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Rochester Hills

Minutes - Final

Police and Road Funding Technical

Review Committee

Don Cline, Jr., John Dalton, Dale Hetrick,

Tim Jacobson, Walter Johnson, Nancy Soisson, Ted Zellers

Council Members: Greg Hooper, Michael Webber

Youth Member: Ishan Patel

6:00 PM

1000 Rochester Hills Drive

Tuesday, March 16, 2010

CALL TO ORDER

Chairperson Cline called the Police and Road Funding Technical Review

Committee meeting to order at 6:03 p.m. Michigan Time.

ROLL CALL

Greg Hooper, Tim Jacobson, Don Cline, Dale Hetrick, Walter Johnson,

Nancy Soisson and Michael Webber

Present

7 -

John Dalton and Ted Zellers

Absent

2 -

Others Present:

Keith Sawdon, Director of Finance

Paul Shumejko, Transportation Engineer

PUBLIC COMMENTS

None.

APPROVAL OF MEETING MINUTES

2010-0124

Approval of Meeting Minutes - February 24, 2010

022410 Minutes.pdf

Resolution.pdf

Attachments:

A motion was made by Hooper, seconded by Hetrick, that this matter be

Approved as Presented. The motion CARRIED by the following vote:

Aye

Hooper, Jacobson, Cline, Hetrick, Johnson, Soisson and Webber

7 -

Absent

Dalton, Patel and Zellers

3 -

Resolved, that the Minutes of the Police and Road Funding Technical Review

Committee meeting held on February 24, 2010 be approved as presented.

(Member Zellers entered at 6:10 p.m.)

DISCUSSION ITEM

Greg Hooper, Tim Jacobson, Don Cline, Dale Hetrick, Walter Johnson,

Nancy Soisson, Michael Webber and Ted Zellers

Present

8 -

John Dalton

Absent

1 -

2010-0063

Police and Road Funding Discussion

Police Road Recom 030711(1)(1).pdf

Rochester Hills Road Video outline (3).pdf

Rochester Hills Road Video outline-tlz-dah - r1 (3).pdf

Rochester Hills Road Video outline-tlz-r1 (2).pdf

2010_PQI_Map_Locals.pdf

Gravel_Roads.pdf

Street_Jurisdiction (2).pdf

Assesrol.xls

CC MTG_1994-01-25.pdf

Decling Rate Methodology_1988-02-24.pdf

Flyer from 1998.pdf

Local Rd Guidelines_1993-02-03.pdf

Local Rd Improvement Policy_1998-04-29.pdf

Local Rd Improvement_1998-05-08.pdf

Local Rd Policy Purpose and Intent_1998-05-08.pdf

Paving Gravel Stds_1998-04-29.pdf

Questions_Local Rd Forum_1997-05-14.pdf

Road Repair Costs.xls

SAD Apportionment Ltr_1990-05-23.pdf

SAD Checklist.pdf

SAD Info_Jan-2001.pdf

SAD Practices in MI_1994.pdf

2010 Survey SAD.pdf

Preliminary Millage Forecast #2.pdf

Spreadsheet Sorted by CC Ranking.pdf

Spreadsheet Sorted by Area.pdf

Spreadsheet Sorted by Timing.pdf

Spreadsheet Sorted by No Action Needed.pdf

Purpose and Charge.pdf

Mayor's memo w attachments.pdf

Attachments:

Chairperson Don Cline indicated that the first item for the committee would be

the Special Assessment District (SAD) policy discussion and thanked Mr.

Shumejko for providing the large volume of supportive materials for the

Committee's review. Chairperson Cline reviewed that at the Committee's prior

meeting, questions had been posed regarding the formation process of a SAD

policy and its funding and turned the discussion floor to Mr. Sawdon.

