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HomeMy WebLinkAboutCC AG PKT 2004-02-23 #U s AGENDA REPORT f/ DATE: February 23, 2004 TO: Honorable Mayor and City Council THRU: John B. Bahorski, City Manager FROM: June Yotsuya, Assistant City Manager SUBJECT: Information re: Agreements for Solid Waste Collection and _ . Cable Television Franchise SUMMARY OF REQUEST: Receive and file information regarding terms of agreements for solid waste collection and disposal and for cable television franchise, provide authorization to conduct a cable franchise fee audit and approve budget amendment number 04 -24 for an increase in contract professional services of $9,200 to perform said audit. DISCUSSION: At the last City Council meeting, Mayor Pro Tem Yost requested information regarding the terms of agreements for solid waste collection and cable television franchise. The following is provided in response to his request for information. What are the terms of the agreement for solid waste collection with the current contractor? The City entered into an agreement for solid waste collection and disposal with Briggeman Disposal Services in March 1997 that granted the contractor exclusive rights to provide said services. The term of agreement is for seven years from the date of execution. Starting in January 1998 and each year thereafter, the agreement automatically extends one additional year up to the full seven -year term of agreement. Therefore, the existing agreement will terminate in 2007. To note, Briggeman experienced a name change when Consolidated Disposal acquired its assets. They continue to operate under both the Consolidated Disposal and Briggeman name, however, the existing contractor is now referred to as Consolidated Disposal. The contractor is obligated under the agreement to provide residential and commercial services, pay a franchise fee and promote recycling. The contractor is authorized to charge reasonable rates in consideration of the services Agenda Item t1 February 23, 2004 City Council Agenda Report- Information re: Agreements for Solid Waste Collection/Cable Page 2 provided and may make annual adjustments to rates based on the CPI formula provided for in the contract. The City may at its discretion conduct an independent audit of franchise fee payments and may review contractor's performance and quality of service. Consolidated Disposal has worked effectively with the City to resolve issues that may arise from time to time and have timely paid franchise fees. No major problems currently exist with the solid waste collection and disposal services. Therefore, staff makes no recommendations to pursue an audit/review at this time. What are the terms of the agreement for cable television franchise? The City authorized renewal of a non - exclusive franchise agreement with Comcast Cablevision in November 1997 for a ten -year term. In 2000, the City authorized transfer of control of the cable television franchise from Comcast Cablevision to Adelphia Communications under the same terms of the existing agreement. This agreement expires in 2007. Although cities have the ability to adopt franchise agreements with cable providers, federal government through various telecommunication and cable acts preempt cities regulatory abilities. The existing franchise agreement set forth provisions for construction, operation and maintenance of a cable system within the City and is essentially an agreement for use of the public rights -of -way with provisions for minimum consumer protection and service standards. The agreement does not regulate rates or program tier options. However, as part of the agreement the cable provider does pay an annual franchise fee as well as an annual grant for PEG access. The City may conduct an audit no more than once every three years during the franchise period. An audit review would include looking at other sources of revenue, such as commissions paid by home shopping channels and advertisements that may be paid directly to the corporate offices rather than directly to a local cable system, and may result in an increase in the franchise fee payment. For the reasons stated previously, the audit does not review rates. Since the City has not conducted any recent audits, staff recommends that the City Council authorize staff to contract for such a service. The recommended consultant, Telecommunications Management Corporation (TMC), has provided services to the City before and is the leading consulting group to local government agencies and to States of California and Nevada chapter of National Telecommunication Officers and Advisors (SCAN - NATOA). The cost for a one -time audit is $9,200 and would be funded through undesignated fund reserves. FINANCIAL IMPACT: The increase in contract professional services will be applied to the General Fund. Total increase in expenditures to the General Fund will be $9,200, which will decrease the February 23, 2004 City Council Agenda Report- Information re: Agreements for Solid Waste Collection/Cable Page 3 estimated FY 2003/04 ending undesignated General Fund fund balance from $3,993,877 to $3,984,677. RECOMMENDATION: It is recommended that the City Council receive and file the information regarding terms of agreements for solid waste collection and cable television franchise and approve the attached resolution authorizing a budget amendment, number 04 -24, to conduct a cable franchise fee audit for the City of Seal Beach. Submitted by: Jun/ otsuy Assistant City Manager N• . A► ►� APPRI,' E'': A_ / J• ahorski, Ci y Manager Atta`' ents ATTACHMENT 1 PROPOSED STATEMENT OF WORK CABLE FRANCHISE FEE AUDIT FOR THE CITY OF SEAL BEACH A. TASK DESCRIPTION Telecommunications