HomeMy WebLinkAboutItem B: Comprehensive Transportation Funding Solutions and a Street Utility Fee
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: Comprehensive Transportation Funding Solutions
and a Street Utility Fee
Meeting Date: July 15, 2009 Agenda Item: B
Department: Public Works Staff Contact: Kurt Corey
www.eugene-or.gov Contact Telephone Number: 682-8421
ISSUE STATEMENT
The purpose of this work session is to provide the council with an opportunity to discuss the concept of a
street utility fee as one potential component of a comprehensive, locally-controlled funding package to
support operations, maintenance, preservation and reconstruction of Eugene’s transportation system. The
council is being asked to provide direction on the questions of whether or not to pursue further
development of a street utility fee at this time, and if so, under what basic fee design assumptions that
effort would move forward.
BACKGROUND
Previous Council Action and History
In December 2002, the council adopted a trip-generation-based street utility fee. Before it could be fully
implemented, the council repealed the ordinance in September 2003. In May 2007, the Council
Committee on Transportation Funding recommended a street utility fee based on parking spaces as one
component in a package of transportation funding solutions. In November 2007, the council was
presented with an update on the efforts to develop a parking-based street utility fee.
Since 2007, staff, council and the community have made progress on a number of transportation funding
efforts, including the following:
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In November 2007, voters rejected a proposed three-cent increase in the local gas tax.
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In January 2008, the council approved a three-year extension to the two-cent portion of the local gas
tax.
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In spring 2008, the Eugene Budget Committee recommended and the council approved a two-time,
$1.0 million annual allocation of resources for enhanced street repair services in FY09 and FY10.
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In November 2008, voters approved a five-year, $35.9 million street repair bond measure.
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In April 2009, the council endorsed the use of $1.4 million in FY10 local gas tax revenue to fund an
FY10 projected budget deficit of $2.8 million in street operations and maintenance services.
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In April 2009, the council approved the use of $500,000 in FY10 stormwater and wastewater funds to
help address the projected budget deficit in street operations and maintenance services for FY10.
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Also in April 2009, the council adopted an ordinance directing the City Manager to consider as one of
the factors in setting future wastewater and stormwater user fees the value of the use and occupancy of
the City’s right-of-way by those local systems.
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?
In June 2009, the council considered but voted not to adopt a surcharge on solid waste fee collections
to generate resources for street operations and maintenance services.
Financial Considerations
Fiscal Year 2009-2010
With recent council actions to identify short-term resources as a “stop-gap funding solution” for FY10,
the council was able to adopt a balanced annual budget for the FY10 Road Operations Fund, although
$900,000 of the enhanced pothole repair budget had to be tapped to accomplish this, and the projected
fund balance at the end of FY10 is far lower than the targeted two-months’ operating expenditures.
The FY10 pavement preservation capital program will receive the remaining estimated $1.4 million
revenue from the local fuels tax, along with $6.5 million from the street repair bond, and $3.0 million in
one-time federal stimulus funding for pavement preservation projects. However, the City still lacks
adequate ongoing funding for major street repair projects, and the backlog of needed street repairs has
grown to over $170 million. The Council Committee on Transportation Funding Solution recommended
an annual revenue target of $7.5-$9.0 million to fully fund the annual overlay program and another $9.0-
$11.0 million per year to begin to make significant progress on the backlog of needed street
reconstruction projects.
Fiscal Year 2010-2011
Prior to the passage of the state transportation bill, the annual deficit for street operation and maintenance
services in the Road Fund was projected to exceed $3.0 million in FY11, growing to over $4.0 million by
FY13. However, with the new state transportation bill, the City could eventually expect to receive $2.0-
$3.0 million in additional state highway funding each year. Together with the ability to charge right-of-
way use fees on City utilities, Eugene may, for the first time in many years, have the ability to stabilize
funding for street operations services such as street lighting and signals, street signage and striping, and
pothole patching and crack sealing.
