HomeMy WebLinkAboutItem B: Funding Strategies for Transportation System Operations, Maintenance, and Preservation
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: Funding Strategies for Transportation System Operations, Maintenance,
and Preservation
Meeting Date: January 22, 2007 Agenda Item: B
Department: Public Works Staff Contact: Kurt Corey
www.eugene-or.gov Contact Telephone Number: 682-5241
ISSUE STATEMENT
Eugene lacks adequate funding to operate, maintain, and preserve its local transportation system. This
lack is manifested in a current backlog of more than $100 million in pavement preservation projects and a
projected FY08 operating deficit of nearly $1.5 million for operation and maintenance activities in the
Road Fund.
This work session provides an opportunity for the council to consider additional or modified funding
alternatives in a strategy to provide stable and adequate funding to operate, maintain, and preserve the
city’s transportation system. Funding options presented here for consideration include a property tax
levy, an increase to the current local motor vehicle fuel tax, a transportation system maintenance fee and a
commuter tax.
BACKGROUND
Previous Council Action and History
On September 26, 2005, the council reviewed and discussed the financial status and fund forecast for
Eugene’s Road Fund. Based on that discussion, the council directed the City Manager to develop a FY07
Road Fund budget at the current service level and to bring back a proposal for a new revenue funding
package which would not only address the projected ongoing operating deficit in street operations and
maintenance but would also generate additional revenue to be dedicated to the backlog of unfunded
projects in the pavement preservation program.
On February 27, 2006, the council reviewed and discussed a number of potential revenue strategies to
address unmet transportation system funding needs. At that session, the council directed the City
Manager to bring back a proposal for reestablishing the previously repealed transportation system
maintenance fee (TSMF) to address not only the projected ongoing operating deficits in Road Fund street
operations and maintenance, but also to generate additional revenue to address the remaining annual
funding gaps in the pavement and off-street bike path preservation programs.
On November 27, 2006, the council considered adoption of an ordinance establishing a transportation
system maintenance fee (TSMF) for the purpose of generating revenue to meet the operational,
maintenance and preservation needs of the transportation system. At that meeting, the council voted to
postpone action on adoption of the proposed ordinance and, instead, directed the City Manager to
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schedule this work session to consider additions or alterations to the proposed funding strategy, including
a TSMF, a gas tax, a bond levy and a commuter tax.
The council’s direction to consider a TSMF is the result of a process that began in 2001 when the
Citizen’s Subcommittee on Transportation System Funding presented its recommendation that the council
implement a transportation funding package consisting of a combination local motor vehicle fuel tax and
transportation system maintenance fee for the purpose of generating an additional $9 million annually to
address the City’s critical transportation system funding needs. A copy of that subcommittee report and
final recommendation is included here as Attachment D. Subsequently, the council in December 2002
approved an ordinance establishing a TSMF. In September 2003, the council voted to repeal the TSMF
ordinance, citing concerns about the impact on local businesses and the hope for collaborative solutions
with partner agencies, including Lane County.
In January 2003, the council approved a related transportation revenue measure, a 3-cent-per-gallon local
motor vehicle fuel tax. A 2-cent increase to the motor vehicle fuel tax was approved in January 2005,
along with a sunset provision that would cause the tax to revert to 3 cents-per-gallon on February 29,
2008. The council added the sunset provision in the third year of the increase, citing the hope that three
years would allow sufficient time to complete a comprehensive review of available funding options in the
effort to develop a more permanent funding strategy for transportation system needs.
Alternative Funding Options
In an effort to provide a diversified and adaptable funding strategy for addressing the city’s highest-
priority transportation system service needs, the council could consider the implementation of one or
more alternative funding options, including but not limited to the ones discussed below.
Property Tax Funding Options
Attachment A provides a comparison and contrast of two potential sources of property tax funding for
pavement preservations projects: General Obligation Bonds (GO Bonds) and a 10-year Capital Local
Option Levy. Additionally, Attachment B provides a more complete overview of these two funding
options. For the reasons articulated in Attachment A, staff recommends the use of a capital local option
levy over a GO bond as the preferred property tax funding mechanism, should the council decide to
include a property tax component in a pavement preservation funding package.
Proceeds from these funding options could be used for both pavement overlay and reconstruction projects.
However, staff is recommending, should the council move forward with a property tax funding option,
that the proceeds be directed to reconstruction projects, since the council has other pavement preservation
funding sources for overlay projects (e.g., the 5-cent gas tax and the reimbursement component of
transportation SDCs).
Increase in Motor Vehicle Fuel Tax
The council could consider raising the motor vehicle fuel tax (gas tax) from the current 5 cents-per-gallon
to 8 cents-per-gallon and earmarking the revenue generated from the additional 3 cents to Road Fund
operations and maintenance activities (about $2 million per year). To ensure continuation of a reliable tax
revenue stream at that level, staff recommends that the council repeal the sunset provision enacted in
2005, which would otherwise cause the tax to revert to the 3-cent level as of February 29, 2008.
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Transportation System Maintenance Fee (TSMF)
On November 22, 2006, the council postponed scheduled action on the adoption of a TSMF. Therefore,
the council could choose to adopt either that proposed ordinance or a revised version. Depending on the
nature of the revisions made, an additional public hearing may be required prior to taking final action on
an ordinance.
Should the council adopt an ordinance increasing the motor vehicle fuel tax and dedicating the additional
revenue to Road Fund operations, as previously discussed, the council could also consider modifying the
proposed TSMF ordinance to eliminate the “flat base rate” component (estimated at $1.87 per month per
account for FY08) which was intended to generate $1.5 million in FY08 to address the projected Road
Fund operating shortfall. Proceeds generated from the remaining “variable trip-rate” component would
then be used for capital pavement preservation projects.
Commuter Tax
Another potential transportation funding option for which council requested additional information was a
commuter tax. This is a tax or fee based upon persons who work but do not live in a jurisdiction.
Attachment C provides a more complete overview of this funding option. Due to unresolved questions
regarding the City’s legal authority to establish such a fee, staff at this time has no recommendation to
offer regarding this potential funding option.
RELATED COUNCIL GOALS AND POLICIES
The council’s Vision and Goals Statement with respect to Fair, Stable and Adequate Financial Resources
reaffirms commitment to “a local government whose ongoing financial resources are based on a fair and
equitable system of taxation and other revenue sources and are adequate to maintain and deliver
municipal services.” In previous years, the council has identified specific work plan items to “identify
and implement funding sources (including possible reallocation of existing sources) for operation,
maintenance and preservation of the transportation system.”
Additionally, the City’s Financial Management Goals and Policy, A.4, states that the City’s municipal
service priority Level 2 (second only to the preservation of the public safety system) is to “maintain and
replace the City’s fixed assets, which includes… infrastructure…so as to optimize their life.” There are
also several financial policies related to the use of specific revenue sources. Policy C.4 states that the City
will secure a dedicated revenue source to fund general capital projects to the extent possible. Policy D.3
states that the use of GO bonds will be limited to major capital construction or improvements in support
of general municipal services. The council also has several financial policies stating that, to the extent
possible, non-recurring resources, such as a temporary property tax levy, should be used for non-recurring
expenses, such as capital projects.
COUNCIL OPTIONS
The funding alternatives and strategies contemplated here are intended to help achieve greater long-term
financial stability for the operations, maintenance and preservation of the city’s transportation service
system and are summarized as follows:
Option 1: The council could choose to take no action at this time with regard to the need for
additional funding for transportation system OM&P, with the result that the Road Fund
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will incur significant annual operating deficits and eventually sustain significant service
cuts, and the backlog of needed road repairs will rapidly continue to grow.
Option 2: The council could direct the City Manager to conduct a public hearing on February 20,
2007, on a proposed amendment to Ordinance No. 20278, increasing the Business License
Tax on Motor Vehicle Fuel Dealers by 3 cents to the 8-cent level and repealing the sunset
provision on the 2-cent fuel tax increase enacted in 2005, with the intent that the proceeds
from the additional 3 cents be dedicated to funding Road Fund operations and maintenance
activities.
Option 3: The council could direct the City Manager to bring back a resolution directing that a
measure be placed on the November 2008 ballot asking voters to authorize property tax
levy (bond or capital local option levy) for the purpose of providing funding for pavement
reconstruction capital projects.
Option 4: The council could adopt the proposed TSMF ordinance, in its current proposed form or
with modifications, in order to generate annual revenue to fund pavement preservation
capital projects.
Option 5: The council could direct the City Manager to bring back for further council consideration
additional information regarding an ordinance establishing a commuter tax.
Option 6: The council could direct the City Manager to do any combination or variation of the above
options.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends that the council take action to approve a combination of options 2, 3 (in
the form of a capital local option levy) and 4 in order provide a diversified and adaptable funding strategy
for addressing the city’s highest-priority transportation system service needs now and into the future.
Increasing the local motor vehicle fuel tax by 3 cents to the 8-cent level would provide an additional $2
million annually to address the projected ongoing operating deficits in the Road Fund operations and
maintenance activities. While the projected operating deficit is $1.5 million for FY08, that annual deficit
is projected to exceed $2 million by FY10.
Voter authorization for a capital local option levy in combination with a TSMF would provide the council
with a flexible funding strategy by which to size the revenue target in any one year or for a period of
years, in order to provide sufficient ongoing capital funding to reduce the pavement preservation backlog.
SUGGESTED MOTIONS
1) Move to direct the City Manager to conduct a public hearing on February 20, 2007, on a proposed
amendment to Ordinance No. 20278, increasing the Business License Tax on Motor Vehicle Fuel
Dealers by 3 cents to the 8-cent level and repealing the sunset provision on the 2-cent fuel tax increase
enacted in 2005, with the intention that the proceeds from the additional 3 cents be dedicated to Road
Fund operations and maintenance activities.
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2) Move to direct the City Manager to bring back a resolution directing that a measure be placed on the
November 2008 ballot asking voters to authorize a capital local option levy for the purpose of
providing funding for pavement reconstruction capital projects.
3) Move to direct the City Manager to bring back a revised TSMF ordinance with modifications to
eliminate the flat base rate component, for the purpose of generating annual revenue to fund pavement
preservation capital projects.
ATTACHMENTS
A. Staff Memo: Property Tax Funding for Pavement Preservation Projects
B. Overview of Property Tax Options - General Obligation Bonds and Capital Local Option Levy
C. Overview of Commuter Tax
D. Budget Committee Citizen Subcommittee “Interim Report on Transportation System
Funding” and “Final Recommendation on Transportation Funding Issues” from 2001
FOR MORE INFORMATION
Staff Contact: Kurt Corey
Telephone: 682-5241
Staff E-Mail: kurt.a.corey@ci.eugene.or.us
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ATTACHMENT A
Central Services
Finance Division
Financial Analysis
City of Eugene
th
100 West 10 Ave, Suite 400
M
Eugene, Oregon 97401
EMORANDUM
(541) 682-5589
(541) 682-5802 FAX
www.eugene-or.gov
Date:
January 12, 2007
To:
Mayor and City Council
From:
Sue Cutsogeorge, Financial Analysis Manager, 682-5589
Subject
: Property Tax Funding for Pavement Preservation Projects
There are two potential sources of property tax funding for pavement preservation projects: General
Obligation Bonds (GO Bonds) and a 10-year capital local option levy. The templates prepared for the
Budget Committee Subcommittee discussion on funding options were updated for the GO Bonds and the
Capital Local Option Levy. Those are included in the packet as Attachment B.
Briefly, the main differences between GO Bonds and a capital local option levy are: (1) using bonds
requires borrowing money, with all the associated costs, while a capital local option levy is a pay-as-you-
go funding approach; and (2) the local option levy would fall within the Measure 5 tax rate cap, and GO
Bonds would not.
If the council desires to include a property tax component in a pavement preservation funding package,
staff recommends that a capital local option levy would be the preferred property tax-based funding
mechanism for this purpose.
The character of the pavement preservation projects that would be funded with either of these two
property tax options are such that new projects would be initiated annually over a multi-year period. By
contrast, GO Bonds are most advantageous for projects that require a large sum of money at the beginning
of a major capital project, such as construction of a new fire station. Because GO Bonds are actually a
form of borrowing money, the City would have to pay debt issuance costs estimated at about $250,000 for
a $10 million bond measure. In addition, the City would have to pay interest costs on the borrowing,
estimated at about $5 million for a $10 million, 15-year bond issue. Issuance of GO Bonds would be
counted against the City’s debt policy limit of 1% of real market value. Given that the City is working on
a City Hall project with a competing need for GO Bonding, there would probably not be sufficient room
under the debt policy cap to accommodate both projects in the next few years.
By contrast, a local option levy for capital purposes would provide new revenues each year that would
approximately match the pavement preservation expenditures that would be expected to occur in that
year. The staff effort and cost for implementing a local option levy are significantly less than the effort
and cost for a GO Bond. No interest would be paid on a local option levy. A local option levy would
count against the Measure 5 tax rate cap of $10 per $1000 of real market value for any general
government taxes. In FY07, the general government tax rate was $9.14 per $1000, and is projected to go
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down in FY08 when the youth levy expires and the library levy is reduced by half. The rate is expected to
go down again in FY11 when the urban renewal special levy to pay for the library bonds is eliminated.
There appears to be sufficient room under the cap to accommodate a capital local option levy with an
average tax rate of $0.75 per $1000 of real market value, leaving some room for property value
fluctuations during the levy term. This tax rate would generate capital spending of about $10 million per
year. Any room under the cap is shared between the City, County and Urban Renewal Agency, so there
would be less room for the City’s governmental partners or for the City to contemplate other local option
levy funding during the term of the pavement preservation capital local option levy.
Should council decide to include a property tax component in a pavement preservation funding package,
staff would recommend a capital local option levy over a GO bond as the preferred property tax funding
mechanism because a) the local option levy could provide sufficient funding under the Measure 5 tax rate
cap without incurring debt or using limited GO bonding capacity, and b) the local option levy is a less
expensive method than GO bonds for providing funding for pavement preservation projects.
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ATTACHMENT B
Transportation System Funding
Overview of Property Tax Options
General Obligation Bonds
Brief Description General Obligation (GO) bonds are a borrowing or issuance of debt, the repayment of
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of Funding which is backed by a property tax levied upon all taxable property in the City. GO
Option
bonds must be approved by the voters.
Precedence General Obligation bonded debt is used extensively by local governments across the
(prior Council United States for a variety of purposes. The City currently has outstanding GO bonds
history, other issued for parks and open space projects, the airport expansion project and several
jurisdictions public safety facility projects. The City last issued GO bonds for transportation projects
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in 1974, with the issuance of $3.3 million of Street and Sewer Project bonds. Examples
practice, etc.)
of Oregon cities that have used GO bonds for transportation projects are the City of
Salem, City of Lake Oswego and the City of Corvallis.
Calculation Base The amount of a property tax levy for GO bonds depends on the annual payments on
and Typical the bonds. The levy calculation would be done annually during the budget process and
Ratesit would take into account discounts and delinquencies in property tax payments,
interest earnings on fund balances, and an Unappropriated Ending Fund Balance to
cover any debt payments due during July through November. The rate would be based
on the total levy amount divided by the total taxable assessed value for real and
personal property in the City. Individual taxpayers would pay the tax rate times their
individual assessed value.
Estimated For each $10 million of pavement preservation projects funded with 15-year GO bonds,
Revenue Yield, the City would need to levy an average of $1 million per year. The cost would average
Administration/ approximately $.07 per $1000 of assessed value over the 15 year period, or about $12
Enforcement per year for the average taxpayer ($180 total over 15 years).
Costs
Property tax levies for GO bonds are exempt from the $10 per $1000 of real market
value tax rate cap for all general governments under Measure 5.
Property tax collections are administered by the County. They prepare the tax bills,
collect the funds, and remit the appropriate amount to the City on a regular basis.
Enforcement is done by both the County and the City in the foreclosure process.
Legal Authority New or additional property taxes must be approved by a majority of the people voting
and Restrictions in an election in November of an even-numbered year. In any other election, there must
on Usealso be at least a 50% turnout of voters (the double-majority requirement).
GO bonds may only be used for capital construction and capital improvements but
A@A@
not for maintenance and repairs, the need for which could be reasonably anticipated.
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The definition of maintenance and repairs includes an exception for street and highway
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construction, overlay and reconstruction.
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General Obligation Bonds
Incidence (who The tax is paid by all property owners within City limits. Property owners include
pays?)business and residences. Businesses may choose to pass the tax on to their customers.
In Eugene, approximately 69% of the taxable assessed value in FY07 is for residential
property and 31% is for non-residential property. The actual taxes paid may differ from
these percentages, however, due to Measure 5 tax rate compression.
Fairness/Equity The property tax is a proportional tax on the value of real and personal property for both
Issuesbusinesses and residences. It does not take into account the ability of the taxpayer to
pay the tax. There are numerous exemptions from the property tax designed to promote
a variety of policy goals, including some designed to lessen the impact on non-profit
organizations and low-income owners and tenants.
Bond financing is a way to more closely match the users of a capital project with those
that must pay for the project. Property taxes are paid only by property owners within
the City limits. Any users of the bond-financed assets that live outside the City do not
pay for a share of the use of that asset.
Assessment of This funding source would generate a lump-sum, which would be spent over a period of
Financial several years on various projects.
Stability and
Political The property tax is understandable to the voters (as opposed to a new form of user fee
Feasibilityor tax), making it politically feasible from that standpoint. GO bond proposals have had
mixed success in the Eugene area in recent years. There have been six GO bond
proposals on the ballot from Eugene since 1998, and three of those have passed (parks,
recreation and open space and fire projects). Council members have expressed
dissatisfaction with heavy reliance on property taxes in various forums in past years.
Potential This tax would increase the cost of owning a home or business, and potentially increase
Economic the cost of leasing or renting a home or business, if the property owner passes on the tax
Impactsincrease.
Consistency with Council has two financial policies around capital funding and debt issuance, both of
Council Goals which are consistent with the use of GO bonds for funding transportation projects.
and PoliciesPolicy C.4 states that the City will secure a dedicated revenue source to fund general
capital projects to the extent possible. Policy D.3 states that the use of GO bonds will
be limited to major capital construction or improvements in support of general muni-
cipal services. The City also has debt policies that limit net direct debt, such as GO
bonds, to 1% of the real market value of property within the City.
Other A number of Oregon cities have used GO bonds to pay for transportation projects in the
Jurisdiction recent past. The City of Salem secured voter approval for GO bonds for a variety of
Experiencestransportation projects in the past, but the last successful measure was in 1995. Since
then, Salem went to the voters in 2000 with a $45.8 million GO bond measure for
transportation improvements and that measure was defeated. They are contemplating a
$60 million transportation bond measure in 2008. There was one Oregon GO bond
measure on the November 2006 ballot for Polk County road repair and improvement
projects. The measure was for $20 million, and it was successful.
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Capital Local Option Levy
Brief Description A local option levy is a temporary property tax that is levied on all taxable property
of Funding within the City limits. A local option levy does not create debt and is not a “bond.”
OptionThe City could impose a capital local option levy for up to 10 years, or for other
purposes for a maximum of five years.
Precedence Temporary property tax levies are used extensively by local governments across the
(prior Council United States. The City has used local option levies to pay for library and recreation
history, other services. The City has not proposed any capital local option levies in the past. Other
jurisdictions Oregon jurisdictions occasionally use capital local option levies, mainly for public
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practice, etc.)safety facility projects.
Calculation Base The amount of a local option levy depends on the desired level of spending for the
and Typical program to be funded with the levy. The levy calculation will take into account
Ratesdiscounts and delinquencies in property tax payments, interest earnings on fund
balances, and a provision for a two-month Unappropriated Ending Fund Balance, if
applicable. The rate will be based on the total levy amount divided by the total taxable
assessed value for real and personal property in the City. Individual taxpayers will pay
the tax rate times their individual assessed value.
There are two ways to structure a local option levy. Under a tax rate levy, the City
would impose a pre-determined tax rate each year of the levy and receive whatever
amount of revenue that was generated by the assessed value within the City each year.
Under a uniform amount levy, the City would impose the same amount of revenue to be
generated each year over the term of the levy. The tax rate would change from year to
year, based on the amount of total assessed value in the City.
Estimated To fund $10 million of pavement preservation capital projects with a 10-year capital
Revenue Yield, local option levy (or about $1.1 million per year, after discounts and delinquencies), the
Administration/ City would need to levy an average of approximately $0.07 per $1000 of assessed value
Enforcement in each year of the 10-year period. This would cost an average of $12 per year for the
Costsaverage taxpayer over the 10-year period ($120 total over ten years).
Local option levies are subject to the $10 per $1000 of real market value tax rate cap for
all general governments under Measure 5. Under Measure 50, local option levies are
the first to be reduced in the event of tax rate compression. This means that if the com-
bined total tax levy for the overlapping general governments exceeds the Measure 5
cap, any local option levies would be proportionally reduced until the tax rate limit is
satisfied. In FY07, the general government tax rate was $9.14 per $1000, and is
projected to go down in FY08 when the youth levy expires and the library levy is
reduced by half. The rate is expected to go down again in FY11 when the urban
renewal special levy to pay for the library bonds is eliminated.
Property tax collections are administered by the County. They prepare the tax bills,
collect the funds, and remit the appropriate amount to the City on a regular basis.
Enforcement is done by both the County and the City in the foreclosure process.
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Capital Local Option Levy
Legal Authority New or additional property taxes must be approved by a majority of the people voting
and Restrictions in an election in November of an even-numbered year. In any other election, there must
on Usealso be at least a 50% turnout of voters (the double-majority requirement). Voters may
approve a 10-year capital local option levy at one election, without requiring any
renewals over the 10-year period.
A 10-year capital local option levy can only be used for capital purposes, which are
specifically defined in the statutes. For pavement preservation, the proceeds from a
capital local option levy could be used for street construction, overlays and
reconstruction, as allowed by the specific language of the ballot measure.
The projects funded with a capital levy must have an average useful life of at least the
term of the levy (i.e., projects with an average useful life of at least 10 years for a 10-
year capital levy). Proceeds could be spent over a longer period than the levy—for
example, levied over a 10-year period but spent over 15 years.
Incidence (who The tax is paid by all property owners within City limits. Property owners include
pays?)business and residences. Businesses may choose to pass the tax on to their customers.
In Eugene, approximately 69% of the taxable assessed value in FY07 is for residential
property and 31% is for non-residential property. The actual taxes paid may differ from
these percentages, however, due to Measure 5 tax rate compression.
