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Home My WebLink About05-18-15 BWS1 Transportation Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Anna Rosenberry, Administrative Services Director Chris Kukulski, City Manager SUBJECT: Fiscal Year 2016 (FY16) Budget Work Session Transportation Issues and Funding MEETING DATE: May 18, 2015 AGENDA ITEM TYPE: Action – Budget Work Session RECOMMENDATION: Listen to staff presentations, ask questions, give direction, as you see fit. BACKGROUND: Attached are a Budget Worksheets and other materials regarding our transportation-related funds. This information has been prepared to assist us in developing the City’s Final Budget, and is based on what is contained in the FY16 City Manager’s Recommended Budget, available at http://www.bozeman.net/Departments-(1)/Finance/Budgets-and-Financials.aspx. Based on feedback during this work session, and the other work sessions held this spring, we intend to prepare the Final Budget resolution. The hearing for adoption of the Final Budget is scheduled for June 22, 2015. TRANSPORTATION RELATED FUNDS: During the Work Session, we will cover the information in the following order: 1. Street Maintenance Fund 2. Gas Tax Fund 3. New – Arterial and Collector District Fund 4. Street Impact Fee Fund 5. Community Transportation Fund 6. Construction funds for Special Improvement Districts/Sidewalk Assessments. • The Recommended budget has an increase of 12.2% for the Street Maintenance Fund. • The Recommended budget proposes creating a new Arterial and Collector District Fund to pay the local share of intersection and street improvements along these major roadways. • The Recommended budget proposes to spend over $8 Million in Street Impact Fees on various street projects. • The Recommended budget includes Special Improvement District projects: o Downtown Streetscapes - $4.5 Million o Wallace Street Reconstruction - $1.2 Million o Sidewalk replacements - $400,000 8 FISCAL EFFECTS: Although the Final Budget adoption has far-reaching fiscal effects, there are no immediate fiscal effects as a result of this work session. The funds discussed tonight have proposed budgets with changes in rates and fees that will affect all property owners. As presented, the City Manager’s Recommended Budget is projected to have the following effects on the typical City resident: Typical Resident: Annual Increase Recommended Budget Street Maintenance Assessment $16.32 Forestry Assessment $0.33 NEW - Arterial Street Assessment $21.54 Property Taxes $96.00 Water Services $14.40 Sewer Services $16.80 Storm Water Services $18.76 Annual Increase $184.15 Monthly Increase 15.35 Attachments: Staff Memo – Transportation Issues, Director Woolard FY16 Budget Worksession - Transportation Report compiled on: May 11, 2015 9 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Craig Woolard, Director of Public Works SUBJECT: FY16 Budget Work Session - Transportation System Funding AGENDA ITEM TYPE: Action – Budget Work Session MEETING DATE: May 18, 2015 KEY ISSUES AND RECOMENDATAIONS: The City of Bozeman transportation system is at a critical point in its development. Sustained rapid growth, years of deferred maintenance and current policies and procedures have resulted in a system that is, in many cases, failing to meet the needs of the community. The funding recommendations outlined in this memorandum are based on the review of the Bozeman’s transportation system presented to the Commission on November 17, 2014. That analysis included a comprehensive analysis of Bozeman’s pavement condition, an evaluation of incomplete road sections and intersections failing to meet level of service standards and a preliminary evaluation of gaps in the bike and pedestrian network. An evaluation of available transportation funding sources and the the funding gaps, or the difference between current funding levels and the funds necessary to preserve existing pavement and complete the arterial and collector network, was also provided in that analysis. Table 1 summarizes Bozeman’s current transportation funding by source. At the bottom of the table, funding sources have been categorized into routine and preventative maintenance, street reconstruction, bike and pedestrian system and completion and expansion of the arterial and collector network. These categories correspond to major deficiencies in Bozeman’s transportation