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HomeMy WebLinkAbout2005-10-24 AFN Options Committee Minutes10/23/24, 11:07 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 24, 2005 Draft Minutes View Agenda Attachments j AFN Options Committee Meetin, October 24, 2005, 7:30am Siskiyou room, CDES Building, 51 Winburn Way CALL TO ORDER Michael Donovan called the AFN Options Committee meeting to order at 7:33 am on October 241 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 MICHAEL AINSWORTH, CABLE TV MANAGER https://old.ashland.or.us/Agendas.asp?AMID=2390&Display=Minutes 1/7 10/23/24, 11:07 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon C I N DY HANKS, PROJECT MANAGER BRYN MORRISON, ADMINISTRATIVE ASSISTANT REVIEW COMMITTEE MINUTES Approval of minutes dated October 17, 2005 Mace/Mackin ms to approve minutes as presented. All Ayes. COMMITTEE WORK SESSION The Committee discussed the charge directed to them by Council. They would like to put their energies into the most viable options that Council should review. The Committee discussed that they should narrow the previous eight options down from the last meeting. It was discussed that Council should be presented with the options not chosen as well with the rationale as to why they were not chosen as a viable option. Councilor Russ Silbiger specifically pointed to the option of Keep/Enhance and that it should be shown why if it is not chosen by the Committee as an option for Council. The Committee discussed assignments that they had worked on. Paul Collins, Rick Barth, Lee Tuneberg, and Richard Holbo met and discussed the Common Carrier option. Paul Collins and Rick Barth addressed the Committee on their assignment. They gave the goal of the common carrier was to create a local competitive market for services delivered over the AFN local distribution network. They added that citizens would retain ownership of AFN while services are owned by private enterprise. There would still be other networks so it would not mean that the City is the only player. They added that the keys still need to be the services. ISP's and Video are the bigger questions and what channels would the provider want to offer. They added that there has to be the motivation to do this option and the City would need to look at the competition, the costs that may increase as a result, and the possibility of a monopoly being created. They were not able to find a success comp for this option. The short term upside for this option is that the City would not have to put any money out, and the long term upside is that it would avoid inviting a monopoly to the City. The Committee discussed that the option is financially unstable and the revenue potential would be risky. https://old.ashland.or.us/Agendas.asp?AMID=2390&Display=Minutes 2/7 10/23/24, 11:07 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon The Committee discussed that if the City were to choose the Enhance option, the Common Carrier could be the path that they could chose for AFN. The Committee discussed that the options are not all risk free and the need to develop a different product and community support. Staff asked the Committee if further detailed research was needed for this option. The Committee chose to place this option as a fall back option and not as one of their first choices for their report to Council so no further research was needed. The Committee discussed the Keep and Enhance AFN option. Paul Mace, Committee member spoke to the research done. See attached. He pointed to the change, debt, financial differences, revenue opportunities, and the annual and future impact on the City and community finances. This option still leaves the City the debt service payments. This option assumes that for success, the new director would have to create more revenue. The liabilities would not change. The Committee asked staff for the savings to the community for AFN customers for lower rates and Charter customers. The Committee added that these figures are important to present to Council. Staff will provide. The positive and negative financial impacts on the community to this option were discussed. The Council would have to allow the new director to do what was needed and make decisions in a business like manner. The Committee questioned if results would be different if the director was not required to submit everything to Council and subject to government entity requirements. The Committee discussed that the operation of this option would be difficult. The Committee discussed the Spin Off option. Mr. Mace spoke to his research and handout provided. See attached. He pointed to the lower than market rate the City is proposing to hire the new director at and cautioned that the City would get what they pay for. Mr. Tuneberg spoke to the internal charges. The total budgeted for 2006 is $549,000 and Central Services is $486,000 of that. Mr. Mace asked Mr. Tuneberg for a breakout of the Central Service charges. Staff will provide. The $2.6 million figure as a total was correct, excluding the debt service. Regarding the Keep and Enhance option, Mr. Mace asked staff if the City would be prepared to allow the new AFN director to make decision on services in association on internal charges and if the new director would be able to approve contracts. Gino Grimaldi, City Administrator responded that the director would not. Mr. Tuneberg added that they will provide a comparison on cost if the entity went out and bought those services. Mr. Grimaldi asked for an evaluation on enhancement options. Mr. Mace responded that they could generate wonderful things that they could do, but could not point to anyone making money doing those things now. Mr. Grimaldi suggested looking at the industry and what is https://old.ashland.or.us/Agendas.asp?AMID=2390&Display=Minutes 3/7 10/23/24, 11:07 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon reasonable for penetration to understand the upside potential for business. Mr. Mace responded that Council is not in the position to debate on what kind of services would make AFN valuable to the community and that should be up to the director. The Committee discussed options that will be eliminated. The only options left were Sell and Spin off. See attached. The Committee discussed that they don't see how AFN will be managed in Keep and Enhance, and Status quo and that was why they eliminated those options. The Committee discussed positives and negatives of the Lease option and that they see it as a fall back option. The Committee discussed the Spin Off option and the board of directors that should be chosen. The splitting apart of the construction and operation costs was discussed. It was discussed to split the $9 and 6.5 million and that the new entity should be given $700,000-$800,000 in initial capital and be responsible for paying it back. Then the City would assume that $9 million was a gift to the community. Mr. Mace stressed the community support that would be needed for this option. The contract should include that failure to meet the financial requirements would reverse the assets and control back to the City. Kevin Shultz and Don Mackin reported on their meeting with Gino Grimaldi on the Sell option. They met with a perspective purchaser of AFN and will have discussions with other interested parties soon. Their recommendation was if the City received an offer in the higher amount of the range specified in previous meetings, they should enter into a sale quickly. They did not receive specific number from the company, but the company did agree with the valuation range. They cautioned if the City pursues the Spin Off option first, they might lose leverage with buyers. The Committee discussed that the City should set in motion the process to establish the legal ground work to establish a board of directors for a non profit entity that would be interested in AFN. They should charge staff to enter into open negotiations for a sale as well and Council would have to choose which option to accept. The Committee discussed urging the Council to begin both processes simultaneously showing that they are prepared to make a decision. Members of the Committee will prepare a comparison matrix and narratives on both options. The Committee will meet again on Thursday, October 27 at 7:30 am. Kevin Shultz, Paul Collins, and Paul Mace will work together to develop the report that will go to Council. The Committee discussed with staff possibly presenting the report to Council on November 1 It. Due to time requirements for the packet, they will defer until November 15th to allow enough time for the report to be in the packet. The Committee decided to meet the week before the https://old.ashland.or.us/Agendas.asp?AMID=2390&Display=Minutes 4/7 10/23/24, 11:07 AM AFN Options Committee - AFN Options Committee - City of Ashland, Oregon 15th to review all documents that will be presented to Council. Chairman Michael Donovan would like to defer commenting to the press until the following week and will be the representative from the Committee that will speak to the press. NEXT MEETING(S) Next scheduled meeting October 27, 2005 at 7:30 am ADJOURNMENT The meeting was adjourned at 9:40 am. Respectfully Submitted, Bryn Morrison Administrative Assistant Administrative Services and Finance Department https://old.ashland.or.us/Agendas.asp?AMID=2390&Display=Minutes 5/7 10/23/24, 11:07 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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