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MEMORANDUM To:Saint Anthony Village City Council From:Charlie Yunker, City Manager Date:April 28, 2026 Request: Consideration of Franchise Fees BACKGROUND At the 2026 annual Goal Setting, one of the action steps for the Fiscal and Organizational Strength goal included considering electric/gas utility franchise fees as well as considering a broadband franchise fee. Minnesota Statute §216B.36 allows cities to establish franchise agreements with utility companies that use the public right-of-way to deliver service. Most often, municipalities craft these arrangements as contracts, which the City Council then adopts as an ordinance. Cities can determine the amount of the franchise fees charged, which is typically either a monthly flat rat, percentage of revenues, or based on production unit. Most municipalities prefer the flat fee as both the most transparent option for the account holder and the most predictable revenue source for the City. Utility companies then have the right to pass on these fees to customers. The City Council had previously considered franchise fees over ten years ago and had ultimately decided to not move forward at the time. Since then, more cities have utilized these fees to support their budget and cover use of services. Electric and gas utility franchise fees Electric and gas utility franchise fees charges utility companies for the use of public property and right of way to deliver services. The fees typically apply to utilities which utilize power lines, gas pipes and underground cables. Franchise fees are associated with utility accounts. As such, they would be applicable to any user who has an active utility account, including single-family residential, multi-family housing, commercial and industrial properties as well as property tax-exempt properties, such as churches and non-profits. It is common for cities to charge a flat monthly fee that residents would see on their utility bills. A flat fee is issued for electric, then a separate fee for gas; these fees are equivalent. Tables 1 and 2 below illustrate the averages within the metro. Table 1: Basic Statistics - Xcel Energy Electric Franchise Fees User Residential Small C&I Non-demand Small C&I Demand Large C&I Public Street Lighting Municipal Pumping Non- Demand Municipal Pumping Demand Median 4.00 6.00 28.00 112.00 9.75 4.00 4.50 Range (Min.)0.80 1.20 2.50 2.50 1.03 0.45 1.03 Range (Max.)7.00 20.00 63.00 525.00 17.51 17.51 65.00 Basic Statistics - Xcel Energy Electric Franchise Fees 11