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ROUGH EDITED COPY
FEDERAL HIGHWAY ADMINISTRATION
VALUE CAPTURE STRATEGIES:
DEVELOPER IMPACT FEES AND OTHER FEEBASED DEVELOPMENT CHARGES
THE PRIMER
WEDNESDAY, APRIL 5, 2023
JOB NO. 23008
CART CAPTIONING*PROVIDED BY:
LINDA M. FROST
on behalf of
MIDATLANTIC INTERPRETING GROUP, INC.
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This transcript is being provided in rough draft format. Communication Access Realtime Translation (CART) is provided in order to facilitate communication accessibility and may not be a totally verbatim record of the proceedings. Due to the nature of a live event, terms or names that were not provided prior to the assignment will be spelled phonetically and may or may not represent the true spelling.
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>> OPERATOR: Ladies and gentlemen thank you for standing by. Welcome to the value capture strategies Conference call. At this time all participants are in listen only mode. To ask a question on the phone press 1 then zero on the telephone keypad. You can remove yourself from times at any time. Now I turn over to your host, Pepper Santalucia.
>> PEPPER SANTALUCIA: Thank you, everyone. Hello, everyone, on behalf of the Federal Highway Administration, I would like to welcome everybody on today's webinar on transportation utility fees and road maintenance fees. As mentioned, my name is Pepper Santalucia. I'm with the Volpe center in Cambridge, Massachusetts. I'll facilitate or run the webinar. The webinar will run until 3:00 p.m. eastern time. We are recording the event and that will be posted to the FHWA Website. The speaker slide desks will also be available for download toward the end of the webinar.
If you are interested in applying for professional development hours or credits for attending today's webinar, we will provide information toward the end of the event, about how to obtain confirmation of your attendance I'll give a quick orientation to the webinar room. In the top left corner of the screen, you should find audio calling information. If you prefer to listen to the webinar by phone instead of computer speakers, you can dial the number you see there, that will enable you to ask questions by phone if you choose to do that. In the lower left corner, there's a chat window you can use to make questions or comments during the with webinar. At various points in the event, we'll field questions from the chat window, and we will do that after several of the presentations, and then we'll have a logger Q&A session at the end of the event.
If we don't have time to address all of the questions submitted, we will post written responses along with the webinar recording on the FHWA Value Capture Website.
If you decide to use your phone during today's event, you can ask questions by phone, and we'll remind you that at the appropriate time.
If you wish to view closed captioning for today's event. You can find an icon with a CC on it towards the top of the screen, if you click that, and select Show Captions, you will have live closed captioning to accompany today's event.
Right now, I'm pulling up some poll questions, and just asking audience members to give us some feedback or some information about your organizational affiliation, and your level of knowledge of Value Capture and specifically transportation utility fees and road maintenance fees.
While you're answering those questions, I'm going to introduce our first presenter. Mr. Sasha Page is principal at ING Rebel. In Washington, D.C., he has two years of directing public partnerships. Sasha focuses on how value capture tools fund the new infrastructure with the FHWA public counts and public agencies in Boston, Miami, and Raleigh Durham.
Let see, we have a strong local government presence today, which makes sense, given the topic of transportation utility fees and their use in funding local road maintenance. Folks have most people have heard about them, but don't necessarily know that much about them. So, this is the right place to be. Hoping to increase your level of knowledge during the course of this event. And I will turn it over to Sasha to get us started on that.
>> SASHA PAGE: Great. Thank you, Pepper. I want to provide a brief introduction to transportation utility fees or TUFs of as we call them. So that you have a baseline interest, understanding, and we'll turn it over to Josh and Rory.
Much of this material comes from a primer that my colleague, Christine Shepherd, and I put together on behalf of FHWA's EDC5 program. And at the end of this presentation, we'll post you’ll see a link to that. And this is found on the FHWA Value Capture page.
So, what are TUFs? They are periodic fees paid by property owners or building occupants to a local government to pay for use of the local transportation system. We're talking about primarily roads and streets. They are called different things by different communities: Transportation maintenance fees, road use fees, maintenance utility fee, et cetera. But they generally have the same purpose, to primarily to maintain local streets and pavements.
So, they are used for street, bridges, arterials, sometimes bike lanes and public paths. That's the primary use. If you look at the ordinances that we've surveyed, you'll see the words "cracked ceiling, renewing, overlaying, repairing, reconstructing and seal coating." I think that gives a pretty good idea what they are used for. They also have been used to pay for the professional services related to that, engineering, planning and management. And some ordinances also allow for the payment of streetlights. Cleaning and installing of storm drain and some in fact allow for pavement of sidewalks, bike paths and even landscaping.
A couple of them allow for the correcting of the street deficiency, such as adding sidewalk curb cuts and other changes to the streets. That's a little more than simply maintenance. Some capital costs, but primarily, these ordinances are focused on maintaining.
So, why do you do this? Penalty TUFs are for local funding, for folks ineligible of highway funding. I think you'll hear their use has increased as traditional funding sources for local maintenance, such as gas taxes or sales taxes, have begun to diminish over time. Especially in Oregon, where I think they got their roots, that's kind of the origin of for them.
Also, TUFs are used, as you'll see in this unique case, in Corvallis, for transit O&M expenses but most used for streets and related infrastructure.
Why use TUFs? They are efficient. They basically charge users based on a collection with municipal utility fees, usually with water to administer they are relatively equitable. It's those folks who use streets, benefit from them are the ones that are paying for it. There are municipals that have lower TUFs, for homeowners who do not own cars or if the home is vacant, or it creates a financial burden on them.
And one can argue that they create greater transparency, because TUFs are usually related to the street maintenance programs, or plans, in the municipality. They can really only be used for that, so residence fee is where their money is going directly.
I'm going to stop there and turn it over to Josh and Rory and then come back and talk about other elements in establishing and administering TUFs. Thanks.
>> JOSH WHEELER: Great. Thank you very much. Sasha, we're going to roll right into our next Ren presentation, and as Sasha mentioned, he'll be coming back to give us a little more detail on the implementation of the TUFs.
So, with that, I'm going to introduce our next presenter. Josh Wheeler is a professional engineer in the state of Oregon, and previously in the states of Illinois and Wisconsin. Josh's career started in private development design and transitioned into the public sector where he became the City of north Chicago's first ever public works Director. He came to Oregon to direct Benton County public works in Corvallis, Oregon and the past five years managed private development, annual road resurfacing, and multiple capital improvement projects for the City of Oregon City.
Josh, please ago ahead.
>> JOSH WHEELER: Thank you for that introduction, I'm going to speak today about various funding that we use here in the state of Oregon, but my folks, it's going to be on our TUFs which we call pavement maintenance utility fund, or PMUF. Various funding in Oregon, we have a gas tax, a state gas tax, that is supplemental to the Federal gas tax. Some cities in Oregon also and County, implement a local gas tax, but not all of them. In Oregon we have system development charge. Another name for that is impact fees in other states. So, those charges are for new development, and whenever there's going to be an impact or increase on the system, and then those charges can only be used for those type of impacts, capacity issues. Pea have pavement maintenance utility fund, which is our TUF for our city. We also recently, Clackamas County, the County that we are in, implemented vehicle registration fees to supplement transportation funding and then there's miscellaneous opportunities, and I'll give you a couple of ideas there.
So, in the state of Oregon, bark around 2017, we had not updated our gas tax for many, many years, just like the Federal Government, finally passed a bill in 2017 where over an eight to ten-year period, the gas tax increased, or will be increasing, 10 cents total, as you can see in the chart. It was originally 4 cents and another two cents each two years as long as certain performance metrics were met. As of 2023, we are at 38 cents push gallon in Oregon.
We also implemented a bicycle tax as part of that safety bill. That adds a $15 fee on new adult bicycle that is cost $200 or more, so it is a tax that is on the sales of the bicycle, because we do not have sales tax in Oregon. There's a special tax on bikes. And it generates around a million dollars for things like, either separated bike paths or walking paths. They also in the state of Oregon implemented a public transportation payroll tax, that is for improved use of the public transportation system with respect to buses and services like buses. And separate from that gas tax bill that we talked about system development charges or SDCs. In the state of Oregon those are authorized by Oregon revised statute, or RS, which are state laws. Again, another word for that is impact fees.
