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maintenance and $947,000 for reconstruction budgeted for in our surrounding communities(see Exhibit <br /> A) . More importantly the recourses available are significantly below the amount required to properly <br /> maintain the city's streets. In the past,the City has funded street reconstruction projects through the sale <br /> of bonds and has applied leftover general fund amounts towards street maintenance projects. This has <br /> resulted in the disproportionally large number of streets in disrepair requiring significant work(See <br /> Exhibit B)and the inability for the Staff to plan for and execute a maintenance plan to protect and extend <br /> the life of these valuable assets. <br /> a. Pavement Planning. The City developed a Pavement Management Report(PMR in 2006 <br /> (updated in 2011)that provided a summary of the condition and rehabilitation recommendation for all of <br /> Orono's roadways. The PMR did not provide any recommendation for prioritizing any of the roads and <br /> did not lay out any sort of funding plan to cover the costs. In October 2014 the City adopted a Pavement <br /> Management Plan (PMP)which does provide prioritization of road maintenance as well as a description <br /> of funding sources. The PMP is used to inform the City's Capital Improvement Plan(CIP)which does <br /> provide specific priorities specific roads to receive maintenance or reconstruction out to 5 years and <br /> identifies a funding requirement in general categories out to 20 years. The 2015-29(CIP)adopted on <br /> December 8, 20]4, plans for annual expenditures for street seal coating of$254,000 and annual <br /> expenditures for mill & overlay and reconstruction of�$1,400,000 beginning in 2015 (see Exhibit D). <br /> b. Staffing and Action to Date. In the Fall of 2013,the City Council directed Staff to develop <br /> options for funding annual street reconstruction and maintenance. In response,the City Engineer <br /> conducted a study to include querying surrounding communities about how they provide funding for <br /> annual street maintenance and reconstruction. In March of 2014, he presented options to the City <br /> Council. Council requested staff to analyze funding options against several scenarios. The scenarios <br /> were then presented at the May 27,2014 working session. The Council directed Staff to bring back more <br /> information on franchise fees and to present an option for road maintenance in the 2015 General Fund <br /> Budget. In August 2014, council directed staff to add $30K to the roads maintenance budget for 2015. <br /> On October 27,2014 the council adopted the PMP. <br /> 5. Funding Options. There are four main methods available to address annual street reconstruction and <br /> maintenance. Many municipalities use a combination of two or more of the strategies. Each method or <br /> combination of inethods has positive and negative aspects associated with them. An analysis prepared by <br /> the previous City Engineer of the methods is provided at Exhibit A. In addition to the four options <br /> below, some funding could be redirected from existing funding sources; however there are not any <br /> existing funding streams that would provide full and predictable street funding. <br /> a. General Fund Allotment(Tax Levy). This method includes utilizing a portion of the annual ta�c <br /> levy for street reconstruction or maintenance. The City would establish an annual amount as part of the <br /> budget/levy process. Any excess revenues for a particular year would be transferred to the PMF and used <br /> for years where the requirement exceeded the annual revenue. While most taxpayers do not want their <br /> taxes to increase, most residents do expect that the City is setting its tax rate and structuring its fees at the <br /> level that is necessary to own,operate, maintain, and improve its infrastructure. This method allows staff <br /> to set up yearly budgets based on a known amount. <br /> b. Bonding. This method requires the City to issue annual bonds to cover the costs of street <br /> reconstruction or maintenance. The overall cost of the project does increase due to the interest paid on <br /> the bond. Because of the costs to issue bonds,this method is beneficial if the City is implementing an <br /> aggressive street reconstruction program where annual budgets would not be sufficient to cover annual <br /> costs or the City wants to undertake an unusually large project and spread the costs over a number of <br /> years. The annual budget does then need to be increased to cover the yearly bond payments. This can <br /> help reduce the annual tax levy variability and provides the City with a known yearly payback amount. <br /> 2 <br />