CHAPTER 15 Long Range Plan Financial Assessment€¦ · Long Range Plan Financial Assessment . ... analysis of trends in federal aid, ... overlay of pavement will occur every 15-20

Chapter 15 Financial Assessment

CHAPTER 15

Long Range Plan Financial Assessment

TABLE OF CONTENTS

Overview / Summary .................................................................................................................................... 1

Introduction .................................................................................................................................................. 3

Needs Assessment ........................................................................................................................................ 4

Jurisdictional Cost Assessment ..................................................................................................................... 8

Jurisdictional Revenue Assessment ............................................................................................................ 14

Findings ....................................................................................................................................................... 20

Managing the Gap Between Revenues and Costs ...................................................................................... 20

Management Strategy #1: Establishing Program Priorities .................................................................... 21

Management Strategy #2: Project Selection Screening Criteria ............................................................. 24

Management Strategy #3: Manage the System for Improved Efficiency ............................................... 25

Management Strategy #4: Avenues to identify Additional Resources ................................................... 25

Management Strategy #5: Targeting Resources ..................................................................................... 27

Transit Financing ......................................................................................................................................... 28

Overview / Summary Chronic shortages in funding for transportation investment have developed over the years as receipts from traditional funding sources such as federal and state gas taxes have not kept pace with increases in construction and maintenance costs and the overall growth in travel demand nationwide. Other sources of funding often used for transportation, such as local property taxes, face many completing demands where the community’s transportation needs must be balanced against other social and economic needs.

In light of this background, the plan identifies a significant shortfall in funding to meet the system preservation and improvement needs that have been identified in the plan. The Revenue-Needs Comparison chart on the next page illustrates the results of the analysis completed for this plan, showing that Mn/DOT will only have adequate funds to meet approximately 50% of identified needs on state facilities, while Olmsted County will have available about 2/3rds of the funds needed and the City of Rochester may have as much as 80% of the needed funds available, depending on its ability to successfully leverage public dollars with private dollars through various land development funding mechanisms. Mn/DOT relies largely on gas tax receipts to fund its program, while Olmsted County relies primarily on the state gas tax (distributed through the County State Aid program) and property tax

15-1 | P a g e R O C O G 2 0 4 0 L o n g R a n g e P l a n


receipts to fund its program. The City of Rochester has a number of mechanisms it utilizes, including transportation improvement districts and substandard street fees, which can be more variable and which may not be available at the time the investment is needed, since they are tied to private land development activity.

In light of the funding shortfall, Chapter 15 includes a discussion of prioritization policies that should be considered when tradeoffs need to be made, suggesting that maintenance and preservation activities should receive the highest priority and network expansion the lowest.



Introduction

Chapter 15 summarizes estimates of anticipated revenues and costs associated with preserving and improving the transportation network throughout the ROCOG study area for a 25-year period. The following steps were completed in preparing this analysis:

1. Using input gathered from the public and community leaders, along with technical analysis completed by project staff, a comprehensive list of transportation needs and issues were identified.

2. Typical costs for various classes of preservation and improvement activities were applied to each

identified improvement need, along with estimates of potential right of way and contingency costs (if applicable). In the case of roadway network preservation, a set of activities that would constitute a typical fifty-year life cycle program were first identified, from which an annual average preservation cost was calculated for each lane mile of road or square foot of bridge structure based on type of roadway system (Trunk Highway, CSAH, MSAS, County Roads, Local Streets). These costs were then aggregated across systems and by jurisdiction to come up with 25 year estimates of preservation needs

3. On the revenue side, an estimate of revenues that would be available over a 25-year period

from traditional highway funding sources was developed. For MNDOT, this involved an analysis of information from the preliminary 2014-2018 State Transportation Improvement Program (STIP), the Statewide Highway Investment Plan 2014-2033 (SHIP) and the Mn/DOT District 6 Ten Year Work Plan from the SHIP. For Olmsted County and the City of Rochester, this involved an analysis of trends in federal aid, state aid, tax levy, other local sources and private contribution revenues, which were then projected out for 25 years into the future.

Given a projected gap between projected needs and baseline revenues, a discussion of the steps needed to manage the gap, including identification of priorities for funding, is discussed in the last section of this chapter.

Current federal guidelines establish that the metropolitan transportation plan must use an inflation factor to estimate future costs reflecting ‘‘year of expenditure dollars’’, based on reasonable financial principles and information, developed cooperatively by the MPO, State(s), and public transportation operator(s). For the purposes of this plan, ROCOG has assumed a 3.15% annual inflation rate for inflating cost estimates in current dollars to future year dollars. This is based on an analysis of the change in the Construction Cost Index reported regularly in the journal Engineering News Record, the findings of which are summarized in Figure 15-1. This shows fairly significant swings in the index over the period of 1994-2014, with very low rates during the recent recession, high rates in the bubble years preceeding the recession, and more moderate values of between 2% and 4% from 1990 until 2003 and in recent years. ROCOG has chosen to use the 20 year index average as its estimate for the inflation factor utilized in the plan.



3.8%

1.2%

2.7%3.7%

1.6%2.3%

2.7%

1.8%

3.2%2.4%

6.3%

4.7%

5.9%

8.4%

0.0%

1.3% 1.2%

4.7%

2.6%

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3.77%3.16%

-1.0%

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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Change in ENR Construction Cost IndexAnnual Change and Averages

Annual %

5 Yr Ave

10 Yr Ave

20 Yr Ave

Figure 15-1 Trends in Engineering News Record Construction Cost Index 1990-2010i

On the revenue side, reasonable assumptions regarding the escalation of funding can also be assumed for purposes of the plan, but under federal planning guidelines these assumptions must be based on a demonstration that there is reason to believe such increases will be available, and should identify strategies that can be used to help achieve that goal. Future revenues may also be projected based on historical trends, including consideration of past legislative or executive action. For the purposes of this analysis, federal and state aids to Olmsted County and Rochester have been estimated based on historical trends, while the tax levy share of local funding assumes that the historic share of tax levy funds devoted to transportation will remain constant but that the tax base will grow in line with historic trends, resulting in a moderate growth of local funds available for transportation purposes over historical levels.

Needs Assessment This section reports the estimated costs for implementing preservation and improvement needs identified on the MNDOT, Olmsted County and City of Rochester roadway systems. Typical unit cost values are used to estimate project costs, and projects are assigned to a time frame (short term of 0-7 years, mid-term of 8 to 15 years, or long term of 16-25 years) in order to apply the 3.15% annual cost inflation factor to future projects. The analysis focuses on the three primary roadway authorities (MN/DOT, Olmsted County and Rochester) for the purposes of this analysis, since these jurisdictions historically have been the only recipients of federal highway funding in the ROCOG planning area.

The component cost factors that are evaluated in this analysis are as follows:

OPERATIONS / REACTIVE MAINTENANCE: These costs include activities such snow and ice removal, street sweeping, pothole repair and other general unscheduled maintenance activities. The initial base year costs for these activities are estimated at $3050 per lane mile for non-local streets and $1810 per lane mile for local streets. The category also includes an annual cost of 10 cents per square foot for bridges for activities such as washing, flushing, patching and sealing,



based on a Transportation Research Board Study on bridge maintenance that included typical costs observed in Minnesota.

PREVENTATIVE MAINTENANCE: This category addresses scheduled maintenance activities including periodic sealcoats ($3200 / lane-mile (lm)) and crack filling ($4250 / lm) on bituminous pavements and joint repair ($14,600 / lm) on concrete pavements. It also assumes that an overlay of pavement will occur every 15-20 years on bituminous pavements, with one concrete pavement restoration with diamond grinding on concrete pavements during the 50-year life cycle of these pavements, and re-rocking of gravel roads once every 3 years.

For bridges, preventative maintenance is assumed to include one deck replacement ($50 / sqft) and two deck overlays ($12 / sqft) during the life cycle of bridges, and the repainting of steel bridges at a cost of $50,000 to $75,000 depending on the length of the bridge.

RECONSTRUCTION: Unit costs are based on recent information from the City of Rochester and Olmsted County and MNDOT. For bridges, the estimated cost of reconstruction is $100 / sqft for structures under 50’ in length, $110 / sqft for structures from 50’-150’, and $125 / sqft for structures over 150’ in length, based on data available from the State Aid Office of MNDOT.

CAVEAT ON LIFE CYCLE COSTS

All of the above costs (Reactive Maintenance, Preventative Maintenance, Reconstruction) are estimated as annual average costs assuming roads have a service life of 50 years and bridges a service life of 75 or 90 years, depending on the type of bridge. This simplifies the analysis in light of the lack of detailed condition information that would be needed to do an accurate assessment of road preservation needs. An Average Annual Cost assessment assumes that over the service life of a facility a certain amount of dollars are needed to complete surface rehab (such as sealcoats), overlays and reconstruction; adding these total costs together for the entire network and dividing by the service life (50 years in the case of roads) results in an estimated of the average annual dollars that would be needed to maintain and preserve the road network.

