2016 Report on the MnDOT Cost Participation Policy

DRAFT – 12/11/15

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Prepared by The Minnesota Department of Transportation 395 John Ireland Saint Paul, Minnesota 55155-1899

Phone: 651-296-3000 Toll-Free: 1-800-657-3774 TTY, Voice or ASCII: 1-800-627-3529

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Contents

Contents ...... 3 Legislative request ...... 4 Summary ...... 5 Interpretation ...... 6 Interpreting the Law ...... 6 Policy Principles ...... 7 Consulting Representatives of Local Units of Government ...... 8 Policy Recommendations ...... 9 Non-Policy Recommendations ...... 11 Financial Resources ...... 11 Communication ...... 12 Training ...... 12 Design Manuals ...... 12 Recommendations for Further Study ...... 14 Attachment 1 Side-by-Side Comparison ...... 15

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Legislative request

This report has been prepared to accompany the update to the MnDOT policy on Cost Participation for Cooperative Construction Projects and Maintenance Responsibilities between MnDOT and Local Units of Government. The update was performed at the request of the Minnesota Legislature in Minnesota Laws 2015, Chapter 75, Article 2, Section 52.

Sec. 52. COST PARTICIPATION POLICY.

The commissioner of transportation, in consultation with representatives of local units of government, shall create and adopt a policy concerning cost participation for cooperative construction projects and maintenance responsibilities between the Department of Transportation and local units of government. The policy must minimize the share of cooperative project costs to be funded by the local units of government, while complying in all respects with the state constitutional requirements concerning allowable uses of the trunk fund. The policy should provide and include sufficient flexibility for unique projects and locations if doing so results in a lower total project cost. The policy must be completed and adopted by the commissioner no later than March 1, 2016.

The legislature did not request a report to the legislature, but this report has been prepared to document the efforts made to consult with representatives of local government, the philosophy for minimizing costs while complying with the constitution, and the rationale for changes that were made to the policy in response.

The contents of this report were recommended by the Cost Participation Policy Steering Team and accepted by MnDOT’s Governance Council.

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Summary

Coming Soon!

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Interpretation

Interpreting the Law As with any law, there is room for interpretation. Following are the key points for how MnDOT and the Steering Team interpreted the direction of the law about cost participation with local agencies.

A. “Complying in all respects with the state constitutional requirements concerning allowable uses of the trunk highway fund.” The constitution says that there is hereby created a trunk highway fund which shall be used solely for the purposes of constructing, improving and maintaining a trunk highway system as public highways by the state. MnDOT interprets this to mean that costs paid by the Trunk Highway fund must be reasonably associated with constructing, improving, and maintaining trunk highways. The constitution does not further define “constructed, improved and maintained as public highways,” however guidance on the definition can be taken from case law and related statutes.

B. “In consultation with representatives of local units of government.” MnDOT interpreted this to mean that it should engage local agencies in the development of the new policy, asking for their input, and seeking their support. MnDOT’s Commissioner retains final authority on what to include in the new policy however.

C. “Cost participation for cooperative construction projects and maintenance responsibilities.” MnDOT interpreted this to mean that the policy should consider the total cost of ownership of infrastructure, including both construction costs and ongoing maintenance costs. This may also include costs for right-of- way and project delivery.

D. “Minimize the share of cooperative project costs to be funded by the local units of government.” MnDOT interpreted this to mean that the policy must minimize total costs passed on to the local agency as explained above. Minimizing costs was viewed through the lens of the constitutional direction on the use of Trunk Highway funds to "construct, improve, and maintain the TH system". Minimize does not mean eliminate unless the constitution would so indicate. It also means that division of costs need not be done equally on construction and maintenance. It may be done unequally, in other words one agency pay more for construction and the other pay more for maintenance.

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E. “The policy should provide and include sufficient flexibility for unique projects and locations if doing so results in a lower total project cost.” MnDOT interpreted this to mean that poor economic decisions should not be made for the sake of policy compliance. It means that both MnDOT and local agencies should seek to minimize costs for the taxpayer, which may not always minimize the cost for the local agency or MnDOT.

Policy Principles Based upon input from the local agencies involved in the process and the Steering Team, the following principles were agreed upon to guide the decisions about how to determine a minimized local cost share.

1. The cost participation policy incorporates the intention of Complete law and policy, which is to plan, scope, design, implement, operate, and maintain Trunk Highways in consideration of the needs of motorists, pedestrians, transit users and vehicles, bicyclists, and commercial and emergency vehicles moving along and across Trunk Highways. Even so, the policy must always follow the constitution.

2. Trunk Highways serve different purposes in different settings (urban, rural, etc.) and what is needed to construct, improve, and maintain a trunk highway may differ also.

3. Costs for local agencies should be minimized through clearly understood and uniformly applied methods based in law or engineering principles.

4. “Minimize” does not mean “eliminate”. Some shared infrastructure elements produce shared benefits and justly have shared costs.

5. Retaining some local cost share helps to control the demand from local agencies for added features and it facilitates equitable funds distribution by ascribing costs with mostly local community benefits to the local taxpayers.

6. Costs should be viewed as total life cycle costs, allowing the option for MnDOT to pay more for construction in exchange for or to reduce maintenance costs.

7. MnDOT needs to have the ability to direct its spending of Trunk Highway dollars to its publicly adopted investment priorities. Everything eligible cannot be afforded.

8. Maintenance costs should be reviewed for each infrastructure element. A one-size fits-all policy of delegating maintenance responsibilities to local agencies is not reasonable.

9. The goal should be to do what is most efficient and achieves the lowest life cycle cost for taxpayers.

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Consulting Representatives of Local Units of Government

MnDOT employed the following methods to consult with the local units of government with whom it cooperates with on trunk highway construction projects.

1. Cost Participation Policy Steering Team. MnDOT asked for participation from representatives of its local agency transportation partners. Team members assisted with addressing comments and developing policy recommendations.

2. Local Agency Survey. MnDOT solicited opinions from local agency partners through a survey. The survey was widely distributed using MnDOT’s State Aid distribution list to reach county and state-aid city engineers. The League of Minnesota Cities and the Minnesota Township Association distributed the survey to their members through their distribution lists.

3. Regional Workshops. MnDOT organized 12 regional workshops that invited stakeholders to discuss cost participation policy concerns in person.

4. Comment Responses. MnDOT recorded every comment received and linked them to specific parts of the policy. Each comment was addressed in groups or individually and those responses were included in the draft policy document

5. Draft Policy Review. MnDOT distributed the draft policy via the same email lists and invited all local agencies to review the proposal and make any additional comments. A webinar was offered to hear a recap of the policy changes.

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Policy Recommendations

The Steering Team reviewed the results of the consultation with the local agencies and the input of MnDOT staff and made several policy recommendations for how the new Cost Participation Policy should be developed. The following is a list of the policy changes made to address minimizing local costs. For a complete summary of the changes, refer to the summary of changes report in the appendix.

1. Safety. When a project has safety benefits, allow MnDOT participation to a higher level without a policy exception when its benefits can be proven by an approved benefit/cost analysis process. This may be useful for cases where a local partner is financially unable to participate or where documented safety benefits are high enough to justify a larger investment.

2. Parking and Extra Wide Pavements. Where there exists an existing pavement that is wider than the minimum required for the through plus parking, MnDOT will resurface the extra width as necessary until such time as the pavement is reconstructed. At that time, either the extra width will be removed, used for another trunk highway eligible purpose, or the local agency will assume the extra cost.

3. . Provide increased flexibility for MnDOT to pay for a higher share of costs when there is a minor leg to the roundabout that contributes little to the and when there are disproportionally high grading and surfacing costs on the local approaches.

4. Interchanges. Change local participation from the 90/10 or 60/40 cost share provisions for Trunk Highway to Trunk Highway improvements brought on by development of adjacent property. Instead, consider these on a case-by-case basis. As in all cases, MnDOT may participate at a lower level than the policy would otherwise allow if it is not a MnDOT priority.

5. Lighting. Further study is recommended to create clearer criteria around when lighting is warranted and therefore a necessary cost for constructing or improving the Trunk Highway system. None currently exist. Lighting is still a shared benefit piece of the infrastructure and so costs should be shared, but the policy allows MnDOT to choose to install the lights at its own cost in cases of high benefits.

6. Signals. Allow greater flexibility for MnDOT to participate in signals that may have become necessitated by adjacent local development. Delete the requirement that these signals always be a 100% local cost.

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7. Signal Interconnections. For a signal system along a Trunk Highway corridor where all of the signals are a part of the Trunk Highway, MnDOT may pay for 100% of the costs of the interconnection. The rest of the signal costs would be split by the procedures in the Traffic Engineering Manual.

8. . Remove the 60/40 and 90/10 cost split language. MnDOT may pay up to 100% for any that is warranted by Trunk Highway design standards or is necessitated by the ADA Transition Plan. MnDOT may choose to not pay for sidewalk that is outside the scope of a project if there are not sufficient funds available.

9. Grade Separations. Current policy only allows participation in grade separated crossings when an expressway is converted to a freeway. Allow MnDOT participation in other pedestrian/bicycle grade separated crossings of a Trunk Highway up to the amount that MnDOT would have paid for an improved at-grade crossing with the rest being a local cost. MnDOT determines what amount is reasonable for the at-grade crossing.

10. Maintenance. Improve the clarity of descriptions of routine and non-routine maintenance where applicable through the policy. Where appropriate, allow local agencies to maintain the assets to their local standards or other law, such as ADA. The following specific changes are recommended. a. Clarified that MnDOT performs maintenance that is necessary for the lifelong integrity of both noise walls and retaining walls. b. MnDOT is paying for a program to update approach guardrail on local over or under trunk highways, but will continue to include those as a local item for maintenance in cooperative agreements. A bigger issue remains for locations that are not subject to any agreement but that subject is outside the scope of this policy. c. Routine maintenance of storm sewers performed by local agencies will be limited to clearing sediment, debris, vegetation, and ice from grates and catch basins. d. Update the policy to conform to the maintenance manual that MnDOT owns and maintains culverts under local approaches after initial installation. e. For lighting, a longer discussion is needed to resolve when MnDOT pays 100% for construction. Maintenance responsibilities will follow that decision. f. With signals, routine maintenance costs for local agencies are being minimized even without policy changes. Signal poles are now galvanized, eliminating the need for painting. The use of LED bulbs reduces the frequency for replacement and reduces power costs.

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Non-Policy Recommendations

During the course of the local agency consultation, in became clear that much of the dissatisfaction does not come from within the policy. For example, inconsistency between Districts is not necessarily due to the policy, but to the interpretation and application of the policy. Following is a list of potential improvements that could be made to increase the satisfaction of local agency partners.

Financial Resources A very common theme heard from both internal and external stakeholders was the lack of sufficient resources to make all the transportation improvements that agencies and the public need and desire. This requires agencies to prioritize their investments. All agencies wish to have enough financial resources to always be a supportive partner in other agencies’ priorities, but many times those priorities don’t match.

While MnDOT strives to communicate early with its partners on upcoming projects, there are times when one-time funding is provided to MnDOT on short notice with an expectation of quick delivery of projects. In those instances, local partners may be caught unprepared to provide their local share regardless of how the costs are split. Stable funding remedies this situation.

In some cases there is a true financial hardship for the local agency partner. The hardship may be caused by timing of the project or the local agency may simply lack the tax base to finance their local share. In the Local Road Improvement Program, there is an existing account called the Trunk Highway Corridor Projects Account (MS 174.52). Funding this account with new general fund resources would help to address hardship concerns.

Another method to minimize local costs would be to engage more aggressively in swapping local Federal funds for state funds. The purpose of the swap would be to increase the efficiency of local project oversight because state dollars have fewer oversight regulations than Federal dollars. On the other hand, MnDOT develops most of its projects to meet Federal requirements. MnDOT may be able to take on additional Federal funds with no loss of efficiency, provided it has the necessary state resources to pay the matching fund requirements.

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Communication 1. Strive to improve on early communication with local agencies about potential cost participation. Consider using a memorandum of understanding to document early agreements.

2. Improve on including local agencies during project scoping phase.

3. Consult local agencies on specifications for elements they will be maintaining. This may require mechanisms to allow MnDOT designers to incorporate local engineer recommendations into MnDOT plans.

4. Develop schedules for maintenance and operational activities with costs for locally maintained infrastructure and include it with the cooperative agreement.

5. Make local agencies aware of the existing option to agree to a lump sum payment that will not change with MnDOT initiated scope changes or bid price variations.

Training 6. Clarify with Project Managers and partners that federally required mitigation, legal obligations, and varieties of funding sources are all causes of non-uniformity.

7. Increase training for project managers on cost participation and the limitations of project scope to promote increased consistency.

8. Remind Project Managers and partners of the $5000 minimum threshold for participation. Although small, that amount negates the need for many agreements and minimizes local costs.

9. Make use of the exception process for truly unique circumstances.

10. Develop a policy exception tracking system to help promote uniformity by flagging repeated occurrences of similar exception requests. Repeated requests for similar exceptions may indicate a need for a policy revision.

Design Manuals 11. The cost participation policy typically states that Trunk Highway funds may be used for whatever elements are necessary to construct, improve, and maintain the Trunk Highways. The policy does not define which elements are needed, but refers to other laws, policies, or engineering documents for determining the “need”. For example, are two lanes or four lanes needed? How wide should the shoulders be? Should there be a separated or shared bicycle facility? MnDOT should review those referenced documents to assure that they adequately fulfill that role.

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12. Change the design manuals to allow for construction of sidewalk/paths on both sides of the Trunk highway in urban settings where sidewalk on both sides is expected or already exists.

13. Review sidewalk and path design standards. Create uniformity between ADA, road design, bridge design, and bicycle and pedestrian design guidance. The review should also include width needed for snow storage.

14. Review procedures and provide direction on reimbursement for detours and unofficial detours. Currently the policy allows both.

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Recommendations for Further Study

A number of improvements to the cooperative agreement process and cost participation policy manual were suggested that could not be completed by the March 1st, 2016 deadline. The following are recommendations for further study and discussion and possible future adoption into the policy manual.

1. MnDOT should look for ways to clearly incorporate MnSHIP investment priorities into the policy manual. The manual could include a matrix that would prescribe different levels of participation based upon context, functional classification, performance needs, and MnSHIP investment priorities. Presently, investment priorities show up in the policy as in-scope or out-of-scope considerations. MnSHIP could be integrated through an overarching principle in the policy or by being extensively ingrained in individual infrastructure elements.

2. Continuous urban lighting does not have any national standard or warrant by which to justify it for transportation purposes. MnDOT should consider developing and adopting warrants for continuous lighting of roads, sidewalks, and trails to determine the appropriate Trunk Highway share, taking the policy into consideration.

3. Drainage laws and storm water permit requirements are becoming increasingly complex. Relying upon the CA contributing flow formula and physical location of a pond on or off of the right-of-way are no longer sufficient to adequately assess state and local responsibilities and cost shares for drainage ponds and water treatment systems. MnDOT should review current laws and regulations and adopt new provisions for the cost participation policy.

