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HomeMy WebLinkAbout15.A.4. Advance Encumberance of State Aid Funds-Res. No. 5863 )5. fj, i, CITY OF SHAKO PEE Memorandum TO: Mayor & City Council Mark McNeill, City Administrator ~ FROM: Bruce Loney, Public Works Director SUBJECT: Consider Resolution to Obtain Advance Encumbrance Funds from Mn/DOT State Aid Construction Account DATE: March 4, 2003 INTRODUCTION: Attached is Resolution No. 5863, a resolution requesting approval of advanced financing from Mn/DOT Municipal State Aid Funds. BACKGROUND: The City of Shako pee does receive Municipal State Aid Funds from Mn/DOT. The City of Shakopee is over 5,000 in population and a portion of the gas tax is dedicated for Municipal State Aid roadways. In this coming 2003 construction year, the City is looking at constructing a segment of Vierling Drive, from C.R. 15 to Orchard Park West; 4th Avenue, from Naumkeag Street to Shenandoah Drive; and Viking Steel Road, from 4th Avenue to C.R. 101 and all of these street segments are on the State Aid System. Attached to this memorandum is a copy of the MSAS General Advancement Guidelines, in which Cities in the Municipal State Aid System can advance funds beyond their fund balance up to $1 million dollars. With the City of Shakopee being a growing City, the City can apply for advancement for these funds and can obtain these funds sooner than waiting for the allocations to made in future years. The advanced funds need to be paid back within 3 years and are deducted annually from future allocations according to a schedule that is agreed upon between the City of Shakopee and Mn/DOT. In order to start this process, an initial resolution is needed indicating to the Mn/DOT Municipal State Aid Department the amount that the City may choose to have advanced. These funds are paid out on a first come first serve basis. If the City is successful in obtaining these funds, these could be applied to Vierling Drive, 4th Avenue and Viking Steel Road projects, in which the City does have assessment costs and tax levy costs in the building and rebuilding of these collector streets. A City Council resolution is required to advance funds for a Municipal State Aid street projects. Attached to this memo is Resolution No. 5863, and would allow us to start the proceedings on whether advanced funds would be available to the City. After a specific project has been authorized for completion, payment requests can be made and the State can then advance payment to the City as allowed in their procedure. By advancing Municipal State Aid Funds earlier, the City would have use of this money for building and rebuilding of City collectors and would allow the City to earn interest on that money until it is utilized. ALTERNATIVES: 1. Adopt Resolution No. 5863, a resolution requesting approval of advanced financing on approved Municipal State Aid street projects in the City of Shakopee. 2. Deny Resolution No. 5863. 3. Table Resolution No. 5863, to allow time for staff to prepare additional information as directed by City Council. RECOMMENDATION: Staff recommends Alternative No.1, to request approval of advanced financing in approved State Aid street projects for the City of Shakopee. This resolution would allow the City to be prepared in order to obtain advanced funding, if it so desires, as State Aid projects are ordered and constructed in 2003. lfthe City Council chooses not to advance any funds at a later date, it could direct staff not to apply for advanced funding. ACTION REQUESTED: Offer Resolution No. 5863, A Resolution Requesting Approval of Advanced Financing on Approved Municipal State Aid Projects in the City of Shakopee in an amount up to $1 million dollars and move its adoption. ~ ~ Bruce Loney Public Works Director BUpmp MEM5863 January 22, 2003 MSASGENERALFUNDADVANCES Revised June, 1999 November 2000 November 2002 Guidelines The October 2002 Screening Board discussed. the possibility of revising the limits that a smaller city may advance, revising the payback period for larger cities, and allowing General Fund Advances on Federal projects. It was explained that any changes were ultimately an administrative decision by the State Aid Engineer with any input and discussion by the Screening Board being taken into consideration. The Screening Board recommended that the limits a smaller city can advance be raised to $1,000,000, allowing all cities up to 3 years to pay back the advance, and to allow advances on Federal projects. After discussing it with State Aid Finance, the following revisions will go into effect for advances from the 2003 allocation: Cities with a construction allotment of $1,000,000 or less can now advance up to three times its previous years construction allotment or $1,000,000, whichever is less. when advancing for Municipal State Aid projects. (Fig. I 5-892.563 in the State Aid manual) Cities with a construction allotment of more than $1,000,000 can now advance up to its previous years construction allotment up to a maximum of $3,000,000 when advancing for Municipal State Aid projects. (Fig. I 5-892.563 in the State Aid manual) Cities may advance for Federal Projects that are programmed by the A TP in the STIP. The city will agree to authorize repayments from their state aid account or from local funds under a mutually acceptable repayment schedule should said project fail to receive Federal funds for any reason. (Fig. J 5-892.563 in the State Aid manual) Clarification of Guidelines The maximum Municipal State Aid construction dollars that can be advanced in anyone year shall be the difference between the Municipal State Aid construction fund balance at the end of the preceding calendar year, current year projected disbursements, and $20 million. SALT may decrease the amount of the required reserve as the year progresses. A City Council Resolution is required to advance funds for an MSAS project. A sample resolution can be found in the State Aid manual (Fig. I 5-892.563). The City Council Resolution can be passed at any time, but must be submitted with, or prior to, any payment requests. It need not be project specific, but must include the maximum amount of advance the City Council is authorizing for financing approved Municipal State Aid Street projects in that. The resolution should be mailed directly to State Aid Finance. The 88 resolution does not reserve the funds. The funds are paid on a first come first served basis established by payment requests. As payment requests are submitted by the city, the amount required to process the payment (up to the resolution/allowable amount) will be added to the city's account. The payment request is verified by the form 'Report of State Aid Contract'. To "reserve" the funds, the City Engineer may submit a "Request to Reserve Advanced Funding" form (Fig. G 5-892.563) up to 8 weeks prior to anticipating or incurring an obligation where advanced funding is required. This form "reserves" the funds in the city's account. Once the request has been approved by State Aid and the funds added to the city's account, a copy of the approved request will be returned to the City Engineer. The "Request to Reserve Advanced Funding" f01111 should be mailed to Sandra Martinez in State Aid Finance. This form is not required, but will allow the funds to be set aside up to eight weeks in advance of the payment request. . A City Council Resolution and an Advance Construction Agreement are required to advance funds for a Federal Aid project. A sample resolution can be found in the State Aid manual (Fig. J 5-892.563). The actual Agreement that must be processed will be written by Lynnette Roshell. Contact her directly at (651) 282-6479 to get the agreement started. This resolution must be project specific and must include the maximum amount of advance the City Council is authorizing. The resolution and signed Agreement should be mailed directly to Lynnette. General Fund Advance repayments maybe relaxed to accommodate the payment on the principal of State Aid bonds. If the General Fund runs out of funds to advance, a city has to submit a new city council resolution ifmore funds don't come available until the following year. Advances will always be processed on a 'first come first served' basis. All cities will have the option of up to 3 years to payback the State Aid advance. Advances will be allowed for Federal Projects that are programmed by the ATP in the STIP. N IMSASIWord DoeumenlsllnstruClions\GENERAl FUND ADVANCES.doe 89 ;i, , RESOLUTION NO. 5863 A Resolution Requesting Approval Of Advanced Financing On Approved Municipal State Aid Projects In the City of Shakopee WHEREAS, the City of Shakopee is planning on implementing Municipal State Aid Street Projects in 2003 which will require State Aid funds in excess of those available in its State Aid Construction Account; and WHEREAS, said City is prepared to proceed with the construction of said projects through the use of advance encumbrances from the General State Aid Construction Account to supplement the available funds in their State Aid Construction Account, and WHEREAS, repayment of the funds so advanced will be made in accordance with the provisions of Minnesota Statutes 162.14, Subdivision 6 and Minnesota Rules, Chapter 8820. NOW, THEREFORE BE IT RESOLVED: That the Commissioner of Transportation be and is hereby requested to approye this advance for financing approved Municipal State Street Projects of the City of Shakopee in an amount up to $1,000,000.00 in accordance with Minnesota Rules 8820.1500, Subparagraph 9, and to authorize repayments from the following year's accruals to the Construction Account of the Municipal State Aid Street fund for said City. Adopted in session of the City Council of the City of Shakopee, Minnesota, held this day of ,2003. Mayor of the City of Shakopee ATTEST: City Clerk