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2011-3087-Minutes for Meeting October 05,2011 Recorded 11/16/2011DESCHUTES COUNTY OFFICIAL NANCY BLANKENSHIP, COUNTY COMMISSIONERS' JOURNAL I2011-31 W CLERKS 1►d ~0~~-3081 11/16/201108:07:38 AM Do not remove this page from original document. Deschutes County Clerk Certificate Page 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 ROAD STUDY GROUP DESCHUTES COUNTY BOARD OF COMMISSIONERS WEDNESDAY, OCTOBER 5, 2011 Commissioners' Hearing Room - Administration Building - 1300 NW Wall St., Bend Present were Commissioners Alan Unger and Anthony DeBone; Interim County Administrator Erik Kropp; and members of the committee: Todd Taylor, George Kolb, Roger Olson, Peter Russell, Chris Doty, Clay Higuchi, Mike Williams, Steve Hultberg, Tyler Deke, Gordon Dukes and Hardy Hanson. Chair Todd Taylor opened the meeting at 4:05 p.m. 1. PCI Data for County Roads. Todd Taylor discussed the PCI of all road needs, and suggested that the County look at software offered by the Oregon Association of County Engineers and Surveyors to see if this makes their work easier. Roger Olson said that he feels the software may fill the needs of the County, which has been using a different system to track pavement condition and needs. Mr. Taylor noted that after a few years, the impact can be clear and confirmed. George Kolb thought the software might be available to the County at little or no cost. Chris Doty said that talk about letting roads go unmaintained should be addressed after other ideas have been tried. Mr. Taylor said that they need to make a recommendation to the County. They should establish the cost of purchasing the software if necessary, to get the best one, and determine the cost of implementation; unless they are doing this in house, or if someone is already doing it in another way. They need documentation of the outcome, and what can be expected on an annual basis. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 1 of 10 Pages Once the PCI is established, they can then look at various methods of construction. 2. Methods of Construction. The basic methods of construction are full-depth reclamation; grind and overlay; chip seal; and gravel road/shoulder maintenance. This depends on where the PCI comes in, to figure how it relates. Mr. Doty said that once the PCI is in place and shows whether something is sufficient or insufficient, it can help with the framework on what kind of funding is needed. The PCI and how that ties into the ADT were discussed at length. This is driven by financial ability and how effective it is felt to be. Of the four methods of construction, they will need to figure out which one is the best one for specific projects. Mr. Taylor asked what is being done to offset the loss of revenue and the impact of higher costs for materials. Mr. Kolb said the work still has to be done, whether contracted or done in- house. Mr. Doty indicated there needs to be a prioritization process, based on the value of the pavement asset. Then they need to develop a strategy to implement the work. With less funding, things will either not get done or will get done in a different way. However, they cannot prioritize safety. They have to think about where weed control comes in, and which roads are the most important. In regard to employees, Mr. Taylor said they need to figure out what they can get by with on a seasonal basis. Perhaps they can spread the work out more. They can contract some work, but other work cannot be handled that way. They could have some contractors on call to do what they can do, if cheaper. Mr. Kolb indicated that they are trying to take advantage of retirements and positions left unfilled as long as possible. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 2 of 10 Pages Mr. Taylor said that a private organization with less revenue learns how to work within that budget. If there is a decline in revenue, they need to anticipate the same in the future and decide which services have to be cut. It was pointed out that this affects not just roads, but culverts, ditches and bridges, which all see a negative impact over time if not maintained. This can be a safety issue. Mr. Doty added that deferred maintenance does not show up immediately. It is like a slow rot and takes a little out of everything. Mr. Kolb noted that they cannot put themselves in a position of too much liability. It was indicated that the Board could say not to plow the roads until there are five or six inches of snow instead of four. They could lower the PCI if not too drastic. Mr. Taylor said they can leave it up to the Board to decide whether they can provide for these things through other funding, if they don't want to take the heat on this. Peter Russell stated that some items don't have much of a budget. The big one is pavement. Mr. Kolb stated they already got rid of most ornamental cutting, down to what is needed for safety reasons. It is hard to save much money on things like that. Mr. Taylor said that it is up to citizens as well as the County to decide on what is important. They should identify the areas where there can be cuts, make those cuts, and then go to the public and ask if even more cuts are acceptable. It was pointed out that people want more service regardless of funding levels, and some won't accept that it can't be provided at that level. Clay Higuchi asked if this committee is to decide what recommendations are best, and leave it up to the Board to find an ultimate solution. There may still be a big shortfall, with no easy fix. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 3 of 10 Pages Mr. Taylor said that there will be a shortfall even when the recommendations are computed. They need to determine what is most important. This would be a five-year plan with no revenue enhancements. Mr. Doty stated they will have to prioritize. It is hard to totally evaluate the services in this timeframe. Mr. Olson noted that they could do some things on a reduced schedule. The Courts are having to cut back and are not available to the public certain hours. Mr. Taylor asked about the possibility of employees going to a 36-hour work week. Mr. Olson said that other departments have had to do this. However, it will compromise some of the work. Erik Kropp added that this is a management issue and some of it is not subject to bargaining. However, service levels will drop. Mr. Taylor said that the public needs to know what can and can't be done. It is better to work some hours than none. He asked what the impact on the budget would be. Mr. Russell stated that there is an impact to the budget at about 36 hours. Community Development had to do this but the public did not notice much change since the department went to flexible schedules. It was noted that no one will say much until there is snow and ice. Mr. Olson said they can cut overtime and work different shifts, and storms don't last forever. Mr. Kolb stated that there are some unfunded mandates coming up that have to be addressed, such as retro-reflective signs and re-signing curves. Also, the edges of roads have to be fixed for the scenic bikeways. All of this has added to the workload. Some of these are costly but there are no funds provided for this work. Mr. Taylor said they need to start the process of figuring out ways to handle reductions in revenue. He suggested that the County come back to the group with ideas on what can be reduced or eliminated, and what has to remain. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 4 of 10 Pages Mr. Doty stated they need to prioritize and decide what is most important. Then they can talk about staffing, not filling positions, reducing hours, etc. He asked if this committee wants to weigh in on what these might be. Mr. Taylor noted that no one wants to compromise safety. Mr. Kolb said that some people may not understand why some things are done. Mr. Kolb stated that the committee can ask the department to analyze certain things. Mr. Taylor said that he would like to know what going down to 36 hours a week means in dollars saved. They would have to prioritize existing services. On the paving side, it is hard to figure out where the real dollars go. That is a big part of the expense. Mr. Doty stated that the easiest thing to do is to cut pavement maintenance, but that is a short-sighted way of handling things. This is a half billion dollar asset that takes funds to maintain. Everyone loses in the long run. Hardy Hanson said that the City Council was told to do no major repairs, just crack seal in residential areas. Some roads are now below reconstruction standards and very bad, so this helps to get a bond passed. Sometimes this becomes a capital improvement. Some roads may only get potholes patched because there is no other option. They end up in the CIP. This is not a good use of those funds, and makes them structurally inadequate. However, it does raise public awareness. Mr. Taylor asked what the anticipated shortfall might be in the future. Mr. Kolb said they have had $4 million eliminated from the budget already. There is the budgeted amount and what they get, and what they get versus what they really need. 27t' Street needs full-depth reclamation, but based on motor vehicle revenue, this may not happen. They would have to take dollars from somewhere else to do this project. They will be losing the forest funds next year. He said they could decide to do no chip seal and put the money all in pavement. They have to figure out the best place to put it. Mr. Taylor pointed out that if there are no chip seals done, that raises the question as to what that does for the labor force. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 5 of 10 Pages 3. Contracting vs In-House. Mr. Taylor said that a decision needs to be made whether some work can be done more efficiently by contracting it out. It was pointed out that deferring maintenance may just end up costing more later. Mr. Taylor stated that it might end up in a CIP, and they can go out for a bond measure to try to capture those projects then. It was stated that this just avoids a decision as to which roads are going to be let go. Maybe some should be let go now and dealt with at some future time. Mr. Kolb noted that if there is no money to maintain roads, they will end up having to do full-depth reclamation at some point. Mr. Russell said that most local roads are in good shape. Collectors and arterials are more important. Much depends on the traffic load. Mr. Kolb stated they won't be doing preventive maintenance but triage. The PCI could get to a certain level and stay there for a while on local roads. Mr. Olson added that there are a lot of seal coat systems that have not been used here, and they could investigate some of those options. Mr. Taylor said they need to look at being the most efficient. Mr. Doty said they need a modeling system showing what is necessary for the PCI, then prioritize based on funding. They should prepare for various scenarios. Some long-term strategies will have to wait until the projections are known. Maybe nothing too drastic should be done until more is known. The preventative maintenance investment might be the best thing to keep. They can continue to explore consolidation with other agencies. 4. Consolidation of Services. It was suggested that perhaps each governmental agency can decide on how to consolidate some work to equal savings for all. Mr. Higuchi said that they are looking at just the Road Department at this point. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 6 of 10 Pages 5. Revenue Enhancements. Mr. Doty said that there is talk about a regional gas tax. Someone should work with the LOC and the AOC to put together legislative work regarding gas taxes. They need to let the Commissioners know what is important. A franchise or tipping fees would take legislative action. Mr. Kolb stated that they need to tap the National Forest for more than just timber. There is recreation there now that has a lot of value. Mr. Taylor said they should always be looking to raise revenue. This group needs to make recommendations on how to be more efficient. They should have some meat to take to the Board, noting where there might be some adjustments made to be able to live within the revenue they have. It is hard to go out to the public to raise more revenue unless all opportunities to reduce costs are examined. Mr. Doty said it has to be both, but the odds of raising revenue are low. Living within your means can happen sooner. Prioritization has to take place to get there, and that means a lot of meetings. Mr. Taylor noted that the revenue shortfall should be addressed first. Then they can decide what they can live with. He asked what can be considered, and what has the greatest chance of happening. Someone wins and someone loses. Tipping fees and franchise taxes don't go over well. SDC opportunities only work when development is taking place. Mr. Higuchi said that the county landfill and fairgrounds are enterprise agencies and have to support themselves. The landfill has a business to run. It is easy to say, raise the fees, but this impacts their business. He suggested that they just call it a gas tax. Call it what it is. Do the people want decent roads? Pay for them. Mr. Taylor noted it is perception of what it is. They should recognize it is a road maintenance issue. The roads don't take care of themselves. They need to identify what revenue sources are available. One is a gas tax. Does the gas tax go towards this? Mr. Doty replied that a local gas tax could go to just that. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 7 of 10 Pages Mr. Taylor said that this has been examined before, but there is a huge number of visitors here, and much is paid by them. Mr. Doty said that there is no local tax so they miss out on the funding, which goes elsewhere. Now all gas taxes have to be voter approved, with a moratorium until 2014. Mr. Higuchi said that those funds cannot be transferred to general fund. Commissioner Unger said that they can't use property tax revenue for roads. It has to be from a different source. Mr. Russell stated that gas taxes have to go to transportation. Mr. Taylor asked how it is distributed. Mr. Doty replied that conceptually, all would share. But he is not sure who gets what. Mr. Taylor said that they need data to show where it would go. The option might be a bond measure or some kind of a tax. Mr. Higuchi said that when real estate was booming, the cities should have put more money into roads. The City of Bend put money into other things. Mr. Taylor noted that they need something with sustainability. Bonds have a life, and then the item remains underfunded. Mr. Russell said that indexing is best. The other option is the transient lodging tax. This is designed to take money from visitors to support the infrastructure. They should take another run at that. Another is a fee for studded tires since they do so much damage. Mr. Taylor stated that the funding needs to come from visitors and not just the locals. They need a dialogue to show the process required to get where they need to be. They could continue to cut services or staff, but at some point, the department can no longer function safely or efficiently. They need to show what could be cut and the possible impacts. If they are still short, and they probably would be, these are the options. Make a choice. Or live with the way it is and the decline of the asset, which will also affect visitors. Mr. Russell explained that there is a ripple effect from bad roads, on tourism and the economy, vehicle maintenance and so on. Mr. Doty said that the County and cities need to get serious about lobbying for franchise fees. Utilities occupy the public rights of way and cities get money for this. Counties don't have this untapped resource. Tipping fees are bush league, but one of the few things the Board can control. Everything else has to be legislative or approved by voters. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 8 of 10 Pages Mr. Higuchi said that he visited California, and they are overlaying roads everywhere. They are putting people to work and the roads are great. Oregon is missing out. Mr. Taylor observed that they are probably spending money they don't have. He said that a franchise tax and a gas tax are sustainable. A bond is not. Mr. Hanson noted that a gas tax won't be sustainable in twenty years. That's the trend. He asked how they can apply a transportation utility fee or tax to visitors. The gas tax is a diminishing resource. Mr. Taylor asked if there is any way to put in a toll. Mr. Hanson said that those can only be used for new roads, not what is already bought and paid for. Mr. Russell stated this is almost impossible except for bridges. Once it is paid off, the toll ends. Mr. Olson stated that they should allow toll roads, and let the legislature deal with that and with indexing the gas tax. There should be a studded tire fee, but that will not be sustainable as people begin to use other types of tires. Mr. Taylor stated they need something sustainable, long-term and likely to pass the legislature or through voters. The gas tax might be the best option at least for the short-term. Commissioner Unger said that this gives a mechanism to use. Others are miles driven. If this switches, it does not require another vote. Mr. Taylor said that collecting is hard. The stations collect it on site. Commissioner Unger stated that if it is a local tax, they can use the same type of system. Mr. Russell noted that it would be collected differently, but the distribution could be the same. Conclusions reached: Mr. Taylor and Mr. Kolb will meet again. Commissioner Unger likes the idea of adjusting the PCI and what it means to maintain that. Thought needs to be given on whether to cut back certain services, staffing or hours. Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 9 of 10 Pages They need to examine funding sources. It was mentioned that the room tax challenge all came from Sunriver. There was a real push-back. People there feel they are taxed enough. Also, the Fairgrounds is allowed to collect a room tax and want a piece of that. Mr. Taylor said that the most gain would be in overhead. He asked if there should be a separate agency to consolidate the work and equipment, and whether there could be a separate taxing district just for roads. They could develop one PCI for all cities and the county. It is challenge for everyone to figure this out. It was noted that this could lead to some opportunities. The various entities would need to have the same policies regarding snow and ice removal. Mr. Kolb said that this could be left up to the umbrella agency. This is being done in Ada County, Idaho. They have a road group representing all the cities and the county, and part of the State highways as well. It is kind of a like a bus system, combined for efficiencies. Mr. Taylor stated that they may want to form a separate committee to examine consolidation. Perhaps the heads of the various departments can get together for this. It might be kind of like a fire district. They could not become territorial, though. Services need to be equitable. Mr. Olson said that there needs to be a lot of hard work on a lot of different levels. Commissioner Unger observed that a there needs to be a decision or you will never get there. The next meeting was schedule for November 9. Mr. Taylor said that they may need one more to finalize their recommendations. They should have these ready for the County by mid-December. Being no further discussion, the meeting adjourned at 5:50 p.m. Respectfully submitted, Bonnie Baker Recording Secretary Minutes of Road Study Group Meeting Wednesday, October 5, 2011 Page 10 of 10 Pages s 17 , O ~J 1 V D § Q e Q) L v CA D, i 1 rA c1v w ~ U N N Y.daG 4 ~ ar ~ c A ti 0 ICY ® p N t~c GL O , 1 ~s S19 -L Q) tX ~ ~ a MEETING AGENDA October 5, 2011 Todd and I met on Wednesday, September 28th and came up with the following points to be discussed and presented to the Board as the five recommendations coming from the Road Study Committee: The County needs to focus on the Pavement Condition Index (PCI) of all the roads in the system and use this data to develop a solid plan for road maintenance. a. Look at software offered by Oregon Association of County Engineers and Surveyors to determine benefits of this system over the system currently used by the County. b. Determine the investment required to transition to the new software and associated benefits. 2. Identify the four different methods of construction and how they tie back into the PCI rating. The four methods currently used by the County are: a. Full Depth Reclamation. b. Grind and Overlay c. Chip Seal d. Gravel Road/Shoulder maintenance 3. Look at contract vs. in-house forces on the following: a. Full Depth Reclamation - Contract b. Grind and Overlay - Contract c. Chip Seal - Contract or in-house (currently done entirely in-house) d. Gravel Road/Shoulder maintenance - in-house e. Other maintenance work done by County forces: i. Snow removal ii. Hazard removal iii. Signs and road striping iv. Sweeping v. General maintenance 4. Consolidation of services with other agencies (i.e. Bend, Redmond, Sister, etc) a. What is available for consolidation of services? i. Equipment maintenance ii. Road Maintenance b. The report done by Jackson County concerning partnering with ODOT was e-mailed out to the committee and we can discuss that. If you need a copy, let me know and I can e-mail them to you. 5. Revenue Enhancements: a. What is available as far as additional revenue: i. Taxes ii. Bond b. We will review funding recommendations that were listed in the Road Maintenance Funding document from Dave Kanner dated June 15, 2011 and also the report from Washington County. If you need copies of the report, let me know and I can e-mail them to you. MEETING AGENDA October 5, 2011 Todd and I met on Wednesday, September 28th and came up with the following points to be discussed and presented to the Board as the five recommendations coming from the Road Study Committee: 1. The County needs to focus on the Pavement Condition Index (PCI) of all the roads in the system and use this data to develop a solid plan for road maintenance. a. Look at software offered by Oregon Association of County Engineers and Surveyors to determine benefits of this system over the system currently used by the County. b. Determine the investment required to transition to the new software and associated benefits. Most counties that use the fully sophisticated software have staff dedicated to it. One of the reasons we have not made the switch before is that with the basic information we collect with our existing system I can interpret and add with other data and experienced observation to determine needed maintenance. Pavement Management is much more strategic than tactical. 2. Identify the four different methods of construction and how they tie back into the PCI rating. The four methods currently used by the County are: a. Full Depth Reclamation. b. Grind and Overlay, Grind and Inlay, Overlay, are all about the same thing, they add some strength to the pavement and thereby protect the base. They correct surface deformations, such as ruts and depressions around cracks, etc. they make a very smooth ride. Those are the only treatments I am comfortable calling a "construction " method. Below this are Maintenance tools or methods. c. Chip Seal, We should talk about seal coats, chip seal is just one of a number of seal coat options. The simplest is a Fog seal which is just spraying a fine dilution of asphalt over the surface to protect from oxidation and seal some of the very small cracks that allow water to penetrate the asphalt. Sand seals are the same, but they are covered with a graded sand to give a smoother surface, Slurry seals are a little thicker and are spread with a squeegee, Micro Surfa ins is even thicker, up to 318 inch, spread with a larger machine and finished with a squeegee process. Micro Surfacing can be used to fall ruts and depressions and produce a smooth ride. Chip seals cover the existing pavement with almost a half-gallon of asphalt per square yard and imbed a single layer of 3/8 inch stone to provide an excellent seal of the surface and a new wearing course of aggregate. Seal coats look real good when placed and hide many blemishes, therefore the PCI goes up for a short period and then starts to fall off quickly. Roads that are rated Poor that receive a chip seal don't become a Good road. Just a poor road with a good surface. We also use Thin Asphalt Overlays as a maintenance tool to smooth out the ride when ride quality is much more noticeable than the surface condition. I calculate the tonnage needed to cover a segment of road with an inch and a half of asphalt and our crews place it with a rented paver. (We have contracted the paver in the past and with the current economy we should look at it again). With a thin overlay some areas, like ruts, will receive 2 inches or more and other places just a skin patch. These will reflect underlying cracks rather quickly so we try to apply a chip seal in 2 to 4 years on these. Placing an 0-9 oil mat over existing pavement can provide a good rehabilitation for some roads also. d. Gravel Road/Shoulder maintenance Gravel Road maintenance has no influence what so ever on the PCI. Numerous efforts to rate the surface condition ofgravel roads have been unsuccessful, there seems to be no consistent, objective factor to measure from. Shoulder condition is a factor in our current rating system but 1 don't think it belongs there. Shoulders should be maintained on their own schedule independent from the surface. 