HomeMy WebLinkAboutAGENDA REPORT 1999 0120 CC REG ITEM 09AFROM:
DATE:
MOORPARK CITY COUNCIL
AGENDA REPORT
Honorable City Council
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CITY OF MOORPARK, CALIFORNIA
City Council Meeting
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BY:.
John E. Nowak, Assistant City Manager G
06 January 1999 (Council Meeting of 01- 20 -99)
SUBJECT: Consider Action Regarding a Change of Control for
the Cable Communications Franchise held by TCI
Cablevision of California, Inc.
BACKGROUND: In March 1996 the City Council approved
transferring a cable television franchise to
Telecommunications, Inc. of Ventura County (TCI) which is a
part of TCI Cablevisions of California, Inc. The national
parent company, Tele- Communications, Inc. is planning to
merge with AT &T. The Moorpark Municipal Code requires City
approval for the new company to assume the franchise in
Moorpark. This matter was continued from the December 16,
1998 meeting at the request of TCI.
DISCUSSION: TCI OF Ventura County currently holds a
franchise to provide cable television service in the City
of Moorpark. In June 1998 the parent company of TCI agreed
to a merger with AT &T which would create a new wholly owned
subsidiary of AT &T that would operate the cable television
franchises. Section 5.06.312(A) of the Moorpark Municipal
Code requires the City's consent for any change in control
of a franchise prior to the change in control occurring
(see attached).
Section 5.06.320 of the Municipal Code provides for the
City Council to charge a franchise fee upon a change of
control that is in addition to any administrative fee. The
fee is identified in Section 5.06.200(20) of the Code.
TCI /AT &T Merger
Meeting of 20 January 1999
Page 02
Staff has identified a franchise fee of $25,000 to be
charged for the TCI /AT &T change of control approval. This
is similar to the fee requirement in the Entertainment
Express Ltd. extension resolution and as obtained from
refuse franchise change of control.
To date TCI has refused to agree to pay any franchise fee
as part of the approval, in violation of the provisions of
the Municipal Code. Staff believes this is sufficient
grounds to deny the change of control application.
Attached for the Council's consideration are two (2)
resolutions. The first would approve the change in control
with the franchise fee payment requirement. The second
would deny the application request on the basis of TCI's
refusal to comply with provisions of the Municipal Code.
Neither action affects any other condition nor requirement
of the current franchise held by TCI, which expires on
December 20, 2000.
This matter was noticed for a public hearing at the
December 16, 1998 Council meeting. The hearing was opened
and no one spoke at that time. The public hearing portion
of the discussion was left open and the matter was
continued to the January 20 meeting at TCI's request.
STAFF RECOMMENDATION: That the City Council determine if
it desires to disapprove or approve a change in control of
the cable communications franchise held by TCI Cablevision
of California, Inc. and adopt the appropriate resolution.
Attached:
Resolution No.
Resolution No.
Municipal Code
5.06.320
99- "A "- Approving with fee
99- "B "- Denying
Sections 5.06.200(20), 5.06.312(A) and
1 ! 1 ! .
RESOLUTION NO. 99- "A"
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MOORPARK, CALIFORNIA, APPROVING THE CHANGE OF
CONTROL OF THE CABLE COMMUNICATIONS FRANCHISE
HELD BY TCI CABLEVISION OF CALIFORNIA, INC.
WHEREAS, TCI Cablevision of California, Inc. through
TCI of Ventura County(hereinafter "Franchisee ") is duly
authorized to operate and maintain a cable communications
system in Moorpark, California (hereinafter the "System ")
by the City of Moorpark (hereinafter "Franchise Authority ")
pursuant to a franchise (hereinafter "Franchise ") granted
by the Franchise Authority in March 1996; and
WHEREAS, pursuant to the Agreement and Plan of
Restructuring and Merger among AT &T Corporation
(hereinafter "AT &T "), a newly formed wholly owned
subsidiary of AT &T (hereinafter "Merger Sub ") , and Tele-
Communications, Inc., the parent of Franchisee (hereinafter
"TCI "), dated as of June 23, 1998 (hereinafter "Merger
Agreement ") , Merger Sub will merge with and into TCI with
TCI as the surviving corporation in the merger, and as a
result of the transactions contemplated by the Merger
Agreement, TCI will become a wholly owned subsidiary of
AT &T (hereinafter "Transactions "); and
WHEREAS, Franchisee will continue to hold the
Franchise after consummation of the Transactions between
AT &T and TCI; and
WHEREAS, Federal Communication Commission's Form 394
with respect to the Transactions has been filed with the
Franchise Authority; and
WHEREAS, Section 5.06.312 of the Moorpark Municipal
Code requires the City's consent for any change in control
of a franchise prior to the change in control occurring;
and
WHEREAS, TCI has agreed to pay related administrative
costs incurred by the City in preparation and review of
this change in control request; and
�r to
Resolution No. 99-
Page 2
WHEREAS, TCI has agreed to pay a "Franchise Transfer
Fee" in the amount of $25,000 as part of the request for
change of control; and
WHEREAS, TCI and AT &T have requested consent by the
Franchise Authority to the Transactions;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF
MOORPARK DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The Franchise Authority hereby consents
to and approves a change in control of the Franchise as a
result of the Transactions to the extent such consent is
required by the terms of the Franchise and the Moorpark
Municipal Code.
