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1. What is the 'Franchise Fee' charge on my utility bill?

The City of Elk River collects a Franchise Fee on all electric and gas accounts within the city. The revenue generated from these fees pays for the maintenance of the city streets (seal coats, mill and overlays, full depth reclamations, and reconstruction). Different from most other cities, Elk River collects all needed revenue for street maintenance and reconstruction through this fee. We do not levy separate general property taxes or special assessments for this maintenance.

2. How can the city do this?

Minnesota Statues allow for a city to impose a fee on a company for its use of the right-of-way (MN Statute 216.36). Council made the decision on the franchise fee at the April 15, 2013 meeting.

3. What is the money going to be used for?

Maintenance of the city streets (mill and overlays, full depth reclamations, and reconstructions).

4. Is this just another tax?

This is a different revenue source for the city. It is not new revenue but rather a replacement of the old revenue source which came from general taxes and special assessments. The revenue generated with the franchise fee eliminates both of these previous sources. The fees have been established at a rate to fully sustain our pavement management program needs for the long term. Under the previous funding approach, property taxes covered about two-thirds of the cost of the pavement management program. The other third consisted of special assessments against the properties along a particular project area.

5. The old taxing and assessing system worked. Why did you change it?

The dollar amount needed to be collected through taxes and assessments was expected to increase significantly over the coming years due to the large growth of our roadway system in the 1990s and 2000s. Increasing the property tax levy and special assessments to cover the increased needs of our street repairs was considered but not found to be the most viable option. Property taxes also exempted renters, non-profits, schools, and other entities that utilize the public infrastructure. The property tax option would have changed yearly based on values of homes and businesses. Having a dedicated fee ensures local control of the revenue and that repairs stay on schedule with the pavement management plan.

6. I live in an apartment or town home. Will I be charged the fee?

Yes, you will pay the standard residential fee. The fee pays for your use and maintenance of the public city streets.

7. How much will I be charged?

Residents see a charge of $5 on their electric bill and $4 on their gas bill every month.

Commercial/Industrial Properties see charges between $29 and $170 per month. You need to call your utility company to find your classification.

Electric
Small Commercial/Industrial - Non Demand $25
General Commercial/Industrial - Demand $70
Large Commercial/Industrial - >1 MW Demand - $100

Gas
Commercial/Industrial, Small Volume A - $4
Commercial/Industrial, Small Volume B - $16
Commercial/Industrial, Small Volume C - $50
Large Commercial/Industrial, Duel Fuel A and B - $70

8. When will the fee collection end?

The fee is expected to be the long term funding option for the city and not anticipated to be eliminated.

9. I have multiple bills or two or more meters on my property. Do I have to pay the fee more than once?

The fees are to be collected per utility account, not per meter. The city is working with the utility companies to better define the classification of their accounts and which ones should be receiving a fee and which ones should not.