In transportation, there are three components to an SDC: a vehicle impact, a bicycle pedestrian general impact, things from like a commercial use for multifamily use, and a bicycle/pedestrian residential impact which is additional above and beyond just a general one, because we know that people that own single family housing, has even bigger use of bicycles woe can only use those for eligible capital projects. They have to be on a list maintained. If they are not on the list, they are not funded. They are not necessarily 100 percent funded. They can add capacity to any existing area. They may only be partially available for that project, because of the existing trips that are already there
And what we're going to spend the focus on excuse me, I have a bit of a cold. Take a little break here and there with some water, we have our PMUF fee. Pavement maintenance utility fund. And in the state of Oregon that's used for a long time. And I believe the moderator at the end of this presentation, the league of Oregon Cities did, which talks about lots of different cities that have a fee. We are actually not mentioned in there, but we will be on their Website soon. I hadn't realized that we weren't on there we implemented ours in $2008 and did a study that we're going to charge $11 per customer. And it started at $4.50. It was raised annually to $11.22 in July of 2012.
These are the various expenses. I'll let you read that for a second as I take a drink.
[ Coughing ]
That is what we're allowed to use it for. That is based on the ordinance that we passed. We have to update our plan every five years. And we update our pavement condition index ratings or PCI every three.
[ Coughing ]
Here's where we are today with our funding. And all of that is based in our ordinance that we passed. This gives you a history of our years and our PCI rating as it went up over time, which was the hope we do a plan every five years to update the funding and update the roads that we will be resurfacing. The annual budget has ranged from 1 .4 million to 2.8 million. And we are now at the end of our five-year plan, and ready for a new one.
The one thing I want to say about this is, some of these numbers are a little artificially inflated. Because not only do these PCIs reflect our existing system, they reflect the existing system that's brand-new, because we had a lot of development in the city. Those are PCR ratings of 90 to 100 which artificially inflates these numbers. In the next five-year plan, we are actually going to compare new roads to just the existing system and really try to get a feel for how much we're improving the existing system and not artificially inflating it from the new road that have been built.
The current revenue that we get right now is around 3 million a year. We try to budget for less than that, so we can do big projects later on. Currently, you see the deferred maintenance is up, the percent of our network is down slightly, and that's a sign that we're kind of at a capped area for using that PMUF fee. One thing that's important to do is make sure that we continue coordinating with utility work, and don't waste the money. Partner with larger projects and always consider new technologies in the new types of pavement. One being the use of fibers in asphalt. It's a pretty controversial idea and does work in the right place, but you have to be considerate of that so you're not wasting money in an area that is not going to be beneficial.
There are various technical sides to take on that. And we are only allowed to increase our fee up to 3 percent a year. This is a picture what our city currently looks like. You can see it is mostly green. Green is a good number. Yellow means we're kind of in the middle. And the org and red are they probably should have been resurfaced by now, we just haven't been able to get to it.
You can see we're doing fairly well as a city. But some of the challenges are that costs continue to go up, city, County and state continue to add taxing, and while PMUF is not a tax, by the state of Oregon, you can read in the link we're going to provide you, it is not a tax, so, therefore, there have not been legal challenges to that, because it's not a tax as a fee, but a lot of people want to get rid of the fee because of all of these other taxes that happen, and we have heard from our commission, and our city manager, that they would like to end it, it was passed by resolution, and not by ordinance.
>> PEPPER SANTALUCIA: Josh, we lost you there for a second.
>> OPERATOR: Looks like we temporary lost his line.
>> PEPPER SANTALUCIA: Okay. We will circle back with Josh when we get him back, and in the meantime, I will go ahead and present our next speaker, and we'll have a chance to finish up with Josh after that. So, do you want to bring up the slides for our next presenter, Mr. Rory Rowan. Rory is currently the transportation division manager at the City of Corvallis, Oregon, a college town that is home to Oregon State university where his staff is responsible for street maintenance, and operations, active transportation programs, a fareless transportation system, downtown parking management and municipal airport that includes an aviation site. Prior to this Rory worked for a number of years in the City of Bend, Oregon, one of the fastest growing cities mountains down located in the cascade’s region. Rory has experience in private and public sectors working for a number of state agencies and consultants, including Virginia and Florida, prior to move to the Pacific Northwest.
Rory, please go ahead.
>> RORY ROWAN: Thank you. Good morning to those on the West Coast, and afternoon to those in other time zones. I'm Rory Rowan, the transportation division manager at the City of Corvallis, Oregon. And you'll hear some similarities, since also in Oregon, like Josh, but definitely some unique things as well, I'll be sharing about our local agency.
So, first I just wanted to lay out some of those unique things and set some context as well for our setting here in Oregon. The community of Corvallis, we have a little over 60,000 in population, and, as you heard my introduction, it is home to Oregon State University, so, very much kind of a traditional college town, so, a substantial portion of our population, almost a third, is students.
What I wanted to say, our location, we're central will met valley, about hour and a half from Portland metro, an hour from the coast, the coast mountain range and Cass said. We're tenth large city and state. What I would like to highlight we're not a large metro region but not a small community. Some things I will share with you today may be applicable to some communities you're in. I think we had a lot of similarities to cities and regions across the country and one really important thing that Federal Highway shares a little about, but I think is very important context, depending on the state or location you're in, is something that you may or may not know much about from a bit of a legal standpoint is states can sometimes be considered either home rule or Dillon's rule, so, as an example, for a number of years I worked and lived in Virginia, Virginia is known as Dillon's rule. Dillon's rule, it's pretty difficult if you're a city or County in a local government to sort of enact things unless the state explicitly let us do those things so, unless the state, or law permit us really can't do anything. Oregon is on the opposite end of that spectrum. It is known as home rule. I know there are other locations in the country like that. It really is a spectrum. Each state has its own unique areas you need to get to know or consult. Oregon is one of the strongest home rule states. What that means unless the state say us explicitly can't do it, generally it's pretty much local agencies want to do they can. That's pretty well known going back to the 1970s. The state did take over and regulates state land use and planning controls. We have what is known as urban growth values from a planning perspective in our cities. Beyond that, a lot of things cities and counties are able to try and do, that's where a lot of transportation utility fees found in Oregon, something that dates back to the 1980s here.
So, related to that, I'll go over our transportation maintenance fee and a couple other fees might be of interest to the audience here. The transportation maintenance fee is what it is called here. It has similarities to other cities in Oregon, definitely what you heard about in Oregon City. It was passed in 2006 but dates back to a few years before that, we were like other cities facing challenges for operation and maintenance of transportation system. Particularly streets, namely paving which is a concern in cities. City Council appointed a Task Force of community members looking for different opportunities to bring funding to the challenge. I think I’ll be honest, you probably heard my introduction, I only recently joined City of Corvallis, full disclosure I wasn't there in those days so I'm hearing from colleagues, or historical things I read about. But the challenges, they looked at different options and proposed things to the council and ultimately what they recommended is looking at other cities in Oregon that started to try this was essentially a transportation utility fee, in this case we called it transportation maintenance fee, and they had a series of outreach meetings, I think more than 20 over a year or two, leading up to the council ultimately voting to enact this. In the case of Oregon, as I mentioned, this being a fee, I'll talk about how that works. It does not require a citywide vote or vote of the population, can be enacted, or changed by council vote and done by ordinance. That's what was done. It started July 1st of 2006. And a number of years later, in 2011, actually just to back up one second, the initial fee had a five-year sort of sunset date to be reviewed and see whether or not it should be renewed or continue, so, starting a few years later, in about 2008, 2009 time frame, there was a larger kind of community conversation, called sustainability initiatives and those were looking at various things that also included transportation, and so some of those included our transit system, and how it was funded, and fares related to that. How we maintain our sidewalks, I'll talk a little more about that in detail later. One thing I won't talk about beyond the slide, what we call urban forestry, this is something you all face, sort of street tree, trees in the public right-of-way, that are sometimes maintained by the adjacent property owner. Other sometimes it is unclear whether or not the city is involved in maintaining those. So, ultimately what resulted from these community conversations were proposals to add additional monthly utility fees. I'll talk more in detail about the transit and sidewalk ones on the slides here, urban forestry fee, what came of that is a small monthly fee that allows the city to be involved in helping to maintain that we have that right-of-way, or plant new ones or replace ones that need to be. Where that intersect was transportation, a lot of times that can affect your sidewalk, our streets, so it has become a very helpful fee to have.
