HomeMy WebLinkAboutApproved Minutes - 2001-09-18 EAKE OS
CITY COUNCIL MEETING MINUTES
'' ► September 18, 2001
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Mayor Judie Hammerstad called the regular City Council meeting to order at 6:10 p.m. on
September 18, 2001, in the City Council Chambers.
Present: Mayor Hammerstad, Councilors Graham, McPeak, Hoffman, Rohde, Schoen and
Turchi.
Staff Present: Doug Schmitz, City Manager; David Powell, City Attorney; Robyn Christie, City
Recorder
Councilor McPeak read a proclamation expressing the City of Lake Oswego's sorrow on behalf
of the citizens of the community for the loss of their fellow countrymen and citizens of the world
in New York City, Washington, D.C., and Pennsylvania as a result of terrorist activities, and its
sympathy to the survivors of the victims.
A voice vote was taken on approving the proclamation and the approval passed with
Mayor Hammerstad, Councilors Graham, McPeak, Hoffman, Rohde, Schoen and Turchi
voting in favor. [7-0]
Councilor Rohde commented that, as last week's events unfolded, it became clear to the
Council that the atrocities reached beyond the local communities on the East Coast, extending
even to Lake Oswego. He said that the Council also understood the importance of supporting the
United States government from the local community level up to the federal level. He read
Resolution 01-76, expressing the City Council's support for President George W. Bush in his
stated intent to rid the world of terrorism.
Councilor Rohde moved adoption of Resolution 01-76. The motion was seconded. A voice
vote was taken and the motion passed with Mayor Hammerstad, Councilors Graham,
McPeak, Hoffman, Rohde, Schoen and Turchi voted in favor. [7-0]
Mayor Hammerstad mentioned that the City would forward copies of the proclamation and
resolution to the President.
Mayor Hammerstad read a statement from the City Council expressing its appreciation for the
actions taken by the Lake Oswego City staff last Tuesday, after it became obvious that the events
in New York City were not accidents but rather deliberate and planned activities, to assure the
safety and security of the community, its citizens and its assets. On behalf of the Council, she
thanked the City employees for their efforts last Tuesday and their daily service to the
community, mentioning the public safety departments in particular.
Mayor Hammerstad mentioned the spontaneous interfaith event at Millennium Park last Friday
noon, to which 500 people showed up, having heard about it through word of mouth and flyers.
She commented that the people were grateful to have an opportunity to join together as a
community. She invited the community to attend a candlelight event this Sunday evening,
beginning at 7:30 p.m. in the Bob Bigelow Plaza and walking down to Millennium Park for a
short remembrance program.
MOMENT OF SILENCE
Mayor Hammerstad invited the public to join the Council in a moment of silence in recognition
of the tragedy last week.
City Council Minutes Page 1 of 15
September 18, 2001
3. PRESENTATIONS AND RECOGNITION
3.1 AT&T, Qwest, Verizon, Metropolitan Area Communications Commission (MACC)—
presentation on high speed access
Mayor Hammerstad explained that the Council scheduled this presentation because AT&T
asked for an extension of their franchise agreement. She noted that this particular presentation
was for the telecommunications companies to discuss high speed access; AT&T would discuss
the franchise agreement later in the meeting.
Mayor Hammerstad referenced the dissatisfaction in the community with the unavailability of
DSL access through the phone companies and with AT&T's failure to provide broadband cable
access by the time people had been to believe it would be available. She mentioned that the City
forwarded the numerous phone calls it received to the Metropolitan Area Communications
Commission (MACC). She reviewed the procedure for this agenda item.
Bill Proust, Qwest Area Manager, explained that DSL, or digital subscriber line, was a
technology that allowed high speed band width transmission over the traditional copper wires of
the phone system, which meant the simultaneous use of voice and data streams. He discussed the
limitations of the technology, focusing on its sensitivity to distance: it only functioned within a
three-mile radius of the central office where the DSL equipment was installed. He noted that
Qwest's central office in Lake Oswego was on First Street, and was one of the 22 out of 77 wire
centers with DSL.
Mr. Proust discussed DSLAMs, the remote DSL terminals that extended the DSL range beyond
the three-mile radius. He noted that Lake Oswego got nine of the 50 remote terminals that Qwest
started installing this year. He mentioned the inherent technical and physical plant problems
with DSL that could prevent getting it to a home or business that fell within the DSL availability
footprint.
Mr. Proust discussed the DSL services offered by Qwest, noting that the higher the speed, the
higher the price. He reviewed Qwest's procedures when someone ordered DSL. He mentioned
that receiving orders, even if DSL was not yet available in an area, helped their marketing people
determine which areas of the community wanted the service.
Mayor Hammerstad recalled that a month ago a young woman came door-to-door in her
neighborhood selling Qwest DSL service. Mr. Proust agreed that that was an unusual marketing
method and observed that, given the competition in the marketplace, Qwest was trying various
marketing methods to get the word out on the services that it offered.
Mayor Hammerstad mentioned that she had one phone line that qualified for DSL and one that
did not. Mr. Proust speculated on the probable technical reasons for the difference.
Observing that Qwest was the primary local phone company in Lake Oswego, Bob Wayt,
External Affairs Manager for Verizon in Oregon, discussed the background of Verizon. He
said that Verizon was a national company formed by the merger of GTE and Bell Atlantic; it was
the largest local phone company in the US as its sister company of Verizon Wireless was the
largest wireless carrier in the US.
Mr. Wayt mentioned the company's pride in its employees who worked around the clock for six
days to restore the telecommunications necessary to make possible the reopening of the stock
market in New York City on Monday.
Mr. Wayt said that Verizon had more than 500,000 customer lines in Oregon, mostly in the
Portland metro area. He noted that they served almost all of Washington County. He described
how Verizon gained a foothold in Lake Oswego as customers with a Lake Oswego address
moved into their boundaries. He indicated that these customers were in the Kruse Way,
Rivergrove, Childs Road and Pilkington Road areas.
City Council Minutes Page 2 of 15
September 18, 2001
Mr. Wayt said that the primary broadband service offered by Verizon was DSL, a service that
customers liked because it did not tie up their phone line while they were on the Internet, and
because it was 20 to 30 times faster than the standard Internet modem connection. He indicated
that GTE began offering DSL in Oregon in 1998, and Verizon has expanded the service to other
areas. He noted that DSL service was presently available to two-thirds of the 10,000 Verizon
customers in Lake Oswego but the number would increase soon as they completed bringing DSL
to the Rivergrove area by the end of the year.
Mr. Wayt concurred with Mr. Proust that DSL did have distance limitations. He mentioned a
key consideration for Verizon in deciding whether to deploy DSL in an area: the projected
number of customers who would order the service. He noted that DSL was expensive to install.
He reviewed Verizon's pricing options, which increased with the higher the speed, as did
Qwest's.
Mr. Wayt indicated to Councilor McPeak that Verizon had four DSL switching units in the
Lake Oswego area, which each had the three-mile radius: Kruse Way, Pilkington, Rivergrove
and Childs Road.
Mr. Proust commented that Qwest placed remote DSLAMs on Lakeview Blvd, Carmen Drive,
South Shore, Boones Ferry and McNary Parkway.
Councilor Graham asked if Verizon and Qwest competed for DSL business. Mr. Proust said
that they did not do so at this time but it was foreseeable in the future that they might do so.
Councilor Graham asked if co-location worked with the DSL technology, as it did with the cell
phone technology. Mr. Proust said that there were possibilities for co-locating equipment in the
future but they did not co-locate now. He explained that usually each company owned its own
equipment (the size of a small refrigerator) and put it on pads located on 10' by 20' pieces of
property.
Mr. Wayt noted that co-location was not unprecedented in the telecommunications industry, as
currently regulations required companies to offer space in their major switching officers to
competitors to locate their equipment in that switching office. He observed that, if it made good
business sense to partner, then they would do so, as they have done in the past.
Debbie Lepold, Vice President, Local Government Relations, AT&T for Northwest
markets, described `Excite At Home,' the high speed data and interne service available from
AT&T Broadband, the cable affiliate of AT&T, which used the cable plant to connect to either
the television set or the computer. She characterized the service as `middle of the road' in terms
of speed and price. She described AT&T's upgrade of its cable plant to deliver enhanced video
services and the At-Home service.
Ms. Lepold said that once these services became available, they would be available to anyone
who lived in an area within the franchise boundaries that met the franchise density requirements.
She mentioned the take rates throughout their markets as averaging around 7% to 8%, which
AT&T found highly satisfactory for this product.
Ms. Lepold indicated to Councilor McPeak that the upstream speed was 128 KB per second
and the downstream varied from 28K to 3.5MB per second.
Ms. Leopold indicated to Mayor Hammerstad that, although currently their price did not
depend upon speed, it was conceivable that in the future it would. She confirmed that the high
speed data service generally followed the upgraded video services by 30 to 60 days. She
confirmed that the density standard requirement was also true for video.
Mayor Hammerstad opened the floor to public questions.
City Council Minutes Page 3 of 15
September 18, 2001
• Carolyn Jones, 2818 S Poplar Way
Ms. Jones noted that, within the last month, Qwest announced that it no longer intended to pay
franchise fees in the City of Portland. She asked Mr. Proust if that held true in Lake Oswego.
Mr. Proust stated that that involved a court proceeding that he was not prepared to address at
this time.
Ms. Jones observed that that case could set a precedent for utilities not paying the fees, which
came to a considerable amount of money. She commented that apparently while no one was
looking, the laws changed and now the telecommunication companies claimed that they were no
longer liable to pay those fees. She suggested that the City rethink the structure of the agreement
before proceeding.
David Powell, City Attorney, indicated that the court system would sort out the controversy
over whether a decision made by the Ninth Circuit Court in Washington State applied. He said
that Qwest and the other telecommunication providers had the right to be in the right-of-way
pursuant to federal law. He pointed out that the City did not regulate DSL service; it regulated
video cable service through MACC. He explained that the Internet broadband access under
discussion tonight was a separate issue from the franchise fee issue.
Mr. Proust commented that they were not arguing with the fact that they needed to pay to be in
the right-of-way; the question was what they paid and how they paid.
Mr. Powell mentioned that Qwest has offered to set aside the franchise fees, as stated in the
agreement, until the courts settled the Portland litigation.
Mayor Hammerstad pointed out that Lake Oswego could argue a pre-existing contract, so they
were not in the same legal position as Portland. She agreed that it was for the courts to decide.
• Michelle Sayer, 220 Chandler Place
Ms. Sayer asked what service did the Lake Oswego library currently use and at what speed.
Bruce Crest, MACC, said that he did not know, because it depended on which County library
system served Lake Oswego. He noted that the Washington County Cooperative Library Service
received its service from the Public Communications Network (PCN), a fiber service from
AT&T.
4. CONSENT AGENDA
Councilor Graham reviewed the consent agenda for the audience.
Councilor Rohde moved approval of the consent agenda with correction to the minutes.
Councilor Schoen seconded the motion. A voice vote was taken and the motion passed with
Mayor Hammerstad, Councilors Graham, McPeak, Hoffman, Rohde, Schoen and Turchi•
voting in favor. [7-0]
Mayor Hammerstad invited interested citizens to pick up an application and the charge
statement for the Ad Hoc Tree Code Review Task Force. She reviewed the composition of the
Task Force, its purpose and its scope of work.
Councilor Rohde noted that the Council also passed on the consent agenda tonight three items
addressing water quality, two of which were on Springbrook Creek.
4.1 COUNCIL BUSINESS
4.1.1 Request to create an Ad-Hoc Tree Code Review Task Force and approve Charge
Statement
ACTION: To approve the formation of an Ad-Hoc Tree Code Review Task Force and
related Charge Statement
4.2 RESOLUTIONS
City Council Minutes Page 4 of 15
September 18, 2001
4.2.1 Resolution 01-57, authorizing a temporary easement on River Run Park for the
purpose of wetland enhancement.
ACTION: Adopt Resolution 01-57
4.2.2 Resolution 01-71, authorizing an amendment to the intergovernmental agreement
continuing the Local Youth Diversion Program in order to increase funding for the
program
ACTION: Adopt Resolution 01-71
4.2.3 Resolution 01-72, authorizing the Mayor to sign an intergovernmental agreement
with Washington County for the installation and operation of a stream gauging
station on Springbrook Creek.
ACTION: Adopt Resolution 01-72
4.2.4 Resolution 01-73, approving an easement for stream restoration on Springbrook
Creek, and authorizing payment.
ACTION: Adopt Resolution 01-73
4.3 APPROVAL OF MINUTES
4.3.1 July 16, 2001, Council retreat
ACTION: Approve minutes as corrected
END CONSENT AGENDA
5. ITEMS REMOVED FROM THE CONSENT AGENDA
There were none.
6. CITIZEN COMMENT
• Carolyn Jones, 2818 S Poplar Way, Glenmorrie Neighborhood Association
Ms. Jones asked the Council to be more hospitable to citizens who came to speak at the
meetings. She indicated that in the past, the Council opened up the curtain to make space for
overflow crowds, which has not happened in the last eight months. She recounted two instances
in the past three months when she came to speak on a specific topic on the agenda but the
Council did not ask for citizen input. She asked the Council to honor citizens' rights to speak.
Mayor Hammerstad mentioned the blue slips that citizens filled out, which let her know who
wanted to speak. Ms. Jones said that filling out the blue slips negated the spontaneity of
conversation. She argued that it was the Mayor's role to ask for citizen input, regardless of
whether she had the blue slips. Mayor Hammerstad observed that the blue slips helped
facilitate the meeting. She thanked Ms. Jones for her suggestion about the curtain.
7. PUBLIC HEARINGS
7.1 Ordinance 2310, amending LOC Chapter 47 (Sign Code) of the City of Lake Oswego
Code to allow temporary signs in the public right-of-way at specified times and
specified zoning districts
Mayor Hammerstad explained that the Council was postponing this item requested by the
realtors because the City Attorney was stuck out of town when staff was working on this item,
and they could not finish it.
Councilor Rohde moved to postpone the hearing to October 16, 2001. Councilor McPeak
seconded the motion. A roll call vote was taken and the motion passed with Mayor
City Council Minutes Page 5 of 15
September 18, 2001
Hammerstad, Councilors Graham, McPeak,Hoffman, Rohde, Schoen and Turchi voting in
favor. 17-0]
7.2 Ordinance 2311, approving an amendment to the non-exclusive cable television
services franchise agreement granted to TCI Cablevision of Tualatin Valley by extending
the deadline for construction of the required system upgrade
STAFF REPORT
Mr. Powell advised the Council that the amended version of Ordinance 2311, which they would
be passing tonight, reflected clerical corrections only. He explained that, under the Charter,
technical changes did not require notice or continuation.
Bruce Crest, MACC, introduced Debbie Lepold from AT&T and Sarah Hackett, MACC
Senior Communications Analyst. He presented the MACC Board of Commissioners
recommendation on AT&T's request for an extension of time to complete the cable TV service
upgrade in the MACC service area (14 jurisdictions). He directed the Council's attention to the
staff report, the question and answer sheet, and the executive summary.
Mr. Crest recalled that one requirement in the franchise renewal to TCI of the Tualatin Valley
was that AT&T upgrade the entire cable TV system within three years of the grant of the
franchise renewal or by January 31, 2002. He mentioned that earlier this year, the MACC staff
noticed, in the monthly staff report from AT&T, a slow down in AT&T's cable upgrade
construction. He reported that AT&T told them that the company was having some financial
difficulties, and thus slowing down their construction activities, which it halted in February.
Mr. Crest indicated that AT&T requested that MACC consider a possible extension of their
upgrade time, due to the financial difficulties they had in obtaining the capital necessary to
continue the construction. He reviewed the process by which the informal staff discussions
became formal discussions with the Commission in June 2001, resulting in the negotiation and
finalization of a formal agreement in August 2001, followed by a public hearing and the
Commission recommendation.
Mr. Crest said that MACC recommended that its 14 jurisdictions grant the requested six-month
extension. He reviewed the specifics of the agreement, including the completion of the Public
Communications Network upgrade by January 31, 2002 (servicing schools and governments) and
the completion of all the remaining upgrade construction by July 31,2002. He indicated that
AT&T had 30 days for final proofing and performance testing of the system and another 30 days
until September 30, 2002, to make sure that the system was ready to be offered to the customers.
Mr. Crest mentioned the benchmarks included in the contract and the heavy penalties for failure
to meet them, such as a $50,000 fine (in addition to daily fines) if AT&T failed to complete the
PCN upgrade by January 31, 2002. He noted the $100,000 penalty and daily fines if AT&T
failed to complete the residential upgrade by July 31, 2002, and the reduction in the 15-year
franchise contract by three years if AT&T did not complete the entire system upgrade by
September 30, 2002.
Mr. Crest stated that MACC studied the amended agreement carefully. He summarized their
reasoning in reaching a recommendation to approve the agreement. Whether AT&T received the
extension or not, it could not finish the complete upgrade by the deadline of January 31, 2002.
Under the current agreement, AT&T paid $2,000 a day fines until it finished the upgrade (or
$60,000 a month), which could take many months. Without the negotiated terms in the
extension agreement, MACC had no certainty as to when AT&T would complete the upgrade.
Mr. Crest stated that the extension agreement provided some certainty that AT&T would
complete the system upgrade by the two deadline dates of July 31, 2002, and September 30,
2002, or face even more significant penalties. He held that the Commission weighed the
uncertainty against the certainty and thus recommended approval of the extension.
City Council Minutes Page 6 of 15
September 18, 2001
Mr. Crest noted that Mr. Powel reviewed the ordinance and made some minor changes. He said
that the extension agreement was attached to the ordinance, detailing the changes that would be
made in the franchise if the MACC jurisdictions adopted the agreement. He mentioned that all
14 jurisdictions had to approve the agreement; one 'no' vote vetoed it for the other 13
jurisdictions.
Debbie Lepold, AT&T, apologized for asking the Council to spend its time on this issue. She
stated that it had not been the company's intention to miss the upgrade deadline when they
negotiated the franchise. She described the market situation that made it difficult for AT&T to
keep on schedule with the upgrade. She said that the company decided that it was crucial for it to
be proactive in approaching MACC and the jurisdictions and keeping them informed.
Ms. Lepold reported that AT&T had 35% of the upgrade done. She indicated that the
construction this year focused on completing the head end, the backbone infrastructure and hub
construction. She noted the location of the primary hub serving Lake Oswego near the
intersection of I-5 and 217. She said that, whether or not AT&T received the extension
agreement, it would continue with the upgrade because this was an important market to the
company.
Ms. Lepold observed that the extension agreement demonstrated that AT&T has put forth as
much effort as it could to provide MACC and its jurisdictions with significant hammers to give
the company the incentive to insure that it completed the upgrade by the agreed upon deadline.
She said that AT&T agreed to those incentives primarily to state to MACC and its jurisdictions
that the company was committed to meeting the deadline date. She mentioned that the senior
leadership team from marketing as well as the engineering staff worked on the benchmarks to
make sure that they were achievable, because if they were not met, the company would pay
dearly for it.
Ms. Lepold indicated that AT&T scheduled an excess of$1 billion in capital over the next year
to complete this upgrade. She mentioned that it was important to the company to move forward
on a positive footing as opposed to going into a non-compliance proceeding. Therefore, the
company decided to work proactively with MACC to provide the certainty that it and its
jurisdictions needed with respect to the completion of the upgrade.
Ms. Lepold mentioned that she has worked with Mr. Crest for 17 years in a number of different
capacities. She said that he could attest to the fact that she and her colleagues have made a
significant effort to craft an agreement that met the needs of their customers, the jurisdictions, the
company and the community in a time of significant competition. She stated that their goal was
to provide service and to get it rolled out as quickly as possible. She asked the Council to give
serious consideration to approving the extension.
COUNCIL QUESTIONS
Mayor Hammerstad referenced Ms. Lepold's comments that the downturn in the economy and
the lack of capital were the reason why AT&T could not complete the upgrades. She asked how
AT&T could do the upgrade now that the economy might even get worse. Ms. Lepold said that
they would not be making this commitment if they did not have assurances from the highest level
at AT&T (those who allocated the capital dollars). She explained that last year they did not have
the necessary amount of capital available in their capital management program to fulfill all the
demands that existed.
Ms. Lepold explained to Mayor Hammerstad that it was not a case of AT&T having fewer
priorities this year than it did last year, rather the company completed certain other priorities,
which allowed it to reallocate the capital needed to complete the MACC upgrade, presuming that
MACC granted the extension. She mentioned the letter of credit ($2 million) and the
performance bond ($12 million) that AT&T included in order to alert all those signing the
agreement that AT&T stood to pay a significant price if it did not meet the commitment.
City Council Minutes Page 7 of 15
September 18, 2001
Councilor Rohde questioned the two different things he was hearing: AT&T was thoroughly
committed to upgrading this region but, if MACC continued with the existing agreement and
charged AT&T $60,000 a month, then the area was not important any more. Ms. Lepold stated
that Mr. Crest said that, not her.
