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2.d. Legislative Policies
CITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR DISCUSSION COMMITTEE OF THE WHOLE MEETING DATE: JANUARY 14, 2004 AGENDA: 2004 LEGISLATIVE POLICIES AGENDA SECTION: DISCUSSION PREPARED BY: JAMIE VERBRUGGE, CITY ADMINISTRATOR AGENDA NO: ATTACHMENTS: LMC 2004 Legislative Policies; City of Rosemount APPROVED BY: Legilsative Items (November 2003) The 2004 Session of the Minnesota Legislature convenes in February. Being the second year of the legislative session,.the Legislature will be focused primarily on passage of a capital bonding bill. There is unlikely to be consideration of spending or tax bills of any significance. However, as with any session, there are certain to be many issues that are at least introduced for discussion, if not outright passage. In November 2003, Mayor Droste, Council member Strayton and the city administrator met with Rosemount's legislative delegation to talk about issues of importance to the community. A number of legislative issues were among those discussed at the meeting. Staff requests that the City Council review the attached materials in advance of the January 14 meeting. Staff is interested in soliciting Council direction to prioritize issues that will be given the most attention and effort at the Legislature. Staff also encourages discussion of items that may not be addressed in either of the attached documents. Following direction from the Council, it is staff s intent to have legislative priorities on the January 20 City Council agenda for formal consideration. RECOMMENDED ACTION: DISCUSSION OF 2004 LEGISLATIVE POLICIES. COUNCIL ACTION: r CITY OF ROSEMOUNT LEGISLATIVE MEETING NOVEMBER 18,2003 INDEX Topic Page Great River Energy Power Plant .................... 1 Aggregate Tax ... ............................... 1 Metropolitan Council Livable Communities Program.... 1 Tax Increment Financing .......................... 2 Transportation Funding ............................ 2 Air Cargo Regional Distribution Center. ............... 2 Postal Facility .... ............................... 3 MCES Issues ..... ............................... 3 Open Space Preservation .......................... 3 Local Government Aid ............................ 4 Levy Limits ....... ..............................4 Reverse Referendum .............................. 4 St. Joseph Catholic Church ......................... 4 CITY OF ROSEMOUNT Community and Legislative Interests —November 18, 2003 Great River Energy power plant Great River Energy (GRE) received a personal property tax exemption from the 2003 Legislature to construct a 600 MW combined -cycle natural gas- burning power plant in Rosemount. The City of Rosemount passed a resolution of support for the requested exemption, providing that GRE enter into a host agreement that includes a host fee. GRE has since notified City and County officials that the project scope is being revised so that GRE will likely be pursuing two smaller gas- burning peaking plants. Because the legislation was very specific to the type of facility, GRE will require new legislation to grant the revised project a similar personal property tax exemption. At this time, the City has not reconsidered its support of GRE's proposal. GRE has indicated that it would like to pursue a host agreement in advance of the 2004 Legislature. Staff will be meeting with GRE to review the revised project financial numbers and to negotiate a host agreement. City staff has been coordinating with County staff on this project. Aggregate Tax The City of Rosemount is interested in supporting legislation that would establish an aggregate tax on gravel mining to host communities. It is our understanding that the gravel mining industry is not opposed to such a tax, so long as it is uniformly applied across the region. The concern is that special legislation on a community -by- community basis would create an unlevel playing field and competitive disadvantage. The City recognizes the importance of aggregate as a resource. It is believed that the establishment of such a tax benefiting local communities would incent cities to allow more gravel mining. The harvesting of aggregate in the metro area is especially important to hold the line on escalating road improvement and other construction costs. Should communities allow available aggregate sites to be developed before the resource is harvested, gravel mining will be forced away from the metro area and will thereby increase (through excessive transportation needs) the cost of aggregate — driving up road construction costs. The City of Rosemount does not have mining operations approaching, for example, what Apple Valley has experienced. However, there are several active permits and likely more opportunity in currently undeveloped areas. The gravel tax is also one way for some communities to diversify revenue alternatives, while spreading the cost over a very large base, and still providing a regional benefit. Metropolitan Council Livable Communities Program The City of Rosemount will actively be pursuing revitalization efforts of its downtown area. The City was the recipient of a $50,000 opportunity grant from the Met Council Livable Communities Demonstration Account this year (with support from our legislators — thank you!). It is likely in the next funding cycle that Rosemount will be pursuing LCDA Development Grant funding to assist with redevelopment. The continued vitality of the downtown area will be a key component to providing balanced and well - managed growth of the community. This is top priority issue for the City Council. Legislative support to maintain the Met Council Livable Communities program would be very beneficial to the future efforts in Rosemount. Tax Increment Financing The redevelopment of the downtown area will require some level of public assistance, most likely through tax increment financing. Recent legislative amendments of TIF statutes have gone a long way to limit the abuses that were occurring in some communities to unfairly use TIF when not appropriate. The City is concerned that future legislative evaluation of TIF adequately balance the concerns of local government. TIF is one of the few remaining programs available to communities to help in the process of stabilizing cities through reinvestment. Transportation Funding The issue of transportation funding is crucial to developing communities. The City Council previously supported study findings that encouraged the Legislature to look at alternative funding mechanisms for transportation needs including impact fees, transportation utilities and local option gas taxes. The City has not taken a specific position in regard to any of the options, but will be working closely with Dakota County and other cities to see that MSA and metro area highways are sufficiently funded. There are several areas of concern in Rosemount. At the top of the list is the future reconstruction of the intersection at Highway 52 and County Road 42. The County transportation plan proposes to reroute the northeast Rosemount segment of Highway 55 along County Road 42. The intersection of 52/42/55 is in need of improvement and will require upgrade to accommodate the 55 reroute. This project has not been funded thus far. The City will be working with the County to pursue MnDOT and federal funding commitments. Another area of concern is mounting traffic levels on Highway 3. The road has been designated as "preserve" status by MnDOT. That means that no future expansion or improvement is forecasted, only maintenance of the existing road section. Staff is concerned that continued development south of Rosemount in Farmington and Empire Township, in addition to projected growth in Rosemount, will build pressure and will create unsafe conditions. At the very minimum, staff will be pursuing MnDOT funding to assist in signalizing especially dangerous intersections — which may include the Rosemount High School entrance, Connemara Trail and McAndrews Road. Air Cargo Regional Distribution Center Staff has met with representatives of the Metropolitan Airports Commission, MnDOT Office of Aeronautics, and Greater Metropolitan Area Foreign Trade Zone to consider locating the proposed air cargo regional distribution center (RDC) in Rosemount. County staff and Commissioner Branning have also met with the project proponents. The RDC 2 concept is intended to staunch the flow of international air cargo distribution to other ports, most prominently Chicago O'Hare Airport. By co- locating cargo distribution operations, it is projected that cargo operators will expand international destinations direct from MSP International Airport. This would have a significant economic benefit to the State of Minnesota. Rosemount is interested in pursuing the RDC in the southeastern portion of Rosemount, east of Highway 52 and south of County Road 42. The project proponents of RDC are also interested in expanding development around the RDC to include a sizeable industrial and business park. There is apparently draft legislation to give the RDC similar incentive status as the recently enacted JOBZ zones. Although staff has not had an opportunity to review the draft legislation as yet and has not taken a position on the issue, the City is interested in pursuing this as an economic development initiative that could provide tremendous benefit to the City and County in terms of jobs and tax base diversification. Postal Facility The City of Rosemount has been active in discussions to relocate the USPS St. Paul distribution facility. The same area as that discussed above is targeted for the USPS. Although the USPS facility would be tax exempt, the City feels the presence of high paying federal jobs is a benefit to the community. This issue has been challenging due to the relatively closed- mouthed approach the USPS is taking in site evaluation. County officials have similarly expressed interest in supporting a Rosemount location. City staff has been in contact with development brokers representing the USPS. MCES Issues The City of Rosemount has been analyzing growth projections and how those projections relate to stormwater and sanitary sewer systems currently in place. The continued development of the community is going to be approaching existing capacity at the MCES Rosemount sanitary water treatment plant in the next several years. This means that alternative system options need to be pursued as soon as possible. Staff has discussed this issue on several occasions with Met Council officials. The City is also working with MCES to combine on the Empire Outfall pipe for stormwater. The outfall is being constructed as an effluent discharge from the Empire Wastewater Treatment Plant. The City is proposing to tap into the outfall pipe for discharge of stormwater runoff. This issue should be coming back to the City in the very near future as MCES provides information about the cost and negotiated agreement to partner. There is no specific action requested other than to continue supporting the City's efforts to work with the Met Council to find reasonable and cooperative solutions. Open Space Preservation The City is currently working with owners of a 60 -acre parcel to consider purchasing the property as a green space preservation project. The City is also working with the Dakota County Farmland & Natural Areas Preservation Committee on preservation issues. Although the City Council has not adopted a formal position, staff believes the City would support additional State commitments to increase DNR grant funding programs to assist local governments with preservation efforts. The issue of open space preservation ranked very high in a recently conducted resident survey. Local Government Aid The City has effectively managed preparation of the 2004 budget to account for reductions in local government aid and market value homestead credit (MVHC). The City strongly supports restoration of MVHC in 2005 that the Legislature has indicated will occur as part of the 2003 tax law. Growth communities such as Rosemount will be adversely impacted if growth inflators are not included in future levy limits, if indeed levy limits exist in future years. The City has managed to maintain the level of services that residents enjoy within the constraints of the 2004 budget. However, the City's ability to continue that level of service will be threatened. Rosemount is expected to grow by 350 -400 new residential homes per year in the foreseeable future. The addition of road miles, utilities and population all strain service levels that are not able to keep pace with growth if restricted in the future. Levy Limits As mentioned above, levy limits create a burden on developing communities because of the increased costs to provide services to a larger population and area. The City believes that local control for the decisions determining an effective tax rate and efficient level of services are best made at the local level. The City Council is ultimately responsible to the residents and businesses which support our local services and should be given the authority to exercise that responsibility. Reverse Referendum Proposals to impose a reverse referendum on municipal property tax increases would diminish the ability of local elected officials to respond to the needs of their communities. In addition, the reverse referendum proposals that have been recently offered would disrupt the local budget process by potentially requiring a public referendum in late January, nearly one month into the City's fiscal year. St. Joseph Catholic Church The St. Joseph community has relocated the parish worship to a new church on Biscayne Avenue. The rectory and school continue to operate at the original site on South Robert Trail. There is significant community interest in maintaining the historic church as a landmark use. The City has had very preliminary discussions with church officials about future re -use of the site to possible include a library or other public facilities. Although no specific plan is likely to emerge for some time, it is likely that the City will be seeking legislative support — possibly as part of future bonding requests — for preservation of this historic site. The church does not have designation as a registered historical site, but it does represent one of the oldest and most recognizable buildings in Rosemount. For more information, please contact City Administrator Jamie Verbrugge at 651- 322 -2006. LEAGUE Of MINNESOTA CITIES 2004 city Policies FOR LEGISLATIVE AND ADMINISTRATIVE ACTION Adopted November 20, 2003 M " c League of Minnesota Cities Cities promoting excellence Copyright © 2003 League of Minnesota Cities. All rights reserved. League of Minnesota Cities L 145 University Avenue West • St. Paul, MN 55103 -2044 L- ..q.00fM ;...