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CITY COUNCIL WORK SESSION FEBRUARY 21, 2001 <br />Lino Lakes and Circle Pines Utilities does not. Jim Keinath, City Administrator of Circle <br />Pines has proposed the franchise fee be replaced by a "payment in lieu of taxes". <br />Working with Anoka County Auditor and the State Department of Revenue, Mr. Keinath <br />was able to establish a property valuation for the Circle Pines Utilities. Based on that <br />value, the payment in lieu of taxes would be $5,234 in 2002. <br />Finance Director Al Rolek has reviewed the proposal. He notes that revenue from the <br />franchise agreement has amounted to $37,000 to $57,000 annually since 1998. He further <br />notes that the City has no identified revenue source for replacing the lost franchise <br />revenue, which will amount to $32,000 to $52,000 annually. <br />If the franchise fee was eliminated effective 1-1-01, and replaced with an in -lieu -of -tax <br />payment, a revenue shortfall of approximately $37,000 would have to be covered for <br />2001. <br />Council Member Reinert stated he understood that Reliant was goi <br />figure was based on what the franchise fee would be with the t <br />amount of $5,000 seems very low. <br />1 <br />Council Member Carlson stated the 4% was for tax o or the fee. <br />Council Member Reinert stated the goal was eve field for <br />4%. The 7% <br />A total <br />playing o each utility <br />company. <br />Mr. Keinath asked the Counci <br />revised franchise agreeme <br />impose a franchise agre <br />not object. <br />dir ction to renegotiate the contract. The <br />tain anguage stating that if the City decides to <br />atural gas provides, the Circle Pines Utilities would <br />Council Member O 1 asked how the rates compare with Reliant. <br />Mr. Keinath distributed a handout with a rate comparison for each company. <br />Council Member O'Donnell stated the rates are comparable. He stated he wants all <br />residents to be treated fairly. He stated he does not want to raise taxes. He indicated he is <br />hesitant to look at reducing the franchise fee right now. <br />Council Member Reinert added he is hesitant to reduce the rates at such a big loss. <br />Council Member Carlson asked if a municipal utility has tax advantages that the other <br />companies can not utilize. <br />Mr. Keinath stated Circle Pines Utilities does not have tax advantages. The company has <br />had some tax exempt bonds in the past. He added there is also the issue of equity. <br />3 <br />