5.2. SR 07-22-1996ity of
'ver
FROM:
DATE:
SUBJECT:
ITEM 5.2.
MEMORANDUM
Mayor & City Council
Pat Klaers, City Administrator
July 22, 1996
League of Minnesota Cities Right of Way Project
Local management of public rights of way is becoming a very critical issue for
municipalities. It is expected that this issue will be the subject of extensive debate at the
1997 Legislative Session. Please see the attached material from the League of Minnesota
Cities (LMC) that provides some information on this critical issue.
The LMC believes that this issue is very important in defining the city's authority to
manage its nongovernmental activities within public property. The LMC Board of
Directors has decided to legally counter any challenge to this local government
management authority. However, the work plan to counter this challenge is not in the
LMC budget and they are asking municipalities to help pay for implementing this LMC
work plan. Based on our city dues to the LMC, it is suggested that the city pay $891 as
its share for this work plan.
Staff supports this LMC effort and recommends approval of this expenditure. The $891
would come from the City Council Contingency Fund.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
League of Minnesota Cities
Cities promoting excellence
145 University Avenue West, St. Paul, MN 55103-2044
Phone: (612) 281-1200 · (800) 925-1122
Fax: (612) 281-1299 o TDD (612) 281-1290
July 2, 1996
Dear Mayor Duitsman and Members of the Elk River City Council;
By now, you are probably aware of the rights of way issue facing cities in Minnesota. US
West's challenge to local management of the public rights of way is one of the most critical
issues cities have faced in years. It was a topic of considerable discussion at the Annual
Conference, where member cities supported the League Board of Directors decision to move
forward with an aggressive work program and financing plan to counter this challenge. We need
your city to make a special payment to this fund and help put the work plan into action.
The work plan developed by the Rights of Way Task Force and approved by the Board could
cost $325,000 or more. This assumes that a large portion of the work plan will be coordinated
by and implemented through League staff. The Board has agreed to allocate $125,000 from the
current League budget for the work plan and is asking member cities to voluntarily pay
$200,000.
Based on your city's 1995-96 League dues, your suggested minimum payment is $891.
Please consider this request in July and submit your payment by August 15, 1996 if at all
possible. If each city meets their minimum payment, the $200,000 target is reachable. However,
because it is unlikely that all cities will join this voluntary effort, we encourage members to
allocate more if this initiative is of particular importance to them.
Two important points should be made: First, this is a voluntary payment. As a member of the
League of Minnesota Cities, you are not required to take part in this effort. However, if total city
payments fall significantly short of the $200,000 goal, the League will not be able to fully
undertake the work plan. Second, your voluntary payment should not be confused with your
League membership dues which will be billed at the beginning of September.
The Board of Directors and I understand that this issue must be weighed against the priorities in
your city. However, we believe that the prospect of losing local control of public property
warrants this extraordinary effort. This is a complicated issue, please consider it carefully.
Enclosed is a brief information sheet to help you in your deliberations. If you have any
questions, contact me at (218) 643-1431, League Executive Director Jim Miller at (612) 280-
1205 or (800) 925-1122, or any member of the Board of Directors.
Sincerely,
Blaine C. Hill
President, League of Minnesota Cities
cc: City Manager, A~~A~O~o~i.~(iT¥/A~,i~mMATIVE ACTION EMPLOYER
Common questions about
public rights of way
Q W
hy did local management of public
rights of way become such an issue?
A- In February, US West challenged a
/~KRedwood Falls ordinance that set standards
for installing fiber optic cable in the public right
of way. The ordinance charges a small per foot
fee, requires the cable to be encased in concrete
conduit, or, if that isn't done, limits the city's
liability in case the cable is damaged. US West
asked the Minnesota Public Utilities
Commission (PUC) to take over jurisdiction of
city rights of way, and set aside any local
regulations. Then, US West sued the city of
Redwood Falls in District Court. US West asked
the court to prevent the city from enforcing the
ordinance, and allow them to lay their fiber optic
cable pending resolution of the matter before the
PUC.
Q Didn 't the District Court rule in favor of
Redwood Falls ?
A-Yes. The League intervened on behalf of
zr-l, Redwood Falls early in the proceedings and
hired outside legal counsel with expertise in
utility law. Those efforts paid off when a Fifth
District Court Judge dismissed the lawsuit
brought by US West. In the order dismissing the
suit, the judge stated essentially that the state law
creating the PUC authorized it to regulate
telephone service providers but did not take
away cities' right to impose reasonable
regulations and to charge a reasonable franchise
fee for the use of their streets and services. The
judge wrote "...The public utility commission
regulates telephone companies, not cities."
