Arden Hills City Council says no to Xcel franchise fees

Following a second public hearing on utility franchise fees on Monday, Feb. 24, the Arden Hills City Council made a unanimous decision to halt any further discussion of enacting the fees.  Had it been implemented, the franchise fee agreement with Xcel Energy would have added $4.75 per month to city residents’ gas and electric bills -- a $3 flat rate for electricity and $1.75 for natural gas.

“I think we have heard loud and clear from the residents and we have had some good speakers for [franchise fees], but the vast majority have been against. The community does not want franchise fees,” council member Fran Holmes said.

The council has been looking for a new, reliable revenue source to fund road, parks and trails improvements given priority as part of the city’s Capital Improvements Plan (CIP).  Adding an Xcel Energy franchise fee to gas and electric utility bills was being considered as one option. The other two funding options the council has looked into are increasing property taxes and a public referendum to fund a multi-park and trails program, city administrator Patrick Klaers said during his presentation.

While Minnesota cities have had the authority to enact franchise fees on gas and electric utilities for 20 years without a public hearing, the city wanted public input and the mayor and council members were pleased with the turnout.

“This is probably a 10,000 percent increase of the number of people that come to our Truth and Taxation hearings,” council member Dave McClung said. “I’m glad you all came today. I don’t see us wanting to move forward with this. That’s my view.”

McClung said he felt the public hearings were important discussions because they prompted the city to “look at the funding question, and realize that [Arden Hills] still has a funding gap for park and trail improvements.”

McClung added that the city will have to prioritize parks, trails and road improvements moving forward and noted that the council has a tough task ahead in trying to close existing funding gaps for those needed projects.

Mayor David Grant said one option to help fund CIP projects is to find matching state grants. He said the city currently has one outstanding grant request, but said it is likely city officials would have to wait until summer to find out if that grant will be awarded.    

More and more Minnesota cities have added franchise fee programs with Xcel Energy, mostly around the Twin Cities metro area. Currently, 74 municipalities collect the fees, including neighboring Mounds View, New Brighton and Shoreview. It does not appear the city of Arden Hills will be joining those ranks anytime soon, or possibly ever.

“I don’t expect it to be revisited at all,” Grant said.

Joshua Nielsen can be reached at or 651-748-7824.


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