Franchise fee debate ‘smacks of privilege,’ trustees say

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Critics of a proposed franchise fee on electricity say they want St. Albert city council to address the effects the fee would have on residents who pay rent and businesses who lease store space.

Councillors will decide on June 25 whether to implement the fee, which would apply a surcharge of up to 10 per cent on the transmission and distribution portion of residents’ electrical utility bills, bringing the city a potential $3.1 million in revenue each year.

Councillors have said they want a corresponding decrease in property taxes equal to the amount of revenue generated by the fee – meaning it would be revenue-neutral – with the hope that residents and some businesses will see their taxes go down.

But during a preliminary council discussion about the fee on Monday, presenters and some councillors raised concerns about the impact the fee could have on people who rent, businesses that lease shop space, and condo owners, who may not see the benefit of a property tax reduction but would certainly pay the additional cost on their electrical bills.

“It’s not revenue neutral for renters and businesses who lease – and those are the small businesses,” said Kim Armstrong, chair of the St. Albert Public School Board.

“(Council) totally ignored that whole piece. That just smacks of privilege.”

Armstrong and fellow board trustee Cheryl Dumont both attended Monday’s meeting, along with three members of the Greater St. Albert Catholic School Board: chair Serena Shaw and trustees Joan Crockett and Greg Schell.

Armstrong outlined the boards’ concerns to council and asked for an exemption for school boards from the franchise fee. The public school board estimates a 10 per cent electrical franchise fee would cost local public schools $36,000 a year. She also urged city council to “correct a past misstep” and create an exemption from the 18.8-per-cent natural gas franchise fee St. Albert already has.

Dumont, who is also on the St. Albert Housing Society, said the school board has to remain hopeful the city will implement an exemption, since increased electrical bills would mean direct impacts on classrooms.

She added the prospect of a franchise fee is concerning to the housing society as well since landlords may pass higher electrical bills on to their renters.

As for businesses that lease their shop space, St. Albert and District Chamber of Commerce chair Jodie McFadzen told council her landlord would not give her a rebate if electrical fees were to go up.

“I want to stay in my community, same as other businesses, but they’re finding it extremely hard to be able to make ends meet and some of them are thinking about closing their doors,” she said.

Following the meeting, McFadzen said it is also difficult for businesses who lease space to know how much the franchise fee would add to their bill, as some landlords would calculate that based on the square footage of each space.

She said the businesses that are already established in St. Albert would be faced with the choice of paying higher costs or packing up shop and going elsewhere.

“Rent is so high already in St. Albert – and if (property owners) do get a rebate or anything, they’re not going to give that to the tenant,” she said.

“If people can’t afford the rent, they’re going to leave.”

Councillors approved a motion from Coun. Wes Brodhead to have city staff bring options to council on June 25 for a 10 per cent flat franchise fee or a staged fee starting at five per cent and increasing over two subsequent years to 10 per cent.

Brodhead said the proposal is not meant to get more money out of residents and businesses but rather to get some money from those who do not currently pay property taxes, such as provincial buildings, schools and nonprofit organizations.

“Quite honestly, I think everybody that lives in our community, to the best of their ability, should help pull the weight that our residents have to pay,” he said.

Coun. Ken MacKay said he is not sure how he will vote on June 25 but he does not want to make life more difficult for businesses, schools or churches. He said his hope is that council will get information before they vote on how the fee would impact renters.

Coun. Sheena Hughes likened the fee proposal to a hidden tax increase and said she does not see the need to pursue a franchise fee.

“This is becoming a council of hidden tax increases and I do not want to explore this any further,” she said.

Mayor Cathy Heron struck at the description of the fee as a hidden tax, reminding council municipal budgets are approved in public and include the amount raised in franchise fees.

She added there have been several rulings – from the courts, the Alberta Urban Municipalities Association, and from the Alberta Utilities Commission – that franchise fees are a user fee and not a tax.

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April Hudson