Agenda Item - 2022-05-17 - Number 7.2 - Funding Options for Pathway Projects 7.2
COUNCIL REPORT
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Subject: Study Session to Discuss Two Funding Options for Pathway Projects
Meeting Date: May 17, 2022 Staff Member:
Erica Rooney, City Engineer & Public Works Director
Report Date: May 6, 2022 Shawn Cross, Finance Director
Department: Public Works
Action Required Advisory Board/Commission Recommendation
❑ Motion ❑ Approval
❑ Public Hearing ❑ Denial
❑ Ordinance ❑ None Forwarded
❑ Resolution ❑X Not Applicable
❑ Information Only Comments:
❑X Council Direction
❑ Consent Agenda
Staff Recommendation: Not applicable— Council discussion, staff seeking direction
Recommended Language for Motion: Not applicable—Council discussion
Project/ Issue Relates To: Pathway Funding 2022 City Council Goal
Issue before Council (Highlight Policy Question):
❑X Council Goals/Priorities ❑X Adopted Master Plan(s) ❑Not Applicable
BACKGOUND
Throughout Lake Oswego, the City has rural transportation infrastructure with suburban and
urban densities. Much of the roadway infrastructure was constructed under historical county
and low-density standards, which did not require any pedestrian or bicycle infrastructure. For
several decades, the City's Transportation System Plan (TSP) has highlighted the lack of
pedestrian and bicycle facilities as a priority to meet the growing needs of the community, both
in density and travel options, as well as to meet the current design standards for transportation
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeosweao.city
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infrastructure. The current TSP (finished in 2014) identifies over 120 pedestrian and bicycle
facility needs, estimated at over$125 Million potential costs. See attached Exhibit A, which
shows the Pedestrian and Bicycle Projects from the TSP
In 2019, the Transportation Advisory Board was tasked with identifying the top school-related
pathway projects from the TSP that would specifically benefit schools and provide better access
for their students. The TAB the prioritized the projects and identified the first round of school-
related projects for the City Engineering department to work on. Attached Exhibit B shows the
top priority school related projects that are a subset of the overall TSP projects shown in the
previous exhibit.
For the past two years, the City Council has identified pathway installation as a Council priority
and goal. The 2020 goal was "continue focus on pavement quality and pathways...". Then in
2021, the goal became more specific, "increase funding for pedestrian facility, beginning with
safe routes to school". In June of 2021, during the budgeting process for FY 21-23, the City
Council made a one-time approval for an extra $2 Million in general funds specifically for the
school-related pathway project. That project is currently underway in the early information
gathering and design phase, and includes five locations from the School Priority listing that TAB
has provided.
In September 2021, the Council held a study session on funding options. Council directed staff
to return to Council for a study session to explore modifications to the Street Maintenance Fee
and a General Obligation Bond alternative. Most recently in January 2022, the City Council's
Goals included "adopt a funding strategy for pedestrian safety capital projects". This report will
delve into the specific options, details, and impacts of these two funding alternatives.
Pathway Project Costs
Given Lake Oswego's current roadway system, pathway projects are not simple, nor
inexpensive. In total, the TSP identified pathway projects equal $4,945,000 funded projects and
$94,525,000 unfunded projects in the current Capital Improvement Plan FY2021/22-2026/27.
All pathway projects that had scopes limited to the pathway itself and minor infrastructure
updates have been completed. Since the TSP was implemented in 2014, the City has completed
or is in process 12 project locations. Of the remaining TSP pathways projects, the vast majority
will require extensive infrastructure updates, including stormwater facilities and conveyance
systems, curb and gutter, and road construction. Almost all of the projects in the TSP listed are
in places that require significant engineering or design. Many locations lack adequate right-of-
way. Each project in the TSP is an individual site that will require public engagement with each
of the projects to clearly identify needs, impacts, and potential mitigation. For efficiency
purposes, the Engineering staff is trying to bundle several projects into one major effort,
tackling 3-4 locations with a single design team designated to coordinate and compile the plans
for construction. This allows for staff efficiencies, as well as projects being more cost effective
and competitive for contractor bidding.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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For the purposes of this study, we are proposing that funding increase alternatives look for
ways to increase the overall funding by$500,000.00 to $1.5 Million to provide alternatives that
would allow several projects to be combined and moving forward each year. Similarly, for the
bonding alternative, this report will consider a one-time $20 Million bond to cover the costs of
specific projects that are a high priority.
FUNDING ALTERNATIVES TO CONSIDER
The two funding alternatives being explored are very different based on impact to the
community, timeline for using the funds, and how they are enacted.
• The Street Maintenance Fee has a monthly impact on the utility bill. This approach
takes several years for funding to accumulate in order to accomplish a project. City
Council has the authority to change the Street Maintenance Fee rate through a Council
vote.
• In contrast, a General Obligation (GO) bond specifically impacts the annual property tax
billing and can provide more immediate funding for projects. GO bonds must be voter
approved by a ballot election. Both of these are explored in more detail for further
consideration.
Street Maintenance Fee Option
The Street Maintenance Fee (SMF) is just one part of the overall enterprise fund, known as the
Street Fund. The Street Fund pays for a myriad of assets—everything from street landscaping
in the median, street lighting, traffic signals, signs, striping, new curb ramps, pavement
replacement, trash receptacle installation, trash disposal, and so much more. Basically,
everything in the public right-of-way that is above ground or visual is funded, maintained, and
operated using the Street Fund. As discussed in the September study session, the SMF provides
about 1/3 of the total revenue for the entire Street Fund.
The Street Maintenance Fee is a part of the monthly utility bill sent to property owners, both
residential and commercial. It was established by Ordinance 2373 in 2003, clearly defined in
LOC 37.02.015, and is "...based upon the relative direct and indirect use of, or benefit from the
City street system that results from activities within the City..."
Each year, the Master Fees and Charges updates include modifications to the Street
Maintenance Fee, and is indexed using a national, standard from the Engineering News Records
Construction Cost Index (CCI) for 20-city Average. This annual adjustment factors the raising
costs of materials, labor, and inflation per the average costs of construction projects
nationwide. There is an annual minimum 2% and maximum 7% increase limit set, per
Resolution 10-20. Master Fees and Charges are updated and adopted for each calendar year.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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Table 1 - Current July 1, 2021 Street Maintenance Fees
Single Family $9.95
Multi-family (per unit) $7.11
Non-Residential
Group I $6.08
Group II $13.69
Group III $50.12
For comparative purposes, the current Master Fees and Charges (page 6) indicted that other
local agencies that have SMFs charges between $4.66 to $14.52 per month for single family
residential customers. Oregon City and West Linn are both in the $14 category.
Currently, the single-family rate of$9.95 per month brings in 45% of the total annual revenue,
while the multi-family and Non-Residential bring in 17% and 38%, respectively, for a total of just
over $3,000,000 per year.
Table 2: SMF Historical Revenue
Fiscal Year SMF Income
2018-19 $ 2,844,032
2019-20 $ 2,938988
2020-21 $ 3,025,367
2021-22 (est) $ 3,086,000
Community Financial Impact:
As mentioned before, there are several increased funding scenarios to consider: from $500,000
per year to as much as $1,500,000 per year. In order to raise more funds at various levels for
increased funding, here would be the monthly impact to each category per scenario:
Table 3: Rate Impact with Increased Funding Scenarios
To obtain Additional Funding in FY 22-23
July 1,2021 July 1,2022
Category Rate Rate $500,000 $1,000,000 $1,500,000
Single Family 9.95 10.65 I 12.21 13.87 15.49
Multi-Family 7.11 7.61 8.76 9.91 11.67
Non-Residential
Group I 6.08 6.51 7.49 8.48 9.46
Group II 13.69 14.65 16.87 19.09 21.3
Group III 51.12 54.70 62.98 71.26 79.54
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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On an annual basis, the SMF would impact a single-family household utility bill by$18.72 per
year for the $500,000 revenue increase option, up to $58.08 per year for the upper end
scenario that could bring in $1,500,000 more per year. These scenarios equate to 16-48%
increases over today's monthly rate. The greatest impact for increased SMF would be towards
Non-Residential.
For any of increased amount scenarios, staff recommends a public education campaign to raise
awareness of the funding gap for pathways and how the increased SMF will be used, as well as
direct outreach to users who will experience the greatest impact.
General Obligation Bond Option
At the September 2021 Council Study Session, staff was asked to further explore bonding
options as a potential one-time source for funds. A General Obligation (GO) bond would allow
Council to raise money for pathway projects that do not generate a revenue stream directly
through the Street Fund. The GO bond option would need to be authorized by voters through a
ballot election before bonds could be issued. This would be a one-time package of projects that
the bond would complete during a specified timeline. This is a different strategy than previously
explored with raising the Street Maintenance Fee, which would be a sustained source of
revenue over time.
To put this in context, the current list of high-priority safe routes to school projects from the
TSP, as organized by the Transportation Advisory Board, has 41 remaining projects that are
unfunded, totaling $42 million. There are two top-ranked projects that equate to more than
$27 million of the total, which may be better candidates for regional funding opportunities.
Removing them from consideration, leaves $15 million needed to address the priority safe
routes to school. For the purposes of this exploration, we are considering a $20 Million bond
to account inflation and other costs, which is similar to the recent Parks Bond measure that was
passed in May 2019.
Community Financial Impact
Table 4—General Obligation Bond Scenario Estimates
Amount $20,000,000
Interest Rate 5 %
Duration 20 year
Annual Debt Service $1,600,000 per year
Impact $0.20/$1,000 Assessed Value
Average Single-Family Dwelling $550,000
Extra Tax Per Year $110 extra tax per year
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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It is important to note the current state of the Parks Bond Debt. The final $6 Million is
projected to be issued in the next fiscal year, which will equate to about $0.06/$1,000 of
assessed value. This will be on top of the current $26.6 Million already on the books, $3.9
million for the Boones Ferry Road project and $22.7 million for the Parks bonds. The current
Parks Bonds won't roll-off the tax roll until 2039. Therefore, adding another$20 million GO
Bond specifically for Pathways will almost double our current millage rate for bond.
To prepare for a voter approved GO bond, staff will need to determine the projects for the
bond, the total dollar amount needed, and timeline for getting on the ballot. Before the ballot,
there will need to be extensive public outreach to explain the gap of funding, bond proposed,
and outcomes if the bond passes or fails.
NEXT STEPS
Following the September Council discussion, staff included a question in the Fall 2021
Community Survey measuring the community's support of an increase funding for pedestrian
safety facilities through an additional fee or bond. 60% of residents surveyed were 'very
supportive' or 'somewhat supportive' of the increased funding. When asked what
"infrastructure services" should receive the most emphasis over the next two years,
respondents' rankings were: 1) maintenance of neighborhood City streets, 2) availability of
pedestrian pathways in the neighborhood, and 3) availability of pedestrian pathways on
major streets/ routes. This community priority, coupled with the Council goal to adopt a
funding strategy specifically for pathway improvements, leads to making a choice on how best
to acquire funds for new work.
The two options presented have different outcomes and impacts:
Increasing the Street Maintenance Fee
• Affects monthly utility rates
• Reliable source of revenue for the Street Fund
• Variable options in the future, should priorities change
General Obligations Bond
• Provides significant one-time funding upfront
• Affects annual property tax rates
• Sunsets after 20 years, and rolls off the tax calculation
• Requires voter approval, preferably on a November ballot
• Specifically define use or projects
Staff recommends that Council determine the preferred option, and direct staff to develop a
public outreach campaign prior to any formal implementation, and consider setting a goal for
implementation in 2023.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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