CR 09-102 Ordinance Amending Sections 701.17 and 702.15 of the Hopkins City Code Extending the termination dates on the utility franchise fees to 12-31-2011November 25, 2009 lo co Council Report 2009 -102
City of Hopkins
ORDINANCE AMENDING SECTIONS 701.17 AND 702.15
OF THE HOPKINS CITY CODE
Proposed Action
Staff recommends that the Council approve the following motion: Move to approve Ordinance 2009 -1009
for the second reading.
Approval of this motion will amend sections 701.17 and 702.15 of the Hopkins City Code to extend the
termination dates on the utility franchise fees to December 31, 2011. The first reading was held on
November 17, 2009.
Overview
In 2003 the City of Hopkins was faced with the loss of $1.8 million in Local Government Aid. In order to
produce a balanced budget for 2004 the Hopkins City Council was forced to reduce costs and increase other
forms of revenue. One of the additional forms of revenue that the Council adopted was to impose franchise
fees on the electric and gas utilities. These fees generate approximately $290,000 per year.
When the ordinances that imposed these fees were adopted in 2003 they contained a termination date of
December 31, 2005 which was extended to December 31, 2007 in 2005 and December 31, 2009 in 2007.
Each budget from 2004 forward has relied on this income as a major source of revenue to balance the
General Fund budget. Franchise revenues are used to support vital city services such as police services, fire
services, street maintenance and recreation facility maintenance along with core city operations. The loss of
this revenue would impact these services and the only other option to preserve the current level of services
would be to raise taxes.
The Hopkins City Council has been given preliminary numbers for the 2010 budget. At this time there is a
loss in state aid for Hopkins making this source of revenue an important component to balancing the 2010
budget. To avoid a significant increase in property taxes or a dramatic reduction in services, staff
recommends continuing the utility franchise fees.
There has been no change to the ordinance since the first reading.
Supporting Information
• Ordinance 2009 -1009
• Section 701 and 702 of the City Code
Christine M. Harkess. CPA, CGFM
Finance Director
Financial Impact: $ $290,000 Budgeted: Y/N X N Source: Utility customers
Related Documents (CIP, ERP, etc.): 2010 Budget Notes:
CITY OF HOPKINS
Hennepin County, Minnesota
ORDINANCE 2009 -1009
AN ORDINANCE AMENDING SECTIONS 701.17 AND 702.15
OF THE HOPKINS CITY CODE
EXTENDING THE TERMINATION DATES FOR
UTILITY FRANCHISE FEES
Whereas the Hopkins City Council adopted utility franchise fees to help make up for the loss of
Local Government Aid; and
Whereas the Hopkins City Council imposed a two year limit on these fees to ensure that there
would be a review of the effect and need for these fees; and
Whereas the Hopkins City Council has determined that utility franchise fees are a fair and
equitable means to raise revenue; and
Whereas the Hopkins City Council has determined that there is a continued need for this
revenue;
Now therefore, the City Council of the City of Hopkins does hereby ordain:
Section 1. Hopkins City Code, Section 701.17 is hereby amended:
701.17. Termination of Ordinance. This ordinance and the franchise fee imposed by it
shall remain in effect until December 31, 2011, at which time they shall terminate and be
of no further effect, except that the Company shall remain obligated after that date to pay
the City all franchise fees due with respect to any period of time prior to December 31,
2011 and collected after that date.
Section 2. Hopkins City Code, Section 702.15 is hereby amended:
702.15. Termination of Ordinance. This ordinance and the franchise fee imposed by it
shall remain in effect until December 31, 2011, at which time they shall terminate and be
of no further effect, except that the Company shall remain obligated after that date to pay
the City all franchise fees due with respect to any period of time prior to December 31,
2011, and collected after that date.
Section 3. The effective date of this ordinance shall be the date of publication.
