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Cost Participation for Cooperative Construction Projects and Maintenance Responsibilities between MnDOT and Local Units of Government

MnDOT Policy FM011
View/print signed policy (PDF)

Policy statement

This policy has been developed to determine the extent to which trunk highway funds may be expended on elements of cooperative construction projects and maintenance. The basis of this policy is that Minnesota Department of Transportation (MnDOT) participation is limited to trunk highway purposes.

This policy is for internal MnDOT purposes only, and it is not intended to provide any claim or expectation of legal entitlement to financial participation except where MnDOT has specifically contracted at its sole discretion for such participation. MnDOT retains the final authority to determine whether it will participate in the cost of any project.

This policy is to be used in conjunction with the Cost Participation and Maintenance with Local Units of Government Manual (PDF).

Reason for policy

Where a mutual benefit and a demonstrated transportation need exist, MnDOT endorses cooperative construction projects with local units of government. MnDOT’s ability to expend trunk highway funds for cooperative construction projects is limited by the Constitution of the State of Minnesota, Article XIV, section 2 and section 6 (pertaining to the Public Highway System, specifically the Trunk highway system and the Trunk highway fund) and by Minnesota Statute §161.20 (regarding the general powers of the commissioner relative to the construction, improvement, and maintenance of the trunk highway system).

Specifically, Constitution of the State of Minnesota, Article XIV, section 2 establishes “… a trunk highway system which shall be constructed, improved and maintained as public highways of the state,” and Constitution of the State of Minnesota, Article XIV, section 6 establishes “ … a trunk highway fund which shall be used solely for the purposes specified in section 2 of this article.”

Minnesota Statutes §161.20 defines the general responsibilities of the Commissioner of Transportation. Minnesota Statutes §161.20, subdivision 2 permits the commissioner to make arrangements with, and cooperate with, any governmental authority for the purpose of effecting the provisions of Minnesota Statutes §161.20. Minnesota Statutes §161.20, subdivision 3 states “The commissioner may expend trunk highway funds only for trunk highway purposes.”

As defined in 2013 Minnesota Laws, Chapter 117, Article 1, Section 3, subdivision (c)(2), the biennial appropriation to the State Road Construction account “…is for the actual construction, reconstruction, and improvement of trunk highways, including design-build contracts and consultant usage to support these activities. This includes the cost of actual payment to landowners for lands acquired for highway rights-of-way, payment to lessees, interest subsidies, and relocation expenses.” This definition is subject to change with each appropriation but remains substantially constant over time.

Minnesota Statutes §161.38, subdivision 1 provides that “The road authorities of any county, city or township may enter into an agreement with the Commissioner for the construction of a roadway or structure of greater width or capacity than would be necessary to accommodate the normal trunk highway traffic upon any trunk highway within its boundaries and may appropriate from any funds available and pay into the trunk highway fund such sums of money as may be agreed upon.”

MnDOT developed this policy in accordance with Minnesota statutes and rules and in coordination with applicable MnDOT Policies. The Related Information section of this policy lists relevant references.

Principal Points:

  • MnDOT participation in cooperative construction projects and subsequent maintenance with local governments is limited to trunk highway purposes.
  • Cooperative construction projects may be initiated by MnDOT requesting local participation in a trunk highway project, or by a local unit of government either: a) requesting improvements or otherwise indicating its willingness to share the cost of a MnDOT project; or b) requesting MnDOT cost participation in a locally-initiated project.
  • This policy is for internal MnDOT purposes only, and it is not intended to provide any claim or expectation of legal entitlement to financial participation except where MnDOT has specifically contracted at its sole discretion for such participation. MnDOT retains the final authority to determine whether it will participate in the cost of any project.

Application of Policy:

  • This policy applies to all trunk highway funds, and in particular, funds in the State Road Construction (SRC) account. The SRC account is comprised of federal aid funds made available to MnDOT and state funds dedicated to the trunk highway fund. All funds allocated to the State Road Construction account are subject to requirements and restrictions of the account, specifically that funds may only be expended for trunk highway purposes, regardless of the original source of the funds.
  • This policy applies to:
    • Determination of the extent to which a local unit of government’s funding participation is necessary for portions of a MnDOT-initiated trunk highway construction project.
    • Determination of the extent to which MnDOT may participate in a locally-initiated project that affects the trunk highway system.
    • Determination of maintenance responsibilities resulting from cooperative construction projects.

Scope of Policy:

  • MnDOT participation, in accordance with this policy, is limited to the project scope necessary to address the trunk highway purposes as determined by the district and approved as required. Costs for items requested by local units of government, beyond those determined as necessary by the district, will be the responsibility of the local unit of government.
  • This policy is written for application to MnDOT projects. MnDOT’s cost participation identified in this policy may also be applied to locally-initiated project, with eligible trunk highway items. Refer to the Manual, Section II.A. “Definition of Scope” for details regarding MnDOT participation in locally-initiated projects.
  • Further clarification of cost participation for MnDOT special funding programs will be provided as a part of the program criteria.

Who needs to know this policy

  • MnDOT personnel and local agency representatives involved in determining funding sources, planning, and executing agreements for cooperative construction projects between MnDOT and local units of government.
  • Anyone involved in planning, designing, constructing or maintaining a MnDOT or local federal-aid project, including but not limited to: MnDOT personnel, local agency representatives, and consultants.

Procedures

Application of Policy and Procedures

Application and procedures related to this policy are found in the Manual. The Manual includes details for applying the policy to projects for cost participation and maintenance responsibilities, methods for computing cost shares, and relevant agreement procedures. The Policy and Manual documents must be used together in order to fully understand policy and procedures and to avoid misinterpretation.

Exceptions to Policy

Justification for exceptions to the application of this policy shall be documented by the district, submitted by the Transportation District Engineer to the Cooperative Agreements Unit, who will forward the request to MnDOT’s Director of Operations Division and the Chief Financial Officer for concurrence, and forwarded to MnDOT’s Director of Engineering Services Division for approval. The merits of such requests will be determined on a case-by-case basis. Exceptions will be granted only for project elements that that meet trunk highway purposes and are eligible for trunk highway expenditures.

Enforcement of Policy

  • MnDOT districts work with the MnDOT Cooperative Agreements Unit to apply this policy to projects.
  • The MnDOT Cooperative Agreements Unit makes the final determination of cost participation responsibilities, in cooperation with the district, during the agreement development process.
  • Final cost participation and maintenance responsibilities are documented in cooperative agreements between MnDOT and local units of government, for each project.

Definitions

Cooperative Construction Agreement

A cooperative construction agreement is an agreement between MnDOT and a local unit of government pursuant to Minnesota Statutes § 161.20 "General Powers of the Commissioner," Minnesota Statutes § 161.38 "Special Agreements for Highways in Municipalities," and Minnesota Statutes § 161.45 "Utility of Highway Right-of-Way; Relocation," concerning construction and/or maintenance in which both parties have an interest.

Cooperative Construction Project

A cooperative construction project that includes trunk highway and local road improvements in which costs and/or maintenance responsibilities are shared between MnDOT and local units of government.

Locally-initiated Project

A locally-initiated transportation project is a project in which the need, scope, or means to accomplish the project is predominantly a determination of and priority for, the local unit of government.

MnDOT-initiated Project

A MnDOT-initiated transportation project is a project in which the need, scope, or means to accomplish the project is predominantly a determination of and priority for MnDOT.

State Road Construction

State road construction is the actual construction, reconstruction, and improvement of trunk highways, including right-of-way.

State Road Construction Account

The State Road Construction (SRC) account is the biennial appropriation of funds by the legislature which may only be expended for trunk highway purposes. This appropriation is comprised of federal aid funds made available to MnDOT and state funds dedicated to the trunk highway fund. All funds allocated to the State Road Construction Account are subject to requirements and restrictions of the account, specifically that funds may only be expended for trunk highway purposes, regardless of the original source of the funds.

State Transportation Improvement Program (STIP)

The STIP is a federally required document that provides a list of transportation projects that are expected to be funded with federal transportation dollars within a four-year window. This list of projects includes state and local transportation projects funded with federal highway or federal transit funds. Minnesota also includes most projects on the state trunk highway system regardless of funding source (federal or state). Rail, port, and aeronautic projects are included for information purposes. Refer to the website for details, State Transportation Improvement Program.

Trunk Highway Fund

This fund is the principal operating fund for MnDOT and to some extent for the Minnesota State Patrol at the Department of Public Safety. It is a governmental fund that accounts for public monies used to construct, improve, and maintain Minnesota's trunk highway transportation infrastructure. Annual transfers of funds to Minnesota Management & Budget (MMB) for Trunk Highway-related debt service are also made from this fund.

Trunk Highway System

All roads established or to be established under the provisions of Article XIV, Section 2 of the Constitution of the State of Minnesota. This system includes highways that are constructed, improved, and maintained as public highways under the jurisdiction of the Commissioner of Transportation, including highways on the Interstate system.

