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1999 Utility Franchise Fee Information City of v� a � �R� � �x�-.»�� � s#w�°'��`���� t�s � ';ti. �, rr'z� «R ��wk s,"�� i..'s..'i .ti::s� � ,•� -s...�;��'w.. �k 3��..aY� aR � u s. x a�s s sr �3�.,v�„'�a�x`a� �3 a..i- mr s ks T3� ^R xa: w�z � �t� s�x 3�M€€� �,..w.w• '. 3 psi sas Er�' 31a��.��ys.:.�'� r°' � Rxk A a T�� -SRi ifx. :T z a§3 R�a�wxa � '"<� s 3x�� s,��3" �"��,.aa•' �9as,,�'�3`�..'� s.. �� `Ys"a'}s'�• �-x-:3vKrs�. � t. � €tR :'k as's�saC s3€x� � t'�s'R"&� � k""' ys � $ _x€ s �€ r� �'s� r.a� 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. 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