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City faces two legal challenges over new business model for Click

Click’s new business model faces legal challenges

One of the legal challenges is a citizens' case against the City of Tacoma. Thomas McCarthy spoke at Tacoma's City Council meeting May 14 about his case.
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One of the legal challenges is a citizens' case against the City of Tacoma. Thomas McCarthy spoke at Tacoma's City Council meeting May 14 about his case.

Two parties have gone to court to try to put to a vote of the public the city of Tacoma’s proposal to enter into a private-public partnership to manage Click, the municipal cable and internet network.

Both cases, filed recently in Pierce County Superior Court, contend the proposal violates the city’s charter, a charge the city rejects.

“The City has not violated its obligations under the City Charter,” attorneys for the city told The News Tribune in an emailed statement Friday.

The section of the charter in dispute is Section 4.6, titled, “Disposal of Utility Properties.” It states: “The City shall never sell, lease, or dispose of any utility system, or parts thereof essential to continued effective utility service, unless and until such disposal is approved by a majority vote of the electors voting thereon at a municipal election in the manner provided in this charter and in the laws of this state.”

Both lawsuits call for putting the matter of Click’s future business model to a public vote.

The legal action comes after the City Council voted in March to negotiate with internet provider Rainier Connect to run and invest in the network. The term sheet offers Rainier Connect a 20-year Indefeasible Right of Use (IRU), effectively a long-term lease of the network, with two, 10-year extensions possible. Final contract approval could happen in July after public review.

City officials contend such a partnership is vital to the financial future of Click, but the idea of turning over the municipally owned network has generated controversy.

The first case challenging the arrangement was filed in April by Mitchell Shook, who is representing himself.

Shook’s company, Advanced Stream, is one of two cable and internet providers on the Click network. UPDATE, MAY 25: The company participated in the initial RFI process. “We offered our input into that process, but in no way did we ever apply to run Click,” Shook told The News Tribune.

In court documents filed April 17, Shook contends that the Tacoma City Council’s approval of the negotiations with Rainier Connect is in effect “disposal of Tacoma Public Utilities’ proprietary interests in the system.”

“All control over the day-to-day ongoing operations of Click, including oversight of rates, would be handed over to a private company,” according to Shook’s complaint.

The document goes on to say that the city’s charter “clearly prohibits the disposal of a ‘utility system’ without a majority vote of the electorate.”

“The purpose of this action is to make sure the clear language in the City charter is followed and the people are allowed to vote on any lease or disposal of the Click system by TPU; for, if charter provisions are ignored, the City would be exceeding its authority,” according to Shook’s complaint.

In an emailed response in April, city officials told The News Tribune: “The City disagrees with the allegations contained in the complaint.”

In a motion filed May 22, city attorneys asked a judge to strike a 399-page declaration filed by Shook “in its entirety,” describing his declaration as “not based upon personal knowledge, contains opinions, speculation and irrelevant information.”

Shook, contacted Friday, was unfazed by the motion, which is pending.

“They are trying to scare me with a lot of nonsense, but those are actual documents, resolutions available online,” Shook said. “It’s not hearsay, so now it gives me a chance to respond and explain how each of these exhibits are relevant.”

A separate case was filed in May by two Click customers, Thomas McCarthy and Christopher Anderson, both of Tacoma, represented by attorneys Trevor Zandell and Kent van Alstyne of Phillips Burgess Law.

Their case contends Rainier Connect’s term sheet “does not provide the council or (public utility board) with any control over the system’s cable television or internet rates.”

It also contends that neither the term sheet, the assets purchase agreement “nor the concepts generally of allowing a private company to take control of the assets and operations of the system, including setting rates for the system, have been presented to the voters of the city in a municipal election, much less approved by the voters.”

Similar to Shook’s case, McCarthy’s and Anderson’s case contends city’s proposed deal with Rainier Connect “constitute a sale, lease and/or disposition of the community’s publicly-owned and operated municipal broadband system, which system is either a ‘utility system’ or a ‘part of a utility system essential to continued effective utility service.’”

McCarthy warned the City Council during its May 14 Citizens Forum of his plans to file the case and that he had been working on the Click issue for the past five to six years.

“The impression that this was going to be resolved by mid-July, you can let that impression go,” he said at the meeting. “We’re going to be talking about this for some years to come because of the 4.6 charter issue.”

McCarthy told The News Tribune Friday that “in essence ... the council is trying to deny citizens of Tacoma their right to vote on whether or not our network will be leased or disposed of.”

“We intend to make a motion for a writ of prohibition or preliminary injunction to bar the city from entering into the IRU with Rainier Connect,” he added.

In an emailed response Friday, attorneys for the city told The News Tribune, “The City disagrees with the plaintiffs’ position and will oppose their request for relief. The City has not violated its obligations under the City Charter.

“We will provide The News Tribune a copy of our response document when filed with the Court. The City cannot comment further because this matter is part of pending litigation.”

For now, negotiations continue with Rainier Connect, according to city representatives in Friday’s email response.

“The City and Rainier Connect are continuing to develop an agreement for consideration by the Tacoma Public Utility Board and City Council in July after an opportunity for public review and comment,” according to the statement.

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