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Home My WebLink About10/12/1982 TENTATIVE AGENDA ADJ .REG.SESSION SHAKOPEE , MINNESOTA OCTOBER 12, 1982 Mayor Reinke presiding 1] Roll Call at 7 :00 P.M. 2] Other Business : a] Authorize hiring of secretary for police department memo to be provided Tuesday b] c] d] 3] 7 :00 P.M. PUBLIC HEARING - Proposed amendment to the Cable Franchise Ordinance, to move the proposed tower and earth station site from CR-16 in Shakopee to the Chaska school property (bring info from 10/5) 4] Adjourn to Tuesday, October 19, 1982. John K. Anderson City Administrator k I • CI1C Associates October 7, 1982 Ms. Jeanne Andre Administrative Assistant Shakopee City Hall 129 East First Avenue Shakopee, MN 55379 Dear Ms. Andre: I mentioned in my letter of September 30, 1982, that there were some procedural issues involved in Zylstra-United's change in the method for providing signals to Shakopee. One issue I had in mind was whether ZU would--after the initial rate freeze--charge the same rates in Shakopee and Chaska, thus considering the two systems as one combined system, orwould maintain separate rate structures for each system. From our conversations I understand that ZU intends to maintain separate cost accounting and rates for the two systems. This being the case, it is important to clearly establish what costs would be allocated to Shakopee and what costs belong with Chaska's system. The capital expenditures for the Shakopee system were listed in ZU's proposal in Form G-2, pages 8 and 9. You will find below a listing of those items where there would be a change in the costs as a result of the headend change. The numbers listed are for the initial construction period in Year 1 of the franchise. Previous Current Capital Expenditures (in $000s) Projections Projections Antennas and Towers 28 25* Microwave (Regional Interconnect) 25 0** Headend 497 250* Earth Station 49 30* Subscriber Network Aerial 483 483 Underground 251 430 Institutional Network 48 60 Test Equipment, Spare Parts 18 20 Other (Interconnect Cable to Chaska) 29 0** 1,428 1,298 * Half of Chaska headend costs. ** Interconnect to headend in Chaska now included in subscriber underground and institutional network costs. Interconnect to other systems will be from Chaska headend. 1800 N. KENT STREET• SUITE 1007• ARLINGTON,VA 22209• (703)528-6838 -2- As can be seen, with the plan currently proposed by ZU there would be a cost savings of $130,000 for the Year 1 ex- penses. This savings, coupled with the savings in future years from being able to share the costs for adding and re- placing headend equipment, means that the average net in- vestment and th'e average interest expenses over the 15-year period would be lower than the figures shown in Table IV-16 and IV-17 of our preliminary report. Since inflation will tend to increase operating expenses beyond the levels that were project- ed, the savings provided by using a common headend site will make ZU better able to withstand the effects of inflation and other unexpected costs before having to raise subscriber rates. During our recent conversation I also indicated that I would provide you with specific performance figures to be in- cluded in Section 5.08 of the franchise ordinance. I am waiting for information from Magnavox before recalculating the institutional network performance. Since this information has no impact on the proposed headend change being considered by the city council, I'll send it to you in a separate letter as soon as I get all the answers. Sincerely, /1/4.4a-L__ Ann R. Muller Director of Engineering ARM:nh 3 MEMO TO: Members of the former Ad Hoc Cable Communications Committee FROM: Jeanne Andre , Administrative Assistant RE: Amendment to Headend Facilities Requested by Zylstra-United DATE: October 6 , 1982 Introduction Zylstra-United has requested a change from facilities originally provided in their cable proposal . The City Council has set a public hearing on this issue for Tuesday, October 12 , 1982 , at 7 : 00 p.m. Although the Committee no longer officially exists , you may wish to contribute your individual expertise to the dis- cussion. Background The actual request as well as a technical analysis by Ann Muller of CTIC Associates , Inc . is enclosed for your information. Zylstra- United has not yet given a formal acceptance to the franchise ordi- nance , and therefore has not yet started construction. I think they need to know if this change is approved before much happens in terms of construction as this change affects the basic design of the system. Therefore Zylstra is pushing hard. I think the technical issues have been fairly well addressed by Ms . Muller, but the financial aspects are still vague. Ms . Muller will be sending further information on her cost analysis and Zylstra will be submitting a list of equipment which will be changed and equipment which will be shared and the costs of each. The issues which have not been adequately addressed include: 1 . A written breakdown of how capital costs will be allocated to each system currently involved. 2 . A written description of how sale of one of the systems or addition of other systems ( they may add Chanhassen to this headend too) will impact the allocation and use of the shared headend facilities . 3 . How any cost savings will be shared with subscribers , such as reduced rates or longer period of frozen rates . Chaska has discussed the issue but their Council determined that the major decision had to be made by Shakopee . Chaska is also concerned with cost allocations , which have not been tied down to their -satisfaction. Representatives from Chaska will be at the meeting. The local representative of the alternate cable company will also be informed of the meeting. Any Committee member who has a chance to review these materials and attend the meeting is welcome to express their sentiments to the Council to assist in the decision. Although the Committee is now disbanded, if a number of you reach a group consensus on any of the issues , you could also speak as a group. Feel free to call me if you would like further information. JA/ jms SHAKOPEE, MN CAPITAL COST DIFFERENTIAL Year One ($00013 ) Before After Difference Antenna & Tower ' 28 25 3 Headend 497 250 247 Earth Station 49 30 19 Underground Plant 251 430 (179) Institutional 48 60 (12) Test Equipment 18 20 (2) Microwave 25 0 �5 Interconnect (Instit. ) _22 0 _22 TOTAL 945 815 130 The Before cost column indicates the Shakopee capital cost figures from the submitted proposal . These figures include the line extension area costs . The After cost column repr9- Bents the combined Chaska and Shakopee capital cost figures based on a single headend feeding both systems , with a hub site located in Shakopee . The Difference column represents the capital cost difference between the two proposed plans . The $130, 000 savings divided among homes passed with all growth penetration projected over the 15-year franchise period, calculates to a savings of .13 a month.