Agenda - Council - 08/12/2019 - Laserfiche WebLink

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Traditional Funding Sources Traditional funding sources for street maintenance projects have included the use of general fund tax revenue, special assessments, bonds, and Municipal State Aid (MSA) funds. Some of these traditional funding sources are becoming less reliable as funding sources due to shrinking budgets resulting in fewer dollars being budgeted annually for pavement management projects, and due to increased public opposition to the use of special assessments. Special Assessment Concerns The City of Ramsey's Charter allows property owners to petition against projects that utilize assessments, making it harder and more expensive to apply special assessments as a funding source. This leads to significant project delays and cost increases, making it more difficult to reliably and economically deliver assessment projects. For example, two street reconstruction projects were recently cancelled due to petitions, one in 2018 and one in 2019, resulting in more than $28,000 in sunk costs. Over the last 5 years, special assessments were levied against abutting property owners on pavement overlay and street reconstruction projects. The amounts of the assessments varied from several hundred dollars for overlay projects to over six thousand dollars for street reconstruction projects. Over the years, assessments have been challenged by several property owners, and the City has typically completed special benefit consultation reports to verify that the assessment amounts are justifiable. However, these reports cost several thousand dollars each which increase project costs, and therefore assessments. Optional Funding Sources Optional funding sources were recently explored by staff including the use of federal and state grants, Public -Private Partnerships, special legislation, and franchise fees. Of these, only franchise fees would provide the reliable, dedicated funding source needed to ensure that pavement management projects could be completed on a regular schedule, allowing the city to maintain city streets as economically as possible. Public Engagement on Funding Source Options In 2018, WSB and Associates was hired to assist the City is engaging the public and seeking public input on available pavement management program funding options. This process included providing information to residents and businesses via direct mailings, the City's website, and by conducting a series of three public workshops. In summary, public input did not appear to significantly favor one funding method over another. Franchise Fees Cities are authorized by state statute to impose franchise fees upon utilities operating within the public right-of-ways. Franchise fees are charged to private utilities that benefit from using public right-of-ways to conduct their business. These fees are typically passed along to the consumer in the utility company's invoices, along with a note stating that the fee is being imposed by the city. Franchise fee revenues amounting to approximately $1,900,000 are required to fully fund all of the pavement management program projects identified in the attached 5 year Capital Improvement Plan, which assumes franchise fees for the funding source. This requires a minimum monthly fee of $7 per each electric and gas utility provider in the City of Ramsey including Anoka Electric, CenterPoint Energy, and Connexus Energy. This equates to $14 per month or $168 per year for residents using both electric and gas utilities. Commercial users are proposed to be charged a per meter fee based on meter size. Churches are proposed to be charged $20 per month ($10 per utility), which is the same as a small commercial fee. See attached franchise fee rate sheet for more detail. There will be no more than one gas and electric franchise fee charged per address. If a property was to contain more than one meter, example: commercial properties the franchise fee will be calculated based off of the largest meter only. Franchise fees can be collected from property renters as well as owners, and also from tax-exempt properties, which seems reasonable since such properties are often significant traffic generators. The following terms and conditions were incorporated into the attached draft ordinances based on input from City