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2011-2942-Minutes for Meeting June 22,2011 Recorded 7/7/2011COUNTY NANCYUBLANKENSHIP,F000NTY CLERKS ~+y iQ+~~7947 COMMISSIONERS' JOURNAL 07/07/201108:30:08 AM II IIIIII~IIIIIIIIIII IIII III 2 11-2842 Do not remove this page from original document. Deschutes County Clerk Certificate Page L Uj 0 Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org MINUTES OF WORK SESSION DESCHUTES COUNTY BOARD OF COMMISSIONERS WEDNESDAY, JUNE 229 2011 Present were Commissioners Tammy Baney, Alan Unger and Anthony DeBone. Also present were Dave Kanner, County Administrator; Erik Kropp, Deputy County Administrator; Peter Gutowsky, Nick Lelack and Peter Russell, Community Development; Tom Blust and George Kolb, Road Department; and three other citizens, including Hillary Borrud and Richard Coe of The Bulletin. Chair Baney opened the meeting at 2: 00 p. m. 1. Discussion of Small Wind Energy Text Amendment. Peter Gutowsky said they had an opportunity to talk with Commissioner DeBone about some of his concerns about the text amendment. Commissioner DeBone referred to item F, approved wind generators, and voiced concern about the wording, "all wind energy systems" having to be approved by the Oregon Department of Energy or the Energy Trust. Chair Baney asked about how flexibility can be added without compromising safety. Mr. Gutowsky said that the issue regarding public safety speaks mostly about net metering, and the energy providers will have certain requirements. The system needs to be certified if there is a power outage and the utility is working on a downed power line, the independent unit might continue to keep working and be a safety hazard for workers. If the unit is not net metering or is off the grid, that would not be a problem. Commissioner DeBone is uncomfortable about the County having jurisdiction. That should be covered by the utility company, so it is not necessary to have it in Code. Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 1 of 7 Pages Commissioner Unger stated that there are systems already engineered for this. Those who want to experiment can already do it if it is less than thirty feet tall Taking out the section might create a potential safety problem. Commissioner DeBone asked if anyone could do something if it is less than thirty feet tall. Mr. Gutowsky said the purpose of the Code is to address accessory units, and Code allows just thirty feet. This allows people who want to go above that height with certified systems. In any case, they would have to work with the Energy Trust. It is up to the Board whether this clause is felt redundant. Commissioner DeBone stated that he is not comfortable with naming these entities in Code. Laurie Craghead said it is probably hard to do much if the structure is less than thirty feet. Mr. Gutowsky stated that the quality control is in place if someone wants to net meter are very robust. The structure needs to be compatible with building code and permitting. Chair Baney asked if there might be other groups out there who could handle the certification. Commissioner DeBone said that he feels there is a lot more potential danger with the structure itself and not the net metering part. He feels that there is safety already built in and the utility company will be very involved in this. He asked if there is other language in Code that is specific about certifications of any kind. Ms. Craghead said that with Measure 49, it is better to start out more restrictive and make something less restrictive over time if appropriate. You don't want someone to think you are taking something away. Chair Baney asked what role the State has in this kind of thing. Mr. Gutowsky replied that you have to come to terms with two potential users. Some will want to net meter and there will be mandatory requirements from the utilities and others. The other is if someone wants to be off the grid and is not contributing to power outside their property. The question is whether it is necessary to certify these units. Chair Baney said that if you are not going to tie into the grid, you should have to abide by the structural requirements but should not have to be a part of one of the certified systems. Mr. Gutowsky stated that most people would buy a tested, certified system anyway. Mr. Lelack said that all wind energy systems have to comply structurally, so there are some safeguards built in. Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 2 of 7 Pages Chair Baney is comfortable that if someone has a stand-alone unit, not tied into the grid, and meets permitting, they should be able to do this. If it is going into the grid, other requirements should be in place. She asked if this wording is a possibility. Commissioner Unger feels that to create less problems with neighbors and others, they need the predictability that a certified unit would provide. Mr. Lelack said that unless a view corridor is otherwise protected, it would not matter what type of unit goes up. Commissioner DeBone asked about removing the system at some point. He asked what "removed" means. Ms. Craghead said that the same requirements are there for cell towers that are no longer being used. Ms. Craghead said that they don't want to end up with a bunch of rusting towers. Commissioner DeBone said that if they bring it to the ground and it is out of sight, it should be left alone. Commissioner Unger agreed, as long as the unit is out of view. Deliberations will begin at the Board business meeting on Monday, June 27. 