Franchise Fees / Street Maintenance

WHAT ARE FRANCHISE FEES?

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.  While not technically considered a “tax”, this is a new dedicated revenue source for the city which would be collected from utility users in Carver; 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 Street Maintenance Program assuming they have cable, gas, and electric services. 

IS IT COMMON FOR A CITY TO COLLECT A FRANCHISE FEE?

Most cities in this area charge private utilities a Franchise Fee for use of city right of way. Utility providers typically distribute a portion of this fee to all of its customers. Through this fee, cities like Chanhassen, Chaska, and Victoria will collect an estimated $7.6 million in cable, electric, and gas franchise fees in 2020.   A franchise fee is collected by 357 cities out of 853 cities in Minnesota. There are 101 cities in the seven-county metropolitan area that currently have franchise fees.  The City of Carver currently collects $0 through franchise fees.  

HELPFUL INFORMATION

Franchise Fee Revenue Projections

Street Maintenance Program – Finance

Street Maintenance Program –  Maps

Let’s Talk Franchise Fees Guide

Share Your Thoughts: Franchise Fees