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League of Minnesota Cities Insurance Trust TO: Gordon Heitke, Administrator, City of Lino Lakes FROM: Chris Smith, Risk Management Attorney, LMCIT CC: Tracie Chamberlin, Loss Control Manager, LMCIT DATE: March 28, 2007 RE: Street Reconstruction This e-mail is to follow-up on our phone conversation last week. As I understand the issue, under the city's home rule charter, the city must hold a referendum to do street reconstruction, if any city funds are to be used. In other words, unless the city specially assesses 100% of the cost against the property owners, the city must hold an election. As a practical matter, this charter provision has greatly limited the city's ability to do street reconstruction, as the ballot issue rarely receives public approval. In light of this fact, you were seeking information on what steps the city can take to help ensure that it does not get sued because city streets are in poor condition. The first step is to have a street maintenance policy or pavement management program which you said the city has. The city has already rated the condition of all city streets and has developed criteria for street repairs and reconstruction. The most important thing the city can do is to follow that policy. If the policy sets up unrealistic standards that the city cannot meet, then the city should amend its policy. Having a policy and following that policy will entitle the city to discretionary immunity for most claims related to the condition of the city's streets. I have attached the following LMCIT memos which discuss these issues further: What to Include in a Street Maintenance Policy and Why Should You Have Street Maintenance Policies? If you have streets that are in need of reconstruction, then pursuant to your city's charter and your policy, the city should hold a referendum on the issue. How often must you hold an election? I suggest that this question should be answered by your street maintenance policy (if it is not answered by your city's charter). My suggestion would be to hold an election once a year. Although the city could hold more frequent elections, there is also a significant cost factor to holding elections. The cost is an appropriate item for the council to consider when deciding how frequently to hold street referenda. As a side note, I think it would be appropriate for the city's Charter Commission to at least consider removing or amending the referendum requirement for street reconstruction. As a practical matter, it really seems to limit the city's ability to reconstruct its streets, and in the long run may actually increase the costs to the city to maintains its streets. Simply trying to maintain the street for years may end up costing more than reconstructing the streets at an appropriate time. Although one might argue that the city can always assess 100% of the costs to the property owner, that presents another problem. The amount of any special assessment cannot exceed the benefit to the property. In other words, if you assess a property owner $10,000 for a new street, you need to show that the value of the property increased by at least $10,000. It is often hard, if not impossible, to show this increase in market value, and may be subject to expensive litigation. Thus, the city could be stuck in a situation where it cannot legally assess the entire cost and cannot get public approval, effectively making street reconstruction impossible. Because street referenda usually fail in your city, it seems likely that some streets are likely to be in poor condition. That raises an issue of what the city should do to warn of dangerous streets. Again, that question should be answered by your policy. It is probably not possible to warn of every condition. And if you tried to do so, a motorist might sue the city for failing to place a