Council ponders Fibrant’s future, may consider lease, sale

Published 12:00 am Wednesday, January 18, 2017

By Amanda Raymond

SALISBURY – The city of Salisbury will be sending out requests for proposals for Fibrant, the city’s fiber optic network, this month.

At a City Council meeting on Tuesday, Lane Bailey, city manager, said the city has been working with CTC Technology and Energy, an engineering and business consulting company, to develop a plan for Fibrant’s future.

The resolution authorizes Bailey to send out requests for proposals to “look at multiple options for the utility, including just the management of the utility, leasing the utility and also the possibility of selling the utility,” Bailey said.

Bailey said the industry norm is to have some type of a public-private partnership.

CTC Technology and Energy will review the proposals that the city receives and determine the best option.

Bailey said the proposals will go out on Jan. 24. Responses will be due on March 10.

“When we meet for our retreat later in March, we should have some different options for council to consider that can put us in a better position than where we are now,” he said.

Bailey said Fibrant is “the wheel that drives everything in our general fund budget.”

“It’s a big issue that we need to deal with and I’m confident this will help us do that,” he said.

Earlier in the meeting, C.J .Palmer, CPA, talked about Fibrant during the presentation of the city’s 2016 Comprehensive Annual Financial Report.

He said there was a small operating loss that included noncash items, such as depreciation. He also said operations were cash-flow positive for the core operations.

The net cash flow from Fibrant was almost $520,000.

“That’s $520,000 that goes towards reducing the debt service, of course. It helps offset the debt service, as far as from a cash flow point of view,” Councilman David Post said.

The debt service payments, which totaled about $3 million, and budgeted transfers from the general fund put the fund in a deficit net position of about $10.4 million since it started offering service.

“That’s actually been coming down over the past couple of years,” Palmer said. He also said the city’s decision to refinance Fibrant’s debt will reduce the debt service.

Because of the Broadband Services Fund’s deficit net position — being subsidized by the General Fund —  the city was found in noncompliance with North Carolina General Statutes.

The recommendation was to “implement a plan, as well as monitoring controls to eliminate the deficit net position over a period of time,” according to the audit.

Post mentioned that if the city decided to just turn Fibrant off, it would still owe the $3 million a year debt service.

“We don’t stop losing money by turning the switch off, is that correct?” Post asked. Palmer said he was not a legal expert, but he agreed.

Bailey said the debt service was the first payment the city was required to make under North Carolina law and the city’s losses would increase if they decided to discontinue the service.

“They’re eating into this debt by operating it at this point,” Post said.

Post later made the motion to give the city manager the authority to send out the requests for proposals. Post said CTC Technology and Energy’s guidance will be beneficial for the city.

Councilman Brian Miller said the city has been working on Fibrant behind the scenes and had to put certain things in place before making bigger moves.

Post said he did not want to inflate expectations. Other cities with public-private partnerships still make significant contributions to support their broadband networks, he said.

“I don’t want the public to be misled that this is going to lead to a profit-making operation,” he said. “I think there’s still going to be a commitment necessary on behalf of the city.”

Miller said the city taking action means they are improving.

“We will only make a decision if it makes the future better than our current. So, for what it’s worth, it gives us an opportunity to see what options are out there,” he said.

Other highlights from the financial report included:

  • Governmental funds reported combined ending fund balances of about $18.4 million, an increase of $415,057.
  • The government’s total net position increased by about $4.1 million. The total assets and deferred outflows of resources decreased by about $4 million.
  • The city’s long-term debt decreased by about $6.6 million, or 9.1 percent.
  • Operations of the Water and Sewer Fund increased net position by about $2.3 million.
  • Operations of the Stormwater Fund increased net position by almost $289,420.
  • Operations of the Transit Fund increased net position by almost $186,500.

In other business, the council:

  • Recognized Salisbury Police officers Joe Wilson and Devin Barkalow with Lifesaving Awards for taking immediate actions to stop life-threatening bleeding.
  • Approved a special use permit to allow government services, specifically a Parks and Recreation facility, at 705 Ryan Street.
  • Heard a progress report from on the Environmental Protection Agency Brownfields Assessment Grant.
  • Heard public comment. Many spoke in regards to the autopsy of Ferguson Claude Laurent, a 22-year-old black man who was shot by police during the execution of a no-knock warrant in November. The autopsy showed Laurent had 10 gunshot wounds.
    Dora Mbuwayesango restated the findings of the autopsy while Whitney Peckman held up a drawing of an outline of a body on a cardboard display, with red dots representing the 10 gunshot wounds. About 12 citizens stood with Mbuwayesango in silence for the remainder of her three minutes.
    Dr. Constance Stanton questioned the need of the no-knock warrant. Whitney Peckman asked how many shots were actually fired during the incident and said Laurent did not get a second chance at living a reformed life.
    Carolyn Logan said the city seemed to be quiet about the wrong things and at the wrong times. She said she was concerned about the safety of the city. She also said she expects the council to respect her while she is speaking during public comment.
    Andrew Davis asked about erecting a monument to Martin Luther King Jr. at the intersection of Innes Street and Martin Luther King Jr. Avenue.
    Minister Latasha Wilks asked the council to put a plan in action to stop the violence in the community.
    Dee Dee Wright asked what was listed in the warrant and if it was found in the home.
  • Approved a budget amendment for the appropriation of $10,000 for the installation of a two-port electric vehicle charging station at Gateway Park.
  • Approved a budget amendment for the appropriation of $162,500 from the Rural Economic Development grant for the Morgan Ridge Brewery and Railwalk Café. The grant is for the creation and retention of jobs.

The mayor pro tem proclaimed Jan. 29-Feb. 4 as Catholic Schools Week.

Mayor Karen Alexander was away at a conference.

Contact reporter Amanda Raymond at 704-797-4222.