to Nicholas Johnson's Public Power Web Site
The Significance of Iowa City's "Public Power" Vote
Where Are the Relevant Statutory Provisions and What Do They Say?
August 1, 2005
[Note: What follows is not a "legal opinion" nor does it represent thorough legal research and analysis of all of the possibly relevant statutes, regulations, court decisions and lawyers' legal opinions. It is a superficial reaction to a reading of the two sections of the Iowa Code cited by the Citizens for Public Power, Chapters 388.2 and 362.4, in Carol Spaziani, "'Yes' on November 8 Provides Options," Iowa City Press-Citizen, July 25, 2005.
For an op ed response to the Spaziani column see Nicholas Johnson, "Power Question is Simple One," Iowa City Press-Citizen, August 29, 2005. For a letter to the editor in response to that op ed, see Paula S. Dierenfeld, Letter to the Editor ("Know Facts on Public Power"), Iowa City Press-Citizen, September 23, 2005.
This document, by contrast, is provided, not for casual reading, but for those who'd like to know more about the significance of their vote on the November 8, 2005, ballot propositions regarding public power for Iowa City, Iowa, and the legal standards underlying the election. It is but one person's interpretation; and one person not acting in his role as a lawyer. Other interpretations have been arrived at by the skilled lawyers representing Citizens for Public Power, the City of Iowa City, and MidAmerican -- lawyers who have done a thorough job of research and issued legal opinions they are prepared to stand behind.]
As a result of a Citizens for Public Power petition, on November 8, 2005, the voters of Iowa City will be presented on their ballots with the following question: "Shall the [City Council] . . . of Iowa City . . . be authorized to establish . . . a city utility . . .?"
Some lawyers offer the opinion that this language satisfies the requirements of the Iowa Code for (a) a “proposal to establish a municipal utility” (which would normally come from a city council rather than being directed to it) and, simultaneously, (b) the requirement that voters must vote on (and approve) such proposals before their city council can proceed. See, e.g., Paula S. Dierenfeld, Letter to the Editor ("Know Facts on Public Power"), Iowa City Press-Citizen, September 23, 2005.
As noted above, the document which follows is not a “legal opinion” nor the result of thorough legal research. Thus, the lawyers who hold this view may very well be correct.
This document merely argues that the language of the Iowa Code is at a minimum ambiguous, and that based on that language alone other interpretations are possible.
So, what will be the significance of the outcome of the vote on the Iowa City ballot proposition?
The outcome may have some political significance insofar as it represents the results of a kind of opinion poll that most elected officials would take into consideration. (It leaves some ambiguity, however, regarding what "opinion" is represented by a vote of "yes" or "no.") But a superficial reading of the relevant Iowa Code provisions suggests that the vote will have little or no legal or technical significance one way or the other.
The Iowa Code contemplates that (1) a city council can propose the establishment of a city utility, (2) following which, if the council wishes to proceed, it must submit the proposal for the approval of that city's voters, and if approved (3) the city council may then evaluate whether and how it still wants to go ahead (it is not legally required to do so).
Even if voters are empowered to put such proposals on the ballot for the voters' approval the particular proposal on the Iowa City ballot would seem to accomplish little (aside from such political significance as it may have). It is not a proposal "to establish," as required by the Code. It is a proposal (if it is a proposal at all) that the City Council "be authorized to establish."
But the City Council is already "authorized" to establish a city utility -- in the sense of putting forward a proposal to establish one. It gets that authority from the Iowa Code. (The only sense in which voters might be said to "authorize" a city council to establish a utility is that their vote approving a city council's proposal is necessary before the city council can go ahead. But that "authorization" is of a pre-existing proposal from the council; it is not, itself, "the proposal to establish," nor does it constitute the source of the city council's legal authority to propose municipal utilities.)
The Iowa City City Council has the authority to propose the establishment of a city utility before the vote on this November's ballot proposition, and it will continue to have the authority to do so after the vote -- regardless of which way the majority votes.
If, after this "authorization," the City Council decides for political reasons (since there are no legal reasons) to pursue the matter of a city electric utility, it will need to go back to the requirements of the Iowa Code. It can be argued that it will then need to create "a proposal to establish" such a city utility, following which a vote will be required on that proposal (as distinguished from the November 8 vote on the Citizens for Public Power ballot proposition "authorizing" a proposal). If that Council proposal is approved the Council will still have the legal authority to proceed, or not, as it chooses.
There's more to the analysis, including the second proposal for a "utility board," but this is the gist of it.
First, the relevant statutory language with some light commentary, and then more detailed analysis and discussion.
As of July 29, 2005, the Johnson County Auditor's "November 8, 2005 City Election" Web page contained the following:
Iowa City Electric Light and Power Questionshttp://www.johnson-county.com/auditor/voter/0511city.htm.
Under the Iowa City charter, the public may petition to place issues on the ballot. (Other cities in Johnson County do not have this procedure.) The following questions will appear on the November 8 Iowa City ballot (50% required):
"Shall the City of Iowa City in the County of Johnson, Iowa, be authorized to establish as a city utility an electric light and power plant and system?"
"Shall the management and control of an electric light and power plant city utility be placed in a Board of Trustees consisting of five trustees as provided by law?"
This page will be updated with more information as Election Day approaches.
The Charter for the City of Iowa City is contained within the Iowa City City Code, available online at http://184.108.40.206/IA/Iowa City/index.htm. Article VII of the Charter ("Initiative and Referendum," Secs. 7.01-7.07) does indeed provide a procedure for citizens to place petitions on the ballot, see "Iowa City Initiative and Referendum," below. ("The qualified electors have the right to propose measures to the council and, if the council fails to adopt a measure so proposed . . . to have the measure submitted to the voters at an election," Iowa City Charter, Article VII, Sec. 7.01 (A) (1).)[For some reason, by August 10 the notice had been changed to refer to Chapter 388 rather than the Iowa City charter. On August 10 it read as follows:Iowa City Electric Light and Power Questions
Under Iowa Code Chapter 388, city residents may petition to place utility issues on the November city election ballot. The following questions will appear on the November 8 Iowa City ballot (50% required):
"Shall the City of Iowa City in the County of Johnson, Iowa, be authorized to establish as a city utility an electric light and power plant and system?"
