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HomeMy WebLinkAbout2020-11-17 City Council Work Session Meeting PacketAgenda City Council Work Session City of Edina, Minnesota VIRTUAL MEETING Call 800-374-0221, enter Conference ID 6942078 to listen to meeting Tuesday, November 17, 2020 5:30 PM I.Call To Order II.Roll Call III.Street Funding Task Force Update IV.Adjournment The City of Edina wants all residents to be comfortable being part of the public process. If you need assistance in the way of hearing ampli$cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: November 17, 2020 Agenda Item #: III. To:Mayor and City Council Item Type: Reports / Recommendation From:Chad A. Millner, P.E., Director of Engineering Item Activity: Subject:Street Funding Task Force Update Discussion CITY OF EDINA 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: None INTRODUCTION: The Street Funding Task Force will provide an update on work to date and is seeking feedback on funding options. Attached is a report summarizing work to date. ATTACHMENTS: Description Task Force Report Staff Presentation November 17, 2020 Mayor and Councilmembers Street Funding Task Force Drafted by Chad A. Millner, P.E., Director of Engineering Street Funding Task Force Update Summary: Funding Options for Discussion 1. 50% Special Assessment / 50% Tax Levy Dollars transition over 16-years 2. 100% Tax Levy Dollars transition over 16-years 3. 100% Tax Levy Dollars transition over 5-years Information / Background: Councilmembers and residents have struggled with increasingly large special assessments related to street reconstruction. Those concerns became more apparent during the public hearing for the potential Prospect Knolls A Neighborhood originally scheduled for 2020 street reconstruction. Council voiced an idea to have members of the community study the issue. That took the form of a City Manager task force. The Street Funding Task Force charge was developed and approved by the City Manager. A copy of the charge is included in the appendix. Members of the task force were selected from an application process. The members of the task force are listed below with notation as to whether they have personally experienced a street special assessment. Ann Swenson (chair), Concord Neighborhood (previously assessed) David Alkie, Minnehaha Woods Neighborhood (previously assessed) Chip Howard, Countryside Neighborhood Kathy Kelly, Normandale Park Neighborhood (previously assessed) Hamid Motadi, Prospect Knolls Neighborhood Matt Scherer, Transportation Commission and Indian Hills Neighborhood (previously assessed) Ralph Zickert, Lake Cornelia Neighborhood The task force charge purpose statement was to “develop recommendations for street reconstruction and maintenance funding”. The objective and goals stated “the Task Force will provide recommendations for street reconstruction and maintenance funding and recommend a transition plan from current methods. The STAFF REPORT Page 2 recommendations will be considered by the City Council and changes would be incorporated into an update of the assessment policy”. The task force has conducted 10 meetings thus far meeting approximately one every other week. A vision statement for the work was developed early in the process and reads as such: To develop a funding solution that A) is viewed by a plurality of residents as equitable, B) is able to maintain Edina’s roadways to the City’s standard, and C) is financially and legally sustainable. The task force is seeking feedback on 3 funding options removing all subcut costs year 1 with variations in transition times. The estimates reflect $4M per year need for street reconstruction and 3% inflation per year. The task force has been provided data and discussed the following at their meetings. 1. Data from previous reconstruction projects, 2. Methods of taxation available to raise sufficient funds 3. Funding practices in the surrounding Twin Cities metro area 4. Alternative methods of allocating costs back to residents 5. Fairness and equity issues across alternatives for all residents 6. Legal consultation with the City Attorney From these meetings, the task force has come to understand that: 1. The current method of street assessment is both fair and unfair at the same time. a. It is fair in that all residents are subject to the same rules. b. It is unfair in that a resident may pay significantly more or less based solely on the location of their property due to sub-soil quality (“subcut”) and the need for retaining wall reconstruction on City owned boulevard. c. It is unfair that some people will live 30 or more years in Edina and never experience a special assessment. d. It is unfair that some people will experience more than one special assessment. 2. Edina’s current method of allocating 100% of street reconstruction costs as special assessments is an outlier among the Twin Cities metro communities. 