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Memo - 2006 Legislative Issues & Priorities ADMINISTRATIVE SERVICES: OFFICE OF THE CITY MANAGER MEMORANDUM TO: FROM: MEETING DATE: SUBJECT: Honorable Mayor and Members of thet; C. . Council Rick Getschow, Hopkins City Manager February 14. 2006 2006 Legislative Issues and Priorities Background: State Senator Steve Kelley and State Representative Steve Simon are scheduled to be in attendance at an upcoming regular City Council meeting to discuss the upcoming 2006 legislative session. Staff felt that it was important to prepare a legislative agenda or a list of issues or concerns that we feel should be made known to the City Council and our legislators. This allows for the Council and staffto speak as one voice on city issues of legislative concern. The enclosed list is currently a draft. It does not cover many of the items that have arisen or may arise at the legislature whereby the City and other city associations may become involved. But it does attempt to highlight the larger issues that may be at the forefront of the 2006 session as they relate to city business. Also, many of the items of general and regional interest, such as levy limits, were taken from the legislative polices of the Association of Metropolitan Municipalities (AMM), of which we are a member. The Council is being asked to review this list and edit or add any additional issues as necessary prior to the agenda being distributed to our legislators and other interested community organizations. Enclosures: 1. Draft 2006 Legislative Agenda 2006 LEGISLATIVE ISSUES AND CONCERNS EMINENT DOMAIN There has been a lot of discussion and activity surrounding the use of eminent domain. The federal govemment has recently enacted legislation that limits funding for development projects that use eminent domain for projects that are not for a public use. There are also other proposals in Congress that would adopt more severe restrictions on the use of eminent domain. Current Minnesota law gives cities the authority to exercise eminent domain in pursuit of a public purpose with the responsibility of balancing the rights of private landowners and the public's best interest. The Minnesota Legislature is currently considering changes to municipal eminent domain powers that would impose a significantly higher standard of proof of public propose, institute judicial review over the deference currently given to local elected officials and authorize payment of the challenger's legal fees by cities and their taxpayers. All of these proposals would severely limit local government's ability to redevelop properties . The City of Hopkins supports the recognition that the vast majority of condemnations conducted by municipalities are considered friendly and non- adversarial; . The City of Hopkins opposes any changes that would severely limit a cities ability to ensure the health, safety and welfare of its citizens or increase the cost born by cities during the eminent domain process; . The City of Hopkins, as a fully developed inner-ring suburb, also supports efforts to maintain and strengthen cities' ability to exercise the power of eminent domain for redevelopment purposes with the intent to reduce blight and increase the local tax base and create jobs. TRANSPORATATION AND TRANSIT FUNDING ISSUES The City of Hopkins needs increased revenues to support the two street systems we own and maintain- the Municipal State Aid system (MSA) and local street (residential) system. The MSA system is funded primarily by the State. Increasing statewide transportation funding through the gas tax, license tab fees, and motor vehicle sales tax revenues will increase MSA funding for the City of Hopkins. The local city street system is funded 100% by property taxes or special assessments. The following actions could address funding concerns: . To provide increased transportation funding for our MSA system, the City of Hopkins supports the passage of the 2006 constitutional amendment which would dedicate all Motor Vehicle Sales Tax (MVST) revenue to transportation purposes; . To allow for increased transportation funding for our local street system, the city supports legislative approval of the LMC proposed "Street Utility Fee", which is similar to a storm sewer utility fee, that would provide a city with a dedicated revenue source for local/residential streets; . To provide increased transportation funding for the State transportation system and transit improvements in and around our community such as the current Southwest Transitways initiatives that may bring light rail transit through the City of Hopkins. (See www.southwesttransitways.org) LEVY LIMITS The City of Hopkins strongly opposes levy limits and urges the legislature to not re-enact them. We also oppose the imposition of artificial mechanisms such as valuation freezes, payroll freezes, reverse referenda, super majority requirements for levy, or other limitations to the local government budget and taxing process. Expenditures for capital improvements such as infrastructure reconstruction should also not be subject to levy limits. LOCAL GOVERNMENT AID (LGA) Excessive property tax burdens should be mitigated by fully funding local government aid. Through state and local taxes and revenue sharing, public investment has supported, not hindered, Minnesota's success. If state lawmakers truly see public safety, economic development, sound infrastructure, and strong neighborhoods as priorities, state revenue sharing with local governments should be a priority as well. SALES TAX ON LOCAL GOVERNMENT PURCHASES The Legislature should reinstate the sales tax exemption for all local government purchases without requiring a reduction in other aids. CITY REVENUE STABILITY AND FUND BALANCE The City of Hopkins opposes state attempts to control or restrict city fund balances. These funds are necessary to maintain fiscal viability, meet unexpected or emergency resource needs, purchase capital goods and infrastructure, provide a'dequate cash flow and maintain high level bond ratings. mRESAFETYSURCHARGE The Minnesota Department of Public Safety, Minnesota State Fire Chiefs Association, Minnesota Fire Department Association, and Minnesota Professional Firefighters have as their main legislative priority for 2006 the repeal of the 0.5% fire insurance tax on residential and commercial properties and support its replacement with the proposed $5 surcharge on residential and $86 on commercial policies. This surcharge would apply commercial and residential fire insurance policies and would replace a percentage system currently being used. The proposed surcharge would raise $20 million annually (as compared to $6.9 million collected under the current tax structure). Money collected would be used to help fund the Office of the State Fire Marshal along with the MN Board of Fire Training and Education. Funds may also