�s.i�Olili- ( 281 -1200 (800) 925-1122 Fax: (651) 281 -1299 cc 11 TDD: (651) 281 -1290 • www.Imnc.org LMC Iaague of MirtneaoEa cww Citiw promoting oscenero¢ December 29, 2003 League of Minnesota Cities 145 University Avenue West, St. Paul, MN 55103 -2044 (651) 281 -1200 • (800) 925 -1122 Fax: (651) 281 -1299 • TDD: (651) 281 -1290 www.Imnc.org TO: City Administrator/Manager /Clerk FROM: Gary Carlson Director, Intergovernmental Relations RE: 2004 CITY POLICIES Enclosed is a copy of the final 2004 League of Minnesota Cities Legislative Policies. These policies are based on recommendations of the League's policy committees and were approved by the Board of Directors on November 20, 2003. In advance of this meeting, the Board sought member input by posting the Proposed 2004 City Policies on the League's website ( www.lmnc.org ) for review. I would like to thank every city official who dedicated significant amounts of their time and energy to the LMC's policy development process. Their input was instrumental in shaping and directing the LMC's legislative agenda. Lists of committee members can be found in the attached policy book. As you will recall, in 2002 there were changes to the policy adoption process. The membership adopted a constitutional amendment that places responsibility for final adoption of legislative policies with the Board. The Policy Adoption Conference and Legislative Conference were combined into the new State of the Cities Conference. In 2003, the Board built upon the 2002 changes. When the new process is fully implemented, policy committees will meet three times the first year of the state's biennium and only one time the second year of the biennium. The changes will be fully implemented for the policy process starting June 2004. Also in 2004, the League's Annual Conference will move to mid - October and the Regional Meetings will move to July. The 2004 State of the Cities Conference is scheduled for March 3, 2004, in St. Paul. The conference will be an important event for all city officials. Additional information on the conference will follow. Your LMC Intergovernmental Relations staff will work hard to represent city interests during the session, but our greatest strength is you and your continued involvement. If you have any questions, comments, or need assistance on these issues, please feel free to contact any member of the LMC Intergovernmental Relations Department. Enclosure AN EQUAL OPPORTUNITY /AFFIRMATIVE ACTION EMPLOYER CONTENTS LeagueStaff ....................................................................... ............................... v Legislative Policy Committee Members ............................. .............................vi Unfunded Mandates .............................................................. ............................... Policy Development Process .................. ............................... ...........................viii SD -3. General Policy Statement ................................................... ..............................x 2 Statement of Intent ............................................................. ..............................x Design- Build . ............................... .............. .................... ..............................2 2004 CITY POLICIES Improving Service Delivery ............................................ ............................... 1 SD -1. Redesigning and Reinventing Government .......................... ............................... 1 SD -2. Unfunded Mandates .............................................................. ............................... 1 SD -3. City Costs for Enforcing State and Local Laws .................... ............................... 2 SD -4. Design- Build . ............................... .............. .................... ..............................2 SD -5. Providing Information to Citizens ......................................... ............................... 2 SD -6. Construction Codes; .............................................................................................. 3 SD -7. National Fire Protection Association (NFPA) Standards ..... ............................... 4 SD -8. Fees for Service ..................................................................... ............................... 4 SD -9. State Assistance for Library Funding ................................... ............................... 5 SD -10. Civil Liability of Local Governments ................................... ............................... 5 SD -11. Private Property Rights and Takings ..................................... ............................... 5 SD -12. Election Issues ...................................................................... ............................... 6 SD -13. Local Election Authority ........................................................ ............................... 7 SD -14. Environmental Protection ..................................................... ............................... 7 SD -15. Creating a Minnesota GIS ..................................................... ............................... 8 SD -16. State Appropriation for Government Training Service ........ ............................... 8 SD -17. Public Safety Spectrum Needs ............................................... ............................... 9 SD -18. Legalization of Fireworks ...................................................... ............................... 9 SD -19. 911 PSAP Consolidation Issues and Funding Needs .............. .............................10 SD -20. Racial Profiling ........................................................................ .............................11 SD -21. 0.08 DWI ................................................................................. .............................11 SD -22. CriMNet ................................................................................... .............................11 SD -23. Red Light Cameras ................................................................. .............................12 SD -24. Misdemeanor Fines ................................................................. .............................12 SD -25. State Regulation of Massage Therapists .................................. .............................12 SD -26. On -Sale Liquor and Wine Licenses to Cultural Centers .......... .............................13 SD -27. Youth Access to Alcohol and Tobacco .................................... .............................13 SD -28. Smoking Ban Ordinances ....................................................... .............................13 SD -29. Park and Library Land Tax Break .......................................... .............................14 SD -30. Medicare Reimbursement for Ambulance Service ................. .............................14 SD -31. Open Meeting Law Exception: Emergency Preparedness ...... .............................14 2004 City Policies i FF -4. Levy Limits ...................................................... ............................... ................. 34 FF -5. Reverse Referendum .............................................................. ............................... 34 FF -6. City Revenue Diversification ................................................. ............................... 35 FF -7. Taxation of Municipal Bond Interest .................................... ............................... 35 FF -8. City Fiscal Year .................................................................... ............................... 35 FF -9. Payments for Services to Tax - Exempt Property ................... ............................... 35 FF -10. Truth -in- Taxation Process .................................................... ............................... 35 FF -11. State Administrative Deductions from State Aid .................. ............................... 36 FF -12. Reporting Requirements ....................................................... ............................... 36 FF -13. Price of Government ............................................................. ............................... 36 FF -14. Impact Fees ........................................................................... ............................... 36 FF -15. Delayed Assessments for Roads ........................................... ............................... 37 FF -16. Taxation of Electronic Commerce ........................................ ............................... 37 FF -17. Limited Market Value ........................................................... ............................... 37 FF -18. State Charges for Administrative Service ............................... .............................37 FF -19. Equity in Library Funding .................................................... ............................... 38 FF -20. City Franchise Authority ........................................................ ............................... 38 FF -21. Ten -Year Certificates for Indebtedness ................................. ............................... 38 FF -22. Local Government Aid Reform ............................................. ............................... 39 H uman Resources & Data Practices ................................ .............................39 Human Resources HR -l. Personnel Mandates on Cities .................................................. .............................39 HR -2. Compensation Limits ............................................................. ............................... 40 HR -3. Public Employees Labor Relations Act ( PELRA) ................... .............................41 HR -4. Re- employment Benefits ....................................................... ............................... 41 HR -5. Essential Employees .............................................................. ............................... 41 HR -6. Pension Benefits ..................................................................... ............................... 41 HR -7. Public Employees Retirement Association (PERA) .............. ............................... 41 HR -8. State Paid Police and Fire Medical Insurance .......................... .............................42 HR -9. Breathalyzers ............................................................................ .............................42 HR -10. Veterans' Preference .............................................................. ............................... 42 HR -11. Drug and Alcohol Rehabilitation ............................................. .............................43 HR -12. Health Care Insurance Programs ............................................. .............................43 HR -13. Efficiencies in Payroll Processing ........................................... .............................43 HR. 14. Deferred Compensation Contributions .................................. ............................... 43 HR -15. Pay Equity ................................................................................ .............................43 Data Practices DP -1. State Model Policies and Training ......................................... ............................... 