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07/19/1988 - Packet AGENDA ECONOMIC DEVELOPMENT COMMITTEE MEETING TUESDAY, JULY 19, 1988, 7:30 A.M. DAVIDSON'S RESTAURANT - 12830 SW PACIFIC HWY 1. CALL TO ORDER 2. ROLL CALL: SAVORY CORLISS DE BERNARDIS HART PIERCE CLARK DOTY MOORE MONAHAN 3. APPROVE MINUTES 4. CITY CENTER PLAN TASK FORCE MEETING • DISCUSSION 5. DEVELOPMENT UPDATES 6. TRIANGLE PLAN 7. TELEPHONE EXTENDED AREA SERVICE 8. COMMITTEE POSITION STATEMENTS • DISCUSSION 9. ELECTIONS 10. OTHER BUSINESS 11. ADJOURNMENT CITY OF TIGARD, OREGON RESOLUTION NO. 87- 14- IN THE MATTER OF DEFINING THE ROLE OF THE TIGARD ECONOMIC DEVELOPMENT" COMMITTEE, MODIFYING RESOLUTION NO. 86-135 AND REPEALING RESOLUTION NO. 83-103 WHEREAS, the City of Tigard created an Economic Development Committee in 1983 to assist the City in developing and implementing an economic development program, and WHEREAS, the Economic Development Committee has followed the direction of the City Council for the past three years, and WHEREAS, the Economic Development Committee desires to expand 'its functions and take a more active .role in attracting new businesses to Tigard, and WHEREAS, the City Council has indicated its interest in utilizing the Economic Development Committee as promoters of Tigard's economic growth. NOW, THEREFORE, BE IT RESOLVED by the Tigard City Council that: Section 1. The City of Tigard hereby revises the composition of the Economic Development Committee to work with the Director of Community Development to prepare and implement an economic development plan ( for the"City. Section 2. The Committee will consist of nine members, who are residents of the City or work within the city, to be appointed by the City Council. Appointments will be for two year terms except where an appointee is completing the unexpired term of a previous committee member. Committee members shall receive no compensation. Section 3. The Committee shall be composed of nine members. In making these appointments membership shall be open, however special consideration will be given to persons representing commercial banking, the Tigard Triangle, the Central Business District, the North Tigard/Cascade Blvd. area. Section 4 The Economic Development Committee's original role shall be expanded to include: A. The Economic Development Committee shall develop and recommend to the City Council a philosophy statement and action plan to attract new businesses to the area. B. The Economic Development Committee will develop methods and recommendations to the City Council which serve to enhance the existing business climate in Tigard. C. The Economic Development Committee shall facilitate cooperation with neighboring communities on the issues of: RESOLUTION NO. 87-4--�_ Page 1 1. economic development coordination 2. transportation and planning coordination D. The Economic Development Committee shall act as Ambassadors to the business community and promote doing business in Tigard. E. The Economic Development Committee will participate in efforts to revitalize the City Center. F. The Economic Development Committee shall assist the Community Development staff in the development of the Tigard Triangle plan. G. The Economic Development Committee shall continually monitor the inventory of the remaining buildable commercial and industrial land in Tigard and provide recommendations to the City Council - and Planning commission. Whenever a proposal for increasing or reducing the inventory is presented, the Economic Development Committee shall suggest the initiation of the review of areas which have the potential for rezoning to commercial or industrial where appropriate. Section 5 The Director of Community Development and a representative of the Tigard Area Chamber of Commerce will serve as ex—officio members. Section 6 The Committee is authorized to create special subcommittees and enlist the aid of private citizens to study special areas of concern and assist in the compilation of area inventories. Section 7 The Committee shall meet at least once in every calendar month at a specified time and place. PASSED: This -;� J day of ! 1987. Mayor - City of Tigard ATTEST: J City Recorder - City of Tigard SOLUTION NO. 87- e 2 The long-term vitality of Tigard depends on an adequate mix of oommeroial' professional, office and industrial developments within our boundaries , The City shuuld act now to enoure that the economic base remains strong and diverse in the future. This Action Plan is designed to outline actions that will be taken to encourage bus inuoo/industrial development within Tigard . Individual elements of the plan address specific problems or opportunities . Implementation of the Action Plan will create an atmosphere that fosters the establishment of new businesses, provides the necessary tools and the means to target specific industries for relocation to Tigard, and uffer, encouragement to existing local businesses to remain or expand in Tigard . on/2394D NNW 14� ACTION PLAN IMPROVE BUSINESS CLIMATE A community' s attitude toward business growth and expansion can play a role in its ability to compete with other communities for new businesses and its ability to retain existing businesses . The following actions will improve Tigard' n business climate and improve the City' s reputation in the business community . � Cummunity Development Code Review — Review Sections of the Community Development Code considering potential roadblocks to business expansion or development of new businesses including clarity, timing, reasonableness of requirementn . A time line will be developed for the Code review. Sections to be reviewed include: 18 . 30-18 .52 Process 18.42 Use Classifications 18.00-18.72 Commercial/Industrial Standards 18.80 Planned Development 18.84 Sensitive Lands 18 .06 Additional Yard Setback Requirements and Exceptions 18 .08 Building Height Limits and Exceptions 18. 100 Landscaping and Screening 18 . 100 Parking and Loading 18 . 188 Access 18. 114 Signs 18. 120 Site Development 18 . 130 Conditional Use 18. 132 Nonconforming Situations 18. 134 Variance 18. 142 Home Occupations 18. 164 Public Improvement Requirements — Review Sections of the Community Development Code to mitigate regulations for budding businesses (i .e. ' home occupations, incubator 6uoinexuuu' street vendors) . Sections to be reviewed include: 18 . 142 Hume Occupation 18. 140 Temporary Use 18 . 188 Conditional 18.00-10.72 Commercial and Individual Zoning Designation Requirements � Develop "Help Sheets'' — Develop help sheets which outline regulations related to business expansion, change of use, or setting up a new buyineoo . Help sheets will be developed on the following: 1%%MWNO� *ftow Signs Business Tax Site Design Review Conditional Use Parking Landscaping w Information to Businesses - Create a list of information and maps available through the City. The list will be mailed to Business Tax Certificate holders once a year. Businesses can then order information that they are interested in. - In order to inform new businesses of City activities, a copy of the will be included with new business tax certificates . - Host an open house to allow businesses the opportunity to ask questions and review available City resources that may be of interest, � Information About Businesses - Create an area in the Civic Center lobby to display information regarding Tigard business activity. One regular feature would welcome now businesses showing business name, type of business, address, and proprietor. - Maintain an up-to-date display of new developments within the City . � Ambassador Program - A few members of Tigard' u business community will be selected to act as ambassadors for the City. The ambassadors will be available to help in retaining current businesses, facilitating business expansion, and recruiting new buninuxoun into Tigard by distributing infurmation, sharing business experience and acting as contact persons , - Create packets of information to be used by ambassadors . The packets will be tailored for retail' heavy manufacturing, light manufacturing' who leyale/warehouoing' professional, "high-tech"' and small entrepreneurial businesses . - Have an orientation session for ambassadors to introduce them to the program and the available material . - Create a one page information sheet describing the Ambassador Program. Distribute the program information to businesses and community organizations via the ambassadors, oummunity groups, mailings and availability in the Civic Center lobby , m Coordination — Continue to share information with the Chamber of Commerce by supplying them with printed material, informing them of major programs (i .e. , sign amortization), providing copies of press releases, and distributing pertinent Chamber information. PROMOTION A development program or, information collection does little good if no one knows about it. It may be necessary to promote Tigard as a good place to do business. The following actions will bring development activities within Tigard more notoriety. w Events — Host an annual breakfast for selected Tigard employers . — Develop an awards program for, Tigard businesses or coordinate with the Chamber of Commeroe. Annual awards would be given to 6uoinusuuu for signs, the most attractive landscaping, renovation or runmdul, the greatest growth' the highest export value, etc. — Develop an annual 6uoinuou outreach program where ambassadors or Economic Development Committee members personally contact existing local businesses . The purpose is to let businesses know that the City is interested in their health and that we have programs and/or information that may be beneficial to them. — Collect and/or develop promotional type information for distribution to targeted audiences . — Encourage ambassadors to participate in community events such as Cruinin` Tigard' Christmas Tree Lighting, July 4th, etc. COMMUNITY EDUCATION Working through unfamiliar local regulations can pose a problem to businesses and residents . A way to ease the fears of the business community an well as local residents in through education. Through the following actions, more information will be distributed about the regulatory process allowing businesses and residents alike to feel more positive about future growth and development. — Develop information sheets based on the Community Development Code. Sheets could pertain to vision clearance, signs, tree cutting, business tax, etc. — Distribute information through NPO members . Where information or interest is City—wide, hold joint NPO meetings . DATA AND INFORMATION In order to anuwer, questions and provide assistance to businesses, the City should maintain certain information about Tigard arid the surrounding area, such as demographics, market data, development activity, etc. The following actions will promote collection of pertinent data and organizing it in easily accessible form. — Develop a categorized list of data and information that is available from the City . — Track information requests by the type of information requested . This will enable staff to eliminate collection of data riot used and concentrate on collection of requested data and information. — Develop packets for selected audiences (i .e. , new businesses, visitors, developers) . COORDINATION It is important to consider other organizations with similar interests when designing an economic development strategy. Interaction with theyu organizations can allow an exchange of information and provide a forum for the City to disseminate news . w Interaction with other organizations — Continue involvement with TVEDC, I-5 Corridor Association, Chamber of Commerce, Washington County Visitors Association, Downtown Council and Kiwanio, Rotary, Lions, etc. • Ambassador Program — Inform other organizations of the program. These organizations could be a source of referrals for the program, on/3526P/0022P COM n4 l?rz=nE-7 NLS op?C-le 6g25 : AA40 3�5RAIp2Di5 L JI LI mors le 2- � � l -2,6 �I % Opposition forms against charges for residential users. their local phone calls,he said. phone ' Robert Alexander, executive di- Pat Furrer, a member of the T pan rector of the Forest Grove Chamber gard Area Chamber of Commerc of Commerce and the Forest Grove- who is serving as a liaison on the EA Cornelius Economic Development issue,said the chamber's board of d By JEFF MIZE Council, is familiar with EAS issues. rectors has passed a resolution oppo- Of the Times Alexander spearheaded Forest ing the PUC proposal for option Grove's effort to get EAS between EAS. A proposal that would dramatically change the Forest Grove and exchanges in Port- "From what I understand about ii way Portland-area telephone users are billed for calls land,Beaverton and Tigard. it's going to be a real disservice to the to other parts of the metropolitan area has met with "This proposal is not an accept- business community out here," h.