03-22-2017 Council Work Session Packet

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Item 02 — Work Session CITY OF ORONO MEMORANDUM DATE: March 22, 2017 TO: Orono City Council FROM: Adam Edwards, P.E., Public Works Director / City Engineer RE: Orono Road Planning and Funding 1. Purpose. The purpose of this work session item is to discuss and develop a plan to maintain the City's roads in a planned responsible manner. 2. Background. For some time the City of Orono has struggled as to how to come up with annual funds to maintain its road infrastructure. The one exception to this has been the City's designates Municipal State Aid (MSA) Roads for which the City receives and annual allotment from the state. The 2017 Budget does include $52,025 for pavement maintenance which is sufficient for potholing, signs and winter maintenance. The Pavement Management Fund (PMF) has $253,000 dedicated funding from the levy for preventative maintenance and reconstruction which is significantly below the amount required to properly maintain the City's roads. In the past, the City has funded road reconstruction projects through the sale of bonds and has applied general fund surpluses towards road maintenance projects. This has resulted in the disproportionally large number of roads in disrepair requiring reactive maintenance and the inability for the Staff to plan for and execute a proactive maintenance plan to protect and extend the life of these valuable assets. a. Pavement Planning. In October 2014 the City adopted a Pavement Management Plan (PMP) which does provide prioritization of road maintenance as well as a description of funding sources. The PMP is used to inform the City's Capital Improvement Plan (CIP) which does provide specific priorities specific roads to receive maintenance or reconstruction out to 5 years and identifies a funding requirement in general categories out to 20 years. Ideally the CIP would then inform the annual budget cycle. b. Staffing and Action to Date. Since 2013 the Council land Staff have been working to develop a viable funding source for Road maintenance. A summary table of actions is at Appendix A. For 2017 the levy for the Pavement Management fund is $253,000. 2. Road Funding. With the exception of the Municipal State Aid (MSA) roads, the City's only source of funding for roads is through the levy. The City does not currently assess of have a franchise fee for roads. Distributing the pavement maintenance and reconstruction requirement (non -MSA) per the City's Pavement Management Plan over a 10 year period, results in a funding requirement of $550,000/ yr for Maintenance and $500,000/yr for Reconstruction for a total of $1,050,000/yr. The $253,000 dedicated to the Pavement Management Fund for 2017 represents 24% of the requirement leaving a funding deficit of $797,000/yr. to increase road funding without impacting other city services will require and levy increase. The table below shows the impact on the Levy to fund 50% of the pavement requirement and 100% of the pavement requirement. a. Tax Levy Impacts of Funding Street Maintenance & Reconstruction Requirements.