transportation utility feasibility analysis city of janesville

Transportation Utility Feasibility Analysis

City of Janesville

Jon Cameron, Senior Municipal Advisor - EhlersJeff Mazanec, P.E. Senior Consultant – raSmith

September 28, 2020

Overview

• Transportation Utility Overview and Authority to Create

• Differentiating Between a Fee and a Tax

• Why Consider?

✓ Borrowing and sustainability

✓ Fairness

• Study Results

✓ Feasibility study scenarios

✓ Understanding of user rates

✓ Estimated tax rates for debt under specific scenarios

✓ Preliminary breakdown of transportation user charges and taxes by scenario for average single-family home

• Next Steps

Transportation Utility OverviewEquates the municipalities transportation network to a utility similar to a

water, sewer or stormwater utility

User rates collected to fund the operations of the transportation system including:

• Operations costs

• Capital

Generally based on TRIP Generation (measure of system usage)

Institute of Transportation Engineer’s TRIP Generation Manual

What is a TRIP = any time a car enters or leaves a driveway

Different land use types have different TRIP generation rates

No direct Statute to establish a Transportation Utility in Wisconsin

Creation of a Transportation Utility linked to Home Rule Authority, whereby municipalities have the authority to act:

• For the good order of the City

• For a municipality’s commercial benefit

• For the health, safety and welfare of the municipality

• Have the ability to carry out its power by appropriation, or by other necessary and convenient means

Formally the means which municipalities relied upon to create stormwater utilities… This has not YET been tested in Wisconsin

Authority to Create a Transportation Utility

WI League of Municipalities June 2020 Opinion on Transportation Utility Creation:

1. Place fees collected in a separate fund, used only for street maintenance transportation projects.

2. Collect fees in same manner as other utility charges.

3. Ensure formula for calculating fees is as accurate as possible.

4. Any credit policy should avoid exempting tax-exempt properties. (gives appearance of a tax).

5. To the extent possible, have a process for allowing properties that demonstrate reduced use of street system to qualify for lower fee.

Differentiating Between a Fee & a Tax

Municipalities are only allowed to increase their levy by the increase in net new construction

• Increases to annual debt payments allowed under levy limits

In 2014 the City Council approved increasing street rehabilitation program from 6 miles to 12 miles annually

• Program currently funded with a combination of transportation aids, wheel tax, general fund, storm water utility and borrowing

City has seen an 8% annual increase (on average) in street rehabilitation costs in recent years (study assumes a 5% increase to costs in 2021 and beyond)

Cost increases influence the City’s annual borrowing obligation assuming other funding sources remain constant

Why Consider a Transportation Utility? – Levy Limits & Sustainability

Why Consider a Transportation Utility? - Fairness

12/23/2020 7

Transportation Utility Feasibility Scenarios

12/23/2020 8

Program

Funding Level Wheel Other Transportation

Supported by Debt Tax Appropriations

Scenario 1 Variable Yes Constant

Scenario 2 0% Yes Constant



Scenario 5 0% No Constant



All transportation utility user rate calculation scenarios assume a two-part user rate:

• Fixed charge per customer: all scenarios allocate 10% of the revenue requirement to the fixed charge

• Trip charge: all scenarios allocate 90% of the revenue requirement to the trip charge to generate a rate per trip which is then applied to different land use categories

Transportation User Rate Methodology

Estimated Tax Rates for Future Street Rehabilitation Debt Under Different Scenarios

12/23/2020 10

Summary of Preliminary Total Charges & Taxes by Scenario for Average Single-Family Home (2021 & 2030)

12/23/2020 11

Total Transportation Charges & Taxes 2021 2030

Scenario 1 (Base, No Utility) 40.00$ 194.86$

Scenario 2 104.26$ 156.29$

Scenario 3 77.47$ 172.37$

Scenario 4 50.68$ 190.75$

Scenario 5 80.77$ 132.80$

Scenario 6 53.99$ 148.89$

Scenario 7 27.19$ 167.26$

Summary of Preliminary Total Charges & Taxes by Scenario for Average Single-Family Home (2021-2030)

12/23/2020 12

Estimate of Future Principal & Interest by Borrowing Scenario

12/23/2020 13

• Decide on a budget and user rate scenario

• Public education and outreach campaign

• Prepare and adopt a formalized Transportation Utility Budget

• Refine trip generation database

• Incorporate trip generation database into utility billing system

• Develop a transportation utility ordinance and potential credit policy

Steps for Creation of Transportation Utility:

Jon Cameron

Senior Municipal Advisor

(262) 796-6179

[email protected]

Transportation Utility Creation Feasibility Study For

The City of Janesville

September, 2020

Prepared by: Ehlers raSmith Boardman Clark

Transportation Utility Creation Feasibility Study Table of Contents

Schedule Page

Transportation Utility Creation Study Report 1

Table 1: Summary of Trip Generation 7

Table 2: Summary of User Rate Scenarios 8

Table 3: Summary of Revenue Requirements by Scenario 9

Table 4: User Rate Calculation by Scenario 13

Table 5: User Rate Summary by Scenario 16

Table 6: Total Transportation Charges for Single‐Family Residential Customer 17

Table 7: Summary of Charges and Taxes for Single‐Family Residential Customer by Scenario 21

Table 8: Base Borrowing Scenario 1 22

Table 9: Allocation of Debt Service Base Borrowing Scenario 1 23

Table 10: Borrowing Scenarios 3 & 6 24

Table 11: Allocation of Debt Service Scenarios 3 & 6 25

Table 12: Borrowing Scenarios 4 & 7 26

Table 13: Allocation of Debt Service Scenarios 4 & 7 27

Table 14: Financing Plan Tax Impact No Transportation Utility 28

Table 15: Financing Plan Tax Impact Scenarios 3 & 6 29

Table 16: Financing Plan Tax Impact Scenarios 4 & 7 30 June 16, 2020 League of WI Municipalities Opinion on Transportation Utility Fees 31

Transportation Utility Creation Feasibility Analysis September, 2020 Janesville, WI Page 1

Transportation Utility Creation Feasibility Study

Introduction The City of Janesville hired the project team of Ehlers, raSmith and Boardman Clark in spring, 2020 to

prepare a Feasibility Analysis for the possible creation of a Transportation Utility. In 2014 the Janesville

City Council approved increasing the street rehabilitation program from six miles to 12 miles annually.

The program includes chip sealing, repaving and reconstruction activities. The program is currently

funded through a combination of general transportation aids, General Obligation Note issuance, the

City’s stormwater utility, the general property tax levy and the City’s Wheel Tax.

The City has experienced approximately 8% annual inflationary cost increases to the street rehabilitation

program in recent years. This has led to increased reliance on the issuance of General Obligation debt to

fund a larger portion of the street rehabilitation program annually due to State imposed levy limits. As a

result of this, the City is considering the creation of a Transportation Utility to help fund a portion of the

City’s street rehabilitation budget.

This study is a feasibility study in that it is intended to provide the Common Council with enough

information to consider if it wants to move forward with the creation of a transportation utility. The

study is intended to educate the Council on what a transportation utility is, including their history in the

United States and Wisconsin, what preliminary user rates would look like for City users under several

possible creation scenarios, the legality of creating a transportation utility in Wisconsin, and next steps

the City will need to consider if the Council desires to create a transportation utility in the City of

Janesville.

Transportation Utility Explanation and History A transportation utility is a funding mechanism for a municipality’s’ transportation system that

essentially equates the transportation system to a utility similar to the City’s water, sewer or

stormwater utilities. User rates are calculated for properties within the municipality based on a

property’s use of the transportation system. The method to measure system usage can vary by

municipality, but the generally accepted practice is trip generation as published by the Institute for

Transportation Engineers (ITE).

