Mayor and Council Minutes – March 19, 2018

MAYOR AND COUNCIL

MARCH 19, 2018

Mayor Cerino called the Mayor and Council meeting to order at 7:30 p.m. In attendance were Councilmembers David Foster, Rev. Ellsworth Tolliver and Mauritz Stetson, W. S. Ingersoll (Town Manager), Jennifer Mulligan (Town Clerk) and guests.

Mayor Cerino asked if there were any additions or corrections to the minutes of the Mayor and Council Meeting of March 5, 2018. Mr. Stetson moved to approve the Mayor and Council minutes of March 5, 2018 as submitted, was seconded by Rev. Tolliver and carried unanimously.

Mayor Cerino stated that total operating cash on hand for unrestricted use is $866,348.01. A total of $303,947.51 in bills has been paid for construction work at the Marina which the Town was waiting to be reimbursed through grants, bringing the total to $1,170,195.52.

Mayor Cerino asked for a motion to pay bills. Mr. Stetson moved to approve payment of the bills as submitted, was seconded by Rev. Tolliver and carried unanimously.

Mayor Cerino called forward Mr. Scott Boone, Director of Information Technology for Kent County Government, and Ms. Judy Morgan, Director of Sales for Think Big, to discuss the fiber project taking place in Kent County. Mayor Cerino stated that the fiber is now being installed in Chestertown and he thought an update on the progress would be helpful to residents.

Mr. Boone showed a map of Chestertown that outlined where the backbone of the fiber system being installed to anchor sites.

Mr. Boone stated that today the boring to Philosopher’s Terrace and Maple Avenue was completed and included the Hospital, the Kent County Middle School, East Campus and Philosopher’s Terrace. He said that all construction in Chestertown to date has been underground. The 400 block of High Street and the library already have fiber into their buildings. He said that anchor sites were adopted based on a “to and through” approach. He said that when the idea first went public, they didn’t know if they would get response to the RFP and it may have just been a dark fiber build. He said that anchor sites avoided a “bridge to nowhere”. He said that 54 sites were listed as anchor sites and they were now approaching their 67th anchor site which included schools, firehouses and town hall. Mr. Boone stated that outdoor hotspots are planned for public parks, pools and the Chestertown waterfront and marina.

Mr. Boone stated that there was now high capacity fiber to and through anchor sites and Think Big came aboard to provide service to the open access network to residents.

Mayor Cerino asked how much longer the infrastructure will take to install. Mr. Boone stated that the backbone infrastructure should take anywhere from 5 to 6 weeks. Mayor Cerino summarized that Kent County’s job was to provide the institutional backbone of the system and then Think Big would hook up houses and businesses. Mr. Boone stated that was correct and there is a separation of resources, although it was a private/public partnership. He said that the County bundles belong to the County and are supplying services to government anchor institutions. The investment with Kent Fiber is to enable leasing to Think Big or whichever provider would like to use the fiber.

Ms. Judy Morgan of Think Big Networks stated that she was eager to bring services to the residents and businesses of Kent County and Chestertown. She said that services are being deployed already in Kentmore Park and there were some local businesses online.

Ms. Morgan stated that fiber was new technology and that fiber installation now was an opportunity to save money. She said that the internet service alone would be $99.00 for a gigabit of connectivity (up to 1,000 megabits per second of synchronous bandwidth). There were no data caps. Ms. Morgan stated that unlimited local and long distance phone service would also be available for $20.00 plus taxes and other fees. Additionally, there was the ability to choose television providers. DirecTV would be available without the satellite dish. She said that the fiber supports IPTV (Internet Protocol Television).

Ms. Morgan stated that fiber infrastructure has shown to add value to a home, as the internet is no longer a luxury, but a utility. She said that more and more people are telecommuting. The fiber installation future proofs your home for technology. Market statistics show that fiber to the home increases property value by 3.1%, averaging nationally at approximately $5,000.00.

Ms. Morgan stated that she is signing customer agreements at this time and the more customer agreements in place show Think Big which way to prioritize their lateral builds. A map was shown of all areas where customer agreements are already in place.

Ms. Morgan stated that there is no money due at the time the customer agreement is signed. The agreement is a 2-year commitment, with a $400.00 charge per household to install the lateral and $99.00 per month thereafter.

