Franchise Fee Ordinance Amendment_Black Hills EnergyMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Franchise Fee Ordinance Amendment - Black Hills Energy
DATE: January 16, 2014
Dubuque
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AI- America City
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2007 • 2012 • 2013
City Attorney Barry Lindahl is recommending an amendment to the City Franchise Fee
Ordinance.
In 1993, the City Council granted a utility franchise to Peoples Natural Gas, its
successors and assigns. Black Hills Energy is the successor to People Natural Gas.
The franchise ordinance provided that the City Council could impose a franchise fee not
to exceed 3% of the company's gross revenues from the sale of gas in the city. In
2003, the City Council imposed a fee of 2% which was increased to 3% in 2010.
The franchise fee ordinances provided for a rebate to certain customers exempt from
sales tax on the sale of gas. However, the ordinances did not establish a procedure for
requesting a rebate.
The attached ordinance repeals the former ordinance provisions relating to the rebate.
The proposed ordinance also requires that effective July 1, 2013, a request for a rebate
must be submitted to the City Manager in the City's fiscal year in which the customer
pays the franchise fee.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:sv
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
THE CITY OF
DUB E MEMORANDUM
Masterpiece on the Mississippi
BARRY LINDAHL
CITY ATTORNEY
To: Michael C. Van Milligen
City Manager
DATE: January 15, 2014
RE: Franchise Fee Ordinance Amendment - Black Hills Energy
In 1993, the City Council granted a utility franchise to Peoples Natural Gas, its
successors and assigns. Black Hills Energy is the successor to People Natural Gas.
The franchise ordinance provided that the City Council could impose a franchise fee not
to exceed 3% of the company's gross revenues from the sale of gas in the city. In
2003, the City Council imposed a fee of 2% which was increased to 3% in 2010.
The franchise fee ordinances provided for a rebate to certain customers exempt from
sales tax on the sale of gas. However, the ordinances did not establish a procedure for
requesting a rebate.
The attached ordinance repeals the former ordinance provisions relating to the rebate.
The proposed ordinance also requires that effective July 1, 2013, a request for a rebate
must be submitted to the City Manager in the City's fiscal year in which the customer
pays the franchise fee.
I recommend that the proposed ordinance be submitted to the City Council for
consideration.
A resolution setting a public hearing on the proposed ordinance is also attached.
BAL:tls
Attachment
cc: Ken TeKippe, Finance Director
F:\ USERS \tsteckle \Lindahl \Franchise Fee Rebate Requests From Tax Exempt Entitites\ MVM_ ProposedOrdinance _GasBlackHills_011514.doc
OFFICE OF THE CITY ATTORNEY DUBUQUE, IOWA
SUITE 330, HARBOR VIEW PLACE, 300 MAIN STREET DUBUQUE, IA 52001 -6944
TELEPHONE (563) 583 -4113 / FAX (563) 583 -1040 / EMAIL balesq @cityofdubuque.org
ORDINANCE NO. 7 -14
REPEALING SECTION 3 OF ORDINANCE NO. 59 -03 AND SECTION 3 OF
ORDINANCE NO. 76 -03 PROVIDING FOR A REBATE OF FRANCHISE FEES FOR
EXEMPT SALES OF NATURAL AND MIXED GAS TO CUSTOMERS OF PEOPLES
NATURAL GAS, ITS SUCCESSORS AND ASSIGNS, AND ESTABLISHING A
PROCEDURE FOR REQUESTING A REBATE OF SUCH FEES
Whereas, Ordinance No. 43 -93 granted to Peoples Natural Gas Company (the
Company), its successors and assigns, a franchise to maintain and operate a gas
distribution system in the City of Dubuque, Iowa; and
Whereas, Black Hills Energy is the successor to Peoples Natural Gas Company;
and
Whereas, Ordinance No. 43 -93 authorized the City Council to impose a franchise
fee not to exceed 3% of the gross revenue of the Company generated from the sale of
natural and mixed gas within the city; and
Whereas, Ordinance No. 59 -03, as amended by Ordinance No. 76 -03, imposed
upon the Company a fee equal to 2% of the gross revenue generated from the sale of
natural and mixed gas within the city and stated that certain sales were exempt from the
fee and that a procedure for the rebate of such exempt fees would be provided but did
not establish a procedure for requesting such rebates; and
Whereas, Ordinance No. 59 -03, as amended by Ordinance No. 8 -10, increased
the fee to 3% of the gross revenue generated from the sale of natural and mixed gas
within the city; and
Whereas, certain customers of the Company did not request a rebate of such
fees until December of 2013; and
Whereas, the City Council of the City of Dubuque finds that the delay in
requesting a rebate is not a reasonable period of time and that it is not in the best
interests of the citizens of the City of Dubuque to honor such requests; and
Whereas, the City Council finds that a reasonable period of time in which to
request a rebate is in the fiscal year in which a customer pays such fees to the
Company.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. Section 3 of Ordinance No. 59 -03 and Section 3 of Ordinance No. 76-
03 are hereby repealed.