Fairness/Equity The property tax is a proportional tax on the value of real and personal property for both
Issuesbusinesses and residences. It does not take into account the ability of the taxpayer to
pay the tax. There are numerous exemptions from the property tax designed to promote
a variety of policy goals, including some designed to lessen the impact on non-profit
organizations and low-income owners and tenants.
Projects with a useful life of more than 10 years would be paid for by those taxpayers
who live in the City only during the 10 year life of the levy, and those citizens that use
the facilities beyond the 10 year life of the levy would receive those services without
paying for them.
Property taxes are paid only by property owners within the City limits. Any users of the
property tax-financed assets that live outside the City do not pay for a share of the use
of that asset.
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Capital Local Option Levy
Assessment of This tax would generate capital funding on a pay-as-you-go basis. The level of
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Financial
revenue generated would be static during the term of the levy (under a uniform amount
Stability and levy) or could increase or decrease each year depending on the change in assessed value
Political
of the City (under a tax rate levy).
Feasibility
The property tax is an understandable and familiar funding mechanism to the voters (as
opposed to a new form of user fee or taxes), making it politically feasible from that
standpoint. The City’s local option levy proposals have been successful in recent years.
There have been five City of Eugene local option levy proposals on the ballot from
Eugene or Lane County since 1998, and all of those have been successful.
Council members have expressed dissatisfaction with heavy reliance on limited term
property tax levies to fund on-going services in recent years. As a result, the youth
levy was not renewed when it expired in FY07, and the library levy was cut in half,
with plans to not renew it when the levy expires in FY11. A capital local option levy to
fund pavement preservation backlog would be different than a shorter-term local option
levy to fund on-going services, however. A capital local option levy would be an
appropriate funding mechanism for those capital projects, according to the City’s
financial policies.
Potential This tax would increase the cost of owning a home or business, and potentially increase
Economic the cost of leasing or renting a home or business, if the property owner passes on the tax
Impactsincrease.
Consistency with Council has several financial policies stating that, to the extent possible, non-recurring
Council Goals resources, such as a temporary property tax levy, should be used for non-recurring
and Policiesexpenses, such as capital projects. Use of a capital local option levy to pay for a
backlog of pavement preservation projects would be consistent with that policy.
Other There is no comprehensive database of statistics on which jurisdictions use local option
Jurisdiction levies or for what purposes. Fire districts seem to be the most frequent users of capital
Experienceslocal option levies. On the November 2006 ballot, the Colton Fire District had a 10-
year capital local option levy on the ballot for a rate of $1.25/$1000 of assessed value.
The City of Cornelius also had a 10-year levy for police and fire equipment on the
ballot, with a tax rate of $0.46/$1000 of assessed value. Both measures failed.
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ATTACHMENT C
Transportation System Funding
Overview of Commuter Tax
Commuter Tax
A commuter tax or fee is designed to generate revenue based on persons who work in a
Brief
jurisdiction, but who do not live in that jurisdiction. The tax or fee could be levied on an
Description of
employer based on the number of employees who live outside the City or the payroll
Funding Option
generated by those employees, or it could be a personal income tax on those employees.
A commuter tax is typically imposed in conjunction with a parallel tax on residents at the
same or a different rate. In this case only the tax elements that apply to nonresident
workers actually make up the commuter tax.
Precedence A commuter tax has never been implemented by the City of Eugene. Staff is unaware of
(prior Council any other jurisdiction in Oregon that has implemented a commuter tax. There are a
history, other number of cities and counties in other states that levy a commuter tax using one or
jurisdictions another of the methods described here, typically in conjunction with a parallel tax on
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practice, etc.)residents.
The following are methods that have been used to impose a commuter tax by other
Calculation Base
jurisdictions, together with rough estimates of the calculation base for in Eugene.
and Typical
1.A tax levied on each employer for that portion of total payroll paid within the
Rates
jurisdiction that is paid to non-resident workers. Annual total payroll for all
workers is about $3 billion, while payroll for non-resident workers only is initially
estimated to be around $1.5 billion.
2.A tax levied on that portion of a non-resident individual’s taxable income that is
earned within the jurisdiction. Annual taxable personal income earned in Eugene
by non-residents may be in the neighborhood of $1 billion, while total taxable
income earned in Eugene by all workers may be $2 billion.
3.A business privilege fee levied on employers on a per capita basis for each non-
resident worker employed within the jurisdiction. About 40,000 jobs are held by
non-residents, out of a total of close to 80,000 jobs within Eugene.
Jurisdictions with commuter taxes in the form of business privilege fees generally charge
from $25 up to $50 per worker per year. Among jurisdictions with commuter taxes on
payroll or personal income, the tax rates range from 0.25% to over 2%.
The numbers provided here are initial, rough estimates based upon information available
from the Oregon Employment Division. Example rates are drawn from a preliminary
review of readily available information on existing commuter taxes. There are many
outstanding questions and additional research and analysis will be necessary.
1
Commuter Tax
Estimated Rough estimates of gross revenue yields for the City of Eugene may be as follows for
Revenue Yield, each method applied to non-residents only. If parallel taxes were applied to residents
Administration/along with the commuter tax the revenue would be approximately doubled.
Enforcement
1.Approximately $3.8 million per 0.25% tax rate applied to non-resident payroll.
Costs
2.Approximately $2.5 million per 0.25% tax rate on non-resident personal income.
3.Approximately $1 million for each $25 annual per capita non-resident business
license fee imposed.
Administration and enforcement mechanisms and costs are as yet undetermined and will
vary for each method. Currently the State of Oregon Department of Revenue (DOR)
collects a payroll tax on behalf of Lane Transit District, at a cost to LTD of about
$300,000 per year. However the LTD payroll tax is not based upon place of residence of
the workers, and furthermore is governed by state statutes specific to transit districts.
State statutes require the DOR to collect the tax on behalf of LTD. In recent years the
DOR collected an income tax for Multnomah County under existing statutes permitting
such an arrangement, but the tax was based upon total taxable income of the taxpayer,
rather than where a portion of personal income was earned.
It is an open question as to whether the DOR would administer and collect a payroll or
personal income commuter tax on behalf of the City. The City would most likely have to
administer and enforce a business privilege fee itself, probably requiring the addition of up
to several FTE. It may be reasonable to assume that, depending on the method used,
administration and enforcement of a commuter tax would cost the City something in the
range of $300,000 to $500,000 a year.
Legal Authority
The City Attorney is reviewing the City’s legal authority to establish a tax or fee solely on
and Restrictions
non-residents and restrictions, if any, on the use of proceeds from a commuter tax.
on Use
Incidence (who This depends on the method used for a commuter tax.
pays?)
1.Employers located in Eugene who employ non-resident workers would be liable
for the employer payroll tax or per capita business license fee.
2.Individuals who live outside but who earn income within the City would be liable
for a non-resident personal income tax.
Fairness/Equity A commuter tax is based on the idea that non-residents who work in the City should be
Issuestaxed so they contribute a share of tax revenue towards the cost of services from which
they benefit. Using this as a basis, potential equity issues are as follows.
1.Employers within the City are already subject to property taxes, unless exempt by
state law, and also generally pay the City’s fuel taxes. A commuter payroll tax or a
per capita business license fee would also be paid by employers and would in all
likelihood not be passed on exclusively to non-resident workers.
2.An income tax on non-residents would directly tax workers who commute to
Eugene and who do not pay Eugene property taxes. These workers do pay City
motor vehicle fuel taxes to the extent that they buy their gas within the City limits.
If the revenue helps fund services that benefit commuters, then this method is
more likely to advance fairness or equity than the other methods.
2
The commuter tax would be an ongoing revenue source, fluctuating from year to year to
Assessment of
the extent that there are swings in the number of non-resident workers or their personal
Financial
income earned within the City. In times of a general economic slowdown, revenue would
Stability and
drop, then rise again in a recovery. Long-term changes in the distribution of metropolitan
Political
area urban development, business location decisions and City annexation practices would
Feasibility
affect the growth in revenue from a commuter tax.
Political feasibility of a commuter tax is difficult to judge since it is a new idea in Oregon.
Implementation of a payroll tax or per capita business license fee would be of concern to
Eugene employers. A non-resident income tax would potentially be of concern to
unincorporated Lane County, Springfield, Junction City and other area cities, since
residents of those jurisdictions would be subject to a City of Eugene tax. Eugene residents
who work outside the City might be concerned that they would potentially be subject to a
commuter tax implemented by another jurisdiction if this type of tax were to come into
widespread use in Oregon. Any commuter tax ordinance could be subject to a referendum
petition to require a vote, although the people subject to a non-resident income tax would
not be able to refer the ordinance.
Potential positive economic effects could offset potential negative economic effects. An
Potential
example of a possible positive effect is that the revenue from the commuter tax could go
Economic
to sustain important services and essential infrastructure and facilities within the City of
Impacts
Eugene that help maintain livability and a healthy business environment and so preserve
jobs. On the other hand, a payroll tax or per capita business license fee would increase the
cost of doing business within Eugene, possibly having a negative effect on business
location decision. A non-resident income tax would decrease non-resident workers’
disposable income, some of which is spent in Eugene.
A commuter tax would provide ongoing revenue to help fund ongoing City services,
Consistency with
consistent with City policy and would serve to further diversify revenue sources.
Council Goals
and Policies
Other A number of jurisdictions across the nation impose a commuter tax or fee, typically in
Jurisdiction conjunction with a parallel tax on residents. These include Philadelphia, Los Angeles, San
ExperiencesFrancisco, Chicago, Kansas City, Pittsburgh and others. New York City had a commuter
tax until 1999 and is now considering re-establishing it. Washington D.C. has asked
Congress to permit collection of a commuter tax. Seattle has recently adopted a
commuter tax in the form of a per-capita business fee of $25 on non-resident workers,
with a parallel per capita tax on resident workers, to be collected starting in July, 2007.
3
CentralServices
Finance & Court Services
Budget Office
City of Eugene
860 West Park Street, Suite 300
M
Eugene, Oregon 97401
(541) 682-5021
(541) 682-5802 FAX
www.ci.eugene.or.us
September 19, 2001
Date:
MayorTorreyand Members of the City Council
To:
The Citizen Members of the Eugene Budget Committee
From:
Final Recommendation on Transportation Funding Issues
Subject:
On July 11, 2001, we submitted to you our interim conclusions and report on the City?s transportation
system funding issues (?Transportation System Funding Interim Report?, dated June 2001). At that time,
we shared with you our conclusion that significant additional funding from one or more new, City-
controlled revenue source is neededin the near future if Eugene is to preserveour investment in
transportation system infrastructure.
We also communicated to you a number of other interim conclusions, based on our study and
discussions, as follows:
In the face of projected O&M funding shortfalls and service reductions beginning in FY03,
C
ensuring adequate funding for the of the City?s
operation and maintenance activities
transportation system is absolutely essential.
The most important capital funding needs to be addressed are in the
backlog of preservation
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, with estimated annual funding needs of $8.5 million
work on roads and off-street bike paths
for roads and $425,000 for off-street bike paths.
Providing adequate funding for is critical to prevent
ongoing annual preservation activity
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preservation backlogs from accumulatingin the future.
The subcommittee?s current consensus is that, in order to accomplish these priority objectives,
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the appropriate .
level of new revenue needed is $9 million annually
The two funding measures which most closely conform to the subcommittee?s guiding principles
C
while also generating sufficient revenue to address the priority objectives are:
the, with a projected annual yield of $7.7 million;
Transportation Utility Fee
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a small, with a projected annual yield of $1.3
local motor vehicle fuel tax
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million.
We strongly support and encourage cooperative efforts with the City ofSpringfield for the
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regional implementation of any new revenue source for transportation funding.
Finally, we suggested that, prior to issuing our final recommendation to the Council,
an independent
for the purpose of issuing a report based on a critical
review be conducted by an external consultant
examination of the pavement condition analysis and preservation backlog estimates which were integral
to our study and conclusions.
That study was undertaken for the purpose of obtaining an independent, expert opinion as to the accuracy
of the pavement managementsystem, and specifically the preservation backlog analysis, as a reliable
indicator and measure of the transportation system funding problems facing Eugene. The results of that
study, conducted by A. M. ?Bud? Furber of Pavement Services, Inc., do confirm the reliability of the
City?s pavement condition analysis, as well as the essential finding of the City?s analysis--namely, that an
annual budget for preservation work of $8.5 million will significantly reduce the backlog of preservation
work over the next ten years. The analysis also predicts that, without additional funding, the 2001
preservation work backlog of $67 million will grow to nearly $232 million by 2011. An annual budget of
$8.5 million to address the backlog is predicted to reduce the 2011 backlog to approximately $40 million,
achieving a net avoided cost of $107 million compared to the no-funding scenario.
A second study was also commissioned for the purpose of obtaining an independent opinion as to the
efficiency and effectiveness of the City?s transportation systemoperation and maintenance (O&M)
services. The essential finding of that report, prepared by John Ostrowski Management Consultant, is
that the operation and maintenance services provided through City road funds are generally efficient
when compared to other cities. In fact, without adjustments of the survey data, the consultant found that
Eugene has the lowest costs in three of the nine categories of services among surveyed cities.
Comparisons of the raw data for total cost-per-mileand the total cost-per-capita place Eugene in the
middle of the surveyed cities. With adjustments to make engineering and administrative charges more
comparable with other cities? reporting practices, Eugene has the lowest costs in both cost-per-mile and
cost-per-capita for Road Fund operations.
It is our belief that the two consultant reports have satisfactorily addressed the concerns which prompted
the recommendation for reviews of certain issues by external consultants. Based on the additional
assurance provided by these two reports, we are now prepared to offer our final recommendation to
Council for funding Eugene?s unmet transportation needs, as follows:
We, the citizen members of the Eugene Budget Committee, recommend that Council
implementa transportation funding package consisting of a combination local motor
vehicle fuel tax and transportationutility fee, collaborating with the City of Springfield
on the motor vehicle fuel tax, for the purpose of generating an additional $9 million
(FY02dollars) each year to address the City?s transportation system funding needs. We
furtherrecommend the use of the Institute of Transportation Engineers (ITE) Trip
Generation manual as the basis for the transportation utility fee.
Additionally, we encourage and support a public education and outreach effort, coordinated with our
regional partners, to increase the public?s knowledge of the physical and financial requirements needed
to maintain the city?s transportation system in its current condition.
We would be pleased to respond to questions or comments about our work and conclusions when we
meet with you in work session on October 17, 2001.
Transportation System Funding
Interim Report
Eugene Budget Committee Citizen Subcommittee
June 2001
Budget Committee Citizen Members
Howard Bonnett
Eric Forrest
Paul Holbo
Jack Lucier
Eleanor Mulder, Chair
Bruce Mulligan
Jennifer Solomon
Craig Wanichek, Vice-Chair
CentralServices
Finance & Court Services
Budget Office
City of Eugene
860 West Park, Suite 300
Eugene, Oregon 97401
(541) 682-5021
(541) 682-5802 FAX
www.ci.eugene.or.us
June 2001
The Honorable James D. Torrey, Mayor
Members of the City Council
We, the Citizen Members of the Eugene Budget Committee hereby submit to you our interim
report regarding the City?s transportation system funding issues. Our study was undertaken at the
direction of the Eugene City Council, based on the charge given July 26, 2000.
Respectfully submitted,
Eleanor Mulder, Chair
Craig Wanichek, Vice-Chair
Howard Bonnett
Eric Forrest
Paul Holbo
Jack Lucier
Bruce Mulligan
Jennifer Solomon
Table of Contents
Page(s)
Executive Summary......................................................... 1-2
Subcommittee Interim Conclusions................................................2
Summary of Subcommittee Process.............................................. 3
Summary of Staff-Produced Information Regarding Transportation System Needs.........3-9
Intergovernmental Partnership Efforts...........................................9-11
Subcommittee Discussion - Transportation Needs Prioritization.....................11-13
Subcommittee Discussion - Transportation Funding Alternatives....................14-20
APPENDICES
Appendix A - Glossary of Transportation System Terminology...............A1-A3
Appendix B - Summary of Transportation Service System Needs.............B1-B3
Appendix C - Street Age Map............................................C1
Appendix D - Transportation Service System Forecast, March 2001..............D1
Appendix E - Preservation Project Maps.................................E1-E4
Appendix F - Subcommittee Member Survey Results........................F1-F2
Appendix G - Council Goals and Policies Related to Transportation Funding....G1-G6
Appendix H - Funding Alternatives for Transportation System Needs..........H1-H3
Appendix I -Templates for Individual Funding Options Explored..............I1-I18
Appendix J - Transportation Financial Forecast with New Funding................J1
Appendix K - Summary of Oregon Local Motor Vehicle Fuel Taxes..............K1
Appendix L - Summary of Oregon Transportation Utility Fees..................L1
Appendix M - Minutes from Transportation Subcommittee Meetings.............M1
i
EXECUTIVE SUMMARY
Eugene?s transportation system consists of local city streets and sidewalks, city collector and arterial
streets and sidewalks, county and state highways,off-street bike paths, street and intersection lighting
(signals and street lighting) and other supporting amenities designed to make the system both functional
and compatible with neighborhoods. The Road Fund, which accounts for the planning, operation,
maintenance and capital rehabilitation of the City?s portion of Eugene?s transportation system, lacks
sufficient resources adequate to maintain the existing level of street transportation services or to prevent
street surfaces from further deterioration.
The fund?s financial difficulties are primarily due to decreasing revenues in the face of growing system
service needs. Since 1996, county road fund transfers to Eugene?s Road Fund have decreased by 54%.
During the same period, state gas tax receipts have fallen behind population growth in Eugene. As the
Road Fund faces increasingly severe resource constraints, less critical operating activities have been
reduced to shift funding to ongoing street operation and maintenance, creating a backlog of major street
rehabilitation and reconstruction needs currently estimated at $53 million. Additionally, there is little or
no funding available to respond to needs related to other components of the transportation system, such
as the sidewalk system, off-street bicycle system, street lighting, traffic calming, nodal development and
selective utility undergrounding,all of which are necessary not only to meet the expectations of the
community but also to accomplish the goals of TransPlan, the comprehensive metropolitan area
transportation plan.
In July 2000, the City Council directedthe Budget Committee CitizenSubcommittee to study Eugene?s
transportationfunding issues, including a review of City receipts from the county road fund, and to report
back findings and recommendations to the Council. The subcommittee met a total of eight times between
September 2000 and May 2001 in a series of public meetings, studying Eugene?s unmet transportation
funding needs and deliberating possible new funding alternatives against a list of preestablished criteria.
After careful study of the street system condition assessment and current cost estimates indicated by the
PavementManagement System Report, dated March 2001, the subcommittee began to address the
challenge of identifying a transportation funding strategy which would provide sustainable funding to
ensure that the City of Eugene roadway and bike system at least falls no further behind in its condition
and to improve that condition over time. In this process, the subcommittee also analyzed the six-year
financial forecast for the transportation service system and reviewed other potential existing
transportation funding sources and needs.
This subcommittee concludes that significant additional funding from one or more new, City-controlled
revenue sources is needed in the near future if we are to preserve the community?s investment in its
transportation system infrastructure. We further conclude that the most critical capital funding need
currently facing the City is its backlog of preservation work. In order to meet the goal of preserving
Eugene?s transportation infrastructure, adequate funds also are required for operating and maintaining the
system. Of the many funding alternatives studied by the subcommittee, the two which were deemed to
most closely conform to the preestablished criteria, while also generating sufficient revenue to address
the priority objectives of operation, maintenance and preservation of the transportation system, were a
transportation utility fee and a small local motor vehicle fuel tax.
The subcommittee further discussed potential restrictions on the amount of new revenue which could be
allocated to address projected operating deficits in the Road Fund. No conclusion was reached on this
issue. However, the City Manager and staff have committed to retaining an external consultant to
conduct an independent review of the City?s transportation system operationand maintenance (O&M)
1
services for the purpose of obtaining an independent opinion as to the efficiency and effectiveness of
those services. A report on the findings of that study will be issued no later than October 2001.
Prior to issuing our final recommendation to the Council, we have recommended that the City Manager
retain an external consultant for the purpose of conducting a critical examination of the pavement
condition assessment and the $53 million preservation backlog estimate, which were integral to our study
and conclusions.The purpose of this external review is to obtain an independent, expert opinion as to
the accuracy of the preservation backlog estimate as a reliable indicator and measure of the transportation
system funding problems facing Eugene.
It is our intention that, upon receipt and review of both the independent pavement management
consultant?s report and the external report on transportation system operation and maintenance services,
we will submit to the Council our final recommendation for funding our unmet transportation needs.
SUBCOMMITTEE INTERIM CONCLUSIONS
We, the citizen members of the Eugene Budget Committee, after study and discussion of both the
transportation system needs and the various revenue alternatives, have reached the conclusion that
significant additional funding from new revenue sources is needed in the near future if Eugene is to
preserve our investment in transportation system infrastructure.
The interim conclusions of the subcommittee are as follows:
In the face of projected O&M funding shortfalls and service reductions beginning in FY03,
C
ensuring adequate funding for the of the City?s
operation and maintenance activities
transportation system is absolutely essential.
The most important capital funding need to be addressed is in the
backlog of preservation
C
.
work on roads and off-street bike paths
Providing adequate funding for is critical to prevent
ongoing annual preservation activity
C
preservation backlogs from accumulatingin the future.
The subcommittee?s current consensus is that, in order to accomplish these priority
C
objectives, the appropriate .
level of new revenue needed is $9 million annually
The two funding measures which most closely conform to the subcommittee?s guiding
C
principles while also generating sufficient revenue to address the priority objectives are:
the
Transportation Utility Fee
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a small
local motor vehicle fuel tax
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We strongly support and encourage cooperative efforts with the City ofSpringfield for the
C
regional implementation of any new revenue source for transportation funding.
Prior to issuing our final recommendation to the Council, this subcommittee recommends
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that for the purpose of
an independent review be conducted by an external consultant
issuing a report based on a critical examination of the pavement condition assessment and
preservation backlog estimates which were integral to our study and conclusions.
However, we also acknowledge the significant challenge facing the Council in educating the community
regarding this critical need for new transportation funding revenues. The daunting amount of the
preservation backlog in itself represents a significant financial obstacle. Given the importance of this
need to the future of our community and the potential impact on its citizens for years to come, we have
2
recommended that the City Manager retain an external consultant for the purpose of obtaining an
independent review of the accuracy and reliability of the City?s pavement condition assessment methods,
as well as the estimated preservation backlog,prior to moving forward with our full recommendation to
the Council and the community.
