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HomeMy WebLinkAboutBudget Advisory Commission - 08/26/2008 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY,AUGUST 26, 2008 7:00 PM, CITY CENTER 8080 Mitchell Road, Eden Prairie, MN Heritage Room COMMISSION MEMBERS: Don Uram(Chair), Katherine Kardell (Vice Chair), Richard (Rick) King, Jon Muilenburg, Richard (Dick) Proops, Gwen Schultz CITY STAFF: Sue Kotchevar(Finance Manager), Tammy Wilson (Finance Supervisor), Gene Dietz (Public Works Director), Rod Rue (Asst. City Engineer), Randy Newton (Traffic Engineer), Angie Perschnick (Recording Secretary) I. ROLL CALL/CALL THE MEETING TO ORDER Chair Uram called the meeting to order at 6:58 PM. Commissioners King and Proops were absent. Kardell moved and Muilenburg seconded approval of the agenda. II. MINUTES A. BAC MEETING HELD TUESDAY,JULY 29, 2008 Uram determined that the minutes would be held over to be approved at the September meeting since only three BAC members from the July meeting were present. III. CHAIR AND STAFF ADMINISTRATIVE ITEMS Kotchevar noted that the next BAC meeting will be held on September 23, and the topic will be utility infrastructure. She also stated that the June quarterly financial report will be posted on the web site soon. IV. BAC COMMENTS A. REVIEW/FINALIZE SUMMARY COMMENTS FROM THE JULY 29, 2008 MEETING The BAC decided to hold over any comments from the previous meeting until the September meeting because only three BAC members from the July meeting were at the August meeting. Eden Prairie Budget Advisory Commission August 26, 2008 Page 2 V. STAFF PRESENTATION AND BAC QUESTIONS A. STREET AND ROADWAY CAPACITY IMPROVEMENT Gene Dietz presented information regarding the five year CIP requests for street and roadway improvements. He also reviewed unmet funding needs and described the funding strategies used by Public Works. He defined transportation projects as capacity improvements and converting rural roads to urban projects. The GTA (Golden Triangle Area) and the MCA (Major Center Area) projects still have their funding under review. The MSA (Municipal State Aid) is the only stable source of funds for the City's transportation system. This is gas tax money, which typically amounts to $1.6 - $1.7 million annually. This funding source may become less stable as gas prices increase and consumers purchase less gas in response. Kardell asked if the MSA money is kept specifically for the transportation division in the CIP. Dietz indicated that it is, but they have a stipulation that they have to use the allotment within three years. Some projects, such as the Pioneer Trail expansion, are delayed for various reasons. Dietz explained that he needs to plan extra spending to make sure they spend the money in case some projects do not happen. There are enough road projects that are backlogged to fill in the gaps. If another source of funding is available besides the transportation fund, they will use that other source. The transportation fund is geared for projects with no other funding source. Most of the City's roadways are MSA eligible, but some are not (only 20% are on the state aid system). If they have more income than is needed, money goes into the transportation fund. On a reimbursement basis, they can collect 95% of the cost of a project plus the engineering cost in advance. The rest of the money is collected from MSA much later. No money is received in interest income for the City (the state of Minnesota is the entity that earns the interest income on MSA money). Municipal State Aid bonds could be sold if needed (they could pledge 60-65% of the income). Schultz asked which roads City residents are paying for through taxes. Residents are not paying for the assessments, and SSDs (Special Service Districts) and developers pay for part of the costs for some roads. Dietz said that the amount of money for transportation in the CIP that is from taxes is low (around $100,000). Schultz asked which funds they know they will receive from the funding source summary page. Dietz said that the summary provides their best estimate of the funds they will receive each year. The funding is expected to be available. The biggest chunk of their expenses for the next five years is the 494/169 project in 2012, and $200 million is the total for all of these projects. Based on projected projects, Dietz is expecting a funding gap of almost $20 million by 2013. If we look fifteen years out, the funding gap increases to Eden Prairie Budget Advisory Commission August 26, 2008 Page 3 $50 million. The 25 year forecast for projects that are identified and planned is $140 million. They know,however, that not all projects will happen. At the September 16 Council workshop, Dietz will present this information to the City Council. Dietz is now beginning to identify the shortfalls in funding upcoming projects and what to do about it. The process of completing planned projects is slow, and often the timeframe is moved back several times before projects are completed. Dietz walked the BAC through the