08-28-00 agaendaCITY OF RICHFIELD, MINNESOTA
MONDAY, AUGUST 28, 2000
RICHFIELD CITY HALL
6700 PORTLAND AVENUE
REGULAR CITY COUNCIL MEETING
COUNCIL CHAMBERS
7:00 P.M.
AGENDA
INTRODUCTORY PROCEEDINGS
Call to Order
Pledge of Allegiance
Roll Call
Approval of minutes of (1) Special City Council Study Session of August 14, 2000 and
(2) Regular City Council Meeting of August 14, 2000 '
PRESENTATION
Individuals who wish to address the Council are requested to print their name
and address on the Speaker's Register for the record.
1. Opportunity for citizens to address the Council on items not on the agenda
Notes:
AGENDA APPROVAL
2. Council approval of agenda
CONSENT CALENDAR
3. Consent Calendar contains several separate items which are acted upon by
the City Council in one motion. Once the Consent Calendar has been
• approved, the individual items and recommended actions have also been
approved. No further Council action is necessary. However, any Council
Member may request that an item be removed from the Consent Calendar and
• placed on the regular agenda for Council discussion and action. All items
listed on the Consent Calendar are recommended for approval.
A. Consideration of approval of new commercial kennel license for Animal Care
Clinic, 1208 East 66th Street S.R. No. 213
B. Consideration of approval of new veterinary license for Veterinary Radiation
Therapy, Inc., 1208 East 66th Street S.R. No. 214
C. Consideration of approval of itinerant food license and temporary on-sale 3.2
percent malt liquor license for Richfield American Legion, 6501 Portland Avenue,
pig roastand family picnic on September 9,°2000 S.R. No. 215
Notes:
PUBLIC HEARING
4. Public hearing regarding presentations from two cable television franchises,
Everest Connections Corporation and WideOpenWest, and consideration of
resolution regarding findings of fact with respect to proposal for cable
communications franchise
Staff Report No. 216
Notes:
RESOLUTION
5. Consideration of resolution approving City of Richfield participation in League of
Minnesota Cities Building Quality Communities initiative
Notes:
6. Airport status report
Notes:
Staff Report No. 217
AIRPORT BUSINESS
is
0 Notes:
CORRESPONDENCE
HRA BUSINESS
7. Housing and Redevelopment Authority report
Notes:
8. Council discussion items
Notes:
• 9. Claims and payrolls
10. Adjournment
COUNCIL CHOICE
Auxiliary aids for individuals with disabilities are available upon request. Requests must be
made at least 96 hours in advance to the Administrative Services Director at 612-861-9702.
0
•
AGENDA SECTION: Resolution
AGENDA ITEM # 5
REPORT # 217
r.•" i .i
REPORT PREPARED BY:
SAMANTHA ORDUNO, CITY MANAGER
NAW, TITLE
•
REPORT PRESENTER:
STAFF REPORT
CITY COUNCIL MEETING
AUGUST 289 2000
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY CITY MANAGER:
SAMANTHA ORDUNO, CITY MANAGER
NAME, TITLE
SIGNATURE
13
6 -1, ? ?-Q?
ITEM FOR COUNCIL CONSIDERATION:
Consideration of resolution approving the City of Richfield's participation in the League of
Minnesota Cities Building Quality Communities initiative.
RECOMMENDED ACTION:
By Motion: Approve the resolution approving the City of Richfield's
participation in the League of Minnesota Cities Building Quality
Communities initiative.
II. BACKGROUND
The League of Minnesota Cities (LMC) is preparing for Minnesota Cities Week,
October 8-14, 2000. This year's theme is Building Quality Communities. That is
also the theme of the LMC's new educational campaign launched in June at the
annual conference. Its focus is threefold:
• Enhance the image of cities and city officials;
• Reinvigorate and increase citizen participation in their city government; and
• Reinstill a sense a pride of public service, inspiring young people to seek
careers in city government.
0828League
This program is a two-year effort in part to change how legislators, the media and
citizens look at local government.
S
III. BASIS OF RECOMMENDATION
A. POLICY I
• Richfield is a member of the LMC. It is customary for the City to
participate in a variety of their efforts and initiatives.
B. CRITICAL ISSUES
• The LMC is in the process of preparing their legislative agenda for the
upcoming session. As part of that effort, the LMC policy committees
will be reviewing policies in the context of the Building Quality
Communities initiative. By framing policies in this way, it will help to
make that important connection between cities and the quality of life.
• Participation in this initiative will demonstrate to legislators and the
media that the LMC has widespread support among Minnesota cities.
C. FINANCIAL
• N/A
D. LEGAL
• N/A
IV. ALTERNATIVE RECOMMENDATION(S)
• The City Council could decide to not approve the resolution and not
participate in the LMC's Building Quality Communities effort.
V. ATTACHMENTS
• Resolution
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• None.
0
RESOLUTION NO.
S RESOLUTION APPROVING CITY OF RICHFIELD
PARTICIPATION IN LEAGUE OF MINNESOTA CITIES
BUILDING QUALITY COMMUNTIES INITIATIVE
WHEREAS, the top values and priorities of citizens include safety, family, job
opportunities, health, the well-being of children and recreational opportunities; and
WHEREAS, many of the services cities provide directly enhance those citizen
priorities; and
WHEREAS, the connection between city services and how they benefit citizen
priorities and concerns is not always understood by citizens; and
WHEREAS, it is one of the responsibilities of city officials to ensure legislators,
media and citizens understand their governments through open and frequent
communication using various avenues and means; and
WHEREAS, it is important to encourage citizens to actively participate in city
government, to share their views and to work in partnership with city officials to ensure that
the needs of the community are met; and
WHEREAS, partnerships developed between citizens and city officials can result in
greater understanding of the connection between Minnesota's high quality of life and the
services provided by Minnesota cities, as well as in greater trust by citizens in the efforts of
their city government.
NOW, THEREFORE, BE IT RESOLVED that the City of Richfield hereby declares
its commitment to join in the Minnesota Cities: Building Quality Communities statewide
educational effort in cooperation with fellow members of the League of Minnesota Cities.
ADOPTED by the City Council of the City of Richfield, Minnesota this 28th day of
August, 2000.
Martin J. Kirsch, Mayor
ATTEST:
Deborah J. Guiher, Deputy City Clerk
0
AGENDA SECTION: PUBLIC HEARING
AUGUST 28, 2000
REPORT PREPARED BY: STEVEN L. DEVICH, ADMINISTRATIVE
SERVICES DIRECTOR
NAME, TITLE
REPORT PRESENTER: STEVEN L. DEVICH, ADMINISTRATIVE
SERVICES DIRECTOR
N ITLE
DEPARTMENT DIRECTOR REVIEW:
j
SIGNATURE /
REVIEWED BY CITY MANAGER: E 1
ITEM FOR COUNCIL CONSIDERATION:
Public hearing regarding presentations from two cable television franchises, Everest
Connections Corporation and WideOpenWest, and consideration of resolution regarding
findings of fact with respect to a proposal for a cable communications franchise.
L RECOMMENDED ACTION:
Conduct and close the public hearing and by motion: consider a
resolution regarding the findings of fact with respect to a proposal for
a cable communications franchise.
III. BACKGROUND
The City of Richfield has been approached by two applicants seeking to obtain
cable television franchises to compete against Time Warner Cable. In response to
these requests the Southwest Suburban Cable Commission ("Commission"), of
which the City of Richfield ("City") is a member, outlined the process which complies
with Minnesota Statute Chapter 238. In particular, the Commission prepared model
franchising documents which included a Notice of Intent to Franchise and an Official
Application Form. Each of the five member cities of the Commission published the
Notice of Intent to Franchise in their newspaper of general circulation in compliance
with Minnesota Statutes. In response to the Notice of Intent to Franchise,
9828cable
•
applications were received from Everest Connections Corporation ("Everest") and
WideOpenWest ("WOW').
Minnesota Statutes also requires that a franchising authority must conduct a public
hearing to review and consider any applications submitted. The purpose of the
City's August 28, 2000 public hearing is to receive input from each applicant and
from any other interested parties. In an effort to ensure that the public hearing is
conducted in the most efficient manner, Commission Attorney Brian Grogan will
present approximately five minutes of introductory information to City Council
Members to explain the process and the issues before them. Thereafter,
presentations (between five and ten minutes each) from Everest and WOW would
be appropriate. The City Council may also wish to provide Time Warner Cable an
opportunity to comment since these issues will have a direct impact on their
operations within the City..
Following the close of the public hearing, the City Council may consider approval of
a resolution with respect to each applicant's respective qualifications. In the event
the City finds that an applicant does not possess the requisite qualifications, no
further action is needed.
•
III. BASIS OF RECOMMENDATION
A. POLICY
While preliminary discussions have been held with each applicant
regarding the terms for such a franchise ordinance, no specific issues
have been agreed upon and therefore, a franchise ordinance has not
yet been prepared for the City's review and consideration.
• The two applications have been reviewed by the Commission at their
August 9 meeting. The Commission adopted a resolution regarding
recommendations with respect to each applicant's proposal for a cable
communications franchise.
B. CRITICAL ISSUES
• In the event the City determines that an applicant possesses the
requisite legal, technical and financial qualifications, the City Council
may then consider the grant of a cable television franchise to the
applicant. A cable television franchise ordinance may not be
introduced to the City Council until at least seven days have elapsed
from the conduct of the public hearing.
• In the event the City determines that one or both applicants possesses
the requisite qualifications, staff will then move to prepare appropriate
franchise documentation for the City Council's consideration.
•
C. FINANCIAL
• Competitive cable franchise providers may have a financial impact
upon the City in terms of franchise fees, etc. However, there is no
way to gauge the impact at this time.
D. LEGAL
• The City Council must make this decision to proceed or not with each
applicant solely on the legal, technical and financial criteria of each
respective applicant.
IV. ALTERNATIVE RECOMMENDATION(S)
None.
V. ATTACHMENTS I
• Resolution for consideration for each applicant.
• Report to the City from Brian Grogan regarding each applicant.
Executed resolutions of the Southwest Suburban Cable Commission
regarding the applicants.
• Franchise application from each applicant. (A copy of each applicant's
application is available from the City Manager's office for the Council
candidates review.)
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
• Brian Grogan, Southwest Suburban Cable Commission Attorney
• Representative of WideOpenWest
• Representative of Everest Connection Corporation
0
0
City of Richfield, Minnesota
Resolution No.
Regarding findings of fact with respect to WideOpenWest Minnesota LLC's
proposal for a cable communications franchise.
Recitals
1. Minnesota Statutes § 238.08(a) mandates that the City require a franchise for
any cable communication system providing service within the City.
2. Federal law at 47 U.S.C. § 541(a) provides that a city "may not unreasonably
refuse to award an additional competitive franchise."
3. The City carefully followed the franchise procedure required by Minnesota
Statutes § 238.081 by publishing once each week (June 21, 2000 and June 28,
2000) for two successive weeks in the Sun-Current, a Notice of Intent to
Franchise a Cable Communications System.
4. The Notice stated all eight (8) criteria outlined in Minn. Stat. § 238.081 Subd. 2.
5. In addition to the published Notice, the City mailed copies of the Notice of Intent
and the Official Application Form to WideOpenWest ("WOW') , as well as other
interested parties.
6. The City's Official Application Form required that proposals for a cable
communications franchise contain responses to each of the items identified in
Minnesota Statute § 238.081 Subd. 4.
7. The City's closing date for submission of applications was set at July 14, 2000
which complied with the statutory minimum of 20 days from the date of first
publication.
8. The City Council determined to call a Public Hearing to consider the application
received from WOW at its regularly scheduled August , 2000 meeting.
9. All interested parties were provided an opportunity to speak to the City Council.
The City Council imposed no time limitations or other constraints on presenters,
and interested parties had every opportunity to present information regarding this
matter.
10. The City carefully reviewed all information and documentation presented to it
regarding WOW's proposal and qualifications to construct, own and operate a
41 cable communications system within the City.
353372/1 1
11. The City, as a member of the Southwest Suburban Cable Commission
("Commission"), retained the law firm of Moss & Barnett, a Professional
Association to assist the Commission and City in conducting the procedure
required under Minnesota Statutes §238.081 and reviewing the application
submitted by WOW as well as comments and information from interested parties.
12. Based on information and documentation made available to the City, the report
dated August 3, 2000 prepared by Moss & Barnett with respect to WOW's
application and the recommendation of the Commission, each of which is hereby
incorporated in this Resolution by reference, the City Council has reached
conclusions regarding WOW's legal, technical and financial qualifications.
NOW THEREFORE, the City hereby resolves as follows:
1. The City hereby finds that WOW's application of July 14, 2000 complies with the
requirements of Minnesota Statute § 238.081.
2. The City finds that WOW possesses the requisite legal, technical and financial
qualifications to construct, own and operate a cable communications system
within the City.
3. The City has determined that an ordinance awarding a franchise to WOW should
be introduced to the City Council for consideration and action.
4. The contents of the franchise should be substantially the same as the franchise
ordinance currently held by the City's existing cable television operator, KBL
Cablesystems of the Southwest, Inc., doing business as Time Warner Cable
("Time Warner"), throughout the existing term of Time Warner's franchise which
will expire on or about December 31, 2011.
5. A construction bond should be required of WOW as part of any franchise award
to provide the City with security in the event damage to the City's rights-of-way
should arise which WOW is unwilling or unable to cure.
6. Subject to all applicable laws, the City shall regulate the provision of cable
television services within the City in a competitively neutral manner and shall
enforce the terms and conditions of all cable communications franchises in
accordance with all applicable laws and regulations in a consistent manner
against all franchised cable operators so that no one operator is given an unfair
competitive advantage over the other.
7. The City finds that its actions are appropriate and reasonable in light of the
mandates contained in Chapter 238 of Minnesota Statutes and applicable
provisions of federal law including 47 U.S.C. § 541(a).
353372/1
2
PASSED AND ADOPTED this day of , 2000:
CITY OF RICHFIELD, MINNESOTA
By:
Mayor
ATTEST:
By:
City Clerk
•
•
353372/1
City of Richfield, Minnesota
Resolution No.
Regarding findings of fact with respect to
Everest Connections Corporation's
proposal for a cable communications franchise
Recitals
1. Minnesota Statutes § 238.08(a) mandates that the City require a franchise for
any cable communication system providing service within the City.
2. Federal law at 47 U.S.C. § 541(a) provides that a city "may not unreasonably
refuse to award an additional competitive franchise."
3. The City carefully followed the franchise procedure required by Minnesota
Statutes § 238.081 by publishing once each week (June 21 and June 28, 2000)
for two successive weeks in the Sun-Current a Notice of Intent to Franchise a
Cable Communications System.
4. The Notice stated all eight (8) criteria outlined in Minn. Stat. § 238.081 Subd. 2.
• 5. In addition to the published Notice, the City mailed copies of the Notice of Intent
and the Official Application Form to Everest Connections Corporation ("Everest")
as well as other interested parties.
6. The City's Official Application Form required that. proposals for a cable
communications franchise contain responses to each of the items identified in
Minnesota Statute § 238.081 Subd. 4.
7. The City's closing date for submission of applications was set at July 14, 2000
which complied with the statutory minimum of 20 days from the date of first
publication.
8. The City Council determined to call a Public Hearing to consider the application
received from Everest at its regularly scheduled August , 2000 meeting.
9. All interested parties were provided an opportunity to speak to the City Council.
The City Council imposed no time limitations or other constraints on presenters,
and interested parties had every opportunity to present information regarding this
matter.
10. The City carefully reviewed all information and documentation presented to it
regarding Everest's proposal and qualifications to construct, own and operate a
• cable communications system within the City.
353373/1 1
11. The City, as a member of the Southwest Suburban Cable Commission
("Commission") retained the law firm of Moss & Barnett, a Professional
Association to assist the Commission and City in conducting the procedure
required under Minnesota Statutes §238.081 and reviewing the application
submitted by Everest as well as comments and information from interested
parties.
12. Based on information and documentation made available to the City, the report
dated August 3, 2000 prepared by Moss & Barnett with respect to Everest's
application, and the recommendation of the Commission, each of which hereby is
incorporated in this Resolution by reference, the City Council has reached
conclusions regarding Everest's legal, technical and financial qualifications.
NOW THEREFORE, the City hereby resolves as follows:
1. The City hereby finds that Everest's application of July 14, 2000 complies with
the requirements of Minnesota Statute § 238.081.
.2. The City finds that Everest possesses the requisite legal, technical and financial
qualifications to construct, own and operate a cable communications system
within the City.
• 3. The City has determined that an ordinance awarding a franchise to Everest
should be introduced to the City Council for consideration and action.
4. The contents of the franchise should be substantially the same as the franchise
ordinance currently held by the City's existing cable television operator, KBL
Cablesystems of the Southwest, Inc., doing business as Time Warner Cable
("Time Warner"), throughout the existing term of Time Warner's franchise which
will expire on or about December 31, 2011.
5. A construction bond should be required of Everest as part of any franchise award
to provide the City with security in the event damage to the City's rights-of-way
should arise which Everest is unwilling or unable to cure.
6. Subject to all applicable laws, the City shall regulate the provision of cable
television services within the City in a competitively neutral manner and shall
enforce the terms and conditions of all cable communications franchises in
accordance with all applicable laws and regulations in a consistent manner
against all franchised cable operators so that no one operator is given an unfair
competitive advantage over the other.
7. The City finds that its actions are appropriate and reasonable in light of the
mandates contained in Chapter 238 of Minnesota Statutes and applicable
provisions of federal law including 47 U.S.C. § 541(a).
353373/1 2
0 PASSED AND ADOPTED this day of , 2000:
•
•
CITY OF RICHFIELD, MINNESOTA
By:
Mayor
ATTEST:
By:
City Clerk
353373/1 3
•
•
•
353372/1
Prepared by:
BRIAN T. GROGAN
MICHAEL R. NIXT
Moss & Barnett
A Professional Association
4800 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4129
Phone: (612) 347-0340
Fax: (612) 339-6686
E-mail: groganb@moss-barnett.com
0
TABLE OF CONTENTS
•
•
Section 1
Section 2
Section 3
Section 4
Section 5
Section 6
Section 7
Section 8
Section 9
Exhibits
Introduction ................................................................................................ .
Statutory Requirements ..............................................................................2
Procedure Followed by City .....................................................................12
Information Reviewed ..............................................................................13
WOW's Legal Qualifications .....................................................................14
WOW's Technical Qualifications ..............................................................15
WOW's Financial Qualifications ...............................................................19
Compliance with State Requirements ......................................................23
Recommendations ................................................................................... 27
A. Notice of Intent to Franchise
B. Request for Proposals Official Form
C. Proposed Resolution
353372/1
Section 1.
Introduction.
In April of 2000, WideOpenWest Minnesota, LLC, ("WOW') a wholly-owned
subsidiary of WideOpenWest Holdings, LLC, ("WOW Holdings") requested the issuance
of a cable communications franchise from the City of Richfield, Minnesota ("City") to
construct, own and operate a cable system.
The City contacted Moss & Barnett seeking input regarding the appropriate
procedure to be followed to consider the award of a cable communications franchise to
WOW or any other qualified entity. Moss & Barnett reviewed state and federal statutory
requirements with City representatives and developed a comprehensive franchise
procedure to comply with applicable laws. A summary of Moss & Barnett's findings and
recommendations follows.
In accordance with Minnesota Statutes § 238.081, the City published a Notice of
Intent to Franchise (attached as Exhibit A) and requested applications for a franchise
from any interested entities. Copies of the Notice of Intent to Franchise were forwarded
directly to WOW and to the City's existing cable television operator, KBL Cablesystems
of the Southwest, Inc., doing business as Time Warner Cable ("Time Warner').
Applicants were instructed to obtain from the City a Request for Proposal Official
• Application Form (attached hereto as Exhibit B). Prior to the deadline for submitting
applications, July 14, 2000, the City received an application from WOW and Everest
Connections Corporation ("Everest").
Pursuant to Minnesota Statutes § 238.081, the City has scheduled a public
hearing for August 28, 2000. The purpose of this public hearing is to receive input from
interested parties regarding WOW's application.
This report will review relevant statutory requirements that the City must follow in
processing a request for a cable communications franchise. The report will then outline
each and every source of information received and considered in preparing this report.
Thereafter, the report will review WOW's legal, technical and financial qualifications to
own and operate a cable communications system in the City, as well as whether
WOW's application complies with State statutory requirements. Finally, the report will
provide recommendations for the City Council's consideration in taking action with
regard to WOW's application.
0
353372/1
Section 2.
Statutory Requirements.
A. Federal Regulatory Scheme: Competition Among Cable Television
Providers and the Federal Cable Act
The Cable Communications Policy Act of 1984, as amended by the Cable
Consumer Protection And Competition Act of 1992 and the Telecommunications Act of
1996 (hereinafter collectively referred to as the "Cable Act") contains many provisions
relevant to the application before the City. According to the Cable Act, one of its
primary purposes is to
promote competition in cable communications and minimize unnecessary
regulation that would impose an undue economic burden on cable
systems.'
Furthermore, 47 U.S.C. § 541(a)(1) provides that a franchising authority may
award one or more franchises within its jurisdiction. To that end, the Cable Act states
that a franchising authority may not grant an exclusive franchise and may
not unreasonably refuse to award an additional competitive
franchise. "2
Any applicant whose application for a second franchise has been denied by a
final decision of a franchising authority is not without recourse. The applicant may
appeal an adverse decision pursuant to the provisions of § 635 of the Cable Act.
The Cable Act also provides that a city may require certain assurances from the
prospective franchisee. Subsection 4 of 47 U.S.C. § 541(a) provides that
in awarding a franchise, the franchising authority -
A. shall allow the applicant's cable system a reasonable period of time
to become capable of providing cable service to all households in
the franchise area;
8. may require adequate assurance that the cable operator will
provide adequate public, educational, and governmental access
channel capacity, facilities, or financial support, and
C. may require adequate assurance that the cable operator has the
financial, technical, or legal qualifications to provide cable service."
When it passed the 1992 amendments to the Cable Act, Congress suggested
that it favors competition in the delivery of cable communications services. The Senate
report that accompanied the amendments concluded that:
1 47 U.S.C. § 521(b).
z 47 U.S.C. § 541(a)(1) (emphasis added).
353372/1 2
Based on the evidence and the record taken as a whole, it is clear that
there are benefits from competition between two cable systems. Thus, the
Committee believes that local franchising authorities should be
encouraged to award second franchises. Accordingly, [the Cable Act
as amended], prohibits local franchising authorities from unreasonably
refusing to grant second franchises.3
B. Federal Communications Commission Observations on Competition in the
Cable Television Industry
Five years after the Cable Consumer Protection and Competition Act of 1992, the
Federal Communications Commission ("FCC") noted that "local markets for the delivery
of video programming generally remain highly concentrated and continue to be
characterized by some barriers to entry and expansion by potential competitors to
incumbent cable systems. ,4 The FCC further found that competitive overbuilding - i.e.,
the process of constructing a second, competing cable system - by franchised cable
operators remains "minimal but is increasing. i5 In the "relatively few areas" where head-
to-head competition between cable providers has developed, the FCC found that "cable
operators have responded quickly with a mix of increased programming choices, lower
rates, and improved customer service." 6
The FCC outlined a number of communities where competitive overbuilding has
occurred throughout the United States. In particular, the FCC stated as follows:
From 1995, when overbuild activity began to increase, to June 1998,
competing franchises have been awarded covering 149 communities in 21
states with the potential to pass 7.2 million homes. However, not all of the
franchises awarded are currently in operation serving customers. Once a
franchise is awarded, it takes a significant amount of time for the
franchisee to build or gain access to a network over which to provide video
service. For example, as of December 1998, Ameritech held 87 franchise
awards, but of the communities included in those franchise areas, service
is currently being offered in only 72 communities (i.e. parts or whole of the
87 franchise areas). Ameritech's 87 franchise awards gives it the potential
to pass 1.5 million homes, and Ameritech thus far has passed 1 million of
those homes with its infrastructure. As of December 1998, Ameritech had
a total of 200,000 customers. Given these figures, it appears that
Ameritech has achieved penetration rates of approximately 10% within its
total of 87 franchise areas. This compares with a current national cable
3 (emphasis added). S. Rep. No. 102-92, June 28, 1991, reprinted in 1992 U.S. Code Cong. & Admin.
News 1133, 1141, 1146,1151; H.Conf. Rep. No. 102-862, reprinted in 1992 U.S. Code Cong. & Admin.
News 1231, 1259.
4 In the matter of annual assessment of status of competition in markets for the delivery of video
programming, FCC 97-423, C.S. Docket No. 97-10 (F.C.C. December 31, 1997).
Id. At 10.
6 -
Id. At 6; see also Id. At 107.
353372/1
penetration rate of 68%. Because Ameritech has not completed
40 construction in all 88 areas, however, its penetration rate in areas of direct
competition is significantly higher. Other local exchange carriers ("LECs')
also have yet to build out their entire awarded franchise areas. Bell South
offers service in parts or whole of nine of its 18 franchise areas. GTE
offers service in three of its 11 franchise areas, and SNET offers service in
12 cities within its Connecticut statewide franchise area. More discussion
about Ameritech video service provision and other LEC video efforts are
discussed later in this Report.
Among other smaller firms awarded competing franchises are
RCN-BETG, McLeodUSA, Knology Holdings, Inc., Private Cable Ltd.,
Fiber Vision. New overbuilds since our 1997 Report include
McLeodUSA's overbuild in Cedar Rapids, Iowa which competes with
incumbent TCI. The competitor offers cable video and audio channels
and Internet access, while the incumbent offers cable video and audio
channels, with plans to offer Internet access by the end of November
1998. McLeodUSA is also expanding its fiber optic network in the area,
over which it currently delivers local phone and long distance service in
the city. The company plans to target Des Moines, Iowa next. In May,
1998, Knology Holdings, Inc. was awarded a franchise for 132,000 homes
passed in Charleston, South Carolina, where it has started to compete
with Comcast and Time Warner. Knology already passes 68,000 homes
in Columbus, Ohio; 82,000 homes in Montgomery, Alabama; and 97,000
homes in Huntsville, Alabama where it competes with TCI, Charter,
Comcast, Media Communications, and Wireless One. Knology, similar to
overbuilders RCN and McLeodUSA, offers its customers numerous
services including video, telephony and high-speed Internet access
services.'
The FCC has also described case studies where a second cable operator has
been authorized to compete against incumbent cable operators and the impact on local
cable subscribers. In these case studies, as well as in case studies outlined in its 1997
Report, the FCC found that
incumbent cable operators, when challenged by a new MVPD
[Multi]Channel Video Programming Distributor] entrant, are responding in
a variety of ways. Incumbents have responded by offering better
customer services, new services, new products, larger channel
compliments for the same price, and, in two cases, apparently cutting
prices.8
The FCC concludes its findings in the 1998 Competition Report by stating
"competitive alternatives and consumer choices are still developing and potential
7 Id. At 25-26 paragraphs 43 and 44 (footnotes omitted).
8 -
Id. At 120.
353372/1 4
competitors to incumbent cable operators continue to face barriers to enter into markets
for the delivery of video programming."
It does appear, however, the FCC is attempting to reduce these barriers to
competition. In the 1998 FCC Competition Report, FCC Chairman William Kennard
stated that "competition is preferable to regulation.s9 Chairman Kennard argues that
Congress envisioned the removal of market entry barriers, resulting in competition that
would offer additional viewing choices at reasonable prices to millions of American
families across the nation.10 In analyzing the data presented in the FCC Report,
Chairman Kennard indicated that "85% of all households subscribing to multi-channel
video service receive that service from their local cable operator (a 2% decline from the
87% reported a year ago). With this high market share, it is not surprising that cable
prices rose more than four times the rate of inflation between June 1997 and June
1998."11 Chairman Kennard additionally noted that:
The drop in local cable operators' dominance of this market
is primarily due to the continued growth of DBS Systems,
and to a lessor degree, the launch of new open video
systems and instances where incumbent cable operators
have faced head-to-head competition from other cable
operators. These cases are immensely important for they
teach us an important lesson. That lesson is that
competition brings consumer benefits. And, as we
continue to move towards a competitive market, it is my
hope that consumers will benefit from lower prices, improve
customer service, and additional services. 12
Finally, in a separate statement, FCC Commissioner Ness observed that:
"When markets are fully competitive - when people have
meaningful choices - the need for government regulation
abates and benefits of competition are manifest: lower
prices, new and different service offerings, and better
customer service. I am encouraged by the level of
competition that has been achieved thus far, and I support
efforts by industry and aovernment to attain a fullv
competitive market for video oroarammina distribution." 73
s Id.
'6Id. Statement of FCC Chairman William Kennard at 1.
1' Id.
17 Id.(emphasis added).
13 Id. Statement of FCC Commissioner Ness at 2 (emphasis added).
353372/1 5
Recent developments: the FCC's 1999 Report
l1b Subsequent to its 1998 comments, the FCC notes additional competition in the
cable television markets in its 1999 Report. In broad terms, the FCC remarked that
"[n]ew municipal overbuild activity continues to grow. 04 From 1995 to 1999, competing
franchises had been awarded in 210 communities in 28 states.15 According to the FCC,
incumbent franchises have responded to this competition in a variety of ways, including
"lowering prices, providing additional channels at the same monthly rate, improving
customer service, or adding new services including high speed Internet and telephone
services." 96 In Oakland County, Michigan, Ameritech, the competitor, offered a variety
of incentives to consumers in response to the incumbent's promotions. Incentives
offered by Ameritech included "free cable service for two months, $120 worth of
grocery coupons, a free premium movie channel, and free installation. 07
Despite these advances, the FCC's 1999 report stated that questions remain with
regard to the increased competition. Generally, these concerns have to do with the
long-term viability of the competitors. According to the FCC, "[o]verbuilding often
requires 'deep pockets' to withstand competitive responses from incumbents that lower
prices and increase services."18 Therefore, "difficulties obtaining programming and
steep discounts enjoyed by incumbent cable operators can hinder overbuilders' ability to
compete effectively in the video distribution market."19
In conclusion, the FCC's 1999 report offered some preliminary findings. First, the
FCC found that subscribers have generally benefited from "head-to-head" competition.
Benefits enjoyed by consumers as a result of the increased competition include:
a. lower monthly charges for services and equipment;
b. additional program offerings;
C. access to alternative sources of telecommunications and Internet services;
d. new digital services; and
e. better customer service from the incumbent cable operator.20
Second, the FCC determined that incumbent operators have responded to the
increased competition by using "price" rather than "non-price" competitive measures.21
Third, the benefits of competition do not extend beyond those communities
where the competition is present. The FCC's 1999 report cites situations where
competition enjoyed by customers in one municipality does not positively affect the
14 In the matter of annual assessment of status of competition in markets for the delivery of video
programming, FCC 99-418, C.S. Docket 99-230 (F.C.C. December 30, 1999).
5 Id. at 22.
1s Id. at 93.
17 Id. at 94.
18 Id. at 67 (footnotes omitted).
19 Id. (footnotes omitted).
zo Id.
z1 Id.
353372/1 6
rates or services in a neighboring location.2 Finally, the FCC observed that the benefits
of competition may be short-lived. Its report referenced the competition between an
incumbent, Coaxial Cable, and a new entrant, Ameritech, in Columbus, Ohio. In that
situtation, the incumbent was forced to sell a 75% stake in its Columbus operations due
to "mounting losses and large sums required to upgrade."23
C. Minnesota Statutory and Judicial Treatment of Competition in the Cable
Television Industry
Minnesota Statutes
In addition to the requirements contained in the federal Cable Act, Minnesota has
several statutory provisions that must be carefully followed by the City when considering
the award of a franchise. In particular, Minnesota Statutes Chapter 238.08, titled
Franchise Requirement, states that a municipality must require a franchise or
extension permit of any cable communications system providing service within the
municipality. Also, Minnesota Statutes § 238.081, Franchise Procedure, provides a
precise procedure to be followed by a municipality when requesting applications for a
cable communications franchise.
The text of § 238.08 and § 238.081 is set forth below to provide the City with the
exact requirements of state law on this matter.
41 Minnesota Statute § 238.08, Franchise Requirement, provides in pertinent
part:
Subdivision 1. (a) A municipality shall require a franchise or extension permit of
any cable communications system providing service within the municipality.
(b) No municipality shall grant an additional franchise for cable service for an
area included in an existing franchise on terms and conditions more favorable or less
burdensome than those in the existing franchise pertaining to: (1) the area served, (2)
public, educational, or governmental access requirements, or (3) franchise fees. The
provisions of this paragraph shall not apply when the area in which the additional
franchise is being sought is not actually being served by any existing cable
communications company holding a franchise for the area. Nothing in this paragraph
prevents a municipality from imposing additional terms and conditions on any additional
franchises.
Subd. 2. Nothing in this chapter shall be construed to prevent franchise
requirements in excess of those prescribed unless such requirement is inconsistent with
this chapter.
22 Id. ("[I]n Independent, Ohio, Cablevision charges a total package price of $50.69 for a channel line-up
nearly identical too that offered by in nearby Brooklyn, Ohio, for $30.90 where it competes with
Ameritech.").
23 Id.
353372/1 7
Subd. 3. Nothing in this chapter shall be construed to limit any municipality from
the right to construct, purchase, and operate a cable communications system. Any
municipal system shall be subject to this chapter to the same extent as would any
nonpublic cable communications system.
Subd. 4. Nothing in this chapter shall be construed to limit the power of any
municipality to impose upon any cable communications company a fee, tax or charge.
Minnesota Statute § 238.081, Franchise Procedure, provides in pertinent part:
Subdivision 1. Publication. The franchising authority shall have published
once each week for two successive weeks in a newspaper of general circulation in each
municipality within the cable service territory, a notice of intent to franchise, requesting
applications for the franchise.
Subd. 2. Required information. The notice must include at least the following
information:
(1) the name of the municipality making the request,
(2) the closing date for submission of applications,
(3) a statement of the application fee, if any, and the method for its submission;
(4) a statement by the franchising authority of the desired system design and
services to be offered,
(5) a statement by the franchising authority of criteria and priorities against which
the applicants for the franchise must be evaluated;
(6) a statement that applications for the franchise must contain at least the
information required by subdivision 4;
(7) the date, time, and place for the public hearing, to hear proposals from
franchise applicants;
(8) the name, address, and telephone number of the individuals who may be
contacted for further information.
Subd. 3. Other recipients of notice. In addition to the published notice, the
franchising authority shall mail copies of the notice of intent to franchise to any person it
has identified as being a potential candidate for the franchise.
Subd. 4. Contents of franchising proposal. The franchising authority shall
require that proposals for a cable communications franchise be notarized, and contain,
but not necessarily be limited to, the following information:
(1) Plans for channel capacity, including both the total number of channels
capable of being energized in the system and the number of channels to
1 be energized immediately;
353372/1 8
(2) A statement of the television and radio broadcast signals for which
permission to carry will be requested from the Federal Communications
Commission;
(3) A description of the proposed system design and planned operation,
including at least the following items:
(i) the general area for location of antennae and the head end, if
known;
(ii) the schedule for activating two-way capacity,
(iii) the type of automated services to be provided,
(iv) the number of channels and services to be made available for
access cable broadcasting, and
(v) a schedule of charges for facilities and staff assistance for access
cable broadcasting;
(4) the terms and conditions under which particular service is to be provided
to governmental and educational entities,
(5) a schedule of proposed rates in relation to the services to be provided,
and a proposed policy regarding unusual or difficult connection of
(6) services,
a time schedule for construction of the entire system with the time
sequence for wiring the various parts of the area requested to be served in
the request for proposals;
(7) a statement indicating the applicant's qualifications and experience in the
cable communications field, if any,
alities in which the applicant either owns or
munici
f th
ti
tifi
(8) p
e
on o
ca
an iden
operates a cable communications system directly or indirectly, or has
outstanding franchises for which no system has been built,
(9) plans for financing the proposed system, which must indicate every
significant anticipated source of capital and significant limitations or
conditions with respect to the availability of the indicated sources of
capital,
(10) a statement of ownership detailing the corporate organization of the
applicant, if any, including the names and addresses of officers and
directors and the number of shares held by each officer or director, and
intracompany relationship including a parent, subsidiary or affiliated
-company, and
(11) a notation and explanation of omissions or other variations with respect to
the requirements of the proposal.
Substantive amendments may not be made in a proposal after a proposal
has been submitted to the franchising authority and before award of a
franchise.
Subd. 5. Time limits to submit applications. The franchising authority shall
allow at least 20 days from the first date of published notice to the closing date for
• submitting applications.
353372/1
Subd. 6. Public hearing on franchise. A public hearing before the franchising
authority affording reasonable notice and a reasonable opportunity to be heard with
respect to all applications for the franchise must be completed at least seven days
before the introduction of the franchise ordinance in the proceedings of the franchising
authority.
Subd. 7. Award of franchise. Franchises may be awarded only by ordinance.
Subd. 8. Costs of awarding franchise. Nothing in this section prohibits a
franchising authority from recovering from a successful applicant the reasonable and
necessary costs of the entire process of awarding the cable communications franchise.
In addition to the above referenced state statutes, Minnesota Statutes § 238.084
identifies the required contents of a franchise ordinance. Given that the City has an
existing Franchise Ordinance with Time Warner 24 (the "Time Warner Franchise") that
complies with the requirements of § 238.084, the City may, if it so determines, grant
substantially the same ordinance to WOW if the City finds that WOW is a qualified
applicant. The reason for using substantially the same franchise is to ensure that any
and all entities providing cable communications service within the City are treated in a
competitively neutral and nondiscriminatory manner so that no one entity is given an
unfair advantage over the other. While there is no statutory requirement for such
• uniformity, we strongly recommend equal regulatory treatment for all cable operators in
the City.25 Furthermore, the Time Warner Franchise at Section 12 contains a
requirement for a level playing field which the City must consider when entertaining the
grant of a franchise to a competitive provider.
D. Judicial Treatment: The Minnesota Court of Appeals' Decision Regarding
Minnesota's Cable Statutes and Competing Cable Television Franchises
In its report accompanying the 1992 amendments to the federal Cable Act, the
United States Senate observed that:
In addition to mergers between an incumbent cable system and a potential
competitor, incumbent cable systems often wage legal battles to prevent
cities from awarding second franchises or building their own franchises.26
24 Ordinance adopted November 25, 1996, effective January 1, 1997, expiration date on or about
December 31, 2011.
25 Minn. Stat. §238.08(b) requires only that additional franchises cannot be granted on terms and
conditions more favorable or less burdensome that those in the existing franchise pertaining to:
1. The area served;
2. Public, educational and governmental access requirements; or
3. Franchise fees.
26 S. Rep. No. 102-92, June 28, 1991, reprinted in 1992 U.S. Code Cong. & Admin. News 1133, 1141,
1146,1151; H. Conf. Rep. No. 102-862, reprinted in 1992 U.S. Code Cong. & Admin. News 1231, 1259.
353372/1 10
In 1999, the Minnesota Court of Appeals addressed one of these "legal battles"
referenced by the Senate Report. In In Re Application of Dakota Telecommunications,
Group, d/b/a Dakota Telecom. Inc., for a Cable Television Franchise in Marshall,
Minnesota (hereinafter "Dakota Telecom"), the incumbent franchise, Bresnan
Communications ("Bresnan"), challenged the City of Marshall's ("Marshal 1)27 grant of a
competing franchise to Dakota Telecommunications Group ("DTG"). Bresnan argued,
among other things, that Marshall acted "arbitrarily and capriciously' when it granted the
competing franchise and that Marshall violated Bresnan's due process rights.
The Court of Appeals rejected Bresnan's arguments and generally determined
that an incumbent franchisee may not challenge the general fitness of a competing
franchise. In its opinion, it noted that Minnesota's cable statutes were "enacted to
encourage such competition." The opinion further recognized that:
Although [Minnesota's] Cable Act . . . intends to further the public's
interest by only awarding franchises to responsible cable operators, it
does not support an incumbent franchisee's attempt to secure a monopoly
by challenging the fitness of new, competing franchises.
