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General Fund Allotment (Tax Levy) <br />This method includes utilizing a portion of the annual tax levy for street reconstruction or maintenance. <br />This method allows staff to set up yearly budgets based on a known amount. The two main benefits of <br />this method are it allows staff to plan multiple years out based on the yearly budget and it does not further <br />burden residents with assessments. <br />If the program is set up properly, a street reconstruction and maintenance plan outlines roads to be <br />addressed multiple years out. Typically communities will have a 5 year street plan which is re-evaluated <br />on a continuous basis. If proper maintenance on roadways is followed, it will extend the life of roadways <br />and reduce the life cycle cost of roads. <br />If a plan is in place, staff can respond to residential requests about when their roadway is going to be <br />addressed. I currently get about one or two inquires from residents per month regarding when their <br />roadway is going to be addressed. <br />Benefits of this process include: <br />•Establishes a reliable, annual funding source that is included into the City budget on a yearly <br />basis. <br />•Distributes cost over entire tax base and provides a smaller yearly cost rather than a onetime large <br />assessment. <br />•Allows staff to establish and implement a street reconstruction and maintenance program that <br />provides a timeline when roadways are going to be addressed in the future. <br />•Allows staff to provide residents with timelines and order as to when improvements are going to <br />take place. <br />Drawbacks of this process include: <br />•Increased tax levy and property taxes in community. <br />•Program does not include maintenance and reconstruction costs of private roadways. <br />Annual Bonding <br />This method requires the City to issue annual bonds to cover the costs of street reconstruction or <br />maintenance. Because of the costs to issue bonds, this method is beneficial if the City is implementing an <br />aggressive street reconstruction / maintenance program where annual budgets would not be sufficient to <br />cover annual costs or the City wants to undertake an unusually large project and spread the costs over a <br />number of years. <br />The annual budget can be reduced to cover the yearly bond payments rather than the large cost of a <br />project. This can help reduce the annual tax levy increase and provides the City with a known yearly <br />payback amount. <br />The City of Mound utilized this method for an aggressive plan which started in 2003. They had a 10 year <br />plan to reconstruct all residential roadways then a 4 year plan to reconstruct all Minnesota State Aid <br />(MSA) roads after. Mound utilized an annual bonding program to cover these costs. <br />Benefits of this process include: <br />•Allows staff to establish and implement a street reconstruction and maintenance program that <br />provides a timeline when roadways are going to be addressed in the future. <br />7 Page 9 of 49