Click to see: The cable issue is the first question in the new RMA elections forum [1]

If the Rancho Murieta Association board of directors takes the recommendation of three committees, the 2010 RMA budget will shift the cost of maintaining and operating the cable system from the overall membership to just the cable subscribers. The reserve contribution for cable would remain in all members' dues.  The Communications and Finance committees endorsed the approach at meetings this month, and the Ad Hoc Cable Committee voted for it last month.

The ad hoc committee was formed to investigate whether a bylaw amendment making participation in the cable system voluntary could be implemented without violating the RMA CC&Rs and legally binding agreements with the Pension Trust Fund for Operating Engineers, the developer of the community.

The amendment was pursued by the Freedom of Choice Committee, a group of neighbors who went to court to force RMA to hold the bylaw election last year. Members of the group now sit on the ad hoc committee, as well as the Finance and Communications committees.

A legal opinion the RMA sent to members [2] last year maintains that “the provisions of the CC&Rs and (the Mutual Benefit Agreement) require that basic cable charges be paid by RMA members as part of the regular assessment.”

Programming costs became optional in April in response to the passage of the amendment. To date, there have been 360 opt-outs, Financial Manager Colleen Hagyard said at the Finance Committee meeting Wednesday. That’s 15.5 percent of the community’s households.  Opting out of cable TV programming reduces a member’s dues by about $20 a month.

The chief alternatives to RMA services are satellite dish for TV and AT&T DSL for high-speed Internet access.

The board voted in July [3] to have two versions of the draft budget prepared. John Weatherford, a leader in the Freedom of Choice effort and now a member of the ad hoc and Finance committees, proposed a version that separates cable income and expenses from the operating budget for the RMA. Funding for salaries was increased $30,000 to $179,000, based on the three staff positions the ad hoc committee recommends. The cable reserve contribution -- about $7 per month per household -- is retained in the budget.

The other version of the budget continues to include maintenance and operating costs as well as the reserve contribution in the monthly dues assessment. A cable manager hire is also included in that budget.

Supporters of the separation say it would benefit the cable system to keep its revenues separate from overall RMA operations.

The RMA board will choose between the two budgets in its planning for 2010.

When Weatherford presented the alternative budget model to the ad hoc committee in June, he said the numbers he’d developed showed the cost to basic cable subscribers would decrease under the proposal.

According to the draft budget based on this proposal, that’s not the case. The draft budget assumes 1,900 members will continue as basic TV subscribers. Committee member Frank Pumilia noted the cost of the cable component would go up from $20 to about $28, with monthly dues dropping to about $113 for those who opt out. Pumilia wondered if the additional cost might be an incentive to basic TV subscribers to opt out, but Weatherford said even $60 or $65 is a low cost for satellite dish service after the introductory offer expires.

“I like this idea. I think it pretty much gives everybody a good idea of what it’s going to take to get this thing running on its own with people supporting it and only it,” said Andy Keyes, Finance Committee chair.

The subscriber base is now 1,955, Hagyard said. After leveling out at 300 for a while, the number of opt-outs picked up again in recent months, Hagyard said, with August's loss totaling 20. “I think you just had a second wave,” she said, adding there had been only one service cancellation so far this month.

“Well, there’s no big rush for the exit that we can tell,” Weatherford said.

“What that is is a pool of people the new cable manager can go after,” Keyes said. Marketing efforts should be centered on broadband -- “That will be the profit, hopefully,” he said.

The ad hoc committee recommends hiring three staffers for the cable operation -- communications manager, communications coordinator and communications field engineer.

According to the legal opinion, optional subscription “would result in a higher cost for basic cable on a per-subscriber basis. … Finally, an increase in the basic cable charges could, in turn, result in further erosion in the number of subscribers and undermine the continuing financial viability of the system.”

The cost of programming -- the biggest expense in the cable budget -- is based on per-subscriber fees.  On the other hand, maintenance and infrastructure costs are not based on the subscriber count, so expenses there could be borne by fewer and fewer subscribers, driving up the cost to each.  With a great number of subscribers, those costs could fall.

Ted Ryon, who chairs the ad hoc committee, read a summary of the committee’s final report [4], which is being delivered to the RMA board. The committee concludes that implementing voluntary participation doesn’t conflict with the governing documents or any legal agreements, and the probability of litigation is “almost zero.”

The summary lists three cable positions, and “strongly recommends separating the Cable TV System income revenue, programming content, and operations and maintenance expenses of the Cable TV System budget from the regular RMA budget.  Then calculate these numbers to determine the price of the Basic TV.” 

A report on the cable system by Peregrine Communications is expected later this month.