HomeMy WebLinkAboutResolutions - 2017.04.26 - 22869MISCELLANEOUS RESOLUTION#17087 April 26, 2017
BY: Commissioner, Thomas Middleton, Chairperson, Finance Committee
IN RE: ESTABLISHMENT OF OAKLAND COUNTY 9-1-1 CHARGE RATE (FORMERLY TELEPHONE
OPERATING SURCHARGE) FOR THE PERIOD JULY 1, 2017 TO JUNE 30, 2018
To the Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS the County has created and now operates and maintains an interoperable public safety radio
communications system for over a decade for the benefit of its residents on behalf of and for local law
enforcement, fire services, emergency medical services, hospitals, homeland security, and operating
purposes other than public safety (such non-public safety agencies using the radio system are funded
from revenue sources outside of the 9-1-1 charges); and
WHEREAS the County constructed this public safety radio communications system through a 9-1-1
charge (fee) on devices, as defined by the Emergency 9-1-1 Service Enabling Act, Michigan Public Act 32
of 1986, MCL §484.1101 et seq., as amended; and
WHEREAS the Michigan statutes requires that county boards of commissioners annually approve the
9-1-1 charge rate for the fiscal year period from July 1 through June 30 each year (including the period
under consideration in Oakland County of July 1,2017 through June 30, 2018); and
WHEREAS the State requires that a certified copy of the board of commissioners resolution be submitted
to the Michigan Public Services Commission no later than mid-May of each year (due May 15, 2017 this
year) covering the ensuing July 1 through June 30 fiscal year without which the fee cannot be charged;
and
WHEREAS the County's 9-1-1 current charge rate is $.28 per month per device as defined by Michigan
statutes and is below the authorized limit established by State statute of $.42 per month per device; and
WHEREAS an attached Memorandum dated April 10, 2017 from the County Administration covering the
financial, programmatic, operating, and capital needs and status of the Radio Communications Fund for
the funding period January 1, 2017 through September 30, 2022 has been prepared outlining in detail the
business issues involving the next several years' 9-1-1 charge rates; and
WHEREAS the attached memorandum also covers major capital projects anticipated to occur in FY 2017
through FY-2022 as mandated by evolving technology and obsolescence of existing radio
communications equipment, including replacement of radio consoles at the eighteen Public Safety
Answering Points (PSAPs) within the County, the replacement of public safety responders' mobile and
portable radios, tower equipment, the replacement of older connectivity in the CLEMIS Wide Area
Network (WAN), and the migration to a Next Generation 9-1-1 Emergency Services IP Network (ESINet)
and associated PSAP call-processing equipment (CPE); and
WHEREAS the attached memorandum has outlined two courses of financial alternative actions arising
from future uncertainties in the funding source arising from the State's operating 9-1-1 fund each of which
would require an increase of $.04 per device per month in the 9-1-1 charge per month under either
alternative course of action as noted in the attached memorandum; and
WHEREAS the Budget Task Force and the CLEMIS Radio Communications Oversight Committee (such
membership of which includes law enforcement, fire, medical, administration and other representatives)
meeting held on April 10, 2017 respectively unanimously agreed with the increase of $.04 per device per
month bringing the total amount to be assessed at $.32 per device per month for the period July 1, 2017
to June 30, 2018.
NOW THEREFORE BE IT RESOLVED that the County's Board of Commissioners hereby approves the
9-1-1 charge of $.32 per month per device as defined by Michigan statutes for the period July 1, 2017
through June 30, 2018.
BE IT FURTHER RESOLVED that a budget amendment is recommended to the Radio Communications
Fund for FY 2017, FY 2018, and FY 2019 to reflect increase in 9-1-1 charge rate:
Radio Communications Fund (#53600) FY2017 FY2018 — FY 2019
Revenues
1080310-115150-630581 E911 Surcharge $170,000 $680,000
1080310-115150-665882 Planned Use of Balance ($170,000) ($680,000)
Total Revenues 0 0
FINANCE COMMITTEE VOTE:
Motion carried on a roll call vote with Woodward voting no and Fleming absent.
missioner Thomas Middleton, District #4
Chairperson, Finance Committee
Chairperson, on behalf of the Finance Committee, I move the adoption of the foregoing resplution.
COUNTY MICHIGAN
L. BROOKS PATTERSON, OAKLAND COUNTY EXECUTIVE
Robert J. Daddow
Special Projects Deputy County Executive
TO: Finance Committee
Radio Oversight Committee
Mike McCabe
Phil Bert°lini
Laurie VanPelt
Jeff Werner
Jeff Nesmith
Pat Coates
Holly Conforti
Shawn Phelps
FROM: Bob Dacidow
SUBJECT: 9-1-1 Operating Surcharge: Rate Proposals for July 1, 2017 to June 30, 2018
DATE: April 10, 2017
State law governing the "9-1-1 charge" (e.g. telephone operating surcharge) requires that the
County Board of Commissioners annually approve the operating surcharge for each year ending
June 30— in this case, for the period from July 1, 2017 through June 30, 2018. The operating
surcharge provides the principal capital and operating support for the County's public safety
radio communications system operated on behalf of the County's Sheriffs Office, local units of
government's police, fire and emergency medical services, hospitals and other related parties
within the County boundaries. Non-public safety users are charged a separate fee for use of the
radio communications services.
Attached to this memorandum are the following exhibits (as well as the footnotes to Exhibits A
and C explaining the assumptions used and Issues relating to the line items as referenced):
• Exhibit A - Summary of Capital Project Needs and Related Footnotes (Full County
Funding; No Support from State): a schedule for the periods FY-2017 to FY-2022
showing the incremental capital and operating needs of the radio communication
system along with funding sources. Exhibit A reflects a critical assumption that the full
operating cost of the ESINet would be funded out of the County's 9-1-1 charge, rather
than the State's technical surcharge. Capital costs for the ESINet are borne by the
County.
The types and nature of capital costs being incurred for the ESINet include but are not
limited to: updated network connections, including hardware and software, replacing a
copper-based system with current limited technology capabilities (launched circa 1963),
technical support in installation, etc. Once constructed, the ESINet will be operating and
maintained by a telecom vendor.
EXECUTIVE OFFICE BUILDING 41 WEST • 2100 PONTIAC LAKE BD DEPT 4/i9 ° WATERFORD MI 48328-0489 • (248) 858-1650 • FAX (248) 452-9215
EMAIL: daddowr@oalcgov.com
The State's technical surcharge is separate from that of the County's operating
surcharge, is controlled through State statutes and requires the State Legislature to
change the rates billed. The current funding approved by the State enabling the State's
technical surcharge, given other counties' installation of similar networks, is presently
inadequate to cover the County's costs without a rate increase.
The present rate is set at $.19 per month per device with a current cap of up to $.25
that could be imposed through State Legislature. Draft legislation is under
consideration by the State Legislature to increase the amount to the $.25 cap with
substantial public safety support for its passage as well as more aggressive efforts for
collecting the current State surcharge on prepaid telephone cards. The request for the
increase in rate has been in progress for at least two years and there can be no
assurances that the State Legislature will act on this matter.
Given the County's full funding under this assumption, a bond issue would be required
in early FY-2020 in the estimated amount of $21.0 million. As noted in Exhibit A, the
recommended increase in the 94-1 charge for FY-2018 would be $.04 per device per
month with an increase of $.04 per device per month in FY-2019. When the bonds are
issued, the final increase to cover the debt service would occur in 2020 of $.06 per
device per month effective July 1, 2020 putting the County at the maximum currently
allowable at $.42 per device per month.
Unfortunately, once at the cap authorized to be imposed by the Board of
Commissioners, additional funds estimated at $1.6 million l would be required to cover
the full debt service costs beyond that which can be charged statutorily without a vote
by the electorate.
• Exhibits B — Calculated Bond Interest and Impact on Surcharge: Full County Funding;
No Support from State - this exhibit calculates the debt service on the amounts
borrowed in Exhibit A ($21.0 million) as well as the amount of incremental 9-1-1 rate
increase is necessary to fund the debt service over a ten-year period (roughly equivalent
to the underlying useful life of the equipment acquired). As noted, by the time the
bonds are issued, the two annual increases of $.04 per device per month (July 1,2017
and then another on July 1, 2018) will have been imposed with the remaining amount of
$.06 per device per month being required to cover the bond debt service —for a
cumulative increase of $.14 per device per month (rounded down) in total as reflected
on Exhibit B. in addition, a County appropriation of $1.6 million would be required
during the life of the debt.
• Exhibit C Summary of Capital Project Needs and Related Footnotes; With Full State
Funding for ESInet - a schedule for the periods FY-2017 to FY-2022 showing the
I The statutory Gap on amounts available without a vote attic electorate would be $.42 per device per
month. With two $.04 increases proposed in FY-2018 and FY-2019, the last increase would be for $.06 per
device per month that could contribute to the debt service funding. Given the need reflected in Exhibit B is
for 14.47 cents necessary to cover the debt service funding and only $.06 is available, the estimated
additional temporary funding for the difference would be: 14.47 cents, less 6 cents times $170,000, or $1.4
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incremental capital and operating needs of the radio communication system along with
funding sources. Exhibit 0 reflects a critical assumption that the full operating costs of
the ESINet would be reimbursed through a telephone company, as approved by the
Michigan Public Services Commission, out of the State's technical surcharge pool of
funds.
Under this assumption, a lesser amount of bonding would be necessary with
approximately $7.0 million being needed in 2020 to complete the project and provide
sustained operating funds. As with the first alternative, two increases of $.04 per device
per month would be required with a $.04 per device per month increases effective July
1, 2020 being required in the 94-1 charges to cover debt service starting in 2020. While
there is a modest 'negative cash' position in FY-2021 indicated in the projections, it is
quickly addressed by the positive cash flow in FY-2022 and need not be considered an
issue at this time given the number of assumptions in place on the timing of the capital
acquisitions.
• Exhibits D — Calculated Bond Interest and impact on Surcharge: Full State Funding for
the ESINet - this exhibit calculates the debt service on the amounts borrowed in Exhibit
C ($7.0 million) as well as the amount of incremental 9-1-1 rate increases necessary to
cover the capital needs and fund the debt service over a ten-year period (roughly
equivalent to the underlying useful life of the equipment acquired). As noted, by the
time the bonds are issued, the two annual increases of $.04 per device per month will
have been imposed with a $.04 per device per month effective July 1, 2020 with no
further required rate increases necessary to cover the debt service.
This presentation assumes that the State increases its statewide 9-1-1 charge from $.19
to $.25 per device per month and the County's telecom (PFN) funds the ESINet
operating costs with a technical 9-1-1 charge approved by the Michigan Public Services
Commission.
• Exhibit E Quarterly Financial Report to Finance Committee — showing the Radio
Communications Fund quarterly operations as of, and for the quarter ended December
31, 2016. This financial information, along with the CLEMIS Operating Fund and the Fire
Records Management System, was previously provided to the Board's Finance
Committee.
BACKGROUND
The statutorily required Board of Commissioners' resolution approving a telephone operating
surcharge must be submitted to the State no later than May 15, 2017 so that the surcharge can
be placed on the customers' telephone bills starting July 1, 2017. Absent the Board of
Commissioners' approval, the operating surcharge cannot be placed on the telephone bills and
an alternative source of funds (e.g. County General Fund or other appropriate County fund )
would be required to maintain the existing radio system operations and address the capital
needs as discussed.
For the period July 1, 2016 through June 30, 2017, Oakland County approved a $.28 per wireline
/ wireless device, charge that was applied to County landline and cell phone users. The FY-2017
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operating surcharge was unchanged from that of FY-2016. The County used $.28 in the
determination of the budgeted revenues adopted for FY-2017 and beyond. Prior to FY-2016,
the rate of $.20 cents per device per month for was in place for an extended time period. The
operating surcharge has been as high as $.57 per device per month during the initial
construction periods circa FY-2002 to FY-2006 or so. Currently, the State limits the county
boards of commissioners to no greater than $.42 per month per device without a vote of the
electorate permitting a higher charge. The County administration has no intentions on securing
amounts in excess of $.42 per device per month.
In addition to the surcharge, the Radio Communications Fund receives funding from a State
distribution from state operating surcharges. Based on a formula determined by the State, the
County received $1,835,000 from the State operating surcharge fund for F1-2016, The County's
9-1-1 operating charge amounted to $4,713,000 in PI-2016. The annual County and State
surcharge revenue for the year ended September 30, 2016 was $6,548,000 at $.28 per device
per month and represented 88% of all revenue collected.
The remaining nominal revenue arises from tower fees paid by telephone companies and other
miscellaneous revenues. Nevertheless, the principal controllable revenue source for the Radio
Communications Fund is the operating surcharge approved annually by the Board of
Commissioners in accordance with State statutes.
On a quarterly basis, the County administration issues a financial analysis covering the operating
results, financial statements and explanatory comments for the Radio Communications Fund.
The financial report for the CLEMIS Funds (including the Radio Communication Fund) for the
quarter ended December 31, 2016 was previously submitted to the Finance Committee. The
financial statements for the Radio Communication Fund for the quarter ended December 31,
2016 are attached as Exhibit E. The projects are discussed in this memorandum as well as
providing beginning cash numbers for use in the projections within Exhibit A and C.
This memorandum covers the financial status of the Radio Communications Fund and its capital
and operating needs for the next several years (Exhibits A through D, inclusive). Since the 9-1-1
operating surcharge is the principal source of controllable revenue for the Fund, the sizing of the
charge going forward is critical to insuring that the capital and operating needs of the Fund are
properly met.
The operating budgets approved by the Board of Commissioners in September 2016 for FY-
2017, FY-2018, and FY-2019 and beyond assumed that the operating surcharge would be set at
$.28 per device per month. This represents base-line revenue used in assessing the adequacy of
the rate per device per month when considering the capital and operating needs arising from
the projects contemplated in the next several years.
At present, the radio communication system has 55 towers (County owned, locally owned by
governmental units within the County or leased space from private vendors), 1,861 mobile
radios and 4,343 portable radios in use. Radio consoles are located in 18 public safety dispatch
centers (PSAPs) throughout Oakland County. There are 15 hospital emergency rooms relying on
the County's radio communication system, as well as a number of private ambulance companies
using the system. Some non-public safety departments of the County and other external
entities use the County's radio communication system for a monthly operating fee.
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REVENUE / OPERATING ANALYSIS RADIO COMMUNICATIONS FUND
The County Radio Communication Fund operations are largely funded from two sources:
proceeds from a 9-14 operating surcharge imposed on County residents and businesses at a
current rate of $.28 per communication device per month and by proceeds from a companion
State-wide operating surcharge assessed to all landline and cellphone users and allocated back
to the counties on a State-set funding formula, Only the County-imposed 9-1-1 operating
charge can be adjusted by the Board of Commissioners and it is this Board action that must be
taken now for the period July 1, 2017 through June 30, 2018. The immediate actionable
request for FY-2018 would require an increase of $.04 per device per month, raising the fee to
$.32 per device per month.
A sensitivity analysis was conducted for the County's operating charge resulting in one penny of
charge equal to $170,000 in revenues. The prior sensitivity analysis conducted in 2014 resulted
in a penny being worth $172,000 in 94-1 charge fees. The revenue per penny has remained
relatively constant from year to year and is adequate for the estimation of the incremental per
penny revenue projections in connection with Exhibit A through D and for purposes of
discussion in this memorandum.
The quarter ended December 31, 2016 reflected total 9-1-1 charge revenues of $1,633,000 as
compared to an operating budget for the quarter of $1,650,000 (an unfavorable variance of
$17,000 or 1.0%). The first quarter's projected revenue for the year is nominally below full
year's operating budget and consistent with the prior year's revenue.
In past years, the State was not aggressively securing its fees from prepaid phone cards.
Fortunately, the State has recently hired employees to secure those fees and collections are
improving, but further State efforts can be undertaken to secure additional revenues through
properly enforcing collections on existing State statutes; such actions are being encouraged by
the public safety community.
Annual State distributions for Oakland increased from $1,760,000 in FY-2014 to $1,850,000 in
FY-2015 and then, $1,835,000 in FY-2016. The County has assumed that the proposed budgets
for operating surcharges will approximate that of the adopted budget for FY-2017 through FY-
2019 at the $.19 per device per month rate currently in effect. No increase in the State 9-1-1
charges have been assumed as there can be no assurances that the State Legislature will
increase the rates to their cap of $.25 per device per month.
Note too, that the County's Radio Communications Fund has financially assisted local units when
dispatch centers were consolidated. The assistance involved the acquisition of equipment and
software, technical consulting support, networking, movement of equipment and similar costs
eligible under State statutes to be charged against the 9-1-1 operating charge revenues.
In addition the County has recently provided assistance in the amount of $50,000 to local units
of government in return for the local unit's agreement to permanently dissolve its dispatch
center and the return of all dispatch equipment to the County (both County-owned and locally
acquired). The local unit must also agree to fund the entire stand-up of a dispatch center if in
the future they choose to restore a local dispatch.
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When the ESINet is constructed and launched, the County has committed to a five-year
operating period for operating and support services to an outside vendor. Once the dispatch
center is attached to the ESINet, there is little immediate benefit to the County in the
consolidation of the dispatch centers as the funding remains largely fixed with or without the
consolidation. As such, the above $50,000 of funding assistance to the local units will be
suspended. Should a local dispatch center decide to consolidate with another dispatch center,
the County will continue to provide 'in-kind' support services in that consolidation (technical
support, consultation, closing down the dispatch center, etc.). The window is closing on the
availability of the payment to local units as the ESINet is expected to be fully operational by late
summer.
Several other matters not reflective in the attached analysis are pending as well:
• The Sheriff's Office has requested that the radio coverage for the Court House and jail
be enhanced and such enhancements could cost upwards of $500,000. Because these
services are not eligible under the State's 9-1-1 charge regulations, the funding for this
project would be the responsibility of the General Fund.
• The City of Royal Oak is contemplating the movement of its City Hall in connection with
a downtown development project. Presently, the City has title to the tower constructed
years ago when the County was launching the radio system upon which the County's
radio antenna is located. The tower, which is 240 foot tall, is currently located in or
near the downtown area of Royal Oak and next to the City Hall. The tower and City Hall
share a generator.
When a local unit moves equipment at its request, the costs of movement are borne by
the local unit. If the County requests the movement, the County funds the move.
Presently, the discussions are underway involving the movement of the tower. Any
movement of the tower further than 70 feet from its current location requires an
update of the frequency license to operate often requiring upwards of a year to secure
from the Federal Communications Commission (FCC). A new tower site could require
environmental and historical approvals prior to the launch of a tower that would begin
shortly after FCC approval of the frequency licenses and could take upwards of another
6 months or longer, depending upon the construction season. No costs have been
incorporated in the attached exhibits for the movement of the tower as the movement
costs would be borne by the City.
In the event that the current tower is removed prior to another tower being in place,
public safety radio coverage would be adversely impacted, but without a radio coverage
study it cannot be assessed at this time.
SUMMARY - OPERATING SURCHARGE FOR JULY 1, 201710 JUNE 30, 2018
The County's three-year operating budgets for the Radio Communications Fund are currently
based on the $.28 per device per month, as defined, as the principal revenue source for the FY-
2017 through FY-2019 budgets adopted by the Board of Commissioners. Similar assumptions in
rates are used through FY-2022 for purposes of the base revenues as well. Two alternative
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courses of action are proposed in Exhibit A and C with vastly different 9-1-1 operating charge
requirements as noted below:
• Exhibit A - County Operating Full Funding of ESINet Operations Through Operating
Surcharge this alternative would fund the ESINet solely out of County operations for
the FY-2018 through FY-2019 period at $.28 per device per month, with an increase of
$.04 per device per month effective July 1, 2017 and another $.04 per device per month
effective July 1, 2018, issue ten-year bonds in the amount of $21.0 million and finally
increase the 9-1-1 operating charge in FY-2020 by another $.06 per device per month,
plus approximately $1.6 million from County sources outside of the 9-1-1 operating
surcharge.
