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delays and /or cancellations which negatively impact the effectiveness of long -term street maintenance and <br />reconstruction programs. Also, due to our Charter, the city of Ramsey faces particular hardships in applying special <br />assessments due to the ability of taxpayers to more easily petition against street improvement projects. <br />State law provides cities the ability to impose franchise fees to utilities operating within the public right -of -way. <br />This fee would be dedicated solely to help pay for the maintenance of existing city streets and would help eliminate <br />the need to apply special assessments against property owners to help fund our SMP. Staff therefore recommends <br />that Council authorize staff to begin preparing draft franchise fee ordinances to allow the city to collect fees from <br />both electric and gas utilities. Staff would propose to charge equal percentages to each utility since there are <br />approximately the same number of gas and electric customers city -wide. Franchise fee revenues, combined with our <br />MSA allocations, the $500,000 currently being budgeted through the general fund, and our ability to continue <br />bonding for projects, should allow us to fully fund our long term SMP for all existing city streets. <br />Attached as Figure 3 is a table prepared several years ago but which is still valid. The table shows the number of <br />electric and gas customers throughout the city versus the revenues that could be collected based on varying monthly <br />franchise fees. As can be seen, the monthly franchise fee would need to be around $5 each, or $10 per month per <br />resident, to collect $1,000,000 in annual revenues. In order to collect $1,500,000 in franchise fees annually, the <br />monthly fee would need to be over $7 each, or $14 per month per resident. This assumes that businesses would be <br />charged the same amount. This is based on the past argument that businesses tend to operate along County and State <br />highways, and therefore do not impact residential streets to the degree that residents do. However, many cities <br />charge their businesses hundreds of dollars or more through their franchise fee ordinances, which would help to <br />raise revenue by keeping residential rates lower. As noted above, the city of Champlin charges their utilities $2.50 <br />per month, although they have 4 utilities so they raise $10 per month at that rate. Similarly, the city of Elk River <br />charges their utilities $4.50 per month for residential rates, which raises $9 per month per resident in revenue. <br />Since several property owners are still paying special assessments on previous street improvement projects, staff <br />would recommend that Council consider adopting a simple rebate program to ensure that residents and /or <br />businesses are not asked to pay twice to fund our SMP. For example, while all properties with gas and electric <br />service in the city would be charged a franchise fee on their bills, property owners still paying on a street <br />assessment could receive an annual rebate of the franchise fees they paid during that year. Rebates could apply <br />whether assessments were prepaid or paid annually, and could be offered through the end of the assessment period. <br />Rental properties, which could also qualify for rebates, should be in the name of the property owner, not the tenants. <br />To qualify for this rebate, the property owner would simply present copies of their gas and electric bills and be <br />refunded the amount paid toward the franchise fee for that year. <br />If Council desires to move forward with adopting a franchise fee, staff would first seek to meet with utility company <br />representatives while drafting franchise fee ordinances for each utility provider. Once the Ordinances are complete, <br />Council would need to hold a Public Hearing prior to adopting the Ordinances. In addition, staff would recommend <br />communicating with the public early and often throughout the process to ensure its success. In order to establish a <br />franchise fee, a waiting period of at least 90 days is required following completion of the franchise fee Ordinances <br />and the Public Hearing before invoicing can begin. Therefore, the earliest any property in the city with gas and /or <br />electric service could be charged a franchise fee on their bill would likely be in January of 2014 or later. <br />Finance Director Lund will be in attendance and can provide more detail on some or all of the financing options if <br />needed, especially as pertains to the 2014 budgeting process. <br />Recommendation: <br />Staff recommends moving away from the use of special assessments as a funding source for our long -term street <br />maintenance program, and instead utilizing franchise fees to supplement our MSA funds, general obligation debt, <br />and general fund revenues to help fund our long -term street maintenance program well into the future. If the City <br />Council directs staff to pursue the use of franchise fees, staff will prepare draft franchise fee Ordinances for each <br />gas and electric utility utilizing public right of ways to conduct their business. These businesses include Anoka <br />Electric, CenterPoint Energy, and Connexus Energy. As part of this process, staff will open a dialogue with each <br />utility, understanding that private utilities are typically not proponents of the use of franchise fees, and that <br />