ROADWAY IMPROVEMENT COSTS: Roadway improvement cost categories include projects such as turn lanes, new signals, signal interconnection systems, upgrades of existing corridors to include paving or the addition of lanes, the construction of roadways on a new alignment or construction / reconstruction of interchanges and overpasses. Another important factor included in roadway cost estimates is right of way acquisition, where a factor for land costs (but not business and relocation costs) has been built into the cost estimates. The assumed unit costs for roadway improvements are listed in Appendix J.



CAVEAT ON IMPROVEMENT COSTS

Applying a 3.15% cost inflation factor to Roadway Improvement projects presents a major challenge in that a determination needs to be made as to when a project may realistically occur. Unlike preservation and maintenance, where the activity is ongoing on a network-wide basis, improvement or expansion of a road or bridge is a one-time expenditure. Assuming a project will occur in the first five years of the planning horizon versus the twentieth year, for example, makes a major difference in how many “inflation-adjusted” dollars are needed to complete the project.

For the purposes of this analysis projects were assigned to either a short (0-7 years), mid (8-15 years) or long (16-25 years) term time frames for purposes of applying an average inflation factor based on the assigned time period. For example, costs for projects in the long term time period were inflated by 3.15% annually for 20.5 years, representing the mid-point of the 16-25 year time period.

Assumptions regarding the time period in which a project would be constructed if funding was available were based on current capital improvement programs if projects were in a CIP. For projects not in a CIP, projects were assigned to a general project grouping, and the land use classification of the geographic area in which a project was located was identified. The land use classification was based on the mapping reflected in Figure 15-2 on the following page, which is a reproduction of the Land Use Area Classification from Chapter 6. The general project groupings included the following categories:

• Signals and Intersections • (Existing) Interchange Improvement • Circle Drive System • Corridor Management • New Interchanges • New Road Capacit • (Outer) Beltway • Minor Network Enhancements • Railroad Crossing Improvements

Projects in existing developed areas were assumed to have a higher priority than projects in future development areas, and projects reflecting lower cost traffic management measures were given higher priority for the near term than new construction or major capacity improvements.





2015 Update

Road Network PreservationTotal 25 Year Cost -

Inflation Adj $$ 1 8 15 25

MnDOT Highways (Interstate / TH / MN)Reactive 57,315,678$ 1,541,330$ 1,915,050$ 2,379,385$ 3,244,569$ Preventative 12,845,084$ 345,429$ 429,184$ 533,247$ 727,144$ Resurface 65,402,043$ 1,758,788$ 2,185,234$ 2,715,080$ 3,702,329$ Reconstruction 159,769,222$ 4,296,504$ 5,338,261$ 6,632,610$ 9,044,338$

MNDOT Road Network Totals 295,332,026$ 7,942,050$ 9,867,730$ 12,260,322$ 16,718,380$

Bridge Preservation Analysis

Annual Maintanance CostMNDOT 2,123,565$ 57,107$ 70,953$ 88,157$ 120,212$ Painting Costs / Steel BridgesMNDOT 2,792,406$ 75,093$ 93,301$ 115,923$ 158,075$

Preservation Costs / DeckMNDOT 25,607,283$ 688,629$ 855,599$ 1,063,053$ 1,449,597$ Reconstruction CostsMNDOT 62,380,353$ 1,677,528$ 2,084,273$ 2,589,639$ 3,531,274$

TOTAL BRIDGE COSTS BY JURISDICTION 8,918,838$

MNDOT 92,903,607$ 2,498,358$ 3,104,125$ 3,856,771$ 5,259,158$

TOTAL 25 YEAR ROAD AND BRIDGE NETWORK PRESERVATIONMNDOT 388,235,633$

Illustrative Yearly Costs showing effects of inflation

Jurisdictional Cost Assessment

MNDOT / Maintenance and Preservation Table 15-1 summarizes the estimated costs for maintenanceii and preservationiii for state highways and bridges that would be borne by MNDOT if the agency was able to fully fund 50 year life cycle needs. An inflation adjusted total of over $388 million dollars is estimated to be needed to meet these needs. Costs are estimated to rise from $13.3 million in the 1st year to $21.9 million in the 25th year.

TABLE 15-1: MNDOT ANNUAL AVERAGE MAINTENANCE AND PRESERVATION COSTS

MNDOT /Improvement / Expansion

Tables 15-2 summarizes the estimated costsiv for improvement needs on the state highway system that were identified with a 3.15% annual inflation factor built in. Table 15-2 identifies the costs cross-



SUMMARY OF Improvement / Expansion Needs / MNDOT Roadways

Short Term0-7 Years

Mid Term8-15 Years

Long Term15-25 Years

Railroad Crossing Upgrade Total By Category

Signals & Intersections 887,466$ 870,548$ 783,136$ -$ 2,541,151$ Interchange Improvements 7,406,316$ 13,631,729$ 50,814,259$ -$ 71,852,304$

Corridor M anagement 4,100,718$ 4,459,005$ 13,919,693$ -$ 22,479,416$ New Interchanges 16,887,522$ 16,887,522$ 23,448,255$ -$ 57,223,299$

Beltway (N/S/E) -$ -$ 5,061,670$ -$ 5,061,670$ M inor Network Enhancements 97,845$ 48,193$ -$ 361,943$ 507,981$

Railroad -$ -$ -$ 1,741,122$ 1,741,122$ TOTALS BY TIME HORIZON Grand total

Totals by Time Frame 29,379,868$ 35,896,997$ 94,027,013$ 2,103,065$ 161,406,942$

tabulated by major project type and the expected time frame of expenditures assuming funding was not a constraint. An aggregate total of $161 million dollars is the estimated need.

TABLE 15-2: MN/DOT IMPROVEMENT COSTS BY PLANNING HORIZON

Olmsted County Maintenance and Preservation Table 15-3 on the following page summarizes the estimated costs for maintenance and preservation for highways and bridges that would be borne by Olmsted County if the agency was able to fully fund 50 year life cycle needs. An inflation adjusted total of over $613 million dollars is estimated to be needed to meet these needs. Costs are estimated to rise from $14.7 million in the 1st year to $31 million in the 25th year

Olmsted County Improvement / Expansion Table 15-4 on page 15-11 summarizes the estimated costs for improvement needs on the county highway and bridge network that were identified. Table 15-4 identifies the costs cross-tabulated by major project type and the anticipated time frame of when projects would be needed if funding availability was not a constraint. A 3.15% annual inflation rate applied to project costs, tied to the time frame within a project is assumed to be needed An aggregate total cost of $296 million dollars for improvement needs was identified, with $57 million in short term (2016-2023) needs reflecting an estimate of the highest priority project needs.

As a comparison, the current Olmsted County Capital Improvement Program has $161 million dollars programmed for road and bridge construction for the five year period of 2015-2019. The evaluation conducted for this plan finds that the needs for the short term period include $57 million in improvement needs and $147 million in preservation needs, for a total estimated short term need of $204 million dollars.



y y

2015 Update



Olmsted County CSAH System Reactive 79,479,390$ 2,137,355$ 2,655,591$ 3,299,483$ 4,499,230$ Preventative 18,943,137$ 509,418$ 632,934$ 786,399$ 1,072,347$ Resurface 98,060,089$ 2,637,026$ 3,276,416$ 4,070,836$ 5,551,060$ Reconstruction 216,169,500$ 5,813,216$ 7,222,725$ 8,973,993$ 12,237,087$

412,652,116$ 11,097,014$ 13,787,666$ 17,130,711$ 23,359,725$ Olmsted County / County Road Network Reactive 31,269,417$ 840,895$ 1,044,784$ 1,298,109$ 1,770,123$ Preventative 3,078,145$ 82,777$ 102,848$ 127,785$ 174,250$ Resurface 40,563,883$ 1,090,841$ 1,355,334$ 1,683,956$ 2,296,271$ Reconstruction 63,984,070$ 1,720,656$ 2,137,857$ 2,656,215$ 3,622,059$

138,895,515$ 3,735,169$ 4,640,822$ 5,766,065$ 7,862,703$

TOTAL 551,547,631$ 14,832,183$ 18,428,488$ 22,896,776$ 31,222,427$


Annual Maintanance CostOlmsted 1,542,984$ 41,494$ 51,555$ 64,055$ 87,346$ Painting Costs / Steel BridgesOlmsted 5,277,954$ 141,934$ 176,349$ 219,107$ 298,778$

Preservation Costs / DeckOlmsted 13,958,194$ 375,363$ 466,376$ 579,456$ 790,156$ Reconstruction CostsOlmsted 41,502,516$ 1,116,083$ 1,386,696$ 1,722,923$ 2,349,406$

TOTAL BRIDGE COSTS BY JURISDICTION 8,918,838$ Olmsted 62,281,648$ 1,674,874$ 2,080,975$ 2,585,541$ 3,525,687$

TOTAL 25 YEAR ROAD AND BRIDGE NETWORK PRESERVATIONOlmsted 613,829,279$


TABLE 15-3: OLMSTED COUNTY ANNUAL AVERAGE MAINTENANCE AND PRESERVATION COSTS



TABLE 15-4: OLMSTED COUNTY IMPROVEMENT COSTS BY PLANNING

HORIZON

City of Rochester Maintenance and Preservation

Table 15-5 on the following page summarizes the estimated costs for maintenance and preservation for roads and bridges that the City of Rochester would bear if the jurisdiction was able to fully fund its 50 year life cycle needs. This accounts for not only the existing network of streets and highways but also the continued expansion of the network at the rate of 1 mile of state-aid highway and 4 miles of local streets annually. An inflation adjusted total of over $557 million dollars is estimated to be needed to meet these needs. Costs are estimated to rise from $14 million in the 1st year to $ 30 million in the 25th year.

City of Rochester Improvement / Expansion

Table 15-6 on page 15-13 summarizes the estimated costs for improvement needs on the network of city streets and highways that were identified. Table 15-6 identifies the costs cross-tabulated by major project type and the anticipated time frame when projects would be needed if funding availability was not a constraint. A 3.15% annual inflation factor built in depending on when projects are expected to be needed. An aggregate total of $287 million dollars is estimated as the need, with $74 million for the period 2016-2023 reflecting the funding needed to meet the highest priority needs on the system. As a comparison, the current Rochester Capital Improvement Program has $96 million programmed for street construction and preservation needs for the period 2015-2019

SUMMARY OF Improvement / Expansion Needs / Olmsted County

Short Term0-7 Years

Mid Term8-15 Years


Railroad Crossing Upgrade Totals by Category

Signals & Intersections 3,749,843$ 4,114,852$ 2,788,538$ -$ 10,653,234$ Interchange Improvements 9,733,309$ 9,733,309$ 14,073,995$ -$ 33,540,613$

Circle Drive 7,019,942$ 3,168,213$ 1,141,206$ -$ 11,329,361$ Corridor M anagement 22,259$ 44,519$ 2,859,570$ -$ 2,926,348$

Road Upgrades 8,024,895$ 9,608,530$ 45,854,754$ -$ 63,488,179$ New Road Capacity 2,562,703$ 2,562,703$ 1,157,517$ -$ 6,282,923$

West Beltway 3,388,028$ 3,388,028$ 19,564,892$ -$ 26,340,948$ New Roadways 4,048,406$ 4,048,406$ 4,048,406$ -$ 12,145,217$

Pavement Strengthening 9,251,796$ 18,503,592$ 21,204,520$ -$ 48,959,908$ Beltway (N/S/E) 9,900,288$ 18,748,926$ 39,892,079$ -$ 68,541,293$

Railroad -$ -$ -$ 12,505,855$ 12,505,855$ TOTALS BY TIME HORIZON Grand Total

Totals by Time Frame 57,701,470$ 73,921,078$ 152,585,475$ 12,505,855$ 296,713,879$



2015 Update



Rochester Municipal State Aid Highway / Preservation Costs for Existing SystemReactive 20,839,687$ 560,420$ 696,302$ 865,132$ 1,179,709$ Preventative 4,134,738$ 111,191$ 138,151$ 171,648$ 234,062$ Resurface 26,754,233$ 719,473$ 893,921$ 1,110,667$ 1,514,524$ Reconstruction 84,135,631$ 2,262,570$ 2,811,167$ 3,492,780$ 4,762,814$

TOTALS 135,864,289$ 3,653,654$ 4,539,542$ 5,640,228$ 7,691,109$ Additonal 25 Year Cost of 1 New M ile of M SAS Added AnnuallyReactive 5,055,538$ Preventative 1,536,411$ Resurface 2,227,910$

Rochester Local Streets / Preservation Costs for Existing StreetsReactive 47,210,071$ 1,269,570$ 1,577,398$ 1,959,864$ 2,672,504$ Preventative 15,534,983$ 417,766$ 519,060$ 644,914$ 879,416$ Resurface 79,292,053$ 2,132,317$ 2,649,332$ 3,291,706$ 4,488,625$ Reconstruction 236,050,356$ 6,347,851$ 7,886,991$ 9,799,321$ 13,362,518$

TOTALS 378,087,462$ 10,167,504$ 12,632,781$ 15,695,805$ 21,403,062$ Additonal 25 Year Cost of 4.5 New M ile of Local City Street Added AnnuallyReactive 8,842,110$ Preventative 3,055,290$ Resurface 5,866,413$ Reconstruction

Rochester Network Totals 540,535,424$


Annual Maintanance CostRochester 413,206$ 11,112$ 13,806$ 17,154$ 23,391$ Painting Costs / Steel BridgesRochester 583,030$ 15,679$ 19,480$ 24,204$ 33,005$

Preservation Costs / DeckRochester 3,578,729$ 96,239$ 119,574$ 148,566$ 202,587$ Reconstruction CostsRochester 12,143,897$ 326,573$ 405,756$ 504,138$ 687,451$

122,827,502$ TOTAL BRIDGE COSTS BY JURISDICTION 8,918,838$ Rochester 16,718,862$ 449,603$ 558,616$ 694,062$ 946,434$

TOTAL 25 YEAR ROAD AND BRIDGE NETWORK PRESERVATIONRochester 557,254,286$


TABLE15-5: ROCHESTER ANNUAL AVERAGE MAINTENANCE AND PRESERVATION COSTS



SUMMARY OF Improvement / Expansion Needs / Rochester

Short Term0-7 Years

Mid Term8-15 Years


Railroad Crossing Upgrade

Totals By Category

Signals & Intersections 4,774,651$ 3,656,060$ 3,112,069$ -$ 11,542,779$ Sales Tax Projects 291,438$ 291,438$ -$ -$ 582,875$

Circle Drive 2,951,364$ 1,988,432$ 242,664$ -$ 5,182,460$ Corridor M anagement 8,950,469$ 7,984,106$ 2,071,556$ -$ 19,006,131$

Roadway Improvements 14,184,629$ 14,184,629$ 44,567,142$ 72,936,401$ Interchanges & Overpasses 9,768,137$ 9,768,137$ 7,701,778$ -$ 27,238,052$

New Road Capacity 8,401,688$ 8,401,688$ 7,901,503$ -$ 24,704,878$ West Beltway 4,497,927$ 4,497,927$ 8,272,204$ -$ 17,268,057$

New Roadways 15,847,003$ 13,135,022$ 35,459,478$ -$ 64,441,503$ Street Enhancements 4,393,980$ 4,075,894$ 5,178,203$ -$ 13,648,077$

Beltway (N/S/E) 294,436$ 294,436$ 2,330,149$ -$ 2,919,020$ Railroad -$ -$ -$ 28,117,790$ 28,117,790$

TOTALS BY TIME HORIZON Grand TotalTotals by Time Frame 74,356,000$ 68,278,000$ 116,837,000$ 28,118,000$ 287,589,000$

TABLE 15-6: ROCHESTER IMPROVEMENT COSTS BY PLANNING HORIZON

In addition to the costs identified above for the City of Rochester roadway system, the development plan for the Destination Medical Center economic development initiative has identified a total of $61m in improvements is anticipated over a twenty year period .

TABLE 15-7: DESTINATION MEDICAL CENTER CAPITAL STREET PROGRAMv



Escalated Cost Total

DMC FundsCity CIP

(Non-DMC)MNDOT Federal Private

Development Phase 1 8,937,309$ 1,524,490$ 711,000$ 6,701,819$ -$ Broadway 8,147,309$ 1,445,490$ 6,701,819$ -$ Shared Streets 790,000$ 79,000$ 711,000$ -$

Development Phase 2 16,354,396$ 5,501,024$ 535,235$ 8,534,021$ 1,784,116$ New Streets 1,784,116$ 267,617$ 535,235$ 535,235$ 446,029$ Shared Streets 6,244,406$ 3,568,232$ 1,338,087$ 1,338,087$ St Mary's Place 8,325,875$ 1,665,175$ 6,660,700$ -$

Development Phase 3 10,765,672$ 10,765,672$ Transit Terrace Street Grid 10,765,672$ 10,765,672$

Development Phase 4 25,883,285$ 7,574,667$ 5,595,357$ 9,287,532$ 3,425,729$ 3rd/4th Ave Spine 10,277,187$ 4,624,734$ 3,083,156$ 2,569,297$ New Bridges 9,135,277$ 1,827,055$ 4,567,639$ 2,740,583$ -$ New Streets 6,470,821$ 1,122,878$ 1,027,719$ 3,463,793$ 856,432$ Grand Total 61,940,663$ 25,365,854$ 6,841,592$ 6,701,819$ 17,821,553$ 5,209,845$

Assumptions regarding source of Revenues

The state legislation establishing the Destination Medical Center economic development program provided funding mechanisms specific to the DMC to offset a portion of the costs associated with improvements in the DMC District. As indicated in Table 15-7, approximately 40% of the costs of roadway improvements are anticipated to be funded with dedicated economic development dollars (“DMC Funds”). The MNDOT column represents turnback funds paid to the City by MNDOT for the jurisdictional transfer of the former TH 63 to the City, and must be used on Broadway Ave. The more challenging aspects of the funding program include the assumption of $17m in federal funds, which would only likely be achieved through monies being received via special program opportunities such as TIGER funds and not the standard federal funding process managed through MNDOT. The City CIP dollars shown will need to compete with other city projects through the annual Capital Improvement Program process and thus are not assured at this point given the competing demands on limited CIP dollars.

