2015.11.10 CC Minutes - Laserfiche WebLink

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November 10, 2015 Page 4 of 9 Motion by Councilmember Burg, seconded by Councilmember Jacobsen to open the Public Hearing. 5 Ayes, 0 Nays - Motion Carried The Public Hearing was opened at 7:10 p.m. Mayor Jacobsen asked for additional comments, there were none. Motion by Councilmember Bauman, seconded by Councilmember Burg to close the Public Hearing. 5 Ayes, 0 Nays - Motion Carried The Public Hearing was closed at 7:11 p.m. Council Business 1. Consider Update to Xcel Gas and Electric Franchise Ordinances. City Manager Lotter indicated Director of Community Assets and Development Schlichting and Finance Director Davitt would be presenting this item to the Council. Director of Community Assets and Development Schlichting reported on November 26, 2002 the City Council adopted Ordinances 699, 700, 701, and 702 enacting gas and electric franchise fees. The purpose of a franchise fee is to grant Xcel Energy permission to construct, operate, repair and maintain a gas and electric distribution utility in the public ways and public grounds of the City of New Brighton. Xcel Energy is the sole provider of natural gas and electricity in the City of New Brighton. Their gas and electric utility systems occupy an estimated 84 acres of City street right-of-way and they benefit from the all-weather access afforded by the City streets that are repaired and maintained by City taxpayers. The provision of the franchise fee is it enables the City to charge Xcel Energy for their use of the street right-of-ways and other City owned property. Finance Director Davitt explained the proposed franchise fees equal 3% of Xcel's gross revenues from the New Brighton service area annually. Xcel, in turn, would pass along the franchise fee to its customers in the New Brighton service area via their utility billing. The benefit of franchise fees to pay for city services versus property taxes is franchise fees are paid by all Xcel Energy customers. Non -profits such as churches, local governments, and school districts do not pay property taxes, yet use and receive services provided by the City. Based on the Adopted Comprehensive Street Plan, the City is currently scheduled to reconstruct roughly 21 miles of streets in the next 10 years. The franchise fee increase will allow a portion of the fees collected to be used to help finance the construction of these streets, which will help lower outstanding debt. The financial impacts of the proposed changes were discussed in detail with the Council. Staff recommended approval of the proposed franchise fee increases. It was noted the increased franchise fees would be implemented in March of 2016. Councilmember Bauman asked what the City collected today in franchise fees. Director of Community Assets and Development Schlichting reported the City currently collected $500,000 annually. Councilmember Bauman did not support additional taxation through higher franchise fees. She explained that property taxes were tax deductible while franchise fees were not She feared higher franchise fees were a dangerous slope for the Council to go down. She anticipated it would be very difficult for the Council to continue to find revenue sources in the future for their high levy increases. She understood that the City could not cut services but believed the City could not continue down this road. She reported she would not be supporting the proposed franchise fee increases. Council Business 1. Consider Update to Xcel Gas and Electric Franchise Ordinances.