Background
In 2016, the Bloomington City Council implemented the use of Franchise Fees to preserve and expand its Pavement Management Program (PMP). City Council is committed to maintaining a sustainable and consistent funding source for PMP Street Overlays, Seal Coating, Park Trail and Right of Way (ROW) Trail and Sidewalk Construction and Maintenance, which are the components of the PMP Program that franchise fees currently fund. This also includes upgrading trails and sidewalks to be ADA accessible as projects are completed.
What is a Franchise Fee and how is it associated with City right-of-way?
Cities hold right-of-way as an assetContinue reading
Background
In 2016, the Bloomington City Council implemented the use of Franchise Fees to preserve and expand its Pavement Management Program (PMP). City Council is committed to maintaining a sustainable and consistent funding source for PMP Street Overlays, Seal Coating, Park Trail and Right of Way (ROW) Trail and Sidewalk Construction and Maintenance, which are the components of the PMP Program that franchise fees currently fund. This also includes upgrading trails and sidewalks to be ADA accessible as projects are completed.
What is a Franchise Fee and how is it associated with City right-of-way?
Cities hold right-of-way as an asset in trust for its citizens. In order to properly care for and manage this important public asset, cities adopt ordinances and regulate the use of and access to the right-of-way. Adopting a right-of-way management ordinance gives cities authority to take advantage of management rights granted to cities under state law. One of those right-of-way management rights is allowing the use of franchise fees. Minnesota State Statutes allow for the city to impose a fee on a utility company for its use of publicly owned right-of-way. These funds are collected from all commercial and industrial businesses, tax exempt properties and residents in Bloomington and are used to fund the street and trail systems.
What have Franchise Fees been used for since implementation in 2016?
Refer to the maps below that show the street sealcoats, overlays and trail/sidewalk reconstruction that have been completed since 2016, utilizing franchise fee revenue to cost effectively keep the city’s infrastructure in good working condition as part of the PMP program.
Maps coming soon!
When Bloomington City Council initiated the collection of these fees in early 2016 it was anticipated that an increase in fees would occur in 2020 to be implemented in January 1, 2021 and would be reviewed every two years starting in 2020. Due to the financial impact of COVID 19 a one-year delay was imposed. City Council approved a rate increase in July 2021. This rate increase was implemented on January 1, 2022, and was the first rate increase since the program began. The City reviews the rate every two years and an additional rate increase was implemented on January 1, 2024. A rate increase was considered in 2025 but City Council voted to take no action and directed staff to return in Spring 2026 with an updated proposal.
Retaining walls
The City is responsible for the maintenance of all retaining walls within City right of way and routinely maintain or replace walls that reached the end of their useful life. Currently, retaining wall work is funded by the City's General Fund and typically covers small wall repairs and maintenance or is carried over from year to year to fund larger wall replacements. City staff is proposing to supplement the funding received from the general fund with an additional amount allocated from franchise fees to allow the continued replacement of walls that are reaching the end of their usable life and allow the proper maintenance of existing walls.
Stone retaining wall.
Log retaining wall.
Proposed fee change
Since January 2024, residents have been charged $5.95 on their electric bill and $5.95 on their gas bill every month. The City Council has started discussion of a possible rate increase that would be effective January 1, 2027 for commercial customers. The residential rate would be unchanged.
The current rates for commercial/industrial properties are on the schedule below, with the maximum proposed increase next to it in bold. The property classification is determined by the respective utility company.
Electric:
- Small Commercial/Industrial - Non Demand $11.90 change to $13.00
- Small Commercial/Industrial - Demand $63.00 change to $80.00
- Large Commercial/Industrial - $182.00 change to $200.00
Gas:
- Commercial, Small Volume A - $11.90 change to $13.00
- Commercial/Industrial, Small Volume B - $11.90 change to $13.00
- Commercial/Industrial, Small Volume C - $63.00 change to $80.00
- Commercial/Industrial, Small Volume Duel Fuel A and B - $63.00 change to $80.00
- Commercial/Industrial, Large Volume Duel Fuel - $182.00 change to $200.00
On March 9, 2026, City Council began the discussion of a rate increase for commercial customers that would be effective January 1, 2027. To view the discussion, visit the City's YouTube channel blm.mn/youtube
Next steps
- March 9, 2026
- City Council study session
- April 29, 2026 at 5:00-6:00pm
- Open House at the Atrium outside of Council Chambers at Bloomington Civic Plaza
- May 18, 2026 at 6:30pm
- City Council to hold Public Hearings
- May–July 2026
- 90-day period for utilities and Public Utilities Commission to process the request and prepare for collection of fees
- January 1, 2027
- New franchise fee rates go into effect
