County, Cities Owed $265K; Should Charter Pay?

Contributed by: Ann Hinch, Knoxnews.comon 9/28/2006

Though both Lenoir City and Loudon city councils have picked Loudon as their new fiscal agent for the Loudon County Cable Television Authority, it will be another month or more before previous agent Loudon County can turn its related accounts over.

"It's not something you do on a regular basis," said Interim Loudon City Manager Lynn Mills of such a transfer, "so it'll just have to be worked out."

The change comes on the heels of an audit showing cable provider Charter Communications may owe the county and two cities in excess of $265,000.

Mills also chairs the Authority; like Lenoir City representative Earl Lauderdale, he was appointed by his council. The Authority had three members before Loudon County commission voted this summer to withdraw from the inter-local cable television agreement.

That may reverse. At their Sept. 11 meeting, commissioners debated the wisdom of doing this with only a little over a year left (the agreement expires December 2007), since it means the county may forfeit about $133,000, its share of the Authority's reserve funds, which Lauderdale estimates at more than $150,000.

Some commissioners disagreed with withdrawing. "Our word's got to be good," said Bob Franke, adding it hurt the county's integrity and credibility.

One reason commission pulled out was inability of the Authority and Charter to reach agreement on renewal of the county's cable franchise contract. Negotiations have stalled for more than six years; Nick Pavlis, Charter's state director of government relations, said the average time is eight months.

"It seems like we were pouring money down a hole," Commissioner Harold Duff said of attorney and consultant fees, "and we weren't getting anything in return for it."

Commissioners were also interested in an August audit of Charter by the Howell Group of North Carolina. The auditor determined Charter owes $265,209 in uncollected franchise fees to Loudon County ($196,028), Lenoir City ($42,274) and Loudon ($26,907) from 2000 to 2005.

Pavlis said this calculation was based on services Charter added mid-contract, such as digital television. He said perhaps his predecessor did not notify Charter's home office in St. Louis to collect franchise fees on behalf of the three governments. Still, he contends it should now collect that $265,209 cost from Loudon County customers over a 12-month period, if the county and cities want payment.

"That's his position," Mills countered. The Authority's is that Charter should absorb the loss because it erred; if it gets to pass the cost along, he believes it should be spread over five years instead of one.

Last year, the three governments received $260,000 in franchise fees from Charter. This is five percent of Charter's income from all services except Internet and phone, Mills explained.

Of this, $168,000 went to Loudon County, $56,000 to Lenoir City and $36,000 to Loudon. Roughly a fifth was requested by the Authority for its operating budget (it can request the entire amount, Lauderdale said) and the rest went into county and city general funds.

Pavlis said Charter serves nearly 10,000 customers in the county and both cities.