HomeMy Public PortalAbout01-12-1998 Regular Session
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MINUTES
HILLSBOROUGH TOWN BOARD
January 12, 1998
7:30 PM, Town Barn
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The Hillsborough Town Board held a regular meeting on January ]2, ] 998 at 7:30 PM in
the Town Barn. Present for the Board Meeting were Mayor Horace H. Johnson, Sr.,
Commissioners Kenneth Chavious, Richard Simpson, Catherine Martin, Frances Dancy, and
Evelyn Lloyd. Staff present were Town Manager Eric Peterson, Town Clerk Donna F.
Armbrister, Finance Director Sherry Carter, Planning Director Margaret Hauth, Town Engineer
Tom Hartye, and Police Chief Nathaniel Eubanks. Others present were Nick Herman from the
Town Attorney's Office.
Mayor Horace H. Johnson, Sr., called the meeting to order at 7:34 PM.
1. PUBLIC CHARGE
Mayor Johnson read the Public Charge.
II. ADDING ITEMS TO THE PRINTED AGENDA
Mayor Johnson added a Resolution for the Issuance of $5,800,000 General Obligation
Water Bonds, series 1998 to the Agenda as Item VIII.G.
Mayor Johnson reviewed with the Board a letter from Barry Jacobs, Chairman of the
Board of Directors of Orange Water and Sewer Authority, requesting the four elected bodies
from Orange County hold a meeting sometime in February or early March on matters of long-
range water supply, future resource options, wastewater treatment and reuse, water conservation,
and so forth. The Mayor asked the Board to review their schedules so they will be able to note
their availability when this meeting is scheduled.
Ill. AUDIENCE COMMENTS
A. Matters on the printed agenda
There were no audience comments.
B. Matters not on the printed agenda
Rick Williams, Ed Gill, and Jo Soulier requested to address the Board regarding a stop
sign which has been erected at the intersection of Lafayette and Sweet Gum in Cornwallis Hills.
This issue was added to the Agenda as Item VILA.
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IV. APPROVAL OF THE MINUTES OF THE DECEMBER 15, 1997 TOWN BOARD
MEETING
Commissioner Dancy requested that the minutes be amended to reflect her appointment to
work with the Town Manager to plan the Board's annual Goal Setting Retreat.
Upon a motion by Commissioner Martin, seconded by Commissioner Lloyd, the Board
moved to approve the minutes with the aforementioned amendment by a vote of 5-0. The motion
was declared passed.
V. REPORT FROM THE TOWN MANAGER
Town Manager Eric Peterson reported that the draft proposed Ordinances relating to
Truck Traffic, Pan Handling, and Weapons are in the hands of the Town Attorney for review and
should be available for Board consideration at the February meeting.
Manager Peterson updated the Board that he and Commissioner Dancy have met and the
plans for the annual Goal Setting Retreat are underway. He is preparing a workbook for each
member to aid in the Retreat facilitation.
VI. REPORT FROM THE TOWN ENGINEER
Town Engineer Tom Hartye presented a status report on all current water and sewer
projects.
A. Consideration of Bids for Construction of Reservoir
Engineer Hartye informed the Board that he has received the bids for the Reservoir
construction and would be getting the figures to the Board very soon.
vn. ITEMS FOR DECISION - CONSENT AGENDA
ADDED ITEM: Stop Sign at the Intersection of Lafayette and Sweet Gum in Cornwallis
Hills.
Mr. Rick Williams appeared before the Board to request they reconsider their decision to
erect this stop sign. Mr. Williams stated that this sign is in the middle of his front yard at 3] 7
Lafayette Drive. He presented comments that he has received from area Realtors indicating that
this sign would depreciate the resale value of his home.
Mayor Johnson asked Police Chief Nathaniel Eubanks to report on the Police
Department's fmdings regarding traffic in this area.
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Police Chief Eubanks stated that their radar reports show traffic on Lafayette in excess of
the legal speed limit.
Commissioner Simpson expressed his concerns with the depreciation of resale value of
Mr. Williams home.
Mr. Williams asked the Board what he could do to make his position stronger. The Board
advised him that obtaining a petition of signatures from community residents would strengthen
his position.
Mr. Ed Gill, resident in Cornwallis Hills, addressed the Board and reported that the
purpose of the stop sign request was to slow traffic down on Lafayette for the safety of the
community residents.
Ms. Jo Soulier of the Cornwallis Hills Property Owners Association presented as a
possible solution that the height of the stop sign be lowered.
Mr. Williams stated he would be glad to have the sign moved to his property line.
The Town Manager stated that moving the sign back to the property line would make it
ineffective.
Manager Peterson stated that he will go back to the site and reassess the situation and
bring back to the Board at their February meeting any additional information or other possible
solutions/recommendations.
VIII. ITEMS FOR DECISION -- REGULAR AGENDA
A. Approve a Resolution Approving the Transfer Order which allows the ownership
of Alert CATV to change to Time Warner Cable Advance Newhouse
Mr. Bob Sepe , the Town's CATV Consultant, informed the Board that he would have a
Resolution prepared for their consideration at their February Board meeting.
B. Adopt a Report from the Town's CATV Consultant, adopting it as the Town of
Hillsborough Report
Mr. Sepe explained the basis and rationale of the report outlining rate structures regarding
CATV in Hillsborough.
C. Adopt a motion to approve a Rate Order for Cable Television
Mr. Sepe explained the proposed rate order.
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Upon a motion by Commissioner Lloyd, seconded by Commissioner Chavious, the Board
moved to adopt the Report from the Town's CATV Consultant as the Town of Hills borough
Report and to approve the Rate Order by a vote of 5-0. The motion was declared passed.
D. Discussion of Staff's proposed Ordinance on Annexation
Planning Director Margaret Hauth presented the proposed Ordinance for the Board's
consideration.
After some discussion, and upon a motion by Commissioner Dancy, seconded by
Commissioner Martin, the Board moved to adopt the Ordinance on Annexation and have it
placed in Chapter 2 of the Town Code by a vote of5-0. The motion was declared passed.
E. Cathy OiPaulo will address the Board and request payment for damage to her
vehicle from a storm drain cover
Ms. Cathy DiPaulo appeared before the Board for a second time to request reimbursement
for damages to her vehicle by a storm drain cover in Cornwallis Hills. She reminded the Board
that the first time she appeared before them, the Board directed the Town staff to file her claim
with the Town's insurance company. Ms. DiPaulo reported that the insurance company has
denied her claim stating that the Town was not negligent in this situation. Ms. DiPaulo reported
her knowledge of two other persons who have had similar damage done to their vehicles by the
same storm drain cover which were never reported to the Town.
After some discussion, and upon a motion by Commissioner Chavious, seconded by
Commissioner Simpson, the Board moved to approve the reimbursement request of Cathy
Dipaulo in the amount of$169.91 by a vote of 5-0 with Commissioners Martin and Dancy
abstaining. The motion was declared passed.
F. Set Meeting date to Award Bids for the Reservoir Project
By consensus, the Board agreed to consider the Reservoir construction bids at the
February 9, 1998 meeting.
ADDED ITEM G.
Resolution Providing for the Issuance of $5,800,000 General
Obligation Water Bonds, Series 1998
Upon a motion by Commissioner Martin, seconded by Commissioner Dancy, the Board
moved to approve the Resolution Providing for the Issuance of $5,800,000 General Obligation
Water Bonds, Series 1998 and authorized the staff to proceed with the sale ofthe bond by a vote
of 5-0. The motion was declared passed. A copy of the Resolution is hereby made a part of these
minutes as Attachment VIlLG.
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IX. REPORTS
A.
The Wooten Company will update the Board on the Reservoir Project
Dan Boone from the Wooten Company reported that the 401 Permit has been obtained.
He stated that the 404 Permit should be obtained within the next month or so. In order to obtain
the 404 Permit, some of the land which at one time was wetland will need to be restored. Boone
reported the issue of wetlands mitigation is what they are working on now. This may require
the Town purchasing land outside of Orange county for wetlands preservation.
B. Ted Abernathy from the Orange County Economic Development Commission will
update the Board
Ted Abernathy, Orange County Economic Development Commissioner Director, reported
that the unemployment rate is at a 100 year low of 1.4%. Abernathy reported that retail sales
have gone up in the last year to about 8%. There were 1,300 new jobs created in the County.
Approximately 98% ofthese jobs are in small businesses. Abernathy indicated that more large
businesses would move into the area if HiIlsborough could support the office space they require.
He is currently working with contractors to promote the construction of additional office space.
