Coon Rapids council to vote on gas prepay ordinance repeal

An ordinance to repeal the city of Coon Rapids’ gas prepay ordinance will be on the agenda of the Coon Rapids City Council’s next meeting – Tuesday, April 2.

Lori Higgins, president of the MetroNorth Chamber of Commerce, spoke on behalf of gas station owners/operators at the Coon Rapids City Council work session on the gas prepay ordinance last night (Wednesday, March 20).
Lori Higgins, president of the MetroNorth Chamber of Commerce, spoke on behalf of gas station owners/operators at the Coon Rapids City Council work session on the gas prepay ordinance last night (Wednesday, March 20).

A majority of the council at a work session last night (Wednesday, March 20) made it clear that they were ready to repeal the ordinance.

Whether that vote happens Aug. 2 or at the following meeting, April 16, has yet to be determined.

Under city charter, an ordinance first has to be introduced at a meeting, then considered for adoption at the next meeting before going into effect 15 days after that.

But councilmembers asked City Attorney David Brodie to research if an emergency ordinance for repeal could be brought to the council for action April 2; if so, then it would go into effect immediately.

The decision to revisit the ordinance, which went into effect Aug. 1, 2012, was made by the council at a strategic planning project goal setting work session in January.

Since the initial 5-2 vote to enact the ordinance last year – Coon Rapids became the first city to do so – there have been two changes on the council.

Melissa Larson and Scott Schulte, who both voted for the ordinance, left the council at the end of last year and their replacements, Ron Manning in Ward 2 and Steve Wells, at-large, were both on record opposing the ordinance.

Mayor Tim Howe and Councilmember Jerry Koch, who voted against the ordinance, remained opposed last night, while it was Councilmember Bruce Sanders, who voted for the ordinance last year, that called for “an up and down vote” on repealing the ordinance.

Councilmembers Denise Klint and Paul Johnson both said they were not yet ready to ditch the ordinance, although Johnson, after a majority of the councilmembers directed that a repeal ordinance be brought to the council for a vote, raised the question whether it could be an emergency ordinance.

At the work session last night, Police Chief Brad Wise presented current crime statistics to show the impact of the ordinance.

The ordinance was recommended by Wise as a “crime prevention measure” to counter the increasing number of no-pays/drive offs in Coon Rapids, which were causing a spike in the city’s crime rate.

There had been 492 gas thefts reported in 2010 and 481 in 2011.

Those numbers did go down after the ordinance was introduced early last year and while the council was considering its adoption because gas stations were not reporting the thefts, Wise said.

Since the ordinance became law, there have been no gas thefts reported in the city, according to Wise.

The ordinance requires prepayment, either by credit card at the pump or by going inside and paying cash, before the pump is turned on.

But there is an exception to the prepay requirement. If business owners enter into a civil agreement with customers, including providing identifying information, then customers can activate a pump prior to payment.

According to Wise, part 1 crimes dropped more than 20 percent, from 2,943 in 2011 to 2,099 in 2012.

One reason was a significant drop in residential burglaries, from 170 to 111, but also in no pay gas thefts from 481 to 44 – the 44 came in the first seven months before the ordinance went into effect, Wise said.

No pay gas thefts in the neighboring cities – Blaine, Anoka and Andover – remained flat or increased slightly, probably because of the enhanced civil process that the Legislature approved last year for gas station owners to deal with gas thefts, according to Wise.

Some police departments in the metro are have told gas station owners and operators that officers would not respond to no pay gas thefts and not to call them in, Wise said.

Wise would not be comfortable taking that approach, he said.

The council had a work session on the ordinance Oct. 30, 2012 to assess the impact of the law over its first three months, but after hearing pros and cons from several speakers, it decided, by consensus, that it was too soon to consider changes or repeal.

At the January meeting, the council asked gas station owners to provide updated sales figures since the ordinance went into effect as well as information on what steps they have taken to prevent drive-offs.

A presentation on behalf of the gas station owners/operators and the Minnesota Petroleum Marketers Association (MPMA) was made by Lori Higgins, president of the MetroNorth Chamber of Commerce.

According to Higgins, negative effects of the ordinance have been fuel sales, inside sales, customer count, jobs and perception.

In seven gas stations reporting figures, fuel sales have declined anywhere from 6 percent to 23 percent since August 2012, while two non-Coon Rapids stores surveyed saw an increase of 5.2 percent and a decline of 4 percent.

“Three stores shared that they were trending positively in the months prior to prepay in fuel sales from 4 to 14 percent,” she said.

“These stores all saw a decline in sales since prepay from 6 to 13 percent.”

Inside sales at the seven stores have also declined since August 2012 ranging from 5 to 15 percent, while the two gas stations outside Coon Rapids only saw declines of 1 percent and 3.6 percent, Higgins said.

“Two stores shared that their total inside profit loss in the past seven months has been $17,000 and $20,500, while another store shared that their inside net profit loss in the past seven months has been $75,000,” she said.

According to Higgins, customer count at two stores reporting has declined 10 and 13 percent, respectively, since August 2012.

Two stores reported cutting hours of employees, while another has reduced staff by one part-time person so far, Higgins said.

Perception has also been negative, she said.

The gas station owners and operators have changed their operational methods – capturing license plate information prior to authorizing pumping has become common place, new technology is being used, hard to see pumps are voluntarily made prepay and industry competitors are communicating, Higgins said.

Most operators are using the new civil process for dealing with gas thefts passed by the 2012 Legislature, she said.

This allows operators and associations liked the MPMA to give and receive notices authorized by this law and collect payments for motor fuel and the specified service charge, according to Higgins.

This process has a 40 percent success rate in collecting, a conservative estimate, Higgins said.

“It filters the crimes from the mistakes,” she said.

Stations are using their own resources, not the police department’s, to weed out the mistakes from the true crime and crime statistics will show a more accurate reflection on real estate websites, Higgins said.

“{It} allows the police department to use its resources in a more efficient and targeted manner,” she said.

“We believe a full repeal is the only way to bring back customers who have gone to other cities.”

According to Manning, opposition to the prepay gas ordinance was the main issue he heard from constituents while campaigning last fall.

“Over 25 to 30 percent of people don’t use credit cards and a lot of people told me they don’t like the ordinance,” Manning said.

The ordinance needs to be repealed and as soon as possible so gas station operators in Coon Rapids can start getting their business back, Koch said.

The ordinance since it has been implemented has been very successful in eliminating the no pays and had got the gas station operators’ attention before that, Johnson said.

The part 1 gas theft crime rate was a “huge problem,” he said.

“The changes gas station operators have made to their business model was because of the ordinance,” he said. “They are more sensitive to no pays.”

Klint was not ready to vote on repealing the ordinance because she still had questions on the effectiveness of the civil process and whether the loss of business reported by gas station operators was unique to their business or whether it was a trend in other types of businesses, she said.

“The ordinance has made a difference in our crime rate,” Klint said.

“We should wait a year at least.”

Howe said he voted against the ordinance last year and he has not changed his mind “but I don’t apologize for the council looking at this.”

The crime rate has been reduced through the prepay ordinance, but the station operators are losing money and have instituted procedures to deal with the no pay issue through the civil process, he said.

While he supported repeal of the ordinance, Wells applauded the police department for not following some other departments in pretending the crime does not exist.

“That’s a poor way of doing business,” he said.

He also had a concern that gas station operators would not continue the operational methods they put in place to deal with no pays, and he wanted assurances that would not occur, Wells said.

“There were one or two bad apples that were responsible for the bulk of the calls and that tarred the other gas station operators with the same brush,” he said.

Brad Fogerty, Kwik Trip, said one positive effect of the ordinance has been to bring gas station operators and competitors in the city together to put in place operational models that are a lot better.

That will not change if the ordinance is repealed, as Fogerty hopes it is, he said.

“We are committed to the procedures we have put in place and to do things right, and we want to make them even better,” Fogerty said.

“We hope that you will allow us the chance to do so.”

Johnson said he liked what was hearing.

Bills have been introduced in both the Minnesota House and Senate that would remove a city’s authority to mandate prepay only at gas stations.

Peter Bodley is at
[email protected]