Choices for Change: A Guide to Local Government Cooperation and Restructuring in Minnesota

BACK TO CONTENTS

NEXT: Boundary and Government Restructuring

Many cities, townships, and counties begin cooperative arrangements to save costs and promote efficiency. Most arrangements involve only two governments, but there are also agreements among many governments.

Intergovernmental cooperation may range from formal joint powers agreements to unwritten understandings. This book divides intergovernmental cooperation into three categories: joint powers agreements; intergovernmental service agreements; and intergovernmental transfer agreements.

Intergovernmental service agreements are the most common and include a wide range of possibilities, including written and unwritten agreements. Two cities may have an unwritten agreement about sharing road repair equipment. A cluster of cities and townships may have a written agreement concerning snow removal or economic development.

Joint Powers agreements are less common and are addressed by the Joint Exercise of Powers Act. (For definitions of the types of intergovernmental agreements click here.)

A study by the Metropolitan Council found that 25 percent of all agreements in the metropolitan area were joint powers agreements, 47 percent were written agreements, and 28 percent were informal agreements. Since studies show that large cities use joint powers agreements more often than smaller cities, it is likely that intergovernmental service agreements are used more in greater Minnesota.

Advantages

Advantages of Local Intergovernmental Cooperation

• Efficiency and reduction of costs.

Cooperating on the provision of services can potentially mean lower costs per unit or person. Although they are by no means the only reasons, efficiency and reduced costs are the most common reasons governments seek to cooperate.

• Limited government restructuring.

Cooperating with neighboring governments often avoids the time-consuming, costly, and politically sensitive issues of government restructuring. If a city and township can cooperate, the township may avoid annexation of its land and the city may avoid incorporation efforts on the part of the township, which may hinder the city's development. Cooperation also helps avoid the creation of special districts that take power and resources away from existing governments.

• Coordination and planning.

Through cooperation, governments can develop policies for the area and work on common problems. Such coordination helps communities minimize costly externalities that can follow when levels of services and enforcement are different among neighboring communities. For example, shared water, sewage, and waste management policies can help avoid the situation in which one area's environment is contaminated by a neighboring jurisdiction with lax standards or limited services. Cooperation can also lead to joint planning for future services and the resources needed to provide them.

• Expanded services.

Cooperation may provide a city or township with services it would otherwise be without. Cooperation can make those services financially and logistically possible.

Disadvantages

Disadvantages of Local Intergovernmental Cooperation

• Reaching and maintaining an agreement.

In general, reaching a consensus in cases in which politics and community sentiments differ can be difficult. For example, all parties may agree that police protection is necessary. However, they may disagree widely on how much protection is needed.

An agreement may fall apart if one city wants infrequent patrolling and the other wants an active and visible police force. Since joint powers agreements are voluntary, a government may pull out before an agreement is reached. Or, if a government dislikes how the agreement has been implemented, it may, under the agreement's particular terms, pull out. The same is true for intergovernmental service agreements.

• Unequal partners.

If one party to an agreement is more powerful than other parties, it may influence the agreement's conditions. With service agreements, the more powerful party, or the party providing the service, may have little to lose if the agreement breaks down - it may already service itself at a reasonable rate. The weaker participants may not have other options and are open to possible exploitation.

• Local self-preservation and control.

Some cities or townships may feel their identity and independence will be threatened by intergovernmental cooperation. The pride of city residents and officials may be bruised if, after decades of providing their own police or fire protection, they must contract with a neighboring city (and possible old rival) for the service. In addition, and possibly more importantly, cities and towns lose some control over what takes place within their boundaries. And, although government officials may lose control, they are still held responsible for the delivery of services to their electorates.

Joint Powers Agreements

(Minnesota Statutes, Sec. 471.59)

Of the two types of joint powers agreements-shared power and service contract-shared power agreements are the most common. Under shared power agreements, governments jointly share responsibility for providing a service. With service contracts, one or more governments contract with another government for a service.

A Minnesota House Research Department study found that counties and cities use shared power agreements much more often than service contracts. While townships have far fewer joint powers agreements, the ones they have are split equally between service contracts and shared power agreements.

The governments entering into a joint powers agreement must both have the legal power to provide a service. For example, a township cannot enter into a joint agreement to provide a service it is not legally allowed to provide. Although the law states that there must be a commonality of powers, it allows for two important exceptions. One, although a county may not have the authority to provide a service to itself, it may provide that service to a government that does have the authority. Two, a government may enter into an agreement with another government to provide any service it is authorized to provide for itself.

