Friday, March 6, 2015

Possible good news on the horizon for Mi-Connection?

If you've been watching the news much lately, you are probably aware the Federal Communication Commission (FCC) has been looking for more ways to control the internet from the Federal level.

One of those moves came last week when the FCC granted a petition from Wilson, NC to preempt a North Carolina law that puts conditions on municipal ownership of broadband networks.

The state legislation, commonly called the Level playing Field Law, was passed in 2011 and does things like limit the footprints of publicly owned networks to municipal boundaries, require voter referendums before funding ventures into the highly competitive telecommunications industry, and limit the ability of a publicly subsidized networks from undercutting prices of private sector networks.

Even though Mi-Connection is the poster child for why a law like this is needed – its purchase was done without a referendum and minus the tens of millions in taxpayer funded subsidies the company surely would have gone under as a private sector operation – both Davidson and Mooresville supported the FCC action.

Last year, each town submitted official comments of support for Wilson’s petition.

In light of all the company’s challenges over the years, it is somewhat ironic that the towns supported the FCC action.  That irony is made even more pointed because Mi-Connection is actually exempted from most provisions of the state law in question as a pre-existing network when the law was passed.  Even the one provision that may have impacted the company – the limit on service boundaries -  was irrelevant.

At the January 22nd Mi-Connection Board meeting company CEO, David Auger, was asked about the possible impact of any upcoming regulatory decisions that would “take the shackles off of municipal ownership.”

Mr Auger responded that it was“not really an issue for us”.  He went on to say “our boundary is so large it would take us 20 years to get out of it.”

No, the FCC action is not why there is something positive on the horizon for Mi-Connection.

It really does nothing for the company one way or the other.

Instead, the potentially positive turn of events originates much closer to home with activity in the office of Mooresville’s finance director, Deborah Hockett.  Ms Hockett has been looking at refinancing the outstanding debt for the company and has been making some real progress.

She has recently worked with Wells Fargo on a rate modification for the nearly $9 million outstanding balance of the installment loan the company took out for network upgrades after the 2007 purchase.  The rate modification drops the interest rate from 6.24% down to 2.36% and saves nearly $1.6 million in interest by the loan payoff date of March 2023.  In the upcoming fiscal year alone, it saves $322,428 in interest - which would be covered entirely by the towns’ annual subsidies if it had to be paid.o

However, as good as that news may be, it pales in comparison to what might be saved if an even bigger financial transaction occurs.

For years, the taxpayers who have been subsidizing the operation have always heard that “there’s nothing that can be done about Mi-Connection until 2017” because of the bonds that were used to buy the company.  Well, it turns out, that is not entirely true.

Yes, much the bonds could not be refunded early without penalty because they have a 10-year call provision – meaning they can't be refunded within the first 10 years.  However, now that we are much closer to the call date and interest rates have dropped enough it may be financially doable to refund a big chunk of the existing bonds and reissue new bonds at a lower rate.

About $61 million of the original $80 million in principal falls into this category with interest rates in the 4-5.1% range.

Mooresville has already begun the process to see if something can be worked out to refinance this portion of the debt.  The town enlisted Southwest Financial Advisors on an RFP for underwriters to conduct the transaction.  If that goes well, the town needs to get on the Local Government Commission’s schedule for approval to issue the new bonds.  That could happen as quickly as April or May.

While there certainly are no guarantees and financial markets can change quickly, if all goes well, the towns could be seeing some significant savings as early as the next budget cycle scheduled to wrap up by the end of June.

Let’s all cross our fingers and wish Ms Hockett success in what she is trying to accomplish.  That, more than anything done or not done in Washington or in Raleigh, will help Mi-Connection gain sounder financial footing.

Monday, March 2, 2015

Tuesday, WidenI77.org has their day in court

Tomorrow is the big day in the long fight against tolling I77 with HOT lanes.  Wideni77.org has their day in court with a hearing on their motions asking for an injunction against the project.

This could go one of a few ways.

The group could get a temporary injunction - halting the project while it works its way through court.w. The project could be allowed to go forward while the court proceedings continue to trial.  Or, the groups case could effectively be thrown out by the judge.

Obviously, the activist group is hoping for an injunction.

What would be interesting to watch will be what happens if they receive no injunction, but the case is allowed to go forward.  How will something like that effect the outstanding financing efforts?  Cintra, the Spanish firm with the contract for the project, has not finalized how it will pay for the project, and it will be interesting to watch how a court case hanging over the project impacts that effort.

