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Finance Director Lund stated it involved a Joint Powers Agreement (JPA) with Anoka County <br />for Alternative Urbanwide Area Review (AUAR) improvements. That debt service totals <br />$500,000 to $600 -000 annually. <br />City Engineer Westby described traditional funding options for street maintenance and explained <br />the need to consider alternative funding options. He noted that utilizing franchise fees to fund <br />the City's long -term SMP would create a consistent funding source that can also fund <br />maintenance at its prescriptive time /schedule. He acknowledged that franchise fees are <br />essentially taxes and if supported by the City Council, staff would work with the electric and gas <br />companies to properly word the notice to residents. He recommended establishing the same fee <br />for both utility companies, noting the SMP could be funded through franchise fees along with the <br />general levy and possibly some bonding. <br />City Engineer Westby described the method used by surrounding communities to fund street <br />maintenance along with the pros and cons for identified financing methods, noting there are <br />more pros than cons with franchise fees. <br />Councilmember Tossey stated the owner of rental properties pay taxes and renters pay taxes as <br />part of their rent so he thinks it is a weak argument that franchise fees are also collected from <br />renters who use the roadways. <br />City Engineer Westby reviewed the estimated SMP funding shortfall and stated with a franchise <br />fee of $5 per utility per month for residential and $10 per utility per month for commercial, it <br />would collect $1 million annually. If the monthly franchise fee is increased to $7 for residential <br />and $13 for commercial, per utility, it would collect $1.5 million. He stated the City of Elk River <br />has adopted a rebate program for property owners who are currently paying a road assessment. <br />City Engineer Westby presented staff's recommendation for franchise fees to fund the SMP. He <br />requested City Council direction regarding its preferred funding option to help pay for the City's <br />long -term SMP. If franchise fees are to be pursued, staff requests direction on the monthly <br />amount to be charged each utility as well as a proposed sunset date for the ordinance. He noted <br />most franchise fee ordinances tend to have a 20 -year sunset date but in this case, it might make <br />sense to apply a 5- or 10 -year sunset date. It was noted that November is the soonest a public <br />hearing can be scheduled unless a special edition of the Ramsey Resident is issued. <br />Councilmember Kuzma asked if a franchise fee would fund road projects and maintenance so <br />residents would no longer be assessed for road improvements. If that is the case, residents would <br />not need to petition against the improvement/assessment. <br />City Engineer Westby stated that would be the case if the franchise fee is set high enough to <br />cover those costs. <br />Councilmember Tossey asked whether property taxes are deductable. <br />Councilmember Riley stated that is correct for a homeowner who pays taxes and itemizes but a <br />franchise fee is not tax deductable. <br />City Council Work Session / September 3, 2013 <br />Page 3 of 12 <br />