HomeMy WebLinkAboutCC AG PKT 2007-10-22 #T
e AGENDA REPORT
DAlE: October 22,2007
TO: Honorable Mayor and Members of the City Council
THRU: David N, Carmany, City Manager
FROM: June Yotsuya, Assistant City Manager
SUBJECT: Cable Franchise Issues
SUMMARY OF REQUEST:
City Council is requested to take several actions in compliance with new state regulations
adopted through Assembly Bill 2987,
DISCUSSION:
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In 2006, the California State Governor signed into law Assembly Bill 2987 , known as the Digital
Infrastructure and Video Competition Act of2006 (DIVCA). The primary purpose ofDIVCA is
to create a ministerial process for the granting of franchises to providers of cable and open video
system services in an effort to foster the rollout oftecbnology, encourage video, voice and
broadband service competition and to expand customer choice.
This new law permanently changes the franchising and regulatory structure for the provision of
cable television and other video services in the State of California. Under DIVCA, video service
franchises are now granted exclusively by the Public Utilities Commission (Commission) rather
than by local franchising entities.
Although the City will no longer be the franchising authority, it will acquire certain rights and
responsibilities under DIVCA with respect to any holder of a state franchise (Holder). DIVCA
provides that these rights and responsibilities must be established by local ordinance before they
become effective and enforceable,
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The key provisions ofDIVCA address franchise fees, permitting of public rights-of-way, PEG
access, customer support and temporary dual franchising regimes. Under DIVCA, local entities
are allowed to assess a 5% franchise fee on Holders, DIVCA establishes a new definition of
gross revenues than what cities have used in the past Only experience will reveal the true fiscal
impact of this change, There is a three-year statute of limitations on cities for collection of any
unpaid or underpaid franchise fees, requiring cities to conduct more frequent audits at the cities'
Agenda Item T
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October 22, 2007
City Council Agenda Report-Cable Franchise Issues
Page 2
expense. Cities will also be responsible for paying the cable operator's audit costs if the audit
reveals no underpayment.
Under DIVCA, with respect to rights-of-way permitting and other public rights-of-way
management activities, Holders must generally be treated in the same manner as telephone
corporations that are certificated by the Commission, Holders are subject to local encroachment
permit requirements when installing, constructing and maintaining facilities in the public rights-
of-way. DIVCA requires that cities act on completed encroachment permit applications within
60 days of filin.,g and provide applicants with an appeal process to the City Council for any
adverse initial 'decisions on their permit applications.
DIVCA allows the City to continue to collect a PEG support fee but will require the City to
reauthorize by ordinance its PEG fee at the expiration and renewal of each Holder's state
franchise, The City's authority over a Holder will be limited to enforcing federal and state
customer service standards, Further, DIVCA requires that the City submit to the State one-half
of any penalties collected for customer service standard violations.
Under DIVCA, a dual system exists which permits the City's current provider to continue to
operate under the City's franchising authority until at least January 2, 2008, while all new
entrants will be able to receive state franchises from the Commission after April 1, 2008, The
City's current cable franchise expires on December 10, 2007. In view of the availability of a
state video franchise under DIVCA to the current provider, Time Warner, it is in the public
interest to preserve the current cable franchise terms until January 2008 or until Time Warner
converts to a new Holder under DIVCA, whichever may occur first.
FINANCIAL IMPACT:
The City's current franchisee and new holders of state franchises will continue to provide
compensation (i.e. franchise fees, funding for PEG access services, etc.) for use of public streets
and rights-of-way. The Public Utilities Commission plans to recover the cost it incurs
administering state video franchises through application fees and a recurring fee to the Holders.
RECOMMENDATION:
Staff recommends that City Council:
1. Approve Resolution Number _ extending the term of the nonexclusive cable
television franchise agreement between the City and Time Warner NY Cable,
LLC, dba Time Warner Cable, to January 2, 2008.
2.
Introduce Ordinance Number . An Ordinance of the City of Seal Beach
Amending City of Seal Beach Municipal Code Title 6-Chapter 6.10 by Adding a
New Section 6,10.085.
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October 22, 2007
City Council Agenda Report-Cable Franchise Issues
Page 3
Submitted by:
tJlloA/~lUl-/
e Y ot Assistant City Manager
NOTED AND APPROVED:
. .
'" -....:-
David~, C~Y, City Manager
Attachment
Resolution Authorizing Extension
Ordinance Amending Municipal Code
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF TIlE CITY OF SEAL
BEACH EXTENDING THE TERM OF THE NONEXCLUSIVE CABLE
TELEVISION FRANCHISE AGREEMENT BETWEEN THE CITY
AND TIME WARNER NY CABLE, LLC, dba TIME WARNER
CABLE, TO JANUARY 2, 2008
THE CITY COUNCIL OF THE CITY OF SEAL BEACH RESOLVES AS FOLLOWS:
Section I. This resolution is adopted in recosnition of the following facts and
circumstances:
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A. Time Wamer NY Cable LLC is a wholly-owned subsidiary ofTime
Wamer Cable (''Time Warner Cable") and is the authorized transferee ofa nonexclusive Coble
Television Franchis. Asreement ("Franchise Agreement'').
B. In accordance with the provisions of the Franchise Agreemen~ the
Franchise Asreement will terminate on December 10, 2007.
C. In view of the availability to Time Warner Cable ofa stale video franchise
under the provisions of the Digital Inftasttucture and Video Competition Act of2006 thol
become effective on Janusry 1, 2007, the City hes dotennined that the public interest will best be
served by extending the term of the Franchise Agreement until such time as a lCOewed Franchise
Agreement becomes effective, or Janusry 2, 200S, whichever may occur first,
Section 2. The Franchise Agreement between the City of Seal Beach and Time
Warner Cable is terminated on such date that a renewed Franchise Agreement becomes effective,
or on Janusry 2, 200g, whichever may occur first, at which time the Franchise Agreement is
terminated in its entirety.
Section 3. The City Couocil's adoption of this resolution will not be deemed to waive
or alter any rights of renewal, whether fonnaI or infonnal, that either party may have under 47
U.S.C. Section 546.
Section 4. The City Clerk is directed to certify to the passage and adoption of this
resolution and to tronsmit a copy of this resolution to the District Manager of Time Warner
Cable.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Seal Beach this
22nd day of October, 2007 by the following vote:
AYES: Council Members
NOES: Council Members
ABSENT: Council Members
ABSTAIN: Council Members
Mayor
ATIEST:
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF SEAL BEACH )
I, Linda Devine, City Clerk of the City of Seal Beach, California, do hereby certify that the
foregoing Resolution is the original copy ofReoolution Number _ on file in the office of the
City Clerk, passed, approved, and adopted by the City Council of the City of Seal Beach at a
meeting thereof held on the 22nd day of October . 2007.
City Clerk
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ORDINANCE NO.
AN ORDINANCE OF TIn! CITY OF SEAL BEACH AMENDING
CHAPTER 6.10 OF TITLE 6 OF TIn! SEAL BEACH MUNICIPAL CODE
BY ADDING A NEW SECTION 6.10.085
TIn! CITY COUNCil. OF TIn! CITY OF SEAL BEACH DOES ORDAIN AS
FOLLOWS:
Section 1 Chapter 6.10 of TItle 6 of the Seal Beach Municipal Code, which is titled
"Cable, Video and Telecommunications," is amended by adding a new Section 6.10.085 to read
as follows:
6 10 OS5. Snecial Provisions Aonlicoble to Holders
of State Video Fronchis..
A. Fee for Su'DDOrt of PEG AcceBR Facilities and Activities.
I. The City Council has c1etennined that the public interest will best be served by
imposing, to the extent authorized by applicoble law, comparable financial obligations upon
similarly-situated multichannel video programming providers that are franchised to provide
video services within the City. Consistent with the City's policy of requiring franchisees to
provide financial support for public, educational, and governmental (PEG) access channel
faciliti.. and activities, a fee is established as set forth below in subparagrapb (3).
2. On December 31, 2006, the City's incumbent coble operator was contractually
obligated to pay an annual fee ofS75,OOO to support PEG channel facilities and activiti... This
fee is in excess of one petCCIlt (1%) of the coble opemtor's reported gross revenues, and it is
approximalely equivalent to 1.20 % of the reported gross revenu... The term "gross revenues"
shall be defined as set forth in California Public Utilities Code Section 5S60.
.
3. The City hereby establishes and imposes upon any state video ftanchise bolder
opemting in the City a fee, separate from the five pon:ent (5%) franchise fee, to support PEG
ace..s channel faciliti.. and activiti... This seplUllte fee is in the amount of one and twenty-
eight hundredths pon:ent (1.20%) ofa video SeMce provider's gross revenu... The restrictions
and limitations set forth below in subplUllgraph (4) apply to this PEG access support fee.
4. The fee in support of PEG ace..s channel facilities and activities specified above
in subparagrapb (3), as applied to a state video franchise holder, is subject to the followins
provisions:
a. The fee must not exceed three percent (3%) of the bolder's gross revenues,
as the term "gross revenues" is defined in the Public Utilities Code section 5S60.
b. The fee will terminate upon expiration of the state video franchise, but it
may be reauthorized by ordinance adopted by the City Council.
c. If the imposition of this fee, or any component thereof, is cletennined to be
contrary to or inconsistent with the provisions of Public Utilities Code section 5870 by
subsequent legislative action,judicial decision, or administrative interpretation, then an
altemative fee for PEG support obligations may be imposed by ordilllUlCe adopted by the City
Council.
d. Tho fee established by this paragraph (A) shall be remitted quarterly to the
City Treasurer and m1lsl be received not later than 45 clays after the end of the precedins
calendar quarter. The fee payment sbaIl be accompanied by a summsry that describes all sources
of the gross revenues upon which the fee is based, which summary must be verified by a
responsible financial officer or employee of the video service provider.
B. Franchise Fee.
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A state video franchise bolder opemtins in the City shall pay to the City a franchise fee
that is equal to five pon:ent (5%) of the gross revenues of that state video franchise holder. Tho
term "gross revenu.... shall be defined as set forth in Public Utilities Code section 5860.
87296-000111006331.1
Ordinance No.
Page 2
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C.
Audit Authoritv.
Not more than once annually, the City may examine and perfonn an audit of the business
records of a holder of a state video franchise to ensure compliance with allapplicshle stalules
and regulations related to the computation and payment of franchise fees.
D. Customer Service Penalties Under State Video FranchiseR.
I. The holder of a state video franchise shall comply with all applicable state and
federal CUSlOmer service and protection stsndards pertaining to the provision of video service.
2. The City shall monitor a stele video franchise holder's compliance with state and
federal cuslOmer service and protection standuds. The City will provide to the state video
franchise holder written notice of any materia1 breaches of applicshle customer service and
Protection standards, and will allow the state video franchise holder 30 days from receipt of the
notice to remedy the specified material breoch. Material bresches not remedied within the 30-
day lime period will be subject to the following monetary pena1ties to be imposed by the City in
occordance with state law:
L For the first occurrence ofa violation, a monetary penalty ofS5oo shaIl be
imposed for each day the violation remains in effect, not to exceed $1,500 for each violation.
b. For a second violstion of the same nature within 12 months, a monetary
penalty ofSl ,000 shall be imposed for eoch day the violation remains in effec~ not to exceed
$3,000 for each violation.
c. For a third or fUrther violation of the some nature within 12 months, a
monetary penalty ofS2,5oo sball be imposed for each day the violation remains in effect, not to
exceed $7,500 for each violation.
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3. A state video franchise holder may appeal a monetsry penalty .....sed by the
City within 60 days. After relevant evidence and testimony i. received, and staffreports are
submitted, the City Council will vote to either uphold or vllC81e the monetary penalty. The City
Council's decision on the imposition of a monetary peoalty shall 'be final.
E. City Remons8 to State Video Franchise AnnHcations.
1. Applicants for state video franchises within the boundaries of the City must
concurrently provide to the City complete copies of any application or amendments to
applications filed with the California Public Utilities Commission. One complete copy must be
provided to the City Manager.
2. The City will provide any appropriate comments to the California Public Utiliti..
Commission regarding an application or an amendment to an application for a stete video
franchise.
F. PEG Access ntA'1Del CBnacitv.
1. A state video franchise holder that uses the public rights-of-way shall designate
sufficient capacity on its network to enable the caiTiase of at least three public, educstiona1, or
governmental (PEG) access cbannels.
2. Additional requirements relating to PEG access channels are as follows:
a. A state video franchise holder is subject to payment of the PEG support
fee specified above in parograph (A).
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b. PEG access channels shaIl be for the exclusive use of the City or its
designe.. to provide public, educational, or governmental prognumning.
c. AdvertisinS, underwriting, or sponsorship reoognition may be carried on
the PEG access channels for the purpose of funding PEG-related activities.
