Rates set for city franchise agreements

Having already decided to institute franchise agreements with utility companies that operate in the city, the Sundance Council settled on an exact percentage last week. Utilities will be asked to enter into agreements that allow “rental” of city rights-of-way in exchange for 2% of gross operating revenue within city limits.

Franchise agreements allow utilities to make use of city-owned rights-of-way to install the necessary equipment to serve their customers. Such agreements have long existed in Sundance but, for the most part, were payments in kind rather than financial; a utility might upgrade or install new equipment for the city, for example.

The topic came up a couple of months ago because the city was approached by Visionary, who would like to place fiber optic cable from downtown Sundance to the top of Sundance Mountain and proposed a 3% franchise agreement.

After the council passed a motion to institute franchise agreements last month, Mayor Paul Brooks said he had been contacted by Powder River Energy. The feedback given from the local cooperative was that they have no problem with an agreement, which they are already doing in other communities, but would prefer to remain at 2% so it does not become necessary to carry an additional line on members’ bills.

As this proposal differed from the one offered by Visionary, City Attorney Mark Hughes took the opportunity to explain that state statutes require franchise agreements to be “competitively neutral and non-discriminatory,” which means the city cannot ask for different percentages from different utility companies.

Brooks reminded the council of the original intent of the franchise agreements: to create a revenue stream at a time when the state budget is in dire straits. The city will probably “skate through” with its usual distribution amount this year thanks to COVID-19 federal funding, he said, but the long-term prospects for carbon don’t look good.

Even if the state distributions dry up, Brooks said, the city is going to have financial obligations for streets, sewer and water – and need revenue streams to meet those obligations.

However, Brooks also noted that PRECorp was the only utility to reach out to the city about this topic and is also willing to enter into an agreement despite not being a communication company, as specified in state statutes regarding the types of utility subject to franchise agreements.

Brooks said the message he was given from PRECorp was: “We see what’s happening here and we are ready to participate.” Because the cooperative reached out to the city and is willing to participate, Brooks stated that he is inclined to listen to their feedback.

Council Member Callie Hilty agreed, and suggested a motion for a 2% franchise agreement for all utilities in town. This will be a ten-year agreement with option to review, allowing the city to revisit the question at that time.

The motion passed. The city will contact Visionary to ask them to reduce their proposal from 3% to 2% accordingly.