- opposition from local chambers of commerce and eco able method of resolving said. "I think they ought to make i nomic development organizations. telecom- munication issues in the metropolitan one zone. The three zones they'r: Several organizations have either lined up in oppo- area,"he said. talking about ought to be one zon-. sition to the proposal, which was generated by staff and they should make it mandator, members at the Public UtilityCommission (PUC), or Alexander said the proposal and we ought to get it over with." are continuingto.stud thewould create one-way .calling and y plan before forming-an lead to"signaling,"a method used to Terri Fichtner,executive directo► opinion. avoid EAS charges. One person who of the Tualatin Chamber of Com The PUC proposal would divide the 21F,telephone does'not have EAS would call a per- merce, said the chamber's board of exchanges in the Portland area into three exiling son who subscribes to EAS and let the directors has not taken a position or zones for extended area service (EAS),which allows phone ring a predetermined number the proposal. But she said the boars phone users to make an unlimited number of calls, of times before hanging up. The sec- might come out in opposition to the with no time limit on each call,to other exchanges for and person would then call the other proposal at its July 19 meeting. a flat monthly fee. person toll free. "At this point, we don't support The PUC is proposing that EAS become an optional Alexander offered a simpler solu- the proposal that's going around,"she aervice. Those who do not want EAS wpuld pay long. tion to the PUC's proposal—'manda- said. "I hope,it dies pretty quickly distance charges for all calls between exchanges. tory EAS throughout the Portland rather than having it drag on Those who want EAS would pay an additional flat area, possibly including parts of, awhile." monthly charge, depending on the number and loca. Yamhill County. People who do not U.S.West and GTE,the two phone tion of exchanges they want to call. make many calls outside their ex- companies serving the local area, A public hearing on the proposal and other PUC change would still have the option of have taken differing views of the recommendations regarding EAS has been scheduled subscribing to measured service,- PUC proposal.-U.S. West favors op- for Aug.11 in Salem. which bills customers based on the tional EAS while GTE believes EAS frequency, length and. distance:of should be mandatory. While the proposal would probably mean lower bills for phone customers who rarely call other ex- changes in the Portland area,local business represent- atives are concerned the proposal would lead to high- er bills. Many businesses use the telephone extensively to stay in touch with customers, suppliers and distribu- tors scattered throughout the Portland area. In addi- tion, the PUC report recommends that EAS charges for business users should be approximately twice the Turn to PHONE,Page to . T tW,­eyes . ne w ro ram p � fore teenabm"..rs TUALATIN — Greater recreational opportunities t TRANSPORTATION IMPROVEMENT PRIORITIES Prepared by Transportation Advisory Committee on June 16, 1988 CUMULATIVE PRIORITY PROJECT DESCRIPTION APPROX. COST TOTAL 1. DURHAM ROAD, between Hall & Pacific Hwy. $2,200,000 $ 2,200,000 Add turn lanes, sidewalks, drainage and streetlighting. Regrade to reduce dips and improve sight distance. Add signals at Hall intersection. 2. McDONALD STREET, between Hall and 98th. $1,200,000 $ 3,400,000 Regrade to reduce dips & improve sight distance. Add turn lanes at intersect- ions, sidewalks, drainage. 3. WALNUT STREET, between Pacific Hwy. and 260,000 $ 3,660,000 city limits. Sidewalk improvements; intersection improvements at Grant Ave. 4. GREENBURG ROAD, between Pacific Hwy. and $1,140,000 $ 4,800,000 Cascade Blvd. Add turn lanes, side- walks, drainage, and street lighting. Add signals at Cascade Blvd. 5. BONITA ROAD, between Hall Blvd. and $ 700,000 $ 5,500,000 Fanno Creek. Add sidewalks, drain- age and street lighting. Regrade to improve sight distance. 6. GAARDE STREET/PACIFIC HIGHWAY inter- $ 850,000 $ 6,350,000 section. Realign Gaarde to intersect Pacific Hwy. at the McDonald St. signal. 7. LOCUST STREET, between Hall and Green- $ 450,000 $ 6,800,000 burg. Widen, add sidewalk along south side, reduce sharp curves. 8. MAIN STREET. Reconstruct pavement, $ 710,000 $ 7,510,000 replace Fanno Crweek Bridge, improve storm drainage, improve Burnham St. intersection. 9. 121st AVENUE, between Scholls Ferry Rd. $ 770,000 $ 8,280,000 and Burlheights Drive. Add turn lanes, sidewalks, and street lighting. 10. 69th AVENUE/PACIFIC HIGHWAY intersection $ 150,000 $ 8,430,000 Revise 6 th Avenue approaches to add turn lanes and to improve the alignment of opposing lanes. - Page 2 - y *Mope 11. 72nd AVENUE/PACIFIC HIGHWAY intersection, $ 450,000 $ 8,880,000 Extend 72nd Avenue to Pacific Highway and revise frontage road. 12. GRANT AVENUE BRIDGE replacement. Replace $ 520,000 $ 9,400,000 and widen bridge and approaches at Fanno Creek. 13. SCHOOL PEDESTRIAN IMPROVEMENTS. Improve $ 340,000 $ 9,740,000 pedestrian facilities on approaches to Twality and Templeton Schools (portions of 96th, 97th, 98th, and Murdock). 14. HALL BOULEVARD AT HUNZIKER AND SCOFFINS. $ 500,000 $10,240,000 Realign Scoffins to intersect Hall at Hunziker; revise signals. 15. NORTH DAKOTA STREET BRIDGE replacement. $ 570,000 $10,810,000 Replace and widen bridge at Fanno Creek. 16, TIGARD STREET BRIDGE replacement. $ 510,000 $11,320,000 Replace and widen bridge at Fanno Creek. 17. BURNHAM STREET, between Hall and Main. $ 400,000 $11,720,000 Widen to provide turn lanes; add sidewalks and street lighting. 18. BONITA ROAD, between Fanno Creek and $ 980,000 $12,700,000 72nd Avenue. Add sidewalks, drainage and street lighting. Regrade to improve sight distance. Replace and widen bridge at Fanno Creek. 19. 121st AVENUE, between Walnut Street $ 430,000 $13,130,000 and Burlheights Drive. Add turn lanes and sidewalks, and street lighting. 20. 92nd AVENUE, between Tigard High School $ 2801,000 $13,410,000 and Cook Park. Realignment and widening to improve safety for pedestrians and bicycles. 21. COMMERCIAL STREET, between Main and Hall. $ 360,000 $13,770,000 Reconstruct and widen. Add sidewalks, street lighting and drainage. 22. 