Range franchise fees approved

Not every member of the Sundance City Council was comfortable passing the proposed franchise fee agreement with Range Communications at Tuesday’s meeting – even after the cooperative agreed to changes that had previously been requested.

However, after a motion to table the question failed, the agreement did ultimately pass its third and final reading.

The agreement was originally very similar to the one that has now been instituted with other utility providers in the city, such as Powder River Energy and Visionary. However, in September, Jason Hendricks, Chief Government Relations Officer for Range, presented various requests for alterations.

At that meeting, he proposed an alternative contract that would offer Range a five-year exemption from paying the fee in recognition of its contributions to the city, which he said include property tax, sales tax and a 3% increase to property values because fiber internet is available here.

In return, the council asked Hendricks to speak with his board about including wording in the agreement that would prevent Range from simply passing the franchise fee through to Sundance customers. Instead, proposed Council Member Joe Wilson, the cost should be “socialized” across all Range cooperative members.

On Tuesday evening, Hendricks returned with the news that his board had, “Agreed to not pass through the franchise fees to customers in years six through ten.” No fees would actually be assessed during the first five years in this version of the agreement.

Despite this capitulation from Range, council members were still uneasy about the agreement. City Attorney Mark Hughes, too, did not think it was necessarily fair.

“How long has Range been in Sundance, Wyoming?” he asked. More specifically, “How long have you not been paying a franchise fee in Sundance, Wyoming?”

The answer, Hughes said, is roughly 43 years. On that basis, he asked, “You don’t think it’s reasonable that you pay a franchise fee now?”

Hendricks pointed out that it’s not as though Range has been resisting the city’s requests for a franchise fee for all that time. “This is the first time that it’s been raised,” he said.

The proposal to institute franchise fees comes shortly after Range invested in a project to bring fiber to the home throughout Sundance, which he stated brings a lot of revenue to the town.

“Given that we just put in all this stuff and this issue wasn’t raised, this would be a new fee on top of what we’ve already provided in town,” he said.

Wilson wondered if the city will be back to “square one” at the end of the ten-year agreement, with the council attempting to convince Range not to pass the fee on directly to its customers while simultaneously profiting from use of the city’s rights-of-way.

Hendricks responded that he cannot answer as to where things will stand in a decade, but pointed out that, “In this situation, there is a mutual benefit.” Range gets access to the alleys, the city gets fiber for economic development, he said, calling it, “A very beneficial arrangement.”

Wilson asked for clarification on Range’s calculations, through which it is estimated that 2% of gross revenue within Sundance would net the city just $3800 per year.

“Are you guys saying the gross revenue that you make is only $190,000 a year?” he asked.

Hendricks explained that the 2% would be applied to the services defined in the agreement, which by law does not include broadband.

At such a low revenue, Wilson asked how long it will take Range to pay off its investment in fiber.

“However many years it takes – it’s a long recovery time,” Hendricks said, explaining that it’s difficult to be conclusive in answering that question.

On that basis, Wilson wondered how it is economically feasible to serve small towns with fiber. In a lot of cases, said Hendricks, it’s not.

“I can tell you that most big companies would not have served Sundance,” he said. However, he added, Range has made a commitment to rural Wyoming, and to Sundance in particular.

Hendricks noted that any kind of fee adds up and makes that payback period more difficult.

Wilson, however, made the point that the city itself is a customer of Range and pays around $8500 per year for services, which is more than double the amount of the proposed franchise fee. Just by being the provider to the city, Wilson said, Range is benefiting.

At this point in the conversation, Hendricks expressed frustration that these points were being made at this time. In September, he said, it seemed as though an agreement was close to being made, and that the two parties were just haggling over the final few details.

“I did my part, I went to the board, got them to agree to this language that they were opposed to originally,” he said, reminding the council that state statute permits Range to pass the fee on to customers. The board has nevertheless agreed not to do so, he said.

Council Member Randy Stevenson stated that his issue with the agreement is the five-year exemption, which gives Range “a free ride” when they’ve already had 43 years of not paying the fee. Hendricks reiterated that Range was not avoiding fees or choosing not to pay them, “There just simply wasn’t a discussion as far as I know.”

That’s not unusual, he noted, as many towns don’t implement franchise fees.

Council members mused as to what would happen if the city failed to grant Range a franchise agreement, through which the cooperative has access to rights-of-way throughout town for installation of equipment.

If the agreement is not granted, asked Wilson, will Range be willing to take its equipment out of town?

“I certainly don’t think Sundance would be benefited by having us take our fiber out of the city,” said Hendricks, stating that, given the investment Range has made in the city, he would hope the council wouldn’t go that route.

Hughes explained that the matter before the council that evening was to pass the agreement on its third and final reading. Therefore, he said, if the council refused to do so then the city would not have a franchise agreement with Range and the company would, indeed, be legally required to remove its equipment.

When the time came to consider whether or not to pass the agreement on its final reading, Stevenson stated that he would like to continue the negotiation and table the question for the next two months to allow time to come to a “more reasonable” agreement. His motion died, however, for lack of a second.

Council Member Brad Marchant instead moved to approve the ordinance as amended. After Wilson commented that he does appreciate Hendricks going back to his board, and the board agreeing to work with the city, all but Stevenson voted in support of the motion.