44 Federal Employment Law FED -l. FLSA/Overtime Compensation ............................................. ............................... 44 FED -2. Medicare /Medicaid Premium Disbursements ........................ ............................... 44 FED -3. Flexible Spending Accounts .................................................. ............................... 44 2004 City Policies iii LEAGUE STAFF WORKING WITH STATE AND FEDERAL ISSUES JIM MILLER, Executive Director GARY CARLSON, Intergovernmental Relations Director Aid to cities; Civil liability, General revenue sources for cities; Insurance; Pensions; Property tax system; Public finance; Tax increment financing ANNE FINN, Intergovernmental Relations Representative Emergency management; Pensions; Personnel; Public safety; Transportation KEVIN FRAZELL, Member Services Director Electric utility restructuring; Government innovation and cooperation ANN HIGGINS, Intergovernmental Relations Representative Cable franchising; Elections and ethics; Emergency management; Housing; Information policy; Telecommunications; Utility service districts CRAIG JOHNSON, Intergovernmental Relations Representative Electric utility restructuring; Environment; Land use and annexation; Local /tribal relations; Transportation; Wastewater Infrastructure Fund LAURA KUSHNER, HUMAN RESOURCES DIRECTOR Human resources; Pensions LAURA OFFERDAHL, Intergovernmental Relations Representative Construction codes; Economic development and redevelopment; Housing; Lawful gambling; Local /tribal relations; Public safety JENNIFER O'ROURKE, Intergovernmental Relations Representative Aid to cities; Economic development and redevelopment; General revenue sources for cities Liquor and tobacco; Property tax system; Tax increment financing 2004 City Policies v Bruce Nawrocki, Councilmember, Columbia Heights Charlie Nelson, Mayor, Montrose Robert Olson, Councilmember, Brainerd Samantha Orduno, City Manager, Richfield Bruce Peterson, Director Planning and Development Services, Willmar Roger Peterson, Legislative Affairs Director, Assoc. of Metropolitan Municipalities Gene Ranieri, Executive Director, Association of Metropolitan Municipalities Joe Rudberg, Administrator, Becker Stephen Sarvi, City Administrator, Victoria Terry Schneider, Councilmember, Minnetonka Ryan Schroeder, City Administrator, Cottage Grove Jim Smith, Councihmember, Fairmont Terry Spaeth, Administrative Assistant, Rochester Steve Stahmer, Assistant City Manager, Hopkins Blair Tremere, Councilmember, Golden Valley Craig Waldron, City Administrator, Oakdale Mark Winson, Chief Administrative Officer, Duluth Liz Workman, Councilmember, Burnsville Heather Worthington, City Administrator, Falcon Heights John Young, Jr., Councilmember, Hawley Improving Service Delivery Mark Karnowski, Chair, City Administrator, Princeton Laurie Ahrens, Assistant City Manager, Plymouth Craig Dawson, City Administrator, Shorewood Pam Dmytrenko, Assistant to City Manager, Richfield John Ehret, Fire Chief, West St. Paul Mary Hammn- Roland, Mayor, Apple Valley Tom Hansen, Deputy Manager, Burnsville Lori Hansen, Councilmember, South St. Paul Dennis Hanson, Councilmember, Rochester Joel Hanson, City Administrator, Little Canada Dave Hutton, Vice President, WSB & Associates Janet Jeremiah, Planning Zoning Supervisor, St. Louis Park Steven Jones, City Manager, Montevideo John Kysylyczyn, Vice Chair, Mayor, Roseville Robert Lilligren, Councilmember, Minneapolis Karen Lowery Wagner, Intergovernmental Relations, Minneapolis Mary McComber, Councilmember, Oak Park Heights Pete Meintsma, Mayor, Crystal Yale Norwick, Mayor, Mahtomedi D.esyl Peterson, City Attorney, Minnetonka Gene Ranieri, Executive Director, Association of Metropolitan Municipalities Jeff Thompson, Mayor, Paynesville Kent Torve, Mayor, Loretto Lynda Woulfe, Administrator, Pine City Human Resources & Data Practices Laurie Elliott, Chair, Human Resources Manager, Shoreview Geralyn Barone, Assistant City Manager, Minnetonka Holly Duffy, Deputy Clerk, Eagan Terry Haltiner, Labor Relations Manager, St. Paul Natalie Johnson Lee, Councilmember, Minneapolis Kay Kuhlmann, Council Administrator, Red Wing . Karen Lowery Wagner, Government Relations Representative, Minneapolis Kay McAloney, Human Resources Director, Anoka Diana Murack, City Administrator, Carver David Osberg, City Administrator, Hastings Carol Rogers, Human Resource Generalist, Minneapolis Jerry Splinter, City Manager, Coon Rapids Dan Tesch, Administrative Director, Lino Lakes Jeanna Troha, Assistant to City Manager, New Brighton Jody Vogl - Eilertson, Assistant to City Manager, West St. Paul 2004 City Policies vii June Policy committees meet for the first time and identify key issues. July Members attending Regional Meetings provide comments on the issues identified by the policy committees. August Policy committees meet for a second time and review feedback from members. At the August Board meeting, League staff updates the Board on the direction and progress of the policy committees. September Policy committees meet for a third time. The Board preliminarily approves policies pending member input. October At the League's Annual Conference, members provide comments on draft policies. November The Board of Directors reviews and, at their discretion, amends policies. The Board adopts policies on behalf of League members. January Legislative session begins. The first year of the biennium is a budget session. March State of the Cities Legislative Conference is held in St. Paul. Second year of the state's biennium: Early Fall Policy committees meet once to update policies in response to emerging issues and legislative changes. October At the League's Annual Conference, members provide comments on policy changes. November The Board of Directors reviews and, at their discretion, amends policies. The Board adopts policies on behalf of League members. February Legislative session begins. The second year of the biennium is a bonding session. March State of the Cities Legislative Conference is held in St. Paul. 2004 City Policies ix solol i 1od vooz S31113 d10S3NNIW 10 3 00V31 IMPROVING SERVICE DELIVERY SD -1. Redesigning and Reinventing Government Issue: Every level of government is re- evaluating, reprioritizing, redesigning, and renewing its organizational structure and programs in response to financial realities and citizens' needs and problems. Reforms, however, must be more than change for the sake of change or a reshuffling of existing programs to appease the electorate. Transfer authority for use of revenues dedicated to such programs, or provide appropriate and adequate alternatives. Identify and repeal programs or discontinue services that are no longer necessary and evaluate which services can 'readily and fairly be provided by the private sector. Employ existing government entities in redesign efforts rather than create new agencies or units. To be meaningful, reorganization and reassignments of governmental entities and services should save money, where feasible, deliver improved services, serve essential needs, and be equitably structured. Cities have and will continue to re- evaluate city programs and services, pursue the use of cooperative agreements, and consider organizational changes that provide greater government efficiency and result in better service to citizens. Response: The federal, state, and county governments should: • Ensure that in redesigning, reinventing or reassigning government services and programs the appropriate level of service to citizens is evaluated and citizen demands and expectations are adequately addressed. • Promote local efforts through incentives, rather than mandates. • Communicate and establish a process of negotiation before shifting responsibility for delivering services from one level of government to another or seeking to reduce service duplication. SD -2. Unfunded Mandates Issue: The cost of federal and state mandated programs substitute the judgment of Congress, the president, the Legislature, and the governor for local budget priorities. These mandates force cities to reduce funding for other basic services or to increase taxes and service charges. The passage by the Legislature of reporting requirements for new state mandates, and the passage by Congress of legislation restraining new federal mandates should help address the problem, but other steps are necessary. Response: • Existing, unfunded mandates should be reviewed and modified or repealed, where possible. • No additional statewide mandates should be enacted, unless full funding for the mandate is provided by the level of government imposing it or a permanent stable revenue source is established. • Cities should not be forced to comply with unfunded mandates. 2004 City Policies 1 Response: Cities should be authorized to take advantage of new technologies to increase the dissemination of information to citizens and potentially lower the associated costs. Specifically, the Legislature should authorize local units of government to designate an appropriate daily /weekly publication; elect alternative means of communication such as city newsletters, cable television, and city web sites; and expand the use of summaries where information is technical or lengthy. Additionally, the Legislature should eliminate outdated or unnecessary publication requirements. SD -6. Construction Codes Issue: Each year, the Legislature addresses construction codes issues that have some impact on local governments. In the past, the Construction Codes Advisory Council (CCAC) and the Builders' Association of Minnesota have indicated an interest in legislation to require statewide enforcement of the building code. Although the CCAC expired on June 30, 2003, due to legislative inaction on a bill to extend the council, the Builders' Association and certain state agencies continue to express interest in an enforced statewide building code. While all cities must enforce certain codes -- such as the accessibility code, the electrical code, and the bleacher safety code - -the state's building code remains a local option for cities outside the metropolitan area. Many greater Minnesota cities have adopted the state building code and all cities within the seven - county metropolitan area are required to adhere to the state building code. Response: A building code provides many benefits, including uniformity of construction standards in the building industry, consistency in code interpretation and enforcement, and life - safety guidance. A statewide - enforced building code may have benefits, but requiring it would result in an unfunded mandate. The enforcement of a building code can be cost prohibitive for many cities due to the expenses and overhead related to staffing vs. the limited building activity occurring in some communities. The League supports adoption of a state building code as long as there is not mandatory enforcement at the local level. The adoption of an enforced state building code should remain a local option for municipalities outside the seven - county metropolitan area, unless the state fully funds the costs of enforcement and inspection services necessary to enforce a statewide building code. In the event that the Legislature requires an enforced statewide building code, local governments must have the option to hire or select a building official of their choice and set the appropriate level of service- - even if the state fully funds code enforcement activities. To the extent the insurance industry is concerned about insuring structures not built to code, the industry should drive code compliance by issuing policies or setting rates based on whether the structure meets various code requirements. 