TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Ryan Zink, Franchise Administrator
SUBJECT:
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Ordinance Bill No. 19-16 amending Salem Revised Code 35.220 to provide the ability to negotiate an annual fee agreement with public utilities occupying the public rights-of-way that earn no gross revenues within the City of Salem.
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
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ISSUE:
Shall the City Council conduct second reading for enactment Ordinance Bill No. 19-16, amending Salem Revised Code 35.220 to provide the ability to negotiate the annual fee agreement with public utilities occupying the public rights-of-way that earn no gross revenues within the City of Salem?
RECOMMENDATION:
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Conduct second reading for enactment Ordinance Bill No. 19-16, amending Salem Revised Code 35.220 to provide the ability to negotiate the annual fee agreement with public utilities occupying the public rights-of-way that earn no gross revenues within the City of Salem.
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SUMMARY AND BACKGROUND:
Salem Revised Code (SRC) Chapter 35 requires public utilities to have an agreement with the City of Salem (City) in order to occupy the public rights-of-way (ROW) and to pay a franchise fee to the City for its use of the ROW.
SRC 35.220 provides two methods for public utilities that occupy the ROW for the purpose of furnishing telecommunications service to compensate the City for use of the ROW; 7 percent of gross revenues earned within the City, or a per linear foot fee for facilities located in the ROW when no gross revenue is earned within the City of Salem.
The SRC allows the City to negotiate the annual fee when the public utility earns gross revenues within the City of Salem. However, there is no provision in the SRC to allow an annual fee, other than a per linear foot fee, when gross revenues are not earned within the City of Salem. Ordinance Bill no. 19-16 would allow the City to negotiate this fee based on relevant factors, and updates the per linear foot fee for facilities in the ROW.
In addition, the proposed ordinance updates code language, and updates the per linear foot fee to the current (2016) amount of $3.86 for facilities in the ROW. The per linear foot fee increases each calendar year based on the Consumer Price Index pursuant to SRC 35.220(b).
The Salem-Keizer School District (District) approached the City with a proposal to construct a dedicated fiber optic network to 65 schools and administrative buildings in order to enhance the education of its 41,000 students. The network would be 80 percent funded by a Federal Communications Commission (FCC) internet connectivity program known as “E-Rate.” Under the E-Rate program, the District would be prohibited from using the fiber optic network to generate revenue.
The District is seeking permission to access to the City’s public ROW and is requesting that the City negotiate the fee normally charged.
The current language in SRC 35.220 does not allow the City to negotiate the annual fee that would apply to the District. Enactment of Ordinance Bill No. 19-16 would allow the City to negotiate this fee based on relevant factors.
Due to the scope and size of the proposed project, the District has stated that if it is required to pay the annual per linear foot fee the cost of the project would be prohibitive. SRC 35.220 allows for the amount of the annual fee to be negotiated when gross revenues are earned within the City of Salem. No provision exists in the code for the amount of the annual fee to be negotiated when no gross revenue is earned within the City of Salem. The proposed amendment would correct that inconsistency in the SRC, and allow for a negotiated fee.
FACTS AND FINDINGS:
Ordinance Bill No. 19-16 corrects the inconsistency that currently exists in SRC 35.220 by providing a method by which the City may negotiate annual fees, when appropriate, with public utilities occupying the ROW for the purpose of furnishing telecommunications service that do not earn gross revenues within the corporate limits of the City of Salem.
Additionally, Ordinance Bill No. 19-16 provides guidance on factors to consider when negotiating the annual fee, such as whether the public utility realizes any revenue from the telecommunications service it provides, whether the service provides a benefit to the public, and any other relevant factors.
The District is seeking permission to access the City’s ROW with the City waiving all franchise fees in SRC 35.220 normally charged to telecommunication providers who sell services to the public.
Staff recommends City Council conduct second reading of Ordinance Bill No. 19-16.
Ryan Zink
Franchise Administrator
Attachments:
1. Ordinance Bill No. 19-16
11/15/2016