Agenda - Council - 09/10/2013 - Laserfiche WebLink

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CC Regular Session Meeting Date: 09/10/2013 By: Bruce Westby, Engineering/Public Works Information 7. 3. Title: Consideration of Approving Draft Franchise Agreement & Ordinance Terms and Ordering Public Hearings Background: At the September 3rd City Council workshop, staff presented updated estimated costs and available funding sources for the city's long-term street maintenance program (SMP). The updated estimated annual costs to maintain all 174.1 miles of city streets (includes 32.28 miles MSAS streets) to a Pavement Surface Evaluation and Rating (PASER) system rating of 7 or better, which is a goal identified in the city's strategic plan, is $2.2M for the 5 year period 2014-2018, $2.5M for the 10 year period 2014-2023, and $4.4M for the 60 year period 2014-2073. These costs assume that the typical city street has a life expectancy of 60 years, and that regularly scheduled pavement maintenance treatments will be completed per a maintenance schedule including crack sealing all streets 3 years after initial construction, overlay, and reconstruction operations; concurrent crack sealing and seal coating operations in years 6, 13, 26, 33, 46, and 53; an overlay and edge mill in years 20 and 40; then either a reclaim and repave project or a full reconstruction around year 60, after which the maintenance cycle starts over again. Funding sources for such improvements have traditionally included the use of special assessments (sealcoats and overlays only), MSA allotments, GO bonds, and general levy budgeting. However, these traditional funding sources are becoming less and less reliable due to shrinking budgets and greater public questioning of benefits versus assessment amounts, which can lead to significant project cost increases and delays which then negatively impacts the city's ability to cost-effectively maintain city streets. Therefore, new alternative funding sources were researched. Such funding sources include grants, Public -Private Partnerships, special legislation (such as Street Improvement Districts), and franchise fees. Of these funding sources, only franchise fess provide the reliable, dedicated and renewable funding source which is essential to ensuring that maintenance operations can be applied on a regular schedule to maintain our streets to a PASER rating of 7 as cost-effectively as possible. Following considerable discussion during the workshop, the consensus of Council was to stop using special assessments to fund part of the street maintenance program, and to instead adopt utility franchise fees with our electric and gas utility providers (Anoka Electric, CenterPoint Energy, and Connexus Energy) based on the following terms and conditions. • Ensure that the franchise fees can only be spent on street maintenance program projects and not on other projects. • Include a 5 year sunset on all new Franchise Agreements, which will allow the city to review the fees against actual and projected costs within 5 years so adjustments can be made if needed. • Charge each gas and electric utility a fixed franchise fee amount of $8 per month per meter on commercial, industrial, and residential properties alike. • Develop an equitable rebate program to prevent anyone currently paying an assessment levied with a street improvement project, or who paid their assessment up -front but would otherwise still be paying an assessment, from paying franchise fees on top of their assessment. Attached is a copy of the survey completed by the city in 2011 in which 66% or respondents favored the use of a franchise fee to help pay for the long term maintenance of streets. Notification: