Link to the site. The most recent post there is a re-attentive look at "franchise fees."
Years ago while I was on the Charter Commission (before resigning over dissatisfaction about pathological indecision and moribund inactivity), the same question was trotted out by city officials as an indirect form of additional taxation; the story being a franchise fee is imposed on a utility, and clearly passed on in pricing, to customers - i.e., an indirect tax, imposed on a pool of citizens having a very great Venn Diagram overlap with those paying property taxes, but with the two pools not identical.
As to fee and tax jargon games; see, Minn. Stat. Sect. 645.44, subd. 19(b), re "fee" and "tax" usage at law.
The Reflector authored:
It has been the opinion of the majority of the Charter Commission up to now, that this “franchise fee” is not in compliance with the City Charter, and implementing it would require a city wide referendum vote to change the City Charter to allow it.Back when I was on the commission and the issue was diddled around by the Charter Commission without useful action, Harry Niska was a commission member who proposed making an explicit unambiguous change to Charter language to curb imposition of a franchise fee upon a utility to be passed on to customers as a hidden indirect tax on those customers. There was support for the change, but it ended up tabled. Statutes may have changed, but the current reading of Ramsey's Charter is explicit. Charter Chapter 10.4 is key:
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. [...]
Neither a franchise fee, nor royalties based upon number of meters, consumption by any consumer, or otherwise are expressly mentioned as part of Ramsey's Charter-based reserved city regulation powers over a franchisee, with only "rates, fares, or prices" enumerated as regulatory aims. Although the term "fares" is ambiguous and, hence, elastic.
Present statutory language of Minn. Stat. Sect. 451.07, subd. 6, is one instance found in searching the term "franchise fee" and usage is in terms of "the minimum franchise fee, if any, required by the city charter," suggesting express requirement in Charter language can properly be at issue. Ramsey's Charter has no express "franchise fee" requirement of any kind, by Charter.
Were I still on the Charter Commission I would argue at any meeting with franchise fees on the agenda, that amendment of the Charter to authorize franchise fees would be a prerequisite to imposition of any such fee on any utility serving Ramsey, whether a utility acquiesces of or disputes the imposition.
That focuses upon only a part of what the Ramsey Reflector recently and anonymously posted. Also, posts from 2019 might interest Ramsey folks reading this blog entry.
__________UPDATE_________
The amendment Harry Niska offered at past Charter Commission deliberation focused upon problematic statutory language :
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, [...]
[emphasis added] Regulatory acts do not mean using a franchise fee for general revenue use, or earmaked, to evade levy limits re general municipal services due the public [such as road upkeep]. Yet the "... to pay to the municipality fees to raise revenue or defray increased
municipal costs accruing as a result of utility operations, or both," language contradicts the "regulatory acts" restraint. Niska's proposal was to insert a sentence into Charter sect. 10.4 to the effect:
The City may require a utility franchisee to pay franchise fees to defray increased municipal costs accruing as a result of utility operations.
That eliminates "to raise revenue ... or both" wording in otherwise tracking statutory language, making it explicit that deferral of costs is authorized, but not a generic revenue grab (apart from actual regulatory acts) for non-regulatory use (other than by lawful taxation separate from any franchise fees).
It got tabled. Setting apart any Charter-city statutory-city dimension that might be argued, CITY OF BAXTER v. City of Brainerd, 932 NW 2d 477, 480-81 (Minn.App 2019) denied imposition of a franchise fee arrangement designed to raise revenue unrelated to regulation, for road work (Baxter is a statutory city). While arguably dicta, in that other grounds for decision existed, it is guiding law, at the least. No case construing that 2019 case was found.
All of that is background, and anybody can have an opinion about what the law is or should be, as policy, and not in any way as legal advice to anyone about anything, which is left by law to licensed lawyers to do.
Much ado about nothing? But an interesting nothing. End of this post.
FURTHER: To eliminate any doubt - The opinion here is that the entire franchise fee revenue grabbing possibility is the result of badly written law, or sneaky intent within the legislature to snake in an indirect tax on citizens, so that any city using franchise fees for anything but recouping costs of regulation and regulatory impact is a sneaky city. Elasticizing franchise fee imposition beyond such "actual regulation" bounds is otherwise an abomination against constrained good government, not being allowed to run amok.
(That is opinion, not legal advice.)
____________FURTHER UPDATE___________
City of Baxter, and Brainard are in the 9th Minnesota Judicial District, not in the 10th as is Ramsey [Anoka County]. That makes City of Baxter v City of Brainard guidance from another District but not binding precedent.
The earlier posts from 2019 on Reflections in Ramsey flesh out more basis for dispute with the imposition of utility franchise fees as a means to fund road work in Ramsey. They also indicate the franchise fee unrest is not recent in origin.
Joe Field continues to chair the Charter Commission, and as a lawyer his speaking at a council meeting [not at a work session alone] as Commission chair would help inform things. He might read the City of Baxter case in a way helpful for council and audience understanding of what the case was about and to what extent it decried and for what rasons franchise fee mis-levying. He might also be able to inform the process of the earlier franchise fee deliberation the commission had. He was chair then, Niska vice-chair. He might even call a Charter Commission meeting, to refresh members on the issue and see if there is any consensus.
It appears The League of Minnesota Cities was not party to the Baxter appeal so that consulting them would be of little help. On the other hand John Baker of the Greene, Espel firm litigated the appeal. He previously was used by the city on a Charter question, and might be willing pro bono to supply the Charter Commission and council with briefing papers from the appeal relevant to franchise fee use for roadwork unrelated to actual regulatory costs to the city arising from a franchisee's operation and city regulation of same.
Were the city to not want to hear bad news and disapprove the messenger, that is politics, but not in any way good politics. The same would be true were the city to hire Baker, not to objectively inform, but to advocate in favor of franchise fee imposition of the kind the Baxter court appears to have found misguided.
Openmindedness is a public service virtue. The council should want to be maximally informed.
_____________FURTHER UPDATE____________
The City of Baxter case actually is of no help. While the evil at play was using a franchise fee - something in the statutes discouraging municipal restraint and accountability - i.e., an apparent bailout of towns like Ramsey that spend beyond their means, allowing them to cheat the people with franchise fee mischief, and can do a cramdown - apparently lawfully - even when the people of the city do not want it done. That's a dimension of the curse of Met Council, and planners, who attach to a town like crabgrass.
The focus in Baxter was that the service provider was a municipal utility. As a statutory city it needed no mention of franchise fees in a Charter providing for utility franchise regulation. It has a statute. The court opined:
A. Chapter 216B
Pursuant to Minn. Stat. § 216B.36, a public utility that furnishes utility services to 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." This requirement may include that the public utility "pay to the municipality fees to raise revenue or defray increased municipal costs accruing as a result of utility operations, or both." Minn. Stat. § 216B.36.
The legislature included a specific definition for "public utility" in chapter 216B applicable to section 216B.36, and that definition excludes municipalities. See Minn. Stat. § 216B.02, subds. 1, 4 (defining "public utility" as "not includ[ing] ... a municipality"). We have concluded that the statute's language, on its face, "mandates that municipal utilities are excepted from regulation under chapter 216B, `except as specifically provided herein.'"
Baxter acknowledges that the legislature excluded municipal utilities from regulation under chapter 216B but asserts two grounds for this court to extend the scope of the statute to permit the revenue-raising fee pursuant to chapter 216B: (1) BPUC is operating its utility outside its municipality's border, and (2) BPUC should not be recognized as a municipal utility.
Baxter's first theory—which challenges the legislature's policy decision —does not have support in the statute's language. he plain language of Minn. Stat. §§ 216B.02, subd. 4, and .36 unambiguously does not authorize the revenue-raising franchise fee imposed by Baxter in ordinance 2016-023 because BPUC is excluded from the definition of public utility by operation of section 216B.02, subdivision
Second, Baxter asserts that Brainerd's establishment of BPUC as an independent commission deprives BPUC of a municipal-utility status. The undisputed facts show that Brainerd established BPUC to control, operate and manage the electric system. Although BPUC can act on its own to institute, prosecute, and defend on behalf of Brainerd, Brainerd continues to exercise control over BPUC. The Brainerd treasury retains revenue from BPUC's operation, the Brainerd city council approves BPUC's exercise of power to appoint and employ individuals to perform BPUC's duties, and the Brainerd city council exercises authority to approve BPUC's budget. Given the manner by which Brainerd controls BPUC, its existence as a separate entity does not deprive its status as a municipal utility.
932 NW at 482-83 (citations omitted)
As Chap. 216B currently stands, co-op utilities are not exempted. Hence, Baxter is of no help to Ramsey's franchise fee opponents, except for the fact Baxter is a statutory city, not a Charter city. And Ramsey's Charter has Franchise regulation provisions in its Chap. 10, without any authorization of franchise fees, and the Charter appears to have been so written from its inception.
With this tax unauthorized anywhere in the Ramsey governing document, the Charter, the intent to infer is that such taxation was never favored in the City to have incorporated it into the Charter. when utility franchise regulation was expressly addressed. The Niska amendment would have made this intent express instead of implicit, i.e., implied by omission of a provision of known existence in long standing law. (The language dates unchanged from Minn. Laws 1974 chap 429 sect 36; i.e. from the time after the 1973 Israeli war when OPEC in retaliation drastically raised oil prices causing "stagflation" to where an extreme new indirect municipal revenue provision may have seemed wise).
BOTTOM LINE: Had the City ever wanted to authorize franchise fees in its Charter (where the Charter expressly addresses utility franchise regulation [Charter Chap. 10]) when first passed, or afterward, the opportunities were rampant. Such a step was never taken, and the only Charter Commission or Council thought known here of any proposed franchise fee language amending the Charter was aimed directly at curbing and forestalling franchise fee imposition to raise general revenue, for roads or other regularly needed municipal duty, making the levy the continuing sole authorized imposition for general revenue income to support regular town duties unrelated to "regulatory acts," per Charter Sect. 10.4 "reasonably regulate and control the exercise of any franchise," i.e., regulation, not extortion of a tax/fee was the inferred intent in keeping that language and never adding any general revenue generation language to the Charter when ample opportunity existed, had that been a municipal intent. The Charter's importance cannot be overemphasized. For Ramsey to have amended its Charter to allow franchise fee taxation such an amendent would have had to have been put to a citizens' vote. That simply never happened, over the entire time of history of Ramsey as a Charter city.
Last, it would stretch human imagination to the breaking point to read "exercise of any franchise" in the Charter to mean shaking down utilities for money known to represent a pass-through, and hence an indirect tax on citizens. Franchises exercising their business practices is a set of actions that does not include extracting an indirect tax from ratepayers. Statutory cities can do that, Charter cities providing expressly for regulation of utilties but not taxing fees cannot.
Clearly, if councilmembers want a franchise fee, put it to a popular vote.
Via proposing a Charter authorization where none exists now, and seeing how the people vote.
Ultimate sovereignty does, by Minnesota's Constitution, rest with the people.
_________LAST UPDATE__________
Ramsey's Charter over time has been amended several times. Citizen petition in the past has led to amendment, the process having followed along specified lines for such a petitioning option.
With an amendment history, together with there never being any amendment proposed to authorize imposition of a franchise fee, is strong circumstantial evidence of a likely true belief among officials that if such a change were to be proposed it would be voted down by the people.
Those opponents to franchise fee mischief do have the option of petition to cause a vote on the Niska amendment to nail shut the franchise fee question.
Likewise officials wanting to burden the citizenry with franchise fee taxation can put their idea to a Charter amendment popular vote.
So far, neither camp has moved to clarify the Charter's implicit bar to franchise fee imposition when regulation is all that the Charter authorizes, apart from any express authorization of that uncapped special tax/fee thing as a way to gain general revenue in avoidance of the State's lawful levy-limit constraint to overspending.
Whether being an ordinary citizen-taxpayer would lead to a person having standing to seek a declaratory judgment on the Charter's implicit bar to franchise fees, a Charter Commission member doubtlessly would have standing. The ball is in the Commission's court, as to going to court. A declaratory judgment, going either way, would bring certainty to a situation appearing against imposition of a franchise fee in Ramsey. The city and electric co-op are okay with the co-op passing through such a fee, so if the city were to seek a declaratory judgment, somebody would have to file to intervene, i.e., a spine would be needed among Charter Commissioners to intervene and argue the Charter's implicit ban on franchise fees, as the Charter now stands. Something more than grumbling or putting a view on the Internet.