HomeMy WebLinkAboutItem B: Strategies for Long-Term Transportation Needs
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: Strategies for Long-Term Financial Stability for Transportation System
Operations, Maintenance, and Preservation
Meeting Date: February 27, 2006 Agenda Item: B
Department: Public Works Staff Contact: Kurt Corey
www.ci.eugene.or.us Contact Telephone Number: 682-5241
ISSUE STATEMENT
This work session provides an opportunity for continued City Council discussion of potential revenue
strategies to address not only the projected ongoing operating deficit in street operations and maintenance
(O&M) but to also generate additional revenue to be dedicated to the backlog of unfunded projects in the
Pavement Preservation Program.
BACKGROUND
In September 2001, the Citizen Budget Subcommittee on Transportation System Funding presented its
Final Recommendation on Transportation Funding Issues which contained among its conclusions the
assertion that “In the face of projected O&M shortfalls and service reductions beginning in FY03,
ensuring adequate funding for the operation and maintenance activities of the City’s transportation system
is absolutely essential.” At that time, the Citizen Budget Subcommittee also 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, which
included $8.5 million for the backlog of road preservation work plus an additional $425,000 for off-street
bike paths.
On December 9, 2002, the council approved an ordinance establishing a transportation system
maintenance fee (TSMF). On January 27, 2003, a related transportation revenue measure, the local motor
vehicle fuel tax (“fuel tax”), was approved by the council. On September 8, 2003, the council voted to
repeal the TSMF ordinance, citing the recent repeal by Springfield City Council of that city’s TSMF and
concerns about equity between the two cities, as well as concerns raised by the Eugene Chamber of
Commerce about the structure and impact of the TSMF on Eugene businesses. At that time, the council
also cited continued hope for collaborative solutions with partner agencies and with Lane County, in
particular.
On January 24, 2005, the council approved a two-cent increase to the City’s local motor vehicle fuel tax,
which has allowed the City to continue to make progress on the backlog of pavement preservation
projects in Eugene. This tax increase was approved with a sunset date of February 29, 2008, at which
time the tax is scheduled to revert to $.03 per gallon.
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On September 26, 2005, the council reviewed and discussed the financial status and fund forecast for
Eugene’s Road Fund. At that time, the council reviewed an illustrative list of program reductions and
eliminations which would be required if a strategy of service reductions alone were employed to correct
the structural deficiency between Road Fund revenues and expenditures and to eliminate the $2 million
projected annual deficit. 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 which would also generate additional revenue to be dedicated to the backlog of
unfunded projects in the Pavement Preservation Program.
At that same work session, staff was directed to come back with a list of the new street-related projects
included in the FY2006-2011 Capital Improvement Program which were expected to be funded with
money that could have otherwise been used for operations, maintenance and preservation of the street
system. That information is being provided here as Attachment A. In summary, within the framework of
existing City Council policies, MPC policies, State law, Federal legislation and intergovernmental
restrictions, the only projects in the FY2006-2011 CIP funded with monies that could otherwise have
been used for street operations, maintenance and preservation (OM&P) are the $30,000 annual allocation
($180,000 over the six-year CIP) of General Fund monies which are directed by City Council policy to
traffic calming.
On February 15, 2006, the council began a review and discussion of the potential revenue strategies
presented here. Due to time constraints, the council reached no definite conclusions but indicated a desire
to continue the discussion at a future meeting date, which is the purpose for this evening’s worksession.
Financial and/or Resource Considerations
Road Fund - The Road Fund accounts for operations and maintenance (O&M) of the city’s street system.
The majority of the Road Fund revenue comes from Eugene’s share of the State Highway Trust Fund,
which is derived from Oregon motor vehicle fuel taxes as well as state motor vehicle registration fees and
weight-mile taxes. Revenue growth in the State Highway Trust Fund has been relatively flat since FY00,
when the City was receiving about $6.0 million per year in allocations. The projected revenue for FY07
is less than $6.2 million, which equates to only a 3% growth over the entire seven-year period.
The second major source of revenue for this fund is the County/City Road Partnership Agreement that
once contributed $2.5 million per year and more recently has been providing about $1.2 million in annual
street maintenance funding to Eugene. The current agreement expires in FY07, and the Board of County
Commissioners adopted a five-year Capital Improvement Plan which discontinues the partnership
payments to Lane County cities after FY07, which means that Eugene would lose over $1 million in
annual street maintenance funding beginning in FY08. In the meantime, Eugene continues to look for
opportunities to cooperate with the County in identifying sustainable mechanisms and agreements for
funding operations, maintenance and preservation (OM&P) for all of the regional transportation system.
Cost reductions of $850,000 were implemented in the Road Fund in FY04, primarily through elimination
of the in-house street overlay program and organizational restructuring and consolidations of Public
Works divisions and work crews, which resulted in the elimination of supervisory positions. These cost
reductions were implemented as a partial remedy for stabilizing the O&M activities for the city’s road
system, with the hope that additional revenue sources for O&M activities would eventually be realized as
an outcome of the council’s ongoing work with transportation funding. However, insufficient additional
resources have been identified to date, while at the same time the fund continues to experience growth in
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operating costs. In FY07, the Road Fund is expected to generate an operating deficit of nearly $540,000
in the course of providing basic O&M activities such as street lighting, pothole patching, street tree
maintenance, signing and striping. Based on current projections, that annual deficit would grow to nearly
$2 million in FY08 when the County/City Partnership transfer is scheduled to be discontinued.
Pavement Preservation Program - On the capital side of the program, the implementation of a 3-cent-per-
gallon local motor vehicle fuel tax in August 2003 (raised to 5 cents in January 2005), along with revenue
from the reimbursement component of the Transportation SDC and Eugene’s share of the Lane County
OTIA III maintenance monies, have allowed the City to begin addressing the significant backlog of
pavement preservation projects in Eugene. During the 2005 construction season, the City completed
rehabilitation of approximately 12 lane miles of streets. Four contracts were awarded on eight different
street segments, including the completion of one additional project made possible due to the two-cent
increase in tax. However, the pavement preservation backlog, projected at $102 million as of the end of
2005, continues to grow. Additional funding is still needed to reverse this trend and to do the repair work
necessary to ensure the efficient and safe operation of the local transportation system. In its report to the
council in October 2001, the Citizen Budget Subcommittee recommended a street pavement preservation
program revenue target of $8.5 million annually to address this high-priority funding need. An additional
estimated $4.7 million is needed to meet that target funding goal for FY07, once the county OTIA III
revenue-sharing agreement ends. That funding gap grows to $5.8 million per year by FY09, when the 2-
cent motor vehicle fuel tax increase is scheduled to sunset.
Citizen Budget Subcommittee Conclusions, June 2001 - As part of its two-year study of Eugene’s
transportation funding issues and deliberations on possible new funding alternatives for the City’s unmet
transportation needs, the Citizen Budget Subcommittee reviewed over 20 potential revenue sources in
broad categories ranging from assessment mechanisms, property tax-based options, various forms of
excise taxes, utility/user fees, as well as more traditional general municipal revenue sources. Additional
revenue sources were suggested by subcommittee members and researched by staff. Staff prepared more
in-depth analysis on those alternatives selected by the subcommittee for further study, and these were
further studied and discussed at subsequent subcommittee meetings. At the end of their deliberations, the
subcommittee members agreed that “the most effective transportation funding package would consist of a
transportation utility 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.” (Transportation
System Funding Interim Report, dated June 2001). Excerpts from the subcommittee report entitled
“Subcommittee Discussion – Transportation Funding Alternatives” are included here as Attachment B.