2. Discussion of Road Maintenance Funding Options. Dave Kanner said the topic of road maintenance funding has come up for at least the past five years. He introduced some ideas in this regard (a copy of which is attached for reference). Cost-cutting measures, including staffing reductions, have occurred but it is still a very big problem. The increased tipping fee and the SDC's have not done well with the economy in the bad shape that it is. There is one more year of the SRS money at a significantly reduced level, with increasing costs for road maintenance. He feels there needs to be modes identified to cover these costs. It may mean gravel roads instead of paved roads. Many of them were paved by local improvement districts, and the property owners won't be happy if the County won't continue to maintain them. So, local roads that are paved but not paid by LID's should be analyzed. Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 3 of 7 Pages Tom Blust provided a pie chart showing road fund revenues at this point. Some of the funding streams may be going away or will remain greatly reduced. Another big concern is the motor vehicle revenue, the largest amount, has been reduced. This means to him that this is not that reliable either. He discussed some of the options, and how motor vehicle revenue is distributed statewide. With the remaining dollars at hand, they have to be careful with what is left. Mr. Kanner said all the sealing is being contracted out. Most contractors do not have the equipment or work force necessary for this. Commissioner Baney said it all needs to be viewed as a package and not eliminate what is already there. Tom Blust spoke about the transportation and utility fee, which would be implemented by County ordinance. Mr. Kanner said the option he started with has to do with letting some rural roads go to gravel. There are about 280 miles, and 95 miles of those were improved through a local improvement district. (He referred to an oversized map at this time) Mr. Blust noted that some roads seem remote but may access a large subdivision or are off other maintained roads. She asked if there are roads that are isolated and may not need the same attention. Mr. Blust stated that it would not be a huge savings to ignore some of these roads, and ranchers or farmers depend on them even though they do not have a lot of traffic. Chair Baney feels that to let roads go is not an option she wants to pursue. Commissioner Unger wants to find other funding sources for the road network that is there now. Chair Baney says that perhaps a group can look at this and ask the community what is important to them, and to give their ideas on how to handle the shortfalls. Let them analyze the options, or maybe there are other options not yet considered. There might be a variety of options needed to come up with the amount of funding required. Commissioner Unger feels the education of the public is critical. It is a system and should be viewed in that way. There is a point when people will have to decide what standard they are willing to pay for. They need to understand what it costs and where those dollars go. Commissioner DeBone asked about the timeframe that should be pursued. Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 4 of 7 Pages Peter Russell said that the transportation plan is a topic of discussion right now and maybe this could be tied into that. There is $250 million in the TSP that needs funding. Mr. Blust stated that it is for modernization and is a completely different pot of money. Chair Baney wants to make sure the timing is such that if they need to go on the ballot, it will be feasible. Mr. Kanner stated that the people who worked on the transportation plan may be willing to work on this type of project. Chair Baney suggested that it should include the cities, COACT and the State, depending on the scope of the ideas. The County will likely end up having to take the lead. Commissioner DeBone asked if they are looking at just finding the $3 to $4 million needed or if they want to consider going back to gravel roads. He is not sportive of doing that, either, and does not feel the cost savings would be adequate. Stable and adequate revenue sources need to be found. They are talking only about maintenance and preservation, not new roads. Mr. Kanner stated that the overlay projects are the biggest items, and many of these are contracted out. He added that ODOT's projections or estimates are not reliable, and collections of gas tax revenues are far below what was expected. Mr. Kolb said when the funding comes in, they analyze which areas are the most critical to address first. Sometimes they have to carry over from one year to the next to get a bigger project done within a certain timeframe. Also, the longer you wait to fix a road, the more expensive the work becomes. Commissioner Unger said there is more to it than just preservation and maintenance. There is the bigger picture of increased population, how to handle local roads when the major highways are changed or improved, and how to deal with the development of industrial or commercial areas to encourage economic opportunities. He does not feel that the Board will be able to push forward on any of the options without the buy-in of the public, and that will take a group to study it and educate citizens. In the meantime, the system will continue to decline. Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 5 of 7 Pages Commissioner DeBone would like to have a work session with such a committee to be sure they know the task. Commissioner Unger feels that a Commissioner should be a part of the committee. The others agreed. They felt that representatives of the cities or other groups should be brought in when appropriate. Commissioner Unger asked if there are any sources of funding within the County that might help in the short-term. Mr. Kanner said whatever is available would be just a Band-Aid, and would take away from other programs that need adequate funding. Commissioner DeBone asked if the local improvement districts would be open to contribute more to their roads. Mr. Blust said that they collect already to maintain their roads, and not everyone could or would be able to pay more. This is a statewide problem that affects some areas in a lot more serious ways than others. George Kolb asked how much time should be spent on this since some of it may end up before the voters, who are not open to increased taxes too much at this time. Chair Baney said the transient room tax issue that went down included some concerns that muddied the waters, along with the collapse of financial markets about that time that created a negative economic environment. 3. Update of Commissioners' Meetings and Schedules. Chair Baney does not have to be in Salem next Monday night. The legislature is wrapping up this year's session. The Commissioners discussed the various meetings on their calendars for the balance of the week and month. 4. Other Items. No other items were discussed. Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 6 of 7 Pages The meeting adjourned at 4:15 p.m. DATED this Day of 2011 for the Deschutes County Board of Commission s. Tammy Baney, Chair Anthony DeBone, Vice Chair ATTEST: aLu' ~t~ 6" - Alan Unger, Commissioner Recording Secretary Minutes of Board of Commissioners' Work Session Wednesday, June 22, 2011 Page 7 of 7 Pages Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org WORK SESSION AGENDA DESCHUTES COUNTY BOARD OF COMMISSIONERS 2:00 P.M., WEDNESDAY, JUNE 22, 2011 Please note later start time! Discussion of Small Wind Energy Text Amendment - Peter Gutowsky 2. Discussion of Road Maintenance Funding Options - Tom Blust; Dave Kanner 3. Update of Commissioners' Meetings and Schedules 4. Other Items PLEASE NOTE: At any time during this meeting, an executive session could be called to address issues relating to ORS 192.660(2) (e), real property negotiations; ORS 192.660(2) (h), litigation; ORS 192.660(2)(d), labor negotiations; or ORS 192.660(2) (b), personnel issues. Meeting dates, times and discussion items are subject to change. All meetings are conducted in the Board of Commissioners' meeting rooms at 1300 NW Wall St., Bend, unless otherwise indicated. Ifyou have questions regarding a meeting, please call 388-6572. Deschutes County meeting locations are wheelchair accessible. Deschutes County provides reasonable accommodations for persons with disabilities. For deaf, hearing impaired or speech disabled, dial 7-1-1 to access the state transfer relay service for TTY. Please call (541) 388-6571 regarding alternative formats or for further information. N H I i Ly CN _ E W C ! i O L a I I I U N N L 4 C i v 'Q N CO I ; a Vo o CL TES OAK Department of Administrative Services CA A Dave Kanner, County Administrator 1300 NW Wall St, Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 www. co. deschutes. or. us June 15, 2011 TO: Board of Commissioners FROM: Dave Kanner RE: Road maintenance funding Discussions on the subject of road maintenance funding in Deschutes County have been going on for at least five years. These discussions gained a sense of urgency in 2007, when it became apparent that the federal money from PL 106-393 would be lost and that measures would have to be taken to fill a $3 million gap in our road maintenance budget. (Note that even with the federal money, the County was not fully funding its maintenance and preservation needs.) In the spring of 2007, the Board of Commissioners endorsed a four-pronged road maintenance funding strategy that included: 1. Raising the solid waste tip fee and dedicating revenues from the increase to road maintenance; 2. Imposing a transportation systems development charge; 3. Increasing the transient lodging tax and using the increase to maintain roads with a substantial purpose of supporting tourism; and 4. Budget cuts. At the time of this decision, it was expected that the $5 per ton tip fee increase would generate about $900,000 per year for road maintenance and that the SDC would generate $1 million to $2 million annually. It was projected that an increase in the County TLT from 7% to 9% would generate $800,000 (assuming it survived an inevitable legal challenge from the Oregon Lodging Association, which we believe it would have) of which $500,000 would have been dedicated to road maintenance. These decisions and projections were derailed by the recession and the collapse of the housing market. The tip fee increase, because of the sharp decline in solid waste tonnage, has generated only about $500,000 and subsequent Boards have voted to allow the Department of Solid Waste to keep half of that. The SDC has generated about $200,000 per year and the proposed TLT increase was turned down by the voters in the November 2008 election. The Road Department went forward with budget cuts, eliminating 4 FTE Quality Services Performed with Pride positions and reducing the preservation/overlay budget by 60%. Compounding the problem, the cost of asphalt, oil and gasoline have skyrocketed, severely impacting the Road Department's budget. In the meantime, since those discussions of four years ago, there were two positive developments that delayed this continued dialogue about road maintenance funding. First, in October 2008, Congress re-authorized the Secure Rural Schools Act, although at a much lower funding level, which brought in more than $2 million for road maintenance funding in FYs 2009, 2010 and 2011, and which will bring in about $1.3 million in FY 2012. Next, the 2009 session of the Oregon Legislature approved a 6-cent per gallon increase in Oregon's gas tax, along with increases in vehicle registration fees. ODOT's projections at the time indicated that these increases would bring another $1 million annually to Deschutes County. Unfortunately, these projections have not come to pass. Because of the spike in gas prices and the recession, people are driving less and purchasing more fuel-efficient vehicles. The result is that the increase in the gas tax has generated significantly less revenue than had been hoped. State motor vehicle revenue for FY 2011 is expected to be about $1 million below budget. Should this trend continue into FY 2012, the County will be forced to reduce major preservation and overlay projects next year. Our ability to do preservation and overlay projects would be severely impacted in FY 2013. The cost of fully funding annual preservation and overlay work is about $5.1 million per year. "Fully funding" maintenance and preservation activities means performing repair, patching and crack sealing activities on all paved County roads so as to maintain a pavement condition index of not less than 70, which is considered the line between "good" and "fair" condition, and to overlay all arterial and collector roads on a 20-year cycle. Attachment 1 is a five-year preservation and overlay project list assembled by Tom Blust. As you can see, it shows that we should be spending approximately $5.1 million annually on these projects. The amount budgeted in FY 2012 is $2.8 million. (The actual amount spent might be less than that. As noted above, state gas tax revenues will likely come up short of budget and money that would have otherwise been spent for preservation will instead be used for routine maintenance.)'. This dilemma is further compounded by the astounding cost increases in oil, gasoline and asphalt, the basic material components of road maintenance. The cost of overlaying one mile of road in FY '05 was $124,000. In FY '08, the cost was $222,000. Because the recession has created a more favorable bidding climate, the cost of this work - all of which is contracted out to the private sector - has actually come down a little and is currently estimated at $210,000. It is unlikely these costs will ever return to FY '05 levels and are in fact likely increase over time. Tom has previously provided the Commissioners and the Budget Committee a chart (attachment 2) that shows asphalt ' The $5.1 million figure is derived as follows: All arterials and collectors should be overlaid (with the use of full-depth reclamation on approximately 1/3 of these roads) every 20 years. There are 414 miles of such roads that we maintain. We should be overlaying 20.7 miles per year. The current average per-mile cost of an overlay is $210,000. The current average per-mile cost of FDR is $320,000. 20.7 x 2/3 x $210,000=$2,898,000 and 20.7 x 1/3 x $320,000 = $2,208,000. $2,898,000 + $2,208,000 = $5,106,000. Memo to BoC re: Road Maintenance Funding Page 2 June 15, 2011 prices far outstripping normal inflation and certainly increasing at a far greater rate than any of our revenue sources; particularly our largest revenue source - state gas tax - which, while increasing in gross dollars, is decreasing on a per registered vehicle basis, from $43.37 in FY '00 to $39.82 in FY '08 and on a per capita basis from $54.97 to $49.52 over that same period. It should also be noted that roads that are not maintained and overlayed on a regular basis will eventually deteriorate to the point at which they have to be replaced. As a rule of thumb, the cost of replacing a road is about four-and-half times higher $1 million per mile - than the cost of overlaying a road. Decisions made today will have huge implications for future generations of taxpayers and road users. Unfortunately, the Board's revenue-raising choices are limited. There is a moratorium on the imposition of new local gas taxes as part of the 2009 increase in the state gas tax. The County could consider a local vehicle registration fee, but with the state having just raised vehicle registration fees, this may not be an attractive option. Included with this report is a list of funding options prepared by Tom Blust (attachment 3). This includes the funding options already implemented. Note that in the case of a property tax, under state law, 50% of