Trip generation is a method for measuring traffic volume based upon trip ends generated by different

land use types. The ITE publishes a Trip Generation Manual that measures traffic generation by land use

type for 1,000’s of potential land uses. The trip generation method and manual is widely accepted by

those municipalities that have transportation utilities as a reliable method for determining daily traffic

generation by land use type. This method measures a property’s use of the transportation system much

the same way a water meter measures a utility customer’s water consumption.

The concept of a transportation utility is relatively new in the United States and very new to Wisconsin. According to a 2019 Master’s Thesis completed by Andrew Eveland (Clintonville Road Maintenance and


Transportation Utility Fee, A Master Thesis. Andrew Robert Eveland. November, 2019. Page, 16), the first transportation utility in the United States was created in Fort Collins, Colorado in 1984 followed by LaGrange, Oregon. The use of transportation utilities has been more prevalent in in the western portion of the United States to date. In the early 2000’s in Wisconsin, the City of Oconomowoc and the Village of North Fond du Lac both

attempted to create transportation utilities. Recently we are aware of the City of Neenah and the Town

of Buchanan as having created transportation utilities in Wisconsin but are not aware of any other

municipalities that have created transportation utilities to date.

Legal Authority Issues Transportation Utilities do not have direct enabling legislation in Wisconsin. In June 2020 the League of

Wisconsin Municipalities published a legal opinion on the creation of transportation utilities. In that

opinion they concluded that municipalities can rely on their broad Home Rule authority under State

Statutes or the Wisconsin Constitution to create such utilities. A copy of the opinion is included with this

report as a reference.

The use of Home Rule authority is what a number of municipalities relied upon in the 1990’s to create

stormwater utilities prior to legislation being drafted to allow for their creation. The use of Home Rule

authority, while broad in nature, does not mean that a municipality would not face a challenge for the

validity of creating a transportation utility. In fact, it is reasonable to suggest that the City may face a

legal challenge on the overall validity of creating a transportation utility.

The League of Municipalities’ opinion includes a number of items that municipalities need to consider so

that the transportation utility is construed as a user fee and not a tax, and furthermore defensible

against a possible legal challenge. These include:

1. Transportation utility fees need to be reasonably based on the costs of the services provided.

(i.e. fees must be cost based)

2. Fee should be related to a property owner’s use of the street system.

3. Avoid using the fee to pay for snow plowing or street sweeping.

4. Place fees collected in a separate enterprise fund, used only for street rehabilitation costs.

5. Collect the fees in the same manner as other utility charges.

6. Any credit policy adopted should avoid exempting tax‐exempt properties so as to not be

construed as a tax.

7. To the extent possible, have a process for allowing properties that demonstrate reduced use of

system to qualify for a lower fee.

Study Methodology and Results City staff wanted to calculate potential transportation user rates under seven different scenarios as

described below. All user rate scenarios were based on the concept of trip generation, and the number

of daily trips that are estimated to be generated within the City. For this exercise raSmith relied upon

City property assessment data and other City parcel data to identify property type and then assign trips


based upon the weekday average trip rate for each parcel type as identified in the ITE Trip Generation

Manual. All residential parcels have a uniform number of 9.44 trips per day assigned to them per the ITE

Trip Generation Manual. Non‐residential parcels have trips assigned based upon land use classification,

related trip generation rates and a scale factor (e.g. building size, site size, etc.). For the purpose of this

feasibility analysis, not all non‐residential parcels within the City were able to be sampled for the

purpose of measuring total daily trip generation. The majority of parcels were sampled with inferences

developed from the large sample size for the remaining non‐sampled parcels to approximate a total

number of trips per day as is shown in Table 1. The total number of non‐residential trips assigned will

need to be refined if the City moves forward to create a Transportation Utility.

The seven scenarios that City staff desired to have user rates developed for are summarized in Table 2

and shown below.

The scenarios generally revolve around the use of debt to help fund the street rehabilitation program,

and whether the City continues to impose the wheel tax. Scenario 1 is a base level scenario assuming

the City does not create a Transportation Utility and continues to fund street rehabilitation projects as

they historically have done. Scenarios 2 and 5 assume the City will not issue debt to support the street

rehabilitation program, but rather increase the level of funding from the Transportation Utility.

Scenarios 3 and 6 assume that the City will fund 25% of the street rehabilitation program with General

Obligation debt, while scenarios 4 and 7 assume that 50% of the program would be funded with debt,

with the rest supported through the Transportation Utility and the City’s other existing funding

mechanisms. Scenarios 5‐7 assume that the City would discontinue the wheel tax, requiring a higher

revenue requirement from the Transportation Utility to bridge the gap lost from the wheel tax revenues.

Table 3 shows these scenarios in greater detail estimated from 2021‐2030. The amount of revenue

required by the Transportation Utility is highlighted in yellow for each scenario.

The user rate calculations for each scenario are shown in Table 4. For each scenario the total revenue

requirement by year is allocated to fixed customer charge and a rate per trip. For all scenarios it is

assumed that 10% of the revenue requirement is allocated to the fixed charge and 90% of the revenue

requirement is allocated to the trip rate. The costs allocated to the fixed customer charge are divided by

the number of customers to arrive at an annual rate per customer. The costs allocated to the trip rate

are divided by the total estimated number of daily trips shown on Table 1 for a rate per trip. The rate

per trip can then be applied to each land use type to calculate the annual utility charge. The annual rate

Program











per trip by scenario is summarized on Table 5. Table 6 shows the calculation by scenario of the total

transportation charges (transportation utility, wheel tax where applicable, and taxes for future

transportation debt issuances where applicable) to an average single‐family home in the City. The

application of the wheel tax assumes two vehicles per household. Table 7 shows the summary total

transportation charges and taxes by

Street Rehabilitation Debt Analysis As part of this feasibility analysis, debt scenarios were prepared to examine the estimated amount of

debt issuance that would be needed by scenario for street rehabilitation. In addition, the analysis could

then estimate the annual principal and interest payments for those debt issuances and develop an

estimate of the total tax rate for debt associated with street rehabilitation work. User rate Scenarios 2

and 5 listed above assume the transportation utility will fund all street rehabilitation costs less other

revenue sources, therefore no new debt would need to be issued for street rehabilitation work.

The base level scenario 1 shown on Table 8 assumes no transportation utility is created and the City

continues its existing funding practices. The estimated annual principal and interest payments are

shown on Tables 9. Table 10 shows the estimated debt sizing for user rate scenarios 3 and 6, which

assume that the City would need to debt finance 25% of the annual street rehabilitation costs, with the

transportation utility and other funding sources paying the remaining costs. The estimated principal and

interest payments for these scenarios are shown on Table 11. Table 12 is the debt sizing for Scenarios 4

and 7 which assume that debt financing would be needed for 50% of the annual street rehabilitation

costs, and the estimated debt service payments for these scenarios are shown on Table 13.

Tables 14‐16 show the City’s tax levy for debt and associated tax rate on an equalized basis for future

transportation related borrowings by scenario. The total annual principal and interest payments for each

debt scenario (base, scenarios 3 and 6, and scenarios 4 and 7) are then summarized in each respective

table along with the associated total tax rate for the estimated 2021‐2030 street rehabilitation debt. The

total estimated tax rate for future street rehabilitation projects, and total estimated principal and

interest by scenario are summarized graphically below.


Summary of Key Findings A summary of the key findings of the analysis are described below:

1. The user rates by scenario vary greatly depending on the supplemental level of debt funding in

the street rehabilitation program and whether the City discontinues the wheel tax.

2. The highest cost to the single‐family home by 2030 is Scenario 1, which assumes the City does

not create a transportation utility and continues collecting the wheel tax.

a. Conversely, Scenario 5 assumes no supplemental level of debt funding in the street

rehabilitation program but discontinues the wheel tax. This results in a higher user rate

than Scenario 2, but the lowest overall cost to the homeowner compared to all other

scenarios.