funding/expenditure assumptions his group has made. They include: (1) steady MSA receipts, (2) steady gas sales, (3) no inflation, (4) project estimates in 2008 dollars, (5) excludes CIP pavement management projects/funding, (6) collector and arterial roads only (no residential streets), and (7) January 2009 MSA and Transportation Fund balance of $6.8 million. The intent of the MSA system is for each City to spend money on its own City streets. The best they can do is to give some money for county and state projects. $3.5 - $4 million is Eden Prairie's share for Highway 212. According to Dietz, there is no state leadership supporting spending on transportation. As a result, most cities are looking for multiple sources of funding. In the past year, they have seen huge drops in gas spending. Full access to 494 and Flying Cloud Drive involves 5 bridges, and a lot of pavement for proper distance and spacing. MNDOT probably will not help with this. There is currently $30 million in the budget for the MCA projects,but Dietz estimates it will be closer to $50 million. Transportation funding sources currently include Municipal State Aid (MSA), special assessments, agency or inter-jurisdictional sources, private sources, and Tax Increment Financing (TIF). Dietz explained that they need to look at other funding sources going forward to meet transportation needs, including the Capital Improvement Fund, a transportation utility, Special Service Districts (SSDs), and/or a tax levy. Dietz is particularly interested in the possibility of a transportation utility fee that could be added to residents' monthly water bills. That would provide a steady source of funding, but the option is not currently available until changes occur in the state legislature. The rules on SSDs are very difficult(most businesses in the district must agree to support the project), so they are not used often. Schultz asked what happens to the $3 million (in federal funding) if it is not spent by September 2008 given the "use it or lose it" rules Dietz mentioned previously. Dietz said the money and project may be gone, or at least the project would be delayed in that case. Kardell asked about the other cities' contributions for the 494/169 project. The City of Eden Prairie paid $3 million towards the project, and $4 million was collected from Bloomington and Edina. The Singletree Lane & 781h Street realignment project will be delayed indefinitely. It has been opposed by Target (and therefore the Eden Prairie Eden Prairie Budget Advisory Commission August 26, 2008 Page 4 Center), so a decision was made by the Council not to pursue the project when it was originally scheduled. In recent years, developers have been required to fund some portion of roads and traffic signals that are needed as a result of their development projects. Development typically has to pay its way. Muilenburg asked if the City could save money if they try to improve traffic flow by using on-demand traffic light timing. Newton explained that they are already optimizing all Eden Prairie stop lights as best they can. All Eden Prairie stoplights are on the actuated or on-demand timing system. In addition, the City did a project with MNDOT a couple of years ago to improve light timing specifically on highway 212. A non-stop ride is not feasible in all directions, but high traffic areas are optimized as much as possible. Certain intersections are very difficult because of high traffic in all directions, such as Flying Cloud Drive and Prairie Center Drive. Rue said that adding double left turn lanes can make a big difference in traffic efficiency, but that is an expensive option also. Newton added that some advancements in technology are available, but generally it is labor-intensive to make things work better. Also, traffic flow changes over time, and they need to monitor many areas regularly to see where changes are needed. Muilenburg said it sounds like they are doing everything they can to optimize the efficiency of stoplights in the Eden Prairie. Newton agreed that they are based on the current technology, and he explained that timing all of the lights together makes each light less responsive to traffic backups that occur. It may make sense to collect more data and retime the signals in 3-5 years since traffic patterns change over time. Uram asked how Dietz justifies projects (if there is a model or process he uses). Dietz responded that there is a regional model for traffic systems. They plugged data into the model and are able to model growth and gather information on service levels (capacity). Every two years, they count traffic as part of their municipal state aid system requirements to determine where capacity problems are showing up. Projects are identified based on when traffic is expected to be over capacity. The Metropolitan Council maintains a model for regional roadways. Eden Prairie modifies this technical model for our city. Hennepin County uses its own model. A consultant is hired to run the model since it is very technical. Uram asked how priorities are determined. Dietz said it is based on demand and where things are happening. Residential requests are also factored together with accident data, and it all combines to create a traffic plan. Rue said the 5 year CIP requests are their work plan. Projects are moved around at times (forward or back) based on ongoing changes in priority. It was noted that most of the transportation projects scheduled between 2009 and 2013 are capacity problem projects. Uram asked about the project for Highways 4 & 5. It will be an expensive project, and they aren't sure how to best fix the problem. The City is waiting to see if the Highway 212 project fixes some of the problems in that area by rerouting traffic. Eden Prairie Budget Advisory Commission August 26, 2008 Page 5 VI. BAC ANSWERS CRITICAL QUESTIONS AND FORMULATES COMMENTS A. CRITICAL QUESTIONS 1. Were the projects adequately described? Was the need for the projects justified? 2. Where appropriate, is there a systematic method for identifying projects and costs? Was the condition of current assets including the projected need for repair or replacement and the likely demand for the improvement considered? 3. What is the funding outlook for these projects? 4. Does the BAC have recommendations in this area including budgetary and operational changes? What are the recommendations and why? In response to questions 1 and 2 above, Kardell said there was a good description of how needs are determined. Schultz said the answers given to the BAC's questions helped the BAC to understand the projects. In response to question 3, it was noted that so much of the funding is driven by groups besides the City, and the funding outlook is murky. The question was raised about whether or not the BAC should become involved in SSD issues. Kardell noted that these improvements will benefit the businesses in the districts,but they may not want to fund it. Kardell also noted that the CIP money should be limited for these types of projects. Dietz said there is a need for a more stable funding source (a bigger levy may be needed). Muilenburg agrees that there is a need for the projects and the necessary funding. He asked if the funding mechanism is open for question. He asserts that the onus should be on the SSDs since the businesses benefit more than residents. Some residents do not go to specific business areas of the City, so they do not benefit from improvements in those areas. Muilenburg said that there will be pushback from City residents for a transportation utility fee that benefits businesses. Dietz notes that residents also benefit since they are the ones driving to the businesses to shop, work, etc. Dietz sees that there is a benefit to all of us to improve roads. He also notes that more money is needed in the system, and businesses and people should pay for their part of the projects. Dietz would like to have a stable source of funding either from taxes, a transportation utility, or the CIP. Since CIP funding was decreased significantly last year, there are concerns about this as a possible stable source of funding. The MSA funding level for the last seven years has generally remained flat (between $1.6 - $1.7 million), although there was an increase this year over previous years (the total received this year was approximately $1.7 million). Eden Prairie Budget Advisory Commission August 26, 2008 Page 6 Since the population of Eden Prairie has grown at a significant rate during this same time period, the same size pie is split among more cities. In addition, $4 per gallon gas is causing a decrease in revenue. Muilenburg asked if there is a decreased load on the transportation system that would be commiserate with the decrease in gas consumption. Dietz said that has not happened yet. Eden Prairie is a prosperous City, and it is a gateway for many other communities. A toll system is not currently an option, but Eden Prairie is one of the communities that would benefit from that since we have so many residents of other cities traveling on our roads. In response to question 4, the BAC said it looks like Public Works is doing what it can to improve traffic flow. If SSDs have to pay for roadwork, these businesses may increase their costs to compensate. Muilenburg thinks this would be fine since that is essentially a user fee for people who are using those businesses and areas. The BAC was put together to review staff's proposals before they go to the City. Dietz would like for the BAC to support to the City Council that they need to establish a stable source of funding for transportation. Kardell would like to hear the outcome of the Council workshop meeting where Dietz will present transportation information. Uram said the BAC would like to make the recommendation to the City Council to establish or designate a stable source of funding for transportation. VII. COMMENTS All comments have been noted in the previous section. VIII. ADJOURNMENT The meeting ended at 8:34 PM. Schultz moved and Muilenburg seconded the motion to adjourn. The next meeting is scheduled for Tuesday, September 23, 2008.