Potential Alternative Revenue Options, January 2006 - As an alternative to implementing service
reductions in the operations and maintenance (O&M) component of the city’s transportation service
system for FY07, the council could consider the implementation of one or more alternative revenue
options, such as those that follow:
?
Street Lighting Fee – Under this concept, the City would levy a city-wide street lighting fee to fund
the operation, maintenance and enhancement of the City’s street lighting system along arterial,
collector and neighborhood streets, a program which is budgeted at about $800,000 for FY07. The
revenue would be dedicated to paying the cost of maintaining light fixtures, replacing fixtures and
parts, and utilities. This revenue mechanism would also potentially allow the council to begin
addressing the issue of missing street lights along arterial and collector streets if the fee were
implemented with a capital component. More detailed information is provided on this potential new
revenue mechanism in Attachment C.
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?
Shift Funding for Street Trees/Median Maintenance Program to Other City Funds – The council could
consider transferring specific programs which are now supported by dedicated Road Fund dollars to
one or more other City funds. Specifically, the Street Trees/Median Maintenance Program with an
FY07 Proposed Budget of $1,310,000 and 14.9 FTE (which includes a $150,000/2.0 FTE service
enhancement package for restoration of preventive maintenance pruning services) could be transferred
to the Stormwater Fund and other City funds. Historically, the Street Tree Program was funded with
General Fund resources, but this program was transferred from the General Fund to the Road Fund in
the early 1990s in an effort to reduce budgetary pressure on the General Fund service system.
However, it may now be appropriate to consider returning a portion of the financial obligation for
street tree/median activities back to the General Fund.
Significant justification also exists for funding a portion of the cost of street tree and median
vegetation maintenance through stormwater user charges. Urban forests, including street trees, have
proven benefits in reducing stormwater runoff, with increased rainfall interception of as much as
4,000 gallons per tree annually. Tree shading also cools curbed and open waterway runoff. Trees and
vegetated medians stabilize soils through their root systems and help prevent erosion and
sedimentation in the storm drainage system. Water absorption by tree and plant roots drains surface
water, resulting in less surface runoff. Generating sufficient additional stormwater program revenue
to fund 50% of the street trees/median program in the Stormwater Fund would require a one-time rate
increase in the neighborhood of 6.5 – 7.0%.
?
As an alternative to shifting all of the funding for street trees/median maintenance to other City funds,
the council could consider partially funding specific road-related activities through a fee-based
system. Early in its discussions, the Citizen Subcommittee considered a conceptual Eugene Livability
Fee (ELF) to fund programs that enhance community livability and transportation alternatives.
Examples presented for possible uses of the ELF included the street tree/median program, traffic
safety elements (accessible pedestrian signals, photo red light, traffic enforcement), the street lighting
program, a neighborhood traffic program (traffic calming, enhanced sidewalk/pedestrian facilities), as
well as traffic demand management coordination and incentives (bicycle/alternative modes
programming and marketing, off-street bike/pedestrian paths OM&P).
?
Transportation System Maintenance Fee (TSMF) - This funding option was recommended by the
Citizen Budget Subcommittee on Transportation System Funding and was implemented by City
Council ordinance but later repealed. The concept behind this fee is that the city’s transportation
infrastructure is a utility system, not unlike the stormwater utility system, which delivers
transportation service to all users of developed real property throughout the city. Under this concept,
a monthly fee is charged to each user to recover their allocable share of the overall system cost,
including operations and maintenance activities. While the council originally enacted the Eugene fee
as a dedicated funding source for the Pavement Preservation Program, a portion of the revenue
generated from a TSMF could be directed by policy to fund street O&M activities as well as pavement
preservation efforts at the level directed by the council. This is realistically the only option presented
with the potential to move beyond funding the annual operating deficit in street O&M activities and
also enable the city to address the funding gap related to the backlog of pavement preservation
projects. An overview of this funding option as studied by the Citizen Budget Subcommittee in late
2000 is included here as Attachment D.
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RELATED COUNCIL GOALS AND POLICIES
The council’s Vision and Goals Statement with respect to Fair, Stable and Adequate Financial Resources
reaffirms its 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.”
COUNCIL OPTIONS
The 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.
Option 1: The council could direct the City Manager to include in the FY07 Proposed Budget a shift in a
portion of the funding for the Street Trees/Median Maintenance Program (total program costs
of approximately $1,310,000) from the Road Fund to the Stormwater Fund, with the remainder
of the program funding to be provided from other City fees or funds.
Option 2: The council could direct the City Manager to bring back a proposal for the implementation of a
Eugene Livability Fee (ELF) to fund programs that enhance community livability and
transportation alternatives, including funding for the street trees/median maintenance program.
Option 3: The council could direct the City Manager to bring back a proposal for the implementation of a
city-wide Street Lighting Fee to fund the operation, maintenance and enhancement of the
City’s street lighting system along arterial, collector and neighborhood streets.
Option 4: The council could direct the City Manager to bring back a proposal for reestablishing the
previously repealed Transportation System Maintenance Fee to address not only the projected
ongoing operating deficit 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.
Option 5: The council could take no action at this time with regard to providing additional funding for
the operations, maintenance and preservation of city streets, which would result in service
reductions of approximately $2 million to be phased in during the FY07 and FY08 fiscal years.
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 1, 2, 3
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.
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SUGGESTED MOTION
Move to direct the City Manager to:
a) Include in the FY07 Proposed Budget a shift in 50% of the funding for the street trees/median
maintenance program from the Road Fund to the Stormwater Fund.
b) Bring back a proposal for the implementation of a Eugene Livability Fee (ELF) to fund programs that
enhance community livability and transportation alternatives, including funding for the street
trees/median maintenance program.
c) Bring back a proposal for the implementation of a city-wide Street Lighting Fee to fund the operation,
maintenance and enhancement of the City’s street lighting system along arterial, collector and
neighborhood streets.
d) Bring back to the council a draft ordinance for reestablishing the previously-repealed Transportation
System Maintenance Fee to address not only the projected ongoing operating deficit in Road Fund
street operations and maintenance, but also to generate additional revenue to address the remaining
annual funding gap in the pavement and off-street bike path preservation programs.
ATTACHMENTS
A. Staff Memo: Response to Council Request for List of Street-related CIP Projects
B. Excerpt from “Transportation System Funding Interim Report” of the Eugene Budget
Committee Citizen Subcommittee, dated June 2001
C. Overview of Alternative Funding Option – Street Lighting Fees
D. Overview of Individual Funding Options – Transportation Utility Fee (2000)
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
c
Public Works
Engineering
MEMORANDUM
City of Eugene
858 Pearl Street
Eugene, Oregon 97401
(541) 682-5291
(541) 682-5032 FAX
www.ci.eugene.or.us
Date:
February 6, 2006
To:
Mayor and City Council
From:
Mark Schoening, P.E.
City Engineer
682-5243
Subject: FY06 - FYl1 Capital Improvement Program - Transportation - Allocation of Funds
to Operations, Preservation and Maintenance
At its work session held on September 26, 2005 the City Council directed staff to provide a list
of the new projects in the Capital Improvement Program (CIP) funded with money that could be
used for operations, preservation and maintenance. Table 1 shows the funding account, source,
project category, and fund restrictions for the transportation element of the FY2006 - FY2011
Capital Improvement Program.
The entirety of the local gas tax ($16,545,000), Lane County ($505,000), Transportation SDC-
reimbursement fee ($3,091,000) and Federal STP-U-preservation ($2,638,000) funds are
allocated to preservation and maintenance projects. These funding sources total $22,779,000
over the six years of the CIP.
With the exception ofthe Federal STP-U-preservation funds, all of these monies are allocated to
preservation and maintenance of the street system. The Federal STP-U-preservation funds are
allocated to preservation and maintenance of the off-street bike path system.
Other federal, state and regional funding sources have specific restrictions that preclude the use
of the funds for operation, preservation or maintenance activities.
Riverfront Research Park Urban Renewal funds may be used for preservation and maintenance
with some restrictions. However, in the FY2006-FY2011 CIP funds from this source are
allocated to the Patterson Street Underpass per a Memorandum of Understanding with McKenzie
Willamette Medical Center.
The only projects in the FY2006-2011 CIP funded with monies that could otherwise be used for
operation and maintenance are traffic calming projects. The traffic calming program is funded
with General Fund monies at $30,000 annually ($180,000) over the six years of the CIP.
Attachment A - Table 1
FY06-FY11 Capital Improvement Program - Transportation
Project CategoryRestrictions
AmountSource
State law restricts the use of gas tax revenue to operation,
maintenance, preservation and capital improvements within public
Preservation/Maintenance
right of way
$16,545,000Local Gas Tax
Preservation/MaintenanceIGA limits spending to preservation and maintenance
$505,000Lane County
State law limits spending to the system for which the fees were
Preservation/Maintenance
collected.
$3,091,000Transportation SDC - Reimbursement Fee
Preservation/MaintenanceMPC policy limited funding to preservation projects.
$2,638,000Federal STP-U Preservation
Upgrades/Capacity EnhancementCouncil action allocated General Fund monies for traffic calming
$180,000Property Taxes (General Fund)
Upgrades/Capacity Enhancement & State law limits spending to the improvements that increase
New Capital Facilitiescapacity
$7,038,000Transportation SDC - Improvement Fee
Upgrades/Capacity EnhancementMPC policy limited funding to modernization projects
$3,060,000Federal STP-U Modernization
New Capital FacilitiesFederal legislation limits funding to a specific project
$4,463,000Federal SAFETEA LUA Earmark
New Capital FacilitiesFederal legislation limits funding to specific types of projects
$898,000Federal Transportation Enhancement
New Capital FacilitiesIGA limits spending to a specific project
$15,000Lane Transit District
State grant criteria limits funding to bicycle and pedestrian
New Capital Facilities
improvements
$125,000Oregon Department of Transportation
State law restricts assessments to the specific improvement
Upgrades/Capacity Enhancement
constructed.
$2,566,000Assessments
State law restricts assessments to the specific improvement
Upgrades/Capacity Enhancement
constructed.
$1,052,000Delayed Assessments
State law limits spending to the improvements that increase
Upgrades/Capacity Enhancement
capacity
$811,000Stormwater SDC
MOU with MWMC specified the use of the funds to a specific
New Capital Facilities
project.
$11,413,000Urban Renewal - Riverfront Research Park
Lane County or City of Springfield were potential sources of funds
Upgrades/Capacity Enhancement
for portions of the Game Farm Road project.
$225,000Other
$54,625,000Total Transportaton CIP Projects for FY2006-2011
ATTACHMENT H
IL);celptedfrom the Ihmsportation Funding System JnJerim Report. Pages J 8-26.
Prepared by rhe Eugene Budget COIllniirtee Citizen Subcommittee, Dated June 2(01)
SUBCOMMITTEE IHSCUSSION - TRANSPORTATION FUNDING A.LTEH.NATlVES
Tn 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 offunding alternatives, rather than
a single alternative. The Guiding Principles were intended to provide a set of criteria against which
various alternative revenue options conld be evaluated and compared. ..
AdditionaHy, the subcommittee requested a copy of all council policies and goals, either adopted or
currently proposed, which "iOuld be re1cvant to their consideration of transportation funding options.
Thos{~ policies and goals considered are included in this repO!i as Appendix G.
Staff next offered for consideration a broad-based
list ofpotentiaJ funding sources "vhich might be
llsed by the City to generate additional revenue for
transportation system service needs. This list
included over 20 potential revenue sources in
broad categories ranging from assessment
mechanisms, property tax-based options, various
forms of excise taxes, utilityh.lser fees, as well as
more traditional general municipal revenue
sources (see l;'undin.~~ _Alternatives .f(J}"
Transportation Systt'm Needs, Appendix H).
Additional revenue alternatives were suggested by
subcommittee mernbers in the course of
subsequent discussions. The subcomrnittee
directed staff to provide flirther analysis on several
alternatives, listed below:
.. Property taxes (both local option
levy and general obligation bonds)
. Expanded assessment
practices/local improvement
dlstncts
.. Broadened use of systems
development charges (SDCs)
. l\10tor fuel tax on distributors
(including sales outside city)
.. Transportation utility fee
. Str{~et improvement tee
Staff prepared analyses, attached ast\ppendix L
on the alternatives selected by the subcommittee.
These were presented and discussed at the
November 13 and December II meetings.
G uidingPrindpals
Diversification of Revenue Sources
An overall funding strategy for
transportation system service needs
should include multiple funding
sources, \vhich will adequately
address the fun range of identified
transpotiation systern service needs.
Consistency wiih Goals and Policies
All proposals lor sources and uses of
timds, overall funding strategies and
other subcommittee products should
be consistent v,Iith adopted City
Council Goals and City policies.
Legal Defensibility
The City must bav{~ dear and
incontrovertible authority and ability
under state and federal statutes to
implement the proposed revenue
sources and uses.
Financial Peas ihiHty
Funding sources must be able to
produce timely, adequ3te t'{~venue
streams with a high degree of long-
tent) sustainability.
Politically Supportable
An overall funding strategy for
transportation system service needs
must be deemed politicaHy acceptable
by both the City Council and the
general public in terms of appropriate
uses ofpublic resources, general
fairness to system users. and level of
acceptance for funding proposals.
The iimding strakgy and specific
revenue sources must also be easily
understood by citizens and have a
direct relationship to specific
community transportation system
service needs.
1n D(~cember, individual subcommittee members also completed a survey in which they evaluated the
various revenue alternatives against the subcommittee's Guiding Principles. l'vlembers were asked if each
alternative merited further disctlssion. The survey results were prov ided to the subcommittee. After
further discussions,. the subcommittee took stra'w polls on five revenue alternatives that had received
considerable member attention. The results were as foUows:
SubcoImnitke..S..l!:g~y Poll Results, Revenue I\.H~n!~~j'yes (J 211 1/(0)
Local Option Levy 7:0 opposed
General Obligation Bonds 6: I opposed
Parking Tax 5:2 opposed
Fuel Tax on Distributors 4:3 in favor
Transportation Utility Fee 6: 1 in favor
Staff continued to develop analyse:; and provide information as the subc:ommiHee members proceeded
with their considerations of revenue alternatives. The alternative for a motor fuel tax on distributor sales
outside the city \vas tound not to be allowable under SL'1te law, so a local motor fuel tax was discussed
instead,
Tn the Januaty 29 meeting, the transportation utility fce continued to be tbe 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 tce, a motor fhel lax
and G.O. bonds. The remaining revenue alternatives were not discussed further.
