HomeMy WebLinkAbout09/24/1985 TENTATIVE AGENDA
ADJ .REG.SESSION SHAKOPEE , MINNESOTA SEPTEMBER 24, 1985
Mayor Reinke presiding
1] Roll Call at 7 : 30 P.M.
2] RECOGNITION BY CITY COUNCIL OF INTERESTED CITIZENS
3] Proposed Assessment of Shenandoah Drive Construction - Res. No. 2439
41 Supplemental Contract No. 1 to 1985-2 Eaglewood Street Rehabilitation
for Norton Drive Street Repair
5] Worksession with representatives from Zylstra-United Cable Television
6] Other business:
a] Senior, Citizen Pancake Breadfast Oct. 6th - Jerry Wampach
b]
c]
7. Adjourn. U
John K. Anderson
City Administrator
C_ STY CDF- SHAKOPaa
INCORPORATED 1870 �^ ^
* ENGINEERING DEPARTMENT
129 E. 1st Avenue - Shakopee, Minnesota 55379-1376 (612) 445-3650
MEMO TO: John K. Anderson, City Administrator
FROM: Stephen Hurley, Engineering Technician
SUBJECT: Proposed Assessment of Shenandoah Drive Construction,
Project No. 1984-4
DATE: September 20, 1985
INTRODUCTION:
Council action is necessary to ammend the Resolution ordering
the preparation of assessments for Shenandoah Drive Construc-
tion.
BACKGROUND:
As a result of our meeting with Rod Krass, Bo Spurrier, and
Greg Voxland the proposed total assessment for Shenandoah Drive
has been revised.
The estimated total project cost is $470, 000. 00.
This amount will be reduced by 25 percent for oversizing deduc-
tion
educ-
tion - $470, 000. 00 less $117, 500. 00 = $352, 500. 00.
From this amount, $352, 500. 00, the Minnesota Racet rack cont r i-
but ion of $88, 000. 00 is subtracted for a net total special
assessment of $264, 500. 00.
This is $21, 500. 00 more than the total assessment of $243, 000. 00
contained in the Feasibility Report, and therefore we propose
to assess the lesser amount of $243, 000. 00.
Because the estimated the total prod ect cost is $98, 600. 00
under the project cost contained in the Feasibility Report,
the Tax Increment Contribution, $23a, 000. 00, has been reduced
in this assessment computation. Therefore, the City will pay
$117, 500. 00 as its share of the oversizing costs mentioned
above as well as the $21, 500. 00, all from Tax Increment Funds.
ACTION REQUESTED:
1. Adopt Resolution No. 2439, A Resolution Amending Resolution
No. 2429 Declaring the Cost to be Assessed for 1964-4 Shenandoah
Drive Construction.
SH/pmp
AMEN-21'439
RESOLUTION NO. 2439
A RESOLUTION AMENDING RESOLUTION NO., 2429
DECLARING THE COST TO BE ASSESSED FOR 1984-4
SHENANDOAH DRIVE CONSTRUCTION
BE IT RESOLVED by the City Council of the City of Shakopee,
Minnesota that Resolution No. 2429 be amended so that the contract
price for such improvements is $2371972. 30 and the expenses,
incurred or to be incur,t,ed in the making of such improvments
artiounts to $232, 027. 70 so that the total cost of the iniprrr.vemerlts
will be $470, 000. 00 and of this cost the City will pay $'227, 000. 00
as its share of the cost ; and that the cost of such impr nvernent
to be specially assessed is hereby declared to be $2243, 000. 00.
Adopted in session of the City Council of the
City of Shakopee, Minnesota, held this _ day of
, 19
Mayor- of the City of Shakopee
ATTEST:
City Clerk
Approved as to farm this
day of , 19
City Attorney
G = TY OF-
INCORPORATED
FINCORPORATED 1870
* ENGINEERING DEPARTMENT
129 E. 1st Avenue - Shakopee, linnesota 55379-1376 (612) 445-3650
MEMO TO: John K. Anderson, City Administrator
FROM: Ray G. Ruuska, Engineering Coordinator
SUBJECT: Norton Drive Street Repair
Date: September 19, 1985
INTRODUCTION:
According to the City of Shakopee Capital Improvement Program,
Norton Drive is to be repaired in 1985.
BACKGROUND:
On April 18, 1984, Braun Engineering and Testing Company sub-
mitted a soils evaluation of the causes of pavement failure
on Norton Drive. Subsequent to the recommendations included
in that report, drain tile was installed on the south side
of Norton Drive. The Engineering Department noted no further
pavement deterioration this past Spring. Braun Engineering
was asked to re-evaluate the roadway based on the performance
of the draintile. That amended report is attached. Road repair
costs have been estimated based on the attached report. The
estimated cost to repair broken areas is $24, 778. 00.
RECOMMENDATION:
This repair can be done in conjunction with Project No. 1985-2.
It would have to be done as a Supplemental Contract No. 1 "
as advised by the City Attorney. It should be noted that ac-
cording to the soils analysis, a 2-inch overlay would be re-
quired on all Deerview Streets in order to bring them up to
current City standards. City policy requires assessment of
costs for overlays and therefore should be considered for the
1986 construction season.
ACTION REQUESTED:
A motion by City Council to authorize proper City officials
to execute "Supplemental Contract No. 1" to Project No. 1985-2
in the amount of $24, 778. 00 to S. M. Hentges & Sons, Inc.
RR/pmp
SUPPLEMENTAL CONTRACT
EAGLEWOOD STREET REHABILITATION
Supplemental Contract No. : 1 Project Name: Norton Drive Street Repair
Date: September 19, 1985 Contract No. : 1985-2
Original Contract Amount $ 151. 941.73
Change Order(s) No. 1 thru No. -- $ 17, 2200.00
Total Funds Encumbered Prior to Change Order $ 169, 141.73
Description of Work to be (Added/Deleted) : See Attached.
The above described work shall be incorporated in the Contract, referenced above, under
the same conditions specified in the original Contract as amended unless otherwise specified
herein. Any work not so specified shall be performed in accordance with the Standard
Specifications adopted by the City of Shakopee, Minnesota.
The amount of the Contract shall be (increased) by $ 24,774. 64
The number of calendar days for completion shall be (increased by 15
Original Contract Amount $ 151,941.73
Change Order(s) No. 1 thru -- $ 17, 200.00
Supplemental Contract No. 1 $ 224, 774.64
Total Funds Encumbered $ 193,916.37
Completion Date: October 15, 1985
The undersigned Contractor hereby agrees to perform the work
specified in this Change Order in accordance with the
specifications, conditions and prices specified herein.
Contractor:
By:
Title
Date:
APPROVED AND RECOMMENDED:
City Engineer Date
APPROVED: City of Shakopee
By: Approved as to form this
Mayor Date
day of 19
City Administrator Date City Attorney
Citv Clerk Date
JECT: NORTON DRIVE
-------------------------------------
--------------------------------
_____
Item I I I Unit 1 Contract
No. I Contract ItemI Unit I Price I Quantity I Amount I
------- I -------------------- i 1
3. 507 I Subgrade Excavation W.Y. I $2. 50 I 1150. 00 I -----$2, 875. 00-
1
II I I I I
I Getoext i le Fabric 1 S. Y. I $0. 79 1 `816. 00
i I2, 224. 64 I
I I I
:1. 501 !Aggregate Base C1-5 I I 1 1 1
1 I
1 ( 100% Crushed) I Ton I $5. 80 1 775. 00 1 $4, 495. 00 1
I 1 I 1 I 1
1. 518 ( Bituminous Mixture I I i I I
I for Patching ITon 1 $66. 00 1 230. 00 1 $15, 180. 00 1
i 1 I 1 I
1 i I i I I
iI
_------ ---------------- I
I Total 1 $24, 774. 64 1
i
i
i
Wq
MINN:SOTA:P�iinneapolis,Hibbing,St.Cloud,Rochester,St.Paul ING Services Since 1957
Affiliated OfhCes: d
NORTH DAKOTA:Bismarck, Williston,- MONTANA:Billings J.s BRAUN, PE GD KLUALLEN. P.E.
P.H.ANDERSON DALE R.ALLEN.P.E.
C.G.KRUSE.F.E. JAMES J.CRAIG,Jr..P.E.
D.R.HAUSLER.P.E.
