“It is ironic that just two weeks ago the state enacted legislation which memorializes Iowa cities’ right to collect up to 5 percent gas and electric franchise fees,” he said. “Franchise fees have been collected by some cities in Iowa for over 100 years.”

Des Moines has collected a utility franchise fee for more than 40 years, but for most of that period it bounced between 1 percent and 2 percent of customers’ utility bills. When the Iowa Legislature phased out its 5 percent statewide utility tax, Des Moines and a number of other Iowa cities raised theirs. In Des Moines, it went to 3 percent in 2004 and 5 percent in 2005.

Judge Joel Novak ruled that the city could only justify charging a 1 percent fee on gas and electric bills, and that the rest would have to be refunded. Just last week, Gov. Chet Culver signed into law a bill allowing cities to charge up to 5 percent. However, that legislation won’t affect the ruling.

“The cost imposed upon the city and its citizens by the existence of a franchise for gas and electric utilities has been significantly underestimated by the Court,” Cownie said. “We will follow the next legal steps to reach a final determination in this issue, which may include an appeal to the Iowa Supreme Court.”

If the ruling is allowed to stand, the city could see “an increase in the tax rate, a reduction in services, a reduction in capital improvements or a combination of all three,” Cownie said.

“The effect upon our taxpayers could be significant,” he said.

Of the $12.6 million a year raised from the franchise fee, the city must refund $9 million, according to the ruling by Judge Joel Novak. The fee, which amounts to a 5 percent charge on gas and electric bills, should have been set at 1 percent, the judge said.

Legislation signed into law by Gov. Chet Culver last week allows cities in Iowa to charge the full 5 percent for franchise fees going forward, but that won’t affect the ruling, which the city has indicated it plans to appeal.

Supporters of the franchise fee say it helps ease the property-tax burden by spreading the cost of government services to nonprofits and other entities that don’t pay property taxes.

Des Moines has collected a utility franchise fee for more than 40 years, but for most of that period it bounced between 1 percent and 2 percent of customers’ utility bills. When the Iowa Legislature phased out its 5 percent statewide utility tax, Des Moines and a number of other Iowa cities raised theirs. In Des Moines, it went to 3 percent in 2004 and 5 percent in 2005.

The Iowa Supreme Court ruled in May 2006 that the city could collect only enough revenue to cover the actual cost of regulating the gas and electric utilities. The court then sent the case back to the district court to resolve whether the amount the city is collecting is justified, prompting Wednesday’s ruling.

The decision could be a big blow to Des Moines’ budget. Last week, City Manager Rick Clark said the city would face a $5 million budget shortfall in 2011, up from an estimated $3.5 million. The prospect of paying back tens of millions in fees collected over the course of five years could force the city to choose between deep cuts — including layoffs — or raising property taxes.

Des Moines City Manager Rick Clark told The Des Moines Register that the city would face a $5 million budget shortfall in 2011, up from an estimated $3.5 million. The city will reach out to its employees to seek salary and benefit cuts to help close the gap. But, if the legislature had not stepped in and officially legalized franchise fees, the city’s budget problems could have become catastrophic.

In 2004, Des Moines resident Lisa Kragnes sued the city saying the franchise fee was an illegal tax. The case, which received class certification for all Des Moines residents and businesses, is now in the hands of a District Court Judge. If the judge rules against Des Moines it could be forced to repay millions of dollars in refunds to customers.

The fee brings in about $12.6 million annually.

The new legislation ensures that even if Des Moines is forced to repay past fees it can still collect in the future, avoiding an even bigger hole being punched into its budget. In addition to Des Moines, 25 other cities in Iowa charge a franchise fee, which is designed to help cover the costs of operating, maintaining and regulating a utility. Supporters of the franchise fee say it helps ease the property-tax burden by spreading the cost of government services to nonprofits and other entities that don’t pay property taxes.

According to The Register, Des Moines cut its 2010 budget by $14 million with a mix of job cuts, privatization, salary freezes and expense reductions.

The franchise fee was included in the catch-all standings bill passed on the final day of the legislative session.

The crowd, numbering around 700 people, brandished placards of all kinds, ranging in subjects from immigration to global warming to the Federal Reserve. One moment, the crowd was chanting “Let Us Vote,” the mantra of same-sex marriage opponents in Iowa. The next, they were booing a proposal to eliminate Iowans’ ability to deduct federal income taxes from state income taxes.

Many attendees wore t-shirts with slogans from talk show host Glenn Beck and U.S. Rep. Ron Paul’s failed 2008 bid for the Republican presidential nomination, but there were few footprints of the state’s elite GOP establishment. Elected officials were few in number, and the crowd seemed less interested in boosting any party or candidate than they were in simply “throwing the bums out.”

Despite the lack of involvement from the party establishment, the event did seem thoroughly planned. Organizers scheduled brief speeches from everyday Iowans who had complaints about their elected officials, and time limits were enforced. There was a large, plywood sign labeled “Declaration of Independence,” to which protesters were encouraged to affix their names.

There does not seem to be a reliable source to cite for this claim, but Sen. Barack Obama’s rally today in Des Moines might be the largest single-candidate political rally in Iowa history.

Sen. Barack Obama rallies a crowd estimated at 25,000 in Des Moines

Four years ago, at an evening rally at the Iowa State Fairgrounds, Sen. John Kerry drew about 15,000.  At the time, many asserted that it was the largest crowd in the state’s long history of campaign rallies.

Today’s turnout for Obama was estimated by Des Moines police at about 25,000.

That number pales in comparison to the crowds Obama has drawn elsewhere — 100,000 in Denver, for instance — but by Iowa standards, crowds do not get much bigger.

GOP vice presidential nominee Sarah Palin drew a crowd of about 10,000 in Des Moines last weekend.

In the final weeks of the campaign, the majority of the Democratic presidential nominee’s public events have been large rallies.  Saturday in St. Louis, he attracted a crowd of as many as 100,000, according to other news organizations.  That same day, he attracted 75,000 to an event in Kansas City, just hours south of the Des Moines metro, where Thursday’s event will take place.

So far, the campaign has only said that “Senator Obama will hold an event in the Des Moines area on Thursday afternoon.”

Since bigger events take longer to plan (and release details) than smaller ones, here’s one possible location: the Iowa State Fairgrounds.  Sen. John Kerry drew a crowd of 15,000 — gigantic in 2004 terms — there on October 15, 2004.

Update: The Obama campaign has canceled Thursday’s event, citing the deteriorating health of the Illinois senator’s grandmother.

The West Des Moines-based grocer announced last year that its Harding Hills store would probably close in late 2009 after a new store opens a few miles away in Beaverdale. Store patrons and activists said the closing of the store, at 3330 Martin Luther King Jr. Parkway, would leave north-central Des Moines residents without a nearby grocery store. Hy-Vee officials have said the Harding Hills operation is not profitable.

After pressure from Iowa CCI, the company relented, saying it would keep the location open as a scaled-down version of its current form similar to one of the company’s stores in Lincoln, Neb., that serves a neighborhood where a full-sized store closed. The Lincoln store is slated to be about one-fourth the size of a regular Hy-Vee.

The decision was seen as a victory for Iowa CCI and its members, but tonight, the group is planning to demand the company not reduce services. In a press release, the group said it isn’t fair to remove services, like a pharmacy, out of a community.

Hy-Vee’s current plans call for closing the store for at least a month for remodeling and removing the services of the pharmacy, butcher and deli. CCI members and Hy-Vee shoppers plan to push Hy-Vee to keep these vital services to the community.

The meeting is scheduled for tonight at 7 p.m. at the Des Moines Public Schools Professional Building, 3330 Martin Luther King Jr. Parkway.

Lincoln High School in Des Moines, one of three high schools in the district called a "Dropout Factory" by a Johns Hopkins University study.

Dick Murphy, Ginny Strong and Jeanette Woods were victorious despite challengers backed by their most vocal critic, and their fellow board member, Jonathan Narcisse, who had said publicly that he hoped adding new members would make him the board’s president and help spotlight what he describes as a board hamstrung by incompetence and collusion. 

The three challengers backed by Narcisse (Mike Pike, Steve Flood and Kristine Crisman) also received the backing of the Christian conservative group Iowa Family Policy Center, which called the race in an e-mail to supporters “a rare and wonderful opportunity to reclaim the school system.” In what is supposed to be a non-partisan election, many people — from elected officials to community activists — said this struck them as odd.

So the usually low-key, low-turnout school board election turned into something much more: a referendum on Narcisse and a key battle between those who believe religion has a place in public schools and those who don’t.

The nasty election culminated a nasty year for the board.

Former School Board President Marc Wrad launched a Web site earlier this year attacking Narcisse and his candidates, calling it “Attack of the Narcisse Clones.” Narcisse then published a newsletter, delivered door to door by volunteers, that accused board members past and present of collusion and financial ineptness. At one meeting in February each of the board members, and District Superintendent Nancy Sebring, confronted Narcisse about his criticism of the board in local media.

With the election finally complete the question remains: Can this fractured board move forward? The Des Moines School District has a $400 million budget and 32,000 students, not to mention real problems with graduation rates and poor student achievement. A recent report by Johns Hopkins University listed three Des Moines high schools as “dropout factories.” Only 45.9 percent of district eighth-graders performed at a “competent” level on standardized tests in the 2006-07 school year.

It’s now up to a board that hasn’t always gotten along to try to make education in the state’s capital city stronger.

