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ARDEN HILLS CITY COUNCIL—FEBRUARY 10, 2014 4 Park and Recreation Manager Olson discussed typical park improvements stating that play structures are replaced on a 20 year cycle. The expense for these structures ranges from $40,000 - $100,000 and the structures have to remain in compliance with ADA requirements. She reported that the City has 11 play structures to maintain. She discussed the enhancements planned for Freeway Park and the expense of hard court and ball field reconstruction. It was noted that construction of a dog park could be another possible use for these funds. Park and Recreation Manager Olson reported that Arden Hills has 17 miles of City maintained concrete, bituminous and natural trails. The PTRC has recommended another 15.5 miles of pathways to be incorporated into the City's trail system. Eight miles within this system have been given a high priority for safety reasons. She indicated that the cost per mile to construct a six foot concrete sidewalk is $500,000 per mile or$800,000 - $1.25 million for an 8 to 10 foot bituminous trail per mile. City Administrator Klaers reviewed the balances of the park reserve fund and the PIR reserve fund. Due to the near zero balance in the park reserve fund, the Council has been considering options to fund park and trail improvements. The Council is looking for additional ways to generate revenues. These options include increasing property taxes, a park referendum, or franchise fees. After discussing these options, the Council expressed an interest to explore franchise fees as a source for additional revenues. City Administrator Klaers stated that franchise fees are allowed by State law and the City would coordinate the details with Xcel Energy. He reported that a number of cities have instituted franchise fees to make up for the loss of LGA, or to finance capital and street projects. He discussed the number of cities currently collecting franchise fees, noting Mounds View, New Brighton, Shoreview and Maplewood all have franchise fees. City Administrator Klaers reviewed the benefits of franchise fees noting that all utility customers would be impacted, providing the City with a broader tax base than what is covered by property taxes. He reported that 43% of the City is comprised of tax exempt properties and the franchise fees would diversify the City's revenue sources. He commented that franchise fees are a flat fee and are not based on usage. He reviewed the disadvantages of franchise fees stating that the fees can be viewed as regressive in nature and are not tax deductible. City Administrator Klaers stated that after much discussion by the Council in work session, the Council is looking at a $3.00 electrical franchise fee and a $1.75 gas franchise fee per month for residential property owners. The proposed franchise fee rates would generate $439,000 annually. Staff reviewed the franchise fee rates for commercial and industrial properties along with how a property tax increase would more adversely impact property owners over the long run. He commented that Xcel was willing to work with local business owners to establish fair and equitable franchise fee rates. He explained that if the franchise fees are approved, the Council discussed that it would not go into effect until 2015. Councilmember Holden requested further information on the PMP between the years of 2017 and 2022.