Review Gravel Road Elimination Program Funding Options

Purpose:
Review updated project costs for Gravel Road Elimination Program (GREP), and discuss project prioritizations and funding sources.
 
Background:
In 2025, the City of Ramsey will be required to regularly maintain approximately 2.2 miles of public gravel surfaced roads. Maintaining gravel roads requires the use of a road grader. In non-winter months, the grader is used to grade the surface to remove potholes and “washboards” and to restore the crown on the roads so they drain properly. During winter months the grader is primarily used to plow snow from gravel roads, though grading the surface may also be required during the winter.
 
A 1999 John Deere road grader is used to maintain gravel roads.  This grader is not identified for replacement within the Capital Improvement Program (CIP).  If this grader was ever out of service for any length of time, the city would need to rent a replacement temporarily to maintain all gravel roads.
 
On May 21, 2002, the Public Works Committee held one of its first in-depth discussions on costs associated with maintaining and paving gravel (called dirt at the time) roads. A copy of the meeting minutes from this Public Works Committee discussion is attached for reference.
 
On July 19, 2011, the Public Works Committee discussed adopting a Gravel Road Elimination Policy.  However, a draft policy was never developed.  Attached is a copy of this Public Works Committee case with meeting minutes.
 
In 2014 the City adopted a Special Assessments Policy, which included a requirement for benefiting property owners to pay 50-percent of the costs to convert a gravel road to a paved street.  Attached is a copy of the adopted Special Assessments Policy.
 
On February 20, 2024, the Public Works Committee directed staff to obtain a geotechnical report with soil borings for all remaining regularly maintained public gravel roads, and to explore stormwater management needs as required to convert these gravel roads to bituminous pavement sections.  Attached is a copy of the Geotechnical Exploration Report obtained from ITT including a summary and map of all existing gravel roads, with the exception of the 0.31-mile cul-de-sac segment of 173rd Avenue west of Nowthen Boulevard/CSAH 5 that is gravel surfaced but is proposed to be paved with the Trott Brook Crossing residential development within the next several years.
 
At the January 21, 2025, Public Works Committee meeting, staff reviewed updated project cost estimates to pave the six gravel road segments, which total approximately 1.9 miles in length and have a total estimated project cost of $2,250,000. Staff also provided a recommendation for gravel road segment paving priorities. Staff then requested direction from the Committee on whether a draft Gravel Road Elimination Policy should be prepared for future review by the Committee and potential City Council adoption, which would include detailed project cost estimates for each gravel road segment, a project prioritization schedule, and a recommended funding program.
 
The consensus of the Committee was that it appeared to be in the best interests of the city to convert gravel roads to paved streets therefore the Committee wanted to make this a priority, especially since the 1999 John Deere road grader was removed from the CIP and is no longer programmed for replacement.  The Committee also requested additional details on projected transfers from the PIR fund to the general fund, noting this could be a potential source of funding. The Committee did not appear to support the use of bonds for this work.  Staff was directed to present additional funding options at a future meeting. 

Notification was not required for this case.

Timeframe:
Staff anticipates up to 20 minutes will be required to present and discuss this case and respond to questions. 
 
Observations:
In 2004, when the Gravel Road Elimination Policy was first being discussed, Ramsey had about 12 miles of gravel surfaced roads. Roughly 10.1 miles of gravel roads have been paved since, or are proposed to be paved with private developments.
 
In 2024, the 0.07-mile gravel surfaced segment of Basalt Street was paved as part of Improvement Project #24-07.  In addition, the 0.13-mile segment of Limonite Street that was gravel surfaced was paved as part of the Jam Hops development. For the purpose of this case, the focus is on paving the remaining 1.9 miles of gravel roads.
 
Until a Gravel Road Elimination Policy is adopted, Staff will continue to explore and promote the elimination of gravel roads during City improvement projects and as part of private development projects.  
 
Alternatives:
Alternative #1:
Motion to direct staff to finalize a draft Gravel Road Elimination Policy that includes estimated project costs for all six gravel road segments, a project prioritization schedule, and a funding program as follows; ___________________. 
 
Alternative #2:
Motion of other. 

Preliminary estimated project costs to convert the six (6) identified gravel road segments totaling 1.9 miles in length to paved streets meeting current city design standards total $2,250,000 based on the information and recommendations included within the attached Geotechnical Report dated October 7, 2024, prepared by Independent Testing Technologies (ITT).  This report provides design recommendations for each gravel road segment based on the results of 24 soil borings completed on September 11th and 12th, 2024. Project cost estimates reflect minimal subgrade correction and stormwater management costs.
 
Copies of the preliminary cost estimates for all 6 segments are attached.
 
Staff previously identified the following potential funding sources for Gravel Road Elimination Program projects;

• Public Improvement Revolving (PIR) funds
• Sanitary Sewer Funds
• Water Funds
• Stormwater Funds
• Municipal State Aid (MSA)
• Bonds
• Assessments

 
Attached is a copy of the cash flow projections for these funds copied from the 2025 to 2034 Capital Improvement Plan.  As previously discussed, of these funds only the PIR fund, bonds, and assessments are applicable. Pavement Management (PM) Funds are not an option as these funds are strictly dedicated to funding pavement overlay and street reconstruction projects and are not applicable to gravel road conversion projects.
 
Per the attached Special Assessments Policy, property owners could be assessed 50-percent of project costs to convert the street they directly access from gravel surfacing to bituminous pavement.  However, property owners could petition against the assessments.
 
Since the January 20th PWC meeting, staff identified two other potential funding sources, TIF 1 and TIF 2.  According to Finance Director Diana Lund, TIF 1 has a current balance of $1,052,000 but approximately $800,000 of this is dedicated to funding a 2026 Pavement Management Program project, which will leave a balance of approximately $250,000 in 2027.  Similarly, TIF 2 has a current balance of $1,300,000 but approximately $680,000 of this is dedicated to funding a 2027 Pavement Management Program project, which will leave a balance of approximately $620,000 in 2027.  This means approximately $870,000 could be available to fund gravel road paving projects from the TIF 1 and TIF 2 districts, of which 2 appear to apply, namely Areas E (158th Lane) and F (Beatty and Collins Drive).  These projects have estimated costs of $430,000 and $280,000, respectively, totaling $710,000.  

There are other potential road improvement projects within TIF 14 (COR) that could be funded partially with TIF 1 and TIF 2 funds.  Ultimately, a priority list of road improvements should be set with the limited funds we have available.

Staff has no recommendation at this time. 

Based on discussion.