NB considering franchise fees to help pay for road repairs

Anyone who drives around North Branch knows there are certain streets that are deteriorating — there are miles of roadway that haven’t been overlaid in nearly two decades.
City Engineer Lee Gustafson told the City Council at its July 25 meeting the city needs to start thinking about how to pay for road repairs, and the option suggested by staff is franchise fees.
According to information from the League of Minnesota Cities, municipalities have the authority to include franchise fees on city utilities.
Gustafson said the suggestion is to have a franchise fee of $6 per month per household in North Branch; that fee would be included in the electrical service charges.
“Since 2008, the city hasn’t had any money (for road repairs), with the exception of some state aid money,” Gustafson said. “The city is falling further and further behind.”
Gustafson noted there is some opposition to franchise fees, but people generally have a tougher time stomaching the other options to raise money for road repairs: property tax levy increases or special assessments. In the case of special assessments, only the people who live along a street set to be overlaid are charged for the fix. Those amounts can total tens of thousands of dollars per household, which is then spread out over time, often a decade or more.
“It takes a lot of money to maintain 105 miles of streets, 70 miles of that being paved streets,” Gustafson said.
In a memo to the council from Gustafson and Public Works Director Shawn Williams, it’s explained that franchise fees are a means to garner money from residents for road repairs in a way that doesn’t have the lump sum shock of assessments.
“One very important and widely supported fact about establishing a franchise fee funding system for street rehabilitation is that it is essentially a ‘pay as you go’ system — meaning you pay a little each month to use the roads within the city,” the memo reads.
That same memo notes just how expensive it is to repair and maintain roads.
“Funding local street rehabilitation is not a one-time need,” it reads. “It’s a permanent need that must be addressed in order to preserve this huge asset. Assuming streets are overlaid once every 20 years, the city of North Branch should be overlaying 2.65 miles per year, so all 59.9 miles of the currently paved non-state-aid street system is overlaid once every 20 years. This equates to a cost of approximately $1.25 million per year.”
As it stands right now, the franchise fee is an idea. The city is looking to get word out about this proposal, and possibly the utilization of a sales tax to generate revenue for road repairs from people who live outside the city, over the next six months.
Council Member Kathy Blomquist said she suggested franchise fees about five years ago and the idea wasn’t palatable to the council at that time. But she said now the council has to take some sort of action, otherwise the city’s road infrastructure will continue to crumble.
“What we’re doing is spreading the amounts among a lot of people,” she said. “No one is taking the full brunt of everything. The city doesn’t really have a lot of choices for bringing in revenue.”
Council Member Robert Canada voiced his opposition to the idea of franchise fees.
“I don’t see why we need to be going down this road,” he said. “We’re being taxed to death.”
Council Member Jim Swenson said people in the community need to come together and offer their ideas on how to fund road repairs.
“I’ve done a lot of research and study on it,” he said. “I’m not sold on franchise fees, but we have to start looking at something. We can’t keep running our roads down. We need the input from the public again.”
Council Member Kelly Neider asked Gustafson if the fee had to be $6 a month.
“It’s whatever you think is appropriate,” he responded. “What I’m recommending doesn’t cover what is needed, but it’s a start.”
The city plans to have a series of meetings to solicit public input on the franchise fee idea and to garner other ideas on funding road repairs. The council voted 4-1 — Canada dissented — to direct staff to start preparing the educational meetings.

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