Montpelier staff lay out FY26 capital plan, paving priorities and stormwater utility option

City staff briefed the Capital Improvement Plan (CIP) committee on the FY26 capital program and a draft five‑year schedule on funding, paving and equipment priorities, saying the city must increase capital investment to stabilize pavement condition and replace aging equipment.

Finance Director Sarah (presenting) said the funding need for FY26 was “really about 3,500,000.0,” and noted the council approved a $220,000 increase in capital funding for FY26 after earlier committee recommendations. She said the plan shown to the committee is for non‑enterprise funds and does not include water, sewer, parking or district heat enterprise budgets.

Why it matters: staff and the consultant concluded the city faces a multi‑million‑dollar gap to bring local streets to steady‑state service levels and that a balanced mix of preventive maintenance and targeted rehabilitation will yield a higher pavement condition index (PCI) over time than a pure “worst‑first” strategy.

What staff proposed and prioritized - Staff presented a “steady state” target (in current dollars) that would put annual paving at about $1,200,000, sidewalks at $100,000 and stormwater at $400,000; equipment needs were roughly $925,000 per year. Staff said those figures were exclusive of debt service and opportunity projects dependent on outside funding. - The FY26 CIP as presented prioritized time‑sensitive items and aging equipment rather than funding all deferred projects in year one. The FY26 budget assumed a two‑cent property tax increase approach previously used to grow the capital fund. - Contracts reported: an existing contract with ECI covering mill‑and‑fill, reconstruction and overlays totaling about $588,000, and a contract with Indus for crack and fog sealing totaling about $75,000. Staff said DPW crews will perform structure adjustments and sidewalk work where feasible to reduce contractor cost.

Paving strategy and LIDAR results - Zach, Deputy Director of Public Works, described treatments used in the plan — crack sealing, fog sealing, overlays, mill & fill, cold‑in‑place recycling and reconstruction — and explained life expectancy ranges: overlays 7–10 years, mill & fill 12–15 years, cold‑in‑place recycling 13–18 years and reconstruction 15–20 years depending on subbase work. - The consultant Beta’s LIDAR assessment covered about 46.8 miles and initially included state arterial routes (class 1) that inflated overall PCI. Staff said the citywide PCI currently reads about 69, but removing state routes will likely drop the local (class 2 and 3) PCI into the low‑60s. Beta’s draft showed a roughly $12,000,000 funding gap to reach desired local network condition. - Staff recommended a balanced investment approach (mixing preventive maintenance and targeted rehab) rather than a worst‑first approach, arguing the balanced approach produces a higher PCI over a multi‑year horizon and is more cost‑effective.

Stormwater utility discussion - Committee members asked about a stormwater utility as a dedicated revenue mechanism to pay for stormwater maintenance and capital work. Zach explained other Vermont communities have established stormwater utilities as enterprise funds similar to water and sewer, saying “it's an enterprise fund: once they create the utility, it's like the water and sewer funds.” He added that creating a utility allows fees based on impervious surface rather than relying on the general tax base. - Staff said the city had started work on a utility but flood response and county billing system limits had slowed progress. No timeline was set; staff said the idea had reappeared in strategic planning and staff will propose a timeline if capacity allows.

Grants, projects and contingencies - Staff said Town Hill Road work will include a cold‑in‑place recycling contract (Indus) and subsequent curb and overlay work under the ECI contract; the city received a Class 2 town highway grant for $200,000 toward that project. Total paving and sidewalk spending for the fiscal year was described as roughly $1.0 million after grant funds and contingency line items were preserved. - Staff noted three in‑house stormwater projects (Blackwell, Taplin and Scribner) would be implemented jointly with Mangan Excavation using hybrid crews to control cost.

Next steps and questions for council - Staff asked the committee to consider funding scenarios; Beta will rerun PCI projections with local streets (class 2 and 3) removed and provide modeled outcomes for different funding levels. Staff proposed additional capital committee meetings prior to the budget season to refine the five‑year plan.

Ending: staff said more detailed modeling and reconciliation of capital reserves are underway and they will return with refined PCI scenarios and a proposed meeting schedule for further committee review.