HomeMy WebLinkAboutSouth 8th Avenue Funding Recommendation.pdf1
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Rick Hixson, City Engineer
Debbie Arkell, Director of Public Services
Anna Rosenberry, Finance Director
SUBJECT: South 8th Avenue Funding Recommendation
MEETING DATE: April 25, 2011
MEETING TYPE: Action
RECOMMENDATION: Consider the information presented and endorse an option or a
combination of options described below to fund the project and/or fund the project as well as
future deferred maintenance street projects.
RECOMMENDED MOTION: Having considered the information provided, I move we adopt
funding Option X and direct staff to proceed with the project.
BACKGROUND:
Jurisdiction and Urban Funds
South 8th Avenue between Main Street and College Street is a city collector street and is also
identified by the Montana Department of Transportation (MDT) as Urban Route U-1205. This
means that the City may use Urban Funds to maintain this portion of South 8th Avenue. Urban
Funds are the dollars the City gets from the Federal Highway Administration (FHWA) via MDT
to maintain the City’s Urban Routes, and they can only be used for street work and cannot be
used for water or sewer maintenance.
The City’s annual Urban Funds allocation is currently $805,000.00 and we have approximately
$3M left in our Urban Funds balance, after the completion of the South 19th Avenue project.
These funds have historically been used on large, expensive projects which benefit the
community at large such as South 19th Avenue or South 3rd Avenue. For a number of years the
City’s number one priority for Urban funding has been West College Street from Main Street to
19th Avenue, and the Commission recently re-adopted this as the number one street project
priority. The Montana Department of Transportation has currently retained Peccia and
Associates to design these improvements, with construction expected to begin within the next
18-24 months.
205
2
The next highest priority for urban funding dollars is Kagy Boulevard from Willson to South
19th. Kagy Boulevard from Highland to Willson will be milled and overlayed this summer using
gas tax money. This priority has been endorsed as the second highest by the City Commission
and the Transportation Coordinating Committee (TCC). We concur that Kagy Boulevard should
remain the next urban fund project after College from Main Street to S. 19th Avenue.
In order to use this source of funding for South 8th Avenue, the TCC and the City Commission
would have to endorse it as a new priority. The use of Urban Funds for South 8th Avenue would
delay the project because MDT has made it clear they will not obligate funds for a new project
until the cost of the current project (College Street) becomes known through the bid process,
which is at least a year away, and possibly not until the end of the project to ensure there are
adequate funds for the College project. The two blocks of South 8th Avenue south of College
Street are not part of the Urban Route system. The block of South 8th Avenue south of Harrison
Avenue was improved by Montana State University (MSU) in 2008.
Configuration
South 8th Avenue is classified as a collector street. It is comprised of sidewalks on both sides of
the street, boulevards, curb and gutter, parking lanes, two driving lanes and a center median.
There are currently no bike lanes on South 8th Avenue.
When MSU rebuilt the block of South 8th Avenue between Cleveland and Harrison Streets in
2008, they reduced the width of the median to 10 feet in order to provide more room for bicycles.
They vetted this idea with us prior to construction and when the city rebuilds the remainder of
South 8th Avenue, we will match that section.
Annual Average Daily Traffic (ADT)
The most recent traffic counts taken on South 8th Avenue show the ADT on South 8th Avenue
north of Alderson Street is 3,420 vehicles per day and south of Babcock Street the ADT is 5,420
vehicles per day. For comparison, the 2008 ADT on West College Street west of South 20th
Avenue was 11,920 vehicles per day, and the ADT on Kagy Boulevard west of Willson Avenue
is 11,620 vehicles per day.
Current Condition
The current condition of South 8th Avenue is poor. The curbs which form the edges of the
medians have deteriorated to the point where they are nearly unrecognizable and are no longer
serviceable. The asphalt itself is in such poor condition that none of the preventive maintenance
techniques used to preserve pavement, such as chip seals and mill and overlays, will work
anymore. The entire street, from the gravel base layers to the pavement markings, needs to be
replaced. The street division is currently spending in the neighborhood of $30,000.00 per year
patching South 8th Avenue. These costs have been going up every year and will no doubt
continue to do so.
Major street improvements should not be undertaken until the existing water main is replaced
since its replacement will involve digging up both the street and the median in many locations.
The award of a contract to replace the water main in South 8th Avenue is scheduled for the April
25th commission meeting. This water main replacement project is being paid for with Water
206
3
Enterprise Funds. The sewer mains that serve properties on South 8th are located in the adjacent
alleys, so their furture replacement has no impact on the project.
