LIST OF FIGURES
LIST OF TABLES
TUFs are intended to fund the maintenance of local transportation infrastructure, thereby extending the lives of street assets for a period of 5 to 10 years, and as much as 25 years, based on a city's experiences.106 Most TUFs programs fund street maintenance on a pay-go basis, in which the monies collected in any given year are used to fund the street maintenance program over the next 1 to 5 years. Should TUFs receipts be inadequate to fund the program, then the city may increase the TUFs, reduce the program, or extend it beyond its stated period, such as from 5 to 8 years. Financing is rarely used in conjunction with TUFs.
Because of the uncertainty regarding the life of the street asset, securing long-term financing may be problematic for municipal TUFs programs. When municipalities secure financing for new transportation infrastructure by issuing municipal bonds or obtaining bank financing, they usually seek long-term maturities or durations, such as for 20 or more years, reflecting the long-term expected life of the asset. A municipality's street maintenance program varies as to how it extends street assets' lives. Since streets are often built at different times and/or because streets are subject to different geotechnical conditions, maintenance on one set of streets may vary from another. Cities, in general, do not measure the extent to which a street maintenance solution extends an asset life. They may, however, measure the PCI, which is arguably a proxy for asset life. Even in that case, however, there are likely to be "gray areas" since cities may accept lower PCIs when funds are scarcer, understanding that this will result in lower maintenance quality, poorer driving conditions, and, likely, additional maintenance costs in the future.107 On its website, Highland, UT, uses similar arguments against bonding instead of imposing an $18.50 monthly fee on all properties to a fund street maintenance program on a pay-go basis.108
Municipalities could secure short-term financing, leveraging TUFs monies based on a conservative assumption that TUFs funding increases asset lives by at least 5 years. Furthermore, if the city has demonstrated that it is collecting its TUFs as expected and there is little volatility in TUFs collections, lenders may view this as a strong credit, similar to other municipal credits. Financing could help cities manage cash flow issues, such as if they were addressing a maintenance backlog. Municipalities could enter into discussions with a variety of lenders, including traditional municipal bond investment banks, commercial banks, the U.S. Department of Transportation's Build America Bureau Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF) programs, and/or State or local infrastructure banks. Such financing considerations usually are coordinated with the municipality's financial and legal advisors.
Even if TUFs are not used to secure financing, they can free up other funding sources that can be used to support financing. Several communities, including Lake Oswego, OR, and Hillsboro, OR, supplemented gas tax sources with TUFs, using gas taxes to fund new projects to secure financing.109
106 City of Chula Vista, CA. Street Maintenance website. https://www.chulavistaca.gov/departments/public-works/operations/street-maintenance;
City of Sacramento, CA. Street Preservation & Maintenance Techniques website. https://www.cityofsacramento.org/Public-Works/Maintenance-Services/Street- Maintenance/Pavement-Techniques
107 Based on Interviews with municipalities regarding their TUFs programs: Tina Bailey, Hillsboro, OR, interview, May 5, 2020; Erica Rooney, Lake Oswego, OR, interview, May 29, 2020; Josh Wheeler, Oregon City, OR, interview, June 8, 2020; Dave Klockeman, City of Loveland, CO, interview, June 30, 2020.
108 City of Highland, UT. Transportation Utility Fund Background Information. https://www.highlandcity.org/399/Transportation-Utility-Fund
109 Rooney, Erica, Lake Oswego, OR, interview. Bailey, Tina, Hillsboro, OR, interview, May 5, 2020.
