City Council Agenda Packet 05-28-2002 Special WorkshopAssessment Policy Workshop
May 28, 2002
A G E N DA
1. Review Current Policy
2. Discuss Infrastructure Needs
■ Street Reconstruction
■ Street Maintenance
- Overlays/Seal Coats/Crack Sealing
■ Storm Sewer Replacement/Installation in Rural Areas
■ Sanitary Sewer/Watermain Replacement
■ County Projects
■ Special Projects — Overpasses/Off Ramps
3. Review Assessment Approaches
■ Option 1: "No Assessment"
■ Option 2: "20/25% Assessment"
■ Option 3: "Cedar Street"
4. Review CSAR 75 Project Costs and Assessment Policies
5. Review Tools to Develop New Policies
■ Pavement Management Plan
■ Update Rate Study
■ Develop Public Information Sessions
■ Consider Stormwater Utility
■ Benefit Appraisals
6. Other
■ Information from 2001 Assessment Policy Work Session
F.•IWPWIN1B.4W1OS2802 Agenda.doc
CSAH 75 ASSESSMENT ISSUES
1. Who do we assess?
■ Properties with access onto 75
■ All properties
■ Residential properties with access/all Commercial properties
2. What do we assess?
Street: City share is $995,000 and includes lighting, median, and pavement. This
is based on County policy. A 32 -foot residential/44-foot commercial street would
cost $47/$62 per FF to reconstruct. The residential properties with access to
CSAH 75 vary from 33 feet to 116 feet, but average around 66 feet. A 100%
assessment would be approximately $3,100. This is well within the range of
benefit that can be shown. The assessable length should be the short side of the
lot. this will make it more fair for corner lots.
F. IWPWIMBAWl&sessment Information.doc
4O REVIEW CSAR 75 PROJECT COSTS AND ASSESSMENT OPTIONS
F.•I WPWINIBAWUssessment Informatiomdoc
City Share
20%
25%
Street Construction
$99311000
$1981P600
-0-
Sanitary Sewer
$105,600
$21,120
-0-
Watermain
$746,100
$149,220
-0-
Pathway/Sidewalk
$77,200
-0-
$19,300
TOTAL
$199219900
$3689940
$199300
TOTAL =
$388,240
F.•I WPWINIBAWUssessment Informatiomdoc
Option 1
"No Assessment"
Policv: This policy would be to consider that reconstruction of existing
infrastructures would be borne completely through City funding sources.
Issues:
Reconstruction to accommodate new or expanded development would still
be assessed at the full cost, as would enhancement of existing systems
(such as installation of curb and gutter/storm sewer in rural street areas).
1. Financing —
In order to bond for a project, at least 20% of the cost must be
assessed. Without the assessment, the City would have to develop
other funding sources or likely increase the levy to generate the funds.
Currently, to generate $500,000/yr, a house valued at $110,000 would
pay $50/yr. Further, it would take at least one year to generate the
funds through a tax levy to start the process.
2. Exceptions —
• The benefited property should still be assessed for specific
improvements that would be added such as curb, storm sewer,
sidewalk, or replacement of services. Assessing for these items,
however, is not likely to generate the necessary minimum
assessment to allow bonding.
• Developer initiated or benefited projects would still be assessed in
full.
3. Timing —
The City is behind on street reconstruction and needs to start
as soon as possible in the older parts of the City. Further, CSAH 75
and the CSAH 18 ramps are pending projects that are likely to be
completed in the next 2-3 years. The extension of 7th Street on both
ends will include some oversizing cost to the City considering the
collector status.
F.•I WPWIMBAWIAssessment Policy WE Session 2002.doc
Option 2
"25% Assessment"
Policv: This option would assess a portion of each reconstruction project in an
amount that can be justified. The minimum assessment to allow for
bonding is 20%, however each city varies in the proposed assessment
amount from approximately 20%-100%. Cities within the metropolitan
area vary from approximately 20%-50% of the street reconstruction, but
then do not assess the utility improvements.
