County agency to Cebridge: Please pay up
Local cable television and Internet provider Cebridge Connections is disputing a $25,000 bill officials with the Nevada County Local Agency Formation Commission claim the company owes.
The $25,000, LAFCo officials contend, is associated with Cebridge’s request that the commission reconsider the Truckee Donner Public Utility District’s broadband plan from last year. Cebridge representatives, however, are disputing the claim, saying that they have already paid $8,000 toward the costs of hearing their reconsideration request, and that they were never told that they might be liable for further charges.
According to LAFCo Executive Officer SR Jones, Cebridge paid the initial $8,000 deposit amount, but has refused to pay any of the additional $25,013 the commission spent in hearing the reconsideration request.
“I think the important thing to note here is LAFCo undertook a process to meet with the applicants, looked at their data, looked at their model, had both of our attorneys analyze Cebridge’s critiques of the financing plan… and at the end of the day when the commission’s response didn’t affirm what Cebridge was asking for, Cebridge refused to pay the bill,” Jones said.
Much of the $33,013 total cost of the reconsideration request went to attorney’s fees, Jones said, noting that LAFCo employed its own attorney and special bond counsel, Jonathan Cristy. Cristy looked at the PUD’s proposed financing scheme for the broadband project throughout the reconsideration process.
Pete Abel, vice president of community relations for Cebridge Connections, said that Cebridge representatives involved in the dispute over the local public utility district’s broadband plan were surprised at LAFCo’s request for additional money.
“We believe we have already gone well above and beyond the requirements of the law, in an effort to work collaboratively with LAFCo on this matter, acting in good faith, at every turn,” Abel said in an e-mail correspondence earlier this week.
Speaking at the commission’s board meeting on April 28 in Truckee, LAFCo Vice Chairman Ron Nulph spoke of the effect the outstanding debt will have on LAFCo’s budget for 2005/2006 ” forecast to be $498,736 this year, up from $470,546 last year.
“The refusal of Cebridge to pay the costs incurred to reconsider the commission’s decision on the Truckee Donner [PUD] telecommunications proposal has prompted the creation of a reserve for bad debt,” Nulph said.
That reserve fund will be established at $26,000, according to the preliminary budget laid out by LAFCo staff.
Nevada County LAFCo gets its funding through an agreement with Nevada County, which pays one third of its annual budget; the cities within Nevada County jointly pay another third; and special districts within its jurisdiction, make up the remaining third.
LAFCo’s complaint against Cebridge stems from the company’s August 2004 request that the commission re-evaluate its approval of the Truckee Donner Public Utility District’s plan to provide broadband services to its existing water and electric customers.
Cebridge currently offers its own cable-Internet services to Truckee residents and argued that the district’s plan would violate California laws regulating what services public agencies can offer.
LAFCo commissioners set up a special telecommunications subcommittee to evaluate the district’s broadband proposal and agreed with the PUD that the district’s plan was viable and met all applicable regulations. On the subcommittee’s recommendation, the full commission certified that the district’s broadband plan met all the conditions required by LAFCo and signed off on the plan Aug. 11, 2004.
Cebridge appealed that decision by filing a request for reconsideration with the commission, which led to the telecommunications subcommittee being called back into action, along with legal and bond counsel for the commission.
At that point, LAFCo asked Cebridge to put down an $8,000 deposit to cover anticipated costs associated with their reconsideration request ” an amount eight times greater than the $1,000 that is typically required as a reconsideration request deposit.
At their most recent meeting, LAFCo commissioners said that they plan to pursue payment of the additional $25,013 owed for the reconsideration request ” using a collections agency if necessary.
While LAFCo commissioners hope to be able to recoup their costs for the reconsideration request, the Truckee Donner Public Utility District has already spent approximately $52,480 in defending LAFCo’s decision and representing their own interests in a lawsuit brought by Cebridge after the company’s objections to the district’s plan were overruled by LAFCo.
Although the district was not named in the lawsuit brought by Cebridge against LAFCo, the district has joined the suit as a “real party in interest” in order to represent their interests in the case.
A court hearing on the matter is scheduled for June 14, and a decision from the court should take approximately 30 to 60 days, according to Steve Gross, legal counsel for the district.
Abel, meanwhile, said that his company still has a number of concerns about the legality of the district’s proposed broadband network, and thus has asked the California Superior Court to validate the decision LAFCo made to allow the district to move forward.
According to Peter Holzmeister, the utility district’s general manager, the district has already spent $28,980 in attorney’s fees during the lawsuit and has had to pay additional money to support LAFCo’s defense because of an agreement worked out between the agency and the district.
LAFCo’s Jones estimated that amount to be $23,500 so far, most of which has paid for expenses incurred by LAFCo staff. She said she expects those costs to go up significantly as the trial date draws near because LAFCo attorneys will begin billing for additional hours.
The district is currently using loans from the water and electric utilities to cover the costs associated with the Cebridge lawsuit, and according to Holzmeister, if the court validates LAFCo’s decision and gives the district the go ahead to set up a broadband utility, all of those loans will be repaid as soon as the broadband utility gets financing.