3. Look at contract vs. in-house forces on the following: We have never looked at a combination such as an equipment rental or time and materials contract where we could get the best price for each bid item of a contract. a. Full Depth Reclamation - Contract b. Grind and Overlay - Contract c. Chip Seal - Contract or in-house (currently done entirely in-house) d. Gravel Road/Shoulder maintenance - in-house e. Other maintenance work done by County forces: i. Snow removal ii. Sanding iii. Hazard removal iv. Signs and road striping v. Sweeping vi. General maintenance vii. Bridge maintenance viii. Channel maintenance & rip-rap ix. Culvert replacement x. Ditch cleaning xi. Roadside tree trimming and removal xii. Mowing xiii. Roadside weed control xiv. Roadside features, mail boxes, fences xv. Cattle guard repairs and installations xvi. Guard rails xvii. Emergency Maintenance xviii. Roadside trash pick up and disposal xix. Dead animal pick up and disposal 4. Consolidation of services with other agencies (i.e. Bend, Redmond, Sister, etc) This is where the most gain could be made. We currently have 4 cities and County overhead. The County overhead being over 65%, If we were to combine all street and road maintenance into a new separate agency we could greatly reduce the overhead burden. a. What is available for consolidation of services? i. Equipment maintenance ii. Road Maintenance b. The report done by Jackson County concerning partnering with ODOT was e-mailed out to the committee and we can discuss that. If you need a copy, let me know and I can e-mail them to you. 5. Revenue Enhancements: a. What is available as far as additional revenue: i. Taxes ii. Bond b. We will review funding recommendations that were listed in the Road Maintenance Funding document from Dave Kanner dated June 15, 2011 and also the report from Washington County. If you need copies of the report, let me know and I can e-mail them to you. W:1 v v.. i 0 EG0M DEPARTMENT OF TRANSPORTATION 200 AMLOP,E ROAD TY= CITY, OR M03 PHONE (541) 826.3122 FO(54J)830-6408 DATE: September 14, 2000 TO: Russ Peterson Jim Stith Doug Tindall FROM: John Vial District 8 Mara SUBJECT: Barriers to Partnering Information for the BB 3465 Task Force INTEROFFICE MEMO I was requested to provide information to you describing barriers that prevent further maintenance partnering efforts between ODOT maintenance districts and Orcgou cities and counties. This information is intended to assist members of the HB 3465 Task Force in understanding barriers and developing solutions to partnering. Process to Identify Barriers to Partnering ODOT District 8 and Jackson County Roads and Parks have been partnering formally since 1994. This effort has resulted in several successes, as well as some failures. Managers of Jackson County Roads and Parks and ODOT District 8 were questioned and asked to identify barriers, which have prevented greater partnering efforts. In addition, all ODOT district maintenance managers statewide were asked the same question. Responses are summarized below. The identified barriers to partnering can be summarized as Policy / Law, Organization / Institutional and Cultural issues. Attached is the "Barriers to Future Partnering" chapter from the Joint Feasibility Study. This study reviewed the feasibility, costs and benefits of consolidating the road maintenance functions of Jackson County Roads and Parks and ODOT District 8. Many of the comments received from poled managers match those identified in the Joint Feasibility Study. Policy / Law Issues Billing Practices - Nearly every manager poled expressed their overriding barrier to further partnering related to current billing practices. MOT and many local governments are required by current accounting practices to bill one another for all services completed. This creates an overly burdensome paperwork problem with numerous bills being exchanged. Often managers find themselves billing one another for equivalent services and simply exchanging money, i.e. a local government bills ODOT for $500 and ODOT bills the local government for $500. Barriers to Partnering memo. September 14, 2000 Page 2 Most managers would prefer a system where labor, cquipment, and material costs could simply be tracked and bills exchanged at set time periods, i.e. once or twice per year. Additionally, this billing would only be made to an agency to "even up" a:balance. For example, an ODOT district spends $9,500 completing work for a county during the year and the county spends $10,000 completing work for ODOT during the year. In this case ODOT would simply send a payment of $500 to the county at the end of The year. ODOT District 8 and Jackson County Roads and Parks have attempted overcome this issue by signing a partnering agreement that allows the two organizations to simply "trade" equipment and labor and only bill each other for material costs. This has done much to further partnering; however, challenges still exist from managers feeling that the "trading" isn't even or fair. As long as the trading of labor and equipment isn't close to equal, managers feel that there own budget (in. which are accountable for) could betaking a disproportional impact and they maybe reluctant to further partnering. Accounting - Locals governments and ODOT do not use comparable accounting practices. Labor rates, equipment rates and unit costs are different between organizations and therefore comparing work is difficult. Often one agency feels another is gouging them because costs to complete the work are not comparable. The attached "Barriers to Future partnering" chapter from the Joint Feasibility Study explains this issues well. Reimbursing Budgets -In. some cases, billing payments or funds cannot be placed into the particular budget in which they are intended. For example, in the Jackson County / ODOT District 8 merging effort, we identified a potential to co-locate the Central Point maintenance facility into the existing Jackson County Roads and Parks facility. ODOT'would pay rent to the county for this co-location and partnering would increase as a result of working closer to peers and managers. The state would then sell the existing Central Point facility. However, funds from the sell of this property would be returned to the statewide highway fund and not to District 8. Therefore, District 8 would immediately feel an impact to their budget for all rent paid to the county. If funds from the sale of this facility could be directed back to the district and the partnership, co-location would be more attractive. Contracting Limits - Current law requiring the contracting out of public improvements over specified amounts prevents some good partnering opportunities. Some. of the best partnering and cost efficient projects between the state and local governments exceed current legal contract-out limits and are therefore not completed. Little Incentives to Farnner-As noted in this memo, there are numerous legal, , organizational, and cultural issues that have to be overcome to effectively partner. Some token partnerships will occur between organizations where both agencies can see a clear advantage in doing so. However, tangible financial incentives could do much to further partnering efforts. i r Barriers to Partnering memo. September 14, 2000 Page 3 Organization / Institutional Issues Operartonal and Emergency Response - ODOT is required by law to deal with operational issues and emergency response problems on the highway. When local governments are working with ODOT maintenance crews, projects are often interrupted when ODOT forces are required to respond to road hazards and emergencies. This is a source of frustration to local governments who see this practice as inefficient and costly. Workplanning - Managers for all maintenance crews complete work plans and schedules. These plans vary in length and complexity. However, once established, these work plans are difficult to change. Crew and equipment schedules, renting specialized equipment, purchasing materials, etc. are all tied to the work plan. When a potential partner calls and requests assistance, often times the manager is forced to decline as the disruption to their established work plan is too great: In order to fully partner, joint work planning processes will need to be developed. Work Schedules -Although not a major impediment to partnering, poled managers did raise incompatible work schedules as a barrier. Maintenance organizations use a wide range of work schedules to complete their tasks and maintenance managers are often challenged by trying to coordinate crew starling times, flexible schedules, four I 0 -hour days, and night work between organizations. This can be a particularly difficult problem when labor contracts require notice to employees for changes in work schedules. Safety and Environmental Practices - Each maintenance organization approaches safety and environmental issues differently. When crews are partnering on.projects, conflict between erewmembers is common over which standards to use on a particular work task. This can be a major impediment to partnering as the risks of changing a particular safety or environmental compliance process can have significant consequences. Cultural Issues Maintenance organizations develop their own identity and "personality" overtime. Partnering can require that maintenance norms and relationships are changed and adopting a partner's way of working could be required. This can cause signWcant challenges to managers and can often be one of the m ost difficult issues for managers to deal `with. The need for healthy positive relationships between managers is vital and without them, partnering will struggle. Following is a list of common cultural issues which present challenges: Reporting relationships from crew members to managers, i.e. team management vs. top-down; Negative attitudes such as "this is our road and we don't need any help;" How equipment operators are assigned to equipment; and traditional ways of completing the work, i.e. "we've always done it that way." Barriers to Partnering memo. September 14, 2000 Page Q It is my belief that all of the above issues can be solved and partnering could be increased between local governments and OODT. The Jackson County Roads and Parks and ODOT District 8 work has identified and worked through many of these issues. I would be happy to discuss this effort :Ctuther with you and if you need additional assistance, please ask. attachment Cc: Paul Mather Joe Strahl ' a II. Partnering Barriers to Future Partnering Some barriers were.mentioned above when discussing specific instances of past or, future part- nering. This section of the report examines additional barriers to future partnering and makes recommendations for overcoming those barriers. The cost-benefit analysis concludes that there is potential for additional savings from future partnering. The two organizations, however, must resolve barriers presented by different ac- counting practices, uncoordinated phmning,• management policies, and cultural differences. Overcoming these barriers will require significant planning and communication. Accounting Practices One of the obstacles to partnering identified by Jackson County and District 8 during past efforts is the incompatibility of the accounting practices of the two agencies. These differences result in the appearance that Jackson County has higher operating costs for direct maintenance activities than MOT has. Although this is hard to analyze - see the following discussion on unit costs - analysis concludes that District 8's and Jackson County's costs are generally similar. The cost of compliance with ODOT's higher safety standards adds to District 8's costs, but if Jackson County complies with those standards its costs will also rise. This means that overall savings are unlikely if one agency merely adopts the work methods and procedives of the other- Labor Rates Accounting for labor varies considerably between the agencies. Labor rates in Jackson County's maintenance management system QVMS) include basic wages and benefits, overhead for the applicable central administrative costs of the Roads and Parks Services Department, and over- head for a share of the administrative costs of centralized support units such as the :omty personnel and accounting departments. Labor rates in ODOT's MMS include basic wages and benefits. They do not include overhead markups for any central administrative costs. ODOT accounting practices do not allocate such costs to any product (in this case direct maintenance). I Equipment Rates Accounting for equipment also varies considerably. Equipment costs arc calculated in Jackson County's MMS using hourly rental rates that include a replacement rate and a maintenance (operating) rate. The equipment rental rates are recomputed annually by equipment class and are intended to recover actual costs. Once the rates are set, the variance from actual costs is not tracked. If rates are set too high, then the reported unit costs of the direct activities are too high. if rates are set too low, then the reported unit costs of direct activities are too low. Any variance in allocation of costs, either under or over, is not charged back to the crew budget. Since rate changes are small, this does not create a problem in the county system. ODOT's hourly equipment rental rates are developed similarly to Jackson County's, although there are differences in the details. ODOT rates arc also recomputed annually by, equipment class and are also intended to recover actual costs. ODOT's MMS, however, tracks any variance and accumulates the total in activity 197, an administrative activity. A positive amount in activity 197 at the end of the year means the rental rates were too low; a negative amount means the rates were too high. Dining fiscal years 1996 and 1997, annual cbarges to activity 197 for 26 IL Partnering District 8 averaged $651,613. This is not trivial- It is apparent that equipment rental rates were considerably understated Jackson County's equipment rates come much closer to true cost recovery than do MOT rates. Consequently, Jackson County equipment appears, to District 8 frontline managers and crews, to cost more than similar ODOT equipment. Unit Costs many unit costs of the two ageacies were analyzed for similar activities to try to compare their relative efficiencies. Ultimately, it was determined that so many other assumptions had to be made that any conclusions to be drawn using unit costs to compare efficiencies, or potential savings, would be unreliable. Several problems were encountered: ® In some cases, activities are performed or described differently. For example, striping accomplishments' are reported in pass miles by Jackson County and line: miles by ODOT. The county sometimes paints off both sides of the truck while the Region 3 crew paints off one side, but is able to drive faster. MOT uses more shadow vehicles because of working on more heavily-traveled routes. All these factors make comparison of costs problematic. m In each MMS, some performance standards allow a wide range of accomplishment. The standard for ODOT activity 120, ditch cleaning, is OS to 1.5 ditch miles per day, and the standard for the county ditching activity, LR2100, is 02 to 0.5 ditch miles per day. The wide range of allowable accomplishments indicates that there are many variables that make it problematic to compare accomplishments under one standard with those Under the other. m In some cases, not all accomplishments are reportable to MMS. Region 3 contracts out some of its striping. Employees report the cost of this contract striping to MMS, but the accom- plishments from contract work are not reported. This distorts unit costs. ® In some cases, sample size