Issues:
1. Financing —
• Using previously provided material, it is estimated that the net street
cost per unit would be $9,000. Assessing 25%-50% of that cost
would amount to a $2,250 to $4,500 assessment per unit. The
$4,500 is getting to be the top end of assessment amounts that can
be proved to increase the property value.
• Assuming a $1,500,000 project cost, with a 25%-50% assessment
would require a City contribution of $750,000-$1,125,000. This,
however, could be acquired through bonding initially, thereby
creating a more readily available source of funds.
2. Exceptions —
• Streets with no direct access (i.e. School Boulevard) would not be
assessed.
F. I WPWINIBAWIAssessment Policy n Session 2002.doc
Option 3
"Cedar Street"
Policv: Cedar Street was assessed using 20% of the cost to replace the existing
width and 100% of the expansion of the street to accommodate the new or
existing development.
Issues:
1. County Projects —
• Because of the County funding policy, the City does not necessarily
pay for standard items as if it were a City street. The City pays for
a similar portion of the project, but in different pieces.
2. Utilities —
• Assessing only 20% of the existing street may not be adequate if
the City plans to bond for the project and pay for utility
reconstruction. If the City intends to assess at least 20% of the
utilities there wouldn't be an issue or if the utility cost was paid for
from a utility fund.
3. Who gets assessed? —
• Would each parcel be assessed equally or by front footage or
based on access? Are commercial properties treated differently
from residential?
F.-IWPWINIBAPlUssessment Policy Wk Session 2002.doc
Miscellaneous Issues
1. Utility Assessments - Utility improvements are not typically assessed for the
pipes within the street. This cost is many times funded through a replacement
cost generated through the operating fund. The City operating fund does not
currently include any costs for replacement. The City recently did assess some
properties for watermain that already had access to watermain. On this project,
the watermain was assessed at $10.80/front foot and $900 for each water
service. It makes sense to continue to assess the services, however, the main
pipes are more difficult to justify.
2. Street Maintenance , - The proposed costs address street reconstruction and do
not address the increased maintenance. The seal coat budget should increase
yearly to allow for a seven (7) year cycle. There can also be a case made to
overlay the streets at the 20-25 year life. These costs should be included in the
yearly maintenance budget.
3. Street Desiqn — The costs included assume construction to City standard
widths. In some of the existing areas, it may be necessary to adjust those
standards to a lesser width, thereby possibly saving some cost.
F.•I WMARBAWAssessment Policy Wk Session 2002.doc
MAY -23-2002 11:52 ASSOCIATES INC. 7635411700 P.02i09
�1 CURRENT POLICY,
The following is the current policy for street reconstruction. There is not a policy on how to
charge for utility reconstruction, however, it has been the City's policy that the property owners
own the service all the way to the main and the City owns the main.
13-1-3: STREETS, INCLUDING CURB AND GUTTER
(A) All street improvements, including curb and gutter, shall be 100%
assessed against the abutting property on a front footage basis.
(B) The assessable footage on a street project consists of all front footage, not
including the long side footage on corner lots; and in the case of odd -
shaped lots, the footage shall be determined to be the footage at the
building setback line but shall in no event be less than the minimum lot
width as required by the City. Costs attributable to intersections and side
lot footage shall be included in the total amount to be assessed and
apportioned over the net assessable footage.
(C) City owned property shall be included as assessable footage and paid for
by the City.
(D) In the event street replacement is necessary as a result of underground
utility construction, the City may determine to assess 50% of the street
replacement cost.
(E) If the Council determines that the street, which must be replaced as a
result of the underground utility construction, was of such deteriorated
condition as to have been in need of replacement whether or not
underground work was necessary, then 100% of the street replacement
cost shall be assessed against the benefited property on a front footage
basis.
