UHills Streets Committee Meeting Minutes, 9/26/05

Next Meeting: 7PM, 10/3/2005. At the church.

Attendees:

Committee Members:

Tom Sontag

Dale Brodsky

Henry Moglia

Claud Eley

Adele Tuchler

Tom Keating

Bob Boland

Rob Klahr

John DeHart

Chuck Goldfarb

Trustees:

Jim Wheeler

Larry Connor

Scott Wilson

Review and Approval of minutes from committee meeting of 8/1/05:

Not done. Approval will be assumed unless someone raises a question.

REPORT of the Engineering Subcommittee:

The Engineering subcommittee distributed a four page report and two pages of spreadsheets summarizing their activities since the formation of the committee and their recommendations.

The focus of this meeting was to vote on several specific issues. The issues discussed and voted are were:

1. Whether to include driveway aprons in our recommendation?

2. What our plan is for the Kingsbury sewer issue?

3. What recommendation to make for curb and gutter repairs?

4. Whether to use a NID or a “pay-as-you-go” option to fund the repairs we are going to recommend?

5. What level of funding to request for a NID if that is the way we decide to fund the repairs we are going to recommend?

6. How should the cost of the repairs be assessed across the subdivision?

Each of these issues generated discussion, some more than others.

Note: There were 10 voting members of the committee present. When the Trustees called for the formation of the committee, they included in their guidelines that Trustees would be non-voting members of the committee.

Aprons:

The Engineering Subcommittee summarized their recommendation which had two parts:

1. That portion of an apron that comprises the gutter should be evaluated using the same criteria as the rest of the gutter and if found to be in need of repair, that portion of the apron should be saw-cut and replaced as part of the curb and gutter replacement program.

2. The trustees continue to replace full aprons on a case-by-case basis.

VOTE: 10-0 in favor of the Engineering Subcommittee recommendation.

Kingsbury Sewer:

There was some discussion about whether there is anything we can do through a private contractor or consultant to gather evidence to convince MSD that there is a sewer problem on Kingsbury.

The Engineering Subcommittee recommended that we continue with our plan to patch and repair Kingsbury while still trying to work with MSD to convince them that there is a sewer problem.

VOTE: by consensus (no objections raised) the Engineering Subcommittee’s recommendation was accepted

Curb and Gutter Repair Alternatives:

Six options were put before the committee by the Engineering Subcommittee:

1. No action

2. Functional Curb and Gutter Replacement (about 21% of the curb and gutter)

3. Functional and Marginal Curb and Gutter Replacement (about 37% of the curb and gutter)

4. Complete Curb and Gutter Replacement

5. Reitz and Jens Recommendation

6. Upgrade to U. City Standards

These options are detailed in the attached Engineering Subcommittee report. Options 1, 5 and 6 were discarded immediately by the committee. The discussion centered on options 2 and 3.

Options 2 and 3 are both defined as 20 year programs which include the same amounts of the following items:

· selected pavement repairs (Kingsbury) in

· applications of chip-seal in years 2 and 12

· pavement/gutter interface repairs

· MSD inlet repair and new inlet installation

The main difference between options 2 and 3 is the amount of curb and gutter that would be replaced.

All of the pavement repairs, pavement/gutter interface repairs, MSD inlet repair, MSD new inlet installation and curb and gutter replacement would occur in years 1 and 2 prior to the application of chip-seal in year 2, aside from normal maintenance.

The Engineering Subcommittee recommended taking a purely functional approach. According to their surveys of the curbs and gutters about 21% is deteriorated to the point of being non-functional. About another 16% shows some small amount of cracking but is still functional. Their recommendation was to replace the 21% of non-functional curb and gutter now. They argued that the next 16% was still functional and to replace it was just doing cosmetic improvements. Other members of the committee argued that the extra 16% should be considered marginal and should be included in the repairs done in the first 2 years. Included in this argument was the belief that especially if we went with a NID (see later discussion) to fund the repairs, doing more work up front left the subdivision in a better position later.

VOTE:

7 votes for Functional and Marginal Curb and Gutter Replacement

3 votes for Functional Curb and Gutter Replacement

0 votes for Complete Curb and Gutter Replacement

NID vs. “Pay-as-you-go”:

Dollar amount of NID to recommend:

The Engineering Subcommittee had previously put a plan before the committee that would pay for repairs on a year by year basis out of the current funds that should be available to the subdivision with an additional infusion of funds from a special assessment. This has been referred to as the “pay-as-you-go” plan.

