2016 Legislative Wrap-up Report

Note Coding Information: Black = Law Blue = Staff Analysis 805 Central Ave East PO Box 267 St. Michael, Minnesota 55376 Telephone (763)-497-2330 MNWATS (800)-228-0296 Fax (763)-497-3361 Website: www.mntownships.org Email: [email protected]

2016 Legislative Session Wrap-up Updated through June 2, 2016 Introduction The 2016 legislative session convened at noon on Tuesday, March 8 and adjourned sine die at midnight Sunday, May 22 (Note: The House remained in their chamber past midnight to listen to retirement speeches, while the Senate opted to return in the morning of Monday, May 23 to listen to the speeches of retiring Senators. May 23 was the constitutionally mandated adjournment date this year, but no bill can be passed on the last day of the legislative biennium.) During the course of the 2016 session, 1,653 bills were introduced by the House and 1,415 by the Senate, for a combined total of 3,068 new pieces of legislation that had to be reviewed and tracked for possible impact on townships. 109 bills managed to pass both houses and be presented to the Governor who vetoed one bill - 2016 Session Laws Chapter 177, the Omnibus Pensions Bill) -and signed 107 others, although he used his line-item veto power to eliminate seven projects totaling a little over $8.4 million from the LCCMR bill (Chapter 186). The fate of the last bill Chapter 189 – the Omnibus Tax Bill – was unknown at the time of the first posting of this wrap-up. The bill has a drafting error that could cost the State over $100 million. The Governor’s options include (1) veto the bill and start anew during special session or 2017; (2) pocket veto the bill – based on the date the bill was presented to the Governor (May 24, 2016) he has 14 days to sign the bill, veto the bill, or let it die without action which is known as a pocket veto – and start anew in a special session of 2017; or (3) sign the bill but pass a revisor’s bill correcting the error (an “and” should be an “or”) in a special session (could not wait until 2017). It sounds as if all leadership agrees the correction needs to be made, but there appears to be a difference as to whether the Governor should sign the bill and do the revisor’s correction bill or veto it and start over. A decision on what to do with the bill has to be made by the end of Monday, June 6. MAT has a number of items tucked into the Omnibus Tax Bill (a detailed summary is included in this wrap-up) and will track its activities closely so that the town provisions are not lost. What follows is a summary of the 2016 Session Laws (identified by their Chapter Numbers) that have a direct impact on townships, and a discussion of how these new laws fit MAT’s legislative policies and its 2016 legislative agenda. MAT’s legislative objectives are primarily driven by resolutions introduced by individual townships and their county units of townships. Resolutions deemed germane to townships issues are vetted by town officers from across the State and ultimately approved by the general membership at the business meeting following each year’s MAT Annual Conference. When deemed necessary, the MAT Board of Directors can also introduce and adopt a resolution seeking legislative action. A special emphasis is placed on the issues identified on the Priorities List. There may be additional Session Laws that have indirect impacts on townships, or which prove to have unforeseeable or unintended consequences on or for townships but which are not included in this wrap-up. A complete list of the 2016 Session Laws, can be found at: https://www.revisor.mn.gov/laws/current/ 2

Annexation Annexation reform has long been a top priority for MAT. Seeking to restore a balance of power between cities and townships, MAT has sought a number of changes to current law, ranging from the restoration of a right of affected residents to have a vote on a proposed annexation, to trying to instill more specificity in and accountability for the conditions used to determine if an annexation is justified. For 2016, MAT’s top priority was to ensure the protection of orderly annexation agreements by seeking passage of HF 919 (Green) / SF 680 (Koenen). This bill, which was first introduced but never heard in 2015, after having been part of a larger bill in the 2013-2014 biennium, sought to protect the integrity of an orderly annexation agreements by prohibiting any city not a party to the orderly agreement from seeking to annex any land subject to an orderly annexation agreement. Unfortunately, HF 919 / SF 680 did not receive a hearing in either chamber during the biennium. The extreme divisiveness of the annexation issue as whole worked against taking up any annexation bill during the extremely short session held this year. In addition to the orderly annexation bill, MAT discussed with various legislators the idea of a bill that would allow a city property owner to detach their land from the city and join the adjacent townships if their property abuts the township, is not served by city water and sewer, the property is not about to be developed in an urban or suburban manner, and the owner is seeking to detach no more than 120 acres in a twelve-month period. All that would be needed is an ordinance adopted by the township accepting the property. This would treat the detachment of land in an equal manner as the annexation by ordinance process as provided in Minn. Stat. 414.033. Unfortunately, given the short duration of the session and upcoming elections, MAT was unable to find authors to introduce this bill. There was one additional bill introduced in 2016. SF3280 (Scalze) was introduced at the request of the Office of Administrative Hearings. Prior to the legislative session, the chief judge of the OAH met with MAT and representatives from the cities in attempt to reach consensus on a number of housekeeping changes to Chapter 414. For the most part, consensus was found, but there were a couple of issues for which the chief judge sought policy changes opposed by both the cities and towns. While most of these changes were dropped before the bill was drafted, a couple strongly opposed by MAT were included. As a result, MAT was able to convince the House to not introduce a companion bill and the Senate file was never granted a hearing. Of particular concern were provisions MAT interpreted as restricting the ability of towns to freely negotiate how reimbursement payments for lost taxes, etc. and one that would eliminate one level of appeal a town would have to fight an annexation it believes is unwarranted. Environment Chapter 85 clarifies a number of issues related to the State’s buffer strip requirements adopted at the end of the 2015 legislative session. Among the issues addressed is a requirement for BWSR to adopt a plan for the implementation of administrative penalties enforce by local