SUMMARY OF SUBCOMMITTEE PROCESS
The subcommittee met over a period of nine months to discuss transportation funding issues. Numerous
staff-produced materials on transportation system needs and funding alternatives were reviewed.
Subcommittee discussion identified the most important needs and the most feasible funding alternatives.
In addition, the subcommittee has actively monitored and participated in the County?s process for
allocating federal dollars received under the Rural Schools and Community Self Determination Act of
2000. Subcommittee members Jennifer Solomon, Howie Bonnett and Craig Wanichek testified before
the Lane County Board of Commissioners on December 5 as part of a united effort of local cities. The
testimony they offered was in favor of continuing and increasing funding for the County/City Road
Partnership Agreement.
Subcommittee Chair Eleanor Mulder and member Howie Bonnett also spoke before the Lane County
Roads Advisory Committee (CRAC) concerning the use of the new federal road dollars. In addition,
Chair Mulder testified in public hearing before the CRAC on behalf of the subcommittee and Eugene,
advocating for increasing the cities? shares in the partnership agreement given the increase in federal
funding received by the County. Member Solomon testified on the proposed County/City Roads
Partnership funding before the Board of Commissioners on May 2, urging the County to increase the
amount of funding and extend the length of the term of the Agreement. Copies of minutes from the
subcommittee meetings are attached as Appendix M.
This report is organized to reflect the subcommittee?s process.Staff-producedinformation relating to the
transportationsystem needs is summarized in the next section. Then the City?s intergovernmental efforts
are described. Finally, subcommittee discussions and prioritizations on both transportation system needs
and funding alternatives are summarized. The appendices provide additional detail.
SUMMARY OF STAFF-PRODUCED INFORMATION REGARDING
TRANSPORTATION SYSTEM NEEDS
A determination of the amount of funding required to adequately support Eugene?s transportation system
must consider the broad nature of the transportation system, the estimated cost of various program needs,
and the availability of existing funds and other resources to accomplish the desired objectives. This
section of the report addresses these issues in the following sequence:
Analysis of the current needs, including pavement condition, backlog, and other
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unfunded transportation needs;
Discussion of operation, maintenance and preservation of the transportation system and
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of the use of contracting and in-house resources to perform work;
Review of the Road Fund and how it relates to the current problems; and
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Projection of how increased funding might affect the condition of the system.
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(Note: This analysis considers only the services and costs related to the operation, maintenance and
preservation (OM&P) of Eugene?s existing transportation system. It does not take into account the
construction of new roads or other new infrastructure that may be required to address issues such as
3
congestion, travel times and safety, except to the extent that OM&P may provide some incidental benefits
in these areas. Funding analyses are limited to the Road Fund, since this is currently the only source of
significant funding for transportation system OM&P. A glossary, found in Appendix A, provides
descriptions of the various component types as well as other terms relevant to the transportation system.)
4
Staff Estimates of Current Transportation System Needs
The Eugene Public Works Department uses a computer-based pavement managementsystem to track
conditions and provide information about Eugene?s street system. The systemtakesinto account the data
provided by annual condition inspections and also factors in age, development type, traffic loads, and
currentand projected use for each segmentof roadway in the city. This information can then be used to
generate reports on rehabilitation needs, appropriate treatments, and estimated costs. The pavement
management system draws on 14 years of pavement condition information and can produce predictive
models to identify current and future needs.
Pavement managementsystem predictive modeling was used to create several views of Eugene?s
transportation system condition, including a current or ?baseline? view and projections of conditions over
a 10-year period assuming varying levels of investment in rehabilitation and reconstruction. These views
were included in a March 2001 report prepared by Eugene Public Works Maintenance Division titled
?PavementManagement System--An Update on City of Eugene Pavement Conditions,? a copy of which
was distributed to each member of the Council and subcommittee.
The current baseline view provided by the pavement management system shows an estimated $53 million
backlog in preservation projects. Specifically, the March 2001 report found that at this point in time 15%
of the major arterials in Eugene need reconstruction or overlay, 57% of the city?s minor arterials need
treatment, 44% percent of the collectors need treatment, 44% of neighborhood collectors need treatment
and 25% of residential streets need treatment.
In addition to the need for pavement preservation, a number of other transportation system needs have
been identified bystaff. A more detailed discussion of these elements is included in Appendix B
,
The amounts shown in parentheses are staff estimates
Summary of Transportation Service System Needs
of annual cost:
Traffic calming ($400,000)
C
Sidewalk system improvements ($300,000)
C
Street trees and median maintenance ($250,000)
C
Street assessments and subsidy program ($300,000)
C
Selective utility undergroundingwithin the right-of-way($200,000)
C
Nodal development planning and implementation ($130,000)
C
Transportation marketing and education ($75,000)
C
Off-street bicycle system reconstruction ($300,000)
C
Bicycle system maintenance and rehabilitation ($125,000)
C
Residential and arterial/collector street lights ($244,000)
C
.
Operation, Maintenance and Preservation
Operation, maintenance and preservation of the existing system are the highest priorities in managing the
transportation system.
encompass a wide range of efforts that extendthe life of streets
Operation and maintenance
C
and provide safety and efficiency benefits to system users. Maintenance activities tend to be
limited in scope and area, typically in the form of localized repairs (such as a singleconcrete
panel replacement, an asphalt patch or a traffic signal repair) in locations throughout the system.
The operating budget includes approximately 76 FTE Road Fund positions in the Public Works
Department, including staff from the Administration, Engineering, Maintenance, Parks and Open
Space and Transportation divisions.
5
Primary areas of operating Road Fund expenditures, along with FY02 gross budget estimates, include the
following elements:
Signs, signal and street light maintenance..................................$1.9 million
Asphalt and concrete...................................................$1.4 million
Trees, landscaping, irrigation and natural resources..........................$1.2 million
Planning and engineering...............................................$1.0 million
Administrativeservices.................................................$1.0 million
Technical services (including public information, permits and inspections)........$0.6 million
Other...............................................................$0.6 million
Total...............................................................$7.7 million
projects go beyondroutine Operations and maintenance and provide major repairs
Preservation
C
at focused points in the system.Preservation projects typically are divided into two categories:
rehabilitation and reconstruction.
in the form of overlays, slurry seals and other surface preventative maintenance
Rehabilitation
treatments is critical because deterioration and associated repair costs accelerate over time. The
chart on the following page (Figure 1) shows the general relationship between pavement age,
condition, preservation type, and cost. As a general rule, reconstructing a street that has failed
due to delayed preservation is four to five times more costly than rehabilitation. Staff estimates
it would cost approximately$3.2 million a year to provide timely rehabilitation on Eugene?s
streets. This amount is separate from ongoing operation and maintenance requirements.
Reconstruction
describes projects in which the street structure typically is removed and rebuilt.
There are a number of reasons that have led to the accelerated deterioration of a large number of
Eugene?s street surfaces. Pavement age is one important reason. Studies have shown that the
typical life of arterial and collector pavement surfaces fall in the range from 12 to 15 years.
Once pavements pass that point, they tend to fail much more quickly (see Figure 1 on following
page), resulting in much higher costs to preserve the investment. An analysis done in 2000 by
PublicWorksshowed that almost half (48.4%) of Eugene?s arterial-collector street system is
more than 15 years old, and more than 70% of the system is more than 10 years old (see
Street
, Appendix C).
Age Map
Eugene?s reconstruction liability is growing. In 1994, approximately7% of Eugene?s arterial-
collector system was in need of reconstruction. By 1999, that figure had more than doubled, to
over 16%. As the system continues to age, and maintenance is delayed, more and more of the
system will deteriorate to the point of needing reconstruction.
6
Typical Pavement Life Cycle and associated costs.
Figure 1:
decisions involve a number of factors, including:
Contracting and in-house work
Availability of staff and/or equipment in-house
C
Amount of specialized knowledge and/or equipment required
C
Scope of work
C
Time frame
C
In general, the City seeks to make the best and most efficient use of both public and private resources in
its public works projects. For small jobs that need to be done right away, the City utilizes the
investments it has made in staff, equipment, and other resources necessary to perform ongoing municipal
operations efficiently and cost-effectively. When a job requires specialized knowledge or equipment, or
if the scope of work is large and does not require immediate completion, the City contracts out the work.
There is no absolute price threshold, although larger projects tend to be contracted out. Smaller jobs
(such as slurry seals or smaller overlay projects) often are "bundled" into a larger contract.
Performing routine maintenance (such as pothole patching) or emergency response activities with Public
Works staff is typically more cost effective and expedient than contracting those activities. The mix of
equipment and training provided for staff is targeted to maximize effectiveness in these areas. Public
Works staff are not trained or equipped to perform large projects (such as street overlays or
reconstructions) or those atypical projects requiring unique equipment. Contracting is typically more
cost effective in these cases.
In general, good candidates for contracting are easily-described projects which are large enoughto gain
vendor interest and to absorb the costs of engineering analysis, plan and document preparation, and
contract management. Routine maintenance activities are generally smaller projects not requiring
engineering analysis, plans and document preparation, or contract management. Staff are dispatched to
perform this type of activity without extensive project oversight and no contract overhead.
7
Emergency response is another area where in-house staff typically perform better than contracting. The
difficulty in predicting the type and severity of an emergency event makes contracting difficult. In-house
staff familiar with the City's infrastructure typically can respond much more quickly than a contractor.
Also facilitating emergency response is the flexibility to quickly assign or reassign in-house staff from
one project to another, or to dispatch crews to deal with unscheduled problems. This avoids delays
which would occur if a private vendor?s representative needed to be contacted and change orders
negotiated.For example, if the local asphalt batch plants become unavailable, crews are readily
reassigned to other work activities.This combination of flexibility and timely response is crucial to the
highest level of customer service and satisfaction. Minor street repairs such as pothole patching or crack
sealing have not generated a great deal of vendor interest in the past due to their nature of being many
small projects--many driven by citizen complaints--and widely dispersed around the city.
In the Transportation Division, all of the capital project work is contracted out with the exception of an
occasional small (typically under $25,000) signal or lighting project that City crews might perform, and
some new street lights that are installed by EWEB on its poles. The bulk of contracted projects involve
capital projects such as traffic signals (new or re-constructed), street lights (new), traffic-calming
projects, and miscellaneous traffic operations improvements such as median islands for pedestrian
crossings. Most of this work goes out through the Engineering Division's bidding and contract processes.
In Transportation operations, City crews do work such as the annual restriping of streets, routine sign
inspection and maintenance, and most of the electrical maintenance and bulb replacement for signals and
street lights. These are mostly routine,repetitive functions that staff is trained and equipped to do. As in
Maintenance, Transportation operations staff is able to cost-effectively blend the pre-scheduled
preventive maintenance work with the various types of service calls or problem solving that comes up
throughout the year. Operational work contracted out includes saw-cutting pavement or concrete (for
loops,conduit runs, etc.),various types of testing, sandblasting and water blasting of old paint. These are
functions that are less frequently needed, so it makes sense to hire an outside contractor. All Public
Worksdivisions contract with consultantsfor studies and specialprojects. Again, these services usually
requirespecialized knowledge (such as bridge designor landscape and architecturaldesign).
Current Funding Situation
The primary sources of funding for Eugene?s Road Fund are:
State Highway Trust Fund, through which gas tax and weight-mile fee revenues are
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distributed to Eugene on the basis of population. These revenues are restricted by the
Oregon Constitution for use within road rights-of-way.
Transfers to Eugene from the Lane County Road Fund through the City/County Road
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Partnership Agreement.
Other sources, such as interest earnings.
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Additional revenues are available from the federal Surface Transportation Program (STP). These funds,
which are allocated locally by the Metropolitan Policy Committee, are available for capital transportation
projects, transportationplanning and other eligible activities. Other special federal, state and county
grants periodically become available; however, they tend to be focused on capacity enhancement versus
operation, maintenance and preservation.
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The following table shows the relative contribution of each of these sources to the City?s transportation
service system budget in FY01.
State Highway Trust Fund$5.94 million
Lane County Road Fund Transfers$1.24 million
STP Funding$0.50 million
Other Revenue$0.46 million
Total Current Funding Sources$8.14 million
The City?s Road Fund has been affected by a number of factors over the past several years:
Oregon?s gas tax has not increased since 1991, with little prospect that the 2001
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Legislature will enact a statewide gasoline tax increase or other significant transportation
revenue measure.
The City?s street tree program was transferred from the General Fund to the Road Fund
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in the mid-1990's.Since then, the scope of the program has grown, and in FY01, Road
Fund expenditures in the Urban Forestry service category were approximately $820,000.
The number of miles of road network has increased significantly due to new
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development.
Inflation rates for materials, supplies and services have exceeded revenue growth.
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County Road Fund annual transfers to the City?s Road Fund have decreased over the past
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four years, from $2.7 million in FY96 to less than $1.25 million in FY01. A one-year
extension has been signed for FY02; however, future transfer payments are uncertain.
State and federal grants, including STP funds, carry many requirements, including
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prohibitions on spending these types of revenues on operation and maintenance.Most
grants have additional limitations on how the moneys can be spent.
Based on financial forecasting, even if the current level of transfer payments from Lane County?s Road
Fund is maintained, Operation and maintenance service reductions will be required as early as FY04 if
new revenues are not found. Public Works over the past several years has actively identified and
initiated efficiencies. However, additional steps were necessary. Road Fund services and positions were
cut in FY01, and Road Fund capital expenditures have been virtually eliminated from the proposed FY02
budget. Despite these efforts, Road Fund reserves continue to be depleted. Additional information is
provided in Appendix D,
Transportation Service System Forecast, March 2001.
TransPlan has identified a significant shortfall in local operation, maintenance and preservation, and
there is direction in the current draft of the Plan to develop a locally controlledsourceof revenue that is
equitably tied to all users of the transportation system. The TransPlan draft recommends these revenues
be used to address operation, maintenance and preservation needs. Because of projected deficits in the
Road Fund, Eugene has not included any funds for capital preservation of roads in the FY02-07 Capital
ImprovementProgram (CIP).
Effects of Additional Funding
Beginning with the $53 million current preservation backlog identified in the pavement management
system?s baseline analysis, a projection was run assuming no treatment over the next 10 years. That
analysis shows that, with no further treatment, unmet preservation needs will have grown to more than
$250 million by 2011. Based on early subcommittee discussions, an analysis was prepared which
illustrates the outcome of an annual investment of $8.5 million ($5.3 million to address the backlog and
another $3.2 million for ongoing needs ) in preservation. In this scenario, the backlog is brought down to
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approximately$30 million over the 10-year period. The reduction in the backlog resulting from this level
of annual investment in preservation is represented by the red area in Figure 2.
Public Works reviewed the $53 million backlog and other available data and produced a map showing
preservation projects that would be necessary to accomplish an outcome similar to that shown below.
Estimated reduction in capital preservation backlog resulting from $8.5 million
Figure 2:
annual investment in capital preservation activity.
The most cost-effective approach is to use a ?best-to-worst? treatment priority. This allows the City to
apply preventive maintenance primarily in the form of overlays in the early years of the program to keep
marginal pavements from slipping into the more expensive reconstruction category. In the latter years of
the program, the work effort would be directed more toward reconstruction projects. Appendix E
contains maps showing locations of projects over several phases of a 10-year preservation program.
INTERGOVERNMENTAL PARTNERSHIP EFFORTS
Intergovernmental relationships play a significant role in the operation, maintenance, and preservation of
Eugene?s transportation system.Examples of intergovernmentalrelationships include inter-jurisdictional
partnerships designed to provide operating efficiencies, formal financial agreements, and shared interests
in finding regional solutions to common problems.
Lane County Partnerships
Eugene works closely with Lane County in several areas related to transportation operation, maintenance
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and preservation.Operating agreements have long been in place to provide efficient service delivery.
Examples of these operating partnerships include road maintenance agreements, ice and snow removal
agreements, and agreements on how other road-relatedservices such as leaf pickup and sweeping are
provided. The goals of these operating agreements, and similar agreements with Oregon Department of
Transportation, are to avoid redundant service and make the most efficient use of equipment in
geographical areas. An example would be the establishment of maintenance jurisdiction responsibilities
in River Road-Santa Clara for specific geographic areas.
Eugene has received transfer payments from the Lane County Road Fund since 1986. Originally, these
payments were related to the transfer of planning, building and park services as well as the transfer of
County roads within Eugene?s urban growth boundary to City jurisdiction. In 1993, the agreement was
modified in the form of the existing County/City Road Partnership Agreement. Transfer payments from
the Lane County Road Fund are deposited in Eugene?s Road Fund and are available for any legal Road
Fund purpose. In recent years, these funds have been used almost exclusively for operation, maintenance
and preservation.
Revenues received through the County/City Road Partnership Agreement have declined in recent years,
from a high of $2.7 million in FY96 to $1.25 million in FY01. The City in May 2001 signed a one-year
extension of the current $1.25 million agreement. Extension of the agreement beyond FY02 is uncertain,
complicatingthe City?s Road Fund financial projections and strategies.
Lane County recently learned it would receive an estimated $24 million in additional road funds over the
next six years through the federal Rural Schools and Community Self Determination Act of 2000 and has
adopted criteria for distributing the additional funds through a new Capital Projects Partnership (CaPP)
fund.Modernization and safety projects are the highest priorities for the CaPP fund; however,
preservation projects may receive funding if other criteria are met. Over the next several months, Eugene
will review its transportation system needs and determine which projects should be submitted for
consideration for CaPP funding.
Eugene also has historically received special capital project funding from Lane County. An example is
the $5 million contribution Lane County made to the recently completed Ferry Street Bridge project.
Another example is the funding Lane County has provided for low-income housing projects through its
Roads for Assisted Housing Projects Program. These funds typically are project specific and are not a
likely source of funding for operation, maintenance and preservation.
Collaboration with City of Springfield
Throughout the course of the subcommittee process, staff from the cities of Eugene and Springfield have
made particular effort to maintain close communications and working relationships, both in preparation
of materials and testimony for the County Roads Advisory Committee and in sharing process and
backgroundmaterials related to our exploration of various transportation funding options.
On a somewhat parallel process to that of Eugene, the City of Springfield staff and council have also
been exploring the issue of transportation funding. When the subcommittee was beginning its work last
fall, Springfield staff indicated that, while their council had not as yet expressed strong interest in
creating new revenue sources, interest on the part of Eugene City Council or the County Commissioners
in doing so could make a difference in Springfield?s interest in exploring different revenue options.
Throughout its evaluation of various funding options, the subcommittee has continued to emphasize the
value of working jointly with Springfield towards regional implementation of a new revenue source to
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address each cities? transportation funding needs.
In March 2001, Springfield staff went to their council to present a wide variety of revenue options,
ranging from a gas tax to a sales or gross receipts tax, which could be considered for providing additional
funding for operation, maintenance and preservation of the city?s transportation network. Staff suggested
that, in their initial development of alternatives for locally generated and controlled revenue sources, five
possibilities seem to emerge with the potential for generating the necessary amounts of revenue: local
fuel tax, transportation utility fee or ?TUF?, local sales tax, local business/occupations tax, and a local
gross receipts tax.At that meeting, the Springfield Council expressed a preference for a local gas tax as
a partial funding solution for Springfield?s Street Fund. None of the more broadly-based revenue sources
(sales tax, gross receipts tax or business/ occupation tax) generated significant council interest. Some
councilors also expressed concern about imposing a new utility fee, in light of Springfield voters? recent
rejection of a tax levy. In general, the council emphasized the need for coordination with Eugene and
Lane County.
In anticipation of a more in-depth fall discussion by the Springfield City Council of the various
transportation funding options, Springfield and Eugene staff are jointly researching issues and existing
models related to both a local gas tax and a transportation utility fee. In a recent executive meeting, the
city managers from both cities agreed to direct their staffs to continue to work together in exploring joint
opportunities for a cooperative transportation funding effort between the cities.
In addition, Eugene staff have been monitoring the work of City of Portland and how they are proposing
to address their transportation funding needs.As part of the FY02 budget process, the Mayor of Portland
is proposing in her budget the creation of a transportation utility.
SUBCOMMITTEE DISCUSSION - TRANSPORTATION NEEDS PRIORITIZATION
The initial list of transportationsystem needs and accompanying funding gaps was assembled by staff
and presented to the subcommittee. Additional information on particular items on the needs list was
made available upon members? requests. In the course of discussions in September through November, it
became clear that subcommittee members viewed several needs as having higher priority.
A Six-Year Road Fund Financial Forecast was provided and discussed at the September 29 and
November 13 meetings. Revenues were projected to be inadequate for operating needs, with the fund
experiencing a deficit fund balance as early as FY04, assuming the City?s share of the County/City Road
Partnership Agreement funding continues at the current annual level of $1.25 million. However, were the
Partnership funding to be restored to the FY96 level of $2.7 million annually, then the operating deficit
would be avoided entirely. In December, subcommittee members individually filled out a transportation
needs preference survey. Members were asked to indicate whether the various needs that had been
identified were very important, somewhat important, somewhat unimportant, or very unimportant.
Comments were collected as well.
In order to more clearly differentiate the listed needs according to importance, weighted composite scores
were produced with ?very important? valued at 2, ?somewhat important? valued at 1, ?somewhat
unimportant? valued at ?1 and ?very unimportant? valued at ?2. Based on the composite scores, the
needs were listed in order of relative importance. Both the raw survey results and the weighted scores
were provided to assist the subcommittee discussion as to which needs should be funded.
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The initial priority order of transportation needs based on December survey results was as follows. The
from the December survey are attached as Appendix F.
Complied Member Survey Results
1. Street Preservation and Maintenance
2. Street Reconstruction Backlog
3. Selective Utility Undergrounding
Bicycle System Maintenance and Preservation
4. Sidewalk System Improvement
Street Assessment and Subsidy Program
5. Street Trees and Median Maintenance
Off-Street Bicycle System Reconstruction
6. Residential and Arterial/Collector Streetlights
7. Photo Red Light Traffic Signal Interconnection
8. Photo Radar
9. Nodal Development
Alternative Transportation Marketing and Education
10.Traffic Calming
In March, the subcommittee reviewed a revised, more comprehensive transportation system financial
forecast which confirmed the expected Road Fund operation and maintenance deficit, possibly as early as
FY03 if county transfer funding were to be cut off. However, if annual county transfers to the City Road
Fund were to continue at the current $1.25 million level and were available for operation and
maintenance uses, the fund deficit would be delayed until FY05.
Subcommittee discussions explored various aspects of the operating activities and capital expenditures of
the Road Fund.The possibility of increased County Road Fund transfers of federal dollars and the
possibility of limitations being placed by the County on use on federal funds was discussed at some
length. The subcommittee reached consensus that the of the road system
operation and maintenance
must continue to be funded at the current level .
he subcommittee maintained a consensus that theand
preservation backlog ongoing
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are the transportation system?s highest priority needs, and
preservation and maintenance
assigned the next highest priority to the and
off-street bicycle system reconstruction bicycle
needs.
system operation and maintenance
In discussions over a period of several meetings, the subcommittee maintained a consensus that the
and are the transportationsystem?s
preservation backlog ongoing preservation and maintenance
highest priority needs. However, members modified the initial priority list and assigned the next highest
priority to the and
off-street bicycle system reconstruction bicycle system operation and
needs. Finally, the subcommittee concluded that, in recognition of community and council
maintenance
interest in the, including elements such as traffic calming, a portion of any new
remaining needs
revenue should be allocated as STP matching funds.Both the STP grant funds and the matching funds
would then be allocated among these remaining needs as determined by the full Budget Committee.
The following list reflects the subcommittee?s discussions as to which needs ought to receive funding
from new revenue sources.
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Street Preservation
Preservation work includes rehabilitation and reconstruction activities.
Summary of discussion:
Many city streets are now showing significant signs of decay. Preserving Eugene?s current
investment in streets and related facilities is the most cost-effective investment of any new
transportationsystem funding and should receive the highestpriority. Timely investment in
preservation will extend useful life of existing streets for many years and prevent additional
deterioration. Failure to invest in rehabilitation would result in a need for much more expensive
reconstruction in the future. If rehabilitation activity is not done in a timely manner, the
subgrade will deteriorate, and failure will occur. When this failure occurs, the street structure
must be removed and reconstructed. The subcommittee agrees that funding rehabilitation first
will have the greatest cost-effectiveness. Reconstruction backlog projects should be funded after
the rehabilitation backlog is addressed.
Street Operation and Maintenance
The importance of continuing to fund transportation system operation
Summary of discussion:
and maintenance at the current level was supported by the subcommittee. Operation and
maintenanceservices are critical to the success of any capitalpreservation program. This is
particularly true if Eugene invests millions of dollars of new revenue in overcoming the
rehabilitation and reconstruction backlog.Without a fully funded Operation and maintenance
program,the preservation strategies will be less effective.
In recent years, the County has transferred $1.25 million of federal funds annually to the City
Road Fund. This money has gone to support operations and maintenance activities. If this
transfer is reduced or restricted to capital activities by the County, the Road Fund operations and
maintenance activities will be in a deficit position as early as FY03. The FY02 budget approved
by the Budget Committee presumes these funds will be available for a period of one year, based
on a one-year extension of the current County/CityRoad Partnership Agreement, signed in May
2001.
Off-Street Bicycle System Preservation Backlog
Despite its popularity and Eugene?s commitment to multi-modal
Summary of discussion:
transportation, the off-street bicycle system has not been funded adequately because of the
constitutional constraints that do not allow use of road fund dollars outside of the road right-of-
way as well as the unavailability of City General Fund dollars. A priority for new, non-
constrained revenue from a transportation utility fee would address the rehabilitation and
reconstruction backlog of this deteriorating system.
Bicycle System Operation and Maintenance
New revenue from a non-constrained source is needed for ongoing
Summary of discussion:
operation and maintenance of the bicycle system, which will be essential to preserveEugene?s
capital investment and ensure that bicycle transportation remains a viable transportation choice.
Traffic Calming and Other Needs
Although the subcommitteedid not rank other needs as highly as those
Summary of discussion:
addressed above, membersrecognized that traffic calming in particular is seen as an important
need by many people in the community. The consensus was that some level of federal STP
matching funds should be provided from any new revenue resource, and the matching and federal
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STP grant funds should be allocatedamong all allowable needs at the discretion of the full
Budget Committee. These allocations could include funding for any of the identified
transportationneeds which are also eligible STP activities, including but not limited to traffic
calming, the sidewalk program, nodal development and transportation demand management.
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SUBCOMMITTEE DISCUSSION - TRANSPORTATION FUNDING ALTERNATIVES
In the September 29 meeting, the subcommittee adopted guiding principles for their work and endorsed
the idea of bringing to the Council a package proposal or combination of funding alternatives, rather than
a single alternative. The Guiding Principles were intended to provide a set of criteria against which
various alternative revenue options could be
evaluated and compared.
Guiding Principals
Additionally, the subcommitteerequested a copy of
Diversification of Revenue Sources
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all council policies and goals, either adopted or
An overall funding strategy for
currently proposed, which would be relevant to
transportation system service needs
their consideration of transportation funding
should include multiple funding
options. Those policies and goals considered are
sources, which will adequately
included in this report as Appendix G.
address the full range of identified
transportation system service needs.
Staff next offered for consideration a broad-based
Consistency with Goals and Policies
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list of potential funding sources which might be
All proposals for sources and uses of
used by the City to generate additional revenue for
funds, overall funding strategies and
transportation system service needs.This list
other subcommittee products should
included over 20 potential revenue sources in broad
be consistent with adopted City
categories ranging from assessment mechanisms,
Council Goals and City policies.
property tax-based options, various forms of excise
Legal Defensibility
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taxes, utility/user fees, as well as more traditional
The City must have clear and
general municipal revenue sources (see
Funding
incontrovertible authorityand ability
Alternatives for Transportation System Needs,
under state and federal statutes to
Appendix H). Additional revenue alternatives were
implementthe proposed revenue
suggested by subcommittee members in the course
sources and uses.
of subsequent discussions. The subcommittee
Financial Feasibility
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directed staff to provide further analysis on several
Funding sources must be able to
alternatives, listed below:
produce timely, adequate revenue
Property taxes (both local option
!
streams with a high degree of long-
levy and general obligation bonds)
term sustainability.
Expanded assessment
!
Politically Supportable
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practices/local improvement
An overall funding strategy for
districts
transportation system service needs
Broadened use of systems
!
mustbe deemed politically acceptable
development charges (SDCs)
by both the City Council and the
Motor fuel tax on distributors
!
general public in terms of appropriate
(including sales outside city)
uses of public resources, general
Transportation utility fee
!
fairness to system users, and level of
Street improvement fee
!
acceptance for funding proposals.
The funding strategy and specific
Staff prepared analyses, attached as Appendix I, on
revenue sources must also be easily
the alternatives selected by the subcommittee.
understood by citizens and have a
These were presented and discussed at the
direct relationship to specific
November 13 and December 11 meetings.
community transportation system
service needs.
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In December, individual subcommitteemembersalso completed a survey in which they evaluated the
various revenue alternatives against the subcommittee?s Guiding Principles. Members were asked if each
alternative merited further discussion. The survey results were provided to the subcommittee. After
further discussions, the subcommitteetook straw polls on five revenue alternatives that had received
considerable member attention. The results were as follows:
Subcommittee Straw Poll Results, Revenue Alternatives
(12/11/00)
Local Option Levy7:0 opposed
General Obligation Bonds6:1 opposed
Parking Tax 5:2 opposed
Fuel Tax on Distributors4:3 in favor
Transportation Utility Fee 6:1 in favor
Staff continued to develop analyses and provide information as the subcommittee members proceeded
with their considerations of revenue alternatives. The alternative for a motor fuel tax on distributor sales
outside the city was found not to be allowable under state law, so a local motor fuel tax was discussed
instead.
In the January 29 meeting, the transportation utility fee continued to be the revenue alternative with the
highest level of member support. A local motor fuel tax also received majority support. Staff were asked
to prepare funding scenarios incorporating combinations of a transportation utility fee, a motor fuel tax
and G.O. bonds. The remainingrevenue alternatives were not discussed further.
Consensus was reached that all residents and visitors, whether motor vehicle drivers or non-drivers, have
an important stake in maintaining the City?s transportationinfrastructure. Even non-drivers have mail
delivered and require access to mass transit, city bicycle lanes and off-street bike paths. Whether
walking to visit friends, bicycling to work, driving to the doctor?s office, or traveling by bus to school,
everyone
depends on the city transportation network and should rightly contribute to its upkeep. The
subcommittee was interested in revenue alternatives that would result in non-residents paying a share,
along with city residents.
A transportation utility fee (TUF) is applied universally and is an equitablerevenue source to which all
property users contribute according to their share of impact on the system. The fee paid by retail and
commercialproperty users will be partially passed on to non-resident visitors shopping or working in the
city. All property within the city, whether currently exempt from property taxes or not, would be subject
to a TUF. This includes the University of Oregon, as well as other state and federal property. The fact
that all property users in the city would contribute their share increases the fairness of the TUF as a way
to cover costs of the transportation system.
The TUF revenue is also very flexible and, unlike a motor fuel tax, can be used for off-street bicycle
paths and other off-street uses because it does not fall under the constitutional provision limiting its use
to roads only. In initial discussions, some members questioned whether a transportation utility fee would
be somewhat regressive because low income people purchase less and use the transportation system less.
However, people with higher disposal income typicallypurchase more goods and services, and so would
pay more of the pass-through of a commercial and retail transportation utility fee. Also, the fee amount
for apartment residents typically is less than that paid by residents of single-family homes, because
surveys of apartment dwellers show they typically use the transportation system less.
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The constitutional limitation referred to earlier does apply to a local motor fuel tax, such that all revenue
raised from a motor fuel tax may only be spent within the road rights-of-way. Since the motor fuel tax is
paid by users of motor vehicles, this dedication of revenue from motor fuel taxes seems appropriate.
Like the transportation utility fee, the motor fuel tax will also capture revenue from non-residents.
Several funding scenarios involving combinations of the transportation utility fee, motor fuel tax and
G.O. bonds were reviewed and discussed by the subcommittee at the February 12 meeting. A
preliminary target of net revenue to be generated was established at $9 millionThe preferred funding
.
package follows:
Motor Vehicle Fuel Tax
A would be expected to produce net revenue of approximately $1.3
two-cent per gallon tax
million per year. All motor fuel tax revenue is restricted to activities related to the road rights-of-
way. Bicycle paths and other off-street activities could not be funded from this source.
Transportation Utility Fee
The remaining $7.7 million of the total funding target could be raised with a TUF. Per
household residential fee levels would be about $4 per month.
The subcommittee agreed that
the most effective transportation funding package would
. These measures are
consist of a transportation utility fee and a motor vehicle fuel tax
capable of raising adequate levels of revenue and most closely conform to the subcommittee?s
guiding principles.
The subcommittee agreed that the most effectivetransportationfunding package would consist of a
transportationutility fee and a motor vehicle fuel tax. These measures are capable of raising adequate
levels of revenue and most closely conform to the subcommittee?s guiding principles. A revised
transportation service system financial forecast was prepared showing the effects of the proposed new
funding package on the six-year outlook for the Road Fund. That forecast is included as Appendix J.
Below are listed the individual revenue options which were raised and/or considered, along with salient
points based on subcommittee discussion and the December survey results. The
Compiled Member
from the December survey are attached as Appendix F.
SurveyResults
Assessments
Broadened Assessment Practices/Local Improvement Districts
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Subcommittee members suggested that this funding option could perhaps be part of a
combination of solutions for funding street improvement projects in neighborhoods, along with
matching grant programs and other sources. Similar to the street improvementfee concept, this
approach would be focused on improving currently unimproved streets to urban standards.
However, the December survey showed that this alternative was seen as having quite a low
likelihood of being politically supported in the community.
Broadened Use of Systems Development Charges
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Subcommittee members noted that this option would not be available for preservation projects,
but did acknowledge the equity in having SDCs pay for improving capacity rather than funding
those improvements from the Road Fund. One concern expressed was that a recommendation to
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include improvements to streets within the Urban Growth Boundary and under County
jurisdiction in the City?s transportation SDC could become another item of dispute or contention
with the County. The County has not yet elected to pursue a proposal to levy a transportation
SDC for similarly planned County-funded improvementswithin the Urban Growth Boundary.
Members also voiced that encouraging out-of-city development may be a poor choice in light of
the potential implications of Measure 7 for development of county tracts. The December survey
revealed that members saw this alternative as providing for diversification of revenue sources,
being consistent with City goalsand policies, and being legally defensible. However, concern
was expressed about political supportability and that it was limited to new improvements that are
capacity oriented (arterials/collectors).
Staff reportedthat the City Roads Advisory Committee (RAC) is currently reviewing the City?s
transportation system development charge methodology. A recommendation under consideration
by the RAC may result in implementation of a reimbursement component to the transportation
system development charge to cover costs that new development impose upon the existing road
system.
Property Taxes
General Obligation (G.O.) Bonds Backed by a Property Tax Levy
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Subcommittee members expressed concern as to whether the City could generate voter support
for a G.O. Bond or Local Option Levy, given the recent failure of the police and fire station
ballot measures. It was also noted that renewal of the Library operating levy in two years would
create competition on the ballot for a transportation funding tax levy. This concern was
countered with the belief that voteropposition could be overcome by identifying specific
improvements that would benefit residents in broad geographic areas and also by limiting the
increase in the debt tax levy to specific amount. This is similar to the funding approach used by
the City of Salem.
The subcommittee also acknowledged that the City was very conservative in its debt practices
and could afford to ?leverage up? slightly for some priority funding issues. Another concern
voiced by the subcommittee members was that only property owners would be responsible for
paying for this funding, and not necessarily all users of the transportation system. Several
subcommittee members expressed doubt as to whether G.O. bonds represented a stable, long-
term funding source. The opinion was also expressed that the tax levy mechanism did not lend
itself well to funding what essentially is a utility need. The subcommitteecontinued to examine
this alternative, though the December survey showed that this alternative was rated as having a
low likelihood of being political feasible.
The subcommittee agreed that, regardless of the solution recommended, the Council would have
a major task in educating the community about the importance of the need for street
improvements. While this option was one of three that made it to the final stages of discussion
for a potential funding package, it was the ultimate conclusion of the subcommittee that the City
shouldnot resort to G.O. bonds to resolveits transportation funding needs. The six
subcommittee respondents assigned a low likelihood of political supportability to this revenue
alternative.
Local Option Property Tax Levy (LOL)
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The subcommittee reiteratedconcern that, as with G.O. bonds, the City might find it difficult to
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generate voter support for this option, given the competition for other levy-funded needs, such as
the Library operating levy. In fact, many of the same concerns were raised around this potential
funding option as for a G.O. bond levy. As with the G.O. bond option, doubt was expressed as to
whether an LOL fits the criteria as a stable, long-term funding source. Five of six respondents
assigned a low likelihood of political feasibility to the LOL alternative.
Excise Taxes
Business Tax on Fuel Distribution (Outside City Limits)
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At the request of the subcommittee, this option was identified for further staff analysis. The
main question to be explored was whether or not the City can legally impose a tax on motor
vehicle fuel distributors for sales of motor vehicle fuel to customers located outside the legal city
limits. Legal counsel?s opinion was that, although the City can tax sales of fuel that occur inside
its limits, it cannot tax sales that occur outside its limits. Given that the City?s authority to tax is
confined within its territorial boundaries, the subcommittee saw essentially no distinction
between this and a local option motor fuel tax, which is discussed in the next section.
Local Option Motor Vehicle Fuel Tax
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Subcommittee members suggested that a two-to-three cent motor vehicle fuel tax (gas tax) could
be a viable second funding source along with a transportation utility fee. It was noted that, if one
of the goals is to assess the cost of the system to system users, then an argument in support of
the gas tax is that it would be assessed at the point of purchase on those who choose
to drive.
Members debated whether the revenues from a gas tax could potentially be undermined by
market flight. Member Howie Bonnett conducted a survey of local gas prices and found a
several-cent difference in retail gasoline prices in a limited geographic section of town--
indicating that a two-to-three cent gas tax would probably not have much impact on consumer
choices around gas purchases. Members agreed with this conclusion. On multiple occasions,
members discussedthe desirability of coordinating with Springfield with regard to that city?s
consideration of and deliberations around a motor vehicle fuel tax. Members noted that the last
time the council had considered the optionof a gas tax was in 1995, during discussions related to
stormwater funding and associated impacts of the transportation system on stormwater quality.
Concern was expressed by the subcommittee that the Legislature might take another run at a
statewide gas tax increase. A is included in
Summary of Oregon Local Motor Vehicle Fuel Taxes
this report as Appendix K.
In early polls of members, the TUF and the motor vehicle fuel tax
were the only options which received majority support.
Parking Tax
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While the parking tax was viewed by the subcommittee as having some potential in promoting
City land use goals, it was noted that previous attempts by the City to change development
choices and driver behavior through parking policy were not successful. It was noted that
parking spaces are not as directly tied to the use of the transportation system as would be a
transportation utility fee based on trip rates. For example, a manufacturing use may have the
same numbers of spaces as a retail use but a much lower trip rate and, therefore, a lower use of
the transportation system. The December survey showed that the parking tax alternative was
seen as having a low likelihood of being financially feasible and an even lower likelihood of
being politically acceptable to the community. In December, members? surveys indicated by a
5:2 margin that the idea should be dropped, and staff was directed to do no further analysis on
this revenue option.
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Carbon-based Fuel Tax
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While both this and the Parking Tax funding option generated some discussion by the
subcommittee, the opinionwas expressed that it might be more appropriate for the council to
address the feasibility and appropriateness of either a carbon-based fuel tax or the parking tax,
rather than for the subcommittee to do so. Proponents for the carbon tax voiced support on the
basis that this is one of the few options that most directly targets the users of the transportation
system.It was also pointed out, however, that unless the City were willing to apply the carbon-
based tax to heating fuels, there would be very little distinction betweenit and a motor vehicle
fuel tax. Ultimately, no direction was given for further analysis of this option. A majority of
members felt that the carbon-based fuel tax was not very financially feasible nor politically
supportable and indicated by a 5:2 margin that it should not be explored further. The alternative
was dropped at that point.
Motor Vehicle Excise Tax
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Vehicle Registration Fees
C
Both of these revenue options generated little interest by the subcommittee.The primary
concern voiced around the vehicle registration fee was that, by State law, the City would be
reliant on Lane County to levy the fee. Additionally,neitherof these options were perceived to
address the issue of out-of-city residents who use Eugene?s transportation system. Neither
alternative was seen as politically feasible. Survey results showed subcommittee opposition to
furtherworkon the motor vehicle excise tax by a 6:1 margin, and opposition by a 5:2 count to
further consideration of the vehicle registration fee.
User/Utility Fees
Transportation Utility Fee
C
Subcommittee members indicated early interest in this option. Some members were particularly
interested if the focus of the utility fee was on preservation and reconstruction rather than
primarily for ?extras,? such as street trees and traffic calming. Members expressed support for
the fact that the fee would assess revenue for people who were driving in from out of town for
work or to do business. There was also specific support for the idea of maintaining the
transportation system through the cost of driving a car. The fact that users of all property,
including the University of Oregon and other tax-exemptproperty, will contribute their share
under a TUF was also identified as an attractive feature of the TUF.
The subcommittee recommended not using ?ELF? (Eugene Livability Fee) or other ?cute? names
for this fee, arguing instead for a simple descriptor of ? transportation utility fee.? In the
December survey, members gave the transportation utility fee a high likelihood of being
consistent with goals of diversifying revenue sources, being legally defensible and financially
feasible. Members assigned a low ratingfor political supportability. Nevertheless, by a 6:1
count, members chose to pursue discussions on the TUF. A
Summary of Oregon Transportation
is included in this report as Appendix L.
Utility Fees
In early polls of members, the TUF and
the motor vehicle fuel tax were the only options which received majority support.
Members said it would be helpful to illustrate some of the initial projects that would be funded
by the utility fee so citizens would be able to see what services the fee would provide. Members
also noted that, based on initial yield estimates, this revenue option on its own could potentially
solve the City?s transportation funding shortfall. Some members expressed concern that the fee
was, or might be perceived as, regressive. Other members opined that it was not regressive but,
instead, was a true user fee based on the estimated use of the transportation system. It was also
21
pointed out that the fee could be structured to reduce somewhat any perceived regressiveness.
The point was also made that the community may accept use of TUF revenues for transportation
system operational needs because the TUF is a utility fee based on use of the system, and
operation and maintenance of the existing system are clearly necessary. Community acceptance
of the fairness of other utility fees was noted in discussions.
22
Overthe course of several meetings, the subcommittee discussedthe basis for and possible
implementation of a transportation utility fee. As discussed, a simple Eugene TUF would be
based on the actual use made of property. Property use categories would be the same or very
similar to the categories used in the City?s Transportation SDC methodology. Each property use
category would be assigned a trip generation rate, using the Institute of Transportation
Engineers? For non-residential property uses, this trip generation rate
Trip Generation Manual.
is usually expressed as a number of trips per 1,000 square feet, or an equivalent unit of measure.
The trip rate would be multiplied by the number of units, and that product would be multiplied
by the fee per trip to generate the utility fee for a particular property. Residential rates would be
per dwelling unit. TUF revenue would be used for operation, maintenance and preservation, not
capacity related projects.
Street Improvement Fee
C
The focus of this option was directed towards addressing the unimproved transportation network.
The concept was to establish a fee that all owners adjacent to unimproved streets would pay for a
period of time (ten years), with the funds to be used to improve streets in a priority order during a
specified period of time. The subcommittee was informed that the Council Subcommittee on
Street Improvement Financing had explored this concept, which was subsequently presented to
the council as part of that subcommittee?s report. Council concluded that the approach was one
they did not wish to pursue. Since this funding option does not address the preservation and
maintenanceneeds of the transportation systemand the council has not chosen to pursue this
option, the subcommittee discontinued any further review of this alternative.The December
survey showed that this option was mediumto low in the area of financially feasibility. The
subcommittee indicated its opposition to this alternativeby a 5:2 count.
Municipal Sticker Fee (Local Vehicle Public Parking Permit)
C
This idea, introduced by a subcommittee member based on practice in other municipalities, was a
proposal to have a municipal ?sticker? attached to a vehicle that would give the owner the
privilege of parking in areas associated with city facilities, such as the Library parking lot. Staff
analysis of two sample cities showed that alternative was more like a city vehicle registration
requirement, which is not permitted under Oregon state law, rather than an optional parking
sticker program.
