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031609 CC WS MinCITY OF SHOREWOOD CITY COUNCIL WORD SESSION MONDAY, ARCM 16, 2009 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5735 COUNTRY CLUB ROAM SOUTHSIIO CENTER 5:30 P.M. Mayor Lizee called the meeting to order at 5:35 P.M. A. Roll Call Present. Mayor Lizee; Councilmembers Bailey, Turgeon, Woodruff, and Zerby; Administrator Heck; Finance Director Burton; Director of Public Works Brown; and Engineer Landini Absent: None B. Review Agenda Turgeon moved, Woodruff seconded, approving the agenda as presented. Motion passed 510. 2. 20 YEAR ROAD PLAN Director Brown stated during its March 2, 2009, work session Council discussed the 20-Year Pavement Management Plan (PMP). The PMP reflects roadways with a 2008 PASER pavement rating of less than 5, which equates to approximately 8.5 miles of roadway, which are targeted for reconstruction over the next 20 years. The estimated cost to do so is approximately $35.2 million. During that meeting Staff discussed the concept of considering pavement reclamation rather than reconstruction for some of those roads to reduce the cost. Council directed Staff to provide the following additional information for review and discussion at this work session: a color graphic depicting the 2008 pavement inventory; a decision flow chart to use in determining if the PMP roadways are candidates for reconstruction or reclamation; a revised PMP showing Staff's initial suggestions about which roadways should be reconstructed and which should be reclaimed (including revised costs); and various road assessment policies of surrounding communities. The information was included in the meeting packet for this evening. He thanked Engineer Landini for his efforts in preparing the requested information. Councilmember Woodruff and Councilmember Zerby requested the colors on the graphic be made a little easier to distinguish. Woodruff requested that the graphic be put on the City's website with a description of what the different colors mean, and stated he thought the graphic was great. In response to a comment from Councilmember Bailey, Director Brown stated when a roadway is reconstructed it receives a rating of 10 and generally the rating is reduced to a 9 the following year. Brown stated when roadways are rated in the 4 range their deterioration becomes more rapid; those with a higher rating have a much slower rate of deterioration. Director Brown reviewed the decision flow chart. He noted that at the end of the decision process one of the results is to "consider" a reclamation process, not necessarily a decision to do so. He stated one key decision point is if there is adequate right-of-way, noting that to determine this takes a great deal of work. It requires an owners and encumbrances report; the report identifies who owns and property and what rights-of-way they have. The time it takes to receive a report for a roadway after it's been ordered varies based in part on the number of properties abutting the roadway. Engineer Landini noted the cost for the encumbrances report ranges from $75 - $85 per property. Brown stated a decision point should be added to ask if the City can acquire the adequate right-of-way if it doesn't exist. Councilmember Woodruff CITY OF SF OREWOOD WORD SESSION MEETING MINUTES March 16, 2009 Page 2 of 6 suggested if the answer to that decision point is no it should flow into the significant drainage decision point. Brown then explained when a roadway is overlaid it is milled out in front of driveways and 1.5 - 2 inches of asphalt is put down over the roadway. When a roadway is reclaimed the existing pavement is ground up and it becomes essentially subsoil, and then 2.5 - 3 inches of asphalt is put over the ground up pavement. This process consumes more material. When roadways are new they have a crown in the center and slop gradually to the edges. Most of the City's roadways are flat because of the number of overlays. During reclamation a crown is reestablished on the roadway. Roadway reclamation may strengthen a roadway, but it won't address deep substrate issues. A decision point should be added to the flow chart for substrate issues. Soil impacts the dynamics of what occurs with roadways. Brown went on to explain the cost to reconstruct all roadways in the PMP is approximated to be $35.2 million. The cost to reclaim a large number of the roadways and reconstruct the others is approximated to be $13.6 million. Coumcilmember Woodruff commented the revised PMP indicates Vine Hill Road will be reconstructed, yet during the March 2nd work session Staff indicated the City of Minnetonka does not have the resources to reconstruct Vine Hill Road and is seeking an estimate to mill and overlay it. Brown stated he hoped Vine Hill Road could be reclaimed, and if so the revised PMP cost would be even lower. Brown then stated he did not think reclaiming all of the roadways in the PMP is a viable option. Based on a comment from Woodruff, Brown stated Staff will review the cost estimates in the reclaim only projections. Brown stated he continued to believe reconstruction of roadways is the best cost benefit for the City over the long-term, but the costs to reclaim some of the roadways may make the PMP costs more palatable. Brown explained a reclaimed road should have a service life of 15 - 18 years. An overlaid road should have a service life of approximately 10 years. A reconstructed roadway should have a service life of 30 - 35 years if it's properly maintained. Mayor Lizee stated if the outcome of evaluating a roadway indicates a roadway could be considered for reclamation, it would still be prudent to evaluate that roadway based on its own unique properties and issues. She cited Harding Lane as an example of a roadway with serious storm water issues that cannot be solved with reclamation. Director Brown stated Harding Lane is burdened by subsurface water flow. He thought if a layer of sand could be placed under a newly constructed roadway surface it would serve as a large drainage conduit. A key component of either reconstruction or reclamation is the management of the subsurface water. He explained that with the reclamation of Strawberry Lane the reclaimed asphalt was ground very coarse and that helped with drainage. Councilmember Turgeon stated she attended a Minnehaha Creek Watershed District (MCWD) meeting on March 12, 2009, during which Rule N and abstraction of storm water was discussed. She questioned what the impact would be on the City's roadway projects costs if the MCWD adopted what is known as Rule N. Engineer Landini explained the MCWD is going to propose Rule N which will require the City to install a system that would abstract (i.e., remove) the first one-half inch of each rainfall as part of each roadway project; the storm water would not be released down stream. That rainwater would have to be stored in tanks, or underground infiltration under reconstructed roadways, or in a big regional storage location, or rain gardens in residential properties, etc. None of these are planned or budgeted for. Councilmember Turgeon stated the MCWD discussion focused a lot on roadway reconstruction projects, which would require reservoirs be installed. She referred to the system installed under the CUB Foods parking lot as an example of what would have to be done. Director Brown stated that type of system CITY OF SHO EWOO WO SESSION MEETING MINUTES March 16, 2009 Page 3 of 6 would be the macro system. He then stated he thought the approached used on Strawberry Lane could be suffice to accomplish the required result. As part of that approach a drain tube was installed, engineering fabric was then put in, and then a substantial amount of rock was placed over that. That system can store a lot of water. There may be times where a storm water pipe may have to be installed. He did not envision the City would have to go to the extreme CUB Foods did. Councilmember Zerby questioned if the City should consider adjusting its hard cover requirements. Councilmember Turgeon stated the MCWD considers grass as hardcover. Councilmember Woodruff questioned what would trigger the City having to adhere to Rule N should the MCWD adopt it. Engineer Landini explained the City would have to disturb something to trigger it. Councilmember Turgeon explained there would have to be development, redevelopment, commercial development or linear projects. Any of those types of projects on at least a one-half acre lot would require abstraction. Woodruff questioned if a seal coating project or a mill and overlay project would trigger the need for abstraction. Engineer Landini stated the MCWD has not decided what types of projects trigger the requirement because the MCWD has not drafter the abstraction rule yet. Landini stated he did not think a seal coat project would trigger it because nothing is being disturbed; a seal coat project does not require a permit from the MCWD. In 2008 a mill and overlay project required the City obtain a construction NPDES permit. That may not the case in 2009 because the NPDES rules have been changed. It is likely abstraction would be triggered by a reclamation or reconstruction project. The triggering event will depend on how the MCWD writes the abstraction rule. Woodruff asked what Staff thought the additional cost would be for a reclamation project if the City had to abstract one-half inch of rainwater. Landini stated that would depend on how wide the reclaimed road would be. Director Brown noted when the City began the process of updating its Comprehensive Water Resource Management Plan the MCWD wanted the City to reduce its storm water runoff to that which existed twenty plus years ago independent of disturbing any surface. He stated staying abreast of storm water regulations is very time consuming as they are continually changing. Councilmember Turgeon stated at the MCWD meeting there was discussion about exempting linear projects from the rule. Councilmember Bailey stated the revised PMP does not factor in those roads currently rated 5 that will deteriorate to less than a 5 rating over the 20-year period. Factoring them in could increase the 20-year PMP costs significantly. Director Brown stated Staff needs to have a few years of experience with managing and revising this plan before it can somewhat accurately factor that in, noting the costs are underestimated. Bailey stated he was not implying the City should not move forward with the PMP. Brown stated the PMP will have to be reviewed and updated annually to reflect more recent information. He also stated situations may occur where part of a roadway is reclaimed and another part is reconstructed. In response to a comment by Councilmember Woodruff, Director Brown stated storm water improvements and sewer improvements done as part of a road reconstruction project are funded out of the respective funds. Those improvements are not included in the PMP costs. Administrator Heck stated for Smithtown Lane there are reclamation costs in 2009 and again in 2024. He asked if that was for another reclamation effort, to which Engineer Landini responded year. He noted the reconstruction/reclamation costs are missing nine years of amortization. Director Brown stated he thought the service life of a reclaimed roadway could be extended to possibly 18 years if water and subsurface soils are managed appropriately. CI'T'Y OF ST- OREWOOD WORK SESSION MEETING MINUTES March 16, 2009 Page 4 of 6 Councilmember Turgeon stated the estimated cost to reconstruct Amlee Road/Manitou Lane/Glen Road is approximately $1.4 million and the cost to reclaim the roads is estimated to be $480,500. She thought the property owners along those roadways would probably find the reclamation solution more appealing. A reclamation approach would probably resolve many of the issues, and it would be nice to have the potholes fixed. She thanked Staff for coming up with an alternative. Discussion turned to road assessment policies. Director Brown stated the meeting packet included a draft roadway upgrade assessment policy for the City written in 2006. He had thought it addressed more details than it actually does. The policy states assessment will be based on a unit basis, but does not define what a unit is. The policy states that 35 percent of the cost to upgrade a 24-foot-wide roadway surface would be considered for assessment. He thought the policy was in very draft form and needs a fair amount of work. He stated the packet also included assessment policies for the Cities of Golden Valley and Victoria, as well as responses from the Cities of Chanhassen and Orono regarding their lack of policies. Many communities fund roadway improvements out of their general fund (i.e., out of their general tax levy). Councilmember Woodruff asked if there was any history about Councils discussing the 2006 draft policy. Director Brown explained he had brought the topic of assessing for roadway improvements before Councils three different times. The general consensus was always to fund them out of the General Fund. Councilmember Turgeon stated that although State Statutes allow for a city to assess for improvements, it is difficult to determine the benefit a property owner would receive from a roadway improvement when other individuals obtain benefit from roadway improvements. Councilmember Woodruff stated he has personally struggled with whether or not a special assessment process if fair. He questioned how Golden Valley and Victoria have or are able to defend their policies if challenged by property owners. Based on discussions he has had with assessors they have difficulty determining the value of roadway improvements to a particular property. Director Brown stated lie thought a 33 - 35 percent assessment would standup in court. Cities are starting to lower their assessment rates to make it more difficult for property owners to challenge them in court and win. There are courts cases that substantiate that. It appears as if it is difficult for property owners to successfully challenge a 25 percent rate. Councilmember Turgeon questioned if assessments were more applicable in growing communities where there is a lot of commercial and industrial development occurring (the developments are assessed for the construction of roadways). Director Brown stated new developments in commercial areas generate tax revenues that flow directly into road funds. He then stated Tonka Bay funds its roadway improvements out of its general fund, and that is likely the same for most residential communities. More fully developed commercial communities tend to have a more formalized assessment policy in part because it's easier to accept assessments on commercial properties in a public hearing process than it is for residential properties. Administrator Heck stated assessments are based on anticipated traffic flow to reach a retail establishment. Councilmember Woodruff stated whether or not the City chooses to assess or use General Fund funds, it will still have to issue bonds to obtain funds. He questioned if there would be any benefit to back up some amount of bonding with special assessments versus General Fund monies. Director Burton stated there are some fiscal advantages. She stated Staff tried to schedule the City's bond consultant to attend this meeting but lie was unavailable; he will be scheduled for a future meeting. She commented small cities often routinely assess for improvements because they do not have the tax capacity to fund them out of their general funds. CITE' OF SHOREWOOD WORK SESSION MEETING MINUTES March 16, 2009 Page n16 Councilmember Woodruff stated he leans toward funding roadway improvements out of the General Fund given the City has to bond anyway. If the City ends up in litigation over an assessment challenge it disturbs the execution of the PMP. The General Fund approach is more straight forward, even though it requires a referendum. He asked if lease revenue bonds were available for roadway improvements, to which Director Burton responded no. He would like a street improvement district approach if it were available. Councilmember Zerby stated the roads on the east end of the City are not in the PMP, yet they could be taxed through the general levy tax for improvements to roadways in other parts of the Cities if the General Fund approach is used. He suggested property