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OF
Ji? COLLDWil
Crry COUNCIL CHAMBER
78495 Calle Tampico
La Quinta, California 92253
Special Meeting
September 29, 1995 11.00 A.M.
CAIL TO OIwER Beginning Res. No.95-70
a. Pledge of Allegiance Ord. No.274
b. Roll Call
CONFIRMATION OF AGENDA
ANNOUNCE?!NTS
PRESENTATIONS
FUBUC COMMENT
BUS[NESS SESSION
1 CONSIDERATION OF APPROVAL OF RESOLUTION APPROVING MULTI-CHANNEL SERVICE
PROVIDERS FRANCHISE AGREEMENT WITH COLONY CABLEVISION.
A) RESOLUTION ACTION.
2. CONSIDERATION OF APPROVAL OF RESOLUTION APPROVING THE TRANSFER FROM
COLONY CABLEVISION OF CALIFORNIA, A DIVISION OF PROVIDENCE JOURNAL COMPANY,
D.B.A. COLONY CABLEVISION OF CALIFORNIA, TO CONTINENTAL CABLEVISION.
A) RESOLUTION ACTION.
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ing -> 10$CLOSED SESSION
1. CONFERENCE WITH LEGAL COUNSEL REGARDING POTENTIAL LITIGATION PURSUANT TO
SUBDIVISION B) OF SECTION 54956.9 ONE CASE).
ADJOURNMENT
DECLARA1ON OF PO?Il!?G
I, Saundra L. Juhola, City Clerk of the City of La Quinta, California, do hereby declare that the foregoing agenda
for the Special City Council meeting of September 29, 1995 was posted on the outside entry to the Council
Chamber, 78-495 Calle Tampico and on the bulletin board at the La Quinta Chamber of Conunerce and faxed to
the 5 media on Friday, September 29, 1995.
AUNDRA L. JUH A, City Clerk
City of La Quinta, California
PUBLIC N?CE
The La Quinta City Council Chamber is handicapped accessible. If special equipment is needed for the
hearing impaired, please call the City Clerk's Office at 777-7025, 24-hours in advance ol the meeting and
accommodations will be made.
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78-495 CALLE TAMPICO LA OUINTA, CALIFORNIA 92253 619) 777-7000
FAX 619) 777-7101
NOTICE OF SPECIAL MEETING
OF THE
LA QUINTA CITY COUNCIL
FRIDAY, SEPTEMBER 29, 1995
11:00 A.M.
NOTICE IS HEREBY GIVEN THAT IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54956, I,
JOHN J. PEN A, MAYOR OF THE CITY OF LA QUINTA, DO HEREBY CALL A SPECIAL MEETING OF
THE CITY COUNCIL FOR 11:00 A.M. ON FRIDAY, SEPTEMBER 29, 1995 SAID MEETING WILL BE
HELD AT THE LA QUINTA CIVIC CENTER COUNCIL CHAMBER, 78-495 CALLE TAMPICO, LA
QUINTA, CALIFORNIA.
PURPOSE OF SAID MEETING IS TO CONSIDER THE ITEMS LISTED ON THE ATTACHED AGENDA.
Dated: September 26,1995
JOHN J. ENA, yor
City of La Quinta, California
JOOJ'O3?
MAILING ADDRESS P.O. BOX 1504 LA QUINTA, CALIFORNIA 92253 U4
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GP?oF BUSINESS SESSION:
COUNCILIRDA MEETING DATE: September 29,1995 CONSENT CALENDAR:
ITEM TIThE: Consideration of Approval of Resolution STUDY SESSION:
Approving a Multi-Channel Service Provider's
Franchise Agreement with Colony Cablevision PUBLIC REARING:
RECOMMENDATION:
Approve the Resolution Approving a Multi-Channel Service Provider's Franchise Agreement with
Colony Cablevision
FISCAL IMPLICATIONS:
There is no direct cost associated with the approval of the new Franchise Agreement other than
the administration of revenue fees paid to the City. The approval of this agreement may enhance
future revenue sources to the City depending on what action the City Council takes in regard to
telephony services. In addition, the City would receive two grants from the cable operator totaling
$175,000 The cost of these grants will not be passed through to the cable subscribers). These
funds may be used to reimburse the City's costs incurred in auditing and negotiating the new
franchise.
BACKGROUND AND OVERVIEW:
At the City Council meeting of September 19,1995, the City Council directed staff to schedule a
Special Meeting to consider the new franchise agreement with Colony Cablevision. The Special
Meeting needs to occur prior to the projected October 1,1995 closing date for the transaction
between Colony and Continental.
Providence Journal, through its subsidiary Colony Cablevision, is currently operating a cable
television system in the City of La Quinta. In the spring of 1994, the City retained special cable
consultant, Municon, to assist in the renegotiating of the franchise pursuant to the transfer
agreement negotiated upon Providence Journals' acquisition of the franchise in December 1992.
The City adopted a new Multi-Channel Service Provider Ordinance in the fall of 1994. Municon
prepared an audit of the cable system citing numerous franchise violations. Discussions ensued
between Colony and the City as to whether the operator was in breach of the franchise and
whether fines should be imposed as well as to how the breaches should be cured.
On February 8,1995, Providence Journal notified the City of an impending franchise transfer of
ownership C'Transfer Requesr') to Continental Cablevision. During this time, the City continued
in negotiations with Colony Cablevision regarding issues which must be resolved before approving
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ing -> 10$the Transfer Request. In April and May of 1995, the Council authorized Bill Marticorena Rutan
& Tucker), special counsel, to present the concept of a franchise similar to the Indian Wells ten
10) year franchise in an effort to resolve the deadlock dispute on the performance of the prior
franchise. Complicating this transaction was the fact that the franchise agreement with Providence
Journal expired on December 31,1994. The City twice extended the term of the franchise
however, the last extension expired on June 29,1995.
The attached document Attachment No.1) represents months of negotiations with Providence
Journal Colony Cablevision) and Continental Cablevision. Please note that this is a marked up
version as it highlights some of the remaining issues to be resolved. The following are some of the
key points of the franchise agreement:
* Fifteen 15) year term This extended term is recommended by staff solely in return for
Continental's agreement to abide by the City's Multi-Channel Service Provider Ordinance
terms.)
* Two 2) grants to the City totaling $175,000 to purchase and install Educational and
Government Access Related Facilities and Equipment or to administer the franchise cost
the cost will not be passed on to the cable subscribers)
* Dedication of 3 channels initially and 2 more at a later date for the Education and
Governmental purposes
* The System Rebuild for the Cove shall be completed within nine 9) months from the
effective date of the franchise
* The entire system, throughout the City, shall have 750 megahertz(M HZ) of total bandwidth
and a minimum of seventy-eight 78) channels
* Performance Review and Exam shall occur in year ten 10) of the franchise
In addition to the concerns marked on the proposed franchise, staff based on the advice of special
counsel Bill Marticorena) and representatives from Colony and Continental were unable to reach
a consensus on the definition of gross revenue. Continental intends to begin providing telephony
services over their system lines and has filed documents with the State to do so. It is staff's
position that the City's Municipal Code regulating Multi-Channel Service Providers provides that
the City shall collect a revenue fee on all services provided over the cable lines not just cable
television Attachment No.2). In fact, one of the primary purposes in adopting the new regulatory
ordinance was to make sure new technologies were covered to the extent legally allowed. The
cable operator's position is that telephony services are not included and they point out that the
phone companies do not pay any franchise fees. The City's special counsel believes that a
comparison can not be made between cable operators and telephone companies as they are
2
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ing -> 10$different businesses subject to different federal regulations. The special counsel's position, based
upon the City's Municipal Code, is that we should be able to receive revenue from any telephony
services provided by any multi-channel service provider unless there is federal or state legislation
which prohibits us from doing so. This is a major policy decision for the Council however, in light
of the currently proposed fifteen 15) year term of the franchise, staff would recommend against
any move by the cable operators to exclude telephony services or any other revenue generating
operation of the physical cable line located in the City's public right-of-way) from the definition of
gross revenue and subject to the franchise fee. Staff recommends approval of the franchise
agreement with the definition of gross revenues to include all revenue generated from the system.
Alternatively, a significantly reduced term of the franchise may be considered to allow the evolution
of this rapidly evolving technology and legal framework to become clearer prior to commitment on
a long term basis. If the City determines that it is unable to reach an agreement with Colony after
taking the extraordinary step of attempting to resolve the franchise breach issues by moving
forward to a new, favorable franchise for both parties), then the next step will be that the City will
consider initiating breach of franchise proceedings and Colony may initiate a formal renewal
process.
