HomeMy WebLinkAboutItem 4: Ordinance Granting Comcast of Oregon II, Inc., an Additional Term and Franchise Renewal
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UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Public Hearing: An Ordinance Granting Comcast of Oregon II, Inc., an Additional Term
and Franchise Renewal for the Operation of a Cable Communications System; Amending
Ordinance 19775; Adopting a Severability Clause; and Providing an Effective Date
Meeting Date: October 15, 2007 Agenda Item Number: 4
Department: Central Services Staff Contact: Pam Berrian
www.eugene-or.gov
Contact Telephone Number: 682-5590
ISSUE STATEMENT
This is a public hearing on a proposal to renewal and amend the current cable television franchise for a
10-year term. Action on the ordinance to adopt the franchise is scheduled for October 29, 2007. As in
the past, the cities of Eugene and Springfield and Lane County coordinated their positions on franchise
renewal and negotiated jointly with Comcast. The current franchise sunsets in July 2008.
BACKGROUND
Franchises are long-term agreements for private commercial use of the public rights-of-way. They are
not exclusive. Eugene’s current cable TV franchise is 38 pages addressing operating definitions,
compensation, reporting, revenue territory, customer service, construction permitting, and provision of
community access channels for public, education and government (PEG) uses. Programming and rate
issues, except those involving the Basic Tier, are not within local government purview.
The 1991 franchise (Ordinance 19775) that is the focus of the current renewal process was between TCI
Cablevision of Oregon and the City of Eugene. Identical but separate franchises were adopted by the
City of Springfield and Lane County. With City Council approvals, the franchise was transferred to
AT&T, and later to Comcast.
Under Ordinance 20083 (codified mostly at EC 3.400 to 3.430), rights-of-way use fees and taxes apply
to Comcast, subject to a federal statutory 5% limit on franchise fees. Comcast pays the 5% fee for use
of the public rights of way plus a 2% cable communications business privilege tax.
Comcast and staff for the three local franchising authorities began discussions about franchise renewal
nearly two years ago. Comcast asserted that it was entitled to a renewal or extension of the current
franchise on the same terms. Staff for the three jurisdictions disagreed and were prepared to initiate
formal franchise renewal procedures which would include a Community Needs (or Ascertainment)
Survey. After months of discussion, both sides agreed to focus on negotiating terms of a renewed
franchise that would be mutually acceptable, instead of resorting to litigation to resolve the procedural
disagreement.
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The attached final draft franchise and accompanying Letter of Agreement is a negotiated compromise of
Comcast’s desire for an expedited ‘as is’ 10-year extension and City’s option to implement a formal
franchise renewal process. Staff believe the draft provisions provide Eugene with programs and
funding that meet the needs of the community and are appropriate in light of rights afforded both
Comcast and the franchising authorities by federal and local laws. The Franchise and Letter of
Agreement have been reviewed by the City Attorney, Finance staff, Public Works Permitting staff, and
Metro TV programming staff.
The vast majority of the provisions in the current franchise are retained in the draft renewed franchise.
additional
The Letter Agreement adds some benefits for the City. New components and amended
provisions being recommended for council approval for the new 10-year term (previous franchise was
for 15 years) are listed below.
New 10-year Franchise Components
•
$200,000 payment to three jurisdictions, divided proportionate to subscriber base.
•
$20,000 towards Eugene downtown build-out if business or municipality matches with $20,000.
•
Basic Service television connections to additional publicly owned buildings which is a homeland
security and disaster preparedness related benefit.
•
A 4th Channel scrambled and dedicated for jurisdictional public safety training and
communications. Seventy-five converters to unscramble the channel at no cost to the
jurisdictions.
•
Additional payment of $50,000 a year for Public, Education, and Government (PEG) access
channels equipment. Federal law allows Comcast to pass on a prorated portion of this cost to
their retail customers.
•
Changing Definition of Gross Revenue to exclude explicitly advertising commission income and
certain programming fee income.
•
Jurisdictions will receive one paid full franchise review/audit in the 10-year term instead of one
every three years.
•
Additional Comcast-provided operational report after 5th year.
•
Expedited renewal option language removed (suggested by jurisdictions).
•
Jurisdictions agree to a limited release of claims clause. The City Attorney believes the release
does not adversely impact any claim the City may have against Comcast.
