Waukee residents may see new fees on their electric and natural gas utility bills.
Waukee City Council approved ion Monday, Dec. 1, a first reading of an ordinance that would establish 2% franchise fees. But city officials still expect residents would have lower gas bills overall because of the sale of its natural gas system to MidAmerican Energy Co. this year.
Waukee closed the sale in October after voters in March approved the move as a cost-saving measure. City officials estimate Waukee natural gas customers will see their bills decrease 20% to 25% under MidAmerican, according to city documents.
The average resident may see a combined $16 increase to their annual electric and gas costs from the proposed franchise fees. But the city expects the average resident to save $225 annually on their gas bills because the city no longer operates its own natural gas utility — leaving residents to still potentially save $209 after the fees. MidAmerican can provide cost savings through scale, the city previously said.
Waukee selected MidAmerican to buy the gas system for almost $18.8 million. Despite the windfall, selling the gas system means the city is no longer collecting revenue from it.
Waukee City Administrator Brad Deets told City Council on Dec. 1 the sale resulted in projected lost revenue of more than $983,000. That’s money that paid for positions in the city’s public works and other departments including administration, finance, human resources and information services.
The proposed 2% franchise fees would backfill the lost revenue. But it would effectively be just a 1% increase on customers’ utility bills because the city already collects a 1% sales tax on electric and gas utilities that would be replaced by the franchise fees.
Franchise fees allow cities to charge utility providers up to 5% of gross revenue that’s generated within the city. Cities can take in beyond what it costs to inspect and regulate utility infrastructure and put the money toward specific purposes, including paying for fire and police services, property tax relief, public building improvement, street repair and economic development.
The franchise fees would replace the utility sales tax, which also means the city would get to keep all of the generated revenue instead of its current almost 19% cut of the sales tax revenue distributed by the county based on a state formula.
One resident, Justin Richeson, spoke Monday against the proposed franchise fees.
“We all voted to move utilities because it all cost too much,” he said. While Richeson added he would be fine with the city matching to the current tax level in order to retain jobs, he said it should not be above that level — “not another dime.”
City spokesperson Heather Behrens said in an interview Wednesday the city would not be getting any extra money from the franchise fees — only enough to cover the revenue needed to backfill paying for the city jobs the gas system had supported.
Deets told City Council that collecting money through franchise fees is a cheaper option for homeowners than an increase to property taxes. Generating $983,000 through increased property taxes would result in a more than $92 annual increase on a $400,000 home, he said.
The next reading of the proposed franchise fee ordinance will be at the 5:30 p.m., Dec. 15 Waukee City Council meeting, where residents can share their thoughts. Questions about how the franchise fees would work can also be sent to communications@waukee.org.
Most cities in Des Moines metro have franchise fees
Waukee is one of the last remaining cities in the Des Moines metro that does not have franchise fees. Bondurant, Grimes and Urbandale are the others that do not, Deets said.
Waukee’s plans for the proceeds from MidAmerican sale
Behrens said the proceeds from the gas system’s sale would be applied toward the civic campus project.
The city is taking on the estimated $400 million civic campus project over the coming decades to build a neighborhood around a new City Hall and public library, townhomes, housing for seniors, commercial space, a lake and a full 18-hole Sugar Creek Golf Course.
It may be seven to 10 years until there are any buildings at the civic campus site — a 220-acre area stretching from University Avenue in the north to 310th Street in the south and from U Avenue in the west to Sixth Street in the east.
(This story has been edited to correct an inaccuracy and add new information.)
Phillip Sitter covers the suburbs for the Des Moines Register. Phillip can be reached via email at psitter@gannett.com. Find out more about him online in the Register’s staff directory.
This article originally appeared on Des Moines Register: Waukee may get a new fee on utility bills. What it would mean.
Reporting by Phillip Sitter, Des Moines Register / Des Moines Register
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