Jurisdictional Revenue Assessment For each of the three jurisdictions (MNDOT / Olmsted County / City of Rochester) revenues available over a 25 year planning horizon are estimated based on historic revenue sources. Where warranted, changes in assumptions as to the level of federal, state or local funds that can reasonably be assumed to be available in the future were made. Since the analysis no longer reflects constant dollar assumptions, various revenue sources were analyzed to determine if growth in the real dollar value (actual dollars available discounted for inflation) occurred over the last 10 year; if so, new projections using the identified revenue growth rates were assumed. This applied primarily to local tax levy money, where



growth in revenue appears to be primarily the result of growth in the underlying tax base. This resulted in an assumption of modest growth in tax levy dollars (on the order of 2.5% to 3% per year) occurring at the city and county level. State Aids (gas tax and tab fee revenues) have seen some growth in the last ten years as the legislature has adjusted the Highway User Trust Fund formula, , while federal aid assumptions have been adjusted downward to reflect reductions in the amount of federal funds available to the District 6 Area Transportation Partnership for programming. The following sections summarize the estimated preservation and improvement costs and the estimated revenues available to MNDOT, Olmsted County and Rochester for the 25 year horizon of the plan.

MNDOT Revenue Assumptions

Identifying the revenues that MNDOT will expend in the ROCOG Planning Area (RPA) presents a challenge in that MN/DOT District 6 serves an eleven county area, and available budget and planning materials for the District reflect district wide needs. To determine what share of district revenues would be available for use in the ROCOG area, an analysis of various source documents including the Statewide Highway Improvement Plan (2014-2033) and District Six Ten Year Highway Investment Plan (HIP) (August 2009) was undertaken. The SHIP identifies 1) specific projects anticipated to be funded through the year 2033, and 2) estimates of dollars targeted on a district wide basis to general categories such as pavement preservation, bridge preservation, traveler safety and mobility .

For dollars in general categories, an analysis of various system measures was completed to determine, for example, the % of district-wide lane miles or bridge deck surface in Olmsted County. The results of this analysis is illustrated in Figure 15-3. Appropriate metrics were then chosen and applied to general funding categories shown in the lower section of Table 15-8 on the following page.



In Figure 15-3 the labels indicated the following measures:

CL-Miles: % of district-wide centerline mileage found in Olmsted Countyvi

% Pop: % of population district-wide that resides in Olmsted Countyvii

L-Miles: % of district-wide lanes miles found in Olmsted Countyviii

% Pop Growth: Projected % of population growth through 2030 anticipated in Olmsted County ix

VMT: % of Vehicle miles of travel district-wide occurring in Olmsted Countyx

% Employ: % of employment district-wide that is in Olmsted Countyxi

HCVMT: % of heavy truck miles of travel district-wide occurring in Olmsted Countyxii

% Employ Growth: % of district-wide employment growth thru 2030 expected to occur in Olmsted County

Based on this analysis, it is estimated that MN/DOT District 6 will have approximately $293 million dollars available for expenditure in ROCOG Planning area over the time period of 2015-2040. To develop this estimate, the specific projects enumerated in the 2015-2018 Statewide Transportation Improvement Program (STIP) for the years 2016-2018 were identified, along with a share (6%) of general category set-asides from the STIP.

Options for Identifying Olmsted County's Share of ATP-6 Resources

11.4%13.2%

20.2%

15.9%

29.6%

39.9%36.7%

38.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

CL-Miles L-Miles VMT HCVMT % Pop % PopGrowth

% Employ % EmpGrowth

Average25.70%

Figure 15-3



Source of

Information Project or Category Funding LevelTH 14 Mill & Overlay CSAH 19 to MN 74 5,590,000$ Overlay TH 52 rochester to Cannon Falls 2,575,000$ Bridge Decks at US 52 over TH 63 4,240,000$ Replace Bridge Deck on I-90 over TH 52 4,000,000$ TH 14 Mill & Overlay CSAH 19 to MN 74 5,590,000$ TH 52 Mill & Overlay Chatfield to I-90 4,860,000$ US 63 Mill & Overlay CSAH 14 to CSAH 78 2,200,000$ Replace I-90 WB Bridge over TH 52 3,450,000$ Replace TH 63 NB Bridge over I-90 2,600,000$ Replace TH 63 SB Bridge over I-90 2,830,000$ Replace Box Culvert on TH 63 North 149,261$ TH 14 Mill & Overlay from Marion Rd to CSAH 19 2,940,000$ TH 52 Overlay NB and SB from Marion to US 63 6,500,000$ I-90 concrete pavement rehab from County Road 19 to Hwy 74 5,900,000$ TH 52 mill and overlay from US 63 to 85th St 13,600,000$ MN 30 Mill and overlay from TH 63 to TH 52 7,650,000$

Share of annual Safety/Access/Pavement

Setas ides 1,500,000$

Roadway Enhancements

Traveler Safety 6,605,400$

Bridge Preservation 29,862,786$

Pavement Preservation 89,265,000$

Raodway Infrastructure Condition 13,530,000$

Estimate for out-years beyond SHIP Horizon

(2033-2040)

Construction spending in Olmsted Co based on his toric pattern reported in State Transportation Finance Database 1995-2012 with mega-project years (2003-2006) removed

78,000,000$

25 Year Total 293,437,447$

Share of Year 11-20 of Statewide Highway

Improvement Program (SHIP)

2015-2018 STIP

From 2014 Major Highway Report to

Legislature

2018-2020 Highway Improvement Program

Additional projects were identified for the period 2018-2020 in the Highway Improvement Program and in the 2014 Major Highway Report to the Legislature.

The SHIP identifies for each District general levels of funding for each of the ten target categories identified in the plan. Using the metrics from Table 15-3, a proportionate share of funds identified for District 6 are assumed to be available for the ROCOG Planning Area. In the 2nd ten years of the SHIP, system preservation is the major priority and most funding is directed to pavement and bridge preservation activities. This provides an estimate of available funding through 2033.

Finally, a projection of out-years funds for the period 2034-2040 is calculated based on historic spending patterns in Olmsted County by MNDOT as reported in the Minnesota State Transportation Finance database for the period of 1995-2012 with the years when the reconstruction of Highway 52 and other major projects (40th and 48th St South interchanges along with Elk Run interchange) removed from the analysis to avoid the distorting effect of these mega-projects on the District 6 budget.

TABLE 15-8: ESTIMATE of Available Mn/DOT Fundingxiii –

ROCOG PLANNING AREA 2009-2029



Olmsted County Revenue Assumptions

Table 15-9 identifies the revenues that Olmsted County is expected to have available over the 25 year horizon of the plan for roadway network needs. A total of approximately $610 million is estimated to be available during the time period. County revenues primarily come from state and federal aids along with a share of the local property tax. While the level of state aid has increased slightly over time, federal aid is expected to decline while assumed funding from the property tax has been adjusted downward from the 2010 plan to reflect actual county budget history for the last decade. Olmsted County in 2014 did adopt two new funding sources, a ¼ cent sales tax authorized as part of the Destination Medical Center initiative, and a wheelage tax, which together are estimated to provide over $130 million in additional funding over the horizon of the plan to offset the decline in federal funds and lower tax levy support.

TABLE 15-9: ESTIMATED OLMSTED COUNTY 25 YEAR REVENUESxiv



SourceOperating

BudgetDedicated

Maintenance

Available for Capital

Improvements Notes2015

PreliminaryOperations & General Repair Budget

118,900,000$ Estimated costs for operations and unscheduled general repair based on 12 yr average ($4.75m)of Street & Alley maintenance f igures reported in Rochester CAFR / assumed to be fully funded from property tax above construction costs

118,900,000$

Municipal State Aid Revenue

13,000,000$ 117,000,000$ MSAS Funds split 10%/maintenance & 90%/ construction. 2010 Plan assumed level of revenue of $2.7 million per year / 2015 Plan estimate based on 2014 allocation of $4.55m inflated by 1% annually to reflect annual current dollar increases realized for last 15 years

130,000,000$

Federal Aid / Construction

21,250,000$ 2010 Plan assumed receipt of historic average of STIP awards (based on 2003-2014 data) of $1,460,000 annually; 2015 Plan estimated based on ATP-ROCOG Setaside of $1.7M split 50 /50 with county

21,250,000$

Sales Tax 15,000,000$ Estimated remaining funds available from portion of Rochester Sales Tax Extensions of 2001/2011 dedicated to transportation improvements, which are split with Olmsted County

15,000,000$

Property Tax 59,000,000$ 59,000,000$ Assume $2 million per year indexed to 3% annual growth in property valuation split equally between preservation and improvement needs 118,000,000$

