04-22-24 Work Session Agenda and MaterialsCITY COUNCIL
WORK SESSION AGENDA
KALISPELL April 22, 2024, at 7:00 p.m.
City Hall Council Chambers, 201 First Avenue East
See the bottom of the agenda to learn how to provide public comment
and watch meetings live or later.
A. CALL TO ORDER
B. ROLL CALL
C. DISCUSSION
1. Special Street Maintenance Fund Review
D. PUBLIC COMMENT
Persons wishing to address the council are asked to do so at this time. See the bottom of
the agenda to learn the protocol for providing comment.
E. CITY MANAGER, COUNCIL, AND MAYOR REPORTS
F. ADJOURNMENT
UPCOMING SCHEDULE
Next Regular Meeting — May 6, 2024, at 7:00 p.m. — Council Chambers
Next Work Sessions — BUDGET TUESDAY AND WEDNESDAY, May 7, and May 8, 2024,
at 6:00 p.m. — Council Chambers
PARTICIPATION
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see administrative code below for the proper manner of addressing the council and limit
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Pagel of 2
Kalispell City Council Agenda, April 22, 2024
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ADMINISTRATIVE CODE
Adopted July 1, 1991
Section 2-20 Manner of Addressing Council
a. Each person not a Council member shall address the Council, at the time designated in
the agenda or as directed by the Council, by stepping to the podium or microphone,
giving that person's name and address in an audible tone of voice for the record, and
unless further time is granted by the Council, shall limit the address to the Council to
three minutes.
b. All remarks shall be addressed to the Council as a body and not to any member of the
Council or Staff.
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enter into any discussion either directly or through a member of the Council, without the
permission of the Presiding Officer.
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Adopted by Resolution 5180 on February 5, 2007
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Page 2 of 2
201 1st Ave E
—almft"01Post Office Box 1997
CITY of Kalispell, MT 59903
KALISPELL Telephone: (406) 758-7720
www.Kalispell.com
To: Doug Russell, City Manager
From: Susie Turner, Public Works Director
Re: Special Street Maintenance Fund Review
Meeting Date: April 22, 2024
BACKGROUND:
The forthcoming Work Session builds upon the groundwork established during the initial review
of Special Street and Traffic Signs and Signal services, costs, and budgets. This session provides
a comprehensive review of the revenues required to support the fund and assessment alteration
options. The Special Street Maintenance Fund evaluation can be broken down into four
categories including maintenance and operations, equipment replacement, pavement
preservations, and financial policy (annual reserve requirement).
Fund forecasting was conducted, over a span of seven years, incorporating inflationary
adjustments for routine maintenance operations and services, new personnel, capital facility and
traffic projects, fleet acquisitions and replacements, and sustainment to the pavement
preservation program's level of service.
Maintenance and Operations forecasting included application of typical inflationary costs for
salary, materials, equipment maintenance, fuel, and IT / administrative transfers. Two new full-
time employees are incorporated into the forecasting and support service operations expansion
for new growth. The City street network has grown 7 miles since 2019, and an additional 10
miles are being incorporated in the next several years. Upcoming capital projects include
construction necessary to house equipment throughout the city and continued traffic
control/signal updates.
Fleet Purchase and Replacement forecasting includes the purchase of new equipment to
support operational/maintenance service for growth area and routine replacements of the fleet to
maintain the standard of service delivery consistently throughout the year. As part of the ongoing
review process, two options for equipment replacement have been outlined for consideration.
• Option A proposes an equipment replacement schedule based on factors such as the
expected service life of the equipment, including consideration for hours, miles, and
years in operation. Additionally, it accounts for mechanical failures, chassis conditions,
structural and hydraulic wear, and associated costs to ensure optimal fleet performance.
• Option B suggests an extended equipment replacement schedule primarily aimed at
reducing annual expenditures, thereby aiming to minimize adjustments to assessments.