See below for the WidenI77.org press release on the project.  If you are interested in going to see the action, contact WidenI77@hotmail.com


Charlotte, N.C. – (February 25, 2015) - The Honorable W. Osmond Smith, III, Senior Resident Superior Court Judge in Judicial District 9A (Caswell and Person Counties) has been appointed to hear the complaint of WidenI77 (Plaintiff) v. N.C. DOT and I-77 Mobility Partners, LLC (Defendants).

Judge Smith will be hearing the Motions with regard to the temporary injunction to stop the I-77 Toll Lane Project at the Alamance County Historic Courthouse in Graham, N.C. on Tuesday, March 3, 2015 at 9:30 a.m.

WidenI77 and our team of attorneys led by Matt Arnold Esq. of Arnold & Smith, PLLC (www.ArnoldSmithLaw.com ) are pleased to have the opportunity to present WidenI77’s case to Judge Smith. WidenI77 would like to invite our friends and supporters to join us in Graham to observe the hearing and to show support. See our website for more information on the trip to Graham Tuesday morning, March 3rd.

Thursday, February 26, 2015

Cautionary Tales for Davidson’s Catalyst Project

When government gets into the development business, things often do not go exactly as planned.  That happens for any number of reasons.  Some are legitimate.  Some are not.  But there is always a reason or an excuse for why it happened.

“It was the economy.” Or, “the consultants gave us bad advice”. Or, “even though the project is an economic failure, it's really a success.”

That last one only makes sense when you are spending someone else's money, but it gets used on occasion.

For sure, the answer is never “we’re sorry.  It was a bad idea, and we shouldn't have done it.”

The recent post about potential development on Davidson’s Main Street, specifically the so called “Catalyst Project” being driven by Davidson Town hall garnered some feedback from Commissioner Rodney Graham.  He made a couple of good points on the upcoming changes to the town planning ordinance as well as the Catalyst Project that deserve mentioning.

Commissioner Graham said on Facebook...

“It is important to note that in what I would call the postcard image of downtown Davidson, that area between the new Mooney's Corner building extending to Depot Street, the proposed revisions to the planning ordinance actually call for a reduction in the allowable building height from 4 to 3 stories. We recognize the uniqueness and importance of this area to Davidson.”

That's definitely good to hear.

He goes on to say “the Town has recognized that it owns some very significant real estate in downtown Davidson. The goal is not to get into the development business by investing in buildings, but rather to guide development on those properties to ensure it is consistent with the needs of our citizens.”

Davidson is known for its strong commitment New Urbanist planning principles, and over the years it has done a very good job of protecting Main Street from development that doesn't “fit” with that Norman Rockwell, small-town image people have come to associate with the town center.

The examples of the two-story CVS and the Stowe Building at the south entrance to the “postcard” section of town are regularly held up as examples of the Town sticking to its guns in the face of possible unwanted change.

However, those are different animals all together than what the Catalyst Project could become – a transformative project in an area that has tried really hard to change as little as possible.  That the Catalyst Project could change what it means to go to downtown Davidson is undeniable when the town is talking about bringing some combination retail, office space, multifamily housing, and a large parking deck to the area adjacent to its “postcard”.

Even if the town is not building any of the actual buildings, is “guiding” and encouraging that much development something the town really wants to be doing?  Also, if things go wrong how much will be taxpayers be on the hook?

Will the project end up like the NASCAR Hall of Fame built by the City of Charlotte which just had the City asking for a bailout from its lenders due to poor attendance?  Or, will the project end up like the Huntersville Town Center built with the intention of spurring revitalization of the old downtown area?  That project cost the town $19 million, but has had limited impact on additional development.

One thing that does not bode well for the Catalyst Project, is that the stated demand according to town hall, does not seem to mesh with what’s happening on the ground.

At the recent presentations on the project, economic development director, Kim Fleming, talked about regularly turning down requests for space in the downtown area.

That sounds promising.  However, when I asked (twice) for a list of commercial projects over the last year that have been unable to find space in the downtown area, the answer from town economic development director, Kim Fleming, was that no such list exists.

Moreover, two blocks down the street at South Main Square you’ll find that nearly all of the commercial space lies empty in the live work portion of the  complex.  Further out from town center you'll see things like the “for lease” signs above RushCo at Exit 30.  The town has also floated a preliminary proposal to convert the planned live-work units in the Bradford neighborhood to affordable housing rentals.

Granted, these may not be comparable examples to the demand for small-space commercial in Downtown Davidson, and I am sure they will be explained away as such.  However, they are examples of the town “guiding” commercial development in ways that have been less than successful.

