11/17/2009 9:51:00 AM A complex, yet tidy, road formula
Bren Road and Highway 169, by the numbers
Cost of a new bridge and related improvements: Nearly $20 million
State funding: About $10 million
UnitedHealth Group: About $3.7 million
The rest: Paid by non-residential properties when they expand, with the amount determined by a formula that charges for how much additional traffic demand is taken by an expansion.
Why? UnitedHealth wants to expand, but the current road can't handle the additional traffic.
Source: city of Minnetonka
By David Schueller
How does a city pay for a $20 million road project without using city taxes and without passing the cost to residential properties?
It asks businesses and the state to pay.
Minnetonka is considering an ordinance that would apply to non-residential properties in the Opus business park area, properties that would pay for shares of a new Bren Road-Highway 169 interchange.
They'd pay in relation to how much traffic demand they create in the future.
"Fairness was the key. The people who are causing the need for the improvement are paying for the improvement," said Community Development Director Julie Wischnack.
UnitedHealth Group's plans to build a second office tower is the reason the city is working on the ordinance now, because currently the road can't handle much more traffic capacity.
In the background is the promise of office and construction jobs being created.
UnitedHealth would pay for about $3.7 million of the cost.
"We knew at the time the original tower was built that this was an issue and that this interchange needed to be addressed. So now is the time obviously that we have to address it as they're ready to move forward with that project," Wischnack said.
Opus Corp. headquarters would also be able to expand with a new interchange.
The ordinance was reviewed by the City Council on Nov. 9 and heads to the Planning Commission on Nov. 19, with City Council adoption scheduled for Dec. 7.
It's already made its way through an open house with business owners and been reviewed by other interested parties.
The way business owners are charged follows a tidy yet complex formula that the city has used in similar fashion for the I-394 corridor, notably at the Hopkins Crossroad office park redevelopment, which required nearby road improvements.
The formula for the Opus area also follows a failed attempt by Minnetonka and other cities early this year to get legislation passed at the Capitol allowing for street improvement districts as an alternative to street assessments or raising property taxes for road projects.
In Minnetonka's proposed formula, and unlike in the street improvement district legislation, property owners aren't charged until they chose to expand - and even then, only if they expand beyond a certain traffic capacity.
It goes like this. Districts within the Opus area were analyzed to see how much they would use the new interchange. Districts closest to it get a higher percentage.
Next, each property gets allocated a number of trips based on current traffic capacity. Some businesses haven't reached this number yet; some have exceeded it already and would be grandfathered in.
Then, the cost of one trip is figured, given the cost of a new interchange. The cost of one trip: about $12,700.
Putting it all together, each property would be charged by multiplying the number of trips above its allocation by its district percentage by the $12,700 cost of one trip - keeping in mind that the ordinance only applies to businesses when they want to expand beyond their allocated number of trips.
That, it's said, will eventually cover $10 million of the cost. The state would pick up the other $10 million.
"The idea is that the increased capacity would allow continued development," Wischnack said.