QDoesn 't that settle things?
A-Not necessarily. The District Court ruling
xr--~probably will have 'little bearing on the PUC
ruling, which is expected later this summer. US
West may also appeal the District Court ruling.
Regardless of what happens in these two arenas,
the Legislature will be looking at this issue when
the 1997 session begins in January.
QWhy is this such an important issue?
A-The implications of this case are enormous.
_f-KAs deregulation and competition among
telecommunication and utility providers
continues, there will be more and more demand
for access to the ground under city streets. All
kinds of businesses and utilities make use of that
scarce space - telephone companies, cable
television companies, gas companies, power
companies - and so on. If cities are not allowed
to manage the use of the right of way, streets
could be torn up regularly and underground
facilities could become a tangled maze. Imagine
your city completing a major repaving project,
only to have the street torn up by a utility
looking to install lines. Imagine the phone calls
to city hall from irate residents if streets are
blocked off two or three times a year. Imagine
your frustration when it becomes obvious that
local taxpayers are being forced to subsidize
private industry and pay higher taxes to build
and maintain city streets.
QASO what is the League of Minnesota
Cities doing?
As the magnitude of this issue became
clear, the League Board of Directors
appointed a Rights of Way Task Force to look at
what should be done. Through the course of
several meetings, the Task Force developed a
work program that involves legal, legislative,
and public information strategies to protect
cities' role in managing the public right of way.
The Task Force estimates that full
implementation of the work program could cost
as much as $325,000. The Board has agreed to
finance this work program by allocating
$125,000 from the current League budget and
asking member cities to voluntarily allocate
$200,00O.
Q$200,000 is a lot of money. What is the
League going to do with all of that?
A-The work plan includes legal
~t Xrepresentation, work with legislative
leaders, and an extensive statewide public
information campaign. While League staff will
take on the bulk of this work, it's likely that
outside assistance will be needed.
Q How did you decide how much you want
our city to pay?
mpYoUr suggested payment is based on a
ercentage of your city's 1995-96 League
dues.
QDo we have to pay? How will the payment
affect our dues?
A-No city if required to pay. This is strictly a
_/-~voluntary payment. Also, it's entirely
separate from the League dues statement your
city will receive in September.
QWhat if our city decides not to pay?
A-That's your choice. As a member of the
/--M~eague of Minnesota Cities, you are not
required to take part in this effort. However, if
total city payments fall significantly short of the
$200,000 goal, the League will not be able to
fully undertake the work plan.
QACtoCan our city pay more?
e~2~}Yt~ ~no[;;t~ ~Vh~se~2i~ri}gt~i~n~n~t~Sve
is of particular importance to them. If all
member cities meet their minimum payment, the
$200,000 target is reachable - but it's unlikely
that every city will join this voluntary effort.
Q Afier we pay, how can we stay up to date
on the issue?
A-we will keep you informed of any
/-~developments through articles in Cities
Bulletin, direct mailings, and broadcast faxes.
QClearly, ourpayment is only part of the
solution. What else can we do?
A- The best thing city officials can do is stay
./'-l, informed, and pass that information along to
as many others as possible. Discuss rights of
way with your local editors and reporters; make
local control a campaign issue for your House
and Senate candidates; talk to your local
Chamber of Commerce about the business
impact of torn-up streets; let taxpayers know
you're working to protect their investment in
streets.
QI'm still confused Who shouM I call?
A-if you have more questions, please contact
_t--~League Executive Director Jim Miller at
(612) 280-1205 or (800) 925-1122, or any
member of the Board of Directors.
Number 19
July 12, 1996
MPUC dismissal of US West petition leaves
right of way questions unanswered
Joel Jamnik
While the League of Minnesota
Cities has won a second victory over
US West in the company's ongoing
battle to restrict cities' authority
regarding rights of way, many ques-
tions about city authority to manage
rights of way remain.
On Tuesday, July 9, the Minnesota
Public Utilities Commission (MPUC)
voted 4-0 to dismiss the petition filed
by US West in February. That petition
asked the commission to exemise its
"exclusive" jurisdiction over public
rights of way. The victory was not
unqualified, however, because the
MPUC also voted to provide in its
order for dismissal an interpretation of
its authority over the provision of
telephone services.
The actual motion to dismiss was
tO:
"Issue an order dismissing the
petition but also interpreting the
extent of the Commission's
authority under Minn. Stat. §
237.16, subd. l(a)(1).