Tolls
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This funding source generated very little discussion from the subcommittee.While some
members liked the idea of capturing toll money from commuters driving in from outside the city,
there was a sense that the mechanism would be too much of a stretch in terms of public opinion
at this time. This alternative received lower ratings in the subcommittee survey and no
recommendation for further staff analysis.
Fees to Compensate for Dedicated Use of Traffic Lanes for Transit Purposes
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This potential funding source also generated little discussion from the subcommittee. The
dedicated lane fee was viewed as somewhat contrary to the City?s goal of supporting transit. It
also received lower ratings in the subcommittee survey and no recommendation for further staff
analysis.
Employer Payroll Tax
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This general municipal revenue source received little discussion from the subcommittee, and
staff received no direction for further analysis of this option.
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Appendix A
Glossary of Transportation System Terminology
Eugene?s transportation system
consists of a number of elements,
TRANSPORTATION SYSTEM ASSET INVENTORY
including streets, sidewalks, bicycle
Streetsowned/maintained by City.......484 centerline miles
paths, traffic signs and signals, and
Major arterials........................ 9.7 miles
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street trees and other amenities
Minor arterials...................... 67.0 miles
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designed to make Eugene?s
Collectors.......................... 33.9 miles
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transportation system functional as
Neighborhood collectors................28.5 miles
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well as compatible with
Local streets........................345.1 miles
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neighborhoods.The transportation
Alleys......................................43 miles
system includes various functional
Bikepaths (off-street).........................27 miles
street classifications (arterials,
Bike lanes (on-street) and bike routes.............85 miles
collectors, and local streets) as well
Median area.............................960,258 sq. ft.
as alleys and unimproved streets, and
Sidewalks and pedestrian ways.................601 miles
extensive off-street bicycle network.
(includes 5,588 sidewalk access ramps)
The following are descriptions of the
Street lights................................... 7,300
various component types as well as
Street trees....................................75,000
other terms relevant to the
Traffic signs.................................. 15,200
transportation system.
Traffic signals...................................222
? The most heavily used streets in the street system. Major arterials are usually four
Arterial streets
or more lanes, serve as major access routes to regional destinations, and carry an average of more than
20,000 vehicles per day. Minor arterials are usually two or three lanes in width, provide intra-city
connectivity, and carry between 7,500 and 20,000 vehicles per day. Eugene has 9.7 miles of major
arterials and 67 miles of minor arterials.
? Eugene?s bicycle transportation system includes on-street bike lanes and routes (85
Bicycle system
miles) and off-street paths (approximately 27 miles). Operation, maintenance and preservation of the
bicycle system is similar to the work done on vehicle travel lanes: cleaning, signing, lighting, patching
and overlaying for preservation when possible, and reconstruction when the path bed has significantly
deteriorated.
? The portion of the annuallyadopted budget that allocates specific funds to specific
Capital budget
capital projects or capital project categories.
? A multi-year plan used to establish project and funding
CapitalImprovement Program (CIP)
priorities. The City of Eugene adopted its CIP for FY2002-2007 in February 2001.
? Streets that carry less traffic than arterials and provide access to neighborhoods and
Collector streets
commercialand industrial areas. Major collectors typically carry between 2,500 and 7,000 vehicles, and
neighborhood collectors typically carry between 1,500 and 2,500 vehicles per day. Eugene has
approximately33.9 miles of major collectors and 28.5 miles of neighborhood collectors.
? Streets constructed in accordance with the specifications established by the Eugene
Improved street
PublicWorksDepartment. Improved streets generally include engineered road beds and surfaces, storm
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drainage systems, sidewalks, street lightingand street trees. Approximately88% of Eugene?s 484-mile
street system is improved.
? Streets whose primary function is to provide access to individual properties. Typically,
Local street
they carry fewer than 1,500 vehicles per day.Eugene has approximately 345 miles of local or
?neighborhood? streets.
? Overall Condition Index, used to rate the condition of streets on a scale of 0 (very poor) to 100
OCI
(excellent)
? The portion of the annually adopted budget used to fund ongoing or recurring
Operating budget
activities such as operations and maintenance, including staff costs.
? The ongoing work efforts required to operate and maintain
Operations and Maintenance (O&M)
the transportation system. Examples include keeping the City?s traffic signals and street lights in good
working condition, responding to neighborhood and citizen traffic issues, pothole patching,sweeping (a
stormwater service), pruning street trees, painting pavement markings, replacing damaged signs,
maintaining median strips, and providing the necessary technical, planning and administrative support
required to provide these services.
? The application of a surface layer of asphalt or alphaltic concrete. An overlaymay be a thin
Overlay
layerof material,such as a slurry seal or a ?skin patch,? or it may be a ?full overlay? which typically is
thicker in depth and usually runs from curb to curb in width.
? The computerized system used by the City of Eugene Public Works
Pavement management system
Department to record data and generate reports about the city?s streets and their condition.
? The work done to preserve and extend the life of transportation system components.
Preservation
While maintenance work does protect road surfaces, the term ?preservation? usually is applied to more
extensive repairs such as rehabilitation and reconstruction.
Extensive street repair work that typically involves the excavation of the existing
Reconstruction ?
street to the road bed and the rebuilding of the road bed and surface layers of the street. Reconstruction
generally is at least four to five times more costly per lineal foot than rehabilitation.
Surface repairs to streets.Examples of rehabilitation work include slurry seals (on
Rehabilitation ?
low-volume streets) and full paving overlays.
Trees planted within the public right-of-way. Through the NeighborWoods program,
Street trees ?
volunteers are encouraged to plant and provide initial care for street trees. The City provides long-term
maintenance and specialized services such as pruning for street trees.
The full range of transportation infrastructure, including streets, sidewalks,
Transportation system ?
bicycle facilities (bike lane and off-street paths), traffic signs and signals, and street amenities.
The portion of the street in which vehicles operate. Typically, travel lanes are 10 to 12
Travel lane ?
feet wide.
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A street that is not constructed to City standards. Unimproved streets (and
Unimproved street ?
alleys) include gravel streets, oil mat streets, and streets that lack engineered road beds or drainage
systems.Approximately 12% of Eugene?s 484-mile street system is unimproved, with most of the
unimproved streets in the local or ?neighborhood? street category.
Document Reference
(adopted by the Eugene City Council on November22, 1999). Available
Arterial/Collector Street Plan
online at www.ci.eugene.or.us/pw/trans/acsp.
(adopted by the Eugene City Council on February
Capital Improvement Program for FY2002-2007
26, 2001). Available online at www.ci.eugene.or.us/pw/cip.
, March 2001, available online at
Pavement Management System Report
www.ci.eugene.or.us/pw/pavement.htm.
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Appendix B
Summary of Transportation Service System Needs
The following is a preliminary list of transportation system needs and the associated funding gaps. Cost
estimates are preliminary. The list is not in priority order but by magnitude of identified funding need.
Preservation and Maintenance
The proposed FY02/FY07 Capital ImprovementProgram (CIP) will have no monies allocated for capital
rehabilitation and reconstruction of the street network due to the dire condition of the Road Fund. The need
includes an ongoing annual preservation program to maintain road conditionsat the current level, plus a multi-
year accelerated preservation program to address an estimated $53 million backlog of rehabilitation and
reconstruction projects. According to the Pavement Management System, approximately 16.1 miles of roads
have deteriorated to the point of needing replacement, while 20.8 miles of roads need other preservation
treatments. Further failure to fund the preservation and maintenance of the system will escalate these values
since the cost of scheduled preservation is far less than the cost of replacement. As the system continues to age,
and maintenance is postponed, more and more of the system will deteriorate to the point of needing
reconstruction.
Estimated funding gaps:$3.2 million per year for ongoing preservation
$5.3 million per year for 10 years to address project backlog
Traffic Calming
To accomplish the goals of Transplan and to meet the expectations of the community, a funding source is
necessary to supporta sustainable traffic calming capital program.At present, little or no Road Fund dollars are
available to respond to this demand.
Estimated funding gap:$400,000 per year
Sidewalk System
In 1993, Council adopteda sidewalk improvementprogram that was intended to complete the sidewalk systemin
priority areas of the community over a 20-year period. The initial three-yearprogram began in 1994. In 1999,
the second phase of the program was presented but the plan was tabled due to a shortage of funds in the Road
Fund for the non-assessable project costs and the high cost to property owners for assessments.
Estimated funding gap:$300,000 per year
Off-Street Bicycle System
The preservation and maintenance of the off-street bicycle system is funded through the General Fund since ORS
prohibits the use of Road Fund resources for this purpose. There are 28 miles of off-street bike paths to preserve
and maintain.The General Fund Capital program is not adequate at the current allocation of $20,000 per year.
The annual allocation should be increased to address both the system preservation needs as well as the on-going
maintenance of the new portions of the system being added to respond to growth (primarily funded through
Transportation SDCs). In addition, several miles of the existing systemneed replacement.
Estimated funding gaps:$300,000 per year for six years for system rehabilitation
$125,000 per year for system preservation
Street Assessments and Subsidy Program
Overthe last three years, staff and the Council have been reviewing street assessment policies in an effort to
address property owner concerns (primarily cost) and equity issues. That effort ultimately will require additional
funds for the new elements of City cost associated with local improvement district projects (increased City share
for the cost of constructing arterial and collector streets).In addition, the City currently has a three-tiered street
subsidy program for low-income property owners who are faced with street assessments. The subsidy program
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has been focused on local street improvement but is now being expanded to include property owners who may
qualify along arterial and collector street improvements. The subsidy program has not been funded for several
years; however, it has a limited reserve remaining for a limited number of properties that may qualify along
pending projects.
Estimated funding gap:$300,000 per year
Street Trees and Median Maintenance
The City has an active Neighborwoods program that is adding to the inventory of street trees. In addition, new
development is required to plant street trees as a condition of development. Capital projects such as Ferry Street
th
Bridge, West 11 from Danebo to Terry Street, etc., have included landscaped medians that are adding to the
City?s maintenance inventory. In FY93, the Landscapebudget was established in the Road Fund to maintain
planting beds in street medians. Since that time, more than 325,000 square feet of median beds have been added
to the inventory. Service demands have increased by more than 200% just for landscape maintenance.
Estimated funding gap:$250,000 per year
Residential and Arterial/Collector Street Lights
Recently, the Council adopted a policy requiring new developmentto install residential street lights.
Transportation System Development Charges (SDCs) currently fund new street lights associated with
improvements to arterialand collector capital projects. At present, funding is unavailableto address the requests
for lightingexisting neighborhoods, and a long list of requests exists. With the installationof street lights
associated with new development, funding for electric service and ongoing maintenance is adding to the current
unfunded liability.
Estimated funding gap:$244,000 per year
Selective Utility Undergrounding within the Right-of-Way
As projects are planned, undergrounding of existing above-ground utilitiesis taken into consideration. This
program is currently unfunded. The goal of the program would be to take advantage of current construction to
limit costs. The cost of this program would depend on the size of the projects and the number of utilities
involved.
Estimated funding gap:$200,000 per year
Nodal Development
Planning for nodal development is currently funded through the Road Fund for the transportation-related
elements. This service has an inadequate budget with approximately $90,000 in staff time spent on this activity.
The amount needs to be increased to provide for anticipated planning.
Estimated funding gap:$130,000 per year
Transportation Marketing and Education
The alternative mode program is dependent on informed citizens and requires adequate funding for educating the
communityabout options to automobile transportation. Marketing different modes of transportation is critical to
getting people out of their cars and it lacks sufficient funding. The City needs a modest, on-going budget for this
type of outreach.
Estimated funding gap:$75,000 per year
Other Transportation System Needs
Other items that need to be considered include system enhancement programs such as photo radar, photo red light
and traffic signal interconnection. Additional evaluation will have to be completed on these elements to cover
not only the capitalcost of installation, but also the on-going costs of maintenance and enforcement.
Estimated funding gaps:$57,000 per year for photo radar
Amounts to be determined for photo red light and traffic signal interconnection
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Appendix G
ADOPTED/PROPOSED CITY COUNCIL POLICIES RELATED TO TRANSPORTATION
FINANCE
EUGENE GROWTH MANAGEMENT POLICIES
Adopted by City Council Resolution No. 3867, February 2, 1998
Policy 13Focus future street improvements on relieving pressure on the City?s most congested
roadways and intersections to maintain an acceptable level of mobility for all modes.
Policy 11Increase the use of alternative modes of transportation by improving the capacity, design,
safety, and convenience of the transit, bicycle, and pedestrian transportation systems.
Policy 14Development shall be required to pay the full cost of extending infrastructure and
services, except that the City will examine ways to subsidize the costs of providing
infrastructure or offer other incentives that support higher-density, infill, mixed-use, and
redevelopment.
Policy 15Target publicly-financed infrastructure extensions to support development for higher
densities, in-fill, mixed uses, and nodal development
Policy 10Encourage the creation of transportation-efficient land use patterns and implementation of
nodal development concepts
Note: In addition to the adopted policies, ?example actions? were prepared for each policy, but were not
adopted by the City Council
Sources:
City Council Resolution No. 4554
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1998 Eugene Growth Management Study Adopted Policies
, Planning and Development
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Department (includes background on the Growth Management Study, adopted policies and
example actions for each policy)
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ADOPTED/PROPOSED CITY COUNCIL POLICIES RELATED TO TRANSPORTATION
FINANCE
REVISED DRAFT TRANSPLAN, MAY 1999
Draft under review by the Eugene and Springfield City Councils, Lane County Board of Commissioners
and Lane Transit District Board, adoption projected for Spring 2001.
FINANCE POLICIESINCLUDED IN MAY 1999 DRAFT TRANSPLAN
Finance Policy #1: Adequate Funding
Support development of a stable and flexible transportation finance system that provides adequate
resources for transportation needs identified in .
TransPlan
Status of review by adopting officials: Agreed by consensus to policy as written at July 12, 2000
adopting officials work session; formal adoption at completion of TransPlan process
Finance Policy #2: Operations, Maintenance and Preservation
Operate and maintain transportation facilities in a way that reduces the need for more expensive future
repair.
Status of review by adopting officials: Agreed by consensus to policy as written at July 12, 2000
adopting officials work session; adoption at completion of review process.
Finance Policy #3: Prioritization of State and Federal Revenue
Set priorities for investment of Oregon Department of Transportation (ODOT) and federal revenues
programmed in the region?s Transportation Improvement Program (TIP) to address safety and major
capacity problems on the region?s transportation system.
Status of review by adopting officials: Eugene, Springfield and LTD greed by consensus to policy
as written at July 12, 2000 adopting officials work session; Lane County agreed bo policy as
written on September 26, 2000, but requested revision to ?policy definition/intent? statement;
.
resolution of differing positions Fall 1999; adoption at completion of review process
Finance Policy #4: New Development
Require that new development pay for its capacity impact on the transportation system.
Status of review by adopting officials: Agreed by consensus to policy as written at July 12, 2000
adopting officials work session; adoption at completion of review process.
Finance Policy #5: Short-Term Project Priorities
Consider and include among short-term project priorities, those facilities and improvements that support
mixed-use, pedestrian-friendly nodal development and increased use of alternative modes.
Status of review by adopting officials: Agreed by consensus to policy as written at July 12, 2000
adopting officials work session; adoption at completion of review process.
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ADDITIONAL FINANCE POLICIES SUGGESTED BY STAFF TO RESPOND TO PUBLIC
TESTIMONY
Proposed New Finance Policy:
Local jurisdictions will seek changes in current restrictions in county, state and federal transportation
funding
Status of review by adopting officials: Considered at August 9, 2000 adopting officials work
session; addition of policy supported only by Eugene; not resolved; to be scheduled for further
.
review by adopting officials
Proposed New Finance Policy:
Support full funding of bicycle project capital and operations and maintenance needs as identified in
TransPlan
Status of review by adopting officials: Considered at August 9, 2000 adopting officials work
session; addition of policy supported only by Eugene and Lane County; not resolved; to be
.
scheduled for further review by adopting officials
ADDITIONAL FINANCE POLICY PROPOSED BY EUGENE CITY COUNCIL
Proposed New Finance Policy:
Maintain transportation performance and improve safety by improving system efficiency and
management before adding capacity.
Status of review by adopting officials: Considered at August 9, 2000 adopting officials work
session; addition of policy supported only by Eugene and Lane County; not resolved; to be
.
scheduled for further review by adopting officials
Note: In addition to the draft policies, ?policy definition/intent? statements were prepared for each
policy, but will not be adopted as policy by the adopting officials.
Sources:
Revised Draft TransPlan
, May 1999, Lane Council of Governments (Section II includes the draft
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policies and a ?policy definition/intent? explanation for each policy
Agenda Packet for August 9, 2000 Joint Adopting Officials Work Session, including full text of
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Eugene City Council proposed policy and policy definition/intent statement
Minutes of July 12 and August 9, 2000 joint adopting officials work sessions.
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The following section is excerpted from the City?s Financial Management Goals and Policies for reference
by the Citizen?s Budget Subcommittee in their work on the transportation funding project. The Financial
Management Goals and Policies provide the framework and direction for financial planning and decision
making by the City Council, City Boards, Commissions and Committees, and City staff. They are
designed to ensure the financial integrity of the City and a service delivery system that addresses the
needs and desires of Eugene?s citizens. Financial Management Goals and Policies were last amended
by the Eugene City Council in April 2000.
Financial Management Goals
To have a capital improvement program that adequately maintains and enhances the
Goal II:
public?s assets over their useful life.
Financial Management Policies
A:Resource Planning and Allocation Policies
Policy A.4
(Service Priorities)
.
Operating and Capital Budgets which reflect Council adopted service levels, will be prepared
by the City Manager and reviewed by the Budget Committee consistent with the following
municipal service priorities...
b.Service Level 2
. Maintain and replace the City's fixed assets, which includes
equipment, infrastructure and facilities so as to optimize their life.
Policy A.5(Operating and Capital Budgets)
.
The relationship between the Operating and Capital Budgets will be explicitlyrecognized and
incorporated into the budget process. Funding for the Operating and Capital Budgets shall
be sufficient to provide for operating services and maintenance or enhancement of fixed
assets needed to support City services.
B:Accounting and Financial Practices Policies
Policy B.9
(Non-Dedicated Revenues)
.
With the exception of grants or earmarked donations, the City will not normally earmark
revenue for specific public purposes in general service funds such as the General Fund.
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C:Revenue and Collection Policies
Policy C.3(Serial Tax Levies)
.
To the maximum extent possible, serial tax levies will be used only for time-limited operating
services or for capital improvements subject to the rate limitation for non-school
governments.
(Dedicated Revenue--Capital Projects)
Policy C.4.
To the maximum extent possible, the City will secure a dedicated revenue source to fund
general and storm sewer capital projects.
Capital Improvements Policies
D:
(Capital Improvement Program)
Policy D.1.
The City will plan for capital improvements over a multi-year period of time. The Capital
Improvements Program will directly relate to the long-range plans and policies of the City.
Operating funds to maintain capital improvements and to fund additional staff and service
needs will be estimated and identified prior to making the decision to undertake specific
capital improvements.
Policy D.2.
(Revenue Bonds--Capital Projects)
Whenever a service is an enterprise or utility-based operation and where the ratepayer
directly benefits, the City will work to finance capital improvements by using
self-supporting revenue bonds, which could be General Obligation backed.
Policy D.3
(General Obligation Bonds--Capital Projects)
.
Use of General Obligation bonds will be limited to major capital construction or
improvements as defined in ORS 310.140 in support of general municipal services.
(
General Fund Debt -- Capital Projects)
Policy D.7.
The General Fund may be pledged as a primary or secondary source of repayment of long-
term debt obligations when it is determined that this pledge is in the best interests of the City.
The maximum annual debt service on all outstanding General Fund debt shall not exceed 10%
of total General Fund expenditures in the year in which any new debt is issued. Of that
amount, no more than 5% of total General Fund expenditures shall be for long-term debt that
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is not self-supporting.
F:Organizational Policies
(Intergovernmental Contracts)
Policy F.7.
The City will evaluate its use of intergovernmental service contracts to prevent duplication
of services in overlapping jurisdictions and to assure an effective and efficient service
delivery system to the community.
G:Other Policies
Policy G.1(Compliance with Laws and Standards)
.
The City will comply with mandatory Federal, State, and local laws and regulations and,
when appropriate, will comply with industry and professional requirements or standards.
(Budget Committee)
Policy G.2.
A Budget Committee will be appointed in conformance with ORS 294.335 and Eugene Code
2.013. Lay members of the Budget Committee serve for terms of three years. The Budget
Committee's chief purpose is to review the City Manager's proposed Budget and prepare a
recommendation for Council consideration. The Budget Committee may consider and
develop recommendations on other financial issues at the direction of City Council.
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Appendix H
FUNDING ALTERNATIVES FOR
TRANSPORTATION SYSTEM NEEDS
Here we use the term to describe any mechanism that generates revenue for government
funding
services or facilities. We use to refer to ways to spread out the impact of collecting funds
financing
through the issuance of debt obligations, such as revenue bonds or interfund loans, that are repaid over
time with interest.
Current Funding Sources
Special Assessments
Local Improvement Districts
System Development Charges (SDCs)
Lane County Road Fund
State Highway Trust Fund (SHWTF)
Federal Surface Transportation Program (STP)
General Fund
Some Alternative/Additional Funding Sources
Assessments:
- Existing use could be
Broadened Assessment Practices/Local Improvement Districts
expanded to fund preservation and ongoing operations & maintenance activities. Funded
activities must directly benefit the property of those paying.
- Scope of existing SDC methodology can be
Broadened System Development Charges
expanded to include impacts of new development on arterials and collectors, local match to state
facilities, and to cover larger share of street projects. Revenues may only be used for capacity
improvements and not for operation & maintenance or preservation activities of the existing
system. SDCs are based on estimated impact on the system by the new development.
Property Taxes:
- A financing mechanism guaranteed with full faith &
General Obligation Bond (GO Bonds)
credit of issuing jurisdiction and repaid with property taxes. Potential funding for capital
construction or capital improvement projects including street and highway construction, overlay
and reconstruction projects. May not be used for operations or maintenance and repairs. GO bond
levies fall outside Measure 5 rate cap. Must be passed by a double majority at a non-general
election or by a simple majority at a general election.
- This could be a capital levy, funding preservation or major
Local Option Property Tax Levy
capital projects for the life of the project (up to ten years) or a five-year operations levy to fund
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ongoing operations & maintenance activities. Subject to Measure 5 rate cap. Must be passed by a
double majority at a non-general election or by a simple majority at a general election.
Excise Taxes:
- Could be assessed on gasoline and diesel at the pump
Local Option Motor Vehicle Fuel Tax
or at distributor level. Typically $.01 to $.03 per gallon in addition to state and federal taxes.
Could contract with state Dept. of Revenue to administer & collect revenue. Constitution limits
use to ?...construction, reconstruction, improvement, repair, maintenance, operation and use of
public highways, roads, streets and roadside rest areas...?
- Could tax gasoline, natural gas, fuel heating oil, coal and other fossil
Carbon-based Fuel Tax
fuels. Assessed in addition to state and federal taxes. Constitution limits use of revenues of the
tax from motor vehicle fuel to ?...construction, reconstruction, improvement, repair,
maintenance, operation and use of public highways, roads, streets and roadside rest areas...?
Could be levied on providers of retail, commercial and non-profit services which
Parking Tax -
provide parking to customers or participants, and on industrial or fleet parking. Amount would be
based on estimated share of use of transportation system as measured by trips generated. Can be
based on actual number of parking spaces provided or by estimated trip generation based on land
use classification.
- Could be levied on the value of the sale of a vehicle.Constitution
Motor Vehicle Excise Taxes
limits use to ?...construction, reconstruction, improvement, repair, maintenance, operation and
use of public highways, roads, streets and roadside rest areas...?
- May be levied only by a county under ORS 803.445. Fee would be
Vehicle Registration Fees
collected by Department of Transportation. Under ORS 801.041 at least 40% of the revenue must
be shared with cities within the county. Constitution limits use to ?...construction, reconstruction,
improvement, repair, maintenance, operation and use of public highways, roads, streets and
roadside rest areas...?
Utility/Usage Fees:
- Could be placed on all businesses, organizations and
Transportation Utility Fee (TUF)
households occupying property in the city. Amount of fee would be determined by property use
classification, based on typical trip-generation potential. Revenue is typically used for
maintenance, preservation and reconstruction of streets. May not be used to increase system
capacity.
- A broader version of the TUF. Could provide revenue for a broader range of
Livability Fee
city activities related to the transportation system, including streets, bike paths, street trees,
lighting, traffic calming, medians, nodal development. Assessment would be based on estimated
share of use of the whole system.
H2
- Could be used to fund construction, operation, maintenance, preservation and
Tolls
reconstruction of particular transportation elements such as bridges.
- Would require participation of residents on all unimproved or
Street Improvement fee
substandard streets in a large, non-contiguous local improvement district. Fees would be pooled
and would go to improvement of these streets only. Over time all the streets in the non-
contiguous district would be improved.
- Could be
Fees to Compensate for Dedicated Use of Traffic Lanes for Transit Purposes
implemented as compensation where public access to certain traffic lanes is impaired due to
dedicated use for Bus Rapid Transit. Lane Transit District would be the only agency paying this
fee.
Other:
- One-time interagency funding, or state or federal grant
Special Road Funding Opportunities
opportunities that may occur.
Some Traditional Municipal Revenue Sources:
Property Tax
General Sales Tax
Personal Income Tax
Corporate Income Tax
Gross Receipts Tax
Payroll Tax
Business Registration Fees
Entertainment, Lodging or Restaurant Tax
H3
Appendix I
Transportation System Funding Project
Overview of Individual Funding Options
Expanded Assessment Practices
Local improvement districts (LIDs) are a common tool that has traditionally been used by
Brief
communities in Oregon and other states to pay for the cost of providing
Description ofinitial
infrastructure to serve a specific area of the community. In Eugene, assessments
Funding Option
associated with LIDs have generally been allocated to the adjoining property owners for
their share of an initial improvement. As an example, when an unimproved street is
initially improved to City standards, the property owners adjacent to the street bear a
portion of the improvement costs. From that point forward, the community is
responsible for the preservation, maintenance and ultimate replacement of that street.
This option proposes to expand this current tool to 1) pay for the replacement/
reconstruction of the infrastructure and/or 2) use the LID concept for preservation and
maintenance needs such as overlays (maintenance districts).
This approach has never been used by the City of Eugene. However, there is no legal
Precedence
barrier to assessing adjacent property owners multiple times for the replacement or
(prior Council
preservation of the infrastructure. The test would be whether there is a ?special? benefit
history, other
to the adjoining property as compared to the overall community. Staff is unaware of this
jurisdictions?
approach being used elsewhere in Oregon. Politically, it would be very difficult to get
practice, etc.)
support by the adjoining property owners. In addition, there is code provisions that allow
for project remonstrances that would be difficult to overcome by Council.
The calculation is typically based on a cost per foot of property length adjacent to the
Calculation Base
street or square footage if wastewater or stormwater systems are the basis of the LID.
and Typical
Typical street assessments run between $70 and $100/foot, depending on location and
Rates
basis of the assessment (street classification).
Currently, staff estimate that a $53 million street reconstruction backlog exists for the
Estimated
street network over which Eugene has jurisdiction. Most of this financial liability is
Revenue Yield,
associated with the arterial/collector street network. Approximately 30% to 50% of the
Administration/
liability might feasibly be addressed through LIDs/assessments. The balance of the costs
Enforcement
would need to be addressed through the Road Fund or other sources.
Costs
There is legal authority to assess a property more than once. However, the historical use
Legal Authority
of this tool has been focused on the cost of an improvement. The use of these
initial
and Restrictions
funds would be restricted to capital projects--they could not be used for operations and
on Use
maintenance.
The adjoining property owners pay for the improvements under current policy. The
Incidence (who
district envisioned under this option could be broader and effect a larger geographic area
pays?)
as long as there could be a ?special? benefit defined for the properties within the
boundary of the LID. Sound walls are an example of a situation where multiple
properties have been assessed based on the degree of benefit derived.
I1
Expanded Assessment Practices
Staff are not aware of instances of this tool being used for subsequent replacement or
Fairness/Equity
preservation of infrastructure that was previously assessed. If, ultimately, all property
Issues
owners in the community would be expected to pay a share of a replacement cost for the
infrastructure adjacent to their property, then there would be no equity issue.
This tool would be politically challenging to implement. The Council subcommittee on
Assessment of
street improvement financing recently evaluated a street improvement fee concept
Financial
whereby all property owners adjacent to an unimproved street would pay a fee that would
Stability and
be consistent with their share of improvement costs. Council reviewed the proposal and
Political
chose not to support it. Local residential unimproved streets are currently improved
Feasibility
through an LID only when a majority of the property owners support an improvement.
Arterial/collector street LIDs are generally initiated by Council. If Council chose to
expand the use of assessments, they would need to also address the improvements of
unimproved local streets if this approach were to be viable. One can assume that this
approach would not generate a stable revenue source.
Generally, the City provides 10-year financing to property owners for the assessable
Potential
costs. If an expanded use of assessments were to be used, Council would need to
Economic
consider such issues as whether the current financing terms offered would be adequate to
Impacts
meet the owners? needs, the likelihood of foreclosure given there would be a lien against
the property, and the frequency at which a property might be reassessed and face another
long-term debt.
This approach would not be consistent with current policy and long-term practice. It
Consistency
would not be consistent with the Council goal regarding affordable housing. However, it
with Council
would provide for safe and efficient infrastructure, consistent with another Council goal.
Goals and
Policies
Staff is unaware of any other jurisdiction in Oregon that uses this approach. LIDs are
Other
common but have been primarily focused on upgrading an unimproved street to urban
Jurisdiction
standards. Another broad based approach of using an LID to provide infrastructure to a
Experiences
large geographic area was the extension and assessment of wastewater services to River
Road and Santa Clara.
I2
Transportation System Funding Project
Overview of Individual Funding Options
Broadened SDCs
Transportation SDCs are used to finance a portion of capacity-oriented improvements
Brief
(arterial/collector streets). This option would expand the use of SDCs to assist in the
Description of
funding of transportation systems within the Urban Growth boundary that are not under
Funding Option
City jurisdiction (State and Lane County). Road fund revenues that would otherwise be
used by these agencies to finance SDC-eligible improvements could be then allocated to
the City for other road funding needs within the UGB.
Currently, the City of Eugene collects a regional wastewater SDC for MWMC. It is
Precedence
likely that the City of Eugene will collect a regional parks SDC for Lane County.
(prior Council
Collection of SDCs, in general, have mitigated the investment that the community would
history, other
otherwise need to make through road funds or other sources to meet growth needs. Staff
jurisdictions?
are unaware of any other jurisdictions transferring road funds in exchange for SDCs.
practice, etc.)
Transportation SDCs are calculated based on the number of trips that are generated by a
Calculation Base
new development proposal. The number of trips are based on studies of similar
and Typical
developments types which are recorded in an ITE manual. The number of trips are then
Rates
multiplied by the cost per trip. A typical single family residential home generates an
equivalent of 1.01 trips, and the typical fee is $738. Commercial/industrial development
pays a fee based on the 1000 gross square feet of the building and number of trips for the
development type.
New development, re-development, infill, etc. pay the fee at the time of building permit
Incidence (who
issuance if additional or new impact is created by the proposed development.
pays?)
Development is creating an impact on the transportation system within the UGB
Fairness/Equity
regardless of which jurisdiction is responsible for the roadway. Collecting a fee to pay
Issues
for this impact is consistent with growth management and Transplan policies.
Lane County has a limited number of arterial/collector streets that remain under their
Estimated
jurisdiction within the City of Eugene UGB. Lane County is currently considering
Revenue Yield,
developing a transportation SDC to offset the investment they would otherwise make
Administration/
with road funds. Lane County?s CIP has currently identifies approximately $9.7 million
Enforcement
for several improvements within the UGB over the next six years. The road funded
Costs
elements of these projects that could be replaced by a Transportation SDC, if established,
and then be allocated to Eugene. A similar scenerio could be established for ODOT
improvements that would provide capacity for growth.
I3
Broadened SDCs
State ORS stipulates the limits under which transportation SDCs can be established and
Legal Authority
restrictions on how the revenues can be used. They can only be used for capacity-
and Restrictions
oriented capital projects responding to growth demands. They cannot be used for street
on Use
reconstruction unless additional capacity is added, and then only for the capacity-related
portion of the projects. Reimbursement fees can also be collected for the community?s
investment in capacity that supports growth, which in turn can be used for road-related
needs. The City is currently evaluating such a reimbursement transportation SDC. Lane
County could establish an SDC to be collected by the City, or the City of Eugene could
include the arterial/collectors under Lane County?s jurisdiction within the UGB in its fee
structure, and then transfer the SDC revenue to Lane County. In either case the projects
would need to be identified in a capital improvement plan. Road funds that would
otherwise have been used for improvements by Lane County are not required by law to
be transferred to Eugene; to do so would be a policy decision by the Commissioners.
As with the Lane County situation, ODOT facilities planned for construction that would
provide capacity for new development within the UGB could be accommodated by a
state or local SDC. A further refinement of this option could be a local match for state
facilities. The issues outlined above would also apply to ODOT facilities.
The revenue stream would be dependent on the pace of development. It would not
Assessment of
address the preservation and maintenance needs of the community unless the road funds
Financial
that would be replaced by SDCs were tranferred to Eugene?s Road Fund. This concept
Stability and
has been reviewed by the City of Eugene Public Works Rates Advisory Committee who
Political
have recommended that the two agencies, should they so choose, each create their own
Feasibility
transportation SDC versus attempting to incorporate all of those needs in the City SDC.
They suggested that it would be appropriate that the associated road funds be transferred
to Eugene, but they also acknowledged the political challenges associated with such a
transfer. The City of Eugene may be interested in supporting Lane County?s goal of
establishing a transportation SDC if the Road Urban Transition agreement that is due to
expire July 2001 can be renegotiated and improved. Likewise, the City may be interested
in establishing matching funds through SDCs if there could be some assurance of
investment in the local area by ODOT.
There is no current estimate available of the financial impact to development as a result
Potential
of either jurisdiction creating a transportation SDC. The additional costs associated with
Economic
such a fee may have an effect on Council affordable housing goals.
Impacts
This proposal would be consistent with Council?s growth management goal that
Consistency
development pay the full cost associated with its impact on the eligible infrastructure.
with Council
Goals and
Policies
As mentioned above, the City of Eugene currently is or is planning to collect an MWMC
Other
regional wastewater SDC as well as a Lane County Parks SDC. It is likely that similar
Jurisdiction
arrangements exist in other jurisdictions, and one would expect that the concept will be
Experiences
increasingly used as funding options for infrastructure improvements become more and
more restricted.
I4
Transportation System Funding Project
Overview of Individual Funding Options
General Obligation Bonds
General Obligation (?G.O.?) bonds are backed by a property tax levy upon all property
Brief Description
in the City. G.O. bonds must be approved by the voters.
of Funding
Option
General Obligation bonds are used extensively by local governments across the United
Precedence (prior
States for a variety of purposes. The City currently has outstanding G.O. bonds issued
Council history,
for the Hult Center garage, the airport expansion project and the public safety projects.
other
The City last issued G.O. bonds for transportation projects in 1974, with the issuance of
jurisdictions?
$3.3 million of Street and Sewer Project bonds. Examples of Oregon localities that
practice, etc.)
have used G.O. bonds for transportation projects are the City of Salem, City of Lake
Oswego and the City of Corvallis.
The amount of a property tax levy for G.O. bonds depends on the desired capital
Calculation Base
spending to be funded with the bonds. The levy calculation will be done annually
and Typical
during the budget process and it will take into account discounts and delinquencies in
Rates
property tax payments, interest earnings on fund balances, and an Unappropriated
Ending Fund Balance to cover any debt payments due during July through November.
The rate will be based on the total levy amount divided by the total taxable assessed
value for real and personal property in the City. Individual taxpayers will pay the tax
rate times their individual assessed value.
To fund $10 million of transportation projects with 20-year G.O. bonds, the City would
Estimated
need to levy approximately $1.1 million per year. This would cost approximately
Revenue Yield,
$0.12/$1000 of assessed value in the first year, or about $17 for the average taxpayer.
Administration/
Enforcement
Property tax levies for G.O. bonds are exempt from the $10/$1000 of real market value
Costs
tax rate cap for all general governments under Measure 5.
Property taxes are administered by the County. They prepare the tax bills, collect the
funds, and remit the appropriate amount to the City on a regular basis. Enforcement is
done by both the County and the City in the foreclosure process.
New or additional property taxes must be approved by a majority of the people voting in
Legal Authority
an election in November of an even-numbered year. In any other election, there must
and Restrictions
also be at least a 50% turnout of voters (the double-majority requirement of Measure
on Use
50).
G.O. bonds may only be used for ?capital construction ? and ?capital improvements ?
but not for ?maintenance and repairs, the need for which could be reasonably
anticipated ?. The definition of maintenance and repairs includes an exception for
?street and highway construction, overlay and reconstruction ?.
The tax is paid by all property owners within City limits. Property owners include
Incidence (who
business and residences. Businesses may choose to pass the tax on to their customers.
pays?)
I5
General Obligation Bonds
The property tax is a proportional tax on the value of real and personal property for both
Fairness/Equity
businesses and residences. It does not take into account the ability of the taxpayer to
Issues
pay the tax. There are numerous exemptions from the property tax designed to promote
a variety of policy goals, including some designed to lessen the impact on low-income
owners and tenants. Bond financing is a way to more closely match the users of a
capital project with those that must pay for the project.
This funding source would generate a lump-sum, which would be spent over a period of
Assessment of
several years on various projects.
Financial
Stability and
The property tax is understandable to the voters (as opposed to a new form of user fee or
Political
taxes), making it politically feasible from that standpoint. G.O. bond proposals have
Feasibility
had mixed success in the Eugene area in recent years. There have been six G.O. bond
proposals on the ballot from Eugene 1990, and two of those have passed (Public Safety
and Parks & Open Spaces). Council members have expressed dissatisfaction with
heavy reliance on property taxes in various forums in recent years.
This tax would increase the cost of owning a home or business, and potentially increase
Potential
the cost of leasing or renting a home or business, if the property owner passes on the tax
Economic
increase.
Impacts
Council has two financial policies around capital funding and debt issuance, both of
Consistency with
which are consistent with the use of G.O. bonds for funding transportation projects.
Council Goals
Policy C.4 states that the City will secure a dedicated revenue source to fund general
and Policies
capital projects to the extent possible. Policy D.3 states that the use of G.O. bonds will
be limited to major capital construction or improvements in support of general
municipal services.
Council goals include a desire to foster affordable housing. An additional property tax
levy would be contrary to that goal, as it would raise the cost of housing.
Several cities had G.O. bond proposals on the November ballot and none of them were
Other
successful. The City of Salem had the largest proposal, at $12 million for restoration
Jurisdiction
and resurfacing projects. They have been successful in the past in securing voter
Experiences
approval for $62 million of G.O. bonds for a variety of transportation projects.
I6
Transportation System Funding Project
Overview of Individual Funding Options
Local Option Levy
A local option levy is a property tax that is paid by all property owners within the City
Brief Description
limits. The City could impose a local option levy for capital projects for up to 10 years,
of Funding
or for other purposes for a maximum of five years.
Option
Property taxes are used extensively by local governments across the United States. The
Precedence (prior
City currently imposes a four-year local option levy, for library service improvements.
Council history,
Voters recently approved a two-year local option levy for recreation services. The City
other
has not proposed any capital local option levies in the past. Since the passage of
jurisdictions?
Measure 50, there do not appear to have been any local governments that have used
practice, etc.)
local option levies for transportation projects.
The amount of a local option levy depends on the desired spending for the program to
Calculation Base
be funded with the levy. The levy calculation will take into account discounts and
and Typical
delinquencies in property tax payments, interest earnings on fund balances, costs for
Rates
interfund loans, and a provision for a 2-month Unappropriated Ending Fund Balance for
operations. The rate will be based on the total levy amount divided by the total taxable
assessed value for real and personal property in the City. Individual taxpayers will pay
the tax rate times their individual assessed value.
There are two types of local option levies. Under a tax rate levy, the City would impose
a pre-determined tax rate each year of the levy and receive whatever amount of revenue
that generated by the assessed value within the City each year. Under a uniform amount
levy, the City would impose the same amount each year over the term of the levy. The
tax rate would change from year to year, based on the amount of total assessed value in
the City.
To fund $10 million of projects with a 10-year capital local option levy, the City would
Estimated
need to levy approximately $1.1 million per year. This would cost on average
Revenue Yield,
approximately $0.10/$1000 of assessed value, or an average of $16 per year to the
Administration/
average taxpayer over the 10-year period.
Enforcement
Costs
To fund $500,000 of operating costs with a four-year local option levy, the City would
have to levy approximately $650,000 per year. This would cost on average
approximately $0.7/$1000 of AV, or an average of $10 per year to the average taxpayer
over the four-year period.
Local option levies are subject to the $10/$1000 of real market value tax rate cap for all
general governments under Measure 5. Under Measure 50, local option levies are the
first to be reduced in the event of tax rate compression. This means that if the combined
total levies for the overlapping general governments exceeds the Measure 5 cap, any
local option levies would be proportionally reduced until the tax rate limit is satisfied.
Property taxes are administered by the County. They prepare the tax bills, collect the
funds, and remit the appropriate amount to the City on a regular basis. Enforcement is
done by both the County and the City in the foreclosure process.
I7
Local Option Levy
New or additional property taxes must be approved by a majority of the people voting in
Legal Authority
an election in November of an even-numbered year. In any other election, there must
and Restrictions
also be at least a 50% turnout of voters (the double-majority requirement of Measure
on Use
50). A 10-year capital local option levy can only be used for capital purposes. The
projects funded with a capital levy must have an average useful life of at least the term
of the levy (i.e., projects with a useful life of at least 10 years for a 10-year capital levy).
The tax is paid by all property owners within City limits. Property owners include
Incidence (who
business and residences. Businesses may choose to pass the tax on to their customers.
pays?)
The property tax is a proportional tax on the value of real and personal property for both
Fairness/Equity
businesses and residences. It does not take into account the ability of the taxpayer to
Issues
pay the tax. There are numerous exemptions from the property tax designed to promote
a variety of policy goals, including some designed to lessen the impact on low-income
owners and tenants. Projects with a useful life of more than 10 years would be paid for
by those taxpayers who live in the City only during the 10 year life of the levy, and
those citizens that use the facilities beyond the 10 year life of the levy would receive
those services with paying for them.
This tax would generate capital funding on a ?pay-as-you-go? basis, rather than
Assessment of
providing lump-sum funding on the front end of projects. The level of revenue
Financial
generated would be static during the term of the levy (assuming a uniform amount levy)
Stability and
or could increase or decrease each year depending on the change in assessed value of the
Political
City (assuming a tax rate levy).
Feasibility
The property tax is understandable to the voters (as opposed to a new form of user fee or
taxes), making it politically feasible from that standpoint. Local option levy proposals
have had mixed success in the Eugene area in recent years. There have been six local
option levy proposals on the ballot from Eugene or Lane County since Measure 47
passed, and three of those have been successful. Council members have expressed
dissatisfaction with heavy reliance on property taxes in various forums in recent years.
This tax would increase the cost of owning a home or business, and potentially increase
Potential
the cost of leasing or renting a home or business, if the property owner passes on the tax
Economic
increase.
Impacts
Council has several financial policies stating that, to the extent possible, non-recurring
Consistency with
resources, such as a local option levy, should be used for non-recurring expenses, such
Council Goals
as capital projects.
and Policies
Council goals include a desire to foster affordable housing. An additional property tax
levy would be contrary to that goal, as it would raise the cost of housing.
Prior to the passage of Measure 50, several jurisdictions funded transportation projects
Other
with a serial levy. Under the ?black box? calculation of Measure 50 permanent tax
Jurisdiction
rates, most of those serial levies were incorporated into those jurisdictions? permanent
Experiences
tax rates. Since implementation of Measure 50, there do not appear to be any local
governments that have used local option levies for transportation funding projects.
I8
Transportation System Funding Project
Overview of Individual Funding Options
Motor Fuel Tax Imposed on Distributors/Dealers
Motor fuel tax on gasoline and diesel sold in Eugene and used in vehiclesutilizing public
Brief
roadways, imposed on distributors of gas and diesel fuel products, as well as service station
Description of
owners who receive fuel from out-of-area distributors.
Funding Option
The tax could be tied to a specific set or category of projects and be structured to sunset when
the net revenue amount needed to fund those projects has been generated.
Excise taxes on motor fuels are imposed in many states. In Oregon, both Multnomah and
Precedence
Washington counties, as well as the cities ofPendleton, The Dalles, Tillamook and Woodburn,
(prior Council
impose local gasoline or motor fuel taxes.
history, other
jurisdictions?
In Eugene, a 2.7-cent per gallon tax to partially fund the storm water treatment program was
practice, etc.)
considered and rejected by the City Council in January 1995.
A motor vehicle fuel tax is typically levied as a cents per gallon but could also be levied as a
Calculation Base
percent of sales. The calculation base is generally gallons of gas (and frequently diesel fuel)
and Typical
sold inside the city limits.
Rates
The state fuel tax is currently $0.24 cents per gallon. The federal fuel tax is $0.184 cents per
gallon. Among the six Oregon cities and counties which currently impose a motor fuels tax, the
tax rates range between one and three cents per gallon.
A 1-cent tax on gasoline and diesel sold or distributed in Eugene as motor vehicle fuel would
Estimated
generate approximately$677,000 for FY02 and $685,000 for FY03, increasing slightly in
Revenue Yield,
successive years. Estimated revenues are based on Oregon Department of Transportation
Administration/
projections for gallon sales statewide (net of refunds), with an estimated allocation for Lane
Enforcement
County and Eugene based on proportionate passenger car registrations and share of population,
Costs
respectively.
Based on experiences in Multnomah and Washington counties, the cost of administration is
estimated at 1% of the gross proceeds for a tax at the distributor level, as the State (ODOT)
would be able to provide administration/collection services under contract to the City. In the
event that the tax were to be imposed at the retail supplier level, these costs may be slightly
higher. Some of the smaller cities administer their local motor fuel tax program in-house but do
not separately track those costs.
I9
Motor Fuel Tax Imposed on Distributors/Dealers
Cities have home rule authority to levy a motor vehicle fuel tax, and Council could impose the
Legal Authority
tax by ordinance, under powers granted in the City Charter. Counsel has advised us of the
and Restrictions
following limitations around the City?s ability to tax motor vehicle fuel distributors:
on Use
Due to constitutional limitations, the City would likely be unable to tax fuel distributed
<
outside of its jurisdiction.
Although the City can tax sales of fuel that occur inside its limits, it cannot tax sales that
<
occur outside its limits.
The Oregon Constitution forbids the City from imposing a tax based solely on
<
geographic location. Therefore, the City could not legally impose a tax solely on sales
to customers located outside of the limits.
The City?s authority to tax is confined within its territorial boundaries. If a distributor?s
<
facility is outside the City limits, then it has no ?nexus? or connection with the City that
would justify its taxing of either the facility or transactions occurring at that facility.
A tax on fuel storage may be an option that would serve the City?s needs, should further
<
analysis of such a tax be desired.
Additionally, Article IX, Section 3a of the Oregon Constitution imposes restrictions on the use
of the tax, in that it provides that revenue from gas and other vehicle-related taxes may be used
only ?for the construction, reconstruction, improvement, repair, maintenance, operation and use
of public highways, roads [and] streets.?The strict test is that an expenditure of gas taxes must
?primarily and directly facilitate motor vehicle traffic.? In justifying the use of motor vehicle
fuel taxes, an expenditure must be used directly for transportation services within the public
right-of-way, and there must be a direct and close connection between the expenditure and
vehicular use.
Although the tax is collected and remitted to the taxing jurisdiction by the distributors and/or
Incidence (who
retailers, it is ultimately passed through to the motor vehicle owner/operator as a component of
pays?)
their cost of motor vehicle fuel purchases. This tax would apply to motor fuel purchases by
residents as well as by non-residents who commute or do business in Eugene and purchase fuel
inside the City limits.
A motor vehicle fuel tax is a proportionaltax on a commoditywhich, to some degree, is
Fairness/Equity
discretionary. In practice, this tax is generally regressive. However, since the use of the tax is
Issues
statutorily restricted to expenditures which primarily benefit vehicular traffic, it truly is a ?user
fee.?
This tax would generate funding on a ?pay-as-you-go? basis, rather than providing lump-sum
Assessment of
funding on the front end of projects. The level of excise tax revenue generated would be subject
Financial
to fluctuation with changes in consumer consumption patterns for motor vehicle fuel. Growth in
Stability and
the revenue yield would mirror growth in the volume of fuel sales which, in turn, would reflect
Political
increased usage of the public roadways.
Feasibility
This tax failed in six out of six counties in Oregon in the November 1998 election. Survey
resultsfroma 1992 Eugene citizen survey indicated that 48% of those surveyed favored this
form of tax.
I10
Motor Fuel Tax Imposed on Distributors/Dealers
There is potential for loss of business for Eugene dealers to dealers selling outside the city
Potential
limits, where sales are not subject to the tax.However, tax rates as low as 1-3 cents per gallon
Economic
are not likely to have much affect on consumer behavior or location decisions. One opportunity
Impacts
for minimizing this concern would be to jointly impose a local motor vehicle fuel tax with the
City of Springfield.
Demand for vehicle fuel is regarded as inelastic relative to business cycles.
This tax would increase the cost of business for consumers of motor vehicle fuel. Gas/ fuel
taxes are not deductible as itemized deductions on individual income tax returns but are
generally deductible as business expenses or expenses for the production of income.
Due to statutory restrictions on the use ofthis tax, there may be limited opportunity for funding
Consistency
improvements which support mixed-use, pedestrian-friendlynodal development and increased
with Council
use of alternative modes. However, the motor fuel tax could be structured to address a
Goals and
significant portion of the funding needs for operations, maintenance and preservation of existing
Policies
transportation facilities, consistent with the priorities in City financial management goals and
draft TransPlan finance policies.
On November 1, 1999, the City of Pendleton implemented a 2-cent per gallon tax on all fuel,
Other
including diesel, sold in Pendleton and used in vehiclesutilizing public roadways. The tax is
Jurisdiction
applicable to all motor vehicle fuel which is imported or acquired for sale, use or distribution in
Experiences
the city by both distributors and wholesale/retail suppliers, provided the city tax has not been
previously incurred. The tax is scheduled to sunset when the net revenue therefrom reaches the
target of $1.2 million, which is the City?s local match share for a major street/underpass
construction project. The City estimates that goal will be reached within five years. The motor
vehicle tax proposal was brought to the Council by a 16-member citizen committeewhich
worked for 18 months, and incurred $9,000 in research and community survey costs, to develop
their recommendation to Council. In the assessment of staff, the successof and community
support for Pendleton?s tax can be principally attributed to the following factors:
direct discussions with and inclusion of wholesale and retail suppliers of gas and diesel
C
fuel in the process;
a specific, well-defined transportation project with strong communitysupport;
C
a ?sunset? provision for the tax, tied to a specific funding target;
C
protections for fuel vendors on issues of concern for them (e.g., protections from having
C
to pay the tax on noncollectible accounts).
I11
Motor Fuel Tax Imposed on Distributors/Dealers
The following list identifies some of the major policies choices which would need to be
Policies Choices
considered in order to develop an ordinance for the implementation of a motor fuel tax:
Would the tax apply to sales of all motor vehicle fuels or only to gasoline?
<
Would the tax be applied upon distribution, sale and/or storage of motor fuel?
<
Would the tax be imposed upon gross receipts from sales of motor fuels or imposed
<
using a volumetric methodology based upon gallonage?
Would the tax be imposed primarily upon persons who import motor fuel for sale or
<
distribution in the city, or should it target retail sales of motor fuel?
Should Council simply implement by ordinance or refer the tax to the voters?
<
To what extent should there be public input/discussion in development of a Eugene
<
ordinance and how would that be facilitated?
Should the tax be dedicated to specific projects or a multi-year list of projects,or should
<
it be available for appropriation for any eligible purposes?
Should the ordinance include any percentage restrictions on the use of the net revenue
<
fromthe tax (e.g., 2/3 dedicated to street reconstruction backlog)?
Should the tax contain a ?sunset provision,? specifying a date certain for Council
<
review?
What protections or concessions for fuel vendors should be incorporated (e.g.,
<
Pendleton?s ?noncollectible account? provision)?
Should the ordinanceinclude a business licensing or dealer permitting requirement?
<
What exemptions from or refunds of tax should be incorporated in the ordinance?
<
Examples of possible exemption/refund situations:
Sales to Armed Forcees
<
Importsof quantities less than 500 gallons
<
Sales of non-retail diesel fuel
<
Use of motor fuel in:
<
aircraft
<
cleaning or commercial use
<
power take-off units (cement & garbage trucks)
<
rural mail delivery
<
operation of vehicleson certain roads or private property
<
stationary gas engines (e.g., motor boats, lawnmowers)
<
Note: Some of these exemptions or refunds may be constitutionally required.
The followinglist identifies the general tasks which would need to be completed in order to
Draft Workplan
implementa motor vehicle fuel tax in Eugene. Should this funding option move forward in a
recommendation to Council, a more detailed version of the workplan would be developed and
provided as part of that recommendation.
Review authorization/implementation alternatives (refer to voters?Council impose?).
<
If appropriate, identify election timeline for submission to voters.
<
Solicit public input and discussion, as deemed appropriate.
<
Determine the structure of the tax (who pays, rate, exemptions, refunds, etc.).
<
Refine revenue estimates with ODOT, other jurisdictions, etc..
<
Develop format of dealer remittancereport;negotiate administration/collectionwith
<
ODOT.
Develop draft ordinance and resolve any legal issues or concerns.
<
Identify service needs to be funded by the tax through the normal budgetary process.
<
I12
Transportation System Funding Project
Overview of Individual Funding Options
Transportation Utility Fee
The basic concept underlying the Transportation Utility Fee (TUF) is that the comprehensive
Brief Description
transportation infrastructure is a utility system that delivers services to all users of developed
of Funding
real property throughout the city. This is similar to the concept of the city?s wastewater and
Option
stormwater utilityservices. Use of a utility systemincurs a real cost. Accordingly, a fee is
charged to recover the user?s share of overall cost of the system.
The total annual cost of the transportation utility service is measured by the city?s budget for
administration, operation, maintenance, minor improvement, preservation, modernization and
reconstruction costs of all elements of the transportation system. The transportation system?s
annualcost to be funded by the TUF is prorated among system users according to an estimate
of their share of their use of the system. A methodology that may include a number of factors
sets the actual fee levels for each propertyuse category. All revenue from a TUF must go to
pay the costs of the existing transportation system and should not be used for expansion of
transportation system capacity. SDCs and assessments remain the primary sources of funding
for capacity expansion.
A TUF is not based on the ownership or value of property and is not a property tax. The fee is
not related to fuel sales or operation of a vehicle, so the revenue from a TUF is not restricted as
a gas tax would be; it can be used for all elements of the transportation system. A TUF is also
not an special property assessment because it is not based on unique benefit to a particular
assessed property.
A Transportation Utility Fee is proportionate
to the estimated fee-payer?sshare of use of the
system. According to this principle of proportionality, a greater share of use of the
transportation system results in a higher fee, while a lower share of use results in a lower fee.
For example, under this principle of proportionality, commercial activity generating heavy use
of the transportation system will pay a higher fee than households, which generate much lighter
use.
An estimate is made of share of system use based upon the statistical data in a standard guide,
the Institute of Transportation Engineer?s, depending on how property
Trip Generation Manual
is used. The fee formula can be further tailored, if necessary, to assure proportionality under
local conditions. Undeveloped or unused property, which does not generate use of the
transportation system, should not be not subject to the fee.
A second principle of a TUF is that it is universal
. Since all developedproperty in the city
benefits from use of the transportation system, all residents, organizations and businesses
occupying that property should pay their proportionate share of the costs of the transportation
system?s operation and upkeep. Some municipalities permit deferral or discount of the fee for
demonstrated economic hardship. However, no blanket exemptions for particular classes of
property should be permitted, just as no property class is exempt from paying wastewater or
stormwater utility fees.
I13
Transportation Utility Fee
In 1985 La Grande was the first of eight Oregon cities to implement a TUF, followed by
Precedence (prior
Ashland, Eagle Point, Tualatin, Medford, Phoenix and Wilsonville. The City of Talent most
Council history,
recently adopted a TUF in 2000. Municipalities in Texas, Washington and other states are also
other
using this method of transportation funding.
jurisdictions?
practice, etc.)
The Eugene City Council has discussed the concept of a TUF in the context of stormwater
utility system funding (1994), development of the Multi-year Service and Funding Plan (1998),
and draft Transplan discussions (1999-2000). No action on a TUF was taken, however.
The total fees charged are typically calculated to produce only the level of annual revenue
Calculation Base
necessary for administration, operation, maintenance, minor improvement, preservation,
and Typical
modernizationand reconstruction the transportation system. The individual fee anyone is asked
Rates
to pay is based upon the estimated trips generated based on the type of use of the developed
real propertythey occupy. To measure trip generation, the Institute of Transportation Engineers
(ITE) has produced a , which is widely used by municipal engineering
Trip Generation Manual
departments. This manual is based on decades of nationwide study of traffic generated by a
wide range of property uses. The City of Eugene currently uses the ITE
Trip Generation
in it?s formula for determining transportation SDCs.
Manual
In most Oregon cities with TUFs, the typical number of trips for a zoned use, as given in the
ITE, is multiplied by the number of square feet of the buildings or
Trip Generation Manual
number of dwelling units. This result is then multiplied by a city-specific cost factor per trip.
Adjustments may be made for a number of factors, such as increased generation of truck traffic
as opposed to other vehicles. Further adjustments may be made for permitted deferrals or
discounts.
In Oregon cities with a TUF, the resulting fees vary from $1.42 to $5.12 per month for a single
family home, with fees for non-residential activities varying considerably depending on the
traffic generated. For example, in 1997 the Medford TUF assigns a monthly fee of $27.84 to a
fast food restaurant, and a fee of $2,195.07to a major shopping center. The fee for a single
family home in Medford in 1997 was $2.20.
Transportation utilityfees are set annuallyby council resolution or administrative action to
Estimated
meet approved budget requirements of the transportation system. The net revenue to be raised
Revenue Yield,
is controlled by the normal budgeting process. The fees to be paid are then calculated according
Administration
to a methodology adopted by council or administrative action. The amount of net revenue
and Enforcement
generated is totally dependent on the budget requirements and resulting fee levels.
Costs
Administrative costs are stable, regardless of the amount of revenue raised by the TUF. A more
complex methodology will result in higher administrative costs, while a simpler methodology
will be cheaper to administer.
If Eugene were to raise $10 million gross revenue from a relative simple TUF, occupants of
each single family residence would pay an estimated fee of $4.19 per month. This assumes that
households will pay their proportionate share of one-third and non-residential activities are
paying about two-thirds of the total revenue generated. The fee paid by commercial and other
non-residential activities would vary widely depending on size and the estimated level of trips
their activity generates.
I14
Transportation Utility Fee
To administer such a TUF, the city will need an estimated six FTE in the first year to set up and
Estimated
implementthe program. Once the TUF is up and operating, staffing can be reduced to an
Revenue Yield,
estimated 2.5 FTE. In addition, EWEB will need to be paid an estimated $0.35 per account per
Administration
month for billing costs. With these assumptions,total TUF administrative costs are estimated to
and Enforcement
be about $685,000 for the first year, and about $407,000 per year thereafter (in current year
Costs (continued)
dollars). A more detailed estimate of administrative costs will be done if the TUF is moved
forward for council consideration.
Net revenues from a $10 million gross TUF would be about $9.6 million under these
assumptions.
An incorporated city may adopt a TUF under its home-rule authority and powers granted in the
Legal Authority
City Charter. No specific authorization by statute is necessary. To avoid being classified as a
and Restrictions
tax or a special assessment and thus found invalid, a TUF must be carefully structured. Not
on Use
only should the methodology of the fee be a concern, but also the procedures for its application.
The city attorney has reviewed the TUF and has advised as follows.
A TUF based on an estimate of trip-generation based on property use is accepted by the
!
Oregon courts. This is demonstrated in the 1990's case when Medford?s TUF was
unsuccessfully challenged based on the different rates Medford charges for various
property uses. The ITE was and is still the basis for
Trip Generation Manual
Medford?s rates. At the Circuit Court leveland Court of Appeals level, the Courts
agreed with Medford?s argument that rates based on the ITE are a valid basis
Manual
for distinguishing between different categories of use. The ITE has been tested
Manual
in litigation and been accepted by courts all over the country.
A TUF is not a tax upon property and therefore is not subject to Measure 5 or Measure
!
50 limitations. Rather, it is a fee imposed upon occupancy. InRoseburg School District
v. City of Roseburg, 316 OR 374 (1993), the Oregon Supreme Court held that the
Roseburg storm drainage utility fee was not a tax on property because it was imposed
on occupants of property and not against property as a direct consequence of ownership
of property. Vacant property should not be subject to the TUF.
Courtswill probably regard a TUF as a fee so long as the amount of the fee is tied to
!
the fee-payer?s use of the transportation system, for instance based on the ITE
Manual,
and the revenue is used to support the city?s transportation system.
It is an open question as to whether the University of Oregon would be subject to the
!
TUF. An 1987 Attorney General?s opinion said that the Southern Oregon State College
was exempt from Ashland?s TUF under the general immunity of state property from
taxes.However, under the subsequentRoseburg
decision, the reasoning of the Attorney
General?s Opinion concerning SOSC?s immunityis in question. (In fact, Southern
Oregon University now pays the TUF to the City of Ashland).
TUF proceeds should not be used for capital improvementsthat are otherwise funded
!
by SDC?s, because that would undermine the basis for the SDC calculations. For
similar reasons, TUF revenue should not be used for projects that are financed through
special assessments.
Since a TUF is not a tax on property, delinquent accounts should not automatically
!
become a lien on property. Enforcement can be achieved as with other utility fees,
through shut off of the water utility.
I15
Transportation Utility Fee
An analysis of the legal aspects of a TUF done by the Lane Council of Governments in 1998
Legal Authority
concludes that, in order to avoid being classified as an assessment, a TUF should be based upon
and Restrictions
actual use of the road system and not be enforced by a lien. The resulting
on Use
benefit should be defined in terms of the resident using maintained streets rather than an actual
(continued)
benefitto that property owner and the property itself. Revenue should be restricted to
maintaining the street system rather than new improvements.
All developed and occupied properties are normally subject to the fee. The recipient of the
Incidence
utility account billing is liable for payment; this is assumed to be the occupant or the
(who pays?)
representative of the occupant.
Because the fee is billed to commercial and retail property, some of the costs of the fee will
likely be recovered from the customers of those businesses. Many customers reside outside the
city,but nevertheless would indirectly contribute to the costs of operation of the city?s
transportationsystem in this manner.
Because a TUF is based on the principles of proportionality and universality, the fee can be
Fairness/Equity
equitable in distributing the share of costs of the transportation system among all those who use
Issues
it according to an estimate of their share of use. If exclusions were granted to a group of
property users then costs would be shifted and the equity of the fee would be compromised.
A TUF is not usually described as progressive or regressive in itself because it is a utility fee
and is not income-based. Charging a fee based in part upon the occupant?s income would likely
violate the share-of-use basis of the TUF. However, inclusion of limited deferrals or discounts
based on economic hardship might bring an element of progressivity to the fee structure while
not violating its basis.
Financially, TUFs are exceptionally stable because they are a fee for service targeted to raise a
Assessment of
specific net amount of revenue. Variations of actual from projected revenues are normally very
Financial
small.
Stability and
Political
A city may adopt a TUF by council action or by placing it on a city ballot. Oregon cities with
Feasibility
TUFs have all implemented the fee structures by ordinance rather than by a vote, and typically
adjust the target revenue and actual fee levels annually by resolution or administrative action.
Development of the TUF methodologies by Oregon cities has often involved a range of
community representatives; this has helped ensured public understanding and support of the
TUF. Reports are that Oregon cities with TUFs have found it to be quite well accepted by their
communities as a means to fund city transportation systems.
Property uses generating heavy traffic will feel the greatest impact, proportionate to their use of
Potential
the transportation system. The actual fee to be paid will depend on the revenue to be raised and
Economic
the fee?s methodology. The level of the fee will likely not affect business activity, however.,
Impacts
and should be considered in comparison to the potential economic effects of deterioration of
the transportation system. No Oregoncity with a TUF has reported adverseeconomic
consequences stemming from it. On the other hand, because net fee revenues are invested in the
transportation system, economic activity is enhanced as the transportation is maintained and
improved.
It is likely that businesses will pass on some or all of their TUF costs to their customers, just as
other business costs are normally passed on. In that many people from outside the city shop and
work in Eugene, a TUF may indirectly increase their contribution to the cost of the
transportation system.
I16
Transportation Utility Fee
Households should feel little economic impact from the TUF. The amount of the TUF is likely
Potential
to be exceptionally low compared to other utility fees. For comparison, a local Eugene
Economic
newspaper subscription is currently $11.50 per month, and the average Eugene residential
Impacts
wastewater utility fee is $13.00 per month. If implemented, a transportation utility fee on a
(continued)
single family residence in Eugene would likely be less than $5 per month.
Adoption of the TUF would be consistent with several Council Goals and Policies. Among
Consistency with
these are Goal I: ?To establish and sustain a community
Financial Management Goals
Council Goals
supported service system,? and Goal II: ?To have a capital improvementprogram that
and Policies
adequately maintains and enhances the public?s assets over their useful life.?
A TUF would also be consistent with
Financial Management Policies,Section C: Revenue and
Policy C.2. ?The City Council will establish cost recovery policies for fee
Collection Policies,
supported services which consider the relative public/private benefits receive from the services
being provided and/or the desirability of providing access to services for specialized
populations. These policies will determine the percentage range of full service costs to be
recovered through fees. The level of cost recovery will be routinely adjusted to ensure that rates
are current, equitable, and competitive and cover that percentage of the total cost deemed
appropriate.?
Finally, a TUF would meet the by allowing continuing
1999-2000 Vision and Goals Statement,
provision of a safe, efficient transportation infrastructure.
Transportation Utility Fees have now been successfully implemented in eight Oregon cities, as
Other
well as cities in other states. Court challenges to TUFs in Medford failed in the 1990s. No
Jurisdictions?
Oregon city has repealed a TUF once having established it.
Experiences
In establishing and structuringa TUF, the followingpolicy issues are among those that should
Policy Choices
be considered.
