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~unds View City Council <br />gular Meeting <br />Page Three <br />November 12, 1991 <br />Orduno stated that it catches up in terms of growth. There is a 10~ growth <br />rate and the contingency fund is factored in. The City doesn't anticipate <br />the level of use to be consistent. In the third year it will not make as <br />much money. <br />Mr. Werner asked then if there would be the possibility of a greater deficit <br />in years 4 and 5 causing an increase in user fee? <br />Orduno stated that there is always that possibility if the utility <br />continues. Orduno further stated that utility revenues don't always remain <br />stable, the rate could increase or it could just as easily decrease. <br />Utility Franchise Fee <br />Mr. Dave Schwartz, NSP representative, commended the Council and staff for <br />its openness of the issues to the residents of this community. Mr. Schwartz <br />stated that this does not happen in every community. <br />Mr. Schwartz explained some of the concerns that NSP has with regards to the <br />utility franchise fee. NSP cannot spread this franchise fee to all rate <br />~yers. According to the franchise agreement, the fee must be collected <br />om those persons who directly benefit, which are the residents of the <br />community. Mr. Schwartz stated that NSP is often looked at as the bad guy, <br />using the City's streets and right-of-ways to do business without paying for <br />this use. The truth is NSP pays personal property tax in large amounts. In <br />Ramsey County NSP pays $5 million per year in real estate taxes and $10.6 <br />million in personal property tax to keep facilities in right-of-ways and <br />county roads. <br />Another concern Mr. Schwartz had was that not all residents in Mounds View <br />use natural gas and those people who do have it will be penalized by this <br />fee and it is not an equitable tax. Mr. Schwartz stated that in this era <br />people have become energy conscious and have cut down on their use of energy <br />just to be taxed again. These people then begin to figure, why <br />conserve? <br />Bill Werner, Jr., 2442 Sherwood Road, asked if the franchise agreement was a <br />legal document executed between the City of Mounds View and NSP and if it is <br />a state law or a state mandate. <br />Mr. Schwartz indicated that the agreement is a contract to do business in <br />this community. Some franchise agreements do not have the fee provision for <br />collection of the franchise fee. <br />Mayor Linke stated that the electric and gas are separate and there could be <br />two franchise fees. One utility could have a fee and the other one not have <br />fee. The City of Mounds View has both gas and electric franchises. <br />