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Franchise Fee Option <br />Pros <br />1) No increase to the tax levy. <br />2) Stable revenue stream that can be readily adjusted anytime of the year. <br />3) Collects from all street users including schools and nonprofits who pay 429 assessments. <br />4) Smaller monthly fees instead of single larger amount on tax statement or assessment. <br />5) Collects money from renters, the actual street users, not just the property owners. <br />Cons <br />1) Less transparency in how the revenue is collected. <br />2) Would require public outreach to describe the fee and process. <br />Through staff's research into the options, the franchise fee has emerged as the most positive approach to <br />funding of a long -term pavement management program. <br />If it is the desire of the Council to move forward with a franchise fee, the next step would be to draft and <br />review a franchise ordinance and authorize the holding of a public hearing. Communication with the <br />public would be integral through this process. The process would culminate with the adoption of an <br />ordinance and notification made to the utility companies. The entire process for establishing a franchise <br />fee would take between 4 to 6 months. <br />Past Street Assessments <br />The largest challenge identified in making a funding transition is how we make it fair to property owners <br />that were recently charged a street assessment. There currently are property owners who are paying off <br />assessments. At this time, we are collecting payments on over $1.6 million of outstanding street <br />assessments. After discussions with other communities on how they have handled or propose to handle <br />this issue, we found that we are further ahead in this process than most others and we determined that <br />due to the timing and condition of our pavements it is difficult to make it any fairer for residents. <br />As alluded to in the opening paragraphs of this memo, all of the costs of the streets in Elk River have <br />been born by the residents. Either it was through the purchase of their property, the payment of an <br />assessment, or general property tax obligation. <br />A case can be made that those owners who purchased a new home, call them Owners A, have paid more <br />for the streets in Elk River than a resident, Owner B, who purchased an existing home and was assessed <br />for a street upgrade. In addition to Owner A paying for 100% of the road in front of their house, they <br />have been paying their prorated share of the 66% general city cost of the other reconstruction projects. <br />Owner B has paid 33% of the costs associated with their street in front of their home through an <br />assessment and then their prorated share of the 66% general city cost of the project. <br />Because of the system age and all residents having previously contributed to the system through either <br />the purchase of their lot or a special assessment, staff feels it is a fair approach to move forward with a <br />change in policy. The following are some ideas for consideration of the Council: <br />1. Charge all properties in the city a franchise fee starting July 2012. Refund about $1.6 million in <br />outstanding unpaid street assessments. No previously paid portions of any street assessments <br />would be refunded. <br />ParIn10 1 <br />'NATUR <br />