Agenda - Council Work Session - 05/12/2020

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City 2 Upon talking with officials from City 2, little funding towards road maintenance and infrastructure came from their general fund, only accounting for 3%. Capital improvement bonds and competing for national and international grants added another 10% for funding towards roads. Special revenues and franchise fees, in particular, were identified as the main funding mechanisms for the road infrastructure, attributing for 85% of these efforts. The attractiveness of franchise fees for City 2 began in 2016 after an 18-month public outreach campaign. The city council and administration initiated this in order to discover new ways for moving forward in funding the road infrastructure efforts. Special assessments were used prior but not favored by the local population, so a type of "pay as you go" approach where equal fees were paid by all residents was desired; which franchise fees were able to achieve. With a balanced political spectrum, there have been no issues with franchise fees and City 2 views that they will continue to use this method for road funding needs in the foreseeable future. City 3 City 3 uses special assessments, general revenue, franchise fees, MSAS funds, and other special revenues to fund its roads. Of the approximately $7 million spent annually on roads, $1.75 million comes from property taxes, $1 million comes from their franchise fees, $500 thousand comes from a special landfill revenue, and the remaining $3.75 million comes from special assessments and MSAS. City 3 started developing their pavement management plan in 2006 when they saw their roads rapidly declining and budgeting would not keep up with the ongoing costs to repair. The city previously assessed property owners for around 70% of the costs for road repairs; however, given the financial strains on community members, this was becoming increasingly unpopular. Franchise fees, and another special revenue source, appeared as a potential opportunity to raise revenue from everyone who uses the roads at an equal rate. Now, City 3 funds their roads with about 30% special assessments and 70% other sources, reducing the overall burden on their residents. City 4 City 4 uses a combination of general fund revenue, franchise fees, and MSAS funds to cover costs associated with street maintenance and reconstruction. General fund revenue, specifically from the street maintenance budget, covers small and routine maintenance such as annual crack seals, while more involved maintenance and reconstruction projects are funded by franchise fees and MSAS funds. The city's franchise fees are flat rate and added to electric and gas utility bills ($5 to residential electric; $4 to residential gas; and other unknown rates for commercial and other zoned properties based on utility classification). On average, the franchise fee revenues total roughly $1.5 million. In special and rare cases, the city also uses special assessments though this only occurs when properties along a gravel road have requested pavement. The current road funding structure has been in place since 2013 when the city council passed the franchise fee system. Their prior funding structure was based on special assessments which are ending in the next couple of years. Properties who have paid assessments since the franchise fee system was implemented have been reimbursed franchise fees for the life of their assessment. City 5 City 5 has a more balanced approach to how they fund their road infrastructure efforts where assessments (20-30%), capital improvement bonds (30-70%), municipal state aid (if eligible 0- 50%), and other sources (5%) all contribute. City 5 has taken the route of using bonds as their