On March 13th of 2023, the Creswell City Council met to discuss the Transportation Utility Fee ordinance. After hearing community feedback, the council elected to postpone the vote until the April 10th City Council Meeting. It will also be on the agenda for discussion at the March 27th City Council Work Session.
In an effort to provide more information to the residents and business owners of Creswell about TUF, the City Council has complied a Q&A pamphlet that is available to all community members.
Q: What is a transportation utility fee?
A: A transportation utility fee (TUF) is a periodic fee paid to a municipality by property users or owners within a local jurisdiction to fund the operations and maintenance costs of transportation facilities, primarily roads. Residents and businesses are charged a fee based on their use of the transportation system rather than being charged taxes based on the value of the property that they occupy. Because the use of the transportation system is not metered like electricity or water, the amount that is charged for a TUF is based on estimates of the number of trips generated by different land uses (e.g., single family residence, multi-family residence, school, gas station, shopping center).
Q: How is the TUF calculated?
A: The amount that is charged for a TUF is based on estimates of the number of trips generated by different land uses (e.g., single family residence, multi-family residence, school, gas station, shopping center). Those estimates are informed by trip-generation rates prepared by the Institute of Transportation Engineers (ITE) Manual. The current street funding gap of $255,000 annually is allocated to the various land uses proportionate to the estimated trips generated by those land uses.
Q: How much will a residential property pay monthly for the TUF?
A: Single family detached homes will pay $4 per month for the TUF on their utility bill.
Q: How much will a nonresidential property pay monthly for the TUF?
A: An individual business can estimate its monthly TUF based on the type of business and square footage of their building. Restaurants, pharmacies, and most retailers will fall in the Class 2 category (40 or more average daily trip counts). That rate is $16.81 per thousand square feet (rounded) of gross floor area. So, for a restaurant building that is 1,200 square feet, the fee is $16.81. For another restaurant building that is roughly 2,000 square feet, the fee is $33.62. Churches, schools, and tire stores fall in the Class 1 category (less than 40 average daily trip counts). That rate is $5.43 per thousand square feet of gross floor area.
Q: What if I am unemployed, don’t own a vehicle, or my business development is vacant:
A: There are special circumstances for a waiver under the proposed TUF ordinance. A request for a waiver may be submitted to the City Manager for consideration under the proposed ordinance.
Q: How much are other cities in Oregon paying for a transportation utility fee?
A: The image on this page shows a sample of cities that charge a TUF, as of January 2023. There are over 30 cities in Oregon that have implemented a TUF. Note that the City of Coburg (not listed below) recently passed a TUF of $7 per month and the City of Florence collects $6.60 per month.
Q: How much money does the city receive for roads from other sources (taxes) per year?
A: The Street Fund currently receives approximately $450k in State Highway Taxes. These revenues come from the State gas tax and vehicle registration fees. The operating costs of the Street Fund are approximately $330k. The operating costs cover the routine maintenance of the street system, such as street sweeping, tree limb trimming, and patching. This leaves approximately $120k annually that can be saved up for a street capital project.
Additionally, there are State/Fed Exchange grants of approximately $60k per year. These funds accumulate until they can be utilized for a street capital project. These funds can only be spent on projects listed in the Creswell Transportation System Plan.
Lastly, the local improvement district (LID) implementation will pay for approximately $20% of the total construction costs of a project. For a $1.5 million project, that would be $300k. The LID, the State taxes, the State/Fed Exchange grants, and inflation are all factored into the equation of years to fund a street capital project. The funding gap of $255k annually relates to the amount needed to reduce the timeline of a typical street capital project being funded from 6 years to 3 years.
Q: How will street projects be prioritized?
A: Street projects are prioritized in the City of Creswell Transportation System Plan (“Plan”) adopted in 2019. Further, priority projects in the Plan will be done in order of engineer’s assessment of road deterioration and use by public safety vehicles and mass transit.
Each year the finance department with the assistance of the public works department shall prepare and present to the budget committee and the City Council the “Capital Improvement Plan” as part of the budget adoption process. This plan shall include a schedule for the proposed budgeted year and the next 4 years.
Q: How can we be assured that the fee is paying for street projects and that rates are set fairly?
A: The new ordinance that authorizes the fee also requires the Water Rate Advisory Committee, consisting of three City Councilors and three citizens, to review the TUF program every year in January and that they recommend changes to the fee at the February City Council Work Session. The Budget Committee will take in consideration the recommended fee and approve the costs of street projects as part of the annual budget. The City Council will hold a public hearing in June when it adopts the annual budget. The public is invited to attend these public presentations and can provide testimony on the fees and budget.
Q: When did the City Council begin considering a $4 monthly TUF?
A: The City Council determined a need to secure a sustainable funding mechanism for street projects when it adopted the 2019 City of Creswell Transportation System Plan prepared by an engineering firm in coordination with the Oregon Department of Transportation.
The Transportation and Public Works Committee met in October of 2020 to discuss the need further and review possible funding mechanisms. In 2022, the Mayor appointed a six member Ad-hoc Road Committee consisting of three City Councilors and three community members. The Ad-hoc Road Committee met in April, May, and June of 2022. The Committee, after weighing the pros and cons of all the various funding mechanisms, recommended a TUF be pursued with a study to be performed by a consultant.
The City Council received the results of the TUF study provided by Donovan Enterprises at the January 23, 2023 work session. The results of that study were used to determine the $4 monthly single family detached residential and the non-residential fee rates.
Q: Are TUFs considered to be more equitable than other funding mechanisms?
A: TUFs are considered by some to be more equitable than property taxes. With a property tax, a percentage of road users pay nothing due to their tax-exempt status (e.g., non-profit schools or religious institutions), whereas, with a TUF, more entities that generate local traffic pay for maintenance of the road system.
Because TUFs are based on trip-generation estimates rather than property values, TUFs tend to allocate more of the cost of road maintenance to the types of land uses (i.e., commercial) that generate larger numbers of trips. This could be considered more equitable because the number of trips is related to the magnitude of impacts on road conditions.
If you have any questions or concerns, please feel free to contact City Hall at 541-895-2531.
Supporting Documents
Transportation Utility Fee Questions & Answers (106 KB)
Original source can be found here.
Alerts Sign-up