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4 <br />Municipal State Aid (MSA) State aid funds allocated to the City each year; annual <br />allocation grows as the City grows. <br />Grants/Donations Funds obtained via contributions by outside parties. One <br />of our major funding sources for Water projects has been <br />MPCA dollars from the 3M settlement funds. There are <br />multiple well and treatment projects currently expected to <br />receive funding from that source. <br />Infrastructure Reserve (409) In 2025, the City began levying a separate amount to build <br />and infrastructure reserve fund, such that we can begin to <br />provide more cash for projects and decrease the city’s debt <br />over time. <br />City Hall Reserve Due to the addition of a $12 million City Center facility, a <br />new levy was added in 2025 to provide cash for future <br />capital maintenance projects. <br />In addition to these sources, it is possible that future projects could be funded from user fees, <br />vehicle trade-ins or other sources not listed. <br />Many projects will be funded from a mix of funding sources, such as part cash and part bonding, <br />or part water fund and part sewer fund. <br />City contributions to capital-type funds have varied over the years. Starting in 2025, the city <br />council adopted levies that will contribute directly to capital reserve funds to more transparently <br />show how much we are saving for future capital investments. <br />Project Priorities <br />Capital improvement projects should be prioritized in some way so that limited funding can be <br />allocated to those which are most important. This is difficult because the varying nature of the <br />projects and their benefits and objectives are so disparate as to be essentially not comparable. Some <br />public agencies have developed elaborate rating and ranking systems to try to set priorities. <br />Complicated scoring systems may have some disadvantages because they may give a false sense of <br />objectivity or precision to the priority setting process. Others use simpler systems, or simply do not <br />try to compare projects that are like “apples and oranges.” There is no accepted system or “industry <br />standard” for prioritizing projects. <br />The following system has been utilized by staff: <br />1.Critical or urgent, high-priority projects that should be done if at all possible; a special effort <br />should be made to find sufficient funding for all of the projects in this group. <br />2.Very important, high-priority projects that should be done as funding becomes available. <br />3. Important and worthwhile projects to be considered if funding is available; may be deferred to <br />a subsequent year. <br />4.Less important, low-priority projects; desirable but not essential. <br />5.Future Consideration