Resume Consideration of Pending Motion Regarding Franchise Fees

The purpose of this case is to resume consideration of a pending motion regarding Franchise Fees.   The pending motion was made at the February 13, 2019 Charter Commission meeting, as follows:  Motion by Commissioner Bendtsen, seconded by Commissioner Anderson, to table the motion until a study can be commissioned.

As background, the tabled motion read as follows:  Motion by Chairperson Field, seconded by Commissioner Sivertson, that Charter Chapter 10, Section 10.4 would be amended to state, “except that any franchise fees imposed under applicable State Statute must be limited to defraying increased municipal costs accrued as a result of utility operations, and may not be used to raise general revenue.”  Following this motion, Chairperson Field stated that he would entertain a motion to table this action until a study can be completed. 

The study has since been completed (report attached)  and the Commission may resume consideration of the motion.  

An attached spreadsheet regarding Franchise Fees has been provided by Charter Commission member Jim Bendtsen.  In addition, the Finance Director Lund's spreadsheet is attached, along with the road funding study report and presentation completed by the University of Minnesota. 

Charter Commission Case from February 13, 2019
The Ramsey City Council has been discussing road funding options, most recently again beginning in March 2018.  The Council reviewed draft scenarios of possible future debt for the next 10 years which included funding for roads, capital equipment and a public works campus.  Staff also presented the net impact if road related debt was removed and other funding was identified. The Council expressed the desire to have input from the public on road funding options as well. 

Subsequently, the City contracted with WSB Engineering to do a review of financing options and a citizens engagement process over an eight-month period to identify the best funding options.  It was felt that this period of time would allow for a thorough discussion among all stakeholders.  The proposal stated that road funding options to be discussed include those currently being utilized.  Currently the city uses shared funding between the City tax levy and special assessments.  The city also wanted to explore alternative options such as the utility franchise fees. 

The Council formally approved a contract with WSB Engineering to administer the community discussion on road funding options at their August 28, 2018 meeting.  The first open house to discuss road funding options was held in January 2019 with members of the various city commissions.  Additional meetings are scheduled on March 20 and 21 to continue the discussion and to respond to questions from the community. 

Prior to adopting the current assessment policy for road construction during 2013-2014, the city explored the use of franchise fees.  Alternatives are being considered given the fact that the city now better knows the actual cost of projects, and has data to analyze the impact of the assessment method on residents and overall city debt levels.

Previously, the Charter Commission was involved with the discussion in terms of potential charter language that would define how franchise fees might be utilized by the city.  This effort was abandoned after the City Council implemented an assessment policy for road construction in lieu of franchise fees.  Charter Commission Chairperson Field inquired whether or not there are financial resources available to the Charter Commission to request an independent study on the same issue - road funding alternatives. 
  
According to State Statutes (sec. 410.06) The members of such commission shall receive no compensation, but the commission may employ an attorney and other personnel to assist in framing such charter, and any amendment or revision thereof, and the reasonable compensation and the cost of printing such charter, or any amendment or revision thereof, when so directed by the commission, shall be paid by such city.  The amount of reasonable and necessary expenses that shall be so paid by the city shall not exceed in any one year the sum of $10,000 for a first class city and $1,500 for any other city; but the council may authorize such additional charter commission expenses as it deems necessary. 

Therefore, statute allows the Charter Commission to spend money only on Charter amendments and that amount is limited to $1,500, unless the Council approves more.  There is no funding to use for non-amendment purposes.  The Charter may also make a recommendation to the City Council to study certain aspects of road funding that they believe are not currently being addressed in the current discussion.

Staff contacted the League of Minnesota Cities to ask about any studies that may already have been done with regard to road funding options.  The response received was that the city is limited to funding through property taxes, special assessments and franchise fees.  There are no other road funding options currently available. 
 

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Based upon discussion.