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those right-of-ways. Right-of-way fees are currently assessed by the City in the form of franchise fees, business licenses and contributions-in-lieu of taxes (CILT) to both publicly and privately-owned utility providers. These fees are imposed in part for the privilege of using City-owned right-of-ways for distribution of utility services and are currently receipted into the City’s General Fund and used to support general municipal services. However, Eugene has never imposed right-of-way use fees on its own City-owned wastewater and stormwater utilities. At least 15 cities in Oregon assess franchise fees on utilities providing water, wastewater and/or stormwater services. For example, the City of Bend charges a right-of-way franchise fee on the gross revenues of the city's Water and Water Reclamation Funds to help fund a shortfall in Bend's transportation budget. The fee generates around $825,000 annually and costs the average ratepayer in Bend an additional $2.88 per month. Staff estimates that at the 7-8% level (which is in line with what the City currently charges telecom providers for use of the City right-of way), a Eugene franchise fee on City-owned sewer and $1.3-$1.5 million annually stormwater utilities would generate for maintenance of city streets. This fee would be treated as an integral business expense of the City utilities and would be reflected on the utility bills, adding an additional $1.17-$1.35 to the monthly bill for a typical Eugene residential customer and increasing the City wastewater and stormwater user fees for commercial customers by a proportionate 7-8%. ? Surcharge on Garbage Haulers – The second revenue mechanism currently under exploration for shoring up the Road Fund service system is a surcharge assessed on solid waste haulers to better reflect the impact their activities impose on the street system as a result of heavy vehicles running on every city street at least once a week. This fee would be based on the premise that heavy solid waste trucks cause relatively more damage to city streets than other categories of lighter vehicles and run principally on local streets. When discussing the recommendations of the Council Subcommittee on Transportation Funding Solutions, the council voted 5-4 to not to move forward with this revenue strategy. The City Manager believes that, with the community in jeopardy of losing core Road Fund services, this mechanism deserves more discussion. The hauler surcharge is currently being explored as a flat percentage of the hauler fees and would vary by account, based on the frequency of collection service and the customer category. As this proposal is currently being framed, a surcharge set to raise $1.5-$2.0 million annually would increase the bill for a residential customer with weekly 32-gallon service by an additional $1.60-$2.14 per month, while commercial customers would see an 8-10% increase in their bills for garbage service. It is the City Manager’s intention to bring back a more comprehensive analysis of these two revenue strategies to council early next calendar year, with the intention of implementing one or more new funding sources dedicated to Road Fund operations and maintenance activities by July 1, 2009. In addition to new revenue sources, the council could also consider redirecting existing revenues to shore up the critical road operations and maintenance functions. ? Local Gas Tax Revenue – The City’s five-cent motor vehicle fuel tax is projected to generate around $3.0 million in FY10. The council could choose to redirect a portion of those revenues to fund critical street maintenance functions performed by in-house staff which might otherwise be defunded, crack sealingasphalt street repairs concrete street/alley including ($305,000/yr.), ($490,000), and repairs ($240,000). The council could redirect $1.0 million of the local gas tax to provide funding for these core street maintenance programs and still remain consistent with the policy of using local gas tax for priority street maintenance and preservation needs. Currently, the gas tax is used for capital Z:\CMO\2008 Council Agendas\M081112\S081112A.doc