HomeMy WebLinkAboutItem B: Update on Street and Lighting Fee Development
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: Update on Street and Lighting Fee Development
Meeting Date: November 21, 2007 Agenda Item Number: B
Department: Public Works Staff Contact: Kurt Corey
www.eugene-or.gov Contact Telephone Number: 682-5241
ISSUE STATEMENT
This work session is to discuss funding for transportation system operation, maintenance and
preservation with user fees. The City Council is asked to provide further direction for development of
two fees, a street and bicycle path lighting user fee and a street utility fee based on parking as a measure
of street use. Staff seeks further council direction on approach and assumptions for developing draft
ordinances to implement the fees.
BACKGROUND
The Council Subcommittee on Transportation Funding Solutions presented its report to the council on
May 23, 2007. That report set out recommendations for a package of solutions to address adequate
funding for the operation, maintenance and preservation of the local transportation system. The City
Council reviewed the subcommittee recommendations and directed moving ahead with four of the five
revenue sources:
Capital Local Option Levy (potential ballot measure in May 2008)
?
Increased Motor Vehicle Fuel Tax (placed on the November 2007 ballot; rejected by voters)
?
Street and Bicycle Path Lighting Fee
?
Street Utility Fee Based on Parking
?
The council declined to pursue a solid waste collection surcharge recommended by the subcommittee.
For a summary of the council action history on the funding solutions, along with next steps for each, see
Attachment A.
Street Utility Fee Development
The street utility fee as recommended by the subcommittee for inclusion in the package of funding
solutions was generally defined as using parking as a measure of system usage, with a number of
implementation details to receive further definition and refinement through development of an
implementing ordinance and rate methodology. A range of policy choices and alternatives exists for
development of the fee as summarized below and outlined in more detail in Attachment B to the AIS.
The purpose of the street utility fee is, in combination with other funding sources, to provide an
adequate and stable funding source to operate, maintain, preserve and reconstruct elements of the City’s
transportation system and reduce the backlog of needed street repairs. While potential uses of street
F:\CMO\2007 Council Agendas\M071121\S071121B.doc
utility fee revenues are broad, the subcommittee identified priorities for use of revenues as described in
Attachment B.
These priorities for use suggest that the implementing ordinance should restrict use of funds generally to
the operation, maintenance, preservation and repair of the transportation system. This approach
provides for more specific allocation of funds to expenditures through the capital and operating budget
processes.
The structure of the subcommittee-recommended street utility fee is similar to that implemented in some
other Oregon communities but differs from transportation system fees previously proposed in Eugene, in
that the fee would utilize vehicular parking as a basis for measuring transportation system usage.
Parking as a measure can provide a relatively simple, understandable and observable basis for
establishing a rational nexus between a customer’s site and usage of the transportation system.
A fundamental requirement of such a usage measurement system is that estimates or inventories of
parking units at customers’ sites and for the community as a whole are established. Estimating the total
number of parking spaces to be accounted for in the fee basis is a critical step in developing rates.
Accounting for parking spaces depends upon several key factors and assumptions. These factors and
corresponding staff recommendations for treatment of each are as follows:
Inclusion or exclusion of on-street parking. Exclusion of on-street parking is recommended;
?
Treatment of sites with limited or no on-site parking relying on public parking structures and
?
other shared parking for a significant portion of parking needs. Recommend inclusion in the
utility of sites within parking exempt areas relying on shared parking, charging a proportionate
share of parking within the area to each customer’s site;
Methods of measuring or estimating parking quantity at customers’ sites. Recommend
?
considering use of estimating parking units at nonresidential customers’ sites, based on one of
several methods – average spaces per total impervious area, available parking area or building
area - rather than utilizing delineated parking spaces only;
Treatment of areas available or used for parking without delineated (marked) spaces. Account
?
for these areas through use of estimating parking units per other observable areas rather than
counting and charging for delineated parking spaces only.
Assumptions about the number of spaces associated with residential customer sites. Assume an
?
average number of parking spaces associated with residential customer sites and consider either a
flat fee for all residential types or varying the assumed number based on broad residential
categories, e.g. single-family versus multi-family housing;
Allowance for credits/adjustments to the system usage (amount of parking) billed at a site. Allow
?
for adjustments to the amount of parking charged at a site due to seasonal and intermittent use,
such as for schools, churches and event centers. Allow for adjustments related to reductions in
transportation system usage such as documented reduction in parking units. Evaluate methods
and issues for providing credits for other methods of reducing transportation system usage, such
as approved travel demand management programs.
Attachment B provides further discussion and rationale for these recommendations.
A final key factor influencing the amount of a street utility fee is the assumed revenue requirements of
the utility. The City Council identified target net annual revenue of approximately $6.5 million with
$150,000 of the revenue generated to be earmarked for neighborhood traffic calming projects. The
F:\CMO\2007 Council Agendas\M071121\S071121B.doc
council may direct a different net annual revenue target depending on the outcome of efforts to
implement other funding package elements. Staff has evaluated and estimated example rates and fees
contained in Attachment B based on the previous council-specified revenue target, resulting in an
estimated monthly fee for a typical single-family home of approximately $4.50.
Street and Bike Path Lighting Fee Development
The intent of the street and bicycle path lighting fee is to provide a utility-based funding mechanism to
pay for benefits to city residents and businesses provided by street and path lighting. The fee as
proposed by the subcommittee was generally framed as recognizing the common benefit of arterial and
collector lighting while differentiating among levels of service provided to different areas of the city,
with details for implementing the fee to receive further definition and refinement through development
of an implementing ordinance and methodology. A range of policy choices and alternatives exists for
development of the fee as summarized below and outlined in more detail in Attachment C.
Fees to fund operation, maintenance and enhancement of the lighting system could be levied on all
occupants of properties benefited by the City’s street and bicycle path lighting services. As a fee for
services, it would be imposed on both public and private agencies and businesses. Typically, the person
responsible for paying a premise’s water and sewer utility charges would be responsible for paying the
street light fee which in most cases is the occupant of improved property. Undeveloped properties would
be exempt.
The revenue from the fee as recommended by the subcommittee would be dedicated to provision of
street and bike path lighting, with a target net annual revenue of approximately $850,000, resulting in an
estimated cost to an average household of approximately $1.50 per month. The subcommittee also
discussed the potential for a process by which neighborhoods could request and pay for a higher or
lower level of lighting service.
Key considerations and staff recommendations for determining the amount and structure of the lighting
fee include:
Determine revenue requirements, uses and limitations on funds derived from the fee.
?
Recommend restricting uses to expenditures related to the lighting system and consider operation
and maintenance requirements in the initial revenue target for the fee.
Determine criteria, if any, for including capital project funding in the allowable uses of funds.
?
Recommend including the potential for capital rehabilitation and upgrades within allowable uses
and use existing capital project funding sources and methods to fund construction of new street
lights.
Consider potential methods and implications of accounting for differing levels of service of local
?
area street lighting. Allow for at least two methods in the draft ordinance: either a system-wide
flat fee or a multi-level rate structure recognizing differing levels of service. A two-level fee
recognizing the system-wide benefit of arterial, collector and bike path lighting and the existence
or lack of local area street lighting is initially recommended.
Evaluate policy options for neighborhood areas to request differing levels or “opt out” of local
?
street lighting service. Recommend structuring the draft ordinance to allow for this possibility
and that staff identify options and return to the council with potential criteria and costs for
implementing an administrative program.
Establish rate structures for residential customers. Recommend implementing a flat rate structure
?
using a per dwelling unit basis (e.g., standard fee for all types of dwelling units).
F:\CMO\2007 Council Agendas\M071121\S071121B.doc
Establish a non-residential rate structure. Consider using either an account flat fee or a
?
nonresidential unit basis (e.g. per premise address at a site).
Attachment C provides further discussion and rationale for these recommendations.
Administrative Efficiency and Billing Issues
The May 2007 subcommittee report identified key criteria with which to evaluate revenue alternatives,
two of which relate to administrative efficiency:
“Efficiency and Cost-Effectiveness: The revenue sources included in the funding strategy should
have low to moderate costs for administration, relative to the total revenue generated.
Administrative Effort: The revenue sources included in the funding strategy should be practical
to administer. There should be practical sources of tax-related or fee-related data, and the
implementation and ongoing program management should not be overly complex.”
New transportation utility fees will require an administrative infrastructure similar to that used for
stormwater and wastewater user fees. The City’s current utility administration unit would provide
customer service, account management, and staff support for the annual fee-setting process. The City
would contract for billing and collections, as is done now with EWEB for stormwater and wastewater
fees. Administrative and contractual billing costs have not yet been determined but will depend
significantly on the complexity of the fee structure and billing requirements. When establishing new
fees, a key consideration is that administrative and billing costs tend to increase in proportion to
complexity of rate and fee structures.
While EWEB is required under the City charter to bill and collect for sewer fees, EWEB is not obligated
to collect transportation utility fees. Until recently, the board had directed EWEB staff to avoid
investing any resources to analyze the feasibility, costs and benefits of including transportation fees on
the EWEB bill. However, after a recent change in a board position, EWEB and City staff members were
able to have an initial meeting earlier this month to begin to discuss possibilities. Staff agreed to
continue discussions to identify issues of concern and options to resolve these issues.
Assuming the board remains supportive, we will continue to collaborate with EWEB staff to find
efficient and effective ways to implement the council policy direction. If feasible, fees should be
structured to enable billing in conjunction with existing EWEB billing and collection systems.
Timing
In order to move forward with the package of transportation funding elements, preparation of draft
ordinances outlining fee structures and rates should be completed within the next several months.
Timing of implementation of the fees will depend on further council direction and resulting
requirements for rate structures and fee methodologies.
RELATED CITY POLICIES
The council’s goals for 2007 include “Transportation Initiative: Develop mechanisms to adequately
fund our transportation system for cars, trucks, bikes and pedestrians including maintenance and
preservation and capital re-construction.”
F:\CMO\2007 Council Agendas\M071121\S071121B.doc
COUNCIL OPTIONS
While the council has broad options related to timing, amount and treatment of both fees, staff seeks
direction on the following options:
?Direct City Manager to prepare draft ordinances implementing the fees using the approaches and
assumptions as recommended.
?Direct City Manager to prepare draft ordinances implementing the fees using approaches and
assumptions as modified by the council.
?Direct City Manager not to prepare draft ordinances at this time
CITY MANAGER’S RECOMMENDATION
The City Manager recommends:
?Developing a draft ordinance implementing a street utility fee as recommended.
?Developing a draft ordinance implementing a street and bicycle path lighting fee as
recommended.
SUGGESTED MOTION
Move to direct the City Manager to bring back to the council in early 2008 draft ordinances
implementing the street utility fee and street and bicycle path lighting fee.
ATTACHMENTS
A. Status of Transportation Funding Solutions
B. Street Utility Fee Alternatives
C. Street and Bicycle Path Lighting Fee Alternatives
FOR MORE INFORMATION
Finance Contact: Kurt Corey, Public Works Director
Telephone: 682-5241
Staff E-Mail: kurt.a.corey@ci.eugene.or.us
F:\CMO\2007 Council Agendas\M071121\S071121B.doc
ATTACHMENT A
Status of Transportation Funding Solutions
Subcommittee Subcommittee Recommended Council Actions to Date Current Status/Next Steps
Recommendation Amount
Seek voter approval of a capital Annual net revenue of $6 million May 23-Approved subcommittee This is the topic of a work session
local option levy, including per year recommendation; increased on December 10, 2007; potential
approximately $350,000 per year Estimated cost to average amount to $6.5 million due to ballot measure in May 2008
for capital bike path preservation homeowner of $80 elimination of solid waste
collection surcharge
Establish a street and bike path Annual net revenue of $850,000 May 23-Approved subcommittee This is the topic of a work session
lighting fee Estimated cost to average recommendation on November 21, 2007
household of $1.50 per month
Establish a street utility fee based Annual net revenue of $6 million May 23-Approved subcommittee This is the topic of a work session
on parking, with $150,000 per Estimated cost to average recommendation; increased on November 21, 2007
year dedicated to funding traffic household of $4.50 to $5 per amount to $6.5 million to make
calming measures month up for half of the elimination of
the solid waste collection
surcharge
Increase motor vehicle fuel tax Annual net revenue of $2 million May 23-Approved subcommittee November 6-Election on 3 cent
Cost to purchaser of gas/diesel of recommendation increase, rejected by voters.