The 2020 increase would be in place for ten years in order to cover the debt service —
principal and interest— of the debt issued in FY-2020). The bond proceeds would fund
capital costs required at that time and would therefore 'free-up' then current year
operating surcharge amounts to fully cover the operating costs for that year and
beyond.
• Exhibit C - Funding of the ESINet Operation's Through the State's Technical Surcharge
Pool — while certainly more attractive to secure this funding from the State's technical
surcharge pool, the likelihood that all of the operating costs can be secured from this
pool is suspect without a state-imposed increase from the $.19 per device per month to
the maximum amount of $,25 per month (or beyond should the State so choose to lift
the existing cap). The State's technical surcharge pool is no longer sustainable and
current operations and commitments are eroding the State's equity position in the
technical surcharge fund. There can be no assurances longer term that this is viable
alternative or even if the State would support its use for Oakland's needs in whole or
part.
Adding to the uncertainty of the use of the State's surcharge pool is the requirement
that the network must first be constructed and the capital costs paid before an
application to the State by the County's telephone company for the ESINet operations
can be made. This construction is likely to continue through the late summer months
and the State application for funding of the ESINet operations filed in the fall with the
Michigan Public Services Commission. At that point, the MPSC could award none, part
or all of the requested amounts of operating costs associated with the network. Any
operating costs not paid for by the State's surcharge pool then require the County to
fund these costs through the County's 9-1-1 operating charge.
Given the above issues and uncertainties, the likely outcome of the State's funding of the ES1Net
operating costs cannot be determined at this time. As such, the below recommendations reflect
the assumptions, which are the most conservative and as reflected in Exhibit A:
• The 9-1-1 current operating charge of $.28 per device per month increase to $.32 per
device per month effective for the period July 1, 2017 to June 30, 2018.
• The 9-1-1 then current operating charge of $.32 per device per month increase to $.36
per device per month effective for the period July 1, 2018 to June 30, 2019.
• Upon the issuance of the bonds in FY-2020, the then operating charge of $.36 per device
per month would have to be increased by $.06 per device per month effective July 1,
2020, plus a source of funding of an additional required amount of $1.6 million annually
be sought and appropriated.
• Given that there is an intention on issuing bonds for either solution, it is incumbent
upon the County to provide a Notice of Intent to issue bonds (along with the possible
notice to the Internal Revenue Service) of the use of the bond proceeds. The Notice of
Intent will not actually approve the debt issuance but will protect the County's rights to
issue the debt at a later date.
Generally, if the County were to purchase capital assets before the bonds are properly
noticed and without IRS approval to do so, the costs cannot be charged against a tax-
exempt bond. In order to insure that the transaction is addressed properly, discussions
should be held with the County's bond counsel for guidance in this matter in the very
near term.
• The construction of the ESINet will be completed in late summer 2017. By that time,
there may be action on the request to increase the State's technical surcharge rate from
$.19 per device per month to $.25 per device per month. If so, the status of the
alternatives would be a discussion topic for the August 2017 Finance Committee in
connection with the operating budget for FY-2018 to FY-2020. While the time will have
passed on the setting of the operating surcharge effective July 1, 2017 (given the
application is due to the State in May 2017), a refined course of action on the two
alternatives may be able to be determined in connection with the FY-2019 funding
needs.
• To the extent necessary and given that the likely outcome of the MPSC accepting the
telecom vendor's application to cover the funding for the operating costs, the final
funding outcome of these two diametrically opposed alternatives (i.e. Exhibit A and C) is
likely somewhere in between these two exhibits. As such and at later date, bonding
would have to be adjusted accordingly and would range between zero and $21.0 million
depending upon events not currently determinable.
CONSULTANT'S STUDY ON ALTERNATIVE RADIO COMMUNICATIONS SYSTEMS — SUMMARY
RESULTS
During 2016, the County initiated a study to assess alternative service means for its radio
communications system with a draft report having been issued in late calendar 2016. At this
writing, the draft report has not been finalized pending updates and corrections cited in the
draft report. The scope of work considered several alternative means of providing public radio
communications including:
• Harris Alternative: Continued use and upgrades to the Harris OpenSky multicast
system. In connection with the prior year's 9-1-1 charge analysis, the Harris alternative
was considered to be the best alternative at the time. Among other benefits cited last
year, quite a bit less radio tower equipment and underlying technical support would
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have been required had this alternative course been undertaken giving rise to a lesser
increase in the 944 charge requirements and debt to be issued.
• Upgrade and Standalone County System: Upgrade to a standalone 700/ 800 MHz P25
simulcast system: with 28 sites, 10 channels and Phase 2 simulcast system that replaces
the current OpenSky system. The component parts would be of a more generic nature
with this course of action and not heavily reliant on any single vendor that would allow
for competitive bidding of each component part (consoles, radios, tower equipment,
technical services, etc.).
• State System (Motorola) But With Local Control: Join the State system by sharing the
State's Core Switch in Macomb County. The underlying structure of the system is similar
in nature of the above simulcast system but would require the purchase of its RF
infrastructure from Motorola in order to be compatible with the State's Michigan Public
Safety Communications System.
• State System Subscriber: Join the State's radio system and become a subscriber on the
State system. This is similar to the third bullet except that the County purchases the RF
infrastructure and then turns over the purchased infrastructure and all frequencies to
the State. Unfortunately, as most of the infrastructure (i.e. towers) are owned by the
local units of government this alternative is not a realistic alternative (along with the
other issues cited involving the third bullet).
The continued use of the Harris OpenSky is not recommended. Upon inquiry of the Harris
representatives, Harris was unable to satisfy the County in the continued investments and long-
range plan for its public safety radio communications system. Using OpenSky commits the
County to using only the Harris product line for portable and mobile radios, console and tower
equipment in lieu of securing competitive bids for this individual equipment. As such, the
County will not be risking the potential sometime in the future of Harris ceasing to maintain its
system with the current versions of technology for local public safety. In the event Harris would
stop producing its equipment, parts could become inaccessible for the consoles, tower
equipment and / or radios and is not acceptable for a critical component of public safety.
The use of the State's Core Switch in Macomb County raises concerns of whether the number of
portable and mobile radios that would burden the existing switch. Discussions with other
Motorola users in the region indicate that 'busies' occur far more frequently with the existing
southeastern communities than would be acceptable for the County (which has minimal number
of 'busies' on its current Harris system). The County's frequencies are generally in the 821 MHz
range of service and make it more difficult for the Motorola system. In addition, the radio
signals are backhauled from the tower to a central switch over OAKNet, a fiber optic network.
The State uses a line-of-sight tower configuration (requiring much taller towers than within
Oakland County) via microwave. Tower replacement would be a potential risk if the OAKINIet
could not be used to backhaul the signal with the Motorola system. Other factors were also
considered.
Becoming a subscriber on the State's system has many of the above issues as well as the
inability to provide most of the existing towers to the State because the tower titles are in the
name of the local units of government in which they reside. In addition, relinquishing the
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frequencies to the State would result in Oakland County relying on the State for its system in the
future with no ability to seek other solutions.
The County administration has chosen to upgrade to a standalone 700/ 800 MHz P25 simulcast
system. In doing so, the County tower infrastructure would be largely used and may actually
result in fewer towers being required. The towers would continue to use the OAKNet as a
means of backhauling the radio communications. Control over the system would continue to
reside with the County. The underlying parts (portable and mobile radios; console equipment
and tower equipment) will largely be competitively bid. The system would be designed in such a
way as to be interoperable with Michigan' radio system.
Given the above considerations and others outlined In the draft consultant's report, the
upgrading of the existing system to a standalone 700 / 800 MHz P25 simulcast system is
recommended.
In reviewing the draft consultant's report, there were a number of matters that needed to be
adjusted to reflect a more realistic projected cash flow towards replacing the existing system to
one of a standalone system. Generally, the consultant's cost projections were far too
conservative and have been adjusted to reflect known actual information representative of the •
County's anticipated actual future costs, specifically:
• The consultant's report used manufactures' list prices for portable and mobile radios
and other equipment components. The County's existing agreement with Harris
provides for a 25% discount off of list price. Since these components will be
competitively bid under the proposed solution, the discount price should be able to be
obtained and possibly a bit better.
• Originally, the mobile units were thought to require near-term replacement as they
were considered to be 'end of life,' The consultant's report indicates that the mobile
units would be replaced concurrent with the portable radios, This is unnecessary as the
useful life of the mobile units is expected to be extended between three to five years.
For purposes of the cash flow analysis, the County has chosen to reflect the
replacement in year 2020 and completion in 2021, rather than immediate replacement.
It is entirely possible that the mobile units may be delayed even further.
• When the County acquired the first set of portable radios, the County acquired a 'tier
three' radio the highest functionality and most costly of the three tiers then available.
In retrospect, few public safety field personnel would use the radio's full functionality.
The consultant's report suggests replacing tier three radios with tier two radios; the tier
two radios are presently believed to contain even more functionality than is needed by
non-special unit field personnel (SWAT; fugitive apprehension team, HAZMAT, etc.), It is
conceivable that 'tier one' radios may be adequate for personnel rarely leaving their
patrol districts.
The cost differential between a tier three ruggedizecl portable radio (list cost - $4,800)
and tier two portable radio (list cost - $2,800) provides a savings of $2,000 per radio
before discount for roughly 1,300 radios. Tier two radios have been assumed to be
acquired for the cost flow analysis but will be investigated further as to whether tier one
10
radios would suffice in a study to be conducted with local police departments assisting
in this assessment. in the event that 'tier one' radios are adequate, the cost savings
would be an additional $800 per radio at list prices.
• The consultant's report suggested that the portable and mobile radios be replaced at
the end of a 7-year useful life, This is unrealistically low as the existing equipment,
when finally replaced will have been in the field for between 12 and 15 years. 13ecause
the cash flow projections have been developed only through FY-2022, this is not a factor
requiring adjustment in the attached analysis.
• The consultant's report recommends a $5 million contingency for unforeseen issues that
has been included in the cash flow analysis.
NOTICE OF INTENT TO ISSUE DEBT
The debt issue will require the Board of Commissioners to authorize a Notice of Intent to
borrow. A Notice of Intent provides notification to the public in order that they may object to
the debt issuance (with sufficient signatures and within a 45-day period). The Internal Revenue
Service has certain rules that permit the expenditure of funds in advance of the debt issuance
and have that debt proceeds cover those expenditures. A waiver will be required.
The County's bond counsel will be contacted to assist in the above two technical matters.
RADIO OVERSIGHT COMMITTEE
On April 10, 2017, the Radio Oversight Committee voted unanimously in support of the radio
communications plan as outlined in this memorandum and the attached exhibits and is in
support of the proposed resolution in front of the Finance Committee on April 20, 2017.
11
1 2 2 3 4 5 7 $ 5 5 150,000 200,000 35,000 150,000 $ 35,000 $ 4.500,000 500,000 1,000,000 1,429,480 200,000 820,000 $ 1,500,000 $ - $ - $ 3,000,000 5,000,000 2,000,000 500,000 3,908,100 3,908,100 8,000,000 6,000,000 3,100,000 2,000,000 2,000,000 1,000,000 113,137 300,000 150,000 35,000 183,000 123,000 143,000 123,000 3,406,004 2,731,280 2,731,280 2,731,280 2,731,280 (1,372,863) (1,400,000) (1,400,009) (1,400,000) (1,400,000) 150,009 10,517,521 14,433,477 18,352,380 12,482,380 3,354,280 9 20,560,532 22,480,512 14,812,891 3,739,414 9,132,024 169,654 10 1,500,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 11 170,000 850,000 1,360,000 1,615,000 2,330,000 2,380,000 11 - 1,600,000 1,600,000 1,600,000 1/ (2,460,000) (2,460,000) (2,460,000) 11 21,000,000 - 22,630,512 25,330,012 13,172,831 27,494,414 12,952,034 3,685,654 $ 22,480,512 $ 14,812,891 $ 3,739,414 $ 9,232,034 $ 169,554 $ 335,374 - (200,000) (200,000) 150,000 (16,000) 200,000 55,000 $ 189,000 $ (50,000) $ (200,000) 150,000 (32,000) 200,000 55,000 $ 123,000 (80,000) $ (100,000) (200,000) (200,000) 200,000 200,000 {32,000) i32,000) 200,000 200,000 55,000 55,000 142,000 $ 123,000 SUMMARY OF cAPiTAL PROJECT NEEDS -RADIO COMMUNICATIONS FUND NO SUPPORT FROM STATE FOR ESINet OAKLAND COUNTY, MICHIGAN April 111, 2017 EXHIBIT A Description Nine Months Ended Notes Sept. 30, 2017 FY-2012 FY-2019 FY-2020 FY-2921 FY-2022 Capital: Radio Consoles in Dispatch Centers Portable Radio Replacement Mobile. Radio Pieplacement Tower and Other Equipment Contingency ESINet Capital Needs WAN Upgrade -Routers Southfield Radio Reimbursement -Police Operating: Adjustments to Operating Budget ESIN at - Final Operating Costs ESIN et Operating Needs In Budget Incremental Capital and Operating Needs Cash and Cash Equivalents - Beginning Estimated Net Cash Flow from Operations Increase in Operating Charge County Appropriation Debt Service - Principal and Interest Bonding Net Cash In-flowfor Capital Needs ENDING AVAILABLE CASH AND EQUIVALENTS Note 7 - adjustments to operating budget: Reductions in investment income Increase in communications experists-TIs Reductions in professional services Increase in tower charges Eliminate operating transfer out to CLEMIS Reduction in training Net Adjustment to Operating Budget Note 8 - Composition of cash and cash equivalents as of Dec, 31, 2016; Cash $ 19,843,477 Accrued interest 314,087 Due from / accounts receivable 1,379,861 Accounts payable (376,513) Net Cash and Cash Equivalents $ 20,560,512 Note 9 - Quick estimation of the cash flow available from operations - based on FY-2015 actual operations: Operating Ions for FY-2018 - actual $ (2,983,718) Depredation add-back in above - full year 6,025,531 Net actual before provision far fiucuations 3,041,315 Reduction for annual fluctuations-cushion (1,041,813) P1-2016 annual cash flow available $ 2,000,000 Nate - the above projections assume no support of PFN a telecom. All capital and operating support would be required of local. resources - principally the County's operating surcharge.
CALCULATION OF BOND INTEREST- RADIO COMMUNICATION FUND - NO SUPPORT FROM STATE FOR ESINet OAKLAND COUNTY, MICHIGAN April 10, 2017 EXHIBIT B Be iiii.&iin Interest Payment - Ending Beginning Balance FY-2020 FY-2021 FY-2022 FY-2023 FY-2024 FY-2025 FY-2026 FY-2027 FY-2028 FY-2029 $ 21,000,000 $ 19470,000 17,285400 15,343,653 13,343,963 11,284,281 9,162,810 6,977,694 4,727,025 2,408,836 630,000 $ 575,100 518,553 460,310 400,319 338,528 274,884 209,331 141,811 72,265 $ (2,460,000) (2,460,000) (2,460,000) (2,460,000) (2,460,000) (2,460,000) (2,460,000) (2,460,000) (2,460,000) (2,460,000) 21,000,000 19,170,000 17,285400 15,343,653 13,343,963 11,284,281 9,162,810 6,977,694 4,727,025 2,408,836 21,101 Interest rate 3.00 % Debt service impact on operating surcharge (1 penny = $170,000): 14.47 cents Note - See footnote explanations and the letter of transmittal for information concerning this schedule.
SUMMARY OF CAPITAL PROJECT NEEDS - RADIO COMMUNICATIONS FUND - WITH SUPPORT FROM STATE FOR ESINet OAKIAND COUNTY, MICHIGAN April 16, 2017 EXHIBIT C Description Nine Months Ended - Notes Sept. 30, 2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 22,630,514 $ 22,480,514 Capital: Radio_Conscl es in Dispatch Centers Portable Radio Replacement Mobile Radio Replacement Tower and Other Equipment Contingency 6SINet Capital Needs WAN Upgrade - Routers Smithfield Radio Reimbursement-Police Operating: Adjustments to Operating Budget ESINet - Final Operating Costs ESINet Operating Needs In Budget Incremental Capital and Operating Needs Cash and Cash Equivalents - Beginning Estimated Net Cash Flow from Operations Increase in operating Charge DebtService - Principal and interest Bonding Net Cash In-flew for Capital Reeds ENDING AVAILABLE CASH AND EQUIVALENTS $ 4,500,000 $ 1500,000 500,000 3,000,000 5,000,000 2,000,000 3,908,100 3,908,200 1,000,000 8,000,000 6,000,000 3,100,000 2,000,000 2,000,000 1,429,480 113,197 200,000 300,000 820,000 35,000 189,000 123,000 - (1,372,863) (1,400,000) (1,400,000) 7,111,617 11,702,197 15,631,100 22,480,514 18,213,897 9,876,700 2,000,000 2,000,000 2,000,000 850,000 1,360,000 1,530,000 (820,000) 7,000,000 25,330,514 21,578,897 19585,700 7,175,600 $ 23,213,897 0 9,876,700 $ 3,955,500 $ (2,575,500) 1 2 4 5 6 7 8 $ 150,000 150,000 9 20,950,514 10 1500,000 11 170,000 1.1 900,000 1,000,000 644,500 21,500 143,000 ' 123,000 (1,400,000) (1,400,000) 9,751,100 623,000 3,955,600 (2,575,500) 2,000,000 2,000,000 2,040,000 2,040,000 (820,000) (820,000) Note 7- adjus-tments to operating budget: Reductions in investment income Increase in communications expenses - Tis Redactions in professional services Increase in tower charges Eliminate operating transfer to CLEMIS Reduction in training Net Adjustment to Operating Budget - 0 (200,200) 150,000 200,000 35,000 150,000 $ 35,000 $ - $ (50,000) $ (80,000) $ (100,000) (200,000) (200,000) (200,000) (200,000) 150,000 150,000 200,000 200,000 (16,000) (32,000) (32,000) (32,000) 200,000 200,000 200,000 200,000 55,000 55,000 55,000 55,000 189,800 $ 123,000 $ 143,000 $ 123,000 Rote 8- composftl on of net cashes of Dec. 51, 2015: Cash Accrued interest Cue from / accounts receivebie Accounts payable Net Cash and Cash Equivalents 19,843,477 114,087 1,379,853 (375,913) $ 20,960,514 Note - the above projections assume full support of PFN a telecom. All capital and operating supportwould NOT be required of local resources - principally the operating surcharge. Note 9 - Estimation of cash flow available from operations: Operating loss for FY-2015 - actual Depreciation add-back in above - full year Net actual before provision for flu mations Reduction for annual fluctuations - cushion $ (2,983,718) 5,025,531 3,041,813 (1,041,813) FY-2016 annual cash flow available 2,000,000
CALCULATION OF BOND INTEREST- RADIO COMMUNICATION FUND WITH SUPPORT FROM STATE ON ESINet OAKLAND COUNTY, MICHIGAN April 10, 2017 EXHIBIT D Beginning Interest Payment Ending Beginning Balance FY-2020 FY-2021 FY-2022 FY-2023 FY-2024 FY-2025 FY-2026 FY-2027 FY-2028 FY-2029 7,000,000 $ 6,390,000 5,761,700 5,114,551 4,447,988 3,761,427 3,054,270 2,325,898 1,575,675 802,945 210,000 $ 191,700 172,851 153,437 133,440 112,843 91,628 69,777 47,270 24,088 (820,000) (820,000) (820,000) (820,000) (820,000) (820,000) (820,000) (820,000) (820,000) (820,000) 7,000,000 6,390,000 5,761,700 5,114,551 4,447,988 3,761,427 3,054,270 2,325,898 1,575,675 802,945 7,034 Interest rate 3.00 % Debt service impact on operating surcharge (1 penny = $170,000): 4.82 cents Note - See footnote explanations and the letter of transmittal for information concerning this schedule.
FOOTNOTES TO SUMMARY OF CAPITAL NEEDS — EXHIBITS A THROUGH D
RADIO COMMUNICATIONS FUND, OAKLAND COUNTY, MICHIGAN
April 10, 2017
The below footnote references are provided as an explanation of the line items included on the
attached schedules entitled "Summary of Capital Project Needs — Radio Communications Fund", Exhibits
A and C, in support of the projected operating surcharge needs to cover both the Fund's operation and
capital needs over the period through FY-2022. Critical assumptions follow in assessing the incremental
operating surcharge needs, along with timing of the surcharge needs:
• The current operating surcharge is $.28 per month, as defined, for the period through FY-2022
(essentially, the 'base surcharge' being analyzed for adequacy).
• As noted, there are two alternative courses of action:
o Exhibit A — the County fully funds the projects, including the ESINet capital and
operating costs with no State incremental support forthcoming. This is the most
conservative approach anticipated. It requires that the County seeks a bond in the
amount of $21.0 million and increases in the 944 operating charge funds both capital
and debt service needs.
o Exhibit C —the State provides full funding for the operating costs of the ESINet as it has
provided to other counties to date. As noted previously, this assumption would require
incremental State funding not currently received as the underlying State operating
surcharge pool is not covering the committed operating costs to counties already on the
EsiNet. The State's equity in this fund is being depleted.
The State Legislature would be required to increase the State technical surcharge rate,
and / or provide for additional enforcement of prepaid telephone cards (or other
actions) beyond the $.19 per device per month currently in place up to the cap of $.25
per device per month (or even lift the cap with further increases). To date and over the
last several years, the State Legislature has taken no action to do so.
• The operating budgets projected into the future are the expected operating results with little or
no variances (such has been the case in the past) on than those cited on the face of Exhibits A
and C. With the exception of depreciation expense, all operating revenues and expenses are
assumed to be equivalent to the cash needs at the time incurred.
These footnotes cover Exhibits A and C as referenced by line item and provide further understanding of
the details surrounding the assumptions used in the dollars cited and timing required for the capital or
operating costs.
NOTE 1— RADIO CONSOLES IN DISPATCH CENTERS
Because the County distributed the radio consoles in the dispatch centers circa 2003 through 2006, this
computer equipment is aging rapidly. Replacement is planned for 1-Y-2018 and FY-2019. The
1
replacement of this equipment, however, is highly dependent upon the course of action taken on the
radio communications system as a whole. The amounts cited in Exhibits A and C reflect the consultant's
projections of the equipment and installation costs, at list price, of $6,171,000 for 19 dispatch centers.
The Oxford Village dispatch operations have recently been consolidated into the County Sheriff's Office
and no longer will require a console. As such, the consultant's report amount has been reduced to $6.0
million and split over the two-year period as cited. There are no remaining dispatch centers known to
he considering consolidation at this time.
The console equipment and installation cited in the consultant's report is at list price. No reduction of
the list price has been reflected in Exhibits A and C as the County experienced difficulties in the
installation of the consoles in the early 2000s and any such discount is considered to be an unspecified
contingency relating to this portion of the project.
NOTE 2 — MOBILE / PORTABLE RADIO REPLACEMENT
In 2013, County administration was notified that the radio communications vendor will no longer
support portable radios beyond December 31, 2017. While the portable radios have been noticed as
end of life they will function perfectly well for several more years. The County has not upgraded to a
higher version of software (County is on SR7 and an upgrade would take the radio system to 5R10) and I
the coming years the portable radios will truly be end of life. Absent damage in an emergency event,
the portables have lasted in good order for upwards of 12-plus years and have more life left in them.
In connection with the past cash flow projections, the mobile units were also assumed to be end of life,
but upon further investigation they may have been three to five more years of useful service. The
mobile units are generally ruggedized and few failures have occurred for the past dozen years absent
vehicle accidents.
While the County administration has been notified that the radios will be end-of-life at the end of 2017,
history would suggest that few governmental units (unlike the County) set money aside for the
replacement equipment. As such, as the end-of-life date closes in, governments seek federal / state
assistance and / or bring pressure on the vendor to delay the actual end-of-life date. While the County
cannot be assured of a delay in the future, County's maintenance efforts, ability to use the equipment
beyond 2017 and the potential delay of the actual end-of-life date suggests that the actual replacement
period would be from 2018 to 2021.
The consultant assumed that the portable radios to be acquired were being valued at list prices (County
receives a discount of 25% and likely, upon competitive bidding may do a bit better) that have been
adjusted to 75% of the value cited in the consultant's report. In addition, the consultant assumed a one
for one purchase of the tier three radios (highest functionality and cost) which has been reduced to the
'tier two' functionality levels with the corresponding savings reflected in Exhibits A and C. Before the
actual purchase of the radios takes place, further research must be held with the local users of the
radios as to the mix of tier three, tier two and tier one radios in the field; such research will help to
define the cost. It is believed that the use of 'tier two' radio functionality for purposes of this schedule is
adequate for purposes of sizing the 9-1-1 operating charge.
As with the mobile radios, the discount of 25% applied to the mobile units needing replacement has also
been reflected in the attached Exhibits A and C. The mobile units are at the 'tier three' level which is
2
currently believed to be necessary for the full functionality of the radios in the field, but will also be
explored as to whether a lower functionality will be possible saving additional costs.
NOTE 3 — TOWER AND OTHER EQUIPMENT
The FY-2017 operating charge analysis and sizing was dependent upon the replacement of the Harris
equipment for portables and mobile radio units and the consoles in general, with nominal replacement
of tower and other equipment. During the past year, the County was informed that Harris is
maintaining the existing radio equipment but not providing substantial research and development
dollars to perfect their current public safety radio communications line of products. As such and as
explained in the attached memorandum, a course other than complete reliance on the Harris product
line is the prudent course of action.
When considering this course of action, the tower and other equipment needs, along with the technical
expertise to link this equipment together now becomes a factor in the cost analysis. The additional
costs have substantially increased the cost of this project.
Given that the components of this equipment will be competitive bid and assembled and this equipment
is currently subject to a 25% discount by Harris, the list prices cited in the consultant's report have been
reduced for purposes of Exhibits A and C.
NOTE 4- CONTINGENCY
The consultant has recommended a contingency for this project of $5.0 million and is reflected in
Exhibits A and C. In prior years' analyses there were no specified contingencies as the capital cost
amounts had not been fully vetted through and outside, objective consultant.
NOTE 5— CAPITAL AND OPERATING NEEDS FOR ESINet
The ESINet project has two components to it: the capital equipment costs and the annual management
of the software and other network components. The capital equipment component will be provided by
ECW, Inc. and will be a County cost of launching the ESlNet operation. The operating costs provided by
PFN, Inc. and the effect on the operating surcharge needs using PFN as a vendor are far more
complicated.
PFN is a telephone company providing service regulated through the Michigan Public Services
Commission. The PFN customers are principally cellphone services; PFN has few if any landline
customers. The technical surcharge billing to customers is only through lancllines. PFN has no direct
means to obtain technical surcharge revenues to cover the costs. However, PEN has the ability (as it has
done in several other counties) to provide the operating services relating to an ESINet and seek cost
recovery from the State's surcharge pool.
Several issues, however, exist in the above:
• The State operating surcharge pool is not currently covering all of its committed costs to the
local units and the State's radio needs. Essentially, the $.19 per device per month the State
charges on both landline and cellphone services could be raised to the current statutory limits
($.25 per device per month). No such actions have been taken by the State to date. It is
3
unknown how much of the operating costs incurred by PFN can be recovered from the State's
pool now and into the future.
• The principal costs associated with the ESINet are dependent by the number of dispatch centers
located in Oakland County (i.e. presently at 18 with no dispatch centers presently considering
consolidation with the Sheriff's Office or other surrounding dispatch center). If fewer dispatch
centers existed at the time the ESINet is built out, the costs would be much lower. The window
is closing rapidly as the build-out of the ESINet is expected to be finished in late summer 2017.
Once the ESINet is built out, the five-year operating costs are almost all fixed.
• The State requires the telephone company to build out and begin operating the network before
the telecom can petition the Michigan Public Services Commission for reimbursement of its
operating costs. As such, this further complicates the ability of the County to determine
whether the ESINet operating costs can be recovered until the State is petitioned and supports
in full, rejects in full or pays some presently undetermined portion of the PFN operating costs.
To the extent that the operating costs are not funded through PEN's efforts in its rate increases
of the technical service charge, these costs will become the responsibility of the County.
• The build out of the ESINet has been on-going throughout calendar 2016 and $1.3 million has
been expended by December 31, 2016. The remaining amount to be expended is reflected in
the 9 months ended September 30, 2017 and in FY-2018.
The actual recovery of the operating costs cannot be accurately projected at this time. As such, Exhibit
A and C have been provided as the 'best' and 'worst' case scenarios relating to the capital and operating
programs under consideration with the differences being entirely related to how much PFN might be
able to secure from the State's surcharge pool.
NOTE 6 — WAN / ROUTER UPGRADES
The WAN / router upgrades were cited in last year's cash flow analysis at $350,000. The consultant's
report has cited this amount at $500,000, likely at list prices. Given the nominal amount involved, no
adjustment to discount has been provided.
NOTE 7 — SOUTHFIELD RADIO REIMBURSEMENT
During the fall of 2015, the City of Southfield approached the County for the replacement of certain
components of its public safety radio communications system. Since the inception and at the choice of
the City administration at the time, the City chose not to participate in the County's Harris OpenSky
radio system. Instead, they used their own lower-band frequency level radio system.