Proposed Improvements
A complete reconstruction of South 8th Avenue from Main Street to Harrison Street is proposed.
The plan is to match the section that MSU just constructed between Cleveland and Harrison
Streets – reduce the median to 10 feet in width and build sidewalk, boulevard, curb and gutter,
parking lanes, bike lanes, travel lanes and a landscaped median. This section is depicted in the
attached figure. The street design will be completed by the City’s Engineering staff.
FUNDING
The original South 8th Avenue improvements were funded by Special Improvements Districts
(SIDs). These were SID 85 which included the area from Story Street to Harrison Street, and SID
98 which included the area from Story Street to Main Street. These SIDs were created in the
second decade of the 1900s.
While we have not prepared a detailed cost estimate for a South 8th Avenue SID project, our best
current estimate is that the cost will be in the neighborhood of $1.5 million.
Funding options for Street Maintenance: Our current Street Maintenance program is funded
by a combination of Gas Tax and our existing Street Maintenance Assessment (annually,
$650,000 and $2.4 Million respectively.) The program consists of pot-hole filling, crack repair,
striping, chip sealing, and mill-and-overlay projects. This type of regular maintenance extends
the life of city streets. Street Maintenance funds also pay the cost of operations, including
wages. While it would be theoretically possible to dramatically cut back on general street
maintenance and divert money to reconstruct South 8th Avenue, it is not recommended.
Funding options for Street Construction and Reconstruction: The City’s current sources of
funding for street construction and re-construction have primarily been a combination of Urban
Funds, Special Improvement Districts, and Impact Fees.
Past construction and re-construction projects:
South 19th Avenue: ~$8 Million. 100% Urban Funds (with a portion appropriated
specifically to the project via a Federal earmark.)
North 19th Avenue: ~$4.4 Million. Combination of Special Improvement Districts and
Impact Fees
West Durston: ~$2.3 Million. Combination of Special Improvement District, Impact
Fees, and 1995 Transportation General Obligation Bonds.
West Babcock: ~$3.5 Million. Combination of Special Improvement District and
Impact Fees.
In addition to these sources, we could pursue a number of other options: Increased Street
Maintenance Assessments to fund a re-construction reserve, or to pay-off a loan from the State of
207
4
Montana; Voter-approved General Obligation Bonds; A new Arterial Construct Fee or other type
of Special District.
Funding Source Exists Now? Improvements Funded Nature of Funding
Street Maintenance
District Assessment
Yes. Can fund construction,
reconstruction, and
maintenance.
Special Assessment to ALL city
property owners, including non-
profits.
Urban Funds Yes. Improvements, on
Urban Routes Only.
Annual Allocation through
Montana Department of
Transportation.
State administers Urban Funds.
Projects must be on their lists for
approval and funding.
Street Impact Fees Yes. Capacity Expanding
Improvements, only.
Funds initial
construction, not re-
construction.
Charged to new construction
projects at time of Building Permit
issuance.
Curb Replacement
Reserve from our
Street Maintenance
District
Yes. Can make Local &
General Improvements.
We are reserving it for
curb replacements.
Special Assessment to ALL city
property owners, including non-
profits.
Special Improvement
District in South 8th
Avenue area.
This area = No.
Other areas of
city = Yes.
Funds Local
Improvements only.
Special Assessment to area
property owners, including non-
profits and governments.
Loan from State
INTERCAP program
paid by Street
Maintenance District
Assessment
Loan = No.
District = Yes.
Can fund construction,
reconstruction, and
maintenance.
A 10-year loan, paid back by Special
Assessments to ALL city property
owners, including non-profits.
New General
Obligation Bond
No. General Improvements Voter approved. Paid by all city
property owners, according to
property taxable values.
Arterial Construction
Fee
No. Construction &
Reconstruction of City
Arterial Streets
City of Billings imposes this fee on
all properties, under its self
governing powers and the impact
fee statutes. See attached
Montana Department of
Transportation sheet – Exhibit A.
We could consider creation of a
new Special District under 7-11-
1001 to accomplish a similar goal.
Note: South 8th Avenue is not an
Arterial – it is a Collector street.
208
5
Recommended Funding Options:
Similar to Babcock, Durston, and North 19th, for all Options, we recommend that the “local”
improvements be paid by the immediately adjacent property owners in the form of a Special
Improvement District (SID). This would approximate what the property owners on Durston,
Babcock, and North 19th funded with their assessments. Property owners within the district
would pay for the curb removal, curb replacement, sidewalk repairs, and pedestrian ramps.
· It would also be possible to consider utilizing the current Curb Replacement Reserve to
fund some, or all, of this project’s curb costs. Assuming the planned increases, in FY12
we would have approximately $120,000 available that could be used to reduce a portion
of the SID amount charged to property owners.
The cost of the improvements for the new bike lanes would be funded by Street Impact Fees, and
the actual street surface and median reconstruction could be funded with either increased Street
Maintenance Assessments (Option B) or general obligation bonds (Option C).
We could look at the problem of funding South 8th’s reconstruction in isolation, and develop
scenarios that simply address the money needed for this one project. Option A is designed to
finance the reconstruction of South 8th Avenue, without substantially changing our long-term
funding options for street reconstruction. One benefit of choosing this option is that currently the
construction bid prices are very reasonable, and the project could be completed in the near future
at minimal impact to taxpayers. If the price of oil continues to increase, or if development
increases to previous levels, the price of the project may increase and could impact this funding
option.
However, given the Commission’s adopted goals related to deferred infrastructure maintenance,
broader strategies could be developed to fund street reconstruction projects around town.
Options B and C seek to provide funding for multiple projects, of which South 8th Avenue is
included.
OPTION A – Fund South 8th project only – Use INTERCAP Loan, paid by existing Street Maintenance
Assessment
Special Improvement District: Curbs, Sidewalks, Pedestrian Ramps $143,600
Street Impact Fees: Bike Lanes (new capacity) $29,400
Loan, paid by Street Maintenance
Assessment:
Street & Median Re-construction $1,336,600
Option A - Using this option: Construction could get underway soon (next spring/summer).
Because of changes in state law, this option did not exist for Street Maintenance Districts until
October 2009.
South 8th Property Owners: Property fronting the improvements would contribute
$143,600 via a Special Improvement District (approximately $1,850 total per average lot
frontage; estimated annual payments of $160 each year for 20 years.)
Street Impact Fees would contribute $29,400 for the new bike lanes.
209
6
Entire City: The existing Street Maintenance Assessment would need to be increased by
7% to fund a loan for the street & median reconstruction. The annual payment to
INTERCAP on a loan of $1,336,000 would be approximately $160,000 per year (3.35%,
10 years). Average sized lots in town would see an increased Street Maintenance
Assessment of approximately $6/year.
After the loan was paid off, the assessment could be decreased, or another loan possibly
funded.
Limitation on this borrowing: The City would be accessing this loan through its general
borrowing authority under 7-7-4101 (6), and 7-7-4104. Street reconstruction is an allowable
project, and voter approval is not required for this loan. We utilized this authority for the Fire
Station #3 loan, and still have the legal capacity to borrow an additional $1.8 Million.
OPTION B – Use existing mechanisms, Fund ongoing Street Reconstruction Reserve.
Special Improvement District: Curbs, Sidewalks, Pedestrian Ramps $143,600
Street Impact Fees: Bike Lanes (new capacity) $29,400
Increase in Street Maintenance
Assessment:
Street & Median Re-construction $1,336,600
Option B – Using this option: Construction could get underway in the later summer/fall of
2013. The annual Street Maintenance Assessment would be increased to establish a
“reconstruction reserve,” similar to what we began to do with Curbs in Fiscal Year 2011. The
South 8th Project would be the first reconstruction project funded with this reserve.
South 8th Property Owners: Property fronting the improvements would contribute
$143,600 via a Special Improvement District (approximately $1,850 total per average lot
frontage; estimated annual payments of $160 each year for 20 years.)
Street Impact Fees would contribute $29,400 for the new bike lanes.
Entire City: The existing Street Maintenance Assessment would be increased by 20% in
FY12, 20% in FY13 to fund a Reconstruction Reserve. As a result of this increase,
average sized lots in town would see an additional Street Maintenance Assessment of
approximately $17.40 in FY12, and $21.30 in FY13. By FY13, the average sized lot’s
annual Street Maintenance Assessment would be $140/year.
In FY12 we would collect $550,000 and in FY13 and each following year, we would
collect $1.2 Million to be accumulated and used for reconstruction projects.
OPTION C – Voter Approved, Fund $6 Million in specific projects
Special Improvement District: Curbs, Sidewalks, Pedestrian Ramps $143,600
Street Impact Fees: Bike Lanes (new capacity) $29,400
General Obligation Bond: Street & Median Re-construction $1,336,600
210
7
Option C - Using this option: Construction could get underway after voter approval, in FY15
(approximately three years.)
South 8th Property Owners: Property fronting the improvements would contribute
$143,600 via a Special Improvement District (approximately $1,850 total per average lot
frontage; estimated annual payments of $160 each year for 20 years.)
Street Impact Fees would contribute $29,400 for the new bike lanes.
Entire City: City voters would be asked to approve a property tax to “re-new” the
Transportation General Obligation bond levy. A bond of $6 Million could be supported
with the current level of taxation (20 years, 4.85%, $472,000 annual payment, 5.85
mills.) If it was timed to coincide with the expiration of the current levy for the 1995
Transportation General Obligation bond, taxpayers would see no increase in taxes. The
final payment on the 1995 GO Bond will be made with the November 2013 tax levy
(FY14.) This would leave construction of the street to be completed in FY15.
If approved by the voters, in addition to the South 8th reconstruction, approximately $4.5
Million in additional street reconstruction projects could be funded with a $6 Million
bond.
ALTERNATIVES: As suggested by the City Commission
Attachment: Map of potential SID area and road section
Fact sheet on Billings Arterial Assessment
Cost breakdown analysis
Report compiled on April 15, 2011
211
S 8TH AVE W MAIN ST
W KOCH ST
W OLIVE ST
W CURTISS ST
W BABCOCK ST S 8TH AVE S 8TH AVE W KOCH ST W STORY ST
W COLLEGE ST
W HARRISON ST
W ALDERSON ST
W DICKERSON ST
W CLEVELAND ST S 8TH AVE North South212
Unit Plan Qty. Conversion Final Qty. Unit Price Total Price SIDStreet Impact FeeOtherStreet ExcavationSF 174,070 CY 16,118 15.00$ $241,764$241,764Median clear and grubSF 26,500 SY 9815.00$ $4,907$4,907Uncrushed sub base courseSF 174,070 CY 6,44716.00$ $103,153$103,153Crushed base courseSF 174,070 CY 4,83522.00$ $106,376$106,376Asphalt Paving (3" thick)SF 174,070 TON 3,26435.00$ $114,233$114,2335' Sidewalk (4 inch)LF 5,930 SF* 5,9303.40$ $20,162 $20,162Ped RampsEA 36 SF 8,1004.25$ $34,425 $34,425Remove existing Curb/GutterLF 11,440 LF 11,4402.00$ $22,880 $11,44011,440$ Curb/GutterLF 11,440 LF 11,4408.50$ $97,240 $48,62048,620$ Standard Square Storm drain inlet EA 86 EA 86 1,500.00$ $129,000$129,000Adjust Storm Drain ManholesEA 10 EA 10 1,000.00$ $10,000$10,000Adjust Storm Drain service lines EA 86 EA 86 1,500.00$ $129,000$129,000Bike Lane (white 6" thermo)LF 6,720 LF 6,7203.50$ $23,520$23,520Traffic Markings (6" thermo)LF 6,720 LF 6,7203.00$ $20,160$20,160Landscaping (trees/shrubs)EA1 EA 1 20,000.00$ $20,000$20,000IrrigationSF 26,500 SY 98115.00$ $14,722$14,722SodSY 981 SY 9816.00$ $5,889$5,889Erosion/Traffic ControlEA1 EA 1 10,000.00$ $10,000$10,000Mobilization/DemobilizationEA1 EA 1 100,000.00$ $100,000$100,000MedianLF 2,650 LF 2,650‐$ $0$0$1,207,432$114,647 $23,520 $1,069,265$1,509,289143,309$ 29,400$ 1,336,581$ Take off Values Final Values25% ContingencySOUTH 8TH AVENUE PROJECT COST ESTIMATEAPRIL 2011213
Montana Land Use and Transportation Toolkit
The Setting
The City of Billings (population 100,000) is located
in Southeast Montana within Yellowstone County.
Healthcare, energy, financial, engineering & technical
services, and agriculture are the primary industries in
Billings. Billings is also home to Montana State University-
Billings and Rocky Mountain College. Recreational
activities and three National Parks (Yellowstone, Teton,
and Glacier) are in close proximity to Billings.
The City of Billings does not have impact fees to fund
transportation system improvements; they rely primarily on grant money and traditional funding
sources for transportation system improvements. The arterial construction fee formula levies a fee
on all properties within the city limits and the resulting revenue (approximately $3 million annually)
is used specifically for constructing or reconstructing arterial roads within Billings. Assessments are
based on parcel square footage and zoning to categorize properties with respect to their current
or potential ability to contribute traffic to the arterial street system. For example, commercial
and multi-family properties pay more because they generate more traffic. The square footage
(and resulting arterial construction fee assessment) of residentially zoned properties is capped
because the size of the residence does not generate additional trips. City staff used the Institute
of Transportation Engineers (ITE) Trip Generation Handbook to develop trip generation rates
for each generic zoning classification in
the City. This effort took 3 months to
complete. Arterial construction fee
revenues may be used to construct
or reconstruct arterial roadways
within the Billings city limits.
The City instituted the arterial
construction fee program in 2004
as the result of a funding gap and
complaints over the assessment fees
being charged property owners in
Special Improvement Districts (SID). At that time, the City’s existing revenue sources were not
sufficient to meet the community’s arterial construction and reconstruction needs. The City decided
to explore other approaches to generate revenue to fund improvements to the transportation
system. This arterial construction fee assessment is unique in Montana and is an example of a
funding mechanism used to finance the local transportation system.
City of Billings Arterial Construction
Fee Program
Montana
Billings•
This case study relates to:
• Workshops;
• Resource and funding coordination;
• Urban Transportation District
Transportation Utility Fee•
EXHIBIT A - BILLINGS FEE
214
Montana Land Use and Transportation Toolkit
Billings Arterial Construction Fee
The Project
The arterial construction fee addresses the construction or reconstruction of arterial roadways within
the city limits as defined within the Transportation Plan. The fee is currently administered by the
public works department. Arterial construction fees are annually assessed citywide regardless of
the parcel’s proximity to designated arterial roadways. The arterial construction fee is a community
cost, borne by all city residents. Arterial construction fee assessment rates are set annually and
the assessments are included on property tax statements. The arterial construction fee assessments
are collected and credited to the municipal arterial construction system fund, which is maintained
by the financial services manager as a separate and special fund.
The Process
According to Montana Code Annotated, Title 7, Chapter 6, Part 16, as a self-governing entity,
the City of Billings is enabled to establish impact fees to help pay for roads, water, sewer, storm
water, parks, fire and police, library, and solid waste facilities.
The arterial construction fee is a financing tool that took about a year to develop. The public
works department began discussing arterial construction funding constraints with the City Council.
The City Council created an ad hoc committee to discuss options to address arterial construction
funding constraints. The committee included City Council members, City staff, and representatives
of various stakeholder groups (Home Builders Association, Billings Association of Realtors, local
developers, etc.). City staff outlined arterial construction project needs, project costs, and the City’s
projected funding revenue. It became clear to the committee that existing arterial construction
revenue sources were not sufficient to meet community needs. The committee discussed the pros
and cons of implementing a citywide arterial construction fee assessment. The proposed ordinance
language was developed and refined. Public meetings and service group presentations on the
Lessons Learned:
The success in developing the arterial construction fee in the
City of Billings was the direct result of public outreach and
stakeholder involvement from the beginning stages. These
stakeholder groups easily could have been opponents of the
arterial construction fee. Because these stakeholder groups
were brought into the committee, they understood the situation
and were empowered to help solve the funding problem. Their
support of the process drove the development of the arterial
construction fee as a mechanism for the City to effectively meet
community transportation needs. The stakeholders presented
and fully supported the arterial construction fee option before
the City Council.
EXHIBIT A - BILLINGS FEE
215
Montana Land Use and Transportation Toolkit
Billings Arterial Construction Fee
proposed arterial construction fee were conducted before the City Council held a public hearing
and took action on the ordinance’s adoption. The Billings City Council passed Ordinance 04-5300
adopting the arterial construction fees in 2004.
Trying this at home
Arterial construction fees could possibly be implemented in other jurisdictions if their respective
laws allow it (City Charter, municipal code, and state code).
Additional information about Billings’ arterial construction fee assessments are available at:
http://ci.billings.mt.us/DocumentView.aspx?DID=1018
Or you may contact:
Public Works Administration
City of Billings
(406) 657-8230
pubworks@ci.billings.mt.us
Additional information about the arterial construction fee can be found in the Billings Montana
City Code Sec. 22-1000 available online at: http://library1.municode.com:80/1287/template.
htm?view=browse&doc_action=setdoc&doc_keytype=tocid&doc_key=2c49d301b4e0c17af6
0f13005b16c0e9&infobase=10441
Information about the Transportation Plan is available at:
http://mt-billings.civicplus.com/index.aspx?NID=1466
photo on p.1 from http://commons.wikimedia.org/wiki/File:Billings_Pano.JPG
photo on p.2 from http://ci.billings.mt.us/photogallery.aspx
EXHIBIT A - BILLINGS FEE
216