72nd AVENUE, between Pacific Highway and $ 800,000 $14,570,000 Hampton Street. Add shoulders for pedestrian safety. Regrade and widen north of Baylor Street to improve sight distance and add turn lanes. - Page 3 - 23. TIEDEMAN AVENUE, between Fanno Creek and $ 720,000 $15,290,000 Fowler Junior High School. Realign to reduce existing sharp curves; replace bridge; add sidewalks. br/5501D Page 4 — JOINT COMMITTEE ON TELECOMMUNICATIONS TASK FORCE JUNE 20, 1988 PUBLIC UTILITY COMMISSION Ed Morrison Subject : Extended Area Service (EAS) Outline• 1. EAS Defined 2. Current EAS Routes a. Metropolitan Portland EAS b. Lower Willamette Valley c. Balance of State 3 . Reguests for EAS Expansion a. EAS Demand b. Docketed Cases c. Other Requests 4 . Effect of a New EAS Route a. Local Exchange Rates in EAS Exchanges b. Toll Revenues c. Cost of Service d. Toll Competition 5. EAS Issues (Docket No. UM 189 a. EAS Rates and Cost Recovery b. Universal Service c. Toll Competition and EAS Resale d. Administrative Procedures db/6739H c , • I a EXTENDED AREA SERVICE (EAS) The term "Extended Area Service" is most commonly replaced by its acronym -- "EAS" . What does EAS mean, and why is it a controversial issue before the Public Utility Commission and the Legislature? EAS DEFINED EAS can best be described as local interexchange telephone service. EAS is interexchange service because it allows customers to call from one telephone exchange to another without incurring a long distance toll charge. EAS is local because the service is confined to limited geographic areas . EAS is an alternative to long distance toll service. According to Oregon law, toll service "means telecommunications between exchanges carried on the public switched network for which charges are made on a per-unit basis" (ORS 757.005(3) (i) ) . The Public Utility Commission has authorized EAS as a replacement for toll in limited situations where community boundaries encompass more than one telephone exchange. A local exchange* is a precisely defined geographic area in which telephone service is provided without a toll charge. Telephone companies are required to file local exchange maps with the Public Utility Commission for approval. With EAS, local exchange customers usually receive unlimited calling between designated local exchanges for a flat monthly charge. EAS allows customers who are located in a multi-exchange community to call one another as if they were in a single exchange. From the customer's point of view, EAS calls are local calls. Regardless of exchange boundaries, customers only need to dial a standard seven digit local telephone number in order to reach any party in the EAS area. EAS charges are part of the local telephone bill. Since customers do not pay an extra charge to make each EAS call as they would with toll service, they come to think of EAS as "free" long distance calling. For example, customers in the Eugene-Springfield exchange use EAS service to call other parties in six contiguous exchanges. For 72 cents per line per month, they can make an unlimited number of untimed EAS calls to Harrisburg, Junction City, Leaburg, Lowell, Marcola, and -1- Veneta. Few Eugene-Springfield customers even know what they pay for their EAS service, since the monthly EAS charge and the charge for local service are bundled together in the same monthly bill. CURRENT EAS ROUTES There are 259 local telephone exchanges in Oregon. Of the 259 exchanges in the State, 132 (51%) are currently linked to at least one other Oregon exchange by an EAS route. Customers in the remaining 127 exchanges must use toll service in order to call outside their own exchange. Metropolitan Portland EAS. Portland and the surrounding metropolitan area comprise by far the largest EAS network in Oregon. The area includes twenty-one telephone exchanges -- the Portland exchange and the 20 peripheral exchanges which have an EAS route to Portland. The Portland metropolitan EAS area incorporates three counties. It also serves 535, 000 local telephone lines, almost one-half of all lines in the entire State. The Portland exchange alone contains nearly 300,000 telephone lines and nine central office switching centers . The 21 exchanges in the Portland metropolitan EAS area are interconnected by 210 interexchange routes . Of these 210 routes, 59 have been converted to EAS. The remaining 151 interexchange routes in the metropolitan area are toll routes . Figure 1 shows all 59 EAS routes in the Portland area. For example, there are EAS routeslinking Gresham with Portland, Sandy, and Corbett. However, a call from Gresham to Sunnyside is a toll call. Please note that EAS routes shown in Figure l do not necessarily represent the electronic paths over which EAS calls are actually transported through the telephone network. Much of the interexchange traffic (EAS and toll) in the Portland metropolitan area is handled by a switch located in the Portland exchange. For example, Figure 1 shows an EAS route between two neighboring exchanges -- North Plains and Burlington. However, calls from Burlington to North Plains actually travel to Portland first and then back out to North Plains. -2- WASHINGTON ' Burlington North �•° '•• Forest ..••••• %as Plalns •` ♦o Cotun�bla R .. Grove �:";��111 n11 . ''-,, if 'l••f •Il/l ''•�•, l YQ r ♦i.., 8111••`-J111 'l••lltl Portland •lflfl �+ -�'I���♦ I,t�� � ft••Rlll f �♦ tf11f11f11 -,�,♦I�;♦�, ll1 � , t/fftl/tIf ♦lfll�� f/lfltll•lff O ',I�, ♦♦I♦::I>♦ Hillsboro ft t••••1� �.��'��'♦♦♦I',l�I ••ll fffl fllfl ��♦� �.lR..•tlfU , , .`• i i ♦j.♦,,♦�,, ff/l Rf/f �,. •,, ,,p�.. ,-:= �k Crpvd� .f..ftffffl ..• ♦ ♦ ♦ ._ ♦ ♦ �.ff.f ••. •:, f. •. Corbett '••r ` , . =_:.1C1i�l�raukle '♦G♦resham -.,� ¢` •.,, �' • .• .•'Lemke:=: -,-•, --;�., •♦., •., eavecton.0w� ' o 10 o rQ•• °'• Sunnyside ''• ,, lop '- Sand Schoils�. n'��,_. - V , , y `.s j♦♦♦♦♦♦i ,moi �1ri� .�� ♦•� � %� L��♦�/`j, ,'-i A' ♦'♦♦i,V♦�. '• T1 5. 7,;r�.,•✓I♦♦♦♦�I♦ ♦,- ''�%' ' Redland va. := •,Oregon ••.,�, '.,. Sherwood%♦l;••''10 SCa'bf6rc� Cityto '�,r..� •:'•-. Estacada Beaver n Creek Charbonneau 0 a . Lower Willamette Valley. Eleven exchanges in the Lower Willamette Valley are interconnected by EAS service as shown in Figure 2. One of these exchanges -- Charbonneau -- also has EAS to Portland and is therefore part of the Portland metropolitan EAS area. As in the Portland area, only some interexchange routes are EAS routes. The remainder are toll . For example, a call from Molalla to Canby is an EAS call, but a call from Molalla to Woodburn is a toll call. Balance of State. EAS routes in the remainder of the State are shown in Figure 3 . In general, EAS routes form hub and spoke clusters around larger population centers (e.g. , Eugene and Medford) or they form chains which connect a series of smaller communities and their surroundings (e.g. , the series of routes involving Lincoln City, Depoe Bay, Newport, Toledo, Waldport, and Yachats) . REQUESTS FOR EAS EXPANSION Many existing EAS routes were established at a time when local telephone companies had to use a cumbersome and costly procedure to bill customers for toll service. Toll billing was a labor intensive manual process. High volume short-haul toll routes were often unprofitable given a combination of high fixed billing costs and relatively low per minute rates. Many local telephone companies concluded that flat rate EAS could save them money by eliminating the high cost of toll billing on high volume short-haul interexchange routes. The companies initially introduced flat rate EAS to improve their own financial position. They also found a receptive audience among many of their local exchange customers because EAS provided "free" calling to many frequently called locations . Now that toll billing is fully automated and relatively inexpensive, local telephone companies no longer save money with flat rate EAS. In fact, they generally lose money or at least miss out on an opportunity to receive steadily growing revenue as the number of measured toll units increases . Under flat rate EAS, there are only two ways that companies can realize revenue growth. Either the number of local telephone lines must grow or the company must gain Commission approval -3- 1 •� •� ANew regonEagle Creek City Re;1wber9 Charbnura Estacada T r' an b •. Oa'ton '� , . tri.,,, •'''•., �.. C St Paul �., '•. ''••.,, ''.. •,,, b�rd ` Conon °'• o 1 PBvrn•••• o lal la • `�` Ervai. ni to r rook ••°� �'tw<< hemaw Mt Anel '1 Si v'erton SALEM Figure 2: EAS Routes in the Lower Willamette Valley Fat Slevin. STORIA ...enw. 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I K L A C U R R Y / Klarnad�Nor I � Chibpuin I N+a S~• GRANTS S'""vxay Eagle Pant I Rocey Pant Gold Rich •/ ASS Id Mill odoc Point • wdder.,ue 11 ,r�,N Labe Gee► Lake of Ily Woods L-.J CaN. r..w. O S E P H k�E c..r :,R,a ►a ". v ` SernJ • r�MEDFORD /om+ j 1Miy awe. P,«wl j���lj 8 O N A_ ♦♦_� /� w,M,rws Taltn} �I� I 11 KlAMA7 grow Ree • yY/ FALL' Car#Junction AiMLAN �ror�� /ri Q Le�toln G"Oh"'P l; J Brww a C S•W►w Pwrhws& Mrw Figure 3 (Page 2 of 3) MIRon-fr..wat.r Nriw 10 Swims lel I for. •♦ 1lot&w NO's Bkm Moummn �- 1 �t .rnlNIon AIM a Weslon r'� j aaasnce field I,J Ybn 1 � Adams Echo .tock PENOIETON SIIIIMer � Cl, I MmMn Wallowa U M A T 1 L L Al E'o'n ♦i • ♦ loshne "r L.1 Madura r r L L W A vm+ea N,! J Imek temQ thrrlpbn Pilot Reck KamN. J ♦ ♦I♦ Ent.rpn.. M O R OW i ��•� mKel ♦e e U "–.—.–j MAgr Island Cd � .bsloh Gne,yNen Heppe.r •La Grand I o w a n tco" I M Canden I OAR" • Union N U I O Hardman N �-•— —1—� F{ I 1 Ukiah North Powder KN SrKs (I) foasd L _.�.—.�.1._ _j�. .�.- %—. J Cah W i ri. Wines Mar'wsv _ Srj Rwe fd w•Y Mo�arnent d Sa.ice Geek to Mrnillon ) eeetistie• Star If.neery � • ♦ R RKMand E IMP Long Creek '✓ B A � Aeas,m Vj0"r W W H E E L E R „ ` �� sdnlwnp ,�� p G R AN T S O ' M � i He elmd W llnlone O Dew+oe v – John Day airk City ( Unity � l.ne Mount Vemon ♦Cantron City I Munt�^obn leT.r�on Vsulin. I Uncastr -- -.—.—•� Owestle v ••e O O K F I O efts* ���i for an increase in the monthly EAS rate. Unlike toll, EAS revenues do not grow with increased usage of the network -- even though EAS costs are largely usage sensitive. Telephone companies prefer measured rates. Consequently, they generally oppose additional conversion of toll routes to flat rate EAS. Many telephone companies would actually like to re-introduce measured toll rates on existing EAS routes . However, customers who already have EAS are now accustomed to paying flat rates for this service. In addition, a large number of customers are pressuring the Commission for more flat rate EAS, not less. EAS Demand. Customers commonly express displeasure about paying toll rates for frequent "local" calls they make to relatives, clients, suppliers, doctors, schools, county government, and other community services. It is not hard to understand why some customers prefer EAS to toll. Pacific Northwest Bell 's daytime/weekday toll rate in the 11 to 22 mileage band is 18 cents for the first minute and 15 cents for each additional minute. Therefore, a customer in the Independence exchange now pays 78 cents for a five minute daytime toll call to Salem. If the Public Utility Commission were to authorize conversion of this toll route to EAS, under Pacific Northwest Bell 's current EAS tariff flat rate customers in the Independence and Salem exchanges would pay a mandatory EAS charge of 12 cents per line per month. Customers in both exchanges would each pay 12 cents per line whether they make calls between Salem and Independence or not. Most interest in EAS can be found among customers who live in areas like Independence. These exchanges are more lightly settled and happen to be located near exchanges like Salem that are more urban and have a relatively large customer base. Many customers in Independence and other similarly situated areas of the State make a large number of short-haul toll calls to their larger neighbor. They also receive frequent toll calls from their larger neighbor. Flat rate EAS is attractive for three primary reasons. First, EAS is attractive because EAS rates are usually very low. For most companies EAS rates are below cost; they do not generate enough revenue to recover the cost of providing EAS service. Second, customers who make a large number of local interexchange calls use flat rate EAS to shift much of their -4- interexchange bill to customers who make relatively few EAS calls. Third, customers in more lightly settled suburban and rural exchanges are often able to shift much of the EAS cost burden to customers in urban exchanges. The latter point requires further comment. Under an EAS tariff like Pacific Northwest Bell 's there is a pronounced shift of EAS costs from rural and suburban exchanges to urban exchanges. The proposed EAS route between Salem and Independence provides an example. There are approximately 80,000 local telephone lines in the Salem exchange and about 5,000 lines in the Independence exchange. Therefore, Salem has 16 times more lines than Independence. Under Pacific Northwest Bell ' s EAS tariff, customers in both Salem and Independence would be charged 12 cents per line per month for EAS service between the two exchanges . Since the Salem exchange serves 16 times more lines than the Independence exchange, customers in Salem would contribute 16 times more EAS revenue than customers in Independence. Yet, customers in the Independence exchange would cause approximately one-half of the EAS cost. As a general rule, interexchange calling volume in one direction tends to be balanced by approximately equal volume in the other direction on any particular EAS route. Customers in Independence can be expected to generate one-half of the calling volume and customers in Salem the other half. EAS cost is largely a function of calling volume. Therefore, it would be reasonable to require customers in Independence to pay one-half of the EAS bill. However, under Pacific Northwest Bell 's current EAS tariff most of the bill would be paid by customers in Salem. It is not surprising that customers in Independence and other similarly