Getting TUF on our streets. March 1, 2011

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1 CITY OF HILLSBORO Public Works Department, Engineering Division 3A&5A Getting TUF on our streets. March 1, 2011 To: Mayor and City Council From: Tina Bailey, Project Manager Re: Proposed Transportation Utility Fee Modifications Over the past few months staff has held three meetings with a Transportation Utility Fee (TUF) Advisory Committee to evaluate the performance and structure of the TUF Program. The TUF Advisory Committee was comprised of both non residential and residential customers. Participating members were: Todd Powell, Jackson School HOA Cynthia O Donell, Downtown Neighbors Rrl Phillips, CPO 9 Steering Committee Scott Anderson, Alderbrook HOA Jonathan Clay, Metro Multi Family Housing Association Bill Ray, Pacific University Deanna Palm, Hillsboro Chamber Bob McIntosh, SolarWorld Industries Amanda Dalton, NW Grocers Association Steve Krautscheid, Tuality Health Care Over the course of the three meetings, the Advisory Committee was provided information regarding the history and development of the TUF, the needs of the Pavement Management and Bicycle and Pedestrian Program, and the performance of the TUF Program (revenue and discount and waiver performance). The Advisory Committee was specifically asked to Consider the current rate methodology and determine whether any program modifications are necessary. Consider a potential modest increase in the fee. Revisit the discount and waiver program and determine whether any modifications are necessary 150 E Main Street, Fourth Floor Office: Hillsboro, Oregon Fax:

2 Program Accomplishments Since the adoption of the TUF program the following has been accomplished utilizing TUF: Completed the construction of $352,000 sidewalk infill project on SE Spruce Street between 13 th and 21 st Avenues. $220, 000 of the project funded with TUF. Began design on a street improvement on SE 18 th Avenue between Maple and Oak. Project will include the installation of sidewalk, curbs, street trees, storm sewer as well the rehabilitation of existing sanitary sewer and water lines. $150,000 of the estimated $1.7 Million project will be funded by the TUF. Upgrade 42 sidewalk ramps to current Americans with Disability Act (ADA) standards. Approximately $80,000 in TUF was used to fund these upgrades. Completed over $2.5 Million in street maintenance. Approximately $1.1 Million was funded by the TUF. Reduced the City s backlogged street maintenance by approximately $2.5 Million by through the introduction of a new maintenance treatment, Micro Sealing. Program Needs The following is a brief summary City s bicycle and pedestrian and street maintenance needs: 148 sidewalk ramps are required by ADA to be brought up to current standard at an average replacement cost of $2000. City has over $120 Million in identified sidewalk projects identified on the Pedestrian Master Plan in the City s Transportation System Plan. Five of these projects, with a 2007 construction cost of $10.15 Million were placed on the City s Bicycle and Pedestrian Capital Improvement Program, over $9 million of which will be funded by TUF. The City currently has a street maintenance backlog of $5.8 Million. Over $13.5 Million in street maintenance projects would be required over the next five years in order to address the existing backlog and next 5 years of maintenance needs. Assuming the City s roadway network does not grow, current projections indicate the City needs to construct approximately $1.8 Million in maintenance projects each year to prevent a significant change in the maintenance backlog. TUF Fund Performance As the TUF program was adopted it was anticipated it would collect just over $1.97 Million per year, with $936,000 in revenue for the Bicycle and Pedestrian Master Plan (BPCIP) and $1.04 Million for the Pavement Management Program (PMP). These revenues were based on the initial developed property land use assessments and building square footages. The initial land use assessments were done by curb side evaluations and building square footages were obtained using aerial photography. Although attempts were made to verify this information with customers prior to actual fee assessments, staff received most corrections after the fee collection began. These initial assessments also did not account for forgone revenue as the result of the discount and waiver program which was adopted after rates were set. In the first 15 months of the program, the City waived 150 E Main Street, Fourth Floor Office: Hillsboro, Oregon Fax:

3 roughly $40,000 in revenue was due to discounts and waivers, primarily in low income waivers. As a result, the actual revenue collection in FY was just under $1.65 Million, with just over $900,000 for the PMP and $748,000 for the BPCIP. TUF Advisory Committee Recommendation The discussions of the TUF Advisory Committee led them to make the following recommendations: 1. Adopt a base charge for non-residential customers equivalent to the lower of the residential customer rates (at this time multi-family). Approximately 280 of our non residential customers are currently paying less than $2.80 per month, the current multi-family rate. Based on Institute of Transportation Engineers (ITE) data, these customers do not generate less traffic than a multi-family customer. 2. Readjust rate methodology to establish a trip cap of 2000 trips per customer for nonresidential Bin 6 customers and reallocate the transportation utility fee costs for developed property classes to ensure that they are fairly proportioned. The TUF program requires the periodic reallocation of the costs to the developed property classes and the related rate structure to ensure the transportation utility costs are fairly proportioned. Because of changes in the composition of businesses within the non-residential bin structure this reallocation resulted in significant increase to Bin 6 customers monthly bills. The establishment of a trip limit in this rate bin reduces, but does not fully eliminate this impact. 3. Keep the Transportation Utility Fee revenue neutral for the upcoming year. The Advisory Committee was asked to consider a potential rate increase of 2 to 6 percent. Given economic conditions the Advisory Committee did not support an increase this year. 4. Increase the revenue collected by the fee in April of Advisory Committee members were open to the adoption of an increase at this time which would not be effective until April of Advisory Committee members indicated levels of support of 2 to 6 percent for an increase. In addition, to these recommendations several committee members expressed concerns regarding the costs of the overhead for the utility fee. These members indicated a desire to see the total overhead costs for the program limited to 10 percent of the total TUF Revenue. For this purpose, overhead is defined as the costs associated with utility billing as well as other program administrative costs (the non-utility billing staff time and materials associated with discount and waiver processing, rate recalibration, stakeholder involvement, etc.). The TUF Program limits the overhead costs that are paid from the TUF fund to 4 percent. This 4 percent, or approximately $66,000, currently covers the administrative costs of the

4 TUF program. Approximately $130,000 is paid from the Transportation operating fund to cover the utility billing costs associated with TUF. Although the TUF fund itself is only paying 4 percent of the overhead costs, the total overhead costs borne by all the TUF and Transportation operating fund are equivalent to 11.6 percent of the total TUF revenue. Transportation Committee Recommendation Based on the Advisory Committee Recommendations, the Transportation Committee has recommended the City Council to set a public hearing on March 1, 2011 to consider: 1. Adjusting the current Transportation Utility Fee rate structure effective May 1, 2011, as required by Municipal Code Section (F), to re-allocate the transportation utility fee costs for developed property classes to ensure that they are fairly proportioned. (This action is revenue neutral.) 2. Establishing a minimum charge for non-residential customers, effective May 1, 2011, equal to the lowest residential unit rate, currently $2.83. (This action will generate approximately $5500 in additionally TUF revenue.) 3. Increasing the revenue collected by the fee by 4 percent effective in April of 2012 with the proviso that starting in fiscal year , the costs related to billing the TUF (approximately $130,000 this year) would no longer be allocated to the Transportation Funds and requiring other funding sources to be identified. (This action will generate approximately $41,000 in additional revenue.) Proposed Rates May 1, 2011 to March 31, 2012 After April 1, 2012 Category (Bin) Rate Basis Current Rates Non Residential Recalibration w/base 4% Revenue Increase Non Residential Base: $ - $2.83 $ sq.ft. $0.22 $0.20 $ sq.ft. $0.53 $0.47 $ sq.ft. $1.78 $1.56 $ sq.ft. $3.73 $3.47 $ sq.ft. $10.18 $9.14 $ sq.ft. $18.41 $18.52 $ trip $0.05 $0.04 $0.04 Residential 8 (SFR) unit $3.10 $3.14 $ (MFR) unit $2.80 $2.83 $ E Main Street, Fourth Floor Office: Hillsboro, Oregon Fax:

5 ORDINANCE NO. AN ORDINANCE AMENDING SECTION OF THE HILLSBORO MUNICIPAL CODE BY ESTABLISHING A MINIMUM MONTHLY TRANSPORTATION UTILITY FEE CHARGE FOR NON-RESIDENTIAL DEVELOPED PROPERTIES. WHEREAS, non-residential developed properties (NDPs) currently do not pay a minimum charge for the Transportation Utility Fee, and WHEREAS, non-residential developed properties generally generate more traffic than that generated by a residential dwelling unit, and WHEREAS, many non-residential developed properties currently pay less per month than a nonresidential dwelling unit (RDP); WHEREAS, there is a need to establish a minimum base charge to ensure that non-residential developed properties pay at least that of a residential dwelling unit. NOW, THERFORE, THE CITY OF HILLSBORO ORDAINS AS FOLLOWS: Section 1. Section is amended to replace subsection F and renumber the current subsection F to subsection G such that subsection F and G shall read as follows: (F) The TUF for NDPs will be a minimum charge equal to the lowest monthly RDP rate per dwelling unit. (G) Periodically, the City will reevaluate the allocation of costs for developed property classes and related rate structure to ensure transportation utility costs are fairly apportioned. A fee examination will take place at least once every five years. Section 2. Except as herein amended, Section of the City of Hillsboro Municipal Code shall remain in full force and affect. Section 3. This ordinance shall be effective from and after 30 days following its passage and approval by the Mayor. First approval of the Council on this 1 st day of March Second approval and adoption by the Council on this 15 th day of March Approved by the Mayor this 15 th day of March Jerry Willey, Mayor ATTEST: Amber Ames, City Recorder Page 1 of 1