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69 °F Forecast | Road Cams Tuesday, May 24, 2005 Today's News | Shop Our Valley | Tempo | Health | Community | Home Delivery | Contact Us SECTIONS Home Page Local News Sports Business Obituaries Life Opinion Tempo AP News Weather Classified Archives Site Map SPECIAL SECTIONS Since We Asked Outdoor Journal Menu Guide How To Guide Health Biz Connection Readers' Choice Real Estate Showcase Real Estate Guide Joy Magazine Homelife Magazine Wedding Guide Passport to the Rogue Valley SHOP OUR VALLEY AutoFinder HomeFinder JobFinder Classified Place an ad TOP JOBS EXTRA Ashland News NIE Personals Movie Times TV Times E The People Volunteer Moving here? eSouthernOregon CUSTOMER SERVICE FAQ's Advertise with us Home Delivery Employment Contact Us Media Kit Oregon Road Conditions & Cams Email Story to a Friend May 12, 2005 Power-rate hike could pay AFN debt By JOHN DARLING for the Mail Tribune ASHLAND — Mired in a sea of debt, the city’s municipal cable television and high-speed Internet service may soon be relying on bumped-up electrical rates to prop up its mounting debt payments. At a special session Tuesday evening, the City Council approved using the city’s electric fund to make a $200,000 interest payment for Ashland Fiber Network, due June 30. City Administrator Gino Grimaldi and Finance Director Lee Tuneberg — were told to find ways to subsidize AFN by using the electric fund and increased electrical rates. The council also put AFN on track to have its own director outside of the city’s electric department. The electric fund, normally used as a buffer against rate increases from supplier Bonneville Power Administration or to lower user rates, is large enough to handle AFN’s debt through the 2005-06 budget year, but "the message is very clear: eventually rates will have to be increased," said Grimaldi. "What we’re talking about, most likely, is raising electrical rates," said Councilwoman Cate Hartzell. In coming months, she added, the city will consider many options for handling AFN’s $3.8 million budget shortfall, including sale of city properties, use of the hotel-motel tax, an electric rate hike — or the last-ditch ploy of selling AFN, which has a total of $15.5 million in recently refinanced debt. Advertisement "No one on the council wants to sell it, but we have to determine our options and act responsibly," Hartzell said. The council will consider options at its June 7 meeting. Grimaldi will hire a director for AFN as soon as possible, probably within four months, he said. The position answers directly to the city administrator. Tuneberg said he has not yet calculated the impact of AFN on electric rates but "we do have enough money in the electric fund to get us through next (budget) year." Potential electric rate hikes could be eased by the ability of the new director to manage and market AFN, potentially improving its solvency, he added. Some council members have also suggested rate hikes for AFN customers, but that would hurt its ability to compete for customers. The only ways to increase revenue are to bump up rates or lure subscribers from private Charter Communications. Mayor John Morrison said the council’s decisions identified the electric fund as the primary funding source for AFN — and mark the opening of a much-needed community dialog on AFN’s fate in which "everything will be on the table, including hanging it up (selling it)." Asked if Ashland residents might react negatively to supporting AFN, Morrison said AFN benefits all of Ashland "because it brings lower rates and fosters economic development by bringing businesses here. Some people are going to have a knee-jerk reaction and others will look at the big picture before making decisions." Charter Communications offers lower rates in Ashland than elsewhere in the Rogue Valley in response to competition with AFN. If AFN is sold — and there’s a referendum afoot to force a November public vote — Charter "could be potentially interested" in buying it, said Charter General Manager Rick Almand. A sale price would fall between $1,000 and $3,000 per subscriber, which, with 3,200 cable and 3,700 Internet users, would mean a tag of anywhere from $3 million to $11 million — still a substantial loss for the city in the best-case scenario. Holding on to AFN will require continuing costly investment in new technology. John Darling is a free-lance writer living in Ashland. E-mail him at [email protected] Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2005 Mail Tribune, Inc. All rights reserved. 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