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governments and BWSR. The first plan must be published in the State Register by July 1, 2017. Chapter 85 also clarifies that local watersheds and counties are the primary sources for compliance, with BWSR’s assistance, and it refines the definition of which waters are considered public. Effective August 1, 2016 MAT had a few environment related issues that did not survive the session but will be back in 2017. These issues include: using environment related funding to pay for culvert replacements done for water quality purposes and not for the integrity of the adjacent road; modifying the MS-4 permitting process so that towns with limited developed areas do not have to incur the full expense of the current permitting process – MPCA is willing to work with MAT on this issue now that new construction permits now address many of the issues formerly required in an MS-4 permit; funding for noxious weed program – MAT was part of a consortium that tried to get $375,000 into the supplemental budget bill as it was in the Senate file; see also ditch mowing under “Transportation”. Government Operations Broadband Obtaining funding for the Border-to-Border Broadband program was MAT’s co-top priority for the 2016 legislative session. After two years of, to say the least, modest funding for the program, MAT was encouraged when the Governor recommended $100 million in his initial release of priorities for new expenditures. MAT, and the coalition of local governments, school districts, private businesses, and other interest groups interested or involved with broadband, was very pleased to see an initial Senate proposal also at $100 million. The House, however, continued to show little interest in funding the grant program by only allocating $15 million in their budget recommendations. The House actually argued their proposal was $40 million, but the additional $25 million was for the fiscal year 2018, which would require the 2017 legislature to actually appropriate the additional funding. Further, the House opted to earmark much their funding, so even less would have been available for competitive grants. The House also proposed a right-of-first-refusal which was designed to protect “incumbent internet service providers” by requiring notice to the incumbent of any grant application proposing new service in the area and giving the existing service provider a chance to stop the grant applicant from moving forward by promising that they would, within 18 months, extend service to the area proposed to be served under the grant application. The House proposal, however, provided no means to force the incumbent provider to honor its “commitment” to extend or upgrade broadband services to the proposed grant area, nor were any penalties proposed. By the time their respective broadband proposals were being debated for inclusion in the Omnibus Supplemental Budget Bill, the Senate position was $85 million for grants issued through the Office on Broadband, plus the adoption of new, faster download/upload speeds that were part of Federal and State recommendations. The House proposed $15 million, with fewer earmarks than originally requested, plus $7 million for installing “Hot-Spot” wireless technology on school buses. The Omnibus Supplemental Bill became Chapter 189 and Article 5 is dedicated to Broadband, although a couple of additional broadband provisions are included in other Articles. 4

Article 5, section 1 of Chapter 189 provides the Department of Employment &Economic Development (DEED) $35 million in fiscal year 2017 for border-to-border broadband grants awarded through the Office of Broadband. Development. The office can keep up to $1,000,000 for administrative needs of the Office, including mapping. It may use up to $5 million for grants in underserved areas, and may expend up to $500,000 to expand the availability and adoption of broadband services in areas containing a significant proportion of low-income households. Additionally, Article 30 section 24 of Chapter 189 establishes a new grant option for school districts. A school district wishing to create broadband service hotspots may seek a grant of up to $50,000 to support student use of data cards, USB modems, or other mobile devices enabling a student to access learning materials available on the Internet through a mobile broadband connection. Article 20, section 25 appropriates $500,000 for expansion grants???? Article 5, section 2 of Chapter 189 does not amend the definition for unserved areas, meaning any area without access to wire-line broadband service at minimum speeds set by the FCC is considered unserved. Underserved areas, however, are now defined as areas lacking access to broadband service offering download/upload speeds of at least 100/20 mps. Preference for grants remain with unserved areas. Article 5, section 3 of Chapter 189 requires that at least 30 days prior to the first day for submitting applications, the Office of Broadband must post on the Department of Employment & Economic Development’s (DEED)website the specific criteria and any quantitative weighting scheme or scoring system to be used in evaluating the applications. Article 5, section 4 of Chapter 189 imposes a new requirement for broadband grant applicants. The application now requires that the applicant will need to show that no more than six weeks before submitting an application, the applicant must show that they contacted in writing all existing service providers in the proposed project area and solicited the existing provider’s plan to upgrade their broadband service within the proposed project site to speeds equal to or exceeding within the time frame specified in the grant application. The incumbents’ plans must be submitted with the application for a broadband grant. Thankfully, the right-of-first refusal language from the House file was not included in the final provisions adopted as Article 5 of Chapter 189. Unfortunately, it was replaced with something that could be worse. Article 5, section 5 of Chapter 189 requires that within three days of the last day to submit an application for a broadband grant, the Office of Broadband must publish on its website the proposed geographic areas to be served under each application, and the speed of service to be provided. An existing service provider in or proximate to any of the proposed service are, then has 30 days to file a written challenge to any application and demonstrate to the Office that they are currently providing or has begun construction to provide broadband service at speeds equal to or faster than the State goals. Construction must be completed within 18 months after the challenged grant was awarded. The Commissioner of the Office of Higher Education must then evaluate the challenge and if the challenge if found to be credible, the grant may not be awarded to the applicant who was challenged. MAT is concerned that this challenge process will have a chilling effect on would-be applicants for grants by which to extend affordable high-speed broadband services to the unserved and

