Minnetonka reviews $65M five‑year CIP as burial, trail and facility costs strain funds

Minnetonka, Minn. — Minnetonka city staff presented a preliminary 2027–2031 Capital Improvement Program on June 15 that totals about $65.17 million and shows a proposed CIP tax levy for 2027 of roughly $9,863,700.

Staff framed the CIP against the city’s strategic priorities of infrastructure, environmental stewardship and connectivity. Darren Nelson, who walked council through fund‑by‑fund details, said the spending plan includes projects ranging from audiovisual upgrades at city broadcast facilities to major street, stormwater and utility projects such as the multi‑component Excelsior Boulevard and Kinsel neighborhood efforts.

Several agenda items drew sustained council attention. Staff warned that electrical burial costs — the work of placing overhead lines underground when building trails or reconstructing streets — have increased sharply in some estimates provided by the utility (staff said Xcel price estimates surprised them). Nelson said the electric franchise fee that funds burial is a largely flat‑dollar revenue source and cannot absorb the current scale of burial expenses; council asked staff to query regulatory and industry partners, pursue consultant rechecks and return with options, including policy choices about whether to raise the franchise fee, limit burial scope, or shift costs to other funds.

On trails, staff proposed work for the Baker Road/Three Rivers corridor; the printed material flagged $4.2 million in the trail fund for that project, with about $4 million—per the materials—earmarked for burial of utilities along parts of the corridor. Staff cautioned that the trail fund’s roughly $2 million a year in franchise revenue will not cover large burial costs without additional funding, and that the projected shortfall is one reason staff and council continue to favor pursuing a local‑option sales tax.

Facilities were another major subject. Staff described a multi‑tiered approach that relies on a combination of (a) seeking state bonding (the city has two‑to‑three years to spend $2.5 million already obtained for one fire station), (b) continuing legislative outreach for sales‑tax authority to fund broadly distributed facility needs (fire stations, community center, Wilson Center), and (c) limited general‑obligation bonding in the absence of sales‑tax authority. Mike summarized the staff view: “the tax levy required for our capital improvement program is $9,863,700,” and staff recommended continued pursuit of local‑option sales tax authority as the lowest‑cost path for voters to fund large facility needs without a heavy property‑tax increase.

Council members asked for more granular cost verification on long lead‑time items (fire apparatus, pumper trucks and ladder units) and asked staff to sharpen consultant estimates where Xcel or utility quotes produce large year‑to‑year swings. Chief Fox noted manufacturers’ lead times remain long — about four years — and that earlier price volatility has moderated but still leaves equipment at elevated cost levels compared with pre‑pandemic prices.

Other highlights: staff programmed the Cullen (Colin) Nature Preserve as a phased project and noted a $250,000 pledge from Friends of Cullen; the Wilson Center — an enterprise facility largely funded by membership and program fees — showed capacity for modest capital work but larger remodels would require additional city funding; and stormwater and water/sewer enterprise funds continue to finance significant neighborhood infrastructure work (Kinsel neighborhood, water meter replacement, sewer sustainability improvements).

Next steps: staff will return with refined cost estimates for burial and major street/trail projects, tighten consultant pricing where feasible, present options to fund the gap (including the continued legislative push for sales‑tax authority), and fold any council direction into the formal CIP review and the upcoming regular meeting schedule.