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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/07/2006 - SECOND READING OF ORDINANCE NO. 010, 2006, GRANTIN ITEM NUMBER: 6 AGENDA ITEM SUMMARY DATE: March 7, 2006 FORT COLLINS CITY COUNCIL STAFF: Elizabeth Stroh SUBJECT Second Reading of Ordinance No.010,2006,Granting allon-exclusive Franchise by the City ofFort Collins to Comcast of California/Colorado LLC and Its Successors and Assigns for the Right to Make Reasonable Use Of, and Erect, Construct, Operate and Maintain Through,the Public Rights- of-way, Easements and Other Public Property Any Equipment Necessary and Appurtenant to the Operation and Maintenance of a Cable System and the Provision of Cable Services to Citizens Within the City. RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. FINANCIAL IMPACT The proposed franchise continues to collect 5%of gross revenues, as allowed by the Federal Cable Act. Franchise fees are paid to compensate the City for Comcast's use of the public rights-of-way and generate approximately one million dollars annually. A new fee is included in the proposed franchise agreement, the purpose of which is to fund capital and facility needs for Public,Educational and Governmental("PEG")cable television programming. The amount of the fee is 50 cents per month per residential subscriber and will be distributed among the PEG entities as determined by City Council. The estimated annual revenue is $164,000. EXECUTIVE SUMMARY This Ordinance,which was unanimously adopted on First Reading on January 17, 2006, will grant a Cable Franchise Agreement between the City of Fort Collins and Comcast of Califomia/Colorado LLC("Comcast"). This agreement is a nonexclusive franchise. The main elements of the agreement are: 1. Term. The length of the franchise is nine years. 2. Customer Service Standards. The standards will be adopted in February, but are referenced in this agreement. The proposed franchise agreement would establish penalties for noncompliance with these standards. March 7, 2006 .2. Item No. 3. Franchise Fee. Five percent(5%) of gross revenues will be paid to the City for use of rights of way. Federal law allows cable companies to pass this cost through to subscribers. 4. Public Educational and Governmental Programming. A PEG fee of 50 cents per subscriber per month will be dedicated to equipment and facility costs associated with providing PEG programming. Comcast has chosen to pass this fee through to subscribers. ..... .._.._ ITEM NUMBER: 21 AGENDA ITEM SUMMARY DATE: January 17, 2006 FORT COLLINS CITY COUNCIL STAFF: Elizabeth Stroh SUBJECT First Reading of Ordinance No. 0 6, tin a Non- lusive Franchise by the City of Fort Collins to Comcast of Califomia/Colorado LLC and Its Successors and Assigns for the Right to Make Reasonable Use Of, and Erect, Construct, Operate and Maintain Through, the Public Rights-of-way, Easements and Other Public Property Any Equipment Necessary and Appurtenant to the Operation and Maintenance of a Cable System and the Provision of Cable Services to Citizens Within the City. RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. The Telecommunications Board has reviewed and discussed the agreement and also recommends adoption. FINANCIAL IMPACT The proposed franchise continues 1 0 oss re ues, as allowed by the Federal Cable Act. Franchise fees are paid to compensate the City for Comcast's use of the public rights-of-way and generate approximately one million dollars annually. A new fee is included in the proposed franchise agreement, the purpose of which is to fund capital and facility needs for Public, Educational and Governmental ("PEG") cable television programming. The amount of the fee is 50 cents per month per residential subscriber and will be distributed among the PEG entities as determined by City Council. The estimated annual revenue is $164,000. EXECUTIVE SUMMARY The proposed Cable Franchise Agreement between the City of Fort Collins and Comcast of Califomia/Colorado LLC ("Comcast"), which was provided to the Council under separate cover on January 5, 2006 and which Ceoo o the ty Clerk, is a non exclusive franchise. The main elementsof1. Term. The length ofthe 2. Customer Service Standards. The standards will be adopted in February, but are referenced in this agreement. The proposed franchise agreement would establish penalties for non-compliance with these standards. January 17, 2006 -2- Item No. 21 3. Franchise Fee. Five percent (5%) of gross revenues will be paid to the City for use of rights of way. Federal law allows cable companies to pass this cost through to subscribers. 