Willmar council adopts replacement gas franchise and a separate franchise-fee ordinance

The Willmar City Council voted Aug. 5 to replace its expired gas franchise ordinance and to adopt a separate ordinance imposing a franchise fee on CenterPoint customers.

Director of Operations Kyle Box told the council the franchise ordinance is a legal agreement that grants a gas company the right to provide service in the municipality while setting service obligations, infrastructure standards and fees. Box said the franchise agreement must be updated because the prior ordinance carried a 20‑year term that has lapsed.

Box presented a second, related ordinance that would impose a customer fee to be collected by CenterPoint and remitted to the city. He described two common fee structures — a flat monthly charge and a percentage of revenues — and said the city is proposing a flat fee approach to provide steadier, more predictable revenue. Box showed comparative rates from other Minnesota cities and the examples proposed in the packet, noting residential rates in the staff proposal were in the neighborhood of $5 per meter and commercial rates vary by consumption class.

During public comment and a later question-and-answer session, residents and council members raised concerns about how the fee would affect multifamily housing and condo buildings. Box said fees are assessed on a per‑meter basis: if an apartment complex has individual meters, each meter would be charged the residential fee; if the building is single‑metere d, the building’s service would be billed under the applicable rate class. He also said landlords could pass charges through to tenants depending on lease terms.

Council members pressed staff on the fiscal scale of the proposal. Staff estimated the fee program could produce roughly $650,000 in annual revenue in current projections and said, very roughly, that would equal about a 3.5% change to the overall general levy under their back-of-envelope numbers; staff committed to returning with more precise budget calculations.

Council member Fagerly proposed amending the motion to dedicate the franchise-fee revenue specifically to street projects, saying that would ensure the money was visible and protected. After deliberation, the amendment failed on roll call (5 no, 2 aye). The council then voted on the original motion to adopt the franchise-fee ordinance and on a separate motion to publish the ordinances by summary; both measures passed with unanimous roll call tallies recorded as 7 ayes, 0 nos.

The ordinances are subject to any required regulatory review before collections begin; Box said collections could begin as early as late 2024 but noted Minnesota Public Utilities review timing could affect that schedule.

The council did not set a permanent designation for how the city will use ongoing franchise-fee revenue; staff said the council would have the option to designate the funds later when it adopts the 2025 budget.