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Metro Cities News 05/08/20

by: Jennifer Dorn
Category: Newsletter
May
08

 

In This Issue:

 

 

Legislative Session Clock is Ticking

The 2020 legislative session will conclude 10 days from now, on Monday, May 18. The House and Senate have been conducting remote floor sessions and holding remote committee meetings to debate bills, many of which are COVID-19 related spending and policy. Metro Cities is monitoring and responding to various bills of interest to metropolitan cities. Please watch for updates in this newsletter, legislative alerts and legislative activity updates via Metro Cities Twitter account @MetroCitiesMN, as the session marches to its finish on May 18th.

 

House Omnibus Tax Bill Contains City-Related Provisions

The House Taxes Committee on Friday heard HF 3389 - Marquart, the committee’s omnibus tax bill. The committee discussed the bill and took public testimony and did not amend or vote on the bill. The bill contains several items of interest to Metro Cities. Specifically, the bill:

  • Provides temporary flexibility in the use of unencumbered TIF increment and certain local special tax revenues (food and beverage, general, liquor, admissions/amusement and lodging taxes), until December 31, 2021, allowing revenues to be transferred to a city’s general fund. The bill requires cities to approve a spending plan and hold a public hearing to discuss the use of any transferred increment or special taxes. Metro Cities supports this provision to provide cities with flexibility in resources as they address unexpected local needs as a result of the pandemic. (Article 6)
  • Extends the five-year pooling rule for redevelopment TIF districts to 10 years for districts outside of the seven-county metropolitan area. Metro Cities supports including an extension for metropolitan redevelopment TIF districts. (Article 6)
  • States that local lodging taxes apply to the whole lodging price, including services by accommodation intermediaries (on-line travel providers). The bill allows cities that collect their own lodging tax and have ten or fewer lodging establishments to opt out of collecting tax on accommodation intermediaries. Metro Cities supports this provision. (Article 6)
  • Allows counties to choose a second settlement date for property tax payments collected in the first half of the year. The provision applies to taxes payable in 2020. (Article 1)
  • Expands the sales tax exemption for construction materials purchased by local governments for specific cities and projects, including Minnetonka, Maplewood, Crystal, Bloomington, Grand Rapids, St. Peter, and Buffalo. Metro Cities supports expanding the construction sales tax exemption for all cities. (Article 5)
  • Establishes a local sales tax criteria working group that includes representation by state officials and local governments, to develop a list of capital projects that may qualify as a project of regional significance, as is required by state law, and a list of projects that should not be considered to qualify. Metro Cities signed a letter with the League of Minnesota Cities, Coalition of Greater MN Cities and the Municipal Legislative Commission to support modifications to the language including removing the requirement for the group to determine projects that would not qualify. (Article 6)

Metro Cities encourages cities that would benefit from the provisions that provide temporary flexibility in the transfer of TIF increment and special tax revenues to contact your legislators to express support for this language. For more information, contact Patricia Nauman at 651-215-4002, or [email protected].


Senate Bill Proposes Formula for Distribution of Federal Funds to Local Governments

A bill that would provide a formula for the distribution of federal funding under the Federal Coronavirus Relief Fund has been introduced and is scheduled for a hearing on Monday in the Senate Finance Committee. SF 4564 - Rosen would appropriate $667 million of the state’s allocation of the federal funding to local governments.

As background, the federal law directly allocated a portion of a state’s allocation of federal funds to local governments over 500,000 in population. In Minnesota, Hennepin and Ramsey counties are the only local governments that qualified for a direct allocation, and the two counties have received a total of $316.9 million. The state remaining allocation totals $1.869 billion. The federal guidance is that 45% of the state’s remaining allocation be distributed to local governments. Subtracting the direct allocation of $316.9 million to Hennepin and Ramsey counties, a 45% allocation amounts to $667 million, which is what the bill appropriates. The state could choose to distribute more or less than that amount, to local governments.

The distribution of funds under SF 4564 requires Hennepin and Ramsey counties to share a portion of their allocation with cities and towns in the two counties. The $667 million appropriation in the bill is distributed to other local governments across the state using a formula that would set an initial distribution for counties and subtract a portion of that amount for distribution to cities. The bill language does not yet specify a value for the split of the funding among counties, cities and towns.

The bill allows funding to be used for a range of local COVID-19 expenses consistent with requirements in the federal law and guidance and federal FAQ. Any unspent funds would be required to be returned to the state by October 1, 2020. Consistent with the federal law, funds may be used for expenditures incurred between March 1, 2020 and December 31, 2020. The bill contains a provision that allows for local collaborative agreements in the use of funds. If local governments are using the funds as specified under this provision, they would have until December 15th to spend the funds.

Metro Cities is working with other city organizations to support an equitable distribution of funds for cities for a range of local expenditures, and that can be administered efficiently. Metro Cities encourages cities to begin tracking COVID-19 related expenditures. Federal funds will be able to be used for a range of local expenses required as a result of the pandemic and cannot cover revenue shortfalls. Stay tuned for additional information. Questions? Contact Patricia Nauman at 651-215-4002, or [email protected]

 

MnDOT Releases Updated Transportation Revenue Estimates

MnDOT has released interim projections for transportation funds to reflect anticipated revenue effects of COVID-19. The update compares funding to the February state budget forecast. The update includes forecasts for six transportation funds, including the Highway User Tax Distribution Fund (HUTDF) and Municipal State Aid Street (MSAS) fund. Updated numbers assume severe impacts for the remainder of FY 2020 (April-June) and assume that the economy will begin to open up more fully starting at the end of summer. The estimates assume a less severe but still significant impact for FY 2021.

MnDOT estimates that the gas tax will see a 30% reduction in revenues from April to June of 2020 and a 15% reduction for the rest of the calendar year based on March-April traffic volumes. Registration taxes are assumed to be reduced by 20% for the remainder of FY 2020 and to see a 10% reduction from July to December. It is estimated that the Highway User Tax Distribution Fund (HUTDF) will see a decline of 8% or $397 million for FY 2020-21. MSAS was forecasted to be $218 million but is now estimated to see a 15% or $33 million reduction, for a current estimate of $185 million. Allocations made for the 2020 calendar year will not change. County State Aid (CSAH) is also projected to lose 15% or $132 million for a revised projection of $736 million.

MnDOT assumes a 50% reduction in revenues to Motor Vehicle Sales Tax (MVST) and a 17% reduction in FY 2021. This will result in a 14% reduction or $43 million loss for transit in the metro in FY 2020 and a loss of $54 million in FY 2021. The Metropolitan Council did receive $227 million from the Federal CARES Act.

To view the full update, click here.


COVID-19 Housing and Small Business Relief Funding Advances

The House passed legislation referred to as the COVID-19 Economic Security Act bill on May 7. HF 1507 - Stephenson includes housing assistance, small business relief and broadband funds.

Housing Assistance
As Metro Cities has reported, proposals for housing assistance are being considered in the House and Senate with differing funding levels and policies to address evictions and foreclosures. HF 1507 provides $100 million to the Minnesota Housing Finance Agency (MHFA) to fund the Family Homeless Prevention and Assistance Program, to pay rent and mortgage payments, mobile home lot rent, or payments on a contract for deed, as well as utility payments and property taxes, to allow people to remain in their homes after they have lost income due to illness related to COVID-19, or due to lost income because of a government action related to COVID-19.

The bill also prohibits landlords from changing late fees and terminating leases or failing to renew leases during a peacetime emergency related to COVID-19 until January 15, 2021. The bill requires landlords to provide a notice after a peacetime emergency related to COVID-19 before initiating an eviction action. It also prevents the initiation of a foreclosure by advertisement or judicial action from the date of enactment during a peacetime emergency related to COVID-19 until January 15, 2021.

House Small Business Assistance
The bill includes $55 million for DEED’s small business emergency loan program. These loans are available to any business that can demonstrate a financial impact from COVID-19 and are not limited to businesses in industries specifically mentioned in the governor’s executive orders. There are several targeted sub-allocations: $11 million is for loans to businesses with six or less employees; those loans are limited to $15,000, have 12 months of deferred payments, and are 100 percent forgivable after two years. $8 million is for loans to businesses with seven to 20 employees; those loans are limited to $20,000, have 12 months of deferred payments, and are 75 percent forgivable over three years. $10 million is for loans to either minority business enterprises or operators of permanent indoor retail space that has a strong ethnic cultural orientation and is leased primarily to very small businesses; those loans that go to the operators of permanent indoor retail space have no maximum amount, have 12 months of deferred payments, are 75 percent forgivable over three years under certain conditions, and must be used primarily for maintaining existing vendors as tenants, such as through forgiveness of rent.

