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Home My WebLink About2007-10-23 - AGENDA REPORTS - STATE VIDEO FRANCHISE (2)CONSENT CALENDAR DATE: SUBJECT: DEPARTMENT: Agenda Item: CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval Item to be presented by: October 23, 2007 Kevin Tonoian Icy ORDINANCE REGULATING STATE VIDEO FRANCHISEES WITHIN THE CITY OF SANTA CLARITA Administrative Services RECOMMENDED ACTION City Council introduce and pass to second reading an ordinance entitled: "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, ADDING CHAPTER 4.22 TO THE SANTA CLARITA MUNICIPAL CODE, ESTABLISHING FRANCHISE AND PEG FEES AND CUSTOMER SERVICE PENALTIES FOR STATE VIDEO FRANCHISE HOLDERS PROVIDING VIDEO SERVICE WITHIN THE CITY OF SANTA CLARITA." BACKGROUND Originally referred to as Assembly Bill 2987, the DIVCA authorized the entry of telecommunication providers (such as AT&T and Verizon) into the competitive market of providing television video services and established the California Public Utilities Commission (PUC) as the sole franchising authority for new video service providers in California. Under state law, the earliest an incumbent cable provider such as Time Warner can seek a state franchise through the PUC is January 2, 2008. The primary impact of DIVCA on the City is, effective January 2, 2008, the City can no longer issue new cable franchises. Instead, the PUC will be the sole franchising authority for video service providers in the State. One of the City's new rights under the DIVCA is the authority to impose a fee of up to one percent (I%) of gross revenues upon video service providers for Public Access, Educational, and/or Governmental ("PEG") support, provided the City has enacted an ordinance establishing such fee. PEG fees can only be used for the capital costs associated with PEG support and the purchase or maintenance of PEG facilities and equipment. �Qs+cv1 e 1-u 6,-S ec`c-i cd The DIVCA also provides cities with the ability to monitor and enforce customer service standards for state video franchisees, but cities are limited to enforcing only those standards enumerated in DIVCA. Additionally, a city may only impose fines, set by ordinance or resolution, for violations of DIVCA standards. The amount of the each fine is limited by DIVCA, and the proposed ordinance would establish fines consistent with the maximum fines permitted by DIVCA. While Time Warner currently operates in the City under its franchise agreement originally issued by the County of Los Angeles in 1987, staff anticipates Time Warner will pursue a state video services franchise through the PUC. Staff expects to receive formal notification from Time Warner of their intent to apply for a State Video Franchise before the end of November 2007. The proposed ordinance will only apply to Time Warner once it secures a state video franchise. If the City does not have this ordinance enacted prior to that date, Time Warner would not be legally required to remit a capital PEG fee or be subject to any customer service standard or monetary penalties imposed upon them by the City for failing to uphold customer service standards until such time as when such an ordinance is in effect. The adoption of this ordinance and anticipated subsequent application by Time Warner to seek a state video franchise to operate in Santa Clarita will generate an additional I% in PEG -related revenue for the City. Based upon conservative calculations that assume an estimated average monthly cable television cost per household of $50 to $60 and an estimated 37,000 subscribers within the City, staff projects the adoption of this ordinance will generate an additional $225,000 to $265,000 in funding that will support capital costs associated with providing local PEG -related services. ALTERNATIVE ACTIONS 1. Do not adopt this ordinance. 2. Other actions as identified by the City Council. FISCAL IMPACT The adoption of this ordinance and anticipated subsequent application by Time Warner and AT&T to seek a state video franchise to operate in Santa Clarita will generate an additional 1% in Public Education and Government (PEG) -related revenue for the City. Based upon conservative calculations that assume an estimated average monthly cable television cost per household and an estimated 37,000 subscribers within the City, staff projects the adoption of this ordinance will generate an additional $225,000 to $265,000 in funding that will support capital costs associated with providing local PEG -related services. ATTACHMENTS Ordinance ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, ADDING CHAPTER 4.22 TO THE SANTA CLARITA MUNICIPAL CODE, ESTABLISHING FRANCHISE AND PEG FEES AND CUSTOMER SERVICE PENALTIES FOR STATE VIDEO FRANCHISE HOLDERS PROVIDING VIDEO SERVICE WITHIN THE CITY OF SANTA CLARITA THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Recitals WHEREAS, a new state law, the Digital Infrastructure and Video Competition Act of 2006 (Pub. Util. Code § 5800 et seq., "DIVCA") went into effect on January 1, 2007; WHEREAS, under