CC Minutes - 10/15/07 Public Hearing

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Ms. Bettman pointed out that bylaws could be changed and asked if Eugene could propose proportional representation. Mr. Mecham said that Eugene could make that proposal. He clarified that the consortium had operating funds that were disposed of according to the decisions of the consortium; however, the City of Eugene was not obligated to provide those operating funds. He said operating funds were generated by the lease of fiber. Ms. Bettman commented that revenues went directly to the consortium even though Eugene likely generated more resources than the other members. Ms. Berrian explained that the fiber backbone used only 66 feet of Eugene's right-of-way, for which the City was provided nine miles of fiber through the city limits. Ms. Bettman asked how the City could pursue the issue that any expenditure or resource investment decision of the consortium would come back to the council. Mr. Lidz said a proposal for proportional representation involving weighted votes based on population could be submitted, although that would mean that Eugene would have greater weight than any other member of the consortium and the partnership could lose its attractiveness to other communities. Mr. Mecham said in a population-based proportional representation scenario Eugene would likely have close to 50 percent of the population and other jurisdictions would probably object. He understood the concern about proportional representation, but Eugene's original intent when entering into the consortium was to provide assistance to smaller cities that did not have access to telecommunications facilities. He said Eugene's involvement was not based on a particular benefit to the City, but rather aiding those other communities. He noted that the negotiations resulted in a large amount of fiber throughout Eugene that significantly increased its fiber infrastructure and from which the City had profited tremendously. He said Eugene had already received far greater value from the consortium than any of the other cities would ever receive. Mr. Pryor indicated he was pleased with the proposal and felt staff had negotiated a good agreement. He felt that any changes should be at the direction of the full council and subject to a vote. Ms. Bettman cited provisions of the agreement that authorized the consortium to enter into contracts for technical services, construction, facilities, purchase and ownership of real and personal property. She asked for language to amend the resolution so that any budget authority or resource allocation decisions were brought first to the council. Mr. Lidz explained that the intent of the consortium agreement was that the consortium derived revenue from the lease of dark fiber and that revenue was available to the consortium to expend; no funds from the City's coffers should be available for the consortium to spend. He asked if Ms. Bettman still wished to have consortium expenditures approved by the council. Ms. Bettman asked how much revenue was generated annually and what portion of that was generated by Eugene. Mr. Mecham said the operating budget for both consortia was under $100,000 and Eugene generated none of the revenue. Ms. Bettman asked if there were likely to be future expenditures that would exceed available revenue and require investments such as revenue bonds. Mr. Mecham said that was theoretically possible but he thought it was unlikely that the representatives of local governments would be interested in bonding. He said the intent was for the consortium to operate without the need for borrowing and the vision was to use private capital investments. He said the difficulty of submitting budget decisions to the City of Eugene for approval was that the consortium was established as a separate legal entity and allowing Eugene or any other city to have veto authority over budget decisions would blur the separation of financial obligations. He reiterated MINUTES—Eugene City Council October 15, 2007 Page 8 Public Hearing