Ms. Lepold discussed the importance of this market to AT&T. She pointed out that the cost to
the company in committing to the agreement was more than if it went into non-compliance and
paid the $2,000 a day fine until they completed the upgrade. She mentioned the credits provided
to customers and AT&T not taking a rate increase. She emphasized that AT&T would complete
the upgrade, regardless of the agreement, but without the agreement, the completion timeframe
was open-ended; with the agreement, the jurisdictions had a commitment on a completion date
for the upgrade.
Ms. Lepold reiterated that AT&T did not want the adversarial relationship with its customers
that an open-ended violation process would most likely create. She mentioned the creation of a
history and track of a material violation for the franchise, which the company did not want. She
confirmed to Councilor Rohde that the extension agreement did benefit the customer beyond
what existed in the current franchise agreement.
Ms. Lepold discussed the Public Communications Network of the MACC jurisdictions, which
she described a one of the most sophisticated institutional networks anywhere in the country.
She mentioned that a primary commitment in the franchise agreement was to upgrade the PCN
from a co-axial base to a fully fiber-based network, and a primary commitment in the extension
was to complete the PCN upgrade by its original deadline date of January 31, 2002. She
explained that during the discussions with MACC, it became clear that the public agencies using
the PCN needed it completed as quickly as possible.
Councilor Rohde asked Ms. Lepold to describe what needed to be done in terms of physical
activities for those who had AT&T cable already coming into their houses. Ms. Lepold
explained that the bulk of the work was enhancing the backbone of the network in order to
increase capacity and to allow AT&T to deliver both analog and digital channels over the same
cable line.
Ms. Lepold said that customers would first see enhanced video services (more channels
available at a higher price). After completion of the upgrade, the customers could sign up for
high speed data service, which meant that they could connect to the Internet via cable modem
technology. She mentioned a third product, available in some markets, of offering residential
telephony in competition with the local exchange carrier.
Ms. Lepold pointed out that with this upgrade, customers would not see the same disruption as
occurred with the initial construction of the cable system (digging up roads, etc.)because AT&T
could use much of the existing co-ax based infrastructure and change out the electronics in the
network as needed in order to offer higher speeds to the home.
Councilor Rohde recalled that MACC had been confident during the franchise renewal
negotiations that the $2,000 a day fine was a significant penalty. He observed that now they
were hearing that $2,000 a day was a pinprick and not significant. He asked what assurances did
they have that the stipulated penalties this time were truly significant.
Mr. Crest recalled that, during the franchise negotiations, the takeover in progress of the small
company TCI by the large company AT&T created the expectation that TCI would have
available significant capital to build the upgraded system very rapidly. He indicated that, as a
professional, he saw the extension agreement assurances as better than the franchise assurances
because it involved a high level of progressive fines culminating in the significant punishment of
the company losing three years off its franchise agreement.
Mr. Crest explained that cable companies leveraged bank money based on the franchise
contracts that they had with local governments. He said that a reduction of the term by three
City Council Minutes Page 8 of 15
September 18, 2001
years would force AT&T to amortize the costs of the upgrade over a shorter period of time and
would reduce the value of the contract in AT&T's attempts to borrow money from banks. He
emphasized that the three-year reduction was a significant penalty.
Mr. Crest cited the time that AT&T has spent discussing this issue with MACC and negotiating
the various parts of the agreement as evidence of AT&T's sincerity. He mentioned that the
AT&T negotiating team kept its bosses informed of the process as a means of gaining their
bosses' confidence that MACC was willing to work with AT&T on this issue, and that the
extension was a limited extension with significant penalties at the end.
Mr. Crest stated his confidence that AT&T would meet the benchmarks in the agreement on
schedule. He expressed his appreciation for AT&T's candor about its financial situation and its
willingness to agree to significant penalties, which were unprecedented in Mr. Crest's experience
in working with cable companies. He mentioned the good will that AT&T stood to lose in the
MACC jurisdictions if it failed to meet the agreement.
Mr. Crest informed the Council that MACC was not interested in discussing further extensions
of the agreement; it would impose the penalties if AT&T failed to perform.
Councilor McPeak, the Lake Oswego representative at MACC, pointed out that the significant
penalties in the extension agreement would make it more expensive to AT&T not to keep the
agreement than to keep it. She observed that the investment of its available capital in this project
was now more attractive to AT&T.
Councilor McPeak reviewed the immediate benefits to the customers that AT&T has agreed to
provide until it made the upgraded product available. She mentioned a 30 cents a month credit,
no increase in the cost of the present service and a $16 credit towards a service offered by
AT&T. She described the efforts of the negotiating teams on both sides as achieving an
extension agreement that guaranteed the upgrade and provided verifiable promises with
significant penalties if AT&T did not meet the agreement, which was the best they could hope
for.
Councilor Schoen asked if the telephony product potentially offered long distance service
bundled with local telephone service. Ms. Lepold explained that primarily the telephony
product was local service with the customer selecting his/her own long distance provider. She
described the vision of a cable drop that went to a house going into a network interface unit and
breaking into three directions: to the TV set, to the computer and to the interior wiring of the
home. She noted that it was a nascent service that they were rolling out slowly in order to
examine it.
Ms. Lepold mentioned that the capital management issues that AT&T dealt with last year largely
resulted from investing a significant amount of money into residential telephony and not having
adequate capital available to complete residential upgrades. She observed that the telephony
product, as she described it, was largely what the Telecommunications Act envisioned in the
provision of alternate services to the local exchange carrier.
