Cities Make Plea for Street Improvement District Authority

A letter from city groups blames deferred maintenance for poor road conditions, and implores state leaders to allow cities to create street improvement districts.
(Published Apr 14, 2014)

Cities have delivered a letter to Gov. Dayton and legislative leadership imploring them to include passage of the street improvement district initiative as a priority in the remaining days of the 2014 session.

Noting that support for funds to fill potholes is helpful, one-time money will not address the crucial need to fund the ongoing maintenance that protects pavement from needing expensive repairs. The letter was signed by the presidents of the League of Minnesota Cities, Metro Cities, the Coalition of Greater Minnesota Cities, the Minnesota Association of Small Cities, and the Municipal Legislative Commission. It states that the current poor condition of road pavement throughout the state is the result of deferred maintenance, and calls on state leaders to allow cities to create street improvement districts.

The letter asks for support of existing legislation, HF 745 (Rep. Ron Erhardt, DFL-Edina)/SF 607 (Sen. Jim Carlson, DFL-Eagan), and explains why cities need an additional funding tool:

"Cities are in a uniquely difficult position as it pertains to road maintenance and reconstruction. While the state and all 87 counties receive funds from the Highway User Tax Distribution Fund, only cities over 5,000 population (currently 146 of 853 cities) are eligible for state aid dollars. Within state aid cities, revenues are not keeping up with needs. Currently 84 percent of city streets are paid for with a combination of property taxes, local government aid and special assessments. Each of these funding mechanisms has limitations, which we would be more than willing to discuss with you in further detail. The point is that cities are falling woefully behind on street maintenance and have long recognized the need for a new funding option."

Bill history
Cities have attempted for several years to secure passage of legislation that would enable them to implement street improvement districts. Just since 2013, more than 100 cities have adopted resolutions of support for enacting street improvement district authority. The legislation would authorize cities to establish street improvement districts within their boundaries to fund municipal street maintenance, construction, reconstruction and facility upgrades. If enacted, this legislation would provide cities with an additional tool to build and maintain city streets. Most importantly, this tool would allow cities to perform maintenance at the optimal time—that is, when it is most cost effective.

Currently, the street improvement district legislation has passed through all policy and finance committees and has not been acted upon by the tax committees. The measure was included in the House version of the 2013 omnibus tax bill, but it was removed during conference committee. Also in 2013, the counties were able to secure expanded wheelage tax authority and local option sales tax authority for transportation purposes.

The League is urging city officials to discuss this legislation with legislators when they return to their districts during the upcoming Easter/Passover break.

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