X. CLOSED SESSION
A. Closed Session for the purpose of discussing potential litigation
Upon a motion by Commissioner Lloyd, seconded by Commissioner Martin, the Board
moved to go into Closed Session for the purpose of discussing potential litigation by a vote of 5-
O. The motion was declared passed.
XI. OPEN SESSION
A. Consider Resolution authorizing appraiser to represent Town during Reservoir
Property acquisition mediation process
Upon a motion by Commissioner Simpson, seconded by Commissioner Martin, the Board
moved to approve a Resolution authorizing Town Manager Eric Peterson to represent the Town,
and authorizing Finance Director Sherry Carter as an alternate to represent the Town, during the
Reservoir Property acquisition mediation process by a vote of 5-0. The motion was declared
passed. A copy ofthe Resolution is hereby made a part of these minutes as Attachment XIA.
Upon a motion by Commissioner Dancy, seconded by Commissioner Lloyd, the Board
moved to authorize the Town Attorney to contract with Steve Yuhasz to proceed with surveying
the property at the Faucette Mill Road Intersection by a vote of 5-0. The motion was declared
passed.
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Upon a motion by Commissioner Lloyd, seconded by Commissioner Simpson, the Board
moved to authorize the Town Manager to pay Louisiana Pacific for timber on the Lowdermilk
property in the Reservoir site in the amount of$14,139.73 by a vote of 5-0. The motion was
declared passed.
XII. ADJOURN
Upon a motion by Commissioner Simpson, seconded by Commissioner Martin, the Board
moved to adjourn by a vote of 5-0. The motion was declared passed.
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Respectfully submitted,
Donna F. Armbrister, Town Clerk
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ATTACHMENT VIII.B
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TIME WARNER CABLE
TOWN OF HILLSBOROUGH NC-0068 & NC-0936
(CARRBORO AND CHAPEL HILL CABLE SYSTEM SUBSCRIBERS)
FCC 1240 REVIEW
for 1998
January 12, 1998
REPORT
TO:
Eric Peterson, Manager, Town of H ill sbo rough ~} ~
Robert Sepe, City of Raleigh Information Access Manag~':d ~JCOG Cable
Television Regulatory Consultant
FROM:
RE:
Review of Annual Updating Maximum Permitted Rates filed by Time Warner
Cable (NC-0068 & NC-0936) - FCC Form 1240
Consultants for the Town of Hills borough have reviewed both of Time Warner Cable's FCC
1240 filings and supporting documentation furnished by the cable operator, and have conducted
fact-finding discussions with the cable operator and Federal Communications Commission
representatives. The values stated in the filing are the responsibility of the cable operator's
management.
Supplied data were reviewed to determine whether the operator calculated "updated" rates
consistent with the procedures prescribed by the FCC in accordance with the 13th Order on
Reconsideration, the Time Warner Social Contract, and the Telecommunications Act of 1996.
Original computations were performed by the consultants and compared against information
provided by Time Warner Cable. The consultants believe that the underlying cost data submitted
by the cable operator is free of material misstatements. However, the FCC 1240 rate filings
submitted to the Town does rely upon old inflation adjustment information, which if left
uncorrected will result in higher than normally occurring cable rates. I The accompanying report
provides a reasonable basis for the recommendations.
1 Time Warner may not have the latest inflation adjustment data available at the time it
prepared its FCC Form 1240 for 1998.
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EXECUTIVE SUMMARY
Time Warner seeks approval from the Town to adjust its maximum permitted rate(MPR) Basic
Service Tier programming rates for 1998 in the Hillsborough systems. Those rates are listed in
the table below:
System 1997 MPR Proposed 1998 Change
Basic Rate Basic MPR Rate
Carrboro System $8.76 $9.02 $0.26
NC-0068
Chapel Hill System $7.68 $7.84 $0.16
NC-0936
The Town's consultants have reviewed Time Warner's rate calculations and accompanying
information, and recommend that the maximum permitted rates be approved as follows:
SYSTEM
JUSTIFIED MAX BASIC RATES
Carrboro System
Chapel Hill System
$8.83
$7.67
Had Time Warner's FCC 1240 rate filings incorporated the true up inflation factor for the second
quarter of 1997 released by the Commission on October 10, 1997 the Maximum Permitted BST,
CPST and Standard service rates would have been lower. Although the FCC's 1240 rules
provide a "true-up" process to rectify over and under charges in subsequent years, it is the
consultant's opinion that prudent public policy acts to eliminate potential over charges as
opposed to providing a "refund-credit" adjustments the following year. This report reflects this
fundamental economic premise.
Time Warner Cable may choose2 to appeal the Town's rate order to the FCC. In this event,
TWC can continue to collect the 'higher" rates until such time that the FCC's Cable Bureau rules
on the appeal [likely in August, 1998]. Given the FCC's historical action in matters, the FCC is
likely to rule in favor of the Town or remand the issue back to the Town to resolve. Should this
occur, the inflation rates shall be known and it will be an easy mater to promulgate new
Maximum Permitted Rates for BST, CPST and Standard cable services and issue subscriber
refunds.
All the information contained in the following report is based upon data provided by the
Company. No independent analysis ofTWC's system cost data has been undertaken, all figures
supplied by TWC, pursuant to TWC's Certification, are accepted as true. The analysis begins by
2The consultant conversed with a TWC representative regarding this matter. No information was provided
with respect to the action that TWC might pursue. The Consultant did offer TWC an opportunity to refile its
FCC1240 to incorporate the latest inflation values. A decision in this regard by TWC has not yet been forthcoming.
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trying to replicate TWC's results. The Consultant has been able to determine that TWC's
calculations are mathematically correct. The report constitutes a detailed analyses of the
Consultant's filings pursuant to this rate filing.
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REPORT
On October 1, 1997, Time Warner Cable notified the Town of Hillsborough that the company
will adjust its cable service rates and equipment and installation service rates on January 1, 1998.
The Town administers two franchises (NC-0936 and NC-0068), Cablevision of Chapel Hill and
the Carrboro cable system, each is a separate entity with separate subscriber bases. It is the
Town's responsibility to verify that the cable operator correctly applied Federal Communications
Commission rate making rules when determining Basic Service Tier cable rates.
The Town has direct regulatory control over the Basic Service Tier, but has only an oversight
role over the upper tiers (i.e., Tier Service, Standard Service) of cable service. However, if the
Town determines that the cable operator incorrectly applied FCC rate making rules in
determining upper tier cable rates, then it may file a formal rate complaint with the FCC, which
will trigger an investigation into the rate making process used by the cable operator.
CARRBORO SYSTEM SUBSCRIBERS - NC-0068
If Time Warner's proposed rate structure is adopted, subscribers receiving the Basic Service
Tier (BST) will see their monthly BST rate increase by $.35, from $8.65 to $9.00, though the
proposed maximum permitted rates (MPR) will increase from $8.76 to $9.02. Time Warner has
chosen to charge a rate below the proposed MPR.
Tier Service subscribers would see their monthly Tier Service rate increase by $1.98 from
$18.95 to $20.93, though the proposed maximum permitted rates (MPR) will increase to $20.97.
Time Warner has chosen to charge a rate below the proposed MPR.
Because of the inflation data discrepancy in Time Warner's FCC 1240filingfor
1998 (see Discrepancies section), the Maximum Permitted Rate which can be justified for the
Basic Service Tier (BST) is $8.83 and $20.68 for the Cable Programming Service Tier (CPST).
Time Warner's BST and CPST Selected Rates of$9.00 and $20.97 are not acceptable in that
they exceed Maximum Permitted Rate which can reasonably be justified.
Table A
Rate Overview
CbS N C 0068
arr oro iystem: -
Cable 1997 1998 Proposed 1998 1998
Service Selected Selected Max Justified
Tier TWC TWC Permitted MPR
Rate Rate Rate
BST $8.65 $9.00 $9.02 $8.83
CPST $ I 8.95 $20.93 $20.97 $20.68
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CHAPEL HILL SYSTEM SUBSCRIBERS NC-0936
There are only three (3) cable service tiers on the Chapel Hill cable system, unlike the Carrboro
system that has two (2) tiers of service. If Time Warner's proposed rate structure is adopted,
subscribers who receive only the Basic Service Tier (BST) will see their proposed monthly BST
rate increase by $.16, from $7.65 to $7.81. The proposed maximum permitted rates (MPRs)
would increase from $7.68 to $7.81. Time Warner proposes to charge a rate below the BST-
MPR.
Current CPST Service subscribers will see their Tier rate increase by $1.29, from $7.85 to $9.14
a month. Though the maximum permitted rate (MPR) will increase from $8.12 to $9.17. Time
Warner proposes to charge a rate below the CPST-MPR.
Current Standard Service tier subscribers will see their Standard Service tier rate increase by
$1.02, from $9.00 to $10.02 a month. Though the maximum permitted rates (MPRs) will
increase from $9.01 to $10.05. Time Warner proposes to charge a rate below the CPST-MPR.
Because of the inflation data discrepancy in Time Warner's FCC 1240 filing for 1998 (see
Discrepancies section), the Maximum Permitted Rate which can be justified for the Basic
Service Tier (EST) is $7.66, $9.08 for the Cable Programming Service Tier (CPST), and $9.89
for the Standard Service Tier. Time Warner's BST, CPST, and Standard Service Selected Rates
are not acceptable in that they exceed the Maximum Permitted Rates which can be reasonably
justified.
Table B
Rate Overview
Ch I B'll S t NC 0936
ape I iys em -
Cable 1997 1998 Proposed 1998 1998
Service Selected Selected Max Justified
Tier TWC TWC Permitted MPR
Rate Rate Rate
BST $7.65 $7.81 $7.84 $7.66
CPST $7.85 $9.14 $9.17 $9.08
Standard $9.00 $10.02 $10.06 $9.89
Inflation Adjustment Discrepancy in TWC's FCC 1240 Filings
Time Warner is claiming inflation adjustments in its true up and projected period segments of its
FCC 1240 rate filing. Time Warner used the FCC true up period inflation figure of 2.70% for
the period January through December, 1997. However, on October 1, 1997 the FCC announced
that the true-up inflation rate for March through June was 1.77%. Pursuant to the FCC's rate
rules, the company must use the "current" inflation figure when calculating its true-up and
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projected rate increase due to inflation. When the lower inflation rate was inserted into the rate
calculation, the BST, CPST and Standard Service Maximum Permitted Rates dropped.
The consultants recalculated Time Warner Cable's charges attributed to inflation using currently
available information3. This resulted in a reduction of the overall inflation for 1997 from 2.7%
to 2.0% and set the projected period (current) inflation figure to 1.77%. The projected period
inflation figure is subject to correction in the operator's subsequent FCC 1240 rate filing.
Time Warner's FCC 1240 rate filing did not reflect the true up inflation factor for the second
quarter of 1997 released by the Commission on October 1, 1997. Had the operator used the
1.77% value to calculate the true-up period inflation rate instead to the previous quarter's value
(2.7%), the Maximum Permitted CPST rates would have been lower. Likewise, Time Warner
applied the 2.7% rate to its 1998 cost projections which contributed to higher Maximum
Permitted CPST rates. Apparently, Time Warner did not have this data available to it at the time
it completed its FCC Fornl 1240 for 1998.
A subscriber's total cable bill amount is inclusive of all tier rates below it. For example, a
Standard Service tier subscriber's total monthly rate will include rates for the Basic plus Tier
plus Standard Service.
Rate Adjustments for Equipment and Installation Services
Regional FCC 1205
In addition to the rate increases for cable services, Time Warner also adjusted its rates for leased
customer equipment and installation services. Pursuant to the Social Contract, Time Warner is
allowed to aggregate equipment and installation costs on a regional basis. Time Warner
submitted a regional FCC 1205 rate filing directly to the FCC for approval of equipment and
installation service rates applicable to multiple franchises across North Carolina. Though the
FCC 1205 filing is not submitted directly to relevant franchise authorities, federal rules explicitly
state that it is the franchise authority's responsibility to review the rates to ensure their
compliance with FCC rules.4
It is important to examine the rates established in the FCC 1205 filing (and those of other filings)
match the rates displayed on subscribers' cable statements. See the following table for equipment
and installation service adjustments scheduled for January 1998.
3See FCC Form 1240 Instructions for Line C3.
411The local franchising authorities will be responsible for reviewing the rates (equipment and installation
services) charged to ensure compliance with the rates approved by the Commission. If Time Warner charges rates
in excess of those permitted by the Commission, the local franchising authority may order a refund." Para. 37.
Time Warner Cable Social Contract. Memorandum Opinion and Order. DA FCC 95-478. Released: November 30,
1995.
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Table C
FCC 1205 Equipment and Installation Rate Adjustments
Effi . J 1 1998
ectIve anuary ,
Equipment 1996 1997 1998 Rate
Rate Rate Rate Change
Addressable Converter $1.96 $2.10 $2.30 $0.20
Non-addressable Converter $1.06 $1.10 $1.18 $0.08
Remote Control $0.24 $0.25 $0.30 $0.05
Installation - new drop $21.90 $22.28 $23.45 $1.17
Reconnect existing drop $17.90 $18.10 $20.32 $2.22
Additional Outlet - initial install $12.53 $12.77 $13.54 $0.77
Additional Outlet - separate trip $16.27 $16.48 $17.87 $1.39
Relocate Outlet - separate trip $15.33 $16.48 $17.87 $1.39
VCR Hook Up $15.70 $13.69 $14.24 $0.55
AlE Switch Installation $15.70 $13.69 $14.24 $0.55
Upgrade - truck trip $12.13 $13.69 $14.24 $0.55
Aerial to Underground $45.76 $46.42 NA NA
Hourly Service Charge $22.28 $23.21 $24.51 $1.30
External Costs - Analysis of Cable Service Rate Increases
The cable service rate adjustments reflect multiple cost elements, the majority of which are
attributed to external costs. An external cost is an expense a cable operator incurs during the
normal course of business, and may be added to the rate base. External cost categories include:
state and local taxes; franchise fees; costs of complying with franchise requirements, including
costs of providing public, educational, and governmental access channels; retransmission consent
fees and copyright fees incurred for the carriage of broadcast signals; other progranlming costs;
FCC regulatory fees; and costs associated with channel additions and deletions. Time Warner's
FCC 1240 rate adjustments reflect the following external cost elements:
1) External costs for true up period;
2) External costs for projected period;
3) Projected cable system upgrade costs (applied to upper cable tier only) - per Social Contract;
4) Inflation from true up period; and,
5) Inflation for projected period.
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True Up and Projected Periods
The FCC 1240 Form must be filed with the local franchise authority 90 days before the rates are
scheduled to take effect; it can be filed no more frequently than annually. The FCC 1240 form
allows cable operators to adjust their rates but once a year, minimizing the impact on subscribers,
and administrative burden on cable operators and franchise authorities.
The FCC 1240 form permits operators to estimate their future costs over a 12-month period: this
is referred to as the projected period.5 The FCC 1240 also allows operators to recover costs that
have already occurred during a specified period of time, referred to as the true up period. If a
cable operator incorrectly estimates its costs for a projected period, it must correct those
estimates by using the true up segment of the next FCC 1240 rate filing.
Time Warner's projected period for NC-0234 encompasses the 12 months of 1998,from
January 1 to December 31. The operator's true up period covers 12 months of 1997,from
January 1 to December 31.
Franchise Related Costs
Time Warner did not attribute any expenses to franchise related costs, such as public, education
or public (PEG) access activities. In the future, should the Town direct Time Warner to
participate in PEG activities, for example in 1999 - 2000, then these modest expenses will
become part of the rate base.
Programming Costs
Programming costs for the BST during 1998 are projected to be approximately $.1135 monthly,
per subscriber. This compares to $.1651 monthly, per subscriber, during 1997. Time Warner
representatives state that program service providers customarily change their fee structure
annually. Time Warner attributes the bulk of its BST programming costs to copyright fees paid
to the Copyright Tribunal and fees for carriage of super stations, like WGN. The company did
not claim any retransmission consent costs for either period.
Programming costs for the Tier Service during 1998 are projected to be approximately $4.84
monthly, per subscriber. This compares to $3.93 monthly, per subscriber, during 1997. In
addition to these programming costs. Added to this cost is the cable system upgrade cost, which
amounts to $3.00 per subscriber, per month, in 1998. Time Warner is allowed to pass through
this cost prior to the rebuild of the cable system, pursuant to the Social Contract between the
company and the FCC.
Subscribers
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FCC 1210 Forms allow for the recovery of past costs, only, not future costs. Future costs are recoverable
through the use of the FCC 1240 Form, only.
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Carrboro System NC-0068
Time Warner states that its average subscribership during 1997 (the true up period) was 913. It
anticipates approximately 1,005 average subscribers during 1998 (the projected period), an
increase of92 subscribers. Subscribers receiving "Only" Basic Service in 1997 numbered 51,
and is projected to increase to 95 during 1998. The average number of Tier Service only
subscribers in 1997 was 862. This figure will increase to approximately 910 in 1998.
Subscribers
Chapel Hill System
Time Warner states that its average subscribership during 1997 (the true up period) was 203. It
anticipates approximately 210 average subscribers during 1998 (the projected period), an
increase of 7 subscribers. Subscribers receiving "Only" Basic Service in 1997 numbered 14, and
is projected to increase to 17 during 1998.
Cable System Upgrade Costs
Pursuant to the Social Contract, Time Warner is allowed to assess each CPST subscriber in 1998
$3.00 monthly to recover estimated costs associated with a cable system upgrade. This
assessment is levied only on the CPST tier and will increase by $1.00 for each of the five years
of the Social Contract. Thus, in the third year of the Social Contract, the operator will collect
$3.00 per subscriber each month in the third year, etc.
By the end of the Social Contract on December 31, 2000, it is estimated that Time Warner will
have collected approximately $205,786.65 to fund its rebuild ofthe cable system(s) within the
Town of Hillsborough (see the following Table for estimated annual revenue collected).
Table D
Cable System Upgrade - Both Cable Systems
Projected Precapitalization of System Upgrade
5 Year Social Contract
Year of Subscribers Monthly Charge Amount To Be Collected
Contract 5% growth rate per Subscriber
1st year - 1996 1,025 $1.00 $12,300.00
2d year - 1997 1,051 $2.00 $25,224.00
3d year - 1998 1,103 $3.00 $39,708.00
4th year - 1999 1,158 $4.00 $55,591.20
5th year - 2000 1,216 $5.00 $72,963.45
5 year total Total amount to be collected for upgrade $205,786.65
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Social Contract
Upgrade and Capital Commitments
According to Paragraph 25 of the Time Warner Social Contract, Time Warner is obligated to
provide "...an average of 15 new analog channels to benefit CPST subscribers and the initiation
of digital distribution technology, which will expand the capacity of Time Warner to add
programming and improve picture quality." Time Warner agrees that at least "...60% of all
capital expended in connection with the upgrade commitment described in the Social Contract
will be applied for the benefit ofBST and CPST subscribers."
Also, Time Warner agrees that "...each cable system will have a minimum bandwidth capacity of
550 MHZ, and at least 50% of Time Warner's subscribers will have access to a minimum
bandwidth capacity of750 MHZ. In the 750 MHZ systems, at least 200 MHZ is expected to be
used for digital distribution."
Paragraph 10 of the Social Contract states that Time Warner must provide each franchise
affected by the Social Contract with a "...progress report outlining the amount of capital
investments made, the number of subscribers affected by those investments, improvements in
system reliability and service, and projected expenditure and upgrades for the following year..."
within 90 days following the end of the calendar year during which the Social Contract is in
effect.
Thus, the Town can expect a report prior to March 31, 1998, from Time Warner stating exactly
what the company has accomplished during the past year regarding the system upgrade.
RECOMMENDATION
The consultants recommend:
1. That the BST rate adjustments contained within the FCC 1240 filings for NC-0068 and NC-
0936 submitted by Time Warner Cable be disapproved;
2. That the proposed maximum permitted BST rates of $9.02 for the Carrboro System
subscribers (NC-0068) and $7.84 for Chapel Hill System subscribers (NC-0936) be found
unreasonable.
3. That the Town approve a Maximum Permitted BST rate of$8.83 for Carrboro System
subscribers (NC-0068) for the January 1 through December 1998 period and $7.67 for Chapel
Hill System subscribers (NC-0936).
January 13, 1998D;\TIMESLlP\ WPDOCS\T JCOG\HILLSBOR\l240\1998\HILLS-40.RPT
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258
4. That the Town follow the FCC's rate complaint procedures and challenge Time Warner
Cable's Proposed 1998, FCC 1240 Maximum Permitted Rates for the upper tier services for NC-
0234 and file a FCC3296 rate complaint form challenging the CPST rates;
5. That the Town direct Time Warner Cable to amend its 1998 FCC 1240 rate filing for NC-
0234 and resubmit them to the Town; and,
6. That the Town request from Time Warner Cable its plan for assigning bill credits, and or,
refunds to subscribers.
The consultants recommend, and that the Board find that Time Warner Cable correctly applied
FCC rate making rules and procedures in calculating the maximum permitted Basic Service Tier
rates except that the "true-up" and "projected" inflation values used by the company were not
current. Additionally, that the Board encourage Time Warner base subsequent FCC 1240 filings
upon inflation update statistics released by the FCC on each October 1 as opposed to submitting
its FCC 1240 filing on October 1 each year.
Proceeding
The franchise authority must either approve or deny the operator's BST FCC 1240 rate request,
finding the rate to be either reasonable, or not reasonable. This determination must be based
upon a finding of fact. The franchise authority should adopt the consultant's report as its own
and give the public an opportunity to offer comment on the matter. It is suggested that the public
comment period coincide with a regularly scheduled meeting.
A rate order, finding the requested rate to be reasonable and conveying approval, is attached. To
be valid, the order must be executed following the conclusion of:
a. a public meeting where the counciVcommissionlboard gives interested parties an
opportunity to comment;
b. council/commission/board's official receipt of the report; and,
c. adoption by the council/commissionlboard of the report as its own - required
by FCC rules (a motion to adopt is necessary).
It is appropriate for public comment to be heard, related to the rate request by the cable operator
at the time the counciVcommissionlboard meets to deliberate upon this matter. A special session
is not required. It is necessary to call public comment during a regularly scheduled public
meeting. The comment period should be publicized by issuing a press release to the print and
electronic media, included in the meeting's publicized agenda, and otherwise publicly announced
in other ways.
6 The Town may choose to enter into a joint TJ-COG region CPST rate complaint.
January 13, 1998D:\TIMESLIP\WPDOCS\TJCOG\H1LLSBOR\1240\1998\HILLS-40,RPT
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ATTACHMENT VIII.C
259
STATE OF NORTH CAROLINA
TOWN OF HILLSBOROUGH
BEFORE THE BOARD OF COMMISSIONERS OF THE TOWN OF HILLSBOROUGH
IN THE MATTER OF:
Review of FCC 1240 Annual Basic
Service Tier Rate Adjustment Request
filed by Time Warner Cable for the
Town of Hillsborough, NC-0068 &
NC-0936.
)
)
)
)
)
)
)
Order Finding TWC's 1998
Proposed $9.02 and $7.84 Basic
Service Tier Maximum Permitted
Rates as Unreasonable and Setting
the BST MPRs at $8.83 and $9.08 for
the Carrboro and Chapel Hill Cable
Television Systems
BY THE BOARD OF COMMISSIONERS
WHEREAS, on October 1, 1997, Time Warner Cable submitted two FCC 1240 Annual
Maximum Permitted Rate filing requests for Regulated Cable Services with the Town of Hills borough,
one for the Chapel Hill system, the other for the Durham system. Both filings cover external costs,
inflation, and cable system upgrade costs for the projected period of January 1 through December 31,
1998; and above stated costs for the true up period of January 1 through December 31, 1997;
WHEREAS, Time Warner Cable is permitted, pursuant to the Social Contract, to estimate and
recover anticipated inflation, external costs, and cable system upgrade costs for the period of January
through December 31, 1998;
WHEREAS, the Town received a report from its consultants stating that Time Warner's FCC
1240 rate calculations are not in compliance with Federal Communications Commission rate making
rules, and that the proposed maximum permitted BST rates of $9.02 for the Carrboro System
subscribers (NC-0068) and $7.84 for Chapel Hill System subscribers (NC-0936) are unreasonable.
WHEREAS, FCC rules grant local franchise authorities an initial 90-day review period,
measured from the date of receipt of the FCC 1240 filing by the franchise authority, to review the cable
operator's rate filings. If said 90-day review period expires before the rates go into effect, the franchise
authority retains review and refund authority past the initial 90-day review period as long as all
inquiries from the cable operator regarding said review are responded to in writing within 15 days of
said inquiry;
WHEREAS, Time Warner's rate filings include cost estimates for the calendar year of 1998,
and said estimates may require adjustment (true up) in the cable operator's subsequent FCC 1240 rate
filings;
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260
WHEREAS, the Town of Hills borough is certified with the FCC to regulate basic service tier
rates, equipment and installation services provided by Time Warner Cable in franchise; and,
IT IS A FINDING:
THAT Time Warner Cable did not structure its 1997 true-up charges for the second through
fourth quarter on the FCC's currently available inflation factor of 1.77%;
THAT Time Warner Cable did not structure its 1998 projected charges for the period January
through December, 1998 on the FCC's currently available inflation factor of 1.77%;
THAT Time Warner Cable has not substantiated the adjustment of its maximum permitted
Basic Service Tier rate of $9.02 for the Carrboro System subscribers, based on past inflation and
current inflation indices;
THAT Time Warner requested maximum permitted BST rate ($9.02) for the Carrboro system
subscribers is determined to be unreasonable;
THAT, Time Warner has selected to charge the Basic Service Tier rate of$9.00 for the
Carrboro System subscribers during the 1998 calendar year in the Town of Hillsborough which
exceeds the justified MPR of$8.83;
THAT Time Warner Cable has not substantiated the adjustment of its proposed maximum
permitted Basic Service Tier rate of $7.84 for the Chapel Hill System subscribers, based on past
inflation and current inflation costs;
THAT Time Warner requested maximum permitted BST rate ($7.84) for the Chapel Hill
System subscribers is determined to be unreasonable; and
THAT, Time Warner has selected to charge the Basic Service Tier rate of$7.81 for the Chapel
Hill System subscribers during the 1998 calendar year in the Town of Hillsborough which exceeds the
justified MPR of $7.67.
IT IS THEREFORE ORDERED:
THAT Time Warner Cable's Basic Service Tier rates assessed subscribers in franchise NC-
0234 shall not exceed the maximum permitted rate of $8.83 for the Carrboro System subscribers and
$7.67 for Chapel Hill System subscribers during 1998, subject to modifications in subsequent findings
by the franchise authority;
THAT the Town retains its authority to issue refunds or rate roll backs after the initial 90-day
review period with respect to the rates set out in the FCC 1240 filings, subject to subsequent findings
by the franchise authority;
THAT Time Warner must keep a full and accurate account of all revenues and costs associated
<, .
