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“Project Walleye” to evaluate Crosslake Communication

Web posted July 8, 2014
By Kate Perkins, Northland Press Correspondent

Charlesmead Advisors visited Crosslake Communications Tuesday, July 1, according to Paul Hoge, general manager of the city’s telephone company. Charlesmead, based out of Baltimore, Maryland, will be evaluating the company in what it’s calling “Project Walleye,” as directed by the Crosslake City Council.

The council voted in May to hire Charlesmead for $40,000 to evaluate the telephone company. According to Project Walleye organizational materials, Charlesmead requested a wide variety of documents from Crosslake Communications, including information on its financial statements from 2010 to present, historical operating metrics, product offerings and pricing, the company’s management structure and staffing, investments and lists of real estate and towers the company owns.

The same documents show that Charlesmead planned to discuss the company’s history, structure and capitalization, business lines and service mix, network, strategic planning, employees, financial, legal, and regulatory.

Hoge said that Charlesmead stayed the day July 1 and then left to go back to Baltimore. He said Charlesmead could be back for a visit, though Hoge wasn’t sure, and that they will be in contact by phone.

At its monthly meeting Wednesday, July 2, the Crosslake Economic Development Authority (EDA) discussed Crosslake Communications. The EDA has a revolving loan fund, sponsored by the USDA, that’s attached to Crosslake Communications Company.

Patty Norgaard, EDA chair, said that it was important for the EDA to stay close with a communications company, so that the city has those products to offer to businesses.

“Communications is a huge part of who we are here and how some of our businesses have developed here,” she said.

One board member asked what would happen to the revolving loan fund, were the city to sell Crosslake Communications. EDA members agreed it would take some research to find out.

Council member Mark Wessels, a member of the EDA, said he does not wish to sell the communications company. He believes that people think he wishes to sell the company because he asked what the company is worth.

“Ever since the first time I uttered ‘What is this thing worth?’ I’ve been attacked. I never ever, ever, ever said sell the telephone company,” Wessels said, later adding, "If it came up for a vote today, ‘Do you want to sell the telephone company?’ no, I don’t want to sell the communications company.”

“We’re more interested in the business model we have. Are we making money? Are we making the right decisions business-wise?” Wessels said.

Mayor Darrell Schneider, also at the EDA meeting, joined the discussion on the communications company.

“We’ve been losing quite a bit of money every year and the city is taking roughly 8 percent of proceeds, and how long can we do that?” Schneider said. He was referring to the practice of the city taking up to 8 percent of Crosslake Communications’ gross revenue to offset the city tax levy.

“Do we have enough money to pay our bonds? This is my concern,” Schneider said. “If you project everything that’s going on, how does it turn out? Unless we look at the whole company, how do we tell?”

“With or without it,” Norgaard said, “we’re still going to need the communications piece to attract businesses.”

In other Crosslake Communications news, the council had planned to hold a special meeting after the resignation of Crosslake Communications Network Engineer Paul Davis, but cancelled that meeting and plans to discuss Crosslake Communications staffing at its next regular meeting, Monday, July 14.

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