Also, the court determined that Marshall adhered to all procedural requirements when it
considered the competing application. According to the court,
Because [Marshall] properly focused on DTG's ability to construct and
. initially operate its proposed system, we conclude it sufficiently considered
substantial evidence of DTG's financial condition.
This decision from the Court of Appeals provides additional guidance for cities
considering an application for a competing franchise. Generally, three lessons may be
learned from the case:
1. Minnesota courts will give broad discretion to a city's decision whether to
award a competing franchise as long as the city follows the applicable
statutory framework,
2. Minnesota's Cable Act was designed to encourage and foster competition
in the cable television industry; and
3. An incumbent franchisee may not challenge the city's decision to award a
competing franchise on due process grounds.
41 27 Moss & Barnett represented the City of Marshall in the process of awarding a franchise to Dakota
Telecommunications Group.
353372/1 11
Section 3.
Procedure Followed by City.
In April of 2000, WOW requested that the City institute the required proceedings
to consider the award of a cable communications franchise to WOW. After consultation
with Moss & Barnett, a detailed procedure was prepared to comply with applicable state
and federal laws regarding the processing of WOW's request.
To that end, on June 12, 2000, the Richfield City Council authorized publication
of a Notice of Intent to Franchise a Cable Communications System. The notice was
published once each week for two successive weeks in the Sun-Current, the newspaper
of general circulation in the City. The Notice was first published on June 21, 2000, and
was thereafter published on June 28, 2000. Copies of the Notice of Intent to Franchise
and the Affidavits of Publication have been attached hereto as Exhibit A.
The Notice of Intent to Franchise referenced the City's Request for Proposals -
Official Application Form that was made available on request at the office of the City
Clerk. Copies of the Notice of Intent to Franchise and Official Application Form were
sent to WOW, Everest, Seren Innovations, Inc., as well as the incumbent cable
operator, Time Warner. A copy of the Official Application Form is enclosed herewith as
Exhibit B.
• Pursuant to Minn. Stat. §238.081 the City established a deadline for submitting
applications on July 14, 2000, at least twenty (20) days following the first date of
publication.
The City will publish a Notice of a Public Hearing to receive input on WOW's
application. The Public Hearing is scheduled for August 28, 2000 at approximately 7:00
p.m. All interested parties will have an opportunity to comment on WOW's application.
•
353372/1 12
Section 4.
Information Reviewed.
Below is a listing of all information received and reviewed by Moss & Barnett.
Each of the listed documents was carefully reviewed and considered in the
preparation of this report, and are hereby incorporated into this report by
reference. The information contained within these documents is part of the City's
record on which the City's decision is based.
1. Notice by the City of Richfield, Minnesota of its intent to franchise a cable
communication system published in the Sun-Current on June 21 and 28,
2000, together with Affidavits of Publication.
2. City of Richfield Minnesota Request for Proposals-Official Application
form.
3. Official Application from WOW dated July 13, 2000.
•
•
353372/1 13
Section 5.
WOW's Legal Qualifications.
The legal qualifications standard relates primarily to an analysis of whether WOW
is duly organized and authorized to own and operate a cable communications system
within the City.
WOW is a Delaware limited liability company and became authorized to conduct
business in Minnesota on April 4, 2000.
WOW is one of several wholly owned operating subsidiaries of WOW Holdings.
The chart below represents those operating subsidiaries identified in materials made
available to us by WOW although may not represent all of the operating subsidiaries nor
the entire corporate structure of WOW Holdings. The applicant for the cable
communications franchise in the City is WOW and WOW has made no representations
that the franchise will be assigned to any other operating subsidiaries or affiliates at this
time.
WideOpenWest Holdings, LLC
•
100%
WideOpenWest WideOpenWest
Oregon, LLC Texas, LLC
WideOpenWest
Colorado, LLC
WideOpenWest
Minnesota, Inc.
WideOpenWest
Minnesota, LLC
0
Based on our review of the information provided, we do not believe the City can
reasonably withhold approval of WOW's request to obtain a cable communications
franchise based upon WOW's legal qualifications.
353372/1
14
Section 6.
WOW's Technical Qualifications.
The technical qualification standard relates to the technical expertise and
experience of WOW with respect to cable communications.
WOW is a new entrant into the cable television industry and does not currently
operate a cable communications system in any other city in the State of Minnesota or
nationwide. WOW has recently received seven (7) franchise awards from Commerce
City, Loveland, Jefferson County, GreenwoodVillage and Aurora, Colorado, as well as
Irving and Grand Prairie, Texas. Moreover, the City Councils in Denver and Boulder,
Colorado have approved the award of a franchise to WOW, pending a public
referendum. To aid the City in an analysis of the responses provided by WOW to the
technical qualifications questions contained within the application, we have retained the
services of Mr. Jonathan Kramer of Kramer.Firm, Incorporated.
Mr. Kramer is nationally recognized by government telecommunications
administrators, cable television operators and telecommunications business leaders, as
a leading communications technology advisor in the areas of broadband
communications, cable communications, telephony, and wireless communications
(cellular, PCS, broadcast, and satellite). He has broad practical experience, as well as
comprehensive theoretical knowledge in the broadband communications field. With
undergraduate education at CSUN, UCLA, LATTC, and WLAC; AS Degree in Radio
Communications (with honors), Los Angeles Trade Technical College.
Mr. Kramer's analysis of WOW's application
Paqe 3 of the Application
Bandwidth
WOW indicates that it intents to construct and operate an 860 MHz system.
WOW indicates a division of 650 MHz of analog services, internet services, and IP
telephony services. An additional 210 MHz of bandwidth is to dedicated to data and
digitally compressed video services.
The technical proposals listed in Section A shown on page 3 are consistent with
other cable systems already deployed, thus the City may expect that WOW can also
accomplish the deployment of the services listed here using the system platform
described in this section.
A system bandwidth of 860 MHz is consistent with systems being rebuilt and
deployed elsewhere. Only a few systems have attempted to activate bandwidth in
excess of 860 MHz due, primarily, to signal maintenance problems associated extended
bandwidth.
353372/1 15
Pages 4 and 5 of the Application
Proposed System Designed
The first six paragraphs in Section 3 responding to the City's question
consistently describe in finer detail a high-quality, high-capacity hybrid fiber cable
system broadly described at Section A, discussed above.
The technical elements described in the first six paragraphs are consistent with
the most modern cable communications systems presently being deployed (whether by
rebuild or by new overbuild).
Response to Specific Questions
The 60-month construction period stated in Response 2 must, by its length, apply
to the proposed Minneapolis area WOW system, rather than just for the City. They City
may be at the "front" of the construction window, or at the end, but not enough
information is provided here to make such a determination.
Page 7 of the Application
Time Schedule For Construction of Entire System Within City
As noted just above, WOW does not state when it will complete the City's system
construction within the overall scope of its Minneapolis system. This question should be
clarified by the applicant in the map it proposes to submit to the City.
Pages 7 and 8 of the Apolication. and Exhibit A
Technical Qualifications of WOW
The technical qualifications of the key WOW engineering staff, Messrs. Michael
H. Brody and Jack Manore, found at Exhibit A, suggest that there is a depth of
experience at the senior management level commensurate with that required to
construct, then operate the system described in the Application.
Paae 12 of the Application. and Exhibit H
Interference Landlords will Experience
The presumptions and process described in Section L(1) are consistent with
usual and customary construction practices for new cable systems.
Exhibit H ("Construction Procedures Overview") accurately describes the general
process steps of building and activating a system such as WOW has proposed in the
Application.
353372/1 16
Page 14 of the Application
Collocation of Facilities
It is unusual to see outside plant facilities collocated. Although a desirable goal
from the standpoint of reducing the impact on the right of way (especially underground),
most existing underground enclosures are smaller than required to permit collocation.
If the City wishes to promote future collocation, and anticipates other entrants
into the market, then special construction requirements must be developed before
WOW 's build commences.
Paqe 15 of the Aoplication
Aesthetic Interference
WOW 's reference to the National Electrical Safety Code (NESC) is inappropriate
as the NESC does not directly deal with the aesthetics of cable construction, but merely
the workmanship required to construct the system.
End of Mr. Kramer's analysis of WOW's application
Mr. Kramer did not express an opinion regarding the technical qualifications of
WOW in as much as he was unable to review any systems which WOW has
constructed.
Based on our review of WOW's technical qualifications it is appears the
experience of WOW's management team is quite impressive. In part WOW relies on
the experience and expertise of its senior management team, many of whom previously
work for RCN Corporation, a large publicly traded multiple system operator. RCN is one
of the country's first competitive cable television operators. RCN constructed systems
on the east coast from Washington, D.C. to Boston and the WOW management team
was heavily involved in those operations.
WOW has provided the requisite information regarding its technical qualifications
per Minnesota statutes. Its application adequately describes its initial service area,
schedule for two-way activation, automated services, status monitoring, channel
scrambling technology, emergency alert system, over-the-air broadcast signals to be
delivered, and related issues. The application provides the information requested in the
City's Request for Proposals Official Application Form as required by Minn. Stat.
§ 238.081. WOW appears to have qualified and experienced personnel which may
allow it to successfully complete the construction and operation of the system.
353372/1 17
In reviewing the technical capabilities of
representations within the materials referenced herein
reasonably withhold approval of WOW's request to
franchise based upon WOW's technical qualifications.
•
WOW, together with WOW
we do not believe the City can
obtain a cable communications
353372/1 18
Section 7.
WOW's Financial Qualifications.
We have reviewed selected financial information provided by WOW regarding the
WOW's plans to construct and operate a cable communications system ("System")
serving the City of Richfield, Minnesota ("City"). The analysis set forth in this Section
presents the results of our analysis of the assumptions used by the WOW in
establishing financial projections for the implementation of its strategic plan for the
construction, development and operation of the System, including cable systems
serving other communities within the overall strategic plan of WOW Holdings, which
strategic plan includes the construction and operation of similar systems in urban
communities in Texas, Colorado, Oregon and Missouri in addition to Minnesota.
A. Standard of Review
Neither federal law nor FCC regulations provide franchising authorities with any
guidance concerning evaluation of the financial qualifications of an applicant for a cable
franchise. It is customary to base a financial analysis, in part, on industry standards
which are generally accepted and uniformly applied in making such a determination.
Due to the fact that the WOW does not currently own or operate any cable systems, and
affiliates of the WOW have only recently been granted franchises to commence the
construction and operation of cable systems, the absence of an operating history makes
. the application of such standards in the present case generally moot. As such, the
financial qualifications of WOW to construct, develop and operate the System serving
the City must be based solely on WOW's present financial condition, its business plan
and an analysis of future prospects for additional equity and the potential for obtaining
debt financing.
We provide no assurance as to the likelihood that any of WOW's projected
amounts or assumptions will be realized and do not provide any conclusions as to
whether WOW or any of its affiliates will be successful in implementing their strategic
plan of financing, constructing and operating the System and related cable system
operations throughout the urban communities which it is currently targeting; the success
or failure of which could have a material diverse result on the overall ability of WOW to
successfully construct and operate the System.
B. Overview of Strategy and Operational Capabilities
WOW Holdings is seeking to differentiate itself from incumbent cable system
operators in the communities in which it is seeking a franchise by focusing on the its
strategy of building a new high capacity residential fiber optic network that is "open" for
use on a fair, non-discriminatory basis by any number of competing ISP's; noting that
the principal advantages of open access is the creation of rural marketplace competition
for high-speed Internet users. WOW Holding's open policy is in contrast to the "closed"
access policy of most incumbent cable operators, whose predominant policy is to
. require high-speed Internet users to first purchase the incumbent cable company brand
353372/1 19
of Internet service in order to obtain high-speed Internet access. In addition to providing
internet access, WOW Holdings will also provide residents with up to 300 channels of
digital cable television programming, video-on-demand and low cost telephone services
(in certain markets).
Based on information from dbusiness.com, WOW Holdings plans to build fiber
optic systems in urban areas of Minnesota, Texas, Oregon, Missouri and Colorado, with
the Colorado system being likely the first to become operational. WOW Holdings is in
the process of trying to raise $150,000,000 with which to begin construction of its
respective systemsof which WOW Holdings anticipates requiring approximately $1
billion to pay for the various projects.28 The anticipated closing of the first significant
capital raising efforts is anticipated to occur sometime late in the third quarter of the
current calendar year.
WOW Holdings plans to fund its cable system developments through a
combination of initial member contributions, equity and debt financing.
C. Financing; Sources and Plans
1. Equity Financing Prospects. WOW has represented that it has obtained
$53.5 million in equity contributions from members and management of WOW Holdings.
Although the application indicates that all $53.5 million is available to WOW, review of
• confidential documents provided by WOW do not support such a conclusion. In
addition, the WOW has further indicated that as part of its strategic business plan WOW
(more likely WOW Holdings) is in the process of its second round of equity financing,
which is anticipated to close by the end of the third quarter (September 2000).
According to information provided on WOW Holdings's web page,
www.wideooenwest.com, this round of equity financing is estimated at approximately
$150 million. WOW (through WOW Holdings) will also be a participant in a third round
of equity financing which is anticipated to occur in early 2001. No information was
available regarding the projected size of the third round of equity financing.
2. Debt Financing; Prospects and Plans. Following the third round of
equity financing, WOW (again, most likely through WOW Holdings) intends to
commence debt financing, which will consist of up to five separate rounds. As a result
of its debt financing, indebtedness incurred is projected to create a debt to equity ratio
of approximately 6.0:1, which ratio, according to industry benchmarks compiled by Paul
Kagan Associates, Inc. ("Kagan") is within the range customary for the industry. WOW
provided a letter from Lehman Brothers establishing a high degree of confidence on the
part of Lehman Brothers ability to raise either a senior credit facility or place senior
subordinated debt in order to satisfy the future financing needs of WOW and WOW
Holdings. The ability to raise such financing is largely dependent upon the present
market conditions and the success of WOW's business plan and strategies leading up
to obtaining such financing. This letter is not a commitment to fund and should not be
construed as such.
28 dbusiness.com July 6, 2000 article from Algeo.
353372/1 20
0 D. System Construction
WOW is projecting that the construction of the System will take approximately 24
months to complete. Based on financial projections provided by WOW, WOW Holdings
anticipates a construction period for the buildout of systems within its strategic plan of
approximately 7 years, at which time operating cash flow is projected to be
approximately 34%, which projection is below industry averages and supports a
conclusion that WOW's projections do not overstate the potential results of operations.
However, as with past results, projections can not be construed as an indication of
future performance.
E. Summary
Based upon the foregoing and limited strictly to the analysis of financial
projections and other information provided by WOW submitted with its application, we
believe there is a reasonable basis upon which the City could approve or deny WOW's
request for a franchise based upon its financial qualifications. With respect to denial, a
reasonable basis exists to support a determination by the City that WOW has failed to
conclusively demonstrate that it has committed financial resources which have been
identified as available to construct and operate the System serving the City. Although
WOW has identified substantial funds as having been contributed or are committed for
future contribution, WOW has acknowledged the need to generate substantial additional
equity and/or debt financing to complete the fulfillment of its strategic plan. As WOW's
success in its ability to meet its capital requirements is uncertain, this constitutes a
reasonable basis for denial.
However, WOW has demonstrated its ability to obtain equity financing and is in
the process of moving forward with its planned construction of its franchise operations in
other areas for which franchises have previously been granted. Investor confidence
remains high and the current market conditions for the industry support WOW's
assertions that there is a substantial likelihood that it will in fact be successful in raising
additional equity financing as well as obtaining debt financing. There is, therefore, a
reasonable basis to conclude that WOW has or will be able to obtain sufficient capital to
construct and operate the System serving the City.
We do not provide any analysis as to the positive or negative effects of having
more than one cable franchise operation serve the City, or the ability of such franchise
operations to achieve or maintain short or long-term profitable operations within the
City, although WOW's pro-forma financial analysis indicates that WOW has made a
determination that it will ultimately be successful in achieving positive cash flow in such
a competitive environment.
In the event the City determines that WOW possesses the requisite financial
qualifications, we recommend that the City seek methods of ensuring that WOW
performs its obligations. To that end, we recommend that if the City determines to grant
353372/1 21
WOW a cable communications franchise, the City enforce a franchise requirement of a
construction bond sufficient to provide the City with security in the event damage to
rights-of-way or other issues arise which may require restoration at the City's expense,
assuming that WOW is unwilling or unable to financially perform. While the construction
bond will not provide the City with assurance of WOW's financial stability, the
construction bond will provide an added layer of protection for the City.
•
353372/1 22
0
•
Notice of Intent to Franchise.
A franchising authority must publish
notice of its intent to franchise a cable
operator once each week for two
successive weeks in a newspaper of
general circulation within the cable
service territory.
Notice must include:
1. The name of the municipality.
2. The closing date for submission of
applications
3. Information regarding the application
fee and method for its submission.
4. A statement regarding the system
design desired by the City and the
services desired by the City.
5. A statement regarding the criteria and
priorities against which applicants will
be evaluated.
6. A statement informing the public that
franchise applications must contain, at
minimum, the information required by
Minn. Stat. Section 238.081,Subd. 4.
7. The date, time, and place of a public
hearing at which proposals from
applicants will be heard.
8. The name, address, and telephone
number of City officials who may be
contacted for further information.
353372/1
23
Copies of notice as
Yes published attached as
Exhibit A to this Report.
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
See Exhibit A to this Report
Exhibit A
Exhibit A
Exhibit A
Exhibit A
Exhibit A
Exhibit A
Exhibit A
Section 8.
Compliance with State Requirements.
Plans for channel capacity, including
both the total number of channels
capable of being energized in a
system and the number of channels to
be energized immediately;
2. Television and radio broadcast signals
for which permission to carry will be
requested from the FCC;
3. A description of the proposed system
design and planned operation,
including at least: (1) the general area
for location of antenna and head end,
if known; (ii) a schedule for activating
two-way capacity; (iii) the type of
automated services to be provided;
(iv) the number of channels and
services to be made available for
access cable broadcasting; and(v) a
schedule of charges for facilities and
staff assistance for access cable
broadcasting;
4. The terms and conditions under which
particular services are to be provided
to governmental and educational
entities;
5. Schedules of proposed rates in
relation to the services to be provided,
and a proposed policy regarding
unusual or difficult connection of
services;
6. A time schedule for construction of the
entire system with the time sequence
for wiring various parts of the area
requested to be served;
Yes WOW Application, Pages 2-3
Yes WOW Application, Page 3
Yes WOW Application, Pages 4-5
Yes WOW Application Page 6
Yes WOW Application, Page 6-7
Yes WOW Application, Page 7
353372/1 24
Proposals must contain the following
information:
•
0
7. A statement indicating applicant's Yes WOW Application, Pages7-8
qualifications and experience in the
cable field, if any;
8. Identification of the municipalities in Yes WOW Application Pages 8-9
which the applicant either owns or
operates a cable system, directly or
indirectly, or has outstanding
franchises for which no system has
been built;
9. Plans for financing the proposed Yes WOW Application,
system, which must indicate every Pages 9-11
significant anticipated source of capital
and limitations or conditions with
respect to the availability of the
sources of capital;
10. Ownership detailing the corporate Yes WOW Application,
organization of the applicant, including Pages 11-12
the names and addresses of officers
and directors and the number of
shares held by each officer or director,
and the intracompany relationship
including a parent, subsidiary, or
affiliated company; and
11. Notation and explanation of omissions Yes WOW Application, Page 12
or other variations with respect to the
requirements of the RFP.
12. Plans for construction and use of right- Yes WOW Application,
of-way Pages12-15
Notice to Other Interested Parties. In
addition to the public notice, a franchising
authority must mail copies of the notice of
intent to franchise to any person it has
identified as being a potential candidate
for the franchise. Minn. Stat. § 238.081,
subd. 3.
353372/1
25
Yes
4.
Deadline for Submitting Proposals.
Any deadline set by the City must occur
at least twenty (20) days after the date
notice is first published regarding the
City's solicitation of franchise
applications.
Public Hearing. The franchising
authority must hold a public hearing
affording all applicants reasonable notice
and an opportunity to be heard. This
hearing must occur at least seven days -
(7) before introduction of any franchise
ordinance.
Yes Notice first published June
21, 2000. Deadline for
applications was July 14,
2000 (20 days)
Yes
Franchise By Ordinance. All franchises To be completed
must be granted by ordinance. Minn.
Stat, § 238.081, subd. 7.
•
Public hearing scheduled for
August 28, 2000
Consideration of WOW's
qualifications scheduled for
August 28, 2000
consideration of Franchise, if
applicable, to follow at
subsequent City Council
meeting.
353372/1 26
Notarized. All franchise proposals must Yes WOW Application, Page 16
be notarized. Minn. Stat § 238.081, subd.
•
•
Section 9.
Recommendations.
Based on our review of WOW's legal and technical qualifications, we believe that
the City cannot reasonably withhold approval of WOW's request for a cable
communications franchise. If the City determines that WOW possesses the requisite
financial qualifications then the City should consider adoption of the attached resolution
which will establish findings of fact regarding WOW's application.
If the City adopts the resolution attached as Exhibit C, the -City will then be in a
position to consider the grant of a franchise to WOW at a future City Council meeting,
no sooner than seven (7) days following the close of the public hearing.
If the City determines that WOW does not possess the requisite financial
qualifications, it should direct staff to prepare an alternative resolution providing for such
a finding for consideration and action by the City.
353372/1
27
Exhibit A
M Notice of Intent to Franchise
•
0
35337211 A-1
NOTICE BY THE CITY OF RICHFIELD, MINNESOTA
OF ITS INTENT TO FRANCHISE A CABLE COMMUNICATIONS SYSTEM
Notice is hereby given that it is the intent of the City Council of the City of Richfield,
Minnesota, to consider the grant of an additional franchise(s) for the purpose of constructing a
cable communications system to serve the City of Richfield, Minnesota. This notice is given in
accordance with the requirements of Minnesota Statutes Section 238.081.
Applications shall be submitted in response to this Notice and to a Request for Proposals
and Proposed Franchise Documents available on request in the office of the Assistant City
Manager, City Hall, 6700 Portland Avenue, Richfield, Minnesota 55423, phone: 612-861-9702.
A. The deadline for submitting applications is July 14, 2000.
B. Applications shall be in writing, notarized, in a format consistent with the Request
for Proposals, and sealed with ten (10) copies enclosed. Two (2) additional
copies of the application must be sent to the attention of Mr. Brian T. Grogan at
Moss & Barnett, 4800 Norwest Center, 90 South Seventh Street, Minneapolis,
MN 55402, who will be providing assistance to the City on this matter. Each
application shall include a nonrefundable application fee of Seven Thousand Five
Hundred Dollars ($7,500) in the form of a certified check made payable to the
City of Richfield, Minnesota. The applications shall be delivered to the attention
of the Assistant City Manager, City Hall, 6700 Portland Avenue, Richfield.
Minnesota 55423, phone: 612-861-9702. Applicants are hereby on notice that
any and all costs incurred by the City and the Southwest Suburban Cable
Commission, of which the City is a member, with respect to the franchise
procedure and franchise award which are not covered by the $7,500 application
fee shall be recovered from applicant.
C. Applicants are requested to be present at a public hearing before the City Council,
that is presently scheduled to be held at City Hall, beginning at 7:00 p.m. on
August 28, 2000. Each applicant will be given time to summarize its application.
The City Council may then continue the public hearing to permit further review of
the application before a final decision is made to select qualified applicants.
D. The Request for Proposals and Proposed Franchise Documents set forth in detail
the expectations of the City of Richfield, Minnesota and the requirements of the
content of the franchise proposal and are made in conformance to the
requirements of Minnesota Statutes Section 238.081, subd. 4.
E. The desired system design and services to be offered are identified in the
Proposed Franchise Documents attached to the Request for Proposals and include
a system serving the entire City of Richfield, Minnesota with a reasonable line
extension policy; flexibility to increase channel capacity; public, educational and
governmental access channels supported by the operator; reasonable rates; a mix,
level and quality of programs and services comparable to other systems and
customer services and maintenance plans to ensure the highest degree of service
to the subscriber. The Request for Proposals and Proposed Franchise Documents
provide further details of the desired system design and services to be offered.
F. The criteria for evaluating the applications and priorities for selection are as
follows:
• 1. The completeness of applications, conformance to Request for Proposal,
and Proposed Franchise Documents;
2. The system design;
3. The programs and services offered initially and criteria for adding
programs and services;
4. The initial service area and the line extension policy;
5. The time for construction;
6. Customer service policies and system testing;
7. The legal, technical, and financial qualifications of the applicant; and
8. The proposal for community services, including public, educational, and
governmental access.
H. Applications which meet the above criteria in the opinion of the City Council
shall be considered for a franchise.
I. The applicant(s) selected by the City Council will be required to accept the
Franchise Documents granted within thirty (30) days after adoption and will also
be required to reimburse the City of Richfield for any and all expenses not
covered by the application fee, as provided for by Minnesota Statutes Section
23 8.081, subd. 8.
J. Applicants are advised that the City of Richfield is member of a joint powers
entity, the Southwest Suburban Cable Commission ("Commission") which will
provide input and recommendations to the City regarding this process. The
Commission consists of the following cities: Edina, Eden Prairie, Hopkins,
Minnetonka, and Richfield each of which has previously granted identical
franchises to KBL Cablesystems of the Southwest, Inc., d/b/a Time Warner.
K. All questions concerning this request should be directed to Mr. Steve Devich,
Assistant City Manager, City Hall, 6700 Portland Avenue, Richfield, Minnesota
55423, phone: 612-861-9702 or Mr. Brian T. Grogan, Moss & Barnett, P.A.,
4800 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402-
4129, phone (612) 347-0340, the Commission's legal advisor regarding this
process.
Date: June 12, 2000
Thomas P. Ferber, City Clerk
0 To Be Published: June 21 and June 28, 2000
City of IR Wdd
(Official Publication)
NOTICE BY THE CITY OF RICHFIELD,
ME4NESOTA
OF ITS INTENT TO FRANCHISE A CABLE
COMMUNICATIONS SYSTEM
_Q1 L _ Notice is hereby given that it is the intent ofthe City Coun-
• n 5papel'S ? of tde City i anchi , Minnesota, o se of th st grant
of an additional onal fianchise(s) for the purpose of censtructct.
ing a cable communications system to serve the City of
Richfield, Minnesota. This notice is given in accordance
AFFIDAVIT OF PUBLICATION with the requirements of Minnesota Statutes Section
238.081.
Applications shall be submitted in response to this Notice
STATE OF MINNESOTA) and to a Request for Proposals and Proposed Franchise
Documents available on request in the office of the Assis-
SS. tent City Manager City Hall, 6700 Ptortland Avenue, Rich-
5eld, Minnesota 66423, phone: 612.861-9702.
COUNTY OF HENNEPIN) A. The deadline for-submitting applications is July 14,
2000.
Frank Chilinski, being duly swom on an oath states or affirms, that he is the publisher of the B. Applications "I be in writing, notarized, in a forma
"e10 consistent with the Request Proposals, 2 adtionalco es offtne
Sun-Current or the residents designated ton (
newspaper known as P
application must be sent to the attention of Mr. Brian T.
agent, and has full knowledge of the facts stated below: SeGrogan venth 8?t, Min?neap" MN5o2 cwho will be pro-
viding assistance to the City on this matter. Each appli-
(A) The newspaper has complied with all of the requirements constituting qualification as a cation shay include a nonrefundable application fee of
Seven Thousand Five Hundred Dollars ($7,600) in the
qualified newspaper, as provided by Minn. Stet §331A.02, §331A.07, and other applicable fiela Min moota. The checit applications i llbeaeu.?atothhe-
attention'of the Assistant City Manager City Hall. 6700
laws, as amended. Portland Avenue, Richfield, Minnesota 66423, phone:
612-861-9702. Applicants are hereby on notice that any and an (I3) The printed public notice that is attached was published in the newspaper once each week, Cable ble Commission, of Wmeh and the City is a member,
with respect to the franchise procedure and franchise
for two successive weeks; it was first published on Wednesday, the 21 day of award which are not covered by the $7,600 application fee
shall be recovered from applicant.
June , 2000, and was thereafter printed and published on every Wednesday to and C. Aplicants are.requested to be present at a public
including Wednesday, the 28 day of June , 2000; and printed below is a copy of ulh end to be heed at C HH?beginnintg art 7:00 p my on Au
gust 28, 2000. Each applicant will be given time to sum-
the lower case alphabet from A to Z, both inclusive, which is hereby acknowledged as being u marize its pc her ng peTittyCo may awn P-rther the size and kind of type used in the composition and publication of the notice: eta fore a final decision is made to select qualified
abedefgi+11 P4ret D. The Request for Proposals and Proposed Franchise
Documents set forth in detail the expectations ofthe f the City
ty
of Richfield, Minnesota and the requirements of the con-
tent of the franchise proposal and are made in confor-
mance to the requirements of Minnesota Statutes Section
PuRsher. '23&081, subd. 4.
E. The desired system design and services to be offered
are identified in the Proposed Franchise E ...... :..,ts at-
tached to the Request for Proposals and include a eye=
serving the entire City of Richfield, Minnesota with a me-
Subscribed and sworn"tor affirmed before me sonable line extension policy; flexibility to increase chan-
100. nal capacity, public, educational and L. , _.,.... mtal access
" % + day of 0 mleeveleand quality of gams and services reasonable compare-
, a
on this his to other _` systems and customer cervices and mainte-
I mince plans to ensure the highest degree of service to the
subscriber. The Request for Proposals and Proposed
Fran- chiseDocumentsprovidefurtherdetailsofthedesiredsys-
tem design and services to be offered.
Notary Public F The criteria for evaluating the applications and prior.
!:. L:". H EDB_Of? ities for selection are as follows:
C•hs!r;tdE^^ 1. The completeness of aplications, conformance to
2 .es
c'/.F n"cS 1 312005 Reqe The system eland Proceed Franchise dents;
The programs and services offered initially and
criteria for adding programs and services;
4. The initial service area and the line extension pd-
RATE INFORMATION hey; 6. The time for construction;
6. Customer service policies and eye= testing;
7. The legal, technical, and financial qualifications of
(1) Lowest classified rate paid by commercial users $ 2.85 ler line the applicant; and
for comparable space S. The proposal for community -coo, including
public, educational, and governmental access.
(2) Maximum rate allowed by law $ 6.20 R, rDine H Applications which meetthealwvecriter aintheopin-
ion of the City Council shall be considered fora f vac hise.
(3) Rate actual) charged $ 1.40 per line 1 The applicant(s) selected by the City Council will be
() y R$- required toaccept theFranchiaeDocuments granted with-
in thirty (30) days after adoption and will also be required'
to reimburse the City of Richfield for any and all experts-
es not covered by the application fee, as provided for by
Minnesota Statutes Section 238.081, subd. 8.
J Applicants are advised that the City of Richfield is
member of a joint powers entity, the Southwest Suburban
Cable Commission ("C.......: lion') which will provide
input and recommendations to the City regarding this
process. The Commission consists of the following cities:
001 Eden Prairie, Hopkins, Minnetonka, and Richfield
which has previously granted identical franchises
Cablesystems of the Southwest, Inc., &We Time
Warner.
K All questions oonoeruM this request should be di- i
rected to Mr. Steve Devich, Assistant City Manager, City
Hall, 6700 Portland Avenue, Richfield, Minnesota 56423'
phone: 612-861-9702 or Mr. Brian T. Grogan, Moos & Bar- ;
nett, PA, 4800 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 65402 4129, phone (612) 347-
0340, the Commission's legal advisor regarding this
Date: June 12, 2000
Thomas P. Herber, City Ckrt
(June 21 & 28, 2000)MOCable
•
0
Exhibit B
Request for Proposals Official Form
353372/1 B-1
0 CITY OF RICHFIELD, MINNESOTA
REQUEST FOR PROPOSALS OFFICIAL APPLICATION FORM
JUNE 12, 2000
Applicants interested in submitting a proposal for a cable communications franchise shall
submit the following information as required by Minnesota Statutes Section 238.081 (subd. 4) to the
City of Richfield, Minnesota on or before July 14, 2000.
A. Plans for channel capacity, including both the total number of channels capable of
being energized in the system and the number of channels to be energized
immediately.
B. A statement of the television and radio broadcast signals for which permission to
carry will be requested from the Federal Communications Commission.
C. A description of the proposed system design and planned operation, including at
least the following items:
The general area for location of antenna and headend, if known;
2. The schedule for activating and two-way capacity;
3. The type of automated services to be provided;
4. The number of channels and services to be made available for access cable
broadcasting; and
5. The schedule of charges for facilities and staff assistance for access cable
broadcasting.
D. Terms and conditions under which particular service is to be provided to
governmental and educational entities.
E. A schedule of proposed rates in relation to the services to be provided and a
proposed policy regarding unusual or difficult connection of services.
F. A time schedule for construction of the entire system with the time sequence for
wiring various portions of the City of Richfield, Minnesota.
G. A statement indicating the applicant's qualifications and experience in the cable
communications field, if any.
H. An identification of the municipalities in which the applicant either owns or operates
a cable communications system, directly or indirectly, or has outstanding franchises
for which no system has been built.
1. Plans for financing the proposed system, which must indicate every significant
anticipated source of capital and significant limitations or conditions with respect to
the availability of the indicated sources of capital. This information shall include the
following:
334195/1
1. List and describe all financial resources (committed or otherwise) which
the applicant proposes to use in constructing and operating the system.
Committed financial resources may include, but are not limited to: bank
financing; existing capital reserves; capital calls (or equivalent rights)
under definitive governance documents of the applicant; operating surplus
to be generated from operating activities; or resources generated through
the issuance of debt or equity securities.
2. With respect to each of the sources described in 1 above, provide
supporting documentation (such as a commitment letter from a financial
institution; copies of definitive governance documents; terms sheet for
debt or equity securities... ) establishing the total resources available and
the amount of resources appropriated for the cable franchise operations, if
different from total funds available.
3. To the extent any of the financing sources described in 1 above have
limitations or conditions imposed by such financing source on availability,
use or other restrictions which could reasonably be expected to adversely
affect the availability of such financial resources for use by the applicant,
describe in detail: (a) each such limitation or condition; (b) the means the
applicant intends to employ in order to satisfy each such limitation or
condition; (c) a projection as to when such conditions or limitations will
be satisfied (to the extent practical); (d) any contingent sources of capital
or financial resources which may be sought in the event such conditions or
limitations are not met; and (e) the reasonably foreseeable effect of the
loss of each such source of financing on the applicant's ability to meet its
obligations to the City.
4. Provide a detailed budget or other financial forecast which identifies the
total capital resources which the applicant projects will be required to
construct and operate the cable franchise system in the City for the lesser
of five (5) years or until the applicant otherwise projects that the cash
deficit from operations will be reduced to zero, including a summary of
the material assumptions employed in such forecast or budget.
5. Provide financial statements (balance sheet, statement of operations and
statement of cash flow) for each of the two immediately preceding fiscal
years, together with the most current set of financial statements for the
current fiscal year, all prepared in conformity with generally accepted
accounting principles (except as noted).
I A statement of ownership detailing the corporate organization of the applicant, if
any, including the names and addresses of officers and directors and the number of
shares held by each officer or director, and intercompany relationship, including the
parent, subsidiary or affiliated company.
K. A notation and explanation of omissions or other variations with respect to the
requirements of the proposal.
334195/1 2
L. Plans for construction and use of right-of-way, as follows:
1. Describe the level of interference landowners will experience with the
installation of equipment by the applicant.
2. Describe what steps the applicant is planning to take to mitigate how long
the installation of the equipment will take.
3. Describe what steps the applicant is planning to take to inform residents of
the equipment installation and any safety concerns or safety measures related
thereto.
4. What percent of equipment does the applicant anticipate will be installed
above-ground and what percent underground?
5. To what extent does the applicant anticipate the need to detour traffic or
close certain roads, sidewalks, or other rights-of-way to accommodate
construction or installation of equipment.
6. What steps is the applicant planning to take to minimize destruction of
public and/or private property during construction and installation?
7. Will the applicant agree to pay for any and all costs to repair public and/or
private property to as good a condition as its was prior to construction and
installation?
8. Where does the applicant intend to store its equipment during construction,
and what measures will it be taking to keep conditions safe from children,
traffic or any other persons who may go near it.
9. What will the applicant do with the equipment during the winter months
when construction may be delayed or temporarily discontinued?
10. Does the applicant believe it will be able to collocate its equipment with that
of existing cable companies, and what steps has and will the applicant take to
determine the feasibility of collocation?
11. Is the applicant committed to collocate its equipment if technically feasible?
12. What steps does the applicant take to secure cable and equipment so there is
minimal aesthetic interference?
Substantive amendments may not be made to a proposal after a proposal has been submitted
to the City of Richfield, Minnesota and before the award of a franchise. All proposals must be
notarized and must include detailed responses to the above information requests, as well as the
information requested in the Notice by the City of Its Intent to Franchise a Cable Communications
System, attached hereto as Attachment A.
The City of Richfield, Minnesota reserves its rights to request additional information of
applicant at any time during this process.
r
334195/1 3
Applicants are advised that KBL Cablesystems of the Southwest, Inc., d/b/a Time Warner
40 Cable, currently provides cable television service throughout the City of Richfield, Minnesota,
pursuant to Ordinance No. 1996-27 which became effective on or about January 1, 1997, and which
will expire on or about January 1, 2012. Applicant's proposal should identify changes in Ordinance
No. 1996-27 which applicant requests be adopted and the substantive basis for applicant's request.
Applicants are advised that Ordinance No. 1996-27 will serve as the basis on which a franchise may
granted to any qualified applicant.
Any questions regarding this Request for Proposals or the exhibits attached hereto may be
directed to Mr. Steve Devich, Assistant City Manager, City Hall, 6700 Portland Avenue, Richfield,
Minnesota 55423 or Mr. Brian Grogan, Moss & Barnett, 4800 Norwest Center, 90 South Seventh
Street, Minneapolis, MN 55402..
•
•
334195/1 4
Aug-23-00 MUM From-MOSS & BARNETT +4800 i-ecs r.uvuo r-cau
southwest Suburban Cable Commission
Resolution No. 1/o° - I
Regarding Recommendations with Respect to
WideOpenWest Minnesota, LLC's
Proposal for a Cable Communications Franchise
Recitals
1. The Southwest Suburban Cable Commission (,,Commission") consists of the
cities of Edina, Eden Prairie. Hopkins, Minnetonka and Richfield, Minnesota
("Member Cities").
2. The Commission administers -arid enforces cable communications franchises on
behalf of its Member Cities.
3. wiaeOpenWest Minnesota, I.LC ("WOW') has approached each of the Member
Cities seeking a cable communications franchise.
4 Minnesota Statutes § 239.08(a) mandates that the Member Cities require a
. franchise for any cable communications system providing service within the City.
5. Federal law at 47 tt.S.C § 541(x) provides that a city "may not unreasonably
refuse to award an additional competitive franchise."
M the
l
l
f
6. ow
y
ol
The Commission has advised each of the Member Cities to careful
franchise procedure required by Minnesota Statutes § 238.081 by publishing
once each week for two successive weeks in the official newspaper of the
respective city a Notice of intent to Franchise a Cable Communications System.
7. The Commission's proposed Notice stated all eight (8) criteria outlined in
Minnesota Statutes § 238.081 Subd. 2.
8 In addition to the published Notice, the Commission advised each Member City
. to mail copies of the Notice of Intent and the Official Application Form to WOW
as well as other interested parties.
9 Each Member Cities' Official Application Form required that proposals for a cable
. communications franchise contain responses to each of the items identified in
Minnesota Statutes §238.081 Subd. 4.
14 On behalf of the Member Cities, the Commission has carefully reviewed all
. information and documentation presented to each of the Member Cities
regarding WOW'S proposal and qualifications to construct, own and operate a
cable communications system within the Member Cities
0 3$3240/1
Aug-23-00 02:02pm From-MOSS & BARNETT +48110 1-043 r.uviuo r-oau
11. The Commission retained the law firm of Moss & Barnett, a Professional
Association to assist the Commission and Member Cities in conducting the
procedure required under Minnesota Statutes §238.081 and reviewing the
application- submitted by WOW as well as comments and information from
interested parties.
12. Based on information and documentation made available to -the Commission and
Member Cities and the report dated August 3; 2000 prepared by Moss & Barnett
with respect to WOW's application, each of which hereby is incorporated in this
Resolution by reference, the Commission has reached recommendations
regarding WOWS legal, technical and financial qualifications.
NOW THEREFORE, the Commission hereby resolves as follows:
1. The Commission hereby finds that WOW s application of July 12, 2000 complies
with the requirements of Minnesota Statutes § 23B.081.
2. The Commission finds that WOW possesses the requisite legal, technical and
financial qualifications to construct, own and operate a cable communications
system within the Member Cities.
3. Based on 'the financial information provided by WOW, the Commission
recommends that each City condition any franchise award on the provision of a
performance bond commensurate with the damages which may result to City
property, streets, and rights-of-way.
4. The Commission recommends that each Member City conduct a public hearing
regarding WOW's application as required by Minnesota Statutes Chapter 238.
5. The Commission further recommends that upon closing of the public hearing that
each Member City take action to adopt a resolution with respect to WOWS
qualifications.
6. The Commission finds that its actions are appropriate-and reasonable in light of
the mandates contained in Chapter 238 of Minnesota Statutes and applicable
provisions of federal law including 47 U. S. C. § 541(a).
0 35334041 2
Aug-23-00 02:02pm From-MOSS & BARNETT +4900 i-UL3 r.uoiuu r-53U
PASSED AND ADOPTED this jf day of 40 -Is, 2000.
SOUTHWEST SUBURBAN CABLE COMMISSION
By:
Ron Case,
Its: Chairman
ATTES
By:
wm*- ail
0
363151/1 3
Prepared by:
•
BRIAN T. GROGAN
MICHAEL R. NIXT
Moss & Barnett
A Professional Association
4800 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4129
Phone: (612) 347-0340
Fax: (612) 339-6686
E-mail: groganb@moss-barnett.com
0
•
TABLE OF CONTENTS
Section 1. Introduction ................................................................................................1
Section 2. Statutory Requirements ..............................................................................2
Section 3. Procedure Followed by City ..................................................................... 12
Section 4. Information Reviewed .............................................................................. 13
Section 5. Everest's Legal Qualifications .................................................................. 14
Section 6. Everest's Technical Qualifications ............................................................ 16
Section 7. Everest's Financial Qualifications ............................................................. 20
Section 8. Compliance with State Requirements ...................................................... 24
Section 9. Recommendations ................................................................................... 28
Exhibits:
A. Notice of Intent to Franchise
B. Request for Proposal Official Form
C. Letter to the City dated July 12, 2000 from Jane Bremer, Esq., of Larkin Hoffman
Daly & Lindgren, Everest's legal counsel
D. Proposed Resolution
•
353373/1
Section 1.
Introduction.
In April of 2000, Everest Connections Corporation ("Everest") requested the
issuance of a cable communications franchise from the City of Richfield, Minnesota
("City") to construct, own and operate a cable system.
The City contacted Moss & Barnett seeking input regarding the appropriate
procedure to be followed when considering the award of a cable communications
franchise to Everest or any other qualified entity. Moss & Barnett reviewed state and
federal statutory requirements with City representatives and developed a
comprehensive franchise procedure to comply with applicable laws.
In accordance with Minnesota Statutes § 238.081, the City published a Notice of
Intent to Franchise (attached as Exhibit A) and requested applications for a franchise
from any interested entities. Copies of the Notice of Intent to Franchise were forwarded
directly to Everest and to the City's existing cable television operator, KBL
Cablesystems of the Southwest, Inc., doing business as Time Warner Cable ("Time
Warner"). Applicants were instructed to obtain from the City a Request for Proposal
Official Application Form (attached hereto as Exhibit B). Upon the deadline for
submitting applications, July 14, 2000, the City received an application from Everest and
WideOpenWest Minnesota, LLC ("WOW').
Pursuant to Minnesota Statutes § 238.081, the City has scheduled a public
hearing for August 28, 2000 to receive input from interested parties regarding Everest's
application. Input will be provided at the public hearing with respect to Everest's
application.
This report will review relevant statutory requirements that the City must follow in
processing a request for a cable communications franchise. The report will then outline
each and every source of information received and considered in preparing this report.
Thereafter, the report will review Everest's legal, technical and financial qualifications to
own and operate a cable communications system in the City, as well as whether
Everest's application complies with State statutory requirements. Finally, the report will
provide recommendations for the City Council's consideration in taking action on
Everest's application.
353373/1
Section 2.
Statutory Requirements.
A. Federal Regulatory Scheme: Competition Among Cable Television
Providers and the Federal Cable Act
The Cable Communications Policy Act of 1984, as amended by the Cable
Consumer Protection And Competition Act of 1992 and the Telecommunications Act of
1996 (hereinafter collectively referred to as the "Cable Act") contains many provisions
relevant to the application before the City. According to the Cable Act, one of its
primary purposes is to
promote competition in cable communications and minimize unnecessary
regulation that would impose an undue economic burden on cable
systems.
Furthermore, 47 U.S.C. § 541(a)(1) provides that a franchising authority may
award one or more franchises within its jurisdiction. To that end, the Cable Act states
that a franchising authority may not grant an exclusive franchise and may
not unreasonably refuse to award an additional competitive
franchise. ,2
Any applicant whose application for a second franchise has been denied by a
final decision of a franchising authority is not without recourse. The applicant may
appeal an adverse decision pursuant to the provisions of § 635 of the Cable Act.
The Cable Act also provides that a city may require certain assurances from the
prospective franchisee. Subsection 4 of 47 U.S.C. § 541(a) provides that
in awarding a franchise, the franchising authority-
A. shall allow the applicant's cable system a reasonable period of time
to become capable of providing cable service to all households in
the franchise area;
8. may require adequate assurance that the cable operator will
provide adequate public, educational, and governmental access
channel capacity, facilities, or financial support, and
C. may require adequate assurance that the cable operator has the
financial, technical, or legal qualifications to provide cable service."
• 1 47 U.S.C. § 521(b).
2 47 U.S.C. § 541(a)(1) (emphasis added).
353373/1 2
When it passed the 1992 amendments to the Cable Act, Congress suggested
that it favors competition in the delivery of cable communications services. The Senate
report that accompanied the amendments concluded that:
Based on the evidence and the record taken as a whole, it is clear that
there are benefits from competition between two cable systems. Thus, the
Committee believes that local franchising authorities should be
encouraged to award second franchises. Accordingly, [the Cable Act
as amended], prohibits local franchising authorities from unreasonably
refusing to grant second franchises.3
B. Federal Communications Commission Observations on Competition in the
Cable Television Industry
Five years after the Cable Consumer Protection and Competition Act of 1992, the
Federal Communications Commission ("FCC") noted that "local markets for the delivery
of video programming generally remain highly concentrated and continue to be
characterized by some barriers to entry and expansion by potential competitors to
incumbent cable systems. ,4 The FCC further found that competitive overbuilding - i.e.,
the process of constructing a second, competing cable system - by franchised cable
operators remains "minimal but is increasing."5 In the "relatively few areas" where head-
to-head competition between cable providers has developed, the FCC found that "cable
operators have responded quickly with a mix of increased programming choices, lower
rates, and improved customer service. ,6
The FCC outlined a number of communities where competitive overbuilding has
occurred throughout the United States. In particular, the FCC stated as follows:
From 1995, when overbuild activity began to increase, to June 1998,
competing franchises have been awarded covering 149 communities in 21
states with the potential to pass 7.2 million homes. However, not all of the
franchises awarded are currently in operation serving customers. Once a
franchise is awarded, it takes a significant amount of time for the
franchisee to build or gain access to a network over which to provide video
service. For example, as of December 1998, Ameritech held 87 franchise
awards, but of the communities included in those franchise areas, service
is currently being offered in only 72 communities (i.e. parts or whole of the
87 franchise areas). Ameritech's 87 franchise awards gives it the potential
to pass 1.5 million homes, and Ameritech thus far has passed 1 million of
those homes with its infrastructure. As of December 1998, Ameritech had
3 (emphasis added). S. Rep. No. 102-92, June 28, 1991, reprinted in 1992 U.S. Code Cong. & Admin.
News 1133, 1141, 1146, 1151; H.Conf. Rep. No. 102-862, reprinted in 1992 U.S. Code Cong. & Admin.
News 1231, 1259.
4 In the matter of annual assessment of status of competition in markets for the delivery of video
programming, FCC 97-423, C.S. Docket No. 97-10 (F.C.C. December 31, 1997).
Id. At 10.
6 Id. At 6; see also Id. At 107.
353373/1 3
a total of 200,000 customers. Given these figures, it appears that
Ameritech has achieved penetration rates of approximately 10% within its
total of 87 franchise areas. This compares with a current national cable
penetration rate of 68%. Because Ameritech has not completed
construction in all 88 areas, however, its penetration rate in areas of direct
competition is significantly. higher. Other local exchange carriers ("LECs')
also have yet to build out their entire awarded franchise areas. Bell South
offers service in parts or whole of nine of its 18 franchise areas. GTE
offers service in three of its 11 franchise areas, and SNET offers service in
12 cities within its Connecticut statewide franchise area. More discussion
about Ameritech video service provision and other LEC video efforts are
discussed later in this Report.
Among other smaller firms awarded competing franchises are
RCN-BETG, McLeodUSA, Knology Holdings, Inc., Private Cable Ltd.,
Fiber Vision. New overbuilds since our 1997 Report include
McLeodUSA's overbuild in Cedar Rapids, Iowa which competes with
incumbent TCI. The competitor offers cable video and audio channels
and Internet access, while the incumbent offers cable video and audio
channels, with plans to offer Internet access by the end of November
1998. McLeodUSA is also expanding its fiber optic network in the area,
over which it currently delivers local phone and long distance service in
the city. The company plans to target Des Moines, Iowa next. In May,
1998, Knology Holdings, Inc. was awarded a franchise for 132,000 homes
passed in Charleston, South Carolina, where it has started to compete
with Comcast and Time Warner. Knology already passes 68,000 homes
in Columbus, Ohio; 82,000 homes in Montgomery, Alabama; and 97,000
homes in Huntsville, Alabama where it competes with TCI, Charter,
Comcast, Media Communications, and Wireless One. Knology, similar to
overbuilders RCN and McLeodUSA, offers its customers numerous
services including video, telephony and high-speed Internet access
services. 7
We have incorporated into this Report Section 4 of the 1998 FCC Competition
Report. In Section 4, the FCC describes case studies where a second cable operator
has been authorized to compete against incumbent cable operators and the impact on
local cable subscribers. In these case studies, as well as in case studies outlined in its
1997 Report, the FCC found that
incumbent cable operators, when challenged by a new MVPD
[Multi]Channel Video Programming Distributor] entrant, are responding in
a variety of ways. Incumbents have responded by offering better
customer services, new services, new products; larger channel
0 7 Id. At 25-26 paragraphs 43 and 44 (footnotes omitted).
353373/1 4
compliments for the same price, and, in two cases, apparently cutting
is prices.8
The FCC concludes its findings in Section 4 of the 1998 Competition Report by
stating "competitive alternatives and consumer choices are still developing and potential
competitors to incumbent cable operators continue to face barriers to enter into markets
for the delivery of video programming."
It does appear, however, the FCC is attempting to reduce these barriers to
competition. In the 1998 FCC Competition Report, FCC Chairman William Kennard
stated that "competition is preferable to regulation."9 Chairman Kennard argues that
Congress envisioned the removal of market entry barriers, resulting in competition that
would offer additional viewing choices at reasonable prices to millions of American
families across the nation.10 In analyzing the data presented in the FCC Report,
Chairman Kennard indicated that "85% of all households subscribing to multi-channel
video service receive that service from their local cable operator (a 2% decline from the
87% reported a year ago). With this high market share, it is not surprising that cable
prices rose more than four time the rate of inflation between June 1997 and June
1998.s11 Chairman Kennard additionally noted that:
The drop in local cable operators' dominance of this market
is primarily due to the continued growth of DBS Systems,
and to a lessor degree, the launch of new open video
systems and instances where incumbent cable operators
have faced head-to-head competition from other cable
operators. These cases are immensely important for they
teach us an important lesson. That lesson is that
competition brings consumer benefits. And, as we
continue to move towards a competitive market, it is my
hope that consumers will benefit from lower prices, improve
customer service, and additional services. 12
Finally, in a separate statement, FCC Commissioner Ness observed that:
"When markets are fully competitive - when people have
meaningful choices - the need for government regulation
abates and benefits of competition are manifest: lower
prices, new and different service offerings, and better
customer service. I am encouraged by the level of
competition that has been achieved thus far, and I support
a Id. At 120.
s Id.
' Id. Statement of FCC Chairman William Kennard at 1.
„ Id.
12 Id.(emphasis added).
353373/1
efforts by industrv and government to attain a ful1v
competitive market for video programming distribution."' 3
Recent developments: the FCC's 1999 Report
Subsequent to its 1998 comments, the FCC notes additional competition in the
cable television markets in its 1999 Report. In broad terms, the FCC remarked that
"[n]ew municipal overbuild activity continues to grow. 04 From 1995 to 1999, competing
franchises had been awarded in 210 communities in 28 states.15 According to the FCC,
incumbent franchises have responded to this competition in a variety of ways, including
"lowering prices, providing additional channels at the same monthly rate, improving
customer service, or adding new services including high speed Internet and telephone
services."16 In Oakland County, Michigan, Ameritech, the competitor, offered a variety
of incentives to consumers in response to the incumbent's promotions. Incentives
offered by Ameritech included "free cable service for two months, $120 worth of
grocery coupons, a free premium movie channel, and free installation.07
Despite these advances, the FCC's 1999 report stated that questions remain with
regard to the increased competition. Generally, these concerns have to do with the
long-term viability of the competitors. According to the FCC, "[o]verbuilding often
requires `deep pockets' to withstand competitive responses from incumbents that lower
prices and increase services. 08 Therefore, "difficulties obtaining programming and
steep discounts enjoyed by incumbent cable operators can hinder overbuilders' ability to
compete effectively in the video distribution market."19
In conclusion, the FCC's 1999 report offered some preliminary findings. First, the
FCC found that subscribers have generally benefited from "head-to-head" competition.
Benefits enjoyed by consumers as a result of the increased competition include:
a. lower monthly charges for services and equipment;
b. additional program offerings;
C. access to alternative sources of telecommunications and Internet services;
d. new digital services; and
e. better customer service from the incumbent cable operator.20
Second, the FCC determined that incumbent operators have responded to the
increased competition by using "price" rather than "non-price" competitive measures.21
13 Id. Statement of FCC Commissioner Ness at 2 (emphasis added).
14 In the matter of annual assessment of status of competition in markets for the delivery of video
Programming, FCC 99-418, C.S. Docket 99-230 (F.C.C. December 30, 1999).
5 Id. at 22.
16 Id. at 93.
17 Id. at 94.
18 Id. at 67 (footnotes omitted).
4P 19 Id. (footnotes omitted).
20 Id.
21 Id.
353373/1
Third, the benefits of competition do not extend beyond those communities
where the competition is present. The FCC's 1999 report cites situations where
competition enjoyed by customers in one municipality does not positively affect the
rates or services in a neighboring location. Finally, the FCC observed that the benefits
of competition may be short-lived. Its report referenced the competition between an
incumbent, Coaxial Cable, and a new entrant, Ameritech, in Columbus, Ohio. In that
situtation, the incumbent was forced to sell a 75% stake i 23ts Columbus operations due
to "mounting losses and large sums required to upgrade.
C. Minnesota Statutory and Judicial Treatment of Competition in the Cable
Television Industry
Minnesota Statutes
In addition to the requirements contained in the federal Cable Act, Minnesota has
several statutory provisions that must be carefully followed by the City when considering
the award of a franchise. In particular, Minnesota Statutes Chapter 238.08, titled
Franchise Requirement, states that a municipality must require a franchise or
extension permit of any cable communications system providing service within the
municipality. Also, Minnesota Statutes § 238.081, Franchise Procedure, provides a
precise procedure to be followed by a municipality when requesting applications for a
cable communications franchise.
The text of § 238.08 and § 238.081 is set forth below to provide the City with the
exact requirements of state law on this matter.
Minnesota Statute § 238.08, Franchise Requirement, provides in pertinent
part:
Subdivision 1. (a) A municipality shall require a franchise or extension permit of
any cable communications system providing service within the municipality.
(b) No municipality shall grant an additional franchise for cable service for an
area included in an existing franchise on terms and conditions more favorable or less
burdensome than those in the existing franchise pertaining to: (1) the area served, (2)
public, educational, or governmental access requirements, or (3) franchise fees. The
provisions of this paragraph shall not apply when the area in which the additional
franchise is being sought is not actually being served by any existing cable
communications company holding a franchise for the area. Nothing in this paragraph
prevents a municipality from imposing additional terms and conditions on any additional
franchises.
22 Id. ("[I]n Independent, Ohio, Cablevision charges a total package price of $50.69 for a channel line-up
nearly identical too that offered by in nearby Brooklyn, Ohio, for $30.90 where it competes with
Ameritech.").
23 Id.
353373/1 7
Subd. 2. Nothing in this chapter shall be construed to prevent franchise
requirements in excess of those prescribed unless such requirement is inconsistent with
this chapter.
Subd. 3 Nothing in this chapter shall be construed to limit any municipality from
the right to construct, purchase, and operate a cable communications system. Any
municipal system shall be subject to this chapter to the same extent as would any
nonpublic cable communications system.
Subd. 4. Nothing in this chapter shall be construed to limit the power of any
municipality to impose upon any cable communications company a fee, tax or charge.
Minnesota Statute § 238.081, Franchise Procedure, provides in pertinent part:
Subdivision 1. Publication. The franchising authority shall have published
once each week for two successive weeks in a newspaper of general circulation in each
municipality within the cable service territory, a notice of intent to franchise, requesting
applications for the franchise.
Subd. 2. Required information. The notice must include at least the following
information:
(1) the name of the municipality making the request,
(2) the closing date for submission of applications,
(3) a statement of the application fee, if any, and the method for its submission;
(4) a statement by the franchising authority of the desired system design and
services to be offered,
(5) a statement by the franchising authority of criteria and priorities against which
the applicants for the franchise must be evaluated,
(6) a statement that applications for the franchise must contain at least the
information required by subdivision 4;
(7) the date, time, and place for the public hearing, to hear proposals from
franchise applicants,
(8) the name, address, and telephone number of the individuals who may be
contacted for further information.
Subd. 3. Other recipients of notice. in addition to the published notice, the
franchising authority shall mail copies of the notice of intent to franchise to any person it
has identified as being a potential candidate for the franchise.
