Municipal street improvement districts green-lighted by House division

At a time of year when potholes aplenty pop up, a new way has been proffered to pay for the pavement.

Sponsored by Rep. Steve Elkins (DFL-Bloomington), HF1565 would allow cities to create street improvement districts and charge for up to 20 years almost all property owners within the designation for street construction, maintenance and upgrades.

Approved via a party-line vote Wednesday by the House Local Government Division, the bill’s next stop is the House State Government Finance and Elections Committee. There is no Senate companion.

“This would allow the city to have a long-term financial plan which addresses the growing infrastructure needs, lowers the financial investment needed over time and begins to address a significant, unfunded liability,” said Rochester Mayor Kim Norton.

Under the plan, costs would be assessed “on the basis of each developed parcel's or tract's relative share of the vehicular trips to and from all developed parcels and tracts in the street improvement district during the preceding calendar quarter.” The data source would be an entity “certified as suitable” by the Department of Transportation. A parcel owned by a statutorily defined “institution of public charity” would be exempt.

“For these kind of expenses, this is just a fairer way to assess them rather than, for example, linear street frontage,” Elkins said.

Elkins provided an example where four big-box stores are built at an intersection, thus traffic increases drastically. “If it were not for this redevelopment activity, the intersection improvements would not be necessary. Why should local homeowners be saddled with paying for this improvement?"

More money is needed across Minnesota to fix or replace aging infrastructure at a time city budgets are already stretched thin and state sources are insufficient or nonexistent.

Supporters note no dedicated state street funding goes to cities with populations under 5,000, and funds received by larger cities as part of the Municipal State Aid program can only be applied to 20% of a city’s street system.

“Overall, 45% of the funding for all roads and bridges in Minnesota is provided by local taxes paid by city and county taxpayers,” Elkins said, adding the number continues to grow, in part, because the state’s gas tax last increased in 2008.

Amber Backhaus is vice president of public affairs for the Minnesota Automobile Dealers Association. She spoke on behalf of 31 organizations opposed to the bill.

“We respectfully disagree … this establishes a funding tool with a direct relationship between those who pay fees for district improvements and those improvements,” she said. “This bill grants cities broad authority to draw the districts however they want. There is no requirement that the property owners benefit from the improvements or even be in the vicinity of them.”

Other reasons cited by opponents include:

• cities have at least seven other ways to finance transportation improvements;
• there is no limit on fee collections; and
• it does not specifically restrict funds from being used for other infrastructure, such as sewers, utility connections and trails.

A constitutional question for collecting fees from tax-exempt properties, such as houses of worship, could be problematic, added Ethan Roberts, director of government affairs for the Jewish Community Relations Council of Minnesota and the Dakotas.