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programs. Current statutes do not explicitly <br />provide city authority to include those types <br />of performance conditions in a franchise <br />agreement. <br />Under current law, cities are permitted to <br />engage citizens when discussing a new or <br />renewed franchise fee arrangement in the <br />manner that best fits the community. A <br />recent legislative proposal would have <br />added a prescriptive notification and reverse <br />referendum requirement to the process of <br />imposing or renewing a franchise agreement <br />with a gas or an electric utility. <br />Response: Municipal authority to collect <br />franchise fee revenues from utilities is an <br />important and equitable mechanism to <br />offset the costs of maintaining public <br />right-of-way and to generate a return on <br />a publicly held asset. Municipal franchise <br />authority must be preserved and should <br />be expanded to allow city policy priorities <br />to be addressed through conditions in <br />franchise agreements that have the cost <br />covered by local ratepayers, where <br />appropriate, and can be accomplished <br />within the local franchise boundaries. The <br />League opposes adding a one -size -fits -all <br />notification requirement and a reverse <br />referendum procedure to the gas and <br />electric franchise fee process. In addition, <br />in situations where a local provider <br />decides to sell their operations, the city <br />must have the right of first refusal to <br />purchase the assets of the utility. <br />FF-22. Utility Valuation Transition <br />Aid <br />Issue: In 2007, the Minnesota Department <br />of Revenue revised its rules regarding the <br />valuation of electric and natural gas utility <br />property. This change in the rules resulted <br />in valuation changes for utility property that <br />dramatically reduced the amount of revenue <br />143 <br />that local governments will collect in <br />property tax from these utilities. <br />Recognizing that the communities that host <br />these utilities bear extraordinary burdens <br />connected with stress on local infrastructure, <br />public safety, and public nuisance due to the <br />presence of these facilities in their <br />communities, the Legislature created the <br />Utility Valuation Transition Aid program. <br />This program compensates host <br />communities that have lost more than 4 <br />percent of their net tax capacity as a result of <br />Department of Revenue's rule changes. <br />Currently the taxation of electric generation <br />personal property represents the best method <br />for reimbursing host communities for the <br />cost of hosting IOUs. However, a 2015 MN <br />Department of Revenue study on electric <br />generation taxation has generated proposals <br />to change the state system of taxing electric <br />generation which raise equal or greater <br />revenues for host cities. <br />Response: The League of Minnesota <br />Cities supports the continuation of the <br />Utility Valuation Transition Aid program <br />and opposes any efforts to change <br />statutory language or to divert promised <br />funds away from host communities for <br />any purpose unless statutory language <br />replaces promised funds with equal or <br />greater revenue to host communities. If <br />the Legislature does determine that it is <br />necessary to re -allocate the funds in the <br />Utility Valuation Transition Aid program <br />for another purpose, the League supports <br />other legislative efforts that would <br />compensate the host communities for the <br />economic and environmental costs of <br />hosting these facilities through <br />reimbursement from the investor owned <br />utilities. These other efforts could <br />include, but are not limited to, increasing <br />the class rate on utility property to the <br />