Resolution 97-04
RESOLUTION NO !l2:-1
A RESOLUTION AUTHORIZING THE P ARTICIP ATION OF THE CITY OF
WYLIE IN A COALITION WITH OTHER SERVICE AREA CITIES OF TCI
CABLE FOR THE PURPOSE OF RATE REGULATION AND OTHER
SERVICE MATTERS CONCERNING TCI CABLE TELEVISION;
AUTHORIZING THE EXECUTION OF THE COALITION P ARTICIP A TION
AGREEMENT; AUTHORIZING THE COALITION'S SERVICE AREA CITIES
TO RETAIN A CONSULTANT TO INITIATE A RATE REVIEW OF TCI
CABLE.
WHEREAS, TCI Cable ("TCI") has increased rates in the service area; and
WHEREAS, the service area cities desire to conduct a rate review; and
WHEREAS, by forming a coalition, the service area cities desire to reduce the
costs of conducting the rate review; and
WHEREAS, the City of Wylie, Texas ("City"), is a regulatory authority whose
citizens will be substantially affected by the rates established by TCI; and
WHEREAS, the Coalition ofTCI Cable Service Area Cities ("Coalition") has
been created to coordinate the participation of cities in TCl's service area; and
WHEREAS, the City has investigated and inquired into such matters; and
WHEREAS, the City desires to participate as a member of the Coalition; and
WHEREAS, C2 Consulting Services ("Consultant") has been designated as the
consultant to perform the initial rate review services at the costs set forth in the proposal
attached hereto as Exhibit A.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF WYLIE, TEXAS:
Section 1. The City agrees to participate with such other TCI Cable Service Area
Cities in a coalition to review rate regulations and other issues affecting such rates and
servIces.
Section 2. Each Service Area City shall enter into an independent letter
agreement with the Consultant which provides for the reduced cost for the services as
a member of the Coalition. The City Manager is authorized to enter into the letter
agreement with the Consultant.
Resolution No
Page 2
Section 3. The City hereby authorizes the Coalition ofTCI Cable Service Area
Cities, of which this City is a member, to engage consultants to conduct a rate review
on behalf of the City.
DUL y RESOLVED by the City Council of the City of Wylie, Texas, on this the
25th day of March, 1997.
es D. Swartz, Mayor
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ONSUL TING SERVICES, INC.
7301 Pencross Lane
Dallas. Te~as 75'248
197'2) 7~6- 7~11j
(97'2)7'21j-7'211jIFa~'
December 30, \ 996
\its Ashley Meeler
Administrative Intern
Town of Flower Mound
2\2 \ Cross Timbers Road
Flower Mound, Texas 75028
Dear Ms. Meeler:
Pursuant to your letter of December \ 7, \ 996, C2 Consultuig Services, Inc. (""CT) IS
pleased to respond to your request for proposal regarding cable television rate regulation.
While C2 only has been in existence since August \ 996, its President, Ms. Constance
Cannady has been assisting numerous Texas municipalities In their regulation of basic
service and equipment and installation rates since "re-regulation" began in \ 993.
Based on the information provided, it is C2's understanding that the Town of Flower
Mound and a number of other Cities wish to form a coalition in order to regulate the rates
of theIr respective cable operators. This can be highly beneticial from several
perspectlves:
. Timely dissemination of information regarding changes in rate regulation,
recent FCC decisions and potential impacts on future rates
. Potential for a uniform approach to rate regulation (particularly in light of the
geographic area under consideration)
. A sharing of any outside costs of rate regulation
Given that the list of Cities currently interested in joining the coalition have TCI as their
service provider, these benetits are further enhanced.
The following proposal provides a description of the scope of services that C2 wi \I
provide in evaluating a FCC Form 1240/\205 that is anticipated to be filed by TC[ during
the first quarter of \ 997. With the understanding that the coalition may consist of Cities
responding favorably to your inquiries, the project costs have been identified to
accommodate the inclusion of the various entities and anticipated filings. Additionally, a
bnef description of the qualifications of C2 and its l'resident have been included.
\h \kckr
Decemhcr 30. \ 996
Page 2
C2 greatly apprecIates this opportUnIty to propose se!"\lces to the Town of Flower Mound
as \\ell as to the other potential partIcIpants In a cable rate regulation coalitIOn. [fyou
have any questIons regarding the proposed project actIvIties. project costs or need further
Information about the tirm and its qual1tications, please t'eel free to contac! Ms.
Constance Cannadv at (972) 726-7216
Very truly yours,
C.A 6n~ ~~ ~ ~ 0v<c. .
C2 Consulting Services, lne
TABLE OF CONTE~TS
PAGE
SECTIO~ I. SCOPE OF SERVICES
SECTION II. PROJECT COST
3
SECTION III. FIRM QUALIFICATIONS AND
RELEVANT EXPERIENCE
~
RESUME
SECTION I. SCOPE OF SEVICES
Project Objectives
Based on C2's expenence in perfonning rate evaluations of various FCC fonns and
calculations, the project objectives include the following:
. Assessment of the completeness of the filings submitted to the Cities based on
required information and documentation per the FCC and Cities' regulations.
. Assessment of the actions taken by the Cities during review of the \996 tiling
of the Fonn 1240/\ 205 to detennine any required treatment of costs for the
1997 filing.
. Assessment of the accuracy of the operator's detennination of costs for the
true-up and projected periods.
. Assessment of the operator's application of vanous FCC instructions, tables
and fonnulae
. Assessment of the operator's compliance with various FCC rulings related to
the provision of basic servIce and installation and equipmentrelated activities.
. Assessment of the reasonableness of any estimation or allocation
methodologies employed by TCl to detennine the costs to be recovered within
each of the Cities' franchise areas.
At the conclusion of the project, C2 will provide each of the Cities with a written report
speCIfic only to their respective rate filings. The report will include a description of the
project activities, findings and recommendations regarding potential City Council
actions.
Project Scope
Based on the understanding that the Cities will receive a Fonn 1240/1205 filing from
TCl, and in light of the project objectives identified above, C2 proposes to conduct the
following activities:
. [nitial review of the filings and identification of:
~ Any filing deficiencies and necessary actions
~ Potential issues based on the operator's approach to developing rates
~ Compliance/non-compliance with FCC rulings
. Submission of detailed requests for infonnation
. Analyses of responses to requests for infonnation and submission of
follow-up requests, as necessary
. Detennination of the reasonableness of TCl' s proposal based on the analyses
and any further rulings issued by the FCC during the course of the review
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. DISCUSSion with the coalition regarding prelimInary findings and
recommendations
. SubmisSIOn of written report and presentation before the coalition
. Meeting w1th TCI and coalition. if desired. to discuss the findings and
recommendations pnor to submission to Counctls
The above includes the activities to be performed for the members of the coalition as a
group. and does not provide for specific activities that may be reqUired by individual
Cities subsequent to the issuance of the reports. However. during past engagements,
additional assistance has been provided which includes the following:
. Assistance to Cities' staff in preparing their respective Council documentation
. Meetings with Cities' legal representatives to discuss potential actions
. Presentation of findings and recommendations before City Councils
Since these activities may not be desired by all participating Cities, C2 has provided them
separately as a "choice" to each of the coalition members, with a segregated cost as
discussed in Section II..
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SECTIO~ II. PROJECT COST
Coalition Activities
C? estimates that the professional fees requIred to conduct an evaluation ofa single Fonn
1240/1205 are not-to-exceed $4,000, plus out-of-pocket expenses. Given that the other
Interested Cities have TCl servIce, evaluations of additIOnal filings (that contain
completely different cost infonnation) can be conducted for a cost not-to-exceed 52,000,
plus out-of-pocket expenses.
It is necessary to note that the Fonn 1240/1205 filings may be identical for a particular
system that includes a number of participating Cities. f()r purposes of this cost orooosal,
~hose FCC Form '140/1105 tilings that are icif'ntical \\iill he treated as one filing and not
separate for each of the Cities bein r re re . Only in the event that the cost data
differs WIt In I mgs, IS It considered an additional filing for purposes ofC2's
not-to-exceed project cost.
Activities of '.Choice~ for Individual Members
The not-to-exceed project cost does not include the activities that have been identified
separately as being a matter of"choice." These activities are proposed to be conducted
based on actual hours spent at the hourly billing rate of Ms. Cannady of $135/hour, plus
out-of-pocket expenses.
Billing Practices
C2 bills its clients monthly based on actual hours worked, plus out-of-pocket expenses.