SECTION 2. That a Franchise Transfer Fee of
$25,000 shall be due and payable upon the adoption of this
resolution.
SECTION 3. This Resolution shall become effective
upon its adoption and compliance with Section 2 above.
SECTION 4. The City Clerk shall certify to the
adoption of this resolution and shall cause a certified
resolution to be filed in the book of original Resolutions.
PASSED AND ADOPTED this 20th day of January 1999.
ATTEST:
Deborah S. Traffenstedt, City Clerk
Patrick Hunter, Mayor
RESOLUTION NO. 99- "B"
A RESOLUTION OF THE CITY OF MOORPARK, CALIFORNIA,
DENYING THE CHANGE OF CONTROL OF THE CABLE
COMMUNICATIONS FRANCHISE HELD BY TCI CABLEVISION
OF CALIFORNIA, INC.
WHEREAS, TCI Cablevision of California, Inc. through
TCI of Ventura County (hereinafter "Franchisee ") is duly
authorized to operate and maintain a cable communications
system in Moorpark, California (hereinafter the "System ")
by the City of Moorpark (hereinafter "Franchise Authority ")
pursuant to a franchise (hereinafter "Franchise ") granted
by the Franchise Authority in March 1996; and
WHEREAS, pursuant to the Agreement and Plan of
Restructuring and Merger among AT &T Corporation
(hereinafter "AT &T "), a newly formed wholly owned
subsidiary of AT &T (hereinafter "Merger Sub ") , and Tele-
communications, Inc., the parent of Franchisee (hereinafter
"TCI "), dated as of June 23, 1998 (hereinafter "Merger
Agreement ") , Merger Sub will merge with and into TCI with
TCI as the surviving corporation in the merger, and as a
result of the transactions contemplated by the Merger
Agreement, TCI will become a wholly owned subsidiary of
AT &T (hereinafter "Transactions "); and
WHEREAS, Federal Communication Commission's Form 394
with respect to the Transactions has been filed with the
Franchise Authority; and
WHEREAS, Section 5.06.312 of the Moorpark Municipal
Code requires the City's consent for any change in control
of a franchise prior to the change in control occurring;
and
WHEREAS, Sections 5.06.200 and 5.06.320 allow the City
to charge a franchise fee for any change of control; and
WHEREAS, TCI has agreed to pay related administrative
costs incurred by the City in preparation and review of
this change in control request but have refused to pay and
franchise fee as permitted by the Moorpark Municipal Code;
and
00GO05
Resolution No. 99-
Page 2
WHEREAS, TCI and AT &T recognize consent by the
Franchise Authority to the Transactions is required;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF
MOORPARK DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The Franchise Authority hereby denies
approval of a change in control of the Franchise as a
result of the Transactions on the basis of TCI's refusal to
pay the franchise fee provided for by the Moorpark
Municipal Code.
SECTION 2. This Resolution shall become effective
upon its adoption.
SECTION 3. A copy of this Resolution shall be
submitted to the Federal Communications Commission.
SECTION 4. The City Clerk shall certify to the
adoption of this resolution and shall cause a certified
resolution to be filed in the book of original Resolutions.
PASSED AND ADOPTED this 20thth day of January 1999.
Patrick Hunter, Mayor
ATTEST:
Denorah S. Trattenstedt, City Clerk
i!
5.06.200
sion channel as defined by the Federal Communications
Commission.
9. "City" means the city of Moorpark, a municipal
corporation of the State of California, in its present incor-
porated form or in any later reorganized, consolidated,
enlarged or reincorporated form.
10. "Commence construction" means the point in time
when the first connection is physically made to a utility
pole, or undergrounding of cables is initiated, after pre-
liminary engineering (strand mapping) and after all neces-
sary permits and authorizations have been obtained.
11. "Commence operation" means the point in time
when sufficient distribution facilities have been installed
so as to permit the offering of cable service to a dwelling
unit located within the franchise area and such services
are actually subscribed to by a resident of the franchise
area.
12. "Commercial use channel" means the channel capac-
ity, if any, designated for commercial use as defined and
required by federal law.
13. "Completion of construction" means the point in
time when all distribution facilities have been installed by
the grantee so as to permit the offering of cable service
to all of the potential subscribers in the franchise area
subject to the limitations of Section 5.06.804.
14. "Community access channel or access channel"
means any channel or portion of a channel utilized for
programming on a non -profit basis.
15. "Consent," "approval" or "agree." Such words or
derivations of said words or words of similar import mean,
unless otherwise expressly provided in this chapter or
grantee's franchise ordinance, the prior approval, consent
or agreement of the person holding the right to approve,
consent or agree with respect to the matter in question,
and "require" or "judgment" or "satisfy" or derivations
of said words or words of similar import mean the require-
ment, judgment or satisfaction of the person who may make
a requirement or exercise judgment or who must be satis-
fied, which approval, consent, agreement, requirement,
judgment or satisfaction, unless otherwise expressly provid-
ed in this chapter or the grantee's franchise ordinance, is
not to be unreasonably withheld or delayed by the person
holding the right to approve, consent or agree or make a
requirement or judgment or who must be satisfied.
16. "Council" means the present governing body of
the city or any future board constituting the legislative body
of the city.
17. "Federal Communications Commission or FCC"
means the present federal agency of that name as constituted
by the Communications Act of 1934, or any successor
agency created by the United States Congress.
68
18. "Franchise" means the right to construct, operate
and maintain a cable television system using the city streets
pursuant to the terms and condition of this chapter, the
franchise ordinance and the acceptance of the franchise
ordinance. Any reference to the "franchise" incorporates
by reference this chapter, the franchise ordinance and the
acceptance of the franchise ordinance.
19. "Franchise area" means the geographic area within
the city designated in a franchise where the grantee may
operate a cable television system.
20. "Franchise fee" means the tax, fee or assessment
of any kind imposed by the city on a grantee or cable sub-
scriber, or both, solely because of its status as such. The
term "franchise fee" does not include:
a. Any tax, fee or assessment of general applicability
(including any such tax, fee, or assessment imposed on
both utilities and grantee(s) or their services but not includ-
ing a tax, fee, or assessment which is unduly discriminatory
against grantee or cable subscribers);
b. Capital costs which are required by the franchise
to be incurred by grantee for PEG access facilities;
c. Requirements or charges incidental to the awarding,
enforcing, transfer or renewal of the franchise, including
payments of bonds, consultants, administrative expenses,
security funds, letters of credit, insurance, indemnification,
penalties, or liquidated damages; or
d. Any fee imposed under Title 17, United States Code.
21. "Franchise ordinance" means the ordinance granting
a franchise to a person to operate a cable television system
pursuant to the terms of this chapter. Any conflict between
the terms of this chapter and the franchise ordinance shall
be resolved in favor of the franchise ordinance.
22. "Grantee" means any person granted a franchise.
23. "Gross revenues" means any and all revenue or
compensation in any form derived directly or indirectly
by the grantee, its affiliates, subsidiaries, parents and any
person in which the grantee has a financial interest, from
the operation of the cable television system utilizing the
public streets and rights -of -way in the city for which a
franchise is required under this chapter, including, but not
limited to, monthly subscriber fees for basic cable service,
pay - television fees, pay - per -view fees and related per -event
revenues, installation and reconnection fees, leased channel
fees, fees paid for data transmission, converter rentals,
advertising revenues, copyright fees, franchise fees or any
other costs of doing business which are separately assessed
to subscribers as a separate line item appearing on periodic
statements for services rendered (except as provided below),
provided, however, that the amount of gross revenues may
be reduced by the amount of any bad debts written off
by the grantee or refunds returned to persons, provided
that the revenue with respect thereto had been included
0OW07
5.06.310
5.06310 Franchise nontransferrable.
A. Except as otherwise provided in the franchise
ordinance, the franchise shall not be transferred, sold,
hypothecated, sublet or assigned, nor shall any of the rights
or privileges therein be hypothecated, leased, assigned,
sold or transferred, either in whole or in part, nor title there-
to, either legal or equitable, or any right, interest or property
therein, pass to or vest in any person, except the grantee,
either by act of the grantee or by operation of law, without
the prior consent of the city expressed by resolution.
