Oxnard staff present pavement impact cost study estimating about $2 million in indirect-cost transfer

Michael Wolf, Director of Public Works for the City of Oxnard, presented an annual enterprise pavement impact cost reimbursement study to the Public Works and Transportation Committee on Feb. 11, 2025, recommending the committee forward the study to the City Council as a receive-and-file item ahead of the council meeting on March 4, 2025.

The study estimates "a little over $2,000,000" in a potential infrastructure-use fee (IUF) transfer from the city’s enterprise funds (water, wastewater and solid waste) to the general fund if the city includes the charge in future rate cases. The report is intended to establish a methodology to measure pavement-related wear attributable to those utilities and to quantify an appropriate indirect-cost transfer.

The matter matters because the IUF, if adopted in future rate proceedings, would shift a quantified portion of pavement maintenance costs onto utility enterprise funds and their ratepayers rather than the general fund. The City previously used a 2014 consultant study to allocate enterprise shares of public safety, governmental facilities and pavement maintenance, which led to recurring transfers from enterprise funds to the general fund until litigation challenged that practice.

Wolf summarized the background: a 2014 HF&H consultant report calculated enterprise shares for three categories (public safety, governmental facilities and streets/pavement maintenance) and that those calculations supported prior transfers from enterprise funds to the general fund. He said a later lawsuit found that the prior transfers violated the California Constitution’s Article XIII D; a 2021 judgment required the city to stop the transfers, reimburse certain past transfers and left open the possibility that the city could adopt a constitutionally valid IUF methodology going forward.

Wolf said the new study — prepared by a consultant and peer reviewed by an independent engineering firm — excludes the public safety component and focuses on pavement impacts. He described the study’s data inputs as including the pavement condition index, mapped solid-waste collection routes, truck weights and field inspections of street conditions, and said the methodology quantifies damage attributed to utility use of the streets. He said the peer review found the study’s approach conservative.

On fiscal implications, Wolf said the water rates approved in February 2023 did not include an IUF component and therefore would not be affected by this study unless and until a future water rate case includes the charge. He said the solid-waste cost-of-service analysis approved in April 2024 did include an IUF starting in January 2025. He added that wastewater rates are under active review and that staff would recommend including an IUF component if a new wastewater rate case is brought forward.

Wolf said staff and the consultant that prepared the report will be available at the Feb. 11 committee meeting and the March 4 City Council meeting to answer questions, and staff’s current recommendation is that the committee recommend the council receive and file the study.

The presentation did not include a formal committee vote in the transcript provided; staff characterized the item as a "receive and file" recommendation for the committee and the council.