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Equipment/Building). The park reserve fund shows the balance being near zero and the only reason the fund is not in a deficit position is due to transfers from the PIR fund. On the other hand, the PIR reserve, as shown on the attachment, has a substantial fund balance. This fund needs a high level of reserves due to the fact that the City does not issue bonds for PMP projects. This means that the City is internally financing PMP projects and the assessed portion is paid back over time usually over 7-10 years. So far, the City has been fortunate to collect a large amount of the assessments up front, but this might not always be the case. The City Council could also decide that it wants to use the PIR reserves to undertake a large trail or a large PMP improvement project; and the City Council needs to be ready if a good project/matching grant opportunity comes along. During past CIP meetings, the City Council has expressed their concern regarding the lack of funding for trails and parks and that street improvement projects were not getting completed in a timely manner. To address these concerns, the City Council looked at ways to generate additional revenues. The main funding options to generate additional revenues that the City Council discussed include: increasing property taxes (general fund levy); proposing a public referendum to fund a multi-year park and trail improvement program (bonding with a levy); and Considering an electric and gas service franchise fee program. After considering the pros and cons of these three options, the City Council decided to further explore franchise fees as a source of additional revenues for CIP projects. Franchise Fee Proposal The City Council met with our area Xcel Energy representative (Colette Jurek, Manager Community & Local Government Relations) at three work sessions in 2013 to learn more about franchise fees and to review funding options. Xcel Energy provides both electric and gas services throughout Arden Hills. Franchise fees are allowed by state law. When a franchise fee is established, Xcel Energy, as the utility provider, will pass the fee on to the customer. The franchise fee is charged to all utility customers and appears on the utility bill as a City fee. Xcel Energy will collect the franchise fees for the City and remit the money to the City on a quarterly basis. Over the last 20 years, as funding for needed city services and programs has become harder to obtain, municipal use of franchise fees has increased. Some cities use franchise fees to compensate for the loss of Local Government Aid (LGA), while other cities use franchise fees to finance capital projects such as street rehabilitation or trail improvements. Within the Xcel Energy service area about 68 cities have electric franchise fees and 27 cities have gas franchise fees. The Xcel Energy website includes a current list of all the cities in their service area that collect franchise fees. The majority of these cities are in the metro area and the list of cities with franchise fees includes our neighboring cities of 35 Page of