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02/03/1998 - City Council Special t AGENDA SPECIAL CITY COUNCIL MEETING Tuesday February 3, 1998 5:00 p.m. Municipal Center Community Room I. ROLL CALL & ADOPTION OF AGENDA II. VISITORS TO BE HEARD III. DIRECTION RE: NORTH PARK IV. OTHER BUSINESS 5:45 V. LEGISLATIVE DISCUSSION: SENATOR WIENER REPRESENTATIVE COMMERS REPRESENTATIVE PAWLENTY VI. ADJOURNMENT 1 4" — )T— W city of eagan MEMO TO: HONORABLE MAYOR& CITY COUNCILMEMBERS FROM: CITY ADMINISTRATOR HEDGES DATE: JANUARY 30, 1998 SUBJECT: SPECIAL CITY COUNCIL MEETING/FEBRUARY 3, 1998 A Special City Council meeting is scheduled for Tuesday, February 3, 1998 at 5:00 p.m. in the Community Room. A menu is enclosed on pages_�J_through S� for your choice of a sandwich or salad. Please contact Maria with your choice (a voice mail message is fine) bv noon on Monday. NORTH PARK The City has taken a reasonable approach to determine if the North Park site has serious environmental hazards for the public. The Minnesota Pollution Control Agency is satisfied with the results and does not feel that additional testing is necessary. However, the County feels otherwise and the testing that is proposed is expensive. The City has to submit a closure plan; to date, we are processing that plan utilizing City staff. The closure plan requires a narrative of how the City intends to proceed with the site clean- up, then to plan how the area impacted by the dumping will be created and used. Elevations and cross-sections will need to be provided. A concept plan for the entire park must also be provided, which means approval of a master plan for the site by the City Council. The master plan that was prepared and submitted to the State Legislature three years ago would be adequate for this purpose. Staff is questioning why the County feels the need to manage the environmental risk at a higher level than the Minnesota Pollution Control Agency. Enclosed on pages through is a copy of a letter the City received from Barry Schade, Environmental Management Director for Dakota County, in mid-December. This correspondence raises various issues that would require additional expense that the staff feels is not necessary given the findings of the Minnesota Pollution Control Agency. The policy question for the City Council is whether the City should proceed ahead with the development of North Park based on the conclusions and find* of the MPCA as outlined in the draft correspondence to Mr. Schade, enclosed on pages through ja or other action deemed appropriate by the City Council. Staff has received a verbal approval from the MPCA; a letter is being processed by that agency essentially stating there are no problems with North Park given the environmental testing performed by the City and its consultants. The MPCA will issue a second letter once the site plan is presented for their review. DIRECTION TO BE GIVEN: To provide staff direction regarding the City's position on the status of more environmental study requested by Dakota County vs. the position by the Minnesota Pollution Control Agency that there is no additional testing necessary for North Park. OTHER BUSINESS At this time, there are no additional items for Other Business. The Council can use this time as a break between the North Park agenda item and the arrival of our legislative delegation or discuss any matters of"other business." LEGISLATIVE DISCUSSION Senator Wiener, Representative Commers, Representative Pawlenty and Metropolitan Council representative Kevin Howe were invited to attend the February 3 City Council workshop at approximately 5:45 p.m. and remain for the start of the regular City Council meeting at 6:30 p.m. to discuss various matters of pending or proposed legislation that impact local government. The City has been told by Kevin Howe's office that he is out of town and will not be able to attend the meeting on Tuesday and Representative Commers is unable to attend due to a family commitment. Senator Wiener and Representative Pawlenty have both responded that they will be present at the meeting. Senator Wiener could develop a conflict if a committee meeting that is scheduled for 4:00 p.m. on Tuesday, February 3, does not conclude in time for her to be present at the meeting. This committee meeting is the Local Metropolitan Property Tax Committee that will be considering the request to defer special assessments and property taxes for the Caponi property for five years. The other request for special legislation to increase the number of liquor licenses will be given consideration by the Senate Commerce Committee at 2:00 p.m. on Tuesday, February 10. The Dakota County League of Governments has proposed legislative position statements on housing, transportation and sales tax. For a copy of the handout that was distributed at the legislative breakfast on Thursday, January 29, refer to pages /. through w2L. There are many other issues that may be pertinent to discuss, such as metro governance bills and the Governor's proposal to extend levy limits. Please refer to noticeshat were faxed by the AMM this week on these two issues enclosed on pages 222 through! . C Other issues the City Council have discussed include the local officials' metropolitan governmental unit economic interest disclosure and the restriction on the number of days the City Council has to act on land use and zoning matters. There may be other legislative issues the City Council would like to discuss with the legislative delegation. There is no official agenda for the meeting. 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" = 1 � r 1S `mq � m � we � � Cm = u aUl eU e°i 1 c Nr o Em m H vs = A 3 h ° u � � U E S' -= 1 co ,a Z fl a w 'o 'g E ` �� � _ "d � •"' � .o q Y � ° 1 v Q � y eYq .d �'46,,, E •o E = o H 10, ?� �i a u � � e0 � � •3 vF� � = s >, n .�o o �_ -� F .e •, y ou � _ U c � �_ Z zO u W 0 c 'H F cr W 'g U � r = F+ o N Z c � � guo� � 3 F � e� � ,:: qg3; �� � .c ,e � e � p � "'i v, § � " OZ � 03 Zy � o � •�' � `o � � C A � w r.� s S '� 3 � � W rs � � w � �.. �_ '" ^ r,,,t• � � w � � � � H u �' � � � '��s 3U F o v eoa°� F o w F o3a, 3 F m m 3 A`7+ Je. vi u � u.rr t DAKOTA COUNTY BARRo RECTO HARE (612)891-7011 ENVIRONMENTAL MANAGEMENT DEPARTMENT FAX(612)891-7031 14955 GALAXIE AVENUE APPLE VALLEY,MINNESOTA 55124-8579 December 11, 1997 Mr. Ken Vraa Director of Parks and Recreation City of Eagan 3830 Pilot Knob Rd. Eagan, MN 55122-1897 RE: Former Borchert-Ingersoll Property Dear Mr. Vraa: On November 24, 1997, Lynn Thompson of this Department met with you and MPCA Voluntary Investigation and Cleanup (VIC) Program staff to discuss the investigative work that has been done to date by your consultant, Northern Environmental Technologies, Incorporated (Northern Environmental), on the above-referenced property. This investigative work was intended both to determine what, if any, environmental impact to soil or ground water has resulted from previous uncontrolled dumping of waste on this property and to characterize the waste that was deposited in each of the two disposal areas. At the end of the meeting, Ms. Thompson agreed that we would provide, in writing, our comments on the ground water sampling and soil evaluation that has been done to date, the need for further characterization of the site, and the level of detail we want to see in your proposed end-use plan. We believe that the data from the investigation to date does not support the conclusions that are being drawn: the data that has been supplied to us is inadequate to determine whether or not the ground water has been adversely impacted; the soil data suggests something different to us than it does to your consultant; and, the waste and the soils in the two disposal areas has not been adequately characterized. We believe that the monitoring well water analyses are not useful for the following reasons: • The groundwater flow gradient was not determined. The ground water contours drawn in Figure 4 of the December 12, 1996 report are highly suspect because they show a radial flow pattern when there is no apparent hydrologic cause for such a pattern. The January 22, 1997 report notes that, "there is at least one perched saturated zone above the regional ground water table, which is somewhat ephemeral." The data in the reports is insufficient for us to determine which wells are in the same aquifers, how the aquifers may be connected, or the direction of ground water flow. aa..•.w............i..•......, AM PMI JAI nPPnRTI INITV PMPLOVEH i • Sample collection techniques during the first sampling event may have invalidated the ground water analytical results. In response to our request for well stabilization data, Northern Environmental representatives indicated that this data was not collected prior to sampling. These representatives further indicated that field notes from the first two sampling events indicate that the wells were not purged in accordance with accepted sampling protocols. • There was no flood protection for the three wells closest to the pond. Flooding of the storm water retention pond may have seriously compromised the water chemistry data from the wells. These wells should have been cased to five feet above the maximum flood level or should have had double watertight seals. • The pond area may represent an area of ground water recharge, causing the ground water to flow away from the pond. The consultant's field notes appear to show that the water levels in three of the five wells are at or below the water level of the pond. Therefore,the water sampled from the wells may have originated from the pond rather than the dumpsites. In general, the water levels in the pond and the three wells noted above are higher than in the remaining two wells. This probably means that the local ground water flow direction is away from the pond, at least when the water level in the pond is high. • The laboratory detection limits for certain compounds were not appropriate. Furthermore, the presence of carcinogenic compounds in the water samples were attributed to laboratory contamination. The Minnesota Department of Health has established Health Risk Limits for compounds that may impact human health. The laboratory should have reanalyzed the samples, at appropriate detection levels, to rule out laboratory contamination as the source of the results. Northern Environmental has conducted inadequate sampling and analysis of the surface, sub- surface and deep soils on the property. The soil data that was submitted to us is inconclusive due to the limited number of samples for a property of this size with two distinct disposal areas, the limited location of the sampling and the limited evaluation for chemicals of potential concern. The soil evaluation that has been done to date is inadequate to conclude that the disposal sites on the property represent no risk or low risk to human health and the environment. Several soil samples that were taken in October 