Mr. Sawdon stated he has been working on a five-year financial forecast with

City Council as it appears on Council's meeting agenda. He reported that

several funds over the last several years have been majority contributors

toward the City's Local Road Fund and that the State's gasoline tax generates

approximately $1,000,000.00 for the City's local roads. He indicated that a

decrease in taxable values which had been a major revenue source for the

City's General Fund and estimated an approximate 50% of its revenue source

is another factor. He continued that the General Fund is experiencing cost

increases mostly driven by health care and general inflationary costs. He

commented that this became apparent to him as he set to work on the financial

forecasting model because the General Fund balances its budget on its

transfers in and out to other funds or the lack of transfers out to other funds,

which in this case, is mainly the Local Road Fund. He stated that in the

upcoming financial forecast, the application of a safety valve on the General

Fund as it pertains to the Drain Fund will be necessary and that most likely, the

Drain Fund and the Local Road Fund will not be able to get transfers. He

explained that this is caused by maintenance costs in excess of $4,500,000.00

which had originally began at $4,000,000.00 to almost $6,000,000.00 estimated

into 2015. He explained further that without the major funding source from

General Fund will result in a shortfall in the Local Roads Fund for road

maintenance. He continued that new road construction expenditures could not

be a consideration with a shortfall in funding current road maintenance. He

suggested that the Committee members note this information when discussing

special assessment districts and the City's financial inability for potential

contributions.

Member Johnson commented that it would have been helpful if a recent

newspaper article would have provided Mr. Sawdon's explanation regarding the

funding for local road maintenance.

Mr. Sawdon responded that he had engaged in a very in-depth discussion with

the writer of the article but that unfortunately, the writer had chosen to print three

seconds of the discussion and had omitted that discussion point. He reported

that the shortfall for maintenance of local roads will come for review before City

Council. While there is funding potential in the Major Road Fund to assist the

Local Road Fund, he cautioned that the Major Road Fund has its own

maintenance expenditure commitments. He noted that if the ballot question

does pass, those funds will be needed for local road maintenance.

Discussion ensued among the Committee members regarding the language of

a proposed SAD policy, the limitations of funding a SAD policy, the repair

limitations of local road conditions, and determination as to the best use of SAD

policy funds for maintenance of local roads.

In response to a question from a Committee member regarding the shortfall in

funding road maintenance, Mr. Sawdon responded that there are some tough

years ahead, especially for the 2011 and 2013 Budgets.

Member Webber discussed that he had heard that Oakland County has

expressed an interest in the discontinuance of the Tri-Party Funding Program.

He inquired that if the program is discontinued, could the allocated funds for

Tri-Party Projects then be re-directed toward the City's local roads, or a SAD

policy or would those funds have to remain in the Major Roads Fund.

Mr. Sawdon responded that without having conducted any research, his

impression would be that most of the fund balance in the Major Road Fund

came from General Fund. He stated there would have to be a review of the

Major Road commitments and the City's Capital Improvement Plan to see the

affect of the fund balance of Major Road Fund. He indicated that caution was

necessary because while Major Roads indicates a sizeable fund balance, many

prior commitments have been made. He stated that possibly if there is a little

bit of leftover funds, there could be potential for funding for seed money for

SADs which could provide help with the maintenance portion.

There was discussion among the Committee members about the Tri-Party

Fund balance and the uses for the funding if the Tri-Party Program was

discontinued.

Chairperson Cline commented that the Committee had discussed the ballot

language and that if the ballot were to pass, what would the benefits be to a SAD

policy fund and what would the conditions be. He stated his impression that the

Committee had obtained that information as well as some additional information

and suggested that the Committee should discuss if this is something it would

want to propose and discuss the other items on its meeting agenda.

Member Zellers responded that he did not think many of the Committee

members have had a chance to review the SAD information provided but that it

does go into detail for the formation and the process. He noted that funding the

SAD policy would be another issue.

Member Webber requested that Mr. Shumejko give a brief overview of each

document provided to the Committee for clarification or questions.

Mr. Shumejko began with the attachments that had been provided to the

Committee members in their meeting packet. The first documents he

described were the Assessing Roll and the Declining Rate Methodology. He

described the math formulas that were used as having originated in Farmington

Hills, then adopted by the City of Troy and the City of Rochester Hills. These

formulas were for a subdivision that went from gravel roads to paved roads.

