12/16/1985 Meeting (2) - Laserfiche WebLink

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II. PUBLIC HEARING: FRANCHISE AGREEMENT WITH AMERICAN TELEPHONE AND e TELEGRAPH COMPANY (memo, ordinance distributed) City Manager Micheal Gleason introduced the agenda item. He said the fran- chise agreement will permit American Telephone and Telegraph Company (AT&T) to use the public right-of-way for fibre optic cable lines. The franchise will provide the City about $26,000 in annual revenue. He said Susan Smernoff of the Finance Division was present if there were questions. Mayor Obie opened the pUblic hearing. There being no requests to testify, he closed the public hearing. Councilor Hansen said the ordinance indicated that the only way the City can raise the annual fee for the franchise is to threaten cancellation of the agreement. He thought the ordinance should include some way to trigger a review of the 15-year agreement so the fee can be adjusted without threatening to cancel the agreement. The ordinance as presented to the council would automatically renew the agreement every three years unless a threat of cancel- lation was made. He suggested the agreement should indicate the reasons the agreement would be cancelled. Ms. Smernoff said the provisions for fee adjustment in the proposed ordinance are similar to those in agreements with other franchise holders such as the Eugene Water and Electric Board (EWEB) and Pacific Northwest Bell (PNB). Answering questions from Councilor Holmer and Mayor Obie, Ms. Smernoff said e the average fee paid by present franchise holders in the city was used to calculate the fee that AT&T will pay. The City has agreements with four franchise holders. The fees are three to six percent of gross revenues earned within the city. However, it is difficult for AT&T to determine what revenue is generated within Eugene. Therefore, Ms. Smernoff calculated the average fee present franchise holders pay for each linear foot of pipe or line. The proposed fee for AT&T represents that average. She called other cities, the office of the National league of Cities, and the Mayor's Conference to find out how other cities charge AT&T, but she was told other cities have not devised a method for charging since the divestiture. For that reason, the proposed charge is conservative. Mayor Obie and Councilor Ehrman said Mr. Hansen's concern seemed valid. Mayor Obie said threatening to cancel the agreement seemed an extreme way to adjust the annual fee. Ms. Smernoff suggested the words "or renegotiate" be inserted in Section 11 of the ordinance. She discussed the termination and renegotiation of the agreement with PNB that will take place soon. Mr. Hansen said the wording suggested by Ms. Smernoff might indicate that the whole agreement would be renegotiated. He said agreements drafted by the City in the future should stipulate when annual fees will be renegotiated. He suggested the agreement indicate that six months before the end of every third year the City will notify AT&T of the expected fee for the next three years and failure to reach an agreement could result in cancellation by either party. e MINUTES--Eugene City Council December 16, 1985 Page 2