1997, from the disposal site on the northern part of the property contain concentrations of cacinogenic Polycyclic Aromatic Hydrocarbons that exceed residential Soil Reference Values, established by the MPCA Site Response Section in its Draft Site Screening Evaluation Guidelines. We are not asserting that this data is representative of this northern disposal site or the property as a whole. However,the identification of chemicals affecting human health on the property warrants additional sampling of on-site soils to determine the extent, distribution and concentration of contaminants of concern. The soils in the southern disposal site have not been appropriately evaluated. In addition,the consultant has not characterized the waste, as was proposed in your May 7, 1996 letter, in either disposal area. This is an essential requirement under the County's Ordinance. We have outlined the requirements for bringing nonconforming sites such as the former Borchert- Ingersoll property into conformance with Dakota County Ordinance No. 110 by providing you with the Ordinance language and by explaining the requirements in various meetings and correspondence, including my letters dated February 7, 1996, and July 28, 1997. Therefore, I will not repeat these requirements in this letter. As noted during the November 24 meeting, a record disclosing what waste has been left on this property will need to be filed in the County Recorder's Office and any physical hazards created by disposed waste must be addressed. In terms of your proposed end-use of this property, a narrative description of the use and drawings depicting any proposed structures, play areas, roads and paths etc. should be sufficient at this time. Without adequate investigation of the two disposal areas, however, we will be unable to evaluate a corrective action plan or whether the proposed end use is prudent. Based on the history of this property, including anecdotal information that has been given to us by various individuals regarding dumping in this vicinity, we believe this property must be thoroughly investigated prior to its being converted to a public use. If you have additional questions, please contact me at 891-7004 or Lynn Thompson at 891-7042. Sincerely, Barry C. ade ENVIR MENTAL MANAGEMENT DIRECTOR c: Joe Otte, MPCA VIC Program Jonathon Smith, MPCA VIC Program Steve Robertson, Northern Environmental Lthorchertl297 FY 1/27/98 Dear Mr. Schade F. Re: Borchert-Ingersoll property :, This is in response to your letter of December 11,1997 in regards to the Borchert Ingersoll site. As you know,this has been a long and arduous process for the City. While we recognize that the City must yet supply the County with a closure plan, quite frankly, I'm disappointed with the critical content of the letter. Particularly when the test results clearly reflect that there is not a strong indication or clear evidence of any of the problems previously thought to be associated with the site. Your letter would give the uninformed reader the mistaken opinion that the City has not done anything to meet your request to investigate the site when, in fact, since 1995 we have invested considerable hours of staff time and tens of thousands of dollars in testing and investigative work. The result of this work reflects that there is not the extreme risk with the site as was previously characterized by the County. We concur with the opinion of Northern Environmental,the City's project consultant,that there is little significant environmental risk with the City using this property for a park as originally proposed. Additionally, and most significantly,the Minnesota Pollution Control Agency is in the process of issuing a"No Action" letter, and upon receipt and approval of a preliminary site development plan, a"No Association" letter. At a meeting on November 24, 1997 with Northern Environmental, County and City staff,the PCA staff informally characterized the site as a"nothing" site. They went on to say "we're done" ...no need for further characterization,money would be ill spent to do more" The main point of the November 20'meeting was to understand why Dakota County still had reservations about the site while MPCA is in the process of issuing liability protection letters. In addition, it was the intent to have our consultant and the MPCA respond to County concerns. Initially the Dakota County representative was abnormally 1 6 concerned about the risk factors but appeared to be persuaded by the MPCA and consultant's report and findings. However,your letter of December 11 seems overly critical of the work completed and requests additional work to be done. I'm very surprised at the need to investigate another location on the site since County staff has been fully apprised of the number, locations and type of samples to be taken throughout the process. The City has been willing to do investigative work,however we do not feel obligated to continue to pursue new areas that have now become"important" in the view of County staff. You criticize Northern Environmental about"inadequate sampling" and "limited location" given the size of the site. Why is the county unhappy with Northern Environmental and the locations of the samples now? County staff had ample opportunity to review the locations prior to the work and to redirect to other locations if they felt it was important. You raise an issue with the groundwater flow gradient in your letter. This issue was thoroughly discussed on