HomeMy WebLinkAboutAgenda Packet 11/26/2002 PORT ANBELES~ WA cJB362
NOVEMBER ~;~6, ~:~l-lr12
4.:00 P.M.
ABENDA
m, CALL TO ORDER
II. ROLL E=ALL
III. ' APPROVAL OF MINUTES FOR NOVEMBER 12~ 2002 TO BE DISCUSSED
AT THE REGULAR DECEMBER ] OTM MEETINB
IVo DIBCUSSION ITEMB
A. LANDFILL BULLDOZER REPLACEMENT (RIDOUT)
B. ATTORNEY P'ONSULTANT CDNTRACT FDR CABLE TELEVIBION
FRANCHIE3E TRANSFER (DUNBAR)
V. NEXT MEETING DATE - DE[~EMBER ~ ntH - P-DUN[~IL P-HAMBERB
VI. AD~JDURNMENT
pORTANGELES
WASHINGTON, U.S.A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: November 26, 2002
To: UTILITY ADVISORY COMMITTEE
FROM: Larry Dunbar, Power Resources Manager
RE: Attorney Consultant Contract for Cable Television Franchise Transfer
Summary: The City Manager approved a consultant contract with Clarence A. West for legal
services as part of the proposed transfer of the franchise from Northland Cable Television, Inc.~ to
WaveDivision m, LLC.
Recommendation: This is an information only report, no action is required.
Background/Analysis: On November 18, 2002 the City received a request to approve the
transfer of Cable Television Franchise Ordinance No. 3116 from Northland Cable Television,
Inc. to WaveDivision HI, LLC. The transfer request was made to comply with the Cable
Communications Act (Act) and the City's Cable Television Franchise Ordinance No. 3116.
Northland's transfer request expressed a desire to obtain City approval within 60 days (by
January 14, 2003).
Mr. West is an experienced lawyer and expert on municipal telecommunications law. Mr. West
recently assisted the City in drafting the telecommunications and cable television franchise
ordinances. Having assisted the City in the above matters Mr. West is familiar with the City's
ordinances and telecommunications goals and will be able to promptly assist the City with the
proposed transfer. The consultant contract is in an amount not to exceed $5,000.
The first step in the review process includes a determination by Mr. West if the proposed transfer
request and supporting documentation is complete and accurate. Although we anticipate a
prompt determination the Act allows the determination to take up to 30 days (December 18, 2002
deadline).
The completion of the transfer request includes a review by Mr. West and staff to assess
WaveDivision's financial, technical and legal qualifications to fulfill the franchise. As part of
this step additional information or clarifications and consulting services may be necessary. There
may also be a need for amendments to the transfer request and/or ordinance. In accordance with
the Act, the City is required to take action on a complete transfer request within 120 days (March
18, 2003 deadline). Depending on the outcome of the review, the earliest anticipated date that
staff will return to the utility advisory committee requesting a recommendation to City Council is
January 14, 2003.
N:\UAC~Original~ca tvfranchisetran~ fcr. wpd
WASHINGTON, U.S.A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: November 26, 2002
TO: UTILITY ADVISORY COMMITTEE
FROM: Ken Ridout, Deputy Director of Operations
Subject: Replacement of Caterpillar Track Type Tractor D-7 with Waste Handling
Arrangement (WHA) for the Port Angeles Landfill.
Summary: The D-7 Cat at the landfill is in need o£major repairs and needs to be repaired or replaced.
Various options have been reviewed and it has been determined that leasing a new D-7 until the closure
of the landfill is the best alternative.
Recommendation: Recommend the City Council grant the Director of Public Works and
Utilities the authority to lease a Caterpillar Track Type Tractor D-7R from N.C.
Machinery Company of Port Angeles in an amount not to exceed $5,700 per month.
Background/Analysis: The Solid Waste Division currently has a Caterpillar Track Type Tractor
D-7 for use at the landfill to maintain the roads, move and spread garbage from the dump area to
the active cell, and as a backup to the Compactor. The D-7, along with the Compactor, are the 2
most vital pieces of equipment in the day to day operations. These pieces of equipment are
necessary to achieve compaction and assure that the current cell will last until 2006, the projected
life of the Landfill. The D-7 has served the Landfill well in its role and has fulfilled the life
expectancy of a D-7 utilized in a landfill environment. Normal life expectancy ofa D-7 in a
Landfill operation is approximately 10 to 12 years, and outside ora Landfill operation would be.
approximately 25 to 30 years.
In 1990 the Solid Waste Division purchased a new Caterpillar Track Type Tractor D-7. The
annual hours used are approximately 800 hours. The machine currently has 10,000 hours and is
in need of a major overhaul or replacement. The D-7 incurred a major rebuild in July of 1998 for
$51,000 and another major repair in November of 2000 for $36,000. Since that time major and
minor repairs have occurred to keep the machine running.
