Council sets Jan. 16 public hearing on franchise fee revenue purpose statement

The Norwalk City Council approved a resolution Thursday to set a public hearing for Jan. 16, 2025, on a revenue purpose statement required to implement franchise fees on electric and natural gas utilities. Staff said the proposal is intended to be revenue neutral with the city’s current 1% local option sales tax.

City staff explained that adopting the revenue purpose statement authorizes the council to later consider ordinances establishing franchise agreements and fees. Staff noted state and city rules permit franchise fees up to 5 percent but said the current proposal is for a 1 percent fee that would be applied to utility bills and would replace the 1% local option sales tax revenue the city currently receives.

Gene Kelly (staff) summarized the intent: "Just that it will be a revenue neutral, at this point with the 1% because we won't be charging that in the [sales] tax. So it'll be revenue neutral to citizens." Another staff member explained the ways the code limits uses for the revenue and noted council could adjust the list of permitted uses at adoption, though staff did not recommend removing items from the standard list during initial action.

Council member Baker moved to approve the resolution setting the Jan. 16 public hearing; the motion was seconded and passed on roll call (Baker: yes; Pool: yes; Meineke: yes). The record shows staff will publish the revenue purpose statement wording taken from the city code and then return to council for ordinance hearings on franchise agreements — including an anticipated agreement with MidAmerican Energy.

Staff emphasized the franchise fee approach shifts the tax incidence compared with the sales tax because some charges subject to a franchise fee are not subject to sales tax; staff said the change would be revenue neutral for citizens given the proposal parameters. The council did not adopt the franchise ordinance at this meeting; the item sets the public hearing date for the revenue purpose statement required before an ordinance can be considered.