Adopt Ordinance #21-16 Repealing Ordinances 20-11, 20-12, and 20-13 in regard to Franchise Fees on Centerpoint Energy, Connexus Energy and City of Anoka Electric

On July 28, 2020 The City of Ramsey Adopted Ordinances #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.  The purpose of the franchise fee was to provide a reliable, dedicated funding source for the City's Pavement Management Program which consists of road reconstruction and road overlay projects in the City. 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.   Since October of 2020, the City has been using a franchise fee dedicated as a long-term reliable funding source for the reconstruction and overlays of streets throughout the city.  Franchise Fees The  franchise fees of $7.00 per utility, or $14.00 per month on residential users that have both electric and gas utilities are currently in place.  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.  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 overlays (see attached franchise fee revenues needed that shows how the $2M amount was determined).  Projects were to be constructed based upon the annual revenue collected from the franchise fees and took away the reliance on special assessments and the issuance of debt. 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. Going Forward Funding for future Pavement Management Projects is to be discussed and identified by the Council during the annual budget/levy process that is currently undergoing with a preliminary budget/levy to be adopted at the city's regular meeting of September 28, 2021.

At the July 13, 2021 City Council Meeting, Ordinance # 21-16 was introduced to repeal the current franchise fee on gas (Centerpoint Energy) and electric (Connexus Energy and City of Anoka Electric).  Per City code, a second reading and adoption of said ordinance is required at a future council meeting. 

Alternatives:  Alternative #1:  Motion to Adopt Ordinance #21-16 Repealing Ordinance #20-11 which implemented a gas franchise fee on Centerpoint Energy for providing gas service within the City of Ramsey, #20-12 which implemented an electric franchise fee on Connexus Energy for providing electric service within the City, and #20-13 which implemented 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 adoption.

Motion to waive the Charter requirement to read the ordinance aloud and adopt Ordinances #21-16 Repealing Ordinance #20-11 which implemented a gas franchise fee on Centerpoint Energy for providing gas service within the City of Ramsey, #20-12 which implemented an electric franchise fee on Connexus Energy for providing electric service within the City, and #20-13  which implemented an electric franchise fee on the City of Anoka Electric for providing electric service within the City of Ramsey.

Roll Call Vote:
Councilmember Heineman
Councilmember Musgrove
Councilmember Howell
Councilmember Specht
Councilmember Woestehoff
Councilmember Riley
Mayor Kuzma