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Table 1 Advantages and Disadvantages of Funding Alternatives Funding Method Advantages Disadvantages Ad Valorem Tax • Administrative Structure for collection in place. • Simple and accepted source of revenue. • Allows for a larger revenue base. • Through tax districts contributors pay. • No incentive to reduce runoff or pollution. • No relationship to level of benefits received. • Discontinuous source of revenue. • Limitations on amount of expenditures due to budget constraints. • Competition with other services (i.e., police, fire). Special Assessments • Only benefited properties pay. • Revenues from assessment are applied to a specific project cost. No competition with general . services. • Benefits directly related to cost for service. • Assessment can be deferred in hardship cases. • ''° Rigid procedural requirements. • Runoff contributions cannot be assessed. • Difficult to determine and prove benefit. • May place an unfair burden on some segments of the population. System Development Charges g • New development generating runoff pays for runoff management. • Administrative structure for reviewing plans and collecting fees is in place. • Systems can be tailored to the specific needs through regulatory changes. • Revenues are applied to water management. No competition with general services. • Only addresses problems within the vicinity of the new development, not usually existing developments. • Only addresses prevention not correction of existing problems. • Limited usefulness as a financing mechanism. User Charges • Properties causing or contributing to the need for runoff management pay relative to their contribution to the problem. • Self- financing system not in competition with general services funds. • Existing and new developments both pay. • Flexibility in the system. • Continuous source of revenues. • Specific dedicated fund. • Administrative structure for collection already in place. • Some initial costs in development of rate formula and philosophy. • May require an expanded administrative structure. Feasibility Study City of Lino Lakes, Minnesota 112316 Page 6 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1