IN THE SUPREME COURT OF IOWA

No. 40 /04-1914 

Filed April 14, 2006 

IOWA GROCERY INDUSTRY 

ASSOCIATION,

 Appellee, 

vs. 

CITY OF DES MOINES,

 Appellant. 

________________________________________________________________________ 

 Appeal from the Iowa District Court for Polk County, Robert L. 

Blink, Judge. 

 City appeals district court decision declaring a municipal 

ordinance which imposed administrative fees on liquor license and beer 

and wine permits illegal. AFFIRMED. 

 Mark Godwin, Des Moines, for appellant. 

 John F. Lorentzen of Nyemaster, Goode, West, Hansell & O’Brien, 

P.C., Des Moines, for appellee. 
2 

STREIT, Justice.

Arguments over government fees concerning liquor have swirled in 

a cocktail of political debate since the Whiskey Rebellion in 1794.1 Iowa 

grocers complain the administrative fees being charged by Des Moines on 

liquor licenses are illegal. The defendant, the City of Des Moines, 

appeals from the district court’s judgment declaring a municipal 

ordinance imposing administrative fees on liquor licenses and beer and 

wine permits illegal. The City claims the district court erred when it 

determined the Iowa Alcoholic Beverage Control Act conflicts with, and 

thereby preempts the administrative fee ordinance. Because we find the 

ordinance conflicts with the statutory scheme created for application 

fees, we affirm. 

I. Facts and Prior Proceedings 

The plaintiff, the Iowa Grocery Industry Association (hereinafter 

“IGIA”), is a group of grocers, some of which operate grocery stores within 

the City of Des Moines. Pursuant to the statutory scheme provided by 

the Iowa Alcoholic Beverage Control Act (hereinafter “the Act”), 

applications for liquor licenses and beer and wine permits are filed with 

the local authority, which in this case is the Des Moines City Council. 

Iowa Code § 123.32(1) (2003). The local authority is authorized to make 

an initial decision whether to approve or disapprove the application. Id.

§ 123.32(2). The application, endorsed by the local authority as either 

approved or disapproved, is then forwarded to the Iowa Alcoholic 

Beverage Division of the Iowa Department of Commerce (hereinafter 

“Division”). Id. If the application is not approved by the local authority, 

 1In 1794, President Washington mobilized an army of approximately 15,000 to 

suppress an uprising of Pennsylvania farmers angered by an excise tax imposed by the 

federal government on whiskey. See generally Jason Mazzone, The Security 

Constitution, 53 UCLA L. Rev. 29, 109-112 (2005). 
3 

the Division notifies the applicant of the disapproval and informs the 

applicant of its opportunity to appeal the decision to the administrator of 

the Division. Id. § 123.32(5)(a). If the application is approved by the 

local authority, the administrator makes any investigation it deems 

necessary and then affirms, reverses, or modifies the local authority’s 

decision. Id. § 123.32(5)(b). 

The Act assigns specific application fees for liquor licenses and 

beer and wine permits. The local authority collects these fees. For beer 

permit applications, the local authority forwards a certified receipt for the 

fees to the Division, but retains all of the application fees for itself. Id. 

§ 123.143(1). In contrast, the fees on liquor licenses and wine permit 

applications are not retained by the local authority. The local authority 

sends these fees to the Division and then receives a percentage of the 

fees back. Id. § 123.36(8). In Des Moines, the fees retained by, or 

remitted back, to the City are placed in the City’s general fund. 

In 2003, the City of Des Moines adopted an ordinance requiring an 

additional “administrative fee” on applications for liquor licenses and 

beer and wine permits. Des Moines City Ordinance § 10-54(3) (2004). 

Although the City is already reimbursed for its role in the application 

process,2 the City passed this ordinance to cover its costs in processing 

and investigating the applications. The additional administrative fee for 

new permit applicants is a minimum of $420 for “on-premises” 

consumption permits (bars and restaurants) and a minimum of $320 for 

 2The local authority is not compensated for every type of application, but it does 

receive varying amounts of compensation based upon the type of application. For 

example, the local authority keeps all fees it collects for beer permit applications. Iowa 

Code § 123.143(1). For Class A, B, and C liquor licenses the local authority receives 

65% of the application fee. Id. § 123.36(8). The State keeps all fees for temporary or 

seasonal licenses, Class A and B wine permits, and Class D and E liquor licenses. See 

id. §§ 123.36, .143, .179. 
4 

“off-premises” consumption permits (grocery stores and convenience 

stores). Unlike the state statutory license fee, the ordinance provides no 

mechanism to refund the administrative fee if the license application is 

not approved. See id.; Iowa Code § 123.32(5)(a). 

The IGIA filed the present declaratory judgment action claiming the 

ordinance is illegal because the State regulation of liquor licensing under 

the Iowa Alcoholic Beverages Control Act preempts the imposition of 

additional fees. Before trial, IGIA and the City agreed upon a joint 

statement of facts, and then both filed motions for summary judgment. 

The court granted IGIA’s motion for summary judgment, and the City 

filed this appeal. 

II. Standard of Review 

 When reviewing a district court’s decision to grant summary 

judgment, our task is to determine whether a genuine issue of material 

fact exists and whether the law was correctly applied. Junkins v. 

Branstad, 421 N.W.2d 130, 132 (Iowa 1988). In this case, the parties 

agree there is no dispute with respect to the material facts of the case; 

the disagreement centers on the interpretation of state law. Our role is 

to decide whether we agree with the district court’s application of the law 

to the undisputed facts before us. Therefore, our review is for correction 

of errors at law. Campbell v. Delbridge, 670 N.W.2d 108, 110 (Iowa 2003) 

(“The standard of review of a district court’s grant of summary judgment 

is for correction of errors at law.”). 

III. Merits 

A. Home Rule Authority 

The City argues the ordinance is valid because, under the “Home 

Rule Amendment,” the City has the power to determine its own local 
5 

affairs and government. In essence, the City argues it can charge the fee 

because the Act does not explicitly limit its right to do so. 

Article III, section 38A of the Iowa Constitution provides: 

Municipal corporations are granted home rule power and 

authority, not inconsistent with the laws of the general 

assembly, to determine their local affairs and government, 

except that they shall not have power to levy any tax unless 

expressly authorized by the general assembly. 

The rule or proposition of law that a municipal corporation 

possesses and can exercise only those powers granted in 

express words is not a part of the law of this state. 

This provision of the Iowa Constitution, known as the “Home Rule 

Amendment,” grants municipal corporations broad authority to regulate 

matters of local concern. City of Des Moines v. Gruen, 457 N.W.2d 340, 

341 (Iowa 1990). However, this authority is limited by the fact that a 

city’s exercise of power must not “be inconsistent with the laws of the 

general assembly.” Iowa Const. art. III, § 38A. 

“A municipal ordinance is inconsistent with a law of the general 

assembly and, therefore, preempted by it, when the ordinance prohibits 

an act permitted by statute, or permits an act prohibited by a statute.” 

Gruen, 457 N.W.2d at 342 (internal quotations and citations omitted). A 

municipal ordinance is also preempted by state law when the ordinance 

invades an area of law the legislature reserved to itself. Id. Stated 

another way, municipalities do not have authority to act if a particular 

power has been denied them by statute. Goodell v. Humboldt County, 

575 N.W.2d 486, 492 (Iowa 1998); see also Sam F. Scheidler, 

Implementation of Constitutional Home Rule in Iowa, 22 Drake L. Rev. 

294, 305 (1973). 

 The district court concluded the Act preempted the City’s authority 

to charge the administrative fee because the fee conflicted with the 
6 

general assembly’s specific directions for governance in the area of 

alcoholic beverage permits. After reviewing the controlling statutes, we 

agree with the district court. 

B. The Iowa Alcoholic Beverages Control Act 

The first section of the Iowa Alcoholic Beverages Control Act 

establishes that the general assembly chose to reserve to itself the power 

to regulate the traffic of alcoholic beverages: 

This chapter shall . . . be deemed an exercise of the 

police power of the state, for the protection of the welfare, 

health, peace, morals, and safety of the people of the state, 

and all its provisions shall be liberally construed for the 

accomplishment of that purpose. It is declared to be public 

policy that the traffic in alcoholic liquors is so affected with a 

public interest that it should be regulated to the extent of 

prohibiting all traffic in them, except as provided in this 

chapter. 

Iowa Code § 123.1 (emphasis added). A subsequent section defining the 

term “local authority” also supports the conclusion that, subject to a 

handful of exceptions, the general assembly reserved in itself the power 

to regulate Iowa’s alcoholic beverage industry. Section 123.3(21) states a 

local authority is empowered 

to approve or deny applications for retail beer or wine 

permits and liquor control licenses; empowered to 

recommend that such permits or licenses be granted and 

issued by the division; and empowered to take other actions 

reserved to them by this chapter. 

(Emphasis added.) More pertinent to the case at hand, the general 

assembly “exclusively” reserved in itself the “power to establish [liquor] 

licenses and [beer and wine] permits and levy taxes as imposed in [the 

Act].” Id. § 123.37. 

While the general assembly reserved to itself the general authority 

to regulate the alcoholic beverage industry in Iowa, it also gave limited 

regulatory powers to local authorities. For example: 
7 

Section 123.30(2) allows the local authority to refuse 

to issue a license or permit for premises which do not 

conform to applicable local laws. 

Section 123.32(3) allows the local authority to “define 

. . . licensed premises” for festivals, fairs and the like. 

Section 123.32(4) allows the local authority to require 

an applicant’s security personnel “to be trained and certified 

in security methods.” 

Section 123.38 allows the local authority to authorize 

the transfer of existing permits from one location to another, 

so long as the location remains within the same city or 

county. 

Section 123.39(1) allows the local authority to suspend 

a license or permit “for a period not to exceed one year” or 

impose a civil penalty “not to exceed one thousand dollars 

per violation.” 

Section 123.39(2) allows the local authority to 

“suspend any retail wine or beer permit or liquor control 

license for a violation of any ordinance or regulation adopted 

by the local authority.” It also allows local authorities to 

“adopt ordinances or regulations for the location of the 

premises of retail wine or beer and liquor control licensed 

establishments.” 

Most important to the present case, the general assembly gave local 

authorities the authority to adopt ordinances which govern “any other 

activities or matters which may affect the retail sale and consumption of 

beer, wine, and alcoholic liquor and the health, welfare and morals of the 

community involved.” Id. § 123.39(2). The general assembly limited this 

authority to ordinances “not in conflict with” the Act and ordinances 

“that do not diminish the hours during which beer, wine, or alcoholic 

beverages may be sold or consumed at retail.” Id. While we attempt to 

interpret statutes and ordinances in a manner so as to render them 

harmonious, Green v. City of Cascade, 231 N.W.2d 882, 890 (Iowa 1975), 

and presume municipal ordinances are valid, Dilley v. City of Des Moines, 
8 

247 N.W.2d 187, 190 (Iowa 1976), we simply cannot avoid the following 

conflicts between the Act and the ordinance. 

1. Transfer Fees 

One patent inconsistency between the statutory process set forth 

by the ordinance and the process set forth by the Act relates to permit 

transfer fees. Under the current ordinance, an existing permittee or 

licensee seeking to transfer the permit or license to a different location 

within the jurisdiction of the city is required to pay an administrative fee 

ranging from $215 to $315. This fee is subject to change by resolution 

of the City Council. 

In contrast, Iowa Code section 123.38 states: 

The administrator [of the Iowa Alcoholic Beverages Division] 

may by rule establish a uniform transfer fee to be assessed 

by all local authorities upon licensees or permittees to cover 

the administrative costs of such transfers, such fee to be 

retained by the local authority involved. 

(Emphasis added.) The Act does not give local authorities the power to 

establish a transfer fee. Instead the general assembly has, under its 

exclusive right to “establish licenses and [alcoholic beverage] permits,” 

assigned the power to establish transfer fees to the administrator. The 

City usurps this power by establishing its own transfer fees. 

In addition, the City’s mechanism for setting the amount of the 

transfer fee does not assure uniformity within the state. Under the 

ordinance, the City Council can set its own fees for transfer requests 

without any regard for a fee established by the administrator. 

Beyond the irreconcilable conflict pertaining to transfer fees, we 

also find inherent conflicts between the fee collection procedures 

established in the Act and those set forth in the ordinance. 
9 

2. Compliance with Existing Statutory Procedure 

Iowa Code section 364.6 states a city must “substantially comply 

with a procedure established by a state law for exercising a city power.” 

See also Iowa Code § 331.301(5) (stating same requirement for counties). 

For the reasons discussed below, we find the application of the disputed 

ordinance results in a procedure which does not substantially comply 

with, and therefore conflicts with the procedures established by state 

law. 

i. Uniformity 

The size of the statutory application fee for a particular applicant is 

based upon a myriad of factors. The application fee varies according to 

whether the applicant is located within corporate city limits, the type of 

applicant, the population of the city, the type of alcoholic beverage, and 

whether the alcoholic beverages are sold on Sundays. See, e.g., id.

§§ 123.36, .134, .179. The only other fee addressed by the legislature 

pertaining to alcoholic beverage permits is the license transfer fee. As 

discussed above, only the Division administrator has the power to set 

this fee, and the administrator must set this fee so that it is “uniform” for 

all local authorities. Id. § 123.38. 

One effect of a uniform statutory application fee system is that it 

keeps local authorities from using license or permit application fees to 

curtail liquor establishments within their jurisdiction. Without a 

uniform application fee system, a local authority could charge a large 

application fee to discourage new liquor permit applicants or to 

discourage renewals of existing permits. For example, under the 

guidelines set forth by the general assembly, an applicant planning to 

open a liquor establishment in the greater Des Moines area would pay 

the same application fee in the City of Des Moines or in the nearby city of 
10

Urbandale. The cost of applying for such a permit (and the cost of 

reapplying for subsequent permits) would not factor into the proprietor’s 

decision of where to locate its business. However, if local authorities 

were allowed to set their own license application fees, then one city could 

raise its application fees and push liquor establishments into a nearby 

jurisdiction. 

The imposition of additional “administrative fees” would 

circumvent the established procedure. The benefit of a standardized 

application fee would be lost because each local authority would be able 

to discourage the proliferation of liquor establishments based on 

administrative fees, rather than application fees. For this reason we find 

the disputed ordinance disturbs, and does not substantially comply with, 

the uniformity so meticulously established by the Act. 

ii. Existing Repayment Mechanism 

Normally, a municipal corporation can, as a home rule entity, 

impose license fees, permit fees, or franchise fees to cover the cost of 

“inspecting, licensing, supervising, or otherwise regulating” activities 

related to the exercise of its police power. Home Builders Ass’n v. City of 

West Des Moines, 644 N.W.2d 339, 347 (Iowa 2002). However, in the 

present case, an “additional administrative fee” is not appropriate 

because the City already receives compensation for these costs. Not only 

is the City already compensated for its role in the application process, 

but the City, with its large population, is compensated more for its 

application review process than other smaller cities or rural counties. 

The fact that the statutory fee schedule assures local authorities in larger 

cities larger application fees than local authorities in smaller cities or 

rural counties leads us to the conclusion that the general assembly 
11

appreciated and accounted for any additional costs involved in 

investigating and processing applications in larger cities.3 

iii. Additional Requirement 

By adding extra fees, the City has increased its role in the licensing 

system—if the applicant does not pay the City its additional 

administrative fee, the City will not forward the application on to the 

Division. This extra hurdle violates the application procedure 

established by the Act. See generally Richards v. City of Pontiac, 9 

N.W.2d 885, 888 (Mich. 1943) (finding conflict where a city imposed a 

licensing fee for trailer camps when the State had already entered the 

field and imposed a similar licensing fee). 

The City argues this extra hurdle does not conflict with the Act. 

The City contends the present ordinance is analogous to an ordinance 

which survived a preemption challenge in the court of appeals. Drawing 

on language from BeeRite Tire Disposal/Recycling, Inc. v. City of Rhodes, 

646 N.W.2d 857, 860 (Iowa Ct. App. 2002), the City claims its 

administrative fee further promotes the underlying policy of the Act “with 

greater force” and “merely” increased “the details of the existing 

regulation.” 

In BeeRite, the city of Rhodes passed an ordinance regulating the 

disposal of old tires. 646 N.W.2d at 858. This ordinance imposed, 

among other things, a $100 annual permit fee payable to the city on top 

of the existing $850 state fee payable to the Department of Natural 

Resources. Id. The court of appeals compared the legislative agenda to 

“regulate the regulation of tire disposal” with our decision in Goodell v. 

 3For example, the application fee for a Class B liquor license in a city of 10,000 

or more people is $1300. The fee for the same permit in a city with a population of 

3000 or less is only $800. Iowa Code § 123.36(3). The local authority receives 65% of 

this application fee. Id. § 123.36(8). 
12

Humboldt County, where we considered the legislative agenda regarding 

livestock confinement. Id. at 860-61 (citing Goodell, 575 N.W.2d at 503-

07). Noting there was a “clear legislative purpose to issue regulations 

intending to limit local over-regulation in the area of livestock 

confinement,” the court of appeals concluded there was no similar 

legislative agenda to regulate the regulation of tire disposal. Id. at 861. 

Unlike the livestock confinement regulations in Goodell, there was “no 

statutory scheme which would be either bypassed, contradicted, or 

overridden by the City of Rhodes’s tire disposal regulations.” Id. at 860. 

Because there was less need for uniform state regulations for tire 

disposal than there was for livestock confinement waste, the court of 

appeals concluded the Rhodes ordinance did not “unduly modify the tire 

disposal statutory scheme established by the State” and did not “stand in 

opposition to regulations promulgated by the Iowa Legislature.” See id.

at 860-61. 

Without determining the validity of the distinction made by the 

court of appeals in BeeRite, we are confident the same conclusion cannot 

be drawn here. The general assembly’s footprint covers the area of 

alcoholic beverage permits. The general assembly limits the ability of 

local authorities to regulate alcoholic beverages and “exclusively” 

reserves in itself the power to establish beer permits, wine permits, and 

liquor licenses. See Iowa Code §§ 123.1, .3(21), .37. In addition, the 

City’s administrative fee disrupts the uniformity in the statutory scheme. 

The ordinance does more than merely increase the details of 

regulation. 

iv. Accountability 

The Act outlines procedures for local authorities to collect the 

“necessary fee” prescribed by statute and to either forward that fee on to 
13

the alcoholic beverage division or to keep the fee and submit a receipt to 

the Division. See id. § 123.32(2). Either way, the local authority is 

required to report any funds received with the application. See id.

§§ 123.32(2), .36(8), .143. Under the Des Moines ordinance, the City 

does not have to account to the Division for the total amount collected for 

the application. It only accounts for the fees collected under the 

statutory guidelines. This violates the established procedure and 

frustrates the general assembly’s intent to monitor the flow of funds from 

license/permit applicants to local authorities.4 

IV. Conclusion 

The general assembly has established a comprehensive and 

uniform procedure for controlling the fees surrounding the issuance and 

transfer of alcoholic beverage permits or licenses. This procedure clearly 

defines the local authority’s role in the application process and 

compensates the local authority for its responsibilities. The Des Moines 

ordinance conflicts with this statutory scheme. We therefore affirm the 

district court’s decision to declare the ordinance invalid. 

AFFIRMED. 

 4Iowa Code section 123.18 expressly prohibits a “person responsible for the 

administration or enforcement of this chapter” from accepting or soliciting donations, 

gratuities, political advertising, gifts, or other favors from any applicant.