Adopt Resolution #19-217 Ordering Assessment Roll and Calling Assessment Hearing for Improvement Project #19-01, Ford Brook Estates Street Reconstructions

Purpose:
The purpose of this case is to adopt Resolution #19-217 ordering preparation of a final assessment roll and calling for an Assessment Hearing at 7 p.m. on October 8, 2019 for Improvement Project #19-01, Ford Brook Estates Street Reconstructions.

Background:
City Improvement Project #19-01, Ford Brook Estates Street Reconstructions, included the reconstruction 180th Lane and Krypton Street in the Ford Brook Estates neighborhood. Maps attached to this case show the general location and scope of the completed improvements.

Original Conditions
Krypton Street and 180th Lane were constructed in 1981 as rural sections with bituminous pavement at a width of 24 feet and measure approximately 860 feet (0.16 miles) in length. Both streets are generally centered within a 66-foot wide right-of-way. Attached is a street segments summary depicting the original conditions including curb type, PASER rating, maintenance history, and pavement section information obtained from ground penetrating radar.

The existing bituminous pavement section ranged between 1.2 and 6.4 inches thick, with a median thickness of 4.3 inches. The existing aggregate base section ranged between 2.4 and 6.8 inches thick, with a median thickness of 4.1 inches. Section thicknesses were obtained using Ground Penetrating Radar (GPR) analysis performed by Braun Intertec in 2017. The original pavement section was built on silty sand and lean clay subgrade materials. Clay subgrade is not good for pavement support, requiring subgrade corrections.

The City annually evaluates and rates the condition of pavement on all City streets using the Pavement Surface Evaluation and Rating (PASER) system. In the summer of 2018, the pavement of the above referenced street segments were rated with PASER ratings of 2 indicating that these streets require complete reconstruction.

The storm sewer system consisted of ditches along both sides of the streets within the right-of-way and drainage and utility easements. Storm runoff was generally carried in ditches to the ditch along TH 47 where it was directed north to Ford Brook.

Municipal utilities (sanitary sewer and watermain) do not serve this neighborhood.

Completed Improvements
The original bituminous pavement and aggregate base sections were removed and hauled off site.  Two-feet of unsuitable existing clay subgrade material was also removed and hauled off site. Geotextile fabric was placed on the bottom of the shaped and compacted subgrade, then drain tile was installed along the outer edges of the fabric.  Two-feet of compacted select granular borrow (sand) was then placed on top of the fabric and drain tile, and the drain tile was connected to a storm sewer structure allowing for positive drainage of the subgrade at low points. Four-inches of imported aggregate base was then placed and compacted on top of the select granular borrow, followed by 3½-inches of new bituminous pavement. The new pavement section provides a 7-ton pavement design, the City standard for residential streets.

Ditches were graded after the pavement section was complete and the necessary driveway culverts were replaced.  The culvert crossing 180th Lane was replaced, and a storm manhole was added to the middle of the culvert crossing so the drain tile could be connected to the storm sewer system.  A swale was also graded across the southeast corner of the property north of 180^th Lane and west of Truck Highway 47 to prevent runoff from the ditch from traversing across the property, which had no drainage easement.
 
Construction was substantially complete by mid-July. The proposed improvements are anticipated to have a serviceable life of 60 years, assuming proactive maintenance operations are performed on a regular basis over the life of the improvements.

Public Comment
Staff conducted a public information meeting for this project on Thursday, November 8, 2018, to present the proposed improvements, estimated costs, funding program, and preliminary project schedule to benefiting property owners, and to receive public input on the project. Property owners from 3 of 8 identified benefiting properties attended. None of the owners objected to the project. Most questions pertained to special assessments and the reasoning behind the School Districts request to expand the cul-de-sac.
 
The residents questioned why the School District asked the City to expand the cul-de-sac now, noting that they see buses stopping on Highway 47 in other locations. The property owners did not formally object to expanding the cul-de-sac, they just didn’t understand why this request was being made now as they said they had asked the School District to pick up and drop off kids in the cul-de-sac years ago when there were far more kids in the neighborhood, yet their request was denied. Now there are fewer kids in the neighborhood and they asked if other options are available.

A property owner in attendance at the Public Hearing in November again questioned why the School District wanted to enlarge the cul-de-sac. Staff has contacted the School District numerous times since and has received the same answer each time. The School District confirms that buses will not be allowed to stop in dedicated turn lanes on Highway 47 and will need to turn onto 180^th Lane to pick up and drop off kids starting this fall, and will therefore need the cul-de-sac expanded so buses can turn around.

Per City Council direction, the cul-de-sac was expanded to accommodate the School District’s request.  Per the City’s Special Assessments Policy, costs to expand streets are ineligible for assessments so the costs to expand the cul-de-sac will be paid in full by the City.

Following Council approval, an Assessment Hearing Notice will be published in the City’s official newspaper on Friday, September 20, 2019.  Assessment Hearing Notices will also be mailed to all benefiting property owners as required per State Statute.
 
Anoka County requires that assessments be certified to the County Auditor by November 15, 2019 for collection on next year’s (2020) taxes.  November 15, 2019 will therefore be the last day that assessed property owners can prepay their special assessments without paying interest.  Conducting the Assessment Hearing at the regular City Council meeting on October 8, 2019, will allow more than 30 days for mailing the required assessment notices to property owners.

