CC 2014-06-24_11.a. Ordinance State Video FranchisesMEMORANDUM
TO: CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER fl<'
. SUBJECT: CONSIDERATION OF ORDINANCE REGARDING STATE VIDEO.
FRANCHISES
DATE: JUNE 24, 2014
RECOMMENDATION:
It is recommehded the City Council introduce an Ordinance regarding State Video
Franchises to require payment of a franchise fee, provision of Public, Education and
Government (PEG) access channels, payment of a PEG access faCilities fee, and
penalties .for customer service violations.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Estimated revenue in FY 2013-14 is $180,000 for cable television franchise fees and
$36,000 for. PEG access fees. The Ordinance is designed to maintain that revenue.
No impact on st~ff resources is projected from this item.
BACKGROUND:
Under Federal cable television regulations, the City has traditionally negotiated
franchise agreements with the cable operator ·for provision of cable television
services in the City. The City's current franchise agreement with Charter
Communications is due to expire on August 2?1h, having been in force ~ince 1996. In
the past, the City would nego.tiate renewal of the franchise prior to the expiration.
In 2006, the State of California adopted the Digital Infrastructure and Video
Competition Act (DIVCA). This statute mandates that all cable franchises in
California shall instead be issued by the California Public Utilities Commission after
January t, 2008. As a result, the City no longer has· authority to require a franchise
from any cable operator.
Under OIVCA, cities do have the authority to maintain some limited local control over
cable operators within their jurisdiction. The attached Ordinance is designed to
protect the interests of the community to the fullest extent permitted by law.
Item 11.a. - Page 1
CITY COUNCIL
CONSIDERATION OF ORDINANCE REGARDING STATE VIDEO FRANCHISES .
JUNE 24, 2014
PAGE2
ANALYSIS OF ISSUES:
Under the franchise agreement, the cable operator currently pays the City a franchise
fee of 5% of gross revenues, which is standard for most jurisdictions. DIVCA
continues payrnent to the City at this rate and continues to allow use of the revenue
for "any lawful purpose." The proposed Ordinance sets forth provisions for payment
of the franchise fee to the City.
Currently, the cable operator is also required under the terms of the franchise
agreement to pay a PEG access fee to the City in the amount of 1 % of gross ·
revenues. The fee can only be used for capital needs associated with PEG
channels. Cities are authorized to continue to charge this fee, which is also set forth
in the proposed Ordinance, and to maintain the current PEG channels. Plans are
under way to utilize. this revenue to upgrade the City's cablecasting equipment in the
Council Chambers. ·
DIVCA eliminated the City's authority to establish customer service standards the
. cable operator is required to meet. However, if made aware of. a material breach of
customer service standards set by the PUC, the City can go through ·a process to
levy· fines· after giving a 30-day period to rem.edy the breach. The maximum
allowable fines ·are set out in DIVCA and are reflected in the proposed Ordinance.
Under the cu~rent franchise agreement, the City is provided basic cable television
servic~ and utilization of a fiber optic .institutional network (I-Net) at City facilities at no
charge. This is no longer provided under DIVCA, which will impact the City's budget
by an estimated $40,000 to $60,000 annually to maintain these services.
ALTERNATIVES:
The followiqg alternatives are provided for the Council's consideration:
1. · Approve staff's recommendations;
2. ·Modify and introduce the Ordinance;
3. Do not introduce the Ordinance; or
4. . Provide staff other direction.
ADVANTAGES:
The primary objective of the Ordinance is to maintain the City's cable television
franchise fee and PEG access fee revenue.
DISADVANTAGES:
No disadvantages with the recommended action are identified.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item
Item 11.a. - Page 2
CITY COUNCIL
CONSIDERATION OF ORDINANCE REGARDING STATE VIDEO FRANCHIS.ES
. JUNE 24, 2014
PAGE3
·. .
PUBLIC NOTIFICATION AND COMMENTS:
The agenda was posted in front of City Hall on Thursday, June 19, 2014 and on the
City's website on Friday, June 20, 2014. No comments were received.
Item 11.a. - Page 3
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF ARROYO GRANDE ADDING CHAPTER 5.25 TO TITLE
5 OF Ti-IE ARROYO GRANDE MUNICIPAL CODE
RELATING TO STATE-ISSUED CABLE TELEVISION
FRANCHISES
WHEREAS, the Legislature of the State of California has adopted the Digital
Infrastructure and Video Competition Act of 2006 (DIVCA); and
WHEREAS, the City of Arroyo Grande's local franchise for the prov1s1on of cable
television services between the City and Charter Communications will expire on August
27,2014;and
WHEREAS, DIVCA establishes a regulatory structure for the State's Public Utilities
Commission to issue franchises to video service providers; and
WHEREAS, DIVCA provides that local entities are responsible for administration and
implementation of certain provisions of DIVCA, but that they are preempted from
regulating most other provisions governing state-issued cable television franchises; and
WHEREAS, DIVCA requires that the City is to establish by ordinance certain provisions
including, financial support provisions for Public, Education and Government Access
(PEG) channel facilities; and
WHEREAS, DIVCA requires that the City adopt a schedule of penalties for any material
breach by a State video franchise holder for violation of customer service and protection
standards that the City is permitted to enforce.
NOW, THEREFORE BE IT ORDAINED by the City Council of the City of Arroyo Grande
as follows:
SECTION 1. Chapter 5.25 is hereby added to the Arroyo Grande Municipal Code to
read as follows:
5.25.010. General Provisions
5.25.020. Definitions
5.25.030. Franchise Fees
5.25.040. Customer Service
5.25.050. Permits and Construc~ion
5.25.060. Emergen~y, Alert System
5.25.070. Public, Educational, and Government Access (PEG) and PEG Fee
5.25.080. City Response to Franchise Holder Applications
Item 11.a. - Page 4
ORDINANCE NO.
PAGE2
5.25.010. General Provisions
A. Purpose.
This Chapter is intended to be applicable to state franchise holders who have been
awarded a state video franchise under the California Public Utilities Code section 5800
et seq. (the Digital Infrastructure and Video Competition Act of 2006 ["DIVCA"]), to serve
any location(s) within the incorporated boundaries of the City of Arroyo Grande. It is the
purpose of this Chapter to implement within the incorporated boundaries of the City the
provisions of DIVCA and the rules of the California Public Utilities Commission
promulgated thereunder that are applicab_le to a "local franchising entity" or a "local
entity" as defined in DIVCA.
B. Rights Reserved.
1. The rights reserved to the City under this Chapter are in addition to all other rights
of the City, whether reserved by this Chapter or authorized by law, and no action,
proceeding or exercise of a right shall affect any other rights which may be held
by the City.
2. Except as otherwise provided by DIVCA, a state franchise shall not include, or be
a substitute for:
(a) compliance with generally applicable requirements for the privilege of
transacting and carrying on a business within the City, including, but not
limited to, compliance with the conditions that the City may establish before
facilities may be constructed for, or providing, non-video services;
(b) any permit or authorization required in connection with operations on or in
public rights-of-way or public property, including, but ·not limited to,
encroachment permits, street work permits, pole attachment permits and
street cut permits; and
(c) any permit, agreement or authorization for occupying any other property of the
City or any private person to which access is not specifically granted by the
state franchise.
3. Except as otherwise provided in DIVCA, a state franchise shall not relieve a state
franchise holder of its duty to comply with all laws, including the ordinances,
resolutions, rules, regulations, and other laws of the City, and every state
franchise holder shall comply with the same.
4. No permit issued by the City to a state franchise holder is itself a franchise, nor
shall any permit create a vested right that would prohibit the City from revoking or
amending the permit.
Item 11.a. - Page 5
ORDINANCE NO.
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C. Compliance with this Chapter.
Nothing contained in this Chapter shall ever be construed so as to exempt a state
franchise holder from compliance with all ordinances, rules or regulations of the City
now in effect or which may be hereafter adopted which are consistent with this Chapter
or California Public Utilities Code section 5800, et seq.
5.25.020. Definitions
. A. For the purposes of this Chapter, "CPUC" shall mean the California Public Utilities
Code.
8. For the purposes of this Chapter, "franchise holder" shall mean a holder of a State
franchise, as that term is defined at CPUC section 5830.
C. For the purposes of this Chapter, "gross revenues" shall have the definition as set
forth at CPUC section 5860.
D. For the purposes of this Chapter, "material breach" shall have the definition as set
forth at CPUC section 59000).
E. For the purposes of this Chapter, "PEG" shall refer to the public, educational and
governmental access operations as addressed at section CPUC section 5870.
F. For the purposes of this Chapter, "State" shall mean the State of California.
5.25.030. Franchise Fees
A. State Franchise Fees. Any state franchise holder operating within the incorporated
areas of the City shall pay to the City a state franchise fee equal to five percent (5%) of
gross revenues.
B. Payment of Franchise Fees. The state franchise fee required pursuant to this
Section shall each be paid quarterly, in a manner consistent with California Public
Utilities Code section 5860. The state franchise holder shall deliver to the City, by check
or other means, which shall be agreed to by the City, a separate payment for the state
franchise fee not later than forty-five (45) days after the end of each calendar quarter.
