Today’s paper includes an insert about the city’s proposed use of franchise fees to fund street maintenance and replacement. As your city, we are responsible for clean water, sanitary sewer and safe streets. The initial cost for this infrastructure was born largely by development. Developers purchase land, install utilities, build streets and sell houses, and the cost is incorporated into the sale price of the homes. However, the maintenance and replacement of streets falls to the city.
In 1970, the population of Prior Lake was 1,100. Today, we have over 27,000 residents. Ninety-six percent of city streets have been built since 1970 and are becoming due for replacement. To address this, the city completed a Pavement Management Plan (PMP) this year. The plan reviewed street conditions and rated them on a scale of 0 to 100 (100 being a new street and 0 being a street in complete disrepair).
The current average rating across all city streets is 71. Most cities aim for an average rating of 70-75. The PMP included a cost estimate of $5 million annually to maintain an average rating of 71, which is more than what the city has historically spent on our streets.
What are the options? We could make no changes and continue to fund street maintenance at existing levels. The result would be a continued degradation and premature reconstruction of our streets. In 20 years at existing funding levels, our streets would deteriorate from an average rating of 71 to 55. At that point, it would cost $150 to $200 million to return our streets to current conditions.
The second option would be to increase the tax levy. Property tax increases impact individual properties differently based on the value of the property. A residential property generates 10 vehicle trips per day on city streets regardless of their value, so property taxes do not equitably distribute the cost of street maintenance. In addition, not all properties that contribute vehicle traffic to our streets pay property taxes.
The third option is to increase existing franchise fees by $7 per month for residential properties. Current fees are $3 per month and were established in 2006. The fees have not been adjusted for inflation or material costs in 15 years. The cost impact to residential property owners utilizing this method is less than if the property tax levy were increased to provide the same level of street funding.
Timely maintenance is more cost effective than waiting for a big problem. To put the city on a financially sustainable path, more street maintenance is required. This helps protect property values, provides safe accessibility to homes and avoids street disrepair that is financially insurmountable. An increase in our franchise fees provides the needed funding.
To learn more about our street maintenance plan and proposed franchise fee increase, the city is holding an informational meeting on July 27 at City Hall at 6 p.m. You can also get more information at www.priorlakemn.gov/franchise.