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Franchise Fee Audit Finds $5,000 for Hartwell

January 16, 2015
David Aldrich, City Manager of Hartwell, Georgia, had GMA audit Comcast’s franchise fee payments for the years 2010-2012. The result? The city recovered approximately $5,000 in unpaid fees. For a small city like Hartwell, that’s not an insignificant amount of money.

More importantly, by using GMA’s Cable and Telecommunications Management Services, Aldrich hardly had to worry about the audit and Comcast paid its fees without any issues. Aldrich points out that happened due to GMA’s experience in handling similar audits with other cities. As a whole, the franchise fee audit experience also led to greater long-term accountability with Hartwell’s cable and telecommunication providers.
 
Aldrich chatted with GMA to talk about how this situation came to his attention and how the franchise fee audit benefited the city—with hardly any disruption to the city’s day-to-day operations.
 
David AldrichHartwell City Manager David Aldrich.
How did this franchise fee situation come to your attention?
As a city manager, I do many things but I’m a generalist. I’m not an expert in working with cable and telecommunications companies, so we’ve utilized GMA in this area effectively in the past. GMA asked me if I had recently conducted a franchise fee audit. I had not. So GMA conducted the audit and kept us in the loop as it progressed.

What did GMA find in the audit?
GMA communicated with Comcast and found there was about $5,000 in fees omitted from our franchise fee payments during 2010-2012. Comcast acknowledged that and they cut a check to the City of Hartwell for that amount of money. Those are monies that would never have been recovered had it not been for GMA and the service they provided us. I myself would not have known or thought about how to discover those unpaid fees, and I certainly wouldn’t have had the expertise to try and conduct that audit.

So it was really a hands-off experience for you?
GMA did all of the work. They initiated the audit by drafting the letter that we needed to submit to Comcast, and then GMA guided us through the entire process. At times, there were questions that Comcast would ask us about what was being done or requested. In turn, we would send that information to GMA. They worked through those questions and responded to me, and then I would go back to Comcast with GMA’s answers. When the audit was done, Comcast acknowledged that there was a $5,000 discrepancy. As a small city of less than 5,000 people, that’s significant money. In addition to the payment from 2010–2012, we will receive more revenue in future payments.
 
We also benefited by not entering into an adversarial role. GMA dealt with Comcast, and we stayed out of the negotiation details while still accomplishing what needed to be done. Our relationship with Comcast was not frayed at all. And that is good. One of the things about this audit that I liked was establishing more accountability with our cable provider. They know we have the ability to audit them and that we’ll occasionally pull the trigger and do it. Additionally, when we receive our quarterly payments from Comcast we’ll send a copy of the report to GMA so they can confirm the correct revenue categories are included.

You suggested earlier that you’ve utilized more than just the franchise fee auditing for this service. How else have you leveraged GMA’s Cable and Telecommunications Management Services? 
We have a communications tower in our city to which several telecommunications businesses have attached antennae and microwave dishes. As a result, we have many long-term lease agreements where we receive a monthly rental from AT&T, Verizon, and other companies. GMA helped our city receive significant rental fees through the use of that tower and it’s been a tremendous asset to us. In fact, we are now inundated by requests from companies about attaching additional equipment to our tower.
 
By GMA helping us in this area, we’ve received much better rates. GMA understands the industry and the prevailing rates for services in similar markets, and they assisted us in crafting these long-term lease agreements. Since I don’t know what needs to be included in these agreements, I asked myself, “How can I protect the city and ensure that I comply with all federal laws and regulations?” GMA helped us do all of that.

For cities with similar challenges, what would you say to them about the importance of dealing with similar franchise fee issues?
Using GMA is the most economical way I know of to find the type of expertise that our city needs for cable and telecommunications-related issues. I’ve been in Georgia city management for 33 years, and I don’t know of a city (other than a very large city) that would have this type of expertise in-house. So many cities couldn’t otherwise afford this expertise, and the fact that we’re able to share the cost of this service through GMA is invaluable to us.
 
Without doing this audit, we would have lost that $5,000. And now we’re most likely going to look at our franchise fees every three years. Right now, times are financially difficult for cities. Our revenue streams are drying up. It’s extremely hard to budget. So it makes sense to use this service. Remember, we’re not levying new taxes—these are revenues owed to the city. I wouldn’t be doing my fiduciary responsibilities if I did not look at all of the options we have to make sure we’re getting every penny owed to us.
 
And when you look at what you pay for this service versus what you receive, this has been one of the most cost beneficial services we’ve ever used. I know there are probably other cable and telecommunications consultants out there, but the fact that we’re able to receive such a low-cost service for pennies on the dollar versus what we would pay on the private market is extremely beneficial. Even with my 33 years of experience, I would assume that most city managers are like myself and really don’t know what franchise fee money they might be missing.
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WHY GMA?
With over 20 years of expertise dealing with cable and telecommunications companies on behalf of cities, we are experienced experts who can negotiate with those companies as your advocate. For your city, that means cable and telecommunications agreements structured by experts that benefit you. From our experience with cities, we routinely see:
  • Returns on investment far exceeding the low annual cost of our services.
  • Cities recouping past underpaid fees, often in the thousands of dollars.
  • Increased rent and right-of-way fees so that you are not undervaluing your city’s property and assets.
Since 2012, a total of over $2 million has been recovered through franchise fee audits for local governments participating in the Telecommunications & Right of Way Management service.