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City council nears a decision on franchise fees

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News Farmington,Minnesota 55024
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City council nears a decision on franchise fees
Farmington Minnesota P.O. Box 192 / 312 Oak St. 55024

Any way they look at it, the Farmington City Council has realized they need to turn to residents to help keep the city's roads in shape.


Farmington needs residents to help pay for the seal coating process that maintains city streets. Of that, there seems to be little question.

But the question council members have wrestled with is whether to get that funding through a levy increase of $500,000 or so, or whether it is time to start asking residents to pay franchise fees.

The idea of using franchise fees to pay for seal coating has been tossed around for nearly a year. The concept is simple. An additional fee would be tacked on to gas and electric bills. That fee would then be forwarded to the city and put into a fund to pay for the annual seal coating projects.

Council members have struggled with the decision for several months, because many see the fees as another form of taxation. In earlier contract proposals, the utility companies proposed a "pass through" charge that would allow the companies to keep a certain percentage of the franchise fees collected.

The other option available is to simply increase the tax levy by $400,000 to $500,000, and allocate the extra funds to seal coating projects.

"Ideally, they want a revenue stream without it costing anybody anything," city administrator Peter Herlofsky said. "They're still trying to find a comfort level, but I think we're getting close."

Mayor Todd Larson thinks they're getting close, too. After a three-hour workshop Monday, Larson is leaning toward approving franchise fees, but he wants to see final comparisons between the benefits of franchise fees against a tax levy before he'll make his decision.

Over the weekend, Larson used his Facebook page to conduct what he called "a very unscientific poll" and asked his friends and families what they would rather do - pay an extra $4.40 monthly ($2.20 per meter, gas and electric) or be asked to pay a larger sum on property taxes. About 95 percent of his respondents indicated they'd prefer the smaller, monthly payment.

"We're not kidding anyone. Both ways are still a tax. No matter what, it's still a tax," Larson said.

Larson thinks the group may be warming to the idea of franchise fees, especially since the utility companies agreed to drop the pass through charges. Council members have asked to get that agreement in writing before they will fully support a franchise fee.

Going to franchise fees hasn't been an easy process, and it's come with a lot of questions and answers over the past few months. One thing council members support fully, though, is the need for seal coating to maintain the community's streets.

"We all agree seal coating is important and want to continue the practice," Larson said. "We just need to pick one of the two options to finance it."

Council members asked city staff to draw up the final comparisons and provide the information prior to the March 7 city council meeting. If council approves the franchise fee option, residents could see those fees on their statements as early as June, Larson said.

"We would start it in June so we would have some feed money to start the (seal coating) program," he said. "That's one of the levy downfalls. We still have to make up close to $100,000 to pay the contractor. We don't have $100,000 in the budget to play with."

The city's seal coating program has been suspended for 2011 so council members could figure out how to pay for it in the future. The city plans to resume seal coating in 2012.

Michelle Leonard
Michelle Leonard joined the Woodbury Bulletin staff in November, 2014, after 14 years covering news for the Bulletin's sister publication, the Farmington Rosemount Independent Town Pages.  Michelle earned her Bachelor of Science degree in Mass Communications: News-Editorial from Mankato State University in 1991. She is an active member of the American Legion Auxiliary Clifford Larson Unit 189 of Farmington, and is the 2014-15 Third District President to the American Legion Auxiliary Department of Minnesota. Michelle is also the volunteer coordinator for the Minnesota Newspaper Museum which is open annually during the Minnesota State Fair. She has earned Minnesota Newspaper Association awards in Investigative Reporting, Local News Coverage, Feature Photography and Column Writing. 
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