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Council passes extra fee

BY SCOTT RAYNOR | DECEMBER 08, 2009 7:30 AM

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Iowa City residents will see an extra tax on their utility bills next spring if the Iowa City City Council upholds its decision to impose a 2 percent franchise fee.

The council voted 4-2 Monday night to pass the fee after failing to pass an amendment that would have lowered it to 1 percent. Councilor Amy Correia did not attend the meeting, and the council split 3-3 on the amendment.

The council also failed to pass two motions of deferral, both ending in a 3-3 vote.

The first requested to move the vote until Jan. 12, 2010, when new councilors would be in office.

Councilor Matt Hayek then wanted to move the vote until the next council meeting so all seven council members would be able to vote on the proposal.

“We are running into a constitutional crisis with not having a seventh member,” he said.

The franchise fee will impose a tax on MidAmerican Energy, which the company will pass on to its customers. Revenue from the tax — which officials estimate will be around $745,000 annually — will go toward public-safety initiatives, including funding a new fire station.

The council delayed the franchise fee vote at last Tuesday’s meeting in anticipation of more firm numbers on property-tax revenue. These numbers could have indicated if any additional property taxes could cover the cost of the fire station, in turn only requiring a 1 percent franchise fee.

Interim City Manager Dale Helling told the City Council that with the city’s projected tax revenue, a franchise fee of less than 2 percent would be feasible.

But Mayor Regenia Bailey had a problem with the amendment. She said the city will likely need more staffing for the fire station than what is currently expected.

“We know what we would hire for the 2 percent franchise fee,” she said. “I just feel I don’t have enough information to vote for an amendment at this time.”

Many agreed they would try to decrease the fee by 1 percent before it goes into effect this spring.

“I think there is so much openness to dampening the effect on those entities that are hit hardest by the franchise fee,” Helling said. “I would foresee us looking for ways to shave back a 2 percent hit.”

Councilor Mike O’Donnell noted it will be easier to lower, rather than raise, the fee 1 percent later on.

Still, Hayek said he would prefer the former.

“I’m of the mind that we should do 1 percent and know that we’d have to revisit it,” he said.

Champion said she was unsatisfied with the results of the meeting and still supported a 1 percent franchise fee.

“Dale has worked for the city for years,” she said. “If he thinks we can get away with 1 [percent], then we can do it.”


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