County, city hash out roundabout funding options

Mille Lacs County commissioners learned at a March 21 workshop that the city of Princeton has asked for a meeting to talk about the possibility of using local option sales tax proceeds to help pay the local $490,000 share for a roundabout at 21st Avenue North and Highway 95.
County Administrator Pat Oman and County Engineer Bruce Cochran, who had been giving a transportation update, made clear that the county’s only role with Princeton’s roundabout project so far has been to act as fiscal agent for a grant the city received toward the project. Cochran said the plans for the project were going to the Minnesota Department of Transportation later that week, and the roundabout construction is scheduled for the 2017 season.
Oman said he had a phone conversation with Princeton City Administrator Mark Karnowski regarding potential funding options when the question about local option sales tax proceeds arose. Oman asked the commissioners if they cared to have the meeting.
The commissioners reacted with questions and criticism, mainly that it was “too late” for county sales tax requests and that funding should have already been identified for the local part of the project.
The county began a long and rigorous process late in 2015 that involved multiple public hearings regarding the local sales tax, and then it enacted the tax in 2016. The local option sales tax is 0.5 percent on applicable taxable items, and revenues from the tax have begun to hit the county coffers this year. The proceeds from it build over its 10-year period.
The money from the sales tax must be used to do a list of specific roadway projects the county defined before it applied to enact the tax. Nobody had suggested the roundabout project be on that list, so it was not included.
Commissioner Genny Reynolds said she did not agree with the idea of using sales tax funds for the roundabout and said the question should have been asked 10 months before.
Commissioner Phil Peterson said the county should not be expected to provide rescue funding. He also said the county might risk losing public trust if it makes changes to the project list now.
Board Chairman Roger Tellinghuisen asked questions about how adding a project would work at this point. Would they have to reprioritize the projects, kick a project off the county list or hold more public hearings? Oman said he would look into the process questions.
Commissioner Tim Wilhelm agreed that the roundabout funding discussion is happening late but observed that 21st Avenue North is County Road 157, which receives no state-aid funding. He pointed out how the majority of local sales tax funds will be spent to improve roads in the north end of the county.
Wilhelm said, “Here is your most traveled road in the district and we’re not going to do it?”
Commissioner David Oslin said he was not opposed to a meeting for discussion purposes and to learn more about the project specifics.
Oman said, “I do think the city has a number of funding mechanisms it can look at.”
Oman said there was a lot more to learn about the project but mentioned the possibilities of franchise fees, citywide or special assessment, tax-increment financing, tax abatement and bond sales. It was unclear when a possible meeting might take place.
Funding facts
Nearly everyone who discussed the project acknowledged it is needed to improve safety and traffic flow at the intersection and has been discussed for many years. As traffic and crashes in the area increase, the need for the project has become more urgent.
According to Princeton City Council meeting discussions beginning January 2016, Princeton applied for and received a $110,200 grant toward the potential $1.63 million project. At that point, the estimated costs broke down this way:
•$794,253 in federal funding.
•$346,000 in state funding.
•$490,000 in local funding.
Princeton has been in the process of gaining the temporary and permanent rights of way needed to build the project. The city administrator said last week that the city had originally leaned toward assessment of benefiting property owners to fund the project.
“Everyone knew something would eventually have to happen” (at the intersection),” Karnowski said.
However, the city’s consultant briefed Princeton councilors in February about the possible scenario of assessing benefiting properties. The method involved an assessment to 26 properties in amounts ranging from $1,614 to $39,272.
An attorney representing several property owners said if assessed, his clients would appeal the assessment because they didn’t feel it is an appropriate funding option for this project. Previous city discussions had determined that the council deemed it fair to bill the properties that would most benefit from the traffic improvements, instead of assessing all owners who may or may not drive that road.
Karnowski said the appeal process or a lawsuit, as has been threatened, has the potential to delay the whole process when at stake is a lot of grant money with expiration dates and traffic improvements that have been needed for a while.
He said while assessments or tapping reserve funds is not out of the question, Princeton is examining all other finance options for the local funding portion of the roundabout at Highway 95 and 21st Avenue North.