Reply To:
P.O. Box 35108
Mpls . , MN 55435
September 18 , 1985 ( 612) 941-5600
City of Shakopee
Attn: Mr . Ray Ruuska
129 East lst Avenue
Shakopee, MN 55379
RE: 84-128 ADDENDUM TO APRIL 18 ,
1984 REPORT
Street Failure
Norton Drive
Deerview Acres
Mr. Ruuska: Shakopee, MN
On September 10 , 1985, we conducted an observation referenced project. The observation was conducted to re-evaluate
above
the subgrade soils in the failed area after the drain t '
le installed. aluate
The observation was also conducted to determine was
the 2-foot subcut which was recommended in our initial re
necessary.
port was
AVAILABLE INFORMATION
The drain tile was installed during the summer
mended in our April lg of 1984 as recom-
installed, our 1984 report. The drain tile was
subgrade correction on the streetn fabric, and was not
with
1984 construction, conducted during in rock.
CONSULTING ENGINEERS/SOILS AND MATERIALS
Affiliated Company for Chemical&Environmental Testing and Consu!flnn—;, . .. 7_
84-128
City of Shakopee
-2- September 18 , 1985
You have indicated that no rutting was noted during the spring of
1985 and that no further deterioration of the remaining roadway
has been observed. y
OBSERVATIOATS
September 11 , 1985 : We observed the street in the area where th
subgrade and pavement cross-section had failed in 1984 . e
auger probes were put down at various locations at the edge
Han
the roadway. The hand auger
probes
ncunered fin -
grained silty clayey sands inaomoiste to avert' emoisttconditioe
r
Based on the resistance duing augering, the soils were estimated
to be in a medium dense condition.
The drain tile outlet at the creek was also observed. Water was
noted flowing from the pipe.
CONCLUSIONS
Based on the soils observed during our recent observation and the
fact that no severe rutting was noted during the spring of
it is our opinion that the drain tile 1985
system a
significantly reduced the frost heave and wet subgrade problem.
We would like to ammend our April 18 report by including an
alternate recommendation to the 2-foot subcut.
It is our opinion, based on the subgrade performance this last
spring that the 2-foot subcut may not be required. Fabric placed
over the subgrade soils and 8 inches of Class 5 and 2 inches of
bituminous will likely provide a section of adequate strength to
support the anticipated traffic loadings. There is
still a
limited risk of frost heave due to the existing subgrade soils
because of their susceptibility to ice 12nsin
appears as if the drain g. However, it
tile is performing such that the subgrade
soils do not have a source of water
indicated that the cost of the 2-fo to sub subcut does r ice gno n
be warranted. you have
appear to
Services performed by the
this project have been conductedhincalmanneraconsisten�lwtiers for
level of care and skill ordinarily exercised by members of the
profession currently with that
and time restraintspracticing in this area under similar budget
made. No other warranty, expressed or implied, is
R074 ff 7n_
84-128
City of Shakopee -3- September 18 , 1985
It has been a pleasure to have been of service to you on this
project. If there are any questions or if further information or
testing is required, please contact us at your convenience.
Very truly yours ,
BRAUN ENGINEERING TESTING, INC.
Ja �1-�afM. lson
Senior Engineering Assistant
� w
C. G. Kruse , P.E.
Vice President - Engineering
JMS/CGK:gec
The content of this report and supporbno documents are for the exclusive use of the addressee.In the absence of our prior wntten approval 12 Mel U 17.1
we make no reoresentabon ano assume nc to arc(!—'oa,n _- -- --
MEMO TO: John K. Anderson, City Administrator
FROM: Barry A. Stock, Administrative Intern
RE: Cable Company Proposed Concessions
DATE: September 18 , 1985
Introduction
On September 3 , 1985 the City of Shakopee received a formal
request for modifications to the Cable Franchise Ordinance from
United Cable Television Corporation; the current managing partner
of the Shakopee cable system. ( See Attachment No. 1 . )
At past City Council meetings the Council has tabled cable issues
( i.e. ( 1 ) fining the cable company for not fulfilling their
character generator obligation, ( 2) pursuit of a financial audit
of the cable system by an independent financial consultant to
be paid for by the company) pending the receipt of further infor-
mation from the cable company. In response to these actions,
representatives from the cable company will be present at the
September 24, 1985 Council meeting to address their proposed
concessions and to respond to any questions from the Council.
Background
On August 12 , 1985 United Cable Television officials presented
Shakopee staff with several financial reports and budget projections
for Shakopee' s cable system. (See Attachment No. 2. ) At that
time, United informally proposed several concessions to the
City of Shakopee for our consideration. Because United' s proposed
concessions were not in writing, staff sent the letter shown
in Attachment No. 3 requesting additional information from the
company. At this time we have received the information that
was requested by the City in our August 20 , 1985 correspondance
(Attachment No. 3 ) .
Prior to the receipt of this information, the Shakopee Cable
Communications Advisory Commission met on August 26 , 1985 to
discuss Zylstra-United' s informal concessions as proposed by
United representative on August 12 , 1985. The Commission felt
that before they could give consideration to any concessions,
they needed to know if Zylstra-United' s alleged financial condition
was justifiable. The Commission also questioned whether or
not a buyer could be found for our system and whether or not
the system will ever be a profitable venture. In addition,
the Commission questioned Shakopee' s position if Zylstra-United
files for bankruptcy. At that time the Commission moved to
recommend to City Council that City staff be authorized to work
with Chaska City officials in hiring an independent financial
consultant familiar with the cable industry to review Zylstra-
United' s proposed concessions and financial condition. The
cost for the proposed study to be assumed by Zylstra-United
pursuant to Section 8 . 12 (d) of the Cable Franchise Ordinance.
On August 27 , 1985 Zylstra-United Cable Company was informed
of the Cable Commission' s action. (See Attachment No. 4 . )
In the August 27 , 1985 correspondance staff informed the cable
company that the CTIC Association, a non-profit corporation
that has extensive experience in the cable industry had been
contacted for cost projections for a joint Shakopee/Chaska financial
study. Since that time I have received information from the
CTIC Association which states that they could perform a study
of our cable system that would cost between $4 , 000 and $6 , 000 .
(See Attachment No. 5 . )
On September 3 , 1985 the Shakopee City Council tabled a Cable
Commission' s recommendation to proceed with the hiring of an
independent financial consultant to perform an analysis of our
cable system' s projected financial condition. On September
9 , 1985 the City of Shakopee received correspondance from the
cable company stating that they would be willing to submit to
a financial analysis under two conditions. First, that the
cost be subject to a $5 , 000 maximum and to Zylstra-United' s
ability to pay such an amount. Second, that should the study
conclude that Zylstra-United' s financial condition was as presented,
and that Zylstra-United' s franchise modifications would produce
the financial results they forecasted, then the cities of Chaska
and Shakopee would refund all fees paid by Zylstra-United to
the consultant. (See Attachment No. 6 . )
At this time Zylstra-United is proposing the following modifications
to the Cable Franchise Ordinance.
1. That the cable franchise fees be frozen at an $18, 000 per
year level. The freeze would be lifted at such a time
that the system achieved a positive cash flow.
2. That any financial support for the public access studio
on the part on the cable company be deferred until such
time that a positive cash flow is achieved. The company
is willing however to turn over all production equipment
to the City should we wish to fund and operate the studio.
3. That all capital expenditures for non-essential projects
such as the character generators and the institutional
network be postponed until such a time that the company
experiences a positive cash flow.
In Attachment No. 7 I have listed the concessions that the City
of Shakopee granted to the cable company earlier this year,
the concessions requested by the company at this time and what
the company still owes the City. I have also listed the annual
cost savings associated with the company' s proposed concessions.
In Attachment No. 8 I have performed a cable budget analysis
for the City of Shakopee without the City assuming the responsibility
of running the cable studio and with the City assuming the respon-
sibility of running the access studio. Please note that the
1986 projected cable budget with the City running the cable
studio assumes several concessions on the part of the cable
company. Finally, in Attachment No. 9 are letters from the
Minnesota Correctional Facility and the Shakopee School System
which address their concern for establishing activation of the
institutional network.
While Zylstra-United contends that they are entitled to a fair
return on net investment; Cable Commission Members have stated
that a fair return on net investment assumes better than average
management of the system. The Cable Commission believes that
the cable company has done little or no marketing of the system
since its initial activation. In addition, the company has
shown little or no interest in pursuing other revenue alternatives
that may have improved their financial situation such as pay-per-
view, leased access and rental of the cable studio when it is
not in use. If these alternatives would have been pursued by
the cable company and steps been taken earlier to improve management,
the commission believes that the company would not be asking
for concessions at this time.
Alternatives
1. Pursue negotiating the sale of the cable system to the
City of Shakopee.
Z. Approve the franchise ordinance modifications as requested
by the cable company.