Responsibilities

Office of Transportation System Management (Central Office)

  • Funding Program Coordinator - The Funding Program Coordinator serves as a liaison and assures compliance and oversight for application of this policy.
  • STIP Coordinator - Works with districts to ensure that cost estimates for MnDOT and local shares of projects are correctly identified in the State Transportation Improvement Program (STIP) and that appropriate anticipated funding sources are identified for each participating agency share.

Chief Financial Officer and the Office of Financial Management (Central Office)

  • The Office of Financial Management provides financial oversight and makes determinations on trunk highway purpose where there is no precedence or clarity.
  • The Chief Financial Officer is ultimately responsible for interpreting trunk highway purpose as stated in the Constitution and state law and assuring MnDOT is compliant.

Office of Project Management and Technical Support (Central Office)

  • Municipal Agreements Engineer - The Municipal Agreements Engineer serves as a liaison and assures compliance and oversight for application of this policy. The Municipal Agreements Engineer also ensures that construction plan information and cooperative agreement documents are consistent with the STIP, with the cost participation responsibilities developed during project development, and with this policy.
  • Cooperative Agreements Unit - The Cooperative Agreements Unit provides assistance with application of this policy during project development as requested by the districts. They review documentation of project cost responsibilities and notify the districts of cost participation responsibilities that may be inconsistent with this policy. They also facilitate the review and approval of requests for exceptions to the application of this policy.

Districts

  • Transportation District Engineers - Transportation District Engineers document requests for exceptions to the application of this policy and submit requests to the Cooperative Agreements Unit.
  • District Project Managers - District Project Mangers work in coordination with the Municipal Agreements Engineer and the Funding Program Coordinator to determine cost participation responsibilities and to identify funding sources early in the project development process. District Project Managers also provide copies of cost estimate information to the Municipal Agreements Engineer, as provided to local units of government.

Frequently asked questions

Q. To what funds does this policy apply?

A: This policy applies to all trunk highway funds, and in particular, State Road Construction (SRC) account funds, including funds that have been carved out of the SRC budget for MnDOT special funding programs, such as Transportation Economic Development (TED), Safety and Mobility Interchange (SAM), and Corridor Investment Management Strategy (CIMS). The SRC account is comprised of federal aid funds made available to MnDOT and state funds dedicated to the trunk highway fund. All funds allocated to the SRC account are subject to requirements and restrictions of the account, specifically that funds may only be expended for Trunk Highway purposes, regardless of the original source of the funds. Further clarification of cost participation for MnDOT special funding programs such as TED, SAM, or CIMS will be provided as a part of the program criteria.

Q. Where are specific construction costs and maintenance responsibilities explained?

A. This policy's companion Manual contains guidance for determining construction cost participation and maintenance responsibilities between MnDOT and local units of government. The Manual also includes methods for computing cost shares, information about agreements, and other relevant procedures.

Q. How are trunk highway purposes defined?

A. Minnesota Statutes §161.20, subdivision 3 states that "The commissioner may expend trunk highway funds only for trunk highway purposes." Constitutionally, trunk highway purposes are those that are necessary to construct, improve, and maintain the trunk highway system. Engineering due diligence and justification is required to define elements of projects that meet the constitutional and statutory definitions of trunk highway purposes. The Manual provides direction regarding MnDOT's cost participation in elements that meet trunk highway purposes.

Q. When should Project Managers begin determining construction cost participation and maintenance responsibilities between MnDOT and local units of government?

A. Project Managers should determine construction cost participation and maintenance responsibilities early in the project development process, as the project scope and trunk highway purposes are determined. It is important to consider the immediate costs for construction as well as the ongoing maintenance impacts, and then document responsibilities in municipal agreements to avoid misunderstandings between MnDOT and local units of government.

Q. When should Project Managers involve the Municipal Agreements Engineer?

A. Project Managers should confer with the Municipal Agreements Engineer as cost participation amounts are being estimated, before discussing cost shares with local units of government. This initial communication should occur early in the project development process as the project scope is being determined. The Municipal Agreements Engineer will work with Project Managers to ensure that construction plan information and cooperative agreement documents are consistent with the STIP, with the cost participation responsibilities developed during project development, and with this Policy.