Subd. 4. Contents of franchising proposal. The franchising authority shall
require that proposals for a cable communications franchise be notarized, and contain,,
but not necessarily be limited to, the following information:
353373/1 8
(1) Plans for channel capacity, including both the total number of channels
capable of being energized in the system and the number of channels to
be energized immediately,
(2) A statement of the television and radio broadcast signals for which
permission to carry will be requested from the Federal Communications
Commission;
(3) A description of the proposed system design and planned operation,
including at least the following items:
(i) the general area for location of antennae and the head end, if
known;
(ii) the schedule for activating two-way capacity,
(iii) the type of automated services to be provided,
(iv) the number of channels and services to be made available for
access cable broadcasting; and
(v) a schedule of charges for facilities and staff assistance for access
cable broadcasting;
(4) the terms and conditions under which particular service is to be provided
to governmental and educational entities;
(5) a schedule of proposed rates in relation to the services to be provided,
and a proposed policy regarding unusual or difficult connection of
(6) services,
a time schedule for construction of the entire system with the time
sequence for wiring the various parts of the area requested to be served in
the request for proposals,
(7) a statement indicating the applicant's qualifications and experience in the
cable communications field, if any;
(8) an identification of the municipalities in which the applicant either owns or
operates a cable communications system directly or indirectly, or has
outstanding franchises for which no system has been built,
(9) plans for financing the proposed system, which must indicate every
significant anticipated source of capital and significant limitations or
conditions with respect to the availability of the indicated sources of
capital,
(10) a statement of ownership detailing the corporate organization of the
applicant, if any, including the names and addresses of officers and
directors and the number of shares held by each officer or director, and
intracompany relationship including a parent, subsidiary or affiliated
company, and
(11) a notation and explanation of omissions or other variations with respect to
the requirements of the proposal.
Substantive amendments may not be made in a proposal after a proposal
has been submitted to the franchising authority and before award of a
franchise.
•
353373/1
Subd. 5. Time limits to submit applications. The franchising authority shall
allow at least 20 days from the first date of published notice to the closing date for
submitting applications.
Subd. 6. Public hearing on franchise. A public hearing before the franchising
authority affording reasonable notice and a reasonable opportunity to be heard with
respect to all applications for the franchise must be completed at least seven days
before the introduction of the franchise ordinance in the proceedings of the franchising
authority.
Subd. 7. Award of franchise. Franchises may be awarded only by ordinance.
Subd. 8. Costs of awarding franchise. Nothing in this section prohibits a
franchising authority from recovering from a successful applicant the reasonable and
necessary costs of the entire process of awarding the cable communications franchise.
In addition to the above referenced state statutes, Minnesota Statutes § 238.084
identifies the required contents of a franchise ordinance. Given that the City has an
existing Franchise Ordinance with Time Warner24 (the "Time Warner Franchise") that
complies with the requirements of § 238.084, the City may grant substantially the same
ordinance to Everest if the City finds that Everest is a qualified applicant. The reason
for using substantially the same franchise is to ensure that any and all entities providing
cable communications service within the City are treated in a competitively neutral and
nondiscriminatory manner so that no one entity is given an unfair advantage over the
other. While there is no statutory requirement for such uniformity, we strongly
recommend equal regulatory treatment for all cable operators in the City.25
Furthermore, the Time Warner Franchise at Section 12 contains a requirement for a
level playing field which the City must consider when entertaining the grant of a
franchise to a competitive provider.
D. Judicial Treatment: The Minnesota Court of Appeals' Decision Regarding
Minnesota's Cable Statutes and Competing Cable Television Franchises
In its report accompanying the 1992 amendments to the federal Cable Act, the
United States Senate observed that:
24 Ordinance adopted November 25, 1996, effective January 1, 1997, expiration date on or about
December 31, 2011.
25 Minn. Stat. §238.08(b) requires only that additional franchises cannot be granted on terms and
conditions more favorable or less burdensome that those in the existing franchise pertaining to:
1. The area served;
2. Public, educational and governmental access requirements; or
3. Franchise fees.
353373/1 10
In addition to mergers between an incumbent cable system and a potential
competitor, incumbent cable systems often wage legal battles to prevent
cities from awarding second franchises or building their own franchises.26
In 1999, the Minnesota Court of Appeals addressed one of these "legal battles"
referenced by the Senate Report. In In Re Application of Dakota Telecommunications,
Group. d/b/a Dakota Telecom. Inc., for a Cable Television Franchise in Marshall.,
Minnesota (hereinafter "Dakota Telecom"), the incumbent franchise, Bresnan
Communications ("Bresnan"), challenged the City of Marshall's ("Marshal 1")27 grant of a
competing franchise to Dakota Telecommunications Group ("DTG"). Bresnan argued,
among other things, that Marshall acted "arbitrarily and capriciously" when it granted the
competing franchise and that Marshall violated Bresnan's due process rights.
The Court of Appeals rejected Bresnan's arguments and generally determined
that an incumbent franchisee may not challenge the general fitness of a competing
franchise. In its opinion, it noted that Minnesota's cable statutes were "enacted to
encourage such competition." The opinion further recognized that:
Although [Minnesota's] Cable Act . . . intends to further the public's
interest by only awarding franchises to responsible cable operators, it
does not support an incumbent franchisee's attempt to secure a monopoly
by challenging the fitness of new, competing franchises.
Also, the court determined that Marshall adhered to all procedural requirements when it
considered the competing application. According to the court,
Because [Marshall] properly focused on DTG's ability to construct and
initially operate its proposed system, we conclude it sufficiently considered
substantial evidence of DTG's financial condition.
This decision from the Court of Appeals provides additional guidance for cities
considering an application for a competing franchise. Generally, three lessons may be
learned from the case:
1. Minnesota courts will give broad discretion to a city's decision whether to
award a competing franchise as long as the city follows the applicable
statutory framework;
2. Minnesota's Cable Act was designed to encourage and foster competition
in the cable television industry; and
3. An incumbent franchisee may not challenge the city's decision to award a
competing franchise on due process grounds.
26 S. Rep. No. 102-92, June 28, 1991, reprinted in 1992 U.S. Code Cong. & Admin. News 1133, 1141,
1146, 1151; H. Conf. Rep. No. 102-862, reprinted in 1992 U.S. Code Cong. & Admin. News 1231, 1259.
27 Moss & Barnett represented the City of Marshall in the process of awarding a franchise to Dakota
Telecommunications Group.
353373/1 11
Section 3.
Procedure Followed by City.
In April of 2000, Everest requested that the City conduct the required procedure
to consider the award of a cable communications franchise to Everest. After
consultation with Moss & Barnett a detailed procedure was prepared to comply with
applicable state and federal laws regarding the processing of Everest's request.
To that end, on June 12, 2000, the Richfield City Council authorized publication
of a Notice of Intent to Franchise a Cable Communications System. The notice was
published once each week for two successive weeks in the Sun-Current, the newspaper
of general circulation in the City. The Notice was first published on June 21, 2000, and
was thereafter published on June 28, 2000. Copies of the Notice of Intent to Franchise
and the Affidavits of Publication have been attached hereto as Exhibit A.
The Notice of Intent to Franchise referenced the City's Request for Proposals
Official Application Form which was made available on request at the office of the City
Clerk. Copies of the Notice of Intent to Franchise and Official Application Form were
sent directly to Everest, WOW, Seren Innovations, Inc., as well as the incumbent cable
operator, Time Warner. A copy of the Official Application Form has also been enclosed
herewith as Exhibit B.
Pursuant to Minn. Stat. §238.081 the City established a deadline for submitting
applications on July 14, 2000, at least twenty (20) days following the first date of
publication.
The City will publish a Notice of a Public Hearing to receive input on Everest's
application. The Public Hearing is scheduled for August 28, 2000 at approximately 7:00
p.m. All interested parties will have an opportunity to comment on Everest's application.
353373/1 12
Section 4.
Information Reviewed.
Below is a listing of all information received and reviewed by Moss & Barnett.
Each of the listed documents was carefully reviewed and considered in the
preparation of this report, and are hereby incorporated into this report by
reference. The information contained within these documents is part of the City's
record on which the City's decision is based.
A. Notice by the City of Richfield, Minnesota of its intent to franchise a cable
communication system published in the Sun-Current on June 21 and 28,
2000, together with Affidavits of Publication.
B. City of Richfield, Minnesota Request for Proposals Official Application
form.
C. Letter dated July 12, 2000 from Jane Bremer, Esq. of Larkin Hoffman Daly
& Lindgren, Everest's legal counsel, to the City enclosing Everest's
application proposal (including all exhibits).
D. Letter from Bremer dated July 27, 2000 enclosing revised page 11 for
Everest's application.
0
•
353373/1 13
Section 5.
40 Everest's Legal Qualifications.
The legal qualifications standard relates primarily to an analysis of whether
Everest is duly organized and authorized to own and operate a cable communications
system within the City.
Everest Connections Corporation ("Everest") is a Delaware corporation and has
not yet created its planned Minnesota operating subsidiary. Everest represents that it is
a corporation duly organized, validly existing and in good standing under the laws of the
State of Delaware.
As outlined in the chart following this page, Everest is wholly owned by Everest
Global Technologies Group, LLC ("EGTG"). The Minnesota operating subsidiary will
also be wholly owned by EGTG. Everest has indicated an intent to assign any franchise
granted by the City to the operating subsidiary which subsidiary will enter into a
management agreement with Everest. Any franchise granted by the City to Everest
should be conditioned upon the City's ability to consider requiring an appropriate
corporate guarantee at the time of any proposed assignment.
Based on our review of the information provided, we do not believe the City can
reasonably withhold approval of Everest's request to obtain a cable communications
franchise based upon Everest's legal qualifications.
353373/1 14
•
EVEREST
UtiliCorp GLOBAL
United, Inc. , TECHNOLOGIES S
GROUP, LLC
GLA
NEW VENTURES
LLC
100%
•
I I
EVEREST Minnesota
CONNECTIONS Operating
CORPORATION management agreement - ? Subsidiary
(management
company)
100%
EVEREST GLA NETWORK
CONNECTIONS TECHNOLOGIES,
CORPORATION INC.
OF VIRGINIA
•
353373(1 15
Section 6.
Everest's Technical Qualifications.
The technical qualification standard relates to the technical expertise and
experience of Everest with respect to cable communications.
Everest is a relatively new entrant into the cable television industry and does not
currently operate a cable communications system in any other city in the State of
Minnesota or nationwide. Everest is in the process of constructing a cable system
throughout the Kansas City metropolitan area and is seeking authorization in Fort
Lauderdale, Florida and Tulsa, Oklahoma. To aid the City in an analysis of the
responses provided by Everest to the technical qualifications questions contained within
the application, we have retained the services of Mr. Jonathan Kramer of Kramer.Firm,
Incorporated.
Mr. Kramer is nationally recognized by government telecommunications
administrators, cable television operators and telecommunications business leaders, as
a leading communications technology advisor in the areas of broadband
communications, cable communications, telephony, and wireless communications
(cellular, PCS, broadcast, and satellite). He has broad practical experience, as well as
comprehensive theoretical knowledge in the broadband communications field. With
undergraduate education at CSUN, UCLA, LATTC, and WLAC; AS Degree in Radio
Communications (with honors), Los Angeles Trade Technical College.
Mr. Kramer's analysis of Everest's application
Paae 1 of the Aaalication
Bandwidth
Everest indicates that it intents to construct and operate an 860 MHz system.
Such a system is able to carry about 135 uncompressed video channels in normal
NTSC format. Thus, I would Everest employ some level of video compression at the
time of system activation, with increasing use of digital compression thereafter.
A system bandwidth of 860 MHz is consistent with systems being rebuilt and
deployed elsewhere. Only a few systems have attempted to activate bandwidth in
excess of 860 MHz due, primarily, to signal maintenance problems associated extended
bandwidth.
Digital Compression/Digital Music
Future deployment of "more than three hundred (300) channels of video service
and forty (40) channels of digital music service" is easily accomplished using the
bandwidth proposed, coupled with digital compression.
353373/1 16
Paae 3 of the Awlication
Fiber-to-Feeder Architecture; Homes per Node; Status Monitor
Here, Everest expands on its technology element statement to indicate its intent
to use a fiber-to-feeder architecture with each fiber node serving an average of 125
homes. Further, Everest proposes to employ "state-of-the-art electronics" and status
monitoring. Each of the elements is consistent with a high quality, technically
sophisticated cable system.
Paae 4 of the Application
Two-Way System Design/Activation
Everest proposes to immediately activate its system for two-way operations. This
is consistent with comparable systems, and is required to provide data services, such
as Internet and telephony, and to facilitate pay-per-view data transmissions.
Paae 7 of the Application
Time to Build
An estimate of 48 to 60 months to build out a 14,800-mile plant in greater
Minneapolis/St. Paul does not strike me as excessive. The issue to explore, not
discussed in the Application, is the order of the areas to be built. Will the City be on the
front end of the timetable?28
Paae 17 of the Aoplication
Collocation of Facilities
It is unusual to see outside plant facilities collocated. Although a desirable goal
from the standpoint of reducing the impact on the right of way (especially underground),
most existing underground enclosures are smaller than required to permit collocation.
. If the City wishes to promote future collocation, and anticipates other entrants into
the market, then special construction requirements must be developed before Everest's
build commences.
Paae 18 of the Aoplication
Aesthetic Interference
Everest's reference to the National Electrical Code (NEC) is inappropriate as the
NEC does not deal with the aesthetics of cable construction.
za See. also. Aoplication oaae 15 0, 1-0.
353373/1 17
0 Application Attachment 2,
HFC System Model
Everest's depiction of only three fibers per node is likely understated. It is
common for a minimum of four fibers per node, and I expect that Everest will deploy up
to six or more fibers per node (for spare capacity purposes).
The depiction of a single 90-volt standby power supply suggests (but is not
conclusive) that it will employ centralized powering.
Question: Does Everest propose to supplement its power supplies with any form
of gas generator?
Finally, the depiction of a single active element (an amplifier) served by the node
is consistent with modern fiber-to-feeder 125 home plant designs.
HFC Multimedia Architecture
Powered Drops
The illustration of a "power passing tap" (coupled with the notation on the "HFC
System Modem" page that the power supply draw will be 22.5 amps) indicates that
Everest will be supplying energy to subscribers.
Transmission via a cable system of more than 60 volts of energy to subscribers,
as appears to be the case here, is prohibited under all versions of the National Electrical
Code before the 1999 edition. If the City has not adopted the 1999 NEC Code, it should
consider doing so now. The 1999 NEC added Code Section 830 governing this type of
powered construction, and sets standards of underground depths, cable types, and
other important safety elements.
Upstream/Downstream Bandwidth,
The bandwidth chart on this page indicates that Everest intends to use 375-860
MHz in the downstream (to the subscriber) direction. This means that subscribers will
be required to use converters in virtually all cases. This is a consideration element for
basic-only subscribers.
End of Mr. Kramer's analysis of Everest's applications
•
353373/1 18
Mr. Kramer did not express an opinion regarding the technical qualifications of
Everest in as much as he was unable to review any systems which Everest has
constructed.
Based on our review of Everest's technical qualifications it is appears the
experience of Everest's management team is quite impressive. In part Everest relies on
the experience and expertise of GLA Network Technologies, Inc. ("GLA') for certain
management services including network design and business development. GLA is a
Delaware corporation which is wholly owned by Everest. Everest together with GLA
possesses significant expertise in the operation of both cable television and telephone
systems. In particular, GLA has been active in the competitive local exchange market
preparing business plans, network design and marketing promotion for a number of
companies. GLA has also assisted in the planning and design of broadband networks
for a number of cable operators throughout the country and internationally.
Everest has provided the requisite information regarding its technical
qualifications per Minnesota statutes. Its application adequately describes its initial
service area, schedule for two-way activation, automated services, status monitoring,
channel scrambling technology, emergency alert system, over-the-air broadcast signals
to be delivered, and related issues. The application provides the information requested
in the City's Request for Proposals Official Application Form as required by Minn. Stat.
§ 238.081. Everest appears to have qualified and experienced personnel which may
allow it to successfully complete the construction and operation of the system.
In reviewing the technical capabilities of Everest, together with Everest
representations within the materials referenced herein, we do not believe the City can
reasonably withhold approval of Everest's request to obtain a cable communications
franchise based upon Everest's technical qualifications.
r
353373/1 19
Section 7.
Everest's Financial Qualifications.
We have reviewed selected financial information provided by Everest
Connections Corporation ("Everest") regarding Everest's plans to construct and operate
a cable communications system ("System") serving the City of Richfield, Minnesota
("City"). The analysis set forth in this Section presents the results of our analysis of the
assumptions used by Everest in establishing financial projections for the implementation
of its strategic plan for the construction, development and operation of the System,
including cable systems serving other communities within Everest's overall strategic
plan, which strategic plan includes the construction and operation of similar systems in
urban communities including Kansas City, Missouri, Ft. Lauderdale, Florida and Tulsa,
Oklahoma, in addition to the Minneapolis/St. Paul metropolitan area.
A. STANDARD OF REVIEW
Neither federal law nor FCC regulations provide franchising authorities with any
guidance concerning evaluation of the financial qualifications of an applicant for a cable
franchise. It is customary to base a financial analysis, in part, on industry standards
which are generally accepted and uniformly applied in making such a determination.
Due to the fact that Everest does not currently own or operate any cable systems, and
Everest (through its affiliates) has only recently been granted franchises to commence
the construction and operation of a cable system serving the Kansas City, Missouri
metropolitan area (which construction commenced on July 19, 2000), the absence of an
operating history makes the application of such standards in the present case generally
moot. However, the application of such standards has been used by Everest for the
purpose of substantiating the reasonable basis upon which its assumptions in its
financial projections are based. As such, the financial qualifications of Everest to
construct, develop and operate the System serving the City must be based solely on
Everest's present financial condition, its business plan and an analysis of future
prospects for additional equity and the potential for obtaining debt financing.
We provide no assurance as to the likelihood that any of Everest's projected
amounts or assumptions will be realized and do not provide any conclusions as to
whether Everest or any of its affiliates will be successful in implementing their strategic
plan of financing, constructing and operating the System and related cable system
operations throughout the urban communities which it is currently targeting; the success
or failure of which could have a material diverse result on the overall ability of Everest to
successfully construct and operate the System. See comments in Paragraph D.
B. OVERVIEW OF STRATEGY; OPERATIONAL CAPABILITIES
AND NETWORK DEVELOPMENT
Everest (which is a subsidiary of Everest Global Technologies Group, LLC)
desires to construct a network throughout the Minneapolis/St. Paul metropolitan area
consisting of approximately fourteen thousand eight hundred (14,800) miles of aerial
353373/1 20
and underground plant and related electronics and equipment. Everest projects that the
is construction and development of the network will be accomplished in approximately 48
to 60 months from inception to completion, although the timing of the completion of a
particular portion of the network will vary on a community by community basis. For
example, Everest has indicated that it intends to commence development, subject to
obtaining all applicable consents and approvals, in Plymouth or Maple Grove areas of
the Minneapolis/St. Paul metropolitan area. As a result, Everest's array of services
would be made available to residents in those communities much earlier in the
projected completion time-line. The total cost of constructing Everest's systems in the
Kansas City, Minneapolis and Tulsa metropolitan areas is projected to cost in excess of
$2.0 billion.
Everest's projections for the Minneapolis/St. Paul metropolitan area network
assumes an aggressive construction schedule of approximately four thousand (4,000)
miles per year. Based on the general terms of a recent construction contract entered
into between Par Electrical Contractors, Inc., to construct the fiber network for the
Kansas City, Missouri market, the average cost per mile is approximately $36,364,
compared to industry statistics which indicated that approximately $38,000 per mile is
average. Although no data was provided which would substantiate the ability of Everest
to generate such favorable commercial rates for the construction of its network serving
the City, the existence of favorable construction rates is one means of Everest
demonstrating its ability to successfully negotiate the cost-effective construction of its
network.
C. FINANCING; SOURCES AND PLANS
1. Equity Financing Prospects. Everest has represented that it has
entered into an agreement with UtiliCorp United, Inc., a major publicly
traded utility based in Kansas City, Missouri, which will result in a $300
million equity commitment from UtiliCorp. According to information
provided in UtiliCorp's 10-Q filed with the Securities and Exchange
Commission on March 31, 2000, UtiliCorp's commitment is subject to
Everest's ability to meet various performance targets and, if required by
the board of Everest's parent company (50% of which is controlled by
UtiliCorp), UtiliCorp will provide such funding.
In addition, Everest has further represented that it is very close to solidifying
vendor financing commitments of approximately $450 million. No description of the
nature or timing of the investment or the source or sources was disclosed.