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underserved areas in the State. The requirement that an applicant contact the existing service providers is likely to be met with a short reply that such expansion plans are trade secrets and will not be shared. Next, there is no definition of “proximate: provided, so it is not clear how far away a provider could be and still challenge a grant application. Further, it is not clear which speed goal must be met by when. An argument could be made that the “incumbent or proximate” service provider could extend very slow and cheap service now so long as they demonstrate the intent and ability to meet the 25/3 goal by 2022 and the 100/20 goal by 2026. Or it could mean that the 100/20 goal must be met by the end of the 18 months. Finally, there is on meaningful penalty to an existing or proximate service provider who fails to satisfy the service delivery promised, other than the inability to challenge another application for 2 years, but by then the damage will have been done and the area will remain unserved or underserved for years to come. Article 5, Section 6 of Chapter 189 requires, by June 30 of each year the Office of Broadband to publish on DEED’s website: (a) a list of all grant applications received in the preceding year; (b) the results of any quantitative weighting scheme or scoring system used to award grants or rank applications; (c) the requested grant amount; and (d) the actual amount awarded (if any.) Article 5, Section 7 of Chapter 189 requires the Office of Broadband contract with at least one independent organization that has extensive experience work with broadband providers in the State for the purpose of: (a) collecting broadband deployment data from Minnesota providers, (b) verifying the accuracy of the deployment data; (c) creating new maps by April 15 of each year beginning in 2017 showing the availability of broadband service at the various download and upload speeds across the State; (d) analyzing the deployment data to help guide future investments in broadband infrastructure; and (e) conduct business and residential surveys measuring broadband adoption and use in the State. Article 5, section 9 of Chapter 189 updates the States’ speed goals for broadband service so that everyone in the State will have access to affordable broadband service at speeds no less than 25 mps down / 3mps up by 2022, and 100 mps down/ 20mps no later than 2026. Although towns may have had some short term benefits by lesser standards, MAT supported the recommendations so that townships would not be stranded with obsolete technology down the road. The funds for the next wave of grants will be appropriated July 1, 2016 with the start of the State’s 2017 fiscal year. All other provisions take effect the day following enactment, which means they became effective on June 1, 2016. The first report required under Article 5, section 6 is due 6/30/2016. Because the investment needed to have affordable access to high-speed border-to-border broadband service far exceeds the amount appropriated for grants in Chapter 189, MAT will continue to seek additional funding for the grant program administered through the Office of Broadband, and will also seek other means likely to help bring proper broadband service to every home and business in townships across the State. Equal access to all with no gaps.

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Elections Chapter 161 (SF 2381) is the 2016 Omnibus Elections Housekeeping Bill. The provisions of concern to townships are: Article 1, section 2 – creates an early voting option for in-person absentee voters. County auditors may provide for a ballot counter and ballot box for use by in-person absentee voters during the seven days before the election. Voters must be given the option to vote in the traditional in-person absentee process, or to use the early voting option. To use the early voting option, a voter must provide his/her name, address and date of birth to the county auditor or authorized municipal (incudes towns) clerk. The voter must sign a voter’s certificate which must include the person’s name, identification number, and certification as required by Minn. Stat. 201.071 (). After signing the certificate, the voter shall be issued a ballot. Upon receipt of the ballot, the voter shall go to a polling station. A spoiled ballot may be replaced upon request, but no ballot shall leave the polling place. Upon completion, the voter shall deposit the ballot in the ballot box. The election official (clerk for townships) must immediately record the voter has voted in the same manner as set forth in Minn. Stat. 203B.121, subd. 3. All election duties under the new section must be performed by the county auditor, the municipal clerk, or their deputies. Article 1, section 3 modifies the duration of an absentee ballot application to be the later of the end of the calendar year, or the next regularly scheduled State general election. Article 1, section 7 deletes antiquated language requiring a voting booth to be at least six feet in height, three feet deep, and two feet wide. Article 1, section 9 clarifies the role of mayors, school boards, and the board of supervisors with regard to who is responsible for the appointment of challengers for elections on a ballot question in the corresponding election jurisdictions while requiring the petition seeking the appointment of such challengers be submitted to the clerk of the entity conducting the election. Article 1, section 6 increases from 46 to 74 days before a special election that the special election may be cancelled. Article 1, section 19 clarifies the number of days a person has to contest an election: (a) contests of special state/federal elections under Minn. Stat. Section 204D.27 will be governed by that statute; (b)5 days following the canvass to contest a primary and 7 days after the canvass to contest a general election; (c) 10 days after the filing of statements of receipts and disbursements for a claim of a deliberate, serious and material violation of election laws to contest a general or special election, and 5 days in the case of a general or special primary. Article 1, section 18 removes an unneeded notice to township provision now that school elections cannot be held on the second Tuesday of March. Article 3 implements the recommendations of an elections study group in which MAT participated, regarding how to conduct elections during or following an emergency. The article