owners be assessed for some portion of the improvement costs. Director Burton stated a minimum percent must be assessed to qualify for Chapter 429. Mayor Lizee stated finding comes down to philosophy; what does a property owner pay for living in a civil society. There is public safety, there are utilities, there are paved roads, etc. Councilmember Zerby stated when roads are constructed as part of a development the developer pays the cost; that cost is factored into the cost of the property. In effect the roadway is donated to the City when the development is completed. The property owner has an investment in that road, and at some point they should continue to have some stewardship in the maintenance of the road. Mayor Lizee stated most of the City's roadways were constructed when the City sewer system was install in the mid 1970s. Councilmember Turgeon stated her property abuts a roadway build in 1957, and she has no investment in the roadway as she did not own the property back then. Lizee stated when Turgeon took ownership of that when she purchase her property. Turgeon stated over the years property owners tax dollars have gone toward maintaining roadways. Councilmember Woodruff stated the City has established a precedent for funding roadway improvements. The City has always funded them out of the General Fund. He cited the example of the Shady Island Bridge replacement being funded out of the General Fund with some county funding, yet it basically benefited the residents on Shady Island. He stated he continues to like the General Fund approach for funding roadway improvements. Councilmember Turgeon stated she favored funding roadway improvements out of the General Fund. Councilmember Bailey stated from a philosophical perspective he is more attune with the special assessment approach, but he is unsure if it will realistically work. He does not like the thought of property owners thinking they can have veto power over roadway improvements. He expressed if the City chose the assessment approach improvements may never be completed. He stated he wanted improvements to get done. He expressed hesitancy about assessing for improvements in these dire economic times because of how property owners would likely react. He somewhat favored a bonding referendum being placed on the 2010 election ballot because it would make the residents support for or against roadway improvements very visible. Councilmember Woodruff concurred with Bailey's last statement. Bailey expressed concern that if the City were to assess for some portion of the improvement costs and put the bonding referendum on the ballot residents may vote against the referendum because they were against assessments and not necessarily bonding. Director Brown stated the City of Minnetonka did an excellent job of marketing the need for an increase in its general tax find levy for roadway improvements to its residents. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 16, 2009 Page 6 of 6 Administrator Heck stated the City of Excelsior dedicated a certain percent of its general fund tax levy to roadway improvements, and the remainder of the levy had to cover the rest of the needs. The PMP provides an estimated cost for road repairs for the next 20 years; therefore, the amount the City has to levy to cover the cost is known for planning purposes. If roadway improvements is a priority, than that cost is the first thing that should be funded out of the levy. There was ensuing discussion about the frequency for issuing bonds. Director Burton noted the bonds have to be substantially used within two year time period. Director Brown stated the next thing that has to be done with regard to the PMP is to determine what financing approach Council wants to use. The City's bond consultant will review bonding options with Council at a future meting. In response to a comment from Councilmember Woodruff, Administrator Heck explained a street improvement district process is based on a 5-year plan and the costs are spread out equally and included on residents' utility bills. The utility revenues are used to pay the bonds. He commented feedback he has received indicates that at the State Legislature the people who have been resistant to this in the past are becoming more receptive to it. The business communities are quite resistant, and he did not understand why. Council thanked Staff for all of its work. Mayor Liz6e stated the City of Minnetonka's request for authorization to establish street improvement districts was defeated by a vote of 4 to 2 in a local government committee; there were a number of business groups testifying against it. A similar request from the City of Sleepy Eye was defeated by a vote of 3 to 3, noting Sleepy Eye wanted to bring this forward as a referendum. Councilmember Turgeon stated she read that because of the proposed budget cuts to the courts by Governor Pawlenty office, some cities are exploring options for prosecuting traffic tickets themselves to recover some potential lost revenue. Administrator Heck explained the League of Minnesota Cities has submitted a bill that would require consistent fines across the State, it would limit the types of violations cities could enforce, and it would improve due process. 4. ADJOURN Zerby moved, Turgeon seconded, Adjourning the City Council Work Session Meeting of March 16, 2009, at 6:55 P.M. Motion passed 510. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Christine Liz6e, Mayor