Rob Klahr put out a memo (attached to these minutes) that argued the benefits of a NID approach.

The discussion of NID vs. “Pay-as-you-go” and what level of NID were intertwined and lengthy. The four main points of discussion were:

1. Fairness to current vs. future residents

2. Protection of the financial well-being of the subdivision

3. Flexibility of NID vs. Special Assessment

4. Management by U.City vs. self-managed

The following is a summary of the discussion of these four points.

The way a NID would be assessed is that at completion of work University City would start assessing the current residents their share of the cost of the project. A typical NID arrangement would allow a residents share to be paid over a 10-year period. A resident who decides to sell their property and move a year after this assessment begins would most likely have to settle the full cost before or at closing of their sale. They would then in affect have paid full cost but only had 1 year of the benefits of the repair program (not counting property values) . The “Pay-as-you-go” program would be mostly using current year assessments for repairs and not generate quite the same possibilities for unfairness. Of course, any special assessment included in the “Pay-as-you-go” plan would cause the same possibilities of unfairness as a NID approach.

A NID approach would leave most of the yearly assessment funds untouched and available for other uses including any unforeseen needs, for example, damage due to an extremely bad storm. The “Pay-as-you-go” option would leave less margin for such unforeseen needs.

A NID would allow each property owner to decide whether they wanted to pay their share over time (probably up to maximum of 10 years at some interest rate) or to pay it in a lump sum. With a special assessment there would be no option for a property owner to finance their share over a number of years.

A NID approach would include the potential benefit of having University City manage the project and handle the collection of funds. This would relieve the Trustees of the burden of collecting the funds as they would for a special assessment. There was some concern within the committee about whether University City managing the actual construction project was a benefit or not.

VOTE: 9-1 in favor of recommending using a NID.

VOTE:

5 votes for recommending a NID to cover all work in years 1 and 2 up to first chip-seal plus enough to cover chip-seal in year 12. (about $600K)

3 votes for recommending a NID to cover 100% of work over 20 years (about %825K)

2 votes for recommending a NID to cover all work in years 1 and 2 up to first chip-seal (about $500K)

How to Assess the cost of repairs:

The discussion on how to assess the cost of the repair program centered around these points:

· What was fair to the property owners?

· What would be acceptable to the property owners?

· What was the justifiably right way to assess the costs?

The three options put before the committee were:

1. Use the current per frontage feet based method

2. Use a flat per lot method

3. Use a hybrid: 50% by frontage feet based method, 50% by flat per lot method

One argument put forth was that the neighborhood was founded on the premise of diversity and that the higher economic end of the neighborhood would carry a larger share of the costs. This would lend weight to the frontage feet method being the method to use.

It was also suggested that using the frontage feet method was the simplest since it is what we currently use for yearly assessments and would be what property owners would be expecting.

Another argument was that this type of repair program was a neighborhood wide program independent of property value and should be shared in a flat per-lot method.

A compromise argument was given that the method should be somewhere in between and perhaps a hybrid approach was best.

VOTE:

6 votes for Assessment by flat Per Lot

2 votes for Assessment by Frontage feet.

1 vote for Hybrid (50% Frontage, 50% Per Lot)

1 abstain

The Communications Subcommittee will work on incorporating all the decisions made at this meeting and some of the background work that was done through the past months into a final report. A draft of this report should be available to committee members in within a week and will be presented to the Trustees and distributed to property owners when approved by the committee.

Next Meeting: 7PM, 10/3/2005 at the church.

Attached:

Engineering Subcommittee Summary 9/26/2005 Report

Memorandum from Rob Klahr 9/12/2005

Engineering Subcommittee

Alternatives Evaluation

September 27, 2005

Pavement Evaluation

According to Reitz, and Jens, Inc. (R&J) Pavement and Drainage Evaluation, December 10, 2004:

§ University Hills pavement consists of layers of chip seal (gravel with an asphalt binder) over a crushed rock base.

§ The combination of pavement thickness, composition, and materials and the soil subgrade types are generally suitable for a light residential street pavement.

