The Vehicle Sticker Proposal March 5, Chicago s City Sticker Model. The purpose of this report:

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1 The Vehicle Sticker Proposal March 5, 2015 The purpose of this report: The purpose of this memo is to outline how parking stickers have been used to raise revenue in Chicago and analyze another proposal by Richard Donin, a Portland- based Marketing and Education Consultant. Additionally, present analysis on feasibility for using these strategies in Portland as a revenue generation mechanism. One important policy consideration is that currently, PBOT manages parking in the City of Portland in order to manage the parking supply, where parking prices modify behavior such that turnover is achieved for economic vitality reasons. It will be important to consider how the proposed vehicle sticker would might correspond to, or conflict with, current parking management practices and policies. Note: If the State Legislature amends ORS so that local jurisdictions can impose a local VRF, it might be less expensive and resource intensive to implement a City of Portland VRF rather than a parking sticker fee program. We have modeled both approaches below. Chicago s City Sticker Model Estimated revenue from the City Sticker program in Chicago is $120 million annually. The City of Chicago has a City Vehicle Sticker Sales program to fund the repair and maintenance of Chicago streets. All Chicago residents using his or her vehicle in the City must have a Chicago City Vehicle Sticker, regardless of where the vehicle is registered. The City Vehicle Sticker model is a wheel tax (much like a Vehicle Registration Fee) that currently applies to residents (whose driver s license address is within city limits), and is supposed to apply to visitors/commuters who come in to the city more than 30 times per year. City code designates it as a user fee. Enforcement occurs largely while vehicles are parked within city limits. Additionally, motorcycles and mopeds are required to pay the wheel tax. In 2014, the City changed its renewal process to mirror the state of Illinois registration schedule. Further, the sticker price varies depending on the type of vehicle. For example, a passenger sedan has a monthly price of $7.16 or $85.97 annually, while a SUV type of vehicle pays $11.38/monthly or $ annually. In addition to the City Vehicle Sticker, Chicago requires that vehicles parked in a Residential Parking Zone during applicable hours also display either the City Vehicle Sticker with Annual Residential Zone Parking or a Parking Daily Permit. Thus a vehicle will have two different permits to display. Residential Zone Parking limits parking on designated streets in densely- populated or highly- trafficked areas to residents and their guests only, for either all times or for certain days/hours. For residents in a Residential Parking Zone, there is an additional charge of $25 per year, in addition to the City Vehicle Sticker. Not all locations in the City of Chicago require adding a Residential Zone Parking number to the City Vehicle Sticker. Drivers can purchase a City Sticker from over 350 retail locations throughout the city, or online through the City Clerk s office. Everyone, however, in the City has to get the City Vehicle Sticker regardless of whether they live in a Residential Parking Zone. 1

2 Chicago s program has two different but integrated systems. First, a wheel tax for all residents using vehicles in the City. Second, a Residential Zone Parking fee if they live in a designated area. The former, appears to raise the most money for street repair and maintenance. Enforcement The program is primarily enforced by the local police although the City Clerk s Office, and the Department of Finance also has investigators that patrol the districts. The City of Chicago also employs Independent Contractors to assist in enforcing the permit program. (No cost information associated with these contractors were available). The City Sticker has a 75% - 80% compliance rate. Non- compliance is due mostly to commuters living outside of the city limits and driving in for work. Under their program, a commuter would have to be caught 31 time in order to be fined. The City still has no method of tackling these issues. Along with issues related to compliance, ability to enforce is an issue. The city is not allowed to enforce on private residential driveways or garages, or private parking garages (essentially anything that does not allow public access). Richard Donin Parking Permit Sticker Fee Proposal According to Donin s estimates revenue would be $26 - $41 million annually. This estimate is based on several assumptions about utilization and enforcement. The focus of this section is a comparison to the Chicago model and high- level consideration of key assumptions in the revenue estimates. Richard Donin s Parking Permit Sticker Fee Proposal is an annual fee that all regional residents (those within Washington, Multnomah, Clackamas, and Clark Counties) would pay in order for the right to park within City limits. This permit does not exclude the vehicle owner from paying any applicable City parking fees (such as meter fees and Area Parking Permit Program fees) on top of the annual sticker fee. As such, this proposal is similar to the Chicago Sticker Model in that it is a wheel tax and charges for the use of the street system. All motorized vehicles who utilize Portland s streets would pay to obtain a sticker. This program is not limited to residents of the City and, therefore, is intended to capture commuters, shoppers, vendors, and other visitors. An annual sticker would be issued through city Permits, DMV during registration renewal, DEQ stations and any participating stores throughout the Portland Metro area. He estimates the cost of the fee sticker range from $35 - $55 per year. Donin estimates a 50% compliance rate for vehicles that are registered outside of the City but in Oregon and 20% for vehicles that are registered in Clark County. Enforcement Donin suggests that enforcement be conducted through current parking patrols, City Police traffic stops and Multnomah County Sheriff traffic stops within the Portland City limits. According to his summary, the revenue estimate assumes that enforcement could be absorbed by current City of Portland operations and there would be no additional costs. 2

3 Taking the learnings from these two programs and implementing a Parking Sticker Permit Program in Portland, PBOT would need to address the following elements. Elements of a Potential City of Portland Vehicle Sticker Program Policy Opportunity Currently, the City is precluded from imposing a fee that is similar to a wheel tax. ORS would have to be overturned at the State Legislative level. Multnomah County has the authority to adopt a county registration fee without obtaining voter approval. This provision is for counties with a population greater than 350,000. ORS (2) provides: Except as provided in ORS (City or county regulation of towing businesses) and this subsection, no city, county or other political subdivisions shall regulate or require or issue any registration, licenses, permits or surety bonds or charge any fee for the regulatory or surety registration of any person required to obtain a certificate from the Department of Transportation under ORS (Certificate). Program Assumptions Who pays? Number of Vehicles registered The proposed Vehicle Sticker Permit is a mechanism to raise maintenance and safety revenue for PBOT through a fee paid by users of the transportation system. As such, the fees reflect the right to use the public street system. Unlike Portland s existing parking fee policies, the vehicle Sticker Permit does not set charges based on location, duration, frequency of parking; rather, any vehicle in the city over the course of the year is required to have the sticker. 1. Any vehicle registered in the City of Portland 2. Any business that pays a City of Portland business license fee with vehicles registered in the City 3. Any non- City of Portland resident that drives into the city for work or any other reason that parks within the city. (Logistics of how to capture these cars needs to be determined- could have employees purchase through employers) a. Assumptions for this proposal include requiring cars registered in Washington, Clackamas and Clark Counties to pay the sticker fee. According to December 31, 2014 numbers, there are 711,098 vehicles* registered in Multnomah County (this includes residential and commercial vehicles). Applying the 80%/20% rule, we can assume that there are 568,878 vehicles registered within the City of Portland. Washington County Vehicle registration: 502,525 Clackamas County Vehicle registration: 425,443 Clark County, WA Vehicle registration: 448,381 *The VRF includes: passenger vehicles; bus; truck; farm truck; heavy trailer, light trailer; for- rent trailer; motorcycle; travel trailer; camper; motor home; vehicles owned by local governments and other political subdivisions, excluding state- owned vehicles. Sticker Fee Point of Option 1: 3

4 Sale PBOT could enter into a contract with either the DMV or DEQ to sell the permits at the point in time when someone renews their VRF. This would have to be administered across the region. o The cost to do this is unknown at this time. We would need to contact DMV/DEQ to understand the possibilities of this option. Options for points of sale could be through: DEQ through emissions testing DMV City of Portland Area Parking Permit Program City of Portland Employers for workers who commute Regardless of the option for point of sale, there would need to be a widespread education campaign to educate regional drivers that this sticker is required when parking within the City of Portland. The costs and undertakings of developing this campaign have not been assumed at this point. Option 2: Create an automated system to sell the stickers on line. Modeling after the arts tax payment interface system, we estimate that it might cost roughly $200,000 to create a system for the stickers. Option 3: For the assumptions of this proposal, the costs of selling the stickers through the City of Portland Area Parking Permit Program (APP) was used. The current permit program is done with staff and is not administered on line through an automated process. This could change if technology solutions are implemented. The current volume of 30,000 permits per year requires 2.5 FTE. Estimating that 500,000 vehicle stickers will be sold, an additional 52 FTE would need to be added (4 supervisors and 48 FTE). This totals $6.0 million in staff resources Additional expenses include merchant fees and the costs of the stickers. The price was set at 2 per sticker. Total sticker point of sale costs: $6.3 million in ongoing costs plus $1.4 million in startup costs. Enforcement City of Portland Enforcement Officers Need to expand ROW enforcement to citywide. Need to explore process steps to acquire legal authority to enforce on private property. o PBOT has authority to enforce code on public ROW under Title 16 of the City Code. City Council has the authority to amend the code to expand enforcement onto private property, including private lots. o A consideration is what groups would support/oppose this 4

5 code change. Continue to conduct enforcement in Area Parking Permit Program zones. Donin and Chicago both propose police/sheriff do enforcement. This idea was not explored under this proposal. Could consider an enforcement sharing agreement with Police and sheriff, but currently that is not the approach we take for parking. This element has not been explored as part of this proposal. Parking enforcement Model all vehicles registered in Multnomah, Clackamas, Washington and Clark Counties that are parked in the right of way (ROW) and on private parking facilities shall display a sticker on their vehicle. Enforcement Officer addition of staff It is anticipated that 13 new FTE would be added. 12 new enforcement officers and one supervisor. Enforcement Officer s Role Existing officer, who enforce the area parking permits and metered zones will add the sticker enforcement. New officers will be added to expand enforcement to right of way and private lots that are currently not on the enforcement routes. Program costs Program costs include one- time/startup and on- going costs for the program. One- time/startup 1. BTS/IT support for data processing and data modification to handheld enforcement technology 2. Purchase of new vehicles for new enforcement officers 3. Expansion of squad room to accommodate new staff 4. New hand- held devices On- going 1. Accessing DMV data for county of registration 2. New staff salaries 3. Technology licensing fees 4. Replacement fund for vehicles and hand- held devices Total estimated enforcement costs: $2.0 million in ongoing costs plus $0.8 million in startup costs. Set cost of fines and payment Use existing system (parking citations), where the courts collect the fees and they split the revenue 50/50 with the city, based on a state law. The courts are administered by the state of Oregon. The necessary laws to enforce the sticker program would be incorporated into Title 16 and would be required to be adjudicated by the state of Oregon circuit court. Fines and potential revenue was not estimated under this proposal. It can be done at a future date. In FY 14-15, PBOT received $6.6 million in citation revenue. Funds Generated? Based on the financial modeling for this program, it is estimated that the 5

6 sticker program would gross $22.1 million in revenue, and net $11.5 million in revenue after program costs of $10.6 million are paid in Year 1. This assumes that the vehicle stickers are priced at the following levels: Motorcycles: $16/year Passenger vehicles: $34/year Trucks < 26,000lbs: $51/year Trucks >26,000lbs: $115/year Compliance Assumptions Additional Staffing Needs Equity considerations We modeled the pricing to match what a VRF could net if we charged the maximum legally allowed: $43 per year. Comparisons to the VRF are modeled below. We can change the pricing per vehicle type to net more revenue. Compliance rate would be high if linked to payment of vehicle registration fee. o o Following Chicago s assumptions for City resident compliance we assumed: 80% Compliance Rate for City of Portland residents Following Donin s assumptions for commuter compliance rates we assumed: 50% compliance rate for other county residents. Estimated additional FTE to administer and track program: Estimated increase in parking enforcement: 14 FTE Estimated increase in sticker sales: 52 FTE Could offer low- income and senior discounts. Possibly offer discounts to non- profit organizations. Would increase administrative costs and data sharing agreements to validate income levels and age. VFR vs. Vehicle Sticker Tax Points of Comparison 6

7 $30 Local VRF (same as Washington County VRF proposal) would generate about $8.0 million annually To generate $8.0 million using Vehicle Sticker Fee, pricing would be estimated to be: Pricing Estimates Annual Fee Motorcycle $13 Passenger $29 Non- Passenger Vehicle < 26,000 lbs $43 Heavy Vehicle > 26,000 lbs $97 $43 Local VRF (max allowable) would generate about $11.5 million annually To generate $11.5 million using Vehicle Sticker Fee, pricing would be estimated to be: Pricing Estimates Annual Fee Motorcycle $16 Passenger $34 Non- Passenger Vehicle < 26,000 lbs $51 Heavy Vehicle > 26,000 lbs $115 Financial Model Sample based on $11.5 million in Net Revenues Estimated Portland Vehicle Sticker Fee Revenues Pricing (includes inflation) Year 1 Year 2 Year 3 Motorcycle $16 $16 $17 Passenger $34 $36 $37 Non- Passenger Vehicle < 26,000 lbs $51 $53 $55 Heavy Vehicle > 26,000 lbs $115 $120 $124 Total Gross Revenue by Vehicle Type Year 1 Year 2 Year 3 Motorcycle $260,752 $273,887 $286,300 Passenger $15,134,867 $15,897,193 $16,617,640 Non- Passenger Vehicle < 26,000 lbs $5,796,043 $6,088,258 $6,364,460 Heavy Vehicle > 26,000 lbs $928,040 $974,801 $1,018,995 Gross Revenues after Compliance $22,119,703 $23,234,138 $24,287,395 Merchant Service Fees $309,676 $325,278 $340,024 Admin Expense (cost of collection) - ongoing** $6,029,627 $6,333,390 $6,365,840 Admin Expense (cost of collection) - one- time $1,400,000 $0 $0 Total Admin Expenses $7,739,303 $6,658,667 $6,705,863 Enforcement expense - ongoing** $2,035,400 $2,116,816 $2,190,905 Enforcement expense - onetime $845,000 $0 $0 Total Enforcement Expenses $2,880,400 $2,116,816 $2,190,905 Net Revenues* $11,500,000 $14,458,655 $15,390,627 * Assumes administrative, general fund and other overhead are included in project cost estimates, consistent with Street Fee model ** Assumes inflation would be applied beginning FY or Year 2. Blended inflation rates per City Economist 7

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