Executive Summary of Preliminary Revenue Projections

City of Baltimore, Maryland
Rights-of-Way Management Study
Executive Summary of Preliminary Revenue Projections
Gross Receipts Franchise Revenue Estimates Based on Survey of Selected U.S. Cities

The franchise fee revenue estimates provided in schedule “A” demonstrate potential revenues which can be earned by the City of Baltimore through the implementation of gross receipts based franchise fees. Potential earnings from electric, gas and telephone franchise fees are provided. Revenue estimates were calculated by multiplying the total population of the City of Baltimore (736,014) by the average franchise revenue/population ratio of those cities surveyed. City of Baltimore revenue estimates range from a high of $24.4 million to a low of $4.4 million.
Schedule A – Percent of Gross Receipts – Franchise Fee Survey of Selected U.S. Cities

Franchise/Conduit Rental Fees Based On Increased Linear Foot Fees

A commonly used franchise fee calculation method involves the assessment of fees based on the amount of public rights-of-way, measured in linear feet, occupied by a utility in order to provide its services to the public.

Currently, the average linear foot franchise fee assessed by U.S. cities is approximately $2 per linear foot with a high of $5 in Atlanta, GA and the low of $0.60 in Albuquerque, NM. Several cities, such as Houston and Dallas, TX, have established franchise fees for long distance carriers based on adjacent property values, then using escalators, such as the Consumer Price Index (CPI) to provide a sliding scale for calculation of franchise fees over the term of the franchise period.

The first estimate prepared by DMG (“Linear Foot Fee-National Average ($2)” seeschedule “B”), illustrates the amount of revenue which could be received by the City if the City’s conduit rental and conduit franchise fees were increased to coincide with the national average. If the City’s rates were increased to the national average of $2 per linear foot, the City would receive approximately $30 million from franchise and conduit rental fees. This represents an increase of over $25.4 million when compared to the City’s current revenue amounts.

DMG’s second estimate (“Fee Equals Property Value Increase (250%)” see schedule “B”), illustrates the amount of revenue which could be received by the City if conduit rental and franchise fees were increased on a sliding scale which coincided with increase in City property values. Upon review of City property values over the past 70 years, an increase of 250% can be found. If the City’s rates were increased by the same percentage, the City would receive over $8.1 million from franchise and conduit fees or an increased of approximately $3.3 million.
Schedule B – Rights-of-Way/Franchise Fee Revenue Estimates
David H. Griffith & Associates, LTD
Preliminary Analysis