by The Oregonian

Saturday February 16, 2008, 2:00 AM

The broken stretch of pavement between Southwest 170th and 209th avenues on Farmington Road west of Beaverton is well known for rattling passing vehicles.

Drivers, beware: Prepare for rocky roads this year across Washington County and a possible bump to your wallet.The soaring cost of petroleum is not just a pocketbook issue at the gas pump, but one coating the roads you drive and the potholes you rattle through. Oil is a key ingredient in asphalt.

As oil prices rise to $90 a barrel and beyond, the price of asphalt tracks in near tandem.

Those soaring oil costs are creating heartburn for public officials faced with shrinking budgets and crumbling roads from Sherwood to Hillsboro. Mix that with higher prices for fuel, steel and concrete, and you can all but break some local budgets.

“We never have enough funds to keep up with deteriorating conditions of our road system,” says Cal Bowersox, public works superintendent in Forest Grove.

Asphalt costs increased by about 50 percent from 2004 to 2006, while the street maintenance budget remained the same, Bowersox says. Other governments are facing the same problem in Washington County.

Municipal governments that are able to stay on top of maintenance needs are saving more than their paving budgets, says Jim Huddleston, executive director of the Asphalt Pavement Association of Oregon. As roads fail, repairing them grows more costly. As potholes develop, damage to cars increases, a cost not measured in the city budget.

“There is a direct link between the quality of the roads and cost of operating a car,” Huddleston says.

Asphalt is made from sand and gravel mixed with a syrupy binder called liquid asphalt. Liquid asphalt is low-grade oil that remains after the higher grades are refined into fuels. That binder is the primary cost for asphalt paving companies such as Lakeside Industries, which paves from Portland up to Canada.

“It doubled in 2006, or it almost doubled, then it slackened a little bit,” says Mike Lee, president of Issaquah, Wash.-based Lakeside. “Now it’s getting ready to jump again; 2008 is going to be another big year.”

The price per ton of finished asphalt –which is about 6 percent liquid asphalt –has risen from about $33 five years ago to as much as $50 or more today. It could go substantially higher by the summer paving season, just as the driving season shifts into full gear.

Cities turn to fees

Some cities –such as Tigard and Tualatin –are prepared with already-in-place surcharges that are keeping paving budgets flush.

Other municipalities are not quite as certain they can meet mounting costs. Beaverton and Hillsboro both are considering possible add-on fees to utility bills to help deal with the mix of deteriorating roads and shrinking funds.

In Sherwood, fees already have climbed. Asphalt prices have increased about 50 percent in the past five years for local roads there, forcing a new surcharge last year to help pay the bills.

“I’m concerned,” said public works director Craig Sheldon. “Sherwood has got a lot of new subdivisions over the last 10 years, and those are 20-year streets. As the price of materials goes up, those streets are going to have to be maintained.”

Until last July, the city was counting pennies to pay for the most basic upkeep of slurry seal and crack sealant –types of thinned-down asphalt used for temporary upkeep between overlays of asphalt. Then, the City Council approved a street utility fee. A charge of $5 a month was added to residential water bills, while businesses paid $10 monthly.

Washington County sees the same problems, on a much bigger scale.

While cities use a variety of funding mechanisms to pave their streets, Washington County relies almost completely on its share of state and county gasoline taxes for road and bridge maintenance, and that includes repaving projects.

For the 2007-08 fiscal year, the county maintenance budget is about $3.1 million. That money already paid for about 27 miles of repaving –out of 1,033 miles of paved county roads. Just six years ago, the county paved nearly 29 miles with only $2.2 million.

“It’s a zero-sum game,” said Dave Schamp, county road operations and maintenance manager. “I have so much money that I can allocate toward pavement, and those dollars don’t go as far as they used to.”

Tough choices

Without new sources of revenues, cities face tough choices on which roads get paved and which roads get pushed onto future lists. Or, as in the case of Cornelius, where a city gas tax was rejected by voters, the city must choose between the longer-lasting asphalt paving or the short-term fix of slurry sealing.

Mark Crowell, operations manager of Cornelius, said paving costs have increased 5 percent to 10 percent above what the city paid last year, while the city’s street repair budget remains unchanged.

In Hillsboro, asphalt costs have worsened a shortfall the city has long suffered, said Tina Bailey, a city engineer. In 2006, Hillsboro needed $6.7 million worth of street work, but the city spent only $1.6 million.

Hillsboro pays for street work with about $1.2 million a year from gasoline taxes and about $600,000 to $700,000 a year from state licensing fees. New streets are funded mostly by Washington County’s traffic impact fee –paid for by developers, whose work is slowing drastically as the real estate market stalls.

The rising cost of asphalt hasn’t helped, Bailey said.

“It certainly affects how many projects we can do a year,” she said.

Much of the city’s street repair in 2008 will be relatively minor compared with the many repavings needed throughout the city. The situation will become more dire in the next 10 years, during which about half of the city’s asphalt will need to be replaced, Bailey said.

To address the shortfall, a city task force has been studying a transportation utility fee for residents and businesses. Although the amounts are still under discussion, the residential fee could be between $2.85 and $3.50 a month, Bailey said.

Beaverton feels pinch

In Beaverton, the story is similar. The spiraling cost of asphalt will add as much as $200,000 to the city’s annual repaving budget of about $800,000, said Gary Brentano, Beaverton’s operations director.

Even before the recent spike in oil costs, city leaders knew they were getting behind. They began thinking about two new sources of money for roads: a systems development charge against new construction and a street utility fee charged to property owners based on how much traffic they generate. Single-family houses could be charged $3 to $4 a month, for example.

The City Council will consider those new fees at its Feb. 25 meeting.

The city has some big projects coming up, including plans to repave 1.5 miles of Southwest Allen Boulevard from Main Avenue to Scholls Ferry Road. That will cost nearly $1 million, eating up the city’s entire repaving budget for the year.

Residential streets, some of which haven’t been repaved in 30 years, will have to wait. And they’ll have to compete with a nearly two-mile section of Southwest Hall Boulevard from Allen Boulevard south to Ridgecrest Drive, that will need to be repaved soon, Brentano said. That $1 million project might have to be split over two years, he said.

Fees to the rescue

In both Tualatin and Tigard, street repair fees added years ago have proved a boon in hard times.

Tualatin’s operations director, Dan Bosssaid the price increases probably will not endanger Tualatin’s pavement quality. The city was the among the first in Oregon to institute a pavement management fee, in 1990. The fee collects about $600,000 a year for street maintenance and is assessed on the estimated traffic a house or business creates.

Several other Oregon cities, including Tigard, have instituted similar fees.

Tigard city engineer Gus Duenas said the rising cost of asphalt remains a concern, but it is not crunch time yet, thanks in part to the street maintenance fee.

Enacted by the City Council in 2003, the fee each month assesses $2.18 per unit for single- and multifamily units, 78 cents per parking space for nonresidential customers, and 78 cents per gas pump for gas stations. That rate has remained stable since the fee’s inception, but Duenas said it could increase after his office formulates the next five-year pavement management plan.

That plan will take escalating asphalt costs into account and will include a safety margin.

“Before we had it, there was one year when our road maintenance balance was about $130,000, and that’s not enough to do anything,” he says.
–Kathleen Gorman; kathleengorman@news.oregonian.com

Reporters David Anderson, John Foyston, Abby Haight, Jill Smith and Elizabeth Suh contributed to this story.

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