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11-08-10 CC WS MinutesCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, NOVEMBER 8, 2010 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:05 P.M. Mayor Liz6e called the meeting to order at 6:02 P.M. A. Roll Call Present. Mayor Liz6e; Couneilmembers Bailey, Turgeon, Woodruff and Zerby; Administrator Heck; Finance Director DeJong; 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. ROAD FINANCING Director DeJong stated the creation of the street maintenance financing plan was a great team effort. It involved pulling together a great deal of disparate information. Director Brown and Engineer Landini educated him on what occurs with regard to infrastructure improvements. Ideas and approaches were bounced off Administrator Heck. It has taken about one and one -half months to prepare this iteration of the plan. DeJong explained Staff reviewed all 536 road segments in the Hennepin County base map in the City's graphic information system (GIS). A segment is each street from intersection to intersection or the City border. The segments the City is responsible were grouped together, where it made sense, resulting in a list of 193 roadways. All of those roadways are included in the 20 -Year Pavement Management Plan (PMP). Director Brown created a spreadsheet for each of the roadways that contains all of the base data (e.g., width and length) necessary to estimate the cost to improve (sealcoat, mill and overlay, reclaim and reconstruct) each roadway. Brown, in consultation with Public Works personnel, also identified roadways with poor base soils. Engineer Landini updated the costs for the improvements based on recent bid tabs for other improvement efforts. A 2 percent inflation factor is factored into the costs. The inflation factor amount will have to be revaluated periodically. DeJong noted that during its October 11, 2010, work session Council decided roadways with a Pavement Surface Evaluation and Rating (PASER) System rating of 2 or less will be considered for reconstruction or reclamation. He explained routine preventive maintenance (sealcoating and overlays) will be done on roadways with ratings higher than 2 to extend their useful life unless a roadway is scheduled to be reconstructed or reclaimed in the near future. Roadways with poor base soils have been scheduled for reconstruction. DeJong explained the PMP indicates when some type of maintenance or improvement will be done on each roadway from 2011 — 2030. The 20 -year street maintenance financing plan includes the CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November S, 2010 Page 2 of 6 maintenance and improvement costs for each roadway in each of the twenty years. The plan also reflects each year's projected beginning and ending balance in the Street Reconstruction Fund, the transfers into the Fund and expenditures out of the Fund. The yearly transfer -in amount is $700,000. The projected deficit over the 20 -year period is approximately $2.2 million. The most costly project is the reconstruction of Eureka Road going north from Smithtown Road scheduled for 2019. The estimated cost is over $1.9 million. Some method for financing that project will have to be identified. The financing plan indicates that in order to make the program self funding over the 20 -year period the yearly transfer - in amount should be increased to approximately $820,000 starting in 2012. DeJong then explained every roadway is on a five -year sealcoating schedule with the exception for the roadways on Enchanted and Shady Islands. Those roadways are on a seven -year cycle which is consistent with the City of Minnetrista's sealcoating schedule. The sealcoat schedule for Dellwood Lane will be corrected to reflect the seven -year cycle. Councilmember Bailey asked why Afton Road is scheduled to have a mill and overlay in 2011. Director DeJong explained that roadways with a PASER System rating of 3 or 4 are considered to be ready to be overlaid, and Afton Road is rated a 4. Bailey then asked why Bayswater Road, currently rated a 6, is scheduled to be overlaid in 2019. Director Brown explained roadway rating information is only available for 2005, 2006 and 2008 — 2010. Staff used that limited amount of data to forecast when a roadway's rating will fall to a 3. As the data pool gets bigger the forecasting will be refined. Roadway specific actual deterioration data will eventually be used to forecast its deterioration rate. He stated he thought the current forecast is good. Bailey also asked if all roadways currently rated a 6 are expected to deteriorate to the condition, a rating of 3, where they will require a mill and overlay at the same rate as Afton Road. Brown responded the forecasting process at this time is fairly linear, but over time the individual deterioration rate of individual roadways will factored into the forecast. Administrator Heck stated in order to be able to use average ratings to some extent Staff factored out those ratings that went up because some type of maintenance had been done to the roadway during the 2005 — 2010 time period. He thought the forecasts are good based on the limited amount of data available. He then stated roadways with a rating of 3 or 4 with poor base soils will be allowed to deteriorate to a rating of 2 and then they will be reconstructed. Councilmember Bailey stated Brand Circle, currently rated a 5, is scheduled to be sealcoated in 2011, 2016, 2021 and 2026 and then reconstructed in 2029. Administrator Heck stated that roadway has poor base soils so it will have minimal maintenance done to it until it needs to be reconstructed. Director Brown stated that after looking at the data it appears the City's roadway patching and sealcoating efforts are extending the length of time before a roadway will have to have a mill and overlay. Councilmember Bailey stated based on this discussion it appears to him that Staff had considered some of the individual characteristics of each roadway when forecasting its improvement schedule. Director Brown responded that is correct. Councilmember Turgeon stated the plan is one of the best laid out plans Council has seen. She asked if the cost estimates for reconstruction include costs for easement acquisitions should that be necessary. Director Brown responded only from the perspective that there is a 20 percent contingency built into the cost estimates. He stated Staff exercised caution so as not to over inflate the estimates too much or to estimate them too low. Administrator Heck stated the City should receive Minnesota State Aid (MSA) reconstruction funds available for reconstruction of MSA roadways, noting that in order to be eligible to CITY OFSHOREWOOD WORK SESSION MEETING MINUTES November 8, 2010 Page 3 of 6 receive that funding the roadways will have to be reconstructed to state standards. Heck then stated the cost estimates do not include dollars for rights -of -way acquisitions. Councilmember Woodruff stated he thought Staff's efforts yielded fantastic results, acknowledging that a lot of work went into this process. Ile then stated if the estimated costs are within 20 percent of the actual costs he would be pleased. Woodruff asked if the reclamation rehabilitation option has been discarded because none of the roadways are scheduled to be reclaimed. Director Brown stated it's still a viable option it just isn't the appropriate option for the roadways scheduled for rehabilitation in the 20 -year program. Brown explained for roadways that have to be rehabilitated Staff focused on the roadways it believes won't last 20 years and those have to be reconstructed. For roadways that appear to be relatively stable the goal is to try and maintain them through overlays. Woodruff then asked why Mill Street is not in any schedule. Director Brown responded it's a Hennepin County road. Woodruff stated Enchanted Point is a gravel road yet it is scheduled for a sealcoat in 2017. He then stated he has spoken with Administrator Heck and Engineer Landini about trying an experimental treatment to put some type of a seal on that roadway in 2011 and he asked that conversation continues. Administrator Heck stated that experimental treatment called fog seal will occur on that roadway in 2011. Engineer Landini explained the process will model the process used in Aitkin County. Woodruff stated if the fog seal process works it could be used on the other gravel roadways in the City. Director Brown stated there are two other gravel roadways. Woodruff commented Lakeway Terrace is rated 5 and he takes issue with that. He stated that roadway is scheduled for an overlay in 2012 and he is comfortable with that. Woodruff asked if someone could develop a statement that would conceptualize for the residents what the City's philosophy is when roadways reach various conditions. He would like the residents to know what the street maintenance program will deliver. For example, the City will make sure roadways will have a PASER System rating of 3 or higher and if a rating falls below a 5 it will be scheduled for maintenance within one to two years to restore the rating to 5 or higher. Administrator Heck stated he thought that was covered when Council discussed the calculated the average condition of roadway pavement surfaces during it October 11, 2010, work session. He challenged Council to come up with that the policy should be for roadway maintenance. Director Brown stated tentative decisions have been made to let some roadways deteriorate to a rating of 2 and then they will be reconstructed. This is in conflict with Councilmember Woodruff s suggestion. He cautioned against saying roadways will be maintained to a rating of 5 or higher. He suggested residents be encouraged to look at the PMP which could be placed on the City's website. Councilmember Turgeon stated she thought it important to have something to communicate to the residents about what the City's goal is. She agreed with putting the PMP on the website and she suggested soliciting feedback on it from residents, noting the PMP could change from year to year. Councilmember Bailey commented it was an eye opener when residents did not want to have Star Circle and Star Lane reconstructed. He stated there is nothing that upsets him more than potholes when it comes to roadway conditions. He finds that to be disconcerting. Potholes needed to be filled in. Director Brown stated Public Works personnel start patching as soon as asphalt is available in the spring and up until the asphalt facilities are closed for the season around Thanksgiving Day. Even so, it's a CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 8, 2010 Page 4 of 6 challenge to fill in all of the potholes on each and every roadway. He noted he understands potholes are an issue and they need to be addressed. Councilmember Woodruff stated he would like to have a policy that states if a City-owned roadways falls below a rating of 5 then the City will do maintenance on the roadway to restore it to a rating of 5 or higher within two years after it falls below a rating of 5. The policy should also include that the City will strive to fill in every pothole on every roadway annually. Councilmember Zerby agreed that it would be a good idea to establish a policy, but he thought there needed to be some flexibility in it to allow for situations such as when a bad winter causes havoc with the roadway conditions. Director Brown noted that Councilmember Woodruffs suggested goals can't be achieved with the available resources. Councilmember Woodruff responded that Council needs to talk about this and decide what goals it wants to achieve. Administrator Heck stated there are different degrees of potholes and at a minimum the goal should be to fill in the more significant ones. Director DeJong cautioned against having a policy that states if a roadway's rating drops below 5,maintenance will be done to the roadways within 2 years to restore the rating to 5 or higher. For example, Star Circle and Star Lane are rated 3. Residents have indicated they think they should be rated 4. Those roadways will not have any maintenance done to them until 2015. The PMP is in contradiction to Woodruff s suggested goal. He does not want to City to create an expectation it won't live up to. Mayor Liz& stated the Public Works Director, the City Engineer and the Councilmembers and somewhat subjective when rating the condition of a roadway. Therefore, there needs to be some flexibility with the PMP. Director Brown thought there is great value in having a PMP to show to residents Councilmember Turgeon thanked Staff for all of the work done to update the PMP and create and 20- year street maintenance financing plan. She thought the information is extremely beneficial. Director DeJong noted the revised financing plan provided to Council today does not include the costs for storm sewer infrastructure repairs; the previous version did. The average annual cost for the repairs included in the previous version was about $100,000. The storm sewer rates will eventually have to be increased to fund the costs of those repairs over the next twenty years. He explained the storm sewer costs in the Stormwaater Management CIP don't tie out very well with specific projects. He stated the projects in that CIP will be revised to coincide with the latest revision of the PMP. Director DeJong stated the cost estimates in the financing plan are not all inclusive. There are other variables not captured yet. The 2010 costs are estimated costs, not actual. Once the estimated costs are replaced with the 2010 actual bid costs the 2011 beginning balance will likely change. Director DeJong explained if the $700,000 transfer -in amount were inflated by 2 percent annually by 2022 or 2023 the amount would be approximately $850,000 annually. It could be left at that rate for a while. Including that inflation factor would help fund the 20 -Year PMP. There would be a positive balance in 2030. Starting in 2019 there will be a big funding gap because of the approximate $1.9 million projected cost to reconstruct Eureka Road North. It's projected there will be a deficit of approximately $1.5 million in 2020 even with the inflation factor included. An additional source of interim financing CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 8, 2010 Page 5 of 6 will have to be identified. Financing could come from other City funds, from bond financing or MSA construction reimbursements. He recommended reconstructing MSA roadways as soon as MSA allocations become available in 2012 or 2013. He stated the financing plan will be refined as more information becomes available. Councilmember Turgeon stated based on what Director DeJong has stated the City should be able to fund the PMP with internal transfers, by including the inflationary factor, and through the use of MSA funds. It should not have to bond for roadways reconstruction. Director DeJong stated he thought the City has sufficient resources but it depends on how the resources are committed. If the funds in the Liquor Fund were transferred into the Street Reconstruction Fund that would definitely lessen the financing problem. He noted it's his understanding that Council has promised the residents that it will solicit input from them on how the Liquor Fund should be used. He stated the City has not assessed for roadway improvements and currently does not have any plans to do so. Using the Liquor Funds for roadway improvements could be considered a benefit to all residents. Councilmember Turgeon stated no Council has wanted to assess for roadway improvements. She then stated from her vantage point using the funds in the Liquor Fund would be the logical thing to do. Mayor Lizee stated the information prepared by Staff is incredible. Councilmember Bailey stated he would like the 2 percent inflation factor to be factored into the transfer- in amount in the financial plan. It does not make sense not to account for increases in costs. He indicated he was pleased with the information provided. Administrator Heck stated another potential funding source for projects is the revenues received from antenna rental space on the City's water towers. That could be used for roadway projects. Councilmember Woodruff stated he is comfortable leaving the financing plan as it stands and starting in 2012 increasing the transfer -in amount to $850,000. Director DeJong clarified lie suggested the amomrt be $820,000 per year over the life of the 20 -year financing plan, noting that is a static number. He stated there are sufficient funds to fund the five -year Local Street Reconstruction Capital Improvement Program (CIP). Councilmember Woodruff stated from his vantage point it's a 2012 budget discussion item Mayor Lizee noted Eureka Road North is a MSA roadway Councilmember Zerby stated he wants the City to start communicating with residents about the PMP. Director DeJong suggested that after the Local Street Reconstruction CIP has been adopted it would be appropriate to publish the PMP and other information on the City's website and to note that it is there in the City's newsletter. Councilmember Turgeon stated the documents prepared by Staff are understandable. Mayor Lizee thanked Director Brown, Director DeJong and Engineer Landini for their efforts CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 8, 2010 Page 6 of 6 3. ADJOURN Turgeon moved, Woodruff seconded, Adjourning the City Council Work Session of November 8, 2010, at 6:50 P.M. Motion passed 510. RESPECTFULLY SUBMITTED Christine Freeman, Recorder b Christ ' ine t Liz6e Mayor ATTEST Administrator /Clerk