situated exchanges find EAS an attractive proposition. Growth in EAS demand tends to be cumulative. Each new EAS route stimulates interest in converting still more toll routes to EAS. Each time the Public Utility Commission authorizes an EAS conversion, customers in similarly situated exchanges tend to want the same treatment. Moreover, customers in exchanges that already have EAS on some interexchange routes tend to then want additional routes converted to EAS. As a result, the Commission has been inundated with numerous EAS requests. Some have been docketed for formal investigation. Others are awaiting formal action. -5- Docketed Cases . There are currently six formal EAS investigations docketed before the Public Utility Commission. UM 158 Request by .Dallas, Independence, Falls City, and Monmouth for EAS to and from Salem UM 161 Request by Elgin for EAS to and from La Grande and Imbler UM 185 Request by Adrian for EAS to and from Ontario, Nyssa, and Vale UM 186 Request by Creswell for EAS to and from Eugene-Springfield UM 187 Request by Myrtle Creek, Canyonville, and Riddle for mutual EAS. Other Requests . In addition to the six formal investigations listed above, Commission staff has received numerous EAS requests which have not yet been docketed. They are summarized below: PROPOSED REQUESTING EXCHANGE EAS EXCHANGE(S) Burlington . . . . . . . . . . . . . Beaverton, Hillsboro, Sherwood Milwaukie-Oak Grove . . . . . . . . . Gresham, Tigard, Beaverton Yamhill . . . . . . . . . . . . . . Portland Newberg . . . . . . . . . . . . . . . Portland, Beaverton Sherwood, McMinnville McMinnville . . . . . . . . . . . . . Portland Molalla . . . . . . . . . . . . . . . Portland Sherwood . . . . . . . . . . . . . . Beaverton Oregon City . . . . . . . . . . . Gresham Sunnyside . . . . . . . . . . . . . . Gresham Independence . . . . . . . . . . . . Dallas Beaver . . . . . . . . . . . . . . . Tillamook Oregon Slope . . . . . . . . . . . . Ontario Cottage Grove . . . . . . . . . . . . Eugene-Springfield -6- EFFECT OF A NEW EAS ROUTE Each EAS petitioner tends to argue that there would be little consequence if the Commission were to grant their one small EAS request. However, the cumulative effect of numerous EAS conversions can be significant. In the current environment, there are four principal effects of a new EAS route. (1) Each new route increases the EAS charge that each customer must pay for flat rate local exchange service. In this way, the basic rate for local telephone service becomes progressively higher in exchanges that continue to add new EAS routes; (2) Each new EAS route reduces the amount of revenue which the affected local telephone companies receive from toll . with each additional loss of toll revenues, local companies come under increased pressure to increase local rates on a company-wide basis, not just in EAS exchanges; (3) Local companies must invest in new interexchange capacity each time a new EAS route is added because EAS stimulates usage; (4) Each new EAS route severely limits possible toll competition from alternative long distance carriers. Alternative long distance carriers cannot compete with mandatory EAS service. (1) Local Exchange Rates in EAS Exchanges . If customers want flat rate local exchange service, they must pay both the basic rate and any applicable EAS charge. Each new EAS route makes basic local exchange telephone service more expensive in each exchange that participates in the new route. Figure 4 illustrates this point by comparing a set of three hypothetical exchanges served by a single telephone company. Before EAS, all three exchanges in the hypothetical illustration have the same flat residential rate. After EAS service is introduced, flat residential rates in Exchange A and Exchange B are higher. This rate increase is almost entirely due to the mandatory EAS charge. In June 1987, the Public Utility Commission approved a new EAS route between Forest Grove and Portland (Order No. 87-606) . As a result, local rates increased in both Portland and Forest Grove. The flat rate for residential service in Pacific Northwest Bell ' s Portland exchange increased from $16.33 per month to $16.45 per month. In GTE Northwest 's Forest Grove exchange, the flat rate for residential service increased from $14 .95 to $15.71. EAS charges now account for 15 percent of the residential flat rate in Portland and 20 percent of the residential flat rate in Forest Grove. -7- After EAS *NTS cost shift from Toll EAS to W After EAS Exch. A .rte EAS to After EAS Exch. 8 TS Costs C ---------- --------- ---------- Before EAS NTS* Before EAS NTSx Before EAS NTS* •� - ---------- -- ------ D LL- Exchange A Exchange B Exchange C ' (Large) (Small) I (No EAS Service) EAS Service Figure 4: Effect of New EAS Service on Local Exchange Rates, Hypothetical Illustration Based on GTE Northwest EAS Rate Design . fir✓ New EAS routes create winners and losers. The losers are customers who do not make EAS calls but still pay for EAS service. These customers pay more after conversion to EAS than they did when the route was still toll service. An estimated 20 percent of customers in EAS areas do not make EAS calls. On any particular route, the percentage who do not make EAS calls can be considerably higher. Among those who pay for EAS service but do not make EAS calls, low income customers are particularly hard hit. The EAS charge makes it even more difficult to have a telephone in the home. Under current mandatory EAS tariffs, each new EAS route tends to undermine the State's policy in support of universal service. (2) Toll Revenues. Local telephone companies receive a little more than $200 million per year from intrastate toll in the form of toll access charges . Toll support for local service is equivalent to about $13 .50 per telephone line per month. Each time an interexchange route is converted from toll to EAS, local telephone companies lose toll revenues . Long distance carriers pay access charges to originate and terminate their intrastate toll traffic within local exchanges. Access charges are divided into two types: (1) non-traffic sensitive (NTS) ; and (2) traffic sensitive (TS) . A new EAS route will affect each type of access charge in a slightly different way. However, the overall effect is to increase local exchange rates by decreasing toll support. . Non-traffic sensitive access charges. Through the payment of non-traffic sensitive access charges, long distance carriers help pay for the local loops that connect customers to central office switches . The cost of a local loop is considered non-traffic sensitive because it is assumed that loop costs are not affected by