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HomeMy WebLinkAbout2005-10-17 AFN Options Committee Minutes10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Learn about the City's plan to construct and move the water treatment plant -Clean drinking water is an essential right Agendas and Minutes City of Ashland V AFN Options Committee (vieWAll) AFN Options Committee Agenda Monday, October 17, 2005 CALL TO ORDER View Agenda AFN Options Committee Meetin, Minutes October 17, 2005, 7:30am Siskiyou room, CDES Building, 51 Winburn Way Michael Donovan called the AFN Options Committee meeting to order at 7:30am on October 17, 2005 in the Siskiyou Room of the CDES Building, 51 Winburn Way Ashland, Oregon. ROLL CALL Committee members Barth, Collins, Donovan, Mace, Mackin, and Shultz were present. Councilor Russ Silbiger was present. STAFF PRESENT: GINO GRIMALDI, CITY ADMINISTRATOR LEE TUNEBERG, ADMINISTRATIVE SERVICES AND FINANCE DIRECTOR RICHARD HOLBO, TELECOMMUNICATIONS ENGINEER https://old.ashland.or.us/Agendas.asp?AMID=2382&Display=Minutes 1/8 10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon MICHAEL AINSWORTH, CABLE TV MANAGER CINDY HANKS, PROJECT MANAGER BRYN MORRISON, ADMINISTRATIVE ASSISTANT REVIEW COMMITTEE MINUTES Approval of minutes dated October 10, 2005 Rick Barth, Committee member amended page 5, paragraph 1, City owned some of OSF's assets and remove except for the theater. Kevin Shultz, Committee member amended page 5, paragraph 2, strike competitive process and add however these are theoretical results, actual results may vary. Mackin/Mace as amended. All Ayes. COMMITTEE WORK SESSION The Committee discussed the two reports presented to the Committee by members of the Committee. They discussed the form of presentation they will make to Council. Councilor Russ Silbiger commented the Committee should present a realistic assessment. The Committee discussed the level of detail Council would prefer. Councilor Silbiger responded that each Councilor has a different level of detail and the Committee needs to present a strong narrative that points to the detail and would like Council to be able to make a choice based on that detail. The Committee discussed that they will present the options to Council in enough detail that they will not need to ask for more work by the Committee afterward. The Committee discussed the options and pros and cons of each. Options: 1. Pull the Plug 2. Status Quo 3. Sell Part 4. Sell All 5. Lease 6. Spin Off 7. Common Carrier 8. Keep -Enhance https://old.ashland.or.us/Agendas.asp?AMID=2382&Display=Minutes 2/8 10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon 1.Pull the Plug: + System control under City of Ashland - No contribution to Debt Service + Eliminates future losses + Retains system for future options -Future value of Dark Fiber - Ongoing R & M costs, but lower - Eliminates consumer choice - Increased CATV and CM prices - Loss of local control - Some ISP's will go out of business The Committee discussed the option of pulling the plug. Members stated that they feel that this would be the worst probable financial outcome for the City, it would result in incurring more cost for the City network, the City would lose the value of assets, and the debt plus additional expense would be placed on the citizens. The Committee commented that if this was the option chosen, the City would not incur any more debt and eliminate the risk of future operating losses. The Committee discussed the possible future value of the fiber and the potential use. 2. Status Quo: 3. Sell: + Best if done before other options -Risk of "losing" value thru process - 3 month political sale process (best case) - Sell options: -Charter - Other CATV provider - Telecom Co, Qwest example - May create a "monopoly" for CATV + Should provide "value" ($) of system - Bottom 3(-) in Pull Plug, depending on buyer - Increased CATV and CM prices - Loss of local control - Some ISP's will go out of business + Contributes lump sum toward debt https://old.ashland.or.us/Agendas.asp?AMID=2382&Display=Minutes 3/8 10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon The Committee discussed the sell option and that if the City did not obtain an acceptable price, then they could look at other options as far as leasing. Members discussed that this option may maximize the value for the annual debt service requirement. The Committee asked what amount of time would be required for a sale. Gino Grimaldi, City Administrator responded that the decision making process would require 3 months. The Committee discussed that the community needs to be aware that the system is at the maximum value and potential now and that they are only exploring the option now, it has not been decided to sell. They will need to explore the market and find what the market value is. Members discussed the sale process and if an open bidding process would require the sale to the highest bidder. Councilor Silbiger responded that they would not have to sell to the highest bidder. 6. Spin Off: + Operate without Public Process/Review + More "Business" like ? May reduce Overhead- for Operator? ? Contribute to Debt Service - Compared to Status Quo- Could contribute some $ -Requires cash for startup + Could still be perceived as local company + Could provide "unique" community services -Recipients might be: Non Profit For Profit Cooperative -Recipient still must compete -Assumed debt may revert to City of Ashland + Life Line Service Paul Mace, Committee member would like staff to research the Central Service cost for AFN. He would like to see what they would be for a spun off entity and would also like to look at how much of the debt the entity would be able to retire. The Committee discussed the personnel that would be moved from the City to another entity and the requirement for PERS. Lee Tuneberg, Administrative Service and Finance Director responded that the other entity, as the hospital did, would not be required to provide PERS. The Committee stated that the operating assumption for a spin off is that it would be to a non government entity. The Committee discussed separating out the $15.5 million debt to what the construction costs were and only show that as the community investment. Some members of the Committee didn't think that the https://old.ashland.or.us/Agendas.asp?AMID=2382&Display=Minutes 4/8 10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon community would see it that way. They would see the whole debt of $15.5 million. The question was raised to ask the community if they would want to invest more to enhance the system to be competitive. The Committee also questioned how they would penetrate the other 3,600 subscribers. The Committee discussed what AFN could offer the community that would make them different from the competition. Mr. Mace stated that he does not see any advantage of spinning off to a for profit entity. Mr. Tuneberg added that the FCC may see the for profit entity as receiving a benefit of municipal financing. Mr. Grimaldi asked if anyone knew of a non profit entity that would be interested in AFN. There was none known. The Committee discussed that a negative would be if the entity failed to meet a specified target, it would revert back to the City. 7. Common Carrier: * Expand ISP concept to CATV and High speed City owns Infrastructure, "others" provide services -Ongoing Maintenance costs + Provides Cash toward Debt ? Ownership and Upgrade issues and Community Antenna -Risk of "tenants" credit worthy -Administrative burden remains to some degree + Life Line Service ? Future opportunities for investment in new Tech/Other Services Don Mackin, Committee member explained what Common Carrier was. The City would own the conduit and would rent or sell the conduit to operate on a wholesale basis. It would have to be determined who would do the future enhancements. It would take the City out of the cable business. It would make the head end simpler to deal with and they would hope to operate it to make enough to make the annual debt service payment. The Committee discussed adding to the requirements of carrier that they would offer a Life Line Service as a community benefit. The Committee asked for costs associated with providing service to every home in Ashland. Staff responded that documentation was presented previously at an Options meeting. 8. Keep/Enhance: + Keeps control - Keeps total debt - More debt ? Change Management/Operations +/- Maintains Public Process -Overhead issues https://old.ashland.or.us/Agendas.asp?AMID=2382&Display=Minutes 5/8 10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon - Increasing competitive pressure - Dealing with growing negative public reaction The Committee discussed that the City would need to develop a new operational management structure if they chose this option. The City would need to hire a director and give the direction to the director so they could operate in a more business type manor. Mr. Grimaldi asked for options on what AFN could do to increase the bottom line. The Committee will present a best and worst case scenario for the options. The Committee discussed how theywill prepare the report for Council. Staff will help with figures needed. Mr. Mace would like to look at the effect financially on charging market rates and analyze Central Service costs for enhancement options, spin off or common carrier costs and how they would change. The Committee would like the equivalent market cost for enhancing product. Mr. Mace would like Richard Holbo to look at if the IT services would have to leave with a spin off. What happens if they try to separate AFN from other services. Members of the Committee will work together to cost out the options. Spin Off/ Enhance: Russ Silbiger and Paul Mace. Sell: Kevin Shultz and Don Mackin. Common Carrier: Rick Barth and Paul Collins. NEXT M E ET I N G (S), Next scheduled meeting October 24, 2005 at 7:30 AM The next meeting will be a work session again with no public input taken. ADJOURNMENT The meeting was adjourned at 9:52 am. Respectfully Submitted, Bryn Morrison Administrative Assistant Administrative Services and Finance Department https://old.ashland.or.us/Agendas.asp?AMID=2382&Display=Minutes 6/8 10/23/24, 11:03 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon Online City Services Email Updates Sign up to receive local important News & Events. 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