2004 City Policies 3 and acknowledging there are other associated costs inherent in the provision of those services, permits or licenses. Cities, however, oppose any move to legislate specific methods to pay for city services or place caps on city fees. SD -9. State Assistance for Library Funding Issue: Many community libraries in Minnesota are city- owned. Although located in an individual community, city libraries serve a much wider area. Local libraries need to be improved in order to provide access to both written and electronic media to enhance the educational capacity of adults and children. Response: The League supports a state matching grant program to provide dollars to assist communities to work in partnership to build and improve libraries. SD -10. Civil Liability of Local Governments Issue: One of the barriers to the delivery of governmental services and programs is the exposure of local governments and their officials to civil damage claims. The state has acted to protect itself and its local governments by enacting exceptions and limitations to liability suits, and authorizing self - insurance and other mechanisms to deal with claims allowed by law. Response: The League supports: • Creating an exception to municipal tort indemnification law, Minn. Stat. §466.07, where an employee is defended and indemnified for claims under a contract of insurance carried by the employee. • Extending the protection of the state and municipal Tort Claims Act to quasi- governmental entities when performing public services such as firefighting. • Existing constitutional safeguards for protecting public and private property interests without any statutory expansion of property rights. • Clarifying and maintaining the applicability of municipal immunity in various areas, including, but not limited to, vicarious official immunity and park and recreational immunity, including the extension to entities providing a public service that have not traditionally been included within the immunity (e.g., state trails over municipal utility easements). • Preserving recent changes to Minnesota's joint and several liability law that requires a municipality to be at least 50 percent at fault to be held responsible for 100 percent of a damage award. SD -11. Private Property Rights and Takings Issue: The Legislature has been introducing an increasing number of bills designed to diminish or control local governments' ability to exercise traditional planning and zoning authority and eminent domain powers. Legislation to control cities' abilities to perform regulatory acts - -such as road rights -of -way condemnation, shooting range zoning, and amortization -- received strong support from legislators. In addition, bills have been introduced to codify the property rights section of the Minnesota Constitution. 2004 City Policies 5 SD -13. Local Election Authority Issue: City authority to schedule city elections and establish terms of office for local elected officials strengthens regard for the role of local self- government -- particularly when voters approve those matters in home rule charter cities. Additionally, statutory cities currently lack authority to create or abolish wards. Response: The Legislature should oppose further limits on either the number or the length of terms elected city officials may serve as provided in current state law- - particularly when those terms have been established by voters in home rule charter cities. State policy on uniform elections should continue to recognize and uphold local authority to schedule city elections in November of either even- or odd numbered years. The Legislature should support provisions to give statutory cities general authority to create and abolish wards. SD -14. Environmental Protection Issue. Cities demonstrate strong stewardship for the protection and preservation of the environment. Minnesota municipalities have historically been the leading funding source for environmental protection and improvements. Municipal efforts include environmental protection through wastewater treatment, wetland restorations, stormwater treatment, public utility emission reductions, brownfield cleanup, safe drinking water programs, as well as others. At some point, however, the diminishing or nonexistent environmental benefit received from additional efforts is fiscally irresponsible. The programs are often improperly designed to meet their stated goals. Additionally, the absence of funding by the state and federal governments has removed an essential restraining feature in program design and implementation. Agencies are less accountable to the governments that mandate environmental programs when they do not have to find the money to implement the programs. Specific problems faced by cities include: • New programs or standards are continually adopted without regard to the existence, attainability or cost of existing programs and standards. • Regulatory bodies fail to consistently use good science and the most current and accurate data when establishing water quality standards. • Regulatory bodies impose new permit requirements without going through rulemaking. Instead, the agencies rely on internal documents, program strategies, and "best professional judgment of staff' when setting permit criteria. 0 Regulatory bodies approve permits and programs that compete with traditional municipal services and encourage urban sprawl. This behavior puts at risk the public investments and growth management efforts cities have made when planning for future development. Permit fees and other cost transfer elements of federal and state programs do not provide an incentive for environmental agency efficiency, policy prioritization or risk assessment. Third party environmental advocacy groups create significant hardships on cities by threatening litigation even when hard science may not support the groups' positions. Response: • Alternative wastewater treatment and cooperative service systems should be 2004 City Policies 7 active use of the services provided by GTS. SD -17. Public Safety Spectrum Needs Issue: Cities are concerned about the trend of increased concentration of ownership of wireless spectrum licenses, particularly for cell phones, radio, TV, and satellite broadcasting. Cities' concerns arise from the implications of the availability of additional spectrum necessary for interoperability and access to the technology required to respond to disasters, terrorism, and other emergencies. Police, fire, and emergency management officials are seeking reconsideration of portions of the FCC order (FCC 03 -34) that restrict interoperability and will prevent police, fire, and emergency responders with public safety licenses from adding needed capacity and coverage to existing radio communications systems. Doing, so would restrict existing systems to current channels and equipment and force local police and fire communications to replace entire radio systems in order to comply with the proposed new FCC rules. Response: The Federal Communications Commission must allow for the expansion of existing public safety communications systems in order to provide broadcast channels needed to allow local public safety agencies to respond to accidents, disasters, and criminal activities that cross jurisdictional boundaries. Federal and state officials should encourage regional public safety communications planning, and address the shortage of broadcast channels to meet future public safety needs. Police and fire departments must be able to expand the authorized bandwidth contour of existing equipment to serve new populations that are expanded service districts. Implementing interoperability among public safety agencies, improving signal strength, and changing operational requirements necessitates such changes. Cities cannot afford to discard their existing public safety communications systems or upgrade radios because of modifications to the local service area. Modification of existing licensed public safety radio communications systems must be permitted, and restrictions on new applications must not hinder interoperability. Cities should receive fair and immediate compensation for transfers associated with state or federal regulations to change frequencies and /or channels in order to operate public safety and emergency communications. The federal government should also take immediate steps to ensure emergency warning systems are linked to make sure that all areas are protected in the event of national, statewide or regional emergencies. SD -18. Legalization of Fireworks Issue: In 2002, the state enacted a law allowing the sale and use of non - aerial, non- explosive consumer fireworks, including sparklers, party poppers, snakes, and other novelty items -- relaxing the ban on consumer fireworks in place in Minnesota since 1941. In 2003, the state enacted a number of provisions limiting local authority pertaining to fireworks sales. The 2003 law caps the allowable municipal permit fee at $100 per vendor selling fireworks with other products and $350 per vendor selling fireworks exclusively. The law restricts cities from requiring fireworks sellers to purchase additional liability insurance. Finally, the 2004 -City Policies 9 modifications to local 911 systems, maintenance and operational support, and dispatcher training. SD -20. Racial Profiling Issue: The League recognizes that where racial profiling exists it must be eliminated. The League supports action by the state of Minnesota to fund and implement effective and meaningful responses to racial profiling that will effectuate fair treatment of all people. Response: The League supports a meaningful and effective response to the concerns of residents that police traffic stops reflect an objective demonstration of probable cause to believe that a law has been violated. All members of the community must have confidence that each member of the community is being treated fairly and respectfully, and that the race or ethnicity of the driver is not used as a factor in deciding to stop a motor vehicle. The League supports training programs to support these goals and recommends that the state develop, fund, and present such training programs to all law enforcement agencies in the state. The League opposes the mandatory collection of traffic stop data as counterproductive and ineffective in adequately responding to those members of our communities who do not feel a part of the community by virtue of their concerns about racial profiling. In an effort to ascertain the scope and degree of the problem, the League would support objective, well - formulated statistical sampling by third parties under the auspices of a state - funded study that would develop documentation of traffic stops and an analysis of those stops, coupled with an effective means of enforcing sanctions against documented instances of inappropriate treatment of citizens. Additionally, the League supports state funding for video cameras in police cars. SD- 21.0.08 DWI Issue. The state of Minnesota is considering a statutory amendment to reduce the legal blood alcohol level for operating motor vehicles from 0.10 to 0.08. Analyses anticipating the fiscal impact of the 0.08 threshold on cities have been inconclusive. Under the current driving- while- impaired (DWI) law, the arresting authority is responsible for prosecution of suspected DWI offenders. A reduced threshold may result in more DWI arrests by city law enforcement officers; thus, increased prosecution costs for cities. Response: The League is committed to building quality communities and to increased public safety. By adopting and implementing the 0.08 percent BAC level threshold, the state will secure existing federal highway funds that will assist in the maintenance and upgrade of a safe transportation system. Prior to adopting this initiative, the Legislature should carefully study the costs associated with a reduced DWI threshold. The state should provide the necessary funding to compensate local units of government for related cost increases. SD -22. CriMNet Issue: Public safety is compromised by the lack of centralized, complete, and accurate criminal history data about individuals, incidents, and cases. Without an integrated 2004 City Policies 11 sanitation standards, several cities have entered the traditional state domain of health -care licensure by enacting ordinances that require all massage therapists to obtain a local professional license. These ordinances allow local law enforcement officers to differentiate between legitimate massage therapists, who have a city license, and prostitution businesses fronting as massage therapy establishments. The lack of statewide regulation of massage therapists has hampered law enforcement techniques and caused problems for cities attempting to regulate an entire health -care profession without any statewide standards. Currently, 25 states regulate massage therapists on a statewide level. Statewide regulation of massage therapists would provide a clear set of educational standards that massage therapists must meet, and would provide local law enforcement agencies with an easy tool to distinguish between prostitution and legitimate massage therapy. Statewide regulation would not disturb traditional powers over land use and business licensure. Response: The League supports the statewide regulation of massage therapists in order to aid local law enforcement efforts to control prostitution and other criminal activity. SD -26. On -Sale Liquor or Wine Licenses to Cultural Centers Issue: Cultural centers are not one of the qualifying entities to which municipalities . may issue on -sale liquor or wine licenses. Several cultural centers have received special legislation that allows their municipalities to issue on -sale liquor or wine licenses to them. This practice interferes with the ability of municipalities to control the placement and operating manner of these entities. In 2003, performing theaters were added to the list of establishments to which municipalities may issue on -sale liquor or wine licenses, but cultural centers were not included. Response: The Legislature should authorize municipalities to issue on -sale liquor or wine licenses to cultural centers subject to restrictions imposed by the municipality. SD -27. Youth Access to Alcohol and Tobacco