§ Existing pavement throughout the subdivision is exhibiting fatigue failure.

§ Thin wearing surfaces are being overloaded by vehicle turning forces at intersections.

§ Wheel track rutting was observed in many areas.

§ Pavement degradation will continue, if not accelerate, with time.

§ There are no interim measures, other than spot repairs of known problem areas, that will prolong the life of the streets.

Pavement inspection was performed by the Engineering Subcommittee and municipal pavement engineers known to the subcommittee. The consensus opinion of these engineering professionals was that the streets were not in the state of imminent failure suggested by R&J. Furthermore, it was their consensus opinion that that the life of the streets could indeed be prolonged through spot repair and ongoing maintenance. Recommended maintenance included periodic application of chip-seal, repair of areas of localized pavement or subbase failure, and repair of curb and gutter and gutter/pavement interface to minimize moisture intrusion into the subbase.

The subcommittee met with R&J project and management personnel on April 26, 2005. The subcommittee voiced its belief that R&J had overstated its concerns regarding pavement condition and life. Mr. Reitz stated that their recommendation would minimize street maintenance costs. Mr. Reitz further stated that a good maintenance program, including periodic applications of chip-seal would extend the pavement life for some time. Mr. Reitz’s responses confirmed the subcommittee’s opinion that street life could be significantly prolonged through periodic maintenance and repair.

Stormwater Inlets and Piping

Discussions with the Metropolitan St. Louis Sewer District (MSD) suggest that MSD will repair existing stormwater inlets as needed and install new inlets and associated subsurface piping where appropriate. Costs are not included in Alternatives 2, 3, and 4.

MSD has prepared bid packages for performing inlet repairs. They are awaiting internal approval. Our MSD contact suggests that approval is a formality and hopes to solicit bids and award most of the work by January, 2006. Planning for the installation of new inlets has not begun. We will remain in contact with MSD to track and support performance of this work. The cost of each alternative will increase by approximately $75,000 if the cost of this work must be borne by University Hills.

Driveway Aprons

Reitz and Jens estimated that approximately 20% of driveway aprons were deteriorated and in need of replacement. Although a specific inventory and evaluation was not performed, the subcommittee believes that less than 20% of the aprons are nonfunctional.

The trustees have indicated that they have replaced aprons on a case-by-case basis. The Subcommittee generally recommends that the Trustees continue this practice. Where that portion of the apron that comprises the gutter is significantly cracked and broken, that portion should be saw-cut and replaced as part of the curb and gutter replacement program.

Whether or not a car “bottoms out” on a driveway apron may have as much to do with the vehicle or the street grade as with the apron. It is unlikely that many apron alignments have changed significantly since properties were purchased. Realignment of an apron to eliminate “bottoming” while maintaining adequate drainage will be far more difficult and expensive than like-for-like replacement of broken or crumbling concrete. We recommend that the trustees continue the practice of replacing aprons on a case-by-case basis.

SUMMARY OF ALTERNATIVES

1. No Action. This alternative does no replacement or repair of curb, gutters, and streets beyond minimal maintenance and repair.

Pros	Cons
Minimum initial cost.	Replaces nonfunctional curb and gutter and repairs streets at the discretion of trustees as normal assessments allow.
	Delay while capital improvement fund accumulates may lead to additional deterioration and associated repair costs.
	Neighborhood curb and gutter will not have uniform appearance.

2. Functional (21%) C&G Replacement. This alternative replaces curb and gutter that is significantly damaged or nonfunctional. This alternative replaces approximately 21% of the curb and gutter and repairs approximately 15% of the pavement/gutter interface. This alternative performs selected pavement repair (Kingsbury), provides two applications of chip-seal, and performs pavement repair as needed.

Pros	Cons
Replaces all nonfunctional curb and gutter.	Neighborhood curb and gutter will not have uniform appearance.
Extends pavement life.
Repairs streets as needed.

3. Functional (37%) C&G Replacement. This alternative replaces all curb and gutter with more than minor cracking. This alternative replaces approximately 37% of the curb and gutter and repairs approximately 15% of the pavement/gutter interface. This alternative, performs selected pavement repair (Kingsbury), provides two applications of chip-seal, and performs pavement repair as needed.

