In response to a lawsuit filed by the Department of Veterans Affairs against the City of Des Moines, the Knoxville City Council voted Monday night to suspend the utility franchise fees applied to bills issued to the VA in Knoxville.
Last year, the council voted to initiate a 5 percent franchise fee on all gas and electric bills in the City. City Manager Harold Stewart said, at that time, he was told by the VA that the department considered it a tax and the VA would not pay. Stewart was unsure whether or not the VA has been paying the fees, but the council did not sanction any exemption. The Knoxville School District officially requested an exemption, but that request was denied.
As for the VA, Stewart told the council they considered the fees a tax that infringed upon its status as being tax-exempt as a federal entity. The lawsuit against Des Moines states such claim, Stewart added.
Stewart recommended the council suspend the fees until such time the property has been leased to a private entity. The 75-year enhanced use lease has been awarded to the Knoxville Veterans Alliance, but, as of last report, has not been signed. The KVA is awaiting the sublease of an entity capable of creating enough of a revenue stream to allow the expenses of the campus to be covered. When the lease is signed, the council is expected to reinstate the franchise fees, as well as collect taxes on the property.
In a separate action, council voted to allow Stewart to enter into future agreements with the Department of Veterans Affairs. This began with discussion between Stewart at the VA regarding access to the campus during a 5K race on June 15. Since then, an application process is being developed for organizations to use when requesting access to the campus.
Council members were surprised by this, given the history with the VA. Stewart said he has been working to develop a good relationship with the VA, and he has one, in the time he has been Knoxville’s City Manager.