6.3. SR 07-10-2006 - Laserfiche WebLink

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City of Elk River REQUEST FOR COUNCIL ACTION Agenda Section Meeting Date W orksession ul T 10, 2006 Item Description Discussion on Funding Street Improvements Through Special Assessments and Pro er T Tax Le"\ r Item Number 6.3. Prepared by Lori ohnson, Ci Administrator Reviewed by Introduction The City Council asked staff to provide information on the use of special assessments and property taxes for funding street impro~lelnent projects. Discussion Currently, the city funds street impro'vements through both property tax levies and special assessments. Ivlaintenance, including sealcoating, is funded by the General Fund through the property tax levy. The Street Rehabilitation Program is funded partially by special assessments with the remainder funded by resel\Tes and a debt service tax levy used to repay the bonds issued to fund the project. Overlay projects are funded entirely tllfougll special assessments to the benefiting properties. Elk River is sunilar to otller cities in that they often use a combination of assessments and tax revenue to fund improvements. City Engineer Terl)T IYfaurer has information from 1:\vo cities that l1ave recently completed sUl'leys on ho\v cities fund street impro\Tements. Of the 26 metropolitan cities sUIyeyed, all 26 assess all or a portion of tlleir street improvements to benefiting property o\vners. lYIost cities assess because tlle property o\vners \VI10 are benefiting from the improvements are the ones \vho are paying for the impro\Tement. The city's goal is to maintain the streets so that the useful life of the street is maxitnized, \vllic11 lneans tllat sealcoating and overlays need to occur on a regular schedule. The ability to assess for o\Terlay projects provides that opportunity \vhen le'v.y limits and political desires to limit levy increases may otllel"\vise delay the needed improvements. The League of :tYlinnesota Cities (LIvIC) recently did a study on funding street improvements. The LIvIe's report states, "special assessments are often preferable to financing road impro\lements \vith general property tax levies or bonding because tl1ey are 'vie\ved as a more equitable \vay to distribute the cost to those who benefit the most, \vhile lninitnizing tl1e delnand on the city tax lev.y and statutory debt limits." In an environment of le"vy limits, the LIvre report states, "the affect of le\ry limits on transportation investments is that city officials have had to be \Tery selecti'Te in determining which projects and programs are appro'Ted and incorporated into capital itnprovement and maintenance plans." In general, bodl the LIvIe report and survey information support levying special assessments for at least a part of the street unpro\jel1lent cost. The burden of placing all street impro\Tements on the tax levy \vould limit tlle number of impro\Tements that could be done eacll year. Financiallmpoct None s: \ Council\Lori\200G \Street Improyement Funding.doc