(a) The moneys shall be distributed to all the cities.

(b) Each city shall receive such share of the moneys as its population bears to the total population of the cities.

(2) Each year, the sum of $2,500,000 shall be withdrawn from the appropriation specified in ORS 366.800 and $2,500,000 shall be withdrawn from moneys available to the Department of Transportation from the State Highway Fund. The sums withdrawn shall be transferred to a separate account to be administered by the Department of Transportation. The following apply to the account described in this subsection:

(a) Money from the account shall be used only upon streets:

(A) That are not a part of the state highway system;

(B) That are within cities with populations of 5,000 or fewer persons; and

(C) That are inadequate for the capacity the streets serve or are in a condition detrimental to safety.

(b) All moneys in the account shall be allotted each year.

(c) Subject to paragraph (d) of this subsection, the department shall determine the distribution of the expenditures after considering applications from the cities submitted to the department.

(d) The department may enter into agreements with cities upon the advice and counsel of organizations representing cities to establish:

(A) The method of allotting moneys from the account; or

(B) The method of considering applications from cities and determining distribution based on the applications.

(3) The Director of Transportation shall establish a small city advisory committee. The advisory committee shall review applications submitted by small cities and shall recommend applications for approval to the director. In consultation with the League of Oregon Cities, the director shall appoint to the advisory committee one representative of a small city in each of the five regions of this state.

(4) For purposes of this section:

(a) Region one consists of Clackamas, Hood River, Multnomah and Washington Counties.

(b) Region two consists of Benton, Clatsop, Columbia, Lane, Lincoln, Linn, Marion, Polk, Tillamook and Yamhill Counties.

(c) Region three consists of Coos, Curry, Douglas, Jackson and Josephine Counties.

(d) Region four consists of Crook, Deschutes, Gilliam, Jefferson, Klamath, Lake, Sherman, Wasco and Wheeler Counties.

(e) Region five consists of Baker, Grant, Harney, Malheur, Morrow, Umatilla, Union and Wallowa Counties. [Amended by 1959 c.170 §1; 1985 c.123 §§1,2; 1989 c.865 §6; 1991 c.355 §1; 2017 c.750 §72]