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HomeMy WebLinkAboutItem B: Tax Levy for Pavement Preservation ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Tax Levy for Funding of Pavement Capital Preservation Projects Meeting Date: January 28, 2008 Agenda Item Number: B Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT This work session is a continuation of the discussion about funding for pavement capital preservation projects with a property tax. The City Council is asked to provide direction for development of a resolution to place a measure on the ballot in May of 2008. BACKGROUND Council Action History The City’s current five-cent local gas tax, together with other dedicated pavement preservation funding, has allowed the City to complete nearly $16.5 million in street preservation project work since 2003, with additional contracts in progress. This past year, more than 17.4 lane miles of slurry seal projects and 20.5 lane miles of rehabilitation projects were completed, including the overlay of portions of 18th th Avenue, Chambers Street and Bailey Hill Road. Projects planned for 2008 include portions of East 13 Avenue, Barger Drive, Chambers Street and Roosevelt Boulevard. In spite of these accomplishments, the backlog of needed repair work continues to grow in the face of rapidly rising construction costs and insufficient revenues. In late 2001, the City was facing an estimated $67 million backlog in pavement preservation work. By spring of 2007, the estimated cost of that backlog had grown to nearly $170 million and, with no new funding, was projected to grow to over $280 million within the next 10 years. With the potential loss of 40% of the current local fuel tax proceeds, the growth in the backlog of street repairs would accelerate even more rapidly. In January 2007, the council formed a Council Subcommittee on Transportation Funding Solutions (the “subcommittee”) to study transportation funding options and bring back creative solutions for adequately funding Eugene’s transportation system for cars, trucks, bicycles and pedestrians in ways that collect funds proportionately (or equally) from residents and non-residents who use the roads, are more consistent with sustainability goals, have direct connection to use of the roads, and give incentives to those who do not have a car or use one very little. This proposal for a bond measure for capital street repairs is an integral component in a package strategy recommended by the subcommittee, and approved by the council, to adequately and equitably fund Eugene’s transportation system for a variety of users. The package of proposed solutions included a street user fee based on parking spaces, and a street and bike/pedestrian path lighting fee, and an increase in the local motor vehicle fuel tax. To ensure continuation of a reliable revenue stream to support ongoing street operations, maintenance, and preservation while the council continues efforts for F:\CMO\2008 Council Agendas\M080128\S080128B.doc development and implementation of other elements of the package funding strategy, the City Manager is also recommending that tonight the council take action to extend the local fuel tax sunset provision by three additional years, leaving the fuel tax at five cents per gallon until February 28, 2011. In the course of its work, the subcommittee learned that, in order to completely eliminate the pavement reconstruction backlog within the next 10 years, an estimated $27 million in pavement preservation funding would be needed per year. The subcommittee deemed this revenue target to be too aggressive and, instead, recommended additional annual funding of $13 million to $14 million, bringing total pavement preservation funding up to $18 million per year. While this additional funding would not eliminate the backlog within 10 years, it was projected that it would stabilize the cost-effective annual overlay program and begin to reduce the reconstruction backlog. The subcommittee recommended that the transportation funding package include a capital local option levy generating approximately $6 million net revenues annually to fund pavement capital preservation projects. The City Council subsequently decided to allocate another $0.5 million to the capital local option levy instead of allocating this amount to a solid waste collection surcharge. In addition, the subcommittee recommended and the council agreed that $350,000 of that amount should be allocated each year for bike and pedestrian path capital preservation. On December 10, 2007, the council discussed a property tax approach to funding pavement capital preservation. Staff presented an approach using a short-term General Obligation (“GO”) bond. The council directed the City Manager to “bring a proposal to a future council work session for a GO Bond measure to fund $81 million of pavement capital preservation projects over 10 years within an appropriate timeframe to place the question on the May 2008 ballot. The proposal should include ballot measure language that provides for both a list of high priority pavement capital preservation projects and appropriate flexibility for planning activities and changing pavement capital preservation project priorities.” Restrictions on the Use of Bond Proceeds The focus of this council work session will be determining more specifically what to include in the resolution placing this measure on the ballot. The resolution will become part of the materials included in the voters’ pamphlet, and resolution language is the basis for the language contained in the ballot title (caption, question and summary). By state law, GO bond proceeds may only be used for capital purposes, not operations. For the transportation system, GO bond proceeds may be used for street construction, overlays and reconstruction. In addition to these statutory restrictions, spending from GO bonds will be limited by the language included in the measure presented to the voters. Measure language may be broad or may be narrower. Specific projects may be named in the measure language, but this is not legally required. In accordance with council direction, the resolution will include five principal areas of restriction on the use of the bond proceeds: Pavement capital preservation treatments: The measure would allow overlay to or reconstruction of the driving surface of streets, as well as the preservation of existing integral elements such as curbs, gutters, sidewalks, on-street bike lanes, traffic signals, street lights, medians, and traffic calming devices. In all cases, these preservation efforts would be undertaken only to preserve existing elements, not to expand the capacity of the system, for instance, by installing new lights or bike lanes. It F:\CMO\2008 Council Agendas\M080128\S080128B.doc is possible that pavement capital preservation efforts could be undertaken as part of a project that also included system capacity enhancements. In that case, pavement preservation bond funds would only be allocated for the preservation-related components, and system capacity enhancements would be funded with SDCs or other funds. Off-street bike/pedestrian path capital preservation activities: The City currently does not allocate any ongoing funds for off-street bike path capital preservation. A portion of pavement preservation bond funds could be used to overlay or reconstruct existing bike path lanes or, if the council were to so choose, to expand the local on- and off-street bicycling system. Proposed list of high-profile projects: A proposed list of high-profile projects is included as Attachment A. The criteria for choosing these projects were: ? Citizens have provided input about the unsatisfactory condition of certain major streets that are in need of reconstruction, and several of those have been included in this illustrative list. When survey results are available, the project list may change. ? According to the American Public Works Association, the cost of reconstructing a road on which maintenance has been deferred is five times as much as the cost to perform a timely overlay. One of the most cost-effective uses of pavement preservation dollars is to perform overlays on streets which are identified as likely to fall into the much more expensive “reconstruct” category if the overlay treatment is not performed in the upcoming year. Several of these “at risk” streets are included in the illustrative list of street projects to be funded first with bond proceeds. ? At the December 10 council work session, there was interest in ensuring that any list of projects to be associated with the bond measure be geographically distributed throughout the community to ensure that all areas of the City receive a benefit from the first use of bond proceeds. An illustrative map of proposed projects by geographic distribution is also shown in Attachment B. The City currently does not have a source of funding for the City’s share of street improvement projects that have been recognized by the council, such as the City’s share of costs for the Crest/Friendly/Storey or Maple/Elmira street improvements. The bond measure could include funding for the City’s share of these or other special street projects which the council felt would be appropriate for bond measure funding. Portion allocated to accommodate future changes in project priorities: Over the life of the bond measure, pavement conditions or circumstances could change, making it more fiscally prudent or a higher community priority to spend funds on projects which were not anticipated in 2008. For example, current street condition ratings, as determined by the City’s pavement management system and additional testing, may change due to unanticipated severe weather which might warrant priority overlays on streets not previously identified as “at risk” or not otherwise due for an overlay for several years. This category could also include contingency funding for any of the high-profile projects, where actual costs of preservation treatments exceed current cost projections. Engineering design and project management costs: In addition to the core costs of a preservation treatment, certain engineering and administrative functions are performed as an inherent part of any capital project and require project funding. A few common examples include: ? Testing of the existing pavement to verify the condition of the pavement and ensure that the appropriate pavement preservation treatment is done in the right timeframe; F:\CMO\2008 Council Agendas\M080128\S080128B.doc ? Preparation of the design and bid specifications for the project, including which sections are to be overlaid or reconstructed, and to what extent other street components will be affected, such as curbs, gutters, sidewalks, and traffic signals; ? Ensuring compliance with state contracting laws and rules, and monitoring the work of the contractors to ensure the City receives the services and value for which it has contracted; ? Coordination of project timelines with other public and private sector partners, so as to minimize the impact on neighboring businesses, residents and institutions. For example, with the reconstruction of Hilyard., coordinating efforts took place with local business owners, 4J and the University to minimize the project impacts on citizens; and ? Project coordination with utility partners, such as EWEB and Northwest Natural Gas, to help ensure that all work in the City’s road right of way is synchronized to minimize the number of construction disruptions and to obtain cost efficiencies across all agency projects. The proposed list of high profile projects included as Attachment A would be undertaken with bond proceeds. Attachment B includes a map illustrating where these proposed projects would occur. The cost of these high-profile projects, including the costs of project design and management, will account for an estimated one-third of the total bond spending over the 10-year period. As recommended by the subcommittee and endorsed by council, $350,000 of the annual bond proceeds would be dedicated for bike/pedestrian path capital preservation activities and would account for an estimated 5% of bond spending over the 10-year period. In subsequent years, that earmarked amount would increase by an inflation rate of 4.8%, along with the bond proceeds generated. The remaining two-thirds of bond spending would not be allocated in the resolution to specific projects. Instead, these funds could be spent on any pavement capital preservation treatments as defined in the ballot measure language and determined by the City’s pavement management system. The resolution would also include a provision for a regular review by an independent auditor for the purpose of issuing a report on the use of the bond proceeds. The auditor procedures would ascertain that the bond proceeds were used for the purposes, and in compliance with the restrictions, set forth in the ballot language. The auditor would furnish a written report to the council, which would also be made publicly available. Timing The subcommittee recommended that the measure be placed on the May 20, 2008 ballot. Should the council wish to proceed with this election date, a resolution placing the measure on the ballot should be approved no later than February 18 to comply with the election time lines for the May election. The council tentative agenda includes a meeting on February 11 to place the measure on the May ballot. Once the council passes a resolution placing the measure on the ballot, the City Attorney will create a ballot title (caption, question and summary), which will be published in the Register-Guard. Citizens will have an opportunity to challenge the ballot language by filing a petition with the Lane County Circuit Court within seven business days of the date that the City Attorney files the ballot title with the City Recorder. If the council acts to adopt the resolution no later than February 18, it should allow enough time for the Lane County Circuit Court to decide any ballot title challenge in time for the measure to be placed on the May ballot. F:\CMO\2008 Council Agendas\M080128\S080128B.doc In early January, a survey was conducted to determine the attitudes of likely voters towards the proposed bond measure and other street funding sources. Citizens were asked a series of questions about the importance of street repairs versus other City services, the potential funding solutions and costs for the average taxpayer, and the relative importance of components of the street, bike and pedestrian transportation system. A summary of the survey results will be presented at this meeting so that the council may use that information when considering how to structure the bond measure. 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 reconstruction.” COUNCIL OPTIONS The City Council has before it several policy decisions related to the size of the measure, restrictions on uses of the revenue and timing for the ballot measure: ? Measure size: The council recommended $6.5 million of spending in the first year, adjusted for inflation, for a total measure of $81 million. The City Council could choose a different amount for the bond measure. Attachment C includes the effect on taxpayers from different bond amounts. ? Project list: A proposed project list to be included in the measure is provided as Attachment A. The council could modify the project list or adopt other measure language as deemed appropriate. ? Timing of the ballot measure: Current direction is for a May measure. The council could reconsider placing this issue on the ballot for the November 2008 election, based on factors previously outlined. CITY MANAGER’S RECOMMENDATION The City Manager recommends that a GO Bond measure to fund $81million of pavement capital preservation projects ($6.5 million plus inflation annually) over 10 years should be prepared for the May 2008 ballot. The resolution placing the measure on the ballot should include a high profile project list and incorporate any additional language as directed by the council at this meeting. SUGGESTED MOTION Direct the City Manager to bring a resolution placing an $81 million GO bond measure on the May 2008 ballot, consistent with the proposed project list included as Attachment A. ATTACHMENTS A. Proposed List of High Profile Projects to be Included in the Bond Measure B. Map of High Profile Projects Included in Bond Resolution C. Impact on Taxpayer from Different Bond Amounts F:\CMO\2008 Council Agendas\M080128\S080128B.doc FOR MORE INFORMATION Finance Contact: Sue Cutsogeorge, Financial Analysis Manager Telephone: 682-5589 Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us F:\CMO\2008 Council Agendas\M080128\S080128B.doc ATTACHMENT A PAVEMENT PRESERVATION BOND PROJECTS Street Begin End 18th Avenue Chambers Street City View Street 18th Avenue Hilyard Street Washington Street 18th Ave Josh Street Bertelsen Road th Bailey Hill Road 18 Avenue Warren Street thrd Patterson Street 13 Avenue 23 Avenue Royal Avenue Hwy 99 Terry Street Harlow Road I-5 Coburg Road West Amazon Drive Hilyard Street Fox Hollow Road thth Willamette St 29 Avenue 47 Avenue thnd Willamette St 47 Avenue 52 Avenue Martin Luther King Boulevard I-5 Centennial Loop Goodpasture Island Road Norkenzie Road Ridgeway Drive Goodpasture Island Road Delta Highway Bridge Kingsley Road Seneca Road Roosevelt Boulevard 7th Place th Garfield Street Roosevelt Boulevard 11 Avenue nd Blair Boulevard 2 Avenue Monroe Street 5th Avenue High Street Blair Street Railroad Boulevard Van Buren Street Cross Street ATTACHMENT C Impact on Taxpayers from Different Bond Amounts First Year Total Cost to Project Issuance Bond Average Average Spending Costs Amount Tax Rate Taxpayer $5,000,000 $100,000 $62,400,000 $0.48 $84 $6,000,000 $100,000 $74,900,000 $0.57 $100 $6,500,000 $100,000 $81,100,000 $0.62 $109 $7,000,000 $120,000 $87,450,000 $0.67 $117 $8,000,000 $120,000 $99,700,000 $0.76 $133 $9,000,000 $130,000 $112,250,000 $0.86 $151 $10,000,000 $130,000 $124,750,000 $0.95 $166