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Mounds View, New Brighton, and Shoreview. The municipality on the list with the lowest monthly fee at $1.25 per household is Maplewood and the highest monthly fee at $7.00 per household is Forest Lake. The approach to charging franchise fees that Xcel Energy approves of is the conversion of the fee to a flat amount per month for each customer classification. When comparing franchise fees as a revenue source to property taxes or a public referendum, the following are viewed as advantages: Franchise fees cover a wider base than property taxes. All customers pay the fee, including tax exempt properties (and the City has a significant amount of tax exempt properties). Franchise fees will diversify . Franchise fees are a reliable and steady source of revenue that is not subject to state restrictions such as levy limits. Franchise fees are charged as a flat fee; and all households pay the same monthly amount regardless of property values or regardless of how much electricity or gas is used in summer or winter. Businesses and residents in newly constructed buildings or homes contribute immediately; this eliminates the typical one or two year lag time between receiving municipal services and paying property taxes. Franchise fee revenues will increase as the City grows. On the other hand, the following points can be viewed as disadvantages: Unlike franchise fees on a service like cable television where the customer may have some choices to receive the service or not; most businesses and homes need both electric and gas services. As franchise fees are charged on a flat fee basis, they could be considered regressive in nature whereby a home that is valued at $150,000 pays the same amount as a home that is valued at $500,000. Unlike property taxes, franchise fees are not tax deductable. After evaluating the overall City CIP situation, the City Council decided last October to look at a residential based franchise fee of $3.00 per month for electric service and $1.75 per month for gas service. According to information provided by Xcel Energy, these rates would generate approximately $439,236 annually and the breakdown by customer classification for the revenue generated is shown in Attachment G. The total franchise fee proposal is $4.75 for both electric and gas services. Some of the percentages that can be derived from the figures in this proposal are listed below: The electric fee generates 73% of the total revenues; and the gas fee generates 27% of the total revenues. The electric fee of $3.00/month is 63% of the $4.75 total proposal; and the gas fee of $1.75/month is 37% of the $4.75 total proposal. 34% of the electric revenue comes from the residential classification; and 48.5 of the gas revenue comes from the residential classification. When combined, 38% of the electric and gas revenue comes from the residential classification. 45 Page of