WATERLOO — A dedicated local-option sales tax has given Waterloo the best streets among Iowa’s largest communities.
But a new report commissioned by the city found road conditions will take a turn for the worse soon if more money isn’t earmarked for major repairs.
The City Council hired HR Green Inc. of Cedar Rapids last year to evaluate the city’s current street funding and repair process.
The consultant noted Waterloo’s average street condition ranks tops among the state’s 10 largest cities based on 2018 data collected by the Iowa Department of Transportation through the Institute for Transportation at Iowa State University.
A 1% local-option sales tax for street repairs approved by voters since 1991 and above-average use of asphalt road surfaces were cited as key reasons for the city scoring a 70.4 pavement condition index rating.
Council Bluffs and Iowa City were the only other major cities averaging over 60 on the scale that runs from 0 to 100.
Waterloo’s high ranking may surprise many motorists familiar with a few of the city’s rougher roads. But Mayor Quentin Hart wasn’t shocked.
“I’m not surprised by this rating,” Hart said. “We are happy to see that the efforts of our staff and investment to streets have gained long-needed recognition in comparison to other cities.
“Although this is the case we still have a tremendous amount of work to do,” he added. “We have several street overlay and reconstruction projects that are valuable to the long-range future of this community.”
The city has been receiving about $10 million each year in local-option sales tax revenue to repair its 420 miles of streets.
Roughly $6.5 million is spent on annual reconstruction and overlay contracts, which respectively involve completely rebuilding failing roads and putting down a new asphalt surface to extend their lives. Another $900,000 is used to put a seal coat on streets that were previously gravel surfaces.
The remaining local-option revenues cover salaries of engineers working on the program and provides matching funds for the construction of new roads, primarily serving economic development projects.
HR Green was retained to inventory the streets, develop maintenance schedules, evaluate funding, and set up a plan detailing which streets should be repaired over the next seven years.
But the firm said a lack of growth in sales tax receipts coupled with rising construction costs will cause Waterloo’s average street condition to begin deteriorating.
“The findings of the investigation determined that the current construction budget of approximately $7.5 million may not be sufficient based on long-term sustainability,” according to HR Green’s report.
“Spending has been relatively flat the past five years and revenue growth has been below the inflation rate,” it continued. “This means that, while the budget is likely more than sufficient right now, it will slowly lose its purchasing power and less work will be completed for the same amount in future years.”
HR Green indicated the first funding hurdle is expected in 2026. The model shows Waterloo would need an increase of $3 million annually, or a one-time $80 million bonding effort, to keep the average road condition steady over the next 15 years.
Put another way, the study said it would take an estimated $182 million today to bring all Waterloo streets up to “very good” condition. Based on current funding levels, that gap is expected to grow to $318 million by 2034.
But the study said keeping the current funding formula would not be disastrous.
“In fact, if no changes to funding occur in the next 15 years Waterloo would still have a higher average condition score than nearly every other major metropolitan area in the state has currently,” the report stated.
The report comes at a time when city policy makers have talked about dividing the local-option tax revenue for other uses. Several council members during the last budget process suggested asking voters for permission to switch a portion of the revenue from street repairs to provide property tax relief.
Hart said he still believed reallocating some of the sales tax money could be a viable option.
“If we propose shifting some funds, I would cap that amount to make sure that we continue working on roads but are able to provide some property tax relief for residents,” he said. “Other communities use these dollars for special projects, blight elimination, or direct property tax relief.
“In comparison, Waterloo is one of very few of the top 10 largest cities that don’t use local-option for property tax relief directly,” he added. “We will have to analyze any impacts and its positive impact on the city.”
Waterloo, Cedar Falls, and Cedar Rapids are the only communities among the state’s 15 most-populous cities that use local-option tax entirely for street repairs, while Council Bluffs covers streets and sewers.
Des Moines, Ames, Sioux City, Dubuque, Davenport, Bettendorf, West Des Moines, and Urbandale all dedicate at least half their local-option tax money for property tax relief.
City Engineer Jamie Knutson said he plans to hold a City Council work session in the future to discuss the findings of the HR Green report. The COVID-19 pandemic has put the meeting on the back burner.
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