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School board takes aim at franchise fee

A 10 per cent electrical franchise fee could cost the St. Albert Public Schools an estimated $36,000 each year. As St. Albert city council gears up for its first formal discussion on bringing in an electrical franchise fee, St.
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The Chamber of Council and both of city's school board are disappointed with the passing of the franchise fee bylaw. Jennifer McCurdy, the president of the St. Albert and District Chamber of Commerce, said that the silver lining was that council will be phasing in the fee, starting with five per cent in 2019 and increasing over the following two years to reach 10 per cent.

A 10 per cent electrical franchise fee could cost the St. Albert Public Schools an estimated $36,000 each year.

As St. Albert city council gears up for its first formal discussion on bringing in an electrical franchise fee, St. Albert Public School Board chair Kim Armstrong says the cost to school boards will only increase as new schools come online.

"That's money coming out of the classroom," she said.

The public school board is breaking with tradition on Monday by having Armstrong speak to city council about the proposed fee, which is on the agenda to be debated later in the day.

Armstrong said the move represents a new way of doing things since the board has not typically commented to council during meetings.

"I think it's a signal that we're looking for ways to have more direct conversation with city council," she said.

On Monday, city council will debate whether to have city staff draw up a report looking at potential impacts of a franchise fee as well as offsetting property tax impacts for residential and non-residential properties.

Although the city has a long-standing 18.8 per cent franchise fee on natural gas, the fee in St. Albert's electrical franchise agreement with FortisAlberta is set at zero per cent.

Monday's discussion follows a Feb. 12 meeting of the governance, priorities and finance committee, where committee members looked at the estimated revenue the city could bring in from a franchise fee on electricity. At that time, numbers provided by the city showed an estimated $3.1 million in revenue from a 10 per cent fee.

Later that month, Coun. Wes Brodhead gave notice he would be bringing the topic of an electrical franchise fee to the council table.

His motion covers a variety of related topics, but city staff are recommending only part of it be moved.

Their recommendation is for Brodhead to move for city staff to provide options by June 25 for a single fee introduction of 10 per cent, a staged fee starting at five per cent and increasing by 2.5 per cent annually until it reaches 10 per cent, and for a property tax reduction corresponding to the revenue from the franchise fee.

In February, Brodhead told the Gazette his intention would be for the fee to be revenue-neutral.

He said a franchise fee would spread the cost of services over a wider net. Some properties, such as schools, non-profit organizations and churches, do not pay property taxes but do pay utilities such as electricity, and a franchise fee would allow the city to get revenue from those properties.

At the time, Brodhead said his hope was that community members would let council know what they think.

Serena Shaw, chair of the Greater St. Albert Catholic School Board, said in an email her school board has also discussed the topic and expects there to be some implication for their schools.

"At this time, we would need to have more information to have a full understanding of those implications," she said.

"As with all matters, our students come first and so from that, we would have a concern with this if educational dollars were directed away from the classrooms and programming."

Armstrong said she wants to talk to council about including schools in the conversation and she also wants to introduce the idea of an exemption to the fee.

Engagement wouldn't even need to be formal, she said, but would allow the schools to collaborate better with the city.

She described the prospect of a fee itself as "baffling," adding it would be a hit to school budgets.

"The lowering of taxes doesn't help school districts because we don't get taxed. It just seems like a way of the city getting more money from the province," she said, noting she doesn't believe the province would reciprocate by offsetting that cost.

"In many areas, (franchise fees) have been that way for a long time, so that's been worked into their budgets. But this would be a whole new expense that the school board doesn't have budgeted."

Armstrong also sees the prospect of a fee as a detriment to organizations, such as non-profits, that provide value to the community.

"It's kind of a loophole that puts those organizations that are doing so much for the social and educational environment of our community at a disadvantage," she said.

"The benefit that comes to the community from those organizations – it's like a punishment."

April Hudson

About the Author: April Hudson

April is the editor of the St. Albert Gazette
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