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HomeMy WebLinkAbout2025-07-08 OrdinanceItem Number: 10.a. CITY OF IOWA CITY COUNCIL ACTION REPORT July 8, 2025 Ordinance amending Title 1, entitled "Administration," to establish the Civil Service Commission. (First Consideration) Prepared By: Susan Dulek, First Ass't. City Attorney Reviewed By: Chris O'Brien, Deputy City Manager Eric Goers, City Attorney Kellie Grace, City Clerk Karen Jennings, Human Resources Administrator Fiscal Impact: none Staff Recommendation: Approval Commission Recommendations: none Attachments: Ordinance Executive Summary: Recently passed SF 311 requires the City establish by ordinance a Civil Service Commission of not less than 5 and not more than 7 persons. State law currently requires Council to appoint 3 members to serve without the necessity of establishing the commission by ordinance, and the City's current Civil Service Commission was never established by ordinance or resolution. Staff recommends a commission of 5 members. Background / Analysis: SF 311, signed by the Governor on May 19, 2025, amends, in part, Section 400.1 of the Iowa Code to require cities with a population of more than 50,000 to establish by ordinance a Civil Service Commission of not less than 5 and not more than 7 persons. SF 311 goes into effect on August 16, 2025. Currently Section 400.1 provides Council is to appoint 3 members to serve on the Civil Service Commission in cities having a population of 8,000 with no requirement the commission be established by ordinance. Under State law, the terms are required to be 4 years and expire the first Monday in April. The 3 current commissioners have the following terms ending: April 2026 April 2028 April 2029 In order to stagger the terms, staff recommends appointing one new member to serve a term ending April 2027 and one new member to serve a term ending April 2029. At the end of the terms of the 2 new members, their successors will serve 4 year terms. I G ,a' Susan Dulek, First Asst. City Attomey, 410 E. Washington St., Iowa City, IA 52240 (319) 3565030 Ordinance No. Ordinance amending Title 1, entitled "Administration," to establish the Civil Service Commission. Whereas, SF 311, signed by the Governor on May 19, 2025, amends, in part, Section 400.1 of the Iowa Code to require cities with a population of more than 50,000 to establish by ordinance a Civil Service Commission of not less than five (5) and not more than seven (7) persons; and Whereas, SF 311 goes into effect on August 16, 2025; and Whereas, currently Section 400.1 provides Council is to appoint three (3) members to serve on the Civil Service Commission in cities having a population of 8,000 with no requirement the commission be established by ordinance; and Whereas, the City's present Civil Service Commission was not established by ordinance; and Whereas, the three (3) current members of the Civil Service Commission appointed previously by City Council should continue to serve on the newly established Civil Service Commission; and Whereas, the Civil Service Commission should consist of five (5) members. Now, therefore, be it ordained by the City Council of the City of Iowa City, Iowa: Section I. Amendments. 1. Title 1, entitled, "Administration,' is amended by adding the following new Chapter 10, entitled "Civil Service Commission": 1. The Civil Service Commission is established. 2. The Civil Service Commission shall consist of five (5) members. 3. The members of the Civil Service Commission serving upon enactment of this ordinance shall continue to serve their existing terms. 4. In order to stagger the four (4) year terms when increasing the commission from three (3) members to five (5) members, one person shall be appointed to serve a term ending April 4, 2027, and one person shall be appointed to serve a term ending April 1, 2029, whose successors shall be appointed for a term of four years. Section If. Repealer. All ordinances and parts of ordinances in conflict with the provision of this Ordinance are hereby repealed. Section III. SeverabiliN. If any section, provision or part of the Ordinance shall be adjudged to be invalid or unconstitutional, such adjudication shall not affect the validity of the Ordinance as a whole or any section, provision or part thereof not adjudged invalid or unconstitutional. Section IV. Effective Date. This Ordinance shall be in effect after its final passage, approval and publication, as provided by law. Passed and approved this day of 2025. Attest: City Clerk Approved by City Attorney/ Ice — 07/03/2025 Ordinance No. _ Page No. 2 First Consideration: T ly 08_ 2025 Vote for passage: AYES: Alter Bergus Moe Salih Teague, Weilein NAYS: None ABSENT: Harmsen Second Consideration: Vote for passage: AYES: NAYS: ABSENT: Pass and Adopt It was moved by and seconded by that the ordinance as read be adopted, and upon roll call there were: AYES: NAYS: ABSENT: ABSTAIN: Alter Bergus Harmsen Moe Salih Teague Weilein Date published: Item Number: 10.b. CITY OF IOWA CITY COUNCIL ACTION REPORT July 8, 2025 Ordinance amending Title 12, Chapter 5, Franchise Fees to repeal the one percent (1 %) franchise fee and enact a two percent (2%) franchise fee on the gross revenue derived from the distribution, delivery, and retail sale of electricity and natural gas by franchisees including MidAmerican Energy Company, or other natural gas providers utilizing the distribution system of MidAmerican, to customers within the current or future corporate limits of the City of Iowa City, and to describe the purpose for the revenue collected. (Second Consideration) Prepared By: Kirk Lehmann, Assistant City Manager Reviewed By: Susan Dulek, First City Attorney Geoff Fruin, City Manager Fiscal Impact: Increased revenue from electric and gas franchise fees Staff Recommendation: Approval Commission Recommendations: N/A Attachments: Ordinance Executive Summary: Iowa City's gas and electric franchises with MidAmerican Energy Company reserve to the City the right to impose a franchise fee on MidAmerican's gross revenue from the sale of electricity and natural gas. Iowa City currently has a 1 % franchise fee enacted in 2010 for inspecting, supervising and otherwise regulating the MidAmerican Energy Company's gas and electric franchises, public safety including the equipping of fire, police and emergency services, and public infrastructure to support commercial and industrial economic development (Ordinance No. 10-4374, codified at Sections 12-5-1 and 12-5-2 of the City Code). To update the franchise fee rate ordinance, the City must hold a public hearing and publish a Revenue Purpose Statement specifying the purposes for which the revenue collected from the franchise fee will be expended. This item consists of a public hearing to consider increasing the franchise fee from 1 % to 2% and to modify the Revenue Purpose Statement to align with the uses allowable in State Code. The Revenue Purpose Statement was published in the Press Citizen on June 10, 2025. Background / Analysis: Iowa City's current gas and electric franchises with MidAmerican Energy Company reserve to the City the right to impose a franchise fee on MidAmerican's gross revenue from the sale of electricity and natural gas. Code of Iowa Section 384.3A allows for the collection of franchise fees in an amount not to exceed 5% of a franchisee's gross revenues. State Code generally restricts revenues to the following purposes: • Property tax relief. • The repair, remediation, restoration, cleanup, replacement, and improvement of existing public improvements and other publicly owned property, buildings, and facilities. • Projects designed to prevent or mitigate future disasters. • Energy conservation measures for low-income homeowners, low-income energy assistance programs, and weatherization programs. • Public safety, including the equipping of fire, police, emergency services, sanitation, street, and civil defense departments. • The establishment, construction, reconstruction, repair, equipping, remodeling, and extension of public works, public utilities, and public transportation systems. • The construction, reconstruction, or repair of streets, highways, bridges, sidewalks, pedestrian underpasses and overpasses, street lighting fixtures, and public grounds, and the acquisition of real estate needed for such purposes. • Property tax abatements, building permit fee abatements, and abatement of other fees for property damaged by a disaster. • Economic development activities and projects. • Any other lawful purpose. To adopt or update a franchise fee rate ordinance, the City must hold a public hearing and prepare and publish a Revenue Purpose Statement specifying the purposes for which the revenue collected from the franchise fee will be expended. Iowa City enacted a 2% franchise fee to be effective April 1, 2010 (Ordinance No. 09-4374) to allow for