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HomeMy WebLinkAboutCC Min 1997-12-11 12-8-97 I 12-11-97 I ADJOURNMENT By unanimous consent, the Council determined to adjourn the meeting until Thursday, December 11th at 5:30 p.m. for continued discussion of the Comcast franchise renewal, and further, that the regular meeting of December 22nd be canceled. The meeting was adjourned by order of the Chair with consent of the Council at 9:12 p.m. l clerk Approved: C' Clerk and the City of \l . ~,\~ 5;l~t~{ ;J;' Attest: Seal Beach, California December 11, 1997 I The City Council of the City of Seal Beach met in regular adjourned session at 5:30 p.m. with Mayor Hastings calling the meeting to order with the Salute to the Flag. ROLL CALL Present: Mayor Hastings Councilmembers Brown, Campbell, Forsythe, Fulton Absent: None Also present: Mr. Till, City Manager Mr. Dorsey, Assistant to the City Manager Mrs. Yeo, City Clerk APPROVAL OF AGENDA Brown moved, second by Hastings, to approve the order of the agenda as presented. AYES: NOES: Brown, Campbell, Forsythe, Fulton, Hastings None Motion carried I ORAL COMMUNICATIONS There were no Oral Communications. DISCUSSION - CABLE FRANCHISE AGREEMENT I ORDINANCE NUMBER 1418 - FRANCHISE REGULATIONS Mayor Hastings requested that speakers limit their comments to five minutes, the intent of this meeting is primarily to bring forth new information for consideration, as this subject has been reviewed and discussed in depth a number of times. 12-11-97 * Mayor Hastings referred to a letter from a Surfside resident advising that when fibre optics was being installed the entire Colony was without cable service for a couple of days, he was reimbursed for those days, however other residents of the Colony were not. From her understanding of the contract subscribers pay a certain amount for so many days of service, if service is disrupted then the consumer should be reimbursed, if they are not that is inappropriate and unfair to the subscriber, and if the Colony Board determines to do so, a letter should be forwarded to Comcast requesting that each residence in the Colony be reimbursed for lack of service. I * Councilmember Forsythe recalled a situation a few years past where a Hill resident was without service, Comcast could not respond until the following Monday, the resident prorated and deducted the days from the billing however Comcast carried that amount forward as past due, an unwillingness on their part to accept the fact that someone should not be required to pay for service they did not receive. A number of residents are accepting Comcast because that is all there is, however they are not pleased with the service, also that the City is considering approval of a ten year contract renewal, as the company has not earned that privilege, to which it was explained that if not renewed the City could be in default and subject to legal action. * It was pointed out that the proposed agreement is the result of negotiations, if not approved the company could offer terms under the formal process that could be considerably less benefit to the City, also the City does not qualify under any of the four reasons for not renewing. I * When the issue of a cable consultant was first brought up several local producers compiled a list of consultants, opinion was that the City should not retain the consultant they did, there was an issue of trust, knowledge of the processes, the consultant was to ascertain compliance, people have complained about the service for years, yet the consultant report states the company is in substantial compliance, there is disagreement with that. The representative of the consultant confirmed the existence of their business for twenty-five years, his association for seventeen, suggested that their list of clients be contacted to ascertain their satisfaction, the clients served fifteen years ago are now returning for their services, how many have what is considered reasonable franchises, how many have enforcement mechanisms. He acknowledged that sometimes information is passed on that the client does not want to hear, based upon experience with the operators the client is often advised as to where they will end up, that does not mean that the consultant does not support the City or that they represent the point of view of the cable industry, the consultant is representing the City in the negotiating process, in this case if their services are not desired the consultant can walk away as their contractual obligations to the City have been completed, the City has approved the cable agreement, the discussion is, from a historical standpoint, whether the * I I I I 12-11-97 company has complied in the past, the statement of substantial compliance is the result of no written documentation of actions by the City finding the cable operator in non-compliance, absent that, by law, they are in compliance. Affidavits from subscribers, etc. are not actions by the City Council under the existing contract, there needs to be actions where the company is given notice, an opportunity to cure, and they continue to fail to comply, absent that, they are in compliance, that is the law. If there was anecdotal evidence or personal complaints, that is simply interesting, that is all, until the Council takes