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1999-08-17 Regular CC MinutesMINUTES OF THE REGULAR CITY COUNCIL MEETING TUESDAY- -AUGUST 17, 1999- -7:30 P.M. Mayor Appezzato convened the Regular Meeting at 8:13 p.m. ROLL CALL - Present: Councilmembers Daysog, DeWitt, Johnson, Kerr and Mayor Appezzato - 5. Absent: None. AGENDA CHANGES (99-401) Continuation of Public Hearing to Consider Introduction of Ordinance Amending Alameda Municipal Code Subsection 6-7.2 to Expand the Alameda Business Improvement Area of the City of Alameda [paragraph no. 99-417] to October 19, 1999 Regular Council Meeting. Matter tabled. Mayor Appezzato announced West Alameda Business Association submitted a letter withdrawing the request for expansion at this time. (99-402) Continuation of Public Hearing to consider a proposed Negative Declaration (IS-99-4) and Finding of No Significant Impact Pursuant to the California Environmental Quality Act [paragraph no. 99-418] to September 7, 1999 Regular Council Meeting. Mayor Appezzato announced the matter would be continued. (99-403) Mayor Appezzato announced adoption of the Resolution Approving an Assignment Agreement By and Between the City and the Alameda Public Financing Authority [paragraph no. 99-415] would be addressed first on the Regular Agenda if there was no objection from Council. No objections were heard. PROCLAMATIONS, SPECIAL ORDERS OF THE DAY AND ANNOUNCEMENTS (99-404) Mayor Appezzato announced a Boy Scout Troop was in attendance. Louis Pappas, Scout, stated the Scouts are from Troop 3. (99-405) Commendation to the City of Alameda for Exemplary Participation in the Alameda County Lead Poisoning Prevention Program. Steve Schwartzberg, Alameda County Lead Poisoning Prevention Director, stated a large grant from HUD pays for Lead Regular Meeting Alameda City Council August 17, 1999 Rehabilitation in four cities: Alameda, Berkeley, Oakland and Emeryville; Councilmembers Kerr and DeWitt sit on the Joint Powers Authority (JPA); the City of Alameda has spent $405,000 toward rehabilitation projects. Carina Kistler, Alameda County Lead Poisoning Prevention, read the commendation to the City of Alameda. Councilmember Kerr stated the City of Alameda staff is doing a wonderful job. CONSENT CALENDAR Mayor Appezzato announced the award of Contract for design of Tinker Avenue extension [paragraph no. 99-412] was removed from the Consent Calendar for discussion. Vice Mayor Daysog moved approval of the remainder of the Consent Calendar. Councilmember DeWitt seconded the motion, which carried by unanimous voice vote - 5. [Items so enacted or adopted are indicated by an asterisk preceding the paragraph number.] (*99-406) Minutes of the Special and Regular City Council Meetings held on August 3, 1999. Approved. [Abstain: Councilmember Johnson - 1.] (*99-407) Recommendation to accept Quarterly Investment Report for the period ending June 30, 1999. Accepted. (*99-408) Recommendation to accept Quarterly Sales Tax Report for the first quarter of 1999. Accepted. (*99-409) Recommendation to accept the work of Rubicon Enterprises for Landscaping Maintenance of Median Strips and Special Areas, No. P.W. 03-97-05. Accepted. (*99-410) Recommendation to accept the work of Total Tree Care for Pruning Trees within the City of Alameda, No. P.W. 03-97-06. Accepted. (*99-411) Recommendation to accept the work of Richard Heaps, Electrical Contractor for East End Signal Coordination Project, No. P.W. 07-97-18. Accepted. (99-412) Recommendation to award Contract in the amount of $661,400 to Bellecci & Associates, Inc. for the Design of Tinker Avenue Extension Project, No. P.W. 04-99-14. Regular Meeting Alameda City Council August 17, 1999 r Vice Mayor Daysog stated the project will address extension of a road from the Alameda Point Fleet Industrial Supply Center area to the Marina Village redevelopment area; there is green space in front of senior housing [at Marina Village]; noted the importance of said green space. Vice Mayor Daysog moved acceptance of the staff recommendation. Councilmember Kerr seconded the motion, which carried by unanimous voice vote - 5. (*99-413) Introduction of Ordinance Approving and Authorizing the Execution of Temporary Construction Easements Between the State of California, Department of Transportation, as Grantee, and the City of Alameda, as Grantor, for the Seismic Retrofit Project for the Posey and Webster Street Tubes. Introduced. (*99-414) Ratified bills in the amount of $4,158,459.93. REGULAR AGENDA ITEMS (99-415) Resolution No. 13134, "Approving an Assignment Agreement By and Between the City and the Alameda Public Financing Authority in Connection with the Issuance By the Alameda Public Financing Authority of Its Revenue Bonds to Finance the Acquisition, Construction, Installation and Equipping of Various Capital Improvements to Alameda Point (the Former Alameda Naval Air Station) and to Finance the Acquisition, Construction, Installation and Equipping of Various Capital Improvements for the City and Approving Related Documents and Official Actions Adopted. Len Grzanka, Alameda, requested Bond Counsel to address why the City's participation in the Bond underwriting is essential; inquired whether the full faith and credit of the City would back bonds; stated if so, the General Fund might not be off the hook; if the full faith and credit of the City is being put up, the taxpayers are on the hook; in reviewing the financing of the projects, everything is dependent on a zero-cost conveyance from the Department of Defense to the City; with zero-cost conveyance, the City would not have to pay a penny for the land to the Department of Defense (DOD); the Clinton Administration wants zero- cost conveyance, however, there are two [opposing] factions in Congress; one faction wants DOD property to be conveyed at market value; another faction wants the property at Alameda Point and other bases to be conveyed at less than market value; urged Council to review plans, projections and measures related to Base conversion carefully; stated the taxpayers will ultimately be on the hook; zero-cost conveyance is not guaranteed. Allan Shore, Alameda, stated coming up with other types of funding for infrastructure is a good investment; the City should take a Regular Meeting Alameda City Council August 17, 1999 7 reasonable gamble to make property a significant potential investment for Alameda residents; encouraged Council to look for similar opportunities in the future. Richard Neveln, Alameda, inquired whether funding for Police and Fire will need to increase as the [former] Base grows; stated growth at the [former] Base will change how Police resources are deployed; inquired how extra cost will be shifted to Alameda Reuse and Redevelopment Authority funds, if there is greater need [for Police and Fire service] at Alameda Point; stated there could be events which require Police service, e.g. at Skate Park; further inquired whether there is a mechanism in the financing plan. The Deputy City Manager stated the Financing Plan is consistent with the Business Plan; one of the cost components in the Business Plan for Alameda Point is a provision for public safety, both Police and Fire; the program provides adequate funds to provide a level of Police protection on a 24 -hours a day, 7 -days a week, 52- weeks a year basis; the Police Chief is committed to the amount of funding in the Business Plan for the next five- years. Mr. Neveln further inquired whether funding amounts are subject to change. The Deputy City Manager responded the budget for the first year has been adopted; stated plans for the following four years are subject to Council review and adjustment as appropriate. Councilmember DeWitt moved adoption of the Resolution. Councilmember Kerr seconded the motion, which carried by unanimous voice vote - 5. (99 -416) Recommendation to accept Social Service Human Relations Board Report on the FY 1999 -2000 Work Program and allocate funding to support Board /Work Group Activities. Ed Dankworth, President, Social, Service Human Relations Board (SSHRB), stated SSHRB proposes a budget increase of $11,636; a plan has been put together on how the Board plans to spend the funds; the funds are needed to complete the program; urged Council to approve the funding. Councilmember DeWitt stated approval will provide funds for the Healthy Start program, child care and other educational programs; the Alameda Youth Collaborative will be doing exciting things; a great deal of the funding will go to children, and teenagers in Alameda. Councilmember DeWitt moved approval of the staff recommendation. Regular Meeting Alameda City Council August 17, 1999 Councilmember Johnson seconded the motion. Under discussion, Councilmember Kerr stated the SSHRB does a great job, members are good people and their projects are good; however, she has a problem with funding programs and activities through a Board; the SSHRB should have its projects considered along with others when Block Grant funding is being prioritized; the Board serves to advise Council on other programs and might not be as favorable towards other projects, if it have its own. Mayor Appezzato stated the SSHRB has an important function; Alameda is a diverse community; there are not as many confrontations as other places in the country; the SSHRB has been somewhat responsible for bringing harmony to the City of Alameda and is slightly different than other Board because it deals with human emotions. Councilmember Johnson stated the bulk of the money goes toward staff support, not directly to the Board. On the call for the question, the motion carried by the following voice vote: Ayes: Councilmembers Daysog, DeWitt, Johnson and Mayor Appezzato - 4. Noes: Councilmember Kerr - 1. *** Mayor Appezzato announced that he was advised the City Council needs to make a motion regarding continuation of the Public Hearing to consider an Ordinance Amending Subsection 6-7.2 [paragraph no. 99-417] and the Public Hearing to consider a proposed Negative Declaration (IS-99-4) [paragraph no. 99-418]. * * * (99-417) Public Hearing to Consider Introduction of Ordinance Amending Alameda Municipal Code Subsection 6-7.2 to Expand the Alameda Business Improvement Area of the City of Alameda; and (99-417A) Recommendations on the Proposed West Alameda Business Association/Business Improvement Area Expansion. Tabled. Councilmember Kerr moved the matter be tabled. Councilmember Johnson seconded the motion, which carried by unanimous voice vote - 5. (99-418) Public Hearing to consider a proposed Negative Declaration (IS-99-4) and Finding of No Significant Impact Pursuant to the California Environmental Quality Act, and a Zoning Text Amendment (ZA-99-2), to amend Subsection 30-4.20 of the Alameda Municipal Code to delete the Master Plan requirement for a market analysis and phasing diagram and allow for preparation of Development Standards, Guidelines and Procedures in-lieu of Regular Meeting Alameda City Council August 17, 1999 detailed development plans within the Mixed Use Planned Development (MX) District; [Continued to September 7, 1999 Regular City Council Meeting] (99 -418A) Adoption of Resolution Adopting a Negative Declaration, IS -99 -4, for a Zoning Text Amendment to Delete the Master Plan Requirement for a Market Analysis and Phasing Diagram and Allow for Preparation of Development Standards, Guidelines and Procedures In- Lieu of Detailed Development Plans Within the Mixed Use Planned Development District (MX); [Continued to September 7, 1999 Regular City Council Meeting] (99 -418B) Introduction of Ordinance Approving a Zoning Text Amendment (ZA -99 -2) to Amend Subsection 30 -4.20 of the Alameda Municipal Code to Delete the Master Plan Requirement for a Market Analysis and Phasing Diagram and Allow for Preparation of Development Standards, Guidelines and Procedures In -Lieu of Detailed Development Plans Within the Mixed Use Planned Development District (MX). [Continued to September 7, 1999 Regular City Council Meeting] Councilmember Kerr moved the Public Hearing [and related legislation] be continued to September 7, 1999. Councilmember DeWitt seconded the motion, which carried by unanimous voice vote - 5. (99 -419) Recommendation to authorize increasing East End Ferry Fares effective September 1, 1999. Councilmember Kerr moved approval of the staff recommendation. Councilmember Johnson seconded the motion, which carried by the following voice vote: Ayes: Councilmembers Daysog, Johnson, Kerr and Mayor Appezzato - 4. Noes: Councilmember DeWitt - 1. (99 -420) Recommendation to approve Second Amendment to Purchase and Sale Agreement of the 10.28 Acre Parcel, APN 074 - 1339. -32 -1, Located within the Harbor Bay Isle Business Park, to Harbor Bay Isle Associates. Len Grzanka, Alameda, stated it seems official policy has been: 1) if it is disagreeable, dump it in the West End; 2) if it costs money, get the East End to pay for it; and 3) by all means, give Doric Development and the community at Harbor Bay Isle a free ride; the free ride Doric Development has received over school fees was documented in his recent [Alameda Journal] newspaper article; in 1997, Measure C would have taxed every parcel of Alameda land, except Doric Development; Doric donated $500.00 to the pro -tax group to support the tax from which it would have been exempt; Harbor Bay Realty also donated $500.00 and the community of Harbor Regular Meeting Alameda City Council August 17, 1999 Bay's Homeowners' Association gave $265.00 to the pro- tax people, according to FPPC filings; there are about eight equity shared low - income residences at the community of Harbor Bay Isle; perhaps a homeless encampment is needed at Harbor Bay Isle as well as the west end; recommended: 1) the City sell the Elm Street property; 2) affordable housing fees be levied on Doric's 10.28 Acres; and 3) the $800,000 from