However, the City still lacks adequate funding for major street repair projects, and the backlog of needed
street repairs has grown to over $170 million. While the five-year street repair bond approved by Eugene
voters last fall will fund 32 projects that will repair an estimated 70 lane-miles of streets and three miles
of off-street bike and pedestrian paths, the City still has not resolved its long-term street repair funding
problem. Development and implementation of a street utility fee could be one more component in a
package strategy endorsed by the council to ensure a stable, locally-controlled revenue stream to allow the
City to continue to make progress on that $170 million backlog of needed street repairs.
The next sections outline the main design elements and implementation challenges for a street utility fee
in Eugene and also suggest next possible steps, should the council decide today to move forward with
development of this fee concept.
Design Options
The two principal high-level design options which the council has explored over the past several years are
trip-generation basisparking-unit basis
the and the . In December 2002, the council adopted a trip-
generation based street utility fee. A property which generates a relatively high share of trips would pay a
higher fee than a property which generates a relatively low share of trips. In September 2003, the council
voted to repeal the ordinance adopting that fee in the face of opposition by both the Lane County
Commissioners and the Eugene business community.
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In November 2007, the council held a work session on two potential transportation fee concepts, one of
which was a parking-space-based street utility fee. The underlying premise of this fee is that a property
with a relatively large number of parking spaces is associated with a higher use and benefit of the
transportation system and would pay a relatively higher street utility fee for the upkeep and repair of that
system.
Both designs would require the compilation of total-system units (total trips, or total parking units), and
the development of a rational basis for assigning each property a fair share of units. Unlike some Oregon
cities which have implemented street maintenance fees, Eugene has no business licensing or business
registry requirement, so it lacks an existing database or registry of Eugene businesses based on
commercial category. Attachment A is a November 2007 memo which outlines some design
considerations related to a parking-based street utility fee.
Administrative Efficiency and Billing Issues
The May 2007 Council Subcommittee report identified key criteria with which to evaluate revenue
alternatives, two of which relate to administrative efficiency:
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“Efficiency and Cost-Effectiveness: The revenue sources included in the funding strategy should
have low to moderate costs for administration, relative to the total revenue generated.
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Administrative Effort: The revenue sources included in the funding strategy should be practical to
administer. There should be practical sources of tax-related or fee-related data, and the
implementation and ongoing program management should not be overly complex.”
New transportation utility fees would require an administrative infrastructure similar to that used for
calculating and billing City stormwater and wastewater user fees. In order to meet the “efficiency”
criteria, the City would administer the program in-house and optimally would contract with EWEB for
billing and collections services, as initial analysis has concluded that developing a stand-alone City street
fee billing and collection system would be cost prohibitive. The overall cost of program management,
billing and collection would depend partly on the complexity of rate structures in the fee design.
While EWEB is required under the City Charter to bill and collect for sewer fees, EWEB is not obligated
to collect City street utility fees. Staff from the City and EWEB have had preliminary discussions about
the concept of expanding the existing EWEB-City billing agreement to include collection for a new City
street utility fee, but to-date the board has not indicated its support for such an agreement.
The lack of an available, cost-effective billing and collection mechanism for a Eugene street fee presents a
significant constraint to moving forward with the implementation of such a fee. In fact, staff research has
revealed that, of the 22 Oregon cities which have adopted some sort of street maintenance fee, 20 of them
have done so with the benefit of a City-owned and controlled municipal utility billing infrastructure. One
city which lacked the billing infrastructure had been able to negotiate a billing agreement with the local
water district, and one small city never returned staff’s calls. In summary, Eugene faces a unique but
significant challenge among Oregon cities in that Eugene’s municipal utility billing system is within the
control of a separately-elected board with a separate management structure, and the City cannot compel
the board to bill this potential new City fee.
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If the council wishes to pursue a street utility fee, it will be critical for the City Council members to
initiate outreach efforts with their counterparts on the EWEB Board to begin discussions as to what it
would take to secure board endorsement for the use of EWEB’s billing infrastructure for a City street
utility fee.
Timing
The “stop-gap” funding solutions for FY10 fall far short of a long-range, comprehensive transportation
funding solution for Eugene. If it is the desire of the council to continue with the development of a street
utility fee as part of the long-term transportation funding solution, it is essential that the council commit to
the time and effort associated with developing this alternative, while also acknowledging that it will not
be a universally acceptable solution.
RELATED COUNCIL GOALS AND POLICIES
The goal of the council Transportation Initiative is to “Develop mechanisms to adequately fund Eugene’s
transportation system for cars, trucks, bikes and pedestrians, including maintenance and preservation and
capital reconstruction.”
COUNCIL OPTIONS
The City Manager is seeking clear direction from the council as to whether or not to move forward with
development efforts for a Eugene street utility fee. The council has two basic options:
Option 1: Direct the City Manager to continue work on development of a street utility fee, including
returning with a proposed budget for additional staffing and program needs for this effort.
?Provide direction to the City Manager as to which metric should be used as the basis for calculating
and billing this proposed fee (trip-generation, parking spaces, other).
?Provide direction to the City Manager and staff to work with EWEB leadership to coordinate a joint
elected officials meeting where the primary topic of discussion would be the potential for use of
EWEB’s billing infrastructure for a City street utility fee.
Option 2: Direct the City Manager to cease efforts to develop a street utility fee until instructed otherwise
by the council.
?Further direct the manager to develop an alternative five-six year transportation funding strategy,
relying on known and projected resources for transportation funding from all sources. By fall, the
City Manager would inform the council of this mid-range funding strategy and advise them regarding
his budget strategy for developing the FY11 transportation services budget within existing sources of
revenue.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends that the City Council proceed with Option 1.
SUGGESTED MOTIONS
?Move to direct the City Manager to continue work on development of a street utility fee, including
returning with a proposed budget for additional staffing and program needs for this effort.
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?Move to direct the City Manager to develop the street utility fee using {trip-generation data, parking
spaces, other} as the metric for measuring relative use of the system and allocating the costs between
user categories.
?Move to direct the City Manager to work with EWEB leadership to coordinate a joint elected officials
meeting where the topic of discussion would be the potential for use of EWEB’s billing infrastructure
for a City street utility fee.
ATTACHMENTS
A. Memo to Mayor/Council Re: Street Utility Fee Alternatives, Dated November 5, 2007
FOR MORE INFORMATION
Staff Contact: Kurt Corey
Telephone: 682-8421
Staff E-Mail: kurt.a.corey@ci.eugene.or.us
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ATTACHMENT A
Public Works
Administration
City of Eugene
MEMORANDUMMEMORANDUM
858 Pearl Street
Eugene, Oregon 97401
(541) 682-8421
(541) 682-6826 FAX
Date:
November 15, 2007
To:
Mayor Piercy and City Council
From:
Kurt Corey, 682-5241
Public Works Director
Subject:
Street Utility Fee Alternatives
This memorandum presents information to the City Council related to methodological options for
determining the fee structure and rates for a proposed street utility fee. The fee as proposed by the
Council Subcommittee on Transportation Funding Solutions (subcommittee) was generally defined
as using parking as a measure of system usage, with a number implementation details to receive
further definition and refinement through development of an implementing ordinance and
methodology. A range of alternatives exists for development of the fee and are presented in this
memorandum. Staff seeks further council direction on these alternatives prior to developing a draft
ordinance implementing the fee.
Background
The intent of a street utility fee is to provide a utility based funding mechanism to pay for benefits to
City residents and businesses provided by the City’s transportation system. The fee would be
established by ordinance to be paid by all customers having possession or control of premises in the
city with the purpose of providing funding for operation, maintenance and preservation of the
transportation system.
The council has expressed support in the past for a utility-type fee as a part of a package of
transportation funding mechanisms. Previous proposals for a similar fee relied on vehicle trip
generation estimates to measure customers’ usage of the transportation system. Through the work
of the subcommittee, the potential for use of parking as a basis for a street utility fee was identified
and emerged as a favored option. Key factors for favoring a parking-based street utility fee
included:
?Parking spaces as a measure of transportation system usage has a rational basis in that
vehicles must use the system to get to and from parking spaces; in general, the greater the
number of parking spaces at a site, the greater potential for the number of vehicles using the
transportation system to come and go from the site.
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?The amount of parking at a site can be directly observed and measured and is probably
easier to understand as a basis for the fee than are average trip generation rates.
?Amount of parking provides a relatively simple basis for the fee. Once an estimate or
inventory of parking units in the community is established, a parking-based fee could be
relatively simple and less costly to administer and maintain than a trip generation
methodology.
?A parking-based fee may provide some incentive for development of fewer parking spaces
and more efficient use of developable land.
?A parking-based fee can be somewhat flexible; a more detailed fee methodology can be
developed, reviewed by council and refined to address specific needs and concerns.
Key Consideration for Fee Structure and Rates
Through the work of the subcommittee and subsequent review by staff, several key considerations
for the fee structure and rates have been identified. These factors and assumption will need to be
further developed and refined to enable drafting of an implementing ordinance and methodology
and include the following:
?Inclusion or exclusion of on-street parking;
?Treatment of sites with limited or no on-site parking relying on public parking structures
and other shared parking for a significant portion of parking needs;
?Methods of measuring or estimating parking quantity at customer’s sites;
?Treatment of areas available or used for parking without delineated (marked) spaces;
?Establishing rate structure for residential customers – assumptions about the number of
parking spaces associated with residential customer sites;
?Develop criteria and allowances for adjustments, credits and reductions; and,
?Determine final revenue requirements, uses and limitations on funds derived from fee;
Each key factor is further discussed below.
Parking Types to Include in the Basis for the Fee (on-street & shared parking)
Discussion of the fee structure with the subcommittee suggested that off-street parking only should
be included in the basis for the fee. This is appropriate from the perspective that the amount and
availability of on-street parking in not directly controlled by customers of the utility. Staff
recommends that on-street parking be excluded from parking areas allocated to customers by the
street utility fee.
Another factor to consider is treatment of shared parking, both commercially- and publicly-owned
surface and structure parking. Within parking-exempt areas such as Downtown and West
University areas, a majority of customers rely on shared parking to account for their site’s vehicular
parking needs. Allocating this portion of parking to the appropriate customers requires additional
consideration beyond measured on-site parking areas or delineated spaces. Charging a public or
private entity providing parking services not associated with an onsite use would not be consistent
with the principle that parking is used as the measure of transportation system usage. A shared
parking site is not a destination itself and as such not the generator of the use of the system, rather
other customer’s sites are the destination generating parking demand and usage of the system. Not
accounting for these parking areas and the associated customers’ use of the system would shift
costs to other customers or result in significant under-collection of the target revenues.
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Staff recommends a fee structure providing for inclusion in the utility of shared parking within
parking exempt areas, with all available parking in these areas allocated proportionately to
customer’s sites.
Non-Residential Rate Structure, Methods for Measuring Parking
In a street utility which relies on parking as the measurement unit for gauging usage of the
transportation system, establishing parking units and methods for measuring customers parking are
critical steps. These factors are interdependent with the resulting rate and fee structure; decisions
about measurement methods can influence the fee structure and vice versa. These factors are most
relevant to recommendations on options for non-residential rate structure, as residential parking is
generally easier to estimate and average.
Measurement of parking spaces and/or capacity at sites can be complicated and potentially
subjective. This is because many sites contain parking areas without formally delineated (marked or
signed) parking spaces. Determining whether an area without delineated spaces is both available
and used for parking, or not considered available or used for parking can be difficult and open to
contention. Conversely, counting only delineated spaces is directly observable and objective, but
may significantly under-account for actual available parking at a site. As such, a method for
estimating available parking based on more readily measured site characteristics is often employed.
Estimating methods considered by staff include using:
?Minimum code-required number of spaces per building floor area
?Sampled ratio of parking spaces to gross building floor area
?Sampled ratio of parking spaces to total impervious area
?Sampled ratio of parking spaces to impervious area available for parking
Each of these methods has advantages and disadvantages which require further evaluation to
determine a preferred method having an appropriate balance of equity and administrative feasibility.
A potential disadvantage in terms of complexity for any estimating method is inclusion of factors
accounting for the variability of the ratio of parking to measurement units by land use type.
Distinguishing parking density by land use may improve equity of the rates but introduces additional
complexity and administrative costs since land use for each customer must be established and
tracked over time. A final factor to consider in selecting a measurement method is the desire to
allow for reduction in the fee related to reductions in the amount of land area used for parking.
Staff recommends preparing a draft ordinance allowing administrative flexibility as to the methods
of measuring or estimating the amount of parking at customer sites.
