HomeMy WebLinkAbout2025-11-17 I01G_01 Franchise Fee Ordinance_Set PHAGENDA ITEM:
CITY OF WAUKEE, IOWA
CITY COUNCIL MEETING COMMUNICATION
MEETING DATE: November 17, 2025
AGENDA ITEM:Consideration of approval of a motion setting December 1, 2025 , as the
date of public hearing on an ordinance imposing a franchise fee of 2% of
the gross revenues derived by the MidAmerican Energy Company from
the transmission or distribution of electricity and natural gas to customers
within the corporate limits of the city pursuant to Iowa Code section
§364.2.
FORMAT:Motion
SYNOPSIS INCLUDING PRO & CON: Earlier this year, the City Council elected to place
consideration of the sale of the Waukee Municipal Gas Utility on a special election which was
overwhelmingly approved in March 2025. The City has recently completed the transaction and
the natural gas utility is now owned and operated by MidAmerican Energy Company. Based
upon the data provided by MidAmerican Energy, it is estimated that Waukee customers will see
as much as a 20% to 25% reduction in natural gas costs with the transition to MidAmerican
Energy.
There are several positions within the City organization that were partially supported by the
revenues of the gas utility including positions in administration, finance, human resources,
information technology and public works. In order to backfill the revenues lost with the gas
utility sale to support these functions, it is recommended that a franchise fee be adopted on both
the natural gas and electric utilities for customers within the City of Waukee.
State Code allows for cities to approve a franchise fee up to 5% for uses as described within the
revenue purpose statement as adopted by the City. The City of Waukee is one of only a few
within the Des Moines Metro that does not currently have a franchise fee which in other
communities range from 1% to 5%.
Staff is recommending that a Public Hearing be set for December 1, 2025 to consider approval of
a franchise fee on the electric and natural gas utilities in the amount of 2% which will be used to
replace revenues previously provided by the municipal natural gas utility to support several
departments within the City organization.
It should be noted that if adopted, the net increase to Waukee utility customers will be 1% versus
2%. Currently a 1% sales tax is collected on all electric and gas utility bills in the City of
Waukee. State Code does not allow both a franchise fee and a sales tax to be collected meaning
the franchise fee would replace the collection of the sales tax on utility bills. Sales tax is
collected at the County level and then distributed to each community based upon a formula as
established within State Code. Currently, the City of Waukee only receives 18.84% of the 1%
sales tax that is collected on Waukee utility accounts. If adopted, the City would receive 100% of
the franchise fee for use within the City of Waukee.
I1G1
FISCAL IMPACT INCLUDING COST/BENEFIT ANALYSIS:
City Staff completed an analysis on the impact of the proposed 2% franchise fee based upon the
average residential consumption of both gas and electric as follows:
Average Annual Residential Gas Cost (Municipal Utility): $1,021.00
Average Annual Residential Gas Cost (MidAmerican): $796.00
Anticipated Gas Cost Annual Savings: $225.00
Franchise Fee Implementation (assumes 1% increase due to elimination of current 1% sales tax)
Average Annual Residential Gas Cost Franchise Fee Increase: $6.00
Average Annual Residential Electric Cost Franchise Fee Increase: $10.00
Annual Franchise Fee Impact to Residential Customer: $16.00
Net Savings to Residential Customer (Gas Cost vs. Franchise Fee): $209.00
COMMISSION/BOARD/COMMITTEE COMMENT:
STAFF REVIEW AND COMMENT:
RECOMMENDATION: Staff recommends setting the Public Hearing Date for December 1,
2025 to discuss the proposed franchise fee implementation
ATTACHMENTS: I. Notice of Public Hearing
PREPARED BY:Brad Deets, City Administrator
REVIEWED BY:
PUBLIC NOTICE INFORMATION –
NAME OF PUBLICATION:
DATE OF PUBLICATION:
NOTICE OF PUBLIC HEARING
A PUBLIC HEARING WILL BE HELD ON AN ORDINANCE IMPOSING A
FRANCHISE FEE ON MIDAMERICAN ENERGY COMPANY IN THE AMOUNT OF
2% OF THE GROSS REVENUES DERIVED BY THE COMPANY FROM THE
TRANSMISSION OR DISTRIBUTION OF ELECTRICITY AND NATURAL GAS TO
CUSTOMERS WITHIN THE CORPORATE LIMITS OF THE CITY PURSUANT TO
IOWA CODE SECTION 364.2 (2025).
You are hereby notified that the City Council of the City of Waukee, Iowa, will hold a
public hearing on the 1st day of December, 2025 at 5:30 p.m. in the City Council Chambers, 230
West Hickman Rd., Waukee, Iowa, on the question of whether to adopt an ordinance imposing a
franchise fee of 2% of the gross revenues derived by the MidAmerican Energy Company from
the transmission or distribution of electricity and natural gas to customers within the corporate
limits of the city pursuant to Iowa Code section 364.2. A copy of the proposed ordinance is on
file and available for inspection at the City of Waukee City Hall located at the address set forth
above.
You are further notified that at the time and place aforesaid all persons desiring it will
have the opportunity to be heard for or against said proposal. The City Council, following
hearing, may take action on such proposal without further notice or opportunity for hearing.
You are further notified that the revenues received from the franchise fees collected will
be used as provided in the Revenue Purpose Statement adopted by the City Council of the City
of Waukee as follows:
REVENUE PURPOSE STATEMENT REGARDING USE OF REVENUE FROM NATURAL
GAS AND ELECTRIC FRANCHISE FEES
Pursuant to Iowa Code § 364.2(4)(f) the City of Waukee states that all revenue generated from
franchise fees assessed on the sales of natural gas and electricity within the City shall be
deposited in the franchise fee account in the general fund and shall be used to reimburse the City
for all costs associated with inspecting, supervising or otherwise regulating its franchises.
Moneys in the franchise fee account in the general fund in excess of the amounts necessary for
costs associated with inspecting, supervising or otherwise regulating its franchisees shall be
expended for any of the following:
a.The repair, remediation, restoration, cleanup, replacement, and improvement of existing
public improvements and other publicly owned property, buildings, and facilities.
b.Projects designed to prevent or mitigate future disasters as defined in Iowa Code Section
29C.2.
c.Energy conservation measures for low-income homeowners, low-income energy
assistance programs, and weatherization programs.
d.Public safety, including the equipping of fire, police, emergency services, sanitation,
street, and civil defense departments.
e.The establishment, construction, reconstruction, repair, equipping, remodeling, and
extension of public works, public utilities, and public transportation systems.
f.The construction, reconstruction, or repair of streets, highways, bridges, sidewalks,
pedestrian underpasses and overpasses, street lighting fixtures, and public grounds, and
the acquisition of real estate needed for such purposes.
g.Property tax abatements, building permit fee abatements, and abatement of other fees for
property damaged by a disaster as defined in section 29C.2.
h.Economic development activities and projects.
i.Property tax relief. The City will use the revenue collected from the gas and electric
franchise fee for the aforementioned purposes, and other lawful city purposes, which will
provide property tax relief in the form of a deposit to the City's general fund, and the use
of such fees collected to pay obligations that would otherwise be paid that fiscal year
with a property tax levy.
Rebecca D. Schuett, City Clerk