November 24`". Although my meeting notes do not capture the whole conversation, MPCA staff was well satisfied with the results. In addition to accepting the results, they offered a reasonable explanation for the ground water contours,which were raised by your staff. Parts of that response noted that the adjacent lake is a storm water pond and subject to frequent fluctuations in elevations in a period of seasonal storms. Other possible explanations were also reviewed,but in the end the MPCA staff hydrologist concurred with the logic and results presented by Northern Environmental on this issue. For what purpose are you asking that further characterization of the site be done? Section 3.05 of County Ordinance 110 (closure)does not appear to make specific recommendations pertaining to characterization but rather focuses on monitoring. We believe the borings and samples that have been taken are indicative of what is there and seems to be consistent with what could be expected at a site filled with construction debris. Each of the six subsurface soil samples was analyzed for twelve compounds, and only one sample was found to contain a single compound level in excess of the Site /0 2 Reference Values. No excessive levels of the compound were found in the groundwater samples. The MPCA expressed no concern over the reading. Further, no detectable levels of Polycyclic Aromatic Hydrocarbons (PAR'S)were found in the groundwater samples. All of these results would seem consistent with the series of aerial photos and anecdotal data submitted to MPCA. The fact that the testing did not find what others might have thought was there should not discredit the results. Your staff has wanted us to excavate the site from the beginning, and it would seem that that thinking persists despite the boring logs and analytical data. Since it's someone else's money it's a simple (albeit an expensive) request to make. If you are still insistent, then perhaps the County should be prepared to step up with dollars it has amassed from the tipping fees to do this work. We believe that, as the MPCA staff has said, that it would be money ill spent. Rather, it would be more appropriateriate to cap the site and pave over it with our intended parking lot thereby reducing the likelihood of exposure, erosion or leaching. This action would also seem consistent with Section 3.0513 of the Ordinance, which states that closure must be addressed in a manner that "eliminates, abates, mitigates OR controls the escape of pollutants". The City of Eagan understands that Dakota County Environmental Management Department has been given the responsibility of managing environmental risk on behalf of the County and that the County also has requirements concerning proper closure of land disposal sites. However, why does the County feel the need to manage the risk at a higher level than the Minnesota Pollution Control Agency? It would seem that the assessment of the risk factors by the County is at the opposite end of the scale from MPCA. We are also aware that this is not the first occurrence of this disparity, which we find unwarranted on the part of the County technical staff. Are the County staff allowed or empowered to deviate from managing the lowest levels of risk possible?And is the County willing to participate financially in any further sampling that is being requested? // 3 It will be incumbent upon the City to proceed in a cautious and responsible manner when developing the site. We believe that the next step is for the City to refine a narrative description and drawing depicting the intended use of the property and to prepare preliminary grading plans. When completed, we will provide a copy to you and MPCA staff. According to Section 3.05A of the Ordinance,the County "in consultation with the applicant shall determine whether any requirements do not apply" to a site or facility when preparing a closure plan. Based upon the current data,we share the opinion of MPCA that the investigative work is complete and that discussions focusing on closure can commence. /� 4 DAKOTA COUNTY LEAGUE OF GOVERNMENTS LEGISLATIVE POSITION PAPER TRANSPORTATION TRANSPORTATION SY TEM El IT` INT T The Dakota County League of Governments supports the establishment of additional funding for highways and transit and a revision of the funding formula by which funding is distributed. The sources of additional finding for highway and transit needs should meet the test of being efficient, progressive, stable and designed to meet both current and future needs. The League supports a change in the distribution formula for County State Aid Highway funds to provide equity in the treatment of developing areas with growing transportation system demands. Increasing the emphasis in the distribution formula on factors such as the vehicles registered in a county, or simply population are examples of changes which would move toward this objective. Support for new revenue should be linked to an acceptable change in the distribution formula. The League supports the creation of separate, dedicated fund for transit and related transportation needs. This fund should be supported through revenues which are derived from sources based on a "user pay" concept. Revenue sources such as motor vehicle registration fees, the motor vehicle excise tax and/or a variety of user fees (e.g., parking space or vehicle mileage fees)might be considered. Monies should not be diverted from the Highway Fund - which currently