MEMORANDUM DATE: January 30, 2015 TO: MAYOR & COUNCIL MEMBERS FROM: DANNY LENZ, CITY MANAGER SUBJECT: CITY MANAGER’S REPORT CGMC LEGISLATIVE ACTION DAY

As I mentioned in my memo last week on Wednesday, January 28th I attended the Coalition of

Greater Minnesota Cities’ (CGMC) Legislative Action Day in St. Paul. I received good information

and background on the priorities for CGMC, which I have attached to this memo, as well as

priorities from the Greater Minnesota Partnership (GMNP). I have attached two handouts on

GMNP’s priorities as well. Following the briefing and presentation I met with State Senator Vicki

Jensen and State Representative John Petersburg. We had a good discussion on issues impacting

Waseca and what the City could do to support and provide information to them on issues

important to the City.

WATER RATE INCREASE INFORMATION

As you are aware, on November 19, 2013 the City Council approved water rate increases for 2014

and 2015. With the 2015 rate increase going into effect I wanted to provide the attached

information showing the changes to the rate structure from 2013 through 2015. Information on

the rate change was included in the newsletter mailed to utility customers in December along with

their utility bill due on February 15, 2015. Questions on the rate change can be directed to the City

of Waseca Utility Billing office at 835-9718.

CENTRAL MINNESOTA INTER-CITY REGIONAL PASSENGER RAIL INITIATIVE

This coming Monday I will be attending an update and discussion on the MnDot Rail Plan hosted

by the Central Minnesota Inter-City Regional Passenger Rail Initiative. The Initiative is working to

make re-starting passenger rail service in southern Minnesota a tier 1 priority in the MnDot Rail

Plan and is seeking the support of cities in the region. Generally speaking, the initiative envisions

passenger rail service from Des Moines up through I-35 cities to the Twin Cities, with contributing

routes from Mankato, Rochester and Winona to Owatonna and Northfield. I am hoping to learn

what impact and/or benefits this initiative will have for the City of Waseca. If any councilmembers

are interested in joining me please let me know. I have attached documents on how this service

would connect to Amtrak, additional detail on the inter-city passenger rail route options, list of

supporting cities and organizations and a form letter of support to MnDot on the initiative. The

meeting will be from 3PM – 5PM on Monday, February 2, 2015 at the Weitz Center for Creativity at

Carleton College in Northfield, MN. A public open house for the general public will be held

immediately following the update for local officials at the same location. ADDITIONAL ATTACHMENTS

• Updated 2015 February Calendar • CGMC In Brief • Greater Minnesota Partnership’s Economic Advantage

Workforce Housing Shortage Holds Back Growth

in Greater Minnesota

What is Driving the Shortage of Workforce Housing in Greater Minnesota?

• Lack of Investment Capital: Lenders and investors may view communities with one or two large employers

as posing too much risk, despite strong demand from potential residents and businesses.

• Prevailing Rent Holds Back Construction: If the current prevailing rent has been traditionally low – even if

good-paying jobs would support higher rents – investors often will not invest. Rural communities may have

small pools of potential renters that offer investment returns which have not drawn developer attention.

• Fewer Skilled Workers: Greater Minnesota has fewer contractors and workers, which limits cost efficiencies

and expertise.

“our e: Greater Mi esota Part ership Workfor e Housi g Worki g Group; Lo re ts i rural Mi esota sty ie e housi g, “tar Tri u e / / 4

Executive Director Dan Dorman

dan@gmnp.org

www.gmnp.org

612-245-5204

The shortage of housi g is a real obstacle to

attracting e ployees [i Warroad].

~ Marvin Windows President Susan Marvin

Source: Minnesota Housing Partnership, http://bit.ly/1w0OeYU

If we want to continue to grow together … housing opportunities are going to be very

important to us, being able to invest in

capacity and growth in this area.

~ Polaris CEO Bennett Morgan

Source: “Skilled Worker Shortages Plague Mi esota Co pa ies fro Roseau to Rochester, Twin Cities Business Oct. 13, 2014

Business Growth in Greater Minnesota Depends on Workforce Housing

Demand Cannot Be Met Due to a Lack of Workforce Housing Development

• Alexandria: Resour es to e pa d [u its] have not been available in recent decades.

• Olmsted County: There is a crisis of need for people who are seeking affordable workforce rental or for-

sale housi g.

• Windom: Be ause of the o erall odest i o es i Wi do , re tal housi g ith odest re ts … are among the co u ity’s greatest housi g eeds.

By 2020, Many Regional Centers Will Have Significant Workforce Housing Needs

• Duluth: Needs 3,552 rental units

• Perham: Needs 100 rental units

• Olmsted County: Needs 2,894 rental units

• Worthington: Needs 300 rental units

Source: Housing studies conducted for each city, by Viewpoint Consulting Group, Maxfield Research, and Community Partners Research.

Prepared by Flaherty & Hood, P.A. for the Greater MN Partnership, 12/2/14

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  Prepared 1/23/15 by Flaherty & Hood, P.A. for the Greater Minnesota Partnership 

GMNP Seeks Flexible, Fast, Employer‐Driven Job Training Program Growing job vacancies in Greater Minnesota shows need – and potential – of GMNP proposal   What is the GMNP job training proposal? 

• Summary: The GMNP job training proposal is a tax credit or competitive grant program that gives employers the tools they need to train the workers necessary to fill open positions. 

• Many Training Options: Includes in‐house training, training at higher education institutions, private training, or educational services. 

• Growing Businesses Only: This program is targeted at training for new jobs only. 

• Training Costs Specific to Position: The GMNP proposal provides that training costs may not exceed 50 percent of an employee’s salary in the first year. 

• Wages Reflective of Community: Wages paid must be at least equal to the median hourly wage for the county in which the employee will be working. 

 Why support the GMNP job training proposal? 

• Fast: While other state programs are valuable, one that gives employers the opportunity to fill job vacancies quickly is needed to ensure economic growth. 

• Flexible: Other programs focus on training through educational institutions or assisting with career choices, while the GMNP proposal gives employers the option to train employees in the most efficient and convenient way they prefer.  

• Employer‐driven: By providing assistance to employers but letting them chose what training solution works best, more employers may be assisted with their job training needs. 

• Works Well With Existing Programs: More Greater Minnesota employers are having a difficult time finding skilled workers than ever before. This program complements other state programs by filling a need not being met by other state programs.   

    

     Legislation is needed to ensure that the employers can find the skilled employees needed 

for long‐term growth in Greater Minnesota!   

Source: DEED, Job Vacancy Survey (full‐time workers), second quarter 2006‐2014

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  Prepared 1/23/15 by Flaherty & Hood, P.A. for the Greater Minnesota Partnership 

GMNP Proposal Similar to Successful DEED Pilot Program Plan would expand, modify successful DEED pilot program  What is the DEED Job Training Pilot Program and how is it similar to the GMNP proposal? 

• In 2014, DEED established a Job Training Incentive Pilot Program that is similar to job training bills advocated by the GMNP. 

• The program awards grants of up to $50,000 to new or expanding businesses for purposes of training new employees quickly and efficiently. The program is available to businesses with fewer than 150 full‐time employees and which are increasing their workforce by at least 10%, with a minimum of five new jobs. 

• Similar to the GMNP job training proposal, the Pilot Program is fast, flexible and employer‐driven by allowing for training through a local college, a specialized trainer, or on the job.   

 What were the results of DEED’s Job Training Pilot Program? 

• Magnum Machining in Deerwood and Ironton: The company designs, engineers, manufactures, and assembles precision Computer Numeric Controlled products and components. It was awarded $50,000 to train 20 new CNC machinists over the next year. 

• C4 Welding Inc. in Sauk Rapids: The company recently relocated to a larger facility and was awarded $50,000 for training of 17 new welders.   

• Edmonton Trailer Manufacturing in Sartell: A Minnesota‐based startup that makes specialty and heavy‐haul trailers, the company was awarded $50,000 to hire 80 new employees by the end of 2016. 

• Talon Innovations in Sauk Rapids: The company, which manufactures proprietary products and provides precision machining services for various industries, was awarded $44,353 to train 20 new jobs over the next year. 

 How will the GMNP proposal modify and expand the successful DEED Job Training Pilot Program? 

• Broader range of employers: The GMNP proposal is open to all employers in Greater Minnesota, while the DEED Job Training Pilot Program is open only to employers with fewer than 150 employees. 

• Broader range of jobs: The GMNP proposal reimburses employers for up to half of an employee’s first‐year wages. The DEED Job Training Pilot Program is limited to $50,000 per business, while the GMNP proposal has no such limitation.  

• Broader range of wages: The GMNP proposal reflects local cost of living by reimbursing for jobs only above the county‐level median wage. The DEED Job Training Pilot Program requires at least 110% of federal poverty guidelines, which may not reflect local conditions or employer needs. 

• Keep training flexible, fast, and employer‐driven: The DEED Job Training Pilot Program and GMNP proposal excel at quickly responding to employment needs by providing a wide range of training options to an employer.  

 Legislation is needed to ensure that the DEED Job Training Pilot Program is expanded, continued into the future, and improved so it can give more employers and more 

employees the opportunity to share in economic growth!  

First Job Training Pilot Program Grants Awarded DEED’s Job Training Incentive Pilot Program awards three manufacturers funding to train 87 new workers

October 21, 2014 Madeline Koch, 651-249-7236, Madeline.Koch@state.m n.us ST. PAUL – Three m anufacturers in Greater Minnesota received worker- t raining grants totaling $144,000 from the Job Training I ncent ive Pilot Program . The funding will help t rain 17 new welders at C4 Welding I nc. in Sauk Rapids, 50 new welders at Edm onton Trailer Manufactur ing in Sartell and 20 new workers at Talon I nnovat ions in Sauk Rapids. The Minnesota Departm ent of Em ploym ent and Econom ic Developm ent (DEED) launched the Job Training I ncent ive Pilot Program this fall to help sm all businesses t rain new workers quickly and efficient ly. The program , an outgrowth of DEED’s exist ing Minnesota Job Skills Partnership, is aim ed at new or expanding businesses in Greater Minnesota that have fewer than 150 full- t ime em ployees and are planning to expand their workforces by at least 10 percent , with a m inim um of five new jobs. “Minnesota’s greatest st rength has always been our highly skilled and product ive workforce,” said Governor Mark Dayton. “To m aintain our com pet it ive edge, we need to provide workers with the t raining they need for these technically advanced jobs. I thank the three com panies for their com m itments to em ploy m ore good Minnesotans.” “As Minnesota’s baby boom ers ret ire and our workforce dem ographics cont inue to shift , it is crucial that we m ake sure we have workers with the r ight skills for available posit ions,” added DEED Com m issioner Kat ie Clark Sieben. “This program encourages sm all businesses to expand and hire new workers by helping to offset som e of the t raining costs.” Businesses in the m anufacturing, skilled product ion and inform at ion technology indust r ies will receive funding prior it y under the program . Workers can be t rained in basic skills, advanced technical skills, specific indust ry equipm ent , processes, safety, worker- related language, soft skills and other areas ident ified by the em ployer. Part icipat ing com panies must provide a cash m atch equal to 50 percent , 75 percent or 100 percent of the am ount awarded by DEED, depending on the size of the business. The following is a sum m ary of the first grant awards and com panies: C4 W elding I nc., Sauk Rapids, $ 5 0 ,0 0 0 The com pany, previously known as WFSI I nc., is a fabricator and assem bler of welded components for the oil and nuclear indust r ies. The com pany recent ly relocated to a larger facilit y and intends to add 17 new welding posit ions. The grant will com plem ent earlier funding that the business received from the Minnesota Job Skills Partnership to t rain 38 new em ployees. Edm onton Tra iler Manufactur ing, Sarte ll, $ 5 0 ,0 0 0 Edm onton Trailer, owned by Canada-based Edm onton Trailer Sales, is a Minnesota-based startup company that will focus on m aking specialt y and heavy-haul t railers. The com pany plans to hire 30 em ployees by Decem ber 2015 and 50 by Decem ber 2016. The new em ployees will be t rained in specialized welding skills. Ta lon I nnovat ions, Sauk Rapids, $ 4 4 ,3 5 3 Talon I nnovat ions m anufactures proprietary products and provides precision m achining services for the sem iconductor, m edical device, aerospace and other indust r ies. The com pany intends to add 20 new jobs over the next year. The grant will supplem ent a Minnesota Job Skills Partnership grant that the com pany was awarded last Novem ber to t rain 41 new em ployees. DEED is the state’s pr incipal econom ic development agency, prom ot ing business recruitm ent , expansion and retent ion, workforce developm ent , internat ional t rade and com m unity developm ent . For m ore details about the agency and our services, v isit us at ht tp: / / m n.gov/ deed/ . Follow us on Twit ter at twit ter.com / m ndeed .

Magnum Machining Workforce to Receive Training with DEED Grant Greater Minnesota company to add 20 new machinists in the next year

Decem ber 30, 2014 Madeline Koch, 651-259-7236, Madeline.Koch@state.m n.us

ST. PAUL - - The Minnesota Departm ent of Em ployment and Econom ic Developm ent (DEED) has awarded Magnum Machining a $50,000 Job Training I ncent ive Pilot award to t rain their workforce.

The Job Training I ncent ive Pilot Program , an outgrowth of DEED’s Minnesota Job Skills Partnership, helps sm all businesses t rain new workers quickly and efficient ly. The program is aim ed at new or expanding businesses in Minnesota that have fewer than 150 full- t im e employees and are planning to expand their workforces by at least 10 percent , with a m inim um of five new jobs. Businesses in the m anufacturing, skilled product ion and inform at ion technology indust r ies, and businesses located in Greater Minnesota receive prior it y for funding.

“As Minnesota’s workforce dem ographics cont inue to shift , it is crucial that we m ake sure we have workers with the r ight skills for available posit ions,” said DEED Com m issioner Kat ie Clark Sieben. “This Job Training I ncent ive Pilot Program grant encourages sm all businesses, like Magnum Machining, to expand and hire new workers by helping to offset som e of the t raining costs.”

Located in Deerwood and I ronton in Crow Wing County, Magnum Machining designs, engineers, m anufactures and assem bles precision Com puter Num eric Cont rolled products and com ponents. Magnum Machining current ly employs 59 workers at the Deerwood locat ion. The com pany plans to add 20 new CNC m achinist j obs over the next year as a result of the Deerwood facilit y expansion.

An internal t rainer will provide classroom-based, custom ized m achine operator t raining using 14 Mazak technology learning m odules. Classroom t raining will be followed by hands-on t raining through Magnum ’s Machine Operator Apprent iceship program . The grant will be used to pay wages for the t rainer and to purchase the Mazak learning m odules.

DEED is the state’s pr incipal econom ic development agency, prom ot ing business recruitm ent , expansion and retent ion, workforce developm ent , internat ional t rade and com m unity developm ent . For m ore details about the agency and our services, v isit us at ht tp: / / m n.gov/ deed/ . Follow us on Twit ter at twit ter.com / m ndeed .

City of Waseca Water Rate Increase

On November 19, 2013, the Waseca City Council adopted Resolution No. 13-81, which approved an increase in water rates for 2014 and

2015. The newly adopted rates appear in the table shown below.

Why did the Council approve a rate increase at this time?

City water utility customers have had no water rate increase since March, 2007. The State of Minnesota is recommending that utilities

adopt rate structures that encourage water conservation. The new tiered rate structure is designed to help accomplish this goal. The

rate i rease ill also address the re e ue eeds of the City’s Capital I pro e e t Proje ts, such as water main replacement and City

well rehabilitation.

What is the difference between customer base charges and usage charges?

Customer base charges ensure that the infrastructure is ready to go at that moment when a faucet is turned on or a toilet is flushed.

The ase harge is deter i ed y the size of the usto er’s ater service and meter, is based on AWWA (American Water Works

Association) standards, and is structured so that everyone pays their fair share. Usage charges offset the costs of pumping water from

the well, the chemicals used to treat it, and the energy it takes to transport and pressurize the water in your faucet. Usage is billed in

’s u i feet CCF . u i feet is e ual to 4 gallo s.

When will I see the increase on my utility bill?

The new rates will be effective with the utility bill due February 15, 2014, and also in 2015 with the utility bill due February 15, 2015.

Who can I call if I have questions about this rate increase?

Questions about the water rate increase can be directed to the Utility Billing office at 835-9718. Office hours are 8:00 AM – 4:30 PM,

Monday through Friday.

Meter/Service Size Customer Base Charge

5/8 to 1" 8.60$ 1.415$

1.5 to 4" 42.20$ 1.415$

6 to 10" 156.80$ 1.415$

Residential: Residential:

Meter/Service Size Customer Base Charge 0-8 9-17 >17 Meter/Service Size Customer Base Charge 0-8 9-17 >17

