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Ladies and gentlemen thank you for standing by. Welcome to value capture. The fee for road maintenance and to enhance safety. At this time the participants are in a listen only mode and later we will conduct a question and answer session. Instructions will be given at that time. Should you require assistance during the call please press star zero. I would like to turn it over to your host.
Thank you pepper. Thank you all for joining this exchange along with realizing that the transportation utility fees and the road maintenance costs. I will introduce a topic and make a couple of points to frame this session. Hopefully you will hear from the presenters and it will generate some discussion and thoughts and we look forward to any questions or comments that we may have. Then pepper said feel free to share those in the chat pod. We and we hope others as well, they will be able to respond to that. We know that there are folks who are attending who are very well acquainted with this topic, and we welcome them to share their thoughts. If we are unable to address your questions, or get to them, we will send the answers out in an email afterwards. I will talk about transportation utility fees or TUFs as I will call them. They can pay -- play an important role in funding overlooked maintenance needs, and how TUFs are calculated and how they estimate the maintenance cost and some other considerations. We will include Richard Martinez from Corpus Christi Texas, and Erika. I think they will elaborate on many of these points. So TUFs are periodic fees paid by property owners or occupants based on use. Many of these TUFs came into issue in the 90s in Oregon because of the state gas tax which was the primary source for this. It had to be increased because the amounts were not increasing with inflation and the amount of able to disavow these was decreasing. TUFs treats the transportation system like a water when you collect a utility, charging the owners or renters for their share of operations based on the use of roads, streets, public alleys, sidewalks, and transit facilities. What is interesting about TUFs is they are often included on the municipality sewer and water bill. They are a very good credit. Erika will talk about how it works in her community. Generally the term use is defined as a generation of trips estimated by the Institute of transportation engineers. They are based on the number of trips generated by different land-use, the fees. There is some that are paid across the board for residential and nonresidential as well. I say my colleague here tied Bishop will discuss these in her presentation. As I mentioned a key tool used in many of these TUFs is C ITE -- the ITE trip generation manual. And one example a municipality determines two types including residential adult developed property, single and multi family, and the other one nonresidential developed property. There is other land use of properties that is hard to classify like gas stations, hospitals, universities, and religious institutions. They are treated definitely based on the characteristics of those and their usage. The way that TUFs are calculated is based on the expected maintenance cost. Again in Hillsboro, Oregon, the TUFs is based on the maintenance cost of various roads within the municipality. The community has assigned the cause for the arterial, collector, and neighborhood route roadways go to the residential and nonresidential developed property equally. But those roasts that are only used for nonresidential properties like local commercial, local industrial, commercial alley, and industrial alley roadways, are allocated to nonresidential properties. Those residential roads and alleys that are allocated, they are allocated naturally to residential property. I think it is important to amplify that the community should generally have a clear plan or master plan of their maintenance needs and how much of the cost that the TUFs is likely to cover. In the city of Newburgh, a program was adopted that had a $1.9 million funding gap in property and funding their street. Being able to point to that deficit was helpful to win public approval of the state. During covid-19 we may need to focus more on waivers. It is simply an indication of an economy that is not doing so well. For Oregon it allows for the low rating or eliminating of the TUF for property and for vacant property, the TUF is built at the lowest bill of rate. Provided that all fees have been paid in full. Furthermore, the principal revenue of people who qualify for special rates, and that person meets the city Council criteria. In training team -- Newberg, Oregon, residents can apply for 50% waiver if fossils are less than 80% of the HUD medium Housel income or if there was recent unemployment in the household. Residents that do not have a vehicle may apply for a 50% waiver. In Newberg we point out in these examples that at least 50% of the TUFs, you can directly transmit them through the mail that is provided or indirectly because the businesses and towns may be acting on those TUFs. Richard Martinez from Corpus Christi will share how his administration addresses these today in a similar way. So there are several reasons for successful TUF programs including anticipating calculations, fees, anticipating the maintenance cost and the legal and funding issues. Here is a checklist to think about when engaging the program. In terms of calculation the commission picked up the appropriate use classification, and is important to have systems that charge for use and is important to minimize the risk of legal challenges. As I said the maintenance cost may be thought out well ahead of time. [indiscernible]. Perhaps setting up every year a long-term maintenance plan. The waiver is important when the economy is not doing well, and while the cost may be five $-10 for residential property or single family probably a month, it is important to monitor and the economy declines because they can have an impact on someone's available income. It is very important to manage the waiver process extensively. Legal issues are a reality and several Oregon communities have gone to a legal processing and there are ways to address that by making sure there is appropriate legislation and the community is following that legislation to allow for a TUF, and second of all it is very important for the community to administer the TUF program fairly. TUFs can be used, or primarily used for funding or on a pay-as-you-go basis. Richard Martinez will also discuss how that works in his community. It is conceivable that some communities with a fairly stable TUF program with consistent revenue each year can demonstrate to the bond market they could issue bonds or obtain loans for major capital maintenance fees as appropriate. We are not aware if that has happened yet, but it could easily with the opportunity. Let me end and I do want to say if you have any questions now, you can ask those to me and we will turn it over to tie Bishop. Thank you very much.
Thank you. I am going to be typing in the chat pod right now, we can also look at the phone questions as an option.
Lathe enjoyment if you wish to ask a question please press star one on your keypad. You may remove yourself by any thing that you do by pressing the star and then the 2. That is*1 at this time. We have no further questions.
Okay. In the interest of keeping things moving, we will shift over to ty Bishop and your slides are up.
