|Title:||Council authorization to enter into an intergovernmental agreement to participate in a joint municipality audit of revenues received from the incumbent local exchange carrier (Qwest) as compensation for the rights and privileges to operate in the public right-of way.|
|Date:||December 17, 2002|
|Submitted By:||Lee Tuneberg, Finance Director|
|Brian Almquist, Interim City Administrator|
|Synopsis:||This Council action authorizes the Finance Director to sign the proposed intergovernmental agreement to participate in the audit of Qwest and any other applicable local exchange carrier to verify payments made and amounts due the city in the way of franchise fees.|
|Recommendation:||Staff recommends the Council authorize the Finance Director to sign the agreement and to participate in the process to audit franchise payments made by the incumbent (and any) local exchange carrier.|
|Fiscal Impact:||The estimated cost for the audit is $12,000. This amount is unbudgeted but will be paid from the Finance Department budget. If necessary, it will be included within a transfer of appropriation later in the year.|
|Background:||Qwest is the incumbent local exchange carrier for
the Ashland area. Qwest pays the city franchise fees
for the rights and privileges to operate in the public right-of-way. Qwest paid over $120,000 to the city in 2001-2002. At times payments have fluctuated without explanation and the city does not have the staff or expertise to audit Qwest.
Over 70 agencies have expressed an interest in sharing the cost of a consultant to review and analyze (audit) Qwest and Verizon to assure the appropriateness of the payments to the local jurisdictions.
Previously 24 Oregon agencies joined together to audit Portland General Electric in a similar manner and found it financially beneficial to do so. This agreement and process are structured similar to that process except for targeting two agencies. Each participant receives franchise payments from one or both companies. The cost sharing is based upon revenue and population and deemed equitable.
The intent of the audit is to assure appropriateness of payments received, perhaps gaining payments not made and avoiding a situation where incorrect payments to the city become a significant liability.
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