City Council Minutes 09-25-2006 SpecialMINUTES
SPECIAL MEETING — MONTICELLO CITY COUNCIL
Monday September 25, 2006 — 5 p.m.
Members Present: Clint Herbst, Wayne Mayer, Tom Perrault, Glen Posusta and Brian Stumpf.
Members Absent: None
1. Call to Order.
Mayor Herbst called the meeting to order at 5 p.m. and declared a quorum present. The
purpose of the meeting was to review the findings of the Fiber Optics Task Force.
Doug Dawson from CCG Consulting, the firm that did the feasibility study, was present as
were representatives from Springsted and members of the Fiber Optics Task Force.
The results of a survey sent to 270 homes was discussed. 84% of those surveyed felt the City
should offer cable TV, data services and telephone services and 64% indicated they would
switch if the City was offering these services. Residents were more interested in the cable
TV service and cost savings while business owners tended to look at the quality of the service.
The benefits of a fiber optic system were discussed. The primary benefit would be economic
development but the areas of education, health care, city services, and cost savings would also
see benefit as a result of fiber optic system in the City of Monticello.
Doug Dawson reviewed the existing technology and the reasons why they were
recommending a fiber optic system. It was felt that fiber optics would still be top technology
30 years from now.
The financial aspects of setting up a fiber optics system were discussed. The study was based
on a number of assumptions which include: 1) The City providing the services at a 15%
discount compared to other providers; 2) The City would purchase switching service from an
outside vendor; 3) Future rates would not be increased for services except for cable TV;
4) Rate increases with the City's system would not be as often or as high as those of other
vendors.
The biggest expenditure would be programming costs. To get affordable costs, it was
suggested that the City join NCTC, a cooperative which currently has a moratorium on
accepting new members. The City will either need to wait until the moratorium is lifted or
find another cooperative. The City could not afford to go into telecommunications business
without being a member of the cooperative. Another major expenditure would be for
employees. In -this case they are estimating nine employees would be needed as well as a
small building to house the system, some of the staff and necessary equipment. It is also
recommended that the City purchase wholesale telephone switching from an outside vendor.
Doug Dawson noted that the reason for doing this, at least initially, is because if the City
would have the switching system, the City would need to hold a referendum and receive 65%
approval.
Bonding requirements were also discussed. There would be a need for construction financing
for an estimated for 18 months. In addition there would be a 20 year revenue bond in the
amount of approximately $24 million. The revenue bond would be supported by revenue
from the system. No tax levy would be required to support the bond payments. CCG
Consulting would anticipate that 50%-55% of the residents would need to sign up for the
service for it to be viable venture for the City. The smaller the community the larger the
percentage of residents needed to sign up for the service. For this reason it was
recommended that the before the City commits to the system, they do an education program
of the residents to see what kind of commitment there is to the system before it is constructed.
Clint Herbst asked if there was any reason why the City would not work in combination with
TDS to provide switching service. Wayne Mayer felt if TDS wanted to provide the service it
could be a win-win situation.
The last area discussed was legal considerations. Milda Hedbloom indicated that one issue
was authority in state statutes for cities to engage in providing these services. The statutory
authority is implied and not explicit in the statutes. She noted that a number of cities continue
to conduct telecommunication businesses and have not been legally challenged.
In summary, the Fiber Optics Task Force felt the City should proceed with providing a fiber
optic system for the city as it would result in benefits in a number of different areas. They
also recommended that before the City commits to the project there should be an education
program for the residents and a sign up of customers to see what kind of support there is for
the system. They also recommended that if the City proceeds with this project, they go to an
outside vendor for the switching service.
The education program phase would take place October -December, 2006 with construction to
take place in 2007. There was some additional discussion about providing this service to the
unincorporated area.
Meeting was adjourned 6:20 p.m.
Recording Secretary