Minnesota Cities Magazine
More from Jan-Feb 2017 issue

2017 Legislative Session: Seeking State Funds for Crumbling Infrastructure

State of Minnesota with pictures of worn out water and street infrastructureBy Mary Jane Smetanka

In the southwest Minnesota town of Currie, long-time water and sewer issues affect more than the 230 residents of the city.

In bad winters, undersized water lines beneath the streets are prone to freezing. The antiquated sewer system and lift station can’t handle heavy rains. Sewage has backed up in basements, and emergency releases of polluted water have flowed into the Des Moines River, a tributary of the Mississippi.

“We really need a bonding bill,” says Currie City Councilmember Eugene Short. “We’ve been in the bonding bill three times in a row, and nothing has happened.”

State action needed
Across Minnesota, cities big and small are facing a backlog of critically important infrastructure projects. Failure to approve a 2016 bonding bill and little recent legislative action on transportation means cities are clamoring for the 2017 Legislature to boost funding for street maintenance and reconstruction and projects affecting drinking water, wastewater, and stormwater.

Last year’s proposed bonding bill included over $1 billion in public infrastructure projects, including $270 million in general obligation and trunk highway bonds for roads and bridges and $25 million for the local road replacement fund and water and dam projects. More than $150 million for drinking water, wastewater, and stormwater projects also went by the wayside.

Getting more funding for city transportation and water projects as well as broadband expansion are 2017 legislative priorities for the League of Minnesota Cities (LMC). Last year’s Legislature allocated $35 million to broadband projects, the most ever. With many cities still lacking broadband, the League would like to see funding for the state’s broadband grant program at $100 million. (To learn about all of the LMC legislative priorities, see the insert included in the middle of this issue of Minnesota Cities.)

water facilityCrumbling infrastructure
But the hottest focus is expected to be on crumbling infrastructure. The scope of Minnesota’s problem with water systems is visible on the Office of the State Auditor’s Infrastructure Stress Transparency Tool website at http://bit.ly/2fY7nbo. The searchable map documents the age and condition of water infrastructure city-by-city. If funding permits, data on streets and bridges will be added, with the purpose of helping policymakers better understand the condition of critical systems and plan for their replacement.

Duluth was one of the cities that lost out when there was no bonding bill last year. Mayor Emily Larson says the city had worked hard to gain support for reconstruction of its main downtown street, a project that included steam plant conversion. The 2016 bonding bill included $15 million for the first phase of that project, which also is a major economic development effort, Larson says.

“It was frustrating and disappointing,” she says. “For two years, we laid the groundwork. You know you’ve done your part, but then the other puzzle piece just doesn’t show up.”

cracked streetLarson also hopes the state will adopt a more comprehensive approach to transportation funding. Duluth, which has 424 miles of streets—“A lot of streets for our population [of 86,000],” she says— has road needs that “exceed our capacity to tax. It is not sustainable or possible for cities to address this on their own,” the mayor says.

Cities need financing authority
Delano City Administrator Phil Kern also wants a better approach to road funding for his city of 5,700 residents. In 2009, the city identified roads that were 40 years or older that needed to be replaced within 15 years. The city has addressed about half of those needs.

In planning meetings that drew hundreds of people, residents rejected street assessments to pay for those projects. Delano used street reconstruction bonds that were levied against everyone’s property taxes, a strategy that the state limits.

“We have the infrastructure, it’s going to age, and we have to replace it,” Kern says. “If the state provides cities the opportunity to have local control over their own funding decisions and not tie their hands, I think cities will get creative and find ways to do this locally as we see fit.”

Like many city officials, Kern has been a supporter of legislation that would authorize street improvement districts. Street improvement district authority would allow cities to collect fees from all properties in an area, including tax-exempt land owners, to pay for road improvements. Despite years of lobbying and support from many cities, the Legislature has never warmed to that strategy.

A new approach
Anne Finn, LMC assistant intergovernmental relations (IGR) director, says the League has recently taken a new approach to street funding legislation. Limits in the Minnesota Constitution make road funding complex. Just 9 percent of money collected from the state gas tax, motor vehicle sales tax, and license tab fees goes to cities. And that funding is limited to cities with populations of more than 5,000, meaning that those funds aren’t flooded streetavailable to over 700 of the state’s 853 cities.

Even cities that receive funding are restricted to using that money on no more than 20 percent of their road system. And with more cities hitting the 5,000 population mark, the slices of the funding pie keep shrinking, Finn says.

One idea the League brought to the Capitol last year was to add a $10 surcharge to license tabs. This proposal got a warmer reception from legislators than street improvement districts. It would raise almost $60 million per year and be split between large and small cities for road work. While the amount is modest compared to the need, Finn says, it would create an ongoing source of revenue that would allow cities to start to catch up with street reconstruction.

“Maintenance is not that expensive if you do it at the right time,” she says. “For every $1 spent on maintenance, you save $7 in repairs.”

Another LMC priority is to create funding to help cities pay for work like moving utilities or reconstructing inter¬sections after state or county roads within their boundaries are rebuilt. A provision in the failed bonding bill included a fund to deal with that issue. The Legislature could put as much money as it wanted into that “local cost participation” account, with competitive grants distributed by the state transportation department.

Water infrastructure needs
Last year’s bonding bill also included significant funding for water infrastructure, says League IGR Representative Craig Johnson. The governor had recommended $167 million for water infrastructure projects, an amount that was lowered to $154 million in the House version of the bill. That bill failed to pass the Senate before the midnight deadline.

Those amounts were higher than in the past, and had been pothole with snowboosted to help communities meet more stringent environmental requirements. Even more expensive requirements are coming, says Johnson, adding that some cities are at crisis points with water systems that date back to the 1930s.

“Because the bonding bill didn’t pass, we didn’t even get what we normally get,” Johnson says. “This would have been by far the most supportive funding for cities at a time when systems are wearing out.”

Small communities simply can’t do such expensive work without help, he says. A 2016 state survey of cities placed the projected need for wastewater improvements at over 1,350 projects costing $4.2 billion.

Opportunities lost
Frazee (population 1,400) is one of the cities that had to delay a major water, sewer, and street project because there was no bonding bill. The city would have received a low-interest loan to pay for the $652,000 project. Mayor Hank Ludtke says the city was eager to move forward because project estimates had come in 30 percent lower than expected, and firms were eager for the work.

“That won’t happen again,” he says.

The project would have meant that 90 percent of Frazee had gotten updated water and sewer service in the last 20 rusty water pipeyears. Ludtke says he worries about old water pipes that are not adequate in winters when frost seems to reach deeper in the ground. Two years ago, the city had to rip up streets when water pipes burst.

“We are very careful with what we do with other people’s money,” he says. “We want to make sure that what we do lasts.” In Currie, Short has the same concerns. Had water initiatives been funded last year, Currie would have received $2.8 million for sewer projects and an additional $1.3 million to upgrade substandard water lines.

Until the 1970s, Short says, Currie’s sewage was pumped into drainage ditches that ran into the Des Moines River. A sanitary sewer system was added, but the ditch system was never closed, was neglected, and needs to be repaired.

Those projects are important not only to preserve water quality in an area of lakes and rivers, but to aid economic development in an area that attracts tourism, Short says.

He says he will once again lobby at the Capitol for infrastructure funding. Frazee’s Ludtke will, too. “We’re going to be back down there after the session starts, knocking on doors, talking to people, and letting them know that this idea of Washington gridlock coming to Minnesota is bull,” Ludtke says. “As citizens of the state, we will not put up with it. We must work together.”

Mary Jane Smetanka is a Minneapolis-based freelance writer.

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