Streets pay for Vancouver's growth

City council to begin discussing possible funding sources for $520 million in needed road maintenance, upgrades

By Stephanie Rice, Columbian Vancouver city government reporter


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Did you know?

• While the city wants more money for street maintenance and improvements, there hasn't been talk of hiring additional employees. Since 2008, the city has cut staff positions by approximately 20 percent, including reductions in the street maintenance division. Vancouver has 100 lane miles per roadway worker, a higher workload than the regional average of 60 lane miles per employee, according to the public works department.

• City Manager Eric Holmes said over the past decade, the cost of salaries and benefits for employees has averaged 13 percent of total street spending.

• "The city has taken significant steps to contain the pace of growth in all of our costs over the last several years," Holmes said. "The current effort to examine our street operations is geared toward maximizing the results we can accomplish with the resources we have. A combination of wage freezes, furloughs, layoffs, combined with restructuring of health care coverage and premium sharing, have been ingredients in our cost-containment efforts."

"Boom Town," read a headline from 1994: "Vancouver annexes more land in the '90s than any other city in Washington, and it's just the start."

The city's territory had grown more in four years than it had in the past four decades. And that was before the 1997 Cascade Park annexation — the largest in state history — brought in 58,000 more residents and made Vancouver the state's fourth-largest city.

With an estimated 164,500 residents today, Vancouver remains the fourth-largest city. Its likely to stay that way.

Vancouver has no plans for large-scale annexations of Hazel Dell, Salmon Creek or other areas in its urban growth boundary, even though by doing so it would become the state's second-largest city with a population of more than 275,000 and have arguably greater clout in Olympia.

Those "boom town" days are over, partly because of the impact the city's rapid growth has had on its streets.

More need, fewer dollars

Between 1989 and 2012, the number of lane miles the city has to maintain has more than tripled, from 577 to 1,806. The city also maintains 10 bridges, 234 traffic signals, 17,000 streetlights and tens of thousands of street signs.

Yet while the city was growing, per capita spending on basic street operations and maintenance has been falling.

In August, a consultant told the city council there's no money to rebuild failed streets. That's just part of the city's estimated $120 million backlog of deferred street maintenance, said Matt Ransom, the city's policy manager.

The issue has become so problematic that city officials say streets need a new revenue source — such as a sales tax increase, a license tab fee or special levy — that could bring in at least $6 million a year to start a new capital preservation fund.

The city council will start discussing the funding shortfall early next year. Streets may not have the same voter appeal as police officers or firefighters or parks, but they are the city's single largest asset and a government service used daily by everybody.

Residents will be able to express their thoughts in an online survey, said Vancouver Mayor Tim Leavitt.

"From my perspective, it's important to lay out the challenges of our community and learn what their expectations are," Leavitt said. He said he's spoken to community and business leaders "who astutely recognize our roadways are necessary for good economic commerce, jobs growth and the highly prized quality of life we enjoy in the city of Vancouver."

Urban standards

People who want the city to maintain streets and upgrade old county roads to urban standards without a new revenue source are bound to be disappointed, unless the city council decides to lower its standards.

"When it comes to a discussion of funding roads, there's no surprises," Leavitt said. "Everybody who has been paying attention to local city governance understand the avenues of funding that require a vote of the people. The feedback we get from the community will help determine what the appetite is for options."

Some options don't require a public vote. For example, the council could authorize a $20 license tab fee, but going any higher — up to a maximum of $100 — would require a public vote.

In the past 15 years, the city has issued more than $78 million in bond debt to pay for infrastructure improvements such as Southeast 192nd Avenue and Mill Plain Boulevard extensions; the bonds won't be paid off until 2035. But the city council has adopted a "pay-as-you-go" policy, so issuing additional bonds hasn't been mentioned.

City Manager Eric Holmes said the council needs, with community input, to have a discussion about what level of service the city should provide. How well do people expect streets to be maintained and built to urban standards? Asking residents to support any type of fee or tax increase won't be easy, Holmes said. But the longer streets are neglected, the more expensive they will be to fix.

"If it's not addressed in 2014, those costs will compound over time," Holmes said.

Costly upgrade

According to an August 2013 report from the city's public works department, it would cost $400 million to bring streets up to urban standards in addition to the $120 million needed to fix deteriorating streets, not including annual maintenance costs.

"The scale of this needed investment will not be resolved overnight. The challenge is to set in place a predictable, reasonable long-term investment plan that starts to address these growing risks," read the report, prepared by Ransom, the city's project development and policy manager.

Ransom, who will start in January as executive director of the Regional Transportation Council, noted that in the city's 2012 Community Survey, Vancouver residents "are less satisfied with major street maintenance compared with residents elsewhere in the Pacific Northwest and on national averages." Compared with a 2010 survey, local satisfaction has dropped 3 percent for major streets and 10 percent for neighborhood streets.

On Monday, the city council will get a better idea of how many miles of streets need preventive maintenance, resurfacing or reconstruction, as they'll discuss the results of a pavement audit.

Rule changes

When the city was on its annexation spree and before he became a city councilor, Larry Smith was assistant city manager. From the 1994 "Boom Town," article in The Columbian:

"After 26 years in the Army, Larry Smith, a retired colonel, knows how to win over new territory.

Against one of his office walls, he has a stack of poster-size maps, sometimes decorated with colored pins for target areas. From his third-floor City Hall bunker he mobilizes staffers into doorbell campaigns to collect annexation petitions."

Smith's tenacity was a force behind the city's aggressive annexation program. Two decades later, he said he doesn't have regrets.

While adding population plumped up the city's tax base, statewide initiatives 695 and 747 limited revenues by replacing the motor vehicle excise tax with a $30 license tab fee and capping annual property tax levy increases to 1 percent. The city's business and occupation tax was eliminated in the 1990s to make annexation more attractive.

The reduction of two revenue sources and elimination of a third hurt the city's ability to provide services for all those new residents, Smith said.

Still, he said annexing those areas was the right thing to do and falls in line with the state's Growth Management Act, which says cities, not counties, should provide urban services.

"That's the way it's set up. The city is structured that way, to provide those services. It certainly has the tax tools to do it, but it takes political initiative to do it," Smith said.

Revenues fall

City streets have another strike against them when it comes to funding. Unlike other mandated services used by everybody — sewer and water — streets don't have user fees. While counties are allowed to collect property taxes for a road fund, in addition to property taxes collected for the county general fund, cities pay for streets out of the general fund.

The city receives approximately $3.4 million yearly from gas taxes — about 4 percent of total statewide gas tax collections — but those cover only about 11 percent of annual street expenditures.

Newer, more fuel-efficient vehicles and electric vehicles are leading to a decline in gas tax revenues, Ransom noted in his August report, and "the wear and tear on city streets is far outpacing the ability of the gas tax to support operations and maintenance. In sum, the gas tax is becoming a smaller and smaller component of the city's street funding sources, and in current form, will not become more relevant over time."

The state Transportation Revenue Forecast Council projects gas tax collections will increase at an annual rate of 0.3 percent through 2027, Ransom wrote.

Priority projects

The city spends about $35 million a year on streets: about 51 percent goes for capital expenses, 22 percent goes for operations and maintenance (this category includes employee expenses), 15 percent goes for pavement preservation and the balance pays off debt.

About one-third of street funding comes from the general fund. Other sources include the gas tax, business license surcharge fees, real estate excise taxes, transportation impact fees, developer contributions, and state and federal transportation grants.

But grants require matching local money, and the city hasn't had enough money lately to meet matching requirements, Ransom said. The $78 million in bonds issued over the past 15 years, for example, was leveraged into $250 million worth of street improvements.

A new capital preservation program would set aside money for expenses including reconstructing streets and replacing city bridges. The city's existing capital improvement budget has a $13 million shortfall between 2015-2020 for four long-awaited projects, Ransom said. The city estimates it has more than $30 million secured for the four projects.

Two projects, upgrading Northeast 18th Street between Four Seasons Lane and Northeast 137th Avenue and completing it from Northeast 107th Avenue to Northeast 97th/98th Avenue, would complete the road's transformation from a two-lane country road to a wider urban arterial with sidewalks. Portions of Northeast 18th Street have already been widened in anticipation of the state Department of Transportation's plans to have an 18th Street interchange at Interstate 205 open in 2016.

Developing 18th Street as a major arterial will ease pressure off chronically congested Mill Plain Boulevard, Ransom said.

The city's other top priorities are widening Northeast 137th Avenue between Northeast 49th Street and Fourth Plain Boulevard and widening Southeast First Street, built as a rural farm-to-market road, from Southeast 164th Avenue to 192nd Avenue.

Rating streets

City streets are given a rating from 1 to 100. Arterial streets currently average a 71, while residential streets average a 65, according to a report that will be shared Monday with the city council. The long-term target, according to the report, would be an average rating of 80 for arterial streets and 70 for residential streets.

In Ransom's report, he wrote that "given the sheer size and needs of the city's streets asset, the existing funding simply does not support the needed ongoing preservation or upgrade of the system. Without appropriation of new funding, the asset will continue to deteriorate and maintenance and upgrades will be deferred."

One point that will be emphasized to the city council will be that they cannot wait until people start to complain. By then, the streets will be so heavily damaged that they will be more expensive to fix.

Bill Whitcomb, manager of finance and asset management for the city's public works department, said when the city does a good job of street maintenance, nobody notices.

"It's difficult to express a future need," he said.