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EXECUTIVE SUMMARY

There is broad agreement that poor infrastructure leads to diminished mobility and thus inhibits economic activity. Unfortunately, especially at the municipal government level, it can be difficult for governments to find adequate resources to keep the infrastructure under management in good repair. Municipal governments have often relied on revenues from State gas taxes and property taxes to pay for road and highway construction and maintenance. Yet, the income from gas taxes declined in both percentage and absolute terms starting in the 1990s as fuel-efficient vehicles reduced effective gas tax receipts and governments failed to index taxes sufficiently to adjust for inflation. The prospect of raising taxes is often politically difficult.

However, when transportation networks are improved, it is often the case that the value of the urban land those networks serve is increased. These improvements directly and indirectly benefit the users of the system–for example, citizens gain improved access to jobs and services, and businesses gain easier access to intermediate goods and markets. It is possible to capture a portion of this increased value and benefits to fund the improvements to the infrastructure through what are known as "value capture techniques," which include transportation utility fees (TUFs) (the subject of this primer).

Summaries of each chapter of this primer are found below. A summary of common TUFs practices can be found in table 1.

Chapter 1. Introduction: Summary of Purpose and Primer Background

This primer introduces the concept of 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. Over nine chapters, the primer provides practical information on what TUFs are and examples of how municipalities use them. It also provides points for consideration when thinking about instituting a TUFs program, such as the favorability of the legal and regulatory environment for TUFs, as well as whether and how TUFs can be used for financing. The final chapter offers examples detailing several ongoing TUFs programs in Texas, Utah, and Oregon.

Chapter 2. Defining TUFs

Chapter 2 defines TUFs–they treat the transportation system like a utility, charging property owners or occupants for their share of transportation costs based on system use–as well as highlights the benefits of levying TUFs to pay for street maintenance as opposed to other mechanisms such as gas or property taxes.

Chapter 3. Establishing a TUFs Program

Establishing a TUFs program typically involves a municipality taking several steps: (1) determining objectives, (2) determining cost and budget, (3) defining streets and boundaries, (4) setting rates,

(5) informing the public, (6) adopting an ordinance, and (7) notifying the public and implementing and adjusting the TUFs as needed. This chapter discusses these steps and presents them in approximate chronological order of how they usually occur.

Chapter 4. Applications of TUFs

TUFs can be primarily, if not exclusively, applied to the maintenance of local transportation facilities. This includes street maintenance and pavement preservation. In some communities, they can also fund other street infrastructure, such as storm drains, curbs, and signs. In other communities, TUFs monies can be spent on street lights, sidewalk maintenance, landscaping, and correcting street deficiencies. This chapter illustrates the various ways the revenues collected from a TUFs program can be applied.

Chapter 5. Calculating TUFs

Many TUFs programs have commonalities in the way that they assess TUFs, including differentiating between land uses such as residential and nonresidential properties, using the Institute of Transportation Engineers (ITE) Trip Generation Manual to determine trip generation by property type, enforcement mechanisms, and a variety of exceptions. TUFs programs differ, however, in some small and large ways, based on the size of the municipality, cities' maintenance needs and goals, and other public policy considerations. This chapter provides an overview of how TUFs are commonly calculated.

Chapter 6. Administering TUFs

Administering TUFs involves some considerations regarding accounting, enforcement, and addressing exemptions and waivers. This chapter provides an overview of the many aspects related to administering a TUFs program.

Chapter 7. TUFs Legal and Regulatory Issues

TUFs are authorized under State and local law, and the legal and regulatory environment in a municipality may not always allow for TUFs. Thus, municipalities considering establishing TUFs programs generally ensure that their State allows for TUFs, understand any legal issues under State law, and anticipate possible local legislative opposition. This chapter provides points for consideration with regard to the legal and regulatory environment surrounding TUFs.

Chapter 8. TUFs and Financing

TUFs are intended to be used for the maintenance of municipal transportation infrastructure, as well as for upgrades to sidewalks and improvements to pedestrian safety, among others. They can extend the lives of existing assets for a period of 5 to 10 years. Because of uncertainties in measuring how long maintenance extends the life of the asset, securing long-term financing may be problematic for municipal TUFs programs. Municipalities could secure short-term financing by leveraging TUFs monies, however, based on conservative assumptions that the TUFs funding increases asset lives by at least 5 years. Most TUFs programs, however, do not use financing and stick to "pay as you go" (pay-go) programs, in which the monies collected in any given year are used to fund the street maintenance program over the next 1 to 5 years. Even if TUFs are not used to secure financing, they can free up other sources that can be used for financing.

Chapter 9. Where TUFs Are Used

TUFs are primarily used in the southwest and northwest United States. This chapter profiles TUFs programs in five cities across Texas, Utah, and Oregon.

Table 1. TUFs common practices.¹

TUFs Characteristics	Common Practice
Definition	This is a value capture technique. Treats transportation system like a utility, charging property owners or occupants for their share of transportation costs based on system use.
Use	Used by municipal governments to help pay for street maintenance and sometimes for related street infrastructure, such as sidewalks, signs, signals, and bike paths.
Key Implementation Steps	Determines program objectives, cost and budget, streets and boundaries, rates to be charged, and the enabling authority. Informs the public about the program. Develops and adopts the ordinance.
Calculation	Differs by municipality, although most construct rates based on property type (residential and nonresidential) and number of trips, per the standards set by the ITE Trip Generation Manual.
Management	Holds revenues in an account separate from the general fund and monies are only used for their intended purpose.
Funding and Finance	Primarily used for pay-go funding. Helps free up gas and other tax revenues that can be used to finance new street infrastructure.
Examples	City of Hillsboro, OR Lake Oswego, OR Corpus Christi, Texas

Footnotes

1 Summary of research conducted for this primer.

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