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05/26/1992 - City Council Special AGENDA SPECIAL CITY COUNCIL MEETING Tuesday May 26, 1992 5:00 p.m. I. ROLL CALL/ADOPT AGENDA II. DISCUSSION WITH ADVISORY PLANNING COMMISSION MEMBERS • REVIEW SIGN/BILLBOARD REGULATIONS • OTHER III. STREET RECONSTRUCTION POLICIES IV. OTHER BUSINESS V. ADJOURNMENT CO e w co z 1_ 2 E 0 0 ƒ R cc Q Um m02 qk Z g 2o & R m $ � 0 z 0 w � � / « < � u M 022 CC CC Zw �� we I- L Lu E w BOO > q ƒ I-2 _ / C ® 0 6 z2c UJ co c) CCw k2 5 $ w 3 _2 n_ UJ 3 ? �n 8L L 2 / / / ?E � O LA C C CO cc cc 0 7 7u m CC CC u- ul == . L UU 0 > () E k k � CCk \ Z w Ili N « U) _ u S = , w LU < 0 UJ CC - k w w E ¥ \ « 2 0 ap k 0wQ ti z < 1.11 Z CL LLI � � 2a � / ƒ _J w 0 VJ z a w L w � � CO 2R k qz E O c « Q % ƒ Q o aL Q Z ƒ Ib z _z 2 J 2 = E ± c / ca 0 z w 0 .1 2w 08 0 ¥ R 9_ 2 20 . ƒ z � Sc,) m Q � . 2 > U ¥ k % 5 6 z< < 0 ƒ / 0 n m k R 0 L /W < « Cl- � w Cr a. 0 a- < L U 0 R « Q c CI 0 z K ur 2 L m o 2 w m I w > a o P E z � 0 z � _ z w cx z « a2 k S � 0 / k ci) MEMO TO: THOMAS L. HEDGES, CITY ADMINISTRATOR FROM: THOMAS A. COLBERT, DIRECTOR OF PUBLIC WORKS DATE: MAY 22, 1992 SUBJECT: STREET RECONSTRUCTION AND MAINTENANCE C.I.P. NEEDS AND FINANCING ISSUES INTRODUCTION Early in 1992, the City Council formally adopted the 1992-96 Five Year C.I.P. for the City. A significant part of that overall C.I.P. is associated with the proposed reconstruction, repair and/or upgrading of our street infrastructure system. Since Eagan is such a young community, our past involvement has been primarily involved with constructing new streets. However, as our community continues to mature, some of the first streets built within our community have reached or exceeded their original life expectancy and have deteriorated to the point where reconstruction is necessary. In evaluating the condition of our street infrastructure system, the Public Works Department has attempted to prioritize these needs and create a five year C.I.P. However, since this is a new phase of our community's growth, it is very important that we evaluate the financial impact of implementing a long term reconstruction/maintenance program. This memo will provide some of the basic information that should be taken into consideration in discussions relating to creating a comprehensive program with related policies that the community will follow from here on out. HISTORY Eagan originally started as a farming community with access provided through limited State and County roadways. In the mid-1950's (35-40 years ago) , the first cluster of local residential developments started to appear in the northern portion of Eagan, (i.e. Country Home Heights and McKee Addition) . This was followed in the late 50's by the Cedar Grove, Oslund-Timberline and Valley View Plateau Additions. With Eagan being a Township at that time, these residential streets were constructed privately by the developer prior to the establishment of any standards. However, with the exception of Country Home Heights, they were constructed with bituminous surfacing and bituminous curbs, with limited (if any) storm sewer facilities. In 1983, the City recognized that these streets had reached the end of their life expectancy and were in need of reconstruction. Subsequently, the Cedar Grove 1st and 2nd Addition was reconstructed to current City standards with concrete curb and gutter, 7-ton per axle bituminous surfacing and additional storm sewer facilities. Approximately 55 percent of the costs associated with this reconstruction was assessed to the adjacent property owners on a per lot basis with the City assuming all remaining costs. Although the City did not have a formal five-year capital improvement program, it was anticipated that the City would proceed with a progression of reconstruction and upgrading of these older streets as their useful life had expired. In 1984, it was proposed that Rahn Road would be reconstructed as a second phase of this informal program. However, 1 i due to significant opposition by the affected property owners, the City Council at that time canceled the program and decided to wait until there was more public concern and support for these projects. Subsequently, the City's street maintenance program was limited to isolated patch and repairs, crack sealing and seal coating. However, during the late 1980's, the City started to receive increasing complaints and editorials regarding the deteriorating condition of Rahn Road. Subsequently, in 1990 Rahn Road was reconstructed with a certain amount of opposition still remaining. PAVEMENT MANAGEMENT SYSTEM Recognizing the continual deterioration of all City streets as a natural process of its life cycle combined with the rapid expansion of our transportation system, there was a need to create a program where staff would inventory and evaluate the system to economically prioritize the maintenance requirements with a shrinking budget. In 1989 and 1990, the City created a Pavement Management Program (PMP) whereby every square yard of public street was reviewed and evaluated based on its current condition, year of construction, structural design and past maintenance history. With this information, a computer program then was able to determine where any particular street was in its life cycle. Certain streets had been subjected to an accelerated aging process either due to traffic loads, poor soil conditions, poor drainage or any other combination of factors. Subsequently, every street was assigned a rating of its Pavement Condition Index (PCI) on a scale of 1-100. The attached graphic showing the relationship of Pavement life versus PCI shows that Eagan streets have a tendency to exceed the normal 20 year life expectancy. However, it still reflects the general deterioration of streets to a point when reconstruction becomes necessary (approximately 26 years) . With this program, the City was then able to put together a Five Year C.I.P. allowing us to address the worst situations first while helping to identify the extent of reconstruction or repair required. 5-YEAR CAPITAL IMPROVEMENT PROGRAM (CIP) The benefits of a 5-Year Capital Improvement Program are self evident. They allow the City staff to prioritize the evaluation and design of future projects in an orderly manner. It allows the City to project its future expenditures and to anticipate and plan for the proper financing of those needed improvements. It also allows the affected property owners an opportunity to anticipate and plan for those improvements. A community with a present population of approximately 52,000 and a projected future population of 80,000+ is expected to anticipate the future demands and properly plan for them in an orderly, efficient and economical manner. Early in 1992, the City Council formally adopted a 5-Year Capital Improvement Program for 1992-1996. This CIP estimates the projected costs of these anticipated improvements as well as identifying the source of funding. However, the funding source was limited to special assessments or City financing. The City's ability to identify and ensure adequate revenue sources to cover its financial participation needs to be discussed in further detail. In addition, 2 the political and increasing judicial restraints on special assessments also necessitates the need to revisit that source of financing as well. The following information relates to the proposed 1993 residential reconstruction/overlay program. PROPOSED RESIDENTIAL RECONSTRUCTION/OVERLAY PROGRAM 1993 Reconstruction Area Miles Yr. Constructed Age Cedar Grove 3rd Addn. 1.71 '61 31 yrs. Cedar Grove 4th Addn. 1.87 '61 31 yrs. Cedar Grove 5th Addn. 2.36 '66 26 yrs. Cedar Grove 6th Addn. 1.57 '69 23 yrs. Timberline 0.97 '69 23 yrs. Valley View Plateau 0.88 '62 30 yrs. Wescott Square 0.25 '73 18 yrs. Subtotal 9.61 miles Overlay Area Miles Yr. Constructed Age Evergreen Addn. 1.29 '68 24 yrs. Kolstad Lane 0.18 '72 20 yrs. Blackhawk Hills Rd. 0.43 '74 18 yrs. Woodgate 1st, 2nd, 3rd Addn. 1.37 '74 18 yrs. 3.27 miles 1993 is the most agressive year of the 5-year CIP due to the fact that a great many of these streets have exceeded their original life expectancy and are in need of immediate reconstruction. As we get into the 5-year CIP, the majority of the work is associated with limited patch/repair with structural overlays as a means to extend the life expectancy and subsequent inevitable reconstruction needs. Due to the advanced planning and design associated with the capital improvement program, the following is a general schedule recommended for its implementation: 3 CIP Improvement Schedule • 5-Year CIP General Public Hearing June '92 • Following year's improvement '93 October '92 • Formal plan and spec approval February '93 • Contract award March '93 • Construction April-October '93 With a multiple year program, there is a natural continuous overlapping for this ongoing program. IMPROVEMENTS/ASSESSMENT POLICY The major source of financing infrastructure related improvements has relied heavily on special assessments to benefitted properties. Subsequently, it has been anticipated that special assessments would continue to be involved in the City's CIP reconstruction program. In 1989, the City Council directed staff to review the current special assessment policy and to recommend modifications specifically taking into consideration the City's future reconstruction needs. On September 8, 1989, a report was submitted to the City Council that presented a proposed special assessment policy resulting from evaluation of previous City projects and a survey of other older communities. The following is a list of typical improvements and related financing sources associated with reconstruction. A. Any improvement necessary to bring the street up to City standards is to be assessed 100% (i.e. concrete curb and gutter if none previously existed, etc. ) . B. 75% of the costs to remove and reconstruct or patch and repair with an overlay is to be assessed to low density (R-I, II and III) residential with 100% of the costs to be assessed to all higher zoning classifications. C. Any repair to the City's sanitary sewer, water main and related services would be financed 100% by the City's Utility Renewal & Replacement Fund. D. Upgrades or modifications to the existing storm sewer system would be financed 100% by the City's Storm Water Utility Renewal & Replacement Fund. However, if inadequate or no storm sewer facilities previously existed, any new additions would be included as a cost of the street improvement and similarily assessed (75%- 100% see "B") E. The installation of any neighborhood residential streetlight system would be assessed 100%. However, if only major intersection streetlights were installed, that would be financed 100% by the City's Street Light Utility Fund. 4 REVENUE SOURCES The following is a summation with a brief description for the various revenue sources available to the City. County, State & Federal Participation Improvements initiated by the State or Federal Highway System historically have been financed 100% by those agencies with limited participation required by the City for only improvements to local roads as necessary to compliment the major improvement. The County finances 55% of street and 50% of signal improvements on any County road. Their participation in storm sewer facilities located within or as necessary to handle County road improvements is limited to $6,000 per mile. Major Street Fund Building Permit Road Unit Charge (RUC) This is a fee collected with the issuance of every building permit to help finance the oversizing of community collector and arterial streets as necessary to accommodate the additional traffic generated by this new development. This amounts to approximately $380 per single-family residence and $1,140 per acre for nonresidential property. Connection Fees/Waivers These are additional contributions collected as a part of the platting or building permit process in recognition of benefit received from previous unassessed public improvements or anticipated future roadway improvements. Property Taxes A portion of the General Fund levy is collected and allocated to the Major Street Fund to help finance annual maintenance and/or construction needs. Municipal State Aid (MSA) A portion of the State gas tax is allocated to all municipalities over 5,000 population. This allocation is based on a two part formula. The first part is based on a city's population ratio to the state's population. Subsequently, as the City of Eagan continues to grow in population, our "piece of the pie" gets larger. However, a city's population is based on the latest official census. The second part of the formula is based on the communities "needs" . This is based on the estimated cost to complete the designated M.S.A. street system within the community. Again, a city's total construction "need ($)" is proportionate to the total needs of all communities eligible for state aid funding. The City of Eagan's 1992 construction allocation is $1,165,660.00. In addition, the City is allocated $1,500 per state aid street mile which amounted to $60,960.00 for 1992. 5 Special Assessments All new construction for local improvements necessary to handle the City's growth has been financed 100% through special assessments against benefitted properties. State law restricts the City's ability to levy special assessments against private property to the extent that the value of the property has been increased by the installation of those improvements. Historically, there has not been a problem in recognizing the benefit associated with installing new infrastructure which provides an improvement to property that previously didn't exist. However, it has become increasingly difficult, especially in times of economic recessions, to prove that the value of property has increased by replacing an existing improvement such as a reconstruction or overlay improvement. OTHER REVENUE SOURCES While the previously listed major revenue sources have been the "backbone" of financing our communities improvements, as we mature, their long term reliability quickly diminishes. For example, as we are building out, our building permit road unit charges will quickly decrease. While our population may increase, our completion of our municipal state aid system will greatly diminish our "needs" and subsequent share of the gas tax allocation. The judicial system's lack of support for the special assessment process quickly renders that unreliable at best for future reconstruction programs. Subsequently, additional/different sources of revenue must be pursued to create a viable ongoing capital improvement program as necessary to maintain the City's transportation system. The following are two potential alternatives. General Obligation Bonds This source of bonding is financed through an ad valorem tax addition to the property taxes. In essence, everyone who owns real property in the City would be contributing on an annual basis to finance the City's ongoing Capital Improvement Program. With our property tax system, higher valued property would contribute proportionately greater amounts to this program. Transportation Utility Fee Similar to the City's Sanitary Sewer, Water and Storm Sewer Utility, this would allow the City to collect a monthly/quarterly fee from every property based on a traffic generated basis. However, this requires specific permissive legislation before our community can implement such a utility. Presently, our community is actively involved in co-sponsoring and promoting such legislation for consideration in 1993. GENERAL CONSIDERATIONS As mentioned previously, the City is entering into a new stage of maturity for our community. We are at a point in time where careful consideration must be given to our future transportation maintenance and reconstruction program. Whether the method is property taxes or utility fees, this requires all property owners to contribute on an annual ongoing basis for transportation maintenance 6 • program that may or may not directly affect them. Contrarily, special assessments are levied only against adjacent properties when their particular street is improved. Fairness and equity dictates that the City not vacillate between one method or the other. While combinations of the two major methods appear to be most practical, it would be best to decide on a method and stay with it into the future. This becomes the difficult policy decision that we must establish in the very near future so that this long delayed Capital Improvement Program can be commenced as soon as possible. Our deteriorating infrastructure requires our immediate attention. I will be providing more in depth discussion and will be available for further clarification at the Council Workshop scheduled for Tuesday, May 26, 1992. Respectfully submitted, C---7//// Ufr,/ J,,/° Director of Public Works cc: Mike Foertsch, Asst. City Eng. Arnie Erhart, Supt. of Streets/Equipment Gene VanOverbeke, Director of Finance TAC/j f/j j 7 auueualuteW aousualutep antleluanaid je1n13n�1s uOtlOnilsuOOag I I I CO 1 I I N I I I N ■ U ■ I 1 < ct hi CD I . I w CC W a LL1 > 1 , 0 0 Itt= W W o H Q I Li.. W / ! U Q , _ .... 1,--.I F"_ 1 W / I 1! O � . > 111 I 1 Q- a V I co 6 / I 1 I 1 1 I co I I /.. I v . I I I 1 . 1 • } N I I I I 0 O 8 m ti o 8 O V. C O O O .— N .- IOd 3OVb3AV