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Mounds View City Council October 11, 1999 Regular Meeting Page 23 City Administrator Whiting explained the discussion to date indicates the amount of the • franchise fee proposed to go into the General Fund is 2.5 percent, as it was for the last two years. He explained that it is with the understanding of Council, that in keeping with the original plan, the fee was to be reduced to 2 percent this year. Council Member Marty stated he would request staff research the possibility of trimming the 2.5 percent portion of the fee as close to half, or 2 percent, as possible, and direct the balance to the street fund, rather than diverting it into the General Fund, in that it was hoped the franchise fee would go into the street fund in the future. City Administrator Whiting noted the next item on the agenda relates to how this can be determined, and the choices that follow. He explained the Council has not completed its budget deliberations, and has another two months in which to do this, and a hearing in one month. He noted they have not reviewed all of the specific details in the final budget. He explained there are several ways to proceed with this ordinance and the policy that is put into place. He envisioned at this point, the franchise fee would continue to go into the General Fund, and the Council will commit to a portion of the revenues to be dedicated to the street fund on an annual basis. City Administrator Whiting noted that based upon the discussions to date, it appears that an equivalent to 1.5 percent of what is collected on the franchise fee will be dedicated to the street fund in the form of a transfer from the General Fund. He reiterated that the franchise fee sunsets on an annual basis, and the matter will have to be revisited year after year, and this will provide • the opportunity to reconsider the issues. City Administrator Whiting explained that at this time, he was not aware of the exact numbers, however, he did not believe this would represent anything similar to the 30 million dollar fund of White Bear Lake. He stated that if the franchise fee generates approximately $125,000 per year from the 1.5 percent, this fund would be viewed in terms of providing the ability to cash flow the projects, so the City does not have to borrow for this purpose. He commented this will require a substantial amount of money, however, he did not believe the franchise fee will be the only source of revenue replenishing the street fund on an ongoing basis. City Administrator Whiting noted in five or ten years there will be some money accumulated in the street fund. He explained, however, there will also be projects that draw down the cash, which will likely be replenished at a ratio of 1 to 3, as at a 25 percent assessment rate, the City will receive a quarter back for every dollar spent on a project. He added the fund will generate some interest, which will help replenish it, in addition to revenues from the franchise fee. He explained that transfers to the dedicated funds generally occur late in the year, when the City has a full assessment of the budget, and how what is affordable. He stated they would have the option of transferring unspent General Fund-budgeted monies into this fund, if so desired, find ways to reduce expenditures, or dedicating a different percentage of the fee to this fund. City Administrator Whiting explained the Council will have to decide the term of this ordinance. He stated that in the last two years, it has sunset annually, which provides that the issues can be . revisited in the following year. He suspected by the end of the budget period, there would be clarification of the details of the street fund, and what it will be able to accomplish.