Agenda - Council Work Session - 05/12/2020

Home

Obiective 2: Understand why cities fund the way they do to better assess how various options may fit into the context of Ramsey. Throughout the interviews and surveys, respondents discussed a variety of reasons for their City's current road funding structures. Below are a number of key themes that highlight how the cities in our sample rationalize their funding structures: City l City 1 expressed wanting to keep the assessment rate reasonable so that property owners are not surprised with large bills. It creates less "sticker shock". While assessment rates increase on average by 3% per year (tied to the Construction Cost Index), the city council pushes back on additional assessment increases. Interviewees also mentioned that once a special assessment framework is established it is hard to make changes since residents may feel the process is not fair. City 2 City 2 had used special assessments for a long period of time, but city officials identified that it was not popular among the local population. Utilizing a public outreach method in 2016, they identified that citizens were looking for something more relatable to a "pay as you go" system, or equity for everyone in road usage. Franchise fees were the best way in order to meet these needs and have been positively received. City 3 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. City 4 City 4 stated that their street funding structure made financial sense. Their franchise fee system was projected to be the most cost-efficient funding tool compared to special assessments, capital bonds, and other funding sources. Their fee rate was set so that the city can adequately cover costs associated with a 60-year road. And, the city considered how feasible its plan would be bringing it to the public. They settled on franchise fees because the tool spread out the financial burden across city residents instead of burdening some residents a lot through assessments and all residents through debt service. City 5 City 5 leaned forward with using bonds as their new funding model in 2018 for road infrastructure. This is likely due to the political makeup of the city, which is very sensitive to tax increases and why little to no consideration is given to new funding mechanisms. Since using bonds as the primary funding source is new, it is too early to determine whether or not it's an effective funding model as the City Council is still evaluating the results.