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Many factors contribute to street reconstruction decisions, city says

WILLMAR -- City Administrator Michael Schmit says he appreciates the observations and recommendations made by the ad hoc business committee on street improvement and reconstruction.

WILLMAR -- City Administrator Michael Schmit says he appreciates the observations and recommendations made by the ad hoc business committee on street improvement and reconstruction.

He says Willmar has streets that need reconstruction, but he says many factors contribute to street reconstruction decisions.

"It's not as simple as some people might think it is, and I don't necessarily agree with the general assessment portrayed by this group and others that we have a serious problem here,'' he said. "I don't think that the really bad streets that need to be reconstructed is anywhere near what someone might think that number might be.''

Schmit said 10 miles out of 127 miles of street need reconstruction.

"That's not to say there aren't some streets that really need to be reconstructed, but when we look at streets, we have to factor in not only the amount of revenue that's available in any given year to reconstruct a street, but we have to look at our capabilities in manpower and our own resources to plan, prepare and supervise all of this activity,'' he said.

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"We have to consider the age of these streets and what we're likely to find underneath when we reconstruct them. We can do more reconstruction if we can do the base and replace the asphalt and curb and gutter as opposed to a street where we have to replace all the utilities while we're there. The costs skyrocket and limit the amount of work we can do in any given year,'' he said.

"All those become factors in the decision about what can be done in any given year and the costs associated with it,'' he said.

The city receives state aid for streets, which can only be used on state-aid streets, he said.

"It plays a big role in our project every year. But you can't take state-aid money and use it to reconstruct a non-state-aid street,'' he said.

"What we can do is include some state-aid streets in a project each year and throw this money into the pot, which might allow us to leverage some more work because even property owners along a state-aid route are assessed as benefited property owners, so that provides more dollars, then, to do other areas,'' Schmit said.

The city's 25 percent share under the assessment formula comes from earnings from the $9 million community investment fund. Schmit said reconstruction miles have decreased because lower interest rates have reduced earnings.

"That's the major reason for not being able to do as much reconstruction as we'd like,'' he said.

Revenue is also affected by the address side of a property. Under the assessment policy, corner lots are assessed only on the legal address side. If an avenue on one side of a corner lot is slated for reconstruction, but the legal address is on the street side, the property isn't assessed on the avenue side, which reduces overall assessment revenue.

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The city also receives about $200,000 a year from a special fee to replace underground utilities. But replacement costs in one street project could eat up most or the entire amount, leaving little for other streets.

"So all these things factor into our decision as to what streets can be done,'' he said.

Schmit says more state aid is not necessarily the answer.

"The answer is clearly in finding new revenues. Property taxes, for example. Nobody's going to want to do that, and I don't blame them. Another possibility might be to look at increasing that utility fee and call it a utility and street fee,'' he said.

Schmit thinks the public would support the committee's 50/50 recommendation. "But the flip side is where does the city come up with that additional money?'' he asked.

Schmit said the city does participate in the cost of major corridors and non-residential streets. For example, if a developer determines that an 8-inch diameter water main is sufficient to serve a project, but the city or Municipal Utilities favors an upgrade to a 12-inch line, the city pays the difference, Schmit said.

The same is true with streets.

"If we determine that it's a major arterial street and we want to make it bigger, we pay that difference. That's current policy,'' said Schmit. "They (the committee) seem to be suggesting that we don't participate in new construction, that we pass all of those costs on to the developers, and that's not true.''

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In many cases, particularly in reconstruction, commercial properties pay 100 percent assessments as opposed to residential properties, which pay on 75-25 basis. To a certain extent, the city uses state aid to write down the cost on major thoroughfares. But in new developments, the developer pays 100 percent.

"Does that stifle growth in the community? I don't know,'' said Schmit. "We don't see that happening in Willmar, not in the last 5 to 10 years anyway.''

City Finance Director Steve Okins says he's gathering information on other cities' street improvement financing mechanisms for Mayor Les Heitke to consider as Heitke puts his 2007 budget recommendations together.

Heitke will ultimately make a recommendation to the full council through the budgeting process. Okins said the business people will be included in the discussion.

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