A fee conundrum

Proposed city fee for alarm systems triggers opposition

Like many initiatives the Minneapolis City Council examines each year, a proposal to charge residents and businesses an annual fee for owning a burglar alarm hit a roadblock when community members raised concerns and council members expressed little support for the initial plan.

Unlike many other initiatives, however, there is more at stake with this proposal than its goal of recouping more of the $800,000 the city spends annually responding to alarms, most of which turn out to be false alerts.

The 2007 budget the City Council passed in December calls for using part of the $370,000 the annual fee would generate to pay for the addition of two full-time liquor license inspectors. The budgeted cost of those two positions is $137,000.

While Council Member Paul Ostrow (1st Ward) added language to the budget that requires the fee be approved by the Council before additional staff members funded by it are hired, he acknowledged that approving a budget that relies on funding from a policy the Council hasn't yet agreed upon is a poorly designed process.

&#8220We shouldn't be passing fees onto people just because we need the revenue,” Ostrow said. &#8220They need to be justified and there needs to be good public policy to raise these fees, and I'm trying to look at it that way. But it really does put us on the horns of a dilemma.”

Ostrow, chair of the Council's Ways and Means/Budget Committee, said budgeting funds for personnel or other things in this way creates a &#8220real problem” that has put the Council in an awkward position at least once before. By the time the City Council took up the issue of increasing the city's rental license fees in 2006, he said, the money the increase was expected to generate had already been spent and staff members had been hired. That left the Council with few options, Ostrow said.

Although the city isn't in as serious a dilemma with the alarm fee proposal, Ostrow brought the plan to the Public Safety and Regulatory Services Committee for a public hearing Jan. 3 in an attempt to have the Council examine the issue as quickly as possible. The Council postponed the issue and is scheduled to take it up again at the committee's Jan. 31 meeting, which begins at 1 p.m. in Room 317 of City Hall, 350 S. 5th St.

The policy initially proposed at the Jan. 3 meeting would charge residents a $15 annual registration fee and businesses a $40 annual registration fee for having a burglar alarm.

City officials estimate that there are more than 30,000 alarm systems in Minneapolis. The $370,000 the alarm registration fee is projected to generate is a very conservative estimate that would largely pay for the two liquor license inspectors and the hiring of two staff members to handle setting up the alarm registration database, according to Burt Osborne, the city's director of operations, business licensing and environmental management. However, he said city officials would expect the fee to generate even more money that would then go into the general fund and be used to defray the costs of police response to false alarms.

&#8220That's our ultimate goal here,” Osborne said.

In 2005, the Minneapolis Police Department responded to 17,781 burglary alarm calls, 84 percent of which were categorized as false alarms, Deputy Director of Licensing and Consumer Services Ricardo Cervantes told committee members. The city currently recoups about $300,000 from false alarm fees paid by the alarm user. Under the ordinance in place now, alarm owners are penalized with a fee beginning with their third false alarm. The third false alarm has a fee of $200 and the fine for each false alarm thereafter increases by $100.

The money collected from those fines, however, still leaves a gap in city costs incurred responding to alarms of about $500,000.

But the Council committee members and several residents weren't sold on the idea that the solution to recouping these costs - and generating revenue to pay for two additional liquor license inspectors - is a fee for simply having an alarm. Several residents argued that they have a burglar alarm in their homes because there is increased crime in their neighborhoods and police will respond immediately to a burglar alarm but not always immediately to a call placed to 911.

&#8220I just hope that you won't charge $15 for alarm owners because I feel like I'm being penalized just for trying to protect myself,” Kingfield resident Judyth Bergan told council committee members.

Wendy Youngren, president of the Minnesota Electronic Security and Technology Association, said the association is in favor of having residents and businesses register their alarms but is aware that an ongoing fee could deter some people from installing alarm systems. The association does not take a position on the fee, she said. The association supports, however, another proposed change to the city ordinance that would require the alarm system monitoring companies or operators to complete an enhanced alarm verification process - which basically means they would have to make at least two attempts to verify with the home or business owner that the situation is not a false alarm before dispatching police.

&#8220If [Minneapolis officials] truly want to address false alarms, then that is the most proactive approach without penalizing anyone,” Youngren said.

Council members also expressed concern about collecting money from everyone who owns an alarm system. Ostrow instead proposed expanding the fees the city charges for multiple false alarms by starting to charge residents and businesses a $100 fine for their second false alarm rather than requiring everyone to pay a registration fee. Committee members were reluctant to support the move on the spot, but agreed that other alternatives should be examined.

Osborne said city staff members are working to prepare other options for the Public Safety and Regulatory Services Committee to examine. Charging residents $50 for their first and second false alarms, for example, could generate an estimated $318,000 annually, according to city documents posted online. A $50 fine for the first false alarm and $100 fine for the second could generate an estimated $402,000.

Osborne said he's not sure how the funding for liquor license inspectors became tied to the revenue generated by the proposed alarm registration fee. If the fee or some other revenue-generating measure isn't approved, Osborne said city staff members plan to examine whether there are other options for funding additional liquor license inspectors.

&#8220In times past, we've often had to evaluate what our priorities are and perhaps switch resources from other divisions within Regulatory Services,” Osborne said, adding that the matter would have to be discussed with leaders in Regulatory Services and the city's Finance Department.

Ostrow said to prevent a similar situation in the future, he would like to see the City Council approve any revenue-generating ideas in the budget before the final version of the budget is approved.

&#8220Ideally, what would have happened is this debate would be taking place a couple months ago, and if we don't want to increase revenue here, we find another place to increase revenue or we don't commit to these positions,” Ostrow said.

Osborne said whatever happens, the addition of two liquor license inspectors is important to helping the city deal with the drastic increase in the number of liquor licenses. The city already takes too long to process new applications and enforce existing licenses, he said.

Reach Kari VanDerVeen at kvanderveen@mnpubs.com or 436-4373.