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Medford gets money from Qwest, hopes for more

sidebar here — — — — The phone company pays its franchise fee but keeps the amount of a refund it says the city owes

Medford has received a long-awaited franchise fee check from Qwest in the amount of &

36;382,751.

But the check is &

36;224,722 less than the city expected, and the money will sit in the bank awaiting the outcome of Qwest's appeal in federal court.

It's not a done deal, said Medford Councilman Jim Key, a board member of the League of Oregon Cities, which took legal action against the telephone company for refusing to pay franchise fees charged by various cities for use of public rights of way.

Council members won't spend the money until they hear the results of Qwest's case before the Ninth Circuit Court of Appeals in San Francisco, said Medford City Manager Mike Dyal.

The check was less than the city expected because Qwest deducted money that Medford owed the company, said Mary Healy of Qwest's public relations department.

The cities were supposed to make refunds to us in 2000 for franchise fees our customers had overpaid, Healy said. We've been waiting for these payments.

When the Public Utility Commission required Qwest to refund its customers &

36;284 million two years ago, the telephone company informed the 88 cities with which it holds franchise agreements of the lower revenue receipts, which would result in lower franchise fees. Central Point, Phoenix and Rogue River paid the refund to Qwest, but Medford didn't, Healy said.

Medford was in the middle of negotiating its refund when Qwest announced it was halting all franchise fee payments, said Jef Faw, Medford's deputy city manager.

We were 90 percent of the way through with successful negotiations and nearly ready to bring it to the City Council for approval, Faw said.

City officials said Qwest shouldn't try to escape its agreement to pay a percentage of its gross receipts as compensation for using right of ways ' city streets that telephone crews dig up when they bury wire.

Where is the logic in this corporation's thinking? Dyal said. Don't they recognize the difference in Washington and Oregon franchise fee agreements? Or are they simply trying to get out of their legal obligation to compensate cities for using the public right of way?

Qwest stopped paying Oregon franchise fees in July after the Ninth Circuit Court ruled in Qwest's favor in a case against the city of Auburn, Wash. When Qwest filed a similar lawsuit against the city of Portland, U.S. District Court Judge John Jelderks ordered Qwest to resume paying the franchise fees to Oregon cities.

In Washington, the state collects franchise fees, while in Oregon, individual cities collect them, said Dave Barenberg, legislative director for the League of Oregon Cities.

I think Qwest is obviously off base ' it's something all the utilities pay to use the cities' rights of way, Key said. It's not something we're asking Qwest to do that any other utility is not already doing.

Qwest is the only company that provides basic phone service in Medford. With 1.5 million access lines in Oregon, Qwest has 29 million customers in 14 states and 190,000 miles of lines carrying voice and data messages.

In the middle of the franchise fee disagreements, the Medford City Budget Committee earlier this month learned that Qwest's raising of analog line costs would result in the city paying &

36;55,670 more for telephone service than last year. Analog lines are used for data transmission for computer modems and faxes.

Qwest was one of several telecommunications companies that discussed the rate change with the Public Utility Commission, the state agency that sets and regulates telephone rates in Oregon, Healy said.

Meanwhile, the city will deposit last week's payment in its general fund, where all franchise fees are put, said Larry Bryant, city finance director.

Once their appeal is heard, we will include the revenue in our budget if the decision is in our favor, Bryant said. If it's in their favor, we would have to pay it back.

Qwest's case before the Ninth Circuit Court of Appeals is moving forward, with deadlines in August and September for briefs from Qwest and the League of Oregon Cities, Barenberg said.

The city of Medford pledged &

36;12,090 to help the League of Oregon Cities in its franchise fee battles.

Leaf-pickup company repays city

While one utility company is fighting fees, another is giving money back.

Rogue Disposal and Recycling Inc. gave the city &

36;17,000 because the local garbage collecting company was under budget in its leaf pickup program.

Manager Don Cordell presented the check to City Council members this week, along with a bag of potting soil from Rogue Disposal's leaf composting program.

It takes two years to get to this stage of composting, Cordell told the council. It's odor free and weed free and great for the soil.

With refund check and potting soil in hand, council members signed a &

36;119,000 contract with Rogue Disposal for leaf pickup this fall.

Rogue Disposal makes three trips to every Medford home to collect leaves during a nine-week period in the fall. The leaves are trucked to a compost pile at the Dry Creek Landfill in White City.

Last year, Rogue Disposal collected 1,000 tons of leaves, most of them not as wet and heavy as previous years'. It took fewer trucks to haul the drier leaves and fewer drivers, thus the &

36;17,000 savings, Cordell explained.

Also during the May 2 City Council meeting, Medford extended its franchise agreement with Rogue Disposal. The city will receive &

36;425,000 in franchise fees from Rogue Disposal this year.