Legislative Corresp. - franchise fee, eminent domain
February 14, 2006
Re: Franchise Fees
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<<CompleteOFFIC IALName _Address>>
Dear <<Title>> <<Last>>,
I am writing to encourage you to support an amendment to Iowa Code S 364.2 to
clarify a city's authority to charge a franchise fee to a utility based on the gross
revenue from the sale of the utility's product.
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Iowa Code S 364.2 authorizes a city to grant a franchise for certain utilities and to
charge a franchise fee for such utilities. However, the Iowa Code does not
elaborate on the nature of the franchise fee that may be charged. A number of
Iowa cities charge a franchise fee based on a percentage of the gross revenue
from the sale of gas and electricity by the utility. The city of Dubuque charges a
franchise fee of 2% on the gross receipts from the sale of gas and electricity. The
gas and electric utilities charge the franchise fees to their customers. However,
for sales tax-exempt properties located in the City of Dubuque, no franchise fee
is charged by Aquila to gas utility customers. In the case of electric utility, Alliant
Energy charges the franchise fee and the City of Dubuque provides
reimbursement to the sales tax-exempt properties in the amount of the franchise
fee paid.
The city of Dubuque first implemented the franchise fees for gas and electricity in
October, 2003 partially to replace state revenue to cities that was eliminated
during the 2003 legislative session. For Fiscal Year 2006 (July 1, 2006-June 30,
2007), the city of Dubuque anticipates approximately $1.5 million in franchise
fees. To make up for the loss of this franchise fee revenue would require a
property tax increase of approximately 10% for city of Dubuque taxpayers.
I encourage you to support an amendment to Iowa Code S 362.2 to clarify a city's
authority to charge a franchise fee to a utility based on the gross revenue from
the sale of the utility's product and that utility franchise fees that have been
collected by Iowa cities under franchise agreements are and were legal.
Sincerely,
Michael C. Van Milligen
City Manager
MCVM:cms
Cc: Mayor Roy D. Buol
Dubuque City Council
Susan Judkins, Director of Governmental Affairs, Iowa League of Cities
Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
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The Honorable Mike Connolly
Senate Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Pam Jochum
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Steve Lukan
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Tom Hancock
Senate Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Pat Murphy
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Ray Zirkelbach
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Roger Stewart
Senate Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Thomas
Schueller
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
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February 14, 2006
VIA Email and
1st Class Mail
<<Email>>
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Re: HF 2321 - Eminent Domain
Dear <<Title>> <<Lasb>,
I am writing to encourage you to oppose HF 2321 regarding changes to the
requirements when a city is considering the use of eminent domain. This bill
proposes a significant number of restrictive requirements that would severely
diminishes a city's ability to 1) redevelop older areas of town such as downtowns
or 2) expand for large-scale economic development opportunities that provide
benefit to the entire community.
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As you know the city of Dubuque has seen a tremendous revitalization in the
downtown and Port of Dubuque Area. Since 2000 over $34 million has been
invested in public improvements, $75 million in building rehabilitations, nearly
$119 million in new construction and 1,849 new jobs created in downtown and
the Port of Dubuque. This is in large part due to the $188 million America's River
Project and while the City of Dubuque used eminent domain on only one of the
parcels acquired for this project to construct the America's River project, this is a
project that would never have happened without the potential to acquire property
through eminent domain.
The Port of Dubuque area, formerly know as the Ice Harbor, was an old industrial
area that at one time had a cold-storage operation, storage of logs and an oil
operation all surrounded by a concrete floodwall. Coupled with property owners
who showed no interest in making improvements to their property and no interest
in negotiating with the City of Dubuque or private developers to sell their property
and create a revitalized area. Today this thriving area is home to the America's
River Project and is a gateway for downtown and our community. This is
because the city has been able to use such tools as Urban Renewal districts,
designation of slum and blight areas and the potential to use eminent domain to
bring all interested parties to the table and negotiate.
HF 2321, the latest bill on eminent domain, incorporates language that would be
onerous for cities trying to develop urban renewal slum and blighted areas such
as the Port of Dubuque or downtown. The largest and most overriding concern
in this bill is the language regarding the burden of proof. As proposed, the city of
Dubuque would be required to provide "clear and convincing evidence" regarding
our burden of proof. This would hold cities to a much higher standard than what
is required in a court of law where there must be a "preponderance of evidence."
Any changes in the current language is inviting litigation that will take years to
resolve and probably kill any project. In addition, there are specific concerns that
I would like to raise under each of the following sections:
Section 2 and 3 - Includes language that requires that each parcel to be
acquired by eminent domain in an urban renewal area must meet the definition of
slum or blight.
Response: This new requirement would make it very difficult for cities to acquire
non-slum and blighted properties along with slum and blighted properties in order
to assemble the large tracts needed for construction of large projects. Rarely,
when a community adopts an urban renewal district based upon the definition of
slum and blight, do all of the parcels of property in the district meet the definition
of slum and blight.
Section 9 - Requires that the applicant acquiring the parcel post the application
for condemnation in a conspicuous place on the property to be condemned.
Response: This issue was recently addressed during the 2000 legislative
session in response to concerns raised and the current system of mailing and
publishing or alternative service adequately meets the needs of property owners
and acquiring agencies in a fair and balanced manner.
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Section 13 - Requires that the compensation commission must deliberate in
open session.
Response: This issue was recently addressed through changes during the 2000
legislative session. The current provision requires that evidence and testimony
be taken in open session but that deliberations may occur in closed session. The
Compensation Commission is a commission made up of citizens with
backgrounds that contribute to their ability to provide fair and balanced analysis
about compensation that should be awarded. This commission, as part of their
deliberation, must evaluate the competency and credibility of the property owner
and officials of the acquiring agency and any expert appraisal witnesses. To
subject the commission to undertake this discussion in a public forum would
severely deter qualified persons from serving on the commission in order to avoid
uncomfortable situations with the impacted parties.
Section 15 - Modifies the language regarding just compensation and an
additional payment for loss of existing business or farm operation.
Response: This language goes significantly beyond the existing relocation
benefit requirements under Chapter 316 of the Code of Iowa and the Uniform
Relocation Assistant and Real Property Acquisition Policies Act. These two
provisions provide more than adequate compensation to persons whose
properties are taken and who must move the business, farm operation or place of
residence.
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Section 19 -If a parcel of property acquired through eminent domain is not
used, this language would give the prior owner of the parcel the right to purchase
the property back at a price equal to the current appraised value of the real
property or the fair market value of the property at the time it was acquired
through eminent domain.
Response: The proposal does not take into account appreciation in value of the
property which may have occurred from the time it was acquired and the time it is
offered for sale nor does it fairly compensate the public for its investment.
Section 20 - Would allow the prior owner to reacquire the property if the
acquiring agency has not, within five years of its acquisition, used the property for
the purpose stated in the application and has not offered to sell the property back
to the prior owner.
Response: This language is particularly onerous for large-scale projects that
may take longer than five years to plan, design, finance, acquire property and
construct the improvement. There are a number of large scale projects such as
the construction of a new bridge, arterials; landfills etc. that take longer than five
years. Initial planning for the America's River Project first began in 1995. This
language would inhibit cities abilities to acquire and hold onto property until such
time as needed for the construction of large scale projects.
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Based upon the above information, I encourage you to oppose HF 2321 and
support efforts to retain a city's ability to use eminent domain for redevelopment
of downtowns as well as for large scale economic development projects that
benefit the community. Thank you for your continued efforts on behalf of cities.
Sincerely,
Michael C. Van Milligen
City Manager
MCVM:cs
Cc: Mayor Roy D. Buol
Dubuque City Council
Susan Judkins, Director of Governmental Affairs, Iowa League of Cities
Bill Baum, Greater Dubuque Development Corporation
Steward Sandstrom, Dubuque Area Chamber of Commerce
Dan LoBianco, Dubuque Main Street Ltd.
Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Dave Heiar, Economic Development Director
.
The Honorable Mike Connolly
Senate Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Pam Jochum
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Steve Lukan
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Tom Hancock
Senate Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Pat Murphy
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Ray Zirkelbach
House Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Roger Stewart
Senate Chamber
Iowa Capitol Building
Des Moines, IA 50319
The Honorable Thomas
Schueller
House Chamber
Iowa Capitol Building
Des Moines, IA 50319