Q. How does cost participation apply to Complete Streets design features?

A. The MnDOT Complete Streets Policy requires that the principles of Complete Streets be considered by MnDOT at all phases of planning and project development in the establishment, development, operation, and maintenance of a comprehensive, integrated, and connected multimodal transportation system. As such, the inclusion of Complete Streets design features such as sidewalks, bikeways, shared use paths, and transit facilities will be determined early in the project development process. Cost participation and maintenance responsibilities for these items are specified in the respective sections of the Manual.

Q. How do this Policy and the companion Manual determine responsibilities for ongoing snow and ice control/removal?

A. Responsibilities for snow and ice control/removal as well as other maintenance responsibilities on trunk highway rights-of-way, including sidewalks, will be documented in cooperative construction agreements or in separate maintenance agreements. These responsibilities are determined by Districts and local units of government, in consultation with the Municipal Agreements Engineer.

Q. If the local unit of government share of a project is less than $5000, what is the process to apply for an exception?

A. The MnDOT Cooperative Agreements Unit (note: for employees only) has implemented an administrative process to address these instances. If the local cost share is less than $5000, this administrative process will allow MnDOT to pay for additional trunk highway eligible expenses without going through a formal exception process. This administrative exception process will only allow MnDOT to participate in costs for project elements that meet trunk highway purposes; local units of government will be responsible for all elements that do not meet trunk highway purposes. If the local cost share is $5000 or greater, a cooperative construction agreement will be written.

Q. Does a maintenance agreement need to be written if MnDOT is solely responsible for the costs of a trunk highway improvement project that affects local units of government?

A. When MnDOT and a local unit of government share maintenance responsibilities as a result of a cooperative construction project, those responsibilities can be written into the cooperative construction agreement or documented in a separate maintenance agreement. If MnDOT maintains sole responsibility for all maintenance costs resulting from a cooperative construction project, a maintenance agreement will not be written.

Related information

This policy's companion Manual provides details for applying this policy to projects, methods for computing cost shares, and relevant procedures including agreements and permits.

This policy's procedures and requirements were developed in accordance with the following:
State of Minnesota Constitution, Article XIV, Section 2, "Trunk Highway System"
State of Minnesota Constitution, Article XIV, Section 6, "Trunk Highway Fund"

Minnesota Statutes § 161.20, "General Powers of the Commissioner"
Minnesota Statutes § 161.20, subdivision 2, "Property acquisition; agreements and contracts"
Minnesota Statutes § 161.20, subdivision 3, "Trunk highway fund appropriations"
Minnesota Statutes § 161.21, subdivision 1, "Location and design of highways"
Minnesota Statutes § 161.21, subdivision 2, "Cooperation with other governmental units"
Minnesota Statutes § 161.24, "Changes Required by Construction of Trunk Highway"
Minnesota Statutes § 161.25, "Temporary Trunk Highway Detour; Haul Road"
Minnesota Statutes § 161.38, subdivision 3, "Frontage road"
Minnesota Statutes § 161.38, subdivision 5, "Definition of municipalities"
Minnesota Statutes § 161.39, "Aid to Other Road Authorities and State Departments"
Minnesota Statutes § 161.45, "Utility on Highway Right-of-Way; Relocation"
Minnesota Statutes § 161.46, "Reimbursement of Utility"
Minnesota Statutes § 162, "State-aid Road Systems"
Minnesota Statutes § 169.04, "Local Authority"
Minnesota Statutes § 169.35, "Parking"
Minnesota Administrative Rules § 8810.3100 – 8810.3600, "Utilities and Equipment"
Minnesota Administrative Rules § 8820, "Local State-Aid Route Standards, Financing"
Complete Streets
Utility Accommodation on Highway Right-of-Way

History of policy updates or amendments

Supercedes

Replaces Policy 6.1 "Cooperative Construction Projects with Local Units of Government," established 08-07-1985, revised 2001, 2004 and Guideline 6.1-G1 and Policy 6.84-2 "Cooperative Bridge Widening Projects," established 12-5-1984 and Guideline 6.84-2G1.

Effective date

Effective date as signed by responsible senior officer.

Ownership

Responsible Senior Officer

Tracy Hatch
Deputy Commissioner/COO/CFO
tracy.hatch@state.mn.us
651-366-4811

Policy Owner

Mark Gieseke, P.E.
Director, Transportation System Management
mark.gieseke@state.mn.us
651-366-3770

Chris Roy, P.E.
Director, Project Management & Technical Support
chris.roy@state.mn.us
651-366-3182

Policy Contact

Maryanne Kelly-Sonnek, P.E.
Municipal Agreements Engineer
maryanne.kellysonnek@state.mn.us
651-366-4634