Require telephone companies to
notify the Commission of any
municipal ordinances or other
local government actions that
appear to infringe on the
Commission's jurisdiction."
Consequently, though the Com-
mission will not act or rule on the
merits of the petition and assert its
jurisdiction, it seems intent on using
the dismissal order to officially tell
cities, utilities and the Legislature what
qualifies as its statutory authority or
jurisdiction over public rights of way. It
is not a surprise that US West and other
similar utilities indicated unqualified
support for this action.
The MPUC not only has reached a
somewhat convoluted and ambiguous
result, but it was accompanied by
statements from MPUC Commission-
ers that indicated great sympathy and
support for telephone companies and
their customers, and little sympathy or
support for cities or citizens. It seems
as though the Commission and the
utility companies agreed that cities
should be responsible for managing the
public's right of ways, but should not
actually manage those resources, and
certainly should not impose conditions
on the use of rights of way, or any
Page 3 -- Rights of way Page 13 -- Cities Week 1996
Confusion exists over US West's
view of managing public rights of
way.
Plan now for Cities Week 1996 --
Making Cities Count - Preserving
our Quality of Life.
"peculiar" charges that would be
considered unreasonable by the
telephone utilities. All of the parties
acknowledged that the Legislature will
ultimately be asked to settle the
dispute.
See MPUC, page 6
Cities
Bulletin to the mayor and to the ·
administrator or clerk. Be sure to
mute it to your councllmembers
and department heads. =~,
League urges city support of
right of way initiative
The MPUC's recent action on the US West petition under-
scores the importance of implementing the League's right of way
management initiative. Because the right of way issue is likely to
be a dominant issue in the 1997 legislative session, it is imperative
for cities to mount a concerted effort to educate city officials,
citizens and legislators to the implications and public costs
intrinsic to this issue.
Letters were sent to all League members in early July asking
for their consideration and support for voluntarily funding this
League initiative. If your city council has not yet discussed
participating in this effort, we hope you will include this item on
your next city council agenda. For more information contact Jim
Miller at (612) 281-1200 or (800) 925-1122. It'
MPUC 9 continued from page 1
The legal effect of the MPUC
~ction is unclear, therefore, the
League's advice to members will have
to wait until the actual order is drafted,
released and subsequently analyzed.
However, MPUC staff made several
points in a briefing paper that indicate
the MPUC will interpret "their" statute
to provide them with expansive and
substantial authority and provide cities
with limited authority.
While cities may continue to adopt
and amend ordinances regulating the
use of public rights of way, if the
affected users challenge the ordinance
in court they may find a litigation
partner in the MPUC.
In order to assist the MPUC
Commissioners, thc MPUC staff
summarized and organized the com-
ments made by all the parties. MPUC
staff also included their interpretations,
opinions and recommendations. A
review of several portions of the
briefing paper gives a fairly clear
picture of what the staff-drafted order
vilt eventually look like. Full copies of
the staff briefing paper are available
from the League, either by requesting a
copy from the IGR department, or by
calling the fax hotline at (612) 215-
4039 and requesting document #64040.
Selected excerpts from the
MPUC staff briefing paper
·... staff believes that its recom-
mendation that the Commission issue
an order outlining the Commission's
interpretation of its authority under Ch.
237 will provide a more expedient, and
at least as useful, solution than would
an expedited hearing, contested case
hearing or rulemaking.
· There are.., jurisdictional
problems with regard to the USWC
petition.., the Commission has no
authority over municipalities and no
authority to strike down any city
ordinances.
· An order resulting from the
Commission's meeting on July 9 can
just as easily describe the extent of the
Commission's authority under Ch. 237
and be concluded in a much shorter
period of time. Ifa municipality adopts
an ordinance that infringes on the
Commission's jurisdiction, then the
matter can be pursued in court, as
USWC has done in Redwood Falls.
· A state agency does have the
authority to interpret the Legislature's
delegation of power to the agency, attd
such interpretations by state agencies
are routinely granted deference by the
courls.
·... under 237.16, the Commis-
sion has the exclusive authority to
authorize any person to furnish
telephone service while the municipali-
ties' authority is limited to specifying
the location of poles, wires, and other
equipment in the public right of way for
the sole purpose of ensuring the safe
and convenient use of streets, alleys
and other public grounds by the public.
