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HomeMy WebLinkAbout1995-12-26 Board of Selectmen Minutes Board of Selectmen Meeting December 26, 1995 The meeting convened at 7:30 p.m. in the Selectmen's Meeting Room, 16 Lowell Street, Reading, Massachusetts. Present were Chairman Sally Hoyt, Vice Chairman George Hines, Selectmen Dan Ensminger and Bruce MacDonald, Town Manager Peter Hechenbleikner, Special Counsel Peter Epstein, Cable TV Committee members Richard Cohen, Jim Guarente and Mike Longo, Continental Cable TV representative John Fouhy. Discussion/Action Items Cable License Renewal - Peter Epstein reviewed the status of negotiations to date. The original fifteen year license was issued in December of 1980 and expires December 29, 1995. The Committee has been negotiating for 2 plus years in the informal process. Discussions were to have a new franchise of between 5 and 10 years. The State maximum is 10 years. The major Committee concern is the cost implications of improvements that are needed in the cable system, and they are passed through. The minimum period that the agreement could continue for is three years - this is considered the minimum in order to preserve the procedural rights. If a three year agreement is signed, then the process going forward would be to commence negotiations via the formal process. The Board members were reminded that the Franchise Agreement does not deal with rates and programs. It does allow externalization of costs. George Hines asked if we signed a three year agreement, could a new agreement supersede it. Epstein noted that it could. Hines noted that Continental Cable should be here to negotiate. MacDonald asked what would happen in three years. Epstein recommended that the Board not allow the current agreement to expire. The Board of Selectmen has the obligation to say yes or no to a franchise renewal. New Federal regulatory changes are expected in six to eight months. George Hines reviewed the options available, and asked what would happen if the Town did not sign a new contract. Epstein noted that the existing contract would expire midnight on the 28th, and that Continental Cable could not operate. John Fouhy from Continental Cable noted that Continental Cable would go to court to get an injunction which would allow them to operate in the interim. Hines noted that the issues for renewal include past performance under their license requirements, and a proposal to reasonably meet the community needs. MacDonald was concerned about time issues - why did we run out of time. The Town Manager noted that the major sticking issues were externalization of costs. Capital costs if externalized would add 19-26 cents to the bill, and operating costs would add $1.00-$1.25 to each monthly bill. Fouhy noted that the Town had not mentioned Continental's expenditure of$3 million to rebuild the entire system in Reading. The Town Manager noted that they are required to do that under the social contract, and that had nothing to do with this franchise renewal. Board of Selectmen Meeting=December 26 1995 - page 2 George Hines asked if the formal process would provide for resolution before the midnight hour. It was noted that it would. Epstein noted that it was a more structured process -- it was a six month time frame to ask for proposals, and four months of negotiation. George Hines asked if we could get to a point in three years so that we could say we had done our best, and bring somebody else in to run the Cable TV system. Epstein noted that there is no interest from other vendors at this time. The competition is NYNEX and they are unregulated. They are doing video dial tone in eighteen Boston communities. They have not asked for approval to do Reading yet. The eighteen communities are more urban areas. Sally Hoyt noted that there is deregulation of the electric industry. George Hines asked what the Continental strategy would be if the Town extended their franchise for three years. John Fouhy noted that Continental is committed to a long term strategy to meet the needs of the community at reasonable cost. This is the first time that they have not gotten an agreement. MacDonald asked how profitable is Continental Cable in Reading. John Fouhy noted that a cable franchise is typically not profitable; 40% of the cash flow before depreciation goes to debt, taxes, etc. Continental Cable has not shown a "paper profit" for many years. After expenses and capital, this system does not return dividends. Continental is not a multi-media conglomerate. They are now publicly reported with the S.E.C. George Hines noted that he was disturbed that the issues have reached this level. He cannot support signing a three year agreement. He would prefer a one year agreement. Peter Epstein noted that a one year agreement could be granted but he questioned whether Continental Cable would accept it. Continental Cable would not have any procedural rights in renewal with a one year agreement . George Hines suggested that the Board go into Executive Session based on litigation. On motion by Ensminger seconded the Hines, the Board voted to go into Executive Session to discuss potential litigation to come out in approximately one hour. On a roll call vote, all four members present voted in the affirmative. The Board returned from Executive Session at 9:55 p.m. On motion by Hines seconded by MacDonald, the Board voted to grant a ninety day renewal of the Cable TV franchise to Continental Cable under the same terms and conditions as the previous agreement. The Board requested Special Counsel to draw up a ninety day renewal license for signature by the Board of Selectmen prior to 12/29/95. Additionally, the Board requested that Continental Cable bring in their major decision makers at the earliest possible date but prior to 1/30/96. They also directed the Town Manager and Special Counsel to work between now and 1/30/96 on a new ten year agreement. The Board wants to see a long term agreement that is in the best interests of the community. The motion was approved by a vote of 4-0-0. i i Board of Selectmen Meeting-December 261995 -page.3 Dan Ensminger noted that this motion reflects the sentiment of the Board of Selectmen which is in the interest of trying to secure a long term agreement in the interest of the community. John Fouhy noted that he was disappointed by the action of the Board. He will need to seek advice from F.C.C. Counsel to see if this constitutes a constructive denial. He will advise the Board of Selectmen tomorrow if he will seek other redress. Peter Epstein noted that he will draft the agreement, and it will be faxed to the Board of Selectmen early tomorrow afternoon. On motion by Ensminger seconded by Hines, the Board voted to adjourn at 10:00 p.m. by a vote of 4-0-0. Respectfully submitt sr (:Secre ry r