On the road to higher maintenance costs

Northern Colorado’s two largest municipalities are pondering how to pay to keep the asphalt from crumbling under the weight of ever-increasing traffic.

Voters in Greeley and Fort Collins will likely see an item on November’s ballots boosting funds for street maintenance. Details on what those measures might look like are still being hammered out, though both will likely revolve around extensions to or increases of certain sales taxes.

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Fort Collins funds its street maintenance activities primarily from a quarter-cent sale tax approved in 2005, with varying amounts from the general fund. The sales tax isn’t slated to sunset until 2015, but the allotment for the pavement management system has been falling off. This year it was $7.1 million, down from $9 million in 2008.

“We’ve been having to reduce some of the resource for our pavement management system over the last few years,´ said Diane Jones, assistant city manager. Much of the cut came from general fund dollars.

The city evaluates streets every three years using the industry standard Pavement Quality Index – a rating of zero to 100. The goal is to maintain a Level of Service B, which translates to a PQI range of 70 to 85. Fort Collins streets are currently at a PQI of 71, down three points from the previous assessment.

“We’re right at the bottom now,´ said Larry Schneider, streets superintendent for Fort Collins. “If it drops again, we’ll be at a Level of Service C.”

About 16 percent of Fort Collins’ streets are at a Level of Service D or F – essentially failing. Schneider believed that without an increase in maintenance funding, 68 percent of the city’s streets would reach that level by 2017.

An audit of Fort Collins’ streets in 2007 showed that funding then was below the level needed to just maintain the quality at a B level. The gap between current funding and that recommended in the audit is between $6 million and $6.5 million.

Fort Collins City Council has reserved a spot on the ballot for some type of measure; exact language must be finalized by the Aug. 17 council meeting. Discussions have centered on an increased sales tax of up to 1 cent, most of which would go to road maintenance, with some siphoned off for parks, police and fire.

The city has hosted a number of public meetings addressing transportation issues. “There’s been quite a bit of community conversation,” Jones said.

Different approach

Fort Collins resident and former city official Rich Shannon is shopping around the idea of using a hybrid system that would substitute a residential street maintenance fee for continued reliance on sales tax funding.

Shannon suggests that the existing sales tax could be used to maintain the main commercial roads in Fort Collins while residents could be charged a utility fee, the proceeds of which would be used only to maintain residential streets.

Shannon, who now works as a private consultant and serves on the Northern Colorado Business Report editorial board, points out that many city services, such as stormwater, evolved to a utility system as long as 60 years ago. The utility fee, he maintains, is a more stable financing mechanism that directly ties revenue with use.

“I’ve been an advocate of this for years,” he said. “With the current financial strain, this is a moment of opportunity to make good public policy and put in place a long-term solution.”

Despite Shannon’s attempts to present the fee as an alternative, it looks as though a sales tax increase is likely to head to the voters.

“That hasn’t been focused on as much,” Jones said of the fee. She anticipates that the council will continue to focus on sales and use tax as the street maintenance revenue source, with the level of funding the variable factor.

The city of Fort Collins had a street utility fee set up in the mid-1980s, but it was challenged in court. District court found that the fee was not valid, but that decision was later overturned by the Colorado Supreme Court. However, by that time the city had moved on to its current sales tax and general fund model.

Jones added that the city had discussions about setting up a transportation maintenance fee a few years ago. It didn’t gain much traction, though, since fees are a major source of funding for other programs in the city.

Loveland fees for upkeep

The utility fee is not a new mechanism. It has been in place, with seemingly favorable results, in the region’s third largest municipality for several years.

Loveland implemented its street utility fee in 2003 after voters rejected several sales tax measures. The fee is assessed to both residential and commercial properties but at different rates calculated on the amount of traffic a particular building might generate. For example, residential utility customers are charged about $1.25 per month on their city utility bill. An industrial user would pay $13.92 per acre, while a high-traffic retail establishment, such as a drive-through restaurant, would pay $139.24 per acre.

Keith Reester, Loveland director of public works, explained that the streets budget is broken into two main categories: rehab and maintenance, which are funded in part by the utility fee; and capital projects, which includes complete rebuilds of roads.

“One of our goals is to keep as many streets as possible out of that category,” Reester said. With that in mind, the city tries to touch every road with some type of maintenance activity every seven years.

The fee has only had one adjustment in its seven-year existence. Reester feels the fee would benefit from being indexed to adjust for price fluctuations and prepare for the future. From 1995 to 2010, the city’s lane miles increased 30 percent, which he worries will lead to a maintenance bubble.

“Our objective is to avoid that,” Reester said.

Loveland’s system has become a national model. Reester has presented it several times, most recently at an American Public Works Association meeting in April in Grand Junction.

Roads share Greeley food tax

The city of Greeley funds its street maintenance with a 3.46 percent food tax, which has been renewed with no change every five years since 1990. Revenue generated is used for not only street maintenance, but also upkeep of public buildings, parks, swimming pools, city sidewalks and other infrastructure.

The tax is set to sunset in 2011, so Greeley will likely have an item on its ballot to continue funding street maintenance. In anticipation, the city kicked off a public process that includes meetings, online questionnaires and door-to-door surveys to gauge what residents want in terms of street quality – and how they want to pay for it.

“The food tax is inadequate,´ said Greeley Public Works Director Joel Hemesath. “(Street maintenance has) been under-funded for a long time, and now we are way behind.”

In a report to city council earlier this year, Hemesath projected that annual funding of $9 million to $10 million would be needed to improve pavement quality. If the current $3 million level of funding is maintained, he predicts Greeley’s streets will deteriorate to an estimated PQI of 41 by 2015.

The average PQI in Greeley is currently 49 – the goals are 65 for neighborhood streets and 70 for major roads – not far from moving beyond repair to replacement.

“We’re using 40 as our tipping point,” Hemesath said.

Once the streets deteriorate to that level, minor maintenance activities such as chip sealing and sealcoats will no longer work, giving way to overlays and reconstruction. Hemesath explained that the cost of an overlay is about 600 percent higher than a chip seal; and the price of a total reconstruction is 200 percent higher than an overlay.

As part of the public process, several funding mechanisms have been suggested: continuing the food tax; creating a dedicated sales tax; using the general fund; bonding; and a street utility fee.

Hemesath’s report points out that previous attempts at putting a street utility into place were unpopular with former city councils, who felt a “disproportionate impact” would fall on commercial properties. The report goes on to suggest a utility fee could be levied on residential utility users only with that money earmarked for residential streets. However, to get the residential streets to the desired PQI of 65, the fee could be as much as $22 per month per residence.

Greeley will host a July 27 public “speak-up session” at 6 p.m. at the Rodarte Center, 920 A St. to hear from residents what road quality they expect. City council hopes to incorporate the community input into its budget planning process, starting at the Aug. 6 meeting.