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aspart ofthe formal renewal process. The financial statements sent tothe IRS reflecting the <br />NSAC as a non-profit organization is not relevant to the financial qualifications of Comcast to <br />hold a franchise in the member cities. <br />Comcast's proposal also relies on an assertion by Mr. Elson on page 22 of his report that <br />the NS[Cand NSACheld $2.1 million in cash and cash equivalents in reserves and demands that <br />half ofthis "reservefund" bedistributed tothe member cities and counted toward the capital <br />grants to the cities proposed by Comcast. Mr. Elson and Comcast apparently fail to recognize <br />that the various NSCCand NS4C checking and money market accounts are not static. While <br />there may have been $21million collectively at one point in time in these accounts, that isnot <br />the case at this point in time. Two ofthe accounts, one for WSCCand one for NSAC,were <br />checking accounts used for daily operations. They will ebb and flow asfunds goinand funds <br />are expended. One ofthe money market accounts isa $250,000 letter of credit required by our <br />lease because of the uncertainties of the franchise renewal process. Another account included <br />inthe "reserve"isadeferred revenue account that holds the PEG funds tobeused inthe next <br />calendar quarter. <br />|naddition, Comcast and Mr. Elson fail toconsider the value ofhaving reserves available <br />tocover large capital expenses that are not annual, such esthe over $ in capital <br />improvements required when CTV North Suburbs had to move out of its former location and <br />lease space in a new office building, or when it has to replace IO cameras in two mobile <br />production trucks and five cameras in the studio, or purchase new servers for video and office <br />storage. |nshort, having financial reserves tocover extraordinary orunexpected expenses is,.in <br />fact, a good thing, and it is inappropriate for Comcast to suggest how much those reserves <br />should beand how the funds should bedistributed. Those are NSCC and NSAC board decisions. <br />The proposal isfor future cable related needs and interests. The use of the current PEG <br />obligations isunder the current franchise agreement, and they are not required tobeused to <br />offset any future cable related needs and interests. This isapractice that isentirely reasonable <br />and under the control ofthe Board ofDirectors. <br />Recommendation <br />The WSCC/NSACrecommends that the NSCC Renewal Committee and the NSCC Board <br />recommend to the Member Citiethat the Member Cities make apreliminary assessment that <br />the Comcast Franchises should not be renewed based on this supplemental staff report <br />including the additional consultant's reports, because the Comcast proposal does not meet the <br />future cable -related community needs and interests, taking into account the cost ofmeeting <br />such needs and interests. Further, staff isvery concerned that, b»adopting the Comcast <br />Proposal,, the NSCC and the member cities will be under franchise terms that will unfairly <br />benefit Comcast. Many ofthe Comcast proposed franchise terms will limit enforcement b«the <br />NSCC and the member cities or will reduce the financial penalties for Comcast's failure to <br />