Highw ay Turnback Money:Broadw ay Ave

26,000,000$ Funds from turnback of Broadway Avenue from MNDOT to City of Rochester in 2014 26,000,000$

Anticipated DMC Funds for Streets

22,000,000$ Portion of Non-transit DMC funds identified in DMC Development Plan for street projects 22,000,000$

118,900,000$ 72,000,000$ 260,250,000$ TOTALS / PUBLIC SOURCES 451,150,000$

Private Sector Charges and Fees

115,150,000$ 292,687,000$ Assumes City fully implements action requiring 75% cost contribution by developers in Transportation Improvement Districts for growth related impact; 50% contribution for property owners for life cycle preservation, and substandard street charges indexed to construction costs. 2010 estimate reduced by $32m by estimated expenditures in 2010-2015 period

407,800,000$

TOTALS / PRIVATE SECTOR SOURCES 407,800,000$

GRAND TOTAL / CITY OF ROCHESTER REVENUES 858,950,000$

TID Charges; Special Assessments; Substandard Street

Reconstruction Charges

25 Year Revenue Estimates / City of Rochester

Rochester Revenue Assumptions

Table 15-10 identifies the revenues that the City of Rochester is expected to have available over the 25 year horizon of the plan for roadway network needs. City revenues come from a variety of sources, including state and federal aids, a share of the local property tax, and contributions from private sector parties through means such as Special Assessments, Transportation Improvement District fees, and Substandard Street Improvement fees. Voters in Rochester also approved a sales tax extension in 2012 of which $15 million dollars is expected to be available for future expenditures.

The table assumes an increase in state aid but a decrease in federal aids based on recent history of these funding sources. The share of tax levy dollars devoted to highways and bridges is assumed to be $2 million per year, based on the historic pattern of tax levy support in the Capital Improvement Program for the period 2004-2014. Private sector charges and fees are expected to rise in line with inflation costs, as the charges are based on a % of actual project costs incurred. An estimated $720 million is anticipated to be available for roadway preservation and improvement after accounting for an estimated $119 million that will be utilized for daily operations such as snow and ice control, street sweeping, etc.

TABLE 15-10: ESTIMATED ROCHESTER 25 YEAR REVENUES xv



Rochester Olmsted MnDOTEstimated Revenue 740 610 293

Estimated Costs

Preservation 557 613 388

Improvements 288 296 162

DMC 61

Total Costs 906 909 550

Surplus (Shortfall) (166.00) (299.00) (257.00)

Comparative Shortfa l l from 2010 Plan (163) (308) (345)

All figures in millions of dollars

Findings Table 15-11 provides a summary across the three roadway jurisdictions (MN/DOT, Olmsted County and the City of Rochester) of estimated inflation adjusted costs for system preservation and improvement and anticipated revenues that will be available to meet these needs. The Surplus(Shortfall) row indicates each roadway authority is anticipated to face a shortfall in funding to meet the needs identified, ranging from over $299 million for Olmsted County to $166 million for the City of Rochester.

TABLE 15-11: SUMMARY OF TOTAL COSTS AND REVENUES IN LONG RANGE PLAN

In order to address this gap, there are different strategies that can be considered. One is to look at sources of new revenues, while the second is to look at the prioritization of needs. The following section discusses the strategies that should be considered when prioritizing future needs.

Managing the Gap Between Revenues and Costs Given the long history of the state and federal government being unable to craft solutions to bring about levels of revenue adequate to meet needs, consideration needs to be given to how the gap that exists between current revenues and needs will be managed. The Plan recommends five factors or management strategies that need to be taken into account. These are:

1) Establishing program priorities to aid in weighing competing needs; 2) Establishing minimum criteria that candidate projects for funding should meet.



3) Placing greater emphasis on system management strategies to maximize use of the existing system

4) Determining in consultation with legislators and other jurisdictions whether changes to existing revenue mechanisms or new funding sources are needed

5) Determining whether resources are being properly targeted

The following sections discuss each of these five sections in further detail.

Management Strategy #1: Establishing Program Priorities In an environment where funding levels cannot address the full range of improvements needed, it becomes necessary for decision makers to weigh competing needs and decide where resources should be directed. In this situation, decision makers typically will want to see emphasis placed on preserving what is already in place and doing as much as possible to insure the system operates safely and efficiently. Federal planning regulations require that state and metropolitan transportation plans discuss how, given a constrained revenue environment, resources will be targeted. A number of plans were reviewed as background in preparing the 2040 Plan, and typical priorities found were as follows:

• Typically the 1st or highest priority is to emphasize preservation of the existing transportation system in order to maintain existing service levels;

• The next highest priority most often places an emphasis on investing in low and moderate cost strategies to improve the efficiency or management of the highway system, including projects such as turn lane additions, correction of geometric deficiencies, access modifications and enhanced traffic signal systems to optimize safety, capacity and operations

• The next highest priority often is to consider targeted higher cost improvements such as bottleneck removal or the reallocation of pavement such as converting shoulders into travel lanes to improve capacity.

• Typically, the lowest priority is often stated as being expansion of the highway system, including construction of new corridors or the addition of new lanes to existing corridors.

The vitality of the urban area in terms of whether it is growing (and at what rate), stable, or in decline, will affect these priorities, particularly in regards to system expansion. With Rochester and the small cities experiencing historically high levels of growth and development, the need to provide for some capacity improvement and expansion is necessary. This must be balanced, however, with preservation and safety needs. Table 15-15 lists Long Range Plan priorities in seven program areas that should be used to guide future capital programming decisions. Chapter 11 discusses the Regionally Significant and Locally Significant improvement projects that should have the highest priority for federal and / or state funding consideration should dollars become available for improvement work.



TABLE 15-15: ROADWAY NETWORK PROGRAM PRIORITIES

Maintenance and Operations 1) Routine maintenance activities to provide safe travel conditions for all roadway network users

should be given the highest priority among all programmatic needs.

Network Preservation 1) BRIDGES

a. Highest priority should be to reconstruct bridges with sufficiency rating below 20 on any classification of roadway

b. 2nd priority should be to rehabilitate or reconstruct bridges if rehabilitation is not feasible on any major arterial or higher classification roadway with a sufficiency rating below 40

c. 3rd priority should be to rehabilitate or reconstruct bridges on any 9 or 10 ton route if the structural condition rating is 4 or less

d. 4th priority should be to rehabilitate or reconstruct other bridges with a sufficiency rating 40 or below.

2) ROADWAYS a. Fund data collection efforts for existing Pavement Management Systems to supply the

information needed to make cost-effective pavement preservation decisions. b. Highest priority should be given to preventative maintenance in the early years of a

roadway’s life cycle to insure extended facility life, while pavement structures near the end of their useful life should be treated with low cost strategies to address safety concerns until dollars can be budgeted for significant restoration or reconstruction

c. 2nd priority should be given to maintaining pavements on roadways classified at the level of major arterial or higher at or above a condition level of good or very good.

d. 3rd priority should be given to the reconstruction of roads classified at the level of major arterial or higher which have reached the end of their structural life

e. 4th priority should be to preserve other non-local highways at a level such that 60% of the overall major highway network has a condition rating of fair or better.

f. 5th priority for the use of public dollars should be to provide the necessary match to special assessment projects approved by landowners for local road preservation

Management & Safety 1) SAFETY

a. 1st priority for safety expenditures should be on those locations where the greatest number of users are being fatally or seriously injured

b. 2nd priority should be to establish an ongoing, project –driven Safety Improvement Program to identify other high risk intersection or roadway section locations and to develop strategies for improving the safety of these locations, which can then be rolled into a multi-year program.

c. 3rd Priority should be to fund at a minimum one intersection safety improvement project annually from the list of needed projects identified in the Intersection Improvement Program.

2) MANAGEMENT

a. Jurisdictions should adopt and implement an access management program to major streets and roadways consistent with the guidelines provided in the 2040 Long Range Plan and provide necessary resources for administration of the program



b. Establish an ongoing, project-driven Congestion Relief program to identify problem intersections and roadway sections that warrant minor improvements to improve capacity and relieve congestion, with a systematic process for identifying locations, and considering alternatives, with the results rolled into a multi-year improvement program.

c. MNDOT, Rochester and Olmsted County should collaborate to institute traffic signal management systems involving the coordination / synchronization of traffic signals on corridors exceeding congestion thresholds and fund the ongoing management of system on 3-5 year cycle

d. Priority should be to fund interim improvements on future freeway or expressway corridors where safety an congestion problems exist but dollars to fund preferred capital improvement reflecting desired facility type are not available

3) TRAVEL DEMAND MANAGEMENT

a. 1ST priority should be to enhance the attraction of transit as an alternative mode of travel through projects that will

i. increase the number and enhance the attraction of park and ride facilities ii. expand the availability of transit subsidy programs

iii. price parking to reflect the market based value of the service b. 2nd priority should be to promote expanded use of strategies that will increase the

relative cost of single occupant vehicle trips through parking cash-out programs or transportation allowances for employees in lieu of free employee parking.