3 cents per gallon August 15-Submitted tax increase Subsequent discussion of repeal
to voters on November 2007 of the sunset.
ballot
Establish a solid waste collection Annual net revenue of $1 million May 23-Did not accept No further action on this item,
surcharge Estimated cost to average subcommittee recommendation due to lack of council support
residential customer of $1 per
month
ATTACHMENT B
Public Works
Administration
City of Eugene
MEMORANDUMMEMORANDUM
858 Pearl Street
Eugene, Oregon 97401
(541) 682-5241
(541) 682-6826 FAX
Date:
November 15, 2007
To:
Mayor Piercy and City Council
From:
Kurt Corey, 682-5241
Public Works Director
Subject:
Street Utility Fee Alternatives
This memorandum presents information to the City Council related to methodological options for
determining the fee structure and rates for a proposed street utility fee. The fee as proposed by the
Council Subcommittee on Transportation Funding Solutions (subcommittee) was generally defined
as using parking as a measure of system usage, with a number implementation details to receive
further definition and refinement through development of an implementing ordinance and
methodology. A range of alternatives exists for development of the fee and are presented in this
memorandum. Staff seeks further council direction on these alternatives prior to developing a draft
ordinance implementing the fee.
Background
The intent of a street utility fee is to provide a utility based funding mechanism to pay for benefits to
City residents and businesses provided by the City’s transportation system. The fee would be
established by ordinance to be paid by all customers having possession or control of premises in the
city with the purpose of providing funding for operation, maintenance and preservation of the
transportation system.
The council has expressed support in the past for a utility-type fee as a part of a package of
transportation funding mechanisms. Previous proposals for a similar fee relied on vehicle trip
generation estimates to measure customers’ usage of the transportation system. Through the work
of the subcommittee, the potential for use of parking as a basis for a street utility fee was identified
and emerged as a favored option. Key factors for favoring a parking-based street utility fee
included:
?Parking spaces as a measure of transportation system usage has a rational basis in that
vehicles must use the system to get to and from parking spaces; in general, the greater the
number of parking spaces at a site, the greater potential for the number of vehicles using the
transportation system to come and go from the site.
B,SUF P17
ATTACHMENT TREET TILITY EE AGE OF
?The amount of parking at a site can be directly observed and measured and is probably
easier to understand as a basis for the fee than are average trip generation rates.
?Amount of parking provides a relatively simple basis for the fee. Once an estimate or
inventory of parking units in the community is established, a parking-based fee could be
relatively simple and less costly to administer and maintain than a trip generation
methodology.
?A parking-based fee may provide some incentive for development of fewer parking spaces
and more efficient use of developable land.
?A parking-based fee can be somewhat flexible; a more detailed fee methodology can be
developed, reviewed by council and refined to address specific needs and concerns.
Key Consideration for Fee Structure and Rates
Through the work of the subcommittee and subsequent review by staff, several key considerations
for the fee structure and rates have been identified. These factors and assumption will need to be
further developed and refined to enable drafting of an implementing ordinance and methodology
and include the following:
?Inclusion or exclusion of on-street parking;
?Treatment of sites with limited or no on-site parking relying on public parking structures
and other shared parking for a significant portion of parking needs;
?Methods of measuring or estimating parking quantity at customer’s sites;
?Treatment of areas available or used for parking without delineated (marked) spaces;
?Establishing rate structure for residential customers – assumptions about the number of
parking spaces associated with residential customer sites;
?Develop criteria and allowances for adjustments, credits and reductions; and,
?Determine final revenue requirements, uses and limitations on funds derived from fee;
Each key factor is further discussed below.
Parking Types to Include in the Basis for the Fee (on-street & shared parking)
Discussion of the fee structure with the subcommittee suggested that off-street parking only should
be included in the basis for the fee. This is appropriate from the perspective that the amount and
availability of on-street parking in not directly controlled by customers of the utility. Staff
recommends that on-street parking be excluded from parking areas allocated to customers by the
street utility fee.
Another factor to consider is treatment of shared parking, both commercially- and publicly-owned
surface and structure parking. Within parking-exempt areas such as Downtown and West
University areas, a majority of customers rely on shared parking to account for their site’s vehicular
parking needs. Allocating this portion of parking to the appropriate customers requires additional
consideration beyond measured on-site parking areas or delineated spaces. Charging a public or
private entity providing parking services not associated with an onsite use would not be consistent
with the principle that parking is used as the measure of transportation system usage. A shared
parking site is not a destination itself and as such not the generator of the use of the system, rather
other customer’s sites are the destination generating parking demand and usage of the system. Not
accounting for these parking areas and the associated customers’ use of the system would shift
costs to other customers or result in significant under-collection of the target revenues.
B,SUF P27
ATTACHMENT TREET TILITY EE AGE OF
Staff recommends a fee structure providing for inclusion in the utility of shared parking within
parking exempt areas, with all available parking in these areas allocated proportionately to
customer’s sites.
Non-Residential Rate Structure, Methods for Measuring Parking
In a street utility which relies on parking as the measurement unit for gauging usage of the
transportation system, establishing parking units and methods for measuring customers parking are
critical steps. These factors are interdependent with the resulting rate and fee structure; decisions
about measurement methods can influence the fee structure and vice versa. These factors are most
relevant to recommendations on options for non-residential rate structure, as residential parking is
generally easier to estimate and average.
