Bend advisory board reviews Phase 2 of transportation fee; staff seeks business input before spring decision

City staff briefed the Bend advisory board on plans to move from Phase 1 to Phase 2 of the city’s transportation utility fee, saying Phase 1 is producing expected revenue and improving pavement conditions while Phase 2 will add a business-intensity factor to nonresidential charges and raise the program’s annual revenue target.

Sarah Hudson, a city staff presenter, told the board the fee “is adopted. It’s been effective as of July 1,” and said staff are working toward an anticipated effective date for Phase 2 of July 1 next year. David Addis, director of the Transportation and Mobility Department, said Phase 1 investments helped stabilize the city’s road network: “Phase 1 was instrumental in getting our conditions turned back around onto an improving trend.”

Why it matters: Phase 2 would raise the annual revenue target from $5,000,000 (Phase 1) to $10,000,000 and will change how nonresidential accounts are charged. City staff said the change is intended to more closely align fees with a property’s impact on the transportation system by combining building square footage with a newly available measure of business “intensity” drawn from business registration data (including NAICS codes).

What staff reported: Staff said the city has billed $1,800,000 to date under Phase 1 and received 17 appeals about nonresidential square footage. They reported the city’s Pavement Condition Index rose to 77 from 76 after Phase 1 investments. For Phase 2, staff propose keeping the same overall allocation between residential and nonresidential users (about 53% residential, 47% nonresidential) while recalibrating nonresidential charges using square footage plus a group-to-use or trip-generation approach drawn from other cities’ models.

How nonresidential rates would change: Staff described a model used by other cities that groups businesses by expected trip generation (for example, low-trip-generation uses at cents per 1,000 sq. ft. up to high-trip-generation uses at tens of dollars per 1,000 sq. ft.). Hudson said consultants will present case-study research at the board’s next meeting and staff aim to present recommendations to council in March or April so a July 1 effective date is achievable.

Business data and implementation timeline: Staff told the board they have been collecting and auditing business-registration data since spring and will use NAICS codes to crosswalk business types to transportation trip-generation rates. The board was asked to advise on: how many intensity tiers to use; which business classes (for example, schools, parks, short-term rentals) should use special-unit metrics instead of square footage; whether any discounts or exemptions are warranted; how to treat mixed-use accounts; and whether a fee cap is appropriate.

Equity and assistance: Staff reiterated that residential customers who qualify for the city’s existing utility assistance program would receive a 50% reduction in the transportation fee, and said staff expect to continue using that program for residential discounting.

Board concerns and outreach: Members raised concerns about predictability for businesses, fee stacking (multiple new or increased charges appearing to customers), and the potential downstream impact on invoices and operating costs. One board member asked for clear case studies showing who would be most affected and what small-business impacts would look like. Staff proposed multiple outreach tools — newsletters, webinars, partner networks, and targeted outreach to high-impact outliers — and suggested recording webinars for later distribution.

Next steps: Consultants will present case-study research at the next BDAB meeting in January. Staff proposed using the board’s January–March meetings to refine groupings and assumptions, return recommendations to council in March–April, and aim for a July 1 implementation of the Phase 2 rate schedule if council approves the recommended structure.

Ending: Staff asked board members to tell staff what data and presentation formats would help board members evaluate the Phase 2 options; staff said they will share slide decks and modeling results a few days before meetings and are available for off-line conversations.