3. Any change to the current system will be unfair to those residents who still reside in Edina and have previously experienced a special assessment. While as individuals on this task force we all have separate feelings on how we feel on tax increases vs assessments; we are interested in hearing from our council/ mayor and then our residents as to how they view these proposals. The task force discussed the fairness of the impact subcuts have on assessments. Assessments to a homeowner can be up to 28% higher on an individual project depending on subcuts. The discussion centered around the randomness of purchasing a property that has bad subsoils, which is something the homeowner would not know. The assessment in this area could be significantly higher than others. But to construct the new street, the poor subsoils need to be addressed. The task force had general agreement on the following items. 1. To no longer have a 100% assessment strategy, no matter how configured. Edina has been an outlier as compared to other cities in this regard. STAFF REPORT Page 3 2. To not use franchise fees as a payment method. Edina already uses franchise fees and we have reason to believe it would be difficult and unacceptable to increase those. 3. To not exceed 50% assessment in any option so that we can better meet the benefit test requirements. It is difficult to prove benefit for all projects at 100% assessment. 4. To use a transition period greater than four years as the impact would be even greater, faster and less acceptable to residents if a shorter transition period was used. 5. To no longer have subcut in the assessment. Funding Options for Discussion Historically, street reconstruction special assessments have averaged $4M per year. Continued reconstruction at that pace will achieve the quality of roadways targeted by the City and is the assumed funding needed going forward. The assumptions with respect to inflation and levy increases have been applied consistently across all options presented. The task force is seeking feedback on 3 alternative funding options with variations in transition time. None of the options recommend keeping the status quo. All the options listed in the table below propose removing subcut costs from the assessments immediately in year 1 of the transition. Staff provided the task force a range of subcut costs. These were $450,000 to $1,125,000 per year. To simplify the analysis and discussion, the funding options below depict a subcut value of $950,000 or 75% of the range. Subcut occurs every year but the scale is dependent on the sub-surface soils. If this concept is supported by council, staff would need to analyze historical subcut costs in more detail to determine a value. Table 1. Funding Option Impacts to Assessments, Levy & Taxes % Reduction in Special Assessments by Year $$$ Increase in Levy % Increase in Levy $$$ Tax Increase to Median Value House (1)(3) % Tax Increase to Median Value House (1)(3) Option # 1 --- 50% Special Assessments / 50% Tax Levy Dollars over 16-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 1.75% $100k -$196K 0.23% $4.01 0.26% Option # 2 --- 100% Tax Levy Dollars over 16-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 5.0% $237K-$489K 0.55% $9.49 0.62% Option # 3 --- 100% Tax Levy Dollars over 5-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 – 5 19.0% $813K-$964k 1.86% $32.47 2.11% STAFF REPORT Page 4 (1) Increase on City portion of property tax levy only. Median Value Home = $551,300 (2) $950,000 is an estimated subcut amount for year 1. This value would cover subcut most years. More historical analysis would be needed to determine what the amount is. Task force would have to determine what to do when subcut is less or more that this amount on a yearly basis. Extra revenue could be considered for street lighting and retaining walls. Advantages and Disadvantage of Funding Options (Not in Ranked Order) Questions to consider when creating advantages and disadvantages. 1. Does it prove or provide benefit? 2. Do we have a policy similar to neighboring communities? 3. What level of impact to taxes does it have on residents? 