Memorandum
City of Lawrence
Legal Services Department
|
TO: |
David L. Corliss, City Manager
|
|
FROM: |
Toni Wheeler, Director of Legal Services
|
|
Date: |
April 2, 2009 |
|
RE: |
Franchise Fees and Information on the City’s Agreements with Lawrence Freenet |
The City Commission directed staff to provide information regarding the City’s authority to enter into franchise agreements and collect franchise fees.
Franchise Fees
Cities are authorized to charge franchise fees under state statutes. The primary statute for franchise authority is K.S.A. 12-2001.[1] The City has entered into a number of franchise agreements with utility companies. The City receives five percent (5%) of the franchisee’s gross receipts for services provided within the corporate limits of the City. Franchise fees are a significant revenue source for the City.
The City has franchise fees with entities offering video and telephone service, as well as electricity and gas service. The City does not have the ability to collect franchise fees on internet service. There is a concern for cities that telephone and video services will increasingly be provided over the internet, endangering franchise fee revenues.
Information concerning the City’s Agreements with Lawrence Freenet is attached.