is too small. ODOT records for activity 520, ditch dipping, have only five instances in fiscal year 1997 for District 8 dews. The unit costs in this sample vary from $5.30 per cubic yard to $47.83 per cubic yard, a range of more than 900 percent. An analysis using this data to compare ditch dipping with Gradall ditching could be very mis- leading. Impact of Accounting and Budgeting Practices on Partnering The different methods used by each agency to establish labor and equipment rates ultimately affect the reported unit costs for each activity. Those reported costs make it appear to the District 8 crews that it costs more to have the county perform work than it does to do the work themselves. Regardless of the fact that true costs have not been determined and are not being used by either agency (although the county is much closer to doing that) the perception that the County has higher costs has hindered partnering in the past and will continue to do so until true costs are available or until all parties agree upon a formula for unofficially adjusting direct costs to make them "comparable" If other factors could be equalized, one way of comparing costs between the organizations would be to adjust direct costs as suggested in Appendix I Even if ways are found to minimize or eliminate the above problems, an effect that can be called the "budget paradoie' will remain as a barrier to full partnering. The root of the problem is that neither ODOT nor Jackson County is allowed by generally accepted accounting practice to apply revenue from work done for others against a crew's budget. In. ODOT, any revenue is lumped in n 27 U. Partnering - with all other agency revenue and made available only in future budget periods, jn the county, the revenue is deposited to the road mod, also to be made available in feature budget periods. Table 6 illustrates this paradox. Agency A and Agency B decide to partner on activities that will save them money. They direct their crews to review their lists of activities and the cost for each activity. Crew A notices it can do Activity C for $900 while it costs Crew B $1400. Crew B notices it can do Activity B for $900 while it costs Crew A $1,100. The crews agree to partner on those activities. Crew A does two units of Activity C and bills Crew B $900 for one unit. Crew B does two units of Activity B and bills Crew A for $900. In both agencies, however, the $900 received is deposited to the agency account, and is not allowable as a direct offset against a crew budget. Table 6. Budget Paradox Activity Agency A Agency B Historical Crew Historical Crew Cost Work Cost Work A $8,000 $8,000 $8,000 $8,000 B 1,100 0 900 1,800 C 900 1,800 1,100 0 Budget $10,000 $10,000 Direct crew work $9,800 $9,800 Paid to other agency 900 (for activity B) 900 (for activity C) Total spending at crew level $10,700 $10,700 Reimbursement to agency account -900 -900 Net cost to agency $9,800 $9,800 As Table 6 indicates,,although each crew budget is overspent the organizations each saved $200. Because frontline managers arc closely evaluated on their adherence I to budget; however, they have little incentive to perform this type of pa-dnerutg; They make good short-term budgetary decisions, but the system leads theme to make poor long-term decisions regarding the agency bottom line. Frontline supervisors recognize this paradox. It partially explains the resistance to partnering, both past and future. If partnering is to increase, this problem must be addressed. Otherwise, iontline supervisors will react to the immediate consequences of potential budget overruns by avoiding some partnering opportunities. Conclusion: The presewation of inaccurate unit costs to managers and crews results is their perception that partnering is unfair or is not cost effective. Not being able to offset expenditures for work done for others is a potential source of budget overrun. Generating revenue from work done for others is not directly rewarded- All of these combine to cause a barrier to increased partnering- Bartering In the past, Jackson County and District 8 tried to avoid the problems of the accounting systems by bartering as much. work as possible. Only costs of materials were billed because. costs of materials are unclouded by overhead accounting differences. But there is some concern among 28 t a r U. Partnering the parties, and to outside reviewers, about whether each agency is contributing an equal share of labor and equipment That determination is based more on the experience and knowledge of the frontline supervisors who keep a running tally in their heads, than on documented evidence. The study analyzed all partnering efforts during fiscal years 1996 and 1997 and determined which were bartered and which involved billings. In bartering, Jackson County absorbed costs of $89,499 and District 8 absorbed costs of $76,737. This narrow difference supports the notion that the frontline supervisors can reasonably track the balance of bartered work,. that,is to say, track "fairness" over time. Leaving "faimess" to the experience and knowledgd of supervisors should be acceptable based on the evidence that they do a reasonable job. Altematively, if this method must be made more objective, negotiate mutually agreeable overhead rates to apply to direct activities, for analysis purposes only, so that the value of bartered work can be less subjectively compared. Although the relative value of bartered work appears to be comparable, the savings that might have re- sulted from that work are still undetermined. Conclusion: Concerns about' incompatible accounting systems can be avoided to some extent by bartering as much as possible. Under a merger scenario, the concern will not exist. Linder a merger, Jackson County would apply a uniform accounting method to all work If accounting and budgeting practices cannot be changed, continue to barter as much as possible. Work Planning Practices Current partnering efforts have been mostly ad hoc and non-systematic, although progress is being made toward more coordinated efforts. There are still opportunities that are not being realized. Long-term, comprehensive joint planning is required to maximize the savings available through operating as if all roads in the area are one system. The study found evidence of several factors that appear to be preventing this type°of planning- a There is still a mindset that separates the roads into "ours" and "d=irs" Long-standing practice has dictated that "you worry about your own budget and level of service and let the other guy take care of bis " In addition, the ideals seen as the best of one organization by its workers are often those cited the most as barriers to partnering by the workers of the other organization. Managers come to a joint planning meeting with their individual plans already written. There is reluctance on both sides to then change these written plans.. . Coordinated planning is largely outside the experience of frontline managers. Coordinated planning is an additional.step to existing.planning methods. Such coordinated planning re- quires dealing with members of another organization who do not share the same crew sched Wing methods or organizational values as one's own. ® A District 8 maintenance section often overlaps two or more Jackson County maintenance districts, and vice versa. The result is that each manager must deal with several counterparts to organize partnering projects. Although this is only an occasional problem for individual projects, it complicates systematic planning., o Emergencies and the need for incident response can disrupt joint plans. As a consequence of these .factors, partnering occurs only where it is relatively easy to make minor changes to current plans. The meetings of the operations team (created in 1996) were a good first step toward comprehensive planning, but the operations team is. not achieving the full potential for joint planning. 29 II. Partnering A joint planning process could be developed to identify various maintenance needs well in advance and then merge those needs into an integrated work schedule that optimizes equipment use and minimizes travel time and geographic relocation of equipment between jobs. Such plans could be roughed out months in advance and then evaluated and coordinated as the time for execution gets closer. This extra planting effort would initially take time away from other duties, but that effort would decrease as the process is refined. Recommendation: Using the recent M Team directive that joint crews be foamed for pothole patching and culvert cleaning as an example, examine other maintenance activities for areas in which partnering can be effective. _ Recommendation: Work with managers and crews to design and implement methods of com- prehensive joint planning that will treat the jurisdictions of the two agencies as one system. Develop a process that satisfies each organization's internal needs while making possible a subsequent merging of plans across organizational lines. If necessary, enlist the services of an outside facilitator to guide the development of this process. Project Evaluation TpAplnte. The study recommends adoption of a method for quickly assessing and documenting the poten- tial benefits of a partaering opportunity. Answering the following short list of questions could provide enough information to determine the potential value of proceeding: • Will this idea allow us to do the job with fewer people? If so, about how many? • Will this idea save us any time (for example, reduce travel time)? If so, about how much? • Will this idea allow us to use fewer pieces of equipment? If so, which pieces? • Will this idea save any materials? If so,. about how much? • will this idea increase our level of service to the public? If so, how? e Will this idea produce intangible benefits, such as promoting cooperation or providing on-the-job training? If the answers to these questions indicate few or no benefits, then partuering should not occur because the increased cost of planning will offset small benefits. Once potential savings have been estimated, results should be monitored to determine and document the actual savings. Recommendation: Concentrate on identifying and scheduling =oxe of those projects that offer the opportunity for true savings. Do fewer of those projects for which little or no benefit can be demonstrated. Monitor results to determine if projected benefits are realized. Management Policies and Cultural Values District 8 and Jackson County differ in several practices that complicate efforts to partner. Assigning equipment to designated operators The county's policy of assigning designated operators to vehicles and equipment creates an obstacle to some partnering. When District 8 runts a piece of equipment from the county, the additional expense of its designated operator often makes that rental more expensive than a rental from a private equipment rental company operated by a District 8 employee. This dis- courages District 8 crews from renting county equipment. County operators are reluctant to trust "their" machines to other operators, however, because of concern that those machines will be damaged or neglected. 30 H. Partnering Different shi schedules Crews In both organizations work different shifts; i.e., eight-hour days, 10-hour days, nights, etc. Joint projects are difficult to organize when the District 8 crew is working one shift and the county crew is worldng another. Because the county does not routinely operate a night shift, the portion of the District 8 work that gets done at night is not eligible for joint projects. The uncertainty of merger Employees of both organizations said that until the question of merger is decided, the uncer- tainty of their personal status is affecting the extent to which they are willing to plan part- nering activities. U Some District 8 crewmembers said they are concerned about losing their team identity and autonomy. They are proud of the work they do as a team and they like ODOT's emphasis on crew and public safety. Although there is evidence that some county employees are also concerned about a merger, they expressed less resistance to partnering than did District 8 employees. Some county managers said they thought partnering was "on hold." At the same time, other county man- agers are moving ahead with additional partnering. Level of service for incident response An ongoing conflict for the crews who attempt to execute joint projects is ODOT's high level of service for responding to accidents and other incidents on state highways. District 8 crews believe their Bust priority is to keep Interstate 5 open and safe to travel. County crews find this difficult to understand and accept because Jackson County Roads and Parks Services does not share this priority regarding incident response. County' crews believe that District 8 crews should make a commitment, when working on a joint project, to stay on the job all day. Safery practices The safety of workers on Interstate 5 and other high-speed, high volume state highways de- pends on the workers' training and experience. District 8 employees have this training and experience. Some county workers are reportedly very concerned about having to work on Interstate 5, and District 8 erewmembers worry about working together with county crews in high-speed, high-volume situations. This has resulted in some partnering opportunities being lost. The more hazardous conditions found on state highways require more traffic control for safe maintenance operations than do lower volume roads. Flaggers, cones, warning signs, and shadow vehicles add to the unit cost of any activity. There would be initial costs and loss of productivity associated with training county managers and workers on safe practices in situa- tions where