2. City of Lino Lakes, Minnesota Financing Plan Highlights Citizens’ Charter Review Task Force March 29,2007 Pavement Management Report Financing Plan Presenter: Terri Heaton, Senior Vice President

3. 2 Background TKDA hired during 2004 to complete an overall pavement management analysis including: –An evaluation of the condition of the current streets and –The costs to maintain / reconstruct them in order to maximize the useful life of these investments The outcome was a Pavement Management Report (“PMR”)

4. 3 Determine a financing plan that is sustainable over the long-term Allocate the costs of the PMR in a fair and equitable manner –Spread evenly all taxpayers –Specific costs to certain property owners –Spread based on utility usage Identify non-tax revenues to finance the PMR Maximize use of appropriate external financing sources Minimize the utilization of City property taxes Purpose of PMR Financing Plan

5. 4 Maintenance –Costs related to the sealcoating and overlay of streets whose pavement life can be extended through on-going maintenance Reconstruction –Costs related to those streets that have outlived their useful life so that pavement is in need of removal and replacement; Two Primary Cost Components

6. 5 YearMaintenanceReconstructTotal 2005$ 230,000$ 0$ 230,000 2006347,500 0 2007365,0001,435,0001,800,000 2008385,0002,750,0003,135,000 2009402,5003,035,0003,437,500 2010422,5003,485,0003,907,500 2011445,0001,577,5002,022,500 2012467,5001,655,0002,122,500 2013490,0001,737,5002,227,500 2014515,0001,825,0002,340,000 Total Estimated Cost$4,070,000$17,500,000$21,570,000 Total Estimated Cost of the Plan

7. 6 Tax Levy on a pay-as-you-go basis General Obligation bonds repaid from property taxes General Obligation bonds repaid from special assessments General Obligation Street Reconstruction bonds repaid from tax levies Storm Water Utility to finance the portion related to storm water Financial Tools Considered

8. 7 Tax Increment / Tax Abatement Special Service District Economic Development Authority Capital Projects funds Storm Water Improvement District State and Federal Transportation Grants Anoka County Municipal State Aids (MSA) Additional Financial Tools Considered

9. 8 Maintenance Portion of PMR –Annual property tax levy for the maintenance portion of the PMR Ongoing costs with ongoing revenues Not capital in nature-not appropriate to bond $330,000 estimated for 2005 with an average annual cost of $407,000 Recommended Financing Sources

10. 9 Reconstruction Portion of PMR –General Obligation Improvement Bonds Repaid by special assessments for reconstruction projects where the existing street width is inadequate No less than 20% of the costs must be assessed to benefiting properties (not to exceed the special benefit to their properties) Remaining amount would be repaid from a property tax levy Recommended Financing Sources

11. 10 Reconstruction Portion of PMR –General Obligation Street Reconstruction Bonds for reconstruction projects where the existing street width is adequate and where other elements not currently existing do not need to be added Benefiting properties would be assessed an amount equal to the special benefit they receive Remaining amount would be repaid from a property tax levy Referendum is not required Unanimous vote by City Council required and subject to reverse referendum Recommended Financing Sources

12. 11 Reconstruction Portion of PMR –Storm water utility to pay for those costs of the PMR related to storm water –Tax Increment Financing, Tax Abatement, EDA Levy and HRA Levy Use is consistent with the City’s statutory authority Rational nexus between the use of these funding tools and a development or redevelopment project Recommended Financing Sources

13. 12 Reconstruction Portion of PMR –M.S.A. should be used to maintain and reconstruct those streets designated as part of the City’s M.S.A. system –Pursue cost sharing opportunities with Anoka County for the reconstruction of C.S.A.H. routes within the City –Pursue State and Federal Grants Recommended Financing Sources

14. 13 Annual property tax levies for maintenance costs of the PMR (sealcoating and overlays) No reconstruction projects meet the requirements for 100% financing with a G.O. Street Reconstruction Bond (all of the reconstructed streets will require widening) The City specially assess benefiting properties 20% of the costs of reconstruction projects The City establishes a storm water utility to pay for the storm water related costs of reconstruction projects Recommendations Assumed the Following

15. 14 Property taxes for maintenance Storm Water Utility G.O. Improvement Bonds: Principal repaid from Special Assessments Principal repaid from property tax levy Total $4,077,038 $4,200,000 $3,500,000 $9,800,000 $21,577,038 Total Funding Sources 2005-2014 Maintenance and Reconstruction

16. 15 Projected G.O. Improvement Bonds

17. 16 Projected Tax Rate Impacts

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19. 18 Projected Property Tax Impacts – $228,400 Residential Homestead

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21. 20 Impact of utility fee not projected because of unknowns: –Make up of the customer classes –Basis of utility charges (i.e. impervious area versus customer classes) –Operational costs attributable to the storm water utility –Storm water credit system for on-site detention/treatment Storm Water Utility

22. 21 Charter requires each PMR reconstruction project funded by our recommended sources would need to be approved by a vote of the citizens Creates an additional requirement the City of Lino Lakes must follow if the PMR is to be implemented – limits ability to ensure implementation of PMR Unique charter requirement that we have not found in previous similar studies Relationship of Financial Recommendations to City Charter

23. 22 Relationship of Financial Recommendations to City Charter Where exceptions are made, allowing certain properties to be specially assessed without referendum, bonds are taxable as they provide a private benefit to those homeowners Taxable bonds result in interest rates of 160 basis points higher than tax-exempt bonds –For example, 4.00% becomes 5.6% if the bonds are taxable –On $3 million bond issue, this costs an extra $465,645, assuming 15 year payback

24. 23 Funding sources recommended provide a method of financing widely used by most other cities in Minnesota Implementing the PMR is in the City’s best interest –Increasing pavement maintenance and reconstruction spending to amounts we have recommended projected to result in net savings of $11 million over the next ten years Relationship of Financial Recommendations to City Charter

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28. 27 The PMR, if implemented, would save $11,000,000 according to TKDA Separate maintenance costs from reconstruction costs and identifies appropriate sources of funding for each The financing plan recommended provides widely used municipal financing practices for implementing a PMR –Sustainable over the long term –Subject to voter approval Conclusions