Residential Rate Structure
As with non-residential sites, measuring parking at individual residential sites could become
complicated and costly. As such, the rate and fee structures for residential customers should utilize
an estimated average number of parking units per dwelling unit. Options range from a single fee
charged to all residential units across all dwelling types to rates which attempt to account for
complex variability in the amount of parking and use of the system per dwelling unit based on
housing or site characteristics. Several challenges with the latter approach include availability of
data to support distinctions, increased complexity in billing, and potentially excessive administrative
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costs. A mid-range approach would be to vary estimated parking spaces within broad residential
categories such as single-family houses and multi-family dwelling units.
Staff recommends further developing the fee structure assuming an average number of parking
spaces associated with residential customer sites and varying the assumed number based on broad
residential categories, e.g. single-family and multi-family housing.
Adjustments, Credits and Reductions
In addition to specifying minimum distinctions between categories of residential and non-residential
uses, the rates may include a variety of factors to adjust or reduce the fee for categories of
customers. The basis for providing adjustments and credits is to recognize customers’
achievements to reduce usage of the transportation system. Rate methodology options range from
providing no adjustments or reductions to establishing administrative programs providing complex
and individualized adjustments. Credits may provide additional equity to the fee and provide a
potential incentive for customers to reduce demand on the system. However, complex credit and
adjustment provisions may provide marginal benefit to customers while significantly increasing
administrative costs.
Conceptually, two forms of adjustments may be considered: direct reductions resulting from a
lower number of measurement (parking) units at a customer’s site; and, other administrative
adjustments for demonstrated reduction in use of the transportation system.
Depending on the unit of measure for parking spaces, an inherent reduction may be allowed based
on reducing number of parking units at a site. For example, if size of available parking area were
the unit of measure, reduction in areas developed or used for parking could result in a fee reduction
while potentially providing an incentive for reducing the amount of land consumed for parking
purposes.
Other administrative reductions allow for recognition of reduced usage or demand on the
transportation system. For example, in implementing the rate methodology, reductions in fees could
be allowed for customers locating in nodal development areas or for businesses implementing
transportation demand management strategies.
Staff recommends preparing a draft ordinance allowing administrative flexibility for incorporating
adjustments, credits and reductions to fees associated with customer’s reduction in transportation
system usage.
Revenue Requirements, Uses of Fee Revenues
The subcommittee recommended a net annual revenue target of approximately $6 million with
$150,000 of the revenue generated to be earmarked for neighborhood traffic calming projects. This
revenue target was estimated to result in an average household fee of $4.50 to $5 per month. Upon
considering the subcommittee recommendations, council determined not to pursue one of the
package components, the solid waste collection surcharge, and shifted half of the revenue target for
that component to the street utility fee, resulting in a net revenue target of $6.5 million for the street
utility fee.
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While potential uses of street utility fee revenues are broad, the subcommittee identified priorities
for use of revenues to include:
1)Operating and maintaining the existing transportation system, including on-street and off-
street bike and pedestrian pathways;
2)Fully funding the annual pavement preservation overlay program, to avoid more streets
falling into the more expensive reconstruction project category;
3)Beginning to buy down the backlog of reconstruction street projects at a reasonable level
and time frame;
4)Acknowledging the importance of alternative modes of transportation by including funding
for a reasonable amount of enhancements and extensions to bike and pedestrian facilities,
including preserving and expanding the sidewalk system and expanding the local on-and off-
street bicycle system; and
5)Respond to priority funding needs related to other components of the transportation system,
specifically neighborhood traffic calming projects (total annual funding of $150,000
recommended from street utility fee).
Staff recommends using these priorities as guidance in developing draft ordinance provisions related
to use of funds being dedicated to the operation, maintenance, preservation and repair of the
transportation system.
Council may direct a different net annual revenue target or use of revenues depending on the
outcome of efforts to implement other funding package elements. Staff has evaluated estimated
example rates and fees contained in this memorandum based on the previous council-specified
revenue target.
Billing and Collections
As reflected in discussion of other fee implementation factors, a street utility fee based on parking
has the potential for relative simplicity or significant complexity and administrative costs.
Administrative and contractual billing costs have not yet been determined but will depend
significantly on the complexity of the fee structure and its billing requirements. When establishing
new fees, a key consideration is that administrative and billing costs tend to increase in proportion
to complexity of rate and fee structures.
At a minimum, a new street utility fee will require an administrative infrastructure similar to that
currently used for stormwater and wastewater user fees. Under this configuration City staff would
provide customer service, account management, and staff support for the annual fee setting process
and the city would contract for billing and collections, as is done now with EWEB.
A multi-layered, variable fee, especially one which requires a new unit of measurement, would
require more resources (City and EWEB) to develop and implement than a simpler fee. The trade
off between complexity needed to achieve policy objectives and the simplicity needed to minimize
administrative costs is a common element in city fee setting.
Assuming the Board remains supportive, we will continue to collaborate with EWEB staff to find
efficient and effective ways to implement council policy direction. If, during the development of the
administrative infrastructure, we identify significant barriers to implementing a specific policy
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direction, staff will bring information back to council, in order to weigh the policy value against the
administrative cost. In this early stage of fee development, precise trade offs are unknown;
however, in general, some policy objectives increase the need for complexity and likely increase
administrative expense. For example:
?A fee that requires a new unit of measurement in the billing system (e.g. building square
footage as an estimating unit for parking spaces, along with land use types by customer)
would require more resources to implement than one which is tied to a current unit (e.g.
impervious area associated with existing stormwater accounts);
?A fee that requires new customer categories would require more resources to implement
than one which corresponds to a current category;
?A fee that allows for variability based on changeable customer characteristics or behaviors
requires more resources than one which remains fixed for a site across time.
Staff recommends implementing a fee structure that best meets policy objectives while achieving a
balance with administrative efficiency.
Example Rate Structure and Fees
While a rate and fee structure incorporating requisite data and all applicable rate factors and
assumptions has not yet been established, staff has prepared example rates and generalized fees
using a rate model based on broad assumptions and the best currently-available data. Based on this
preliminary rate model, using a target revenue of $6.5 million and estimating approximately 240,000
parking spaces being billed within the utility results in a monthly rate of about $2.25 per parking
unit (space). Table A provides an example of a simple rate structure’s customer categories and rate
per unit of size for each category. This is purely an example to provide context for the various
options and factors considered in this memorandum.
Table A – Example Draft Customer Categories and Monthly Fee per Unit of Measure
Category Description Unit of Estimated Fee per
Measure Parking Unit of
per Unit Measure
of
Measure
Residential Single-family home on an individual lot is one Dwelling 2.0 $4.50
Customersdwelling unit. Duplexes, triplexes and apartments Unit
(assuming a single treated as multiple dwelling units.
category)
Non-residential Example based on sampled ratio of parking spaces 1000 Sq. 2.1 $4.75
Customersper 1000 square feet of available parking area Ft.
(assuming a single across a variety of non-residential customer types. Available
category) Parking
Area
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Next Steps
The major work elements for implementation of the street utility fee include:
?Prepare draft ordinance reflecting proposed rates and fee structure for council review;
?Refine rates, factors and adjustments to include in the proposed rates;
?Prepare proposed ordinance and hold public hearing;
?Work with EWEB to identify billing needs and options;
?Gather and evaluate data necessary to implement the rate methodology and establish fee
amounts for all customers;
?Implement billing systems and modifications to enable billing;
?Conduct additional public outreach to customers and customer groups;
?Give notice of proposed fee, prepare methodology and administrative order implementing
the fee.
Summary
Utility fee rate methodologies in general and transportation system fees in particular by their nature
rely on assumptions to allocate costs and estimate usage in both an equitable and administratively
feasible manner. A number of methodological assumptions and approaches are technically and
legally feasible. Along with equity considerations, consistency, complexity and administrative cost
are factors to consider when selecting methodological approach and assumptions.
Staff has prepared a range of approaches and related sets of assumptions for consideration in
preparing a draft ordinance implementing a street utility fee. Staff seeks council direction on
preferred approach and assumptions.
If you have questions regarding the information in this memo, don’t hesitate to contact me at
682-8421 or kurt.a.corey@ci.eugene.or.us.
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