Okay. Good afternoon and good morning to everyone. Again I am ty Bishop, and I am also the co-lead for EDC-5 value capture initiative with Stefan Natzke, the team manager at the office of planning, environment, and he will stand by today to answer all of the questions that you might have. On my discussion today I am going to take a moment here to clarify some of the terminologies. The difference between funding and financing. The two are often used in an interchangeable and confusing way. Also want to clarify value capture strategies versus tax, and those are very important. I am also briefly will discuss about every day counts innovation that the Federal Highway administration has underway to promote value capture strategy. And why the growing level interest at all levels of government recently? And how it can be used in our highway community. Next I to provide a brief overview of value capture techniques available for the state, and local public agencies and state of practice. The topic for today is transportation utility fees, [indiscernible], and last, I want to discuss a little bit about the federal influence in transportation utility fee and with value capture in general. Funding or revenue repaid financing. Funding refers to how the infrastructure is actually paid for. Financing can be pay-as-you-go or borrowing it refers to a supply of capital such as debt or equity which is used to pay for upfront investment costs of an infrastructure project. All that you need to remember is three things. You need a revenue source to repay the financing; you need the financing vehicle to pay for the upfront cost, and you need a procurement technique to get the project completed. This is similar to the way that we purchase a home or a car in our personal life. Many defined value capture as any tax that imposed to the property owner and that is not correct. Here are the differences. A tax is primarily revenue generating and it forced contribution to generate revenue for the maintenance of governmental services offered to the general public. Mandatory taxes provided by the general law. Everyone pays regardless if you benefit from those public investments or services or not. Value capture is not a revenue-generating, but a way to compensate for the public sector a portion of the cost of the special services or transportation investment. Authorization for value capture comes from the power of the local government, local make decision to implement the value capture and control the money generate from the value capture. Here is a very important point and that it requires a proportionality between benefit and cost. And strict accounting procedures for each value capture strategy. We actually in the second year of the fifth round of everyday counts, or EDC 5. EDC is a state model that rapidly deploy proven but underutilize innovation such as value capture. States select an innovation in which they are best fit for the highway community, and work to quickly turn those innovations into the practice. It is a two-year cycle. Federal Highway Administration work with the state and local transportation agency to identify a new set of collection and to champion for every two years. [indiscernible] value capture is one of those ten innovation. The EDC-5 value capture promotes value capture as funding and financing strategy to provide a reliable and sustainable and equitable funding to accelerate project delivery and to save time and money. So why is the need for value capture? Here is the reason why the states and locals should consider all of the revenue sources that included value capture strategies, the state and the local are facing the same challenges and not only decaying infrastructure and from funding crisis. While the traffic congestion to me it's a good problem because those are the signs of growth un economic activities and service delivery, but it has to be addressed -- because it impacts our quality of life and the cost of wasting time and fuel. $836 billion backlog of highway and bridge capital needs. This price tag will continue to grow if no action is undertaken. And lack of funding can really compromise safety. Additional funding, need to address the safety for the pedestrian. over 6000 pedestrian fatalities and this is a concern at the Federal, state, and local levels. One of the EDC-5 Innovation is safe transportation for every pedestrian or [indiscernible] and it provides a seven counter measures to ensure pedestrian safety [indiscernible]. Several value capture strategies can be used to fund these counter measures. Also additional funding need to bring to the city to smart city to leverage the 21st century technology and intelligent transportation system. We need all of the funding sources available to us to fix the system, and it really begins at the local level. When I am talking about local I am referring to city, county, township, tribe government [indiscernible], and the major funding sources for the federal aid highway system come from the highway trust fund and it is unsustainable. Since 2008 congress has infused a total of 164 billion, and I think that is a correct number, from the general fund to the highway fund. You can see that gap on the chart and it continues to widen. And keeping in mind, [indiscernible], there is 3.2 million miles of public road in a great need for repair, maintenance, and improving and I am providing the table break out between federal-aid and non-federal aid mileages [indiscernible] and the nonfederal aid highway system is desperate need of repair and maintenance. it has to come from some sort of revenues. I am not sure if our infrastructure system can wait for Federal come to the rescue. That is why we are continuing to seek new funding sources to help pay for the infrastructure needs, and value capture is an untap revenue sources available for the state and local public agencies to fund infrastructure needs and meet all of the objectives. So what is he value capture? This slide describes a value creation opportunities from the public investment and the value capture process. So when the public sector make an investment in transportation improvements, and it creates a broad range of the benefits. Those benefits typically happen at the local level, the type of improvements like increased accessibility, and enhance safety, reduce travel time can really attract new development. Many of those benefits flow to an increase in the property value, and new tax revenues through the private-sector investment and economic activities. Value capture only seeks to share a portion of the increased value and use to fund the project itself or to fund additional transportation projects [indiscernible], Value capture can be a very powerful funding technique that provides supplement to the traditional funding sources. It can promote an infrastructure cost sharing with the win-win outcome to the public and the private stakeholders. It can share up to 50% of the value created by transportation investment from the beneficiaries such as developers, property owners, employers, and businesses, and can apply to multimodal projects and can be used in urban, suburban and rural settings. It can provide a local matching share for the federal and state grants. It can access to Federal and State low interest rate loan programs and a very attractive private capital. Most importantly it provides a funding of 3.2 million miles of public road [indiscernible] that needed improvements. We group value capture techniques into seven broad categories. Value capture is an umbrella term, covers a range of revenue mechanisms with a common goal funding project from beneficiaies rather than from general tax payers [indiscernible]. Value capture define here is the spectrum or mechanisms that includes a land value capture, cost recovery, and the revenue that you generate from the publicly owned facility like recycling the value of the excess, or underutilize property or land in the form of long-term leases and to fund for the new infrastructure project. The land value capture is a subset of value capture techniques that we define here. Today we discuss transportation utility fees. The rest of the categories are going to be covered in upcoming virtual peer exchanges. Transportation utility fee can come in many names. They are very similar in the way only benefits pay and pay for the local road maintenance and improving. It might be slightly different as stated in the city ordinance and it depends for a very's specific purpose but in general are very similar. Typically of using at the local governments to fund for the ongoing transportation improvements such as repair and maintenance of street, traffic light, sidewalk, bicycle paths, pedestrian safety enhancement and transit facilities. They are paid for by the property occupant rather than the property owner in the defined boundary or the city limit, because [indiscernible] all are benefits from a well maintained and safety road system. It is determined by trip generation that Sasha was talked about earlier, and fees are added into a utility bill, to minimize administrative cost, but many cities are allowed to pay on line as well. It really differs from the transportation impact fee or the mitigation fee or the transportation development charges. It is paid for by the occupants rather than developers and paid every month by the occupants versus one time payment by the developer for the capital investment that needs it to support the new development. You will hear in much more detail from our city experts. I apologize because I left out Montana. There are two leading states using's transportation utility fees are, the state of Oregon and the state of Texas. Those cities have a population of less than 100,000, and over half of them are below 10,000. I will talk a little bit about a federal influence in value capture and [indiscernible], and I would said that the federal had no influence in the transportation and utility fee since transportation utility fees mostly used for the work maintenance and federal only funds for the capital. However if you receive a grant, safety grant, or preservation grant, then you must follow the federal requirement for that project. The federal has limited influences [indiscernible] in value capture in general. It is very limited. Most of the value capture strategy is a local matter and the federal government does not have a legal authority to regulate a local land use. State establish a legal and regulatory framework for revenue and financing strategies [indiscernible], but the local has hold the power of authority to implement land use over the revenue, assessing, establish districts, and zoning. Provide opportunity for partnerships between state, local, private sector, community, and federal working together in value capture strategy. US DOT support value capture for example, at one of the BUILD grant criteria, require local fund contribute to the project. Value capture revenue definitely helps. Federal Highway Administration assembled a value capture implementation team, and to provide technical assistance to the state as well as locals who want to implement value capture strategies. Members are from the Federal Highway Administration, as well as from the state and other federal agencies. We provide a technical assistant that includes workshops and trainings. The most recent publication that rolled out in late November of last year is the value capture implementation manual, and it provides how to and everything that you need to know to implement value capture. We also established a peer program where we partnered with the experts from the leading cities, counties, states, and tribes to share their experiences in implementing value capture. We also had consultant experts to provide direct technical assistance. We also serve as the national clearinghouse using web platform and there is significant information, but understand this is evolving. We can only update if the information available to us, and you have been helping us. We want the website to be a one-stop shop for you and all who are searching for the information. So if you state or local is using a value capture or any technique, please share with us. We would love to showcase them and make it available for others. This slide will provide you the link to some of the resources on the website. Before I turned it over, I want to leave you with a couple of important points. There is several billion of infrastructure needs by the public sector and value capture can fund 30% of those. It is essential to include value capture strategy in early and in planning stage so you can maximize the value capture potential. Keep in mind that -- keep in mind that one size does not fit all in value capture strategy. It requires the right value capture strategy to the right project as well as consider multi beneficiaries, multiple value capture techniques and multiple financing tools to advance major project. While it can contribute significant revenue to the project, operating and maintenance needs, it’s usually supplemental and is not replace additional funding sources. Lastly I to remind you this is your forum and your platform to engage the city experts, but also if you have experience in using transportation utility fee [indiscernible], we welcome you to share with us. This is your forum, and with that, I will turn it over to Pepper Santalucia.
Thank you Thay. For those folks who are having trouble hearing we are troubleshooting as best that we can. We will do our best to try and address that. We suggest the phone as a affordable option and some people have tried that and said it is not working. There will be a recording of the webinar available on the FHWA website , and the audio should be better and that recording that some of you will be able to get to today. With that I'm going to ask Kathy again if anyone was to answer or ask a question by phone, we will keep an eye on the chat window.
Ladies and gentlemen that is start 1 on your telephone keypad if you would like to ask a question via the phone line. Currently we have no phone questions.
Thank you Kathy. In the interest of time, I will now turn the event over to Richard Martinez from Corpus Christi. Richard, why don't you take it from here.
Thank you pepper. I am Richard Martinez and the director of public works for the city of Corpus Christi and I appreciate the opportunity to come and speak today about our street maintenance fee. The agenda today will cover a few things but I want to tell you a little bit about Corpus Christi before we get started. We are a coastal city and the eighth largest city in Texas. With that being the eighth largest city in Texas, most cities that have a utility fee or a street maintenance fee are usually under 100,000, and we are about 325,000. Out of the eight largest cities in Texas, there is to the other cities larger than us that have a street maintenance fee as well. That is interesting for Texas and I believe there is five major cities that have a maintenance fee across the state. A little bit, since we are close to the bay and the ocean, or the Gulf of Mexico, we have sand, but we have highly classic soil as well. The street conditions are not very good and I will get to that when we get to the point. Some of the catalysts that spurred on a street maintenance fee in our area. We will talk about the establishment of the fee and when that occurred and how it occurred. We will talk about the classifications and calculations which are very interesting. A lot of what you have heard today but a little twist on those as well. Every city has adjustments to those. Then I will talk about the budget, and then we will take some questions as we are going along. Again, like I said earlier, a coastal city of Texas and we are kind of the for this you can drive in Texas before you run into the Gulf of Mexico, with a population over 325,000, and we have [indiscernible], 1205 center line miles of roadways. That is equivalent of light driving from here to Chicago, and we had that entire infrastructure to maintain. When you have infrastructure that has had deferred maintenance over the years that becomes more difficult as you are going through the process. 