consultants are sandburs

Thursday, June 26, 2014


Previously in a June 10 Meeting and by a 4-3 vote, Ramsey's council elected to break off discussion of franchise fee use for road-only purposes.

Whether there may be an intent to rekindle the issue, such as after the election or early next year when two new council members are seated, remains a presently indeterminate question.

At last night's charter commission meeting, based on the 4-3 council vote mooting the franchise fee question at least for now, the mood of the charter commission was to not make it a ballot question for the November election.

The issue was postponed indefinitely, leaving the matter open to possible future action, though moot at present.

Discussion focused far less on more complicated possible charter chapter 7 amendment text, and far more on an earlier charter amendment proposed months ago by commission vice-chair Niska, which would append language to the end of the italicized charter text

Sec. 10.4. - Power of regulation reserved.

Subject to any applicable state statutes, the council may by ordinance reasonably regulate and control the exercise of any franchise, including the maximum rates, fares, or prices to be charged by the grantee. No franchise value shall be included in the valuation of the grantee's property in regulating utility rates, fares, or prices under any applicable state or municipal law, or regulation, or in proceedings for municipal acquisition of the grantee's property by purchase or eminent domain.

The "Niska amendment" would adapt italicized language from the state statute authorizing municipalities to impose franchise fees

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. [...]

Per that language franchise fees are nominally imposed on utilities and not taxpayers, but with utilities allowed a pass-through to ratepayers. City staff and council admit the actual effect and impact is an indirect taxation of ratepayers.

Vice-chair Niska's proposal was adding language tracking statutory wording but limiting franchise fee use in Ramsey to "defray increased municipal costs accruing as a result of utility operations," and not for raising general revenue. The impact of that amendment, were it to happen, would be reasonably clear, to all.

The prevailing mood of the charter commissioners was to favor such a simple and direct charter prohibition should the issue again arise in a way triggering a commission reconsideration; but to be restrained rather than proactive; i.e., to not confuse the general election in November with a franchise fee ballot question of any kind.

Hopefully the wisdom of restraint will prevail, although ill-advised and confrontational citizen initiative could happen, with a ballot issue on franchise fee use raised that way and cluttering the November ballot.

It would be unfortunate were that to happen.

The last thing the Commission did, by a five member majority was to send the council this amendment proposal

Petition against council initiated improvement. If the local improvement was initiated by council resolution without an initiating petition and, within 60 days of the conclusion of the public hearing, a petition is filed with the city administrator against such local improvement and which petition is signed by greater than 50 60 percent of the owners of real property proposed to be assessed for and benefited by the local improvement, the council shall not make such local improvement at the expense of the benefited property owners. For purposes of the foregoing sentence, "owners of real property" shall not include owners of properties zoned for commercial or industrial uses or owners of properties zoned residential greater than ten acres in size based on zoning classifications in effect at the date of such petition, or owners of non-homestead real property greater than one acre in size.

Nothing else was changed in charter chapter 8, nor anywhere else in the charter.

Staff via agenda language suggested a change to a higher number might be more favorable to council sentiment, yet after substantial commission discussion the split was between leaving the lower original number unchanged, or suggesting it be raised to 60, but to no higher number than that.

During discussion, assessment language used by Ham Lake was suggested as potentially useful in Ramsey, but no formal action was taken. Presumably staff now holds that text as appropriate in public works commission deliberation and in possible future amendment of special assessment provisions of city code.

The charter is online here, and the franchise fee statute here. The city clerk noted in commission staff input at the meeting's end (before adjournment) that some charter language "housekeeping" was needed, and this was discussed along with preliminary thoughts about procedural matters for future meeting deliberation. No specific date was set for any future commission meeting.

One of the aspects of using revenue generation via a generic franchise fee, to create an ongoing pot of road related money [suggested primarily to be available to fund road upkeep, (and not new road projects), in order to avoid assessment impacts on existing homeowners] that has received inadequate attention, is evidenced by the history of the beginning of Town Center planning and effort.

Prior to the approval of Town Center sketch plan and preliminary platting, then council member Terry Hendriksen publicly argued and published on the web his argument that the city was poised to spend millions on infrastructure for a private developer/development whereas the norm always has been the developer pays for his/her/its infrastructure costs within the development, fronting whatever money that way which the market at the time requires.

Without delving into the politics of another council member owning land to be sold into development as a part of Town Center at the time Hendriksen posed his argument, (and conflicting interest problems that way), which is all history now of unfortunate decision making that cannot be undone, there remains a possible inclination of city government, if having a neat and tidy "road fund," to extend it beyond upkeep of existing infrastructure to giving subsidy to development which would socialize the costs and/or risks of the for-profit adventurer's efforts, but with the profits [if any] going narrowly into the private pocket - and more importantly - with the risk of failure/bankruptcy/incomplete activity shifted from the profit-seeker to the public.

Surely situations such as the Town Center were structured so that infrastructure cost fronted by the public was to be recouped by incremental payback as development to full build-out progressed. And the city lending Flaherty money had its payback plan too, but with the risk of failure shifted there also.

The "Town Center" subsidy problem which was then being foreseen by some who were characterized by Town Center project boosters as "negative thinkers," was that the situation was rift with risk shifting from the privateer profit-seeker(s) to the public.

A contrary situation was when sewer-water was extended to the gun club and to John Peterson's cornfield project on Nowthen Blvd at Trott Brook, in that to get development potential, sewer/water extension to the two sites was fronted in large measure - to the tune of six million dollars - by Peterson and the interests he represented [a council member's in-laws showed up prominently in the gun club chain of title, suggesting another conflicted interest situation]. That six million did not cover up front the full cost of sewer/water extension to the benefited properties, but it was a substantial majority of the infrastructure cost, [with in-project road financing, gun club and corn field, being unclear to me as to who fronted what].

Having indirect revenue channels (i.e., franchise fee) for road infrastructure invites such mischief; whereas having an attitude that for new development the developer cannot socialize either the costs or the risks of failure to the public is more in line with assessment principles.

It seems that whatever charter related franchise fee amendment, if any, may happen; the Charter Commission should study the question of whether, by charter, the citizens of Ramsey might want to forever curtail risk-shifting subsidy of private development.

The charter, and its suitable amendment that way at some point should be made a ballot question.

I would rather see that than some possibly ill-thought-out and polarizing franchise fee thing being raised this election, by citizen initiative.

The question of development subsidy restrictions, by charter, has the failed Town Center as historical fact, and the Flaherty subsidy levels pending (i.e., a risk shift for which chickens have yet to come home to roost).

Hence, may Flaherty's success happen so the city is paid back its millions that a past council put at risk; but more importantly, might the charter presently be fine-tuned to make all manner of risk shifting from private profit seeking developers to the public become "history" in Ramsey.

_____________FURTHER UPDATE____________
In terms of where Ramsey spent, in anticipation of developer promises coming to fruition, add Legacy Christian Academy, and that business they pulled, "We will move the school," which of course is still in Andover where it's been and yet the wisdom of the previous council was to pave Puma Street [aka street to nowhere] and to waste MSA money on intersection work at Hwy 116 and Armstrong, well north of where any change was needed in anticipation of the Armstrong - Hwy 10 interchange being built. It was MSA money for that, and now franchise fee spinning because Mother Hubbard's made her cupboard bare. 

Dumb is as dumb does; and we've had our share of dumb. It would be a sound charter provision to require that infrastructure cost and risk of project failure within a development be the sole responsibility of the developer, without risk or cost shifting to the public and without any part of the financing of any development cost being fronted by our town. Town Center, Flaherty, the Legacy Christians - that's what's called a track record, and if the decision makers were claimer horses with that track record, there'd be no claim but for putting the poor animals out to pasture. For all the scorn some heap on Jim Deal, he has paid his own way and put property into the tax base; or readers, if any of you know otherwise, please leave an on-point comment.


Randy Backous said...

I don't understand. If the Charter Commission truly believes the use of franchise fees over assessments is not appropriate, why don't they go ahead and put a charter amendment to the voters forever settling the issue? They either have merit or they don't. Why does the council's change of direction change their argument? Was it principle or politics? I had thought principle but this action and these statements clearly answer that question. The arrogance of threats to “keep an eye” on us is beyond outrageous.
I’m disappointed. They should have listened to staff. The 60% threshold gets us right back to where we were in my humble opinion and won’t solve any of the reasons I wanted to get away from assessments. They are begging me to go back to franchise fees and force the issue.

eric zaetsch said...

1- Randy, why did the council not pass an ordinance to force the issue? Mirror question. Mirror answer - it did not go that way.

I voted against having a ballot question since it could polarize turnout to affect up-ballot candidacies - muddying the ballot in a way I thought unwise. A way to be avoided.

The hope is that there will be no "citizen initiative" to put franchise fees on the ballot in a way that might polarize turnout.

The up-ballot candidacy choices, in the giant scheme of things, are simply more important.

As for thinking of others on the Charter Commission, I believe Susan Anderson may think as I do based on something she said in Commission-Staff input, but really Randy, I cannot speak for the minds of other people.

2- 60% barely prevailed over a mood to leave things entirely unchanged. So, why gut the entire set of protective provisions by some absurdly high super-majority requirement? Would that use of indirection be good government, or ad hoc and wrong?

Also, Randy, you presume facts not yet in evidence; that 60% makes no difference.

Experience under tThe US Senate's 60/40 anti-filibuster requirement suggest your presumption is wrong. There the 60% super-majority differential has made one big hell of a difference; with some believing a "make the obstructionists actually filibuster" being better than what's presently the case.

The road in front of our house is fine, lightly traveled with the ACE and other trucks being the main road stress; and the soil is sandy (and perks well) so that stormwater drainage instalation, curbing, widening the road - all that is/would be pure waste.

Crack tarring and scheduled seal coating are not that onerous and could be financed from general revenue - by levy.

Has a thorough boots-on-the-ground review of the actual road grid, road-by-road, been done before this entire Chicken Little exercise started?

I believe not.

Why is the council so adverse to using the levy for a clear levy purpose - road upkeep?

Cops, firemen, and roads are the basic municipal level needs; not planning or land speculation.