Nothing set forth in this chapter prevents the grantee from
leasing or otherwise allocating use of any channel or pro-
gramming time to any person, whether over a commercial
use channel, local origination channel or otherwise.
B. If the grantee transfers the franchise prior to obtain-
ing city consent, twenty-five percent (25 %) of the gross
revenues of the cable television system from the date of
franchise transfer until the date of city consent shall be
returned to the system's subscribers, on a per- capita basis.
C. The city may not unreasonably withhold its consent
to a franchise transfer. For the purpose of determining
whether it consents to such change, transfer, or change
in control, city may inquire into the qualifications of the
prospective transferee or controlling party, and grantee shall
assist city in any such inquiry. In seeking city's consent
to any change of ownership or control, grantee shall have
the responsibility of insuring that transferee completes an
application in form and substance reasonably satisfactory
to city, which application shall be submitted pursuant to
Section 5.06.320 of this chapter. An application shall be
submitted to city not less than ninety (90) days prior to
the date of transfer. The grantee shall be required to estab-
lish that it is in material compliance with its franchise. The
transferee shall be required to establish that it possesses
the qualifications and financial and technical capability
to operate and maintain the system and comply with all
franchise requirements for the remainder of the term of
the franchise. If the city finds that the legal, financial,
character, technical and other public interest qualities of
the applicant are satisfactory, and that the proposed
transferee has the capability to operate and maintain the
system and comply with all franchise requirements for the
then remaining term thereof, the city shall transfer and
assign the rights and obligations of such franchise. The
city may condition the transfer to insure the transferee is
in material compliance, and remains in material compliance
with, the franchise. (Ord. 133 § 1 (part), 1990)
5.06.312 Change in control.
A. City consent is further required for any change in
control of grantee, pursuant to subsection 5.06.3 10 above.
"Change of control" means any sale, transfer or acquisition
70
of grantee, grantee's parent, the parent of grantee's parent,
etc. If grantee or its parent(s) is a corporation, any acquisi-
tion of more than 10% of grantee's voting stock by a person
or group of persons acting in concert, whom already own
less than 50% of the voting stock, is deemed a change in
control.
B. Any change of control of the grantee occurring
without prior city approval shall constitute a material breach
of the franchise. (Ord. 133 § 1 (part), 1990)
5.06.314 Franchise area — Annexations.
A. The franchise ordinance shall establish the franchise
area.
B. Territory annexed to the city which is not within
the franchise area of an existing franchise may be added
to an existing franchise pursuant to council resolution adopt-
ed after conducting a noticed public hearing, provided that
such new territory shall be deemed a part of the franchise
area of any grantee authorized to serve the entire geographic
area of the city without action by the council. (Ord. 133
§ 1 (part), 1990)
C. Territory annexed to the city that is already covered
by an existing franchise or license granted by another public
entity but where the grantee of such franchise or license
has not commenced installation of a cable television system
in the area of such annexed territory shall be deemed not
to be served by a franchise or license, and all rights ac-
quired under said franchise or license in the area of such
annexed territory shall terminate by operation of law as
of the effective date of the annexation.
D. Territory annexed to the city that is already served
by a franchise or license issued by another public entity,
may continue to be served by the grantee under said fran-
chise or license for the balance of the term of said franchise
or license, subject to the provisions of said franchise or
license and the provisions of this chapter, and provided
the franchise fees, which the city may establish by resolu-
tion up to the maximum permitted by law, are paid. (Ord.
133 § 1 (part), 1990)
5.06.316 Franchise applications.
A. Any person may apply for the grant of a new
franchise.
B. The city may, by advertisement or any other means,
solicit applications for new franchises pursuant to a request
for proposals.
C. Upon receipt of an application, the city manager
shall cause to be prepared a report, including his recom-
mendations respecting such application, which shall be
filed with the council and each applicant. Upon receipt
of said report, a public hearing shall be noticed to consider
the approval of the application.
tl
D. The city may, at any time prior to the close of the
public hearing, require the applicant to provide supple-
mentary information reasonably necessary to determine
whether the application should be approved.
