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increase of existing funding sources or implementation of new funding sources to meet the needs <br />of a Pavement Reconstruction Program to maintain streets at a rating of 7. City Engineer <br />Westby stated staff is looking for funding sources that are dedicated and continuous. He <br />presented design assumptions used when estimating the costs, noting the City has an updated <br />database with all of the City's streets so the costs can be applied to each of the various street <br />segments to provide a close estimate. It was noted that pedestrian elements will also be <br />considered. City Engineer Westby described funding options that have been previously used and <br />considered, noting some are not as dependable so new options need to be considered. One <br />option would be to institute a franchise fee on public utilities that use the City's rights -of -way to <br />generate revenues. This would be a tax applied to the private utility entity that would then pass it <br />along to their customers. It would produce a reliable and continuous revenue stream. Other <br />options would be to borrow against and leverage revenues, tolls, private /public partnerships but <br />they are not as dependable or continuous. City Engineer Westby noted the pros and cons for <br />each funding source are listed in staff's report as well as the information prepared by Paul Donna <br />of Northland Securities. He stated assessments are an option but the City needs to prove benefit, <br />it can be contested by the property owner, which costs additional, so it is not the ideal funding <br />source. In addition, the Charter allows residents being assessed to petition against the <br />assessments, which can result in delays or cancellation of a project. Because of that, it is a less <br />stable funding source and increases project costs. Bonding also increases project costs. City <br />Engineer Westby stated information from other municipalities will be presented on August 13, <br />2013, before consideration of the preliminary levy. He presented each of the funding sources <br />identified in the staff report as well as the pros and cons of each. City Engineer Westby <br />indicated staff recommends moving away from assessments and to instead consider a more <br />reliable funding source. <br />Acting Mayor Backous asked the City Council to first address the assumptions. <br />Councilmember Riley questioned Assumption 2 indicating that costs do not go up. <br />City Engineer Westby explained he wanted to make it easier to discuss and provide <br />comparability. <br />Councilmember Riley stated it is nice to have comparability but it is known the costs will <br />increase so when planning for future costs, there needs to be an inflation factor. <br />Acting Mayor Backous agreed and stated it is also a concern of his since it is not realistic to <br />consider costs without an inflation factor. Rather than ratcheting up the funding source, such as <br />franchise fees, he would prefer including an inflation factor. <br />Mr. Donna stated the Council will want to also address the tax impact to the property owners <br />since if the cost is inflated, it will impact taxpayers. He agreed it will be a balancing act. <br />Councilmember Tossey arrived at 6:09 p.m. <br />Councilmember Kuzma stated when this was discussed before, it was thought the figure of $3 <br />million was a little high based on the needs. <br />City Council Work Session / July 9, 2013 <br />Page 4 of 7 <br />