Minnesota State Statutes allow for a city to impose a fee on a utility company for its use of publicly owned right-of-way (MN State Statute 216.36). Many cities throughout the state have adopted franchise fee ordinances to help pay for roadways and trails. For example, within Hennepin County, 87% of the population pay franchise fees to the utility companies that are passed through to the specific cities. The majority of these cities utilize this revenue source for their related PMP.
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The City of Chanhassen is responsible for the upkeep of 112 miles of city streets and 60 miles of trails. Since the start of the PMP in 1991, the city has made a commitment to provide residents with a systematic program of street and trail rehabilitation and repair in order to assure that the city streets and trails are serviceable, safe, functional, and provide a cost-effective approach to meet the needs of our residents. The City of Chanhassen’s PMP strives to expend taxpayer funds to ensure the most value for residents.Every mile of street and trail is inspected every three years. Distresses such as potholes, cracking, rutting, etc. are entered into a computerized program to calculate a pavement condition numeric value. Streets that are new and have no distresses have a value of 100, while streets that have completely deteriorated have a value of 0. For the past 10 years, the city’s overall pavement network value has been around 70 and is considered to be in good condition. The pavement condition values assist staff in developing a list of streets and trails that are in need of maintenance. The goal of the program is to “do the right maintenance at the right time” so costly improvement projects can be delayed as long as possible.
Every City has a franchise agreement with each utility company (gas, electric, etc.) for their use/rent of city-owned right-of-way for their business purposes.
While not technically considered a “tax”, this is a new dedicated revenue source for the city which would be collected from utility users in Chanhassen; it will have the same effect as a tax. However, it is not levied in the way a property tax is levied, given that franchise fees are not tied to the value of a property. Thus, all single-family homes would pay the same amount toward the PMP assuming they have both gas and electric services. Specifically, franchise fees are a method of collecting funds from utility companies who use city rights-of-way. These funds are typically passed directly through to all commercial businesses, tax-exempt properties, and residents that use the street and trail systems.
The franchise fees would be set aside in a dedicated fund and will be used solely for expenditures related to the PMP projects such as street overlays and reconstruction, and trail improvement projects.
Charges for residential customers $5 for both electric and gas. Commercial and other properties would be charged at a separate rate. This fee would generate approximately $1.76M million annually.
Yes, per the current City assessment policy.
Yes, the fees are charged by electric and gas meters and you will pay the standard residential fee. The fee pays for your use and maintenance of the public city streets and trails.
The City is planning to review the fee every five years. It is not anticipated that the fee will need to be adjusted in the near term.
For more information about the Franchise Fee, please contact the City’s Engineering Department at 952-227-1160.