Fayetteville staff preview franchise-fee fund to secure homelessness funding, authorize contract for five tiny homes

Fayetteville officials at an agenda session previewed measures designed to protect and allocate franchise‑fee revenue for homelessness initiatives and to authorize funding for a nonprofit to expand tiny-home shelter capacity.

City staff proposed creating a franchise‑fee special revenue fund so payments from utilities and other franchise holders would be segregated from the general fund. Kent, the city attorney, told the council the distinction matters for legal protection: “I recommended you do a franchise fee because the constitutional amendment ... treats franchise fees differently and, therefore, it protects us from the illegal exaction claim.”

The council previewed two linked items. One would formally establish the new franchise‑fee special revenue fund. The second would authorize allocating up to $70,000 from that fund contingent on the Salvation Army’s successful award of an Emergency Solutions Grant (ESG) so the city can immediately document support for the grant application.

Separately, staff described a proposed contract with CIRR (referred to in materials as New Beginnings) to expand an existing tiny‑home pallet shelter campus. The resolution would authorize a five‑year contract for $150,000 plus a $15,000 project contingency (a total potential commitment of $165,000) to add five tiny‑home units and fund associated engineering, grading, foundations, electrical, fencing and landscaping. Staff said the five‑year term is a minimum maintenance requirement for the units.

City staff emphasized that the units funded under this contract would be owned and operated by the nonprofit; they would not be city‑owned housing. The franchise‑fee fund is intended to hold the city’s franchise receipts until disbursement, rather than routing those receipts into the general fund, which staff said would make allocations more legally defensible.

Councilmembers asked about the source and timing of funds and whether the city must return for a later vote. Staff and the city attorney explained the procedural steps: if the council establishes the fund and approves the contingent allocation next week, the city could deposit franchise‑fee receipts directly to the special fund and pay the nonprofit without returning for another vote once the ESG award is confirmed.

Next steps: these items were previewed at the agenda session for action at the council meeting next week; no formal votes were taken at the agenda session.