County officials hailed the 185-mile fiber network as a high-speed, low-cost Internet link serving schools, fire districts and other public agencies in rural and underserved areas as well as seven cities.
The project, funded largely through a $7.8 million federal stimulus grant in 2010, started with great promise.
Installation of the fiber went smoothly but ran into a roadblock last year in Oregon City, which demanded that the county pay a franchise fee for using the city's right of way.
The county said its budget didn't include money for a fee. The county is building the line but provides no service. Public agencies would contract with broadband providers, who would provide high-speed service at low cost through the publicly owned network.The yearlong spat took a toll as ill will built between city and county.
The delay forced some public agencies to change plans. Instead of connecting to the less expensive county service, the Oregon City School District signed a three-year contract with its current telecommunications provider.
Oregon City offered a 50 percent "discount" that would cut the county's annual franchise bill to about $106,000 a year -- possibly less. The county rejected the deal and started plotting an alternate route that bypassed several schools and public buildings.
County commissioners did further damage when they made an unannounced appearance at a city meeting in December to lobby for the project. City officials viewed it as an act of disrespect.
Deadlocked and with time ticking away -- the federal grant requires the project be completed by June 2013 -- the elected officials recently agreed to mediation.
During a daylong session Sept. 7 with retired Clackamas County Judge Robert R. Selander, two city and two county commissioners agreed on a plan that could resolve the impasse.
Giddy with relief and hope, two of the participants -- Mayor Doug Neeley and County Commissioner Jamie Damon -- went out for a celebratory glass of wine after the meeting.
"We are optimistic we are working toward a mutually beneficial agreement," Damon said that evening. "We're feeling very positive about it."
The big challenge now: clearing away thorny details and closing the deal.
County objects to fees
?
County officials said they contacted Oregon City about the broadband network in late 2010.
City officials said the county needed right of way permits and nothing more, said Laurel Butman, a deputy county administrator in charge of the project.
"No one ever mentioned a franchise fee and no one ever said you need a franchise agreement to be here," Butman said in a recent interview. "Fees were never mentioned ever."
Oregon City officials dispute that.
County crews had installed about 23,000 feet of the fiber-optic line in Oregon City -- nearly three times the amount the city permitted -- when the city issued a stop-work order in September 2011. The right of way permits were subject to a franchise agreement, city officials said, and the project could not resume until the county signed one and paid a fee.
Butman and Clackamas County commissioners were stunned by the city's hardball response.
Adding to their mistrust, the city revised its outdated telecommunication ordinance that September as it prepared to renegotiate several franchises. Utilities, telecommunications companies and other businesses, such as Comcast and Portland General Electric, pay franchise fees to cities in order to operate in public rights of way.
Butman said she didn't learn about the changes until after the city halted work on the project.
Under the new terms, the county would have to pay franchise fees. County officials said they were exempt because the ordinance doesn't cover government agencies.
Ordinance or not, anyone who uses the city right of way is subject to a fee, said City Manager David Frasher.
Confusion all around
City officials admit they were confused in early 2011 when the county started construction.
The city issued a permit, believing the cable was part of the county's internal communications network.
Then the city learned the broadband service would be available to public and private customers and compete with other franchisees such as CenturyLink.
"(Initially) I though we had two different projects going," said Nancy Werner, an attorney who handles the city's utility and franchise issues.
The city feared it could lose franchise fees if telecommunications companies leased space in the county network. Another concern: the telecoms could sue the city for discrimination if it waived fees for the county.
"If it's going to compete with private services, that's something different," Werner said. "We feel like from the very beginning we were clear with them a franchise fee would be required."
A city official made the point in an April 2011 email to David Soloos, the county's broadband project manager. "We look forward to exchanging information, completing a letter of understanding, and finalizing a franchise agreement," wrote Bob Cullison, a public works manager.
A few months later Frasher told Soloos, ex-assistant director of Portland's Office of Cable Communications and Franchise Management, that the county needed to sign an agreement before proceeding.
Fee or no fee
It appears county officials did not immediately understand that the city wanted money. City officials find it perplexing that experienced bureaucrats such as Soloos and Butman did not grasp that fact.
"A franchise agreement is not necessarily a franchise fee agreement," Butman said. "They never mentioned there was a fee associated. After the stop-work order, they made that clear. Before that, they were not clear that was the case."
Early in the process the county was told to "be aware this is an issue" and the city commission would make the final call, Werner said. "We were always clear there could be a franchise fee," Werner said. "Everybody else pays."
What the county would do differently if given a second chance?
"Nothing," Butman said, "because we thought we were doing the right thing."
Reporter Yuxing Zheng contributed to this story.
Steve Mayes
Source: http://www.oregonlive.com/clackamascounty/index.ssf/2012/10/broadband_bargain_reached_betw.html
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