3. These scenarios will have different outcomes for non‐residential property owners depending on

their level of trip generation.

4. Scenario 1 (as‐is) debt scenario assuming no transportation utility is created produces the

highest total principal and interest payments and overall tax rate for debt. The scenario

conceivably leaves the City with less borrowing ability for other non‐street rehabilitation

projects as the City has a policy to not allow annual principal and interest payments for debt

supported by the tax levy to exceed 20% of the total tax levy. This scenario also produces the

highest overall tax rate for debt.

Next Steps This feasibility study attempts to provide the Common Council with enough information to consider if it

wants to move forward with the creation of a transportation utility. Assuming the Council wishes to

proceed with the creation of a transportation utility we identify the following steps to be taken:

1. The Council to decide on a budget and user rate scenario that it would like to proceed with.

2. Develop a potential public education outreach campaign on the transportation utility and

engage in public outreach as needed on the utility.

3. The City would need to establish a formalized transportation utility budget to define total

revenues and detailed expenses on an annual basis.

4. The trip generation database will need to be refined such that all properties have been reviewed

and trip generation rates are assigned to each parcel.

5. The trip generation database will then need to be incorporated into the City’s utility billing

database so that the applicable user rates can be assigned to each parcel based on their

individual trip generation rates.

6. A Transportation Utility Ordinance will need to be created specifying the governance structure

of the utility, the frequency and method for billing and method for settling any disputes on

charges and/or any applicable credit policy.

Table 1Transportation Utility Feasibility Analysis - Trip Generation SummaryCity of Janesville, WI

Land Use Category1No.

Properties

Percentage

(Properties)

No. Daily

Trips

Percentage

(Trips)

Port & Terminal 11 0.04% 307 0.04%

Industrial 511 2.07% 45,806 6.11%

Residential2

21,903 88.91% 237,539 31.67%

Lodging 13 0.05% 4,689 0.63%

Recreational 153 0.62% 9,640 1.29%

Institutional 125 0.51% 22,868 3.05%

Medical 22 0.09% 3,585 0.48%

Office 326 1.32% 44,890 5.99%

Retail 175 0.71% 260,264 34.70%

Services 253 1.03% 120,412 16.05%

Admin (VAC, COMP, UTIL) 1,142 4.64% 0 0.00%

Totals 24,634 100.00% 750,000 100.00%

Notes:

1. Source of Table: raSmith Trip database for Janesville and developed from

ITE Trip Generation Statistics 10th Edition:

https://www.ite.org/technical‐resources/topics/trip‐and‐parking‐generation/trip‐generation‐10th‐edition‐formats/

2. Residential categotry includes:

Single‐family residential

Multi‐family residential

Mobile home park

Senior living facilities

6%

32%

1%

1%3%

0%

6%

35%

16%

Estimate of Daily Trips by Land Use Type Port & Terminal

Industrial

Residential2

Lodging

Recreational

Institutional

Medical

Office

Retail

Services

Admin (VAC, COMP, UTIL)

Transportation Utility Creation Feasibility Analysis

Janesville, WI Page 7

Table 2Transportation Utility Feasibility Analysis - Summary of Rate ScenariosCity of Janesville, WI

Program












Table 3Transportation Utility Feasibility Analysis - Summary of Utility Revenue Requirementsand Borrowing Needs by ScenarioCity of Janesville, WI

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Projection Projection Projection Projection Projection Projection Projection Projection Projection Projection

Scenario #1 ‐ Baseline

Appropriations Remain Constant

Debt as % of Program Funding = Variable

Prior Debt ‐ General Fund 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000

New Debt ‐ General Fund 4,176,200 4,460,200 4,758,400 5,071,500 5,400,200 5,745,300 6,107,700 6,488,300 6,887,900 7,307,500

Appropriations

General Fund

Wheel Tax 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

General Transportation Aids 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000

Wheel Tax Special Revenue Fund 973,200 973,200 973,200 973,200 973,200 973,200 973,200 973,200 973,200 973,200

Stormwater Utility 1,284,700 1,348,900 1,416,300 1,487,100 1,561,500 1,639,600 1,721,600 1,807,700 1,898,100 1,993,000

Transportation Utility ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Subtotal 2,527,900 2,592,100 2,659,500 2,730,300 2,804,700 2,882,800 2,964,800 3,050,900 3,141,300 3,236,200

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Scenario #2


Debt as % of Program Funding = 0%

Prior Debt ‐ General Fund 250,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

New Debt ‐ General Fund ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Appropriations

General Fund

Wheel Tax 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000




Transportation Utility 4,176,200 4,710,200 5,008,400 5,321,500 5,650,200 5,995,300 6,357,700 6,738,300 7,137,900 7,557,500

Subtotal 6,704,100 7,302,300 7,667,900 8,051,800 8,454,900 8,878,100 9,322,500 9,789,200 10,279,200 10,793,700

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$


Janesville, WIPage 9

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Scenario #3





Appropriations

General Fund

Wheel Tax 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000





Subtotal 4,963,100 5,224,200 5,498,400 5,786,300 6,088,700 6,406,100 6,739,400 7,089,400 7,456,900 7,842,800

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Scenario #4





Appropriations

General Fund

Wheel Tax 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000




Transportation Utility 694,100 804,000 919,400 1,040,600 1,167,700 1,301,200 1,441,400 1,588,700 1,743,300 1,905,600

Subtotal 3,222,000 3,396,100 3,578,900 3,770,900 3,972,400 4,184,000 4,406,200 4,639,600 4,884,600 5,141,800

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$



2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Scenario #5

Appropriations Remain Constant, but Wheel Tax is Eliminated


Prior Debt ‐ General Fund 250,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

New Debt ‐ General Fund ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Appropriations

General Fund

Wheel Tax ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐


Wheel Tax Special Revenue Fund ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐



Subtotal 6,704,100 7,302,300 7,667,900 8,051,800 8,454,900 8,878,100 9,322,500 9,789,200 10,279,200 10,793,700

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Scenario #6





Appropriations

General Fund

Wheel Tax ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐





Subtotal 4,963,100 5,224,200 5,498,400 5,786,300 6,088,700 6,406,100 6,739,400 7,089,400 7,456,900 7,842,800

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$



2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Scenario #7





Appropriations

General Fund

Wheel Tax ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐





Subtotal 3,222,000 3,396,100 3,578,900 3,770,900 3,972,400 4,184,000 4,406,200 4,639,600 4,884,600 5,141,800

Reimbursable 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000

GRAND TOTAL 6,964,100$ 7,312,300$ 7,677,900$ 8,061,800$ 8,464,900$ 8,888,100$ 9,332,500$ 9,799,200$ 10,289,200$ 10,803,700$

Notes:

1. Source for all data in table was provided by the City of Janesville Finance Department September, 2020. All scenarios assume construction costs will increase by 5.00% annually.



Table 4Transportation Utility Feasibility Analysis- User Rate Calculation By ScenarioCity of Janesville, WI

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 1

Revenue Requirement1 0 0 0 0 0 0 0 0 0 0

Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634

Fixed Rate per Customer3 0 0 0 0 0 0 0 0 0 0

Total Trips per Day2 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000

Rate per Trip4 0 0 0 0 0 0 0 0 0 0

Percentage Increase N/A N/A N/A N/A N/A N/A N/A N/A N/A

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 2

Revenue Requirement1 4,176,200$ 4,710,200$ 5,008,400$ 5,321,500$ 5,650,200$ 5,995,300$ 6,357,700$ 6,738,300$ 7,137,900$ 7,557,500$

Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634

Fixed Rate per Customer3 16.95$ 19.12$ 20.33$ 21.60$ 22.94$ 24.34$ 25.81$ 27.35$ 28.98$ 30.68$


Rate per Trip4 5.01$ 5.65$ 6.01$ 6.39$ 6.78$ 7.19$ 7.63$ 8.09$ 8.57$ 9.07$

Percentage Increase 13% 6% 6% 6% 6% 6% 6% 6% 6%



2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 3


Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634



Rate per Trip4 2.92$ 3.16$ 3.41$ 3.67$ 3.94$ 4.23$ 4.53$ 4.85$ 5.18$ 5.53$


2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 4

Revenue Requirement1 694,100$ 804,000$ 919,400$ 1,040,600$ 1,167,700$ 1,301,200$ 1,441,400$ 1,588,700$ 1,743,300$ 1,905,600$

Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634



Rate per Trip4 0.83$ 0.96$ 1.10$ 1.25$ 1.40$ 1.56$ 1.73$ 1.91$ 2.09$ 2.29$


2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 5


Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634



Rate per Trip4 6.30$ 6.94$ 7.30$ 7.67$ 8.07$ 8.48$ 8.92$ 9.37$ 9.85$ 10.36$




2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 6


Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634



Rate per Trip4 4.21$ 4.45$ 4.69$ 4.96$ 5.23$ 5.52$ 5.82$ 6.13$ 6.47$ 6.82$


2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 7


Customers2 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634 24,634



Rate per Trip4 2.12$ 2.25$ 2.39$ 2.54$ 2.69$ 2.85$ 3.02$ 3.19$ 3.38$ 3.57$


Notes:

1. Revenue requirement for each scenario taken from Table 3.

2. Customers and number of trips taken from Table 1. Total trips from Table 1 are expressed daily.

3. Fixed charge per customer calculated by allocated 10% of the revenue requirement to the fixed charge divided by the number of customers within the utility.

4. Rate per trip calculated by dividing 90% of the revenue requirement by the number of assumed daily trips. The rate per trip is an annual rate and rounded off to the hundredth decimal place.



Table 5Transportation Utility Feasibility Analysis- User Rate Summary By ScenarioCity of Janesville, WI

Summary of User Rates By Scenario

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 1 Fixed Charge ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Trip Rate ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Scenario 2 Fixed Charge 16.95$ 19.12$ 20.33$ 21.60$ 22.94$ 24.34$ 25.81$ 27.35$ 28.98$ 30.68$

Trip Rate 5.01$ 5.65$ 6.01$ 6.39$ 6.78$ 7.19$ 7.63$ 8.09$ 8.57$ 9.07$


Trip Rate 2.92$ 3.16$ 3.41$ 3.67$ 3.94$ 4.23$ 4.53$ 4.85$ 5.18$ 5.53$


Trip Rate 0.83$ 0.96$ 1.10$ 1.25$ 1.40$ 1.56$ 1.73$ 1.91$ 2.09$ 2.29$


Trip Rate 6.30$ 6.94$ 7.30$ 7.67$ 8.07$ 8.48$ 8.92$ 9.37$ 9.85$ 10.36$


Trip Rate 4.21$ 4.45$ 4.69$ 4.96$ 5.23$ 5.52$ 5.82$ 6.13$ 6.47$ 6.82$


Trip Rate 2.12$ 2.25$ 2.39$ 2.54$ 2.69$ 2.85$ 3.02$ 3.19$ 3.38$ 3.57$



Table 6Transportation Utility Feasibility Analysis - User Rate Summary & TotalTransportation Charges and Taxes For Single-Family Residential CustomerCity of Janesville, WI

Scenario 1

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Rate per Trip (Annual) ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44

Annual Fixed Charge ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Annual Transportation Utility Charge ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Wheel Tax 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$

Transportation Tax Rate for Debt ‐$ 0.09$ 0.18$ 0.29$ 0.40$ 0.51$ 0.63$ 0.76$ 0.90$ 1.04$

Annual Transportation Tax for $149,000 Property ‐$ 13.30$ 27.51$ 42.80$ 59.19$ 76.35$ 94.55$ 113.59$ 133.71$ 154.86$

Total Transporation Charges & Taxes 40.00$ 53.30$ 67.51$ 82.80$ 99.19$ 116.35$ 134.55$ 153.59$ 173.71$ 194.86$

Percentage Change 33.24% 26.67% 22.65% 19.79% 17.31% 15.64% 14.15% 13.10% 12.18%

Scenario 2

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Rate per Trip (Annual) 5.01$ 5.65$ 6.01$ 6.39$ 6.78$ 7.19$ 7.63$ 8.09$ 8.57$ 9.07$

Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44

Annual Fixed Charge 16.95$ 19.12$ 20.33$ 21.60$ 22.94$ 24.34$ 25.81$ 27.35$ 28.98$ 30.68$

Annual Transportation Utility Charge 64.26$ 72.48$ 77.07$ 81.88$ 86.94$ 92.25$ 97.83$ 103.69$ 109.83$ 116.29$

Wheel Tax 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$

Transportation Tax Rate for Debt ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Annual Transportation Tax for $149,000 Property ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$





Scenario 3

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44



Wheel Tax 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$





Scenario 4

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44



Wheel Tax 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$ 40.00$







Scenario 5

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44



Wheel Tax ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Transportation Tax Rate for Debt ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$

Annual Transportation Tax for $149,000 Property ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$



Scenario 6

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44



Wheel Tax ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$







Scenario 7

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030


Assigned Trips 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44 9.44



Wheel Tax1 ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$





Notes:

1. Total wheel tax assumes two vehicles per household.

2. Transportation tax rate for debt taken from Tables 14 ‐ 16.



Table 7Transportation Utility Feasibility Analysis - Summary of Total Charges & TaxesFor Single-Family Residential Customer by ScenarioCity of Janesville, WI

Total Transportation Charges & Taxes 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Scenario 1 (Base, No Utility) 40.00$ 53.30$ 67.51$ 82.80$ 99.19$ 116.35$ 134.55$ 153.59$ 173.71$ 194.86$

Scenario 2 104.26$ 112.48$ 117.07$ 121.88$ 126.94$ 132.25$ 137.83$ 143.69$ 149.83$ 156.29$

Scenario 3 77.47$ 86.13$ 95.25$ 105.04$ 115.00$ 125.42$ 136.46$ 148.00$ 159.74$ 172.37$

Scenario 4 50.68$ 63.46$ 77.10$ 91.25$ 106.12$ 121.75$ 138.12$ 155.05$ 172.50$ 190.75$

Scenario 5 80.77$ 88.99$ 93.58$ 98.40$ 103.46$ 108.77$ 114.34$ 120.20$ 126.35$ 132.80$

Scenario 6 53.99$ 62.64$ 71.77$ 81.55$ 91.52$ 101.93$ 112.98$ 124.52$ 136.25$ 148.89$

Scenario 7 27.19$ 39.97$ 53.61$ 67.77$ 82.63$ 98.27$ 114.64$ 131.56$ 149.02$ 167.26$



Table 8Transportation Utility - Base Borrowing Scenario 1No Transportation UtilityCity of Janesville, WI

2021 G.O. Notes 2022 G.O. Notes 2023 G.O. Notes 2024 G.O. Notes 2025 G.O. Notes 2026 G.O. Notes 2027 G.O. Notes 2028 G.O. Notes 2029 G.O. Notes 2030 G.O. Notes

CIP Projects

Street Rehabilitation Projects 4,176,200 4,460,200 4,758,400 5,071,500 5,400,200 5,745,300 6,107,700 6,488,300 6,887,900 7,307,500

Estimated Issuance Expenses 102,750 106,850 110,750 115,050 119,650 130,000 135,200 142,150 147,900 155,600