Studies show that joint powers agreements are used by cities, townships, and counties across Minnesota for a variety of reasons. Governments with large populations use joint power agreements more often than those with small populations, (smaller governments tend to use fewer formal agreements). Cities use multiple joint powers agreements more than any other government. Counties often use joint powers agreements to provide state-mandated services and functions, such as environmental programs.

The following table shows (by unit of government) the most common types of services and functions performed under joint powers agreements. (The information included in the table was taken from Uses of the Joint Exercise of Powers Act, a report prepared by the Research Department of the Minnesota House of Representatives in May 1992.)

What Joint Powers Agreements Require

The Joint Exercise of Powers Act includes a series of requirements for joint powers agreements. These requirements are often unclear. It is important that attorneys drawing up these types of agreements are well versed in the law and court rulings concerning it. The office of the Attorney General of Minnesota can help clarify the law's provisions and related court rulings.

All negotiating governments must have the authority to provide the services the agreement will cover. An exception is when a county or government has the authority to provide a service to a government that does not have that authority. This exception is discussed here.

Basic requirements for the agreement.

A joint powers agreement must include:

• the purpose of the agreement, or what government power will be exercised jointly; and
  
  
• how the purpose of the agreement will be accomplished or how the power will be exercised.

Representation on the board.

If the agreement calls for the use of a joint board-which is not required, but is often the case-the board must be made up of representatives of each party to the agreement. This provision ensures that governments have some control in the operation and expenditures of the joint powers board. It also helps residents keep their local governments accountable for the board's decisions and actions.

The joint powers agreement may provide for disbursements from public funds to carry out the purpose of the agreement. However, strict accounting of all funds must be outlined in the agreement. Although this seems simple enough, reaching an agreement on funding issues can be a big stumbling block. Deciding who pays how much can be difficult, especially when several governments are involved. Some governments may question whether their share is too much given the services they will receive.

As in most cases of joint cooperation in which efficiency and cost-saving are key objectives, each party will have to find out how much it would pay for the service without the agreement and whether potential headaches and loss of control still make the agreement worthwhile. Governments providing a service have to find out whether providing that service to another government will lower the average cost to its own citizens. For example, if a city expands its police department in order to patrol a nearby city, will the average cost of police protection per resident decrease?

In addition, the law states that the agreement must provide for the disposition of any property or assets acquired as the result of an agreement. After the agreement has been completed, these resources must be returned to the parties to the agreement in proportion to their contributions. For example, funds generated through fees for garbage collection would not be evenly divided among the governments who signed the agreement unless the governments contributed equally.

Parties to a joint powers agreement may also establish a joint board that may issue revenue bonds or obligations. The revenue from those bonds must be used for the purposes presented when the bonds were issued and are the responsibility of the joint powers board.

Application of other laws.

In addition to following the provisions of the Joint Exercise of Powers Act, local governments must also comply with all other provisions of law concerning intergovernmental cooperation. In other words, an agreement reached under the joint powers act does not exempt governments from the procedural requirements of any other law. For example, if two or more governments wish to negotiate a joint powers agreement on police or fire protection, they must look at both the joint powers section and the specific sections concerning those services.

Terminating an agreement.

A joint powers agreement can include a specific termination date, such as five years from the date signed, or a specific ending date. Or, the agreement can continue indefinitely and be terminated through specific provisions included in the agreement. A combination of the two is possible as well. An agreement may terminate on January 1, 2004, for example, or be terminated by a resolution passed by the governments that are party to the agreement.

How to Begin

• Identify the cities or townships that may share a common problem or may stand to benefit from cooperation.
  
  
• Identify whether the county is cooperating with other cities or towns on a similar service. What type of arrangement do they have? Are the participating cities satisfied with the quality and quantity of the service?
  
  
• Although cooperation on several services may be desired, analyze each one separately at first. Initially, it may seem logical to lump services. However, it is best to first understand from a cost and non-cost perspective what cooperation in each service area entails.

Consider the costs associated with each option carefully.

• Look at the potential cost savings of each option. This should be done from a per resident or per unit of service provided perspective. For example, will the cost of fire protection per person decrease if the cities cooperate? Or, can the city lower the per resident cost of providing snow removal if it plows other cities' streets?
  
  
• Consider the costs associated with each form of cooperation. What type of administrative or insurance costs might be necessary with each option?

Now, consider other important non-cost or related issues.