The Pavement Preservation Program supports the preservation of the City's street network
and includes mill and overlays, chip seal, and reconstruction projects. The costs associated with
pavement preservation projects have seen a notable increase since 2018. Presently, the allocated
amount of $450,000 from the Special Street Maintenance Fund for pavement preservation falls
short of meeting the necessary requirements to sustain the street network's preservation at the
previously established levels. Several funding sources are utilized to support preservation
operations costs including Special Streets Maintenance, BarSAA, Gas Tax, Westside Urban
Renewal Area and Downtown Urban Renewal Area. The street assessment adjustment considers
a gradual allocation increase starting in Fiscal Year (FY) 2028 from $450,000 to $850,000 to
preserve the street network at the same percentages considering the inflationary cost. For
example, in 2018-2019 preservation project level of service accounted for:
• 3-4 miles of mill and overlays equaling an improvement of 5.5% of the fair to good roads
• 3-5 miles of chip sealing equaling an improvement of 7% of the fair to good roads
• 0.4 miles of reconstruction equaling an improvement of 1.1% of the poor to very poor
roads
The proposed assessment incorporates gradual adjustments to achieve the same level of service
for the pavement preservation as defined in the bullet points for the 2018-2019 preservation level
of service. Beginning in FY 25, Urban Renewal funding was allocated to fill the gap between
current costs and sustaining similar pavement preservation levels through the forecasting period,
while directing attention to the infrastructure needs outlined in the respective Urban Renewal
plans. Urban Renewal funding allocations will be utilized to complete necessary street
improvements within the respective Urban Renewal Districts and thereby minimize the need to
significantly increase the up -front special streets maintenance assessment to maintain pavement
preservation operations in the near future.
The Financial Policy has integrated an end -of -year operational reserve equivalent to four
months' worth of operations or 35% of the annual operational expenses. Special Streets
Maintenance Fund receives revenue deposits biannually, and these annual reserves provide
financial security to sustain operations and debt coverage during intervals between assessment
billing periods. Additionally, staff recommends incorporating a policy to adjust rates by the
annual percentage listed in the Construction Cost Index (CPI) starting in FY32.
The following tables and graphs support the evaluation and assessment adjustments
incorporating the discussions from above for two options. This information will be reviewed in
detail during the upcoming work session.
Budget Worksheet and Graph
FY25
BEGINNING CASH
CASH: Operating 3,513,031
Cash, Designated Equip. Replacement 166,394
Cash, Designated Pavement Replacement 149,160
Total Cash 3,828,585
REVFNUE
Percent Increase
Maintenance Assessments
-designated for pavement replacement
-designated for equipment replacement
Penalty & Interest/Sales/Invest
Inception of Loan - Equip (Loader)
T otal Revenue
Total Available
EWU'iDH'URES
Street Department/T SS
Capital Equip. Replacement
Pavement Replacement Program
Total Expenditures
