ITEM 6.1 Fees related to StreetsTY
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MINNESOTA ! 7
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR: MEETING DATE:
Legal
City Attorney MacArthur March 11, 2019
PRESENTER(s)
REVIEWED BY: ITEM #:
City Attorney
City Administrator/Finance Director Flaherty 6.1
STRATEGIC VISION
MEETS:
THE CITY OF_OTSEGO:
fees.
Is a strong organization that is committed to leading the community through innovative
communication.
X
Has proactively expanded infrastructure to responsibly provide core services.
No
Is committed to delivery of quality emergency service responsive to community needs and
expectations in a cost-effective manner.
As previously discussed with the City Council, legislation has recently been introduced in both the State
Is a social community with diverse housing, service options, and employment opportunities.
pay for needed street improvements outside of proposed developments but that need to be constructed or
Is a distinctive, connected community known for its beauty and natural surroundings.
AGENDA ITEM DETAILS
RECOMMENDATION:
That the City Council approve a resolution supporting legislation authorizing infrastructure development
fees.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?,
No
No
BACKGROUND/JUSTIFICATION:
As previously discussed with the City Council, legislation has recently been introduced in both the State
Senate and House of Representatives to authorize City's to establish Infrastructure Development Fees to
pay for needed street improvements outside of proposed developments but that need to be constructed or
improved due to the traffic that will be generated by the development impacting the existing street
system. This is in light of the recent Harstad v. Woodbury case which disallowed such fees, even if
specifically agreed to by the Developers.
The League of Minnesota Cities and various affected Cities have requested that other cities adopt a
resolution in support of the legislation. Attached is such a resolution as well as a copy of the Senate version
of the bill. Staff believes that such legislation would add to the tools available to the City to deal with
ongoing development scenarios where street and other improvements outside of a proposed subdivision
are necessary for safe and fiscally responsible development. The particulars of implementing the legislation
will have to be worked out by individual cities, but will require adoption of a plan and ordinance and will
require public hearings.
Adoption of the infrastructure development fee by the City, if the legislation is approved, does not
preclude it from utilizing other methods of funding City streets and infrastructure.
SUPPORTING DOCUMENTS ATTACHED:
• Resolution 2019-13
• Senate File No. 1271, Municipal Street Improvement Districts
POSSIBLE MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to adopt Resolution 2019-13 supporting legislation authorizing infrastructure development fees
related to streets.
BUDGET INFORMATION
FUNDING: BUDGETED:
N/A N/A
CITY OF OTSEGO
COUNTY OF WRIGHT
RESOLUTION NO. 2019-13
RESOLUTION SUPPORTING LEGISLATION
AUTHORIZING INFRASTRUCTURE DEVELOPMENT
FEES RELATED TO STREETS
WHEREAS, the City of Otsego's population is growing and is anticipated to continue
growing in accordance with the City Comprehensive Plan; and,
WHEREAS, city streets are one of the four major types of infrastructure local
government is responsible to provide to protect public safety and health; city streets
represent a separate but integral piece of the network of roads supporting movement of
people and goods; and
WHEREAS, the City of Otsego's existing street infrastructure is sufficient to support
the current community population and work force within existing neighborhoods, commercial
districts and industrial parks; and,
WHEREAS, developers, builders, and new homeowners and businesses are
driving the need for street improvements, including new streets, street expansions, and street
reconstruction; and
WHEREAS, municipal statutory authority appropriately exists for fees related to t h e
costs of municipal parks, sanitary sewer utilities, and waterutilities; and
WHEREAS, this municipal statutory authority does not exist for infrastructure
development fees related to street improvements; 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, neighborhood streets are constructed according to city standards by
developers; and
WHEREAS, funding sources for n e w s t r e e t s o r expanded streets and
intersections to support new development have historically come from infrastructure
development fees; and
1
WHEREAS, the infrastructure development fee mechanism f o r f u n d i n g s t r e e t
infrastructure needs related to development is no longer allowed as a result of
the Harstad vs. Woodbury court case; and
WHEREAS, costs of growth in the short term should not be supported by current
residents through community tax and/or utility fee increases but rather by those that
represent the growth; and
WHEREAS, the City Council of the City of Otsego finds it is difficult to develop
adequate funding systems to support the City's needed street improvements related to
growth while complying with existing State statutes; and
WHEREAS, cities need flexible policies and greater resources in order to meet
growing demands for street improvements.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF OTSEGO, that
the City Council supports legislation that would authorize cities to levy infrastructure
development fees to fund municipal street improvements as a necessary component of growth.
