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Hermiston raises franchise fees to pay for street projects

The Hermiston City Council voted Monday to increase franchise fees on electric, natural gas, cable and telecommunications companies.
Jade McDowell

East Oregonian

Published on September 12, 2017 2:25PM

Hermiston residents will see an increase in their bills that will add more than $400,000 to the city’s street repair fund.

The council voted Monday to raise franchise fees, part of an agreement that various companies selling electricity, natural gas, cable television, telephone landlines and internet have made with the city in exchange for placing cables and wires in the city’s right of way.

Assistant city manager Mark Morgan estimated the increases — in most cases from 3 percent to 5 percent — will increase the average Hermiston resident’s electric bill by about $1.70 per month. Other impacts are harder to estimate, he said, because not all households pay for things like cable or natural gas, but it should average out to about $2.36 a month per resident for everything else combined.

Total, the impact will be about $48.72 per year for the average Hermiston resident.

The move will raise an estimated $413,000 per year for street projects. Currently the city’s total budget for street improvements is about $200,000 per year. At that rate, Morgan said, it would take the city 59 years to complete its top seven capital improvement projects if it stopped spending money on any maintenance.

“Obviously, with inflation as it is, we would never actually catch up,” he said.

With the extra money from the franchise fees, in addition to an anticipated $400,000 a year from the gas tax increase passed by the legislature this summer, Morgan said that timeline shrinks to more like 11 years.

The city’s five-year capital improvement plan for streets, which the city council also passed Monday, outlines those projects that will be a priority. During the 2018-2019 fiscal year the city plans to realign the confusing three-way intersection at Harper Road, Geer Road and North First Place behind Home Depot at a cost of about $1.25 million.

Other top projects include major maintenance work around Newport Park, paving the unpaved portions of Theater Lane, widening North First Place, redesigning the intersections of Highland Avenue and North First Place by the high school and Orchard Avenue and North First Place by the fire station, paving and extending West Gettman Road and widening East 10th Street.

Franchise fee money will also go toward maintenance of current streets, such as a grind and overlay of Hermiston Avenue planned for the coming fiscal year. City councilors said they don’t like raising rates on Hermiston residents, but they also feel a need to make sure Hermiston’s streets are maintained and that its street system can accommodate the city’s growth.

“If you don’t keep it up, you have to replace it, and that’s much more expensive,” Jackie Myers said.

Doug Smith said he recently hit a pothole on a county road that cost him more in payments to Les Schwab Tires than paying increased franchise fees will cost.

Not everyone was on board with the fee increase, however. Resident Cyndie Traner said utility payments were already too expensive for residents, and questioned why the city council could raise those fees without a vote of the citizens.

“I personally don’t want to have any increase in my utilities,” she said.

Steven Gerber, senior manager of government relations for Charter Communications, said the fee increase would not come out of Charter’s pocket, but will be passed directly on to customers. He questioned the legality of the council’s actions, particularly concerning a separate ordinance that allowed the city to start charging franchise fees on Charter’s internet and phone services instead of just the fees on cable it had previously been paying.

“Fees are imposed to recover costs, taxes are to raise revenue,” he said. “It seems clear this is to raise revenue.”

Rich Lorenz, the city’s utilities attorney from Cable Huston, said the language in the ordinance matched language that the Oregon Supreme Court recently upheld in a legal battle between the city of Eugene and Comcast.

In the end the city council voted on a series of resolutions raising franchise fees on Umatilla Electric Cooperative, Cascade Natural Gas, Charter Communications, Eastern Oregon Telecom, EZ Wireless, Inland Development Corporation, Windwave Communications and M2 Machmedia. It also passed a resolution allowing the city to charge franchise fees on Charter’s internet and phone offerings, a resolution dedicating 33 percent of all franchise fees to the street department, and a resolution adopting the city’s five-year capital improvement plan for street improvements.

The increase will come into effect Oct. 1 for Umatilla Electric Cooperative and Jan. 1 for other companies.


Contact Jade McDowell at jmcdowell@eastoregonian.com or 541-564-4536.


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