Mayor Cerino asked how long someone would wait to get onto the fiber network after contacting Think Big. Ms. Morgan stated that they are continually evaluating where to build next so once the density is in place, they decide where to build. The more people in close proximity interested, the better prioritized that area will be for the build.

Mayor Cerino asked if installation was on a case-by-case basis. Ms. Morgan stated that there were splice points, with multiple sites on the splice. The engineer would decide the best ways for installation. She said that fiber should be a 35-50 year in-ground infrastructure.

Mayor Cerino stated that at a Kent County Commissioners meeting there was a quote that this project was only designed to hit government buildings. He said that this is available to individual homeowners and businesses through Think Big Networks. Mayor Cerino stated that this would be good for economic development.

Rev. Tolliver asked if there was an opportunity for a hot spot by the Kent County Detention Center. Mr. Boone gave Rev. Tolliver a business card and said that they could discuss an area for a hot spot. Ms. Morgan stated that they would take a customer, but the hot spot would have to be part of an anchor site. Rev. Tolliver stated that there were many children in that area who did not have internet at home and would have difficulty getting into the Town center for connectivity.

Mr. Jeff Weber of Main Street Chestertown asked about Wi-Fi access in downtown Chestertown. Ms. Morgan stated that when a business subscribes to their service they will have the ability to have an internal network for administrative functions but they could also establish a public Wi-Fi. She said that Think Big lighting up Chestertown with wireless connectivity was a conversation for another time.

Mayor Cerino stated that the next item on the agenda was a presentation from Horizon Cinemas. Ms. MacIntosh stated that she sent the Council a summary of this request. She said that when the movie theater was closed there was a lot of disappointment in the community. The owner of Washington Square said that he would work to find another movie theatre and he did establish a relationship with a company in Baltimore. She said that the principals of that company, Horizon Cinema, were present this evening to discuss their agreement to reopen the theatre by Memorial Day weekend. Ms. MacIntosh stated that there is a $75,000.00 shortfall of funds in order to reach a final deal. Ms. MacIntosh stated that Horizon Cinemas would like to request that the Town of Chestertown front $75,000.00 as an advance against the anticipated Admission and Amusement taxes they would generate. She said that the financials indicate that the money would be returned in 5 to 6 years.

Ms. MacIntosh introduced Mr. Ira Miller, Mr. Bob Weinhold and Mr. Michael Fein, principals of Horizon Cinemas, and Ms. Rebecca Murphy, part-time Chestertown resident and member of Main Street Economic Vitality Board.

Mr. Fein stated that he has made several trips and made contact with different people in Kent County and Chestertown to make sure his this theatre would be welcomed to and become a party of the community. He said that he is working on ideas with Kent County High School and Washington College. Mr. Fein stated that he thought this would be a successful endeavor and that there would be a great deal of community support for the theatre.

Mr. Stetson stated that he read that Horizons Theatres runs first and second run movies and asked which would be shown in Chestertown. Mr. Fein stated that this would be a first run theatre, with 5 screens.

Mr. Fein stated that the new movie theatre will have improved seating, concessions, finger foods, beer and wine. The seating will be on raised platforms with high back rockers and recliners. The screens will be wider and there will be new projection equipment. He said that this will be a state of the art theatre.

Rev. Tolliver stated that he heard negative comments about the old theatre because of their programming. He asked how they decided on what movies are shown. Mr. Miller stated that he would do the booking for this theatre and all types of movies would be shown so there was something for everyone. He said that the theatre would also be available for private fundraisers and parties. Mr. Miller stated discounts would be given for students, including college students. Mr. Weinhold stated that he wanted to partner with local businesses to advertise on the screens and in other areas of the theatre.

Mr. Foster stated that he was aware of the level of interest for the theatre and the level of disappointment in the old theatre leaving. He said just that a week ago the GAR offered a bus trip to Middletown to see a movie and 50 people attended.

Mayor Cerino asked for an explanation of the Amusement Tax and what makes this a unique case. Mr. Ingersoll stated that in 1991 the Town adopted the Amusement Tax by ordinance. Revenues came primarily from video games and the movies. It is collected by the State and given back to the municipalities. He said that at present the Amusement Tax is almost zero, the last big numbers from those funds coming when the old movie theatre was still running.