ADOPTED by the City Council of the City of Otsego, Minnesota this 11th Day of March
2019.
Motion by:
Second by:
All in favor:
Those opposed:
CITY OF OTSEGO
Jessica L. Stockamp, Mayor
Tami Loff, City Clerk
N
03130419] REVISORY LMIR: 19-26-74• astintroduced,:
SENATE
STATE OF MINNESOTA
NINETY-FIRST SESSION
_,..(SENATE.AUTHOR& SEMEMmW-Carlsau)
DATE D -PG OFFICIAL STATUS
02/14/2019 393 Introduction and fiirstreading
Referred to Local Government
S.F. No. 1271
El Abill>fbT-awa& '
1.2 relating to cities; establishing procedure for creating municipal street improvement
1.3 districts; proposing coding for new law in Minnesota Statutes, chapter 435.
1.4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1:5 --Section 1.--(4M.-391-, U, W—IP.A L frT ET- ROVE— ENT DIST4UC-T-S.
1.5 Subdivision 1. Definitions. (a) For the purposes of this section, the following terms have
1.7 the meanings given.
1.8. (b):"Oaverningbody'! means.the.city.-council:of amunicipahty.:,
1.9 (c) "Improvements" means construction, reconstruction, and facility upgrades involving:
1.10 right-of-way acquisition; paving; curbs and gutters; bridges and culverts and their repair;
L11 milling; overlaying; drainage and storm sewers; excavation; base work; subgrade corrections;
1:12 •street.*lighting;,traffic�signals;signage;,sidowallc-s;,pavement=marlcings;=boulevaWand
1.13 easement restoration; impact mitigation; connection and reconnection of utilities; turn lanes;
1.14 medians; street and alley returns; retaining walls; fences; lane additions; and fixed transit
1.15 infrastructure, trails, or pathways. "Fixed transit infrastructure" does not include commuter
1.16 rail rolling,stocle, light raii,vehieles; or-trans1way buses; capital,eosts for,par-k-and=ride-
1.17 facilities; feasibility studies, planning, alternative analyses, environmental studies,
1.18 engineering, or construction of transitways; or operating assistance for transitways.
1.19 (d) "Maintenance" means striping, seal coating, crack sealing, pavement repair, sidewalk
1.20 Maintenanoe,signal,-maintenance,-W--eet-lightmaintenanec,•and,signage.
1.21 (e) "Municipal street" means a street, alley, or public way in which the municipality is
1.22 the road authority.
Section 1. 1
01/30/19 REVISOR LCB/SL 19-2674 as introduced
2.1 (f) "Municipality" means a home rule charter or statutory ci
2.2 (g) "Street improvement district" means a geographic area designated by a municipality
2.3 and located -within the municipality-within-whichstreet improvements and maintenance
2.4 may be undertaken and financed according to this section,
2.5 (h) "Unimproved parcel" means a parcel of land that is not improved by construction of
2.6 an authorized structure or contains a structure that has not previously been occupied, and
2.7 abuts an:
2.8 (1) unimproved municipal street and that is not served by municipal sewer or water
2,9 utilities; Or
2.10 (2) improved municipal street and served by municipal sewer or water utilities.
2.11 Subd. 2. Authorization. To pay for street improvements andmaintenance, a municipality
2.12 may, by ordinance, impose a street improvement fee. The fee amount must be just and
2.13 equitable. The ordinance must not be adopted until after public notice is provided and a
2.14 public hearing=is held pursuant to subdivision 5.
2.15 Subd. 3. Improvement fee. Except as provided in subdivision 10. a municipality must
2.16 apportion street improvement fees to all of the developed parcels located in the district. A
2.17 street improvement district must not include any property already located in another street
2.18 improvement distriot.
2.19 Subd. 4. Uniformity. (a) All or part of the costs of municipal street improvements and
2.20 maintenance mustbe apportionedto all developed parcels or developed tracts of land located
2.21 in the established street improvement district on a uniform basis within each classification
2.22 of real esftft, Apportionmentmusfbe made -on the basis of one -of the allowing:
2.23 (1) estimated market value;
2.24 (2) tax capacity;
2.25 -0) -front faotage;
2.26 (4) land or building area; or
2.27 (5) some combination of clauses (1) to (4).