Yet, because the collections for the County's public safety radio system is based on County-wide 9-1-1
operating charges, the principal benefit derived by Southfield was the ability, through a 'patch', to
communicate with other Harris OperiSky County public safety users. Because the telephone companies
are not statutorily required to provide census data relating to its users (and in particular, local
government census data), no such information is available relating to what Southfield residents and
businesses might have paid in operating surcharges.
4
Given that it is known that the Southfield residents and businesses have paid amounts in support to the
County's radio system, the County has agreed to cover certain replacement costs of its local radio
system — principally the portable and mobile radio system based on the formulas in use involving local
government users in the County's radio system.
The amounts cited in the Schedule include only the police radio replacements as Southfield is seeking a
fire grant in support of those costs. Should the grant not be forthcoming, an estimated additional cost
of $484,000 may be necessary for inclusion on the Schedule.
NOTE 8— ADJUSTMENTS TO OPERATING BUDGET
A brief review of future operating budgets beginning in FY-2018 was made. The nominal adjustments
made (see detail on the Schedule itself) generally involved issues associated with the project's
implementation.
NOTE 9 BEGINNING CASH BALANCE
The detail of the beginning net cash and cash equivalent balances as of December 31, 2016 was
obtained from Exhibit E for the Radio Communication Fund's operations as of and for the quarter ended
December 31, 2015. The accounts receivable is based on actual cash receipts from the telephone
companies in January 2017 for the quarter ended December 31, 2015 (essentially 'cash' at or about
December 31, 2015). See the Schedule for the details of the cash and cash equivalents.
NOTE 10 — ESTIMATION OF CASH FLOW AVAILABLE FOR CAPITAL AND OPERATING NEEDS
The projection of the cash flow available for incremental capital and operating needs has been derived
from the Fund's accrual-based actual operations for FY-2016. The critical assumption in the use of the
actual results for FY-2016 is that the prior year's operations will mirror future cash receipts and
disbursements. Given that the balance sheet has little non-cash transactions, this proxy is considered to
be acceptable, particularly since the only non-cash items on the balance sheet are inventory and prepaid
expenses and they have been excluded from the opening cash balances — See Note 9).
The Fund's operating loss for FY-2016 are caused by depreciation expense (a non-cash expense) and
must be added back to the losses in order to secure a net cash flow from operations for purposes of this
Scheduled. Given that this is an imprecise approach to the projection of cash flow into the future (as
would other alternatives that might have been used), the projection of $3.0 million in operating cash
flow available for capital and operating needs has been reduced to $2.0 million in order to provide for a
more conservative projection for purposes of the Schedule.
NOTE 11— BONDING, DEBT SERVICE AND IMPACT ON OPERATING SURCHARGE RATES
Exhibit A reflects an assumption that PFN (telecom vendor) will not be able to secure any
reimbursement of the operating costs from the State surcharge pool. As such, these incremental cash
costs will draw from the 9-1-1 operating charge otherwise available for capital and operating needs. By
FY-2019, the cash position of the Fund would be largely depleted and the need to borrow approximately
$21.0 million would be required to complete the capital and operating programs through FY-2022.
5
Effective July 1, 2017 and July 1, 2018, the Schedule assumes the increase of $.04 per device per month
elevating the 9-1-1 operating charge from $.28 to $.32 for FY-2018 and then again to $.36 for FY-2019.
In early 2020, the County would issue approximately $21.0 million in bonds to complete the project
requiring additional increases in the surcharge of $.06 per device per month effective July 1, 2020.
At this time, the cap on the maximum rate of $.42 per device per month that the Board of
Commissioners could authorize will have been reached and yet, this will not cover the full of the debt
service under the Exhibit A assumptions after debt issuance. An additional funding need of
approximately $1.6 million would be required from another County source for the remaining life of the
bonds (estimated in Exhibits B and D to be ten years to compliment the estimated useful life of most of
the underlying assets the bond proceeds will be used to acquire).
Exhibit C has very much the same 9-1-1 operating rate increases through the issuance of the bonds.
However, because the assumption for this Schedule is that the State will fully fund the ESINet
operations, the bond issuance amount is estimated at $7.0 million, with a substantial reduction of debt
service over the ten year bond period. As such, the last increase as noted in Exhibit C to the 9-14
operating charge would be approximately $.04 per device per month beginning with the July 1, 2020
billing period resulting in a $.40 per device per month collection from
6
EXHIBIT E
riattli(soLNDF L. BROOKS PATTERSON, OAKLAND COUNTY EXECUTIVE
COUNTY MICHIGAN
Robert J. Daddow
Special Projects Deputy County Executive
TO
FROM:
Radio Oversight Committee
Jeff Werner
Jeff Nesmith
Pat Coates
Steve Murphy
Holly Conforti
ShaVan Phelps
Bob
SUBJECT: Radio Communication Fund Financial Statements and Schedules
For The Quarter Ended December 31, 2016.
DATE: February 21, 2017
The following financial statements are attached as of and for the quarter ended December
31, 2016 for the Radio Communications Fund.:
• Statement of Net Position (Exhibit A). This statement provides the assets,
liabilities and net assets (e.g., equity) of the Radio Communications Fund.
• Statement of Revenues, Expenses, and Changes in Net Position (Exhibit A-1).
This statement compares the adopted budget to actual operating results.
• Operating Transfers In and Out (Exhibits A-2 and A-3) - the operating transfers
into the Fund were largely for the acquisition of individual portable and mobile
radios ($99,264). The operating transfers out of $486,000 involved the
reimbursement of the Information Technology and CLEMIS Funds for
administrative and communications services.
• Brief Explanations (Exhibit A-4) — a set of explanations of operating budget to
actual variances included in the financial statements and schedules above.
The Radio Communications Fund has a number of planned projects as outlined in a
memorandum to the Finance Committee dated April 1, 2016; such memorandum was
used in the establishment of the fitly 1, 2016 to June 30, 2017 operating surcharge and is
incorporated within this memorandum by reference. Within the next month, detailed
analyses of the capital projects' financial status, future funding needs and available
funding will be conducted in connection with thenperating fee recommendations to Cover
EXECUTIVE OFFICE BUILDING 41 WEST a 2100 PONTIAC LAKE RD DEPT 409 a WATERFORD MI 48328-0409 0 (248) 858-1650 a FAX (248) 462-9215
EMAIL: ,daddowr oakgov.corii
the period July 1, 2017 to June 30, 2018 (required annually in accordance with the
underlying state statutes),
The April 1, 2016 memorandum included a significant discussion of the status of the
planned radio projects requiring capital funds and the Radio Commimication Fund's
ability to cover those project costs now and into the future. The conclusions in that
memorandum generally remain unchanged, but will be addressed more fully in the
coming capital need and funding memorandum several weeks hence,
The Board of Commissioners acted on the recommendations in the April 1, 2016
memorandum and set the FY-2017 operating surcharge beginning July 1, 2016 at $.28
(the same rate as used in the FY-2016 period).
At present, the radio communication system has 55 towers (County owned, locally owned
by governmental units within the County or leased space from private vendors), 1,861
mobile radios and 4,343 portable radios in use. Radio consoles are located in. 18 public
safety dispatch centers (PSAPs) throughout Oakland County. There are 15 hospital
emergency rooms using the County's radio communication system and a number of
private ambulance companies as well. Non-public safety units use the County's radio
system for a monthly operating fee.
Comments on the status of significant planned projects and preliminary funding follow:
• Radio Consoles: the radio console replacement has the highest priority as the
consoles are no longer being sold. and the County is relying on the parts it can
scavenge in the market or those that can be obtained as the PSAPs consolidate
with one another. The equipment is a critical component of communications and
is aging rapidly. Unfortunately, the decision relating to the consoles is entirely
dependent upon the direction of the replacement of the mobiles, portables and
radio frequency infrastructure (e.g. tower equipment) still pending.
Replacement is planned for late FY-2017 or early FY-2018. An estimated east
for the radio console replacements could approach $6 million to $8 million,
depending upon the number of dispatch_ centers remaining in Oakland County at
the time of replacement (shortly to be 18 in the County). The console cost has
been reviewed by an outside consultant assisting in the evaluation of the
alternatives under consideration relating to the equipment replacement noted
above.
At December 31, 2016 the unreserved equity-designated for projects includes
$6.25 million set aside to address the console replacement. As discussed
subsequently, given that the F,SINet project is now in its deployment phase and
will be completed this summer, it is unlikely that any immediate consolidation of
dispatch centers will occur to mitigate the console needs.
2
• Mobile / Portable Radios and Tower Equipment: County administration was
notified in 2013 that the radio cornmtmications vendor will no longer support the
current version of the OpenSky mobile and portable radios and underlying
infrastructure after calendar year 2017. While the County administration
received notification that the current radios will be end-of-life, history would
suggest that few governmental units (unlike the County) set money aside for
replacement equipment. As such, as the end-of-life date closes in, other
governments seek federal / state assistance and/or bring pressure on the vendor to
delay the actual end-of-life date until their funding issues can be resolved.
While the County cannot be assured of a delay in the future, the County's
maintenance efforts, ability to use the equipment beyond 2017 and the potential
delay of the actual end-of-life of the equipment itself suggests that the actual
replacement period could be delayed, from 2018 and beyond, particularly for the
mobile units which have shown virtually no failure rates (absent vehicle
accidents) over the past decade. While the vendor considers the equipment at that
point to be 'end-of-life', the equipment is still functional and could be used for
several years thereafter on the current platform, as well as the tower equipment.
While the mobile units will need replacement, the replacement may be able to be
delayed longer than originally anticipated.
A contractor was secured to assess the alternative radio systems available in the
market today given the sizable investment facing the County in the replacement of
the consoles, mobile / portable radios, tower equipment, and other related
equipment. A draft of the contractor's report has been received and provides
guidance as to whether the County remains with the Harris OpenSky, Motorola
P25 Phase 1 (State is on Phase I) or Phase II (-based, TDMA, two-track
system), or considers other potential radio systems on the market today.
The draft consultant's report is being reviewed, both programmatically and
financially, and will be a significant component to the discussions related to the
fees considered for July 1, 2017 to June 30, 2018. However, out the abundance of
caution, the consultant has used list prices (County gets discounts), has not
identified thnhag for replacement, includes mobile replacement currently which
could be delayed and used a 7-year life expectancy (by the time the current
equipment is replaced it will be more than a dozen years in use) and other matters,
the Radio Shop and DMB are taking time to consider these matters for budget
purposes and timing of replacement.
Then consultant did note, however, that the County is not on the current software
version of the Harris equipment and has not been for several years. Should the
County be required to Upgrade the software, the complexity of doing so it
substantial given the radio system must be on line 24 x 7. The upgrade may
require portions of the radio system's functionality to be taken off-line during this
upgrade process. A cut-over plan for that effort would have to be carefully
planned and executed; such plan has yet to be developed.
.4‘
3
The County has restricted equity relating to depreciation in the net amount of
$10,233,584 as of December 31, 2016. Additional funds of perhaps $10.0 million
to $15.0 million over the next 3 to 4 years may be required to ensure that there are
sufficient available resources to fully replace the mobile and portable radios and
tower equipment beginning in FY-2018 with an anticipated completion projected
circa FY-2021.
At present and discussed subsequently, the operating surcharge may be able to
fund the replacement of these radios or, alternatively, bonding may be required
(as outlined in the April 1, 2016 memorandum). The determination of the
alternative funding course for this project will be made in connection with the
financial analysis conducted in spring 2017 for the 2018 operating surcharge rate
being charged starting July 1, 2017. The financial analysis of the consultant's
report is pending and will be necessary to complete the fee analysis as well.
• NG-911 Project Needs (ESItiet): in FY-2010 the infrastructure equipment was
nearing obsolescence and parts were becoming increasingly scarce from the
vendor or other sources; such equipment was replaced with digital equipment at
that time. Unlike older telephony-based call-taking equipment, new NG-911
systems are IP-based software-driven systems and can be expected to have a
shorter useful life than earlier systems before requiring a technology refresh (an
issue of note when considering the replacement of this equipment and the
assembling the funding to do so in the next half dozen years).
The County is installing a local NG-911 ESInet (Emergency Services IF network)
through a leased commercial network, as the present 911 network provider
gradually migrates away from the legacy copper-wire trunks installed in 1963.
The PFN network has been installed and is being reviewed and tested by the
County's Information Technology network team. The first PSAP to be using the
system will be the City of Southfield with a `go-live' date of roughly February
2017. Novi, Royal Oak and Ferndale are being trained in late February with a 'go
live' date in early March. Other PSAPs will follow shortly thereafter with a
completion date of the summer of 2017.
As described in the April 1, 2016 memorandum, PFN has proposed the significant
cost recovery from the State and Technical Surcharge pool. At this time, the
actual cost of the ESInet cannot be determined until such time as that cost
recovery is approved by the Michigan Public Services Commission, in part or in
whole, or denied. If approved by the State, a separate technical surcharge outside
the Board of Commissioner approval would be required of the Michigan Public
Services Commission That would fund this project, in whole or part. The County
is striving to complete the project in order to submit completed cost information
in the County's build-out within the State's current fiscal year.
4
However, given the underlying State and Technical Surcharge pool is presently
fiscally stressed, to do so will require the State Legislature to increase the current
$.19 per month per device State surcharge to the maximum amount of $.25 per
month per device Or consider an alternative fimcling source (e.g. prepaid telephone
card fees which have been assessed but the State has not actively pursued in their
collection of local sales points). The State Legislature did not address the
increase in fees in the 'lame duck' session and closed the session without acting
on this matter.
At December 31, 2016, $2,874,961 has been restricted for the ESinet project with
$1,322,284 having been spent to date (net - $1,552,677 available).
• WAN Upgrade — equipment relating to the COunty's Wide Area Network
applicable to radio operations will be necessary and equity has been restricted of
$350,000 at December 31, 2016.
Comments concerning the financial information follow:
o The Fund has approximately $21.0 million in cash, investments and receivables,
net of liabilities and excluding prepaid expenses and inventories at December 31,
2016 ($20.7 million at September 30, 2016).
• The ending equity has been classified as 'unrestricted — designated for projects' in
the amount of $20,386,262 as of December 31, 2016 with the following
components:
• Funding of depreciation: $12,233,584 has been set aside currently in equity to
be used towards mobile and portable radio and tower equipment replacement.
• Console replacement - $6,250,000. for console equipment replacement.
• ESINet equipment and related costs - $1,552,676 ($2,874,961, net of expenses
to date of $1,322,284).
• WAN upgrade - $350,000.
The City of Southfield has requested that the County assist in acquiring its portable and
mobile radios (at an estimated cost of $800,000). Southfield did not join the radio
communications system at the time offered in the early 2000s and is not presently using
the Hards radios today. Converting Southfield to the Harris radio system has some
serious barriers not least of which is seeming adequate, interferenee-free frequencies to
accommodate them and replacing a fairly extensive local hi-directional radio system in
many of the high-rise units within the City. The City's residents have been funding the
operating surcharge since its inception. The final resolution of this matter is pending.
Should there be any questions concerning the above, please contact me.
5
Radio Communications Fund
Statement of Net Position
December 31, 2016
EXHIBIT A
ASSETS
Current assets:
Cash and cash equivalents
Accrued interest on investment
Due from other governments
Accounts receivable
Inventories
Prepaid items
Total current assets
Non-current assets:
Capital projects in progress
Tower rights
Equipment
Structures
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total assets
LIABILITIES
Current liabilities:
Vouchers payable
Duo to municipalities
Accounts payable
Unearned revenue
Total current liabilities
Total liabilities
NET POSITION
Net Investment in capital assets
Unrestricted-designated for projects
Unrestricted
Total net position
$ 19,843,477.11
114,086.66
22,082.28
1,357,778.68
301,887.05
181,772.01
21,821,083.79
1,681,482.23
8,585,770.20
27,708,260.04
12,831,806.50
(34,294,433.26)
16,512,885.72
38,333,969.51
52,067.33
9,917.86
83,377.71
231,550,90
376,913.80
376,913.80
16,512,885.72
20,386,261.80
1,057,908.19
$ 37,957,055.71
$ 1,633,460.71
77,183.64
41,464.60
72,311.78
16,960.62
7,669.94
40,133.71
5,192.20
1,914,567.09
86.32% $
4.03%
3.22%
3.78%
0.80%
0.40%
2,10%
0,27%
100.00%
(14,539.29)
2,183,64
3,957.50
17,311.78
710,52
2,660.34
40,123.71
6,192.20
55,620.09
146,703.04 7.47% 21,492.50
EXHIBIT A-1.
County of Oakland
Radio Communications Fund
Statement of Revenues, Expenses, and Changes in Net Position
For the Three‘IVionths Ended December 31, 2016
2017
Amended Percent of
Budget Revenue Allotment
Year to Date
Favorable
Percent of (Unfavorable) •
Actual Revenue Variance
Operating revenues:
911 Surcharge - Radio system
Antenna site management
Leased equipment
Parts and accessories
Outside agencies ,
Productive labor
Prior years adjustments
Refund of prior years expenditure
Total operating revenue:
Operating expenses;
Salaries
$ 6,800,000.00 46,78% $ 1,660,00600
300,000.00 4.03% 75,000.00
230,788.00 3.10% 57,697.00
220,000.00 2.96% 66,000,00
66,000,03 0.87% 14,260,00
20,000.60 0.27% 5,000.00
- 0,00% -
- rum% -
7,435,788.00 100.00% 1,858,947.00
076,142.00 9.06% 160,205.50
Fringe benefits 387,813.00 5.22% 98,053.26 74,663.77 3,89% 22,399.48
0.00%
6.36%
0,00%
1.34%
4.37%
0.11%
2.74%
0.01%
0.01%
0,05%
0,01%
0.74%
0.01%
0.40%
18.14%
0.54%
4.43%
1.01%
0.30%
0.00%
49.59%
Contractual services:
Adjustment of prior year's revenue
Communications
Contracted services
Electrical service
Equipment maintenance
Freight and express
Indirect costs
Laundry and cleaning
Membership, dues
Personal mileage
Printing
Professicinal services
RebIllable services
Software rental lease purchase
Software support maintenance
Special projects
Tower charges
Training
Travel and conference
Workshops and meeting
Total contractual services
400,000.00
100,000.00
325,000.00
8,550.00
204,000.00
700.00
1,000.00
3,600,00
500.00
660,000.50
600.00
20,000.00
1,348,588.00
40,000.00
477,631.00
75,000.00
22,500.00
100.00
3,587,719.00
100,000.00
25,000.00
81,240.00
2,126.00
51,000.00
175.40
260.00
876.00
125.00
162,5011,00
126.00
7,500.00
337,147.00
10,000.00
110,457.75
18,750.00
5,624.00
28.00
921,020,76
34,460,90 1.80%
119,254.11 623%
000,00 0.06%
15,555.46 0.81%
44,723,47 2.34%
739,80 0.04%
55,137.75 2.08%
133.96 0.01%
0.04%
1,023.76 0,06%
0.00%
8,413.64 0.18%
549.90 0.03%
0,00%
33,468.00 1.76%
'0.00%
103,051.02 5.42%
* 0.00%
200.00 0.01%
0.00%
413,460.75 21.60%
(34,459.90)
(19,254.11)
(000,00)
9,444.64
38,628.63
1,805.20
(4,137.75)
41.05
260.00
(148.75)
125,00
159,088.36
(444.00)
7,500.00
303,479.00
10,000.00
16,605.73
18,760.00
5,425.00
25.00
508,489.00
Commodities:
Dry goods and clothing
Expendable equipment
Metered postage
Office supplies
Parts and aessories
Shop supplies
Small tools
Total commodities
.1,900.00
100,786.00
126.00
5,000.00
200,000.00
12,000.00
6,000.00
824,814.00
0.03%
1.36%
0.00%
0.07%
2.69%
0.16%
0.07%
4.37%
475.00
26,107.00
31.50
1,250.00
60,000.00
3,000.00
1,250.00
81,203.60
969,00
408.90
474.05
50,547.55
3,823.20
632.51
67,246.21
0,05%
0.04%
0.00%
0.02%
3.18%
0.20%
0.03%
3.61%
(404.00)
24,388.10
31.50
775.96
(10,547.56)
(823.20)
617.49
13,958,29
76.66% 329,850.13
Internet services:
Building space cost allocation
Irdo Tech CLEWS
Info Tech Development
Info Tech Operations'
Info Tech Managed Print Services
Insurance Fund
Maintenance Department Charges
Motor Pool fuel charges
Motor Pool
Telephone Communications
Total internal services
Total operating expense •
Operating Income (loss)
•
34,377.00
900,000.00
220,938.00
1,204.00
17,400.00
36,000.00
10,000.00
37,500.00
30,6'15,00
1,287,032,00
13,542,806.00
(6107,108.00)
0.46%
12.10%
um%
2.97%
0.02%
0.24%
0.47%
0,13%
0.50%
0.41%
17.31%
182.13%
-62.13%
8,594.25
225,00000
66,234.50
201.60
4,374.00
8,750,00
2,500.00
0,375.00
7,028.76
321,764,00
3,305,724.00
(1,528,777.00)
1,455,743.67
8,694,28
70,434.00
166.50
82,893.86
279.41
2,682.83
1,450.68
8,934.84
6,098.45
182,447.72
2,360,244.32
(435,677.23)
0.45%
3.68%
0.01%
4.33%
0.01%
0.00%
0.14%
0.08%
0.47%
0.37%
9.53%
122.76%
-22,78%
164,568.00
(146,50)
(27,569,35)
22.09
4,374.00
6,067.17
1,040.42
436,16
030.30
139,310.28
1,036,479.68
1,091,099.77
Depreciation:
Equipment, structures and tower rights 7,182,37,6.00 95.59% 1,796,694.00
County of Oakland
Radio Communications Fund
Statement of Revenues, Expenses, and Changes in Net Position
For the Three Months Ended December 31, 2016
2017
Year to Date
Favorable
Amended
13udget
Percent of
Revenue Allotment
Percent of (Unfavorable)
Actual Revenue Variance
Non-operating revenues (expenses):
Planned use of fund balance
Income from investments
Transfer to muntolpalitles
Total non-operating revenues (expenses)
Income (loss) before transfer
Transfers in
Transfers out
Change itt net position
Net Position - beWnning
Net Position - ending
6,247,508,00
180,000,00
60,000.00
6,477,608.00
1370,400.00
16,600,00
(286,000.00)
$ 100,000.00
84.02%
2.42%
0.67%
87.11%
4.98%
0,21%
-3.86%
1.84% $
1,561,877,00
40,000.00
12,500.00
1,610,377.00
92,600.00
3,900.00
(71,500.00)
25,000.00
0.00% (1,061,877.00)
62,903.07 2.76% 7,903.37
0.00% 12,600.00
52,903,07 2.76% (1,666,473.93)
(382,774.16) 40.99% (475,374.16)
16,600,00 0,81% 11,700.00
(71,500,00) -3.73%
(438,674.16) -22.91% $ (463,674,16)
38,393,729.87
$ 37,957,065.71
EXIJHBIT A-2
kADIO DOivIMUNicATIONS FUND 63600
OPEAting Transfers Fiscal Year. 2d47
Description
Transfer from the General Fund, Sheriffs Dept to Radio Communications
Fund per Res. 16-264 for Sheriffs contract with Lyon Township
Transfer from the General Fund, Sheriffs Dept. to Radio Communications
Fund per Res. 16-339 for Sheriff's contract with Commerce Township
Amount
7,800.00
7,800.00
Total $ 15,600.00
EXINIBilT A-3
RADIO C01110111UN1CATIONS - FUND 63600
Operating Transfers Out - Fiscal Year 2017
Description
Budgeted Operating Transfer from Radio fund to Info Tech fund for
1st quarter FY 2017 OakNet operation costs.
Budgeted Operating Transfer from Radio Communications fund to
Info Tech fund for 1st quarter FY 2017 Help Desk support
Amount
59,000.00
12,500.00
Total $ 71,500.00
1EXHINT A-4
RADIO COMMUNICATIONS FUND 53600
Fiscal Year 2017 1st Quarter
grief Explanation of "Acivals"
Following are some comments regarding Radio Communications innd's 1st quarter Fiscal Year
2017 financial statements.
STATEMENT OF NET POSITION
• Radio Cormnimications fund reports all monetary assets as Cash. Available cash is invested
and managed by the Treasurer as a pool. The Treasurer's Office allocates interest earned to
the participating funds on a monthly basis.
co Due from other governments is the amount due from municipalities for leased equipment.
• Accounts receivable includes $1,285,000 for accrued E-911 operational surcharge revenue
which is paid to the County quarterly. The remaining balance is prepaid rent and rent due
from antenna site co-locators, sin 01iniS due from non-governmental external MOTs for leased
equipment and anticipated amounts due for rebanding efforts.
o Inventories are parts and accessories used to maintain customer equipment and the radio
system; including equipment purchased for the completion of the radio system.
O Prepaid items are rent paid in advance per the lease agreements for co-location of radio
system equipment and advanced maintenance contract payments.
O The 821 MHz radio system was fully operational on July 1, 2010 and all related asset
expenditures for equipment and radio tower &tinctures were originally capitalized with a ten-
year life. The useful-lives for all portable and mobile radios were updated in Fiscal Year
2014 to end in 2017, when this equipment will no longer be supported.
a Tower rights axe the Connty's rights to co-locate equipment on towers constructed by the
Radio fund on land owned by various municipalities. Ownership of the towers was
transferred to the min :cipalities upon completion of construction in 2010 in exchange for
ongoing rights to place radio equipment on those towers.
O Vouchers payable and Accounts payable are accrued 1st quarter expenses and prior year's
over-payment by E911 surcharge filers.
O Due to :municipalities iS the City of Novi's share of lease payments for co-locators on Novi's
antenna site as set forth in the Board of Commissioners Resolution 98-291.
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
Revenues:
O The Board of Commissioners Resolution 16-091 maintained the E-911 surcharge rate of
$0.28 for the period covering July 1, 2016 through June 30, 2017. The revenue reported for
this quarter is based upon current estimated surcharge filings.
O Antenna site management revenue is for telecommunications companies that have contracted
with Oakland County to place equipment on county-owned towers. ▪ The favorable variance for Parts and A.ccessories indicates higher than anticipated radio
equipment repair requests.
• Productive labor revenue is higher than anticipated due to increased demand for service and
reimbursement from CLEMIS for work performed, by Radio technical staff on CLEMIS work
orders.
• Prior year's adjustment is related to transactions that should have been recorded in FY 2016.
Prepared by: Y. Tipton —Fiscal Services 1
RADIO COMMUNICATIONS FUND 53600
Fiscal Year 2017 —1st Quarter
4ef Explanation of "Actual's"
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION (Cont' d)
O Refund of a prior year's expenditure is for communications expense credits received that
relate to FY 2016.
Expenses:
O Salary and Fringe Benefit variances are favorable due to lower than anticipated overtime, on-
call hours andirn-filled positions.
• Adjustment of prior year's revenue is to adjust the anticipated rebanding revenue previously
recognized.
o Communications cost is unfavorable due to higher than anticipated cell tower connectivity
costs.
• Contracted services are for leased space at the Oakland County International Airport.
• Equipment maintenance is lower than expected due to the timing of services.
O Indirect cost expense is based on the County's Indirect Cost allocation. It includes Human
Resources, Payroll, Treasurer, Accounting, and Budgeting and Administrative services.
• Professional services expense is under budget due to the timing of the ER/let project.
o Rebillable services are payments for parts and labor to be invoiced upon work completion.
• Software rental, lease purchase and software support rani -ntenance is favorable due to the
timing of the ESInet project.
O Special projects expense is favorable due to the timing of projects. The budget for this line
item is for costs associated with tower maintenance such as painting.
o Tower charges represent payments for tower rental agreements.
• Overall commodities are under budget due to the timing of purchases.
O Internal service expense is favorable (overall) based on actual usage that falls below
expectations.
Non-Operating Revenues and Expenses;
O Income from investments represents the portion of income from cash managed and allocated
by the Treasurer's Office.
O Transfers to municipalities are for anticipated PSAP cessation settlement payments.
o Transfers In includes: $7,800 approved. on. Resolution 16-264 for the Sheriffs contract with
Lyon Township and $7,800 approved on Resolution 16-339 for the Sheriff's contract with
Commerce Township.
• Transfers Out includes $12,500 for Help Desk support and $59,000 for OakNet operation
costs; both provided by Information Technology.
Prepared by: Y. Tipton— Fiscal Services 2
Resolution #17087 April 26, 2017
Moved by Middleton supported by Dwyer the resolution be adopted,
Discussion followed.
AYES: Dwyer, Fleming, Gershenson, Hoffman, Jackson, Kochenderfer, KowaII, Long,
McGillivray, Middleton, Quarles, Spisz, Taub, Tietz, Weipert, Zack, Berman, 'Bowman,
Crawford. (19)
A sufficient majority having voted in favor, the resolution was adopted.
I HERESY IAPPAOVE IRIS RESOLUTION
CHIEF DEPUTY COUNIN EXECUTIVE
ACTING PURSUANT TO MCL 45.559A (7)
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, Lisa Brown, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true and
accurate copy of a resolution adopted by the Oakland County Board of Commissioners on April 26, 2017,
with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at
Pontiac, Michigan this 26 th day of April, 2017.
,'&‘-1/2 — —
Lisa Brown, Oakland County