system which were explained in detail in November 17, 2014 policy memorandum. Table 1 – Transportation System Funding Summary 10 Street Funding Sources Approximate Annual Funding Purpose Urban Funds 960,000$ Expansion of major roadways. Urban funds are accumulated to construct major roadway improvement approximately every 3-5 years Gas Tax Fund 660,000$ Routine and preventative maintenance activities Chip seal and mill and overaly funds 400,000$ Routine "pothole" funds 260,000$ CTEP and TA funds 225,000$ Last year of this program to improve pedestrian and bike infrastructure TA Funds 100,000$ Estimate for new competitive TA program Street Impact fees 1,200,000$ FY15 estimate funds capactity expanding portion of arterials and collector network. $~10,000,000 Approximate balance in the transportation impact fee fund Street Maintenance District Captial Funds Street Maintenance Fund Reconstruction Fund (SMRF)800,000$ Street and curb reconstruction as a result of deferred maintenance. SMRF funds are leveraged against local SID funds for leveraged amount at 75 SID /25 SMRF for local 3,200,000$ leveraged amount at 50 SID/50 SMRF for minor collector 1,600,000$ leveraged amount at 15 SID/85 SMRF for major collector 941,176$ leveraged amount at 0 SID/100 SMRF for arterial 800,000$ Street Maintenance Fund Curb Replacement Fund 50,000$ Street Maintenance Fund Concrete Repair Fund 50,000$ Street Maintenance Fund Preventative Maintenance Fund 200,000$ New funding added last budget cycle for preventative maintenance Community Transportation Fund $530,000 Previous transportation bond rollover for "non-growth" match Developer Exactions project specific Annual Transportation Funding Summary by Category Total Description Routine and Preventative Maintenance $960,000 sum of all funds allocated to routine and preventative maintenance Street Reconstruction $800,000 - $3,200,000 street reconstruction funding leveraged with SIDs Bike and pedestrian system $100,000 estimate of annual TA allocation - estimate Completion and expansion of the aterial and collector network $1,490,000 - $2,690,000 variable depending upon payment of impact fees. Includes urban funds 11 Table 2 provides a simple gap analysis between the existing level of funding and the overall funding need based upon condition assessment data, transportation plans and recent construction costs. Table 2 - Funding Gap Analysis TRANSPORTATION FUNDING RECOMMENDATIONS: There are a number of policy and practice changes that could help address the deficiencies identified in Bozeman’s transportation system. However, the need for additional resources to address the funding gap outlined in Table 2 are critical for success. The FY16 budget proposal contains recommendation for closing the routine and preventative maintenance as well as a funding mechanism to allow for completion of the arterial and collector network. These recommendations are based on the following analysis. Street Reconstruction – Street Maintenance Fund and Special Improvement Districts. Continue with the existing street reconstruction funding level and policy. Based on the condition assessment, Commission Policy 4507 will effectively leverage dedicated reconstruction funding to address Bozeman’s backlog of failed streets over the next 15 years. Should residents routinely protest out of the proposed SID’s, then the policy may need to be reevaluated. Staff recommends no change to this policy or level of funding. The project that we plan to address in the coming fiscal year is the reconstruction of North Wallace Avenue. Routine and Preventative Maintenance – Street Maintenance Fund Failure to adequately maintain our existing streets will undoubtedly result in further deterioration and ultimately increase the number of streets requiring reconstruction. Staff have already implemented new approaches to routine maintenance (e.g., the use of new spray patch technology for pothole repair, purchase of new patching equipment for winter use). But ultimately the Commission will need to consider adding capital for preventative maintenance. We recommend, based on a condition assessment and the use of best industry practice to develop a maintenance schedule, that an additional $1.0 million annually be added to the street maintenance assessment for preventative maintenance. We are recommending that the existing street assessment be increased over a three year period