cannot meet the needs for construction of safe, efficient roadways -for transit purposes. THE NEED FOR ACTION In 1990, about 600 million miles per year were being driven on Dakota County roads. In 1996, the number is estimated to exceed 750 million. Over the next 25 years, this number is expected to grow by another 80%, reaching over 1.3 billion miles per year. Traffic volumes in Dakota County will continue to grow at a rate exceeding the growth in population and households. The County is expected to add nearly 68,000 households from 1995 to 2020, or over 2,700 per year. 13 ► Employment in the County continues to increase at approximately 3% per year,with the long term growth rate projected at 2.3%annually. From 1995 and 2020, employment in Dakota County is expected to grow from 122,600 jobs to 168,400 (37%). The growth in traffic will produce serious deficiencies on the County road system. Peak traffic on CSAH 42 near the Burnsville Center already exceeds 60,000 vehicles per day, in the next 20 years,traffic on an average day on Cedar Avenue in Apple Valley will be at this level. Traffic volumes along major parts of CSAH 42 will exceed the current capacity of the roadway. On the average, commuting times are expected to double (from between 17 and 18 minutes to 35 minutes) without correction of these deficiencies. The costs - both economic and political-of these expansions will be high. Regional plans currently provide almost no funding for expansion of roadways outside of the I-494/694 beltway. Per capita,Metropolitan Area counties receive less than 1/3 of the State average per capita allocation under the CSAH distribution formula. Some counties with about the same land area as Dakota County receive 21 times the per capita funding level for Dakota County. ► Dakota County receives about 1/3 of the State average in CSAH funds per vehicle. ► Dakota County receives about$.01 per vehicle mile driven; the State average is $.03 per vehicle mile driven. The 10 counties comparable in land area to Dakota County receive from $.04 to $.115 per vehicle mile driven. Anoka, Dakota and Washington Counties receive the lowest amount of highway aid per capita in the State. All of the Metropolitan Area counties are in the bottom 10 counties in the State. cAdsr'aa1141a AFFORDABLE HOUSING In this time of low mortgage interest rates and high rates of employment one might believe that affordable housing is more accessible to people than at any time in the recent past. This, unfortunately,is not true. Finding affordable housing in the Twin Cities Metropolitan Area, Dakota County in particular,is becoming a challenge for an increasing number of families who wish to work and live in Dakota County. The employment growth and strong economy in Dakota County creates a situation in which landlords,sellers and builders can demand an increased price. This negates the benefit that a lower interest rate usually provides and further in the gap between earned wages and monthly housing costs. While many more people are able to locate employment,the majority of new jobs pay wages less than what is needed to afford housing in our area. This disparity often forces people to pay a higher proportion of their income than they can afford toward housing in Dakota County. Housing is considered affordable if an individual or family pays no more than 30 percent of their monthly income toward housing costs. As indicated above,many jobs pay lower salaries than necessary for a family to afford housing priced at Dakota County averages. Households with only one full-time wage earner,such as single parent families,face particular difficulty finding an affordable home. Even with two family members working full time in jobs that pay close to minimum wage($5.15/bour or$10,700/year)a family cannot afford the typical two-bedroom apartment or three-bedroom house. In Dakota County,an average three bedroom apartment rents for$893.90 per month. A family would need to have an annual income of$35,752 in order to afford such housing. This is an hourly rate of$37.19,which is significantly higher than many Dakota County residents earn. If a family wished to purchase an average priced home in the county($108,000)their annual income would need to be$37,000. Despite the aggressive efforts of Dakota County Housing and Redevelopment Authority and its communities,there exists long waiting lists for individuals and families in need of housing assistance. Currently,there are over 2,000 individuals/families waiting to receive assistance. In most instances they will wait at least two years before being assisted. Clearly there exists a need for more affordable housing in Dakota County. Even though the economy is strung and unemployment rates are historically low,housing costs continue to escalate at a rapid pace. State legislative support is important to help ensure success in the provision of affordable housing in Dakota County. The following state legislative actions would assist Dakota County in better meeting affordable housing needs: Community Rehabilitation - Set Aside Eleven Dakota County communities have formed a cluster Pursuant to the Metropolitan Livable Communities Act to address affordable housing needs in the county. These communities have approved a 5-year Action Plan that articulates the efforts that will be made to address a variety of housing needs. To successfully implement this plan, a stable source of flexible state funding is needed. The Dakota County Housing and Redevelopment Authority is requesting that state legislation be enacted to set aside a portion of currently appropriated community rehabilitation funds. A $800,000-$900,000 annual set aside of funds would allow the cluster to have a certain source of funding that can be utilized for carrying out the variety of activities included in the 5-year Action Plan. Housing and Economic Vitality Initiative Sponsored by the Twin City Family Housing Fund and the Greater Minnesota Housing Fund, the Housing and Economic Vitality Initiative calls for the state to dedicate$.40 million to provide affordable housingfor Minnesota families, to be matched by$20 million from the private sector. The Housing and Economic Yitality Initiative will raise$60 million in public and private funds for affordable. • In the past two years,the Family Housing Fund and the Greater Minnesota Housing Fund have raised$40 million for fordable housing in Minnesota. These organizations propose to: 1)use$10 million of these funds for affordable housing for working families,and 2) leverage$10 million from private corporations through a state housing tax credit,for a total of$20 million from the private sector. • The Housing and Economic Vitality Initiative calls for the state to match this private sector commitment with a one time$40 million allocation for a total of$60 million for affordable housing. • These funds can leverage an additional$180 million in federal,local and private sector funds for a total of$240 million. This amount would create 3,000 new units of affordable housing. Sales Tax Exemption for Affordable Housing Exemption from the state sales tax of construction supplies and materials can assist'in providing affordable housing. Assuming that 60%of the cost of new housing is materials and supplies,the sales tax exemption could reduce the cost of units by 4%. For example, a$100,000 unit could have its cost reduced by $4,000. In the 1997 Session,Senator Metzen introduced legislation to provide a sales tax exemption for tax credit and essential function housing. The bill was also introduced in the Nouse. The House bill was heard in tax committee and was considered for,but not included in,the omnibus tax bill. The Senate bill was not heard. + See also Sales Tax on Local Government P=hases. Preservation of Existing Affordable Housing A large amount of the existing affordable housing in the state was financed through federal assistance in the 1970s and early 1980s. 1n many cases the federal contracts providing this affordable housing will be expiring in the late 1990s and the early years of the next century. If these contracts are not renewed,thousands of Minnesota residents will lose their affordable housing. State legislation to provide private landlords with incentives to retain their housing as affordable is critical. A working group is presently developing a proposal to the state legislature in this area. It is our understanding the Governor's Supplemental Budget will also include some funding for this issue. The Crst of Obtaining Affordable Housing $1,000 . Monthly Cost m Own a 1.000-1.500 Square Foot home $9251 $900 Average Monody Rem for a 3-bedroom Apartment 5993 $800 Average Monthly Rent Cur a 2-bedroom Apartment $708 $700 $600 $500 A Family Making Between $18,000-$23,000 per year A Family Malting Between Can afford $400 $15,000-$18,000 per year $450-$575 can afford a Month for Housing A Family Making $375-$450 `"'WS�Mdood $15,000 or less per year a Month For Housing .rodiaal as�ahy ha at�) $300 cant afford (Jabs in thU ranee Iudede: $312-$375 bask taller,bQ"ban a'dy refturann caaL fie deme and a Month For Housing Doose d.a,K„) (Jobs to this=up batadc Dat hasten,count=er dirty,retain sate,and"d cm waken) Housing is considered affordable if it does not exceed 30 percent of the households monthly income. Families wbo earn wages between$0-$23,000 would have,a difficult time renting or purchasing a home at currelit rates. For a family to be able to afford an average monthly rent payment on a two bedroom apartment they must make at least$28,320 per year;for a three bedroom apartment the household would need to make at least$35,752- 1. Co&to own a ho=is baacd or.Prindpal,lamest,Taxes and Iasurancc(P.I.T.n. Monthly utilities and taaintamm would add additional hwsiag expenuw- / 1996 Median Sales Price of Existing Homes ir.Dakota County - s2so,000 rlv0000 ' slso,000 . 5100,000 W.000 so o c e . o S c � a. IL 7'5a m e C p J S w ,K ? O Dakota County Dakota County Median Sale Price of Existing Homes Unemployment Rates From 1990 to 1996 From 1990 to 1997 $140,000 $120,000 aoo°N. 1100,000 3.00x $80.000 2.009 $60,000 1.00°ti 1990 1901 1992 149.3 104 1995 1996 1990 1991 1992 1993 1994 1985 1996 1987 l 1997 Average Rents 4 Dakota F2 ftft= $1,000 40 CL Average 1 Rents Bedroom Apartments in Dakota County From IM to 19" 111ff—*-3 Swroam .f1 $600 moo I DAKOTA COUNTY LEAGUE OF GOVERNMENTS LEGISLATIVE POSITION PAPER STATE SALES TAX ON LOCAL GOVERNMENT PURCHASES LEGISLATIVE SUMMARY The Dakota County League of Governments (DCLG) believes that the state sales tax on local government is essentially a State imposed property tax. As the Legislature contemplates methods for property tax relief, elimination of this sales tax on local government would achieve two objectives. First,reduction of the property tax burden on residential and commercial property owners who actually pay this tax as a "pass through" from local government. And secondly, preserving