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A franchise fee in the range of $100,000 to $125,000 to cover General Fund deficits is recommended. <br />(Effectively, the franchise fee dollars will be used in the Infrastructure Fund and the levy dollars in a <br />corresponding amount would be available to offset losses in our General Fund.) A side note on the <br />collection of the franchise fee would be that the fee should be collected through the Infrastructure <br />Fund. Since the fee is related to the City's granting of rights -of -way use to utilities, it would be <br />logical for the fee to go to the fund that supports those types of expenses. This, in turn, frees up any <br />levies currently earmarked for the Infrastructure Fund to be used in the General Fund. <br />Staff also recommends that the funding of the trail system be considered at this time. The City has <br />recently been awarded a $100,000 matching grant for trails. The $100,000 match could be funded in <br />2004 with the franchise fee. A rough estimate of the full trail expansion plan is projected at <br />$1,200,000 with no additional grant monies. This cost could be funded with bonds that would be <br />retired using franchise fees collected. A $1,200,000 12 -year bond at 3.5% would require $125,000 in <br />debt service. (Based on current rates, changes in term or interest rates will impact the supportable <br />debt.) <br />Based on these two needs above and the range of dollars being targeted, we prepared a matrix of the <br />possible mix of choices for the gas and electric fee amounts, see Attachment G. A copy of the listing <br />of cities and the amounts charged is included as Attachment H. As mentioned earlier, while Xcel has <br />a preference for flat fees for gas, we have modeled the gas charges on a percentage basis. Staff is <br />requesting Council to determine the total dollar amount of franchise fee to be adopted by selecting <br />the percentage fee be added to the electric and gas billings. Any future receipts of grants, restoration <br />ofLGA/MVHC or other aid increases can be used at that time to reduce or eliminate future franchise <br />fees. <br />cc: Collette Jurek, Xcel <br />4- <br />