Senate Study Bill 1184 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE
ON COMMERCE BILL BY
CHAIRPERSON SCHULTZ)
A BILL FOR
1 An Act relating to cities that own or operate a municipal
2 utility providing telecommunications services and municipal
3 utilities providing such services.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. Section 388.10, subsection 1, paragraph a,
2 subparagraphs (1) and (4), Code 2021, are amended to read as
3 follows:
4 (1) Use general fund moneys for the ongoing support or
5 subsidy of a telecommunications system, except as provided in
6 section 388.10, subsection 1, paragraph “a”, subparagraph (6).
7 (4) Use funds or revenue generated from electric, gas,
8 water, sewage, or garbage services provided by the city for the
9 ongoing support of any city telecommunications system, except
10 as provided in section 388.10, subsection 1, paragraph “a”,
11 subparagraph (5).
12 Sec. 2. Section 388.10, subsection 1, paragraph a, Code
13 2021, is amended by adding the following new subparagraphs:
14 NEW SUBPARAGRAPH. (5) Lend funds or revenue generated from
15 electric, gas, water, sewage, or garbage services provided by
16 the city at an interest rate which is less than the prevailing
17 market rate for comparable lending by a financial institution.
18 NEW SUBPARAGRAPH. (6) Lend moneys from the general fund or
19 reserve fund to a telecommunications system at an interest rate
20 which is less than the prevailing market rate for comparable
21 lending by a financial institution.
22 NEW SUBPARAGRAPH. (7) Forgive any loan, indebtedness, or
23 bonds extended by the city to a telecommunications system.
24 NEW SUBPARAGRAPH. (8) Provide telecommunications services
25 or access to telecommunications system facilities, equipment,
26 or services at a cost which is less than the reasonable cost of
27 providing such facilities, equipment, or services or access to
28 such facilities, equipment, or services.
29 NEW SUBPARAGRAPH. (9) Provide a telecommunications system
30 with any municipal utility facilities, equipment, or services
31 at a cost for such facilities, equipment, or services which is
32 less than the reasonable cost of providing such facilities,
33 equipment, or services.
34 NEW SUBPARAGRAPH. (10) Sell or offer to sell
35 telecommunications services to any customer or prospective
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1 customer in the same transaction as electric, gas, water,
2 sewage, or garbage services are sold or offered for sale.
3 Sec. 3. Section 388.10, subsection 1, paragraph b, Code
4 2021, is amended by adding the following new subparagraph:
5 NEW SUBPARAGRAPH. (01) “Financial institution” means a bank
6 or credit union as defined in section 12C.1.
7 Sec. 4. Section 388.10, subsection 2, paragraphs a and b,
8 Code 2021, are amended to read as follows:
9 a. Prepare and maintain records which record the full cost
10 accounting of providing telecommunications services. The
11 records shall show the amount and source of capital for initial
12 construction or acquisition of the telecommunications system
13 or facilities. The records shall be public records subject to
14 the requirements of chapter 22. Information in the records
15 that is not subject to examination or copying as provided in
16 section 388.9, subsection 2, may be expunged from the records
17 prior to public disclosure. This section shall not prohibit
18 a municipal utility from utilizing capital from any lawful
19 source, provided that the reasonable cost of such capital is
20 accounted for as a cost of providing the service, and provided
21 that the interest rate associated with obtaining the capital
22 does not exceed a rate that is greater than the prevailing
23 market rate for comparable lending by a financial institution.
24 In accounting for the cost of use of any city employees,
25 facilities, equipment, or services, a city or municipal utility
26 may make a reasonable allocation of the cost of use of any
27 city employees, facilities, equipment, or services used by
28 the municipal utility based upon reasonable criteria for the
29 distribution of the cost of use in any manner which is not
30 inconsistent with generally accepted accounting principles.
31 b. Adopt rates for the provision of telecommunications
32 services that reflect the actual cost of providing the
33 telecommunications services. However, this paragraph shall not
34 prohibit the municipal utility from establishing market-based
35 prices for competitive telecommunications services.
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1 Sec. 5. Section 388.10, subsection 3, Code 2021, is amended
2 to read as follows:
3 3. This section shall not prohibit the marketing or
4 bundling of other products or telecommunications services,
5 in addition to telecommunications services. However, a city
6 shall include on a billing statement sent to a person receiving
7 telecommunications services from the city, a separate charge
8 for each telecommunications service provided to the person.
9 This subsection does not prohibit the city from also including
10 on the billing statement a total amount to be paid by the
11 person.
12 Sec. 6. Section 388.10, Code 2021, is amended by adding the
13 following new subsection:
14 NEW SUBSECTION. 5. This section shall not apply to any city
15 in which greater than one-third of the United States census
16 bureau census blocks within the city are targeted service
17 areas, as defined in section 8B.1.
18 EXPLANATION
19 The inclusion of this explanation does not constitute agreement with
20 the explanation’s substance by the members of the general assembly.
21 This bill relates to cities that own or operate a municipal
22 utility providing telecommunications services and municipal
23 utilities providing telecommunications services.
24 The bill prohibits cities that own or operate a municipal
25 utility and the municipal utility itself from lending funds
26 or revenue generated from electric, gas, water, sewage, or
27 garbage services at an interest rate that is less than the
28 prevailing market rate. The bill also prohibits these cities
29 and municipal utilities from lending moneys from the general
30 fund or reserve fund to a telecommunications system at an
31 interest rate that is less than the prevailing market rate.
32 The bill prohibits such cities and municipal utilities from
33 forgiving any indebtedness extended to a telecommunications
34 system.
35 Further, these cities and municipal utilities are
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1 prohibited from providing telecommunications services or
2 access to telecommunications system facilities or equipment
3 at a cost which is less than the reasonable cost of
4 providing the telecommunications services or access to the
5 telecommunications system facilities or equipment, and from
6 providing telecommunications systems with any city or municipal
7 utility facilities, equipment, or services at a cost for such
8 facilities, equipment, or services which is less than the
9 reasonable cost of providing such city or municipal utility
10 facilities, equipment, or services.
11 Additionally, the bill prohibits such cities and municipal
12 utilities from selling or offering to sell telecommunications
13 services to any customer or prospective customer in the
14 same transaction as electric, gas, water, sewage, or garbage
15 services are sold or offered for sale.
16 The bill provides a maximum interest rate at which a
17 municipal utility can obtain capital to finance the initial
18 construction or acquisition of telecommunications systems or
19 facilities.
20 Current law provides municipal utilities shall not
21 be prohibited from establishing market-based prices for
22 competitive telecommunications services. The bill removes that
23 provision.
24 Current law provides cities that own or operate a municipal
25 utility and the municipal utility itself are not prohibited
26 from marketing or bundling other products or services, in
27 addition to telecommunications services. The bill amends this
28 provision to remove reference to other products or services and
29 substitutes instead telecommunications services.
30 The bill provides that Code section 388.10 shall not apply
31 to any city in which greater than one-third of the United
32 States census bureau census blocks within the city are targeted
33 service areas, as defined in Code section 8B.1.
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Statutes affected:
Introduced: 388.10