consultants are sandburs

Tuesday, October 29, 2013

RAMSEY FRANCHISE FEES - Who should set city policy, within the laws of the State of Minnesota? And, let's draw back and look at the big picture.

At present, the elected council seems disposed to adopt franchise fees.

At present, the Charter Commission has proposed a Charter amendment, the language having originated with Commissioner Harry Niska, hence it will be called the Niska Amendement, although passed by a majority of the Charter Commission, en banc.

The thrust of the Niska Amendment would be to stymie use of franchise fees to gain general revenue, or earmarked revenue, for the City; except that franchise fees could be instituted to defray increased municipal costs accruing as a result of utility operations.

The State, by statute, has determined it the policy of the State, that municipalities can use franchise fees to generate general revenue. The Niska Amendment would cut against this State policy, within Ramsey.

The council is elected. The Charter Commission is appointed by a judge, with the Legislature having decided this best rather than having a parallel elected body.

So, who should set a policy of following a State statute's revenue generating permissions, or denying that?

That's an interesting question where everyone can think it over and form an opinion.

BIG PICTURE - The Charter is the big picture for purposes of this post.

Readers can find it online, not in a single file, but chopped up into chapters which makes understanding the big picture more difficult. There had been posted on the City website a single PDF file with the entire charter in one document, but that's another story and one that is left at that for this post.

Practically, under the Niska Amendment, as worded and rushed through in a single Charter Commission meeting where the ability to reflect was lessened, there are two major loopholes.

FIRST: The council under the amendment is free to establish a "Utility Operations Reserve Account," with the stated purpose to build a reserve account earmarned to, "defray increased municipal costs accruing as a result of utility operations," that being the Niska Amendment language for which franchise fee collection would still be allowed. The council then, having created that reserve fund, impose a franchise fee structure as it deems wise, and then borrow from that reserve for road upkeep. Given how the Look-McGlone-Ramsey-Wise council majority borrowed from reserves to buy the Town Center mess from foreclosure, there is a City precedent for borrowing from Peter to pay Paul, like it or love it. Yes, it would be an end run around the Niska Amendment to do that, but the Niska Amendment by its wording not only allows it, but in fact by paralleling the statutory language of MS Sect. 216B.36, invites the end run. And if challenged in court, it likely would stand as a rational policy/implementation exercise wholly within the city's police power.

SECOND: City of Ramsey has a Stormwater Utility, with a "fee" structure not too unlike what is being proposed as a franchise fee approach. It is tiered between homes and commercial properties, but it exists. And under Charter Chapter 11, there is no cause to say it should not exist as a charter-limitations matter.

So, Niska Amendment, whatever happens in a joint Chater Commission - Council work session (whether it is mooted by some other conciliatory consensus approach) or whether not passed by a council majority and then put to a citizen vote, is irrelevant to Charter Chapter 11 being permissive of the council forming a "Road Grid Maintenance and Upgrade Utility," with the word "utility" being elastic enough to permit that reading, and to finance it nearly identical to how the stormwater utility raises its revenue for the stormwater drainage needs as they may arise, in Ramsey.

The mayor at the last televised city council meeting cited a survey conducted in the past. Last year, I believe. It might make sense if a description of the survey protocol, how participants were selected, the exact question(s) as phrased in the survey, the percentage of non-respondents, and the breakdown of how those responding responded - the key result of the survey. It would be wise if the joint Charter Commission - Council work session were to have that survey information as part of the full agenda package. Since ultimate sovereignty rests with the people [Minn.Const. ARTICLE 1, Section 1, under "BILL OF RIGHTS," unequivocally stating precisely that], an indication of a will expressed by the people is highly relevant. Surely hair-splitting is available, in that a public will expressed via a survey of course differs from a plebiscite, the survey being indicative and the plebiscite being determinative when used. However, despite such obvious distinctions, the nature and result of the survey nonetheless would be a highly relevant factor for every work session participant to weigh in considering what is best for the people. It might even trump individual prejudices of good/bad taxation held by individual work session participants, on reflection and in a spirit of working together for pragmatic outcomes.

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Arguably related and arguably unrelated to the BIG PICTURE, the question in the minds of some, is this "fee" a "tax," is not merely one asked in the abstract as a philosophical thing, nor merely a political slings-and-arrows thing; INSTEAD, it is subject to law, with the Legislature having incorporated in Minn. Stat. Ch. 645 a Sect. 645.44 WORDS AND PHRASES DEFINED, subdivision stating:

Subd. 19. Fee and tax. (a) "Tax" means any fee, charge, exaction, or assessment imposed by a governmental entity on an individual, person, entity, transaction, good, service, or other thing. It excludes a price that an individual or entity chooses voluntarily to pay in return for receipt of goods or services provided by the governmental entity. A government good or service does not include access to or the authority to engage in private market transactions with a nongovernmental party, such as licenses to engage in a trade, profession, or business or to improve private property.

(b) For purposes of applying the laws of this state, a "fee," "charge," or other similar term that satisfies the functional requirements of paragraph (a) must be treated as a tax for all purposes, regardless of whether the statute or law names or describes it as a tax. The provisions of this subdivision do not exempt a person, corporation, organization, or entity from payment of a validly imposed fee, charge, exaction, or assessment, nor preempt or supersede limitations under law that apply to fees, charges, or assessments.

(c) This subdivision is not intended to extend or limit article 4, section 18, of the Minnesota Constitution.

Add that to your philosophical musings.

___________UPDATE_____________
Everyone to a degree is familiar with the federal Constitution. For those like me who may have read only a part and not studied the entirety of Minnesota's Constitution; it is online here.

Second, it is interesting that council members, elected by the people, have contact information posted on the city website, so that members of the public can contact them to express feelings and preferences. However, the Charter Commission which is proving itself a secondary policy setting body of the City, has judicially appointed members, and members of the general public likely do not even know the makeup of that body, or how to contact Charter Commission members to express ideas and preferences. Clearly, those on council are closer to knowing the public will, while those on the Charter Commission, in honestly acting toward what they believe to be the public interest, are more distanced from direct expressions of members of the public as to what they as individuals see the public interest to be. When the Charter Commission moves against a legislated permissive fee/tax, there is some hubris to the step, of the father knows best variety, in instigating such a step. However, anything the Charter Commission suggests as a change of a city's "constitutional" nature and documentation is without effect unless ratified unanimously by council, or passed by majority via a plebiscite. In effect, charter Commissioners by majority vote can suggest virtually anything, but cannot enact a thing absent a higher level of consent.

At a guess, either a joint work session yields a compromise charter revision, or if the Commission is intransigent, there will likely be a council lack of unanimity [indeed a lack of a majority for the Niska Amendment is most likely], so that there will be a ballot question. If things go to a plebiscite, whether the plebiscite is on the Niska Amendment as it now reads, or on something else, is a guess at the future where my crystal ball is cloudy and my tealeaves indecisive.

___________FURTHER UPDATE___________
Well, given that there is the "fee" is a "tax" language in MS Ch. 645, and the totality of that section's subdivision wording, WAC and SAC fees are taxes. At least arguably so. Now, Minn. Const. Article 10, begins:

The power of taxation shall never be surrendered, suspended or contracted away. Taxes shall be uniform upon the same class of subjects and shall be levied and collected for public purposes, [...]

Well that is interesting because the imposition of SAC and WAC fees is for each dwelling unit being connected to these services, and should be "uniform upon the same class of subjects" while the past McGlone-Wise-Ramsey council voted to not impose SAC and WAC per dwelling rates general to the community, upon Flaherty's dwelling units. They "contracted away" that constitutionally mandated uniformity "upon the same class of subjects." And is such a contracting away at all permissible, in a constitutional sense? To me you'd have to torture the opening clear language of Article 10, to try to justify the deal given Flaherty by those then holding city power. And it appears to me what they did is void, as against public policy, void as against Constitutional mandate. Void.

Flaherty and his tenants got a break you and I would not get. Because, well, go figure.

History dooms us to repeat what we fail to learn from.

But aside from history being a teacher, is history binding? Is there a Constitutional impediment to Flaherty SAC and WAC fees being compromised from that which should be "uniform upon the same class of subjects," i.e., a non-waivable uniform per dwelling-unit SAC/WAC tax imposed when such dwelling-unit is connected to sewer and to water? Should that be revisited? Should Flaherty be made to pay fair freight, as a constitutional requirement?

Again, the reality is - the council can do anything it wishes by a majority vote, unless or until a judge says no.

Absent either the council revisiting the question, considering it in its constitutional dimension, or absent a taxpayer uprising against the special treatment accorded Flaherty's adventuring arising, and taking the matter to court, things will stand as they are.

Who litigates taxpayer interests? It seems Harold Hamilton's Taxpayer League is asleep at the switch. Unless Harold likes special treatment for business prospects. They should be litigating such injustices, instead of litigating to have an Iron Curtain covering their financial affairs from disclosure.

Go figure that one, sports fans.

Judges decide justiciable issues presented in cases and controversies brought to the judiciary. They do not second guess government actions on thier own initiative, absent a ripe case before them for resolution.

However, the legal arguments in our town's hypothetical case of this nature are interesting to consider in contemplation, even with no case filed or, unfortunately, likely to be filed.

There is the judicial doctrine of ripeness, and in multiple senses of the word "ripe" the Flaherty special treatment seems to be not only judicially ripe, but in another sense overripe, at least in my perception.

__________FURTHER UPDATE___________
To save reader time hunting, the first two sections of Charter Chapter 11, in their entirety state:

Sec. 11.1. - Acquisition and operation of utilities.
The city may own and operate any gas, water, heat, power, light, telephone or other public utility for supplying its own needs for utility service, or for supplying utility service to private consumers or both. It may construct all facilities reasonably needed for that purpose, and may acquire any existing utility properties so needed; but such action shall only be taken by ordinance, which shall not be an emergency ordinance. The operation of all public utilities owned by the city shall be under the supervision of the city council.

Sec. 11.2. - Rates and finances.
The council may, by ordinance, fix rates, fares and prices for municipal utilities, but such rates, fares and prices shall be just and reasonable. The council shall make each municipal utility financially self sustaining. Before any rates, fares or prices for municipal utilities shall be fixed by the council, the council shall hold a public hearing on the matter in accordance with section 11.6 of this chapter. The council shall prescribe the time and the manner in which payments for all such utility services shall be made, and may make such other regulations as may be necessary, and prescribe penalties for violations of such regulations.

Reading that last sentence of Sect. 11.2, it seems as if the council could, for a road grid utility, prescribe regular payments billed through Connexus for each account there, with a power shutdown being the penalty for nonpayment; and argue if litigated that such an arrangement is "just and reasonable" (per first sentence of 11.2), and within the city's inherent police powers. Such an argument might likely win the litigation.

Remember, the road grid is the mesh upon which the gas and electric utilities are routed. Is provision of roads not a utility function? One that can, in a colossal lack of wisdom, be privatized with toll booths at major intersections, a hopper in which you toss a quarter or two to have the arm lifted so you can drive the stretch of road to the next toll gate. Or you swipe a credit card through a reader and the arm lifts. There probably are statutes applicable to roads, for which a reader with knowledge can leave a comment, which might hedge against a municipality's privatization of its town roads. Perhaps not.

So, what's a utility? For franchise fee purposes, definition of a "utility" may be different than the most generic sense of the word, where Ramsey has a stormwater utility with stormwater grid planning, construction and maintenance outside of Minn. Stat. Ch. 216B. That Statutory Chapter is entitled, "Public Utilities." wherein the ubiquitous Sect. 216B.36 resides and authorizes franchise fee (i.e. tax) impositions.

For purposes of that statute, Sect. 216B.02, subd. 4, in a way only our legislators could deem terse, states:

Subd. 4.Public utility.
"Public utility" means persons, corporations, or other legal entities, their lessees, trustees, and receivers, now or hereafter operating, maintaining, or controlling in this state equipment or facilities for furnishing at retail natural, manufactured, or mixed gas or electric service to or for the public or engaged in the production and retail sale thereof but does not include (1) a municipality or a cooperative electric association, organized under the provisions of chapter 308A, producing or furnishing natural, manufactured, or mixed gas or electric service; (2) a retail seller of compressed natural gas used as a vehicular fuel which purchases the gas from a public utility; or (3) a retail seller of electricity used to recharge a battery that powers an electric vehicle, as defined in section 169.011, subdivision 26a, and that is not otherwise a public utility under this chapter. Except as otherwise provided, the provisions of this chapter shall not be applicable to any sale of natural, manufactured, or mixed gas or electricity by a public utility to another public utility for resale. In addition, the provisions of this chapter shall not apply to a public utility whose total natural gas business consists of supplying natural, manufactured, or mixed gas to not more than 650 customers within a city pursuant to a franchise granted by the city, provided a resolution of the city council requesting exemption from regulation is filed with the commission. The city council may rescind the resolution requesting exemption at any time, and, upon the filing of the rescinding resolution with the commission, the provisions of this chapter shall apply to the public utility. No person shall be deemed to be a public utility if it furnishes its services only to tenants or cooperative or condominium owners in buildings owned, leased, or operated by such person. No person shall be deemed to be a public utility if it furnishes service to occupants of a manufactured home or trailer park owned, leased, or operated by such person. No person shall be deemed to be a public utility if it produces or furnishes service to less than 25 persons.

Just as you've always used the word, right? Where by definition a municipal stormwater utility, or a road grid utility, would be outside of "public utility" regulation per MS Ch. 216B.36.

Ramsey provides water to homes connected to the sewer/water grid, and could implement a road utility fee of a regular fixed monthly amount invoiced on top of the usage based metered water charges. That would be a hoot to see, for those of us on our private well and septic systems - more reason to want to stay there.

Clearly, that is why the City would not impose road upkeep fees that way, since it is arguably not as "just and reasonable" as tacking the fee onto something more universal, energy to the home, or starting a separate road grid utility and doing monthly flat fee billing per dwelling unit in the city, with tiered adjusted billing possibly set for commercial entities. I.e., exactly as is the case for the stormwater utility.

There I go. Next there will be some faction of the Charter Commission hot to trot after the stormwater utility, as yet another revenue source they just do not like. I can envision that.

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