Agenda - Council Work Session - 05/13/2014

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CC Work Session 2. 5. Meeting Date: 05/13/2014 Title: Charter Amendment - Chapter 7: Franchise Fees Information Purpose /Background: Purpose: To review the Charter Commission's proposed changes to the amendment to Chapter 7 of the City Charter as it pertains to franchise fees. Background: The Charter Commission and the City Council have had an ongoing dialog about possible restrictions on the imposition of franchise fees. At its January 27, 2014, meeting the Charter Commission proposed to limit franchise fee revenue to an amount equal to the "increased municipal costs accruing as a result of utility operations," as opposed to allowing franchise fees for the purpose of simply raising revenue. At its February 11, 2014, work session, the Council declined to endorse the restriction on franchise fees to an amount equal to the "increased municipal costs accruing as a result of utility operations." The Council instead proposed to require a super majority (5 of 7 votes) to enact a franchise fee ordinance, or to renew such an ordinance after it terminates (with a term no longer than five years). Annual adjustments to the fees would not require a super majority vote. The Charter Commission discussed the proposed language at a meeting held on April 23, 2014. After much discussion, the Commission approved increasing the proposed super majority requirement from 5 of 7 votes to 6 of 7. The Commission agreed that the super majority would only be required when a new franchise fee ordinance is enacted or is renewed; annual adjustments because of levy changes would require only a simple majority. The Charter Commission also approved reducing the maximum total franchise fees collected from 20% of the previous year's established annual levy to 15% plus an amount equal to the amount in the budget designated for street maintenance If the budget includes $500,000 for street maintenance, then the total amount of franchise fees that could be collected is $500,000 plus 15% of the annual levy. The purpose behind the proposed change was to help ensure that general fund dollars would continue to be used for some portion of street maintenance, as opposed to being siphoned off for non - street purposes and then relying solely on franchise fees for street maintenance and reconstruction. The proposed changes to Chapter 7 of the Charter are attached, as is financial information provided by Diana Lund. Timeframe: Approximately 15 minutes. Funding Source: Responsible Party(ies): City Attorney Langel City Administrator Ulrich Outcome: