Agenda - Council - 10/22/2013 - Laserfiche WebLink

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diverted to other uses. In addition, the ideal funding source should be viewed by taxpayers as being reasonably beneficial, equitable and transparent to allow taxpayers to better understand what they are paying, as well as where it is being spent. Other funding sources have been researched. Federal and state grants, Public -Private Partnerships, special legislation (such as the recently proposed Street Improvement Districts), and franchise fees are other funding sources that have been identified as potential options. Of these funding sources, only franchise fees offer a reliable, dedicated funding source to ensure that street maintenance projects can be completed on a regular schedule, thereby allowing the city to maintain city streets as economically as possible and ensuring that all streets can be maintained to an average PASER rating of 6.5 as identified in the city's Strategic Action Plan. In addition, franchise fees would be collected from property renters as well as owners, and also from tax-exempt properties, which seems reasonable given that renters also city use streets and tax-exempt properties are often significant traffic generators. Franchise Fees Cities are authorized by State Statute 216B.36 to impose franchise fees on energy utilities operating within the public right-of-way to conduct their business. Utility companies typically pass franchise fees through to their customer via their billing, and include a note stating that the fee is being imposed by the city. If franchise fee ordinances are adopted, staff will work with the utility companies to clearly communicate to their customers (as identified in the draft ordinance) that the fee is being imposed by the City of Ramsey to help pay for the city's long-term street maintenance program to ensure that there is adequate transparency. By consensus, the City Council provided the following assurances/conditions to staff that must be met before any franchise fee ordinances would be considered for adoption: • Special assessments must no longer be levied to help fund street maintenance projects. • Franchise fee revenues must be dedicated only to long-term street maintenance program projects. • Five (5) year sunset terms must be used for any new franchise fee ordinance • An equitable rebate program must be implemented to prevent anyone paying an assessment levied with a street maintenance project, or who pre -paid their assessment but would otherwise still be paying, from paying franchise fees on top of assessments. • Franchise fee revenues must cover the shortfall amount of $1,700,000 so each gas and electric utility would need to be charged $8 per month per account across all commercial, industrial, and residential properties. These conditions have all been addressed by adding specific language for each in the franchise fee ordinances. The special assessment rebate program is proposed to work as follows. Anyone currently paying a special assessment for a street maintenance project and is served by electric and/or gas utilities would be required to pay their special assessment and franchise fees throughout the year, then staff would calculate their rebate at the end of the year based on the lesser annual amount paid for franchise fees or special assessments. This process would continue to occur annually over the remaining term of their assessment, regardless if the assessment was pre -paid or is currently being paid through property taxes. All rebates would then be applied as a credit to the fourth-quarter municipal utility bill. The rebate program would need to be administered by City staff since the private utilities are not able to adjust their residential class rate codes. This would require a fair amount of staff time to implement and maintain on an on -going basis. Based on accountings received to date from Anoka Municipal Utility, CenterPoint Energy, and Connexus Energy, a monthly franchise fee of $8 per each electric and gas utility would fully fund the $1,700,000 annual shortfall needed for the 5 year street maintenance program. However, at the time this case was prepared, staff had not yet received current account information from CenterPoint Energy, though it is not anticipated that CenterPoint's current number of customers is less than the number of customers used to estimate projected franchise fee revenues. Staff also needs to review all utility account listings to make sure only Ramsey residents are being counted since the utility accountings may include several residents in neighboring cities but again, this should not significantly impact projected revenue amounts. It should also be noted that anyone served by both electric and gas utilities would be charged $16 per month, unless they are served by multiple gas meters in which case they would be charged multiple gas franchise fees. Also,