"Shall the management and control of an electric light and power plant city utility be placed in a Board of Trustees consisting of five trustees as provided by law?"
This page will be updated with more information as Election Day approaches.
However, some of the confusion in this proceeding (illustrated by the changes in the official notice, quoted above) arises from the fact that there is another provision for putting proposals on the ballot in a city election that is (a) specifically applicable to a city's creation of city utilities, and (b) in the Code of Iowa. Normally this would be the end of the matter. Just as an act of congress can sometimes overrule, in effect, a state statute or court decision, so typically a state statute is superior to a city charter or ordinance. In this instance, however, the state law (Chapter 364.2) makes reference back to cities' provisions for initiative and referendum ("If a petition of the voters is authorized by the city code, the petition is valid if signed . . .. If the petition appears valid on its face it shall be accepted for filing").
More significant is that the Iowa Code requires that a prerequisite to a municipal utility is "the proposal to establish . . . a city utility" -- something that a casual glance might suggest does not, and will not, exist either before or after the vote. Moreover, the language of the Code suggests that the proposal must be "of a city," that is, a proposal from (in this case) the City Council. Chapter 388.2 provides that "The proposal of a city to establish . . . a city utility . . . or . . . a utility board, is subject to the approval of the voters of the city . . .. The proposal may be submitted to the voters . . by the council on its own motion. Upon receipt of a valid petition . . . the council shall submit the proposal . . .. A proposal for the establishment of a utility board must specify . . . either three or five members. If a majority . . . approves the proposal [sic; although somewhat ambiguous presumably a reference to either a proposal for a "city utility" or a "utility board"] , the city may proceed as proposed. If . . . not . . . the . . . proposal may not be submitted . . . for at least four years . . ." (emphasis supplied).
The definitions in Chapter 362.2 include (4) "'City' means a municipal corporation . . ..", (6) "'City utility' means all or part of a . . . electric light and power plant and system . . .." and (12) "'May' confers a power." Chapter 388.1 (2) provides that a "'Utility board' . . . means a board of trustees established to operate a city utility . . .."
Chapter 388.3 specifically refers to a proposal to establish a utility board, subsequently approved by a majority of the voters, and provides that following this voter approval "the mayor shall appoint the board members . . . subject to the approval of the council" (emphasis supplied).
Chapter 388.4 seems rather clearly to contemplate the prior existence of the utility (as distinguished from an exploration of the possibility of such). It refers to "the city utility . . . administered by the board." It says the board can "exercise all powers of a city in relation to the . . . utility system it administers" -- following which it goes on to address some of the details of such administration by a board. Chapter 388.3 is consistent. Since Chapter 388.2 refers to the necessity of "approval of the voters of the city" to "discontinue a utility board" the question arises of the procedure to be followed if the city utility the board "administers is disposed of or leased for a period of over five years." (In that situation, Chapter 388.2 provides that a board "may be discontinued by resolution of the council . . ..")
References in Chapter 388.2 to "the proposal" and "of a city" are subject to a number of interpretations that raise some of the questions discussed below (see, e.g., "The Process," immediately below).
What is meant by the word “proposal”? One assumes that if the preferred, general procedure were followed -- that is, it is a city council that is putting its “proposal” before the voters -- the "proposal" would encompass more than a single, one-liner including the words “establish” and “city utility.” Hopefully, the city council would have disclosed to the citizenry before the vote a more detailed “proposal,” something more akin to a “business plan.”
Thus, assume that (a) under some circumstances voters do have the statutory power to come up with the proposal when their city council has failed to do so, and (b) the Iowa City proposition read “shall establish” rather than “shall be authorized to establish.” Even under those partially false assumptions, have the voters of Iowa City been presented with enough detail in this instance for the Citizens for Public Power ballot proposition to constitute a “proposal”?
Whatever ambiguity there may be surrounding the word “proposal,” it would seem there could be very little room for confusion or interpretation in the Chapter 388.2 phrase, "The proposal of a city to establish . . . a city utility" (emphasis added). Both as a matter of common usage and legal interpretation, what can be made of, "Shall the City of Iowa City . . . be authorized to establish . . . a city utility . . . ?" To the extent this proposition can be considered a proposal of anything it is a a proposal to "authorize" something, not a proposal to "establish" something. One would think that a "proposal to establish" would more likely read something like, "Shall the City of Iowa City establish . . . a city utility . . . ?"
Abbott v. Iowa City, 224 Iowa 698, 277 N.W. 437 (1938), involved a similar situation in which the latter language was used. As the Iowa Supreme Court described the facts, "petitions signed by the requisite number of property owners were filed with the mayor of Iowa City requesting him to submit 'the question of establishing a city-owned and city-operated electric light and power plant and distribution system,' to the voters at a special election as authorized by section 6132 of the Code of 1931," 277 N.W. at 438. In other words the voters were to address "the question of establishing," not the question of whether the City Council "shall be authorized to establish." (Of course, aside from the fact the same city, Iowa City, was involved, and the issue then was also the establishment of a municipal power utility, the times were different, the laws at the time undoubtedly varied from those today, and the issues before the court were for the most part unrelated to any the community now confronts.)
In fact, Citizens for Public Power appear to support this interpretation. As Carol Spaziani has written of the consequences of the passage of the first ballot proposition, "The Council would be authorized but not required to proceed. 'Authorized' is not the same as 'required.'" Precisely. That's the point.
This fact takes on great significance later on in the analysis.
Given the definition of "city" in Chapter 362.2 (4), above ("municipal corporation"), without more the use of "city" in Chapter 388.2 ("The proposal of a city to establish . . ." (emphasis supplied)) would appear to require that the "municipal corporation" called the City of Iowa City (presumably acting through its governing body, the City Council) be the creator, the source of the proposal. (Chapter 362.2 (4) provides that "when used in relation to land area, 'city' includes only the area within the city limits." Clearly, the reference to "city" in Chapter 388.2 could not have been intended to suggest that a "land area" could make a proposal.)
At a minimum, it would seem a stretch short of reach to argue that a proposal from voters could qualify as "the proposal of a city." (On the other hand, to the extent the public power proponents seem to be arguing that the statute elsewhere empowers voters to "play all the parts" -- draw up a proposal, petition to put it on the ballot, and then vote to approve their own proposal -- thereby removing the city council from the process, they obviously do not, and do not need to, argue that the voters' proposal is "the proposal of a city.")
On the assumption that "the proposal of a city" is required, Chapter 388.2 would seem to contemplate the following process:
1. Every city council in the State of Iowa is empowered by the State Legislature, should a given city council choose to do so, to make a "proposal" to establish a "city utility."
2. For this "proposal" to proceed it must have the "approval of the voters."
a. To effectuate this requirement the city council "may," but need not, put the council's proposal on the ballot. (Of course, if it does not do so, and nothing more happens, the council is precluded from proceeding with its proposal.)3. If the "proposal" is adopted by a majority of the voters, the city council then may, at its option, take further action, or not. ("If a majority . . . approves the proposal, the city may proceed as proposed" (emphasis supplied). Chapter 388.2) If the council does nothing, that is the end of the matter. The voters can vote for new council members at the next city council election, but that is their only remedy. They cannot otherwise force the sitting council to proceed with the proposed "city utility" if the council deliberately chooses not to do so, or simply never gets around to it.
b. If the city council fails to put its proposal before the people, "upon receipt [by the council] of a valid petition [from the voters] as defined in section 362.4 . . . the council shall submit the proposal at the next regular city election" (emphasis supplied). That is, if there is a city council proposal on the table, which the council nonetheless refuses to submit to the voters, if those voters live in a city (such as Iowa City) in which "a petition of the voters is authorized by the city code" (the standard of Chapter 362.4) they may, by such a Chapter 362.4 petition, force the council to submit the council's "proposal" to the voters.
Thus, while on most matters a city council can act on its own, when it comes to establishing a "city utility" the city council's power to act is "subject to the approval of the voters." Similarly, the "approval of the voters" is subject to two checks from the city council: (1) that the city council comes up with "the proposal" in the first place, and (2) that it chooses to exercise its power ("the city may") to proceed after voter approval.
4. There are no requirements regarding the meaning of "proceed." Theoretically, the council could endeavor to create a "city utility" immediately, without more. It could postpone "proceeding" for an indeterminate period of time. It could study the matter further in any one of a variety of ways, hold hearings, try to draft business plans, or proposals for the Iowa Utilities Board. No particular procedure is required by statute. Indeed, a council is therefore legally authorized to do nothing at all.
5. What is required, as yet one more check on the process, is the approval of the Iowa Utilities Board. See Larry W. Loos and Thomas J. Sullivan, "Considerations in Governmental Acquisitions of Utility System Properties," (Black & Veatch Corporation, April 2003, revised, June 2005), http://www.iowautility.org/asp/BV_White_Paper_6-30-05_Final.pdf ("For electric utilities in Iowa, the Iowa Utilities Board (IUB) is required to determine whether it is in the public interest to grant a city a certificate of authority for the city to take possession of and to operate the electric system." For a longer excerpt see Appendix A, below).
6. For the many other considerations along the way, see Appendix A, below. But the five itemized above are the major milestones.
Can Voters' Petitions Create "The proposal of a city"?
Carol Spaziani, Co-coordinator of Citizens for Public Power, has written that "Should Nov. 8 bring majority voter support . . ., here is what would happen. The Council would be authorized but not required to proceed." Carol Spaziani, "'Yes' On Nov. 8 Provides Options," Iowa City Press-Citizen, July 25, 2005, p. 11A.
If the analysis in "The Process," above, is correct would it not put the process backwards to say that, as the result of a majority affirmative vote on proposition one, "The Council would be authorized but not required to proceed"?
That is to say, the statutory language on its face does not contemplate that the voters must come up with, and vote on, a proposal for a "city utility" before their elected council members can consider such an idea. Nor does the council need the voters' "authorization" before it can make its proposal. The city council is given that "authorization" by Chapter 388.2. That chapter would appear to not only permit, but require, that the council ("the city") will draft all proposals for city utilities. Having done so, the only restraint upon the council is that it is forbidden from proceeding with the implementation of its proposal before receiving a majority vote of approval from the electors.
[Paula Dierenfeld is a former member of the Iowa Utilities Board, and present member of the prestigious Des Moines law firm, Nyemaster, Goode, West, Hansell & O'Brien. Nyemaster lists among its clients MidAmerican.
Thus, while Paula Dierenfeld could speak with considerable authority on these issues, it is not clear whether her letter to the editor represents the independent, academic view of a former Board member, or the paid view of a MidAmerican lawyer/lobbyist. Whatever the case may be, what she has to say is entitled to respect, and to being evaluated on the basis of its content.
And what she has to say runs contrary, in some respects, to the analysis in this document.
Ms. Dierenfeld asserts that the Iowa City ballot proposition is the equivalent of (a) a city utility proposal from the Iowa City City Council, (b) submitted to the voters for their approval:
The subsequent language also makes most sense under this interpretation: "If a majority [of the voters] . . . approves the proposal, the city may proceed as proposed." That is "the city" (the "municipal corporation," the "city council") may "proceed as [it, the city council, has] proposed [in the original "proposal of a city," namely, that of the city council].""Under Iowa law, once the voters grant a city the authority to establish a city utility, the city need never again ask its residents to vote on the issue. The city could at anytime proceed to establish the utility . . ..These are excerpts. For the full text of her letter follow this link to Paula S. Dierenfeld, "Know Facts on Public Power," Iowa City Press-Citizen, September 23, 2005.