N.C. Machinery Company of Port Angeles performed an analysis on the D-7 to determine the
current condition and assist in developing a time line for future repairs. The first report was done
in October 2001, and the second one in August 2002. Both reports indicated the D-7 would incur
the following major component failures, power train ($70,000) undercarriage, ($30,000)
hydraulic, transfer case, and steering recondition ( $10,000), rent D-7 during repairs ( $25,200 /
$4,200 per week x 6 weeks ), miscellaneous items ($18,000) for a total cost of $153,200 tax and
freight included. Additional significant repairs can be expected because of the additional wear
on the machine from the demolition of the Rayonier Mill. This material came out in large pieces,
Landfill D-7 Replacement
November 26, 2002
Page 2
such as wood beams, concrete chunks, etc. Moving and burying this extra large material could.
have had a significant impact on the Cat's framework and other intemal parts that have not been
detected yet. Based on the age and condition of the existing D-7 we can anticipate major repairs
over the 4 years, equal to or greater than, we already need to accomplish. The D-7 had been
programmed through Equipment Services to be replaced in 2001 and the replacement was
deferred 2 years to 2003, because we had made some major repairs in late 2000.
Different equipment vendors were asked to submit proposals that included a landfill equipment
protection package. The following are some of the key factors used when determining what type
of dozer to purchase or lease:
1. Weight of the dozer: The machine is used as a backup for the compactor and weight is a
critical factor. The City's Landfill Consultant, Parametrix, Inc. has advised us that if we
are to continue to achieve compaction of the garbage, we need to continue with the size
machine that we currently use. They do not recommend a smaller machine.
2. Support services: This includes availability to respond to need for repairs, rental
machine, and limited down time. This would include local service versus Seattle area.
3. Type of track system: This system makes operations in garbage a major concern because
the tracks of the equipment pick up and carry garbage that sticks, causing a problem any
time the tracks need to be worked on or cleaned. The high type of tracking system allows
a large portion of the track to be out of the garbage ifa problem arises.
4. Warranty: Provide full 4 year coverage on major components. (All responders have equal
warranty provisions).
Equipment Analysis
Equipment Repair Trade-In Value Purchase New Lease Cost
Cost Current D - 7 (Annual)
Current D-7 $153,200
( 60,4361bs )
Caterpillar D-7 $45,000 $388,100 $67,728
( 60,436 lbs. )
Caterpillar D-6 $45,000 $279,800 $61,048
( 43,000 lbs. )
JOHN DEERE 850C H $50,000 $230,000 $43,200
( 44,000 lbs. )
JOHN DEERE 1050C $50,000 $423,750 $76,968
( 74,373 lbs. )
CASE 1850 K $40,000 $209,625 $50,208
( 53,000 lbs.)
NOTE: Fuel and general maintenance costs are $6,000 annually. All prices include tax.
Landfill D-7 Replacement
November 26, 2002
Page 3
The special features for a Waste Handling Arrangement (WHA) for a Landfill Caterpillar Track Type
Tractor are as follows:
Additional Guards for the various areas of the machine, such as chassis, seals, hydraulic
lines, radiator, crankcase, and fuel tank.
Striker bars both front and rear to prevent debris from rolling up on and/or sticking to the
tracks.
Heavy duty steps and handles.
Additional lights
All of the Landfill Caterpillar Track Type Tractors listed have this WHA arrangement.
The various options have been reviewed, including repairing or replacing, as well as, leasing a
new machine until the closure of the Landfill. The cost to repair the unit is excessive as
compared to the value of the machine. Purchase ora new D-7 would not be a good investment
because the D-7 will not be needed after landfill closure. The lease option would seem to be the
most prudent investment at this time.
After a review of all the proposals, we have determined that the lease of a Caterpillar Track Type
Tractor D-7R with Waste Handling Arrangement (WHA) would be the best overall solution for
the Landfill. This would give us the weight we need for compaction, when necessary, best
overall availability of local mechanics should a breakdown occur, availability of a replacement
machine in a timely fashion, and lowest overall cost to the City for the remaining life of the
Landfill. If the D-7 has a failure under the warranty, the local company would provide a loaner
to the City at no cost.
The expected lease cost over the next 4 years is $270,912. If we were to purchase the D-7 at the
end of that time, the residual to purchase would be $117,188. The value of the D-7 would be
between $100,000 and $200,000. This is dependent upon the wear it has received over the 4
years. The cost to repair the existing D-7 is $153,200 and the possibility that a like amount could
be spent over the next 4 years for a total repair cost of approximately $300,000.
We have discussed the leasing of a machine with the Finance Department and they concur that
the lease option would best suit the needs of the City, while providing the Landfill with a reliable
machine. The existing machine has accumulated $297,000 in replacement reserves to date.
These reserves could be used to offset the difference in the lease payments and the amounts
collected at the current rental rate tkrough Equipment Services. The need to accumulate future
reserves will not be necessary for the D-7 after Landfill closure.
The Caterpillar Track Type Tractor D-7R with Waste Handling Arrangement (WHA) is
considered Pollution Control Equipment and does not require that the City go through the formal
bidding process.
N:\UAC~DepDir~D7 LANDFILLUAC.wpd
11/25/024:08 PM
EQUIPMENT SERVICES
FIXED ASSET CHANGES-Options for EQ'I909
Cash Flow Analysis N.C. Machinery
Option #1 Option ~Y2 Option #3
Repair Old Dozer Purchase New Lease New Dozer
(out of reserves) ca{b~Pll[ar D~? (out of reserves)
(60,436 lbs.)
Cash Outflow 2003 153,200.00 343,100.00 67,728.00
Less: Interest Earnings (2003) on unspent reserves (4,292.00) (7,882.00)
Plus: Interest Expense on add'l, cash depletion 1,405.00
Cash Outflow 2004 67,728.00
Less: interest Earnings (2004) on unspent reserves (4,292.00) (5,810.00)
Plus: Interest Expense on add'l, cash depletion 1,405.00
Cash Outflow 2005 67,728.00
Less: interest Earnings (2005) on unspent reserves (4,292.00) (3,756.00)
Plus: interest Expense on add'l, cash depletion 1,405.00
Cash Outflow 2006 67,728.00
Less: Interest Earnings (2006) on unspent reserves (4,292.00) (1,706.00)
Plus: Interest Expense on add'l, cash depletion 1,405.00
Less: Estimated Sale Price of Dozer (116,000.00)
TOTAL NET CASH OUTFLOW 136,032.00 232,720.00 251,776.00
CLARENCE A. WEST
Counselor and Attorney at Law
1201 RIO GRANDE, SUITE 200 Direct Dial: 512.499.8838
AUSTIN, TEXAS 78701 Fax: 512.322.0884
ww.cawestlaw.com Email: cawest(&cawcstlaw.com
November 22, 2002
Mr. Richard I. Clark
Northland Cable Television, Inc.
1201 Third Avenue, Suite 3600
S~attle, Washington 98101
WaveDivisiou Network, LLC
Attn: Mr. Steve Weed
14100 Southeast 36th Street, Suite 201
Bellevue, Washington 9806
RE: Transfer of Franchise of the City of Port Angeles, Washington-Incomplete and
Inaccurate FCC Form 394.
Dear Mr. Clark and Mr. Weed:
I represent the City of Port Angeles, Washington ("CITY"). The City is in receipt of your
FCC form 394 (application for franchise authority consent) as of November 18, 2002.
While the City has not concluded its review to determine the extent it is an incomplete or
inaccurate application, we forward this letter as to a few initial comments.
First of alt, 1 would note in the cover letter by Mr. Pete Grigorieff, Regional Manager of
Northland Cable, he appears to be requesting in the last paragraph that, as the anticipated
closing is to be within the next 60 days (from November 15, 2002), the City consent in
that time frame. I would respectfully point out that federal law provides the City has 120
days after a completed application form 394, to act on the application for consent. (47
USC Sec. 537). While the City will review the matter as expeditiously as possible, the
City does not waive its rights to a full 120 day review after we have received a completed
application form.
I would further point out that Section 4.1.2 of the Franchise expressly provides that if
there is a transfer of the franchise without the City's prior consent, the City may revoke
the franchise for default. The City is not waiving any rights it has to enforce that
provision.
While there may be other errors in the FCC Form 394 the ones that have been found to
date include the following. In Section V., Part II, please correct or explain why Mr. Clark
signed for Northland and Wave Division Eli, LLC.
FCC Form 394, Sec. I, Part I in your Exhibit 1, Schedule 2 incorrectly states that the Port
Angeles franchise will expire May 30, 2017. That is wrong. The current franchise expires
in less than 5 years, on May 31, 2007, unless certain upgrades and institutional network
requirements are met by a certain date (per Section 4.2 of the Franchise.) Your exhibit 1,
Schedule 5.15.1, as to Channel capacity, also appears to be inconsistent with the City's
recent certification from Northland. Which is correct?
As to FCC Form 394, Financial Qualifications-Sec. III, Question 2, your Exhibit 6 is
incomplete. In order to review the financial qualifications of the transferee, the City must
have the business plan that provides the underlying assumptions which support the
financial projections. If there is no business plan, we need the specific detail as to all of
the capital contributions needed to comply with the Port Angeles Franchise. We would
also need detail as to the EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization) as the specific revenue sources such as, cable television, premium cable,
cable modem, advertising, ect. Please explain "Northland CedarComm" in the financials
in Exhibit 6. Please address how cable rates are to be affected in the next 5 years under
the proposed financials. What are the assumptions? Are the cable rates to remain the
same, go up or go down?
The Port Angeles Franchise was just recently negotiated a few months ago. The
Franchise requires significant upgrades of fiber optic infrastructure in 2003 and 2004 to
be in compliance. The franchise also requires capital contributions in 2004 for access
channel production facilities and equipment. Please provide specific details as to your
planned capital expenditures under the franchise.
While the principal Mr. Weed may have substantial financial resources, there is nothing
to indicate that those resources are dedicated, pledged or guaranteed, or in any way would
be contractually provided to insure performance under the Port Angeles Franchise. (One
possible way to remedy this issue is to increase substantially the amount of the
performance bond under the current Port Angeles Franchise and pledge significant
amounts of Contractually binding financial support from Mr. Weed).
FCC Form 394 is also incomplete as to the technical/operational abilities of the transferee
(Section IV, your Exhibit 7.) Except as to the principal Mr. Weed there is no detail, and
even as to Mr. Weed, it is not clear what time he will be devoting to this enterprise, and
what other matters Mr. Weed may have to occupy his time. Please provide detail as to
Mr. Weed's contractual commitment to this enterprise. Also specifically provide detail as
to who are the personnel and what are their qualifications to operate the system in Port
Angeles.
2
The City would hope in the next few weeks to complete our initial review of your form
394 as to "accuracy", in which the City has a full 30 days under the FCC regulations (47
CFR Sec. 76.502 (b)) from the date of a completed FCC Form 394.
I would also mention the separate agreement with Northland Cable concerning the
institutional network, entitled "Fiber Optic WAN Use Agreement", dated August 27,
2002 listed (erroneously twice) in section 10, of Schedule 2 to your Exhibit 1. In order to
conform that later agreement to the earlier Franchise, there have been discussions
concerning certain amendments to the Franchise. Those amendments are to address
several matters. One is the use of the reserve fibers and the City's right of first refusal
concerning use of those fibers. Those matters should also be finalized prior to the
franchise transfer.
After we have received the above information the City would like to arrange a meeting to
discuss your business plans, amendments sought by the .City, and the. timeline for
approving the franchise transfer.
If you have any questions, please do not hesitate to contact me at my direct line telephone
number (512) 499-8838.
Sincerely,
Clarence A. West
cc: Larry Dunbar, City of Port Angeles (via e-mail) c.c. /t,,A.~'~<.~ C~.,
Pete Grigorieff, Regional Manager
Northland725 East 1stCable Television, Inc.
Port Angeles, Washington 98362 ~__~[~e~ (_~.
3
NORTHLAND C. BLE
TELEVISION, INC.
VIA HAND - DELIVERY 1201 Third Avenue, Suite 3600
Seattle, Washington g8101
November 15, 2002 (206) 621-1351
Mr. Alan Bentley, Utilities Advisory Committee
Mr. Mike Quirm, City Manager, City of Port Angeles
P.O. Box 1150
Port Angeles, Washington 98362
Re: Northland Cable Television, Inc. ("Northland") - Ordinance No. 3116, dated May 21, 1992 (the
"Franchise")
Dear Messrs. Bentley and Quinn:
Northland is the current franchisee providing cable television service to the City of Port Angeles,
Washington, under the Franchise referred to above.
Northland has entered into an agreement for the potential sale of the Port Angeles cable television
system to WaveDivision III, LLC ("Wave"). The sale is conditioned upon Northland and Wave meeting
certain conditions prior to closing of the sale. We are writing to you now to request your consent to the
assignment of the Franchise, in the event the sale closes, from Northland to Wave, and the further
assignment from t/me to time to Wave's lender(s) for security purposes. Accordingly, enclosed is our
proposed Franchise transfer ordinance for your consideration. Additionally, please t-md FCC form 394,
entitled Application for Franchise Authority, Consent to Assignment or Transfer of Control of the Cable
Television Franchise, which includes additional information regarding the contemplated transaction.
Northland respectfully requests this item to be placed on thc agenda of the Utilities Advisory
Committee's (the "UAC") next meet/rog and also, the City's next regularly scheduled Board meeting.
Please confirm the date and time so that a representative of Northland may be present at each meeting to
answer any questions the UAC or City may have.
We plan to close this transaction within the next sixty (60) days. We apologize for the short
notice. Please let us know if you need any more information or if you have any questions about the
proposed transaction or our proposed ordinance. I may be reached at (360) 452-8466.
Very trulyyo ' ~ '
Pete GrigorieF "--'1~' )
Regional Mahager 4/ --
Enclosure
cc: Richard Dyste R E C E i V E D
PaulMilan NOV I 8 ~
Craig S hrontz, attolney for Wave Division l II, LLC ~~~~
Dv85_City o£ Port Angeles