Some Minneapolis leaders are pushing a plan that would raise the city's borrowing limit on individual building projects from $15 million to $80 million.
Council Member Abdi Warsame said the change would create more transparency in allowing the city to make good on promises for major projects such as affordable housing and renewable energy.
Since 1973, the city charter has capped the debt for capital expenditure projects — such as building a fire station or parking ramp — at $15 million. The council set into motion a proposal to adjust that figure for decades of inflation and continue to factor in future inflation.
In a presentation to the council's Ways & Means Committee — the first step in a long process — the city's Chief Financial Officer Mark Ruff said his staff floated the idea of re-examining the limit when he first took the position two years ago.
He said the time now seemed right because costs associated with these projects are going up, and the current council and Mayor Jacob Frey are pushing priorities such as affordable housing and renewable energy that involve major new spending.
Currently, the city can — and does — take out debt exceeding the $15 million limit in its charter by invoking Minnesota state law that allows it. But bypassing the charter can be time-consuming and overly bureaucratic. The change would encourage the council to rely more frequently on the city charter's guidelines, Ruff said.
"If we were going to undertake a major renewable energy project, there's not as much clear state authority for those types of projects, so we'd have to try to get the state law changed," he said.
"The charter amendment would seem to be a more direct and efficient and transparent process of getting full input from all the elected officials."
As of last year, Standard & Poor's gave Minneapolis a healthy AAA bond rating. The credit-rating agency said that the city had $688 million in debt, less than half of what it was a decade ago.
Under the charter, issuing bonds requires a supermajority council vote — or two-thirds approval — and at least four out of six votes from a separate body, the Board of Estimate and Taxation, Warsame explained when introducing the change at the council last month.
"The approval of a project under the charter is a more transparent process that requires more public review and scrutiny," he said.
"I also think it builds public trust because we as a council will not be seen as avoiding a limit in our own charter."
In an interview, Ruff said the decades-old debt cap is unusual, and raising it with inflation will put Minneapolis more in line with other cities. Given that the city routinely gets around the limit, raising it won't lead the city to incurring more debt, he said.
The Ways & Means Committee unanimously approved the measure with no discussion.
It will go through several more council committees before going to a final vote with the full City Council. In order to make it official, the council would have to amend its charter, which requires a 13-0 vote. If that succeeds, Ruff said the change likely wouldn't go into effect until the end of the year.