HomeMy WebLinkAbout4 Underground Conduit Agenda Item # 4
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Public Utility District
Staff Report
To: Board of Directors
From: Stephen Hollabaugh
Date: September 2, 2005
Subject: Reconsideration of Cebridge's request for continued use of an underground
conduit on TDPUD property (Northside Well and Tank Site)
Why this matter is before the board: This matter involves granting Cebridge Connections
an easement for the continued use of a conduit across District owned land at the Northside
well and tank site for access to the tower site and their new headed. Only the board can
grant this easement.
History: There is considerable history to the District's dealings with Cebridge Connections,
and since the board is familiar with the details of that history, I will not repeat it here.
New Information: Until recently Cebridge has leased a portion of the Northside site from the
District and had its head end facility there. The District now needs the land (see item #5 on
this agenda) and Cebridge in is the process of relocating its head end. At the August 17,
2005 board meeting the board extended Cebridge's lease until the end of September 2005 in
order that Cebridge could negotiate an alternative route to the tower site. Cebridge
requested that this matter be reconsidered and presented to the board for re-consideration.
Attached are the e-mail request from Pete Abel of Cebridge and a letter to the board from
Robert F. French which gives a status report of the negotiations between Cebridge and Dr.
Dennis Chez. I have also attached a map outlining where the existing conduit runs.
Recommendation: I recommend that the request be denied.
Page I of 1
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recipient has requested fax transmission. The author of this memo considers all content
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TO: Ron Hemig
COPY: Joe Aguera, Pat Sutton, Tim Taylor, Bill Thomason, Peter Holzmeister
FROM: Pete Abel
SUBJECT: Request for 9/7 Agenda Item & Update on Lease Negotiations with Dr.
Chez
We respectfully ask that the following action item be placed on the TDPUD
Board's agenda for its regular meeting on September 7, 2005: "Reconsideration
of Cebridge's request for continued use of an underground conduit on TDPUD
property (Northside well and tank site)."
We are requesting the Board's reconsideration of this request because neither Dr. Chez
nor his attorney has delivered a revised, draft agreement to us, for leasing the
underground conduit on Dr. Chez's property -- despite our previously documented
notice that today is the last possible day we can finalize such an agreement and still be
confident we can reasonably meet the TDPUD's extended deadline of September 30,
2005, for final removal of our above-ground facilities from TDPUD property.
Although Dr. Chez or his attorney could submit a revised agreement later today, we
have no assurance such an agreement will be consistent with the terms to which Dr.
Chez previously committed, as outlined in my August 24 memo to the TDPUD Board.
Furthermore, we felt compelled to seek this action item on your September 7 agenda, at
this time, given the impact the Labor Day weekend may have on required deadlines for
the production/posting of that agenda.
At your September 7 meeting, we are prepared to agree to the following, in
exchange for continued use of the underground conduit in question ...
1. The same, above-market price that Dr. Chez previously requested and to which he
verbally committed ($3,000 per month)
2. The condition that, should the underground conduit (approximately 2-4 inches in
width) need to be moved to accommodate the Water Department's needs, we will do so
at our cost, on expedited timing.
3. Reasonable changes to the above-noted conditions, plus the addition of other
reasonable conditions, consistent with the TDPUD's needs.
Thank you for your consideration. We would appreciate the courtesy of a reply to
this request. (For additional background information, please refer to my August 24
memo.)
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Page 1 of 3
Stephen Hollabaugh
From: Robert F. French [frenchlaw@sbcglobal.net]
Sent: Thursday, September 01, 2005 11:24 AM
To: Ron@Hemig-Erle.com; mrsmorticia@earthlink.net; resutton@sbcglobal.net;
ttaylor@auerbachengineering.com; wltcpa@exwire.com;joeclare@ltol.com
Cc: Peter Holzmeister; Stephen Hollabaugh; dokterchez@yahoo.com; tlashbrook@townoftruckee.com;
Steven C. Gross
Subject: Status of Cebridge/Cequel III Negotiations with Dr. Dennis Chez
Law Offices of
RQBERT F. FRENCH
September 1, 2005
Board of Directors
Truckee Donner Public Utility District
11570 Donner Pass Road
Truckee, California 96161
Re: Status Report on Cebridge Connections/Cequel III Negotiations With Dr. Dennis Chez
Dear TDPUD Board Members:
In light of communications that Cebridge Connections/Cequel III has apparently directed to some or all
members of the TDPUD Board, as well as members of the District staff, pertaining to its "negotiations"
with my client, Dr. Dennis Chez, I feel compelled to provide to the Board the remaining information that
will enable it to fairly evaluate the status of this matter.
As I understand it, Cebridge Connections/Cequel III (hereinafter"Cequel III") appeared at a meeting of
the Board on or about August 17, 2005, requesting the right to continue to utilize the TDPUD's facilities
in their Truckee operations. It is my understanding that they contended that there were no other
alternatives available to them do so. (Cequel III denies this, stating that, "We were clear with the
TDPUD (first with the General Manager's office and subsequently with the Board) that we were in fact
reviewing other options but were legitimately concerned about the state of the negotiations associated
with those options, and hence felt compelled — in light of the timing considerations noted later in this
correspondence—to enter simultaneous negotiations with the TDPUD.") The bottom line for us is that
Dr. Chez was completely unaware that Cequel III was having any parallel negotiations with the TDPUD
at the same time that he was in negotiations with them for the leasing of his conduit to Cequel III.