variation in calling volume. A very large proportion of each local telephone company's total cost of service is non-traffic sensitive cost. Each year, a statewide plan allocates a proportion of each local telephone company's non-traffic sensitive costs to intrastate toll. For 1988, the total statewide allocation is $78 million. This allocation represents approximately one-fifth of Oregon's -8- total annual non-traffic sensitive cost. The remainder is recovered from a combination of interstate toll, the FCC's subscriber line charge (SLC) , and local exchange rates . Intrastate non-traffic sensitive access charges are currently about 9 cents per minute at the terminating end of a toll call and approximately 2 cents per minute at the originating end. Originating and terminating rates are recalculated each year. Rates are re-set at levels which will generate that portion of the State' s non-traffic sensitive revenue requirement which has been allocated to intrastate toll (e.g. , $78 million for 1988) . Non-traffic sensitive rates for originating and terminating access are therefore a function of two factors: (1) access minutes and (2) the amount of non-traffic sensitive cost which has been allocated to intrastate toll . In the event that access minutes increase while the the amount of non-traffic sensitive cost allocated to toll remains constant, originating and/or terminating access rates will go down the following year. On the other hand, if the number of access minutes decreases, access rates must go up in order to generate the same amount of revenue. EAS minutes are not counted as toll access minutes . Therefore, each conversion from toll to EAS reduces the total number of intrastate access minutes which are subject to the non-traffic sensitive charge. Accordingly, each new EAS route puts upward pressure on the non-traffic sensitive access rate because the same non-traffic sensitive cost must be recovered from fewer access minutes . In turn, higher non-traffic sensitive access rates will eventually be reflected in higher intrastate toll rates and higher toll rates will supress demand for toll service. Suppressed demand for toll implies fewer access minutes. In order to generate the same non-traffic sensitive revenue requirement from fewer intrastate minutes, the access rate must be increased once again. Non-traffic sensitive access rates cannot increase indefinitely. In the long run, extensive conversion of toll routes to EAS will force a reduction in the current level of non-traffic sensitive cost support from intrastate toll to local exchange service. With less support from toll, local exchange telephone rates will rise. Indirectly, each new EAS route has the effect of increasing local exchange rates throughout the State. Local rate increases are felt in all exchanges, not just those exchanges which have EAS service. -9- The preceding point is illustrated in Figure 4 . After new EAS service is installed between Exchange A and Exchange B, a small amount of additional non-traffic sensitive (NTS) cost will eventually be added to the local rate in all three exchanges, including the exchange which does not have EAS service (Exchange Q . For this reason, new EAS routes imply higher local rates throughout the State. Traffic sensitive access charges . Local telephone companies incur costs to transport, switch, and record toll calls. These costs are considered traffic sensitive. Long distance carriers pay local telephone companies a traffic sensitive access charge of between 3 and 6 cents per access minute at both the originating and terminating end of a toll call. The traffic sensitive rate varies from company to company according to their traffic sensitive costs and transport distances . Local companies currently receive between $120 and $130 million per year from this source. When an existing toll route is converted to EAS, local telephone companies which jointly provide the new EAS service receive less revenue from traffic sensitive access charges . This revenue loss occurs because EAS minutes are not counted as toll access minutes. For some companies, traffic sensitive revenues are a very large proportion of total revenues . In those instances, conversion of even one toll route to EAS can have a major impact on the company. Upon losing revenues from traffic sensitive access charges, a local telephone company must attempt to make up for all or part of the loss. It can only do so by increasing local rates . Preferably, the entire revenue shortfall would be offset by revenues from the local EAS charge. The illustration in Figure 4 makes this assumption. However, some local companies may not find it practical to offset the entire shortfall with EAS revenues . The revenue shortfall from traffic sensitive access charges may be so large that a significant number of customers would be unwilling or unable to pay the necessary EAS rate. (3) Cost of Service. when an existing toll route is converted to EAS, local telephone carriers typically experience a significant increase in the amount of traffic sensitive cost which is allocated to local telephone service. There are two primary sources of increased local exchange cost. -10- First, lower EAS rates typically stimulate substantially greater interexchange calling volume on EAS routes. Typically, a new EAS route will be accompanied by a 3 to 6 fold increase in traffic. Increased traffic means increased investment in interexchange capacity to handle peak EAS demand. Second, for cost allocation purposes EAS is defined as local service not toll service. Consequently, each new EAS route increases the proportion of a company' s overall traffic sensitive cost which is allocated to local service and away from intrastate and interstate toll . Higher traffic sensitive costs due to EAS service are not necessarily recovered from EAS rates. As a result, telephone companies increase other local rates. Consider Exchange C in Figure 4 . In this illustrative example, customers in Exchange C do not have EAS service yet they experience higher rates after EAS service is started between two other exchanges -- Exchange A and Exchange B. Customers in Exchange C pay higher local rates because the higher traffic sensitive costs caused by new EAS service are spread across all of the company' s local ratepayers. (4) Toll Competition. The Legislature has declared that it is a goal of the State of Oregon " . . .to encourage innovation within the [telecommunications] industry by a balanced program of regulation and competition" (ORS 757.810) . The Public Utility Commission has been directed to follow this policy with respect to rates and services . EAS presents a