Alternative Financing for City Streets Preservation

Is the SMU Right for Your City?

Presented By:

Dennis Dowdy, PE Public Works Director, City of AuburnDick McKinley, MPA, PWLF Public Works Director, City of TacomaPablo Para, PE Traffic Engineer, City of AuburnAshley Probart, AICP Legislative & Policy Advocate, AWC

Moderated by: Dan McReynolds, PE Principal, Parametrix

Alternative Financing for City Streets Preservation

Session Goals:– Present the proposed Street Maintenance Utility (SMU)

Option for financing street maintenance and operations.– Compare and contrast the advantages & disadvantages of the

Transportation Benefit District (TBD) Option vs. the SMU Option.

– Present a standard process and rate model for establishing an equitable SMU program.

– Determine which cities feel a need for legislative authorization for the SMU which is currently an AWC priority.

Our Common Street System Goals

Maintain a safe transportation system that: Provides efficient movement of goods and people Maintains and enhances our economic competitiveness Creates tangible return on investments for businesses

and citizens

Why a new funding source is needed….

281 Cities and Towns in Washington State are currently responsible for 16,421 miles of streets.

Motor Vehicle Fuel Tax (MVFT) Declining– The main source for local agency street maintenance has been diminishing

over time due to inflationary pressures, increasing fuel costs and improved vehicle fuel efficiency.

Local General Fund Options (Sales Tax, Property Tax, Real Estate Excise Tax etc.)

– Declining general fund revenues and other city service needs have left most agencies unable to supplement declining MVFT revenue.

Transportation Benefit District– Currently the only other viable option for local agencies to fund

transportation needs has limitations and may not work for all cities.

Transportation and Economic Development

Transportation or Economic Development—

Which Comes First?

Does good transportation create economic development or does economic development drive the need for good transportation?

It seems like a classic “chicken or egg” question. But the relationship between transportation and economic development is a more complicated matter – one does not necessarily come before the other.

Transportation and economic growth are interrelated and interdependent. Transportation development and economic development go hand in hand.

A good transportation system doesn’t guarantee economic development, but it can help create an environment that fosters economic growth. In turn, economic growth can create a need for increased transportation services.

One thing’s for certain, transportation does have a constraining impact on economic development.

Source: Ernest Perry, Ph.D., Missouri Department of Transportation, June 2004

OR

What is a Street Maintenance Utility?

The Street Maintenance Utility is a Utility. Fees are equitably assessed based on land use intensity, trip

generation and heavy vehicle impact factors. Revenue goals are set by each agency based on need. Requires voter approval only for initial establishment. Revenue can be used for O&M and preservation of street system,

including ADA. Allows rate reductions for low income, seniors and land uses

implementing TDM strategies. Allows independent trip generation rate calculations.

What is a Transportation Benefit District?

Description– Revenue option for funding transportation improvements– Available to cities & counties (used by Des Moines, Edmonds, Lake Forest Park, Olympia, Prosser,

Seattle, Shoreline, Snoqualmie and counting)– Commercial vehicles are exempted from increased Vehicle License fees– Project oriented, TBD automatically dissolves upon completion of defined projects– Has several accountability measures

Financing options- Councilmanic– Up to $20 motor vehicle licensing fee Voter approved up to $100– General obligation bonds

Up to 1.5% of TBD assessed valuation

Financing options – With voter approval (simple majority)– Up to $100 motor vehicle licensing fee– Up to .2% sales and use tax– Property taxes in excess of one-percent limit (for one year period only)– Fees or charges imposed on commercial construction or reconstruction– Road tolls– General obligation bonds

Up to 5.0% of TBD assessed valuation

Why SMU if we have the TBD?

Creates a separate governmental entity to administer

Can require ongoing public votes. Not equitable distribution since it exempts

trucks in license fees and property taxes don’t represent traffic impacts.

Revenue may not cover program need and is dependant on voter reauthorizations.

Simpler assessment & collection process than a SMU.

Less staff is generally required to establish & operate than a SMU.

TBDSMU Administered by existing city government structure Requires only one public vote. Most equitable distribution of burden based on

traffic impacts of individual land use types. Rates can be set based on actual needs. Revenue is consistent and reliable based on system

needs. Allows rate reductions for low income, seniors and

land uses implementing TDM strategies Allows independent trip generation rate

calculations

Establishing an SMU in your City or Town

New state legislation is needed to authorize the SMU option. Once authorized, local agencies would generally need to do the following under the drafted legislation:

– A public vote must be held approving an SMU.– Advisory Board is formed consisting of stakeholder

representatives.– Define level of service goals and estimate costs for

implementing the SMU.– Establish utility rates, assessment and collection procedures.

SMU Rate Schedule Auburn’s Model

City of Auburn Background Data– 99 Centerline miles of Arterial/Collector Roads– 115 Centerline miles of Local Residential Roads– 91 Traffic Signals– Population over 70,000– Over 27,000 residential units (SF, condo’s, apart., etc)– Heavy freight and pass through traffic.

Model Flexibility– Based on existing Impact Fee Structure– Auburns model is easily adapted for use by other agencies

with minimal adjustments for local land use and traffic data.

Making Auburn’s ModelWork for your City

Step 1: Data Collection– Land Use Data

Residential (Dwelling Units) Non-residential (KSF)

– Local Traffic Data Heavy Vehicle Impact Factor (1450 in

Auburn Model) based on WSDOT pavement manual.

