Bill Requires Cities to Directly Notify Businesses of New Ordinances

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2 Page 2 of 15 Bill Requires Cities to Directly Notify Businesses of New Ordinances The bill would create a potentially costly new mandate for cities and counties. Among the 108 bills introduced on Feb. 20 is a bill that would add a potentially costly and burdensome mandate to cities and counties. The bill, SF 1224 (Link to: which would require cities to notify businesses of ordinances that impact their operations, is authored by Sen. Andrew Mathews (Link to: (R- Milaca). The bill is identical to a bill that was debated, but not enacted, during the 2016 legislative session. The House companion bill, HF 1242 (Link to: b=house&f=hf1242&ssn=0&y=2017), is authored by Rep. Chris Swedzinski (Link to: (R-Ghent). The legislation is supported by the Minnesota Petroleum Marketers Association (Link to: and the Minnesota Retail Merchants Association (Link to: Under the legislation, each city and county would be required to send notification by first class mail or by to all potentially affected businesses that a pending ordinance may affect. Cities and counties would also be required to post the proposed ordinance, and a statement that the ordinance may affect licensed businesses, on the city s website. The trigger for whether an ordinance would affect a business is vaguely defined in the bill as an ordinance that changes the location or availability of a product or service provided by the business. The League s policies oppose the legislation as an unfunded mandate. The bill has not yet been scheduled for a hearing. Read the current issue of the Cities Bulletin (Link to:

3 Page 3 of 15 Bill Seeks New Requirements for City Franchise Fee Process Among the changes are a requirement for voter approval to enact or renew gas and electric franchise fees. (Published Feb 21, 2017) Rep. Bob Vogel (Link to: (R-Elko-New Market) has introduced HF 1146 (Link to: f=hf1146&b=house&y=2017&ssn=0), a bill that would modify the process to enact or renew certain franchise fees with gas and electric utilities. Among the changes are a requirement for voter approval for the franchise fees. The bill currently has 11 co-authors but no Senate companion. League policies oppose adding voter approval to the franchise fee process. Cities are currently allowed under Minnesota Statutes, section 216B.36 (Link to: to impose a franchise fee to (1) raise revenue, or (2) defray the increased municipal costs resulting from the operations of the utility or both. According to Rep. Vogel, the bill is intended to create transparency by modifying the process for franchise fees that would raise revenue beyond the costs due to utility operations. Rep. Vogel introduced a similar bill in 2016 that would have allowed voters to petition for a referendum on certain new or renewed franchise fees. Notification requirements Under the bill, a city must identify in its ordinance the uses of the portion of the fee that is for purposes other than to defray the cost of utility operations. A city would also be required to publish a notice that explains, among other specified information, the fee structure, the uses of the revenue, and an acknowledgement that the public utility is likely to pass the fee on to customers. The city would also be required to publish information on the ordinance at least once each week for two consecutive weeks in the official publication of the municipality and similar information must remain posted on the municipality s website throughout the notice period. The notice must also be sent to all affected ratepayers by either first class mail from the city or by including the notice in the affected ratepayers billings. Voter approval requirements Before imposing the fee, the city would be required to hold a referendum at the next municipal general election. If enacted, the city would be required to establish

4 Page 4 of 15 separate accounts in order to segregate revenues that defray utility costs from the portion of franchise fee revenue for other purposes. The law would be effective for new or renewed franchise fees after Aug. 1, The bill would also require that if a city has any existing franchise agreements in place or renewed before Aug. 1, 2017, that would be in effect beyond Aug. 1, 2022, the city would need voter approval in 2022 and then every two years thereafter for the franchise fee to continue. The bill will likely be scheduled for a hearing in the near future. Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Gary Carlson IGR Director (651) or (800) gcarlson@lmc.org (Link to: mailto:gcarlson@lmc.org)