• How would residents respond to the change in the level of services they receive?
  
  
• How would taxpayers respond to additional government expenses? Would they reject it?
  
  
• Could the agreement affect municipal or county staffing? If so, how would the employees and, if applicable, their union, respond to the agreement?
  
  
• Are the city's residents willing to give up some control over a particular service? This may take considerable polling to determine and will likely vary depending on the type of service in question. For example, it may be all right to share snow removal and street repair equipment, but residents might not be willing to give up their own police department and the security they feel it provides. Perceptions matter.
  
  
• Would an informal/formal/joint powers agreement make residents and city government more or less comfortable? Is flexibility more important than legal responsibilities? Or, is a considerable amount of money and power potentially involved so that a joint powers or more formal agreement might be preferred?
  
  

• Keep the public and local officials informed throughout the entire process. Present the options and invite public comment. If residents and officials feel they have played a role in the effort, or at least been given the opportunity to provide their input, they will be more likely to support the initiative. Plus, some creative ideas may be generated.
  
  
• Approach the actual negotiations with a flexible attitude. However, be sure the negotiator knows when entering into the negotiations what the city or township can or cannot accept. This information must be based on thorough analysis.
  
  
• Patience is important. The more governments involved in the negotiations, the longer it will take to develop an agreement and reach a consensus. In addition, negotiators may have to go back to their city councils or town and county boards several times for directions or approval.

Questions

Q. Can additional cities or townships become party to an existing agreement?

A. In most cases, an agreement can be written to allow for additional members.

Q. Will a joint powers agreement make my government less accountable for problems I may have with services provided through the joint powers board?

A. No. Although a government may be party to a joint powers agreement, it is still accountable to its electorate.

Q. Can we include cities from other counties in a joint powers agreement?

A. Yes, joint powers agreements are not limited by geography. The law states that eligible governmental units include cities, counties, townships, school districts, other political divisions of Minnesota or any other state, and any agency of the state of Minnesota or the United States.

Q. Does each party to the agreement get equal representation on the joint powers board?

A. Not necessarily. Although each party is required to be represented on the board, equal representation is not required. Parties to an agreement may, for example, decide to let a larger city or county have two representatives while other governments have only one.

Intergovernmental Service Agreements

Intergovernmental service agreements may take many forms. They may be written agreements between two or more cities or townships, among cities and townships, between counties, or with counties, cities and townships.

These types of agreements may also be informal. For example, they may be decades-old understandings between cities or townships or oral agreements to share equipment or swap responsibilities. Counties and larger cities are more likely to have formal agreements, whereas in many smaller, rural communities, informal cooperation is a way of life.

In a study performed by the Metropolitan Council, formal or written agreements were found to be the most common types of agreement used by cities, counties, and townships. These agreements primarily covered public safety and public works activities. Informal agreements often dealt with the sharing of equipment. In these cases, expensive capital equipment is shared with other cities or townships as needed or as convenient to each government.

The steps laid out here in the section on joint powers agreements should be considered before pursuing an intergovernmental agreement.

Under these agreements, a government may transfer to another government total responsibility for providing a service. For example, cities and townships in a county may transfer to the county the responsibility for solid waste disposal. The county will then charge the cities for the service.

Since tougher environmental regulations often require expensive disposal procedures, such agreements often make sense. A small city might have a difficult time meeting state mandates and ensuring a clean environment for its residents. Transfer of responsibility for such services to the county relieves the city of that responsibility, and makes large-scale disposal possible for the county.

The steps laid out here in the section on joint powers agreements should be considered when thinking about this option.

Case Studies:
Intergovernmental Cooperation

1

Deephaven, Greenwood, and
Woodland

Deephaven, in Hennepin County, has several types of cooperative arrangements with nearby cities, including public works, police, and fire agreements. Deephaven also has a unique joint powers agreement with Greenwood and Woodland in which the three share a city hall and clerk. One person who knows the laws and regulations of each city handles phone, mail, and walk-in inquiries for all three cities.

Sharing a clerk is not always easy, but it is cost effective. The cities are working on better coordination of zoning regulations, fee schedules, and ordinance books. This will make for better cooperation in the area and an easier job for the clerk. Although the cities cooperate on this important service, they try to keep their own identities. For example, the clerk prepares a separate budget and newsletter for each city.

Deephaven and Greenwood tried to consolidate in the 1980s, but the effort was rejected by residents in a referendum held in 1985. These communities have considered their options, and have found that cooperation, not consolidation, is better for them at this point.

2

Falcon
Heights

Falcon Heights, in Ramsey County, uses a variety of contracts to provide services within its boundaries. The city also provides services to Lauderdale, a smaller neighboring city. The city has written intergovernmental service agreements that require delivering a particular service as needed. For example, the city contracts with Ramsey County for snow plowing as needed, contracts with Lauderdale for some public works projects, and shares the services of a financial advisor with other cities.

In developing and evaluating a contract, Falcon Heights follows specific steps. These 14 steps may be useful for governments interested in intergovernmental cooperation.

1. Recognize an opportunity and explore it.
2. Do not assume there will be economies of scale.
3. Determine how much control the city needs over a service and whether or not contracting guarantees this.
4. Determine what new employment opportunities and problems this gives the staff.
5. Understand and communicate well with the party(ies) to the contract.
6. Clearly identify when, where, and how the service is provided.
7. Evaluate the hassles of contracting compared to the hassles of in-house service.
8. Tie cost as closely as possible to a measure of the service being provided.
9. Compare costs.
10. Check the liability clause.
11. Balance the desire for a longer term commitment to providing a service with the flexibility of a shorter term contract.
12. Take time to prepare the contract.
13. Revise and improve the contract over time.
14. Be able to explain the contract's service and financial benefits to the community.

3

Sibley
County

Several types of cooperative efforts are in place in Sibley County, including a county-wide effort to promote economic development. The small cities in Sibley county recognized that they would have a difficult time competing for development opportunities with cities of 5,000 to 10,000 people.

The cities have worked together to attract business, such as an ethanol plant, to the county. Although each city would have liked the plant to locate within its boundaries, all saw the benefits of having it in their county and not across the state. The agreement to work together on economic development was informal as are many of the agreements among cities and townships within the county.

Although the county has enjoyed some important success in its cooperation efforts, there is still some opposition to working together in some areas. Old rivalries haunt efforts to bring cities together to work on common problems. However, as memories of these rivalries fade, more people see intergovernmental cooperation as important to development in Sibley County.

4

Multi-County
Cooperation

Eight counties in western Minnesota have a joint powers agreement that addresses the disposal of solid waste at two sites in the area. These counties include Otter Tail, Grant, Traverse, Wilkin, Stevens, Todd, Hubbard, and Wadena. Becker County was involved in the initiative, but withdrew when it found the tipping fee too high.

All but one of the counties has one representative on the joint powers board. Otter Tail County, the largest of the eight, has two representatives.

The driving force behind the joint powers agreement was state environmental law. Grant County was burying waste in landfills and felt this was environmentally sound. However, they believe that intercounty cooperation, which involved incineration of waste, would be more cost effective. The steam produced from the solid waste incinerator is sold and the revenue is used to lower tipping fees.

While the counties remain satisfied with the agreement, they find negotiations and discussions trying at times. It is hard to get eight counties to agree. The counties also find it can take a long time to resolve an issue since each representative must go back to his or her county board for approval. Because representatives often fail to bring back an answer or comment from their county boards, resolving even small issues can take several meetings.

Although these problems can be frustrating, the counties ask themselves the following questions: "Is the system working? Are we meeting our goal-to get rid of solid waste in an economically and environmentally sound fashion?"

Since they can answer "yes" to the questions, they continue to work together.

Lessons and Recommendations

One way to improve the process of working through a joint powers board is to create a service district. A service district could make decisions and accomplish the same objectives more efficiently. In this case, however, the counties have been reluctant to lose their power to another layer of government.

It is important to keep asking whether a joint powers or any other intergovernmental agreement continues to help the county, city, or township meet its objectives. If it does, the agreement and intergovernmental cooperation is worth the time, effort, and frustration.

BACK TO CONTENTS

NEXT: Boundary and Government Restructuring

The information given in this publication is for educational purposes only. Reference to commercial products or trade names is made with the understanding that no discrimination is intended and no endorsement by University of Minnesota Extension is implied.

Produced by Communication and Educational Technology Services, University of Minnesota Extension.

In accordance with the Americans with Disabilities Act, this material is available in alternative formats upon request. Please contact your University of Minnesota Extension office or the Extension Store at (800) 876-8636.

University of Minnesota Extension is committed to the policy that all persons shall have equal access to its programs, facilities, and employment without regard to race, color, creed, religion, national origin, sex, age, marital status, disability, public assistance status, veteran status, or sexual orientation.