formal action either under the existing or proposed ordinance the company is in compliance, the company takes advantage of that, they know it takes considerable effort by staff and the Council to substantiate non-compliance, some cities do, this City has chosen not to, this places the City in a position that the cable industry lobbied for before Congress in 1984, that resulted in Section 626 relating to renewal, it does not say they are given the presumption but that is what is meant, over the past ten years there have been only three franchises in this country that have gone through the process and renewal was denied. * The comments of the consultant were referred to as those of a proponent of the cable industry and not of the City. * The response was that the comments are in defense of the agreement negotiated in the best interest of the City as represented by the Council sub-committee at numerous meetings and community meetings for the gathering of information from the Council and staff. * Comments were made as to the poor cable service in the past and what improvements can be anticipated in the future to warrant a ten year renewal. * The consultant explained that an upgrade of the system is accomplished by modifying the existing plant for additional services, when it is rebuilt the entire plant is replaced, in some cases the cable operator has replaced plant over the years for a variety of reasons therefore it may be relatively new and may only need to be upgraded, as they go through their construction the company will decide whether to upgrade or rebuild the plant, either way the plant will be expanded and the subscriber will receive added channel capacity. * Question was posed as to the criteria for upgrading or rebuilding, as the criteria is not spelled out, more specificity in the contract would be helpful. Response was that what is appropriate is whether or not it is capable of handling 750 MHz, able to provide seventy-eight analog cable channels, and 200 MHz of visual information, and if the company can use the existing plant in certain areas to provide that capacity to subscribers the company will only upgrade, if it is unable to support that capacity, which is set forth in the second sentence of paragraph one, section 4.1, the decision will be made to upgrade or rebuild, it is not * 12-11-97 that the company will do nothing to the plant. * It was noted that that does not address the lack of service, lack of sound, etc. which is distressing to the subscriber, again, more specificity would make the contract provisions more understandable. Question was also raised as to why the technical standards are not in written form in the franchise documents. I A point was raised that without the ordinance the agreement is not in effect. * Response was that there are prov1s10ns in the ordinance for customer service, provisions that outline the technical standards to be applied, etc. Technical standards were discussed at length at a prior meeting. The industry standards are those adopted by the FCC, those deal with signal quality, testing, noise, etc., standards that all cable operators must meet, they are minimum standards, the City can determine if they are being met, yet it is up to the FCC to enforce those standards, copies of the FCC regulations and the Cable Act were provided the City previously and to the negotiating team. It was stated that the Buena Park documents are the same as this City, that statement disputed as their technical standards being referenced were from their previous ordinance. * I Comment was made that the concern may be that there is need to specify the technical standards in the ordinance 1 That may make enforcement easierl However if the FCC were to make changes to the standards the City could be locked into standards that are not up to date. * Response was that section 23A-9 of the ordinance addresses technical standards, reads 'applicable technical standards - the grantee must construct, install, operate, and maintain a system consistent with all applicable laws, ordinances, construction standards, governmental requirements, FCC technical standards, and any additional standards that may be set forth in the franchise agreementl in addition, the grantee must provide the grantor, upon request, a written report of the grantee's periodic proof of performance tests that are conducted in accordance with FCC guidelines.' Also, section A-9(1), second paragraph, non-compliance with standards, states 'the repeated and verified failure of the grantee to maintain specified technical standards will constitute a material breach of the franchise. Again, this ordinance is basically the same language as that of Buena Park. I * Assurance was stated that the language of the Buena Park ordinance is in the Seal Beach ordinance and it is better 1 also that Buena Park gets nothing close to $75,000 per year for access programming. * Comment was made that over time inflation could cause that number to go up, Buena Park also has a facility, if I I I 12-11-97 they were to lose their facility the cable company would need to provide another, they have a coordinator, medical benefits, and engineer; in this case Seal Beach has asked the cable company for things, they have not been realized, and remains under the existing