Pros	Cons
Replaces all nonfunctional curb and gutter.	Replaces functional curb and gutter with cosmetic flaws.
Replaces curb and gutter with more than minor cracking.	Neighborhood curb and gutter will not have uniform appearance.
Extends pavement life.
Repairs streets as needed.

4. Complete C&G Replacement. This alternative replaces 100% of the curb and gutter and repairs 100 % of the pavement/gutter interface. This alternative performs selected pavement repair (Kingsbury), provides two applications of chip-seal, and performs pavement repair as needed. Note that curb and gutter that has been installed recently will not be replaced.

Pros	Cons
Replaces 100% curb and gutter.	Replaces functional curb and gutter with cosmetic or no flaws.
Provides uniform curb and gutter appearance.
Repairs all interface.
Extends pavement life
Repairs streets as needed.

5. R&J Recommendation. The Reitz and Jens alternative replaces 100% of the curb, gutter, and streets, repairs certain existing stormwater inlets and provides new inlets as appropriate. This alternative does not provide for routine maintenance of curb, gutter, or streets after installation.

Pros	Cons
Replaces 100% of curb and gutter.	Streets are not in state of imminent failure.
Replaces 100% of Streets.	Replaces functional curb and gutter with cosmetic or no flaws.
Minimizes future curb, gutter, and maintenance costs.	Maximum disruption during construction.
Uniform curb and gutter appearance.	No ongoing maintenance and repair.
Uniform street surface.	High cost.

6. U City Standard. This alternative will bring the streets, curb, and gutter up to University Standards. It replaces 100% of the curb, gutter, and streets, repairs certain existing stormwater inlets and provides new inlets as appropriate. This alternative will widen Teasdale, Creveling, Bedford, Stratford, Norwood, Purdue, Warren, and Midvale Avenues by approximately four feet and will require removal and replacement of 300 trees and 10% of the sidewalks. This alternative does not provide for routine maintenance of curb, gutter, or streets after installation. There is no value added with this alternative if the subdivision will remain private.

Pros	Cons
Replaces 100% of curb and gutter.	Streets are not in state of imminent failure.
Replaces 100% of Streets.	Replaces functional curb and gutter with cosmetic or no flaws.
Minimizes future curb, gutter, and maintenance costs.	Maximum disruption during construction.
Uniform curb and gutter appearance.	Loss of 300 mature trees on widened streets
Uniform street surface.	No ongoing maintenance and repair.
Streets suitable for assumption by U City.	No value added if subdivision remains private.
	High cost.

COST SUMMARY

The estimated cost of each alternative is summarized below. Please be aware that these are estimates only, in spite of the accuracy implied by spreadsheet-generated values with six significant figures.

Alternative	Total ($) (See Note 3)	Per Residence ($) (See Note 2)
1. No Action	(See Note 1)	(See Note 1)
2. Functional (21%) C&G Replacement	609,146	2,446
3. Functional (37%) C&G Replacement	825,613	3,316
4. Complete C&G Replacement	999,272	4,013
5. Reitz & Jens	3,300,000	13,253
6. U City Standard	3,710,000	14,900

Notes: 1. No Action alternatives were not specifically estimated, but may approach or exceed Functional C&G Replacement costs.

2. Average. No use of annual assessment or capital improvement fund is assumed. Partial funding through annual assessment and capital improvement fund will reduce per resident cost.

3. Additional Cost if Inlet Repair and New Inlets are not provided by MSD = $75,000.

Memorandum

To:	University Hills Streets Committee Larry Connor Jim Wheeler Scott Wilson
From:	Robert D. Klahr
Date:	September 12, 2005
Subject:	Factors Affecting the Choice between a Neighborhood Improvement District Assessment and a “Pay-As-You-Go” Special Assessment under the University Hills Subdivision Second Revised and Restated Indenture (the “Indenture”)

At the meeting of the University Hills Streets Committee (the “Committee”) held on August 1, 2005, a recommendation was made to fund the proposed street repairs within the University Hills Subdivision (the “Subdivision”) on a “pay-as-you-go” basis. Specifically, it was proposed that one or more Special Assessments imposed pursuant to the Indenture would be sufficient to fund the street repairs when coupled with disbursements from the annual General Assessment imposed pursuant to the Indenture and with cash on hand in the Capital Fund.

