07-12-2023 Workshop Packet - Laserfiche WebLink

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Additional Information and Considerations: According to Minnesota Statute 216B.36, a city may impose a franchise fee on a gas or electric utility for the use of the public right-of-way by adopting an ordinance that establishes fee terms, including structure, collection, schedule and effective dates. Franchise fees are established by ordinance which provides an opportunity for the City Council to adjust these fees as needed. Franchise fees can be used for any public purpose, but the City of Little Canada has traditionally used these fees exclusively for capital improvement costs. Municipalities have the option of imposing a flat fee (e.g., $3 per month) or a percentage fee (e.g., 3 percent) based on utility usage. These fees can vary between residential customers and various commercial customer types. While a flat fee is constant from month-to-month, a percentage-based fee will change seasonally. When comparing franchise fees to property taxes as a revenue source, advantages include: • Wider base than property taxes • Diversifies the City’s revenue sources • Reliable source of revenue on an annual basis • A flat-rate franchise fee is the same for each property, making it easy to administer. • New construction would contribute immediately, which would eliminate the one to two-year lag for the City to receive property taxes for property owners receiving municipal services. COUNCIL ACTION REQUESTED: Staff is requesting Council direction on possibility of increasing the existing electrical franchise fees and/or adding a gas franchise fee in order to generate additional revenues to fund the increased cost for capital infrastructure. If the Council is interested in adjusting fees, staff will work with representatives from Xcel our City Attorney to prepare updated ordinances. Attachments: • PUC Information Filing-Xcel Energy • Ordinance 551-Gas Franchise (2003) • Ordinance 552-Electric Franchise (2003) • Ordinance 692-Electric Franchise (2010)