Consensus 'was reached that all residents and visitors, whether motor vehicle drivers or non-drivers, have
an impOli<lOt stake in maintaining the City's transportation infrastructure. Even non-drivers bave 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 tbe doctor's office, or traveling by bus to school, everY()n~
dept~nds on The city transportation network and should rightly contribute to its upkeep. The subcommittee
'vVas interested in revenue alternatives that '.'>'Ould result in non-resid.ents pay ing a share, along with city
residents.
A transportaTion utility fee fTUFi is applied universally and is an equitable revenue source to vv'hich all
property users contribute according to their share of impact on the system. The fee paid by retail and
commercial property users will he partially passed on to non-resident visitors shopping or working in the
city. l....lJ property wiThin the city, '""hether currently exempt from property taxes or not. wonkl be subject
to a TUF. This includes the lJniversity of Oregon, as well as otber stale and tederal property. The fact
that all property users in the city \\iould contribute their share increases the fairness of the TUF as a way
to cover costs of the transportation system.
The TUF revenue is also vcry flexible and, unlike a motor fiJel 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 disclJ.ssions, some rnember.s questioned whether a transpoliation utility tee would be
sOfnewhat regressive because low income people purchase less and llse tbe transportation system less.
However, people with higher disposal income typically purchase more goods and services, and so would
pay more of the pass-through of a commercial and retail transportatiollutility fee. /\lso, the fe(~ amount
for apa;iment residents typically is less than that paid by residents of single-family homes, because
surveys of apartment dwellers show they typic:ally use the transpOJiation system less.
The constitutional limitation refcrred to earlier does apply to a local motor fuel tax, such that aU 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 frorn non-residents.
Several funding scenarios involving cmnbinations of the transportation utility fee, motor fue! tax and
G.O. bonds w{~re revie\ved and discussed by the subcommlttee at the February 12 meeting. A
preliminary target of net revenue to be generated was established at S9 million. The preferred fundinQ
package f()Jlovis: ,~
M9.!!;~LY~hicle Fuel Tax
A two~cent per gallon tllX would be expected to produce net revenue of approximately $ t.3
million per year. All motor filel 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 TLJF. Per household
residential fee levels would be about S4 per month.
The subcommittee agreed that tbe most effective transportation funding package would
consist of a transportation utility fee and a motor vehicle fuel tax. These measures are
capable of raising adequate levels of revenue and most closely conh.mn to the subcommittee's
guiding principles.
The subcommittee agreed that the most effective transportation funding package would consist of a
transportation utility fee and a motor vehicle fUe! tax. These measures are capable of raising adequate
levels of revenue and most closely conform to the subcommittee's guiding principles. A revised
transportation serv ice system financial {()recas t was prepared showing the effects ofthe proposed new
fi.ll1ding package on the six-year outlook for the Road Fund. That f~')recast is included as Appendix J.
Below are listed the individual revenue options which \vere raised and/or considered. along with salient
point> based on subcommittee discussion and the December survey results. The Compiled z\Jernber Surve,V
Results from the December survey are attached a:, Appendix F.
Assessments
Broudened AsS(~ssm(~nt I'nll:tices!Lo(:~ll Improvement Districts
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 i.npt'Overnent fee concept, tbis
approach would be focused on improving cun-ently unimproved streets to urban standards.
However, the December survey shO\ved that this alternative \",as seen as having quite a low
likelihood of being politicaHy supported in tbe community.
Broudencd Use of Syskms Hevcloprnent Charges
Subcommittee members noted that this option \vould not be available for preservation projects,
but did acknowledge the equity in having SDCs pay for irnproving capacity rather tban funding
those improvements from thl: Road Fund. One concern expressed was that a recommendation to
include improvements to streets witbin the Urban Gnw,1h Boundary and under County
jurisdiction in the City's transportation SDC could become another item of dispute or contention
\vith the County. The Coun,)' has not yet elected to pursue a proposal to levy a transportation
SDC for similarly planned County-funded improvements \vithin the Urban Growth Boundary.
Members also voiced that encouraging out-orcity dev{~lopmeni 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 ,his alternative as prov iding for di ve!'.~ificati(>n of r(~venue sources,
being consisknt \vith City goals and policies, and being legally defensible. However, concern
was expressed about political supportabi iity and that it was limited to ne\v improvements that are
capacity miented (arterials/collectors).
Staff reported that th<~ City Roads Advisory Committee (RAe) 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.
Propertv Taxes
· General Obligation (G.O.) Bonds R.lcked by .1 Property Tax Levy
Subcommittee members expressed concern as to whether the City could generate voter support
for a Ci .0. Bond or Local Option Levy, given the re('ent i'ail ure 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 banot for a transportation funding tax levy. This concern was countered '8ith
the belief that voter opposition 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 i1$ debt practices
and could afford to "leverage up" slightly for some priority funding issues. Another concern
voiced by the subcommittee members was that only propeli}' owners would be responsible for
paying for this funding, and not necessarily aU users of the transportation system. Several
subcommittee members expressed doubt as to \vhether G.O. bonds represented a stable, long-term
funding source. The opinion was a.lso expressed that the tax levy mechanism did not lend itself
\vell to funding what essentially is a utility need. The subcommittee continued to examine this
alternative, though the Decernber survey showed that this alterna!ive was rakd as having a low
likelihood of being political feasible.
The subcommittee agreed that, regardless of the solution recommended, the Council 'vvou!d have a
major task in educating tbe community about the impclliance ofthe need for street improvements.
While this option was one of three that made it to the final stages of discussion f()r a potential
funding package, i; was the ultimate conclusion of the subcommittee ;hat the City should not
resort to G.O. bonds to resolve its transportation funding needs. The six subcommittee
respondents assigned a low likelihood of political supportability to this revenue alternative.
LOC.I! Option Property Tax Levy (LOL)
The subcommittee reiterated concern that, as with G.O. bonds, the City might find it difficult to
generate voter support fi)r this option, given the competition for other levy-funded needs, sucb as
the Library operating levy. In t~lct, many of the same concerns were raised around this potential
funding option as for a G.O. bond levy. As with ;he G.O. bond option, doubt was e~;pressed as to
whether an 1.01. fits the criteria as a sta hie, long-term funding source. Five of six respondents
assigned a Jow likelihood of political feasibility to the LOL altemative,
Excise Tg~~?
Business Tax on Fuel Distribution (Outside City Limits)
At the request of the ~)ubcommittee" this option was identified for further staff analysis. The main
question to be explored was whether or not the City can legaHy impose a tax on motor vehide
fuel distributors ti}r sales of motor vehicle fuel to customers located outside the legal city limits.
