Charter to pass franchise fees to customers

DALLAS — The city of Dallas is considering establishing a utility license requirement and fee for all utilities operating in the city’s rights-of-way and a new internet modem license.

The city has franchise agreements with Pacific Power, Northwest Natural Gas, Century Link and Charter.

Those utilities are exempt from the license, but it applies to all other utilities who don’t have a valid agreement with the city.

The ordinance also creates a new license requirement and fee on internet modem services.

That portion of the proposal is modeled after similar licenses established in Gresham and Eugene.

Councilors conducted a first reading of the ordinance on Sept. 18, and two utility representatives from NW Natural and Charter spoke before the council.

Bruce Anderson, NW Natural’s regional community affairs manager, said he appreciated that utilities with current franchise agreements are exempted, but said the ordinance didn’t make clear what happens when the agreement expired.

“Once we get to the end of our franchise agreement, would the intent be to have us renew that franchise or to be rolled under this new regulation?” he asked.

Robin Smith, representing Charter, warned that any new fees would fall to customers to pay.

“If the purpose of the utility license ordinance is secure fair and reasonable compensation for its (the city’s) residents, then realize that any tax imposed will most likely be passed on to the customer as line items on their bill,” Smith said.

She said if the city establish a 7 percent fee on modem services, that would equate an average $11 bill increase for customers each month. If the ordinance is approved, the council would separately establish fee rates.

“To the extent that the city intends to impose any new fees or taxes on Charter customers, regardless of service, we believe it is unwarranted and unlawful,” Smith testified. “If the intent is to tax the internet, the city should recognize the internet as an important service in today’s economy and adding a tax to that service is unwarranted and unlawful.”

She said the requirements in the ordinance appear to violate the Cable Communications Policy Act, a federal law, and asked the city to reconsider.

Councilor Micky Garus asked if it’s true that the ordinance could increase customer bills. City Attorney Lane Shetterly said yes.

“You would need to adopt a resolution setting the amount of the fee on internet or modem services,” he said. “But her testimony to you is absolutely correct that would be a fee that the customers don’t pay now on internet or modem services.”

Shetterly added that he disagreed that the ordinance is illegal, saying that it is modeled after those in Gresham and Eugene that have been upheld by the Oregon Supreme Court.

“I guess what I would say is safe harbor,” he said. “The supreme court has looked at both the Gresham and Eugene ordinances and we are well within the tracts of those two city ordinances.”

The ordinance will go to a second reading and vote on Monday.

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