What is the Transportation Utility Fee (TUF)?
The Transportation Utility Fee or TUF is a fee that will be paid by all households and businesses that have a utility account with the City of Bend. The city plans to begin charging the fee this summer and phase it in over the next 3 years, raising about $5 million the first year, $10 million the second year and $15 million the third and subsequent years. The City Council can assess it without voter approval. Many cities in Oregon have a TUF to help fund their transportation system.
Why is Bend implementing the TUF?
The Transportation System Plan (TSP) identified big gaps in our transportation budget both in construction and maintenance of our streets. We need to think about that gap both from the revenue supply and revenue demand sides.
New city streets are built by developers or by the city using System Development Charges collected as developments are built. So there are funds to build streets as growth continues. Our streets are maintained using city funds, primarily property taxes, gas taxes, and electric vehicle fees. Because of the restrictions on property tax increases passed in the 1990’s the city has no ability to change property taxes more than 3% a year except with new development. The gas tax has been flat for many years. This means that funds for street maintenance are not keeping up with growth. The TUF is designed to fill this gap.
However, the city has a lot of control over how development occurs and how streets are built for new developments. Most development in Bend has been low density, single family homes requiring many streets and producing relatively low property tax per acre. Our city street standards require wide streets and too many arterials. Consequently, our streets are more expensive to maintain.
We are seeing more high density development which will provide more tax revenue per acre and require fewer streets per housing unit. If more of our growth consists of higher density development and our street standards change allowing for narrower streets, our transportation system will become more sustainable. The TUF may still be needed but we will need less revenue to maintain our streets.
There has been no public discussion about how the city could change street standards to make our streets less expensive to maintain.
Who will pay for the TUF?
Plans are to raise about $15 million per year when the TUF is fully in place in about 3 years. That amount will be split about half and half between residential and business customers. In the first year, residential customers will be charged a flat rate with single family homes being charged a slightly higher rate than units in multi-family buildings. There will be reduced fees for low income households. Businesses will be charged the first year based on their square footage. Over the next two years, the city will explore methods and collect data so charges for businesses can be based on their impact to the transportation system. This could nudge businesses to figure out ways to reduce their impact on the transportation system. There will be more community involvement, particularly from the business community, to decide how this will work. There could be similar incentives for residential customers.
To capture some of the impacts to our transportation system on our tourism industry, hotel rooms and short term rentals will be assessed a fee.
What will the TUF be used for?
TUF funds will be used to support the city’s transportation system including:
- Street maintenance (repaving, restriping, safety projects)
- Seasonal street maintenance (plowing, sweeping)
- Pedestrian and bicycle infrastructure and its maintenance
- Programs that support the transportation system as identified in the TSP including: bike and pedestrian planning, parking programs, travel demand management, and the neighborhood street safety program.
How TUF funds will be spent will be decided during the standard biennial budgeting process. Public input is part of this budgeting process.
An annual report will show how TUF funds are being spent and the rate structure will be reviewed by the city council every five years.
Bend Bikes’ Takeaways
- The city needs more funding for transportation and has few ways to raise those funds. A TUF is a reasonable approach.
- So far there has been virtually no discussion about how our transportation system can be made less expensive–standards still require wide streets and too many wide arterials.
- The city needs to concentrate on higher density development which generates more property tax revenue per acre and needs fewer streets per housing unit, making our streets less expensive to build and maintain.
- Phasing in the TUF over 3 years makes sense and using that time to figure out how to charge businesses based on their impact to the transportation system is smart.
- More discussion about how to charge residential customers based on their impact is needed.
- Charging hotels and short term rentals helps cover the costs to our transportation system of our tourism industry.
- Providing a discount for low-income customers is a good idea.
- Allocation of TUF revenue will be done through the city’s standard budget process.
As Winston Churchill may have said, “We have run out of money; now we have to think.” What do we need to think about?
- Why can’t kids walk or bike to schools and parks?
- Why do so many people drive to places that are close to their homes?
- Why is it so hard and feel so dangerous to bike across town?
- Why is it so hard and feel so dangerous to cross our arterials and collectors on foot and by bike?
- Why is traffic faster than the speed limit on our arterials and collectors?
- Why do we continue to build wide, fast, expensive streets?
As the city asks for more funding for our transportation system, these questions need to be addressed in a very public way.