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AGENDA ITEM MEMORANDUM DATE: July 15, 2013 TO: Honorable Mayor and City Councilmembers FROM: Patrick Klaers, City Administrator SUBJECT: Franchise Fees Introduction When the City Council discussed the Capital Improvement Program (CIP) in the summer of 2012, concerns were again raised about not having sufficient funds to do all the projects that were included within the 5 year plan and to do all the projects that are needed in the long term. Later in the year, the Council approved a benefits and drawbacks associated with a franchise fee program. At that time, in October 2012, staff was directed to follow up on the possibility of establishing a utilities franchise fee. Background Earlier this year I discussed franchise fees with neighboring City Managers/Administrators and learned that Mounds View and New Brighton have existing franchise fee programs and that Shoreview was considering a franchise fee program (since approved in May, 2013). Sue Iverson, Director of Finance and Administrative Services, has worked with the Ramsey County staff and did some preliminary research on our City tax base composition. This past spring, I contacted Colette Jurek, Manager Community & Local Government Relations, for Xcel Energy to st Colette sent me some preliminary data on gas and electric revenues based on a 1% amount that was converted into a flat fee plan. The City Council discussed the possibility of establishing a franchise fee program during the s discussed. Benefits of a franchise fee program were reviewed and included: . Will generate a significant amount of revenue that could not be raised from property taxes alone. May reduce the growing pressure on taxpayers in the community for more revenues. . 15 Page of