regulatory dilemma. Pursuant to State policy, the Commission has certified various competitive long distance carriers who want to provide toll service in competition with the service jointly provided by the regulated local telephone companies . However, EAS service is generally incompatible with toll competition. EAS service severely limits the possibility that a competitive long distance carrier could compete for short-haul interexchange traffic within the State. Mandatory EAS is particularly anti-competitive. Since EAS is a mandatory service in this State, it is difficult or impossible for long distance companies to compete with EAS for short-haul interexchange traffic. Local exchange customers have no incentive to divert their calls to long distance companies if they are required to pay for EAS service as part of their local telephone bill. -11- EAS Issues (Docket No. UM 189) The Public Utility Commission has initiated a comprehensive investigation into the provision of EAS in the State of Oregon (Docket No. UM 189) . In that investigation, the Commission will review the criteria it uses to evaluate requests for new EAS service. In addition, the Commission is considering whether EAS rate structures should be revised to incorporate optional EAS and other modifications. A public hearing is scheduled for August 11, 1988. In UM 189, the Commission will address various EAS issues. Of these issues, four are particularly important: (1) EAS rates and cost recovery, (2) universal service, (3) toll competition and EAS resale, and (4) administrative procedures. (1) EAS Rates and Cost Recovery. EAS rate structures vary a great deal from one local telephone company to another. The Commission will consider whether EAS rate design should be more consistent throughout the State. If a consistent approach is adopted, the Commission will consider the advantages and disadvantages of alternative EAS rate structures. Some of the principal alternatives can be illustrated by comparing EAS rates for the two largest local companies -- Pacific Northwest Bell and GTE Northwest. In general, Pacific Northwest Bell charges 12 cents per telepone line per month to provide EAS service on one interexchange route. Residential and business customers both pay the same EAS rate. For example, business and residential customers in the Portland exchange pay (20 * $. 12) or $2.40 per line each month for EAS to 20 other exchanges in the metropolitan area. In contrast, GTE Northwest charges its business customers an EAS rate which is four times the residential rate. GTE Northwest' s EAS rates also differ between exchanges depending on the relative number of local telephone lines. Where two exchanges have EAS with one another, customers in the exchange with fewer lines pay a higher EAS rate. For example, residential customers in Scholls pay $.51 per line per month for EAS to Beaverton. Beaverton residential customers pay $.28 per line per month for EAS to Scholls. In recent tariff filings before the Public Utility Commission, both GTE Northwest and Pacific Northwest Bell have proposed to introduce optional EAS service. The Commission has suspended -12- *APO' implementation of optional EAS while comprehensive consideration is given to the issue in UM 189 . The Commission will consider whether EAS charges should continue to be a mandatory part of local rates or whether customers who do not want EAS should be allowed to subscribe to local exchange service without EAS. GTE Northwest has also proposed to increase its EAS rates . Higher EAS revenues would be offset by reduced local exchange rates throughout GTE Northwest's territory. The company contends that current EAS rates do not recover the cost of providing EAS service and that customers who have EAS service should pay rates which recover those costs. Implementation of this proposal has been suspended by the Commission pending comprehensive consideration of the EAS cost recovery issue in UM 189. (2) Universal Service. Mandatory EAS charges make local exchange service more expensive in exchanges that have EAS service. In addition, new EAS routes tend to shift traffic and non-traffic sensitive costs from intrastate toll to local exchange customers throughout the State. EAS therefore tends to make telephone service unaffordable for an increasing proportion of low income households. In UM 189, the Commission will balance concern for maintaining universal service against demands for expanded EAS service. (3) Toll Competition and EAS Resale. Long distance carriers cannot successfully compete with mandatory flat rate EAS. However, long distance carriers can use flat rate EAS to compete with toll service. They can do this by reselling flat rate EAS. In certain circumstances, .EAS resellers are able to provide the equivalent of toll service by interconnecting a series of EAS routes. The Portland metropolitan EAS area provides numerous opportunities for EAS resale. For example, the Sunnyside and Sandy exchanges do not have direct EAS service with one another (see Figure 1) . A call between Sandy and Sunnyside is a toll call. However, these exchanges have an indirect EAS connection through Portland. Consequently, it is a simple matter for someone to install a switch in Portland, subscribe to local service, and then enter the discount long distance business by completing calls between Sandy and Sunnyside over the EAS network via Portland. -13- r In the preceding example, an EAS reseller is better off because it can make a profit from the difference between measured toll rates and flat EAS rates. Customers in Sandy and Sunnyside are better off because they can call each other at rates that are lower than regular toll . However, the local telephone companies that actually provide the interexchange facilities are significantly worse off. They lose toll revenues while continuing to bear the cost of building and operating the underlying interexchange facilities. EAS resellers are now operating in the Portland area and their operations are expanding rapidly. (4) Administrative Procedures. At present, the Commission' s administrative rules do not include any procedural guidelines for handling EAS requests. Neither do current administrative rules provide standards for the Commission to follow when evaluating the merits of any particular EAS request. Consequently, the EAS process is uncertain and often confusing for all concerned. In UM 189, the Commission will consider whether to adopt rules in this area. If it is determined that EAS rules should be adopted, the Commission will also consider whether the rules should be restrictive or permissive with respect to EAS expansion. -14-