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Proposal aimed at ending need for loans every seven years for chip seal
Lewis and Clark County Special Districts Program coordinator Jessica Makus proposed an increase to the maintenance assessments for the Lincoln and Lambkins Rural Improvement Districts during a public meeting held in conjunction with the monthly meeting of the Upper Blackfoot Valley Community Council June 20.
The county Public Works Department held the meeting to discuss the change that is designed to fully fund the 2029 chips seal projects for Lincoln's paved streets.
"The reason I wanted to talk tonight about the districts is to potentially try to get us out of this loan cycle in these districts," Makus said.
In theory, funding for chip seal work could have been covered by the annual maintenance assessments. By statute the county has the capacity to increase those assessments annually as needed. That hasn't been done in Lincoln. Instead, property owners in the RIDs pay set annual maintenance assessments and make payments on the seven-year loans taken out to cover the costs of the chip sealing on top of that.
Makus explained that both RIDs were chip sealed last summer to maintain the surfaces of the streets, but both districts were short on funding for the maintenance projects, which in turn required both districts to take out loans to get the work done. It was the second time the RIDs needed to take out loans for the work. A loan was needed for the work in 2014 as well. Makus noted the INTERCAP loan program through the Montana Board of Investments has an interest rate of 6 percent, and they also have to add 5 percent of construction costs to the RID revolving fund, which secures those loans for the county.
"Instead of waiting for that chip seal cycle and taking out a loan, what we can do is increase our maintenance assessment now and until that 2029 cycle to potentially save that money in interest and the RID revolving fund," Makus said.
Rather than going through the process of applying for a loan every seven years, Makus is instead proposing to use the county's ability to adjust the maintenance assessments to ensure the RIDs can cover the cost of the next chip seal without the need for a loan.
The proposal would see the maintenance assessment for the Lincoln RID increase from $59.45 to $90 per property per year, while the Lambkin RID would increase to an average of $80 per property per year.
"I don't think that will be a final increase," she said. "What I would like to do is keep an eye on our chip seal costs over the next couple years and increase as necessary to stay on track, up to 2029."
Barring further bouts of major inflation like that seen in 2022, Makus expects the final assessments will settle somewhere around $150 for the Lincoln RID and an average of $200 for the Lambkin RID.
Currently, property owners in the Lincoln RID pay a total of 97.20; $59.14 for the maintenance assessment and $37.75 to cover the loan for the 2022 chip seal.
The older Lambkin RID is assessed per square foot of property, which complicates estimates due to the varying sizes of the properties. However, property owners pay an average total of $115 per property per year. The current maintenance assessment averages about $32 (which doesn't currently cover annual maintenance costs for crack sealing and pothole patching) and the loan assessment averages $83.
Looking ahead to 2029 - the next time the streets are slated for chip sealing - Makus and RID construction coordinator Caleb Marcus found that both RIDs are likely to face major funding shortfalls again.
They estimate the Lincoln RID – composed of the paved streets in Lincoln south of Highway 200 and north of Highway 200 west of Eighth Ave. – will be short $156,900. The Lambkin RID – streets north of the highway east from Eighth Ave. – is expected to be short nearly $68,300.
If a loan is needed in 2029 and the maintenance assessments remain unchanged, assessments for the Lincoln RID would increase to $161 per property per year, with $101 of that covering loan costs. The Lambkin RID face payments of $155 for the loan, totaling about $203 per property per year on average.
The next step for the proposal will be a recommendation to the county commission to increase the maintenance assessments for the RIDs. That recommendation will be published as a legal notice that will also be sent to property owners at the address they get their tax bill.
A public hearing will then be held during the Aug. 4 Government Day meeting at the Lincoln Library at 10:30 a.m.
"There will be an opportunity in that period of time to submit written testimony, whether for it or against it," Makus said.
The county will make their decision based on the feedback they receive from property owners.
"We keep having to get these loans," UBVCC Chairman Zach Muse said to help sum up the situation. "We're throwing away $50 grand, $50 grand in just interest, where we can be paying that ahead and making interest, with the potential of paying it off early and not having to pay that loan. To me, it's a no brainer. It sucks, but it's a no brainer. I don't want to be paying interest. I would rather make interest than pay it. It makes more sense to me. We're paying for it one way or another, or our roads are going back to dirt."
In 2014 the question of changing the Lambkin RID assessment from a square footage basis to a per property parcel basis was raised, but not followed up on. The possibility was raised again during the discussion.
Muse pointed out it would still likely be more expensive than for the Lincoln RID due to the ratio of paved streets to property owners in the Lambkin RID, but Makus said that's something they could do through a petition from property owners.
Additionally, Makus pointed out at the outset of the meeting that the state legislature passed a law in 2021 that creates a clear process for the dissolution of RIDs. "If districts no longer want to be an RID, if they want to abandon this process and go with a private option like a (Home Owners Association)...there is a process to initiate that dissolution as well."
Stan Paulson, who owns property in the Lambkin RID, asked if they were ever going to get to the point where they have to do an overlay rather than simply a chip seal. Makus said the roads will eventually get to the point where it will no longer be economically feasible to simply repair the double-shot chip seal the streets currently have. "If it gets to the point where a chip seal cycle is not working anymore, then that's a different kind of meeting and a different kind of proposal."
Marcus said it's important to maintain the chip seal on a seven-year cycle to maintain the longevity of Lincoln's streets, which don't have the underlying asphalt mat most other roads have. Due to the COVID-19 pandemic the work done last year was actually completed a year later than expected and the loan process was complicated by inflation that saw the actual cost of materials come in at more than double projections.
Makus explained that she and Marcus hold positions created in 2019 to help manage the growing number of special districts in the county.
"In 2014, there was one person in a half-time capacity looking with these districts," she said. "So, there wasn't this capacity to look at these budgets and get a handle on this before it got to that point. That's something Caleb and I are trying to set up for the future. This has been complicated drastically by the inflation we're seeing in everything right now. We'd like to see if we can get out of this cycle, or at least be able to have that option.
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