05-22-1995 Council Packet - Laserfiche WebLink

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2. streets will need to be reconstructed. The City Council has authorized a pavement management program to enable the city to determine how to maintain its roads most cost effectively and at what point the roads should be reconstructed to ensure the most cost effective use of the city's roadway dollars. Given that public improvement projects (i.e. sewer projects) have been funded substantially through special assessments in the past; it is staff s recommendation that, when city streets are reconstructed independently of sewer projects, assessments should be a major funding source. MSA Roadway Funding Issues MSA roads are somewhat different from regular city streets in that they can be 93% funded by MSA funds. Fhere are two funding issues related to MSA roads, one minor and one major. The minor issue is that MSA funds cover approximately 93 % of the costs. The remaining 7% including portions of storm sewer, bike trail and easement costs must be funded by other sources. These alternate funding sources are discussed in the attached memo dated May 20, 1994. The more significant funding issue is that the amount of MSA roads that will need reconstruction in future years will exceed the amount of MSA funds available to the city. This is especially true given the large costs projected for the County 6 reconstruction project. As with non-MSA roads, the city will reach the point were the MSA roads deteriorate to such an extent that it is either impractical or not cost effective to conduct continuous maintenance and repair activities related to these roads, and it will be necessary to reconstruct them. Because the city’s allocation of MSA funds will not be sufficient to fund this reconstruction, the city needs to consider other funding sources. There are two major additional sources of funding available to the city. These are special assessments and property taxes. A. Special Assessments Special assessments are charged to the properties that benefit from the public improvement project. The amount of the special assessment is limited to the amount by which the value of the property is increased by the project. The advantage of special assessments is that they are targeted toward those who directly benefit from the project. The disadvantage of special assessments, in addition to the limitation on the amount which can be assessed, is that whether the adjacent property owners are in support of or in opposition to the specific project, they are generally in opposition to being assessed for a portion of the costs. B. Property Tax Property taxes can be used as a revenue source for public improvement projects in two ways. They can be used on a pay-as-you-go basis. For example, sufficient property taxes are levied to cover the cost of projects completed in the current year. Or, if a bonding program is used as the funding method, the property taxes are levied to cover the portion of the current year’s debt service