So, the history, at that same time, after success of several years, other transportation fees being in place, a decision was made being permanent. Evergreen. The sunset date came and went and there was success keeping the fee, and in 2012, after the first six years of the fee, the decision was made to index it to inflation, it had been flat for the first few years. The inflation measure used is ENR. Many in the industry might know that's called engineering news record. It's a little different than CPI that most of the population knows, it's index to construction cost. Some years it can be quite a bit different than what the general consumer population might face.
And in 2020, I'll talk about this in a bit. Eligible uses for the TMF changed, it went from purely paving to being able to use it for transportation uses, like biking or walking. That was important to the community, still is. And just recently, since I came on board, we were actually able to adjust our sidewalk maintenance fee and urban forestry fee for the first time. They had unfortunately been flat for some time now, since 2010 when the initial ordinances were passed.
So, a little bit about the actual details of the transportation maintenance fee, how they work. This is pretty similar you find in most places in Oregon, this is what differentiates it as a fee versus tax from a legal perspective, in the case of Oregon especially. So, in order for it to actually qualify as a fee, it has to be used as I abase. So, many of you probably heard of ITE, institute of transportation engineers. There's a number of things they do as a society. They have trip generation or trip rates they preserve for various land uses or land types, what the fee does, it breaks it down in by city, Corvallis, we have single family residential, makes up most land like most traditional cities. Then multifamily residential. Pretty common being a college town and of course we have nonresidential, which is a bit of land use, those are commercial businesses, things like that. There are different amount of trips generated by each. We have a rate that we charge per type of land use, and, as I mentioned, the rate was actually flat for the first, about many years, so, I did not generate more than about $500,000 for the first decade. I'll show a graph here, and table in another slide, but major, major adjustments have been made in recent years due to council action and conversation in the community, and we're now approaching a much, much higher level of revenue to invest in our system. A big benefit of the transportation revenue we're bringing in for it, we are able to leverage Federal funding program that the Oregon Department of Transportation, state DOT makes available to local agencies called STBG, surface transportation block grant. We use that for pavement. Work and curb ramps specifically. Not enough funding to do needs on our own, even half of it but just the ability to leverage and match that with these dollars that is proven helpful year after year. I don't need to read it in detail, but I copied a sense of a lengthy ordinance. You can see with the recent changes made a few years ago how this fee is directly for street reconstruction, pavement maintenance and led just like Josh in Oregon City, it is led by a PCI, pavement condition index monitoring, kind of scientific sort of system and as I mentioned recently there's a change to also say that it can be used for sort of walking, biking kind of projects, so, beyond thinking that's kind part of street maintenance.
Won't go into all of the details. I wanted to mention there's changes made in recent years. The fee was very flat for the first almost ten years. However, what happened, there was equalization done about seven, eight years ago where the rates did vary a bit Fort first few years per different land uses, single family, commercial. Eventually what was done, they were all brought into a similar equivalent per trip rate no matter what the land use was, then significant changes were made to the actual rate overall, so, now, as you see, it's gone up quite a bit. It is not quite as high as Oregon City. Honestly, I don't have a comparison table available to tell you, if you look at 20plus cities in Oregon that have a fee, Corvallis might be on the lower side, might be getting to the middle eventually but definitely not the highest of the various communities in Oregon that have a fee. That's part of the conversation with council, the community is getting a good deal and we were falling behind of pavement maintenance and trying to catch up as they heard concerns from the community.
A little more about the things I covered on the earlier slide. So, as I mentioned there was a conversation about our transit system in a college town, like we have, it is very well utilized, very popular. Prior to 2011, a substantial part of the funding came from our general fund, so we still get Federal and State operating sources. Always under threat like the general fund, like many communities it is divided up into many departments. Every budget season you're competing. Public works. Part of the conversation, ultimately the proposal to implement transportation operations fee, has been very successful, because we were able to do it, to not only kind of moving away to be reliant on general fund tax revenue, but it allowed us to introduce a fair system in 2011. So, in recent years, there's been a move to do that in some community, they are able to. In Corvallis, we were able to do that quite a while ago, over a decade ago. In the first year or two the ridership went up over 30 percent. It was very, very successful, not only financial goals but to help in the community for really value it. And kind of mentioned there, two things that are important about it, it is indexed. It is indexed to the price of gasoline beyond that floor. So, it is actually, because of this past year, because of gas prices in 2022, it's the highest it's been, but the idea of being indexed to the fuel price, when fuel is higher, deeper transit in theory should be higher, that's how it works and provides a great match to Federal fund which tend to be about 50 percent match, and in Oregon, you heard Josh's presentation, in 2017, the state implemented a statewide payroll tax for transit and we were able to leverage those fund, a portion of formula and portion of discretionary, you often need to match discretionary. Having those locally, puts the City of Corvallis in great position to pursue those, successfully.
Sidewalk maintenance, the area that I'm very, very familiar with, having worked in this for much of my career, many of you are properly familiar that in most communities, Corvallis was no different about 20 years, sidewalk maintenance tends to be decentralized and on the adjacent property owner, the city may be doing it from a complaint-based system. Telling people if you hear about it, you have to repair it and it's your cost, you have to be the private manager as homeowner, which leads to it not being done or being done timely, it leads to a lot of knocking heads. One thing the city did was a big change, initially they tried to, a couple decades ago, I have a photo of the old process, at least try to the city would try to manage it and get people to participate, however, from what I understand, it was a bit of a spiral, because they get a contractor, get people to join, and then as people find out the price, they can opt out so it caused as many problems as it tried to solve. So, the conversation in 2010, 2011 what was to implement a fee to generate revenue, just like the other fee, and then the city would take over just doing inspections, more holistically, not just doing it complaint based. Bundling everything into a contract and doing an actual repair of a district once per year. And that has been a big game changer for the city, we did additional repairs that came up in between. We were finally able to raise it for the first time, unfortunately we did get behind that, and now the goal is trying to be more regular with that, as we've done with the other fees. Big change, more helpful. I can't speak more highly about this, much more equitable. You can imagine, only the people who know how to use the system or aware. Repairs are not always in the area you think they are needed. One of the better, more valuable fees we have, I would think.
And just kind of some general benefits about it. So, in a town like Corvallis, as already mentioned, traditional sort of University town, that's the major landowner, major is state University, major landowner, major employer, and the second major one is a very large regional nonprofit health system. You always have churches and things like that, and in this town especially, you have from a property tax perspective, which tends to be the biggest source of fund in Oregon for local government, you have big, big donut holes in the ability to bring in revenue, so, that's not the case with these utility fees because they go on all utility counts, which all of those institutions pay, so, in the case of the home owner, there's a few dollars a month, for these fees. In the case of some of those larger institutions, they are paying upwards to tens, hundreds of thousands per year depending on the size of the number of trips they generate. I mention trip generation for some of these fees, others it is a flat fee in the case of sidewalk.
So, that's the biggest benefits especially in the context of Corvallis but would apply essentially to any community that does it in this way.
One thing that's a benefit I found being in my position, as manager, and sometimes dealing with different community concerns, sometimes you get the argument, for example, fuel tax is the way you're paying for things, which we still use here for some operations we get revenues from the state just like other communities in Oregon. People argue, well, if somebody bikes or walks or whatever. Mostly use transcript. They are not paying their fair share you heard that from every community I worked. It is nice to say, everyone in the community is paying this, no matter if they are a car owner or not or how much they use the system in whatever way. In my opinion that's a good benefit of this. It's a way to say its trip generation based on every utility account. There's no real argument who is getting the fair share of that. And in the case of Oregon, it's a nonrestricted revenue source. There's not many of those in the case of statement development charges that Josh covered those can only be used as capital and only for new capacity and only on certain roads like higher classification roads. Same with gasoline tax, they have restriction, too. Every state has their own unique thing. And in this case, Oregon, we can use utility fees for really whatever our organs says. The city can change that, like you saw, we have added eligible uses. For transparency purpose Weise try to be specific what it is for and have a special account for that. But it is nice to know it is more flexible in the state, and Federal Government is not saying exactly what the fund something for us. It's up to us to kind of be responsible.