5 Page 5 of 15 LGA Bills Abound at the Capitol Several bills have been introduced that would increase the appropriation, adjust the formula, or restrict the distributions under certain circumstances. (Published Feb 21, 2017) Without a significant funding increase since 2015, funding for local government aid (LGA) and the LGA formula have become broadly discussed topics for many legislators in the 2017 legislative session. Below is a list of 2017 bills that relate to the LGA appropriation and formula. The House and Senate Taxes committees have yet to hold hearings on the bulk of the LGA-related bills, but they are expected to schedule hearings in the near future. Appropriation increase bills: HF 672 (Link to: (Rep. Paul Anderson (Link to: R-Starbuck and SF 476 (Link to: (Sen. Bill Weber (Link to: R-Luvurne) would increase the LGA appropriation from $519.4 million to $542.2 million for aids payable in 2018, and then to $565 million for aids payable in 2019 and beyond. The $565 million funding level reflects the 2002 LGA distribution, which was the highest appropriation in the program s history. HF 1320 (Link to: (Rep. Ben Lien (Link to: DFL-Moorhead) and SF 1045 (Link to: (Kent Eken (Link to: DFL-Twin Valley) would increase the LGA appropriation from $519.4 million to $586.8 million for aids payable in 2018 and beyond. The $586.8 million funding level reflects the original certified LGA amount in 2003 before the Legislature reduced LGA in response to a state budget deficit. SF 45 (Link to: (Sen. Ann Rest (Link to: DFL-New Hope) is a version of last year s vetoed omnibus tax bill that included a $20 million permanent increase in the LGA appropriation effective for the 2018 distribution. The bill also included a base year formula adjustment for the newly incorporated city of Rice Lake. HF 893 (Link to: (Rep. Greg Davids

6 Page 6 of 15 (Link to: R-Preston) and SF 726 (Link to: (Sen. Roger Chamberlain (Link to: R-Lino Lakes) is the governor s tax bill, which includes a $20 million permanent increase in the LGA appropriation effective for the 2018 distribution. Formula adjustment bills: HF 773 (Link to: (Rep. Mary Murphy (Link to: DFL-Hermantown) and SF 615 (Link to: (Sen. Tom Bakk (Link to: DFL-Cook) would address a glitch in the LGA formula due to a modification to the LGA formula enacted in The change was intended to prevent cities that were losing aid under the formula from having a larger reduction simply because the overall LGA appropriation was increasing. As a result of that 2014 change and without an appropriation increase for 2017, 20 cities that should be frozen or should be receiving an LGA increase are actually experiencing an LGA reduction in The bill would correct that error in the formula and bring those 20 cities up to their intended funding level. HF 849 (Link to: (Rep. Bob Gunther (Link to: R-Fairmont) and SF 813 (Link to: (Sen. Julie Rosen (Link to: R-Vernon Center) would modify the LGA formula transition mechanism for cities moving from the mid-sized city formula (populations between 2,500 and 10,000) to the large city formula (populations greater than 10,000) by expanding the transition threshold from 10,500 to 11,000. HF 760 (Link to: (Rep. Jason Metsa (Link to: DFL-Virginia) and SF 583 (Link to: (Sen. David Tomassoni (Link to: DFL-Chisholm) would compute the LGA need for the City of Hibbing as if the city s population were between 2,500 and 10,000, and would provide Biwabik with the greater of its formula distribution or the amount received by the city in Other LGA bills of note: SF 881 (Link to: (Sen. Bill Ingebrigtsen (Link to: R-Alexandria) (no House companion) would disallow the distribution of LGA to any city if the city has, or had within the last year, an ordinance prohibiting public safety

