TPU board member: City shouldn’t have to pay for Click

The Tacoma Public Utilities board now has at least three public funding options to weigh for expanding Click Cable TV into internet and phone service, and the newest of them doesn’t require any money from the city’s general fund to subsidize the system.

That option, presented at Wednesday’s meeting by board member Bryan Flint, also would eliminate a controversial section in a pair of funding options drafted by two TPU board members that would give the Tacoma City Council a late-November deadline to bless whatever proposal the utility board approves or risk having the utility outsource its operations to a private company. That provision was derided by some City Council members, who voted against leasing Click to a private company last year, and some questioned its legality.

With an additional funding proposal in hand, TPU board chairman Mark Patterson and member Karen Larkin, both of whom served on the committee that met for nearly seven months and came to no consensus on how to fund Click, will now draw up one or two resolutions for the utility board to decide Sept. 28. Whatever plan the five-member board approves will go to the City Council for consideration.

“We need to make a decision one way or another and move on,” Patterson said at the end of Wednesday’s meeting, in which the board discussed possible public funding options and heard public comment. “We can’t continue to have our poor employees suffer waiting for the rest of us to make decisions about this for another two years.”

Patterson said three options for funding the losses that Click is expected will incur if it’s operated as a publicly owned and operated municipal broadband provider are:

• The first says the city should have an increasing responsibility to subsidize Click each year, from nearly $2.8 million in 2017 to $7.5 million in 2025. That proposal phases out TPU’s annual funding of Click from $6.1 million in 2017 to $2.4 million by 2025.
• The second option says TPU should pay increasingly more for Click over that nine-year period — from $6.1 million in 2017 to $7.5 million in 2025 — and the city should pay far less. The city’s subsidy in this plan also would grow, from $1.7 million in 2017 to $2.1 million in 2025.
• Flint’s proposal says the city’s general fund shouldn’t have to subsidize Click at all, and also removes a provision in the first two options that would seek to borrow $12 million to $14 million from the city to upgrade Click’s infrastructure.

Flint and Larkin have argued that TPU ratepayers benefit from Click’s system, which is used by Tacoma Power.

“What we’re talking about is connecting a ratepayer portion to that benefit,” Flint said. “We have to remember that in this plan the consumers of the Click products that we will offer pay 90 percent of the cost. So we’re not talking about covering all of Click’s costs with ratepayer funds, we’re talking about a portion of those costs, less than 10 percent in some cases.”

Tacoma Power’s budget is roughly $459 million a year. The city’s general fund budget is approximately $212 million a year.

Flint also said the utility has the reserves to pay for upgrading Click to gigabit internet service speeds, part of the plan to expand Click’s offerings and embrace the all-in model, in which Click will compete directly with the likes of Comcast and CenturyLink for market share.

Patterson and board member Monique Trudnowski have supported operating Click in a public-private partnership, in which the city would still own Click but lease it to a private company to take the burden of financial losses off the public entities. By TPU Director Bill Gaines’ estimate, the system loses $5.5 million to $7.5 million per year, though the intermingling of Click’s funds with Tacoma Power’s has made that figure difficult to determine. TPU staff has said yearly losses are expected to continue.

“We’ve been charged by the City Council to come up with an all-in business plan,” Trudnowski said. “My all-in business plan will not be representing a loss. No business I know of … can operate at a loss.”

Trudnowski also requested that TPU staff do research to figure out how much Click subscribers’ rates would go up if the burden of balancing Click’s budget fell to them.

“Are you willing to pay for what it costs to keep Click? And if so, we could provide you with that information,” she said. “The cable broadband business is not about maintaining dams and reservoirs, it’s about customer service.”

Both also questioned the legality of forcing TPU ratepayers to subsidize Click. “There have been a series of court decisions really limiting the ability of a utility using ratepayer funds for purposes other than providing electricity,” Patterson said.

While Trudnowski and Patterson have sought to keep open the option to privatize Click’s operations, those who came to the podium during public comment Wednesday spoke against it. In the two earlier funding plans published by TPU on Friday, the City Council would have until Nov. 30 to bless the funding model the utility board chooses. In that proposal, if the council doesn’t act, utility officials could search for an outside firm to lease Click.

Former Tacoma Mayor Bill Baarsma was one of a handful of people who spoke out against that provision Wednesday, calling it “deeply troubling, in that this board is directing the action of the City Council and then conveying an implied threat if it does not comply with that directive,” he said. “This, in my view, is precedent-setting and contrary to section 2.1 of the city charter.”

Baarsma and others also spoke against having the city’s general fund subsidize Click or pay for upgrades to its infrastructure.

“I cannot recall Tacoma Public Utilities ever requesting that the general government transfer funds from its operating budget dollars for police, fire, public works, libraries and basic services to enhance and modernize a utility asset,” he said.

Public comment is open on the utility’s website, and can be submitted by visiting myTPU.org/ClickResolution. On an issue where consensus has been difficult to come by, the board members vigorously encouraged the public to share their thoughts.

“I would really encourage input from you all on who you think should be paying for this,” Patterson said.

This story was originally published September 14, 2016 at 10:26 PM with the headline "TPU board member: City shouldn’t have to pay for Click."