Section 2 Ordinance No. 59 -03 and Ordinance No. 76 -03 are amended by
adopting the following Section 3:
Attest:
Section 3.
(1) Effective July 1, 2013, the fee imposed by Section 1
of Ordinance No. 59 -03, as amended by Section 1 of Ordinance
No. 76 -03 and Section 1 of Ordinance No. 8 -10, shall not apply to
any sale of natural and mixed gas by the Company that is exempt
under Iowa Code Sec. 423.3 from the tax imposed by Iowa Code
Sec. 423.2 and in computing the amount of the fee, the Company
shall not include such sales, unless it is impracticable to so, in
which event the City Manager shall provide a rebate of the amount
of the fee for such exempt sales of natural and mixed gas to
Company's customers provided a written request is submitted by a
customer to the City Manager in the City's fiscal year (July 1 — June
30) in which the customer pays such fees.
(2) Any rebate of franchise fees which may have been
available under any prior amendment or ordinance which was not
paid prior to July 1, 2013, is declared void and any claim for any
such rebate shall not be honored or paid by the city.
Passed, approved and adopted the 3rd day of February, 2014.
// %Mi!il
Kevi S.Firnsta I, City erk
Roy D. lol, Mayor
F: \USERS \tsteckle \Lindah I\ Ord finances \Fra n ch iseFee_Sec3 RepealOrd59- 03876- 03_GasPeoples_011414.docx
CITY OF DUBUQUE,
IOWA
OFFICIAL NOTICE
Notice is hereby given
that the City Council of
the City of Dubuque
will hold a public hear-
ing on a proposed ordi-
nance, amending the
franchise fee ordinan-
ces under the City's
gas franchise with
Black Hills Energy by
repealing Section 3 of
Ordinance No. 59-03
and Section 3 of Ordi-
nance No. 76-03 provid-
ing for a rebate of fran-
chise fees for exempt
sales of natural and
mixed gas to custom-
ers of Peoples Natural
Gas, its successors and
assigned and estab-
lishing a procedure for
requesting a rebate of
such fees. Said public
hearing will be held at
6:30 p.m. in the City
Council Chambers, His-
toric Federal Building,
350 West 6th Street,
Dubuque, Iowa, on
Monday, February 3,
2014.
Copies of supporting
documents for the pub-
lic hearings are on file
in the City Clerk's Of-
fice and may be
viewed during normal
working hours.
Written comments re-
garding the above pub-
lic hearings may be
submitted to the City
Clerk's Office on or be-
fore said time of public
hearing. At said time
and place of public
hearings all interested
citizens and parties
will be given an oppor-
tunity to be heard for
or against said meas-
ures.
Any visual or hearing
impaired persons
needing special assis-
tance or persons with
special accessibility
needs should contact
the City Clerk's Office
at (563) 589-4100 or
TTY (563) 690-6678 at
least 48 hours prior to
the meeting.
Kevin S. Firnstahl
City Clerk
it 1/24
STATE OF IOWA {SS:
DUBUQUE COUNTY
CERTIFICATION OF PUBLICATION
I, Suzanne Pike, a Billing Clerk for Woodward Communications, Inc., an Iowa
corporation, publisher of the Telegraph Herald,a newspaper of general circulation
published in the City of Dubuque, County of Dubuque and State of Iowa; hereby
certify that the attached notice was published in said newspaper on the following
dates: January 24, 2014, and for which the charge is $20.02.
Subscribed to before me/, . Notary Public in and for Dubuque County, Iowa,
this er, day of , 20 /1-. .
No ary Public in and for Dubuque County, Iowa.
MARY K. WESTERMEYER
Commission Number 154885
My Comm. Exp. FEB. 1, 2017
" ' of the City of Dubuque
- OFFICIALto honor such re-
PUBLICATION .quests;and
ORDINANCE NO.7-14 i Whereas, the City
REPEALING SECTION 1 Council finds that a
3 OF ORDINANCE NO. reasonable period of
59-03 AND SECTION 3 i time in which to re-
OF ORDINANCE NO..1'quest a rebate is in the
76-03 PROVIDING FOR fiscal year in which a
A REBATE OF FRAN-', customer pays such
CHISE FEES FOR EX-I fees to the Company.
EMPT SALES OF NAT-I NOW, THEREFORE,
URAL AND MIXED BE IT ORDAINED BYSTATE OF IOWA {SS.•
GAS TO CUSTOMERS THE CITY COUNCILIL
OF PEOPLES NATU-, OF THE CITY OF DU-
RAL-GAS, ITS SUC- BUQUE,IOWA: DUBUQUE COUNTY
i LESSORS AND AS- Section 1.Section 3 of
SIGNS, AND ESTAB- Ordinance No. 59-03
LISHING A PROCE- and Section 3 of Ordi-
DURE FOR REQUEST-; nance No. 76-03 are
ING A REBATE OF hereby repealed.
SUCH FEES - Section 2. Ordinance CERTIFICATION OF PUBLICATION
Whereas, Ordinance 1 No. 59-03 and Ordi-_
No. 43-93 granted to 1 nance No. 76-03 are
Peoples Natural Gas" amended by adopting
Company (the Compa- the following Section 3:
ny), its successors and 1 . Section 3.
assigns,a franchise to'Ii (1) Effective July 1,
maintain and operate a 2013, the fee Imposed ; I, Suzanne Pike, a Billing Clerk for Woodward Communications, Inc., an Iowa
i gas distribution system by Section 1 of Ordi-
in the City of Dubuque, nance No. 59-03, as corporation,publisher of the Telegraph newspaper of general circulation
Iowa;and amended by Section 1 Herald,ap per
Whereas, Black Hills of Ordinance No.76-03 • published in the City of Dubuque, County of Dubuque and State of Iowa; hereby
Energy Is the successor and Section 1 of Ordi-
to Peoples Natural Gas ; nance No. 8-10, shall certify that the attached notice was published in said newspaper on the following
Company;and not apply to any sale of -
Whereas, Ordinance natural and mixed gas , dates: February 07, 2014, and for which the charge is $37.20.
No, 43-93 authorized by the Company that is
the City Council to im- exempt under Iowa !
pose a franchise fee Code Sec. 423.3 from
not to exceed 3% of the tax imposed by lo-
the gross revenue of wa Code Sec.423.2 and
the Company generat- in computing the
ed from the sale of nat- amount of the fee,the ://t.e
ural and mixed gas Company shall not in- ,
within the city;and clude such sales, un-
Whereas, Ordinance less it is impracticable
No.59-03, as amended to so;In which event
by Ordinance No. 76- the City Manager shall . 7)6( g.-
03, imposed upon the provide a rebate of the
Company a fee equal amount of the fee for
to 2%of the gross rev- such exempt sales of
enue generated from natural and mixed gas
the sale of natural and to Company's custom-
mixed gas within the ers provided a written
city and stated that request is submitted Subscribed to.before me, a otary Public in and for Dubuque County, Iowa,
certain sales were ex- by a customer to the
empt from the fee and City Manager In the ?
that a procedure for City's fiscal year(July 1 this ! day f l *.-ar L/ , 20
the rebate of such ex- -June 30)in which the
empt fees would be customer pays such
provided but did not fees.
establish a procedure (2)Any rebate of fran-
'for requesting such re- chise fees which may
bates;and have been available
Whereas, Ordinance under any prior 1111 / IIIMI _ _ -_ -_ --
No.59-03,as amended amendment or ordi-
by Ordinance No.8-10, nance which was notdr
increased the fee to paid prior to July 1, ifotary Public in and for Dubuque County, Iowa.
3% of the gross reve- 2013, is declared void
nue generated from , and any claim for any
the sale of natural and ' such rebate shall not
mixed gas within the be honored or paid by
city;and . - the city.
Whereas,'certain cus- ` Passed,approved and
tomers of the Company adopted the 3rd day of
did not request a re- February,2014. loo-AlMARY K.WESTERMEYERbate of such fees until Is/Roy D.Buol,Mayor : Commission Number 154885
December of 2013;and Attest:/s/Kevin S.
Whereas, the City Firnstahl,City Clerk ro WMy Comm. Exp. FEB. 1,2017
Council of the City of Published officially in
Dubuque finds that the the Telegraph Herald
delay in requesting a newspaper on'the 7th .
rebate is not a reason- day of February,2014.
able period of time and /s/Kevin S.Firnstahl,
that It Is not in the best City Clerk
interests of the citizens It 2/7