FRANCHISE FEES: How City Plans To Pay Back Money

The Des Moines City Council met Monday night to discuss how to pay the more than $40 million in franchise fee refunds it owes to Des Moines residents.

A judge ruled the fee charged on utility between 2004 and 2009 was an illegal tax, Monday night the council looked at several options to pay back the money.

“What`s it’s going to require is that we deposit $41 million with the courts in the very near future,” says Des Moines City Manager Rick Clark.

Clark laid out the city’s options to pay back the franchise fee refund.

“We don`t have $41 million lying around anywhere so tonight the council is considering at this hearing the issuance of $41 million of general obligation bonds,” says Clark.

Two options were presented to the council to pay back those bonds.

The first would increase property taxes by 41 cents per $1,000 in taxable value for the next 20 years.

The second would raise the current franchise fee 2.5% for the next 7 years.  That option requires voter approval.

City Council Member Brian Meyer doesn’t like either option.

“I`m consistent on not supporting anything that will be longer than a few years to pay it back,” says Meyer.

Meyer wasn’t on the City Council when the council first voted on franchise fees and says he will continue to stay out of the issue.

Under the second option, the $5 franchise fee on a $100 MidAmerican Energy bill would jump to $7.50.

That works out to an increase of $30 a year or $210 for the entire 7-year period.

City council member Bob Mahaffey says because roughly 40-percent of Des Moines property is tax exempt, he prefers raising the franchise fee.

“They will also be paying into the franchise fee for the usage of whatever utilities they use, so it will reduce the amount that the residents would have to pay,” says Mahaffey.

The city council voted Monday 6 to 1 to move forward with issuing the bonds.

They don’t have to decide which option they will choose to pay back the bonds until they submit the 2015 fiscal budget in March of 2014.

8 comments

    • dave

      an’t that the truth Todd. This is that same city council that wouldn’t allow,(took money from under the table from MediaCom),a cable co. from Cedar Rapids to start up here and compete with Mediacom!!!!!!!!!!!
      .

  • Rick Weir

    I think that should be illegal to make us pay it back by raising our taxes etc. How does that work, they charge us for things that were wrong and then raise taxes or fees so they can pay us back. If that’s the case we would be better off to just forgive them for that money so we do not have to pay higher taxes. It looks like no matter what we are still going to pay for it one way or another.

  • Sharon

    I was thinking the EXACT same thing ^. They charged us wrongly, going to refund it cuz they got caught and then we give it back to the city. I call BS!

  • James

    Thank the women that started the lawsuit. We all knew from the begining if found wrong we would just be charged another way.

  • John

    The city illegally took money from us and spent it. The only just way for the city to pay us back is to cut spending and make room in their budget for restitution payments. Delay some road improvements and repairs, put nonessential employees on short work weeks. Don’t ask the victims to make restitution to themselves.

  • Lisa

    The winners here – the attorneys who are claiming $15 million of our tax dollars for waging this fight. The city taxes us wrongly, gets caught, we have to pay them more in taxes because of it, and the lawyers laugh the whole time.

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