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Ordinance 819 May 11, 2009 Page 2 The other issue raised by the Council addressed the broader aspect of how fee increases are limited and under what circumstances a referendum would be required. The Charter, in Section 7.03, imposes limitations on general fund levy increases and increases to certain fees that are passed along to residents. The City's annual resolution to levy ad valorem taxes (raising money against real and personal property) shall not exceed the lesser of the following formulas; either the prior year tax levy dollar amount increased by a maximum of 5%, or CPI (Consumer Price Index) plus 2%. The CPI shall be the 12 month average of the most recently published data for all Urban Consumers in the Minneapolis, St. Paul metropolitan area, as defined by the U.S. Department of Labor, Bureau of Labor Statistics. Thus, it is not possible for the tax levy to increase by more than 5% from one year to the next, and if the CPI is less than 3%, the maximum increase would be less than 5%. If the proposed levy exceeds the cap, the proposed increase would need to be put to a vote of the residents by referendum. The same increase limitations apply to certain fees imposed and adopted by the City Council, such as the gas and electric utility franchise fee. Chair Thomas confirmed that the fee increase restrictions are applied on a per fee basis rather than on an aggregate computation. For example, if the Council desired to increase the utility franchise fee back to 4% from 3.75%, that would result in an increase of more than 6%, more than what is allowed by the formula in Subdivision 1. Attached is Ordinance 819 which incorporates the language adopted by the Charter Commission in Resolution 2009-02d in addition to the change made on April 27, which was to strike the words “for certain fees” from the last line of Subdivision 3b of Section 7.03. This Ordinance is being presented for second reading and adoption, with an effective date of August 19, 2009, if approved. Recommendation: Staff recommends the City Council approve the second reading and adoption of Ordinance 819, an ordinance amending Chapter 7, Section 7.03, of the Mounds View City Charter. Action on the ordinance requires a ROLL CALL VOTE. Staff further asks for Council consent and direction to publish an ordinance summary in the newspaper consistent with provisions of the City Charter. Respectfully submitted, ________________________ James Ericson Clerk-Administrator