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Page 2 of 2 statutory formula. A total of $192 million was distributed statewide for the municipal state aid system in 2019. The City of Arden Hills received a total of $391,859 in annual allotment from the Municipal State Aid (“MSA”) program for 2019. This annual allotment is divided into two components each year. One component (75%), in the amount of $293,894, is available for construction of road improvement projects on state aid routes in Arden Hills. The second component (25%), in the amount of $97,965, is provided to the City to assist with the cost of maintaining city streets designated as municipal state aid routes. Cities can receive advances on the annual construction allotment, which are repaid as future annual construction allotments become available. These advances are similar to a loan repaid with future City revenue from the state aid program. Attachment A to this memorandum provides a summary of the City’s MSA construction fund balance from 2001 through 2019. The annual ending fund balance is provided in the right column. The fund balance peaked in 2014 with a balance of $1.5 million, and was then drawn down to a negative balance of -$774,250 in 2015, as the City initiated advances for three projects listed on the attachment. Since 2015, these advances were paid off with the annual construction allotment over the past four years. Therefore, the current construction fund balance is essentially zero, with the annual construction allotment for 2020 becoming available to the City for the remaining payment on one past project (Gateway Blvd) and for other projects. In 2018, the City began construction of the Old Snelling Trail and Watermain Project. When the project was awarded, the project funding plan assumed $1.47 million would be derived from MSA funds. However, construction funds were not available at that time, as described above, and a funding request was not submitted to the State Aid office to receive future construction allotment payments for the Old Snelling Trail and Watermain Project. This funding shortfall must be reconciled as the project is closed out. City staff requests an opportunity to discuss the current MSA construction fund balance and a recommendation for the City Council to authorize a request to the MnDOT State Aid Office for an advancement of $1.47 million in future construction allotment to reconcile the funding needed for the Old Snelling Trail and Watermain Project. This advancement would consume most, if not all, of the City’s annual MSA construction allotment through the year 2024. Budget Impact An advancement of $1.47 million from future annual construction allotments would provide necessary funding to reconcile the 2018 Old Snelling Trail and Watermain project. If an advancement is not received for this project, the City will continue to cover the project deficit with an internal funding source, which would then be repaid by the future construction allotments. While the limitations of the construction allotments do not preclude the City from further street projects, it does have an impact on cash flow which needs to be factored in during the Budget and Capital Improvement Plan process. Attachment Attachment A – MSA Construction Fund Summary