HomeMy WebLinkAbout1983-10-17 Info PacketCity of Iowa City
MEMORANDUM
Date: October 14, 1983
To: City Counci `
From: Don Schm iser 'rector of Planning & Program Development
Re: Adoption Schedule of the Proposed New Zoning Ordinance
Attached to this memorandum is a tentative adoption schedule for your
perusal. I assume that the number of comments which the Council
receives at the public hearings will to a large extent determine the
number of informal meetings you will need to address the comments.
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City.Council
1.
Public
2.
Discus
3.
Consid
4.
Adopti
City Staff
1.
Revisi
2.
Redraf
3.
Assemb'
4.
Submit
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ZONING ORDINANCE
ADOPTION SCHEDULE
1
City of Iowa City
f - MEMORANDUM
Date: October 14, 1983
To: City Council
From: Dale HeIIing, Assistant City Manager
Re: Cable Television Rate Increase and Ordinance Amendments
Included in your packet are materials regarding 1) the request from
Hawkeye CableVision for an increase in the basic service rate, and 2)
proposed amendments to the Franchise Enabling Ordinance.
Public hearings on both these items are scheduled for your regular meeting
on October 25, 1983. In addition, a brief period will be scheduled on
your informal agenda on October 24 at which time the Chairperson of the
Broadband Telecommunications Commission and staff will be present to
answer questions or provide further information for Council members prior
to the public hearings.
cc: Drew Shaffer
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• APO
City of Iowa City
MEMORANDUM
Date: October 14, 1983
To: City Council
From: Drew Shaffer P3
Re: Proposed Cable Ordinance Amendments
Attached are nine proposed ordinance amendments to cable ordinance 78-2917 that
were recommended by the Broadband Telecommunications Commission (BTC). These
amendments include: Amendment #1 which includes two new definitions needed for
the Required Extension Policy; Amendment #2 allows Hawkeye (at their request)
one extra month each year to prepare and file their financial records for the
City; Amendment #3 insures the time frame for the payment of the franchise fee
to the City will remain the same as in the original ordinance agreement;
Amendment #4 corrects a typographical error that refers to a non-existent
clause; Amendment #5 also corrects a typographical error that refers to a non-
existent clause; Amendment #6 sets out the required extension policy, which
determines the• conditions under which the franchisee must extend the cable
network to newly annexed and new housing areas; Amendment #7 sets out what has
been previously been called the Universal Service Clause, whereby those dwelling
units not passed by cable service between 1979 and 1982 and existing prior to
1979 can receive service based on the cost formula contained therein; Amendment
#8 sets out the requirements of having cable lines buried at least 12 inches
underground to help avoid accidential cutting; and Amendment #9 helps ensure
fewer service outages by requiring notification to the franchisee before
excavation or digging.
Amendments #6 and #7 are carefully drafted and are the result of recently
completed negotiated agreements between the BTC and Hawkeye CableVision.
If you have any questions, please feel free to call me.
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ORDINANCE NO.
AN ORDINANCE AMENDING ARTICLE IV, DIVISION
2 OF CHAPTER 14 OF THE CITY CODE (THE
ENABLING ORDINANCE OF THE CITY'S BROADBAND
TELECOMMUNICATIONS FRANCHISE).
SECTION I. PURPOSE. The purposes of this
ordinance are to clarify the conditions of
required extension of the broadband
telecommunications network by the grantee,
to specify the depth of burial of
underground cables, to require 24 hours
notice to the grantee from any persons
intending to perform construction work in
certain areas where grantee's facilities
are located, to revise the schedule for the
filing of various reports and payments by
the grantee to the City, to correct some
reference numbers in the provisions for
rate increase requests, and to provide a
cost formula for the offering of basic
service to certain dwelling units to which
access was not reasonably available.
SECTION II. AMENDMENT. Article IV,
Division 2 of Chapter 14 of the Code of
Ordinances of the City of Iowa City, Iowa,
is hereby revised as follows:
1. Section 14-61 is hereby amended by
adding the following new definitions:
Sec. 14-61. Definitions.
"Contiguous" shall mean abutting
or within two hundred (200) feet.
"New housing area" shall mean any
area containing any newly
constructed, rehabilitated, or
restored residential or commercial
unit which did not exist prior to
April 19, 1979.
2. Section 14-72(a), (b), (c), (d), and
(e) are hereby amended by substituting
the word "four (4)" in place of "three
(3)" in the phrase "...within three
(3) months after the end of each
subsequent fiscal year...".
3. Section 14-73(d)(1) is hereby amended
by deleting the second sentence of
said section and substituting in its
place the following new second
sentence:
Payments due the City under the
provisions of subsection (c) above
shall be computed annually as of
December 31 for the preceding year and
shall be paid annually within three
(3) months after said date at the
office of the City Clerk during the
City Clerk's regular business hours.
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4. Section 14-76(q)(3) is hereby amended
by repealing the second paragraph in
said section and substituting in its
place the following new second
paragraph:
No such resolution shall be
adopted without prior public notice
and opportunity for all interested
members of the public, including the
grantee, to be heard, subject to the
procedures set forth in Section 14-
64(b). No change in rates shall take
effect until thirty (30) days after
the approval of the rates by the City
Council.
5. Section 14-76(g)(5) is hereby
repealed and in its place is
substituted the following new Section
14-76(g)(5):
(5) Records to be made available: In
addition, for the purposes of
determining the reasonableness
of grantee fees, rates or
charges, all such information,
in accordance with the
provisions of Section 14-72(i),
shall be made available to the
City.
6. Section 14-78(b)(1) is hereby
repealed'and substituted in its place
is the new Section 14-78(b)(1):
Sec. 14-78. Extension of network.
(b) "Extension of network within
city boundaries":
(1) Conditions of required
extension: the grantee shall at
its expense extend its broadband
telecommunications network so as
to provide full network service
to all potential subscribers in:
a. Newly annexed areas of the
city contiguous with an
area served by or required
to be served by an existing
network as soon as possible
but in no event later than
six (6) months after the
first request for service.
b. Newly annexed areas of the
city non-contiguous with an
area served by or required
to be served by an existing
network as soon as possible
but in no event later than
six (6) months after the
first request for service
when the annexed area
contains at least twenty
(20) potential subscribers
per plant mile including
interconnecting trunk.
.-,
C. New housing areas developed
within the city limits and
contiguous with an area
served by or required to be
served by an existing
network as soon as possible
but in no event later than
six (6) months after the
first request for service.
d. New housing areas developed
within the city limits and
non-contiguous with an area
served by or required to be
served by an existing
network as soon as possible
but in no event later than
six (6) months after the
first request for service
whenthe housing area
contains at least twenty
(20) potential subscribers
per plant mile including
interconnecting trunk.
e. Any resident dwelling
within the city limits and
within two hundred (200)
feet of an existing network
as soon as possible but in
no event later than thirty
(30) days after the first
Section 14request
79(e)isohereby�amended by
adding the following new sentence:
For any dwelling unit existing in
the service area on the effective date
Of FCC certification which' has not
been offered basic service within
thirty-six (36) months of said date
because access is not reasonably
available, upon request the graqtee
shall provide basic service as soon as
Possible to said unit pursuant to the
following cost formula: said service
shall be provided at the grantee's
expense when the cost is three ( or
3)
less times the average cost to the
grantee to provide basic service to an
Iowa City subscriber; additional
costs beyond said amount required to
be borne exclusively by the grantee
shall be shared on a equal basis by
the grantee and subscriber up to the
next one thousand dollars ($1000); all
additional costs beyond those
previously stated herein shall be
borne at the rate of ninety (90)
percent by the grantee and ten (10)
perceriber; in all
cases,�tthe subscriber the cequesting said
service shall pay the grantee any
amount due in advance.
J
8. Section 14-85(f) is hereby amended by
adding the following new sentence to
the end of said section:
All underground installations of
wires and cables shall be buried at
least twelve (12) inches below ground.
9. Section 14-85(g) is hereby amended by
adding the following new sentence to
said section:
Any person, company or
corporation intending to perform any
of the above-described work in an area
where grantee's facilities are
located shall notify grantee at least
twenty-four (24) hours prior to
performing said work.
SECTION III. REPEALER. All ordinances
and parts of ordinances in conflict with
the provision of this ordinance are hereby
repealed.
SECTION IV. SEVERABILITY. If any
section, provision or part of the Ordinance
shall be adjudged to be invalid or
unconstitutional, such ajudication shall
not affect the validity of the Ordinance as
a whole or any section, provision or part
thereof not adjudged invalid or
unconstitutional.
SECTION V. EFFECTIVE DATE. This
Ordinance shall be in effect after its
final passage, approval and publication as
required by law.
Passed and approved this
MAYOR
ATTEST:
CITY CLERK
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City of Iowa City
MEMORANDUM
Date: October 12, 1983
To: City Council
From: Drew Shaffer 9).S
Re: Hawkeye's Rate Increase Request
As staff and advisor to the Broadband Telecommunications Commission (BTC) I
worked in conjunction with the Finance Department to analyze the financial
information submitted by Hawkeye for their rate increase request.
In addition, as part of this rate request analysis, other factors were
considered based on the legal department's recommendation including, but not
limited to: overall franchise compliance; management efficiency;
service and willingness to upgrade; provisions and performance of access level of
related
facilities and services.
After reviewing these considerations, along with financial material provided by
Hawkeye and ATC representatives, it was determined that, although there are many
rate regulation methods available and in use, a standard of living increase may
be the most appropriate approach to take at this point in time.
Taking this approach rejects Hawkeye's initial justification for a rate
increase, yet recognizes some increases in the cost of doing business to
local cable operation. This approach was taken -because: the
A. A more extended business history in Iowa City would be necessary to apply a
rate base calculation analysis to Hawkeye's operation.
6. The Commission and staff were unable to identify, distinguish and/or
differentiate between some of the costs and revenues that Hawkeye accrued
and those that ATC and Time, Inc. accrued.
C. While Hawkeye is, for the most part, in compliance with the franchise
agreement, Hawkeye has not provided a foreign language channel as
the payback
originally agreed and has changed certain financial arrangements, such as
periodand amounts paid on the debt to ATC, which does and will
affect its financial status.
D. The original franchise agreement set out certain subscriber and other
revenue expectations which have been exceeded for the most part. The
projected subscriber basic service rates as outlined in the franchise
agreement, according to the original franchise, follow more in line with
the staff evaluation and the BTC's recommendation than with Hawkeye's
request of a $2.00 increase.
If you have any questions, please feel free to call me.
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City of Iowa City
MEMORANDUM
Date: June 24, 1983
To: City Council
From:
a���
From: Assistant City Manager
Re: Request from Hawkeye CableVision for Rate Increase
Attached please find a copy of a letter from Hawkeye CableVision and
accompanying supporting information requesting an increase in the basic
service rate of $2.00 per month effective October 1, 1983. This request
has been referred to the Broadband Telecommunications Commission for
consideration. This request is to be processed as outlined below.
Rate increase request is received at least 90 days prior to the
proposed date of the increase.
The Broadband Telecommunications Commission reviews the request and
makes recommendation to the City Council within 60 days.
The City Council must hold a public hearing giving 30 days clear
notice and must actually hold the hearing within 90 days of that
notice. (Note: The Commission is not required to hold a public
hearing but may do so if it is so desired.)
The City Council must then act on the request no later than 180
days after the date on which it originally sets the public hearing.
Any increased rate, if approved, becomes effective 30 days after
approval by the City Council.
For your general information, the City Council has the option of approving
the original requested increase or an amount different from that requested,
or it may deny any increase. Council will be kept informed as the
review by the BTC progresses.
If you have any other questions or concerns regarding this matter,
please contact me at your convenience.
bdw/sp
cc: Broadband Telecommunications Commission
City Manager
City Attorney
David Brown
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AHawkeye 0 ,903
Cable�Tisio
June 7, 1983
Iowa City Broadband Telecommunications Commission
410 East Washington Street
Iowa City, Iowa 52240
Dear Commissioners:
For almost three years Hawkeye Cablevision has supplied cable
i television service to Iowa City. At this time we reaffirm our.
commitment to provide the highest quality cable television service
available. A wide range of services for residents includes the
best in national satellite entertainment programming and an active
and vigorous community programming effort.'
Hawkeye's commitment to subscribers started with the
franchise award in April 1979. Since then, Hawkeye has met its
new build construction obligations an a regular basis. As Iowa
City grows, Hawkeye Cablevision would like to be in a financial
position to grow with the community and continue providing the
best entertainment value in town. Recently, for example, Hawkeye
added new entertainment programming, Music Television (MTV), the
popular cable music channel.
In order to keep growing in this rapidly changing industry,
Hawkeye Cablevision must receive an equitable and fair return on
its investment. During the franchise process the city recognized
a 13 percent to 17 percent ROI (Return on Investment) as
acceptable. As the attached documents show, Hawkeye's ROI since
1980 has been significantly below an acceptable rate.
To assure continued growth with the community, excellent
customer service and a fair and equitable return on its
investment, Hawkeye proposes its first rate increase. Even with
the proposed rate increase, Hawkeye's 1983 ROI would still fall
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far below an acceptable level. However, Hawkeye also recognizes
that trying to bring the ROI to an acceptable level might limit
the total number of subscribers and reduce gross revenues. Thus,
Hawkeye proposes limiting the rate increase to $2.00 for basic
cable service.
This is the first rate increase proposed since the franchise
was granted four years ago. During this time prices for virtually
all of our supplies have risen along with wages and benefits for
our local employees. Additionally, although copyright fees
increased earlier this year, Hawkeye continues to offer the same
channels it provided before at no additional cost to Iowa City
subscribers. Yet, our costs increased substantially. j
The cable television industry continues to change and our
outlook is optimistic. Hawkeye is proud of the service it has
provided to Iowa City residents. We look forward to a
continuation of excellent service in this growing community. We
have attached financial information to assist the commission in
its rate review. If you should have any questions regarding the
financial statements or contents of this letter, please do not i
hesitate to contact me.
Sincerely,
Bill Blough
Hawkeye Cablevision
,70?.,V
City of Iowa City
MEMORANDUM
Date: August 5, 1983
To: City Council
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From: W.O. "Bill" Terry, BTC ChairpersonY'154
Re: The BTUs recommendation regarding Hawkeye CableVision's rate
increase request
BTC RECOMMENDATION TO COUNCIL:
Moved by Terry, seconded by Ehninger, that the BTC recommend to City
Council that Hawkeye CableVision be granted a 95 cent or an 11.9% increase
in the basic service rate, based on an average increase in local
operational, origination and administration costs to Hawkeye from 1981 to
1982. With four Commissioners present, this motion was unanimously
approved.
BACKGROUND OF THE RATE INCREASE REQUEST AND THE BTC'S RECOMMENDATION
Following is a synopsis and comments of the BTC to Council regarding the
recommendation. Further details will be available from the minutes of the
meetings. The BTC would like to meet with Council to discuss this
recommendation. In this discussion other BTC recommendations, including
the required extension policy and suggested ordinance amendments may also
be covered.
As an advisory commission to City Council, the BTC is charged with the
responsibility of making a recommendation to the Council on the matter of
Hawkeye CableVision's request for an increase in basic service rates of
$2.00. The BTC has 60 days in which to make this recommendation from the
time of the request filing, which was June 7, 1983. As per ordinance 78-
2917, section 14-76, Hawkeye has filed their rate increase request and
Justified their request for arguing their goal, as stated in their
original proposal to Iowa City, of reaching an average of 13% to 17%
return on investment (ROI) over the first ten years of the franchise will
not be reached if an increase of $2.00 is not granted. Hawkeye and ATC
project an 11% average ROI for the 15 year franchise without an increase
in rates.
From the financial information supplied the City, and that requested by
the BTC, the BTC finds that the evidence presented by Hawkeye to justify
their rate increase request to be inconclusive. This is primarily due to
the facts that Hawkeye has: 1) only been in operation for three years,
and 100% operational for only 15 months, therefore it was difficult for
the BTC to determine a 15 year projection could be made based on the
current track record; 2) Hawkeye has continued to -grow in terms of
dubscribers and rate of return every year at a rate of 3% to 4%, although
this rate of growth has slowed somewhat.
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It is still unclear and difficult to attempt to project a leveling off or
plateau effect in subscriber levels and thus gross income for the company.
Such a plateau effect normally does occur in cable systems, and Hawkeye
has argued that effect is starting to occur now; 3) it became clear that
Hawkeye's financial status and growth as a company is interwoven with ATC
and Time, Inc. 's finances, through the interest payments, management fees
and pay channel costs returned to ATC and Time, Inc. The BTC was unable to
determine exactly the extent to which this relationship does or should
affect Hawkeye's ROI.
Therefore, the BTC recommends there is not enough of a basis or
accumulated information upon which to decide a projected rate of return
calculation using traditional ROI procedures. However, it is recognized
that: 1) Hawkeye has had to build considerably more cable plant than
originally anticipated (at least 60 miles more plant); 2) that
construction costs have been higher than anticipated; and, 3) that there
have been increased costs on the local level categorized as operational,
origination and administration costs. It is upon an average of these
local increased costs in C. above from 1981 to 1982, which the Finance
Department pointed out to the BTC, that an increase is recommended. This
increase would amount to 95 cents per month more in .the basic service
rate, or an 11.9% increase.
This is not to say more traditional ROI procedures should not be used in
the future, or that this method of computing an increase should be used
heretofore. This next year should give the City an indication of how
close Hawkeye's projections are, so that any futrue rate increase
considerations will have more history and a company projection on which to
be based. It was noted that if at any point Hawkeye appears to be making
more money than the average 13% to 17% ROI, the Commission can recommend,
and the City Council can reduce basic service rates a— ccord n91Y.
There were several concerns expressed by the BTC during their considera-
tions. In the financial area, ATC and Hawkeye's original proposal
projected a basic service rate of $8.95 through year ten of the franchise.
The requested increase at this time would mean a $9.95 rate at year four
of the franchise. Also, that the interest payments to ATC and Time, Inc.
will continue to be substantial throughout the life of the franchise, when
the original proposal projected a repayment of loans at year eight of the
franchise. There was also mention by the BTC of the potential growth in
revenue in other areas Hawkeye may become involved in, such as
advertising, data services, security services and increases in the pay
channel costs.
While considering a rate increase request, the City does not have to
confine itself to financial analyses only. The City may include in its
review, but is not limited to, overall franchise compliance, management
efficiency, services provided, and upgrading of the system. In that vein,
some Commissioners expressed concerns about the specific amount and uses
of the management fees to ATC, and management cooperation of ATC in
conjunction with the BTC in the form of a lack of responsiveness on the
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part of ATC in providing letters back to the BTC involving the extension
Policy. financial information and the provision of requested programming
services, such as a foreign language channel and a better weather channel.
However, it was noted that there have been new programming services
offered on the Iowa City system such as CNN, SNC and MTV; that cooperation
on the local level regarding the resolution of the extension of cable to
new areas has been good and that company support of access related
activities has been far above average. There has been no weighting system
devised to evaluate such points in regard to a rate increase request, yet
such points can figure in such a determination and were included in the
considerations of the BTC.
Because of the magnitude of the task of rate regulation, the bulk of
material to be processed, the need to determine precisely the right
questions to ask in such a process, the number of ways rate regulation can
be approached and the relatively short timeframe within which the BTC must
come to a recommendation (60 days), it is suggested that for this process
it would have been extremely helpful if: 1) the BTC would have had the
assistance of a third party consultant to make such determinations as fair
and efficient as possible; 2) the BTC could have had more than the
allotted 60 days to make a recommendation, which could be accomplished by
an ordinance amendment; and 3) the Finance staff could have had the
latitude to make a definite recommendation to the BTC.
If the Council decides to grant Hawkeye CableVision a rate increase, the
BTC Chairperson is expressing an interest, which was endorsed by the BTC
members, that any more revenues generated to the City be used to give the
BTS position and/or office the compensation and/or funds that cre more
commensurate with the pay scale similar positions receive across the
country and with the work that yet needs to be done with cable TV in Iowa
City so that: 1) high quality personnel are attracted to and can be kept
in Iowa City; 2) Iowa City continues to progress as a model system and
provide more benefits to its citizens; and 3) the future work, such as
access related, civic related, institutional uses, interactive services
and potential City funds, savings and/or revenue producing endeavors can
be realized. It is recognized that the majority if not all expenses
incurred involving cable will be paid for by the franchise fee.
The BTC is very grateful for all of the assistance provided by the Finance
Department, the City Manager's office, the legal staff and the BTS in this
process.
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Monthly Rate
Basic Servic
Extra Outlet
Video Tape Re
FM Service
Premium Servi
Bone Box Of
Cinemax
Bane Box Of
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SANKEYECAeIErISION MWORMON
REMM CN INVFSMM
Years Ended December 31, 1980 through Domer 31, 1983
Cumulative
April 11, 1979
Year Ended December 31,
to
1981
1982
1983
December 31, 1980
Projected
I�turn:
I Net income/(loss) before tax
$( 252,012)
$( 454,250)
$( 118,558)
$ 150,509
plus interest
112 1136612,775
609,274
602,700
( 141,876)
158,525
490,716
753,209
Provision for income tax (a)
72,924
( 81,482)
( 252,228)
( 387,149
i
$( 68,952)
$ 77,043
$ 238,488
$ 366,060
j
1westment:
Average net tangible arca intangible
assets, at cost
$2,248,154
$4,143,644
$4,281,907
$4,223,034
Working capital allowance
31,254
155,661
176,815
195,890
$2,279,408
$4,299,305
$4,458,722
$4,418,924
f(eturn cn InvesbTent
1.8%
%
8.33
ONP51
FMNKM Qu3IEVIsIoN CORPDRATION
SnUMM NP CF OPERNMONs
Years Ended December 31, 1980 through December 31, 1983(b)
Cumulative
April 11, 1979
to
December 31, 1980
Revenues:
Service - CATV $ 69,187
Pay programming 80,419
149,606
Connection and other 32,491
182,097
Expenses:
Operating and origination 97,067
Selling, general and administration 152,965
Depreciation and amortization 73,941
Interest 110136
MO -Off
Net Inoane/(Loss) Before Income Taxes $( 252,012)
Year Ended December 31,
1981 1982 1983
Projected
$ 726,060 $1,034,564 $1,265,37
874,052 1,140,737 1,381,22
1,6001112 2,175,301 2,646,60
95,265 95,620 79,77
1,695,377 2,270,921 2,726,37
701,587 863,346 980,78 ;
543,704 551,170 586,34
291,561 365,689 406,04
612,775 609,274 602,70
2,149,627 2,389,479 2,575,86'
$( 454,250) $( 118,558) $ 150,50
W,
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December 31, 1980 through 1983 (Projected)
a) On a consolidated incase tax reporting basis net operating losses
generated by one system offset taxable income generated by other systems
rin the current year. The 1980 operating loss of Hawkeye has, therefore,
eflect the(and the taxdecreaseturn an resultingvestment from theosubjecttooperating loss) to
b) Years ended December 31, 1980 through 1982 per audited financial
statements. Year ended December 31, 1983 Projected based on historical
information and budget. Interest and management fees per audited
financial statements have been adjusted as follows to reflect the actual
allocation of costs incurred by the parent company (American Television
and Communications Corporation);
Cumulative
April ll, 1979 Year Ended December 31
to 1981 1982
De2e r 111 lgg0
Net income/(loss) before income
taxes $(331,525) $(585,786) $(260,180)
Less Adjustments: Interest ( 76,927)
Management fees 2, (183,001) (200,460)
Adjusted inane before taxes S(25� 2,012) 586) 51,465 58,838
� $ (454,2 S (116,558
c) Projected includes Basic increase of $2.00 effective October 1, 1983, HBD
increase of $1.00 and Cinemax increase of 500 effective July 1, 1983. If
all increases had been effective January 1, 1983, the return on
investment would have been 10.78.
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Programming Costs
1981 HBO 186,412
MAX 142,851
1982 HBO 255,048
MAX 175,093
P.O. Box 4500
546 Southgate Avenue
Iowa City, Iowa 52240
319-3SI-3984
A subsidiary of American Television 6 Communications Corp.
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MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 20, 1983, 5:00 PM
CIVIC CENTER CONFERENCE ROOM
MEMBERS PRESENT: Ehninger, Madsen, Sigrin, Terry
MEMBERS ABSENT: Johnson
MEMBERS EXCUSED: Johnson
OTHERS PRESENT: John Campbell, Press -Citizen; Bill Blough and Karen
Kalergis of Hawkeye Cablevision; Kathy Cance,
Regional Manager for ATC
STAFF PRESENT: Shaffer, Monica Bieri, Dave Brown
RECOMMENDATIONS TO COUNCIL:
None.
MATTERS PENDING COUNCIL -COMMISSION DISPOSITION:
Hawkeye's rate increase request for basic service.
MEETING CALLED TO ORDER:
Meeting called to order at 5:15 PM.
SUMMARY OF DISCUSSION AND FORMAL ACTION TAKEN:
The BTC initiated discussion regarding Hawkeye CableVision's rate
increase request. Bieri of Finance Department highlighted areas of her
analysis of the financial information presented by Hawkeye. Bieri noted
lower ROIs received by Hawkeye during 1979 and 1980 were probably due to
high costs during the heaviest construction period. She said there does
not appear to be a cash flow problem for Hawkeye at this time. Bieri said
she had not received an amortization schedule so she could not comment on
the comparatively large interest line item payments made by Hawkeye to ATC
and whether and how much this item may decrease in future years.
The projected 8.3% ROI for 1983 included in Hawkeye's financial
information does include the increase in pay channel revenues and an
assumption of a $2 basic rate increase effective October 1, 1983. Current
penetration levels are 52 to 53% for basic service, 60% for HBO and 40%
for Cinemax. It was not determined at the meeting how much of the pay
channel rate increase is kept by Hawkeye. The decisions to raise HBO and
Cinemax rates in July 1983 were made by ATC.
Ehninger pointed out the high volume of construction going on in Iowa City
may be a good potential of new revenue for Hawkeye. Hawkeye stated that
most current construction involves apartment complexes and that is where
Hawkeye's penetration rates have traditionally been the lowest (32-33%).
- o?o9s
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 2
Several Commissioners pointed out this is a 15 year franchise agreement
and to reach a double digit ROI this soon may be premature. Cance from ATC
pointed out she believed the BTC should note Hawkeye is less then halfway
to their financial goal at this point and that the ROI will not continue
to increase as it did in 1981 and 1982.
The ROI for Hawkeye has been -3%, 1.8%, 5.3% for 1979-1980, 1981 and 1982
respectively . Bieri pointed out the substantial growth in 1981 and 1982.
Blough said those two years represent the largest growth the system will
ever experience, and a plateau effect in subscriber growth and revenue is
already occurring.
The viability of cable advertising as a revenue activity for Hawkeye was
discussed and the BTC requested Shaffer further research this subject.
The factors of unregulated comp:, -tion in the form of Low Power TV (LP' �
Direct Broadcast Satellite (OBS) and others, and their effect on Hawkeye
were discussed.
Ehninger inquired if Hawkeye had obtained basic service rate increases in
Coralville and University Heights. Blough stated Coralville and
University Heights' rates are tied to Iowa City's, and that their rates
would automatically be raised if Iowa City allowed basic rates to
increase. It was determined the financial information presented by
Hawkeye to the BTC incorporated the revenues and expenses for Iowa City,
Coralville and University Heights. Terry stated he did not like this
approach of compiling different cities' figures.
Hawkeye pointed out costs for building the Iowa City system were much
higher than originally anticipated partly due to having built 160 miles of
plant instead of the originally projected 120 miles. Management fee
payments to ATC from Hawkeye were discussed. It was determined these fees
are a set contract amount - either 5% of Hawkeye's gross revenues or
$2,000 per month, whichever is greater.
Bieri was asked, in light of the discussion at the meeting, what her
opinion of the rate increase was. Bieri stated she believed there is not
enough history to support an increase, especially a $2 increase.
Madsen requested a further breakdown of the operating, origination and
administration line items. Terry asked for a debt reduction schedule for
the rates Hawkeye owes up to the current $4.4 million spent on the Iowa
City system.
ANNOUNCEMENTS:
This meeting will be adjourned after A hours and will be continued at
5:00 PM on Tuesday, July 26, 1983.
PUBLIC DISCUSSION:
0709-'
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 3
None.
The primary purpose of this meeting of the BTC is the consideration and/or
recommendation by the Commission regarding Hawkeye CableVision's rate
increase request for basic service in Iowa City, which was submitted on
June 7 to the City Clerk's office. Shaffer distributed copies of Section
14-76 of Ordinance 78-2917 which pertains specifically to the matter of
rate increase consideration. Shaffer also distributed copies of the page
from Hawkeye CableVision's franchise proposal from which Hawkeye
Cablevision drew its justification for a rate increase request (i.e. the
1fiancal goas stated by 3-17%ireturnlon investment over ythe afirst sten years ofion of �the franchise)of
.
Terry caldieri of
he
's Financ
artment for her
appraisalleofupHawkeyecs Brequest tand C�thes financialepr
on Monia statementsand
justifications submitted'by Hawkeye. Bieri commented on the significance
of the timeframes involved in this rate increase request, in particular,
that in 19frames0 operating revenues were down due to this being a
in
construction p rirod ate t oreturn.Sut UDuringbscribers. These const uction,vrevenu enues se areemost
calculating e
always down, making the rate of return look bad and it will not look goo
until the system is at full operational level. Bieri noted that in her
estimation there does not appear to be a cash flow problem at this time.
This is because, without the expense item oa non-cash
n the operatingpstatement,reciation eHawkeyeense �ismshowing awhich snet income.
Revenues have increased considerably fromperiods
to 198; and 1982)eri aand ted that
these are the two true operating p
Commission should Boeri'd notedse 'thatre shesihadfnotnseena the
anamortization
period: Finally,
schedule -and so she could not comment on what the Commission shout
statement -inwhiregard
eg adto the significant einssizePenTheoretically, se line item � he sthe aid, the
principal amount should start decreasing and, in turn, the interest
payments would also start to decrease. This would, therefore, increase
the net income as well as increase the rate of return.
Sigrin requested for the record the origin of the information on which
Bieri had based her comments. Bieri stated she had reviewed the financial
reports filed by Hawkeye with the City Clerk's office for calendar years
1981 and 1982 and the information submitted by Hawkeye.as justification
for the rate uest '
rin asked
opportunity to bserveeHawkrwhether
Hawkeye's booksherself and Bieri stated she had
orts
re
one of
the largest tenrfedms int the country land pthat athe a udited y
auditing firm's
credibility is on the line if inaccurate statements are presented.
Slough explained the methods by which the financial information iant
together and substantiated.' Ehninger brought up a question of an appar
discrepancy between the franchise fee received by the City of Iowa City
and the total revenue recorded in the financial statements presented by
a7el.S
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 4
as prepared
Hawkeye. Although Blough staclarify
what was represented by thed that this information wamounts. Terry
yy
ATC, he did attempt to clarify d at
stated the question was
The aimmediiatenquestion oft one and htheddibsddrepancy betweennthe
ata later meeting.
franchise fee amount and the total revenue reported in Hawkeye's
financials was left unresolved.
Madsen asked whether the Hawkeye financial statements are showing a
reduction in principal of the loan debt accrued by Hawkeye. Bieri replied
she did not believe that such information would affect the operating
expense statement, and that no debt repayment schedule or amortization
schedule was available so that any reduction in the principal is not a
known factor.
Terry asked whether the 8.3% return on investment projected for 1983
mentioned by Blough includes the HBO and Cinemax increases which Hawkeye
instituted on July 1, 1983. Blough stated that the projection does
include those increases and also represents an assumption of a granting of
a $2.00 increase in basic service rates from October 1 through December
31, 1983. ROI for 1983 would be
with
ut the
Terry rate ithen asked
Blough Blough whatdthe was unsure what that amount owould be. 00
Terry inquirehow much of the increase in the rates for HBO and Cinemax
are direct costs to Hawkeye from the suppliers of HBO and Cinemax. Slough
d
said he was unsure of the exact figures and that the extra charges are
split between the program supplier and Hawkeye. Hawkeye uses the funds
from these pay channels to cover their costs such as the purchase and
installation of traps to filter out the pay ser Shaffer asked
to those not
subscribing to them, in other words, for security purposes. that
if such costs were increases in costs to Hawkeye. Blough responded that
these are not increased costs. Blough said it is the pay
chan
enable the basic service cost to remain low and even for over 12 channel
cable systems to exist.
Madsen inquired about the overall changes in pay channel subscriber costs.
Blough responded HBO was first sold for $6.95 and is now selling for $9.95
and that Cinemax started at $8.95 and is now selling for $10.45. Sigrin
asked if charges for these services were set by Hawkeye's parent company,
ATC. Cance responded that such charges are set by HBO and Cinemax, which
are subsidiaries of Time, Inc., and ATC is a separate subsidiary of Time,
Inc. When asked who decided to raise the pay channel rates in July, Cance
responded that was an ATC decision.
is.a lot of new construction going on in the city
Ehninger commented there
which appears to be close to the existing network that will only require
drops and that this situation should assist Hawkeye's financial
situation. Blough responded that there is an investment cost involved in
t apartment buildings average only 32-33%
wiring such buildings and tha
penetration. Cance said the igh turnover of residents in,apartment
h
beilCance sstressed thatteven ifese �Hawkeyets the mhadyaa$2.00kers tincreasewouldforpall of
1983, their return on investment would have only been about 10%.
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 5
Cance described why there was a need for a 15% return on investment,
citing the business investor risks involved, technical obsolescence,
competition in the form of radio and television stations, noting that
cable is simply an entertainment medium like those competitors. Shaffer
interjected that whether cable TV is an entertainment medium only and what
real competition means to cable TV is being debated in state legislatures
and in Congress right now.
Madsen asked whether it was reasonable to expect a 13-17% return on
investment at such an early point in franchise, with 100% of the City
being served for only a little more than one year. Cance said no, and
that's why they are only requesting a $2.00 increase in basic rates,
bringing the return on investment from 1983 to 8.3%. Also that because
such a $2.00 increase would mean a 3% jump from 1982 to 1983 in return on
investment (from 5.3% to 8.3% respectively) that a 3% jump for 1984 to
11.3% does not necessarily follow..
Shaffer requested what the return on investment for 1983 would be given no
rate increase was granted. Cance said this could be supplied.
Terry requested information regarding how much of the pay channel rate
increases Hawkeye gets to keep. Cance said they do have confidential
agreements with their suppliers but that she could probably supply the
total cost and revenue figures that would lead to the information he
requests.
Madsen and Bieri questioned the need to reach double digit return on
investment figures this soon in the franchise given this is a long term
proposal of 15 years, even though ATC had set out goals, in their initial
proposal, of an average of 13-17% return on investment over the first ten .
years of operation. Bieri suggested the BTC was voicing doubts that a
need to raise rates to get to double digits by next year seems too fast.
Cance says she doesn't understand the concern about speed here, since they
are four years into the franchise and only half way to where they want to
be. She felt the concern should be whether Hawkeye is making too much
money or that they are not doing something that they should be doing in
the community and that neither of those things are occurring.
Bieri pointed out the substantial growth in the last two years of the
franchise. Blough said that such increases will not occur again, and that
there will be a plateau of growth reached soon. Since all new growth has
to be built underground, this is a very expensive endeavor and will not
add greatly to the return on investment.
ao9s
Li
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 6
Sigrin asked if Hawkeye has been or is considering local advertising as a
future source of revenue.
Slough and Cance responded negatively stating local advertising
operations for cable systems were not yet a proven business, although they
are still open to this idea.
Blough mentioned his fear of unregulated services, such as LPTV (Low Power
TV), DBS (Direct Broadcast Satellite) and others that will provide strong
competition for Hawkeye and the cable industry.
Shaffer responded to points made by Cance and Blough. Shaffer said that
although there are a number of media choices in Iowa City, there are no TV
stations here, and therefore cable is the most viable visual advertising
form, given its rates will be more comparable to radio than to TV.
Already local companies have provided funds to back access programs,
indicating a willingness and interest to advertise through cable. Shaffer
said Blough's point of competition is well taken, although cable can do
things those competitors can't, such as a multiplicity of channel
offerings, local programming services, bundling of services including
leased access, data services, radio FM services, institutional network
services plus the satellite and local broadcast network services.
Blough responded that these other services like OBS will be selling the
bread and butter of cable TV - the pay services, which can offer those
services fust as easily as cable.
Shaffer agreed that they will and that may be why Earl Haydt of ATC is
working so hard to experiment with and get local services by cable
integrated into communities.
Madsen said certainly these forms of competition were foreseen by ATC.
Cance said yes, but ATC also anticipated that if they came to Iowa City
with their financials and these were not showing a reasonable rate of
return and that their rates are not out of line, in fact they are low, that
Iowa City would grant an increase.
Terry asked what the national average for basic service rates are. Cance
said she didn't know and didn't think that would be applicable anyway
because of the wide variance in numbers of channels and services in each
system.
Terry quoted Cance as saying a 17% rate of return is•an average for the
cable industry. Cance said this has nothing to do with the basic rate but
rather the cost of capital which includes what interest is paid and what
is paid the stockholders. Terry said if he were an investor starting a
business in Iowa City and got returns of 1.8%, 5.3% and 8.3% in respective
years he'd be happy. Cance said that there is also a great debt yet that
will take years to be paid off. Madsen said that no large business
expects to pay off their debts right away, and this is a 15 year
franchise.
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 7
Ehninger asked if rate increases had been obtained in Coralville or
University Heights.. Slough said rate increases for those communities
would be automatic with Iowa City's rates because they included that
stipulation in their ordinances. Slough said he thought when considering
rate increases that financial realities rather than future possibilities
or hypotheticals need to be taken into account.
Terry inquired if the financials submitted by Hawkeye includes all three
systems. Slough said yes, and that may be the reason for the franchise
fee discrepancy noted. Slough stated that the effect of building the
three systems together was a cost benefit to all concerned.
Madsen inquired about the pay channel penetration. Blough said HBO has
60% penetration, Cinemax has 40% penetration, basic services is 52 to 53%
penetration and all three services are showing signs of leveling off for
maintenance and new construction has to be taken into account too. Madsen
said those capital expenditures would have been foreseen by ATC. Slough
said 120 miles were originally planned and 160 miles of plant have
actually been built. Slough said the original investment in Iowa City has
been much higher than anticipated by ATC. Shaffer asked for a
clarification of Slough's projected penetration leveling off percentages,
since earlier projections were up to 65% penetration of the basic service.
Slough said initially he thought penetration of basic may go that high,
but that it now looks as if it is beginning to level off in the 50 to 55%
range.
Terry asked about the management fees to ATC. Cance said that covers
services ATC provides such as payroll, income tax reports, FCC reports,
etc. Terry brought up the statements Slough told the BTC about the
decentralization of the decision making process in ATC, so more decisions
are made locally. Slough said he was referring to the clustering concept.
with ' those statements. Shaffer stated then the decentralization
statements and shift of regional manager Gerry Yutkin in Omaha to Kathy
Cance in Denver was not of cost benefit to ATC. The management fees
include both services performed by ATC for Hawkeye and management
decisions which take time. Some of this time may be saved now that Slough
has more decision making control on the local level, while the services
performed by ATC (such as accounting) will remain the same.
Sigrin asked Shaffer if he had any first hand knowledge of advertising
experiments in other communities this size that are showing a profit.
Shaffer said he was unsure of this but could certainly collect such
information from the Cable TV Advertising Bureau and his other contacts in
the industry. Slough said his information has led him to believe most
such advertising endeavors are break even propositions.
Cance pointed out the fast growth depicted in Hawkeye's financials is an
unrealistic projection for the year ahead because, as Slough said,
penetration rates are leveling and there will be additional capital
expenditure costs.
Madsen inquired if the management fee is a contract and set amount between
ATC and Hawkeye. Cance said ATC has an agreement with the shareholders
a'o9S
l
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 8
that ATC will provide these management services for 5% of the annual gross
revenues or $2,000 per month,whichever is greater. Madsen inquired about
the differences between the audited statements and the rate financial
information supplied. Cance said the audited statements reflect contract
figures and the rate financials show actual costs of doing business. She
added the interest cost reflected in the rate financials have been
"adjusted down because in fact we have incurred less actual interest
expense than we are allowed by contract to charge and put in the audited
financials so that is favorable for you. For the management fees, except
for the first year, the other two years shown, we have actually incurred
higher management fees than we are allowed to charge by contract as far as
the corporation is concerned." Overall, Cance said, the resulting effect
is favorable to Iowa City.
Madsen said the BTC could recommend any increase up to $2 or no increase.
Madsen asked when Hawkey could come back and ask for another rate
increase. Terry said the earliest Hawkeye could request an increase is 12
months from their last increase request (which would be June 7, 1984).
Sigrin asked Bieri if she would still agree with the opinion she expressed
in her report, that Hawkeye's current rates are ,adequate. Bieri said
because of her approach to interpreting Hawkeye's financial statements
(which is an emphasis on cash flow and trends) she believes there is not
enough history here to support an increase, especially a $2 increase in
rates. She said she was unsure when and how much revenues would level off.
Even if they do level off, the interest expense line item, which is
such a large item, should decrease and the principal should start to be
paid off.
Cance said the City is seeing giant steps in the first few years, but that
this is beginning to and will level off. The company feels, as a result,
it is reasonable to come in at this time and ask for a $2 increase for
continued growth. Slough said the cable industry looks at patterns and
growth in a different way than a city would.
Bieri said she just didn't see there is a pattern in these financials that
says the company is not going to make their financial goals.
Cance said yes, but as the interest goes down the depreciation schedule
wiII go up. Bieri said no that is not true with the straight line
depreciation method used here. Cance agreed.
Terry said he had trouble with Iowa City, Coralville and University
Heights figures all put together in the financials received, and in the
fact that an increase in other communities would be automatic if one is
granted in Iowa City.
Cance said that is the only logical way to do business and keep records in
such a setting as this one. Slough added that Coralville and University
Heights decided to put the stipulations in their ordinances that said
their increases would follow Iowa City's, so it was their choice.
MAI
ff
BROADBAND TELECOMMUNICATIONS COMMISSION
JULY 20, 1983
PAGE 9
Terry said he has no problem with the company receiving a 13 to 17%
average return on investment, but he does have a problem seeing the
company reach a double digit return on investment after three or four
years of operation. Terry said he is afraid of the company reaching 20 to
22% at the ten year period.
Cance said that if they did reach such a ROI it would be a reflection of
good business and good management and that is what the City should want to
see. Terry said he did not wish to see the company making 22% ROI.
Ehninger said she was working here for the citizens of Iowa City and
wished to see the rates remain as low as possible.
Madsen asked for more of a breakdown in the Operating, Origination,
Administration and Selling line items in Hawkeye's financials. Cance
said the operating and origination lines wod'J include all technical help,
i vehicles, workshops for teaching video, equipment, etc. Selling would
include all marketing and advertising costs. Administration refers to
management and customer service representatives.
i
Terry and Bieri asked for a debt reduction schedule for the current debt
up to the current $4.4 million spent on the system in Iowa City.
Cance said she would do her best to obtain that information before the
next Tuesday,, July 26, meeting.
ADJOURN:
Moved by Madsen, seconded by Ehninger, to adjourn. Adjournment at 7:15
p.m.
Respectfully submip4d,
William Drew Shaffe
Broadband Telecommunications Specialist
4491s-
Lf-
MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26,1 983 5:00 P.M.
CIVIC CENTER CONFERENCE ROOM
MEMBERS PRESENT: Ehninger, Madsen, Sigrin, Terry
MEMBERS ABSENT: Johnson
MEMBERS EXCUSED: Johnson
OTHERS PRESENT: Blough of Hawkeye CableVision; Mavis Dooley,
accountant from ATC; John Campbell of the Press -
Citizen
STAFF PRESENT: Shaffer, Bieri
RECOMMENDATIONS TO CITY COUNCIL:
None.
MATTERS PENDING COUNCIL -COMMISSION DISPOSITION:
Hawkeye's rate increase request.
MEETING CALLED TO ORDER:
Meeting called to order at 5:03 p.m.
SUMMARY OF DISCUSSION AND FORMAL ACTION TAKEN:
The BTC annual report was accepted. A 9ocument was distributed that
contains the timeframes by which Hawkeye intends to have wired many of the
new housing areas in Iowa City. Discussion with Hawkeye's rate increase
request continued, with Shaffer reporting back to the BTC on several
issues raised. Shaffer said the University Heights rates are
automatically adjusted to Iowa City's but there is still some question as
to whether Iowa City's rates will effect Coralville's basic service rates.
In response to Sigrin, regarding any precedence being set involving
successful company advertising programs, Shaffer said that some initial
research indicates there are precedents in this area. Successful cable
advertising programsgenerating additional revenue for the cable
companies in Chapel Hill, North Carolina, and Doylestown, Pennsylvania,
are two examples of such success in systems and communities of similar
size to Iowa City. Shaffer queried the Cable Television Information
Center (CTIC) about average Return On Investments (ROI) being given cable
companies in the United States. CTIC responded that 13 to 17 percent is
about average. Shaffer was asked to research any data pertaining to
average service rates across the nation. Shaffer cited a study done by
0709.s
-v+
MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26, 1983 5:00 P.M.
PAGE 2
CTIC in 1981 showing an average of $9.08 per month for basic service with
an average of 62 activated channels.
Dooley of ATC presented information requested by the BTC which included
data projection charts for the 15 year franchise. This chart estimated an
11 percent ROI average over 15 years if the $2 rate increase was granted
(with additional rate increase requests of $1 projected for approximately
every three years after 1983). Hawkeye has used as a justification for
their rate increase request the goals stated by ATC in their original
proposal of attaining a 13 to 17 percent average ROI over the first ten
years of the franchise. Hawkeye contends without the basic service rate
increase that this average will not be attainable. The BTC had requested
an amortization schedule and a debt retirement schedule from Hawkeye or
ATC. Dooley said neither schedule exists because ATC does not expect the
principle on the payable due them from Hawkeey to be reduced over the
length of the franchise and this payable varies from month to month.
Hawkeye said they had to build in Iowa City 160 miles of plant rather than
the initially proposed 120 miles and that construction and other costs,
including inflation,were much higher than anticipated. Madsen pointed out
the company's original proposal which indicated that they should be doing
very well at this time given the projected penetration rates and the
current penetration rates of Hawkeye. She pointed out the basic service
rate was projected to be $7.95 in years one through four; $8.25 in years
four to six; and $8.95 in years seven through ten. BieriIs memo to the BTC
was discussed. Bieri said her concern was that it seems the interest
payments to ATC will remain high throughout the life of the franchise;
that the interest payments will continue to climb; that the increases in
ROI for 1981 and 1982 have been healthy; the cash flow for Hawkeye looks
all right; and the management fees to ATC are quite large. Bieri said she
does not feel comfortable using the rate'of return analysis because of the
lack of history and trends with the cable company here in Iowa City. She
added the cost of doing business locally has gone up, and that this is
another way of approaching any rate increase request.
Blough said he thought he would lose very few subscribers, possibly 50 or
60, if the $2 rate increase were granted.
Terry suggested using a standard of living increase cost approach to the
rate increase request, so that the BTC would concentrate on Hawkeye's
local operational, origination and administration costs. Terry moved the
BTC recommend to Council a rate increase of 95 cents representing an 11.9%
in increased operational, origination and administration costs to Hawkeye
from 1981 to 1982. Terry and Ehninger voted aye; Madsen and Sigrin voted
nay. Motion did not carry.
ANNOUNCEMENTS:
Shaffer distributed several documents for BTC perusal, including the BTC
Annual Report and some of the financial information from Hawkeye Cable -
Vision's original proposal.
a o9.S'
MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26, 1983 5:00 P.M.
PAGE 3
Terry distributed a document from Blough. This document outlined all of
the new areas in Iowa City and the timeframe within which Hawkeye is
planning to provide cable service to them. Blough also stated to avoid
any confusion in the future regarding when a new dwelling or new housing
area will get cable, all "cn questions will be routed to him personally.
PUBLIC DISCUSSION:
None.
ANNUAL REPORT OF THE BTC:
Moved by Madsen, seconded by Ehninger, to accept the BTC annual report as
written. Unanimously approved.
Terry said the date of April 18, 1982, mentioned in the definition of new
housing area of the required extension policy as recommended by the BTC
should have read April 18, 1979. Madsen moved that the date in the
definition of new housing areas be changed to April 18, this recommended
Ehlinger. Unanimously approved. inquired if 1979. Seconded by
Madsen i
Policy would go to Council 'with the other STC recommended amendments to
the ordinance. Shaffer said that there were six such recommended
amendments and that all of these would go to Council at the same time.
These recommended policies and amendments will not be in effect until or
if the Council approves of them.
Terry said the BTC has been discussing the rate increase as per their
mandate in Section 14-76 of the ordinance. The last meeting the BTC
discussed Hawkeye's justification for the rate increase in detail and ATC
regional manager Kathy Cance attended this meeting to make a presentation
and to help answer any questions. The BTC had more questions and needed
more time to digest the material, so the discussion is proceeding today.
Mavis Dooley, ATC accountant, is present to answer questions and present
other information the BTC has asked for. Shaffer presented some
information the BTC requested him to research. Pertaining to the question
of whether or not Coralville and University Heights basic service rates
will automatically follow Iowa City's, Shaffer said Brown has been on
vacation so a legal opinion has not been available. But, Shaffer said,
after looking at the two communities' franchise agreements, it appears
University Heights' rates do follow Iowa City, while it is still
questionable if Coralville does. He added that he felt this does not have
to be a factor in the making of the BTC's recommendation, because a legal
opinion on this matter will be given to Council if they desire one and
'409.5-
MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26, 1983 5:00 P.M.
PAGE 4
each of the communities is responsible for its own franchises. Shaffer
said he had some information regarding questions that were asked of him by
the BTC about advertising potential in cable systems. Most of the systems
pointed out to him in his calls were larger systems, as Viacom in San
Francisco and Cox in Omaha. However, two of the systems were of
comparable size to Iowa City. These were Chapel Hill in North Carolina and
Doylestown in Pennsylvania. Both of these systems have been quite
successful in their cable advertising revenue generating programs.
Shaffer said at least these two systems of comparable size had very
successful advertising programs, and were making heavy use of satellite ad
availability time. Shaffer said he had checked with CTIC about whether 13
to 17 percent is realistic in terms of a cable company's ROI. CTIC
responded that 13 to 17 percent is about average, with 13 percent being a
little on the low end. This is information the BTC may use, if they desire
to try to base their decision on a return on investment percentage basis.
Shaffer was also asked about an average basic service rate or the average
basic service rate being charged across the country. Shaffer said he
located a survey done in 19'1 by CTIC and Brian Owens. This survey
encompassed 31 cities. The average basic service rates for those 31
cities, for an average of 62 channels offered was $9.08. When the t:o low
and t..o high rates were not included in this average (the two lows were
approximately $5 for basic service while the two highs were $25 for basic
service; these costs were significantly different than those in the rest
of the cities) the average basic service rate was $8.74 per month. Madsen
said she knew, of an FCC study done in 1981 which indicated the average
basic service rate was approximately $7.95.
Terry asked Dooley if she had any answers to the questions asked of Kathy
Cance from ATC, such as an amortization schedule, a debt retirement
schedule and a projection of what Hawkeye would get as a ROI over the 15
year franchise if no rate increase is granted. Dooley said Cance had
asked her for an amortization schedule and Dooley said she was not sure
what was meant by this which is one of the reasons she came to the BTC
today. Dooley met earlier in the day with Bieri and Shaffer to discuss
the requested information. Dooley said the interest paid by Hawkeye is
calculated on the payable due to ATC. This payable is a loan from ATC to
Hawkeye CableVision. The interest that is calculated and paid by Hawkeye
is an interest payment only, and does not include any of the principal.
-So, in that sense there is no amortization schedule to reduce the
principal because the principal changes all the time. For instance, every
time Hawkeye adds something to the plant or buys a piece of equipment, the
payable. increases and the interest increases. The interest is figured
monthly at 1.5 percent over prime divided by 12 to come up with the
monthly interest due. ATC does not expect the payable to be reduced over
the life of the franchise. Terry interjected then that ATC is not showing
any debt retirement schedule or amortization schedule. Dooley agreed.
Madsen inquired about the loan and loan repayment schedule in Hawkeye
CableVision's original proposal, which projected an eight year retirement
cgo9S
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BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26, 1983 5:00 P.M.
PAGE 5
or pay off period, and why that varies so much from the current financial
figures provided by Hawkeye and ATC. Dooley said ATC disregards or does
not take into account the interest expense on their ROI statements. For
instance, when taking a look at 1982 actual costs and revenues, Hawkeye
CableVision's actual expenses were $118,000 more than the revenue it
generated. But, in the ROI statements provided, the interest payment is
figured back in and therefore Hawkeye is showing a profit of 5.3 percent
or a net revenue of $238,000. Madsen said she didn't see any way they
could continue making payments of $600,000 a year for the length of the
Franchise and consider that this was a viable operation. Dooley said the
interest
debt woulnts d nlytbe will
eifcthe amounted some of net income year.
Bieri
is more
than the amount of capital expenditures on plant, equipment, etc. Only
then would the debt decrease. Bieri said she believed the debt would
remain high as Madsen suggested because of this fact. The more capital
expenditures go up for Hawkeye, the more interest payments will increase.
Terry asked Bieri if a fair approach to this rate increase request would
be to base the BTC's recommendations on any increases in expenses related
to the local company, such as operational, origination and administrative
processes. Bieri said she thought that would be a fair approach and up to
the BTC to decide if that is what they want to do. Madsen suggested taking
closer look at
cost categories. lSheefelt those d in the expenses wererh9ghtfor
a system of this size. Madsen also said that she finds it unfathomable
that a company the size of ATC could be so far off from their original
proposal. The proposal stated that inflation was taken into account in
their projection; that a 48 to 53 percent penetration rate was projected
for basic service and that Iowa City's basic service penetration rate is
about 52 percent now; the one pay channel of HBO was projected to be at 43
percent penetration and Iowa City's two pay channels have a 60% and 40%
penetration rate; ginal proposal
and the basic service rates in the ori
were projected to be $7.95 from years one through four, $8.25 in years
four through six, t , ATC and and $8.95 in years seven through ten. Yet
Hawkeye now say ayear four they need a $2 increase. Dooley said that
proposal is one that was put together in 1978, and that there has been
anosal
ticipatede120 miles Of plant beinginflation sincehbuthat the
had to be built (or 194 miles iIt when in fact 160�miles of plant
University Heights of plant for all three communities
and Of
and that those construction costs were
much higher than anticipated. Madsen said ATC is essenially saying
t
because of their miscalculations an what it would take to build the system
Hawkeye
the BTG is being asked to cover this and at the rate of return ATC or
substantial oricostginally
dset as t err goal. Dooley agreed that there were
what was originally projected.
Ehnined
uch of th
Dooleyesaidkthisoyisma privateecon ractualcost�agreementtwithiHBOoandCthis
information
Hawkeyegets the be to Possibleucost for HBOiandeCinemax even thoughyththat
ese
Li
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BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26, 1983 5:00 P.M.
PAGE 6
are separate subsidiaries of Time Inc. She said that the information
requested by the BTC could be made available under some kind of
confidential agreement to avoid trouble with their competitors. Terry
said the BTC is a public body and all information given to them is public,
so that this kind of an arrangement could not be accomplished. It was'
made clear the BTC has no control over the pay channel costs, yet those
revenues are figured in the overall financial picture of Hawkeye. Madsen
asked about the large net revenue made from the pay channels and what
happens to this money. Blough said that this money is used to offset
Hawkeye's other costs.
Terry pointed out some figures from Bieri's memo
said there has been an increase of July 11, 1983. He
in operating, origination and
administration costs of about 11.9 percent. Terry asked the other
Commissioners how they felt about approaching the analysis of the rate
request in this way.
Sigrin said he wanted to ask Bieri to review the status of this request as
she sees it from a financial perspective. He said he thinks there seems
to be two issues involved here. One issue being that ATC and Hawkeye
greatly underestimated their expenses in build..:: the system and the other
deals with the financial information presented and the varying
interpretation of that information. Bieri said she based her opinions in
her memo on conventional accounting methods. Therefore, she anticipated a
reduction in interest payments at some point, which ATC says will. not
necessarily be the case. Her concern is that there has to be a
sLubstantial growth in revenue or rate increases in order -to see any
reduction in the payable to ATC. The
estimation will contidebt or interest payments in her
nue to climb. Also she pointed out that 1979 to 1980
were heavy construction periods where costs would normally be high and
revenue could not be expected to be high, so the -3% ROI makes the overall
financial picture look worse than it really is. Bieri also ,painted out
the high management fees paid to ATC. Bieri looks atitinterms of history
and cash flow. Cash flow does not look bad for looks
at However, she said
the cast of doing business has gone up and that is one way to approach this
rate request. She said she is still uncomfortable with the rate of return
analysis because there are a lot of hills and valleys and no trends yet
can be established with the cable company in Iowa City, Therefore,
approaching this question from the standpoint of increased operating
costs to the local companies is one viable alternative.
Dooley presented a 15 year projection including ROI figures in response to
a request from Shaffer: This projection shows a one dollar increase in
HBO and every two years after July
Cinemax as of July 1 1, 1983; a fifty cent increase in
and every two years after July 1, 1983; an assumption
of a two dollar basic service rate increase in October of 1983 and a raise
in basic service rates of approximately one dollar every three years
thereafter. This projection chart went to year 1994 and indicates an
average of 11 percent ROI. Sigrin asked if there were any
4? 093
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BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING - JULY 26, 1983 5:00 P.M.
PAGE 7
revenues associated with advertising possibilities on this chart. Dooley
responded no. Blough said he thought the risk of the investment to start
such an advertising program in Iowa City would be great. Sigrin asked
Shaffer if there were precedents for such an advertising program and
Shaffer said that there were.
Ehninger asked Blough how many subscribers he thought he would lose if
they were to get a $2 increase. Blough said he thought very few, maybe 50
or 60 subscribers, but that he thought those people would come back and
subscribe again at a later date.
Terry said he has leaned towards the approach Bieri suggested, which takes
into account the increases in local operation, origination and
administration costs. Terry moved that the BTC recommend to Council a
rate increase be granted to Hawkeye of 95 cents, or representing an 11.9
percent increase in Hawkeye's operation, origination and administration
costs for 1981 to 1982. Seconded by Ehninger. Madsen asked how those
figures were arrived at. Bieri pointed out the figures in her memo and
how the 11.9 percent inflationary increases from 1981 to 1982 in those
cost categories were determined. Bieri did not include any consideration
of the 1979 to 1980 period. Terry said that the BTC recommendation to
Council on this matter should include a justification as to how the
recommendation was reached and that this method seems fair and best at
this point. Sigrin asked Bieri if that was her recommendation to the BTC.
Bieri said the decision was up to the BTC. Madsen inquired if any other
costs or considerations would be taken into account in this recommen-
dation. Blough said Hawkeye and ATC tried to use a rate return analysis
for their rate increase request justification. Dooley said a shortcoming
of approaching the rate increase as Terry has suggested is that for
example if ATC had built a slipshod kind of system for much 'less money
than it has, it could be showing a high ROI, but the system would be having
a lot of problems. ATC chooses not to build systems that way. Terry said
he would rather take this approach, maybe just for this year, then next
year or whenever Hawkeye comes in again for another rate increase request
there will be more of a history to base the rate of return analysis on.
Motion called to question: voting aye on the motion made by Terry were
Terry and Ehninger. Voting nay were Madsen and Sigrin. Motion did not
carry.
Sigrin said he would like to have more time to digest all of the
information given the BTC. Also he said there seems to be a variety of
approaches to this issue and that he would like to study it further.
Madsen agreed.
The next BTC meeting is set for 4:00 p.m. Thursday, July 28, 1983.
a a9,s'
MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPf"...
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MINUTES
BROADBAND TELECOMMUNICATIONS COMMISSION
SPECIAL MEETING
JULY 28, 1983 4:00 P.M.
CIVIC CENTER CONFERENCE ROOM
MEMBERS PRESENT: Terry, Madsen, Sigrin, Ehninger
MEMBERS ABSENT: Johnson
MEMBERS EXCUSED: Johnson
OTHERS PRESENT: Blough of Hawkeye Cablevision; John Campbell of the
Press -Citizen; Meryn of the Daily Iowan
STAFF PRESENT: Shaffer, Bieri
RECOMMENDATIONS TO COUNCIL:
Terry moved and Ehninger seconded, that the BTC recommend the City Council
grant Hawkeye Cablevision a 954 increase in basic service rates, or an
11.9% increase, based on an average of the increase in operational,
origination and administration costs incurred by Hawkeye from 1981 to
1982.
MATTERS PENDING COUNCIL -COMMISSION DISPOSITION:
Hawkeye's rate increase request for basic service.
MEETING CALLED TO ORDER:
Meeting called to order at 4:00 p.m.
SUMMARY OF DISCUSSION AND FORMAL ACTION TAKEN:
Terry read a statement prepared by Shaffer and himself, which attempted to
synopsize the discussion to date on the rate increase request and to point
out alternate directions the BTC could take. The BTC agreed there was not
enough of a basis or history to grant Hawkeye an increase based on a
projected return on investment over a ten or fifteen year period of the
franchise. The BTC did recognize several areas of increasedcost to
Hawkeye, including: a) increased operational, origination and
administration expenses; b) building approximately 40 more plant miles
than anticipated; and c) higher construction costs than were anticipated.
It is upon category a. above that the Commission based their
recommendation for a 954 increase in basic service rates. The BTC
suggested the standard of living increase approach, but also suggested
future rate increase requests should not necessarily be determined by this
method.. Each STC member expressed concerns about a variety of factors
regarding these proceedings and about the company in general, including:
the originally projected basic rate structure, which was to reach $8.95 by
year ten of the franchise; the apparent change in interest payments and
reduction schedule from Hawkeye's originally -projected debt completion by
02095-
Broadband Telecommunications Commission
July 28, 1983
Page 2
year eight to the current plan where substantial interest payments are to
continue throughout the life of the franchise; the lack of time in
determining a recommendation for Council on this matter; the inclusion of
other matters in the consideration of a rate increase request, such as the
company's support of access, management efficiency, and overall franchise
compliance; the continued need for a foreign language channel and a better
weather channel; the difficulty in sorting the financial information
regarding interest payments, management fees and pay channel costs to ATC
and Time Inc.; the need for a third party consultant in a process such as
this. The BTC also noted that there have been new programming services
offered in Iowa City such as CNN, SNC and MTV; that the cooperation on the
local level regarding the resolution of the extension of cable to new
areas has been good and that the company's support of access related
activities has been far above average. The BTC asked Hawkeye to file with
the City Clerk their extension policy; to continue to upgrade the system
and access equipment with the state of the art; and to ensure no further
disparate or varying information comes from Hawkeye to citizens. There
was also discussion of how City cable related funds should be spent and
how more funds for this area may be obtained.
ANNOUNCEMENTS:
Terry asked for a holiday in August so that no regular BTC meeting would
be held. The BTC agreed to this. He did request the subcommittees to meet
in August.
PUBLIC DISCUSSION:
None.
BTC CONSIDERATION'AND/OR RECOMMENDATION -REGARDING HAWKEYE CABLEVISION''S
BASIC SERVICE RATE INCREASE REQUEST:
Terry read a statement of status prepared by Shaffer and himself. The
statement read as follows: As an advisory Commission to City Council, the
BTC is charged with the responsibility of making a recommendation to the
Council on the matter of Hawkeye Cablevision's request for an increase in
basic service of $2. The BTC has 60 days in which to make this recommen-
dation from the time of the request filing, which was June 7, 1983. As per
ordinance 78-2917, Section 1476, Hawkeye has filed the rate increase
request and justified their request by stating their goal, as quoted from
their original proposal to Iowa City, of reaching an average of ,13-17%
return on investment (ROI) over the first ten years of the franchise will
not be reached if an increase of $2 is not granted. Hawkeye and ATC
project an 11% average ROI over the 15 year franchise without an increase
in basic rates.
From the financial' information supplied the City, and that requested by
the BTC, the BTC finds that the evidence presented by Hawkeye to justify
their rate increase request to be inconclusive. This is primarily due to
the facts that Hawkeye has: 1) only been in operation for three years and
100% operational for only 15 months, therefore it has been difficult for
the BTC to see how a 15 year projection could be made based on this limited
go9S
Broadband Telecommunications Commission
July 28, 1983
Page 3
track record; 2) Hawkeye has continued to grow in terms of subscribers and
rate of return every year at a rate of three to four percent although this
rate of growth has slowed down somewhat. It is still unclear and
difficult to attempt to project a leveling off or platequ effect of
subscriber levels and thus gross income for the company. Such a plateau
effect normally does occur in cable systems, and Hawkeye has argued that
effect is starting to occur now; 3) it became clear that Hawkeye's
financial status and growth as a company is interwoven with ATC and Time,
Inc's finances, through the interest payments, management fees and pay
channel costs returned to ATC and to Time, Inc. The BTC has been unable to
determine exactly to what extent this relationship does or should affect
Hawkeye's ROI.
Therefore the BTC has found there is not enough of a basis or historical
information upon which to decide a projected rate of return calculation
using traditional ROI procedures. The BTC does not find an adequate basis
for a recommendation of an increase in basic rates based upon this method.
However, it is recognized that: A) Hawkeye has had to build considerably
more cable plant than originally anticipated (approximately -TO miles more
plant); B) that construction costs have been higher than anticipated; C)
and that there have been increased costs on the local level categorized as
operational, origination and administration costs. One alternative the
BTC has is to recommend a standard of living increase based uponan
average of the local increases in costs in C. above from 1982 to 198:.
This increase would amount to 954 per month more in the basic service
rate, or an 11.9% increase.
This is not to say more traditional ROI procedures should not be used in
the future, or that this method of computing an increase should be used
henceforth. This next year should give the City an indication of how
close Hawkeye's projections are,i
so that any future rate increase
considerations will have more history and a company projection on which to
be based. It was noted that if at any point Hawkeye appears to be making
more money than the average 13-17% ROI, the Commission can 'recommend and
the City Council can reduce basic service rates accordingly.
There were several concerns expressed by the BTC during their considera-
tions. In the financial area, ATC and Hawkeye's original proposal
projected a basic service rate of $8.95 through year ten of the franchise.
The $2 requested increase at this time would mean a $9.95 rate at year
four of the franchise. Also that the interest payments from Hawkeye to
ATC and Time, Inc., will continue to be substantial throughout the life of
the franchise, when the original proposal projected a repayment of loans
at year eight of the franchise. There was also mention by the BTC of the
potential growth in revenue in the other areas Hawkeye may become involved
in, such as advertising, data services, marketing or security services and
increases in the pay channel costs and/or additional pay channels.
While considering the rate increase request, the City does not have to
confine itself to financial analyses only. The City may include in its
review, but is not limited to, overall franchise compliance, management
efficiency, services provided, and upgrading of the system. In that vein,
some Commissioners expressed concern about the specific amount and uses of
a? 0$"
Broadband Telecommunications Commission
July 28, 1983
Page 4
the management fees to ATC, and management cooperation of ATC in
conjunction with the BTC in the form of a lack of responsiveness on the
part of ATC in providing letters back to the BTC involving the extension
policy, financial information and the provision of requested programming
services such as a foreign language channel and a better weather channel.
However, it was noted that there have been new programming services
offered on the Iowa City system such as CNN, SNC and MTV; that cooperation
on the local level regarding the resolution of the extension to new areas
has been good and that company support of access related activities has
been far above average. There has been no weighting system devised to
evaluate such points in regard to a rate increase request, yet such points
can, and the BTC believe should, figure in such a determination.
Finally, because of the magnitude of the task of rate regulation, the bulk
of material to be processed, a need to determine precisely the right
questions to ask in such a process and the relatively short time frame
within which the BTC must come to a recommendation (60 days), it is
suggested that for this process it would have been extremely helpful to
have the assistance of a third party consultant to make such determi-
nations as fair and efficient as possible.
Terry said he hoped that this statement helps to bring some of the points
raised in previous meetings to the foreground for further discussion
today.
Madsen said she had written down several of the same points mentioned in
the statment that was read. She added that she has felt frustrated in
this process and has found things difficult to sort out because of the way
ATC and Hawkeye has answered some of the financial questions. She
questioned in particular the interest payments to ATC, management fees to
ATC, 'the revenues kept over expenses by ATC and Hawkeye regarding the pay
channels, and the ability to write off losses or cross subsidize one
system with another. Those areae she said, are of legitimate concern and
she felt it was too bad the BTC had to confine its recommendation based on
operational, origination and administration expenses - but that this is
what needs to be done at this time due to the deadline stipulation of the
ordinance. Madsen said that in future rate increase request proceedings
hopefully very specific breakdowns of the operational, origination and
administration expenses would be available. Madsen stressed the need for
ATC to provide timely information, including a prompt and quick filing of
the extension policy with the City Clerk. She saw the need to continue to
monitor the availability of access equipment, although she was pleased
with the maintenance and repair contract for the access equipment that
Hawkeye has obtained and the fact that Hawkeye has purchased several
thousands of dollars in additional equipment for access use. The BTC had
to work hard to get that contract in place and should continue to
monitor it. Madsen was pleased CNN and SNC are now in Iowa City. She
mentioned the continued need for a foreign language channel and another
better weather channel, and that the data channels should still be
compiled as discussed in previous BTC meetings. She felt sure Hawkeye
would: 1) keep the time and weather channel accurate and 2) that
differing messages regarding the status of cable extension to homes would
not continue to occur to come out of Hawkeye. Finally, she wished to see
�o9.s
Broadband Telecommunications Commission
July 28, 1983
Page 5
Hawkeye continue to upgrade the equipment and systems so that it is kept
to a standard of the state of the art.