Observations:
At the time this report was prepared, construction of this project was complete with only punch list item work remaining and Staff was calculating final construction costs to assist in determining final assessment amounts for use in publishing and mailing notices for the Assessment Hearing.

 

Alternatives:
Alternative #1 – Adopt Resolution #19-217 ordering preparation of a final assessment roll and calling for an Assessment Hearing at 7 p.m. on October 8, 2019 for Improvement Project #19-01, Ford Brook Estates Street Reconstructions.

Alternative #2 – Deny adoption of Resolution #19-217 at this time.

Project Costs
On May 14, 2019, the City Council accepted bids and awarded a construction contract to Asphalt Surface Technologies (ASTECH) of Saint Cloud, Minnesota, per their low bid of $262,503.25.  This bid included $249,901.55 for the base bid, plus $12,601.70 for the alternate bid to expand the cul-de-sac so school buses could pick students up in the cul-de-sac instead of on Highway 47.
 
Street reconstruction project costs include construction costs plus 23% indirect costs for administrative (6%), engineering (15%), finance (1%), and legal (1%) costs.  Upon adding 23% to construction costs, the contracted project cost is $322,879.00.  The engineer’s project cost estimate based on final plans was $244,045.28.  The contracted project cost is $78,833.72, or 32.3 percent, higher than the engineer’s project cost estimate.
 
When preparing engineer’s estimates, Staff applies unit bid prices from projects most recently bid (within the last year or two), and adjusts unit prices based on the latest available information pertaining to inflation. The intent is for the engineer’s estimate to fall within the middle of all bids received, which has been the norm in recent years.  Bids received this year were higher than the engineer’s estimates.  The unit bid prices that were significantly higher on this project were for mobilization ($18,000), bituminous pavement ($12,867), and concrete work ($8,262).  Other cities also experienced higher bid prices this year, particularly on bituminous and concrete pay items.
 
Staff is working to finalize actual construction costs.  Based on quantities known to date, final construction costs will likely be equal to or slightly more than the contract amount.  Final project costs will be reviewed in detail during the Assessment Hearing.
 
These improvements were included in the City’s Capital Improvement Plan for 2018 construction.  Funding sources include a combination of unexpended street reconstruction bond funds, special assessments to benefiting properties, and stormwater utility funds.
 
Special Assessments
The City’s Special Assessments Policy (attached) calls for special assessments to pay for up to 25% of eligible street reconstruction improvement costs. Special assessments are calculated using methods resulting in reasonable and equitable distribution of assessments that are uniform upon the same class of properties within the assessable area. The test for determining the validity of a special assessment is whether the improvement for which the assessment was levied has increased the market value of the property against which the assessment was levied in at least the amount of the assessment.
 
Ramsey’s Special Assessments Policy identifies three optional methods for calculating assessments; Adjusted Front Footage, Area, and Per Lot.  The Feasibility Report for this project identified 8 benefiting residential properties that are proposed to be assessed up to 25-percent of eligible project costs. On all previous residential street reconstruction projects, the Per Lot assessment method was applied so Staff recommends using the Per Lot method for this project.
 
Eight (8) benefiting properties receive special benefit from the improvements and are proposed to be assessed up to 25-percent of eligible project costs. Eligible project costs include all costs except those related to subgrade corrections and public utility improvements. Assessments are proposed to be applied equally across the 8 assessable properties using the “per lot” assessment method as allowed by the adopted Special Assessments Policy.

Over the last four years, special benefit consultation reports have been prepared for each street reconstruction project, and the results of the reports were used to defend final assessment amounts. This year, special benefit consultation reports were not prepared since each report costs around $6,500 and this year’s projects are so similar to other projects that the results from those reports can be directly applied to these.  For this project, the Jarvis Street Reconstruction project report is most applicable, and the range of special benefits identified within that report fell between $7,500 and $8,500.

The City will fund 100% of all project costs not eligible for assessments, including subgrade corrections and expansion of the cul-de-sac per the alternate bid.
 
On November 13, 2018, the City Council adopted a preliminary assessment amount of $3,919.90 per benefiting property.  Based on the contracted project cost, and assuming final construction costs are equal to or slightly higher than the contracted project cost, final assessments for benefiting parcels will increase to approximately $6,600 using 25-percent of eligible project costs per the Special Assessments Policy.  Considering the significance of this increase, Staff will seek verification from the City Council that 25-percent of eligible final project costs should be used to calculate final assessments for this project.  Over the last four years, final assessments have been relatively close to preliminary assessments as adopted by Council.  This by far represents the greatest discrepancy between preliminary and final assessment amounts to date.  Staff therefore wants to make sure we are on the same page with Council before preparing a final assessment roll and publishing and mailing hearing notices based on the final assessment roll.
 
Council will adopt final assessments following public input at the Assessment Hearing on October 8, 2019.

Staff recommends Alternative #1.

Motion to adopt Resolution #19-217 ordering preparation of a final assessment roll and calling for an Assessment Hearing at 7 p.m. on October 8, 2019 for Improvement Project #19-01, Ford Brook Estates Street Reconstructions.