At the TDPUD Board meeting of August 17, 2005, Dr. Chez also appeared and indicated to the Board
that he had been in negotiations with Cequel III and that his conduit clearly represented another
9/1/2005
Page 2 of 3
alternative to the continued use of the TDPUD's site. I understand that the Board thereafter denied
Cequel III's request for the extension and asked them to remove their technical facility from the
TDPUD's site by September 30, 2005,
Following that denial, on the morning of Thursday, August 18, 2005, Pete Abel, of Cequel III, went to
Dr. Chez's office and discussed with him with an agreement for the use of his conduit. Dr. Chez told
Mr. Abel that he would need to have the agreement reviewed by legal counsel. Due to my schedule, I
was not able to confer with Dr. Chez until the beginning of the following week. Dr. Chez thereafter
elected to seek the advice of an outside telecommunications consultant regarding, among other things,
a market rate for the licensing fee to be charged Cequel III. (Mr. Abel contends that there was an
"agreement" on a fee of$3,000 per month, as he alleges Dr. Chez reported to the TDPUD Board, but
Dr. Chez denies that an "agreement"was ever struck for that amount, or any other amount.)
On Tuesday, August 23, 2005, Mr. Abel e-mailed me regarding the status of the licensing agreement.
He indicated that "we must reach a final, mutually acceptable agreement with Dr. Chez no later than
next Wednesday, August 31, or seek alternative solutions." I replied via e-mail that same day and
assured Mr. Abel that Dr. Chez was proceeding promptly, but that he felt "compelled to conduct a slight
degree of due diligence before entering into such an agreement, even if this does not exactly match
your timing needs." I further stated to Mr. Abel: "Insofar as your imposed deadline of August 31, 2005,
is concerned, Dr. Chez and I will make every effort to reach an agreement with you by that date. I
agree with your suggestion that this may be difficult, however, given the work that remains to be done,
as well as the fact that Dr. Chez will need to have completed his market analysis before moving forward
with any agreement. Please also note that I will be out of my office on Thursday, August 25, and
Friday, August 26. 1 will also be in court on the afternoon of Monday, August 29."
An outside telecommunications consultant was retained and that consultant worked expeditiously to
canvas the market to attempt to develop an appropriate licensing fee for Dr. Chez's transaction with
Cequel III. The consultant finalized its recommendations regarding the licensing fee and the terms of
the transaction and forwarded them to Dr. Chez and to me on Tuesday afternoon, August 30, 2005. 1
immediately began to work on modifying the agreement into the Tuesday evening hours. Yesterday
morning, I spoke for the first time with the consultant regarding its recommendations and made further
revisions to the proposed license agreement. After review by Dr. Chez, at 2:36 p.m., I transmitted the
revised agreement to Mr. Abel, and his company's general counsel, via e-mail. At 2:54 p.m., I received
a reply e-mail from Mr. Abel in which he advised that the licensing fee was too much. Not only did
Cequel III not make any counter-offer, but, they indicated that they would only move forward on the
basis of the $3,000 per month fee that they had previously proposed to pay. No further negotiations
have been proposed or attempted by Cequel III.
I would offer to you my own personal observation of this transaction: During all communcations with
Cequel III and Mr. Abel, there was a repeated theme; namely, "Let's hurry up and sign the agreement
that we previously gave you." Any suggestion that Dr. Chez needed to conduct due diligence to
determine the market value of the license was met with suggestions that he was acting "dishonorably"
and that he was "retracting his unequivocal verbal commitment" because he had given Mr. Abel his
"assurances" that he would move forward with the transaction on the basis of the modest licensing fee
which Cequel had originally sought. At the same time, Mr. Abel was attempting to make a "record" of
any of our discussions and attempted to impress me with the idea that the TDPUD and the Town of
Truckee would be looking over our shoulders. In his e-mail to me of August 23, 2005, he stated, "In the
meantime—given the past confusion surrounding this matter and the multiple parties with a vested
interest in the resolution of this matter—we believe it would be wise to document our ongoing
discussions and to share said documentation with the Town and the TDPUD, in the event one or both
are required to intervene to protect their associated interests." Finally, once the agreement was
provided to Cequel III yesterday afternoon, Mr. Abel gave an almost immediate rejection of the
proposed terms, and offered no alternatives, other than returning to Cequei's below-market offer of
$3,000 per month. This did not impress me as a person who was interested in trying to reach an
agreement. Rather, I have questioned whether the negotiations with Dr. Chez were being used as a
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possible pretense to eventually reject any proposal which Dr. Chez would make and to permit Cequel III
to thereafter return to the TDPUD Board or to the Town of Truckee and allege that Dr. Chez was being
intransigent and seek some form of relief from either the TDPUD Board or from the Town of Truckee.
Certainly, the manner in which our"negotiations" (if one could call them that) progressed could leave
one with that distinct impression.
I have taken this opportunity to address these remarks to you for two reasons: (1) To permit you to
have the full information about the manner in which the negotiations have progressed and to
demonstrate to you the timeliness with which Dr. Chez acted in meeting Cequel III's imposed deadline;
and (2) to pre-emptively seek to protect Dr. Chez's reputation and integrity from the assaults thereon
which I anticipate might be made by Cequel III, either directly or implicitly, at the TDPUD's next Board
meeting.
I thank you for your time in considering these remarks and, should you have any questions about this
matter, I would be pleased to speak with you at greater length about them.
Very truly yours,
ROW F. F
French
Law Offices of Robert F.
Frenchlaw@sbcglobal.net
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9/1/2005
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