247 signalized intersections. I am talking a little bit about that street network and what the catalyst was that actually spurred on a street maintenance fee. A lot of deferred manuals depending on what the economy was like and street maintenance was deferred for many years. The condition of our road weight was evident and is still evident today. With the city going on five months and having been a government for 30 years in to treat larger cities before coming to Corpus Christi, and our pavement index for Corpus Christi is a 56. From zero up to 100 with 100 being a brand-new Street, the average of our streets are 56, which doesn't meet the minimum national standard of at least an average of a 70 across the board. That we give the an idea of what people see day in and day out and the ability to have a street maintenance fee or utility maintenance fee in our area. If you look in the categories of local streets and you go to the bottom you will see there is 840.21 miles in that area and the poor or failed is about 500. If you look at that area compared to the rest of those he gives you an idea that the residential streets, what the condition is. If you look at what came up on the screen in the green area, we use the street maintenance fee to cover those areas, good or fair. Anything that has to do with maintenance to be covered, and we try to cover our bonds, the bond work in the poor or failed category that you see below that. So that the money that we do have and collect we can at least make a difference in our program as we are scheduling our work. So a little bit about the street maintenance fee. It was established by city Council and approved in January of 2013 and building began in January 2014. This is our seventh year to be with our street maintenance fee. There is a provision that city Council put in place and after 10 years we would have to go back and readdress it. Annually we have to report to counsel about what our accomplishments are and over the next few years we will be putting that out what we have done over the last 10 years because like anything else we need additional funding. We will have to prove why we need to increase the street maintenance fee or if everybody is happy where it is. We will have until June 25th of 2023 to be able to go back and show what our accomplishments have been. It is instinct that not only do we fund contractual services, but our internal services as well. On the picture on the right, we just started to implement painting again here in Corpus Christi and previous to that it was all contractual. You are able to fund a lot of different aspects with the street maintenance fee which gives you more tools in your toolbox, and that is what you need, you need tools to be able to pay for the type of maintenance that is needed. I will go over little bit about our fee classifications. It is very simple, residential and non-residential. Residential have a few subcategories. Attached multi family housing and detached single family residence, and detached dwelling unit like a recreational vehicle, and we covered every single bit as we was looking at that. So here is where it gets interesting. We are going to talk a little bit about calculations for the two categories and we will start with residential. The residential calculations to residential property is based on the number of dwelling. It is called equal to 1, an ER you, and it is for single family residence and we get everything from the of appraisal district. So ERU equal to 1, so how is the property used. A single family trip factor is 1, and that is what it was set at. Multi family is set at .45. If you look at the calculations below it is simple to see. So 5.38×1×1 for a single family, and it comes down to $5.38 a month and that is on average most of our residential housing throughout the city. They pay a $5.38 the per month. But what I want to tell everyone that is listening is that when you have something outside of the general fund and you have a street maintenance fee, you will get a lot of questions. When you have residents that come out and say why is my street not on the program because I pay $5.30 a month, and I want to know when my street will be on the program. Having a residential fee requires a lot of public education and requires a lot of preplanning. Again I will continue with the multi family. If you go 5.38 times 1, times .45, that is less than half of the $5.38 they would be paying per month. Remember that is a multi family complex that you would be dealing with that. That is the residential calculation which is pretty straightforward. When we go to nonresidential it gets a little interesting. If you want to look at the calculation for not residential property, it is based on the square footage and we call it LASF. We get that information from the appraisal County district and per ordinance they set a limit on our living area square footage around 118,000 square feet. This is captivated by each water meter. If a business has more than one water meter they will get a square footage, let me use an example, a large box retail store, that has two meters. Each meter can go up to 118,000 square feet used for the living area of square footage. If they have one meter they will pay that at the base. If they have more than one meter they will pay up to that if they are a large box store. Then we will look at the equivalent residential unit and how that is calculated. If it is a box store we can only do 180,000 square feet. But we will calculate 1600 into that which will give us the equivalent residential units we can use in the bottom calculation as well. Then we have land-use and we also look at the trip factor, and based on the trip institution rate published by the Institute of transportation engineers. With all of that said we use that information, but counsel has put a Because they are very informed about what that would do to some businesses and they use that factor as a whole. We use the trip factor as 5.78 maximum. I will give you a calculation for a large box store. A large box store at $5.38, that is the fee, times the square footage of 1500 square feet, and let's say 118,000 square feet was the, and you divide 115 into that, that is 76.66 equivalent residential units. Then times the maximum For trip factor at 5.78, that would be $126.97 for a large box retail store. If they have more than one meter that will be times each meter they have. You can see that some of the fees can get up there in a non-residential area and that is the reason why counsel took a look at that and why we are calculating all of the fees and said we need to put a cap in place otherwise we would have a lot of opposition toward that. Those things, when we look at the next review of our fee, we will look at updating these calculations as well to see whether not they are fair and equitable, and also if they are generating the amount of revenue that is needed for our street program as well. We do have adjustments as I also mentioned earlier. They are available for low income residential customers. They will receive a 50% discount on the street maintenance fee for 12 months if you are eligible, and you will need proof of income and the correct documents, and currently we have a little over 80 that do have that discount. But this is a fee of over 325,000 residents, and only 80 applicants have applied and met the criteria for reducing their payment down on the street maintenance fee. Soul fee applicability, what can we charge the street maintenance to and what can we not charge it to? [indiscernible]. Any benefit of property that is not exempted and have living area square footage, the LASF that we talked about earlier. Tax-exempt properties and nonprofit agencies, we can charge those as well and you can see on the next page that some are exempt. And it does not have to receive other city services and property that is not being used should be billed once it becomes active again. Let's say a property removes the meter and it doesn't have any use or building on it, and what it does become active again [indiscernible], and also we talked a little bit about the vacant property. We do bill on the water bill, and I want to talk a little bit about that especially during the time that we have right now with COVID. We have been monitoring the revenue on a monthly basis to see if we see a decline in our revenue. To this date we have not received any information that we have had a decline in the revenue although our city has allowed that anybody who needs assistance in paying their water bill or a need to defer the water bill, that has been a possibility. But all of that has continued to move forward and our revenue has stayed steady because it has been on our water bill. We have also had a request to have a variance for certain businesses based on what is happening now with the health emergency that is out there right now, and we are doing some calculations to see whether or not it makes sense to allow some industries to have a variance based on how they have been affected during COVID . That is some of the things we are looking at today and will continue to do that as the climate and emergencies are still ongoing. So applicable and those that are exempt from that that it is owned or leased by a taxing entity. City, county, state, and federal agencies are exempt from the fee. We have a large port in Corpus Christi and we are one of the major exporters for petroleum products around the country. A large port is exempt and the regional Transportation Authority is also exempt. School districts, charter schools, and hospital districts are exempt. Properties outside of the city