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Sunday, February 22, 2009

Crown Hydro and eminent domain, and overlap with fiber-to-the-home municipal broadband sagas.

On this recent post asking factual questions [even if FERC hearings addressed such issues, updating things to the present Obama-stimulus proposal times would be needed], Two-Putt Tommy left a comment touching upon the eminent domain and other questions and objections raised at the Dump Michele Bachmann blog. That was the incentive, to put up this post.

The question of eminent domain use-&-power to benefit a private entity has a history. Dispute over a governmental body using eminent domain for the benefit of a land development inititive of a private entity (with public benefits) had recent Supreme Court attention (and an opinion was issued favoring the extensive readings of governmental power to take, subject to Fifth Amendment due process [aka fair compensation].

Urban renewal and land use planning involving broad "taking" has been a Minnesota litigation theme, and FindLaw picked up the Walser Auto v. Best Buy and City of Richfield, litigation, with the litigation history being online if you search at the law library site. There a total taking of the auto lot, for the higher and better use [in the municipality's view] of a Best Buy headquarters campus, was at issue. Utility easement/right-of-way taking has been around for some time, with easement [use rights of a limited scope] being less intrusive than a total taking and buyout, with pricing being the main issue litigated. There are indirect "partial taking" questions that relate, for example, to airplane flight paths to airports where the noise might be (and has been) argued to "take" the beneficial enjoyment from adjacent or neighboring lands. Other related flavors of issues exist that lawyers can and have argued. The term "inverse condemnation" is used in such instances, meaning no actual condemnation proceeding went on, but a public action so impacted private real property that a "constructive taking" was attained. "Taking" law, eminent domain law, is extensive, with national precedent and state-by-state variations on the theme.

For now, with a recent Strib article in mind, there is the question of private utility/service providers going to court to stop a government taking "service provision rights" for itself, as somehow unfair or disadvantageous or "anti-competitive" to private providers of such services; specifically, the companies first say screw providing ultrafast broadband bandwidth until we want to provide it, but if a municipality acts, they then say they've a host of lawyers to cause a host of delay. Something like that. And often with the private service provider then jogged off the dime to provide a parallel network and "get there first" while the municipality is tied up in court [preliminary injunction against the municipality being a usual first aim of the "privateers," we'll call them that].

Strib reporting was by Jean Hopfensperger, online here, the gist being:

North St. Paul caught in middle of fiber optic fight -- Who should control our information highways? North St. Paul offers a test case being watched across the state.
Last update: February 20, 2009 - 9:17 PM


North St. Paul hoped to be a suburban trailblazer when it drafted a plan to become the first metro community with a city-owned fiber-optic network that would give residents the fastest available cable, Internet and telephone services. But it was taken aback by the reaction from Internet and cable leaders, who launched an aggressive opposition campaign charging "unfair competition'' and predicting failure.

Opponents spent $40,000 in the past two weeks alone to shape a Tuesday city referendum on an issue being watched by cities across the metro area.

"Why would a company like Comcast, with millions of subscribers, be so concerned about its maybe 2,000 subscribers in North St. Paul?'' asked North St. Paul Mayor Mike Kuehn.

North St. Paul has found itself in the middle of a state -- and national -- debate over who controls the nation's information highways. The telecommunications industry says that cities have an unfair advantage when owning the networks, and that being owner and part regulator is a conflict of interest. Only one Minnesota city, Windom, has a city-owned fiber-to-home network. [There's Monticello also, see below]

"We're very concerned when cities want to get into the business and add to the competitive mix with a subsidy,'' said Mike Martin, executive director of the Minnesota Cable Communications Association, which contributed $15,500 to the referendum campaign this month. "And there is no service the city has proposed that is not available now or could be in the future.''

Leaders in North St. Paul, which has owned and operated its own electrical utility for more than 100 years, said it has no problem letting private industry manage the so-called PolarNet. But it wants to own the infrastructure and tap any future profits for the city's economic development.

"Comcast is interested in selling cable: We're interested in developing a town,'' said city manager Wally Wysopal. "This [fiber-optic network] could be a factor in where a person decides to live, stay or open a business."

This aging suburb has lost nearly 900 jobs, or 25 percent of its workforce, since 2000, city leaders said. It's also losing $810,000 in local government aid in the next two years. Having a state-of-the-art fiber-optic network could give the city a competitive edge over its more affluent suburban neighbors.

Here's how PolarNet would work, city officials told the group:

The city would take out an $18.5 million general obligation bond, payable over the next 25 years, to build the network. Loan payments for the first three years are wrapped into the $18.5 million. After that, the project would fund itself if 27 percent of the city's 4,000 households purchase the service.


There's more to the story, so read the entire Strib post.

I have hoped that City of Ramsey, where I live in Anoka County, would be so progressive. Some in the city have been responsive, but it has not been a high priority of the old mayor, who retired this election cycle and never during an extended tenure in office chose to post an email address on the city's website, for contacting him. Call Tom and chat was his Gestalt.

Bob Ramsey, the new mayor, uses email and might be more receptive to infrastructure improvements that can attract twenty-first centruy business growth to the locale.

But that's a digression.

The Hopfensperger report ignored the ups and downs in Monticello, litigation and all, where so far the City's effort to improve itself via municipally owned broadband has been successful although delayed and impeded by a privateer competitor.

The Monticello situation might merit its own post, since the storyline is compelling, the small town vs the powerful business firm, etc.

For now, this link to the "Community Owned and Locally Operated" municipal venture, "FiberNet Monticello."

From that link you can explore things, however, this "National Broadband Strategy" link page might also interest most Crabgrass readers.

You're either part of a solution, or part of the problem, and that obstreporous telco utility in the Monticello dispute sure looks to be no solution worth mention.

Read what you can, get the telco's side of things, etc., to form an opinion. The telco is identified on the FiberNet Monticello site, here:

Bridgewater Telephone Company, an affiliate of TDS Telecom, sued the City of Monticello in May, challenging the City’s authority to use revenue bonds for a fiber-to-the-premises (FTTP) system. On October 8, the court issued its ruling dismissing the lawsuit with prejudice on the merits. In his ruling, Judge Jonathan Jasper concludes that “the City has express authority” to “issue bonds to fund the FTTP project as an “other public convenience.” Additional rulings by the judge also denied TDS requests relating to the lawsuit and were filed by the courts on October 10. State Statute allows TDS Telecom to file an appeal within 30 days from the date of the notice.

The revenue bonds in the amount of $25 Million dollars were sold to private investors this summer. The money is currently being held in escrow pending final resolution of the lawsuit. Once the bonds are released they will be used to reimburse the city with interest for liquor store reserve funds used to start the fiber loop project prior to the lawsuit being dismissed.


Google them, see what, if anything, their website(s) have to say.

That last link, containing the quote, has links to allow you to download some of the District Court papers from the suit, and Judge Jasper is expected to be as impartial and dispassionate a commentator as there'd be. Have a look. There's plenty of story there, and the issue is now playing out again in parallel, in North Saint Paul.

_______UPDATE______
The public/private interaction over services provision, public works departments, etc., and the history of private electric power provision [except for TVA, Bonneville Dam, and the railroads vs subways and muni-transit] has had an interesting focus in Texas, over the question of private money for a toll-road superhighway; this Google. Seattle has its own power utility, with its own hydro dam on the Skagit River, while most of the rest of the state has a private firm supply power; and all are on the grid now, gencos, transmission owners, and distribution grid owners; with electric futures being a traded commodity. We live in interesting times. Toll roads are nothing new, although the super-highway turnpikes-vs-freeway distinction is new. Toll roads, instead, were common in our history, Wikipedia stating:

The first major toll road in the United States was the Philadelphia and Lancaster Turnpike, built in the 1790s, within Pennsylvania, connecting Philadelphia and Lancaster. In New York State, the Great Western Turnpike was started in Albany in 1799 and eventually extended, by several alternate routes, to the Finger Lakes region.

Prior to the American Revolution, some smaller toll roads organized by local governments existed, such as the Little River Turnpike which connected Alexandria, Virginia with the farmland of Western Virginia.