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Home My WebLink About2009-12-07 Ordinance~-i ` :~_ Prepared by: Eleanor Dilkes, City Attorney, 410 E. Washington Street, Iowa City, IA 52240; 319-356-5030 ORDINANCE N0. 09-4374 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 WHEREAS, 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; and WHEREAS, Senate File 478 enacted by the state legislature during the 2009 session legalized such a franchise fee; and WHEREAS, Senate File 478 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, the Revenue Purpose Statement and notice of public hearing on this ordinance was published on October 26, 2009. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF IOWA CITY, IOWA: SECTION I. AMENDMENTS. TITLE 12, FRANCHISES: is hereby amended by adding Chapter 5, entitled "Franchise Fees" as follows: Chapter 5. Franchise Fees 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 April 1, 2010. 12-5-2 Gas Franchise Fee Pursuant to Section 12-2-13 of the City's franchise agreement with the 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 Ord. No. 09-4374 Page 2 company, to customers within the current or future corporate limits of the city, commencing with gross revenue received on or after April 1, 2010. 12-5-3 Audit The city may, at its option, require that an audit of the calculation and basis for calculation of the franchise fee be conducted by an auditor of the city's selection and the company will cooperate with such an audit. Said audit shall not be conducted more than once a year. The city shall pay the costs of the audit unless the audit shows an underpayment of franchise fees by an amount equal to three percent (3%) or more of the fees, in which event the company shall pay the cost of the audit. 12-5-4 Revenue Purpose Statement The revenue collected from said franchise fees will be expended for any of the following purposes: 1. Inspecting, supervising and otherwise regulating the MidAmerican Energy Company's gas and electric franchises. 2. Public safety, including the equipping of fire, police and emergency services. 3. Public infrastructure to support commercial and industrial economic development. SECTION II. 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. Pa~i and apprgved tflis, 7th_ day of TIPrPmhar , 2009. ATTEST: / CIT CLERK A oved by ~~ - ~~-09 City Attorney's Office Ordinance No. 09-4374 Page 3 It was moved by Wright and seconded by as read be adopted, and upon roll call there were: AYES: NAYS: ABSENT: x Bailey _ x Champion _ _ x Correia x Hayek x O'Donnell x Wilburn x Wright First Consideration 1 i / 2 / 2009 Wilburn that the Ordinance Vote for passage: AYES: O'Donnell, Wilburn, Wright, Bailey, Correia, Hayek. NAYS: Champion. ABSENT: None. Second Consideration 11 / 17 / 2009 Vote for passage: AYES: Hayek, O'Donnell, Wilburn, Wright, Bailey. NAYS: Champion. ABSENT: Correia. Date published 12/16/2009 ~~ Marian Karr From: Karen Kubby [kubby@pobox.com] Sent: Friday, December 04, 2009 2:36 PM To: Council Subject: franchise fee City Council, Its nice to know that the TIF program does indeed bring in needed revenue once the TIF project is paid off. Glad to see that the franchise fee proposal may be able to be reduced or eliminated as a result of the TIF program. My concern remains with any special arrangement with industrial users. If you reduce the fee for industrial users, it leaves the residential and commercial users to make up the difference. Please ensure that if a fee is to be instituted and passed on to users, it is done so in an equitable manner. Small businesses employ the majority of people in the United States and it is vital to not do anything that tips the balance of our current vulnerable financial status so that small businesses are destined to fail in our area, especially downtown. When many downtown retailers are struggling to pay "bar rents", even a 1% add on to a utility bill could put some of us in a very tight place--no raises for already low wage positions, sparse inventory, and little money to advertise--all of which can spiral any one of us to failure. Leaving residential customers in a bind isn't fair either. That ideal 30% of income people "should" pay for housing includes utilities. If utilities go up due to a franchise fee, that means we have less to pay for rent/mortgage and thus the quality of housing may be reduced for many. Please do not favor industrial users in a way that creates an undue burden to commercial or residential users. Karen Kubby Dawn's Hide & Bead Away Jewelry, Beads, and Instruction since Iowa City, IA 52240 (319) 338-1566 phone (319) 688-2847 fax www.dawnsbeads.com Mon-Sat, loam-6pm/Until 8pm on Thurs. 1987 220 E. Washington St. /Sundays 12-5pm 1 Marian Karr From: Karen Kubby [kubby@pobox.com] Sent: Friday, December 04, 2009 2:36 PM To: Council Subject: franchise fee City Council, Its nice to know that the TIF program does indeed bring in needed revenue once the TIF project is paid off. Glad to see that the franchise fee proposal may be able to be reduced or eliminated as a result of the TIF program. My concern remains with any special arrangement with industrial users. If you reduce the fee for industrial users, it leaves the residential and commercial users to make up the difference. Please ensure that if a fee is to be instituted and passed on to users, it is done so in an equitable manner. Small businesses employ the majority of people in the United States and it is vital to not do anything that tips the balance of our current vulnerable financial status so that small businesses are destined to fail in our area, especially downtown. When many downtown retailers are struggling to pay "bar rents", even a 1% add on to a utility bill could put some of us in a very tight place--no raises for already low wage positions, sparse inventory, and little money to advertise--all of which can spiral any one of us to failure. Leaving residential customers in a bind isn't fair either. That ideal 30~C of income people "should" pay for housing includes utilities. If utilities go up due to a franchise fee, that means we have less to pay for rent/mortgage and thus the quality of housing may be reduced for many. Please do not favor industrial users in a way that creates an undue burden to commercial or residential users. Karen Kubby Dawn's Hide & Bead Away Jewelry, Beads, and Instruction since Iowa City, IA 52240 (319) 338-1566 phone (319) 688-2847 fax www.dawnsbeads.com Mon-Sat, loam-6pm/Until 8pm on Thurs. 1987 220 E. Washington St. /Sundays 12-5pm 1