Management Corp. (TMC) shall perform an audit of the cable system franchise fees computed and paid to the City of Seal Beach (the City) by the City's cable operator, Adelphia Communications Corp. ( Adelphia). The scope of the audit shall include the following: • A review of the revenue records of the cable operator (including the predecessor operator, Comcast) for the four calendar years 2000, 2001, 2002 and 2003, including the sources of all revenue components. This will include revenue, such as commissions paid by the home shopping channels, which may be paid to the corporate offices or to an affiliate rather than directly to the local cable system. • A review of the method utilized by the operator to compute franchise fees due to the City, including all revenue elements included in the computation. A detailed analysis will be made of any revenues excluded from the computation, and whether these exclusions are in compliance with franchise requirements and cable industry practices. • A review of the PEG Access support funds collected from subscribers, the extent to which such revenues may have exceeded the $75,000 annual grant for such support, and the amount (if any) that should be refunded to subscribers. • A comparison of the computed franchise fees due with actual payments made to the City, to verify that all fees have been paid. In the event of any discrepancies, an estimate of the underpayments will be made. 1 Exhibit B.5(a) of the City's franchise agreement with Adelphia requires Adelphia to provide a $75,000 annual grant to the City to support PEG Access. 1 -1 The end - result of the review and audit shall be a written report detailing all findings, along with estimates of incorrect payments, to the extent any are found, and recommendations for future financial reports and procedures. Three (3) bound copies and one (1) unbound (reproducible copy) are included in the cost quoted in C. below. B. SCHEDULE The audit report shall be submitted to the City within forty -five (45) days of receipt of all information requested from Adelphia. C. COST The cost shall be $9,200 on a firm, fixed -price basis. The cost includes up to two (2) meetings with City staff and officials to review the audit findings. Invoices shall be submitted in accordance with the following schedule: • 50% thirty (30) days after authorization to proceed; and • 50% upon submission of audit report. For services beyond the stated scope of work, the City will be invoiced monthly on an hourly basis at the following TMC rates: Mr. Pilnick $220 per hour Mr. Friedman $185 per hour. 2 TELECOMMUNICATIONS MANAGEMENT CORP. 5757 Wilshire Blvd. • Suite 635 • Los Angeles, CA 90036 • (323) 931 -2600 • Fax (323) 931 -7355 GENERAL BACKGROUND Telecommunications Management Corp. (TMC) is an independent consulting firm, founded in 1972, with no ties either to cable television system operators or equipment manufacturers. All of our clients are local governments. TMC's experience in assisting municipalities in all aspects of their relationships with cable operators is unparalleled. TMC has provided consultant services to such major cities as New Orleans, Nashville, Miami, Baltimore, the District of Columbia, Portland, Cincinnati, Phoenix, Minneapolis, Jacksonville, Little Rock, San Jose and Los Angeles, in addition to more than 400 smaller communities. Our general experience has included almost all aspects of cable television and communications, including: (a) Provision of consultant services and support for the initial franchise award, renewal and transfer processes. (b) Cable system performance review and evaluation. (c) Technical evaluation of cable systems, including the introduction of new technology such as fiber optics and digital compression. (d) Financial evaluation of cable systems, including franchise fee and compliance audits. (e) Planning studies of new and advanced services that could be provided via cable systems, and evaluating the costs and benefits of such services. (f) Evaluating public, educational and governmental (PEG) access needs. (g) Reviewing system construction, operations and technical performance, and planning for governmental, educational and public uses of cable system facilities and channels. Page 1 of 2 TMC's primary personnel are Mr. Carl Pilnick and Mr. Michael J. Friedman. Mr. Pilnick is President and Principal Consultant of TMC and has been responsible for all consultant assignments since TMC's founding in 1972. His resume includes Bachelor's and Master's degrees in electronics engineering and over 35 years of cable television experience. He is a member of the Society of Cable Television Engineers. In addition, Mr. Pilnick was a member of the Federal Communications Commission's Technical Advisory Committee, which advised the FCC on cable technology, standards and practices. He is extremely familiar with the services that cable systems may not only offer today, but advanced services that may be provided in the future. He also has extensive experience in franchise negotiations and strategies, franchise renewals, cable system finances and operation. Mr. Friedman has been an Associate Consultant with TMC for the past 23 years and has participated in all TMC projects during that period. He holds Bachelor's and Master's degrees in communications, and has been a featured speaker on franchise renewal and new developments in cable television technology at seminars for the National Association of Telecommunications Officers and Advisors (NATOA) and the Alliance for Community Media. Mr. Friedman is a past president of the States of California and Nevada (SCAN) Chapter of NATOA, and has served on the SCAN NATOA Board since 1996. Page 2 of 2