affordable housing fees and sale of the Elm Street home, be used to buy a few units for the homeless on Sea View Parkway. Charles Ward, Alameda, requested the City Council to review the information; stated if there is a way to increase revenues for the schools and city, it should be done. Mayor Appezzato gave an overview of the history of the property; stated Harbor Bay Isle Associates is requesting an extension; the purchase price has been agreed upon; granting an extension to the Agreement has nothing to do with school fees; that he will support the staff recommendation. Vice Mayor Daysog stated that he is in favor of moving forward with the staff recommendation; seeking school fees would drag down a process; even if the City sought school fees, it would not be enough to pay for a school; the effective way to pay for schools is through a parcel tax. Vice Mayor Daysog moved approval of the staff recommendation. Councilmember Johnson stated the City Council has shown concern for schools in Alameda through on -going discussion with the School District regarding school fees; requested the City Attorney to address whether the liquidated damage clause in the Agreement ensures the City will receive the money if the deal does not go through, as long as the City is not responsible for it not going through. The City Attorney stated that the clause is enforceable; if the Council would like further assurances, representatives of Doric could be requested to verbalize their commitment of payment. Councilmember Johnson stated there is concern among members of the public, requested Doric go on record tonight, to satisfy concern. Tim Hoppen, President and Chief Operating Officer, Harbor Bay and the Doric Group, stated regarding the funds deposited in escrow, which total about $100,000 assuming approval tonight, in the event that the transaction moves forward, the $100,000 along with accrued interest would be applied to the purchase price; in the event the transaction does not move forward, the $100,000 and accrued interest will revert back to the City. Regular Meeting Alameda City Council August 17, 1999 4 Councilmember Johnson seconded the motion. Under discussion, Councilmember Kerr stated penalty money is non- refundable; however, penalty money will apply to the purchase price; if the, sale goes through, the City will not receive extra money; 6% interest on $2.2 Million is $120,000 annually; negotiations have gone on for over a year; the City is not receiving interest on the money; the transfer. of $200,000 to general fund is musical chairs; the Traffic Improvement Fund (TIF) would relieve the Assessment District of $200,000 of Cross Airport Roadway funds and the Assessment District would release $200,000 into the General Fund; however, TIF was designed to pay for Capital Projects which would relieve traffic caused by the development of Harbor Bay Isle all over the City; essentially, Harbor Bay is doing what morally should have been done, but in a greater amount than $200,000; Council was informed Doric Development paid for two schools, however, the City bought the land from Doric; residents of Harbor Bay Isle have heavy duty Mello -coos bonds and actually paid for schools; there is a gap in the responsibility of developers paying for schools at Harbor Bay; the purchase has gone on for a year now; the City paid for bare land without entitlements; the purchaser is waiting until plans are approved by the Planning Board and only wants to pay unentitled price for land with entitlements in place; given that, she cannot support the recommendation; the deal is moving nowhere. On the call for the question, the motion carried by the following voice vote: Ayes: Councilmembers Daysog, DeWitt, Johnson and Mayor Appezzato - 4. Noes: Councilmember Kerr - 1. * ** Mayor Appezzato called a recess at 8:53 p.m. and reconvened the Regular Meeting at 9:10 p.m. * ** (99 -421) Introduction of Ordinance Granting a Non- Exclusive Cable Communications Franchise to the City of Alameda Bureau of Electricity, d.b.a. Alameda Power & Telecom, for a Period of Five Years. Introduced. General Manager Tom Evans, Bureau of Electricity (BOE), a.k.a. Alameda Power & Telecom (AP &T) stated a Business Plan was developed in 1997 to investigate the business opportunities in the area of providing communication services to Alameda residents and businesses, the Plan was reviewed and commented upon by the Consulting Firm of SRI; based upon said evaluation, the Public Utilities Board (PUB) chose to move forward; the next step taken was a validation action; its objective was to determine whether or not the BOE had the authority to enter into said line of business; a City Charter amendment was determined to be needed, and was [approved by the voters] in November, 1998; market surveys were Regular Meeting Alameda City Council August 17, 1999 conducted to determine whether there was customer interest in having a competitive cable provider in Alameda, as well as a company which would provide Internet access on an open basis; 20% of survey respondents indicated they were ready to switch providers immediately; in April and May, 1999, BOE sent cards of interest to BOE customers and received over 1,600 responses; when the BOE's name change to Alameda Power & Telecom (AT &P) was announced at the Art & Wine Festival, an additional 1,200 individuals expressed an interest in purchasing Internet or cable television services from AP &T; AP &T is confident the customer demand for services is fairly universal throughout Alameda and continues to build. One of the key questions Council raised is how said business activity relates to the core business of providing electricity: the current transfer to the General Fund is approximately $3 Million; AP &T expects the General Fund transfer to increase, based on increased business growth in the electricity business over the next eight (8) to ten (10) years. In addition, an issue was raised about the effect of open access or electric deregulation on the core business of the BOE: the PUB has resolved said issue, at least on a temporary basis, by postponing direct access in Alameda and by waiting until such time when Congress resolves the issues of private use restrictions on the tax exempt bonds issued to build power plants owned by AP &T and Northern California Power Association (NCPA). A competitive pricing reserve has been established which currently stands at $23 Million; reserve will continue to grow so that in mid -year 2002, the stranded investment in debt on the power plants will be paid off, and electric rates will be reduced by at least 20 %; moving into the telecommunications business will not effect funds dealing with the stranded costs; an implementation of rates reduction will occur before the first bond payment is required in the telecommunications business. General Manager Evans further noted another question was raised pertaining to exit strategy, components of