Comcast is expected to sign the Letter of Agreement prior to materials being finalized for the October
22 City Council meeting packets. If the ordinance is adopted, Comcast will sign the Acceptance
attached to the ordinance. When that has occurred, the City Manager will sign the Letter of Agreement,
and the franchise renewal will be complete. If the Letter or Agreement is not signed as expected, staff
will review its options.
Staff prefers the suggested 10-year term for the renewal. However, the legal, legislative, and regulatory
telecommunications and cable communications environment is unstable, so it is possible that some
portions of the agreement and ordinance will be rendered less effective or ineffective. Local
governments continue their joint efforts to prevent such changes.
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RELATED CITY POLICIES
FAIR, STABLE AND ADEQUATE FINANCIAL RESOURCES: A government whose ongoing
financial resources are based on a fair and equitable system of revenues and are adequate to maintain
and deliver municipal services.
CITY TELECOMMUNICATION VISION AND POLICY: The City of Eugene's telecommunications
vision is completion and operation of a coordinated regional information infrastructure that provides
accessible and affordable high-speed connectivity for citizens, public institutions, and businesses and is
constructed in a manner that best serves the public interest.
COUNCIL OPTIONS
Not applicable; this is a public hearing only.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends that the Mayor and City Council convene the public hearing. Action on
the franchise ordinance is scheduled for the October 29 City Council meeting.
SUGGESTED MOTION
No motion is suggested. This is a public hearing only.
ATTACHMENTS
A. Ordinance 19775, the 1991 TCI Cablevision of Oregon franchise.
B. Letter of Agreement to be signed by Comcast before renewal Ordinance adoption
C. Draft Ordinance: Granting Comcast of Oregon II, Inc., an Additional Term and Franchise Renewal
for the Operation of a Cable Communications System; Amending Ordinance 19775; Adopting a
Severability Clause; and Providing an Effective Date
FOR MORE INFORMATION
Staff Contact: Pam Berrian
Telephone: 682-5590
Staff E-Mail: pam.c.berrian@ci.eugene.or.us
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ATTACHMENT B
August 13, 2007
Mr. Milo Mecham
Staff Counsel
Metropolitan Policy Commission
Lane Council of Governments
99 East Broadway, Suite 400
Eugene, Oregon 97401-3111
Dear Mr. Mecham:
The purpose of this letter of agreement is to set forth several commitments between
Comcast of Oregon II, Inc. (hereinafter, “Comcast”) and the cities of Eugene and
Springfield, and Lane County as to the matter of Comcast’s cable franchise additional
term and renewal.
Attached please find three ordinances, one for each respective jurisdiction, which have
been drafted with identical substantive provisions and are the product of our discussions.
The terms set forth in this letter, along with the terms incorporated from the enclosed
attached ordinances, have been negotiated in good faith and agreed to as part of the
informal discussions to make certain amendments to and grant an additional term and
renew the current Franchise until August 1, 2018, and specifically relate to unique
community needs that exist in the these communities. The terms of the attached
ordinances are proposed for the purposes of setting forth the substantive terms of the
ordinances. It is understood that the recitals may or may not be used by the Cities of
Eugene and Springfield, or Lane County in enacting ordinances, and that the enactment
clause and signature section may differ by jurisdiction. Should that be the case, the
parties agree that the recitals need not be a part of the final ordinance and that the
enactment clause and signature section may be changed to reflect the policy and practice
of each jurisdiction. This letter agreement shall become effective upon approval of this
agreement by the three jurisdictions’ governing legislative bodies (Eugene, Springfield,
and Lane County) and the attached ordinances amending and adding an additional term to
the current franchises between Comcast and Eugene, Springfield, and Lane County,
respectively.
In consideration of the mutual promises made herein, and in addition to the terms agreed
to in the attached ordinances, the terms of which are expressly incorporated herein by
reference, the parties agree to the following terms and conditions:
Payment to Local Franchising Authorities.
Within ninety (90) days of approval of this
agreement and the amended franchise agreements by the City Councils of Springfield and
Eugene, and the Lane County Board of Commissioners, Comcast shall pay to the
Commission the amount of $200,000 (Two Hundred Thousand Dollars) with said amount
to be divided pro-rata among Eugene, Springfield, and Lane County based upon the
number of cable subscribers in each jurisdiction. Comcast agrees that this amount may
not be offset against franchise fees due or to become due and will not be itemized on
subscribers’ bills.
Extension of Service to non-residential areas
. At any time during the period of the
franchise, the City of Eugene, the City of Springfield and/or Lane County may identify
projects to extend services to non-residential areas of downtown Eugene and the
Glenwood area that are not currently served by cable service. If the City of Eugene, City
of Springfield and/or Lane County or an appropriate governing Urban Renewal Agency
determines that funds are available to assist the extension of services to the area of
downtown Eugene and/or Glenwood not currently served, Comcast will match the
amount secured on an equal basis, up to a maximum amount of Twenty Thousand Dollars
($20,000) to each Springfield, Eugene, and Lane County ($60,000 total). The entity
having jurisdiction in the area in which the project will occur shall notify Comcast at
least nine months in advance of the project's desired completion date with the notice
including a commitment that the funding is available and secured. The provisions of each
amended franchise between the Comcast and the City of Eugene, the City of Springfield,
and Lane County, respectively, including but not limited to Section 21, shall apply to
Comcast’s obligations under this section. Nothing in this agreement shall limit or prevent
Comcast from initiating any construction in Downtown Eugene or Glenwood without a
matching contribution.
No Additional Compensation or Reimbursement Required
. Comcast is not required
to pay any additional compensation or reimbursement to the Cities or the County or any
other entity in order to secure the additional term and renewal of the Franchise described
herein.
Federal Law Applicable.
The City of Eugene, City of Springfield, Lane County and
Comcast acknowledge that this agreement and the amendments to the Franchise are
subject to federal law. Omission in this agreement or the amended franchise of an
express mention or acknowledgement of any right or obligation existing under current
law shall not be taken as a consent to or expectation of forbearance in the exercise of any
right or obligation created by federal law.
No Franchise Fee Offset.
Comcast agrees that no payments made pursuant to this
agreement or the amended franchise, and no services provided pursuant to this agreement
or to the franchise except those expressly designated as franchise fee payments, will be
used as an offset, or otherwise deducted from, franchise fees due or to become due unless
allowed by federal law or regulation, or a final and binding decision by a court of
competent jurisdiction over the subject matter and the parties hereto.
Release of claims.
The City of Eugene, City of Springfield and Lane County (the LFAs)
release Comcast from any and all claims in dispute or known by the parties as of the date
of this Agreement and arising out of Comcast’s compliance or noncompliance with the
Franchise, specifically Eugene Ordinance 19775, Springfield Ordinance 5567 and Lane
County Ordinance 6-91; provided, however, that this release does not include: (a) any
claims arising out of state or local laws other than the Franchise (notwithstanding any
references to state or local law in the Franchise); (b) any claims arising out of matters that
are the subject of pending litigation or administrative proceedings between one or more
of the LFAs and Comcast; and (c) any matters related to Comcast’s payments to any of
the LFAs or the Commission that have not yet been the subject of audit or financial
review by the LFAs or the Commission subject to limitations provided under the
Franchise and applicable law.
The terms and conditions of this letter agreement shall be binding upon Comcast, the City
of Eugene, the City of Springfield, and Lane County, and their successors and assigns.
Comcast stipulates and agrees that a violation of these terms by Comcast may be
considered by the local franchising authorities that are a party to this agreement as a
violation of the Franchise, subject to the rights and remedies contained therein.
If you are in agreement with the terms and conditions of this letter agreement, please so
indicate by having this document countersigned by the appropriate officials on both
enclosed copies, and returning one fully signed copy to Robert L. Schroeter, Government
Affairs Director, Comcast Cable, 2897 Chad Drive, Eugene, OR 97408 at your earliest
convenience.
Very truly yours,
COMCAST OF OREGON II, INC.
____________________________________________
Curt Henninger
Senior Vice President
Agreed to this ____ day of __________, 2007
CITY OF EUGENE
_____________________________________________
Angel L. Jones
City Manager Pro Tem
Agreed to this ____ day of __________, 2007
CITY OF SPRINGFIELD
_____________________________________________
Gino Grimaldi
City Manager
Agreed to this ____ day of __________, 2007
LANE COUNTY
_____________________________________________
Faye Stewart
Chair, Lane County Board of Commissioners
ATTACHMENT C
ORDINANCE NO. _____
AN ORDINANCE GRANTING COMCAST OF OREGON II, INC.,
AN ADDITIONAL TERM AND FRANCHISE RENEWAL FOR THE
OPERATION OF A CABLE COMMUNICATIONS SYSTEM;
AMENDING ORDINANCE 19775; ADOPTING A SEVERABILITY
CLAUSE; AND PROVIDING AN EFFECTIVE DATE.
