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<br />meeting, that it is an excellent time to borrow money because of the very low interest <br />rates. <br /> <br />The Risks <br /> <br />There is one primary risk to be aware of in the whole "new Media Center" scenario. <br />That is the source of the collateral. As has been demonstrated, that collateral is the <br />5% franchise fee on AT&T Broadband gross revenue, paid to the Member Cities for <br />use of their rights-of-way, to deliver cable services. The Cities have a I5-year <br />franchise that requires the company to pay this amount. Circumstances that could <br />impact that payment include the earnings of the cable industry, and state and federal <br />law governing local Municipalities ability to charge franchise fees for use of their <br />rights-of-way. While the Franchise document guarantees the franchise fee payment, <br />and it could be argued that those entities with such an agreement are exempt from <br />changes in law until the end of that agreement term, there exists the possibility that <br />the funding source could change or be eliminated. In this scenario, the Cities could <br />choose to continue payments on the facility, or sell the property. All seven Cities <br />would be responsible their portion of debt on the new facility. (Dependent on <br />percentage of subscriber income for each City.) <br /> <br />Conclusion <br /> <br />This is a very important decision for the Cable Commission and Member Cities. <br />Something must be done about a Media Center facility. Our current facility is <br />inadequate to meet our actual needs and has absolutely no growth potential. It makes <br />the most long-term financial sense for the Cities to own a facility outright. Both the <br />City of Coon Rapids and Quad Cities Cable Commission recently reached the same <br />conclusion and took the steps necessary to accomplish their goal. The <br />communications needs, of the Cities and our citizens, is not going to diminish. We <br />have the opportunity to develop the infrastructure necessary to provide these <br />important services for the long-term. It is my hope that the Cities will see fit to move <br />forward with the building of a new Community Media Center. <br /> <br />Attachments: <br /> <br />a. CBG Communications Facility Needs Assessment Analysis (relevant portion <br />of report.) <br /> <br />b. Example Joint Powers Agreement modification resolution <br /> <br />c. Northland Securities Revenue Bonding qualifying and repayment scenario <br /> <br />P.5 <br />