261
.
with the aforementioned cable rate adjustments;
THAT Time Warner revise its Form 1240 for the 1997 true-up and 1998 projected periods by
applying the correct inflation values described in this Order and file an amended FCC Form 1240 with
the Town within thirty (30) days of this Order; and
THAT Time Warner is directed to toll all revenues related to its proposed increase, issue
refunds and roll back BST rates to the MPRs set by this Order immediately upon the adoption of this
Order by the Town.
ISSUED BY ORDER OF THE TOWN BOARD OF COMMISSIONERS
This the 12th day of January, 1998.
ATTEST:
MAYOR:
pt~~
.
ff----1( ~,t
Deliver a copy of the Report and an Executed Order
via Certified U.S. Mail to: Time Warner Cable
Copy to:
City of Raleigh/TJCOG
.
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ATTACHMENT VIII.G
262
A regular meeting of the Board of Commissioners of the
Town of Hillsborough, North Carolina, was held at the
Hillsborough Town Hall Complex in Hillsborough, North Carolina,
the regular place of meeting, on January 12, 1998, at 7:30 P.M.
Present: Mayor Horace H. Johnson, Sr., presiding, and
Commissioner Ke/lllllel-A G.IAt:J-II/otls I ~R'AAI~5 ~. /J;rnef; EvdyAJ I?lkY'cr:
(}f}/A~~i~-, ..1. /lJ;J;ehAJ tfJ"/.AI7t?/J tJ. 5"irn ~soJl/
. ,
Absent: -0
*
*
*
*
*
*
Commissioner ,@,6l.ehA/
introduced the following
resolution, a copy of which had been provided to each
Commissioner, which was read by title and summarized by the
Finance Director:
RESOLUTION PROVIDING FOR THE ISSUANCE OF
$5,800,000 GENERAL OBLIGATION WATER BONDS,
SERIES 1998
BE IT RESOLVED by the Board of Commissioners of the
Town of Hillsborough:
Section 1. The Board of Commissioners has determined
and does hereby find and declare:
(a) That an order authorizing not exceeding $5,800,000
Water Bonds was adopted by the Board of Commissioners of the Town
of Hillsborough on September 16, 1993, which order was approved
by the vote of a majority of the qualified voters of said Town
who voted thereon at a referendum duly called and held on
November 2, 1993.
::-177018.1
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k 263
(b) That none of said Water Bonds have been issued,
that $2,500,000 notes have been issued in anticipation of the
receipt of the proceeds of the sale of a like amount of said
Water Bonds, which notes are dated July 15, 1997 and mature on
February 15, 1998, and that it is necessary at this time to issue
all of said Water Bonds, $2,500,000 of the proceeds thereof to be
applied to the payment of said outstanding notes.
(c) That (i) the Town is governmental unit with
general taxing powers, (ii) no bond which is part of the issue of
bonds described in Section 2 hereof is a private-activity bond,
as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), (iii) 95 percent or more of the net proceeds of said
bonds are to be used for local governmental activities of the
Town, (iv) the aggregate face amount of all tax-exempt
obligations (other than private-activity bonds), with the
exception of the obligations used to retire the outstanding
notes, issued by the Town and all subordinate entities thereof
during calendar year 1998 is not reasonably expected to exceed
$5,000,000 and (v) to the best of the Town's knowledge, there are
no subordinate entities of the Town.
(d) That the maximum period of usefulness of the water
system improvements to be undertaken with the proceeds of said
bonds to be issued is estimated as a period of not less than 40
years from February 1, 1998, the date of the General Obligation
Water Bonds, Series 1998, to be issued as hereinafter provided,
and that such period expires on February 1, 2038.
: .770IS I
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264
Section 2. Pursuant to said orders, there shall be
issued bonds of the Town of Hillsborough, North Carolina (the
"Issuer") in the aggregate principal amount of $5,800,000,
designated "General Obligation Water Bonds, Series 1998" and
dated February 1, 1998 (the "Bonds"). The Bonds shall be stated
to mature (subject to the right of prior redemption as
hereinafter set forth) annually, February 1, $225,000 1999 to
2008, inclusive, $250,000 2009, $350,000 2010 to 2012, inclusive,
$375,000 2013, $400,000 2014 to 2017, inclusive, and $275,000
2018, and shall bear interest at a rate or rates to be determined
by the Local Government Commission of North Carolina at the time
the Bonds are sold, which interest to the respective maturities
thereof shall be payable on August 1, 1998 and semiannually
thereafter on February 1 and August 1 of each year until payment
of such principal sum.
Each Bond shall bear interest from the interest payment
date next preceding the date on which it is authenticated unless
it is (a) authenticated upon an interest payment date in which
event it shall bear interest from such interest payment date or
(b) authenticated prior to the first interest payment date in
which event it shall bear interest from its date; provided,
however, that if at the time of authentication interest is in
default, such Bond shall bear interest from the date to which
interest has been paid.
The principal of and the interest and any redemption
premlum on the Bonds shall be payable in any coin or currency of
: ~7701~ I
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I'f.
265
the United States of America which is legal tender for the
payment of public and private debts on the respective dates of
payment thereof.
The Bonds will be issued by means of a book-entry
system with no physical distribution of Bond certificates to be
made except as hereinafter provided. One fully-registered Bond
certificate for each stated maturity of the Bonds, registered In
the name of Cede & Co., the nominee of The Depository Trust
Company, New York, New York ("DTC"), will be issued and required
to be deposited with DTC and immobilized in its custody. The
book-entry system will evidence beneficial ownership of the Bonds
in the principal amount of $5,000 or any multiple thereof, with
transfers of beneficial ownership effected on the records of DTC
and its participants pursuant to rules and procedures established
by DTC and its participants. The principal of and any redemption
premium on each Bond shall be payable to Cede & Co. or any other
person appearing on the registration books of the Issuer
hereinafter provided for as the registered owner of such Bond or
his registered assigns or legal representative at such office of
the Bond Registrar mentioned hereinafter or such other place as
the Issuer may determine upon the presentation and surrender
thereof as the same shall become due and payable. Payment of the
interest on each Bond shall be made by the Bond Registrar on each
interest payment date to the registered owner of such Bond (or
the previous Bond or Bonds evidencing the same debt as that
evidenced by such Bond) at the close of business on the record
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266
date for such interest, which shall be the 15th day (whether or
not a business day) of the calendar month next preceding such
interest payment date, by check mailed to such person at his
address as it appears on such registration books. Transfer of
principal, interest and any redemption premium payments to
participants of DTC will be the responsibility of DTC, and
transfer of principal, interest and any redemption premium
payments to beneficial owners of the Bonds by participants of DTC
will be the responsibility of such participants and other
nominees of such beneficial owners. The Issuer will not be
responsible or liable for such transfers of payments or for
maintaining, supervising or reviewing records maintained by DTC,
its participants or persons acting through such participants.
In the event that (a) DTC determines not to continue to
act as securities depository for the Bonds or (b) the Finance
Director of the Issuer determines that continuation of the book-
entry system of evidence and transfer of ownership of the Bonds
would adversely affect the interests of the beneficial owners of
the Bonds, the Issuer will discontinue the book-entry system with
DTC. If the Issuer identifies another qualified securities
depository to replace DTC, the Issuer will make arrangements with
DTC and such other depository to effect such replacement and
deliver replacement Bonds registered in the name of such other
depository or its nominee in exchange for the outstanding Bonds,
and the references to DTC or Cede & Co. in this resolution shall
thereupon be deemed to mean such other depository or its nominee.
~ .770Ig.1
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267
If the Issuer fails to identify another qualified securities
depository to replace DTC, the Issuer will deliver replacement
Bonds in the form of fully-registered certificates in the
denomination of $5,000 or any multiple thereof ("Certificated
Bonds") in exchange for the outstanding Bonds as required by DTC
and others. Upon the request of DTC, the Issuer may also deliver
one or more Certificated Bonds to any participant of DTC in
exchange for Bonds credited to its account with DTC.
Unless indicated otherwise, the provisions of this
resolution that follow shall apply to all Bonds issued or
issuable hereunder, whether initially or in replacement thereof.
Section 3. The Bonds shall bear the manual or
facsimile signatures of the Mayor and the Town Clerk of the
Issuer, and the corporate seal or a facsimile of the corporate
seal of the Issuer shall be impressed or printed, as the case may
be, on the Bonds.
The certificate of the Local Government Commission of
North Carolina to be endorsed on all Bonds shall bear the manual
or facsimile signature of the Secretary of said Commission and
the certificate of authentication of the Bond Registrar to be
endorsed on all Bonds shall be executed as provided hereinafter.
In case any officer of the Issuer or the Local Government
Commission of North Carolina whose manual or facsimile signature
shall appear on any Bonds shall cease to be such officer before
the delivery of such Bonds, such manual or facsimile signature
shall nevertheless be valid and sufficient for all purposes the
~,..t770I3.1
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268
. same as if he had remained in office until such delivery, and any
Bond may bear the manual or facsimile signatures of such persons
as at the actual time of the execution of such Bond shall be the
proper officers to sign such Bond although at the date of such
Bond such persons may not have been such officers.
No Bond shall be valid or become obligatory for any
purpose or be entitled to any benefit or security under this
resolution until it shall have been authenticated by the
execution by the Bond Registrar of the certificate of
authentication endorsed thereon.
The Bonds to be registered ln the name of Cede & Co.
and the endorsements thereon shall be in substantially the
.
following forms:
No. R- ......
$. . . . . . . . .
United States of America
State of North Carolina
County of Orange
TOWN OF HILLSBOROUGH
GENERAL OBLIGATION WATER BOND,
SERIES 1998
Maturity Date
Interest Rate
CUSIP
February 1,
. . . %
The Town of Hillsborough, North Carolina (the
"Issuer"), a municipal corporation located in the County of
Orange, is justly indebted and for value received hereby promises
to pay to
.
CEDE & CO.
: .J17018.1
7
269
. or registered assigns or legal representative on the date
specified above, upon the presentation and surrender hereof, at
the office of the Finance Director of the Issuer (the "Bond
Registrar"), in the Town of Hillsborough, North Carolina, the
principal sum of
.
.
................ DOLLARS
and to pay interest on such principal sum from the date hereof or
from the February 1 or August 1 next preceding the date of
authentication to which interest shall have been paid, unless
such date of authentication is an February 1 or August 1 to which
interest shall have been paid, ln which case from such date, such
interest to the maturity hereof being payable on August I, 1998
and semiannually thereafter on February 1 and August 1 in each
year, at the rate per annum specified above, until payment of
such principal sum. The interest so payable on any such interest
payment date will be paid to the person in whose name this bond
(or the previous bond or bonds evidencing the same debt as that
evidenced by this bond) is registered at the close of business on
the record date for such interest, which shall be the 15th day
(whether or not a business day) of the calendar month next
preceding such interest payment date, by check mailed to such
person at his address as it appears on the bond registration
books of the Issuer. Both the principal of and the interest on
this Bond shall be paid in any coin or currency of the United
States of America that is legal tender for the payment of public
and private debts on the respective dates of payment thereof.
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270
For the prompt payment hereof, both principal and interest as the
same shall become due, the faith and credit of the Issuer are
hereby irrevocably pledged.
This bond is one of an issue of bonds designated
"General Obligation Water Bonds, Series 1998" (the "Bonds") and
issued by the Issuer for the purpose of providing funds, together
with any other available funds, for enlarging, expanding and
improving the water system of the Issuer, and this bond is issued
under and pursuant to The Local Government Bond Act, as amended,
Article 7, as amended, of Chapter 159 of the General Statutes of
North Carolina, an order adopted by the Board of Commissioners of
the Issuer, which order was approved by the vote of a majority of
the qualified voters of the Issuer who voted thereon at a
referendum duly called and held, and a resolution duly passed by
said Board of Commissioners (the "Resolution").
The Bonds maturing prior to February I, 2009 are not
subject to redemption prior to maturity. The Bonds maturing on
February 1, 2009 and thereafter may be redeemed, at the option of
the Issuer, from any moneys that may be made available for such
purpose, either in whole or in part on any date not earlier than
February 1, 2008, at the principal amount of the Bonds to be
redeemed, together with interest accrued thereon to the date
fixed for redemption, plus a redemption premium of 1/2 of 1% of
the principal amount of each Bond to be redeemed for each period
of 12 months or part thereof between the redemption date and the
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maturity date of such Bond, such premium not to exceed 2% of such
principal amount.
If less than all of the Bonds of anyone maturity shall
be called for redemption, the particular Bonds or portions of
Bonds of such maturity to be redeemed shall be selected by lot in
such manner as the Issuer In its discretion may determine;
provided, however, that the portion of any Bond to be redeemed
shall be in the principal amount of $5,000 or some multiple
thereof and that, in selecting Bonds for redemption, each Bond
shall be considered as representing that number of Bonds which is
obtained by dividing the principal amount of such Bond by $5,000;
provided further, however, that, so long as a book-entry system
with The Depository Trust Company, New York, New York ("DTC"), is
used for determining beneficial ownership of Bonds, if less than
all of the Bonds within a maturity are to be redeemed, DTC shall
determine by lot the amount of the interest of each DTC direct
participant in the Bonds to be redeemed. If less than all of the
Bonds stated to mature on different dates shall be called for
redemption, the particular Bonds or portions of Bonds to be
redeemed shall be called in the inverse order of their
maturities.
Not more than sixty (60) nor less than thirty (30) days
before the redemption date of any Bonds to be redeemed, whether
such redemption be in whole or in part, the Issuer shall cause a
notice of such redemption to be filed with the Bond Registrar and
given by first class mail, postage prepaid, to the registered
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owner of each Bond to be redeemed in whole or in part at his
address appearing upon the registration books of the Issuer,
provided that such notice to Cede & Co. shall be given by
certified or registered mail. On the date fixed for redemption,
notice having been given as aforesaid, the Bonds or portions
thereof so called for redemption shall be due and payable at the
redemption prlce provided for the redemption of such Bonds or
portions thereof on such date plus accrued interest to such date
and, if moneys for payment of such redemption price and the
accrued interest have been deposited by the Issuer as provided in
the Resolution, interest on the Bonds or the portions thereof so
called for redemption shall cease to accrue. If a portion of
this Bond shall be called for redemption, a new Bond or Bonds In
principal amount equal to the unredeemed portion hereof will be
issued to the registered owner or its legal representative upon
the surrender hereof.
The Bonds are being issued by means of a book-entry
system with no physical distribution of bond certificates to be
made except as provided in the Resolution. One Bond certificate
with respect to each date on which the Bonds are stated to
mature, in the aggregate principal amount of the Bonds stated to
mature on such date and registered in the name of Cede & Co., a
nomlnee of DTC, is being issued and required to be deposited with
DTC and immobilized in its custody. The book-entry system will
evidence ownership of the Bonds in the principal amount of $5,000
or any multiple thereof, with transfers of ownership effected on
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the records of DTC and its participants pursuant to rules and
procedures established by DTC and its participants. Transfer of
principal, interest and any redemption premium payments to direct
participants of DTC will be the responsibility of DTC, and
transfer of principal, interest and any redemption premium
payments to beneficial owners of the Bonds by direct and indirect
participants of DTC will be the responsibility of such
participants and other nominees of such beneficial owners. The
Issuer will not be responsible or liable for such transfers of
payments or for maintaining, supervising or reviewing the records
maintained by DTC, its participants or persons acting through
such participants.
In certain events, the Issuer will be authorized to
deliver replacement Bonds in the form of fully-registered
certificates in the denomination of $5,000 or any multiple
thereof in exchange for the outstanding Bonds as provided in the
Resolution.
At the office of the Bond Registrar, in the manner and
subject to the conditions provided in the Resolution, Bonds may
be exchanged for an equal aggregate principal amount of Bonds of
the same maturity, of authorized denominations and bearing
interest at the same rate.
The Bond Registrar shall keep at his or her office the
books of the Issuer for the registration of transfer of Bonds.
The transfer of this Bond may be registered only upon such books
and as otherwise provided in the Resolution upon the surrender
: .\77018.1
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hereof to the Bond Registrar together with an assignment duly
executed by the registered owner hereof or his attorney or legal
representative in such form as shall be satisfactory to the Bond
Registrar. Upon any such registration of transfer, the Bond
Registrar shall deliver in exchange for this Bond a new Bond or
Bonds, registered ln the name of the transferee, of authorized
denominations, in an aggregate principal amount equal to the
unredeemed principal amount of this Bond, of the same maturity
and bearing interest at the same rate.
The Bond Registrar shall not be required to exchange or
register the transfer of any Bond during a period beginning at
the opening of business fifteen (15) days before the day of the
mailing of a notice of redemption of Bonds or any portion thereof
and ending at the close of business on the day of such mailing or
of any Bond called for redemption in whole or in part pursuant to
the Resolution.
It is hereby certified and recited that all acts,
conditions and things required by the Constitution and laws of
North Carolina to happen, exist and be performed precedent to and
in the issuance of this Bond have happened, exist and have been
performed in regular and due form and time as so required; that
provision has been made for the levy and collection of a direct
annual tax upon all taxable property within the Issuer sufficient
to pay the principal of and the interest on this Bond as the same
shall become due; and that the total indebtedness of the Issuer,
:~7701~.1
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including this Bond, does not exceed any constitutional or
statutory limitation thereon.
This Bond shall not be valid or become obligatory for
any purpose or be entitled to any benefit or security under the
Resolution until this Bond shall have been authenticated by the
execution by the Bond Registrar of the certificate of
authentication endorsed hereon.
IN WITNESS WHEREOF, the Issuer, by resolution duly
passed by its Board of Commissioners, has caused this bond [to be
manually signed by] [to bear the facsimile signatures of] its
Mayor and Town Clerk and [a facsimile of] its corporate seal to
be [printed] [impressed] hereon, all as of the 1st day of
February, 1998.
Mayor
Town Clerk
CERTIFICATE OF LOCAL GOVERNMENT COMMISSION
The issuance of the within bond has been approved under
the provisions of The Local Government Bond Act of North
Carolina.
Secretary, Local Government Commission
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CERTIFICATE OF AUTHENTICATION
ili.
276
This bond is one of the Bonds of the series designated
~ herein and issued under the provisions of the within-mentioned
Resolution.
~
.
Date of authentication:
FINANCE DIRECTOR OF THE TOWN OF
HILLSBOROUGH, NORTH CAROLINA,
as Bond Registrar
By
Authorized Signatory
ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner thereof
hereby sells, assigns and transfers unto
the within bond and all rights thereunder and hereby irrevocably
constitutes and appoints
attorney to register the transfer of said bond on the books kept
premises.
for registration thereof, with full power of substitution in the
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be
guaranteed by an institution
which is a participant in the
Securities Transfer Agent
Medallion Program (STAMP)
or similar program.
:..177013.1
NOTICE: The assignor's signature
to this assignment must corres-
pond with the name as it appears
upon the face of the within bond in
every particular, without altera-
tion or enlargement or any change
whatever.
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Certificated Bonds issuable hereunder shall be in
substantially the form of the Bonds registered in the name of
Cede & Co. with such changes as are necessary to reflect the
provisions of this resolution that are applicable to Certificated
Bonds.
Section 4. The Bonds maturing prior to February 1,
2009 will not be subject to redemption prior to maturity. The
Bonds maturing on February 1, 2009 and thereafter will be
redeemable, at the option of the Issuer, from any moneys that may
be made available for such purpose, either in whole or in part on
any date not earlier than February 1, 2008, at the principal
amount of the Bonds to be redeemed, together with interest
accrued thereon to the date fixed for redemption, plus a
redemption premlum of 1/2 of 1% of the principal amount of each
Bond to be redeemed for each period of 12 months or part thereof
between the redemption date and the maturity date of such Bond,
such premium not to exceed 2% of such principal amount.
If less than all of the Bonds of anyone maturity shall
be called for redemption, the particular Bonds or portions of
Bonds of such maturity to be redeemed shall be selected by lot in
such manner as the Issuer in its discretion may determine;
provided, however, that the portion of any Bond to be redeemed
shall be in the principal amount of $5,000 or some multiple
thereof and that, in selecting Bonds for redemption, each Bond
shall be considered as representing that number of Bonds which is
obtained by dividing the principal amount of such Bond by $5,000;
~'-H70IS I
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278
~J:
. provided further, however, that, so long as a book-entry system
with DTC is used for determining beneficial ownership of Bonds,
if less than all of the Bonds within a maturity are to be
redeemed, DTC shall determine by lot the amount of the interest
of each DTC direct participant in the Bonds to be redeemed. If
less than all of the Bonds stated to mature on different dates
shall be called for redemption, the particular Bonds or portions
of Bonds to be redeemed shall be called in the inverse order of
their maturities.
.
Not more than sixty (60) nor less than thirty (30) days
before the redemption date of any Bonds to be redeemed, whether
such redemption be in whole or in part, the Issuer shall cause a
notice of such redemption to be filed with the Bond Registrar and
to be mailed, postage prepaid, to the registered owner of each
Bond to be redeemed in whole or in part at his address appearing
upon the registration books of the Issuer, provided that such
notice to Cede & Co. shall be given by certified or registered
mail. Failure to mail such notice or any defect therein shall
not affect the validity of the redemption as regards registered
owners to whom such notice was given as required hereby. Each
such notice shall set forth the date designated for redemption,
the redemption price to be paid and the maturities of the Bonds
to be redeemed. In the event that Certificated Bonds are
.
outstanding, each such notice to the registered owners thereof
shall also set forth, if less than all of the Bonds of any
maturity then outstanding shall be called for redemption, the
:..177013.1
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distinctive numbers and letters, if any, of such Bonds to be
redeemed and, in the case of any Bond to be redeemed in part
only, the portion of the principal amount thereof to be redeemed.
If any Bond is to be redeemed in part only, the notice of
redemption shall state also that on or after the redemption date,
upon surrender of such Bond, a new Bond or Bonds in principal
amount equal to the unredeemed portion of such Bond will be
issued.
On or before the date fixed for redemption, moneys
shall be deposited with the Bond Registrar to pay the principal
of and the redemption premium, if any, on the Bonds or portions
thereof called for redemption as well as the interest accruing
thereon to the redemption date thereof.
On the date fixed for redemption, notice having been
given in the manner and under the conditions hereinabove
provided, the Bonds or portions thereof called for redemption
shall be due and payable at the redemption price provided
therefor, plus accrued interest to such date. If moneys
sufficient to pay the redemption price of the Bonds or portions
thereof to be redeemed, plus accrued interest thereon to the date
fixed for redelnption, have been deposited by the Issuer to be
held in trust for the registered owners of Bonds or portions
thereof to be redeemed, interest on the Bonds or portions thereof
called for redemption shall cease to accrue, such Bonds or
portions thereof shall cease to be entitled to any benefits or
security under this resolution or to be deemed outstanding, and
c.l7701~.1
18
'2'(~'71',
\, '
. the registered owners of such Bonds or portions thereof shall
have no rights in respect thereof except to receive payment of
the redemption price thereof, plus accrued interest to the date
of redemption.
If a portion of a Bond shall be selected for
redemption, the registered owner thereof or his attorney or legal
representative shall present and surrender such Bond to the Bond
Registrar for paYment of the principal amount thereof so called
for redemption and the redemption premium, if any, on such
principal amount, and the Bond Registrar shall authenticate and
deliver to or upon the order of such registered owner or his
legal representative, without charge therefor, for the unredeemed
.
portion of the principal amount of the Bond so surrendered, a
Bond or Bonds of the same maturity, of any denomination or
denominations authorized by this resolution and bearing interest
at the same rate.
Section 5. Bonds, upon surrender thereof at the office
of the Bond Registrar together with an assignment duly executed
by the registered owner or his attorney or legal representative
ln such form as shall be satisfactory to the Bond Registrar, may,
at the option of the registered owner thereof, be exchanged for
an equal aggregate principal amount of Bonds of the same
maturity, of any denomination or denominations authorized by this
resolution and bearing interest at the same rate.
The transfer of any Bond may be registered only upon
. the registration books of the Issuer upon the surrender thereof
C .177013.1
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to the Bond Registrar together with an assignment duly executed
by the registered owner or his attorney or legal representative
in such form as shall be satisfactory to the Bond Registrar.
Upon any such registration of transfer, the Bond Registrar shall
authenticate and deliver in exchange for such Bond a new Bond or
Bonds, registered in the name of the transferee, of any
denomination or denominations authorized by this resolution, ln
an aggregate principal amount equal to the unredeemed principal
amount of such Bond so surrendered, of the same maturity and
bearing interest at the same rate.
In all cases in which Bonds shall be exchanged or the
transfer of Bonds shall be registered hereunder, the Bond
Registrar shall authenticate and deliver at the earliest
practicable time Bonds in accordance with the provisions of this
resolution. All Bonds surrendered in any such exchange or
registration of transfer shall forthwith be cancelled by the Bond
Registrar. The Issuer or the Bond Registrar may make a charge
for shipping and out-of-pocket costs for every such exchange or
registration of transfer of Bonds sufficient to reimburse it for
any tax or other governmental charge required to be paid with
respect to such exchange or registration of transfer, but no
other charge shall be made by the Issuer or the Bond Registrar
for exchanging or registering the transfer of Bonds under this
resolution. The Bond Registrar shall not be required to exchange
or register the transfer of any Bond during a period beginning at
the opening of business fifteen (15) days before the day of the
c..I77018 1
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232
mailing of a notice of redemption of Bonds or any portion thereof
and ending at the close of business on the day of such mailing or
of any Bond called for redemption in whole or in part pursuant to
Section 4 of this resolution.
As to any Bond, the person ln whose name the same shall
be registered shall be deemed and regarded as the absolute owner
thereof for all purposes, and payment of or on account of the
principal or redemption price of any such Bond and the interest
on any such Bond shall be made only to or upon the order of the
registered owner thereof or his legal representative. All such
payments shall be valid and effectual to satisfy and discharge
the liability upon such Bond, including the redemption premium,
if any, and interest thereon, to the extent of the sum or sums so
paid.
