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EN HILLS <br /> MEMORANDUM <br /> DATE: December 19, 2011 <br /> TO: Honorable Mayor and City Councilmembers <br /> Patrick Klaers,City Administrator „, <br /> FROM: Terry Maurer, Public Works Director �,� <br /> SUBJECT: Municipal State Aid System Update <br /> Old Snelling Avenue Improvement <br /> Background <br /> At a recent discussion of transportation issues the Council asked for a list of projects for <br /> which Municipal State Aid (MSA) funds could be used as a funding source. Staff <br /> thought it may be worthwhile providing a brief explanation of the overall MSA system. <br /> So here are some general points on how the MSA system is set up and operates: <br /> 1. The MSA system was started in the 1950's and is used to distribute the Highway <br /> Users Tax Distribution Fund (basically gas tax and some other minor funding <br /> sources)to local governments. <br /> 2. The distribution is established constitutionally as 62% Mn/DOT; 29% counties <br /> and 9% cities. In 2011 the City's 9% amounted to $139,081,139. Any city with <br /> a population over 5,000 is eligible to participate. In 2011 there were 147 eligible <br /> cities, 83 in the metro area and 64 outstate. <br /> 3. The City's 9% is distributed in two ways. Half is distributed based on population <br /> of the 147 eligible cities (in 2011 each person was worth $18.80). The other half <br /> is distributed by what is known as "needs". Needs are roughly a calculation of <br /> how much it would cost to build out the entire system today. In 2011, total needs <br /> for the entire system were $5,239,406,230, Arden Hills' total needs in 2011 were <br /> $8,012,390. From a distribution standpoint each$1,000 of needs received $13.27 <br /> in 2011. Arden Hills' total apportionment in 2011 was $304,067. <br /> 4. Each city's annual apportionment is then divided into Maintenance and <br /> Construction Funds. From a maintenance standpoint each city must take a <br /> minimum of$1,500 per State Aid mile up to a maximum of 25% of the annual <br /> distribution (35% can be requested but requires documentation as to how the <br /> money was spent). Arden Hills takes 25% of the annual distribution for <br /> maintenance. The Maintenance Funds are sent directly to the city in three <br /> installments during the year. The remaining annual allotment goes into the <br /> Construction Fund which is held at the State until a State Aid approved plan is <br /> bid and the contract awarded. <br /> City Council Meeting <br /> P:\Admin\Council\Agendas&Packet Information\2011\12-19-11 Worksession\Packet Information\12-19-11MSAUpdate.doc <br /> Pagel of 3 <br />