local government accountability for levies it actually imposes and uses for its own purposes versus acting as a collection arm for a disguised state government tax. BACKGROUND In 1992, the Legislature repealed the sales tax exemption for local government purchases, (excluding Fire Services capital outlay purchases), that included all cities and counties, with the exception of school districts. This action increased the cost of local government by an estimated $77.5 million in fiscal year 1998 and a projected $89 million in 1999. As no additional state aids were introduced to offset this additional cost to local governments, this repeal has effectively increased local property taxes to finance state operations by forcing local governments to increase local tax levies. In addition, other states that have imposed sales tax on local government purchases, have indicated it is costing 5% to 7%of gross receipts in administration costs. The League of Minnesota Cities and Association of Minnesota Counties has adopted a similar legislative position calling for the reinstatement of the sales tax exemption for local government purchases. DISCUSSION The chart below reflects capital outlay purchases, excluding project construction materials and non- capital operating expenses, for 'Dakota County and selected 2cities between 1994-1997, with 1998 budgeted expenditures. GovLUnit .. .. ..:: ales Tax j Dakota COan $ 9,086,938 $ 10,228,815 $ 9,700,877 $ 9,824,846 $10,109,769 $ 3,181,831 ppte allie� $ 1,705,342 $ 2,708,319 $ 1,370,647 $ 1,367,467 $ 1,374,588 $ 554,214 umsvin $ 652,488 $ 607,950 $ 484,423 $ 624,854 $ 907,399 $ 213,012 Agan _ $ 719,727 $ 1,116,528 $ 1,384,330 $ 1,278,324 $ 1,290,047 $ 376,282 rmingto` $ 445,100 $ 549,083 $ 376,962 $ 599,293 $ 263,927 $ 145,234 as'tngs $ 327,521 $ 409,935 $ 163,347 $ 110,806 Not Available $ 65,755 �e�ifl $ 787,460 $ 865,070 $ 476,901 $ 884,977 $ $20,188 $ 249,249 oseMotint $ 217,495 $ 613,394 $ 717,228 $ 380,282 $ 224,920 $`• 139,966 raffil aQW $13,942,071 $ 17,099,095 $ 14,674,715 $ 15,070,848 $14,990,838 $ 4,925,542 As the reader can easily see,total sales tax payments to the State are significant and present continuing fiscal challenges to local government units attempting to reduce costs. Total sales tax paid by the 'Dakota County capital outlay figures and sales tax paid are inclusive of all categories of direct capital expenditures. 2 Cityfigures do not include sales tax paid on City construction project materials and non-capital operating expenses. C:?OV above local government units over this period of time is almost$5 million. This figure does not include sales tax paid by cities on materials used in city constructed public improvements. It should also be noted that the sales tax paid by contractors directly on construction materials contained within construction bids are also not included in the chart's figures for either Dakota County or Dakota County cities. Ostensibly, sales tax paid directly by contractors to purchase materials in privately awarded public improvement projects are passed through to local government in the form of higher construction costs. Key Points Sunnortine the Dakota County League of Government's Position ■ Sales tax paid by local governments through General Fund operations is raised through the property tax effectively increasing the local tax burden for property owners and raising the cost of local government. ■ Accountability to taxpayers is lost when one level of government taxes another level of government. ■ Sales tax collected by local units of governments is essentially a state imposed tax levy. The State of Minnesota should exclude the collection of sales tax from levy limits on City/County levies as this is a state tax revenue source.. ■ The establishment of the Local Government Trust Fund provided for local units of governments, including Counties, to be the recipient of 1/2 percent of the sales tax revenue collected. The State has not met this commitment and is effectively using this source of revenue to fund its own operations. It should be noted that the State threatened to reduce state aid to cities and counties who did not"voluntarily" chose to support the 1/2 percent sales tax option increase. ■ The State Legislature did not impose sales tax upon all levels of government specifically excluding school districts from this tax. This type of state policy is discriminatory, inconsistent and punitive in its application as it treats one level of local government differently without legislatively articulating the reasons for this disparate treatment. ■ Finally, the State continues to realize huge budget surpluses on its general tax collections. The collection of sales tax should be limited to goods and services produced by the private sector, exempting the provision of public services that are in essence paid through property taxes, state and federal aids and targeted user fees. LEGISLATIVE ACTION REQUESTED Dakota County and the Cities of Dakota County support full exemption from Minnesota Sales tax on all purchases by local government. In addition, as there was no increase in state aids to cities and counties when the sales tax was imposed,there should be no corresponding reductions in state aids upon its repeal. Accordingly, this exemption must not be coupled with any reductions in Local Government Aid or 1gACA. We request that Dakota County's legislative representatives support this position during the 1998 Legislative Session. On