Measurement of parking spaces and/or capacity at sites can be complicated and potentially
subjective. This is because many sites contain parking areas without formally delineated (marked or
signed) parking spaces. Determining whether an area without delineated spaces is both available
and used for parking, or not considered available or used for parking can be difficult and open to
contention. Conversely, counting only delineated spaces is directly observable and objective, but
may significantly under-account for actual available parking at a site. As such, a method for
estimating available parking based on more readily measured site characteristics is often employed.
Estimating methods considered by staff include using:
?Minimum code-required number of spaces per building floor area
?Sampled ratio of parking spaces to gross building floor area
?Sampled ratio of parking spaces to total impervious area
?Sampled ratio of parking spaces to impervious area available for parking
Each of these methods has advantages and disadvantages which require further evaluation to
determine a preferred method having an appropriate balance of equity and administrative feasibility.
A potential disadvantage in terms of complexity for any estimating method is inclusion of factors
accounting for the variability of the ratio of parking to measurement units by land use type.
Distinguishing parking density by land use may improve equity of the rates but introduces additional
complexity and administrative costs since land use for each customer must be established and
tracked over time. A final factor to consider in selecting a measurement method is the desire to
allow for reduction in the fee related to reductions in the amount of land area used for parking.
Staff recommends preparing a draft ordinance allowing administrative flexibility as to the methods
of measuring or estimating the amount of parking at customer sites.
Residential Rate Structure
As with non-residential sites, measuring parking at individual residential sites could become
complicated and costly. As such, the rate and fee structures for residential customers should utilize
an estimated average number of parking units per dwelling unit. Options range from a single fee
charged to all residential units across all dwelling types to rates which attempt to account for
complex variability in the amount of parking and use of the system per dwelling unit based on
housing or site characteristics. Several challenges with the latter approach include availability of
data to support distinctions, increased complexity in billing, and potentially excessive administrative
B,SUF P37
ATTACHMENT TREET TILITY EE AGE OF
costs. A mid-range approach would be to vary estimated parking spaces within broad residential
categories such as single-family houses and multi-family dwelling units.
Staff recommends further developing the fee structure assuming an average number of parking
spaces associated with residential customer sites and varying the assumed number based on broad
residential categories, e.g. single-family and multi-family housing.
Adjustments, Credits and Reductions
In addition to specifying minimum distinctions between categories of residential and non-residential
uses, the rates may include a variety of factors to adjust or reduce the fee for categories of
customers. The basis for providing adjustments and credits is to recognize customers’
achievements to reduce usage of the transportation system. Rate methodology options range from
providing no adjustments or reductions to establishing administrative programs providing complex
and individualized adjustments. Credits may provide additional equity to the fee and provide a
potential incentive for customers to reduce demand on the system. However, complex credit and
adjustment provisions may provide marginal benefit to customers while significantly increasing
administrative costs.
Conceptually, two forms of adjustments may be considered: direct reductions resulting from a
lower number of measurement (parking) units at a customer’s site; and, other administrative
adjustments for demonstrated reduction in use of the transportation system.
Depending on the unit of measure for parking spaces, an inherent reduction may be allowed based
on reducing number of parking units at a site. For example, if size of available parking area were
the unit of measure, reduction in areas developed or used for parking could result in a fee reduction
while potentially providing an incentive for reducing the amount of land consumed for parking
purposes.
Other administrative reductions allow for recognition of reduced usage or demand on the
transportation system. For example, in implementing the rate methodology, reductions in fees could
be allowed for customers locating in nodal development areas or for businesses implementing
transportation demand management strategies.
Staff recommends preparing a draft ordinance allowing administrative flexibility for incorporating
adjustments, credits and reductions to fees associated with customer’s reduction in transportation
system usage.
Revenue Requirements, Uses of Fee Revenues
The subcommittee recommended a net annual revenue target of approximately $6 million with
$150,000 of the revenue generated to be earmarked for neighborhood traffic calming projects. This
revenue target was estimated to result in an average household fee of $4.50 to $5 per month. Upon
considering the subcommittee recommendations, council determined not to pursue one of the
package components, the solid waste collection surcharge, and shifted half of the revenue target for
that component to the street utility fee, resulting in a net revenue target of $6.5 million for the street
utility fee.
B,SUF P47
ATTACHMENT TREET TILITY EE AGE OF
While potential uses of street utility fee revenues are broad, the subcommittee identified priorities
for use of revenues to include:
1)Operating and maintaining the existing transportation system, including on-street and off-
street bike and pedestrian pathways;
2)Fully funding the annual pavement preservation overlay program, to avoid more streets
falling into the more expensive reconstruction project category;
3)Beginning to buy down the backlog of reconstruction street projects at a reasonable level
and time frame;
4)Acknowledging the importance of alternative modes of transportation by including funding
for a reasonable amount of enhancements and extensions to bike and pedestrian facilities,
including preserving and expanding the sidewalk system and expanding the local on-and off-
street bicycle system; and
5)Respond to priority funding needs related to other components of the transportation system,
specifically neighborhood traffic calming projects (total annual funding of $150,000
recommended from street utility fee).
Staff recommends using these priorities as guidance in developing draft ordinance provisions related
to use of funds being dedicated to the operation, maintenance, preservation and repair of the
transportation system.
Council may direct a different net annual revenue target or use of revenues depending on the
outcome of efforts to implement other funding package elements. Staff has evaluated estimated
example rates and fees contained in this memorandum based on the previous council-specified
revenue target.
Billing and Collections
As reflected in discussion of other fee implementation factors, a street utility fee based on parking
has the potential for relative simplicity or significant complexity and administrative costs.
Administrative and contractual billing costs have not yet been determined but will depend
significantly on the complexity of the fee structure and its billing requirements. When establishing
new fees, a key consideration is that administrative and billing costs tend to increase in proportion
to complexity of rate and fee structures.
At a minimum, a new street utility fee will require an administrative infrastructure similar to that
currently used for stormwater and wastewater user fees. Under this configuration City staff would
provide customer service, account management, and staff support for the annual fee setting process
and the city would contract for billing and collections, as is done now with EWEB.
A multi-layered, variable fee, especially one which requires a new unit of measurement, would
require more resources (City and EWEB) to develop and implement than a simpler fee. The trade
off between complexity needed to achieve policy objectives and the simplicity needed to minimize
administrative costs is a common element in city fee setting.
Assuming the Board remains supportive, we will continue to collaborate with EWEB staff to find
efficient and effective ways to implement council policy direction. If, during the development of the
administrative infrastructure, we identify significant barriers to implementing a specific policy
B,SUF P57
ATTACHMENT TREET TILITY EE AGE OF
direction, staff will bring information back to council, in order to weigh the policy value against the
administrative cost. In this early stage of fee development, precise trade offs are unknown;
however, in general, some policy objectives increase the need for complexity and likely increase
administrative expense. For example:
?A fee that requires a new unit of measurement in the billing system (e.g. building square
footage as an estimating unit for parking spaces, along with land use types by customer)
would require more resources to implement than one which is tied to a current unit (e.g.
impervious area associated with existing stormwater accounts);
?A fee that requires new customer categories would require more resources to implement
than one which corresponds to a current category;
?A fee that allows for variability based on changeable customer characteristics or behaviors
requires more resources than one which remains fixed for a site across time.
Staff recommends implementing a fee structure that best meets policy objectives while achieving a
balance with administrative efficiency.
Example Rate Structure and Fees
While a rate and fee structure incorporating requisite data and all applicable rate factors and
assumptions has not yet been established, staff has prepared example rates and generalized fees
using a rate model based on broad assumptions and the best currently-available data. Based on this
preliminary rate model, using a target revenue of $6.5 million and estimating approximately 240,000
parking spaces being billed within the utility results in a monthly rate of about $2.25 per parking
unit (space). Table A provides an example of a simple rate structure’s customer categories and rate
per unit of size for each category. This is purely an example to provide context for the various
options and factors considered in this memorandum.
Table A – Example Draft Customer Categories and Monthly Fee per Unit of Measure
Category Description Unit of Estimated Fee per
Measure Parking Unit of
per Unit Measure
of
Measure
Residential Single-family home on an individual lot is one Dwelling 2.0 $4.50
Customersdwelling unit. Duplexes, triplexes and apartments Unit
(assuming a single treated as multiple dwelling units.
category)
Non-residential Example based on sampled ratio of parking spaces 1000 Sq. 2.1 $4.75
Customersper 1000 square feet of available parking area Ft.
(assuming a single across a variety of non-residential customer types. Available
category) Parking
Area
B,SUF P67
ATTACHMENT TREET TILITY EE AGE OF
Next Steps
The major work elements for implementation of the street utility fee include:
?Prepare draft ordinance reflecting proposed rates and fee structure for council review;
?Refine rates, factors and adjustments to include in the proposed rates;
?Prepare proposed ordinance and hold public hearing;
?Work with EWEB to identify billing needs and options;
?Gather and evaluate data necessary to implement the rate methodology and establish fee
amounts for all customers;
?Implement billing systems and modifications to enable billing;
?Conduct additional public outreach to customers and customer groups;
?Give notice of proposed fee, prepare methodology and administrative order implementing
the fee.
Summary
Utility fee rate methodologies in general and transportation system fees in particular by their nature
rely on assumptions to allocate costs and estimate usage in both an equitable and administratively
feasible manner. A number of methodological assumptions and approaches are technically and
legally feasible. Along with equity considerations, consistency, complexity and administrative cost
are factors to consider when selecting methodological approach and assumptions.
Staff has prepared a range of approaches and related sets of assumptions for consideration in
preparing a draft ordinance implementing a street utility fee. Staff seeks council direction on
preferred approach and assumptions.
If you have questions regarding the information in this memo, don’t hesitate to contact me at
682-5241 or kurt.a.corey@ci.eugene.or.us.
B,SUF P77
ATTACHMENT TREET TILITY EE AGE OF
ATTACHMENT C
Public Works
Administration
City of Eugene
MEMORANDUMMEMORANDUM
858 Pearl Street
Eugene, Oregon 97401
(541) 682-5241
(541) 682-6826 FAX
Date:
November 15, 2007
To:
Mayor Piercy and City Council
From:
Kurt Corey, 682-5241
Public Works Director
Subject:
Street and Bicycle Path Lighting Fee Alternatives
This memorandum presents information to the City Council related to methodological options for
determining the fee structure and rates for a proposed street and bicycle path lighting fee. The fee
as proposed by the Council Subcommittee on Transportation Funding Solutions (subcommittee)
was generally defined to recognize the common benefit of arterial and collector lighting while
differentiating among levels of service provided to different areas of the city, with a number
implementation details to receive further definition and refinement through development of an
implementing ordinance and methodology. A range of alternatives exists for development of the fee
and are presented in this memorandum. Staff seeks further council direction on these alternatives
prior to developing a proposed ordinance and detailed methodology for implementing the fee.
Background
The principal purpose of street and bicycle path lighting is to provide additional visibility of streets,
sidewalks and paths at night to safeguard, facilitate and encourage vehicular, bicycle and pedestrian
traffic. Street and path lighting provides several benefits to the public, including:
(a) Reduction in night accidents
(b) Safer and easier pedestrian traffic.
(c) Prevention of crime and aiding police protection.
(d) Facilitation of traffic flow.
(e) Promotion of business and industry during night hours.
