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ARDEN HILLS CITY COUNCIL—OCTOBER 28, 2024 4 MOTION: Councilmember Monson moved and Councilmember Rousseau seconded a motion to Authorize Purchase and Installation of Playground Equipment at Freeway Park and Purchase of Additional Equipment for Arden Oaks Park. The motion carried (5-0). B. Motion to Approve 2024 3rd Quarter Financials Councilmember Holden reported the City receives its property tax payments from the County in April and October. She indicated the 3`d quarter financials only went through September 30. She stated the City's revenues would go up significantly in October once the City's second property tax payment was made by the County. Councilmember Monson asked if the City would have a revenue shortfall in 2024. Finance Director Yang commented there would be a revenue shortfall in 2024 due to a decrease in building permit revenues. She anticipated this amount would be $150,000 to $200,000. She explained after further forecasting she understood there would be some savings on the expenditure side, which would lead the City to be on budget through the end of the year. MOTION: Councilmember Holden moved and Councilmember Monson seconded a motion to Approve 2024 3rd Quarter Financials. The motion carried (5-0). 10. PUBLIC HEARINGS A. Ordinances for Implementation of Electric Franchise Fees and Rcne-'i'al of Existing Electric and Gas Franchise Agreements Finance Director Yang stated the Minnesota Public Utilities Commission regulates public utilities and has authorized cities to impose a franchise fee on energy providers for utilization of public rights-of-way through a utility franchise agreement. When a franchise fee is levied on a private utility, it is passed on directly to customers and itemized on customer bills. These fees are invoiced and collected from all property classes, including residential and commercial property, public agencies, and non-profit businesses. Franchise fees are an equitable way to raise funds for important infrastructure needs. A franchise fee can only be implemented through a franchise agreement with the local energy provider (Xcel Energy). There are over 370 franchise agreements for electric and/or gas services that have been established throughout Minnesota, and the City of Arden Hills has a long history of partnering with Xcel Energy with both gas and electric franchise agreements in place for many years. Finance Director Yang reported the City is anticipating future gaps in funding for infrastructure needs. These gaps are largely due to increased costs for the new Lake Johanna Fire Department (LJFD) station project,trail projects, and an equipment needs schedule. . Finance Director Yang explained staff held a Capital Funding Update Open House on Saturday, April 20th at City Hall, sharing the anticipated future gap in capital funding for the City. Staff shared information on the City's current infrastructure investments and priorities, revenue sources, and the need for the City to generate additional revenue to fill the gap. Staff reviewed franchise fees and property tax levies as financing options and their impact to property owners. A survey was released, thereafter, for City residents and businesses to provide additional input.