3 . Authorize staff to work with Chaska city officials in hiring
an independent financial consultant to review the cable
company' s alleged financial position. The cost for the
proposed study to be assumed by Zylstra-United entirely.
4. Authorize staff to work with the City of Shakopee and the
cable company in hiring a financial consultant to review
the cable company' s financial position pursuant to the
terms established by the cable company in their September
9 , 1985 correspondance.
5. Approve the franchise freeze proposal, the postponement
of non-essential capital projects and the City take over
of the access studio as proposed by the cable company under
the following conditions: ( 1 ) that the company dedicate
their leased access channel and equipment to activate their
least access channel until such time that the company should
achieve a positive cash flow, ( 2 ) that the cable company
provide free studio space to the City until which time
that the cable company should achieve a positive cash flow,
( 3 ) that the cable company grant an additional . 50 per
subscriber per month grant to the City of Shakopee for
the operation of the studio until such time that the cable
system should experience a positive cash flow.
Staff Recommendation
Staff recommends alternative No. 3 .
Action Requested
Move to authorize staff to work with Chaska City officials in
hiring an independent financial consultant familiar with the
cable industry to review Zylstra-United proposed concessions
and financial condition. The cost for the proposed study to
be assumed entirely by Zylstra-United pursuant to Section 8 . 12
(d) of the Cable Franchise ordinance. Implementation of the
proposed study to commence upon receipt of a certified check
for Zylstra-United in an amount equal to the final project cost
quotation.
BAS/jms
MEMO TO: Shakopee Cable Communications Advisory Commission
FROM: Barry A. Stock, Administrative Intern
RE: September 23 , 1985 Meeting Cancellation
DATE: September 20 , 1985
Please be advised the the regular session of the Shakopee Cable
Communications Advisory Commission scheduled for Monday, September
23 , 1985 has been canceled. On Tuesday, September 24 , 1985
the Shakopee City Council will be reviewing the cable company' s
proposed concessions at 7: 00 p.m. in the Shakopee City Council
Chambers.
It is my hope that all Cable Commission members will be in attendance
at this meeting to provide their input into the cable concessions
discussion. If you have any questions prior to the meeting,
please feel free to call me at 445-3650.
The next regularly scheduled meeting for the Cable Commissions
Advisory Commission is scheduled for Monday, October 21 , 1985
at 7: 30 p.m. in the Shakopee City Council Chambers.
BAS/jms
Attachment Number 1
.. united ceble television corporation
0
centr® l division office
August 30 , 1985 C
Mr. John Anderson
City of Shakopee
129 E . First Ave.
Shakopee, MN 55379-1376
Dear Mr. Anderson:
As per our meeting August 12 , 1985 , the following will provide
a situation analysis and details of Zylstra-United proposed franchise
modifications :
ZYLSTRA-UNITED SITUATION ANALYSIS
---------------------------------
Since assuming the responsibility of Managing Partner in January,
1985 , United Cable has committed considerable financial and
management resources to the Zylstra-United cable systems . These
resources have resulted in improved technical and operating quality
as indicated by reduced service calls. It is significant to note
we have a good operating system, which as you know, was a primary
objective.
In May we consolidated offices improving our communication and
operating efficiency. Basic subscribers have increased from 2367
in May, 1984 to 2464 in May, 1985 or 41% of homes passed. While
we feel there is an opportunity to raise basic penetration, other
Minneapolis area systems are only averaging 43%. Pay subscribers
have fallen from 3422 to 2819 during the same period. This type of
softness has been experienced by United and the Cable Industry as
a whole.
Lastly, rate increases granted in April , 1985 improved our
margins with minimal subscriber drop-off.
525 Tollgate Road, Suite D & Mona Loa Office Park Elgin, Illinois 60120
The financial effect of our efforts after six months ending June ,
1985 compared to the same period in 1984 are as follows :
6 Mo . Ended 6 Mo. Ended
June , '1985 June, 1984
Revenues $ 364819 $ 313947
Operating Expense 301845 255200
Operating Income ( Loss) 62974 58747
Management Fee 25295 21976
Depreciation & Amortization 3381!56 358459
Interest 127494 157391
Net Income ( Loss) $ (427972) $ (479079)
While our income statement has improved, the system continues to
drain cash as indicated to you by our cash flow statement we
presented August 12 , 1985 . This has left our balance sheet in
critical condition . This was already apparent in the audited
financial statements for Zylstra-United' s :Fiscal Year Ending
December, 1984 and is further emphasized in our six month statement
for 1985 .
Basically, if the Zylstra-United cable system does not get an
infusion of capital in the next 30-60 days , it will likely default
on its Northwest Bank loan and/or face legal proceedings from
trade creditors .
However, Mellon Bank has tentatively agreed to refinance Zylstra-
United. This would allow repayment of bank and trade debt with a
small remaining amount to fund some future negative cash flow.
However, Mellon is concerned about two issues . Zylstra Communication ' s
unwillingness to share security of the loan and recent cash flow
projections which show negative cash flow continuing until 1988.
A rigorous financial analysis showed that three major operating expenses
could be cut without affecting quality of service or basic and pay pro-
gramming. They are as follows :
Franchise Fees
--------------
At 5% of gross revenue, Zylstra-United will pay approximately $40, 000
in franchise fees in 1985 . Five percent is the maximum allowed by
Congress . Most United Cable systems have franchise fees of less
than 5%. Some are as low as 2%.
Management Fees
---------------
Per Zylstra-United' s management agreement , the managing partner
receives 7% of gross revenues for performing management services .
Most similar agreements in the industry call for 6%. United Cable
has accrued but not paid itself these fees since assuming manage-
ment in January, 1985 . At 7%, Management Fees will total approxi-
mately $50 , 000 in 1985 .
Public Access
-------------
In early 1985 , we sought partial relief from the financial burden
of Public Access by requesting consolidation of the studios . We
were denied. The following is an annual cost breakdown for Pulic
Access :
Salaries & Benefits
( 2 fulltime coordinators and
4 part-time cable casters) $ 45100
Maintenance
($200/month-studio average 4800
historical expense)
Studio Rental (Chaska) 3600
TOTAL $ 53500 or
$21 . 40/sub/year or
$ 1 . 78/sub/month
While United and other cable operators have access functions , they
are at less cost and spread over much larger subscriber bases . Annual
costs of . 20 to . 130 per sub/month are the norm. Paying $1 . 50 -
$2. 00/sub/month puts Zylstra-United in a difficult position. We
cannot absorb the high cost , yet our subscribers would not put up
with any significant pass through. Lastly, it is United Cable' s
experience that most people buy cable TV for basic and pay programming,
not public access . How can we justify paying . 15 -. 25/sub/month for
WGN or WTBS , both very popular channels , and at the same time pay
$1 .50 - $2. 00/sub/month for Public Access? The viewership is not
there to justify the cost . The price/value relationship is way out
of line.
SHAKOPEE PROPOSED FRANCHISE MODIFICATIONS :
--------------------------------------
Franchise Fees Re: Shakopee Franchise Section 9. 01
--------------------------------------
Zylstra-United would propse a freeze on frachise fees effective
October 1 , 1985 at the current amount of $1500/month or $18, 000/year.
We would further propose to lift the freeze at a time when the system
achieved positive cash flow. Annual , audited financial statements
would be used to determine when that breakeven point is reached.
Management Fees
---------------
United Cable will concede to reducing management fees from 7% to 4%,
saving $22-25 , 000 annually. Further, to aid cash flow, United will
continue to accrue but not pay itself management fees until positive
cash flow is achieved and 5% franchise fees are restored. The
same aforementioned method would be employed to determine when
management fees would be paid.
Public Access
-------------
Because of the significant cost burden of public access relative to
studio usage and hours of programming, Zylstra-United also proposes
to defer public access in Shakopee per Section 5. 05 until positive
cash flow is achieved. An annual operating expense reduction of 10%
would be realized.
However, we are willing to turn all production equipment over to the
cities of Chaska and Shakopee should they wish to fund and operate a
public access function during this interim period.
Postponement of Non-Essential Capital Projects
------------------------------------------------
Capital expenditures are an important component of cash flow. To
ensure Shakopee will be a financially viable cable system, only
essential , revenue producing capital expenditures must take place.
Therefore, Zylstra-United requests holding; all future projects per
Sections 5 of the Shakopee Franchise until, positive cash flow
is achieved.
