Agenda Packets - 1992/08/24 - Laserfiche WebLink

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STAFF REPORT AUGUST 24, 1992 PAGE THREE The franchise fee provisions of both the gas and electric franchise agreements provide for a maximum of 4% of the utility company's gross operating revenues to be paid to the City for use of the public land, use of the City's equipment, staff and services and for the privilege of conducting a gas and electric energy business within the City limits. The franchise fee is a form of taxation. It has never been presented otherwise— fit ism—form of taxation because the bottom_ line result from the City's imposition of the fee onto NSP is that the company will pass the cost onto the residential, commercial and industrial users in Mounds View. However, franchise fees represent a fair and equitable method of taxation and are a common, acceptable business practice which is not new to Mounds View, nor new to the cities in and around the Metro area. Several years ago, Mounds View and 9 other Ramsey County cities entered into a franchise agreement with Group W Cable Company. The franchise allowed Group W to operate and maintain cable operations in the cities. As part of that franchise, a franchise fee of 5% of gross operating revenues was imposed on the cable company by each of the 10 cities. The company passed those costs onto the customers and is reflected in what each customer pays for basic cable service. However, the revenue the City receives from the franchise fee can only be used to fund the City's municipal cable operations and the 10 city Cable Commission. There are no such restrictions on utility franchise fees. The funds can be used to buy down property taxes and fund necessary programs without further encumbrances on a person's home or business property tax. Prop?rty tax inrreasPs can be held at bay, but at the same time the City will have funds to continue programs which the residents desire (summer playground programs, senior citizen programs, the D.A.R.E. program, neighborhood watch, maintenance of City parks and recreation facilities) . It will also provide funds to initiate programs and services which have been delayed, previously eliminated because of levy limits and revenue decreases or develop new programs and services which the residents have requested (senior housing, redevelopment of Highway 10 and business retention programs for current Mounds View businesses. Our businesses are an important, viable part of our community and the City must be involved and participate in programs which keep businesses strong and growing. Unfortunately, such programs are not without cost, many Federal and State grant programs require City matching funds.