Lega! counsel's opinion was that, although the City can tax sales of fuel that occur inside its
lirnits, it cannot tax sales that occur outside its limits. Given that the City's authority to tax is
confIned within its t(~rritorial 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
Subcommittee members suggested that a two-to-three cent motor vehick fuel tax (gas tax) could
be a viable second funding source along with a transportation utility tee. It was noted that, if one
of the goals is to assess the cost of the system to syskm users, then an argument in support of the
gas tax is that it \.\;OU ld be as sessed at the poin t of purchase on those who 9_b!;!9_~~ to drive.
~1embers debated whether the revenues from a gas tax could potentially be undermined by
market flight Member Howie Bonnett conducted a survey oflocal gas prices and t~)und a
several-cent difference in retail gasoline prices in a limited geographic section of town--indicating
that a two-to-three cent gas ta:< would probably not have much impact on consumer choices
around gas purchases. J'y1embers agreed with tbis conclusion. On multiple occasions, members
discussed tbe desirability of coordinating with Springfield witb regard to that ciiY's consideration
of and deliberations around a motor vehide file 1 tax. Members noted that the last time the council
had considered the option of a gas tax was in ) 995, during discussions related to stomnvater
funding and associated impacts of the transportation system on stonnwater quality Concern was
expressed by the subcommittee that the Legislature might take another run at a statewide gas tax
increase. A Swmnary a/Oregon Locaf AIotor Vehicle Fuel Taxes is induded in this repon as
Appendix K. In early pons of members, the TUF and the mojoI' vehicle fuel tax ,,,'ere the
only options which received majority support.
Parking Tax
While the parking tax was viewed by the subcommittee as having some potential in promoting
City land llse goals, it was noted that prev ious attempts by the City to change development
choices and driver behavior through parking policy were not successful. It "vas noted that
parking spaces are not as directly tied to the use of the tmnsportation system as would be a
transportation utility fee based on trip rates. For example, a ma:llrbduring use Inay have the
same numbers of spaces as a retail use but a much lower trip rate and, therefore, a ]ov>,er use of
the transportation system. The December survey showed that the parking tax alternative was :;een
as having a lo'vv likelihood of being financially feasible and an even lower likelihood of being
politica1iy acceptable to the community. In December, members' surveys indicated by a 5:2
margin tbat the idea should be dropped, and stafl was directed to do no further analysis on this
revenue option.
Carbon-based Fuel Tax
Wbile both this and the Parking Tax timding option generated some discussion by the
subcommittee, the opinion \vas expressed that it might be more appropriate for the council to
addre:;s the feasibil ity and appropriateness of either a cm-bon-based fuel tax or the parking tax,
rather than for the subcommittee to do so. Proponents f\)r the carbon tax voiced support on the
basis ihat tbis is one of the few options that most directly targt~ts the users oftbe transportation
system. It was also pointed out, however, that unless the City \vcre willing to apply the carbon-
based tax 10 hearing fuels, there '"vollld be very EttIe distinction between it and a motor vehicle
fuel tax. Ultimately, no direction was given lor fllliher analysis of this option. A. majority or
members felt tbat the carbon-based fuel tax was not very financially feasible nor pol itically
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
Vehicle Registration J.'ees
Both ofthese revenue options generated little interest by the subcommittee. The primary concern
voiced around the vehicle registration fee was that, by State la\v, the CilY would be reliant on
Lane County to levy the fee. Additionally, neitber of these options \vere perceived to address the
issue of out-of-city residents who use Eugene's transpoliation system. Neither alternative was
seen as poiitically feasible. Survey results showed subcommittee opposition to further work on
the motor vehicle excise tax by a 6: 1 margin, and opposition by a 5:2 count to further
consideration ofthe vehicle registmtion fee.
IJseriUtilitv Fees
Transportation OtHity Fee
Subcommittee members indicated early interest in this option. Some members were particularly
interested if the focus ofthe utility fee was on preservation and reconstruction rather than
primarily for "extras," such as street trees and traffic calming. Members expressed support f<x
the f(ict that the fee would assess revenue for people \YhO were driving in from out of town for
work or to do business. Tbere was also specific support for the idea of maintaining the
transpOltation system through the cost of driving a car. The tact that users of a!l property,
including the University of Oregon and other tax~exempt property, 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 OIher "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 \",ith goals of divers! fying revenue sources, being legally defensible and financially
feasible. fvlembers assigned a 10\1/ rating for political supportability. Nn'ertheless, by a 6: 1
COllnt, members chose to pursue discussions on the TUF. A Sumnhuy afOregon Transportation
Utility Fees is included in this report as Appendix L. In early polls or members, the TVI" and
the motor vehicle fuel tax were the only options which recei\"ed ma.iorit), 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 \vhat services the fee would provide. Members also
noted that, based on initial yield estimates, this revenue option on its own could potential1y soll/e
the City's transportation funding shortfall. Some members expressed concern that the fee was, or
might be perceived as, regressive. Other mernbers opined that it was not regressive but, instead,
was a true user ke based on the estimated use of the transportation system. ft was also pointed
out that the fee co uld be structured to reduce sornewhat any perceived regressiveness. The poim
was also made that the community may accept use ofTUF revenues for transportation system
operational needs because the TUF is a utility fee based on use of the system, and operation and
maintenance of tile existing system are clearly necessary. Community acceptance of the f:aimess
of other utility fees was noted in discussions.
Over the course of several meetings, the subcommittee discussed the basis for and possible
impkmentation of a transportation utility fee. As discussed, a simple Eugene TUF \.<,:ould 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 v,ould be assigned a trip generation rate, using the I nstitute of Transportation Engineers'
Trip Generation AIanual. For non-residential propelty uses, this trip generation rate is usually
expressed as a nutnber of trips per 1,000 square feet, or an equivalent unit of meaSllr{~. The trip
rate \vould 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 \vould be lIsed for operation, maintenance and preservation, not
capacity related projects.
Stred Improvement Fce
The focus of this option 'vvas directed tcn:vards addressing the unimproved transportation network.
The concept was to establish a fee that all movners adjacent to unimproved streets 'vvould pay J(X a
period of time (ten years), with the thnds 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 vv'as 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
maintenance needs of the transportation system and the council has not chosen to pursue this
option, the subcommittee discontinued any further review oftllis alternative. The December
survey showed that this option was medium to low in the area of financially feasibility. The
subcommittee indicated its opposition to this alternative by a 5:2 count.
Municipal Stkker Fcc (Local Vchiclcl'ublie Parking Permit)
This idea, introduced by a subcommittee member based on practice in other municipalities, ,vas 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 altemative was more like a city vehicle registration
requirement which is not permitted under Oregon state la'vv, rather than an optional parking
sticker program,
Tolls
This funding source generated very little discussion from the subcommittee. While some
members liked the idea of capturing ton rf!o!Jey ii-om commuters driv ing 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
This potential funding source also generated little discussion from the subcommittee. The
dedicated Jane tee was vie\ved as some'vvhat contrary to the City's goal of supPOliing transit. It
also received lower ratings in the subcommittee survey and no recommendation for further staff
analysis.
Employer Payroll Tax
This general municipal revenue source received. little discussion from the .subcommittee, and staff
received no direction for tbrther analysis of this option.
ATTACHMENT C
Street Lighting Fees
Brief Description of Fees, levied on occupants of properties benefited by the city’s
Funding Option street lighting services, to fund operation, maintenance and
enhancement of the city’s street lighting system. Fee revenue
would be accounted for in a separate fund and dedicated to
provision of street lighting.