Des Moines School Board results (top three vote-getters are victorious)
Ginny Strong (I), 8,017 votes
Dick Murphy (I), 7,863 votes
Jeanette Woods (I), 7,200 votes
Kittie Knauer, 6,979 votes
Steve Flood, 5,699 votes
Mike Pike, 5,504 votes
Kristine Crisman, 4,385 votes
Larry Barrett, 1,741 votes

Iowa Supreme Court Building in Des Moines.

Eight parents sued the board in 2005, saying it acted illegally when it approved expenses that were not spelled out in a spending plan shown to voters. A district judge ruled that the courts should not intervene, and the parents appealed to the Supreme Court.

The school board modified the 10-year tax plan by deciding to close four elementary schools and sell a central facility that provided advanced secondary education and technical training courses. The modification included additional spending on new facilities that was not part of the original plan. The board also approved hiring a construction firm to create a management plan in connection with the infrastructure projects. This expense was not specified in the original plan, either.

The court ruled that the board was not outside its jurisdiction to make changes to the plan because the plan presented to voters in 1999 allowed for adjustments.

“Contrary to the taxpayers’ assertions, the board’s initial 10-year plan was not set in stone,” the ruling said. “The plan made clear it was preliminary and subject to change.”

According to the ruling, while the plan identified the needs of all of the then-existing schools in the district, it noted the plan was subject to budget constraints, demographic changes and program needs. The law the parents used in bringing the case to trial, the court said, wasn’t even in place until 2003, when the Legislature passed an amendment that requires voter approval before a school district can change the use of the revenue generated from a local option sales tax.

“While we sympathize with the taxpayers and their desire to maintain their neighborhood schools, the board has the authority to determine the number and location of schools and appropriate the necessary resources to maintain them,” the ruling said. “The taxpayers failed to demonstrate the board acted illegally or exceeded its jurisdiction.”

The announcement, which came during a closed-door meeting between Hy-Vee leadership and representatives from Iowa Citizens for Community Improvement (CCI), appears to have cooled tensions between community activists and the supermarket chain.

But the ultimate fate of the Harding Hills supermarket in Des Moines remains uncertain.Wrangling over the store began in the fall of last year, when Hy-Vee announced plans to close the store at that location. After months of criticism from community members and a mobilization campaign by CCI, Hy-Vee seemingly reversed course in May, when it divulged plans to keep the store open, albeit after a remodeling that would scale down its operations.

Now the supermarket chain says that any change to the Harding Hills store is years away, citing construction delays on a new store planned for the Beaverdale neighborhood of Des Moines. Yet it remains silent on exactly what services a scaled-down store will offer.

That silence has some Harding Hills residents worried. Shelley Hodges, who owns an apartment building less than two blocks from the supermarket, fears the impact of any changes on the elderly tenants in her building. If the store was to close during remodeling, she said, or a scaled-back store didn’t offer essential services like a pharmacy, she doesn’t know how her tenants would make do. As it stands, “A lot of them are in wheelchairs and they wheel themselves down there and then carry their groceries home in their chair.”

Other community members express concern that a remodeled location will be a glorified convenience store, with the same limited selection and inflated prices that, as studies have found, characterize small, urban grocery stores.

But Chris Friesleben, a spokesman for the company, told the Iowa Independent that prices on essentials will not go up as a result of the remodeling and that a new Hy-Vee will continue to offer daily essentials. “You’re still going to be able to go in there and get your fruits, vegetables, meats, dairy, bread, beer, liquor, everything you need,” she said.

Asked whether the new store would have a pharmacy, she said that a decision will be made after the company gauges the success of a scaled-down Hy-Vee to be built in Lincoln, Neb.

For its part, Iowa CCI continues to oppose any reduction in services and advocates for the Harding Hills location to remain open as a full-service grocery store. But the organization appears to have shelved its demand that CEO Richard Jurgens meet with community members, as Hy-Vee plans to hold an open forum with residents later this summer.

That forum will likely feature many of the same concerns that residents expressed last month at a CCI gathering to discuss the Harding Hills store.

There, community members often veered away from sharp criticism of Hy-Vee to voice long-simmering frustration with the signs of decline in their neighborhood, from blighted storefronts to vacant lots that become centers of crime.

David Stephenson — who, after 40 years of working in factories, had to start driving a truck because manufacturing jobs began to disappear — rattled off the stores that have shuttered since he moved to the neighborhood. “There used to be two up here –one on 6th and one on Euclid. We’ve lost all of the grocery stores on University,” he said.

“We’re working hard to rebuild these neighborhoods but the big companies say there isn’t enough cash-flow,” said Stephenson.

Matthew Covington, an organizer for CCI in Des Moines, took a more optimistic view. Even if Hy-Vee goes forward with a remodeling in a few years, he says, the company “is planning on making a real investment in that community.”

But as with everything in the retail sector, Covington notes, “The overriding message is that nothing is set in stone.”