Senate Study Bill 1115 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON LOCAL GOVERNMENT BILL BY CHAIRPERSON WEBSTER) A BILL FOR An Act relating to approval requirements for city utilities. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 2373XC (2) 91 sb/js
S.F. _____ Section 1. Section 364.2, subsection 4, paragraphs a, b, and 1 c, Code 2025, are amended to read as follows: 2 a. A city may grant to any person a franchise to erect, 3 maintain, and operate plants and systems for electric light 4 and power, heating, telegraph, cable television, district 5 telegraph and alarm, motor bus, trolley bus, street railway or 6 other public transit, waterworks, sewer services, or gasworks , 7 within the city for a term of not more than twenty-five years. 8 When considering whether to grant, amend, extend, or renew a 9 franchise, a city shall hold a public hearing on the question 10 follow the same procedure for approval as provided in section 11 364.7 . Notice of the time and place of the hearing shall be 12 published as provided in section 362.3 . The franchise may be 13 granted, amended, extended, or renewed only by an ordinance, 14 but no exclusive franchise shall be granted, amended, extended, 15 or renewed. 16 b. Such an ordinance shall not become effective unless 17 approved at an election. The A proposal may be submitted 18 by the council on its own motion to the voters at any city 19 election or by petition of eligible electors . Upon receipt of 20 a petition meeting the requirements of section 362.4 requesting 21 that a proposal be submitted to the voters, the council shall 22 submit the proposal at the next regular city election or at 23 a special election called for that purpose before the next 24 regular city election. However, the city council may dispense 25 with such election as to the grant, amendment, extension, or 26 renewal of an electric light and power, heating, waterworks, 27 sewer services under section 357A.23 , or gasworks franchise 28 unless there is a valid petition requesting submission of the 29 proposal to the voters, or the party seeking such franchise, 30 grant, amendment, extension, or renewal requests an election. 31 If a majority of those voting approves the proposal, the city 32 may proceed as proposed. The complete text of the ordinance 33 shall be included on the ballot if conventional paper ballots 34 are used. If an optical scan voting system is used, the 35 -1- LSB 2373XC (2) 91 sb/js 1/ 7
S.F. _____ proposal shall be stated on the optical scan ballot, and the 1 full text of the ordinance posted for the voters pursuant to 2 section 52.25 . All absentee voters shall receive the full text 3 of the ordinance . 4 c. Notice of the election shall be given by publication 5 as prescribed in section 49.53 in a newspaper of general 6 circulation in the city. 7 Sec. 2. Section 380.3, Code 2025, is amended to read as 8 follows: 9 380.3 Two considerations before final passage how waived. 10 1. A proposed ordinance or amendment must be considered 11 and voted on for passage at two council meetings prior to 12 the meeting at which it is to be finally passed, unless this 13 requirement is suspended by a recorded vote of not less than 14 three-fourths of all of the members of the council. If a 15 proposed ordinance, amendment, or resolution fails to receive 16 sufficient votes for passage at any consideration and vote 17 thereon, the proposed ordinance, amendment, or resolution shall 18 be considered defeated. 19 2. Notwithstanding subsection 1, a proposed ordinance under 20 section 364.2, subsection 4, may be passed following the same 21 procedure for approval as provided in section 364.7. 22 Sec. 3. Section 388.2, Code 2025, is amended to read as 23 follows: 24 388.2 Submission to voters council . 25 1. a. The proposal of a city to establish, acquire, 26 lease, or dispose of a city utility, except a sanitary sewage 27 or storm water drainage system, in order to undertake or to 28 discontinue the operation of the city utility, or the proposal 29 to establish or dissolve a combined utility system, or the 30 proposal to establish or discontinue a utility board, is 31 subject to the approval of the voters of the city, except that 32 a same procedure for approval as provided in section 364.7. 33 Additionally, a board may be discontinued by resolution of the 34 council when the city utility, city utilities, or combined 35 -2- LSB 2373XC (2) 91 sb/js 2/ 7
S.F. _____ utility system it administers is disposed of or leased for a 1 period of over five years. 2 b. Upon the councils own motion, the proposal may be 3 submitted to the voters at the general election, the regular 4 city election, or at a special election called for that 5 purpose. Upon receipt of a valid petition as defined in 6 section 362.4 , requesting that a proposal be submitted to the 7 voters, the council shall submit the proposal at the next 8 regular city election. 9 c. If the special election is to establish a gas or electric 10 utility pursuant to this section , or if such a proposal is 11 to be included on the ballot at the regular city or general 12 election, the mayor or council shall give notice as required by 13 section 376.1 to the county commissioner of elections and to 14 any utility whose property would be affected by such election 15 not less than sixty days before the proposed date of the 16 special, regular city, or general election. 17 d. A proposal for the establishment of a utility board must 18 specify a board of either three or five members. 19 2. a. If a majority of those voting for and against 20 the proposal approves the proposal, the city may proceed as 21 proposed. 22 b. If a majority of those voting for and against the 23 proposal does not approve the proposal, the same or a similar 24 proposal may not be submitted to the voters of the city for at 25 least four years from the date of the election at which the 26 proposal was defeated. 27 Sec. 4. Section 388.2A, Code 2025, is amended to read as 28 follows: 29 388.2A Procedure for disposal of city utility by sale. 30 1. A proposal to discontinue a city utility and dispose of 31 such utility by sale, whether upon the councils own motion 32 or upon the receipt of a valid petition pursuant to section 33 388.2, subsection 1, paragraph b , shall not be submitted 34 to the voters of the city pursuant to section 388.2 at any 35 -3- LSB 2373XC (2) 91 sb/js 3/ 7
S.F. _____ election unless the governing body of the city utility meets 1 the requirements of this section shall meet the requirements of 2 this section before a final determination is made . 3 2. a. (1) The governing body of the city utility shall 4 determine the fair market value of the utility system after 5 obtaining two appraisals of the systems fair market value. 6 One appraisal shall be obtained from an independent appraiser 7 selected by the governing body, and the other appraisal shall 8 be obtained from an independent appraiser approved by the Iowa 9 utilities commission. Both appraisals shall be conducted 10 in conformance with the uniform standards of professional 11 appraisal practice or substantially similar standards. 12 (2) Any appraisal obtained pursuant to this paragraph 13 shall consider the depreciated value of the capital assets 14 to be sold, the loss of future revenues to the city utility, 15 including the right to generate surpluses, and the cost of any 16 capital improvements reasonably necessary to provide adequate 17 service and facilities to the city utilitys customers. 18 b. After considering the appraisals obtained pursuant to 19 paragraph a , the governing body shall establish the city 20 utilitys fair market value. The fair market value shall be 21 the greater of any of the following: 22 (1) The average of the two appraisals obtained pursuant to 23 paragraph a . 24 (2) The depreciated value of the capital assets to be sold. 25 (3) The amount necessary to retire all of the citys 26 outstanding revenue and general obligations issued for purposes 27 of the city utility. 28 c. The governing bodys determination of a city utilitys 29 fair market value pursuant to this subsection shall not be 30 dispositive of the city utilitys system price, which shall be 31 subject to negotiation by the governing body. 32 d. The governing body shall prepare an inventory of the 33 city utilitys real and personal property, and a statement of 34 net position or balance sheet of the city utility, including 35 -4- LSB 2373XC (2) 91 sb/js 4/ 7
S.F. _____ all assets, liabilities, outstanding revenue and general 1 obligations used to finance the city utility system. 2 e. The governing body shall prepare a financial information 3 statement of the city utility that includes current and 4 projected rate schedules for the next five fiscal years, as 5 well as the five most recent fiscal year revenue statements, if 6 such statements exist, and a projection of the city utilitys 7 revenue statements for the next five fiscal years. 8 f. The governing body shall consider alternatives to 9 disposing of the city utility system by sale, including 10 entering into an agreement pursuant to chapter 28E , or into a 11 finance agreement, purchase agreement, or lease agreement with 12 another entity described in section 476.1, subsection 3 . 13 g. (1) The governing body shall make available on its 14 internet site, at least sixty thirty days prior to submitting a 15 proposal for election pursuant to section 388.2 , a copy of each 16 item listed in paragraphs a through f of this subsection . 17 (2) If, at the time of posting information pursuant to 18 subparagraph (1), the governing body has received any offers or 19 appraisals of fair market value from any prospective purchasers 20 of the city utility system in connection with a proposal to 21 discontinue the city utility and dispose of such utility by 22 sale, then the governing body shall make available on its 23 internet site each offer and appraisal then in existence. 24 Proprietary information of a rate-regulated public utility 25 under chapter 476 that is exempt from disclosure pursuant to 26 section 22.7 may be withheld from disclosure on the governing 27 bodys internet site. The governing body may continue to 28 receive new or revised offers or appraisals thereafter. 29 (3) The governing body shall make a good-faith effort to 30 provide, by regular mail to each property owner of the city and 31 each ratepayer of the city utility, a notice of the proposal to 32 dispose of the city utility by sale, a summary of the proposal, 33 a summary of the information described in subparagraphs (1) and 34 (2), and instructions for locating the information described 35 -5- LSB 2373XC (2) 91 sb/js 5/ 7
S.F. _____ in subparagraphs (1) and (2) on the governing bodys internet 1 site. 2 3. Upon the governing body meeting the requirements 3 of subsection 2 , a city council may submit a proposal to 4 discontinue and dispose of a city utility pursuant to section 5 388.2 . 6 4. If a proposal to discontinue and dispose of a city 7 utility is to be submitted to voters following the receipt 8 of a valid petition pursuant to section 388.2, subsection 1 , 9 paragraph b , the council shall submit the proposal at the next 10 general election, regular city election, or a special election 11 called for that purpose, within one hundred twenty days after 12 the governing body of the city utility meets the requirements 13 of subsection 2 . 14 5. 4. A proposal to discontinue and dispose of a city 15 utility by sale that is approved by the voters pursuant to 16 section 388.2 , subsection 2, paragraph a , shall not require 17 the governing body or any purchasing entity to finalize a sale 18 of the city utility. 19 6. No action may be brought which questions the legality of 20 the election or the city and governing bodys compliance with 21 this section , except as provided in section 57.1 , within twenty 22 days of the canvass of votes for the election by the county 23 board of supervisors. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanations substance by the members of the general assembly. 27 This bill relates to approval requirements for city 28 utilities. 29 Under current law, when a city is considering whether to 30 grant, amend, extend, or renew a franchise within the city, a 31 public hearing must be held. After the public hearing, the 32 franchise may be granted, amended, extended, or renewed only 33 by an ordinance, and is not effective unless approved at an 34 election. Generally, an ordinance must be considered and voted 35 -6- LSB 2373XC (2) 91 sb/js 6/ 7
S.F. _____ on for passage at two council meetings prior to the meeting at 1 which the ordinance is to be finally passed. The bill provides 2 that after the public hearing, the city council may make the 3 final determination on whether to grant, amend, extend, or 4 renew the franchise. The bill allows the city council to make 5 the final determination in a single meeting. 6 Under current law, a proposal of a city to establish, 7 acquire, lease, or dispose of a city utility, in order to 8 undertake or to discontinue the operation of the city utility, 9 or the proposal to establish or dissolve a combined utility 10 system, or the proposal to establish or discontinue a utility 11 board, is subject to the approval of the voters of the city. 12 Under the bill, the approval requirement is changed to require 13 the city council to set forth its proposal in a resolution and 14 publish notice of the resolution and of a date, time, and place 15 of a public hearing on the proposal. The bill provides that 16 after the public hearing, the city council may make the final 17 determination on the proposal by resolution. 18 Under current law, a proposal to discontinue a city utility 19 and dispose of such utility by sale, whether upon the city 20 councils motion or upon the receipt of a valid petition is 21 subject to the approval of the voters of the city. The city 22 must make the proposal available at least 60 days before 23 submitting a proposal for the election. Under the bill, the 24 approval requirement is changed to require the city council 25 to set forth the proposal in a resolution and publish notice 26 of the resolution and of a date, time, and place of a public 27 hearing on the proposal at least 30 days before the hearing. 28 The bill also provides that after the public hearing, the city 29 council may make the final determination on the proposal by 30 resolution. 31 -7- LSB 2373XC (2) 91 sb/js 7/ 7