Issue: The minimum age to purchase alcohol in Minnesota is 21. The minimum age to purchase tobacco in Minnesota is 18. The minimum age to sell alcohol and tobacco products in Minnesota is 18. Cities have an interest in preventing youth from obtaining these products. To this end, many cities operate compliance check programs in an effort to discern the current level of youth access and to reduce youth access. Response: The League opposes any proposal that could result in increased risks of youth access to alcohol and tobacco products and expanded off -sale venues for the sale of such products. The League supports the sale of alcohol and tobacco products only in controlled environments. The League supports statutory changes that assist in reducing youth access to alcohol and tobacco products. The League supports mandatory alcohol compliance checks with state funding initiatives to support locally- determined compliance efforts. SD -28. Smoking Ban Ordinances Issue: Cities are being confronted with the issue of local smoking ban ordinances. Some local governments in Minnesota have adopted ordinances that ban smoking in 2004 City Policies 13 Response: The Legislature must make a limited exception to the open meeting law to allow elected officials to convene a closed meeting when emergency preparedness for public services, infrastructure, and facilities are discussed. SD -32. Phosphorus Reduction Issue: In 2002, the Legislature enacted a new law to regulate the sale and use of lawn fertilizers containing phosphorous. The law will serve to improve and enhance the quality of the state's surface waters. In addition, the new law will reduce the costs to local governments of complying with a variety of federal and state surface water quality standards. Cities are required by several levels of government to improve and enhance the quality of surface waters. Additionally, surface water runs through watersheds that rarely are wholly within a city's boundaries. To be effective, measures for comprehensive water quality improvements need to be regional or statewide. The 2002 law underscores the most cost - effective way to reduce phosphorus in our lakes, wetlands, and streams by preventing it from entering these systems. The law, however, addresses only non - commercial residential use of lawn fertilizer. Many other sources of phosphorous, such as commercial detergents, affect both surface water quality and treatment requirements at municipal wastewater treatment facilities. The state is the appropriate level of government for effective and economical administration and enforcement responsibility. Response: The League opposes any legislation that would weaken the 2002 phosphorous regulation legislation and supports removing phosphorus products at the manufacturing level rather than at the wastewater treatment center. SD -33. Administrative Fines Issue: Cities have implemented administrative enforcement programs for violations of local regulatory ordinances, such as building codes, zoning codes, health codes, and public nuisance ordinances. This use of administrative proceedings has kept enforcement at the local level and reduced pressure on over - burdened district court systems. The Legislature recently instituted significantly higher fine surcharges on district court cases, causing concern at the local level because the total of the fine and surcharge appears disproportionate for minor matters. To lower the amount imposed on its citizens, a number of cities have expanded their administrative programs to include some offenses traditionally heard in district court, such as minor traffic offenses, causing concern at the state level. Response: The League supports the use of city administrative fines for local regulatory ordinances, such as building codes, zoning codes, health codes, and public nuisance ordinances. The League supports the use of city administrative fines, at a minimum, for regulatory matters that are not duplicative of misdemeanor or higher level state traffic and criminal offenses. Further, the League endorses the concept that administrative penalty hearings should be held before disinterested third parties, which may include city councils, to ensure fairness in the proceedings. 2004 City Policies 15 treatment facilities. Municipal stormwater systems will also face increased protective requirements and regulation as part of the state's impaired waters program. Response: The League will work actively with the administration, the Legislature, and other stakeholders in the design and implementation of Minnesota impaired waters program to: • Ensure equitable funding solutions are found that do not put the entire burden for addressing water quality concerns on municipal water and sewer system subscribers. • Direct the majority of fees collected by the state from municipal ratepayers into programs that fund municipal wastewater and stormwater projects, and for state programs needed for municipal wastewater and stormwater permitting and technical support. • More adequately cover the current five -year wastewater infrastructure funding need projection of more than $2.1 billion. • Recognize and address the upcoming costs of stormwater management infrastructure and operation on municipalities from new regulatory mandates and load reduction requirements. • Allow flexibility in achieving TMDL limits through trading of pollutant load reduction credits for both point and non -point load reduction requirements within watersheds. • Recognize and credit the work already being done by local units of government to limit point and non - point source water pollutant discharges. • Recognize the diversity of efforts and needs that exists across the state. • Ensure the best science available is used to maximize environmental outcomes and minimize unnecessary regulatory and financial burdens. • Clarify state water quality mandates so cities know specifically what they are required to do and what methods of achieving those outcomes are acceptable to state and federal regulators. SD -37. Procurement Reform Issue: With many cities facing budget shortfalls and struggling to maintain the important services that citizens expect with fewer resources, local officials are seeking ways to streamline the purchasing process and reduce costs. Reverse auction purchasing is a proven way to use information technology to streamline government and reduce costs. Many federal, state, and local governments around the country are using this Internet -based technology to allow multiple vendors to compete in an open and interactive environment to provide goods and services at the lowest selling price. As a result, these governmental agencies are providing quality goods and services and saving taxpayers' money. In 2000, the Minnesota Dept. of Administration launched a reverse auction initiative for certain goods purchased by the state. The Legislature expanded the commissioner's authority in the 2003 session to allow reverse auctions for certain state services. Changes to Minnesota's Uniform Municipal Contracting Act are necessary to give cities the authority to use this purchasing tool. M.S. 471.345 sets forth the purchasing and contracting requirements for political subdivisions within Minnesota. The statute requires these subdivisions to use a 2004 City Policies 17 underground facilities designed to safeguard public safety. Response: Cities must not be held responsible for locating private underground facilities. The Legislature should not expand the authority of Gopher State One Call to allow utility contractors to use emergency locate requests to commence excavation, particularly when using directional boring, without locating and exposing private underground facilities. In such circumstances, taking such action without proper locates requires contractors to accept responsibility for damage and threats to public safety. Private contractors working for public utilities and other service providers must construct or install underground utilities or devices in compliance with local permitting, ordinances and building code requirements. Contractors operating directional boring equipment should be required to be responsible for training operators, maintaining logs regarding scope of work, contractor name, material installed and for any damage done to public or private property. When engaged in such projects, contractors must be required to provide advance notice to the city or municipal utility of intent to use directional boring without exposing all utilities. Cities must have discretion not to locate privately - owned laterals and not be held responsible for actions taken by excavators when the city determines not to locate such facilities. When cities act in good faith at the request of contractors to locate and mark private connections to publicly -owned underground facilities, cities must have immunity from liability if excavation causes damage or loss of service. SD -39. Utility Relocation Under Design -Build Road Construction Issue: The Minnesota Dept of Transportation (Mn/DOT) has promoted legislation relating to the design -build construction process that would require private and public utilities to be responsible for utility relocation necessitated by road construction. The policy, if enacted, would create unanticipated costs for utilities owned and operated by cities. Municipally -owned utilities would be unreasonably held to the same standards as privately -owned utilities that exist in the public right -of -way. Response: The League supports use of the design -build procedure; however, municipal utilities that exist in the public right -of -way should not be penalized under this process. Municipal utilities legitimately exist in the public right -of- way. When a Mn/DOT construction project requires the relocation of utilities, the cost of relocating municipal utilities should be equitably shared between the department and affected municipal utilities. SD- 40.800 MHz Radio System Issue: The 2003 Legislature provided financing and planning authority to the departments of Public Safety and Transportation for the Phase III portion of ARMER (Allied Radio Matrix for Emergency Response) - -the statewide public safety radio communications backbone to serve the west central and southeast portions of the state. The Legislature has also approved plans for further expansion of the backbone to remaining areas of the state over the next four years. While state agencies are developing the design and planning to implement the statewide 800 MHz system, little thought has been given to 2004 City Policies 19 simplify, and streamline these controls; eliminate duplication in their administration; and fully defend and hold harmless any local government sued for a "taking" as a result of executing state land -use policies. • Give cities broader authority to extend their zoning, subdivision, and other land -use controls up to two miles outside the city's boundaries, regardless of the existence of county or township controls, to ensure conformance with city facilities and services. • Clearly define and differentiate between urban and rural development and restrict urban growth outside ,city boundaries. • Facilitate the annexation of urban land to cities by amending state statutes that regulate annexation to make it easier for cities to annex developed or developing land within unincorporated areas. • Oppose legislation that would reinstate the election requirement in contested annexations. • Encourage ideas consistent with the long -term goal of allowing urban development only in urban areas. Density incentives such as sprawl reduction aid programs are more straightforward methods of rewarding and encouraging compact urban development than using LGA for another new purpose. LE -2. Electric Service Extension Issue: Minnesota law currently protects the right of municipally -owned utilities to extend electric services to annexed areas. Electric cooperatives have announced their intention to seek legislation that would eliminate the right of municipally -owned utilities to extend electric services to annexed areas. Eliminating municipal authority to extend services would interfere with cities' natural growth and with the ability of municipally -owned utilities to serve the entire community. Response: The League opposes any statutory change that would impede or eliminate the ability of municipally -owned utilities to extend electric services to any portion of their respective cities, including annexed areas. LE -3. Statutory Approval Timelines Issue: Since 1995, cities have been required to act on written requests relating to zoning, septic systems, the expansion of Metropolitan Urban Service Areas (MUSA), and other land -use applications in accordance to a statutory time period generally referred to as the 60 -day rule. Pursuant to Minn. Stat. § 15.99, state and local government agencies must approve or deny a permit within a statutory timeframe. Failure by the agency to issue a specific denial of the application with contemporaneous written findings of fact shall be deemed an approval. Recent court decisions have made it clear the law needs to be clarified to make it more efficient and to assist cities in providing accurate and timely responses to applicants. Response: The Legislature should repeal or amend Minn. Stat. § 15.99. If repeal is unlikely, amendments should: • Allow government agencies to provide final written findings of fact at the next official meeting of the governing body. • Allow an automatic 60 -day extension of the time limit if the agency votes 2004 City Policies 21 LE -6. Affordable Housing Issue: The roles of federal and state government are critical to assist cities in responding to the lack of both rental and single - family housing for those priced out of the market. However, the federal government has largely removed itself from providing direct funding and subsidies for housing production, and the recent state budget deficit has resulted in significant cuts to state housing programs. State fiscal policies - -such as levy limits, restraints on local impact fees, and the current property tax class rate structure- - discourage cities from making land readily available for affordable housing development, and restrict cities' ability to raise the revenues needed to finance infrastructure and services critical to new affordable housing. In the last several years, state government largely depended on one -time housing appropriation increases, including directing federal welfare reform dollars and increased federal tax- exempt bond funding to boost construction of low - income rental and entry - level owner- occupied housing. This one- time funding has now disappeared, and the Minnesota Housing Finance Agency (MHFA) is struggling to retain existing state funding for critical housing programs. The 2003 Legislature also failed to repeal the $100 housing penalty and, instead, reduced the penalty to $50. As a result, welfare participants in federally- subsidized housing will have $50 counted as unearned income against their monthly MFIP grant starting Sept. 1, 2003. Response: The League recommends the following actions to aid cities in addressing housing needs: • Alert members of the Minnesota congressional delegation to the critical housing problems facing communities throughout the state. • Develop a flexible state funding program to channel MHFA program funds directly to cities. • Provide state bonding to increase availability of supportive housing to reduce long -term homelessness. • Allow early collection of increments in tax increment financing (TIF) housing districts for development of affordable housing units. • Raise the level of permanent funding for affordable housing production by increasing the base budget of the MHFA. • Create a state low - income charitable tax credit and a historic preservation tax credit program to encourage affordable housing production and preserve and rehabilitate housing. • Continue funding to preserve federally - subsidized housing threatened by mortgage prepayments or conversion to market -rate rental property. • Repeal the $50 housing penalty that punishes welfare recipients in federally - subsidized housing by counting $50 of their housing support payment as unearned income against their monthly MFIP grant. LE -7. State and /or County , Licensed Residential Facilities (group homes) Issue: As the need for more residential - based care facilities increases, sufficient funding is also needed to ensure residents living in group homes and licensed facilities have appropriate care and supervision. In 2004 City Policies 23 Action is needed to create more permanently affordable owner - occupied housing by maximizing the cost - effectiveness of taxpayer investments. The MHFA previously had authority to assist cities with funding community land trusts for affordable housing. Response: The 2004 Legislature should support a land trust capacity - building program and provide capital start -up funds so community land trusts can offer gap financing, interest -rate write- downs, predevelopment financing, and financial underwriting costs. LE -10. Municipal Telecommunications Authority Issue: Cities must have the authority and the tools to establish the necessary infrastructure, educational resources, applications, and skill -sets to become connected communities. Several court decisions demonstrate that provisions of the 1996 federal Telecommunications Act requiring removal of barriers to entry for "any entity" apply directly to cities' interests in gaining clear authority to create municipal telecommunications utilities in order to provide advanced services at the local level. Response: The Legislature and state agencies must act to allow cities to provide affordable access to advanced telecommunications and information services by: • Allowing a city to become a telecommunications and information service provider upon approval of the city council, and to extend services beyond city corporate boundaries upon consent of the local jurisdiction to which service would be provided. • Eliminating barriers to municipal entry and defining a strategic leadership role for cities. • Supporting efforts by cities to bring advanced services to local residents and businesses. • Encouraging collaboration among . communities and institutions to expand education, health care, and economic opportunities at the local and regional level. • Allowing cities and municipal utilities to join with other entities, such as cooperative associations, investor - owned utilities, or other municipal utilities or power agencies, to provide telecommunications and information service. LE -11. Right -of -Way Management Issue: Cities have fundamental responsibility for managing the safe and convenient use of public rights -of -way, and hold local rights -of -way in trust for the public as an increasingly scarce and valuable asset. As demand increases for use of rights - of -way for tower sites, as well as for underground and overhead wireless facilities, cities must continue to exercise their authority to allocate and coordinate the resource among competing uses. Local management responsibilities vary and are site specific, underscoring the necessity for maintaining local authority. Response: State and federal policymakers and regulators must: Uphold local authority to manage and protect public rights -of -way, including reasonable zoning and subdivision regulation and the exercise of local police powers. 2004 City Policies 25 LE -13. Wireless Tower and Antenna Siting Issue: As demand for wireless communication service increases, wireless service providers have increasingly requested to site towers, antennas, and other facilities in cities. Cities must continue to have local zoning authority and police power to manage and coordinate the siting of these facilities. Local management needs vary and are site specific, underscoring the necessity for maintaining local authority. While state law regarding local rights -of- way management (M.S. 237.162.163) does not apply to siting such facilities in public rights -of -way, the Telecommunications Act of 1996 preserves and provides for the exercise of state and local authority over zoning and land -use decisions for wireless service facilities. Response: The Legislature should clarify that wireless service providers are not exempt from local zoning and police power regulations where the provider proposes to use public rights -of -way to site their facilities. Cities must continue to be permitted to consider public health, safety, and welfare concerns, including issues of aesthetic and property value, in responding to requests to site wireless facilities. The Legislature should maintain laws that recognize and uphold city authority to manage the siting of wireless facilities through local zoning and regulation and provider agreements, which may include fair compensation. LE -14. Community Reinvestment Partnerships and Financing Issue: The 2001 property tax reform package is having a dramatic impact on how the state of Minnesota's community reinvestment needs are addressed. The impacts bring into question the future viability of tax increment financing (TIF) as the primary tool to fund community reinvestment efforts. Activities that cities have historically been able to undertake, but will likely be less to achieve in the future given the likely diminished effectiveness of TIF, include: long -term tax base stabilization and growth, job creation, development of low -to- moderate income and workforce housing, remediation of pollution, elimination of blight, recycling and redevelopment of infrastructure, and redevelopment of communities. Response: To ensure Minnesota is able to continue to effectively compete with other states, the Legislature has a responsibility to partner with cities, state agencies, and other community reinvestment organizations to develop a statewide community reinvestment strategy, and to identify and implement additional tools to fund community reinvestment efforts. The state should partner with cities in community reinvestment activities. State acknowledgment of the need for community reinvestment and economic development is essential to the state's prosperity, and legislation is needed to generate resources sufficient to address these critical needs at the local level. LE -15. Tax Increment Financing Issue: Until the state identifies and implements additional development tools, TIF remains the most viable tool available to fund community reinvestment efforts despite the significant impacts of the 2001 property tax reform package. Cities and development authorities will be required to devote considerable efforts in order to understand and address the impacts of the 2001 property 2004 City Policies 27 business development programs, such as the Minnesota Investment Fund, are not adequately funded. In light of the current economic times, local governments increasingly may need to rely on these types of state programs in order to effectively compete nationally and internationally for business development. Response: The Legislature should continue to fund the Greater Minnesota Business Development Public Infrastructure Grant Program, as well as statewide business development programs such as the Minnesota Investment Fund and redevelopment accounts at DEED. LE -19. Land Recycling Programs Issue: Communities across Minnesota are faced with expensive barriers to re -using property. These roadblocks include deteriorating, obsolete, and vacant structures, as well as varying levels of contamination. Such barriers pose significant problems for cities seeking to re- use existing infrastructure, maintain and improve the property tax base, provide jobs and housing opportunities, and preserve historic structures. While land recycling activities have always been particularly costly, since they usually encompass multi- phase projects of extensive duration where site assemblage, demolition, relocation or pollution cleanup must occur before private - sector interest can be generated, the 2001 property tax reform package significantly diminished the ability of cities to undertake these efforts by dramatically reducing revenues generated by TIF. Exacerbating this situation, the redevelopment accounts administered by the Dept. of Employment and Economic Development and the Metropolitan Council programs supporting land recycling continue to be under funded. Response: In recognition of the unique needs of land recycling projects, the Legislature should restore the statewide redevelopment program administered by the Dept. of Employment and Economic Development and increase the funding. Additionally, as part of a comprehensive approach to land recycling needs, the Legislature should consider state income tax credits and other tax incentives for local historic preservation efforts. The Legislature should also revive the "This Old House" law, and consider enacting similar authority that would provide a tax deferral on improvements to commercial buildings located in designated rehabilitation or historic preservation districts. Finally, the Legislature should continue its support and increase funding levels for state and regional programs to assist in contamination cleanup and brownfields remediation efforts. LE -20. Property Tax Abatement Authority Issue: In an effort to increase the number of development tools available, the 1997 Legislature authorized local units of government to grant property tax abatements. Although TIF continues to be the primary financing mechanism for local development projects, tax abatements provide a good addition to a needed list of economic development tools. In order to provide maximum benefits, tax abatements should be less restrictive in terms of funding caps and financing terms. Property tax abatements should not be considered a replacement for tax increment financing. Response: TIF is still the primary, viable development tool available for cities. Abatement authority should continue to be available, but not offered as a rationale to eliminate