<1 inch 8.85$ 1.48$ 1.55$ 1.63$ <1 inch 8.85$ 1.56$ 1.64$ 1.72$

1 10.50$ 1.48$ 1.55$ 1.63$ 1 12.50$ 1.56$ 1.64$ 1.72$

1 1/2 25.00$ 1.48$ 1.55$ 1.63$ 1 1/2 25.00$ 1.56$ 1.64$ 1.72$

2 37.50$ 1.48$ 1.55$ 1.63$ 2 37.50$ 1.56$ 1.64$ 1.72$

3 55.50$ 1.48$ 1.55$ 1.63$ 3 68.75$ 1.56$ 1.64$ 1.72$

4 80.80$ 1.48$ 1.55$ 1.63$ 4 118.75$ 1.56$ 1.64$ 1.72$

Non-Residential (Business/Commercial/Industrial): Non-Residential (Business/Commercial/Industrial):

Meter/Service Size Customer Base Charge Meter/Service Size Customer Base Charge

<1 inch 8.85$ 1.51$ <1 inch 8.85$ 1.59$

1 10.50$ 1.51$ 1 12.50$ 1.59$

1 1/2 25.00$ 1.51$ 1 1/2 25.00$ 1.59$

2 37.50$ 1.51$ 2 37.50$ 1.59$

3 55.50$ 1.51$ 3 68.75$ 1.59$

4 80.80$ 1.51$ 4 118.75$ 1.59$

6 195.50$ 1.51$ 6 234.40$ 1.59$

8 289.00$ 1.51$ 8 421.25$ 1.59$

10 352.00$ 1.51$ 10 546.85$ 1.59$

Water Sales Station Per 200 Gallons: 2013 $1.25 2014/2015 $1.50

Vegetable Company Industrial Usage Standby Water Fee: 2013 $1,110/month 2014/2015 $1,240/month

Non-Residential Sprinkler Use (Deduct Meter Usage): 2013 $1.415/CCF 2014 $1.63/CCF 2015 $1.72/CCF

Note:

a. 2014 rates begin on bill due February 15, 2014. 2015 rates begin on bill due February 15, 2015.

b. The water utility may not downsize a customer account meter

c. All meters must be obtained from the water utility

d. Meter replacement charges will apply based on the most recent meter prices

City of Waseca Water Utility Rates

2015 Rate Structure

Usage Charges (Per CCF)

Usage Charges (Per CCF)Usage Charges (Per CCF)

2013 Rate Structure

2014 Rate Structure

Usage Charges (Per CCF)

Charge Per CCF

Rochester

MankatoOwatonna

Winona

Northfield

Newton to Oklahoma City Connection

Rochester to Northfield Line

Union Pacific "Spline" Line (former Rock Island Line)

Winona to Mankato Line

500 0 500250Miles

Amtrak Train Routes

Other Rail Services

Thruway Connecting Services

THE AMTRAK SYSTEM

Letters of Support to MnDot from Cities/ Counties and Stakeholders (as of 1/23) in Support of

Tier One Status forInter-City Regional Passenger Rail between South Central Minnesota and the Twin Cities Metro, on existing rail through Northfield.

1. City of Albert Lea 2. Carleton College 3. City of Dundas 4. City of Edina 5. City of Elko/New Market 6. City of Farmington 7. City of Lonsdale 8. Minnesota Association of Railroad Passengers 9. Minnesota State Colleges and Universit ies System (MNSCU) 10. City of Northfield 11. Northfield Convention and Visitors Bureau 12. Northfield Chamber of Commerce 13. Northfield Economic Development Authority 14. City of Owatonna 15. Ramsey County Regional Rail Authority 16. Rice County 17. City of Richfield 18. City of Rosemount 19. City of Saint Paul 20. City of Savage 21. South Central Community College, Faribault and North Mankato 22. Rep. Clark Johnson, District 19A (Mankato) (House Transportation Committee) 23. UMore Development LLC, Rosemount

Some of the additional letters that are schedule for consideration on upcoming Agendas: 24. pending approval 1/26 - City of Mankato 25. pending approval 1/26 - Northfield School Board 26. pending approval 1/27- City of Faribault 27. pending approval 1/27 - Steele County Board of Commissioners

Official letters and public comments regarding the Revision of the State’s Rail Plan must be received by MnDot by the end of the day on March 10, 2015.

South Central Minnesota Inter-City Regional Passenger Rail Initiative

DRAFT TEXT for letters to MnDot

Summary: letters to MnDot are requested from regional governing bodies, economic stakeholders and residents, to ask MnDot to study the feasibility of restoring inter-city regional passenger rail service between south central Minnesota and the Twin Cities on existing rail lines through Northfield, and to move that project to Tier One status in the State’s Rail Plan which is currently under revision.

Letters are due to MnDot by (NEW Public Comment Deadline) March 10, 2015.

Please address letters to: Charles Zelle, Commissioner, Minnesota Department of Transportation 395 John Ireland Boulevard, Mailstop 100, St. Paul, MN 55155-1899

cc: Dave Christianson, Project Manager, Minnesota State Rail Plan, MN Department of Transportation, 395 John Ireland Blvd , Mailstop 480 Saint Paul, MN 55155-1899

cc: Dan Krom, Passenger Rail Director, Minnesota Department of Transportation, 395 John Ireland Blvd , Mailstop 480 Saint Paul, MN 55155-1899

SUGGESTED TEXT – to be adapted/edited as needed

Dear Commissioner Zelle:

We writing to encourage MnDOT to move restored inter-city regional passenger rail service between south central Minnesota and the Twin Cities on existing rail lines through Northfield, to Tier One status in the State’s revised Rail Plan. We urge MnDot to commence an evaluative study of our rail corridor, including the inter-state connections that this line would restore to our State and communities.

We feel strongly that this project presents sufficient merit to our region and State to warrant serious study for possible development in the near future. We see this project as beneficial to the economic development of our city and region. We also recognize the potential inter-state rail connections that our particular rail line would open for Minnesotans by virtue of the intersection of our line with three of Amtrak’s most heavily trafficked inter-state lines that intersect with our rail line as it continues south to Kansas City and Des Moines.

The 2009 Minnesota Comprehensive Statewide Freight and Passenger Rail Plan identifies the Northfield – Metropolitan corridor for Tier II development. Moving this corridor forward to Tier One Status in the Stats Rail Plan for purposes of evaluative preliminary study is more than justified by the forecasted levels of usage, and the apparent technical feasibility of two existing rail alignments that serve our region. Importantly, study of restored passenger service between south central Minnesota and the Twin Cities through Northfield is also justified by the financial feasibility of this project as compared with other proposed passenger rail projects in the State, since our project would introduce passenger service on existing rail lines.

Elevating our central Minnesota passenger rail corridor to Tier One Status in the State Rail Plan is warranted by the enthusiastic grass roots support that this project has received from regional stakeholders. Representatives of (municipality/county or other stakeholder) have met with elected and appointed leaders from around our region and we see this project as one of common interest to our communities, region and the State.

We strongly encourage MnDOT to elevate restored regional inter-city passenger rail service from south central Minnesota to the Twin Cities metropolitan area, to Tier One status in the State’s revised Rail Plan, and ask you to commence an evaluative study of that alignment as part of your statewide rail planning.

Respectfully,

________________

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Newsletter for the Week of January 29, 2015

Record turnout for Legislative Action Day

This year’s CGMC Legislative Action Day was a huge success! Nearly 100 city

officials from 40 cities attended the CGMC's annual lobbying event, which was held

in St. Paul on Wednesday. We also had a record number of legislators attend the

legislative reception and dinner that capped off the day, with a bipartisan mix of

nearly 60 legislators representing both rural and urban districts. Notable attendees

included House Speaker Kurt Daudt (R-Crown), House Minority Leader Paul

Thissen (DFL-Minneapolis), Senate Tax Chair Rod Skoe (DFL-Clearbrook) and

House Capital Investment Committee Chair Paul Torkelson (R-Hanska).

The day began with a membership meeting in which attendees were apprised of

the CGMC’s top legislative priorities and given tips on how to lobby at the Capitol.

The meeting was followed by a lunch with speakers Senate Majority Leader Tom

Bakk (DFL-Cook) and House Tax Committee Chair Rep. Greg Davids (R-Preston),

who shared their insights into the legislative session and fielded questions from the

crowd.

Attendees then spent the afternoon meeting with legislators at the Capitol and

urging them to support CGMC proposals on Local Government Aid, broadband,

workforce housing, transportation, environmental regulations, job training and the

Business Development Public Infrastructure grant program. A copy of the lobbying

materials that were given to the legislators can be found here.

A big thank you to all the member cities that participated in this year’s event!

Gov. Dayton’s budget a missed opportunity for Greater Minnesota

growth

Despite many legislators deeming 2015 the “Greater Minnesota session,”

Governor Dayton released a budget this week that focuses on students and higher

education. Under his proposal, more than 77% of the projected $1 billion surplus

will go toward Health and Human Services, Higher Education and E-12 education.

Despite the bipartisan focus on Greater Minnesota economic development in the

legislature, the Governor has no new initiatives in that area. And, while the

Governor’s budget dedicates $30 million to the Broadband Infrastructure Fund, this

is far short of his own Broadband Task Force’s recommendation of $200 million.

Governor Dayton also failed to increase Local Government Aid in his budget for

the next two years. The CGMC is proposing to increase LGA by $45.5 million by

2017 to get back to the 2002 level.

In response to the Governor's budget, CGMC President and Ely City Councilor

Heidi Omerza released a statement to the press calling it "a missed opportunity to

bring economic growth to Greater Minnesota." Her comments were included in

several news articles, including this one in the Star Tribune.

For more information on the Governor's budget, click here.

Property tax changes do not provide property tax relief to Greater

Minnesota

In Governor Dayton’s budget, documents showed that “new revenue” would be

coming to Minnesota cities – which could help assist cities in a year where the

Governor did not increase LGA. Unfortunately, the budget documents conflate

revenue with tax base in the case of railroad property tax “modernization” and

directs most new funding to the metro area in the case of changes to the Municipal

State Aid Street Fund.

In recommending “modernization” of state railroad property assessments, the

Governor proposed expanding the taxable property of railroads to include property

like rolling stock while also simplifying rules for taxing railroads. According to the

Governor, current laws do not provide for an accurate determination of the fair

market value of railroad operating property. This proposal would allow the

commissioner to use “modern, generally accepted appraisal practices” to estimate

market value for railroads, update obsolete language, and may reduce the burden

of resources spent on dealing with appeals stemming from older appraisal

methodology. However, this is not new “revenue” because this proposal merely

expands the tax base – by $12.5 million in FY 2017. In order to capture this

expanded tax base, cities would still need to raise their levies.

The Governor's budget proposal also includes changes to the Municipal Street Aid

Street Fund, including a gross receipts tax (at 6.5%) and registration fee increases.

In 2016 and 2017, these changes add up to more than $77 million in aid to cities,

with 66% going to the Metro area. However, because few cities in Greater

Minnesota receive funds under the MSAS, new revenue would impact only 9.5% of

Greater Minnesota cities, but 56% of metro area cities. Moreover, of the new

revenue, over 24% goes to cities that do not receive LGA, which undercuts the

administration’s assertion that the revenues are a substitute for LGA.

Gov. Dayton unveils transportation proposal

Gov. Dayton released his transportation funding package on Monday. His proposal

addresses a 10-year time period, pledging money to the constitutional funding

formula, funding for metro and Greater Minnesota transit and bike and pedestrian

pathways. The new funding mechanisms included in his proposal are a 6.5 percent

tax on gasoline at the wholesale level, an increase in tab fees, a half-cent metro

area sales tax, and money from the general fund. It also includes $2 billion in

Trunk Highway Bonds.

On the spending side, this translates to $6 billion to the state trunk highways,

$2.356 billion to counties, cities and townships, and $2.92 billion to transit, all over

10 years. As for the Corridors of Commerce program, which is one of the CGMC’s

top transportation priorities, the plan pledges $1.6 billion over 10 years.

Unfortunately, the plan does not address road funding for cities with a population

under 5,000, which is another key transportation issue for many CGMC cities.

The Governor, Senate and House have now all introduced their opening bids on

transportation. We anticipate that the CGMC will be called on to produce stories

about the need for more transportation funding, especially about the increases in

project cost participation. Get your stories and numbers ready so the Legislature

does not ignore the need for transportation investment in Greater Minnesota!

CGMC President Heidi Omerza pens guest column

CGMC President Heidi Omerza wrote a guest column urging the Legislature to

keep its focus on Greater Minnesota issues and take meaningful action to improve

economic development this session. The column was sent to newspapers across

the state and has already been published in the Bemidji Pioneer, Owatonna

People’s Press, Hutchinson Leader and Worthington Daily Globe.

Advocating for Parks & Trails

For those who missed Legislative Action Day, lobbyist Elizabeth Wefel introduced

CGMC members to Greater Minnesota Parks & Trails, an organization comprised

of counties, cities and individuals from across the state who are interested in

strengthening our regional and local parks and trails. GMPT will be holding its first

ever Legislative Day in St. Paul on Feb. 10. If you’re interested in joining the group

or learning more, please contact Elizabeth at eawefel@flaherty-hood.com or 651-

259-1924. The GMPT’s membership form is available here.

