Senate Study Bill 3037
SENATE FILE
BY (PROPOSED COMMITTEE
ON COMMERCE BILL BY
CHAIRPERSON BEHN)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to municipal utilities that provide
2 telecommunications services, including the examination and
3 confidentiality of certain accounting records and provision of
4 property tax exemptions.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 11.6, subsection 1, paragraph a,
1 2 unnumbered paragraph 1, Code 2003, is amended to read as
1 3 follows:
1 4 The financial condition and transactions of all cities and
1 5 city offices, counties, county hospitals organized under
1 6 chapters 347 and 347A, memorial hospitals organized under
1 7 chapter 37, entities organized under chapter 28E having gross
1 8 receipts in excess of one hundred thousand dollars in a fiscal
1 9 year, merged areas, area education agencies, and all school
1 10 offices in school districts, shall be examined at least once
1 11 each year, except that cities having a population of seven
1 12 hundred or more but less than two thousand shall be examined
1 13 at least once every four years, and cities having a population
1 14 of less than seven hundred may be examined as otherwise
1 15 provided in this section. The examination shall cover the
1 16 fiscal year next preceding the year in which the audit is
1 17 conducted. The examination of school offices shall include an
1 18 audit of all school funds, the certified annual financial
1 19 report, and the certified enrollment as provided in section
1 20 257.6. Differences in certified enrollment shall be reported
1 21 to the department of management. The examination of a city
1 22 utility shall include a report of the utility's compliance
1 23 with section 388.10.
1 24 Sec. 2. Section 388.9, Code 2003, is amended by adding the
1 25 following new subsection:
1 26 NEW SUBSECTION. 3. Notwithstanding subsections 1 and 2,
1 27 if, pursuant to section 11.6, subsection 1, paragraph "a", the
1 28 auditor of state or a certified public accountant reports that
1 29 the city utility is not in compliance with section 388.10, all
1 30 records submitted to the auditor of state or certified public
1 31 accountant or required to be submitted pursuant to section
1 32 388.10, subsection 2, paragraph "a", relating to compliance,
1 33 shall be public records subject to chapter 22.
1 34 Sec. 3. Section 388.10, Code 2003, is amended to read as
1 35 follows:
2 1 388.10 MUNICIPAL UTILITY PROVIDING LOCAL EXCHANGE
2 2 TELECOMMUNICATIONS SERVICES.
2 3 1. a. A city that owns or operates a municipal utility
2 4 providing local exchange telecommunications services pursuant
2 5 to chapter 476 or the such a municipal utility shall not do,
2 6 directly or indirectly, any of the following:
2 7 (1) Use general fund moneys for the ongoing support or
2 8 subsidy of a telecommunications system.
2 9 (2) Provide any city facilities, equipment, or services to
2 10 provide telecommunications systems or services at a cost for
2 11 such facilities, equipment, or services which is less than the
2 12 reasonable cost of providing such city facilities, equipment,
2 13 or services.
2 14 (3) Provide any other city service, other than a
2 15 communications service, to a telecommunications customer at a
2 16 cost which is less than would be paid by the same person
2 17 receiving such other city service if the person was not a
2 18 telecommunications customer.
2 19 (4) Use funds or revenue generated from electric, gas,
2 20 water, sewage, or garbage services provided by the city for
2 21 the ongoing support of that portion of a system or service
2 22 used to provide local exchange services any city
2 23 telecommunications system.
2 24 b. For purposes of this section, "telecommunications:
2 25 (1) "Telecommunications system" means only that portion of
2 26 a system or facilities which is used to provide local exchange
2 27 that provides telecommunications services.
2 28 (2) "Telecommunications services" means the retail
2 29 provision of any of the following services:
2 30 (a) Local exchange telephone services.
2 31 (b) Long distance telephone services.
2 32 (c) Internet access services.
2 33 (d) Cable television services.
2 34 2. A city that owns or operates a municipal utility
2 35 providing local exchange telecommunications services pursuant
3 1 to chapter 476 or the such a municipal utility shall do the
3 2 following:
3 3 a. Prepare and maintain records which record the full cost
3 4 accounting of providing local exchange service
3 5 telecommunications services. The records shall show the
3 6 amount and source of capital for initial construction or
3 7 acquisition of the local exchange telecommunications system or
3 8 facilities. The records shall be provided for any
3 9 examinations or audits performed pursuant to section 11.6,
3 10 subsection 1, paragraph "a". This section shall not prohibit
3 11 a municipal utility from utilizing capital from any lawful
3 12 source, provided that the reasonable cost of such capital is
3 13 accounted for as a cost of providing the service.
