Fergus Falls, MN
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The City of Fergus Falls is considering adding a 5% franchise fee on utilities (gas and electric). This would help fund costs relating to resurfacing and reconstructing city streets. A franchise fee is collected by more than 1/3 of Minnesota cities. Implementing franchise fees has become a common way for a city to raise revenue. We are working closely with our local utility companies, Otter Tail Power Co., Lake Region Electric Co., and Great Plains Natural Gas Co. who will collect this fee from their customers who are city residents.
Open House Follow Up - Thank you to all who attended the open house. A handout was provided and can be downloaded HERE. Moore Engineering created a brief survey that will remain open until March 31, 2024. The survey link is available HERE.
March 2024 Update - Moore Engineering will host an open house on Thursday, March 21, 2024 from 5-6:30 p.m. in the City Council Chambers.
December 2023 Update - The City Council hired Moore Engineering to guide the planning and consideration of road projects, utility rates, and franchise fees. The use of franchise fees is under consideration.
November 2023 Update - This is still in discussion but on pause until 2024. The City Council asked staff to calculate additional scenarios, options and outcomes.
What is a franchise fee?
A franchise fee is a fee paid by a utility company to the city, for the use of public rights-of-way (usually underground) for utility lines, wires, etc.
What does that mean for residents and businesses?
The franchise fee is proposed at 5% per month, per account on residential and commercial gas and electric bills. Utility companies have the right to pass franchise fees on to their customers, which is noted on their gas and electric bills as a “City Fee.” The utility companies collect the franchise fees and remit them to the City. This is authorized by State Statute. There will be a cap for large companies of $1,000/month/account.
Why does the city need to implement a franchise fee?
The proposed franchise fees will generate nearly $1.3 million in revenue annually that will help the city cover unfunded costs relating to city streets. Utility franchise fees would apply to all utility customers in the city regardless of whether they pay property taxes. This includes non-profit organizations, schools, churches and government customers. Thus, these fees are more equally distributed than property taxes.