E. Following the public hearing, the council, at its
discretion, shall determine whether to approve the applica-
tion. In making its determination, the council shall give
due consideration to the quality of the service proposed,
income to the city, experience, character, technical and
financial responsibility of the applicant, and any other
considerations deemed pertinent by the council for safe-
guarding the interests of the city and public. (Ord. 133
§ 1 (part), 1990)
5.06317 Multiple franchises.
A. City may grant any number of franchises, either
on a city-wide basis or for a limited service area. City may
limit the number of franchises granted, based upon, but
not necessarily limited to, the following considerations:
1. The capacity of the public rights -of -way to accom-
modate the facilities of two or more cable systems.
2. The benefits that may accrue to cable subscribers
as a result of cable system competition, such as lower rates
and improved service.
3. The disadvantages that may result from cable system
competition, such as the requirement for multiple pedestals
on residents' property, and the disruption arising from
numerous excavations of the rights -of -way.
B. City may require that any new grantee be responsible
for its own underground trenching and the costs associated
therewith, if, in city's opinion, the rights -of -way in any
particular area cannot feasibly and reasonably accommodate
additional cables.
C. In the event that, subsequent to the effective date
of this chapter, city grants an additional franchise for a
cable communications system on terms that, on a whole,
are more favorable or less burdensome than those contained
in an existing grantee's franchise granted pursuant to this
chapter, such more favorable or less burdensome terms
shall be automatically extended to such existing grantee
to the effect that any provision in such grantee's franchise
which is inconsistent with such more favorable or less
burdensome terms shall be superseded by such more
favorable or less burdensome terms. Such more favorable
or less burdensome terms shall be effective with respect
to the grantee's franchise as of the effective date of the
franchise granted to such other person. In order to invoke
the benefit of this clause such existing grantee shall notify
city in writing of the specific terms in the proposed fran-
chise that are more favorable or less burdensome than the
terms of the existing franchise prior to the public hearing
described at Section 5.06.316, provided that city has given
71
5.06.316
such existing grantee at least thirty (30) days prior written
notice of such public hearing, together with a copy of the
proposed franchise. (Ord. 133 § 1 (part), 1990)
5.06.318 Franchise renewal.
The city may establish franchise renewal procedures
by resolution subject to applicable federal law. (Ord. 133
§ 1 (part), 1990)
5.06.320 Franchise processing costs.
Any application for either a new franchise grant, a
franchise renewal or a franchise transfer, shall be made
in a manner prescribed by the city manager, and shall
include an application fee, in an amount to be set by city
resolution, to cover the cost of all direct and indirect
administrative expenses, including consultants and attorneys,
necessary to adequately analyze the application. In addition,
the grantee shall reimburse the city for all out -of- pocket
processing costs, which shall include, but not be limited
to, costs of publications of notices, development and
publication of relevant franchise ordinances and agreements,
and any other out -of- pocket not covered by the application
fees, incurred by the city in its study and evaluation of
applications. The city may periodically bill the applicant
for such additional amounts to reimburse the city for ad-
ministrative expenses incurred in addition to the application
fee. The bills shall be supported with evidence of the
expense or cost incurred. The applicant shall pay such bills
within thirty (30) days of receipt.
These franchise processing costs are over and above
any construction inspection and permit fees and the fran-
chise fees specified in this chapter or the franchise ordi-
nance. (Ord. 133 § 1 (part), 1990)
5.06322 Franchise fee.
A. Every grantee shall pay a franchise fee to the city
in the amount designated in the franchise ordinance. The
city, upon request, shall be furnished a statement, either
audited and certified by an independent certified public
accountant or certified by a financial officer of the grantee,
reflecting the total amounts of gross revenues and all
computations for the period covered by the payment. City
shall have the right to conduct an independent audit of those
records of grantee reasonably necessary to determine gross
revenues, and if such audit indicates a franchise fee under-
payment of three percent (3 %) or more, the grantee shall
assume all costs of such an audit.
B. Acceptance of a franchise fee payment for more
than four (4) years after its receipt shall amount to a release
and accord and satisfaction as to any claim the city may
have for additional sums payable. The grantee shall maintain
gross revenue records for a minimum of four (4) years.
(JOGW9