Agenda - Council Work Session - 11/17/2009

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..J CITY COUNCIL WORK SESSION Topic Report: Street Reconstruction Policy By: Tim Himmer, City Engineer Background: The concept of developing an assessment policy for street reconstruction has been talked about numerous times over the past year. The discussions really escalated with the advancement of the Andrie Street/164th Lane State Aid (MSA) improvement project last spring. The only existing City street assessment policy pertains specifically to the Street Maintenance Program (SMP); where overlays are assessed at a rate of fifty percent (50%) and sealcoats are being phased out from a fifty percent (50%) rate through the year 2014 (29% in 2010). The purpose ofthis case is to receive direction on the development of a policy for the assessment of street reconstruction projects. A majority of the discussion related to this matter has leaned towards the use of additional revenues, and to get away from one time assessments. Doing so would most likely require the levying of additional taxes, but it could also eliminate or greatly reduce the amount of projects that are counter-petitioned due to cost factors (assessments) to the residents. Advancement of this policy will establish a more concrete funding mechanism, and allow for more consistent resident interaction on future street improvement projects. Currently the City generates approximately $900,000 per year in assessments and other funding sources (MSA, general fund) for the SMP. This dollar amount primarily deals with maintenance activities only (overlays and sealcoats), but once total reconstructions become necessary this amount will increase by about three to four times as much to approximately $3,150,000 per year. Offsetting this amount with approximately $1,000,000 in MSA contribution leaves a budget gap of approximately $2,150,000 that would need to be financed in some fashion. If this gap were to be filled by the general fund alone it would equate to an additional tax of $235 per year per parcel. Utilizing the general fund alone to offset these costs leads to a few concerns and topics of discussion: 1. Tax exempt parcels would receive benefit without any contribution. 2. The City would not be ableto issue improvement bonds unless a minimum of20% of the project is assessed, thereby eliminating a potential funding source. 3. How would levy limits affect this process? 4. The loss of $300,000 per year in TIF money (in 2013) that is currently being used to offset the general fund contribution.