(F) In the event streets are restored to their condition prior to the underground
utility construction, the street cost shall be assessed on a unit basis as a
part of the utility construction cost. If the street is upgraded, the
difference between the cost of restoration to its prior condition and the
desired upgrading shall be assessed against the benefited property on a
front footage basis with the restoration cost being included in the utility
construction assessment on a unit basis.
(G) In no event shall assessments for street construction be spread over a
period of more than ten (10) years.
(#58, 7/10/78)
F;-1 RPiiINUU WUniusmou Infww9imstoc
MAY -23-2002 11:52 WSB & ASSOCIATES INC.
Q2 DISCUSS INFRASTRUCTURE NEEDS,
7635411700 P.03i09
While our primary discussion item is related to the assessment policy, the City must address all
infrastructure needs. The City has needs in many areas including the following:
■ Streets requiring reconstruction = $109000,000
Utility repair (unknown cost) assume = $1,000,000
■ CSAH 75 = $2,000,000
■ CSAH 18 Interchange (partial) = $2,000,000
■ Fallon Avenue Overpass = $3,000,000
These projects are all necessary within the next ten (10) years, with at least half necessary in the
next five (5) years. This would amount to an expenditure of approximately $1,700,000 per year,
with varying amounts in each year. Assuming that the City receives $200,000/year in State Aid
funds would leave a levy amount of $1,500,000/year. Considering inflation, the levy amount
should be adjusted 3-4% per year. If the City were to assess at least 25%,.a levy of $1,125,000
would still be required.
fitwpwnM&tW�WMS CMIef"MW16&d0C
MAY -23-2002 11:52 WSB 3 ASSOCIATES INC.
7635411700 P.04i09
Total Number of
Number of
Total Front
Front Footage
Properties with
Properties with
Footage
with Access
Frontage
Access
Residential 109
64
92517
5,198
Commercial 67
20
6,278
3,318
159795 FF
89516 FF
Assume 20% street assessment of $995,000 = $198,600
If spread equally by front foot or by front foot with access, the assessable cost would be $12/FF
and $22/FF, respectively. A 100 -foot wide lot would pay between $1,200 and $2,200 per lot.
If 100% of the cost were to be spread using the same method, the rates would be $60/FF and
$111/FF, respectively. Resulting in an assessment for a 100 -foot lot of between $6,000 and
$117100, respectively.
■ A $4,000 assessment to all properties with access would result in $336,000 in revenue.
F:1WPW11V "ii4tAsesMMIlO—da "
MAY -23-2002 11 52 w52 & ASSOCIATES INC. 7635411700 P.05i09
ASSESSMENT COST ANALYSIS
A $4,000 assessment spread over 10 years at 8% interest would have the following annual cost
based on the following methods:
E u 1 Pament
Years 1-10 = $5 96/year
Total = $5,960
Equal Princival
YEAR
1
2
3
4
5
6
7
i 8
9
10
TOTAL
PRINCIPAL
$400
$400
$400
$400
$400
$400
$400
$400
$400
$400
$4,000
INTEREST
$320
$288
$256
$224
$192
$160
$128
$96
$64
$32
$1,760
TOTAL
$720
$688
$656
$624
$592
$560
$528
$496
$464
$432
$5,760
MAY -23-2002 11:53 WS2 2 ASSOCIATES INC. 7635411700 P.07i09
ASSESSMENT POLICY WORKSHEET,
Item 5 — Pavement Management Plan
As the City of Monticello moves forward reconstructing streets, an annual program will be
developed in an effort to properly manage the reconstruction program and to make sure that the
appropriate streets are being reconstructed in the order of need. It is recommended that the City
develop a Pavement Management Plan. This plan will rate the streets on condition and will
allow the City to more accurately determine which streets should be reconstructed.
