Ramsey delaying road franchise fees decision

The Ramsey City Council is indefinitely tabling any decision on proposed franchise fees to fund road maintenance projects.

The next step the council unanimously approved Oct. 22 is to schedule a meeting with the Ramsey Charter Commission to discuss what safeguards could be included in the city charter to prevent future councils from modifying city ordinances to drastically increase any franchise fees or use the revenue for something other than road maintenance.

Tim Mahoney, Mary Olson and Jim Bendtsen were the first three citizens to speak at an Oct. 8 Ramsey City Council public hearing regarding proposed franchise fees for road maintenance projects. Photo by Eric Hagen
Tim Mahoney, Mary Olson and Jim Bendtsen were the first three citizens to speak at an Oct. 8 Ramsey City Council public hearing regarding proposed franchise fees for road maintenance projects. Photo by Eric Hagen

The commission on a 6-1 vote Oct. 21 recommended the council amend Chapter 10 of the charter regarding franchise fees. Charter Commission Chairperson Joe Field said the one dissenting voter prefers the proposed amendment go directly to the voters, which could happen if the council does not unanimously approve it.

“The charter commission in taking its present action is merely attempting to provide some system of accountability if the city of Ramsey is convinced that now is the time to impose franchise fees,” Field said.

Field made it clear that the charter commission is skeptical of the concept of charging $8 a month each through the electric and natural gas utility bills to collect $1.7 million annually.

The commission believes any fee should be limited to “defraying increased municipal costs occurring as a result of the utility operations. It may not be used to raise general revenue,” he said.

Field said the commission wants to see what the city’s actual costs are for allowing utilities to operate in the city’s right of way along city roads.

Councilmember Mark Kuzma said there has been a lot of talk about tax increases and how the money is being spent.

“The issue here is that we have a problem that’s not being addressed and that’s the roads, and our infrastructure is starting to age,” he said. “What people need to realize is that if we don’t do anything about this, four to five years from now you could be looking at some serious assessments, and we’re trying to find a solution that’s going to temper that so we can address the problem now.”

The council has said it would eliminate special assessments charged to residents when a city road project is done in front of their home if the franchise fee ordinance passes.

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. City Engineer Bruce Westby said assessments in Ramsey have varied from hundreds of dollars to over $7,000.

No special assessments have yet been charged for Ramsey road reconstruction projects. Westby said assessments for road reconstructions “would easily exceed $10,000” if 50 percent of a project’s costs were assessed.

Field said the commission was unable to discuss the special assessments charter rules, so this would be part of the ongoing discussion.

Only about five of the 174 miles of city streets need to be reconstructed now, according to Westby, but the city is concerned about finding a reliable funding mechanism to address about half of the streets constructed from the mid-1970s to the mid-1980s when they come up for reconstruction.

Westby said ideally a Ramsey city street should last 60 years, but only if it receives nine crack seals, six seal coats and two overlays, which means the city must be steady with funding even in difficult budget years.

He said the problem with funding road projects through the property tax levy is it fluctuates depending on the council’s priorities.

Councilmember Jason Tossey and many citizens who spoke at the Oct. 8 public hearing believe the property tax is the fairest funding source for roads, however, because it factors in property values while the current franchise fee proposal is the same regardless if a person lives in a two-bedroom townhome, a four-bedroom single-family home or owns a storefront.

According to information City Administrator Kurt Ulrich provided Tossey, $100,000 and $400,000 homeowners would each pay $192 a year under the franchise fee proposal if they have both natural gas and electric. If the $1.7 million was collected through the tax levy, the $100,000 homeowner would pay $63 and the $400,000 homeowner would pay $349, according Ulrich’s information.

“Using a franchise fee is an attempt to bypass charter on funding sources, levy limits and using taxes for local improvements tied to property values,” said resident Jim Bendtsen at the Oct. 8 hearing.

If the citizens cannot count on its council to maintain its focus on funding roads projects through property taxes, how can citizens be assured the franchise fees will not increase, he said.

After being called out by citizens for omitting safeguards for the franchise fee program within the ordinance in the Oct. 8 council packet, the Oct. 22 ordinance did include a five-year sunset clause, a section stating that franchise fee revenue would be in lieu of special assessments for street maintenance projects and could only be used for “pavement preservation and street reconstruction projects.”

Field said the charter commission consists of seven members who were appointed by the chief judge of the 10th Judicial District Court and not the council. The commission chose to convene to discuss franchise fees.

“I’m proud of the charter commission for getting involved and I’m proud of our citizens for getting involved. It’s going to lead to a better solution than what we had originally come up with and that’s what the process is supposed to do,” Councilmember Randy Backous said.

Eric Hagen is at [email protected]