4. How does it effect current and recently assessed residents? After guidance from the Council, the task force will engage the community to seek comments on 1 or more ideas for street funding. Task force will review the advantages and disadvantages to make sure these are related to what the community thinks versus just the task force. We would expect lots responses from our community as it relates to their individual financial situation. Option #1: 50% Special Assessments / 50% Tax Levy Dollars with 16-year transition 1. Advantages a. Eventually all residents will have some assessments b. Property owner can see what the assessment funds c. Accepted and legal process used by other cities d. 50% funding directly corresponds to specific project costs and location e. Keeps street reconstruction portion of the tax levy lower for all residents than 100% options f. Tax-exempt / non-profits are still part of the funding solution g. Reduction in potential challenges regarding the benefit of improvements 2. Disadvantages a. Long transitions subjects property owners to bare uncertainties with project costs b. 50% of local streets have been completed under 100% Special Assessment Policy c. Recently assessed properties may not support Option #2: 100% Tax Levy Dollars with 16-year transition 1. Advantages a. Stable revenue stream b. Smaller monthly or annual fees instead of large lump sum or 15-year financing c. Collects money from most users of the system STAFF REPORT Page 5 d. No need to prove benefit to property owner e. Gradual movement to 100% tax funded which reduces financial shock to homeowners f. Easy to understand and administer 2. Disadvantages a. Long transitions subjects property owners to bare uncertainties with project costs b. Change in policy doesn’t benefit previously assessed properties c. Greater tax levy amount d. Funds are not directly tied to specific project costs or location after 16-years e. Cannot include tax exempt / non-profit into funding solution. There are 557 tax exempt properties out of 21,344 properties or 2.6%, of which 450 are city properties. f. 50% of local streets have been completed under the 100% Special Assessment Policy Option #3: 100% Tax Levy Dollars with 5-year transition 1. Advantages a. Stable revenue stream b. Smaller monthly or annual fees instead of large lump sum or 15-year financing c. Collects money from most users of the system d. No need to prove benefit to property owner after 16-years e. Easy to understand and administer 2. Disadvantages a. Change in policy doesn’t benefit previously assessed properties b. Greater tax levy amount c. Fast movement to 100% tax funded for those that have recently paid d. Funds are not directly tied to specific project costs or location after 5-years. d. Difficult to include tax exempt / non-profit into funding solution. There are 557 tax exempt properties out of 21,344 properties or 2.6%, of which 450 are city properties. e. 50% of local streets have been completed under 100% Special Assessment Policy f. Other/Future Discussion Topics / More Task Force Work Needed 1. Municipal State Aid Assessment Policy a. Review in more detail after council feedback on the local funding options 2. Street Lighting – Future Discussion Topics a. Quality of Life Issue b. Create City Standard? c. Project area residents determine need or require in all reconstruction areas? i. Require on local streets ii. Require only on MSA streets iii. Require only adjacent to sidewalks d. Is lighting still assessed? 3. Retaining Walls STAFF REPORT Page 6 a. Walls within street reconstruction i. Funded by funding option selected? b. Walls outside street reconstruction i. Underfunded now and funding gap increasing due to age of City walls. 4. Pet Fences, Irrigation Systems, Wood/Chain Link Fences – Things in the ROW a. Require owners to move things out of ROW and repair per ordinance? b. Continue to repair as part of projects? 5. Public Engagement Appendix 1. Street Funding Task Force Charge EDINA ADVISORY TASK FORCE I STREET FUNDING TASK FORCE I CITY OF EDINA Page 1 CITY MANAGER TASK FORCE CHARGE PROJECT: STREET FUNDING TASK FORCE PURPOSE Develop recommendations for street reconstruction and maintenance funding OBJECTIVE / GOALS The Task Force will provide recommendations for street reconstruction and maintenance funding and recommend a transition plan from current methods. The recommendations will be considered by the City Council and changes would be incorporated into an update of the assessment policy. METHODOLOGY - Review current policies and practices of the City - Review policies and practices of other communities - Review available funding tools OUTCOMES - The Task Force is asked to provide City Council a report including recommendations for street reconstruction and maintenance funding along with a transition plan for moving from the current to the new process. The report will support City Staff in updating the assessment policy and developing an implementation plan. TIMELINE March 2020 through March 2021 KEY DATES March 2020 City Council approval of Task Force Charge April-May 2020 Outreach and recruitment of applicants May 2020 City Manager appoints Task Force members November 2020 Task Force presents update to City Council (work session) January 2021 Task Force presents draft recommendations to City Council (work session) February 2021 City Council considers adoption of the recommendations March 2021 Recommendations incorporated into assessment policy COMMITMENT EDINA ADVISORY TASK FORCE I STREET FUNDING TASK FORCE I CITY OF EDINA Page 2 - Appointed members will be asked to fulfill their work until Council considers final recommendations in February 2021 - Appointed members should expect to meet at least monthly with additional off-line work - Appointed members should consider project timeline prior to accepting an appointment MEETINGS - The Task Force will establish their schedule including meeting times and dates as needed to complete the work - Conclusion of work must fall into the indicated timeline - Meetings will be open to the public LEVEL OF AUTHORITY CITY MANAGER The City Manager has the authority to: - Establish and appoint Task Force members - Appoint/remove members - Designate the Staff Liaison and any additional staff support needed - Authorize financial resources - Enter into a service contract with subject matter experts/consultants TASK FORCE The Task Force has the authority to: - Conduct public engagement and collect input using the City’s public engagement protocols - Provide input on the recommendations - Develop a report and make recommendations which will be presented to City Council for consideration TASK FORCE LEADERSHIP The City Manager will designate a member of the Task Force to serve as the Chair and another member as the Vice Chair. The role of the Chair will be to: - Prepare the meeting agenda - Lead meetings and facilitate discussions - Maintain meeting decorum - Encourage participation of all members The Vice Chair will support the Chair as needed and perform the Chair duties if the Chair is unavailable. STAFF LIAISON The City Manager will designate the Staff Liaison(s) to the Task Force. The role of the Liaison(s) will be to: - Support the Task Force Chair in preparing agendas and meeting materials - Provide technical expertise and access to City resources - Relay information from City Manager to Task Force and vice versa - Submit packet materials for City Council review The Task Force will not direct the work of the Liaison(s). EDINA ADVISORY TASK FORCE I STREET FUNDING TASK FORCE I CITY OF EDINA Page 3 RESOURCES AVAILABLE The Task Force will have access to City resources available to other advisory groups (i.e. marketing/communications, meeting supplies, etc.). Other resources may be allocated at the discretion of the City Manager. MEMBERSHIP APPLICATION The City of Edina’s Volunteer Edina program will manage the recruitment, application and onboarding process. CONSIDERATIONS & COMPOSITION The composition of the task force will be up to 7 members with a variety of perspectives, experiences and geographical locations. Composition will include members that have and have not been assessed for street reconstruction. Members must be residents of Edina. The Transportation Commission will select one commissioner to be considered for appointment. Members, Chair and Vice Chair will be appointed by the City Manager. The CITY of EDINAStreet Funding Task Force Update City Council Work Session November 17, 2020 The CITY of EDINA Discussion Topics 1.Funding Options 2.Public Engagement www.EdinaMN.gov 2 Street Funding Task Force The CITY of EDINA Schedule •April – May 2020 Outreach & Recruitment •May 2020 City Manager Appoints Members •November 2020 Task Force Presents Update to Council •January 2021 Task Force Presents Draft Recommendations to Council •February 2021 Council Considers Adoption of Recommendations •March 2021 Update to Assessment Policy / Funding Policy www.EdinaMN.gov 3 Street Funding Task Force The CITY of EDINA City Manager Appointed 7 Members •Ann Swenson (chair), Concord Neighborhood (previously assessed) •David Alkire, Minnehaha Woods Neighborhood (previously assessed) •Chip Howard, Countryside Neighborhood •Kathy Kelly, Normandale Park Neighborhood (previously assessed) •Hamid Mohtadi, Prospect Knolls Neighborhood •Matt Scherer, ETC and Indian Hills Neighborhood (previously assessed) •Ralph Zickert, Lake Cornelia Neighborhood Staff: Don Uram (Finance), Chad Millner (Engineering), Dave Kendall (City Attorney) www.EdinaMN.gov 4 Street Funding Task Force The CITY of EDINA Purpose / Goal •Develop recommendations for street reconstruction funding Vision Statement •To develop a funding solution that A) is viewed by a plurality of residents as equitable, B) is able to maintain Edina’s roadways to the City’s standard, and C) is financially and legally sustainable. www.EdinaMN.gov 5 Street Funding Task Force The CITY of EDINA Funding Options 1.50% Special Assessment/50% Tax Levy Dollars transition over 16-years 2.100% Tax Levy Dollars transition over 16-years 3.100% Tax Levy Dollars transition over 5-years Subcut 1.Up to 30% impact on assessments 2.Fairness by location of property www.EdinaMN.gov 6 Street Funding Task Force The CITY of EDINAStreet Funding Task Force www.EdinaMN.gov 7 The CITY of EDINA 1. 