4. Public Educational andWded Pas i PEG fee of 50 cents per subscriber per month wilen d facility costs associated with providing PEG programos to pass this fee through to subscribers. BACKGROUND The Federal Cable Acts allow cities and cable companies to begin informal negotiations within 36 months of the expiration of the existing franchise. The City began the renewal process in the fall of 2003 with a needs assessment as to the legal, financial and technical capabilities of Comcast to continue to provide cable television services to Fort Collins. Needs Assessment Staff used several sources to collect information about the needs of the community, including: • A statistically valid subscriber/non-subscriber survey, • An on-line survey, • A survey of neighborhood oups. • A telephone call in line for mm • A community meeting (pub d n s releas , paid advertising and newspaper articles) which was rerun on Channel 27 during a 4 week period, • Surveys of City Departments, Front Range Community College, Colorado State University, and Poudre School District, followed by workshops,including a technical briefing, • Phone calls and/or letters to the City s Franchise Administrator, • Input from the Telecommunications Board identifying priorities for the community. In addition, consulting firms were hired to evaluate both the financial and technical capabilities of Comcast's Cable system in the City. Needs Assessment Results Based on the results of the needs assessment process, a number of topics were discussed with Comcast during franchise renewal negotiations. The needs assessment indicated that: • There is a need for a basicCshOecie Pfor er cable channels at a reduced price). • The current cable system needs for the next 5-6 years. A mid-term technology review of the cable system should occur, with subsequent modifications made as needed to meet the cable-related needs and interests of the community. • If the cable system is updated, then all connections for City and educational facilities should January 17, 2006 -3- Item No. 21 be concurrently modified as needed at Comcast's expense. Access equipment/facilities upgrades by the City, public schools (K-12), and CSU resulting from changes in Comcast's system should be at the cable company's expense. • Free cable drops and Basi d de is r City buildings, libraries and educational facilities(for e ple, blic s o -12 ould be provided. Additionally, Comcast should be encour to We a ervice t e digital line-up for all key City, School District and school bu ings. e Ci should so encourage Comcast to provide free Cable Internet Service, on a voluntary initiative basis, to key City buildings, public schools(K-12) and libraries. • The City's Governmental Access Channel, the Public Access Channel, and the Educational Access Channels should be preserved,with additional Access channels being made available based upon trigger mechanisms in the new franchise. Over the life of the new franchise, there is a need and interest in having enhanced studio and production facilities to enable the PEG Access Channels to provide for the community's evolving programming needs • There may be a need in assigning a small portion of the subscribers' cable bills to support PEG Access facilities and equipment. An Access and I-Net capital grant fund could be established based upon a monthly per subscriber charge to be negotiated with Comcast. In addition, the City could negotiate with the cable company for an initial capital grant for Access and/or I-Net purpose a t cPysequipment d be sufficient to upgrade or replace aging Access equi ent capabilities for Channel 14. The Access/I-Net payment and pr 'sion need to be in addition to the franchise fee paymen • Comcast should construct fiber optic links to all remaining key un-served government sites with reliable and secure capacity for two-way video,voice and high speed data services. • As the City or public schools establish new or relocated facilities, Comcast, at its expense, should provide network connections to such facilities when requested by the City or other entity. • There is a need and interest in having comprehensive customer service standards that, among other things, ensure that deficiencies in operator performance that may have occurred in the past do not recur. • A regional interconnection between the Comcast cable system in the City and other neighboring Comcast cable systems should be effectuated for the purposes of sharing Access programming, fu aPble. plic 'ons, promoting information sharing and enhancing ho and se ty. • Comcast's financial positio Negotiations The results of the needs assessment were presented to City Council in February 2004. Council identified the following three top priorities: a low cost basic tier of service similar to those in January 17, 2006 -4- Item No. 21 surrounding communities; a system that kept pace technically with the industry and was `state of the art"; and support for PEG access. The proposed franchise addresses the on ' fo s: Basic Tier: Although not a p of the anchi Ynmcast recently announced the creation of a basic tier of service t wi tai hanncost of$13.99 excluding fees and taxes. The basic tier will consi De broadcastls, Public Broadcast channels (PBS), local PEG channels, and additional channels that will make Fort Collins' basic tier similar in program line up and cost of service in the communities of Greeley, Loveland and Windsor. State of the Art Technoloey: The parties were unable to agree to any language in the proposed franchise agreement that would requires Comcast to maintain a "state of the art" system. Because of this, and because the technical consulting firm believes that the current system will meet the needs of the community for 5-6 years, the term of the franchise was reduced from the initially proposed 15 years to a 9 year franchise. Public. Educational and Governmental Access: The availability of bandwidth for PEG programming is mandated by the Federal Cable Act, but cities cannot require cable companies to provide a studio or equipment for public use. Therefore, the City took the path of obtaining a PEG fee to fund local access ch ds ech at in t cities across the nation use. The provisions in the proposed chi gre in ee of 50 cents per residential subscriber per month to be dedi ted to apita s ( ilities and equipment) for PEG entities. Federal law allows cab co e s throu these costs to subscribers and Comcast has indicated it will do this. Counci wi decide how to allocate the PEG revenue, limited only by the requirement that the funds be spent on capital (equipment and facility) expenses. The City is also working collaboratively with Aims Community College Fort Collins Campus and a group of local citizens to facilitate the production of local programming. ATTACHMENTS • Comparison between the current franchise and the proposed franchise • Telecommunications Board January 4, 2006 Meeting Minutes • PowerPoint slides ORDINANCE NO. 010, 2006 OF THE COUNCIL OF THE CITY OF FORT COLLINS GRANTING A NON-EXCLUSIVE FRANCHISE BY THE CITY OF FORT COLLINS TO COMCAST OF CALIFORNIA/COLORADO LLC AND ITS SUCCESSORS AND ASSIGNS FOR THE RIGHT TO MAKE REASONABLE USE OF, AND ERECT, CONSTRUCT, OPERATE AND MAINTAIN THROUGH, THE PUBLIC RIGHTS-OF-WAY, EASEMENTS AND OTHER PUBLIC PROPERTY ANY EQUIPMENT NECESSARY AND APPURTENANT TO THE OPERATION AND MAINTENANCE OF A CABLE SYSTEM AND THE PROVISION OF CABLE SERVICES TO CITIZENS WITHIN THE CITY WHEREAS Comcast s ofCalifornia/Colorado LLC("Comcast"),is the successorto Heritage g Cablevision of Delaware Inc. and The World Co mpany and currently holds a cable television franchise with the City of Fort Collins("City"),granted by Ordinance No. 115,on October 19, 1993, and amended by Ordinance No. 169, on October 26, 1998; and WHEREAS, the cable television franchise was extended by Ordinance No. 116, 2005 on October 18,2005 until March 17, 2006 or until a new agreement is entered into between the parties, or until the cable television franchise is terminated pursuant to its terms; and WHEREAS, Comcast and the City have been involved in negotiations for the past several months related to the granting of a new cable franchise agreement to Comcast; and WHEREAS, these negotiations have resulted in a proposed Franchise Agreement that is being presented to City Council for its consideration and approval (the "Franchise Agreement:), a copy of which is on file with the City Clerk; and WHEREAS, the Franchise Agreement includes the following major terms and conditions: (1)a term of nine years(2)a requirement that Comcast pay to the City a franchise fee of five percent of the gross revenues that Comcast receives from the operation of its cable system within City rights- of-way; (3) updated customer service standards; and (4) public, educational and governmental funding for public access channels. WHEREAS, Section l of Article XI of the City Charter and Section 6-3 of the City Code set forth notice requirements that must be satisfied prior to the City granting a cable television franchise. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, as follows: Section 1. That the City Council hereby finds that the notice requirements of Section 1 of Article XI of the City Charter and Section 6-3 of the City Code relating to the granting of a cable television franchise have been satisfied with respect to the granting of a cable television franchise to Comcast under the terms and conditions of the Franchise Agreement. Section 2. That if any portion of this ordinance is held to be unconstitutional or invalid for any reason, such decision shall not affect the constitutionality or validity of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance and each part hereof irrespective of the fact that anyone part be declared unconstitutional or invalid. Section 3. That all other ordinances or portions thereof inconsistent or conflicting with this ordinance or any portion hereof are hereby repealed to the extent of such inconsistency or conflict. Section 4. That City Council finds that the City's grant of a cable television franchise to Comcast in accordance with the terms and conditions of the Franchise Agreement is in the best interests of the City and its citizens, and will meet the future cable related needs of the community. Introduced and considered favorably on first reading and ordered published this 17th day of January, A.D. 2006, and to be presented for final passapQq the 7th day of February, A.D. 2006. M ATTEST: �L" City Clerk Passed and adopted on final reading this 7th day of February, A.D. 2006. Mayor ATTEST: City Clerk