Introduce Ordinance #21-16 Repealing Ordinances 20-11, 20-12, and 20-13 in regard to Franchise Fees

At the June 22, 2021 City Council meeting, the council adopted a 2021-22 Strategic Plan that included an action item to bring forward Council action to repeal the franchise fee ordinances by year-end 2021.  Subsequently, two Council members requested that this item come before the Council for consideration at the July 13, 2021 Council meeting.  Background: In  2014, the Ramsey City Council adopted a Pavement Management Program that relied on special assessments and an annual property tax levy to support the effort.  It was concluded that this method was the best approach at the time and that the funding would be re-evaluated after five-years.  To continue the current pavement management program, the city will need to consider ways to supplement the program via annual budget discussions. Since October of 2020, the City has been using a franchise fee dedicated as a long-term reliable funding source for street repair and maintenance.  The program is known as the Pavement Management Program and support ten years of planned city street repair over ten years.  The city anticipated revenue of approximately $2 million per year of Franchise Fee revenue to cover road reconstruction and maintenance.  Projects were constructed based upon annual revenue and there is no dependence on future franchise fee revenue for debt service. Cities are authorized by state statute to impose franchise fees upon utilities operating within the public right-of-ways.  The City currently has franchise ordinances with Connexus Energy, City of Anoka (Anoka Electric) and Centerpoint Energy.  Within each of these ordinances is a fee provision in consideration of the rights granted to the electric and gas distributors.  These fees are typically passed along to the consumer in the utility company's monthly billings with a separate line item noting that the fee is being imposed by the city. The City currently has a franchise fee of $7.00 per utility, or $14.00 per month on residential users that have both electric and gas utilities.  This equates to $168.00 per year for residents connected to both gas and electric utilities.  Commercial/Industrial users are charged a per meter fee based on meter size.  Most churches (small/mall type are charged $20 per month $10 per utility), which is the same as a small commercial fee.  See attached franchise fee revenue generated sheet for more detail on commercial rates.  No more than one gas and one electric franchise fee is charged per address.  If a property was to contain more than one meter, the franchise fee is calculated based off of the largest meter only.  An estimate of the total revenues projected in 2021 are attached. A rebate program is currently in-place that rebates the annual franchise fee to those that have been assessed since 2015.  The rebate program applies 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 is capped at the lesser of the annual assessment amount or annual franchise fees paid.  Homeowners need to apply for the rebate annually, and they will be eligible for a full rebate of the franchise fee in 2021 if the ordinance remains in place until year-end.

This item is presented as an ordinance at the July 13, 2021 council meeting, and per City code, requires a second reading and adoption at a future council meeting. 

Alternatives:
Alternative #1:  Motion to Adopt Ordinances #21-16 Repealing Ordinance #20-11 implementing a gas franchise fee on Centerpoint Energy for providing gas service within the City of Ramsey, #20-12 implementing an electric franchise fee on Connexus Energy for providing electric service within the City, and #20-13 implementing an electric franchise fee on the City of Anoka Electric for providing electric service within the City of Ramsey, with an effective date of December 31, 2021.

Alternative #2:  Motion of other.

Funding for future Pavement Management Projects is to be discussed and identified by the Council during the annual budget process. 

  The ordinance is presented for introduction.

Motion to Adopt Ordinances #21-16 Repealing Ordinance #20-11 implementing a gas franchise fee on Centerpoint Energy for providing gas service within the City of Ramsey, #20-12 implementing an electric franchise fee on Connexus Energy for providing electric service within the City, and #20-13 implementing an electric franchise fee on the City of Anoka Electric for providing electric service within the City of Ramsey.