7 Page 7 of 15 officials from undertaking any law enforcement action for the purpose of detecting the presence of undocumented persons or to verify immigration status. Any amounts disallowed would be redistributed to all other cities under the formula. HF 74 (Link to: (Rep. Duane Quam (Link to: R-Byron) would dedicate a portion of LGA to create a loan program to renovate rural municipal water treatment facilities. HF 80 (Link to: (Rep. Duane Quam (Link to: R-Byron) and SF 576 (Link to: (Sen. David Senjem (Link to: R-Rochester) would require cities receiving LGA to dedicate a portion of the distribution to housing development, redevelopment, and rehabilitation programs. HF 838 (Link to: (Rep. Rick Hansen (Link to: DFL-South St. Paul) and SF 670 (Link to: (Sen. Matt Klein (Link to: DFL-Mendota Heights) would provide a one-time $1 million LGA increase for the City of West St. Paul. HF 718 (Link to: (Rep. Dan Fabian (Link to: R-Roseau) and SF 600 (Link to: (Sen. Mark Johnson (Link to: R-East Grand Forks) would provide LGA forgiveness for the year 2013 to the City of Oslo. The required financial reports, which were not submitted to the Office of the State Auditor, have since been submitted. This provision was included in the 2016 tax bill that was vetoed. HF 663 (Link to: (Rep. Rod Hamilton (Link to: R-Mountain Lake) and SF 492 (Link to: (Sen. Bill Weber (Link to: R-Luverne) would provide LGA forgiveness for the year 2014 to the cities of Woodstock, Jeffers, and Dundee. The required financial reports, which were not submitted to the Office of the State Auditor, have since been submitted. This provision was included in the 2016 tax bill that was vetoed. Read the current issue of the Cities Bulletin (Link to:

8 Page 8 of 15 Your LMC Resource Contact Gary Carlson IGR Director (651) or (800) gcarlson@lmc.org (Link to: mailto:gcarlson@lmc.org)

9 Page 9 of 15 Proposal Calls for Peace Officer Crisis and Diversity Training On a strong bipartisan vote, a House committee passed the measure, aimed at improving relationships between law enforcement and the communities they serve. (Published Feb 21, 2017) A bill that requires and funds training for peace officers in crisis response, conflict management, and cultural diversity passed easily out of the House Public Safety and Security Policy and Finance Committee (Link to: on Feb. 15. The measure, HF 346 (Link to: authored by Rep. Tony Cornish (Link to: (R-Vernon Center), is supported by the League and law enforcement groups. It is aimed at helping police officers foster trust with the communities they serve. League Executive Director David Unmacht testified in support of the bill, noting it aligns with one of the League s Board-directed legislative priorities for Details of the bill The bill would: Appropriate $21.7 million of new general fund spending in the biennium for the Peace Officer Standards and Training (POST) Board (Link to: for training purposes. Require training in crisis intervention and mental illness crises; conflict management and mediation; and recognizing and valuing community diversity and cultural differences. Provide grants to assist with bringing people with nontraditional backgrounds into law enforcement. Allow the officer and his or her agency to choose the type of training delivery that is the best fit. The bill also calls for money from a special revenue fund now financed through a $9.75 surcharge on traffic tickets and dedicated to peace officer training about $2.8 million last year to be redirected to the general fund, meaning the bill would ultimately provide about $16.5 million in new funds for peace officer training. The current state reimbursement for officer training is $312 annually per officer. The bill would increase that to roughly $1,000, still below what many local agencies now spend.

10 Page 10 of 15 Of the new money, $10 million annually (minus $33,000 in setup costs in fiscal year 2018) would be distributed by the POST Board for peace officer training reimbursements to local governments. An additional $1 million each year would go toward reimbursing local governments that operate pathway to policing programs. Communities could receive up to a 50 percent reimbursement of costs, based on the number of grant applications. Next stops for the legislation HF 346 was referred to the House Ways and Means Committee (Link to: The Senate companion, SF 445 (Link to: authored by Sen. Warren Limmer (Link to: (R-Maple Grove) is awaiting its first hearing in the Senate Judiciary and Public Safety Finance and Policy Committee (Link to: Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Anne Finn Assistant IGR Director (651) or (800) afinn@lmc.org (Link to: mailto:afinn@lmc.org)

