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Future Street Maintenance Funding

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Federal Stimulus Dollars
Recognizing the current funding gap, the City of Tigard applied for federal stimulus funding (via the American Recovery and Reinvestment Act) for pavement overlay projects, along with other projects. It appears that Tigard will be receiving some federal stimulus funds to construct pavement overlays on:

Durham Road from Upper Boones Ferry Rd to Hall Blvd
72nd Avenue from Upper Boones Ferry Rd to Fir St (just south of Hwy 217)
Bonita Road from the I-5 bridge to Fanno Creek

These projects will help fill this year's gap in funding for Arterials and Collectors, but the future funding gap remains.

Proposed Fee Increase
When the existing Street Maintenance Fee was established, the target revenue was set at $800,000 a year. Because an inflation adjustment was not built into the program, fees have remained constant while City needs and the costs of repairs have increased dramatically. For instance, asphalt purchased in 2003 dollars with $800,000 now requires approximately $1,800,000 for the same amount, due to a steep increase in raw material costs. In addition, the City has experienced an increase in traffic levels throughout the system, accelerating the rate at which the City's roads deteriorate. Vehicle use is up 21% statewide, and City streets are seeing more and heavier trucks and buses. In other words, the existing fees are not enough to maintain a healthy road system in good repair.

The current Street Overall Condition Index (OCI) is 68 and declining every year due to an increasing backlog of maintenance. An OCI of 73 to 75 would be optimal for the City because it ensures that the City can enter into, and stay within, that perpetual maintenance cycle over the long term. The City can achieve that OCI target goal over a 20-year period with a fee increase and inflation adjustments each year to account for the rise and fall of material and labor costs. The amount required to maintain a comprehensive preventative maintenance program over the long term is $2,200,000 in 2008 dollars. This continually revised target would ensure that the City could continue to maintain the streets in a perpetual maintenance cycle that would keep good streets good and gradually improve the condition of the overall street network for the long term.

View the Pavement Condition by Budget Graphic

The proposed fee increase would include additional funding for right-of-way maintenance on the City's major street network as a part of overall street maintenance. This additional funding would address fire hazards and unsightly overgrowth resulting from unmown grass, weeds, and other plants in the planters, medians, and areas between sidewalks and property lines on the City's arterial and collector streets. The funding required for this maintenance work annually is $300,000. The combined total for both street maintenance and right-of-way maintenance would be $2,500,000 annually in 2008 dollars.

Proposed Increase Phases
The proposed fee increases are from $2.18 to $6.06 monthly for residential units, and from $0.78 to $2.44 monthly for non-residential uses. The new fee, if implemented, would produce the annual revenue target of $2,500.000. However, because the increase in fee is relatively large, immediate adoption of the new rates will not be sought. To lessen the immediate impact, the increases will be phased in over two years so that by 2011, the fees charged will be at the level needed to adequately maintain the streets and rights-of-way. An inflation factor of 6.5% annually is incorporated in the phase-in plan to ensure that the fees collected in 2011 will be at the level needed at that time. After 2011, any future increases to account for inflation will be based on one or more recognized construction cost indices.

	Current Rate	April 2009	April 2010	April 2011
Residential Rate	$2.18	$3.73	$5.22	$6.86
Non-Residential Rate	$0.78	$1.43	$2.07	$2.74
Note: Rates for 2009 to 2011 include a 6.5% annual inflation factor

Residential versus Non-Residential Rates
The original 5-year plan developed in 2003 resulted in the residential uses paying for 58% of the costs and the non-residential uses 42%. The new 5-year plan developed in 2008 changes the ratio to 55% to 45% because the City's experience during the past 5 years has been that the larger main arteries of the City (collectors and arterial roads) require more frequent and extensive maintenance than do neighborhood roads. More than half the costs are still borne by residential uses.

Among non-residential users, the largest payers are still the big businesses, but the maximum charges are capped at 200 spaces. Those with more than 200 spaces are many of the Washington Square businesses, the Lincoln Center, Fred Meyer along Highway 99W, and the Tigard Plaza along 99W and Hall Blvd, etc. Although Washington Square appears to be one entity, in reality it is a number of businesses, each charged individually, with a 200-space cap. Macy's, Nordstrom, and J.C. Penney are among the businesses that own their properties. Lincoln Center is similar in that at least 5 different businesses are charged the 200-space maximum. Charges are associated with each water meter and assessed based on the square footage for each business.

Procedural Steps
In order for the City to raise fees, the Council must vote on the following items. Each will occur at a public hearing where public testimony will be taken prior to the vote.

Revision to Ordinance No. 03-10 to add right-of-way maintenance as an integral part of street maintenance under the definition of street maintenance
Revision to Ordinance No. 03-10 to include local commercial and industrial streets under the non-residential category for fee calculation purposes
Revision to Ordinance No. 03-10 to incorporate an annual inflation factor to ensure that the fee rates keep pace with cost increases or decreases
Resolution to set the City's long term OCI goal of 75
Adoption of the new fee rates with phase-in plan incorporated

Additional Options
The City has constrained options when searching for ways to maintain the roads. One alternative to a fee increase is to allow the roads to continue to deteriorate, and pass the costs to future taxpayers. Another is to find an alternative funding source, a difficult proposition in today's economic climate and constrained federal and state budgets.

Tigard Street Maintenance Update

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