limits and personal property are exempt. New construction before they get a certificate of occupancy, they don't have to pay until that happens. Then property without the living area square footage also is exempt in most cases. So what do we do with the fee? The next couple of slides is very interesting because we do have a lot of different funding mechanisms along with the street maintenance fee that makes of how we are able to distribute our funding throughout the program. There is the cost of operation and we talked a little bit about that earlier. Those of you that do street maintenance know the patches and base repair, the curb or the gutter, and we have a maintenance program that does overlays. We have also the contractual sources were we do more heavier lifting projects that need more heavy, heavy maintenance products that have more repairs. They are almost like a reconstruction project as well. A couple of administrative fees and planning and engineering which is a big component of this as well. We do have an in-house group that does planning for both groups, and then we do inspections as well. We talked a little bit about maintenance and reconstruction of some streets. We don't like to use the street name for reconstruction because when we show you in a minute what we collect, we would not be able to do very many streets if we put them in the recon category. We have a residential street reconstruction fee as well. We have a street maintenance fee and a reconstruction fee that we have also added to that and I will tell you how that is paid for in a minute. So here is all of the different funds that cover the street maintenance funding sources. And the top in the orange you see the street maintenance fee and we collected over 11 me dollars last year. That trend this year is showing about 7 million. We are trending a little higher this year and that one is based on development and we are not sure if the development will slow down based on the emergency with COVID. Right now we are trending up, and we are able to plan for more streets and we have a category of streets in an area waiting for additional funding. That area as you look at the entire street name is area in-house with contractual services, and that is over $32 million. 11 million of that comes out of the street maintenance fee. We get some money from the regional Transportation Authority and some from our industrial district. Also for the street cut we get additional dollars and we do have a general fund. Out of that there is 14 million that comes out of the general fund. We try to limit that and when the times are tough, that is where the major cuts happen out of the general fund. We are trying to look at funding some of our staff out of the street maintenance fee so that the general fund, if it becomes volatile, we can have more stability out of her street maintenance fund as well. The general maintenance and not reconstruction, this is where we get our dollars to be able to operate. We have to keep all of those separate, and accounting is challenging to say the least. This is our budget as a whole. We are about 128 million over the last two years. I will point you to the right-hand side, that white circle. You see the residential streets reconstruction? That is 25 million and that mostly comes from a four cent property tax. Citizens in our community went back and said we want to have our streets in better condition. They championed a four cent property tax that they all pay to be able to assist in residential street reconstruction. That is all that we can use that money for and we cannot use that money for any type of overlay maintenance. It has to be total reconstruction, but that gives us a boost that we don't have to wait for a bond issue every four years to be able to put reconstruction on streets. When we have a bond now we look at doing collectors and the bond so we can use our residential construction fee to handle streets in our residential area. Of course the bond that was looked at and reconstruction, that is $70 million. If you look at that and think that is a lot of funding for a city of our size, we have a $2 million shortfall right now in need for reconstructing our streets. For the last 30-35 years there has been a lot of deferred maintenance and we are trying to catch up. You see a lot of construction going on right now throughout the city. To go back to our original topic, the street maintenance fee assist us with the day-to-day operations and maintenance that we would not have the funding to do and we are able to rely on our general fund, and it had not been enough over the last 20-30 years. We are making some headway and I think once we can print to our citizens that we are making headway and they can see it happen in our neighborhoods, they would support two additional dollars. I don't think right now is the time to do it with the emergencies that are going on and we totally understand that. We know that we will have to tighten our belt like anybody else with what that is happening today. I will tell you I feel very fortunate and I have been in municipal government for 30 years, and the other larger cities that I was in, they are all general fund based. Based on the economic climate, that is where you go, up and down based on the economic climate. With a street fee it is a little more stable and you have more tools in your toolbox. With that, that is my presentation, and there is my contact information if you want to get in touch with me directly.
Thank you Richard.
A couple of answers to the questions in the chat box. Maybe Richard you can address them. So how is the fee of $5.38, how was it originally established?
That is a good question. Again that was seven years ago and I was not here at that time. From what I understand it had gone all the way up to $10, and when they came back to it, it was not what they felt the average citizen could withstand on a monthly basis at that time. It is not calculated based on the needs. We have way more need that what that $5.38 on average can cover. It is based on what they felt the citizens could handle.
That is one my questions related to that. Is there a maintenance plan that you had and you figure out what percentage of the maintenance fee it will cover?
Right now we are working on that to come up with the need, and it is a $2 billion need and if we came back, it is outrageous and they cannot take care of that.
Thank you. We have another question, and the question is if the area adjacent to the city doesn't have the same fee, what incentive does the developer have to locate in the city if the same services are available outside of the city. Do you have any additional thoughts about that issue and if you can counter that in Corpus Christi.
We have encountered that and recently this last week we worked with a developer that is building outside of the city adjacent, and the county and the city worked together with this developer, and we also have money, a pot of money, that developers pay into, they can go and submit for dollars to upgrade those types of streets, and that helps the city and the county and in this case accounting came in and said we will upgrade the street as well as the developer who also contributed to it. Then the city said we will pave that street once it was upgraded. Some of the streets on the peripheral of the city, we are willing to work with them. If they are further out, that will be a county thing. They do want to locate in the city and we have been working with them.
Thank you. There is a question, and as you think about that Richard, I want to summarize the response from Lowell, and he says private developers look at a number of factors when they decide to locate. If the fees are reasonable and they provide services appropriate, they do support, and they make decisions on the actual charge, and what infrastructure.
Basically if they are going to put in utilities like that, if they need to cut our Street, they did have to pay for repairs. That utilities that come in they are owned by city and are actually city groups, and what happens is the water department and others the department will pay us to repair a street. Like any other city government I cannot make money. It is just what our cost is. We would just recuperate our cost to do that at this point.
Okay. Thank you. Is there any other questions for Richard either in the chat box or as he operator said -- the operator said.
Obviously you can put your question here and we will have a question and answer at the end. Let's move into Erika and she is coming from lacus Wego and we will talk about the municipality program.