TOTAL TO BE FINANCED 4,278,950 4,567,050 4,869,150 5,186,550 5,519,850 5,875,300 6,242,900 6,630,450 7,035,800 7,463,100

Estimated Interest Earnings (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000) (1,000)

Rounding 2,050 3,950 1,850 4,450 1,150 700 3,100 550 200 2,900

NET ISSUE SIZE 4,280,000 4,570,000 4,870,000 5,190,000 5,520,000 5,875,000 6,245,000 6,630,000 7,035,000 7,465,000



Table 9Allocation of Debt Service - Base Scenario 1No Transportation UtilityCity of Janesville, WI

Year

Ending Principal Interest Total

2020 0 0 0

2021 0 0 0

2022 390,000 66,188 456,188

2023 820,000 128,523 948,523

2024 1,280,000 203,091 1,483,091

2025 1,775,000 286,180 2,061,180

2026 2,310,000 362,266 2,672,266

2027 2,890,000 435,696 3,325,696

2028 3,510,000 505,429 4,015,429

2029 4,180,000 570,251 4,750,251

2030 4,900,000 629,256 5,529,256

2031 5,680,000 681,486 6,361,486

2032 5,380,000 525,130 5,905,130

2033 4,970,000 435,298 5,405,298

2034 4,520,000 348,761 4,868,761

2035 4,025,000 267,761 4,292,761

2036 3,490,000 194,205 3,684,205

2037 2,905,000 129,568 3,034,568

2038 2,265,000 75,729 2,340,729

2039 1,570,000 34,910 1,604,910

2040 820,000 9,020 829,020

Total 57,680,000 5,888,748 63,568,748

Notes:

1) Estimated interest rates for 2021‐2030 debt issues assumes Aa2 sale from

August, 2020 plus 35 basis points for the 2021 issuance, an additional 60 basis points

for the 2022 issuance, an additional 85 basis points for the 2023 issuance

and an additional 100 basis points for the 2024‐2030 issuances.

Total 2021‐2030 Debt Issuances



Table 10Transportation Utility - Borrowing Scenarios 3 & 6City of Janesville, WI


CIP Projects





Rounding 2,200 1,700 3,950 1,600 4,350 2,000 4,150 4,050 4,700 4,000

NET ISSUE SIZE 1,815,000 1,905,000 2,000,000 2,095,000 2,200,000 2,305,000 2,420,000 2,540,000 2,665,000 2,795,000



Table 11Allocation of Debt Service - Scenarios 3 & 6City of Janesville, WI

Year


2020 0 0 0

2021 0 0 0

2022 165,000 28,050 193,050

2023 345,000 53,864 398,864

2024 540,000 84,184 624,184

2025 735,000 117,261 852,261

2026 945,000 147,053 1,092,053

2027 1,175,000 175,118 1,350,118

2028 1,420,000 201,150 1,621,150

2029 1,670,000 224,741 1,894,741

2030 1,950,000 245,478 2,195,478

2031 2,240,000 262,896 2,502,896

2032 2,110,000 202,521 2,312,521

2033 1,940,000 167,245 2,107,245

2034 1,750,000 133,494 1,883,494

2035 1,550,000 102,144 1,652,144

2036 1,335,000 73,861 1,408,861

2037 1,110,000 49,120 1,159,120

2038 860,000 28,596 888,596

2039 595,000 13,105 608,105

2040 305,000 3,355 308,355

Total 22,740,000 2,313,235 25,053,235

Notes:








Table 12Transportation Utility - Borrowing Scenarios 4 & 7City of Janesville, WI


CIP Projects





Rounding 4,900 3,250 2,800 3,050 3,400 2,900 2,250 400 1,600 3,550

NET ISSUE SIZE 3,585,000 3,760,000 3,945,000 4,140,000 4,345,000 4,565,000 4,790,000 5,025,000 5,275,000 5,540,000



Table 13Allocation of Debt Service - Scenarios 4 & 7City of Janesville, WI

Year


2020 0 0 0

2021 0 0 0

2022 325,000 55,468 380,468

2023 685,000 106,371 791,371

2024 1,055,000 166,210 1,221,210

2025 1,445,000 231,754 1,676,754

2026 1,870,000 290,606 2,160,606

2027 2,325,000 346,261 2,671,261

2028 2,805,000 397,834 3,202,834

2029 3,310,000 444,481 3,754,481

2030 3,850,000 485,516 4,335,516

2031 4,430,000 520,339 4,950,339

2032 4,170,000 400,879 4,570,879

2033 3,835,000 331,158 4,166,158

2034 3,475,000 264,290 3,739,290

2035 3,075,000 202,058 3,277,058

2036 2,650,000 145,935 2,795,935

2037 2,190,000 96,969 2,286,969

2038 1,695,000 56,493 1,751,493

2039 1,170,000 25,993 1,195,993

2040 610,000 6,710 616,710

Total 44,970,000 4,575,323 49,545,323

Notes:








Table 14Financing Plan Tax Impact Base Scenario 1 - No Transportation UtilityCity of Janesville, WI

Base Level Scenario 1

Street Rehabilitation Total Total Tax Levy Change Annual Taxes

Year New Debt Rate for from Prior $149,000 Year

Ending Total Principal and Interest Service Levy

Transportation

Debt Service Year Home Ending

2020 5,061,218,500 0 0 $0.00 $0 2020

2021 5,086,524,593 0 0 $0.00 0 $0 2021

2022 5,111,957,215 456,188 456,188 $0.09 456,188 $13 2022

2023 5,137,517,002 948,523 948,523 $0.18 492,335 $28 2023

2024 5,163,204,587 1,483,091 1,483,091 $0.29 534,569 $43 2024

2025 5,189,020,609 2,061,180 2,061,180 $0.40 578,089 $59 2025

2026 5,214,965,713 2,672,266 2,672,266 $0.51 611,086 $76 2026

2027 5,241,040,541 3,325,696 3,325,696 $0.63 653,430 $95 2027

2028 5,267,245,744 4,015,429 4,015,429 $0.76 689,733 $114 2028

2029 5,293,581,973 4,750,251 4,750,251 $0.90 734,823 $134 2029

2030 5,320,049,882 5,529,256 5,529,256 $1.04 779,005 $155 2030

2031 5,346,650,132 6,361,486 6,361,486 $1.19 832,230 $177 2031

Total 63,568,748 Total

Notes:

1. TID out equalized value assumed to increase by 0.5% annually.

Proposed Debt

Levy and Tax Rate

Equalized Value

(TID OUT)



Table 15Financing Plan Tax Impact Scenarios 3 & 6City of Janesville, WI

Scenarios 3 & 6

Street Rehabilitation Total Total Tax Levy Change Annual Taxes Projected

Year New Debt Rate for from Prior $149,000 Operating Year

Ending Total Principal and Interest Service Levy Transportation Debt Year Home Budget Ending

2020 5,061,218,500 0 0 $0 $52,665,734 2020

2021 5,086,524,593 0 0 $0.00 0 $0 $53,218,720 2021

2022 5,111,957,215 193,050 193,050 $0.04 193,050 $6 $53,970,570 2022

2023 5,137,517,002 398,864 398,864 $0.08 205,814 $12 $54,741,050 2023

2024 5,163,204,587 624,184 624,184 $0.12 225,320 $18 $55,536,960 2024

2025 5,189,020,609 852,261 852,261 $0.16 228,078 $24 $56,341,620 2025

2026 5,214,965,713 1,092,053 1,092,053 $0.21 239,791 $31 $57,164,050 2026

2027 5,241,040,541 1,350,118 1,350,118 $0.26 258,065 $38 $58,010,870 2027

2028 5,267,245,744 1,621,150 1,621,150 $0.31 271,033 $46 $58,876,840 2028

2029 5,293,581,973 1,894,741 1,894,741 $0.36 273,591 $53 $59,751,620 2029

2030 5,320,049,882 2,195,478 2,195,478 $0.41 300,736 $61 $60,659,850 2030

2031 5,346,650,132 2,502,896 2,502,896 $0.47 307,419 $70 $61,581,140 2031


Notes:


Levy and Tax Rate

Equalized Value

(TID OUT)

Proposed Debt



Table 16Financing Plan Tax Impact Scenarios 4 & 7City of Janesville, WI

Scenarios 4 & 7

Street Rehabilitation Total Total Tax Levy Change Annual Taxes

Year New Debt Rate for from Prior $149,000 Year

Ending Total Principal and Interest Service Levy

Transportation

Debt Service Year Home Ending

2020 5,061,218,500 0 0 $0.00 $0 2020

2021 5,086,524,593 0 0 $0.00 0 $0 2021

2022 5,111,957,215 380,468 380,468 $0.07 380,468 $11 2022

2023 5,137,517,002 791,371 791,371 $0.15 410,904 $23 2023

2024 5,163,204,587 1,221,210 1,221,210 $0.24 429,839 $35 2024

2025 5,189,020,609 1,676,754 1,676,754 $0.32 455,544 $48 2025

2026 5,214,965,713 2,160,606 2,160,606 $0.41 483,853 $62 2026

2027 5,241,040,541 2,671,261 2,671,261 $0.51 510,655 $76 2027

2028 5,267,245,744 3,202,834 3,202,834 $0.61 531,573 $91 2028

2029 5,293,581,973 3,754,481 3,754,481 $0.71 551,648 $106 2029

2030 5,320,049,882 4,335,516 4,335,516 $0.81 581,035 $121 2030

2031 5,346,650,132 4,950,339 4,950,339 $0.93 614,823 $138 2031


Notes:


Levy and Tax Rate

Equalized Value

(TID OUT)

Proposed Debt



June 16, 2020 Funding Streets through Transportation Utility Fees By: Curt Witynski, J.D., Deputy Executive Director Claire Silverman, Legal Counsel Maria Davis, Assistant Legal Counsel Wisconsin municipalities are searching for alternative ways to pay for essential services like street maintenance and other transportation services. One reason is lack of adequate funding to pay for those services. Although Wisconsin municipalities’ main source of revenue is the property tax, Wisconsin local governments have operated under the strictest property tax levy limits in the country for nearly a decade. Moreover, the State expressly prohibits municipalities from imposing other taxes such as a sales tax (with extremely limited exceptions) and local income taxes. At the same time, funding for state aid programs, such as shared revenue, has been flat or decreasing for years. State transportation aids currently cover, on average, sixteen percent (16%) of city and village transportation-related costs. In addition to lack of funding, some municipal leaders have concluded that paying for street improvements through special assessments imposed on abutting property owners is inequitable and places a disproportionate burden on property owners for improvements that benefit the area or community in general. Substantial assessments can jeopardize the ability of some residents (e.g., those living on fixed or limited incomes) to remain in their homes. As a result of these factors, some municipalities are turning to alternative revenue options like local vehicle registration fees and transportation utility fees to pay for street maintenance and other transportation services. Several League members have requested the League’s legal opinion on whether Wisconsin municipalities may create transportation utilities and charge property owners transportation utility fees. We conclude that a municipality may rely on its broad statutory and/or constitutional home rule powers to create a transportation utility and charge property owners transportation utility fees. Alternatively, a municipality may charge property owners a street maintenance user fee under Wis. Stat. § 66.0627. Any fee must be reasonably related to the cost of the services provided. The League suggests that a transportation utility fee is most defensible against challenge if the basis for the fee is closely related to property occupants’ use of the local street network. It is the League’s opinion that transportation utility fees with such a basis are accurately characterized as fees and not taxes. Such fees should be segregated and used only for street maintenance and other transportation services. To avoid needing to reduce the community’s property tax levy under § 66.0602(2m)(b) of the levy limit law, municipalities should avoid using transportation utility fee revenue to pay for snow plowing or street sweeping.

Page 31

Sources of Authority for Transportation Utility Fees While no state statute expressly authorizes Wisconsin communities to create transportation utilities and charge transportation utility fees, Wisconsin municipalities have broad authority to create, manage, and finance utilities. Transportation utility fees are financing mechanisms that treat the community’s street network and other transportation services like a utility. Residents and businesses are charged fees based on their use of the transportation system, analogous to how municipalities provide and pay for water, sewer, electric and stormwater services. In the state’s early years, no statutes existed expressly authorizing cities and villages to own and operate water, sewer, or other common municipal utilities. Instead, municipalities relied on non-specific, broad police power authority to create and fund such now-familiar utilities. Similarly, in the early 1990s, municipalities like Appleton, Glendale, and Eau Claire initially relied on their broad police power authority to create stormwater utilities and charge property owners stormwater fees based on the amount of impervious surface on the property. Cities over 10,000 in population began to charge such fees to help pay for the cost of complying with new state regulations requiring the removal of pollutants from stormwater. Only later did the Legislature add language to the predecessor of Wis. Stat. § 66.0681 expressly confirming municipal authority to create stormwater utilities and stormwater fees. See 1997 Wis. Act 53, which took effect January 9, 1998. Notably, the Wisconsin Supreme Court determined fairly early that Wisconsin municipalities do not need explicit statutory authorization to create a municipally-owned utility. In 1895, the Court held that “it is not necessary to seek an expressed delegation of power to the city to build a water works and an electric lighting plant, because the power expressly granted to the city to pass ordinances for the preservation of the public health and general welfare includes the power to use the usual means of carrying out such powers, which includes municipal water and lighting services.”1 Similarly, a general grant of authority to act for the public health or general welfare is adequate legal authority today for Wisconsin cities and villages to create, operate, and finance through user charges, a transportation utility. Statutory Home Rule Authority Wisconsin cities and villages are vested by the state legislature with broad general police powers. The general city charter law, chapter 62, gives cities the “largest measure of self-government compatible with the constitution and general law.” Wis. Stat. § 62.04. Wisconsin Stat. § 62.11(5), the general authority statute for city councils, provides:

Except as elsewhere in the statutes specifically provided, the council shall have the management and control of the city property, finances, highways, navigable waters, and the public service, and shall have power to act for the government and good order of the city, for its commercial benefit, and for the health, safety, and welfare of the public, and may carry out its powers by license, regulation, suppression, borrowing of money, tax levy, appropriation, fine, imprisonment, confiscation, and other necessary or convenient means. The powers hereby conferred shall be in addition to all other grants, and shall be limited only by express language.

