11-25-96 agenda•
CITY OF RICHFIELD, MINNESOTA
MONDAY, NOVEMBER 26, 1996
REGULAR CITY COUNCIL MEETING
7:00 P.M.
COUNCIL CHAMBERS
AGENDA
INTRODUCTORY PROCEEDINGS
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL
APPROVAL OF MINUTES OF THE (1) SPECIAL CITY COUNCIL MEETING OF
NOVEMBER 7,1996; (2) REGULAR CITY COUNCIL MEETING OF NOVEMBER 12,
1996; AND (3) SPECIAL CITY COUNCIL MEETING OF NOVEMBER 13, 1996
PRESENTATION
OPPORTUNITY FOR CITIZENS TO ADDRESS THE COUNCIL ON ITEMS NOT
ON THE AGENDA
AGENDA APPROVAL
2. COUNCIL APPROVAL OF AGENDA
CONSENT CALENDAR
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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 SETTING PUBLIC HEARING DATE
OF DECEMBER 9, 1996 FOR RENEWAL OF PAWNBROKER AND
SECONDHAND GOODS LICENSES FOR THE GUN SHOP AND
PAWNBROKER AND PLAZA PAWN C.L. 337
• B. CONSIDERATION OF APPROVAL OF SETTING PUBLIC HEARING DATE
OF DECEMBER 9, 1996 FOR RENEWAL OF ON-SALE LIQUOR
LICENSES FOR CHI CHI'S MEXICAN RESTAURANTE, THE GROUND
ROUND, KHAN'S MONGOLIAN BARBECUE, AMERICAN LEGION POST
NO. 435, VFW POST NO. 5555, DON PABLO'S AND CHAMPPS OF
RICHFIELD C.L. 338
C. CONSIDERATION OF APPROVAL OF SETTING PUBLIC HEARING DATE
OF DECEMBER 9, 1996 FOR RENEWAL OF WINE LICENSES FOR
MILLER'S FIRESIDE PIZZA, SILVER SPOON RESTAURANT, RED
PEPPER CHINESE RESTAURANT AND THE FRENCHMAN'S C.L. 339
D. CONSIDERATION OF APPROVAL OF SETTING PUBLIC HEARING DATE
OF DECEMBER 9, 1996 FOR NEW ON-SALE WINE AND NOW
INTOXICATING MALT LIQUOR LICENSE FOR THOMPSONS FIRESIDE
PIZZA, 6736 PENN AVENUE C.L. 340
E. CONSIDERATION OF APPROVAL OF SETTING PUBLIC HEARING DATE
OF DECEMBER 9, 1996 FOR NEW ON-SALE NON-INTOXICATING MALT
LIQUOR LICENSE FOR LAN'S VIETNAMESE RESTAURANT, 7545
LYNDALE AVENUE C.L. 341
F. CONSIDERATION OF APPROVAL OF AWARD OF TWO-YEAR
CONTRACT TO FEED-RITE CONTROLS, INC. FOR APPROXIMATELY
400 TONS OF SODA ASH FOR WATER TREATMENT FOR TOTAL
G. AMOUNT OF $71,476 C.L. 342
CONSIDERATION OF APPROVAL OF AWARD OF TWO-YEAR
CONTRACT TO CUTLER-MAGNER COMPANY FOR 2,800 TONS OF
QUICK LIME FOR WATER TREATMENT FOR TOTAL AMOUNT OF
$177,604 C.L. 343
PUBLIC HEARINGS
4. PUBLIC HEARING AND CONSIDERATION OF APPEAL TO BOARD OF
ADJUSTMENT AND APPEALS REGARDING VARIANCE DENIED BY HEARING
EXAMINER FOR CONSTRUCTION OF DECK AT 7015 PENN AVENUE
COUNCIL LETTER NO. 344
5. PUBLIC HEARING AND CONSIDERATION OF RESOLUTION REGARDING
APPROVAL OF MODIFICATION TO RICHFIELD REDISCOVERED PROJECT
AREA REDEVELOPMENT PLAN AND APPROVAL OF MODIFICATIONS TO
LHN AND ILN TAX INCREMENT FINANCING PLANS
COUNCIL LETTER NO. 345
6. PUBLIC HEARING AND SECOND READING OF ORDINANCE REGULATING
GRANTING OF FRANCHISES TO OPERATE AND MAINTAIN CABLE SYSTEM
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IN RICHFIELD; AND CONSIDERATION OF RESOLUTION APPROVING
SUMMARY PUBLICATION
COUNCIL LETTER NO. 346
7. PUBLIC HEARING AND SECOND READING OF AMENDMENT TO APPENDIX
E OF CITY CODE RELATING TO CABLE FRANCHISE AGREEMENT
ORDINANCE; AND CONSIDERATION OF RESOLUTION APPROVING
SUMMARY PUBLICATION
COUNCIL LETTER NO. 347
ADMINISTRATIVE REPORTS AND OTHER BUSINESS
8. CONSIDERATION OF BID RECEIVED FOR WALK-IN COOLER AND
APPURTENANT WORK FOR SHOPS AT LYNDALE WINE AND SPIRITS, 7700
LYNDALE AVENUE
COUNCIL LETTER NO. 348
9. CONSIDERATION OF CONDUCTING CITY COUNCIL MEETING ON
DECEMBER 23, 1996
COUNCIL LETTER NO. 349
AIRPORT BUSINESS
10. AIRPORT STATUS REPORT
CORRESPONDENCE
11. LEGISLATIVE REPORT
COUNCIL CHOICE
12. COUNCIL DISCUSSION ITEMS
13. CLAIMS AND PAYROLLS
14. ADJOURNMENT
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 861-9702.
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CITY OF RICHFIELD, MINNESOTA
Council Letter No. 349
Agenda November 25, 1996
Issue Statement:
Council consideration regarding conducting a City Council meeting on December 23,
1996.
Background:
The City Council regularly meets the second and fourth Monday evening of each
month. However, items for the December 23 Council meeting can be carried over to
January 1997. It is suggested that the regular Council meeting scheduled for
December 23, 1996 be canceled.
Recommended Motion:
Cancel the City Council meeting scheduled for December 23, 1996.
Basis of Recommendation:
1. The City Council business can be carried over to January 1997.
2. The regular Council meeting in December is the fourth Monday which is prior to
the Christmas Eve (Tuesday) and Christmas Day (Wednesday) holidays.
Alternative Recommendation:
1. Do not cancel the December 23 City Council meeting.
2. Reschedule the Council meeting.
Discussion/Decision Mode:
This item has been placed on the November 25, 1996 City Council agenda so proper
notification can be made if the December 23 meeting is canceled or rescheduled.
Respectfully submitted,
Jam Prosser
City anager
JDP:cak
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CITY OF RICHFIELD, MINNESOTA v
Council Letter No. 348
Agenda November 25, 1996
Issue Statement:
Consideration of bid received for walk-in cooler and appurtenant work for the Shops at
Lyndale Wine and Spirits, 7700 Lyndale Avenue.
Background:
Invitations to bid were advertised and six refrigeration vendors were invited to submit
bids for a walk-in refrigeration unit and related work at The Shops at Lyndale Wine and
Spirits, 7700 Lyndale Avenue, on October 30, 1996.
A public bid opening was held on November 13, 1996 with only the following bid
submitted:
AA Equipment Company $70,300
Minneapolis, MN
The original budget estimate for a walk-in refrigeration unit and related work was
$35,000 at the time of store planning. Some additional features were recommended by
the Bloomington Health Department and added to the specifications.
Recommended Motion:
Staff is recommending that the City Council reject the AA Equipment Company bid and
direct staff to modify the specifications to bring bids closer to the original budget
estimate.
Basis of Recommendation:
1. Modifications can be made to lower cost and still not affect performance or
, aesthetics.
2. Only one vendor submitted a bid.
Alternative Recommendation:
Council could accept the only bid submitted.
Discussion/Decision Mode:
This item is scheduled for action at the November 25, 1996 Council meeting.
Respectfully submitted,
James D. Prosser
city manager
JDP:cak
CITY OF RICHFIELD, MINNESOTA
Bid Opening
November 13, 1996
10:00 a.m.
Walk-in Cooler and Appurtenant Work
The Shops at Lyndale Wine & Spirits
City Project No. 701-1570
Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative Staff
was called by Thomas P. Ferber, City Clerk, who announced that the purpose of the
meeting was to receive, open and read aloud, bids for walk-in cooler and appurtenant
work, City Project No. 701-1570, as advertised in the official newspaper on October 30,
1996.
Present: William Fillmore, Liquor Operations Director
Thomas Ferber, City Clerk
Cheryl Krumholz, City Manager Representative
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The following bids were submitted and read aloud:
Vendor Bond Total
AA Equipment Company
Minneapolis, MN Cashier's Check $ 70,300.00
The City Clerk announced that the bids would be tabulated and considered at the
November 25, 1996 City Council Meeting.
Thomas P. Ferber City Clerk
City Project #701-1570 November 25, 1996
Code# 4844
Shops at Lyndale Wines S Spirits
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Construction Budget/Actual Comp arison
Bid Package Description Budget Est. Actual Deviation
1 Bar Joist/Deck $ 15,817 $ 12,200 $ (3,617)
RFP 1 Concrete Precast 20,020 17, 240.. (2,780)
2 Concrete Footing /Slab 46,426
3 Masonry 106,897 261,000 107,677 tomb. #3 8 #4
4 Misc. Steel 41,730 42,000 270
5 Steel Erection 12,500 16,178 3,678
6 Curb. /Paving 42,899 65,248 22,349
7 Plumbing 19,965 26,100 6,135
8 H VAC 30,024 43,600 13,576
9 Fire Protection 13,200 17,654 4,454
10 Electric 39,600 54,300 14,700
11 Doors, Hardware 6,650 3,990 (2,660)
12 Single ~Ply Roofing 14,566 17,250 2,684
13 Window, Aluminum 32,593 33,500 907
14 Rough Carpentry 19,723 27,500 7,777
15 Metal Roofing 15,288 19,688 4,400
16 Drywall, Light Framing 34,439 28,295 (6,144)
17 EIFS 8 Sealants 28,836 18,560 (10,276)
18 Painting and Relating Wk . 10,070 '91321 ( 749)
19 Carpet/Vinyl Tile 7,425 5,892 (1,533)
20 Hard Tile 4,667 4,820 153
21 1 rrigation 4,000 - Out -
- Dock Leveler 5,300 2,908 (2,392)
- Overhead Door 1,500 1,275 ( 225)
$ 574,135 $ 728,519 $ 154,384
C. M. Fee 29,000 29,000
General Conditions 49,292 49,292
Special Conditions 10,787 10,787
Winter Applications 7,250 7,250
$ 663,214 $ 824,848 $ 161,634
Architect Fee 30,000 30,000
Architect Site Inspection 15,000 15,000
Refrigeration 35,000
Shelving 10,000
Checkout (point of sale) 8,000
Signage 7,000
Communications 3,500
Alarm (fire, intrusion) 2,500
Surveillance Equipment 5,000
Point of Sale Register 8,000
Misc office equipment 2,000
$ 789,214 869,848 $ 161,634
Land Aquisition 226,018
11095,956 $ 161,634
is
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CITY OF RICHFIELD, MINNESOTA
Council Letter No-34-7
Agenda November 25, 1996
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Issue Statement:
Public hearing and second reading consideration of an amendment to Appendix E of
the City Code relating to Cable Franchise Agreement Ordinance and resolution
approving summary publication.
Background:
The Cable Franchise Agreement Ordinance is the second part of the cable issues for
consideration at the November 25 Council meeting. The City Council has just
considered first reading of a regulatory ordinance that re-established the City's authority
governing any cable operator within the community. The franchise agreement
ordinance is an agreement entered into by the City of Richfield and KBL Cable Systems
of the Southwest Inc. a wholly owned subsidiary of Time Warner Inc. doing business as
Paragon Cable.
The City of Richfield, as one of the member cities of the Southwest Suburban Cable
Commission (SWSCC), is joined with the cities of Eden Prairie, Edina, Hopkins and
Minnetonka in securing a cable franchise agreement for a franchise to provide cable
television services through the Southwest Suburban Cable Commission area. The
SWSCC has reviewed and approved the franchise ordinance and has voted to approve
it and recommend it to each of the member cities. Each member city must take
independent action to consider and ratify the ordinance with Paragon Cable.
City staff, along with representatives of the cable company and legal representative of
the SWSCC, have appeared before the City Council during one of two Study Sessions
held in June and August 1996, to informally discuss progress in the negotiations for a
new franchise ordinance. The final terms of the Franchise Agreement Ordinance are
substantially the same as those previously discussed during the August Study Session.
In summary, the following are the major issues that are included in the new ordinance:
The new ordinance would provide for an upgraded cable system from the present
configuration to a 750 megahertz system. It would include increasing channel
capacity from 58 to 79 and significantly improve picture quality.
2. The City of Richfield would continue to receive 5% franchise fees However, the
franchise fees would be subject to level playing field language which sets forth a
mechanism by which Paragon may reduce franchise payments to the member cities
down to a floor of 2% providing that certain competitive conditions occur within the
cable franchise area.
3. With respect to public access Paragon may consolidate its current three studios into
one studio which would provide for an area for audience participation, additional
editing suites and additional hours of operation during weekends and week nights.
10
A second part of the public access provisions would require Paragon to provide a
total of $200,128 for public, educational and government (PEG) access for the first
year of the franchise agreement. Paragon must maintain that same level of PEG
service in the future as is provided by the $200,000 contribution in 1997.
4. The cable company would continue to provide a connection and basic service to
public schools and public buildings and to private schools under specified
conditions.
5. The ordinance, in effect, replaces Appendix E of the City Code by repealing the
current language.
The new proposed franchise ordinance is a reflection of the current environment within
which providers of wired cable services do business. The competition for providing
cable services to citizens of Richfield whether through wired equipment or satellite
based equipment is far different from that of the original franchise ordinance in
approximately 1980. The cable television system currently in place within Richfield
does not have the channel capacity necessary to be competitive with some of the
newer cable providers and does not afford all of the channel selection which citizens
have indicated they would like to receive. The upgrading of the system to a 750
megahertz system using the extra channel capacity will provide a much broader
selection of cable channels to Richfield customers than is now possible with the existing
system. In addition, the recognition of a balance between the City's right to require
PEG funding and franchise fees in the competitive environment within which the
Paragon Cable system must operate is contained in the proposed ordinance.
The first reading of this ordinance was approved on October 28, 1996. Notices were
provided for the public hearing on November 25, 1996.
Also included in the materials for consideration is a resolution which would authorize a
summary publication of the amendment to Appendix E of the City Code (Franchise
Ordinance.)
Representatives of Paragon Cable and legal representatives of the SWSCC will be
present at the meeting to address any questions or concerns regarding this franchise
agreement ordinance.
Recommended Motion:
Conduct a public hearing and second reading of the Cable Television Franchise
Agreement Ordinance between the City of Richfield and KBL Cable Systems of the
Southwest Inc. and approve a resolution authorizing summary publication.
Basis of Recommendation:
1. The representatives of the five member cities of the SWSCC and Paragon Cable
have conducted extensive negotiations to fashion a franchise agreement which
would provide incentive for Paragon Cable to upgrade its system to 750
?_ D-
megahertz while at the same time insuring that the cities preserve their cable
franchising rights. This agreement is a result of those negotiations.
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2. The agreement has been reviewed by legal council of the SWSCC, has been
passed by the Southwest Cable Commission, and was recommended for approval
by each of the member cities.
3. The franchise ordinance under consideration, provides for an early renewal to the
current franchise which would have expired at the end of 1999. Passing this
ordinance at this time allows the cable franchise operator some certainty with
respect to their future operations and obligations and a basis for investing the
significant funds necessary to upgrade the current system to a state-of-the-art 750
megahertz system.
4. The resolution approving summary publication would save the City the expense of
a very costly legal publication while providing all essential information.
Alternative Recommendation:
1. The City of Richfield could decide not to approve the proposed franchise
ordinance in its current form and seek changes through further negotiations
between the City of Richfield and Paragon Cable.
2. The City of Richfield could reject the proposed franchise ordinance and at the
same time reject the concept of the early franchise renewal and instead wait until
the expiration of the current ordinance at the end of 1999. However, it is staff's
opinion that waiting until the end of 1999 will not put the City in a more competitive
position with respect to seeking better terms or conditions of the franchise
ordinance.
Discussion/Decision Mode:
This item is being considered for second reading on November 25, 1996 so that
consideration of this item may be accomplished during the month of November. It is the
desire of both the SWSCC and Paragon Cable that the franchise renewal be completed
by the end of November so that the company may take steps to begin upgrading the
current system.
Respectfully submitted,
James D. Prosser
City Manager
JDP:cak
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so BILL NO.
AN ORDINANCE AMENDING APPENDIX E OF THE RICHFIELD
CITY CODE BY REPEALING SECTION E2, THE CABLE
COMMUNICATIONS FRANCHISE ORDINANCE, AND
SUBSTITUTING THEREFORE A CABLE TELEVISION FRANCHISE
AGREEMENT ORDINANCE BETWEEN THE CITY OF RICHFIELD
AND KBL CABLE SYSTEMS OF THE SOUTHWEST, INC.
THE CITY OF RICHFIELD DOES ORDAIN:
Section 1. Appendix E of the Richfield City Code is amended by repealing
Section E2, entitled "Minnesota Cablesytems-Southwest" and by substituting therefore
the Cable Television Franchise Agreement Ordinance by and between the City of
Richfield and KBL Cable Systems of the Southwest, Inc., a copy of which is attached
hereto and is incorporated herein as though fully set forth at this point.
Sec. 2 The effective date of this ordinance shall be the date specified in Section
13.2.E of the attached Cable Television Franchise Agreement Ordinance, except that
this ordinance shall be null and void if it has not become effective by 11:59 p.m. on
January 1, 1997.
L?
Martin J. Kirsch Mayor
ATTEST:
Thomas P. Ferber City Clerk
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Cable Television
Franchise Agreement Ordinance
CITY
MINNESOTA
Prepared by:
Adrian E. Herbst, Esq.
Theresa M. Harris, Esq.
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402
Telephone: (612) 347-7000
Fax: (612) 347-7077
With the assistance of:
The Southwest Suburban
Cable Commission
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TABLE OF CONTENTS
0 Page
SECTION 1. RENEWAL OF GRANT OF FRANCHISE ................... 2
SECTION 2. SHORT TITLE ................................... 2
SECTION 3. DEFINITIONS ..................................... 2
SECTION 4. EFFECTIVE DATE AND TERM OF RENEWAL .............. 2
SECTION 5. WRITTEN NOTICE ................................. 2
SECTION 6. DESIGN PROVISIONS ............................... 3
6.1 System Des=* ..................................... 3
6.2 Cable Nodes System Connect ............................ 3
6.3 Service to the Schools and Government Buildings ................ 3
6.4 Parental Control Lock ................................ 4
6.5 Standby Power ..................................... 4
6.6 Periodic Review Provisions ............................. 4
SECTION 7. PUBLIC, EDUCATIONAL AND GOVERNMENTAL ACCESS
PROGRAMMING ................................... 5
7.1 Access Channels .................................... 5
7.2 Studio/Facilities .................................... 6
7.3 Funding for PEG Access ............................... 7
7.4 Regional Channel Six ................................. 7
7.5 Override of the Government Access Channel .................. 7
SECTION 8. PERIODIC CUSTOMER SURVEYS ....................... 8
SECTION 9. LINE EXTENSION POLICY ............................ 8
SECTION 10. GENERAL FINANCIAL AND INSURANCE PROVISIONS ....... 9
10.1 Payment to City .................................... 9
10.2 Bonds .......................................... 9
10-.3 Security Fund ..................................... 10
SECTION 11. SOCIAL CONTRACT ............................... 13
SECTION 12. COMPETITION ADJUSTMENT ......................... 13
588638
Franchise Agreement Ordinance
October 16, 1996 - Page i
SECTION 13. ACCEPTANCE ................................... 17
13.1 Other Franchises .................................... 17
13.2 Time of Acceptance: Incorporation of
Offering: Exhibits . .................................. 18
EXHIBITS
Exhibit A - Franchise Fee Payment Worksheet .......................... 20
Exhibit B - Time Warner Social Contract ............................. 21
Exhibit C - Paragon Cable Initial Programming ......................... 22
588638
Franchise Agreement Ordinance
October 16, 1996 - Page ii
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FRANCHISE AGREEMENT ORDINANCE
This Agreement, made and entered into this day of , 19_, by
and between the City of , a municipal corporation of the State
of Minnesota, and KBL Cable Systems of the Southwest Inc., a wholly-owned subsidiary of
Time Warner Inc.
WITNESSETH
WHEREAS, KBL Cable Systems of the Southwest Inc. has operated a Cable System in
the City of , pursuant to Ordinance No. , also known as the
Cable Communications Ordinance, which expires on December 31, 1999; and
WHEREAS, KBL Cable Systems of the Southwest Inc. has requested an early renewal
of its Franchise because KBL Cable Systems of the Southwest Inc. intends to rebuild its System
to a modern state of the art design as described herein and at substantial cost; and
WHEREAS, KBL Cable Systems of the Southwest Inc. and the City of
, based on City's understanding the rebuilt System will provide
40 considerable new service capabilities and economic benefit opportunities to its institutions,
residents and businesses, have agreed to enter into an early renewal of the Franchise; and
WHEREAS, the City of , will repeal Ordinance No.
also known as the Cable Communications Ordinance, including amendments and
agreements relating to it beginning with the effective date of this Agreement Ordinance, and
enact Ordinance No. , also known as the Cable Regulatory Ordinance, through which the
City is authorized to grant and renew one or more nonexclusive revocable Franchises to operate,
construct, maintain and reconstruct a Cable Television System within the City; and
WHEREAS, the City, reviewed the legal, technical and financial qualifications of KBL
Cable Systems of the Southwest Inc. and after a properly noticed public hearing, has determined
that it is in the best interest of the City and its residents to renew its Franchise with KBL Cable
Systems of the Southwest Inc..
NOW, THEREFORE, the City of (hereinafter also
known as the "City" or "Grantor") hereby grants to KBL Cable Systems of the Southwest Inc.
(hereinafter the "Grantee") renewal of its cable television Franchise in accordance with the
provisions of Ordinance No. and this Agreement.
588638
Franchise Agreement Ordinance
October 16, 1996 - Page I
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SECTION 1. _RENEWAL OF GRANT OF FRANCHISE
The cable television Franchise granted through Ordinance Number on the day IM"W
of , 19 and now held by Grantee is renewed. Ordinance Number
that granted the original franchise is repealed and replaced by the Cable Television Franchise
Ordinance, Ordinance Number and this Franchise Agreement Ordinance. This
Franchise shall be subject to the terms and conditions of this Franchise Agreement Ordinance
and shall be subordinate to the Cable Television Franchise Ordinance and all applicable federal,
state and local law.
SECTION 2. SHORT TITLE
This Agreement shall be known and cited as the "City of Cable
Television Franchise Agreement Ordinance. " Within this document it shall also be referred to
as "this Franchise" or "the Franchise."
SECTION 3. DEFINITIONS
The definitions contained in Ordinance Number of the City of
are incorporated herein by reference and adopted as fully as if
set out verbatim.
SECTION 4. EFFECTIVE DATE AND TERM OF RENEWAL
This Franchise shall commence on the effective date described in Section 13 and shall expire 15 •
years thereafter.
SECTION 5. WRITTEN NOTICE
All notices., reports or demands required to be given in writing under this Franchise shall be
deemed to be given when delivered personally to any officer of Grantee or City's Manager of
this Franchise or 48 hours after it is deposited in the United States mail in a sealed envelope,
with registered or certified mail postage prepaid thereon, addressed to the party to which notice
is being given, as follows:
If to City:
If to Grantee:
Such addresses may be changed by either party upon notice to the other party given as provided
in this section.
588638
Franchise Agreement Ordinance
October 16, 1996 - Page 2
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SECTION 6. DESIGN PROVISIONS.
40 6.1 System Design.
Grantee agrees to upgrade its System to a capacity of 750 MHz which is the
equivalent of 112 6 MHz analog video channels. However, Grantee will initially
use the 54 MHz-550 MHz section of the System to deliver analog signals and
reserve the 550 MHz to 750 MHz section for future applications. Stated in terms
of 6 MHz analog channels the 54 MHz to 550 MHz of the System has capacity
for 79 channels. The upgraded System shall have the technical capacity for non-
voice return communications which means the provision of appropriate system
design techniques with the installation of cable and amplifiers suitable for the
subsequent insertion of necessary non-voice communications electronic modules.
Such upgrade shall be completed and in use by December 31, 1999.
6.2 Cable Nodes System Connect.
Grantee will locate its "nodes" near schools where possible, without in Grantee's
opinion, comprising the engineering design of the System. The City will provide
maps showing the location of the schools.
6.3 Service to the Schools and Government Buildings.
A. Service to Pubic Schools and Public Buildings
1. The Grantee shall continue to provide one outlet of Basic Service,
the Cable Programming Service Tier and one Converter, if needed,
to those facilities presently served. Service to public schools and
municipally owned buildings constructed or occupied after the
effective date of this Franchise shall be similarly provided subject
to the building being located within 200 feet of the Grantee's then
existing System.
2. If facility is over 200 feet from Grantee's then existing System, the
school or municipality shall be responsible for all equipment,
construction costs and additional wiring beyond the first 200 feet
that are the Grantee's responsibility.
3. All internal wiring cost beyond the one outlet that Grantee agrees
to provide shall be the responsibility of the school or municipality.
4. The financial responsibility for any additional Converters desired
by the school or municipality shall be their responsibility.
588638
Franchise Agreement Ordinance
October 16, 1996 - Page 3
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B. Service to Private Schools
Grantee shall provide Installation to private schools within 200 feet of
plant. A private school is defined as any private secondary school that
receives funding pursuant to Title 1 of the Elementary and Secondary
Education Act of 1965. Installation and Cable Service shall be provided
for free to such private schools through the year 2000.
6.4 Parental Control Lock.
Grantee shall provide, for sale or lease, to Subscribers, upon request, a parental
control locking device.
6.5 Standby Power.
Grantee shall continue to provide standby power throughout the System now and
as rebuilt capable of providing at least three hours of emergency supply.
6.6 Periodic Review Provisions.
The City may request a State-of-the-Art review at any time between the sixth year
anniversary and the twelfth year anniversary of the granting of this Franchise.
In conducting a State-of-the-Art review, the City shall undertake the following
process:
A. The City and the Grantee shall undertake a review of the then existing
Cable System. This review shall, at a minimum, take into account the
following:
1. Characteristics of the existing System;
B.
C
588638
Franchise Agreement Ordinance
October 16, 1996 - Page 4
2. The State-of-the-Art;
3. Additional benefits provided to customers by the State-of-the-Art;
4. The market place demand for the State-of-the-Art; and
5. The financial feasibility of the State-of-the-Art taking into account
associated rate increases, and the premature retirement of assets..
The City shall hold at least two public hearings to enable the general
public and Grantee to comment and to present evidence.
For the purposes of this Section the term "State-of-the-Art" shall mean
equipment or facilities that:
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Are readily available with reasonable delivery schedules from two
or more sources of supply;
2. Have the capability to perform the intended functions demonstrated
within communities with similar characteristic (including, but not
necessarily limited to, population, density, Subscriber penetration,
etc.) under actual operating conditions for purposes other than tests
or experimentation; and
3. Are technically and economically feasible to implement. The term
"State-of-the-Art" shall not include equipment or facilities
associated with or dedicated to the general public, educational or
governmental access or telecommunication services.
D. Notwithstanding anything to the contrary, the City may not undertake a
State-of-the-Art review at any time the Grantee is deemed subject to
effective competition pursuant to then applicable state or federal law.
E. As a result of any review based on this Section, City and Grantee may
enter into good faith negotiations to amend this Franchise as agreed upon.
SECTION 7. PUBLIC EDUCATIONAL AND GOVERNMENTAL ACCESS
PROGRAMNffNG.
7.1 Access Channels.
A. Grantee shall provide four public, educational and government (PEG)
Access Channels (the "Access Channels"). One channel shall be dedicated
to public access, one channel shall be dedicated to governmental access,
and two channels shall be dedicated to educational access.
B. Grantee shall provide to each of its Subscribers who receive all or any
part of the total services offered on the System, reception of each public,
educational and governmental Access Channel.
C. Grantee shall provide at least one specially designated access channel
available for lease on a first come, nondiscriminatory basis by commercial
and noncommercial users. This Section is not applicable to Subscribers
receiving only alarm system services or only data transmission services for
computer operated functions. The VHF spectrum shall be used for at
least one of the specially designated noncommercial public Access
Channels required.
•
D. Whenever any of the Access Channels are in use during 80 percent of the
weekdays (Monday-Friday), for 80 percent of the time during any
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consecutive three hour period for six weeks running, and there is demand
for use of an additional channel for the same purpose, Grantee shall then
have six months in which to provide a new specially designated access
charnel for the same purpose at no additional cost to Subscribers.
E. Grantee must establish rules and regulations for the public, educational
and leased Access Channels. The rules and regulations established by the
Grantee are subject to approval by the City.
F. Subscribers receiving programs on one or more special service channels
without also receiving the regular Subscriber services may receive only
one specially designated composite Access Channel composed of the
programming on Access Channels. Subscribers receiving only alarm
system services or only data transmission services for computer operated
functions shall not be included in this requirement.
7.2 Studio/Facilities.
A. Subject to a transition plan that shall be filed with the City before the City
executes this Agreement and that shall be updated annually until the
transition is complete, Grantee will provide one large facility containing
one studio with the current square footage of 1440 square feet in the Eden
Prairie studio for public, educational and governmental access production
which will be located in Eden Prairie. The studio will have the capacity
for audience participation. The facility will include two separate editing
suites, storage space and the entire studio facility will be wheelchair
accessible. The facility shall meet the current hours of Monday through
Friday 10:00 a.m. to 6:00 p.m. and by appointment on evenings and
weekends. The facility shall also add regular weekend hours and some
regular week night hours.
B. Grantee shall make readily available for public use at least minimal
equipment necessary for the production of programming and playback of
prerecorded programs for the: specially designated noncommercial public
Access Channel. The Grantee shall also make readily available upon need
being shown, the minimum equipment necessary to make it possible to
record programs at remote locations with battery operated portable
equipment.
C. No charges shall be made for channel time or playback of prerecorded
programming on the specially designated noncommercial public Access
Channel. Grantee can include any costs associated with production and
playback for the noncommercial public Access Channel in the total sum
allocated for public, educational and governmental access programming
as stated in Section 7.3. Additionally, at the City's request, Grantee will
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work with the City to institute a nominal membership fee for users of the
PEG access facility.
D. Need within the meaning of this section shall be determined in the sole
discretion of City or by Subscriber petition. Said petition must contain the
signatures of at least 10 percent of the Subscribers of System, but in no
case more than 500 nor fewer than 100 signatures.
7.3 Funding for PEG Access.
•
In the first year after the effective date of this Franchise, Grantee shall provide
no less than $200,128 annually for PEG access operating expenses collectively
for the cities of Edina, Eden Prairie, Hopkins, Minnetonka, and Richfield. After
the first year of the Franchise, Grantee shall provide sufficient financial and in-
kind support to maintain a substantially equivalent level of services, facilities and
equipment in the remaining years of the Franchise Agreement Ordinance
comparable to the services, facilities and equipment provided in the first year of
the Franchise. These expenses will be itemized on customers' bills. This amount
will provide the following services: (a) labor costs; (b) educational consultant;
(c) facilities and utilities; (d) access expenses; (e) educational expenses;
(f) equipment maintenance; (g) technical support; and (h) replay expenses. This
funding shall not be deducted from the Franchise Fee within the meaning of this
Agreement. Grantee shall not calculate a Franchise Fee upon funds itemized on
the customers' bills for public, educational or governmental access production and
programming.
7.4 Regional Channel Six.
Under Minnesota Cable Communications Act, standard VHF Channel six has
been designated for usage as the regional channel. Also known as Metro Cable
Network, this independent, non-commercial, non-profit channel shall be made
available without charge. This provision shall remain in effect as long as a
regional channel is required by the State of Minnesota.
7.5 Override of the Government Access Channel.
Grantee agrees to provide the capability such that the City, from its City Hall,
can switch its government Access Channel in the following ways:
A.
B.
C
Insert live Council meetings from City Hall;
Replay government access programming from City Hall;
Transmit character generated programming;
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D. Schedule for Grantee to replay City-provided tapes in pre-arranged time
slot on the government Access Channel; and
E. Switch to C-SPAN 2 or other comparable programming provided by
Grantee at any time when not carrying live or taped government access
programming.
SECTION 8. PERIODIC CUSTOMER SURVEYS
8.1 The Grantee shall upon request of the City and at times mutually agreed upon by
the parties, but no more frequent than once every three years conduct a random
survey of a representative sample of Subscribers. Each questionnaire shall be
prepared and conducted in good faith so as to provide reasonably reliable measure
of customer satisfaction with: (1) audio and signal quality; (2) response to
customer complaints; (3) billing practices; (4) programming; and (5) Installation
practices;
8.2 The survey shall be conducted in conformity with standard research procedures
including the use of telephone survey conducted by an independent person in the
business of regularly conducting such surveys. The survey shall consist of a
sample size of 300 customers or such other sample size as to yield a margin of
error of plus or minus six percent or less of the total customer base.
8.3 The Grantee shall report the results of the survey and any steps the Grantee may is
be taking in response to the survey within 60 days of the completion of the
survey.
8.4 Notwithstanding anything to the contrary, the Grantee shall be under no obligation
to conduct a survey at any time the Grantee is deemed subject to effective
competition under then applicable state or federal law.
SECTION 9. LINE EXTENSION POLICY.
9.1 The Grantee shall within 12 months of receiving a request, extend the System to
any residences within the City served by City water and sewer facilities.
9.2 The City recognizes that in some instances the Grantee needs the permission of
private property owners to extend service to others who may be interested in
service and agrees that should the Grantee be unable to obtain these needed
permissions under terms reasonable to the Grantee and the property owners from
whom permission is required that the Grantee shall be under no obligation to
extend service.
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SECTION 10. GENERAL FINANCIAL AND INSURANCE PROVISIONS.
10.1 Payment to City.
A. Grantee shall pay to the City a Franchise Fee in an amount equal to five
percent (5 %) of its annual Gross Revenues.
B. The foregoing payment shall be compensation for use of Streets.
C. Payments due the City under this provision shall be computed at the end
of each calendar quarter. Payments shall be due and payable for each
quarter not later than 60 days from the last day of the quarter. Each
payment shall be accompanied by a brief report showing the basis for the
computation. At the end of each calendar year, Grantee shall complete
a Franchise Fee Payment Worksheet attached hereto as Exhibit A.
Grantee shall file a completed Franchise Fee Payment Worksheet no later
than 60 days after the last day of the calendar year.
D. No acceptance of any payment shall be construed as an accord that, the
amount paid is in fact the correct amount, nor shall such acceptance of
payment be construed as a release of any claim the City may have for
further or additional sums payable under the provisions of this Franchise.
All amounts paid shall be subject to audit and recomputation by the City.
rI
E. In the event any payment is not made on the due date, interest on the
amount due shall accrue from such date at the annual rate of 12 %.
10.2 Bonds.
A. At the commencement of this Franchise, and at all times thereafter until
Grantee has completed the System Upgrade in Section 6.1 of this
Franchise, Grantee shall maintain with City a bond in the sum of
$300,000.00 in such form and with such sureties as shall be acceptable to
City, conditioned upon the faithful performance by Grantee of this
Franchise and the acceptance hereof given by City and upon the further
condition that in the event Grantee shall fail to comply with any law,
ordinance or regulation, there shall be recoverable jointly and severally
from the principal and surety of the bond, any damages or losses suffered
by City as a result, including the full amount of any compensation,
indemnification or cost of removal of any property of Grantee, including
a reasonable allowance for attorneys' fees and costs (with interest at two
percent in excess of the then prime rate), up to the full amount of the
bond, and which bond shall further guarantee payment by Grantee of all
claims and liens against City or any, public property, and taxes due to
City, which arise by reason of the construction, operation, maintenance
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or use of the System. Upon completion of the System Upgrade as
described in Section 6.1 of this Franchise, the City may reduce the bond
to the sum of $100,000.
B. The rights reserved by City with respect to the bond are in addition to all
other rights the City may have under this Franchise or any other law.
C. City may, in its. sole discretion, reduce the amount of the bond.
10.3 Securi , Fund.
A. In the event the Grantee is given notice of a non-compliance pursuant to
Section 34 of the Ordinance, the Grantee shall within ten (10) days thereof
deposit into a bank account, established by the City, and maintain on
deposit the sum of Twenty Thousand and 00/100 Dollars ($20,000.00) or
deliver to the City a letter of credit in the same amount as a common
Security Fund for the faithful performance by it of all the provisions of
this Franchise and compliance with all orders, permits and directions of
the City and the payment by Grantee of any claim, liens, costs, expenses
and taxes due the City which arise by reason of the construction, operation
or maintenance of the System. Interest on this deposit shall be paid to
Grantee by the bank on an annual basis. The security may be terminated
by the Grantee upon the Resolution of the alleged non-compliance.
B. Provision shall be made to permit the City to withdraw funds from the
Security Fund. Grantee shall not use the Security Fund for other purposes
and shall not assign, pledge or otherwise use this Security Fund as
security for any purpose.
C. Within ten (10) days after notice to it that any amount has been withdrawn
by the City from the Security Fund pursuant to (A) of this section,
Grantee shall deposit a sum of money sufficient to restore such Security
Fund to the required amount.
D. In addition to recovery of any monies owed by Grantee to City or
damages to City as a result of any acts or omissions by Grantee pursuant
to the Franchise, City in its sole discretion may charge to and collect from
the Security Fund the following penalties:
1. For failure to complete System construction in accordance with
Grantee's upgrade plan, unless City approves the delay, the
penalty shall be $200.00 per day for each day, or part thereof,
such failure occurs or continues.
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2. For failure to provide data, documents, reports or information or
to cooperate with City during an Application process or System
review, the penalty shall be $50.00 per day for each day, or part
thereof, such failure occurs or continues.
3. For failure to comply with any of the provisions of this Franchise
for which a penalty is not otherwise specifically provided pursuant
to this Paragraph C, ' the penalty shall be $50.00 per day for each
day, or part thereof, such failure occurs or continues.
4. For failure to test, analyze and report on the performance of the
System following a request by City, the penalty shall be $50.00
per -day for each day, or . part thereof, such failure occurs or
continues.
5. For failure by Grantee to provide additional services as negotiated
between City and Grantee at a periodic review session within 45
days after a request by City the penalty shall be $200.00 per day
for each day, or part thereof, such failure occurs or continues.
6. Forty-five days following notice from City of a failure of Grantee
to comply with construction, operation or maintenance standards,
the penalty shall be $200.00 per day for each day, or part thereof,
• such failure occurs or continues.
7. For failure to provide the services Grantee has proposed, including
but not limited to the implementation and the utilization of the
Access Channels and the making available for use of the
equipment and other facilities to City, the penalty shall be $100.00
per day for each day, or part thereof, such failure occurs or
continues.
8. Each violation of any provision of this Franchise shall be
considered a separate violation for which a separate penalty can be
imposed.
E. Exclusive of the contractual penalties set out above in this section, a
violation of any provision of this Franchise is a misdemeanor.
F. If Grantee fails to pay to the City any taxes due and unpaid; or fails to
repay to the City, any damages, costs or expenses which the City shall be
compelled to pay by reason of any act or default of the Grantee in
connection with this Franchise; or fails, after thirty (30) days notice of
such failure by the City to comply with any provision of the Franchise
which the City reasonably determines can be remedied by an expenditure
• 388638
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of the security, the City may then withdraw such funds from the Security
Fund. Payments are not Franchise Fees as defined in Section 29 of the
Ordinance.
G. Whenever the City finds that Grantee has allegedly violated one or more
terms, conditions or provisions of this Franchise, a written notice shall be
given to Grantee. The written notice shall describe in reasonable detail
the alleged violation so as to afford Grantee an opportunity to remedy the
violation. Grantee shall have 30 days subsequent to receipt of the notice
in which to correct the violation before the City may require Grantee to
make payment of penalties, and further to enforce payment of penalties
through the Security Fund.. Grantee may, within 10 days of receipt of
notice, notify the City that there is a dispute as to whether a violation or
failure has, in fact, occurred. Such notice by Grantee shall specify with
particularity the matters disputed by Grantee and shall stay the running of
the above-described time.
L City shall hear Grantee's dispute at the next regularly scheduled or
specially scheduled Council meeting. Grantee shall have the right
to subpoena and cross-examine witnesses. The City shall
determine if Grantee has committed a violation and shall make
written findings of fact relative to its determination. If a violation
is found, Grantee may petition for reconsideration. •
2. If after hearing the dispute, the claim is upheld by the City, then
Grantee shall have 30 days within which to remedy the violation
before the City may require payment of all penalties due it.
3. The time for Grantee to correct any alleged violation may be
extended by the City if the necessary action to correct the alleged
violation is of such a nature or character as to require more than
30 days within which to perform provided Grantee commences
corrective action within 15 days and thereafter uses reasonable
diligence, as determined by the City, to correct the violation.
H. If City draws upon the Security Fund delivered pursuant hereto, in whole
or in part, Grantee shall replace the same within three days and shall
deliver to City a like replacement Security Fund for the full amount stated
in Paragraph A of this section as a substitution of the previous Security
Fund.
I. If any Security Fund is not so replaced, City may draw on said Security
Fund for the whole amount thereof and hold the proceeds, without
interest, and use the proceeds to pay costs incurred by City in performing
and paying for any or all of the obligations, duties and responsibilities of •
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Grantee under this Franchise that are not performed or paid for by
Grantee pursuant hereto, including attorneys' fees incurred by the City in
so performing and paying. The failure to so replace any Security Fund
may also, at the option of City, be deemed a default by Grantee under this
Franchise. The drawing on the Security Fund by City, an use of the
money so obtained for payment or performance of the obligations, duties
and responsibilities of Grantee which are in default, shall not be a waiver
or release of such default.
J. The collection by City of any damages, monies or penalties from the
Security Fund shall not affect any other right or remedy available to City,
nor shall any act, or failure to act, by City pursuant to the Security Fund,
be deemed a waiver of any right of City pursuant to this Franchise or
otherwise.
SECTION 11. SOCIAL CONTRACT.
The Social Contract between Grantee and the Federal Communications Commission is attached
hereto as Exhibit B. It is expressly understood by the City and the Grantee that the Social
Contract is made a part hereof for informational purposes only. Inclusion of the Social Contract
by reference is not intended to nor shall it create any right of the City to enforce any provisions
of the Social Contract directly or indirectly under the terms of this Franchise. The parties
expressly acknowledge and understand that the Social Contract and the obligations contained
therein are enforceable exclusively by the FCC as more fully set forth in the Social Contract.
SECTION 12. COMPETITION ADJUSTMENT.
12.1 In consideration of Grantee's substantial investment estimated at $20 million
dollars to rebuild its System at an early date for the Cities of Eden Prairie, Edina,
Minnetonka, Hopkins and Richfield, MN, the City agrees to include the following
provisions.
12.2 Any additional or subsequent cable Franchise granted to cable or non-cable
companies who may compete with Grantee within the Franchise area will be
granted only on substantially similar terms and conditions as this Franchise and
shall not contain less burdensome nor more favorable terms than those imposed
on Grantee by this Franchise.
12.3 The City and Grantee agree that all Franchise provisions that Grantee is subject
to are effective against the Grantee only if such requirements are applied as well
to any and all wired competitors of the Grantee within the Franchise area. For
purposes of this subsection, a wired competitor is any video provider using
Streets and offering at least 12 channels of video programming at least one of
which is a broadcast signal, which uses wires, coaxial cables, optical fiber or
other similar technology and places or attaches such wires, cables or fibers on
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Streets or public utility facilities. This definition of wired competitor does not
include a Satellite Master Antenna Television system located wholly on private '
property within a building.
°12.4 Any Franchise provision or other regulation enforced by the City upon Grantee
which is not also imposed upon Grantee(s) wired competitors within the Franchise
area of the City, shall be void as to Grantee, subject to the following
requirements:
A. The existence of a wired competitor in the Franchise area of the City shall
not relieve Grantee of an obligation to provide an annual minimum
Franchise Fee of two percent of Gross Revenues. If the wired competitor
obtains a cable Franchise which requires it to pay a Franchise Fee or
substantially similar fee of an equivalent amount to the City, the State of
Minnesota or any other governmental entity which is less than five percent
of Gross Revenues, the City shall reduce Grantee's Franchise Fee to the
same level, but in no event less than two percent of Gross Revenues. If
the wired competitor does not obtain a cable Franchise, but it is required
to pay a Franchise Fee or substantially similar fee to the City, State of
Minnesota or any other governmental entity, then Grantee shall pay the
same fee, but in no event less than two percent of Gross Revenues. If the
wired competitor is not required to pay a Franchise Fee or similar fee to
the City or the State of Minnesota, then the two percent minimum
Franchise Fee shall apply to Grantee for all homes and customers who are
passed by the wired competitor's system. If at any time a wired
competitor with a cable Franchise pays a Franchise Fee of more than two
percent, or if a wired competitor without a Franchise Fee pays a
Franchise Fee or similar fee of more than two percent, Grantee shall pay
the same Franchise Fee. In no event shall Grantee be required to pay
more than a five percent Franchise Fee. If the wired competitor
discontinues providing multichannel video services, the Grantee's
Franchise Fee shall immediately return to its original level.
B. The existence of a wired competitor shall not relieve Grantee of an
obligation to provide at least one channel for public, educational and
governmental access programming. If the wired competitor obtains a
cable Franchise which requires it to provide less than four public,
educational and governmental Access Channels, the City shall, upon the
effective date of the subsequent Franchise, reduce Grantee's requirement
to the same number of channels, but in no event shall Grantee provide less
than one public, educational and governmental access channel. If the
wired competitor does not obtain a cable Franchise, but it is required to
provide less than four public, educational and governmental Access
Channels, or if the wired competitor is not required to provide any public,
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•
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educational or governmental Access Channels, then the City shall reduce
the number of Access Channels required of Grantee as follows:
(i) If the wired competitor passes less than 25% of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, Grantee shall provide at least four
public, educational and governmental Access Channels.
(ii) If the wired competitor passes 25 % or more but less than 50 % of
the homes and customers in the cities of Edina, Eden Prairie,
Hopkins, Minnetonka and Richfield, Grantee shall provide at least
three public, educational and governmental Access Channels.
(iii) If the wired competitor passes 50% or more of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, Grantee shall provide at least one
public, educational and governmental Access Channel.
If at any time, a wired competitor provides channels for public,
educational and governmental access which exceed the channels provided
by Grantee, Grantee shall provide the same number of channels as the
wired competitor. In no event shall Grantee be required to provide more
public, educational or governmental Access Channels than it has agreed
to in this Franchise Agreement Ordinance.
If the wired competitor discontinues providing multichannel video
services, the Grantee's requirement for the provision of public,
educational and governmental Access Channels shall immediately return
to its original level.
C. If a wired competitor obtains a cable Franchise which requires it to
provide less funding for equipment or facilities for public, educational and
governmental access or less facilities and equipment than Grantee, the
City shall reduce the Grantee's requirement for funding for public,
educational and governmental access and facilities and equipment to the
level of the wired competitor. If the wired competitor does not obtain a
cable Franchise, including open video providers in accordance with the
Telecommunications Act of 1996 and FCC rules, but it is required to
provide less funding for public, educational and governmental access or
less equipment or facilities than Grantee, or if the wired competitor is not
required to provide any funding for public, educational or governmental
access or equipment or facilities, then the City shall reduce the Grantee's
required funding as follows:
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7as
(i) If the wired competitor passes less than 25 % of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, Grantee shall continue to provide .the
same level of funding for public, educational and governmental
access facilities and equipment as indicated in this Ordinance.
(ii) If the wired competitor passes 25 % or more but less than 50 % of
the homes and customers in the cities of Edina, Eden Prairie,
Hopkins, Minnetonka and Richfield, the City shall reduce the
funding and, equipment and facilities requirements of the Grantee
by 30%.
(iii) If the wired competitor passes 50% or more of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, the City shall eliminate the funding
and, equipment and facilities requirements for public, educational
and governmental access funding.
It is not the intent of this section to reduce Grantee's funds, equipment
and facilities requirements regarding public, educational and governmental
access programming to an amount less than the amount provided by its
wired competitors. If at any time a wired competitor provides funds,
equipment or facilities for public, educational and governmental access
that exceed the funds, equipment or facilities provided by Grantee under
this paragraph, Grantee shall provide the same amount of funds,
equipment and facilities. In no event shall Grantee be required to provide
more funds, equipment or facilities than it has agreed to provide in
Section 7 of this Franchise Agreement Ordinance.
If the wired competitor discontinues providing multichannel video
services, the Grantee's requirement for the provision of funding and,
equipment and facilities for public, educational and governmental access
and, facilities and equipment shall immediately return to its original level.
D. For all other Franchise provisions imposed upon Grantee in this
Ordinance, if a wired competitor obtains a cable Franchise which does not
require it to meet the same Franchise provision, the City shall not require
Grantee to meet that Franchise provision. If the wired competitor does
not obtain a cable Franchise and it is not required to meet the same
Franchise provision, then the City shall relieve the Grantee from that
Franchise provision as follows:
(i) If the wired competitor passes less than 50% of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
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0
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Minnetonka and Richfield, Grantee shall continue to comply with
the Franchise provision.
(ii) If the wired competitor passes 50% or more of the homes and
customers in the cities of Edina, Eden Prairie, Hopkins,
Minnetonka and Richfield, the City shall not require Grantee to
meet the Franchise provision.
If at any time a wired competitor provides a requirement contained
originally in this cable Franchise, Grantee shall comply with that same
requirement.
If the wired competitor discontinues providing multichannel video
services, the Grantee shall be required to meet the Franchise provision.
12.5 If Grantee is aware of a Franchise provision imposed by the City upon Grantee
which is not also imposed by the City or the State of Minnesota upon a wired
competitor, it shall identify the wired competitor, including the basis for stating
that the entity is a "wired competitor" as defined above; it shall identify the
Franchise provision in question; and it shall provide this information to the City.
Within 90 days, the City shall: (1) pass a resolution declaring that Grantee is
subject to this section for that requirement; (2) declare why the entity in question
is not a wired competitor; or (3) state that the "wired competitor" is subject to a
requirement that substantially duplicates the Franchise provision. During the
above process, the Grantee shall escrow any funds at issue in the above process
that the Franchise requires be remitted during the time period of the above
process and Grantee shall continue to meet any and all requirements in question.
If the City declares such requirement void as to Grantee, the City is not liable for
Grantee's past compliance with the requirement, including any past fees remitted
to the City.
12.6 If the City and Grantee are unable to agree upon the operation of this section of
the Ordinance within 90 days after one party provides notice to the other party,
the parties may agree to enter mediation.
SECTION 13. ACCEPTANCE.
13.1 Other Franchises.
A. The System intended for City, may be part of a joint system that serves
the cities of Eden Prairie, Edina, Hopkins, Minnetonka and Richfield,
Minnesota.
B. Grantee will, in good faith, apply for and accept, if offered to it, a
Franchise (similar Franchise) from each of the other cities on all the same
is 588638
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October 16, 1996 - Page 17
terms and conditions herein provided, except provisions omitted as
inapplicable. 0
13.2 Time of Acceptance: Incorporation of
Offering: Exhibits.
A. Grantee shall have 30 days from the last date of adoption of a similar
Franchise by all of the cities listed in Section 13.1(A) of this Section, to
accept this Franchise in form and substance acceptable to City. Such
acceptance by Grantee shall be deemed the grant of this Franchise for all
purposes.
B. Upon acceptance of this Franchise, Ordinance No. _, also known as the
Cable Communications Ordinance, shall be repealed and Grantee shall be
bound by all the terms and conditions contained in Ordinance No. ,
also known as the Cable Regulatory Ordinance, and herein. With its
acceptance, Grantee also shall deliver to City an opinion from its legal
counsel, acceptable to City, stating that this Franchise has been duly
accepted by Grantee, that this Franchise is enforceable against Grantee in
accordance with its terms, and which opinion shall otherwise be in form
and substance acceptable to City.
C. With its acceptance, Grantee also shall deliver to City true and correct
copies of documents creating Grantee and evidencing the power and
authority referred to in the opinion of Grantee's counsel, certified as of
a then current date by public office holders to the extent possible and
otherwise by an officer of Grantee.
D. At the time of acceptance, Grantee shall provide a copy of its initial
services which shall be attached hereto as Exhibit C.
E. The effective date of this Franchise Agreement Ordinance shall be the date
executed by Grantee including acceptances as described in this Section 13.
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•
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IN WITNESS WHEREOF, Grantor and Grantee have executed this Franchise Agreement
the date and year first above written.
CITY OF , Minnesota
(SEAL)
•
By
Date:
Mayor
ATTEST:
, City Clerk
KBL CABLE SYSTEMS OF THE SOUTHWEST,
INC., A WHOLLY-OWNED SUBSIDIARY OF
TIME WARNER INC.
By.
(Corporate Seal) Date:
STATE OF )
COUNTY OF )
The foregoing instrument was acknowledged before me on , 199, by
the of the City of ,
on behalf of the City.
Notary Public
• 588638
Franchise Agreement Ordinance
October 16, 1996 - Page 19
/ Q(p
STATE OF )
COUNTY OF )
The foregoing instrument was acknowledged before me on , 199_, by
the of KBL Cable Systems of the Southwest,
Inc., a wholly-owned subsidiary of Time Warner Inc., on behalf of the company.
Notary Public
388638
Franchise Agreement Ordinance
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C
•
-7-0-7
•
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588638
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EXHIBIT A
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EXHIBIT B
•
TE"E WARNER SOCIAL CONTRACT
•
588638
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October 16, 1996 - Page 22
FOR FCC RECORD ONLY
i// M080, Time Warner Social Contract, FCC 95-478//i
i/ 79.922 Rates for the basic service tier and cable programming services tier /i
i/ 76.942 Refunds /i
i/ 76.950 Complaints regarding cable programming service tiers /i
FCC 95-478
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of)
Social Contract for )
Time Warner )
MEMORANDUM OPINION AND ORDER
Adopted: November 30, 1995 Released: November 30, 1995
By the Commission:
Table of Contents
Paragraphs:
1. Introduction 1
11. Background 2
A. Overview of the Social Contract 5
III. Discussion
A. Waiver 14
S. Preemption of State and Local Notice Requirements 20
C. Provisions of the Social Contract 24
a. System Upgrades and CPS Price Cap Increases
i. Terms of the Social Contract25
ii. Comments 28
iii. Discussion 31
b. Equipment and Installation Averaging
i. Terms of the Social Contract37
ii. Comments 38
iii. Discussion 40
C. Resolution of Pending Cases
i. Terms of the Social Contract42
ii. Comments 43
iii. Discussion 45
d. Lifeline Basic Tier Rates
i. Terms of the Social Contract52
ii. Comments 54
iii. Discussion 56
e. Migrated Product Tier
i. Terms of the Social Contract59
ii. Comments 62
iii. Discussion 63
f. Services to Schools
i. Terms of the Social Contract65
ii. Comments 68
iii. Discussion 71
-73i
g.
i. Name Wiring
Terms of the Socie't Contract74
11. Comments 75
iii. Discussion 76
h. System Acquisitions and Divestitures
i. Terms of. Social Contract 77
if. Comments 78
iii. Discussion 79
i. Modification and Termination Provisions
i. Terms of the Social Contract8l
if. Comments 83
iii. Discussion 84
j. Preemption
i. Terms of the Social Contract85
if. Comm ts 86
iii. Discussion 87
k. Other Issues 88
IV. Concl usion and Ordering Clauses 92
1. INTRODUCTION
1. Time Warner Cable (Time Warner) and the Federal Communications Commission
("Commission") have negotiated a Social Contract designed to provide upgrade incentives for
Time Warner and to provide rate stability and increased quality of service for its consumers.
In addition, the Social Contract resolves over 900 rate cases and provides refunds of
approximately $4.7 million plus interest to subscribers. In this Order we approve the Time
Warner Social Contract ("Social Contract"), which is attached as Appendix A. The proposed
Social Contract was placed on Public Notice and comment periods were established. The
Commission received both initial and reply comments.
II. BACKGROUND
2. In the Cable Television Consumer Protection and Competition Act of 1992 ("1992
Cable Act"), Congress set as one of its policy goals to ensure that cable operators continue to
expand the capacity and programs offered over their systems, where econamicatly viable. In
Implementation of Sections of the Cable Television Consumer Protection and Competition Act
of 1992: Rate Regulation, MM Docket No. 93-215, Report and Order and Further Notice of
Proposed Rulemaking ("Cost Order") establishing interim regulations for cost of service
filings, we adopted an upgrade incentive plan on an experimental basis. We noted that the
basic outline of this approach would be "to permit an operator to enter into a social contract
with its customers under which the operator would be given substantial flexibility in setting
rates for new regulated services it introduces, such as new service tiers offering additional
program channels. In exchange, customers would be guaranteed that rates for current services
would be kept stable and reasonable, . and that this rate would purchase at least the same
program channels, or channels of equivalent value to customers. The operator would also
commit to otherwise maintaining or improving its service quality. The contract would be
effective for a term of years and would be overseen by this Commission, and reviewed before
the end of the term." We also noted that this plan "protects the rates and quality of current
cable service tiers, while providing profit incentives for operators to introduce new and
improved regulated services, may help carry out the purposes of the Cable Act white also
being fair to customers of current services, less burdensome on cable operators and those
responsible for their regulation, and more likely to encourage worthwhile investments to
upgrade cable service." We recently have approved such a social contract with Continental
Cablevision, Inc. (the "Continental Contract"). The Continental Contract was approved by the
Commission in an Order adopted on August 1, 1995.
3. On May 4, 1995, pursuant to special ex parte procedures available in certain cable
rate proceedings, Time Warner requested relaxed ex parte treatment to enable it to discuss
broad rate related matters with Commission officials. The Bureau orally approved this
request on May 16, 1995. Consistent with these ex parte procedures the Cable Services
Bureau ("Bureau") and Time Warner negotiated the terms of the Social Contract. On August
3, 1995, the Commission approved the release of the draft of the Social Contract for public
comment.
4. The Commission has reviewed and considered the comments it received in
-7-3a
approving the terns and conditions of the Social Contract and making modifications to it.
A. Overview of the Social Contract
5. The Social Contract is for a term of five years. From 1995 through 2000, Time
Warner is required to invest $4 billion to rebuild and upgrade all of its domestic cable
systems, including deployment of fiber optic technology, increased channel capacity and
improved system reliability and signal quality. At least 60% of all capital expended in
connection with the upgrade commitment will.be applied for the benefit of basic service tier
("BST") and cable programming service tier ("CPST") subscribers. In addition, at least 60%
of the new analog capacity added as a result of the upgrade will be used for traditionally
regulated CPSTs, and, on average, traditionally regulated CPSTs on the upgraded systems will
have at least 15 additional channels. To fund this investment, Time Warner will be allowed
to increase the monthly rate for the most highly penetrated CPST in each system by $1 during
each year of the Social Contract. If Tim Warner fails to meet the upgrade commitment
within the time provided for under the Social Contract, subscribers to the cable systems that
have not been upgraded will be entitled to refunds equal to the CPST rate increases provided
by the Social Contract, with interest, plus a liquidated damages penalty of 15% of such
amount. The Social Contract contains a provision that allows Time Warner to average broad
categories of equipment and installation and associated costs for all of its systems an a
geographic regional basis.
6. The Social Contract wilt resolve Time Warner's pending CPST cases, including
CPST cases against the systems Time Warner recently acquired from Houston Industries, Inc.
MLCOM) and Newhouse Broadcasting Corporation. Altogether this resolves 946
complaints. To resolve these cases, Time Warner will make cash refunds in the form of bill
credits to certain customers totalling approximately $4.7 million plus interest for the period
beginning on the date of the applicable complaint and ending with the date of payment.
Time Warner cannot implement any rate adjustment for the upgrade of a particular system
unless the refund provided for under the Social Contract has been issued to such system or the
issuance of the refund begins simultaneously with such rate-adjustment. All refuels must be
issued within six months of the first rate adjustment implemented with respect to the upgrade
for the Time Warner systems. BST cases will not be resolved by the Social Contract. Those
cases will continue to be resolved by Time Warner and the local franchising authorities
pursuant to Commission rules.
7. Time Warner will create a "lifeline basic tier," priced to enhance the affordability
of BST. Time Warner will accomplish this in two ways. First, on systems serving at least
85% of its total subscribers, Time Warner will reduce the price on its BST by 10% within six
months of the effective date of the Social Contract, with a revenue neutral increase in CPST
rates. Local franchising authorities may elect not to have this reduction by notifying Time
Warner and the Commission in writing within 45 days of the effective date of the Social
Contract. Second, on the remaining systems where BST rates have not been reduced by 10%,
The streamlined lifeline basic tiers will carry only those stations required by law, such as
must-carry stations, public, educational and governmental ("PEG") stations, and local
origination. Any additional channels wilt be moved from the BST to the CPST with a
corresponding revenue neutral decrease in the price of the BST and increase in the CPST
price.
8. Time Warner will offer a free cable connection to all of the public schools
located in the franchise areas where Time Warner provides cable service and that are passed
by its systems. Time Warner also wilt provide a cable connection at cost to all secondary
private schools whose students receive funding under Title I of the Education and Secondary
School Act in such franchises that are passed by its systems. Time Warner will wire
additional classrooms in existing schools at cost. For new public schools and existing public
schools undergoing extensive rehabilitation, Time Warner wilt coordinate with the local
officials and contractors to wire each of the classrooms in new schools free of charge, if Time
Warner is notified of construction. BST and CPST wilt be provided to each outlet in the
connected public and private schools without cost. Time Warner will also provide the
connected schools with a monthly educational program guide with curriculum support ideas to
assist educators in effectively using the new services. In addition, Time Warner and Time
Inc. are developing an on-tine personal computer service. Once this service has been
developed and test-marketed, Time Warner will offer this service to each connected school in
areas in which the service is generally offered, free of charge, during the school year and will
also provide a free modem to access the service. Time Warner will provide schools with
additional modems at cost and will provide free service to each additional modem purchased.
Time Warner also will sponsor workshops and materials so that teachers have the training
necessary to appropriately use the services provided.
1* 9. The Social Contract further provides that, in Time Warner systems where neither
Time Warner nor its predecessors have created a la carte packages, Time Warner will be
permitted to create Migrated Product Tiers ("MPTs"), consisting of up to four services
migrated from the regulated tiers. The migrated channels will be priced at the rate regulated
price with increases allowed for inflation and external costs in accordance with the
Commission's price cap rules. There will be no limitation on the number of new channels
that Time Warner may add to the MPTS at the price of up to S.20 per channel plus license
fees. After April 1, 1997, Time Warner may convert any MPT into a new product tier
("MPT"), as defined by Implementation of Sections of the Cable Television Consumer
Protection and Competition Act of 1992: Rate Regulation, MM Was. 92-266, 92-215, sixth
order on Reconsideration, Fifth Report And Order, and Seventh Notice of Proposed Rule
Making, ("Going Forward") provided that the tier is offered without a buy-through
requirement other than BST.
10. Finally, during the term of the Social Contract, Time Warner will forego its right
to use a cost of service justification to support any future rate increases in any franchise area
covered by the Social Contract. The Social Contract requires that no later than 90 days
following the and of each calendar year during which the Social Contract is in effect, and
within 90 days following the end of the last month following expiration of the Social Contract
other than calendar year end, Time Warner will provide the Commission and each local
franchising authority having jurisdiction over an area covered by the Social Contract with a
progress report outlining the amount of capital investments made, the number of subscribers
affected by those investments, improvements in system reliability and service, and projected
expenditure and upgrades for the following year.
11. The Social Contract my not be modified or terminated without the mutual
agreement of both parties to the Social Contract. Time Warner may petition the Commission
to modify or terminate the Social Contract based on any relevant change in applicable laws,
regulations or circumstances. In addition, in the event of any changes to the provisions of the
1992 Cable Act or any material changes to the Commission's rules thereunder relating to rates
(BST, CPST or equipment) that are favorable to Time Warner, any Time Warner system may
elect to be relieved from the relevant rate provisions in the Social Contract, but shall remain
bound by all other provisions of the Social Contract.
12. We believe that the Social Contract is consistent with the goals for upgrade
incentive plans which were outlined in the Cost Order. The Social Contract benefits
subscribers by assuring reasonable and stable rates in all Time Warner systems, improving
service offerings and picture quality with state of the art technology, increasing consumer
choice by lifeline basic tier pricing and elimination of buy-through requirements, and
providing refunds to customers. The Social Contract further benefits subscribers through
Time Warner's agreement not to restrict subscribers' ability to remove, replace, or rearrange
wiring so long as it does not interfere with TWC's ability to provide services and collect
revenues from that subscriber or other subscribers in a multiple dwelling. Local franchising
authorities benefit from the opportunity to assist elderly, low income, and basic only
subscribers with the lifeline basic pricing. In addition, the Social Contract will reduce the
administrative burden and cost of regulation for Time Warner, local governments, and the
Commission. The Social Contract also provides a significant public benefit to all public
schools and certain private secondary schools that are located within Time Warner franchise
areas and passed by its systems.
13. The Social Contract will permit a rate structure that will allow Time Warner to
focus on its long-term strategic planning and growth, having resolved its outstanding rate
complaints. Local franchising authorities will retain their right to regulate rates for basic
service, their right to negotiate upgrades and other benefits for their individual franchises, and
their ability to comment and participate on any changes in this Social Contract that would
affect their localities. The Social Contract ensures that the rights of local franchise authorities
and subscribers to seek redress at the Commission will be preserved.
111. DISCUSSION
A. Waiver
14. Upgrade Incentive Plans represent an alternative to the Commission's usual
procedures for resolving rate complaints against cable operators. Indeed, the Commission
recognized in the Cost Order the experimental nature of this type of social contract. There
are several aspects of the Social Contract that do not conform precisely to the Commission's
rate regulation rules or to the stated experimental Upgrade Incentive Plan outlined in the Cost
order. We believe that the Social Contract furthers the Commission's policy goals of
ensuring that cable operators expand the capacity and programs offered over their systems
where economically viable, and reducing regulatory burdens while still ensuring that cable
rates are reasonable. As a result, we conclude that special circumstances warrant a deviation
from our generally applicable rules and that waiver of certain of the Commission's rules is in
the public interest.
15. In particular, Time Warner seeks a waiver of "U 76.923 to allow equipment cost
-7 --34
averaging. This section of the rules sets forth the methodology.for determining the rates for
equipment and installation used to receive 'BST >ietvice. 'The intended purpose of the section
is to ensure that equipment is charged at cost and that all BST subscribers pay for the
equipment. Waiver of this provision to enable Time Warner to average equipment costs on
a regional basis is consistent with the purpose of "U76.923 because equipment will continue to
be charged at cost; this cost will be spread across all subscribers in a region, rather than a
franchise area.
16. Time Warner also seeks a waiver of ^U 76.961(e), which requires local franchising
authorities to reimburse Time Warner for CPST franchise fees that were based on CPST
charges that are being refunded to subscribers. Time Warner has agreed to waive its right to
reimbursement by the franchising authorities; thus, this waiver provides a benefit to the local
franchising authority and subscribers, and we see no reason to deny it. Time Warner also
seeks a waiver of ^U^U 76.309(c)(i)(8) and 76.964 on a one-time basis to allow Time Warner
to add service and change line-ups on less than 30 days' notice.