TIF. Additionally, the 2004 City Policies 29 revisit the county EDA legislation, and add specificity to other process and limitations issues such as the local recommendation committee. LE -24. Workforce Readiness Issue: State and federal welfare reform efforts have focused on the importance of the welfare -to -work transition, and have recognized the challenge of ensuring that individuals are qualified to work. Cities have an interest in the availability of qualified workers as part of their economic development efforts, and can serve as a catalyst with other public entities and the private sector to address workforce readiness issues. Response: The Legislature should continue to fully fund the job skills partnership and pathways programs administered by the Dept. of Employment and Economic Development. The Legislature should provide additional funding to local workforce councils for the purpose of upgrading the skills and productivity of the workforce. LE -25. Adequate Funding for Transportation Issue: Current funding for roads and transit systems across all government levels in the state is not adequate. If funding remains inadequate, Minnesota's transportation system will not meet the capacity needs necessary to sustain population growth and promote economic development. The League acknowledges that all Minnesota communities benefit from a sound and adequately funded transportation system that offers diverse modes of travel. Response: More resources must be dedicated to the state's transportation system. The League supports constitutionally dedicating a portion of the motor vehicle sales tax (MVST), or other new revenue sources, to a transportation fund that would fund both highway and transit projects. The League also supports an increase in the gas tax that would be dedicated under the existing highway user trust fund formula. Replacement funding for vehicle registration taxes (known as tab fees) must be constitutionally dedicated to the highway user trust fund. If adequate funding does not come from the state, cities should have funding options, such as special taxing authority, made available to them to raise the necessary dollars to adequately fund roads and transit. The League also supports special funding for cities burdened by excessive cost participation responsibilities imposed by improvement projects on the state's principal arterial system, and for transportation components of economic development and redevelopment projects of regional significance. Cities under 5,000 population should be eligible for this funding. All non - transportation programs should be funded from sources other than the highway user distribution fund or other funds dedicated to transportation. LE -26. Turnbacks of County and State Roads Issue: As road funding becomes increasingly inadequate, more roads are being "turned back" to cities from counties and the state. 2004 City Policies 31 IMPROVING FISCAL FUTURES FF -1. State -Local Fiscal Relations Since the 1970s, services provided by Minnesota cities have been largely funded through a combination of property taxes, state aids, and state property tax relief programs. This system of municipal finance has evolved to ensure that municipal services can be funded without excessive local tax burdens. Any further changes to the state -local fiscal system should meet the following goals: • Reduce tax burden disparities among communities and between cities and adjacent townships. • Compensate cities and their taxpayers for overburden and tax exempt property. In 2001, the Legislature enacted significant changes to the property tax system. With those changes, the state increased its funding participation for schools while city operations received less funding. On average, cities are now more reliant on property taxes to fund their operations, although some cities are now more reliant on state aid. The changes to the state aid distribution were necessary to more evenly distribute tax relief across the state. In 2003, the Legislature significantly reduced funding for LGA and the market value homestead credit reimbursement while simultaneously extending strict levy limits for cities over 2,500 population. The combination of these changes will prohibit larger cities from replacing aid cuts with property taxes. For many smaller cities, the tax increase needed to cover the loss of state aid could be unacceptable to local residents. Although the 2004 -2005 state budget deficit was addressed by the 2003 Legislature, future state budget forecasts could reveal a further short-term state deficit. Further reductions in state aid to cities will create fiscal problems for many communities already struggling with the effects of the 2003 aid cuts. • Compensate for state - imposed mandates. • Provide sufficient funding to address these principles. • Respect the decision- making authority of local officials. • Avoid further cuts in state aid and homestead credit reimbursement programs. FF -2. LGA and Market -Value Homestead Credit Cuts Issue: During the 2003 legislative session, the Legislature partially balanced the state's budget deficit by permanently reducing LGA by $150 million and temporarily reducing funding for the market -value homestead credit reimbursement by $20 million. These cuts in city funding were coupled with an extension of levy limits that will prohibit larger cities from recovering these lost revenues through the property tax. To balance the state budget in 2002, the Legislature eliminated more than $200 million in funding for the tax increment financing (TIF) district grant program and repealed the LGA reform account. The elimination of the TIF grant program will ensure that TIF district deficits caused by the 2001 tax reforms will translate into 2004 City Policies 33 property tax increases would diminish the ability of local elected officials to respond to the needs of their communities. In addition, the reverse referendum proposals that have been recently offered would disrupt the local budget process by potentially requiring a public referendum in late January, nearly one month into the city's fiscal year. Response The League supports the principle of representative democracy and opposes reverse referendum requirements. FF -6. City Revenue Diversification Issue: Under current state law, the property taxis the only generally accessible form of local tax revenue for cities. Recent retrenchment in state aid programs will likely increase city reliance on property taxes in the future. Allowing cities to diversify their revenue stream would prevent rapid rises in property taxes. Response: Cities should be able to diversify their sources of revenues. FF -7. Taxation of Municipal Bond Interest Issue: The state law that grants a tax exemption for municipal bond interest lowers borrowing costs for cities and reduces property tax levies. Response: The state should maintain the tax exemption for municipal bond interest income. FF -8. City Fiscal Year Issue: The fiscal year for cities and counties currently corresponds to the property tax cycle. Response: The state should maintain current law and not change the city fiscal year to coincide with the state fiscal year. FF -9. Payments for Services to Tax - Exempt Property Issue Taxable property in many cities is being acquired by nonprofit and government entities. Converting the property to tax - exempt status can lead to serious tax base erosion without any corresponding reduction in the service needs created by the property. Response: Cities should have the authority to collect payments from statutorily exempt property owners to cover costs of service as cities have with special assessments. FF -10. Truth -in- Taxation Process Issue: Cities must set a preliminary levy by Sept. 15, which, by law, becomes the maximum that cities can levy the following year. In recent years, cities have not received complete tax base and aid information in a timely manner. As a result, cities often either set apreliminary levy that is artificially high or they are unable to budget for unforeseen needs that arise after Sept. 15. Response: The League supports changes to the Truth -in- Taxation process to provide more meaningful information to citizens, including the exemptions enacted in 2001 for cities that propose levy increases less than the implicit price deflators. This calculation, however, should account for the impact of state aid cuts on proposed levies. Cities should have the authority to increase the final levy from the preliminary levy to meet unforeseen and uncontrollable needs. 2004 City Policies 35 FF -15. Delayed Assessments for Roads Issue: Current law allows a city to recoup the costs for water, storm sewer or sanitary sewer improvements by levying additional assessments on the property benefiting from the improvement but not previously assessed. This authority for delayed assessment has not been extended to other infrastructure, such as road improvements, even though properties are benefiting from the improvements. Response: Cities should be allowed to delay assessments against property located outside the city for road improvements benefiting property abutting the improvement but not previously assessed for the improvement. For example, if a city makes improvements to a road that benefits city residents and township residents, the city should be able to recover costs through future assessments to the township property when the property is brought into the city. Once the township property is brought into the city, the city would then be able to assess that property for road improvements previously done but not assessed at the time of the improvements. FF -16. Taxation of Electronic Commerce Issue: Sales over the Internet and through other electronic means are projected to increase exponentially over the next several. years. Electronic transactions pose significant tax policy challenges because of the difficulty of assigning a location to electronic sales and because many Internet goods are not tangible property. Response: Federal tax policy should not place main street businesses at a competitive disadvantage to electronic retailers, must not jeopardize repayment of bonds backed by state and local sales tax revenues, and should ensure stability in state and local revenues. To address the challenges created by the growth of ecommerce, the League supports the multi -state effort to develop a streamlined sales tax system. FF -17. Limited Market Value Issue: The 2001 Legislature enacted a phase -out of the state's limited market value (LMV) system. Under the LMV system, homeowners and cabin owners who experience rapid escalation in their property's value, effectively have a temporary exemption of taxes on a portion of that growth. This exemption has grown rapidly over the past several years and now shifts substantial property tax burdens to other types of property. On the other hand, a rapid phase -out of the program could dramatically shift tax burdens back to homes and cabins. Response: The Legislature should closely monitor the effects of the phase -out of LMV to avoid excessive tax burden increases for currently benefiting properties. If the phase -out schedule results in excessive tax increases, the Legislature should increase funding for the targeting program or delay the scheduled phase -out, which will buffer the tax burden increases. FF -18. State Charges for Administrative Services Issue: Currently, some state agencies have wide discretion in setting the fees for special services they provide to local governments. 2004 City Policies 37 the financing must not exceed five years. Often the equipment has a longer expected useful life than five years, and city officials would prefer to spread out the cost over the life of the equipment. Response: The League supports a change in law allowing cities to issue certificates of indebtedness up to the useful life of the equipment but not to exceed 10 years. This would allow a city to spread out the cost of the equipment purchase closer to the actual life of the equipment. FF -22. Local Government Aid Reform Issue: The 2003 Legislature adopted a new LGA formula, largely based on recommendations by the governor, for cities over 2,500 population -- redefining how need is measured for those cities. The need formula for smaller cities was updated to reflect current city conditions. The Legislature also changed how the program measures a city's ability to pay for its needs by including taconite aids in the formula. This provision was not part of the governor's recommendation to the Legislature. The Legislature and administration also considered adding other factors to the ability -to -pay measure, including local sales tax revenues, tax increment financing tax capacity, fees, and service charges. Response: The League supports returning to the ability -to -pay measure of adjusted net tax capacity only. The League opposes the inclusion of any additional factors in the LGA formula's measurement of ability to pay. Including these measures will reward some cities and punish others based on past and future financial decisions, which runs counter to past legislative intent to have the LGA distribution unaffected by local financial decisions. HUMAN RESOURCES & DATA PRACTICES Human Resources standards of conduct. Several laws are potentially contradictory and force local HR -1 . Personnel Mandates on governments to choose which one to follow. Cities Issue: Many state laws increase the cost of providing city services to residents by requiring city governments to provide certain levels of compensation or benefits to public employees, by specifying certain working conditions, or by limiting city governments' ability to effectively manage their personnel resources. For instance, existing state laws limit governments' ability to effectively address incompetence or misconduct of city employees specifying certain procedures to be followed or Response: Any new legislation and changes to existing legislation should meet the following goals: Recognize the need for local decision - making authority by local elected officials with regard to the terms and conditions of employment for local government employees. Provide funding that pays the full costs of any mandated employment - related expenditures. 