Ramsey to consider franchise fees for road maintenance

The Ramsey City Council may be scrapping special assessments in favor of franchise fees to help pay for road projects, but it wants citizen input.

While City Engineer Bruce Westby said most city streets do not need to be reconstructed in the near future, a segment of Garnet Street (shown) and 168th Avenue in Now and Then Estates is on the city of Ramsey’s radar for reconstruction. The Ramsey City Council is considering franchise fees totaling $16 a month to help fund road projects and getting rid of the process where property owners abutting a project pay a special assessment over a number of years, with interest. Photo by Eric Hagen
While City Engineer Bruce Westby said most city streets do not need to be reconstructed in the near future, a segment of Garnet Street (shown) and 168th Avenue in Now and Then Estates is on the city of Ramsey’s radar for reconstruction. The Ramsey City Council is considering franchise fees totaling $16 a month to help fund road projects and getting rid of the process where property owners abutting a project pay a special assessment over a number of years, with interest. Photo by Eric Hagen

The city will be hosting an open house from 6-9 p.m. Tuesday, Oct. 1 in the Lake Itasca room at the Ramsey Municipal Center, 7550 Sunwood Drive NW, and a public hearing at the Oct. 8 Ramsey City Council meeting that starts at 7 p.m.

An $8 fee would be charged to every CenterPoint Energy and Connexus Energy customer in Ramsey, so the total monthly cost to natural gas and electricity users would be $16. The soonest the council could vote on the proposal is Oct. 22 and if approved, there is a legally required 90-day notice period to the utility companies, so any billing changes could not be in place until around February, according to City Engineer Bruce Westby.

This is not the first time Ramsey has discussed franchise fees to address road maintenance. A 2011 citizen survey showed more support for franchise fees versus a property tax increase. Special assessments were the least popular by far with only about one in six of the 300 surveyed supporting this.

However, the issue was never resolved and Mayor Sarah Strommen said the council cannot continue to “kick the can down the road” because maintaining roads is a fundamental responsibility of the council.

“Although it can be a tough decision to figure out how to pay for it, that’s why we’re all here,” Strommen said. “I don’t expect seven uniform opinions on how to pay for it, but we all are in agreement that our roads need to be fixed. We owe that to our residents.”

The city could still utilize the general fund, general obligation bonds and state aid to pay for projects as it has historically done, but franchise fees would immediately replace special assessments if approved by the council, according to Westby.

Ramsey estimates it would collect approximately $1.7 million annually based on the current number of customers.

“Any way you talk about it, it’s a tax,” Councilmember John LeTourneau said. “Any way you talk about it, there has to be a commitment to road maintenance.”

Councilmember Jason Tossey calls franchise fees “a regressive tax” because everyone is charged the same whether they own a small or large business or a home on 20 acres or a half-acre.

“I do not think a senior citizen sitting at home on a fixed income should have to pay the same amount to fix their roads as someone who lives in a million dollar home,” Tossey said.

According to Tossey, the tax levy is the fairest way to address the roads because every resident pays the same tax rate.

Businesses do have higher tax rates though, said former Councilmember Jeff Wise, the owner of Wiser Choice Liquor.

“We’re already paying four times the amount of taxes as residential, being a business owner,” he said when asked about semis and delivery trucks to businesses having a greater impact on the roads.

“If you own a million dollar home or a $100,000 home you still have the same wear and tear no matter what car or truck you are driving,” Wise said.

But Wise would want franchise fees to be in lieu of special assessments and higher taxes and not used as another source to tax residents at a much higher rate, he said.

Those on the council who have expressed some support for the franchise fees believe there is little room to cut in the budget to substitute for the $1.7 million the city could receive through franchise fees.

“I agree Mr. Tossey that there are probably some things we could cut out of the budget, but I don’t think there is $1.7 million that we can cut out of the budget,” Councilmember Randy Backous said during the Sept. 10 council meeting.

Ramsey budgeted for $1,327,500 in road projects contracts this year, but the $500,000 it slated for the 2014 budget falls in line with the amounts in 2011 and 2012. The 2010 road maintenance contracts totaled $326,247, according to the city budget.

According to Westby, many of Ramsey’s 174.1 miles of city streets were constructed between 1976 and 1985. None of Ramsey’s roads have received an extensive reconstruction that includes tearing out a road and repairing any road base and drainage problems before putting a new road in.

Westby said a Ramsey city street could last 60 years before a reconstruction is necessary if it is properly maintained. He said a street should receive nine crack seals, six seal coats and two overlays before it is reconstructed within 60 years.

