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2000 Municipal Code Ordinance 310 - An Ordinance of the City of RH Establishing Video Franchise Fees, PEG Fees, Penalties & other Related MattersOLD BUSINESS CONSIDERATION ORDINANCE NO. 310: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. City Manager Dahlerbruch reported that Ordinance No. 310 .was introduced at the last City Council meeting and that it is being presented this evening for second reading and adoption. Hearing no discussion, Mayor Hill called for a motion. Mayor Pro Tem Heinsheimer moved that the City Council waive further reading and adopt Ordinance No. 310. Councilmember Lay seconded the motion which carried unanimously. l ' AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE City Manager Dahlerbruch provided background regarding the ordinance. Hearing no discussion, Mayor Hill called for a motion. Councilmember Lay moved that the City Council waive further reading and introduce Ordinance No. 310. Mayor Pro Tem Heinsheimer seconded the motion which carried unanimously. This item was continued to the next regular meeting of the City Council for consideration of second reading and adoption. ORDINANCE NO. 310 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. The City Council of the City of Rolling Hills does ordain as follows: SECTION 1: Section 5.08.020 "Definitions" of the Rolling Hills Municipal Code is amended by adding thereto the definition of "State Franchisee" in alphabetical order to read as follows: "State Franchisee" means any holder of a State -issued video franchise operating in the City, as defined in Public Utilities Code section 5830(p). SECTION 2: A new Article V entitled "State Video Franchisees" commencing with section 5.08.400 is hereby added to Title 13, Chapter 5.08 of the Rolling Hills Municipal Code to read as follows: "DIVISION 7. STATE VIDEO FRANCHISEES 5.08.400. PEG Fee Established. In accord with Public Utilities Code section 5870(n), any Grantee of a Franchise, or State Franchisee, must pay to the City a fee for the support of PEG channel facilities. (a) The amount of the PEG Fee established by this section is one percent (1%) of Gross Revenues, as defined in this Code, the applicable City -issued franchise, or Public Utilities Code section 5860(d). 5.08.410. Franchise Fee Established. For any State Franchisee, the amount of the franchise fee imposed by Public Utilities Code section 5840(q) shall be two and one-half percent (2.5%) of Gross Revenues, as defined in Public Utilities Code section 5860(d). (a) In accord with Public Utilities Code section 5860(a), the City Manager will prepare and provide to State Franchisees all necessary documentation supporting the percentage franchise fee paid by the incumbent cable operator serving the City. 5.08.420. Notices from State Franchisees. Any notice a State Franchisee is required to deliver to the City by 5840(m) must be delivered to the City Manager. 5.08.430. Nothing in this Chapter is intended to limit or restrict in any way the imposition of any existing or future generally applicable, nondiscriminatory, competitively neutral tax, fee, or charge to a State Franchisee, City franchisee or the services the franchisees provide. 5.08.440. Customer Service Provisions for State Franchisees (a) All State Franchisees must comply with all applicable State and Federal laws and regulations regarding customer service and customer protection. (b) The City Manager may review the performance of State Franchisees for compliance with the customer service requirements specified in Public Utilities Code section 5900 (the "Customer Service Standards"). (c) If the City believes a material breach of the Customer Service Standards has occurred, the City Manager must give the State Franchisee written notice of any alleged material breach(es). The State Franchisee must remedy the specified material breach(es) no later than thirty (30) days from receipt of the notice. (d) If the State Franchisee fails to remedy the specified material breach(es) within 30 days, the City Manager may impose monetary penalties on the following schedule: a. Up to 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. b. For a second material breach of the same nature within 12 months, up to 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. c. For a third or further material breach of the same nature within 12 months, up to 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. Ordinance No. 310 -1- 1,4 Marilyn Kern Deputy City Clerk (e) Any r :ary penalty imposed under this section ma - appealed by the State Franc: to the City Council. Appeals must be recei n writing by the City Clerk witnin sixty (60) days of imposition of the penalty. the State Franchisee may present any relevant written or oral evidence of its choice. The City Council may uphold or reverse, in whole or in part, the imposition of the monetary penalties. 5.08.450. The City Manager shall ensure PEG transmissions, content, and programming provided by the City to a State Franchisee is in a format compatible with the State Franchisee's system. In the alternative, the transmissions, content, and programming may be provided in a industry standard format, in accord with Public Utilities Code section 5870(g)(1). 