Let’s consider a utility franchise fee to fund new sidewalk, trail and non-motorized transportation projects

At its Aug. 6 meeting, the Edina City Council:

…took the first step toward implementing utility franchise fees to create a new revenue stream. Funds would finance new sidewalk, trail and non-motorized transportation projects around the community. Currently, such projects are funded through the City’s annual Capital Improvement Plan or special assessments. The utility franchise fees are estimated to generate more than $1 million in new revenue per year.

Edina City Manager Scott Neal has the full rationale in his Aug. 17 blog post, What’s a franchise fee?

The new utility franchise fee is like a sales tax in that it will be a small charge listed on the monthly bill that customers receive from each utility, but its unlike a sales tax in that it is a flat amount each month that is tied to the type of customer you are, not how much electricity or natural gas you consume. For a typical residential customer of Xcel Energy, the new monthly franchise fee is $1.45 per month.  It’s exactly the same for the typical residential customer of CenterPoint Energy…

This goal will require resources to complete.  After looking at a number of different ways to fund this goal, the Council and I settled on the utility franchise fee as our best option.  Why?  It has a wide base.  Everyone in the community (including non-property tax paying properties) uses electricity and natural gas, so everyone will pay the franchise fee.  Because the base of people paying this fee is wide, the rate of the fee itself can be low.  That’s how a $2.90/month/residence franchise fee can generate over $1 million a year in revenues.

utility franchise feeWe really need a way to pay for new sidewalks that’s not so onerous for the residential property owners along streets where none exist, for example, Woodley.    And yes, bicycle-related infrastructure, too.

Having a tax that everyone would pay, including schools, colleges, churches, and non-profits, is especially appealing. 

Downsides?

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