contract; a response was a belief that the cable company bought a lot of equipment in years past. * It was reported that the negotiating team sat at the table and discussed the things that this City could and could not get, the consultants guided and advised the team of what could most likely be achieved, it is believed the contract is much better than could have been achieved without their assistance, $75,000 per year, the franchise fee, a studio can be run however is desired, three channels, a coordinator can be retained, insurance coverage could be worked out, the City is now ready to talk with the Foundation about their concerns, work out a budget, decide how to utilize the studio for the next three years, locate another studio location within the downtown area that will be less costly, again, it is a good contract. It is believed that when the consultant says that if any changes are made to this contract, in that it was negotiated in good faith, the company will back away from it. * Reference was made to the company paying the lease on the studio for three years, in the meantime the intent is that the City is going to secure another location within one year then the two year balance of lease money would come back to the City, too, it is understood the company is going to enter a three year lease for the building; the response was it is understood that they have not signed a lease for three years; in turn demand was made that any lease be in written form. * Response was that the requirement is that 'the grantee shall continue to payor provide a grant to the City to pay the rental cost of the studio and control room for a period of three years from the effective date of this agreement.' * Suggestion was made that the language be changed from 'the' studio to read 'a' studio; also that there be an addendum to the agreement with regard to the building lease; with regard to the studio, question was raised as to what arrangements will be made, who will make the arrangements, and who will be the signators; response was that the agreement states that 'no later than sixty days after the effective date of the agreement the grantee shall convey to the City the title to all of its cable casting equipment located in the existing studio and control room at the Old City Hall, the City or a delegate shall assume the responsibility for studio operation.' * with regard to finances, it was noted that the City will receive the $75,000, the City will work with the Foundation as to a budget, $50,000 of that will not be repaid to Comcast; to that comment a response was that that is not enough money, $50,000 will go back to Comcast for salaries, benefits, etc., there needs to be funds for programming, rent, etc.; however it was agreed that the details need to be resolved with the Foundation as there will not be any increase of those monies from 12-11-97 the company; suggested that this be resolved before approval. * The Foundation Chairman mentioned that the issue of use of the van has not been resolved; concern was offered as to the language of a 'reasonable fee', nothing defines 'reasonable', it would not be a surprise if eventually use of the van will be denied or its use priced out, which could in turn mean the purchase or the building of the City's own production vehicle at a cost of about $100,000; with the changing technologies an upgrade of the van as it exists may be necessary, that could be a sizeable expense as well; question was raised as to what was felt to be a reasonable rental for the van to which it was reported that someone suggested the cost of gasoline and a driver. I * A Foundation member said his point of view is somewhat different, basically how much money is there to work . with. He noted that the Foundation budget for the past several years has been approximately $35,000, the $25,000 plus $10,000 interest earned, the other $50,000 went to Comcast, that amount can be used quickly with the salary and benefits for the coordinator, the LO shows still need to be done and in order to do so it will be necessary to hire some of the local producers, certainly at a lower rate; looking at this agreement, stated that $75,000 will not be adequate for the type of program that is desired, there will be more involvement by the City, Police, Fire, the schools, this will be PEG not just public access. Understanding was expressed that it is quite likely that the Council representatives on the negotiating committee, the Manager, and consultant put forth best efforts to do the best for the City. In his opinion the $75,000 should go directly to the Foundation which resolves a liability issue, yet if the City wants to absorb that, that is okay too; if another agency has better technical standards then include those in this contract as it is believed that Seal Beach will get no more than what the competition will force Comcast to give. Comment was made that this City loves public access, this will merge the schools and other services, and believed that the community will support it. Again, suggested changes would be that the money go directly to the Foundation, consider inclusion of the technical standards, effort also needs to be put forth to build, rent or whatever a studio location, develop an edit bay, an area for the coordinator. I * Concern was mentioned with the 'most favored nation' clause, concern are comments to the effect that as soon as Comcast completes all of their contracts the company will be sold, boxed up with five other cities and at the bottom as to technology; the question again as to who will negotiate the use of the studio and the control room, negotiate the lease of the building for the City, Comcast or a City person, whose responsibility is it, is it known that Comcast is not negotiating it; response was it is hoped that a couple of members of the Foundation could serve in that capacity. I * The Foundation Chair said he had spoken recently with the gentleman who holds the lease on the building, a new sublessee is presently renting a portion of the building, the leaseholder had stated that Comcast had I I I 12-11-97 informed him that their intent, once the contract with the City is signed, was to sign a lease with him for the entire upper floor of the building for a period of three years with three year options at the same rate agreed upon at the time of signing the contract, yet it appears that may not seem be the opinion now; question was raised, if Comcast were to sign such lease would the City then be committed to it; a concern raised was that the City does not have a guarantee from either the leaseholder or Comcast that public access will be allowed to remain in the building; for the amount of money it would take it would be best for public access to relocate rather than take the risk of being evicted. * A local producer pointed out that the agreement proposed does not specify the amount of rent, if public access finds itself having to vacate that building, question is whether the cable company will pay the rental of another location, a rental figure should be incorporated into the agreement; as to the van, the 'reasonable cost' in the past has been $400 per shoot, that cost determined by Comcast some time back; it was pointed out also that when Cal State rented the van the rental went up to $1200 per shoot per day, therefore $400 would probably seem reasonable then to Comcast1 this agreement should show an amount not to exceed a specific figure, the company may also choose to add an amount should a technician be included; at issue as well is the use of the van just twelve times a year in that it was used three times in just this past week. * The signators of a studio lease was brought up again1 again suggested it could be either the City or the Foundation 1 suggestion too to have the company just give the City the moneY1 concern with Comcast renting the studio for the CitY1 suggested that the Foundation may be able to obtain more desirable terms, possibly by going directly to the leaseholder1 to which objection was raised, citing the need to get out of a lease if desired. * Councilman Brown deemed this to be a good contract, during negotiations the company had been pushed to the max on each point, it is believed they will act in good faith, however any changes to the agreement may be unacceptable. * Suggestion was made that there be further negotiation of the van use, the rental fee, possibly on a not to exceed basis, etc., then incorporated as an addendum to the agreement 1 to that the response was that a side letter would be the appropriate means. * To comments directed to renewal and renegotiating provisions, question was what will the City be realizing; the consultant responded that when a contract expires it becomes of no further force and effect unless the parties thereto agree, with a renewal it is then necessary to negotiate new terms and conditions; under federal law and the Cable Act, if the company goes through the formal procedure, as previously discussed, there is a process established for renewal, first an assessment of needs, then the cable operator seeking the renewal and by its own initiative or at the request of the franchising authority, submit a proposal for 12-11-97 renewal, a best and final offer, the proposal is reviewed, and based upon the four conditions also previously discussed there is either a preliminary approval or denial, denial must be based on the four conditions, if approved that then becomes the terms of the contract, there can be some negotiation as to enforcement measures, etc. however as to provisions for what the system will be, PEG access support, etc. those are as proposed, not to be negotiated, merely voted for or against by the Council: nothing says that the company could not offer more, yet unlikely, rather a proposal could be significantly less: example, most communities are getting one to two percent of gross revenues for PEG support, $75,000 per year for a community this size is between two and three percent, and it can be suspected the company would propose something much less: if taking that chance is desired, suggested then to go through the formal process. I * To comments relating to the possibility of revision of cable regulations as well as rates, the consultant advised that in 1984 Congress took it upon itself to preempt all cities that had rate regulation authority, in 1992 took it upon itself, no matter the terms of a contract, to reimpose that ability on a limited basis for communities: it is not believed that Seal Beach has taken an active role in the regulation