Two weeks ago, in the Vanguard’s weekly “My View” segment, I wrote that “Civil Pool repairs May Not Justify Inclusion in Parcel Tax.” In that column, I argued that, based on the staff report on civic pool repairs, and the estimated $50,000 not-to-exceed price tag along with the report that “sufficient funds are budgeted in the pool equipment replacement fund for FY14/15,” we should focus on roads rather than pools in a possible parcel tax.
However, in making that case I erroneously stated, “In the short term, Davis has sufficient money through the general fund to put about $4.7 million into road repairs, but that is not ongoing money. We need a funding mechanism.”
Dan Carson, a member of the Finance and Budget Commission, who has also agreed to serve a de facto public editor for the Vanguard, immediately challenged the claim. “I know the focus of this piece is the pools, but I am curious about the source of information for your claim in this piece that most of the $4.7 million budgeted for road and bike path pavement rehabilitation is one-time money. That’s not my understanding. About $3.8 million of the $4.7 million is from the General Fund. The five year budget projections released last April show the General Fund “base” for these projects staying in place over that entire period. Who told you the money is one-time? I welcome any clarification in case I am misunderstanding the situation.”
The source turned out to be a slideshow by the city from June, which showed $4.7 for 2014-15 and $1 million afterwards. Dan Carson agreed to research it further and get back to us.
City Staff has since verified that $3,930,000 of the $4,700,000 initially budgeted for 2014-15 is ongoing. This includes the $3 million in General Fund resources, $130,000 in monies from the Construction Tax Fund, and $800,000 from development impact fees that the City Council has added to the base budget for transportation infrastructure rehabilitation purposes over the course of 2013-14 and 2014-15.
There is a $3 million ongoing augmentation that has been added to the General Fund base and would continue through the five-year period.
About the slide I referred to, Mr. Carson stated, “City staff advises me that the slide you cite was ‘for illustrative purposes’ to reflect how the numbers would play out if the council only appropriated $1 million in future years. They noted that it did not reflect the actual funding commitment to date reflected in the five year fiscal forecast.”
In addition, Mr. Carson told me, “City staff advises me that the carryover of prior appropriations, as well as some new appropriations of funding by the City Council for the Eighth Avenue Street Improvements made in August, will bring the total monies committed to the pavement rehabilitation program in 2014-15 to about $5.9 million, even higher than the $4.7 million initially budgeted for the pavement rehabilitation program. These indeed are one-time monies. So, taking into account these additional resources, just over $3.9 million of the $5.9 million available for the program in 2014-15 is ongoing.”
Back in February 2013, the Davis City Council received a report that showed that the city’s street and bike paths were in worse condition than previously believed and the level of deferred maintenance was far higher than previously known. The PCI for the city streets was 62 with bike paths at 59.
Pavement conditions decline at a rate of about two to three points per year, so the city now believes that roads are at around a 60 while bike paths are at 56.
The report recommended that the city consider increasing pavement expenditures from $1 million per year to a level that would maintain the current deferred maintenance.
The cost of that would be about $140 million over 20 years or $7 million per year. In follow up meetings, council would discuss scenarios that would allow the city to attempt to meet the funding options. They quickly centered around a scenario that would pay about $25 million up front ($15 million in year one and $10 million in year two, and obtained through a parcel tax) and then $2 to $4 million per year after that for pavement maintenance.
City Manager Steve Pinkerton last year suggested that low-interest loans or increased revenue would be the best approach to create the large, up front funds.
As a September 8, 2014, staff report from Michael Mitchell, the Principal Civil Engineer noted, “City Staff have allocated $4.7 million to a paving program (Capital Improvement Project 8250). While this amount is less than the $15 million mentioned above for the first year, it is better than the $1 million previously allocated. The $4.7 million will go toward a crack sealing and base repair project this fall and an overlay project next construction season on most or all of the streets that will undergo this season’s crack sealing and base repair. The overlay project next year will include some bike paths and concrete curb, gutter and sidewalk repair as well as ADA compatible ramps.”
