2000-10-10 - Laserfiche WebLink

Home Browse Search

I I I Council Minutes - October 10,2000 Page 6 Council Business. continued Collection of the proposed franchise fee, $465,000 annually, would begin January 1,2001. Advantages to the fee include: equitable ROW costs for users, funding vehicle for underground utilities, revenue to continue services, reduce reliance on unstable state aids, reduce dependency 011 already burdened property tax system, less out of pocket costs to taxpayers, and help to hold down property tax increases. Disadvantages include that it represents another fee to taxpayers with payment through utility billing. There are many nearby municipalities that currently charge franchise fees, and several considering implementation. New Brighton proposes to use the revenue as follows: · Street Lighting ($110,000) to pay for operation and maintenance of existing street lighting systems and $50,000 to fund future ornamental street lighting of Silver Lake Road north of 1-694 · Street Maintenance ($150,000) to pay for a portion of snowplowing, streetsweeping, street patching and crack sealing and other miscellaneous costs · Contracted Work ($50,000) to pay for portion of equipment costs associated with maintaining the ROW · Under grounding of Utilities ($50,000) to fund placing electric feeder lines underground · Further, the revenue would fund new services and programs with approximately $150,000 going to fund ROW beautification such as ornamental street lighting. Larson views this fee as a method to avoid increasing property taxes for both residential and commercial properties. Fulton said of that amount expected to be collected through the franchise fee, $315,000 would be used to reduce the City's tax levy. The remaining $150,000 would be used for special/new projects. Samuelson asked how would the franchise fee be passed backed to utility customers. Fulton said thc fee would be seen on customer's utility bills. Tax exempt properties such as schools and churches will also pay this fee through utility bills. One resident objected to the fact that utility bills also include other taxes and surcharges above the utility consumption rates. Proper noted that Xcel is very concerned about keeping rates down, especially with increased oil prices. Jim Strommen, Kennedy and Graven, is working on the City's behalf to negotiate the franchise fee, and does not believe the utility bill would apply the 6.5% sales tax on top of the franchise fee. Larson asked if there is a way to establish a base line rate which will not be affected by fluctuating oil prices. Strommen agreed that the City has many options available during negotiations with Xce1. Samuelson asked ifthe fee will remain at 2.5% for the length of the contract. Strommen does not expect the fee to exceed 2.5%. Brian Pletscher, 631 Old Hwy 8 NW, asked if property taxes will be reduced due to this fee. Fulton said Council recently approved a minimum levy increase of 11 % for next year. Since the City is fully developed, there is an increasing reliance on property taxes, however, the impact of the franchise fee will decrease the levy maximum amount by 3%. Fulton added that there is currently no legal system established to apply franchise fees to telecommunications companies. Council Business Franchise Fee Discussion