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2023-06-06 City Council Agenda Packet - work session CITY OF MENDOTA HEIGHTS CITY COUNCIL WORK SESSION AGENDA Tuesday, June 6, 2023  4:30 p.m. City Hall  1101 Victoria Curve, Mendota Heights 1. Call to Order 2. Discussion a. Financial Management—Funding City Operations and Infrastructure 3. Adjourn Alternative formats or auxiliary aids are available to individuals with disabilities upon request. Please contact city hall at 651-452-1850 or cityhall@mendotaheightsmn.gov. _________________________________________________ City Council Work Session Memo DATE: June 6, 2023 TO: Mayor and City Council FROM: Cheryl Jacobson, City Administrator Kristen Schabacker, Finance Director SUBJECT: City Financial Management Training and Informational Work Session INTRODUCTION City staff, the city’s financial advisor and city attorney will present information on city funding tools including charitable (lawful gambling), utility franchise fees, hotel and lodging tax and referendums. BACKGROUND The City’s budget reflects council priorities, city plans and policies and plays a critical role in communicating to elected officials, the community and employees the city’s plan for the use of its resources. Each year the City goes through an annual budget process to determine what operations, infrastructure and capital will be provided, how much those will cost and how they will be paid for. City Funding Tools Property Tax Levy (General Fund) The city’s operating budget is the budget used to finance the city’s core functions and obligations of the city. The operating budget is also called the General Fund budget and is supported primarily by property taxes (i.e. the levy). Property taxes are the primary revenue source for the city, and apply to all taxable property in the city. Other potential sources of revenue to consider, include: Charitable Gambling Statutory Authority: Minnesota Statutes Chapter 349 Lawful gambling is the operation, conduct, or sale of bingo, raffles, paddlewheels, tipboards and pull-tabs. The State of Minnesota, through the Gambling Control Board (the Board), regulates the conduct of charitable gambling, approves all gambling equipment, issues licenses and provides training and education to organizations, conducts compliance reviews and site inspections and imposes penalties for violations. City staff has had two inquiries from local businesses wishing to offer charitable gambling within their establishments in Mendota Heights. A prior city council last considered the allowance of charitable (lawful) gambling in September, 2019. A majority of council members were not in favor of allowing charitable gambling in Mendota Heights at that time. As a result, the proposed ordinance was not brought forward. Attachment A: Proposed Ordinance No. 543 (2019) Utility Franchise Fees (Gas and Electric) Statutory Authority: Minnesota Statutes 216B.36 Minnesota Statutes allow for cities to impose a fee on a utility company for its use of publicly owned right-of-way. Franchise fees for gas and electric utilities are subject to negotiation. The revenues from franchise fees can be useful in offsetting a city’s costs to regulate these businesses and maintain and protect the public right of way. The city’s franchising ordinances are codified in city code Title 13, Chapters 1-4. The city currently has two franchise agreements, one with Northern States Power, d/b/a Xcel Energy for electric (Ordinance 463, approved November 18, 2014) and one with Northern States Powers, d/b/a Xcel Energy for gas (Ordinance 464, approved November 18, 2014). Both are 20-year agreements. In 2014, the then city council had several discussions about the charging of utility franchise fees which could be used as a funding source to augment or replace the city’s property tax levy. At that time, the city council decided to delay any franchise fee implementation. Section 13-2-9 and section 13-3-9, provide the following franchise fee language: The city at the time of adopting this franchise agreement does not desire to require the company collect a franchise fee from its customers in the city. At a future date during the term of this franchise agreement, the city may require company to collect a franchise fee in accordance with applicable law. If so, the city may give company notice to amend this franchise agreement to authorize collection of a franchise fee by separate ordinance in an amount and upon such terms and conditions as company at that time is willing to incorporate in its electric franchise agreements with other cities. Upon receipt of such notice company shall negotiate in good faith with city to so amend this franchise agreement. (Ord. 463, 11-18-2014) (Ord. 464, 11-18-2014) Attachment B: City Ordinances 463, 464, Attachment C: Proposed City Ordinances 465, 466 from 2014 Attachment D: Xcel Energy Utility Franchise Fees Information Sheet Lodging Tax Statutory Authority: Minnesota Statutes 469.190 Lodging taxes are imposed on short-term lodging by a number of local governments in Minnesota. A local lodging tax imposed under the general law applies to rentals of 30 days or less for lodging at a “hotel, motel, rooming house, tourist court, or resort.” The city has three hotels—Extended Stay America, Courtyard by Marriot and Fairfield Inn and Suites. A local government may use 5 percent of the proceeds for administration costs but the remaining 95 percent of the revenues from a tax imposed under the general authority must be used to fund a local convention or visitor’s bureau for tourism and convention center promotion. As a way to promote recognition of Mendota Heights through area brand development, the prior city council included as a strategic action item studying the implementation of a city lodging tax. Referendum Referendum is the term given to a direct vote on a specific issue. Referendums have been used in Mendota Heights for funding initiatives like the purchase of the Par 3 golf course and the creation and expansion of the city’s Parks system in the late 1980s. Behind the scenes funding referendums are typically supported by the sale of bonds, which are paid back or paid off by residents and businesses through property taxes. REQUESTED ACTION The information presented during the work session is meant to be training and informational. Council should ask questions and generally discuss the use of the identified funding tools. Staff is looking for direction from Council on whether or not to proceed with implementation of any of the funding possibilities. If the direction is to move forward, staff will begin working on the details and necessary approvals. CITY OF MENDOTA HEIGHTS DAKOTA COUNTY, MINNESOTA ORDINANCE NO. 543 AN ORDINANCE ADDING TITLE 4 CHAPTER 8 RELATED TO GAMBLING The City Council of Mendota Heights does hereby ordain: Section 1. Mendota Heights City Code Title 4 Chapter 8 is hereby added to read as follows: 4-8. Gambling. 4-8-1. Purpose. The purpose of this chapter is to ensure that charitable gambling in the city is conducted by organizations licensed or exempt from licensing under Minnesota Statutes and that the proceeds from such gambling are used primarily for the betterment of the residents and businesses of the community. These restrictions shall be no less restrictive than Minnesota Statutes or regulations and shall apply to all forms of lawful gambling. 4-8-2. Applicability. This chapter shall regulate all forms of lawful gambling within the city except bingo conducted within a nursing home or a senior citizen housing project or by a senior citizen organization and the following are followed: A.The prizes for a single bingo game do not exceed $10.00; B.Total prizes awarded at a single bingo occasion do not exceed $200.00; C.No more than two bingo occasions are held by the organization or at the facility each week; D.Only members of the organization or residents of the nursing home or housing project are allowed to play in a bingo game; E.No compensation is paid for any persons who conduct the bingo; and F.A manager is appointed to supervise the bingo. 4-8-3. Approval required. Unless excepted from regulation by this chapter and not including exempt or excluded lawful gambling as defined by state law, it is unlawful for any organization to conduct lawful gambling in the city without approval from the city council in the form of a premises permit-and without a permit issued by the city clerk or designee. 4-8-4. Applications. A.Applications to conduct lawful gambling shall be considered and approved by the council at regular meetings. B.Only applications submitted by eligible organizations will be considered for approval. C.An application organization shall provide adequate proof that it has at least 15 active members and that at least 15 of its members are either employed or live within the city or that it is a nationally known organization as determined by the city. D.An applicant for a premises permit shall be subject to a criminal background investigation which shall include investigation of the organization and the gambling manager. E.No application for a premises permit will be considered or approved by the city council until the investigation fee is paid in full. The investigation fee under this chapter shall be in an amount set forth by city council resolution. Attachment A:Proposed Ordinance from 2019 4-8-5. Regulations and restrictions. A. In addition to regulations imposed by the state, all information and reports required to be submitted to the state shall also be submitted to the city, both with the application and on an annual basis. Failure to comply with this reporting requirement shall result in suspension of the premises permit. The city council may revoke the premises permit where the organization has failed to meet the reporting requirements on more than one occasion. B. Lawful gambling may be conducted only in on-sale liquor licensed establishments in the city, which are either owned or leased by the eligible organization. C. Eligible organizations may, however, be granted off-site gambling approval for lawful gambling in a premises other than on-sale liquor licensed establishments for no more than four consecutive days. 4-8-6. Distribution of proceeds. Every organization conducting lawful gambling within the city of Mendota Heights shall expend 50 percent of its expenditures derived from lawful gambling on lawful purposes conducted or located within the city of Mendota Heights or the city of Mendota Heights' trade area. The City of Mendota Heights' trade area is defined as the cities of Sunfish Lake, Eagan, Mendota, Lilydale, and West St. Paul. Every organization must submit a report to the city each January listing all lawful purpose expenditures from January 1 to December 31 of the preceding year. The report shall identify the name of the entity to whom the check was written, the city location of the recipient, and the amount of the donation. 4-8-7. Penalties. Violation of any provision of this Chapter shall be fined in accordance with section 1-4-1 of the city code. Additionally, a violation of this chapter shall be reported to the State Gambling Control Board and a recommendation shall be made for suspension, revocation or cancellation of an organization’s license. Section 2. This Ordinance shall be effective immediately upon its passage and publication. Adopted and ordained into an Ordinance this 3rd day of September, 2019. CITY COUNCIL CITY OF MENDOTA HEIGHTS Neil Garlock, Mayor ATTEST Lorri Smith, City Clerk page 24 ELECTRIC FRANCHISE ORDINANCE ORDINANCE NO. 463 CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, D/B/A XCEL ENERGY ITS SUCCESSORS AND ASSIGNS, PERMISSION TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF MENDOTA HEIGHTS, MINNESOTA, AN ELECTRIC DISTRIBUTION SYSTEM AND TRANSMISSION LINES, INCLUDING NECESSARY POLES, LINES, FIXTURES AND APPURTENANCES, FOR THE FURNISHING OF ELECTRIC ENERGY TO THE CITY, ITS INHABITANTS, AND OTHERS, AND TO USE THE PUBLIC GROUNDS AND PUBLIC WAYS OF THE CITY FOR SUCH PURPOSES. THE CITY COUNCIL OF THE CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA, ORDAINS: SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized teens listed in alphabetical order shall have the following meanings: 1.1 City. The City of Mendota Heights, County of Dakota, State of Minnesota. 1.2 City Utility System. Facilities used for providing non -energy related public utility service owned or operated by City or agency thereof, including sewer and water service, but excluding facilities for providing heating, lighting or other forms of energy. 1.3 Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government, which preempts all, or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission. 1.4 Company. Northern States Power Company, a Minnesota corporation, d/b/a Xcel Energy its successors and assigns. 1.5 Electric Facilities. Electric transmission and dist ibution towers, poles, lines, guys, anchors, conduits, fixtures, and necessary appurtenances owned or operated by Company for the purpose of providing electric energy for public use. 1.6 Notice. A written notice served by one party on the other party referencing one or more provisions of this Ordinance. Notice to Company shall be mailed to the General Counsel, 414 Nicollet Mall, 5th Floor, Minneapolis, MN 55401. Notice to the City shall be mailed to the City Administrator, City Hall, 1101 Victoria Curve, Mendota Heights, MN 55118. Either party may change its respective address for the purpose of this Ordinance by written notice to the other party. Ordinance 463 Page 1 Attachment B:City Ord. 463 and 464 1.7 Public Ground. Land owned by the City for park, open space or similar purpose, which is held for use in common by the public. 1.8 Public Way. Any street, alley, walkway or other public right-of-way within the City. SECTION 2. ADOPTION OF FRANCHISE. 2.1 Grant of Franchise. City hereby grants Company, for a period of 20 years from the date passed and approved by the City, the right to transmit and furnish electric energy for light, heat, power and other purposes for public and private use within and through the limits of the City as its boundaries now exist or as they may be adjusted in the future. For these purposes, Company may construct, operate, repair and maintain Electric Facilities in, on, over, tinder and across the Public Grounds and Public Ways of City, subject to the provisions of this Ordinance. Company may do all reasonable things necessary or customary to accomplish these purposes, subject, however, to such reasonable regulations as may be imposed by the City pursuant to ordinance and to the further provisions of this franchise agreement. 2.2 Effective Date; Written Acceptance. This franchise agreement shall be in force and effect from and after passage of this Ordinance, its acceptance by Company, and its publication as mg -tilted by law. The City by Council resolution may revoke this franchise agreement if Company does not file a written acceptance with the City within 90 days after publication. 2.3 Service and Rates. The service to be provided and the rates to be charged by Company for electric service in City are subject to the jurisdiction of the Commission. The area within the City in which Company may provide electric service is subject to the provisions of Minnesota Statutes, Section 216B.40. 2.4 Publication Expense. The expense of publication of this Ordinance will be paid by City and reimbursed to City by Company. 