Six Goals Announced by Governor s Housing Task Force

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2 Page 2 of 11 Six Goals Announced by Governor s Housing Task Force The governor-appointed housing task force released its final report and recommendations for improving access to quality, affordable housing. The final report of the Governor s Task Force on Housing (Link to: released by Gov. Dayton on Aug. 21, includes 30 action steps aimed at improving access to quality affordable housing, and building a more vibrant, inclusive economic future for all Minnesotans. The 70-page report contains six goals and is the culmination of work the task force started last January. The goals are: 1. Commit to homes as a priority. Create a broader and stronger public commitment to the urgent need for more homes that are more affordable to more Minnesotans. 2. Preserve the homes we have. Keep the homes we already have, especially those that are most affordable. 3. Build more homes. Build 300,000 new homes by 2030, across all types, prices, and locations to stabilize prices and meet demand. 4. Increase home stability. Assist twice as many people at risk of losing their homes because of rent increases, evictions, and heavy cost burdens. 5. Link homes and services. Build stronger links between where we live and the services we may need to live stable lives. 6. Support and strengthen homeownership. Create pathways to sustainable homeownership, with a focus on removing barriers for households of color. Read the task force s one-page summary of the goals and recommendations (pdf) (Link to: 20Recs_with%20title.pdf) Read the task force s full report (pdf) (Link to: Report specifically mentions LMC The League of Minnesota Cities was mentioned at least once in the report in recommendation 3.3 (page 26): The Task Force recommends that Minnesota Housing, the Metropolitan Council, and other state and regional agencies join with the League of Minnesota Cities, Metro Cities, and the Regional Council of Mayors to compile and promote

3 Page 3 of 11 implementation of best practices for local governments on strategies to encourage the development of homes and increase diversity in the types of homes available. This includes providing information to local governments on options to incentivize affordable homes through tax abatements, density bonuses, inclusionary zoning, housing trust funds, alternative or modular housing, and other policies. City involvement in the task force The task force was comprised of a group of statewide housing advocates and experts, including two with city connections that were directly appointed by the governor: Mayor Emily Larson from the City of Duluth and Mayor Mike Maguire from the City of Eagan. See the list of task force members (Link to: League staff attended the full task force meetings and work groups that helped develop the report. The League presented information to the homeownership working group and submitted multiple public comments to the three working groups. Next steps Minnesota Housing Finance Agency Commissioner Mary Tingerthal will be presenting the report to the League s Improving Local Economies Policy Committee (Link to: which is the policy committee that addresses housing issues. The policy committee will then review the League s legislative policies in light of the report. Read the current issue of the Cities Bulletin (Link to:

4 Page 4 of 11 Small Cities Assistance Account Not Yet Funded for 2019 and Beyond Although the 2019 Legislature could still provide funding for the account, small cities should be cautious when setting their 2019 budgets. (Published Aug 27, 2018) As cities under 5,000 in population prepare their 2019 budgets, they can t count on money from the Small Cities Assistance Account, as the 2018 Legislature did not provide funding for it. During the 2017 legislative session, the League argued to permanently fund the Small Cities Assistance Account, the program that provides street funding for cities that do not receive municipal state aid (MSA) because they don t meet the 5,000 population eligibility threshold for dedicated funds established in the Minnesota Constitution. Unfortunately, the Legislature only funded the program (Link to: with $8 million per year for calendar years 2017 and During the 2018 session, the House discussed an extension of the funding through calendar year 2020 but, in the end, the Legislature did not extend the funding. As a result, the program is not currently funded for calendar year 2019 and beyond. Although there has been strong, bipartisan support to continue the program, cities should plan conservatively and not yet consider any distribution for their 2019 calendar year budgets. The League will be advocating for a permanent extension of the program when the Legislature convenes in January. More budget information The League has updated the online Budget Guide for Cities with new state laws that can affect city budget decisions for Download the Budget Guide for Cities (pdf) (Link to: Read the current issue of the Cities Bulletin (Link to:

5 Page 5 of 11 Your LMC Resource Contact Anne Finn Assistant IGR Director (651) or (800) afinn@lmc.org (Link to: mailto:afinn@lmc.org) Contact Gary Carlson IGR Director (651) or (800) gcarlson@lmc.org (Link to: mailto:gcarlson@lmc.org)

