Minutes - Public Works Committee - 02/15/2005

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COMMITTEE BUSINESS Case #1: Review Street Maintenance Program Projected Future Costs City Engineer Jankowski indicated the 2005 street maintenance program was presented at the January meeting of the Public Works Committee. At that meeting the Committee requested a review of the financing required for future year programs. Attached to this case is the anticipated schedule for future programs through the year 2011 which includes each segment of the City's 154 miles of paved streets. He reviewed the anticipated project costs and funding necessary to finance this program. He explained the first two columns in the anticipated costs represent the total project costs, including overhead costs of approximately 20%, for the two major types of maintenance, which include sealcoats and bituminous overlays. These costs are estimated at $0.80 and $4.10 per square yard respectively. The column labeled "City" represents the amount required each year from the City general fund to support the program, which is equal to the revenue obtained through special assessments since half of the total costs are assessed. Two additional funding sources are available to fund this program. Municipal State Aid Funds (MSA) are available for maintenance projects undertaken on MSA streets, and developer escrow have been set aside to defray the cost of the first sealcoating following the construction of a street. City Engineer Jankowski explained in 2004 the City has budgeted $300,000 for this program which was an increase over $250,000 in 2003 when the City needed to reduce budgets to compensate for the reduction in state aid. Although the City's share of this program averages approximately $243,000 annually over the next six years, the projected expenditures for 2006 and 2007 are roughly $100,000 higher than this average. The reason for this variation in annual expenses associated with this program is due primarily to the fact that new street construction was extremely high during the six year period between 1978 and 1983 when nearly 40% of the current street inventory was paved. He explained this grouping of streets has been requiring the more expensive bituminous overlay maintenance over the past several years. It can be observed that future annual costs will be decreasing as the needs of these older streets are satisfied. However, over the last several years a number of measures had been undertaken to provide for this needed funding including the lengthening of sealcoating intervals and the deferral of some overlays. In addition, funding from all designated MSA streets have been programmed for MSA funding even when such streets have similar numbers of benefited properties as neighboring non- MSA streets. City Engineer Jankowski advised the projected six-year program continues to employ these same techniques, however, the streets projected for overlays in 2006 and 2007 do not appear to be capable of being deferred to a later year. If it is desired to cap the annual program at $300,000 it would be possible to defer some of the 2007 sealcoats to 2008. However, the 2006 program does not allow for this flexibility since the program contains few sealcoats that are not financed by developer escrows or MSA funding. He advised one alternative toward achieving a budget amount equal to the current allocation would be to increase the annual City allocation to this program in 2006 by $60,000 and defer some of the 2007 sealcoats until 2008. Another alternative might be to investigate the use of a portion of the overhead costs to increase the size of the program. Currently 17% of the actual project construction costs are added to determine the total project costs that are assessed. In addition, 5% for contingencies are included in the costs Public Works Committee/February 15, 2005 Page 2 of 8