Street Surface Maintenance Program FAQs

PROGRAM BASICS 

1. What Does the Street Surface Maintenance Program (SSMP) Do? 
2. Why Was the Street Surface Maintenance Program Established? 
3. How Does the City Decide Which Streets to Repair? 
4. Why Aren't Gas Tax Revenues Sufficient to Maintain City Streets? 
5. How Does the City Spend Milwaukie's Share of State Gas Tax Revenues? 
6. How Was The Street Surface Program Established? 
7. Why Doesn't the State or Federal Government Pay for Street Maintenance? 
8. What Will Happen if the State Passes an Increase in the Gas Tax? 
9. What Is the City Doing to Protect New Streets from Being Damaged by Utility Cuts? 
10. Who Can I Contact with Questions Regarding the Street Surface Maintenance Program? 

STREET MAINTENANCE FEE 

1. What is a Street Maintenance Fee? 
2. Do other Oregon cities have a Street Maintenance Fee? 
3. What are the Residential Street Maintenance Fees? 
4. What are the Commercial Street Maintenance Fees? 
5. How Were the Street Maintenance Fee Rates Determined? 
6. Why Am I Being Charged for Almost Ten Trips Per Day for My Home? 
7. I Cannot Afford To Pay the Street Maintenance Fee. What Can I Do? 
8. Who Can I Contact with Questions Regarding the Street Maintenance Fee? 

PGE PRIVILEGE TAX 

1. What is the PGE Privilege Tax? 
2. Why Are PGE Privilege Tax Revenues Being Used for Street Maintenance? 
3. Is An Electricity Privilege Tax Unusual? 
4. I Have Electric Heat, the PGE Privilege Tax Seems Unfair. Why Are Electricity Users Being Singled Out? 

PROGRAM BASICS 

What Does the Street Surface Maintenance Program (SSMP) Do? 
Answer: The SSMP protects the City's investment in the street infrastructure by maintaining and repairing City streets. All of the revenues raised are dedicated exclusively to roadway maintenance, including re-sealing street surfaces, re-paving (or "overlaying") streets, and reconstructing streets. Preventive maintenance and overlay projects are prioritized; reconstruction will only be considered for streets that either have inadequate bases or are damaged to the point at which an overlay is not practical. 

Why Was the Street Surface Maintenance Program Established? 
Answer: The City of Milwaukie is responsible for maintaining approximately 138 lane miles of paved streets. The replacement value of Milwaukie's street system was estimated at $65 million in 2004. A July 2004 report by the consulting firm Engineering Information Services (EIS Inc.) rated Milwaukie's overall street network condition as a 67 (out of 100), which placed the City's street network in the upper range of the "satisfactory" condition. However, that report also concluded that the value of deferred street maintenance was growing rapidly and that the City was not allocating sufficient funds to address street maintenance needs. In fact, EIS projected that by 2006, absent a new street maintenance effort, the overall street network condition would fall from 67 to 63. Maintaining streets is five times more cost-effective than re-building them after they have failed. As a result, the value of deferred maintenance can build up very quickly as deteriorating streets pass the point of effective maintenance or rehabilitation. Prior to the establishment of the program, the City was unable to fund street maintenance and repair projects, and the backlog of deferred maintenance was growing at roughly $700,000 per year. 

How Does the City Decide Which Streets to Repair? 
Answer: As part of the annual Capital Improvement Plan development process, the Public Works and Engineering departments update the SSMP project schedule. In addition, a more detailed schedule of sealing and similar preventive maintenance projects for the up-coming summer is developed. The project list development begins with the recommended maintenance program produced by a Pavement Management System (PMS) software application. The Engineering Director and Street Operations Supervisor select a package of treatments. They match the recommendations generated by the PMS software with local knowledge of street condition, the cost benefits of grouping multiple projects (both coordinating with other utility projects and tackling adjacent streets where possible to minimize mobilization costs), and other project needs (for instance, recently built new projects that require overlays to match grades). In allocating resources among projects, staff prioritizes projects with the greatest return (i.e., street life extension versus cost). Remaining funds are dedicated to reconstruction projects on significant routes. These routes are prioritized according to their functional classification within the City Transportation System Plan, with adjustments made by the project selection team based on school routes, freight routes, emergency routes, safety considerations, traffic patterns, and cost-effective contracting practices. A list of projects for year 1 has been developed and included in the Public Works budget request for Fiscal Year 2007/2008. The projects slated for FY 07/08 are Oak Street (from Hwy. 224 to Monroe), 37th Ave. (from Lake Road to Wister), Washington Street (99E to Oak Street), and 42nd Avenue (from Harvey to Johnson Creek Boulevard). The reconstruction of King Road (from 43rd to the City limit) will be the primary project for FY 2008/2009. 

Why Aren't Gas Tax Revenues Sufficient to Maintain City Streets? 
Answer: The Oregon State Motor Vehicle Fuel Tax is assessed per gallon on motor vehicle fuel sold statewide. The tax has not been increased since 1993. In 1995-1996, the City's share of Gas Tax revenues was $906,065; the projection for 2006-2007 is $959,646. The second primary regular source of revenues for the Street Fund is franchise fees, collected from other City utilities (water, storm and wastewater). Franchise fees total about half of Gas Tax revenues ($490,198 in 2004-2005; $546,650 projected for 2006-2007). While Street Fund revenues have remained largely flat, the cost of road construction and maintenance has increased substantially, particularly in recent years. According to the Federal Highway Administration's surfacing price index, $128 worth of surfacing projects in 1995 would cost $215 today. Milwaukie's share of state gas tax proceeds are down nearly 40% over the past decade when adjusted for this inflation in costs. According to Clackamas County's 2006 construction bids, costs jumped almost 30% just from 2005 to 2006. (Both asphalt and concrete are very energy intensive and have increased rapidly in price in recent years.) 

How Does the City Spend Milwaukie's Share of State Gas Tax Revenues? 
Answer: The City Street Fund combines revenues from the State Motor Vehicle Fuel Tax, Franchise Fees, and grants for projects. In recent years, the City has enjoyed success competing for grants and loans for specific capital projects. In the 2006-2007 budget, these accounted for just over $1 million in revenue. However, such funds are dedicated to specific projects and cannot be expended on maintenance. 

Street expenditures in 2004-2005 totaled $2.2 million. These expenditures broke down as follows: 

• 32% to capital expenditures and 8% to reserves for future capital projects (largely funded by grants); 
• 20% to contributions to support or administrative functions (transfers to Engineering and Community Development Administration, and General Administrative Services Charge); 
• 17% to maintenance (see below); 
• 13% to street light electricity costs; and 
• 9% to overhead (the vast majority for vehicle fuel, maintenance, and replacement fees). 

The Street Department maintains multiple aspects of the street system. Based on FTE assignments and allocable materials and services costs, staff estimates that in 2004-2005, out of a total maintenance budget of $378,000: 24% went to right-of-way maintenance (mowing, removing branches, etc.); 23% was devoted to emergency street repairs (i.e., filling potholes and patching); 16% was spent on sign and signal maintenance; 15% went to street sweeping; 13% went to street marking and striping; and 8% was devoted to preventive surface maintenance (crack sealing as needed). 

The preventive surface maintenance expenditures do not include any rehabilitation or reconstruction projects, which the city cannot currently afford. In recent years, the city's CIP has included an "unfunded" $200,000 line item for overlay (rehabilitation) projects. 

How Was The Street Surface Program Established? 
Answer: The City Council has the authority to establish user fees by ordinance. Other examples of user fees include water, sewer, storm water management and systems development charges. After a public hearing, City Council established the program and two of the funding sources (the Street Maintenance Fee and Privilege Tax) upon a second reading of the establishing ordinances on January 2, 2007. (The public hearing and the first reading took place on December 19, 2006.) The Local Gas Tax was established by City Council on April 17, 2007. 