Let's hope if the town ends up guiding development in a way that transforms Main Street, they don't have to look for any of those same excuses.

Monday, February 23, 2015

WidenI77 vs Reason Foundation - HOT Lanes Showdown this Thursday on WFAE

This Thursday, WFAE a Charlotte Talks will host a panel discussion on HOT Lanes with Wideni77.org's, Kurt Naas, going head to head with Robert Poole of the Reason Foundation - a libertarian think tank in California.  Charlotte City Councilman Al Austin will also be on the panel.

For those paying close attention to the HOT lanes debate Poole's name may be vaguely familiar.  He was recently quoted in the lake Norman Citizen calling the WidenI77 lawsuit against the HOT lanes project a "nuisance suit".  If you've been a long-time reader of this blog, you may remember the below pice as well.

This is a common practice of the big money in these big transportation projects.  If any opposition gets traction, the "experts" are summoned to aid in the defense.

It happened with the transit to repeal debate in 2007 when the pro-repeal side warned of an out of control spending plan that would need more money.  It also happened in 2012 when the Red Line commuter rail project was going through its most recent attempt to get going, and it's supporters were   hocking a pie in the sky finance plan.

The predictions of 2007 have come true with the politicians and pro-transit types now looking for new "revenue streams" aka taxes to fund any additional lines.  The cost of the Red Line has now ballooned significantly and that highly touted
 finance plan has suffered an ignominious death.

Both of these transportation plans were put together by "experts".  Remember that when you hear Mr Poole on Thursday.

(Earlier post on Mr Poole's and the HOT lanes sales pitch. Originally posted March 11, 2013.)

HOT lane usage...Bait and switch coming?

The 10 second version of the HOT Lanes sales pitch sounds pretty positive, but a look behind the curtain says the fast talking salesman is prepping his mark for the old bait and switch.

Here's what they tell you, the citizen, the voter, the mark...

HOT lanes will reduce congestion.  Some users will be able to ride for free.  The road will be open to all comers.

Sounds good doesn't it?  Except that HOT lane supporters don't even really believe it...

In a 2011 piece by the Reason Foundation's Robert W. Poole Jr, one of the leading proponents of HOT lanes, he outlines why this is not and more importantly should not be the case.  (See Automating HOT Lanes Enforcement, Reason Foundation 2011.)

Who is Robert Poole?  From the above linked article...

"Robert W. Poole, Jr. is the director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation, the free market think tank he founded. Poole, an MIT-trained engineer, has advised the previous four presidential administrations on transportation and policy issues.

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since." 
(Emphasis added)

Poole coined the term HOT Lanes.  He is one of the field's leading experts.  Yet, his paper says the only way to effectively manage HOT lanes like the ones proposed for I-77 is to effectively do none of the things tossed out in the HOT Lanes 10-second sales pitch.

The I-77 project is actually described as a HOT 2.0 facility where tolls will finance the actual construction of much of the project. (The small HOV conversion portion being the exception.)  As a HOT 2.0 effort, toll collection and enforcement become vital to the success of the project.  They are critical because they are used to actually pay for the construction of the road.  To ensure these critical needs are met, changes from the promises of the "sales pitch" are necessary for the project to meet it's funding requirements.

  • Instead of "reducing congestion" for all travelers, we get a "congestion-relief lane" for those willing to pay a premium.
  • Instead of "some users get to ride for free", we get a system designed to reduce the number of free riders by as much as possible.  According to Poole, 83% of vehicles on existing HOT 2.0 projects pay tolls. That's compared to 35% of riders on HOT 1.0 lanes which are entirely converted HOV-2 facilities.
  • Instead of "the road being open to all comers", we get proposals from Mr Poole that only pre-registered and audited carpoolers should be allowed to use the lanes for free with all others needing some sort of transponder.

These proposals don't come from people opposed to HOT lanes or tolls in general.  These proposals don't come from people who have a vested interest in seeing these projects fail.  These proposals come from the person who coined the term HOT and who is one of its biggest supporters.

But Mr Poole didn't coin the term HOT 2.0.  No, according to Mr Poole, that honor goes to David Ungemah.

If you would like to hear Mr. Ungemah, he'll be participating in the HOT 2.0 sales pitch this Wednesday at the Lake Norman Transportation Commission meeting in Mooresville - 7PM at the Charles Mack Center.

Just remember, as with any sales pitch it isn't always representative of what they are truly trying to sell you.

Friday, February 20, 2015

HOT Lanes Bonus Allocation Project Raising Eyebrows

It has been called a bribe, a sweetener, and an incentive, but its official name is the “bonus allocation”.

