Grand Rapids has a tax and a plan to fix its bad roads

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1 Grand Rapids has a tax and a plan to fix its bad roads By Rod Kackley Crain s Detroit Business November 16, 2014 ISTOCK PHOTO A report released by the Grand Rapids 21st Century Infrastructure Task Force recommended spending $4 million more a year to maintain the city's roads, pushing the roads budget to $12 million. The task force recommended increasing general fund support, maximizing state and federal grants, and also called on the Michigan Legislature to chip in more funding, possibly through a higher gas tax. That report was released a dozen years ago. The 2002 plan fell apart when the state's economy began to crumble. Followed by the state's roads. Twelve years after that report came out, with Grand Rapids' roads now in even worse shape, the city's voters approved the 15-year continuation of an increase of the city income tax to 1.5 percent from 1.3 percent for residents and 0.75 percent from 0.65 percent for nonresidents that had been scheduled to end in July of next year. The tax, renewed by voters in May, should raise close to $9 million annually through 2030 for repairs to the city's vital streets. The original increase was part of the city's "transformation plan" approved by a margin of only 204 votes in The five-year increase helped balance the budget and gave the city time to negotiate union concessions. The tax also allowed Grand Rapids to retain 10 community police officers and pay for a 15-member fire rescue squad.

2 Andy Johnston With the new money, city officials also have a new asset management plan for deciding which roads get fixed first. And plenty of them need fixing. Deputy City Manager Eric DeLong said that of the 588 miles of city roads in Grand Rapids, 371 miles are in poor condition. The goal is to get 70 percent of them into fair to good condition in 15 years. Andy Johnston, vice president of government and corporate affairs for the Grand Rapids Area Chamber of Commerce, said the chamber supported the May ballot proposal because taking care of city streets "is a core function of government." "The city went through a really robust process," Johnston said. "They implemented asset management. They also dedicated general fund support to fund roads in addition to the income tax." Don't blame last winter Road conditions are judged by the Grand Valley Metropolitan Council, a regional planning agency, using a van outfitted with laser technology. The van drives every street and looks at every crack and pothole. The data flow into a Pavement Surface and Evaluation Rating or PASER system that provides a numerical designation for each street segment, with zero being on the poor end and 10 very good. Although battered by one of the worst winters on record, the road conditions were the result not of one year but of at least 12 years of delayed repairs and maintenance, DeLong said. Steve Warren, managing director of the Kent County Road Commission, doesn't agree with the common wisdom that the winter beat up the roads more than normal. "Regardless of the severity of winter, every winter is characterized by not only cold weather but a lot of fluctuations," he said. "It is the freeze-thaw cycle that gives us a roller-coaster ride in Michigan. "So if roads are bad going into the winter, they are going to be bad coming out of it." Warren said that during the fall of 2013, up to 35 percent of county roads carrying the heaviest

3 volume of traffic were in poor condition. Grandville, to the southwest of Grand Rapids, is another municipal survivor of the winter of But that city maintains that none of its roads are in poor condition. "Roads are like a car. You can't neglect it for five years and expect it to last," said Ron Carr, the public works director for the city of Grandville. John LaMacchia II Carr said Grandville had the same problem as Grand Rapids but "to a much smaller extent," thanks to a dedicated road millage of 1.5 mills that helps pay for road maintenance. John LaMacchia II, a state affairs legislative associate at the Michigan Municipal League, said that by the his organization's count, 40 cities and 60 villages in the state have some source of dedicated funding. He said most of those 100 municipalities are doing it with a property tax millage. However, he said, most communities are also forced to raid their general fund budgets to pay for road and other infrastructure repairs. The road to a tax Grand Rapids officials knew they had a major problem with the city's roads going into the winter. The city had been able to put more money into the roads from its general fund for close to 10 years, DeLong said. But that ended in fiscal "By then our financial situation had deteriorated so severely that we needed to reprogram those monies for operations," he said. "We could no longer invest in capital" improvements. A group known as the Sustainable Streets Task Force was appointed and developed the recommendations that resulted in May's income tax ballot proposal. City officials considered asking residents for a property tax increase or an income tax increase and decided the income tax would be best "because you would have city residents and noncity residents paying for it," DeLong said. The tax is expected to bring in about $9 million a year for the city's vital streets. That will be on

