There will be an Open House scheduled for Thursday, October 26, at 5 in the evening in the City Council Chambers.
The City of Fergus Falls encourages its residents to learn more about the proposed franchise fees and its potential impact by attending.
Additional information will also be disseminated through utility bills, the city’s website, and various other platforms.
As the city explores this unique funding mechanism, Fergus Falls residents are urged to stay informed and engaged in the decision-making process that could significantly impact the city’s infrastructure.
In an effort to address the pressing need for street resurfacing and reconstruction, the City of Fergus Falls is contemplating the implementation of a five percent franchise fee on utilities, specifically gas and electricity, for its residents.
While the name might imply a connection to retail franchises, the franchise fee, in this context, is related to utility companies’ use of public rights-of-way for utility lines and transmission, typically underground.
The proposed franchise fee will not only help generate essential funds for street projects but also introduce a unique funding mechanism for the city.
Utility companies operating in Fergus Falls, including Otter Tail Power Co., Lake Region Electric Co., and Great Plains Natural Gas Co., would be required to pay this fee to the city for their use of public rights-of-way.
To recover these costs, the utility companies would have the right to pass the franchise fees on to their customers, which will be clearly listed on gas and electric bills as a “City Fee.”
The utility companies would then collect the franchise fees and remit them to the city.
It is anticipated that the proposed franchise fee would generate approximately $1.3 million annually, supplementing the existing budget for street projects.
Rather than reducing the standard budget allocation, these additional funds would be channeled to address a broader range of street projects that would not have been possible through the city’s regular street funding sources, which include municipal state aid, assessments, bonds, and property taxes.
It is important to note that the utility franchise fees would be applicable to all utility customers within the city, irrespective of whether they pay property taxes.
This includes non-profit organizations, schools, churches, and government customers. For larger utility customers, a monthly cap of $1,000 per account per utility will be enforced.
While the concept of a franchise fee may be new to many Fergus Falls residents, it is worth highlighting that nearly half of the cities in Minnesota have already implemented similar fees.
Additionally, cable television subscribers in Fergus Falls currently pay a franchise fee that contributes to covering the cost of PEG Access.
Fergus Falls’ utility partners have experience working with other municipal customers who employ franchise fees, and they have expressed their commitment to collaborating with the city as they consider implementing this initiative, with a potential start date in March 2024.
You can find out more information about the city’s plan by clicking here.