August 30, 2017 at 3:44 p.m.
PRAT-funded street repairs may be delayed
Committee looking at seal coating in October
PRAT-funded street repairs may be delayed
That was the takeaway from Monday's meeting when public works director Tim Kingman told the committee that he had to put an end to attempts to negotiate with the apparent low bidder on the proposed North Stevens Street and Boyce Drive grind and overlay projects at the insistence of city attorney Carrie Miljevich.
"We did take steps after our last meeting to prepare to bring that to the (City) Council. Before the council meeting, we came into a couple little impasses that resulted in we recommend that we don't accept bids at this time from this process," Kingman said. "The first point of interest was that Carrie wasn't all the way comfortable with the negotiating that was going on after the bid and thought it would be safest to rebid them."
That brought up the question of how long it would take to go through the bid process for a second time. There was no way to complete the process and have bids back in time for Monday's committee meeting, Kingman said, adding that until Friday the city didn't have its PRAT revenue figure for the period of May 16 through Aug. 15. With three of the four periods now in, the city has collected a total of $191,270.95 from the tax, with the first period being just a partial payment since that period started on Nov. 16, 2016 and ran through Feb. 15. The .05 percent sales tax on certain consumer goods didn't go into effect in Rhinelander until Jan. 1
"That made it very difficult to determine how much money could be spent responsibly," Kingman said, noting that the third factor was the major one in deciding to stop the process, but the other two also played a part.
Committee chair Tom Gleason said he was told by a representative from Town and Country Engineering that the bids came in about 10 percent higher than expected.
"It was like with the parks boardwalk (at Pelican Rapids boat landing)," Gleason said. "We're at the end of the season, the contractors, most of them, don't need the work this time of year but they'll throw out a bid. The bids came in 10 percent higher and if they get it they'll split a crew and do the job, or if not maybe they'll be looking for it in the springtime and maybe be a little more aggressively bidding to get the job. So it may come in a little bit lower."
While late season bids often do come in higher, Kingman said these bids may have been affected by the delays on other projects caused by the wet summer.
"The same efforts that have delayed our work on repairs has also delayed their work on other jobs," Kingman said. "They're pushing all their work to the end of the season. And that time frame comes at a premium cost."
Before the committee could vote, mayor Richard Johns said the community has waited a long time to see some attention given to the damaged city streets.
"You have about $191,000 with the latest quarter coming in (of PRAT money) and by God I think we should show the public where some of their money can go," Johns said. "I don't care what you're going to do with it, but do it right and get it done. I don't know how big of a job we'll be able to take on, but I certainly think we should spend some of that money now. I think the public deserves it."
"Are there any intersections that we could do?" asked council president George Kirby.
Kingman said he had a suggestion for an alternative way to get some work done, but it was related to the next item on the meeting agenda.
The committee then voted unanimously not to accept any of the bids and rebid the work in the spring, clearing the way for discussion on Kingman's alternative idea, which involved seal coating about 3.5 miles of streets at an estimated cost of $155,693.
"We've spent about $55,000 to date, doing largely repairs on Phillips Street, Stevens Street and Evergreen Court and Abner intersection. And we're behind (schedule) because of the rain, just like everybody else, but our next thing to do is Davenport Street which is last on our curb and sidewalk replacement," Kingman said. "That's starting to get underway right now. So we have quite a bit of work in the queue as far as concrete work and probably two months at most."
This puts the street department on track to spend the $80,000 earmarked in this year's budget for street repairs, which means the city can tap PRAT dollars this year. With the proposed grind and overlay work now on hold, there is still time in the construction season to get in other street work and seal coating would not only extend the life of the streets it can be done relatively quickly, Kingman argued.
"This is something that can be done to roads to extend their lives when they're a little newer," he said. "And it's easier to do because it's a one-pass process. The person comes in and does it and they leave."
There are probably a dozen sections of streets that would benefit from the treatment, he added.
"The going cost out there for this right now is about $45,000 a mile," Kingman said, adding that the next step would be to seek a proposal from an area company that does this type of work to see how accurate his estimate is.
"We could get this done in October or November or just October," he added. "That would be one way we could chip away at getting some things done this year."
Alderperson Sherrie Belliveau noted the proposal Kingman presented did not include a price for striping the streets afterward. She said she has heard from numerous people about Maple and River streets not being striped. Kingman replied that those streets should be done this week, if the weather holds out.
She also noted that the majority of the streets on the list were predominately in the north side of the city.
"I think it could be more randomly picked," Kingman conceded.
He said the candidates for this treatment are streets that are around 10 to 15 years old and sealing them would add five to 10 years to their lifespan by keeping moisture from working its way into the surface.
"I'm sure, if we look, we could find some in each ward," he said.
"I was just wondering how the perception of the city taxpayers is going to be if we're spending PRAT money on roads that basically are in good repair versus some streets that are in bad disrepair, like Oneida Avenue or Timber Drive," Belliveau interjected.
"That is a very good perception," Kingman admitted. "And that is one that is really combated by saying that this is the most effective way to treat your roads to get them to be improved."
If streets are allowed to deteriorate to a certain point, there is only one alternative to repair them and that's grind and overlay, he noted, adding that seal coating streets that are in good repair stops the deterioration before it begins, allowing more attention - and money - to be spent on problem streets later.
"So there is value in being preemptive in doing this," Kingman said.
Interim city administrator Keith Kost said the city has two choices. If city leaders intend to tackle the worst streets, that will have to wait until the 2018 construction season to get the best bang for the buck. However, if the committee wants to spend PRAT money this year, seal coating is the way to go.
"If we don't do anything this year, we potentially will have six quarters (of PRAT money) by next construction season. We could have a really nice chunk of change to do a really big job, or at least two medium-size jobs," Gleason pointed out.
Alderman Mark Pelletier noted that PRAT money banked this year, coupled with what comes in later, would allow the city to at least do the previously delayed North Stevens Street and Boyce Drive projects.
"We're going to be stretching to get anything done here (this year)," Kingman said. "We just picked the low-bearing fruit, and that's what we have. We could go through and pick places in the west side and the south side that could be done. The important thing is to get this to the attention of the service provider to get it in their schedule. They don't care what the footage is or that it is in the city, they just want to know what is there."
He said the list he provided would be a starting place to talk with the provider and then substitute other streets before the CIty Council makes a final design in September.
"That will be my goal, to get something in here, cost-wise," he said. "I don't think we will have declare the final streets until we have a better consensus around the city."
The committee directed Kingman to have firm prices and a wider cross-section of town ready for the council to consider in September.
Kost then explained how the city could use a portion of the PRAT revenue each year going forward to pay for borrowing to fund either a big street project or a large number of smaller projects.
"I had the bonding company run some numbers and you would dedicate $345,000, round number, everything is a little less than that, in principal and interest (and) that would get you $3.45 million. After the underwriter's discount and cost of issuance, you would have $2.965,960 of funds available for roadwork and that would be on a 10-year payback at market rates and 25 basis points," Kost said.
If the PRAT brings in the $400,000 city leaders anticipate, this would leave $55,000 annually for other street projects.
"It's something you don't have to make a determination today, but it is something for you to start thinking about leveraging this money to get more bang for your buck," Kost said.
He noted that committee member Steve Sauer, who was not present, has previously expressed concerns about the PRAT being eliminated by the state, but he doesn't see that as a real possibility.
"I have enough gray in my beard that I've never seen a tax that ever got in acted that ever got repealed," Kost said.
Gleason asked Kingman if he knew of any street projects that would require that much money to complete,
"I can actually think of three or four," Kingman replied. "For the street expense alone. I think Stevens Street could bear that, both halves. I think Lincoln Street with just the section it has could probably do so, as well. There are quite a few candidates out there."
Kingman also said there are other options the city can explore for helping fund street projects.
"CDBG (Community Development Block Grant) can bear some grant funds if a roadway is done a certain way. That will be the next place for us to go," he said. "The PRAT won't be the sole means to finance the streets, I do not think, for years to come."
Alderman Alex Young said it might be worth exploring the bonding option, especially since interest rates are still relatively low.
"We all know that there are a lot of streets that we've been a little behind on on maintenance a little bit that need the work," Young said. "Everybody all know that in our own districts and our own neighborhoods there are streets that suck, that are really bad, that needed to be done like 10 years ago. And we've got a lot of catching up to do. Borrowing a large sum of money gives us the option of doing all that catching up in a pretty short period of time, make a visible impact and get a lot of stuff done."
Kingman also pointed out that if underground utility work such as water and sewer lines are bundled into a street project those utilities can share in the cost of the project.
"There are other grant funds out there that can compliment PRAT money," he said.
"The other thing to remember is that if you put this in your borrowing at the end of this year, your first payment is not going to be due until the end of 2018," Kost said. "So you're going to have a year-and-three-quarters of (PRAT) payments. So you're going to have the pot you have available right now, which is about $200,000, plus the next quarter coming in, plus all of next year, which you'd be able to use. Now, all of a sudden, you're looking at having that pot plus another $300,000, and another $350,000 minimum for next year."
He added that if interest rates stay the same, the city can pay back the bonds early, say in five years, go back out and offer more bonds to raise money for additional projects.
Alderman Mark Pelletier asked if PRAT money could be used for interest payments since the state statute authorizing Rhinelander to charge the tax limits spending to just transportation-related infrastructure expenses.
"I would not want to use it for interest, even if we could," Pelletier said. "But I think we would have to allow that."
"That is one of a number of things that need to be explored before next construction season," Gleason replied.
A Department of Revenue spokesperson said Wednesday that the city can use PRAT revenue for interest payments.
Young agreed with Kost that if the city issues the bonds by the end of the year, and the first payment isn't due until the end of next year, that's the best of both worlds.
"The problem you guys are having with putting the PRAT money toward work this year is you got behind the eight-ball on bidding and now the bids came back bad," Young said. "If this is seriously going to be explored as an option, it could make a major impact next year, especially if we have to tell people we're not going to be able to do anything this year because the bids came in too high, then look at making a big hit next year by leveraging borrowing and things like that and getting a lot of stuff done around the city."
If the borrowing is done at the end of 2017, as part of the city's 2018 borrowing, the city would know how much money it would have next spring when it sends out for bids, Young added.
"I think companies are going to be bidding aggressively to get those jobs knowing that the funding is available," Gleason responded. "You would at least think, anyway."
"I also think we should explain to the taxpayers that we'd like to do something this year but the weather and timing worked against us," Kirby added.
Belliveau asked if the PRAT borrowing would impact regular borrowing. Young said the reason the city borrows every other year is so the payments are not a huge burden on the taxpayers.
"This borrowing (PRAT) would not increase the tax levy because it is not being paid back out of property taxes," Young said. "It's getting paid back by PRAT."
"I'm just concerned that this wouldn't disrupt any proposed 2018 borrowing that we might have in mind for other departments because there's some big hitters in that borrowing," Belliveau said.
Pelletier also floated the idea of tying up half of each year's PRAT receipts, or $200,000, for payments on a loan of up to $2 million for a major project, which would leave at least $200,000 for other projects each year.
"I like the idea, but I don't like to see all of the money taken because then what happens if something comes up?" he asked.
"You don't want to put all your eggs in one basket," Gleason agreed.
"This would give the taxpayers an instant hit with the money while not having them think well, it isn't being done in front of my house, it can't be done for 10 years," Pelletier said.
Gleason said the major arteries in town, Lincoln, Kemp and Stevens streets, are in pretty bad shape and if a couple of those streets could be addressed next year that would go a long way toward making the public feel better about paying the tax. He added that fixing those streets would also improve visitors' perception of the city.
"Coming in on Kemp is great until you hit Arbutus, then it's hold on to your shorts," he said.
Kost said he asked that the bonding question be placed on the agenda because he wanted feedback from the alderpersons. He also said Kingman is going to start identifying other possible funding sources for bigger projects.
"What I'm trying to do is give you three or four months leeway so that you can decide what you're going to do," Kost said.
"Like Tim said, there's no shortage of projects out there," Gleason replied.
"That is the one point I really think we should recognize here is that this PRAT tax is a very good thing for the streets, but there's more than the PRAT tax that is needed to fix the streets," Kingman said. "There is going to be an element of patience that has to be involved with this."
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