PUBLIC HEARING: Adopt Resolution #17-02-044 Accepting Feasibility Report and Ordering Plans and Specifications for Improvement Project #17-00, Sunwood Drive Reconstruction

Purpose:
The purpose of this case is to conduct a Public Hearing and adopt Resolution #17-02-044 accepting the Feasibility Report and ordering Plans and Specifications for Improvement Project #17-00, Sunwood Drive Reconstruction.

Background:
City Improvement Project 17-00 proposes to reconstruct the segment of Sunwood Drive between Ramsey Boulevard/County State Aid Highway (CSAH) 56 and Bunker Lake Boulevard /County Road 116 which is approximately 3,050 linear feet (0.58 miles) in length.  A map showing the scope of the proposed improvements is included as Figure 1 in Appendix A of the attached Feasibility Report.
 
City staff evaluates and rates the pavement condition of all city streets on an annual basis using the Pavement and Surface Evaluation Rating (PASER) system.  In the fall of 2016, this segment of Sunwood Drive received PASER ratings of 3 to 4 which means the pavement is in very poor condition and past the point of applying mill and overlay improvements. Pictures of this street segment are located in Appendix A of the attached Feasibility Report.
 
Existing Conditions
Based on record plans, this segment of Sunwood Drive was constructed in 1996 using B618 concrete curb and gutter at a consistent width of 40 feet from face-of-curb to face-of-curb, centered within an 80 foot wide right-of-way.  Record plans show that 3½ inches of bituminous pavement was constructed over 5 inches class 5 aggregate base, but based on recently completed soil borings and pavement corings, an average of about 4¾ inches of bituminous pavement exists along the corridor.  Parking lanes are delineated along both sides of the street using 4 inch wide white striping.  A concrete storm sewer system also exists consisting of numerous catch basins which drain runoff from the street to adjacent low-lying areas through concrete storm sewer pipes.
 
A total of four pavement corings were completed by WSB and Associates (WSB) to assist with the preparation of this report.  In addition, eleven soil borings were completed by Northern Technologies, Inc. (NTI).  Both firms offered pavement design recommendations which were considered and incorporated to varying degrees within the pavement design outlined in the Feasibility Report. Copies of WSB’s and NTI’s reports are included in Appendix D of the Feasibility Report.
 
Proposed Improvements
Damaged sections of existing concrete curb and gutter will be removed and replaced, including the concrete cross gutters at driveways and intersections which help facilitate drainage to prevent pockets of standing water, which then freeze in the winter resulting in unsafe conditions for drivers and pedestrians.
 
The existing bituminous pavement will be reconstructed using a process called Stabilized Full Depth Reclamation (SFDR).  The SFDR process would include milling the top 3 inches of existing bituminous pavement and disposing of the millings off site.  The remaining 1¾ inches of existing bituminous pavement will then be reclaimed (ground up and mixed) along with about 4 inches of existing class 5 aggregate base.  Approximately 1 inch of reclaimed material will need to be removed from site, then an asphalt emulsion will be mixed into the remaining reclaim material.  This stabilized reclaim material will be shaped and compacted into a 5 inch lift, then 4 inches of new bituminous pavement will be placed on top of the compacted stabilized reclaim material. This new pavement section will result in a 10-ton pavement design meeting current State Aid pavement design standards.
 
The existing storm sewer system is in good condition and based on preliminary review appears to meet all applicable current State Aid design standards meaning no improvements are proposed, other than casting adjustments as needed.
 
An off-street 10 foot bituminous bike trail exists along the north side of Sunwood Drive which is in relatively good condition so no improvements are proposed to the trail as part of this project.
 
Estimated Costs
The engineer’s opinion of probable costs for completing the proposed improvements on Sunwood Drive as outlined in the Feasibility Report is $607,000.  Estimated costs include 23% indirect costs for administrative, engineering, finance and legal costs.  A summary of the engineer’s opinion of probable costs is included in Appendix B of the Feasibility Report.
 
Funding Sources
The improvements are proposed to be funded using a combination of Street Reconstruction and Overlay Program (SROP) bond funds, stormwater utility funds, and special assessments to benefiting properties.  The majority of the proposed improvements will be funded using SROP bond funds, which will be paid back over a 10 year term using the general fund.  This cost is estimated at $447,950 in the Feasibility Report.  Stormwater utility funds will pay for required storm sewer improvements estimated to cost $7,300.  Special assessments are proposed to fund 25% of eligible construction costs totaling $151,750 as per the City’s adopted Special Assessments Policy.  A total of 9 parcels have been identified as receiving special benefit from the improvements. These parcels are identified in the preliminary Assessment Map and Roll in Appendix C of the Feasibility Report.
 
Special Assessments
When special assessments are proposed to pay for all or a portion of the cost of an improvement, the objective is to choose an assessment method which will result in a reasonable, fair and equitable assessment that is uniform upon the same class of property within the assessed area.  Per the City’s adopted Special Assessments Policy, staff recommends using special assessments be pay for 25% of eligible improvement costs which totals $151,750.  This amount must then be distributed across the 9 parcels which staff has identified as benefiting properties. In doing so, it is important to recall that 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.
 
The Special Assessments Policy identifies three optional methods for assigning assessments.  The 9 identified benefiting properties are zoned industrial (E1 or E2). Only two assessment methods are recommended for assessing industrial parcels, these being the “adjusted front footage” and “area” methods.  Staff completed a cursory review of both methods as they would be applied in their current context within the policy which showed that the adjusted front footage method results in less variance between assessments ($9K - $40K), whereas applying the area method results in assessments that are more variable ($3K - $42K).  Based on the geometry of the assessable parcels, including significant differences in lot depth, staff recommends applying the area method so assessments are more equitable to the benefit received.
 
Staff then reviewed all assessable parcels to determine what appreciable differences existed between parcels that would impact the benefit received from the proposed improvements.  Staff determined there are two significant differences that should be accounted for when calculating assessments; whether a parcel has direct access onto an improved street, and whether the parcel abuts other City streets requiring future improvements whose costs will be assessed to the parcel. Staff therefore developed and applied the following adjustments to the area method of assessment.
 

• Properties abutting Sunwood Drive only with access onto Sunwood Drive are proposed to be assessed for 100% of their property area.
• Properties abutting Sunwood Drive and other City streets, with access onto Sunwood Drive, are proposed to be assessed for 75% of their property area.
• Properties abutting Sunwood Drive with no access onto Sunwood Drive are proposed to be assessed for 50% of their property area.

 
These adjustments are relatively similar to adjustments found in other cities assessment policies which adjust assessment calculations to allow industrial properties with multiple accesses and/or frontages to be assessed between 150% and 200% for improvements completed to all abutting streets. Based on the proposed percentages above, B&F Fastener Supply will pay assessments for 150% of their property area for mill and overlay and reconstruction improvements on Sunwood Drive and Jaspar Street, both of which they directly abut and have access onto.  Vision Ease will pay assessments based on 200% of their property area for improvements made to Sunwood Drive, 143rd Avenue, and Jaspar Street since they abut all three and have access onto Sunwood Drive and 143rd Avenue (75% each), but no access onto Jaspar Street (50%).  Lastly, Altron, Inc. and the small City parcel on the east end of Sunwood Drive are both proposed to be assessed for 50% of their property areas since neither has direct access onto Sunwood Drive.  This analysis strictly considers existing conditions.  If a property that is assessed for 50% of the property area based on not having access onto an improved street requests an access onto an improved street in the future, the assessment amount they forgiven could be collected through the permitting process.  Staff will consider available methods to capture such funds, and will report our findings and recommendations to Council at an upcoming work session.  The Special Assessments Policy can then be amended to include such language, as well as to address any assessment calculation adjustments approved by Council.
 
A revised assessment map and assessment roll are attached which reflect the proposed property area percentage adjustments outlined above.  In addition, the property area for (Anderson Dahlen) was corrected to include all of their property.  The assessment map and roll in the draft Feasibility Report accepted by Council on January 24^th inadvertently omitted a significant portion of their benefiting property area because the parcel data in the City’s GIS system that was used to create the assessment map and roll for the Feasibility Report had not yet been updated with the new parcel data based on the recent replat associated with their current building expansion project.
 
All costs for this project are eligible for special assessments since the street is proposed to be reconstructed at its existing width, which meets current State Aid standards, and since the existing and proposed pavement sections both meet 10-ton design standards and are therefore equivalent sections.
 
