Woodbury close to deciding how to pay for crumbling streets

The question of just who will pay for Woodbury's crumbling blacktop streets — and how much — goes before the City Council on Wednesday as local leaders debate the nagging legacy of a faulty state asphalt formula.

Woodbury was one of at least 35 Minnesota cities and counties to report problems with deteriorating pavement after relying on a state formula for mixing blacktop used to build streets 15 to 25 years ago.

Those roadways, expected to last 30 years, have begun failing after two decades of use. Statewide changes in blacktop mix designs in the early 1990s resulted in pavement that allowed water to seep through the seal coat layer and cause the asphalt to decay prematurely. The problem may be more noticeable in Woodbury, city officials have said, because many roads were built as residential development ballooned in the 1990s.

A street rehabilitation task force examining the problem said the worst failures — and increasing complaints from residents — have come in the past two years.

The result is that Woodbury faces a road repair "bubble" that will cost about $20 million from 2015 to 2020, said Klayton Eckles, the city's engineering and public works director. Streets cost about $350,000 a mile to rehabilitate.

"We have a bunch of 20-year-old roads that were all built in the same era and they're all starting to fail about the same time," Eckles said. "It's roughly 60 miles of roadway in a five-year period. In a five-year period we might typically do more like 30 miles, so it's a major increase in the amount of roads we need to replace."

To increase Woodbury's street reconstruction and maintenance fund, the council adopted a 5.5 percent increase in the city's property tax levy from 2012-14. But that didn't generate enough money to maintain roads at a level set in 2004.

Woodbury now uses a different asphalt formula, although it still works with the state on what to use. The formula is not state-mandated.

The council will consider the task force recommendations Wednesday. A final report will go to the council in January.

Property owners will receive notice of a public hearing and road repairs in their neighborhoods, Eckles said.

To catch up, the task force presented two financing options to pay for the additional repairs at a Nov. 19 workshop with council members. Both would continue the city's policy of paying for two-thirds of roadway project costs and assessing property owners who benefit from the work for one-third of the expense.

The option the task force preferred calls for continuing the 5.5 percent levy for street rehabilitation, issuing $2 million in debt next year and using $5 million from the city's reserves in 2016.

Single-family home assessments on past street repair projects have ranged from $2,200 to $3,000 while that work has added $4,500 to $5,500 to the property's value, the report said. This year's single-family home assessments have been about $4,000, Eckles said.

Homeowners would see similar property value increases from road projects planned in the next few years, although their share of the cost — without a minimum assessment — would be $1,200 to $1,500, the report said.

"We're going to see some projects that are very inexpensive," Eckles said. "We can just do these mill and overlays because it's a fairly new roadway, so the only thing that's failing is the blacktop itself."

The minimum assessment would generate an additional $1.6 million for road projects in 2015, the report said.

The second financing option presented by the task force would continue the 5.5 percent property tax levy, use $5 million in city reserves next year and establish a 3 percent franchise fee on electric and gas bills. The franchise fee would take effect in 2016 and run through 2023.

Based on the workshop discussion, council members appear likely to adopt the minimum assessment recommendation when they consider the issue this week, Eckles said.

Mayor Mary Giuliani Stephens said she would be more comfortable with adopting minimum assessments. "There were good reasons for both of them," she said of the financing options. "The one that they recommended that got the most support had more of a mix, of debt issuance and the floor on the assessments. … We'll see where the council is."

Council Member Christopher Burns, who chairs the task force, said the council appears likely to adopt the minimum assessment option.

"As a policy matter, whether we want to be trying to pass more along to charities and schools and other nonprofit organizations is causing all of us some pause," Burns said.

Burns said he discussed the city's roads and the task force recommendations with thousands of residents as he campaigned for re-election this year.