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First, what is the proposed franchise fee?
It is a 5% fee on gas and electric utility bills to consumers in Marshalltown. Our 1% LOST (local option sales tax) will no longer be collected on these bills, so it's a net 4% fee to consumers.
How will the money be spent?
The money collected from the fee can only be spent according to the revenue purpose statement.
See https://bit.ly/3CEXnMX
A summary:
12% for property tax relief
9% maintenance of public facilities
9% for public safety
70% for roads
Who pays it?
Everyone who consumes gas or electric utilities except government entities. Households, businesses, restaurants, churches, and non-profits will pay the fee.
How much money are we talking about?
The city is estimated to collect $528,000 a year per 1% fee, so $2.65 million a year at 5%, but approximately 1% of that will be replacing the LOST that would no longer be charged on the utilities.
How much will it cost me?
Grab your utility bill and calculator. Take your bill and multiply it by .04. That will give you the dollar amount of your net increase.
I.e., If your gas and electric utilities cost $250/mo.: $250/mo. x .04 = $10/mo. == $120/yr.
Does any other city in Iowa do this?
Yes, 216 cities and towns in Iowa currently have some sort of franchise fee. Source:
https://bit.ly/3NHH1t6
Why do we need this?
The City of Marshalltown simply doesn't collect enough money to keep our streets repaired to the standards that the citizens and council would like. Local government has many duties and competing concerns for funding from our limited resources. With the average lifespan of roadways, the current condition is due to decades of insufficient funding in this area.
A 2018 Pavement Management study showed 66% of our total roadways were in fair or worse condition. In a new analysis that was done last fall, we expect to see the percentage of fair, poor, and very poor ratings increase due to the tornado and derecho cleanup activities in particular.
How will the money be spent?
The intention is to spend the $1.85 million road portion of this fee incrementally on projects. There will be other dollars from tax collections and bonding that we will continue to spend on road projects. This will give us enough dollars to increase the average quality of our roads rather than just battle the decay of time. And the spending power, as needed, to tackle large road projects.
How will you decide which roads get repaired or replaced first?
We intend to make data driven decisions about which roads need attention because of factors like usage and condition. Busier roads generally take precedence, but as busy roads get upgraded, we could then focus on the poorest quality roads.
We get periodic data from the DOT and Iowa State University about our road usage and pavement conditions. This data -- along with city inspection -- will be the basis for these decisions. We also intend to do repairs and replacements in the most economical manner. Repairing 4 consecutive blocks has an economic advantage over four non-adjacent 1-block repairs.
Will my house's street get replaced?
Perhaps. The takeaway is that the roads we all drive every day will get better.
It would take hundreds of millions of dollars and decades to replace every aged street in Marshalltown. Local road maintenance and repairs have been chronically underfunded for decades, and it's time to change this. It will take time to catch up -- even with $1.85 million more in new spending on roads every year. But don't give up hope! We won't need to replace every street, for many some maintenance will give a better ride and a long life.
With the franchise fee -- over time -- some roads will be replaced, and some will be repaired; so, the average condition of our streets will improve over time. In lieu of replacement, we'll use techniques like crack sealing, patching, replacing certain sections, leveling, and other proven techniques to upgrade our roads.
Will this fee sunset?
The gas and electric franchise agreements with Interstate Power & Light Company (Alliant) were adopted 4/9/07 for a period of 25 years so they will sunset 4/9/32. The new electric franchise agreement with Consumers Energy Cooperative would sunset in 25 years.
Resources: https://www.iowautility.org/about/franchise-fees/ and
https://iowaleague.org/resource/franchise-fees/.
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Jeff Schneider, Barry Kell and Gabe Isom are
members of the Marshalltown city council.