Meeting Date: April 15, 2026
To: Members of the Environmental Quality Commission
From: Risi Karim, Assistant City Administrator
Title
Annual Report of the Carbon Reduction Fund (2025).
Body
Action Requested:
Commission receives the Annual Report of the Carbon Reduction Fund (2025).
Summary Report:
The Carbon Reduction Fund (CRF) was established in 2021 to support implementation of initiatives identified in the City’s Climate Action Plan, particularly those focused on reducing reliance on carbon-based fuel sources.
The CRF is funded through a designated portion of the City’s Franchise Fee Program. Under this program, Xcel Energy collects monthly franchise fees from utility subscribers and remits those funds to the City, where they are primarily used to support Capital Improvement Projects. Prior to 2026, annual CRF funding was capped at $100,000.
Policy Change (Effective January 1, 2026):
On September 23, 2025, the Northfield City Council adopted Ordinance No. 1087, which amended the City’s utility franchise fee structure. This change removed the $100,000 annual cap on contributions to the Carbon Reduction Fund. The update was made to support funding for a full-time Sustainability Coordinator position and to increase available resources for climate action projects.
The updated ordinance language now states:
“The City shall use all franchise fee revenue collected pursuant to this Ordinance only for public streets, trails, and climate action projects. No more than eight percent (8.0%) of the annual revenues collected, pursuant to Ordinances 1017 and 1018, may be used for climate action projects.”
As a result, CRF funding is no longer limited by a fixed dollar cap and will instead scale with total franchise fee revenues, up to 8% annually.
Budget balance and expenditures for 2025 are listed below:
2025 Beginning Budget Balance - $243,627
2025 Expenditures
Professional Services
$ 757 LHB (Sustainable Building Policy)
$78,000 Wolf River Electric (NCRC Solar Installation)
$ 4,530 Guth Electric (Liquor Store LED Light replacement)
$ 307 City Attorney Services
$8,600 Carbon Day LLC ( EV Charging station cloud renewal 5-year)
$92,215 Total
Programs & Public Services
$500 Northfield Earth Day Sponsorship
$100 Riverwalk Market Fair
$ 647 Printing & Marketing Material - By All Means Graphic
$ 155 EQC Programing
(October EE Community Program- Food & Material)
$1,402 Total
Transfer Out
$17,129 HRA rebate reimbursement - Residential Energy Efficiency
$17,129 Total
$110,746.55 Total Expense
2025 Revenue
$48,000 State Grant & Aid ( MN Solar on Public Buildings Grant- NCRC Solar)
$100,000 Franchise Fee Allocation (8%)
$148,000 Total Revenue
$291,533* 2025 End Balance
*End balance includes $10,652.06 revenue earned from market investment and interest
The Climate Action Plan highlights project options that would best align with the city’s goal to reach 100% carbon-free electricity by 2030 and creating a 100% carbon-free community by 2040. In order to fund some of the strategies in the Climate Action Plan, especially those focused on carbon sequestration, the Carbon Reduction Fund allows for an alternative source of revenue for projects without additional burden on the general operating fund.
Other Related Expenses to come from the CRF:
• Energy Efficiency Processing: $20,000 is reserved annually to process rebate applications through the Energy Efficiency Program (HRA). These funds are covered by the HRA budget and reimbursed by the Carbon Reduction Fund.
• Climate Champion Program: Funds allocated annually for the Climate Champion Program for Northfield businesses. These funds are provided by the EDA and reimbursed by the Carbon Reduction Fund.
• Tree Planting & Maintenance: Funds may be used to supplement existing tree planting grants, enhance ongoing projects, or support Emerald Ash Borer management efforts.
• NPSD Geothermal Feasibility Study: The City Council authorized $25,000 from the Carbon Reduction Fund to support the Northfield School District’s study on the feasibility of a geothermal system for Northfield High School.
• Solar Rooftop Project: The NCRC solar rooftop project faces a potential funding shortfall due to uncertainty around federal tax credits. The City may need to cover the 40% funding gap, estimated at $48,000.
• Sustainable Building Policy Support: LHB provides technical assistance to developers, builders, and City staff to implement the Sustainable Building Policy.
• Education & Marketing: Funds support outreach efforts for the Carbon Reduction Fund and Energy Efficiency Rebates.
• Electric Vehicle & Charging Infrastructure: Funds set aside for a Level 2 charging station at the NCRC building
• Earth Day Sponsorship: Funds support Northfield’s Earth Day event and related activities.
• Community Climate Program: Funds used to provide financial assistance for Northfield residents who wish to participate in the Northfield Community Climate program
Alternative Options:
N/A
Financial Impacts:
N/A
Tentative Timelines:
N/A