This is Erica Rooney and I and the city engineer for the city of Lake Oswego in the city of Oregon. We are going to bring it down quite a notch. We are about a 10th of the size that Richard has to deal with in Corpus Christi. It was fascinating to hear how complex his system is, and we will bring it down to about 35,000 or 40,000 population. The goal for today is to talk about our Street maintenance fee, and the transportation utility fee as what it is called. I will end with a little bit of information about something else that we have as a source of income which is our [indiscernible]. This talk about where are we in the world? Portland is in the northern end of the state. Lake Oswego is one of the suburbs of Portland and you can find this on the southern end and we have a lake in the middle of our town. Just for size purposes, the state of Oregon has about 4.2 million people and nearly 2.8 million of them [indiscernible], assessable by the general public and it is somewhat like a country club. The rest of the residential and commercial property do not have access to the lake. Kind of a unique situation. This is a typical summer day in Oregon and it is not like this the other nine months out of the year. Getting down to the demographics, the town originally started as the mining operation but after the turn-of-the-century became more of a vacation spot for people in Portland having a second home at the lake. This town is fairly well-off. It is a small town with winding rolls -- roads and the elevation would change 1500 feet in the matter of half of a mile. The vast majority is a residential area, and we have a small commercial component as well and we will talk about that later. The infrastructure is pretty old. It doesn't start out as a county area and there is not a lot of city standards here. Our standard refers to it depends. We are a relatively wealthy community and that has a lot of benefits to it. We have a lot of support to making sure that the city looks good and operates well and I am fortunate to work year. Getting down further into what is our Street fund? We have a budget of about 18-20 million. Our maintenance staff, and paving and maintenance. The roadway and street system, and much [indiscernible], and Richard said he had over 400. We have sits torrential rains and the road systems are hard to maintain. Our goal is to get it around 70, and as we have talked about before that is not a great goal, or not the sweet spot that you want to be on the pavement index, but at least it is an upward trend. So what do we spend our money on? [indiscernible]. Some things like brick sidewalks and a beautiful median and flowers that gets changed out all the time. That is where a portion of our funds go. In general we have about five typical resources that go to our Street fund that come from the state motor fee and taxes, or modal -- motor fees and we have a new county vehicle registration fee that started. We do get some general fund money put in here that is a direct result of the Council making paving the number 1 priority. Also we have our Street maintenance fee. Outside of all of these funds would have a system development charge and I will speak to that at the end. We are look -- lucky for small town that we have a diversified portfolio of resources, and that is a good thing for us. These are number so you get a sense of magnitude. Not very large but deftly -- definitely sick African. When you talk about the gasoline tax I think early on in the presentation I think it was Sasha that brought up a gas tax and Oregon was the first state to have a gas tax that started back in February of 2019. We was flat for many years and that was the impetus for a street maintenance fee at the legislative level because we was not increasing the gas tax. They decided they needed to have another way to get funding because we was not getting enough to the vehicle gas tax. Right now we had a recent increase and we are up to $.36 per gallon and on top of that is the $.18 from the fans. About a year ago we added specifically to the county that we are hand, and this is not in every county in the state, but specifically in our accounting, we added a $30 per vehicle registration feet that is a two-year registration. It has only started coming in in the last couple of months, but we are anticipating $700,000 per year for that. What we are doing is with the recent gas tax increase, and the county vehicle registration fee, we are bonding the funds. We are fortunate to have a AAA rating, and we get some very good deals on bonded money and we are going to use that to pay for improvements. The history here in Lake Oswego, the street maintenance fee became available for local agencies and 1984 and we started hours in 2003. The chapter reported in the local code and I will provide a resource that at the end. The fee started at three dollars and 75 cents per standard resident. Even though it says Street maintenance fee and it can be used for all transportation related components like what you see here. I wasn't here at the time that it was sold to the public, but my guess is that people anticipated it being strictly for street maintenance fees and they think that as paving, but quite frankly we have designed the code that it is for fairly wide use and has been used in a number of different ways. Similar to what has been mentioned before with Sasha and even Richard, is we tack this on to the local water bill. The water bill has four components to it. Water, sewer, and the storm maintenance fee and we also had the street maintenance fee. When everybody says I have a high water bill they are putting the whole thing together and not remembering there is a separate component in there. It is amazing that people understand that water bill has a multiple component to it. Real quickly I will go over the components of art code regarding the street maintenance fee. It is fairly simple, and there is very few exceptions. The only waiver is if the property is vacant. The exceptions that are mentioned here are a few things similar to what Richard had. We don't give out waivers are low income waivers, the strictly at the property is vacant, you don't have to pay the fee. You can appeal it and the appeal will go straight to city Council and that decision is binding. I am not aware of it ever having to go to the city Council for appeal. We have had some people question the commercial ones and we have done research and look back into what the rate would be and put them into different categories and resolve them, but we have never had an appeal go to the city Council. This is the current status of the street maintenance fee and we are running at $9.75 per single-family residence. There is a multi family cost and we have a rate for businesses based on the trips per day. It sounds more simplistic than what we saw in Corpus Christi, but is on the same general idea of how many trips per day for the size of the building. Annually all of this brings in about 2.8 million. As I mentioned before this is mostly a residential community, and we have about 12,000 single-family accounts, and about 4 to 50 general accounts, and in general, we get most of our funding from that $9.75. In the Portland metropolitan area there is nine other cities that have a street maintenance fee. Portland surprisingly does not and has failed a couple of times. The fee will range anywhere from $4.89 per single-family of two $13 per family. We do run toward the higher end. So where does all the money go? These are funding sources right now along with the bonded money that I talked about. We are getting a $12 million infusion which is very helpful. It goes to all those things I mentioned before with signal maintenance being one of them. Almost all of the signals are over than 20 years. We have only put in one new signal in the last 15 years. A large number of the signals will eat up parts of the street maintenance fee because they are literally falling apart. This one is put together with almost baling wire. A little embarrassing but we are getting to it and that is where we would shift some of the street maintenance fees in the future. As mentioned the main focus for the entire Street fund is about the roadway system itself. We have very old infrastructure. The rose was initially built by the county and in some of our neighborhoods, [indiscernible], and we can have a problem when we get 45 inches of rain a year. The neighborhoods are older and we don't have a lot of new development. In the time I have been here for the last 11 years, the largest subdivision that we have is 10 lots. Large subdivisions of a couple of 100 haven't occurred for 25 years and we are fairly built out. A lot of redevelopment with tearing down a small home and putting in a new one. To give you a sense of size here is the roadway system and we have about 154 miles of roadway and the vast majority is residential. This tells you a little bit about the makeup of our system. It is pretty similar to most cities. This is where our priority is. It is all about paving, paving, and more paving. That is all that we are doing right now. We are not replacing bridges and we do have eight bridges, but we are not working on those right now. We are trying to get the [indiscernible] up because it is the number 1 priority for the city Council. With the infusion and the recent bonding that I alluded to, it has really increased, and we're spending anywhere from 5 million up to now be dollars a year on paving and we are hoping to spend 35-40 million over eight 506 your periods. I think we are going to reach that goal and get it up into the low 70s before we get done with this large infusion. This is a quick example of where we are paving. For us that is a fairly significant amount of paving. The green indicates pavement preservation and the street maintenance fee goes to that as well. Along with the paving as you know there is requirements for ADA. Some of this funding go to the replacement of the ADA ramp as we are doing these pavement projects. We are replacing over 90 curb ramps and over half 1 million in the construction cost of the curb ramp and that does not include the design that was done ahead of time. Like I mentioned before for a city that has less than 40,000 people we are spending a lot of money on paving. If not for the generous infusion from the general fund and bonding we would not be able to do this level of effort and we are fortunate to have this funding resource available to us. One of the things that was talked about earlier and I think Richard mentioned it and even Sasha, with the situation of COVID and locked down and we are still in lockdown in the state of Oregon, there has been a lot of discussion in some of the neighboring communities about providing assistance for your utility bill. We have a small program that we have expanded just a little bit. But it is very small and we get maybe 5-10 people year that apply for it. We are not seeing a lot of requests for it now. I am not saying it will not change, but going back to the demographics of this town, we are fairly fortunate and most people are continuing to pay their utility bill. I don't know how this will play out over the next couple of years or months as we try to get through this crisis, but there has not been any conversation at the political level talking about limiting our fee or changing them or even freezing them. We raise our rates every year, in January, and they are raised based on the engineering need record construction cost index. Maybe by January that will be conversation to not raise the fee based on the crisis, but right now there is not any discussion. I will take just a few more minutes that I have left to touch on our last resource that we use for Street improvement. These aren't system development charges, and they are specifically for capacity improvements only. If we are adding a signal it is certainly a capacity improvement. But adding a lane or a bicycle lane or a sidewalk is also another option for using the system development charges. In this town we don't have any lanes and we are not doing any capacity improvement. I don't anticipate we would change any lanes to a four lane road, so it is all going toward signals, bike lanes and pedestrian sidewalks. The annual income is between 500-800,000 per year but is going down. You can see the rate is currently at 15,000 per new home. We only get about 30-50 new homes per year. That is probably on the high side for this year. We don't have a lot of development and the commercial rates vary quite a bit. They are based on standard ITE trip distribution and a lot of cities have eight development will charge. Hours is in the middle not the highest or the lowest. The reason we don't get a lot of money even though we have redevelopment going on and here is a site for example what we have 200 units for the apartment and 50,000 feet in retail space, but we are getting zero dollars in transportation fees because of the prior use. The prior use was a medical space, and the difference was actually a reduction. We may have lost a connection and I apologize for that if it has happened.
I can get to your slides and can advance them for you.
I am almost done. Might is coming back on. The last slide was to show where we spend our system development charges and this is the person we have done in 15 years. The system development charges are a resource for capacity charges and we don't use them any way for street maintenance. The curb and gutter we don't use them for Street lighting and they are fairly restrictive. With that I will bring it to closure and this next slide which I think I can advance, it is to share if you need to get in touch with me, this is how you can reach me and you can find the street maintenance fee available online, and this is a booklet that has all that information available if you would like to look into those fees as well. With that, I will be happy to take any questions.
Angking Erika. You can submit your questions to Erika in the chat box or dial*1. We will take one question in the chat box that we see already. Did the cities experience any political pushback during implementation specifically from the property tax exempt and schools and churches, and this has been a major issue. Erika, maybe start with you and Richard if you can join in as well.
I have not heard of any pushback in this town. I have heard of other cities having a broader list of exemptions, but that has not been the case here.
Thanks. Richard?
We received a couple of request from some churches and in one of our shopping centers and ultimately when we met with them, they decided to go ahead and pay the fee.
May be on a related point here, we had a previous question, from someone in the city that says we are currently changing the methodology for the transportation fee, from parking spots to trip generations. I would like to ask if anyone is currently using the methodology and if they can electronically track the data. Is there anyone on the chat pod that has a response to that?
We don't do parking spots and they are trip generations for us and we do not even look at that when we was looking at our program.
We have not had a parking issue as far as using the parking Jen for that. Everyone in the Portland area has a similar approach to this Street maintenance feet when they do have them and we have been using the IT trip distribution to determine the trips and they are fairly similar methodologies throughout the metropolitan area.
Thank you. I think in some legal cases there is some challenges about whether or not ITE it is an estimate and not actual trips. I know that some commercial properties allow an owner to conduct their own trip study at their expense, and if that is done in a way that is successful to the city, those numbers can be used to generate the fees. The you have any experience with that? Navy Richard?
Yes. Here there is no mechanism for them to do their own trip study. We have them in classifications, and it will be something like a food mart or other cleaners, and those are classifications that have been studied, but we don't allow them to do their own study.
Erika.
I have not heard of that in regards to the street maintenance fee, but in regards to our system development charges, we have ever development within certain size that has to do a traffic study and has use IT for trip generation. That is often the basis for our system development charge as well. There has been a few times rather than using banks in particular which have really changed quite a bit regarding online banking and we have had banks challenge that and do their own study. Instead of using ITE they was able to prove to other examples the rate is quite a bit lower. For them it was a significant reduction in trips and therefore the system development charge, so it was worth the time and effort to do that. But most of the time we stick with the ITE and they don't challenge.
That is a very good point. We will see what happens after this crisis.
I want to add one more thing. For a city our size we have had very few challenges to the fee at all. We have had a couple of questions, but most of the time the methodology that all of them have went ahead and sated -- said they understand but for a city our size, very few challenges.
Any experience and challenges to assess under deserved communities? Has that been an issue for you? Erika?
For us in this town honestly no. Again the demographics of our town tend to be fairly well served. I am not saying that we don't have some, but a very small portion of our community that would be considered underserved and we have never had any challenges.
Richard?
For me I would consider the entire city being underserved as far as condition. When you look at that and you have a label for income, and looking at that, we have had a little over 80 applicants that have been approved to go forward. I totally understand the underserved areas, and we have a lot of underserved areas in our city based on conditions. All of the cities and one area except for our business area along the bay, that infrastructure seems to be much better, but we are concentrated in those areas with the limited funding we had before. We handle it to our labor system.
Here is another question from Steve. I think it is probably more for you Richard. Should the trip length be a factor in calculating Street maintenance fees? It could be tabulated based on geographic areas so that inner urban areas would be assessed lower fees. Is that something you considered?
For us, we did consider a trip fee for all of those that he talked about. But our counsel wanted to limit those. With the limitation it is an average across the board for everyone.
Erika, I sympathize with you because you are quite smaller and not long distances right?
I think our whole town is only 4.5 miles wide and that is not an issue. So the trip length and different factors have come into play as far as development charges,
Another question that has come in before, and this person asked and said they would be interested to know the method and criteria to use which projects to include an which to leave off? How do you successfully managed to not leave projects out that might need to be on the list? Maybe Erika you can start with that?
I am trying to understand. You are asking about the system developmental charges?
Yes, that's correct. What is on the maintenance list and which ones are left off and which ones are on the list?
