A Polk County judge has signed off on a plan to reimburse Des Moines utility customers nearly $40 million from a class action lawsuit.
In 2004 a Des Moines woman sued the city and won, claiming it was illegally charging franchise fees on utility bills. Last year, the Supreme Court upheld that ruling and ordered the city to repay $39 million to customers.
The city has been working for more than a year to come up with a plan to return the money.
On Wednesday, Judge Joel Novak formally approved a plan to pay customers back who held accounts between September 1, 2004 and May 26, 2009.
Legal fees and costs must still be determined before customers are reimbursed. Notices will then be mailed out.
According the plaintiff’s attorney, no one should be owing anybody money in the first place.
“If the city had simply stopped when we told them to stop in 2004 when we filed the lawsuit there would be no money to pack back, there`d be no attorney`s fees, no cost, all they had to do was stop when we told them that it was illegal,” says Brad Schroeder.
City manager Rick Clark told Channel 13 he is glad all of this is coming to a close. However, the city now faces a $40 million bill which is about 25 percent of the annual budget.
One option is to borrow money and use property taxes to pay off the refunds or if the public approves, the city could increase a franchise fee to pay off the debt.
Dipping into this year’s budget is not an option.