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Court Rules Against Iowa Cities Over Franchise Fees

4/27/2007 4:33 AM Eastern

A Scott County, Iowa, judge ruled that the cities of Davenport and Bettendorf are illegally handling the franchise fees they collect.

Those cities have been placing the fees they collect from cable customers, via their cable operator, in city general funds. The judge ruled that if there is money collected beyond the cost to inspect, license, supervise or otherwise regulate cable, then the overage represents a tax levy, a category forbidden by state law.

The ruling by Judge Patrick Madden follows the rationale by the state Supreme Court, which last May reversed a partial judgment by a trial court and sent a consumer challenge over excessive gas and electric utility franchise fees back to the lower court for trial. The tax interpretations in that trial also apply to the cable assessments, according to Madden.

Citizens in seven Iowa towns sued last September over the amount of franchise fees. The other five suits -- against Des Moines, Cedar Rapids, Dubuque, Sioux City and Waterloo -- are still pending. The legal challenge addresses franchise fees collected by the targeted towns since 2000.

 

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