Precedence (other The Oregon cities of Nyssa, Klamath Falls and Wilsonville
jurisdictions’ practices) currently levy fees for street lighting.
Calculation Base and The City of Eugene expects to spend about $800,000 to
Typical Rates operate and maintain the city’s street lighting system in FY07
at the current level of service. Of this total, about $440,000 is
for lighting on arterial/collector streets, and $360,000 is for
lighting on neighborhood streets.
An additional amount will be needed to cover fee
administration and collection costs. Final administrative costs
will depend upon whether the method of assessment is simple
or complex and how the fee is collected. This estimate
assumes a fairly simple fee is implemented, which still
differentiates among levels of service. The most efficient way
to collect this fee will be to include it in billings for the city’s
wastewater fee. All properties with active water accounts
receive wastewater billings.
In this example the fee would have three components: a
citywide base assessment for lighting services on
arterial/collector streets reflecting citywide benefits of those
services, a citywide component covering fee administration
and collection costs, and a local area lighting assessment
reflecting the level of service on neighborhood streets. There
could be several different local assessment areas reflecting
substantially different levels of local lighting service.
With this assessment methodology administrative and fee
collection costs are estimated to be about $200,000. There will
be about 58,000 active water accounts in the city in FY07, so
the average total monthly fee would be about $1.44 per month.
However the amount actually assessed on a particular
property’s occupant would be higher or lower depending on
the local area lighting service level.
Using FY07 estimated street lighting costs, under this three
component approach the citywide base fee for arterial and
collector street lighting would be about $0.63, and the
citywide administrative component would be about $0.29.
Depending on the level of local area lighting service, the local
service assessment would range from zero (for no local
lighting services at all) to a level reflecting the highest level
of local service, with an average of $0.52.
ATTACHMENT C
Calculation Base and The administrative costs would be higher for more complex
Typical Rates (cont’d) methods. If the street lighting service fee were collected
separately from wastewater billings, collection costs will also
be higher. Before implementing a street light assessment
program, a more in-depth examination will need to be made of
assessment methodology, collection methods, administrative
costs, and resulting fee levels.
Estimated Revenue Total fees assessed would be set to generate enough revenue
Yield, Administration to cover street light operating, maintenance, enhancement and
and Enforcement Costs administrative costs, net of other revenue that may be
available for street lighting services.
Legal Authority and Under Oregon’s constitutional home rule powers the Eugene
Restrictions on Use City Charter grants the City Council broad authority over
matters within the city’s boundaries. The City Council may
levy fees or assessment on occupants of property benefited by
particular city services. Service fees are usually authorized by
ordinance, and fee levels are set to meet annual service costs.
Revenue is dedicated to the purpose of the fee.
A citywide fee for citywide services may be implemented
without use of a special services district. The City’s
Stormwater and Wastewater service fees are examples of
citywide fees for citywide services assessed according to
benefit received by occupants of property.
For services to limited areas of the city a special services
district is used. Currently, the City has two Special Service
Districts formed under this authority, in the Downtown area
and in the West University area, to fund particular services
provided to those areas. It would be possible, though not
necessary, to use a special services district that extends
citywide to assess fees for street lighting service.
Service fees are assessed on the benefit of the service to the
occupant of the property, not on the value of property, and so
do not fall under constitutional tax limitations. Service fees
assessments do not contribute to property tax compression.
Incidence (who pays?) The occupant of record of each property receiving benefit
from street lighting services will be liable for the fee on the
property. If street lighting fees are collected along with
wastewater fees, the person responsible for the water service
bill will also be liable for both wastewater and street lighting
fee.
Fairness & Equity Fairness and equity will be advanced by adopting a fee
assessment methodology that results in fees that reflect
substantially different level of street lighting services in
different areas of the city, as well as citywide benefits from
arterial/collector lighting.
ATTACHMENT C
Assessment of Financial The service fee revenues will grow naturally as new homes
Stability & Political and commercial/industrial construction occurs. New
Feasibility development therefore can be expected to cover its own street
lighting service cost.. Revenue will also be quite stable
because occupancy is not subject to large swings from year to
year. These characteristics are highly desirable in funding a
growth-impacted and infrastructure-dependent service such as
street lighting.
Street lighting provides convenience and safety for motorists,
pedestrians and bicyclists. Most people will probably agree
that some level of street lighting is an essential service and
should be funded, especially on arterial/collector streets.
Establishment of a street lighting service fee would probably
be politically accepted if citizens feel that the alternative may
be an unacceptable reduction of street lighting services, and
the fee is seen to fairly allocate costs of the service.
The discussion of a street lighting fee would take place within
the context of a broader discussion of the range of services
that are now funded by the city’s Road Fund.
Potential economic Adverse economic impact will be minimal. The monthly fee
Impacts will be small and unlikely to discourage economic activity.
On the other hand, street lighting services reduce personal and
property damage from accidents, discourage criminal activity
and encourage business and industry during night hours,
Insofar as this service is made possible with revenue from the
proposed fee, it will have a positive economic impact.
Consistency with Council The following Council Goals apply to discussions of the
Goals & Policies desirable level of operation and maintenance of street lighting
services and possible implementation of a fee to support those
services:
?
Safe Community: A community where people
feel safe, valued, and welcome
?
Effective, Accountable Local Government: A
government that works openly, collaboratively, and
fairly with the community to achieve measurable and
positive outcomes
?
Fair, Stable and Adequate Financial Resources: A
government whose ongoing financial resources are
based on a fair and equitable system of revenues and
are adequate to maintain and deliver municipal
services
ATTACHMENT C
Consistency with Council The following City Financial Management Policy also applies:
Goals & Policies (cont’d) Policy C.2. (Cost Recovery--Fee Supported Services): The
City Council will establish cost recovery policies for fee
supported services which consider the relative
public/private benefits received from the services being
provided and/or the desirability of providing access to
services for specialized populations. These policies will
determine the percent 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.
Other The cities of Nyssa, Klamath Falls and Wilsonville currently
Jurisdictions’Experience levy fees for street lighting. A monthly service fee is typically
assessed on the occupant of each property receiving service
and is collected as part of utility billing. Unserved or vacant
properties are typically assessed a zero amount.
Since 1991 the City of Nyssa has had a street lighting fee with
no reported opposition. Nyssa increased the fee in FY06, and
now assesses a monthly flat fee of $2.50 per residence and
$3.75 per commercial/industrial property. Vacant property is
not subject to the fee.
Klamath Falls created its fee in 1994 after street lights were
turned off due to lack of funds. As the fee was imposed on
areas of the city, lighting was restored. Klamath Falls assesses
$2 monthly for each occupied property regardless of type of
use. The fee is collected with water billings. Upon application,
a resident can have the fee reduced to $1 if no occupant owns
or operates a motor vehicle. Neighborhoods of at least 4 city
blocks may be excluded from street lighting services if at least
51% of the water customers sign a petition to be excluded.
The fee has had no substantial opposition. For the last two
years Klamath Falls has waived collection of the fee due to
availability of electric cogeneration revenue, but the fee
ordinance remains in effect and may again be collected when
required.