FINDINGS AND ALTERNATIVES:
The franchise agreement with the City's cable operator expired on June 29,1995 and Colony has
requested consideration of a new franchise agreement. There are three options available to the
Council as follows:
1. Approve the Resolution Approving the Multi-Channel Provider's Franchise Agreement with
the gross revenue definition including telephony services; or,
2. Approve the Resolution Approving the Multi-Channel Provider's Franchise Agreement with
the gross revenue definition excluding telephony services with a consideration of a
substantially shorter term; or,
3. Do not approve a new franchise agreement; or,
Provide further direction to staff.
Dawn C. Honeywell, City Attorney
INDEX:
1. Resolution approving franchise agreement
2. Attachments
1. Franchise agreement
2. Definition of Gross Revenue from La Quinta Municipal Code
tftO9.95 BVV)
3
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CP4OF
AGENDA CATEGORY:
BUSINESS SESSION
COUNCILIRDA MEETING DATE: September 29, 1995 CONSENT CALENDAR:
ITEM TIThE: Consideration of Approval of Resolution STUDY SESSION:
Approving the Agreement Relating to the
Consent of the City of La Quinta, California PUBLIC HFARING:
to the Transfer of Control of the Franchise
Agreement Granted to Providence Journal
Company
RECOMMENDATION:
Approve the Resolution Approving the Agreement Relating to the Consent of the City of La Quinta,
California to the Transfer of Control of the Franchise Agreement Granted to Providence Journal
Company
FISCAL IMPLICATIONS:
None
BACKGROUND AND OVERVIEW:
On February 8,1995, Providence Journal notified the City of an impending franchise transfer of
ownership Transfer Request") to Continental Cablevision of its cable television franchise with the
City of La Quinta. A full copy of the transfer request is available in the City Attorney's Office,
however, a cover letter from Colony Attachment No.1) and one from Continental Attachment No.
2) provides a summary of the Transfer Request. At the time of the original transfer request, an
audit report had concluded that the current franchise was in breach. Discussion with Colony of the
issues regarding the breach of the franchise agreement and the renegotiating of the existing
franchise agreement were already underway The franchise that Providence Journal hoped to
transfer had expired on December 31,1994 and was granted an extension by the City Council two
times, with the latest extension expiring on June 29,1995. During that time, staff, consultants and
special legal counsel have been negotiating with both cable operators Colony and Continental)
to reach agreement on a new franchise and settle the breach of franchise issues which must be
resolved before an approval of the transfer may occur.
At the special City Council meeting on September 29,1995, the City Council is scheduled to
consider whether to approve a new franchise agreement with Colony Cablevision although there
remains a significant issue. This issue is regarding the definition of gross revenues. If the City
Council approves the new franchise agreement at the September 29,1995 meeting, the City
Council will be able to consider the approval for Colony to transfer the franchise to Continental
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ing -> 10$Cablevision pursuant to the Transfer Request filed on February B, 1995 by executing the
AGREEMENT RELATING TO THE CONSENT OF THE CITY OF LA QUINTA, CALIFORNIA TO
THE TRANSFER OF CONTROL OF THE FRANCHISE AGREEMENT GRANTED TO
PROVIDENCE JOURNAL COMPANY). Continental advised staff on September 27,1995 that they
were making some last minute changes and would provide staff and the City Council with the
Agreement at the September29, 1995 City Council meeting.
FINDINGS AND ALTERNATIVES:
The City's cable operator has filed a Transfer Request pursuant to federal law with the City on
February 8, 1995. The request was originally denied on June 23, 1995 due in part to the fact that
the franchise breach issues and new franchise terms were not resolved at that time. This action
is contingent upon the City Council approving the new franchise agreement on September 29,
1995. There are three options available to the City Council as follows:
1. Approve the Resolution Approving the Agreement Relating to the Consent of the City of La
Quinta, California to the Transfer of Control of the Franchise Agreement Granted to
Providence Journal Company: or,
2. Take no further action, which would leave intact the earlier denial of the transfer; or,
3. Provide further direction to staff.
Dawn C. Honeywell, ty Attorney
INDEX:
1. Resolution
2. Attachments
1. Colony Letter on transfer
2. Continental Letter on transfer
2
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MEMORANDUM
CONFIDENTIAL
CLOSED SESSION AGENDA ITEM NO.1
TO: The Honorable Mayor and Members of the City Council
FROM: Thomas P. Genovese, City Mana?er?4
DATE: September 29, 1995
RE: Conference with Legal Counsel Regarding Potential Litigation
Pursuant to Subdivision B) Of Section 54956.9 One Case)
A verbal update will be provided by the City Attorney regarding Colony
Cablevision.
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