Belen council considering raising franchise fee
Belen city councilors are looking into changing a franchise tax outlined in a franchise agreement with CenturyLink, who claims the tax was increased without negotiations.
Leo Baca, CenturyLink's state legislative affairs director, said he submitted a draft of the franchise agreement in an ordinance between CenturyLink and the city to be reviewed, but didn't notice the franchise tax increased from 3 to 4 percent until after councilors adopted the ordinance in May.
Leo Baca claims there were no negotiations with city administrators on the increase.
Councilors discussed keeping the 3 percent franchise tax, but decreasing the length of the contract from 10 years to two or three years upon discussions with Baca at a July 16 city council quorum.
The franchise fee was "intentionally changed" to match a similar agreement entered upon by the city and Plateau Telecommunications, Inc., said City Manager Mary Lucy Baca at a June city council meeting.
Plateau entered into a franchise agreement with the city in December to install an underground fiber optic infrastructure to anchor institutions throughout Belen.
Leo Baca argued that Plateau is entering Belen under different financial circumstances, including offering lower prices due to government-funded infrastructure.
But the bottom line is that the company isn't the one that is paying the increased franchise tax, the consumer is, said Councilor Wayne Gallegos.
Which is why, Leo Baca points out, CenturyLink is concerned. Wireless and cable companies, providing phone services, don't pay a franchise tax, which is causing CenturyLink to lose customers to competitors.
"We're already losing them as it is and we may lose them even faster if (the franchise tax) occurs," he said.
The city of Santa Fe is facing a lawsuit with CenturyLink over a similar issue, Leo Baca said. CenturyLink would be countering its legal position in the Santa Fe lawsuit if it accepted the increased franchise tax outlined in Belen's ordinance.
However, if the city can prove the cost of maintaining a right of way has increased, CenturyLink would be open to an increase, Leo Baca said.
Lawrence Kaneshiro, the city's information technology specialist, generated the franchise tax by reviewing the 2012 Streets Department budget, which maintains the right of ways CenturyLink's equipment runs through.
The budget, detailing each utility company's contribution, showed CenturyLink pays the least amount compared to other utilities, Kaneshiro said.
"If the opportunity comes up where we can charge or create a franchise agreement with those companies, I'm going to look at that because I think we need to even the playing field and those people who do business in Belen and use our airways and use our ground and use our infrastructure we have to get some kind of money for that," Kaneshiro told councilors. "I think its the only fair thing to do."
CenturyLink's franchise tax has remained at 3 percent for the past 20 years, Kaneshiro added.
Councilor Mary Aragon questioned what could happen if CenturyLink's franchise tax was decreased to 3 percent, but Plateau's kept at 4 percent.
Plateau might "come back and say, 'Why did you lower their's to 3 (percent) and keep ours at 4 (percent)?' I don't know if that would be the case, but that may be," Mary Lucy Baca responded.
CenturyLink's statewide franchise tax average is 3 percent, Leo Baca said.
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