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<br />e Mr. Mounts said staff recommends that the City proceed with adoption of an ordi- <br /> nance amending the City's franchise agreement with Pacific Northwest Natural Gas <br /> to increase the franchise fees from three to five percent. He noted that revenue <br /> based on an increase in this franchise rate was included in the adopted FY90 <br /> budget. Mr. Mounts said that if the company chooses not to accept the ordinance, <br /> staff recommends that the City nullify tbe franchise and impose a five-percent <br /> utility tax after a 30-day waiting period. <br /> Mr. Sercombe explained that the Oregon statutes limit the City's ability to impose <br /> more than a five-percent privilege tax for utility companies using a public <br /> right-of-way without a franchise agreement. If Pacific Northwest Natural Gas <br /> decided not to accept the franchise agreement, the City is limited in the amount <br /> of tax it can impose in lieu of a franchise agreement. Mr. Sercombe said that <br /> historically the franchise fees have been set at three percent, because of a rule <br /> requiring utility companies to bury a franchise fee of three percent or less in <br /> their rates. A franchise fee greater than three percent can be shown on the <br /> company's bill as a City tax. <br /> Mr. Boles pointed out that sales of tariff-governed industrial gas is not included <br /> in the gross revenues and, therefore, is not taxed. He asked how much additional <br /> money would be generated for the City if this gas were included in the revenues. <br /> Mr. Holmer and Mr. Boles asked whether the two-percent rate increase will allow <br /> the City to recover the costs of maintaining the public right-of-way. They were <br /> concerned that the increase was not large enough. Mr. Whitlow said staff conduct- <br /> ed a very specific analysis of the costs of maintaining the public right-of-way <br />e when renegotiating its franchise agreement with Pacific Northwest Bell. Staff <br /> found that a franchise fee of five percent did not cover the full cost of creating <br /> and maintaining the public right-of-way. Mr. Mounts said that if the company <br /> chooses not to accept the ordinance, staff recommends that the City nullify the <br /> franchise and impose a five-percent utility tax when the franchise expires. <br /> Mr. Sercombe explained that the Oregon statutes limit the City's ability to impose <br /> more than a five-percent privilege tax for utility companies using a public <br /> right-of-way. If Pacific Northwest Gas decided not to accept the franchise <br /> agreement, the City is limited in the amount of tax it can impose in lieu of a <br /> franchise agreement. Mr. Sercombe said that historically the franchise fees have <br /> been set at three percent, because of a rule requiring utility companies to bury a <br /> franchise fee of three percent or less in their rates. A franchise fee greater <br /> than three percent can be shown on the company's bill as a tax. <br /> Mr. Boles pointed out that tariff-governed industrial gas is not included in the <br /> gross revenues and, therefore, is not taxed. He asked how much additional money <br /> would be generated for the City if this gas were included in the revenues. <br /> Mr. Holmer and Mr. Boles asked whether the two-percent rate increase will allow <br /> the City to recover the costs of maintaining the public right-of-way. They were <br /> concerned that the increase was not large enough. Mr. Whitlow said staff conduct- <br /> ed a very specific analysis of the costs of maintaining the public right-of-way <br /> when renegotiating its franchise agreement with Pacific Northwest Bell. Staff <br />e MINUTES--Eugene City Council September 25, 1989 Page 2 <br /> Dinner/Work Session <br />