Columbia Heights Moves Forward with Utility Franchise Fees to Fund City Projects

Columbia Heights Moves Forward with Utility Franchise Fees to Fund City Projects

COLUMBIA HEIGHTS, MN — The City of Columbia Heights is moving forward with an ordinance to establish new franchise fees on natural gas and electric utilities, a financial mechanism commonly used by Minnesota municipalities to fund essential services and capital projects.

Under the proposed plan, utility companies such as Xcel Energy and CenterPoint Energy would continue delivering service to residents while collecting the franchise fees on the city’s behalf. Minnesota Statute 216B.36 authorizes cities to impose these fees for the right to use public rights-of-way, including streets and sidewalks. Collected fees are then remitted to the city, typically appearing as a separate line item on customer utility bills.

City staff presented the potential fiscal impact of adopting these fees to the City Council in early 2025. Based on comparisons with neighboring municipalities, residential electric customers could see median monthly fees around $3.69, while gas customers could pay approximately $4.00 per month. Staff estimates the program could generate up to $700,000 annually, depending on the final fee structure and adoption.

Franchise fees can be structured either as a flat rate per account or as a percentage based on consumption. City officials emphasized that careful planning and coordination with utility providers would be required to implement the fees, including programming for billing systems and providing the statutorily required 90-day notice to utilities.

Columbia Heights staff framed the effort as a way to expand the city’s funding options for capital improvements and essential services, noting that many peer cities use franchise fees to support infrastructure maintenance, street repairs, and local clean energy or climate initiatives. Officials also caution that the fees would likely be passed on to customers, highlighting the importance of transparency and public engagement before final adoption.

The City Council has not yet voted on the ordinance. Residents interested in the proposal can review council work-session materials and upcoming meeting agendas on the City of Columbia Heights website for updates and opportunities to provide public comment.

MinneapoliMedia