5.08.460. For the duration of any City -issued franchise, if that Franchisee has existing unsatisfied obligations under the franchise to pay to the City any cash payments for the ongoing costs of public, educational, and government access channel facilities or institutional networks, the fee payable by each City and State Franchisee shall be the Franchisee's pro rata per subscriber share of the cash payment required to be paid by the City franchisee to the City for the costs of PEG channel facilities. (a) Within 45 days of receipt of the notice required by Public Utilities Code section 5840(n), each City and State Franchisee must provide to the City Manager a written statement of the number of its subscribers within the Franchisee's service area in the City. (b) Within 45 days of receipt all Franchisee subscriber number statements, the City Manager must calculate the division of the cash payments among all City and State Franchisees, and provide written notice to each Franchisee of the Franchisee's share of the cash payment. This amount may expressed as a percentage of gross revenue or as an amount per subscriber, per month, or otherwise. 5.08.470. Interconnection. To properly serve the City's interest in PEG programming, each State Franchisee and City Franchisee must comply with the PEG system interconnection requirements of Public Utility Code section 5870. The City Manager, or his or her designee, may make any interconnection determinations of the City under Public Utility Code section 5870, including requiring interconnection where the City Franchisee and State Franchisee fail to reach a mutually acceptable interconnection agreement." SECTION 3: Repeal or amendment of any provision of the Rolling Hills Municipal Code herein will not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Ordinance's effective date. Any such repealed part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Ordinance. SECTION 4: If any part of this Ordinance or its application is deemed invalid by a court of competent jurisdiction, the city council intends that such invalidity will not affect the effectiveness of the remaining provisions or applications and, to this end, the provisions of this Ordinance are severable. SECTION 5: The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City of Rolling Hills's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. SECTION 6: This Ordinance will become effective on the thirty-first (31st) day following its passage and adoption. PASSED AND ADOPTED this 24th day of March, 2008. Frank E. Hill Mayor ATTEST: Ordinance No. 310 -2- STATE OF CALIFORP.__ _ COUNTY OF LOS ANGELES ) §§ CITY OF ROLLING HILLS I certify that the foregoing Ordinance No. 310 entitled: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. was approved and adopted at a regular meeting of the City Council on March 24, 2008 by the following roll call vote: AYES: Councilmembers Black, Lay, Pernell, Mayor Pro Tern Heinsheimer and Mayor Hill. NOES: None. ABSENT: None. ABSTAIN: None. and in compliance with the laws of California was posted at the following: Administrative Offices MARILYN KERN DEPUTY CITY CLERK Ordinance No. 310 -3- TO: FROM: SUBJECT: DATE: C1t opefl,,.gJJ.fP INCORPORATED JANUARY 24, 1957 NO. 2 PORTUGUESE BEND ROAD ROLLING HILLS, CALIF. 90274 (310) 377.1521 FAX: (310) 3777288 Agenda Item No.: 7-A Mtg. Date: 03-24-08 HONORABLE MAYOR AND MEMBERS OF THE CITY -COUNCIL ANTON DAHLERBRUCH, CITY MANAGER CONSIDERATION ORDINANCE NO. 310: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. MARCH 24, 2008 At City Council meeting held on Monday, March 10, 2008 the City Council introduced Ordinance No. 310. Ordinance No. 310 is being presented this evening for second reading and adoption. . AD/' Cable Franchise Report 2''reading.doc Page 1 of 1 ® Printed on Recycled Paper ORDINANCE NO. 310 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. The City Council of the City of Rolling Hills does ordain as follows: SECTION 1: Section 5.08.020 "Definitions" of the Rolling Hills Municipal Code is amended by adding thereto the definition of "State Franchisee" in alphabetical order to read as follows: "State Franchisee" means any holder of a State -issued video franchise operating in the City, as defined in Public Utilities Code section 5830(p). SECTION 2: A new Article V entitled "State Video Franchisees" commencing with section 5.08.400 is hereby added to Title 13, Chapter 5.08 of the Rolling Hills Municipal Code to read as follows: "DIVISION 7. STATE VIDEO FRANCHISEES 5.08.400. PEG Fee Established. In accord with Public Utilities Code section 5870(n), any Grantee of a Franchise, or State Franchisee, must pay to the City a fee for the support of PEG channel facilities. (a) The amount of the PEG Fee established by this section is one percent (1%) of Gross Revenues, as defined in this Code, the applicable City -issued franchise, or Public Utilities Code section 5860(d). 5.08.410. Franchise Fee Established. For any State Franchisee, the amount of the franchise fee imposed by Public Utilities Code section 5840(q) shall be two and one-half percent (2.5%) of Gross Revenues, as defined in Public Utilities Code section 5860(d). (a) In accord with Public Utilities Code section 5860(a), the City Manager will prepare and provide to State Franchisees all necessary documentation supporting the percentage franchise fee paid by the incumbent cable operator serving the City. 5.08.420. Notices from State Franchisees. Any notice a State Franchisee is required to deliver to the City by 5840(m) must be delivered to the City Manager. 5.08.430. Nothing in this Chapter is intended to limit or restrict in any way the imposition of any existing or future generally applicable, nondiscriminatory, competitively neutral tax, fee, or charge to a State Franchisee, City franchisee or the services the franchisees provide. 5.08.440. Customer Service Provisions for State Franchisees (a) All State Franchisees must comply with all applicable State and Federal laws and regulations regarding customer service and customer protection. (b) The City Manager may review the performance of State Franchisees for compliance with the customer service requirements specified in Public Utilities Code section 5900 (the "Customer Service Standards"). Ordinance No. 310 -1- (c) If the City _ eves a material breach of the Cust-..,,r Service Standards has occurred, the City Manager must give the State Franchisee written notice of any alleged material breach(es). The State Franchisee must remedy the specified material breach(es) no later than thirty (30) days from receipt of the notice. (d) If the State Franchisee fails to remedy the specified material breach(es) within 30 days, the City Manager may impose monetary penalties on the following schedule: a. Up to 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. b. For a second material breach of the same nature within 12 months, up to 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. c. For a third or further material breach of the same nature within 12 months, up to 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. (e) Any monetary penalty imposed under this section may be appealed by the State Franchisee to the City Council. Appeals must be received in writing by the City Clerk within sixty (60) days of imposition of the penalty. The State Franchisee may present any relevant written or oral evidence of its choice. The City Council may uphold or reverse, in whole or in part, the imposition of the monetary penalties. 5.08.450. The City Manager shall ensure PEG transmissions, content, and programming provided by the City to a State Franchisee is in a format compatible with the State Franchisee's system. In the alternative, the transmissions, content, and programming may be provided in a industry standard format, in accord with Public Utilities Code section 5870(g)(1). 5.08.460. For the duration of any City -issued franchise, if that Franchisee has existing unsatisfied obligations under the franchise to pay to the City any cash payments for the ongoing costs of public, educational, and government access channel facilities or institutional networks, the fee payable by each City and State Franchisee shall be the Franchisee's pro rata per subscriber share of the cash payment required to be paid by the City franchisee to the City for the costs of PEG channel facilities. (a) Within 45 days of receipt of the notice required by Public Utilities Code section 5840(n), each City and State Franchisee must provide to the City Manager a written statement of the number of its subscribers within the Franchisee's service area in the City. (b) Within 45 days of receipt all Franchisee subscriber number statements, the City Manager must calculate the division of the cash payments among all City and State Franchisees, and provide written notice to each Franchisee of the Franchisee's share of the cash payment. This amount may expressed as a percentage of gross revenue or as an amount per subscriber, per month, or otherwise. 5.08.470. Interconnection. To properly serve the City's interest in PEG programming, each State Franchisee and City Franchisee must comply with the PEG system interconnection requirements of Public Utility Code section 5870. The City Manager, or his or her designee, may make any interconnection determinations of the City under Public Utility Code section 5870, including requiring interconnection where the City Franchisee and State Franchisee fail to reach a mutually acceptable interconnection agreement." Ordinance No. 310 -2- SECTION 3: Repeal or amendment of any provision of the Rolling Hills Municipal Code herein will not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Ordinance's effective date. Any such repealed part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Ordinance. SECTION 4: If any part of this Ordinance or its application is deemed invalid by a court of competent jurisdiction, the city council intends that such invalidity will not affect the effectiveness of the remaining provisions or applications and, to this end, the provisions of this Ordinance are severable. SECTION 5: The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City of Rolling Hills's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. SECTION 6: This Ordinance will become effective on the thirty-first (31st) day following its passage and adoption. PASSED AND ADOPTED this day of , 2008. Mayor ATTEST: City Clerk APPROVED AS TO FORM: Michael Jenkins, City Attorney Ordinance No. 310 -3- STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) §§ CITY OF ROLLING HILLS ) I certify that the foregoing Ordinance No. 310 entitled: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. was approved and adopted at a regular meeting of the City Council on October 8, 2007 by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: and in compliance with the laws of California was posted at the following: Administrative Offices MARILYN KERN DEPUTY CITY CLERK Ordinance No. 310 -4- ORDINANCE NO. 310 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. The City Council of the City of Rolling Hills does ordain as follows: SECTION 1: Section 5.08.020 "Definitions" of the Rolling Hills Municipal Code is amended by adding thereto the definition of "State Franchisee" in alphabetical order to read as follows: "State Franchisee" means any holder of a State -issued video franchise operating in the City, as defined in Public Utilities Code section 5830(p). SECTION 2: A new Article V entitled "State Video Franchisees" commencing with section 5.08.400 is hereby added to Title 13, Chapter 5.08 of the Rolling Hills Municipal Code to read as follows: "DIVISION 7. STATE VIDEO FRANCHISEES 5.08.400. PEG Fee Established. In accord with Public Utilities Code section 5870(n), any Grantee of a Franchise, or State Franchisee, must pay to the City a fee for the support of PEG channel facilities. (a) The amount of the PEG Fee established by this section is one percent (1%) of Gross Revenues, as defined in this Code, the applicable City -issued franchise, or Public Utilities Code section 5860(d). 5.08.410. Franchise Fee Established. For any State Franchisee, the amount of the franchise fee imposed by Public Utilities Code section 5840(q) shall be two and one-half percent (2.5%) of Gross Revenues, as defined in Public Utilities Code section 5860(d). (a) In accord with Public Utilities. Code section 5860(a), the City Manager will prepare and provide to State Franchisees all necessary documentation supporting the percentage franchise fee paid by the incumbent cable operator serving the City. 5.08.420. Notices from State Franchisees. Any notice a State Franchisee is required to deliver to the City by 5840(m) must be delivered to the City Manager. 5.08.430. Nothing in this Chapter is intended to limit or restrict in any way the imposition of any existing or future generally applicable, nondiscriminatory, competitively neutral tax, fee, or charge to a State Franchisee, City franchisee or the services the franchisees provide. 5.08.440. Customer Service Provisions for State Franchisees (a) All State Franchisees must comply with all applicable State and Federal laws and regulations regarding customer service and customer protection. (b) The City Manager may review the performance of State Franchisees for compliance with the customer service requirements specified in Public Utilities Code section 5900 (the "Customer Service Standards"). (c) If the City believes a material breach of the Customer Service Standards has occurred, the City Manager must give the State Franchisee written notice of any alleged material breach(es). The State Franchisee must remedy the specified material breach(es) no later than thirty (30) days from receipt of the notice. (d) If the State Franchisee fails to remedy the specified material breach(es) within 30 days, the City Manager may impose monetary penalties on the following schedule: a. Up to 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. b. For a second material breach of the same nature within 12 months, up to 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. c. For a third or further material breach -of -the same nature within 12 months, up to 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. Ordinance No. 310 -1- (e) Any monetary penalty imposed under this section may be appealed by the State Franchisee to the City Council. Appeals must be received in writing by the City Clerk within sixty (60) days of imposition of the penalty. The State Franchisee may present any relevant written or oral evidence of its choice. The City Council may uphold or reverse, in whole or in part, the imposition of the monetary penalties. 5.08.450. The City Manager shall ensure PEG transmissions, content, and programming provided by the City to a State Franchisee is in a format compatible with the State Franchisee's system. In the alternative, the transmissions, content, and programming may be provided in a industry standard format, in accord with Public Utilities Code section 5870(g)(1). 5.08.460. For the duration of any City -issued franchise, if that Franchisee has existing unsatisfied obligations under the franchise to pay to the City any cash payments for the ongoing costs of public, educational, and government access channel facilities or institutional networks, the fee payable by each City and State Franchisee shall be the Franchisee's pro rata per subscriber share of the cash payment required to be paid by the City franchisee to the City for the costs of PEG channel facilities. (a) Within 45 days of receipt of the notice required by Public Utilities Code section 5840(n), each City and State Franchisee must provide to the City Manager a written statement of the number of its subscribers within the Franchisee's service area in the City. (b) Within 45 days of receipt all Franchisee subscriber number statements, the City Manager must calculate the division of the cash payments among all City and State Franchisees, and provide written notice to each Franchisee of the Franchisee's share of the cash payment. This amount may expressed as a percentage of gross revenue or as an amount per subscriber, per month, or otherwise. 