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Utility Franchise Fee OrdinanceMEMORANDUM TO: FROM: SUBJECT: September 10, 2003 The Honorable Mayor and City Council Members Michael C. Van Milligen, City Manager Utility Franchise Fee Discussions have taken place with Aquila and Alliant on the implementation of the Utility Franchise Fee. Both organizations advise th that they need until the 15 of the month to report on the previous month's receipts, so that requirement is being changed. Alliant advises that the only accounts for which it cannot charge the fee are the City accounts. All other Dubuque customers will be charged the fee and the City will need to rebate to all of the customers who are fully or partially sales-tax exempt. Aquila advises that it will not charge the fee to any customers that the City advises Aquila are fully exempt from sales taxes, and therefore exempt from the franchise fee. However, the City will need to provide a rebate to any customer who is only partially sales-tax exempt. Aquila has also asked that we include a provision to defend Aquila if legal action is brought against Aquila challenging the calculation of the franchise fee. Any other changes are non-substantive. Finance Director Ken TeKippe is preparing a rebate procedure. I respectfully request Mayor and City Council approval of these ordinance amendments. M~chae C. Van Milligen "' MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Ken TeKippe, Finance Director Pauline Joyce, Administrative Services Manager Preparer: Barry A. Lindahl 300 Main Street Suite 330 Dubuque IA 52001{563) 583-4113 ORDINANCE NO. 75-03 AMENDING ORDINANCE NO. 58-03 ESTABLISHING A FRANCHISE FEE OF TWO PERCENT (2%) OF THE GROSS REVENUE OF INTERSTATE POWER COMPANY, ITS SUCCESSORS AND ASSIGNS, GENERATED FROM THE SALE OF ELECTRICITY WITHIN THE CITY OF DUBUQUE Whereas, City of Dubuque Ordinance No. 58-93 (City of Dubuque Code of Ordinances Appendix D), adopted by the City Council on the 4th day of October 1993, granted to Interstate Power Company, its successors and assigns (hereinafter referred to collectively as the Company), nonexclusive authority for a period of twenty-five (25) years to maintain and operate its electrical system within the limits of the City of Dubuque; and Whereas, Ordinance No. 58-93 provides that the City Council may, impose a franchise fee not to exceed three (3) percent of the gross revenue of the Company generated from the sale of electricity within the City of Dubuque; and Whereas, the City Council has determined that a franchise fee is in the best interests of the City of Dubuque; and Whereas, the City Council by the adoption of Ordinance No. 58-03 established a franchise fee; and Whereas, the City Council has determined that an amendment to Ordinance No. 58-03 is necessary. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. Ordinance No. 58-03 is amended to read as follows: ORDINANCE NO. 58-03 ESTABLISHING A FRANCHISE FEE OF TWO PERCENT (2%) OF THE GROSS REVENUE OF INTERSTATE POWER COMPANY, ITS SUCCESSORS AND ASSIGNS, GENERATED FROM THE SALE OF ELECTRICITY WITHIN THE CITY OF DUBUQUE Section 1. Effective October 1, 2003 and for the term of the franchise granted by Ordinance No. 58-93, there is hereby imposed upon the Company a fee equal to two percent (2%) of the gross revenue generated from the sale of electricity within the City of Dubuque. Section 2. The Company shall on the fifteenth day of each month, commencing November 15, 2003, provide to the City Manager in a form acceptable to the City Manager records establishing the gross revenues from the sale of electricity by the Company within the City of Dubuque for the preceding month and shall pay the fee to the City within thirty (30) days following the last day of the preceding month. Section 3. The fee imposed by Sec. 1 shall not apply to any sale of electricity by the Company that is exempt under Iowa Code § 422.45 from the tax imposed by Iowa Code § 422.43 and in computing the amount of the fee, the Company shall not include such sales, unless it is impracticable to do so, in which event the City Manager may provide for a rebate of the amount of the fee for such exempt sales of electricity to the Company's customers. Section 2. This ordinance shall take effect upon publication. Passed, approved and adopted this 15th day of September, 2003. Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, CMC City Clerk Terrance M. Dugga~,~for F:'~USER$~ Preparer: Barry A. Lindah1300 Main Street Suite 330 Dubuque IA 52001(563) 583-4113 ORDINANCE NO. 76-03 AMENDING ORDINANCE NO. 59-03 ESTABLISHING A FRANCHISE FEE OF TWO PERCENT (2%) OF THE GROSS REVENUE OF PEOPLES NATURAL GAS COMPANY, ITS SUCCESSORS AND ASSIGNS, GENERATED FROM THE DISTRIBUTION AND SALE OF NATURAL GAS OR MIXED GAS WITHIN THE CITY OF DUBUQUE Whereas, City of Dubuque Ordinance No. 43-93 (City of Dubuque Code of Ordinances Appendix C), adopted by the City Council on the 19th day of July, 1993, granted to Peoples Natural Gas Company, its successors and assigns (hereinafter referred to collectively as the Company), nonexclusive authority for a period of twenty-five (25) years to maintain and operate its gas distribution system within the limits of the City of Dubuque; and Whereas, Ordinance No. 43-93 provides that the City Council may, impose a franchise fee not to exceed three (3) percent of the gross revenue of the Company generated from the sale of natural and mixed gas within the City of Dubuque; and Whereas, the City Council has determined that a franchise fee is in the best interests of the City of Dubuque; and Whereas, the City Council by the adoption of Ordinance No. 59-03 establish a franchise fee; and Whereas, the City Council has determined that an amendment to Ordinance No. 59-03 is necessary. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. Ordinance No. 59-03 is amended to read as follows: ORDINANCE NO. 59-03 ESTABLISHING A FRANCHISE FEE OF TWO PERCENT (2%) OF THE GROSS REVENUE OF PEOPLES NATURAL GAS COMPANY, ITS SUCCESSORS AND ASSIGNS, GENERATED FROM THE DISTRIBUTION AND SALE OF NATURAL GAS OR MIXED GAS WITHIN THE CITY OF DUBUQUE Section 1. Effective October 1, 2003 and for the term of the franchise granted by Ordinance No. 43-93, there is hereby imposed upon the Company a fee equal to two percent (2%) of the gross revenue generated from the sale of natural and mixed gas within the City of Dubuque. Section 2. The Company shall on the fifteenth day of each month, commencing November 15, 2003, provide to the City Manager in a form acceptable to the City Manager records establishing the gross revenues from the sale of natural and mixed gas by the Company within the City of Dubuque for the preceding month and shall pay the fee to the City within thirty (30) days following the last day of the preceding month. Section 3. The fee imposed by Sec. I shall not apply to any sale of natural and mixed gas by the Company that is exempt under Iowa Code § 422.45 from the tax imposed by Iowa Code § 422.43. The City shall, prior to October 1, 2003, and thereafter as persons on the exemption list are changed by the City, provide the Company with a list of the names of persons who are exempt from the fee and in computing the amount of the fee, the Company shall not include any sales to such persons. The City Manager shall provide a procedure for the rebate of the fee to persons who are partially exempt under § 422.45 from the tax imposed by Iowa Code § 422.43 for sales of natural and mixed gas to the Company's customers. Section 4. If for any reason the time and manner of collecting, or any aspect of the franchise fee, is challenged by or before the Iowa Utilities Board, Company shall promptly give notice to City and the Company shall, in any case, diligently and continuously exercises its efforts to sustain said fee and payments and the time and manner of its collection. If at any time the Iowa Utilities Board, or any other authority having proper jurisdiction, prohibits the City from imposing the franchise fee called for herein, the Company will no longer be obligated to collect and pay the franchise fee herein. The City agrees to save harmless the Company, its employees or agents from and against all claims, demands, losses and expenses arising out of the collection of the franchise fee from the Company's customers or in remitting the franchise fee amounts collected to the City; provided, however, that the City shall not be required to save harmless the Company from claims, demands, losses and expenses arising out of the negligence of the Company, its employees or agents Section 5. The amount billed by the Company for the sale of natural gas or mixed gas to its customers may be adjusted for any net write-off of uncollectible accounts and corrections of bills theretofore rendered, and past or future franchise fees remitted to the City may be adjusted accordingly by the Company to reflect the lawful or necessary correction to billing and collection from its customers for natural gas sold within the corporate limits of the City. Section 6. The City shall provide copies of annexation ordinances to the Company on a timely basis to ensure appropriate franchise fee collection from customers within the corporate limits of the City. Section 2. This ordinance shall take effect upon publication. Passed, approved and adopted this 15th day of September, 2003. Terrance M. Duggan, Mayor Attest: Jeanne F. Schneider, CMC City Clerk 15th day of September ,2003. Effect of Amendment ORDINANCE NO. 58-03 ESTABLISHING A FRANCHISE FEE OF TWO PERCENT (2%) OF THE GROSS REVENUE OF INTERSTATE POWER COMPANY, ITS SUCCESSORS AND ASSIGNS, GENERATED FROM THE SALE OF ELECTRICITY WITHIN THE CITY OF DUBUQUE Whereas, City of Dubuque Ordinance No. 58-93 (City of Dubuque Code of Ordinances Appendix D), adopted by the City Council on the 4th day of October 1993, granted to Interstate Power Company, its successors and assigns (hereinafter referred to collectively as the Company), nonexclusive authority for a period of twenty-five (25) years to maintain and operate its electrical system within the limits of the City of Dubuque; and Whereas, Ordinance No. 58-93 provides that the City Council may, impose a franchise fee not to exceed three (3) percent of the gross revenue of the Company generated from the sale of electricity within the City of Dubuque; and Whereas, the City Council has determined that a franchise fee is in the best interests of the City of Dubuque. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. Effective October 1, 2003 and for the term of the franchise granted by Ordinance No. 58-93, there is hereby imposed upon the Company a fee equal to two percent (2%) of the gross revenue generated from the sale of electricity within the City of Dubuque. Section 2. The Company shall on the fifteenth day of each month commencin.q November 15, 2003~ provide to the City Manager in a form acceptable to the City Manager records establishing the gross revenues from the sale of electricity within the City of Dubuque and shall pay the fee to the City within thirty (30) days following the last day of the preceding month. Section 3. The fee imposed by Sec. I shall not apply to any sale of electricity by the Company that is exempt under Iowa Code § 422.45 from the tax imposed by Iowa Code § 422.43 and in computing the amount of the fee, the Company shall not include such sales, unless it is impracticable to do so, in which event the City Manager may provide for a rebate of the amount of the fee for such exempt sales of electricity to the Company's customers. Effect of Amendment ORDINANCE NO. 59-03 ESTABLISHING A FRANCHISE FEE OF TWO PERCENT (2%) OF THE GROSS REVENUE OF PEOPLES NATURAL GAS COMPANY, ITS SUCCESSORS AND ASSIGNS, GENERATED FROM THE DISTRIBUTION AND SALE OF NATURAL GAS OR MIXED GAS WITHIN THE CITY OF DUBUQUE Section 1. Effective October 1, 2003 and for the term of the franchise granted by Ordinance No. 43-93, there is hereby imposed upon the Company a fee equal to two percent (2%) of the gross revenue generated from the sale of natural and mixed gas within the City of Dubuque. Section 2. The Company shall on the fifteenth day of each month, commencin,q November 15, 2003, provide to the City Manager in a form acceptable to the City Manager records establishing the gross revenues from the sale of natural and mixed gas by the Company within the City of Dubuque for the preceding month and shall pay the fee to the City within thirty (30) days following the last day of the preceding month. Section 3. The fee imposed by Sec. I shall not apply to any sale of natural and mixed gas by the Company that is exempt under Iowa Code § 422.45 from the tax imposed by Iowa Code § 422.43. The City shall, prior to October 1, 2003, and thereafter as persons on the exemption list are changed by the City, provide the Company with a list of the names of persons who are exempt from the fee and in computinR the amount of the fee, the Company shall not include any sales to such persons. The City Mana.qer shall provide a procedure for the rebate of the fee to persons who are partially exempt under § 422.45 from the tax imposed by Iowa Code § 422.43 for sales of natural and mixed .clas to the Company's customers. Section 4. If for any reason the time and manner of collectin.q, or any aspect of the franchise fee, is challen.qed by or before the Iowa Utilities Board, Company shall promptly .qive notice to City and the Company shall, in any case, dili.qently and continuously exercises its efforts to sustain said fee and payments and the time and manner of its collection. If at any time the Iowa Utilities Board, or any other authority havinR proper jurisdiction, prohibits the City from imposin.q the franchise fee Called for herein, the Company will no Ion.qer be obliRated to collect and pay the franchise fee herein. The City aRrees to save harmless the Company, its employees or a.qents from and a.qainst all claims, demands, losses and expenses arisin.q out of the collection of the franchise fee from the Company's customers or in remittin.q the franchise fee amounts collected to the City; provided~ however~ that the City shall not be required to save harmless the Company from claims, demands, losses and expenses arisinR out of the neqliRence of the Company, its employees or a.qents. Section 5. The amount billed by the Company for the sale of natural .qas or mixed .qas to its customers may be adiusted for any net write-off of uncollectible accounts and corrections of bills theretofore rendered, and past or future franchise fees remitted to the City may be adjusted accordin,qly by the Company to reflect the lawful or necessary correction to billin.q and collection from its customers for natural .qas sold within the corporate limits of the City. Section 6. The City shall provide copies of annexation ordinances to the Company on a timely basis to ensure appropriate franchise fee collection from customers within the corporate limits of the City.