DUBUQUE, Iowa — Dubuque city leaders may end up paying more than $283,000 to 16 manufacturers that are seeking rebates on natural gas franchise fees.
The city council will review the proposed legal settlement on Wednesday, according to the Dubuque Telegraph Herald (http://bit.ly/2umf3Zj ).
City officials recommended that council members approve the settlement to end an ongoing lawsuit, more than three months after the Iowa Supreme Court declined to hear the city’s appeal.
Council members passed a 2 percent natural gas franchise fee in 2003, which provided a rebate for companies exempt from taxes on natural gas used in manufacturing. The 16 companies argued they were unaware of the exemption until 2013, and filed a 2014 lawsuit claiming the city wrongfully withheld reimbursement on their utility bills dating back to 2009.
The city passed an ordinance the following month that voided any retroactive claim for a refund of fees paid prior to July 1, 2013. They also passed a requirement that companies file requests for rebates by June 30 in the fiscal year in which the franchise fee was paid, said Barry Lindahl, the city’s senior counsel.
The companies argued that the new city ordinance was a retroactive tax that violated their due process and equal protection rights.
A district court judge ruled in the city’s favor, but the Iowa Court of Appeals overturned that decision in a 2-1 opinion.
Lindahl and Des Moines attorney Sean Moore, who represents the companies, said the settlement avoids additional time, effort and legal costs. Moore said the amount represents what the companies argued they were owed prior to the city ordinance change.
“The payout to my clients, it would have been the same had we gone to the hearing,” Moore said.
Information from: Telegraph Herald, http://www.thonline.com