Legislative Issues - franchise fee
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MEMORANDUM
January 21,2006
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Additional State Legislative Issue
Assistant City Manager City Steinhauser recommends City Council amendment of the
2006 State Legislative issues to include language requesting that our Legislators amend
Iowa Code S364.2 to clarify that a franchise fee may be based on the gross revenue
from the sale of the utility's product and that the fees that have been collected under
franchise agreements were legal.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Micha'el c. Van Milligen -----
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
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MEMORANDUM
January 17, 2006
TO:
Michael C. Van Milligen, City Manager
FROM:
Cindy Steinhauser, Assistant City Manager
SUBJECT: Additional State Legislative issue
Introduction
The purpose of this memorandum is to request City Council approval of an additional
legislative issue for the 2006 Legislative session.
Discussion
The Iowa District Court for Polk County recently held that the city of Des Moines
franchise fee imposed on 5% of the gross revenues from the sale of gas and electricity
by the local utility was an illegal tax. Currently Iowa Code S 364.2 authorizes a city to
grant a franchise for certain utilities and to charge a franchisee fee for such utilities.
However, the Iowa Code does not elaborate on the nature of the franchise fee that may
be charged. Dubuque, along with a number of Iowa cities, charges a franchise fee
based on a percentage of the gross revenues from the sale of gas and electricity by the
utility. Dubuque's franchise fee for gas (2%) and electric (2%) has been in place since
October 2003.
Recommendation
Iowa Code S 364.2 should be amended to clarify that a franchise fee may be based on
the gross revenue from the sale of the utility's product and that the fees that have been
collected under franchise agreements were legal.
Action
The requested action is for City Council to amend the 2006 State Legislative issues to
include language regarding franchise fees as recommended above.
Cc: Barry Lindahl, Corporation Counsel
Dawn Lang, Budget Director
Ken TeKippe, Finance Director