The word you use to describe this pot of money likely depends on whether or not you support the I77 HOT Lanes project.  Regardless, a lot of taxpayer money is in the process of being planned and approved if the HOT project overcomes financing and legal hurdles to move forward.

Earlier this month, a group called the Technical Coordinating Committee (TCC) provided a draft list of projects to the Charlotte Regional Transportation Planning Organization (CRTPO) for spending the “bonus allocation” from NCDOT for having the HOT lanes project instead of new general purpose lanes.

According to Bill Coxe, Huntersville’s transportation planner, the recent TCC action “was to forward the list of projects that would use either bonus allocation or direct attributable funding to CRTPO for ‘review and consideration’ and did not make a formal recommendation.  That will occur at the March 5th TCC meeting.”  Coxe also said he “would not be at all surprised to see changes at that time."

That's good to hear because the current list leaves a good bit to be desired.

Again, regardless of what you call this pot of money or whether or not you support the HOT Lanes project, since citizens are going to be stuck with toll lanes for 50 years under the current plan, one would think the money should go primarily to those who are going to be stuck paying the tolls.  Unfortunately, the current list seems to have lost track of that point.

Here is the breakdown of proposed project costs by municipality: Huntersville  $44.5m , Cornelius  $42.7m, Statesville $30m, Charlotte $23m, Mooresville $15.7m, Davidson $5.2m with a miscellaneous $5m thrown in for studies not attributable to any single town.

The total of $166.6m for the 22 projects on the list is greater than the expected available funding of something closer to $158m, so some trimming or changes are likely.

However, one of the projects on the list is definitely raising eyebrows.  That would be the $30m project to add direct access ramps to the HOT lanes from the bridge at Stumptown Rd in Huntersville.  The concern is that this project pprimarily helps tolling contractor Cintra rather than local residents.

I asked Huntersville Commissioner Rob Kidwell about his concerns on spending Bonus money for a HOT direct access ramp.

“It is my opinion that if we are getting this ‘Bonus Allocation Money’ for having the project in our area, we should be able to use it for projects that benefit all of our citizens, not just a few who ‘might’ use the HOT lanes.  The thought process of giving it back to the company to help them on the build out, is absurd and those are items they should of thought about when they bid on this project, not after.”

Commissioner Kidwell went on to say if Bonus money is spent on HOT access points “they should at least, at the very minimum, require that they build access points to both the general purpose lanes and the HOT lanes on these new bridges. By doing that, you now are serving the entire community, which is the responsible and right thing to do.”

I also checked with Cornelius Commissioner Dave Gilroy for his take on this proposed use of bonus funds.

Gilroy said “the logic of using ‘Bonus Allocation’ dollars to help build the toll lanes project itself is utterly asinine. In fact, such an allocation underscores the cynicism and thoughtlessness with which NCDOT has planned this tolling project from the beginning.

These "Bonus" dollars are meant entirely as an incentive to local citizens to help make-up for the tens of thousands of dollars in personal toll expenses which routine users of I-77 will incur in the coming years. NCDOT's consultant Stantec projects that local families, with at least one daily commuter to Charlotte, will incur over $400 per month in new expenses within the first few years of I-77 tolling. That's a body blow to working class families. For NCDOT to then apply "Bonus" incentive funds to the very same project helps nobody other than NCDOT and toll road operator Cintra.

This is insult on top of injury for local residents."

Strong words to be sure, but there is another project on the draft list that should maybe worry taxpayers even more.  That’s the $3m “feasibility study” for even more direct access points which would require further additional cost to taxpayers for the benefit of Cintra.

Before this HOT lanes project even gets the first shovel in the ground, it’s true cost is starting to balloon above its $655m price tag.

Friday, February 13, 2015

NCGA targets local government overreach...

With the new General Assembly barely underway, multiple bills have already been submitted that put State lawmakers and some local government officials on a collision course over local authority to make some planning decisions.

S25(H36) - Zoning/Design and Aesthetic Controls was submitted last Tuesday.  That was followed by Wednesday's H51 -  Justice for Rural Citizens Act.

S25 and its companion bill, H36, are carryover bills from previous legislatures. The legislation has never been passed mostly due to timing on the legislative calendar, but it has raised angst among local officials every time it has been discussed.  The bills submitted last week match versions from the 2013 session that received overwhelming bi-partisan support.  Republican Senator Jeff Tarte from Cornelius is a primary sponsor on the Senate side – the same as he was last time.

The bill would explicitly prevent municipalities from implementing regularions on single family homes such as designating specific external building materials or design restrictions such as minimum setbacks on garage doors.

When this legislation was being discussed in 2013, the Town of Davidson took the unusual step of asking citizens to contact their legislators encouraging them to oppose it.  When asked if the Town would do that this time around, Public Information Officer, Christina Shall said "we will likely ask citizens to contact their representatives to oppose these bills, but we are waiting for the appropriate time."

Davidson Commissioner, Rodney Graham, who is also a custom home builder, was specific as to why he opposed this legislation.  Graham said "this legislation is being promoted by the production home builder lobby, and I have no idea why Raleigh feels they are better equipped to legislate design considerations than are the local towns."

When asked about this concern regarding local control of these decisions, Senator Tarte had this to say.

"The purpose of the aesthetic controls bill is to clarify where municipalities have inappropriately reached beyond their sphere of control as originally intended by the General Assembly. Nothing more and nothing less."

That sentiment meshes with comments received from Charlotte Mayor Dan Clodfelter.  In 2013, then-Senator Clodfelter - a Democrat - was also a primary sponsor of this legislation along with Senator Tarte.  We asked Mayor Clodfelter's office if his feelings had changed now that he is on the municipal side.  Interestingly, he said we could use the same colorful quote he gave back in 2013 regarding the legislation as well as a study called a Health Impact Assessmenr opposing it completed by Davidson staff.

"The bill has no effect on such things as walkable design, bike-friendly design, or anything of the sort.   I have read the “study” and was perplexed by the fact that the authors of the study seemed to be talking about a piece of legislation they had never even read.   There has been a great deal of “Chicken Little” reaction to the bill, and that has been equally perplexing.   The bill actually is a restatement and reinforcement of current zoning statutes, which I think are quite direct about the permissible subjects that may be regulated through zoning ordinances.   The need for the bill has come about because some local governments have been simply ignoring the limitations in the current statutes.”

A collision course with Davidson would seem to be set on this one.
The second potentially controversial bill entered last week, H51 - The Justice for Rural Citizens Act, will also no doubt cause major heartburn for elected officials used to having their way with local planning decisions.

H51, if passed, would strip municipalities of their Extra Territorial Jurisdiction (ETJ) planning authority.  Currently, municipalities can have some level of land use control beyond their municipal boundaries.  H51 would remove that authority over land use in an ETJ while leaving authority over public safety and things like water/sewer in place.

The rational is simple.  Residents from ETJs can not vote in municipal elections, so municipalities should not have a say in how their land can be used.

Again in Davidson, while town officials would certainly oppose seeing their authority over the town's ETJ stripped away, not everyone would be sorry to see it go.

Former Davidson Planning Board member, Martha Jenkins, had this to say when asked about the bill.  "The ETJ is a terrible and unfair restriction for property owners outside of town limits. Property owners in the ETJ are subject to people making decisions on land uses – while the actual property owner has no voting rights for those people who make those decisions. This concept allows town officials to control zoning and land uses without giving regard to the people who own the property and pay taxes."

She went on to say "the ETJ concept contradicts the American ideal  – all citizens should be allowed to vote for decision makers."

If this bill goes forward, after decades of living in Davidson's ETJ, Ms Jenkins and others may finally see that contradictory situation remedied.

Tuesday, February 10, 2015

Sling TV Launches with Expanded Channel Offerings

We recently told you about Dish Network's new Sling TV OTT service, and its possibility to impact Mi-Connection.

Well, that day is finally here.

Sling TV opened to the public on Monday with an a few more offerings than originally announced.  How much more space they have under their $20/month price tag to add additional channels will be something to watch closely.

The most common criticism of Sling TV is the limited number of channels, but with the addition of channels like AMC, that criticism could diminish rapidly.  AMC has the most popular show on cable - The Walking Dead.  If channels like FX and Fox News are ever added, this new service could become truly transformative.

Below outlines what has been added for launch.

  • AMC will be added to the $20 per month core.      package.
  • “Sports Extra” pack now available for $5 per month. This includes: the SEC Network, ESPNEWS, ESPNU, Universal Sports, Univision Deportes, beIN Sports, ESPN Buzzer Beater, ESPN Bases Loaded and ESPN Goal Line. These channels have been added to your reviewer account.
  • WatchESPN now available at no additional cost to all Sling TV customers.
  • Maker Studios’ Polaris+ channel coming soon.
  • Supported devices at launch include: current-generation Roku players, Roku TV models, Android, iOS, Mac and PC, with support for Amazon Fire TV and Fire TV Stick in the coming days