Update Rate Study
When the City constructed the new wastewater treatment plant some work was undertaken to
determine the rates charged for sanitary sewer treatment and water production. There was no
question at that time as to if any of those dollars related to production costs should be put back
into the reconstruction of the utilities. At this time very little cost is directed in this manner due
to the fact that most of the construction has been new systems over the past years. We are now
getting to the point where there will be reconstruction of watermain and sanitary sewer systems,
and we need to determine whether we need to try to assess for those items or have a utility fund
to pay for those costs. As it has been previously mentioned, it is difficult to assess the cost of
mainline reconstruction, however, services can be typically be assessed for removal and
replacement. Analyzing the entire city funding systems will be necessary to determine how
utility system reconstruction can be financed.
r. I WPW NI AAVA: umar1 Po11cy ;Vm rArA&rt =JaZ.lac
MAY -23-2002 11 53 Wc2 '/. -53CCIATc3 !NC. 7635411700 P. 08/09
■ Develop Public Information Sessions
As we move forward with significant street reconstruction in residential areas, it will be
important to develop a public information presentation which can be consistently used
throughout the affected neighborhoods. It is important that we remain consistent in the
information presented and try to provide an education process that can inform the public of all
the issues related to the street reconstruction program. This will be very helpful as the projects
start to minimize the discussion and anxiety during the public hearing and assessment hearing
meetings.
Consider a Stormwater Utility
A stormwater utility is a fielding mechanism established by the legislature that allows City's to
charge a fee for stormwater improvements related to the amount of impervious surface on each
particular property. This cost is billed as a part of the sewer and water bill on a quarterly basis
and generates dollars that can be utilized to pay for stormsewer improvements to existing
systems. The advantage to this program is that is does collect stormwater improvement dollars
from non-taxable entities such as churches. The downside is that people do consider it to be a
tax. Typically residential properties charge somewhere between $5.00 - $15.00 a quarter,
commercial and industrial properties with higher impervious areas are charged according to the
similar amount based on what a residential property would pay.
F. i WP►r04L«:Wwe& mt J%1ky Warb"a OJUMZ oe
MAY -23-2002 11:5--3 WSB 3 PSSCCIATcS INC. 7635411700 P.09/09
■ Bcnefit Appraisals
It may make sense to have some benefit appraisals completed that would provide information as
to how much different properties could usume as an assessment for street and utility
reconstruction. It is our infornnztion that it is beneficial in some ways to give the City an idea as
to how much various properties could receive in assessments. Typically if that property chooses
to challenge the assessment, appraisals will be completed in this instance it is just completed in
advance of the actual project. Before the final policy is adopted, it may make sense to complete
a few random benefit appraisals on properties in the City.
TOTAL P.09
6O OTHER
INFORMATION FROM 2001
ASSESSMENT POLICY WORK SESSION
AGENDA
1. CURRENT POLICY AND ASSESSMENT METHODS
2. APPROXIMATE STREET RECONSTRUCTION/REHABILITATION COSTS
3. TYPICAL STREET COSTS
4. ESTIMATE OF SYSTEM COSTS FOR STREET MAINTENANCE AND RECONSTRUCTION
5. POSSIBLE STREET MAINTENANCE PROGRAM
F.•IWPW7NIBAW11001 Assessment Policy Work Session.doc
I CURRENT POLICY AND ASSESSMENT METHODS
• New Construction
- Residential Developer pays 100% except for oversizing
above the City standards.
- Commercial/Industrial => Developer pays 100%
• State Aid Rates:
- City receives funding each year to pay for 1/20 1h of the State -Aid system (20%
of the system) that amounts to approximately 1/1001h of the City each year.
- Currently, the City assesses according to the new construction method and
collects the extra State -Aid funds for use on other street projects.
• Reconstruction
• Assess 100%
• Assess Set %
- City policy currently assumes 100% assessment if the street has exceeded the
20 year design life.
ASSESSMENT METHODS
While this is preferred, due to State law and the requirement that the property
must receive benefit, it is not likely this can be achieved.
