The four-member executive committee of the Local Government Commission in Raleigh on Tuesday approved a request by Davidson and Mooresville to obtain up to $80 million in bank financing to buy and upgrade the local cable and Internet system. But that may not be the final word on the matter. Will the fall election determine the fate of the proposed purchase?

Approval of the financing was a milestone in the towns’ efforts to acquire the system, though other hurdles remain, including a new potential wrinkle that came up at Tuesday’s meeting.

In a telephone interview from Raleigh following Tuesday’s vote, Town Manager Leamon Brice said the financing package could be in jeopardy if the Nov. 6 election gives opponents of the cable purchase a majority on the Town Board.

“This should be the final say,” Mr. Brice said Tuesday. But he added, “It’s possible if the election were to result in a majority that opposed this, then maybe the bank would want to withdraw.”

Bank of America is helping the towns arrange a type of bond called Certificates of Participation, or COPS, to fund the approximately $40 million purchase. The additional funds will pay for badly needed upgrades on the cable and internet system.

The Local Government Commission reviews all local financing deals. At Tuesday’s hearing, the commission heard statements from Davidson Town Board member Evan Webster and Mooresville Commissioner Frank Rader and asked questions of Mr. Brice. Mayoral candidate William E. Jackson Jr. also appeared at the hearing, arguing against approval.

WHERE DO CANDIDATES STAND?

Could Davidson elect a new board that opposes the current board’s decision to buy the cable system?

It’s not clear if enough of the nine Town Board candidates oppose the cable deal to change the picture. Two Town Board incumbents — Margo Williams and Evan Webster — voted in favor of the cable purchase this summer, as did current board member John Woods, who is running for mayor.

Mr. Webster said Tuesday two other candidates have told him privately they support the purchase.

Two Town Board challengers — Rodney Graham and Ian Robb — have said publicly they oppose it. Mr. Jackson said in a press release Tuesday he knows of four who oppose it, though he did not name them.

Davidson candidates’ views should become clearer during Thursday’s candidate forum at St. Alban’s Episcopal Church.

The election and voters’ opinions about the cable purchase may not be a factor in Mooresville. Commissioners there are chosen in staggered terms, and the three who approved the cable purchase are not up for election this fall, Mr. Brice pointed out Tuesday.

TOWNS VOTE TO BUY

The Davidson and Mooresville town boards voted Aug. 13 to exercise options to buy the system. The system was available because of the 2002 bankruptcy of Pennsylvania-based Adelphia. The towns plan to rename the system MI-Connection.

Time Warner Cable is operating the local system while the towns work to complete the purchase.

The August votes came amid mixed opinions from local residents and after two years of legal battles, legislative lobbying and bankruptcy court delays. Critics had argued that the towns should stay out of the cable business and that government ownership would bring the risk of failure, which ultimately could cost taxpayers.

But supporters like the idea of maintaining local ownership of the system, and control over pricing, customer service and capital spending. They have argued that Davidson and Mooresville will be able to invest profits in improvements here, keeping the network up with current technology — something Adelphia did not do. They say there would be no pressure from shareholders to cut costs to boost share prices or to invest in other areas.

“This was a unique opportunity that the towns had,” Mr. Webster said Tuesday night. He said town board members carefully weighed the decision. “Two questions … had to be answered in the affirmative for us to go ahead: Who would manage it? We found BVU (Bristol Virginia Utilities) to do that. And second is: Does it make sense financially? Looking at the projections, projections that have been reviewed by at least four different groups, (the board decided) that yes, it does make sense financially.”

At a public hearing in May, Davidson Town Board member Cary Johnston, who is retiring after this term, explained the board’s rationale this way: “It is far better to me that what profit is earned here — and we anticipate there’ll be considerable profit after a few years — is ploughed back into our system here. … Cable systems are very valuable. And to me there is tremendous value in towns owning things locally.”

The towns’ efforts to buy the system come at a time when North Carolina municipalities have seen their right to negotiate with cable companies legislated away. In the past, towns signed local franchise agreements with cable companies, and through that process had some leverage over pricing and service. But the North Carolina legislature last year deregulated video, taking away local franchising authority.

Davidson Mayor Randy Kincaid, Cornelius Mayor Gary Knox, and Mooresville Mayor Bill Thunberg said in a joint statement after the Aug. 13 votes: “MI-Connection will provide a new tool for economic development, stable prices, upgraded technology and excellent customer service for citizens. We are excited about this project and look forward to the towns working together.”

OPPOSITION?

Citizen sentiment at public hearings on the purchase deal over the past year was a mix of support and opposition.

Mr. Jackson acknowledges that speakers’ views at hearings were mixed, but says he thinks most residents are opposed to the deal. And he questions whether municipal ownership can work. In remarks prepared for Tuesday’s hearing, which he provided to DavidsonNews.net, he said, “The business viability of the two-town plan remains open to serious question.”

Mr. Webster said Tuesday citizens and community groups he has talked to often have questions about how the deal would work, but he has not seen widespread opposition. “Our experience is that the more people find out about it, the less likely they are be to opposed to it,” Mr. Webster said.

The election issue was not enough to keep the Local Government Commission from endorsing the financing package Tuesday.

Mr. Jackson said after Tuesday’s meeting by email he thinks the Local Government Commission could review the matter if Davidson voters elect a board with a majority of members opposed to the deal.

Although Mr. Jackson is the deal’s most outspoken opponent, if elected mayor he would not have a say on the matter if it came up for a vote. Davidson has a five-member Town Board which votes on town policies; the mayor chairs meetings but does not vote, except in the case of a tie. (CLARIFICATION Oct. 2: This article originally said the mayor does not vote.–DB)

The towns have said they hope to complete the purchase in mid-December. Davidson’s portion of the $80 million financing is about $40 million, which is about eight times the town’s current debt. But town officials say the MI-Connection business plan anticipates that revenues from the highly-profitable system will cover annual debt payments and eventually generate excess capital.

PREVIOUS COVERAGE

Sept. 6, 2007, “Cable system picks a manager.”

Aug. 13, 2007, “Towns approve cable system purchase.”

Read previous coverage of the cable purchase proposal, including the pros and cons.

DOCUMENTS

Updated fact sheet on the MI-Connection, issued by the towns Aug. 13 (requires Adobe Reader software).

RELATED STORY

Oct. 5, 2007, “Quit cable deal? Think twice, supporters say.”