Monticello council approves contracts for new FiberNet managers

The Monticello City Council has entered into contracts with Brian Estrem and Dan Olsen for general management and technical services supporting FiberNet Monticello, the city’s broadband initiative.

The agreements unanimously approved Monday extend to Dec. 31, 2014.

According to a background memo prepared by City Administrator Jeff O’Neill, Brian Estrem’s contract calls for a monthly fee of $11,500 through 2014 which is an all-inclusive fee.

This amount is consistent with the proposal presented at a special city council meeting March 10.

“Brian’s goal is to become a full-time employee of the city at the expiration of the contract,” O’Neill stated in his memo.

Under his contract, Estrem would be operating on a trial basis. Near the end of the trial period, the city could decide whether or not to bring Estrem as a full-time employee or go out on the market for candidates.

Future salary and benefits would be negotiated in conjunction with bringing Estrem on full time, O’Neill stated.

The contract with Olsen features payment of an hourly rate for services rendered.

Hours spent in Monticello would be at a rate of $90 per hour. The fees charged by Olsen do not include travel time, O’Neill said. Hours on the project from a remote location would be compensated at a rate of $65 per hour.”Please note that the total hours on the project are hard to project at this time,” O’Neill wrote.

According to the proposal submitted by Estrem and Olsen, technical support services are estimated at $72,000 for year one and will be spent on subject expert fees or to Olsen depending on the needs as they arise.

O’Neill also stated: “It should also be noted that according to the proposal, technical assistance should drop off in year two and three. Dan’s goal is to assist with stabilizing the platform along with achieving potential cost savings over time for WindomNet and FiberNet via the Muni Alliance concept.”

Due to their experience operating in a municipal environment utilizing a similar technology platform and due to the relationships they have developed in the Minnesota telecommunication setting, it is possible that significant savings and operational improvements can be realized over time via this team, O’Neill told the city council.

When calculated on a 12-month basis, the total net reduction in expense amounts to $162,000. This amount accounts for the shifting of the billing cost “in house” and also includes a projected average technology support cost of $72,000. O’Neill said the savings will be greater if the $72,000 is not all spent.

Councilmember Glen Posusta said one of the reasons he pulled the item from the council’s Monday night consent agenda was an email that he had received from the Monticello Times that posed a number of questions associated with the proposed change in FiberNet management.

Specifically, the newspaper wanted to know when Estrem would be officially taking over, since a publicly distributed city meeting schedule for the week of March 24 to March 30 showed someone with the initials “ES” running the full FiberNet Monticllo staff meeting from 12:30 to 1:30 p.m. Tuesday, March 25.

City Administrator Jeff O’Neill, who was out of the office this week, provided this response via email Monday night before the start of the council meeting: “Dan Olsen and Brian Estrem were authorized by myself, City Attorney Joel Jamnik and a negotiations team of Mayor Clint Herbst and Councilmember Lloyd Hilgart to work as interim managers when [former FiberNet Monticello General Manager] Mark Pultusker quit [on Feb. 21]. We needed immediate support and they were available,” O’Neill stated.

“I thought this was going to be a six-month deal,” Posusta asked during discussion. “Now we are talking about an eight-month deal, and no one ever mentioned there was going to be some type of a bonus system in the contract. That kind of shocked and astonished me. How did you come up with that?”

Herbst said at the six-month point in the contract, the city would determine if it was happy with the services being provided.

“I think we’ve found the right people, but sometimes, that’s not always the right case,” Herbst said. “And it takes time to make a transition.”

Posusta said the reason he was asking the question dealt with the fact that Estrem stated his goal was to become a city of Monticello employee. “How do we give a bonus to a city employee, and if we do that, then what’s to prevent [someline like] our liquor store manager from becoming concerned?”

Herbst said the FiberNet management contract represented a much more intense proposition. “They weave and bob and deal with all the issues that occur day in and day out,” Herbst said. “There’s a lot of issues that come up.”

Posusta referenced a FiberNet Monticello report prepared by consultant Doug Dawson indicated that if hired, Estrem would enter city employment at the top of his salary range.

Herbst replied: “I think what we’re looking at now [with FiberNet], it’s a huge difference because of the knowledge involved. We are bringing on two people, not one,” he said.

Councilmember Tom Perrault was concerned about a bonus structure if Estrem eventually became a city employee.

Councilmember Brian Stumpf replied: “It’s a negotiable item in the contract. It’s not something that’s set in stone.”

Human Resources Manager Tracy Ergen provided the council with background on how pay equity would work in such a situation. “[City Administrator] Jeff O’Neill and I haven’t had any in-depth conversations about what would happen if Brian became a full-time city employee,” she said.

“We do realize with that potential salary range, it may be outside of what we can do with pay equity. It doesn’t mean we can’t do it, it’s just something that we need to look at closely as well as any bonus. We still have a lot of research to do on this,” she told the city council.

Herbst commended city staff, also mentioning Finance Director Wayne Oberg, for their efforts in working with Estrem and Olsen on short notice when they were asked to help operate the city-ownewd broadband system after former FiberNet Monticello General Manager Mark Pultusker resigned Friday, Feb. 21.

“It’s not easy to walk in and figure things out when you don’t know where everything is,” Herbst said. Posusta said he wasn’t comfortable voting on a motion with a bonus. Herbst suggested Posusta offer a motion to exclude.

“That’s a negotiable thing,” Herbst said. “If you want to make a motion, just say any future bonuses will be negotiated.” Posusta wasn’t sure he wanted to talk about bonuses at all. “Then just take it out of there,” Herbst replied.

Perrault motioned to approve the contracts, but asked the 2015 compensation budget for Estrem and Olsen be excluded and moved to negotiable.

Stumpf seconded Perrault’s motion. Herbst and Posusta concurred, and on a unanimous vote (Councilmember Lloyd Hilgart was absent), Estrem and Olsen’s contracts were approved.

Contact Tim Hennagir at tim.hennagir@ecm-inc.com

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