Behalf of the Dakota County League of Governments, Brandt Richardson Thomas Burt John Erar County Administrator City Administrator City Administrator Dakota County City of Rosemount City of Farmington January 28,1998 4:04 PM From:AMM Fax#: Page 2 of 2 AMM FAX . hociationof NEWS Metropolitan Municipalities January 26-30, 1998 (no. 2) Rep. 4rfield introduces metro governance bills Rep.Myron Orfield has intro- bility of transferring functions or duced two bills regarding services from metro counties to metropolitan governance. the Metropolitan Council. One bill (HF 2766)would The study must, however, provide for an elected Metro- include an analysis of the feasi- politan Council, while the other bility and benefits of transferring (HF 2588)would authorize county county correctional facilities and commissioners to serve as highways to the council.The Metropolitan Council members. report must be sent to the Both bills have been referred to legislature by Dec.31,2000. the House Local Government ♦ Have the Metropolitan and Metropolitan Affairs Com- Council district, if it lies wholly mittee.HF 2588 is scheduled for a within the county, also serve as hearing on Thursday, Feb.5. the county commissioner district. HF 2588 would: ♦ Have the council chair be /fdah' i> ®e�l9d/ t®�AXN ♦ Authorize a 25-member elected from among the council Metropolitan Council of elected members.The chafes term is one d1yo4wAly d1rill7aw Ik county commissioners and year. faati�/ni�tevdedt®brr��re/rrftb®ay permit the legislature to increase ♦ Implement the new Metro- a% malmi0ift fr/e,Ntesda,* the membership by up to eight politan Council structure in 2002. Arfa,7O'kpOtmM &15 members in order to Increase the AMM does not have a policy number of county commissioners regarding an elected Metropoli- ©�//j7ltf19�8�1�°l who are selected from Metro- tan Council, but this legislation politan Council districts. will be presented to the Board at ♦ Require the legislature to its Feb. 12 meeting. �tOa> MA�e�lc� redraw the boundaries of the We would like to hear from c11s Metropolitan Council districts you! If you have any comments *hXafter each decennial census. or concerns, please contact &2&-1149 ♦ Direct the Metropolitan Gene Ranieri at 215-4001. Bali A"607 Council staff to study the possi- ga94/ AMM 01-28-98 05:38PM P002 #38 anuary 27, 1998 3:56 PM From:AMM Fax M. Page 2 of 2 AMM FAX association of NEWS Metropolitan Municipalities January 26-30, 1998 Governor proposes levy limit extensions The governors tax proposal stead credit of about$80 million year at a cost of$500 million for includes an extension of levy for FY 2000(45 percent of state 20 percent of property taxes limits for local units through the education levy to a maximum of paid in 1998. year 2000. $270)and$47 million in FY 2001 A major problem not ad- The extension is based on the (52 percent of state education dressed Is the impact of class some rationale used in 1997— levy to a maximum of$290). rate reductions on TIF collections property tax reform and insur- Also,included is$49.5 and$55 and bond payments. For ex- ance that local units won't leap million for aid to reduce general ample, the C/I class reduction at at raising taxes which are other- education property tax levy In FY 4 percent has created problems wise reduced by state education 2000 and in FY 2001 respectively. in certain areas.A further reduc- funding. The governor implements the tion to 3.5 percent and then 3 Despite revenue department 1997 class rate reduction targets percent needs to be analyzed. reports that citylcounty pro- by the year 2000 of 3.5 for C/I, 2.5 At this time,there is no general posed truth-in-taxation property for apartments, and 1.25 for first- TIF bill proposed to remedy the tax rates came in lower than tier single family non-homestead current problem caused by more expected and that over a residential. C/1 class rate reductions.Several period of years without limits, In addition,he sets new tar- groups,including the AMM, are rates were acceptable and that gets based on future revenue meeting to develop possible state and education expendi- projections of 3.0 for CJI, 2.0 for remedies to the Issue. tures are high, the governor and apartments and 1.0 for first-tier We urge you to contact your others still feel"comfort'in being single family non-homestead legislators with strong objections able to say they are controlling residential plus 1.5 for second-tier to levy limit extensions and property tax through levy limits. homestead. discuss the impact on TIF of The governor has proposed an Finally,the property tax rebate general class rate reductions. Increase in the education home- program is extended another -- � �'od/��� Sign-up deadline for Legislative d/y�asg�r�d�t�Ifiate�: ll�r 1e�6rm'tl�ir/at�d�t® ire, Contacts Reception is Friday �,dl&Mr&erdcnto Iffdl A4i&V#'AWWfidV Ohm II AMM legislative contacts For those of you who are are cordially invited to veteran contacts,updated (r)t4 WteYfflA 1 attend a Legislative Contacts information will be available to Reception on Tuesday,Feb.3 insert in your sourcebooks. If Iff&1lt7V2YAP!whW from 4-6 p.m.at the AMM. you are a new contact, a Ato* Yifgig62d# We will address a number of complete sourcebook will be *AffC2>S4M critical issues which will surface provided. this session and we will provide Please RSVP by Friday,Jan.30 &0 Aft,��rd you with helpful lobbying tips. by calling Laurie at 215-4000. fi�1�,� Yi ; 3 R-94% AMM 01-27-98 07:55PM P002 #17