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.