And the biggest thing, this is the case in Oregon, this is a fee not a tax. There's a pro and con, to a certain extent the community looks at you in a different way, they might try to argue, it is tax without representation, however, often as you might know, in almost every state, there are laws if something is going to go to a vote, the community basically, the people who are knowledgeable, or staff at the agency, they are not allowed to speak on it, other than actual factual questions, basically, you lose the ability to talk about it, advocate about it, and relying on an outside campaign, or PAC who may or may not know as much about it, the beauty of this you heard of the initial implementation of fees. The city can get as much time as they wanted and presentations to various groups. So not much to do other than answering questions in front of council, scheduling a vote, and voting on it.
There's not much with people saying there's an increase, I didn't have a say. You do. There's a number of counselors, they raise your water bill, you don't have a say on that. Other than representation. That's a big way to talk about the fee and people's ability to have a say on it through their representatives. And as I mentioned related to that, it is easy to do. You're not going to a public vote every time. They can change things through the ordinance, or in the case of annual adjustments through fee structure, through resolution, that's going to be different from agency to agency, that's how it is able to be handled in Corvallis.
And just kind of finally, a few lessons learned in the future, things we're thinking about here, just those first few years, not indexing to inflation, definitely probably hurt a bit and some of our other fees like sidewalk, not affected by inflation the first decade, falling behind in some areas. That's something that being able to do that from the beginning. People get used to having orderly increases. Not making big jumps. That's more than anything that we do. This is initially some of the things that we put directly in the ordinance, we sort of do them in the resolution like some annual adjustments to the fee structure, versus going back to the case in our context. Ordinances can be difficult and sometimes take multiple votes. Sometimes you have to be unanimous on one of them. Sometimes you have a second vote. That's different than the local agency, learning that what's the best way to structure, you're doing this on a more administrative level. Not so much a citywide vote, trying to make it easier upon yourself. Making changes and recommending it.
Having a plan, that's something I learned from the staff coming on board when I worked here and manage. There's times council got excited, the community got them excited, let's definitely invest more. Let's tackle more streets with this increase it in fee, they have given us more financial structure. They say here's our structure for the next few years to do this. That's something I can't highlight enough. If we're going to have the public entrust us with a big increase, as you saw, making sure you're ready on the back end, here's the next couple of years. One thing that, kind of a pro and con, as the fees have gone up, as the fees have come on board, some things that were coming in, such as general fund revenue has gone away. It is not just supplemented in some ways, it just ended up replacing it. I say that's a bit of a con. I think that's been approached at times because you have a situation of always being on the chopping block every budget season. Well, in the case of transit, before we were always struggling to justify certain things, now we tend to be one of the more well tubbed programs in the city, can be a pro as well. Something to be aware of that can happen. Crack and slurry seal, they are great low-cost preventive treatments, they have always been eligible. But haven't gotten the attention. That's more of a management thing, something we're looking to do for the future to be able to use and finally, you may have seen operational stuff, doing sign replacement, markings, unless they are a pavement project, they are not eligible spending on this. Same thing with signals, that's the thing we're trying to approach next, maybe expand the usage here. Right now, we have to use limited fuel tax dollars from the state which we don't control the local level ability to increase the state's allocation, again, it is formula based. That's something that's really important to us to see if that's an area you can try to make eligible use under here. Always important for every community is more than just asphalt.
So, anyway, thank you. Appreciate the opportunity to share with you today. Looking forward to trying to answer some questions here in a bit.
>> PEPPER SANTALUCIA: Great. Thanks, Rory. Operator, at this time, we can open up the phone line, or provide our audience with the option of asking questions by phone. Could you remind us how they can do that if they are dialed in?
>> OPERATOR: Absolutely. For questions over the phone press 1 then zero on the telephone keypad. You can remove yourself from this that queue any time by repeating the 1 then zero command.
>> PEPPER SANTALUCIA: Okay. Sasha, did you have done you see any questions specific to Corvallis? If not, we can go back and finish Josh's presentation.
>> SASHA PAGE: No. I don't. I think it was a great presentation, hopefully will have good things to talk about. Things like inflation and cost increases that's something we should come back to.
Since we have Josh, continue his presentation.
>> PEPPER SANTALUCIA: Great. Thank you. Josh, we're pulling up your slide. Should be exactly where we left off. Are you able to see this again?
>> JOSH WHEELER: Yeah. Apologize for that. Rory, great job there, great addition to what I provided there.
Where I left off, is saying those challenges that we have, that really, we are hearing more and more, they would like to get rid of this fee, and all they have to do is adopt a resolution to end this fee. That's all they have to do, pretty simple. Although, I see in my presentation, not codified. It is codified. That does make it difficult. So, not completely true there, I made a mistake on there. So, our recommendation is to codify it and make it much more difficult to reveal.
Other programs that we're using, vehicle registration tax, safe schools’ grants. Streetscape grants, CDBG grant, and our program is different than Corvallis. We recently adopted a program where we are reimbursing property up to $1500 per site, and each site considered where a tree is. When the tree is causing a sidewalk problem. They can get money back.
So, ultimately, that's been very successful. We've already paid out over 200,000 over the past, about 15 months. And that's our way of saying, it's still your responsibility, owner, to take care of the sidewalk. We're not going to take care of it yet, but we will help you fund it. That's what we chose to do, because we don't have the resources to run the program ourselves or fund the replacement of sidewalks ourselves.
Vehicle registration does have really no it can be used however you want and does require some grant matches. Grants, of course, they are very competitive. Require funding matches, they are administration happy. So, not the easiest to use. This is what I mentioned previously about the sidewalk program, and, lastly, we never have enough money, that's what this little comic is trying to tell us, too. And it is still a challenge. But it is better than nothing, and it definitely the PMUF program, if we didn't have that, we would be in a very bad place. I think that's why I think 20 communities or nor in Oregon have adopted something, so, it really is the way to go to try some things. So, I also look forward to hearing your questions.
>> PEPPER SANTALUCIA: Great. Thanks, Josh.
>> SASHA PAGE: This is Sasha. Josh, I think you answered a lot of the questions that were asked of you, I think in the chat. I think one of them I see was outstanding, I believe on whether you treated uses that involve trucks differently, and how you dealt with that. I think Mr. Hoff setter asked that question. Is the rate different for industries that operate a large number of trucks?
>> JOSH WHEELER: The answer is no to that. It is based on the ITE manual. If their use is truck heavy, they have a data space on that use. If their use is not, it is based on that. Everything is based on the ITE manual number of trips.
>> SASHA PAGE: Okay. Thank you. This is a question we can talk about now or later, but I think maybe one more question. This probably goes to both Josh and Rory. I'm thinking one of the reasons that Oregon has so many TUFs, they don't have all of the other taxes that other states have. Rory, or Josh, you want to jump in there?
>> RORY ROWAN: Josh, do you want to try?
[ Laughter ]
>> JOSH WHEELER: You want to take a stab at that one?
>> RORY ROWAN: I would in quite a few places. I probably argue the opposite. I don't think many people think of Oregon as a low tax place. We have a 10 percent income tax, one of the highest in the country. Part of that, we don't have a sales tax. We are only one of a couple states that doesn't. So, I guess that's a bit of a wash. I think you'd be probably surprised at the number of other things we have in terms of like in the Portland metro, they have some local taxes. You probably heard in Josh's, you go look at your W2 or reading your paystubs we have a statewide payroll tax, which is I’m guessing that's pretty unique in the country. I don't know of any other state that does that, and then you have like the Portland metro is to own regional. The state did that, it was already a precedent. The Portland metro has its own regional taxes, that fund that system. Light rail, bus system. There's the same thing in the Eugene area, which is another college town just near us. Home of the university of Oregon. There's similar, they implemented other payroll taxes in the last few years in Portland metro. As Josh mentioned there's registration fees as well, sort of local level. There's option for the local fuel taxes you see. I really think if you were to ask the community members here, they may not think that we are a low tax or don't have as many taxes as other places, especially compared to, say, neighbors places like Idaho or things like that so, I think the reason we have, has more to do with home rule tradition here, and the Courts have tended to with notable exception of land use, of course tend to be more favorable if there are challenges. I'll give an example of a few years ago, the last ten years, the local communities started jumping on the plastic bag, and trying to say, we'd like to have our own local ordinances related to either banning or having fees for plastic bags at store, and so initially, you had a bit of a hodgepodge of that, and the state did eventually step in. Typically, when the state steps in, it is not to ban any cities doing it. It is just to say, we'll set a statewide law for this and look at what cities have done, try to have some sort of compromise for that. That is what you tend to see in Oregon, not so much that there's any one reason for something more there’s a lot of deference from Courts and even legislature to local agencies. Having worked a lot of places you tend so see the opposite. Dillon's rule is the norm.
>> JOSH WHEELER: The other thing I add to that. I'm not sure it's different in other states. I have also worked in a few others. But the taxes here are so specific on what they are allowed to be used for, that really prevents like there's certain things, like property taxes cannot be used for road. Now, other general fund taxes have more flexibility, but that usually gets eaten up with people like police and parks. So, it really leaves us with a very limited amount of money, and I think that's why the TUFs are working here, because we're not getting money from anywhere else, because of all of the constraints on those other taxes.
>> SASHA PAGE:
>> RORY ROWAN: Yeah, I should have mentioned this. People outside of Oregon and audience, probably don't know this. People in Oregon know it well. Voters in the '09s passed two important measures to limit proper tax assessments and rates. So, pretty much every city in the State, and counties as well, every taxing authority had its ability to raise assessments or change its base tax rate limited now, for basically 25, 30 years, 1995, 1997 the dates of those two measures. That's one thing, if you're a local agency especially, it doesn't affect the state, they don't receive revenues from property taxes. Most of them receive it from unrestricted revenue, which is what property taxes are, which is constrained. Although some fees started before that, that's when you saw a big pickup after that. Although there are ways to increase your taxes. You can go to the voters for bond measures and things, those are restricted by law in Oregon. And I think in other states, too. To very specific things. Like it has to be for new construction. One lasting projects, you can't do those, bonds for maintenance and things like that, or operations. So, that's a big reason, too, since state doesn’t Oregon and states and Courts don't ban you from doing these types of fees, it's been a thing where you see more communities do this due to voter restrictions, being able to raise assessments in any way, or change your tax rates.
>> SASHA PAGE: Great. I think there are a lot of good questions in the chat. I suggest we address some of those that deal with what you've been saying, and what is happening in Oregon. Let me refer to Renee's comment. How is the initial fee calculated? Maybe both of you can, without going into excruciating detail. Describe your calculation approach. Josh, want to start?
>> JOSH WHEELER: Um, our calculation approach is set forth in our ordinance. I'm actually scrolling through right now to remind myself. There's a residential rate per trip and nonresidential rate per trip, and then we've assigned five different bins to a myriad of uses, so, if you're in bin 1, you have two average daily trips, if you're bin 2 through 10, so on, so forth. Instead of applying it to every land use, we take a group of land use and put it in a bin to make it a little simpler and we multiply that to residential or nonresidential rate.
I'll put a link to the ordinance in the chat that's probably the easiest way to explain that simply.
>> SASHA PAGE: Thank you. Rory?
>> RORY ROWAN: The paper does a good job summarizing what every agency does. If I understand the question correctly, I think the simplest answer is, you work your way backwards from start with how much revenue do I need and work your way backwards to however you decided at a local level to classify either utility accounts, kind of by land use, and as I mentioned in my slides. In the beginning in Corvallis, there was a differentiation, not every rate was charged. After a number of years, there was community conversation around we would like each land use to be paying the same rate. I wasn't here but everything I understand, there was a big conversation around that. It was important they were brought into parity, there was a dip for a couple years, eventually they were brought in together. But the simplest answer is, there's no right answer. How much revenue did we need to replace or add supplement to the existing and from that total amount divide by how many number of accounts we had and work our way back. In a simple way that's how the sidewalk fund works. The city is partnering had a number of years. That's why I showed crazy pictures of convoluted process, to share costs, we already had a budget number in mind what of annual expenses were in 2010 and divided that to 15,000 utility accounts at the time. That's how we came up with 80 cents initial fee to generate 150,000 per year. That's the simplest way you see a lot of communities do it, there's no right answer.
>> SASHA PAGE: Thank you. Both of you, what we'll do, I'll go ahead and present a couple more slides on establishing and administering TUFs and please continue to provide your comments in the audience chat. As can see, we're answering them few have specific answers. Some also we'll use as a way to issue a conversation afterwards. So, I'll continue on this, and I will say, in putting this together, we benefit from a number of communities, several in Oregon, including Oregon City. And Josh was very helpful putting together these good practices that we've seen in other setting up and administering a tufts program. I'll talk about establishing TUFs and administering TUFs. There are five things administering the trim, make sure it's clear. And adopting ordinance and legislation. We mentioned that several times. The key determinant of the establishment in determining objectives is often to address deferrals or back logs in street maintenance, and as Josh and Rory mentioned, a very common approach is to look at the PCI index of the street's maintenance performance. And based on the ranking of streets, develop a street maintenance plan or program over one to five years, and then set the TUFs collection to meet that as best as possible. Those who don't rank that, this ranks street quality, maintenance quality, by a number of factors, there's software that helps do that. What is an important concept here, just on a straight line, if you maintain the treats well, you'll maintain them in the PCI rating of 70 percent or higher. Which is often the goal. You can see that's the case in Oregon City. But if you don't make those investment, very soon the streets deteriorate. Instead of just maintaining them, you're going to be reconstructing them in the red.
So, many cities develop a program that seeks to maintain a PCI of 70. They may invest or maintain certain roads that are in pretty good shape. But in the next street over. That one that's in really bad shape, they are ignoring because they decide that's a road they reconstructed and applying overlay on it is not going to address any problems. Also important is to understand that they may prioritize street maintenance based on utility reconstruction. Other activity that waters, sewer, telephone may be doing. So, if there's an upcoming project for water main, a city may decide to carry out the overlay there first, or deal with that schedule in coordination of other utilities.
So, this is one this is one of many. This is from Kai lean, Texas and many, many cities have this.
What's important also, in establishing the program in Loveland corrode. There's also a committee that is set up. In this case it's from the City Council and other citizens and they came up with a recommendation to address their maintenance issues.
Hillsboro, Oregon in 2007, figured $9 million in deferred payment maintenance, and figured ten years later, that would increase to over $28 million. So, they developed a program to fully fund pavement maintenance to eliminate all back log in the next 20 years. And also, to address the fact that a third of their sidewalks were the roads had missing sidewalks or bike lanes. And the purpose also was to free up state and local gas tax revenue for those activity, bicycle, and pedestrian infrastructure. And as you see in other places as well, to free up those funds, especially valuable gas taxes to be allocated to new construction programs.
So, we found in the research we've done in the primer, that I provided the link to, that many TUFs fund roughly 40 to 60 percent of the official street maintenance budgets that a city will put together, with the remaining sources of funding coming from gas taxes or property taxes or any other funding sources. And that can change. In Loveland, Colorado, they also use general fund to fund their project. Hillsboro had a certain goal, and they realized when costs were going to be higher, they pushed back achieving that goal based on the available funds that they had to work with.
As we've just discussed, setting the TUFs, is obviously a very important process. It is often linked to the ITE, traffic engineering handbook as was mentioned and discussed in the chat. The TUFs rates are often set to, overtime, eliminate deferred maintenance back log, not in any one, two, three years. And there is a split, and maybe a little tension between the fees that are allocated to single family residence, and to commercial property. The former is often based on per unit, a residential property pays X per month, 10 to $15 in many cases, whereas commercial is often allocated on a per square foot basis, that's all driven by the I.T. handbook. So, it is a not uncomplicated process but a little bit involved. And they said in the primer, there's several chapters devoted to that.
Informing the public is very important, as discussed, it is not a tax, but a fee. Nevertheless, it can create controversy and lack of clarity. Here's some materials that Hillsboro put together in explaining its program. Other communities put information on Websites, they have special literature that's put together, of course, many have hearings, public hearings that have to be passed by City Council before an ordinance can be accepted.
Hillsboro put together a map that is, not similar to what Josh had shown, where they showed what they anticipated to the next ten years, their street maintenance, PCI would be, and as you can see, there are many that are red, which is are very, very low PCI rating, and several in pink and light pink. This was the projection if there was not a TUFs program. The next slide you see here, they projected they are able to raise all streets to a PCI index of blue or dark blue of 70 or higher and that was used in some of the literature to explain their program
Finally, the city adopted an ordinance that lays out very clearly the program, it's uses, how it is being managed, how the stats are collected, enforcement, waiver of fees, exemption and appeals. There are also explanations included with utility bill. Other communities have mailed out information. Lake Oswego Oregon had a business group that informed them, and others, like grocery industry, hotel groups, to really get the word out, because it is somewhat confusing, if you will. And of course, social media is an important vehicle for this as well. And some communities also had a hotline where they would provide information about the TUFs at the utility.
