CR 2013-086 Move to Approve Ordinance 2013-066 for first reading-4m
August 20, 2013 Council Report 2013-086
Cite of Hopkins
ORDINANCE AMENDING SECTIONS 701.07, 701.099, 701.17,
702.079 702.09 AND 702.15 OF THE HOPKINS CITY CODE
Proposed Action
Staff recommends that the Council approve the following motion: Move to approve Ordinance 2013-1066 for first
reading.
Approval of this motion will begin the process of amending sections 701.07, 701.09, 701.17, 702.07, 702.09 and
702.15 of the Hopkins City Code to increase the franchise fee rates and extend the termination dates on the utility
franchise fees.
Overview
The city receives approximately $290,000 in franchise fees per year that support the operations of the General Fund
and approximately $200,000 to write down street improvement debt levies. Franchise fees were implemented in 2003
when the city was faced with the loss of $1.8 million in local government aid. 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 along with holding down the tax levy by reducing the levy needed for
bonded debt.
As part of the annual process of updating the Capital Improvement Plan (CIP) we identify sources of income for
needed projects. The Park Dedication Fund accounts for park improvement projects funded through park dedication
fees when development projects are platted. There are insufficient funds to provide for the upkeep of the various parks
in Hopkins, therefore additional funding needed to be identified. It was suggested that we look at a $0.50 cent increase
in the gas and electric franchise fees to fund park improvements. This will provide approximately $85,000 per year,
however will still not be sufficient to fund all improvements identified in the 2014-2018 CIP. When required,
developer fees will continue to be an important part of funding park projects.
When the ordinances that imposed these fees were adopted in 2003 they contained a termination date of December 31,
2005 and the ordinance has been renewed every two years since for two year terms.
• Council and staff are recommending that the ordinance be renewed for a five year term expiring December 31,
2018 and the proposed increase in rates be earmarked for park improvements.
Supporting Information
• Power Point presentation
• Rate Increase schedule
• Ordinance 2013-1066
• Section 701 and 702 of the City Code
Christine M. Harkess, CPA, CGFM
Finance Director
Financial Impact: $ $85,000 Budgeted: Y/N X N
Source: Electric and gas utility customers
Related Documents (CIP, ERP, etc.): 2014 Budget Notes:
Park System Capital Improvement
Needs and Funding
Park system needs
❑ Play equipment
x
❑ Cottageville Park — �s
w
improvements
❑ Picnic shelters ..
❑ Warming houses
❑ Lighting, drinking
fountains, tennis
courts
08/13/2013
2014 — 2023 Capital Improvement Plan
includes:
❑ 6 play equipment sets
❑ 7 picnic shelters
❑ Refurbish 7 warming
houses
❑ New energy-efficient
lighting —
-mt. r
V'
Capital needs funding
❑ 2014-2018
Play equipment: $495,000
Picnic shelters/warming houses: $150,000
Lighting, drinking fountains, etc.:
$125,000
08/13/2013
0
Capital needs funding
0-
o 2019-2023blota
'
Play equipment: $180,000
Picnic shelters/warming houses:
$1,100,000 (includes $400,000 Pavilion addition)
Lighting, drinking fountains, etc.:
$300,000
Capital needs funding
❑ The proposed 10 -year program requires:
Continued periodic park dedication fee
contributions via redevelopment
Dedicated annual utility franchise fee revenue
Grant funding as it's
available
Community partnerships
08/13/2013
I
Goals of Park Improvement Plan
❑ Meet future park system needs
❑ Investment in our park system =
enhanced aualitv of life for all residents
mmmp
Proposed Funding
❑ Increase gas and electric franchise fees
50¢ each for all customer classes
❑ All customer classes - $1.00 maximum
monthly increase or $12 per year
❑ Residential customer —
$2.20 for gas and $2.20 for electric
$4.40 per month
08/13/2013
�t
08/13/2013
5
Proposed Funding
❑ Electric Rates
Proposed
2012
New Rate
Xcel Energy
Rate
2014
Residential
1.70
2.20
Small C & I Non Demand
3.35
3.85
Small C & I Demand
15.00
15.50
Large C & 1
105.00
105.50
08/13/2013
5
Proposed Funding
❑ Gas Rates
Proposed
2012
New Rate
Centerpoint Energy
Rate
2014
Residential/Commercial A
1.70
2.20
Commercial B
5.00
5.50
Commercial/Industrial C
15.00
15.50
Small Dual Fuel A
30.00
30.50
Small Dual Fuel B
105.00
105.50
Large Volume Dual Fuel
105.00
105.50
08/13/2013
5
Proposed Funding
❑ Rate will generate $85,000 per year
All customers who have gas and electric will pay
the franchise fee including tax exempt entities
❑ Alternative — $1.5 million bond sale
Adds to tax levy
$225,000 average priced home will pay an
estimated $23.89 in additional property taxes per
year.
Tax exempt entities not affected
08/13/2013
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CITY OF HOPKINS
Hennepin County, Minnesota
ORDINANCE 2013-1066
AN ORDINANCE AMENDING SECTIONS 701 AND 702
OF THE HOPKINS CITY CODE AMENDING UTILITY FRANCHISE FEE RATES,
THE EFFECITVE DATE OF THE FEES AND 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 701.07 is hereby amended:
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 21613.36 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
Small C & I— non demand
Small C & I— demand
Large C & I
Monthly Fee Per Customer Premise
$2.20
$3.85
$15.50
$105.50
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 2. Hopkins City Code, Section 701.09 is hereby amended:
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 January 2014.
Section 3. 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, 2018, 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,
2018 and collected after that date.
Section 4. Hopkins City Code, Section 702.07 is hereby amended:
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
$2.20
$2.20
$5.50
$15.50
$30.50
$105.50
$105.50
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.
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 5. Hopkins City Code, Section 702.09 is hereby amended:
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 January 2014.
Section 6. 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, 2018, 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,
2018, and collected after that date.
Section 7. The effective date of this ordinance shall be the date of publication.
First Reading: August 20, 2013
Second Reading: September 3, 2013
Date of Publication: September 12, 2013
Date Ordinance Takes Effect: September 12, 2013
ATTEST:
Kristine A. Luedke, City Clerk
APPROVED AS TO FORM AND LEGALITY:
City Attorney Signature
Gene Maxwell, Mayor
Date
Hopkins City Code
(Amended Sept 2013) 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 21613.36 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 21613.36 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 $2.20
Small C & I— non demand $3.85
Small C & I—demand $15.50
Large C & I $105.50
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. (Amended Ord. 2011-1036)
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 January 2014.
Section 701 Page 1
Hopkins City Code (Amended Sept 2013) 701
70 1.11. Limitation. Franchise Ordinance 87-578 limits the total amount of franchise fee which may be
collected to 5% 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 5% 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.
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, 2018, 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, 2018, and collected after that date.
(This Section added through Ord. No. 2003-910)
Section 701 Page 2
Hopkins City Code (Amended Sept 2013) 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 Minnesota Gas, 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 21613.36 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
Minnesota Gas, 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
$2.20
$2.20
$5.50
$15.50
$30.50
$105.50
$105.50
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.
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 702 Page 1
Hopkins City Code
(Amended Sept 2013) 702
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 January 2014.
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.
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 26113.36 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, 2018, 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, 2018, and collected after that date.
(This Section added through Ord. No. 2003-911)
Section 702 Page 2