The City of Traverse City has 271 projects totaling over $490 million planned for the next six years – a massive list that’s particularly frontloaded for 2023-24, when nearly half those projects are slated to take place. City staff told commissioners Monday the city’s capital improvements plan (CIP) needs to be redesigned so that project priorities are clear and funding is in place to ensure work gets done, from improving neighborhood streets to replacing water and sewer pipes. Interim City Manager Nate Geinzer said he wants to help map out a process that will take the CIP from a “wish list” to an actionable plan that reflects commission priorities – with the goal of getting the city in shape to hand over to a new city manager.

Staff reviewed the city’s infrastructure projects ahead of a June 5 commission vote to approve the 2023-24 budget. City Planning Director Shawn Winter noted that projects in the six-year CIP are particularly frontloaded for next year, with 116 projects totaling nearly $190 million on deck. When projects are frontloaded instead of being spread out in a CIP, the document “loses its effectiveness as being a helpful planning tool,” Winter said. He said the city had an opportunity to “create a more meaningful CIP” that would offer stronger long-term financial forecasting, clearer budget priorities, and more effective implementation.

Besides the CIP, the city has numerous other plans – from its master plan to the Lower Boardman River Unified Plan to new facility and mobility action plans underway – that are not currently “strategically integrated,” Winter said. The result is that staff find themselves “operating under an everything-is-a-priority model, and of course, if everything is a priority, nothing is a priority,” Winter said. Projects and plans then end up competing for “limited staff resources and financial resources,” he added. Geinzer affirmed Winter’s position, noting that some projects can take years to plan and execute and that changing priorities on the fly makes it difficult for staff to follow through on them. The CIP should be realistic and have clear funding sources attached to projects, Geinzer said. “It doesn’t do you all any good if we’re not funding these capital improvements,” he said.

A strategic approach is needed because infrastructure needs in the city are real, staff agreed. Approximately 6.6 miles of the city’s major streets and 16.7 miles of its neighborhood streets are rated in poor condition. Geinzer highlighted the importance of investing in regular maintenance, because once streets reach poor condition and need to be completely reconstructed, costs escalate significantly. “Your best dollar to be invested in infrastructure is in maintenance,” he said. “If you miss those key maintenance points, the integrity of that street...is going to have a sharp decline.”

The city will soon have a street improvements plan that maps out conditions throughout the city, the city’s overall outstanding liability for repairs, and how much the city should be investing in annual maintenance. Multiple commissioners said they personally live on or close to roads rated in poor condition and empathized with residents who ask year after year when their neighborhood streets are going to be repaired. Commissioners advocated for using a map or format that would allow residents to click on a particular street and see its condition and the intended timeline for its repair. “I think a tool like this would be a fantastic resource for our community,” said Commissioner Mi Stanley.

Another major infrastructure liability is the city’s water and wastewater system. Approximately nine miles of water main need to be replaced throughout the city at an estimated cost of $24 million, staff said. The city also has 59 miles of aging clay sewer pipe it will eventually need to address, much of which is 80-plus years old. A major project to make treatment and UV disinfection upgrades at the wastewater treatment plant next year will likely cost between $23.5 and $29 million. The city is applying for state grant funding for that project – and will learn next summer if that funding is approved – but could also bond the project if needed, staff said.

Proposed rate increases are included in this year’s budget to help address some of those improvements. Wastewater rates are proposed to increase for city residents from $5.30 to $5.75 for each 100 cubic feet of sewage past the first 600 cubic feet. Rates outside the city will increase from $7.95 to $8.63. Meanwhile, water rates are set to increase from $2 to $2.10 for city residents and from $3 to $3.15 for non-city residents per 100 cubic feet. Staff said the city’s water fund is relatively stable – hence the smaller increase for water rates – but the sewer fund is a concern and needs to be increased.

Geinzer warned that construction inflation costs are another serious consideration for the city’s budget and CIP. “The amount of money that it costs for you to pave a mile today is significantly more than it used to be,” he said. Between 2017 and 2022, hot mix asphalt prices have climbed between 26.5 and 69.23 percent, while asphalt has climbed between 38.05 and 77.29 percent, according to staff-provided project costs. Water mains – which now need at least a year of lead time to order – have skyrocketed in cost by 205.49 percent in five years, while sidewalk costs have increased by over 105 percent. “Nobody knows where that end is,” Geinzer said of rising costs. While hopeful that prices will eventually stabilize and inflation rates decrease, Geinzer cautioned that if the trend continues, “we’re really going to be in trouble.”

Geinzer emphasized that redesigning the CIP – and tackling other city strategic projects, like succession planning for staffing and finishing the street improvements plan – won’t happen overnight. He told commissioners he hopes to hold study sessions in the coming weeks on those topics to move the ball forward. Commissioners are required to adopt the 2023-24 budget by June 5, but that budget is a living document that can be amended as city priorities come into clearer shape. “It is not a license to spend, it is a guide to spend within,” Geinzer said.

With a new city manager likely to be in place by the end of the year – and other key city positions to be filled, including a new finance director, chief of police, and assistant city manager – Geinzer said it was a “great time” for the city to undertake a strategic overhaul because of the “new eyes” coming in to look at projects and plans. “We need to regroup and realign,” Geinzer said.

Photo Credit: Jacobs (operating firm for Traverse City's wastewater treatment plant)