Adopt Resolution #19-237 Adopting Assessment Roll Certifying Assessments for Improvement Project #19-03, Wood Pond Hills & Chestnut Ridge Street Reconstructions

Purpose:
The purpose of this case is to conduct the required Assessment Hearing and adopt Resolution #19-237 adopting the final assessment roll certifying assessments 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.
 
Staff met with numerous property owners during construction to coordinate construction of various improvements adjacent to or otherwise affecting the use of their properties.
 
At the time this case was prepared, no benefiting property owners had contacted Staff regarding their proposed assessment or the Assessment Hearing.  If any formal comments or objections are received after this case is published, Staff will share this new information with Council prior to the Public Hearing.

Notice for this Assessment Hearing was published in the City’s official newspaper, the Anoka Union Herald, on Friday, September 20, 2019.  Assessment Hearing Notices were also mailed to all benefiting property owners as required by Minnesota Statute Chapter 429.  A copy of Statute 429 is attached to this case, as is a copy of the Notice mailed to benefiting property owners.
 
Anoka County requires that assessments be certified to the County Auditor by November 15, 2019 for collection on 2020 taxes.  Property owners must therefore prepay their special assessments in full by November 15, 2019 to avoid paying interest.

Observations:
Construction of this project is substantially complete.  Only punch list work remains, which will be completed next spring or summer.  As is standard practice on street reconstruction projects, the City will not issue final payment to the contractor until the following year to allow punch list work to be completed during next year’s growing season.  Most property owner concerns are related to grading and turf establishment so final payment is withheld until the following summer or fall so such concerns can be addressed.
 
Staff has received several complaints and concerns from property owners related to the application of the curb curing compound, which is done to make the old curb and gutter blend in with the spot curb replacements.  Several property owners called to complain that the curing compound got on their vehicles.  Staff instructed them to go to their preferred automobile detailer and to send the bill to the curb contractor for payment.  No calls were received after these instructions were provided.
 
A letter was mailed to property owners recently so they understand that the City will be out on site again next spring to address any outstanding concerns before closing the project out.

Alternatives:
Alternative #1 – Adopt Resolution #19-237 adopting the final assessment roll certifying assessments for Improvement Project #19-03, Wood Pond Hills and Chestnut Ridge Street Reconstructions.

Alternative #2 – Deny adoption of Resolution #19-237 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.  After adding 23-percent to the contractor’s construction bid, the contracted project cost is $375,047.33.
 
The engineer’s project cost estimate based on final plans was $327,938.11 therefore 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 uses unit bid prices from recent projects, then adjusts the unit prices for inflation based on the latest available information. The intent is for the engineer’s estimate to fall within the middle of bids received, which has been the norm in recent years.  Bids received for this project were significantly higher 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 worked with the contractor to calculate final construction costs for this project, which were used to calculate final project costs to determine final assessments.
 
Final construction costs are $277,251.93 and final project costs are $341,019.87. This means final project costs were 3.99% greater than the engineer’s estimate of project costs.  Final assessments are therefore $1,445.00 per benefiting property based on assessing 25% of eligible project costs.  This amount was included in the Assessment Hearing Notice published in the Anoka Union Herald, and was included in the Assessment Hearing Notices mailed to all benefiting property owners.
 
Funding Sources
Funding sources for this project include a combination of unexpended pavement management program funds, special assessments to benefiting properties, and stormwater utility funds.
 
Unexpended pavement management program funds
These funds include unspent 2013 budgeted pavement management project funds, plus 5-years of bond premiums and interest earnings.
 
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.
 
Fifty-nine (59) benefiting properties receive special benefit from the improvements and are proposed to be assessed for eligible project costs. Eligible project costs include all costs except those related to subgrade corrections, widening or strengthening of pavement, and public utility improvements. None of these conditions were applicable to this project so all project costs are eligible for assessments.
 
The City of Ramsey’s Special Assessments Policy identifies three optional methods for calculating assessments; Adjusted Front Footage, Area, and Per Lot.  All recent residential street reconstruction projects used the Per Lot method to calculate assessments so Staff again applied the Per Lot method to calculate final assessments for this project.
 
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.  Special benefit consultation reports were not prepared this year since each report costs around $6,500 and this year’s projects are similar enough to other projects that the results from those reports can be directly applied to this project.  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.

On November 13, 2018, the City Council adopted a preliminary assessment amount of $1,303.70 per benefiting property.  Proposed final assessments are therefore 10.84% greater than adopted preliminary assessments.

Staff recommends Alternative #1.

Adopt Resolution #19-237 adopting the final assessment roll certifying assessments for Improvement Project #19-03, Wood Pond Hills and Chestnut Ridge Street Reconstructions.