08-22-2016 Council Work Session Packet

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May 2015 Council of directed Staff to provide a by year maintenance and reconstruction plan for the Levy next five years. June 2015 Council reviewed a sample five year plan and the impacts to the Levy to fund the plan. Work Council provided guidance to create a funding source for Pavement Management Fund Increase with a dedicated Levy of $183,000. December Council deferred decision on road maintenance projects for 2016. Setting April of 2016 2015 as the date to review road planning and funding. April Council selected roads for Mill and Overlay but moved road funding discussion to the 2016 May work session May 2015 Council directed funding discussion to be held concurrently with 2017 budgeting Impact discussions. 2. Street Funding. Distributing the pavement maintenance and reconstruction requirement 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 $183,000 dedicated to the Pavement management fund for 2016 represents 17% of the requirement leaving a funding deficit of $867,000/yr. Based on current projections the City could dedicate another $200,000 the Pavement Management levy for a total of $383,000 without raising the tax rate. This represent 36% of the requirement leaving a deficit of $667,000. The first table below shows the impact of these costs on the Levy. The second table depict Levy impacts if the City were to adopt franchise fees as a funding source for remaining maintenance requirements. a. Tax Levy Impacts of Fully Funding Street Maintenance & Reconstruction Requirements Type of Street Annual Levy Tax Rate Tax Tax Tax Tax Work Cost Increase Increase Impact Impact on Impact Impact Fee ($) (%) (Percentage on $546K on $1M on $2M (%) (Percentage Impact Points) $250K Home Home Home Home (Median) on $546K Maintenance $167,000 3.37% 0.54 $ 13 $ 27 $ 61 $ 128 Reconstruct $500,000 10.09% 1.62 $ 39 $ 81 $ 182 $ 385 Total $667,000 13.46% 2.16 $ 52 $ 108 $ 243 $ 513 b. Tax Levy and Franchise Fee Impacts of Funding Street Maintenance & Reconstruction Requirements. This assumes a franchise fee of $2/month on Natural Gas and $2.25/month on Electrical Bills. Type of Street Annual Levy Tax Rate Tax and Tax and Tax and Tax and Work Cost Increase Increase Fee Fee Fee Fee ($) (%) (Percentage Impact Impact on Impact Impact Points) on $546K on $1M on $2M $250K Home Home Home Home (Median) Maintenance via Franchise Fee $167,000 0 0 $ 51 $ 51 $ 51 $ 51 Reconstruct $500,000 10.09% 1.62 $ 39 $ 81 $ 182 $ 385 Total $667,376 10.09% 1.62 $ 90 $142 $ 233 $ 436 3. Impacts. Fully funding the both preventive maintenance and reconstruction as in tables above allows the city to realize it Pavement Management Plan. 4. Road Budgeting for 2017. The table below depict preliminary budgeting numbers for 2017 based on the 2016 CIP, projected Pavement fund balances. The third Column depicts the fund balance with an assumed Pavement Levy increase of $200,000. The forth column depicts the fund balance assuming a 2017 road levy of 1,050,000. More detailed estimates will be provided in the 2017 Public Works Plan Orono Budget - 2017 Attachment C