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authorizes a single, accessible combined polling place to be established following May 1 of any year in the event of an emergency. The section goes on to provide local election officials with the power to combine two or more polling places in case of an emergency, even after May 1 of each year. Normal limits regarding the size and location of polling places are waived during an emergency. All effected election officials (i.e. the town clerk) must approve of the combined polling place. Immediate notice of where the combined polling place will be and the reason for combining them must be provided to the county auditor and the Secretary of State, and as soon as possible the entities must post notice of the alternate location, including on any website any of any of the participating entities maintain. Notice to the election judges and the media is also required. On election day, when possible, notice shall be posted in a conspicuous spot at the preemergency polling place site and at such other sites visible to voters, of the new site and reasons for the change. If on election day a new polling place is needed due to an emergency rendering the original site unsafe, unsecure, and unable to be used for all operations of a polling place. The new polling place shall be secured by the election official (i.e. town clerk). It is to be as close as possible to the original polling site, but if no site is available within the precinct, the election official may be located outside the precinct w/no regular miles restrictions applying. Notice of the change is to be provided in a manner essentially the same as discussed above. Article 3 directs the Secretary of State, in consultation w/ the Dept. of Public Safety and the Division of Homeland Security and Emergency Management, to develop an emergency plan for State elections. The Secretary must also develop a guide for local election officials in developing first County plans and then for local plans. When developing these guides, the Secretary shall consult the Minnesota State Council on Disability. The guide must include a model plan for Counties. Any locally adopted city, town or school district plan must meet the requirements of the county plan, and changes must be made. State and local plans must be reviewed prior to each state election. Article 3, section 4 allows local election officials to extend polling hours by one more hour to accommodate voters who would normally have been in line by 8 p.m. but for the change in or combing of polling places. Articles 1 and 3 are effective August 1, 2016 except that the initial county elections emergency plans are due by September 1, 2016. Article 2 does not apply to townships. Chapter 162 (SF 2985) establishes a presidential nomination primary process to replace the current use of precinct caucuses to select a presidential candidate. Caucuses would still be held for all other offices currently voted on in a caucus. Section 1 was perhaps the second most controversial part of this bill, but was demanded by the major political parties as a condition of honoring the outcome of the primary. It requires each county auditor to make available not only the current public information regarding a voter’s 8

name, address, year of birth and voting history, but also the party choice of the voter at the last presidential nomination primary. Section 2 provides that in the year of a presidential nomination primary, the major parties cannot caucus on the day of the primary, nor on the date of the town general election. If the parties fail to submit a date, the default in a non- presidential nomination primary year will be the first Tuesday in February, and in a presidential nomination primary year, the Tuesday immediately preceding the presidential nomination primary. Section 3 requires voters to select the ballot of the party of their preference. Section 4 restricts the date after which a combined polling place may be established preceding a presidential nomination primary year to November 1 of the preceding year, but withdrawal from an existing combined precinct must occur by October 1 in a year preceding a presidential nomination primary. Section 5 prohibits any precinct boundary changes after December 1 of the year preceding a presidential nomination primary. Section 6 adds presidential nomination primaries to Minn. Stat. Section 204C.04, subd. 2 regarding how a vacancy in nominated office is to be filled. Section 7 was the most controversial provision and nearly blocked approval, but again was a provision demanded by the major parties. It requires the polling place roster signed by a voter to state that the voter is I general agreement with the principles of the party of the candidates for which he/she intends to vote. Section 8 requires a sample ballot for a presidential nomination primary. Section 9 requires the presidential nomination primary to be held on a date agreed to by the major parties but not on township election day. It is expected to be the first Tuesday in March so as to retain Minnesota’s participation in “Super Tuesday” Section 10 requires the presidential nomination primary to be conducted like a state primary, except a voter must request the ballot of one party which then is recorded by the election judge in the polling place roster. Section 11 sets out the form of ballot for a presidential nomination primary Section 12 requires notice of the presidential primary. Municipal clerks (including town clerks) will need to post at least fifteen days before the presidential nomination primary the date and location of the primary, the location of each polling place w/in the municipality, and the hours the polls will be open Section 13 authorizes local governments to be reimbursed for most costs of the presidential nomination primary. Reimbursable expenses include all costs of administering the presidential nomination primary, and specifically the following listed items: ballot preparation and printing,

