City renews Idaho Power franchise agreement

Payette resident Mike Duke addresses the Payette City Council on Aug. 3, while Councilors Mike Kee, left, and Daniel Lopez listen. Duke argued against the franchise fee, stating not only is now a bad time to add a franchise fee, but he is opposed to adding revenue streams for the city.

PAYETTE — Despite the year 2020 being a pandemic year due to COVID-19, the Payette City Council voted at its Aug. 3 meeting to renew its franchise agreement with Idaho Power with the utility paying an amount equal to 1% of its gross revenues for electricity sold within the city for the preceding calendar quarter. Appearing on the agenda as Ordinance 1476, the agreement builds off of the city’s 1970 agreement, known as Ordinance 749.

The city previously charged no such fee while other cities in the area do, according to Deputy Clerk Bobbie Black.

Councilors cited neighboring cities having franchise rates with Idaho Power, some higher than what Payette added, including Ontario. With that in mind, Mayor Jeff Williams said he felt comfortable the proposed fee was negligible in keeping affordability up in Payette.

Payette resident Mike Duke addressed the Council prior to their discussion; Duke asked the Council to vote against the ordinance, saying it was the wrong time to think about adding franchise fees.

“As a matter of course, I disfavor adding more revenue streams into government,” said Duke. “Over time, these little things accumulate and it burdens the people in any one area. In this particular circumstance, I think the budget is a hard thing because of … what’s going on.”

Councilor Daniel Lopez argued against the fee, echoing Duke’s sentiment about the timing of the agreement.

“We’re just causing an extra burden on the taxpayer, so not only are they not getting what they deserve on what’s being put on their property, they’re also paying more for what’s on their property,” said Lopez.

Lopez argued that the agreement would create a new line item on residents’ utility bills.

“[Taxpayers] do use the street lights, and this is a way to reimburse taxpayers so they don’t have to pay all that in taxes,” said Williams. “We have the lowest levy rate we’ve had in twenty-plus years, so I would vehemently disagree.”

Councilor Mike Kee said while timing is rough, he believes the need for revenue outweighs the benefit of putting off having a franchise fee.

“The thing that this could help us accomplish is to complete projects like River Street,” said Kee. “I wouldn’t be as supportive of this if we collected fifty thousand dollars and the fifty thousand dollars got lost in the street fund and was used for maintenance or to buy a new water truck.”

Wickersham said he considered the fee a more ‘even’ means of establishing needed revenue for the city than a property tax.

“You either gotta … take it out of the property tax or you take it out of electric,” said Wickersham. “I’ve asked a couple of people in town, businesses about this. In general, they didn’t have a problem with it.”

Still, Wickersham said, “A tax is a tax is a tax.” 

Lopez said that while commercial accounts are likely to pay more on their bills to cover this franchise fee, he remains opposed to adding revenue streams to the city.

“If we wanted to argue a fairer tax, we would be getting more commercial in here and it would be less burden on our residential if we had more commercial,” he said.

Williams made a point of looking at the city’s situation compared against neighboring cities.

“The neighboring cities have Idaho Power franchise fees. All of them,” said Williams. He noted that Idaho Power declined to send a representative to the meeting to discuss the fee because the city was proposing only 1%.

“Ontario has seven [percent]; I’m not advocating for seven percent,” said Williams.

City Attorney Dan Chadwick reminded the council that the agreement pertains to Idaho Power’s use of rights-of-way.

“That is a lease on land, that is not a tax,” said Chadwick. “You call this a tax, but a franchise fee is not a tax. The franchise is whether you charge for it or you don’t charge for it, you have to have an agreement in place so they can use the city rights-of-way.”

Chadwick notes that utilities have to go through the Idaho Public Utilities Commission to set rates and collect whatever fees they get.

Lopez argued that because the fee is added to electric bills, it makes it hard for citizens to hold the Council accountable in the future. Councilor Lori Steiniker said the opposite is true:

“I think we’re held accountable, because if they don’t like we’re doing we won’t be sitting here in another few years,” she said.

Councilor Kahlia Morin made the motion to approve Ordinance 1476 on its first reading, with Councilor Kathy Patrick seconding. The vote to approve was 5-1, with Lopez voting against. 

Idaho Power is responsible for paying its franchise fee every January, April, July and October. The new agreement is set to expire after 20 years.

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