MINUTES FOR THE SPECIAL MEETING
ASHLAND CITY COUNCIL
May 10, 2005 - 7:00 p.m.
Public Works/Community Development Building 51 Winburn Way

CALL TO ORDER
Mayor Morrison called the meeting to order at 7:05 p.m. in the PW/Community Development Building.

ROLL CALL
Councilors Amarotico, Jackson, Hartzell and Silbiger were present. Councilor Hardesty was absent.

UNFINISHED BUSINESS
1. Ashland Fiber Network Organizational Change.
City Administrator Gino Grimaldi explained that this was a continued discussion from a previous council meeting. He noted that this is an important discussion, given the upcoming Budget, and the effect of the proposed changes in departments. He presented two alternatives:

1) Create an Assistant to the City Administrator position. The Finance Director and Human Resources Director would report to the Assistant City Administrator.

Mr. Grimaldi explained that this alternative would differ from the proposed organization structure by replacing the Controller in Finance with an Account Representative. A clerical position would be added to support the Assistant City Administrator. The net increase in personal services would be approximately $145,000. The reasoning behind this alternative would be that it would reduce work load on the City Administrator.

2) Reclassify the existing Finance Director position to Administrative Services/Finance Director. The Human Services Director would report to the Administrative Services/Finance Director.

This alternative eliminates the direct reporting relationship between the City Administrator and the Human Resources Director. This alternative would differ from the proposed organizational structure by replacing the Controller in Finance with an Account Representative. This would save approximately $37,000.

Council discussed whether the addition of an Account Representative would provide the same needs as a Controller. Finance Director Lee Tuneberg explained that the Account Representative would provide work on rate models, advanced accounting performances and provide needed help for the Ashland Fiber Network (AFN).

Council further discussed and debated the issue of hiring an interim manager versus a permanent manager for AFN. Point was made that by accepting alternative two, it would free up more time for the City Administrator to spend on AFN. Council favored the AFN Manager reporting directly to the City Administrator. Questions were raised as to the amount of time that the Finance Director would be able to spend on AFN. Mr. Tuneberg explained that he currently spends 25-30% of his current time on AFN related issues. Concern was raised that alternative two was not clear on how much of the Finance Director's time would be devoted to AFN and what the Central Service fees would be.

Mr. Tuneberg stated that regardless of the alternative that is chosen, he would be spending a significant amount of his time on AFN related issues. He explained that it is demand that sets his work schedule and that he spends more time on AFN than anything else.

Council discussed the strategy for hiring of an interim manager. Mr. Grimaldi explained that this would be an approximate 6 month interim and that the Finance Department would provide support to the interim director. There would be no limit set for support for this position. It was stated that autonomy was important and that alternative two addressed all the concerns. That this position would have control over business and operations of AFN and that this position would report directly to the City Administrator.

Council discussed the difficulty with recruiting full-time interim versus full-time permanent. Comment was made that there may be individuals in this field of expertise that would be interested but may not apply given the uncertainty of AFN. It was pointed out that the person hired for this position may become permanent as things could be different after a year.

Mayor Morrison asked the council to consider what direction they wanted to go in regards to this issue as staff is need of direction for budget purposes. That council needs to consider whether this position is long term or short term. Council agreed that this needed to be done, but the decision regarding structural reorganization needed to done first.

Council requested that they have a clear picture of the impact to the budget in regards to this change. Mr. Tuneberg explained that there would be a difference in the budget of $178,000 between this year and next years budget. It was suggested that the council consider adding that 30% of the Finance Director's time would be dedicated to the AFN budget, a smaller central service fee, and the cost of the manager with staff support. Mr. Tuneberg stated that it is difficult at this time to provide answers without further research.

John Gaffey/637 Oak Street/Noted prior discussion amongst mayor and council and the comments they made regarding qualifications of proposed manager. That this person would act as a CEO and that this would not be an easy but huge task. He further noted comments made by mayor in regards to the future of AFN. Mr. Gaffey questioned if this person that the mayor was speaking of, was the interim position that is being discussed this evening. He also questioned the timeframe discussed and shared a discussion he had with a citizen. This discussion was on how this is a "million dollar" position and questioned who this would be. He wanted to know if the qualifications for this position still match what was previously stated by mayor and stressed the direness without that person.

Mayor agreed that he had made these comments and that he had referred to a full time position. He stated that the council will continue discussion and acknowledged that they may not be able to find this person.

