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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/04/2004 - RESOLUTION 2004-056 AUTHORIZING THE MAYOR TO EXECU ITEM NUMBER: 17 AGENDA ITEM SUMMARY DATE: May4, 2004 FORT COLLINS CITY COUNCIL STAFF: Mike Herzig SUBJECT Resolution 2004-056 Authorizing the Mayor to Execute a Revocable Permit to US Cable of Coastal- Texas, L.P., a New Jersey Limited Partnership for Existing Cable Television Lines and Appurtenances. RECOMMENDATION Staff recommends adoption of the Resolution. FINANCIAL IMPACT The amount that the City receives annually for the fee established in the current Revocable Permit will be reduced with the issuance of the proposed new Revocable Permit. The funds received from j the permit are unanticipated General Fund revenues. The amount received for 2004 would be reduced to one quarter from$26,211.78 to$6,552.94. The permit amount is revised annually based upon the value of the City owned rights-of way and easements that the cable company system occupies. EXECUTIVE SUMMARY It is recommended that a new permit be issued to US Cable granting permission for it to maintain its installation of an underground cable television line and related facilities within City right-of-way and utility easements to serve the Horsetooth and University mobile home parks located at the southwest comer of the Horsetooth Road/Taft Hill Road intersection. It has been determined that the fee may be excessive for the service provided under the existing revocable permit. The fee with the new revocable permit will be one quarter of the amount charged under the current permit. BACKGROUND On September 6, 1988 the City Council adopted Resolution 88-138, approving the issuance of a revocable permit to Fanch Cablevision of Colorado,doing business as"KIVA Cable," and granting permission for it to install an underground cable television line and related facilities within City rights-of-way and utility easements. The line serves the Horsetooth and University mobile home parks located at the southwest comer of the Horsetooth Road and Taft Hill Road intersection (see attached map). The area served is not within the city limits. The City issued the revocable permit May 4, 2004 -2- Item No. 17 because KIVA Cable had no franchise agreement or any other agreement to provide service within Fort Collins. A formula was approved to require KIVA to pay an annual fee for the use of City right-of-way and utility easements. The fee has been adjusted every year to account for (1) the additional length of cable within the city limits, as areas along the cable route were annexed and(2) the land values of property along the route changes. The initial fee was $1038. Over the last 15 years the fee has increased every year. The fee for 2003 was calculated at $26,211.78. This amounted to a greater than 25% increase per year. During the term of the permit, KIVA Cable was sold to US Cable, and in 2002 US Cable made its first payment of$20,377.21. However,in 2003 the fee increased significantly to$26,211.78,a 29% increase. Most of the increase was caused by annexations of new land into the city. After receiving the invoice, US Cable contacted the City to request a meeting to discuss a renegotiation of the fee. Staff met with US Cable representatives to explain the fee. US Cable maintains that it is losing money in providing service to 157 customers. It has no objection to a fee, but representatives state the company cannot afford to continue to pay the current rate. Its representative suggested that a typical franchise fee would be in the range of 5% of revenues. This fee currently is 35% of revenues. The US Cable representative pointed out that if service is cut off to the area, Comcast will most likely move in to serve it. Since Comcast has a franchise agreement with the City, the revocable permit will not be needed and the City will receive no revenue for a permit. While the City wants to be fair to US Cable,it must be consistent in its policy for issuing revocable permits and charging fair market value for the use of public right-of-way. The following are three areas that were reviewed for possible reduction of the fee: (1)Land Value: Staff's finding is that the land values used to calculate the fee are correct for full value of an exclusive easement. Since the area that its cable occupies is shared with other utilities,it is appropriate to reduce the land value by one half to account for the shared space; (2) Benefit to the City: Staff determined that there is no benefit to the City that could give credit for the cable occupying the right-of-way; and (3) Easement Width: The width of the easement used in the current formula is 10 feet. This dimension could be reduced. A normal width for a cable easement where it is abuts public right-of-way would be 5 feet. Therefore, reducing the easement width from 10 feet to 5 feet is justified. Applying the reasonable reductions given in(1)and(3) above,the formula can be revised to reduce the fee by 75% to a current level of$6,552.94. This amount is still above the US Cable's proposed 5% of revenue. The fee would be about 8.75% of revenue. Staff recommends that a new revocable permit be issued to US Cable with all of the features of the original permit, except that: (1) the value of the easement be reduced by one half to account for the easement being non-exclusive, shared with other utilities; and (2) the easement width be reduced to a current standard of the industry width from 10 feet wide to 5 feet wide. I tir.. 1 c yPa �/ Lake oiie e7T,1 / o Street ZH v c 2 0 I_ UND (N IQ 1 � pq t I N I U 0 es H o th Ro d N F I � I U G Y 1 ET c .y I Y CITY LIMITS e n oa Cable Inside Cable Outside City Limits _ City Limits CABLE ROUTE FOR US CABLE NORI71 Cdy o[ Fort Collins I"—IIh70, RESOLUTION 2004-056 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE MAYOR TO EXECUTE A REVOCABLE PERMIT TO US CABLE OF COASTAL-TEXAS, L.P., A NEW JERSEY LIMITED PARTNERSHIP FOR EXISTING CABLE TELEVISION LINES AND APPURTENANCES WHEREAS, by Resolution 88-138, the Council of the City of Fort Collins approved the issuance of a revocable permit to Fanch Cablevision of Colorado,doing business as "K1VA Cable", granting permission to KIVA Cable for the installation of an underground cable television line and related facilities within the City rights-of-way and utility easements to serve the Horsetooth and University Mobile Home Parks located at the southwest corner of the intersection of Horsetooth Road and Taft Hill Road; and WHEREAS, the Horsetooth and University Mobile Home Parks are not located within the City limits,but the cable television lines serving said mobile home parks must cross through territory which has been annexed by the City; and WHEREAS, the Council has determined that the formula which was approved for KIVA Cable should be adjusted to better reflect an annual fee that would be appropriate for proper compensation to the City for the issuance of a new revocable permit to the successor of KIVA Cable (US Cable of Coastal-Texas, L.P., a New Jersey limited partnership); and WHEREAS, the staff of the City has negotiated a new revocable permit which the Council believes is appropriate for issuance to US Cable of Coastal-Texas, L.P., and the Council has determined that the Mayor should be authorized to execute such new revocable permit. NOW,THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the Mayor is hereby authorized to execute a revocable permit to US Cable of Coastal- Texas,L.P., in substantially the form shown on Exhibit"A",attached hereto and incorporated herein by this reference,with such modifications and additional terms as the City Manager,in consultation with the City Attorney,determines to be necessary and appropriate to protect the interests of the City. Passed and adopted at a regular meeting of the City Council held this 4th day of May, A.D. 2004. Mayor ATTEST: City Clerk EXHIBIT "A" REVOCABLE PERMIT This Permit, made and executed on the day of , 2004, by and between the CITY OF FORT COLLINS, COLORADO, a municipal corporation organized and existing under the laws of the State of Colorado, hereinafter referred to as "City," and US CABLE OF COASTAL-TEXAS, L.P., A New Jersey Limited Partnership, hereinafter referred to as the "Permittee." Article One GENERAL PROVISIONS 1.01 The City, for and in consideration of the sum of One Hundred Dollars ($100.00) annual administrative fee and the payment, in advance, of an annual use fee based upon the formula as set forth in Article Two hereof and other good and valuable consideration, does hereby grant to the Permittee a revocable, temporary Permit to use certain portions of the dedicated rights-of-way for Overland Trail, Drake Road and Taft Hill Road within the City of Fort Collins, Colorado, for the construction and maintenance of cable television lines and related appurtenances. The route of said lines and the particular premises subject to this Permit, as well as the specifications and manner of installation of the lines and appurtenances which may be constructed thereon, are described and identified on Exhibit A, attached hereto and incorporated herein by this reference. This Permit shall be for the sole and exclusive purpose of using the premises as described and depicted on said plans attached hereto as Exhibit A and for no other purpose and in no other manner whatsoever. This Permit shall apply to those portions of the route of said lines as shown on Exhibit A which are presently in the City and, upon annexation, to those portions of said route which become located within the City, if any. This Permit shall not constitute the City's authorization for the sale or provision of any cable television services within the City by the Permittee. THIS PERMIT REPLACES AND SUMMARILY TERMINATES THAT CERTAIN REVOCABLE PERMIT DATED SEPTEMBER 6, 1988, ISSUED BY THE CITY TO THE PERMITTEE'S PREDECESSOR IN INTEREST, FANCH CABLEVISION OF COLORADO, D/B/A KIVA CABLE. 1.02 This Permit shall be effective as of the day of 2004, and shall be revocable by the Council of the City of Fort Collins at its pleasure, with or without cause, upon which revocation the Permittee shall vacate said premises and remove all effects and improvements therefrom at the Permittee's cost as hereinafter provided. 1 Article Two CONSIDERATION, FEES, TAXES AND ASSESSMENTS 2.01 The Permittee hereby agrees that, in consideration for the granting of this Permit, the Permittee shall pay to the City: (a) The sum of One Hundred Dollars ($100.00) annually, in advance, the receipt of which is hereby acknowledged for the first annual payment. (b) The payment of an annual fee for the use of the City's right-of-way or easement based upon the following formula: Fee = 2.2957 x 10 -6 x length of cable within the City in feet x fair market value in dollars/acre of the land adjacent to the right-of- way or easement in which the cable is installed, as determined by the City's Right-of-way Agent. (c) Any taxes and assessments which may be levied, charged or imposed upon or against the premises as described above, when due. (d) All fees as established pursuant to the subparagraphs (a) and (b) of this Article shall be paid to the City annually, on or before the anniversary date of each one year period (in advance) following execution hereof. Article Three NATURE OF INTEREST ACQUIRED HEREUNDER 3.01 The Permittee agrees and specifically understands that this Permit is confined solely to the nonexclusive privilege to use the premises set forth in Article One hereof, and no other; that the authority and permission herein granted does not thereby invest the Permittee with any interest or estate in said property which is the subject of this Permit, but is a mere privilege to do certain acts of a temporary character on the lands of the City; and that the City retains dominion, possession and control of said property, including access thereto, at all times. 2 Article Four REVOCATION AND TERMINATION 4.01 The City hereby reserves the right to revoke and terminate this Permit at any time, without cause and for any reason that it deems proper, upon giving ninety (90) days' notice, in writing, of such termination to the Permittee and, thereupon, the Permittee shall vacate said premises and remove its effects and improvements therefrom, at the Permittee's sole expense. 4.02 In the event the Permittee uses or allows the premises to be used for any illegal purpose or for any purpose other than that hereinabove, specifically provided, or violates any of the provisions hereof, this Permit may be terminated by the City upon giving ten (10) days' notice, in writing, to the Permittee and, thereupon, the Permittee shall forthwith vacate said premises and remove all effects and improvements therefrom, at the Permittee's sole expense. Article Five INDEMNIFICATION AND INSURANCE 5.01 The Permittee shall be solely responsible for and shall defend, indemnify, keep and save harmless the city, its officers, agents and employees against any and all injuries, deaths, losses, damages, claims, suits or causes of action of any kind whatsoever which may hereafter arise, relating to or in any way arising from or as a consequence of the granting of the permit, or from any work performed thereunder, whether or not it shall be alleged or determined that the act or omission was caused by negligence of the Permittee or the Permittee's employees, or of any contractor or subcontractor or their employees, if any, or of the City or its officers, agents and employees. The Permittee shall, at the Permittee's sole expense, appear, defend and pay all charges of attorneys and all costs and other expenses arising therefrom or incurred in connection therewith, and, if judgment shall be rendered against the City, its officers, agents or employees, in any such action, the Permittee shall, at the Permittee's sole expense, satisfy and discharge the same. 5.02 The Permittee, prior to entering upon said premises and using the same for the purpose for which this Permit is issued, shall provide the City with evidence of commercial general liability and automobile liability insurance covering and pertaining to the subject premises of this Permit, and naming the City as an additional insured. The policies will have minimum limits of $1 million per occurrence with a $2 million aggregate. 5.03 The Permittee expressly understands and agrees that any insurance protection required by this Permit shall in no way limit the responsibility of the Permittee to defend, indemnify, keep and save harmless the City as hereinabove provided. 3 Article Six LIABILITY FOR EXPENSES, COSTS AND DAMAGES 6.01 It is further expressly understood that the City shall not be liable to the Permittee for any loss, cost or expense which the Permittee shall sustain by reason of any damage to its property or business caused by or growing out of the construction, repair, reconstruction, maintenance, existence, operation or failure of any of the sewers, structures, streets or other works or equipment of the City now located or to be constructed upon said premises or upon the property of the City adjacent to said premises, or by reason of the City's exercise of any other rights which may be necessary in furtherance of its municipal purpose. 6.02 The Permittee also agrees that, if the City incurs any additional expense for work which the City would not have had to incur if this Permit had not been executed, then, in that event, the Permittee agrees to pay to the City such additional expense, as determined by the Chief Engineer for the City, promptly upon rendition of bills therefor to the Permittee. Article Seven PERMITTEE'S OBLIGATIONS 7.01 The Permittee, prior to entering upon said premises and using the same for the purpose for which this Permit is granted, shall, at the Permittee's sole cost and expense, obtain all permits, consents and licenses which may be required under any and all applicable state, county or municipal statutes, laws, ordinances and regulations. 7.02 The Permittee covenants and agrees that it shall strictly comply with any and all federal, state, county or municipal statutes, laws, ordinances and regulations which in any manner affect this Permit and any work done thereunder, or which control or limit in any way the actions of the Permittee, its agents, servants and employees, or of any contractor or subcontractor or their employees. 7.03 The Permittee covenants and agrees that, on or before the termination date of this Permit as hereinabove provided, the Permittee shall remove or cause to be removed any and all improvements, structures, facilities, equipment, debris or other things erected or placed upon said premises, and will yield up said premises to the City in as good condition as when the same was entered upon by the Permittee. Upon the Permittee's failure to do so, the City may do so at the sole expense and cost of the Permittee. 4 Article Eight NOTICE AND BINDING EFFECT 8.01 Any notice herein provided to be given shall be deemed properly served if delivered in writing personally or mailed by certified mail, postage prepaid, return receipt requested, to the Permittee at its last known address and to the then-current property owner occupying the premises which are the subject of this Permit, or to such other persons or addresses as either party may from time to time designate in writing. 8.02 This Permit constitutes the entire understanding of the parties hereto, and there are no oral or any other written understandings pertaining to the subject matter hereof. The parties hereto understand and agree that the descriptive headings of Articles One through Eight of this Permit are included for purposes of illustration only and have no effect upon the rights and obligations of the parties hereto. 8.03 This Permit and all rights herein conveyed to the Permittee may be transferred and conveyed by the Permittee; and any such transferee shall, upon such transfer or conveyance, be entitled to exercise all rights and privileges herein granted with the same force and effect as if such transferee had been the original Permittee hereunder, and shall further assume all of the Permittee's obligations, which assumption shall not release the Permittee of its liability under the terms of this Permit. IN WITNESS WHEREOF, this Permit has been executed this day of 2004. CITY OF FORT COLLINS, COLORADO a Municipal Corporation By: Ray Martinez, Mayor ATTEST: City Clerk APPROVED AS TO FORM: Deputy City Attorney 5 STATE OF COLORADO ) ) ss. County of Larimer ) Subscribed and sworn to before me this _ day of , 2004, by Ray Martinez as Mayor and Wanda M. Krajicek as City Clerk of the City of Fort Collins. Witness my hand and official seal. My commission expires: Notary Public By: STATE OF COLORADO ) ss. County of ) Subscribed and sworn to before me this day of , 2004, by , as of US CABLE OF COASTAL-TEXAS, L.P., A New Jersey Limited Partnership. Witness my hand and official seal. My commission expires: Notary Public 6