Street Maintenance District (SMD) assessments are set annually by resolution.  There are currently two SMDs in Billings.  SMD 1 encompasses primarily the downtown area.  SMD 2 is the entire City.  Properties in SMD 1 are also in SMD 2.  The existing rates are not adequate to provide for the operation and maintenance and capital investment necessary to continue providing service at the current level.  Two options to increase rates were presented and discussed at the Council Work Session on May 24, 2016.  Option 1 increases the assessments by 2.3% to keep up with inflationary costs.  Option 2 increases the assessments in SMD 1 by 2.3% and in SMD 2 by 8.4% to increase the service level to contract for snow plowing on local streets. 

The attached resolution specifies the proposed rates under option 1.  An alternate resolution is also attached showing the rates under option 2.  If Council passes option 2, the Street/Traffic Fund and Street Maintenance District Fund budgets will need to be amended to increase contracted services costs by $425,000 in the Street/Traffic Fund budget and add a transfer of $425,000 from the Street Maintenance District Fund to the Street/Traffic Fund budgets.

City Council must hold a public hearing and then may:

• approve the recommended resolution,
• approve the alternate resolution, or;
• not approve either the recommended or alternate resolution.  If Council does not approve a resolution, an amended resolution to establish street maintenance district assessments will need to be considered at a future City Council meeting and adopted no later than the August 8, 2016 Council meeting to be in accordance with state statutes.

The proposed Option 1 rate adjustment would increase an average 10,000 square foot residential lot in SMD 2 from $106.77 per year to $109.23 per year and will generate approximately $167,000 of additional revenue in FY 2017.

Option 2 rate adjustments would increase an average 10,000 square foot residential lot in SMD 2 from $106.77 per year to $115.70 per year and will generate approximately $592,000 of additional revenue in FY 2017.

Staff recommends that a public hearing be held and that Council approves the proposed resolution setting annual street maintenance district assessments for fiscal year 2017.