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ARDEN HILLS CITY COUNCIL WORK SESSION JULY 15, 2013 4 Ms. Jurek reviewed the proposed flat rate further with the Council and discussed the history of franchise fees. She commented that the flat rate allowed residents to better budget for their heating and electrical bills. She explained that the flat rate would be charged once per meter on a premise. Councilmember Holden expressed concern that all properties would be charged a flat fee by classification and that the revenues generated would not be based on user consumption. Discussion ensued regarding how apartment complexes, Presbyterian Homes, and Bethel University would be charged franchise fees. Ms. Jurek explained that if a franchise fee were pursued, a bilateral agreement would be signed between the City and Xcel after all terms were agreed upon by both parties. She commented that the fee would have to be fair and balanced and not be burdensome to any user within the City. Councilmember McClung stated that originally he was supportive of the franchise fee, but after reviewing the information further, he has concerns with the regressiveness of the plan. He did not feel it was fair that a flat rate was being charged to all homeowners. He wanted to see the rate vary by use or by home value. Councilmember Holden asked if residents on energy assistance would be charged the fee. Ms. Jurek stated that this was the case. Councilmember Holmes questioned if two residential franchise fee rates could be established for large users and small users. Ms. Jurek stated that this would not be possible. Councilmember Holden supported the flat rate due to the fact the proposed park improvements would benefit each residential property regardless of their value in the same manner. She commented that homes with higher property values were already charged higher property taxes. Mayor Grant discussed the proposed flat rate and how this would affect Arden Hills' residents. He questioned if commercial properties could be charged a higher flat rate than residential properties. Ms. Jurek stated that there is a little bit of flexibility in this area. She questioned what level of funding the City was hoping to generate. She reported it would take Xcel approximately 60 days to set up the franchise fee on the Arden Hills bills. Mayor Grant estimated that the City might want to generate approximately $600,000. Councilmember Holden was in favor of increasing the rate to 2.9% which would raise approximately $650,000.