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HomeMy WebLinkAboutItem 2c: Ordinance 2276 to Establish Franchise Fees and Penalties for Video Service ProvidersDATE: TO: FROM: July 20, 2010 Office of the City Manager Mayor and City Council Don Penman, City Manager By: a Linda Garcia, Communications, Marketing and Special Projects Manager SUBJECT: ORDINANCE NO. 2276 AMENDING UNCODIFIED ORDINANCE NO. 2206 TO ESTABLISH FRANCHISE FEES, PUBLIC ACCESS SUPPORT FEES AND CUSTOMER SERVICE PENALTIES FOR STATE FRANCHISE HOLDERS PROVIDING VIDEO SERVICE WITHIN THE CITY OF ARCADIA Recommendation: Adopt On July 6, 2010, the City Council introduced Ordinance No. 2276 concerning video service operations in the City of Arcadia. The ordinance is presented tonight for adoption. Attachment: Ordinance No. 2276 and the accompanying staff report from the July 6, 2010 City Council meeting. ORDINANCE NO. 2276 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, AMENDING UNCODIFIED ORDINANCE NO. 2206 TO ESTABLISH FRANCHISE FEES, PUBLIC ACCESS SUPPORT FEES AND CUSTOMER SERVICE PENALTIES FOR STATE FRANCHISE HOLDERS PROVIDING VIDEO SERVICE WITHIN THE CITY OF ARCADIA WHEREAS, the City Council of the City of Arcadia ( "City ") has previously adopted uncodified Ordinance No. 2206 to regulate the provision of cable television within Arcadia; and WHEREAS, a State law known as the Digital Infrastructure and Video Competition Act of 2006 ( "DIVCA ") went into effect January 1, 2007; and WHEREAS, under DIVCA, the State of California is authorized to issue video services franchises; and WHEREAS, the City of Arcadia, although not the franchising authority with respect to franchises issued under DIVCA, has certain rights and responsibilities with respect to State video franchise holders, which must be addressed through the adoption of an ordinance; and WHEREAS, DIVCA provides that the City shall receive a fee of 5% of gross revenues of each State video franchisee which operates within the City for use of the public rights -of -way, but requires the City to adopt an ordinance in order to make this effective; and WHEREAS, DIVCA further authorizes the City to establish and enforce penalties against state video franchisees for violations of customer service rules consistent with state law. -1- NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1. Uncodified Ordinance No. 2206 is hereby amended by amending Section 60 thereof to read as follows: SECTION 60. APPLICATION OF CHAPTER TO STATE VIDEO SERVICES FRANCHISEES. (A) Notwithstanding any provision of this Ordinance to the contrary, nothing in this Ordinance shall be deemed to require any person or entity to obtain a franchise issued by the City, to the extent that such person or entity is authorized to provide cable service or video services under a cable franchise or video services franchise issued by another government entity under applicable law, including but not limited to Section 5800 et seq. of the California Public Utilities Code. The requirements and provisions of this Chapter shall not apply or be enforced to the extent that they actually conflict with applicable State or Federal law. (B) This Section 60 of this Ordinance is intended to regulate video service providers holding State video franchises and operating within the City. As of January 1, 2007, the State of California has the sole authority to grant state video franchises pursuant to the Digital Infrastructure and Video Competition Act of 2006 ( "Act "). Pursuant to the Act, the City of Arcadia shall receive a franchise fee from all State video franchise holders operating within the City. Additionally, the City has the responsibility to establish and enforce penalties, consistent with state law, against all State video franchise holders operating within the City for violations of customer service standards, but the Act grants all authority to adopt customer service standards to the State. (C) For any State video franchise holder operating within the boundaries of the City of Arcadia, there shall be a franchise fee paid to the City equal to five percent (5 %) of the gross revenue of that State video franchise holder, and an additional fee paid to the City equal to one percent (1 %) of the gross revenue of that State video franchise holder, which 1 fee shall be used by the City for public, educational, and -2- government access purposes consistent with State and Federal law. This fee obligation shall take effect upon the earlier of: (i) the fulfillment of all obligations to remit cash payments to the City for support of public, educational, and government access facilities which are contained within a City - issued cable franchise that was in effect on January 1, 2007, and which remained unsatisfied as of the effective date of this ordinance; or (ii) the termination by the holder of a City- issued cable franchise of its franchise as provided under state law. The intent of this subsection is to comply with the requirements of subsections (I), (m), and (n) of Section 5870 of the California Public Utilities Code, and the 1% fee established in this subsection is intended to be a fee authorized by subsection (n) of Section 5870. Gross revenue, for the purposes of this subsection, shall have the definition set forth in California Public Utilities Code 5860. (D) Not more than once annually, the City Manager or his or her designee may examine and perform an audit of the business records of all holders of a State video franchise operating within the boundaries of the City of Arcadia to ensure compliance with subsection (C) of this Section 60. (E) Any holder of a State video franchise operating within the boundaries of the City of Arcadia shall comply with all applicable State and Federal customer service and protection standards pertaining to the provision of video service. The City Manager, or his or her designee, shall provide any required notice in advance of enforcing such standards, including but not limited to the 90 -day notice required by 47 CFR 76.309(a), 76.1602(a), 76.1603(a), and 76.1619(c). The City Manager shall monitor the compliance of holders of a state video franchise operating within the boundaries of the City of Arcadia with respect to state and federal customer service and protection standards. The City Manager, or his or her designee, shall provide the State video franchise holder written notice of any material breaches of applicable customer service standards, and shall allow the state video franchise holder 30 days from the receipt of the notice to remedy the specified material breach. Material breaches not remedied within the 30 -day time period will be subject to the following penalties to be imposed by the City: -3- (1) For the first occurrence of a violation, a fine of $500.00 shall be imposed for each day the violation remains in effect, not to exceed $1,500.00 for each violation. (2) For a second violation of the same nature within 12 months, a fine of $1,000.00 shall be imposed for each day the violation remains in effect, not to exceed $3,000.00 for each violation. (3) For a third or further violation of the same nature within 12 months, a fine of $2,500.00 shall be imposed for each day the violation remains in effect, not to exceed $7,500.00 for each violation. • (F) A holder of a State video franchise operating within the boundaries of the City of Arcadia may appeal a penalty assessed by the City Manager to the City Council within 60 days of the initial assessment. The City Council shall hear all evidence and relevant testimony and may uphold, modify or vacate the penalty. The City Council's decision on the imposition of a penalty shall be final. The City of Arcadia shall comply with any statutory requirement to remit all or a portion of collected fine revenue to the State of California, including but not limited to the requirement in Public Utilities Code Section 5900(g). (G) Applicants for State video franchises, or amendments to existing franchises, that will authorize the applicant to operate within the boundaries of the City of Arcadia must concurrently provide complete copies to the City of any application or amendments to applications filed with the Public Utilities Commission. At a minimum, one complete copy must be provided to the City Manager. Within 30 days of receipt of notice of an application for a State video franchise that will authorize the applicant to operate within Arcadia, the City Manager shall provide any appropriate comments to the Public Utilities Commission regarding an application or an amendment to an application for a State video franchise. (H) Any holder of a State video franchise, or City - issued cable franchise, operating within the boundaries of the City of Arcadia, that proposes to install above- ground facilities in the public right -of -way shall, no less than 20 days prior to installing such facilities, provide written notice to the owner of the private or public property (excluding the public right -of -way) —4— ATTEST: City Clerk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney nearest to the proposed facility. For purposes of this subsection, "above- ground facilities" shall include only those facilities that are located on the ground or on a base or pedestal that is on the ground, and shall exclude aerial or pole - mounted facilities. Any franchisee to which this section applies shall provide the City with a copy of the proposed form of notice to be used in compliance with subsection (a), no Tess than 10 days prior to mailing or delivering the notice. The City may require the franchisee to amend the form of the notice. Once the City has approved the form of notice, the franchisee shall not be required to obtain additional approvals of notice from the City, so long as the franchisee does not materially deviate from the form of notice approved by the City. SECTION 2: The City Clerk shall certify to the adoption of this Ordinance and shall cause a copy of the same to be published in the official newspaper of said City within fifteen (15) days after its adoption. The Ordinance shall take effect thirty -one (31) days after its adoption. Passed, approved and adopted this day of , 2010. - Mayor of the City of Arcadia DATE: TO: SUMMARY DISCUSSION July 6, 2010 Mayor and City Council Office of the City Manager FROM: Don Penman, City Manager By: Linda Garcia, Comminications, Marketing and Special Projects Manager r SUBJECT: ORDINANCE NO. 2276 AMENDING UNCODIFIED ORDINANCE NO. 2206 TO ESTABLISH FRANCHISE FEES, PUBLIC ACCESS SUPPORT FEES AND CUSTOMER SERVICE PENALTIES FOR STATE FRANCHISE HOLDERS PROVIDING VIDEO SERVICE WITHIN THE CITY OF ARCADIA Recommendation: Introduce Staff is requesting that the City Council introduce Ordinance No. 2276 establishing a franchise fee and a public education fee for cable television operators, and setting forth the penalties for violating State and Federal customer service standards as outlined and authorized by the Digital Infrastructure and Video Competition Act of 2006 (DIVCA). BACKGROUND The Digital Infrastructure and Video Competition Act of 2006 (DIVCA) allows video service providers (cable television) to obtain a State issued franchise to provide video services in local communities. DIVCA also establishes the California Public Utilities Commission as the sole franchising authority for video service providers throughout the State, although it delegates certain limited rights to local authorities. These rights need to be established by local ordinance to be enforceable on State video franchise holders. All three cable operators in the City of Arcadia hold a State franchise. The City of Arcadia already collects a 5% franchise fee from cable television operators for cable television service. If adopted, Ordinance No. 2276 will provide the legal instrument to continue to collect this fee and be compliant with DIVCA. In addition to the franchise fee — and consistent with DIVCA - the proposed ordinance institutes a 1% "public access support fee," to be remitted to the City for the purpose of capital Mayor and City Council — Introduction of Ordinance No. 2276 July 6, 2010 Page 2 expenses related to the operation of Arcadia Community Television, and it also spells out the penalties for violating State and Federal customer service and protection standards pertaining to the provision of video (cable) service. FISCAL IMPACT The City will continue to collect the franchise fee as it has in the past. By way of background, in FY2007 -2008 the City received a dombined total of $495,339 in franchise fees from the three cable operators. In FY2008 -2009 the fees amounted to $435,730, and fees collected to date in FY2009 -2010 amount to $388,690. The public access support fee collected hereafter will be compiled in a separate account to pay for capital expenses related to the government access channel. RECOMMENDATION It is recommended that the City Council introduce Ordinance No. 2276 amending uncodified Ordinance No. 2206 to establish a franchise fee, public access support fee and customer service penalties for State franchise holders providing video service within the City of Arcadia. Attachment: Ordinance No. 2276