06/02/75 Board of Public Works Minutes

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'REGULAR MEETING JUNE 2 1975 to act affirmatively on the rate adjustment for which Valley Cablevision has petitioned. The increase is needed for the extended service of Valley Cablevision and the obtaining of equipment. Construction costs have more than doubled. Mr. White. said the original franchise agreement submitted in 1966 envisioned far different techniques than are required in 1975.� Current prices have greatly increased operating expenses. Mr. White said con- struction costs in 1966 were based on $4200 per mile. The figure in 1975 is $11,500 per mile. It is necessary that Valley Cablevision. comply with all regulatory actions of the F.C.C. They must provide additional and more costly equipment in order to clear new channels for the future. They must invest in sophisticated testing equipment and provide the capacity for two-way communication. Mr. White said Valley Cablevision maintains a public access channel for public use and this channel is utilized by forty different political, educational, ethnic, religious, municipal and civic groups. ,Valley has added an emergency alert system for severe weather warnings. They provide closed-circuit facilities for hospitals and schools. Mr. White pointed out that Valley Cablevision is a taxpayer and Q will pay personal property taxes of $100,000 this year.- They `p pay a 3% fee to the City of South Bend from customer revenue. They pay a percentage of revenue to the F.C.C.- The -Board has been provided with audited statements which show the income. Mr. White then ;ZZ quoted cablevision rates from other cities which range from $6.00 to $6.95 per month. Mr. White said the interest rate in 1966 was 6%. In 1974, it was been 11% and 12%. The inflationary trend showed a 57.8% increase. Mr. -White then quoted local utility rates which have increased more than 50% in some cases. Mr. White concluded by saying that he felt Valley Cablevision's petition for -the rate increase ,was necessary, reasonable and justified: He said he would respectfully ask the Board to approve the petition. Mr. Farrand then asked if there was anyone else who wished to,speak on the matter. Mr. Silas West, 222 Laurel Street, identified himself to the Board. Mr. West said his concern was that the overall community did not have enough information about Cable Television. Mr.: West said he did not believe the Board had enough in-depth information from the presentation of Mr. White to act on a rate hike this Morning. Mr. West said Valley Cablevision serves 17,000 homes in South Bend and these customers cannot afford the rate increase. Mr. West said the original franchise agreement called for a review of the rates, at five-year intervals and said this was not done. He said he questioned the three per cent that was paid to the City. The F.C.C. now has new rules and regulations which govern the amount of money to be paid to the City and it is now -five per cent. Mr. West said the Valley Cablevision Corporation paid no revenue to the City in 1966 and in 1967. They paid $500 in 1968 and $500 in 1969 and the paid $3000 in 1972 and $3000 in 1973. Mr. West then questioned the fact that a contract such as this franchise agreement was awarded in 1966 without a feasibility study. Mr. West said the F.C.C. had requested that some of the principals in Valley Cablevision divest themselves of certain interests and this was not done. He said he was not sure that Vallev Cablevision was in compliance with al-1 F.C.C. regulations. Mr. West then said the best interests of the community should be kep in mind. He said, in these times, with the economic situation what it .is, the customers cannot afford this increase. Mr. Chapleau was asked if he wished to comment and he said they would have no response to Mr. West's presentation since he raised matters which were not pertinent to this hearing. He said the only question before the Board is whether the petition submitted should be approved or not approved. He said, in reference to the contract provision for review of the rates in five years and the provision for Board approval.being necessary for any rate increase, they consider these are two individual provisions in the contract. There was no