Agenda - Council - 07/28/2020 - Laserfiche WebLink

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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 (small/mall type 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 on commercial rates. 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. • Collected Fees will be deposited into a committed fund - "Pavement Management Program Fund" • Annual review by City Council of franchise fees collected, funds expended and balance remaining in Pavement Management Program Fund • Rebate Program - Discussed below • A 5-Year sunset term on all ordinances to allow a thorough review of revenues versus expenditures, to consider other potential funding sources in the future, and to make adjustments as desired or needed. A rebate program is proposed that will return the annual franchise fee to those have been assessed since 2015. The rebate program will apply to those currently paying an assessment on a street reconstruction or overlay project that was levied, starting in 2015 (first year of city's Pavement Management Program), or who paid their assessment upfront (prepaid) and would otherwise still be paying an assessment. The rebate would be capped at the lesser of the annual assessment amount or annual franchise fees paid. The rebate is no longer eligible if a property has been sold since the assessment was levied. Homeowners will need to apply for the rebate annually. See attached franchise fee rebates summary. It is important to note that the current pavement management program funding method, which again relies on a combination of special assessments and property tax levy dollars, allows property owners to petition against pavement management projects. This happened to one proposed street reconstruction project in 2018, and another in 2019, which resulted in streets in two different neighborhoods not being reconstructed, resulting in a decline in the average pavement condition across all City streets. The City rates the condition of pavement sections using the Pavement and Surface Evaluation Rating (PASER) system, which is a scale from 1 to 10 with 1 representing pavement in complete disrepair, and 10 representing a brand new pavement section. Since 2015 the PASER ratings of City streets have been trending downward (2015 = 7.50, 2016 = 7.45, 2017 = 7.21, 2018 = 6.78, 2019 = 6.07) indicating that the condition of City streets are steadily declining. Notification: The three franchise fee ordinances were introduced on July 14, 2020 and a public hearing was held. Letters were also sent out to Connexus Energy, Centerpoint Energy & City of Anoka Electric on June 11, 2020 notifying them of the city's intention of adopting a franchise fee. Observations/Alternatives: