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Shakopee City Council
April 4, 2023
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| | | | | | | | | FROM: | John Bradford, Interim City Engineer | | TO: | Mayor and Council Members |
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| | | | | | | | Subject:
Municipal State Aid Street Funds Advancement. | | |
| | | | | | | | Policy/Action Requested:
Adopt Resolution R2023-042, applying for an advance of Municipal State Aid (MSA) funds. | | |
| | | | | | | | Recommendation:
Adopt Resolution R2023-042. | | |
| | | | | | | | Discussion:
This Council item is related to asking MnDOT for an advance on the annual construction allocation for the Municipal State Aid System (MSA).
The MSA funding mechanism allocates money to cities with populations over 5,000 based on their population and the needs of the streets identified as State Aid Streets. In 2023, the city received an allocation of approximately $1.7 million for construction. An additional allocation of $572,000 is received annually for general roadway maintenance.
In 2023, the City is constructing three projects that are eligible for funding through the Municipal State Aid System (MSA): Hwy 169 Pedestrian Bridge, Traffic Signal Improvements at Fuller & CSAH 16, and Traffic Signal Improvements at CSAH 101 & Shenandoah Drive. The total eligible costs of these projects is approximately $4.8 million.
MnDOT allows cities to apply for an advance on the anticipated construction allocations up to $4 million for projects being constructed in the current year. Because of our existing balance (approximately $2.3 million) this resolution applies for approximately $2.5 million as an advance. This amount is paid back with the approximate $1.7 million we receive each year until paid off.
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| | | | | | | | Budget Impact:
If approved the funds would be transferred from the state aid account to the city. The benefit to the city is that money would be available prior to construction and the city would have an opportunity to earn interest on these funds. The city’s current checking account interest rate is 4.49 percent.
An advance can be applied for each year so long as the cumulative amount advanced is less than $4 million.
In looking at the 2023 thru 2027 CIP, it appears that there are projects that would be eligible for advances in 2024, 2025 and 2026 without exceeding the $4 million cap.
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