So, that's establishing the program. Then administering the program, they there are also some key things to think about. First of all, there are some startup costs, not major ones. But, as discussed, even once you've adopted an ordinance, it's often important to update studies or repair studies just to indicate what the maintenance fees should be. It's important sometimes to classify properties, and special commercial property, what category it is, and special retail has different categories depending on the ordinance.
Setting the fees, of course is important, and there's a degree of staff time as we found out in discussing this with several communities. It's not oppressive but something one has to anticipate, as with any major fee or new program that is established.
And, again, there's importance to develop info materials.
Something that's very important from a legal perspective and fits into the whole concept of TUFs. The money, the TUFs moneys collected and put into a separate account. They should not be put into a general fund account, and that's because they are intended, and that's the promise in most communities, to be used exclusively for straight maintenance programs or related uses set forth in the ordinance. As a Colorado community got in trouble, they actually put money into the general fund and they could not demonstrate those moneys exactly when to pay for street maintenance, and in that case, the Colorado Supreme Court struck down the use of TUFs for that city. They did not strike down the use of TUFs in general, but the way they handled those fees was inappropriate.
Also, transparency that these TUFs are specifically for these programs, and as discussed earlier, a challenge if you have your fees tied up in certain uses and things fall through the cracks, but that's the intent of TUFs.
Also, enforcement is important because many of these TUFs are linked to your water bill. Enforcement tends to not be an issue. Loveland, again, did not have that initially in its ordinance, and found that people were not paying their fees for a variety of reasons. They didn't realize they owed them, and they added them to the water utility bill and very quickly their enforcement challenges essentially went away
Certain TUFs ordinances allow for exemptions like city, parking lots, farms, properties that don't receive water, park spaces, public schools but I think it is important in Corvallis's case, as Rory was talking about. OSU is not exempt, because OSE is a generator of traffic. And this is only for residential or commercial activities. But not every city is the same. Loveland has no exemptions, as you can see, hills borough, Oregon had some exemptions unique to its city.
Also, a number of cities had exemptions, allow waivers, and hardship discounts they speak to, if users have incomes below a certain threshold, if you're recently unemployed, there's ordinances that will allow for waiver of the ordinances or elderly, or you did not own a vehicle. If you can prove you don't own a vehicle, then in some places you're given a substantial discount.
Even in that case, in the case of Newburg, Oregon. You pay only 50 percent of the TUFs, because the feeling there, you still benefit from the transportation network. You may receive mail, you may receive parcels, visitors, et cetera. So, you still benefit to a certain extent from the transportation network.
And again, example of Hillsboro, they have unique waivers for people who have annual transit passes, with the idea that if you have bought those, then you should get a discount, because you are using the roads much less.
Some of the TUFs allow for appeals processes, example was the Gulf course appealed because they only had weekend traffic, and not weekday traffic and appeals can go to either staff, or City Council. In our work, we did not find that there were that many appeals for these once residents understood, and commercial business owners understood what they were for, generally there was not that much opposition. I looked forward to hearing what Josh and Rory have to say about that.
Reporting is important, these are often reported on an annual basis, they are annual reports connected with the city's annual reports. The data is often on the Website. Killeen, Texas has a nice video. I encourage you to go to it. It is a very clear explanation of where the money goes and what it really means to maintain a road. And I think that's always very helpful, because maintenance, versus reconstruction, is not something that is always clear to the lay person.
And lastly, our best practices would indicate that municipalities should index TUFs to some sort of escalator, like CPI, or, as I believe as mentioned, ENRs, crux cost index which reflects the costs of materials. Some communities allow adjustment of 20 percent or maximum of 7 percent. Hillsboro, actually not using an index, they increase based on need for Loveland. So, it is not for all. I would like to under from Josh and Rory, what their experience has been with current inflation, which has been significant, and has been an issue really throughout the country, our understanding is for paying for new construction materials.
So, I'm going to stop there. I do want to point you out here, and I put these in the chat, this is the primer link, and a link of course to other Value Capture materials FHWA has put together.
Good, so, let us stop there, and I think, maybe, Pepper it the audience wants to ask telephone questions one more time and then we can have a bit of a Q&A Hmong us.
>> PEPPER SANTALUCIA: Sure. Operator, can you remind us how to take phone questions?
>> OPERATOR: Yes, from the phone please press 1 then zero on the telephone keypad for questions over the phone. Okay. Thank you. Sasha, I'm going to bring up a different layout here that lets us see robust discussion that we're having in the chat. I'll point out at this time, that there's a file share window to the left, where you can download the combined slides, the TUFs primer itself, of the Oregon league of cities report that Josh mentioned as well as three different resources on the bipartisan infrastructure law and opportunities for state, local and tribal government resulting from that law. So, if you put your mouse pointer over any one of those resources, you should see a popup window, and there's a downward pointing arrow icon that will allow you to download that particular document.
Alternatively, if you click on the three dots in the upper right corner of that file share window, if you click on that, there's an option to download all of the files that should come to you as a zip file. We have that on the side, but we also have the audience chat front and center, so, Sasha, take it away.
>> SASHA PAGE: Yeah. I think, as Pepper is saying, we have a nice back and forth here. I'm going to point out a couple questions and maybe ask for further explanation or discussion from Rory and Josh. I think, let's start with the ITE, I think Robert pointed out the ITE is updated on a somewhat regular basis, moving from the ninth and tenth edition. I guess your point, Josh, you do not change basically new to ITE and maybe, if you can elaborate on that, will do you that in the future, and what's the process? Is it simply just to cut and paste and that affects the new rates, or do you do something else, and, Rory, maybe you can take it from there afterwards.
>> JOSH WHEELER: Yeah, the intension right now is really, the ITE was used as base models for the uses and how many trips, and we don’t update the base models we have to go through a completely full recalculation assessment and that's not realistic at this time, so, unless it changes significantly or we get a challenge by a certain user, we do not intend to relook at the whole system.
>> SASHA PAGE: Thank you. Rory?
>> RORY ROWAN: I was pulling up the full ordinance to check it. I will say this: My group does not actually manage the fee itself or any appeals of it, but just so I can't say for certain how it is managed but I know the ordinance language, reading it literally doesn't reference any particular edition of the imagine, it just says the ITE manual. And it does mention that it is it does put the burden, for example, on the utility account owner, the person whose property it is, does put the burden on you to tell us if you think the property uses change. I think that happens from time to time, because you get somebody that comes in and they've been running a certain type of business in there, or they buy the property and change the business use. So, we don't automatically do anything, we say you have to let us know if you get your new bill or whatever, and you feel like, oh, it's based on some totally different trip generation of land use that's going on here. So, that much I do know. I don't know every detail of the rest of it.
>> SASHA PAGE: Thank you. On a related point, I think the question was, about uses or demand from outside of the community. How does that take into account the community has a lot of tourism? I think Rick kind of answered that. It really depends on if the community feels the ITE was accurate. Of course, a hotel will generate different activities in another commercial facility. That's taking into account a certain status. You have to have a major unique tourist site, it may not accurately reflect that traffic. And some communities do adjust their TUFs, or their calculations for ITE to take into account certain unique uses. I think that's properly, on the commercial side, more variability, TUFs in the residential side. Any comments you want to add to that, Josh, Rory?
>> JOSH WHEELER: Not from Josh.
>> SASHA PAGE: Rory
>> RORY ROWAN: I will add something.
>> SASHA PAGE: You have a lot of visitors with football games or whatever.
>> RORY ROWAN: I will add every type of fee or tax, right, is going to be imperfect in terms of what you're trying to capture. A good example will be like a bond measure. Bond measure, if you go out you see this quite a bit. We say we would like to find in transportation we want to fund a whole list of programs, they will do all these things. You see I came from the community that recently did that. Funds a very large transportation bond measure for a number of years it's going to make a business investment. In Oregon that's the only way to increase the frozen property tax rates. You can add that for a number of years. To fund that. That's a great example you are making a huge investment in transportation, all you're doing is taxing the local property tax base and clearly sometimes people make a decision to do that. Even a fuel tax which is the closest you can get to capturing visitors, depending on the location of your community, you may be in a metro, where you have in Oregon, we are allowed to do the local option fuel tax, cities and counties can do that. If you're the one, who has it and you're surrounded by other communities that are very close, people may not fill up very much in your community, even if visiting. They may fill up outside of the city limits so you may not capture that revenue. They are all very imperfect. That's something, relying on the TUF to say, I want to capture all residents, visitors, and commuters, you're never going to get there in terms of catching it perfectly. That's something to be aware of in terms of those.
If you're trying to put together FAQs for outreach, on your Website, once you implement something like this, you can have a variety of revenue streams. Each of them will do a little bit of different things. No one will grab all those different types of people.
>> SASHA PAGE: Good point. An example from Loveland, Colorado, when they serve their TUF state, they found a new use of activity not in the ITE, that was drive through coffee shops and they found that the Starbucks and others in the world were generating an enormous amount of trips that a typical retailer, or coffee shop did not indicate. And so they actually, I believe, petitioned ITE or sent that to the ITE and that was later incorporated. I think that's fairly unique. But there are new patterns involved, I think after COVID, there will be a lot of rethinking, what is really generating trips.
Maybe let's turn to Nick Harvey's question about utility bills. Are they considered a fee outside of the utility billing structure, outside of the utility build itself, Josh, Rory, do you have experience with that? Has that been challenged?
>> RORY ROWAN: Can you say that again?
>> SASHA PAGE: Are the TUFs considered part of the utility bill?
>> RORY ROWAN: Yeah 12348 or sort of an outside fee that sort of stuck on the utility built that hasn't been challenged?
>> RORY ROWAN: We call it a utility fee, and it's not challenged. I mean, every now and then we get a complaint, but it is not challenged, no. And it is all because when we established that fee, which is allowed by law, there's a thing that we put in our ordinance, section 5, that has this statement of why it a fee, not a tax, and it is a thing that the state of Oregon recommends us to do.
>> JOSH WHEELER: Yes, similarly, there's one of our things that says this is not a tax, bla, bla, bla, Oregon constitution. I was looking for it. That wouldn't be relevant to 90 percent of the people outside of Oregon. I think the thing that's important, too, those of you that have ordinances or things in the community, that talk about a good example sidewalk, a lot of communities have language that says if you have a system that Corvallis used to have. Property owners are 100 percent responsible for sidewalk maintenance and you don't do it, the city may make repairs themselves and bill you for it. If you don't do it, we can lien your property. That's a common thing is the ability to put liens on your property. One thing that's different with the fees, you won't see that, because the lien says it is against a property owner tis not a tax type of thing, whereas property tax related to a property. Whereas with a fee it tends to be from a legal perspective and the usage testify S. So, you will see language about it is basically, we will pursue collections if it is not paid. So, we will not be doing things like liening your property or recording anything against your property, so, that's something that lawyers typically would advise you, there's a big difference how you word a lot of actions related to these things. They are just not the same as other mechanisms that you have.
>> SASHA PAGE: Thank you. I would like to turn the topic a little bit to inflation. We've had tremendous inflation in the last year, construction projects that we've seen have gone up from 10 to 20 percent or more. Obviously, inflation is decreasing now. How has it affected your ability to complete your street maintenance, and what pressures has that put on trying to raise the TUFs. Josh, want to start?
>> JOSH WHEELER: Um, not exactly I would like to hear what Rory has to say first.
>> RORY ROWAN: Only 10 to 20 percent? What communities are those?
[ Laughter ]
>> RORY ROWAN: I think we had 50 percent increases on some of our projects last year, so on certain things like asphalt, and like a utility alone, we had chemicals and things go up that much or more, so, it has been a very challenging last 12 to even 24 months. So, we obviously let’s just put it this way. E&R, for example on the transportation maintenance fee, we couldn't use that to say, we are not going 50 percent. I know E, R, we can't ask or recommend a 50 percent increase in our fee. I believe looking backwards, it was the biggest increase, at least in the last decade or so. It was 12 percent, so, we did ask for a 12 percent increase this year. But you don't have my slide up. If you review my slides later, you'll see honestly that wasn't the biggest increase in the last few years, we had just gone through a big percentage increase every year for the last three years, because the fee had been pretty stagnant for about a decade. So, we had already gone through a conversation of adjusting it to be more in line with not only other communities in the state that had fees, but just our needs in general, that people really knew, you could see it in the streets, and our deferred maintenance, which I don't go into as much detail as Josh did, deferred maintenance on the street and going into a conversation. I didn't cover that much because I knew Josh would be covering. I didn't feel I needed to repeat it at a local level in Corvallis and talk about the structure. But to handle it at local level we pushed Fort increase, yeah, we would like to follow this. 10 percent. And we did get that. And had to cut back on the probably and push things out. We had a five-year plan like many communities, capital type program. And we still had to cut back on things, take some things out that are in future years, and we'll just have to see what comes in the next few years, whether or not things stabilize or stay at a high level in terms of increases in prices, but I know that I mentioned in my slide, my final one about the future, it is definitely pushing us to look at the crash and slurry seal which we did do a number of years ago but were only using fuel tax dollars for that that we did not use for the state, and used transportation fees which were eligible use, we used them for more costly treatments like the grind or overlay, and we have a major one that will take up this year's revenue. That's something we'll push for more, saying hey, we might do some more visible programs that are big expensive treatments, but we really need to use more of this, too, to do these ones that can cover more ground but are, you know, the very effective but lower cost treatments. So, I think that's, if we don't, we'll chase our tails on the maintenance side, where you continue to invest in more and more expensive things.
>> JOSH WHEELER: The only thing I had to that, in Oregon City, the increases are capped at 3 percent. We don't follow the ENR, we follow the resolution which capped it at 3 percent, so, even though costs go up, there's really not much we can do about that, and, of course, the same thing happens that we push projects, too, that were maybe planned five years ago for year four, but now we're going to end up in year six or seven because of that.
I do see another question, I'll just go ahead and say verbally, COVID did we see reduction in TUFs? No, the amount of land is used and occupied. So, it is based on property owner, not the number of trips. We did not adjust because of the trips. Like the gas tax did see a reduction, but the utility fee did not, because it is based on the owner of the land, not how many true trips happening, it's based on projected trips.
>> SASHA PAGE: Did you see any increase of go ahead.
>> RORY ROWAN: I would add to that, on a theoretical level, you could say, yeah, you could inspect it, maybe community communities on your own could grant this. Could grant utility bills especially during the height of COVID, hardship waivers or deferred bills. So, in theory, if all else is held equal, that could be what you could have expected at least for the residential side, and potentially on the commercial side of businesses, stops paying or went under. In the case of Corvallis, I already mention aid different situation, we were actively increasing our fee at a much higher level. Even if you had accounts that stopped paying or businesses that didn't exist anymore, it is sort of a moot point because the overall fee was being increased at the same time, so, it washed out.
>> SASHA PAGE: Did either of you see increases in requests for waivers or exemptions during COVID?
>> JOSH WHEELER: We did not during COVID, but we do allow for reduction for cost assistance for people with limited incomes. And that relates similarly to our water and sewer rates, but if you meet a certain income threshold in a certain criteria, your rate is less because of that.
>> RORY ROWAN: Same answer. I was not here, I can't speak to any data in this community, but I feel we have the same type of program.
>> SASHA PAGE: Are any of you able to respond to Jason Ender's question. New business in town. How do they get charged a TUF? I assume it's utility fees, right? If they have sewer hookup or related, then they'll get a bill for the TUFs as well. Is that correct?
>> JOSH WHEELER: That's correct. When the business license is applied for all of those fees get set up as a business license.
>> RORY ROWAN: A little different. Might be different in other states. Oregon does not actually require a business license. There is no statewide business license. That's a little different than what I have run into elsewhere in other states. So, as a result, once again there's the home rule thing coming into play. Cities can do whatever the city and counties as well, can do whatever they want. So, the city I was in, did have a business license program where cities, businesses did apply, and cities have to maintain annual business license. This community has not, never has, and probably makes a few things challenging beyond knowing what businesses are existing in your city and what their uses, however, the way that's handled from a fee perspective or fees, as you know, people are constantly applying for or moving locations or changing their account information, so, from everything I understand, we have a utility billing group like most of these do, that handles all of those types of connections, disconnections, information change and they are the ones who are usually processing or handling that. So, that would be true whether you were a residential customer or business, and so that's how it is handled here. Even with lack of business license it happened. Now things fall through the cracks in terms of people never reporting to us their use, that goes both ways. For all we know there's people paying a higher rate and we do have language in our ordinance that says, you can tell us and change it, but we won't adjust it backwards. There's no retroactive credit for you to pay the wrong rate. It is on you to tell us.
>> JOSH WHEELER: Just to add to that. Oregon City has a business license program, which is why we were able to do that in Oregon City.
>> SASHA PAGE: Okay. So, Josh talked about the fact City Council members wanted to roll back the TUF. What is the sentiment in Corvallis regarding the TUFs. Rory?
>> RORY ROWAN: Well, obviously, I haven't been here long, but one thing that is apparent, they have one of the lowest overall utility bills, when you combine everything, Walter, sewer, and various even all of the various fees they do have which is different in some other communities. They have been told recently, they have one of the lowest overall combined utility billies in the state and Josh talked about how I guess their ordinance or resolution, they capped their increases for at least a transportation fee. Sounds like we had done that for a number of years for water and sewer utilities. They are definitely placed where they are having to do some catchup. I think that's a good and bad, right, you're in the community, you are like, oh, that thing is fairly affordable compared to other nearby communities. That now means we've definitely been trying to make major adjustments in recent years in proposing that and trying to get that type of language out of our code that happens at these artificial low levels, like it is never more than 3 percent, even when that doesn't reflect reality of what is going on in certain years and what is needed.
So, this past December was one of the biggest adjustments we've made combined in terms of, because of the past year, inflation, and some of them were small, in the case of like I mentioned the sidewalk fee, had been 80 cents per month for, gosh, 13 years, and we said, we're going to go to a dollar with it, and that's a 25 percent increase but really only 20 cents a month. You're still paying only $12 a year, yet you're not facing a surprise 1,000plus dollar repair if we tell you about it, or someone plains about it, so, it's a good tradeoff. I think some people recognize that. Of course, you hear, as you hear with anything with these. The overall burden is going on in some cases or we feel there's taxation in that representation, however, what their what I've even and heard about here, in recent years, any time there is things that have gone to voters we have operating Levies we do for parks and libraries, they are continually approved by high margins by the community.
So, at least in this particular region, paying for things has not been anything that has been contentious, if there is contention, it's more specific, philosophical issues about things you expect in any community, debates on land use, or project or whatever. But the actual payment of things seems to be good. For example, back in the winter, I know I attended a meeting with our we have a council of wards, I attended a meeting. We went through, several of us and people from different departments that have fees and talked through that, with the people, so still making sure we're getting out and communicating this, and giving people a face to this, so they understand. As Josh said, it is probably important to get the information out. People are reminded what it is, sometimes even paying the fee for years, and it goes up here and there, they can forget exactly what benefit they're getting out testify if they don't see it in their exact neighborhood, so
>> SASHA PAGE: Good. Thank you. Wrapping up. If there's any more questions, put them in the chat and we'll try to answer them now or afterwards.
Question for Josh, I was struck by the fact you have in Oregon City a bicycle tax, you have SDCs that fund bike pedestrian construction and you also have a sidewalk fee, sidewalk program. I guess two questions. One, these overlap? And two, do you also have this is your PMUF also fund a sidewalk or bike/pedestrian facility rehab?
>> JOSH WHEELER: If I separate those, so, the bicycle tax comes from the state. It's not a city fee and back tax is taking in by the state and ultimately disbursed out through a grant program to whoever applies and competes for it. Which could be and it could be used for, typically new bicycle facility that are off road or separated in some way. Like lanes are not generally the full intent of that, that, although I'm sure one could make a case for it.
The PMUF fee itself, the way it is designated in the code, it can be used for anything that is infrastructure related in the roadway, so that would include new sidewalks, ADA ramps, curbs, resurfacing the roads, reconstruction of roads, anything that deal was that, however, we generally limit that, mostly to just the road surface itself, and then state law require us to fix ADA whenever we touch the ADA, and that means up against it, too, with the roadway, so, that ends up ADA is becoming very expensive, and really cutting into our funds. But that there was a situation with the state of Oregon a long time ago, with ADA, and it then caused all of our cities to be subject to getting our ADA up to standard, so we are required to do it any time we're next to it.
>> SASHA PAGE: Okay. Let me ask one more question to both of you. Despite maybe in Oregon City, concerns about TUFs. When you look at the sources of funding for maintenance, street maintenance, property tax, local sales tax, gas taxes, is TUFs still an important element to that, sort of capping stack of funding for maintenance, and is that will that be the case going forward as well?
>> JOSH WHEELER: Yeah. I'll touch really quick on that.
>> SASHA PAGE: Yeah.
>> JOSH WHEELER: The system development charges cannot be used for maintenance, only capacity, new project, gas tax can be used for maintenance, but with the amount we get, it really only covers employee costs for the most part, and a small bit of maintenance, so, if we didn't have the PMUF we would have very little money for cracked ceiling, slurry sealing, chip fills if we choose, and other methods like reconstructing things. So, our PCI would plummet.
>> SASHA PAGE: Uhhuh. Rory?
>> RORY ROWAN: Yes. I mean, it's I'm sure that the situation in Oregon is the situation at local jurisdiction is very similar across the country, which is so many of these things are so dependent on what voters have passed, what legislators passed, and what happened at the local level. For example, the community I was in for almost a decade before I came here, in that region, you have a number of different taxing districts that were set up over several decades. So, the city in some ways is somewhat fortunate. For example, there's a completely separate parks and recreation district, which has its own elected board its own tax authority. So that allows the city, they don't have to have parks competing with road, and the library district is the same way, separate here. I'm back to somewhat the normal set up where you have the libraries and parks in the city. Right here, here they don't have their own fees, so they are very dependent on the general fund tax dollars. So, you always get into that situation, as Josh is saying, okay, what do you have for transportation other than general fund revenue. You have the development charges or impact fees elsewhere outside of this area. You have fuel tax dollars. Those are both maybe you can pass bonds for unique special things over the several years. Every one of those are extremely I call those restricted revenues, in the states of legal precedence, they have all of these restriction on how and what you can use them for. At least in the case of home rule, in Oregon the precedence should be set, really you decide whatever you want to use it for. In a way it doesn't have to be maintenance and operations. That's what most places have chosen to use them for. We're hear this is more or less maintenance and operations. That tends to be something many of us know, get a lot of funding, no offense like the Federal Government and States, they tend to make more funding available than almost ever before in recent decade and new construction or rebuilding the failing things but tend to not make ongoing dollars to us for operations maintenance. That's really for us to solve at the local level.
So, it is a great, great tool, I think if you're able to do it and pursue it, it could take a lot of work upfront, educating and speaking to people and reminding them once you have it so you don't face challenges going away to be a tremendous solution that I'm really fortunate coming into the position that it was done before me that we have it, something I don't want to lose, for example guest tax, like Josh mentioned, that's something we're de he dependent on the state for. They can decide if they freeze it or raise it. Then it becomes an issue, and it becomes stagnant again.
The ability to control it on some level. Those who work in local agencies not to be caught up on Federal and state philosophical discussions what is the right thing to do, whether or not to increase a tax or pass a bill, it's a good feeling on a local level to know you control your own destiny closer the ground, with delivery and stuff.
>> SASHA PAGE: Okay. Thank you both for your presentations and input, very much. Obviously, thanks to the attendees for their constructive comments and questions. Turn it back to you, Pepper.
>> PEPPER SANTALUCIA: Great. Thank you, Sasha. As we wrap up today's webinar, we invite you to provide feedback on today's event, using the evaluation tool you should now see in the center of the screen. As I mentioned before, on the left side of the screen is a file share window or pod that has today's slides, as well as the other resources that I mentioned, available for download. One of those is the TUFs primer that was the FHWA released in 2020, which was the basis for Sasha's presentation today. If you as I mentioned in the chat, if you're interested in applying for professional development hours or educational credits for today's webinar, you can request confirmation by sending an email to valuecapture@DOT.gov. That's value capture, all one word. That email is in the upper left window.
If the evaluation tool doesn't work for you and you would like to provide feedback, you can use that valuecapture@DOT.gov email address and send us feedback that way.
I would like to thank all of the presenters today for their presentations, and we'd also like to acknowledge the ongoing support of the FHWA web conferencing office. That concludes today's webinar. Thank you for attending.
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