Review of estimated costs and funding program options for Garnet Street and 168th Avenue Reconstruction project.

Purpose:
The purpose of this case is to review the preliminary estimated costs developed to date for the Garnet Street and 168th Avenue Reconstruction project, and to discuss and receive Council input on the proposed funding program for this project.

Background:
The segment of Garnet Street between 167^th Avenue and a point about 300 feet south of 169^th Lane NW, which measures approximately 1,350 feet in length and 32 feet in width, was originally constructed with bituminous pavement and curbing in 1988.  The segment of 168^th Avenue NW west of Garnet Street, which measures approximately 670 feet in length and 32 feet in width, was constructed at the same time using the same materials and design.
 
Both streets are relatively flat and do not efficiently shed stormwater runoff which has resulted in fairly rapid pavement degradation, especially along the edges of the streets where stormwater collects. It also appears that both streets were constructed with a non-standard pavement section, but as is discussed later, this will be verified prior to completing the Feasibility Report.
 
Both streets were sealcoated in 2006 and currently have a Pavement and Surface Evaluation Rating (PASER) of 1, which ranks them among the worst streets in the City in terms of pavement condition. In fact, large areas of Garnet Street are no longer paved and the City has been filling the non-paved areas with class 5 aggregate to maintain the streets in as passable a condition as practical. And each spring when the ground thaws, the streets become extremely difficult to navigate and maintain due primarily to the poor underlying soils which become unstable when saturated with groundwater.

On February 25^th, Council authorized preparation of a Feasibility Report for reconstructing both 168^th Avenue and Garnet Street by matching the existing alignments and geometrics.  The only differences between the existing and proposed street sections is that the bituminous curb is proposed to be replaced with concrete curb and gutter, and storm sewer is proposed to be added to provide positive drainage. And as was discussed on February 25^th, pedestrian facilities do not currently exist along either Garnet Street or 168^th Avenue but are proposed to be constructed with this project. A 5-foot wide concrete sidewalk is proposed to be constructed along the east side of Garnet Street to connect the existing sidewalk that terminates at the north end of the project to the existing sidewalk along the north side of 167^th Avenue.  A 5-foot wide concrete sidewalk is also proposed along the north side of 168^th Avenue that will connect the proposed Garnet Street sidewalk to the future sidewalk to be constructed with a future phase of the Brookfield development.  The entire sidewalk system then connects to the bituminous trail on the west side of TH 47.

Staff is also proposing to identify estimated costs for constructing sanitary sewer and watermain under both streets in case Council wants to bid these utilities as alternates when bidding the rest of the project. The bids could then be considered by Council to determine if utilities should be constructed with the project in anticipation that abutting property owners will want to connect to city utilities at some time during the design life of the streets, which is currently estimated to be 60 years if the proper subgrade corrections are made and routine maintenance is applied. Staff believes it is important to consider these costs as part of the Feasibility Report since public utilities are typically installed under City streets and adding utilities after a street is reconstructed would require much of the street to be reconstructed again. It may therefore be more cost-effective to construct public utilities with this project, even if the utilities remain unused for a decade or more.
 
Current preliminary cost estimates for the various components of the project including streets, drainage, sanitary sewer, and watermain are shown below.  It should be stressed that these preliminary cost estimates will likely change once additional information is received that will allow staff to complete the Feasibility Report and better determine estimated project costs.
 

Preliminary Estimated Project Costs City Improvement Project 13-10
Street Segment	Street	Drainage	Sanitary	Water	Total
Garnet Street	$653,977.45	$142,425.00	$138,996.00	$142,202.25	$1,077,600.70
168th Avenue	$337,899.39	$48,978.00	$76,281.75	$79,628.40	$542,787.54
Totals	$991,876.84	$191,403.00	$215,277.75	$221,830.65	$1,620,388.24

 
A Geotechnical Evaluation and Report, including several soil borings, must be completed to define the existing pavement sections, groundwater elevations, subgrade and topsoil compositions, and pavement design recommendations.  Also, a proposed funding program must be developed, including proposed funding sources and percentages.
 
In the past, the City has used a mix of funding sources to pay for street maintenance projects including the general levy, bonds, special assessments, and municipal state aid funds. Since a decision is still pending on whether Franchise Fees will be used to help pay for future street reconstruction projects, staff plans to complete the funding section of the Feasibility Report by recommending the standard mix of past funding sources. However, since assessments have yet to be applied to street reconstruction projects, staff would welcome Council input on what percentage to apply to special assessments.  A minimum of 20% must be assessed per State Statute 429, and at the high end the assessment cannot exceed the benefit to the property.  Since benefit can only truly be defined through an appraisal process which adds significant cost to a project, most cities that use assessments to help pay for street reconstruction projects typically apply an assessment rate between 20% and 50%, with most cities landing in the middle at 25% to 40%.
 
Below is a table showing a range of estimated special assessments between 20% and 50% assuming the costs are applied uniformly across the 13 residential properties directly abutting the streets proposed for reconstruction.  As is noted below, these assessment rates were calculated using only project costs related to streets and drainage improvements.  All sanitary sewer and watermain utility improvements would be fully funded through from the utility enterprise funds.
 

Estimated Special Assessment per Residential Property*
20%	30%	40%	50%
$18,204	$27,306	$36,409	$45,511
*Assessments only include street and drainage costs (no utilities).

 
Based on the assessments above, staff is of the opinion that it may be very difficult to justify the benefit to each project as a result of this project based on any of the assessment rates above, even at the minimum of 20%.  The primary reason that the estimated assessment costs are so high is that the abutting lots are large lots so there are fewer lots to share in the costs than there would be in developments with smaller lots and greater densities.

It should be noted that some cities do not assess costs for certain project elements such as sidewalks, so there may be some latitude for reducing project costs that are applicable to assessments. It should be noted that on May 20^th the Public Works Committee will be discussing the framework for developing a Special Assessments Policy for use in applying special assessments to help pay for public improvement projects in the City of Ramsey.  Such a policy would specify how special assessments should be applied based on the project type, property use, size and location, etc.  Other considerations such as assessment deferrals or non-assessable project costs can also be incorporated into the policy.  If a decision is made to develop a Special Assessments Policy, it would likely take some time to complete the policy but this project may be impacted by discussions on the development of such a policy, and vice versa.  Based on discussion at tonights Council meeting, as well as during the May 20th Public Works Committee meeting, staff can further research potential assessment reductions for future discussion purposes.

No notifications are required for this case.

It is likely too late to reconstruct these streets in 2014 so this project will be added to the CIP as a 2015 project.

The project funding program for this project could include a mix of several funding sources including bond proceeds, special assessments, and/or general levy funds. Neither street is a Municipal State Aid Street so MSA funds are not an option for this project. A recommended funding program will be identified within the completed Feasibility Report, and any input received from the City Council will be considered in shaping the funding program.

Staff recommends continuing to work towards completing the Feasibility Report to make sure the City is ready to move forward with this much needed project in the near future.  Completing the Feasibility Report will also allow staff to generate accurate estimated costs to help budget for this much needed project. In order to complete the Feasibility Report in a timely manner, staff is seeking input from Council on a proposed funding program for the project.

The City Council is asked to provide input on the proposed funding program for the reconstruction of Garnet Street and 168^th Avenue, more specifically whether special assessments should be utilized and, if so, what percentage of applicable project costs should be assessed. 

Motion to defer to Public Works Committee to review a possible assessment policy and to analyze the impacts of various levels of assessment to this project.