4 top of the $3.4 million the city was already spending out of its major and local street fund and the $3 million in grants from the federal government. That's an improvement but still not enough for what needs to be done, DeLong said. "We are counting on $6 million more from the state," he said. "We are going to be a lot better off than we would have been even if the state never comes up with that money." DeLong also said funding can't be a one-time parachute drop of manna from Lansing. The funding must be "a consistent, long-term, every-year, systematic investment." Although the income tax revenue has not started coming in and the $6 million in state funding may never materialize, city officials decided they could wait no longer. And so work has begun on city streets. Some funding is from the $3 million in Metropolitan Planning Organization money from the federal government that flows through Lansing. Some is from money for special projects. But most is borrowing in anticipation of the income tax revenue. DeLong said they had no alternative. If everything ran on its natural course, the city would not start receiving the revenue from the income tax increase, which takes effect June 30, until August or September "Which would have meant we would have missed one construction season, and we would have suffered through another horrible winter," DeLong said. The Grand Rapids City Commission authorized up to $50 million in bonding. The city has borrowed, to date, $17 million for the first construction season. The worst shall not be first Eric DeLong Now, Grand Rapids officials not only have new money to fix the city's roads, but they also they have a new strategy. They no longer fix the worst first, the way roadwork was done when state funding was never an issue. They decided to look at different scenarios, using the PASER data, and determine what it would

5 cost to bring poor streets to fair condition and fair streets to good condition. DeLong said they also looked at what the right "balance point" would be for the condition of Grand Rapids' roads. It might seem obvious that streets and roads should be brought up to 100 percent. Not so, DeLong said. "If you're building a nuclear plant, you do need to hit 100 percent," he said. "But with streets, there is a balance. We found that once we got beyond 70 percent of the roads being good or fair, we essentially were over- investing. We were stretching too far, trying to achieve too much." The investments are all focused on making sure that what is good and fair stays good and fair and doesn't drop to poor. "Doing rehab, which is the roto-milling (grinding down the road surface) and resurfacing, we get four miles for every $1 million" spent on roadwork, DeLong said. Reconstruction costs $1 million for every mile of road. With a process known as "cape seal" which provides a thinner, waterproof treatment the city get 36 miles for every $1 million spent, he said. Rick DeVries, Grand Rapids' assistant city engineer, said that under asset management, rather than fixing the worst first, the city concentrates on making sure roads stay good. "Basically, the poor roads are as bad as they are going to get," he said. "They are not going to get a whole lot worse." DeVries said major streets eligible for federal funding are being targeted first. To pay for that work, the city expects to receive a steady stream of $6.5 million of federal funding annually for 15 years from Metropolitan Planning Organization fundings, replacing the $3 million grant received this year. Major streets that are not eligible for federal funding are in the second category. DeVries said officials decided to invest heavily in the first two categories for the first two years about $11 million to improve 70 percent of those streets to good or fair condition, then do preventive maintenance for the rest of the 15-year period. Next, they start working on local streets. DeVries said each of the private contractors has been given a list of streets and told: "These are the streets you have to go after. You have to do half of the streets this fall and the other half next spring." City crews are doing "wedging" or triage paving on really bad roads where reconstruction is not going to happen for a while. They put some asphalt down and hope it holds together until they can get there to really fix it after they finish improving roads that can be saved.

6 DeLong said city officials hope to add more streets to the list after they re-evaluate the situation over the winter. DeVries, the city engineer, said that as of Oct. 22, they had worked on about 35 miles of the 588 miles of city streets. They have not started on reconstruction of the poor roads yet, concentrating instead on moving fair roads into the good category. "We are much better prepared to get through this next winter," DeLong said, "and we will continue to make steady progress next year." The next phase is to "make sure we never go back, continuing to innovate and grow and manage these resources very well." Meantime, newly re-elected Gov. Rick Snyder has not given up his quest to win legislative approval for $1.2 billion in funding to repair Michigan's roads. Dave Murray, deputy press secretary for the Snyder administration, said the governor wants that package approved by the end of the year. However, that amount is far short of what the Michigan Municipal League and County Road Association of Michigan think is needed to fix all of the roads in the state. "Eighty-two percent of the roads that are eligible for federal funding are in fair or poor condition," said Denise Donohue, the director of the county road association. "Final numbers from all 83 counties in Michigan are not in yet, but the feeling is they will show most of the other roads in the state are in much worse shape." LaMacchia of the municipal league agrees with Johnston of the Grand Rapids chamber that the issue needs to be addressed in the Legislature's lame-duck session. He wants any measure on Snyder's desk by Christmas. "If it doesn't happen by then, we are going to usher in a whole new session and a bunch of new legislators," LaMacchia said. "Then the whole debate and the whole education process would have to begin again." DeLong said Grand Rapids officials have testified before state Senate committees, met with legislators and talked with the Snyder administration about the need for a stable stream of state funding for road repair and construction. Said the chamber's Johnston: "The longer we wait to address the issue, the more expensive it becomes to fix. And a partial solution is only going to slow the decline. It is not going to maintain the roads at the proper level, long term."