November elections will be some of the most contested in recent Davidson history. The Herald Weekly asked Davidson’s nine candidates their positions on one central issue, MI-Connection.
MI-Connection
Davidson and Mooresville purchased cable-TV broadband company MI-Connection from bankrupt Adelphia in 2007. The towns have a total of $92.5 million in debt in the company. Davidson and Mooresville share operational shortages and profits based on the relative percentage of MI-Connection customers in each town. Davidson’s share of the shortfall was $2.02 million in fiscal year 2010-2011. About 21 percent of Davidson’s budget, $1.94 million, will go toward MI-Connection debt in the current 2011-2012 fiscal year. MI-Connection has $89.9 million in debt at this point.
1. What do you see as the future for MI-Connection?
Mayoral candidates
Vince Winegardner
First let me say that I have MI-Connection and find it to be an outstanding service at a competitive price. My hope for MI-Connection is that it will reach a level of profitability in the near future that allows Mooresville and Davidson to sell the company and remove it from our list of liabilities. Until then, if you are making a choice about your Internet, telephone, or video service provider, give MI-Connection a shot. It is a good company – it is your company.
John Woods (I)
We are working diligently to stabilize the financial operations of MI-Connection. Davidson citizens have responded to the opportunity to use this service. We are encouraging our Mooresville partner to develop its service penetration to help achieve that stability. It is clear that the environment for municipal-owned broadband services in North Carolina is not favorable and I support the sale or merger of the system, once stabilized, into a larger network that honors our great employees and service ideals.
Town Board candidates
Kristen Coupal
My hope for MI-Connection would be to support it in a way to make it viable for sale so that the town could extricate itself from this business.
Jim Fuller
It is time to move from 2007 to 2012-13. Five-year-old problems, and the lessons to be learned from them, are important. Yet, future solutions are more important. We need to recognize that good people are already hard at work, including the present MI-Connection board. Let’s lend them a hand. We need an aggressive marketing campaign, and serious discussions with our neighbors in Mooresville and with local businesses. We need to work to pull MI-Connection up to break-even or close. We can do that. Then, we need to go into the market to sell it. Let’s work hard, and together.
Rodney Graham
We need to consider all options for MI-Connection, and we specifically need to find the best way to transition MI-Connection to private ownership. Davidson does not have the resources to compete in this industry, and there are private companies that can competently provide these services.
Brian Jenest (I)
I see Davidson and Mooresville continuing to grow MI-Connection by marketing the merits of this great system and then convincing both residential and commercial customers to sign up so that it can break even or make a profit financially which will then make it attractive to a buyer so that we can sell it.
Mickey Pettus
Unfortunately the future is not bright. It is time to settle this mistake by reorganizing debt, developing a new business model, and mitigating losses through a sell or transfer on behalf of Davidson taxpayers.
Laurie Venzon (I)
The recently installed MI-Connection board (April of this year) has put the desired focus on the profitable growth of MI-Connection … with the ultimate goal of having MI-Connection be in a much more favorable position for an exit strategy. I believe this is the right direction for the company and both towns to pursue.
Connie Wessner (I)
Though the customer base has not grown as quickly as anyone would have hoped because of the flat economy, the system continues to add customers and revenue generating units. If the towns are to realize the potential in the asset purchased nearly five years ago, we need to continue strengthening the management structure and improving the marketing effort. My hope is that the system eventually becomes a marketable asset.
2. Do you think MI-Connection will continue to drain town resources indefinitely?
Mayoral candidates
Vince Winegardner
I have formed a group of very knowledgeable citizens who have been tracking the performance of MI-Connection since it was formed. We are very concerned that even though the company may be successful from a pure service and revenue point of view, the bond debt and interest associated with its purchase has the company losing money for at least the next six years. Unfortunately, there is no crystal ball to predict the future of this taxpayer-owned technology company. Not even MI-Connection is able to accurately forecast what may happen over the next year. My committee has put together a rough forecast, which predicts total subsidies for Davidson taxpayers of between $5 million to $11 million through 2017. Evolving technologies and competition may add to these losses in the form of increased capital expenditures and reduced market share. On the other hand, strong residential and economic growth may reduce these numbers. Conversations with MI Connection executives paint a much more optimistic picture based on these hopeful growth assumptions and improved marketing. We truly hope they are right. Learn more about MI-Connection at my web site VoteForVince.org.
John Woods (I)
No, we can grow our way through this challenge if citizens and businesses agree to use it. We definitely have the ability to create success, albeit more slowly than we had planned before the recession.
Town Board candidates
Kristen Coupal
I’m hopeful that the leaders of MI Connection, with insight and oversight from the board, can develop the business and make it viable for sale.
Rodney Graham
We need to be realistic and honest. The $2 million annual subsidies are not a short-term thing. Our decision-makers need accurate information. While I wish it were true, saying that we’ll only subsidize MI-Connection for another year or two simply will not happen. The math is unfortunately daunting, but we need to share it with our decision-makers and the ultimate investors, the citizens of Davidson.
Brian Jenest (I)
The plan calls for the system to continue to grow and improve, and therefore reduce the financial resources needed by Davidson and Mooresville. Based on recent projections, we are moving in the right direction.
Mickey Pettus
No. Optimistically this cannot happen. There is a solution – it is not an easy one and it requires hardball with investors and other municipal business partners. Unabated, the answer is MI-Connection will forever be a drain on town resources.
Laurie Venzon (I)
No. The steps that have been taken in the past 12 months (restructuring the contract with BVU, restructuring the MI-Connection board, localizing key functions, etc.) have started to grow the company. The first two months of this fiscal year have already shown major improvement in the net growth of subscribers and we expect this to continue.
Connie Wessner (I)
First, I take issue with your choice of the word “drain.” It suggests that you already have an answer in mind. That said, I hope that with ongoing attention to the management structure and the marketing effort that MI-Connection will represent a smaller slice of the town’s budget.
3. Are you satisfied with letting the current MI-Connection board work out problems or would you favor a new, independent committee/task force to take a fresh look at MI-Connection and make recommendations to the town boards, and why?
Mayoral candidates
Vince Winegardner
The MI-Connection Board is tasked with making MI-Connection a successful business. It should be left alone to do that job. A separate committee of Davidson citizens should be formed to review actual versus forecast success of MI Connection. This qualified and focused citizens’ group would track the profitability and salability to identify an optimal point for sale. I would encourage Mooresville to have a similar committee in place with a similar purpose. The committee would also recommend other exit strategies if appropriate.
John Woods (I)
The MI-Connection Board of Directors is composed of newly appointed individuals, all experienced, talented, financial, communications industry-oriented marketing and technical professionals. All volunteers. This board is the right group to engage the growth needed for financial stability, make recommendations and brainstorm ideas with the owners.
Town Board candidates
Kristen Coupal
I believe it is the responsibility of the MI-Connection board to run the business. However, with this important of an issue, I don’t think any options should be off the table in terms of how to look at solutions going forward. A first step may be for the board to increase oversight frequency, raise its expectations and insist upon accountability.
Rodney Graham
Good advice is always welcome, and commissioners should listen to what the citizens have to say in all instances. Ultimately though we need one board that is accountable for MI-Connection. If it cannot get the job done we need to change the membership of that board and MI-Connection management. When 20 percent growth is budgeted and 3 percent is realized, changes are typically made. MI-Connection should be no different.
Brian Jenest (I)
I am confident the MI-Connection Board of Directors will make the decisions necessary to move us in the right direction. The members represent a broad range of knowledge and are always available and open to receive constructive input and suggestions from any concerned citizen. I don’t see the need for an independent committee.
Mickey Pettus
I’m not privileged to all the current MI-Connection Board is doing to mitigate Davidson’s losses in this venture. I believe that a more concentrated effort on our (Davidson’s) behalf is required to accelerate a solution. I’ve had enough with tweaks and management changes. There is no rabbit to be pulled from that hat. The problem is not operational, but rather an ill-advised investment mistake costing Davidson about 20 percent of the annual town budget.
Laurie Venzon (I)
Given that we just put this new board in place in April and they have taken a fresh look at MI-Connection and have put together a new plan, I do not believe another official committee or task force is necessary at this time. We have been fortunate to have numerous folks (individuals and/or groups) provide recommendations and/or suggestions and even provide valuable research to the towns and the MI-Connection board. The new board has welcomed their input and every recommendation to date has been pursued for viability.
Connie Wessner (I)
As with all town-related issues, I am always open to hearing ideas from citizens, whether individually or organized as task forces and independent committees. In fact, we have been approached with and actively solicited a broad range of opinions and ideas in the short time that I have been on the board. As a result, we have explored ideas including: 1) selling the asset (we’ve not been approached by a potential buyer nor been offered any viable plan for selling the asset), 2) refusing to honor our debt service obligations (the Local Government Commission would intervene to prevent any municipality from defaulting on its debt), 3) restructuring the debt (a part of the ongoing effort to manage the system), and 4) strengthening the management structure and revving up the marketing effort (ongoing). q
– Editor’s note: Jim Fuller submitted one, longer answer to the three questions, which is included with the answers to the first question.
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