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| Franchise Fees |
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Franchise fees are collected from businesses having an agreement allowing the
operation of their business within the City. The City charges a franchise fee
for water, solid waste, cable, natural gas and electricity.
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| Franchise
Fees |
1998a |
1999a |
2000a |
2001 a |
2002 a |
2003 b |
2003 p |
2004 p |
2005 p |
2006 p |
2007 p |
| Gas |
840 |
906 |
947 |
1,574 |
1,649 |
1,204 |
1,195 |
1,231 |
1,268 |
677 |
448 |
| % Change |
� |
7.9% |
4.5% |
66.2% |
4.8% |
-27.0% |
-27.5% |
3.0% |
3.0% |
-46.6% |
-33.8% |
| Water |
598 |
727 |
732 |
750 |
799 |
828 |
827 |
860 |
895 |
926 |
959 |
| % Change |
� |
21.6% |
0.7% |
2.4% |
6.6% |
3.6% |
3.4% |
4.0% |
4.1% |
3.5% |
3.5% |
| Trash |
560 |
574 |
612 |
653 |
650 |
696 |
660 |
675 |
697 |
718 |
739 |
| % Change |
� |
2.5% |
6.6% |
6.7% |
-0.5% |
7.1% |
1.5% |
2.3% |
3.3% |
3.0% |
3.0% |
| Cable |
638 |
717 |
789 |
948 |
937 |
985 |
901 |
900 |
900 |
900 |
900 |
| % Change |
� |
12.4% |
10.0% |
20.2% |
-1.2% |
5.1% |
-3.8% |
-0.1% |
0.0% |
0.0% |
0.0% |
| Subtotal Operating Fees |
2,636 |
2,924 |
3,080 |
3,925 |
4,035 |
3,713 |
3,583 |
3,666 |
3,760 |
3,221 |
3,046 |
| Electric
(capital) |
901 |
949 |
957 |
1,200 |
1,527 |
1,601 |
1,401 |
1,215 |
1,233 |
1,264 |
1,296 |
| % Change |
� |
5.3% |
0.8% |
25.4% |
27.3% |
4.9% |
-8.2% |
-13.3% |
1.5% |
2.5% |
2.5% |
| Total
Franchise Fees |
3,537 |
3,873 |
4,037 |
5,125 |
5,562 |
5,314 |
4,984 |
4,881 |
4,993 |
4,485 |
4,342 |
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| Historical Events |
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The City annexation in 2000 impacted all franchise fee sources in FY 2000.
However, it took several months after the annexation before United Water and
Idaho Power assessed the franchise fee due to billing cycles.
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There was a significant electric rate increase (between 18% and
42% depending on user) during FY 2001.
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United Water initiated a water rate increase in the summer of 2002.
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Commercial construction slowdown in 2002 resulted in decrease of solid waste
franchise fees.
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Population growth and annexation coupled with rate increases resulted in large
revenue gains to cable franchise fee revenue until FY 2002. As of April 2002,
Cable One no longer paid the City a franchise fee for cable modem services
based on a preliminary ruling by the Federal Communications Commission. An
annual loss of $132,000 in revenue was projected.
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| Projection/Assumptions |
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PUC utility rate increases resulted in significant anomalous increases in FY
2002 for electric and gas. The PUC reduced gas rates close to FY 2001 rates
effective July 1, 2002.
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Projections are based upon city population growth and identified rate
adjustments.
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City Council policy (established in July 2002) sets aside excess electric
franchise fee revenue beyond historic base. Therefore, only the historical base
is presented in the projection years with a small growth factor based on
population.
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The December 2002 proposed rate increases for solid waste services are
included in projections.
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Gas rates were reduced 29% by PUC in summer 2002.
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Water projections assume normal water usage years.
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Cable proceeds reflect loss of cable modem fees.
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Electric franchise fees assume no rate adjustments.
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Effective May 15, 2003, the PUC approved a power cost reduction averaging
18.9% for Idaho Power residents. This will not affect the FY 2004 and 2005 base
budgets since only the historical level amount, plus a small factor for
population growth, was assumed. However, it will most likely result in no
excess revenue beyond the historical level. The FY 2004 and 2005 excess amount
offset a projected utility overrun cost and had a zero net impact.
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On January 9, 2006, the gas franchise agreement expires. Based on state code,
enacted in 1995, the City is limited to a franchise fee of 1% unless a majority
of city voters or the utility�s board of directors agrees to increases up 3%.
The projections for FY 2006 and 2007 assume a 1% franchise fee.
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Threats/Opportunities
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Continued drought.
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Future adoption of trash rate increases that will require City Council action.
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Continued cable service litigation, continued loss of market to wireless and
state legislative preemption.
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Police choice to increase water franchise percentage to cover city water
issues.
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