S.F. _____ Section 1. Section 388.10, subsection 1, paragraph a, 1 subparagraphs (1) and (4), Code 2021, are amended to read as 2 follows: 3 (1) Use general fund moneys for the ongoing support or 4 subsidy of a telecommunications system , except as provided in 5 section 388.10, subsection 1, paragraph “a” , subparagraph (6) . 6 (4) Use funds or revenue generated from electric, gas, 7 water, sewage, or garbage services provided by the city for the 8 ongoing support of any city telecommunications system , except 9 as provided in section 388.10, subsection 1, paragraph “a” , 10 subparagraph (5) . 11 Sec. 2. Section 388.10, subsection 1, paragraph a, Code 12 2021, is amended by adding the following new subparagraphs: 13 NEW SUBPARAGRAPH . (5) Lend funds or revenue generated from 14 electric, gas, water, sewage, or garbage services provided by 15 the city at an interest rate which is less than the prevailing 16 market rate for comparable lending by a financial institution. 17 NEW SUBPARAGRAPH . (6) Lend moneys from the general fund or 18 reserve fund to a telecommunications system at an interest rate 19 which is less than the prevailing market rate for comparable 20 lending by a financial institution. 21 NEW SUBPARAGRAPH . (7) Forgive any loan, indebtedness, or 22 bonds extended by the city to a telecommunications system. 23 NEW SUBPARAGRAPH . (8) Provide telecommunications services 24 or access to telecommunications system facilities, equipment, 25 or services at a cost which is less than the reasonable cost of 26 providing such facilities, equipment, or services or access to 27 such facilities, equipment, or services. 28 NEW SUBPARAGRAPH . (9) Provide a telecommunications system 29 with any municipal utility facilities, equipment, or services 30 at a cost for such facilities, equipment, or services which is 31 less than the reasonable cost of providing such facilities, 32 equipment, or services. 33 NEW SUBPARAGRAPH . (10) Sell or offer to sell 34 telecommunications services to any customer or prospective 35 -1- LSB 2081XC (1) 89 jda/rn 1/ 4

S.F. _____ customer in the same transaction as electric, gas, water, 1 sewage, or garbage services are sold or offered for sale. 2 Sec. 3. Section 388.10, subsection 1, paragraph b, Code 3 2021, is amended by adding the following new subparagraph: 4 NEW SUBPARAGRAPH . (01) “Financial institution” means a bank 5 or credit union as defined in section 12C.1. 6 Sec. 4. Section 388.10, subsection 2, paragraphs a and b, 7 Code 2021, are amended to read as follows: 8 a. Prepare and maintain records which record the full cost 9 accounting of providing telecommunications services. The 10 records shall show the amount and source of capital for initial 11 construction or acquisition of the telecommunications system 12 or facilities. The records shall be public records subject to 13 the requirements of chapter 22 . Information in the records 14 that is not subject to examination or copying as provided in 15 section 388.9, subsection 2 , may be expunged from the records 16 prior to public disclosure. This section shall not prohibit 17 a municipal utility from utilizing capital from any lawful 18 source, provided that the reasonable cost of such capital is 19 accounted for as a cost of providing the service , and provided 20 that the interest rate associated with obtaining the capital 21 does not exceed a rate that is greater than the prevailing 22 market rate for comparable lending by a financial institution . 23 In accounting for the cost of use of any city employees, 24 facilities, equipment, or services, a city or municipal utility 25 may make a reasonable allocation of the cost of use of any 26 city employees, facilities, equipment, or services used by 27 the municipal utility based upon reasonable criteria for the 28 distribution of the cost of use in any manner which is not 29 inconsistent with generally accepted accounting principles. 30 b. Adopt rates for the provision of telecommunications 31 services that reflect the actual cost of providing the 32 telecommunications services. However, this paragraph shall not 33 prohibit the municipal utility from establishing market-based 34 prices for competitive telecommunications services. 35 -2- LSB 2081XC (1) 89 jda/rn 2/ 4

S.F. _____ Sec. 5. Section 388.10, subsection 3, Code 2021, is amended 1 to read as follows: 2 3. This section shall not prohibit the marketing or 3 bundling of other products or telecommunications services , 4 in addition to telecommunications services . However, a city 5 shall include on a billing statement sent to a person receiving 6 telecommunications services from the city, a separate charge 7 for each telecommunications service provided to the person. 8 This subsection does not prohibit the city from also including 9 on the billing statement a total amount to be paid by the 10 person. 11 Sec. 6. Section 388.10, Code 2021, is amended by adding the 12 following new subsection: 13 NEW SUBSECTION . 5. This section shall not apply to any city 14 in which greater than one-third of the United States census 15 bureau census blocks within the city are targeted service 16 areas, as defined in section 8B.1. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill relates to cities that own or operate a municipal 21 utility providing telecommunications services and municipal 22 utilities providing telecommunications services. 23 The bill prohibits cities that own or operate a municipal 24 utility and the municipal utility itself from lending funds 25 or revenue generated from electric, gas, water, sewage, or 26 garbage services at an interest rate that is less than the 27 prevailing market rate. The bill also prohibits these cities 28 and municipal utilities from lending moneys from the general 29 fund or reserve fund to a telecommunications system at an 30 interest rate that is less than the prevailing market rate. 31 The bill prohibits such cities and municipal utilities from 32 forgiving any indebtedness extended to a telecommunications 33 system. 34 Further, these cities and municipal utilities are 35 -3- LSB 2081XC (1) 89 jda/rn 3/ 4

S.F. _____ prohibited from providing telecommunications services or 1 access to telecommunications system facilities or equipment 2 at a cost which is less than the reasonable cost of 3 providing the telecommunications services or access to the 4 telecommunications system facilities or equipment, and from 5 providing telecommunications systems with any city or municipal 6 utility facilities, equipment, or services at a cost for such 7 facilities, equipment, or services which is less than the 8 reasonable cost of providing such city or municipal utility 9 facilities, equipment, or services. 10 Additionally, the bill prohibits such cities and municipal 11 utilities from selling or offering to sell telecommunications 12 services to any customer or prospective customer in the 13 same transaction as electric, gas, water, sewage, or garbage 14 services are sold or offered for sale. 15 The bill provides a maximum interest rate at which a 16 municipal utility can obtain capital to finance the initial 17 construction or acquisition of telecommunications systems or 18 facilities. 19 Current law provides municipal utilities shall not 20 be prohibited from establishing market-based prices for 21 competitive telecommunications services. The bill removes that 22 provision. 23 Current law provides cities that own or operate a municipal 24 utility and the municipal utility itself are not prohibited 25 from marketing or bundling other products or services, in 26 addition to telecommunications services. The bill amends this 27 provision to remove reference to other products or services and 28 substitutes instead telecommunications services. 29 The bill provides that Code section 388.10 shall not apply 30 to any city in which greater than one-third of the United 31 States census bureau census blocks within the city are targeted 32 service areas, as defined in Code section 8B.1. 33 -4- LSB 2081XC (1) 89 jda/rn 4/ 4