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This primer introduces the concept of transportation utility fees (TUFs) and how they can provide an alternative source of funding to help maintain and improve road networks. TUFs can also provide a source of funding to upgrade sidewalks and add or improve pedestrian safety features and curbs, as well as comply with the Americans with Disabilities Act of 1990.
Practitioners agree that eroding infrastructure "diminishes mobility, public safety, and quality of life."2 However, often at the local level, governments struggle to have sufficient funds to maintain transportation infrastructure in good condition. Historically, many States have relied on gas taxes to fund road maintenance. However, as both Lake Oswego3 and Hillsboro,4 OR, document as reasons for creating their respective TUFs programs, gas tax revenues available for local road maintenance have not kept pace with road maintenance needs. In addition, local roads are not eligible for Federal-aid Highway Program (FAHP) funding, nor can FAHP funding be used for routine maintenance.5
This led to a situation in many cities, such as Corpus Christi, TX, and Hillsboro, OR (see chapter 9), where road maintenance costs outpaced the revenues available to pay for them. Local governments needed to find funding to operate and maintain roads, as well as eliminate congestion.
TUFs are typically used to fund local road maintenance, rehabilitation, and/or preservation, especially for those roads that are ineligible to receive Federal-aid highway funding. In rare cases, they have also been used to fund operations and maintenance (O&M) expenses along transit corridors. In using TUFs, cities can help close their funding gap in an equitable manner as fees are levied on all properties (there are no exemptions for schools or religious institutions) in proportion to their use of the road network, rather than their value, as would be done with property taxes. In this way, the cost of maintaining the infrastructure is equitably distributed, as well as directly linked to the benefits derived. This primer provides an overview of TUFs, when and how they are used, and considerations regarding their use. It also provides several cases to illustrate how cities have approached instituting TUFs and managing their TUFs program.
2 D'Angelo, Daniel, Applied Research Associates, Inc.; Tayo Edun, Pauline Hovy, Herb Ladley, and Sasha Page, IMG Rebel Advisory, Inc.; Thay Bishop and Stefan Natzke, Federal Highway Administration. August 2019. Value Capture: Capitalizing on the Value Created by Transportation. FHWA-HIN-19-004. Federal Highway Administration (FHWA).
3 Lake Oswego, OR, Public Works. Street Fee Questions, question 3. https://www.ci.oswego.or.us/publicworks/street-fee-questions
4 Ad Hoc Committee on Transportation Finance. April 2008. City of Hillsboro: Report to the Transportation Committee, Proposed Hillsboro Transportation Utility, p. 1. https://www.hillsboro-oregon.gov/home/showdocument?id=990
5 Federal Highway Administration. Federal-aid Essentials for Local Public Agencies. https://www.fhwa.dot.gov/federal-aidessentials/federalaid.cfm