Mr. Ingersoll stated that the Mayor and Council had received a proforma which showed that with decent crowds the Town could expect up to $20,000.00 per year in amusement tax revenues. The advance requested on these taxes could pay itself back in 3½ to 4 years at that rate. He said that this was a unique situation because the movie theatre is the only entity in Town capable of producing amusement revenues at this scale. He said that there is over $500,000.00 being committed between the shopping center owners and Horizon Theatres. Mr. Ingersoll stated that Horizon Theatre would have to commit to repaying the advance should the business not work out and that a time period would have to be decided on in any agreement.

Mr. Ingersoll stated that one thing to remember was that the community had to support the theatre when it is here. Mr. Miller stated that he though the theatre would be so luxurious that people would want to come. Mr. Miller stated that he thought people would drive from Middletown to this theatre.

Mr. Ingersoll stated that Horizon Theatres has expressed the idea of bringing in food from local businesses. Mr. Miller stated that he could not wait to meet with the local restauranteurs. They would also be obtaining a liquor license for beer and wine.

Mr. Ingersoll stated that as an alternative a movie theatre could request that the Town remove the Amusement Tax all together and this seemed like a more proactive request.

Mr. Foster asked what guarantee would be in place if this did not work. Mr. Ingersoll stated that the Council would have to work out a written agreement. He said that they would have to insure that the Amusement Tax repaid the loan and if the theatre left there had to be mechanism for repayment, such as a bond.

Mr. Weinhold stated that the blame for the decline of the old movie theatre is on the former ownership, as the theatre was 21 years old and never had a change made to it. He said that he built a theatre in Baltimore 21 years ago and it has been remodeled 4 times over the years and that any business left to deteriorate is going to fail. Mr. Weinhold stated that before the lease was signed the keys were given to him with the promise that it would be signed when the owner returned from vacation. He said that he performed some demolition and saw the condition of the theatre. Mr. Weinhold stated that the community did at one time support the theatre and he understood why they stopped, noting that he would never allow the theatre to deteriorate. He said that the investment on the movie equipment alone is $270,000.00, but that did not include all of the other renovations that were necessary.

Mr. Weinhold stated that the larger movie theatre businesses are not interested in coming to Chestertown, but Horizon Theatres is more of a niche company and communities such as Chestertown were their targeted area and that was how independent theatre owners stayed in business today.

Mr. Ingersoll asked how many people would be employed at the theatre. Mr. Weinhold stated that there would be 12 to 15 employees.

Mayor Cerino stated that he really wanted to see the movie theatre reopen, but felt he had a responsibility to minimize the risk to the Town. Mayor Cerino asked if there was a way for Horizon Theatre to front the $75,000.00 and the Town would agree to return their amusement taxes to them. Mr. Weinhold stated that they had leveraged as much as they are able, noting that they just built a brand new theatre in Fallston. He said that they only had so much financing ability and the landlord already financed the equipment part for them. Mayor Cerino asked if the landlord could put up the $75,000.00 and the Town would reimburse him the Amusement Tax with it. Mr. Weinhold stated that the landlord has probably gone as far as he was willing.

Rev. Tolliver asked if there was any possibility of interest on the loan in negotiations. Mr. Ingersoll stated that he thought that the Town would either be in or out on this project. He said that if they have the attendance the loan would be paid back at a more rapid rate than merely principal and interest alone. He said that he thought the Council should establish whether they wanted to work towards a contract or not.

Mayor Cerino stated that he had reservations about the precedent a loan like this could create. He said that this was somewhat unique because of the Amusement Tax but he wanted to be sure that the tax was unique to the movie theatre business. Mayor Cerino stated that tax incentives have been given to businesses in the Enterprise Zone, but the Town has never fronted money to private enterprise. Ms. Murphy stated that this request was non-precedent setting in a number of ways, such as the known source of repayment. She said that all of the details of the request could be worked out in negotiations.

