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Attachment B <br />PRESENTATION ITEM —4E <br />'It <br />,-ARZEN HILLS <br />105 1 DIU [I].7_1►1111A/ <br />DATE: September 18, 2023 <br />TO: Honorable Mayor and City Councilmembers <br />FROM: Dave Perrault, City Administrator <br />SUBJECT: Franchise Fee Discussion <br />Budgeted Amount: Actual Amount: Funding Source: <br />N/A N/A N/A <br />For Council Consideration <br />Council should consider providing direction on next steps relating to the Franchise Fee Discussion. <br />Background <br />At the August worksession, the City Council received a presentation from Ehlers on possible use of <br />Franchise Fees on electric and gas bills in the City. The memos from that meeting are attached <br />under Attachment A for background. The idea of Franchise Fees was raised as part of the need to <br />fund ongoing capital projects in the City. At the July worksession, the City Council discussed the <br />Capital Improvement Program (CIP) and noted shortfalls in the Public Safety and Equipment fund. <br />One solution to this problem was to consider raising approximately $400,000 in Franchise Fees and <br />distributing between the PIR Fund, Public Safety Fund, and Equipment Fund. This would create <br />stability in the Public Safety and Equipment Funds and provide an ongoing revenue stream for the <br />PIR Fund. The outlook of each fund can be found below with no changes, as well as, if we were to <br />introduce Franchise Fees to the different funds. Note: for the PIR Fund this does not include the <br />Lake Jo Blvd Trail or the Old Highway 10 Trail, and for Public Safety it does include the proposed <br />fire station starting in 2026. <br />In order to raise $400,000 in Franchise Fees, Xcel projects it would require a residential monthly <br />fee of $2.00 on electric and $2.25 on gas, for a total of $51 annually between the two (Attachment <br />B outlines the proposed rates, other associated rates, and generated revenue). Should the Council <br />decide not to charge Franchise Fees and pay for these expenditures with a tax levy increase, a <br />comparable levy increase of $400,000 would equate to an annual increase between $55 and $60 on <br />a median priced home ($469,000). The question was also raised at the worksession if either a fee <br />on electric or gas would be more equitable. Xcel did look at this question and did not have a <br />Page 1 of 4 <br />