This memorandum addresses the possible benefits of using a neighborhood improvement district assessment (a “NID Assessment”) to fund some of all of the street repairs rather than funding those repairs on a “pay-as-you-go” basis. Where applicable, it also points out specific areas where the assumptions regarding the Special Assessments should be refined.

All capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Indenture.

1. Background

One of the “pay-as-you-go” proposals calls for replacement of approximately 21% of the curb and gutter in the years 1 and 2 and a chip and seal of the streets in years 2 and 12 of the street repairs (“Proposal #1”). The cost of the street repairs in the years 1 and 2 is approximately $300,000. This proposal calls for a Special Assessment of approximately $150,000 in year 2 of the street repairs with the remaining $150,000 to be funded out of the annual General Assessment (including both the Base Amount and the Capital Improvement Fund Amount) and all of the cash on hand in the Capital Fund.

The other “pay-as-you-go” proposal calls for replacement of 100% of the curb and gutter in years 1 through 10 and a chip and seal of the streets in years 2 and 12 of the street repairs (“Proposal #2”). The cost of the street repairs in years 1 through 10 is approximately $828,000. This proposal calls for Special Assessments of approximately $268,000 in years 2 through 10 with an additional Special Assessment of $53,000 in year 12 to cover a portion of the costs of the chip and seal. The remaining $560,000 of costs in years 1 through 10 would be funded out of the annual General Assessment (including both the Base Amount and the Capital Improvement Fund Amount) and all of the cash on hand in the Capital Fund.

2. Benefits of a NID Assessment

Regardless of whether the Committee ultimately decides to pursue Proposal #1 or Proposal #2 or something in between, there are several benefits to funding these street repairs through a NID Assessment rather than on a “pay-as-you-go” basis. These benefits are as follows:

a. With a NID Assessment, the City of University City (the “City”) is responsible for construction of the street repairs and collection of the NID Assessment rather than the Trustees.

Under either “pay-as-you-go” scenario, the Trustees would be responsible for obtaining bids for construction, entering into the construction contracts, making payments to the contractors and ensuring that the Special Assessments were paid on an annual basis in a timely manner so that such payments to the contractors could be made. If the Special Assessments are not paid, there may be insufficient funds to pay for the cost of the street repairs and work may not be completed.

With a NID Assessment, the City would be responsible for obtaining bids for construction, entering into the construction contracts, paying the up-front costs of the street repairs and, in turn, levying a NID Assessment to reimburse itself for those costs. If a NID Assessment is unpaid, it is the City’s responsibility to collect the unpaid NID Assessment. However, at the time the NID Assessment is levied, the City has already paid for all of the street repair costs. Therefore, there is no risk that the street repairs would not be completed because of unpaid NID Assessments.

b. A NID Assessment allows the Owners of the Subdivision to wait longer before having to pay for the costs of the improvements, since the improvements would initially be constructed and paid for by the City.

Under Proposal #1, the Special Assessment on a “pay-as-you-go” basis must actually be imposed in year 1 in order for there to be sufficient funds available to make the payments due in year 2. Under a NID Assessment, the City would pay the entire amount and would levy the NID Assessment only after all of the work was completed. Under Proposal #1, this would likely not occur until year 3. Under Proposal #2, if the City were requested to undertake approximately $828,000 in street repairs, a NID Assessment would likely not occur for several years.

c. A NID Assessment could be used to avoid tapping out the Capital Fund, thus preserving this “rainy day” fund for various Subdivision needs other than street repairs.

Under either “pay-as-you-go” scenario, a significant portion of the General Assessment and the entire Capital Fund would be committed to the cost of street repairs. This creates a danger that there will be insufficient funds available for the Trustees to pay for other unforeseen costs that may arise, such as repairs to sidewalks, driveway aprons, storm damaged common areas, tree replacement, island maintenance/improvement, etc.

With a NID Assessment, there is some flexibility to avoid such a heavy reliance on the annual General Assessment and the cash on hand in the Capital Fund. For example, under Proposal #1, the NID Assessment could be levied in the amount of $300,000, which would not only replace the one-time Special Assessment of $150,000, but would also avoid having to draw upon the annual General Assessment and all of the cash on hand in the Capital Fund in years 1 and 2. These funds could either be spent by the Trustees for other current needs within the Subdivision or saved as a “rainy day” fund for the future needs of the Subdivision (including future street repairs).

The same theory would apply to Proposal #2, where a NID Assessment could be levied in the amount of $828,000, which would replace the Special Assessments of $268,000 in years 2 through 10, would avoid having to draw upon the annual General Assessment and all of the cash on hand in the Capital Fund in years 1 through 12, which would leave sufficient funds for the Trustees to pay for the second chip and seal in year 12.

d. The NID Assessment would provide the Owners with more flexibility of repayment.

Under either “pay-as-you-go” scenario, the Special Assessments would need to be paid in a lump sum in the year prior to the year in which the funds were needed by the Trustees to pay for the costs of street repairs. There is no option to pay the Special Assessment in annual installments over time. With a NID Assessment, the Owners could choose to pay the lump sum in the year that the NID Assessment is levied, or to pay it in annual installments over a 10 year period.

e. A NID assessment would ensure that the Committee fulfills an important aspect of its mission.

The mission of the Committee is to identify a solution that is acceptable to an overwhelming majority of the Owners. A NID Assessment requires 2/3 approval of the Owners, whereas a Special Assessment requires only the approval of a majority of votes cast at a Subdivision meeting. Therefore, seeking approval of the Owners for a NID Assessment would ensure that the Committee fulfills its mission.

3. Assumptions Regarding the “Pay-As-You-Go” Proposals

The “pay-as-you-go” proposals are premised on the ability of the Trustees to commit $40,000 per year from the Base Amount of the General Assessment and $11,000 per year from the Capital Improvement Fund Amount of the General Assessment. Attached is a spreadsheet that identifies all expenditures made for streets and sidewalks from January 1, 2000, through August 17, 2005. Based upon the attached, it does not appear that the Trustees have been spending $51,000 per year on streets and sidewalks, which raises a question as to whether the Trustees would have the ability to commit $51,000 per year solely to street repair over the next 20 years.

Furthermore, the “pay-as-you-go” proposals are premised on there being $50,000 on deposit in the Capital Fund. According to the attached e-mail from Leanne Monroe at Wilhelm & Whitworth, the balance in the Capital Fund as of August 17, 2005, is $17,600.94. In fact, the last transfer into the Capital Fund occurred in July 2001, which suggests that the Trustees may not have the ability to regularly save the Capital Fund Amount of the General Assessment due to the press of current Subdivision expenses.

Finally, the “pay-as-you-go” proposals assume a Capital Fund Amount of $11,000 per year. However, based upon the current Capital Fund Amount of the General Assessment ($0.50 per Assessable Frontage Foot) and a total of 19,675 Assessable Frontage Feet, the maximum annual Capital Fund Amount is $9,837.50.

To the extent that the Committee continues to pursue the “pay-as-you-go” proposals, it should revise the assumptions to reflect the ability and willingness of the Trustees to expend General Assessments on street repairs and to reflect the actual balance in the Capital Fund and the maximum annual Capital Fund Amount.

4. Analysis and Recommendation

Over the past several months, the Committee has reached a general consensus that it would recommend that the Trustees limit the scope of street repairs to those portions of the streets that are determined to be non-functional. However, this determination does not necessarily dictate how such street repairs should be funded.

Based upon the current proposals for the amount of street repairs to be funded, I would recommend that the Committee pursue a NID Assessment rather than a “pay-as-you-go” Special Assessment. As described above, a NID Assessment would result in the City being responsible for construction of the street repairs and collection of the NID Assessment rather than the Trustees. It would allow the Owners of the Subdivision to wait longer before having to pay for the costs of the improvements, since the improvements would initially be constructed and paid for by the City. A NID Assessment could be used to avoid tapping out the Capital Fund, thus preserving this “rainy day” fund for various Subdivision needs other than street repairs. It would also provide the Owners with more flexibility of repayment and would ensure that the Committee fulfills an important aspect of its mission by requiring that an overwhelming majority of the Owners approved of the proposed street repairs.

A guiding principle of the Committee is to seek the most practical, long-term approach to solve the Subdivision’s streets problems over the next 15 to 20 years. A NID Assessment can provide for payment of the up-front costs of the street repairs while enabling the Subdivision to accumulate reserves in the Capital Fund, thereby enabling the Trustees to better address the long-terms needs of the Subdivision to maintain its streets.

RDK