Review Gravel Road Elimination Program Funding Options

Purpose:
Review funding options for Gravel Road Elimination Program (GREP).

Background:
Since 2004, the Public Works Committee (PWC) has discussed on numerous occasions the potential conversion of public gravel-surfaced roads to bituminous paved streets to allow for more cost-effective maintenance operations and to prevent the need to replace the road grader.  In 2004, the city maintained roughly 12 miles of gravel-surfaced roads. About 10.1 miles of these gravel roads have either been paved since, or are proposed to be paved with private developments.

The city currently routinely maintains approximately 1.9 miles of public gravel-surfaced roads. Maintaining these gravel roads during summer months requires using a road grader to remove potholes and “washboards” and restore crowns to the roads so they drain properly. In winter months, the road grader is primarily used to plow snow from gravel roads, though grading the surface may also be required. The city currently owns a 1999 John Deere grader, which is not identified for replacement in the Capital Improvement Program (CIP).  If this grader were to be out of service for any length of time, the city would need to rent a replacement temporarily to help maintain our gravel roads.
  
Attached are copies of recent PWC cases and meeting minutes that address Gravel Road Elimination Program (GREP) estimated costs and funding sources. Also attached to this case is a map showing the locations of the six (6) road segments identified for potential conversion from gravel-surfaced roads to paved streets through the GREP.  

Timeframe:
Staff anticipates up to 60 minutes will be required to present and discuss this case and respond to questions. 
 
Observations:
In 2011, the City discussed adopting a GREP but a formal policy was never adopted.  Then when the City adopted a Special Assessment Policy in 2014, a statement was included in this policy that requires benefiting property owners to pay for 50-percent of the costs to convert a gravel road to a paved street. A copy of the Special Assessment Policy is attached.
 
Until a Gravel Road Elimination Policy is developed and funded, staff will continue to explore and promote the elimination of gravel roads as part of City improvement projects and private developments. 
 
Staff are currently working to prepare plans and specifications for the purpose of obtaining bids for all 2026 Pavement Management Program projects before next spring. Staff would therefore not be able to develop one or more GREP projects in-house for construction in 2026 so any projects proposed for 2026 construction would need to be contracted out. 
 
Alternatives:
Alternative #1:
Provide consensus direction to staff to further explore the following funding sources to fund GREP projects, ___________________, and to present the information at a future City Council work session. 
 
Alternative #2:
Provide consensus direction to staff to finalize a draft Gravel Road Elimination Policy including detailed estimated project costs for all six gravel road segments, a project prioritization schedule, and a funding program using the following funding sources; ___________________. 
 
Alternative #3:
Provide other consensus direction to staff as follows; ___________________. 

Current estimated project costs for converting all six (6) gravel-surfaced roads to streets with bituminous pavement total $2,250,000.  These estimated project costs were developed with the aid of soil boring reports on all segments to identify required subsurface soil corrections.  
 
Potential funding sources for Gravel Road Elimination Program projects include;

• General levy
• Public Improvement Revolving (PIR) funds
• TIF Funds from Districts 1 and 2.  Only 2 of the 6 segments are eligible to use TIF funds.  TIF funds can only be used within the Cities TIF Development District.
• Bonds
• Assessments
• Stormwater Funds

 
TIF District maps are attached.
 
PIR and TIF funds are often used to fund other city improvement projects. If PIR and/or TIF funds are used to fund GREP projects, other improvement projects may not be able to be completed.
 
Also attached are cash flow projections for relevant funding sources.
 
PWC members were generally split on the use of bonds, and by consensus were opposed to applying special assessments to GREP projects.
 
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.    

Based on discussions. 

Based on discussions.