Franchise Fee Increases Will Fund Infrastructure Improvements

Franchise fee increases approved by the City Council in December 2017 to help fund infrastructure improvements are expected to provide approximately $1 million per year in additional revenue after 2019. The increases are part of the City’s strategic plan to outline infrastructure project priorities and provide financing solutions that lessen the use of long-term debt.

Although this additional revenue will not be enough to completely address the City’s future infrastructure needs, the funds will be coupled with other fees, grants, assessments, etc to help offset the costs for ongoing rehabilitation and maintenance of water, sewer, storm water, and street infrastructure citywide.

Minnesota Statute (Section 216B.36) allows Cities to impose franchise fees on private utility companies for use of the public right-of-way. Energy providers pass the fees on to their customers within the city.

At its Dec 19, 2017 meeting, the Golden Valley City Council passed an ordinance to increase franchise fees on CenterPoint Energy and Xcel Energy.

These increases will go into effect in April 2018 on Golden Valley customers’ monthly bills. Residential customers will see an increase of $4 per month per utility. The increase will be higher for small commercial properties, larger commercial/industrial properties, and commercial/industrial properties with dual fuel rates.

The City previously approved franchise fee ordinances in 2010 (Xcel Energy) to help fund the reconstruction of Douglas Dr, and in 2013 (CenterPoint Energy) to help fund needed infrastructure repairs.

Golden Valley is one of approximately 35 Minnesota cities that currently have CenterPoint franchise fees and 71 that have Xcel franchise fees. Neighboring cities that have both gas and electric franchise fees include Brooklyn Center, Hopkins, Minneapolis, Minnetonka, New Hope, Robbinsdale, and St Louis Park.

This entry posted in | Administrative Services | Community | Finance Department