2.5 Dispute Resolution. If either party asserts that the other party is in default in the performance of any obligation hereunder, the complaining party shall notify the other party of the default and the desired remedy. The notification shall be written. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved within 30 days of the written notice, the parties may jointly select a mediator to facilitate further discussion. The parties will equally share the fees and expenses of this medin tor. If a mediator is not used or if the parties are unable to resolve the dispute within 30 days after first meeting with the selected medintor, either party may commence an action in District Court to interpret and enforce this franchise agreement or for such other relief as may be permitted by law or equity for breach of contract, or either party may take any other action permitted by law. SECTION 3. LOCATION, OTHER REGULATIONS. 3.1 Location of Facilities. Electric Facilities shall be located, constructed and maintained so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways and so as not to disrupt normal operation of any City Utility System previously installed therein. Ordinance 463 Page 2 Electric Facilities shall be located on Public Grounds as detertnined by the City. Company's construction, reconstruction, operation, repair, maintenance and location of Electric Facilities shall be subject to permits if required by separate ordinance and to other reasonable regulations of the City to the extent not inconsistent with the terms of this franchise agreement. Company may abandon underground Electric Facilities in place, provided at the City's request, Company will remove abandoned metal or concrete encased conduit interfering with a City improvement project, but only to the extent such conduit is uncovered by excavation as part of the City improvement project. 3.2 Field Locations. Company shall provide field locations for its underground Electfic Facilities within City consistent with the requirements of Minnesota Statutes, Chapter 216D. 3.3 Street Openings. Company shall not open or disturb any Public Ground or Public Way for any purpose without first having obtained a permit from the City, if required by a separate ordinance, for which the City may impose a reasonable fee. Permit conditions imposed on Company shall not be more burdensome than those imposed on other utilities for similar facilities or work. Company may, however, open and disturb any Public Ground or Public Way without permission from the City where an emergency exists requiring the immediate repair of Electric Facilities. In such event Company shall notify the City by telephone to the office designated by the City as soon as practicable Not later than the second working day thereafter, Company shall obtain any required permits and pay any required fees. 3.4 Restoration. After undertaking any work requiring the opening of any Public Ground or Public Way, Company shall restore the same, including paving and its foundation, to as good a condition as formerly existed, and shall maintain any paved surface in good condition for one year thereafter. The work shall be completed as promptly as weather permits, and if Company shall not promptly perform and complete the work, remove all dirt, rubbish, equipment and material, and put the Public Ground or Public Way in the said condition, the City shall have, after demand to Company to cure and the passage of a reasonable period of time following the demand, but not to exceed five days, the right to make the restoration at the expense of Company. Company shall pay to the City the cost of such work done for or performed by the City. This remedy shall be in addition to any other remedy available to the City for noncompliance with this Section 3.4, but the City hereby waives any requirement for Company to post a construction performance bond, certificate of insurance, letter of credit or any other form of security or assurance that may be required, under a separate existing or future ordinance of the City, of a person or entity obtaining the City's permission to install, replace or maintain facilities in a Public Way. 3.5 Avoid Damage to Electric Facilities. Nothing in this Ordinance relieves any person from liability arising out of the failure to exercise reasonable care to avoid damaging Electric Facilities while performing any activity. 3.6 Notice of Improvements. The City must give Company reasonable notice of plans for improvements to Public Grounds or Public Ways where the City has reason to believe that Electric Facilities may affect or be affected by the improvement. The notice must contain: (i) the nature and character of the improvements, (ii) the Public Grounds and Public Ways upon which the improvements are to be made, (iii) the extent of the improvements, (iv) the time when the City will start the work, and (v) if more than one Public Ground or Public Way is involved, the order in which Ordinance 463 Page 3 the work is to proceed. The notice must be given to Company a sufficient length of time in advance of the actual commencement of the work to permit Company to make any necessary additions, alterations or repairs to its Electric Facilities. 3.7 Shared Use of Poles. Company shall make space available on its poles or towers for City fire, water utility, police or other City facilities upon terms and conditions acceptable to Company whenever such use will not interfere with the use of such poles or towers by Company, by another electric utility, by a telephone utility, or by any cable television company or other form of communication company. In addition, the City shall pay for any added cost incurred by Company because of such use by City. SECTION 4. RELOCATIONS. 4.1 Relocation of Electric Facilities in Public Ways. If the City determines to vacate a Public Way for a City improvement project, or at City's cost to grade, regrade, or change the line of any Public Way, or construct or reconstruct any City Utility System in any Public Way, it may order Company to relocate its Electdc Facilities located therein if relocation is reasonably necessary to accomplish the City's proposed public improvement. Except as provided in Section 4.3, Company shall relocate its Electric Facilities at its own expense. The City shall give Company reasonable notice of plans to vacate for a City improvement project, or to grade, regrade, or change the line of any Public Way or to construct or reconstruct any City Utility System. If a relocation is ordered within five years of a prior relocation of the same Electric Facilities, which was made at Company expense, the City shall reimburse Company for non -betterment costs on a time and material basis, provided that if a subsequent relocation is required because of the extension of a City Utility System to a previously unserved area, Company may be required to make the subsequent relocation at its expense. Nothing in this Ordinance requires Company to relocate, remove, replace or reconstruct at its own expense its Electric Facilities where such relocation, removal, replacement or reconstruction is solely for the convenience of the City and is not reasonably necessary for the construction or reconstruction of a Public Way or City Utility System or other City improvement. 4.2 Relocation of Electric Facilities in Public Ground. City may require Company at Company's expense to relocate or remove its Electric Facilities from Public Ground upon a finding by City that the Electric Facilities have become or will become a substantial impairment to the existing or proposed public use of the Public Ground. 