Purpose:
The purpose of this case is to adopt Resolution #18-057 approving plans and specifications and authorizing advertisements for bids for 2018 Street Overlay Improvements, Improvement Project #18-03.

Background:
Numerous public street segments were identified in eight residential developments throughout the City having Pavement and Surface Evaluation Rating (PASER) values between 3 and 5, indicating they are good candidates for pavement overlay improvements in 2018.  Overlaying these streets in 2018 will allow the City to maintain the pavement in the most cost-effective manner throughout the serviceable life of the streets.
 
Attached is a figure showing the specific street segments proposed to receive bituminous pavement overlay improvements in 2018.  These street segments are located in the following residential developments:

• Northfork
• Northfork Oaks
• Northfork 2^nd Addition
• Northfork 3^rd Addition
• Northfork Itasca Shores
• The North Forty 2^nd Addition
• The North Forty 3^rd Addition
• Woodland Green

 
As outlined in attached Resolution #18-057, a Feasibility Report was ordered for the proposed 2018 Street Overlay Improvements, and on January 9, 2018, the City Council conducted a Public Hearing, approved the Feasibility Report, adopted preliminary assessments, and ordered the preparation of plans and specifications.
 
Special assessments are eligible as a funding source for these improvements per requirements of Minnesota Statute Chapter 429, Chapter 8 of the City Charter, and the City’s Special Assessment Policy.
 
The proposed improvements are designated as City Improvement Project #18-03, 2018 Street Overlay Improvements.

If Council approves plans and specifications and authorizes advertising for bids, bids will be advertised on Friday, March 30, and again on Friday, April 6, both in the City’s official newspaper, the Anoka Union Herald, and in Finance & Commerce.

Observations:
While preparing plans and specifications, Staff reviewed existing pavement conditions in detail and discovered several areas of severely damaged pavement in three project areas.  Staff proposes to complete bituminous pavement patching work in these areas prior to overlaying the streets so the overlay improvements can achieve its design life of 15 to 20 years.  The proposed bituminous patching work involves removing the existing damaged pavement, shaping and compacting the existing aggregate base, and placing and compacting new bituminous pavement to the same elevation of the existing pavement.
 
Attached is a copy of the plans prepared by Staff.  The proposed pavement patching work is shown on plan sheets 20, 21, and 22.  Staff estimates this bituminous patching work will increase project costs by $33,000.  Also attached are copies of plan sheets 20, 21, and 22 with the areas proposed to receive bituminous patching work highlighted in yellow.
 
The City’s adopted Special Assessments Policy allows up to 25-percent of eligible overlay project costs to be assessed against benefiting properties.  Staff proposed to assess 25% of eligible project costs when calculating preliminary assessments, which were then adopted by Council.  Unless bids come in significantly less than the engineer’s estimate based on the attached plans, it is likely the proposed bituminous patching work would result in increased special assessment amounts in three project areas, unless patching costs were to be paid by the City and not assessed to property owners.
 
Staff discussed this with the Public Works Committee on March 20^th and presented the four following options to address the increased project costs and potential impacts to special assessments.

• Overlay damaged areas as is – This option would likely result in the overlay improvements failing prematurely over areas of severely damaged pavement.  Staff does not support this option.
• Overlay damaged areas after patching with new pavement – This option should allow the overlay improvements to achieve their design life of 15 to 20 years.  Staff supports this option.
• Reconstruct affected street segments in 2019 – This option is viable since these improvements are listed in the 5-year Street Reconstruction Overlay Plan. However, street reconstruction costs are typically several times higher than overlay costs meaning special assessments are also typically several times higher.  Multiple overlays can therefore typically be performed for the same cost as a reconstruction.  It is also important to understand that one of Staff’s goals while maintaining streets is to ultimately allow all streets within a neighborhood to be maintained using the same treatment on the same schedule to minimize maintenance costs and impacts to residents.  Staff therefore recommends patching the damaged pavement areas in an effort to extend the life of the existing pavement as much as possible before reconstructing.
• Do nothing – Staff does not generally support this option.

After discussing the patching issue in detail, including the four options outlined above, the Committee unanimously recommended City Council approval of including the proposed bituminous patching improvements with the 2018 Street Overlay Improvements, with all costs for the patching to be paid by the City.

Alternatives:
Alternative #1 – Motion to adopt Resolution #18-057 approving plans and specifications and authorizing advertisements for bids for 2018 Street Overlay Improvements, Improvement Project #18-03, and to approve of the City paying for all bituminous patching costs.

Alternative #2 – Motion to adopt Resolution #18-057 approving plans and specifications and authorizing advertisements for bids for 2018 Street Overlay Improvements, Improvement Project #18-03, and to approve of assessing 25% of the bituminous patching costs to benefiting properties.

Alternative #3 – Motion of other.

The estimated project cost based on final plans and specifications is $662,900.88.
 
The City’s 5-year Street Reconstruction and Overlay Program includes the streets listed above as proposed 2018 overlay improvements, allowing the City to utilize street reconstruction bonds to fund the improvements up front.  The City’s current 10-year Capital Improvement Plan (CIP) includes the proposed 2018 overlay improvements.  Copies of each are attached for reference.
 
Special assessments are proposed to fund 25% of eligible project costs, which excludes bituminous patching costs.  This amount totals $157,465.92.  Proposed special assessment amounts vary by project area.  To be consistent with past practice, special assessments are proposed to be equal across all properties in each project area since each property generally receives the same benefit based on similar property values.  This is consistent with the “per lot” method of assessment defined within the City’s Special Assessments Policy.  Final assessment amounts may be more or less based on final construction costs.
 
Storm water funds will fund all storm sewer project costs, which total $27,930.
 
Street reconstruction bonds will ultimately fund all remaining project costs in the estimated amount of $477,504.96, which includes bituminous patching costs.

Staff recommends approval of Alternative #1 for the following reasons:

• The bituminous patching work was not identified in the Feasibility Report, nor was it addressed at the Public Hearing.
• Assessing 25% of the bituminous patching costs would significantly increase assessments in two of the project areas.
• Staff believes the areas of severely damaged pavement correlate to areas of poor subgrade soils.
• Subgrade soil corrections are ineligible project costs for street reconstruction projects per the City’s adopted Special Assessments Policy.

Motion to adopt Resolution #18-057 approving plans and specifications and authorizing advertisements for bids for 2018 Street Overlay Improvements, Improvement Project #18-03, and to approve of the City paying for all bituminous patching costs.