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Public Works

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Franchise fee Questions

Questions & Answers

What is a franchise fee?

  • It is a fee that the city charges utility (gas and electric) companies to use the public right-of-way for them to conduct business in the city. The utility companies then pass on these fees to their residential and commercial customers.
  • Franchise fees are common. More than 100 cities in Minnesota use them to fund street repairs.

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Why do we need a franchise fee?

  • It is needed to fix 205 miles of streets over the next 14 years.
  • There is premature street deterioration on streets constructed, reconstructed or resurfaced from 1992-2006. (165 miles of streets; that’s 75 percent of our city streets)
  • There are 40 miles of streets that are more than 35 years old and need a mill and overlay (grind off top 2 inches of asphalt and pave 2 inches of new asphalt). City staff has a plan to overlay 10 to 15 miles of streets each year for the next 14 years. The cost to overlay residential streets is $170,000 per mile.
  • There is a need to fully reconstruct seven miles of streets in the Bass Creek neighborhood. Revenue from franchise fees will be used for reconstruction projects instead of assessing each household $11,000 or more to pay for their portion of the street costs.

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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). After much public input, the Council approved the franchise fee at the November 23, 2015 meeting.

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What is the money going to be used for?

Revenue from franchise fees will be used for transportation infrastructure projects including street rehabilitation and maintenance, sidewalks, trails, and work required as part of street overlays and reconstructions.

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Is this just another tax?

Franchise fees are an alternative revenue source for cities to fund street repairs. It is not called a tax and it cannot be deducted on your tax return, but yes it is money from residents and businesses just like a tax.

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I thought my property tax paid for street repairs. Why do you add more fees for the same thing?

Approximately five percent of property taxes are currently used for street maintenance including pothole patching, crack sealing, snow plowing, ice control, and street sweeping. Property taxes are not enough to address the major street repairs needed each year to fix our streets. Schools and non-profits benefit from our street infrastructure and are exempt from property taxes, but they are not exempt from franchise fees.

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

Yes, if you pay a gas or electric bill, you will pay the standard residential fee of $14 per month. The fee pays for your use and maintenance of the public street system.

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How much will I be charged?

Residents will be charged $7 on their Xcel Energy electric bill and $7 on their CenterPoint Energy gas bill every month.

Commercial properties will be charged between $14 and $320 per month depending on the classification of the business or entity, which is based on consumption levels of electricity and natural gas.

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When will the fee collection start and end?

The fees start in March 2016 and have a sunset (ending) date of December 31, 2028. The need to continue the fee will be reviewed annually based on street repair needs and as part of the budget development process.

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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 collected per utility account, not per meter. If a property has two or more accounts, the property has to pay a franchise fee for each account.

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What happens if I don't pay the franchise fee portion of my gas or electric bill?

Utility companies treat any part of an unpaid bill the same. Non-payment may lead to shutting off your electric or gas service.

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My street was recently reconstructed and I am paying a special assessment, do I still have to pay a franchise fee?

The City Council voted to rebate franchise fees to property owners as long as they are paying on their special assessment. Since utility companies collect the franchise fee, you will have to pay it on your monthly Xcel and CenterPoint Energy bill, but the city will rebate an equivalent amount of the franchise fees through a credit on the city utility bill. The credit will be done at least annually, but we are working to be able to do it quarterly.

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About Public Works (Operations and Maintenance)

The Operations and Maintenance department is responsible for taking care of the parks, storm and sanitary sewers, water systems and city vehicles. We also build and maintain the streets and manage the recycling program.

Divisions

The department has five divisions:

  • Engineering
  • Park Maintenance
  • Public Utilities (Water and Sewer)
  • Recycling Services
  • Street/Fleet Maintenance

Contact us

Public Works Facility (Operations and Maintenance)

8300 Noble Ave. N.
Brooklyn Park, MN 55443
View map and directions to the Public Works Facility

Hours

Monday through Friday, 8 a.m. to 4:30 p.m.

Holiday hours

We are closed December 26 and January 2.

Phone and email

763-493-8007
Contact Public Works Staff

Emergencies after hours (for water, sewer or street)

763-493-8222

 
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