1999 Utility Franchise Fee Information City of
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What is the franchise fee? current services but are demanding more. In the
he franchise fee is actually a local 3% sales tax meantime, there is a growing gap between revenues
levied against gas and electric use by Fridley and expenditures. Your City needs more revenues to:
consumers. If passed by the citizens of Fridley, it will • Offset $325,000 in annual costs for six new police
be added to your monthly NSP and Minnegasco officers hired since 1994.
bills, and will cost the average residential consumer • Pay for $100,000 in annual costs for the Police
of gas and electric about $3.00 per month. Department's youth outreach efforts through
"Project Safety Net".
Why does the City need a • Continue the Recreation Department's after-
school programming for elementary and middle
franchise fee? school age youth that costs nearly $60,000
asically, the City either needs to charge this fee as annually.
a fair way to cover increasing City costs and • Pay for the City's share of annual operating
spread them over a larger base of City services users, expenses for the Fridley Community Center and
or to raise property taxes of only those who pay the Hayes Gymnasium, an annual cost of$56,000.
property taxes. • Cover the $50,000 annual cost for the City's rental
Some citizens have suggested that a franchise fee inspection program.
is not necessary if we further cut costs by reducing e Cover other costs that have been increasing
our level of services or dip into our reserves. without the benefit of compensating property tax
However, even more citizens not only value the increases.
other Citywide fees are the lowest in this area. Even
after the collection of the proposed franchise fee,
Fridley will remain the lowest-cost City in the
northern suburbs.
Why the franchise fee rather than a
property tax?
nlike property taxes, the franchise fee is paid in
small monthly increments. Moreover, it will be paid
by ALL users of City services. These include railroads,
} State and Federal agencies, the City of Minneapolis,
property tax-exempt entities (such as churches, public
Is the City in the red? If not, what's the and private schools, health care institutions, and other
purpose of the franchise fee?
non-profit properties), and businesses that are
benefiting by tax increment financing.
he City is not in the red; but it doesn't want to be The City has the flexibility to grant abatements for
there either. We operate on a very lean budget and schools and those that are below the poverty line. And
have already cut nearly $1 million from the budget in the fee serves to diversify the City's funding sources
1996. This necessitated laying off five employees. Any while helping to remove the City from competition
future cuts will mean loss of services. with the school districts for property taxes.
While the City does have cash reserves, drawing
them down reduces interest earnings, lowers bond Hasn't the City created the need for the
ratings, limits the City's ability to match Federal franchise fee by assisting businesses like
grants, and weakens its ability to respond to
emergency needs. Medtronic through tax increment
financing?
Aren't Fridley taxpayers already overtaxed? o, tax benefits to businesses such as Medtronic
Fridley is one of the lower taxed communities in the Nhave not created the need for the proposed
metropolitan area.An October 1999 STAR TRIBUNE franchise fee. The City does not automatically get
article showed that Fridley's property taxes on a additional taxes when new value is added to property.
$125,000 home ranked 74th out of 107 cities surveyed. It only gets what it levies.
The City's own survey of all surrounding cities New property tax levies have increased by only 4.5%
reveals that the City's share of property taxes and all since 1992. This amounts to about a half a percent a
year. At the same time, tax assistance to businesses like
Medtronic and Onan serve to create development in
Monthly Cost of City Properly Taxes on Fridley that would never have happened here otherwise.
a $105,000 Home in 1999 Between 3,500 and 4,000 jobs will be created by the
Fridley Medtronic project and it's presence will have a very
New Brighton favorable impact on property values in Fridley.
Coon Rapids `
Blaine ., Will the City raise the franchise fee when
Mounds View it needs additional revenues?
Columbia Heights °
t s possible, but it is not likely. The franchise
Spring Lake Park µ ordinance with NSP limits the franchise fee to 4%of
Brooklyn Park Fridley sales. The State prohibits franchise fees on
Brooklyn Centerother services, such as phone service. Furthermore,
y"a :s
Minneapolis Fridley City Councils have historically shown great
0 $5 $10 $15 $20 $25 $30 $35 $40 $45 restraint in raising property taxes or any other kinds of
fees.
Won't the franchise fee really hurt low-
income people?
mlPhe cost of the franchise fee, $36.36 per year for an
average utility user, will be rebated to those who
fall below the Federal poverty guidelines.
Doesn't the franchise fee have a negative
impact on our schools?
here is some cost to schools; however these costs
help to offset more than $100,000 in City costs for
police services to our schools. Moreover, the franchise
fee ordinance provides rebates for amounts paid by
schools that are in excess of$2,000 per year. �`�
Isn't the franchise fee unfair to business?
he fee applies to businesses differently than how it property taxes; cut City services; lay off additional City
applies to residential properties. For businesses, it workers; charge maintenance fees to every property for
is a meter charge based on average consumption of gas street cleaning, repair and snow plowing; or perhaps
and electric in various customer classes.The ordinance some combination of all of them.
does contain provisions that protect smaller business It was the City Council's earlier decision that the
users. These include a rebate for franchise fees paid in franchise fee would be the most fair, most balanced
excess of 5% of annual gas and electric charges. The manner in which to raise additional revenue to cover
City is willing to consider adjustments to the current City operations. Other Fridley citizens do not
ordinance that address any unforeseen inequities. agree with the Council's action for a variety of
legitimate philosophical and economic reasons. The
Why should I pay more for City upcoming referendum will give some direction to the
government? Council on whether to raise funds in other ways or
perhaps cut services, but it will not diminish our City's
ity government needs your help in keeping services ongoing revenue needs.
strong and responsive to the changing needs of our
community. For instance, as Fridley grows older, we How can I hear both sides of this issue
need to maintain funding for public streets and
and get more information before the
infrastructure.
Also, as our population matures, we need to December 14 referendum?
maintain senior programs. Since an increasing num- he Fridley League of Women Voters is sponsoring a
ber of families have two working heads of households, I community forum on Tuesday, November 30,
we need to maintain strong and responsive youth ser- 1999, at 7 pm, at the Fridley Community Center, 6085
vices. And, as concerns about crime increase, we need 7th Street. Speakers will discuss the "pros" and "cons"
to maintain a strong police department that will work of a franchise fee, and there will be opportunity for
with our schools and our neighbors to prevent crimes. questions from the audience. We urge you to attend
the League's forum and become educated in this
What will happen if the franchise fee important matter dealing with the future of our City.
referendum fails? And then we ask you to vote on December 14.
ailure of the referendum will not cause an
Thank you for taking the time to consider these
questions and answers about the proposed franchise
immediate financial crisis for the City. Still, the City fee. We hope you will call the City Manager's Office at
Council—after further input from Fridley citizens— 572-3500 or e-mail us at www.ci.fridley.mn.us if you
will need to grapple with several alternatives: raise have further questions or comments.
City of Fridley BULK RATE
6431 University Avenue NE U.S. POSTAGE
Fridley, MN 55432 PAID
MINNEAPOLIS, MN
PERMIT NO. 2886
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