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Audit: Mediacom owes city

ALBANY, Ga. -- City officials and authorities with Mediacom are working to resolve what the city says is a $139,000 bill stemming from what a city auditor says are underpayments of the corporation's franchise fees, interest and penalties.

The Herald obtained documents Friday from the city of Albany in response to a request using Georgia's Open Records Act related to an audit initially undertaken by the city in the fall of 2009.

In a letter dated Dec. 24, 2009, Scott Lewis, a CPA for Lewis & Associates in Cooper, Fla., wrote that after a review of Mediacom's records for the four-year period beginning Jan. 1, 2004 and ending Dec. 31, 2008, his company had determined that Mediacom had underpaid the city $105,287 in franchise fees.

Lewis said his company had further calculated that, according to the franchise agreement, Mediacom was also liable for $46,630 in interest, bringing the total due the city at that time to $151,916.

After sharing the city's findings with Mediacom General Manager Gary Crosby, the two began reviewing the disputed figures, whittling down the amount to $139,922, according to a letter from Lewis to city Finance Director Krista Newton dated Oct. 13.

Under a franchise agreement approved by the Albany City Commission on Nov. 9, 2001, Mediacom is obligated to pay an agreed-upon amount quarterly to the city of Albany. The audit states that Mediacom has made its quarterly payments but has underpaid based on the requirements of the franchise agreement.

The largest single part of the underpayment is actually the interest Lewis claims is owed on the amount of money that was underpaid. Per the franchise agreement, the city can charge 1 percent interest, compounded monthly, on unpaid franchise fees. This amount through Oct. 31, 2010, is $51,220, according to the auditor.

The rest of the underpayments appear to come from Mediacom not including what Lewis contends to be applicable revenue from advertising, miscoding of subscriber services and revenue from a shopping channel.

According to the documents, Mediacom reported $77.4 million in subscriber revenues between 2004 and 2008.

According to the franchise agreement adopted by the commission in 2001, the city is entitled to 5 percent of the annual gross revenues generated by Mediacom.

Newton said Friday that the city is working with Mediacom to settle the debt.

"Like everyone else, they're having some staffing issues and need a little more time to go over the documents and respond," Newton said. "We're confident that we'll get our money. They're good for it."

Attempts to reach Mediacom officials for comment Friday were unsuccessful.

The results of the audit come as the city is weighing granting a second franchise to L2Networks Inc., a Florida-based telecommunications company that is trying to get permission to connect to fiber lines laid by the Albany Water, Gas & Light Commission to provide high-speed Internet access, television and phone service.

City Attorney Nathan Davis said Friday the audit was started long before L2Networks approached the city seeking the agreement.