to phase-in the additional $1 Million. The Recommended budget includes the first step, an increase of $290,000 for FY16. These funds will be used primarily for contracted services to complete chip seal and mill and overlay projects, based on condition assessment data, to extend the life of the existing roadways. Based on the current costs of these projects (i.e., chip seal projects currently cost approximately $ 0.29/ft2 or $50,000/mile of local street and mill and over lay projects currently cost Transportation System Activity Funding Need Current Funding Routine and Preventative Maintenance $2.0 million per year $960,000 per year Street Reconstruction $19 million total $800,000 - $3,200,000 per year Complete existing arterial and collector network $60 million total $1,490,000 - $2,690,000 per year ~10 million in impact fees Address gaps in bike and pedestrian network $ 200,000 - ??$100,000 12 approximately $ 1.26/ft2 or $220,000/mile of local street.), these additional maintenance funds would allow for effective preservation of several miles of streets per year. Phasing-in the increase will smooth the effect for assessment-payers and will allow staff to ramp-up the scale of contracts and projects over the 3 year period. Completion of the Arterial and Collector Network – Arterial and Collector District Assessment Efficient operation of Bozeman’s transportation system requires a backbone of complete collector and arterial streets. Bozeman’s Transportation Master Plan specifies a network of collector and arterial streets to provide a high level of service throughout the City. However, in practice these roadways are constructed in a piecemeal fashion that results in an incomplete network that delays diverts traffic. Bozeman’s arterial and collector network is currently constructed primarily using a combination of developer contribution and impact fees (Bond funds have been available in the past but no current transportation bond exists). A private development is proposed that fronts one or more collector or arterial streets. Using the City’s current approach, the developer would construct some or all of the arterial or collector street as part of the conditions of approval for the development. Impact fees would be applied to cover the “capacity expanding” portion of the roadway. The developer would be financially responsible for the “local share”. In other words, the developer would be financially responsible for building a standard two lane residential street complete with curb and gutter and impact fees would be applied to cover the difference between that cost and the cost for constructing the additional lanes and traffic control devices required on collector and arterial roadways. This funding system functionally places the planning and scheduling of construction in the hands of the developer resulting in an arterial and collector network that is constructed based on the schedule of the private development, not on the overall needs of the transportation system. In addition, this approach results in piecemeal construction of the network and often requires developers to correct deficiencies in the arterial and collector system for which they are only partially responsible. Overall costs to the community increase as a result. To address gaps in the arterial and collector network, Staff proposes to create a working “non-growth share” capital fund to augment impact fees. This could be done through existing “Special District” statutes that would levy an annual assessment on all property owners. Capitalizing a non-growth share fund would provide the funding to plan and construct a functionally complete street independent of development. No change in the existing impact fee system is proposed. Developers would pay their local share when they develop and those funds would be used to capitalize the next project. In effect, the City would finance the local share of the project cost in advance of development. Prioritization of these arterial and collector projects would be based on the results of the transportation master plan and the use of transportation system model currently under development by the Western Transportation Institute (WTI). Use of routine modelling would 13 ensure that the “non-growth” and “impact fee” funds would be utilized on projects with maximum overall network benefit rather than projects proximate to the latest development. Staff