Every city has a franchise agreement with its utility companies (gas, electric, etc.) to use or rent the city owned right-of-way for business purposes.
The city would fund regular maintenance projects with the money collected from the fee, including overlays and reconstruction, to prolong the life cycle of streets to 50- 60 years. The average life expectancy of local streets is approximately 25-30 years without ongoing maintenance.
Reliance on state funds, property taxes and increasingly expensive materials make the pavement management program vulnerable to cuts and delays, thus decreasing street life.
The city currently borrows money through bonding for new and reconstruction projects which is funded by general property taxes. At this point in time, the majority of all city streets are older than 30 years and require costly maintenance and repair.
By definition, the planned franchise fee is a rental fee or reimbursement with proceeds dedicated to finance the costs of the city street system.
Revenue collected from the fee, which will likely be passed on to customers of the utilities, will replace the portion of the property tax levy used to pay for street improvements.
To manage the larger street network and fully implement an adequate street improvement plan, the city will need to continually add $350,000 to the levy without an alternate funding source.
Fees would be applied to electric providers within the City of Grand Rapids and are proposed as follows:
Residential: $1.25/month ($15/year)
Commercial/Industrial: 2.5% of monthly electric bill with a maximum of $2,000/month.
Fees would increase on an annual basis as the program progresses. Most property owners will see an overall reduction in the amount they pay towards the street improvement program. This is due to the reduction in the amount of their taxes that are attributable to street projects and the more equitable approach of including tax exempt properties.
The average household value in Grand Rapids is $269,600. Based on this value, the amount of 2024 City tax attributed to completed street projects is $421.68. In order to continue repairing, replacing and maintaining our infrastructure, there are two options for funding the program.
Determining the exact costs for a commercial property is not as straightforward as residential. Commercial will be determined on a percentage basis, based on your monthly bill. As an example:
Some commercial properties will see an overall reduction in the amount they pay towards the street reconstruction program, while others will see an increase. It will be dependent on the amount of electricity you use and the value of your business. If you would like to get a preliminary estimate of your proposed payments, use the link at the bottom to send an email.