a county local option levy for road maintenance must be shared with the cities and road districts in the county. In the case of a levy in the unincorporated area only, 50% would have to be shared with the road districts. If Deschutes County were to create a special road district, it would have to exclude the cities, which are already considered road districts under state law, and any other existing road districts. Thus the tax rate for a special road district would have to be extraordinarily high. A 2008 memo from legal counsel explaining this is further detail is attached. (Attachment 4.) Also attached is a five-year projection of Road Department revenues/expenditures. This projection (attachment 5) assumes that the Secure Rural Schools money will expire after FY 2012 and that we will return to the old funding formula based on actual timber harvest. It also assumes that ODOT projections for future-years motor vehicle revenues are accurate. I must emphasize that so far, the ODOT estimates have in fact been well over actual revenues. Also attached is a five-year projection based on "expected revenue," an extrapolation of our actual revenue in the current year. (Attachment 6.) With the above assumptions, Deschutes County is able to budget about $2.8 million annually for major preservation and overlay projects. The annual need is estimated at $5.1 million, thus creating a gap of $2.3 million that will only grow over time as maintenance and construction costs increase. If we use the "expected revenue" projections, between $1.1 million and $1.5 million would be available in future years, thus creating an even larger gap. I continue to believe that all future scenarios for the Road Department must involve significant budget cuts; cuts that I do not believe can be achieved through additional staff reductions or privatization. The only way to realistically achieve significant savings is to Memo to BoC re: Road Maintenance Funding Page 3 June 15, 2011 reduce road maintenance activities and expenditures and, as politically unpopular as such a move might be, that necessarily means allowing certain paved roads to become gravel roads. The cost of maintaining a gravel road, over time, is about one-half the cost of maintaining a paved road. While it is difficult to determine exactly what the cost savings would be from allowing local roads to return to gravel, one way of looking at it, simply as an intellectual exercise, is as follows: • Approximately 40% of the paved roads currently maintained by the County are classified as local roads (280 of 694 miles). • The fully loaded average annual cost of routine maintenance activities on all roads is approximately $10.2 million. (That's the total for all personnel and materials budgeted in the current fiscal year and a number that, for planning purposes, we assume is adequate for one year's worth of road maintenance.) • If the cost of maintenance activities on 40% of our roads is reduced by one-half, the savings average $2.04 million annually. ([$10,200,000 x.4] x.5 = $2,040,000) • The average annual cost savings from returning a paved road to gravel, on a per mile basis, is $7,300. ($2,040,000 - 280) However, there is a cost to removing a pavement surface (even a badly degraded one) and replacing it with a drivable, four-inch gravel base. That cost is estimated at $50,000 per mile. If that cost is amortized over 25 years at $2,000 per year and included in the savings figures above, the average annual cost savings is $5,300 per mile; still a very significant figure. Unfortunately, these costs cannot be determined on a straight-line basis, since the cost of maintaining a local road is somewhat less than the cost of maintaining a collector or arterial. Similarly, the cost of maintaining a road near Terrebonne, which needs to be plowed less frequently in the winter, is lower than the cost of maintaining a road near La Pine. There are other variables related to striping, shoulder maintenance, signage, etc., that will vary widely from road to road. As such, this report deals in averages rather than specifics. Additionally, the cost savings noted above assume that we would allow all 280 miles of local roads to return to gravel, which, while technically possible and administratively feasible, is probably not politically sustainable (although that's the Board's call to make). I have no doubt that even raising the possibility of letting paved roads return to gravel will raise hackles. At the same time, we face persistent public demands for government to operate less expensively. This is what less expensive road maintenance operations look like: Gravel roads rather than paved roads. I urge that you not delay a decision on whether to pursue this particular cost-reduction action. Although the effects of the decision will not be seen on the ground for many years out into the future, the decision cannot be put off to a future Board. That's because the process by which roads would be returned to gravel involves a present-day decision to Memo to BoC re: Road Maintenance Funding Page 4 June 15, 2011 stop patching and crack-sealing such roads, allowing them to deteriorate and then, when they reach the point of being undrivable, tearing them up and putting down gravel. That process could take ten years or more (during which time, property owners along those roads might become very unhappy with the condition of "their" roads; another political consideration). At this point, there are two things I need from the Board of Commissioners before moving forward: 1. A decision on allowing local roads to return to gravel and direction to staff to develop a list of local roads that are the most likely candidates for such action, with, if possible, estimated savings for each identified road. 2. Direction as to whether to pursue any other revenue options. I look forward to discussing this further with you in a work session. 