11 Page 11 of 15 Construction Material Exemption Bills Considered by Senate Taxes Committee The legislation would simplify and streamline the process of securing the sales tax exemption for city purchases of construction materials, supplies, and related equipment. (Published Feb 21, 2017) The Senate Taxes Committee (Link to: last week considered two bills, SF 283 (Link to: f=sf283&b=senate&y=2017&ssn=0) (Sen. Ann Rest (Link to: leg_id=10558), DFL-New Hope) and SF 460 (Link to: f=sf460&y=2017&ssn=0&b=senate) (Sen. Gary Dahms (Link to: R-Redwood Falls), that would simplify the process for cities and other local units of government to receive a refund on the sales tax paid on construction materials used in public projects. The identical bills reflect an agreement developed by the League of Minnesota Cities working with the Minnesota Department of Revenue. Testifying in support of the bills were Marshall Municipal Utilities General Manager Brad Roos, Crystal City Manager Anne Norris, and the former interim Crystal Public Works director Wayne Houle. The League also testified in support of both bills. Refund proposal simplifies cumbersome process Under current law, in order for cities, counties, townships and school districts to receive the benefit of the sales tax exemption for building, construction, or reconstruction materials, supplies, and equipment used in public buildings and public infrastructure projects, they must follow a very cumbersome set of rules. Because the current required process adds considerable risk and potential cost to the contracting process, many local governments choose not to pursue the sales tax exemption at all, which greatly increases the cost of projects. Under SF 283 and SF 460, contractor purchases on behalf of cities will be initially subject to the sales tax, but a city, county, township or school district would now be able to apply to the state for a refund of the sales tax paid after completion of the project. May be included in omnibus tax bill The bills were laid over for possible inclusion in the Senate version of the omnibus

12 Page 12 of 15 tax bill. The House companion bill to SF 460 is HF 299 (Link to: f=hf299&b=house&y=2017&ssn=0) (Rep. Chris Swedzinski (Link to: R-Ghent). The House companion bill to SF 283 is HF 456 (Link to: (Rep. Mike Freiberg (Link to: DFL-Golden Valley). They have also been laid over for possible inclusion in the House omnibus tax bill. Learn more in LMC Fact Sheet: Streamlining the Sales Tax Exemption for Construction Materials (pdf) (Link to: For more background information about this topic, read a previous Bulletin article. (Link to: Read the current issue of the Cities Bulletin (Link to: Your LMC Resource Contact Gary Carlson IGR Director (651) or (800) gcarlson@lmc.org (Link to: mailto:gcarlson@lmc.org)

13 Page 13 of 15 Bills Introduced to Help Cities Combat Workforce Housing Shortages The League-supported bills would provide more tools for cities dealing with workforce housing shortages. (Published Feb 21, 2017) Bills providing tax increment financing (TIF) for workforce housing development and tax credits for workforce housing investments have been introduced in both the House and Senate. Providing more tools for cities dealing with workforce housing shortages is one of the League s 15 legislative priorities (Link to: Workforce housing TIF HF 1178 (Link to: (Rep. Paul Anderson (Link to: R-Starbuck)/SF 1168 (Link to: (Rep. Mark Johnson (Link to: R-East Grand Forks) would allow cities to use TIF for workforce housing. The bills await hearings in the House Property Tax and Local Government Finance Division (Link to: and the Senate Jobs and Economic Growth Finance and Policy Committee (Link to: This provision was included in both the House and Senate tax bills in 2016, but was not included in the omnibus tax bill that was vetoed last year. Co-authors include Rep. Dan Fabian (Link to: id=15346) (R-Roseau) and bipartisan support from Sens. Andrew Lang (Link to: (R-Olivia), Bill Weber (Link to: (R-Luverne), Dan Sparks (Link to: (DFL-Austin), and David Senjem (Link to: (R-Rochester). Workforce housing investor tax credits HF 1020 (Link to: (Rep. Rod Hamilton (Link to: R-Mountain Lake)/SF 785 (Link to: (Sen. Mike Goggin (Link to: R-Red Wing) would give investors of workforce housing a 40 percent state tax credit (up to $1 million) for contributions toward eligible rental workforce housing. A project must also have at

