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HomeMy WebLinkAbout1976-06-18 MinutesMINUTES OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS June 18, 1976 The Board of Directors of the City of Fayetteville, Arkansas, met in a special session on June 18, 1976, at 3:00 p.m. in the Directors' Room of the City Administration Building. PRESENT: City Manager Donald Grimes; Administrative Assistant David McWethy; Susie Sandage, in the absence of the City Clerk; and Directors Marion Orton, Ernest Lancaster, John Todd, Paul Noland, and Russell Purdy. ABSENT: Directors Morris Collier and Al Hughes; City Attorney Jim McCord; City Clerk Darlene Westbrook OTHERS PRESENT: George Holland, Walter Niblock, Sturman Mackey, Pat Tobin, and representatives of the news media. CALL TO ORDER 200.1 The meeting was called to order by Mayor Marion Orton. Following a brief moment of respectful silence and roll call, the Mayor stated the purpose of the special meeting as being to discuss the franchise tax agreement between the City and Southwestern Bell Telephone Company. 200.2 City Manager Donald Grimes presented copies of his memorandum dated March 10, 1976 concerning revenue producing measures proposed by the Task Force. It appeared to Grimes that oneparagraph of the memo brought about a misunderstanding of the amount of franchise tax the telephone company would pay to the City for the year 1976. That paragraph read as follows: 200.3 Mr. George Holland, local manager of Southwestern Bell Tele- phone Company, indicated quite strongly that he felt the proposed 50C per telephone per month was very much out of line when compared with the 4% franchise tax to be imposed upon the other utilities. He indicated that he felt that SWEPCO's gross revenues were approx- imately double those of the telephone company, and that the gas company's revenues were 12 times those of Southwestern Bell. He went on to indicate that he would furnish substantiating information to support his contention. On the basis of this, Mr. Holland indicated that Southwestern Bell would double its present franchise tax this year (from $37,500 to $75,000) and they would be willing to go to $100,000 per year beginning in 1977. If Mr. Holland's contention con- cerning comparable gross revenues proves accurate, then I feel this is a very fair offer on the part of the telephone company. 200.4 Mr. Grimes further stated that the misunderstanding came about by the City's interpreting the above paragraph to mean that the telephone company was to pay to the City the first year the ordinance was enacted the amount of $75,000 for the entire year of 1976. But Bell felt that application of the tax at mid year would overburden the customer; therefore, the telephone 200 company felt the amount should be reduced proportionately. Mr. Holland was granted the floor and stated he felt Mr. Grimes, as well as the Board, was negotiating in an honest and sincere manner. He stated his main concern at this time is to "fairly" represent the customers of Southwestern Bell. The City's "special tax" (as Mr. Holland preferred to term the franchise tax) had been agreed to since he felt it to be equitable with other utility companies and that $100,000 seemed consistent and in order. It appeared that $75,000 for the year 1976 and $100,000 for the year 1977 was the best approach and would be applied immediately upon enactment of the ordinance. He felt by asking the customers to pay an amount of $75,000 beginning upon enactment of the ordinance would be asking the customers to do something they did not agree to when they voted for the tax package. He asked the Board to consider alternatives. CQ Following a lengthy discussion among members of the Board, City Manager Cr Grimes presented a proposed agreement which he read: caOn July 1, 1976, the franchise tax is to be set at an annual rate to produce $75,000 per year. This will stay in effect until December 31 1976, and should produce, during this 1976 calendar year, a total amount of $56,250. Beginning on January 1, 1977, based upon the number of phones in the City of Fayetteville, the telephone company is to set a percentage as franchise tax to be passed on to consumers to produce a minimum of $106,250 per year. This percentage is to remain in effect for a maximum three-year period. It was agreed upon to set the rate for the subsequent years at $106,250 to recoup the difference between $56,250 to be received and the $75,000 rate. It was felt that the additional number of customers in the coming years would help share the expense. Mayor Orton questioned Mr. Holland as to whether or not his company could go along with the proposed change. He stated he felt it was an alter- native which he could present to the company. Director Purdy, seconded by Noland, moved approval of the City Manager's proposal. The recorded roll call vote of the Board was: "Ayes": Orton, Purdy, Lancaster, Todd, Noland "Nays": None Absent: Hughes, Collier The motion was declared passed. The Board insisted upon referring the proposed change to the City Attorney for his advice and comment and that the City Attorney word the change to comply with the wording of the ballot question. ADJOURNMENT There being no further business, the Mayor declared the meeting adjourned. ATTEST: APPROVED: SA-441)7.Q.-)7fray-rzio7. ARLENE WESTBROOK, City Clerk MA ION R. ORTON, Mayor These minutes recorded and transcribed by Susie Sandage.