HomeMy WebLinkAbout07(A) - Conduct a Public Hearing to Consider - Adoption of an Ordinance Amending Chapter 3, Section 314 of the Prior Lake City Code Related to Gas and Electric Franchise Fees ReportThe city is evaluating a proposal to adjust the city franchise fees to help fund the
maintenance of city streets at necessary levels. Residential property owners would see
a small increase in their monthly gas and electric bills with this change. The revenue
generated from these fees would be placed in a dedicated fund and used solely for
expenditures related to the maintenance of city streets.
franchise feesCITY OF PRIOR LAKE
miles of Streets in Prior Lake
Maintenance is critical for extending the usable life of city
streets to 50+ years and avoiding costly road replacement.
Prior Lake has 110 miles of street that require regular
maintenance, including crack sealing, chip sealing, mill and
overlay (the process of rejuvenating asphalt roads by milling
off the top 2 inches of the old asphalt and replacing it with new
material), and eventually complete reconstruction.
Earlier this year the city completed a Pavement Management
Plan. The plan found that the current level of maintenance is
insufficient to keep the city’s road conditions from further
deteriorating to unacceptable levels. The projected cost of
street maintenance in Prior Lake is estimated to be
approximately $95 million over the next 20 years or $5 million
annually.
WHY is this needed in Prior Lake?
Cities charge utility companies (electricity and natural gas) a
“franchise fee” for the use of city-owned, public right-of-way.
This fee is then passed on to utility customers. Many cities
across Minnesota use franchise fees to offset city expenses for
street maintenance that would otherwise go to the property tax
levy.
The City of Prior Lake’s franchise fees have remained
unchanged since 2006. The costs associated with maintaining
the city’s aging street infrastructure are climbing rapidly resulting
in the need to identify a sustainable funding source to support
Prior Lake’s road network. By increasing franchise fees and
dedicating the funds to street maintenance, the city would be
able to equitably distribute the financial burden of these costs
across all properties that generate traffic on our roads.
WHAT is a franchise fee?
J U L Y 2 0 2 1
million dollarseach year tomaintain PriorLake Streets
110
5
Public Information Meeting: Franchise Fees
Tuesday, July 27 @ 6:00 pm
City Hall
City Council Meeting: Franchise Fees Public Hearing
Monday, September 7 @ 7:00 pm
City Hall
City staff will host a public informational meeting on July 27, 2021. At this meeting, staff
will present more detailed information on the city’s street network, road conditions, future
improvements, and cost. To learn more about franchise fees and the city’s pavement
management program, you also may visit the city’s website: www.priorlakemn.gov
WHERE do I get more information?
WHEN would the franchise fee
begin?
The franchise fee adjustment would be
reflected in gas and electric bills beginning
in January 2022.
Contact Us:info@PriorLakeMN.gov (952) 447-9800
Prior Lake property owners currently pay a
total franchise fee of $3.00 per month
($1.50 on gas bills and $1.50 on electric
bills). The proposed adjustment would
increase the fee to $5.00 on gas bills and
$5.00 on electric bills. The fee would be a
flat increase to each residential property
owner. Commercial and industrial
businesses would pay a higher rate based
on their usage and meter sizes.
HOW much is the franchise fee?
Annual Impact
Franchise Fee
$84
Annual Impact
Tax Levy
$188
Franchise fees would have a lower annual
cost for Prior Lake homeowners compared
to increasing property taxes for street
maintenance.
For example, a
house costing
$600.000 would
pay less with a
franchise fee verses
a tax levy in 2022.