04-23-2003 Council Agenda - Laserfiche WebLink

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of Little Canocyo COMMUNITY PRIDE 1953 - 2003 515 Little Canada Road, Little Canada, MN 55117 -1600 (651) 766 4029 / FAX: (651) 766-4048 www.ci.little- canada.mn. us MEMORANDUM TO: Mayor Fahey & Members of the City Council FROM: Joel Hanson, City Administrator DATE: April 18, 2003 RE: Franchise Fee on Utilities MAYOR Michael I. Fahey COUNCIL Jim LaValle Matt Anderson Rick Montour I1ill Blesener ADMINISTRATOR Joel R. I- Ianson Staff has been conducting research into the issue of implementation of a franchise fee on the gas and electric utilities serving the City. Here is a summary of the key information gathered to date. • The City attorney states we have the ability to amend our franchise ordinances (Attachment A is the electric and Attachment B is the gas) without re- negotiating of our franchise agreement. However, he goes on to state that their firm's past experience in dealing with this type of' issue is it is mutually beneficial to work with the franchisee. (See Attachment C for City Attorney memo.) • Colette Jurek, Community Relations Manager for Xcel Energy, has stated it is Xcel's position that the franchise must be re- opened for negotiations to implement a franchise fee when not currently provided for in the agreement. They will expect an agreement covering a 20 -year period. She reiterated that Xcel is not opposed to re- opening franchise agreements. • Re- opening the franchise agreement can be done with a letter from the City to Xcel. It will take about four months to complete negotiations and implement the fee. • Attachments D & E are Xcel's listing of franchise fees currently in effect in Minnesota communities they serve. You will note that there are 14 arrangements on electric service and 10 on gas. Ms. Jurek also informed me that 10 other communities have contacted them in the past few weeks and that the Cities of Robbinsdale and New Brighton have recently implemented a franchise fee. • Attachment F is the City of New Brighton's revised franchise agreements and their ordinance implementing the franchise fee on electric service. We also have copies of Shoreview's franchise agreements that are modeled after the Suburban Rate Authority guidelines. You will note these agreements have a little more substance to them than our present arrangement. ▪ Xcel will expect to be exempted from right -of -way permit fees if we implement a franchise fee. • Xcel has a task force in place to establish some standards /guidelines for implementation of franchise fees by cities. Ms. Jurek said they are in the process of finalizing their recommendation. This information may be available by Wednesday's meeting. • Some items Xcel's task force is considering and likely to implement are: 1. Mailed notice to their customers whenever a city implements a fee of 2% or greater on either /both utilities. 2. Some type of cap or max fee on high volume accounts (commercial). - 1 -