A dispute about franchise fees has halted work on a portion of a broadband stimulus project under construction in Oregon, reports local media outlet The Oregonian. The 185-mile fiber ring network is being built by the County of Clackamas, which won $7.8 million in broadband stimulus funding toward the $11.1 million project.

The county’s plans for the network include connecting anchor institutions such as schools, fire department locations, and hospitals in Oregon City, which had a 2010 population of 32,000. But after the county installed about 20,000 feet of fiber within the city back in September, the city issued a stop-work order, arguing that the county failed to reach a franchise agreement as required under city code, The Oregonian reports. The county did, however, obtain permits to work in the city’s rights of way, said The Oregonian.

Clackamas County officials told The Oregonian that Oregon City officials were notified of the project in 2009, but they were not informed of any franchise fee until the stop-work order was issued. The Oregonian also reports that the city passed an emergency ordinance less than a week before the stop-work order was issued that redefined “telecommunications service” under city code—a move that Clackamus County spokesman Tim Heider said was driven by the need to justify a request for a franchise fee.

Nancy Ide, recorder for Oregon City, disputed that allegation, claiming the city has been talking about changing the definition for a long time, The Oregonian reports. “Our main intent is to make sure it’s a level playing field and that the county is not providing a service that would be cheaper for a customer and take away from someone else’s business,” Ide told The Oregonian.

Heider told The Oregonian that the city has proposed that the county pay an estimated $210,000 annually in franchise fees, which would require the county to more than triple the amount of fees that anchor institutions would pay annually to use the network, potentially pricing the county network out of the market.

The Oregonian quotes Heider saying “If no solution can be reached within the next week or two, the project will simply bypass Oregon City.”

The Oregonian adds, however, that both parties say they are hopeful they will be able to reach an agreement.

This seems like the sort of issue that could come up with other broadband stimulus projects—and considering the iron-clad deadlines imposed on those projects, none of them can afford any long drawn out legal battles over franchise issues.

It would be interesting to hear from other stimulus winners whether they are paying franchise fees in areas where they will be constructing new networks, what steps they took up front to make sure their plans reflected any such fees up front and if there is any way a stimulus winner can help ensure that franchise fees are not imposed at a later date.


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