Ms. Murphy stated that Horizons Theatres was in this project already for $500,000.00 and the $75,000.00 would allow them to get from where they are now to actually opening the theatre. Ms. Murphy stated that the old movie theatre paid $12,000.00 in the Amusement Tax in their last year of business. She said that the Council could assume that was lowest amount they would receive from the Tax, which gave a projection of 7 years until the debt was paid in full. She said that this is money not currently collected.

Mr. Stetson stated that the Town was waiting on reimbursements of over $300,000.00 from the State of Maryland. He said if the State was timely with their distributions it may not put such a burden on the Town. He said that the Town was spending their way down to the point where they won’t be able provide services to the Town residents.

Ms. MacIntosh stated that she thought that if the Town did not start investing in quality of life for the residents, there would be fewer people in need of services. She said that this was a good opportunity and she did not want the Town to miss it.

Ms. Murphy stated that what was requested tonight was a commitment to proceed to an agreement. She said that in doing so everyone will understand the details on repayment.

Mr. Foster stated that he was interested in discussing the matter further but said that the terminology had to be precise, with clear terms on a guarantee for reimbursement of the funds if the movie theatre was not a success. He said that the Town would not take risks.

Mr. Miller stated that he could assure the Council that they were not willing to make such a large investment in Chestertown only to walk away after a year. Mr. Weinhold suggested putting a number on the amount of years for the loan.

Ms. Pam White, board member of the River Arts Film Society was present and said that they would like to have a film festival in Chestertown and the theatre would help exponentially. She said that this was an investment in the community.

Rev. Tolliver moved that the Mayor and Council move towards an agreement and a negotiation process, authorizing Mr. Ingersoll to work on their behalf and addressing all monetary concerns raised at this meeting, was seconded by Mr. Foster and carried unanimously.

Mr. Weinhold stated that he would love for the Mayor and Council to go to Horizon Theatre’s Fallston location to see how the Chestertown theatre would look once it is finished.

Chief Baker presented the police report for February 2018. Mr. Stetson stated that some of the calls for service are being shown in the wrong wards on the report, especially along Washington Avenue. Rev. Tolliver asked if there was a resolution the runaway situation. Chief Baker stated that the child was located and taken to juvenile services.

Mr. Ingersoll stated that he had a permit request from Social Action for a march on Saturday, March 24th and he wanted to clarify the permit request with Chief Baker. Chief Baker stated that he was aware of the requests and was in agreement with the permit submitted today via email. The march will assemble at 400 High Street and use the sidewalks to get to the Wilmer Park for the rally. Mr. Stetson moved to approve Social Action’s permit request for March For Our Lives, using the parade route as discussed on Saturday, March 24, 2018, was seconded by Rev. Tolliver and carried unanimously.

Mr. Ingersoll stated that the only thing on his report was based on a request from Ms. Kuiper so the matter could wait until a subsequent meeting.

Mayor Cerino stated that the Chestertown Environmental Commission will be showing “Wasteland” on Thursday, April 5th at 7:00 p.m. at Sumner Hall.

Mr. Foster stated that he met with President Landgraff of Washington College regarding the possibility of a symposium at Washington College on the challenges facing small towns. A faculty member from the school of business has been identified to work with him on the symposium.

Rev. Tolliver stated that he attended the School Board meeting in support of Garnet Elementary School. He said that there was a presentation on their reading program and the success they were having with the younger grades. He said that the teachers should be applauded for their work.

Mr. Stetson stated that the Dog Park needed the degraded granite to be installed. He said that it was a budgeted item and the track has sunk below the grass and water was now running from the grass to the track. Mr. Stetson stated that both people and the dogs were getting caked in mud.

Mayor Cerino stated that there were no requests from the public to be on the agenda and asked if there were any questions from the audience.

Ms. Trish McGee of the Kent County News asked what the next steps with Horizons Theatres were going to be. Mr. Ingersoll stated the Town would negotiate a contract between meetings but the ultimate agreement would be voted on publicly in a Council meeting.

There being no further business and no questions from the audience, Mr. Stetson moved to adjourn the meeting at 9:00 p.m., was seconded by Rev. Tolliver and carried unanimously.

 Submitted by:                                                       Approved by:

Jennifer Mulligan                                                  Chris Cerino

Town Clerk                                                            Mayor

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