Minutes - Council Work Session - 06/09/2020

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Finance Director Diana Lund reviewed the staff report. Finance Director Lund stated 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 program would be re-evaluated after five years. The City Council held a work session on May 12, 2020 to discuss Pavement Management Plan funding options and to determine a preferred option to fund road repair and maintenance over the next five years. The consensus of the City Council at this work session was that staff should focus on the franchise fee option,but that they would also like to see the effect if the roads were funded 100% via the tax levy. Finance Director Lund reviewed the proposed franchise fee ordinances, impacts, and timeframe required for implementation of a franchise fee. The documents reviewed included: Calendar, Proposed Franchise Fee Ordinances, Calculation of Franchise Fee Needed based on 2021-2029 CIP Project Costs, Franchise Fee Revenue Generated, Special Assessments Assessed, Net effect on tax rate if fully levied to taxes, and Effect on Taxes vs Franchise Fee: Breakeven Point. Road funding options discussed included 100% property tax, property tax & franchise fee and full franchise fee. Mayor LeTourneau commented on the importance of having a sustainable program that can be used to maintain the road system. He believed that the seven-dollar option would be the best fit and that the tax levy option could be easily cut in the future which would place the City back in the same situation. Councilmember Musgrove referenced the administrative costs that were factored in at ten percent. Finance Director Lund stated that the administrative costs were estimated at five to ten percent and therefore 10 percent was used. Councilmember Musgrove asked to discuss the rebate. Finance Director Lund provided background information on the rebate element, which would be factored into the five-year plan. Councilmember Musgrove commented that she did not support the rebate. She stated that people will have to understand that the City is changing the program but will not receive a rebate for the assessments they have paid. Councilmember Riley commented that during the last five years, some property owners have been charged thousands of dollars. He noted that those property owners were allowed to spread that assessment across five to ten years, therefore those people are still paying that assessment and should not be made to pay the franchise fee during this five-year period. Councilmember Musgrove noted that those people also had their road improved and enjoyed that improvement. City Council Work Session/June 9,2020 Page 2 of 5