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Attachment 1 Side-by-Side Comparison

Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy II.B. Categories of Remove the 90/10 and 60/40 Two categories of local units of Two categories of local units of Local Units of split for sidewalk cost sharing. government will be used in government will be used in determining Government and determining cost participation for cost participation for trunk highway Division of Costs trunk highway parking, frontage parking and frontage roads. roads, and sidewalks.

II.D.3. Cooperative Add the ability to increase TH -- MnDOT may participate in construction Construction Costs participation beyond the costs for items that are beyond a project’s policy amount without an initial scope of work or participate at a exception using a cost/benefit higher level than outlined in each analysis. corresponding section on a case by case basis, when a safety benefit to the trunk highway system is documented.

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Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy II.D.3.a.2.ii.Trunk In some cities, there is extra -- • For reconditioning projects, such Highway Parking pavement width between the as mill and overlay or other preservation traveled lanes and the parking improvements, MnDOT will participate lanes. MnDOT will pay 100% up to 100% for the roadway width from for resurfacing of that extra outside edge of the traffic through- to width and parking lanes until the edge of . reconstruction occurs.

II.D.3.a.2.iv. Treat roundabouts as an -- • MnDOT may participate to a Non-traditional intersection control device higher amount in the following situations, Intersection with participation starting as except that if a comparable signal design Modifications split by legs. Increase MnDOT has a lower cost, the local share of the participation to more than costs may not be less than the amount for 50% with factors to reflect the the traffic signal alternative. greater importance to TH • Where one leg of approach to the users. roundabout does not contribute more than 5% to the entering traffic volume, costs for that leg will be divided among the other legs of approach. • When approach grading and surfacing costs are disproportionally located on the local approach legs to reduce the need for alignment change on the Trunk Highway legs, the difference in grading costs may be apportioned to each leg of approach.

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Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy II.D.3.b.2.i. Trunk Remove the 90/10 or 60/40 Construction costs for specific local Construction costs for specific local Highway-to-Trunk cost split for these types of actions or for development that actions or for development that creates Highway TH to TH interchanges. creates new or expands existing new or expands existing traffic generators Interchanges and traffic generators that directly that directly necessitate the need for such Grade Separations necessitate the need for such improvements will be viewed as improvements will be viewed as cooperative construction items on a case- cooperative construction. All by-case basis. associated costs will be apportioned in accordance with section II.B II.D.3.b.2.iv. Change the Interregional o Is either on an Interregional o Is either on a National Highway New Local Road Corridor System to the Corridor, or on a High Priority System (NHS) route or trunk highway Interchanges or National Highway System. The Regional Corridor or trunk highway principal arterial within the Twin Cities Grade Separations NHS is larger and will result in principal arterial within the Twin urban interstate ring; on Expressways higher MnDOT shares for Cities urban interstate ring; o Is on an underperforming NHS more interchange projects. o Is on an underperforming route or principal arterial; IRC, High Priority Regional Corridor or principal arterial; II.D.3.d.2.i. Lighting Make roundabout lighting and o MnDOT participation in o MnDOT participation in costs for diverging diamond lighting a costs for lighting roundabouts at lighting roundabouts at trunk highway part of the intersection trunk highway intersections will be intersections or lighting at trunk highway treatment. Local costs may go as follows: interchanges will be shared in the same down depending upon the  MnDOT will be responsible for ratio as the roundabout, interchange or cost split of the roundabout costs of the lighting on the main diverging or diverging diamond (see roundabout and the trunk highway construction costs. MnDOT participation II.D.3.a.2.iv.) legs of the roundabout. The local will be based on MnDOT standard unit of government will be lighting equipment. If a non-standard responsible for the costs of lighting system is installed, the local agency will be

