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4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
PRESENTED BY:
AGENDA ITEM:
GOAL AREA AND
OBJECTIVE:
DISCUSSION:
FEBRUARY 19, 2019
5H
MICHAEL PLANTE, CITY MANAGER
MICHAEL PLANTE
CONSIDER APPROVAL OF A RESOLUTION SUPPORTING LEGISLATION
AUTHORIZING INFRASTRUCTURE DEVELOPMENT FEES
High-Value City Services
6. Seek community engagement through a variety of communication methods to
reach all residents.
Introduction
The purpose of this agenda item is to request that the city council adopt a
resolution urging the state legislature to adopt a statute which will provide legal
authority for local government entities to charge infrastructure development fees.
History
For years cities have recovered the costs for infrastructure through infrastructure
developmemt fees. The state legislature has passed laws allowing for cities to
charge for sanitary sewer, storm sewer, water and parks fees and the expectation
was that the same was true for street fees.
But recently the supreme court ruled in Harstad v City of Woodbury that local
government entities do not have the authority under existing statute to charge
infrastructure development fees.
To some cities like Prior Lake this ruling has meant a great deal since the ultimate
transportation system for the community is not yet constructed. In the case of Prior
Lake, it is estimated that the city will experience as much as a $26 million shortfall
if the infrastructure development fee continues to be prohibited.
Under the city’s current ordinances, developers pay for the infrastructure required
to serve the needs of their subdivisions. Sewer, water, storm water and even
neighborhood roadways are installed to the city’s specifications by the developer
who recovers his costs through selling the land and building homes.
What these fees do not reimburse is the indirect roadway costs caused collectively
by community development. That is what the infrastructure development fee is
intended to do.
Current Circumstances
The city council desires that development pay for itself to the extent possible.
Without the street impact fee, there is a “hole” in the city’s ability to pay for the
ISSUES:
FINANCIAL
IMPACT:
major elements of the transportation system. The intersection at Revere and
County Road 21 is an example of a transportation intersection improvement which
would be funded in part by the infrastructure development fee.
To address the supreme court’s action the city is taking several steps. The city has
contracted with a consulting firm to more specifically identify the costs which must
be recovered to make the city whole. The report from that study is expected late in
April. Once received the city council will consider its options for reinitiating the
infrastructure development fee.
In the meantime, the city intends to take cooperative action with other similarly
situated cities. The attached resolution is a first step. Adopted resolutions will be
forwarded to the city’s legislative delegation
The resolution represents a statement of city position. City council members have
helped to refine this document which was originally provided by the League of
Minnesota Cities. The staff made a minor change to the first three “Whereas”
clauses for emphasis purposes.
We hope that when our legislators clearly understand the city’s financial situation
and legislative position that they will lend a hand.
New Governor Walz’s administration has adopted a platform of “One Minnesota.”
In his inauguration speech the governor repeated his commitment to helping
cities. It is our hope that by forwarding this resolution to the governor as well that
we can receive that support.
Without the infrastructure development fee or something similar Prior Lake may
be unable to build the transportation system essential to serve our community at
build out. This could mean that the city must consider some other form of fee or
some action to slow or halt development—neither of which is a desirable
alternative.
ALTERNATIVES: 1.Motion and second at part of the consent agenda to adopt a resolution
supporting legislation which would authorize infrastructure development fee.
2.Motion and second to remove this item from the consent agenda for additional
discussion.
RECOMMENDED
MOTION:
Alternative #1
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 19-029
RESOLUTION SUPPORTING LEGISLATION AUTHORIZING
INFRASTRUCTURE DEVELOPMENT FEES
Motion By: Second By:
WHEREAS,
WHEREAS,
WHEREAS,
the City of Prior Lake’s population is growing; and,
the City of Prior Lake’s existing street infrastructure is sufficient to support the
current community population, workforce and commercial/industrial parks; and,
developers, builders and new homeowners are driving the need for road
improvements, street oversizing, street redesign, and street reconstruction; and
WHEREAS, municipal statutory authority appropriately exists for fees related to parks, sewer
and water; and
WHEREAS, this municipal statutory authority does not exist for infrastructure development fees;
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, 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 larger streets and intersections to support new developments
have historically come from infrastructure development fees; and
WHEREAS, the infrastructure development fee mechanism 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 Council of the City of Prior Lake 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
2
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 PRIOR LAKE,
MINNESOTA that this Council supports legislation that would authorize cities to levy
infrastructure development fees to fund municipal street improvements as a necessary
component of growth.
Passed and adopted by the Prior Lake City Council this 19th day of February 2019.
VOTE Briggs Thompson Burkart Braid Erickson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Michael Plante, City Manager