SHELDON—After months of debating with constituents, the Sheldon City Council dropped the fee portion of its proposed electric and natural gas franchise ordinances with MidAmerican Energy Co. when it met Wednesday, Aug. 21.
However, the council did pass the second reading of the ordinances and will hold a third reading at its Sept. 4 regular meeting.
Additionally, with the fees off the table, the council could implement the agreement without a public vote, an option it previously approved on June 5 after mayor Greg Geels suggested it at during the May 1 meeting.
“If the council chooses to move forward without the fee, if the fees were to be added in later, it would trigger another round of public hearings and a potential vote,” said city manager Sam Kooiker.
“It’s not something that we could just add to the budget, we would have to go through the process.”
The decision to drop the fees was not unanimous by the council.
Councilman Brad Hindt was the lone “no” on each vote — one for gas, one for electric — while councilmen Wayne Barahona, Shawn Broesder and Pete Hamill voted “yes.” Councilman Tom Eggers was absent.
“Without the fees, I think we can have some intelligent conversation,” said Hamill, who made the motion to drop the fees.
The fee portion of the ordinances would have supported Sheldon’s four emergency agencies — Sheldon Emergency Service Agency, Sheldon Community Ambulance Team, Sheldon Fire Co. and Sheldon Police Department.
Hindt, who also is on the fire department, argued that without the fee in place, the property tax levy in Sheldon would have to go up to support the city’s emergency services in the future which in turn also would raise rents.
“If you have the franchise fee, it spreads it out; not just to the property owners but spreads it amongst everybody that has a utility bill with the exception of the schools,” Hindt said.
Under Sheldon’s proposed ordinances, residents would have to pay a 5 percent fee on their MidAmerican gas and electric bills. Nonresidential customers would pay a 2 percent fee and city accounts as well as public and private schools including Northwest Iowa Community College in Sheldon are excluded.
At a 5 percent rate, a person with a $100 electric bill would pay an additional $5 on their bill. Estimates from MidAmerican — based on 2018 billing — show the city could collect $355,000 annually with a franchise fee set at 5 percent for residential customers and 2 percent for nonresidential customers.
Approximately 37.5 percent of those funds would be used to replace the city’s local option sales tax while the remaining amount would be used to support the city’s emergency services.
Those funds can be used for equipment or for the construction, reconstruction or repair of public grounds associated with public safety.
The decision to eliminate the fees came 53 minutes into the meeting after comments — some of which were heated — from about seven people not including the council.
Some speakers did not support the fee, some did support them and some supported the agreement but not the fees tied to them.
Former mayor Tricia Meendering, also general manager of the city-owned Crossroad Pavilion, came out in favor of the fees and agreement.
“If our emergency services care or cost budget goes down, are we going to have the top equipment? It’s not about a shiny firetruck — though they do look good — it’s about the best equipment, best service we can provide,” she said.
“If that goes down, our care goes down, our volunteers go down and when I need to call 911 someday — God forbid — I need them to be the best that they can be. If we ever have to take away from that — God forbid — we have to take away growth.”
Lori Anderson, who has been against the fees and agreement, questioned why Sheldon needed the agreement since MidAmerican has operated without for 32 years.
“Have we had any kind of legal ramifications for not having a franchise with MidAmerican?” Anderson asked.
“No,” said MidAmerican franchise manager Mark Reinders.
“So what is the impetus of moving so quickly on said franchise?” she asked. “Forget about the fees; why do it?”
Hamill said under a franchise agreement, MidAmerican would cover relocation expenses for utility lines if the city were to widen streets. Without the agreement, he said MidAmerican could charge the city for that service.
“To me, that could be huge,” Hamill said.
“Could be, do you have big plans to widen a bunch of streets in town?” Anderson asked Hamill.
“We did, but decided not to,” he said.
“So therefore it’s not really an issue,” Anderson said.