Minutes - Council - 06/24/2003 - Laserfiche WebLink

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Case #3: l~,nblic Hearing: Introduce Ordinances Implementing a Gas Franchise Fee on CenterPoint Energy, Minnegasco, a Division of CenterPoint Energy l~esources Corp., a Delaware Corporation, for Providing Gas Energy Service wiithin the City of Ramsey, and Implementing an Electric Franchise Fee on Ctonnexus Energy, a Minnesota Cooperative, and the City of Anoka, a Municipal Electric Distributor, for Providing Electric Energy Service within thee City of Ramsey, Minnesota Mayor Gam~ e~lled the public hearing to order at 7:24 p.m. Presentatioi Finance Offi :er Lund stated that ordinances were presented to the City Council for review and discussion a~ th6ir regular meeting of May 27, 2003. Since that time, information regarding franchise fee~ ha been subm;tted to the public in the Ramsey Resident. The effected companies of ConnexusfEn{rgy, City of Anoka, and CenterPoint Energy, Mirmegasco were mailed copies of the City's prOpoSed ordinances. In dealing with the revenue shortfalls placed upon the City by State aid cut~ an~t levy limits, the City is proposing the adoption of a franchise fee as a possible revenue sou~Jlee, i Franchise ordinances currently exist with Connexus Energy, City of Anoka Electric, andlMl~lwest Gas (now known as CenterPmnt Energy). W~thin the electric ordinance there is a fee!proVision in consideration of the rights granted to the electric distributors under the ordinance. 'l~he Midwest Gas (CenterPoint Energy) ordinance was silent on a possible franchise fee and a revCediord~nance was introduced to include language regarding franchise fees. The gas franchise wil[ne~d to be adopted prior to the adoption, of the franchise fee ordinance. Franchise fees can be set ir~ three ways: a percent of the utility s gross revenues within the City; a charge per unit of en~. rg~ used; or a flat money fee for every meter or property in the City. The franchise fees that hav~ b~n discussed with all companies is a percentage of gross revenues. After the franchise fee[ pragrams are in place, the companies will make quarterly payments to the City. The City of Ramsey was proposing a franchise fee of 4.5 percent of gross revenues on all users. At 4.5 perce~t, tlie City would receive approximately $525,000 in franchise fee revenue per year. Franchise feefrev~nues would be used for the City share of street maintenance costs and the labor associated wiih t~e maintenance and repair of City streets. Staff feels that using a percentage rate on all users Woul~t be more equitable than a flat rate for every property in the City or a per-unit charge of en~gylused. A comparison of what franchise fees may mean to the typical resident versus a pro~ert~ tax adjustment is difficult to make due to the variation in home valuations. Franchise fe{s ~vill relate specifically to each individual homeowners' use and lifestyle. However, forlinf0rmation and discussion purposes, an "average" homeowner may pay $75 per year for gas a~d ~:lectnc franchise fees. If the amount were lewed to the property taxes it would cost a homeo~vne~ $103 per year if their house was assessed at $150,000. Citizen Input~ Gary Reiman~, li8008 Waco Street NW, Ramsey, stated that he understood that the State of Minnesota ha~ cui the amount of money the City receives but adding a franchise fee is a taxation without representation. He stated that franchise fees are a hidden tax and it was unfair to the City [ City Council/June 24, 2003 Page 9 of 37