3 14 b. Adopt rates for the provision of local exchange
3 15 telecommunications services that reflect the actual cost of
3 16 providing the local exchange service telecommunications
3 17 services. However, this paragraph shall not prohibit the
3 18 municipal utility from establishing market=based prices for
3 19 competitive local exchange telecommunications services.
3 20 c. Be subject to all requirements of the city which would
3 21 apply to any other provider of local exchange
3 22 telecommunications services in the same manner as such
3 23 requirements would apply to such other provider.
3 24 3. This section shall not prohibit the marketing or
3 25 bundling of other products or services, in addition to local
3 26 exchange telecommunications services. However, a city shall
3 27 include on a billing statement sent to a person receiving
3 28 services from the city, a separate charge for each service
3 29 provided to the person. This subsection does not prohibit the
3 30 city from also including on the billing statement a total
3 31 amount to be paid by the person.
3 32 4. This section shall not apply to telecommunications
3 33 services provided directly by a municipal airport.
3 34 Sec. 4. Section 427.1, subsection 2, Code Supplement 2003,
3 35 is amended to read as follows:
4 1 2. MUNICIPAL AND MILITARY PROPERTY. The property of a
4 2 county, township, city, school corporation, levee district,
4 3 drainage district, or the Iowa national guard, when devoted to
4 4 public use and not held for pecuniary profit, except property
4 5 of a municipally owned electric utility held under joint
4 6 ownership and property of an electric power facility financed
4 7 under chapter 28F or 476A that shall be subject to taxation
4 8 under chapter 437A and facilities of a city or of a municipal
4 9 utility that are used for the provision of local exchange
4 10 telecommunications services pursuant to chapter 476, but only
4 11 to the extent such facilities are used to provide such
4 12 services, as defined in section 388.10, subsection 1, which
4 13 shall be subject to taxation under chapter 433 and chapter
4 14 441, except that where otherwise provided, and section 433.11
4 15 shall not apply. The exemption for property owned by a city
4 16 or county also applies to property which is operated by a city
4 17 or county as a library, art gallery or museum, conservatory,
4 18 botanical garden or display, observatory or science museum, or
4 19 as a location for holding athletic contests, sports or
4 20 entertainment events, expositions, meetings or conventions, or
4 21 leased from the city or county for any such purposes, or
4 22 leased from the city or county by the Iowa national guard or
4 23 by a federal agency for the benefit of the Iowa national guard
4 24 when devoted for public use and not for pecuniary profit.
4 25 Food and beverages may be served at the events or locations
4 26 without affecting the exemptions, provided the city has
4 27 approved the serving of food and beverages on the property if
4 28 the property is owned by the city or the county has approved
4 29 the serving of food and beverages on the property if the
4 30 property is owned by the county.
4 31 EXPLANATION
4 32 This bill relates to the regulation of municipal utilities
4 33 and cities owning or operating municipal utilities that
4 34 provide telecommunications services.
4 35 The bill replaces the term "local exchange services" with
5 1 "telecommunications services" where it appears in Code
5 2 sections 388.10 and 427.1 and provides a definition for what
5 3 services constitute "telecommunications services". Municipal
5 4 airports providing telecommunications services are exempted by
5 5 the bill from compliance with Code section 388.10.
5 6 The bill requires the examination of a city utility by the
5 7 auditor of state or certified public accountant to include a
5 8 report of whether the utility is in compliance with Code
5 9 section 388.10. In preparation for the examination, the
5 10 utility must provide all accounting records to the auditor of
5 11 state or certified public accountant. If it is reported that
5 12 the utility is not in compliance with Code section 388.10, all
5 13 accounting records provided or which were required to have
5 14 been provided become public records under Code chapter 22.
5 15 The bill specifies that property of a city or municipal
5 16 utility used to provide telecommunications services is not
5 17 exempt from taxation under Code chapters 433 and 441.
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