"If a majority vote against the proposal, the city council would still have all the authority it needs under its home rule powers to study the issue further, perform a cost benefit analysis and develop a business plan that the voters would then have available to them to consider before voting on the issue again at some later date."
The process described in her second paragraph ("If a majority vote against . . ."), above, supports the analysis in this document. That is, as this document has argued, normally (a) "the proposal" would come from a city council, not the voters, (b) it would involve the details of a "business plan" (or its equivalent), rather than be merely a one-line ballot proposition, and (c) if the Iowa City City Council were to follow this procedure the voters would have to vote, again, this time on the City Council's genuine "proposal."
No argument there.
But the first paragraph ("Under Iowa law . . .") essentially begs the question (the question being the statutory power of the voters to act on their own without the participation of the city council).
Clearly it's true under the Code provisions that if a city follows the procedure she outlines in the second paragraph, above (a city council makes a proposal, it's put on the ballot, and the voters approve it), then it follows that "once the voters grant a city the authority to establish a city utility, the city need never again ask its residents to vote on the issue."
No argument there either.
Moreover, she may well be right that the Iowa Code contemplates a procedure similar to that being used in Iowa City. In other words, it may be that the Code provides (or has been judicially interpreted to mean) that the voters are free to "end run" their city council by (a) creating their own "proposal," which (b) need be nothing more than a one-line ballot proposition, that (c) "authorizes" their council to "establish" (rather than providing that their council "shall establish" a utility), which (d) they can petition to get on the ballot, and then (e) vote to approve as if it were a city council proposal.
That assertion may be supportable with arguments based on provisions of the Iowa Code, judicial interpretations, or past practice. And it's understandable that one cannot fit full-blown legal analysis into a letter to the editor (or op ed column, which is why this document exists).
But even if it turns out that sound legal analysis (beyond what is contained in her letter) supports her conclusion -- regarding the voters' power to make utility proposals in the absence of any proposals from a city council -- that conclusion does not follow from her assertion. Of course it is true, if the usual council-proposal procedure is followed, that once "the proposal" has been approved by the voters a city council needs no more authority from its constituents before it fleshes out and takes its proposal to the Iowa Utilities Board.
But that's not the question. The question is whether voters have the statutory power to play all the roles. They may or they may not. But the fact that they do have the power to approve, or not, a city council proposal on which they vote does not answer the question whether they have to power to create the proposal on which they vote.
Finally, we are presumably both in agreement as well that the vote will have little significance in the sense that (a) if the voters approve the proposition the City Council is still free to ignore the vote, and do nothing about establishing a city electric utility. And (b) if the voters turn it down the City Council is still free to continue to study the possibility of municipal power, come forward with a proposal for its establishment, put it on a later ballot (the Code provides a four-year waiting period), and if the voters then approve move forward with the project.]
What might be the possible arguments to the contrary?
(1) Consider the language of the second sentence of the second paragraph of Chapter 388.2: "Upon receipt of a valid petition as defined in section 362.4, requesting that a proposal be submitted to the voters, the council shall submit the proposal at the next regular city election" (emphasis added).
Note the reference to "a proposal." Is that significant? Most references throughout the section refer to "the proposal." And, since the section begins with "The proposal of a city . . ." any subsequent reference to "the proposal" can most reasonably be interpreted as a reference back to a proposal coming from a city council. Even in the sentence quoted, the final reference is "the council shall submit the proposal."
Under this interpretation, the "valid petition" referred to in the second paragraph would be a petition from the voters demanding that the city council's "proposal of a city to establish" be put on the ballot for their vote. This would be necessary because the prior sentence, against which it is juxtaposed, says one option is that the council "may" submit its proposal to the voters "on its own motion." Thus, the alternative option is that if a city council made a city utility proposal, but never put it on the ballot, the voters are given the power to put it on the ballot. This interpretation is reenforced by the subject matter of the second paragraph, in which both sentences are found, which deals with the matter of putting proposals on ballots.
However, since the requirement that the council put a proposal on the ballot most immediately follows the designation of "a proposal" from petitioners, one could argue that the section intentionally confers on a city's voters, as distinguished from its city council, the authority to generate a proposal for a city utility, and, by petition, accomplish both (a) the creation of "the proposal," and (b) the power to compel the city council to put it on the ballot.
One problem with this argument is that it rests the enormous weight of a rather significant legal variation from the otherwise clear language of the section on the single word "a" (rather than "the"). Changing a procedure by which the council creates "the proposal" and the voters then vote on it, into one in which the voters can simultaneously both create, and then vote on, their own proposal is a radically different process. If the legislature truly intended to confer such a power on a city's voters, in a section primarily devoted to the powers and procedures of a city council, one would think it would have done so more explicitly.
The other problem with this interpretation is that if "a proposal" does not refer to "the proposal" of a city council regarding a "city utility" it would seem to envision any proposal on any subject. It would mean, in effect, that if a city code authorizes "a petition of the voters," and if a valid petition requests that a "proposal" be put in the ballot, the city council "shall" do so regardless of the subject matter.
Fair enough. It's a not an unreasonable grant of power to voters. It's essentially what the Iowa City Charter provides. But, if that's what the Iowa Code provision means, why would the legislature put such an all-purpose provision -- going well beyond the creation of "city utilities" -- in a section dealing with the power and procedures governing a city council that wishes to establish a city utility? (The chapter heading on Chapter 388 is "City Utilities.")
Moreover, would it not be a redundant, or useless, act for them to do so? Chapter 388.2 refers to the petitioning process in Chapter 362.4 which in turn contains a condition on its applicability: "If a petition of the voters is authorized by the city code . . .." Now if "a" petition of the voters (presumably on any subject whatsoever, so long as it is not expressly forbidden) is authorized by a city's code why on earth would the Legislature want or need to provide additional authorization for petitions in general? Is it not much more reasonable to assume that the Chapter 388.2 reference to voters' petitions has to do with petitions related to "the proposal of a city to establish a . . . city utility"?
