Council Agenda - City of Burbank

Tuesday, November 9, 2004

Agenda Item - 5

 

                                        Burbank Water and Power
                                                 MEMORANDUM
 

 
DATE: November 9, 2004
TO: Mary J. Alvord, City Manager
FROM: Ronald E. Davis, General Manager, BWP
SUBJECT: APPROVAL OF LOCATION AGREEMENT WITH STARWEST PUBLIC COMMUNICATIONS, INC.

PURPOSE

 

Staff is requesting that the City Council authorize the BWP General Manager to enter into a five-year Location Agreement (Agreement), attached, with Starwest Public Communications, Inc. (Starwest).

 

BACKGROUND

 

The City has 70 payphones: 54 are outdoors and 16 are indoors in various City facilities. Payphone revenues go to Fund 535, the City�s internal service fund for its radios and telephones. In recent years, payphone revenues have steeply declined owing to the widespread use of cell phones.

 

Burbank Water and Power (BWP) manages Fund 535 on behalf of the City. Administrative oversight also comes from the Fund 535 Executive Committee (BWP General Manager, Financial Services Director, Fire Chief, Information Technology Manager, Police Chief).

 

Recently, the City�s Location Agreement with SBC Pacific Bell (SBC) came up for renewal. (The City is presently on a month-to-month agreement with SBC.) Staff believes that entering into an Agreement with Starwest would be more favorable to the City, increasing its payphone revenues.

 

ANALYSIS

 

The key features of the Agreement with Starwest would include: 

 

  • Starwest would have the exclusive right to install and maintain the payphones and would be the exclusive agent to deal with the local exchange carrier, interexchange carrier, and other service providers.

  • The City would have the right to place its logos on the phone equipment.

  • The term of the Agreement would be five years.

  • The City would receive 30% of the adjusted gross profits of all U.S. coin revenue plus all operator services.

  • The City would not be liable for theft, vandalism, or destruction of phone equipment caused by third parties.

  • The City would receive a signing bonus of $4,000.

In contrast to the 30% commission offered by Starwest, SBC proposes to pay no commission on indoor phones and only a 10% commission on outdoor phones. (Moreover, SBC wants to remove eight outdoor phones immediately and other outdoor phones later on as it deems necessary.) Under an Agreement with Starwest, staff expects payphone revenues to go from $1200 to at least $3600 per year. 

 

In contrast to SBC�s $500 per month charge for the City�s 16 indoor payphones, Starwest wouldn�t charge anything at all, saving Fund 535 $6000 annually. Therefore, the Agreement would represent a net benefit of at least $8400 per year (the $6000 reduction in expenses plus the $2400 increase in revenue).

 

The reference checks, which included Zelman, were all very positive.

 

The Fund 535 Executive Committee unanimously approved entering into an agreement with Starwest. The Committee also directed BWP staff to check with the Community Development Department on the placement of any logos. The Committee was comfortable with displaying logos as long as the Starwest logo was prominent enough so that customers would call Starwest with any service complaints and not the City.

 

Gail Stewart and Cassidy Allen have created specifically-designed icons representing each Department where the phone booths are located. �Downtown Burbank� logos will be used on the phones in the downtown area.

 

FISCAL IMPACT

 

The fiscal impact to the City�s Fund 535 is positive.

 

RECOMMENDATION

 

Staff recommends that the City Council authorize the BWP General Manager to approve the five-year Location Agreement between the City and Starwest.

 

GLS:jg

L:\City Council\Staff Reports\2004\Approval of Payphone Service Agreement.doc

 

Attachment

 

c:          Fund 535 Executive Committee

Sue Georgino

Gail Stewart

 

 

 

go to the top