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Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy on the local roadway legs of the responsible for all costs over the standard roundabout. and will own the system.  MnDO T participation will be based on MnDOT standard lighting equipment. If a non-standard system is installed, the local agency will be responsible for all costs over the standard and will own the system. o MnDOT will be up to 100% responsible for lighting the trunk highway ramps of diverging diamond interchanges. MnDOT will participate in up to 50% of the costs of lighting the local roadway and intersection using MnDOT standard equipment, including lighting of the traffic control signal system, along diverging diamond interchanges. If the local agency wishes to use a non- standard equipment, they will be responsible for any additional costs and will own the system. II.D.3.d.2.ii.Traffic MnDOT participation in signals When a local road project or a Delete Control Signal needed to address local specific adjacent development Systems development will be based on directly necessitates the need for a other provisions, raising new traffic control signal system, or MnDOT’s participation to up the revision of an existing traffic

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Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy to 50-100% and are subject to control signal system, the local unit availability of funds in the of government will be responsible District construction budget. for 100% of the traffic control signal system and for other costs necessary to provide the safe and efficient operation of the trunk highway, as determined by MnDOT. II.D.3.d.2.ii. MnDOT will pay 100% of Costs for interconnected system MnDOT will be 100% responsible for the Traffic Control the cost for interconnect equipment, including the master costs for interconnected system Signal Systems equipment for systems that controller and cabinet, related equipment, including the master serve only a Trunk Highway equipment, and interconnect controller, related equipment, and corridor. (hardwire, fiber optic, or wireless) interconnect (hardwire, fiber optic, or will be pro-rated in the same ratio as wireless) for systems on a Trunk Highway the total number of interconnected corridor. If both Trunk Highway and local legs of the system under each corridors are being served, costs will be jurisdiction to the total number of pro-rated legs in the interconnected system. Any additional equipment necessary in each traffic control signal system cabinet will be included and pro- rated at each traffic control signal system. II.D.3.e.2.i. MnDOT requires a When determining MnDOT cost When determining MnDOT cost Sidewalks minimum of 5 feet of participation, the standard sidewalk participation, the standard sidewalk width unobstructed sidewalks width will be a minimum of 6 ft., will be a minimum of 5 ft. of width. If the sidewalk has which includes 5 ft. of unobstructed unobstructed width, or wider as specified necessary obstructions, width, or wider as specified in the in the MnDOT Road Design Manual or

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Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy MnDOT would participate in MnDOT Road Design Manual or the MnDOT Load and Resistance Factor more width. the MnDOT Load and Resistance Design (LRFD) Bridge Design Manual Factor Design (LRFD) Bridge Design Manual. II.D.3.e.2.i. Delete the 90/10 or 60 40 cost See draft policy for current See the draft policy for proposed Sidewalks split. Reduce the number of participation. participation. situations to where sidewalk is needed and where it is not. Allow MnDOT to participate up to 100% for warranted sidewalk that the District agrees to install. II.D.4.d. Drainage Reduce the maintenance Routine drainage maintenance is Routine drainage maintenance is defined Maintenance responsibilities of the local defined as any work needed to as removal of sediment, debris, agencies to keeping grates and preserve the existing drainage vegetation, and ice from, the grates and catch basins clear. All other facility and to prevent conditions catch basins informing the District maintenance needed will be such as flooding, erosion, Maintenance Engineer of any needed done by MnDOT. sedimentation or accelerated repairs. deterioration of the system which would cause adverse safety, environmental, traffic capacity, aesthetic or cost concerns to governmental and regulatory agencies, and the public. Such work typically does not require replacement of existing drainage infrastructure and may include

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Comparison of Policy Changes that Minimize the Local Cost Share

Policy Section Description 2014 Policy Proposed 2016 Policy removal of sediment, debris, vegetation, and ice from structures, grates and pipes, repair of minor erosion problems, and minor structure and pipe repair. II.D.4.e.1.ii. Signal poles now come No changes proposed. Traffic galvanized, meaning they do Control Signal not need paint unless desired Systems for aesthetic reasons. LED Maintenance lamps last longer, requiring fewer replacements, and use less energy reducing electric bills. All of these are local agency responsibilities that have seen cost reductions without a policy change.

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