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postage for absentee ballots, publication of sample ballots, polling place preparations not to exceed $150 per polling place and the preparation of electronic voting systems up to $100 per precinct, compensation for temporary staff time or overtime payments, salaries of election judges, and compensation for the county canvassing board. The law is effective July 1, 2017 and shall apply to any election conducted after that date. MAT continues to discuss the possible extension of the current HAVA equipment mandate exemption for March town-only elections in townships with fewer than 400 registered voters but it is a difficult issue for members. MAT did support an effort by the Secretary of State’s office to create a dedicate account from which grants could be made to assist local governments begin replacing aging election equipment, but the issue was set aside for the 2017 session which will be a budget based session. MAT continues to discuss the possible extension of the current HAVA equipment mandate exemption for March town-only elections in townships with fewer than 400 registered voters but it is a difficult issue for members. MAT did support an effort by the Secretary of State’s office to create a dedicate account from which grants could be made to assist local governments begin replacing aging election equipment, but the issue was set aside for the 2017 session which will be a budget based session. Employment Chapter 81 (SF 2891) provides for lower unemployment taxes whenever the State’s unemployment trust fund equals or exceeds the average high cost by 4% more. Effective retroactively to December 31, 2015 Chapter 189 (HF2749) Article 1, section 16 requires all public sector employers to provide all employees with annual information about the employee’s potential eligibility for the Federal Public Service Loan Forgiveness Program. The notice must be in the form of the 1-page letter, fact sheet, and FAQ document developed by the Commissioner for the Office of Higher Education. New employees must be provided the same notice within two weeks of their first day of employment. The information can be provided by electronic or printed means. An employee may request, and the employer must provide, an employment certification form. Effective January 1, 2017 Chapter 189, Article 13, section 54 allows counties, cities, towns, and school districts to require a veteran to complete an initial hiring probation period. Effective August 1,2016 Chapter 189, Article 13, section 55 clarifies appellate options a person has in cases brought under the Veterans’ Preference Act. A request for a hearing after receiving a notice of intent to terminate must be made within 30 days, down from 60. The veteran may request a hearing before a community’s civil service board (if one exists) a merit authority or an arbitrator. Effective August 1, 2016 Chapter 189, Article 14, section 3 attempts to clarify a requirement imposed by the 2015 legislature regarding the continuation of health insurance, or the required purchasing of health

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insurance, for the surviving spouse and children under the age of 26 when a firefighter or other public safety officer is killed in the line of duty. A person will be considered to have been killed in the line of duty if they die by an accidental means while performing work within their scope of duties or as the direct or proximate result of a heart attack, stroke, or vascular rupture while on duty, or engaged in a situation that involves non-routine stressful or strenuous physical action or activity and was on duty or within 24 hours engaging in such action or activity. Effective day following enactment, so June 2, 2016 General Chapter 87 (HF 1003) authorizes local governments, including townships, to donate surplus public works department equipment, cell phones, and emergency medical and firefighting equipment to one or more non-profit entities. A local unit seeking to make a donation must first adopt a policy on how it will determine what equipment is surplus and how it will determine which non-profits may receive donations. The policy must also include a disclosure that the equipment may be defective and cannot be relied on for safety purposes. No tort claim may be sustained against a local unit of government based on a donation unless it was made by direct fraud or intentional misrepresentation. Effective August 1, 2016 Chapter 92 (HF 2956) modifies the membership, structure, and duties of various county agencies in Dakota and Washington Counties. In Washington County, towns with a local economic development authority may request the County Community Development Agency to handle economic development. Requires the any economic development project proposed in Washington County to be approved by the city or town in which it is to be located, and it must be subject to the planning, zoning, sanitary, and building laws and ordinances in place within the city or town. Effective after ratified by the counties Chapter 102 (SF 2986) grants to cities the same powers towns already enjoy to exempt parcels of land that cumulatively have less than 20 acres from the fence law. Similarly, cities will also be able to adopt alternative policies if petitioned by at least 8 land owners. Effective May 13, 2016 Chapter 150 (SF 2603) requires any television placed in a waiting room for the use of the public have its closed captioning feature, if any, activated at all times; however, no violation shall occur if the closed captioning feature, if any, is turned on again after a request is made. Effective August 1, 2016 but may already be considered part of the ADA so advisable to turn on the closed captioning now Chapter 189 (HF2749), section 13 clarifies that the county attorney is acting as the town’s attorney when prosecuting parking violations or other statutory or ordinance violation having occurred within a township. This will allow towns to again receive 100% of any fine issued in the prosecution of a parking violation with a town, and 2/3 of any other fine revenue generated from a prosecution where the offense occurred within the town. This had been the practice until 2013 when e-ticketing was initiated and the court administration somehow determined towns were not really represented in court and thus stopped sharing the fine revenue. Effective August 1, 2016 11

Planning & Zoning/ Land Use Chapter 111 (SF2555) is officially entitled the “Temporary Family Health Care Dwellings” bill, but it was more commonly referred to as the “Granny-pod” bill because of the vision of aging mothers living in tiny mobile homes next to their kid’s house. In response to the increasing need for short-term transitional housing to serve the disabled and an aging population, this bill allows property owners to place small trailer-style dwellings on their property. Among other restrictions and conditions, the law limits the size of the dwelling to 300 square feet, imposes design standards and required amenities, provides a permitting process and regulations, and limits the permit term to a maximum of one year. This law will be codified as Minnesota Statute 462.3593. Placement of the dwellings will be subject to a permitting process, but the zoning authority in each jurisdiction may prohibit the placement of these dwellings by ordinance. This likely means that if the county prohibits the placement of the dwellings, town residents would not be able to use these dwellings even if the town board wanted to allow the practice. This would be true even in towns engaged in planning & zoning activities. Town boards are advised to work with county officials to set policies that meet the town’s needs. In counties that do not prohibit the use of temporary health care dwellings, towns may either permit their or choose to prohibit their use by ordinance. In the coming months, MAT will produce a sample ordinance that may be used to prohibit the use of these dwellings. Effective September 1, 2016