- This can work and is a fair method to each property owner. However, because
each project can vary in cost, residents receive differing assessments from their
neighbor. Typically, Cities assess anywhere from 20-50% of replacement costs
and attempt to assess 100% of new items such as curb and gutter and storm
sewer.
• Assess a Set Amount
- Some Cities choose to assess a fixed amount to each property year after year so
that everyone is treated equally. Usually, this amount is set based on a benefit
appraisal to determine what a typical house receives in benefit (approximately
$2,000 - $5,000).
• 3 Year Average
- With this method residents are charged based on a three year average of
construction costs. This may or may not be legal if the actual costs are lower
than the assessment.
• Commercial/Industrial
- Most Cities assess the actual reconstruction cost to these properties on all street
frontage regardless if there is an access or not.
• Residential
- Most Cities assess on a unit basis with no regard to the lot size or street front
footage unless the lot can be subdivided into additional lots.
These assessment issues apply only to the street and storm sewer project costs. Sanitary sewer and
watermain replacement and repair costs are not addressed. Most communities complete utility repair
and replacement from their core funds (funds that are generated through user fees).
F.-IWPWIMBdW12001 Assessment Policy Work Session.doc
2 APPROXIMATE STREET RECONSTRUCTION/REHABILITATION COSTS
Total Length of Streets within Monticello
Trunk Highway
County Highway
Total City Road Length
Background;
1. 15.96 Miles or 40% of all Monticello streets
are 20+ years old
2. 3.9 Miles of these 20+ year old streets are
without curb and gutter
3. 12.06 Miles of these 20+ years old streets
have curb and gutter and storm sewer
(reconstruction of these streets assumes
removal and replacement of 25% of the curb
and gutter)
4. . Roads with curb and gutter have storm sewer
5. 7.98 Miles or 20% of Monticello streets are
10-20 years old
6. 15.96 Miles or 40% of all Monticello streets
are 1-10 years old
7. Streets 20+ year old have fulfilled their
design life and are subject to reconstruction
within the foreseeable future
8. Streets 10-20 years old are assumed to
receive a structural overlay to extend the life
span to 25-30 years subject to their existing
condition.
= 51.0+ Miles
<3.9 Miles>
_ <7.2 Miles>
39.90 Miles
(growing at - 3.5%/year
or 1.4 miles/year)
9. Construction Estimate Costs are based on the following
• Street Reconstruction = $21.50/SY of pavement
• Bituminous Overlay = $3.50/SY
• Remove and Replace Curb and Gutter = $20.00/LF
• Storm Sewer = $6.90/SY of pavement
• New Curb and Gutter = $15.00/LF (Includes both sides of the street)
F. t WPW"APA2001 Assessment Policy Work Sessiomdoc
3 TYPICAL STREET COSTS
• Existing Rural Streets in Good Condition
Example: 7th Street (Cedar Street to Washington Street)
- $370,000 Estimated Cost
- 4,500 front feet
- $83.00/FF
7th Street is currently a 40' wide rural section street. Upgrading includes removing the ditches,
adding concrete curb and gutter and storm sewer. The cost includes a 2 -inch pavement overlay.
• Downtown Streets with Concrete Curb and Gutter
Typical Residential Block
400' x 150' w/5 houses
- $44,900 Estimated Cost
- $8,980/house
The costs assume %2 of a block because there are many corner lots in Monticello. Many of the
streets are 36' wide and include curb and gutter and storm sewer. Reconstruction would involve
curb repair and replacement of the pavement surface and subgrade.
