<br /> Charles Larson, CPA, .Kohnen, Larson & Co., explained that the $10 million value he placed
<br /> on TelePrompter was somewhat below their expected selling price, should they wish to sell,
<br /> ana somewhat above replacement cost. He said the rate of return on that investment for
<br /> - 1973 was 2.4%, substantially below what should be made on this type of investment.
<br /> Projected, it would amount to 3.7% for 1974, 6.4% for 1975. However, if a lower in-
<br /> vestment figure was used the rate of return could be pushed higher - $8 million, 8% for
<br /> 1975; or if the $10 million estimate was completely wrong and the value was $5 million,
<br /> say, the rate of return could be calculated to be 12.8%. Mr. Larson said that in re-
<br /> viewing with the city auditor the company's valuations and figures in the Assessor's
<br /> office he was struck by the wide difference between the totals for underground cable _
<br /> while the County showed 14 miles, TelePrompter estimated 105 miles, which would seem to
<br /> indicate difficulty in keeping values up to date on the County's record.
<br /> I
<br /> (2155) Mr. Cobb added that:the TelePrompter people had met with the Council's subcommittee~
<br /> Information supplied them was not substantially different from that given here, and the
<br /> subcommittee had recommended that the increase was reasonable. He too felt the increase
<br /> was reasonable and reminded the Council that the city had the burden of proving that it
<br /> was not. '
<br /> (2164 ) LileEverbe, 2620 Potter Street, was opposed to the increase, saying the service provided
<br /> was a commercial endeavor presented in terms of dollars rather than a function or service,
<br /> and she was against using money in exchange for services. She said there should be
<br /> improved use of broadcasting, it should be used for public service to debate issues of
<br /> interest to citizens or for creative production using other than paid staff.
<br /> _94) Robert Haas, 2288 Blackburn, reflected on the alternatives to avoid paying higher garbage
<br /> rates. Individuals could recycle or haul their own trash. But for may, he said, there
<br /> was no suitable alternative for television reception without -cable. . He called attention
<br /> to height limitations on-,television- antennas in building regulations and in deed re-
<br /> strictions. He doubted that there was real needfor_the:rate increase.and.notedthat the
<br /> city realized 3% of TelePrompter's gross revenues under present franchise provisions.
<br /> (2235) Gerard vonDahln of Tenefly, New Jersey, thought the ,opinion with regard to investment
<br /> value should be considered in light of , auditing practices from which the'. opinion was
<br /> deri ved. He questioned replacement cost values in rate of return calculations as an
<br /> acceptable accounting practice, and said that the :market_,value basis measurement 'was
<br /> inherently "circular" because market value,depended on'income.- ' , !'
<br /> ~
<br /> (2247) Robert Tappan, 240 West 20th. Avenue, felt TelePrompter had~,a lucrative ,business and that
<br /> the franchise provision placing the "burden of proof" on the city was unreasonable. Instead
<br /> the city should have the privilege to decide what was reasonable. He felt the cable
<br /> service was a public utility in' the sense that it provided service: to, the community and
<br /> that the rate increase was not justified or warranted_ without further consideration..r
<br /> (2258) Jonathan Walker, 570 West 19th Avenue, felt most of the revenues derived from the rate
<br /> . increase would be allocated back to TelePrompter stockholders and would not be used to
<br /> enhance local cable teevee service, which he thought should' include 'weferendums.:among.
<br /> othen public' services. He proposed that the rate increase be denied, or_if approved
<br /> that a certain'.percentage of the increase he- allocated_ to provide. for public input and
<br /> interactio~ through cable television programming. He proposed an elective body, incor-
<br /> porated, with its major obligation to provide an operating budget._foT the purchase of
<br /> equipment and supplies for the express purpose of community access to television. He
<br /> wondered how the city' s' 3%~Jof TelePrompter's gross revenues was _ spent and, how the rate
<br /> increase'would be'used by TelePrompter. {I" " _ V .:. J:' -- . :'1
<br /> :"";.'"
<br /> Public hearing was' closed,. there:.being. no further testlmony..
<br /> . . .' "
<br /> (2305) Councilman Williams said he was unwilling to approve the rate increase, it appearing that
<br /> the question of value should be "tied down", as well as some of the costs allocated against
<br /> it. He recognized the difficulty' of showing the. requested. increase was unreasonable and
<br /> said there were alternatives for solving the problem with the Council performing a real
<br /> public service for the' community. One' such alternative was the installation ofia tTan-
<br /> slatorsystem, the sam~.process now used by TelePrompter; ,;Researchhe:had undertaken,
<br /> he said, indicated an estimated cost of $15,000 per chann~l calling for. a total investment
<br /> of about $90,000 to create a UHF system to serve thi~ area at very little cost to.. the:
<br /> consumer. Information from, the FCC and different, attorneys knowledgeable in tbi~ type of
<br /> . service, he said, indicated no impropriety in'the city's maintaining that type of service
<br /> in competition with cable teevee,franchises. He estimated the proposed TelePrompter. rate
<br /> increase would cost people of this area about $2.5 million and he felt if that much was
<br /> paid for reevee signals and if government could ,provide the same service for a one-time
<br /> $90,000 capital outlay pilus minor maintenance expenditures it should be carefully re-
<br /> searched.
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<br /> 8/26/74 - 15
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