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HomeMy WebLinkAboutLocal Street Funding Options Discussion Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Craig Woolard, Director of Public Works Rick Hixson, City Engineer SUBJECT: Local Street Funding Options Discussion AGENDA ITEM TYPE: Action is not required - Discussion MEETING DATE: December 16, 2013 KEY ISSUES AND RECOMENDATIONS: It is clear that many of Bozeman’s local streets have failed and the backlog of reconstruction needs will take decades to remedy without additional funding. At this time, we believe a clear policy is required to effectively plan for local street reconstruction and curb replacement projects citywide. This memo addresses this critical issue and is important to discuss prior to approving the streets capital improvement plans. The City of Bozeman currently dedicates a portion of the street maintenance assessment to street reconstruction and curb replacement. A portion of the costs of street reconstruction and curb replacement has historically been covered by adjacent property owners in the form of a special improvement district (SID) assessment. However, no specific policy guidance currently exists on how costs should be allocated. This memorandum:  Provides background information on funding sources for all City streets and the condition of the City’s streets and curbs and estimates of construction costs.  Requests policy guidance on the allocation of street and curb reconstruction and special improvement district (SID) funding for local streets. In doing so, we provide specific subjects for your consideration. This policy guidance is needed to inform how we proceed with the Story Street Reconstruction project that is budgeted in this current year and with the Street and Curb Reconstruction capital improvement plans. 180 We believe a local street and curb funding policy that is simple and predictable will improve capital planning and level of service for the community. Furthermore, timely resolution of this funding policy is required because current reconstruction projects are being designed. As such, we recommend that the Commission: 1) Allocate $50,000 per year of the current curb reconstruction funding to curb repair and replacement projects. These funds would be used to conduct spot repairs/replacements on curbs where the street is not in need of reconstruction. 2) Combine the remainder of the curb replacement funds with the street reconstruction funds to create a single fund used to reconstruct local streets (including curbs). These funds would be allocated based the condition of the street as determined by the Pavement Condition Index (PCI). 3) Establish a fixed percentage of funding for local street reconstruction to be funded by an SID. We propose that 75% of the costs of street reconstruction (including curbs) be paid by SID assessments and the remaining 25% be paid from dedicated street and curb reconstruction money. We request the Commission review and discuss each of the above recommendations and provide direction on the preferred allocation of street reconstruction costs. We will then prepare the appropriate policies and/or resolutions and budget/financial documents based on Commission guidance. BACKGROUND: Bozeman’s Transportation Network: The most recent review of all of the City’s street assets showed that the overall network contains approximately 231 miles of roadways divided into the following categories: • Principal Arterials (high traffic volume streets designed to serve major centers of activity) = 25 miles • Minor Arterials (streets that interconnect the principal arterial system and distribute traffic to smaller geographic areas)= 25 miles • Collector Streets (streets that provide priority traffic flow and distribute traffic from the arterial network to the ultimate destination, often through residential and commercial neighborhoods) = 33 miles • Local Streets (streets that provide direct access to individual properties with limited through movement of traffic) = 134 miles. • Alleys = 28 miles • All Other Roads (streets that are part of the network that are not maintained by the City) = MSU streets (6.4 miles), Private Drives (4.5 miles), privately maintained streets (18.6 miles), Privately maintained streets in the public right of way (9.6 miles). Of these streets, the Montana Department of Transportation (MDT) is responsible for the major maintenance (i.e., chip sealing, mill and overlay, etc.) of 25 miles of State Highway Routes (e.g., 19th Ave., 7th Ave., and Main Street). After eliminating MDT and private or privately maintained streets, the City of Bozeman is responsible for the ongoing repair and maintenance of 181 approximately 192 miles of streets and 28 miles of alleys. Almost 70% of these streets serve local traffic. 100% of the alleys provide local access. Transportion Funding: There are several potential sources of funds for the maintenance and repair of the City’s overall transportation network. • Urban funds are appropriated to the City by the MDT based on population. Approximately $800,000 per year is allocated for use to upgrade urban routes. Urban routes are typically high volume arterials. Past and current projects utilizing urban funds include the upgrade of College, future upgrade of Kagy and past upgrades of 19th Ave. Urban funds projects typically involve upgrades of arterials to expand capacity and level of service. It should be noted that only one Urban Fund Project may be pursued at a time. • Gas tax funds are appropriated to the City by the MDT on a population and street milage based allocation of the Montana Gas Tax (more information can be found at http://www.mdt.mt.gov/business/fueltax/allocations.shtml). Portions of the gas tax funds are used by the City for contracted street maintenance work. Typically this work consists of asphalt overlays (with or without cold milling), chip sealing, and pavement marking replacements. Gas tax funds have also been used by the City for curb replacements and ADA ramp installations. Approximately $400,000 per year is used by the City for contracted maintenance work, with the majority of the funds going towards mill and overlay projects. About 20% of the funds are used for chip seals. The City’s Public Works Department, in general, designates these funds to do preventative repair and maintenance of street infrastructure to extend its useful life. Public Works does not use the funds for reconstruction of failed or failing streets. In Fiscal Year (FY) 2013 gas tax funds were used to chip seal and mill and overlay 3.5 miles and 1.2 miles of streets, respectively. These projects included cold milling and asphalt overlays of Ferguson Ave. from Huffine Lane to Babcock Street, S. 12th, S. 13th, and S. 14th, from College Street to Dickerson Street, Dickerson Street from S. 11th to S. 15th, Technology Blvd,Research Drive, and a portion of Professional Drive. The City also used gas tax funds for chip sealing of local streets in Brentwood Subdivision, Stoneridge Subdivision, and portions of Annie Subdivision. In FY13 gas tax funds were also used to chip seal N. Ferguson Ave (north of Kimberwicke Street) and N. 27th Ave (south of Valley Center after millings were placed on these roadways by the Streets Division. An asphalt overlay of Aspen Street east of Rouse was also added work. • Community Transportation Enhancement Program (CTEP) is a federal program that allocates to the City approximately $230,000/year for projects such as sidewalks and trails to enhance the transportation network. This program is being phased out next year and will be replaced by a competitive Transportation Alternatives (TA) program. We believe less than one third of the historic CTEP funding will be available under the TA program. And those funds will be designated for specific projects. • Transportation impact fees are used by the City to pay for the capacity enhancing portion of a street construction. The City currently uses transportation impact fees for streets when development occurs. Impact fees are typically used to upgrade streets, when required, to collector or arterial standards after a developer has committed to constructing the required local streets. • Special improvement districts (SIDs) are a mechanism the City may use to fund all or a portion of a street and are established by the Commission. An SID may require adjacent 182 property owners to share some or all of the costs of a street improvement project. Many of the local streets in the City were originally constructed with SID funds. The reconstruction of South 8th Ave. was the most recent example of street reconstruction using partial SID funding. • Payback districts may be created by the City if a developer constructs street improvements required for the development but which will also serve other properties. The construction must be done upfront by the developer. The City then facilitates reimbursement (i.e. payback) to the original developer as future development occurs in the district. A payback district may include vacant and undeveloped lands that benefit from development of transportation systems. • The Street maintenance district is the City’s major source of funding to maintain and repair the existing local street network. The City Commission first established a street maintenance district for the City of Bozeman in fiscal year (FY) 1990. Annual assessments are levied against lots or parcels with the City to fund the overall maintenance of streets, alleys and other public transportation infrastructure. In 2010, the Commission directed a portion of the street maintenance assessment be dedicated to curb replacement. And in 2011, the Commission dedicated a portion of the assessment for the street reconstruction capital improvement program (CIP). The goal for the curb replacement is to increase the street maintenance fees dedicated to curb replacement by 2% per year for five years resulting in an allocation of 10% of the street maintenance assessment to curb replacement in FY2016. The goal for street reconstruction is to increase the dedicated amount until 18% of the street maintenance fees were will be designated for street