traffic speed and volume are high. On the other hand, improved- safety practices could result in long-term savings resulting from fewer accidents and. worker. compensation claims. Environmental concerns MOT has chosen to adopt positive programs, often beyond the minimum requirements of the law, to protect endangered species, streams, and wetlands, and to address other environ- mental concerns. MOT has developed guidelines, work practices, and training intended to minimize the possibility its workers would violate the various environment laws and, regula • 31 II. Partnering tions. If the county performs maintenance on state right of way, unit costs to comply with ODOT standards and to obtain additional training could increase. Radio communications Each agency has its own radio communications system. Each has only 12. radios set up to use the other's frequency. This sharing is limited to supervisors. During'past partnering ef- forts, the radios wc- not effective tools to link the crews of the two agencies because of the limited number of r..,,.os programmed to enable cross communication and because the county crews tend to sra; can the "local" channel and the state supervisors who have the county channel tend to mrwitor Oregon State Police channels. Partnering would .s enhanced by full sharing of radio frequencies to allow better communi- cations at the crew level, especially for incident response. There are no technical reasons why all radios could not have full use of the other's frequencies. This would require inter- agency agreements for sharing the frequencies owned by each agency, upgrading or installing radios in more crew level vehicles, and use of scauuers to monitor the frequencies of both agencies. Summary: Partnering Past partnering efforts have been successful in demonstrating that the organizations' employees can work together and that some efficiencies are possible. Although these partnering accom- plishments are encouraging, they involved only a small percentage of the total work of both agencies. Additi'on~l partaersh p savings can be realized if effort is put into comprehensive joint planning. Improving the planning process for partnering will have a cost. If a decision is made to proceed with a merger, then few addition-91 , sources should be invested in trying to improve partnering. The organizations should invei:• tee most resources in planning and implementing a merger. On the other hand, if the beat. :s of a merger are not sufficient to justify the effort necessary to implement it, there is much that could be done to improve partnering. ~t 32 Jackson County / ODOT Partnering Activities August 17, 2011 Co-Location of Facilities • ODOT leasing office and storage space from County.. All ODOT engineering, technical, planning, construction, and District maintenance staff in Josephine and Jackson Counties co-located with county road staff in leased space. • Sign crews co-located and share responsibility for sign maintenance. Formal Partnering Partnering work where bills for services are usually exchanged: • ODOT using county grinder complete pavement inlay patches. County grinds the patch and ODOT completes the layback • ODOT completes all signal maintenance for County • County completing all chip seal work for ODOT's District 8 area. For the 2011 summer county completed 56 lane miles of chip seals on ODOT highways. County billed ODOT $142,000 for work completed. Most projects were partnership type projects where equipment and operators were a mixture of ODOT and County. • County sign shop fabricating signs for ODOT. • Agreement for County to utilize ODOT geotechnical services. • County shops doing some equipment repair and maintenance for ODOT • ODOT buying fuel from County • County and state exchange some spray areas for efficiency. • County and state exchanging paint striping for roads and highways for efficiency In-Formal Partnering Partnering agreement which allows the trading of eggipment and personnel without billing each party. For the 09-10 fiscal year, this resulted in 779 labor hours and 313 equipment hours of Jackson County "partnering work" where a bill was not sent to ODOT. ODOT completed a similar number of hours for the County. Areas where this partnering work occurred include: • Joint snow plowing of each other's roads • ODOT deicing County roads (billing for material cost, but not labor or equipment) • ODOT blowing snow on County roads • County supplying culvert flusher and joint crews completing vactor work. The County purchased the culvert flusher with a commitment from ODOT that they would utilize the equipment and would be billed the equipment rental rate for its use. The operator(s) time of the culvert flusher is not billed and considered to be part of the partnership. For the 10+ years we have had this agreement, ODOT has logged more hours on the equipement than has the county. • Joint sign installation and maintenance on each other's roads Sharing of stockpile sites Other Partnering Activities • ODOT buying cinders and aggregate from County contract. • Sharing of the maintenance and planting of a wetland mitigation site for County and ODOT projects. • ODOT and County co-planning capital projects that impact both jurisdictions. Lesson's Learned I think the impediments to partnering are mostly made up. My experience from both the ODOT and County side is that if you want to partner, you will, if you don't, managers and staff can find a thousand reasons why it won't work. Most all those reasons are easily overcome if that's the collective desire, if that's not the desire; they will kill it every time. The lesson's we've/I've learned are as follows: • Three keys to successful partnering: - Relationships - Relationships - Relationships • Staff will follow their managers - Lead the partnering efforts. Meet often with peer managers, go to lunch, resolve issues • Sell this to your managers, you need their help! • Hold Regular planning meetings, Quarterly is best, semi-annual is ok • Jump on relationship issues fast - don't let issues brew • Address safety, traffic control, and liability issues up front - This will get in the way if you don't. Bottom line is that you have to follow the rules of the road owner you are working on. For example, If ODOT want s 48" signs for the secondary highways, even thought 36" signs are allowed, you have to use 48". • Focus partnering activities where the efficiencies cannot be argued i.e. for us, ODOT doesn't have to buy a chip-spreader / county doesn't buy a snow blower. 8/19/2011 `~~rliV9 ~Yafi-l►i~7~!` A~Y'w1+YIQ~~ Histor' • Started in 1994 under Joe Strahrs leadership for the County and ODOT to partner. • April 1995- Flexible Service agreement- billing each other • Fall 1995- stop billing for "small stuff" - simply trade • 1996-1998- Focus changed from partnering to merging into a single organization i' fl y C ~ynT Yti~ . k Tunes of vartnering • Co-location of facilities • Formal Work (bills exchanged) • In-Formal Work (no bills exchanged) • Other Misc. Partnering 0D0T I Jackson iCot i,Ity'` aitnenng Sign Crews co-located since Marsh 1998 • Crews work on each others roads regularly, usually without billing each other • County makes most small signs for ODOT SIGN SHOP" i ~j History • 1998 - Feasibility study to merge into a single organization - showed a savings 596 • Huge organizational and legal challenges • 1999 - changed direction to move back to partnering and away from merging. • 1999 - Present - considerable partnering between the two organizations. % ~g CoAccation • January 1997-ODOTProject Management staff and O'istrict Maintenance Office - County built an office for state on county compound - County occupies about 20% of building - 10-year lease, monthly bills - Building was "paid for" by 2007 • Sign Crew-March 1998 • OOOT Technical Center Staff - Sept 2005 - County built a 2"d office for state on county compound - 10-year lease, monthly bills k'`ru ~fN 'ODOT Jackson toUntYVArf n9 Formal Partneerinit • Typically utilizes a flexible service contract • Bills for sharing equipment and labor are usually exchanged • "Safest" way to partner - everyone is always whole. Important when materials are involved. • Billing rates and total costs will often limit this type of partnering • Expensive activities (pavement work particularly) should usually be a formal billing type of partnering 1 8/19/2011 >rn Formal Partnering - examples • County chipsealing ODOT highways • ODOT inlay patching county roads • ODOT completing all signal maintenance for county • County fabricating state signs • County shop repairing state equipment • Exchanging paint striping • State deicing county roads (material cost) In-Formal Partnering • Joint snow plowing • ODOT snow blowing county roads • Shared use of the culvert flusher • Joint sign installation and repair • Sharing of stockpile locations (don't mix the pile) • Labor for ODOT deicing county roads • For FY 07-08, Jackson County and ODOT'traded' 952 hours of labor and 668 hours of equipment. • Some years has exceeded 1500 hours labor 0DO' / Jackson 0ourdy IF.artnering Lessons Learned • Three keys so successful partnering: - Relationships - Relationships - Relationships • Staff will follow their managers - Lead the partnering efforts. Meet often with peer managers, go to lunch, resolve issues • Sell this to your managers, you need their help! • Hold Regular planning meetings - Quarterly is best, semi-annual is ok In4ormal Parknering • Bills for sharing equipment and labor are usually not exchanged • Make sure you have support from the policy makers -TRACK COSTS! • Should utilize an IGA or other similar tool • Truest way to partner - organizationally blind • Be careful doing this with materials. • "Balance the books" yearly based on hours, not $ Other Misc. Partnering • ODOT buying cinders and aggregate from County contract • ODOT and County sharing a wetland mitigation site • ODOT buying fuel from county • ODOT and county sharing phone answering and other administration duties ODOT I Jadkson-CouniV-Parbi6rift Lessons Learned • Jump on relationship issues fast- don't let issues brew • Address safety, traffic control, and liability issues up front • Focus partnering activities where the efficiencies cannot be argued - i.e. ODOT doesn't have to buy a chip-spreader / county doesn't buy a snow blower. 2 Clemmons and Saager l 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Financing Low-Volume Road Improvements Gregory H. Clemmons, P.E. (corresponding author) Operations Engineer Washington County Department of Land Use and Transportation 1400 SW Walnut Street Hillsboro, OR 97123 (503) 846-7653 (phone) (503) 846-7620 (fax) gr_ a clemmonsgco.washington.or.us Victoria Saager Management Analyst Washington County Department of Land Use and Transportation 1400 SW Walnut Street Hillsboro, OR 97123 (503) 846-7616 (phone) (503) 846-7620 (fax) victoria saa ergco.washinaton.or.us Submitted August 31, 2010 Body of the report (7500 words max. - figures, tables and photos = 250 words each) 5 tables/figures 6,077 words in text Clemmons and Saager 1 ABSTRACT 2 In the last 30 years, the population of Washington County, Oregon, doubled to more than 530,000 residents. The 3 waves of development came with growing pains. Many local roads were gravel, sparking citizen concern. 4 Population growth generated higher traffic levels on low-volume local roads, making some surface upgrades more 5 cost effective over the life of the road. But little funding was available for maintenance and improvement of local 6 roads. 7 The county has about 250 miles of gravel roads in its 1,279-mile inventory. Upgrading all the gravel roads 8 to a standard four-inch hot mix asphalt pavement would require an investment of over $50 million. If all were paved, 9 a 20-year overlay interval at a cost of $2 million a year would be challenging to fund and difficult to justify. 10 Despite these challenges, under ever declining budgets, the entire county road system is now in good 1 1 condition and about 75 miles of low-volume roads that were once gravel are now hard surfaced. Grants, local 12 improvement districts and cooperatively funded projects were used to place chip seals and asphalt pavements on 13 many roads. Washington County's Board of Commissioners adopted and backed road maintenance policies and 14 county voters supported funding initiatives that made possible a variety of creative financing methods to fund low- 15 volume road improvements in an increasingly urbanized area serving an ever more demanding public. 