Don Laws/968 Hillview/Pointed out that there are alternatives to explore and that there is a need to consider the cost to the citizens and the need to get AFN to a point where it is viable on its own. He noted that because the debt is growing as rapidly as it is, it is obvious to do this. And, that if nothing is done this department will continue to lose money. Mr. Laws suggested that the viability of AFN should be considered on an annual basis. He felt that a person hired for this position would know that there is a possibility of this position being short-term but he supports moving ahead with the hiring of this position. Mr. Laws does not support this position reporting to the Finance Director, but to report directly to the City Administrator. He felt that the person hired should have specific skills and should be a department head and that this may mean offering higher compensation.

Thomas Gaffey/680 Oak Street/Stated that he has yet to see anybody that has asked the question of what we are trying to accomplish with AFN. He questioned what this CEO is suppose to accomplish and whether there had been an audit of this program. He raised concern with the huge budget for AFN and was confused as to the direction that the city is going. Mr. Gaffey felt that the city should get out before it gets any worse. He commented that wireless is going to take over and then the city will have to take a real loss. He requested hard answers and what the council expected this manager to do.

It was explained to Mr. Gaffey that the council is not discussing what the manager is, but that there is a desire to put operation aright. It was stated that there is perception that AFN is a "loser", but that there are many who continue to believe in the viability and value of this service.

Alan DeBoer/Spoke regarding how this is potentially a great thing for the city and that we are getting closer to a break even. He suggested that the city create an ad hoc advisory committee to be headed by two qualified city staff. He recommended Richard Holbo and Mike Ainsworth. Mr. DeBoer suggested giving them the charge to make a profit and then report back in a year. This would be an alternative to those presented. He further explained that this alternative would have five key people making recommendations to the two that are running the service. He volunteered to be one of those five individuals if the council should elect to consider his suggestion.

Cathy Shaw/886 Oak Street/Spoke in defense of AFN and stressed that the government should be in the business of creating infrastructure. She noted that other infrastructures make no money and that AFN provides a super highway for businesses to conduct businesses. She stated that this should not be viewed as a way to make money, but should be viewed as a way to help economic development. Ms. Shaw stated that Charter, Inc. would not have brought high speed data to our community if there had not been competition and that competition is good for this valley. She stated that other communities look to Ashland as a leader and that we should be proud of AFN. Ms. Shaw stated that the city should sue Charter, Inc. for predatory pricing and that Charter Inc. is part of the problem. She explained that the city was aware that Charter Inc. would lower its prices and that predatory pricing should not go unpunished. She noted the government strongly disapproves of predatory pricing and pays triple damages for those that are damaged.

Council continued its discussion regarding the merits of a long-term versus short-term position and the strategy for the next 3-4 months. It was suggested that even though there is a need to take time to find the right person, they did not want to see this stretched out. Council favored alternative two, hiring a manager that reported to the City Administrator, to direct time from the Finance Director for financial needs, to look at the central service fees and to provide support staff for this position.

Council discussed the next steps regarding AFN after their decision regarding alternative two would be. City Administrator Gino Grimaldi explained that it depended on the time involved in hiring an interim. He suggested that they form a small committee as the hiring panel. It was stated that it was important that the interim makes sure that the AFN system continues to operate at least at the current level.

Council discussed the need for a strategy for AFN, that all options should be considered along with restructuring. That by not considering all options would not be in the best interest of the City. The importance of making a decision regarding restructuring was important in regards to the budget.

Council requested that there be clear language in regards to this position and how it is addressed in the budget for the departments. Mr. Tuneberg provided budget amounts from the AFN budget, Electric budget and Finance budget in regards to allocation of AFN expense. He further explained the differences of these budgets with the proposed alternative two and consideration of a tech position. It was pointed out that this discussion would be better served at a budget committee meeting. That expense related to this position would be worked out through the budget process.

Council noted that there are individuals of expertise in this field in the community and that we should ask for their help in our recruitment process.

Council continued to discuss the idea of an "interim" versus "full-time permanent." Point was made that "interim" was being discussed because there is still discussion being held regarding the life of AFN, although there is support amongst the council that this position should be permanent on the position that AFN is going to stay. Suggestion was made that the city hire an interim director but commit to hiring a full time permanent director.

Council discussed the amount of time allocated by the Finance Director for AFN. It was suggested that a competent Director for AFN may not relay so much on the Finance Director. It was determined that the time allocated by the Finance Director could be outcome based rather than based on a percentage.

Comment was made that the council should try to concentrate on what they want in the new budget and to leave the personnel issues regarding this position with the City Administrator. That the council should focus on recruitment.

Council continued to discuss the merits of hiring a permanent person. It was stated that without a reality check this would be a waste of time. That how we recruit will be important and that there may be individuals who would be interested in a short term challenge. There is a need to have "breathing room" to look at all the options, at least a year, in regards to AFN. And, that by next budget season there should be a better understanding of what direction should be taken.

It was noted that the ad hoc Advisory Committee had been working for more than a year with the current system and had not been able to get the information they needed regarding revenue/expenditures.

Comment was made that putting a filter on the recruiting process may hinder the hiring of a qualified person. Staff requested direction from council as there are implications in the budget and the focus of this position based on whether it was part-time, interim, or permanent. It was stressed that staff support was important and consideration of ½ time tech position.

Council agreed that there needed to be further discussion regarding whether this would move forward, but that the council needed to make a decision regarding the hiring of this position.

Councilor Jackson/Amarotico m/s to establish a Director position that reports to City Administrator, that the budget for this position include appropriate funding for staff support and a Head-end technician be included. DISCUSSION: Clarification was made that this would also need to include the creation of the Administrative Services/Finance position.

Councilor Jackson/Amarotico m/s to amend motion to reclassifying the existing Finance Director position to Administrative Services/Finance Director. DISCUSSION: Councilor Hartzell stated that she was uncomfortable with dealing with the reclassification of finance at this time. City Administrator Grimaldi stated that he would not support moving forward without this element. Voice Vote: all AYES. Motion passed.

Discussion on original motion: Councilor Hartzell noted that the support from the Finance Director for AFN was missing in the motion.

Councilor Hartzell motioned to amend the motion that support be directed by the Finance Director to assist with AFN. Motion died due to lack of second.

Councilor Hartzell motion to amend motion that Director be hired within a 4 month period. Motion died due to lack of second.

Vote on original motion as amended: Voice Vote: all AYES. Motion passed.

ORDINANCES, RESOLUTIONS AND CONTRACTS
1. Reading by title only of "A Resolution Authorizing a Subsidy from the Electric Fund to the Telecommunications Fund for Debt Service.
Finance Director Lee Tuneberg noted the upcoming debt service payment and how there was not enough AFN revenue to make these payments. He explained that the proposed resolution identifies that there will be shortfalls. Mr. Tuneberg further explained that any requests for subsidies would be brought to the council identifying the shortfalls and asking for approval. The proposed resolution deals only on the policy to set the council perspective and position.

Mr. Tuneberg explained that the reason the subsidy is being considered out of the Electric Fund is because this is where AFN came from. He stated that staff expects to bring a resolution requesting a subsidy to the council in July.

It was suggested that a sunset clause be added in order for the council to be reminded of this policy. Mr. Tuneberg explained that this would be discussed every year during the budget process and if a transfer would happen, it would need to be brought to the attention of the council.

Councilor Silbiger explained that the reason he had brought forward the idea of the proposed resolution was to identify shortfalls for AFN. That there was a need for a policy that identified where shortfalls were, and where the subsidies would come from. He stated that there is a need to be clear to the budget committee where these dollars are coming from and even clearer to the public in order for the public to understand

Council discussed the need to tie these subsidies to the Electric Fund. Comment was made that this may cause constraints on how things are funded and that it was important for the city to manage their own finances in terms of how dollars are spend. Mr. Tuneberg assured the council that changes could be made if this proves to be a constraint. Council discussed the merits of being specific about where the funds would come from and the use of the word "subsidy." Mr. Tuneberg explained that the 2005/06 budget had been based on the proposed resolution.

Council discussed using alternative language in the resolution in regards to "any transfer can be considered" and "from electric or general fund." Comment was made that there should be a specific plan considering the process of the current budget.

Councilor Amarotico/Silbiger m/s to approve Resolution authorizing a subsidy from then Electric Fund to the Telecommunication fund for debt service. DISCUSSION: Councilor Hartzell voiced her concern that this would not give the necessary flexibility for funding and that it would result in "tying our hands behind our back." Councilor Silbiger explained that changes could be made later if necessary but it was important for the council to give clear direction. Mr. Tuneberg stated that there would be direct impact on electric rates eventually, that it may not impact next year as there may be sufficient dollars to cover the debt service. Councilor Hartzell stated that she believes there will be an impact. Voice Vote: Amarotico, Hartzell, Silbiger, YES; Jackson, NO. Motion passed 3-1.

ADJOURNMENT
Meeting was adjourned at 9:15 p.m.

Barbara Christensen, City Recorder
John W. Morrison, Mayor