Save the date!

Please mark your calendar for upcoming CGMC events and important dates:

• CGMC Summer Conference: July 22-24, 2015, Duluth

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New sletter for the w eek of Jan. 27 , 2015

Rem inder - - GMNP membership meeting, Legislat ive

Action Day

As part of the day-long Legislative Action Day event, the GMNP will be holding a

membership meeting tomorrow (Wednesday, Jan. 28) at 10 a.m. Even if you

haven’t signed up to attend Legislative Action Day, all GMNP members are

encouraged to attend the meeting either in person or via conference call. While

originally scheduled to be a Board of Directors meeting only, it has been extended

to a full membership meeting in order to vote on appointing a new GMNP treasurer

to fill the position recently departed by Mark Phillips. Other topics of discussion at

the meeting include membership and legislative updates.

If you would like to participate in the meeting via conference call, please email Julie

Liew at jlliew@flaherty-hood.com for call instructions.

Governor Dayton unveils budget proposal

Governor Dayton released his budget proposals for the 2015 legislative session

this morning. The highlights of his ideas for the $1 billion surplus include:

• $100 million for child and dependent care tax credits

• $175 million for a 1 percent K-12 formula increase in 2015 and an additional

1 percent in 2016

• $110 million for pre-K and school readiness programs

• $20 million in additional Head Start funding

• $45 million addition to Department of Human Services spending relating to

education

• $30 million increase to a variety of education programs

• $125 million increase in general health and human services funding

• $90 million in additional higher education funding

• $65 million in additional court service funding

• $30 million in broadband funding (note that this is far less than the $200

million recommended by the Governor’s Task Force on Broadband)

The remainder of his proposal is spread across a variety of programs.

Unfortunately, Gov. Dayton did not recommend any investments in job training

programs or workforce housing, which are two of the GMNP’s top priorities this

session. However, the Governor’s staff has requested more information from the

GMNP and we hope to gain his support by the end of session.

More detailed information on the Governor’s budget proposal can be found here.

GMNP int roduces plan to address w ork force housing

w oes

The GMNP, after gathering stakeholders and organizations involved in workforce

housing, released its workforce housing plan this week. It provides a market-based

solution to drive investment in workforce housing, while giving DEED additional

tools to address this longstanding barrier to growth. The program is modeled after

the best parts of programs already in place in Iowa and North Dakota -- states

encountering similar workforce housing issues. We hope the legislature will tackle

this large issue with a comprehensive solution.

For more information on the GMNP workforce housing proposal, click here.

Dayton releases t ransportat ion plan

On Monday, Governor Dayton released his transportation proposal. If enacted into

law, the plan would add $6 billion over the next 10 years. The plan includes $1.6

billion for the Corridors of Commerce program, which is one of the GMNP’s

legislative priorities.

The Governor’s plan requires an increase in the gas tax by imposing a 6.5 percent

tax on wholesale gas sales. In order to add additional funding for metro transit, a

half-cent metro sales tax would be imposed. The plan also includes an increase in

vehicle tab fees. License tab fees go into the same account as the gas tax.

The Governor’s proposal is very similar to the Senate DFL plan announced

previously. We will be monitoring all of the transportation proposals closely and

keep you posted as developments occur.

GMNP test if ies before tw o House com m it tees

GMNP Executive Director Dan Dorman testified before two House committees

within the last week. He provided an overview of the GMNP’s workforce housing

proposal to the Job Growth and Energy Affordability Policy and Finance Committee,

and he shared the GMNP’s ideas on workforce housing and water-quality

regulations before the Greater Minnesota Economic and Workforce Development Policy

Committee. The GMNP’s proposals appeared to be well-received, though the

details of the plans were not discussed as these were just “overview” hearings on

various ideas and proposals.

I m portant Dates

• Jan. 28: GMNP membership meeting and Legislative Action Day,

St. Paul

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The Greater Minnesota Partnership brings together b usinesses, economic

development organizations, local governments and no n-profits to promote

and advocate for economic prosperity in Greater Min nesota.

Copyright © 2015 Flaherty & Hood, P.A., All rights reserved.

Questions? Contact:

Executive Director Dan Dorman

Email: dan@gmnp.org

Phone: 612-245-5204

Our mailing address is:

Greater Minnesota Partnership

Flaherty & Hood, P.A.

525 Park St., Suite 470

St. Paul, MN 55103

Visit us online at gmnp.org.