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HomeMy WebLinkAbout2009-12-07 Transcription#2 Page 1 ITEM 2. CONSIDER AN ORDINANCE AMENDING TITLE 12, ENTITLED "FRANCHISES", OF THE CITY CODE TO ADD A CHAPTER IMPOSING A FRANCHISE FEE ON THE GROSS REVENUE OF FRANCHISEE MIDAMERICAN ENERGY COMPANY DERIVED FROM THE DISTRIBUTION AND RETAIL SALE OF ELECTRICITY AND THE DISTRIBUTION, DELIVERY AND RETAIL SALE OF NATURAL GAS BY MIDAMERICAN, 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 ON A REVENUE PURPOSE STATEMENT SPECIFYING THE PURPOSE OR PURPOSES FOR WHICH THE REVENUE COLLECTED FROM THE FRANCHISE FEE WILL BE EXPENDED. (DEFERRED FROM 12/1) (PASS AND ADOPT) Wright: Move adoption. Bailey: Moved by Wright. Wilburn: Second. Bailey: Seconded by Wilburn. Discussion? Dale, I believe you have some information for us. Helling: I do. Um, and the information I have essentially is that the...the information that I got today essentially is that our revenue projections are about the same as we projected with the very preliminary information, uh, from the auditor last week. So, um, I believe as I indicated, uh, in your last work session, uh, it's very possible that, uh, that we can, with our new revenue projections that we can do the, uh, the fire station, um, the firefighters that are necessary for the station, plus the operation, uh, and add police officers. Hopefully it'll be the six that we talked about, um, and with our additional revenue that we're projecting, we could do that with...with less than a 2% franchise fee. Um, as I indicated before 1% would, if you go, you know, to 1 %, that would be, uh, sort of net neutral for the average payer that's not tax-exempt because they are now paying the 1 % local option sales tax, and by it being subject to a franchise fee, that sales tax is no longer applied to the...to the gas and electricity that...that is being purchased. So...uh, for the, at least the three years that the local option sales tax is in effect, um, they would be paying the same with the 1% franchise fee as they would be paying...I say "they" - I mean "we" - um, the same as we would be paying without a franchise fee because we'd be paying the local option sales tax. That's just...just that (both talking) Wright: ...neutral for...most people and... This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 2 Helling: That's right. Now, there...the revenue you raise from the franchise fee will be revenue that comes off of the total revenue package for the local option sales tax, and I...still our best estimate of that number is $840,000 per 1%. Uh, so... Champion: That's really good news! Wright: So, are you just recommending a 1%...reduction? Helling: I...as I said, I think that we can...we can do what we need to do with that, um, certainly from the standpoint...I can live with it, um, I think it's up to you to...to make that decision about what you want to do. Bailey: Well... Hayek: Just to make sure I understand...when you say the...the projections are unchanged, do you mean unchanged this week relative to the information you got last week? Helling: Right, I told you last week I thought they were much better? And the indication from...the information I received today is that that was...correct (both talking) that's correct, yeah. Hayek: Okay. Helling: Right. Bailey: Further discussion? Wright: I would be very happy to amend the franchise fee to make it 1 %. Champion: And I'll second that! Bailey: So...Eleanor, you're squinting. Oh! Okay, I...usually that means a question (laughter). I just wanted to make sure! (several talking) Wilburn: How soon before we get our...our proposed budget (mumbled) Helling: Um, we're...we're shooting for the 17th. That gives us a couple of days leeway so we can make sure to have it in your hands before the Christmas holiday. Bailey: Mike, you had a question? O'Donnell: Yeah, uh, I think everybody here knows that we were looking at, uh, shortfalls in the budget coming up. I'm...I'm wondering what cuts will still be necessary if we go to 1 %, rather than 2%. This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 3 Bailey: Yeah, I...you know, I'm...given that we don't have numbers from our bargaining units, I'm a little bit uncomfortable jumping right in. I...I trust the numbers that you've gotten for sure, but it's still an incomplete picture from my perspective on expenditure side. I would rather go ahead and do this as I've indicated a11...I've always been willing to back off of the franchise fee, should we find it possible, but I would rather go ahead and do this. It's alternative revenue, um, and then see what we get when...when we get the budget expenses. Because I...I just have really dramatic concerns. I think that we need to address our challenges from the revenue, as well as the expenditure side, with this budget. So...I'm not going to be supportive of this amendment at this time. Wright: I understand your concern with it, and it certainly would be...for lack of a better word: convenient right at this...this moment, but we've been so specific that this is going to be used for public safety that I'm unwilling to alter that. Bailey: Well, I'm unwilling to alter that, but I'm also unwilling, I mean...I would like to continue to go that direction. My concern is that...that we end up in a situation where, you know, bargaining doesn't come out favorably and we end up hiring fewer people. I mean, this...we know what we would hire from a 2% franchise fee. That's clear. I think that that's an answer...that's an answer I...I appreciate, and...um, I just don't have enough information to vote for an amendment at this time. Champion: I disagree, I mean, I...I really think that this is a positive thing that Dale has told us. I'm not saying that we won't have to do budget cuts. We probably will have to do budget cuts, but so is everybody else in the country! Bailey: I'm not saying that we wouldn't have to, I'm just saying that for me there's still not enough information on the expenditure side, and given some of the information that we've heard, um, I have real concerns about being able to hire at the level that we would like, if we cut this to 1 %. Champion: I don't have any concerns. Bailey: I hear that. Wilburn: How many police officers are you talking about, that we'd be able to add, if this went to a 1 %? Helling: We talked about six, and...hopefully we could...we could stay with that six. Um, there are a number of other factors, obviously, and we don't...we don't get all our, you know, have our firm information, for instance, even on the...on the TIF revenue, we...that's not certified until January, uh, but it's generally very, very close to the estimates we get in December. Uh, but you know, there are some other things, you know, outcomes of...of collective bargaining is one, um, just a This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 4 number of issues that we...frustratingly enough we don't always know that even in January when you...when you approve your budget. Um, but certainly felt compelled to let you know that the revenue projections are (both talking) at this point significantly higher than we originally had talked about. Wilburn: And...and I'm sure ...I don't remember this, but um...oops, sorry about that! What, um...how many more, where we will be at with collective bargaining say by mid to end...end of January? Are we on hold? Are talks ongoing until then or... Helling: Well, L ..I'd like to talk with you about that and we should talk about that in... in a closed session, um, generally speaking, just from..from past history, we usually bargain up through the holidays. If we haven't settled we'll start a mediation process right afterwards, um... Wilburn: That's what I was looking for...I wasn't, you know (both talking) Helling: ... if it's needed can occur in January and February. Hayek: I suppose municipal finance is always a moving target, um, cause you have so many inputs and....um, but if...either the...the bargaining outcome is...is widely different from....from our assumptions, or the TIF numbers for some reason turn out to be different, if we...if we need to, and we go with the 1% let's say, for the purpose of discussion, if we need to we can at any time, following proper...protocol, notice and etc., uh, change that number, can we not? Helling: Um, yes you can (both talking) Hayek: Once passed, that can be changed by...by Council (both talking) Helling: As long as you go through a similar process of... O'Donnell: Do you not think though that it would be better to go from...from 2 to 1, rather than from 1 to 2? Bailey: I do. O'Donnell: I'd rather not (mumbled) Wilburn: At what point in January will we...and again, I'm sorry, I'm forgetting...I'm tired tonight. The, uh, when will the auditor certify so that we know the TIF numbers? Helling: Early January. Probably...well, certainly before you finish your budget discussions, and maybe as early enough to, uh, have that as you go into it. This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 5 Champion: I hate to see us think of using this, uh, franchise fee as a way to correct our budget, I mean, it...I think what you said, it was to hire policemen and firemen, and now we've found another way that we can still hire them, then...then I think what I'm hearing from Mike and Regenia is, well, we might want to use it to...well, but that's what you're saying, because... Bailey: No. Champion: Then you're saying we'll use...we'll still use this to hire more police and firemen and then... Bailey: No. Champion: ...but we'll...so I...I... Bailey: I believe our expenses will be higher than we anticipate, that's all I'm saying. Champion: They always are! (several talking) Helling: Just so...you're clear. We have as a purpose statement for the franchise fee for public safety, and certainly that's what this...that's what the franchise fee money would be used for. It just may mean that we can supplement part of that expense, uh, for firefighters and police officers with other revenues that are coming about because of the TIF roll-offs. Champion: I do think it's damaging to, uh, some of our major companies, um, and...and I'm really concerned about that outcome. That's a lot of money to them, where this is... Bailey: It's a net 1 % increase. I mean.. . Champion: Well, you don't run a business, and a 1% increase is a lot! Bailey: I understand that, but I've asked (both talking) but...if it's a utilities franchise fee, or a property tax, um, flattening or potential property tax relief, the question is which...which is preferable, which is the greater number? Champion: Oh, I think if we went to 2% saying we're going to use it for property tax relief, that's just not going to happen! Bailey: No! That's not what I'm saying. What I'm saying is we go ahead and use this for public safety as our revenue purpose statement says. As this comes in, this additional fund...these additional funds, perhaps there's opportunity. I don't know. I just don't have enough information to change the course that we've set with this. You...you feel comfortable, I can hear that, but I do not. That's...that's simply...I think it's easier to go from the 2% to a 1%, rather than...oops, we made This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 6 a mistake. We now need to increase the franchise fee. I...I think that just makes more sense from my perspective. Champion: Well, I would be willing to increase the franchise fee. I'd have to make other budget cuts to make up for the shortfall. Bailey: I don't doubt that we're going to have to make budget cuts. Champion: Exactly! Bailey: But you have to manage a budget from both the revenue and the expenditure side. You don't get to an answer in a difficult economic time, um, by just managing one side of your... of your budget. Champion: So in difficult economic times...you're going to thrust more expenses on the companies that are keeping this town afloat! I mean, that's what you're doing...that's what you're willing to do. Bailey: I'm willing to pass a 2% fee. I've been willing to pass a fee since June. I've been really clear about that. It's an alternative revenue that the legislators provided to us, and I'm grateful for it, because I think that we need to diversify our revenue stream if we're going to manage in a...in a responsible way. So...I mean, the amendments on the table for 1%. I think, I mean, if there's no further discussion we can go ahead and vote on the amendment. Hayek: It seems to me that, um, this body...we've...we've discussed, and I think there's some... some, uh, openness to, um, dampening the impact on... on those entities that are hardest hit by a fee...a franchise fee, um, you know, we know that, uh, if we go with a... something that's in excess of a net neutral fee, so anything in excess of 1% we're going to be looking at, um, a proposal from ICAD and...and the Chamber, or ICAD with Chamber support or some...some combination, for some sort of relief, um, perhaps based on that...on a cap, uh, formula that they want to come up with, and so I...I would foresee us looking at ways to shave back, uh, a 2% hit, um, but...there are pitfalls with that because...and in fact there's a letter in...in today's correspondence that ...that asks us not to do that. Um... and I...I'd like to avoid being in a position of having to do that, and if we go with a 1 % at least for now we can do that. There is zero impact to any non- exempt, um, entities, to cover the entire private sector, uh, and...the exempt entities would be the ones that...that would pay the I%, um, that was envisioned...and that's...that underlies our...our move toward this means of revenue diversification, getting some of the big players in this community don't pay, uh, the property taxes to...to pitch in, um...given that...and I understand we don't have exact information, but my perspective is staff is comfortable enough to through this out there as a possibility, and mindful of the fact that if the numbers prove to be different, we can revisit this at any time, following the proper process. This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 7 I guess I'm of a mind to...to try 1% and um, and...and know that we may have to revisit it. Bailey: Further discussion... Wilburn: I'd rather wait till we see the certified numbers from (mumbled) from the, uh, auditor, before I move from 2 to 1. So I...I don't know what the affect of deferral would be, in terms of your planning and... Helling: Well... Bailey: (both talking) different group. Helling: Yeah, I mean, we won't have the numbers, and...the certified numbers until January. All I can tell you is that historically...according to the Finance Director the numbers that we get now are always very, very close to the certified numbers. So... Hayek: Now you... I... it's probably safe to say, you need a number from us to proceed with your budget, right, I mean, waiting until...are you talking about going ahead with 2%, seeing what the numbers are, and then making decisions, or... Bailey: ...talking about a deferral. Wilburn: Um... Bailey: Or were you just... Wilburn: I was just asking the...the affect of deferral, and if...if that's not...if that's not helpful for their planning, then I would say to (mumbled) to move or work it down to 1. Helling: Well, if you're...if you have a mind to defer it, until after we prepare the budget, then I would be looking for some sort of consensus, and probably put 1 % in the budget, I mean, that's...I would...if...ifthere's aconsensus of the Council that, you know, that's probably the least amount that's going to go in. On the other hand, if there's...if there's not a clear consensus that something will happen, then I'd have to give you a budget without any...any franchise fee revenue... Wilburn: And I would be looking at a floor of l ...for the...if we were to... Bailey: So...are we voting on the amendment? Are you (mumbled) let's vote on the amendment. Karr: Yeah, we have an amendment on the floor. This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 8 Bailey: Okay. Um, the amendment is to...would you restate your amendment, please. Wright: To reduce the proposed franchise fee from 2% to 1 %. Bailey: And it was seconded by Champion. Um, all right. Let's do all those in favor of the amendment say aye. Those opposed say nay. Okay, it's 3-3, and that means it fails, the amendment fails. Okay. So we will go back to the original, um, ordinance, a pass and