recommends that an additional $2.0 million annually be allocated to a working “non-growth share” capital fund to be used to complete construction of the arterial and collector network. Staff is recommending that the $2 million be phased-in over the next three years. The budget proposal outlines how these funds would be allocated based on our current needs (Baxter and Davis Intersection project.) A full Capital Improvement Plan for the fund will be established this fall – and will work in concert with the Street Impact Fee schedule to more quickly complete necessary projects. . Development of a system-wide transportation model that is routinely updated will allow the City to more fully evaluate the impacts of development and better allocate capital funds for improvements would occur concurrently with the update of the transportation master plan (currently in progress) and be funded through a combination of impact fees, non-growth share capital and potentially developer fees. Staff recognizes that a complete, integrated and well maintained bike, pedestrian and public transportation system will result in reduced demand on the transportation system and reduce the need for more expensive transportation system improvements. Although creation of the non- growth share capital fund proposed herein does not specifically identify funds for addressing these alternative transportation options, we suggest that the streets and sidewalks adjacent to City-park properties be called out in the creation of the Fund so that the “developer share” of the project be funded. These critical pathways to often-used recreation facilities will improve the system for pedestrian and bicycle users. FISCAL EFFECTS: The FY16 Recommended budget includes Street Maintenance District assessments that increase 12.2%; of that amount, 8.2% is directly attributed to the increased Pavement Maintenance money (phase in of $1M). Assessments for a typical residential property owner will increase by $16.32 for the year. The FY16 Recommended budget includes the new Arterial and Collector Construction District assessments. These assessments will by $21.54 for the typical residential owner. (This equates to approximately 16% of the current street maintenance district assessment.) For property owners living within the boundaries of a Special Improvement District, special assessments will vary depending on the cost of project improvements and the size of the individual property. Estimates of cost will be provided at the time of district creation. ALTERNATIVES: Funding alternatives are limited. Cuts could be made in the General Fund to make more room for transportation project funding. Street Impact Fees could potentially be increased to account for the costs of missing arterial and collector roadways. Pavement maintenance could continue to be delayed. UNRESOLVED ISSUES: Commission Resolution 4498 (December 16, 2013) restricted the use of impact fees for intersection upgrades to 60% of the intersection costs (the “growth” related 14 share). No funding source was specified for the 40% “non-growth” related share. Creation of a “non-growth” capital fund may eliminate the need a specified split in intersection funding. 15 FY16 Budget Work Session ‐ Transportation May 18, 2015 Street Maintenance Fund – FY16 Budget Worksheet The Streets Department information begins on page 143 of the City Manager’s Recommended Budget document. Revenue The City Manager’s (CM) Recommended Budget includes a proposed assessment increase for FY16, totaling 12.2%.  4% General rate increase  8.2% Added maintenance rate increase We are anticipating an increase in revenues from “customer growth” this year of 2%. Street Assessments are based on square footage of lots. On the following page you will find a “5-Year Projection” of revenues and expenditures for the Street Maintenance Fund. We have utilized these long-range financial projections to give us an indication of what the current program costs, with small inflationary increases, and approved capital projects that will require in assessment increases. Expenditures The following 5-Year Projection also describes the expenditures for Street Maintenance Fund. Personnel Costs: $1,324,551  Due to our existing labor contract, we expect to see total personnel costs remain somewhat flat in the fund, over the next 5 years. The existing labor contract brings new positions on