the system and technological obsolescence; stated the majority of the expenditure relates to investment in construction of the fiber optic and co- axial cable system throughout Alameda; the next major component relates to the head end unit which has some element of technological obsolescence; the Business Plan provides for reinvesting in that piece in the fifth year of operation; when the unit is initially installed, it will be newer than the other systems providing cable service throughout the Bay Area. The Public, Educational and Governmental Access Studio cost is about $1 Million; a small percentage will require changes due to technology; BOE is prepared to invest accordingly. Under the Business Plan, AP &T will finance the first three years of operation through the sale of bonds: finance the cash flow and postpone the first bond payment for three years; during that period, BOE can build up the number of customers and not be confronted with bond payments of approximately $3 Million per year. BOE's goal is to reach 8,000 customers to achieve a break-even point; if BOE is not at that Regular Meeting Alameda City Council August 17, 1999 level in three to five years, the exit strategy indicates BOE will be prepared to liquidate the entire system--to sell it: the estimated value is about $8 Million; BOE would be confronted with paying off the remaining $8- to $10 Million principal on the bonds, which, within the financial structure, AP&T would be capable of doing, if necessary. BOE has continued to work with SIGCORP Communications; if BOE does not want to be in this business at the end of five years, for whatever reason, SIGCORP has committed to pay BOE $16 Million--essentially pay off the expenditure; in addition, if the System is worth more than $16 Million, SIGCORP wants the first right of refusal; staff is working with the City Attorney, Bond Counsel and SIGCORP's attorneys to finalize matter; BOE believes it now has a financial backstop that addresses the concern of what happens if the number of customers needed is not achieved. Another question raised was: what is the sense of urgency? Fundamentally, there are two reasons: 1) the current interest rates are favorable to refinance BOE's current Certificates of Participation and blend with additional financing for the telecommunications services; AP&T would be issuing two types of bonds: refinancing tax exempt, as well as a taxable component; financing rates are favorable at this time and BOE wants to take advantage of opportunity; and 2) market demand: 3,000 individuals have stated they want to buy from AP&T; there is continuing interest from corporations seeking expansion in Alameda that need high technology infrastructure; the time to move forward is now; there are significant community benefits besides the opportunity for increasing the transfer to the General Fund: a high technology infrastructure that will be beneficial to advance technology firms and firms who depend upon a fiber optic infrastructure for their communication and data movement needs; BOE believes pursuing this opportunity makes sense at this time. Mayor Appezzato inquired what the potential customer base total is, to which General Manager Evans responded approximately 31,000 to 32,000 customers. Mayor Appezzato stated market penetration is currently under fifty percent; TCI is at 43%-47%. General Manager Evans stated TCI currently has 15,000 customers. Mayor Appezzato stated the Bureau's 8,000 customers would come from either new customers or TCI. Councilmember Johnson questioned, in regard to exit strategy, whether purchase of the system in five years would be "as is". General Manager Evans responded in the affirmative. In response to Mayor Appezzato's inquiry regarding SIGCORP's commitment to purchase system after five years should AP&T decide Regular Meeting Alameda City Council August 17, 1999 to sell, General Manager Evans stated SIGCORP would pay $16 Million for the system, which would cover construction costs; depending upon what is finally worked out in terms of bond financing costs, there may be costs around $2 Million AP &T may have to pay. Mayor Appezzato inquired why SIGCORP would purchase a System AP &T could not make work. General Manager Evans responded SIGCORP has confidence the System will work as a private entry into the market. In response to Councilmember Kerr's inquiry regarding exit strategy, General Manager Evans affirmed that if the SIGCORP alternative was not used, AP &T could sell existing cable equipment for 50 cents on the dollar, and the City would be left with a possible debt between $8 Million to $10 Million: Len Grzanka, Alameda, stated that according to AP &T General Manager Evans' graph, 1997 projections for build out were $16 Million; during the last election, a flyer sent out in support of Measure A stated the cost for building a full service municipal communications network would be $7.9 Million which would be backed by the Bureau's reserves; that he is pleased the Bureau has implemented a backdoor strategy to sell out assets if the business fails, however, he still has uncertainty and doubt; negotiations [with SIGCORP] should be held publicly; there must be a good, firm deal to ensure the City will get the $16 Million back. Ken Hansen, Member, Public Utilities Board (PUB), stated AP &T staff have worked with vigor, intelligence and due diligence in preparing for this action; they are ready to go and have done their homework; the venture will make money; there is a need for competition; citizens are supportive; having a City-owned cable network television system will be the key stone for the City to enter into other telecommunication projects. Sebastian Bladassarre, Vice President, PUB, stated the PUB and AP &T prepared the franchise application and business plan with a great sense of responsiblity and a cautious approach; the same standard of quality service and competitive pricing are corner stone ingredients in the telecommunications plan; AP &T would make significant contributions to the City of Alameda General Fund; since 1914, the Bureau has returned over $17 Million in support of City services, e.g. Police and Fire; an additional economic benefit is AP &T will support local business by purchasing in Alameda; issuance of the franchise will be a major step to accommodate the needs of advanced technology businesses and will provide a critical and effective tool to recruit new businesses to Alameda; that he is confident the financial plan is solid and minimizes risk; electric rates will not be increased; Alameda residents or businesses tax dollars will not be used to fund the Cable TV business; the PUB has Regular Meeting Alameda City Council August 17, 1999 incorporated Council's concern; it is time to act. Lance Russum, Chair, PUB, stated last November, Measure A passed even though supporters only spent a small amount of money against substantial financial opposition; the people of Alameda spoke [voted for Measure]; the 1996 Telecommunications Act is about a level playing field; according to Steve Klein, Superintendent of Communications at Tacoma Power, only one -year after implementation of Tacoma's communications /cable plan, there are 7,000 or more customers; Tacoma exceeds projections without marketing; the system cannot be built fast enough to sign up people on waiting list; there has been virtually no loss of customers returning to AT &T /TCI; Tacoma Power spent over $100 Million and the system's value has doubled; Council was provided endorsement from Tacoma's Mayor. Karin Lucas, former Councilmember, stated the City Council wanted to look for other sources of revenue; Mayor Appezzato and she met with the BOE to explore contributions to City funds; the plan came out of said meetings; four years later, the City has the option to obtain additional funds for the City budget; there are additional benefits for the citizens of Alameda; the quality of life for Alameda residents will be better because they will have the option of service to their home; the City will also be a more attractive community to businesses; requested the Bureau be given the opportunity. Ben Tilos, Alameda, urged Council to support the franchise;, stated the Bureau has always been courteous and has treated him like an owner; members of the PUB have always responded positively to his needs; the Bureau has provided a significant amount of money to the General Fund; the cable business will provide a larger transfer [to the General Fund]; AP &T will offer another choice; prices will be based on competition; and there will be local control of programming. George Edwards, Alameda, stated that he has a telecommunication company which has been in Alameda for a number of years; the digital revolution has changed communications; Alameda owns a high - capacity fiber optic network which has the capacity to handle cable television, internet access, upgraded telecom services, video on demand and high speed, data transfers; homes and businesses would have increased telecommunication services; 911 systems would be improved; the system is good from a technical standpoint. Tracy McKean, Alameda, urged passage of the franchise; stated organizations in town could benefit from competition, e.g. donations; that she would like to have a choice; there is a tremendous opportunity to make City of Alameda a better place. Ruth Brumfield, former President, Harbor Bay Telecom, stated that Regular Meeting Alameda City Council August 17, 1999 she supports AP &T's franchise request; having competition forces companies to work harder on customer service and improve pricing; cable penetration will increase; AP &T will be able to provide better service at more affordable rates and has the knowledge, resources and skills necessary to provide the service. Tom Reiman, President, Broad Band Group in Sacramento, stated the Broad Band Group represents over 600,000 homes in communities similar in size to Alameda; there has been very significant improvement in development of telecommunications networks; the BOE is facing significant hurdles to retain base as core electric service provider; American consumers are asking for bundled service; networks built five years ago do not meet needs of today; infrastructure will become a benefit; a non- exclusive franchise encourages competition; in Florida, the largest corporate relocation, American Automobile Association, occurred due to phone and cable technology; there are economic development incentives. Mayor Appezzato inquired whether AT &T will be able to bundle services, to which Mr. Reiman responded in the affirmative; stated the city should demonstrate there is competition. In response to Mayor Appezzato's further inquiry regarding maintaining state of the art equipment ten years down the line compared to AT &T, Mr. Reiman stated corporate giants often are not agile; there is a place for wireline and wireless services to co- exist nicely; fiber optic networks meet growth needs of industry; there is a formidable company, however, there is no reason to not have a secondary player; the City should not believe having a giant in town is good enough. Bill Smith, Alameda, discussed the significance of technological advancements. James Hauer, Alameda, stated AT &T /TCI has argued AP &T should not go into business because bad things will happen to Alameda; AT &T /TCI is driven by profit; with AP &T, the citizens of Alameda will own the business; Alamedans should be given a choice; relatives in Tacoma informed him rates went down due to competition. Allan Shore, Alameda, stated there is a lot of dissatisfaction with TCI; the Bureau has a history of involvement in the community; people rely on technology; benefits will come if providers allow access to more than cable television basic broadcast. Mrs. Jim Thomas, Alameda stated last November, she voted yes on Measure A to support the BOE's publicly - owned, revenue- generating business plans; TCI tried to buy election; voice of people prevailed; City Council is on record supporting plans; urged Council to approve franchise. Regular Meeting Alameda City Council August 17, 1999 47 Stan Lichtenstein, Chair, Cable TV Advisory Committee, stated three years ago the committee did a cable survey and found dissatisfaction with programming, spiraling rates, billing and service; last spring, the Committee unanimously approved the BOE's plan; Cedar Falls, Iowa has a two-year program in direct competition with TCI; in spite of TCI's opposition efforts, Cedar Falls is ahead of projections in private use of the fiber optic system. Iry Hamilton, Alameda, stated West Alameda Business Association supports the diversification for AP&T which will offer an important amenity and economic development tool; as a resident, he supports competition; cable tv service will be improved; AP&T is an important community resource; AP&T is in increasingly competitive market; diversification will allow AP&T the opportunity to compete. Dick Hood, Massachusetts, stated that he works for a small fiber optic manufacturing company outside of Boston; fiber optics will not be obsoleted by other technologies; most technology innovations will enhance fiber optics; the City will be providing a conduit for services, other than cable; if the City were going to fail, the incumbent [TCI] would not be trying to convince against moving forward and there would not be someone waiting in the wings to buy the business. Steve Gardner, Alameda, stated the technology is upgradeable and there are not limitations; will be a huge asset to the City of Alameda. John Kopchik, AT&T, stated AT&T is eager to serve Alameda; AT&T offers a wide-range of video and digital services and products, and high speed digital access through cable modems; in the very near future, AT&T will be offering telephone service over hybrid fiber/co-axial system; acquisition of TCI by