FAIRMONT — A natural gas franchise fee and policy decisions about the tree dump, housing demolition program and liquor licenses were on the Fairmont City Council agenda Monday.

Fairmont customers of Minnesota Energy, the city’s natural gas provider, will notice a slight bump in their monthly bills in 2021, due to a franchise fee approved by a 4-1 council vote. Wayne Hasek dissented.

“To me, this just seems like a tax increase,” he said.

Fairmont gas customers will pay $2.50 plus a therm fee every month, costing them about $40 to $50 annually. At the end of each quarter, Minnesota Energy will transfer these funds, projected to be about $265,000 per year, to the city, where they will be earmarked for street improvements.

Council members noted this was just one step of a proposed three-part plan to generate enough funding for street improvements to offset and possibly eliminate the current method of borrowing and bonding paid off by assessments to homeowners. The other steps include an infrastructure fee added to public utility bills and a half-cent local option sales tax.

The sales tax, which requires legislative approval, is stalled. It passed through the House committee hearings, but Senate hearings were cancelled because of COVID-19. The addition of the infrastructure fee has not yet been analyzed by the city staff or the council.

Even with just one piece of the plan in place, the funds generated could be used to expand the number of street projects or reduce the assessments on affected homeowners.

“I’m hearing from most people that they’d be glad to pay if it’s going for roads,” Bruce Peters said.

Mayor Debbie Foster said the franchise fee, as well as the addition of an infrastructure fee or local option sales tax, would make the financial responsibility for street improvements more equitable, with all people who use the streets paying for their repair.

“If we don’t live on that street, we don’t pay. It (franchise fee) would spread the cost among the whole community,” she said.

Cathy Reynolds, city administrator, told the council they could determine the use of the franchise fee funds, whether to lower assessment costs or expand street improvement projects, at a budget work session 4 p.m. Aug. 24.

In another matter, the council unanimously adopted a usage policy for the yard waste recycling site at 1880 100th St., better known as the city’s tree dump.

In developing the policy, Troy Nemmers, city engineer/public works director, checked with other communities before presenting the final draft to the council.

The site has faced a lot of challenges over the years with misuse and overuse, he said. It is intended for Fairmont public utility customers only, who pay a $1.25 monthly fee on their utility bills for its upkeep.

“That is the intent of the site. It is not meant for people who live outside of Fairmont to use,” he said.

The new policy would limit its hours of operation from April through November, closing over the winter months to allow time for maintenance and, if necessary, to burn the excess debris.

Use by commercial handlers would be restricted and would require a permit application and $1,500 fee.

Dumping of unauthorized materials such as garbage bags, dirt, rock, concrete, appliances, furniture, construction debris and other materials that are not natural yard waste is prohibited and may be prosecuted under city ordinance.

Turning to other business, the council also gave unanimous approval to a new housing demolition program policy governing the disposition of property the city receives through tax forfeitures or donations.

Once the city obtains title to a property, it will be inspected to determine if it can be rehabilitated. If not, it will be demolished.

If an empty lot is not a buildable size, it will be offered to adjacent property owners for a minimum sale amount based on demolition costs, survey and asbestos inspection. If a lot is buildable, it will be sold to the highest bidder at a public auction.

Homes that can be rehabilitated and lots not sold will be offered to the Fairmont Housing and Redevelopment Authority, Habitat for Humanity of Martin and Faribault Counties or other non-profit organizations focused on providing affordable housing.

In another matter, the council set a precedent concerning a long-standing but unwritten policy of not refunding liquor license fees if a business is sold or closed.

Dave Pederson requested a refund of almost $1,000 for a liquor license fee for the Bowlmor Lanes due to the sale of his business to his son, Doug, on Aug. 1. The city allows liquor license holders to pay the annual fee in two installments, in July and December, and the elder Pederson had paid the first installment on July 1, using it only one month before the change in ownership.

Earlier in the meeting, the council approved a new liquor license for Doug Pederson at the Bowlmor.

Although the city had not previously refunded any liquor license fees when a business closed or was sold, council members felt this situation merited a closer look at the policy.

“This is father/son. It is a bit unique. I think that does merit consideration,” Peters said.

“It could open a can of worms, but this is a family transaction,” Tom Hawkins said. “I don’t want to penalize any local business.”

“This should be cost neutral. The city’s not out anything,” Randy Lubenow said.

“I would like people to know we’re trying to work with businesses, not against them,” Hasek said.

Reynolds said the city has no written policy on the matter and approving a refund would simply indicate the council is headed in a different direction.

Mark Rahrick, city attorney, supported the refund, saying that, under the current policy, the same site would be charged double for a single active license.

The council unanimously approved a prorated refund for Dave Pederson.