Each payment made shall be accompanied by a report, detailing how the payment was
calculated, and shall include such additional information on the appropriate form as
designated by the City.
C. Examination of Business Records. The City may examine the business records of
the holder of a state franchise in a manner consistent with California Public Utilities
Code section 5860(i).
D. Late Payments. Pursuant to California Public Utilities Code subsection 5860(h), in
the event a state franchise holder fails to make payments required by this Section on or
Item 11.a. - Page 6
ORDINANCE NO.
PAGE4
before the due dates specified in this Section, the City shall impose a late charge at the
rate per year equal to the highest prime lending rate during the period of delinquency,
plus one percent (1%).
5.25.040. Customer Service
A. A state franchise holder shall comply with sections 53055, 53055.2, 53055.2 and
53088.2 of the California Government Code; the FCC customer service and notice
standards set forth in sections 76.309, 76.1602, 76.1603, and 76.1619 of Title 47 of the
Code of Federal Regulations; section 637.5 of the California Penal Code; the privacy
standards of section 551 of Title 47 of the United States Code;.and all other applicable
state and federal customer service and consumer protection standards pertaining to the
provision of video service, include any such standards hereafter adopted. In case of a
conflict, the stricter standard shall apply. All customer service and consumer protection
standards under this paragraph shall be interpreted and applied to accommodate newer
or different technologies while meeting or exceeding the goals of the standards.
B. The City Manager or her/his designee will provide a franchise holder with written
notice of any material breach of applicable customer service and protection standards,
and will allow the franchise holder at least thirty (30) calendar days after the franchise
holder's receipt of the notice to remedy the specified material breach. A material breach
that is not remedied by the franchise holder within the remedy period shall subject the
franchise holder to the following penalties, as set forth in California Public Utilities Code
Section 5900:
1. For the first occurrence of a material breach, a penalty of not more than ·
Five Hundred Dollars ($500) for each day of each material breach, not to exceed
One Thousand Five Hundred Dollars ($1,500) for each occurrence of a material
breach.
2. For the second violation of the same nature within twelve (12) months, a
penalty of One Thousand Dollars ($1,000) for each day of each material breach,
not to exceed Three Thousand Dollars ($3,000) for each occurrence of the
material breach.
3. For a third or further violation of the same nature within twelve (12)
·months, a penalty of Two Thousand Five Hundred Dollars ($2,500) for each day
of each material breach, not to exceed Seven Thousand Five Hundred Dollars
($7,500) for each occurrence of the material breach.
C. The franchise holder may appeal any imposition of penalties to the City Manager.
Any appeal must be made within thirty (30) calendar days after the City's delivery of the
notice regarding the imposition of penalties. All appeals must be timely submitted in
writing to the City Clerk. Any appeal must contain a detailed explanation of why the
applicant believes that the finding of material breach or the imposition of penalties was
inconsistent with statutory requirements or authority.
Item 11.a. - Page 7
ORDINANCE NO.
PAGES
D. The City Manager shall hear all evidence and relevant testimony and may uphold,
modify or vacate the penalty. The City Manager's decision on the imposition of a penalty
shall be final.
E. The City and any franchise holder may mutually agree to extend the time periods
specified herein. Any such agreement shall be in writing and executed by the City
Manager, or her/his designee, and an authorized representative of the franchise holder.
F. Any penalty imposed on the franchise holder pursuant to this Section shall be paid to
the City. As provided for in Subsection 5900(g) of the CPUC, the City shall submit one-
half of all penalties received from a franchise holder to the Digital Divide Account
established in Section 280.5 of the CPUC.
5.25.050. Permits and Construction
The following provisions are hereby adopted in accordance with the requirements of
Public Utilities Code Section 5885 with regard to holders of state franchises, installation,
construction and maintenance of networks within public rights-of way, and
encroachment permits issued in accordance with Chapter 13.26 of this Code for
construction or operation of such facilities.
A No encroachment permit under Chapter 13.26 shall be issued unless a written
application for the issuance of an encroachment permit is submitted to the Public Works
Director. The written application shall state the name and address and principal place of
business of the applicant, the name and address and telephone number of the person
responsible or in charge of the work, plans and specifications including the location and
dimensions of the installation, the purpose of the facility and the approximate time which
will be required to complete such work, full restoration work per City standard and
remove waste material and debris.
8. When a completed application for a permit is received by the Public Works
Department, the application shall be approved or denied by the Public Works Director,
or his/her designee, within sixty (60) days after the date of his/her receipt.
C. An application for a permit sought pursuant to Chapter 13.26 shall not be complete
until the applicant has complied with all requirements, including any analysis required
under the California Environmental Quality Act (CEQA) and State CEQA Guidelines,
and has paid the required fee as established by a resolution of the City Council.
D. Any permit shall be subject to any reasonable conditions or limitations imposed
thereon, to assure the elimination or avoidance of adverse effects.
E. If the applicant complies with every provision of Chapter 13.26 and with all applicable
provisions of this Code, the Public Works Director may issue to the applicant a written
permit to perform the work set forth in the application. The application, when approved
and signed by the Public Works Director, shall constitute the permit.
F. An extension of time may be granted by the Public Works Director for good and
sufficient reasons.
Item 11.a. - Page 8
ORDINANCE NO.
PAGES
H. In the event the Public Works Director denies an application for a permit, the Director
shall notify the applicant of the denial and furnish to the applicant a detailed explanation
of the reason(s) for the denial.
I. In the event an applicant wishes to appeal the Public Works Director's decision to
deny an application or revoke a permit issued pursuant to Chapter 13.26, the decision
may be appealed to the City Council. An appeal shall be filed by submitting to the City
Clerk, within ten (10) days after the Public Works Director's notification of a decision on
the application, a notice of appeal stating the grounds for the appeal, along with a filing
fee in an amount established by resolution of the City Council. If the tenth day falls on a
weekend or legal holiday recognized by the City, then the final appeal day shall be the
next regular business day of the City. Within thirty (30) days after the receipt of a timely
appeal.
5.25.060. Emergency Alert System
In accordance with Public Utilities Code Section 5880, each state franchise holder shall
comply with the emergency alert system requirements of the Federal Communications
Commission in order -that emergency messages may be distributed over the state
franchise holder's network.
5.25.070. Public, Educational and Government Access and PEG Fee,
A.PEG Channel Capacity.
1. A State franchise holder shall designate a sufficient amount of capacity on its network
to allow the provision of at least three (3) PEG channels to satisfy the requirement of
state law, within the time limits specified by state law. This Section shall serve as the
request for PEG channels required by California Public Utilities Code section 5870(a).
2. A state franchise holder shall provide an additional PEG channel when the standards
set forth in section 5870(d) of the California Public Utilities Code are satisfied by the
City or any entity designated by the City to manage one or more of the PEG
channels.
B. PEG Fee.
As provided in CPUC subsection 5870(n), the City hereby establishes a _fee of one
percent (1 %) of a franchise holder's gross revenues to support PEG facilities, to be paid
by any franchise holder operating within the boundaries of the City of Arroyo Grande in
accordance with the following:
1. The fee shall be payable to the City quarterly, and shall be paid no-later than
June 1, September 1, December 1 and March 1 for the preceding calendar
-quarter for which the payment is due.
Item 11.a. - Page 9
ORDINANCE NO.
PAGE7
2. As permitted by CPUC subsection 5870(0), any franchise holder operating iri
the City may recover the PEG fees required herein as a separate line item on the
regular bill of each subscriber.
5.25.080. City Response to Franchise Holder Applications.
A. Any person who applies to be a State franchise holder within the boundaries of the
City of Arroyo Grande must concurrently provide complete copies to the City of any
application, or amendments to applications, filed with the CPUC. One complete copy.
must be provided to the City Clerk.
B. Within thirty (30) days after receipt of any documents described in Subsection A,
above, the City Administrator, or her/his designee will provide any appropriate
comments to the CPUC regarding an application or an amendment to an application for
a State franchise.
SECTION 2. If any section, subsection, subdivision, paragraph, sentence, or clause of
this Ordinance or any part thereof is for any reason held to be unlawful, such decision shall
not affect the validity of the remaining portion of this Ordinance or any part thereof. The
City Council hereby declares that it would have passed each section, ·subsection,
subdivision, paragraph, sentence, or clause thereof, irrespective of the fact that any one or
more section, subsection, subdivision, paragraph, sentence, or clause be declared
unconstitutional.
SECTION 3. A summary of this Ordinance shall be published in a newspaper
published and circulated in the City of Arroyo Grande at least five (5) days prior to the
City Council meeting at which the proposed Ordinance is to be adopted. A certified
copy of the full text of the proposed Ordinance shall be posted in the office of the City
Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the
names of those City Council Members voting for and against the Ordinance shall be
published again, and the City Clerk shall post a certified copy of the full text of such·
adopted Ordinance.
SECTION 4. This Ordinance shall take effect thirty (30) days after its adoption.
On motion by Council Member ___ , seconded by Council Member ___ , and by
the following roll call vote to wit:
AYES:
NOES:
ABSENT:
the foregoing Ordinance was adopted this __ day of ___ , 2014.
Item 11.a. - Page 10
ORDINANCE NO.
PAGES
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
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