Agenda - Council Work Session - 08/27/2013

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and /or configuration of lanes; traffic control measures; pavement material; etc.) or roadway type (urban vs. rural). 2. No costs are included for the addition of sidewalks and /or pathways along reconstructed streets (although this will be discussed at a later date as addressed earlier). 3. Costs are primarily shown as 2013 costs for ease of comparison, although construction inflation costs can easily be considered by applying a 5% per year inflation factor based on the current MnDOT recommendation for street improvement projects. 4. A minimum PASER rating of 7 continues to be used as the target rating for our long -term street maintenance and reconstruction program. If this rating changes it would impact costs due to decreased /increased maintenance costs and life expectancies for streets. Based on the most recent design assumptions and estimated unit costs identified above, staff estimates the required annual cost will be about $4,368,000 to fund the city's long -term street maintenance and reconstruction program (SMP) to maintain a Pavement Surface Evaluation and Rating (PASER) system rating of 7 or better on all 174.1 miles of Aid city streets, including non -MSA and MSA streets. This annual cost was determined based on an assumed 60 -year life - expectancy for a typical city street and accounts for all costs required to maintain and reconstruct all streets at the end of their expected 60 -year life span, excluding initial construction costs. The updated estimated total cost to maintain all 174.1 miles of city streets over the 5 year period from 2014 through 2018 is $11,011,879, which equates to an annual cost of $2,202,376. The estimated cost to maintain and reconstruct all city streets as needed during the 10 year period from 2014 through 2023 total $25,247,367, which equates to an annual cost of $2,524,737. Therefore, unless existing funding sources are increased or new funding sources are identified and implemented, the city will not be able to maintain our streets to the desired level and our streets will continue to degrade and fall further into disrepair. Staff does not intend to discuss costs for adding sidewalks and /or pathways to existing streets at the time they are reconstructed, during this worksession. However, staff does plan to develop a draft policy for eventual Council consideration to address the current lack of direction related to the addition of sidewalks and /or pathways along reconstructed streets as was briefly discussed at the Public Works Committee meeting on Tuesday, May 22nd. The draft policy will likely reflect the city's current sidewalk and pathway policy for new street construction. Of course, the draft policy language will first be discussed with the Public Works Committee before presenting to Council. Funding Options - Staff has researched alternative financing options that would allow the city to adequately fund our long -term street maintenance and reconstruction program needs as discussed above. Ideally, funding sources should be dedicated, dependable, and secure. In addition, any funding source should be viewed by taxpayers as being reasonably beneficial, equitable and transparent. Numerous funding options are currently available to cities to fund their long -term street maintenance and reconstruction programs. In recent years, traditional funding options for street improvement projects have included annual budgeting through the general levy, purchasing General Obligation (GO) bonds on a project -by- project basis, applying funds from annual Municipal State Aid construction and maintenance allotments provided through MnDOT, and applying special assessments as allowed under Minnesota Statute Chapter 429. However, each of these options are becoming less and less effective and favorable as a means of providing dedicated, dependable and secure funding over the long term because local agencies are receiving fewer dollars these days from state and federal agencies, and since levies continue to shrink for various reasons. Many cities are now exploring new funding options for long -term street maintenance and reconstruction programs. Such options include the increased pursuit of grant funding, the adoption of franchise fees, and the application of special legislation such as the recently proposed street improvement districts (this legislation was not passed so it is not an option at this time). Of these options, only franchise fees would provide a dedicated, dependable, and secure funding source to help fund our street maintenance program in the years ahead. This funding source is rapidly gaining traction and is being adopted by more and more cities across the state. Franchise fees, which could also be called franchise taxes, are simply fees charged to private utilities that benefit financially from using public right -of -ways to conduct their business. This fee or tax is then typically passed along to the consumer in the utility