Minneapolis finds deal to pay for road, park repairs

After weeks of trading proposals, Minneapolis leaders on Monday reached an $800 million agreement, unprecedented in recent history, to breathe new life into the city's crumbling roads and neighborhood parks over the next 20 years.

The deal, which appears to have enough support to pass, relies heavily on property tax hikes — though not as much as an earlier proposal by Mayor Betsy Hodges. It would set what one council member described as a "new level of service" for maintaining the city's streets, in addition to overhauling myriad deteriorating park facilities scattered across the city.

The compromise proposal was unveiled at the City Council's financial committee meeting, with the expectation the full council would vote on it later this week. It mixes components of a parks financing plan authored by two council members, Barb Johnson and Lisa Goodman, with another by Hodges addressing both roads and parks. Hodges, who vetoed a version of the parks-only plan, worked on the compromise.

Starting in 2017, the plan would devote an extra $22 million a year primarily to reconstruct city streets — adjusted annually for inflation. Another $11 million per year would pay to rebuild and improve maintenance at 157 neighborhood parks, which are distinct from the city's regional parks.

The bulk of the new money would come from issuing debt and raising the city's tax collections beyond the 3.3 percent average annual increase city officials expect will be necessary to maintain existing city services over 20 years. The deal would increase the levy an additional .66 percent per year, on average, about half of Hodges' initial proposal.

It would begin with raising the city's total levy by 4.8 percent, or $14 million, in 2017, which could prove a tall order for a council that two years ago could not stomach a 2.4 percent increase. It was scaled back to 2.2 percent. It's not yet clear how the plan would impact individual homeowners since the levy is a dollar amount spread out over the city's fluctuating tax base.

The effort will be aided substantially by the expiration in 2020 of special taxing districts, accounting for more than 3 percent of the city's tax base, that are now devoted to Target Center debt and neighborhoods. The arena's original debt will be paid and the city can bring the taxes into the more flexible general fund — through a levy increase — to pay for streets, parks and neighborhoods.

"The [tax district] decertification is a significant part of the equation," Mark Ruff, the city's chief financial officer, told council members.

The plan relies in the early years on some pension savings that Hodges previously criticized as too speculative for a long-term commitment. It would also initially tap some city balances and reserves, determined annually based on conditions, including money in the city's liability payout fund, excess information technology balances and debt service reserves.

Council President Barb Johnson said low interest rates make it foolish to keep unnecessary cash "in the checkbook."

"Is that the most sensible place to [keep] it when we have these demands for real investment in fairly hefty quantities in our city?" Johnson asked.

She added that low interest rates also make this a wise time to issue new debt.

The plan will be presented to the council's Committee of the Whole on Wednesday, where the fine print will get a more thorough review.

If approved, the deal would represent a new level of cooperation between City Hall and the city's semi-independent Park Board. The Park Board was pushing for a referendum this fall on a $300 million, 20-year plan to improve neighborhood parks, which would not be necessary if Monday's plan wins approval.

So far, the basic outline appears to have attracted support from the council, Park Board leadership, and the mayor's office.

"The Mayor believes it is a genuine compromise that will make critical investments in both streets and parks," David Prestwood, Hodges' spokesman, wrote in an e-mail.

Eric Roper • 612-673-1732

Twitter: @StribRoper