2.4.
CC Work Session
- Meeting Date:
- 02/11/2014
Information
Title:
Charter Commission Feedback Regarding Franchise Fees
Purpose/Background:
Purpose: The purpose of this report is to discuss some alternatives proposed by the Charter Commission for an amendment to the City Charter in regard to franchise fees.
Background: The Charter Commission met on October 21, 2013, to discuss the pending franchise fee ordinances. After discussing various revenue issues, the Commission approved an amendment to the Charter to be submitted to the Council. The proposal added language as follows: Subject to any applicable state statutes, the council may by ordinance regulate and control the exercise of any franchise, including the maximum rates, fares, or prices to be charged by the grantee, except that any franchise fees imposed under applicable state statutes must be limited to defraying increased municipal costs accruing as a result of utility operations and may not be used to raise general revenue. (The rest of Section 10.4 would remain the same.)
This amendment was submitted to the Council pursuant to Minnesota Statutes section 410.12, subdivision 7, which allows the Council to enact the amendment by ordinance. The required public hearing was held by the Council on December 10, 2013, at which, the Council rejected the Charter language proposed by the Charter Commission and recommended alternative language for consideration.
Prior to that hearing, a joint meeting with City Council and the Charter Commission was held on Tuesday, November 19 for the purpose of discussing viable options for funding sources for road reconstruction. Funding Sources mentioned were: Franchise Fees, Assessments, General Property Tax Levy, General Obligation Bonds, TIF, Grants and Use of MSA Dollars. It was determined the top three most viable options were Franchise Fees, Assessments, and General Property Tax Levy. Pros and cons were discussed for each of the three options as well as solutions.
The common interest was in establishing limits to the use of franchise fees. The Council and Charter Commission discussed drafting language for the Charter that would place a moratorium on assessments while franchise fees are in place, placing a limit on franchise fees - amount and length of time, and reporting requirements (e.g., annual report on franchise fees).
Also attached is the ordinance amending the Charter recommended by the Charter Commission.
The Charter Commission considered the proposed Council alternative language at their meeting on January 27. They concluded their discussion by requesting that the Council provide feedback on each of these three options:Background: The Charter Commission met on October 21, 2013, to discuss the pending franchise fee ordinances. After discussing various revenue issues, the Commission approved an amendment to the Charter to be submitted to the Council. The proposal added language as follows: Subject to any applicable state statutes, the council may by ordinance regulate and control the exercise of any franchise, including the maximum rates, fares, or prices to be charged by the grantee, except that any franchise fees imposed under applicable state statutes must be limited to defraying increased municipal costs accruing as a result of utility operations and may not be used to raise general revenue. (The rest of Section 10.4 would remain the same.)
This amendment was submitted to the Council pursuant to Minnesota Statutes section 410.12, subdivision 7, which allows the Council to enact the amendment by ordinance. The required public hearing was held by the Council on December 10, 2013, at which, the Council rejected the Charter language proposed by the Charter Commission and recommended alternative language for consideration.
Prior to that hearing, a joint meeting with City Council and the Charter Commission was held on Tuesday, November 19 for the purpose of discussing viable options for funding sources for road reconstruction. Funding Sources mentioned were: Franchise Fees, Assessments, General Property Tax Levy, General Obligation Bonds, TIF, Grants and Use of MSA Dollars. It was determined the top three most viable options were Franchise Fees, Assessments, and General Property Tax Levy. Pros and cons were discussed for each of the three options as well as solutions.
The common interest was in establishing limits to the use of franchise fees. The Council and Charter Commission discussed drafting language for the Charter that would place a moratorium on assessments while franchise fees are in place, placing a limit on franchise fees - amount and length of time, and reporting requirements (e.g., annual report on franchise fees).
Also attached is the ordinance amending the Charter recommended by the Charter Commission.
1) proceed straight to the voters with the original amendment proposed by the Charter Commission,
2) the alternative City Council language, plus adding the Charter Commission amendment to go into effect at the end of the initial five year term,
3) the alternative City Council language, plus adding the Charter Commission amendment to go into effect at a point something less than five years (say 1-4 years).
The minutes of the Charter Commission are attached for review of the discussion surrounding these broad concepts, plus some minor technical changes they would recommend.
Staff is of the opinion that, in any option, adding the term "...defraying increased municipal costs accruing as a result of utility operations..." in the current Charter Commission proposal is difficult to interpret and, therefore, might be narrowly or broadly defined, and subject to criticism from both sides of the issue. Consequently, staff would recommend more quantifiable language if any restrictions to the fee were to be put in place.
A five year term is the minimum recommended to adjust the City's tax rate to accommodate a long term road maintenance expenditure. The longer the initial term, the longer period of time the City would have to designate alternative revenue, cut expenses, develop growth, and or take advantage of potential future state authorized funding options (e.g., a street utility).
Timeframe:
15-20 minutes
Funding Source:
Not Applicable.
Responsible Party(ies):
City Administrator.
Outcome:
Direction from the City Council in regard to the Charter Commission proposals.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 02/06/2014 06:15 PM |
| Kurt Ulrich | Kurt Ulrich | 02/06/2014 06:16 PM |
- Form Started By:
- Kathy Schmitz
- Started On:
- 02/06/2014 02:53 PM
- Final Approval Date:
- 02/06/2014