inspecting, supervising and otherwise regulating the MidAmerican Energy Company's gas and electric franchises, public safety including the equipping of fire, police and emergency services, and public infrastructure to support commercial and industrial economic development. It was reduced it to 1% effective June 1, 2010 (Ordinance No. 10-4382, codified at Sections 12-5-1 and 12-5-2 of the City Code) while maintaining the same purposes. City Council's Strategic Plan for Fiscal Years 2023-2028 proposes considering alternative revenue sources including franchise fees to help achieve strategic plan goals. One of Council's mobility strategies is "to enhance mobility by expanding the access and convenience of environmentally friendly and regionally connected public transit." Since August 1, 2023, Council implemented a fare -free transit pilot, supported by American Rescue Plan Act dollars. In FY 2025, Council increased several parking -related fees and citations to help support continuation of fare -free transit. Increasing the 1 % gas and electric franchise fee increase to 2% further supports continuation of this service. In order to use franchise fees for transportation -related expenses, the Revenue Purpose Statement must be updated. Staff recommends expanding the scope of the City's Revenue Purpose Statement to align with the allowable uses in State Code to maximize flexibility in addressing Council's strategic priorities. The current Revenue Purpose Statement is Section 12-5-4 of the City Code, and the expanded Revenue Purpose Statement is stated in the ordinance. The City's franchise agreement with MidAmerican Energy requires 90 days notice of any franchise fee put into effect by the City. With this public hearing on June 17, 2025, an updated franchise fee could become effective November 15, 2025. Prepared by Kirk Lehmann, Assistant City Manager, 410 E. Washington St., Iowa City, IA (319)356-5014 Ordinance No. Ordinance amending Title 12, Chapter 5, Franchise Fees to repeal the one percent (1%) franchise fee and enact a two percent (2%) franchise fee on the gross revenue derived from the distribution, delivery, and retail sale of electricity and natural gas by franchisees including MidAmerican Energy Company, or other natural gas providers utilizing the distribution system of MidAmerican, to customers within the current or future corporate limits of the City of Iowa City, and to describe the purpose for the revenue collected. Whereas, Iowa City has current gas and electric franchises with MidAmerican Energy Company that reserve to the City the right to impose a franchise fee on the franchisee's gross revenue from the sale of electricity and natural gas; and Whereas, Iowa Code section 364.2(4xf)(2) requires the City, prior to adopting a franchise fee rate ordinance, to prepare and publish a Revenue Purpose Statement specifying the purpose or purposes for which the revenue collected from the franchise fee will be expended; and Whereas, by Ordinance No. 09-4374 the City Council adopted a 2% franchise fee to be effective April 1, 2010; and Whereas, by Ordinance No. 10-4382 (codified at Sections 12-5-1 and 12-5-2 of the City Code) the City Council repealed the 2% franchise fee and imposed a 1 % franchise fee to be effective June 1, 2010; and Whereas, the City's current Revenue Purpose Statement for the franchise fees in Section 12-5-4 of the City Code is to utilize funds for inspecting, supervising, and otherwise regulating the MidAmerican Energy Company's gas and electric franchises, for public safety including the equipping of fire, police and emergency services, and for public infrastructure to support commercial and industrial economic development; and Whereas, the City Council's Strategic Plan for Fiscal Years 2023-2028 updated December 2024 proposes considering alternative revenue sources including franchise fees to help achieve strategic plan goals; and Whereas, the Strategic Plan includes a strategy to enhance mobility by expanding the access and convenience of environmentally friendly and regionally connected public transit; and Whereas, increasing the franchise fee from 1 % to 2% would allow the City to support mobility initiatives including but not limited to its fare -free Transit program; and Ordinance No. Page 2 Whereas, expanding the scope of the City's Revenue Purpose Statement to align with State Code allows the City to continue meeting City Council's strategic priorities while providing enhanced flexibility to do so; and Whereas, the City's franchise agreement with MidAmerican Energy requires 90 days' notice of any franchise fee put into effect by the City; and Whereas, the Revenue Purpose Statement and notice of public hearing on this ordinance was published on June 10, 2025; and Whereas, it is in the best interest of the City of Iowa City to repeal said 1% franchise fee and adopt, in lieu thereof, a 2% franchise fee effective November 15, 2025. Now, therefore, be it resolved by the City Council of Iowa City, Iowa: Section I. Amendments. Title 12, Chapter 5, entitled "Franchise Fees" is hereby amended by repealing Sections 12-5-1 entitled "Electric Franchise Fee", 12-5-2 entitled "Gas Franchise Fee", and 12-5-4 "Revenue Purpose Statement", and substituting the following sections in -lieu -thereof. 12-5-1 Electric Franchise Fee: Pursuant to section 12-1-16 of the City's franchise agreement with MidAmerican Energy Company (hereinafter "company"), there is hereby imposed upon the company a franchise fee in an amount equal to two percent (2%) of the gross revenue of the company, minus uncollectible accounts, derived from the distribution, delivery and retail sale of electricity by the company to customers within the current or future corporate limits of the City, commencing with gross revenue received on or after November 15, 2025. 12-5-2 Gas Franchise Fee: Pursuant to section 12-2-13 of the City's franchise agreement with company, there is hereby imposed upon the company a franchise fee in an amount equal to two percent (2%) of the gross revenue of the company, minus uncollectible accounts, derived from the distribution, delivery and retail sale of natural gas by the company or other natural gas providers utilizing the distribution system of the company, to customers within the current or future corporate limits of the City, commencing with gross revenue received on or after November 15, 2025. 12-5-4 Revenue Purchase Statement: The revenue collected from said franchise fees will be expended for any of the following purposes: A. Inspecting, supervising and otherwise regulating the MidAmerican Energy Company's gas and electric franchises. B. Property tax relief. C. The repair, remediation, restoration, cleanup, replacement, and improvement of existing public improvements and other publicly owned property, buildings, and facilities. D. Projects designed to prevent or mitigate future disasters. E. Energy conservation measures for low-income homeowners, low-income energy assistance programs, and wealherization programs. F. Public safety, including the equipping of fire, police, emergency services, sanitation, street, and civil defense departments. Ordinance No. Page 3 G. The establishment, construction, reconstruction, repair, equipping, remodeling, and extension of public works, public utilities, and public transportation systems. H. The construction, reconstruction, or repair of streets, highways, bridges, sidewalks, pedestrian underpasses and overpasses, street lighting fixtures, and public grounds, and the acquisition of real estate needed for such purposes. I. Property tax abatements, building permit fee abatements, and abatement of other fees for property damaged by a disaster. J. Economic development activities and projects. K. Any other lawful purpose. Section It. Repealer. All ordinances and parts of ordinances in conflict with the provision of this Ordinance are hereby repealed. Section III. Severability. If any section, provision or part of the Ordinance shall be adjudged to be invalid or unconstitutional, such adjudication shall not affect the validity of the Ordinance as a whole or any section, provision or part thereof not adjudged invalid or unconstitutional. Section IV. Effective Date. This Ordinance shall be effective upon publication. Passed and approved this day of , 2025. Mayor Approved by: Attest: City Clerk City Attorney's ice (Sue Dulek — 06/11/2026) Ordinance No. _ Page No. 4 First Consideration: June 17, 2025 Vote for passage: AYES: Alter, Bergus, Harmsen, Moe, Salih, Teague, Weilein NAYS: None ABSENT: None Second Consideration: July 08, 2025 Vote for passage: AYES. Alter, Bergus, Moe, Salih, Teague, Weilein NAYS: Nnn ABSENT: Harmsen Pass and Adopt: It was moved by and seconded by , that the ordinance as read be adopted, and upon roll call there were: AYES: NAYS: ABSENT: Alter Bergus Harmsen Moe Salih Teague Weilein Date published'