There was a cap of $4,000.00 on the homeowner's portion of the project and the

City picked up the balance which at that time was approximately $1,500.00. He

stated that the original intent was to be a 60/40 split, 60% by the homeowner and

40% by the City, then construction costs increased and a moratorium was

placed on the assessment cap. He described the evaluation process of a

typical beneficial unit (with or without the cap) wherein a base unit is created

using the average lot size, lot frontage and the formula and added that corner

homes (which have two frontage areas) would be limited to 1.3 times a base unit

or less to create an incentive for such larger lots because the cost would be

higher than the average lot size.

Member Soisson asked if there is prepayment by residents on these types of

projects, and if not, what would the size of payment be and for what time period

would residents be assessed for their portion of the road project? How quickly

would such road projects begin?

Mr. Shumejko responded his recollection that the City sought two-year bonds

at whatever the interest rate was at that time plus a 1% Administrative Fee, the

assessment roll was presented to the interested homeowners' association who

then had to obtain the support of more than 50% of its members, City Council

then adopted the assessment, and the residents were billed over a fifteen-year

period. He stated his belief that the homeowners are in their tenth year of

paying on this assessment. He commented that residential road projects are

an investment by the homeowners' in their homes, enables the homeowners to

pay an amount over time thereby increasing the value of their homes. He noted

that most of the City's past typical SADs were for gravel roads to be paved.

Many of the committee members discussed that the investment would not be

realized by the participating homeowners until sales of homes in those areas

had occurred or until a couple of years had passed reflecting an increase in the

participating homes' market values. Discussion ensued regarding the

differences in road project costs from gravel to paved roads and the

rehabilitation and reconstruction of previously paved roads.

Mr. Shumejko made reference to an older legal opinion provided in the

Committee Members' packet addressing the City's ability to levy different cost

shares for different types of road projects such as 'gravel to paved' or 'existing

paved to repaved'. He explained that the logic was that for the residences that

were built in areas where the developer/contractor had built a paved road, those

costs were built into the market price of the homes. He explained further that for

homes built in areas of gravel road, the homeowners never paid an initial road

paving cost. He noted that reconstruction of driveways had also been

discussed and what the sharing percentages should be for those projects. He

recollected that in approximately 1998 or 1999, there had been a millage

proposed that had not passed. The committee members discussed and

inquired when had a millage been passed by the voters.

Mr. Sawdon referred to a memorandum that stated one mill had been approved

by voters in 1986.

Mr. Shumejko commented that the creation of a special assessment is a detail

process, interested residents conduct a poster campaign to address the

checks and balances, the City conducts public hearings, both supportive and

nonsupportive residents appear before City Council with petitions, design of the

project, and estimation that a full year would pass before actual construction is

commenced. He explained that he had worked with Mr. Sawdon on costs for

different types of repairs based on previous construction contracts. He stated

that he had identified different repair costs based upon specific repair strategies

and had included a cost column for contractor and geotechnical expenses

under each type of repair strategy:

- Concrete reconstruct

- Asphalt road rehabilitation and reconstruction

- Simple asphalt overlay (an inch and a half to two inches of asphalt overlay on

an existing road surface)

- Gravel road constructed to paved road.

He added that he had also included City staff time for design inspection and

other internal costs that could be part of the City's soft match. He described the

different types of repair determinations based upon different sizes of lot

frontage, utilizing 15% which had been discussed before in potential sharing for

SADs and gave the example of a concrete road assessment being at

approximately $10,000.00.

Discussion ensued among the committee members on the amount or amounts

that could be generated assuming that the ballot passes. It was noted that the

repair cost estimates could be used as part of the educational campaign to

assist residents in making an informative decision regarding the ballot.

Discussion then moved to whether residents would have the option to choose

between asphalt and concrete and Mr. Shumejko talked about the various

differences between paving from gravel to asphalt or paving with concrete and

that with the use of an SAD, other improvements like ditches, culverts and

curbs have to be constructed as well. He stated that most gravel road

subdivisions, the residents have a paved driveway to a certain point that stops

before the roadway. The committee members then discussed maintenance of

tree lines and the like in residential frontage areas as well as catch basins,

turbines, storm sewers and open ditches with culverts.

Member Soisson commented that in returning to the SAD policy discussion of

earlier, that according to the previous SAD policy provided in the packet, that if

residents do not pay the assessment in full, there is an interest charge as well

as a lien placed on the property which would have to be paid before the

residence is sold, refinanced or mortgaged. She stated that the current

economy might adversely affect the homeowners' abilities to accomplish

payment of the assessment in full.

The comment from the previous meeting was revisited in that Farmington Hills

had informed one of its subdivisions' homeowner association residents that if

the residents would not fund the road project, the alternative would be to return

the paved road back to a gravel road. The committee members discussed that

road repair cost details and funding will be necessary in getting the ballot passed

otherwise the City's residents' default answer would be 'no'. The committee

members discussed the importance of implementing the SAD policy sooner

than later as the sole funding source for repaving subdivisions, if the term of the

SAD policy would be in perpetuity or until funding becomes available and

property values have increased.

Mr. Sawdon commented that in going forward, the City has a forecast that

includes taxable declines through 2013 followed by at least a ten-year recovery

period of revenue recapture coupled with increasing health care costs that will

affect the economy.

Discussion continued that as part of the educational campaign, the focus should

be on incentives for residents to be proactive on a special assessment district

percentage match at approximately 30% that could decrease over time to 10%.

Concern was expressed by committee members that there will be subdivisions

who will not want to contribute, match or spend any monies on the special

assessment district incentives and there could be as many as twenty

subdivisions adopting a 'wait and see policy' until a road condition crisis were to

erupt and the City would be expected to perform and fund the repair. It was

discussed further how much more costly the 'wait and see' approach would be

then to proactively involve residents to participate in the maintenance and repair

of the road conditions sooner than later at a lower cost, that an asphalt overlay

could result in an additional four or five years of road condition.

Mr. Shumejko cautioned that the road underneath would have to be in a

condition to sustain the overlay treatment and a caveat would have to be

presented to residents regarding each specific road's condition and what repairs

could and could not be performed.

The question was asked regarding the time period for bonds to be issued.

Mr. Sawdon responded that bonds cannot be issued for longer than the life of

the project in which the revenue stream is based upon, for example, fifteen-year

bonds cannot be issued for a project with a seven-year life.

The committee members discussed the possible divisive results of residents

defining what constitutes a 'maintained road' and residents determining

maintenance of roads to be a 'need' versus 'want' cost expenditure. One

member suggested his opinion that gravel roads using better materials such as

limestone and aggregate could result in a better road without the cost

expenditure of paving to asphalt. Another member suggested that an SAD

policy had been attempted in the past and failed, that if a subdivision wants

better road conditions, it will have to pay for it. Discussion moved to how other

area communities are funding road improvements and maintenance and that

some are including assessments for routine maintenance such as snow

plowing.

Chairperson Cline suggested that cost information would be important to the

educational campaign component for the residents as well as what other

communities are doing to manage their cost expenditures.

Mr. Sawdon reported that at the previous meeting, the discussion of tax

increment financing (TIF) had been suggested and he had asked the City

Assessor about the possibility of using TIF within residential areas and that the

City Assessor is unaware of any public law that allows TIF districts within

residential areas.

Member Johnson asked if there was a policy that City Council could approve

during the assessment period for this type of project that would grant some level

of credit back against the property taxes.

Mr. Sawdon responded that would be a question for the City Assessor.

Discussion ensued over this being a policy question and how this might be

accomplished through General Fund.

[someone suggested] that the committee members not quibble over

processes when the discussion should be about the priority setting of the City's

road money, coordination of the City's monies with the County and State road

funding, presentation to the City's residents and an approximate determination

as to whether or not the ballot will be passed by the residents.

A request was made by one of the committee members to have a City map that

shows the City's Public City Gravel Roads and another City map that shows

Street Jurisdiction that shows City Local, City Major, County, Private, and State

roads within the City limits.

Mr. Shumejko stated he would provide those maps for the committee

members.

