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Councilmember Riley stated the City has historically funded $500,000 annually for road projects <br />so it is looking for $2.5 million. He stated if the City taxes it, the costs are deductable, which <br />saves everyone one -third of the tax. In addition, for the same reasons the utility companies do <br />not want a franchise fee on their bill, he felt it was disingenuous to push this issue onto the utility <br />companies. <br />Acting Mayor Backous stated the utility company can present the franchise fee on the bill any <br />way they want. <br />City Administrator Ulrich stated staff did look at how several other cities have addressed road <br />reconstruction and can provide that information. Coon Rapids has a flat fee for residential that is <br />reasonable and not challenged. He noted road assessments are usually $7,000 /property and the <br />Coon Rapids' flat fee is in the area of $2,500 /property. Another option is to hold public hearings <br />prior to extensive engineering. In that way, the City would not invest several hundred thousand <br />dollars on a project that is challenged and does not move forward. <br />Finance Director Lund stated Coon Rapids also has a franchise fee but it is based on a percentage <br />of the utility bill. <br />Acting Mayor Backous agreed that a franchise fee is a tax and he would not object to having it so <br />stated on the Connexus bill. <br />Councilmember Riley asked why the City would then not tax. <br />Councilmember Elvig explained that franchise fees do not come into the General Fund so those <br />funds cannot be used to balance the General Fund. <br />Acting Mayor Backous stated it also brings in all property owners, which does not occur with <br />taxes. He stated he does not want the City to sneak something in, but wanted to make it clear <br />that franchise fees are a tax. <br />Councilmember Kuzma stated it is the responsibility of the City to provide services and good <br />roads are one of those services. <br />Acting Mayor Backous stated he does not support a franchise fee of $28 /month but would <br />support a single -digit franchise fee that is not a burden for residents but would allow the <br />immediate problems to be addressed. Then the funding can be refined over time as better <br />numbers come in. <br />Councilmember Riley asked how the other 50% would be funded. <br />Councilmember Kuzma stated one option is to stretch out the reconstruction schedule. <br />Councilmember Elvig stated all of the criteria has not yet been entered in so he does not think <br />this scenario is accurate. <br />City Council Work Session / March 19, 2013 <br />Page 7 of 16 <br />