Item 4: Ordinance on Wastewater and Stormwater

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BACKGROUND Previous Council Action and History On November 12, 2008, the City Manager provided the council with an update about the status of the Road Fund as well as his intended interim funding strategies to keep these critical City services funded for FY10 and beyond. At that meeting, individual councilors acknowledged that the Road Fund funding shortfalls could not be found in service reductions alone and that the need to find new sources of City revenue for transportation systems was great. On February 8, 2009, the council discussed two new potential revenue sources for preserving existing street O&M services—a right-of-way use fee (similar to a franchise fee) on City-owned utilities, and a transportation surcharge on solid waste (garbage) haulers. Councilors discussed the need for two different sets of funding strategies, with the first being a one-time, “stop gap” plan for fully funding these critical services in FY10. The second funding strategy set called for was in the form of a comprehensive “road map” for solving the City’s overall transportation funding problems in the long term. The council acknowledged that developing the longer-term solutions, including a potential Street Utility Fee and a potential Street Lighting Fee, would need to involve more public input and buy-in over the coming months. On April 8, 2009, the council discussed the City Manager’s proposed one-time funding strategy to maintain street O&M services through fiscal year 2010, which included as one of its elements a $500,000 transfer from existing reserves in City-owned wastewater and stormwater utilities, acknowledging that City utilities derive a direct benefit from the use of the road right-of-way but, unlike other utility providers, have never paid a fee for the commercial use of the right-of way. After extended discussion, a council majority voted to send forward for public hearing the proposed amendments to Eugene City Code to specifically allow the use of certain stormwater and wastewater resources for road operations, maintenance, repair, preservation and reconstruction (see Attachment A). Financial and/or Resource Considerations Use of Wastewater and Stormwater Reserves – Nexus to Road Services and Ratepayer Impact - The City has made a significant investment in the road right-of-way over the years and has historically charged a variety of utility providers for the use of those rights-of-way. Fees for the commercial use of the rights- of-way are currently assessed by the City in the form of franchise fees, license fees and permits to privately-owned utility providers. EWEB pays contributions-in-lieu-of-taxes (CILT) at a similar rate. The ROW fees and CILT payments 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 right-of-way or 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. The City Manager has scheduled tonight’s public hearing to allow the council to receive public comment on proposed amendments to the Eugene City Code that would specifically allow the use of certain stormwater and wastewater resources for road operations, maintenance, repair, preservation and reconstruction (see Attachment A). On April 27, the council will have an opportunity to take final action on the proposed code amendments. Budget authority for the FY10 one-time transfer of $500,000 from wastewater and stormwater utility reserves would move forward as part of the FY10 Budget coming to the council for formal adoption in June. Approval of this one-time transfer from City-owned utilities to the Road Fund would impose no ongoing obligation on utility ratepayers. Z:\CMO\2009 Council Agendas\M090420\S0904204.DOC