Taxes, Bonding & Aids MAT has long supported townships being eligible for aids, tax relief, and state sources of revenue to help keep local property taxes down. Until the year 2000, townships enjoyed approximately $33 million dollars in Local Government Aid (LGA) and Homestead Agricultural Credit Aid (HACA). These programs were eliminated in the 2000 tax bill and payments ended in 2002. Then, in 2013 Township Aid was restored with the first payments being made in 2014. The new program is only funded to $10 million per year and is designed to reward rural, nondeveloped areas. No funding change has occurred, but the formula now provides aid to unorganized territories as if they were a township. MAT was asked to allow at least 4-5 years of funding before seeking any changes in the distribution formula, so while cities and counties acquired some additional funding for LGA and County Program Aid, townships broke even. MAT also worked closely with the Association of Minnesota Counties seeking to modify the PaymentsIn Lieu-of-Taxes (PILT) program to guarantee that counties and towns would be compensated fully and upfront for the ongoing loss of tax capacity when lands are taken out of private ownership and off the take rolls. The MAT/AMC PILT alternative would have required that an amount equal to 30x the tax on a parcel be invested with the State Board of Investments in the name of the counties and the interest accumulated would pay for the property tax value assessed to the land by the counties and townships. The PILT alternative was in the House file for the Omnibus Tax bill but was not included in the conference report. MAT also worked closely with AMC seeking modifications to the requirement that all assessors be fully certified by 2019. MAT and AMC negotiated a deal with the Dept. of Revenue and the House on a partial waiver

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plan where local assessors who have been assessing property for a set number of years and have no outstanding issues on file, could take a test and be grandfathered in so long as they did not assess revenue producing parcels. Regrettably, this provision too stalled in conference committee. The following summaries all refer to sections in 2016 Session Laws Chapter 188, the Omnibus Tax Bill, which came in at 208 pages and 15 distinct Articles. Fate Not Known – Pocket veto on Monday June 6? Will be back in Special Session Chapter 188 Article 1, section 2 authorizes cities and towns to levy up to .02428% of the estimated market value of the community to be given to historical societies. In the past this was limited to State or County historical groups affiliated with the State Historical Society. Now funding can be given directly to the historical society of the city or town. The local group will still need to be affiliate with the State Historical Society. Effective day following enactment - ___ Article 1, section 27 recognizes the unorganized territory of Sawyer in Carlton County as eligible to be assessed up to $2,000 annually for recreational purposes. The biggest problem is with the use of Unorganized Township instead of Unorganized Territory. It is important for people to understand that residents outside of a true town or city, are residents of the county only. There is no other governing body and they are not township. Effective day after ratified by Carlton County Article 1, Sections 28-32 authorizes the Town of Perch Lake and the City of Cloquet to restructure the Cloquet Area Fire and Ambulance District as the Cloquet Area Fire and Ambulance Special Taxing district. The new board will have authority to levy a tax to pay for the costs of providing fire and ambulance services. These sections will be effective following local ratification by the city and township Article 1, Section 33 ratifies an agreement MAT reached with the Department of Revenue regarding mandatory training for local boards of appeals and equalization board. Current law requires a township to certify by February 1 (December 31 prior to 2016) of each year that the town had a quorum of board members at the prior year’s meeting. A handful of towns were able to certify compliance on February 1, but through death, moving, or losing a re-election bid, the trained member was not going to be available for the 2016 hearings, held in April and May. These towns turned to the online training the Department of Revenue to get at least one supervisor trained in time for the 2016 local hearings, but discovered that the Department turned off its training program on February 1, and with no live training events scheduled, these towns were being forced out of compliance and thus were in jeopardy of forfeiting their power to conduct boards of appeal hearings to the county, even though the local township tried everything in their power to remain in compliance. MAT felt it would be wrong to punish these townships when it was the Department that, without warning, shut down the online training even though they had no intent to offer live training. After some discussions, the Department of Revenue agreed with MAT and thus any town that certified on February 1, 2016 that they were in compliance with training requirement but subsequently but before the April-May time period to conduct local boards of appeals meeting, fell out of compliance, may keep their 2017 local

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board of appeals and equalization hearing provided that on February 1, 2017 they can certify compliance again by submission of a resolution documenting attendance by at least one supervisor at a mandatory training event, online or live. Effective August 1, 2016. Article 1, Section 34 grants the Town of Tofte with the authority to own and operate up to 12 housing units for housing of those 55 years old or more, or families where at least one member is at least 55. Effective upon ratification by the town. Article 2, sections 10-11 requires townships to be in full compliance, as certified by the State Auditor, with economic reporting requirements to the State Auditor’s office prior to receiving their next town aid check. Cities and Counties have long had this requirement and MAT supported adding townships once town aid was restored so that there are no accusations of towns wanting free money and no accountability. Effective for aids payable in 2017 based on the submission of 2016 financial reports. Article 2, section 19 establishes a base for determining the LGA that should be paid to a newly incorporated city. Adopted following the incorporation of Rice Lake Township. There is a fear by some fiscal staff members at the Capitol that factor is too high and will serve as an incentive for towns to become cities. Given all that is involved with the process, including annexation by the neighboring city as the town needs to prove it is urban or suburban in nature, it seems doubtful a town would seek to become a city. Threat of annexation seems to be the driving force to incorporate. Effective for aids payable in and after 2017 Article 4, section 17 clarifies that that .385% “Legacy Fund” portion of sales tax is not collected as part of MVEST. Effective August 1, 2016. Article 8, section 1 authorizes a town to take out a certificate of indebtedness for up to 20 years instead of the normal 10, to finance the removal of R-22 containing coolers in ice arenas. Effective August 1, 2016 Article 8, section 8, certain reconstruction and overlay projects may be authorized by a simple majority vote instead of a unanimous vote of the local governing body. Effective August 1, 2016 Article 14, sections 15-17 gives the county assessor authority to require the local assessor to enter construction and valuation into the records in a manner prescribed by the county assessor. Effective for 2017 assessment year and each year thereafter Article 14, section 27 clarifies differences between the local board of appeals and equalization and such board at the county level. Effective day following enactment ___ Article 14, section 28 prohibits a board of appeals and equalization from making any individual market value adjustment or classification change in a manner that would benefit the property if the owner or person controlling the land has refused access to his property. Effective day following enactment __ Article 14, section 31 deletes towns from certain reporting requirements??? Check 275. Effective day following enactment _

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Transportation Chapter 142 (HF 3588) re-codifies one weight limit exemption and extends another. Vehicles equipped with idle-reduction technology continue to have a 550-pound exemption. Natural Gas vehicles, however, will now be subject to Federal weight provisions not to exceed an additional 2,000 lbs. Effective August 1, 2016 Chapter 168 (SF 3368) provides for the temporary placement of high-pressured flexible force mains in the road rights-of-way of the State, counties, cities, and towns. As introduced, MAT strongly opposed the bill as it stripped local road authorities of any permitting authority (which had been granted as part of the 2015 session) while mandating force mains be allowed in the road ditches. After long negotiations between representatives of local road authorities and the advocates (primarily milk producers), and a conference committee between the House and the Senate, a deal was reached that is not perfect, but is workable for now and MAT and others may seek revisions of the law as time goes by and experience is gained with the expected broader use of force mains. Section 1 of the bill retains MNDOT’s control over state rights-of-way, including the ability to issue or deny requested permits and to impose conditions on the permits. Section 2 establishes authority for counties, cities, and townships to issue permits for use of force main in their respective rights-of-way. The permits must be issued if the road authority is convinced all statutory requirements have been satisfied. The permitting process must be imposed by ordinance, and towns must be authorized at an annual town meeting before adopting such an ordinance. MAT will try to get the town boards more flexibility – the requirement was not part of any conversation with MAT and simply appeared in the conference report which cannot be amended once adopted by the conference committee. Similarly, a provision prohibiting any fee from being charged for a permit ended up in the conference committee. AMC will likely join MAT on restoring the right to impose reasonable fees to offset the costs of issuing and enforcing permits. It seems wrong that local property tax dollars will be used to subsidize sizeable feedlot operations by providing them with free permits to have a private use in the public’s right-of-way. Permits issued under this section are to be valid for 1 year. Section 3 Allows flexible force mains to be in local rights-of-way if the local road authority opts not to issue local permits Section 4 Provides the general requirements for a flexible force main to be lawful in the rightsof-way, and provides local road authorities the power to deal with unlawfully placed mains or mains remaining after the 21st day. Section 5 Requires the licensed operator to clean up and be responsible for all expense related to a spill. Also provides that no cause of action related to the placement or operation of a flexible force main can be maintained against a county, town or city. This chapter effective the day following enactment, so June 1, 2016

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Unfortunately, a comprehensive transportation finance bill failed to materialize during the 2016 regular session, despite being the stated top priority of the House, Senate and Governor. The lack of an agreement on how to pay for the recognized $600 million / year needed additional revenues doomed the bill despite some last minute allegedly “rogue” negotiations between members of the House and Senate conference committee. The Senate held firm to supporting some sort of a gas tax increase, at first a “gross receipts” tax that could have generated the equivalent of an approximate 16 cents/gallon increase in the gas tax, and then a flat 12 cents / gallon gas tax phased in over 3 installments. The House countered with a plan whose centerpiece was to capture the revenue generated from the existing sales tax collected on car parts and repairs. Both sides were willing to modify the rate and depreciation schedule for tab fees. MAT has long supported reasonable periodic increases in the gas tax and supports efforts to bring tab fees back to a level at least equal to where they would have been pre-Ventura cuts. This support is based on the fact that these two sources make up a significant amount of the funding to the Highway User Tax Distribution Fund, from which towns receive dedicated funding for roads and bridges. The gas tax and MVEST are both funding sources constitutionally protected for road and bridge purposes. Captured sales tax on auto parts and repairs would not be protected w/o a constitutional amendment which was discussed in some offers. MAT could consider support of the sales tax capture if a paired with a future constitutional amendment, but there is risk as opposition from taking $300 million from the current general fund meaning there will be less dollars for other purposes, is expected to be strong. Perhaps the most encouraging thing about the last minute exchanges is that the House offers contained additional funds just for town roads, raising the amount towns would have received from about $6 million in the first bill to potentially $16 million plus. The Senate offers always generated around $12-13 million. The estimated town need is at least $15 million per year in new funds. MAT encourages that a comprehensive, sustainable source of funding to meet the needs of all road authorities be a part of any special session. MAT also acknowledges that transit needs also need to be part of a comprehensive package. MAT is, however, opposed to any plan that would provide guaranteed dedicated funds for metropolitan transit without a similar source of funding for transportation needs of roads and bridges. MAT also encourages that a sizeable bonding bill be a part of any special session planning. Bonding, and one-time cash can be an excellent supplement to a comprehensive transportation funding plan by helping address expensive bridge projects and local road improvements. MAT appreciates the level of bonding and cash for roads and bridges that were being exchanged at the end of session, with numbers in the neighborhood of $100 million each for local bridges and local road improvements. However, it is equally important for BWSR to be fully funded for the wetland mitigation program that makes local road improvements viable. A minimum of $5 million is needed for the mitigation program. MAT also supports having a separate bonding provision for major bridge projects, the costs of which could drain the entire amount dedicated for the regular local bridge program. 16

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If you have any questions about MAT’s legislative issues and policies, or if MAT can be of assistance on a constituent service matter, please feel free to contact any member of our legislative policy team:

Gary Pedersen Executive Director [email protected] O: (763) 497-2330

Kent Sulem General Counsel & Director of Governmental Relations [email protected] C: 612-817-9005 O: (763) 497-2330

Jim Fisher MAT Director District 10 [email protected] C: (218) 750-1687

Rob Vanasek Lobbyist [email protected] C: (612) 964-4876

Steve Fenske Staff Attorney [email protected] O: (763) 497-2330

Minnesota Association of Townships

805 Central Avenue East PO Box 267 St. Michael MN 55376 E: [email protected] O: 763-497-2330 or 1-800-228-0296 F: 763-497-3361 www.mntownships.org Follow

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2016 MAT Legislative Priorities Transportation  Seek both immediate and long term increased funding that is sufficient, sustainable, dedicated (preferably constitutionally,) and equitable to townships o Townships maintain over 55,000 miles of roads and increasingly report the need to reduce maintenance efforts due to increased costs o Townships are responsible for approximately 6,000 bridges, over 400 of which are listed on MNDOT’s priority list for deficient bridges o Most recent State Auditor’s Report on Township Expenditures reveals that collectively, in 2013, townships spent $155.6 million on roads and bridges o $150 million above current township road & bridge maintenance expenditures estimated 10-year township need o No revocation of a County highway shall occur without the approval of the receiving Township Broadband • Seek funding to ensure equitable access to high speed and expandable/scalable broadband internet service for all residents in all parts of the State, with priority first being given to those communities determined to be unserved o Protects and enhances rural communities by increasing economic opportunities, improving medical care options, equalizing educational opportunities, and assisting with other needs Orderly Annexation Agreements • Seek prohibition of annexation of land subject to an orderly annexation agreement by a city not a party to the agreement

o Protects the integrity of orderly annexation agreements, the State’s preferred annexation method o Reduces costs by protecting townships from defending agreement against hostile annexation efforts Truck Weights/Size o Oppose increased weight limits and larger/longer truck size o Heavier and longer trucks pose safety issues, including increased wear on roads o Extra axles dig into gravel when trucks turn o Extra axles do not lessen weight impact on bridges o Other safety concerns have been raised by law enforcement

Payment-in lieu-of Taxes (PILT) • Seek increased, sustainable, and dedicated funding to hold townships harmless on a dollar-for-dollar basis when State acquisition removes property from the tax rolls or reduces its market value o Legacy funding, ambitious wetland restoration plans, increased pheasant habitat efforts, etc. is resulting in more land being acquired and taken off the tax rolls, or having their market values greatly reduced, thus shifting more tax burden onto residential properties Noxious Weed Control • Seek authority to mow township road ditches at any time needed to prevent noxious weed from going to seed • Seek funding for training and abatement assistance Election Equipment Funding • Help develop and implement funding plan to replace HAVA equipment nearing end of technological life Mandate Relief & Cost Reductions • Reduce costs of townships obtaining easement across state land, especially for roads sited on school trust land • Water Issues o Monitor impacts of buffer strip requirements, oppose extension to road ditches, and support compliance deadline extension o Protect local control & rights of townships opting not to participate in the One Watershed-One Plan o Require reasonable and measurable outcomes for water quality standards and regulations, including for septic systems, as new requirements can unduly drive up costs and promote annexation for sewer & water services regardless of city’s capacity

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