16 Clemmons and Saager 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 BACKGROUND Population growth projections in the mid-1980s led Washington County planners to two obvious conclusions: transportation infrastructure improvements were needed and road maintenance funds were not sufficient to keep up with demand. County roads were in a deteriorating condition and, as a result, Washington County's Transportation Plan (1), adopted in 1988 as an annex to the "County 2000" (2) strategic plan, states that new road construction, reconstruction, improvements and maintenance should be funded by the benefiting parties. The plan also prioritizes the use of road maintenance funds (Road Fund), derived primarily from gas tax. The Road Maintenance Priority (RMP) policy, shown in Table 1, identifies emergencies, hazards and mandated items as the highest priority and reconstruction of local roads as the lowest priority. With funding only reaching Priority 7, the upgrade of low-volume local roads is not possible with normal maintenance allocations. TABLE 1 Washington County Road Maintenance Priorities Activity Arterial Collector Rural Resource Route Neighborhood Route Local Road Mandated 1 1 1 1 1 Emergencies 1 1 1 1 1 Hazards 1 1 1 1 1 General Maintenance 2 3 4 5 8 Minor Improvements 6 7 11 13 14 Reconstruction 9 10 12 15 16 Through the 1990s, Washington County slowly dug itself out of a "pothole" with the help of three significant initiatives. The first was implementation of a pavement management system that reflected the strategies established by the RMP. The other two were new road funding initiatives that benefited the entire county road system. The Traffic Impact Fee (3), approved by voters in 1990, required every new development to pay an amount, based on projected traffic increases, to support road improvements. The Major Streets Transportation Improvement Program (MSTIP) (4), approved by the voters three times (1986, 1989 and 1995), assesses a property tax which funds a specific list of major road improvements. Through these funding initiatives, Washington County spent about $925 million in major system road improvements over the last 25 years. These two new funding sources, in alignment with the "County 2000" philosophy, addressed county-wide needs on the major system roads. All county residents benefited, and they all funded the improvements through their property taxes. Since 1988, the Transportation Plan, "County 2000" and the RMP have served as a valuable compass for the Road Maintenance Division. Although these policies have been tested many times by local road issues, staff and the Board have held the line, which has paid dividends. The Transportation Plan underwent minor revisions and was updated in 2002, with the RMP remaining basically intact. While the major road system was undergoing significant improvements, the low-volume local roads were continuing to deteriorate. By 1993, many local roads, both rural and urban, were in poor condition, with little prospect for improvement. In the urban area, 23% of the low-volume neighborhood streets were rated in poor or very poor condition. Voters in the urban unincorporated area approved formation of an Urban Road Maintenance District (URMD) (5) in 1987, and in 1994 voters approved a property tax to support URMD. URMD successfully fulfilled the need for road surface maintenance funding on local roads in the urban area. Rural low-volume roads were also in deteriorating condition, but rural voters failed to approve the formation of a Rural Road Maintenance District in 1987 to fund maintenance of rural local roads. With low population density, lower property values, and just as many road miles to be maintained as in the urban area, a much higher tax rate would be needed to deliver URMD-level service in the rural area. Consequently, funding for maintenance and improvements on the rural low-volume roads is virtually nonexistent. When compared to other Oregon counties, Washington County is in an unusual position, both geographically (Figure 1) and economically. As a suburb of metropolitan Portland and as one of the top ten Oregon counties for gross agricultural sales receipts, it has had to balance demands from both sides of the urban/rural fence. Clemmons and Saager 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Oregon's land use laws and the county's strict development code limit development to within the urban growth boundary (UGB), which has led to a sizeable population in the urban area. In fact, the population of unincorporated urban Washington County exceeds 200,000, making it Oregon's second largest "city". About 90% of Washington County's population lives in the urban area; only 10% are rural residents. Consequently, the demands of the urban area often trump the needs of the rural area. However, the county's road system of 1,279 miles is split about equally between urban and rural (659 rural, 620 urban). Of the 659 miles of rural roads, 413 are low-volume local roads. Of these rural local roads, 250 miles are gravel. The road maintenance budget (excluding URMD) is spent about equally between the rural and urban areas. U E Wih,ur RivcrllvV aunsek Ff~r. V,+ison FiverHwY. Fore!-` Grove (5as t.Ori North '_L N0 _11m; wept Union [V LS~UYels4GGti ~as'minc~on " ~R d. R d. La i~l Rd. f ~Sr:ru u' c m ~ Urban p13fPA k h w r~ Ferry Rd. as ' 9 r I FIGURE 1 Map of Washington County, Oregon 1Xw somri II e ADDRESSING THE PROBLEMS Local governments can be hotbeds of citizen activism and Washington County is no exception. By 1994, the poor condition of the low-volume rural road system generated many complaints to staff and elected officials. Something more than a simple "NO" was needed as an answer to requests for improved service. To address this, a collaborative solution was sought and the Rural Roads Operations and Maintenance Advisory Committee (RROMAC) (6) was formed. RROMAC is comprised of 12 citizen members who reside or have business interests in the rural area. Representatives from Christmas tree farms, nurseries, school bus service providers, fire departments, large scale timber operations, bicycling interests and general residents have served on RROMAC. Initially, staff assumed they knew best and frequently cited authorities such as AASHTO, the Manual on Uniform Traffic Control Devices (MUTCD) and "County Standards" as reasons for denying requests. Over time staff's posture has changed to that of "finding ways to meet the needs" while remaining within accepted rules and guidelines. As a result, RROMAC has become a true ally of the Road Maintenance Division and has lent their support to numerous initiatives. In turn, the division has implemented several efforts initiated by RROMAC. It has truly been a "win-win" relationship. Clemmons and Saager 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 In the late 1990s, significant weather events brought the plight of Washington County's rural low-volume roads to the forefront. Flooding struck the northwest in February 1996 devastating much of the county's rural infrastructure. Over five feet of snow accumulated in the Coast Range, much more than normal. The snow was followed by a warm rain. In three days more than 20 inches of rain fell on the snow pack in the mountains, while over eight inches fell on the valley floor. All of the snow melted, numerous landslides occurred, roads were washed out and several bridges were destroyed. Emergency response efforts greatly diminished the county's budget reserve. More flooding and then freezing temperatures in 1997 weakened the sub-grades on many low-volume roads chip sealed in the 1970s. As directed by the RMP, safety was the immediate concern. Vehicles dodged potholes, veering into the oncoming travel lane, increasing the risk of serious crashes. Long past their expected lifespan, these deteriorating roads needed to be rebuilt. But with no funding available for reconstruction, the decision was made to revert 12 low-volume roads to gravel (about 10 miles). Although the decision was consistent with the RMP, the Transportation Plan and "County 2000", and it was supported by the County Board, it was very unpopular. RROMAC understood the dilemma and reluctantly supported staff recommendations. Local residents and road users were understandably upset about the reversions. Alternatives to reversion all required the adjacent property owners to pay for the reconstruction, in accordance with "County 2000" policy. It was a somewhat "bloody" chapter in the history of low-volume roads in Washington County, but it was not the end of the story. As a result of the reversion chapter, RROMAC recommended and the Board adopted a resolution directing that 10% of any new road money be allocated to rural local road improvements (gravel road upgrades). A supporting argument was that dust damages roadside crops, reducing agricultural revenue to local farmers, and is therefore a detriment to the county economy. However, new money is difficult to find in times of diminishing budgets. SURFACE TREATMENT STRATEGIES AND COSTS Washington County uses a pavement management system to assist in developing its pavement maintenance program. Information from the system is used to plan future budget needs, and to assess the impact of varying long- term budget scenarios on pavement conditions. Maintenance strategies are selected to optimize the budget amounts by treatment type (seal coats and overlays). Seal coats are either chip seals or slurry seals. Chip seals are applied in the rural area on major system roads. Slurry seals are applied on local, low-volume streets in the urban area and are funded by URMD. In addition to the preventive maintenance chip seal program, a three-shot chip seal may be applied over a prepared base as a gravel road upgrade, funded by stand alone funding mechanisms. Again, strict adherence to the RMP has been instrumental in the design of these various programs of work. Consistent compliance to the RMP over the years has strengthened the county's position and enabled it to hold the line when unusual requests are made. Major system roads in the urban area are usually overlaid with a standard two-inch lift of asphalt if structural problems are evident, or given a thin lift overlay of one-inch thickness if a true preventive maintenance treatment is warranted. As a rule, seal coats are not applied on major system urban roads because these roads have traffic volumes exceeding 10,000 vehicles per day. The long lane closures required by the seal coat set up time (longer than four hours) is extremely difficult to manage; traffic on the overall network suffers during the work. Standard and thin lift overlays, while more costly, provide the best maintenance strategy for these high-volume urban roads. To this point in the discussion about surface treatment, strategies on high-volume urban and rural roads have been mentioned along with low-volume local roads in the urban area. What hasn't been mentioned is the strategy for the low-volume roads in the rural area. This has been and continues to be a vexing problem for the county's road system, and for the users of these roads. Washington County has 413 miles of local roads in the rural area. Paved surfaces comprise 163 miles (39%), while the remaining 250 miles (61%) are gravel surfaces. The challenges these statistics present are (1) routine maintenance of the paved surfaces and (2) the desire of many rural residents to have their gravel road upgraded to a paved or chip seal surface. Both of these activities are identified as Priority 16, the lowest priority on the RMP. According to "County 2000", this type of work will not be accomplished through the normal Road Fund budget. It must be funded by the benefiting parties: the property owners. The two most frequent arguments received from citizens who want their roads upgraded are: 1. I pay property taxes, so the county should pave my road. 2. My road is used as a major thoroughfare, decreasing my standard of living and my property value, so the county should pave my road. Clemmons and Saager 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Addressing these arguments has largely been a matter of providing public information. Property taxes, except for the relatively small MSTIP assessment, are used for schools, public safety, social services, etc. Gas tax is the primary revenue source for road maintenance, with very little left over for improvements. The gas tax in Oregon has not increased since 1993. The effective purchasing power of the gas tax revenues have diminished markedly in the 17 years since the last increase. The state's $0.24 per gallon gas tax currently buys what $0.10 bought in 19939 assuming a 5% per year construction industry inflation rate. Most citizens accept the wisdom of keeping the heavily traveled major roads in good condition and that there really isn't any money for low-volume gravel road upgrades. Similarly, when the population trends are explained to the citizens, they understand that there are more cars everywhere and traffic volumes are going to increase, even on their low-volume roads. Another argument often presented by the public favoring the paving of the low-volume gravel roads is that it is cheaper to pave a road than to maintain it over many years as a gravel surface (replace rock, grading). Washington County's cost records over the past 20 years show the cost to maintain its 250 miles of gravel roads is an average of $3,160 per mile per year (current cost). This includes grading and surface rock replacement only. Drainage, vegetation and sign maintenance costs are about the same on both gravel and paved roads. There is, however, a loose correlation between traffic volume and maintenance cost, based on a sampling of twenty gravel roads. Regression analysis of the data shows that the grading and rocking costs can be estimated by the formula C = 8.84V + $2,164, where C is the average maintenance cost per mile per year and V is traffic volume or average daily traffic. Gravel Road Maintenance Cost $7 000 , $6 000 , $5 000 , c 4 000 . $ , m E $3 000 , m a $2 000 y , 0 U $1 000 , 0 50 100 150 200 250 30 0 Traffic Volume (V) FIGURE 2 Graph showing annual maintenance costs of selected gravel roads Upgrading a gravel road costs the county about $110,000 per mile for a three-shot chip seal. This includes a small amount for base rock additions and soft spot repairs. An additional single-shot chip seal, at $37,000 per mile, is applied at about ten-year intervals, along with spot maintenance to repair soft areas and potholes. Based on this analysis, it appears that on low-volume roads a gravel surface is the most economical alternative. If user costs and an accelerated maintenance cost, both adjusted by traffic volume, are added into the analysis, the findings change. Assuming a user cost savings of $0.10 per mile for a car driving on a paved surface as compared to a gravel surface (7), and combining that cost with the annual gravel road maintenance cost results in the following value: C = 8.84V + 2164 + (0.10V)(365) =44.9V+2164 Where: C 8.84V + 2164.3 ♦ = Rz = 0.2222 ♦ C =Annual cost for a gravel road (maintenance and user cost included) V =Traffic volume (average daily traffic) Clemmons and Saager 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 The graph of this equation is shown in Figure 3. Gravel Road Maintenance and User Cost $30,000 $25,000 a~ T $20,000 CL C = 44.9V + 2164 $15,000 - m c $10,000 . to a 0 $5,000 0 100 200 300 400 500 600 Traffic Volume (V) FIGURE 3 Graph showing maintenance and user cost as a function of traffic volume. Where is the breakpoint when it is more economical to pave a road than it is to leave it in gravel? To determine this, a long range look at the costs of the two alternatives considering the value of money is used. The approach used here assumes that a pool of money is invested so that the return is sufficient to pay for the cost of future expenditures. The size of that investment amount for the alternate courses of action (gravel vs. paved) is the unknown. For this case, we've assumed that the amount is invested in an account that returns 2% per year more than inflation. Table 3 shows the assumptions made and the results. The assumptions call for an initial three-shot chip seal, single-shot chip seals at the 10-year points and then a grinding and rebuild with another three-shot chip seal at 20-year intervals. $1,000 per year per mile for routine maintenance is also anticipated. The analysis is carried out for 100 years, although it is recognized that that may not be a realistic scenario. It is just used for analysis purposes. With these assumptions, the breakeven point in terms of traffic volume is at about 145 vehicles per day. Varying the interest rate does not affect the overall outcome significantly. For example, using an interest rate of 4% above inflation results in a breakeven point of just under 200 vehicles per day. Clemmons and Saager TABLE 2 Chip Seal vs. Gravel Surface Maintenance and User Cost Analysis Gravel Road Maintenance and User Cost Maintenance Investment 0 $2,164 $108,200 100 $6,654 $332,700 200 $11,144 $557,200 300 $15,634 $781,700 400 $20,124 $1,006,200 500 $24,614 $1,230,700 ADT and User Cost Amount Chip Seal Alternative 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Investment Activity Actual Amount Amount Initial Construstion $110,000 $110,000 Annual Cost $1,000 $50,000 10 year seal $37,000 $30,353 20 year rebuild $110,000 $74,027 30 year seal $37,000 $20,427 40 year rebuild $110,000 $49,818 50 year seal $37,000 $13,747 60 year rebuild $110,000 $33,526 70 year seal $37,000 $9,251 80 year rebuild $110,000 $22,562 90 year seal $37,000 $6,226 100 year rebuild $110,000 $15,184 $435,119 Based on this analysis, it appears that the more cost-effective approach would be to chip seal any low- volume road with an ADT above 145 vehicles per day. According to current traffic count information, this means that a chip seal surface would be more cost-effective than gravel on about 40 miles of county roads. This would require about $4.4 million for chip sealing costs. Unfortunately, there is no funding available for these improvements. Compared to other infrastructure-related needs such as routine maintenance on major system roads, congestion relief, bridge repairs and replacements, traffic calming issues, bike and pedestrian concerns, etc., it is apparent that only the most critical gravel roads should be paved under present funding levels. FINANCING TOOL KIT Washington County's annual road maintenance allocation, which is funded from gas taxes, weight-mile distribution and vehicle registration fees, is approximately $17 million. This is high relative to other counties in Oregon, but, because of its population, the county's transportation needs are somewhat greater than most other counties in the state. Through a judicious implementation of the policies contained in the Transportation Plan along with the various capital improvement programs, the county has been able to keep its major system in good condition. Additionally, the URMD has provided a reliable and consistent funding source for its low-volume local roads in the urban areas. What hasn't been made available is money for the funding of improvements in the rural area. Recognizing that money was and would continue to be limited, the 1988 and 2002 Transportation Plans stated that improvements should be borne by the benefiting parties. This has been carried out on the major system roads and within the URMD quite successfully. Because of the relatively sparse population density and the large road network, the same has not held true in the rural area on a consistent basis. However, there have been numerous success stories in the rural area over the past 22 years. These have been made possible by creatively seeking out funding opportunities from a variety of sources. Funding has been made available from federal grants, state bond measures, county money and private sources. What follows is a discussion of how approximately 80 projects have been creatively funded over this time. As with most bureaucracies, Washington County employs acronyms very liberally. Gravel roads have been upgraded and then maintained through URMD, LIDS, MLIDs, Co-ops, GRUB, CDBGs, FAs, and blends of these. Clemmons and Saager 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 All have been employed to some extent in developing small projects to pave the low-volume gravel rural roads. Most of these projects were initiated by the residents living along and using these roads'' What these projects demonstrate is that funding mechanisms are available for local governments to use under the right circumstances. Urban Road Maintenance District (URMD) Washington County's greatest success story related to low-volume road financing is the URMD. Voters in the urban unincorporated area approved formation of the URMD in 1987, but failed to approve funding until 1994. On its third presentation to voters, a property tax to fund the district narrowly passed by a margin of only 137 votes (50.3% approval). The property tax rate of $0.245 per $1,000 assessed value, $49 per year for a $200,000 house, provides $3.5 million a year for maintenance of 430 miles of low-volume local roads in the urban area. A recent audit of URMD (8) projected that the current tax rate will be adequate to maintain current service levels for another 10 to 15 years. With URMD-funded maintenance, the percentage of road miles rated fair or better increased from 77% in 1994 to 99% today (2010). The average pavement condition index (PCI) for URMD is now 86. URMD successfully fulfilled the need for road surface maintenance funding on local roads in the urban area. An emerging unfunded need in the urban area is construction and maintenance of bicycle and pedestrian facilities. Local Improvement District (LID) The most commonly used funding mechanism in the rural area is the LID. Washington County Code, Section 3.20.320 (9), provides the mechanism to form an LID in the rural area. A typical LID will provide funding to pave or chip seal a gravel road that is less than two miles long, with 30 or fewer adjacent residences. LIDs require that the benefiting parties pay for the cost of the improvement. All properties along roads that are tributary to the road improvement contribute to the project. LIDs are voted on by the affected property owners by signing a petition which is developed by County Counsel. Each property owner is given one vote, with a husband and wife counting as a single vote. An owner of multiple parcels is given one vote. The Board approves the LID if the majority of the affected property owners sign the petition. There are two strong advantages to forming an LID. First, everyone within the LID area pays for the improvement, spreading the costs out. Secondly, the property owners can take up to 10 years to pay for their share, which is typically $2,000 to $4,000. Along with the advantages, there are disadvantages. The process is democratic, sometimes ruthlessly so. Owners of multiple parcels, while given one vote, are responsible for paying for each parcel. Also, there are no provisions for low income participants. Elderly couples on a fixed income, but owning multiple properties are often the hardest hit. Definition of the LID area is critical to the process. In the case of a dead end road, it is obvious. In the case of a through road or a partial road, the definition of the area can become complicated and sometimes contentious. Sometimes, adjustment of the boundaries on an unsuccessful LID has resulted in approval of the newly defined LID. This can lead to the inclusion of unwilling participants and is done only after serious consideration. Maintenance Local Improvement District (MLID) MLIDs are a variant of the LID process. They allow a group of property owners to "buy into" a maintenance program. Implemented in the late 1980s, they were originally intended to fund maintenance on the local roads associated with new subdivision development. With the formation of the URMD, their need has been largely eliminated. While development-related MLIDs are still formed as a safety net for URMD, maintenance fees are not assessed. There are, however, a couple of active MLIDs in the rural area. One is on a public local access road which is ineligible for Road Fund maintenance. The other was formed as an "add-on" to an LID. With these MLIDs, funds are built up for resurfacing as needed. The MLIDs have been very successful in keeping these road segments in excellent condition. Cooperative (Co-op) Project In the absence of a clear majority support for an LID, one or more property owners may still wish to improve their road by forming a Co-op and paying for the improvements up front. They can have the county prepare and chip seal the road. Or they can hire their own contractor and complete the work under a county right-of-way permit, to county specifications. A Co-op occurs most often on a road that provides access to a small business or on a road that has recently undergone housing construction and a few new residents have moved to the area. A Co-op is the simplest Clemmons and Saager 10 l 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 funding method to administer. A Co-op is simple and quick, compared to the process required for an LID. The obvious disadvantage is that not everyone who benefits from the improvement pays his full fair share. Gravel Road Upgrade (GRU) Program The Background Section of this paper briefly discussed the role that RROMAC has had in finding "new money" for low-volume road improvements. With the purpose of advising staff and the Board on the operation and maintenance of rural roads, RROMAC has a strong interest in advocating for additional rural road funding and making sure that available resources are used effectively. The reversion crisis that occurred in the late 1990s resulted in the "10% New Money Rule". RROMAC was instrumental in the adoption of that rule by the Board and guided the development of the prioritization model for selecting which roads to improve should any new money appear. Gravel roads can be an inconvenience for many from traffic generated dust entering nearby homes and a nuisance for keeping cars clean and presentable. Gravel roads will cause accelerated wear and tear on vehicles, reflected in the $0.10 differential in user costs for paved versus gravel roads. In the winter time, mud and potholes can cause similar livability and user cost concerns for the general public. Health and air pollution are concerns for others. But for the farmers and agricultural interests, dust results in crop damage that creates an economic hardship. One RROMAC member who operates a large nursery business tracked roadside crop size reduction and the related loss of value due to dust damage. Over three years of meticulous tracking, he calculated the loss to be $3,000 a year for every 100 feet of gravel road frontage. He noted that crops closest to the road had greater reduction, with some being unmarketable. Crops farther from the road experienced half-size reduction, when compared to crops beyond reach of the road dust. To deal with the livability and crop damage issues, RROMAC asked staff to develop a prioritization model that reflected these two concerns. A benefit-cost model was developed that identified the benefit as the elimination of dust damage to crops and the reduction of dust-related livability issues. While true values of these items were not calculated, surrogate values were assumed. Points were assigned for houses. Dust sensitivity and relative value of crops were categorized as high, medium and low sensitivities and values. A substantial inventory effort was undertaken using technicians and RROMAC volunteers to identify the crop types and lengths of frontage along with the number of houses along each road section. The following model was developed: P = (S+H)(I)(F)(T)/C; Where P = Priority Points S = Crop Sensitivity Points, H = House Points I = Road Importance Factor (dead end) F = Functional Class Factor T = Traffic Volume Factor C = Cost of Improvement The initial model was developed so that the sum of the house points was equal to the sum of the crop sensitivity points. This was the "balanced" model. It was later modified to weight the sum of the crop sensitivity points equal to double the house points. As previously stated, "10% New Money" is quite rare, but it occasionally does happen. It happened for Washington County in 2004 with the passage of the Oregon Transportation Investment Act (OTIA) (10). The county receives about $1.5 million per year in OTIA funds for its 10-year period. The "10% New Money" policy results in about $150,000 per year for low-volume road improvements, or enough to chip seal a little over a mile of gravel road. While it is just a drop in the bucket, the GRU has been a significant benefit to the agricultural interests within the county. Almost 20 miles of gravel road have been improved over the last seven years, funded at least partly through the GRU program. Community Development Block Grant (CDBG) Program (11) Most low-volume gravel roads do not compete well for the extremely limited GRU funds. Additionally, many residents living along them do not have resources sufficient to pay for an LID or a Co-op project. But sometimes, for a variety of reasons, there is a need to improve the surface. Such was the case for Sell and Turk roads in the summer of 2008. Sell Road connects two segments of US HWY 26, the major artery connecting Portland with the northern Oregon coast. Occasionally, because of an accident between the two Sell Road access points, HWY 26 would close detouring traffic, at a rate of several thousand vehicles per day, onto Sell Road, an otherwise low-volume rural gravel road. The problem steadily grew over the years, as traffic volumes increased between the coast and Portland. Clemmons and Saager 1 I 1 Numerous complaints about dust and the traffic came from residents. Their solution was to have the county pave the 2 road. Because there were no high-value dust-sensitive crops along Sell Road, it was not competitive for GRU 3 funding. The financial resources of the residents were not enough to pay for an LID. And there was no individual or 4 small group of people who could afford the cost of a Co-op. 5 The Road Maintenance Division had previous experience with the federal Housing and Urban 6 Development's (HUD) CDBG Program on past projects. Eligibility for CDBG funding depends on a sufficient 7 percentage of the residents being at or below moderate income levels. A survey of the individuals living along the 8 road was needed to determine if the project was eligible for the program and, once shown to be eligible, it competed 9 against other infrastructure candidates proposed by other agencies in the county. Turk Road, a tributary to Sell Road, 10 was included in the scope of the project to satisfy HUD's requirements. 1 1 After two tries, the county was awarded a grant to cover the cost of a chip seal on Sell and Turk roads, with 12 the county paying for the preparation cost as the county's match. The project was completed in August 2008 and 13 successfully resolved the residents' problems with dust generated by the HWY 26 traffic detours. 14 15 Road Fund Projects 16 While the County's RMP generally eliminates the possibility of using Road Fund revenues for making 17 improvements on low-volume roads, there are times when it is the right course of action. This usually occurs when a 18 short segment of gravel road is remotely located, or when it is between two segments of paved road and there are no 19 other gravel roads in the area. The cost of mobilizing a grader and trucks to the site to restore the template increases 20 the cost of gravel road maintenance up to where it is more cost effective to apply a chip seal surface. While it is very 21 rarely done, using Road Fund for low-volume road improvements is another "tool in the tool box". (URMD also 22 upgraded some gravel road orphans where maintenance mobilization costs warranted.) 23 24 Combinations 25 While there are strict guidelines for financing low-volume road improvements in Washington County, there is room 26 for exercising creativity in solving a problem. Such was the case for a gravel road that experienced a large increase 27 in heavy truck traffic due to the operations of a commercial nursery. A small community-supported farm that 28 provided fresh organic produce to its members was also located along the road. 29 The traffic on the road had grown to exceed the normal levels for a low-volume road, and by 2006 it had an 30 ADT of almost 700 vehicles per day, with 38% trucks. Because of the organic farm's high value dust-sensitive crop 31 points, it was competitive on the GRU priority list, but only as a chip seal surface. With the volume of truck traffic, 32 a chip seal surface would quickly fail, making hot mix asphalt a requirement, 33 The county, the nursery and the organic farm negotiated the financing of a project that combined GRU 34 funding, Co-op payment and Road Fund resources. The county used Road Fund to pay for the preparation cost, 35 justified by future savings in gravel road maintenance. The GRU program funded the cost of a chip seal surface, 36 based on the fact that it would have been the top priority for this program had the traffic been similar to other low- 37 volume roads. Finally, the organic farm and the nursery paid for the cost difference between a chip seal and the five 38 inches of hot mix asphalt concrete pavement. 39 40 SUMMARY 41 Budgets for maintaining and improving transportation infrastructures are continually being stretched. New 42 requirements such as increased standards, additional environmental regulations, and legal issues further diminish the 43 amount of money available. The infrastructure is continuing to deteriorate, creating increased demands on what is 44 already in place. The picture for improving low-volume roads is bleak. 45 Having policies approved and enforced by the governing officials is critical to the success of transportation 46 management agencies. It is often too easy for the manager to give the user or tax payer what he wants, but without 47 support from senior management, this will usually result in a negative impact in the long term. Washington County 48 has been fortunate for.the past 23 years to have a Board-adopted and enforced Transportation Plan. Its "benefiting 49 parties" concept is translatable into all aspects of its road system across the county. 50 Citizen advisory groups such as RROMAC are important to the success of a program. Staff benefits 51 tremendously from the professional relationships formed. For example, having a design engineer ride in a large 52 wheat combine to better understand its maneuvering requirements along a low-volume road is far better than 53 studying output from a computer program showing the off-tracking characteristics of that vehicle. Explaining 54 funding limitations to a group of interested citizens provides them with the knowledge and tools to communicate to 55 their friends and business acquaintances that there really is a valid reason for not making desired improvements. Clemmons and Saager 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 Jointly developing a Gravel Road Upgrade Prioritization Model provides both parties ownership in that model which can be defended by both when it is challenged by an upset citizen. Finally, having the mechanisms in place to make improvements on low-volume roads is crucial. While formal design expertise is important, practical knowledge of existing methods is equally important. Using the AASHTO pavement design process on a low-volume road paving project may prove to be cost prohibitive and impractical. An LID provision in a county code lays out the procedures and requirements that can be applied consistently from one project to the next. Implementing a "10 Percent New Money Rule" through board adoption provides legitimacy to the process. Board-supported road maintenance policies and voter-supported funding initiatives made possible a variety of creative financing methods to fund low-volume road improvements in an increasingly urbanized area serving an ever more demanding public. REFERENCES 1. Washington County 2020 Transportation Plan. Adopted by Ordinance 588 on Oct. 29, 2002. http•//www co washiniZton or us/LUT/Divisions/LonizRangePIanniny/PubIications/transportation-plan cfin Accessed Aug. 21, 2010. 2. Washington County. Mission and Strategic Plan http://ivimv.co.lvashinglon.or.us/CA0,+VissionStratelZic/index.cfmAccessed Aug. 26, 2010. 3. Washington County Land Use & Transportation, Transportation System Funding. What Was TIF?. http://www.co.washington.or.us/LUT/TransportationFundin / TransportationSystemFunding/what-is-tif cfm Accessed Aug. 26, 2010. 4. Washington County Land Use & Transportation, Transportation System Funding. What Is MSTIP? http://Nvxvw.co.washinaton.or.us/LUT/TransportationFundin /g TransportationSystemFundina/what-is-mstip cfm Accessed Aug. 26, 2010. 5. FrameWork LLC. Washington County Auditor. Performance Evaluation of the Urban Road Maintenance District (URMD) Final Report, February 2009. http://www.co.washington.or.us/Auditor/audit-reports.cfni Accessed Aug. 21, 2010. 6. Washington County Land Use & Transportation, Operations & Maintenance. RROMAC. http://www.co.washington.or.us/LUT/Divisions/Operations/rromac.cfni Accessed Aug. 26, 2010. 7. Gravel Roads: Maintenance and Design Manual Download, United States Environmental Protection Agency http://water.epa.gov/polwaste/nps/gravelroads index.cfin. Accessed Aug. 19, 2010. 8. FrameWork LLC. Washington County Auditor. Performance Evaluation of the Urban Road Maintenance District (URMD) Final Report, February 2009. http://www.co.washingion.or.us/Auditor/audit-reports.cfni Accessed Aug. 21, 2010. 9. Washington County, County Charter & Code. http://www.co.washinL-ton.or.us/CAO/CharterCode/index.cfln Accessed Aug. 27, 2010. 10. State of Oregon, Oregon Transportation Investment Act. http://www.oregon.eov/ODOT/HWY/OTIA/ Accessed Aug. 26, 2010. 11. Washington County Community Development, CDBG Block Grants. http://www.co.washington.or.us/Communi Development/BlockGrant/index.cfni Accessed Aug. 26, 2010. JT~-E--S- ~v Department of Administrative Services Dave Kanner, County Administrator 0 AiVA) 1300 NW Wall St, Suite 200, Bend, OR 97701-1960 (5411388-6570 - Fax [5411385-3202 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%. COMPOLInding tile 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 111 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 brine 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 clot less than 70. Which is considered the line between and "fair- condition, and to overlay all arterial and collector roads on a 20-year cycle. Attachment 1 is a five-near 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 $121,000. 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 S5.1 million ligure is derived as follows: All arterials and collectors should be overlaid (with the use of full-depth reclamation on approximately L/3 of these roads) every 20 years. There are -t 14 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 avera~_e per-mile cost of FDR is 5320,000. 20.7 x 2/3 x $210.000=$2,898,000 and 20.7 x 1 /3 x 5320,000 = 52,208,000. $2.898,000 _ $2,208,000 = S5.106.000. Memo to BoC re: Road Maintenance Fundine Page 2 June 15.'--011 prices far outstripping normal inflation and certainly increasing at a far urreater rate than any of our revenue sources: particularly our largest revenue source - state =as 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 tees, this may not be an attractive option. Included with this report is a list of funding options prepared by Tom Biust (attachment 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 ~\clI over actual revenues. Also attached is a live-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 ~_row 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 noC re: (toad Maintenance Funding Pa_c June 1,;. 20 1 1 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 allowting local roads to return to gravel, one w-ay of'looking at it. si I IN 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). • "file 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 b}- one-half. the savings average $2.04 million annually. ([$10.200,000 x .41 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 $x,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 Ii. 1-011 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. Direction as to whether to pursue any other revenue options. I look forward to discussing this further with you in a work session. .Mcmo to BoC rc: Road NIaintcnancc FUndine Paee 3 June 15. 20 11 - r N J W r U > W W J ZIr z a o O o 5 (n W (X In 2 = W NU) W W na00 IX U Q W r CX N O M O C O V O a00 O O O 0) .0 0 u1 N O 0 V O r c0 m te O Qf be W .0 (D 6a ~ Cl) O co ~ N N 64 a0 h h III w to O ^ O ut W fH > N N O E O 2- o O N W T C Y N lp D T N 7 O O N c O V T N ~ 0 r~ 7 SQ O !fl 2 m0M - 0 L Q 0 m Q z N N LL 0 ❑ 0 LL I O a' Y y IX m t6 LL co N O Y Q' 2' - 0 O T aa 0 w m C O y y tU ) TJ p O C D C 0 D O N> O V ow .V U cu0 R Q C 6-0 0 BCD 0 E 0< E O aF ¢Sn° 0 0 0 0 0 0 0 0 0 o h O N Q O C tD O N 0 CD O ? 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O J C 10 U C LL' CD n c0 0 o (D c.c y N h E < O N m to 0: C U - F- 1 11 AT-0::040,0' 2- r 0 J `Q w w ~ V J a CL i a w U 2 ~ d U cn Q~ ce) C 0 c •L a~ w a. m ~ U Q a. ao { Q N 1 1 G Wz 0 LOZ 600z 8002 LOOZ 9002 W sOOz v00z s00z z00z C) LO 0 LO LO CO Lc) L ~ C l) CO N 69 69 6% 6% 6a Efl e% 69 NO1/1SOO LOOZ O N 69 A; TACl-Fr160T' 1 DESCHUTES COUNTY TRANSPORTATION FUNDING IMPLEMENTED LOCAL FUNDING SOURCES June 2011 • Rural Area Systems Development Charge (SDC) Implemented in July, 2008 (Deschutes County Resolution 2008-059) Estimated annual revenue: FY 11-12 budgeted revenue $250,000 Statutory authority: ORS 223.297 to 223.314. 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 e 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. e 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. e 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 4of4 • 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: /~i Te~~I~rtE►~ Memo to Dave Kanner RE: Road Districts October 28, 2008 Page 1 of 4 DESCHUTES COUNTY LEGAL COUNSEL MEMORANDUM CONFIDENTIAL TO: Dave Kanner RE: County Local Option Levy for Roads CC: Mark Pilliod FROM: LAURIE E. CRAGHEAD Assistant Legal Counsel S Ext. 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. Id. 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. CCU 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. 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