2004 City Policies 39 HR -3. Public Employees Labor Relations Act (PELRA) • The state should modify the definition of public employee under PELRA by removing the existing 14- hour /67 -day requirement and replace it with a definition in which employees must work more than an annual average of 20 hours per week. • Temporary or seasonal employees should be excluded from the PELRA definition of public employee in Minn. Stat. § 179A. • The arbitration process has produced decisions that are contrary to the interests of the public. The legal standard for overturning arbitration decisions is very difficult to meet; therefore, public employers should be allowed to bypass mandatory arbitration required under PELRA and directly access the district court system in situations where an employee is being terminated for gross misconduct (sexual harassment, sexual abuse, theft, or a felony conviction) that is related to the employee's position with the public employer. HR -4. Re- employment Benefits • Public sector temporary or seasonal employees should not be eligible for re- employment benefits. HR -5. Essential Employees Cities must balance the health, welfare, and safety of the public with the costs to taxpayers; therefore, the Legislature should carefully examine requests from interest groups seeking essential employee status under Minn. Stat. § 179A ( PELRA). • The League opposes legislation that mandates arbitration that increases costs and removes local decision - making authority. HR -6. Pension Benefits • The League opposes special legislation for individual employee pension benefit increases, unless they are initiated and approved by the city council of the impacted city. HR -7. Public Employees Retirement Association (PERA) PERA identified a significant long -term funding deficiency in its coordinated plan in 2000 that was the result of changing demographic patterns. The 2001 Legislature adopted employer and employee contribution rate increases and plan modifications to address the deficiency. • The state must carefully analyze future actuarial reports and experience studies to determine if the 2001 contribution rate increases and plan modifications are sufficient to cover the plan's deficiency. The state must assist local governments in covering any deficiency that still may exist. • The PERA eligibility guidelines must be modified to take into account unique part -time and student employment situations in cities, particularly in recreational operations. The plan should be modified to use pro -rated service credit, which would make PERA consistent with the other major Minnesota pension plans • The League opposes the expansion of the PERA corrections plan to include 2004 City Policies 41 HR -11. Drug and Alcohol Rehabilitation Under Minn. Stat. § 181.953, subd. 10(b), an employer cannot terminate an employee for a positive controlled substance test without first providing the employee a chance for rehabilitation and treatment. Recently, some cities have been advised that this law applies to "probationary" employees as well as regular employees. • The League supports a legislative change to clarify that the state law on drug and alcohol rehabilitation and treatment does not apply to probationary employees. HR -12. Health Care Insurance Programs • The League supports group programs designed to provide post- retirement health insurance benefits or health insurance plan benefits for public employees if participation by cities is strictly voluntary. - HR -13. Efficiencies in Payroll Processing • The League supports amending Minn., Stat. § 412.271 to reflect modern technologies and timekeeping practices. Changes must include an option for cities to employ paperless time recording systems. Last year, legislation was passed to allow the state to require direct deposit for all state employees. • The League supports changes to Minn. Stat. §177.23, subd. 4 that would allow cities to require direct deposit of payroll checks for all city employees. HR -14. Deferred Compensation Contributions Current law allows contributions to many pension funds sponsored by union organizations. • The League supports changes to Minn. Stat. §356.24 that would allow employer contributions to any deferred compensation program that meets the requirements of §457 of the Internal Revenue Code of 1954. HR -15• Pay Equity • The League supports the purpose behind the Local Government Pay Equity Act. • In the 2003 session, the Legislature adopted a two -year reporting moratorium and changed the pay equity reporting cycle from three to five years beginning in 2005. The League supports the moratorium and the extended reporting cycle to ease the burden of this mandate at a time when cities are struggling to fund important city services with fewer resources. • In order to assist cities with compliance, the League also supports streamlining pay equity reporting requirements by permitting electronic reporting of pay equity data. This change would reduce the administrative time associated with preparing pay equity reports and ensure timely feedback about cities' compliance with the law. 2004 City Policies 43 ELECTRIC RESTRUCTURING Cities have a strong interest in the public policy debate about electric restructuring or deregulation. Minnesota already enjoys some of the lowest average electric rates in the nation. The case has yet to be made that deregulation will result in either lower rates or improved service for consumers. Issue: For many decades, electric service to Minnesota citizens has been delivered through a combination of investor -owned utilities (IOUs), municipal utilities, and rural electric cooperatives. This system has served Minnesota well, delivering reliable, universal service at rates among the lowest in the country. In recent years, many have begun to promote "deregulation" or "restructuring" of the industry, meaning that electric service would no longer be a franchised monopoly. A number of states, primarily those with high electric rates, have taken steps to move toward such restructuring. In most of these cases, transmission and distribution remain regulated, with retail competition allowed for generation source. Advocates of restructuring argue that such competition will lead to lower rates. However, estimates by the federal Energy Information Agency* are that while the upper Midwest, including Minnesota, will experience slightly lower rates in the short- term, longer -term rates may actually be higher under restructuring. Concerns have also been expressed as to whether residential customers, and those in rural and other harder -to -serve areas will actually experience decreased reliability and increased rates. Local elected officials have the primary responsibility to the citizens of their cities to make certain restructuring that allows retail competition is as beneficial to the citizens as it is to the industry. Beneficial to the citizen means that all Minnesotans experience the same reliable, high - quality, universal, and low -cost service they experience under the current system of electric power delivery. City residents have a strong interest in the outcome of this important public policy debate. Cities are substantial consumers of electric power. Many cities have a significant portion of their property tax base in electric industry property, while others collect franchise fees and/or sales taxes on electric purchases within their boundaries. Citizens in 126 Minnesota communities currently receive economical electric service from municipal utilities, which make payments -in -lieu of taxes to help support city services. Significant increases in the cost of electric power for city operations or losses of these traditional sources of revenue will result in property tax increases. Response: The federal government should not mandate restructuring; the decision should be left to the states. The Legislature should continue to follow a slow, deliberative approach, taking time to consider how alternative models for delivering electric power will affect the state's traditional benefits of reliable, universal, high - quality and low -cost service. The public policy discussion should be focused on actual benefits to citizens, rather than on ideological arguments, stakeholder interests, and over - reliance on simplistic objectives like "consumer choice." Those advocating a 2004 City Policies 45 payments -in -lieu of taxes from municipal utilities. Cities' authority to negotiate siting fees and agreements for proposed generating facilities should be enhanced. • To avoid unnecessary demand for the limited space in public rights of way, open access to transmission and distribution facilities should be maintained through regulation. As the electric market is opened to interstate competition, the federal government must preserve the application of Minnesota's state and local sales taxes to the sale of electricity, regardless of the place of origin. Stranded Cost Recovery Issue: Regulated utilities have traditionally made operating decisions based on needs of consumers within their service territories. Many decisions, therefore, have been based more on need than on economics. In the transition from a regulated to a restructured competitive environment, electric generators' investments in fixed assets and other obligations may or may not remain as economically viable. Estimates of these "stranded costs" vary greatly, with some indicating no stranded costs or possibly even negative stranded costs resulting from increased prices after deregulation in Minnesota. Response: If regulatory actions have contributed to investment by existing regulated utilities that are not economically viable in a competitive market and if restructuring occurs, the League supports transition mechanisms that will allow utilities to collect revenues for those particular stranded costs. These charges, however, must be carefully monitored to ensure that only eligible and verifiable costs are covered and that over - collections do not occur. Taxpayers and ratepayers should not be expected to cover the cost of investments made for business reasons, apart from the requirement to serve under the regulated system. If negative stranded costs for the regulated utility as a whole can be established, and are solely the result of transition to a restructured environment, these regulated utilities should be required to contribute some limited percentage of established amounts to offset tax breaks given to these utilities as a result of restructuring. Property Tax Issue: Part of the discussion regarding possible deregulation of the electric power industry has centered on electric utility taxation. Proponents of restructuring assert that if effective free market competition is to replace governmental regulation, state tax policy must be changed. The main focus of the investor owned utilities (IOUs) so far has been removal of the attached machinery or personal property tax. Utilities subject to the tax argue it places them at a competitive disadvantage to non- Minnesota companies, rural electric cooperatives (co -ops), and municipals. However, accurate comparisons of tax burden are difficult, as other states use completely different taxing systems. Municipals make substantial payments -in- lieu of taxes. Additionally, co -ops and municipals do pay direct taxes on some of their property and indirectly when they purchase wholesale power from sources that are taxed, such as IOUs. Utility personal property can be a significant portion of the local tax base in all cities. Most obviously affected are cities that have 2004 City Policies 47 League of Minnesota Cities Cities promoting excenence League of Minnesota Cities 145 University Avenue West St. Paul, MN 55103 -2044 TEL: (651) 281 -1200 (800) 925 -1122 TDD: (651) 281 -1290 FAX: (651) 281 -1299 WEB: www.Imnc.org