87296-0001\1006338.1
2
Ordinance No.
Page 3
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d.
The PEG access channels shall be cmied on the basic service tier.
e. To the extent feasible, the PEG access channels shaIl not be separated
numericolly fiom other channels carried on the basic service tier, and the channel numbers for
the PEG access channels shall be the same channel numbers used by the incumbent cable
opela!or unless prohibited by federaI law.
f. After the initial designation of PEG acce.. channel numb.,., the channel
numbers shaIl not be changed without the prior written consent of the City, unless the clumge is
required by federal law.
g. Each PEG access channel shall be capable of carryins a National
Television System Committee (NTSC) television signal.
G. Interccmnecnon.
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Where technically feasible, a state video lionchise holder and incumbent cable opela!or
shall negotiate in good faith to interconnect their networks for the purpose of providing PEG
access channel programming. Interconnection may be accomplished by direct cable, microwave
link, satellite, or other reasonable method of connection. Slate video franchise hold.... and
incumbent cable operators sbaIl provide interconnection of the PEG access channels on
reasonable tenDS and conditions and may not withhold the interconnection. If a state video
lionchise holder and an incumbent cable operator cannot reach a mutually acceptable
interconnection agreement, the City may require the incumbent cable operator to ollow the state
video fimlchise holder to interconnect its network with !be incumbent's network at a technically
feasible point on the holder's network as identified by the holder. Ifno technically feasible point
for interconnection is available, !be state video fimlchise holder shall make an interconnection
available to the channel originator and shaIl provide !be facilities necessary for the
interconnection. The cost of any interconnection shall be bome by the state video fimlchise
holder requesting !be interconnection unless otherwise agreed to by the parties.
H. Emerrrencv AJert. SYStem and .....mfl!l'01lmev Overrides.
A slate video franchise holder must comply with the Ertir!rgeocy Alert System
requirements of!be Federal Corrununications Commission in order that emergency messages
may be distributed over the holder's network. Provisions in City-issued lianchises authorizing
the City to provide local emergency notifications sholl remain in effect, and shaIl apply to oil
state video franchise hold.... in the City for the duration of the City-issued fimlchise, or until the
term of the franchise would have expired bad it not been terminated pursuant to subdivision (m)
of Section 5840 of the Colifornia Public Utilities Code, or until Janusry 1,2009, whichever is
later.
I. Encroachment Pennit Annlication!.
I. As used in this section, the term "encroachment permit" means any permit i..ued
by the City relating to consbuction or operstion offacilities by the holder ofa state video
franchise.
2. The City shall either approve or d!'l'y an application from a holder ofa state video
franchise for an encroachment pennit within 60 days of receiving a completed application.
3. If the City denies an application for an encroachment pennit, the City sholl, at the
time of notifying the applicant of the deniol. fumish to !be applicant a detailed explanation of the
reason for the deniol. An applicant may appcal the City's denial of an encroachment penuit
application to the City Council. A written notice ofappcal stating the facts of!be matter and the
grounds for appcalsholl be filed with the City Clerk within ten days of the deniol. The City
Clerk shall set the matter for hearing at a regular meeting of the City Council and shall give the
appellant written notice of the time and place of hearing at least five days before the hearing.
The decision of the City Council taken after the appellant has bad an opportunity to be heard will
befinol.
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Section 2.
This ordinance shall become effective 30 days after its adoption.
57296-0001\1006331.1
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Ordinance No.
Page 4
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Section 3. The City Clerk is directed to certifY to the adoption oftbi. ordinance and
to cause this onlinance to be published or posted as required by law.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Seal Beach
this day of , 2007 by the following vote:
A YES: Council Members
NOES: Council Members
ABSENT: Council Members
A13STAIN: Council Members
Mayor
A TrEST:
City Clerk
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STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF SEAL BEACH
)
) SS
)
I, Linda Devine, City Clerk of the City of Seal Beach, California, do hereby certi1Y that the
foregoing Resolution is the original copy of Resolution Number _ on file in the office of the
City Clerk, passed, approved, and adopted by the City Council of the City of Seal Beach at a
meeting thereof held on the day of 2007.
City Clerk
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S7296.()OO 1 \ 1 006338.1
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