City revisits franchise fees

With budget cuts looming ever closer, the Sundance City Council is revisiting the idea of franchise agreements with utility companies that serve citizens within town limits. While these do already exist with certain companies, until now they have seldom involved the exchange of money.

Mayor Paul Brooks introduced the topic last week, “In light of the recent financial struggles of the State of Wyoming, which is going to trickle down to us.” A franchise agreement is standard in most places, he said, and it may be time to formalize the process in Sundance.

“I’d like you guys to think about if in fact we want to go through the task of implementing franchise fees for the utilities that do business here,” he said, later adding, “It’s something we need to have some further discussion on, but I thought it would be prudent to start the discussion.”

The topic was raised as the council heard that state distribution is likely to be cut by 20% for 2021, which is expected to reduce the city’s income by $30,000 in a single year.

“I feel like we’ve never been at the point where the state was in the financial condition that it’s in and I look at oil futures and I don’t see it rallying out,” the mayor said. “I think we may need to look at other things to remain financially viable.”

Brooks said he is aware that some people may react to the idea of franchise agreements negatively and view it as a tax, because ultimately it will be paid by the consumer, while others will view it as simply leveraging the city’s property more effectively.

“It may be considered by some people to be double taxation. On the other hand I look at it more as a rental of our public right-of-way,” Brooks said.

Franchise agreements do already exist in Sundance, allowing utilities to make use of the city’s rights-of-way to install the necessary equipment to serve their customers, but they have tended not to reflect the usual way of doing things. In Moorcroft, for example, a franchise agreement with Powder River Energy brings the town 2% of the gross revenue generated within town limits.

“We have a franchise agreement with Powder River Energy, but it’s never been a cash payment. If we’ve needed some upgrades or a power line, they’ve balanced it out that way,” said Lenz.

She noted that it would not be a surprise if Sundance has left money on the table over the years by not leveraging this opportunity. Range Telephone also has a franchise agreement with the city, she said, but again it is not monetary.

The question is timely, said Brooks, because of an upcoming opportunity for a franchise agreement.

“Visionary approached us and I don’t know if they’re going to get off the ground but they have talked about placing some fiber optic cable from downtown Sundance to the top of Sundance Mountain,” said the mayor.

“I’m not sure that’s going to happen because I think it was part of the COVID-19 money, although it may be re-funded in the second go-around, but they wanted to do it.”

Lenz confirmed that Visionary is indeed interested in a franchise agreement. “Their proposal is 3% of the gross revenue that is raised in the City of Sundance,” she said.

With budget issues almost a certainty at the local level, it’s time to look for ways to fill the gap, the mayor said – especially if the council wants to see the city continue to grow.

“I think we’re on the cusp of taking off, there’s a lot of activity taking place in this town and I don’t want to kill it over a small amount of money that we’re not going to get from the state,” he said.

“I think we need to look at additional revenue sources to keep doing what we’re doing and I know it’s not popular and I know it’s not fun, but I think it’s a discussion we need to have.”

Brooks requested that the topic be placed on next month’s agenda, giving the council a month to think about it and the public an opportunity to chime in.

“Hopefully the folks who are impacted by this will read it and they will come – that’s what they call the vetting process,” he said. “Vetting is never fun, but it is part of the way that we do government.”