reconstruction. During FY2014, we reached the 15% level. We anticipate the final 3% being adopted in FY15. As such, street reconstruction and curb replacement funds received 3% and 2% of the street maintenance funds in FY2014, respectively. In FY2014, $525,000 was allocated for street reconstruction capital projects and $375,000 was allocated for curb replacements projects. Street reconstruction and curb replacement funding has been historically earmarked for repair and replacement of local streets and collectors. Project Prioritization: The projects specified in the CIP for each source of transportation funding are approved by the Commission during the annual budgeting process. In FY2013, Story Street from Tracy to Church was identified in the CIP as the major project that will utilize available street reconstruction and curb replacement funds. That project is currently under design and has and estimated cost of $815,000 ($450,000 for street and curb reconstruction and $365,000 for water line replacement). Curb replacement projects have generally been prioritized using the results of a condition assessment conducted in 2001 along with staff observations. As of the last curb condition assessment conducted in 2000, the City had 18 miles of streets with no curb and five miles of curb in poor condition. Street replacement projects have generally been prioritized using a condition assessment last updated in 2006 along with staff observations. As of the last condition assessment (which was partially updated in 2006), Bozeman’s streets were rated as follows: 183 • Excellent (Pavement Condition Index (PCI) = 100-90) = 60.7 miles (37%) • Good (PCI = 80-89) = 5.6 miles (3%) • Fair (PCI=70-79) = 48.4 miles (29%) • Poor (PCI=60-69) = 29.2 miles (17%) • Critical (PCI=<60) = 23.3 miles (14%) A review of the current condition assessment data suggest there are very few streets in need of curb replacement that are not in fair or worse condition. Coordination among the various funds to complete street and curb replacement projects has generally occurred in practice although the funds have been managed separately. In FY2014 the Commission approved a project to conduct a complete assessment of all the City’s transportation network. TransMap was selected through a competitive, qualifications based selection process. TransMap utilizes state of the art technology to conduct a complete inventory of the network and determine the condition of each street based on several measured parameters (e.g., roughness, cracking, rutting, etc). TransMap will recommend a pavement maintenance and replacement program based on the industry standard Pavement Condition Index (PCI). The PCI will serve as an objective measure of street condition. A partial inventory of the City’s curbs will also be collected. We anticipate preliminary data on street PCI to be available by the beginning of 2014 and a pavement management plan completed by the end of March, 2014. These results will likely alter the project prioritization and CIP projects recommended to the Commission. However, the basic conclusion is that much of the local street network is in fair to critical condition will not change with updated TransMap condition assessment information Curbs are also, in general, in the worst shape on those streets. Local Street and Curb Reconstruction Costs: Most of the local streets in critical to poor condition are too far degraded to repair and will, in many cases, need to be reconstructed (i.e, asphalt and sub-base will need to be removed and new base material added to allow for proper drainage and effective application of new asphalt). Based on a review of the available condition assessment data and staff observations, streets in critical to fair condition also have failed or missing curbs. Streets in fair condition, in many instances, will also require a substantial or complete reconstruction. Based on an analysis of recent competitive construction bids, the costs for reconstruction of local streets and curbs were estimated as follows: • Replacing failed or adding new curbs = $80 per lineal ft. (curb on both sides of a local street) or $422,400 per mile or $32,000 per block assuming a 400 ft. block length. • Reconstruction of a local street, complete with curbs = $250 per lineal ft., or $1.32 million per mile or $100,000 per block assuming a 400 ft. block length. Actual costs will vary depending upon field conditions. These values represent conservative cost estimates for a total street reconstruction. Based on these costs, with the current allocation of street reconstruction and curb replacement funding applied exclusively to local street projects (a combined total of $900,000 for FY14) is sufficient to reconstruct approximately 3,600 ft. (0.68 184 miles or approximately 9 blocks) of local streets. At the current level of funding for the street reconstruction and curb funds, it will take over 30 years just to reconstruct the streets currently in critical condition and almost 80 years to reconstruct streets in critical and poor condition. Most of these streets are