IC supports fire station, looks at franchise fees

May 28, 2009

By Gregg Hennigan

IOWA CITY – The City Council tonight once again pledged support for a long-discussed new fire station — and utility customers may be paying more for gas and electric service to make it happen.

Council members were unequivocal that a fire station would finally be built on the northeast side of town, where response times lag. They even said they’d like to start construction in the coming months, and Fire Chief Andy Rocca said it would take about 14 months to complete.

This council and previous ones have long said they want to build a station, which would be the city’s fourth, but have been unwillingly to pay for the extra firefighters needed to staff it.

A new state law may give the council its chance. Gov. Chet Culver signed a bill on Tuesday that allows cities to impose franchise fees of up to 5 percent on gas and electric service

In Iowa City, every 1 percent on gas and electric utilities would generate an estimated $360,000 and $490,000 annually, respectively, according to Interim City Manager Dale Helling.

Local-option sales taxes, like the one Iowa City voters just approved, cannot be collected on natural gas and electric utilities if a franchise fee is in place, so Helling suggested the first 1 percent of the fee be used to offset the lost tax revenue, which is to go toward flood-related projects.

But even at 4 percent, the money brought in would be significant, at up to $1.96 million on electric and $1.44 million on gas annually, according to city estimates.

Council members said they needed more information on the fees and will discuss them at an upcoming meeting. But they strongly indicated they would favor imposing the fees to pay for the fire station.

“We’ve been handed an opportunity with franchise fees,” Mayor Regenia Bailey said.

Added Connie Champion, “I don’t think we have a choice.”

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