AT&T means nothing but good things for the Bay Area and Alameda; the video and telecommunications business is moving at light speed; competition is everywhere; AT&T is preparing its network and work force for the uncertain markets ahead; uncertainty should give pause for concern before putting public funds at risk; urged Council to be cautious before committing tens of millions of dollars required to build and start up the service; further stated all details should be carefully reviewed; AT&T believes competition is good for customers; AT&T's regulator [City] may be their competitor which is of concern; AT&T plans to continue to work with the City to build out their network which will provide better and faster service to Alameda. Charles Ward, Economic Development Commission, stated there is economic viability of a City-owned telecommunication and cable network; the market is competitive and there is money to be made; urged Council approval; stated the quality of life in Alameda will Regular Meeting Alameda City Council August 17, 1999 improve. Dion Griffin, Executive Director, Harbor Bay Business Park Association, stated similar infrastructure projects have been occurring throughout the United States; AP&T has assured the Business Park that they would be an integral part of plans; AT&T has not [contacted Business Park]; and currently, Harbor Bay does not have high speed internet access. John Piziali, Alameda, stated that he trusts the PUB and AP&T's staff; urged Council approval. Dennis Chacones, Superintendent, Alameda Unified School District, stated when the Board of Education endorsed the Ballot Measure to allow business expansion, the importance of maximizing the value of public assets to bring benefit to the community was noted; cable service provides benefits to the School District and community-at- large; benefits of competition can be seen in TCI upgrading services and offering assistance to the School District; the opportunity to use public ownership to ensure equal access to information resources is critical; the municipal cable system would bring the advantage of a digital network to more Alameda homes, businesses and learning centers, than any privately owned company; citizens would be shareholders and profits could be returned in the form of cost savings; Alameda is in a unique situation to provide fast, expandable, reliable networks for entertainment, information and education; he and the Board of Education urge Council to move forward. Debra Arbuckle, Alameda, stated that she was not certain of the proposal, however, after thorough review of the information she is convinced it is a great idea; urged Council to move forward. George Oliver, Alameda, stated that he does not have cable, but he would receive the service if he could get it from AP&T. John DiDomizio, SIGCORP Communications Services, stated SIGCORP's business is based upon working with municipalities to provide a network for the future of the community; the proposal is not about adding cable channels or very basic service, it is really about the community's right to self-determination in an information age; the City has an opportunity to provide effective competition; communities throughout the country are moving forward; the system will not fail; SIGCORP is willing to put at risk the possibility of writing a $16 Million check in five years to buy the system because there is a low probability of pay out; other entities are putting large capital at risk to be in the business because there are inherent opportunities of the technology; SIGCORP is a strong partner; offered to demonstrate SIGCORP's commitment by donating 150 personal computers to be used in the school system, community college and City library system, provided the Council moves Regular Meeting Alameda City Council August 17, 1999 forward. In response to Mayor Appezzato's inquiry regarding SIGCORP's size, Mr. DiDomizio responded SIGCORP is over a $1 Billion corporation and is in the process of a merger which will make it an approximately $2.5 Billion corporation. Mayor Appezzato inquired whether SIGCORP would be willing to purchase the system before five years, to which Mr. DiDomizio responded the system has to be completely built out; the system will take four years for completion. In response the Mayor Appezzato's inquiry whether SIGCORP would purchase the system for $16 Million in five-years, Mr. DiDomizio responded in the affirmative. Mayor Appezzato announced there were no ore speakers. Vice Mayor Daysog inquired how many public utility companies are in Cable Television business currently. Mark Hanna, former Councilmember and current PUB Member, stated there are 75 public utility companies who have there own cable television business right now; in first year budget, AP&T expects to have more money come in from broadband service rather than cable TV. PUB Chair Lance Russum stated communities are jumping on the bandwagon to do exactly what Alameda is doing; many communities are behind Alameda; the number PUB Member Hanna quoted will increase over the next year or two; the increase of data, broadband and internet use will quadruple every year for the next five years; the revenue generating opportunity is enormous. Vice Mayor Daysog stated the BOE is part of the Northern California Power Association (NCPA) and pools resources to invest or purchase things related to the utilities industry; inquired whether there has been discussion or action to create pooled resources among the 75 public utility agencies, similar to the NCPA, to deal with large, significant cost issues. PUB Chair Russum responded to cut down programming costs, there are a number of cooperatives in existence; said cooperatives are one reason municipalities have the ability to compete well. Vice Mayor Daysog stated there is concern about technological obsolescence five- to ten years down the road; inquired how the City can position itself to take advantage of changes in a rapidly changing environment; stated perhaps pooling resources with other utility companies is one way to address changing technologies. Regular Meeting Alameda City Council August 17, 1999 PUB Chair Russum stated local alliances can be cost effective. General Manager Evans stated one of the reasons AP&T brought SIGCORP on was to take advantage of the brain power of the organization; there is a subtle difference with the franchise; the franchise is based on inclusiveness; open access will be provided to other Internet service providers or others who would like to use and ride on the broad band network; others will be taking the risk and investing in the technology to take advantage of the infrastructure; AT&T's approach is exclusive; AT&T wants to be the only user; AT&T is in a court case in Portland to prevent other users from being able take advantage of their system. Vice Mayor Daysog inquired whether allowing other users access to fiber optics has a potential to generate revenue, to which General Manager Evans responded in the affirmative; stated competition and access would be fostered based on customers' needs and demands rather than the narrower portfolio AP&T would offer if the system were exclusive. Councilmember Johnson stated the head end part of the unit is most likely to become obsolete, requested General Manager Evans to address the matter, as well as the likelihood of the fiber optics portion of the network infrastructure becoming obsolete. General Manager Evans stated the vast majority of the investment is in the fiber optic co-axial cable network itself, which has low probability of being rendered obsolete with even the latest high speed computer; a wireless system would be a competitor; the head end is more likely to require continued investment to be competitive; the Business Plan provides continued investing in the [head end] system in the fifth year to ensure it remains competitive; depreciation was built into the Business Plan to generate a fund for reinvestment. Councilmember DeWitt stated his questions dealt with risks and exit strategies; with SIGCORP coming forward, the risk for the taxpayers is almost completely eliminated; his questions have been answered. In response to Mayor Appezzato's inquiry regarding the remaining amount of the financial cost, after five years and assuming there is a $16 Million check from SIGCORP, the General Manager stated the cost is $2- to $4 Million depending upon the actual financing costs and overhead associated with the financing; the first three years of interest payments are being built into the financing; AP&T would be faced with paying said costs which would exceed the $16 Million. PUB Chair Russum stated there are criteria when a system sells; when Tacoma completed their system, it was worth twice its cost; if there are 8,000 customers, at $5,000 per customer, or higher, the City would receive at least $40 Million for the package; the risk Regular Meeting Alameda City Council August 17, 1999 251 is so small and the benefits are so enormous. Councilmember Kerr stated when deregulation was first announced, there was concern about the survival of the BOE, however, the City has found out the Bureau could operate in a protected environment for a limited period of time; the PUB has elected to do so to help pay for stranded costs; the Bureau staff began discussing an alternate way to make money; now that the City can operate in a protected environment, the City does not need to take the risk to save the Bureau; communications from staff have indicated it is acceptable for the BOE to take risk because the protected environment of the electric business exists; due to protected environment, the BOE could afford to pay off $8- to $10 Million in debt incurred if the venture fails; said debt would be down to between $2- to $4 Million if SIGCORP puts in a purchase offer; one document indicates only the cable assets would be at risk, however, another document indicates both the electric and cable business would be used as collateral; the question is why the City should move forward; the risk is not needed to protect assets which belong to the people of Alameda; there is risk; the first Business Plan had 5,000 subscribers as the break even point; the latest figure is 8,000; projections eventually reach a much higher number of people than have cable currently; the City is a line-of-site city; the transmitter can be seen; people do not want more television than they get, TCl/AT&T offers service; very high-speed internet access is available to the people of Alameda; the City does not have to put in the system for the people and companies in Alameda to have access to high technology; there must be a reason no other profit- making company is competing with TCWAT&T; a coalition similar to the NCPA might not be beneficial because NCPA has an enormous amount of debt of which the City is obligated to pay a certain percent; getting into coalitions has proved to not necessarily be a good idea; Measure A was a vote to allow the Bureau to go into other businesses, not specifically cable; the City controls , granting of franchises and is not depriving people of having access; Council is being told it is great to take the risk; however, the City is not a private company and is risking the assets of the people of Alameda- Mayor Appezzato stated many people are supportive; the financial commitment of SIGCORP to hold the City financially harmless after five years is new tonight and has not been reviewed by the City Attorney, City Manager and Finance Director, that he is willing to wait until staff informs Council this [agreement with SIGCORP] is the way to go; he met with AT&T; AT&T requested the matter be delayed for 30 days to allow presentation of a package which would provide financial benefits to the community or a reduction in cost; waiting on a decision of this magnitude is acceptable to him; AT&T is not a company to take lightly. Councilmember Johnson stated that she was aware of AT&T's request Regular Meeting Alameda City Council August 17, 1999 c., for continuance, however, it was not mentioned by AT&T's representative tonight. Mayor Appezzato stated AT&T wants to prepare a financial package. Councilmember Johnson stated there was no further request for a continuance [by AP&T]; one way to resolve the matter tonight is Council could vote on the issue conditioned upon satisfactory negotiation of a City Attorney-approved agreement with SIGCORP; Council could give direction to staff to continue discussions and negotiations with AT&T; if AT&T is serious about wanting to partner with Alameda, Council's vote would not prevent such discussions. Councilmember Johnson further stated the issue has not been taken lightly; that she has been very cautious and taken a very conservative approach; she has had many meetings with many different people; she was very concerned about the BOE and City going into said business against what has been heard stated by the giants in the industry; she has done a great deal of research, gathered information, and spoken to many knowledgeable people; City Council has a responsibility to take the matter very seriously because the assets being risked are assets of the City of Alameda and residents; this is not the last step in the procedure; at this point, City Council should vote yes or no on the Franchise application with direction to staff to continue negotiations with AT&T, conditioned upon a satisfactory agreement with SIGCORP; the offer by SIGCORP eliminates so much of the risk being taken, Council should vote tonight on the Franchise Agreement. Councilmember Kerr inquired whether Council would be granting BOE the right to issue bonds if they grant the Franchise. The City Attorney responded there would be a separate hearing on the issuing of debt and financing; the matter before Council is merely an Application to grant AP&T the ability to do the