City council to vote in two weeks on franchise fee and bonding for street repair work to free up city funds
BY CHUCK VANDENBERG
FORT MADISON – After hearing a synopsis of the city’s five-year financial outlook, Fort Madison Mayor Matt Mohrfeld told the City Council he was putting a franchise fee vote on the agenda for the next meeting.
During Tuesday’s regular meeting, City Manager David Varley presented the city with a comprehensive look at what the city’s finances will be like in five years and what options there are to get the city on solid financial footing.
Varley said the city expenses, 81% of which are personnel costs, are about $400,000 more annually then the city is bringing in. He said the city has been surviving on one-time revenue influxes that can’t be counted on, and by dipping into fund reserves.
He said a franchise fee on natural gas and electricity is one answer, possibly combined with bonding for the rest of the Hwy. 61 improvements and moving the rest of that money in the Hwy. 61 fund into the city’s general fund.
Mohrfeld said he favored starting small with the franchise tax, a 1.5% initial fee and then phase it up with annual reviews of the city’s finances.
“I would like to see that phased up,” he said. “If you’re a corporation – if you’re Matt’s Greenhouse – Chief Mark (Rohloff) – we all have budgets. It’s easier to ratchet something up than it is to leap into it, so we need to watch and stair step it,” Mohrfeld said.
Varley said a 3% franchise fee closes the city’s gap for five years, builds up an adequate fund balance, and provides funds for other city projects. He said bonding for street projects also frees up money.
“If you did that and a smaller franchise fee you can kind of get the best of both worlds. You take care of the funding gap for five years and you have some funds available to do some other projects,” Varley said.
He mentioned building a new fire station, and shop for the Streets Department, as well as having some money left for additional city beautification efforts.
Mohrfeld told the council to be prepared to vote on both issues at the Sept. 29th meeting.
‘Next meeting there will be two things on the agenda. One is a franchise fee and the other is for bonding for street improvements and a proposal to use some of the money in the bank for reserve, and maybe some budget gap financing,” Mohrfeld said.
“Those will be separate agenda items and we will be able to discuss them, but that is coming for a vote next meeting.”
Councilwoman Rebecca Bowker, who has advocated for limited income residents and families when considering the franchise tax in past discussions, said the city may not have a choice.
“I have a tendency to agree with Mr. Mayor that I think we seriously need to consider a franchise fee, whether it’s 1% or 2%, whatever that looks like. I don’t think we have a choice,” she said.
“I know that’s not popular and I do express my concern for our lower income folks that may take that as an additional thing to struggle with.”
She said the tax will impose extra costs on industry, but she said those same entities enjoy the services the city provides, such as fire, police and streets.
Councilmen Kevin Rink and Tyler Miller both agreed that a 3% tax might be a better place to start as it would solve the problems for the long-term and would alleviate any city staff or program cuts.
Councilman Rusty Andrews said the city has talked about franchise fees for many years and it’s time to stop kicking the can down the road.
“Community’s not gonna to like it, industry isn’t gonna like it, but if we educate them and explain it well, they’ll understand it’s a necessary thing we’re gonna have to do.” he said.
The city actually has a franchise fee in place, it’s just set at 0% currently. Moving the percentage up to activate the collection again would take a vote of city council.
Mohrfeld asked city attorney Pat O’Connell of Lynch Dallas out of Cedar Rapids, if the vote would require a simple majority or a super majority and O’Connell said he would have to research the issue.
Iowa code caps franchise tax at 5% and typically it takes about six months for revenues to circulate back to the city at the outset. However, since the city has the ordinance for a franchise fee in place, it could take slightly less time for the city to start to see the revenue.
Councilman Mark Lair said he favored a closer look at the franchise fee, but didn’t support bonding for the Highway 61 work because he didn’t want any chance of losing the project.
“We’ve been working on that for too long and it needs completed,” Lair said.
Miller, who announced Monday he was resigning effective Wednesday, extended his time on council for two weeks after speaking with city staff on Tuesday. The next meeting will be his final meeting on the council.
Councilman Bob Morawitz was absent from the meeting, and according to Mohrfeld has been admitted to a hospice facility. Morawitz has been battling cancer.