Bend advisors review first run of phase 2 transportation-fee model; staff seek policy direction

City staff presented the first public run of a phase 2 transportation-fee model at the Bend Economic Development Advisory Board meeting on March 3, showing how business-registration data, NAICS-to-ITE trip-generation mapping and nonresidential utility account square footage combine to produce a six-bin fee structure and sample monthly bills.

"So this is the, the next round of discussions around phase 2 of the transportation fee," said Russ Grayson, chief operations officer, as he opened the presentation. Sarah Hudson, senior policy analyst, described the modeling workflow: layer business-registration NAICS codes onto ITE (Institute of Transportation Engineers) trip rates, collapse fine-grained NAICS categories into broader bins and multiply by thousand-square-foot units on the nonresidential utility account.

Why it matters: the transportation fee is intended to supply a portion of the city's transportation revenue target that staff say will total about $10 million annually, with $4.7 million to be recovered from nonresidential accounts. How the nonresidential burden is distributed will determine which businesses see the largest bills and how much cost is passed to consumers and tenants.

What staff showed

- Dataset and compliance: staff said 40% of nonresidential utility accounts lack an active business registration. To improve modeling coverage they temporarily used inactive registration records and third-party commercial real-estate analytics; the current model run represents roughly 80% of accounts.

- Bins and mapping: staff proposed a bin structure that groups uses by trip rates from the ITE manual and overall square-foot distribution. The draft scenario used six bins, with the highest-trip-rate uses (convenience stores, fast-food with drive-throughs, liquor stores) placed in the top bin. Staff emphasized the trip-rate to square-foot relationship is nonlinear and grows exponentially in higher bins.

- Mixed-use treatment: about 40% of nonresidential square footage in the model is mixed-use (multiple NAICS codes on an account). Staff proposed a limited set of blended assignments (for example, industrial-flex space assigned by weighted average to bin 2; warehouse+office collocations in bin 1) rather than dozens of custom mixed-use codes.

- Geographic and special cases: staff proposed a medical overlay (hospital campus and immediate medical-office cluster assigned to lower trip-rate bins), integrated retail rules that treat very large shopping centers differently, and area-rate treatment for consolidated commercial zones (Central Business District and Old Mill District) so that parcelized ownership within a single commercial area would be charged as a single, lower bin rate.

- Special unit classes: staff proposed continuing unit-based charges for uses that do not fit a square-foot basis (hotels by room, short-term rental supplements, parks per acre). New special-unit proposals included a partial short-term-rental supplement for non-whole-house STRs ($100/year), gas stations (per fueling position: $31 without convenience store, $62 with convenience store), golf courses ($18.50 per hole), cemeteries ($375 per acre) and car washes (per stall; rate to be developed).

- Modeling assumptions and sample rates: staff warned this is an initial cut and will change as data improves. To illustrate the model they used specific calibration choices (e.g., placing unidentified accounts conservatively in the lowest bin for initial revenue recovery; growth and inflation assumptions). The example rate scenario presented for nonresidential accounts used a per-1,000-square-foot scale roughly like: $5 (bin 1), $7 (bin 2), $13 (bin 3), $21 (bin 4), $31 (bin 5) and $49 (bin 6) per 1,000 sq. ft. (staff noted the relationship is not linear and the top bins rise steeply). Staff then translated those rates into sample monthly bills for representative accounts to show absolute- and percentage-change impacts.

Policy questions staff asked BDAB

- Number of bins and fairness: staff recommended consolidating bins 5 and 6 because the highest bin covered a small share of total square footage and produced a large tail in rates. Board members asked for runs combining bins 5 & 6 and combining larger bin groups to see distributional changes.

- Baseline/minimum rate: several members asked whether the current phase-1 minimum ($6.25 per 1,000 sq. ft.) could be retained as a floor for one or more bins to limit impacts on certain businesses; staff said they can run that scenario.

- Treatment of accounts without business registrations: staff modeled unidentified accounts conservatively in the lowest bin for this run but asked BDAB whether policy should place unregistered accounts in a higher default bin to avoid under-collection or keep the conservative placement to encourage registration. Staff reported a planned outreach push (letters and business open houses) to raise registration compliance.

- Appeals and administrative burden: staff emphasized the need for a simple administrative appeals process and cautioned against excessive special cases that would make the program hard to administer or explain.

Board discussion and technical follow-up

Board members asked for additional model scenarios, including a simple weighted-average approach, the pure mean/median within bins, and the 'minimum-floor' run. Several members volunteered to participate in a technical session with staff and the consultant to review the model mathematics and trade-offs.

Staff timeline and next steps

Staff said the current presentation is a technical briefing and that they expect to return to BDAB in two weeks with a recommended model run and a draft policy document staff will ask BDAB to refine before forwarding a recommendation to council. Staff also said the billing software and customer notices must be updated in advance of any July 1 effective date and that the first bills under a new structure would likely appear in August.

Selected direct quotes from the meeting

- "This is not the final recommendation. It's really more of trying to make sure you understand how the dials and levers work on this and how you would like us to approach this," Sarah Hudson, senior policy analyst.

- "So this is the, the next round of discussions around phase 2 of the transportation fee," Russ Grayson, chief operations officer.

What remains unresolved

Staff will return with alternate bin combinations, a scenario that keeps the $6.25 baseline, and clearer options for the policy placement of accounts without business registrations. The group also asked staff to clarify the appeals process and to provide more examples of how mixed-use accounts will be billed.

Reporting note: quotes and attributions in this article are taken only from speakers identified during the transportation-fee presentation and discussion (see speakers list).