adopt, um, discussion on that? Roll call on... Hayek: Wait a second. Um... so if we enact 2%, um, how does that play out if... if the numbers you believe we will get pan out to be correct? What decisions can we make in terms of, uh... (several talking) yeah. Bailey: We can reduce this! Champion: Or we could move to defer (several talking) Bailey: How quickly can we reduce this? It's the same...do we have to do the same notice, or can we simply...just do a three readings for the ordinance? Dilkes: There'd have to be three readings for the ordinance. I think if your revenue purpose statement doesn't change, you wouldn't have to republish. Bailey: Okay. All right. Dilkes: But we... Helling: Even if it's voted down? Karr: No, I think the question on the floor is, if they were to proceed this evening and pass it at 2%, what the step would be to reduce it at that point. Champion: And (several talking) Bailey: Three readings without... a requirement to publish if our revenue statement doesn't (several talking) Wilburn: That's the same...it's the flip side of what you were just saying, it's from the other direction. You said do 1 % and then we could have three readings to move it to... l 1/2 or 2. This is just the opposite direction. We have 2. It would take three readings to reduce it to... Champion: But we could possibly have another 3-3 vote. It would beano! Bailey: Right. This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 9 Wright: We could always possibly have a 3-3 vote. So, that's kind of what if thing. Dilkes: If you do a 3-3 vote, then the ordinance is gone, and we start over. Bailey: Completely, and then we...we start over with publish...publication as well, right? Champion: I move to defer until January. Bailey: Uh, move to defer...what's your date? Champion: Well, whatever meeting we're having... Bailey: ...that's the first formal meeting... Karr: Well, the first formal meeting's the 12th. Bailey: Okay. Is that... Karr: Okay, and you're deferring it...hold on one second. She's deferring... Bailey: (both talking) pass and adopt, to the 12th. Karr: To the 12th of January, hoping for firm numbers from the auditor at that time. Not to the next formal meeting. Bailey: I think she's hoping fora (mumbled) Karr: Okay. That's what you're waiting for, January 12th? Hayek: Can you do that? Dilkes: The question is, do you want to defer until...you have these numbers, or do you want to defer until you have the full Council here? Bailey: She just wants to defer until we have a full different Council here. Dilkes: Then that's next week. Karr: That's the 14th. Champion: No. Bailey: No, a full different Council. Karr: Different! This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 10 Dilkes: Oh, the full different Council. Bailey: Two...two characteristics. Karr: January 12th. Bailey: A motion to defer till the 12th. Is there a second? O'Donnell: Second. Bailey: Okay. All those in favor of deferring this, um, pass and adopt until January 12th say aye. Those opposed say nay. Karr: It's 3-3 so it...is that 3-3? Bailey: Yes. Karr: It fails. Bailey: Fails. All right. Shall we vote on... Karr: I'm sorry, can I... for the record. Bailey: It was, for the record, Wilburn, um, Wright, and Bailey in the negative. Hayek: Now may I ask a question. So, and this is apropos. Ross's comment, to go from 2 to something less than 2, does that require an ordinance change? Or is that just a decision we could make? Bailey: No, it's an ordinance change. It would require three readings. Hayek: It's the same process whether you increase or decrease... Bailey: But with no publication. So we could start three readings on the 12th. If we've gotten numbers or whatever. Hayek: Got it. Bailey: Okay? Hayek: Okay. Karr: Okay, just to clarify. If you're waiting for numbers it'll be after the first of the year. If you're waiting for a seventh member, so a three-three is not possible, that is possible by the... This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009. #2 Page 11 Dilkes: You have defeated a motion to defer till January. Bailey: Right. Dilkes: You have two options now - to vote on the (both talking) as amended, or to defer to the 14th. Bailey: Yes. Karr: And you still have it on the floor. Bailey: Yes. So, shall we do a roll call vote on adoption? Wilburn: I'm sorry, I just want to make sure...the...the, did you get what I was saying? Hayek: No, I ...yeah, I've got it, yeah. Bailey: Okay? Hayek: But what I'm hearing is another option, to move to defer till, uh, our next formal meeting? Bailey: Right. Dilkes: Correct, next week. Hayek: I'll move to defer to the next formal meeting next week. Champion: Second. Bailey: Okay. There's been a motion, um, by Hayek, seconded by Champion to defer till 12/14. Discussion? Wilburn: And you're just hoping one way or the other it'll be decided or... Hayek: Well...we're running into a constitutional crisis here, not having a seventh member, um...and I've not spoken to her. I have no idea how she... Bailey: Okay...all those in favor of deferring to 12/14 say aye. All those opposed say nay. Voting in the negative Wilburn, Wright, and Bailey. Shall we do a roll call vote on adoption? (several responding) Let's! Okay, motion passes...Champion and O'Donnell voting in the negative. All right. Dilkes: Notice will be given to MidAm that this has passed. Bailey: Thank you. This represents only a reasonably accurate transcription of the special formal Iowa City City Council meeting of December 7, 2009.