(On the other hand, a contrary argument might be that while Chapter 362.4 appears to be conditional ("if a petition of the voters is authorized by the city code"), it could be that the reference to Chapter 362.4 contained in Chapter 388.2 is not designed to trigger Chapter 362.4. It could be that Chapter 388.2 creates a procedure for use in Chapter 388.2 matters only (granting the petition right to all citizens of Iowa for these purposes, regardless of what their city code may provide) and merely refers to Chapter 362.4 for the procedures to be followed when petitions are used in Chapter 388.2 proceedings.)
A much more likely explanation is that the drafters of Chapter 388.2 were using "a" and "the" interchangeably, with no intention to attach significance to their choice. They refer to "A proposal for . . . a utility board" and in the very next sentence describe what happens if the voters approve "the proposal." The next section, Chapter 388.3, refers to "a proposal to establish a utility board" and later in the same sentence refers to the provisions of "the proposal." This would be consistent with the interpretation that any reference in the section to a "proposal" involving the establishment of a city utility is a reference back to the first sentence of Chapter 388.2 ("the proposal of a city . . .").
(2) A second possible argument would be that the Iowa City Charter's Article VII does, indeed, trump the Code of Iowa. It provides that the citizens of Iowa City can, in effect, through the initiative and referendum process, perform directly what would otherwise be city council functions. (Of course, under the parenthetical argument two paragraphs above, the Iowa City Charter is totally irrelevant, notwithstanding the County Auditor's initial reference to it (which has now been removed). The right of petition is found in Chapter 388.2, and that is all that is necessary.)
The Iowa Code says that one of those city council functions is creating "the proposal" for a city utility. The City Council having failed to do so, the voters are doing so directly. Thus, in Iowa City, what has happened is that "the proposal of a city" has, in this instance, come from the voters directly rather than from "the city" (that is, the city council). However, since "the proposal" must come from "a city" the voters must be, in this instance, functioning as the City of Iowa City. It is by this analysis that "a proposal" of the voters will be treated by Chapter 388.2 as "the proposal" of "a city."
Even if one accepts this tortured language and logic, the problem with the interpretation, as noted above, is that normally state constitutions and statutes trump city charters and ordinances rather than the other way around.
(3) A third possibility is that what the City Council has done can be interpreted as a "constructive proposal." That is, even though the City Council never made a proposal of its own, by putting the petitioners' proposal on the ballot that can be read as the equivalent of the Council at least agreeing with the proposal, thereby making it "the proposal of a city." That seems a little strained, since all the Council has done is to follow its own charter in putting a proposition on the ballot -- a procedure which, by design, is intended to be in lieu of Council action.
From Two-Step to Waltz.
(4) Another interpretation might be that what is happening here is a three-step, rather than a two-step process. That is, accepting the interpretation in "The Proposal," and in (1), above, the voters are not creating "the proposal." In fact, notwithstanding Citizens for Public Power's reference to Iowa Code Chapter 388.2, they are not utilizing any of Chapter 388.2 -- including its reference to the Chapter 362.4 "petition." The City Council has not made a Chapter 388.2 "proposal to establish" and neither has Citizens for Public Power.
What Citizens for Public Power has done is to utilize the City of Iowa City Charter, Article VII, procedure for putting a proposition on the ballot at the next city election -- November 8, 2005. Judging by the County Auditor's initial representation that their propositions will be on the ballot, and his reference to the Iowa City Charter, we can assume they have done so properly and complied with all the Charter's requirements. The proposition they offer is quoted in full at the top of this paper, and is discussed in "The Proposal," above. It is, quite simply, that the City Council "be authorized" to consider coming forward with a proposal for municipal power.
It is, in other words, "step one."
By this interpretation, if proposition one passes the voters will have thereby granted an authorization they do not have the power to grant, to a City Council which already has the statutory authorization and doesn't need more. It is, moreover, an authorization that does not require the City Council to do anything with regard to city utilities or anything else -- as even Citizens for Public Power concedes.
Should the City Council ever decide to run with their new-found unnecessary "authorization," and actually come out with "the proposal of a city to establish a . . . city utility," that Council proposal (one satisfying Chapter 388.2) would be "step two."
As "step three" the voters would then have to vote -- for the second time -- on what is now a City Council proposal, as contemplated in Chapter 388.2.
If that ballot proposition passes the Council then "may proceed as proposed" -- or not, at its choice.
The problem with this fourth interpretation is that this would make the first vote a useless act on two counts. (a) A city council doesn't need the "authorization" of the voters to create "the proposal of a city." Chapter 388.2 gives it all the authority it needs to do that without a peep out of the voters. (b) Second, the "authorization" provides nothing new. The Council is not required to create "the proposal of a city" according to the November 8th ballot issue, it's merely "authorized" to do so. Thus, the vote becomes little more than a very expensive poll of those who bother to vote -- many of whom may well not fully comprehend the significance of the question the pollsters are putting to them.
Like all polls, however, the results will have political significance. Whatever the votes will represent in theory, they will be interpreted by proponents and opponents alike as some evidence of "the will of the people."
Utility Boards and Trustees.
The ballot proposition regarding a "utility board" provides: "Shall the management and control of an electric light and power plant city utility be placed in a Board of Trustees consisting of five trustees as provided by law?"
This is a little confusing.
The Iowa Code defines a "utility board" as a "board of trustees." Chapter 388.1 (2). And Chapter 388.2 provides that if there is a proposal for such a board the proposal must "specify a board of either three or five members."
The "as provided by law" may suggest to some voters that the proposition's terms -- the "board of trustees" and the number five -- are required by law. Thus, the law abiding may feel compelled to vote "yes."
(a) There's no requirement in the provisions cited that there must be a proposal for a utility board as a prerequisite to a referendum on a city council's proposal for a city utility. The requirements are conditional: if there is a proposal for a utility board then that proposal must specify the number of members as three or five.(1) Because Chapter 388.3 provides that if the second, utility board, ballot proposition passes "the mayor shall appoint the board members . . ." (the "shall" removing any possible discretion on the part of the mayor and council), as drafted the proposal creates the possibility that the first November ballot proposition would fail and the second pass. (There may well be some who don't like the idea of municipal power, but who would, nonetheless, want to support what is "provided by law.") The City would thus be left without a city-owned electric company, but with a utility board that had no function.
(b) It's a "utility board" that is being created according to the Code definitions, not a "Board of Trustees," although admittedly the Code refers to one made up of a "board of trustees."
(c) There's no requirement in the provisions cited that a utility board need ever be created, let alone that it be created before the utility exists.
(d) It is not "provided by law" that there should be five utility board members. That is an option for those drafting the proposal, not a requirement.
(2) The reverse is not much better. What happens if the first proposition passes and the second fails? With regard to utility boards, Chapter 388.2 provides that "The proposal of a city to . . . establish . . . a utility board, is subject to the approval of the voters . . .." Paragraph 3 is the source of the language that "A proposal for the establishment of a utility board must specify a board of either three or five members." The fifth paragraph's references to "the proposal" can most reasonably be interpreted as applying to either proposals for a "city utility" or a "utility board." It notes that "If a majority . . . does not approve the proposal, the same or a similar proposal may not be submitted . . . for at least four years . . .."
So what happens if the first proposal passes, and the utility board proposal fails? For four years the City Council will be prevented by the language of Chapter 388.2, par. 5, from from proposing (and subsequently having the voters pass on) a utility board to administer the City's new municipal electric power company.
Referring to the utility board (what Citizens for Public Power calls the "Board of Trustees") the citizens' group says that if the propositions pass "The Board would develop a sound business plan." There are at least six problems with this assertion.
To the extent studies are to be done, or business plans drawn up, given the legislative silence on the issue, coupled with the the references to the utility boards' operational responsibilities, one must conclude that the Legislature assumed the studies and planning tasks would be undertaken by a city council -- the body that created "the proposal" in the first place. By definition, and as a matter of common sense, the utility board would only assume its tasks of administration and operation after there was a utility to operate.(1) The City Council has offered no assurances whatsoever as to what it will do if either or both ballot propositions pass. As noted above, one of its options under the law is to do absolutely nothing whatsoever (at least as to the first).
(2) It certainly hasn't said it would draw up a business plan, or have anyone else do so.
(3) It has given no indication of what tasks would be given to the utility board.
(4) There is no reference in the law to any entity (at this stage of the process) drawing up business plans.
(5) There are in the law, however, specific indications that the Iowa Legislature expressly did not envision that the tasks of utility boards would include doing studies, or drawing up business plans, for city utilities not yet in existence. Consider the definition of a "utility board" as one "established to operate a city utility," Chapter 388.1 (2), and the description of its functions in Chapter 388.4, mentioned above, involving "administration."
(6) Finally, even if the City Council had agreed to any of the above, there will be an election of new Council members on the same day these ballot propositions go to the voters. If the old Council members made representations regarding Council action on public power -- which they did not -- there is no reason why new Council members would feel bound by those representations.
An argument can be made that putting both proposals (city utility and utility board) on the ballot is just a cost saving measure. In other words, it might be more orderly, in one sense, to first establish a city utility before locking in its management structure. On the other hand, even if a referendum is not required regarding the utility's management, as long as the electors are voting on the city utility anyway they might as well also vote on its management. Especially is this so if it is contemplated that they would later be voting on this proposition at a subsequent election with all of its attendant costs of time and money.
There are two problems with this argument.
(1) The more propositions, the more wording that has to be worked through, the more is the voters' inclination to stay away from the polls, and the more confusion there is for those who do vote.Chapter 388.3 (which requires the immediate appointment of the utility board members) refers only to "a proposal to establish a utility board . . .." Does the second ballot proposition qualify? It says, "Shall the management and control . . . be placed . . .?" Intuitively, that looks like "a proposal to establish a utility board." On the other hand, one could argue that it is not a "proposal to establish" because it contemplates the "management and control" that can only exist after a city utility is in existence.
(2) The second ballot proposition is somewhat ambiguous as to whether it is conditional (conditional, that is, on the passage of the first proposition) or not.
Would there be any way to word a proposal that would both (a) refer in any way to a utility board that would, nonetheless, (b) enable one to argue that it is not a "proposal to establish"? For example, imagine a proposal that said "In the event a city utility is ever established by the City of Iowa City, the City Council is authorized, at its option, to provide for its management and control to be placed in a utility board of five members." Could one then argue that the proposal is not a "proposal to establish" a utility board, and therefore would not trigger the Chapter 388.3 requirement of immediate appointment of utility board members? Maybe not even then, and in any event that's not what the second ballot proposition provides.
This analysis has been little more than an interesting intellectual exercise. So long as everyone -- Citizens for Public Power, MidAmerican, the Iowa City City Council, Iowa Utilities Board, and voters -- go along with what's happening (and there's no reason to believe they shouldn't or won't) any disagreements will focus on the merits of municipal electric companies rather than the legal process of which the November 8 vote is a part. While the process seems complex on its face, and there are questions of legal interpretation, nothing that is being done (especially if not objected to) seems to be a substantively serious violation of the spirit of the law and the basic approach laid out by the Iowa Legislature and the Iowa City Charter.
Larry W. Loos and Thomas J. Sullivan, "Considerations in Governmental Acquisitions of Utility System Properties," (Black & Veatch Corporation, April 2003, revised, June 2005), http://www.iowautility.org/asp/BV_White_Paper_6-30-05_Final.pdf
Initially, the city or town usually commissions a feasibility study to assess whether there are economic benefits of replacing the ownership and operation of the incumbent utility with municipal ownership and operation. Economic benefits are typically measured based on the impact to ratepayers. Studies commissioned by a municipality often conclude that ratepayers in a community will pay lower rates or that extra funds will be available for other municipal operations without an increase in rates if the city condemns the system. These studies typically use averages and estimates rather than actual data related to the incumbent’s system.
