Salem Streetlights: Solutions for a Sustainable System

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Title: Salem Streetlights: Solutions for a Sustainable System
Author: Landis, Joshua; Moore, Caroline; Mosley, Rachel; Ruderman, Chris; Skinner, Seth
Abstract: The City of Salem operates and maintains a complex and costly network of over 10,500 streetlights. This report examines several challenges within Salem’s current streetlighting system and provides recommendations to enable the city to achieve a more sustainable operations structure. Three primary attributes affect the operational sustainability of streetlights in Salem: funding sources, ownership arrangements, and energy efficiency. Funding is relevant because Salem, ideally, would use funds from the state gasoline tax exclusively to finance required street maintenance, and would draw revenue for streetlights from a difference source. At present, Salem allocates approximately 20 percent of gas tax funds to pay for streetlights. Simultaneously, Salem allocates roughly one million dollars annually from the city’s General Fund to meet its needs for street maintenance. Secondly, ownership arrangements are relevant because Salem has a unique streetlight ownership and maintenance structure that involves three separate entities. Shared ownership constitutes a complicated system consisting of over 100 combinations of lights and ballasts. Without streamlined ownership, the city is unable to modify maintenance costs or introduce technology to ensure least-cost streetlight operations. Implementing energy efficient technology is a key opportunity for the city to reduce cost of streetlighting. As part of the University of Oregon’s Sustainable City Year program, the Salem Public Works Department commissioned students in a Master of Public Administration Capstone course to investigate both fundraising and cost saving opportunities within this system. The research team performed three analyses to identify the best means of reducing the burden of streetlight operations and ownership. The principal analysis evaluated the city’s many options for raising streetlight revenue based on equity and cost. Two additional analyses determined the financial implications of (1) the acquisition of streetlights owned by Salem Electric and Portland General Electric and (2) investment in energy-saving technological upgrades. Through the first analysis, the research team determined that Salem will likely experience immediate stabilization of funding and increased funding by implementing a direct user fee. A fee of this type presents the most favorable form of tax collection for an entity of Salem’s size, taking into consideration cost of collection and residents’ ability to pay. Results of our secondary financial modeling indicate that investment in LED upgrades and streetlight acquisition may produce positive returns for the city, although Salem would not realize these benefits for many years. Based on the results of the analyses described above, the research team offers a three-tiered policy recommendation to the city. First, we recommend that the city adopt a direct streetlighting fee, levied as an electric utility pass-through. A fee of one dollar fifty cents per month per address will fully fund Salem’s streetlight operations. In addition, this funding mechanism allows the city to include an additional twenty-five cent fee per month for the creation of a streetlight improvement fund. After the implementation of a direct streetlight fee, the research team recommends that the city use revenue generated by the suggested capital improvement fee to purchase the Salem Option A segment of streetlights. In addition, the team recommends that Salem table the option to upgrade PGE Option C lights to LED technology.
Description: Examining committee: Colleen Chrisinger, faculty advisor
Date: 2011-06

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