5.08.470. Interconnection. To properly serve the City's interest in PEG programming, each State Franchisee and City Franchisee must comply with the PEG system interconnection requirements of Public Utility Code section 5870. The City Manager, or his or her designee, may make any interconnection determinations of the City under Public Utility Code section 5870, including requiring interconnection where the City Franchisee and State Franchisee fail to reach a mutually acceptable interconnection agreement." SECTION 3: Repeal or amendment of any provision of the Rolling Hills Municipal Code herein will not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Ordinance's effective date. Any such repealed part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Ordinance. SECTION 4: If any part of this Ordinance or its application is deemed invalid by a court of competent jurisdiction, the city council intends that such invalidity will not affect the effectiveness of the remaining provisions or applications and, to this end, the provisions of this Ordinance are severable. SECTION 5: The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City of Rolling Hills's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. SECTION 6: This Ordinance will become effective on the thirty-first (31st) day following its passage and adoption. PASSED AND ADOPTED this 24th day of March, 2008. Frank E. Hill Mayor ATTEST: aad --ek r Marilyn Kern Deputy City Clerk Ordinance No. 310 -2- STATE OF CALIFORNIA COUNTY OF LOS ANGELES ) §§ CITY OF ROLLING HILLS I certify that the foregoing Ordinance No. 310 entitled: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. was approved and adopted at a regular meeting of the City Council on March 24, 2008 by the following roll call vote: AYES: Councilmembers Black, Lay, Pernell, Mayor Pro Tern Heinsheimer and Mayor Hill. NOES: None. ABSENT: None. ABSTAIN: None. and in compliance with the laws of California was posted at the following: Administrative Offices MARILYN KERN DEPUTY CITY CLERK Ordinance No. 310 -3- TO: FROM: SUBJECT: city op2lling �aee INCORPORATED JANUARY 24, 1957 NO. 2 PORTUGUESE BEND ROAD ROLLING HILLS, CALIF. 90274 (310) 377.1521 FAX: (310) 3777288 Agenda Item No.: 13-C Mtg. Date: 03-10-08 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL ANTON DAHLERBRUCH, CITY MANAGER CONSIDERATION OF AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. DATE: MARCH 10, 2008 RECOMMENDATION It is recommended that the City Council introduce and conduct its first reading of an ordinance establishing video franchise fees, public education and government (PEG) fees, penalties, customer service provisions and other matters in compliance with AB 2987. BACKGROUND In 2006, the State Legislature passed AB 2987 formally known as the Digital Infrastructure and Video Competition Act, or the "DIVCA" and in doing so, created a new system of state -issued cable franchising in California. With the DIVCA, cable companies will no longer obtain a municipal franchise. However, State franchisees will still be required to obtain construction permits from the City for any work in the rights -of -way, just as telephone providers have in the past. "DIVCA tasks local entities with governing 'time, place, and manner' of a state video franchise holder's use of the local rights -of -way." (Decision 07-03-014, p. 76-77, footnotes in original.). In doing so, the City will attach any necessary bond requirements to the right-of-way permit. DISCUSSION At this time, State franchises have only been issued to Verizon California, Inc. and AT&T California; the franchises include all areas of telephone service where they did not already have a local franchise. Eventually, local cable franchises will expire and be replaced by with a State franchise. Page 1 of 2 ® Printed on Recycled Paper State franchisees have the right to offer video service within their franchise areas. They will collect and remit franchise fees on video services, though not on the voice and data services. Existing franchises will continue to be in effect until: a. The franchise expires, b. The City and the cable operator agree in writing to terminate the franchise, or c. A holder of a state franchise (likely Verizon or AT&T) provides notice that it intends to begin offering video service in the City. It is further relevant to note that Public Utilities Code section 5820(c) now specifically states holders of a state franchise are not public utilities, and the PUC has no authority to regulate "rates, terms, and conditions of video services." CONCLUSION From a practical standpoint, there's no longer any reason for an incumbent operator to negotiate a franchise renewal or extension with the City. If its franchise is expired or expires before January 1, 2008, the incumbent operator can obtain a state franchise. If its' franchise extends beyond January 1, 2008, the incumbent operator can obtain a state franchise after expiration or when competition arrives, and the City is pre-empted by Section 5840(c) from issuing a new franchise. At this time Cox Communications has not contacted the City with regard to its franchise agreement. The existing franchise was renewed for 15 years in 2006. AD/ Coble Franchise Report Page 2 of 2 ORDINANCE NO. 310 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. The City Council of the City of Rolling Hills does ordain as follows: SECTION 1: Section 5.08.020 "Definitions" of the Rolling Hills Municipal Code is amended by adding thereto the definition of "State Franchisee" in alphabetical order to read as follows: "State Franchisee" means any holder of a State -issued video franchise operating in the City, as defined in Public Utilities Code section 5830(p). SEC ION 2: A new Article V entitled "State Video Franchisees" commencing with section 5.08.400 is hereby added to Title 13, Chapter 5.08 of the Rolling Hills Municipal Code to read as follows: "DIVISION 7. STATE VIDEO FRANCHISEES 5.08.400. PEG Fee Established. In accord with Public Utilities Code section 5870(n), any li Grantee of a Franchise, or State Franchisee, must pay to the City a fee for the support of PEG channel facilities. (a) The amount of the PEG Fee established by this section is one percent (1%) of Gross Revenues, as defined in this Code, the applicable City -issued franchise, or Public Utilities Code section 5860(d). 