Corridor Preservation 1) First priority should be to annually fund 1 or2 Early Project Development or Corridor Preservation

studies, identified from a list of corridors at-risk for loss of affordable critical right of way. 2) 2nd priority should be to establish and fund a set-aside annually in local Capital Improvement

Programs to fund early right-of-way acquisition for interchanges and strategic arterials 3) 3rd priority should be to prepare official maps following completion of EPD or Corridor Preservation

studies.

Network Improvement 1) PRIORITY INTERSECTION IMPROVEMENTS

a. First priority should be fund lower cost improvement projects aimed at correcting geometric deficiencies that result in safety hazards

b. 2nd Priority should be given to funding needed at-grade intersection capacity improvements through the installation of turn lanes or auxiliary lanes, on roadways classified as major arterials or higher.

c. 3rd priority should be given to the installation of traffic signals where warranted and needed to manage traffic flow and roadway access on highways classified as major arterials or higher

d. 4th priority should be given to Interchange or Overpass improvement projects on Interstate or Interregional Corridors to address safety and capacity issues

2) ECONOMIC DEVELOPMENT NEEDS a. Program funding to expand the network of 10 Ton routes should be established to

provide for 1-2 miles of strengthened pavement with paved shoulders annually. 3) PRIORITY CORRIDOR IMPROVEMENTS



a. 1ST priority should be to fund improvements on planned regional freeway corridors where traffic volumes are expected to result in inadequate Level of Service within 10 years.

b. 2nd priority should be to fund improvement of existing gravel or deficient two lane paved roadways planned as major arterials in urban growth areas where collection of development fees to support construction are expected to be realized within 10 years

c. 3rd priority should be given to phased upgrading and development of outer beltway system planned for Rochester Urban Service Area, reflecting expected traffic growth trends and connectivity needs.

In all cases, projects with federal or state funding has been secured through the District 6 Areawide Transportation Partnership should receive priority for local matching funds to insure that availability of these outside funds does not lapse.

Planning 1) 1st priority should be to develop a prioritized list of projects for Early Project Development focusing

on those projects that will likely require federal or state environmental review and program 1-2 studies a year for completion (See Chapter 16 for further discussion)

2) 2nd priority should be to work with cities, townships and Olmsted County to incorporate strategic changes into zoning, subdivision or land development codes reflecting the design and management recommendations of this plan

3) 3rd priority should be to promote greater integration of transportation and land use planning through elimination of barriers to transit-supportive and pedestrian-friendly development in targeted transit corridors, coordination of transportation investments with land use through targeted corridor or subarea investment areas, and the development of guidelines to permit redevelopment of infill and greyfield (ie, underused commercial retail centers) sites. (See Chapter 14 for further discussion)

4) Over time, monitor traffic volume growth on regional highway corridors in the small cities and as Level of Service begins to deteriorate proceed with proactive Main Street Planning project (as discussed in Chapter 6).

Management Strategy #2: Project Selection Screening Criteria In a constrained funding environment, projects considered for state or federal funding should meet a minimum set of criteria to justify funding. The following project screens are suggested for use when ROCOG considers candidate projects to submit to the Area Transportation Partnership during the annual Transportation Improvement Program solicitation process.

1) Readiness: Project has been through initial Project Development Process steps and no significant

environmental flaws or concerns have been identified which would cast doubt on the ability of the



project to proceed through final environmental clearances, and local sources of matching funds have been identified

2) System Importance: The project is functionally classified as being either Interstate or Interregional

roadway or a Strategic and Major Arterial roadway. 3) System Development: The project will contribute to maintaining or improving overall system

continuity and is located on a corridor that serves regional as well as local area traffic needs or provides important service to a major development area

4) Project Need: Project addresses either a significant safety deficiency or substandard structural

conditions, or addresses an existing capacity deficiency or one anticipated to materialize in a 1-10 year time frame.

5) Economic Development: The project is needed to support the creation of new employment

opportunities in industries or business sectors that generate income or sales primarily from the sale of products or services to areas outside of the local region. In economic terms, these businesses are referred to as basic industries.

6) Multi-modal Travel: The project will enhance opportunities for travel via modes other than single

occupant by improving conditions for pedestrians and/or bicyclists or improving conditions for transit system users.

Management Strategy #3: Manage the System for Improved Efficiency This plan has discussed various network management concepts, particularly in Chapter 12 (Safety and Security) and Chapter 13 (Transportation System Management & Operations) focused on actions aimed at making the system operate more efficiently or preserving future options for system improvements. A number of the strategies are grounded in the need to for early planning studies or the application of guidelines at the time of land development review and approval. Other strategies, such as congestion mitigation, safety improvements, or access management projects, rely on lower cost improvement actions such as traffic signal system enhancements, ITS technologies or turn lane projects to imprve operations at specific locations. Typically these types of improvement projects are not systematically approached on a network-wide basis, but rather on site-specific basis. Targeting these types of low cost improvements as a program, typically referred to a Transportation System Management (TSM), at either a network or corridor level should be considered as a means of enhancing the overall operation of the roadway network and stretching limited resources further.

Management Strategy #4: Avenues to identify Additional Resources The level of financial limitation suggested by analysis of needs and revenues describes a scenario where projected funding levels will not be sufficient to adequately preserve the existing system much less meet the need for improvements to address anticipated increases in regional population and economic growth. Without additional capital funding, regional accessibility is likely to deteriorate and constrain



the movement of goods and people throughout the region. To address these limitations, a number of strategies are suggested for further consideration by the ROCOG Policy Board.

Overall Funding Strategy ROCOG should work in partnership with local jurisdictions to formulate and implement a comprehensive strategy designed to provide stable and sufficient sources of revenue for the preservation, maintenance and improvement of existing transportation facilities and services, and for the planning, construction and operation of new facilities and services to meet long- term transportation needs. To advance this strategy on a local level, ROCOG should consider:

1. Appointment of a sub-committee of Policy Board members to provide leadership and direction, on a continuing basis, for the overall coordination and development of a funding strategy.

2. Undertaking a region-wide, multiyear public awareness program to familiarize decision makers

with the issues being addressed in the LRTP and the importance of the funding strategies to regional mobility, economic well-being and the quality of life.

3. Creating a regional partnership involving the cities, townships, Olmsted County and area groups

interested in transportation issues to advocate for the implementation of funding strategies.

4. Working with other regional interests to communicate needs to state and federal legislators from the region, explaining the long-term transportation requirements of the region and the funding options needed to address these requirements.

State and Federal Funding In relation to state and federal funding, ROCOG should develop a policy position in terms of what changes to the transportation financing system the Policy Board would like to see adopted and communicate this to elected state and federal representatives.

Accelerating the financing of Major Improvement Projects ROCOG should work to support the application of governmental or institutional financing mechanisms to provide accelerated capital for transportation system improvements where a demonstrated benefit of advanced construction can be shown. Among the tools worth consideration include:

1. Working with MNDOT and the State Legislature to establish an out-state Revolving Loan Fund for advance right-of-way acquisition modeling on the Twin City metro-area RALF fund.

2. Supporting transportation improvements as part of joint development projects involving co-

location of public improvements (e.g., park and ride lots, transit stations) with private, for-profit development (such as a retail or office center) on individual sites.



3. Supporting the use of local road bonding for major projects to accelerate construction while benefiting from potential savings in construction costs, savings in user costs due to shortening of construction timelines, or a favorable interest rate conditions.

Management Strategy #5: Targeting Resources The ability to access to revenues streams adequate to handle large projects and differences in institutional capabilities to deliver larger projects, coupled with responsibilities dictated by statute, suggest that various levels of government will have different capabilities in terms of addressing different types of travel needs. The state, having an interest in addressing and promoting statewide or regional development needs, and with access to large state and federal revenue streams, is better able to address certain needs than counties, cities or townships. Similarly, county priorities are likely to differ from those of towns and cities to a certain extent as well. As a result, in order to achieve the greatest public good from the investments being made by these different levels of government, it is important to consider whether the resources of each level are being targeted most effectively from a network wide perspective. A key question is whether state and county investment should be going into needs that are purely local in nature, or whether it would be better to focus the efforts of these agencies on major travel demand needs and hand off strictly local travel to the local level of government. Consideration of this question suggests some key potential policy directions:

Highway Jurisdiction The jurisdiction of area roadways is distributed among state, county, and local governments. Roadways are classified both by the function they serve (functional designation) and by the level of government that operates them (jurisdictional classification). Over time, functions can change as urban growth areas expand, employment or business patterns change or roadway investment is deferred, any of which can cause shifts or growth in traffic to occur. It may be advantageous to consider the current alignment of roadway ownership and whether it is matched with the agency best suited to manage and make decisions about the facility. Matching the jurisdiction of roadways with their functional classification will help to ensure that resources commensurate with their function can be marshaled to preserve and improve the facility. Inadequate service often results when function and jurisdiction are mismatched, such as when low-volume roads serving a limited area and population under state or county jurisdiction receive less attention than high-volume routes serving the region and state. Similarly, it may provide for a more rational network if high-volume roads serving regional traffic under town or city jurisdiction are shifted to the county or state.

