CR 2013-031 Support Street Improvement District Legislation- Ca
City of Hopkins
April 2, 2013
Council Report 2013-031
Support Street Improvement District Legislation
Proposed Action
Staff recommends adoption of the following motion: "Move that Council adopt
Resolution No. 2013-020, supporting legislation authorizing establishment of
municipal street improvement districts ."
Overview
The State Legislature has taken up bills that authorize municipalities to create
street improvement districts. This legislation puts another tool in the hands of
City Councils to fund street maintenance and improvement projects.
The primary benefits of the proposed legislation are highlighted on the attached
fact sheet from the League of Minnesota Cities.
Supporting Information
• Street Improvement District Fact Sheet
• Resolution 2013-020
John R. Bradford, P.E.
City Engineer
Financial Impact: $ 0.00 Budgeted: Y/N NA Source: NA
Related Documents (CIP, ERP, etc.): NA Notes:
U
LEAG
1 OF CONNECTING & INNOVATING
INNESOTA SItiCE 1913
CITIES
Briefing paper ---2013
Minnesota cities and street improvement districts
League position
The League supports HF 745 (Erhardt, DFL -Edina) and SF 607 (Carlson, DFL -Eagan), legislation
that would allow cities to create street improvement districts. This authority would allow cities to
collect fees from property owners within a district to fund municipal street maintenance,
construction, reconstruction, and facility upgrades. If enacted, this legislation would provide cities
with an additional tool to build and maintain city streets.
Supporters
HF 745/SF 607 is also supported by the following organizations:
• Association of Metropolitan Municipalities
• Coalition of Greater Minnesota Cities
• Minnesota Association of Small Cities
• North Metro Mayors
• Minnesota Transportation Alliance
• City Engineers Association of Minnesota
• Minnesota Chapter of the American Public Works Association
Background
Just as the state has fallen behind in making transportation investments, some cities faced with
budget challenges have made the difficult decision in recent years to hold off on scheduled street
improvement projects. Maintenance projects, such as seal coating and overlays, can prolong the
lifecycle of streets to 50 to 60 years. Without ongoing maintenance, the average life expectancy of
local streets is approximately 25 to 30 years. For every $1 spent on maintenance, a road authority
saves $7 in repairs. But this maintenance requires a reliable dedicated funding source other than
the current volatile property tax system.
For the same reasons, cities are also falling behind on the reconstruction projects necessary to help
keep property values stable; and, cities lack viable options for building new transportation
infrastructure to attract and retain the investments by businesses that keep Minnesota's economy
strong.
Existing funding mechanisms for street maintenance and reconstruction are inadequate. Special
assessments can be onerous to property owners and are difficult to implement for some cities.
Special assessments are not always useful for funding collector streets and other streets that do not
abut private property. Property tax dollars are generally not dedicated and are sometimes diverted
to more pressing needs such as public safety, water quality and cost participation in state and
county highway projects. Municipal state aid (MSA) is limited to cities over 5,000 population --147
145 UNIVERSITY AVE, WEST PHow: (651) 281-1200 FAX: (651) 281-1299
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of 853 cities in Minnesota --and cannot be applied to more than 20% of a MSA city's lane miles.
Existing MSA is not keeping up with needs on the MSA system.
Key messages
• This is enabling legislation. No city would be required to create a municipal street
improvement district.
• The street improvement district authority legislation is modeled after Minn. Stat. 435.44,
which allows cities to establish sidewalk improvement districts.
• This authority would provide a funding mechanism that is fair. It establishes a clear
relationship between who pays fees and where projects occur, but stops short of the benefit
test that sometimes makes special assessments vulnerable to legal challenges. It also does
not prohibit cities from collecting fees from tax exempt properties within a district.
• Fees paid under a street improvement district would be deductible just as property taxes
are.
• This tool allows cities to perform maintenance and reconstruction on schedule. Timely
maintenance is essential to preserving streets and thereby protecting taxpayer investments.
• This tool would allow property owners to fund expensive projects by paying relatively
small fees over time. The tool could be used to mitigate or eliminate the need for special
assessments.
LMC Contact: Anne Finn, Assistant IGR Director, 651-281-1263, afann(c)lmc.org
Updated March 13, 2013
CITY OF HOPKINS
HENNEPIN COUNTY, MINNESOTA
RESOLUTION NO. 2013-020
A RESOLUTION SUPPORTING LEGISLATION AUTHORIZING THE
ESTABLISHMENT OF MUNICIPAL STREET IMPROVEMENT DISTRICTS
WHEREAS, Minnesota contains over 135,000 miles of roadway, and over 19,000
miles—or 14 percent --are owned and maintained by Minnesota's 853 cities; and
WHEREAS, 84 percent of municipal streets are ineligible for dedicated Highway User
Tax Distribution Fund dollars; and
WHEREAS, the more than 700 Minnesota cities with populations below 5,000 are
ineligible for dedicated Highway User Tax Distribution Fund dollars; and
WHEREAS, city streets are a separate but integral piece of the network of roads
supporting movement of people and goods; and
WHEREAS, existing funding mechanisms, such as Municipal State Aid (MSA),
property taxes and special assessments, have limited applications, leaving cities under -equipped
to address growing needs; and
WHEREAS, maintenance costs increase as road systems age, and no city --large or
small—is spending enough on roadway capital improvements to maintain a 50 -year lifecycle;
and
WHEREAS, for every one dollar spent on maintenance, a road authority saves seven
dollars in repairs;and
WHEREAS, the Council of the City of Hopkins finds it increasingly difficult to develop
adequate funding systems to support the City's needed street improvement and maintenance
programs while complying with existing State statutes; and
WHEREAS, cities need flexible policies and greater resources in order to meet growing
demands for municipal street improvements and maintenance.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Hopkins
supports enabling legislation that would authorize cities to establish street improvement districts
to fund municipal street maintenance, construction and reconstruction.
Adopted by the City Council of the City of Hopkins this 2nd day of April, 2013.
IM
ATTEST:
Kristine A. Luedke, City Clerk
Eugene J. Maxwell, Mayor