The Comcast Cable contract that was recently approved by the BCC Board of Directors and signed by Board President Slota, was, in fact, negotiated by a company called Communications Consulting Group, CCG for short, under a contract signed in September of 2008. This company (CCG) is a “savings contingent” company which is compensated for its efforts to negotiate lower cable rates than proposed by Comcast by receiving 25% of all savings achieved.
Under the terms of the contract there are two areas of savings. First there is a one-time $128,000 “sign-up” bonus for BCC agreeing to a 10 year contract, and second there is a reduction in the monthly rate per unit over the ten years of the contract. Under the terms of the contract with CCG they are entitled to 25% of both the “sign-up” bonus and 25% of the savings for the next ten years.
As Shakespeare said, “ay, there’s the rub”. The payment to CCG for the “sign-up bonus” is not a problem since it will be paid for out of the bonus itself, but since savings don’t generate cash, all the payments due for savings in the out-years, a total of more than $89,000, will have to come from the quarterly maintenance assessments. To my astonishment, this came as a complete surprise to all the other Board members. You have to wonder, did anyone actually read the contract before it was signed?
Now there are two responsible ways to solve this problem. The first is to take the net “sign-up” bonus of $96,000 ($128,000 minus CCG’s 25% or $32,000) and put it in a protected bank account which cannot be used for any purpose but to pay off the future obligation.
The second, and preferred, strategy is to negotiate a discounted, up-front payment to CCG which would extinguish the debt now. Depending on the discount rate used this could be in the $60,000 to $70,000 range and would assure that future Boards can’t raid the bank account for other purposes.
To be completely clear about this, if the Board spends the $96,000 for current expenses or unbudgeted improvements like updating the rec center bathrooms, future homeowner are on the hook for $89,000 in payments over the next ten years.
I’ve polled my fellow Board members for agreement with one of the two approaches and asked that it be placed on the agenda for the September meeting and have heard nothing, which leads me to believe that the Board wants to keep this under wraps and proceed with business as usual. This is just not acceptable.
Bill Brady
Secretary, BCC
Under the terms of the contract there are two areas of savings. First there is a one-time $128,000 “sign-up” bonus for BCC agreeing to a 10 year contract, and second there is a reduction in the monthly rate per unit over the ten years of the contract. Under the terms of the contract with CCG they are entitled to 25% of both the “sign-up” bonus and 25% of the savings for the next ten years.
As Shakespeare said, “ay, there’s the rub”. The payment to CCG for the “sign-up bonus” is not a problem since it will be paid for out of the bonus itself, but since savings don’t generate cash, all the payments due for savings in the out-years, a total of more than $89,000, will have to come from the quarterly maintenance assessments. To my astonishment, this came as a complete surprise to all the other Board members. You have to wonder, did anyone actually read the contract before it was signed?
Now there are two responsible ways to solve this problem. The first is to take the net “sign-up” bonus of $96,000 ($128,000 minus CCG’s 25% or $32,000) and put it in a protected bank account which cannot be used for any purpose but to pay off the future obligation.
The second, and preferred, strategy is to negotiate a discounted, up-front payment to CCG which would extinguish the debt now. Depending on the discount rate used this could be in the $60,000 to $70,000 range and would assure that future Boards can’t raid the bank account for other purposes.
To be completely clear about this, if the Board spends the $96,000 for current expenses or unbudgeted improvements like updating the rec center bathrooms, future homeowner are on the hook for $89,000 in payments over the next ten years.
I’ve polled my fellow Board members for agreement with one of the two approaches and asked that it be placed on the agenda for the September meeting and have heard nothing, which leads me to believe that the Board wants to keep this under wraps and proceed with business as usual. This is just not acceptable.
Bill Brady
Secretary, BCC
