Item 3: An Ordinance Concerning Transportation System Maintenance Fees

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On September 26, 2005, the council reviewed and discussed the financial status and fund forecast for Eugene’s Road Fund. Based on that discussion, the council directed the City Manager to develop an FY07 Road Fund budget at the current service level and to bring back a proposal for a new revenue funding package which would not only address the projected ongoing operating deficit in street operations and maintenance but would also generate additional revenue to be dedicated to the backlog of unfunded projects in the pavement preservation program. In the course of its FY07 budget deliberations, the Budget Committee added a one-time funding allocation of $1.5 million to the pavement preservation capital budget for FY07 to be focused on overlay projects for streets that would otherwise fall into the reconstruct category in a subsequent year. On February 27, 2006, the council reviewed and discussed a number of potential revenue strategies to address unmet transportation system funding needs. At that session, the council directed the City Manager to bring back a proposal for reestablishing the previously repealed TSMF to address not only the projected ongoing operating deficits in road fund street operations and maintenance, but also to generate additional revenue to address the remaining annual funding gaps in the pavement and off-street bike path preservation programs. Summary of Proposed Ordinance The proposed TSMF ordinance (Attachment C) is identical to the ordinance that was the subject of the public hearing before council on October 16. In essence, the ordinance establishes a TSMF to be paid by all customers having possession or control of premises in the city. The proposed rate methodology includes three components: 1) a variable trip-rate component which uses estimated trip generation to measure a customer’s impact on the transportation system; 2) a flat base rate component; and 3) a flat administrative fee component. The methodology includes five residential and four non-residential customer property use categories. To provide a frame of reference for public and council discussion, staff in July prepared preliminary examples of monthly rates: $5.22 for a single family home; $19.95 for a 12,000-square-foot general office building; and $824.75 for a 40,000-square-foot grocery store. The examples are based on a number of assumptions, detailed in the July 24, 2006, agenda item summary for the council work session on the TSMF. Actual rates for each customer category would be established through an administrative ratemaking process, following the requirements set forth in Section 7.765 of the proposed ordinance. The fee would be used to fund operation, maintenance and preservation of the existing transportation system, including funding to reduce the backlog of needed street repairs. The ordinance would restrict the use of revenues to the purposes stated in the ordinance and would prohibit the use of revenues for capacity-enhancing street improvements. The ordinance would exclude TSMF funding for projects that are routinely funded by assessments or work that would otherwise be eligible for the improvement fee component of transportation system development charges. To facilitate discussion at the July 24, 2006, City Council work session, staff projected TSMF revenue for FY08 at $6.72 million, based on a number of assumptions. Actual annual revenue targets would be established by the City Manager based on an investigation of the prescribed revenue needs and administrative costs, in accordance with the procedures described in the TSMF ordinance. Attachment A offers issue analyses and potential motions, should the council wish to amend portions of the proposed TSMF ordinance. Attachment A also discusses how offsetting revenues from the local motor vehicle fuel tax and other alternate sources of transportation system funding would be considered in determining the annual need for TSMF revenue. L:\CMO\2006 Council Agendas\M061127\S0611273.doc