local streets. New condition information from the TransMap assessment project will result in more accurate numbers. But it is clear that many of Bozeman’s local streets have failed and the backlog of reconstruction needs will take decades to remedy without additional funding. LOCAL and COLLECTOR STREET FUNDING POLICY GUIDANCE: Major repair and reconstruction of local streets can currently be funded with street reconstruction and curb replacement money and with SID funding. Historically, the Commission has not provided specific guidance on how local street reconstruction costs should be allocated among the various available funds. At this time, we believe a clear policy is required to effectively plan for street reconstruction and curb replacement projects citywide. In addition, because Bozeman has historically underfunded its transportation network, a substantial amount of additional funding will be necessary to address this backlog of failed or failing local streets. As such, Staff is recommending that the Commission consider the following policies: 1. Designate a portion ($50,000/year) of the curb reconstruction allocation for curb spot repairs and replacements. These funds will be used primarily to extend the useful life of currently functional curbs. 2. Combine the remainder of the curb replacement fund with the street reconstruction funds. These combined funds would be used to completely reconstruct streets (including curbs) and would be managed and prioritized based on the pavement condition assessment (PCI) scores and traffic volumes. Because most the failed curbs exist on failed or failing streets, these funds should be allocated and managed in combination rather than as separate funds. 3. Establish a fixed percentage for SID funding for local street reconstruction and apply this policy citywide. We recommend a significant percentage of the funding for local streets be allocated to SIDs. Without this additional source of funding, it is unlikely that for decades the City’s local streets will be brought up to at least fair condition. We recommend the Commission consider a policy that requires 75% of the construction cost for a local street be paid by an SID and the remaining 25% of the cost be paid using street reconstruction funds. This funding split is reflective of the fact that the majority of traffic on local streets is local (i.e., property owner) traffic. As for SIDs, at the percentage recommended above, the City would leverage its existing street reconstruction and curb replacement funds for local streets by four fold, effectively quadrupling the amount of local streets and curbs that could be reconstructed. It is important to note an SID may be created only to fund specific improvements that benefit the properties being assessed. State law governs the creation and use of SID’s and these laws contain provisions for public hearings and for public protest of their creation. Using this proposed policy, property owners could protest out of an SID. If a protest against an SID is sufficient to bar the City from proceeding, we recommend no street reconstruction funds 185 or curb replacement funds be utilized on that street. In such a case, we recommend the City implement a minimal maintenance program. Failed streets that are not repaired in a timely manner place an inordinate maintenance burden at the expense of the rest of the transportation network. NEXT STEPS: Based on the results of this policy discussion, we will return to the Commission with a resolution establishing a local street funding policy. We will also update the CIP as necessary to reflect changes in local street projects resulting from adoption of a local streets funding policy. FISCAL EFFECTS: If the Commission were to adopt the three policies recommended above, and individual lots were to be assessed for an SID based on street frontage, then for typical residential lot with 50 ft. of frontage on a typical local street, the estimated assessment for a street reconstruction would be calculated as follows: [($250/ft.(the estimated construction cost for a local street)/ (2)(lots on each side of the street)] x (50ft)(a typical residential lot frontage on a local street) x (0.75)(the SID % recommended)= $4,688. A 5% SID administration cost would be added resulting in a total assessable cost of approximately $4,922. These costs could be financed over 20 years. At the current estimated interest rate of 4.5%, a typical residence would be assessed approximately $375 per year; equivalent to $31.25/month. In addition, Street and Curb Reconstruction money would provide 25% of the costs of these projects; the portion not funded with SID’s. Other alternatives besides street frontage could be used to calculate assessments. ALTERNATIVES: As suggested by the City Commission. UNRESOLVED ISSUES: Funding policies for collectors, minor arterials and major arterials will also need to be developed. Staff will return to the Commission with suggestions for funding these elements of the transportation system after completion of the TransMap condition assessment project. 186