Other interested parties may prepare studies in response to studies commissioned by the city. These other studies may reach different conclusions than those prepared on behalf of the municipality. Decision makers will likely be provided with conflicting information about the costs and benefits of municipalization. If this conflicting information raises doubt, decision makers may commission follow-up studies to examine issues in light of additional information and perspective provided by other parties.
If decision makers decide
to put municipalization to a vote and the voters
approve, the next step usually involves seeking to condemn the existing utility’s system. If the voters approve a referendum to “establish” a utility, the city will be free to pursue municipalization regardless of its price. The municipalization process will require the city acquire facilities through condemnation unless voluntary agreement can be reached with the existing utility to sell the system. Before filing an application for condemnation, the city must negotiate and make an offer to the incumbent for the purchase of the system. Since the municipality typically has not prepared a detailed valuation study, this offer is usually based, in part, on the prices used in the feasibility studies or the prices of other unrelated utility acquisitions. If the incumbent utility rejects this offer, the value of
the system must be determined through legal proceedings. In order to commence these proceedings, the city will have to prepare a petition to condemn the facilities, which, among other things, includes a detailed description of the specific facilities subject to the condemnation.
* * *
For electric utilities in Iowa, the Iowa Utilities Board (IUB) is required to determine whether it is in the public interest to grant a city a certificate of authority for the city to take possession of and to operate the electric system. If the IUB finds it in the public interest to grant a certificate, the IUB must also determine the market value of the utility system and the damages incurred by the utility as a result of the city’s taking. The IUB’s public interest determination will weigh whether municipalization is in the best interest of the citizens of the State of Iowa, including the citizens of the city, all customers of the incumbent utility, and the State population as a whole.
It should be anticipated that the IUB will establish a price as one indicator of whether municipalization is in the public interest. If a certificate of authority is granted, the IUB must establish a price, as this price will be used as the conclusive value of the system in a companion judicial proceeding. The condemnation process involves the hiring of legal counsel and expert witnesses by both parties to support their cases. This process is similar to a court proceeding where there are phases that typically include discovery, depositions, hearings, trials, briefs, orders, and appeals. These proceedings may require city officials or their representatives to provide detailed data and sworn testimony during hearings or depositions. Like any lawsuit, the parties may negotiate a settlement at any time during the process. However, unlike most lawsuits, condemnations of utility systems are seldom settled. Also, since the IUB ultimately is responsible for determining whether municipal ownership of an electric system is in the public interest, the Board has independent authority to approve or disprove of any settlement that the parties agree to.
Once the hearings are completed, legal counsel may submit written briefs. After briefing, the hearing panel (condemnation court or IUB) renders a decision that will establish the price which the city must pay if it wants to acquire the system at issue. Typically, some explanation of how the price was arrived at will be given. In addition, for electric utilities, the IUB will determine whether the acquisition is in the public interest. Either party may appeal such a decision. The appeal process will involve a reconsideration of the decision by a district court.
If the decision of the court clearly makes municipal takeover unfeasible, the city may decide to abandon the project. Should the city abandon the process, either voluntarily or involuntarily, the city will have to pay for feasibility studies, legal counsel, and expert witnesses out of its current resources and will not be able to pay the costs as part of a bond issue used to finance a newly established municipal electric system. As a case-in-point, we understand the city of Sheldon, Iowa spent almost $450,000 in its four-year effort to acquire MidAmerican’s electric distribution system. The IUB, in its August 2, 1990 “Order Denying Petition for Certificate of Authority,” found that the city’s acquisition would not be in the public interest. In order to finance these expenditures, Sheldon increased its property taxes.
Prior to taking possession
of the system, the city must establish the infrastructure, staff, and administration
of the utility. This may include hiring and training personnel, purchasing
inventory and equipment, acquiring or modifying computer systems,
contracting for (or otherwise arranging) power or gas supply and transmission (electric) or interstate pipeline transportation (gas), and establishing operation, maintenance, and administrative procedures. While most municipalities in Iowa already own and operate water and wastewater utility systems, the skills and equipment required to operate these systems are usually not directly applicable to owning and operating gas and electric systems.
"Yes" on Nov. 8 Provides Options
Iowa City Press-Citizen
July 25, 2005
[Note: This material is copyright by the Press-Citizen, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of the Iowa City Press-Citizen.]
What will really happen if voters approve the two public power measures on the Iowa City ballot November 8?
Iowa City voters will be asked to vote on these two measures on Nov. 8. Here is the exact wording as it will appear on the ballot:
"Shall the City of Iowa City in the County of Johnson, Iowa, be authorized to establish as a city utility an electric light and power plant and system?" Code of Iowa, Ch. 388.2
"Shall the management and control of an electric light and power plant city utility be placed in a Board of Trustees consisting of five trustees as provided by law?" Code of Iowa Ch. 362.4
When the exclusive franchise agreement between the City of Iowa City and the privately-owned MidAmerican Energy expired in 2001, a grassroots group of Iowa City residents, Citizens for Public Power (CPP), encouraged the City Council to consider the option of a city-owned electric utility.
The Council and the University of Iowa joined 18 other cities in conducting a feasibility study that showed great savings were likely if a municipal electric utility were to be formed.
Following these findings, CPP directed the Council to place the two measures on the Nov. 8 ballot by filing petitions carrying more than 1,200 signatures. In so doing, residents have provided the Council with critical options as it deliberates on whether a municipal electric company, owned by citizens, would be in the best interests of our community. By Iowa law, the Council cannot proceed with any formal steps in this direction without a "Yes" vote on question Number 1.
What 'yes' vote means
Should Nov. 8 bring majority voter support of both issues, here is what would happen:
The Council would be authorized but not required to proceed. "Authorized" is not the same as "required."