In the event that the actual hours spent in conducting the total coalition activities are less
than those used in the development of the not-to-exceed proposed costs, the coalition will
be billed only for the actual hours. However, if the actual hours exceed the estimate, the
coalition will only be billed up to the not-to-exceed cost, plus out-of-pocket expenses.
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SECTION III. FIR:\I QVALIFICATIO~S A~D RELEV.-\.~T EXPERIE~CE
Business Organization
C? Consulting Services, Inc. is a Texas corporation which began conducting business on
A ug ust I, 1996. ,ounded by Its PreSIdent, Constance T. Cannady, C 2 was orgamzed for
the PUfflose of providing high quality consulting services to local and state governmental
entities located in the Southwest. As C2 is in its infancy, the firm's qualifications are
attributable to its President, Ms. Cannady and her thirteen years of consulting in both the
pub Iic and pn vate sectors. Much of Ms. Cannady's consul ti ng experience has foc used
on the regulatlOn and franchising of utility services, regulated by either local or state
organizations. This experience is clearly demonstrated in Ms. Cannady's resume.
Due to its organization and the general focus of the consulting services to be provided,
C2 tiled for certification by the North Central Texas Regional Certification Agency as a.
woman-owned business and received certification on November \ 5, \ 996, No.
WFSD8073N \ 197.
Business Address
C2 is located at the following address:
C2 Consulting Services, Inc.
780 \ Pencross Lane
Dallas, Texas 75248
(972) 726-7216
(972) 726-7216 (Fax)
Firm Engagements
Since its organization in August, the firm has been conducting engagements for the City
of Garland. Texas, the City of Marshall, Texas, the Gulf Coast Coalition of Cities and the
Oklahoma Corporation Commission. For the City of Garland. C2 is assisting in the
evaluation of lone Star Gas Company's application to change the statewide city gate
rate. For the City of Marshall. C2 is assisting in the- determination of cable television
rates as well as a review of the cable franchisee' s compliance with the City franchise
agreement. With respect to the Gulf Coast Coalition of Cities, C2 assisted in the
assessment of Texas-New Mexico power Company's "Community Choice" proposal
before the Public Utility Commission ofTexas, The Oklahoma COfjlOration Commission
engagement mvolves the development of a rate case processing manual to be used by the
Public Utility Division.
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Engagements Specific to Cable Television Rate Regulation
While employed as a Manager at Reed-Stowe & Co.. Inc. \ls Cannady conducted
numerous evaluations of cable rate filings, the majority of which dealt with systems
operated by TCI. Below is a brief outline of the engagements conducted by Ms. Cannady
Since the "re-regulatlOn" of cable television rates in 1993
I. Texas Cities for whom evaluations of the 1996 Form 12~0! 1205 rates were
performed:
City of Alvin
City of Bedford
City ofEl Lago
City of Farmers Branch
City of Flower Mound
City of Friendswood
City 0 f G rapevi ne (Paragon)
City of Harlingen
City of La Marque
City of League City
City of Marshall (Falcon)
City of Mesquite
City of Nassau Bay
City of Seabrook
City of Taylor Lake Village
City of Texas City
City of Webster
Many issues arose during the evaluation of the TCI filings for equipment and
installation rates. Based on recommendations made at the conclusion of the
analyses, many of the above municipalities established rates that were later
appealed by TCI to the FCC. Recent FCC decisions have been rendered on a
number of these appeals, and the FCC has found in favor of the actions taken by
the Cities with respect to almost all issues raised.
2. With the exception of the Cities of Bedford. Harlingen. and the Town of Flower
Mound, analyses were conducted of the FCC Form 393, FCC Form 1200/l205
and quarterly FCC Form 1210 for each of the Cities identified under Item 1.
3. Ms. Cannady conducted a review of the TCI cost-of-service filing, FCC Form
1220, for the City of Dallas in 1995. This was the basis for the City's
establishment of the tirst regulated basic service rate and equipment and
installation charges since the enactment of the 1992 Cable Act.
~. Ms. Cannady assisted the City of Rockwall in its review of Mission Cable's small
cable operator rates under the FCC Form 1235.
5. As required. Ms. Cannady has assisted legal counsel in preparing responses to the
FCC concerning appeals by the operator of the local franchise authority's
decisions.
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Engagements Related to Regulation of Public Ctility Services
!n addition to cable television services, Ms. Cannady has conducted cost of service and
rate deSign studies regarding electric. gas and telephone services before the following
state and federal agencies:
Alabama Public Service Commission
Arizona Corporation CommisSlOn
Colorado Public Utilities Commission
New Mexico Public Service Commission
Oklahoma Corporation Commission
Public Utility Commission of Texas
Railroad Commission of Texas
Bonneville Power Administration
[n addition, Ms. Cannady has performed numerous cost of service and rate design studies
for municipalities with original jurisdiction concerning gas, water, and wastewater
operations. She has provided expert testimony regarding rate base issues and appropriate
fuel costs before the Public Utility Commission of Texas with respect to Texas Utilities
Electric Company's and Houston Lighting and Power Company's respective operations.
Professional References:
Mr. Ron Cox
City Manager
City of Friendswood
910 South Friendswood Drive
Friendswood, Texas 77546
(281) 996-3250
Ms. Eugenia Cano
City Attorney
City of Alvin
216 West Sealy Street
Alvin, Texas 77511
(281) 388-4267
Mr. Richard Escalante
City Manager
City of Farmers Branch
One City Hall Plaza
Farmers Branch, Texas 75234
(972) 919-2516
Mr. Bob Miller
Attorney
Gardere & Wynne L.L.P.
1601 Elm Street, Suite 3000
Dallas, Texas 75201
(214) 999-4219
Mr. 1. C. Hughes
Assistant City Manager
City of Marshall
PO Box 698
Marshall, Texas 75671
(903) 935-4419
Mr. Ted Barron
City Manager
City of Mesquite
ISIS North Galloway
Mesquite, Texas 75149
(972) 288-7711
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Mr, Robert A. Rima
Attornev
Law Office of Robert A, Rima
1005 Con~1Tess Avenue, Suite 1010
Austin, Texas 78701
(512) 478-2700
:VIs, Cheryl 'vV i1 son
Attornev
Olson & Olson
3485 Three Allen Cerlter
333 Clav Street
Houston. Texas 77002
(713) 759-0696
Mr. Jack E, Stowe, Jr.
President
Reed-Stowe & Co" Inc,
1651 N, Collins Boulevard, Suite 115
Richardson, Texas 75080
(972) 680-1880
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RESUME
CO[\;STA~CE T. CANNADY
PRESIDENT
C2 CONSULTING SERVICES. I~C.
\ 1:; Cannady. fOltlldl:r or C2 Consulting S~r\lic~s. Inc. has had approximately thirteen years of consulting
~'(penellce \1uch of her career has been spent dealing with issues related to regulation and franchising of
utilitv servIces. both at the local and state level She has been involved in numerous rate studies involving
cable television. dectric. gas. telecommunications. water and wastewater services. In addition. 'vfs Cannady
1Ia,. ~onducted a number of management and operations reviews of utility operations, manufacturing
concerns. rlnancial institutions. entrepreneurial operations and state agencies' programs. Additional work
experience includes positions as Manager at Reed-Stowe & Co.. Inc.. Manager of Accounting and Control
for the Information Services Division of Blue Cross of California. Senior Consultant for Touche Ross & Co.
\now Ddoitte & Touche), and as a Management Auditor for the U S. General Accounting Office.
"m'e specifically. Ms. Cannady's experience includes:
.
Currently assisting the Gulf Coast Coalition of Cities concerning Texas-New Mexico Power Company's
proposed "Community Choice" program - Docket No. 15560 before the Public Utility Commission of
l'exas
.
Currently assistin!:!- the Oklahoma Corporation Commission in developing a rate case processing manual
to be used by its Public Utility Division
.
Currently assistin~ the City of Marshall. Texas in its regulation of cable television rates and franchise
compliance
.
Recently assisted the Gulf Coast Coalition of Cities in its participation in Project No. 14400 (Integrated
Resource Planning Rule) before the Public Utility Commission of Texas.
.
R~cently assistt:d the Dallas Independent School District during its participation before the Railroad
Commission of Texas (and earlier before the City of Dallas) regarding appropriate gas utility rates to be
charged to the District.
.
Recently assisted the City of Austin in the performance of a thirteenth year compliance review of its
cable franchisee, A.ustin CableVi!lion (8 Time Warner system).