As a final means of obtaining equity financing, Everest disclosed that it
anticipates a second round of equity financing will be accomplished by the end of the
current calendar year. Everest projects that an additional $600 million in additional
equity would be available as a result of this offering. No details as to the nature of the
offering or its current status were disclosed.
353373/1 21
2. Debt Financing; Prospects and Plans. In order to complete the
construction and development of its networks in the various markets identified above,
Everest has acknowledged the need to seek additional capital resources through debt
financing. Although no formal plans were disclosed by Everest regarding its prospects
in successfully identifying and securing required debt financing, Everest has disclosed
that it believes the equity commitments and prospects described above together with its
positive working relations with major lenders will support Everest's ability to secure
sufficient financing to construct and operate the System. It appears that Everest's
strategy with respect to debt financing is to attempt to defer any debt repayment until
Everest's projections demonstrate that there will be sufficient cash flow from operations
to fund the debt service payments; the effect of which is to enable Everest to obtain the
use of financing to construct the system and initiate operations well in advance of any
mandatory debt service payments.
D. GENERAL DISCLAIMER ON FORWARD LOOKING STATEMENTS
Information, including projected financial results, provided by Everest include
statements regarding expected revenues are based on belief of Everest's management
as well as assumptions made by and information which was stated as being currently
available to Everest. Although Everest has disclosed that it believes that the
expectations and assumptions used in its projections and forward looking statements
contained in the application are reasonable, no assurance can be given that such
assumptions or expectations will prove to have been correct, accurate or reasonable.
Such statements are subject to certain risks and uncertainties, including the ability of
Everest to secure essential contracts and agreements essential to the construction of
the System, as well as general risks related to the industry in which Everest operates.
Should one or more of the foregoing risks materialize, actual results could vary in
material respects from those projected.
E. SUMMARY OF FINANCIAL PROJECTIONS
Everest has provided, under seal of confidentiality, financial projections for the
Minneapolis/St. Paul network, a pro-forma balance sheet as of March 31, 2000,
together with certain summary information providing a comparison of Everest's
assumption to industry data (cross referenced to the 1999 Cable TV Databook
regarding industry benchmarks compiled by Paul Kagan Associates, Inc.). Due to the
confidential nature of the financial projections and related data, no detailed analysis is
included in this report. However, we offer the following observations regarding
Everest's projections, generally. In each of the categories for which Everest provided
comparative information to Kagan statistical data, Everest's projections were more
conservative, with the only exception being its fiber optic deployment. In all other
categories listed, including (i) telephone penetration; (ii) telco revenue per line; (iii)
average long distance revenue per line; (iv) business CATV penetration; (v) business
CATV revenue per subscriber; (vi) high-speed modem access (as a % of HP); and (vii)
annual cable rate adjustments, Everest's projected results of operation were, in all
i
353373/1 22
cases more conservative and in several categories, significantly more conservative than
is the industry statistical data would suggest.
F. SUMMARY
Based upon the foregoing and limited strictly to the analysis of financial
projections and other information provided by Everest submitted with its application, we
believe there is a reasonable basis upon which the City could approve or deny Everest's
request for a franchise based upon its financial qualifications to construct and operate
the System. With respect to denial, a reasonable basis exists to support a
determination by the City that Everest has failed to conclusively demonstrate that it has
committed financial resources which have been identified as available to construct and
operate the System serving the City. Although Everest has identified substantial funds
as having been contributed or are committed for future contribution, Everest has
acknowledged the need to generate substantial additional equity and/or debt financing
to complete the fulfillment of its strategic plan. As Everest's success in its ability to
meet its capital requirements is uncertain, this constitutes a reasonable basis for denial.
However, Everest has demonstrated its ability to obtain equity financing and is in
the process of moving forward with its planned construction of its franchise operations in
other areas for which franchises have previously been granted. Investor confidence
remains high and the current market conditions for the industry support Everest's
assertions that there is a substantial likelihood that it will in fact be successful in raising
additional equity financing as well as obtaining debt financing. There is, therefore, a
reasonable basis to conclude that Everest has or will be able to obtain sufficient capital
to construct and operate the System serving the City.
We do not provide any analysis as to the positive or negative effects of having
more than one cable franchise operation serve the City, or the ability of such franchise
operations to achieve or maintain short or long-term profitable operations within the
City, although Everest's pro-forma financial analysis indicates that Everest has made a
determination that it will ultimately be successful in achieving positive cash flow in such
a competitive environment.
In the event the City determines that Everest possesses the requisite financial
qualifications, we recommend that the City seek methods of ensuring that Everest
performs its obligations. To that end, we recommend that if the City determines to grant
Everest a cable communications franchise, the City enforce a franchise requirement of
a construction bond sufficient to provide the City with security in the event damage to
rights-of-way or other issues arise which may require restoration at the City's expense,
assuming that Everest is unwilling or unable to financially perform. While the
construction bond will not provide the City with assurance of Everest's financial stability,
the construction bond will provide an added layer of protection for the City.
•
353373/1 23
•
Notice of Intent to Franchise.
A franchising authority must publish Copies of notice as
notice of its intent to franchise a cable Yes published attached as
operator once each week for two
successive weeks in a newspaper of Exhibit A to this Report.
general circulation within the cable
service territory.
Notice must include:
1. The name of the municipality. Yes See Exhibit A to this Report
2. The closing date for submission of Yes Exhibit A
applications
3. Information regarding the application Yes Exhibit A
fee and method for its submission.
4. A statement regarding the system Yes Exhibit A
design desired by the City and the
services desired by the City.
5. A statement regarding the criteria and Yes Exhibit A
priorities against which applicants will
be evaluated.
6. A statement informing the public that Yes Exhibit A
franchise applications must contain, at
minimum, the information required by
Minn. Stat. Section 238.081,Subd. 4.
Yes
Exhibit A
7. The date, time, and place of a public
hearing at which proposals from
applicants will be heard.
8. The name, address, and telephone Yes Exhibit A
number of City officials who may be
contacted for further information.
353373/1 24
Section 8.
Compliance with State Requirements.
•
•
•
1. Plans for channel capacity, including Yes Everest Application,
Page 1
both the total number of channels
capable of being energized in a
system and the number of channels to
be energized immediately;
2. Television and radio broadcast signals Yes Everest Application,
Page 2
for which permission to cant' will be
requested from the FCC;
3. A description of the proposed system Yes Everest Application,
Page 34
design and planned operation,
including at least: (1) the general area
for location of antenna and head end,
if known; (ii) a schedule for activating
two-way capacity; (iii) the type of
automated services to be provided;
(iv) the number of channels and
services to be made available for
access cable broadcasting; and(v) a
schedule of charges for facilities and
staff assistance for access cable
broadcasting;
4 The terms and conditions under which Yes Everest Application,
. particular services are to be provided 6
Page 5-
to governmental and educational
entities;
5. Schedules of proposed rates in Yes Everest Application, Page 6
and Attachment 3
relation to the services to be provided,
and a proposed policy regarding
unusual or difficult connection of
services;
6. A time schedule for construction of the Yes Everest Application, Page 7
and Attachments 4-6
entire system with the time sequence
for wiring various parts of the area
requested to be served;
353373/1
25
Proposals must contain the following
information:
•
8. Identification of the municipalities in
which the applicant either owns or
operates a cable system, directly or
indirectly, or has outstanding
franchises for which no system has
been built;
9. Plans for financing the proposed
system, which must indicate every
significant anticipated source of capital
and limitations or conditions with
respect to the availability of the
sources of capital;
10. Ownership detailing the corporate
organization of the applicant, including
the names and addresses of officers
and directors and the number of
shares held by each officer or director,
and the intracompany relationship
including a parent, subsidiary, or
affiliated company; and
11. Notation and explanation of omissions
or other variations with respect to the
requirements of the RFP.
12. Plans for construction and use of right-
of-way
Notice to Other Interested Parties. In
addition to the public notice, a franchising
authority must mail copies of the notice of
intent to franchise to any person it has
identified as being a potential candidate
for the franchise. Minn. Stat. § 238.081,
subd.3.
Yes Everest Application, Pages
9-10 and Attachments 11-14
Yes Everest Application, Page 11
and Attachments 15-17
Yes Everest Application, Page 13
and Attachment 18
Yes Everest Application, Page 14
and Attachment 19
Yes Everest Application, Pages
15 - 18
Yes
353373/1 26
7. A statement indicating applicant's Yes Everest Application, Page 8
qualifications and experience in the and Attachments 7-10
cable field, if any;
Notarized. All franchise proposals must
be notarized. Minn. Stat § 238.081, subd.
4.
Deadline for Submitting Proposals.
Any deadline set by the City must occur
at least twenty (20) days after the date
notice is first published regarding the
City's solicitation of franchise
applications.
Public Hearing. The franchising
authority must hold a public hearing
affording all applicants reasonable notice
and an opportunity to be heard. This
hearing must occur at least seven days
(7) before introduction of any franchise -
ordinance.
Yes
Everest Application,
Page 19
Yes Notice first published June
21, 2000. Deadline for
applications was July 14,
2000 (20 days)
Yes
Franchise By Ordinance. All franchises To be completed
must be granted by ordinance. Minn.
ie Stat, § 238.081, subd. 7.
353373/1
27
Public hearing scheduled for
August 28, 2000
Consideration of Everest's
qualifications scheduled for
August 28, 2000
consideration of Franchise, if
applicable, to follow at
subsequent City Council
meeting.
•
M
•
Section 9.
Recommendations.
Based on our review of Everest's legal and technical qualifications we believe
that the City cannot reasonably withhold approval of Everest's request for a cable
communications franchise. If the City determines that Everest possess the requisite
financial qualifications then the City should consider adoption of the attached resolution
which will establish findings of fact regarding Everest's application.
If the City adopts the resolution attached as Exhibit D, the City will then be in a
position to consider the grant of a franchise to Everest at a future City Council meeting,
no sooner than seven (7) days following the close of the public hearing.
353373/1
28
Exhibit A
Notice of Intent to Franchise
353373/1 A-1
NOTICE BY THE CITY OF RICHFIELD, MINNESOTA
OF ITS INTENT TO FRANCHISE A CABLE COMMUNICATIONS SYSTEM
Notice is hereby given that it is the intent of the City Council of the City of Richfield,
Minnesota, to consider the grant of an additional franchise(s) for the purpose of constructing a
cable communications system to serve the City of Richfield, Minnesota. This notice is given in
accordance with the requirements of Minnesota Statutes Section 238.081.
Applications shall be submitted in response to this Notice and to a Request for Proposals
and Proposed Franchise Documents available on request in the office of the Assistant City
Manager, City Hall, 6700 Portland Avenue, Richfield, Minnesota 55423, phone: 612-861-9702.
A. The deadline for submitting applications is July 14, 2000.
B. Applications shall be in writing, notarized, in a format consistent with the Request
for Proposals, and sealed with ten (10) copies enclosed. Two (2) additional
copies of the application must be sent to the attention of Mr. Brian T. Grogan at
Moss & Barnett, 4800 Norwest Center, 90 South Seventh Street, Minneapolis,
MN 55402, who will be providing assistance to the City on this matter. Each
application shall include a nonrefundable application fee of Seven Thousand Five
Hundred Dollars ($7,500) in the form of a certified check made payable to the
City of Richfield, Minnesota. The applications shall be delivered to the attention
of the Assistant City Manager, City Hall, 6700 Portland Avenue, Richfield.
Minnesota 55423, phone: 612-861-9702. Applicants are hereby on notice that
any and all costs incurred by the City and the Southwest Suburban Cable
Commission, of which the City is a member, with respect to the franchise
procedure and franchise award which are not covered by the $7,500 application
fee shall be recovered from applicant.
C. Applicants are requested to be present at a public hearing before the City Council,
that is presently scheduled to be held at City Hall, beginning at 7:00 p.m. on
August 28, 2000. Each applicant will be given time to summarize its application.
The City Council may then continue the public hearing to permit further review of
the application before a final decision is made to select qualified applicants.
D. The Request for Proposals and Proposed Franchise Documents set forth in detail
the expectations of the City of Richfield, Minnesota and the requirements of the
content of the franchise proposal and are made in conformance to the
requirements of Minnesota Statutes Section 238.081, subd. 4.
E. The desired system design and services to be offered are identified in the
Proposed Franchise Documents attached to the Request for Proposals and include
a system serving the entire City of Richfield, Minnesota with a reasonable line
extension policy; flexibility to increase channel capacity; public, educational and
governmental access channels supported by the operator; reasonable rates; a mix,
level and quality of programs and services comparable to other systems and
customer services and maintenance plans to ensure the highest degree of service
to the subscriber. The Request for Proposals and Proposed Franchise Documents
provide further details of the desired system design and services to be offered.
F. The criteria for evaluating the applications and priorities for selection are as
follows:
1. The completeness of applications, conformance to Request for Proposal,
and Proposed Franchise Documents;
2. The system design;
3 The programs and services offered initially and criteria for adding
programs and services;
4. The initial service area and the line extension policy;
5. The time for construction;
6. Customer service policies and system testing;
7. The legal, technical, and financial qualifications of the applicant; and
8. The proposal for community services, including public, educational, and
governmental access.
H. Applications which meet the above criteria in the opinion of the City Council
shall be considered for a franchise.
I. The applicant(s) selected by the City Council will be required to accept the
Franchise Documents granted within thirty (30) days after adoption and will also
be required to reimburse the City of Richfield for any and all expenses not
covered by the application fee, as provided for by Minnesota Statutes Section
238.081, subd. 8.
J. Applicants are advised that the City of Richfield is member of a joint powers
entity, the Southwest Suburban Cable Commission ("Commission") which will
provide input and recommendations to the City regarding this process. The
Commission consists of the following cities: Edina, Eden Prairie, Hopkins,
Minnetonka, and Richfield each of which has previously granted identical
franchises to KBL Cablesystems of the Southwest, Inc., d/b/a Time Warner.
K. All questions concerning this request should be directed to Mr. Steve Devich,
Assistant City Manager, City Hall, 6700 Portland Avenue, Richfield, Minnesota
55423, phone: 612-861-9702 or Mr. Brian T. Grogan, Moss & Barnett, P.A.,
4800 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402-
4129, phone (612) 347-0340, the Commission's legal advisor regarding this
process.
Date: June 12, 2000
Thomas P. Ferber, City Clerk
To Be Published: June 21 and June 28, 2000
•
STATE OF MINNESOTA)
SS.
COUNTY OF HENNEPIN)
newspapers
AFFIDAVIT OF PUBLICATION
Frank Chilinski, being duly swom on an oath states or affirms, that he is the publisher of the
newspaper known as Sun-Current , or the president's designated
agent, and has full knowledge of the facts stated below:
(A) The newspaper has complied with all of the requirements constituting qualification as a
quailed newspaper, as provided by Minn. Stat. §331A.02, §331A.07, and other applicable
laws, as amended.
(B) The printed public notice that is attached was published in the newspaper once each week,
for two successive weeks; it was first published on Wednesday, the 21 day of
June , 2000, and was thereafter printed and published on every Wednesday to and
including Wednesday, the 28 day of June , 2000; and printed below is a copy of
the lower case alphabet from A to Z, both inclusive, which is hereby acknowledged as being
the size and kind of type used in the composition and publication of the notice:
abodefghOldmnopgrstuvwxx 0000
?/do
/ PuRsher Subscribed and swom,to)pr affirm1before me
? I
on this ' A day of i -a c .P2000.
Notary Public
?,F'?,=S 1.3 i-2005
RATE INFORMATION
(1) Lowest classified rate paid by commercial users $ 2.8 r line
for comparable space
(2) Maximum rate allowed by law $ 8.20 uer line
(3) Rate actually charged $ 1.40 p2r line
•
pry or lwenrim
(Official Publication)
NOTICE BY THE CITY OF RICHFMA
NMgNFSOTA
OF rM ENTENT TO FRANCHISE A CABLE
COMKMCATIONS SYSTEM
Notice is herebygiven that it is the intent of the CityCoun-
cii of the City of Richfield, Minnesota, to consider the grant
of an additional fianchise(s) for the purpose of construct-
ing a cable communications system to serve the City of
RidiSeld, Minnesota. This notice is given in accordance
with the requirements of Minnesota Statutes Section
238.081.
Applications shall be submitted in response to this
and to a Request for Proposals and Proposed F
r ? .... nts available on request in the office of the Assis-
tant City Manager, City Hall, 6700 Portland Avenue, Rich-
field, Minnesota 55423, phone: 612-861-9702.
A. The deadline for-submitting applications is July 14,
2000.
B. Applications shall be in writing, notarized, in a format
consistent with the Request for Proposals, and sealed with
ten (10).copiee enclosed. Two (2) additional copies of the
application must be sent to the attention of Mr. Brian T.
Grogan at Moss & Barnett, 4800 Norwest Center, 90 South
Seventh Street, Minneapolis. MN 55402, who will be pro-
viding assistance to the City on this matter. Each appli-
cation fee of
Seven Thousand Five Hundred Dollars ($7.6000 in the
form of a certified check made payable to the City of Rich-
field . Minnesota. The applications shall be delivered tothe
attention of the Assistant City Manager; City Hall. 6700
Portland Avenue, Richfield, Minnesota 55423, phone:
612.861-9702. Applicants are hereby on notice that any
and all costa incurred by the City and the Southwest Sub-
urban Cable Commission, of which the City is a member,
with respect to the franchise procedure and franchise
award which are not ......1 by the $7,500 application fee
shall be r.. ? :. _ 1 from applicant.
C. Applicants are.requested to be present at a public
hearing before the City Council, that is L. ;ly sched-
uled to be held at City Hall, beginning at 7:00 p n on Au-
gust 28, 2000. Each applicant will be given time to sum-
marize its application. The City Council may then contin-
us the public hearing to permit further review of the ap-
plication before a final decision is made to select qualified
applicants.
D. The Request for Proposals and Proposed Franchise
Documents set forth in detail the expectations of City
of Richfield, Minnesota and the requirements of the con-
tent of the franchise proposal and are made in oonfor-
menoe to the requirements of Minnesota Statutes Section
238.081, subd. 4.
E. The desired system design and services to be offered
are identified in the Proposed Franchise Documents at-
tached to the Request for Proposals and include a system
serving the entire City of Richfield, Minnesota with a rea-
sonable line extension policy; flexibility to increase chan-
nel capacity; public, educational and 1,. . .... ...ental access
channels supported by the operator, reasonable rates; a
mix, level and quality of programs and services compara-
ble to other systems and customer services and mamte•
nance plans to ensure the highest degree of service to the
subscriber. The Request for Proposals and Proposed Fran-
chise Documents provide further details ofthe desired sys-
tem design and services to be offered.
F. The criteria for evaluating the applications and prior-
ities for selection are as follows:
1. The completeness of applications, conformance to
Request f1mProposai, and Proposed Franchise Documents;
2. The system design;
3. The programs and services offered initially and
criteria for adding programs and services;
4. The initial service area and the line extension pol-
icy:
5. The time for construction;
6. Customer service policies and system testing;
7. The legal, technical, and financial qualifications of
the applicant; and
8. The proposal for community services, including
public, educational, and governmental access.
H Applications winch meet theabove criteriaintheopm-
ion of the City Council shall be considered fora franchise.
I The applicant(s) selected by the City Council will be
required to accept the Franchise Documents granted with-
in thirty (30) days after adoption and will aim be required
to reimburse the City of Richfield for any and all expens-
es not covered by the application fee, as provided for, by
Minnesota Statutes Section 238.081, subd. S.
