Agenda - Council - 06/23/2020 - Laserfiche WebLink

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CC Regular Session Meeting Date: 06/23/2020 By: Diana Lund, Finance 7. 1. Information Title Motion Calling for a Public Hearing on the Proposed Franchise Fee Ordinances Purpose/Background: In 2014, the Ramsey City Council adopted a Pavement Management Program that relied on assessments and an annual property tax levy to support the effort. It was concluded that this method was the best approach at the time and that the funding would be re-evaluated after five -years. A successful long-term pavement management program requires a dedicated, reliable funding source. The ideal funding source for such program would provide the amount needed year -after -year to fund the program and would prevent it from being diverted to other areas. The ideal funding source would also be equitable and transparent so taxpayers can fully understand how much they are paying, what they are paying for and where the funds are spent. The City is currently in the second, five-year time period of the Pavement Management Program. Based on the city's current Capital Improvement Plan, the city needs an average of $2.1 million to fund the current method of funding of the Program via Special Assessments and tax levy. The City Council is choosing to look at other possible financing methods to fund the Pavement Management Program. The option that is currently proposed for the next five-year time frame is the implementation of a monthly franchise fee. The franchise fee would provide a reliable, dedicated funding source that would ensure that the Pavement Management Program could be completed on a regular schedule. Based on the current Capital Improvement Plan, an average of approximately $1.893M would be required to fund the program (see attached calculation of franchise fees needed). The difference between the $2.1M, as noted above, and the $1.893M is in regards to the savings that would be attributed to administrative costs associated with special assessments (legal, engineering and finance). Cities are authorized by state statute to impose franchise fees upon utilities operating within the public right-of-ways. The City currently has franchise ordinances with Connexus Energy, City of Anoka (Anoka Electric) and Centerpoint Energy. Within each of these ordinances is a fee provision in consideration of the rights granted to the electric and gas distributors. These fees are typically passed along to the consumer in the utility company's monthly billings with a separate line item noting that the fee is being imposed by the city. The City is proposing a franchise fee of $7.00 per utility, or $14.00 per month on residential users that have both electric and gas utilities. This would equate to $168.00 per year for residents connected to both gas and electric utilities. Commercial/Industrial users are proposed to be charged a per meter fee based on meter size. Most 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 one electric franchise fee charged per address. If a property was to contain more the one meter, example: commercial properties, the franchise fee will be calculated based off of the largest meter only. The following terms and conditions were incorporated into the attached draft ordinances based on input from the City Council: . Collected franchise fees can only be spent on Pavement Management Program projects.