Chairperson Cline summarized that the committee needs to determine what it

is going to recommend to City Council, whether its recommendation is how to

obtain money for local road funding or the options regarding a policy

recommendation involving SADs or similar. He stated that to do this, the

committee needs to determine what monies are available, if any, or only

available if the millage passes, if there is any combination of state, local or

federal funding available. He commented that the information and ideas

provided have been good but asked what is the committee's intentions or plans?

Member Johnson responded with his opinion that the ballot millage is the only

fund generator, how best to market it to the residents and how to best utilize

those funds should the ballot pass and funding be obtained.

The committee members reached a general consensus that the focus of the

next couple of meetings should be:

- The educational campaign component for the August ballot millage

- The educational component of fund balance and policy

- Whether a SAD policy or similar type policy should be created

- Address the funding and how it should be utilized

- The marketing sales line to the residents

- Communication of the value of a special assessment district

- Communication of the value of passage of the August ballot millage

- Communication of consequences to residents' actions

A committee member suggested that the question most residents will be asking

is: 'if the millage does not pass, then what' and that an answer should be

prepared for that as well.

Member Johnson shared his opinion that most residents have the

misconception that there are funds in different places for road maintenance

which will eventually get the job done.

Mr. Sawdon advised that once the five-year forecast is given, the residents will

be well informed and requested if he could at the committee's next meeting, give

a condensed version of the five-year forecast. He suggested that it would be a

powerpoint presentation.

Member Hooper asked if there was Committee support for the creation of a

SAD policy.

Member Zellers offered his opinion that the committee is very interested in

creating an SAD policy but that the question of how it would be funded, whether a

percentage portion of the millage would be allocated to it assuming the ballot

passes, both questions were never answered. He stated that there were two

variations to the SAD policy, one for paved roads and the other for gravel roads.

He stated his belief that the bigger issue is that assuming the millage passes, it

will only provide a quarter of the funding necessary for maintenance and asked

where the other three-quarters of funding will be obtained. He suggested that the

education process must be addressed first by the preparation of supportive

information regarding the funding source choices, an outline of options for the

best use of the allocated funds as well as the consequences if the millage does

not pass. He stated then the residents can be asked to commit to a SAD

policy. He asked how would the committee prioritize spending funds it does not

have or what funding cuts would have to be made in order to obtain funding. He

suggested that the cornerstone of the committee's message for the educational

campaign for the ballot millage would be best summarized with 'local roads are a

local responsibility, Rochester Hills owns its own destiny'.

Discussion ensued among the Committee members regarding funding sources.

2010-0096

2010 Election of Vice Chairperson

Resolution.pdf

Attachments:

Walter Johnson nominated Dale Hetrick as Vice Chairperson.

A motion was made by Johnson, seconded by Jacobson, that Dale Hetrick be

appointed Vice Chairperson. The motion CARRIED by the following vote:

Aye

Hooper, Jacobson, Cline, Hetrick, Johnson, Soisson, Webber and Zellers

8 -

Absent

Dalton and Patel

2 -

Resolved, that Dale Hetrick is appointed Vice Chairperson of the Police and Road

Funding Technical Review Committee for 2010.

ANY OTHER BUSINESS

Discussion ensued regarding setting the Committee's meeting schedule. It was

the consensus of the Committee to set Wednesday, April 7, 2010 at 6:00 p.m.

and Wednesday, April 21, 2010 at 6:00 p.m. as the next two meetings. The

Committee will revisit setting its meeting schedule at either of the next two

meetings.

Chairperson Cline responded that the Committee could prepare the

educational campaign information at its next meeting and requested that Mr.

Shumejko obtain the color maps of the Public City Gravel Roads and Street

Jurisdiction to aide in this preparation. He referenced Mr. Sawdon's plan to

present a powerpoint of a draft City Financial Forecast to the Committee

members at the next meeting as well.

NEXT MEETING DATE

Wednesday, April 7, 2010 - 6:00 p.m.

ADJOURNMENT

There being no further business before the Police and Road Funding Technical

Review Committee, Chairperson Cline adjourned the meeting at 7:50 p.m.

____________________________________

DON CLINE, JR., Chairperson

Prepared by Christine A. Wissbrun

Administrative Secretary, City Clerk's Office