· Chapter 237 also confers upon
the Commission other substantial
responsibilities such as ensuring that
rates are just and reasonable... To the
extent that an action by a municipality
would impact areas of Commission
responsibility, then the Commission
would be concerned about that
municipal action. For example, ifa city
ordinance caused a telephone company
to incur additional costs, and those
costs are in turn proposed to be
recovered from ratepayers, then the
Commission's ability to establish just
and reasonable rates is affected. The
Commission has no authority to require
a municipality to repeal an ordinance.
However, the Commission should be
interested in learning of specific
municipal ordinances which the
industry believes affects the
Commission's jurisdiction in order for
the Commission to decide whether to
request, or join in a request, for
judicial review of such an ordinance.
· Staff believes that municipalities
do not have the authority to impose
franchise fees on telephone companies.
·... staff agrees with those parties
who have argued that in today's
radically changing telecommunications
industry., the concern for statewide
uniformity is of even greater impor-
tance. Parties must face uniform
regulation, with no significant barriers
to entry. Unique ordinances enacted
by each municipality would be
problematic for the development of
competition. ~.
Page 6 LMC Cities Bulletin
What does US West want?
JoelJamnik
Though imprecisely drafted, the
petition filed by US West that was
recently dismissed by the MPUC cited
a number of recent city ordinances that
the company believes infringe on the
Commission's jurisdiction over public
fights of way. By asking for the
Commission to exercise jurisdiction,
the company sought to avoid being
bound by city ordinances or regula-
tions.
The documents filed by US West
indicate that the following municipal
actions or requirements are at least
considered unreasonable, if not
unauthorized and illegal, by the
company:
· Encase all fiber within the city
limits in concrete;
· Execute easement agreements in
which the city purports to grant
authority to use the fight of way;
· Pay a fee of 2.6 cents per lineal
foot per year during the term of the
easement;
· Execute a limitation of liability
agreement with the city limiting
liability of anyone cutting cable to
$2,000;
· Provide the city with proprietary
information concerning the
specific telecommunications
services intended to be provisioned
over the fiber placed in the fight of
way;
· Provide statements concerning its
intention to sell, convey, lease or
otherwise allow another the use of
its fiber;
· Acknowledge city authority over
telecommunication facilities;
· Provide a permit fee which "shall
be set from time to time by the
City Council by resolution;" and,
· Deposit, prior to commencement
of work, security in a sufficient
amount as determined by the
director for completion of work
with the security to be held until
16 months after work is com-
pleted.
Following the MPUC's decision
on Tuesday, Mary Hisley, a US West
spokeswoman, was quoted in the
Minneapolis Star Tribune as saying that
the dispute "is not just a franchise fee
issue. The issue is who has substantial
authority over the public right of way."
These statements seem to differ
from what the company told Minnesota
mayors in a recent letter (see below).
Ironically, the letter is dated May 31,
the very date that the Redwood County
District Court ruled against US West's
legal challenge of several of the city
actions listed above. ~
GOMMUNICADOIV$ (~
May 31, 1996
Robert Benke. Mayor
City of New Brighton
803 5th Avenue: N.W.
New Bdghton MN 55112-2792
Dear Mayor Benke:
As part of my ongoing effor~ to provide you with updatns on various issues
concerning telecommunications, I am writing to advis~ you of ~cent activities
regarding the public right-of-way.
Ks you may know, U S WEST Communications is wofldng with ~be public Utilifins
Commission, the Minnesota Telephone Association, the D~pastment of Public
Services and the League of Minnesota Cities in an attempt to bring uniformity to the
public right-of-way permitting process.
Our efforts have focused on ensuring the enforcement of municipal police power
interest over the public right-of-way while clarifying the Minnesota Public Utility
Commi,~ion's jurisdiction over telephone companies and the substantive issues under
which access to the public right-of-way may he obtained.
U S WEST wishes it to he clear that it doe~ not advocate:
· Taking away any authority cities have under exizting Minnesota law. or
· Modifying or eliminating protection citi~ currently have under existing law
related to liability associated with right-of-way.
Rather U S WEST seeks to:
· Maintain the allocation of authority found in existing s:atutes.
· Acknowledge and respect the police power rights of municipalities to the
location of poles, wires and other equipment.
If you have any questions or would like to discuss this issue, please give me a call on
663-5730. ff you prefer to write, my address is:
Kathy Kolbo
U S WEST Communications
200 South 5th Street, Room 390
Minneapolis, MN 55402
or
kkolbo@uswest.com
Thank you for your time.
Sincerely,
Kathy Kolbo
Community Affairs Manager
July 12, 1996 Page 3