.
Recently assi!lted fifteen Texas municipalities in reviews of the FCC Form 1240 rate change filing
mbmitted by local cable televi!lion operators.
.
Assisted the City of Dallas in its review ofa comprehensive FCC Fonn 1220 Cost-of-Service Showing
for cable television rates.
.
Assisted the City of Greenville in developing a cost allocation model to be used by the City to allocate
shared costs with its electric utility operations.
.
Provided testimonv before the Public Ltilitv Commission of Texas regarding appropriate rate base
treatment of fuel i~ventories and fuel expe~se of Houston Lighting & Power Company, Docket No.
[2065.
.
Presented testimony before the Public Utility Commission of Texas regarding appropriate rate base of
Texas Utilities Electric Company to be used in determining revenue requirements, Docket No. 5640
.
Di reeted and pertormed numerous analyses of rate base. rate of return.. operating income. revenue
requirements and capital structure tor state authorities regulating gas, electric. water and telephone
companies 10 Arizona. :'IIew Mexico. Texas and Oklahoma
.
Di reeted and perfonned numerous analyses of rate base. operating income, rate of return. revenue
requirements. capital structure and rate design tor municipalities regulating natural gas burner tip rates.
.
Conducted analvses of water and wastewater cost of service in order to determine appropriate retail
andlor wholesale rates lor several Texas municipalities.
.
Conducted numerous customer class cost allocation studies regarding natural gas and electric utility
operations in Texas, Colorado and Oklahoma.
.
Conducted reviews of FCC cable rate filings for numerous municipalities since re-regulation of cable
rates in 1993 The FCC forms include Form 393, Form 1200, Form 1205, Form 1210, Form 1220,
Form 1230 and Form 1240. (filings are made either on a quarterly basis or an annual basis.)
.
Assisted several Texas municipalities in franchise renewal efforts involving cable. gas and electric
franchises
.
Directed the review and analysis of public and cooperative utilities' requests for rate subsidies under a
program involving a tederally operated electric utility.
.
Developed written procedures covering all areas of operations within a state agency" s transportation
dlv;sion.
.
Developed written procedures covering manual operations of docketing, case assignment, and case
tracking tor a state regulatory agency.
.
Participated in the investigation offuel procurement practices of an electric utility.
.
Assisted in the development ofa state-wide Emergency Energy Conservation Plan for the Department
of Energy of the State of Oklahoma.
.
Directed analyses of organization and operation of a voluntary blood donor program.
.
Directed analysis for Debtor in Possession ofa company involved in sale of precious metal. Analyzed
company"s tinancial position at time of bankruptcy.
.
Directed analysis of product line profitability related to detennination of possible predatory pricing
practice in the aerospace industry
.
Participated in management studies concerning the efficiency of internal audit functions within federal
tinancial regulatory agencies.
Ms. Cannady has provided CORJultinl services to the following municipal clients:
:::) Cities of Abilene, Carrol ton, Denison, Farmers Branch, Garland. Grand Prairie, Killeen.
Lewisville, Mesquite. Paris, Piano. Richardson, Sherman and Wichita Falls, Texas
. Lone Star Gas Company Rates
RI"~l/mf: . Cl: CutnJUV
PlJgcl
~ City of Arlington, Texas
. Lone Star Gas Company Rates
. I,Vllolesale Wastewater Rates
. Tarrant County Water Control and Improvement District No.
~ Cilv of Dallas
. TCI Cablevision of Dallas Rates
~ City of North Richland Hills
. WaterlWash:watcr Service Rates
~ Citv of Rowlett
. W aterlW astewater Service Rates
~ Cilies of Alvin. Fanners Branch. Bedford. Harlingen.. Flower Mound, Friendswood.
Seabrook. El Lago. Nassau Bay. Webster. League City. Taylor Lake Village, Clear Lake
Shores. Jacksonville. La Marque. Mesquite. Texas City .