• Rural Design Citv Streets
- Widths range from 24'-28' without curb and gutter
- Ditches provide stormwatcr control
- Proposed improvements would include curb and gutter, storm sewer and new pavement
- Issues include determination of width, existing trees and parking
Example: Assume a 400' Block - 5 houses/side
- $53,400 for %2 of road to be reconstructed
- 400 front feet
- $133.50/FF
F.•IWPWINIBAM2001 Assessment Policy WorkSession.doc
4 ESTIMATE OF SYSTEM COSTS FOR STREET MAINTENANCE AND
RECONSTRUCTION
Reconstruction of streets currently constructed with curb and gutter
• 12.06 Miles = 63,677 FT x 33 FT = 2333,500 SY
• 2337500 SY x $21.50/SY (pavement) _ $5,020,250
• .25 x 63,677 x $20.00/LF (curb) _ $3183385
$5,338,635
10% Contingency = $533,864
$5,872,500
28% Indirect = $1,644,300
$7,516,800
Reconstruction of streets currently constructed without curb and gutter
• 3.9 Miles = 20,592 FT x 33 FT
= 66,352 SY
• 661352 SY x $21.50/SY (pavement)
_ $1,426,568
• 201592 FT x $15.00/LF (new curb)
_ $308,880
• 75,504 SY x $6.90/SY (storm sewer)
_ $520,980
_ $2,2561,428
10% Contingency
= $223,642
_ $2,482,070
28% Indirect =
$694,979
_
$3,177,050
Overlay 10-20 Year Old Roads
• 7.98 Miles = 421134 FT x 33 FT = 1557000 SY
• Overlay Cost
1551000 SY x $3.50/SY = $5427500
_ $542,500
10% Contingency = $54,250
_ $596,750
20% Indirect = $119,350 (less overhead costs)
$716,100
Seal Coat 1-10 Year Old Roads
• 15.96 Miles = 84,270 FT x 33 FT = 30900 SY
• Seal Coat and Crack Seal
309,000 SY x $0.75/SY = $231,750
_ $231,750
10% Contingency = $23,175
_ $254,925
15% Indirect = $38,238 (Reduced due to staff coordination
$293,163 and limited indirect costs)
F: I WPWFMBAW12001 Assessment Policy Work Session doc
This cost assumes construction of all items in one year to provide a present day cost. These costs would
be spread over a period of time and in the case of the overlay and seal coat would be budgeted annual
costs in addition to the street reconstruction program.
Summary of Estimated Expenditures
2000 Dollars
20+ Years Roads
Roads with Curb and Gutter
Roads without Curb and Gutter
10-20 Years Roads
1-10 Years Roads
= $7,516,800
= $37454,100
= $763,840
= $326,300
Total = $12,061,040
F. I WPWINIBAW12001 Assessment Policy Work Session doc
5 POSSIBLE STREET MAINTENANCE PROGRAM
Annual Prozram
• Reconstruct Streets on a 30 Year Interval
- 40 miles* x 1/30 system/year
• Overlay Streets @ 20 Years
- 40 miles x 1/20 system/year
• Crack Seal and Seal Coat Streets @ 7-15 Years
= 1.33 miles/year -- $650,000/year
= 2.00 miles/year — $200,000/year
- Streets seal coated two times in first 15 years.
- 2 x 40 miles x 1/15 system/year = 5.33 miles/year -- $100,000/year
Proposed Program
• Establish a 7 Year Reconstruction Program for all Streets Currently 20+ Years Old
- Based on a $7,500,000 total cost, the annual cost for this would be $1.3 million
per year for 7 years
- During this time the annual reconstruct program would not be initiated
- Initiate the overlay and expand the seal coat program to the proposed annual
program. These costs would be adjusted in the budget annually to account for
growth in the system.
• Establish Pavement Management Program in 2001
- Rate all streets
- Assign a Pavement Condition Index (PCI) value on all street segments based on
a predetermined method for rating streets
- Rank streets from high to low
- New streets have highest PCI value, streets to be reconstructed have lowest PCI
value.
- Streets rated annually.
- As streets are reconstructed, assign PCI value and enter into Pavement
Management Program
- Program annual costs for reconstruction of streets, overlays, and seal coats
* Note: Currently the City has 40 miles of local streets. This quantity has been increasing at a
rate of 3.5% per year or approximately 1.4 miles.
F.•I JFPWDABAWL001 Assessment Policy Work Session.doc