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Qwest will pay disputed city fees But the telecommunications company plans to appeal a ruling on the charges The Associated Press PORTLAND - Ending a long stalemate, Qwest has agreed to pay 88 Oregon cities the $8.4 million it owes them in past-due fees for stringing telecommunications lines on public property. The cities include Medford, Ashland, Central Point and Phoenix. Local cities aren't ready to spend yet By JOHN DARLING for the Mail Tribune Rogue Valley cities will be happy to see those overdue franchise fee payments from Qwest, but they're not going to run out and spend it until they hear the outcome of a likely appeal by Qwest. "We're not going to spend the money they've withheld from us," said City Manager Michael Dyal of Medford, which is owed $450,000 by Qwest. "They've said they're going to appeal to the 9th Circuit Court of Appeals and if the decision gets overturned, we wouldn't want to have to pay back money after it's spent." Ashland, which did not budget the $177,000 owed by Qwest, will put the money into its general fund, said city Finance Officer Lee Tuneberg. "It's been a long process getting them to pay what they owe us," he said. "We'll be happy to see regular payments again, because when you lose that amount each year it puts a squeeze on programs." Medford and Ashland had ending fund balances or contingency funds to cushion them from the withholding of the fees, so no programs or personnel were cut, they said. In the settlement, Qwest told cities it is withholding a percentage of back franchise fees proportional to lost income from refunds that the Oregon Public Utility Commission ordered it to make in late 2000. The result is that Medford expects less than half of the amount it is owed, said Deputy City Manager Jef Faw. Ashland expects $110,000 of its $177,000 Tuneberg said. Phoenix and Central Point had budgeted their Qwest money for this fiscal year and will now apply it to the general fund, officials said. Phoenix expects $13,500, said city recorder Betty Smith. Central Point is looking for about $60,000, said interim City Administrator Brian Almquist. Ashland and Central Point joined Portland's suit seeking to force Qwest to pay for local rights of way. As part of the agreement, Qwest must also pay 9 percent interest on its unpaid fees. Qwest began withholding its scheduled payments to Oregon cities last summer, claiming the franchise fees were illegal in a lawsuit against Portland. Nine cities intervened on Portland's behalf. In March, federal Magistrate John Jelderks ruled the franchise fees are legal and do not violate the Telecommunications Act of 1996. In a hearing Tuesday, Jelderks said he would approve an agreement ordering Qwest to pay the amount it has withheld plus interest to the 10 cities involved in the case. The Denver-based local-phone company said it will pay the fees, plus interest, within 14 days. Portland is receiving the largest payment: $3.77 million, which includes $103,511 in interest. Also Tuesday, Qwest signed a stipulation agreement to pay the remaining 78 cities within two weeks. Though Qwest will pay, it continued to say the fees are illegal. Qwest has 45 days to file with the 9th U.S. Circuit Court of Appeals, and Judy Peppler, Qwest's vice president for Oregon, said the company plans to appeal "just as quickly as we have the briefs put together." The appeals court could order the cities to repay the money to Qwest if it determines the fees are illegal. So some cities might be hesitant to rely on the franchise fees when balancing their budgets. Peppler said Tuesday's agreement balances the cities' financial needs with Qwest's right to appeal. "I think it's a win-win for both," Peppler said. "The cities will get to have their money during the term of the appeal. We've got the assurance for our customers that should we prevail upon appeal, we'll be able to refund the money to them." The majority of the money would return to Qwest, however. Under Oregon law, cities can charge Qwest up to 7 percent of its basic local phone revenues. Three percentage points appear as an additional surcharge on customers' bills - that's what customers would get. Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.