Asheville City Council

InterMedia gets a new Asheville cable franchise — but City Council members reserve the right to sue both them and former franchisee TCI for alleged underpayment of fees to the city.

After hours of haggling over percentages and details — and two years of negotiations before that — Council voted 2-5, killing Chuck Cloninger‘s July 14 motion to accept InterMedia’s $175,000 offer to settle a franchise-fee dispute (Council member Tommy Sellers seconded his motion; all other Council members opposed it).

Depending on whose legal arguments you believe, InterMedia — and the cable companies that have preceded them during the past 10 years, including TCI — may owe considerably more, argued Council member Earl Cobb.

The city’s cable consultant, Jean Rice, estimates the underpayment at $600,000, Cloninger reported — based on the city’s argument that franchisees should have been paying 6 percent of gross revenues during that time, as written in the 1967 franchise agreement. A local nonprofit organization, Citizens for Media Literacy, says the total due could be upward of $1.3 million. InterMedia, however, counters that $175,000 is fair, for several reasons: a 1985 federal ruling set the maximum allowable fee at 5 percent of gross revenues; the statute of limitations restricts the city’s claim to a three-year period; and the term “gross revenues” — as used in the 1967 agreement — does not include income derived from premium-channel, advertising, home-shopping-network and pay-per-view services.

“I’m not going to vote for this [$175,000] settlement. … They owe us some more money, and they should pay it — and they can afford it,” Cobb proclaimed, earning applause from the assembled audience.

But City Attorney Bob Oast cautioned that taking InterMedia to court could be expensive and could take more than four years of litigation to resolve. To beat InterMedia in court on each legal point in the case would require a home run, Oast said.

“This is the year of home runs,” interjected Cobb.

“If it means going to court to have a clear, definitive answer [to these issues], why not?” added Council member O.T. Tomes.

Vice Mayor Ed Hay tossed his weight against the settlement as well, despite his legal opinion that the InterMedia offer appears fair and avoids lengthy litigation. “But as a lawyer, I always ask my clients what [they] want to do, [and] our clients — [Asheville residents] — are not willing to accept a settlement at this time.”

“A settlement is as much a matter of principle as it is a matter of legal advice,” proclaimed Mayor Leni Sitnick. Since first offering premium-channel service in 1980, Asheville cable-franchise operators continued to pay 6 percent — of basic and expanded-tier services, at least — “long after the [1985] federal law change,” she noted, which could strengthen the city’s legal position. She also observed that the city bears some culpability in the issue, because officials didn’t get tough on cable franchisees years ago.

Sitnick, Cobb, Hay, Tomes and fellow Council member Barbara Field voted against accepting the settlement.

That led Oast to suggest that Council members include a paragraph in the new franchise agreement stating that the city retains the right to pursue the fee settlement. On a motion from Cobb, Council voted 5-2 to grant the franchise to InterMedia — with the fee-settlement stipulation. Tomes and Sitick opposed the motion, arguing that: the 12-year term of the agreement is too long; InterMedia offers no senior-citizen discounts; the pass-through charge of $46.20 per household (spread out over 12 years) is too high; and the city’s negotiating position would be strengthened by delaying action until 1999.

The new franchise: toughens customer-service standards; commits InterMedia to providing free Internet service and modems to schools within its Asheville service area; and spells out that the company will pay the city 5 percent of all cable revenues as a franchise fee each year. “We just need to get on with it and start getting 5 percent of it all,” said Cobb.

Within the next decade, that slice of the pie could include a 5 percent cut of local telephone and Internet service fees, InterMedia General Manager Joe Haight pointed out. Responding to Field’s question about what effect the recent merger of AT&T and TCI could have on Asheville, Haight explained that InterMedia is a TCI affiliate and, as such, might eventually be able to offer local phone service over cable lines. One of the prime reasons AT&T bought TCI was to break into that market and compete head-on with the baby Bells, he said. [See the July 8 Mountain Xpress, “What does AT&T plus TCI equal for Asheville?”].

New services — including digital television — “are coming sooner rather than later, and I’d kick myself if, four years from now, we were still under the [1967] franchise [agreement] and not getting [those] new revenues,” said Hay.

Under the city’s rules for adopting ordinances, Council members must take a second vote on the cable franchise on July 28.

Council blocks duplex in Shiloh

Does having a rental unit next door decrease the value of your single-family home?

Some Shiloh residents think so, and their impassioned pleas on July 14 persuaded Asheville City Council members to deny property owner Emory Mitchell‘s request that he be allowed to place a former West Terrace duplex on his lot at the corner of London Road and Shady Oak Drive.

Similar buildings already moved into Shiloh by other developers remain unfinished and unsightly, reported resident Lucy Hunter, passing pictures to Council members. “We worked hard to have home ownership,” she said, explaining that some homes in the Brooklyn Road area of Shiloh are worth nearly $200,000.

The average value of homes in the London Road area of Shiloh is about $55,000, with many homes in the $70,000 range, Asheville City Planner Bruce Black indicated.

Hunter insisted that those values are threatened by an influx of substandard rental units, many of them moved from West Terrace, an apartment complex formerly located off Patton Avenue: Even if the developer commited to covering the asbestos siding and dressing up the West Terrace units to blend with the surrounding neighborhood, residents are “leery,” she said, “because for these [other] homes, what was promised was not what we got.”

Movers transporting the homes through Shiloh damaged mailboxes and cut at least one tree on private property, said Council member O.T. Tomes, who had met with several residents in recent weeks. “You just don’t treat people like this,” asserted Tomes.

Shiloh resident Catherine Proctor agreed, calling city staff’s detailed report on the duplex proposal “a sneak attack.” Residents had not been given copies of the report until Mayor Leni Sitnick asked staff to do so during the meeting.

Sitnick asked staff to make sure neighborhood residents and other affected parties have copies of any reports — at least by the beginning of the Council session — the next time a similar issue comes up. Shiloh residents had sat through more than three hours of cable-franchise discussions and other Council business, Sitnick pointed out: They would have had ample time to peruse the report.

In that report, Black concluded that — if Council chose to approve the duplex’s placement in Shiloh — Mitchell should be required to rehab the structure and make it blend with other homes in the neighborhood, by installing a single-door front entrance (to give it the appearance of a single-family home) and planting evergreen trees to screen rear parking areas from surrounding homes, for example.

Residents, however, stuck to their guns. Even if that were done and the duplex “looked nice … we [do] not want a rental unit — specifically, these particular units. … We’re trying to maintain [our] property values,” insisted resident Charles Williams.

Neighbor Freida Nash agreed: “If Mitchell and others keep bringing these or similar units into Shiloh, that will change our neighborhood from home ownership to rentals. We are standing up, and we are not going to be bought or bossed. You are not going to use us anymore as a dumping ground.”

Council member Earl Cobb agreed. “You start transitioning a single-family neighborhood from home ownership to rentals, property values are going to be affected.” He made a motion to deny Mitchell’s request.

Vice Mayor Ed Hay said he understands that the Shiloh community “feels dumped on,” but he still supports the section of the city’s Unified Development Ordinance that allows duplexes in single-family areas, if numerous conditions are met. Hay said he had been leaning in Mitchell’s favor, but had told Mitchell before the July 14 session, “You’ll have to sell [me] on this project, because the rest of [these duplexes are] junk.”

Hay looked at Mitchell, who was seated in the audience. “Quite frankly, Mr. Mitchell, you didn’t do anything.”

Council member Barbara Field agreed — despite her support of mixed-use development allowing multifamily homes in single-family neighborhoods.

The vote was 5-2 to deny Mitchell’s request. Council members Chuck Cloninger and Tommy Sellers voted against Cobb’s motion.