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Agenda Item - 2022-11-15 - Number 12.1 - Proposed Street Maintenance Fee for Pathways 12.1 O., COUNCIL REPORT o ORE00� Subject: Street Maintenance Fee for Additional Pathway Projects Meeting Date: November 15, 2022 Staff Member: Madison Thesing, Asst. to the City Manager, Report Date: November 4, 2022 Erica Rooney, Public Works Director 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: Direct staff to incorporate the proposed increase of the Street Maintenance Fee, to raise approximately $1.5 million annually, into the 2023 Master Fees and Charges Resolution for consideration and adoption at the December 6, 2022 City Council meeting. Recommended Language for Motion: Move to direct staff to include a proposed increase in the Street Maintenance Fee in the 2023 Master Fees and Charges Resolution, scheduled for a Public Hearing at the City Council Meeting on December 6, 2022. Project/ Issue Relates To: 2022 City Council Goal to increase funding options for pathway improvements Issue before Council (Highlight Policy Question): ❑X Council Goals/Priorities ❑Adopted Master Plan(s) ❑Not Applicable Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 2 ISSUE BEFORE COUNCIL Following this report on public outreach conducted, whether to direct staff to include an increase in the Street Maintenance Fee by approximately 50% in order to increase the income to the Street Fund, allowing for additional funding towards projects that improve pedestrian safety, such as pathways and sidewalks. EXECUTIVE SUMMARY The Council goals over the past several years have continued to focus on funding more pathway projects. After several study sessions on the matter, staff was directed to pursue an approximately 50% increase in the Street Maintenance Fee as a way to improve the overall Street Fund by nearly$1.5 million each year, allowing for additional funding to be available for pathway projects. Since the last study session in May 2022, staff conducted a thorough outreach effort to inform the public of this pending proposal. The public education and outreach campaign included general information of the proposed changes in the HelloLO, LO Down e-newsletter, utility bills, and more. There was also targeted outreach to the largest business utility accounts and business groups. This resulted in less than 25 calls and emails from the public. Of the 25 follow- up calls and emails, roughly half were related to concerns about inflation and the timing of raising rates. The other half were clarification questions, support for the projects that would be as a result of the additional funding, and general questions about street maintenance. Given the wide reach of the campaign and the limited response of concern, the proposed rate appears acceptable to the public. BACKGROUND For the past two years, the Council has clearly indicated that providing more pathways or sidewalks is a priority for the City. Particularly, the focus is on routes related or adjacent to school areas. 2020 City Council Goal: Continue focus on pavement quality and pathways... 2021 City Council Goal: Increase funding for pedestrian facilities, beginning with safe routes to school 2022 City Council Goal: Adopt a funding strategy for pedestrian safety capital projects The Council held study session in September 2021 and May 2022, evaluating several options to consider for increase funding. During the May 2022 meeting, Council by consensus indicated that staff should continue with steps that would lead toward Council consideration of increasing the Street Maintenance Fee (SMF) as the best option for creating an increased source of funding for pathway infrastructure improvements as a sustainable, ongoing revenue source. This funding alternative was instead of pursuing a General Obligation Bond, which would have increased property taxes. At that meeting, staff advised that a public outreach effort to educate the community of the proposed changes would be undertaken. Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 3 DISCUSSION The proposed approximate 50% increase in monthly rates would create an additional $1.5 million per year for the Street Fund to be used for projects like pathways, sidewalks, and pedestrian safety improvements. The rates would be as noted in the following table: Proposed Street Maintenance Fee Increases Proposed Rate based on Proposed Rate Proposed Construction Increase per July 1,2021 July 1,2022 Rates during Cost Index Month over Category Rate Rate Outreach Actuals 2022 Rate Single Family 9.95 10.65 16.30 16.07 5.42 Multi-Family 7.11 7.61 11.60 11.48 3.87 Non-Residential Group I Group II 6.08 6.51 10.00 9.82 3.31 Group III 13.69 14.65 22.30 22.11 7.46 *per 1,000 sq.ft 51.12 54.70 83.30 82.55 27.85 The proposed rates during outreach were based on estimates of how to achieve the additional $1.5 million. For the final proposed rates, staff has calculated rates based on the Engineering News Record Construction Cost Index (CCI) for 20-City Average. The Council's consideration of proposing an increase to the Street Maintenance Fee has been shared with the public through a variety of outreach efforts, which has run from September through November. The objectives and goals of the SMF public outreach were: • Inform and educate Lake Oswego residents and business owners of the proposed SMF increase • Explain the need for the proposed SMF rate increase (more than $94,000,000 in unfunded Pathways Projects) • Clearly outline the benefits for the proposed rate increase and the types of projects that could be funded through the SMF increase • Highlight the benefits of pedestrian safety improvements for accessible and safe roadways for all • Monitor community response Staff created a project website communicating these changes, proposed project types that the SMF could be directed to, and frequently asked questions. The project page was treated as the landing page for all messages, highlight videos of information, and who to contact for more information. This webpage and its subpages have been viewed 1,807 times. Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 4 Additionally, information has been shared through: • HelloLO—September (two-page insert, Council Corner- Rapf) & October (half-page article), mailed monthly to roughly 23,000 households and businesses • LO Down —featured in three e-newsletters, roughly 14,000 subscribers • Social Media — posting throughout the last two months, boosted for additional views (greatest Facebook post reach was 4,957) • NextDoor— posting throughout the last two months • YouTube videos—four informational videos (also shared on social media, NextDoor, and website) • Utility Billing—October e-bill, reaching roughly 13,000 accounts • Lake Oswego Review Article (9/26/22) • Lake Oswego School District e-newsletter (The Current)— included on 11/4/22 & 11/11/22 editions Business outreach specifically: • Chamber Board Presentation • Lake Grove Business Association Presentation • Direct letter mailed to top 200 business utility accounts o These business bills range from $31 to $18,000 per month, representing a wide range of large and small businesses in the community • Direct phone calls to the top 10 business utility accounts • Chamber e-newsletter—included 11/8/22, & 11/15/22 Through these outreach efforts and the follow up 25 calls and emails that were received, the overall response was neutral. The concerns raised were related to inflation and the timing of raising rates. For next steps of the public education, if Council votes to approve the rate increase in the 2023 Master Fees and Charges Resolution, staff recommends continuing the messaging of the change in the spring in advance for the rate change going into effect July 1. Additionally, as projects funded by the Street Maintenance Fee are underway, project sites will have signage highlighting that the project is funded by the Street Maintenance Fee. This will increase transparency on how dollars are being spent, as well as draw awareness to the projects completed by these funds. FISCAL IMPACT An increase in the Street Maintenance Fee as proposed will increase the overall Street Fund by approximately$1.5 million per year. Proposed rates would go into effect beginning July 1, 2023. RECOMMENDATION Direct staff to include an increase of the Street Maintenance Fee by approximately 50%within the 2023 Master Fees and Charges Resolution for consideration and adoption at the December 6, 2022 City Council meeting. Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY