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Inver Grove Heights <br />Inver Grove Heights uses special assessments, general revenue, franchise fees, MSAS funds, and <br />other special revenues to fund its roads. Of the approximately $7 million spent annually on roads, <br />$1.75 million comes from property taxes, $1 million comes from their franchise fees, $500 <br />thousand comes from a special landfill revenue, and the remaining $3.75 million comes from <br />special assessments and MSAS. Inver Grove Heights started developing their pavement <br />management plan in 2006 when they saw their roads rapidly declining and budgeting would not <br />keep up with the ongoing costs to repair. The city previously assessed property owners for around <br />70% of the costs for road repairs; however, given the financial strains on community members, <br />this was becoming increasingly unpopular. Franchise fees, and another special revenue source, <br />appeared as a potential opportunity to raise revenue from everyone who uses the roads at an equal <br />rate. Now, the city funds their roads with about 30% special assessments and 70% other sources, <br />reducing the overall burden on their residents. <br />Inver Grove Heights started developing their pavement management plan in 2006 when they saw <br />their roads rapidly declining and budgeting would not keep up with the ongoing costs to repair. <br />The city previously assessed property owners for around 70% of the costs for road repairs; <br />however, given the financial strains on community members, this was becoming increasingly <br />unpopular. Franchise fees, and another special revenue source, appeared as a potential opportunity <br />to raise revenue from everyone who uses the roads at an equal rate. <br />Elk River <br />Elk River uses a combination of general fund revenue, franchise fees, and MSAS funds to cover <br />costs associated with street maintenance and reconstruction. General fund revenue, specifically <br />from the street maintenance budget, covers small and routine maintenance such as annual crack <br />seals, while more involved maintenance and reconstruction projects are funded by franchise fees <br />and MSAS funds. The city's franchise fees are flat rate and added to electric and gas utility bills <br />($5 to residential electric; $4 to residential gas; and other unknown rates for commercial and other <br />zoned properties based on utility classification). On average, the franchise fee revenues total <br />roughly $1.5 million. In special and rare cases, the city also uses special assessments though this <br />only occurs when properties along a gravel road have requested pavement. The current road <br />funding structure has been in place since 2013 when the city council passed the franchise fee <br />system. Their prior funding structure was based on special assessments which are ending in the <br />next couple of years. Properties who have paid assessments since the franchise fee system was <br />implemented have been reimbursed franchise fees for the life of their assessment. <br />Elk River stated that their street funding structure made financial sense. Their franchise fee system <br />was projected to be the most cost-efficient funding tool compared to special assessments, capital <br />bonds, and other funding sources. Their fee rate was set so that the city can adequately cover costs <br />associated with a 60-year road. And, the city considered how feasible its plan would be bringing <br />it to the public. They settled on franchise fees because the tool spread out the financial burden <br />across city residents instead of burdening some residents a lot through assessments and all <br />residents through debt service. <br />8 <br />