FINDING CASH
End Cash, OPERATING
Cash, Designated Equip. Replacement
Cash, Designated Pavement Replacement
Total End Cash
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1, 000,000
s
Option A
FY26 I FY27 I FY28 I FY29 I FY30 I FY31
2,832,319
2,297.677
1,713,572
1,264,785
1,251,880
1,293,157
13,394
93,394
139,696
25,998
90,472
113,946
149,160
149,160
149,160
149,160
149,160
149,160
2,994,873
2,540,231
2,002,428
1,439,943
1,491,512
1,556,263
I5.00°a
10.00%
7.00%
7.00%
5.00%
3.00%
3.00%
2.255.463
2,689,019
2,998,828
3,233,638
3,454,898
3,546,521
3,595,865
450.000
450,000
450,000
550,000
600,000
700,000
850,000
750,000
700,000
700,000
700,000
700,000
700,000
700,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
0
0
500,000
0
450,000
0
450,000
3,470,463
3,854,019
4,163,828
4,498,638
4,769,898
4,961,521
5,160,865
7,299,047
6,848,892
6,704,059
6,501,066
6,209,842
6,453,033
6,717,129
2,951,174
3,238,661
3,597,933
3,697,425
3,482,803
3,520,244
3,663,606
903,000
620,000
653,698
813,698
635,526
676,526
687,354
450,000
450,000
450,000
550,000
600,000
700,000
850,000
4,304,174
4,308,661
4,701,631
5,061,123
4,718,329
4,896,770
5,200,960
2,832,319
2,297,677
1,713,572
1,264,785
1,251,880
1,293,157
1,240,417
13,394
93,394
139,696
25,998
90,472
113,946
126,592
149,160
149,160
149,160
149,160
149,160
149,160
149,160
2,994,873
2,540,231
2,002,428
1,439,943
1,491,512
1,556,263
1,516,169
Option A
FY25 FY26 FY27 FY28 FY29 FY30 FY31
Street Department/TSS M&O . ! Capital Equip. Replacement
Pavement Replacement Program Total Expenditures
Total Revenue End Cash, OPERATING
Operating Reserves 35% Operating Reserves 50%
Option A
Assessment Adjustment
FY25 I FY26 I FY27 I FY28 I FY29 I FY30 I FY31 I FY Future
% Increase 15% 10% 7% 7% 5% 3% 3% CPI %/Yr
Current Pronosed Pronosed Pronosed Pronosed Pronosed Pronosed Pronosed
Description Sq FT
FY24
I FY25
FY26
FY27
I FY28
FY29
FY30
I FY31
East Side Typical SFR
8,000
$142.21
$163.54
$179.89
$192.49
$205.96
$216.26
$222.75
$229.43
Commercial (90%)
20,000
$524.52
$603.20
$663.52
$709.96
$759.66
$797.64
$821.57
$846.22
Commercial (100%)
20,000
$552.74
$635.65
$699.22
$748.16
$800.53
$840.56
$865.78
$891.75
Cost/Year Incre as e So FT I FY25 I FY26 I FY27 I FY28 I FY29 I FY30 I FY31 I Total
East Side Typical SFR
8,000
$21.33
$16.35
$12.59
$13.47
$10.30
$6.49
$6.68
$87.22
month
$1.78
$1.36
$1.05
$1.12
$0.86
$0.54
$0.56
$7.27
Commercial(90%)
20,000
$78.68
$60.32
$46.45
$49.70
$37.98
$23.93
$24.65
$321.70
month
$6.56
$5.03
$3.87
$4.14
$3.17
$1.99
$2.05
$26.81
Commercial (100%)
20,000
$82.91
$63.57
$48.95
$52.37
$40.03
$25.22
$25.97
$339.01
-monthl
$6.91
1 $5.30
1 $4.08
1 $4.36
1 $3.34
1 $2.10
1 $2.16
1 $28.25
Option A Supports
• Projection % inflation increases to FY 2031
• 2 FTE Additions (FY25, FY27)
• Equipment Replacement CIP-Per Scheduled Replacements
• $750,000-$700,000 Allocated for Equipment Replacement
• CIP -Facility Additions (equipment housing, material storage, land acquisition)
• CIP -TSS Traffic Control/Signal Updates
• $450,000 - $850,000 allocated for Pavement Restoration from FY 25 to FY 31
Option B
Budget Worksheet and Graph
FY25
FY26
FY27
FY28
FY29
FY30
FY31
BEGINNING CASH
CASH: Operating
3,513,031
2,832,082
2,230,526
1,677,302
1,171,408
1,091,891
1,102,525
Cash, Designated Equip. Replacement
166,394
332,679
231,964
216,250
20,535
22,992
356,466
