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Item No: 7F Meeting Date: April 27, 2009 Type of Business: CB Administrator Review: City of Mounds View Staff Report To: Honorable Mayor and City Council From: Jim Ericson, Clerk-Administrator Item Title/Subject: Second Reading and Adoption of Ordinance 819, an Ordinance Amending Chapter 7, Section 7.03, of the City Charter Relating to "Fees" Background: The Charter Commission has adopted a resolution to amend the City Charter in Section 7.03 relating to "fees". The amendments serve to clarify which fees are subject to annual increase limitations. The limits, generally speaking, are as follows: Either the prior year tax levy dollar amount increased by a maximum of 5%, or the Minneapolis / St. Paul CPI plus 2%, whichever is less. The Charter Commission approved Resolution 2009-02d at their meeting on March 12, 2009. The resolution is attached for your reference. Discussion: A public hearing was held on April 13, 2009 to consider the first reading and introduction of the subject ordinance. While the first reading was ultimately approved, there were two questions raised regarding the language which I will restate and address in this report. One of the proposed changes is to exclude the annual reauthorization of the utility franchise fee from the limitations imposed in Section 7.03. Without the proposed exclusion, a strict interpretation of the Charter would require that the City conduct a referendum EVERY year to continue with the gas and electric franchise fee, which sunsets annually. The Council asked what happens when the Franchises agreements expire and new Franchise agreements are adopted—would the proposed exclusion apply even then? Staff's interpretation is that the annual reauthorization applies to the franchise fee and is not tied to approvals of new Franchise agreements, which would occur Nov 2012 in the case of Xcel and July 2019 in the case of CenterPoint. Members of the Charter Commission have been asked to provide their opinion regarding this specific revision and have been invited to attend the meeting on April 27th The other issue raised by the Council addressed the broader aspect of how fee increases are controlled 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 fees that are passed along to residents. How this works is explained on the following page. (The complete text of Charter Section 7.03 appears later in this report.)