10.1. SR 01-22-2013 - Laserfiche WebLink

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Eli REQUEST FOR ACTION ..� River _ To ITEM NUMBER City Council " 10.2 AGENDA SECTION MEETING DATE PREPARED BY Administration November 19, 2012 Justin Femrite,P.E., City Engineer ITEM DESCRIPTION REVIEWED By Pavement Management Program Funding Options Tim Simon, Finance Director REVIEWED BY Cal Portner, City Administrator ACTION REQUESTED Discuss and consider alternative approaches to funding the city pavement management program. BAC KGROU NDI'D ISCUSSION At the October 8, 2012, City Council Work Session,staff gave an overview of the pavement management program and funding options. The overview explained the program methodology,highlighted existing pavement conditions,and discussed the trending of city street maintenance over the next 40 years. Staff also presented some pros and cons of funding the pavement management program with a fee or general tax approach instead of a private property assessment approach. Council direction was to come back to a future work session further detailing a general tax approach verses a franchise fee approach. An underlying question to the discussion was how to make a change in policy fair for those property owners that have recently paid a street improvement assessment. As detailed at the July work session,81% of Elk River's streets were constructed or rehabilitated within the last 20 years. All of these improvements have been paid for by residents,either through special assessments by property owners fronting the improvements or by new homebuyers through the purchase of their home or lot. Ideally, the most favorable time to consider a different funding option for a pavement management program is when the entire system is 100%new or 100%deteriorated. Neither of these scenarios is likely,but with 81%of our streets less than 20 years old,this may be as close as we can get to a new system. The system's age and the continual challenges associated with the Minn. Stat. 429 assessment process make it an opportune time to consider alternative funding for the program. Analysis of the pavement management program details the need to invest approximately$4.5 million for rehabilitation every other year to sustain the current average pavement condition or$2.25 million annually. Our current Municipal State Aid allocation dedicated to construction/reconstruction is $750,000 per year,which leaves a $1°5 million yearly shortfall. The two long-term alternative approaches previously discussed include a general tax increase or implementation of a franchise fee. Both of these options,if implemented fully,would eliminate need to assess costs directly to the adjacent property owners. General Tax verses Franchise Fee The first option is a general(special) tax levy against all properties in the city. Under this approach,we would propose to generate the$1.5 million through the collection of a tax over all properties in the city. Through this approach, the highest valued properties end up paying the largest share of the costs. PIMEaEa I NATURE '