Wilsonville has assessed a monthly street lighting fee since
1991. It is based on the level of lighting service provided to a
neighborhood, ranging from $0.80 to $5.01 per residence.
Commercial/industrial property is assessed based on the
number of employees or number of commercial/residential
units. There had been no significant opposition.
By contrast, the City of Ashland operates street lighting as part
of the City’s electrical utility services. It does not levy a
separate fee for the service, which is part of the operating cost
of the electrical utility. Ashland reports it has had no
opposition to the inclusion of costs of street lights in electric
ATTACHMENT C
billings.
Policies Choices The following list identifies some of the major policy choices
which would need to be considered in order to develop an
ordinance for implementation of a street lighting fee:
?
What level of street lighting services within the city is
desirable?
?
Should the City continue to operate and maintain
street lighting or should the service be provided by an
independent separate district?
?
Should street lighting services continue to be funded
from the Road Fund, or should a new funding source
be implemented?
?
Is a fee for city street lighting services, assessed
according to benefits provided by those services, an
appropriate revenue source?
?
How should a fee be assessed to best balance fairness
in allocating service costs with efficiency in fee
administration and collection?
?
Should the fee be collected along with current city
wastewater billings, or by another method?
?
Is there to be an appeal process?
?
Should there be a method for local areas to request
higher or lower levels of street lighting service, with
accompanying adjustment of fees assessed?
?
Will fee levels be adjusted from time to time by
ordinance, resolution or by administrative order?
ATTACHMENT D
Transportation System Funding Project
Overview of Individual }.~unding Options
Brief Description
of Funding
Option
- j
T:'1e basic concept underlying the Transportation UtilitY Fee (TUF') is that the comprehensive
transportation infrastmcture is a utility system that delivers services to all users of developed
real property throughout the city. This is similar to the concept ofthe city's wastewater and
stormwater utility services. Use of a utility system incurs 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
ann.ual cost 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 nlllnber of factors
sets the actual fee levels for each property use categor.:,v. All revenue from a Th'F must go to
pay the costs of the existing transport.ation system and should not be used for expansion of
transportation system capac ity, SDCs and assessments remain. the primary sources of funding
for capacity expansion.
A TtJF is not based on the O\vnership or value of property and is not a property ta.x.. The fee is
not related to fuel sales or operation of a vehicle, so the revenue from a TUI' is not restricted as
a gas tax would be; it can be used for all elements of the transpormtion system, A Th'F 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 prQPfltT.ooa1e to the estimated fee-payer's share of use of the
system. According to this principle ofproportiona1ity, 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, corr..mercial acti'vity 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 Trip Generation Afanuat~ depending on how property
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 uni'lJ~rsa1. Since all developed property in the city
benefits from use of the transpor:.ation system, all residents, organizations and businesses
occupying 1.'1at property should pay t:'1eir proportionate share of the costs of the transportation
system's operation and upkeep. Some municipalities permit deferral or discount of the fee tor
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.
Il3
Precedence (prior
Council history,
other
Jurisdictions ~
practice, etc.)
Calculation Base
and Typical
Rates
Estimated
Revenue Yield,
Administration
and Enforcement
Costs
!
;
In 1985 La Grande was the first of eight Oregon cities to implement a TIJF, followed by
Ashland, Eagle Point, Tualatin, Medford, Phoenix and Wilsonville. The City of Talent most
recently adopted a TUF in 2000. Municipalities in Texas, Washington aud other states are also
using tbis method of transportation funding. .
The Eugene City Council has discussed the concept of a TIJF in the context of sl:ormwater
utility system l1mding (1994), development oftbe Multi-year SeD/ice 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
necessary for administration, operation, maintenance, minor improvement, preseI1lation,
modernization and reconstruction the transportation system. The individual fee anyone is asked
to pay is based upon the estimated trips generated based on the type of use of the developed
real property they occupy. To measure trip generation, the Institute of Transportation Engineers
(lTE) has produced a Trip Generation Manual, which is \viddy used by municipal engineering
departments. TIlls manual is based on decades of natiomvide study of traffic generated by a
wide range of property uses. The City of Eugene currently uses the ITE Tnp Generation
Manual in it's formula for detennining transportation SDCs.
In most Oregon cities with TITFs, the typical number of trips for a zoned use, as given in the
ITE Trip Generation l'vfanual, is multiplied by the number of square feet of the buildings or
number of dwelling units. This result is then multiplied by a city~specific cost factor per trip.
Adjustment,> 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 TliP, 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 restal.want, and a fee of $2,195.07 to a major shopping center. The fee for a single
family home in Medford in 1997 was $2.20.
Transportation utility fees are set annually by council resolution or administrative action to
, meet approved budget requirements of the transportation system. The net revenue to be raised
is controlled by the normal budgeting process. The fees to be paid are then calculated
according to a methodology adopted by council or administrative action. The anlount of net
revenue generated is totally dependent on the budget requirements and resulting fee levels.
Administrative costs are stable, regardless of the amount of revenue raised by the 'IUF. A more
complex methodology win 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 WQuld 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 toml revenue generated. The fee paid by commercial and otber
non-residential activities would var)' ,videly depending on size and the estimated level of trips
their activity generates.
Il4
Estimated
Revenue Yield,
Administration
and Enforcement
Costs (continued)
Legal Authority
and Restrictions
on Use
To administer such a TUF, the city ",ill need an estimated six rYE in the first year to set up and
implement the program. Once the TUF is up and operating, staffing can be reduced to an
estimated 25 FIE. In addition, EWEB will need to be paid an estimated $0.35 per account per
month f'Or billing costs. With these assumptions, total TUF ad.'11inistrative costs are estimated
to be about $685,000 for the fIrst year, and about $407,000 per year thereafter (in current year
dollars), A more detailed estimate of administrative costs will be done if the TIJF is moved
forward for council consideration.
Net revenues from a $10 million gross TOP would be about $9.6 million under these
assumptions.
An incorporated city may adopt a TIJ'"F under its home~ruJe authority and powers granted in the
City Charter. No specific authorization by statute is necessary. To avoid being classified as a
tax or a special assessment and thus found invalid, a TUF must be carefully structured. Not
only should the methodology of the fee be a concern, but also the procedures for its
application.
The city attorney has reviewed the TIJF 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 Mediord charges for various
property uses. The lTE Trip Generation Manual was and is still the basis for
Medford's rates. At the Circuit Court level and Court of Appeals level, the Cou..'ts
agreed \"it~ Medford's argument that rates based Oll the lTE Manual are a valid basis
for distinguishing bet\veen different categories of use. The ITE ,Manual has been tested
in litigation and been accepted by courts allover 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. In Roseburg Schelo! DiFtri~:t
Y.....Ci1:y...Df~hurg, 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 11)F.
. Courts will 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 fyfanual,
and the revenue is used to support the ci(}"s transportation system.
. It is an open question as to whether the University of Oregon would be subject to the
'llJF. 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 subsequent Roseburg decision, the reasoning of the Attorney
General's Opinion concerning SOSC's immunity is in question, (In fact, Southern
Oregon University now pays the TUF to the City of Ashland).
. TUF proceeds should not be used for capita! improvements that are othen'irise funded
by SDC's, because that would undennine the basis for the SDC calculations. For
similar reasons, TUE revenue should not be used for projects t...'u1t are financed tltrough
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 Vvith other utility fees,
tr..:rough shut off of the water utility,
115
Legal Authority
and Restrictions
on Use
(continued)
Incidence
(who pays'!)
Fairness/Equit)'
Issues
Assessment of
Financial
Stability and
Political
Feasibility
Potential
Economic
Impacts
An analysis of the legal aspects ofa TI1'F done by the Lane Council of Govemments in 1998
concludes that, in order to avoid being classified as an assessment, a TUF should be based l..'Pon
actual use of the road system and not be enforced by a lien, The resulting
benefit should be defined in terms of the resident using maintained streets rather than an actual
benefit to that property ovmer and the property itself. ievenue should be restricted to
maintaining the street system rather than new improvements.
An developed and occupied properties are nomlally subject to the fee. The recipient of the
utility account billing is liable for payment; this is assumed to be the occupant or the
representative of the occ.upant.
Because the fee is billed to com...'1l.ercial 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 ofoperntion of the city's
transportation system in this manner.
Because a TIJF is based on the principles of proportionality and universality, the fee can be
equitable in distributing the share of costs of the transportation system among all those who use
it according to an estimate of their w..are of use. If exclusions were granted to a group of
property users then costs \vould be sbifted and the equity of the fee would be compromised.
A TI}F 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 shareoof-use basis of the TUF. However, ulclusion oflimited 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
specific net amount of revenue. Variations of actual from projected revenues are normally very
small.
A city may adopt a TUF by council action or by placing it on a city ballot. Oregon cities v,rjth
TUFs have aU 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
'fUF. 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
the transportation system. Tbe actual fee to be paid will depend ont~e revenue to be raised and
the fee's methodology. The level of the fee v.liB likely not affect business activity, however.,
and should be considered in comparison to the potential economic effects of deterioration of
the transportation system. No Oregon city "vith a TUf has reported adverse economic
consequences stemming from it. On the other hand, because net fee revenues are mvested in
the transportation system, economic activity is enhanced as the transportation is mai."ltained
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 ma.."1Y people from outside the city shop and
work in Eugene, a l1JF may indirectly increase their contribution to the cost oft...~e
transportation system.
Il6
Potential
Economic
Impacts
(continued)
Consistency with
Council Goals
and Policies
Other
Jurisdictions'
Experiences
Policy Choices
Households should feel little economic impact from the TUE The amount of the TUP is likely
to be exceptionally low compared to other utility fees. For comparison, a local Eugene
newspaper subscription is currently $1 L50 pCf month, and the avemgc Eugene residential
wastewater utility fee is $13.00 per mouth. Ifimplemented,a transportation utility fee on a
single family residence in Eugene would likely be less than $5 per month.
Adoption of the TUF would be consistent with several COU:l.cil Goals and Policies. ..6..mong
these are Jiinancial Management Goals Goal I: "To establish and sustain a community
supported service system," and Goal II: "To have a capital improvement program that
adequately maintains and enhances the public's assets over their useful life. "
A TIJF would also be consistent "'Y1th Financial Management Policies, Section C: Revenue a.nd
Collection Policies, Policy C.Z. "The City Council will establish cost recovery policies for fee
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 ""ill be routinely adjusted to ensure that
rates are current, equitable, and competitive and cover that percentage of the total cost deemed
appropriate. "
Finally, a TIJF would meet t..'le 1999-2000 Vision and Goals Statement, by aHo\ving continuing
provision of a safe, efficient transportation infrastructure.
Transportation Utility Fees have now been successfully implemented in eight Oregon cities, as
well as cities in other states. Court challenges to TUFs in Medford failed in the 19905. No
Oregon city has repealed a TUF once having established it
In establishing and structuring a TIJF, the following policy issues are among those that should
be considered.
L The ordinance establishing a TIJ'F must declare a transportation utility exists a,'1d
should list the systems elements. The greatest t1exibility will result from a
comprehensive listing of system elements. '\-\-'hat transportation system element.e; 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 greatest flexibility will result from a broad listing of eligible
activities. Vv'hat activities should be included? .
3. Should the ordinance establishing the 'fUF have a sunset date?
4. How will the TIJF rates be adjusted to produce the necessary revenue; by ordinance,
resolution Of administrative order? Should rates be adjusted annually or less
frequently?
5. Hm;<,< will the counc.il, budget committee or other group be involved in rate-setting?
6. Should the TUF be referred to the banot or should it be adopted by action of the Cit"f
Council?
!. Should the lTE Trip Generation Manual or another means of estimating trips, such as
required parking spaces, be the primary basis for assigning trip generation rates to
categories of use of properties?
8. Should there be a credit for bicycle or transit use? How will this be applied?
9. Should heavy truck or other intense traffic generated by the property use be included in
calculating the rate for a category of use, if the data is available?
117
Policy Cboices
(continued)
Draft ,\1 orkplan
To what extent will administrative action be allowed to address requests tor change in
u..<;e category, requests for adjustments, application for deterrals or discounts, or other
issues not addressed in the enabling acts? Should ciiy conncil participation be required
for some of these actions? .
It is feasible to have from three or four to over thirty separate property use categones,
each virith an assigned rate. Should the TUF have only a few categories of property uses
v!lith highly generalize trip-generation rates or greater number of categories with more
specific trip-generation estimates?
Should residential uses be subdivided into si.'lgle-fa."!1ily and multi-family \\;th
different rates assigned'?
Should there be a separate senior housing and group housing property use categories?
Should there be an at-home business adjustment to the residential rates to account for
increased trips from home businesses?
\vnat form of appeal will be provided if someone feels they are not paying the correct
rate?
Will traffic surveys andior other means be allowed as a way to improve rnfonnation
and adjust the rate otherwise provided in the IrE Manual?
Should a limited economic hardship deferral or discount be included? Y\'hat should be
the definition of economic hardship for deferral eligibilily?
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 nOll-residential use categories?
Should variation in typical trip length be included in calculating rates for different
geographic areas of the city, if the data is available?
Should the TUF include a factor adjusting for atypical modes of transportation of users
ofthe property, such as greater than average use of bicycles or public transit, if the data
is available? "\Vhat will be tL1.e basis for the adjustment?
The following identifies the general tasks to be taken in order to implement a TUF in Eugene.
Should this fu"'lding option be moved to council, a more detailed version of the implementation
plan ",rill be prepared.
10.
11.
12.
13.
14.
'"
1..1.
16.
17.
18.
19.
20.
. Solicit public input at each stage of work
. Adopt general structure and outline methodology.
. Draft ordinance andlor resolution.
. If appropriate, submit WI' to voters.
. Address any identified legal issues,
. Finalize methodology, including property use categories, adjustment factors, deferr<ll
and discounts, appeals process.
. Set up dedicated subfund in the Road Fund, or independent dedicated fund.
. Set up work unit and assign or r.dre staff,
. Develop necessary data, including accurate estimates of square footage, updated
information on use of property, data on w.msportation mode and truck traffic gener<ited
by various use categories.
. Perform field surveys as necessary.
. Work with EWER, LCOG, Lane County Assessment & Ta.xation 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.
. IdentitY service needs to be funded and funding levels through the regular budgetary
process.
. Implement model and set rates according to budgetar}' need.
. Implement appeals and adjustment processes.
Il8