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REQUEST FOR COUNCIL CONSIDERATION Agenda Section: 8. STAFF REPORT Report Number: 92-425WS 111706 AGENDA SESSION DATE December 7, 1992 Report Date: 12-3-92 DISPOSITION Item Description: Support of State Legislation to Allow Cities to Establish Transportation Utilities Administrator's Review/Recommendation: - No comments to supplement this report - Comments attached. Explanation/Summary (attach supplement sheets as necessary.) SUMMARY: The League of Minnesota Cities and several individual Cities are supporting legislation to allow cities to create transportation utilities. This is an effort to give cities flexibility in deter- mining the method of funding street reconstruction, facility upgrades and maintenance. The request is for legislation that would enable, not require, cities to utilize the concept of a utility as a means to finance infrastructure repair. Attached is a draft document prepared by the Minnesota Public Works Associa- tion in conjunction with the League of Minnesota Cities describ- ing the concept and application of a transportation utility. The need for an alternative funding source for transportation infrastructure is based on restrictions in current funding sourc- es. The 2 basic sources of funds for these projects are property taxes and special assessments. Property taxes have been con- strained by levy limits in the past and may again be constrained in the future. Also the cost of the infrastructure projects are determined for each taxpayer by the value of the property, not the benefit derived from projects. Non-property tax paying enti- ties do not contribute toward the project, even though they may derive great benefits or contribute significantly to the need. Special assessments are restricted by state law to the amount of benefit to each property. This is a reasonable concept, but in reality is determined by the before and after property values. Many types of infrastructure projects do not increase the proper- ty value in question. Projects such as seal coats, overlays, traffic signals, and turn lanes and similar projects would be difficult to show increases in property Values yet the benefits to properties are considerable. - continued - i Ric ine or City Engineer/Director of Public Works Staff recommends that Council consider a resolu- RECOMMENDATIONs tion to support state legislation allowing cities to establish transportation utilities.