Everybody is on the list. Let's start with that. The list is just never ending. The way that we determine how we are going to do streets is we obviously do our pavement conditioning index every three years. That gives us a roadmap for the next several years. We go through and we have to identify and prioritize based off of a number of things. Major arterials and collectors have first collections for the funding. We also look at conflicts with other utility projects. We will move around the order of projects based off of some of the other things that are going on so that we can make sure that we do the underground utility work first like replace a water line or storm line, and then pave the year after or something like that. The priorities change, and I cannot say it is always the same. We have to look at all of the other infrastructure needs that are going on and make our decision from there. Those that answer the question?
Yes, I think so.
We have a policy here that we call a [indiscernible], and what the city Council doesn't want to see is paving and then three years later come and put in a water line. We are checking our different infrastructure needs against each other and paving is a piece of that.
I will add to what she said. She talked about the paving index, and that is important and yes it is a never ending list. You can go 20 to 30 years out and not have enough funding to complete the roadway. We look at paving conditions and we look at need. I have five counsel districts and they have a different % of need. We fund up to that percentage of need so that we are improving the pavement condition on an equal basis to make sure it is equitable, and the areas that are in the worst condition are getting more money. But if you remembered when I gave the presentation, the money can only be used for certain types of applications, and also the type of roadway. I have arterial collector money and I have Street maintenance money. We balance all of those dollars and put those in a methodology so that when we are selecting streets in residential areas for street maintenance, we are also joining that with reconstruction. We may have three months for streets in the neighborhood that are reconstructive, and then we will start doing a neighborhood approach as we are looking at that. We had the same degradation factor in a neighborhood coming out instead of having woman is too good streets left that are in horrible condition. That is when you start to get [indiscernible], and taking a look at the neighborhood approach is important to us. Residential's when we are looking at the program, we are trying to keep those in very good condition so that we may be going through and invariably keeping them in a certain pavement condition throughout the city because that is where the transportation network is moving people in and out of neighborhoods and onto the highways. We put our program in based on a lot of different things. I mentioned earlier the type of work that is needed like drainage work, and there is a decision tree that is put together that helps us do that as well.
Thankful and very helpful. We will be wrapping up fairly soon and if anyone has any additional questions, please press star 1 or put them in the chat box. While you think about that I am going to ask, and you mentioned on your slide that you are now able with a property tax of four cents able to finance and restructured some streets. Major maintenance can be financed and usually we are talking about ongoing funding. Have you thought about ever, if you have some major maintenance issues, using any bonding?
Yes we have but there is limitations on that. The type of applications that you put in have to last more than 20 years. They may not qualify for that. Overlay is 16 years but never up to 20 years, at least in Texas. If we do a reclamation, you are doing base stabilization and during a reclamation you are putting in flat work, and that one will reach it but that is on the upper end of the maintenance, and we have looked at that but there is some qualifying and disqualifying factors that we have to meet.
Erika, for you as well?
We don't have that same situation obviously. But we get 3 million in general funds and that is coming from property tax, and that is just a flat amount that the city Council has decided to put toward paving in general. They haven't dictated to us where it should go. They haven't said that it has to be residential or anything like that. They have given us a lot of leeway to make those decisions internally.
A question for both of you. Some communities have an issue and there is street maintenance and poorly maintained streets, and for the preservation and actually a street that is in pretty good shape, and some of them, on their website, they make clear they have to do both because preservation leads to reconstruction and is much more expensive. Have you come across those issues in your community and how do you deal with this. Erika?
Every three years we do a pavement condition analysis. That is where we talk about the needs of different level of preservation. We do not do chip failure. We do overlays or grind and overlay and sometimes full reconstruction. We don't have a lot of input from counsel or others as to what our preservation choices should be. They are very fixated on this number of 70, [indiscernible], and that is what we are trying to tell them what 70 looks like. 70 is not great and barely hanging on and the backlog will continue to grow if 70 is our only goal.
Thank you.
For me, pavement preservation is a big component of the street maintenance network and street maintenance program. It is interesting in my career and the two larger cities before coming to corpus, we had to implement more pavement preservation in those cities so we can keep the streets good and working on getting into the pool of the reconstruction project and the reconstruction project getting big. If you do only reconstruction as an overlay you are just chasing your tail and eventually all of the streets will fall back into their. The first two large cities have a lot to implement, and hot pavement applications and those types of things, and coming to Corpus Christi five months ago, we was doing nothing but pavement preservation because that is all that we was geared for. All of the heavy reconstruction was in the bond but no maintenance work [indiscernible], and we had to re-gear and retrain and hire more equipment and we could start doing more heavy applications along with our preservation. We dialed back our payment -- pavement preservation, and [indiscernible], where she is at and Oregon, our residents did not appreciate seal coating. We had to dial back our pavement preservation to make room for more reconstruction and rehabilitation projects.
Thank you. We are going to turn it over to Pepper for closing remarks.
Thank you. As we draw to a close we want to thank all of our presenters who participated today and thank you for Sasha for facilitating the event today. We have coming up in a series once a month over the next few months. The events are described on the flyer and it is the second one down, and you can get registered for the future of events. On the screen you should see a question that will help us get your feedback on the event today. If you click on the button and hit the submit button in the right corner, it will take you to the next question and so on, and we encourage you to take a second to help us in the future events. The slides are available in the file share window on the left-hand side of your screen. If you highlight one of the files and you can use that shift and click to highlight more than one, and you can download the file on the file button and a browser window should open which will allow you to download the file. If you are interested for other types of educational credits for the event today you can request confirmation in your participation today. You can send an email to value capture@DOT.gov. That is in the chat box. It seems like some folks are having trouble with the file, I will have the recording of the webinar and the files available on the website, we just need them to link to the page. If we can we will point you to the spot on our webpage where the files will be posted. With that, again I encourage you to take the evaluation question and thank you to all of our presenters and to Sasha for moderating the event.
We also want to thank the web conferencing group that spent a lot of time and effort to make this webinar possible. We cannot thank them enough for them helping us through the registration process during the webinar, and thank you.
There is a lot of background support in the era of virtual meetings, and there is plenty of technical issues going around. We do appreciate having that support. We thank you all for being part of this today and that concludes the event today. Thanks everybody.
[Event concluded]
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