Minutes - Council Work Session - 03/19/2013

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Councilmember Kuzma asked if the City charges other fees that are similar to a utility fee. Finance Director Lund stated the City does not currently have a franchise fee on the Connexus utility bill. She explained that in 2003, the City collected $450,000 in a utility fee to replace Local Government Aid the State had cut, but that utility fee sunset after three quarters. Councilmember Elvig stated when the Council instituted that utility fee, residents did not think it would be sunset, but it was. He noted the City charges a stormwater drainage fee and streetlight fee. Finance Director Lund stated the City service bill has fees for recycling, streetlights, and stormwater drainage. The franchise fee under consideration would be on the Connexus utility bill. Acting Mayor Backous stated Connexus is opposed to having a franchise fee because it is on their bill and their customers will think it is a fee from Connexus. He stated he supports a franchise fee because it brings all to the table, including tax - exempt entities that use the roads and bring in traffic. He felt it was fair for those types of properties to also contribute. Acting Mayor Backous stated he did not like the assessment process because residents with 200 feet of road frontage may have one car while others with 100 feet of road frontage may have ten cars. He did not believe the assessment process was fairly tied to use. Finance Director Lund noted property tax is based on value, and not how much you use the road. She stated the 2013 budget includes $1,327,500 in the General Fund budget for roads. This was decreased from $1.5 million when the Riverdale Drive project was dropped. It was noted that another source is Tax Increment Financing (TIF) District 4 but it decertifies in 2014. Finance Director Lund presented a summary of road maintenance funding within the 2013 budget and number of employees that would have to be cut to fund those projects through staff reductions. Councilmember Kuzma asked if a $14 /month franchise fee makes up the $520,000. Finance Director Lund stated at $14 /month it contributes about $1.5 million based on the number of customers from several years ago. Interim Engineer Nelson stated $1.44 million would provide 50% funding for the initiative so the City will have to rely on another revenue source, such as assessments, for the other 50 %. At $28 /month, the initiative would be fully funded. Acting Mayor Backous stated that assumes everything stays flat and asked if it is anticipated there will be property tax increases, population increases, or cost increases. Finance Director Lund noted it could hold funding within the General Fund and address the additional $800,000 that has been found by short-term funding. Acting Mayor Backous stated if the City is funding this level of road projects, it will need to hire additional help so further staff reductions is not a feasible consideration. . City Council Work Session / March 19, 2013 Page 4 of 16