5.08.410. Franchise Fee Established. For any State Franchisee, the amount of the franchise fee imposed by Public Utilities Code section 5840(q) shall be two and one-half percent (2.5%) of Gross Revenues, as defined in Public Utilities Code section 5860(d). (a) In accord with Public Utilities Code section 5860(a), the City Manager will prepare and provide to State Franchisees all necessary documentation supporting the percentage franchise fee paid by the incumbent cable operator serving the City. 5.08.420. Notices from State Franchisees. Any notice a State Franchisee is required to deliver to the City by 5840(m) must be delivered to the City Manager. 5.08.430. Nothing in this Chapter is intended to limit or restrict in any way the imposition of any existing or future generally applicable; nondiscriminatory, competitively neutral tax, fee, or charge to a State Franchisee, City franchisee or the services the franchisees provide. 5.08.440. Customer Service Provisions for State Franchisees (a) All State Franchisees must comply with all applicable State and Federal laws and regulations regarding customer service and customer protection. (b) The City Manager may review the performance of State Franchisees for compliance with the customer service requirements specified in Public Utilities Code section 5900 (the "Customer Service Standards"). Ordinance No. 310 -1- , (c) If the City belie a material breach of the Customei vice Standards has occurred, the City Manager must give the State Franchisee written notice of any alleged material breach(es). The State Franchisee must remedy the specified material breach(es) no later than thirty (30) days from receipt of the notice. (d) If the State Franchisee fails to remedy the specified material breach(es) within 30 days, the City Manager may impose monetary penalties on the following schedule: a. Up to 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. b. For a second material breach of the same nature within 12 months, up to 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. c. For a third or further material breach of the same nature within 12 months, up to 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. (e) Any monetary penalty imposed under this section may be appealed by the State Franchisee to the City Council. Appeals must be received in writing by the City Clerk within sixty (60) days of imposition of the penalty. The State Franchisee may present any relevant written or oral evidence of its choice. The City Council may uphold or reverse, in whole or in part, the imposition of the monetary penalties. 5.08.450. The City Manager shall ensure PEG transmissions, content, and programming provided by the City to a State Franchisee is in a format compatible with the State Franchisee's system. In the alternative, the transmissions, content, and programming may be provided in a industry standard format, in accord with Public Utilities Code section 5870(g)(1). 5.08.460. For the duration of any City -issued franchise, if that Franchisee has existing unsatisfied obligations under the franchise to pay to the City any cash payments for the ongoing costs of public, educational, and government access channel facilities or institutional networks, the fee payable by each City and State Franchisee shall be the Franchisee's pro rata per subscriber share of the cash payment required to be paid by the City franchisee to the City for the costs of PEG channel facilities. (a) Within 45 days of receipt of the notice required by Public Utilities Code section 5840(n), each City and State Franchisee must provide to the City Manager a written statement of the number of its subscribers within the Franchisee's service area in the City. (b) Within 45 days of receipt all Franchisee subscriber number statements, the City Manager must calculate the division of the cash payments among all City and State Franchisees, and provide written notice to each Franchisee of the Franchisee's share of the cash payment. This amount may expressed as a percentage of gross revenue or as an amount per subscriber, per month, or otherwise. 5.08.470. Interconnection. To properly serve the City's interest in PEG programming, each State Franchisee and City Franchisee must comply with the PEG system interconnection requirements of Public Utility Code section 5870. The City Manager, or his or her designee, may make any interconnection determinations of the City under Public Utility Code section 5870, including requiring interconnection where the City Franchisee and State Franchisee fail to reach a mutually acceptable interconnection agreement." Ordinance No. 310 -2- SECTION 3: Repeal or amendment of any provision of the Rolling Hills Municipal Code herein will not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Ordinance's effective date. Any such repealed part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Ordinance. SECTION 4: If any part of this Ordinance or its application is deemed invalid by a court of competent jurisdiction, the city council intends that such invalidity will not affect the effectiveness of the remaining provisions or applications and, to this end, the provisions of this Ordinance are severable. SECTION 5: The City Clerk is directed to certify the passage and adoption of this Ordinance; cause it to be entered into the City of Rolling Hills's book of original ordinances; make a note of the passage and adoption in the records of this meeting; and, within fifteen (15) days after the passage and adoption of this Ordinance, cause it to be published or posted in accordance with California law. SECTION 6: This Ordinance will become effective on the thirty-first (31st) day following its passage and adoption. PASSED AND ADOPTED this day of _ , 2008. Mayor ATTEST: City Clerk APPROVED AS TO FORM: Michael Jenkins, City Attorney Ordinance No. 310 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) §§ CITY OF ROLLING HILLS ) I certify that the foregoing Ordinance No. 310 entitled: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ROLLING HILLS ESTABLISHING VIDEO FRANCHISE FEES, PEG FEES, PENALTIES AND OTHER RELATED MATTERS FOR STATE VIDEO FRANCHISE AGREEMENTS AND AMENDING THE ROLLING HILLS MUNICIPAL CODE. was approved and adopted at a regular meeting of the City Council on October 8, 2007 by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: and in compliance with the laws of California was posted at the following: Administrative Offices MARILYN KERN DEPUTY CITY CLERK Ordinance No. 310 -4- JENKINS & HOGIN, LLP A LAW PARTNERSHIP MICHAEL JENKINS CHRISTI HOGIN MARK D. HENSLEY BRADLEY E. WOHLENBERG KARL H. BERGER GREGG KOVACEVICH JOHN C. COTT1 LINDA A. BURROWS LAUREN B. FELDMAN MANHATTAN TOWERS 1230 ROSECRANS AVENUE, SUITE 1 10 MANHATTAN BEACH, CALIFORNIA 90266 (310) 643-8448 • FAx(310) 643-8441 WW W. LOCALGOVLAW.COM WRITER'S EMAIL ADDRESS: BwoiiLINBI-:RG a,LocAL.GovLAW.coM How to Deal with State Cable Franchising An Implementation Guide to AB2987 The passage of AB2987 (fomially known as the Digital Infrastructure and Video Competition Act, or the "DIVCA") in 2006 created a new system of state -issued cable franchising in California. We have prepared this guide to answer the common questions about the new law, and help guide you through the steps your city must take in the new system. 1. Who has a state video franchise? So far, franchises have been issued to the two major telephone companies in California: Verizon California, Inc, and AT&T California. However, their franchise areas include every area of their telephone service area where they did not already have a local franchise. Therefore, between these two companies almost all of California now is subject to a state video franchise. Eventually, local cable franchises will expire and be replaced with State franchises, so areas currently served by cable and telephone service will end up with two competing State video franchisees. On March 1, 2007, the California Public Utilities Commission approved its regulations for issuing state-wide video franchises under the DIVCA. Verizon California, Inc. submitted its application on March 2, and the CPUC issued Verizon's franchise on March 8. AT&T California submitted its application on 1 JENKINS & HOGIN, LLP February 25, 2008 Page 2 March 7, and the CPUC issued AT&T's franchise on March 30. These franchises are remarkable for their brevity and lack of detail, but that is to be expected if the goal was to streamline the franchising process. 2. What Rights Does This State Franchise Give the Companies? State franchisees now have the right to offer video service within their franchise areas. Despite the use of different technologies, to the consumer this is functionally identical to cable television service. State franchisees still must obtain construction permits from the City for any work in the rights -of -way, just as telephone providers have in the past. The City should attach any necessary bond requirements to the right-of-way permit, as the new CPUC decision states: "DIVCA tasks local entities with governing `time, place, and manner' of a state video franchise holder's use of the local rights -of -way.' In overseeing time, place and manner of this use, local entities may issue rights -of -way permits, and these local permits may require further security instruments to ensure that a state video franchise holder fulfills locally regulated obligations.'" (Decision 07-03-014, p. 76-77, footnotes in original.) While appropriate conditions should be attached, we urge caution in conditioning the permits beyond any standard right-of-way requirements. During their vote on March 1, the CPUC commissioners warned that cities opposed to state franchising should not use the permitting process to delay the market entry of competitive video providers. Public Utilities Code section 5840(e)(1)(C) (providing that a state video franchise holder must comply with "all lawful city, county, or city and county regulations regarding the time, place, and manner of using the public rights - of -way, including, but not limited to, payment of applicable encroachment, permit, and inspection fees"). See also id. at § 5885(a) ("The local entity shall allow the holder of a state franchise under this division to install, construct, and maintain a network within public rights -of -way under the same time, place, and manner as the provisions governing telephone corporations under applicable state and federal law, including, but not limited to, the provisions of Section 7901. I ."). 