Staff recommends ordering a benefit appraisal consultation report for this project to verify that the proposed assessment amounts will not exceed the amount of benefit to any assessable properties. If the report concludes that the benefit to any property is less than the proposed assessment, Staff will propose to lower the assessment accordingly at the Assessment Hearing scheduled for October 10, 2017.  However, if the benefit appraisal consultation report finds that the benefit exceeds the proposed assessment for any property, Staff will propose to adopt the final assessment using the assessment preliminarily proposed within the Feasibility Report.  Attached to this case in a copy of the City’s Special Assessments Policy adopted in December 2014 and amended January 2015.  Based on input received from the frim that conducts our benefit appraisal consultations at the time the policy was developed, language was included in Section 6.10, “Benefit Appraisals”, stating “As a general rule, benefit appraisal consultations may be ordered when the proposed assessment exceeds $5,000 for a standard city street reconstruction project on a residential lot, or $20,000 per acre for commercial or industrial property.”  Since none of the proposed assessments come close to approaching $20,000 per acre, Staff is confident the benefit appraisal consultation report will find that the proposed assessments are defendable.
 
Public Input
At the time this case was published, Staff had met with owners of 5 of the 7 identified assessable properties. Below is a very general summary of comments received from these property owners.
 

• Altron, Inc. – Does not generally oppose the proposed improvements or their proposed assessment based on the revised assessment roll, but supports postponing the public hearing to allow more time to review their proposed assessment with City staff before the public hearing.
• B & F Fastener Supply – Does not generally oppose the proposed improvements or their proposed assessment based on the revised assessment roll, and they do not plan to attend the public hearing.
• Class C Components – Does not generally oppose the proposed improvements but supports postponing the public hearing to allow more time to review their proposed assessment with City staff before the public hearing.
• Connexus Energy – Does not generally oppose the proposed improvements but supports postponing the public hearing to allow more time to review their proposed assessment internally and with City staff before the public hearing.  However, they question whether adjustments should be made to assessments based on whether a property is developed or undeveloped; in general they are asking whether their assessment should be reduced since it is an undeveloped parcel.
• In’Tech, Industries – Does not generally oppose the proposed improvements or their proposed assessment based on the revised assessment roll, and does not object to postponing the public hearing.

 
Staff was unable to meet with owners of the Anderson Dahlen and Vision Ease parcels before this case was published.  If Staff meets with one or both of these property owners before the Council meeting, results of the meeting(s) will be presented to Council in summary format.
 
Based upon the short amount of time that assessable property owners have had to consider the project and their proposed assessments, and considering that three of the assessable property owners requested or support postponing the public hearing to allow more time to discuss their assessments with City staff, staff recommends postponing the public hearing until February 28, 2017.  This should allow staff enough time to make any necessary adjustments to the assessment map and roll based on specific Council direction, and to share new information with the assessable property owners.  However, a two week delay should not negatively impact bids or prevent the project from being completed in 2017.

Public Hearing Notices were published in the Anoka Union Herald on January 27^th and February 3^rd, 2017, were mailed to all property owners proposed to be assessed for a portion of the improvements, and was posted in City Hall as required by State Statute.
 

Observations:
This project would best be constructed as a stand-alone project and is necessary, feasible, and cost-effective from an engineering standpoint, and can be constructed as proposed in the Feasibility Report.
 
The proposed pavement design is anticipated to provide a life of at least 30 years, assuming proactive, regular pavement maintenance treatments are performed throughout the life of the pavement. While a 60-year design life is typically targeted for reconstructed streets, this project is not proposing a full reconstruction due to the good condition of the majority of existing 20 year old curb and gutter.  At the time the existing curb and gutter that is left in place needs to be reconstructed, which will likely occur 30 years or more in the future, Staff will evaluate whether it would be cost-effective to reconstruct the pavement section again.
 
Developed properties along the project corridor may have private irrigation systems and impacts to these systems may occur while existing curb and gutter is being replaced.  On past street reconstruction projects, the City repaired private irrigation systems that were damaged as part of the project.  Due to the significant project costs and impacts to Staff, it is recommended that private property owners be responsible for locating, relocating, and repairing their private irrigation systems with future improvement projects.  Staff recommends notifying property owners in writing of the pending construction as far in advance of construction as possible to allow them to relocate their irrigation systems out of the construction area, then to replace it once work is complete.  This recommendation is included in the Feasibility Report which was preliminarily accepted by the City Council on January 24, 2017.

Alternatives:
Alternative #1 – Motion to deny adoption of Resolution #17-02-044 at this time, to postpone the public hearing for Improvement Project #17-00, Sunwood Drive Reconstruction, until February 28, 2017, and to revise the Feasibility Report by incorporating the attached assessment map and roll.

Alternative #2 – Motion to deny adoption of Resolution #17-02-044 at this time, to postpone the public hearing for Improvement Project #17-00, Sunwood Drive Reconstruction, until February 28, 2017, and to revise the Feasibility Report as follows, ________.

Alternative #3 – Motion to adopt Resolution #17-02-044 accepting the Feasibility Report and ordering Plans and Specifications for Improvement Project #17-00, Sunwood Drive Reconstruction.

City staff prepared the Feasibility Report in-house as part of staff’s normal duties.
 
The engineer’s opinion of probable costs for the proposed improvements on Sunwood Drive as outlined in the Feasibility Report is $607,000.  Estimated costs include 23% indirect costs for administrative, engineering, finance and legal costs.  A summary of the engineer’s opinion of probable costs is included in Appendix B of the Feasibility Report.
 
NTI completed a Geotechnical Exploration and Engineering Review at a cost of $4,400 which is included in Appendix D of the Feasibility Report.  WSB and Associates, Inc. completed Pavement Evaluations and Recommendations at a not-to-exceed cost of $2,687.50 which is also included in Appendix D,
 
Assessable industrial parcels are preliminarily proposed to be assessed for 25 percent of eligible project costs totaling $151,750.   The City will pay the remaining 75% of project costs including $447,950 from the 5 year Street Reconstruction and Overlay Program bond funds, and $7,300 from stormwater utility funds.  The preliminary Assessment Map and Roll included in Appendix C of the Feasibility Report were preliminarily approved by Council on January 24th.  Attached are a revised assessment map and revised assessment roll that reflect staff proposed adjustments to the preliminary assessments for this project.  If Council accepts the adjustments proposed by staff, the assessment map and roll included in the attached Feasibility Report will be replaced with the revised map and roll attached.  Alternatively, Council may direct staff to make other adjustments to the assessment roll, in which case such revisions would be incorporated into the Feasibility Report before the Public Hearing.

Staff recommends Alternative #1 or #2, depending on whether Council directs any modifications to the Feasibility Report. Staff does not support Alternative #3 since the property owners staff met with were informed Staff’s recommendation would be to postpone the hearing until February 28, 2017.
 
It is the recommendation of City staff that City Project No. 17-00 is feasible, necessary, and cost-effective from an engineering standpoint, and that this project would best be constructed as a stand-alone project as proposed in the Feasibility Report.
 
The following Staff recommendations related to the proposed project are presented for Council consideration and concurrence:
 
 

1. Staff recommends reconstructing the segment of Sunwood Drive between Ramsey Boulevard/CSAH 56 and Bunker Lake Boulevard /CSAH 116 as proposed in 2017 thereby meeting current State Aid design standards and allowing all project costs to be eligible for the use of special assessments per the City’s Special Assessments Policy.

 
 

2. Staff recommends ordering a benefit appraisal consultation report to ensure the preliminary assessments as proposed will not exceed the benefit received as a result of the improvements in accordance with the City’s Special Assessments Policy.

 
 

3. Staff recommends reconstructing the off-road bike trail along the north side of Sunwood Drive at a later date pending adoption of the City’s Trail Maintenance Policy/Program.

 
 

4. Staff recommends excluding private irrigation system work from this project, and instead recommends notifying property owners of pending construction as far in advance as possible and instructing them to relocate their irrigation system(s) away from the construction area during construction, then allowing replacement in or near the original location after construction is complete.

 
 

5. Staff recommends continued meetings with owners of assessable properties to ensure they are kept informed on the proposed improvements, that they understand their proposed special assessments, and that Staff can obtain their input prior to concluding the Public Hearing and requesting Council authorization to prepare plans and specifications on February 28, 2017.

Motion to deny adoption of Resolution #17-02-044 at this time, to postpone the public hearing for Improvement Project #17-00, Sunwood Drive Reconstruction, until February 28, 2017, and to revise the Feasibility Report by incorporating the attached assessment map and roll, and/or based on other Council direction as follows; _________.