Broadband
The bill appropriates $15 million for emergency distance learning wireless needs, $2 million for telemedicine needs, and $10 million for border-to-border broadband needs.


Senate Committee Passes Small Business Relief Package

The Senate Finance Committee passed a small business relief package on May 8. It includes $60 million from the Federal Coronavirus Relief Fund to provide small business relief grants. The appropriation would be split at $30 million for greater Minnesota and $30 million for the metropolitan region.

Of the metropolitan region’s share, a minimum of $18 million must be awarded to businesses that employ the equivalent of five full-time workers or less; and a minimum of $9 million must be awarded to minority business enterprises, as defined in Minnesota Statutes, section 116M.14, subdivision 5, businesses that are majority-owned and operated by veterans as defined in Minnesota Statutes, section 197.447, or businesses that are majority owned and operated by women.

Grants of up to $10,000 would be made to individual businesses that are located in the state of Minnesota and owned by a permanent resident of Minnesota; are in good standing with the secretary of state and the Department of Revenue; employ the equivalent of 50 full-time workers or less; and can demonstrate financial hardship as a result of the COVID-19 outbreak. Grant funds received by individual businesses would be used for working capital to support payroll expenses, rent, mortgage payments, utility bills, and other similar expenses that occur in the regular course of business.
Contact Charlie Vander Aarde at 651-366-7564 or [email protected] with any questions.


Senate Passes Transportation Policy Bill

The Senate on Thursday passed a transportation policy and technical bill, SF 3255 - Newman. The bill includes language that directs a road authority to notify the owner of any work or improvements being made on the road and directs MnDOT and Public Safety Commissioners as well as the Metropolitan Council Chair to report COVID-19 related expenditures for which entities are receiving federal funds, to the Legislature. An amendment providing for a study of state trooper salaries and changes to medical requirements for commercial drivers’ licenses was adopted to the bill. The House Bill, HF 976 - Hornstein currently awaits action in the House Rules Committee and is anticipated to be heard next week.


Senate Passes City Charter Commission Changes Legislation

The Senate passed SF 3298 - Senjem, a bill related to City Charter Commissions. The bill changes current laws related to the appointment of charter commission members. A district court judge may now reappoint a commission member within 60 days rather than 30 days. The bill eliminates the authority of a city council to appoint a replacement if the district court judge fails to do so within the allotted time. An amendment was adopted to the bill that would change the amount of charter city commission expenses paid by the city to be the greater of .07 percent of the city’s current property tax levy or $1,500 and not to exceed $20,000 in a year. Currently the costs could be $10,000 for a city of the first class and $1,500 for other cities. In MN 107 cities are charter cities. The House companion bill is on the House Floor.


Governor’s COVID-19 Briefings

Below are highlights from this week’s Wednesday and Thursday briefings from Governor Walz and his administration. See the state’s COVID-19 web page for the latest specific health data.

Wednesday:
Minnesota Department of Health’s Commissioner, Jan Malcolm gave updates on global, national, and statewide case and death numbers. The state saw its largest jump in lab-confirmed cases Wednesday with 728 reported. Part of this increase was due to a lag in the previous day’s reporting. There was also a new high in the number of reported COVID-19 deaths in a single day (30). Commissioner Malcolm stated that these numbers will continue to climb as more testing is done and she said more detailed racial and ethnic data is forthcoming.

Department of Administration Commissioner Alice Roberts-Davis provided an update on the state’s preparedness plan. She said supply chain issues associated with procuring PPE and other supplies has improved but expects the “burn rate” of supplies to increase, especially as elective surgeries begin to be rescheduled.

Thursday:
The primary focus was the Department of Health’s “Five-Point Battle Plan” to protect the state’s most vulnerable populations. Long-term care facilities have remained a point of concern for public health officials. Residents of long-term care facilities represent less than 1 percent of Minnesota’s population, but 15 percent of cases and 80 percent of COVID-19 deaths. Commissioner Malcolm walked through the plan’s five pieces, which include:

  1. Expand testing for residents and workers in long-term care facilities.
  2. Provide testing support and troubleshooting to clear barriers faster.
  3. Get personal protective equipment to facilities when needed.
  4. Ensure adequate staffing levels for even the hardest-hit facilities.
  5. Leverage our partnerships to better apply their skills and talents.


Click HERE to view the full MDH presentation.

 

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