Cash, Designated Pavement Replacement
149,160
149,160
149,160
149,160
149,160
149,160
149,160
Total Cash
Percent Increase
Maintenance Assessments
-designated for pavement replacement
-designated for equipment replacement
Penalty & Interest/Sales/Invest
Inception of Loan - Equip (Loader)
Total Revenue
Total Available
EWU'iDH'URES
Street Department/T SS
Capital Equip. Replacement
Pavement Replacement Program
Total Expenditures
ENDING CASH
End Cash, OPERATING
Cash, Designated Equip. Replacement
Cash, Designated Pavement Replacement
Total End Cash
3,828,585
3,313,921
2,611,651
2,042,712
1,341,103
1,264,043
1,608,151
10.00%
10.00%
10.00%
5.00%
5.00%
5.00%
3.00%
2,255,225
2,622,105
3,029,709
3,176,531
3,388,286
3,515,877
3,561,972
450,000
450,000
450,000
550,000
600,000
700,000
850,000
600,000
600,000
600,000
600,000
600,000
650,000
650,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
340,000
0
0
0
450,000
500,000
0
3,320,225
3,687,105
4,094,709
4,341,531
4,603,286
4,880,877
5,076,972
7,148,810
7,001,026
6,706,359
6,384,243
5,944,389
6,144,921
6,685,123
2,951,174
3,238,661
3,597,933
3,697,425
3,482,803
3,520,244
3,663,606
433,715
700,715
615,715
795,715
597,543
316,526
840,526
450,000
450,000
450,000
550,000
600,000
700,000
850,000
3,834,889
4,389,375
4,663,648
5,043,140
4,680,346
4,536,770
5,354,132
2.832.082
2,230,526
1,677,302
1,171,408
1,091,891
1,102,525
1,015,891
332,679
231,964
216,250
20,535
22,992
356,466
165,940
149,160
149,160
149,160
149,160
149,160
149,160
149,160
3,313,921
2,611,651
2,042,712
1,341,103
1,264,043
1,608,151
1,330,991
Option B
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
FY25 FY26 FY27 FY28 FY29 FY30
Street Department/TSS M&O Capital Equip. Replacement
Pavement Replacement Program Total Expenditures
Total Revenue End Cash, OPERATING
----Operating Reserves 35% Operating Reserves 50%
FY31
Assessment Adjustment
1 1 FY25 1 FY26 I FY27 I FY28 1 FY29 1 Mo I FY31 I FY Future l
% Increase 10% 10% 10% 5% 5% 5% 3% CPI %Yr
Cun-ent Pion-ed Pion-ed Pion-ed Pion-ed Pion-ed Pion-ed Pion-ed
Description Sq FT
FY23/24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
East Side Typical SERI
8,000
$142.21
$156.43
$172.07
$189.28
$198.74
$208.68
$219.11
$225.69
Conmiercial (90%)
20,000
$524.52
$576.97
$634.67
$698.14
$733.04
$769.70
$808.18
$832.43
Conmiercial (100%)
20,000
$552.74
$608.01
$668.82
$735.70
$772.48
$811.11
$851.66
$877.21
Cngt/Venr Tnerenge Rn FT I FV2G I FV26 I FV27 I FV2R I FV29 I F"o I FV31 I Tntal
East Side Typical SFR
8,000
$14.22
$15.64
$17.21
$9.46
$9.94
$10.43
$6.57
$83.48
month
$1.19
$1.30
$1.43
$0.79
$0.83
$0.87
$0.55
$6.96
Conmiercial (90%)
20,000
$52.45
$57.70
$63.47
$34.91
$36.65
$38.48
$24.25
$307.91
month
$4.37
$4.81
$5.29
$2.91
$3.05
$3.21
$2.02
$25.66
Commercial (100%)
20,000
$55.27
$60.80
$66.88
$36.78
$38.62
$40.56
$25.55
$324.47
month
$4.61
1 $5.07
1 $5.57
1 $3.07
1 $3.22
1 $3.38
1 $2.13
1 $27.04
Option B Supports
• Projection % inflation increases to FY 2031
• 2 FTE Additions (FY25, FY27)
• Equipment Replacement CIP-Per Extended Scheduled Replacements to lower
assessment adjustments
• $600,000 - $650,000 Allocated for Equipment Replacement
• CIP - Facility Additions (equipment housing, material storage, land acquisition)
• CIP - TSS Traffic Control/Signal Updates
• $450,000 - 850,000 allocated for Pavement Restoration for FY 25- FY 31