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MEMORANDUM DATE: February 10, 2014 TO:Honorable Mayor and City Council Members FROM: Patrick Klaers, City Administrator SUBJECT: Franchise Free Public Hearing Introduction The Arden Hills City Council has called for two public hearings to discuss a proposal to establish a City franchise fee on electric and gas services provided by Xcel Energy. The purpose of these hearings is to present information on the proposal and to obtain feedback from the public. Before discussing the franchise fee proposal, some background information needs to be presented on the CityCapital Improvement Plan (CIP) and why the City Council is exploring additional sources of revenues for the CIP. In this regard, Director of Finance and Administrative Services Sue Iverson and Public Works Director Terry Maurer will present information on: the funding sources for recently completed CIP projects; the current CIP for streets, parks, and trails and the non-programmed CIP projects; reserve funds; and The funding options available to the City Council if they want to do more than what is currently in the CIP. Background The CIP is a long range plan that matches up needed projects with available funds. Annually the City Council evaluates the long range CIP and adopts a five year plan. Over the past few years the City Council has expressed concern regarding having enough money for trail and park improvements while at the same time completing the needed street projects in a timely manner. This is a challenge because the main funding source that is available for the street, park, and trail improvements is the Permanent Improvement Revolving (PIR) Fund and this money tends to be used first for streets; then is used for trails, parks, and other capital expenditures that are needed. Part of the problem for funding improvements to trails and parks is due to the fact that the City has no fund balance in the park dedication reserve. New development projects 15 Page of