The City Council of the City of Eugene finds that:
A.
Lane County and the cities of Eugene and Springfield, the local
franchising authorities, entered into a franchise with TCI, Inc. which franchise was
transferred to ATT Broadband, and subsequently transferred to Comcast of Oregon II,
Inc., (hereinafter “Comcast”), the successor in interest to ATT Broadband, the successor
in interest to TCI, Inc., for the operation of a cable communication system and have
designated the Metropolitan Policy Commission (MPC) as the representative of the local
franchising authorities in administration of the franchise.
B.
The City of Eugene enacted Ordinance No. 19775 on May 13, 1991,
granting such franchise.
C.
The current franchise agreement with all three local franchising authorities
provides that the current franchise term expires in July, 2008, subject to certain renewal
rights and rights to an additional term possessed by the Grantee.
D.
In prior cable franchise renewals, Lane County and the cities of Eugene
and Springfield, and Grantee’s predecessor used the renewal successfully to clarify,
update and renew previous franchises with Lane County, Eugene and Springfield.
E.
Lane County and the cities of Eugene and Springfield, have had extensive
discussions with Comcast that have resulted in the local franchising authorities
concluding that an additional term and renewal of the franchise for an additional ten-year
term to 2018 is warranted upon certain terms and conditions as more particularly set forth
herein and in a certain letter of agreement between the parties dated as of
________________, 2007.
F.
The parties have agreed to certain amendments to the franchise as set forth
herein below.
NOW, THEREFORE,
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Ordinance - 1
Section 1
. Section 3 of Ordinance No. 19775 is hereby amended by deleting
the current definitions of “Grantee” and “Gross Annual Revenue” in their entirety, and
replacing them with the following:
"Grantee" shall mean Comcast of Oregon II, Inc., its successors and assigns.
"Gross Annual Revenues” means any and all compensation in whatever
form, grant, subsidy, exchange, or otherwise, directly or indirectly
received by Grantee for services provided to subscribers within the
franchise territory but excludes the following: taxes Grantee is required to
separately state and collect from subscribers; commissions paid on
advertising sales revenues; amounts received from programmers as
reimbursement of marketing expenses and launch fees, and, PEG access
capital support collected by the Grantee from subscribers if permitted by
federal or state law. Except as expressly set forth in this definition, Gross
Revenues shall be calculated in accordance with generally accepted
accounting principles.
Section 2
. Section 5(4) of Ordinance No. 19775 is hereby deleted in its
entirety, and replaced with the following:
Service to Institutions. Upon request of the Commission, the
Grantee shall provide single installations of basic service to each fire and
police station, public school, City Hall, County Courthouse, and all public
libraries on the terms provided in Section 7(2) of this Ordinance. In
addition to the institutions listed above and after August 1, 2008, Grantee
shall provide, upon request of the Commission and at no cost, a single
installation of basic service to no more than 30 additional public buildings
owned and occupied by Eugene, Springfield, or Lane County and located
within the Franchise Area and within 150 feet of the then existing system
operated by Grantee, except for portions of buildings used primarily to
house jail populations. No standard installation fee and no monthly
service charge shall be made for the distribution of the services described
in this section to these locations.
Section 3
. Section 5(6) of Ordinance No. 19775 is hereby amended by
deleting paragraphs (a) and (b) in their entirety, and replacing them with the following
paragraphs (a) and (b) below, and adding a new paragraph (c) as follows:
Access Channels.
(a) Grantee shall provide four channels dedicated for public,
educational, and local government access programming, three within basic
service and one additional channel as provided in subsection (b).
Ordinance - 2
(b) Public Safety Channel. Grantee shall make available
continued use of a fourth scrambled channel to the Commission providing
public safety programming created by the Commission or its designee.
The channel shall reside on Grantee’s digital service tier and Grantee shall
make available, without charge, use of not more than 75 digital converters
to each designated location that shall be configured to receive only the
public safety channel. The location of the 75 converters shall be
designated in writing by the Commission. Grantee shall provide, at no
charge, replacement converters should technology change such that the
originally distributed converters are no longer capable of providing access
to the channel. The public safety channel as provided herein is the fourth
PEG channel required under the franchise prior to this amendment and
Grantee shall not be required to provide any other service over this fourth
PEG channel.
(c) Grantee shall not be responsible for programming,
operations or oversight of any public, educational, governmental, or access
channels provided for in this Section.
Section 4
. Section 10(5) of Ordinance No. 19775 is hereby deleted in its
entirety, and replaced with the following:
In addition to the franchise fees required by this section, Grantee
shall pay to the Commission on or about March 1 of 2007 and 2008
$50,000 per year. Beginning on or about March 1, 2009, and on or about
said date each year thereafter for the remaining term of this franchise,
Grantee shall pay to the Commission $100,000 per year. Money received
by the Commission under this subsection shall be used only for capital
costs related to public, educational and governmental access facilities
including but not limited to access center equipment acquisition or
replacement. Payments under this subsection may, at Grantee’s sole
discretion, be made quarterly at the same time franchise fee payments are
made pursuant Section 10(1). Grantee's right, if any, to pass through and
itemize amounts collected from residential subscribers for payments
required pursuant to this section is governed by provisions of federal or
state law.
Section 5
. Sections 16(1) and (2) of Ordinance No. 19775 are hereby deleted
in their entirety, and replaced with the following:
(1) Duration and Renewal. This franchise and the rights and
privileges granted herein shall remain in effect until August 1, 2018,
unless terminated sooner under provisions of Subsection (4) of this
section. Renewal of the Grantee's franchise at the end of such term shall
be governed by and comply with the provisions of applicable law then in
effect.
Ordinance - 3
(2) Franchise Review.
(a) A review of the franchise performance may be
undertaken upon agreement of the Grantee and Commission.
(b) Upon request of either the Commission or Grantee,
a review of franchise performance may be undertaken once after
August 1, 2013. As a result of such franchise performance review,
the Commission and Grantee may negotiate modifications or
revisions to the franchise upon mutually acceptable terms and
conditions.
(c) After January 1, 2013 but before August 1, 2013,
Grantee shall submit a report to the Commission on the
performance of the system under the franchise. The report shall
include:
(i) The channel capacity and plans for additional channels;
(ii) Service extension policies set forth in Section 7;
(iii) Technical adequacy of the system, including, but
not limited to, picture quality, two-way transmission
capacity, and compliance with standards sets forth
in Section 8;
(iv) Changes in the Federal Act or FCC authority, rules, or
regulations which, in Grantee’s opinion, might affect the
franchise; and
(v) The franchise fee payments set forth in Section 10 and
financial support for public, education, and governmental
access.
(d) The Grantee shall be represented during review
negotiations by a representative of the company authorized to
speak on questions or corporate practice, policy, and plans.
Section 6Severability
. . If any section, sentence, paragraph, term, or
provision hereof is determined to be illegal, invalid, or unconstitutional, by any court of
competent jurisdiction or by any state or federal regulatory authority having jurisdiction
thereof, such determination shall have no effect on the validity of any other section,
sentence, paragraph, term or provision hereof, all of which will remain in full force and
effect for the term of the Franchise.
Section 7.Savings Clause.
Except as amended herein, all other provisions of
Ordinance No. 19775 remain in full force and effect.
Ordinance - 4
Section 8 Effective Date.
. This Ordinance shall take effect thirty (30) days
after its enactment by the City Council and approval by the Mayor. Subject to applicable
federal, state and local law, Grantee must accept the provisions of this Ordinance and
agree to be bound thereby. Such acceptance shall be in writing signed by an officer of the
corporation which is delivered to Grantor within 30 days of enactment of this Ordinance.
In the event Grantee fails to deliver its acceptance as provided herein, and
notwithstanding any other provision of this Ordinance, Grantor may repeal this
Ordinance without further notice to Grantee and without giving Grantee an opportunity to
be heard.
Passed by the City Council this Approved by the Mayor this
____ day of ____________2007 ____ day of _____________, 2007
____________________________ ____________________________
City Recorder Mayor
Ordinance - 5