Bend staff outline data-driven plan to revamp nonresidential transportation fee

City staff on Jan. 9 told the Visitor Development Advisory Board they plan to pair business-registration NAICS codes with Institute of Transportation Engineers trip-generation data to reclassify nonresidential accounts and set a tiered transportation fee aimed at adoption this summer.

The project team said the goal is administrative predictability and fairness: "what we're trying to do is really move towards, getting this fee adopted in July," Sarah Hudson, senior policy analyst and project manager for the Transportation Fee Project, said at the meeting.

Staff said the current Phase 1 system charged by square footage and produces about 2,300 commercial utility accounts. "We have, you know, close to 2,300, commercial accounts," Hudson said, noting the average current commercial bill is about $80 per month and the median is roughly $45 per month. Most accounts are small by area: about 96% are under 50,000 square feet, roughly one‑third under 5,000 sq. ft., and about two‑thirds under 10,000 sq. ft.

Why it matters: staff and consultants argued that pairing NAICS business-use codes with ITE trip-generation rates creates a plausible proxy for how different nonresidential uses place demand on the transportation system. That approach groups uses with roughly similar trip impact instead of charging strictly by square footage, which can under- or over-charge uses with atypical trip patterns (for example a large warehouse vs. a fast‑food restaurant).

Key details and near-term work

- Missing business-use data: Hudson told the board that about 900 of the roughly 2,300 commercial utility accounts currently lack a verified NAICS code. Staff said the gaps arise because some businesses have not completed required city registration, some renewals are pending, and some nonresidential accounts (for example, some schools or houses of worship) are not required to register as businesses. Cyrus, a city licensing staff member, added that "The revenue that we receive from business registrations does fund the business advocacy program and my position," underscoring why improving registration compliance matters for both program administration and fee design.

- Design approach: staff said they will test a modest number of tiers (staff suggested 6–10 bins) and retain special‑unit charges for uses ill-suited to per‑1,000‑sq‑ft rates (examples shared by staff and in the case studies include hotel rooms, gas pumps, and schools charged per student). "We're trying to find that 95% system" Hudson said, referring to designing tiers that fit the great majority of accounts while managing outliers.

- Case studies and tradeoffs: staff reviewed five Oregon cities (Ashland, Hillsboro, Lake Oswego, Medford and Newberg). All use group‑to‑use bins and nearly all use special‑unit classes for hotels or pumps. Cities vary widely in the number of bins (three to 22 in the sample) and in whether they use caps, discounts, or fee waivers; staff emphasized administrative complexity and equity tradeoffs when programs include many discounts or appeals.

- Discounts, exemptions and targets: Council previously asked staff to explore nonresidential exemptions for childcare and deed‑restricted affordable housing; staff said those are technically feasible but would reduce revenue and shift costs to other payers. K–12 public‑school adjustments were already reflected in Phase 1 billing. Staff committed to returning to the board with estimated revenue impacts for any proposed discounts.

- Timeline: staff said they need policy direction in March–April so recommended changes can be implemented in the billing system and appear on August bills; adoption by Council targeted for July 1 implementation. Staff asked whether the board wants a small subcommittee to review model runs in detail; several members said a subcommittee would be useful.

What staff will return with: consultants will run model scenarios that pair NAICS→ITE crosswalks into candidate tier structures and show estimated revenue, impacts by sector, and the fiscal effect of proposed exemptions. Staff also flagged that a compliance push on business registration is needed to reduce the roughly 900 unclassified accounts and improve the accuracy of base projections.

Ending

Board members emphasized simplicity for administration and cautioned that aggressive discounts can open an administratively costly appeals process; several members supported the consultant approach to link NAICS to ITE and asked staff to show concrete modeled revenues and per‑category impacts at the next briefings.