the long term impact on the City's operating budget, staff is recommending the one time payment option. Note that EBRCSA staff continues to have discussions with jurisdictions interested in participating and as a result, the total subscriber units may change. Assuming more subscribers join, Pleasanton's share may be reduced. Page 3of6