1.The ordinance establishing a TUF must declare a transportation utility exists and
should list the systems elements. The greatest flexibility will result from a
comprehensive listing of system elements. What transportationsystem elements are to
be included in this definition of the transportation utility?
2.The ordinance also authorizes the type of activities on which TUF revenue may be
spent.Again, the greatestflexibility will result from a broad listing of eligible
activities. What activities should be included?
3.Should the ordinance establishing the TUF have a sunset date?
4.
5.How will the TUF rates be adjusted to produce the necessary revenue; by ordinance,
resolution or administrative order? Should rates be adjusted annually or less
frequently?
6.How will the council, budget committee or other group be involved in rate-setting?
7.Should the TUF be referred to the ballot or should it be adopted by action of the City
Council?
8.Should the ITE or another means of estimating trips, such as
Trip Generation Manual
required parking spaces, be the primary basis for assigning trip generation rates to
categories of use of properties?
9.Should there be a credit for bicycle or transit use? How will this be applied?
10.Should heavy truck or other intense traffic generated by the propertyuse be included in
calculating the rate for a category of use, if the data is available?
I17
Transportation Utility Fee
11.To what extent will administrative action be allowed to address requests for change in
Policy Choices
use category, requests for adjustments, application for deferrals or discounts, or other
(continued)
issues not addressed in the enabling acts? Should city council participation be required
for some of these actions?
12. It is feasible to have from three or four to over thirty separate property use categories,
each with an assigned rate. Should the TUF have only a few categories of property uses
with highly generalize trip-generation rates or greater number of categories with more
specific trip-generation estimates?
13.Should residential uses be subdivided into single-family and multi-family with different
rates assigned?
14.Should there be a separate senior housing and group housing property use categories?
15.Should there be an at-home business adjustment to the residential rates to account for
increased trips from home businesses?
16.What form of appeal will be provided if someone feels they are not paying the correct
rate?
17.Will traffic surveys and/or other means be allowed as a way to improve information
and adjust the rate otherwise provided in the ITE?
Manual
18.Should a limited economic hardship deferral or discount be included? What should be
the definition of economic hardship for deferral eligibility?
19.Should ?by-pass? adjustments, which reduce the total trip-generation rate for properties
that serve people who happen to be passing by rather than making a special trip, be
made to certain non-residential use categories?
20.Should variation in typical trip length be included in calculating rates for different
geographic areas of the city, if the data is available?
21.Should the TUF include a factor adjusting for atypical modes of transportation of users
of the property, such as greater than average use of bicyclesor public transit, if the data
is available?What will be the basis for the adjustment?
The following identifies the general tasks to be taken in order to implement a TUF in Eugene.
Draft Workplan
Should this funding option be moved to council, a more detailed version of the implementation
plan will be prepared.
Solicitpublic input at each stage of work
!
Adopt general structure and outline methodology.
!
Draft ordinance and/or resolution.
!
If appropriate, submit TUF to voters.
!
Address any identified legal issues.
!
Finalize methodology,including property use categories, adjustment factors, deferral
!
and discounts, appeals process.
Set up dedicated subfund in the Road Fund, or independent dedicated fund.
!
Set up workunit and assign or hire staff.
!
Develop necessary data, including accurate estimates of square footage, updated
!
information on use of property, data on transportation mode and truck traffic generated
by various use categories.
Perform field surveys as necessary.
!
Work with EWEB, LCOG, Lane County Assessment & Taxation as appropriate.
!
Develop and implement computer models and data structures; enter data as necessary.
!
Refine revenue estimates and administrative cost estimates.
!
Integrate rate-setting process with annual budgetary process.
!
Identify serviceneeds to be funded and funding levels through the regularbudgetary
!
process.
Implement model and set rates according to budgetary need.
!
Implement appeals and adjustment processes.
!
I18
J1
Off-street Transit Facilities
Transit Facilities
Off-street Pedestrian Facilities
Pedestrian Facilities
ilitiesOff-street Bicycle Fac
ilitiesBicycle Fac
Facilities
Off-street Handicapped
Handicapped Facilities
Health, Safety & Welfare
Street Trees
Other Activities
Related Operations or
Striping
Lighting
Signals
Signage
Replacement
Renewal
Minor Improvement
Reconstruction
Repair
Maintenance
Construction
Operation
Administration
M I N U T E S
Citizen Subcommittee of the Budget Committee
Transportation Funding Project
Public Works Conference Room, 858 Pearl Street, First Floor
September 19, 2001, 5:30 p.m.
PRESENT:Eleanor Mulder, Chair; Craig Wanichek, Vice Chair; Howard Bonnett, Jack Lucier, Bruce
Mulligan, Jennifer Solomon, members; Jim Carlson, City Managers Office; Kurt Corey, Eric
=
Jones, Valerie Dixon, Jeff Lankston, Jim McLaughlin, Paul Klope, Public Works
Department; Larry Hill, Becky Koble, Central Services; Bud Furber, Pavement Services,
Inc.; John Ostrowski, JOMC.
ABSENT:Eric Forrest, Paul Holbo, members.
Ms. Mulder called the meeting of the Citizen Subcommittee of the Budget Committee to order.
I.APPROVAL OF MEETING MINUTES
Ms. Solomon moved, seconded by Mr. Bonnett, to approve the Citizens Subcommittee of the Budget
=
Committee meeting minutes of April 23, 2001, as submitted. The motion passed unanimously.
II.PRESENTATION OF CONSULTANT REPORT ON PAVEMENT PRESERVATION
Mr. Corey explained that the Public Works Department staff had analyzed pavement conditions throughout
the Citys network of improved streets, which were presented in a report entitled Pavement Management
=
System Report - An Update on City of Eugene Pavement Conditions(March 2001). He said that to
confirm the results of that report, the City authorized a review of the analysis of pavement conditions and
funding needs through Pavement Services Inc. He proceeded to introduce Arthur (Bud) Furber, Principal
Engineer of Pavement Services, Inc., who presented an overview of findings in the Review Of Funding
Needs for Pavement Preservation.
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 1
Mr. Furber stated the review confirmed that the City of Eugenes assessment of the current condition of the
=
pavement as rated through the Citys pavement management system was on track. He said the study
=
concluded there needed to be some adjustment in the unit prices for pavement rehab work, and the effect
of that adjustment was a slight increase in unit prices. Mr. Furber explained that the City had an excellent
data base of how pavements performed over time,and that these pavements had an expected life 37
percent longer than what had been modeled in the software and, therefore, would cost less to maintain. He
commented there was a more effective way of allocating maintenance dollars by using a sub-budget for the
arterial overlays, the residential overlays, etc.
Mr. Furber referred to page 5 of the review - Exhibit 1, Comparison of Effect of Budget Allocation on
Deferred Work Backlog, as follows:
Estimated backlog after 10 years with no additional funding - $231,500,000
Estimated backlog after 10 years with $8.5 million Annual Budget Prioritized Best First in Single
A@
Budget - $56,600,000
Estimated backlog after 10 years with $6.5 million Annual Budget Prioritized by Sub-budgets -
$55,100,000
Estimated backlog after 10 years with $8.5 million Annual Budget Prioritized by Sub-budgets -
$40,100,000
Mr. Furber summarized that the Citys work with the pavement condition assessment was on target, and the
=
result of the findings of his analysis was that the additional cost could be attributed to the delay in funding
and, if it were not for that fact, the backlog in 2011 would be the same as the City had estimated: namely,
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 2
$32 million.
Mr. Furber referred to Exhibit 2, Cost Distribution; Exhibit 3, Effect on Backlog Distribution; and Exhibit
4, 2011 Pavement Condition Distribution, which reflected that most streets would be in good condition in
2011, if preserved and rehabilitated as scheduled with the recommended $8.5 million per year. He said the
streets in the chart in Exhibit 4 that were in poor condition in 2011 were due to the lack of funding
available to be spent on reconstruction projects (in the $8.5 million per year plan) because most of the
available funding would be directed to overlays and slurry seals.
In response to a question from Mr. Wanichek, Mr. Furber replied that the first objective would be to
stabilize the backlog. He conceded that 10 years was a long time over which to attempt to estimate but
opined it would be prudent to get to a funding level where, over time, the backlog would decline.
In response to a question from Mr. Bonnett, Mr. Furber replied that if all the projects were put in one pot
of money and sorted by condition, some projects would not be addressed. He explained that projects
should be separated into segments with money allocated from “the bottom up to prevent projects from
@
falling into the reconstruction category. Mr. Furber added that, with respect to residential streets, they
could be protected from falling into overlays by applying slurry seals. He explained that separating
systems into sub-budgets and prioritizing accordingly provided the ability to focus where the need was
greatest.
In response to another question from Mr. Bonnett, Mr. Furber replied that a minor arterial classification
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 3
would average all streets together and review their performance over time. He said there were default
models in the software, a critical component, to arrive at a better performance. Mr. Furber explained that
the default model came into play approximately 60 percent of the time. He remarked that (1) 37 percent
was a weighted average of all the classifications; (2) an increase in the life of major arterials, which
accounted for approximately two percent of the total system lane-miles, could be as high as 85 percent; and
(3) an increase in the life of residential streets, which accounted for approximately 70 percent of the
system, was approximately 30 percent.
In response to a question from Mr. Mulligan, Mr. Furber confirmed that the slurry seal was the most
effective method to maintain the condition of residential streets and more economical than doing overlays.
He elaborated that the primary failure on residential streets was the aging of asphalt concrete and that
applying slurry seal within 3 to 5 years would prevent the age-related cracking. Mr. Furber estimated that
at least 8 to 10 years of life (possibly up to 20 years, based on the City of Vancouver’s experience) would
be possible for residential streets with the application of aggregate slurry seal, and that this application
could be applied at least two to three times. He added that residential streets with bus routes were a
different situation, because the buses will more quickly cause structural failure to the pavement.
In response to a question from Mr. Wanichek, Mr. Furber responded that, in simulating the $8.5 million
annual funding applied to the preservation backlog, the unit cost used included the Citys engineering and
=
administration costs, testing, ancillary/associated work, and the effects of inflation. He noted that 22
percent was the average percentage, based on actual City experience, used for estimating those City costs
as a percent of the construction cost. He said in some cases, the actual cost items were quite high as a
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 4
percent of the construction cost and were, therefore, adjusted downward to reflect an overall average of
those costs across project sizes and types and to compensate for the effects of inflation from 1995-2001.
After adjustment, the result was a slight increase in the unit cost over that period.
Mr. Bonnett asked the following question: If $8.5 million was provided for a program to include the
application of slurry sealing and overlaying, and an allocation was included for striping, engineering, and
administration expenses, what percentage savings to the current budget of the Department would be
realized? Mr. Furber responded that the stop-gap work would move off to other parts of the system, and he
doubted a significant portion of it would be replaced by the repair work. He said he could not provide an
exact figure to Mr. Bonnetts question. Mr. Corey said that the report to be presented in the next agenda
=
item would provide information on what was being spent on various activities that were funded by Road
Fund revenues. He said he would not want there to be an expectation that the current expenditures would
decrease by a certain percentage; however, he added that the goal for this type of pavement management
program was to cap the liability and avoid inflationary increases, and over time the overall maintenance
expenditures would decrease. Mr. Corey concluded that absent such a program, the costs would increase
over time. Mr. Bonnett questioned how much of the operations and maintenance needs could be
discounted if this program was instituted.
III.PRESENTATION OF CONSULTANT REPORT ON ROAD FUND OPERATION AND
MAINTENANCE ACTIVITIES
Mr. Corey explained there had been a request made by the Budget Committee that an analysis be prepared
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 5
by an outside source of what was presently being undertaken with the existing Road Fund budget and the
level of efficiency it demonstrated. He said that John Ostrowski, JOMC, had been selected to provide this
analysis and would present an overview of its contents.
Mr. Ostrowski referred to the City’s request for a review of the efficiency of functions of the Road Fund
and a review of privatization options. He said that the report would include an analysis of both of these
areas.
Mr. Ostrowski stated that he chose Vancouver, Washington; Fort Collins, Colorado; Boulder, Colorado;
Salem, Oregon; and Sunnyvale, California for comparison analysis, as they were roughly the same
geographical size, the same size of roadwork network, and employed a similar approach to progressive
government. Mr. Ostrowski highlighted the key findings:
1.Eugene places more reliance on State Highway Trust Fund Revenue than other similar cities.
2.Urban forestry is charged to the Road Fund only in Eugene.
3.Eugene has generally efficient operations when compared to other cities.
Mr. Ostrowski highlighted the key recommendations:
1.Need to continue performance measurement and focus on key activities.
2.Private contracting options should be further analyzed with employee involvement.
3.Begin funding Pavement Management overlay program to reduce future maintenance costs.
Mr. Ostrowski pointed out that the total budget of general maintenance and sidewalk/concrete maintenance
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 6
was $2 million, in response to Mr. Bonnet’s question during the last segment, explaining that you can not
hope to save even half of that amount through increased efficiency. He further explained that while there
might be some efficiency gained through review of the use of the concrete crew to balance workload, and
vice versa, the cost of the concrete crew is only around $500,000, so you can’t hope to save any more than
that.
Mr. Ostrowski observed that he initially thought the pavement backlog costs in Eugene seemed higher than
he was accustomed to in Vancouver until he acknowledged that Vancouver had been doing restoration
projects for 20 years, and the higher Eugene cost represented the cost of delayed maintenance. He noted
that the $5,000 per mile expenditure in Vancouver was a council policy.
Mr. Ostrowski highlighted the minor recommendations, and said many had been suggested by City staff:
Review amount of departmental administration charged to the Road Fund.
Survey administrative customers to improve service.
Continue to assess co-location opportunities.
Review Grounds Maintenance Practices against APWA Management Practices Manual.
Continue to review new construction of landscaped areas to minimize future maintenance expense.
Separate group re-lamping costs in the Street Lighting budget.
Examine Street Light shop inventory for surplus materials.
Continue review of signing and striping costs.
Examine cost saving opportunities by tracking vehicle utilization in traffic engineering.
Track the effort devoted to ongoing traffic operations, system improvements such as optimized signal
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 7
timing, neighborhood traffic studies, complaint response, and general information.
In response to a question from Ms. Mulder, Mr. Ostrowski pointed out that as other cities tapped general
fund money for administrative costs, they were not paying for those costs out of their Road Fund budget.
Mr. Carlson pointed out there was a separate Central Services Allocation in the Road Fund and cautioned
the committee to consider that point when comparing administrative costs with other cities. Mr. Ostrowski
said that the standards in the industry depended on the magnitude of the programs and cautioned against
usingbenchmarks for administrative costs.
In response to a question from Mr. Wanichek, Mr. Ostrowski replied that funding shortfalls could be
closed in a variety of ways, such as general tax revenues. He cautioned that the more complicated the
structure, the more difficult it would be for citizens to understand. Mr. Ostrowski said that the other cities
in the report were spending $4,000 - $5,000 per mile on pavement preservation projects. He also remarked
that other cities were receiving funding for such slurry seals and overlays from general fund sources or
special taxes and not from their street funds.
In response to a question from Mr. Bonnett, Mr. Ostrowski opined that a transportation utility fee would be
preferable to generate funding. Mr. Carlson commented that General Fund moneys for road costs ceased
when Lane County began to provide revenues to cities for that purpose.
Mr. Bonnett spoke of historical budget shifts that had occurred in Eugene for programs such as street
cleaning and street trees. For example, unlike comparable cities, Eugene provides urban forestry services
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 8
through the Road Fund. On the other hand, Eugene provides street cleaning through the Stormwater Fund
instead of the street funds used by comparable cities. He questioned if there could be some savings in the
Street Tree Pruning Program and asked if there was data that would allow the comparison of the
contractual versus in-house costs for such programs. Mr. Ostrowski said he did not provide such a cost
comparison but that it could be obtained. Mr. Bonnett also questioned if the City had properly defined the
service areas and/or the performance measures if they do not allow comparisons with other cities. Mr.
Ostrowski reiterated that the City is doing more than most cities in the area of performance measures. His
recommendation to the City was to focus on the elements already in place, to keep doing what we’re doing
and improving on it. He suggested that measurements are a waste of time if no one is going to use them to
improve performance.
Mr. Bonnett commented that the report was very well done but said that the asterisks were very confusing.
Mr. Ostrowski explained that the use of two asterisks were not to be construed as a reference; two
asterisks reflected his whimsical way of noting that such data did not come with as high a degree of
confidence as he would have preferred. He said he would modify that format in future productions of the
report.
Mr. Carlson asked Mr. Ostrowski for a general sense of how the City was providing transportation
operation and maintenance services, as compared to other cities. Mr. Ostrowski replied there was a self-
assessment culture in Eugene that was essential to efficiency and that the City was doing an excellent job.
He said that the only shortcoming he detected was in the failure to provide adequate funding for pavement
management.
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 9
In response to a question from Mr. Wanichek, Mr. Ostrowski responded that the only administrative cost
associated with a $8.5 million preservation program would be what was necessary in order to administer
the projects. He doubted that the distribution of administrative costs city-wide would change dramatically
due to the capital projects. Mr. Carlson added that additional personnel would not be added in Payroll or
the City Manager’s Office due to the increased capital budget, so the total pool of administrative costs
would not necessarily increase. Mr. Ostrowski concluded that in his experience, administrative costs were
a non-issue.
IV.SUBCOMMITTEE DISCUSSION OF FORMAT AND CONTENT OF FINAL FUNDING
RECOMMENDATION TO COUNCIL
Mr. Carlson confirmed the pavement preservation backlog was higher than previously estimated, but that it
would cost less to preserve over time, as pavements were apparently lasting longer than estimated.
However, Mr. Carlson reiterated that an investment of $8.5 million was needed to begin making progress
on the preservation backlog.
Ms. Mulder distributed a draft memorandum dated September 19, 2001, entitled Final Recommendation
on Transportation Funding Issues.
Mr. Carlson reminded the committee that it had delayed making a final recommendation on this issue
pending the pavement management review and now, with that in hand, a recommendation could be
finalized.
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 10
In response to a question from Mr. Bonnett, Mr. Carlson replied that the green line on Exhibit One on page
5 of the Review of Funding Needs for Pavement Preservation assumed that the City would have annual
funding of $8.5 million for the preservation program, including the backlog. He explained, however, that
it was anticipated there may be operation and maintenance funding shortfalls over the ten-year period
which could affect the ability to dedicate the entire $8.5 million to the preservation backlog in years in
which operation and maintenance services were not adequately funded. Mr. Bonnett said he was
uncomfortable recommending the proposed funding package to the council if, in fact, the projection
outlined by the green line could not be achieved. Mr. Carlson responded that the reason it was suggested
the annual budget process be utilized with the implementation of such a funding package was because
there are many variables in the out years which could affect the actual outcome of the funding
recommendation. For example, we do not know what will happen in the future with the Lane County
Road Fund, state-shared revenues, or even a proposed reimbursement component to the transportation
SDC. He noted that two or three years from now, if revenues are realized as projected in the spreadsheet,
Council may make the choice to increase the TUF or other funding mechanism in order to generate
sufficient resources to meet both operation and maintenance costs and to maintain the $8.5 million level of
annual funding to the preservation backlog.
Ms. Mulder stated she had not understood that the TUF could be used for operation and maintenance. She
said if there was an excess of revenues that was not needed, the council, through the budget process, could
reduce the TUF. Ms. Mulder concluded that she would support the committee’s original suggestion, as
long-term estimates were difficult to project.
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 11
Mr. Mulligan pointed out that if the committee did not act, the costs would escalate and the streets would
continue to deteriorate. He said that the gas tax was a risky proposition given the current economic
climate, but it could be a start. Mr. Mulligan referred to one of the consultant’s recommendations that the
early treatments of the residential streets would provide a noted improvement to residents as to what was
being done with their dollars.
Mr. Bonnett suggested that a different set of graphs be prepared to track reconstruction and actual forecasts
and that narrative be included with the committee’s recommendation elaborating the details of the plan.
Mr. Carlson explained that a transportation utility, created to account for the new funding resources, would
be managed through the annual budget. Additionally, budgetary decisions would need to be made on an
annual basis to adjust the TUF rate, as needed, and to allocate the proceeds therefrom.
Mr. Wanichek stated that, in his opinion, it was a sound investment to recommend this funding package to
begin addressing the preservation program. He added that capturing Lane County residents and
businesses, as well as Lane Transit District (LTD) would be prudent and that the trips measurements
should be consistent with the standard measurements as listed in the Institute of Transportation Engineers
(ITE) Trip Generation Manual. Mr. Carlson remarked that no entity used every single trip rate from the
ITE Manual and that there would need to be some adjustment.
Mr. Wanichek suggested that an amendment be made to the motion to include a provision that the gas tax
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 12
be instituted in collaboration with the City of Springfield and that it not exceed five cents per gallon.
Mr. Mulligan stated strongly that, in light of the current political climate, it would be ill-advised for the
City of Eugene to individually implement a gas tax; rather, that a cooperative implementation with
Springfield would be the best approach.
Ms. Solomon pointed out that the City Council could set up a TUF that would collect less revenue than
that of the recommendation put forth by the committee.
Mr. Mulligan urged that the committee recommend that the standard, industry-specific measures be used to
determine trip generation charges. Mr. Bonnett said he was not comfortable with the inclusion of such
language in the motion but would not vote against it. There was additional discussion on appropriate
language.
Mr. Wanichek moved, seconded by Mr. Mulligan, as follows:
We, the citizen members of the Eugene Budget Committee, recommend that the City Council implement a
transportation funding package consisting of a combination local motor vehicle fuel and transportation
utility fee, collaborating with the City of Springfield on the motor vehicle fuel tax, for the purpose of
generating an additional $9 million (FY02 dollars) each year to address the City’s transportation system
funding needs. We further recommend the use of the Institute of Transportation Engineers (ITE) Trip
Generation Manual as a basis for the transportation utility fee.
MINUTES- Citizen Subcommittee of the Budget Committee September 19, 2001Page 13
The motion passed unanimously.
V.DISCUSSION OF DELIVERY OF RECOMMENDATION AND REPORTS TO COUNCIL
Ms. Koble announced that the work session with the City Council would be held on October 17, 2001. It
was determined that Ms. Mulder and Mr. Wanichek would review the draft memorandum entitled Final
Recommendation on Transportation Funding Issues and that comments on the contents of that memo
should be forwarded to Ms. Koble.
VI.ADJOURNMENT
The meeting adjourned at 7:34 p.m.
(Recorded by Joyce Ogden)
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