09/09/1991 Meeting (2) - Laserfiche WebLink

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e VII. FIRST READING: AN ORDINANCE REGARDING MCI FRANCHISE City Manager Mike Gleason introduced the topic. Tony Mounts, Finance Divi- sion, gave the staff report. He said that the City of Eugene and MCI have been negotiating terms for a franchise which would allow MCI to utilize a portion of the City of Eugene public way for the construction of a fiber optic link between Sacramento and Seattle. The proposed ordinance establish- es a franchise for laying a single cable within the public way. The fran- chise calls for the payment of a specified amount, similar to the AT&T fran- chise rate, paid in one lump sum for a period of 15 years. CB 4330--An ordinance granting to MCI Telecommunications Corpo- ration the nonexclusive privilege to use the public way to construct and maintain public communications facilities within the city of Eugene. Responding to a question from Ms. Bascom, Mr. Mounts reiterated that the method that the City has chosen to calculate the compensation rate was pat- terned after AT&T's franchise agreement. AT&T pays a higher amount because it uses the right-of-way on a more extensive basis. MCI has negotiated with Burlington Northern and Southern Pacific Railroads for right-of-way through most of the City. Mr. MacDonald observed that the amount of compensation actually paid to the City will be insignificant because of the amount of right-of-way used. e Mr. Boles noted that under this franchise agreement, right-of-way is being sold at a very low rate. He suggested that the council reconsider its method for calculating franchise fees at a future work session and said that he does not support a IS-year franchise agreement. Mr. Gleason agreed that it might be valuable to reevaluate the City's method of negotiating franchise agreements. However, the City needs to establish a fair methodology that is justifiable in order to avoid lawsuits. He noted that the City has calculated what the expenses are in the right-of-way. This formula was used to calculate AT&T's rates in 1986; the cost formula has not been recalculated since that time. Mr. Mounts said that the franchise agree- ment requires AT&T to be responsible for any maintenance needed within the right-of-way caused by that line. Mr. Green supported Mr. Boles suggestion to hold a work session on this is- sue. He asked how the rates proposed for this franchise compare to rates charged by other municipalities. In response, Mr. Mounts said that the $1 per lineal foot is comparable to what other municipalities are charging AT&T. Mr. Boles suggested that the cost base be adjusted, at a minimum, for infla- tion between 1986 and the present. In response to a question from Mr. Boles, Mr. Mounts said that the City does not have an existing franchise with MCI. e MINUTES--Eugene City Council September 9, 1991 Page 9