1 Ellinwood v. Reedsburg, 91 Wis. 131 (1895).

Page 32

The Legislature has directed courts to liberally construe this provision “in favor of the rights, powers and privileges of cities to promote the general welfare, peace, good order and prosperity of such cities and the inhabitants thereof.” Wis. Stat. § 62.04. A virtually identical grant of authority is provided to Wisconsin village boards by Wis. Stat. § 61.34(1). That authority is also to be liberally construed in favor of “the rights, powers and privileges of villages to promote the general welfare, peace, good order and prosperity of such villages and the inhabitants thereof” to give villages the largest measure of self government compatible with the Wisconsin constitution. Wis. Stat. § 61.34(5). These grants of power to cities and villages are substantial and give the governing body of a city or village “all the powers that the legislature could by any possibility confer upon it.” Hack v. Mineral Point, 203 Wis. 215, 219, 233 N.W. 82 (1931). These provisions are sufficient on their face to authorize city councils and village boards to create a municipal transportation utility and charge property owners transportation utility fees. However, these broad powers are not absolute. Home rule powers granted by §§ 62.11(5) and 61.34(1) are constrained if the state has preempted municipal authority in a particular area. Statutory home rule powers may not be exercised if: the legislature has expressly withdrawn the power of municipalities to act; municipal action would logically conflict with state legislation; municipal action would defeat the purpose of state legislation; or, municipal action would go against the spirit of state legislation. See Anchor Savings & Loan Ass’n v. Equal Opportunities Comm’n, 120 Wis. 2d 391, 355 N.W.2d 234 (1984); DeRosso Landfill Co. v. City of Oak Creek, 200 Wis. 2d 642, 651, 547 N.W.2d 770 (1996). Nonetheless, municipalities may enact ordinances in the same field and on the same subject covered by state legislation where such ordinances do not conflict with, but rather complement, the state legislation. Johnston v. City of Sheboygan, 30 Wis. 2d 179, 184, 140 N.W.2d 247 (1966). Municipalities are not preempted in the area of creating transportation utilities and charging transportation fees. In applying the above preemption tests to creating a transportation utility and charging transportation user fees, the State has not expressly prohibited communities from creating such a utility and imposing such fees. Indeed, the state has not entered the field of municipal transportation finance other than to explicitly authorize certain methods of funding transportation infrastructure improvements such as through the levying of special assessments under Wis. Stat. § 66.0703, imposing special charges for current services under Wis. Stat. § 66.0627, and charging local vehicle registration fees under Wis. Stat. § 341.35.2 The State has also created and funded several aid programs to assist local governments with transportation costs, including the General Transportation Aids and the Local Road Improvement programs. None of these grants of authority and financial assistance programs impliedly preempt municipal authority to create a transportation utility and charge property owners a transportation user fee. Indeed, the statute authorizing special charges for current services expressly provides “The authority under this section is in addition to any other method provided by law.” Wis. Stat. § 66.0627(2). Similarly, the special assessment authority granted pursuant to § 66.0703 expressly

Wis. Stat. § 66.1113 authorizes six cities and villages to impose a sales tax on tourism-related retail and requires that the revenue be used on infrastructure costs.

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states that it is a “complete alternative” to other methods provided by law. Wis. Stat.§ 66.0703(1)(a). Likewise, we are not aware of any statutory provisions that creation of a transportation utility would logically conflict with, defeat the purpose of, or go against the spirit of. Although there is an argument that Wis. Stat. § 66.0907 preempts municipalities from using transportation utility fees to finance sidewalk construction and repair because it specifies certain ways in which municipalities may cover expenses associated with sidewalks, we believe the stronger argument is that municipalities can use alternative means for financing sidewalks, such as transportation utility fees, because the language in § 66.0907 regarding financing options is permissive rather than mandatory. The exercise of home rule authority under §§ 62.11(5) or 61.34(5) must also serve a legitimate public purpose. This is usually not a significant bar to action because Wisconsin courts have adopted a very expansive view of public purpose. See State ex rel. Hammermill Paper Co. v. La Plante, 58 Wis. 2d 32, 55, 205 N.W.2d 784 (1973). (“Public purpose is not a static concept. The trend of both legislative enactments and judicial decisions is to extend the concept of public purposes in considering the demands upon municipal governments to provide for the needs of the citizens.”) Examples of public purposes that may be served by creating a transportation utility and imposing a user fee include protecting the health, safety and general welfare of the public as well as acting for the municipality’s commercial benefit by ensuring the fiscal ability to safely maintain municipal transportation systems and improve such systems to accommodate and facilitate economic growth. Funding and maintaining a transportation system is critically important to a community’s economy, tourism, and ability to attract and retain people and jobs. A well-maintained street network is also vital to ensuring that municipal emergency services can quickly and efficiently access commercial buildings and residences throughout the community. Constitutional Home Rule Authority A city or village may also rely on its constitutional home rule authority to create a transportation utility and charge transportation user fees. This authority is found in Article XI, Sec. 3 of the Wisconsin Constitution, which provides:

Cities and villages organized pursuant to state law may determine their local affairs and government, subject only to this constitution and to such enactments of the legislature of statewide concern as with uniformity shall affect every city or every village.

The method of exercising such authority is specified in Wis. Stat. § 66.0101 and requires enacting a charter ordinance. A charter ordinance exercising home rule authority is preempted if it conflicts with an existing state law that applies to all cities and villages. Black v. City of Milwaukee, 2016 WI 47, 369 Wis. 2d 272, 882 N.W.2d 333. However, no state law prohibits municipalities from creating transportation utilities and imposing transportation utility fees. For example, there are no state laws requiring communities to fund local transportation systems in a specific and exclusive way, precluding other options, such as a user fee. Similarly, no statute limits the type of utilities a municipality may create or the types of user fees it may charge. Indeed, the Legislature has chosen not to prohibit communities from charging transportation utility fees even though several

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municipalities, like the City of Neenah, Village of Harrison, and Village of Weston, along with the Town of Buchanan have implemented such fees in recent years. Special Charges for Current Services In addition to the statutory and constitutional home rule powers mentioned above, Wis. Stat. § 66.0627 provides authority for a municipality to charge property owners for municipal transportation-related services. Under § 66.0627(2), a municipal governing body may impose a special charge against real property for current services rendered by allocating all or part of the cost to the properties served. The statutory definition of “services” includes transportation maintenance activities like “street sprinkling, oiling, and tarring” and repair of sidewalks, curb and gutter. The definition of “services” is not an exclusive list. The examples given are not meant to limit its application in any way, but merely to highlight possible uses. Rusk v. City of Milwaukee 2007 WI App 7, ¶ 17, 298 Wis. 2d 407, 727 N.W.2d 358.

Fees for current services are not invalidated merely because a property does not use the service. In City of River Falls v. St. Bridget’s Catholic Church, 182 Wis.2d 436, 512 N.W.2d 673 (Ct. App. 1994), the Wisconsin court of appeals held that charging user fees for making water available for fire protection services was valid, even though the party charged the fee had not used the water. Services under § 66.0627 can be rendered within a district and need not be performed for specific, individual properties. In Grace Episcopal Church v. City of Madison, 129 Wis. 2d 331, 385 N.W.2d 200 (Ct. App. 1986), the court of appeals upheld service charges imposed under a predecessor to § 66.0627 (Wis. Stat. § 66.60(16)) on all properties within the State Street Mall and Capitol Concourse district, not just those abutting the pedestrian mall and concourse. The services the city provided to the district included lawn, tree, and shrub care, snow removal from walks and crosswalks, trash clean up and removal, and bus shelter and fixture maintenance. The city charged a portion of the annual cost of providing such services against property owners adjacent to or near the State Street Mall and Capitol Concourse. Municipalities may, therefore, rely on § 66.0627 to charge all property owners in a community a fee for current maintenance of the community’s street network even though not all properties being charged actually abut the streets being reconstructed or maintained with the fee revenue at any one time. The fact that the entire transportation system is being maintained is sufficient to charge all property owners using the system a fee for current services rendered under § 66.0627. Fees must Reasonably Relate to Costs Whether a community relies on its broad statutory or constitutional home rule authority or § 66.0627, a transportation utility fee must bear a reasonable relationship to the service for which it is being charged. Wis. Stat. § 66.0628. That is, the fee amount that a community charges a property owner may not exceed the municipality’s reasonable direct costs associated with activities the community takes related to the fee. Wis. Stat. § 66.0628(1). In addition, the fee amount that any property owner pays should reasonably relate to how much the property’s occupants use the transportation system. According to an expert on the use of transportation utility fees in the U.S., a transportation utility fee with a basis that is most closely related to actual use of the street network has the greatest chances of successful implementation

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and withstanding critical scrutiny by a court or a tax appeals commission.3 A transportation utility fee is most appropriate if its basis is closely related to property occupants’ use of the local street network and is sensitive to local context and individual variation.4 For example, a commercial business that generates a high amount of traffic may be charged a higher fee than a one-car household based on the different usage rates of a municipality’s transportation system. Generally, municipalities establish a more convincing link between transportation infrastructure usage and user fee charges when they base their transportation utility fee on the number of trips generated by the property. That is why, according to the U.S. Department of Transportation Federal Highway Administration, Center for Innovative Finance Support, most transportation utility fee programs in the United States use trip generation rates prepared by the Institute of Transportation Engineers (ITE).5 Fees v. Taxes. Transportation utility fees are susceptible to challenge if the fees resemble an unauthorized tax. The primary difference between a tax and a fee is the source of the municipality’s power and, more importantly, the municipality’s purpose in imposing the payment requirement. The Wisconsin Court of Appeals explained the primary difference between a tax and fee as follows in Bentivenga v. City of Delavan, 2014 WI App 118, ¶ 6, 358 Wis. 2d 610, 856 N.W.2d 546:

A tax is an “enforced proportional contribution[ ] from persons and property” levied to support a government and its needs. State ex rel. Bldg. Owners & Managers Ass'n v. Adamany, 64 Wis.2d 280, 289, 219 N.W.2d 274 (1974) (citation omitted). The purpose, and not the name it is given, determines whether

A TUF Sell: Transportation Utility Fee as User Fees for Local Roads and Streets, by Carole Turley Voulgaris, Public Works Management & Policy 2016 Vol. 4 pages 305-323 (2016). Id

5 See Transportation Utility Fees, Center for Innovative Finance Support, U.S. Department of Transportation Federal Highway Administration, available at https://www.fhwa.dot.gov/ipd/value_capture/defined/transportation_utility_fees.aspx#. For discussion of the pros and cons of basing transportation utility fees on trip generation rates for different classes of property, see the following sources:

1. Transportation Utility Fees: Possibilities for the City of Milwaukee, a 2007 research paper prepared by students at the Robert M. La Follette School of Public Affairs, UW Madison. https://lafollette.wisc.edu/images/publications/workshops/2007-tuf.pdf

2. Clintonville Road Maintenance and Transportation Utility Fee, Andrew Robert Eveland (2019) https://www.lwm-info.org/DocumentCenter/View/3516/Eveland-Clintonville-TUF-Final-Thesis

3. A TUF Sell: Transportation Utility Fee as User Fees for Local Roads and Streets, by Carole Turley Voulgaris, Public Works Management & Policy 2016 Vol. 4 pages 305-323 (2016). https://journals.sagepub.com/doi/pdf/10.1177/1087724X16629961?casa_token=RJ3FY9IWC7gAAAAA:uzmdZqQTPn5YPKej33W2pYmTkfy3rYOzxmAhw8otjF8gpthIKMQcpnA9fjsH2JGwTPhaTHXGDyKunQ

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a government charge constitutes a tax. City of Milwaukee v. Milwaukee & Suburban Transp. Corp., 6 Wis.2d 299, 305-06, 94 N.W.2d 584 (1959). “[T]he primary purpose of a tax is to obtain revenue for the government” as opposed to covering the expense of providing certain services or regulation. City of River Falls v. St. Bridget's Catholic Church of River Falls, 182 Wis. 2d 436, 441-42, 513 N.W.2d 673 (Ct.App.1994). A “fee” imposed purely for revenue purposes is invalid absent permission from the state to the municipality to exact such a fee. Milwaukee & Suburban Transp., 6 Wis. 2d at 306, 94 N.W.2d 584.

Municipal taxing power in Wisconsin is very limited. A municipality cannot impose a tax unless it is specifically authorized by the Legislature. Wisconsin municipalities are authorized to impose only property taxes and room taxes. (Six communities statewide are authorized to levy a sales tax on tourism-related retail sales under the Premier Resort Area tax laws. Wis. Stat. § 66.1113). In contrast, municipal fees are charged to cover the costs of specific services provided or the costs associated with regulating in a specific area. As discussed above, a transportation utility fee would be imposed under a community’s statutory or constitutional home rule powers or as a special charge for current services under § 66.0627. A transportation utility fee would not be implemented pursuant to a community’s power to levy general property taxes under Wis. Stat. Chap. 70. The Wisconsin Court of Appeals addressed service charges and their relation to general property taxes under the predecessor statute to Wis. Stat. § 66.0627 in Grace Episcopal Church v. City of Madison, 129 Wis. 2d 331, 385 N.W.2d 200 (Ct. App. 1986). The court held that since the services provided were authorized by the Legislature by the predecessor to Wis. Stat. § 66.0627, the service charges were not general property taxes and the property tax exemption provided to churches by Wis. Stat.§ 70.11(4) did not exempt the church from paying the fees. Grace Episcopal, 129 Wis. 2d at 335. In contrast to the general property tax, the purpose of a transportation utility fee is exclusively to help pay for the cost of a specific governmental service, street maintenance. A review of case law and scholarly literature on transportation utility fees suggests best practices that municipal officials can implement to avoid having a transportation utility fee ruled an illegal tax:

1. Place all transportation utility fee revenue in a separate fund used only on street maintenance and other transportation projects. Emerson College v. City of Boston, 462 N.E.2d 1098 (Mass. 1984).

2. Collect the transportation utility fee in the same manner as the community does other municipal utility fees by including the amounts on property owners’ utility bills alongside sewer, water, and stormwater service charges.

3. Ensure the formula used to calculate fees is as accurate as possible. Over-generalization of fee-paying entities and ignoring real differences in their use of the street network or end-trip generation gives the fee strong tax-like characteristics. Clintonville Road Maintenance and Transportation Utility Fee, Andrew Robert Eveland (2019).

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4. Transportation utility fee policies should avoid exempting tax-exempt properties as thisgives the fee the appearance of being a tax. For the same reason, such policies shouldexempt undeveloped properties and vacant buildings. Clintonville Road Maintenance andTransportation Utility Fee, Andrew Robert Eveland (2019).

5. To the extent practicable, a transportation utility fee policy should include a process bywhich users are permitted to demonstrate reduced use of the street system to qualify for alower fee. (e.g., Austin, Texas transportation utility fee ordinance allows residents who donot own or regularly use a motor vehicle to opt out of fee; Corpus Christi, Texas likewisehas a process by which property applicants may appeal their fee level). A TUF Sell:Transportation Utility Fee as User Fees for Local Roads and Streets, by Carole TurleyVoulgaris, Public Works Management & Policy 2016 Vol. 4.

Avoiding Levy Limit Consequences The levy limit law requires a municipality to reduce its allowable levy by the estimated amount of fee revenue it collects for providing certain listed services, including snow plowing and street sweeping, if those services were funded in 2013 in part or whole by the property tax levy. Wis. Stat. § 66.0602(2m)(b). To avoid having this statute apply, a community that imposes a transportation utility fee to help pay for street maintenance and other transportation services, must not use the fee revenue to pay for snow plowing or street sweeping services.

Conclusion Wisconsin cities and villages struggling to pay for the cost of maintaining quality streets and other transportation services residents and businesses demand, may rely on their broad statutory or constitutional home rule powers or, alternatively, Wis. Stat. § 66.0627, to charge property owners transportation utility fees. Such fees must be reasonably related to the cost of the services provided. Transportation utility fees are most defensible against a challenge if the basis for the fee is closely related to how much a property’s occupants use the local street network. It is possible to design a transportation utility fee policy that is defensible against a challenge that the fee is more like an illegal tax. Finally, to avoid needing to reduce the community’s property tax levy, municipalities should not use transportation utility fee revenue to pay for snow plowing or street sweeping.

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transportation utility feasibility analysis city of janesville

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