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Norwalk adopts revenue-purpose statement for 1% utility franchise fee; public hearing set on ordinance
Summary
The council voted to adopt a revenue-purpose statement for a proposed 1% electric and natural-gas franchise fee and set a subsequent ordinance hearing. Staff said the 1% rate would be revenue-neutral for most customers while allowing the city to capture roughly $100,000 previously collected through local option sales tax.
The Norwalk City Council on Jan. 16 adopted a revenue-purpose statement that lays out how the city would use proceeds from a proposed 1% franchise fee on electric and natural-gas providers. The action is an initial step toward replacing a portion of the current local option sales and services tax with a franchise-fee mechanism; staff said the city's chosen 1% level is intended to be revenue-neutral for most residents in the short term and would allow Norwalk to retain revenue that under the sales-tax mechanism would otherwise be shared across a wider geographic area.
Why this matters: Staff estimated the proposed 1% franchise fee would generate about $100,000 for the general fund while maintaining customers' bills at current levels for those who already paid the local sales-tax component. The franchise fee is levied on the utility provider (for example, MidAmerican Energy) and, in practice, utilities commonly pass the cost on to customers; staff said MidAmerican could choose to do so.
Council debate and next steps Council members discussed whether a higher percentage should be considered. Several members said they supported the initial 1% proposal but signaled they might propose a higher rate at a later meeting given pressure on city services and payroll. Staff said increasing the fee later would require additional ordinance action and would be subject to petition or referendum procedures in some circumstances.
Staff also noted that the franchise fee differs from the local-option sales tax in that some organizations (schools, churches, nonprofits) that are exempt from local sales taxes would generally be subject to the franchise fee unless the city adopts an explicit waiver or exemption. Staff reported they had consulted the Norwalk Area Ministerial Association and received no negative feedback during preliminary outreach.
Public process and vote The council set a public hearing for Feb. 6, 2025 to consider the actual franchise-fee ordinance and the council adopted the required revenue-purpose statement at this meeting by roll-call vote. Motion: Livingston; Second: Brown. Vote: unanimous (all present voting yes).
Direct quote (transcript): "This 1% better than that. K." (staff summary of proposal) and from several council members: "I'm willing ... to go forward now, but I may be proposing 2 or 3% [at the next discussion]."
Ending: Staff will return with the draft ordinance, outreach results and an explanation of possible waivers or exemptions for specific organizations before the Feb. 6 public hearing for final ordinance consideration.
