Franchise fees may impact some Cloquet utilities

Due to a lack of funding for street and utility infrastructure projects, the Cloquet City Council will discuss the possibility of adding franchise fees to gas and electric bills within the city.

According to City Administrator Tim Peterson, after this year there will be "zero dollars" in the street and utility project fund. Because of this, Peterson brought forward the idea of implementing franchise fees to the City Council on Tuesday, June 15, explaining that they could craft an ordinance that would allow them to use the fees in a very specific manner.

“Basically, you can set aside this money in separate pod for exactly what you want to use it for," he said. “It’s not just money for the general fund.”

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Currently, Cloquet has an existing franchise fee related to cable television, but its use is limited to funding for specific projects, such as the public access television network CAT-7. If gas and electric franchise fees were implemented, Peterson said the city would have more freedom to choose how the funds are spent.

He suggested specifying them for road and utility use, which would allow officials to budget for projects years in advance and meet long-term goals.

“It’s basically a way that we can use funds specifically for the greatest need in this community," he said.

The proposal of franchise fees was brought before the council last year, but put on hold due to the COVID-19 pandemic. Peterson suggested officials resume discussions in the upcoming months as COVID-19 restrictions have loosened.

The council members agreed to take up the issue after voicing some concerns, such as the average cost per household and transparency.

“We don’t want to have people making a choice between water and food," Ward 2 Councilor Sheila Lamb said.

Peterson estimated the total cost per household to be about $4, but said there are many different ways to structure the fee. Officials could choose to charge per meter, where commercial and industrial meters would be charged more than residential meters, or they could charge based on usage.

After Ward 4 Councilor Kerry Kolodge brought forward the issue of transparency, Peterson said the franchise fee would appear on its own line on utility bills.

He also said that there will be opportunities for transparency through the discussion and the crafting of the ordinance. The process of implementing a franchise fee could take up to eight months, Peterson said.

Members of the council seemed to unanimously agree it was important to begin looking towards the future of roads in the city.

“It seems like the time to talk about that is, in fact, now," Ward 3 Councilor Chris Swanson said.