2,29 (b)=Rates=must•notbeaplrortipne(IiHsuelyawaythaftheratebornebyanyclas&firation-
2.29 of property is more than twice the rate that would be borne by that classification if rates
2.30 were apportioned uniformly to all classifications of property under the method selected in
2.31 paragraph (a), clauses (1) to (5).
Section 1. 2
01/30/19 REVISOR LCB/SL 19-2674 as introduced
3.1 Subd, 5. Adoption of plan; notice and hearing. (a) Before establishing a municipal
3.2 street improvement district or authorizing a street improvement fee, a municipality must
3.3 propose and adopt a street improvement plan that identifies the location of the municipal
3.4 street improvement district and identifies and estimates the costs of the proposed
3.5 improvements during the proposed period of collection of municipal street improvement
3.6 fees, which must be for a period of at least five years and no more than 20 years,
3,7 (b)Notice of a public hearing on the proposed plan must be given by mail to all affected
3.8 landowners at least 30 days before the hearing and must be posted in a public place for at
3.9 least 30 days before the hearing. The notice shall include the time and place of the hearing,
3.10 a map showing the boundaries of the proposed district, and a statement that all persons
3.11 ownine proDertv in the proposed district that would be subiect to a service charize will be
3.12 given the opportunity to be heard at the hearin
3.13 (c) At the public hearing, the governing body must present the plan and all affected
314 landowners in attendance must have the opportunity to comment before the governing body
3.15 considers adoption of the plan.
3.16 Subd. 6. Use of fees. Revenues from street improvement fees must be placed in a separate
317 account and used only for projects locatedwithin the district and identified in the municipal
3.18 street improvement plan.
3.19 Subd. 7. Collection; up to 20 years. (a) An ordinance adopted under this section must
3.20 provide for billing and payment of the fee on a monthly, quarterly, or other basis as directed
3.21 by the governing body. The governing body may collect municipal street improvement fees
3.22 within a street improvement district for no more than 20 years.
3.23 (b) As of October 15 of each year, fees that have remained unpaid for at least 30 days
3.24 may be certified to the county auditor for collection as a special assessment payable in the
3.25 following calendar year against the affected property.
3.26 Subd. 8. Not exclusive means of financine improvements. The use of the municipal
3.27 street improvement fee by a municipality does not restrict the municipality from imposing
3.28 other measures authorized by statute or by home rule charter to pay the costs of local street
3.29 improvements or maintenance, except that a municipality must not impose special
3.30 assessments for projects funded with street improvement fees.
3.31 Subd. 9. Utrimproyad pareels; fees. A municipality may riot impose a'street impl`Qyement
3.32 fee on any unimproved parcel located within an established street improvement district until
3.33 at least three years after the date of substantial completion of the paving of the previous
Section 1. 3
01/30/19 .REVISOR LCB/SL 19-2674 as introduced
4.1 unimproved municipal street, or the date which a structure is built and first occupiedpursuant
4.2 to a certificate of occupancy, whichever is later.
4.3 Subd. 10. Institutions of public charity. A municipality may not impose a street
4.4 improvement fee on any parcel ownedby an institution of public charity as defined in section
4.5 272.02, subdivision 7.
4.6 Subd. 11. Appeal to district court, Within 30 days after adoption of a street improvement
4.7 fee, any affected landowner may appeal to the district court by serving a notice upon the
4.8 mayor or cjerk of the municipality. The notice shall be filed with the court administrator of
4.9 the district court within ten days after its service. The appeal shall be placed upon the
4.10 calendar of the next general term commencing more than five days after the date of serving
4.11 the notice and shall be tried as other appeals in such cases. The court shall either affirm the
4.12 street improvement fee or set it aside and order a reassessment as provided in subdivision
4.13 3. All objections to the street improvement fee shall be deemed walvedunless presented on
4.14 appeal. This section provides the exclusive method of appeal from a street improvement
4.15 fee issued under this section.
4.16 EFTE CTIVE DATE. This section is effective July 1, 2019.
Section 1. 4