Using today’s dollars and assuming the same width of roads and no new curb and gutter, Westby estimated the city could need $2.2 million a year over the next five years for road maintenance.

Projecting it out 60 years, the city could need more than $4.4 million a year and again this does not factor in inflation, he said. This shows that not many of Ramsey’s roads need reconstruction in the near future, but there needs to be a consistent funding source set up to address reconstruction projects as they come up, Westby said.

The issue with relying on the tax levy is the amount can fluctuate greatly depending on the council in place, he said.

“We would have a dedicated funding source with a franchise fee,” Westby said.

Prior to 2013, 50 percent of total project costs for overlays were assessed to abutting property owners, while seal coat projects were assessed at a declining percentage from 50 percent in 2007 to 15 percent in 2012, according to Westby.

Every community has a different way to fund roads. For example, Andover does not assess for seal coats or overlays, but usually assesses 25 percent of city street projects to abutting property owners while the city covers the rest.

For example, a little more than half the property owners along the recently reconstructed South Coon Creek Drive in Andover face a $2,333,43 assessment, while others face a $6,603.21 assessment that must all be paid within 10 years.

Andover is charging those without city sewer and water more because they are generally on larger lots that could be see more home development in the future.

Councilmember Chris Riley said he has seen road assessments as high as $8,000 in other communities. If you were paying $192 a year, it would take just over 41 years to get to that amount.

Joe Field, chairperson of the Ramsey Charter Commission and a member of the Ramsey Planning Commission, was one of several candidates who in response to an ABC Newspapers 2012 primary election questionnaire said road maintenance is the greatest municipal concern.

Field opposes franchise fees because he said there would be no limit on what the council could impose through the utility companies. There are currently levy limits imposed by the state Legislature, but that is not always in place.

“Sixteen dollars (a month) sounds harmless, but once it’s opened up, what’s to prevent it from going to $30 or $50?” Field said.

Westby said the $8 per utility per month would be a flat rate over the five-year term of the franchise agreements with CenterPoint and Connexus.

Backous said, “It’s not a new tax revenue stream. It’s a different revenue stream.”

Eric Hagen is at [email protected]

  • Jim Bendtsen

    Backous said, “It’s not a new tax revenue stream. It’s a different revenue stream.” That is a LIE.

    • Randy Backous

      Mr. Bendtsen, the proposed franchise fee (a tax, a revenue stream) will replace special assessments (a tax, a revenue stream) otherwise I would not support it. This is not a new tax, just the same one spread over a longer time period in smaller payments to replace the existing one. Please explain how that is a lie. This time, try to use your head instead of your mouth.

      Furthermore, regarding my constituents, quite the contrary. I really only have contempt for politicians who are more concerned with taking care of their friends, their political power and their campaigns than doing what is best for the citizens for whom they have sworn a fiduciary duty. I’m not a politician; I’m just a citizen who decided to take his turn and I don’t care about your Landform friends, your caucus or anyone else’s for that matter. I care only about the citizens of Ramsey, Minnesota, United States of America. You have no power over me, so save your lies and bullying tactics for Mr. Tossey who apparently responds to them.

      Mr. Tossey says that franchise fees are “the easy way out.” I say political lip service is the easy way out. He actually supported exactly what we’re proposing but at an even higher amount – $28 per month. Don’t believe me? Check the minutes at Politicians say a lot of things which is why we keep these pesky minutes to hold them accountable. Unfortunately for the citizens of Ramsey, this problem would have been solved in 2012 but elections were getting a little too close for comfort so the cowardly politicians ran for the hills and here we are.

      Since I have your attention, I’d also like to know why a citizen such as you – so concerned with taxes – would support candidates who were in favor of paying a company called Landform $15,000 a month for “administrative services” PLUS 2% of the total project cost of anything built in The COR, PLUS exclusive engineering contracts, whose President and owner, Darren Lazzan, just happens to be friends with your friends. Colin McGlone, Bob Ramsey, Jeff Wise and Jason Tossey. Where were you, Mr. Concerned Citizen, when Tossey voted to extend that contract, and I tried to get it terminated? Where were you when I tried to stop your buddies from building a $30 million building with $20 million of government money and other subsidies? I sure could have used your help on those issues, Mr. Bendtsen. (By the way, McGlone’s wife now has a nice job with the builders of that apartment complex.) Seems to me, I’m the real conservative here.

      No, Mr. Bendtsen, I have NO contempt for my constituents, I only have contempt for you and some of the other hypocrites you show up with at every meeting; those who call themselves conservatives, but act like and support anything but conservatism. I only have contempt for politicians and political lip service.

      • Jason Tossey

        With all due respect to Mr. Backous, I have never supported Franchise fees. The minutes he referred to clearly state my opposition to the Fees. (from the link Mr. Backous provided) “Councilmember Tossey stated he had talked to a property owner with 22 lots but only two lots are developed. He felt it would be unfair for that property owner to pay taxes for roads on 20
        lots that are barren. He believed it was the most fair to stick with the Charter because franchise fees subvert the Charter. ”

        I’m not sure what he is referring to, but it is not accurate.

      • MJL

        I should weigh in your inability to understand the Landform deal. The original request for proposal, in which 4-5 entities responded, all had administrative fees and commissions on deals landed. Landform’s commission was 2%, the next closest was 7%. Do the math. Residence of the COR, 30 million dollar deal….at 7% = 2.1 million in commission. I tire of your arm chair quarterbacking, questioning the decisions that were made before you were on council….decisions mind you that made sense! You Mr. Backous come in late, think you have all the answers and start your trash talking campaign.
        What I find even more interesting is your council is proposing hiring another economic development coordinator to go out and find deals to bring to the COR. Consider this, you pay this person $80-100,000 a year. If you could make 7% as a deal maker, the possibility of making millions, do you think 100K would be a carrot. I can assure you, anyone interviewing has zero contacts and certainly is not a player in the industry. But this city is no stranger to zero return on investment, the prior Economic development coordinator, didn’t close one profitable deal, in the two years employed.
        As to your friends accusation, no one knew Mr. Lazan before he was hired under contract. You tend to make friends with people when you see that they are genuinely interested in the work they do and actually get things accomplished. Keep in mind, nothing done was done by Landform…..all decisions were vetted in public meetings and needed a majority vote to pass.

      • Jim Bendtsen

        If you have contempt for political hypocrites who claim to be conservatives, I can more easily understand the split personality you demonstrate in the way you deal with everyone publicly and especially in private. I will soon have the media from the meeting where you stated publicly that you do not need to listen to constituents now that you’re elected.

      • Maria

        Randy, I want to make sure that everyone knows that the hypocrites you are referring to are Maria & Wayne Buchholz,that show up at all your meetings. isn’t that right rockford pi? And it eats you alive because you can’t control their conservative minds.

  • Krover McGraham

    It’s about high time that those residents who rent or own low valued homes pay their fair share. Putting road funding on the tax bill would be unfair to those citizens in Ramsey who actually offer something in the way of taxes. Besides the taxes that are being raised should be used for important things like helping our business owners succeed, not roads.

    Thank God there are good councilmen like Backous and Riley who understand that it is necessary that this burden get placed evenly across the board even if it hurts the poorest in city, because they don’t pay taxes anyways.

    • Jim Bendtsen

      Your post is pure BS. I prepared a quite comprehensive spreadsheet based on tax figures from both the City of Ramsey and Anoka County showing the property value break points from 100k to 3 million and the amounts and percentages of taxes vs franchise fee payments. The people who have properties valued at 250k and below will pay over 83% of the amount gathered from franchise fees, but will pay a dramatically higher percentage of any property value increase vs. those with property valued above 250k whose franchise fee payments become dramatically lower than what they would be paying in property taxes. The “franchise fee” is a truly unfair regressive method of taxing and is in direct opposition to the language and intent of the City Charter which states that the charges for “local improvements” should be related to the property value. This issue will be taken up by the Charter Commission later this month.

    • Jim Bendtsen

      on another point: the map of the streets in the worst condition, needing immediate replacement in Ramsey shows that the major portion is in Northfork, which is the golf club neighborhood with the concentration of highest valued homes in Ramsey. The residents of Northfork stopped a planned road reconstruction project with a petition several years ago, and under a franchise fee system, the overwhelming portion of funding for replacing Northfork’s streets would be paid for by those who can least afford it.

  • jeremy mess

    It’s a new tax. Just a new way of getting it . Little on you phone bill ,little on your gas bill, little on your electric bill, little on you internet bill ,little on your cable bill . Plus they send me a bill for lights and storm sewers . I have a ditch and no lights so what I’m I paying for. ALL THEY WANT IS MORE, MORE ,AND THAN MORE. Ramsey is the biggest joke in Anoka county and it get worst every year .

    • Wayne Buchholz

      I agree and if you think the fee is bad, just wait! They are on a hiring spree, the next thing they are planning on hiring is a new EDA manager, I’m still waiting for the City manager to get back to me on what the last one did for the City. My bet is nothing!