Third Funding Option Proposed for Apple Valley Road Reconstruction; Council Delays Vote

The Apple Valley City Council on Thursday voted unanimously to push back a vote on how to fund the shortfall for future road reconstruction projects.

Jan. 26 would be the soonest the council would vote on how to obtain an additional $960,000 a year for the next 10 years; council members agreed to have staff collect more public input and provide more education on the options, especially after a new, third option was introduced.

The first option, originally presented Nov. 22, would be to increase the road improvement tax levy by $960,000 per year.

The second option was a combination of tax levy increase—$300,000—and a special assessment to those whose properties are adjacent to the reconstructed roads, which would generate the remaining $660,000 per year.

Option three would use part of the remaining balance in the city's Future Capital Projects fund each year to bridge the gap until the year 2018, when some of the city's debt is paid off and the debt levy drops by a little more than $1 million per year, said city Finance Director Ron Hedberg.

The $960,000 amount could be then be levied for the road improvement tax levy in subsequent years.

"It is avoiding a spike," said City Public Works Director Todd Blomstrom.

Several council members expressed appreciation for the addition of a third option; Council Member Ruth Grendahl said she would not support options one or two, but does agree with at least the first part of option three—using capital projects fund balance until 2018.

"More public input is certainly needed," she said.

Blomstrom said, however, that it would be important to keep a contingency in the capital projects fund for unforeseen needs.

"You cannot plan for everything," he said.

Another unknown to bear in mind into the future is inflation, Council Member Clint Hooppaw said.

But Blomstrom said what the most immediate decision comes down to is for the council to decide whether to use a special assessment, or whether to figure out another to generate the funds.

Public Input

Apple Valley Chamber of Commerce President Ed Kearney told the council Thursday that chamber members hadn't yet come to a consensus on a funding option, though the discussion and options thus far are "a really good start."

"We think that this good start needs a little bit more momentum to accomplish the goal," Kearney read from a letter from the chamber board of directors.

The letter also suggested that the chamber board members thought more public input and education were needed, asking for another month or two for discussion before a vote.

Apple Valley resident Terry Cook, a former Apple Valley police officer, said he recognizes the "onerous costs of kicking this can too far down the road," and supported moving forward with reconstruction plans.

He said he does not support a special assessment option for funding; residents use roads other than the one they live on, he said, and there could be challenges of assessments every year during the assessment period, he said.

He said levying the money would be of a reasonable cost to all residents and would serve a common good.

Council members and staff suggested possible neighborhood meetings, open houses and individual contacts to get out information to more people.

Impacts of Funding Options 1 and 2

City staff has estimated that to meet its goal for road quality across the city, $53 million in road reconstruction would be needed over the next 10 years. Each mile of road reconstruction costs about $1 million, Blomstrom said.

Other funding sources—$1.6 million per year from the road improvement tax levy, some utilities money and some state aid—provide part of the $53 million. But those sources leave the annual $960,000 shortfall, thus the proposals to garner the money in some other way.

Option 1: Road Improvement Tax Levy Increase

• Tax levy would increase by $960,000 per year, adjusted annually.

Residential

• Owners of a median-value $197,800 home who pay $75 in property taxes for the road improvement levy would pay an additional $30 for the first year with this increase.

• Owners of a $300,000 home who pay $122 for the road improvement levy would pay an additional $49 for the first year.

Commercial

• For owners of a $500,000 commercial property, the tax levy increase would mean an additional $391 in the first year.

• At the other end of the spectrum, the owner of a $9 million commercial property would see an increase of around $7,900 the first year.

Option 2: Special Assessment Pays 30 Percent of Project Costs

• Residential property owners in the assessment area would pay a flat $2,500 over 10 years—$325 in the first year, including interest.

• Commercial property owners would be assessed by front footage, at $48 per foot.

Option three, again, would be to use $960,000 of fund balance from the city's Future Capital Projects fund annually until 2018, when the city has paid off enough existing debt to levy the $960,000 in its road improvement tax levy without a large spike in taxes.

On its website, the city has provided a detailed explanation of why staff believes steps toward road reconstruction should happen now, as well as a copy of the presentation given to council members on Dec. 20.

The council's next regular meeting is scheduled for 7 p.m. Jan. 12 at the ; all future regular meetings will begin at 7 p.m., while workshops will begin at 5:30 p.m.