The intent of a street and bicycle path lighting fee is to provide a utility based funding mechanism to
pay for benefits to city residents and businesses provided by street and path lighting. Fees to fund
operation, maintenance and enhancement of the lighting system can be levied on all occupants of
properties benefited by the city’s street and bike path lighting services. As a fee for services, it
would be imposed on both public and private agencies and businesses. Typically, the person
C,S&PLF P15
ATTACHMENT TREET ATH IGHTING EEAGE OF
responsible for paying a premise’s water and sewer utility charges would be responsible for paying
the street light fee which in most cases is the occupant of improved property. Undeveloped
properties would be exempt.
Key considerations for determining the amount and structure of the lighting fee include:
Determine revenue requirements, uses and limitations on funds derived from fee;
?
Determine criteria, if any, for including capital project funding in the allowable uses of
?
funds;
Consider potential methods and implications of accounting for differing levels of service of
?
local area street lighting;
Evaluate policy options for neighborhood areas to request differing levels or “opt out” of
?
local street lighting service;
Establish rate structures for residential customers;
?
Determine sizing factors, if any, for non-residential fees; and,
?
Establish billing and collection systems.
?
Each key factor is further discussed below.
Basis for Revenue Requirements, Capital Funding
The subcommittee recommended fee revenue would be dedicated to provision of street and bike
path lighting with a target net annual revenue of approximately $850,000. This target was
estimated to cost the average household approximately $1.50 per month. The revenue from the fee
as recommended by the subcommittee would be dedicated to provision of street and bike path
lighting. The subcommittee also discussed the potential for a process by which neighborhoods
could request and pay for a higher or lower level of lighting service.
The city currently spends about $845,000 per year to operate and maintain the city’s street and bike
path lighting system. Of this total, about $440,000 is for lighting on arterial/collector streets and
$360,000 is for lighting on neighborhood streets. Cost for lighting bike paths is about $45,000.
The subcommittee target revenue considers operation and maintenance requirements but does not
include capital funding for rehabilitation, upgrades and new capital facilities. Staff suggest
considering the potential for capital rehabilitation and upgrades within allowable uses and the use of
other existing capital project funding sources and methods to fund construction of new street lights.
New street light construction currently falls into two general categories, lighting on arterial and
collector streets and bike paths, and lighting improvements on local streets. Three funding
mechanisms are used: transportation systems development charge revenues for lighting on arterial
and collector streets and bike paths; property owner funded improvements via assessments under a
local improvement district; and, developer-funded lighting improvements on local streets in
conjunction with new development. Local improvement districts provide a mechanism by which
neighborhoods can request and pay for a higher level of lighting service.
Rate Structure, Differing Levels of Service
C,S&PLF P25
ATTACHMENT TREET ATH IGHTING EE AGE OF
The subcommittee suggested a rate structure recognizing both the broad benefit of arterial,
collector and bike path lighting and differing levels of service for local area street lighting. Under
this approach, all customers would share in the costs of arterial and collector street lighting and
bicycle and pedestrian path lighting while local street lighting costs would vary by the level of
lighting service in an area.
At a minimum this would require establishing a rate structure with two levels: one for those
residences and nonresidential customers served only by the overall arterial/collector/bike path
lighting system and another for those customers served by both the overall arterial/collector/bike
path lighting and local area street lighting systems. Criteria for defining when a customer is served
by the local street lighting system would need to be developed.
Staff recommends allowing for at least two methods of accounting for differing levels of service of
local area street lighting in the draft ordinance, allowing either a system-wide flat fee or a multi-
level rate structure recognizing differing levels of service. A two-level fee recognizing the system-
wide benefit of arterial, collector and bike path lighting and the existence or lack of local area street
lighting is initially recommended. Depending on administrative and billing cost implications, options
for a system-wide flat fee may also be considered.
In either case, residential customers would pay the fee on a per dwelling unit basis. For non-
residential customers the fee could be imposed on either a per account or per address flat fee or
another nonresidential unit accounting for the size of a non-residential site. Given the relatively
small amount of the proposed fee and the administrative complexity and higher cost of accounting
for site characteristics, staff recommends a flat fee per premise address, varying only based on level
of local street lighting service.
“Opt Out” Program Options
Despite the benefits of street lighting, some residents in an area currently served by local street
lights may desire the option of having less nighttime lighting and would prefer darker skies in their
neighborhood area. While the rate structure described above would provide for a rate differential
should lights in an area be turned off, the City does not currently have a program or mechanism in
place to process such requests. Staff recommends developing a draft ordinance that allows for the
potential for such a program, returning to council at a future date to evaluate policy options,
potential criteria and costs for an administrative program allowing neighborhood areas to request
differing levels of service or to “opt out” of local street lighting service. A general assumption is
that customers in such areas would continue to share in the costs of arterial/collector/path lighting.
Billing and Administrative Issues
Billing and administrative issues for the street and bicycle path lighting fee are similar to those
described for the street utility fee. Please refer to Attachment B to the AIS for additional
background on general administrative and billing issues. Given the relatively small amount of the
proposed street and bicycle path lighting fee, concerns with administrative cost overhead are
potentially more significant. Any significant complexity which causes costs of billing and account
management to increase could result in a disproportionate share of revenues being committed to
overhead. Keeping the rates relatively simple and inexpensive to bill and administer will be
necessary for cost-effective implementation.
C,S&PLF P35
ATTACHMENT TREET ATH IGHTING EE AGE OF
Example Rates
While a final detailed ratemaking process incorporating all necessary data and applying all rate
factors has not yet been completed, staff has prepared example estimated fees using a rate model
based on the best currently-available data. Using this rate model and assuming a target net revenue
of $850,000 and 60,000 billed premises, results in a flat monthly rate of about $1.50 per unit
(premise) for customers with local area street lighting. Table A provides an example of a simple
rate structure’s customer categories and rate per unit of size for each category. This is purely an
example to provide context for the various options and factors considered in this memorandum.
