Consider Recommending City Council Approval of Municipal State Aid Maintenance Allocation Reduction

Purpose:
The purpose of this case is to consider recommending City Council approval of reducing the City of Ramsey’s Municipal State Aid Maintenance Allocation from 35% to 25%.

Background:
Municipal State Aid Cities, of which Ramsey is one, receive annual State Aid allocations for both construction and maintenance activities.  In 2017, the City of Ramsey’s total State Aid allocations were $1,199,156, of which $717,811 was allocated for construction and $481,345 was allocated for maintenance activities.  Attached for reference is the City of Ramsey’s 2017 Notice of Annual Distribution for Ramsey.
 
According to State Aid rules (SA Operational Rule 8820.14 subpart 3) a city can request a maintenance allocation based on one of the following four options:

1. $1,500 per improved mile.
2. 25% of the total allocation.
3. 35% of the total allocation.
4. A lump sum dollar amount, which is greater than $1,500 per Improved Mile, but not more than 35%.

 
If a city has never submitted a request, its maintenance allocation is set at the minimum of $1,500 per improved mile, plus bond interest.
 
A Maintenance Expenditure Report must be completed by a MSA City if:

1. The City’s maintenance request (not including bond interest) is greater than 25% of its total allocation (construction + maintenance allocation).
2. The City’s lump sum request (not including bond interest) is greater than 25% of its total allocation (construction + maintenance allocation).

 
Therefore, if a City requests more than 25% as a maintenance allocation a Maintenance Expenditure Report must be completed and filed each year.  In 2007, the City of Ramsey requested its maintenance allocation be increased to 35%.  As a result, Engineering Staff have been filling out Maintenance Expenditure Reports every year since then, which takes numerous hours to complete.
 
To avoid the need to complete expenditure reports each year, Staff would like to reduce the City’s maintenance allocation to 25% again.  This would reduce the City’s maintenance allocation for 2018 to roughly $300,000, which would not have a negative impact on our street maintenance program.  Each year $140,000 is transferred from the State Aid account to the General Fund to cover street maintenance activities, which is well below $300,000.     
 
Requests are due to MnDOT by December 15, 2017.

Staff estimates this case will take 10 minutes to present and respond to questions.

Alternative #1 – Motion recommending City Council approval of reducing the City of Ramsey’s Municipal State Aid Maintenance Allocation from 35% to 25%.
 
Alternative #2 – Motion of other.

Staff will prepare and submit the request as part of our regular duties.

Staff recommends Alternative #1.

Motion recommending City Council approval of reducing the City of Ramsey’s Municipal State Aid Maintenance Allocation from 35% to 25%.