4.3 Projects with Federal Funding. City shall not order Company to remove or relocate its Electric Facilities when a Public Way is vacated, improved or realigned for a right-of-way project or any other project which is financially subsidized in whole or in part by the Federal Government or any agency thereof, unless the reasonable non -betterment costs of such relocation are first paid to Company. The City is obligated to pay Company only for those portions of its relocation costs for which City has received federal funding specifically allocated for relocation costs in the amount requested by the Company, which allocated funding the City shall specifically request. Relocation, removal or rearrangement of any Company Electric Facilities made necessary because of a federally - aided highway project shall be governed by the provisions of Minnesota Statutes, Section 161.46, as supplemented or amended. It is understood that the fights herein granted to Company are valuable rights. Ordinance 463 Page 4 4.4 No Waiver. The provisions of this franchise apply only to facilities constructed in reliance on a franchise from the City and shall not be construed to waive or modify any rights obtained by Company for installations within a Company right-of-way acquired by easement or prescriptive tight before the applicable Public Ground or Public Way was established, or Company's rights under state or county permit. SECTION 5. TREE TRIMMING. Company may trim all trees and shrubs in the Public Grounds and Public Ways of City to the extent Company finds necessary to avoid interference with the proper construction, operation, repair and maintenance of any Electric Facilities installed hereunder, provided that Company shall save the City harmless from any liability arising therefrom, and subject to pen -nit or other reasonable regulation by the City. SECTION 6. INDEMNIFICATION. 6.1 Indemnity of City. Company shall indemnify, keep and hold the City free and harmless from any and all liability on account of injury to persons or damage to property occasioned by the construction, maintenance, repair, inspection, the issuance of permits, or the operation of the Electric Facilities located in the Public Grounds and Public Ways. The City shall not be indemnified for losses or claims occasioned through its own negligence except for losses or claims arising out of or alleging the City's negligence as to the issuance of permits for, or inspection of, Company's plans or work. The City shall not be indemnified if the injury or damage results from the performance in a proper manner of acts reasonably deemed hazardous by Company, and such performance is nevertheless ordered or directed by City after notice of Company's determination. 6.2 Defense of City. In the event a suit is brought against the City under circumstances where this agreement to indemnify applies, Company at its sole cost and expense shall defend the City in such suit if written notice thereof is promptly given to Company within a period wherein Company is not prejudiced by lack of such notice. If Company is required to indemnify and defend, it will thereafter have control of such litigation, but Company may not settle such litigation without the consent of the City, which consent shall not be unreasonably withheld. This section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City and Company, in defending any action on behalf of the City shall be entitled to assert in any action every defense or immunity that the City could assert in its own behalf. SECTION 7. VACATION OF PUBLIC WAYS. The City shall give Company at least two weeks prior written notice of a proposed vacation of a Public Way. Except where required for a City improvement project, the vacation of any Public Way, after the installation of Electtic Facilities, shall not operate to deprive Company of its fights to operate and maintain such Electric Facilities, until the reasonable cost of relocating the same and the loss and expense resulting from such relocation are first paid to Company. In no case, however, shall City be liable to Company for failure to specifically preserve a right-of-way under Minnesota Statutes, Section 160.29. Ordinance 463 Page 5 SECTION 8. CHANGE IN FORM OF GOVERNMENT. Any change in the form of government of the City shall not affect the validity of this Ordinance. Any governmental unit succeeding the City shall, without the consent of Company, succeed to all of the rights and obligations of the City provided in this Ordinance. SECTION 9. FRANCHISE FEE. The City at the time of adopting this franchise agreement does not desire to require the Company collect a franchise fee from its customers in the City. At a future date during the tem) of this franchise agreement, the City may require Company to collect a franchise fee in accordance with applicable law. If so, the City may give Company Notice to amend this franchise agreement to authorize collection of a franchise fee by separate ordinance in an amount and upon such terms and conditions as Company at that time is willing to incorporate in its electric franchise agreements with other cities. Upon receipt of such Notice Company shall negotiate in good faith with City to so amend this franchise agreement. SECTION 10. PROVISIONS OF ORDINANCE. 10.1 Severability. Every section, provision, or part of this Ordinance is declared separate from every other section, provision, or part and if any section, provision, or part shall be held invalid, it shall not affect any other section, provision, or part. Where a provision of any other City ordinance conflicts with the provisions of this Ordinance, the provisions of this Ordinance shall prevail. 10.2 Limitation on Applicability. This Ordinance constitutes a franchise agreement between the City and Company as the only parties and no provision of this franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. Ordinance 463 Page 6 SECTION 11. AMENDMENT PROCEDURE. Either party to this franchise agreement may at any time propose that the agreement be amended to address a subject of concern and the other party will consider whether it agrees that the amendment is mutually appropriate. If an amendment is agreed upon, this Ordinance may be amended at any time by the City passing a subsequent ordinance declaring the provisions of the amendment, which amendatory ordinance shall become effective upon the filing of Company's written consent thereto with the City Clerk within 90 days after the date of final passage by the City of the amendatory ordinance. SECTION 12. PREVIOUS FRANCHISES SUPERSEDED. This franchise supersedes any previous electric franchise granted to Company or its predecessor. Passed and approved: November 18, 2014. Attest: City Clerk Date Published: ic:;?c2014-- Page 7 Ordinance 463 ACCEPTANCE OF ORDINANCE NO. 463 CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA ACCEPTANCE OF ELECTRIC FRANCHISE: WHEREAS, the City Council of the City of Mendota Heights, Dakota County, Minnesota, on the 18th day of November, 2014, passed and adopted Ordinance No. 463, entitled: AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, D/B/A XCEL ENERGY ITS SUCCESSORS AND ASSIGNS, PERMISSION TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF MENDOTA HEIGHTS, MINNESOTA, AN ELECTRIC DISTRIBUTION SYSTEM AND TRANSMISSION LINES, INCLUDING NECESSARY POLES, LINES, FIXTURES AND APPURTENANCES, FOR THE FURNISHING OF ELECTRIC ENERGY TO THE CITY, ITS INHABITANTS, AND OTHERS, AND TO USE THE PUBLIC GROUNDS AND PUBLIC WAYS OF THE CITY FOR SUCH PURPOSES. which Ordinance was duly published according to law on the 7th day of December, 2014, in the South-West Review, a newspaper circulated in and serving as the legal newspaper for the City of Mendota Heights, Dakota County, and State of Minnesota, and which Ordinance is not effective unless accepted in writing by Northern States Power Company, a Minnesota corporation. NOW THEREFORE, Northern States Power Company, a Minnesota corporation for itself and its successors and assigns, does hereby accept all the terms and conditions of said Ordinance. IN WITNESS WHEREOF, Northern States Power Company, a Minnesota corporation has caused this document to be executed in its corporate name by its duly authorized persons and its corporate seal to be hereto affixed this 29th day of January, 2015. Q?;DQ,PO/.j,9 Fn Attest: ii o m rro.U-, IVES P Tara Heine Assistant Corporate Secretary Northern States Power Company, a Minnesota corporation UZI/ By: trick V. Cline Director, Community Relations GAS FRANCHISE ORDINANCE ORDINANCE NO. 464 CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, D/B/A XCEL ENERGY ITS SUCCESSORS AND ASSIGNS, PERMISSION TO ERECT A GAS DISTRIBUTION SYSTEM FOR THE PURPOSES OF CONSTRUCTING, OPERATING, REPAIRING AND MAINTAINING IN THE CITY OF MENDOTA HEIGHTS, MINNESOTA, THE NECESSARY GAS PIPES, MAINS AND APPURTENANCES FOR THE TRANSMISSION OR DISTRIBUTION OF GAS TO THE CITY AND ITS INHABITANTS AND OTHERS AND TRANSMITTING GAS INTO AND THROUGH THE CITY AND TO USE THE PUBLIC GROUNDS AND PUBLIC WAYS OF THE CITY FOR SUCH PURPOSES. THE CITY COUNCIL OF THE CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA, ORDAINS: SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terns listed in alphabetical order shall have the following meanings: 1.1 City. The City of Mendota Heights, County of Dakota, State of Minnesota. 1.2 City Utility System. Facilities used for providing non -energy related public utility service owned or operated by City or agency thereof, including sewer and water service, but excluding facilities for providing heating, lighting or other forms of energy. 1.3 Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government, which preempts all, or part of the authority to regulate Gas retail rates now vested in the Minnesota Public Utilities Commission. 1.4 Company. Northern States Power Company, a Minnesota corporation, d/b/a Xcel Energy its successors and assigns. 1.5 Gas. "Gas" as used herein shall be held to include natural gas, manufactured gas, or other form of gaseous energy. 1.6 Gas Facilities. Pipes, mains, regulators, and other facilities owned or operated by Company for the purpose of providing gas service for public use. 1.7 Notice. A written notice served by one party on the other party referencing one or more provisions of this Ordinance. Notice to Company shall be mailed to the General Counsel, 414 Nicollet Mall, 5th Floor, Minneapolis, MN 55401. Notice to the City shall be mailed to the City Administrator, City Hall, 1101 Victoria Curve, Mendota Heights, MN 55118. Either party may change its respective address for the purpose of this Ordinance by written notice to the other party. 1.8 Public Ground. Land owned by the City for park, open space or similar purpose, which is held for use in common by the public. 1.9 Public Way. Any street, alley, walkway or other public tight -of -way within the City. SECTION 2. ADOPTION OF FRANCHISE. 2.1 Grant of Franchise. City hereby grants Company, for a period of 20 years from the date passed and apptoved by the City, the right to transmit and furnish Gas energy for light, heat, power and other purposes for public and private use within and through the limits of the City as its boundaries now exist or as they may be adjusted in the future. For these purposes, Company may construct, operate, repair and maintain Gas Facilities in, on, over, under and across the Public Grounds and Public Ways of City, subject to the provisions of this Ordinance. Company may do all reasonable things necessary or customary to accomplish these purposes, subject, however, to such reasonable regulations as may be imposed by the City pursuant to ordinance and to the further provisions of this franchise agreement. 2.2 Effective Date; Written Acceptance. This franchise agreement shall be in force and effect from and after passage of this Ordinance, its acceptance by Company, and its publication as required by law. The City by Council resolution may revoke this franchise agreement if Company does not file a written acceptance with the City within 90 days after publication. 2.3 Service and Rates. The service to be provided and the rates to be charged by Company for Gas service in City are subject to the jurisdiction of the Commission. 2.4 Publication Expense. The expense of publication of this Ordinance will be paid by City and reimbursed to City by Company. 2.5 Dispute Resolution. If either party asserts that the other party is in default in the performance of any obligation hereunder, the complaining party shall notify the other party of the default and the desired remedy. The notification shall be written. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved within 30 days of the written notice, the parties may jointly select a mediator to facilitate further discussion. The parties will equally share the fees and expenses of this mediator. If a mediator is not used, or if the parties are unable to resolve the dispute within 30 days after first meeting with the selected mediator, either party may commence an action in District Court to interpret and enforce this franchise agreement or for such other relief as may be permitted by law ot equity for breach of contract, or either party may take any other action permitted by law. SECTION 3. LOCATION, OTHER REGULATIONS. 3.1 Location of Facilities. Gas Facilities shall be located, constructed and maintained so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways and so as not to disrupt noting operation of any City Utility System previously installed therein. Gas Facilities shall be located on Public Grounds as determined by the City. Company's construction, reconstruction, operation, repair, maintenance and location of Gas Facilities shall be subject to permits if required by separate ordinance and to other reasonable regulations of the City to the extent not Ordinance 464 Page 2 inconsistent with the terns of this franchise agreement. Company may abandon underground gas facilities in place, provided, at City's request, Company will remove abandoned metal pipe interfering with a City improvement project, but only to the extent such metal pipe is uncovered by excavation as part of the City's improvement project. 3.2 Field Locations. Company shall provide field locations for its underground Gas Facilities within City consistent with the requirements of Minnesota Statutes, Chapter 216D. 3.3 Street Openings. Company shall not open or disturb any Public Ground or Public Way for any purpose without first having obtained a permit from the City, if required by a separate ordinance, for which the City may impose a reasonable fee. Permit conditions imposed on Company shall not be more burdensome than those imposed on other utilities for similar facilities or work. Company may, however, open and disturb any Public Ground or Public Way without permission from the City where an emergency exists requiring the .immediate repair of Gas Facilities. In such event Company shall notify the City by telephone to the office designated by the City as soon as practicable. Not later than the second working day thereafter, Company shall obtain any required permits and pay any required fees. 3.4 Restoration. After undertaking any work requiring the opening of any Public Ground or Public Way, Company shall restore the same, including paving and its foundation, to as good a condition as formerly existed, and shall maintain any paved surface in good condition for one year thereafter. The work shall be completed as promptly as weather permits, and if Company shall not promptly perform and complete the work, remove all dirt, rubbish, equipment and material, and put the Public Ground or Public Way in the said condition, the City shall have, after demand to Company to cure and the passage of a reasonable period of time following the demand, but not to exceed five days, the right to make the restoration at the expense of Company. Company shall pay to the City the cost of such work done for or performed by the City. This remedy shall be in addition to any other remedy available to the City for noncompliance with this Section 3.4, but the City hereby waives any requirement for Company to post a construction performance bond, certificate of insurance, letter of credit or any other form of security or assurance that may be required, under a separate existing or future ordinance of the City, of a person or entity obtaining the City's permission to install, replace or maintain facilities in a Public Way. 3.5 Avoid Damage to Gas Facilities. Nothing in this Ordinance relieves any person from liability arising out of the failure to exercise reasonable care to avoid damaging Gas Facilities while performing any activity. 3.6 Notice of Improvements. The City must give Company reasonable notice of plans for improvements to Public Grounds or Public Ways where the City has reason to believe that Gas Facilities may affect or be affected by the improvement. The notice must contain: (i) the nature and character of the improvements, (ii) the Public Grounds and Public Ways upon which the improvements are to be made, (iii) the extent of the improvements, (iv) the time when the City will start the work, and (v) if more than one Public Ground or Public Way is involved, the order in which the work is to proceed. The notice must be given to Company a sufficient length of time in advance of the actual commencement of the work to permit Company to make any necessary additions, alterations or repairs to its Gas Facilities. Ordinance 464 Page 3 SECTION 4. RELOCATIONS. 4.1 Relocation of Gas Facilities in Public Ways. If the City determines to vacate a Public Way for a City improvement project, or at City's cost to grade, regrade, or change the line of any Public Way, or construct or reconstruct any City Utility System in any Public Way, it may order Company to relocate its Gas Facilities located therein if relocation is reasonably necessary to accomplish the City's proposed public improvement. Except as provided in Section 4.3, Company shall relocate its Gas Facilities at its own expense. The City shall give Company reasonable notice of plans to vacate for a City improvement project, or to grade, regrade, or change the line of any Public Way or to construct or reconstruct any City Utility System. If a relocation is ordered within five years of a prior relocation of the same Gas Facilities, which was made at Company expense, the City shall reimburse Company for Non -Betterment Costs on a time and material basis, provided that if a subsequent relocation is required because of the extension of a City Utility System to a previously unserved area, Company may be required to make the subsequent relocation at its expense. Nothing in this Ordinance requires Company to relocate, remove, replace or reconstruct at its own expense its Gas Facilities where such relocation, removal, replacement or reconstruction is solely for the convenience of the City and is not reasonably necessary for the construction or reconstruction of a Public Way or City Utility System or other City improvement. 4.2 Relocation of Gas Facilities in Public Ground. City may require Company at Company's expense to relocate or remove its Gas Facilities from Public Ground upon a finding by City that the Gas Facilities have become or will become a substantial impairment to the existing or proposed public use of the Public Ground. 4.3 Projects with Federal Funding. City shall not order Company to remove or relocate its Gas Facilities when a Public Way is vacated, improved or realigned for a right-of-way project or any other project which is financially subsidized in whole or in part by the Federal Government or any agency thereof, unless the reasonable non -betterment costs of such relocation are first paid to Company. The City is obligated to pay Company only for those portions of its relocation costs for which City has received federal funding specifically allocated for relocation costs in the amount requested by the Company, which allocated funding the City shall specifically request. Relocation, removal or rearrangement of any Company Gas Facilities made necessary because of a federally - aided highway project shall be governed by the provisions of Minnesota Statutes, Section 161.46, as supplemented or amended. It is understood that the rights herein granted to Company are valuable rights. 4.4 No Waiver. The provisions of this franchise apply only to facilities constructed in reliance on a franchise from the City and shall not be construed to waive or modify any rights obtained by Company for installations within a Company right-of-way acquired by easement or prescriptive right before the applicable Public Ground or Public Way was established, or Company's rights under state or county permit. SECTION 5. TREE TRIMMING. Company is also granted the permission and authority to trim all shrubs and trees, including roots, in the Public Ways of City to the extent Company finds necessary to avoid interference with the proper construction, operation, repair and maintenance of Gas Facilities, provided that Company shall save City harmless from any liability in the premises. Ordinance 464 Page 4 SECTION 6. INDEMNIFICATION. 6.1 Indemnity of City. Company shall indemnify, keep and hold the City free and harmless from any and all liability on account of injury to persons or damage to property occasioned by the construction, maintenance, repair, inspection, the issuance of permits, or the operation of the Gas Facilities located in the Public Grounds and Public Ways. The City shall not be indemnified for losses or claims occasioned through its own negligence except for losses or claims arising out of or alleging the City's negligence as to the issuance of permits for, or inspection of, Company's plans or work. The City shall not be indemnified if the injury or damage results from the performance in a proper manner of acts reasonably deemed hazardous by Company, and such performance is nevertheless ordered or directed by City after notice of Company's determination. 6.2 Defense of City. In the event a suit is brought against the City under circumstances where this agreement to indemnify applies, Company at its sole cost and expense shall defend the City in such suit if written notice thereof is promptly given to Company within a period wherein Company is not prejudiced by lack of such notice. If Company is required to indemnify and defend, it will thereafter have control of such litigation, but Company may not settle such litigation without the consent of the City, which consent shall not be unreasonably withheld. This section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City and Company, in defending any action on behalf of the City shall be entitled to assert in any action every defense or immunity that the City could assert in its own behalf. SECTION 7. VACATION OF PUBLIC WAYS. The City shall give Company at least two weeks prior written notice of a proposed vacation of a Public Way. Except where required for a City improvement project, the vacation of any Public Way, after the installation of Gas Facilities, shall not operate to deptive Company of its rights to operate and maintain such Gas Facilities, until the reasonable cost of relocating the same and the loss and expense resulting from such relocation are first paid to Company. In no case, however, shall City be liable to Company for failure to specifically preserve a right-of-way under Minnesota Statutes, Section 160.29. SECTION 8. CHANGE IN FORM OF GOVERNMENT. Any change in the faun of government of the City shall not affect the validity of this Ordinance. Any governmental unit succeeding the City shall, without the consent of Company, succeed to all of the rights and obligations of the City provided in this Ordinance. SECTION 9. FRANCHISE FEE. The City at the time of adopting this franchise agreement does not desire to require the Company collect a franchise fee from its customers in the City. At a future date during the term of this franchise agreement, the City may require Company to collect a franchise fee in accordance with applicable law. If so, the City may give Company Notice to amend this franchise agreement to authorize collection of a franchise fee by separate ordinance in an amount and upon such terms and conditions as Company at that time is willing to incorporate in its gas franchise agreements with other cities. Upon receipt of such Notice Company shall negotiate in good faith with City to so amend this franchise agreement. Ordinance 464 Page 5 SECTION 10. PROVISIONS OF ORDINANCE. 10.1 Severability. Every section, provision, or part of this Ordinance is declared separate from every other section, provision, or part and if any section, provision, or part shall be held invalid, it shall not affect any other section, provision, or part. Where a provision of any other City ordinance confficts with the provisions of this Ordinance, the provisions of this Ordinance shall prevail. 10.2 Limitation on Applicability. This Ordinance constitutes a franchise agreement between the City and Company as the only parties and no provision of this franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. SECTION 11. AMENDMENT PROCEDURE. Either party to this franchise agreement may at any time propose that the agreement be amended to address a subject of concern and the other party will consider whether it agrees that the amendment is mutually appropriate. If an amendment is agreed upon, this Ordinance may be amended at any time by the City passing a subsequent ordinance declaring the provisions of the amendment, which amendatory ordinance shall become effective upon the filing of Company's written consent thereto with the City Clerk within 90 days after the date of final passage by the City of the amendatory ordinance. SECTION 12. PREVIOUS FRANCHISES SUPERSEDED. This franchise supersedes any previous Gas franchise granted to Company or its predecessor. Passed and approved: November 18, 2014. City Clerk Date Published: 7 -14 - Ordinance 464 Page 6 ACCEPTANCE OF ORDINANCE NO. 464 CITY OF MENDOTA HEIGHTS, DAKOTA COUNTY, MINNESOTA ACCEPTANCE OF GAS FRANCHISE: WHEREAS, the City Council of the City of Mendota Heights, Dakota County, Minnesota, on the 18th day of November, 2014, passed and adopted Ordinance No. 464, entitled: AN ORDINANCE GRANTING TO NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, D/B/A XCEL ENERGY ITS SUCCESSORS AND ASSIGNS, PERMISSION TO ERECT A GAS DISTRIBUTION SYSTEM FOR THE PURPOSES OF CONSTRUCTING, OPERATING, REPAIRING AND MAINTAINING IN THE CITY OF MENDOTA HEIGHTS, MINNESOTA, THE NECESSARY GAS PIPES, MAINS AND APPURTENANCES FOR THE TRANSMISSION OR DISTRIBUTION OF GAS TO THE CITY AND ITS INHABITANTS AND OTHERS AND TRANSMITTING GAS INTO AND THROUGH THE CITY AND TO USE THE PUBLIC GROUNDS AND PUBLIC WAYS OF THE CITY FOR SUCH PURPOSES. which Ordinance was duly published according to law on the 7th day of December, 2014, in the South-West Review, a newspaper circulated in and serving as the legal newspaper for the City of Mendota Heights, Dakota County, and State of Minnesota, and which Ordinance is not effective unless accepted in writing by Northern States Power Company, a Minnesota corporation. NOW THEREFORE, Northern States Power Company, a Minnesota corporation, for itself and its successors and assigns, does hereby accept all the terms and conditions of said Ordinance. IN WITNESS WHEREOF, Northern States Power Company, a Minnesota corporation has caused this document to be executed in its corporate name by its duly authorized persons and its corporate seal to be hereto affixed this 29th day of January, 2015. S pSEu Pqd - PpO%9Vp Attest: 2 ' 2000. R1 NNES P ara Heine Assistant Corporate Secretary Northern States Power Company, a Minnesota corporation By: Patriyk V. Cline Director, Community Relations ORDINANCE NO. 465 AN ORDINANCE IMPLEMENTING AN ELECTRIC SERVICE FRANCHISE FEE ON NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, D/B/A XCEL ENERGY, ITS SUCCESSORS AND ASSIGNS, FOR PROVIDING ELECTRIC SERVICE WITHIN THE CITY OF MENDOTA HEIGHTS. THE CITY COUNCIL OF THE CITY OF MENDOTA HEIGHTS DOES ORDAIN: SECTION 1. The City of Mendota Heights Municipal Code is hereby amended to include reference to the following Special Ordinance. Subdivision 1. Purpose. The Mendota Heights City Council has determined that it is in the best interest of the City to impose a franchise fee on those public utility companies that provide electric services within the City of Mendota Heights. (a)Pursuant to City Ordinance ___ , a Franchise Agreement between the City of andNorthern States Power Company, a Minnesota corporation, d/b/a Xcel Energy, its successorsand assigns, the City has the right to impose a franchise fee on Northern States PowerCompany, a Minnesota corporation, d/b/a Xcel Energy, its successors and assigns, in anamount and fee design as set forth in Section 9 of the Northern States Power CompanyFranchise and in the fee schedule attached hereto as Schedule A.Subdivision 2. Franchise Fee Statement. A franchise fee is hereby imposed on Northern States Power Company, a Minnesota Corporation, d/b/a Xcel Energy, its successors and assigns, under its electric franchise in accordance with the schedule attached here to and made a part of this Ordinance, commencing with the Xcel Energy __________ , 20_ billing month. This fee is an account-based fee on each premise and not a meter-based fee. In the event that an entity covered by this ordinance has more than one meter at a single premise, but only one account, only one fee shall be assessed to that account. If a premise has two or more meters being billed at different rates, the Company may have an account for each rate classification, which will result in more than one franchise fee assessment for electric service to that premise. If the Company combines the rate classifications into a single account, the franchise fee assessed to the account will be the largest franchise fee applicable to a single rate classification for energy delivered to that premise. In the event any entities covered by this ordinance have more than one premise, each premise (address) shall be subject to the appropriate fee. In the event a question arises as to the proper fee amount for any premise, the Company's manner of billing for energy used at all similar premises in the city will control. Subdivision 3. Payment. The said franchise fee shall be payable to the City in accordance with the terms set forth in Section 9.4 of the Franchise. Subdivision 4. Sur charge. The City recognizes that the Minnesota Public Utilities Commission may allow Company to add a surcharge to customer rates of city residents to reimburse Company for the cost of the fee. Attachment C:Proposed Ordinance 465 & 466 from 2014 page 59 Subdivision 5. Enforcement. Any dispute, including enforcement of a default regarding this ordinance will be resolved in accordance with Section 2.5 of the Franchise Agreement. Subdivision 6. Effective Date of Franchise Fee. The effective date of this Ordinance shall be after its publication and ninety (90) days after the sending of written notice enclosing a copy of this adopted Ordinance to Xcel Energy by certified mail. Collection of the fee shall commence as provided above. Passed and approved: 12014. Attest: City Clerk SEAL Mayor SCHEDULE A Franchise Fee Rates: Electric Utility page 60 The franchise fee shall be in an amount determined by applying the following schedule per customer premise/per month based on metered service to retail customers within the City: Class Residential Sm C & I — Non -Dem Sm C & I — Demand Large C & I Public Street Ltg Muni Pumping —N/D Muni Pumping — Dem Amount per month 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Franchise fees are to be collected by the Utility at the rate listed below, and submitted to the City on a quarterly basis as follows: January — March collections due by April 30. April — June collections due by July 31. July — September collections due by October 31. October — December collections due by January 31. page 61 ORDINANCE NO. 466 AN ORDINANCE IMPLEMENTING A GAS SERVICE FRANCHISE FEE ON NORTHERN STATES POWER COMPANY, A MINNESOTA CORPORATION, D/B/A XCEL ENERGY, ITS SUCCESSORS AND ASSIGNS, FOR PROVIDING GAS SERVICE WITHIN THE CITY OF MENDOTA HEIGHTS. THE CITY COUNCIL OF THE CITY OF MENDOTA HEIGHTS DOES ORDAIN: SECTION 1. The City of Mendota Heights Municipal Code is hereby amended to include reference to the following Special Ordinance. Subdivision 1. Purpose. The Mendota Heights City Council has determined that it is in the best interest of the City to impose a franchise fee on those public utility companies that provide natural gas services within the City of Mendota Heights. a) Pursuant to City Ordinance , a Franchise Agreement between the City of Mendota Heights and Northern States Power Company, a Minnesota corporation, d/b/a Xcel Energy, its successors and assigns, the City has the right to impose a franchise fee on Northern States Power Company, a Minnesota corporation, d/b/a Xcel Energy, its successors and assigns, in an amount and fee design as set forth in Section 9 of the Northern States Power Company Franchise and in the fee schedule attached hereto as Schedule A. Subdivision 2. Franchise Fee Statement. A franchise fee is hereby imposed on Northern States Power Company, a Minnesota Corporation, d/b/a Xcel Energy, its successors and assigns, under its gas franchise in accordance with the schedule attached here to and made a part of this Ordinance, commencing with the Xcel Energy 12013billing month. This fee is an account -based fee on each premise and not a meter -based fee. In the event that an entity covered by this ordinance has more than one meter at a single premise, but only one account, only one fee shall be assessed to that account. If a premise has two or more meters being billed at different rates, the Company may have an account for each rate classification, which will result in more than one franchise fee assessment for electric service to that premise. If the Company combines the rate classifications into a single account, the franchise fee assessed to the account will be the largest franchise fee applicable to a single rate classification for energy delivered to that premise. In the event any entities covered by this ordinance have more than one premise, each premise (address) shall be subject to the appropriate fee. In the event a question arises as to the proper fee amount for any premise, the Company's manner of billing for energy used at all similar premises in the city will control. Subdivision 3. Payment. The said franchise fee shall be payable to the City in accordance with the terms set forth in Section 9 of the Franchise. Subdivision 4. Surcharge. The City recognizes that the Minnesota Public Utilities Commission may allow Company to add a surcharge to customer rates of city residents to reimburse Company for the cost of the fee. Subdivision 5. Enforcement. Any dispute, including enforcement of a default regarding this ordinance will be resolved in accordance with Section 2.5 of the Franchise Agreement. page 62 Subdivision 6. Effective Date of Franchise Fee. The effective date of this Ordinance shall be after its publication and ninety (90) days after the sending of written notice enclosing a copy of this adopted Ordinance to Xcel Energy by certified mail. Collection of the fee shall commence as provided in above. Passed and approved: 12014. Attest: City Clerk SEAL SCHEDULE A Franchise Fee Rates: Gas Utility Mayor page 63 The franchise fee shall be in an amount determined by applying the following schedule per customer premise/per month based on metered service to retail customers within the City: Class Residential Commercial Non -Demand Commercial Firm Demand Small Interruptible Medium and Large Interruptible Firm Transportation Interruptible Transportation Amount per month 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Franchise fees are to be collected by the Utility at the rate listed below, and submitted to the City on a quarterly basis as follows: January — March collections due by April 30. April — June collections due by July 31. July — September collections due by October 31. October — December collections due by January 31. xcelenergy.com | © 2022 Xcel Energy Inc. | Xcel Energy is a registered trademark of Xcel Energy Inc. | 22-11-617 Some cities impose franchise fees to their energy providers as part of utility franchise agreements. As allowed by the Minnesota Public Utilities Commission, franchise fees levied on us are passed on directly to our customers within a city. This fee is itemized on our customer bills as a City Fee. A franchise fee can only be implemented if it is allowed by the city’s existing franchise agreement with us. If a community determines a franchise fee is appropriate, there are several guiding principles we follow in discussing fee options. • Franchise fees are set forth in a fee ordinance authorized by, but separate from, the franchise agreement. • An equivalent fee must be placed on all energy suppliers serving the city. • We will not be subject to permit fees while franchise fees are in effect. • We will prepare fee schedule options for the amount of revenue sought by the city. • The fee is calculated as a flat fee, per premise and is applied equally for all customers in a given rate class. • Fees are paid to the city on a quarterly basis. Franchise Fee Considerations As in any case where a city is considering a new revenue source, we urge careful consideration of the possible negative impacts of a franchise fee since they increase the cost of energy for all customers in that city. Timeline Implementing franchise fees is a complex process requiring adequate time for system programming and testing. Here’s a typical sequence of events: • City provides us with written notice of intent to enact a fee prior to formal consideration. • City and Xcel Energy negotiate the fee. • In order to meet the PUC’s requirements, the approved fee ordinance must be received by us at least 90 days before the anticipated start of fee collection. • We collect the fee from our customers monthly and transfer it to the city on a quarterly basis. Sample Timeline INFORMATION SHEET MINNESOTA UTILITY FRANCHISE FEES DAY 1 DAY 90 DAY 120 DAY 210 DAY 240 Xcel Energy receives proposed ordinance Xcel Energy implements fee on customers’ bills Xcel Energy pays the city at the end of the month after the quarter’s fees have been collectedFee collection (Xcel Energy pays the city quarterly) City adopts ordinance Attachment D