50% Special Assessment/50% Tax Levy Dollars transition over 16-years www.EdinaMN.gov 8 Street Funding Task Force % Reduction in Special Assessments by Year $$$ Increase in Levy % Increase in Levy $$$ Tax Increase to Median Value House (1)(3) % Tax Increase to Median Value House (1)(3) Option # 1 --- 50% Special Assessments / 50% Tax Levy Dollars over 16-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 1.75% $100k -$196K 0.23% $4.01 0.26% The CITY of EDINA 1. 50% Special Assessment/50% Tax Levy Dollars transition over 16-years Advantages a.Eventually all will have some assessments b.Property owner can see what the assessment funds c.Accepted and legal process used by other cities d.50% funding directly corresponds to specific project costs and location e.Keeps street reconstruction portion of the tax levy lower for all residents versus 100% options f.Tax-exempt / non-profits are still part of the funding solution g.Reduction in potential challenges regarding the benefit of improvements Disadvantages a.Long transitions subjects property owners to bear uncertainties with project costs b.50% of local streets have been completed under 100% Special Assessment Policy c.Recently assessed properties may not support www.EdinaMN.gov 9 Street Funding Task Force The CITY of EDINA 2. 100% Tax Levy Dollars transition over 16-years www.EdinaMN.gov 10 Street Funding Task Force % Reduction in Special Assessments by Year $$$ Increase in Levy % Increase in Levy $$$ Tax Increase to Median Value House (1)(3) % Tax Increase to Median Value House (1)(3) Option # 2 --- 100% Tax Levy Dollars over 16-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 5.0% $237K-$489K 0.55%$9.49 0.62% The CITY of EDINA 2. 100% Tax Levy Dollars transition over 16-years Advantages a.Stable revenue stream b.Smaller monthly or annual fees instead of large lump sum or 15-year financing c.Collects money from most users of the system d.No need to prove benefit to property owner after 16-years e.Gradual movement to 100% tax funded which reduces financial shock to homeowners f.Easy to understand and administer Disadvantages a.Long transitions subjects property owners to bear uncertainties with project costs b.Change in policy doesn’t benefit previously assessed residents c.Greater tax levy amount d.Funds are not directly tied to specific project costs or location after 16-years e.Cannot include tax exempt / non-profit into funding solution. There are 557 tax exempt properties out of 21,344 properties or 2.6%, of which 450 are city properties. f.50% of local streets have been completed under the 100% Special Assessment Policy www.EdinaMN.gov 11 Street Funding Task Force The CITY of EDINA 3. 100% Tax Levy Dollars transition over 5-years www.EdinaMN.gov 12 Street Funding Task Force % Reduction in Special Assessments by Year $$$ Increase in Levy % Increase in Levy $$$ Tax Increase to Median Value House (1)(3) % Tax Increase to Median Value House (1)(3) Option # 3 --- 100% Tax Levy Dollars over 5-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 19.0% $813K-$964k 1.86%$32.47 2.11% The CITY of EDINA 3. 100% Tax Levy Dollars transition over 5-years Advantages a.Stable revenue stream b.Smaller monthly or annual fees instead of large lump sum or 15-year financing c.Collects money from most users of the system d.No need to prove benefit to property owner after 5-years e.Easy to understand and administer Disadvantages a.Change in policy doesn’t benefit previously assessed properties b.Greater tax levy amount c.Fast movement to 100% tax funded for those that have recently paid d.Funds are not directly tied to specific project costs or location after 5-years. e.Difficult to include tax exempt / non-profit into funding solution. There are 557 tax exempt properties out of 21,344 properties or 2.6%, of which 450 are city properties. f.50% of local streets have been completed under 100% Special Assessment Policy www.EdinaMN.gov 13 Street Funding Task Force The CITY of EDINA Other Topics •Municipal State Aid Policy •Street Lighting •Retaining Walls •Pet Fences, Irrigation Systems, Fences – things in ROW www.EdinaMN.gov 14 Street Funding Task Force The CITY of EDINA Discussion Topics 1.Funding Options 2.Public Engagement www.EdinaMN.gov 15 Street Funding Task Force The CITY of EDINA www.EdinaMN.gov 16 Street Funding Task Force % Reduction in Special Assessments by Year $$$ Increase in Levy % Increase in Levy $$$ Tax Increase to Median Value House (1)(3) % Tax Increase to Median Value House (1)(3) Option # 1 --- 50% Special Assessments / 50% Tax Levy Dollars over 16-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 1.75% $100k -$196K 0.23% $4.01 0.26% Option # 2 --- 100% Tax Levy Dollars over 16-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 - 16 5.0% $237K-$489K 0.55% $9.49 0.62% Option # 3 --- 100% Tax Levy Dollars over 5-years Year 1 24.0% $950k (2) 2.26% $37.90 2.46% Year 2 – 5 19.0% $813K-$964k 1.86% $32.47 2.11%