2 Id. at § 5840(e)(1)(C) (recognizing that state video franchise holders must abide by lawful local regulations regarding "the time, place, and manner of using the public rights -of -way"). JENKINS & .HOGIN, LLP February 25, 2008 Page 3 When they are able, State franchisees will begin offering video services in the areas they serve, in addition to the voice and data services they already had authority to offer. They will collect and remit franchise fees on those video services, though not on the voice and data services. While State franchisees now have use of the public rights -of -way identical to public utilities, it is important to remember they are not considered public utilities, apparently even if other non -video operations are public utilities. Public Utilities Code section 5820(c) now specifically states holders of a state franchise are not public utilities, and the PUC has no authority to regulate "rates, terms, and conditions of video services." 3. What happens to our existing cable franchise? Existing franchises continue in effect until one of three things happens': a. The franchise expires. b. The City and the cable operator agree in writing to terminate the franchise. c. A holder of a state franchise (likely Verizon or AT&T) provides notice that it intends to begin offering video service in the City. Once one of those three things occurs, the incumbent cable operator can replace their City -issued franchise with a state -issued franchise. They are not required to do so. 4. Can our existing franchise be renewed or extended? Existing franchises cannot be renewed after January 1, 2008. Starting on that date, the PUC becomes the sole franchising authority for video services. The DVICA states, "Any person or corporation who seeks to provide video service in this state for which a franchise has not already been issued, after January 1, 2008, shall file an application for a state franchise with the commission." (Public Utilities Code section 5840(c).) } These are listed in Public Utilities Code section 5840(o). JENKINS & HOGIN, LLP February 25, 2008 Page 4 From a practical standpoint, there's no longer any reason for an incumbent operator to negotiate a franchise renewal or extension with the City. If its franchise is expired or expires before January 1, 2008, it can obtain a state franchise. If its franchise extends beyond January 1, 2008, it can obtain a state franchise after expiration or when competition arrives, and the City is pre-empted by Section 5840(c) from issuing a new franchise. 5. Do we need to amend our cable ordinance? Once your local franchise expires or is terminated, most of your Municipal Code provisions on cable franchising will be obsolete. The DVICA requires cities enforce the customer service requirements, and a few other sections appear to require local action. Attached is a proposed ordinance we have drafted to address these issues. The fee amounts and financial penalties we included are the maximum allowed under the DVICA, and other aspects of the ordinance use the maximums allowed as well. It is within the City Council's discretion to impose lower requirements, and we would be pleased to amend the ordinance as directed. 6. Interacting with the New State Franchisees. Because the state franchisees are so new, there is little practical experience available on how to interact with them. However, there are a number of things that have come to light so far. First, make sure you provide the state franchisees with information on the existing franchise fee. The DVICA requires cities provide that information to the state franchisees before the franchisees are required to remit the franchise fee. Next, because the City will be responsible for enforcing customer service issues, you may wish to establish protocols for receiving and tracking customer complaints received by the City. The standards themselves are set by the Legislature in Public Utilities Code section 5900. JENKINS & HOGIN, LLP February 25, 2008 Page 5 If the City does impose a monetary penalty for a breach of the Customer Service Standards, be aware that under Section 5900(g), fifty percent (50%) of the penalty must be given to the Digital Divide Account established by the DVICA. We also expect various interconnection problems. Almost every cable operator "brands" or marks the programming it creates or transmits. However, Section 5870(i) states: "A holder of a state franchise shall not be required to interconnect for, or otherwise to transmit, PEG content that is branded with the logo, name, or other identifying marks of another cable operator or video service provider. For purposes of this section, PEG content is not branded if it includes only production credits or other similar information displayed at the conclusion of a program. The local entity may require a cable operator or video service provider to remove its logo, name, or other identifying marks from PEG content that is to be made available through interconnection to another provider of PEG capacity." So, a state franchisee is not required to carry PEG programming that is branded by another video provider, though the City can require the branding be removed. Unfortunately, the Legislature failed to include a simple enforcement mechanism for that requirement, so it will likely require action before the Public Utilities Commission, or litigation. Without extraordinary action by the City, the state franchisees will end up with the minimum direct feed for government programming from the City, and not a simple interconnection with the incumbent franchise. We also note that a state franchisee's deadlines to comply with the interconnection requirement are suspended if the incumbent cable provider refuses interconnection. We hope you find this brief guide helpful. If you have any specific questions or concerns, please feel free to contact our office at your convenience.