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SDC's must be established by resolution or order adopting the calculation methodology and a list of the improvements to be funded with the SDC fees. A public hearing and 60 day legal challenge period is required prior to adoption. Adoption of SDC's does not require a vote of the public. Use of SDC's is restricted to capacity increasing capital improvements. Other jurisdictions currently levying: At least 9 counties in Oregon have implemented SDC's. • Solid Waste Hauler Transportation Fee Implemented in 2008 - tipping fee increase of $5 per ton Estimated annual revenue: Revenue history: FY2009 $861,470 FY2010 $708,567 FY2011 $291,740 (Budget Committee decision to reduce transfer to Road Fund by half) FY2012 $285,773 (budgeted) Other jurisdictions currently levying: No other counties currently assess a transportation fee on solid waste. Transportation Funding June, 2011 Page 2 of 4 DESCHUTES COUNTY TRANSPORTATION FUNDING POTENTIAL LOCAL FUNDING SOURCES • Transient Lodging Tax Proposed TLT increase was turned down by voters in the November 2008 election. Estimated annual revenue: Current rate of 7% generates $2,626,000 (11-12 estimate). An increase of 2% (9% total) would generate additional revenue of $750,000 per year (current law may prevent these funds from being used for road purposes). Statutory authority: ORS 320.300 to 320.350 (note: ORS 320.350 imposes a moratorium on local transient lodging tax rate increases with certain exceptions) Other jurisdictions currently levying: No counties currently levy a room tax for transportation purposes. • Local Gas Tax Estimated annual revenue: $0.01 per gallon gas tax = $800,000 per year (note: County's share would depend upon revenue sharing agreement with the cities). Statutory authority: Oregon constitution Art. IX Section 3a, ORS 319.010 to 319.430. Gas tax must be approved by the voters (ORS 203.055) and is then imposed by ordinance. Collection of tax is administered by the State. Note: 2009 legislature imposed a 4-year moratorium on city and county gas tax ordinances and required voter approval of such taxes after January 1, 2014 (ORS 319.950). Other jurisdictions currently levying: Multnomah County ($0.03), Washington County ($0.01), there are also 14 cities that levy a gas tax. • Local Vehicle Registration Fee Estimated annual revenue: Dependent upon fee. The County currently has 199,254 registered vehicles. A registration fee of $15 (biennial registration period) would yield Transportation Funding June, 2011 Page 3 of 4 $1,494,000 per year. Under state law 40% of the collected fee goes to the cities within the county unless the cities agree to a different percentage. 60% of $1,494,000 = $896,000 per year. Statutory authority: ORS 801.040 to 801.041, and 803.445. Registration fee must be a whole dollar amount and cannot exceed the state fee (currently $54 biennial). Fee must be approved by voters and established by ordinance. Other jurisdictions currently levying: Multnomah County adopted a $38 (biennial) vehicle registration fee in 2009 to help fund the Sellwood Bridge replacement. Aggregate Fee (Natural Resource Transportation Fee) Estimated annual revenue: $300,000 per year @ $0.15/ton (based on DOGAMI estimate of 2,000,000 tons per year consumption in Deschutes County). Statutory authority: ORS 203.035 to 203.055. Must be approved by the voters and imposed by County ordinance. Other jurisdictions currently levying: Columbia County ($0.15 per ton) fee is levied on the transportation of aggregate into or within the County. • Transportation Utility Fee (Road User Fee) Estimated annual revenue: Dependent upon fee structure. $1 per month (single family dwelling) _ $750,000 per year (county-wide) or $250,000 (unincorporated only) Statutory authority: Fee implemented by County ordinance. Monthly fee charged to residents and businesses (similar to sewer or water fee) used for road maintenance. Fee is based on type of dwelling or business and estimated trips generated by usage. Other jurisdictions currently levying: A number of cities, but currently no counties, have implemented a transportation utility fee Transportation Funding June, 2011 Page 4 of 4 • County Service District for Roads Estimated annual revenue: Dependent upon funding method. A rural district (unincorporated area) tax levy rate of $0.53 would generate $3.0 million (based on FY 10-11 taxable assessed values) Statutory authority: ORS 451.010 to 451.620. Requires vote to form district. May assess service or user charges, connection charges, district ad valorem taxes, issue bonds, local option taxes or any combination of these. Other jurisdictions currently levying: Washington County • Property Tax (Local Option Tax) Estimated annual revenue: A county-wide rate of $0.18 would generate $3.0 million. A rural-only rate of $0.53 would generate $3.0 million. (based on FY 10-11 taxable assessed values) Statutory authority: ORS 280.040 to 280.145. Must be approved by the voters. Tax can only be authorized for 5 years or, if for a capital project, the expected useful life of the project up to a maximum of 10 years. ORS 368.705 to 368.710 - 50% of the tax shall be apportioned to cities. Other jurisdictions currently levying: ? • County Road Bonding Act Estimated annual revenue: Bond amount specified by governing body. Statutory authority: ORS 370.010 to 370.240. Authority to issue bonds must be decided in an election. Funding amount needed for redemption and interest payments on outstanding bonds is added to the general levy of taxes (levied upon all taxable property within county). Money raised under this authority must be used for the construction and maintenance of permanent roads in the county. Other jurisdictions currently levying: /~ki Tl~r~l~rtEt1T Memo to Dave Kanner RE: Road Districts October 28, 2008 Page 1 of 4 DESCHUTES COUNTY LEGAL COUNSEL MEMORANDUM -C CONFIDENTIAL TO: Dave Kanner RE: County Local Option Levy for Roads CC: Mark Pilliod FROM: LAURIE E. CRAGHEAD Assistant Legal Counsel W EA. 6593 DATE: October 28, 2008 FILE NO.: In September, Mark forwarded me your e-mail with your various questions regarding various alternatives for the County seeking additional real property tax revenue for funding construction, maintenance and repair of County roads. At that time, I was able to answer some of the questions but needed to do additional research on others. I apologize for taking so long to respond. Split Region Levies One question was whether or not the County could seek a local option levy that applied only to properties in the unincorporated areas of the County. The answer is, "Yes, maybe." At first glance, state law appears to prohibit differing taxing regions within the boundaries of a single taxing authority. Article 1, Section 32 of the Oregon Constitution requires "No tax or duty shall be imposed without the consent of the people or their representatives in the Legislative Assembly; and all taxation shall be uniform on the same class of subjects within the territorial limits of the authority levying the tax." Additionally, ORS 280.060 requires uniformity in the application of local option levies. In Jarvill v. City of Eugene, 289 Or 157, 613 P.2d 1 (1980), the Oregon Supreme Court, however, found that the constitutional provision does not prohibit differing taxing regions so long as the state or local government has findings as to why the "class of subjects" are different and that the difference in class of subject justifies the difference in the tax application. In that case, the City of Eugene citizens passed a city charter amendment allowing the city council to establish a downtown taxing district. !d. at 159. The city council then created such a district and adopted an ordinance calling for an ad valorem tax only on the property in the downtown area. Memo to Dave Kanner RE: Road Districts October 28, 2008 Page 2 of 4 The Court found that the tax did not violate the Oregon Constitution despite other similar property within the city not being taxed. According to the Court, because the purpose of the tax revenues from this new district was to revitalize the city's downtown area, the class of subjects could be limited to the downtown properties because those properties being taxed were located to uniquely benefit from the tax revenue and share the same unique conditions that necessitated the tax. Id. at 181. Therefore, the Jarvill case provides the "yes" in answer to whether the County could establish a local option levy for road funds that applies only outside the incorporated areas of the County. That case also provides the "maybe" in that the County would have to include in the order findings as to why the unincorporated area has conditions that are unique from conditions inside cities and the county would have to show that the unincorporated areas would uniquely benefit from the tax that would not be applied countywide. At first glance, the findings would appear to be simple in that the roads proposed to benefit from the revenues from the new tax are uniquely located outside the limits of any of the cities. An argument could be made, however, that city residents drive on the county roads as well resulting in a benefit to a class of subjects other than just the property owners in the unincorporated areas. Although this may be true for some property owners within incorporated areas, the frequency of those property owners using those rural roads is not as significant as the use of those roads by the rural property owners. Thus, this latter argument against the property owners in unincorporated areas being a unique class of subjects is not as strong as the argument for the unique class of subjects. I found no case law, however, to help decide this issue. Although I did not find any case law to help with the constitutional issue, the County has a County Code chapter that allows for different taxing regions within the County. Deschutes County Code ("DCC") 4.32.050 lists the criteria for creating split taxing regions. Those criteria are: "A. Differences in services to be provided in different geographic areas must be real and substantial. B. Geographic boundaries shall be drawn so that services provided within designated areas are qualitatively different from services provided within other geographical areas. C. Services provided within the different geographical areas must be unique. Any differences in tax burdens shall be based upon the actual costs of providing services. " Therefore, if the County establishes a separate levy area excluding the cities, findings will have to be crafted showing compliance with the above criteria. Apportionment of Local Option Tax Revenue Another question you asked is, if the County can establish a local option tax that is levied only in the unincorporated areas of the County, whether the County must still share not less than 50 percent of the tax revenue with the cities and road districts within the County. This question is based on the requirement in ORS 368.710(1)(a) that requires the minimum 50 percent apportionment to the cities and road districts " in the same proportion as the amount of taxable Memo to Dave Kanner RE: Road Districts October 28, 2008 Page 3 of 4 property in each district bears to the whole amount of taxable property in the county. To answer the question, however, case law is of no help despite this statute being the subject of a half dozen cases dating as far back as 1918. Although cities are considered separate road districts under ORS 371.060, because none of the property within any of the cities will be assessed, the cities should not be entitled to a portion of that 50 percent apportionment requirement. On the other hand, the various road districts other that the cities would be entitled to the apportionment. County Road District As stated above, we do not know if a court would accept the County's findings for declaring the property owners in the unincorporated areas as a unique class of subjects. Even if the court would accept such findings as adequate for excluding the cities from the local option tax levy, we do not know if the court will accept not providing the cities with any portion of the tax revenue. Therefore, forming a county road district per ORS 371.055 through 371.110 and ORS Chapter 451 (county service districts) would be the safest method for establishing and levying ad valorem taxes, under ORS 280.040 through 280.145, outside the cities for County road purposes. Although the County road district will actually be a County service district form under ORS 451, that service district is still a separate legal entity from the County. At first glance, this difference in entities appears to not make a difference because ORS 368.710 appears to apply to any local option tax levied for road purposes. Additionally, an argument could be made that it is unlikely that the Oregon Legislature would maintain and even amend in 1999 the apportionment statute yet allow counties such an easy.out from that apportionment requirement as creating a county road district. Because that apportionment statute.falls under the heading in ORS Chapter 368 of "COUNTY ROAD FUNDS," however, a local interpretation is that the apportionment requirement applies only to local option taxes levied by a county and not a county road district. Therefore, the funds raised from the local option levy would not need to be apportioned amongst the cities and road districts. Initially, I thought that there would be a problem with forming the county road district in that all the other road districts would have to be merged with the county road district or dissolved. For most districts, the elimination of the existing road districts would be required because ORS 198.180(1) defines a special district as including a county service district and ORS 198.720(2) says that "A district may not include territory included within another district formed under the same principal Act when the other district is authorized to perform and is performing the services the affected district is authorized to perform." County road districts, however, are formed :under a different principal act than other special road districts. County road districts are formed and operate under ORS 371.055 through 371.110 and ORS Chapter 451. The principal act for special road districts is ORS 371.301 through 371.385. Therefore, it is unlikely that all the special road districts will have to be dissolved or merged with the county road district if the County forms the latter. Additionally, the special road districts will not be performing the same services as the county road district because the county road district would be funding the construction, maintenance, and repair of public roads that are Memo to Dave Kanner RE: Road Districts October 28, 2008 Page 4 of 4 in the county's road maintenance system and, therefore, classified as county roads. Special road districts maintain, repair, and, possibly, construct public roads that are under the county's legal jurisdiction but are not in the county's road maintenance system and, therefore, not classified as county roads. I hope this information has been helpful. Please let me know if you need any further information. Z O F- a O (D z 0 z LL 0 W 0 Z W O U W w 0 00 0: 0 0 1 Lo O. 0' 1 N 0, O O 'a (O 010 r- LO O N 0 CA CA O O! N O O N li h r (D O O O O O O N M M 000 O M'N O -I o O (O' Mj V N N (0L r- O O (D r , M M I Lo M (O ; M COI Lc) In tO 0 O 00 O pl I , M N ~ n r C LL. 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