business; and Council has the obligation to consider whether or not it will issue debt to support it. Councilmember Kerr stated the City perhaps could get a better deal with AT&T if there is not a positive vote tonight. Councilmember DeWitt moved that Council: 1) grant Alameda Power & Telecom the authority to have a five-year communications franchise, contingent upon an agreement with SIGCORP with regard to financing; and, 2) [direct] negotiations continue with AT&T. The City Attorney clarified Councilmember DeWitt's motion as follows: [Council] introduce the Ordinance and make the four findings recommended in the Staff Report, subject to the two (2) conditions requested by Councilmember Johnson. Councilmember DeWitt concurred with the City Attorney's Regular Meeting Alameda City Council August 17, 1999 clarification. Councilmember Kerr inquired whether Councilmember Johnson's conditions included acquiring a written statement /commitment from SIGCORP. Councilmember Johnson responded [conditions include] a written agreement [from SIGCORP] approved by the City Attorney's Office. Councilmember Kerr commented that the City Attorney's Office approves the legality of documents and does not make judgements on the good sense of a document. Councilmember Johnson stated the City Attorney's Office should ensure that the Contract drafted: 1) reflects what Council discussed and, 2) is an offer to purchase the system for $16 Million in five years, if for any reason the City chooses not to continue in the business. Mayor Appezzato stated the document should protect the City's financial liability. Public Utilities Board Chair Lance Russum stated the purchase price should be "not less than $16 Million ". Mayor Appezzato stated the Bureau should review the draft document, as well as anyone else. Councilmember Johnson stated said review could be added to the condition(s). Mayor Appezzato stated BOE should also have an opportunity to provide input. Mayor Appezzato commented the Motion [on the floor] is to go forward, with options to negotiate with AT &T and review the SIGCORP document as to whether the City is financially held harmless at least $2- to $4 Million; stated there is an opportunity to stop if there is disagreement, or something happens later; the City's ability to compete is, of concern; and that he will "Abstain" [on the Motion] until the Document is reviewed, and possibly [there is] a package with AT &T Councilmember Johnson seconded the motion. Under discussion, Councilmember Daysog stated there are two critical points: 1) policy issues, and 2) business issues; from a policy issue, the question of access should not be underestimated, particularly for a City declaring itself to be Silicon Island; access should be evaluated on means, not aspirations, and should be a business decision; there is the capacity to provide businesses Regular Meeting Alameda City Council August 17, 1999 2 ri 4 with fiber optics in a prudent fashion; that he is supportive of the move; the fact that questions have been raised on how to concretely follow through on SIGCORP's offer and on pulling resources to reduce cost, demonstrates prudence; nothing is risk free; and clearly this [the matter before Council] is just the first portion of many more steps. Mayor Appezzato stated these are critical decisions and citizens should bear with Council as they work through the difficulties; it [matter] is not taken lightly. Councilmember Kerr stated that she will vote "no" on the Motion, however, she would be delighted if staff came back with an iron- clad risk-free agreement. Mayor Appezzato stated that he will not be voting "no" [on the Motion]; there is always a risk in everything you do, but risk must be calculated; that he will look for the calculated risk if it comes back; if the majority of the Council goes forward and supports proposal, and he joins later, fine; but, if he does not and the majority wants to go forward, they will have his support; he looks forward to the next 30 days, or whatever it takes to look at the document. On the call for the question, the motion carried by the following voice vote: Ayes: Councilmembers Daysog, DeWitt and Johnson - 3. Noes: Councilmember Kerr - 1. Abstentions: Mayor Appezzato - 1. ORAL COMMUNICATIONS, NON-AGENDA (99-422) Bill Smith, Alameda, commented on opportunities in the City of Alameda. COUNCIL COMMUNICATIONS (99-423) Consideration of Mayor's nomination for appointment to the Recreation Commission. Mayor Appezzato nominated Jay L. Ingram and Christine Johnson for appointment to the Recreation Commission. (99-424) Consideration of Mayor's nomination for appointment to the Social Service Human Relations Board. Mayor Appezzato held matter over. (99-425) Considerations of Mayo Transit Committee. Mayor Appezzato appointed Carla M. B. Schatmeier and Allan D. Shore Regular Meeting Alameda City Council August 17, 1999 r's appointments to the Public Moreno, Richard P. Neveln, Eric as the Citizens-At-Large on the Public Transit Committee. (99-426) Mayor Appezzato stated there was a newspaper article regarding Alameda County being among the slowest to answer 911 calls; there might have been misunderstanding the article was about the City of Alameda; read a statement from the Chief of Police: "In a chance that there may be some confusion about Alameda County and the City of Alameda public safety answering system, I would like to inform you that the City's system rates above the state average in every category, e.g. the our Communications Center answers 911 calls in 0-5 seconds in 72.46% of the calls vs. 72% for the average of all others in the state; additional our Center answers 96% of 911 calls in less than 11 seconds vs. the state average of 95%"; if there is any confusion, the article did not apply to the City of Alameda; problems are in the County system. (99-427) Councilmember DeWitt announced that the Public Transit Committee will have its first meeting on Wednesday, September 1, 1999 at 7:30 p.m. following the Alameda Reuse and Redevelopment Authority Meeting. (99-428) Vice Mayor Daysog stated the City of Alameda has a lot of programs emerging to deal with the question of housing affordability, e.g. first-time homeownership programs, establishment of non-profit housing organization(s); there are different ways to deal with issues regarding Alameda Point; requested the City Manager's Office, in conjunction with staff, to think of ways to bring all of the elements together, e.g. work force and affordable housing; different ideas should be brought together to provide a coherent strategy to deal with issues raised by Renewed Hope and others. ADJOURNMENT There being no further business before the City Council, Mayor Appezzato adjourned the Regular Meeting at 11:18 p.m. Respectfully submitted, Di ne B. Felsch, CMC City Clerk The agenda for this meeting was posted in accordance with the Brown Act. Regular Meeting Alameda City Council August 17, 1999