Grimes council adopts 3% franchise fee on utilities to fund public safety

The Grimes City Council on May 26 approved ordinance A12 to impose a 3% franchise fee on Black Hills Iowa Gas Utility Company LLC, Black Hills Energy and MidAmerican Energy Company, directing revenue exclusively to public safety programs. Staff estimated the fee would generate about $700,000 annually.

Jake, a city staff member presenting the ordinance, said, “It will generate $700,000 a year,” and reminded the council the city adopted a revenue purpose statement limiting use of the funds to public safety. He framed the measure as a response to rising public-safety needs and limits on property-tax growth imposed by state law.

Councilmember Johansen said he opposed the measure and reiterated prior objections to the funding approach. “So while I'll be voting no tonight, what this money is going to fund is largely needed,” Johansen said, expressing concern about the funding mechanism but acknowledging public-safety needs.

After discussion the council took roll-call votes on third consideration and then on final passage. The final roll call showed a majority in favor and the ordinance passed; Johansen voted no. The city cited Iowa Code sections 364.2 and 384.3A during the presentation as the statutory authority for municipal franchise agreements and fees.

The city will implement the fee following final adoption; staff said the revenue will be earmarked for public-safety uses as described in the council's revenue purpose statement. The council thanked staff and members of the public for questions and engagement during the ordinance process.