Parks and Trails Replacement Plan and Funding
At its Aug. 11 meeting, the City Council approved the necessary ordinances to begin collecting a franchise fee on gas and electric bills to help fund future parks and trail facility replacements. Pending approval from the Minnesota Public Utilities Commission, the new fee ($5 per month total increase for residential properties) will appear on monthly bills starting in January 2022. See the frequently asked questions to learn more.
Woodbury’s extensive parks and trails system is the envy of most other Twin Cities communities. The exceptional recreational amenities residents enjoy today were made possible through solid, forward-thinking decisions made by past city residents and leaders and built through a carefully managed development process that limited the cost to residents.
The parks and trails system includes park buildings and structures, courts, fields, playgrounds, irrigation systems, parking lots, trails, and other miscellaneous items. As the system ages and needs repairs, the city needs a long-term funding tool to ensure proper replacement of the amenities for years to come. Now is the time to commit to carrying forward the community’s parks and trails legacy for future generations.
Developing a Plan
In December 2019, the Woodbury City Council directed staff to develop a parks and trails replacement plan with the intent to ensure the city’s parks and trails meet the needs of a growing and changing community. As city staff completed a comprehensive asset management plan for parks facilities, it became clear a sustainable funding plan for replacing the assets was essential for moving forward. Subsequently, the City Council approved the creation of a Park and Trails Replacement Fund as part of the 2020 budget to begin to address the initiative and seeded the fund with approximately $700,000.
However, a key missing component to connect the City Council’s strategic goal, staff’s asset management planning and the new replacement fund was a sustainable revenue plan. In 2020, the City Council directed the Parks and Natural Resources Commission and the Audit Investment Commission to provide a joint funding recommendation to sustain a currently underfunded Parks and Trails Replacement Fund.
At the commissions’ recommendation, the City of Woodbury is instituting a franchise fee on utilities (gas and electric) to help fund future parks and trail facility replacements. Below are some frequently asked questions and answers regarding franchise fees.
Frequently Asked Questions
What is a franchise fee?
Utility franchise fees are commonly found across Minnesota and the country as a way to fund city operations. Under Minnesota Statute (216B.36), cities can impose a fee on utility companies that use the public rights-of-way to deliver service. These utilities then pass on these charges to utility customers on monthly bills. As fees are collected through monthly customer bills, utilities then return the fees collected back to the city.
The Woodbury Audit and Investment Commission and Woodbury Parks and Natural Resources Commission worked together throughout 2020 to analyze franchise fee and other funding options and develop recommendations for community input and City Council consideration.
What will the cost impacts to residents and businesses be?
Multiple funding options are under consideration (as detailed in the recommendations report). One of these options (Option 1A) would use a combination of the property tax and franchise fee to allocate approximately $2.9 million annually to address the parks and trails replacement funding shortfall.
The estimated franchise fee impact to Woodbury property owners would be $5 per month (total for gas and electric) for most residential properties. The franchise fee for larger commercial properties will be more, with many variables influencing the final estimate. See below, or reference page 11 in the recommendations report.
|Proposed Monthly Franchise Fees||Option 1A: Blended (Mid End Fee)|
|Small Commercial/Industrial, Non-demand||$3.50|
|Small Commercial/Industrial, Demand||$23|
|Public Street Lighting||$8|
|Commercial Gas Service - Xcel Energy|
|Commercial Firm, Non-demand||$10|
|Commercial Firm, Demand||$100|
|Commercial/Industrial Gas Service - CenterPoint Energy (Estimated)|
|Commercial A <1,500 therms/year||$10|
|Commercial/Industrial B 1,500> or <5,000 therms/year||$10|
|Commercial/Industrial C >5,000 therms/year||$100|
|Small Volume Dual Fuel A <120,000 therms/year||$90|
|Small Volume Dual Fuel B >120,000 therms/year||$90|
|Large Volume Dual Fuel >1,999 therms peak day||$55|
If approved, the collection of the monthly franchise fee through Xcel Energy and CenterPoint Energy utility bills is planned to start in January 2022.
What is the estimated financial impact to non-residential properties?
The estimated franchise fee impact to the majority of Woodbury non-residential properties (for Option 1A) would be $10 per month for gas and $3.50 per month for electric. Larger non-residential utility users may have a higher fee applied.
Do other cities collect franchise fees?
What are the next steps to implementing a franchise fee?
The City of Woodbury currently has franchise ordinances in the City Code. However, these franchises have expired and proceeding with the implementation of franchise fees will require these ordinances to be updated and renegotiated with utility providers. The public will be invited to participate in upcoming community outreach and engagement opportunities related to implementing a franchise fee.
In addition, ordinance amendments that result in changes to an established franchise fee take approximately 90 days to implement fully. After such approval, the city would be required to notify the Minnesota Public Utility Commission and then allow time for the utilities to implement into their billing processes.
Questions about the franchise fee should be directed to Parks and Recreation at 651-714-3583 or firstname.lastname@example.org.