Based on this information, the city has the ongoing funding in place. Council deserves a lot of credit for prioritizing funding within the existing general fund budget. What the city lacks however, is the $25 million up front to be able to pour into roads.
However, as the discussion went last spring, there are potential limitations to how much the city can spend in a year, anyway.
Based on this analysis, a smaller parcel tax might be all that is needed to generate the city’s needed revenue for roads. The question is whether the city also wants to pump money in for pools, parks, and city buildings.
—David M. Greenwald reporting
Does anyone honestly think that if less is needed for roads than previously thought, that folks will still be willing to fork out more on a parcel tax, above about $50 a year, to fund a new pool? And I would ask the author of this piece to investigate how much of a parcel tax is needed to cover the $25 million necessary to be generated up front for road repairs. That kind of information would be extremely helpful. Are we talking $50 a year, or $150 a year?
Anon, at 4.5% interest borrowing $25 million with a 20 year payback, the annual debt service is $1,921,904 ($2 million per year). At 5.5% interest the annual debt service amount rises to $2,091,983.
From the December 2013 Staff Report. If we spend the $25 million up front, then the annual maintenance amount is $2 million more per year for the next 20 years over and above the debt service (see page 24 of http://city-council.cityofdavis.org/Media/CityCouncil/Documents/PDF/CityCouncil/CouncilMeetings/Agendas/20131210/05-Transportation-Infrastructure-Rehabilitation-Presentations-Combined.pdf); however, that will result in a further deterioation of the City-wide PCI (Pavement Condition Index) from 65 (fair) to 37 (poor). If we want to maintain the current 65 PCI it will take an additional $4-5 million per year.
All totaled that would mean and annual price tag of $8-9 million ($2 million debt service plys $2 million plus $4-5 million) to keep our roads at the good (but compromised) current condition.
Nowhere in this almost well done article that includes more figures than a Buzz Oats tax return is there any mention of $15 million other than this sentence. Did you mean $25 million? Please explain.
And if I get the math here, we have $3.9 million ongoing funding for roads, and $2 million in one-time help this year. But we need about $7 million per year… and it would be better if we had that $7 million per year after spending $25 million up front to “catch up” maintenance that we have fallen behind on. And that $7 million per year would be net of the existing $3.9 million per year we already have… or another $3.1 million per year.
So, if I have this right, our increase tax revenue need at this point could be handled by a supplemental parcel tax that would back a low-interest city loan for $25 million with revenue from that parcel tax covering the debt service of the loan plus also providing another $3.1 million per year in road maintenance funding.
As Anon asks above, it should be simple enough to determine the size of the new parcel tax. I think that will be a high number. If I am not mistaken, I think I read that there are about 20,000 taxable parcels in Davis. Assuming this, a $100 per year parcel tax will bring in $2 million in city revenue (I am over simplifying of course). Assuming a 20-year term on the $25 million loan, the debt service would be about $1.7 million per year. $1.7 plus $3.1 is $4.8 million. So the parcel tax needed would be $240 (assuming my 20,000 taxable parcels is accurate).
I don’t think there is a chance in hell that a $240 per year new parcel tax will pass a 2/3 vote.
I doubt a $100 per year tax will succeed.
My suggestion is for the city to put a $50 or maybe $75 tax on the ballot and then work to get our innovation parks moving so they start filling our city coffers with the funding we need to maintain our roads and repair our pools.
Sorry, the $25 million was originally to be split between $15 million year one and $10 million year two
Thanks. Now the numbers all add up.
To Frankly: Thank you for your back of the napkin assessment of how much of a parcel tax we would need to repair our roads. And I completely agree that a $240 parcel tax has no chance to pass a 2/3 vote, so the best option is to try for a $50-75 parcel tax for road repairs, and push like heck to get a suitable innovation park strategy approved that will generate the needed tax revenue to fix our rapidly decaying roads.
As I have told David, I believe that the Vanguard strengthens its credibility with readers when it corrects the record in pieces such as this one. I really appreciate it, and I hope other readers do too.
Strongly agree.
I was at the city council meeting when this was discussed. I wonder when “this fall” will happen. I kept waiting to see roads being seal coated this fall. Granted I travel in a fairly limited area of town so maybe they are real busy in south Davis or west Davis but my guess is the older streets are In worse condition than the newer ones. I also remember staff saying making additional money available this season wouldn’t make a difference because they had sufficient funds for the work scheduled for ‘this season’. My understanding was it would take some time to gear up for additional street maintenance next year. Like other city projects, I am left wondering if we will ever hear how much was spent on road repair this year and where repairs where done. When will we know what is allocated for next year and how they plan to use the money?
There was no enthusiasm for a $50 parcel tax for the upcoming election but I thought it made sense to do it while the need for road repair had a lot of press. Had we seen roads being repaired and continued to publicize the problem I think a $50 tax would have had a good chance of winning. Instead we debated pools and parks and put it off.
Because road repair went dark and the media blitz switched to innovation parks, it was as if the roads were no longer an issue so I am glad to see this imminent problem getting some attention. But I would like to know what the plan is for street repair. Seems like we haven’t moved from last May. We have 4.7 million, we need substantially more and nothing has changed. And innovation park income is five years minimum down the road–if we wait that long to make repairs we will be in a deep pothole usually only found in northern climes In the spring.
I believe PGE paid for the extensive work done on Olive Drive last spring and I believe the fifth street project did not come from the street repair budget but was paid for from other sources. It would be nice to have a report on that. Actually, it seems like an interested party could simply ask the city for information but that hasn’t worked for me yet. Or it could be simply findable on the city web page. I believe the 8th street project going on right now is a city funded project but like most Davis citizens, it’s just a guess.
The council approved the construction contract for the 2014 Crack Seal and Base Repair Project on September 16. This project comprises about $780,000 of work (of which about $608,000 is actual construction), and is the first project in the new Pavement Management Program.
Part of your answer is that the two employees most familiar with the street maintenance program retired 3-4 years ago. Other city engineering staff are familiar with the program, but due to the reduction in engineering positions (unlike planning or HR or Finance positions) the knowlegable engineering staff has been ‘spread thin’. Only so many balls one person can juggle. I think we need to let staff focus on the important things, and if necessary, augment staff.
“There was no enthusiasm for a $50 parcel tax for the upcoming election but I thought it made sense to do it while the need for road repair had a lot of press. Had we seen roads being repaired and continued to publicize the problem I think a $50 tax would have had a good chance of winning. Instead we debated pools and parks and put it off.”
Well said! I could not agree more!
“City staff advises me that the slide you cite was ‘for illustrative purposes’”
When will they manage to give any facts at these meetings? If City Staff was told to make up information for ‘illustrative” purposes, what else have they put up there?
I also am not understanding whether this money $25M is for “catching up” deferred work, or new work.?
Miwok, essentially all the work is “catching up” on deferred maintenance work. If you look at page 24 of http://city-council.cityofdavis.org/Media/CityCouncil/Documents/PDF/CityCouncil/CouncilMeetings/Agendas/20131210/05-Transportation-Infrastructure-Rehabilitation-Presentations-Combined.pdf) what Staff laid out were six scenarios for dealing with the deferred streets maintenance backlog. Scenario 1 was “do nothing.” Scenarios 2 through 6 were various flavors of “do something” and front-loading a $25 million expenditure was a key feature of Scenarios 4 and 5. Only Scenario 6 resulted in a halt to the steady decline in PCI (Pavement Condition Index) that Davis has experienced over the past 10 years of deferring maintenance.
Even Scenario 6 has a problem. It does keep the roads PCI where it is now (in the low 60’s) but the deferred maintenance backlog rises from the current $21 million by a factor of six to $132 million. There really should be a Scenario 7 where we front load an additional $25 million over and above the Scenario 6 spending in order to bring the deferred maintenance backlog down from $21 million to $0.
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