14 Page 14 of 15 least 50 percent non-state matching funds to be eligible. HF 1020 was heard on Feb. 15 in the House Job Growth and Energy Affordability Policy and Finance Committee (Link to: The committee heard testimony in support of the bill from Dan Dorman with the Greater Minnesota Partnership (Link to: ; Abraham Algadi, Executive Director, Worthington Regional Economic Development Corporation (Link to: ; and Heather Corcoran with the League. Background A number of cities in Greater Minnesota have local employers that want to expand, but the city lacks adequate housing facilities to meet workforce needs. Advocating for more resources for workforce housing has been a priority issue for the League since The League was successful in securing funding for the Department of Employment and Economic Development (DEED) workforce housing grant program (Link to: but there are still cities facing barriers to have enough housing to support businesses that want to expand in their communities. Learn more in LMC Fact Sheet: Workforce Housing Solutions for Cities Across Minnesota (pdf) (Link to: The League supports continued funding for the DEED program, workforce housing TIF authority, and an investor tax credit incentive program to help provide tools for cities to work with prospective developers of workforce housing. View the League s policy on workforce housing (pdf) (Link to: We need your help Cities experiencing a shortage of housing for potential expanding businesses should contact League staff to share your city s story and discuss how the legislation could assist your community. Cities are also strongly encouraged to share those stories with legislators, especially if they are on the House or Senate Taxes committees. You can encourage your members to sign on as co-authors to the legislation while it awaits a hearing. Read the current issue of the Cities Bulletin (Link to:

15 Page 15 of 15 Your LMC Resource Contact Heather Corcoran IGR Liaison (651) or (800) (Link to:

16 LMC Awards Programs Page 1 of 2 LMC Awards Programs Nominate Your City or Official for a 2017 League Award! The League each year honors the special achievements of cities and city leaders. Entries are now being accepted for the City of Excellence Awards, C.C. Ludwig Award, and James F. Miller Leadership Award. Chief appointed and chief elected officials in every member city will receive entry brochures in the mail. You may also download the brochures here. The deadline to enter is May 5. View the City of Excellence Awards entry form (pdf) (Link to: inline=true) View the C.C. Ludwig Award & James F. Miller Leadership Award entry form (pdf) (Link to: About City of Excellence Awards The City of Excellence Awards (Link to: recognize cities for programs that have helped their cities progress in some way. Awards are given in three different population categories and in one special topical category, which is different each year. The 2017 Topical Category is "Promoting Civility in Your City." Read more about the City of Excellence Awards (Link to: About the C.C. Ludwig Award and James F. Miller Leadership Award The C.C. Ludwig Award (Link to: recognizes elected officials who have made significant contributions to Minnesota city government. Similarly, the James F. Miller Leadership Award (Link to: honors appointed city officials who have gone above and beyond the call of duty for their city and all Minnesota cities. Read more about the C.C. Ludwig Award & James F. Miller Leadership Award (Link to: Your LMC Resource Let us know if you have questions or suggestions about our LMC Awards Programs. Contact Don Reeder Assistant Director of Communications for Public Affairs (651) or (800) dreeder@lmc.org (Link to: mailto:dreeder@lmc.org) Meet our city vendors!

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18 Sustainable City Award Page 1 of 1 Sustainable City Award Submit your 2017 entries now! Cities currently participating in the Minnesota GreenStep Cities program are eligible to submit an entry for the 2017 League of Minnesota Cities/GreenStep Cities Sustainable City Award. The deadline to enter is May 5. View the Sustainable City Award entry form (pdf) (Link to: The award will be given to a single city that has implemented a project, program, or initiative that is helping the city achieve its sustainability goals through implementation of one or more of the GreenStep Cities program s 28 best practices. The winner will be announced at the 2017 LMC Annual Conference, happening June in Rochester. In addition to special recognition at the Annual Conference, the winning city receives a cash prize of $1,000. The winner is also featured in League press releases and publications. Past Sustainable City Award winners 2015 Sustainable City Award winner (Link to: Sustainable City Award winner (Link to: Your LMC Resource Contact Don Reeder Assistant Director of Communications for Public Affairs (651) or (800) dreeder@lmc.org (Link to: mailto:dreeder@lmc.org) Register Today! (Link to: