consultants are sandburs

Saturday, January 11, 2014

RAMSEY - FRANCHISE FEES - A current proposal that in my mind merits consensus but for one item needing attention, and to my mind, revision.

For the convenience of readers, who like me generally block pop-ups, especially when the courtesy of providing a direct link that could open in a new browser tab would be a better approach, here is the direct link to the proposed charter language amendment:

http://156.142.212.178:8080/docs/2014/CCReg/20140114_849/3963_Charter%20amendment.pdf


You will not find that direct link in the city's agenda posting. I have no idea why Ramsey's webmaster changed from links to a popup mode, but it was not a good idea - either both should be enabled, or the popup approach rescinded.

That said, the proposed language amends Charter Chapter 7, re texation. By putting an amendment there, referring to the franchise fee for what it is, a tax, one worry of some citizens over local tax payment deductibility seems met; moreover, this placement does conform to Minn. Stat. Ch. 645.44, Subd. 19, a definitions section noting "fee" and "tax" word interchangeability. The thinking behind that step is sound.

Here is where I would highlight an issue; in beginning amendment language:

SECTION 1. AUTHORITY.
This Ordinance is enacted pursuant to Minnesota Statutes section 410.12, subdivision 7.
SECTION 2. AMENDMENT.
Section 7.3 of the Home Rule Charter of the City of Ramsey is hereby amended to provide as written below:
Section 7.3 – System of taxation.
7.3.1 General authority. Subject to the state constitution, and except as forbidden by it, or by state statutes, the council shall have full power to provide by ordinance for a system of local taxation, with the exception of franchise fees, which shall be regulated as provided herein. This authority includes the power by ordinance to assess, levy, and collect taxes on all subjects or objects of taxation except as limited or prohibited by the state constitution, by this Charter or by state statutes imposing restrictions upon the city, irrespective of Charter provisions.
7.3.2 Franchise fees. All franchise fees imposed by ordinance pursuant to this Charter and Minnesota Statutes section 216B.36 shall conform to the following provisions.
7.3.2.1 Use restriction. All revenue generated through a franchise fee ordinance shall be used solely for long-term street maintenance projects, including crack filling, seal coating and overlays, and street reconstruction projects.
[...]

[italics highlight added] For starters, earmarking for road maintenance seemed too restrictive. If you are going to do franchise fees at all, better practice would be to require it for a single purpose, and require separate accounting from general funds raised by levy. But do not emarmark it in the charter.

Next, and the crux of things presuming road project earmarking will be done, "All revenue generated through a franchise fee ordinance shall be used solely for long-term street maintenance projects, including..." might best be changed to, "All revenue generated through a franchise fee ordinance shall be used solely for long-term road projects, including..." with the rationale for that suggestion being as follows:

First, primary council objection to franchise fee use, at all, has been from the Ward 3 representative. Second, Ward 3, however has been the primary beneficiary of new road work, the rerouting of Sunwood in Town Center to fit the proposed Armstrong interchange modifications, and the Armstrong work itself. Town Center residents, renters included, are and will be disproportionately benefited by these high-cost projects, in their direct neighborhood; yet all of us will pick up the tab; by general levy, presumably, where those taxpayers remote from such costly Ward 3 improvements will benefit proportionately less. Third, the narrowness of the language - as charter language - unduly constricts the future use of franchise fee income to not include possible use for debt service and debt principal retirement for those Ward 3 road items.

The suggestion is not a ward-by-ward assessment view. Rather, by making the proposed language more generic, franchise fees could be used beyond patching potholes, to pay for ALL road projects, in whole or at least in part.

The rationale for a franchise fee approach has been the canard, "We all use the roads the same whether we own large acreage, expensive homes, or rent." It is a canard, but there is still truth there.

Ward 3 has a disproportionately high share of the rental housing that exists in Ramsey. That is a fact beyond dispute. The likelihood is this will hold true into the future, a forecast clearly open to debate which the test of time will resolve. So - put that together -

Franchise fees will be charged renters. Renters, by Ward 3 locale benefit disproportionately from the Sunwood - Armstrong projects, and arguably should pay a "fair" part of the cost; with "fair" in that context being a clearly elastic term.

BOTTOM LINE: The minor language change suggested here fits charter language avoiding the trap of overspecificity, while allowing franchise fee revenue to be, (at the discretion of those we elect and not the Charter Commissioners who are appointed by a judge), used now and in the future for "road projects" generically - the cost of such projects should hit us all, while in turn, we all use the roads, renters included.

------------------

Coincidentally, I have a problem with long-term charter language referencing State statutes, particularly, given the penchant of the legislature for amendment and the code revisor's consequent renumbering, and suggest for example, that the opening sentence in the above agenda item quote might best read:

This Ordinance is enacted pursuant to Minnesota Statutes section 410.12, subdivision 7; as presently enacted or as amended or renumbered in the future.

- instead of -

This Ordinance is enacted pursuant to Minnesota Statutes section 410.12, subdivision 7.

Stylistically, it is wordier and that is a fault, yet the charter in theory at least endures over time with infrequent amendment, and the legislature changes code with a far greater frequency; leaving the situation one where an understanding of charter language might require digging into historical code changes to pin down what provision was active per a citation, at the time of charter language enactment. The sentence difference will not lessen that problem as a practical matter, but it would flag for the inexperienced reader the need for retrospection beyond simply looking at current statutory numbering and perhaps being perplexed from the effect of a prior renumbering.

This is a minor point, certainly so relative to the main suggestion above, that if earmarking is done, that it not be done in an overly restrictive way, and that - most importantly - new road project debt servicing might also be a subject addressed by franchise fee usage in addition to general levy revenues. The rationale for including new road project costs is no different from the rationale for paying road maintenance that way, and renters in either case would pay a "fair" share, fairness being greatest when rental locales are disproportionate beneficiaries of road expansion.

Much can be said about all taxation being best if by levy, and much can be said against that. However, once a decision is made to implement a franchise fee for constrained purposes, then deliberation should be given to define a proper degree of constraint -- not too much, not too little, sort of like Goldilocks and the three dishes of porridge, one being just right.

__________UPDATE___________
If the franchise fee question is destined to end up on the next election ballot, then the political football should be one fully inflated. A franchise fee for "road projects" inclusive of the Armstrong - Sunwood expense, most benefiting Ward 3, should be a part of things. That way the renters and townhome owners cannot object, as at one of the Charter Commission meetings where one resident said the equivalent of, "I own a small townhome but would be paying the same as someone with a much bigger road frontage." Put everyone's road wishes into the same pot, and that much more likely will engender consensus thought from everyone. If Ward 3 residents can get their extensive and expensive road work on everyone else's back, disproportionately via general levy, they likely would be happier but if everyone's road needs and wants are more equally subject to franchise fee revenue spending, the Ward 3 people get a benefit re the new roadwork they use more frequently, while the more distanced Ramsey residents get a road upkeep benefit for the street on which they live. Everyone pays something, everyone gets something, and there is less cause to regard any ward as disproportionately benefiting or being burdened, for another. The Ward 3 council rep and the Ward 3 residents should work all that out among themselves to realize the fairness of some form of sharing of road-related cost/benefit, citywide. If Ward 3 wants to be an impediment then they should not expect the rest of the city to be as receptive to the massive Armstrong reroute they have been most vocally championing. I know the value of the home where I reside will not get one iota of market value increase from the Armstrong project. I know that as well as I know the Town Center residents will each likely gain such a benefit; yet I am amenable to the Armstrong stuff since it does have an undeniable public safety dimension. But there needs to be some fair give and take.

No comments: