Franchise Fee Increase for ParksCITY OF HOPI<INS FINANCE DEPARTMENT
1011 a LVA Lei Eft, ►U1J u
Date: August 5 2013
To: Mayor & City Council
From: Christine Harkess, Finance Director
Subject: Franchise Fee Increase for Parks
The Franchise Agreement for electric and gas expires on December 31, 2013. This is an
opportune time to review the fees and determine if an adjustment should be proposed.
We are looking at the impact of a $0.50 franchise fee increase on each of these franchise fees
with the funds dedicated to park improvements.
Another option is to sell $1.5 million in park improvement bonds which will then be part of the
tax levy and will require a referendum.
Attached are the following.
1. Franchise Fees - An analysis of the original rates, the increase for streets and in yellow
the increase for parks.
2. Park Bond Levy — An analysis of the impact on various home values if a bond were sold.
3. Comparison of the impact on homeowners between an increase in franchise fees and a
park bond levy.
The main difference between the two options is that we would have $1.5 million up front to do
park improvement. With the franchise fee increase we expect to generate $85,339 annually for
as long as the fee increase is in place. With the franchise fees it would take over 17 years to
generate the same income.
With the tax levy we are looking at the difference between $12 a year in franchise fees vs. a
$21.13 annual increase in a property levy for a home valued at $225,000.
2014 Rate Increase - +0.50 for Park Improvements
Xcel Energy
Residential
Small C & I Non Demand
Small C & I Demand
Large C&I
(to 101)
(to 101)
Proposed
No of
Original
2012
New Rate
Customers
Rate
Rate
2014
March 2013
1.00
1.70
2.20
7,991
2.00
3.35
3.85
734
9.00
15.00
15.50
333
63.00
105.00
105.50
57
9,115
Estimated
(to 101)
6.00
2013
Amount to
Amount to
Annual
Gen Fund
Streets
210,957.38
95,889.72
67,122.80
33, 919.58
17, 620.56
11, 893.88
61,982.64
35,989.92
23,993.28
72,162.00
43,092.00
28,728.00
379,021.60
192,592.20
131,737.96
Increase
(to 101)
6.00
Proposed
to Park
Percentage
Dollar
0.50
Dedication
Incr
Incr
Annualized
47,944.86
29.41%
0.50
6.00
4,405.14
14.93%
0.50
6.00
1,999.44
3.33%
0.50
6.00
342.00
0.48%
0.50
6.00
54,691.44
Proposed franchise increase would cost the home owner with gas & electric $1.00 a month at a $0.50 increase on each or $12 a year.
29.41%
(to 101)
6.00
Proposed
No of
Estimated
3.33%
0.50
Increase
1.67%
Original
2012
New Rate
Customers
2013
Amount to
Amount to
to Park
Centerpoint Energy
Rate
Rate
2014
March 2013
Annual
Gen Fund
Streets
Dedication
Residential/Commercial A
1.00
1.70
2.20
4,635
122,364.00
55,620.00
38,934.00
27,810.00
Commercial B
3.00
5.00
5.50
194
12,804.00
6,984.00
4,656.00
1,164.00
Commercial/Industrial C
9.00
15.00
15.50
249
46,314.00
26,892.00
17,928.00
1,494.00
Small Dual Fuel A
18.00
30.00
30.50
21
7,686.00
4,536.00
3,024.00
126.00
Small Dual Fuel B
63.00
105.00
105.50
9
11,394.00
6,804.00
4,536.00
54.00
Large Volume Dual Fuel
63.00
105.00
105.50
-
-
-
-
5,108
200,562.00
100,836.00
69,078.00
30,648.00
TOTALS
579,583.60
293,428.20
200,815.96
85,339.44
General
Street
Park
Fund
Projects
Projects
Proposed franchise increase would cost the home owner with gas & electric $1.00 a month at a $0.50 increase on each or $12 a year.
29.41%
0.50
6.00
10.00%
0.50
6.00
3.33%
0.50
6.00
1.67%
0.50
6.00
0.48%
0.50
6.00
0.48%
0.50
6.00
Proposed Park Bond Referendum
$1,500,000 Bond Sale
Impact on Homeowners and Cost Difference between
Tax Levy and Franchise Fee
Park Bond Levy
Annual
Residential
Annual
Franchise
Home Value
Tax
Fee Incr.
100,000
7.29
12.00
150,000
12.82
12.00
200,000
18.36
12.00
225,000
21.13
12.00
250,000
23.89
12.00
300,000
29.43
12.00
350,000
34.96
12.00
400,000
40.50
12.00
500,000
50.78
12.00
600,000
63.48
12.00
700,000
76.17
12.00
800,000
88.87
12.00
Cost
Difference
Btwn Tax
& Franchise Fee
4.71
(0.82)
(6.36)
(9.13)
(11.89)
(17.43)
(22.96)
(28.50)
(38.78)
(51.48)
(64.17)
(76.87)