Maplewood and cable commission await judge’s decision on $1.15 million lawsuit

After a Feb. 6 hearing, a Ramsey County judge will be deciding the resolution of a two-year financial dispute between Maplewood and the Ramsey/Washington Counties Suburban Cable Communications Commission II, which regulates cable television delivery and services for the residents of its member cities. 

The commission is currently made up of 11 member cities including North St. Paul, Oakdale and Lake Elmo. 

The disagreement started in late 2015 when Maplewood announced its plans to withdraw from the commission at the end of that year and tried to negotiate taking with it a portion of the commission’s cash reserves, which were generated while Maplewood was still a member.

At the beginning of 2016, the rift escalated when the commission dispersed excess franchise fees from 2015 to the remaining member cities, leaving Maplewood out of the payment, though Maplewood cable customers paid into the sum being dispersed.

In November 2017, Maplewood filed a lawsuit in Ramsey County District Court, asking a judge to declare the city is entitled to about $329,000 of the 2015 excess franchise fees and about $825,000 of the excess reserve funds held by the cable commission. The city and commission met at the Feb. 6 hearing and Judge Leonardo Castro has 90 days from that hearing to make his decision.

 

Franchise fees

Maplewood contends that the cable commission, which collects franchise fees on behalf of its member cities, owes the city a quarter of the unspent franchise fee money collected in 2015. The city says it was a member of the commission for the entirety of 2015 and was the only city not to receive a share of that money. 

In previous years, Maplewood received between 25 and 27 percent of the leftover money based on the percentage of revenues generated by cable TV subscribers in the city.

Maplewood left the commission in order to use the franchise fees and other money generated from cable TV customers however it wanted. The city was also seen as having a large enough cable subscriber base to no longer need membership in the commission.

“A quarter of the excess franchise fees that Comcast paid to the cable commission for 2015 were generated from cable subscription fees paid by Maplewood residents during that year,” explained John Boyle, the attorney representing Maplewood in the case. 

However, the cable commission contends that because the disbursements for the excess franchise fee money were not distributed until early 2016, after Maplewood was no longer a member, Maplewood forfeit its claim to its percentage of the money. 

In support of this stance, the cable commission’s attorney, John Baker, cited a passage from the commission’s joint powers agreement, which Maplewood signed upon becoming a member city. The joint powers agreement states that excess franchise fees “shall be redistributed to the then existing Members.”

“It’s always been the case that the annual distribution is one that takes place in the next year,” Baker said. “It has to be that, because the formula that’s provided for under the joint powers agreement is one that is based upon information about what happened in the previous year, and that financial information isn’t clear until the previous year is over.”

Boyle held firm that the date of the payment is irrelevant because the money was accrued in 2015 when Maplewood was still a member.

“We feel very comfortable about getting the money back that we’re owed on the franchise fees,” said Maplewood City Manager Melinda Coleman in a summary provided at the Feb. 12 Maplewood City Council meeting.

“We’re not sure how we’re going to fare on the other part,” she added.

 

Cash reserves

Maplewood also tried to negotiate a distribution of its share of the cable commission’s roughly $3 million cash reserve, which accumulated over the years while the city was a member. The city is asking for about a quarter of the money that was in the reserve fund at the time Maplewood left the commission, amounting to about $830,000.

Coleman explained that all of the residents who subscribe to Comcast for cable TV pay a monthly franchise fee as well as other fees, which are used to help finance the broadcasting of public meetings. She explained that this is where the money in the commission’s reserve funds comes from.

“[The cable commission was] taking and saving all their money and not giving it back to the city memberships, and so we believe ... that we’re entitled to a share of that because Maplewood had 25 percent of the cable subscribers in the commission area,” Coleman said. “We think it’s important to get that money back because you, our subscribers and residents of Maplewood, have been putting that money in for over 20 years.”

According to Baker, the city’s claim to a portion of the reserve funds doesn’t have a basis in the joint powers agreement, which legally governs what happens when there’s a dispute between a past or present member of a commission. 

“What Maplewood is asking the court to do goes above and beyond what the requirements are in the joint powers agreement,” Baker said.

One commission member said she thinks Maplewood is asking for something to which it’s not entitled.

“They left the commission willingly, and we have joint powers, so if somebody leaves they’re not really entitled to any of the assets,” said Candy Petersen, a North St. Paul City Council member and the city’s cable commissioner.

 

The impact

Petersen explained that the outcome of the lawsuit won’t affect North St. Paul directly, but as a member city of the cable commission, North St. Paul — as well as Oakdale, Lake Elmo and the other eight member cities — will share in the total effect on the commission. 

The other eight commission members are Birchwood Village, Dellwood, Grant, Mahtomedi, Vadnais Heights, White Bear Lake, White Bear Township and Willernie.

If the commission wins, Petersen said residents probably won’t see a change, but if Maplewood wins, the cable commission could experience further budget cuts than what it has already faced since Maplewood withdrew.

Without the roughly $500,000 in operating revenues Maplewood brought to the commission annually, the organization was forced in July 2016 to cut all public access programs produced by residents. In addition, two positions were eliminated and three other positions remained unfilled after employees left.

Petersen described Maplewood’s withdrawal as “harmful” to the commission. She added that commissioners are hoping for the best, but they have prepared as much as they can just in case the judge doesn’t rule in the commission’s favor.

“We’ve planned ahead with budgets and stuff. We might not be hiring another person that left, and we might have to downsize,” Petersen said. “I don’t think we’ll have to close or shut the thing down, but it’s a scary thing.”


 

– Aundrea Kinney can be reached at 651-748-7822 or akinney@lillienews.com.

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