Opinion ID: 4249806
Heading Depth: 1
Heading Rank: 3

Heading: Enactment of Iowa Code Section 477A.7(5).

Text: As noted above, in Kragnes, this court examined a municipality’s power to charge fees for gas and electric services in excess of the cost of regulating those activities. 714 N.W.2d at 637–43. We held: Our decisions reveal that even after the adoption of the home-rule amendment and the enactment of the Home Rule for Cities bill, we have continued to adhere to the position that a fee imposed by a city needs to be related to the reasonable costs of inspecting, licensing, supervising, or otherwise regulating the activity in order to be permitted under a city's home-rule authority. If a fee charged by a city exceeds the amount necessary to inspect, license, supervise, or otherwise regulate the activity, it is nothing more than a tax levy, which the legislature has strictly prohibited. Id. at 641. We concluded that, to the extent the franchise fees charged by the defendant city exceeded its cost of regulation, the fees constituted an illegal tax. Id. at 642–43. In the wake of this decision, several lawsuits, including the present case, were filed by residents of various Iowa cities, claiming a five percent franchise fee for cable television services charged by the defendant cities was an illegal tax and should be refunded. See Lindstrom v. City of Des Moines, 470 F. Supp. 2d 1002, 1004–05 (S.D. Iowa 2007). 3 While these actions were pending, the Iowa General Assembly enacted a law relating to franchise fees for cable television services. See 2007 Iowa Acts ch. 201. The following provisions of this act are pertinent to our discussion: 4. A franchise fee may be assessed or imposed by a municipality without regard to the municipality’s cost of inspecting, supervising, or otherwise regulating the franchise, and the fees collected may be credited to the 3Seven cases filed in state court seeking refunds of illegal “franchise fees” were removed to federal court, where they were consolidated. See Lindstrom, 470 F. Supp. 2d at 1004 n.1. Eventually, all seven cases, including the present case, were remanded back to state court for lack of federal court jurisdiction. Id. at 1013. 6 municipality’s general fund and used for municipal general fund purposes. 5. To the extent that any amount of franchise fees assessed by and paid to a municipality prior to the effective date of this Act, pursuant to a franchise agreement between a municipality and any person to erect, maintain, and operate plants and systems for cable television, exceeds the municipality’s reasonable costs of inspecting, supervising or otherwise regulating the franchise, such amount is deemed and declared to be authorized and legally assessed by and paid to the municipality. Id. ch. 201, § 8(4), (5) (emphasis added) (codified at Iowa Code § 477A.7(4), (5)). It is clear from the timing of the enactment and the language used in the statute that the legislature intended section 477A.7(5) to validate any municipality’s collection of fees on cable television services in excess of the reasonable costs of inspecting, supervising, or otherwise regulating the franchise, regardless of when the fees were assessed and paid. The district court relied on the legislature’s authorization of past fees in subsection (5) in granting the city’s motion for partial summary judgment. It is the constitutionality of this retroactivity provision that lies at the heart of this appeal.