consultants are sandburs

Sunday, October 13, 2013

RAMSEY - A quick thought that arises from current franchise fee discussion. With contemplation of transformation of the former city hall property on Nowthen into a "data center," if a cloud storage provider function is possible, City staff should look to assure that all law regarding utility franchises, and posible franchise fees, would be reviewed - cloud service being a utility provision function.

Amazon, Mircosoft and Google, along with Box and Dropbox, Sugar Sync, and others all provide some free account cloud storage with pricing for storage beyond the initial free individual non-commercial account levels.

Readers can Bing or Google "cloud service providers" for more information.

The sole and single point here, it is a utility service, if a data center sells users a piece of the cloud. It is not if a corporation were to site a strictly in-house data sink on that site, (were it to make an offer we can't refuse).

Since no specific buyer with money on the table and a firm offer are involved, as yet, it is premature to anticipate either an in-house or utility services situation. Hence, wisdom says, plan for either or both.

And that gets into all law relating to utilities, including but not limited to MS Sect. 216B. and Sect. 410.09, respectively:

216B.36 MUNICIPAL REGULATORY AND TAXING POWERS.
Any public utility furnishing the utility services enumerated in section 216B.02 or occupying streets, highways, or other public property within a municipality may be required to obtain a license, permit, right, or franchise in accordance with the terms, conditions, and limitations of regulatory acts of the municipality, including the placing of distribution lines and facilities underground. Under the license, permit, right, or franchise, the utility may be obligated by any municipality to pay to the municipality fees to raise revenue or defray increased municipal costs accruing as a result of utility operations, or both. The fee may include but is not limited to a sum of money based upon gross operating revenues or gross earnings from its operations in the municipality so long as the public utility shall continue to operate in the municipality, unless upon request of the public utility it is expressly released from the obligation at any time by such municipality. Notwithstanding the definition of "public utility" in section 216B.02, subdivision 4, a municipality may require payment of a fee under this section by a cooperative electric association organized under chapter 308A that furnishes utility services within the municipality. All existing licenses, permits, franchises, and other rights acquired by any public utility or municipality prior to April 11, 1974, including the payment of existing franchise fees, shall not be impaired or affected in any respect by the passage of this chapter, except with respect to matters of rate and service regulation, service area assignments, securities, and indebtedness that are vested in the jurisdiction of the commission by this chapter. However, in the event that a court of competent jurisdiction determines, or the parties by mutual agreement determine, that an existing license, permit, franchise, or other right has been abrogated or impaired by this chapter, or its execution, the municipality affected shall impose and the public utility shall collect an excise tax on the utility charges which from year to year yields an amount which is reasonably equivalent to that amount of revenue which then would be due as a fee, charges or other thing or service of value to the municipality under the franchise, license, or permit. The authorization shall be over and above taxing limitations including, but not limited to, those of section 477A.016. Franchises granted pursuant to this section shall be exempt from the provisions of chapter 80C. For purposes of this section, a public utility shall include a cooperative electric association.
History: 1974 c 429 s 36; 1978 c 795 s 5; 1Sp1981 c 1 art 6 s 8; 1982 c 378 s 1; 1991 c 291 art 9 s 4

- and -

410.09 REGULATION OF FRANCHISES.
Such proposed charter may provide for regulating and controlling the exercise of privileges and franchises in or upon the streets and other public places of the city, whether granted by the city, by the legislature, or by any other authority; but no perpetual franchise or privilege shall ever be created, nor shall any exclusive franchise or privilege be granted, unless the proposed grant be first submitted to the voters of the city, and be approved by a majority of those voting thereon, nor in such case for a period of more than 25 years.
History: (1283) RL s 753; 1973 c 123 art 5 s 7

There is no time like the present for full dialog. Neglect touching one of the bases and the umpires might rule the run does not score.

Now, if a cloud provider were to site there, and sell cloud storage nationally and possibly internationally, a franchise fee in that circumstances would not necessarily weigh on any Ramsey residents, other than optional subscribers, and if a monthly franchise fee were to be demanded, how would that square with current cloud service individual low-use entry-level marketing? Franchise fees have many, many devils in their details. And anything possible should be regarded as likely, at some future time and in some future situation.

___________UPDATE____________
How about this language, from the first quoted statute:

The authorization shall be over and above taxing limitations including, but not limited to, those of section 477A.016. Franchises granted pursuant to this section shall be exempt from the provisions of chapter 80C

That MS Sect. 477A.016 states

477A.016 NEW TAXES PROHIBITED.
No county, city, town or other taxing authority shall increase a present tax or impose a new tax on sales or income.
History: 1Sp1981 c 1 art 6 s 5

So, yeah, like a sales tax. A sales tax on power, a finger ready on the switch, no pay, no heat, no lights -- no TV.

Eat raw. No cooking, if no pay the tax. Cute?

A reference to MS Ch 80C? This link.

So the cell phone towers and land line phones next, the database franchise tax on cloud services franchised to originate in Ramsey; is there any end in sight, as to possibilities to generate revenue this new fashioned way?

There seems to be a limit, in that not everything in life is a utility franchise service, but other than that, what will the market bear?

Reference to that Sect. 477A.016 undeniably says it's a tax. A retail energy sales tax. Ramsey should step back. Heed Nancy Reagan.

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