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from: WFC Courier

Friday, September 21, 2007 12:00 PM CDT

Polk County franchise fee suit has bearing on Waterloo

By TIM JAMISON, Courier Staff Writer
WATERLOO --- A court ruling in Des Moines could mean good news for Waterloo cable television customers and budget woes for their city government.

A Polk County District Court ruling last week said a state law designed to shield cities against damages for past cable franchise fee overcharges was unconstitutional. It cleared the way for Des Moines cable television subscribers to pursue a lawsuit seeking refunds from the city government and could have implications for similar actions in six other Iowa cities, including Waterloo.

"It's not good news because I imagine the judge's decision in Des Moines will have some weight in other jurisdictions," said Waterloo City Attorney Jim Walsh. "It's extremely unusual for a district court judge to find a law unconstitutional. I expect the Polk County issue will be appealed and the Court of Appeals or Iowa Supreme Court will weigh in."

Waterloo, Bettendorf, Cedar Rapids, Davenport, Des Moines, Dubuque and Sioux City were sued in September 2006 by customers claiming the franchise fees passed on to cable subscribers through Mediacom and other providers amounted to an illegal tax under Iowa law because the amount collected exceeded the cities' costs of administering the franchises.

Five of those cities, including Waterloo, banded together to hire the Ahlers & Cooney law firm to mount a joint defense.

Court rulings in the Davenport and Bettendorf cases in April 2007 declared the taxes to be illegal in those jurisdictions.

But the Iowa Legislature approved a law, signed into effect by Gov. Chet Culver on May 29, that allowed cities to collect cable franchise fees "without regard to the municipality's cost of inspecting, supervising or otherwise regulating the franchise." That law also retroactively legalized any franchise fees collected by cities prior to its adoption.

Citing the new legislation, the city of Des Moines attempted to have the lawsuit dismissed.

District Court Judge Michael D. Huppert instead found the case could continue based on the fees collected before May 29.

"The retroactive provision contained in (the newly adopted state law) violates the plaintiff's due process rights under the federal and state constitutions," Huppert said.

The lawsuits have multi-million dollar implications for local governments collecting the fees. The city of Waterloo has collected about $700,000 annually through a 5 percent franchise fee passed on to subscribers through Mediacom.

Contact Tim Jamison at (319) 291-1577 or tim.jamison@wcfcourier.com.