of rates despite the provisions of federal law: a scenario was described where the federal government might decide that PEG access were a waste of cable company and subscriber monies, determined there should be no further money for PEG unless it were grand fathered into an existing franchise, upon expiration of that franchise PEG monies would be no more, under that scenario the longer the franchise the longer PEG access money is guarded. I * Projection as to what Congress may do in the future, to occur in an even numbered year, an election year, if the Republicans maintain control of both the Senate and House do not believe anything will occur in 1998, if not, a change probably in the year 2000. * It was reported that when the cable company first came to the negotiating table they said they wanted nothing to do with PEG, negotiations on that issue continued for many hours, the uniqueness of Seal Beach was pointed out to the company, they were informed that the community does watch channel three, without the local channel cable would be nothing, eventually the company listened, thus the $75,000, during early discussions anything paid for PEG was to be required to be used for equipment, with the assistance of the consultant a loophole and examples were found, now the monies can be used for things other than equipment. I * Question was raised as to determination of how many subscribers turn to alternate systems, specifically satellite dishes: partial response was that Leisure World would be easily known, otherwise the cable company would need to be relied upon for such information: it was noted that Leisure World has a good relationship with Comcast, that community wants them to stay as well as channel three. I I I 12-11-97 * A point was made again that the service level of this company has been poor, there is no provision for accountability or consumer protection in the proposed contract. * General discussion continued, that the desire is for a side letter setting forth the dollar amount for the studio, the number of times for van use, the cost thereof, changing the word 'the' to 'a' in reference to the studio; commercial sponsorship of local programming; the headend lease will be included as an addendum; a budget needs to be developed to set forth what is perceived as needs; the amount of money that will be forthcoming to the Foundation has yet to be determined. * The consultant explained that there is no provision of federal law that says PEG access use has to be for free, there is no reason that a charge can not be made to users of a reasonable fee for the studio, equipment, editing bays, etc., sponsorships are possible as well. * It was noted that the consultant said the contract with Comcast has been extended by mutual agreement of the Council and grantee; under the existing contract the $75,000 is still supposed to be coming to the City for PEG support, this is now December, the amount from March is now $56,250, the company was supposedly going to be paying that concurrently with the franchise fees, the Foundation has not seen any of those monies and it is not certain if the City has; response of the City Manager was that it is understood from the Finance Department that payment from the company was late last year, actually they could wait until the last day of the year to pay it; a Foundation member added his belief that it is on a fiscal year basis; a producer mentioned that the contract for the $75,000 is with the City, upon expiration the provisions thereof have continued, Comcast has routinely been late with payments, therefore interest is being lost, the new agreement calls for payment of the first and last year, $150,000. * With regard to the issue of accountability, suggested that a review board of some undetermined number of persons be established, possibly five or six persons, there needs to be a person to contact when it is felt the company is not following their contract, there needs to be a procedure to ensure their performance; the response was that the ordinance defines the grantor as the City of Seal Beach represented by the City Council or by any delegate acting within the scope of its jurisdiction, if the City delegates, that can be done by a multi-member committee or any other means, that authority is in the ordinance, there are provisions as well as to how violations will be enforced, a contact number would be placed on all billings for information of tpe public; a memb~r of the Foundation noted that Santa Ana has such a body that could be patterned to Seal Beach, the provision for such body should be separate from the documents under discussion; it was noted also that such body would get regular updates from Comcast as well. * The Manager explained that the franchise agreement has been approved previously, the ordinance has received first reading, these documents are felt to have been a 12-11-97 best effort of all parties, the company has said they will accept side letters of agreement after the adoption of the ordinance. Brown moved, second by Hastings, to adopt Ordinance Number 1418 as presented entitled "AN ORDINANCE OF THE CITY OF SEAL BEACH GOVERNING FRANCHISES GRANTED BY THE CITY FOR CABLE I TELEVISION SYSTEMS AND TELECOMMUNICATIONS SYSTEMS AND AMENDING CHAPTER 23A OF THE CODE OF THE CITY OF SEAL BEACH." By unanimous consent, full reading of Ordinance Number 1418 was waived. It was also directed that a side letter be prepared to address further the issues discussed relating to the studio, van, etc. Objection was raised by some persons present to adoption of the Ordinance citing the need for more discussion, answers to their questions, direct communication with Comcast representatives, etc. To references to cable franchises in the communities of Santa Ana, Long Beach, Torrance, Buena Park, and Signal Hill and accusations of lack of effort on the part of the consultant firm for Seal Beach, the consultant mentioned that all of those communities were their clients, and explained that in the case of Long Beach there were franchise compliance issues that needed to be cleared up with the existing franchisee before the franchise was transferred to a new operator, there were concerns with qualifications of the applicant publicly stated and other issues. He noted that the Seal Beach ordinance states that the transferee must establish that it possesses the legal, technical, and financial quality to maintain the cable system l_ and to comply with all requirements for the remaining term of the franchise, all cities they have consulted to provide that the franchise transfer document state it is not the granting of a new franchise and all existing franchise obligations remain in effect, explaining further that if a cable company comes to a city and requests modification of any existing franchise provision that opens up the documents to negotiation, if they choose not to negotiate then the choice is to deny. Another issue that went on in Long Beach and Signal Hill, under federal law when a franchise is transferred the FCC assumes that the franchise is in compliance, again, one of the reasons for denying renewal is whether the franchise is in compliance, Long Beach did not want to transfer the franchise, was correcting the outstanding issues of compliance as it would have then been placed in a bind of having to renew the franchise when up for renewal, concurrent issues as the transfer and renewal were happening at the same time, that the reason for holding up their processes, that is not what is under consideration in Seal Beach. Question was raised as to whether the ordinance should receive second reading now and then prepare side letters or in the reversel there is still concern as to past I performance 1 there is continued concern with regard to the $25,000 of funding, the company now provides tapes, etc., there is nothing providing for thatl question raised as to the language relating to inferior signalsl the response was that the City or its delegate will determine if the signal is inferior, notify the company, if they fail to cure, there are penalties for thatl suggested that a definition for the term 'delegate' be similar to that of Santa Anal the response was that 'delegate' is defined under definitions and the technical standardsl request again that the technical standards be set forth in the ordinancel response was that 12-11-97 I those standards change frequently thus the reference thereto is preferable 1 request that there be a testing schedulel response was that they are required twice per yearl with reference to special review question was raised as to who supervises those tests and could someone from the City accompany the person(s) conducting the tests to assure they are performed properly and corrections are madel response was who on staff would be qualified to do that, to Section 26 the amount of notice was stated to be thirty daysl request was made under Section 23A as to a definition of 'reasonably acceptable to Seal Beach'; requested that the Manager look into the late franchise payment and concern was expressed that the $75,000 PEG monies could be lost with a potential transfer of ownershipl to a question relating to disposition of franchise fees it was clarified they are held in a separate fund, can only be used for PEG access, however it has been made clear that those monies can be used for equipment and other PEG related purposesl response was that a budget will be developed to address the use of the $75,0001 Comcast is only willing to enter into agreement with the City, having nothing to do with PEG accessl as to a potential liability of losing access funding, the response was that the company could go to court, they have indicated they do not intend to do that as it is now recognized that PEG is important to this communitYI in the past there have been contract violations relating to channel assignments, etc.1 again clarified that in the event of any possible agreement violations the company would need to be notified and given time to correct 1 it was again suggested that this matter be continued on a month to month basis, possibly without triggering the formal process 1 the response was that such action could pose a problem. I Vote to approve second reading and adopt Ordinance Number 1418: AYES: NOES: Brown, Fulton, Hastings Campbell, Forsythe Motion carried ADJOURNMENT It was the order of the Chair, with consent of the Council, to adjourn the meeting at 8:18 p.m. with the understanding that the December 22nd regular meeting will be canceled. Approved: o ex-of cio clerk Seal Beach I Attest: