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Negotiations begin on music network contract

Wednesday, September 1, 2004 by

Council seeks more information

On Tuesday, members of the Council Committee for Telecommunications Infrastructure worked through the fine print of a proposed contract with Austin Music Partners, the private group that is offering to take over the operation of Channel 15. The station, currently run by the Austin Music Network, would become a regional network devoted to Austin arts and entertainment.

According to proposal submitted by AMP's Connie Wodlinger, the city would receive approximately $2.4 million worth of free advertising for local events, festivals, and general tourism as the channel was picked up by other cable systems across the state and beyond. "It is an economic development tool," Wodlinger said. "That's always been one of the primary goals. The budget for advertising the City of Austin is limited, so this will be another way to promote the city." Wodlinger is offering 10 commercials per day for the five-year life of the contract along with an annual budget of $50,000 for in-house production of the city's commercials.

The proposal also lays out a six-month timeline for AMP to secure new studios and to hire personnel once an agreement with the city is signed. Wodlinger predicts hiring approximately 40 full-time staff members, although that number could change depending on whether the business chooses to locate within a freestanding studio facility or finds another company to share overhead and other expenses. In the interim, Wodlinger is offering to operate the channel in a fashion similar to the bare-bones operation currently being handled by the Austin Music Network. AMN has also submitted a proposal to continue programming Channel 15 with some help from ACTV after the AMN contract expires September 30.

Council members had questions about protecting the rights of musicians whose material is part of the current AMN archives. In addition, they indicated they would seek assurances that control of Channel 15 would revert to the city in the event that AMP should go out of business. They also wanted more financial information from Austin Music Partners, including the identity of investors in the private company.

"It was formed as a working group," said AMP's Connie Wodlinger. "I'm the one negotiating the contract. Obviously, those who invest money in the operation are going to have a sizeable interest, and also the cable operators who pay fees and give us the distribution will have an equity position as well." But she said the lineup of investors was not yet finalized. "It would be presumptuous to do it before we have an actual deal. There will be groups of stockholders. There will be the group that I represent, there will be the investment group," she said. "Obviously what we will do is the deal that is best for this project."

Since the cable companies carrying the network will have the option to be part owners, Mayor Pro Tem Jackie Goodman called for some assurances in the contract that they would not use that position to assume total control of the channel. "We need to work out some guidelines for our own protection," she said. "Because interested folks may be those who have a conflict of interest, or perhaps an agenda that could compromise our long-term retention of the channel, we should work out some legal benchmarks to look for."

Wodlinger reminded the Committee that the proposed contract specified what types of programming could run on the channel, and that the city would retain control if AMP should go out of business. "I don't have the right to put any other programming on it, and neither would any successor," she said. Still, Goodman, who chairs the committee, said additional contract language should be considered to strengthen the city's position. "I see things come through court with legal claims that aren't entirely logical and sometimes they win. I just want to make sure we're solidly protected," she concluded.

Commissioners express anger over hospital reserve fund

The practical and political fallout over the Travis County Hospital District's reserve funds is still very much on the county commissioners’ radar screen. They were quick to jump on the subject during a discussion of hospital district finances yesterday.

Clarke Heidrick, president of the Travis County Hospital District's Board of Managers, submitted a letter to Travis County Commissioners Court, asking the county to pony up more than double its proposed contribution to the hospital district's reserve fund, from the planned $1 million up to $2.5 million. That request was like waving a red flag in front of the court, which still considers the question of the "missing $33 million" to be unresolved.

Interim Manager Jim Collins opened up the discussion by outlining recommendations on the reserve funds. When Collins was done, Commissioner Gerald Daugherty said he was amazed that the subject of the now-disbursed $33 million was being swept under the rug with a single legal opinion from city counsel. Daugherty said someone needed to say, outright, whether or not the $33 million was actually gone for good.

"Somebody needs to tell me—the city needs to tell me—'Get over it,'" Daugherty said. "If I'm going to enter into interlocal agreements with the City of Austin, the first thing I need to do is to feel comfortable that I'm dealing with somebody who is leveling with me."

Commissioner Karen Sonleitner said it wasn't just the issue of the $33 million. She wondered whether additional millions of dollars deposited in the city's hospital fund ultimately ended up in the city's General Fund because the city decided to repay itself for carrying the burden of indigent health care over the years.

"The next time they come us to help them out, I'm going to tell them to go look in their General Fund. It's already there," Sonleitner said. "There are many, many good things that we can and should work together on in this community, but this is troubling . . . and it's far from over."

The reserve issue has put the hospital district squarely in the crosshairs of a fight between the city and the county. The board of managers, split between city and county appointees, has not yet chosen to make the reserve fund a contentious issue.

Collins said it was his understanding that the city would not transfer the $33 million "unless they are forced to do so through litigation." The board of managers has not decided whether it should sue the city, Collins said, because many members preferred to resolve the issue through negotiation rather than litigation.

The hospital district would likely come out ahead in any out-of-court settlement, Collins said, but board members are sensitive that any funding pulled from the city for the hospital district would have to be taken from other programs with competing needs. Still, the board of managers is committed to stand by a reserve amount when they land on a number, Collins said. That number should be fairly clear by the time members approve its budget on Sept. 8. A presentation to commissioners is scheduled for Sept. 14.

"It is my understanding that when they do settle on a number, they are not prepared to compromise below that number," Collins said. "We will throw down the gauntlet. We will insist that we will have at least the amount of reserves that is responsible."

Contacted later, Council Member Betty Dunkerley, said, "They stated to us they would like to have a $15 million reserve. Even though we think that's high, we’re working very hard with them to help them get to that number." Dunkerley served as the city's Chief Financial Officer prior to retiring and running for the City Council.

Each side has offered different advice on the reserve funds. The city has recommended 5 percent; the county has suggested an 11-percent reserve, plus a 5-percent allocated reserve and $1 million in capital reserves. Financial advisor Ladd Patillo has suggested 100 to 120 days of operating expenses. Collins has followed county recommendations but suggested that the hospital district double the allocated reserve the first year in operation.

Collins further pointed out that Nueces County had set aside twice the amount of its annual budget—$60 million—for reserves, on the assumption the county might have to pick up the cost of contracted services if a contract were broken.

A public hearing on the hospital district's budget is scheduled for 6pm tonight at the Granger Building.

Toll press conference . . . Several Austin business groups want to clear up what they say are the biggest misconceptions about the toll road plan approved this summer by CAMPO and the CTRMA. RECA, the Greater Austin Chamber of Commerce, the Greater Austin Hispanic Chamber of Commerce, and other toll road supporters will hold a news conference on the steps of City Hall this morning at 11am to "set the record straight" about the plan . . . Fixing a neighborhood problem . . . Council Member Betty Dunkerley was trying to bring an end to a long battle between the owner of the Hampton Road houses in the Hancock Neighborhood and surrounding residents. The single property owner wishes to win a new zoning classification to maximize the use of this property, but neighbors fear the encroachment of multi-family housing. ( See In Fact Daily, November 11, 2003.) The matter will be before the Council on third reading Thursday, along with numerous other zoning changes associated with the Central Austin Combined Neighborhood Plan . . . Council Member Daryl Slusher also had a line of neighborhood advocates and development representatives waiting to see him Tuesday afternoon, most of them interested in the University Neighborhood Overlay . . . Today’s meetings . . . The City Council Judicial Subcommittee is scheduled to meet at 1pm in room 304 of City Hall. One matter they will discuss involves adoption of an ordinance that would impose a 30 percent collection fee on delinquent fines and fees. Those who pay fines tardily are often subject to an additional fee for issuance of an arrest warrant, which must be cancelled. The Municipal Court Clerk is hoping the Council will approve upgrading the court’s computer system and software. In Fact Daily wonders if there is a connection between the items . . . The Environmental Board is scheduled to meet at 6pm in Room 325 of One Texas Center. The Water and Wastewater Commission will meet at 6pm also in Waller Creek Center . . . The Historic Preservation Task Force, recalled to reconsider some of its decisions on the historic preservation ordinance, will meet again next Wednesday. Chair Betty Baker is optimistic the group's work could be finished in September, but until then, the task force will continue to meet most Mondays and Wednesdays, with the exception of tonight and Labor Day. Next week's meeting will include discussion of the impact of various formulas for tax abatements . . . The Hospital District Board of Managers will meet at 6pm for a public hearing on the new entity’s proposed agenda. That meeting will be in the Commissioner’s Courtroom of the Granger Building at 11th and Guadalupe . . . Lunchtime Thursday with city planners . . . The Young Men's Business League will hear from Jana McCann and Susan Daniels on the "State of Downtown Austin” from 12-1pm Thursday in the McBee Room of Headliner's Club. That’s on the 21st Floor of the Bank One building. They will be discussing current and upcoming construction in and near the Central Business District. For more information about YMBL, visit www.sunshinecamps.org.

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