Lake Elmo City Council — Transcript
Tuesday, June 16, 2026
Utility Franchise Fees Implementation
Franchise Fee Structure and Revenue Dedication
Votes (1)
Discussion on Proposed Utility Franchise Fees and Revenue Dedication
Dissent: Councilmember Baxter expressed strong opposition to the implementation of franchise fees and the lack of specific revenue dedication. Councilmember Hearn also expressed general reservations but agreed with the need for transparency.
The workshop commenced with an explanation of utility franchises and fees, their legal basis, and historical context. Bob Voss, an expert, clarified that franchises are both contracts and ordinances, and are necessary to impose fees. He noted Xcel Energy's increasing 'pushback' in negotiations. Mike Wilhelmy from Xcel Energy countered that cities are becoming 'more aggressive.' Discussion then shifted to specific fee scenarios designed to raise about $500,000 annually, with proposed residential electric ($3.75) and gas ($2) fees. Council also debated where these funds should be dedicated, with options including the Park Reserve Fund, Street Maintenance Fund, and the Lake Elmo Avenue/Highway 36 interchange project. Concerns were raised about the regressive nature of fees and the need for clear transparency on fund usage. Councilmember Baxter noted a prior 2022 workshop did not direct staff to implement fees but to explore scenarios. The consensus leaned towards dedicating revenue to the Park Reserve Fund to address declining park dedication fees and future maintenance needs.
Notable Quotes (7)
So, they're unique animals in that they're both contracts and they're ordinances. And um that that's significant uh about them.
The other value that's, I think, the purpose for your your conversation tonight is that unless you have a franchise, unless you have a contract with your utility, you can't impose a franchise fee on the utility.
Uh we would we feel the other way. We feel like cities are being much more aggressive in some of their negotiation. Um things that we thought that were not complicated and and simple that cities are are asking to to be removed from agreements.
My recommendation in order to create a more sustainable um financial outlook for the city long-term is definitely to get that tax rate up to to something similar to other cities our size um or uh add these these diversified revenue streams in some way.
To me it's all wishy-washy and well, we could put it here, we could put it there, we could use it here. To me that's not fair to our residents and and those we're going to be adding this fee to to not say, 'Here's why we need this franchise fee because we want to replace the uh playground equipment or we want to make sure that our infrastructure is set up.'
I would err on the side of putting it here because this structure allows for a consistent and stable revenue stream. And I I I agree with the comments from the mayor in that one advantage of this as a source of revenue is that it's predictable and consistent and also diversifies the revenue streams.
I I The The notion of you can do more with less, I think it's hogwash.
Ordinances & Resolutions (7)
City regulations that also serve as contracts with utility providers, enabling the imposition of franchise fees.
Comprehensive city laws regulating utility use of public rights-of-way, adopted by many Minnesota cities.
A template provided by the League of Cities that many Minnesota cities, including Lake Elmo, have adopted for right-of-way regulation.
A standardized franchise agreement template provided by Xcel Energy used as a starting point for negotiations with cities.
The city's plan for capital projects, recently extended from 5 to 10 years, which is currently underfunded.
State agency that oversees utilities like Xcel Energy and must approve changes to customer bills.
A recently completed plan for city parks, identifying significant future needs and costs.