Councilor Schoen observed that customers found it difficult to compare the variety of programs
available in order to know what was the best deal. Ms. Lepold commented that the ideal
situation was a consumer receiving one bill from AT&T for cable service, local dial tone, long
distance, high speed data network, and a discount because it cost less to send one bill for bundled
services than it did to send five bills for separate services. She indicated that the concept of
bundling into one bill with cross discounts in order to provide savings to the customer was
appealing to AT&T.
Councilor Turchi questioned whether the imposition of the penalties, should AT&T not meet
the extension agreement deadlines, crippled AT&T's ability to borrow money to complete the
upgrade and functioned as a disincentive instead of as an incentive. Ms. Lepold indicated that
the primary impact on the company of reducing the term of a franchise agreement was the public
City Council Minutes Page 9 of 15
September 18, 2001
relations nightmare that the company would encounter while going through a revocation
proceeding. She stated that it did not cripple the company's ability to secure the capital to
continue with the upgrade.
Ms. Lepold mentioned the second impact on the company, the creation of a negative and
demoralizing atmosphere that affected their employees, customers and jurisdictions. She said
that their goal was to manage the process proactively in light of the lack of sufficient capital they
had last year to complete the upgrade.
Ms. Lepold described the extension as providing an environment of a positive framework in
which to acknowledge the current status, to move forward, to provide certainty for PCN users,
the jurisdictions and the customers (as well as modest compensation to the customers), and to
provide MACC with significant recourse in the event the company failed to meet the deadline.
She concurred with Mr. Crest that these penalties were far in excess of the recourse to which the
company normally agreed in any franchise agreement. She said that the reason the company
agreed was because they could say with certainty that it would complete the upgrade within the
window of time outlined in the extension agreement.
Councilor Turchi said that he would vote for the agreement under those circumstances. He
commented that what he heard was that AT&T could not afford to do the upgrade before, and
now, with worsening conditions, it could afford to do it. He indicated that it sounded like they
had a reasonable agreement in place to accomplish the upgrade.
Ms. Lepold clarified that when AT&T acquired TCI and Media One, it made a promise to Wall
Street that it would have a certain number of cabled homes with residential telephony; therefore,
the company diverted funds from the conventional bread and butter of residential upgrades to the
deployment of telephony. Now the company was reducing the funding for residential telephony
and allocating it back to completing the residential upgrades. She confirmed to Mayor
Hammerstad that it was not that AT&T had no money, rather that the company diverted the
money to other project priorities.
Councilor Graham asked what Plan B was, should one jurisdiction veto the agreement. Mr.
Crest said that MACC had no Plan B because the staff worked hard to make Plan A work by
meeting with the jurisdictions and finding out what it took to make a hesitant jurisdiction
comfortable. He indicated that if staff could not convince a jurisdiction to delay its vote until
staff could address the jurisdiction's issues, then staff would take it back to MACC, and the
Commission would work on finding a way to help the jurisdiction see its way clear to approving
the agreement.
Mr. Crest commented that, personally, he thought it would be unfortunate if one jurisdiction did
veto the agreement, as that meant that they returned to the original franchise language and had no
certainty that the upgrade would occur in a reasonable amount of time.
Mayor Hammerstad asked if AT&T has completed the upgrade in any one MACC jurisdiction.
Mr. Crest said that most of Beaverton was done, as well as a portion of Aloha and
unincorporated Washington County and some parts of Hillsboro.
Mayor Hammerstad noted the reference to `substantial compliance' in the reporting
requirements. She asked what happened if AT&T completed the upgrade in only 12 or 13 of the
jurisdictions by the deadline and Lake Oswego was not one of them. Mr. Crest clarified that
substantial compliance dealt with the way that MACC verified that AT&T has actually
completed the system. He commented that if a few homes were out of compliance, MACC
would let AT&T fix those without declaring the upgrade incomplete at the deadline date.
Councilor Hoffman asked how long did it take to produce the negotiated compromise
agreement. Mr. Crest indicated that they began informal discussions early this year and
developed the framework over April and May. They presented the outline to the Commission in
City Council Minutes Page 10 of 15
September 18, 2001
June for review and input, and then spent July and the first part of August hammering out the
final details. Staff presented the final agreement to the Commission in August.
Councilor Hoffman asked if Lake Oswego was the first jurisdiction MACC approached. Mr.
Crest said Lake Oswego and Hillsboro were the first two jurisdictions considering the
agreement, however Hillsboro did not require a presentation from MACC.
PUBLIC TESTIMONY
Mayor Hammerstad opened the hearing to public testimony.
• Carolyn Jones
Ms. Jones asked if it was AT&T's policy to pass on the costs of performance bonds and
potential fines or fees to subscribers. Ms. Lepold said that it was not.
Mayor Hammerstad closed the public hearing.
COUNCIL DISCUSSION
Sarah Hackett, MACC, referenced an earlier question about the library in clarifying that the
PCN served the Lake Oswego City library; the library would be upgraded to fiber by February 1,
2002. Mr. Crest noted that they still needed to find out exactly where the library got its Internet
service from. Ms. Hackett mentioned the possibility that the library received high speed internet
access over an ISDN line or a DSL line subsidized by the Federal Universal Service Fund, which
everyone paid on the phone bill.
Councilor McPeak moved to adopt Ordinance 2311, approving an amendment to the non-
exclusive cable television services franchise agreement granted to TCI Cablevision of
Tualatin Valley by extending the deadline of the construction of the required system
upgrade. Councilor Hoffman seconded the motion.
Councilor Rohde thanked MACC and AT&T for taking the time to answer the Council's
questions and concerns for the community. He thanked Councilor McPeak for her work, citing
her work on behalf of the community as the reason why he changed his skepticism and would
vote for the agreement.
Mayor Hammerstad thanked MACC for following up on the citizens who contacted the City
with telecommunications questions, which the City directed to MACC. She commented that she
thought the flyer in the cable bill explaining what has gone on would be helpful, especially if it
included the direct phone numbers for MACC.
A roll call vote was taken and the motion passed with Mayor Hammerstad, Councilors
Graham, McPeak, Hoffman, Rohde, Schoen and Turchi voting in favor. [7-0]
8. INFORMATION FROM COUNCIL
8.1 Councilor Information
Mayor Hammerstad reported that two weeks ago five Councilors attended a two and a half day
conference on sustainability in Portland. She indicated that they found it very valuable and
intended to schedule a public forum to discuss sustainability with the community, and the kinds
of things that citizens could do to sustain the community, the environment and the livability of
Lake Oswego. She said that each Councilor would give only a brief report tonight.
Councilor Graham reviewed the goal of the forum and the goals of sustainability. She said that
she attended seminars revolving around businesses, both small and large, working towards
sustainability. She listed the common steps and the common stumbling blocks in working
towards sustainability that she identified from the various presentations. She described the basic
City Council Minutes Page 11 of 15
September 18, 2001
idea that she heard at the conference: one person can make a difference. She stated her belief
that a community like Lake Oswego could make a difference as well.
Councilor McPeak spoke to City government having a role in public education on
sustainability. She mentioned the need for an easily understandable definition of sustainability
as part of the education process, and relayed two examples of definitions she heard at the
conference. She described the Oregon Sustainability Act of 2001 as a positive step.
Councilor McPeak discussed the idea of`green buildings' (buildings that left a significantly
lower ecological footprint), as something that the City government might consider. She pointed
out that, over a building's lifetime, a green building would pay for the extra upfront costs of
building it green, which was something to remember during the annual government budget cycle.
She observed that in the private market builders had to figure out how to make green buildings
profitable.
Councilor McPeak mentioned specific ideas she heard at the conference, including putting sod
roofs on buildings and the State Facilities Division training teams to help cities provide a green
inspection capability. She proposed that the Council address the idea of green inspections as
soon as possible.
Councilor Rohde stated that that it was a valuable conference with an overwhelming amount of
in formation presented. He described the sustainability movement as focusing on increasing
efficiencies, conserving resources and guaranteeing long-term prosperity. He noted that the
interest in prosperity was an important aspect of this movement that had been absent from earlier
green movements.
Councilor Rohde speculated what the U.S. could accomplish if it concentrated its resources on a
sustainability initiative, similar to President Kennedy's pledge to put a man on the moon in 10
years, in which the country pledged to develop the energy resources and materials that would
eliminate the need for oil in 10 years. He said that he was looking forward to the community
discussion of what they could do to improve sustainability and improve their long-term
prosperity. He encouraged the citizens to participate in the sustainability round table.
Councilor Turchi seconded the comments already made. He said that, of the different meetings
he attended, he found the one on `asset mapping' the most interesting. He explained that asset
mapping was identifying the resources in the community and looking at how to bring those
resources together to focus on the question of sustainability, which he thought had possibilities
for Lake Oswego in the future. He described the conference as informative and forward-looking.
Mayor Hammerstad mentioned that she attended a session on the Oregon Sustainability Act.
She read the 10 objectives listed in the Act, which state agencies were to enable and encourage
local communities to achieve. She described the list as encapsulating the State's direction and
providing the community with guidelines for where it would be going if it pursued a policy of
sustainability.
Mayor Hammerstad observed that the objectives covered a broad spectrum of activities that the
community and the City could make plans to achieve. She indicated that the Council hoped that
the community forum presentation on the various aspects of sustainability would also yield
citizen feedback on sustainability and on what Lake Oswego's priorities should be, if the Council
pursued policies of sustainability.
8.1.1 Joint Use Library Task Force Revised Charge Statement
Mayor Hammerstad reported that, with both the Council and the School Board making
revisions to the draft charge statement, they would meet to work out a document that each
agency could pass at its next meeting. She mentioned that the Council revisions included useful
suggestions from the Library Advisory Board. She encouraged all interested citizens to obtain a
copy of the charge statement, once it was adopted, and an application for the task force. She
City Council Minutes Page 12 of 15
September 18, 2001
indicated that the City would mail the charge statement to those who submitted applications
before adoption of the charge statement.
8.1.2 Formation of Clackamas County Coordinating Committee
Councilor McPeak moved to adopt the bylaws and to appoint the Mayor as the Lake
Oswego representative and Councilor Rohde as the alternate. Councilor Turchi seconded
the motion. A voice vote was taken and the motion passed with Mayor Hammerstad,
Councilors Graham, McPeak, Hoffman, Rohde, Schoen and Turchi voting in favor. [7-01
8.2 Reports of Council Committees, Organizational Committees and Intergovernmental
Committees
8.2.1 Regional Water Providers Consortium
Councilor McPeak reviewed the formation, membership and purpose of the proposed
Consortium. She reported that at the September meeting they discussed the first five-year update
of the regional water supply plan. She said that they heard a report from Portland Commissioner
Eric Sten on his initiative to form a regional water supply and transmission agency, in which the
current buyers of wholesale water from the Portland Water Bureau would become equity
partners, rather than simply customers. She mentioned that Commissioner Sten had support from
Metro and nine cities or water districts in the Metro area, including Portland.
Councilor McPeak mentioned the ongoing program to encourage water conservation: Water—
Be Resourceful With It. She gave the web address (conserveh20.org) for more information. She
described Clackamas River Water's new voluntary program of waterline insurance (repairs and
replacement between the water meter and the home) for $2 a month.
Councilor McPeak reported that the Consortium underspent its FY 2001 budget by $73,000; the
members were considering a dues reduction for FY 2002/03
8.2.2 Announcements
Councilor Graham reminded the community about the Great Adult Community Center Estate
Sale on October 13. She said that anyone interested in donating antiques and collectibles to the
Center should contact Rachel Hoffman at the Center.
Councilor Graham announced that the Library Advisory Board, with assistance and grants from
the Friends of the Library, has reinstituted First Tuesdays at the library, a music program from
7:00 to 8:30 p.m. She indicated that the first performance would be on October 2 with Sally
Harmon and Frank Bruner,jazz musicians. She mentioned the calligraphy exhibit that would be
up at the library at the same time.
Councilor Graham drew attention to the Unsung Heroes program, instituted by the City to
recognize those people in the community who have done something good and wonderful but no
one ever thanked them publicly. She mentioned that the City was in the process of appointing a
task force to make the first selections. She noted that nomination forms were available
throughout the city.
8.2.3 JPACT
Councilor Rohde reported that, after significant debate, JPACT decided to fully fund the
Springwater Corridor bike project out of the available federal funds, to half-fund the Nyberg
Road overcrossing, and to aggressively seek the other half through the new State transportation
bonding program. He mentioned that, at the last minute, Washington County withdrew its
request for funding for its Cornell Road boulevard project because the $500,000 it received out
of its $2 million project request was not enough to do the project. He said that JPACT decided to
allocate that money to the Nyberg Road overcrossing, thus reducing the amount requested from
the state and likely insuring its success in achieving funding.
City Council Minutes Page 13 of 15
September 18, 2001
Councilor Rohde reported that JPACT allocated funding for a full feasibility study of the
Willamette Shore Rail Line as a commuter option. He noted that JPACT, despite the
competitive interests, did pass the funding allocations unanimously in its tradition of coming to
consensus.
Mayor Hammerstad thanked Councilor Rohde on behalf of the Council for his hard work on
JPACT on behalf of Lake Oswego.
9. REPORTS OF OFFICERS
9.1 City Manager
Mr. Schmitz announced that paving has begun for the Old River Road pathway and should be
completed in a couple weeks, after which landscaping would commence.
Mr. Schmitz reported that he received a call from the County Executive this morning that the
County Board was willing to front the money for the Rivergrove sewer project, per the Council's
request at their joint meeting. He mentioned that staff would work out a repayment schedule
over time and prepare an ORS agreement to move forward on this project. Mayor Hammerstad
commented that she and Councilor Rohde attending the Timothy Lake retreat helped achieve this
because they were able to say the right things at the right time.
Mr. Schmitz thanked the School District and Superintendent Bill Korach for the approval of an
easement at Oak Creek School, which the City needed for a project. He mentioned that the City
would ratify the agreement at its next meeting.
Mr. Schmitz announced that the Development Review Commission and Gramor would meet
here tomorrow night at 6 p.m. for a work session on plans for Block 138.
Mr. Schmitz thanked the Council for its thank you to staff for its work last week in response to
the East Coast terrorist attacks. He recounted what the City staff did to provide a sense of
security, as well as actual security, to the citizens of the community in the first few days
following the attacks.
Mr. Schmitz said that within one hour of when the plane hit the second tower in New York City,
he met with the command staff of the police department. In the meeting, they called the director
of maintenance services and instructed him to take precautionary measures at certain City
facilities, such as the refueling station.
Mr. Schmitz said that Chief Bicart left the meeting to meet with the School Superintendent; as a
result, for the next several days, the City had police patrols in the schools to give the students a
sense of security. He mentioned that he and Superintendent Korach spoke together three times
on Tuesday and several times on Wednesday, providing mutual assistance and sharing of assets.
Mr. Schmitz mentioned the regularly scheduled morning and afternoon meetings with the
command staff. He reviewed the results of the Tuesday afternoon meeting, which the Fire Chief
and Maintenance Services Director attended; the maintenance services staff was assigned to
assist the police department with patrols on Tuesday, Wednesday and Thursday evenings to
watch the City's public facilities and infrastructure. He noted that, in addition, the Fire Chief
called in several CERT volunteers to help with the protection and monitoring of City Hall.
9.2 City Attorney
10. ADJOURNMENT
Mayor Hammerstad adjourned the meeting at 8:25 p.m.
City Council Minutes Page 14 of 15
September 18, 2001
Respectfully submitted,
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Robyn Ch�Is
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City Recorder
APPROVED BY THE CITY COUNCIL:
ON October 16. 2001
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Hammerstad, Mayor
City Council Minutes Page 15 of 15
September 18, 2001