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January 19, 2018

12/11/2017 10:29:00 AM
North Branch proceeds on franchise fee, council votes 4-1 to draft ordinance

The North Branch City Council on a 4-1 vote inched the city closer to instituting some level of a franchise fee, to be dedicated to paying for deferred street projects.  (See Press story November 23 on fee public hearing.)  Among reasons for the fee approach expressed by council is a flat franchise fee is a fair method of spreading expenses for supporting municipal transportation costs over all property owners and renters, non-profits, and non-taxable school sites. It is a predictable source of revenue.

In North Branch,  city councils stopped putting money into major street projects starting with the 2009 levy, according to city finance director Richard Hill.  Any projects beyond pothole repair or crack sealing on city streets have been ignored ever since.  

There’s about 20 percent of North Branch streets that qualify for state aid status and the city uses state aid funds to tackle those miles.  

Hill advised that the city needs a plan now to tackle the rest of the streets’ needs. For the last several years a plan to chip away at city debt burden has proven effective and city debt was a looming huge financial disaster when Hill came on-board.  

He explained that North Branch trimmed costs and dedicated revenues to servicing debt but there will come a time when millions of dollars will be needed for neglected streets and, if no attempt is made at funding now, it will be “a freight train coming,” Hill stated.
The city council vote last week did not adopt the franchise fees just yet.  

Staff will draft an ordinance “framework” for the council to digest at the December meeting.  The motion supported last week calls for $4 per billing cycle on gas bills, and $4 per billing cycle on electric, for residential subscribers.

City Engineer Lee Gustafson explained that commercial-industrial franchise fees need to get set independently of residential customers,  and it’s been his experience that residential is the toughest to get a consensus on from elected officials.

The lone no vote was from Council member Robert Canada. When asked by the mayor for input, as she went around polling each councilperson on Kathy Blomquist’s motion, Canada simply said no comment.

There’s any number of configurations the council will ultimately act on, but doing both gas and electric fees seemed to be preferred process, versus picking one type of energy franchise over the other.  

Fees can be set at any amount, but $4 at least generates relatively substantial funding.  As Council member Swenson put it, “...it gets us started.”
Hill cautioned there will still need to be levy support for streets as well.  Council members must find agreement on a two-pronged approach because fees alone won’t support what North Branch has foregone allocating money to for so many years.

Council member Kelly Neider added that she can only move forward from this point,  and not be responsible for prior lack of action by earlier councils, neglecting to levy sufficiently.  She expressed some concern about adding any fee onto Water & Light bills, though, saying people “are screaming the most” about this when it comes to cost of living concerns in North Branch.

The staff will create wording for granting the utility companies authority to collect the $4 fee on each electric and gas customer’s bill,  plus there will be some numbers on potential revenues and the ordinance will set up a process with the energy companies for remitting the revenue back to the city.  

But it all still awaits final action in December.

Should everything be finalized quickly, the first fee dispersement should arrive in the city bank account by May, Hill guessed.

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