Right-of-Way Management and Fees

Municipalities are obligated to protect the health, safety, and welfare of the public with respect to their streets and roads (“public rights-of-way” or “ROWs”). In addition to vehicular and pedestrian traffic, the ROWs are also used by utilities and other service providers to install wires, pipes, and other facilities for gas, electric, broadband, telephone, water, sewer and other services. As a general rule, there has been a higher level of activity by these providers in the last several years as new technologies have been deployed and new services have been launched.

Municipalities are required to manage this activity by service providers, which results in significant costs to the municipalities. These ROW management costs include: 1) direct costs, such as permitting, utility coordination, and inspections; 2) indirect costs, such as central support functions, and other “overhead costs”; and 3) street degradation costs. Even if a service provider restores a street excavation to the street’s former condition, the excavation itself results in a depreciation of the useful life of the street.

Depending on the law of the particular state, municipalities have the legal right to recover these ROW management costs from the service providers that create the need for the costs. Most likely, your municipality is “under-recovering” those costs from utilities and other service providers. If so, not only is the municipality failing to obtain the revenue it deserves for cost recovery, but also the taxpayers of the municipality are subsidizing the service providers for these municipal costs.

Municipalities can address this problem by developing a fee schedule applicable to utilities and other service providers that relates directly to the municipality’s ROW management costs. Typically, these costs are identified and calculated by means of a cost ascertainment study. CLG has assisted many municipalities in ascertaining their eligible ROW management costs. If a municipality is “under-recovering” its costs, then it may implement a new fee schedule to recover those costs from companies with facilities in the ROWs.

In addition to adding new and enhanced revenues to achieve cost recovery, municipalities may also gain greater control over the ROW’s with respect to utilities and other service providers. This can be achieved through a ROW Management Ordinance that: 1) authorizes new and enhanced ROW management fees; 2) establishes a streamlined permitting process; 3) requires coordination of utility construction activities; 4) obtains facilities mapping and related information; 5) provides legal protections for the municipality; 6) includes strong enforcement measures; and 7) includes other ROW-related benefits. These regulatory tools must be carefully crafted so as not to conflict with the jurisdiction of the state Public Utilities Commission.

If a municipality takes these steps, then it will achieve more effective ROW management and implement new fees for cost recovery—both of which will promote public safety. The Cohen Law Group has the expertise and the experience to guide municipalities through this ROW management process. In addition, we also represent municipalities in direct negotiations with service providers to obtain fees and legal protections through right-of-way agreements and pole attachment agreements.