Item 7: Ordinance on Wastewater and Stormwater Service

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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 expand the allowed uses of wastewater and stormwater user fees for road-related purposes and allow a one-time transfer of $500,000 from existing City wastewater and stormwater fund reserves to the Road Fund for FY10 (see Attachment A). At the April 20 public hearing, one speaker offered testimony in support of these proposed code amendments authorizing the one-time $500,000 fund transfer to the Road Fund. 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 right-of-ways. Fees for the commercial use of the right-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. Current Budget Outlook - Under the most current projections, the Road Fund is expected to generate a $2.3 million annual operating deficit this current year (FY09), and with no new revenues that annual deficit would grow to nearly $5 million in the out years of the six-year forecast. In the absence of deliberate action, the fund will deplete all available fund resources and become insolvent sometime in the fall of 2009. On the other hand, a set of $3.8 million ongoing revenue solutions implemented by July 1, 2009, would eliminate the projected future annual operating deficits throughout the forecast period and As an alternative, a minimum of $2.8 restore the fund balance to the policy-recommended level. million in one-time revenue would be needed for FY10 to fully fund the current operations of the Road Fund for one year while the council continues to work on a comprehensive, sustainable funding strategy. One-time Funding Strategy - Responding to council direction to bring back a one-time funding strategy to maintain street O&M services through FY10, the City Manager is proposing a three-part funding package as a FY10 stop-gap solution, comprised of the following three elements: Redirect up to $1.4 million of the FY10 local motor vehicle fuel tax revenue 1) from capital pavement preservation to critical street O&M services; Authorize a transfer from stormwater/wastewater reserves 2)of a one-time $500,000 contribution for FY10 from existing reserves in City-owned wastewater and stormwater utilities; and Impose a 5% transportation surcharge on solid waste haulers. 3) ? It is the second element of the City Manager’s stop-gap funding strategy to keep the Road Fund solvent through FY10 that is the subject of the council’s discussion and potential action. Z:\CMO\2009 Council Agendas\M090427\S0904277.doc