Adopt Resolution #19-218 Ordering Assessment Roll and Calling Assessment Hearing for Improvement Project #19-03, Chestnut Ridge and Wood Pond Hills Street Reconstructions

Purpose:
The purpose of this case is to adopt Resolution #19-218 ordering preparation of a final assessment roll and calling for an Assessment Hearing at 7 p.m. on October 8, 2019 for Improvement Project #19-03, Wood Pond Hills and Chestnut Ridge Street Reconstructions.

Background:
City Improvement Project #19-03, Wood Pond Hills and Chestnut Ridge Street Reconstructions, included the reconstruction of streets within the Wood Pond Hills and Chestnut Ridge neighborhoods including 146th Avenue, Helium Street, and Krypton Street. Maps attached to this case show the general location and scope of the proposed improvements.

Original Conditions
The streets within these developments were constructed between 1992 and 1994 as urban sections using bituminous pavement, surmountable concrete curb and gutter, and concrete storm sewer. These streets were constructed to a width of 30-feet from face-of-curb to face-of-curb, are generally centered within 60-foot wide right-of-ways, and measure approximately 3,310 linear feet (0.63 miles) in length. Attached is a street segments summary depicting the original conditions including PASER ratings, maintenance histories, and pavement section information obtained from ground penetrating radar.

The existing bituminous pavement section ranged between 1.6 and 5.0 inches thick, with a median thickness of 2.5 inches. The existing aggregate base section ranged between 1.3 and 8.4 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 pavement section was built on generally poorly graded sand with silt subgrade material generally considered suitable for pavement support with proper conditioning.

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 sections of the above referenced street segments had a PASER rating of 2, except the south half of Krypton Street, which was rated at 4.  PASER ratings of 3 or less indicate the street requires reconstruction. Staff recommends reconstructing all streets, including the south half of Krypton Street. This will keep all pavement sections on the same maintenance schedule moving forward, and it would likely cost more to overlay the south half of Krypton Street due to additional contractors and mobilizations.

The storm sewer system consists of concrete catch basins that collect stormwater runoff from the curb and gutter, and concrete storm sewer pipes that route the runoff to stormwater ponding areas where the runoff is stored and treated. The storm sewer system was also inspected and was generally found to be in good operating condition so only minor maintenance work occurred including re-grouting of some structures and resetting castings.

Municipal utilities (sanitary sewer and watermain) exist under each of the streets. These utilities were inspected and were found to be in good operating condition so no improvements were needed with this project.

Completed Improvements
All damaged concrete curb and gutter sections were removed and replaced.

Existing bituminous pavement sections were reconstructed using the Full Depth Reclamation (FDR) process.  This process involved reclaiming (grinding) the existing bituminous pavement section, along with a portion of the underlying aggregate base, then spreading the reclaim material over the reshaped and compacted remaining aggregate base. Excess reclaim material was removed and hauled off site to allow 3½-inches of new bituminous pavement to be placed over the remaining compacted reclaim material. This resulted in a 7-ton pavement design, which is the City standard for residential streets.


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 on Wednesday, November 7, 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 the 59 identified benefiting properties attended and none of the property owners generally objected to the project, and most of the questions pertained to special assessments, particularly payment options.

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 #19-218 ordering preparation of a final assessment roll and calling for an Assessment Hearing at 7 p.m. on October 8, 2019 for Improvement Project #19-03, Wood Pond Hills and Chestnut Ridge Street Reconstructions.

Alternative #2 – Deny adoption of Resolution #19-218 at this time.

Project Costs
On May 14, 2019, the City Council accepted bids and awarded a construction contract to Omann Contracting Companies Inc. of Albertville, Minnesota, per their low bid of $304,916.53.
 
Street reconstruction project costs include 23% indirect costs for administrative (6%), engineering (15%), finance (1%), and legal (1%) costs.  Upon adding 23-percent to construction costs, the contracted project cost is $375,047.33.  The engineer’s project cost estimate based on final plans was $327,938.11.  The contracted project cost is $47,109.22, or 14.4-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 bituminous pavement ($25,587), and concrete work ($11,535).  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-percent 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 59 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.
 
Fifty-nine (59) 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 59 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 Rivers Bend Street Reconstructions project report is most applicable, and the range of anticipated special benefit to each property identified within that report fell between $7,000 and $7,500.
 
The City will fund 100% of all project costs not eligible for assessments, including subgrade corrections.
 
On November 13, 2018, the City Council adopted a preliminary assessment amount of $1,303.70 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 are anticipated to increase to approximately $1,480 using 25-percent of eligible project costs per the Special Assessments Policy.
 
Council will adopt final assessments following public input at the Assessment Hearing on October 8, 2019.

Staff recommends Alternative #1.

Adopt Resolution #19-218 ordering preparation of a final assessment roll and calling for an Assessment Hearing at 7 p.m. on October 8, 2019 for Improvement Project #19-03, Wood Pond Hills and Chestnut Ridge Street Reconstructions.