There was some question as to when Hawkeye Cablevision may next approach
the City for another rate increase request. Some Commissioners believed
Hawkeye cablevision may approach the City as early as next January 1,
1984, while others believed the company would have to wait a minimum of
one ea, mking le date
thatyan opie nion onthis �wouldosbebrequested ufrom Bro n in Shaffer
thelegal
department.
Ehninger said the BTC has discussed TeleFrance specifically as a foreign
language channel in Iowa City. Blough said it appears TeleFrance may be
going broke and may not be available soon. Blough said CNN may also be in
financial difficulty. HBO is going strong though. Ehninger questioned
whether MTV would be charging next year. Blough said that MTV would be
charging up to 104 per subscriber next year from the cable operator.
Ehninger said she saw the cable company going to more and more pay
channels. Blough expressed an advantage of having ATC as a cable company
in that hardware and software items can be purchased less expensively due
to their ability to buy in volume.
Sigrin said the statement read earlier expressed much of what he was going
to say. He added though, that he felt it would have been extremely
helpful if the BTC had more time to consider a rate increase request and
that he would also like to see a third party consultant involved in the
process. Any recommendation reached today, he stated, would now have to
be based on certain assumptions rather than having researched all the
financial aspects that could have been studied, had there been time.
Terry entered a motion recommending that City Council grant a 99 increase
in basic service rates charged by Hawkeye Cablevision, representing an
11.9% increase, based on an increase to Hawkeye in operational,
origination and administration costs in 1981 to 1982. Seconded by
Ehninger. Unanimously approved.
Terry said if an increase were to be granted by Council that he would like
to see those funds used to raise the BTS salary and further support access
related activities. Madsen suggested another route would be to hire other
help that would assist in some of the BTS responsibilities, cutting down
his direct workload.
Madsen pointed out the Triannual Review contained a plan whereby
additional access equipment was identified as a need, and this should be
addressed at some point so that the additional equipment can be obtained
as necessary.
Sigrin inquired if Shaffer was aware of other means of obtaining funds for
cable/access use. Shaffer said although he had not studied the
possibilities, grants may be obtainable for certain projects the City may
want to undertake. In addition, the 3% franchise fee could be increased
anywhere up to 5%. Ehninger suggested approaching the Committee on
Community Needs for funds.
ao9,3
Broadb
July 2
Page 6
Blough
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City of Iowa C.dty
MEMORANDUM
Date: October 7, 1983
To: City Council r , ✓
From: Joe Fowler, Parking Systems Superv]]'so5q�«�
Rosemary Vitosh, Finance Director((
Re: Capital Street Parking Ramp Traffic Pattern
As a result of problems caused by the traffic pattern in the Capitol Street
parking ramp, Joe visited Lincoln, Nebraska to evaluate a similarly designed
parking ramp. Lincoln has a 1,000 car ramp with basically the same design as
ours but a different interior flow. In our ramp the in and out traffic merge and
travel together on the north bay. In Lincoln the in and outbound traffic do not
mix.
There are several differences in the design of the two facilities. In Lincoln
the flat bays are away from the shopping center. This area is used for long-term
permit parking. Sloped ramps are used for in and outbound traffic with a
crossover in the middle of each bay that allows the vehicles to change their
direction of travel.
In the Capitol Street ramp the flat bay is located next to the shopping area and
the sloped decks that would be used for traffic flow are located south of it. On
the slope decks there is a pedestrian walk-through. However, it has such a low
clearance it could not be converted to a vehicle cross-over. As a result of the
low clearance in the cross-over we have no way to remix the outbound traffic
with the inbound except at the entrance/exit area.
The volume of traffic handled by the ramps is also different. Lincoln has 400
permit parkers and approximately 400 short-term vehicles parked per hour. We
have 900 spaces with 85 permits and approximately 600 short-term vehicles parked
per hour.
In order to convert the Capitol Street ramp to a traffic pattern similar to
Lincoln, we would have to reroute the traffic using the middle and south bays
for in and out traffic flow and the north bay for parking and changing from
inbound to outbound (see attached schematic). Once a vehicle entered the
outbound flow it would not be able to get out of it until it reached the exit.
We would have a potential problem on two levels of vehicles meeting head-on at
the down ramp where levels A and B join.
Prior to making any changes in the interior flow, we recommend that a vehicle
detection and counting system be installed on four of the north bays to notify
the public when there is no parking available in that parking bay. Without this
equipment a vehicle could travel from the entrance to level C, pull out of the
inbound flow to look for a parking space, not find one and then be in the
outbound flow. If there were no spaces on the down ramps from level C to B and B
to A, the vhicle would be at the exit after having driven on six parking bays.
The driver would then have the option of reentering the inbound flow and driving
up at least three bays or exiting. As people currently exit the ramp saying
ao910
L
JORM MICROLAS
TARGET SERIES MT -8
PRECEDING
DOCUMENT
City of Iowa (.oty
MEMORANDUM
Date: October 7, 1983
To: City Council /
From: Joe Fowler, Parking Systems Supervisor,-6&
Vitosh, Finance Director ), ,5
Re: Capital Street Parking Ramp Traffic Pattern
As a result of problems caused by the traffic pattern in the Capitol Street
parking ramp, Joe visited Lincoln, Nebraska to evaluate a similarly designed
parking ramp. Lincoln has a 1,000 car ramp with basically the same design as
ours but a different interior flow. In our ramp the in and out traffic merge and
travel together on the north bay. In Lincoln the in and outbound traffic do not
mix.
There are several differences in the design of the two facilities. In Lincoln
the flat bays are away from the shopping center. This area is used for long-term
permit parking. Sloped ramps are used for in and outbound traffic with a
crossover in the middle of each bay that allows the vehicles to change their
direction of travel.
In the Capitol Street ramp the flat bay is located next to the shopping area and
the sloped decks that would be used for traffic flow are located south of it. On
the slope decks there is a pedestrian walk-through. However, it has such a low
clearance it could not be converted to a vehicle cross-over. As a result of the
low clearance in the cross-over we have no way to remix the outbound traffic
with the inbound except at the entrance/exit area.
The volume of traffic handled by the ramps is also different. Lincoln has 400
permit parkers and approximately 400 short-term vehicles parked per hour. We
have 900 spaces with 85 permits and approximately 600 short-term vehicles parked
per hour.
In order to convert the Capitol Street ramp to a traffic pattern similar to
Lincoln, we would have to reroute the traffic using the middle and south bays
for in and out traffic flow and the north bay for parking and changing from
inbound to outbound (see attached schematic). Once a vehicle entered the
outbound flow it would not be able to get out of it until it reached the exit.
We would have a potential problem on two levels of vehicles meeting head-on at
the down ramp where levels A and B join.
Prior to making any changes in the interior flow, we recommend that a vehicle
detection and counting system be installed on four of the north bays to notify
the public when there is no parking available in that parking bay. Without this
equipment a vehicle could travel from the entrance to level C, pull out of the
inbound flow to look for a parking space, not find one and then be in the
outbound flow. If there were no spaces on the down ramps from level C to B and B
to A, the vhicle would be at the exit after having driven on six parking bays.
The driver would then have the option of reentering the inbound flow and driving
up at least three bays or exiting. As people currently exit the ramp saying
J�
there are no places to park when we have as many as 200 open spaces, it is
probable that many people would exit rather than reenter the traffic flow.
At the present time one system has been investigated which would monitor the
number of parkers on the north bays. This would require the installation of two
detection loops, one car counter and a full sign on four floors. Estimates for
the equipment necessary range from $7,659 to $11,952. These estimates do not
include labor for the installation or freight.
A potential problem has developed with that system as to where we can cut the
surface of the ramp without doing structural damage. Walker, design and
construction consultants for the ramp, advised we cannot cut the precast T -
beams. Engineering has verified that cutting loops into an epoxy section which
joins the T's may also cause structural damage. Therefore, this system is not
workable, and we recommend abandoning this approach.
Other monitoring detection systems are currently being investigated by City
staff. The concern with the other systems are the increased costs, exposure to
vandalism and lack of employees trained in their maintenance and repair. Joe
has contacted Federal Signal Corp., Stanley Parking System, Sarasota
Automation, and A.P.E. Troybright Industries. Troybright, of Toronto, Canada,
stated they could custom make a system that would include four electric photo
eyes per floor. All other suppliers stated they did not have products to meet
our needs.
Although the change in the traffic flow in the Capitol Street parking ramp has
the potential for decreasing traffic congestion, we do not recommend any changes
unless the problem with the north bay is resolved. The problem of traffic
meeting head-on on two levels probably could be overcome with signage. Parking
can be an extremely emotional issue and we cannot recommend creating a'situation
that could alienate downtown parkers from using the Capitol Street Ramp.
Traffic flow could be improved by realigning the entrance equipment on Capitol
Street. At the present time many vehicles use both entrance lanes to maneuver
in order to pull parallel to the ticket spitter. This in effect often leaves us
with one entrance lane. To make this change, the Capitol Street curb would have
to be realigned and the current spitter and gate island relocated. Engineering
has put a rough estimate of $20,000 on this project.
If the above changes are made, entering and exiting will be improved on normal
usage days, but there will still be traffic problems on high usage days and
there is no way we can overcome the driver who ties up the ramp waiting for a
parking space.
It should be pointed out that the Capitol Street ramp is currently operating a
70 percent or more occupancy during the day and that to make either of these
changes, portions of the ramp will be closed for a day at a time. In addition,
these changes must be made when the daytime temperature is 40 degrees or higher
in order to paint out the current parking stalls and repaint new ones. For these
reasons, we recommend consideration of only the entrance realignment at this
time and ask approval to further investigate the custom design of the electric
eye system prior to further consideration of the revised traffic pattern.
� 44
Ci
F-xl'
4VMF�
EXPANDED VIEW
EL. 154'-O"
TOP TIER
� I
i
EL. 144'-O*
5TH TIER
I
EL. I3 4'-d'
4TH TIER
EL. 124'-0'
3RD TIER
EL. 110'-00
2ND TIER
EL, 100'-O"
15T TIER
J
CITY OF IOWA CITY
CIVIC CENTER 410 E. WASHINGTON ST. IOWA CITY, IOWA 52240 (319)356-500C)
October 14, 1983
To All Capitol Street Ramp Permit Holders:
The City has received numerous inquiries regarding the need for removing monthly
permit parkers from the Capitol Street Parking Ramp. This letter is being sent
to all Capitol Street Ramp permit holders to further explain the decision to
remove the permits from the ramp and to detail future alternatives available for
permit parking.
Parking in the Capitol Street Ramp has increased so that the occupancy level
which existed during the month of September 1983, was the same as the occupancy
level during the Christmas shopping season last year. Parking Systems
statistics show that the occupancy level for the Capitol Street Ramp continue to
steadily increase on a year-round basis.
Therefore, in anticipation of a continuing increase in parking occupancy
throughout the year and the more immediate need to provide parking for the
short-term parker during the upcoming Christmas shopping season, the decision
was made to remove all permit parking from the Capitol Street Ramp. Both
downtown parking ramps were built to provide parking for the short-term parkers
and parking permits were sold in the ramps only as an interim program until
short-term parking usage of the ramps increased. This policy has been confirmed
by input received from downtown merchants and businessmen which indicates that
they are most concerned that sufficient parking be available for their
customers.
All permit holders will be allowed to move to the Dubuque Street Parking Ramp
and may continue to purchase permit parking in that ramp until such time as the
short-term parking demand in that ramp necessitates the removal of permit
parking.
The City is well aware of the limited parking availability in the Central
Business District for the long-term parker and is in the process of conducting a
study of parking needs in that area which will address the needs of both the
short-term and the long-term parker.
Please call me should you need any additional information.
Sincerely,
Joe Fowler
Parking Superintendent
356-5094
cc: City Council
tp3/3
ao97
r
` Johnson t�ou tyCCobuoo 2i�fGoverrj,Hent
f % nJ Y.
Date: October 6, 1983
To: Neal Berlin;/Dale Helling and Don Schmeiser
From: Cheryl Mintle, Human Services Coordinator`„
Re: HOPE House and Hilltop meeting September 29, 1983
Individuals present at the meeting between Project HOPE and Hilltop were
the following: Rod Kodros, Manager of Hilltop; Rose Hyatt, Hilltop
resident; Dianne Coppens, Hilltop resident; Waylon McCullough, Director
of Project HOPE; John Stratton, Chairman, HOPE Board; Larry Nelson, 6th
Judicial District Probation and Parole and myself.
The meeting September 29th, from 8:00 to 9:00 p.m. was held at the City
Library. Individuals from Hilltop had an opportunity to ask questions
concerning the relocation of HOPE into their neighborhood. I felt they
received answers that they felt were helpful and responsive to their
concerns. The Project HOPE representatives were very open and listened
very well to the concerns raised by the Hilltop residents. Openness and
concern came across from the Project HOPE representatives to the Hilltop
representatives. Hilltop was told by HOPE to let the Director of Project
HOPE know if ever there was a problem that developed in the trailer court
due to HOPE residents or individuals visiting the HOPE House.
The information provided by HOPE was very helpful and did indicate that it
is highly unlikely both from the experience of halfway houses such as
this and also from the knowledge base of those who work with houses that
residents of HOPE House would conduct themselves in an illegal manner in
the neighborhood of the house. It is much more likely that these
individuals would act out away from the house since the house staff has
the ability to return them to prison. Information was shared concerning
the number of probation and parolees who would be visiting the house,
their types of crimes and the sanctions that are available to deal with
them. The Project HOPE residents also have numerous controls placed upon
them including the fact that they cannot drink on or off the project's
premises, nor can they engage in drug usage and this is monitored by means
of laboratory tests. There are curfew rules and noise rules at the house
and many regulations that probably would make living near this home a more
positive experience than perhaps living next to a random group of college
students.
All in all, I felt the meeting went as well as could be expected under the
circumstances and perhaps even better than one might have anticipated. I
did indicate to Dianne Coppens that if at any time she has a concern
related to HOPE's presence in their neighborhood and that the HOPE staff
does not respond to it to their satisfaction that she let me know and I
would follow-up on it for them.
bdw2/4-5
THE REGISTER'S EDITORIALS
Allocating sewer funds
Next week the citizens' com-
mission that sets policy for the
state's environmental -quality
agency will convene to consider a
change in the way federal funds
are disbursed for sewage -treat-
ment projects. It is perhaps the
most critical and complex
decision the new commission has
faced since its creation In July to
replace two other state boards.
The issue is how to carve up a
$33-mIDloe annual federal grant
designated to be used for sewage.
treatment projects In areas
where Inadequate systems cause
water pollution. Under the
existing rules the les Moines
metropolitan area would get 100
percent of the money for the next
seven years to finance construc-
tion of a $194.5 -million sewage -
treatment plant for which eight
Des Molne"m cities and two
counties have been preparing
over the past 10 years. The Iowa
Department of Water, Air and
Waste Management staff has rec-
ommended that the rules now be
changed, the priority system re-
shuffled and a.50•pereent lid be
put on allocations to any one
project each year.
This would set the Dee Nolan
project back a year or more and
eduld add more than two years to
the construction time and raising
monthly sewer -rental rates to
$13 to $19 a month In the Des
Nolan area for an average
family, up from M to $9 a month.
Industrial rates would jump even
more, officials say. Chit officials
also are concerned about the
effect on their ability to'sell
bonds H the plant is 10 years old
before It it completed. ,
Agency Director Steven Ballou
argon that the new rales will
recognise the worst-case
pollution, problems and will
spread the federal money around
to more communities In Iowa.
'Des Moines city officials counter
That On damping of millions of
gallons of raw sewage into the.
Des Moines River when the sew-
age -treatment plant becomes
overloaded several times a year
Is sufficient reason to assign a
top priority to the city's project
They argue, too, that the rules
change could delay all projects
even further as it goes through
the lengthy public hearing
process and review by a legis-
lative rules review committee,
Gov. Terry Branstad and the
federal government
The eight Des Moines metro-
area
etroarea cojiunuaities, representing
one-tenth of the state's popula-
tion, have been preparing for this
huge project for a decade —
spending $25 million on studies
and building new sewer floes that
feed into the Des Moines sewage -
treatment plant. That plant,
already declared Inadequate,
must now be expanded to accom-
modate the additional sewage.
Meanwhile, as this preparation
has gose on, the state his handed
oqt tens of millions of dollars to
other cities to build almilar
plants.
Past of the problem is the size
Of the metro Des Moines project
At just under $200 milli* it is
far and away the moat expensive
of any project la the state — four
times bigger than the next most
espeasim a $Wmllllm project
piamed for low& City. No matter
how a =33 -million pie is sliced,
Des Nolan is going to have to
have the Hon's share for an
extended period until Its project
is complete.
The state's goal of addressing
the most serious pollution
problems first is a worthy one,
and deserves close consideration
by the commis"' But It's not
fair to Des Kohn and the otber
communities that have In good
faith been preparing plans for
Improved systems with the on-
derstanding that the money
would be there. The commission
should pro sed under the present
system of alloeaflag the money
for projects ready to go in 1984,
then start the machinery in
motion for a rules change that
would reorder the priorities for
future yeah.
a'o9)
Waste, plant seen as
,By Carlos Trevino
Staff Witte,
Citing a 1970 sewer service study
report that vlmtned Iowa Cilv's waste
water treatment plant enuld "ac.
rnmodae a population of 73,000 pm•
,le." a number of the lows Cily Waste
Water Facility Commission says anew
sewage treatment plant is not needed.
But a new study submitted to the
Iowa City Council Monday by the same
lira that issued the 1970 report con•
lends the plant is currently serving a
papulation "equivalent" lomore than
ut 73.000 people and a new plant is
needed.
-Thai' population equivalent crap
doesn't do it forme."Jim Hvnes of the
Iowa City Wasle Water Facility Com.
mission said. "In 1970 Vecnstra &
Kimm said the plant was good. The
problem is the sewer lines, not the
treatment plant."
Veenstra & Kimm Inc. is the
engineering and planning"corporation
that conducted both studies. Professor
Richard Duque of the UI College of
Engineering was also hired by the city
to develop a recommendation on the.
sewage situation,
THE NEW REPORT" recommends
that the city proceed with a four-phase
plate to meet its current waste water
treatment needs and states the cfat
struclion, whick could take Up to 310
• years to complete, would cosh nearly
150 million.
The 1970 Veenstra & Kimm report
'stated It would cart 14 million to con-
struct a new sewage treatment plant.
.It cost. the city 11 million to build the
current plant, built in the mid -1930.%.
Ihe'report states.
That same report also slated that the:
current facility "has several vears of
useful life ... and is adaptable to expan-
sion." Veenstra & .Kimm engineers
also sold It was '!questionable"
whether anew plant was feaslple until
after 1190' .. .-.1.
City Mamker Ndal Berlin .said com-
paring the old report with the recent
Vicenstra-& Kimm report was'
-heading down line.wrong Irark ... the
1970 report isn't'applitable anymore.
That was'13.vears ago and tilt, world
changer fast In 13 yeah.
"in 1972, the federal legislation (lh,•
Clean Water Act) created an entire
new b21lgaMC as far as the-plans*
programs and construction of new
plants," Berlin said.
BERLIN ALSO SAID higher aqui rt,-
ments for pollution control and an in -
cream, In sewage Input have oracle if
new plant necessary.
unneeded
Rvnes said, however. 'The rharar-
ler of lhesewage hasn't changed. them
is no new wet industry or heavv In.
dustries adding Io the sewage. I don't
think there was ever realiv a study to
.et, if the old phml r(,uld he dune up
I improved)." he said.
Hynes claimed a new plant would III,
"a monument. Borvaurrds love if,
hmld monuments. Sewer lines have to
he. (-overeat up, but visit ran %vv if new
sewege treatment plans." he said.
'•Mayhe somrbedy is trying to make
a nice resume item. the bfgRt,a in Iowa
Cary hisinry' ... they just don't unders.
land the mal needs." he said.
Mavnr Mary Neuhauser and other
memAers.of the Iowa City Waste
.Water Facility Comntil lee are keeping
track of the aclivnips of the Iowa
Department of Water. Air and'Wasle
Management. which might grant Iowa
City up to $29.6 million in federal
funds over a four-year period to
Improve Its sewage system.
IWAWM, which. receives and
distributes all federal money for
waste water projects in lows
cities, N currently reviewing 19
alternative plans for dispensing
the grants.
The deparlmenl.had planned to
Withhold funds from Iowa City un-
til fiscal 1990 but then tentatively
planned to give 129.6 million to the
city beginning in fiscal 1966:'
That derision could change on
Tuesday when the commission
meets In Des Moines to review its
alternatives and decide which one
to Implement, beginning in fiscal
1965. -
City officials have indicated that
regardless of whether the , city
receives federal funds the project
will continue with funds coming
from general obligation bends and
increased rates for sewer service.
City officials have also considered
borrowing, 111 million to finance
the project..
Berlin said an exact estimate of
how much rales for sewer service
would have to be raised "depends
on .what is adopted by the city
council for financing" the sewage
treatment project.
Residential sewer bills could in-
crease more than 309percent by
the mid-1980s; due to the rale hikes
that would be necessary to finance
the new plant, the report stated.
3
The council is reviewing alter.
natives for reducing the 250
million price tag of the sewer im.
provement plan as well as the
potential ratio increase city rest.
dents may be asked pay.
Hynes said considering the es.
timated Increases in sewer bills
and the cost of the project,
'•Mavbe it's a blessing in disguise.
not getting the funds for this."
In Phase I of the recommended
plan, an interceptor sewer (a ma.
jor sewer line that would relieve
pressure from smaller lines)
would be constructed on the
southeast side of the city. The city
would also spend nearly it million
to provide sewer lines from the
new plant. site — the first part of
which would cost 17.5 million — to
the Iowa River. Another. 1550,000
would be spent to repair the old
plant.
The -Phase I plan will cost about
119 million; the recommendation
staled, and could be completed by '
the end of 1965.
Phase 1I gives main priority to
the construction of an outfall
sewer, a sewer line that normally
discharges into a river, connecting
the old plant to the new plant, and
would cost 18,5 million. Phase 11
should be completed by 1991.
In Phase RI the capacity of the,
main sewage treatment plant
would be Increased at a cost of 15,
million. Repairs would also' be
made on the current plant at a cost
of 00,000. Phase III would cost an
estimated 18.4 million and should
4e completed in 1996. '
Phase IV, with planned compl&
tion by 2001, includes the building
of offices, a.. laboratory -and a
malnlenance. shop. Phase IV
would cost 19.1 million.
"Many cities (In Iowa) that
have new sewer systems are hav-
ing problems with them," Hynes
said. "They gold-plated sewage
plants and then they don't meet
their expectations."
But, Hynes said, "The (current)
council has done more than any
other council In the past to solve
the sewage problems In Iowa City.
I think they're 'trying to move
ahead... I dont think they want to
destroy that." But, "They're
pushing this loo fast."
3,000