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The City Council is evaluating the option t;, <br />fund the pavement management program <br />through the collection of a franchise fee in lieu <br />of assessments and property taxes. <br />What is a Franchise Fee? <br />Each city has a franchise agreement with each <br />utility company (gas, electric) for their use of city - <br />owned right -of -way for their business purposes. <br />• Right -of -way is the city property located <br />adjacent to roadways for utilities, <br />construction access, and snow storage. <br />• By law, cities may charge utilities a fee for <br />the use of city -owned right -of -way. <br />How will it be used? <br />The city would fund regular maintenance <br />projects with the fee, including overlays and <br />reconstruction, to prolong the lifecycle of streets <br />to 50 -60 years. The average life expectancy of <br />local streets is approximately 25 -30 years with <br />out ongoing maintenance. <br />Reliance on state funds, property taxes and <br />increasingly expensive materials make the <br />pavement management program vulnerable to <br />cuts and delays, thus decreasing street life. The <br />- " -- ---- `- . -'1 -- 1 -- -- - - -- -- -' - - -- '1- '- - - - -1- 1 -- 17' -- <br />Why Now? <br />With proper care, streets in Elk River should <br />last 60 years. At this point in time, over 80% <br />of all city streets have been constructed or <br />reconstructed within the last 20 years. <br />We have a growing number of streets requiring <br />costly maintenance in the near future. Scheduled <br />assessments in 2013 are as high as $8,000 for <br />some homeowners and $20,000 for the average <br />business. <br />w <br />What are the benefits? <br />• More equitable funding plan than <br />assessments based on lot size and property <br />taxes based on property value. <br />• Eliminates the need for bonding and <br />associated financing costs <br />• Smaller monthly fees instead of large tax <br />statement or assessment <br />• Also collects money from renters who pay <br />utilities, the actual street users, not just the <br />property owners <br />• Current and future property owners pay a <br />similar fee <br />• Keeps maintenance and reconstruction on <br />a proactive and timely schedule <br />Is this a New Tax? &_ <br />By definition, the planned franchise fee is a rental <br />fee or reimbursement with proceeds dedicated to <br />finance the costs of the city street system. <br />To manage the larger street network and fully <br />implement an adequate pavement management <br />plan, the city will need to more than double the <br />property tax levy to $600,000 without an alternative <br />funding source. <br />The fee will replace the general property tax levy <br />used to pay for: <br />1. Some current street improvements; <br />2. Property tax assessments directly to property <br />owners; and <br />3. General Obligation bond payments, <br />administrative fees and bond interest <br />What if I am still paying for a <br />street reconstruction or overlay <br />,_assessment? <br />A rebate plan will be put in place to offset a <br />portion of the costs associated with the past street <br />maintenance projects. <br />For Comments and More <br />Information <br />