ANN ARBOR, MI - Ann Arbor has a goal of getting 80 percent of its streets in good or better condition by 2025.

More specifically, that means 80 percent rated at least 7 out of 10 on the PASER scale, a pavement rating system the city uses.

But can it get there?

A new memo from City Administrator Howard Lazarus to the City Council suggests the city might not be on track to meet that target within the desired timeframe.

Officials believe the city can meet the 80 percent goal for major streets by 2025, but can't say the same for other neighborhood streets classified as "local streets," which account for the majority of the city's roadways.

"For the Local Street system, the model shows significant progress towards the target goal by 2025, but suggests that miles of streets in the target range will fall short of the 80% goal," the memo states.

Reasons cited include rising street repair costs, funding limitations and lack of contractor capacity to take on the work.

"For the Local Street system, additional funding would theoretically move the needle further upward by the target year of 2025," the memo states. "However, contractor capacity is already presenting a challenge at current funding levels."

The costs associated with trucking materials to a construction site typically restrict successful paving bidders to a tight geographic area around the city, the administrator's memo states.

"The city's present level of paving efforts appears to be tapping the full capacity of regularly successful bidders," the memo states. "Coupled with the short Michigan construction season, local paving contractors are already juggling multiple city projects and struggling to successfully deliver awarded projects in a given season."

In an effort to address that challenge, Lazarus said, the city's staff has been making efforts to solicit bids from a wider range of paving contractors, but it's not yet known whether additional contractors from further outside Ann Arbor can bid competitively.

"Another strategy being explored is the possibility of issuing multi-year contracts to 'raise the stakes' and encourage more bidders from out of area," the memo states. "This could also have the added benefit of lowering prices from the city's currently successful bidders."

Council Member Jane Lumm, an independent from the 2nd Ward, said the fact that the city appears to be falling short of its goals on local streets is disappointing, as they account for roughly two-thirds of the street system, with major streets making up the rest.

"I do appreciate staff's honesty and transparency. It would have been easy to just say we're on track and everything's fine," Lumm said.

"But I don't think we should just accept failure at this point," she added. "There is no other issue we hear about more than fixing the roads, and there's not a close second, so we just have to keep working the issue to figure out how we can meet the target."

Lumm said she's troubled by the administration's recommendation to defer major improvement projects, such as State Street and Nixon Road reconstruction projects, until the goals have been met.

"I recognize that there may be trade-offs, but before simply concluding we won't do anything on the Nixon corridor for a decade or so, we need more discussion on that recommendation," she said, adding there also needs to be more discussion about tapping into fund balances. She said she'll be making sure that's front and center in the city's upcoming budget discussions for the next fiscal year.

Multiple City Council candidates who recently ran on platforms calling for picking up the pace on street repairs are slated to take office in November, changing the makeup of council. They'll have a chance to decide whether to shift more money toward fixing local streets when they approve the city's next annual budget next May.

The city increased funding for street repairs this fiscal year by taking $4.3 million from cash reserves.

The city has been scoring the pavement conditions for all streets on a three-year cycle and did so in 2014 and 2017.

The administrator's memo notes the 2017 ratings showed the major street system progressing toward the desired target range, while local streets experienced a reduction of miles in the target range.

"This reflected, in part, prior commitments of funding heavily to projects in the Major Street system," the memo states.

Information provided by the city shows the percentage of local neighborhood streets rated 1 to 3 on the PASER scale (failing or poor condition) rose from 30 percent to 43 percent from 2014 to 2017, while the percentage rated 4 to 6 (fair or good) dropped from 31 percent to 28 percent, and the percentage rated 7 to 10 (good to excellent) dropped from 39 percent to 29 percent.

Along major corridors, the percentage of city streets rated 1 to 3 rose from 22 percent to 24 percent, while the percentage rated 4 to 6 dropped from 33 percent to 26 percent, and the percentage rated 7 to 10 ticked up from 45 percent to 49 percent.

An analysis of city records by The Ann Arbor News and MLive found the city had 266 failing segments on roughly 175 different city streets with a score of 1 out of 10 last year.

Several streets, including some rated as failing in 2017, have been repaved since then, while others have gotten worse.

Lazarus suggests in his new memo that the city may have inadvertently rated some streets too harshly. He said the rating technique used in 2014 and 2017 appears to be over-reporting the percentage of streets in the bottom range.

"Those previous ratings utilized a very intense technical procedure that generated a rating called a Pavement Condition Index (PCI) score that was then mathematically converted to the PASER rating system," the memo states. "PASER ratings are based on a general visual exam. It appears that the conversion between systems rates streets more harshly at the lower end of the scale."

Lazarus said the city plans to switch to using direct PASER ratings to avoid that in the future, and the city plans to start rating pavement conditions every two years to better track progress. That means the next ratings will be done in 2019 instead of 2020.

Lazarus said that provides more opportunity for any needed course corrections, such as directing additional dollars to local streets.

While the city may be falling short of its goal for local streets, the administrator's memo suggests the number of local streets in poor condition still will be considerably reduced by 2025.

"In other words, there are likely to be many streets rated 5 or 6, just below the target rating of 7," the memo states. "The model describes 5 as the bottom of 'Fair' and 7 as the top, so all such ratings fall in the same general pavement rating category."

Escalating street treatment costs are one of the challenges the administrator's memo discusses.

"Costs per square yard for pavement treatments rose significantly during the economic upturn that occurred after the original model was generated in 2014," the memo states.

"The result of this was that less miles of street were treated in 2014-2018 with available funds than originally anticipated in the model. Recent bidding seems to indicate a trend toward stabilization of costs."

Typically about 40 percent of the city's available funding for streets is restricted by funding guidelines to use on major streets, which represent about 34 percent of all city streets, the memo states.

A city analysis of projected revenues shows available annual funding ranging from $12.9 million to $18.3 million through 2025.

The city's model suggests allocating those funds primarily to the local street system would be the most optimal use.

The administrator's memo notes the city didn't begin intensive use of new preventive maintenance and surface treatment techniques until after the last pavement ratings in June 2017.

"These treatments, along with traditional resurfacing and reconstruction efforts, are serving to elevate significant miles of streets to the target range," the memo states.

"In addition, the crack-sealing treatment also being utilized serves to stabilizes roads with current PASER ratings of 7 to maintain them within the rating target for a number of years."

When the next ratings are done in 2019, the memo states, the effects of those treatments -- coupled with a direct PASER rating of the system -- will enable a "significant model update."

Other than making targeted funding shifts to local streets, the city's staff recommends staying the course through the next construction season using current strategies.

The administrator's memo notes the city receives Act 51 funds from the state of Michigan for routine maintenance such as pothole repair, patching, street sweeping, pavement markings and snow plowing, as well as some crack sealing and light preventive maintenance. But the city is required to put 75 percent of those funds toward major streets, leaving only 25 percent for local streets.

The city's forecast for that Act 51 money shows between $1.3 million and $1.6 million annually for major streets and about $300,000 to $350,000 for the local street system.