AGENDA #4c

MEMORANDUM

TO:	Mayor and Town Council
FROM:	Bruce Heflin, Assistant Town Manager Ralph D. Karpinos, Town Attorney
SUBJECT:	Telephone Franchise for BellSouth – First Reading
DATE:	November 20, 2006

The attached ordinance would approve, on first reading, a new franchise for BellSouth for provision of a telephone system within the Town of Chapel Hill. Under State law (N.C.G.S. Sec. 160A-76(a)), adoption will require the Council to vote again at a subsequent meeting.

BACKGROUND

State law allows the Town to require franchises for utility companies that use public rights-of-way or Town-owned property.  The local franchising process sets forth certain terms for the use of the Town’s facilities and how equipment may be located and relocated.   Provisions to protect the Town from liability related to a franchise holder’s operations are included in the local franchise.  Other issues such as rates are subject to federal and State regulation.

The Town has been in the process of establishing, updating and renewing franchises with utility service providers who use Town right-of-way to provide service to citizens and businesses within the Town’s corporate limits.  Over the past few years, this has included those utility providers who serve the entire Town, such as Public Service Gas, as well as smaller utility providers who serve only certain areas of Town.  We have been working with BellSouth for the past few months to develop a franchise based on some of the same principles that were included in the recent Public Service Gas Franchise, with adjustments based on the difference in the nature of the two service providers. 

DISCUSSION

Attached is the proposed new franchise that is the result of negotiations and exchange of drafts that have taken place over the past few months. 

Key points of the proposed franchise include:

• The franchise would be for a 10-year term with provisions for automatic two-year renewals up to an additional 10 years unless either party gives notice requesting renegotiation.
• The Company would have the right to use the public rights-of-way for installation and operation of its services and would agree to use due care in construction activities and to restore the disturbed rights-of-way upon completion of any work. 
• The Company would assume liability for any damages resulting from its failure to use due care in exercising the rights granted by the franchise agreement.
• The franchise would not be exclusive.
• The franchise would be subject to applicable State and local laws and ordinances.
• The franchise includes language similar to that, which was most recently added to the approved franchise for Public Service Gas, which would facilitate the use of any BellSouth easements for public pedestrian and non-motorized vehicular facilities.

The substantive terms of the proposed franchise are based on franchises issued to other similar service providers and the recent franchise issued to Public Service Gas.

If the Council approves this franchise on first reading, it would need to come back on the Council’s agenda for a second reading at its next meeting, December 4, 2006.

RECOMMENDATION

We believe that the attached franchise ordinance will allow the Town and BellSouth to continue a good working relationship, and we recommend enactment of this Ordinance tonight on first reading.