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Franchise Fee
Updated 6/22/20
The City wishes to make an amendment to the long-term street repair funding solution, franchise fee, which is used exclusively to fund annual street repair projects. A franchise fee was implemented in January 2018 on our gas and utility companies as a long-term funding solution to cover annual costs related to city street maintenance and improvements.The fee is used exclusively to fund annual street repair projects and to invest in our street infrastructure.
Over the past year, City Council has had significant discussions about our street repair program and the desire to do more. With our current funding levels, we’ve quickly found that we are unable to “catch up” with our street repair needs and meet the demands of our property owners. This led to a discussion about how to do more and it quickly became a financial discussion. The amendment to the franchise fee would double the amount collected and effectively double the amount of street repair completed each year.
Franchise Fee Fact Sheet (PDF)
Letter to Resident (PDF)
- Covers a wider base than property taxes
- Diversifies the City’s revenue sources
- Flat fees are reliable source of revenue to budget for
- Flat-rate fees are easy to administer and eliminates the ups and downs of summer/winter extremes.
Some communities in a similar position as Vadnais Heights, have elected to move forward with approving an increase to their franchise fees, but defer the start of the new fee collection until the start of 2021. If Vadnais Heights was to defer the start of a new fee, the delay would obviously impact the size of the 2021 street projects, but would allow the City to move forward with the approval process.
City Street Program & Costs
Street repair repair needs and costs continue to rise. Vadnais Heights has 36 miles of streets with a majority of them constructed in the 1980’s and 1990’s. With expected street life of 30 years, the City should be repairing about 1.2 miles per year AT A MINIMUM. Current repair rate is 75% of the ideal rate of repair, or a little less than 1 mile/year. The proposed fee increase would double the street repair capacity.
| Year | Assessed Cost | City Cost | Total Project Cost | Length Improved |
|---|---|---|---|---|
| 2015 | $260,000 | $335,000 | $595,000 | 3,100 feet = 0.59 miles |
| 2016 | $250,000 | $230,000 | $480,000 | 4,330 feet = 0.82 miles |
| 2017 | $283,000 | $352,800 | $635,800 | 5,117 feet = 0.97 miles |
| 2018 | $0 | $0 | $0 | none |
| 2019 | $277,000 | $491,000 | $768,000 | 4,500 feet = 0.86 miles |
| 2020 | $553,000 | $1,677,000 | $2,230,000 | 1.70 miles |
Fee Breakdown
*Reminder Connexus only provides electric to Vadnais Heights. Xcel provides both electric and gas within city limits. Please check the state's online map to confirm your service area.
| Classification: Electric | Current Monthly Fee (Adopted 2018) |
2021 Monthly Fee (Proposed 2020) |
|---|---|---|
| Residential | $2 |
$4 |
| Small Commercial & Industrial (C&I): Non-Demand | $3 |
$6 |
| Small C&I: Demand | $13 |
$26 |
| Large C&I | $60 |
$120 |
| Annual Total Fee Collection for Xcel Energy Electric |
$144,372 |
$288,744 |
| Annual total Fee Collection for Connexus Energy |
$62,616 |
$124,776 |
| Classification: Gas | Current Monthly Fee
(Adopted 2018) |
2021 Monthly Fee
(Proposed 2020) |
|---|---|---|
| Residential | $1.25 |
$2.50 |
| Commercial Firm: Non-Demand | $3.50 |
$7 |
| Commercial Firm: Demand | $30 |
$60 |
| Small Interruptible | $0 |
$0 |
| Medium & Large Interruptible | $60 |
$120 |
| Firm Transportation | $0 |
$0 |
| Interruptible Transportation | $0 |
$0 |
| Annual Total Fee Collection for Xcel Energy | $93,831 |
$187,662 |
| Grand Total | Existing Collection |
2021 Fee |
|---|---|---|
| Electric and Gas | $300,819 |
$601,182 |