Historical Resolution Tracking Feature » Treatment of New gTLD Historical Costs
Important note: The explanatory text provided through this database (including the summary, implementation actions, identification of related resolutions, and additional information) is an interpretation or an explanation that has no official authority and does not represent the purpose behind the Board actions, nor does any explanations or interpretations modify or override the Resolutions themselves. Resolutions can only be modified through further act of the ICANN Board.
Treatment of New gTLD Historical Costs
Board authorizes the President and CEO to take all actions necessary to transfer from ICANN’s operating fund to ICANN’s Reserve Fund all amounts, whether already paid or to be repaid in the future, that constitute Historical Development Costs.
Whereas, ICANN incurred costs over several years to design and prepare the launch of the New gTLD Program.
Whereas, the costs incurred from October 2007 (the date of the GNSO recommendation on the New gTLD Program) to the launch of the program (“Historical Development Costs”) are to be repaid to ICANN from a portion of the New gTLD Program application fees.
Whereas, the Historical Development Costs are charged to the Program progressively as the evaluation work advances and the fees become non-refundable, which began in July 2012.
Whereas, the Board Finance Committee has recommended that the amount of Historical Development Costs repaid to ICANN’s operating fund from the New gTLD Program be transferred to the Reserve Fund.
Resolved (2013.09.28.11), the Board authorizes the President and CEO, or his designee(s), to take all actions necessary to transfer, when and as appropriate, from ICANN’s operating fund to ICANN’s Reserve Fund all amounts, whether already paid or to be repaid in the future, that constitute Historical Development Costs.
ICANN has incurred costs to define, design and prepare the launch of the New gTLD Program throughout the years preceding the launch of the Program in January 2012 (“Historical Development Costs”). (See Appendix 1.)
As part of the design of the Program, the Historical Development Costs, were advanced by ICANN’s operating fund and were to be recouped through a portion of the application fee collected from applicants in the New gTLD Program. In order to ensure sufficient funds were received, the application fee included $25,000 per application to allow for the repayment of the Historical Development Costs to ICANN. The $25,000 amount resulted from an historical estimation of the total development costs of the Program divided by 500 applications. It was also determined that the costs incurred by ICANN that would be repaid through a portion of the application fee would be those incurred between October 2007, the approximate date of the GNSO policy recommendations on new gTLDs, and the launch of the Program in January 2012.
ICANN staff has estimated the Historical Development Costs to be approximately $32.5 million. This amount has been communicated as part of the FY13 Budget presentation in June 2012. Its detailed documentation is currently being finalized for auditing and communication to the community.
The amount of Historical Development Costs covered through the $25,000 collected from actual applications received amounts to approximately $48 million (25k * 1930 applications), before the impact of refunds. The difference between $48 million (less refunds) and the approximately $32.5 million contributes to the net remaining balance of the Program.
The amount of repayment of the Historical Development Costs is being charged to the New gTLD Program, starting in July 2012, as the evaluation work advances and application fees become non-refundable.
Approximately $17 million of costs charged to the New gTLD Program from July 2012 through June 2013, with a corresponding revenue to ICANN, was transferred into ICANN’s operating account in August 2013.
Although it has always been the intention that the funds resulting from the repayment of the Historical Development Costs be transferred into ICANN’s Reserve Fund, this intention was never formalized in a Board resolution. (See Appendix 1.)
Following the imminent initial transfer to the Reserve Fund of the already recovered Historical Development Costs now sitting in ICANN’s operating account, for practical purposes ICANN intends to make quarterly transfers to the Reserve Fund as amounts are charged to the New gTLD Program account.
This resolution will have a positive impact in that it provides clarity on the management of ICANN’s resources. This will have a fiscal impact on ICANN and the community as intended. This should not have any impact on the security, stability and resiliency of the domain name system (DNS).
This is an Organizational Administrative Function that does not need public comment at this stage, but the nature and method of handling the Historical Development Costs and the fact that they be transferred to the Reserve Fund have previously been posted and subject to public comment.