Agenda - Council - 11/26/1996 - Laserfiche WebLink

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,'1 I I I I I I I I I I I I I i I experiences s~nificant recommendatkbn. cost increases in the years 2003 and 2004 and thus the prior An alternative '~resented for your considgrafion at this ~ is setting the fee at a level of I% 'of residential re~enues. At the October 22 meeting, thrum was a desire expressed that comm.'claY'mi as~al prop.-ties should sham in the burden as well. A review of the PIR cash flow reveals th: :in effect, they already are. For the past few years, we have been dedicating the tax increment i~terest earnings toward the PIR fund (which then is used as revenue to pay for sealcoating), l~or the next five years, these revenues are projected to average roughly $98,000. The residential :~ranchise fee is expected to raise $62,000. Nonetheless we have proposed a .3% fee agahast the :ommercial revenue base. The rationale is that the average commercial property pays taxes at a mm of 4.6% w/th the average residential customer paying at the rate of 1.37% (30% of the commem[al rate). Therefore, the differing rates here even that playing field somewhat. The institutional customer is proposed at i%. The cash flows icontemplate receipt of these franchise revenues during 1997. Further, however, also contemplat~xt is an elimination of the sealcoating assessment program as a result. Given that the assessment ~bortion of the sealcoating program the next five or six years would otherwise be about $150,000 annually, that represents a nice trade to the benefit of the residential customer base. This benefit to We customer is only possible, due to the TIF u'ansfer and the fact that the PIR has sufficient funds i through past and future projected revenues to provide revenues other than assessments It~should be noted, however, that if future revenues do not increase significantly above projecuort$ (or expenditures decrease) an increase in the franchise fee will need to occur prior to the year g003. The City could l~vy a franchise fee for rent and maintenance of our fights-of-ways to the benefit-of utility companie~against the entire Ramsey customer base. However, if the revenues are, in fact, dedicated to the Sealcoating program the commercial customer effectively will be subsidizing the residential progr~-n with minimal benefit (similar to a general tax levy). Therefore, the recommendation Is that the fee be levied against the customer base which is the primary beneficiary of the maintenanOe expense experienced by the City. Regardless of th~ dedication of revenues (to sealcoating or some other purpose) the City should levy a charge agaJ nst the utilities. As Council is aware, protection of municipal rights-of-way has become a major c~),ncern of the League of Cities and its statewide and national members. It is not prudent to provid ~ the benefit of use of property to the utilities free of charge. The 5% charge against cable tele~!ision revenues recognizes the huge benefit that industry has rece/ved by cities providing property' for their infrastructure. The energy utilities are receiving the same benefits but, to date, have avoi~ :ed a contribution toward this benefit within the City of Ramsey. The result of the _tbove has the same impact upon the typical residential customer as a 5% tax decrease ($150,0(t0 annual assessment - $62,000 franchise fee = $88,000 savings to the customer). Therefpre, we are recommending this program as an effective tax reduction program. Committee ActiOn: Motion to recornn~end Council introduce Ordinance 4/96- Franchise Fees. Establishing Electric and Gas · Reviewed by: City Administrator Finance Officer City Engineer City Attorney FC: 10/22/96 /jmt