First Reading: November 17, 2009
Second Reading: December 1, 2009
Date of Publication: December 10, 2009
Date Ordinance Takes Effect: December 10, 2009
ATTEST:
Terry Obermaier, City Clerk
APPROVED AS TO FORM AND LEGALITY:
City Attorney Signature
Gene Maxwell, Mayor
Date
Hopkins City Code (Rev Dec., 2003) 701
Section 701 - Electric Utility Franchise Fee
701.01. DEFINITIONS. For purposes of this Ordinance, the following
capitalized terms shall have the following meanings:
Subd. 1. City. The City of Hopkins, County of Hennepin, State of
Minnesota.
Subd. 2. Company. Xcel Energy, a Minnesota Corporation (formerly
Northern States Power), its successors and assigns.
701.03. Purpose. The Hopkins City Council has determined that franchise
fees should be imposed on gas and electric utilities in return for their use
of City -owned rights -of -way. The purpose of this ordinance is to establish
such franchise fees to be paid to the City by the Company.
701.05. City Authority. Minnesota Statutes 216B.36 grants cities the
authority to impose a franchise fee on gas and electric utility services.
Such fees are in return for basic right to operate within municipally -owned
rights -of -way and other public property as provided in utility franchise
agreements /ordinances between a city and the respective utilities operating
within the municipal boundaries. In addition, City of Hopkins Franchise
Ordinance 87 -5 78 authorizes the City to impose, by separate ordinance, a
franchise fee on the Company.
701.07. Franchise Fee Imposed. A franchise fee is hereby imposed on the
Company, Xcel Energy, pursuant to City of Hopkins Franchise Ordinance 87 -578
and Minnesota Statutes 216B.36 and subject to the fee schedule below.
A franchise Fee is to be collected by the Company from each customer in the
designated customer classification for service at each and every customer
premise, as indicated by the following schedule:
Fee Schedule
Customer Classification Monthly Fee Per Customer Premise
Residential $1.00
Small C & I— non demand $2.00
Small C & I— demand $9.00
Large C & I $63.00
This fee is an account -based fee on each premise and not a meter -based fee.
In the event that a customer of the company covered by this ordinance has
more than one meter at a single premise, but only one account, only one fee
shall be assessed to that account. If a premise has two or more meters for a
single customer billed at different rates, the Company may have an account
for each rate classification, which will result in more than one franchise
fee assessment for electric service to that premise. If the Company combines
the rate classifications into a single account, the franchise fee assessed to
the account will be the largest franchise fee applicable to a single rate
classification for energy delivered to that premise. In the event any
customer of the Company covered by this ordinance has more than one premise,
each premise (address) shall be subject to the applicable fee. In the event a
question arises as to the proper fee amount for any premise, the Company's
manner of billing for energy used at all similar premises in the city will
control.
Section 701 Page 1
Hopkins City Code
(Rev Dec., 2003) 701
701.09. Date Franchise Fee Takes Effect. The above utility franchise fees
shall go into effect in and be applicable to all of the Company's billings
commencing with bills for the month of February 2004.
701.11. Limitation. Franchise Ordinance 87 -578 limits the total amount of
franchise fee which may be collected to 50 of the Company's gross revenues
within the City limits. So long as this limitation remains in effect, in no
event shall the total of the fees collected pursuant to Section 701.07 be
greater than 50 of the Company's gross revenues within the City of Hopkins as
defined in the Franchise Ordinance.
701.13. Payment of Fee. Franchise fees shall be paid to the City
quarterly, based on a calendar year, with payment due by the 30th day after
the end of each quarter. The first such payment will be for the first quarter
of 2004 and will be due April 30, 2004.
701.15. Dispute. Any disputes or other issues which arise will be subject
to the terms of this Ordinance, Franchise Ordinance 87 -578, Minnesota
Statutes 261B.36 as well as any other agreements entered into by the City and
the Company.
701.17. Termination of Ordinance. This ordinance and the franchise fee
imposed by it shall remain in effect until December 31, 2009, at which time
they shall terminate and be of no further effect, except that the Company
shall remain obligated after that date to pay the City all franchise fees due
with respect to any period of time prior to December 31, 2009, and collected
after that date. (Amended Ord. 2007 -993)
(This Section added through Ord. No. 2003 -910)
Section 701 Page 2
Hopkins City Code (Rev Dec., 2003) 702
Section 702 - Gas Utility Franchise Fee
702.01. DEFINITIONS. For purposes of this Ordinance, the following
capitalized terms shall have the following meanings:
Subd. 1. City. The City of Hopkins, County of Hennepin, State of
Minnesota.
Subd. 2. Company. CenterPoint Energy Minnegasco, a division of
CenterPoint Energy Resources Corporation, a Delaware corporation, its
successors and assigns.
702.03. Purpose. The Hopkins City Council has determined that franchise
fees should be imposed on gas and electric utilities in return for their use
of City -owned rights -of -way. The purpose of this ordinance is to establish
such franchise fees to be paid to the City by the Company.
702.05. City Authority. Minnesota Statutes 216B.36 grants cities the
authority to impose a franchise fee on gas and electric utility services.
Such fees are in return for basic right to operate within municipally -owned
rights -of -way and other public property as provided in utility franchise
agreements /ordinances between a city and the respective utilities operating
within the municipal boundaries. In addition, City of Hopkins Franchise
Ordinance 2002 -879 authorizes the City to impose, by separate ordinance, a
franchise fee on the Company.
702.07. Franchise Fee Imposed. A franchise fee is hereby imposed on the
Company, CenterPoint Energy Minnegasco, pursuant to City of Hopkins Franchise
Ordinance 2002 -879 and Minnesota Statutes 216B.36 and subject to the fee
schedule below.
A franchise Fee is to be collected by the Company from each customer in the
designated customer classification for service at each and every customer
premise, as indicated by the following schedule:
Fee Schedule
Customer Classification
Residential
Commercial A
Commercial /Industrial B
Commercial /Industrial C
Small Dual Fuel A
Small Dual Fuel B
Large Volume Dual Fuel
Monthly Fee Per Customer Premise
$1.00
$1.00
$3.00
$9.00
$18.00
$63.00
$63.00
This fee is an account -based fee on each premise and not a meter -based fee.
In the event that a customer of the company covered by this ordinance has
more than one meter at a single premise, but only one account, only one fee
shall be assessed to that account. If a premise has two or more meters for a
single customer billed at different rates, the Company may have an account
for each rate classification, which will result in more than one franchise
fee assessment for gas service to that premise. If the Company combines the
rate classifications into a single account, the franchise fee assessed to the
account will be the largest franchise fee applicable to a single rate
classification for energy delivered to that premise.
Section 702 Page 1
I Hopkins City Code (Rev Dec., 2003) 702
In the event any customer of the Company covered by this ordinance has more
than one premise, each premise (address) shall be subject to the applicable
fee. In the event a question arises as to the proper fee amount for any
premise, the Company's manner of billing for energy used at all similar
premises in the city will control.
702.09. Date Franchise Fee Takes Effect. The above utility franchise fees
shall go into effect in and be applicable to all of the Company's billings
commencing with bills for the month of February 2004.
702.11. Payment of Fee. Franchise fees shall be paid to the City
quarterly, based on a calendar year, with payment due by the 30th day after
the end of each quarter. The first such payment will be for the first quarter
of 2004 and will be due April 30, 2004.
702.13. Dispute. Any disputes or other issues which arise will be subject
to the terms of this Ordinance, Franchise Ordinance 2002 -879, Minnesota
Statutes 261B.36 as well as any other agreements entered into by the City and
the Company.
702.15. Termination of Ordinance. This ordinance and the franchise fee
imposed by it shall remain in effect until December 31, 2009, at which time
they shall terminate and be of no further effect, except that the Company
shall remain obligated after that date to pay the City all franchise fees due
with respect to any period of time prior to December 31, 2009, and collected
after that date. (Amended Ord. 2007 -993)
(This Section added through Ord. No. 2003 -911)
Section 702
Page 2