“User Fee” or “Harmful, New Tax”

Des Moines Right-of-Way Management Fee Proposal

On Monday, September 8, 2014 the City of Des Moines approved a first reading of an adjustment to their right-of-way management fees.  These are fees that are charged to utilities and other companies to reimburse the City for the costs it incurs by virtue of hosting utilities in the right-of-way.  It includes such things as the cost of designing and working around the utilities when city construction projects are undertaken; declines in remaining useful life of streets as a result of patching over right-of-way access points; extra operating costs, etc.  The City believes the Kragnes (franchise fee) case defined for them what charges are allowable, and it is proceeding accordingly.

The first reading of the ordinance passed 6 to 1, Councilman Coleman in opposition. The second reading is scheduled for Monday, September 22, 2014; there will also be a third reading.

The numbers are significant and fall largely on two utilities: CenturyLink (Qwest) and the Des Moines Water Works.  CenturyLink ‘s cost would go from $34,000 to (at the end of five years) $615,000, with DMWW experiencing something very similar.

Des Moines is looking for revenue and alternatives to property tax increases. The Taxpayers Association of Central Iowa supported the City in the franchise fee referendum for that reason.  However, at the time the Association took that position the Association was assured that cost reduction strategies would be instituted that would help mitigate the impact to citizens from the increase in the franchise fee.  Such cost cutting measures have not been forthcoming and instead the City is proposing this increased fee to be passed indirectly on to taxpayers though the utilities and private companies utilizing the ROW.

Below are links to materials that provide information about the ordinance, as well as an action alert issued by a coalition of ROW users.

The Taxpayers Association of Central Iowa supports full disclosure of information relating to major tax and fee proposals by governments in central Iowa.  We have reached out to the utilities companies and will post additional information as it becomes available.

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