Franchise Fee

Franchise Fee Approved

At the City Council meeting on January 5, 2026, City Council approved implementing a franchise fee of 2 percent on electric and natural gas bills. There is an implementation process to work through, so customers in Waukee will likely will not see the fee on their bills through MidAmerican Energy until May. The franchise fee will replace the 1 percent local option sales tax on electric and gas services that is currently in place. This means it will only be a net increase to customers of 1 percent, which is estimated to be about a $16 increase for the year for the average residential customer. Gas customers are still expected to save around $200 per year on average with the transition to MidAmerican Energy.

Funds received from this franchise fee will help cover City staff positions in shared services, such as IT, human resources, finance, administration and communications. A portion of their time was previously allotted to work on things related to the gas utility, such as natural gas education, billing, hiring staff and technical support. That portion of their time was paid for through revenues from natural gas sales. With our growing community, these staff members continue to support all other City departments as they deliver services for residents and care for roads, parks and other community assets.

More Background on the Franchise Fee

At the meeting on December 1, 2025, Waukee City Council held a public hearing and first reading of a proposed ordinance to apply a 2 percent franchise fee on the electric and gas utility bills through MidAmerican Energy. If you prefer to watch rather than read, you can view a short 2-minute video explanation on our City of Waukee YouTube channel here.  

What does this mean for residents' utility bills?

Currently, Waukee residents pay a 1 percent sales tax on gas and electric service. State Code does not allow both a sales tax and a franchise fee to apply. The 1 percent sales tax would go away if a franchise fee is applied. This means the net increase to Waukee electric and gas customers will only be 1 percent.

MidAmerican Energy purchased the Waukee Municipal Gas Utility in October. Based on data from MidAmerican Energy, Waukee customers are estimated to have as much as a 20-25% reduction in natural gas costs with this transition of natural gas service. That is an estimated $225 in savings per year on the average residential gas bill. The franchise fee would have an average annual impact of $16 per year to residential utility bills. That is still an estimated net savings of $209 per year after transitioning gas service to MidAmerican Energy and applying the 2% franchise fee, which replaces the 1% sales tax. 

Why is the City looking at a franchise fee instead of the sales tax?

The City of Waukee only gets 18.84% of the 1% sales tax collected due to the State formula used to calculate sales tax distribution. However, the City of Waukee will receive 100% of the 2% franchise fee.

What would the revenue from the franchise fee pay for?

Revenues from the Waukee Municipal Gas Utility supported the Gas division within the Public Works department and partially supported other departments within the City that provide services and support across many City functions, including Administration, Finance, Human Resources, Communications and Information Services departments. With the sale of the gas utility, the City has a projected loss of $983,328 in revenue. This small franchise fee will help cover costs of important services, such as hiring employees, paying bills, providing information to residents and keeping technology systems safely operating. 

The Waukee City Council approved a Revenue Purpose Statement at their meeting on November 17, 2025 that says what the franchise fee revenue can be used for, including:

• Repair, replacement and improvement of existing public improvements and publicly owned property
• Projects to prevent future disasters
• Energy conservation measures including energy assistance for low-income residents
• Public safety
• Repair and construction of public transportation systems
• Assistance for property damaged by a disaster
• Economic development activities
• Property tax relief

Why isn't the City using property tax to pay for these shared services?

To generate $983,328 in additional revenue, it would require a tax levy increase of about 49 cents. On an average $400,000 home, that would be about a $92.62 increase in taxes per year. The franchise fee has a lower impact on residents.

How does this compare to other communities?

Only four metro cities currently do not have franchise fees: Bondurant, Grimes, Urbandale and Waukee. Other communities range from 1-5%. Des Moines has a special exception to go above the 5% cap for the public transportation system. 

What is the State Code related to franchise fees?

Chapter 364.2 of the Iowa State Code specifies rules for the approval and management of a franchise within City limits and includes the ability for a City to establish a franchise fee. A franchise fee of up to 5% may be assessed by a City based upon gross revenues generated from sales of the franchise within the City. The franchise fee collected in excess of the amounts necessary to inspect, supervise and otherwise regulate the franchise may be used by the City for any other purpose authorized by law and based upon a revenue purpose statement approved by the City Council.

Where can I ask questions or share my thoughts?

If you have questions about how the franchise fee works, email us at communications@waukee.org. 

To share your thoughts about the proposed franchise fees, you can attend the council meeting and speak during open forum or email council members at councilmembers@waukee.org. The next reading of the ordinance is expected to be at the next city council meeting on Monday, December 15 at 5:30 p.m. at City Hall or by Zoom. Sign up for agenda notifications with the City's Notify Me tool.