Franchise agreements

Franchise agreements

By Joseph M. de Leon Friday, 19 June 2009

Leander and Cedar Park franchise agreements

Together, Cedar Park and Leander expect to collect nearly $4 million this year in franchise fees from more than a dozen franchise agreements.

Last year, Cedar Park collected about $2.9 million in franchise fees. This year, it expects to collect about $3.2 million. Leander collected about $1 million in 2008, but expects $770,000 this year from the fees. The 2008 amount is higher because it includes late payments that were due the year before.

The agreements, which are negotiated independently and have varying provisions, often create a complicated three-way benefit where the city earns money, companies get permission to use public spaces and residents gain access to services they otherwise might not have.

A franchise agreement allows a company to operate and maintain public utilities in a local government’s public right-of-way. For example, a cable company might use an alley to install its equipment.

The city agrees to give the company permission to use the city’s right-of-way to maintain its equipment, which could include installing new power and communication lines or digging up streets to upgrade or move infrastructure. In return, the company pays the city a franchise fee for the use of the right-of-way, essentially paying a fair market price to rent space that belongs to the public.

While franchise agreements can be a lucrative source of money for cities, representatives from Cedar Park and Leander said no new franchise agreements are currently in negotiations.

Each company typically collects the fee from its customers, because operation, maintenance and improvements to the system are done on the customer’s behalf.

Franchise agreements are attractive to companies if the cost to pay the fee is cheaper than buying private easements or using other means to do business, such as paying another company to use its equipment.

Franchise agreements regulate how a company may use the public right-of-way, help protect the public’s safety and sometimes include rules to regulate the quality and reliability of service residents can expect.

The city might also use the agreements to create a level playing field for companies competing against each other, which could reduce rates for residents. Other times, a franchise agreement is offered to a single company.

For example, Leander’s solid waste collection franchise agreement was granted exclusively to Clawson Disposal of Jarrell. City officials decided such an agreement would cost less and improve quality of life, said Sharon Johnson, assistant city manager and finance director.

Offering more than one solid waste disposal company a franchise agreement would mean more noisy trucks in residential neighborhoods. It could also mean a conflicting trash collection schedule, leading to confusion and an increase in the number of trash carts along curbs, Johnson said.

A reduced number of trucks on the road minimizes wear on city streets and improves safety in residential neighborhoods. The agreement also reduces the ultimate cost to residents on monthly bills.

Franchise agreements

Leander

• Cable and internet :
  • Time Warner Cable
  • Suddenlink
  • AT&T
• Electric Providers:
  • Pedernales Electric Cooperative, Inc.
• Gas Providers:
  • Atmos Energy
  • Texas Community Propane (Gaby Burge)
• Solid Waste Collection:
  • Clawson Disposal
• Telephone Providers:
  • State regulated

Cedar Park

• Cable and internet:
  • Time Warner Cable
  • Grande Communications Networks, Inc.
• Commercial Solid Waste Collection:
  • IESI Texas Corporation
  • Browning Ferris Industries (BFI)
  • Central Texas Refuse, Inc.
  • Texas Disposal Systems, Inc. (TDS)
  • Waste Management of Texas, Inc. (WM)
  • Accurate Disposal, Inc.
  • Al Clawson Disposal, Inc.
• Electric Providers:
  • Pedernales Electric Cooperative, Inc.
• Gas Providers:
  • Atmos Energy Corporation
  • Texas Gas Service
• Residential Solid Waste Collection:
  • Red River Service Corporation of Texas, Inc. (RR)
• Telephone Providers:
  • State regulated

By the numbers
	Leander	Cedar Park
2008	$1,062,651*	$2,924,421
2009**	$770,000	$3,214,965
* Amount includes late payments that were due the year before. ** Estimated amount the city expects to earn from franchise agreements.