Average Trip Length (3 miles in Auburn Model)

– Program Burden Annual transportation system

maintenance costs

Residential TOTAL Commerical-Restaurant TOTAL

APARTMENT 5962 FAST FOOD RESTAURANT 45

CONDOMINIUM 2228 DINE IN RESTAURANT 49

DUPLEX 881 COFFEE STAND 17

FOURPLEX 781 Commercial-Retail/Shopping TOTAL

LOW INCOME HOUSING 157 DRUG STORE 5

MOBILE HOME 2527 GROCERY STORE 10

SINGLE-FAMILY 13923 AUTO SALES 37

TOWNHOME 471 RETAIL 500

TRIPLEX 79 Commercial-Office TOTAL

SENIOR HOUSING 27 MEDICAL OFFICE 74

ASSISTED LIVING 774 Industrial TOTAL

Commercial-Services TOTAL MANUFACTURING 82

HOTEL 6 WAREHOUSE 75

MOTEL 2 PUBLIC STORAGE 5

DAY CARE 36 Unknown TOTAL

LIBRARY 1 UNKNOWN 1528

POST OFFICE 1 Commercial-Institutional TOTAL

GAS STATION 16 ELEMENTARY SCHOOL 12

MINI MART 7 MIDDLE SCHOOL 4

AUTO CARE 62 HIGH SCHOOL 4

HEALTH CLUB 5 COMMUNITY COLLEGE 1

CAR WASH 5 NUSRING HOME 3

AGRICULTURE 2 CHURCH 25

CEMETARY 1 CHURCH WITH SCHOOL 3

FIRE STATION 5 HOSPITAL 7

MOVIE THEATER 2 FINANCE INSTUTIONS 18

RECREATION 6

SERVICE 443

SHIPPING COMPANIES 4

GOVERNMENT FACILITIES 13

MUSEUM 1

TRASNPORATION 26

TELECOMUNICAITON 1

Making Auburn’s ModelWork for your City (cont.)

Step 2: Populate SMU spreadsheet and sort into groups by Total Impact Score

– Policy Questions: How Many Rate Groups

per category? What is burden

distribution between Residential and Non-Residential Categories?

Step 3: Calculate your SMU Rates

SMU Land Use CategoriesITE Land Use Code

Unit of MeasureTotal

Impact Score

Total Units Per Land Use

Types

Annual SMU Rate (Per ksf or

du)

Annual SMU Burden

Non-Residential ksf 75% 750,000.00$ Non-Residential Level I 30.9 2038 1.76$ 3,592.47$ Nursing Home 620 ksf-beds 15.7 45Assisted Living 254 ksf-beds 15.9 387Espresso Stand NA ksf/site 17.7 34Self Service Car Wash 947 ksf/stall 33.6 40Church 560 ksf-GFA 34.2 250Day Care Center 565 ksf-GFA 39.8 72Automated Car Wash 948 ksf-GFA 40.2 10Junior/Community College 540 ksf-GFA 40.3 500Hospital 610 ksf-GFA 41.1 700Non-Residential Level II 75.3 1446 4.29$ 6,205.09$ Library 590 ksf-GFA 62.5 5Motel 320 ksf-rooms 67.4 30Hotel 310 ksf-rooms 70.4 225Elementary School 520 ksf-GFA 87.1 300

General Office710, 715,

750 ksf-GFA 89.1 886Non-Residential Level III 152.2 1970 8.67$ 17,088.33$ Auto Care Center 942 ksf-GFA 119.9 124Free Standing Discount Store 813, 815, ksf-GFA 130.5 10Furniture Store 890 ksf-GFA 141.4 50Specialty Retail Center 814 ksf-GFA 151.1 1000Hardware/Paint Store 816 ksf-GFA 152.8 100Middle/Jr High School 522 ksf-GFA 137.5 200Government Office 730 ksf-GFA 166.5 50Drive-in Bank 912 ksf-GFA 181.8 36High School 530 ksf-GFA 188.7 400Non-Residential Level IV 319.6 923 18.21$ 16,809.97$ Movie Theater 444, 445 ksf-GLA 213.6 200Car Sales -New 841 ksf-GFA 234.8 370Health Club 492, 493 ksf-GFA 278.1 50Medical Office 720 ksf-GLA 287.8 148Service Station 944 ksf-VFP 399.7 20Supermarket 850 ksf-GFA 398.9 100Convenience Market 851 ksf-GFA 424.3 35Non-Residential Level V 505.6 12320 28.81$ 354,945.15$ Industrial Park 130 ksf-GFA 452.9 2000Warehouse 150 ksf-GFA 460.5 7500General Aviation Airport 22 ksf/Based aircraft 501.1 275Pharmacy w/drive through 881 ksf-GFA 514.0 4Pharmacy no drive through 880 ksf-GFA 518.5 6Service Station w/minimart 945 ksf-GFA 526.5 35Mini-Warehouse/Storage 151 ksf-GFA 526.6 500Heavy IndustryNon-Residential Level VI 1287.9 4788 73.38$ 351,358.98$ Light IndustryHigh Turnover RestaurantManufacturingRestaurant

Residential-Level I 18.7 2554 6.39$ 16,313.05$ Senior HousingMobile Home in MH ParkResidential-Level II 28.0 24482 9.55$ 233,686.95$ Condo/TownhouseApartments

Making Auburn’s ModelWork for your City (cont.)

Sample Rates: $1M Program

Is the SMU right for your City?

We have seen that depending on the makeup of your city, the variety of land uses, and the dependency of each land use on the freight industry greatly influences whether a revenue source is equitable.

We have seen that in many cases although a TBD is a simpler process, it does not provide for an equitable distribution of the burden to keep good roads.

We are aware that in order to obtain an alternative source of financing we need our legislators to understand the advantages that the SMU provides to our citizens.

Now therefore; Which method do you feel is best for your jurisdiction.

Question & Answers