The Issuer shall appoint such registrars, transfer
agents, depositaries or other agents as may be necessary for the
registration, registration of transfer and exchange of Bonds
within a reasonable time according to then current commercial
standards and for the timely payment of principal, interest and
any redemption premium with respect to the Bonds. The Finance
Director of the Issuer is hereby appointed the registrar,
transfer agent and paying agent for the Bonds (collectively, the
IIBond Registrarll), subject to the right of the governing body of
the Issuer to appoint another Bond Registrar, and as such shall
keep at his office the books of the Issuer for the registration,
:..177013.1
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283
registration of transfer, exchange and payment of the Bonds as
provided in this resolution.
Section 6. The Issuer covenants that, to the extent
permitted by the Constitution and laws of the State of North
Carolina, it will comply with the requirements of the Internal
Revenue Code of 1986, as amended (the IICodell), except to the
extent that the Issuer obtains an opinion of bond counsel to the
effect that noncompliance would not result ln interest on the
Bonds being includable in the gross income of the owners of the
Bonds for purposes of federal income taxation.
Section 7. The Issuer hereby represents that it
reasonably expects that it and all subordinate entities thereof
will not issue more than $10,000,000 of tax-exempt obligations
(not counting private-activity bonds except for qualified
501(c) (3) bonds as defined in the Code) during calendar year
1998. In addition, the Issuer hereby designates each of the
Bonds as a IIqualified tax-exempt obligationll for the purposes of
Section 265(b) (3) of the Code.
Section 8. The Issuer hereby undertakes, for the
benefit of the beneficial owners of the Bonds, to provide:
(a) by not later than seven months from the end of
each fiscal year of the Issuer, to each nationally
recognized municipal securities information repository
(IINRMSIRII) and to the state information depository for the
State of North Carolina (IISIDII), if any, audited financial
statements of the Issuer for such fiscal year, if available,
C .177013.1
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.
prepared in accordance with Section 159-34 of the General
Statutes of North Carolina, as it may be amended from time
to time, or any successor statute, or, if such audited
financial statements of the Issuer are not available by
seven months from the end of such fiscal year, unaudited
financial statements of the Issuer for such fiscal year to
be replaced subsequently by audited financial statements of
the Issuer to be delivered within 15 days after such audited
financial statements become available for distribution;
(b) by not later than seven months from the end of
each fiscal year of the Issuer, to each NRMSIR, and to the
SID, if any, (i) the financial and statistical data as of a
date not earlier than the end of the preceding fiscal year
for the type of information included under heading liThe Town
- Debt Information and - Tax Informationll in the Official
.
Statement relating to the Bonds (excluding information on
overlapping units) and (ii) the combined budget of the
Issuer for the current fiscal year, to the extent such items
are not included in the audited financial statements
referred to in (a) above;
(c) in a timely manner, to each NRMSIR or to the
Municipal Securities Rulemaking Board (IIMSRBII), and to the
SID, if any, notice of any of the following events with
respect to the Bonds, if material:
(1) principal and interest payment delinquencies;
. (2) non-payment related defaults;
c..I7701~.1 23
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285
(3) unscheduled draws on debt service reserves
reflecting financial difficulties;
(4) unscheduled draws on any credit enhancements
reflecting financial difficulties;
(5) substitution of any credit or liquidity
providers, or their failure to perform;
(6) adverse tax opinions or events affecting the
tax-exempt status of the Bonds;
(7) modification to the rights of the beneficial
owners of the Bonds;
(8) call of any of the Bonds for redemption;
(9) defeasance of any of the Bonds;
(10) release, substitution or sale of property
securing repayment of the Bonds; and
(11) rating changes; and
(d) in a timely manner, to each NRMSIR or to the MSRB,
and to the SID, if any, notice of a failure of the Issuer to
provide required annual financial information described in
(a) or (b) above on or before the date specified.
If the Issuer fails to comply with the undertaking described
above, any beneficial owner of the Bonds then outstanding may
take action to protect and enforce the rights of beneficial
owners with respect to such undertaking, including an action for
specific performance; provided, however, that failure to comply
with such undertaking shall not be an event of default and shall
not result in any acceleration of payment of the Bonds.
The Issuer reserves the right to modify from time to time
the information to be provided to the extent necessary or
appropriate in the judgment of the Issuer, provided that:
c:.I77013.1
24
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(a) any such modification may only be made in
connection with a change in circumstances that arises from a
change in legal requirements, change in law, or change in
the identity, nature, or status of the Issuer;
(b) the information to be provided, as modified, would
have complied with the requirements of Rule lSc2-12 issued
under the Securities Exchange Act of 1934 (IIRule lSc2-1211)
as of the date of the Official Statement, after taking into
account any amendments or interpretations of Rule lSc2-12,
as well as any changes ln circumstances; and
(c) any such modification does not materially impair
the interests of the beneficial owners, as determined either
by parties unaffiliated with the Issuer (such as bond
counsel), or by approving vote of the registered owners of
not less than a majority in principal amount of the Bonds
then outstanding pursuant to the terms of this bond
resolution, as it may be amended from time to time.
The Issuer agrees that the annual financial information
containing the amended operating data or financial information
will explain, in narrative form, the reasons for the amendments
and the impact of the change in the type of operating data or
financial information being provided.
The provisions of this Section 8 shall terminate upon
payment, or provision having been made for payment in a manner
consistent with Rule lSc2-12, in full of the principal of and
. interest on all of the Bonds.
c.l77013.1
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Section 9. The action of the Finance Director of the
Issuer ln applying to the Local Government Commission of North
Carolina to advertise and sell the Bonds is hereby ratified and
confirmed, and the Local Government Commission of North Carolina
is hereby requested to ask for sealed bids for the Bonds by
publishing notices and printing and distributing an Official
Statement and a Supplement to such Official Statement relating to
the sale of the Bonds. Such Official Statement, to be dated
January 16, 1998 and in substantially the form presented at this
meeting, is hereby approved and the Mayor, the Town Manager and
the Finance Director of the Issuer are each hereby authorized to
approve changes in such Official Statement, to approve such
Supplement and to execute such Official Statement and such
Supplement for and on behalf of the Issuer.
Section 10. The Letter of Representations, as required
by DTC in connection with the issuance of the Bonds and
substantially in the form presented at this meeting, is hereby
approved, and the Finance Director of the Issuer is hereby
authorized to complete and execute such Letter of Representations
and to deliver the same to DTC for and on behalf of the Issuer.
Section 11. This resolution shall take effect upon its
passage.
Upon motion of Commissioner ~R~~
, seconded by
Commissioner ~rrAltJl ' the foregoing resolution entitled:
IIRESOLUTION PROVIDING FOR THE ISSUANCE OF $5,800,000 GENERAL
~'-!7701~.1
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. OBLIGATION WATER BONDS, SERIES 1998 II was passed by the following
vote:
.
.
Ayes:
/7J~AJ
J
2>/17lYjI, (1/1111/10115, LJrJfld.. ~mjJ50.J
Noes: V
*
*
*
*
*
I, Donna F. Armbrister, Town Clerk of the Town of
Hillsborough, North Carolina, DO HEREBY CERTIFY that the
foregoing is a true copy of so much of the proceedings of the
Board of Commissioners of said Town at a regular meeting held on
January 12, 1998 as relates in any way to the passage of a
resolution providing for the issuance of $5,800,000 General
Obligation Water Bonds, Series 1998 of said Town and that such
proceedings are recorded in Minute Book No. ~ of the
minutes of said Board, beginning at page d~/j and ending at
page .:{50
I HEREBY FURTHER CERTIFY that a schedule of regular
meetings of said Board, stating that regular meetings of said
Board are held at the Hillsborough Town Hall Complex, in
Hillsborough, North Carolina, on the second Monday of each month
at 7:30 P.M., has been on file in my office as of a date not less
than seven days before the date of said meeting in accordance
with G.S. 143-318.12.
: .I7701H I
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this /..3-M
WITNESS my hand and the corporate seal of said Town,
[ SEAL]
C .177018 1
day of January, 1998.
4;./~;~.
Town Clerk
28
289"
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ATTACHMENT XI. A .
RESOLUTION AUTHORIZING TOWN MANAGER
TO REPRESENT TOWN DURING RESERVOIR
PROPERTY ACQUISITION MEDIATION PROCESS
290
WHEREAS, the Town of Hillsborough has entered into the condemnation process to obtain the
remaining property for the reservoir; and
WHEREAS, there are 22-23 properties which are in question and will require mediation
sessions which require the presence of the Town Attorney and a representative of
the Town; and
WHEREAS, the Board of Commissioners wishes to authorize the Town Manager as the
Town's representative and the Finance Director as the Town's alternate
representative to attend the required mediation sessions with the Town Attorney.
ADOPTED TillS 12TH DAY OF JANUARY 1998.
Mayor Horace H. ohnson, Sr., Mayor
ATTEST:
Lw~~,
Donna Armbrister, Town Clerk