DIVCA, the State of California is the "sole franchising authority" for new video service providers within the City of Santa Clarita ("City"), effective January 2, 2008; WHEREAS, the City, although not the franchising authority, has certain rights and responsibilities with respect to the new state video franchise holders; WHEREAS, pursuant to DIVCA, certain rights and responsibilities must be established by local ordinance before they may become effective and enforceable against state video franchise holders; WHEREAS, on November 11, 2006, the City and Pacific Bell Telephone Company, a California corporation doing business as AT&T California ("AT&T") entered into a Public Benefits Agreement ("AT&T Agreement") currently set to expire on November 11, 2009; WHEREAS, the County of Los Angeles ("County") passed Ordinance 87-0134F to grant a cable franchise to American Television and Communications Corporation (dba ATC Cablevision) with an effective date of October 1, 1987; WHEREAS, the County passed Ordinance 87-0169F to grant a cable franchise to King Videocable Company -Newhall with an effective date of October 1, 1987; WHEREAS, upon the City's incorporation on December 15, 1987, the City inherited all rights and responsibilities under County Ordinances 87-0134F and 87-0169F (the "Time Warner Franchises"); WHEREAS, Time Warner Cable ("Time Warner") obtained the rights to provide, and currently does provide, cable service pursuant to the Time Warner Franchises; WHEREAS, the Time Warner Franchises expired on April 30, 2004; WHEREAS, the Decision Adopting a General Order and Procedures to Implement DIVCA ("PUC Decision"), provides on page 20, "we conclude it is necessary and reasonable to require automatic extension [until January 1, 2008] of [local] video franchises that are held by incumbent cable operators planning to seek video franchises;" WHEREAS, Time Warner has informed numerous California jurisdictions that it will apply for a state video franchise to provide services throughout California effective January 2, 2008; WHEREAS, consistent with Public Utilities Code § 5870(k), AT&T and Time Warner must continue to provide and support PEG Channel facilities and institutional networks and to provide cable services to community building contained in the AT&T Agreement and Time Warner Franchise (collectively, the "Local Franchises") until they expire, until the date the Local Franchises would have expired but for termination under Public Utilities Code § 5840(0), or until January 1, 2009, whichever is latest; WHEREAS, the City will receive a fee of five percent (5%) of gross revenues from each state video franchisee which operates within the City for use of the public rights-of-way unless the City opts to waive collection of the fee; WHEREAS, the City does not currently opt to waive the collection of the five percent (5%) franchise fee; WHEREAS, the City may require payment a fee of one percent (1 %) of gross revenues from state video franchisees which operate within the City for Public, Educational and/or Government (PEG) purposes; WHEREAS, the City may audit the business records of a state video franchisee once annually to ensure compliance with the payment of the franchise and PEG fees; WHEREAS, the City may establish and enforce penalties against state video franchisees for violations of customer service rules consistent with state law; WHEREAS, consistent with DIVCA, the City retains authority, without change, over AT&T and Time Warner until their respective Local Franchises expire or are otherwise terminated; SECTION 2. Chapter 4.22 of the Santa Clarita Municipal Code is hereby amended to provide as follows: "Chapter 4.22. State Video Franchises Sections: 2 4.22.010 Purpose and Application 4.22.020 State Video Franchise and PEG Fees 4.22.030 Audit Authority 4.22.040 Customer Service Penalties Under State Franchises 4.22.050 City Response to State Video Franchise Applications Section 4.22.010 Purpose and Application This Chapter is designed to regulate video service providers holding state video franchises and operating within the City. On January 1, 2007, the State of California became the sole authority with power to grant state video franchises pursuant to the Digital Infrastructure and Video Competition Act of 2006 ("DIVCA"). Pursuant to DIVCA, the City of Santa Clarita shall receive a franchise fee and a fee for public, educational and/or government (PEG) purposes from all state video franchise holders operating within the City. Additionally, the City acquired the responsibility to establish and enforce penalties, consistent with state law, against all state video franchise holders operating within the City for violations of customer service standards. DIVCA precludes the City from adopting its own standards and grants all authority to adopt customer service standards to the state. DIVCA leaves unchanged the City's authority to regulate the City's existing cable franchises until the expiration of any such franchises. Section 4.22.020 State Video Franchise and PEG Fees (a) Any state video