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Home My WebLink About04-27-2007 Ord 819 Second ReadingItem 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.) Ordinance 819 April 27, 2009 Page 2 Subdivision 1 of Section 7.03 of the City Charter indicates the following: 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. Subdivision 3 of Section 7.03 indicates that any fee that is increased beyond the same limits as imposed upon the levy shall be put to a vote of the residents by referendum. 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. This Ordinance is being presented for second reading and adoption, with an effective date of August 5, 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. Respectfully submitted, ________________________ James Ericson Clerk-Administrator 19 ORDINANCE NO. 819 CITY OF MOUNDS VIEW COUNTY OF RAMSEY STATE OF MINNESOTA AN ORDINANCE AMENDING CHAPTER 7, SECTION 7.03, OF THE CITY CHARTER RELATING TO FEES SUBJECT TO PROVISIONS OF SECTION 7.03, SUBDIVISIONS 1 AND 2 THE CITY OF MOUNDS VIEW DOES HEREBY ORDAIN: SECTION 1. The City Council of the City of Mounds View, pursuant to the recommendation of the City of Mounds View Charter Commission, has hereby determined that Chapter 7, Section 7.03, Subdivision 3 of the City Charter be amended with additions underlined and deletions stricken as follows: CHAPTER 7 TAXATION AND FINANCES … Section 7.03 System of Taxation … Subdivision 3. Any other fee or levy, created, or increased beyond the limits set forth in Subdivision 1, shall require voter approval as stipulated in Subdivision 2 of this Section. a) For the purposes of this Section, "fee" includes utility charges (other than water, sanitary sewer, storm water and street light), recycling fees, franchise fees (for cable, gas and electric), Administrative offense fees, and shall also include any other fee that produces a tax burden or direct financial obligation to a simple majority of property owners and/or residents of Mounds View and not specifically excluded in Section 7.03 Subd. 3b. b) For the purposes of this Section, the term "fee" does not include: Filing for Office fee, park or recreational participation fees, charges for photo-copying, sales of municipal liquor store products, Building and Zoning Permit or Inspection and Planning fees, or civil, criminal and banking fines and other charges collected in cases of restitution or violation of law or contract. The term “fee” does not include charges collected by the direction of the State, County or other taxation authority, or as a result of joint powers agreements. The term "fee" also does not include rental housing fees, liquor license fees, cable television service franchise fees, annual license fees for the operation of a regulated business, and any miscellaneous fees for services, including health and safety related Code enforcement, and other goods, services or materials routinely provided by the City to its citizens or other members of the public which, by law, must be limited to that for those applicable, pursuant to MN Statute, the amount charged for certain fees shall reflect the actual cost of the service being provided. The term "fee" shall not include any special assessments made under Minnesota Statutes Section 429, as amended. Ord 819 Page 2 c) For the purposes of this Section, "fee increase" includes a new tax or fee, a monetary increase in an existing tax or fee, a tax or fee rate increase, an expansion in the legal definition of a tax or fee base, and an extension of an expiring tax or fee, excluding the annual recertification of the utility franchise fee. SECTION 2. This ordinance shall take effect ninety days after the date of its publication. Read by the Mounds View City Council on this 13th day of April, 2009. Read and passed by the Mounds View City Council on this 27th day of April, 2009 Publication Date: May 7, 2009 Effective Date: August 5, 2009 __________________________________ Joe Flaherty, Mayor ATTEST: __________________________________ Jim Ericson, Clerk-Administrator (SEAL)