To: Honorable Mayor and Members of Town Council
Through: Daniel Sailer, Director of Public Works
From: Ryan Germeroth, Assistant Director of Public Works
Title
Discussion/Direction: Impacts of Deferring the 2020 Slurry Seal Project to Reduce 2020 Budget Expenditures
Body
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Executive Summary
The purpose of this memorandum is to outline the benefits and impacts to eliminating a large portion of the scope of the Slurry Seal service contract, and obtain Council’s direction on how to proceed. The Town Council adopted a resolution, approving a construction agreement between the Town of Castle Rock and Vance Brothers, Inc., in March of 2020 for the 2020 Slurry Seal Project. The scope of the work associated with this contract includes: 1) Asphalt patching of point locations, 2) Crack sealing, 3) Removal of pavement markings and 4) Slurry Seal coating. This is one of 6 service contracts that make up the Pavement Maintenance Program (PMP). The Council approved budget encumbrance for the full scope of this contract is $1,758,421. Shortly after this resolution was approved, the COVID-19 pandemic emerged, which is expected to have an impact on the Town’s sales tax revenues in 2020. While we won’t know the full impact to reduced revenue, Town staff has been reviewing ways to reduce expenses in the approved 2020 budget, particularly in Funds that rely primarily on sales tax. The Town’s Transportation Fund is one such fund, and our PMP is the highest dollar service contract program. This year’s total approved encumbrance amount for all PMP contracts is $10.6M. This is an important policy consideration, as pavement maintenance is a critical service provided to the community.
Of the 6 PMP service contracts, we have identified the Slurry Seal contract as the best potential candidate. While an important maintenance treatment to assist with providing the lowest total lifecycle cost for our pavements, we believe the elimination of this treatment has the least amount of impact on the pavements’ life. Removing the slurry sealing coating and removal of pavement markings scope of this project could save the Town approximately $1.3 million in expenses. This project is targeted to be underway in early June. To minimize the potential impacts of reducing this service contract, we are seeking to make a decision on whether to decrease the scope under this contract by mid-May.
Discussion
During April, staff has reviewed and considered ways to reduce the 2020 budget expenditures within the Town’s PMP. The outcome of this review has resulted in the potential to cancel the majority of the work outlined in this year’s slurry seal project.
The PMP Slurry Project for 2020 is a combination of annual and 5-year regional rotation timeframes. Primary streets are addressed every year in the PMP, and secondary streets are addressed by area every 5 years in the PMP. In 2020, the secondary streets fall within the PMP Central area. The Central area includes streets generally bounded by Meadows / Founders Parkway on the north, Founders Parkway on the east, Plum Creek Parkway and Coachline Road on the west and Fifth Street on the south with the roads in Craig and Gould between Front Street and Gilbert (Attachment A).
Since primary streets are addressed every year, working them in over the course of the next few years is likely achievable but could be constrained by available funding depending on the overall impact to sales tax receipts due to the COVID-19 pandemic.
However, secondary streets, on a 5-year rotation would require a separate approach. Secondary streets will still require a level of maintenance in 2020 to include crack sealing and asphalt patching. This portion of the contract would cost about $425,000 to complete. These tasks are critical and help to prevent water from infiltrating the pavement until the next 5-year cycle in 2025.
However, cancelling the slurry seal portion of the project will have impacts to the overall life of the pavement on these roadways within the Central PMP area. As of now, the secondary streets in the Central PMP area have a remaining pavement life of about nine years on average. By still providing asphalt patching and crack sealing only, the overall life of the pavement will be approximately 35 years (as opposed to 36 years if the project was done in its entirety). It’s forecasted that when the PMP program returns to the Central area in 2025, the remaining pavement life will be seven years on average under normal conditions wear and tear. This is a reduction of about one year overall on the life of the pavement. If this forecast holds, these secondary streets will still be good candidates for slurry seals for some streets and mill and overlay for others due to the various rates of decay over the 5-year timeframe. However, the reduction in the overall life cycle of the pavement by skipping the full slurry treatment can never be regained which means a full replacement will likely be needed earlier than originally expected or that an additional interim preservation treatment may be needed. It’s also worth noting that by foregoing these slurry treatments, the streets will not be as aesthetically pleasing since they will only be sealed or patched at spot locations to protect against moisture attack. The lack of aesthetics may be a concern for some residents during the interim period.
One other consideration is related to the existing contract the Town already has in place with Vance Brothers for the project. The contract contains provisions for alteration or termination but that may trigger an obligation of the Town to cover at least some of the financial benefit the contractor would have realized if the work proposed to be deleted had actually been completed. These contractual remedies are somewhat made more uncertain given the extraordinary nature of the underlying cause. In that regard we are also looking at the contractual implication if the previously appropriated and encumbered funds are no longer realistically available. However, our preferred approach is to see if we can reach a mutually acceptable modification of the scope of work with the contractor. In initial conversations, Vance Brothers has indicated they would be willing to reduce the scope of the project to just crack seal and patching work with no additional charge beyond the items charged for that work. If directed by Council to reduce the PMP Slurry Seal Project, Town staff would begin discussions with the contractor to modify the contract.
Financial Impact
The following provides a summary of the potential savings to the Town’s Transportation Fund if the slurry seal work is deferred.
Total bid cost from Vance Brothers: $1,758,421.84
Cost of Type II Slurry: ($1,130,531)
Pavement Markings / Removals: ($200,691)
Contingency on crack seal and patching work: $42,800______
Total $470,000
Savings $1,288,421.84
Staff Recommendation
Staff recommends that Town Council direct staff to administratively reduce the scope of the Slurry Seal Project by negotiating a modification to the contract with Vance Brothers, Inc.
Proposed Motion
“I move to direct staff to pursue a reduction of the slurry seal scope of work within the 2020 Slurry Seal contract.”