Fie,
J Applicants am advised that the City of Richfield is
member of a joint'', . , entity, the southwest suburban
Cable Commission ("Commisaton") which will provide
input and recommendations to the City regarding thia
The Commission consists of the following cities:
Eden Prairie, Hopkins, Mirmetonka. and Richfield
na ted identical franchises
4F.h r of which has previously Bran
KBL Cablesystema of the Southwest, Ina., dlWa Time
Warner
K All questions concerning this request should be di-
rected to Mr. Steve Devich, Assistant City Manager,
Hai, 6700 Portland Avenue, Richfield, & Ear-
phone: 612,'861-9702 or Mr. Brian T, C 'o6ac + Mom nett, PA, 4800 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 664024129, phone (612) 347-
0340, the Commission's legal advisor regarding this
process. _
Date: June 12, 2 City Clerk
Thomas P. Ferber,
(June 21 & 28, 2000)D21Cnide
0
Exhibit B
Request for Proposals Official Form
353373/1 B-1
CITY OF RICHFIELD, MINNESOTA
REQUEST FOR PROPOSALS OFFICIAL APPLICATION FORM
NNE 12, 2000
Applicants interested in submitting a proposal for a cable communications franchise shall
submit the following information as required by Minnesota Statutes Section 238.081 (subd. 4) to the
City of Richfield, Minnesota on or before July 14, 2000.
A. Plans for channel capacity, including both the total number of channels capable of
being energized in the system and the number of channels to be energized
immediately.
B. A statement of the television and radio broadcast signals for which permission to
carry will be requested from the Federal Communications Commission.
C. A description of the proposed system design and planned operation, including at
least the following items:
1. The general area for location of antenna and headend, if known;
2. The schedule for activating and two-way capacity;
3. The type of automated services to be provided;
4. The number of channels and services to be made available for access cable
broadcasting; and
5. The schedule of charges for facilities and staff assistance for access cable
broadcasting.
D. Terms and conditions under which particular service is to be provided to
governmental and educational entities.
E. A schedule of proposed rates in relation to the services to be provided and a
proposed policy regarding unusual or difficult connection of services.
F. A time schedule for construction of the entire system with the time sequence for
wiring various portions of the City of Richfield, Minnesota.
G. A statement indicating the applicant's qualifications and experience in the cable
communications field, if any.
H. An identification of the municipalities in which the applicant either owns or operates
a cable communications system, directly or indirectly, or has outstanding franchises
for which no system has been built.
1. Plans for financing the proposed system, which must indicate every significant
anticipated source of capital and significant limitations or conditions with respect to
the availability of the indicated sources of capital. This information shall include the
is following:
334195/1
1. List and describe all financial resources (committed or otherwise) which
the applicant proposes to use in constructing and operating the system.
Committed financial resources may include, but are not limited to: bank
financing; existing capital reserves; capital calls (or equivalent rights)
under definitive governance documents of the applicant; operating surplus
to be generated from operating activities; or resources generated through
the issuance of debt or equity securities.
2. With respect to each of the sources described in 1 above, provide
supporting documentation (such as a commitment letter from a financial
institution; copies of definitive governance documents; terms sheet for
debt or equity securities... ) establishing the total resources available and
the amount of resources appropriated for the cable franchise operations, if
different from total funds available.
3. To the extent any of the financing sources described in 1 above have
limitations or conditions imposed by such financing source on availability,
use or other restrictions which could reasonably be expected to adversely
affect the availability of such financial resources for use by the applicant,
describe in detail: (a) each such limitation or condition; (b) the means the
applicant intends to employ in order to satisfy each such limitation or
condition; (c) a projection as to when such conditions or limitations will
be satisfied (to the extent practical); (d) any contingent sources of capital
or financial resources which may be sought in the event such conditions or
limitations are not met; and (e) the reasonably foreseeable effect of the
loss of each such source of financing on the applicant's ability to meet its
obligations to the City.
4. Provide a detailed budget or other financial forecast which identifies the
total capital resources which the applicant projects will be required to
construct and operate the cable franchise system in the City for the lesser
of five (5) years or until the applicant otherwise projects that the cash
deficit from operations will be reduced to zero, including a summary of
the material assumptions employed in such forecast or budget.
5. Provide financial statements (balance sheet, statement of operations and
statement of cash flow) for each of the two immediately preceding fiscal
years, together with the most current set of financial statements for the
current fiscal year, all prepared in conformity with generally accepted
accounting principles (except as noted).
I A statement of ownership detailing the corporate organization of the applicant, if
any, including the names and addresses of officers and directors and the number of
shares held by each officer or director, and intercompany relationship, including the
parent, subsidiary or affiliated company.
K. A notation and explanation of omissions or other variations with respect to the
requirements of the proposal.
334195/1 2
Plans for construction and use of right-of-way, as follows:
L
. h
1. e
Describe the level of interference landowners will experience with t
installation of equipment by the applicant.
2. Describe what steps the applicant is planning to take to mitigate how long
the installation of the equipment will take.
3 Describe what steps the applicant is planning to take to inform residents of
. the equipment installation and any safety concerns or safety measures related
thereto.
4. What percent of equipment does the applicant anticipate will be installed
above-ground and what percent underground?
5 To what extent does the applicant anticipate the need to detour traffic or
. close certain roads, sidewalks, or other rights-of-way to accommodate
construction or installation of equipment.
6. What steps is the applicant planning to take to minimize destruction of
public and/or private property during construction and installation?
7 Will the applicant agree to pay for any and all costs to repair public and/or
. private property to as good a condition as its was prior to construction and
installation?
8 Where does the applicant intend to store its equipment during construction,
. and what measures will it be taking to keep conditions safe from children,
traffic or any other persons who may go near it.
9. What will the applicant do with the equipment during the winter months
when construction may be delayed or temporarily discontinued?
10. Does the applicant believe it will be able to collocate its equipment with that
of existing cable companies, and what steps has and will the applicant take to
determine the feasibility of collocation?
11. Is the applicant committed to collocate its equipment if technically feasible?
12. What steps does the applicant take to secure cable and equipment so there is
minimal aesthetic interference?
Substantive amendments may not be made to a proposal after a proposal has been submitted
to the City of Richfield, Minnesota and before the award of a franchise. All proposals must be
notarized and must include detailed responses to the above information requests, as well as the
information requested in the Notice by the City of Its Intent to Franchise a Cable Communications
System, attached hereto as Attachment A.
The City of Richfield, Minnesota reserves its rights to request additional information of
applicant at any time during this process.
•
334195/1 3
Applicants are advised that KBL Cablesystems of the Southwest, Inc., d/b/a Time Warner
Cable, currently provides cable television service throughout the City of Richfield, Minnesota,
pursuant to Ordinance No. 1996-27 which became effective on or about January 1, 1997, and which
will expire on or about January 1, 2012. Applicant's proposal should identify changes in Ordinance
No. 1996-27 which applicant requests be adopted and the substantive basis for applicant's request.
Applicants are advised that Ordinance No. 1996-27 will serve as the basis on which a franchise may
granted to any qualified applicant.
Any questions regarding this Request for Proposals or the exhibits attached hereto may be
directed to Mr. Steve Devich, Assistant City Manager, City Hall, 6700 Portland Avenue, Richfield,
Minnesota 55423 or Mr. Brian Grogan, Moss & Barnett, 4800 Norwest Center, 90 South Seventh
Street, Minneapolis, MN 55402..
0
A
334195/1 4
Exhibit C
Letter to the City dated July 12, 2000
from Jane Bremer, Esq., of
Larkin Hoffman Daly & Lindgren, Everest's legal counsel
•
•
353373/1 C-1
LARKIN, HOFFMAN, DALY & LINDGREN, LTD.
ATTORNEYS AT LAW
1500 NORWEST FINANCIAL CENTER
7900 XERXES AVENUE SOUTH
Jane E. Bremer BLOOMINGTON. MINNESOTA 55431-1194
DIR. DIAL (952) 896-3297 TELEPHONE (952) 835-3800
E-MAlLjbremer@lhdi.com FAX (952) 896-3333
July 12, 2000
Mr. Steve Devich, Assistant City Manager Via Federal Express
City of Richfield
6700 Portland Avenue
Richfield, Minnesota 55423
Re: Cable Communications Franchise Application /Everest Connections Corporation
Dear Mr. Devich:
Enclosed, please find one (1) original and nine (9) copies of Everest Connections Corporation's
Application for a Cable Communications Franchise to provide broadband services in the City of
Richfield. Per your request, we have forwarded two (2) copies of this Application to Mr. Brian T.
Grogan, Esq.
We are also enclosing a check in the amount of seven thousand five hundred dollars ($7,500) which
represents the Application fee. The check is located in the front cover of the original Application
materials.
Please do not hesitate to contact me with any questions or comments. Thank you for your
consideration.
Sincerel
J e E. Bremer, for
LARKIN, HOFFMAN, DALY & LINDGREN, Ltd.
Enclosures
cc: Michael B. Roddy
Brian T. Grogan, Esq.
0599092.01
go
Au-23-00 02:03pm From-MOSS & BARNETT
+aauu
Southwest Suburban Cable Commission
Resolution No. ? 04 ?.
Regarding Recommendations With Respect to
Everest Connections Corporation's
Proposal for a Cable Communications Franchise
Recitals
1. of the
The Southwest Suburban Cable Commission ("Commission")
and 1}2ichf'e d?iMinnesota
Minnetonka
kins
Ho
e
i
P
,
p
,
ri
ra
cities of Edina, Eden
(`Member Cities").
The Commission administers and enforces cable communications franchises on
2. behalf of its Member Cities_
3 Everest Connections Corporation ("Everest") has approached each of the
. Member Cities seeking a cable communications franchise.
4. Minnesota Statutes § 238.08(a) mandates that the Member Cities require a
stem providing service within the City.
s
ti
i
y
ons
ca
franchise for any cable commun
5 Federal law at 47 U.S.C. § 541(a) provides that a city "may not unreasonably
"
. refuse to award an additional competitive franchise.
3. The Commission has advised each of the Member Cities to carefully follow the
081 by publishing
tes § 238
t
S
.
u
ta
franchise procedure required by Minnesota
e weeks in the official newspaper of the
i
v
once each week for two success
Notice of Intent to Franchise -a Cable Communications System
respective city a
4 The Commission's proposed Notice stated all -eight (8) criteria outlined in
Minnesota Statutes § 238.081 Subd. 2.
5 ea ? ? ? ? advised each
In addition to the published Notice, th
Form to Everest
. a
of the Notice of Intent n
i
es
to mail cop
as well as other interested parties.
g. Application Form
ses to required
each that
Each Member Cities' Offiia?
of the emssdentfedbin
on
tain respon
communications franchise
Minnesota Statutes § 238.081 Subd. 4.
7 On behalf of the Member Cities, the Commission has carefully reviewed all
-each of the Member Cities
. information and documentation presented to
osal and qualifications to construct, own and operate a
'
s prop
regarding Everest
stem within the Member Cities.
s
y
cable communications
0 353151/1
+4900 i-ow I—.,... ---
Aug-23-00 02:03pm From-MOSS & BARNETT
a Professional
The Commission retained the law firm of Moss & Barnett,
commission and Member Cities in conducting the
Association to assist the
procedure required under Minnesota Statutes §238:081 and reviewing the
s comments and information from
application submitted by Everest as well a
interested parties.
Commission
lablle
t -to the
tion ma
ava
9. 3
Based on information and documenta
& Barne
d by Mo
i
Cities and the report dated August p
Member
with respect to Everest's application, each of which hereby is incorporated in this
eached recommendations
Resolution by reference, the Commission has r
.regarding Everest's legal, technical and financial qualifications
NOW THEREFORE, the Commission hereby resolves as follows.
.1. The Commission hereby finds that Everest's application of July 12, 2000
ements of Minnesota Statutes § 238.081.
i
r
complies with the requ
2. The Commission finds that Everest possesses the requisite legal, technical and
te a cable communications
financial qualifications to construct, own and opera
system within the Member Cities.
3. Based on the financial information provided by Everest, the Commission
anchise award on the provision of a
f
r
recommends that each City condition any
ith the damages which may result to City
performance bond commensurate w
property, street4, and rights-of-way.
4. The Commission recommends that each Member City conduct a public hearing
ired by Minnesota Statutes Chapter 238.
'
s application as requ
regarding Everest
5 The Commission further recommends that upon closing-of the public hearing that
t's
each Member City take action to adopt a resolution with respect to Everes
qualifications.
6. The Commission finds that its actions are appropriate and reasonable in light of
f Minnesota Statutes and applicable
the mandates contained in Chapter 238 o
isions of federal law including 47 U. S. C. § 541(a).
prov
2
353tiM
Aus-23-00 02:03pm Prom-NESS & BARNETT +49UU 1-81.9 1-— 1 -11
1211 -A3-
PASSED AND ADOPTED this day of g a 1 , 2000.
SOUTHWEST SUBURBAN CABLE COMMISSION
By.
Ron Case,
Its: Chairman
ATTEST.
By, ,
= pvpc 0(1C(e A6tC
3
Is 353240/)
AGENDA SECTION: Consent
AGENDA ITEM # 3 C
REPORT # 215
•
STAFF REPORT
gF.
CITY COUNCIL MEETING
AUGUST 289 2000
•
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY CITY MANAGER:
M i:6
SIGNATURE
// nn
ITM ORCOUNCIL CONSIDERATION:
Consideration of a request for an itinerant food license and a temporary on-sale 3.2 percent
malt liquor license, for the Richfield American Legion, 6501 Portland Avenue, for their pig roast
and family picnic to be held on Saturday, September 9, 2000.
RECOMMENDED ACTION:
By Motion: Approve an itinerant food license and a temporary on-sale
3.2 percent malt liquor license, for the Richfield American Legion for
their pig roast and family picnic to be held on Saturday, September 9,
2000.
III. BACKGROUND
On August 15, 2000, the Richfield American Legion submitted an application for an
itinerant food license and a temporary on-sale 3.2 percent malt liquor license for
September 9, 2000. The pig roast
as family a fupicnic ar being held in ndraisee and will take place from 10
with the American Diabetes Association
a.m. to 4 p.m.
They will be serving food items such as pig, baked beans, corn on the cob,
watermelon, coleslaw, and pie.
0828Amer
The applicant has supplied proof of liquor liability insurance to cover the exterior of
the premises for this event.
• It appears that the American Legion is conscious of the need to carefully oversee
the event to prevent the sale and consumption of alcohol to underage youth. There
will be constant adult supervision overseeing the event to ensure it does not get into
the hands of youth.
The Richfield American Legion has contacted food sanitarians from the City of
Bloomington to ensure that proper food handling practices are followed. They will
work with Bloomington sanitarians and follow their recommendations for safe and
wholesome food handling.
III. BASIS OF RECOMMENDATION
A. POLICY
The applicant has complied with all of the provisions of the City
application.
B. CRITICAL ISSUES
The applicant has been advised of the need to oversee the event to
prevent the sale and consumption of alcohol to and by underage
youth. A letter has been furnished acknowledging their compliance
with the City ordinance and State law regarding underage
• consumption.
C. FINANCIAL
N/A
ID. LEGAL
N/A
IV. ALTERNATIVE RECOMMENDATION(S)
1
Deny the request. This would result in the applicant not being able to
conduct activities on September 9, 2000.
V. ATTACHMENTS
Letter from Richfield American Legion
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
Jim Morris
•
C?/? % !?P C'oa?Su?vl?T?oo?
/?4 lecq ko l Cbe?c?, !s 43a, Aq r
A (( 14::,? /C(
U,?o <nr
??t? Alalu?7`eel?s c toll
C`
u c a cal ? e r? ? Z`D z`?C e
kt c ? P((2 lC? ? p /1 C 7?44
?t l t / o LA- dcoO t/ / loop yo y?, t,I 1r
C A 1? e cc sM4/?
Y Ir.)
???l /?1? u??e?Z Coa9S?o9?C'
?? (J` Su? ?l?U? SloG?. c?5 u9?1
e- S m rLt B n9cQe
e .,5 IA C-i?
R,?9 0,4,4 ?o?4 or
S ? ? ?4 ?? S e 64 t?S .
( LAA9 C- JI o -x) I -S <?? /
1 n) <2 o tU ttAc?rcD,? u9 ? 1?
(? t 14 ? eC ?e s ?s s c. z4c: t: 12aq I s ? ?' `'`•`??S
02 A 4A
1/915c)
71 e.5
l lc? 4 0 S C Q> 4OGt9
k, IAA cA C-
,oo a c? A
1?kt?l ?o ???? you 000t??
Oct -??s ,???00 SctccesS
AGENDA SECTION: Consent
AGENDA ITEM # 3B
REPORT # 214
STAFF REPORT,
MAO CITY COUNCIL MEETING
AUGUST 28, 2000
BETSY CIIRISTENSEN, ADMINISTRATIVE
REPORT PREPARED BY: SUPPORT SERVICES MANAGER
NAME, TITLE
REPORT PRESENTER: DAN SCOTT, DIRECTOR OF PUBLIC SAFETY
NAME, TITLE
C-A
DEPARTMENT DIRECTOR REVIEW:
SIGNATU
1
REVIEWED BY CITY MANAGER: l
..r 1
ITEM FOR COUNCIL rONSIDERATION:
Consideration of a request for a new veterinary license for Veterinary Radiation Therapy, Inc.,
1208 East 66th Street.
I. RECOMMENDED ACTION:
By Motion: Approve a new veterinary license for Veterinary Radiation I
Therapy, Inc., 1208 East 66th Street.
111. BACKGROUND 1
On August 5, 2000, Ralph Weichselbaum submitted an application for a new
veterinary license for providing radiation treatments on cats. The application is
complete and the $150.00 fee has been received.
Veterinary Radiation Therapy, Inc., was previously located at 6521 Cedar Avenue
South, but because of redevelopment, is moving to a new location at 1208 East
66th Street.
The veterinary service will be located within the same building as Animal Care
Clinic.
0828 Weichselbaum
The applicant, Ralph Weichselbaum, is a licensed veterinarian in the State of
Minnesota and has a history of no complaints with the Minnesota Board of
Veterinary Medicine.
III. BASIS OF RECOMMENDATION
A. POLICE'
The applicant has complied with the City codes pertaining to a
veterinary license.
The applicant was previously licensed at another location. It was
necessary to reapply due to relocation.
B. CRITICAL ISSUES
N/A
I C. FINANCIAL
® N/A
D. LEGAL
N/A
IV. ALTERNATIVE RECOMMENDATION(S)
The Council could decide to deny the request of a new veterinary license.
However, the Public Safety Department has not found any basis for a denial.
V. ATTACHMENTS
N/A
VI. PRINCIPAL PARTIES EXPECTED AT MEETING
Ralph Weichselbaum
•
AGENDA SECTION: Consent
AGENDA ITEM # 3A
REPORT # 213
J STAFF REPORT
CITY COUNCIL MEETING
0
AUGUST 289 2000
REPORT PREPARED BY: BETSY CHRISTENSEN, ADMINISTRATIVE
SUPPORT SERVICES MANAGER
NAME, TITLE
REPORT PRESENTER: DAN SCOTT, DIRECTOR OF PUBLIC SAFETY
NAME, TITLE
DEPARTMENT DIRECTOR REVIEW:
REVIEWED BY CITY MANAGER:
Q'04
§IGNATURE
EITEM FOR COUNCIL CONSIDERATION:
Consideration of a request for a new commercial kennel license for Animal Care Clinic,
East 66th Street.
1208
,A
I. RECOMMENDED ACTION:
By Motion: Approve a new commercial kennel license for Animal Care
Clinic, 1208 East 66th Street.
III. BACKGROUND
On July 12, 2000, Animal Care Clinic submitted an application for a new commercial
kennel license. The application is complete and the $150.00 fee has been received.
Animal Care Clinic was previously located at 6521 Cedar Avenue South, but
because of redevelopment, is moving to a new location at 1208 East 66th Street.
The Public Safety Department has received no complaints during the past year for
Animal Care Clinic.
0828ANIM
III. BASIS OF RECOMMENDATION
A. POLICY 1
• The applicant has complied with the City codes pertaining to a
commercial kennel license.
• The applicant was previously licensed at another location. It was
necessary to reapply due to relocation.
I B. CRITICAL ISSUES
• N/A
C. FINANCIAL j
• N/A
D. LEGAL 1
• N/A
IV. ALTERNATIVE RECOMMENDATION(S) i
• The Council could decide to deny the request for a new commercial kennel
license for Animal Clinic. However, the Public Safety Department has not
found any basis for a denial.
P V. ATTACHMENTS .
1
• None
VI. PRINCIPAL PARTIES EXPECTED AT MEETING I
0 None