How would it determine what is in the public interest?
1. The Council would appoint a knowledgeable and widely representative five-member Board of Trustees.
2. The Board would develop a sound business plan building on the work already done in 2003 in the City/University of Iowa-commissioned feasibility study by Robert Latham & Associates of Cedar Rapids.
3. If facts support a viable, rate-saving plan of action, a case would be prepared and a request submitted to the Iowa Utilities Board (IUB) for review and possible approval.
4. The IUB would convene a formal hearing to determine whether establishing a publicly-owned utility is in the public interest, and, if so, determine a fair price for acquisition of MidAmerican's local assets.
5. The Iowa City Board of Trustees would take over local operations, hiring new, experienced personnel as needed, including existing MidAmerican employees who wished to stay with the local system.
At every step, the City Council will be able to reconsider and drop the process if it determines that the course of action is not in the public interest. A "YES" vote on Nov. 8 does not signify a "done deal." A "YES" vote preserves the Council's options.
What 'no' vote means
On the other hand, if the voters vote "NO" on Nov. 8, the City Council would be prevented from taking any further formal action. A "NO" vote cuts off the Council's options. By Iowa law, the required authorizing referendum could not be placed on the ballot for four more years. In this case it is very likely that MidAmerican Energy would renew its request for the Council to negotiate and adopt another long-term local franchise (15 years has been historically common). During that franchise period citizens would be unable effectively to raise the public power question again. Local ratepayers would continue to pay between 40 percent and 60 percent more for electricity than is paid in communities like Ames, Cedar Falls, Muscatine and Omaha, Neb., which all operate their own city-owned systems.
Contrary to the statements being made by MidAmerican Energy that the "horse would be out of the barn" or "The Council would have a blank check" if the Nov. 8 ballot measure passes, we do not believe that any Iowa City City Council would charge ahead to spend money on something that is not in the best interests of Iowa City residents. And Citizens for Public Power would not want them to! The deliberative process outlined above is designed to make sound decisions possible by our democratically elected City Council, and the "YES" vote on Nov. 8 will authorize them to do just that.
Note: The Charter for the City of Iowa City is contained within the Iowa City City Code, available online at http://220.127.116.11/IA/Iowa City/index.htm. Article VII of the Charter ("Initiative and Referendum," Secs. 7.01-7.07) provides the procedures to be used when citizens wish to place proposals on the ballot, and the consequences that flow when this propositions do, or do not, receive a majority vote. All of the provisions of Article VII can be found at the link, above. However, this opening section is a good overview.
Section 7.01. General Provisions.
(1) Initiative. The qualified electors have the right to propose measures to the council and, if the council fails to adopt a measure so proposed without any change in substance, to have the measure submitted to the voters at an election.
(2) Referendum. The qualified electors have the right to require reconsideration by the council of an existing measure and, if the council fails to repeal such measure, to have it submitted to the voters at an election.
(3) Definition. Within this article, "measure" means all ordinances, amendments, resolutions or motions of a legislative nature, however designated, which (a) are of a permanent rather than temporary character and (b) include a proposition enacting, amending or repealing a new or existing law, policy or plan, as opposed to one providing for the execution or administration of a law, policy or plan already enacted by council.
(1) Subject Matter. The right of initiative and referendum shall not extend to any of the following:
(a) Any measure of an executive or administrative nature.
(b) The city budget.
(c) The appropriation of money.
(d) The levy of taxes or special assessments.
(e) The issuance of general obligation and revenue bonds.
(f) The letting of contracts.
(g) Salaries of city employees.
(h) Any measure required to be enacted by state or federal law.
(i) Amendments to this charter.
(j) Amendments affecting the city zoning ordinance or the land use maps of the comprehensive plan, including the district plan maps.
(k) Public improvements subsequent to city council action to authorize acquisition of property for that public improvement, or notice to bidders for that public improvement, whichever occurs earlier. "Public improvement" shall mean any building or construction work.
(2) Resubmission. No initiative or referendum petition shall be filed within two years after the same measure or a measure substantially the same has been submitted to the voters at an election.
(3) Council Repeal, Amendment And Reenactment. No measure proposed by initiative petition and adopted by the vote of the council without submission to the voters, or adopted by the voters pursuant to this article, may for two years thereafter be repealed or amended except by a vote of the people, unless provision is otherwise made in the original initiative measure. No measure referred by referendum petition and repealed by the vote of the council without submission to the voters, or repealed by the voters pursuant to this article, may be reenacted for two years thereafter except by vote of the people, unless provision is otherwise made in the original referendum petition.
(1) Scope Of Power. It is intended that this article confer broad initiative and referendum powers upon the qualified electors of the city.
(2) Initiative. It is intended that (a) no initiative petition will be invalid because it repeals an existing measure in whole or in part by virtue of proposing a new measure and (b) an initiative petition may amend an existing measure.
(3) Referendum. It is intended that a referendum petition may repeal a measure in whole or in part.
D. Effect Of Filing Petition. The filing of an initiative or referendum petition does not suspend or invalidate any measure under consideration. Such measure shall remain in full force and effect until its amendment or repeal by council pursuant to section 7.05A or until a majority of the qualified electors voting on a measure vote to repeal or amend the measure and the vote is certified.
E. City Obligations. An initiative
or referendum vote which repeals an existing measure in whole or in part
does not affect any obligations entered into by the city, its agencies
or any person in reliance on the measure during the time it was in effect.
(Ord. 05-4152, 3-1-2005)
This page one article in
the August 13, 2005, Iowa City Press-Citizen represents a skilled
reporter's effort to present the range of legal opinions regarding the
public power ballot propositions. It is, however, too lengthy to be incorporated
in this document. To see the full text click on the link immediately above.
As of August 13 it was also available directly from the Press-Citizen's
Web site at http://www.press-citizen.com/apps/pbcs.dll/article?AID=/20050813/NEWS01/508130330/1079.