Norwalk council sets 1% franchise fee, approves first readings of MidAmerican gas and electric ordinances

The Norwalk City Council set a 1% franchise fee and approved first readings of separate ordinances renewing MidAmerican Energy Company's nonexclusive natural gas and electric franchises after public comment and a lengthy council debate on Thursday.

The council held two separate public hearings, one for the natural gas franchise and one for the electric franchise, before voting to set the franchise fee amount at 1% and to approve the ordinances'first readings. City attorneys and staff told the council the 1% fee would replace the local option sales tax line item that currently appears on utility bills; under that switch, staff said customers would not see an increase on their MidAmerican bills, and all of the revenue from that 1% would be retained by Norwalk rather than being distributed across Warren County under the current sales-tax allocation.

City Manager Luke Paris and City Attorney Jim (last name on the record as Jim) explained the legal process: the council must adopt franchise ordinances by ordinance readings; state law caps local franchise fees at 5% and preserves a petition process that can force a public vote if residents collect the required signatures. Paris and Jim told the council the staff recommendation was a 1% fee this year and that any future increase above that would require the same public hearing and could be petitioned to a public vote under Iowa Code.

Residents who spoke during public comment expressed mixed views. Lynn Dewey told council she supported keeping the fee at 1% but opposed any higher rate, asking council to build in "guardrails" against future increases. Another speaker, Vaughn Breese, urged caution about tax increases and questioned the city's spending priorities in general.

Council members debated whether to set the rate at 1% (the staff recommendation) or higher. Councilmember Jackie (last name on the record as Jackie in transcript) argued for a larger fee (advocating for 2%) to provide more immediate revenue to cover projected shortfalls in the coming fiscal years; other council members said increasing beyond 1% risked triggering a petition and a public vote after budget adoption and would expose the city to a mid-year revenue shortfall if a petition succeeded.

To resolve the immediate procedural question, Councilmember Brown moved, and Councilmember Meineke seconded, a motion to set the percentage in the franchise ordinances to 1%. The roll call on the motion to set the percentage to 1% recorded the following votes: Councilmember Baker: yes; Councilmember Brown: yes; Councilmember Cool: yes; Councilmember Livingston: no; Councilmember Meineke: yes. After that vote, the council voted to approve the first reading of the ordinance granting the natural gas franchise and separately approved the first reading of the ordinance granting the electric franchise; those first-reading votes were recorded in the public minutes and the ordinance process will continue to the required subsequent readings.

City staff told the council that the fiscal impact of switching from the county-distributed local option sales tax to a city franchise fee is roughly $100,000 in additional revenue projected for FY2026; staff said that figure has been incorporated into the FY2026 draft budget. Staff also reminded council that some types of users (for example, tax-exempt entities) do not currently pay the local option sales tax and that any future change in the fee percentage would again be subject to legal notice, public hearings and the signature-petition option available under state law.

The council recessed after the votes and will consider further ordinance readings and any petition filings in future meetings.

Votes at a glance - Ordinance (first reading): Grant nonexclusive natural gas franchise to MidAmerican Energy Company; franchise term 25 years; council set the franchise-fee percentage at 1% (motion to set percentage: Baker yes; Brown yes; Cool yes; Livingston no; Meineke yes). Outcome: first reading approved. - Ordinance (first reading): Grant nonexclusive electric franchise to MidAmerican Energy Company; franchise term 25 years; council set the franchise-fee percentage at 1% (motion and roll call for ordinance first reading carried). Outcome: first reading approved.

What happens next The ordinances require subsequent readings before final adoption. Under Iowa Code the public may gather signatures on a petition to require a citizen referendum on any franchise fee increase; staff reminded the public that petitions must meet statutory signature thresholds and deadlines in order to force an election.

Documentation of public comment and staff estimates of revenue from the franchise fee are part of the FY2026 budget documents that staff presented simultaneously with this item.