board at a lower rate than current employees, due to the actual labor-market conditions for the work. Actual savings will be dependent on employee turnover. Attached, you will also find a more detailed listing of Street Maintenance Fund operating and capital expenditures titled “FY16 Operating Budget”. The budget, excluding personnel, totals $3.7 Million this year. Notable items include:  Operating Expenditures: $2,197,184 (including pavement maintenance) o Road Supplies - $99,000 o Vehicle Supplies - $42,500 o Gas & Oil - $140,000 o Repair & Maintenance of Equipment - $187,500 o Electricity for non-SID street lighting & traffic signals - $58,000 o Transfer to Construction Fund for SCR07: N. Wallace Reconstruction (Lamme to Tamarack) - $626,500 o South 8th Intercap Loan payments - $133,676  Capital Expenditures: $1,535,637 16 FY16 Budget Work Session ‐ Transportation May 18, 2015 o STR43 – Self Propelled, Self-Loading Asphalt Milling Machine With Trailer - $375,000 o STR47 – Storage building replacement options and designs at vehicle maintenance shop site - $50,000 o GF199 – Professional Building remodel - $109,139 o STR30 – Medians & boulevard maintenance - $50,000 o STR52 – Street Improvements – Chip Seal - $200,000 o Preventative Maintenance - $287,998 – NEW! o STR22 & 34 – Grader and Sweeper leases - $51,146 o SCR01 – Annual curb replacement and concrete repair program - $60,000 o SCR09 – S. Church (Story to Babcock) - $200,000 o STR44 – Truck to replace #3081 - $40,000 o STR20 – Bike path improvements as recommended by BABAB - $25,000 17 Date: 5/11/2015FY16 Operating Budget FY16 CM RECOMMENDED BUDGET STREET MAINTENANCE FUND DESCRIPTION FY16 CM RECOMMENDED BUDGET ADMINISTRATIVE OVERHEAD $192,414.00 ADVERTISING $3,000.00 BLD:BUILDINGS+BLDG DESIGN $159,139.00 BOOKS & REFERENCE MTRLS $700.00 CHEMICALS $11,500.00 CLOTHING & UNIFORMS $7,700.00 COMPUTER SUPPLIES $5,960.00 COMPUTERS & SERVERS < $5K $6,000.00 CONSULTANTS & PROF SERV $60,800.00 CONTRACTORS $73,000.00 DUES & CERTIFICATIONS $1,430.00 ELECTRICITY $81,700.00 GASOLINE AND OIL $140,000.00 GENERAL $162,780.00 IMP:INFRASTRUCTURE+IMPROV $822,998.00 IN-STATE $5,400.00 INSURANCE $15,000.00 INTEREST $16,851.00 INTERNET $21,504.00 M&E:MACH+EQUIP/HEAVY TRUK $485,000.00 MAINTENANCE CONTRACTS $25,205.00 MEDICAL SERVICES $2,000.00 OFFICE SUPPLIES $1,800.00 OUT-OF-STATE $10,500.00 POSTAGE $8,250.00 PRINCIPAL $167,971.00 REFUSE DISPOSAL $14,500.00 RENTS & LEASES $12,800.00 REPAIR & MAINT - OTHER $11,000.00 REPAIR & MAINT- BUILDINGS $5,500.00 REPAIR & MAINT- EQUIPMENT $187,500.00 ROAD SUPPLIES $99,000.00 SHIPPING & HANDLING $700.00 SMALL EQUIPMENT AND TOOLS $27,100.00 STORM WATER $125.00 STREET SIGN REPAIR $7,000.00 SUBSCRIPTIONS $800.00 TELEPHONE $8,600.00 TRANSFERS TO OTHER FUNDS $626,500.00 VEH MAINT FUND ALLOCATION $121,094.00 VEH:AUTOS + LIGHT TRUCKS $68,500.00 VEHICLE SUPPLIES $42,500.00 WATER SERVICE $11,000.00 TOTAL $3,732,821.00 18 FY16 Budget Work Session ‐ Transportation May 18, 2015 Gas Tax Fund – FY16 Budget Worksheet Revenue The main revenue for this fund is the City’s share of the State Gas Tax. For FY16, the estimate is $658,500. $3,900 is also budgeted for interest income. Expenditures Operating ‐ $229,500  Road Supplies ‐ $133,500  General Supplies ‐ $81,000  Contracted Services ‐ $15,000 Capital ‐ $892,000  Chip Seal, Mill & Overlay Projects ‐ $330,000  Pedestrian Ramps – ADA ‐ $25,000  Thermoplastic Lane Marking Projects ‐ $25,000  Curb, Gutter and Sidewalk Replacement Program ‐ $50,000  STR51 – Mill & Overlay Projects ‐ $462,000 19 FY16 Budget Work Session ‐ Transportation May 18, 2015 NEW! Arterial & Collector District Fund – FY16 Budget Worksheet The FY16 City Manager Recommended budget includes a new Street Fund – Arterial & Collector District Fund. This fund will be used to collect revenue for the local share of street capital projects along the major roadways, including intersections and the city portion of projects along city‐owned parks. Revenue Revenues consist solely of additional Street Assessments, projected to be $575,996 for FY16. $425,000 will be transferred to the fund before the end of FY15 to cover the remaining capital expenditures for CIP project SIF42 (described below). Expenditures Capital ‐ $1,000,996  Added – Local Share Street Arterial Construction ‐ $575,996  SIF42: Baxter & Davis Intersection – City Commission approved increase to FY15 capital item (this portion will occur in FY16) ‐ $425,000 20 Arterial & Collector District - 5 year Projection FY2016 Budget Preparation BUDGETED Projected Projected Projected Projected Customer Increase - sq ftg 200,520,986 n/a 3% 2% 2% 2%Rate Increase - General n/a 90% 90% 4% 4% General Street Maintenance FY16 FY17 FY18 FY19 FY20 Beginning Fund Balance - Projected 425,000 4 742,236 2,431,812 4,524,209 Estimated Revenues: 0.002873 Assessments: Undesignated 576,000 1,127,232 2,184,576 2,317,398 2,458,296 Total Estimated Revenues:576,000 1,127,232 2,184,576 2,317,398 2,458,296 Proposed Expenditures:Existing Personnel - - - - - Operations - - - - - Debt Service, incl Intercap - - - - - Approved CIP *with adjustments 1,000,996 385,000 495,000 225,000 225,000 Total Proposed Expenditures:1,000,996 385,000 495,000 225,000 225,000 Ending Fund Balance - Projected 4 742,236 2,431,812 4,524,209 6,757,505 Total Annual Assessments: Small Lot, 5,000 sq ft.14.36$ 27.29$ 51.85$ 53.92$ 56.08$ Average Lot, 7,500 sq ft.21.54$ 40.93$ 77.77$ 80.88$ 84.12$ Large Lot, 10,000 sq ft.28.73$ 54.58$ 103.70$ 107.85$ 112.16$ A. Rosenberry 5/11/2015 21 FY16 Budget Work Session ‐ Transportation May 18, 2015 Street Impact Fee Fund – FY16 Budget Worksheet Revenue The Street Impact Fee Fund’s revenue consists mainly of Impact Fee revenue. We estimate this revenue based on a 5 year average. It is difficult to accurately predict these revenues, since they are based mainly on the building occurring in the community. Revenues fluctuats based on a variety of factors related to building type and size. FY16 is estimated to collect $2,236,375 in impact fees, with $94,500 in interest income. Expenditures Expenditures will be supported by the large existing fund balance that has accumulated in the Fund. We expect to begin FY16 with over $10 million accumulated; there are many critical projects that we hope to complete over the next year. Capital ‐ $8,825,640  SIF01 – Right‐of‐Way Acquisition ‐ $132,000  SIF40 – Broadway & Main Reimbursement to Town Pump ‐ $660,000  SIF48 – Cottonwood (Fallon to Alpha) ‐ $2,543,640  SIF49 – Oak Street (15th to 19th) ‐ $330,000  SIF50 – Laurel Parkway (Durston to Babcock) ‐ $700,000  SIF52 – Kagy (Willson to 19th) – Engineering Services ‐ $858,000  SIF53 – Oak (L to Cottonwood) – Engineering Services ‐ $500,000  SIF54 – Ferguson (Baxter to Oak) ‐ $900,000  SIF59 – Durston (Fowler to West City Limit) – Engineering Services ‐ $265,000  SIF63 – Cottonwood (Fallon to Baxter) – Engineering Services ‐ $250,000  SIF64 – Durston (West City Limit to Cottonwood) ‐ $1,012,000  SIF42 – Baxter Davis Intersection – Commission approved increased to FY15 project (this portion to occur in FY16) ‐ $675,000 $1,208,135 $1,090,715 $2,480,576 $2,934,550 $3,615,098 $600,000 $600,000 $921,000 $921,000 $1,872,769 FY11 FY12 FY13 FY14 FY15 Street Impact Fees Budgeted Revenues Actual Revenues 22 FY16 Budget Work Session ‐ Transportation May 18, 2015 Community Transportation Fund – FY16 Budget Worksheet The Community Transportation Fund houses the CTEP Grant Revenue and corresponding Capital Improvement Projects. This was also the fund that accumulated the 5‐mill levy dollars in FY15. FY16 will be the last year for the CTEP program. We also do not anticipate collecting the 5‐mill levy; instead, we are recommending the creation of the Arterial & Collector District. Revenue FY16 Grant revenues are estimated to be $239,548 for the last year of the CTEP program. Expenditures Capital ‐ $239,548  CT010 – Shared‐Use Path – N. 19th Ave (Baxter to Valley Center) ‐ $100,000  CT011 – Deficient Curbs and Crosswalks ‐ $139,548 23 FY16 Budget Work Session ‐ Transportation May 18, 2015 Street Construction Funds – FY16 Budget Worksheet The Construction Funds for Street projects in FY16 will contain 3 Capital Improvement Projects, each with different funding methods. Budgets contain full revenue sources and full spending on the project. Revenue  SCR07: N. Wallace – 50% Revolving Fund Loan for Special Improvement District (SID) ‐ $626,500; 50% Street & Curb Reconstruction Funded (Transfer in from Street Mtc. District Fund ) ‐$626,500 ‐ $1,253,000 total  Intercap Loan for FY16 Sidewalk Program ‐ $400,000  Bond Sale for FY16 Downtown Side‐street Project ‐ $4,500,000 Expenditures  SCR07: N. Wallace (Lamme to Tamarack) ‐ $1,253,000  FY16: Sidewalk Program ‐ $400,000  FY16: Downtown Side‐street Project ‐$4,500,000 24