Table A - Proposed Customer Categories and Monthly Fee per Unit of Measure
Category Description Unit of Arterial/ Local Area Total
Measure Collector/Lighting Lighting fee
Path fee fee per per unit w/
per unit unit local service
Residential Customer Categories
Residential Detached single-family homes, duplexes Dwelling $0.80 $0.70 $1.50
with local and apartments with local area lighting Unit
lighting service.
Residential Detached single-family homes, duplexes Dwelling $0.80 $0.00 $0.80
without local and apartments without local area lighting Unit
lighting service.
Non-residential Customer Categories
Non-residential Nonresidential customers with local Per $0.80 $0.70 $1.50
with local lighting service. For sites with multiple premise
lighting premises or uses with distinct street address at
addresses, a per address fee is a site
recommended.
Next Steps
Should Council direct that an ordinance establishing a lighting fee be prepared, staff will proceed
with the following steps:
Prepare draft ordinance reflecting proposed rates and fee structure for council review;
?
Refine rates, factors and adjustments to include in the proposed rates;
?
Prepare proposed ordinance and hold public hearing;
?
Work with EWEB to identify billing needs and options;
?
Gather and evaluate data necessary to implement the rate methodology and establish fee
?
amounts for all customers;
Implement billing systems and modifications to enable billing;
?
Conduct additional public outreach to customers and customer groups;
?
C,S&PLF P45
ATTACHMENT TREET ATH IGHTING EE AGE OF
Give notice of proposed fee, prepare methodology and administrative order implementing
?
the fee.
Summary
Utility fee rate methodologies in general and transportation system fees in particular by their nature
rely on assumptions to allocate costs and estimate usage in both an equitable and administratively
feasible manner. A number of methodological assumptions and approaches are technically and
legally feasible. Along with equity considerations, consistency, complexity and administrative cost
are factors to consider when selecting methodological approach and assumptions.
Staff has prepared a range of approaches and related assumptions for consideration in preparing a
draft ordinance implementing a street and bicycle path lighting fee. Staff seeks council direction on
preferred approach and assumptions.
If you have questions regarding the proposed fee or the information in this memo, don’t hesitate to
contact me at 682-5241 or kurt.a.corey@ci.eugene.or.us.
C,S&PLF P55
ATTACHMENT TREET ATH IGHTING EE AGE OF
ATTACHMENT C
Public Works
Administration
City of Eugene
MEMORANDUMMEMORANDUM
858 Pearl Street
Eugene, Oregon 97401
(541) 682-5241
(541) 682-6826 FAX
Date:
November 15, 2007
To:
Mayor Piercy and City Council
From:
Kurt Corey, 682-5241
Public Works Director
Subject:
Street and Bicycle Path Lighting Fee Alternatives
This memorandum presents information to the City Council related to methodological options for
determining the fee structure and rates for a proposed street and bicycle path lighting fee. The fee
as proposed by the Council Subcommittee on Transportation Funding Solutions (subcommittee)
was generally defined to recognize the common benefit of arterial and collector lighting while
differentiating among levels of service provided to different areas of the city, with a number
implementation details to receive further definition and refinement through development of an
implementing ordinance and methodology. A range of alternatives exists for development of the fee
and are presented in this memorandum. Staff seeks further council direction on these alternatives
prior to developing a proposed ordinance and detailed methodology for implementing the fee.
Background
The principal purpose of street and bicycle path lighting is to provide additional visibility of streets,
sidewalks and paths at night to safeguard, facilitate and encourage vehicular, bicycle and pedestrian
traffic. Street and path lighting provides several benefits to the public, including:
(a) Reduction in night accidents
(b) Safer and easier pedestrian traffic.
(c) Prevention of crime and aiding police protection.
(d) Facilitation of traffic flow.
(e) Promotion of business and industry during night hours.
The intent of a street and bicycle path lighting fee is to provide a utility based funding mechanism to
pay for benefits to city residents and businesses provided by street and path lighting. Fees to fund
operation, maintenance and enhancement of the lighting system can be levied on all occupants of
properties benefited by the city’s street and bike path lighting services. As a fee for services, it
would be imposed on both public and private agencies and businesses. Typically, the person
C,S&PLF P15
ATTACHMENT TREET ATH IGHTING EEAGE OF
responsible for paying a premise’s water and sewer utility charges would be responsible for paying
the street light fee which in most cases is the occupant of improved property. Undeveloped
properties would be exempt.
Key considerations for determining the amount and structure of the lighting fee include:
Determine revenue requirements, uses and limitations on funds derived from fee;
?
Determine criteria, if any, for including capital project funding in the allowable uses of
?
funds;
Consider potential methods and implications of accounting for differing levels of service of
?
local area street lighting;
Evaluate policy options for neighborhood areas to request differing levels or “opt out” of
?
local street lighting service;
Establish rate structures for residential customers;
?
Determine sizing factors, if any, for non-residential fees; and,
?
Establish billing and collection systems.
?
Each key factor is further discussed below.
Basis for Revenue Requirements, Capital Funding
The subcommittee recommended fee revenue would be dedicated to provision of street and bike
path lighting with a target net annual revenue of approximately $850,000. This target was
estimated to cost the average household approximately $1.50 per month. The revenue from the fee
as recommended by the subcommittee would be dedicated to provision of street and bike path
lighting. The subcommittee also discussed the potential for a process by which neighborhoods
could request and pay for a higher or lower level of lighting service.
The city currently spends about $845,000 per year to operate and maintain the city’s street and bike
path lighting system. Of this total, about $440,000 is for lighting on arterial/collector streets and
$360,000 is for lighting on neighborhood streets. Cost for lighting bike paths is about $45,000.
The subcommittee target revenue considers operation and maintenance requirements but does not
include capital funding for rehabilitation, upgrades and new capital facilities. Staff suggest
considering the potential for capital rehabilitation and upgrades within allowable uses and the use of
other existing capital project funding sources and methods to fund construction of new street lights.
New street light construction currently falls into two general categories, lighting on arterial and
collector streets and bike paths, and lighting improvements on local streets. Three funding
mechanisms are used: transportation systems development charge revenues for lighting on arterial
and collector streets and bike paths; property owner funded improvements via assessments under a
local improvement district; and, developer-funded lighting improvements on local streets in
conjunction with new development. Local improvement districts provide a mechanism by which
neighborhoods can request and pay for a higher level of lighting service.
Rate Structure, Differing Levels of Service
C,S&PLF P25
ATTACHMENT TREET ATH IGHTING EE AGE OF
The subcommittee suggested a rate structure recognizing both the broad benefit of arterial,
collector and bike path lighting and differing levels of service for local area street lighting. Under
this approach, all customers would share in the costs of arterial and collector street lighting and
bicycle and pedestrian path lighting while local street lighting costs would vary by the level of
lighting service in an area.
At a minimum this would require establishing a rate structure with two levels: one for those
residences and nonresidential customers served only by the overall arterial/collector/bike path
lighting system and another for those customers served by both the overall arterial/collector/bike
path lighting and local area street lighting systems. Criteria for defining when a customer is served
by the local street lighting system would need to be developed.
Staff recommends allowing for at least two methods of accounting for differing levels of service of
local area street lighting in the draft ordinance, allowing either a system-wide flat fee or a multi-
level rate structure recognizing differing levels of service. A two-level fee recognizing the system-
wide benefit of arterial, collector and bike path lighting and the existence or lack of local area street
lighting is initially recommended. Depending on administrative and billing cost implications, options
for a system-wide flat fee may also be considered.
In either case, residential customers would pay the fee on a per dwelling unit basis. For non-
residential customers the fee could be imposed on either a per account or per address flat fee or
another nonresidential unit accounting for the size of a non-residential site. Given the relatively
small amount of the proposed fee and the administrative complexity and higher cost of accounting
for site characteristics, staff recommends a flat fee per premise address, varying only based on level
of local street lighting service.
“Opt Out” Program Options
Despite the benefits of street lighting, some residents in an area currently served by local street
lights may desire the option of having less nighttime lighting and would prefer darker skies in their
neighborhood area. While the rate structure described above would provide for a rate differential
should lights in an area be turned off, the City does not currently have a program or mechanism in
place to process such requests. Staff recommends developing a draft ordinance that allows for the
potential for such a program, returning to council at a future date to evaluate policy options,
potential criteria and costs for an administrative program allowing neighborhood areas to request
differing levels of service or to “opt out” of local street lighting service. A general assumption is
that customers in such areas would continue to share in the costs of arterial/collector/path lighting.
Billing and Administrative Issues
Billing and administrative issues for the street and bicycle path lighting fee are similar to those
described for the street utility fee. Please refer to Attachment B to the AIS for additional
background on general administrative and billing issues. Given the relatively small amount of the
proposed street and bicycle path lighting fee, concerns with administrative cost overhead are
potentially more significant. Any significant complexity which causes costs of billing and account
management to increase could result in a disproportionate share of revenues being committed to
overhead. Keeping the rates relatively simple and inexpensive to bill and administer will be
necessary for cost-effective implementation.
C,S&PLF P35
ATTACHMENT TREET ATH IGHTING EE AGE OF
Example Rates
While a final detailed ratemaking process incorporating all necessary data and applying all rate
factors has not yet been completed, staff has prepared example estimated fees using a rate model
based on the best currently-available data. Using this rate model and assuming a target net revenue
of $850,000 and 60,000 billed premises, results in a flat monthly rate of about $1.50 per unit
(premise) for customers with local area street lighting. Table A provides an example of a simple
rate structure’s customer categories and rate per unit of size for each category. This is purely an
example to provide context for the various options and factors considered in this memorandum.
Table A - Proposed Customer Categories and Monthly Fee per Unit of Measure
Category Description Unit of Arterial/ Local Area Total
Measure Collector/Lighting Lighting fee
Path fee fee per per unit w/
per unit unit local service
Residential Customer Categories
Residential Detached single-family homes, duplexes Dwelling $0.80 $0.70 $1.50
with local and apartments with local area lighting Unit
lighting service.
Residential Detached single-family homes, duplexes Dwelling $0.80 $0.00 $0.80
without local and apartments without local area lighting Unit
lighting service.
Non-residential Customer Categories
Non-residential Nonresidential customers with local Per $0.80 $0.70 $1.50
with local lighting service. For sites with multiple premise
lighting premises or uses with distinct street address at
addresses, a per address fee is a site
recommended.
Next Steps
Should Council direct that an ordinance establishing a lighting fee be prepared, staff will proceed
with the following steps:
Prepare draft ordinance reflecting proposed rates and fee structure for council review;
?
Refine rates, factors and adjustments to include in the proposed rates;
?
Prepare proposed ordinance and hold public hearing;
?
Work with EWEB to identify billing needs and options;
?
Gather and evaluate data necessary to implement the rate methodology and establish fee
?
amounts for all customers;
Implement billing systems and modifications to enable billing;
?
Conduct additional public outreach to customers and customer groups;
?
C,S&PLF P45
ATTACHMENT TREET ATH IGHTING EE AGE OF
Give notice of proposed fee, prepare methodology and administrative order implementing
?
the fee.
Summary
Utility fee rate methodologies in general and transportation system fees in particular by their nature
rely on assumptions to allocate costs and estimate usage in both an equitable and administratively
feasible manner. A number of methodological assumptions and approaches are technically and
legally feasible. Along with equity considerations, consistency, complexity and administrative cost
are factors to consider when selecting methodological approach and assumptions.
Staff has prepared a range of approaches and related assumptions for consideration in preparing a
draft ordinance implementing a street and bicycle path lighting fee. Staff seeks council direction on
preferred approach and assumptions.
If you have questions regarding the proposed fee or the information in this memo, don’t hesitate to
contact me at 682-5241 or kurt.a.corey@ci.eugene.or.us.
C,S&PLF P55
ATTACHMENT TREET ATH IGHTING EE AGE OF