Ad-Express and Daily Iowegian, Centerville, IA

March 25, 2014

Cincinnati approves franchise fee; Centerville inching closer to one

By Michael Schaffer Managing Editor
The Daily Iowegian

---- — The Cincinnati City Council during their March 10 regular meeting passed a resolution to adopt a revenue purpose statement for a gas franchise fee set at 2 percent.

The council followed that resolution with an ordinance granting Iowa Power and Light — Alliant Energy — a 25-year non-exclusive gas franchise and to set the franchise fee at 2 percent.

The council approved the first reading of the ordinance and waived the second and third readings.

Cincinnati residents who use natural gas supplied by Alliant Energy will have the 2 percent franchise fee added to their monthly bill.

The money collected from the franchise fee will go back to Cincinnati’s general fund budget.

The Daily Iowegian last week placed two telephone calls to the mayor of Cincinnati to ask about the franchise fee and revenue purpose statement but he never responded to our request for a return call.

Iowa code requires municipalities adopt a revenue purpose statement, which spells out what the franchise fee can be used for or spent on.

Items a through i are allowed uses for franchise fee revenues as established by Iowa Code:

a. Inspecting, supervising and otherwise regulating each franchise approved by the City.

b. The repair, remediation, restoration, cleanup, replacement and improvement of existing public improvements and other publicly owned property, buildings and facilities.

c. Projects designed to prevent or mitigate future disasters as defined in Iowa Code Section 29c.2.

d. Energy conservation measures for low-income homeowners, low-income energy assistance programs and weatherization programs.

e. Public safety including the equipping of fire, police, emergency services, sanitation, street and civil defense departments.

f. The establishment, construction, reconstruction, repair, equipping, remodeling and extension of public works, public utilities and public transportation systems.

g. The construction, reconstruction, or repair of streets, highways, bridges, sidewalks, pedestrian underpasses and overpasses, street lighting fixtures, public grounds and the acquisition of real estate needed for such purposes.

h. Property tax abatements, building permit fee abatements and abatement of other fees for property damaged by a disaster as defined in Iowa Code Section No. 29C.2

i. Economic development activities and projects.

The city of Centerville is moving toward a natural gas and electric franchise fee with Alliant Energy.

The council approved a resolution on Monday, March 3 to adopt a revenue purpose statement for the use or expenditure of fee revenues from electric and natural gas franchise fees for Centerville.

The council on Monday, March 17 set a public hearing date for Monday, April 7 at 5:30 p.m. at City Hall for electric and natural gas franchise(s).

Patrick Antonen, city administrator, said the city is looking at a 3 percent natural gas and electric franchise fee. He said state law allows up to 5 percent franchise fees.

Antonen said the franchise fee will replace the 1 percent Local Option Sales and Service Tax being charged for electric and natural gas services from Alliant.

“You can’t have both,” Antonen said about the franchise fee and LOSST. “You can have one or the either.”

Alliant Energy customers only need to look at their billing statement to see their electrical charges are multiplied by the 1 percent LOSST.

By going from the LOSST 1 percent to the 3 percent franchise fee, the city gains 2 percent to address infrastructure needs and utility customers’ bills go up by 2 percent.

Antonen said the revenue purpose statement allows the city to do a lot of good things.

One area of focus for the city is item G, Antonen said: The construction, reconstruction, or repair of streets, highways, bridges, sidewalks, pedestrian underpasses and overpasses, street lighting fixtures, public grounds and the acquisition of real estate needed for such purposes.

“That’s the big one that this franchise fee will go towards, is infrastructure,” Antonen said. “Because, you look at our streets. They’re in disrepair right now. We have a lot of roads to repair.”

Antonen said the city will need to raise additional money because it is looking at a projected $200,000 deficit in the next 10 years due to the state property tax valuation rollback on commercial and multi-family dwellings. The deficit is according to what the Iowa League of Cities has projected for Centerville, Antonen said.

The state property tax rollback takes what started at 100 percent down to 95 percent this year and 90 percent next year, Antonen said.

“We’re going to have a deficit here with our taxable valuations,” Antonen said. “So the city will be losing out on that property tax valuation.”

More than 80 Iowa communities have adopted franchise fees, Antonen said. Those communities are both large and small and include Exline, Chariton, Knoxville, Oskaloosa, Des Moines and West Des Moines.

“Most cities are switching over to the franchise fee,” Antonen said.

Some communities, like Storm Lake and Albert City, authorized a 3 percent franchise fee in October of 2013. Central City authorized a 5 percent franchise fee in April of 2012.