Street Funding Task Force

Engineering Director Chad Millner and Ann Swenson, chair of the Street Funding Task Force, will present information about street reconstruction and funding at a special “Town Talks” event 7 p.m. Nov. 1. An open forum will follow to allow residents and staff the opportunity to discuss the topic of the night and ask questions. The Town Talk will be broadcast live on Edina TV and available for online viewing on Facebook Live and through the City’s website. The video and materials for the Town Talk, as well as community conversation about the topic, will be available on BetterTogetherEdina.org for a week following the presentation.

At the July 21, 2021 City Council Meeting, staff presented a recommendation to change how street reconstruction is funded. The recommendation was based on the work of the Street Funding Task Force and previous comments from the City Council. The recommendation that was approved will transition funding of street reconstruction from 100% special assessments to 100% taxes with a transition period of 16-years. This change was adopted in a revised assessment policy and is effective immediately. This was an exact recommendation from the Street Funding Task Force. Staff would like to again recognize the work of the task force on this very difficult topic.

Thanks, Chad Millner, City Engineer

Staff had the opportunity to continue the discussion with the City Council on street funding at a work session on June 1. Staff heard support for Option #2 from the Street Funding Task Force Report. Option #2 would fund street reconstruction 100% with taxes with a transition period of 16-years. Council asked staff to provide examples of various assessment rates over the 16-year transition period. Staff intends to bring back a change to the assessment policy for council consideration later this summer. Thanks, Chad Millner, City Engineer

The City Council approved one of the recommendations from the street funding task force recommendations on April 6. The assessment policy was revised to remove subcuts and public retaining walls from assessments starting with the 2021 Street Reconstruction Projects. A work session is scheduled for June 1 to continue the discussion on how to fund street reconstruction long term. Thanks, Chad Millner, City Engineer.

The Street Funding Task Force recently presented two recommendations to fund street reconstruction. Along with the funding recommendations, they also recommended removing subcuts and public retaining walls immediately from assessments. This topic was also discussed at the March 13, City Council Retreat.

At the retreat, in addition to facilitating a discussion on how street reconstruction is funded, staff presented the schedule and assessment concerns for the 2021 projects. The projects are Melody Lk and Creek Knolls. Staff voiced concerns that without removing subcuts and public retaining walls now, the street reconstruction program would have to be delayed until a decision is made. If Council supports removing subcuts and public retaining walls now, the 2021 street reconstruction projects could most likely continue if we receive reasonable bids.

Council supported removing subcuts and public retaining walls from assessments now for the 2021 street reconstruction projects. On April 6, staff will bring a revised assessment policy to reflect those changes. On April 20, if we receive reasonable bids, staff intends to ask Council to decide on preliminary assessments and on awarding a contract to the low bidder. Recall from earlier discussions that the estimated assessment without subcuts was $17,200 per REU. It would be our intention to ask Council to approve that preliminary assessment amount of $17,200 at the April 20 City Council Meeting. Recall the Public Hearing was closed but City Council had up to six months to decide on assessments.

While Council supported a small change to the assessment policy for 2021 projects, a permanent decision on street funding is required this summer. Council directed staff to bring back more information to continue the discussion. Staff are reviewing schedules to determine when that discussion can continue. Thanks, Chad Millner, City Engineer

The Street Funding Task Force final report & recommendations have been posted to the document center. This report will be presented to the City Council on March 2, 2021 at 7 pm. The Council will receive the report and use it's recommendations for future conversations about the budget. No formal decisions about street funding will be made on March 2 as the council will need time to process the report recommendations with other needs of the City. Thanks, Chad Millner, City Engineer.

Thanks again for all the feedback. The Task Force had many discussions about your comments. The Task Force is working hard to finalize their report detailing what they learned and the recommendations they have for the City Council. The final report and recommendations will be presented to the City Council on March 2, 2021. The timing of that report presentation syncs well with 2022 - 2023 budget discussions the council will begin in March. Once the final report is completed, we will post here. Thanks, Chad Millner, City Engineer.

Thanks to all that completed feedback forms. We received 313 forms. The results of those forms have been saved to the document center under 3 documents. "All Responses" is all the forms with no sorting. "Responses - Assessed" are forms from only the people that said they were previously assessed for a project. "Responses - Non Assessed" are forms from only the people that said they had not been previously assessed for a project. The feedback forms will be shared with the Task Force and City Council for consideration. Thanks, Chad Millner, City Engineer

Please find additional clarifications based on the feedback forms returned to date. Thanks

How would the City phase in the new policy?

The cost of subcuts would be removed from special assessments in the first year. After the first year, assessments would be reduced by a certain percentage each year. In the case of Option 1 (half taxes, half assessments), assessments would be reduced each year until it reached half the cost of a project at Year 16. In the case of Option 2 (all taxes), assessments would be reduced each year until it reached no assessment at Year 16.

Under the current policy, residents may pay their special assessments up front or over the course of 15 years. What percentage of residents pay up front?
Approximately one-third of special assessments are paid off immediately and do not show up on tax statements. Another one-third of property owners pay off their special assessment early during the 15-year re-payment period. The remaining one-third pay it off over the entire re-payment period.

Approximately what percentage of single-family homes have paid for a street reconstruction project under the current Special Assessment Policy?
The City has reconstructed approximately half of the local streets. Therefore, approximately half of the properties have paid an assessment. Approximately 4% of properties change owners per year. If they moved into a neighborhood after street construction, some property owners within a recently constructed street may not have paid for an assessment. We anticipate it will take approximately 20-25 years to complete reconstruction of the remaining local streets.

Did the Task Force consider removing the subcut cost from the assessment, but otherwise leave the Special Assessment Policy as is?
The task force reviewed how this would impact assessments and the ability of the City to continue to assess properties for public improvements. The Task Force felt just removing subcut was not enough and that it would still be difficult to prove the market benefit required by State Statute.

Additional information based on comments on the feedback forms.

Why isn’t the value of a home considered when special assessments are levied?

The courts have been very clear that the assessment must be uniform across the same class of properties in an assessed area. Because single-family residences are in the same class of properties and receive the same benefit of a new street, home valued at $300,000 and $600,000 in a project area would have the same special assessment.

Can the City refund residents who have been previously assessed for street reconstruction?

No; the State Statute that allows the City to assess for public improvements is very clear on this matter. If the special assessments were validly levied and collected, there is no way for the City to refund previously paid special assessments. If the City made a mistake in the assessment, finds the assessment to be excessive, or hears from the City Attorney that the assessment is or may be invalid, the City Council may reassess affected parcels.

If a change is made, could residents who are still paying off a previous special assessment be taxed differently?
Minnesota’s power of taxation is found in Article X of the Constitution of the State of Minnesota. The article states that taxes will be uniform. The City cannot tax properties of the same class differently based on the fact that they were previously subject to a special assessment. All single-family residential properties must have the same tax rate.

Thanks for the continued comments. Chad Millner, City Engineer