. TCI Cablevision Rates and/or Services
~ Cities of Austin. Galveston and Port Arthur. Texas
. Southern Union Gas Company Rates
~ Cities of Atlanta and Marshall. Texas
. Falcon T elecable Rates
~ Cities of Beaumont and Houston.. Texas
. Entex. (ne. Rates
~ City of Rockwall. Texas
. F anch Communications Rates and Services
\15. Cannady has performed consulting services regarding matten before the following state
regulatory agencies:
~ Railroad Commission of Texas
. Lone Star Gas Company Gate Rate - Docket No. GUD 3543
~ Public Utility Commission of Texas
. Project No. 14400 - Integrated Resource Planning
. Houston lighting & Power Company - Docket No. 12065
. Texas-New Mexico Power Company - Docket Nos. 15560. 12900. 10200
. Texas Electric Utilities Company - Docket No. 5640
. Gulf States Utilities COl11llany - Docket No. 4510
. General Telephone Company of the Southwest - Docket Nos 4300 and 5011
. West Texas Utilities Company - Docket Nos. 4202 and 4716
R..,;uoll: . C. T. Call1/dJy
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=> Arizona Corporation Commission
. Arizona Public Service Company - Docket No. U- \345-82-266
~ Oklahoma Corporation Commission
. Arkansas Oklahoma Gas Corporation - Cause No. PL'D 001346
=> \iew Mexico State Corporation Commission
. Continental Telephone Company of the West - Docket No 942
. General Telephone Company of the Southwest - Docket.;\io 990
=> Colorado Public Utilities Commission
. Southern Colorado Power - cost allocation study
=> Alabama Public Sc:rvice Commission
. Alabama Power Company - Fuel Procurement Review
Education
Master of Public AITairs.. May 1979
Moody Fellowship. LBJ School of Public Affairs
University of Texas At Austin
Bachelor of Arts. magna cum laude. May 1977
Vanderbilt University
R':3.Umc - C T. Cannady
Pagl:4
ONSUL TING SERVICES, INC.
7801 Pencross Lane
Dallas, Texas 75248
(972) 726-7216
(972) 726-7216 (Fax)
January 30, 1997
Ms. Ashley Meeler
Administrative Intern
Town of Flower Mound
2121 Cross Timbers Road
Flower Mound, Texas 75028
Dear Ms. Meeler:
C2 Consulting Services, Inc. eC2") is pleased to have this opportunity to work with the
Coalition of Cities in determining reasonable cable television service and equipment
rates. Based on the information provided, it is anticipated that there will be two separate
TCI Cablevision system rate filings received by the Coalition.
Pursuant to the Scope of Services and the associated Project Cost sections included
within the proposal dated December 30, 19961, and based on the above assumption of
two separate system filings, C2 estimates that the Coalition's total costs for performing
"Coalition Activities"Z will not exceed $6,000, plus out-of-pocket expenses. Additional
activities performed on behalf of individual Cities will be billed at an hourly rate of
$ I 35/hour directly to the City requesting the additional services.
In the event that other Cities choose to participate in the Coalition and have FCC Forms
I 24011205 rate filings that are identical to those already under consideration, C2 will bill
the Coalition only for any out-of-pocket expenses incurred on behalf of the additional
participants. However, if these new participants have filings that are not the same, the
Coalition will be billed an additional $2,000 for each dissimilar FCC Forms 1240/1205
filing for which C2 conducts the activities noted as "Coalition Activities."
Based on your request, C2 agrees to bill each of the Coalition members separately in
order to effectively account for any additional services/out-of-pocket expenses incurred
I Proposal to Provide Assistance in the Evaluation o.fCable Television Service and
f-'quipment Rates, December 1996.
zld., page 3.
-..........
...........,-.....
Ms. Ashley Meeler
January 30, 1997
Page 2
on behalf of a particular member. However, C2 respectfully requests that the Coalition
membership determine the method by which the billing for "Coalition Activities" will be
divided (~ cable subscribership).
ACCEPTANCE
If this letter is in agreement with the Coalition of Cities' understanding as to the scope of
services to be provided and the associated fees as referenced within the proposal of
December 30, 1996 as well as specified above, please execute one copy and return it to
C2 at the following address:
C2 Consulting Services, Inc.
7801 Pencross
Dallas, Texas 75248
If you have any questions, please feel free to contact Ms. Connie Cannady at (972)
726-7216.
Very truly yours,
Cd- ~~Jl~ ~A(.vl LUC-.
C2 Consulting Services, Inc.
City
By:
Date:
Signature
Typed/ Printed Name
Typed/ Printed Title