At the urging of environmentalists and immigrant advocates, the Minneapolis City Council is considering an ordinance that would funnel more money to home and property owners who work towards reducing greenhouse gas emissions.
A proposed ordinance to increase franchise fees, which are a percentage of gas and electric bills that goes to the city, was introduced Oct. 9. The proposal would steer proceeds from those increased fees to programs that help property owners finance improvements to boost energy efficiency and decrease emissions.
The increase would raise energy costs by about $10 a year for the average household, according to Council Member Katie Cashman, who authored the ordinance.
Mayor Jacob Frey’s 2023 Climate Equity Plan proposed allocating $10 million annually from franchise fees for zero-interest loans and rebates aimed at lowering emissions from city buildings. But in 2024, only $8.4 million was raised for those programs, according to Minneapolis Budget Director Jayne Discenza.
“That’s not enough,” Cashman said. “The first week of October it was 90 degrees out. It served as a reminder that climate change is here, as the scientists predicted, and it’s impacting our day to day lives. It’s a reminder that we need to be bold on climate change.”
Current city franchise fees on Xcel Energy bills are 5.25% for residential customers and 6.75% for commercial accounts. CenterPoint franchise fees are 6% for residents and range between 7.75 and 9.5 % for commercial accounts, depending on gas usage.
The proposed increase would raise franchise fees on Xcel bills to 5.5% for residents, 7.25% for small commercial accounts and 7.75% for large commercial accounts. CenterPoint bills would see larger fee increases to reflect the fossil fuel emissions of gas. Residential CenterPoint fees would rise to 7% for residents, and range between 8.25 to 9.5% for commercial customers.
Dedicated funding
The goal is to direct an additional $5 million annually for climate spending. The money funds the city’s Green Cost Share Program, which Minneapolis uses to reimburse home and property owners for investments that lower their carbon footprint, such as improving insulation, installing solar panels or improving heating and cooling appliances.
“We need this funding to increase so we can scale up and meet the moment,” Cashman said.
Leila Lopez, a Minneapolis resident from Ecuador, said she is grateful to live in a city that takes climate change seriously. Increasing spending for energy efficiency programs, especially for those in need is a critical step, she said.
“It’s crucial to do so now,” Lopez said.
The Green Cost Share Program offers increased benefits for projects in the north and south side green zones, diverse neighborhoods with a disproportionate amount of pollution sources like industrial sites and highways. In 2024, the program directed $7.5 million to roughly 1,100 projects city wide, according to Minneapolis records.
The Green Cost Share Program allocates funding on a first-come, first-served basis until it runs out for the year. This year, the program dried up in August, Cashman said. The program saw a record year in 2024, more than tripling the number of properties served thanks to the boost approved in 2023, but many climate activists want to see it grow.
“We’ve been asking for this for a long time,” Ulla Nilsen, a climate organizer with Unidos, told Sahan Journal.
One landlord’s green campaign
Minneapolis landlord Dale Howey is a man on a climate mission. Howey, 63, owns 185 rental units across 12 buildings in Minneapolis’ south side green zone. He was an early adopter of energy efficiency, recycling and solar power, and has used the Green Cost Share program to make his buildings as low-emission as possible.
At one of his Green Rock apartment buildings in Elliot Park, Howey showed off a large recycling area and a room where residents can take free soap and zero-waste laundry sheets he buys in bulk to avoid plastic.
“If you take advantage of the cost share program, it gives you more leeway to do good things,” Howey said.
He took advantage of the program’s rebates to install a 52-kilowatt solar system and insulation on the roof, and add electric vehicle charging to his parking lot. He’s installing electric heat pumps at as many of his buildings as possible, and is replacing his water heaters with more energy efficient units — all improvements Green Cost Share helps subsidize. Lowering energy costs has helped keep rents affordable, he said.
“I wouldn’t have been able to do any of this without the cost share program,” he said.
Howey is driven to make as many emission reduction improvements as he can, but says the Green Cost Share Program has greatly accelerated his progress. He’s urging the city to approve the proposed ordinance, and encourages other property owners to participate in the program.
What happens next
Franchise fees raised more than $41 million in 2024, with most of the money going toward the city’s general fund and public works, according to Discenza, the city’s budget director. But only about $8.4 million was dedicated to climate projects.
“The city needs to step up for our residents,” Cashman said.
Minneapolis updated its franchise fee agreements with Xcel and CenterPoint in February. Under the agreements, Xcel is committing to lower electricity emissions in Minneapolis 91% by 2030. CenterPoint committed to cut emissions between 20-30% by 2035.
But franchise fees can be amended by the City Council at any time, and the utility companies have no authority over the amount.
Council Members Jason Chavez, Aurin Chowdhury, Aisha Chughtai, Emily Koski and Elliott Payne joined Cashman at a press conference announcing the proposed ordinance. The group expressed confidence in passing the measure, which needs a simple majority approval by the 13-member City Council to pass.
A public hearing on the matter is set for Nov. 13. The earliest the City Council could vote on the measure is Dec. 11.
NOTE: Sahan Journal reporter Andrew Hazzard has received funds from the Green Cost Share Program, which did not impact the reporting of this story.
