WILLMAR -- Two suggestions for financing street construction and reconstruction were offered to the Willmar City Council's Finance Committee Monday evening.
Committee Chairman Denis Anderson said the council has for the past several years been discussing various street improvement financing options.
An informal business committee in April said the city was falling behind on street reconstruction, and urged the council to consider funding sources and policy changes to increase street construction and reconstruction.
The city has about eight miles out of about 127 miles of streets that need reconstruction, according to a Public Works Department rating system.
Anderson suggested the council consider the possibility of increasing the utility replacement fee charged against all utility customers from $2 to $4 per month.
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The city uses the $200,000 raised annually by the fee to help pay for underground utility upgrades during street reconstruction projects, thereby reducing assessments to benefited property owners.
Doubling the fee would generate about $400,000 a year.
Anderson also suggested the council establish a public works reserve fund into which the council could place an additional $200,000 being budgeted in the 2007 property tax levy for street construction.
The additional levy was over and above the levy proposed by Mayor Les Heitke in the 2007 budget. The council wanted some additional funding for new construction of roads next year, said Anderson. He said the city needs a place to put the money.
"I think the important thing is we would allocate that money on an annual basis and I would suggest we use it within two years. It's not a fund that I would like to see accumulate a big fund balance,'' said Anderson.
He suggested the committee receive his suggestions as information. The ideas could be discussed further when the Finance Committee meets Nov. 27 to make final recommendations on the 2007 budget. The full council would act on the budget at the first meeting in December.
Anderson said the council could act on the utility replacement fee increase in early 2007. He hoped the money could be available for use in the 2007 street improvement program.
"I think it's a very good start.''
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Two members of the informal business committee, Greg Hilding and Gary Geiger, praised Anderson's suggestions. Hilding said there is a link between economic development and infrastructure.
Committee member Jim Dokken said he agrees with increasing the utility replacement fee. He said street reconstruction should be a priority, and he said having good streets is a quality-of-life issue.
Mayor Les Heitke said increasing the natural gas franchise fee is one mechanism to increase street funding, but the council rejected a proposal to increase the fee.
The city spends an average of $2 million to $3 million a year on street construction and reconstruction, said City Administrator Michael Schmit in an interview. Funding comes from a variety of sources: new developments, assessments and state aid, and interest earnings from the community investment fund, which help fund reconstruction.
The additional $200,000 tax levy could either be used on a particular street project, or it could be used to finance a bond issue to accomplish more street work, Schmit explained. An annual levy would be required, however, to finance the debt service on the bond, he said.