SUMMARY
To conclude, Zylstra-United is requesting the City of Shakopee to
modify three portions of the franchise agreement involving franchise
fees, public access , and institutional services . Services such as
public access and institutional loops are not economically feasible
because of the high cost relative to such a small subscriber base.
both the City of Shakopee and Zylstra-United assumed high basic (63%)
penetration at a time when no Minneapolis area systems were in an
operating mode. In addition , we both assumed over $200, 000 in
Pay-Per-View and security revenue for 1985 . The fact that actual
basic penetration is significantly lower (43%) , and that security
and Pay-Per-View are not yet commercially feasible was not fore-
seeable. No matter how much we market , it is not realistic to expect
our original penetrations at normal rates . I am sure you agree that
our present rates are fair, and any drastic increase would backfire
as subscriber drop-off would offset the rate increase.
P.
We strongly urge the City of Shakopee to approve our proposed changes .
Zylstra-United is meeting you half-way. We are willing to turn over
$100 , 000 of video equipment , lower and defer paying our management
fee and most importantly, return to these original franchise provi-
sions when we are financially able.
We are faced with a simple problem. Even with 43% basic penetration
(area average) , franchise fixed expenses are too high relative to the
available subscriber base.
Shakopee will continue to have excellent cable systems by national
standards . They are well constructed, operating efficiently
with good technical quality. Each system has addressable, 58 channel
capacity which should exceed the supply of available programming for
years to come. The same quantity and quality of programming will be
maintained. We only need your assistance in getting us out of our
"financial hole" and giving us a chance to achieve a fair rate of
return on our investment in the long term.
Your prompt attention to our proposals would be appreciated.
Sincerely,
9 �
Ja es R. Clark
Division Manager
JRC: jd
Attachment No. 2
ZYLSTRA-UNITED CABLE TELEVISION COMPANY
BALANCE SHEET
AS OF JUNE 30, 1985
(UNAUDITED)
ASSE'T'S
CASH AND SHORT-TERM CASH INVESTN1ENI'S $ 23,275
ACCOUNTS RECEIVABLE 13,119
PREPAID EXPENSES, INVENTORY AND OTHER ASSE'T'S 6,098
ORGANIZATION COSTS, net of accumulated
amortization of $38,014 98,877
INVESTMENT IN CABLE TELEVISION SYSTEM
Property, plant and equipment, at cost $ 3,214,550
Less-Accumulated depreciation ( 1,510,634)
1,703,916
Deferred cable television permit costs, net
of accumulated amortization 119,075
Total investment in cable television
system 1,822,991
TOTAL ASSETS $ 1,964,360
LIABILITIES AND PARTNERS' CAPITAL
TRADE ACCOUNTS PAYABLE $ 711
ACCRUED LIABILITIESS AND SUBSCRIBER PREPAYMENT'S 883,207
DEBT, INCLUDING ACCRUED INTEREST 2,240,237
Total liabilities 3,124,155
PARTNERS' CAPITAL
Limited Partners' Contribution 1,170,000
Retained Earnings (Deficit) (2,329,795)
Total Partners' Capital (1,159,795)
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,964,360
ZYLSTRA-UNITED CABLE TELEVISION COMPANY
STATT2= OF OPERATIONS
FUR THE SIX ►O?ITHS ENDED JUNE 30, 1985
(UNAUDITED)
RES $ 364,819
OPERATING EXPENSES 301,845
OPERATING INCOME (LASS) 62,974
OTHER INCOME (EXPENSE) :
Interest (127,494)
Depreciation and amortization (338,156)
Management Fees ( 25,295)
TOTAL OTHER INCOME EXPENSE (490,495)
NET INCOME (LOSS) ($427,971)
I
Iv'ITID CABLE TELEVISION CONNSPA'�h'
ZYLSTRA-U
CEPA
BALANCE SHEET
AS OF JUNE 30, 1985
(UNAUDITED)
ASSETS
CASH AND SHORT-TERM CASH INVFS`I�= $ 10,956
ACCOUNT'S R- IVABLE 6,175
PREPAID EXPENSES, INVENTORY AND OTHER ASSETS 2,870
ORGANIZATICN COSTS, net of accumulated
amortization of $17,893 46,541
INVESIN1ENT IN CABLE TELEVISION SYSTEM
Property, plant and equipment, at cost $ 1,513,089
Less-Accumulated depreciation ( 711,055)
802,034
Deferred cable television permit costs, net
of accumulated amortization 56,049
Total investment in cable television
system 858,083
TOTAL, ASSETS $ 924,625
Li-�BILITIES AND PARTNERS' CAPITAL
TRADE ACCCOUNI'S PAYABLE $ 335
ACCRUED LIABILITIES AND SUBSCRIBER PREPA2V1EN'I'S 415,726
DEBT, INCLUDING ACCRUED INTEREST 1,054,480
Total liabilities 1,470,541
PARTNERS' CAPITAL
Limited Partners' Contribution 550,689
Retained Earnings (Deficit) (1,096,605)
Total Partners' Capital ( 545,916)
TOTAL LIABILITIES AND PAR'T'NERS' CAPITAL $ 924,625
17=TRA-UNITED CABLE TELEVISION COf�ANY
CLIA
STATEMFN'I'S OF OPERATIONS
FOR THE S IX 'QHS ENDED JUNTE 30, 1985
(UNAUDITED)
REVENUES $ 185,457
OPERATING EXPENSES 159,894
OPERATING INCCME (LOSS) 25,563
OTHER INCA (EXPENSE) :
Interest ( 61,682)
Depreciation and amortization (162,260)
Management Fees ( 12,862)
TOTAL OTHER INCOME EXPENSE (236,804)
NET INco`E (LOSS) ($211,241)
ZYLSTRA-UNITED CABLE TELEVISION COf'TANY
SHAKO
BALANCE SHE,:_"rT
AS OF JUNE 30, 1985
(UNAUDITED)
ASSETS
CASH AND SHORT-TERM CASH INVFSTIEN S $ 12,319
ACCOUNTS RECEIVABLE 6,944
PREPAID EXPENSES, INVENTORY AND O`= ASSETS 3,228
ORGANIZATION COSTS, net of accumulated
amortization of $20,121 52,336
INVESTMENT IN CABLE TELEVISION SYSTEM
Property, plant and equipment, at cost $ 1,701,461
Less-Accumulated depreciation ( 799,579)
901,882
Deferred cable television permit costs, net
of accumulated amortization 63,026
Total investment in cable television
system 964,908
TOTAL ASSN $ 1,039,735
LIABILITIES AMID PARTNERS' CAPITAL
TRADE ACCOUNTS PAYABLE $ 376
ACCRUED LIABILITIES AMID SUBSCRIBER PREPAYMENTS 467,481
DEBT, INCLUDING ACCRUED INTEREST 1,185,757
Total liabilities 1,653,614
PAF0iERS' CAPITAL
Limited Partners' Contribution 619,311
Retained Earnings (Deficit) (1,233,190)
Total Partners' Capital ( 613,879)
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,039,735
ZYLSTRA-UNITED CABLE TELEVISION COMPANY
SEIAKOPM
STATEMIIII5 OF OPERATIONS
FUR THE SIX N=S ENDED JUNE 30, 1985
(UNAUDITED)
REVENUES $ 179,362
OPERATING EXPENSES 141,951
OPERATING INCOME (LOSS) 37,411
OTHER INCOME (EXPENSE) :
Interest ( 65,812)
Depreciation and amortization (175,896)
Management Fees ( 12,433)
TOTAL OTHER INCOME EXPENSE 1254,141)
NET INCOME (LOSS) $ 216,730)
ZYLSTRA-UNITED FIVE YEAR FORECAST
WITH CONCESSIONS
FYE '86 FYE '87 FYE '88 FYE '89 FYE '90 COMMENTS:
------- ------- ------- ------- ------- ---------
Homes Passed 6450 6530 6710 6845 6980 21 Growth/Year
Maxivision 2195 2475 2635 2755 2835
Rate 12.80 13.45 14.15 14.85 15.60 71 in FY'86, 51 FY'87-FY'90
Econovision 510 580 620 650 670
Rate 8.50 8.90 9.35 9.80 10.30
Total Basic Subs 2705 3055 3255 3405 3505 Current penetration in Minneapolis
X / Homes Passed 41.91 46.41 48.51 49.71 50.21 Suburbs 38-511, Avg. 451
Pay TV Subs 2975 3055 3255 3405 3505
Composite Rate 10.00 10.00 10.00 10.00 10.00
1 / Basic Subs 1101 1001 1001 1001 1001 10 pt. Pay-per-view erosion in FY'87
Other Revenue ($)
Remote 30000 31500 33100 34800 36500 51 Increase/Year
Add Outlets 30000 31500 33100 34800 36500 51 Increase/Year
Install 6000 6000 6000 6000 6000
Pay-per-view 0 30800 33800 35700 37000 151 of avg. basics take one event/month @ $3.95
------ ------ ------ ------ ------ + $2.00 access charge @ 401 margin.
TOTAL 66000 99800 106000 111300 116000 -------
------ ------ ------ ------ ------
ZYLSTRA-UNITED FIVE YEAR FORECAST
WITHOUT CONCESSIONS
FYE '806 FYE '87 FYE '88 FYF '89 FYE '90 COMMENTS:
------- ------- ------- ------- ------- ---------
Homes Passed 6450 6580 6710 6845 6980 21 Growth/Year
Maxivision 2195 2475 2635 2155 2835
Rate 12.55 13.15 13.80 14.50 15.20 51 FY'8 -FY 10
Econovision 510 5130 620 650 670
Rate 8.35 8.75 9.20 9.65 10.15
Total Basic Subs 2705 3055 3255 3405 3505 Current penetration in Minneapolis
1 / Homes Passed 41.91 46.41 48.5% 49.71 50.21 Suburbs 38-51X, Avg. 451
Pay TV Subs 2975 3055 3255 3405 3505
Composite Rate 10.00 10.00 10.00 10.00 10.00
1 / Basic Subs 1101 1001. 1001 1001 1001 10 pt. Pay-per-view erosion in FY'87
Other Revenue (S)
Remote 30000 31500 33100 34800 36500 51 Increase/Year
Add Outlets 30000 31500 33100 34800 36500 51 Increase/Year
Install 6000 6000 6000 6000 6000
Pay-per-view 0 30800 33300 35700 37000 151 of avg. basics take one event/month @ $3.95
------ ------ ------ ------ ------ + $2.00 access charge @ 40% margin.
TOTAL 66000 99800 106000 111300 116000 -------
------ ------ ------ ------ ------
------ ------ ------ ------ ------
COMPARISON OF ANNUAL OPERATING FORECASTS (IN THOUSANDS)
OPERATING FORECAST
WITH CONCESSIONS gZ
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
REVENUE
~BASIC - 353 421 488 541 588
RATE INCR 0 0 0 0 0
PAY TV 323 362 379 400 415
OTHER 66 100 106 111 116
SUBTTL REV 742 883 973 1052 1119
FRAN ADJ -10 -18 -19 -21 -22
TTL REV 732 865 954 1031 1097
EXPENSES
COMP/BENE 114 120 126 132 139
MAINT 22 23 24 25 27
POLE RENT 11 11 11 11 11
SYS POWER 16 17 18 19 19
PROP TAX 3 3 3 3 3
VEHICLES 10 10 11 12 12
CAP DROPS -28 -25 -22 -20 -18
CONT SVCS 2 2 2 2 2
PROG COSTS 27 37 39 41 45
ROYALTIES 139 178 187 197 205
GUIDES 4 4 4 4 5
MKTG 11 12 12 13 13
FRAN FEE 27 26 29 31 33
BAD DEBT 14 18 19 21 22
SUB BILL 15 16 17 17 18
UTILITIES 5 5 6 6 7
TELEPHONE 8 9 9 10 10
T I E 24 25 26 27 28
OFFICE 32 34 36 38 40
PROF SVCS 2 2 2 2 2
MISC 11 11 12 13 14
TTL EXP 469 538 570 604 637
NOI 263 328 384 427 460
OTHER
INTEREST - 297 297 297 297 297
MGT FEE 30 35 38 41 44
CAPITAL 28 100 82 75 68
TTL OTHER 355 432 417 413 409
CASH FLOW -92 -104 14 _u
CH6SKAiSh6KOPEE
COMPARISON OF ANNUAL OPERATING FORECASTS (IN THOUSANDS)
OPERATING FORECAST
W/O CONCESSIONS ` G Qoc
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
REVENUE
BASIC 348 413 476 529 576
RATE INCR 0 0 0 0 0
PAY TV 323 362 379 400 415
OTHER 66 100 106 111 116
TTL REV 737 875 961 1040 1107
---- ---- ---- ---- ----
EXPENSES
COMP/BENE 156 164 172 181 190
MAINT 26 28 29 31 32
POLE RENT 11 11 11 11 11
SYS POWER 16 16 17 18 19
PROP TAX 3 3 3 3 3
VEHICLES 10 11 11 12 12
CAP DROPS -28 -25 -22 -20 -18
CONT SVCS 2 2 2 2 2
PROG COSTS 27 37 39 41 45
ROYALTIES 139 178 187 197 205
GUIDES 4 4 4 4 5
MKTG 10 12 12 13 13
FRAN FEE 37 44 48 52 55
BAD DEBT 14 18 19 21 22
SUB BILL 15 16 17 18 18
UTILITIES 5 5 6 6 7
TELEPHONE 6 9 9 10 10
T I E 24 25 26 27 28
OFFICE 32 34 36 38 40
PROF SVCS 2 2 2 2 2
MISC 13 14 15 16 17
TTL EXP 526 607 643 682 719
NOI 211 268 318 358 388
OTHER
INTEREST 297 297 297 297 297
MGT FEE 52 61 67 73 77
CAPITAL 28 100 82 75 68
TTL OTHER 377 458 446 445 442
CASH FLOW -166 -191 -129 -86 54
OPERATING FORECAST
W/O CONCESSIONS
MATH 1 MONTH Z MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MWTH 12 TOTAL
REVENUE
BASIC 27382 26939 26939 27318 28054 28054 29170 29170 30635 30635 31806 31806 347908
RATE INCR 0 0 0 0 0 0 0 0 0 0 0 0 0
PAY TV 26118 24904 24904 25369 25835 25835 26766 26766 28750 28750 29750 29750 323497
OTHER 5500 5500 5500 5000 5500 5250 5250 5500 5800 5800 5300 5800 65700
TTL REV 59000 57343 57343 57687 59389 59139 61186 61436 65185 65185 66856 67356 737105
EXPENSES
COMP/BENE 12000 12000 12000 12000 12,000 18000 12000 12000 12000 12000 12000 18000 156000
MAINT 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 26400
POLE RENT 935 935 935 935 935 935 935 935 935 935 935 935 11220
SYS POWER 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 1300 15600
PROP TAX 240 240 240 240 240 240 240 240 240 240 240 240 2884
VEHICLES 850 850 850 850 850 850 850 850 850 8`,0 850 850 10200
CAP DROPS -3250 -1500 -1500 -2000 -4500 -2000 -3000 -2000 -2000 -2000 -3000 -1500 -28250
CONT SVCS 0 0 0 0 0 0 0 0 0 0 1000 1000 2000
PROG COSTS 2100 2100 2100 2100 2200 2200 2300 2300 2300 2300 2300 2400 26700
ROYALTIES 11500 11000 11100 11000 11400 11400 11800 11800 11800 11800 11800 12200 138600
GUIDES 300 300 300 300 300 300 300 300 300 300 300 300 3600
MKTG 0 0 800 800 1800 800 1300 804 800 800 1800 800 10500
FRAN FEE 2950 2867 2867 2884 2969 2957 3059 3072 3259 3259 3343 3368 36854
BAD DEBT 100 1500 1450 1400 1350 1300 1250 1200 1200 1200 1200 1200 14350
SUB BILL 2000 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 15200
UTILITIES 300 400 400 300 300 400 500 600 500 500 400 400 5000
TELEPHONE 800 800 800 800 600 600 600 600 600 600 600 600 8000
T 8 E 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 24000
OFFICE 3000 3000 3000 3000 2500 2500 2500 2500 2500 2500 2540 2500 32000
PROF SVCS 200 200 200 200 200 200 200 200 200 200 200 200 2400
MISC 1100 1100 1100 1100 1100 1100 1100 1100 1100 1100 1100 1100 13200
TTL EXP 40625 42492 43342 42609 40944 48482 42634 43197 43284 43284 44268 51293 526454
NOI 18375 14851 14001 15078 18445 10657 18552 18239 21901 21901 22588 16063 210651
OTHER
INTEREST 24750 24750 24750 24750 24750 24750 24750 24750 24750 24750 24750 24750 297000
MGT FEE 4130 4014 4014 4038 4157 4140 4283 4301 4563 4563 4680 4715 51597
CAPITAL 3250 1500 1500 2000 4500 2000 3000 2000 2000 2000 3000 1500 28250
TTL OTHER -32130 30264 30264 30788 33407 30890 32033 31051 31313 31313 32430 30965 376847
CASH FLOW -13755 -15413 -16263 - -15710 -14962 -20233 -13481 -12812 -9412 -9412 -9842 -14902 -166196
Attachment No. 3
CITE' OF SHAKOPEE
INCORPORATED 1870 ,
129 EAST FIRST AVENUE, SHAKOPEE, MINNESOTA 55379-1376 (612) 445-3650 (t
August 20 , 1985 %
bz
Mr. James R. Clark
Division Manager
Central Division
United Cable Television Corp.
525 Tollgate Road, Suite D
Mona Loa Office Park
Elgin, IL 60120
.Dear Mr. Clark:
On August 12 , - 1985 United Cable Television officials
pre-
sented Shakopee staff with several financial reports and budget
projections for Shakopee ' s cable system. Having no opportunity
to review these statistics, - your contentions in regard to the
alleged financial condition of the Shakopee cable system seemed
plausible. However, an investigation of several cable systems
in our area that have recently experienced proposed concessions
and renegotiation hearings have prompted us -to take the following
course of action. Please be , advised that before any further
consideration can be given to Zylstra-United' s proposed conces
sions and the Shakopee cable system the following in,
is. -hereby requested.
1. Detailed explanation of proposed concessions and reasons
for said concessions.
2. Annual audited financial report of United Cable Television
Corporation for the past three years..
3. Annual audited. financial report of Zylstra Cable Television
Corporation for the past three years.
At this time, Shakopee is also considering an independent
financial analysis of Zylstra-United's alleged financial posi-
tion. We have been in contact with the consulting firm of Touche
Ross and Company who have had extensive experience in the area
-of cable television. Preliminary cost projections for a review
of the reasonableness of Zylstra-United ' s financial assumptions
that would support your proposed concessions range between
$15 , 000 and $20 , 000. In accordance . with Section 8 . 12 .( d). of
the cable franchise ordinance, Zylstra-United would be respon-
sible for all aforementioned consulting fees. We are also+ in-
vestigating the possibility of working- closely with the City
of Chaska in developing a negotiation pos4tion that will be
in the best interest of our residents. y
1'17e Heart of Progress I'aliel,
Mr. James R. Clark
Page Two
August 20 , 1985
On August 13 , 1985 City Council action on the Shakopee
Cable Communications Advisory Commission' s recommended character
generator fine was tabled until further information is available
in regard to Zylstra-United ' s proposed concessions. If you
should have any questions in regard to the information requested
above, please call Barry Stock at 445-3650 .
Sincerely
JohnK. Ande on
City Administrator
JKA/jms
cc: Steven J. Schippers
Dave Pokorney, Chaska City Admr.
Bill Anderson, Shakopee Cable Communication Advisory
Committee Chairman
i
i
Attachment Number 4
CITY OF SHAKOPEE j �®
INCORPORATED 1870
129 EAST FIRST AVENUE, SHAKOPEE, MINNESOTA 55379.1376 (612) 445-3650 f„�
August 27 , 1985
Mr. James R. Clark
Division Manager
Central Division
United Cable Television Corp.
525 Tollgate Road, Suite D
Mona Loa Office Park
Elgin, IL 60120
Dear' Mr. Clark:
On Monday, August 26 , 1985 the Shakopee Cable Communications
Advisory Commission met to discuss Zylstra-United' s informal
concessions as proposed by United representatives on August
12 , 1985. At that time the Cable Commission moved to recommend
to City Council that City staff be authorized to work with Chaska
City officials in hiring an independent financial consultant
familiar with the cable industry to review Zylstra-United' s
proposed concessions and alleged financial condition. The cost
for the proposed study to be assumed by Zylstra-United pursuant
to Section 8. 12 (d) of the Cable Franchise Ordinance.
We have been in contact with the CTIC Association, a non-
profit corporation that has extensive experience in the cable
industry. In the past CTIC has done work for Shakopee in regard
to our cable system. Preliminary cost projections for a joint
Shakopee/Chaska financial study range between $4, 000-$6 , 000.
Please be advised that upon receipt of a final cost quota-
tion you will be notified. Before we proceed with the study
we expect to receive funding from Zylstra-United, in the form
of a certified check for the final project cost.
By pursuing a financial study, Shakopee is demonstrating
a willingness to consider Zylstra-United' s proposed concessions.
The Heart of Progress Valley
Mr. James R. Clark
Page Two
August 27 , 1985
If Zylstra-United does not submit to a independent financial
analysis, Shakopee will not be in any position to consider
Zylstra-United' s proposed concessions any further. If you have
any questions please feel free to call me or Barry Stock at
( 612 ) 445-3650.
Sincerely,
ohn K. Anderson
City Administrator
JKA/jms
cc: Steven J. Schippers,
United Cable Television General Manager
Dave Pokorney,
Chaska City Administrator
Bill Anderson,
Shakopee Cable Communications Advisory Commission Chairman
Attachment No. 5
SIC Associates
Affllioted with
'he Coble Television Information Center
September 18, 1985
Mr. Barry Stock
Administrative Aide
City of Shakopee
City Hall
129 East First Avenue
Shakopee, MN 55379
Dear Mr. Stock:
Thank you for your telephone call advising me of recent
cable developments in Shakopee.
As you are aware, requests for franchise concessions such
as United Cable is asking of your City have become common this
past year. Frankly, we have found that sometimes such requests
are justified by real financial need; sometimes they are not.
Only with a careful look at each specific situation can a fair
appraisal of such requests be made.
The Cable Communications Policy Act of 1984 provides a legal
basis for a cable company to ask and receive modifications of its
franchise obligations upon a showing of "commercial impractica-
bility." However, such a showing must prove that the concessions
are required due to ". . .a change in conditions which is beyond
the control of the operator and the non-occurrence of which was
a basic assumption on which the requirement was based" when the
franchise was awarded. [See Act, Section 625(f) . ] Thus, finan-
cial need alone is not sufficient to force a City to grant re-
quested concessions under the Act.
Few cable companies have used the provisions of the Act to
force franchise concessions, in part, because of the "commercial-
ly impracticable" test which is difficult to satisfy and because
of the rigorous review process required by the Act. Instead,
most companies asking for franchise concessions are electing
to rely on the "good graces" of the local government officials.
A fundamental first question then is whether United Cable is
formally asking the City of Shakopee for franchise modifications
pursuant to Section 625 of the Act as this will determine how
the City should proceed on any consideration of the request.
1500 NORTH BEAUREGARD STREET.SUITE 205,ALEYANDRIA,VA 22311(703)845-1700
Mr. Barry Stock
September 18, 1985
Page Z
Whether the City follows a formal or informal review process,
CTIC Associates stands ready to be of assistance. We have had ex-
tensive experience in reviewing the financial condition of operat-
ing cable systems and the need, if any, for reductions in services
and commitments. As we discussed, CTIC is prepared to do a de-
tailed review of United Cable's request for concessions along with
supporting documentation to provide the City with an assessment of
the company's current and potential profit levels from its Shakopee
operations. As is often the case, it may be necessary to request
additional information from United. CTIC will examine the company's
actual capital costs, revenues and operating expenses in comparison
with current industry-wide experience and United's original projec-
tions. We will also analyze the probable impact on profitability
should the City grant all or some of the requested concessions.
The extensive experience of CTIC Associates in performing sim-
ilar financial reviews for our many other local government clients
plus our involvement in the initial Shakopee franchising process
makes CTIC Associates uniquely qualified to now assist the City in
these deliberations.
As before, all of our work is done on the basis of the cost of
actual professional time ($70 to $90 per hour) plus expenses. The
basic in-house financial review as described above will be done for
a total cost not to exceed $5,000. Additional research, a technical
inspection of the system or participation in hearings or work ses-
sions in Shakopee can also be provided at additional cost for pro-
fessional time and expenses.
I have enclosed an extensive list of our recent local govern-
ment clients along with brochures further describing our organiza-
tion and services. We at CTIC Associates look forward to again
being of service to the City of Shakopee. Please contact me
should you have additional questions or need further information.
Sincerely,
12�David
Owen Ko
Vice President
Enclosures: as stated
Attachment Number 6
g united cable television corporation
central division office
0
September 5, 1985
Mr. John Anderson
City of Shakopee
129 East First Avenue
Shakopee, MN 55379-1376
Dear Mr. Anderson:
I am in receipt of your letter dated August 27, 1985 and the following
is Zylstra-United's position regarding the Shakopee Cable Commission's
recommendation to City Council that CTIC be hired to review our financial
condition and proposed franchise modifications.
Because we are confident an expert consultant should confirm our financial
condition, as did our audited financial statements for 1984, Zylstra-
United does not object to such a review. Accordingly, they are welcome
to review our proposed franchise modifications.
However, we have three concerns. First, the time this review will take.
Second, the cost which Zylstra-United is not in a financial position to
pay. And lastly, the independence of CTIC who because of thier initial
consultations are largely responsible for such a commercially impracticable
franchise to begin with.
Despite our concerns, Zylstra-United will cooperate with a consultant's
review on two conditions. First, that our cost be subject to a $5,000
maximum and to Zylstra-United's ability to pay such an amount. Second,
that should the study conclude that our financial condition is as presented,
and that our franchise modifications would produce the financial results
we forecasted, then the cities of Chaska and Shakopee will refund all
fees paid by Zylstra-United to the consultant.
Sincerely,
James R. Clark
Division Manager
JRC:jd
cc: Fred Vierra
Gary Howard
Steve Schippers
Dave Pokorney-Chaska
525 Tollgate Road, Suite D Mona Loa Office Park Elgin, Illinois 60120
ATTACHMENT NUMBER 7 /
Concessions Granted to Cable Company Earlier This Year
1. Increase in cable subscriber rates prior to the scheduled date
of relief.
2 . Combining cable business offices .
3 . Reduction in Character Generator equipment and channels .
Concessions Requested by Company at this time
1. Discontinue company operation and funding of the cable access
studio until company experiences a positive cash flow.
2 . Freeze franchise fees at $18 ,000 per year until company
experiences a positive cash flow.
3 . Postponement of company expenditures for the I-Net and
Character Generator system until company experiences a positive
cash flow.
Things Company owes the City
1. Full time system manager.
2. Character Generator equipment.
3 . Eleven activated I-Net channels and all equipment needed to
activate.
4. System Interconnection (Microwave ) - two upstream and two
downstream channels and all equipment needed to activate.
5 . Studio equipment - ?
1986 Cost Savings associated with Company' s Proposed Concessions and
the Shakopee Cable System
1. Discontinued company operation and funding of the cable access
studio
- staff reductions (access manager and playback operators ) $22 , 550
- studio maintenance 2 ,400
2. Freeze on Cable Franchise Fee 10, 000
3 . Cable management fee reduction from 7% to 40 (concession
company is making) 11 , 000
Total 45,950
Short Term Cost Savings
1. Delay in providing Character Generator equipment $ 9 ,000
'� T)cI ?ss in c}nr}irn T_1.Tn4- ———— L: —
cJ
ATTACHMENT NUMBER 8
Cable Budget Analysis
EXPENDITURES
1986 1986
Projected Projected
OBJECT DESCRIPTION w/o Studio with Studio
4100 Salaries - Full Time 8 , 270 8 , 270
4130 Salaries - Park Time 0 21, 000 A.
4140 PERA 350 350
4141 Pensions - FICA 590 590
4150 Health & Life Ins . 1 , 290 1 , 290
4151 Work Comp 150 150
**** Total Personal Services 10 ,650 31,650
4210 Supplies 200 300
4232 Equipment Maint. & Repairs 0 2 , 000
4310 Professional Services 800 800
4319 Promotions 0 1,000
4320 Postage 100 100
4321 Telephone 100 100
4330 Travel & Susist. 220 220
4350 Printing & Pulish 600 600
4360 Insurance 0 2, 500
4390 Conferences & Schools 400 400
4391 Dues & Subscriptions 600 600
4499 Misc. (Payment to Access Corp. ) 8 ,200 0
**** Total Supplies & Services 11 ,220 8 ,620
4511 Capital-Equipment 0 1 , 500
**** Total Capital- Equipment 0 1, 500
TOTAL AMOUNTS THIS FUND 21,870 41,770
REVENUES
Cable Franchise Fee 16 , 400 18, 000
Leased Access Advertising 0 10 , 000 B.
Studio Rental 0 3 , 000 C.
Subscriber Grant 0 7,200 D.
Total Revenues 16 ,400 38 ,200
Net Income ( 5 ,470 ) ( 3 , 570 )
A. Studio Manager $18 ,000 yr - no benefits
Playback Operators - $3 , 000 yr.
B. 20 users @ $40/mo.
C. $50/hr @ 5 hrs. /mo.
D. 50¢mo. per subscriber paid to City by the Company
Attachment Number 9
/Ylinnesota , Minnesota Correctional Facility
Department of
Corrections -� -� 1�-Shakopee 5
August 28, 1985
Barry Stock
Administrative Assistant
Shakopee , Minnesota 55379
Dear Barry,
Regarding the current use of the institutional network, I would
like to make a few comments about our arrangement . As you know,
we are currently t6 be operating over the public access channels
rather than the institution-only channels, at least for the time
being. For the purposes of starting up our use of the institution
network this arrangement is fine, but there may be reasons to press
for establishing use of the institution-only network.
When using the public access channels , we are aware that anyone
who is being presented on the air must be willing to sign a re-
lease to avoid problems of confidentiality of identity, which can
be a potentially troublesome problem for us at the correctional
facility . In addition, strict observance of copyright laws in the
production of any event over the public channels could also hinder
the development of those events , making it very awkward to produce
a show without going through an enormous amount of red tape . I
would assume that there are any number of other restrictions which
may become a hindrance to our intended use of two-way interactive
video in the institution-only network.
There are a number of inmates here who would not participate in a
two-way interactive educational or vocational class if they know
that they would also appear on public channels . Our intent, of
course, is to remove barriers to their participation and enhance
the educational process in their rehabilitation. Thus , it seems
wise to some time soon establish the use of the institution-only
network.
There are advantages to also being able to use the public channels,
as there are classes we hope to televise which could be formatted
to include the general public. These courses could potentially in-
crease the use of the public channels and even perhaps increase the
number of subscribers . Course from Inver Hills Community College,
and, if the linkage is developed, vocational courses from South
Hennepin Technical Center could offer attractive possibilities not
only for institution network particpants , but also for the general
public.
Therefore, it seems wise to press for the "B" channels for instit-
ution network sites only, and, when appropriate, use the public
access charnels for a broader audience .
Si ,
cnuerely '
)o
Ro�er dson
BOX 7 0 SHAKOPEE, MINNESOTA 55379 0 612-445-3717
Attachment Number 9 cont.
SHAKOPEE TECHNOLOGY OFFICE
1137 MARSCHALL ROAD
SHAKOPEE, MINNESOTA 55379 /
September 18 , 1985
Barry Stock
Administrative Assistant
Shakopee City Hall
Shakopee, MN 55379
Dear Barry,
I would like to thank both you and the City of Shakopee for your
assistance in facilitating the interactive video demonstration between
the Minnesota Correctional Facility/Shakopee and Shakopee Senior High
School on August 29, 1985. The demonstration was successful despite
continuing technical problems which caused the audio transmission
quality to be compromised.
It is the school district's intent to proceed with program
development using the Institutional Network between the public
schools , MCF/Shakopee, and the Carver-Scott Vocational Cooperative in
Chaska. As you are aware, the demonstration on August 29 used only a
portion of the "I-net." The return portions of the broadcast were
carried over the regular subscriber network . It is my understanding
that this does not meet the intent of the franchise agreement between
the City of Shakopee and Zylstra/United. Any attempt to carry
interactive video instruction over the commercial subscriber network
is severely handicapped due to the need for written releases by both
individuals and publishers. It can also create the need for royalty
payment to publishers when films on other media are broadcast in this
commercial arena.
Shakopee Public Schools has been awarded a two year development
grant to improve the educational opportunity of inmates at the
MCF/Shakopee through the use of interactive video. The grant
application and subsequent award was completed on the basis that
Zylstra/United"s commitment to the institutional network would be
completed per the franchise agreement. This was affirmed through
numerous meetings with management from Zylstra/United, Shakopee Public
Access Corporation, city staff, and district representatives.
In conclusion, there has been considerable investment of time on
the part of several organizations based on assurances of the franchise
agreement. Any concessions with respect to the institutional network
will cause considerable damage to program commitment and development.
Again, let me thank you for your assistance.
Sincerely,
Ron Ward
RW/so
cc: Dr. Carruth
Jerry Martinson
Roger Knudson
action
I or . -
ILL�
league of minnesota cities
ILUj
September 19 , 1985
To: Mayors, Managers, and Clerks
From: Joel Jamnik, Legislative Counsel
Re: Possible Congressional Action on Fair Labor Standards Legislation
Immediate action is requested regarding lobbying our Congressional
Delegation regarding passage of interim legislation that will provide
cities relief from enforcement actions of the Department of Labor, which
are scheduled to begin October 1 .
The interim measure is an amendment which will be offered by
Representative John Porteer the week of september 23 to the
Appropriations bill for the Departments of Labor, Health and Human
Services, and Education for fiscal year 1986. The amendment , if
adopted , would prohibit the Department of Labor from bringing
enforcement actions against cities prior to March 31 , 1986 and would
also prevent the Department from inposing retroactive liability for
failure to comply with the FLSA prior to March 31 , 1986.
Unless immediate action is taken to pass this amendment , the Department
of Labor will be required under law to take action on the more than 600
complaints against states and localities now pending at the Department
of Labor. There has been an excellent response to the League' s earlier
Action Alert requesting passage of resolutions supporting S. 1570, which
would provide permanent relief to cities. Passage of this interim
measure in the House will go a long way in promoting final passage on
S. 1570, in fact this initial vote is viewed by many as being a test
vote on S. 1570.
According to NLC , the major problems facing passage of legislation in
the House are: ( 1 ) the Education and Labor committee is dominated by
members who tend to be pro-union; (2) the perception on the part of key
House members that cities have failed to properly document the cost
impact of the Garcia decision; (3) a view that , in certain cases , city
employees are "abused" or "exploited" , and; (4) an unwillingness to
recognize the adverse impact of the FLSA on the collective bargaining
process .
Again, the interim measure will be acted on the week of September 23-27 .
Immediate action is required . City officials should CALL their
Representatives and urge support of the Porteer amendment to the
Dep�tmerEtr�ofvLrabor_,AppgQpC4,at"pr!�)iri�Aalota 551 01 (61 2) 227--5000
Washington phone numbers of Minnesota' s Congressmen are:
Tim Penny First District 202-225-2472
Vin Weber Second District 202-225-2331
Bill Frenzel Third District 202-225-2871
Bruce Vento Fourth District 202-225-6631
Martin Sabo Fifth District 202-225-4755
Gerry Sikorski Sixth District 202-225-2271
Arlan Stangeland Seventh District 202-225-2165
James Oberstar Eighth District 202-225-6211
w�
MEMO TO: John K. Anderson, City Administrator
FROM: Judith S. Cox, City Clerk
RE: Application for Gambling License by Fraternal Order
of Eagles Airie #4120
DATE: September 24 , 1985
Introduction
The Shakopee Eagles are applying to the State Gambling Board
for a gambling license. Rather than wait the full 30 days
that the City has to advise the Gambling Board if the City
wishes the application to be denied, the Eagles are requesting
that the City advise the Gambling Board •that they have no
objections to the issuance of the license, 'immediately.
Background
A municipality can ask the Gambling Board to deny a gambling
license and that request must be honored. The Gambling Board
can not .act on an application until 30 days have past after
the municipality has been notified by the applicant that
application has been made. If the municipality does not
object within the 30 days, the application may be approved
by the Gambling Board. However, if the municipality advises
the Gambling Board that they have no objections , the appii
cation can be approved and a license granted prior to the
full 30 day waiting period.
The Gambling Board meets once a month on the 30th, and the
Eagles would like to be open and conduct activities on
Halloween.
The Eagles are asking Council to advise the Gambling Board
that they have no objections to their being granted a
license, if that is the case, in order that the application
can be considered September 30th and a license issued in time
for Halloween.
Our City Code simply requires one to be a club or a church or
service organization which carries on activities and are
located and based in the City of Shakopee. The Eagles do
not meet the definition of a club, but upon a quick examination
by staff to accommodate the Eagles it appears that they are a
service organization which carries on its activities and are
located with the City. The Eagles are a new organization
within Shakopee. The license is good for one year only.
If for some reason Council does not wish their license to
be renewed after one year, they have the option of so advising
the State Gambling Board.
Alternatives
1. Approve application.
2. Deny application.
Recommendation
Alternative No. 1.
Action Requested
Direct staff to notify the State Gambling Board that the City
Council of the City of Shakopee has no objections to the issuance
of a Gambling License to the Shakopee Airie Fraternal Order of
Eagles #4120.
JSC/jms
I
i
Minnesota Charitable Gambling Control Board FOR BOARD USE ONLY LV
900 Summit State Bank Building
` 310 4th Avenue South
3 aF
Minneapolis, MN 55415
(612) 341-7676
GAMBLING LICENSE APPLICATION
(Class A, B, or C)
INSTRUCTIONS: 1. PRINT OR TYPE..
2. Bring completed application to local governing body, obtain signature and date on all copies,
and leave goldenrod copy. Applicant keeps pink copy and sends remaining copies to above
address.
3. Changes in application information must be submitted within 10 days after the Chan e.
Type of Application:
D Class A - Fee $100.00 (Bingo, Raffles, Paddlewheels, Tipboards, Pull-Tabs)
❑ Class B - Fee $ 50.00 (Raffles, Paddlewheels, Tipboards, Pull-Tabs)
❑ Class C - Fee $ 50.00 (Bingo only)
Make checks payable to: Minnesota Charitable Gambling Control Board.
A t Off'ci,al le al me, of rgan ati n) Site Address
tgrcal 0111 a2 agfes ir$e #412C 220 west Second Street
City, State, Zip
e �Ss,est Address
Street Shakopee, Minnesota 55379
City, State, Zip Count
Shekonee I.'i nes -KK1 o Scott
CqJJ O ugntyt t Yes No 1. Are all gambling activities conducted at
the above site? If no, complete a sepa-
Business Telephone Number Federal I.D. Number rate application form for each site as a
( 612 445 3685 Applied for separate license is issued for each site.
Type of Organization
Paternal. 2. Is site located within city/town limits?
❑ Veterans
❑ Religious ❑Other Nonprofit Organization 3. Does organization own the site where
Type of Organization Charter X gambling activity will be conducted? If
❑ International ) National ❑ State no, attach copy of the lease for the
Number of Years in Number of Articles of site.
Existence (in Minnesota) Inco? oration (if incorporated) Lessor Name i lease or rent
54 49160 Thomas Gestach
LocatioWher is es are File Address
liept. o 6� ate Lecretary, St. Paul 5950 C.R. 240
Yel No 1. Does organization have a dues structure? City, State, Zip
If yes, number of active members' 74 Chaska, Xln. 55318
. Has organization been previously licensed Gambling Mana9er Name
by the Board? If yes, give date Lugene Lepley
3. Has license ever been denied, suspended Ad M7 Jackson Street
X or revoked? If yes check all that apply:
❑Denied ❑Suspended ❑Revoked CitMESM ae&, 1;Annesota 55379
4. Is organization exempt from payment of '��"�22''
X U.S. income tax? If yes, attach copy of The $10,000 fidelity bond required by Minnesota
letter declaring exemption. Statutes 349.09 has been obtained.
5. Is organization tax exempt from payment Company Name Bond Number
X of Minnesota tax? If yes, attach copy of .Fraternal Crder of Lagles Blanket
letter declaring exemption.
will follow
Name of Organization's Officers and Titles
a. Willie m Lepley_ Worthy Fres. C. Timothy Kelly= Worthy Secretary
b. Yen Sass- Worthy Vice Fres. d. Gary 1L. - Worthy Treasurer
CG-00001-01 (12/84) Continued on Page 2
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This is to acknmv6cdcge that the items described below have been accepted�'the Secretary o f Stan o f ? k�
S Minnesota on the date noted. Tfwse documents vi iff be micro fifined and the original tittiff be retunied to the �`', .
submitter within ten days. The microfilm 11iff be avaifabfc for public inspection at the of fisc o f the Secretary tom♦ .�.
of State. '
DccriFtinn of Itcm Dote Accepted F1 No.NOT 1ALID UNTIL RI NUMBER 15 AFFIXED + Y
rS- 11 9160
Company Name -
' a h4eleI e- �2R-�e✓hA er- L e e✓ _^o e ♦-.�
State of Minnesota y
Office of the Secretary of State
Corporation Division
180 State Off—Buil .g ~
Etidcncc of Ft t9 C -00184-01
1 St.Paul MN 55155 (612)296-2803
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--7
Memo to: John K. Anderson , City Administrator
From: Stephen Hurley, Engineering Technician
Re: Aerial photograpy of City
Date: 9/20/85
INTRODUCTION: The City can use current aerial photography as an
aid in determining impermeable areas for the upcoming storm
sewer utility billing calculations.
BACKGROUND: Tim Keane of Scottland , Inc. informed the City that
they are having a portion of the City flown by Mark Hurd and
asked us if we would be interested in using the photography or
having other flown.
The City can have Scottland 's photography and an additional
` portion covering the urban area for approximately $150-250.
Total coverage would be about two-thirds of the City area from
approximately Valley View Road north to the river.
We would receive color negatives and would need enlargements
printed.
'
The City Administrator has authorized an expenditure in the
above range on the current date in order to take advantage of
the opportunity.
`