Staff recommends that the City Council conduct a public hearing and approve the proposed Resolution setting annual street maintenance district assessments for FY26.

Street Maintenance District (SMD) assessments are established annually by resolution. Billings currently operates two SMDs:

• SMD 1: Primarily encompasses the downtown area.
• SMD 2: Encompasses the entire city; properties in SMD 1 are also included in SMD 2. 

These districts fund essential road maintenance and repair activities, including dust control and grading of gravel streets, chip sealing and overlaying, sweeping, snow plowing and removal, maintenance of traffic signal systems and signs, and pavement markings. Current funding levels are insufficient to maintain the existing service standards and support the approved 5-year Capital Improvement Plan, which includes significant infrastructure projects such as street reconstructions and traffic signal installations.  Despite these needs, staff proposes a 0% increase in SMD assessments for FY26.  This decision is based on the expectation that funding for Safe Routes to School projects can be reduced and offset with grant and Transportation Alternatives Program funding.  These adjustments are expected to sustain existing service levels without increasing the financial burden on property owners.

City Council must hold a public hearing and then may:

• Approve the recommended Resolution; or,
• Approve an amended resolution; or, 
• Not approve a 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 to be in accordance with state statutes.

Street Maintenance District assessments generate approximately $17.4M of revenue.  If the proposed Resolution is approved, an average 9,691 square foot residential lot in SMD2 will be assessed $216.25 annually.