franchise holder operating within the boundaries of the City shall pay a fee to the City equal to five percent (5%) of the gross revenue of that state video franchise holder. (b) Any state video franchise holder operating within the boundaries of the City shall also pay the City a fee equal to one percent (M) of the gross revenue of that state video franchise holder, which fee shall be used by the City for any Public, Educational, and/or Governmental (PEG) purposes consistent with state and federal law. (c) In addition, any state franchisee that has held a locally issued franchise agreement shall, consistent with Public Utilities Code § 5870, continue to fully provide and support PEG channel facilities and institutional networks and to provide cable services to community buildings to the maximum extent permitted by law. (d) Gross revenue, for the purposes of (a), (b) above, shall have the definition set forth in California Public Utilities Code § 5860. Section 4.22.030 Audit Authority Not more than once annually, the City Manager or the Manager's designee may examine and perform an audit of the business records of a holder of a state video franchise to ensure compliance with Section 4.22.020. Section 4.22.040 Customer Service Penalties Under State Video Franchises (a) The holder of a state video franchise shall comply with all applicable state and federal customer service and protection standards pertaining to the provision of video service. (b) The City Manager or the Manager's designee shall monitor the compliance of state video franchise holders with respect to state and federal customer service and protection standards. The City Manager or the Manager's designee will provide the state video franchise holder written notice of any material breaches of applicable customer service standards, and will allow the state video franchise holder 30 days from the receipt of the notice to remedy the specified material breach. Material breaches not remedied within the 30 -day time period will be subject to the following penalties to be imposed by the City: (1) For the first occurrence of a violation, a fine of up to $500.00 may be imposed for each day the violation remains in effect, not to exceed $1,500.00 for each violation. (2) For a second violation of the same nature within 12 months, a fine of up to $1,000.00 may be imposed for each day the violation remains in effect, not to exceed $3,000.00 for each violation. (3) For a third or further violation of the same nature within 12 months, a fine of up to $2,500.00 may be imposed for each day the violation remains in effect, not to exceed $7,500.00 for each violation. (c) A state video franchise holder may appeal a penalty assessed by the City Manager to the City Council within 60 days of the initial assessment. The City Council shall hear all evidence and relevant testimony and may uphold, modify or vacate the penalty. The City Council's decision on the imposition of a penalty shall be final. Section 4.22.050 City Response to State Video Franchise Applications (a) Applicants for state video franchises within the boundaries of the City must concurrently provide complete copies to the City of any application or amendments to applications filed with the California Public Utilities Commission (PUC). One complete copy must be provided to the City Manager. 0 (b) Within 30 days of receipt, the City Manager will provide any appropriate comments to the PUC regarding an application or an amendment to an application for a state video franchise." SECTION 3. Severability. If any section, sentence, clause or phrase of this Chapter is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Chapter. The City Council hereby declares that it would have passed this ordinance and adopted this Chapter and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. SECTION 4. The City Clerk is hereby directed to publish this ordinance, or the title hereof as a summary, pursuant to state statute. SECTION 5. This ordinance shall take effect and be in force on the thirtieth (30th) day from and after its final passage. PASSED AND APPROVED this day of 2007. MAYOR ATTEST: CITY CLERK STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, Sharon L. Dawson, CMC, City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Ordinance No. 07-10 was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the IM day of IMM, 2007. That thereafter, said Ordinance was duly passed and adopted at a regular meeting of the City Council on the IN dayof ' , 2007, by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: 3 CITY CLERK STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) CERTIFICATION OF CITY COUNCIL ORDINANCE I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that this is a true and correct copy of the original Ordinance No. 07-M,adopted by the City Council of the City of Santa Clarita, CA on 111111MM,2007, which is now on file in my office. Witness my hand and seal of the City of Santa Clarita, California, this day of )20—. Sharon L. Dawson, CMC City Clerk Susan Caputo Deputy City Clerk 7