6 Page 6 of 11 Focus on New Laws: Pension Funding and Sustainability A new law addresses pension funding and sustainability for the state s major pension systems, including the Public Employees Retirement Association. (Published Aug 27, 2018) The 2018 omnibus pension bill, signed into law on May 31, requires $27 million in additional state funding this biennium and $113 million in the biennium. It also makes changes in pension benefits for active members and retirees and, for some plans, increases employer and employee contributions to stabilize the state s major public pension plans. The 245-page law, Chapter 211 (Link to: year=2018&type=0&doctype=chapter&id=211), is estimated to reduce the state s pension liabilities by $3.4 billion immediately, with an additional reduction of $2.7 billion over the next 30 years. PERA General Plan Changes to the General Plan include: Reducing the investment return assumption from 8 percent to 7.5 percent for all pension plans. Eliminating future augmentation of pension benefits for all former members. Lowering the refund interest rate from 4 percent to 3 percent for former members of a public pension plan. Resetting the amortization period for the major state pension plans to a new 30-year period ending in The employer and employee contribution rates for participants in the General Plan will remain unchanged. Employers will continue to contribute 7.5 percent of each participating employee s salary, while the employee will contribute 6.5 percent. These contributions are in addition to Social Security/Medicare contributions of 7.65 percent from the employee and employer. Under the General Plan, the new law removes the current retiree cost-of-living adjustment (COLA), which provides for a 1 percent annual COLA and automatic COLA when specified funding ratios are met. It replaces it with a new COLA that is equal to 50 percent of the increase announced by the Social Security Administration, with a minimum increase of at least 1 percent and a maximum of 1.5 percent. The annual COLA for early retirees is also eliminated.

7 Page 7 of 11 PERA Police & Fire Plan For the PERA Police & Fire (P&F) Plan, the new law: Increases the employer and employee contribution rates. Freezes the retiree COLA at 1 percent. Requires the state to make an annual direct state aid payment of $4.5 million on Oct. 1 of 2018 and Increases the direct state aid amount to $9 million annually until The table below shows the contribution rates for employees and employers through Participants and employers for personnel in the PERA P&F Plan do not contribute to Social Security, but for personnel hired after March 31, 1986, the employee and employer each contribute 1.45 percent to Medicare. Volunteer Fire Relief Associations Specific to Volunteer Firefighter Relief Associations (VFRA), the new law provides default procedures for allocating special fund assets or liabilities after a joint powers fire department dissolves. Under the new law, any remaining assets in the trust fund cancel to the general fund of each municipality that was a contracting party to the joint powers agreement. The new law requires that when a VFRA that had provided a lump sum benefit of $9,500 or more as of June 1, 2018, dissolves, any remaining assets after paying out benefits must go to either: (1) the municipality, if the municipality paid a required contribution to the VFRA during the 10 years preceding the June 1, 2018, date; or (2) the state, if the municipality did not pay a required contribution within those 10 years. According to the Legislative Commission on Pensions and Retirement, the only two VFRAs that provide benefits of $9,500 or more are Brainerd and Plymouth. The new law also requires PERA to establish a Fire State Aid Work Group to study the impact of allocating a portion of fire state aid to pay PERA P&F employer contributions. Additionally, the new law establishes a Relief Association Work

8 Page 8 of 11 Group to consider possible changes to the statutes governing VFRA plan type conversions, dissolutions, and disposition of surplus assets. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Jacob Glass Research Attorney (651) or (800) jglass@lmc.org (Link to: mailto:jglass@lmc.org) Contact Gary Carlson IGR Director (651) or (800) gcarlson@lmc.org (Link to: mailto:gcarlson@lmc.org)

9 Page 9 of 11 Minimum Wage Increase Effective Jan. 1 The increase will affect all Minnesota employers, including cities, but some people who work for cities may not be covered by the state minimum wage law. (Published Aug 27, 2018) Effective Jan. 1, 2019, Minnesota s minimum wage will increase to $9.86 per hour for large employers (up from $9.65 per hour), and to at least $8.04 per hour for small employers (up from $7.87 per hour). These new rates were announced by the commissioner of the Department of Labor and Industry (DLI) last week. Under Minnesota law, the DLI commissioner is required to determine and announce the inflation-adjusted minimum wage rate each year by Aug. 31. Minnesota law increased the minimum wage for the first time in nearly a decade in 2014, with phased-in hourly increases on Aug. 1 of each year through 2016, and then indexed to inflation based on economic conditions beginning January The 2019 minimum wage rate increase is linked to a change in the price deflator as an increase of 2.16 percent. Read the DLI announcement about the increase (Link to: Is your city a large or small employer? The criteria for determining a large or small employer has not changed from Large employers in this context means cities with a total budget greater than $500,000. How do you figure out what your total budget includes? Basically, include all city operations, so enterprise funds such as water/sewer operations and municipal liquor stores must be included in this calculation of your city s total budget. However, the DLI states that, for purposes of determining city status as a large employer or small employer under Minnesota s minimum wage law, a city need not include revenue from legally separate public entities. These legally separate entities are limited to economic development authorities, housing and redevelopment authorities, municipal power or gas agencies, and other special taxing districts created and organized under Minnesota law. Youth minimum wage is $8.04 As of Jan. 1, 2019, both large and small employers must pay employees under age

10 Page 10 of at least $8.04 per hour (an increase from $7.87). Since small employers must pay at least $8.04 per hour to all employees already in 2019, the youth wage rate does not allow small employers to pay employers under the age of 18 less than that $8.04 minimum. Ninety-day training wage is $8.04 The training wage, as of Jan. 1, 2019, allows large employers to choose to pay employees under age 20 a 90-day training wage of at least $8.04 per hour, but only for the first 90 consecutive days of employment. Importantly, once the 90-day period is up, large employers must increase those wages to $9.86 per hour. Since small employers must pay at least $8.04 per hour to all employees in 2019, this 90-day training wage does not allow small employers to pay employers under the age of 20 less than that $8.04 minimum. State and federal law apply Remember, there are both state and federal minimum wage laws to consider for a position. As of August 2018, the federal minimum wage remains at $7.25 per hour. If both state and federal minimum wage laws apply to a particular employee, that employee is entitled to the higher of the two minimum wages. In most cases for Minnesota cities in 2019, the state minimum wage rate will be higher than the federal minimum wage since state minimum wages will be $9.86 per hour for large employers and $8.04 for small employers. Who is not covered by minimum wage law? Check for specific legal advice to ensure a particular employee is paid according to state and federal minimum wage law. Generally speaking, state minimum wage laws do not apply to the following people, but federal laws may still apply: Elected officials. Individuals who serve on any governmental board, commission, committee, or other similar body. City volunteers. Any individual employed, directly or indirectly, by the city to provide police or fire protection services. Those whose annual salary from one governmental subdivision never exceeds $5,100 stipulated in writing in advance. Student interns, as defined in the law (Minnesota Statutes, section , subdivision 2b (a) (9) (i) (Link to: ).

11 Page 11 of 11 Any individual under 18, working less than 20 hours per workweek for a municipality as part of a recreational program. Learn more from the League s HR Reference Manual, Chapter 1 (pdf) (Link to: If you have questions about minimum wage laws, contact the League s Human Resources Department at hrbenefits@lmc.org (Link to: mailto:hrbenefits@lmc.org), (651) , or (800) Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact LMC Human Resources Department (651) or (800) hrbenefits@lmc.org (Link to: mailto:hrbenefits@lmc.org)

12 LMC Board Approves 0 Percent Dues Increase for FY Page 1 of 1 LMC Board Approves 0 Percent Dues Increase for FY 2019 The League Board of Directors at its meeting on July 19 approved a 0 percent dues schedule increase for fiscal year (FY) 2019, which begins Sept. 1, This is the same as the maximum dues schedule increase of 0 percent approved by the Board earlier this year. LMC membership dues invoices for FY 2019 will be sent out to all League members on or around Sept. 1, Invoices and an accompanying letter from League Executive Director David Unmacht will be sent via to the dues address on file with the League. For those members for which no dues address is available, the invoice and letter will be sent via regular mail. Also included in the mailing will be the FY 2019 Minnesota Mayors Association dues invoice. Access to affordable training opportunities, consulting services, legislative advocacy, risk management, and the League of Minnesota Cities Insurance Trust s comprehensive city-specific coverages for workers compensation and property/casualty are just a few of the benefits available to League members. Read the current issue of the Cities Bulletin (Link to: Meet our city vendors! (Link to:

13 The 2018 Mayor for a Day Essay Contest Is Now Open! Page 1 of 1 The 2018 Mayor for a Day Essay Contest Is Now Open! What would our cities look like if kids were in charge? Find out by having students you know take part in the 2018 Mayor for a Day Essay Contest! Open to Minnesotans who will be in the fourth, fifth, or sixth grades this school year, entries must be handwritten and postmarked by Oct. 12. Three winners will be chosen and awarded $100, as well as have their essays published in Minnesota Cities magazine. Winners only will be notified by Dec. 3. Download the entry form (pdf) (Link to: inline=true) Meet our city vendors! (Link to:

14 Apply Now for NLC Committees, Councils, and Constituency Groups Page 1 of 1 Apply Now for NLC Committees, Councils, and Constituency Groups The National League of Cities (NLC) is now accepting applications for leadership and membership positions with its Federal Advocacy Committees, Member Councils, and Constituency Groups. The application process is completely online this year. Learn more about these opportunities and submit your application (Link to: To be eligible for a position, your city must be a direct member city of NLC. The deadline for leadership applications is Oct. 8. The deadline for general membership applications is Nov. 30. The application form will ask if you have the endorsement of your state municipal league. NLC advices the League of Minnesota Cities (LMC) of all the applications, once submitted, and LMC handle all endorsements as one group. Individual endorsement letters are not required. However, LMC appreciates early notice if you are applying. If you have questions or plan to apply for an NLC position, please contact Ann Lindstrom at alindstrom@lmc.org (Link to: mailto:alindstrom@lmc.org) or (651) , or Kevin Frazell at kfrazell@lmc.org (Link to: mailto:kfrazell@lmc.org) or (651) Read the current issue of the Cities Bulletin (Link to: Meet our city vendors! (Link to:

15 'Thriving by Design Rural and Urban Together' Community Meetings Ahead Page 1 of 2 'Thriving by Design Rural and Urban Together' Community Meetings Ahead There has been much discussion over the past few years about differences and even divides between the urban and rural parts of our state. Many have become concerned that these differences could undermine efforts to build a sustainable economy that benefits all of Minnesota. In an effort to bridge any divides, a series of community-based meetings will be held across the state this fall. Working on an equity blueprint The nonprofit organizations Growth and Justice and OneMN.org, with financial support from the Blandin and McKnight foundations, have joined forces with community groups across the state to develop Thriving by Design Rural and Urban Together, a dialogue that will culminate in development of a One Minnesota Equity Blueprint to be presented to the next governor and Legislature. Thriving by Design began with a June gathering in Granite Falls, hosted in part by Mayor Dave Smiglewski. The 140 attendees identified several issues that need to be addressed to ensure Minnesota s future success, including rural-urban relationship building, infrastructure and renewable energy, housing, workforce readiness, natural resources, diversity and inclusion, community development, and civic engagement. Learn more about Thriving by Design (Link to: Seeking ideas from all Minnesotans Expanding upon what was developed in June, the next step in the process is to convene a series of community-based meetings across the state from mid-september through October. With the input and ideas of all Minnesotans, delegates from those meetings will meet in early December to develop the final equity blueprint document. If you are interested in how you can work with your residents to hold a meeting in your community, contact Growth and Justice Policy and Outreach Manager Sarah Leistico at sarah@growthandjustice.org (Link to: mailto:sarah@growthandjustice.org) or (651) ext. 4. You can also contact League Director of Member Services Kevin Frazell at kfrazell@lmc.org (Link to: mailto:kfrazell@lmc.org) or (651) Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Kevin Frazell Director of Member Services (651) or (800) kfrazell@lmc.org (Link to: mailto:kfrazell@lmc.org) Meet our city vendors!

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