RECOMMENDATION: In order to assist decision makers in rationalizing investment levels and the use of state, federal and county dollars on a regional basis, complete a highway jurisdiction study addressing the following matters in a systematic, region-wide study.

o Identification of the criteria to use in assessing jurisdictional ownership o Determine an appropriate level of compensation to facilitate the transfer of road ownership o Establish minimum roadway condition thresholds that should be met at time of transfer



o Establish management guidelines for transition periods, such as who will be responsible for maintenance, utility permits, driveway access permits, or changes to traffic controls and signing after an jurisdictional transfer agreement is reached but before the transfer occurs.

Road Network Responsibilities / Cost Sharing The basic premise of cost sharing or cost participation is that different road authorities (state / county / city / town) each have different priorities and that each jurisdiction should participate in project costs to the extent that certain roadway features serve local or regional needs. In this scenario, for example, cities would be responsible for those costs related to local needs while the county or state would address costs related to regional travel needs. In the ROCOG planning area, MNDOT has established statewide cost sharing policies for cooperative projects with local units of government. Olmsted County currently does not have a formal cost-sharing policy outlining its expectations in terms of the sharing of various project costs. Rochester has adopted policies outlining cost sharing with private sector parties on projects such as street maintenance and reconstruction, new street construction, and traffic impact.

RECOMMENDATION: To provide for standardization in project funding throughout the ROCOG study area, to maintain equity in how costs are shared across the study area, and to serve as an aid in budgeting, Olmsted County should consider establishment of a cost sharing policy to complement state and local policies. The county will need to balance issues of uniformity, equity and appropriateness of cost-sharing policies across a range of jurisdictions. As an example, since small municipalities with populations less than 5,000 are not eligible for state aid, should a lower participation rate for certain project elements be used as compared to the participation rate when working with larger communities?.

Transit Financing Assuming growth of the urban area will continue into the future in line with what has been observed in the past, a trend line analysis of operating costs and capital needs was completed to determine long term funding needs for the Rochester bus transit system. However, the MPO growth scenario shows a future increase in transit mode use along with a minor reduction in the growth of auto use.

Table 15-16 shows the total estimated capital costs for a 20 year period (A 20 year vs. 25 year time frame was based on FTA analysis standards) as well as estimated 20 year operations costs for both the Rochester Fixed route service and Dial a Ride Service.

Table 15-16: 20 Year Rochester Transit Capital and Operating Costsxvi

Bus Service 20 Year Costs 20 Year Period

CAPITAL COSTS Fixed Route & Dial a Ride $187 million 20 Year Federal Cost: $148 million 20 Year State/Local Cost: $39 million



OPERATIONS COSTS Fixed Route & Dial a Ride $198 million Fare Revenue $ 95 million Federal Funding $28 million State & Local $75 million

Table 15-17 shows the estimated and projected annual costs for fixed route and dial a ride operations in Year 1 and Year 20 as an illustration of the budget impact due to cost inflation over time. Annual Costs are expected to increase by a factor of 2.75 in dollar value over that time period

Table 15-17: Annual costs for Operating Rochester Transit Service in Year 1 and Year 20xvii

Table 15-18 illustrates the existing 2010 and anticipated Year 20 fleet needs that were used to estimate the capital and operating costs illustrated in Tables 15-15 and 15-16. The number of fixed route and dial-a-ride vehicles needed is expected to double over the 20 year horizon of these estimates.

Table 15-18: Year 1 and Year 20 Vehicle Needs

Bus Service 2015 Annual Cost 2035 Annual Cost

Fixed Rt. Operating Expense $6.6 million $11.6 million

Fare Revenue: $3.2 million $6.2 million Deficit: $3.4 million $5.4 million

Federal Funding: $1.1 million $1.8 million

State & Local Funding: $2.3 million $3.6 million Dial-a-Ride: Operating Expense $782,000 $1,135,000

Fare Revenue: $156,000 $227,000

Deficit: $626,000 $908,000

State Funding $602,000 $875,000

Local Funding: $24,000 $33,000

Bus Service Capital 2010 2030

Fixed Route: Vehicles in Service 30 peak hour 58 peak hour

Dial-a-Ride: Vehicles in Service 5 10



Assumptions regarding source of RevenuesEscalated Cost

TotalDMC Funds

City CIP (Non-DMC)

MNDOT Federal Private

Development Phase 1 11,406,233$ 8,567,815$ 2,838,417$ -$ Bus Streets 210,253$ 210,253$ -$ Circulator 5,256,329$ 5,256,329$ -$ Commuter Bus 262,816$ 262,816$ -$ Transit Station 5,676,835$ 2,838,417$ 2,838,417$ Development Phase 2 231,233,325$ 50,019,475$ 38,427,479$ 3,806,114$ 119,872,374$ 19,107,882$

Bus Streets 428,188$ 64,228$ 128,456$ 128,456$ 107,047$ Circulator 154,623,385$ 30,924,677$ 36,336,495$ 71,899,874$ 15,462,338$ Circulator Streets 43,413,489$ 8,355,610$ 1,962,528$ 31,459,912$ 1,635,440$ Park & Ride 19,030,570$ 3,806,114$ 3,806,114$ 9,515,285$ 1,903,057$ Transit Operations 892,058$ 446,029$ 446,029$ -$ Transit Station 12,845,635$ 6,422,818$ 6,422,818$ -$ Development Phase 3 61,229,759$ 15,812,080$ 14,735,513$ 25,232,043$ 5,450,121$

Bus Streets 6,055,690$ 1,816,707$ 2,422,276$ 1,816,707$ -$ Circulator 6,728,545$ 6,728,545$ -$ Circulator Streets 4,037,127$ 605,569$ 1,211,138$ 1,211,138$ 1,009,282$ Intermodal Station 44,408,396$ 6,661,259$ 11,102,099$ 22,204,198$ 4,440,840$ Development Phase 4 177,772,493$ 26,244,129$ 40,854,482$ 68,746,006$ 41,927,877$

Circulator 121,803,695$ 24,360,739$ 24,360,739$ 60,901,848$ 12,180,370$ Circulator Streets 9,257,081$ 1,388,562$ 2,777,124$ 2,777,124$ 2,314,270$ Park & Ride 45,722,062$ 13,716,619$ 4,572,206$ 27,433,237$ Transit Operations 989,655$ 494,828$ 494,828$ -$

Grand Totals 481,641,809$ 100,643,500$ 94,017,475$ 3,806,114$ 216,688,840$ 66,485,880$

Table 15-19 summarizes the estimate of costs prepared for the Destination Medical Center Development Plan to implement the various transit improvements recommended in the plan. Improvements would include:

• changes along streets such as 4th St South west of Broadway and 4th Ave West (“bus

streets” in the table) where higher frequency bus service would be planned and functions associated with the downtown transit center would relocate to;

• changes along streets such as 2nd St SW (“circulator streets” in the table) where a future downtown transit circulator would be operated;

• costs for development of a downtown transit circulator (“circulator” in the table)

Table 15-19: Destination Medical Center Potential Transit Projectsxviii

• “ Transit Stations” refer to future circulator transit stations at the Government Center, St Mary’s and downtown

• “Commuter Bus” refers to an off-street layover lot for parking regional commuter buses during the day



• “Park & ride” refers to lots at the edge of downtown linked to the downtown circulator, and additional park & ride lots at the edge of the city linked to downtown with express bus service

• “Intermodal Station” refers to site on the north end of downtown where commuter bus, city bus, circulator vehicles, park & ride parking and a potential intercity passenger rail service would interface

• “Transit Operations” refers to technology such as would be needed to provide for real time transit vehicle location and distribution of that information to patrons

The estimated $481m price for these features assumes contributions of approximately $100 from the dedicated DMC funds, which would include the local transit funding to match state funds that Olmsted County would provide as its share of the DMC development. About 45% of the funding is expected to come from federal transit capital programs, including Small Starts/New Starts funding or TIGER funding for development of a circulator system and associated parking for commuters. The biggest challenge in the funding program proposed by the DMCC is the city’s non-DMC contribution of $94m, which is well beyond the City’s historical contribution to transit through the CIP program and also well beyond the current ability of the city’s enterprise Parking Fund to support. New sources of funding including private-public partnership models for the development of facilities, increased user fees, travel demand management measures such as parking cash-out or dynamic parking pricing will need to be explored in order to raise the funding needed to leverage dedicated DMC funding and any state and federal grant funds that are secured.



ENDNOTES

i Data for Figure 15-1 obtained at U.S Department of Agriculture Natural Resources Conservation Service web site at http://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/econ/costs/ ii Maintenance costs were estimated using average lane mile maintenance costs as reported in January (Winter 2013) Edition of Municipal State Aid Street Apportionment Data Handbook, Mn/DOT Office of State Aid for Local Governments, p 125 iii Preservation costs were estimated for each jurisdiction utilizing the life cycle treatment assumptions documented in Mn/DOT Technical Memorandum No. 04-06-MAT-01, Pavement Selection Procedures, March 1, 2004, p. 6 iv Unit costs for improvement needs are reported in Appendix J and are estimated based on review of multiple sources, including City of Rochester and Olmsted County Capital Improvement Program, ATP-6 Transportation Improvement Program, and City of Rochester Cost Estimating system, with review and acceptance of proposed figures by ROCOG Transportation Technical Advisory Committee (TTAC) v Data on street improvement program in Destination Medical Center Development District taken from DMC Development Plan, April 2015, available at http://www.dmccorporation.org/draft-dmc-development-plan/. Additional information included working cost model files provided to ROCOG by project consultant for DMC Economic Development Authority vi Centerline mileage data from Mn/DOT Transportation Data and Analysis Section, accessed at http://www.dot.state.mn.us/roadway/data/data-products.html#SMLM vii County population data from Minnesota Department of Administration, Office of Geographic and Demographic Analysis, accessed at http://mn.gov/admin/demography/data-by-topic/population-data/our-estimates/ viii Lane Mileage data from Mn/DOT Transportation Data and Analysis Section, accessed at http://www.dot.state.mn.us/roadway/data/data-products.html#SMLM ix Projections for county level population growth from Minnesota Department of Administration, Office of Geographic and Demographic Analysis, State Demographic Center, accessed at http://mn.gov/admin/demography/data-by-topic/population-data/our-projections/ x Vehicle Miles of Travel data from Mn/DOT Transportation Data and Analysis Section, accessed at http://www.dot.state.mn.us/roadway/data/data-products.html#SMLM xi Employment data at county level from Minnesota Department of Employment and Economic Development, accessed online at https://apps.deed.state.mn.us/lmi/qcew/AreaSel.aspx xii Heavy Truck Vehicle Miles of Travel (HTVMT) data from Mn/DOT Transportation Data and Analysis Section, accessed at http://www.dot.state.mn.us/roadway/data/data-products.html#SMLM xiii Minnesota Department of Transportation Revenues were estimated using the following source data:

• 2015-2018 Statewide Transportation Improvement Program; accessed at http://www.dot.state.mn.us/planning/program/stip.html

• 2015-2024 District 6 Highway Improvement Program accessed at http://www.dot.state.mn.us/planning/10yearplan/pdf/D6v2.pdf

• 2014 Major Highway Report to the Legislature accessed at http://www.dot.state.mn.us/govrel/reports/2014/major-highway-projects-and-trunk-highway-fund-expenditures.pdf

• Statewide Highway Improvement Program (SHIP) 2014-2033; accessed at http://www.dot.state.mn.us/planning/mnship/

• Minnesota State Transportation Finance Database, File K, accessed at http://tpec.umn.edu/research/finance/MNTF/data.html

xiv Olmsted County Revenues were estimated using the following source data: • State Aid Funding estimate based on analysis of data reported in annual CSAH Apportionment Data

Handbooks prepared by Office of State Aid for Local Transportation, Minnesota Department of Transportation, accessed at http://www.dot.state.mn.us/stateaid/csah.html

• Federal Aid Highway: ROCOG estimate of annual federal funding derived from agreement between ROCOG and District 6 Area Transportation Partnership for fixed allocation of annual funds


http://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/econ/costs/

http://www.dmccorporation.org/draft-dmc-development-plan/

http://www.dot.state.mn.us/roadway/data/data-products.html%23SMLM

http://mn.gov/admin/demography/data-by-topic/population-data/our-estimates/


http://mn.gov/admin/demography/data-by-topic/population-data/our-projections/


https://apps.deed.state.mn.us/lmi/qcew/AreaSel.aspx


http://www.dot.state.mn.us/planning/program/stip.html

http://www.dot.state.mn.us/planning/10yearplan/pdf/D6v2.pdf

http://www.dot.state.mn.us/govrel/reports/2014/major-highway-projects-and-trunk-highway-fund-expenditures.pdf

http://www.dot.state.mn.us/govrel/reports/2014/major-highway-projects-and-trunk-highway-fund-expenditures.pdf

http://www.dot.state.mn.us/planning/mnship/

http://tpec.umn.edu/research/finance/MNTF/data.html

http://www.dot.state.mn.us/stateaid/csah.html


• Federal Aid Bridge and State Bridge Bonding estimated based on analysis of historical programmed funds as reported in Olmsted County annual Capital Improvements Program for years 2005-2015

• Tax Levy: ROCOG estimate of annual funding derived from analysis of data in annual Minnesota County Finances Report, Minnesota Office of State Auditor, various years, accessed at http://www.auditor.state.mn.us/list.aspx?get=8

• Rochester Sales Tax Funding estimated from Olmsted County 2015-2019 Capital Improvement Program, accessed at http://www.co.olmsted.mn.us/pw/Documents/OlmstedCountyCIP.pdf

• Revenue from Olmsted County ¼ cent Sales Tax for transportation estimated based on historical retail sales volume in Olmsted County based on data reported to the Minnesota Department of Revenue, available at http://www.revenue.state.mn.us/research_stats/Pages/Sales-and-Use-Tax-Statistics-and-Annual-Reports.aspx

• Revenue from Olmsted County Wheelage Tax estimated based on trend analysis of vehicle registrations in Olmsted County extrapolated over horizon of plan; registration data available from Minnesota Department of Public Safety at https://dps.mn.gov/divisions/dvs/Pages/default.aspx in annual County Motor Vehicle Report

xv City of Rochester Revenues were estimated using the following source data: • Operations and General Repair: ROCOG estimate of annual funding derived from analysis of data in

annual Minnesota City Finances Report, Minnesota Office of State Auditor, various years, accessed at http://www.auditor.state.mn.us/list.aspx?get=4

• Municipal State Aid: Estimated of available funds based on analysis of data reported in annual Municipal State Aid Street Apportionment Data Handbooks prepared by Office of State Aid for Local Transportation, Minnesota Department of Transportation, accessed at http://www.dot.state.mn.us/stateaid/msas.html

• Federal Aid Construction: ROCOG estimate of annual federal funding derived from agreement between ROCOG and District 6 Area Transportation Partnership for fixed allocation of annual funds

• Rochester Sales Tax: Estimate based on review of Rochester 2015-2019 Capital Improvements Program, accessed at http://www.rochestermn.gov/departments/finance-information-technology/reports

• Property Tax Levy: ROCOG estimate of annual funding derived from analysis of data for 2008-2018 included in annual Rochester Capital Improvement Programs Reports, available from City o of Rochester Finance Department

• Highway Turnback Funds reflect funds Minnesota Department of Transportation will pay the City of Rochester to accompany turnback of former Trunk Highway 63 to the City of Rochester

• Destination Medical Center / Rochester Funding estimate based on information taken from DMC Development Plan, April 2015, available at http://www.dmccorporation.org/draft-dmc-development-plan/. Additional information included working cost model files provided to ROCOG by project consultant for DMC Economic Development Authority

• Transportation Improvement District Charges, Special Assessments and Substandard Street Charges: Estimate of anticipated revenues based on information provided by Rochester Department of Public Works and funding programmed annual 1st year element of Rochester Capital Improvement Programs for years of 2008- 2018

xvi Rochester Transit Operating Costs estimated using trend analysis of historic data from Fiscal Year 2003 through Fiscal Year 2013 as reported annually in the Minnesota State Transit Report, accessed at http://www.dot.state.mn.us/transit/reports/reports-publications/transit-report.html. Capital costs for transit estimated using trend analysis of historic programming data from the Statewide Transportation Improvement Program, District 6 Area Transportation Partnership, for the years 2009 to 2018. xvii Annual Transit Operating for Year 1 and Year 20 estimated using trend analysis of historic data from Fiscal Year 2003 through Fiscal Year 2013 as reported annually in the Minnesota State Transit Report, accessed at http://www.dot.state.mn.us/transit/reports/reports-publications/transit-report.html. xviii Data on transit improvement program in Destination Medical Center Development District taken from DMC Development Plan, April 2015, available at http://www.dmccorporation.org/draft-dmc-development-plan/. Additional information included working cost model files provided to ROCOG by project consultant for DMC Economic Development Authority


http://www.auditor.state.mn.us/list.aspx?get=8

http://www.co.olmsted.mn.us/pw/Documents/OlmstedCountyCIP.pdf

http://www.revenue.state.mn.us/research_stats/Pages/Sales-and-Use-Tax-Statistics-and-Annual-Reports.aspx

http://www.revenue.state.mn.us/research_stats/Pages/Sales-and-Use-Tax-Statistics-and-Annual-Reports.aspx

https://dps.mn.gov/divisions/dvs/Pages/default.aspx

http://www.auditor.state.mn.us/list.aspx?get=4

http://www.dot.state.mn.us/stateaid/msas.html

http://www.rochestermn.gov/departments/finance-information-technology/reports



http://www.dot.state.mn.us/transit/reports/reports-publications/transit-report.html

http://www.dot.state.mn.us/transit/reports/reports-publications/transit-report.html
