Applicants reluctant to commit to AFN

By Vickie Aldous
Ashland Daily Tidings

Uncertainty about the Ashland Fiber Network’s future is hampering the search for a new director for the city-owned cable television and Internet service.

During a Thursday meeting, City Administrator Gino Grimaldi briefed members of the AFN Options Committee about the progress of the search. The committee, which was appointed by the Ashland City Council and began meeting in August, plans to present options in a few months for dealing with the financially struggling service that range from selling it to offering new products in an effort to boost revenues.

Grimaldi said he has been contacting the top six candidates of a field of more than 70 applicants this week.

“When I describe what’s going on with the options committee, people are expressing reluctance as to making a commitment until they know where we’re going with AFN, particularly if we’re going to sell AFN,” he said.

However, the AFN Options Committee already had wanted the search to be slowed so a new AFN director would not be hired until the committee presented its list of detailed options to the city council.

During the meeting, Dick Wanderscheid — who previously headed both AFN and the city electric department and now leads only the electric department — said three mistakes contributed to AFN’s current financial woes. Wanderscheid was not the head of AFN or the electric department when AFN was launched.

Construction costs for the telecommunications system ballooned from an estimated $5.9 million to $9 million primarily because the city found out it had to pay higher wages to private contractors under Oregon’s prevailing wage law, he said.

Building out the system took longer than expected and the city did not predict that Charter Communications, the city’s business competitor, would cut its rates to below market levels, according to Wanderscheid.

“It took too long, it cost too much and we underestimated the response of Charter and set our rates way too low,” Wanderscheid.

AFN currently is breaking even on expenses and revenues, but is saddled with a $15.5 million loan covering shortfalls from previous years.

AFN Options Committee member Paul Mace questioned how much of that loan is from costs for city employees that were charged to AFN, versus outside costs to contractors, materials suppliers and others.

A variety of city employees — including electric technicians and the city finance director, city attorney and city administrator — have performed or continue to perform tasks for AFN.

Mace asked city staff to separate the loan into internal and external costs. Perhaps if the Ashland City Council chooses to spin off AFN as a private nonprofit entity, only a portion of the $15.5 million debt would accompany AFN. The rest of the debt could remain the responsibility of the city, and ultimately, its residents, he said.

He pointed to the model of the Mt. Ashland Association. That nonprofit organization manages the Mt. Ashland Ski & Snowboard Resort, which was purchased through a $500,000 state economic development grant and community donations after the private company that owned the ski area sought to dismantle it.

“One of the ways we could make AFN attractive would be not to place all the debt service on the new entity. Mt. Ashland did not start life in debt,” Mace said after the meeting.

On Tuesday night, the city council voted to add a $7.50 monthly fee to electric bills beginning in early October and to raise AFN’s cable television rates in January 2006 so that the city can make its AFN debt service payments.

Staff writer Vickie Aldous can be reached at 482-3456 x. 3018 or valdous@dailytidings.com.