be used for Hazmat Team readiness, structural collapse teams, CISM teams and other items affecting the fire service of Minnesota. This surcharge could benefit Hopkins in the following ways: . Funding for the state Fire Marshal's Office will help with fire code development, fire investigation, code enforcement inspections and code training. . The State Board of fire training, if funded, will have what it needs to establish a State wide certification program and is the likely group to handle National Response Plan certification and documentation for first responders. . Currently several members of the Hopkins Fire Department also are members of the State Chemical Assessment Team, a specialized state wide technical team that receives federal and state financial assistance. This surcharge proposal would benefit this organization. TELECOMMUNICATIONS The City of Hopkins wants to maintain or enhance the current environment to promote innovation in telecommunications by not prohibiting any current government role in the provision of any telecommunication or infonnation service. The City hopes that there is not state legislation proposed, similar to federal legislation under consideration that would completely prohibit government's role or hinder the ability of cities to retain their franchise authority. AFFORDABLE HOUSING- STATE ROLE Primarily through the programs of the Minnesota Housing Finance Agency (MHF A), the state establishes general direction and prioritization of housing issues. The state financially supports a variety of housing types including homeless shelters, transitional housing, supportive housing, senior housing, and family housing. The state must continue to be an active partner in addressing lifecycle and affordable housing issues. AFFORDBALE HOUSING- FEDERAL ROLE The City of Hopkins encourages the federal government to maintain. and increase current levels of funding for affordable housing. Federal investment in affordable housing will increase the supply of affordable and life cycle housing as well as increase the inter- jurisdictional collaboration between the two levels of government. Federal funding plays a critical role in aiding states and local governments in their efforts to maintain and increase affordable housing throughout the state. The City strongly encourages the following: . To preserve and increase funding for the Community Development Block Grant Program, which is a catalyst for creating more affordable housing; . To create and implement a more streamlined procedural method for local units of government to participate and access federal funding and services dealing with grants, loans, and tax incentive programs for economic and community development efforts; and . To commit resources to Section 8 funding. It is a flexible, cost effective, and successful program that has helped nearly two million families find housing through promotion of self-sufficiency and stability. INFLOW AND INmTRATION (III) The Metropolitan Council's Water Resources Management Plan establishes an III surcharge on cities that are determined to be contributing unacceptable amounts of clear water to the MCES wastewater treatment system. Currently 35 cities have been identified as excessive III contributors. Hopkins is currently not one of those cities. However, the City is still subject to potential excess III charges related to this proposal The City of Hopkins recognizes the importance of controlling III because it affects the size, and therefore the cost, of wastewater treatment systems and because excessive III in one city can affect development capacity of another city that lies down pipe. Still, the City still opposes an III surcharge until such time that the Metropolitan Council, in conjunction with cities, establishes criteria for the surcharge. HOPKINS SCHOOL DISTRICT (ISD 270) BUS DEPOT The Hopkins School District and the City of Hopkins have been working cooperatively with the Minnesota Pollution Control Agency (MPCA) to secure sta'te funding to match local funding and grant funding to convert a closed landfill site in the City of Hopkins into a bus depot facility for the Hopkins School District. The facility would greatly assist the school district by reducing operating transportation costs for the district. This project is considered by the MPCA as the only development that could occur on this state closed landfill. This project would also initiate the further environmental remediation and clean-up of the site that would not Have occurred for several decades ifnot for this project. Therefore, this project is considered a win-win for the City, the Hopkins School District, and the State of Minnesota. This project has already received Metropolitan Council and Hennepin County environmental clean-up grant funds. The School District has also committed significant dollars to the project. The remaining financial commitment is from the MPCA through the state bonding bill. TRAIN SWITCHING YARD IN GLENCOE The Cities of Hopkins, St. Louis Park and Minnetonka are seeking approximately $3 million in funding from Federal, state, local and private entities to relocate the Twin Cities & Western Railroad's train blocking operations to a new facility outside of the cities ofMinnetonka, Hopkins and St. Louis Park. The affected cities have recommended that the Twin Cities and Western Railroad's (TC&W) blocking operations be eliminated in St. Louis Park, Hopkins and Minnetonka and relocated to a new switch yard west of the three cities. The TC& W blocking operations generate noise levels that exceed the state of Minnesota nighttime noise standards. In addition, the switching operations cause vibrations and they often disrupt local transportation systems because at-grade crossings are temporarily blocked by trains conducting switching operations. The G1encoe Railroad Congestion Mitigation Project, located in the City of G1encoe, involves constructing four siding tracks to accommodate the anticipated amount of rail car maneuvering/switching operations at this new facility. It is a nine acre site and the City of Glencoe was selected as the preferred site for a switch yard because it would consolidate operations, it would provide for noise mitigation for residents in Glencoe (existing rail car maneuvers would be relocated to the west side of town away from the east side), and it would provide opportunities for economic development. Anticipated project costs of $2,962,000 to $3,000,000 for the yard include the land acquisition and design costs. Proposed funding sources include $2 million of Federal Funds, $700,000 of state funds, $200,000 from neighboring cities, and $100,000 from private investors. The site will be owned by the McLeod County Rail Authority and be operated by TC& W. Construction start date, assuming funding is secured, is planned for September 2006; the yard is expected to be fully operational by the fall of2007.