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MnDOT Adopts Policy Reducing City Cost Shares on Trunk Highway Projects
The Minnesota Department of Transportation (MnDOT) has adopted an update to its Cost Participation Policy that will reduce how much cities must contribute to certain trunk highway projects.
MnDOT staff presented the legislatively mandated update to the Senate Transportation Committee and the House Transportation Finance and Policy Committee when the draft was released. The League and other stakeholders testified in support.
The updated policy will apply to trunk highway projects approved after July 1, 2026, and significantly lowers cost-share requirements for cities.
View the Cost Participation Policy update (pdf).
Cost Participation Policy background
MnDOT’s Cost Participation Policy provides a framework for determining cooperative construction costs and maintenance responsibilities for projects affecting trunk highways. The policy was first adopted in 1985 and last revised in 2016.
The update stems from concerns raised by local government advocates, including the League, about the high cost-share burden tied to MnDOT projects.
Senate Transportation Committee Chair Sen. Scott Dibble (DFL-Minneapolis) and Minority Lead Sen. John Jasinski (R-Faribault) collaborated in 2025 to advance the legislative directive, but work on the update has been underway since May 2024. A steering committee and subcommittees guided the effort. Members included MnDOT staff and local government officials, including city engineers from Albert Lea, Bloomington, Minnetonka, Minneapolis, Moorhead, Plymouth, Richfield, St. Louis Park, St. Michael, and St. Paul.
Key updates
The 150-page policy includes the steering committee’s recommendations on the following:
- Ability to pay
- Aesthetics
- Bridges and interchanges
- De minimis thresholds
- Drainage and stormwater management
- Frontage roads
- Green infrastructure
- Lighting
- Maintenance
- Parking
- Rectangular rapid flashing beacons
- Roundabouts
- Sidewalks, shared-use paths, and bikeways
- Pedestrian bridges
- Traffic signals
Key provisions affecting cities, counties, and townships include:
- Establishing a project-specific maximum that limits local responsibility for trunk-highway-eligible costs on MnDOT-initiated projects to 0.8% of a community’s five-year average adjusted net tax capacity.
- Clarifying that non-trunk-highway-eligible items and optional additions requested by a city, county, or township do not count toward that maximum.
- Proposing legislation requiring MnDOT to pay, from the Trunk Highway Fund, for the remaining service life of a local government-owned utility relocated because of trunk highway construction.
Next steps
With the policy now adopted, MnDOT will begin implementing the changes for projects approved after July 1, 2026.
MnDOT will host a webinar on March 23 to provide an overview of the updated Cost Participation Policy, including key changes such as the new ability-to-pay provision. The session is intended as a high-level overview, with more detailed training planned later in 2026. Learn more and register for the Cost Participation Policy webinar.
View additional documents related to the Cost Participation Policy draft update: