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HomeMy WebLinkAboutMemo - Read Before Packet - 1/22/2013Cityof Fort Collins MEMORANDUM Date: January 22, 2013 To: City Council Members Through: Darin Atteberry, City Manager M- � `'l�\J From: Mike Beckstead, Chief Financial OfficerA CC: Steve Roy, City Attorney Carrie Daggett, Deputy City Attorney Brian Janonis. Utilities Director Subject: Potential Natural Gas Franchise Fee Finance 215 N. Meson Street, 2n0 floor PO Box 580 Fort Collins„QO 66522 970.221.6796 fcgov.com Currently, the City of Fort Collins does not have a franchise agreement with Xcel for the provision of gas in the City. The City collects an occupation tax from Xcel under sections 25- 342 through 354 of the City Code. The annual occupation tax revenue is approximately $445k. The vast majority of local governments in Colorado including Loveland, Longmont, Louisville, Denver, and Boulder have a 3% franchise fee agreement for natural gas. Under a similar agreement, the City would charge Xcel 3% of annual revenue for gas sales, including transport gas. In 2009, it was estimated a franchise agreement would generate additional revenue above that generated by an occupation tax. Xcel would pass this increase on to customers and return the revenue to the City. The estimated cost impact to residential customers in 2009 was estimated at $12 - $18 per year. It is staff's goal to organize a work team including Legal, Utilities and Finance to outline the City's desired requirements in a franchise agreement and open negotiations with Xcel to replace the occupation tax with a franchise fee agreement. It is believed a franchise fee may provide the City more control and coordination of Xcel activities within the City. Prior to opening discussions with Xcel, staff will review the requirements with Council.