Thursday, February 27, 2014

Research Q of the Week: A New Weapon for Fighting Potholes (2/27)

Question: What’s worse than packed snow on Minnesota roads? Seriously, not much. But pothole season’s a close second, and those tire-eating pits are already appearing. Is there any hope for cities trying to keep up?

Answer: Now there’s a new way to fund resurfacing roads that may help rid roads of those gaping holes—or prevent them: the 2013 Legislature amended state bonding law to allow cities to use street reconstruction bonds (SRBs) for bituminous overlay projects.

Let’s take a short detour. What the heck is “bituminous overlay”? It’s a thin protective surface made up of a mixture of asphalt and other road surfacing materials. Overlays are a cost-effective way to renew and extend the life of a street.

But let’s get back on the road to paying for overlays. Cities may now use SRBs (without a citywide vote on whether to issue the bonds) to pay for bituminous overlays under the amended law. Previously, the law only allowed SRBs to be used to pay for more long-term capital investments like buildings or a shiny, new, from-scratch road.

A number of rules apply when cities issue SRBs:

•    The bonds must be issued under a five-year street reconstruction plan.
•    Notice of a public hearing on the matter must be published in the official newspaper at least 10 days but not more than 28 days before a hearing on the matter.
•    The public hearing must be held, and
•    All council members present at the meeting following the public hearing must approve issuing the SRBs.

A reverse referendum also applies, meaning citizens may file a petition requesting a citywide vote on issuing the SRBs. And, SRBs are subject to the city’s legal debt limit, so consulting with your city’s financial folk is a must.

In sum, if your city is considering issuing SRBs in 2014, the money brought in to the city from that bond may now be used to pay for bituminous overlay projects, too. Potholes, be gone!

Interested in new funding options for transportation infrastructure in your city? Learn about the street improvement district initiative here

This blog post conveys general information. It’s not legal advice. Please check with your city attorney before acting on this information.

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