Minutes - Council - 05/27/2003 - Laserfiche WebLink

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Anoka Electric, and Midwest Gas (now know as Centerpoint Energy). Within the electric ordinance there is a fee provision in consideration of the rights granted to the electric distributors under the ordinance. The Midwest Gas (Centerpoint Energy) ordinance is silent on a possible franchise fee and a revised ordinance will be introduced to include language regarding franchise fees. The gas ordinance wilt need to be adopted prior to the adoption of the franchise fee ordinance. The City of Ramsey is proposing a franchise fee of 4.5 percent of gross revenues on all users. At 4.5 percent, the City would receive approximately $525,000 in franchise fee revenue per year. Franchise fee revenues would be used for the City's share of street maintenance costs and the labor associated with the maintenance and repair of City streets. Staff feels that using a percentage rate on all users would be more equitable than a flat rate for every property in the City or a per-unit charge of energy used. It is anticipated that the average homeowner may pay $80 per year for gas and electric franchise fees. The City of Ramsey is not the only city looking to franchise fees as a possible revenue source. Several of the neighboring communities have either inquired about, are in the process of, or have put in place, the adoption of a franchise fee ordinance. Each of these cities is faced with the same dilemma: major (or total) cuts in state aids and loss of levying power at the time of major growth within their communities. Staff recommended that the Council schedule a public hearing to introduce ordinances establishing franchise fees at the rate of 4.5 percent of total revenues. Councilmember Cook inquired as to what the total impact would be on an average household with the City being able to levy back the 60 percent loss in Local Government Aid. Finance Officer Lund replied that she did not have that information available. Councilmember Cook inquired if the City would be able to eliminate the franchise fee in the future when the City has a better tax base. Finance Officer Lund replied yes and explained that every year the Council is presented with the rates and charges so the Council can amend it each year. Councilmember Cook inquired if there was a way to determine the tax impact on a property owner. City Administrator Norman replied that the action before the Council was to schedule the public hearing, but he agreed with putting together better figures for the Council to review the full impact on the property owners. Mayor Gamec stated that he would like the information before they hold a public hearing. Councilmember Strommen inquired if it was possible to delay the public hearing until after their budget discussions in July. City Administrator Norman replied that staff has already made some budget assumptions for 2003, and that they would be collecting franchise fees in the fourth quarter of 2003. City Council/May 27, 2003 Page 15 of 18