City staff conducted extensive community outreach as the program was designed. Staff invested literally hundreds of hours in such efforts. Phase 1 of outreach focused on explaining the problem and introducing policy options: Beginning in May 2006, staff gave presentations to the City's seven Neighborhood Associations and distributed information fliers and surveys at The Library Plant Sale and at Down-To-Earth Day. A letter was mailed to approximately 400 Milwaukie businesses, inviting their participation in the process. In June, staff gave presentations to the Rotary Club and the Citizen Utility Advisory Board. Display materials were featured at the Farmers' Market Community Booth throughout May and June and information and surveys were posted on the City's website. 

After developing a proposed program, staff conducted a second phase of oureach, beginning in October 2006. The proposal was presented to the Neighborhood Associations and information was sent to apartment owners and to business members of the North Clackamas Chamber of Commerce. In November a special transportation insert ran in the November Pilot; local church groups and PTA groups were provided information; and two Open Houses were held to gather additional input. Throughout the outreach campaign, articles ran in seven editions of the Pilot, messages were included in two utility bill cycles, and staff met with the Neighborhood Leadership group on three different occasions and met with more than 50 local businesses. 

In total, each mailing address in Milwaukie received at least seven notifications of the process (either articles or inserts mailed with The Pilot), and each City utility customers received two additional notices. Four articles in the Oregonian provided updates and information. Feedback forms or comments were received from over 200 individuals and businesses. Staff made detailed presentations to over 400 residents. 

Concerns raised by both residents and business representatives shaped the Program design. The following modifications or additions to the program were made in the course of discussions with businesses and the community: 

• All new revenues are dedicated exclusively to street surface maintenance by ordinance. Program funding is not subject to indirect charges by the City, nor will it be used to "match" federal grants. 
• A Local Gas Tax of $0.02 per gallon was added to the revenue package. 
• Projects are geographically distributed throughout the City, benefiting both neighborhoods and business districts. 
• A detailed annual report on the program will be provided to City Council and the public by the Community Development and Public Works Director. 
• Procedures are included to ensure that best practices are employed in project selection and inspection. 
• The Program initiates refinement of the City's policy to minimize damage from street cuts. Program projects are identified and coordinated with other utility projects well in advance of construction. 
• The street fee calculation includes an ongoing process allowing businesses the opportunity to justify a reassignment of fees. 
• The street maintenance fee is capped at $250 per property, indexed to the annual inflation rate. 

Why Doesn't the State or Federal Government Pay for Street Maintenance? 
Answer: Local street maintenance is a local responsibility. Although the City has been very aggressive (and successful) in pursuing grants for transportation projects, no such grants are available for on-goingmaintenance. 

What Will Happen if the State Passes an Increase in the Gas Tax? 
Answer: By ordinance, Program funding will be reduced or eliminated if and when new state, county or federal funding becomes available to fund local street maintenance in Milwaukie. 

What Is the City Doing to Protect New Streets from Being Damaged by Utility Cuts? 
Answer: The City has established a five-year moratorium on utility capital projects beneath recently constructed or reconstructed streets. The City, as part of a new set of Public Works Standards, has established a higher standard for repair of any emergency street cuts made to these new streets. Finally, as part of the annual fee update, the City will be establishing a new street opening fee to cover the cost of inspecting and monitoring street opening repairs and patches. 

Who Can I Contact with Questions Regarding the Street Surface Maintenance Program? 
Answer: Engineering Director (503) 786-7601 

STREET MAINTENANCE FEE 

What is a Street Maintenance Fee? 
Answer: A Street Maintenance Fee (sometimes known as a Transportation Utility Fee, Road User Fee, or Street Utility Fee) is a monthly fee based on use of the transportation system that is collected from residences and businesses. The fee is based on the number of trips a particular land use generates and is collected through the City's regular utility bill. 

Do other Oregon cities have a Street Maintenance Fee? 
Answer: Yes. The cities of Ashland, Eagle Point, Eugene/Springfield, Hubbard, Lake Oswego, La Grande, Medford, Phoenix, Talent, Tigard, Tualatin, and Wilsonville all have a Street Maintenance Fee. 

What are the Residential Street Maintenance Fees? 
Answer: Category/ Unit Trips/Unit Monthly Bill/Unit Typical customer Single Family Resid./ dwellings 9.57 $3.35 Detached house Multi-Family Resid./ dwellings 6.00 $2.10 Apartment or condo Elderly Housing/ dwellings 4.00 $1.40 Retirement community Congregate Care/ dwellings 2.00 $0.70 Long term care facility 

What are the Commercial Street Maintenance Fees? 
Answer: The non-residential street maintenance fee is calculated based on the number of square feet of building area (or alternative unit, such as gas pumps, or members) and a charge per thousand square feet. The monthly non-residential fee is capped at $250 per property, adjusted annually for inflation. 

How Were the Street Maintenance Fee Rates Determined? 
Answer: The City adopted a methodology developed by DKS Associates in 2002/2003 when the County was considering a Transportation Maintenance Utility Fee (TMUF). DKS used "trip generation" estimates reported by the International Traffic Engineers (ITE) as their baseline. Those were then adjusted downwards for certain uses, such as retail and schools, for two factors: (1) many retail trips are "pass-by" trips, they are stops on the way to another destination; and (2) these types of trips are often very short. After making these adjustments, DKS grouped similar land uses into categories and assigned each category a trip generation rate. The City calculated a monthly fee of $.35 per "daily trip generated" in order to raise the revenues necessary to fund the program. 

Why Am I Being Charged for Almost Ten Trips Per Day for My Home? 
Answer: Transportation engineers include many trips in their counts, such as the mail carrier coming to deliver mail, the meter readers, visits by relatives and guests, delivery trucks for packages and furniture, school buses picking up your child, or a friend picking up a resident to go to work. All of this is in addition to the auto trips with a resident behind the wheel. The estimate of daily trips for a Single Family Residence (9.57) is based on three hundred and fifty transportation impact studies. This is an average, so nobody actually counts your house, but people who don't even own a car often generate as many or more trips than car owners. This is because they often rely on others to come and pick them up and this generates double the trips than if they drove themselves. 

I Cannot Afford To Pay the Street Maintenance Fee. What Can I Do? 
Answer: Households that qualify for the "Low Income Utility Program" are 100% exempt from the Street Maintenance Fee. Visit the "Low Income Utility Program" page for more information. 

Who Can I Contact with Questions Regarding the Street Maintenance Fee? 
Answer: Resource & Economic Development Specialist (503) 786-7608 

PGE PRIVILEGE TAX 

What is the PGE Privilege Tax? 
Answer: The PGE Privilege Tax is a tax imposed on Portland General Electric of 1.5% on PGE's revenues in the City. PGE passes on the tax to customers as a line item on electricity bills. On a typical residential electric bill, the 1.5% tax translates to roughly $1 per month. 

Why Are PGE Privilege Tax Revenues Being Used for Street Maintenance? 
Answer: The City Street Fund pays for street lighting electricity costs. In recognition of this burden, the SSMP commits PGE Privilege Tax revenues to street maintenance exclusively. The cost of street lighting and expected Privilege Tax revenues are close and are likely to change similarly in the future. 

Is An Electricity Privilege Tax Unusual? 
Answer: No. The new Privilege Tax of 1.5% is on top of a 3.5% Franchise Fee that PGE already paid to the City. Statewide about half of cities have combined rates (franchise + privilege tax rates) above 3.5%; most of those charge 5%. In the Portland metro-area, Portland, Gresham, Troutdale, West Linn, and Woodburn all have combined rates of 5%. Thirteen of the 20 largest cities in the state charge a combined rate of 5% (or close to it, e.g., Springfield, which has a municipal utility, charges a volumetric-based rate that is roughly the equivalent of a 4.5% tax). 

I Have Electric Heat, the PGE Privilege Tax Seems Unfair. Why Are Electricity Users Being Singled Out? 
Answer: The new 1.5% Privilege Tax makes the total combined City of Milwaukie tax and franchise fee for natural gas and electricity the same (5%). So, in fact, the new tax makes the system more fair, at least when comparing residents with natural gas versus electric heat.