17. Time Warner seeks a one-time waiver of ^U 76.933 to allow it to implement rate
and service restructuring and annual rate adjustments to the BST and the CPST on 30 days'
notice, or less, subject to refunds and subject to the further condition that, if a local
franchising authority exercises the opt-out provision after Time Warner commences
implementation of the January 1, 19% rate and service restructuring and adjustment, Time
Warner will restore the 10% reduction in the BST rate in the next billing cycle (i.e. the
difference between the new rate and the rate charged under the Social Contract, if a subscriber
cancels service during the first month of implementation of the Social Contract). These
provisions set forth customer service standards to ensure, among other things, that customers
have adequate notice of changes in their service and time to cancel services. The Social
Contract further provides that if any subscriber cancels its subscription to the relevant CPST
within 30 days after the date of the first bill reflecting the CPST adjustment authorized by the
Social Contract, Time Warner will issue a refund to that subscriber for the incremental
amount attributable to such increase.
18. We understand the need for a waiver of these provisions if Time Warner is to
implement the necessary changes by January 1, 1996. These waivers are on a one-time basis
only. Subscribers will be protected if the local franchising authority opts out of the creation
of a lifeline basic tier, or if subscribers choose not to receive the restructured service. We
40 conclude that a waiver of these provisions is not inconsistent with the purposes of the
provisions.
19. In addition, Time Warner seeks waivers of various Commission rules that it states
are necessary to effectuate the terms of the Social Contract. At the core of the Social
Contract is the upgrade incentive plan whereby Time Warner will rebuild and upgrade all of
its domestic cable systems and in turn will be allowed to recover the costs of the upgrade
over time by adding a charge to the highest penetrated CPST during the years of the Social
Contract. Consequently, Time Warner seeks a waiver of ^U^U 76.922 and 76.933 to allow Time
Warner to recover the CPST rate increase for the upgrade in lieu of the methodology provided
under our Going Forward rules. Time Warner also seeks to waive: 1) ^U 76. 960, requiring
that prior approval be sought for rate increases for one year after CPST rate reduction under ^U
76. 933; 2) ^U^U 76.922(b), 76.930, and 76.956, to allow Time Warner to use a one-time
restructuring form in situations where systems become newly regulated; and 3) ^U 76.922 to
allow revenue neutral, pro-rata adjustments rather than adjustments to the maximum permitted
rate less previous external costs ("residual rate") where the lifeline tier and/or an MPT are
created in accordance with the Social Contract terms. We believe that the Social Contract
provides significant overall benefits and that the waiver of these provisions is not inconsistent
with the purposes of the provisions and such waiver is in the public interest. Accordingly, we
hereby find good cause to waive these provisions of the Commission's rules necessary to
effectuate the terms of the Social Contract.
B. Preemption of State and Local Notice Requirements
20. Time Warner asked the Commission to preempt, on a one-time basis, those local
franchise rules that require advance notice of rates and service charges to subscribers in
connection with its initial implementation of the Social Contract. Time Warner asserts that it
will otherwise be unable to comply with the January 1, 19% rate restructuring date contained
in the Social Contract and to fulfill 60 or 90 day local notice requirements.
21. We believe that preemption is appropriate in this case as the state and local
notice requirements may hinder Time Warner's ability to implement rate adjustments
uniformly pursuant to the terms of the Social Contract by January 1, 1996. Preemption
generally is held to be appropriate in cases such as this one where the local law conflicts with
agency regulation or frustrates the purposes of the regulation. Indeed, many of the goals
regarding upgrade incentive plans outlined in the cost order, and stet in this Social Contract,
could not be achieved if implementation of rate restructuring does not occur by January 1,
1996. For example, many of the programming cost increases occur on January 1 of each
year. As such, Time Varner would seek to adjust its rates to account for these increased 46
costs as provided for under our rules. In order to achieve the Social Contract's goal of
having a one time rate adjustment, and thus provide rate stability to subscribers, it is essential
that Time Warner implement the upgrade surcharge provided for under the Social Contract by
January 1, 1996.
22. We further believe that prompt implamentation of the Social Contract best serves
the public interest. Thus, to allow Time Warner to implement the rate restructuring and MPT
provisions of the Social Contract, any local franchise agreement or any state or local law or
regulation is preempted on a one-time basis to the extent that it requires Time Warner to give
greater than 30 days advance notice of rate and service changes to subscribers. Such
preemption shall be limited to the period prior to February 1, 1996. If Time Warner is
unable to commence implementation of such refunds and rate adjustments by January 1, 1996,
but commences such implementation between the period January 1, 1996 and February 1,
1996, it shall provide at least 30 days, notice to local franchising authorities and subscribers.
23. The Social Contract further provides that if any subscriber cancels its subscription
to the relevant CPST within 30 days after the date of the first bill reflecting the CPST
adjustment authorized by the Social Contract, Time Warner will issue a refund to that
subscriber for the incremental amount attributable to such increase. Accordingly, the
preemption of state and local notice requirements and the waiver of Commission notice
comments will not injure subscribers.
C. Provisions of the Social Contract
24. The Commission received rumerous comments on several terms of the proposed
Social Contract. This section addresses the concerns of the commenters and sets forth
modifications to the proposed Social Contract.
a. System Upgrades and CPS Price Cap Increases
(i) Terms of the Social Contract
25. The Social Contract provides for an investment of $4 billion over a five year
period to upgrade all of Time Warner's systems. As part of this investment, each Time
Warner system will have a minimum bandwidth capacity of 550 MHz and at least 50% of
Time Warner's subscribers will have access to a minimum bandwidth capacity of 750 MHz.
In the 750 MHz systems, at least 200 MHz is expected to be used for digital distribution. All
Time Warner system will be deployed to include fiber to the node architecture, which will
improve signal quality and reliability for all subscribers. Time Warner's ability to correct
outages in a more timely manner wilt also be improved through the use of telemetry to locate
problems within the system.
26. To fund this investment, Time Warner will be permitted to increase the monthly
rate for the most highly penetrated CPST in each of its systems by 51.00 during each year of
the Social Contract. Further, this increase will serve as the only increase on the CPST with
the exception of revenue-neutral adjustments provided elsewhere in the Social Contract and
adjustments for inflation and external costs permitted under the Commission rules. For the
term of this contract, Time Warner waives its right to increase its CPST rates pursuant to the
Commission's Going Forward rules. Moreover,, Time Warner will add 60% of all new analog
services to the CPST offered without any further increase in rates beyond the $1.00 per year
permitted by the Social Contract. This will equal an average of 15 new channels to the
CPSTs on Time Warner system. Additionally, 60% of the capital cost of the upgrade will be
used for regulated purposes. Time Warner waives its right to file a cost of service showing to
justify any rate increases during the term of the Social Contract.
27. The Social Contract mandates that Time Warner's investment in the upgrade of its
systems will be conducted without discrimination based on the socio-economic status of Time
Warner's subscribers. If Time Warner fails to upgrade all of its systems as prescribed in the
Social Contract, Time Warner will provide refunds (in the form of bill credits) to all
subscribers not receiving the upgraded service. The refunds will equal the amount of the total
surcharge levied on each subscriber plus interest and a 15% liquidated damages penalty on the
refund amount.
(ii) Comments
28. Most commenters express support for the system upgrades, maintaining that
subscribers will benefit from more advanced technology, access to the information 0
-7
superhighway, and improved picture quality. For example, Kern County, California states
that Time Warner will bring information superhighway services toa "vast number of its
residents", a substantial number of whom "are underserved and live in rural areas." Many
commenters support Time Warner's plan to phase in rate adjustments over a five year period
because it spreads the costs over a period of time and provides for rate certainty.
29. Many commenters did not oppose the concept of the system upgrade but
nevertheless raised various objections to provisions in the Social Contract. Some commenters
claim that the upgrade would be required in any event either because of the efforts of local
franchising authorities or competitive requirements. Other commenters claim either that too
much or too little of the upgrade is to be dedicated to digital services and that those
jurisdictions which had already required upgrades will be disadvantaged vis-a-vis those
jurisdictions that previously did not require upgrades. Some commenters oppose any CPST
rate increase that exceeds the limits of the Commission's Going Forward rules. first; these
commenters claim that the rate increase: 1) should be limited to the amount of the Going
Forward increase which Time Warner could have received during the same period, 2) should
not cover the cost of new services which customers have not requested, 3) should not be
required for an upgrade which is a settlement concession, or 4) should not include external
costs). Second, these commenters claim that the Commission's cost-of-service rulings
require that the rate increase not be implemented before the upgrade is in service. Finally,
some of these commenters state that the rate increase will require users of regulated cable
services to subsidize other Time Warner services. Ameritech New Media Enterprises, Inc.,
Bell Atlantic Telephone Companies and Cincinnati Bell Telephone Company contend that
Time Warner will use the revenues from the rate increases to enter the local telephone market.
In particular, these companies propose that Time Warner: 1) account for the costs of the
upgrade so that those costs can be properly allocated; 2) file an application for a certificate of
public convenience and necessity under Section 214 of the Communications Act; and 3) be
required to adhere to the rules applicable to telephone companies on cost accounting, cost
allocation, depreciation, transactions with affiliates, and joint marketing of services. The
City of Gardena raises a question as to whether system upgrades required by franchising
authorities could be passed through to subscribers along with the upgrades required by the
Social Contract. Finally, some commenters raise questions as to the implementation of the
rate increase, and some have misconceptions about the meaning of language in the Social
Contract. For example, one community inquired as to how the rate increase wilt relate to the
increase in the CPST to offset the BST rate reduction.
30. In its reply comments, Time Warner contends that the Social Contract requires all
communities it serves to have upgrade benefits. Time Warner further maintains that, even
where Time Warner already is committed to making upgrades, the Social Contract provides a
firm completion deadline and a federally-enforceable upgrade commitment with meaningful
penalties. Time Warner denies that its rate increase includes the cost of any equipment
needed to provide telephone service, such as telephone switches, and further contends that the
Commission has carefully reviewed Time Warner's costs to preclude cross-subsidies. Time
Warner states that it believes that it has accomplished the goat of undertaking only those
upgrades that are economically justified and best meet customer needs in the most efficient
manner possible. According to Time Warner, the purpose of the upgrade is to improve
reliability and picture quality, and to allow increased system addressability and interactive
capability. Time Warner also argues that phasing in the cost of the upgrade, as provided
under the Social Contract, provides predictable, though modest, rate increases, avoiding rate
shock. Time Warner states that subscribers wilt benefit because spreading the cost over
five years is preferable to paying one large sum once the upgrade is completed. To the
extent that commenters argue that the rate increases will exceed the amount allowed by the
Going Forward rules, Time Warner argues that those rules provide an incentive to add
programming services, not an incentive to add capital for the upgrade of channel capacity.
Time Warner also notes that it has agreed to waive any right it may have to take any future
increases under the Going Forward rules as of the effective date of the Social Contract.
Finally, Time Warner maintains that it has no intention of passing through the cost of any
local franchising upgrade requirement that does not exceed the requirements in the Social
Contract.
(iii) Discussion
31. The majority of the commenters have expressed support for the provision of the
Social Contract that requires Time Warner to invest $4 billion to rebuild and upgrade Time
Warner's cable systems. The commenters support the deployment of advanced technology
and improved picture quality. They also support Time Warner's plan to phase in the
payments over a five year period to avoid rate shock.
32. We find that the upgrade provision of the Social Contract represents a valuable
benefit to subscribers in terms of advanced technology, improved reliability and picture
quality, and increased programming choices. Further, we conclude that phasing in the cost of
the upgrade, in contrast to a one-time increase when the upgrade is completed, is preferable
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because it provides predictable rate increases, avoiding rate shock.
33. While Time Warner way have chosen voluntarily to upgrade or have been
required by local franchising authorities to upgrade some sections of its system, the Social
Contract binds Time Warner Cable to continue to wake significant upgrades throughout its
systems. Those local franchising authorities that have negotiated upgrade benefits will not be
disadvantaged. The Social Contract makes clear that local franchising authorities can enforce
local franchise agreements or negotiate future agreements which provide for upgrade benefits
exceeding the upgrade benefits of the `Social Contract. Section 111. J. 2. a. states that
"In)othing herein shall affect the enforceability of any otherwise valid preexisting local
franchise agreement, ordinance, local law or regulation which provides benefits which exceed
those provided in this Contract relating to system upgrades or the wiring of schools, nor shall
local franchising authorities be restricted in their authority to negotiate for such additional
benefits after the Effective Date of this Contract." Further, Time Warner has agreed to
modify the Social Contract to wake clear that, except in those situations where a local
franchising authority places upgrade requirements an Tim Warner that exceed the
requirements of the Social Contract, Tim Warner will not seek to pass through any capital
costs (other than the surcharge provided under the Social Contract) to the subscribers.
34. The upgrade provision embodies a balance between a guarantee of an average of
15 new analog channels to benefit CPST subscribers and the initiation of digital distribution
technology, which will expand the capacity of Time Warner to add programming and improve
picture quality. As noted in the Social Contract, Time Warner agrees that at least 60% of all
capital expended in connection with the upgrade commitment described in the Social Contract
will be applied for the benefit of BST and CPST subscribers. The Commission does not
believe that it is in the public interest for it to determine how much digital and analog
capacity Time Warner should use for particular programs and markets, since such a
requirement might limit the economic feasibility of the upgrade. However, we point out that
Time Warner may use digital capacity for the benefit of regulated services.
35. We are mindful of the concerns expressed by same commenters that the rate
increases may be used to pay for Time Warner's plans to provide competitive services. We
have examined Time Warner's cost data and believe that the costs of the upgrade are
reasonable and necessary and that Time Warner has fairly allocated the costs of the upgrade
between its current regulated and non-regulated operations. Further, Time Warner has agreed
to a modification to the Social Contract which provides that the amount of the capital costs of
the upgrade that will be recovered in the rate increases on regulated services will be applied
for the benefit of regulated BST and CPST subscribers during the period of the Social
Contract. The Commission also has the authority under the Social Contract to audit Time
Warner's books and records and to interview Time Warner corporate employees to ensure
compliance with this amendment. Indeed, if it is determined that Time Warner has not
complied with the obligations under the Social Contract, we may exercise any of the rights
and remedies which are attendant to violations of a Commission order. Wrier these
circumstances, we find it unnecessary to adopt the suggestion of several telephone companies
that Time Warner be required to comply with the rules applicable to telephone companies.
36. The contention that the upgrade increases will exceed the amount permitted under
the Going Forward Order is misplaced. The Going Forward Order was intended to be an
incentive for operators to add a small number of cable channels to existing systems. The
increases under the Social Contract, on the other hand, are intended to enable Time Warner to
undertake a major system upgrade, which will modernize facilities to provide improved
quality and efficiency and to add new tiers of services and new types of services.
Consequently, the rate increases are not primarily being paid for new services, but for
improved quality of services as a result of modernization. The Social Contract does not
change the requirements of the Commission's rules governing the pass-through of external
costs and inflation. Finally, the Social Contract provides that the upgrade rate increase is to
be assessed annually on all CPST subscribers, in addition to any amount necessary to offset
the 10% BST rate reduction.
b. Equipment and Installation Averaging
M Terms of the Social Contract
37. Under the Social Contract, Time Warner will be permitted to establish a blended
average regional rate for the equipment basket categories of hourly service charge,
installations, remote control devices, addressable converters, non-addressable converters, other
teased equipment, and customer tier changes. The geographic regions used for averaging are
shown on Appendix B of the Social Contract and essentially correspond with the Areas of
Dominant Influence ("ADIs") served by Time Warner. Regional averaging will be
accomplished by the filing of a Form 1205 Equipment Form or its equivalent with the
Commission on an annual basis beginning no sooner than December 1, 1995. Time Warner
way begin charging revised equipment rates upon 30 days' notice to the Commission subject
to a refund pursuant to Commission rules. The local franchising authorities will be
responsible for reviewing the rates charged to ensure consistency with the rates approved by
the Commission. If Time Warner charges rites-in excess of'those'permitted by the
Commission, the local franchising authority may order a refund.
(ii) Comments
38. Commenters who support the equipment and installation averaging contend that it
will streamline the process for review of these rates. On the other hand, some local
franchising authorities claim that both Commission regulation of equipment rates and
averaging of equipment rates violate the 1992 Cable Act. Other local franchising authorities
raise specific questions about blending, including whether blended rates will track costs,
whether there wilt be different rates for different types of equipment, whether addressable
converters will be subsidizing ran-addressable converters, whether the geographic regions are
appropriate for blending, the effect blending wilt have on the level of rates, and how the
Commission and the local franchising authorities will work together under the blending
proposal.
39. in its reply comments, Time Warner notes that, in the Continental Contract
Order, we granted a waiver to permit Continental to aggregate equipment and installation
costs on a state or regional basis. Time Warner notes that we granted this waiver because it
was our belief that equipment averaging will serve the objectives of the Upgrade Incentive
Plan and will minimize drastic increases in rates for subscribers as upgrades take place. Time
Warner contends that because the Social Contract has a similar equipment averaging
provision, the rationale in the Continental Contract Order applies here. Time Warner states
that it would be willing to establish separate charges for addressable and non-addressable
converters, due to specific concerns raised regarding converters. Time Warner further
explains that, in those situations where any local franchising authority is still reviewing a
Form 1205, the process will continue under local franchising authority jurisdiction.
According to Time Warner, after the effective date of the Social Contract, the Commission
wilt review future equipment rates, but the local franchising authority may order rollbacks
and refunds of any rate in excess of that approved by the Commission, subject to the normal
Commission appeal process.
(iii) Discussion
40. We believe that a waiver of our rules to allow Time Warner to average broad
categories of equipment and various installation costs for all of its systems on a regional basis
is in the public interest. As in the case of the Continental Contract, we conclude that
equipment averaging will minimize drastic increases in rates for subscribers as upgrades take
place and wilt reduce the administrative burdens on Time Warner to prepare rates on a
franchise by franchise basis. While the rates for particular franchise areas may change, the
overall impact will be revenue neutral. We conclude that the geographical regions established
in the Social Contract are appropriate because they reflect Time Warner's regional cost
centers and therefore would simplify cost tracking. We do note, however, a concern raised by
commenters that addressable converters will be subsidizing non-addressable converters. To
address this concern, Time Warner has agreed to a modification to the Social Contract which
provides that the prices of addressable and ran-addressable converters will be separately
established.
41. We conclude that this provision of the Social Contract does not violate any
provision of the 1992 Cable Act. As we recognized in the Continental Contract Order, the
1992 Cable Act does not mandate the level at which equipment and installation rates are
established, i.e. the franchise, system, regional or company level. Rather, Congress specified
that the rates must be based on actual cost. This provision in the Social Contract is
consistent with the 1992 Cable Act's directive that the Commission establish standards by
which local franchising authorities establish rates for installation and equipment used to
receive basic service. We will review new regional rates submitted by Time Warner for
compliance with the requirement that they be true regional averages of the local equipment
and installation costs. Notice of our decisions will be provided to local franchising
authorities. Through refunds or rate roll-backs, the local franchising authorities will continue
to enforce the requirement that Time Warner charge equipment and installation rates which
comply with our standards.
c. Resolution of Pending Cases
(i) Terms of the Social Contract
42. Under the Social Contract, Time Warner will settle its existing benchmark CPST
cases. Time Warner is required to provide refunds of approximately $4.7 million to
customers in the franchise areas shown in Appendix A of the Social Contract. Refunds will
continue to accrue interest until the date that the refunds are actually paid. Time Warner is
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also precluded from making any rate adjustment allowed under the Social Contract prior to
the time such refunds are made to affected subscribers. The refunds were determined based
upon the Commission's review of Time Warner's rate justifications for the CPST where a
complaint had been filed. Pending cases justifying rates for the BST wilt continue to be
resolved with the local franchising authorities.
(ii) Comments
43. Numerous commenters expressed support for the resolution of the pending Time
Warner rate cases in the Social Contract as a way to avoid litigation expenses and to conserve
resources. However, a rnaber of local franchising authorities raised concerns regarding the
settlement of the rate cases in this Social Contract. Among the concerns, some local
franchising authorities contended that complainants have the statutory right to have their
complaints adjudicated individually on the record, that the Commission violated its own ex
parte rules, and that the Commission's proposed procedures for social contracts were not
followed. Others argued that the local franchising authorities should receive refunds and
punitive damages, and that the refunds should be paid earlier then provided for under the
Social Contract. Further, the City of St. Petersburg expressed concern that there was no
finding of wrongdoing and that the refund amounts can be recovered by Time Warner's price
cap and other increases allowed under the Social Contract. Some local franchising
authorities contend that the finding that the Time Warner rates are reasonable wilt result in
rate increases in the BST rates.
44. In its reply comments, Time Warner states that the Commission has stated a
general policy "to make every effort possible to resolve appropriate disputes through
mediation, arbitration, settlement negotiation, negotiated Rule Making and other means of
dispute resolution." Citing the Rate Order, Time Warner further contends that the
Commission has advocated the use of alternative dispute resolution techniques to decide cable
rate cases. Time Warner further contends that each complaint has in fact been reviewed on an
individual basis, and that the resolution of the complaints in this Social Contract wilt result in
immediate bill credits to subscribers in contrast to the delay that wilt result if each case is
individually litigated. In reply to the City of St. Petersburg, Time Warner states that
findings of no wrongdoing are necessary to give operators the incentive to enter into social
contracts, and that here there is no evidence of wrongdoing. Time Warner further states that
the ability of Time Warner to recover its future costs under the price cap provision is
irrelevant to refunds for past overcharges. Finally, in response to comments that the
Commission's ex parte rules and other social contract procedures were not followed, Time
Warner first notes that the commenters fail to specify which particular provisions of the
Commission's ex parte rules have been violated. In any event, Time Warner states that it has
followed the same procedure as the Commission approved with respect to the Continental
Contract, i.e., it has made an initial proposal to the Commission, including an outline of its
objectives. Time Warner notes that in the Continental Contract Order, the Commission
waived its requirement that a company's initial proposal for an upgrade incentive plan
include statements from affected local franchising authorities because there are "significant
number of franchises with diverse interests and concerns". Time Warner argues that given
the nxmiber of commenters and affected franchising authorities in this case, waiver of this
requirement is even more applicable here. Time Warner further notes that the social contract
negotiation procedures followed here were announced in the Commission's Cable Ex Parte
Order and that consistent with that Order, (and similar to the case with the Continental
Contract), all interested parties have had an opportunity to comment on the Social Contract.
(iii) Discussion
45. We conclude that proper procedures were followed with respect to the Social
Contract. As an initial matter, we address the comments regarding the resolution of the rate
complaints as part of the Social Contract. We note that the 1992 Cable Act provides the
Commission with broad discretion to resolve cable rate complaints. The 1992 Cable Act
directs the Commission to create "fair and expeditious procedures for the receipt,
consideration, and resolution of complaints." Under the 1992 Cable Act, the Commission
also is charged with establishing "the procedures to be used to reduce rates for cable
programming services that are determined by the Commission to be unreasonable and to
refund such portion of the rates or charges that were paid by subscribers after the filing of
such complaint and that are determined to be unreasonable. Pursuant to these statutory
provisions, the Commission adopted rules providing for the use of social contracts as one
method of setting cable rates. We believe that the broad language of Congress' mandate
allows the Commission to choose the procedures used to resolve complaints. We further
believe that Congress' desire to simplify cable rate regulation supports the adoption of the
most expeditious means of resolving complaints that wilt afford adequate protection for the
subscribers. Contrary to the claims of some commenters, there is no statutory requirement
that each rate complaint be individually adjudicated. Rather, the Commission is required to
establish procedures to resolve rate complaints and to provide refunds of excessive charges.
A social contract is one such procedure.
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46. We find that the rates provided for in the Social Contract are reasonable.
Although past rates are not found to be unreasonable, the Social Contract provides for refunds
of amounts paid in excess of rates we find in this Order to be reasonable. Those rates were
arrived at after making certain adjustments claimed by Time Warner and after factoring in the
public interest benefit to consumers of prompt, certain relief. Moreover, although we do.not
rule on the merits of each of Time Warner's claims, we believe that it is fully consistent with
the 1992 Cable Act to consider the benefits of avoiding the delays and uncertainty of
litigation in setting rates within the range of reasonableness. Further, we believe that it is
fully consistent with the 1992 Cable Act, as well as the.social contract rules, to consider
upgrades and other improvements in service as part of a determination of what constitutes a
reasonable rate. Finally, we do not believe that deviation from our usual practice of requiring
refunds to subscribers and instead requiring refunds and punitive damages to local franchising
authorities is warranted. Our rules provide for refunds to subscribers and do not provide for
punitive damages in any case. Further, we do not believe that six months is an unreasonable
period for Time Warner to make refunds, in view of the implementation and billing problems
involved in a nationwide settlement. Thus, we conclude that the Commission has the authority
to resolve rate complaints in the mamer embodied in the Social Contract.
47. In the Cable Ex Porte Order, we noted that "[v]arious cable television system
operators have made presentations to the Commission on issues relating to the Commission's
cable television rate regulations. These communications have generally been in the nature and
context of broad policy discussions regarding the rules as well as the future application of the
rules to the operators, but frequently also have focused on the specific economic situation and
future prospects of a particular company." We held that relaxed ex parte rules are
applicable to such discussions "that are general in nature although they potentially implicate
specific pending rate proceedings." These are the very type of discussions that occurred
here. A party wishing to take advantage of the modified ex parte procedures must: 1) submit
to the Cable Services Bureau a written request to meet and, if applicable, a request for relaxed
ex parte treatment; 2) receive Bureau approval to meet and, approval of the relaxed treatment;
and 3) in the event of the development of a specific company-wide proposal or proposed
resolution, serve all parties to each affected pending rate complaint and/or appeal proceeding
with the final version of the proposal or proposed resolution. The Cable Ex Porte Order
states that "the Commission will take no action based on any such proposal or proposed
resolution without it having first been served on all parties to each affected pending rate
0 compliant and appeal proceeding and without providing not less than thirty days for
comment."
48. We conclude that these requirements were complied with here. On May 4, 1995
Time Warner made the necessary written request for application of relaxed ex parte rules in
order to engage in general discussions. This request was subsequently' granted by the Cable
Services Bureau. All complainants and affected local franchising authorities were served with
a copy of the proposed Social Contract and given 40 days to comment. These comments have
been reviewed and considered by the Commission and, in many instances, have resulted in
changes to the Social Contract. The Commission's ex parte procedures set forth in the Cable
Ex Porte Order have been fully complied with as to the Social Contract.
49. We further address those comments that the Social Contract procedures set forth
in the Cost Order were not followed. In the Cost Order, the Commission stated that it would
consider upgrade proposals and directed any interested cable operator to "submit a proposal .
. accompanied by a written statement by any certified franchising authority with jurisdiction
over cable systems affected by the plan of its views concerning the proposed agreement." In
the Continental Contract Order, we noted that "given that the initial proposal and subsequent
negotiations affected a significant ,ember of franchises with diverse interests and concerns, it
is more efficient and has proven more practical for the Commission to negotiate the proposed
Social Contract with Continental." In the Continental proceeding, we waived, on our own
motion and for good cause shown, the requirement that at the time a proposal is made a
statement be filed by the local franchising authority. However, consistent with the
requirement in the Cable Ex Porte Order, this waiver was conditioned on local franchising
authorities and complainants being given the opportunity to express their views after the
Public Notice was issued. We note here that there are significantly more local franchising
authorities affected by the Social Contract than were affected by the Continental Contract and
that these local franchising authorities likewise have diverse interests and concerns. We
conclude that the rationale stated in the Continental Contract Order for waiving the
requirement that statements from affected local franchising authorities be included in the
proposal is applicable in this case. As noted above, the comment period and extensions have
provided significant opportunity for local franchising authorities to express their views as to
the Social Contract. We believe it is appropriate to waive, on our own motion and for good
cause shown, the requirement in the Cost Order that a company's initial proposal for an
• upgrade incentive plan include statements from affected local franchising authorities.
50. The City of St. Peterburg's concern that there is no finding of wrongdoing is
110)-ql
misplaced. One of the goals of the Social Contract is to resolve disputed issues without
requiring the Commission to spend significant time and resources to make a finding of any
wrongdoing as to these issues. We also note that the statement in the Social Contract finding
that the CPST rates, other than those resolved in Appendix A to the Social Contract, are
reasonable has no bearing an determinations by local franchising authorities as to the
reasonableness of BST rates. Local franchising authorities may continue to make their own
determination as to the reasonableness of BST rates without being bound by rates derived as a
result of negotiations of the Social Contract.
51. Finally, under Sections 76.942(f) and 76.961(e) of the Commission0•s rules, local
franchising authorities are required to return to cable operators an amount equal to that
portion of the franchise fee that was paid based on the total amount of refunds, when refunds
are ordered by the local franchising authority or the Commission. We wish to clarify that
local franchising authorities for Time Warners systems are not required to return any portion
of franchise fees collected from Time Warner pursuant to the terms of the Social Contract.
The Commission has not made a determination that Time Warner has imposed unreasonable
rates on subscribers in the Social Contract.
d. Lifeline Basic Tier Rates
(f) Terms of the Social Contract
52. The Social Contract provides that Time Warner will create a "tifetine basic tier"
priced to enhance the affordability of basic service. Time Warner will accomplish this in two
ways. First, an systems serving at least 85% of its total subscribers, Time Warner will reduce
the price of its BST by 10%, with a corresponding revenue neutral increase in CPST rates.
in systems where Time Warner proposes to apply the 10% BST reduction, local franchising
authorities may elect not to have this lifeline reduction by notifying Time Warner and the
Commission in writing within 45 days of the effective date of the Social Contract.. Second,
on the remaining systems, Time Warner will restructure the BST to create a lifeline type
service consisting only of stations required by law to be carried on the BST. All other
existing BST channels will be moved from the BST to a CPST with a corresponding revenue
neutral decrease in the price of the BST and an increase in the CPST price.
53. Time Warner will not add any additional satellite channels to the BST for the
term of this contract, except as required by law or regulation. Furthermore, in the event that
the Commission's must-carry rules are rendered invalid, Time Warner may discontinue
carriage of local broadcast stations but all local broadcast stations that it continues to carry
must be carried on the BST. To the extent that Time Warner discontinues the carriage of any
broadcast station, Time Warner may substitute any programming service in place of the
discontinued station to maintain the size of the BST. This substitution is limited to an
average of three services per system over all Time Warner systems and five services for any
individual Time Warner system. The Social Contract provides that these substitutions only .
will affect BST rates and only to the extent there are changes in external programming
charges to Time Warner.
(ii) Comments
54. Most commenters support the creation of a lifeline BST because low cable rates
are essential to various groups including the elderly and low-income persons. Of those
commenters who expressed opposition, the concerns are: 1) a large number of CPST users
will be supporting a low rate for a few BST-only subscribers; 2) BST is not important where
the reception of broadcast television is clear; 3) local franchising authorities might prefer
other benefits to the creation of a lifeline BST; and 4) the restructuring of the BSTs will
enable Time Warner to remove important channels from BST and increase prices for services
that previously were regulated. Commenters also raise various questions with respect to the
creation of a lifeline basic tier. They question whether the Social Contract permits Time
Warner to exclude 15% of its systems from the reduction in BST (in light of the Social
Contract provision that at least 85% of Time Warner's systems will be changed to a lifeline
basic). They ask whether the restrictions contained in the Social Contract precluding increases
in BST rates and the number of BST channels should be changed (either because of the desire
of a local franchising authority to make more extensive BST services available or the
desirability of promoting low power television). They also raise concerns as to: 1) whether
the reduction in SST channels will reduce franchise fees; 2) what effect a local franchising
authority's decision to opt out of the lifeline BST provision will have; 3) whether the
Commission will review the CPST rate increase that is made to offset the BST price decrease;
4) why the discount is 10% instead of 15% as it was in the Continental Contract Order; and
5) whether the Social Contract should contain a date for completion of the restructuring of the
BST.
55. In its reply comments, Time Warner contends that a low- priced BST was one of
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the goals of the 1992 Cable Act and, in connection with the Continental Contract, the
Commission approved that goal and its implementation with minimal cross-subsidization
(between CPST and BST) in the creation of a lifeline basic tier. In addition, Time Warner
contends that any local franchising authority that does not agree with the creation of a lifeline
BST may opt-out of this provision of the Social Contract. Time Warner also contends that
its right to determine the channels that it will include on the BST, other than must-carry
stations, PEG access stations, and television broadcast stations except for superstations has
been upheld by the Commission and the Court of Appeals for the District of Columbia
Circuit. Time Warner states that a local franchising authority's decision to opt-out will
alleviate the need to offset a BST rate reduction with a CPST rate increase, but otherwise will
not affect the terms of the Social Contract. Finally, Time Warner explains that services
retiered from the BST will not be unregulated, except for those services that are placed on an
MPT in systems which are eligible for a new MPT under the Social Contract, and that all
communities which do not opt out will receive the 10% rate reduction during the term of the
Social Contract.
(iii) Discussion
56. In the Continental Contract Order, we approved the creation of a lifeline BST
noting that there were strong social benefits to the creation of a lifeline BST that furthered the
goats of the 1992 Cable Act. In particular, we noted that the creation of a lifeline BST
increases the option of consumers and increases competition for services on the upper tiers.
We also noted our belief that any increase in rates for subscribers that receive both the BST
and the CPST will be de minimis. We find that the same circumstances exist here and thus
approve the similar provision in the Time Warner Social Contract. In view of the valuable
public benefits brought by the creation of a lifeline BST, as well as the other benefits of the
Social Contract discussed elsewhere in this order, the preference for other benefits cited by
the Ithaca City Cable Commission in the Social Contract does not warrant a rejection of the
Social Contract. One of the main arguments advanced by commenters opposing the lifeline
BST was that it was not necessary because there were so few BST-only subscribers.
However, because there are few BST-only subscribers the overall impact on the majority of
subscribers who receive both BSTand CPST wilt be minimal. In addition, we note that the
Social Contract contains a provision that allows local franchising authorities to elect not to
have Time Warner implement the BST rate reduction and corresponding CPST adjustment in
its franchise area. This provision provides subscribers additional protection if lifeline BST is
inadvisable in a particular area.
57. Because some Time Warner systems contain only one tier, not all of the Time
Warner systems can immediately provide for a lifeline BST. However, Time Warner has
represented that those systems that initially are not given the benefit of a 10% reduction wilt
subsequently be restructured and wilt have the right to a per channel rate reduction after the
restructuring is accomplished. Because the restructuring is likely to include the upgrading of
Time Warner's facilities, we find that a requirement to complete the restructuring by a
specific date prior to the termination of the Social Contract would be inconsistent with the
Social Contract, which permits Time Warner to upgrade its facilities over the five-year term
of the Social Contract. We thus reject the suggestion that the Social Contract contain a date
for completion of the restructuring of the BST. We also note that while the restructuring wilt
require Time Warner to shift programming between the BST and the CPST, Time Warner
already has that right and can exercise it independent of the Social Contract. Likewise,
Time Warner has the discretion, independent of the Social Contract, not to increase the
number of BST channels. We believe that allowing Time Warner to add more channels to
the BST, and subsequently increase rates, is contrary to the purpose of creating a lifeline
service. Thus, we reject the suggestion by some commenters that these provisions in the
Social Contract require modification. However, in order to alleviate some of the concerns
raised by the commenters, Time Warner has agreed to modify the Social Contract to ensure
that any restructuring (other than for the creation of MPTs) will not result in the shifting of
channels from the BST to unregulated tiers. Further, while we note the argument of the New
Jersey Board of Public Utilities that a reduction in the BST will reduce franchise fees under
New Jersey law, we point out that Time Warner has agreed to waive its right to a credit for
the franchise fee paid to a local franchising authority on CPST refund amounts. If a local
franchising authority wishes to preserve its rights under New Jersey law to a franchise fee for
a more expensive BST, it has the right to opt out of the lifeline BST provision.
58. Finally, we address the effect on the Social Contract of an local franchising
authority's decision not to elect the lifeline BST provision. The only effect a local franchising
authority's decision to opt out of the lifeline provision is that there will be no reduction in the
BST and no offsetting CPST rate increase. For purposes of clarification, Time Warner has
agreed to modify the Social Contract to specifically state that the opt-out provision contained
in the Social Contract is limited to local franchising authorities opting out of the creation of a
BST lifeline tier.
e. Migrated Product Tier
7 -?3
(i) Terms of the Social Contract 46
59. The Social Contract provides that in the Time Warner systems where Time
Warner or its predecessors did not create a is carte packages, Time Warner will be permitted
to migrate up to four existing services from its cable programming services tier to an MPT.
The channels migrated from the BST or CPST will continue to be priced at the rate regulated
price, subject to increases allowed for inflation and external costs under the Commission's
rules. There will be no limitation on the number of new channels that Time Warner my
add to an MP.T at a price of up to S.20 cents per channel plus license fees. After April 1,
1997, Time Warner may convert the MPT into an NPT as defined by the Commission's
Going Forward rules. The Social Contract provides that Time Warner may not require the
subscription to any tier other than the BST as a condition for subscribing to an MPT, and may
not require subscription to an MPT as a condition for subscribing to a CPST. Time Warner
also may not offer an NPT with a buy-through requirement of any tier other than the BST.
60. For the Newhouse Systems that had a to carte packages, Time Warner will be
permitted to create two MPTs. One MPT will consist of typically three superstitions and
one satellite channel and will initially be priced at its current rate, the average price of_which
is less then 29 cents per channet (exclusive of copyright fees). Time Warner also wilt be
allowed to create an MPT consisting of channels currently located in a to carte packages, so
that the total number of migrated services is no greater than six. These channels wilt be
priced at the current per channel rate. (Newhouse's non-superstition a to carte packages were
affirmatively marketed and had traditionally low penetration rates, ranging from 26% to 59%
of BST subscribers). Time Warner wilt be able to add an unlimited number of new channel
offerings at the rate of up to S.20 cents per channel plus license fees to these MPTs as well.
The remaining channels that had been offered in a is carte packages on Newhouse Systems
will be returned to CPSTs. The rates for CPSTs will increase due to the addition of these
channels; however, the increases will be limited to up to 50.25 per channel.
61. In systems where Time Warner has created a is carte packages that are being
treated as NPTs in areas contiguous with franchises where MPTs will be created pursuant to
the Social Contract, Time Warner will be permitted to lower the prices of the NPTs and raise
the prices of the adjacent MPTs in a revenue neutral manner to provide uniform rates for
uniform offerings in those systems. In those circumstances, the NPTs will be subject to the
price caps applicable to the MPTs under the Social Contract (i.e. prior to April 1, 1997, the
price may be adjusted solely to reflect unrecovered inflation and external cost increases).
(ii) Comments
62. The majority of comments on these provisions raised questions and requests for
clarifications. The questions raised included: how many channels Time Warner is allowed to
move to MPTs; how many MPTs can be created; and what the effect will be on rates in the
regulated tiers. In addition, as to subscribers to the Newhouse system, a question was raised
as to whether the provision in the Social Contract allowing for price uniformity in contiguous
Time Warner and Newhouse Systems will lead to excessive rate increases. Other
commenters contended that channels should not be removed from the regulated tiers, but just
duplicated. Commenters urged that a to carte channels created between April 1993 and
September 1994 by Newhouse which had previously been marketed as a separate tier and are
not required to be returned to a CPST should be subject to anti-buy-through and price
restriction rules. Some commenters proposed that there should be specific requirements as to
the rxamber of packages of channels on non-BSTs and that there be a uniform rate schedule
and channel line-up throughout the Charlotte-Meckenburg community. Finally, there were
comments which misperceived the meaning of the Social Contract. In its reply comments,
Time Warner notes that a total of only four channels may be migrated from both the BST and
CPST, that the rate for any regulated tier from which the channels are taken to create an
MPT wilt be proportionally reduced so that the creation of any MPT will be done in a
revenue-neutral manner to Time Warner, and that the Commission recognized in the Cost
Order that the rate-regulated services will provide competition for new services offered under
social contracts.
(iii) Discussion
63. In the Continental Contract Order, which contained provisions similar to those
in the Social Contract, we waived the channel migration provisions of the Cost Order and the
Going Forward Order to the extent that they prohibited the migration of up to four existing
services from its cable programming services to an MPT. We found that a waiver was in
the public interest in the context of the Continental Contract because the creation of MPTs
and NPTs expands the programming choices for subscribers. We believe that the public
interest also will be served and that a similar waiver of the channel migration provisions of
these orders is appropriate in the context of the Social Contract.. Except in the case of the
Newhouse Systems, only four channels can be migrated to a MPT, whether the channels are
7,4(/
migrated from the BST, the CPST, or a combination of both: '= Further, the Social Contract
provides that only one MPT per franchise area can be created, except in a limited number of
Newhouse Systems where there will be superstation tiers and a second package containing
such number of channels as brings the total number of channels an MPTs in the franchise
area to six, offered as separate MPTs. Similar to the Continental Contract, pricing for the
MPT may be increased only if Time Warner adds additional channels to the tier. Like the
Continental Contract, the Social Contract also provides that if Time Warner elects to convert
the MPT to an NPT, the elimination of all buy-through requirements wilt ensure that the
product offerings and rates on the MPT are competitive with the regulated BSTs and CPSTs.
Thus, the MPT option will increase customer choice while maintaining reasonable rates, and
warrants our authorization. We do not believe that we should prescribe what channels should
be in the MPTS, since this might require Time Warner to engage in services that are not
economically feasible. In response to the New York State Commission on Cable Television,
we clarify that any a Is carte packages created on Newhouse Systems between April 1, 1993
and September 30, 1994, from which no channels are required to be returned to a CPST, are
MPTs for the purpose of the anti-buy-through and price constraining provisions. Finally,
under the Social Contract, any adjustments between contiguous Time Warner systems and
Newhouse System ant be accomplished on a revenue neutral basis.
64. We conclude that the provisions in the Social Contract that allow for the creation
of MPTs will bring benefits to subscribers. However, for purposes of clarification, and to
alleviate the concern raised that the creation of MPTs wilt increase the prices of the regulated
tiers, Time Warner has agreed to a provision in the Social Contract that states that the rates
for any BST or CPST from which channels are moved to create MPTs shall be reduced so
that the creation of any such MPT wilt be revenue neutral to Time Warner.
f. Service To Schools
(i) Terms of the Social Contract
65. Under the Social Contract, Time Warner has agreed to provide a cable connection
free of charge to ail public schools in its franchise areas that are passed by Time Warner
systems. Time Warner also wilt provide a cable connection at cost to all secondary private
schools having students that receive funding under Title 1 of the Education and Secondary
School Act of 1%5 and that are passed by Time Warner systems. BST and CPST cable
service will be provided to all connected public and private schools without cost. Time
Warner wilt wire additional classrooms in existing schools at cost, and provide BST and
CPST service to each such outlet free of charge. With respect to new public schools and
existing public schools undergoing rehabilitation, if Time Warner is notified of new
construction or rehabilitation, Time Warner will coordinate with local officials and contractors
to wire each of the classrooms in the new or rehabilitated public schools free of charge.
66. Time Warner also will provide a free monthly educational program listing to each
connected school and will provide materials explaining the educational applications of Time
Warner's broadband cable systems. Each school district will receive one copy of the
materials free of charge with the opportunity to purchase additional copies at cost.
67. Time Warner will provide each connected school with a free connection to the
Time Warner/Time Inc. on-line service for personal computers, assuming this service is
successfully developed. If requested, each school wilt receive one free modem to use this
service with additional modems provided at cost. Time Warner also will sponsor a workshop
in each franchise area to demonstrate the service and its educational uses to teachers.
(ii) Comments
68. The majority of comments support this provision of the Social Contract because
the schools need advanced tools to enable their students to compete in a technological world,
and these technological toots can help equalize the gap between affluent and less affluent
schools. The Orange County Public Schools state that they would greatly benefit from the
Social Contract, commenting that of "special interest to our educators are the educational
materials, educational programs and the future on-line computer service, all of which will
enable our teachers and students to keep current with the latest information and technology."
The Spring Independent School District, Houston, Texas, praises Time Warner's commitment
to supporting the educational process as shown by its "efforts in providing free installation
and cable services for educational use in their 'Cable for the Classroom' project'M and further
comments that the additional services such as on-line computer services and technical training
are "of tremendous value to our District considering our limited funds."
69. A number of commenters requested that the proposed services be expanded to
cottages and universities, private schools, local governments, and schools which are not passed
by Time Warner, but are close to Timis Warner facilities. some commenters contend that
the benefits in the Social Contract are already provided under Time Warner's franchise
obligations, and that the Social Contract fails to require equipment in schools which has been
required by the local franchising authority, such as video distribution amplifiers. Some
commenters claim that Time Warner will only incur minimal costs in providing the school 46
benefits, but will gain through the advertising it will provide. Others comment that these
benefits will force schools to spend money an such things as VCRs and maintenance.
Finally, some commenters asked that the schools be permitted to do their own wiring:
70. In its reply comments, Time Warner acknowledges that many schools already are
connected or are planning to be connected pursuant to franchise agreements, but that in many
cases these connections are a new benefit to the schools. Time Warner further states that the
Social Contract provides additional benefits not typically contained in the school service
clauses of franchising agreements, such as internal wiring at cost, connections to certain
private schools, educational training for teachers, program guides, on-line service, and
modems.
(iii) Discussion
71. We believe that the school services to be provided by Time Warner are a
significant provision of the Social Contract. White the Social Contract cannot, and is not
intended to, provide benefits to every institution that desires them (e.g., universities and
hospitals) we note that it does bring new and improved educational opportunities to public and
private schools. We note that the cost to Time Warner of these services will be borne by
Time Warner, and is not included within the S4 billion upgrade cost that forms the basis for
the rate increases authorized under this Social Contract. These benefits will be provided
across the economic spectrum, helping many schools that otherwise could not access the
"information superhighway." We believe that the benefits to the schools are significant even
if the schools incur certain secondary costs, such as televisions, VCRs, or maintenance. While
we cannot be certain what these costs would be, we note that the schools have the option to
acceptor reject the benefits being offered by Time Warner and can decide whether or not
they should expend any necessary funds.
72. Despite the significant benefits these provisions will provide to students, we are
mindful.of some of the concerns expressed by some commenters and, as a result, have
negotiated some modifications to-the Social Contract. In particular, as originally drafted, the
Social Contract provided that Time Warner would offer service connections free of charge at
one outlet in 100% of the public schools passed by its cable systems and at cost to any private
secondary school which receives funding pursuant to Title I of the Elementary and Secondary
Education Act and which are passed by its cable systems. In response to requests by
commenters that connections be provided to schools which are close to Time Warner
facilities, Time Warner agreed to offer free of charge service connections in 100% of public
schools and at cost connections to any private secondary school which receives funding
pursuant to Title I of the Elementary and Secondary Education Act which are located within
200 feet of the activated plant of its cable systems and are within its service area.. In making
this modification, Time Warner relied upon the definition of "Standard" installation provided
under section 76.309(c)(2)(i) of the Commission's regulations which defines a "Standard"
installation as "those that are located up to 125 feet from the existing distribution system."
Time Warner extended the range to 200 feet of its activated plant. Time Warner further
agreed to provide such connections at cost to any other public or private schools located
beyond 200 feet from its activated plant and within its franchised service areas. In addition,
we agree that schools, like the subscribers themselves, should have the option to do their own
wiring. Time Warner has agreed to this request and has modified the Social Contract to state
that any such public or private school may elect to install its own internal wiring at its own
cost.
73. some commenters raised concerns that the Social Contract fails to provide some
of the benefits already provided under certain Time Warner franchise obligations. We wish to
clarify that the Social Contract is not intended to affect any agreements that a franchising
authority has otherwise obtained from Time Warner. To make this clear, Time Warner has
agreed to modify the Social Contract to state that "[n]othing herein shall affect the
enforceability of any otherwise valid preexisting local franchise agreement, ordinance, local
law or regulation which provides benefits which exceed those provided in this Contract
relating to system upgrades or the wiring of schools, nor shall local franchising authorities be
restricted in their authority to negotiate for such additional benefits after the Effective Date of
this Contract." Further, the Social Contract provides that to the extent a local franchise
agreement contains an obligation to provide connections to schools as agreed to in the Social
Contract, Time Warner cannot seek to recover any such costs for these connections as external
or other costs. Accordingly, any school benefits obtained outside of this Social Contract will
not be affected.
g. Home Wiring
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(i) Terns of the Social Contract
74. Under the Social Contract, Time Warner will not restrict the ability of a
subscriber to remove, to replace, to rearrange, or to maintain any cable wiring located within
the interior of a his or her dwelling as long as these actions do not interfere with the ability of
Time Warner to collect revenues from that subscriber or any other adjacent subscribers.
Subscribers will be responsible for the cost of remedying any improper installation resulting
in a violation of the Commission rules. Time Warner will provide high quality home wiring
and materials at cost to its subscribers.
(ii) Comments
75. Some commenters claim that the home wiring provision in the Social Contract
merely restates the Commission's preexisting rules. Other comments relate to the fact that
the Social Contract does not specifically extend the subscriber's rights to cable located at least
twelve inches outside the subscriber's dwelling; a misconception that there has been a total
deregulation of inside wiring and thus no need for the Social Contract provision; a question as
to the ownership of the wiring and whether Time Warner has maintenance obligations if the
subscriber does not maintain the home wiring. In its reply comments, Time Warner claims
that the Social Contract goes further then the Commission's rules because, unlike the
Commission's rules, the contractual provisions here apply before a customer terminates cable
service.
(iii) Discussion
76. Contrary to the claims of some commenters, the hone wiring provision of the
Social Contract does not merely restate our existing rules, but rather goes beyond those rules
to cover situations prior to the time a customer terminates its cable service. However, the
provision does not exempt Time Warner from these rules; therefore, those rules continue to be
applicable to cable wiring located at least twelve inches outside the subscriber's dwelling.
While telephone rate regulation of inside wiring has been terminated, our cable hone wiring
rules have not been eliminated. We find that the hone wiring provisions of the Social
Contract provide a benefit to subscribers as the provisions enable subscribers to change the
location of their cable without incurring additional costs. Further, the provisions provide that
Time Warner will inform the customers of their rights to remove, to replace, to rearrange, or
to maintain home wiring, as well as their obligations if signal leakage occurs as a result of
their installation or rearrangement. This education process will be a public benefit since it
will enable customers to make rational choices whether to install or to rearrange hone wiring.
h. System Acquisitions and Divestitures
(i) Terms of the Social Contract
77. Time Warner has a pending contract to acquire cable systems from Cablevision
Industries Corporation (CVI). The Social Contract provides that at its option, Time Warner
may include any cable systems acquired from CVI, provided that the CPST settlement
provisions of the Contract will not apply until any applicable settlements are mutually agreed
upon between Time Warner and the Commission. The Social Contract further provides that
the addition of any other newly acquired systems by Time Warner to the provisions of the
Social Contract will be subject to Commission approval, which will be expeditiously decided
and not unreasonably withheld. Finally, in the event of a sale of any system during the
period of the Social Contract, the purchaser may elect, with the concurrence of the
Commission, for the provisions of the Social Contract to continue to apply to such systems
and the Commission's concurrence shall be expeditiously decided and not unreasonably
withheld. In the event the purchaser elects not to have the provisions of the Social Contract
apply to any such system, the CPST subscribers to such system shall be eligible for the
refunds calculated under the Social Contract in the event the upgrade commitment has not
been completed prior to the consummation of such sate.
(ii) Comments
78. The comments regarding this provision were from communities served by CVI,
contending that they should be pert of the Social Contract. In addition, the City of Los
Angeles contends that it should not have to comment on this issue until the acquisition of CVI
is finalized, but that CVI systems should not be added to the Social Contract without the
consent of the local franchising authority. In its reply comments, Time Warner stated that
it has no objection to including CVI communities as part of the Social Contract.
(iii) Discussion
'47-4?
79. in view of the desire of franchising authorities (with the exception of Los
Angeles) of CVI systems to be included in the Social Contract and Time Warner's agreement •
to include all CVI systems in the Social Contract, we find that the inclusion of such systems
is in the public interest. The Social Contract is thus modified to state that Time Warner shall
include any cable systems acquired from CVI within the provisions of the Social Contract. In
addition a provision in the Social Contract has been added providing for 45 days, notice of
the Social Contract to the affected local franchising authorities in order to provide.them with
an opportunity to opt out of the lifeline BST provision of the Social Contract.
80. Because the upgrade capital costs committed by Time Warner in the Social
Contract are tied to the systems it currently owns, any such acquisition or divestiture of
systems by Time Warner, as provided for under this section, could change the amount of
capital costs expended for the upgrade. As part of our oversight responsibilities with respect
to the Social Contract, a provision in the Social Contract has been added that states that the
upgrade capital costs set forth in the Social Contract will be adjusted, as mutually agreed to
by Time Warner and the Commission, to reflect any additions or deletion of systems subject
to the Social Contract. To address the parties' desire to have the required review and
approval of additions and deletions of smaller systems accomplished expeditiously, the Social
Contract further provides that the approval from the Commission of such adjustments shall be
expeditiously decided and not be unreasonably withheld. In view of the fact that these capital
commitment decisions must be made expeditiously and involve a thorough examination of the
upgrade plan, we believe that, with respect to acquisitions or dispositions of cable assets
involving 400,000 or fewer subscribers, the Cable Services Bureau is in the best position to
take any actions contemplated under section III F. 6 of the Social Contract, including approval
or disapproval of additions or deletions from the provisions of the Social Contract and the
adjustments in the monetary amount of the upgrade which results from such additions or
deletions as well as any other actions contemplated under this section. Therefore, on our own
motion, we order that the Cable Services Bureau be given delegated authority to take any
actions contemplated viler section III F. 6 of the Social Contract.
i. Modification end Termination
(i) Terms of the Social Contract
81. The Social Contract provides that it may not be modified or terminated without
the mutual agreement of both parties. Time Warner may petition the Commission to modify
or terminate the Social Contract based on any relevant change in applicable laws, regulations,
or circumstances. Any petition to modify or terminate this contract will be served on the 4P
Local franchising authorities for the affected systems. The Commission will allow 30 days
after the release of the Public Notice for interested parties to comment and 15 days for reply
comments before acting on any such petition.
82. In the event of a material change in the 1992 Cable Act or the Commission rules
that would favorably impact Time Warner, any Time Warner system may elect not to be
bound by the relevant provisions of the contract addressing the BST price cap (III.A.2),
additions to the BST (III.A.3), equipment rates (III.B.), MPTs (III.D.), and the CPST price
cap (III.F.4). All other provisions of the Social Contract would remain valid and enforceable.
(ii) Comments
83. Several commenters contend that the provision in the Social Contract permitting
Time Warner systems to elect not to be bond by certain sections of the Social Contract is
one-sided because it allows Time Warner to terminate the Social Contract unilaterally if any
applicable law or regulations change. Some commenters also contended that the local
franchising authorities should have input on any modifications or terminations. In its reply
comments, Time Warner contends that this provision relates only to certain rate provisions in
the Social Contract, and that notwithstanding any such changes in the law or in regulations,
Time Warner still is required to comply with other non-rate provisions and that Time Warner
will be subject to the rate regulation rules in effect at that time.
(iii) Discussion
84. We believe that the provision in the Social Contract allowing Time Warner to
take advantage of any changes in the current rate regulations is both justified and necessary.
We are mindful of the pending telecommunications legislation and the reality that we could
not reasonably expect Time Warner to agree to comply with existing rate regulations in the
event they are eliminated. Thus, viler the Social Contract, Time Warner, similar to all other
cable operators, will be able to take advantage of any changes in either the 1992 Cable Act or
the Commission's regulations with respect to the rate provisions in the Social Contract, i.e.
Time Warner will be subject to whatever rate regulation.is in effect at that time. However,
even if the statutory or regulatory provisions concerning rate regulation change, Time Warner
is not relieved of any other provisions in the Social Contract. We retain our oversight
/ x`73
authority with respect to these non-rate provisions and do not_beLieve further review by local
franchising authorities is necessary.
S j. Preemption
(i) Terms of the Social Contract
85. The Social Contract provides that to the extent that any state or local law,
regulation, ordinance, or franchise is inconsistent with the terms of the Social Contract, the
Social Contract preempts those requirements. Additionally, the Social Contract provides that
all waivers of the Commission's rules and modifications to the Commission forms necessary
to effectuate the terms of the Social Contract are granted. The Social Contract does not
preempt the right of local franchising authorities to negotiate upgrades which exceed the scope
of the Social Contract.
(ii) . Comments
86. Many local franchising authorities argue that the Social Contract contains
language which could be interpreted as precluding them from requiring that Time Warner
adhere to the conditions imposed in franchising agreements or from imposing certain
conditions in future franchising agreements. in its reply comments, Time Warner contends
that the language does not preclude any local franchising authority from negotiating with
Time Warner for a higher level of upgrades.
(iii) Discussion
87. In view of the concerns raised by many local franchising authorities, Time Warner
has agreed to a modification to the Social Contract that limits the scope of the preemption. In
particular, the Social Contract only preempts the local franchising authority from regulating
rates or ordering refunds in a manner inconsistent with its terms. As stated in Section III. I.
2. a. of the Social Contract, the provision added specifically affirms the enforceability of any
"otherwise valid preexisting local franchise agreement, ordinance, local law or regulation
which provides benefits which exceed those provided in this Contract relating to system
upgrades or the wiring of schools, nor shall (local franchising authorities] be restricted in their
authority to negotiate for such additional benefits after the Effective Date of this Contract."
We believe this language sufficiently addresses the concerns raised by various local
franchising authorities as it clarifies that the Social Contract is not intended to preempt any
preexisting or future franchising agreement that provides for a different or higher level of
upgrades or benefits.
k. Other Issues
(1) Comments
88. A variety of other issues and questions were raised by commenters. Among the
issues raised are that (1) the comment period was too short; (2) the Commission has abdicated
its oversight responsibilities over the cable monopoly; (3) local franchising authorities should
be permitted to deny franchise renewals for failure to comply with the Social Contract; and
(4) the Commission should address the issue of scrambling. Further, a number of comments
discuss matters related to Time Warner's behavior in particular communities including claims
of unfair competition and discrimination. In its reply comments, Time Warner did not
respond to all of these issues, but did contend that it is subject to an increasing amount of
competition and that the Commission has ample power to enforce the Social Contract without
further harsh penalties being added by local franchising authorities.
(ii) Discussion
89. We have allowed almost two months for comments and reply comments on the
Time Warner Social Contract. It is our view that this period of time correctly balances the
need for public comment with the need to make the public benefits of the Social Contract
available as soon as possible. One of the mein goals of the 1992 Cable Act is to protect the
interests of subscribers. Comments that we have abdicated our oversight responsibilities
over Time Warner are without support. To the contrary, the Social Contract is a regulatory
mechanism expressly provided for in our rules for cable systems not subject to effective
competition. Moreover, under the Social Contract, we have retained oversight responsibilities
for Time Warner's compliance with the Social Contract. We believe that the goals of the
1992 Cable Act are being met in this Social Contract. The Social Contract provides
reasonable, stable rates to subscribers, as well as various social benefits.
90. We find that the Social Contract provides remedies for violations, and, thus,
further enforcement procedures by local franchising authorities are not necessary. We note
that the Social Contract provides that each local franchising authority will be served with
`7-49
progress reports no later than 90 days following the and of each calendar year that the Social
Contract is in effect. The Social Contract provides that any violation of its terms shall be
treated as a violation of a Commission order with the corresponding rights and remedies
associated with the enforcement of an order. Tim Warner will report to the Commission on
an annual basis within 90 days following the end of each calendar year of the Social Contract.
This report will detail the number of BST and CPST subscribers benefitting from upgraded
service, the system reliability and service improvements resulting from the upgrade, and the
projected upgrade activities for the following year. This report will be served on each local
franchising authority. To verify the accuracy of these reports and ensure compliance, the
Commission reserves the right to inspect the books and records of Time Warner and to
interview corporate employees.
91. To the extent that local franchising authorities or other interested parties disagree
with Time Warner's interpretation of any provision of the Social Contract, perceive a lack of
enforcement of its terms and conditions, or disagree with the remedies we my prescribe, they
may seek redress at the Commission. Further, the Social Contract is not intended to resolve
every conceivable issue raised with respect to Time Warner's service and operations. There
are other avenues available to address concerns regarding such matters as scrambling, alleged
discriminatory treatment by Time Warner of its competitors, poor service, billing problems
and other disputes with complainants.
IV. CONCLUSION
92. The Social Contract negotiated with Time Warner fulfills the objectives of the
Incentive Upgrade Plans which were established in the Cost Order. The Social Contract
ensures that customers will have reasonable, stable rates for existing services. Additionally,
Time Warner will obtain pricing flexibility to upgrade its system in cost effective ways in
order to provide customers with increased programming choices and improved quality of
service. Furthermore, the Social Contract will reduce the regulatory burdens associated with
rate regulation on local franchising authorities, Time Warner, and the Commission.
93. It is our belief that by approving the Upgrade Incentive Plan we encourage
upgrades that provide services that are economically justified and that best meet customers'
needs. Therefore, we find this plan, to the extend modified above, to be in the public interest
and approve the agreement.
94. Accordingly, IT IS ORDERED that the Social Contract between Time Warner and
the Commission as modified above IS APPROVED.
95. IT IS FURTHER ORDERED that there is a general waiver of any Commission
rule that is necessary to effectuate the terms of this Social Contract including, but are not
limited, to the foltowing rules: 47 C.F.R. ^U 76.923; 47 C.F.R. ^U 76.987; 47 C.F.R. ^U
76.%1(e); 47 C.F.R. ^U^U 76.309(c)(i)(8),76.964; 47 C.F.R. ^U 76.960; 47 C.F.R. ^U 76.933; 47
C.F.R. ^U 76.922; 47 C.F.R. "U 76.956.
%. IT IS FURTHER ORDERED that waiver of any Commission rule or
modifications to the Commission's forms necessary to effectuate the terms of the Social
Contract IS GRANTED.
97. IT IS FURTHER ORDERED that the Cable Services Bureau is given delegated
authority to oversee implementation of the Social Contract, including authority to resolve all
pending complaints covered by the Social Contract and to make adjustments in the amount of
Time Warner's upgrade commitment on additions or deletions of systems subject to the Social
Contract.
98. IT IS FURTHER ORDERED that preemption of any local franchise agreement or
any state or local rule or regulation that requires Time Warner to give more than 30 days'
notice of rate and service changes to subscribers for the period prior to January 1, 1996, IS
GRANTED.
99. IT IS FURTHER ORDERED that the Secretary is instructed to sign the Social
Contract, attached as Appendix B, on behalf of the Commission.
100. IT IS FURTHER ORDERED that this Order is effective upon adoption.
FEDERAL COMMUNICATIONS COMMISSION
9
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Wittiam F. Caton
Acting Secretary
0
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APPENDIX A: Comments Expressing Unqualified Support of Time Warner Social Contract
• Alabama
City of Irordale
Birmingham Public Schools
City of Brighton
City of Bessemer
Alabama Public Service Commission
City of Birmingham
California
Cathedral City
Coronado High School
San Bernardino _
CounciLmL4. r Barbara Warden, San Diego
Assemblywoman Dede Alpert
San Diego County Office of Education
International Center for Communications, San Diego
San Diego Business Roundtable for Education
City of Barstow
Congressman Brian R. Bilbray
Poway Unified School District
San Diego City Schools
City of Palm Springs
Assemblywoman Susan A. Davis
City of Coronado
Coronado Unified School District
Jean Farb Middle School, San Diego
Kern County
San Diego State University
Council aroaber Randy Rowles, Bakersfield
Steve A. Perez, Bakersfield
Dianne Jacob, Chairwoman, San Diego County Board of Supervisors
San Diego Council axsnber Harry Mathis
James W. Silva, Supervisor, Second District, Orange County
Connecticut
Cable Television Advisory Council
Florida
National Development Properties of Florida-Bay, Inc.
Representative John Morroni
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Town of Melbourne Beach •
Representative R.Z. Saftey
School Board of Polk County
Manatee County
Jaymie G. Carter
City of Belleair Stuffs
City of Temple Terrace
Polk Education Foundation i Business Partnership, Inc.
Brevard County
Town of Indian Shores
Town of Lake Hamilton
School District of Hillsborough County
City of Auburndale
School Board of Manatee County
Representative Dennis L. Jones
City of Treasure Island
City of Palm Bay
Pittsburgh Baseball Club, Florida Baseball Operations
Barnett Bank of Manatee County
Hillsborough Education Foundation, Inc
City of St. Pete Beach
City of Crystal River
City of Bradenton
City of Largo
Town of Malabar
School Board of Manatee County
City of Bradenton Beach
Lake County Information Services
City of Cocoa Beach
County Commissioner Joe McClash
City of Melbourne
City of Maitland
State Senator David G. Kelley
City of Rockledge
City of Edgewood
7-53
State Senator Donald C. Sullivan
Dave i Lynn McDaniel
Eastside Elementary School, Haines City
Osceola High School, Seminole
Tamara L. Nagar
Oak Grove Middle School
City of Lakeland
School Board of Brevard County
Hillsboro Public Schools
City of Winter Park
Orange County Public Schools
Faye C. Roberts, Columbia County Public Library
Polk County
Richard Fawley
Georgia
The Travel Channel
Illinois
City of Berwyn
Ronald F. Crick
Village of Tinley Park
Village of Stickney
Indiana
NOLA, Indianapolis
Indianapolis Chamber of Commerce
Indianapolis Urban League
William G. Mays, Mays Chemical Company
Kinder Vision, Peru
Congressmen Dan Burton
Indianapolis Public Schools
Kentucky
Tommy Sanders
Dr. Robert N. McGaughey, Murray State University
Louisiana
Caddo Parish School Board
Caddo Parish Commission
St. John the Baptist Parish
S Ouachita Parish School System
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Monroe City Schools
Maine
Congressman John E. Baldacci-
Suzan Nelson, Librarian, Portland Nigh School
Donna Crook, Computer Technology Steering Committee, Portland Nigh School
Maryland
Discovery Communications, Inc.
Massachusetts
City of Melrose
City of Medford
0
Lynn Business/Education Foundation
Swommpscott Public Schools
Lynn Business Partnership
Salem Public Schools
Lynn Public Schools
Melrose Chamber of Commerce
Central Berkshire Regional School District
Patrick J. Markham, Pittsfield Public Schools
City of Pittsfield
Minnesota
City of Shakopee
City of Chaska
City of New Ulm
Bloomington Chamber of Commerce
Richfield Chamber of Commerce
Edina Public Schools
Eden Prairie Chamber of Commerce
Eden Prairie Schools
Minneapolis Public Schools
Minnesota Public Utilities Commission
Jackie Cherryhoees, President, City Council, Minneapolis
Richfield Public Schools
Edina Chamber of Commerce
Greater Minneapolis Chamber of Commerce
State Senator Steve Novak
Susan Ray Euler, Fire Department Not Spots
City of Ranlo
7-56"
State Senator Cart Y. Kroening
• Mississippi
Mississippi Economic Council
Jackson Public School District
Town of Coldwater- Supports Contract, especially rate stability, reduced basic rates, and
upgrades.
City of Ridgeland
City of Raymond
Hinds County
City of Senstobia
Madison County
Town of Edwards
Missouri
Ferguson-Berkeley Chamber of Commerce
City of Belton
City of Parkville
Village of Calverton Park
City of Lee's Summit
Nebraska
City of Auburn
City of Lincoln
City of York
City of Nebraska City
City of Superior
Lancaster County
City of Fairbury
New Jersey
Assemblyman Patrick J. Roma
New York
East Syracuse-Minoa Schools
Village of Malone
Village of North Syracuse
Village of Painted Post
Fayettevilte-Manlius Schools
Town of Catlin
Town of Camillus
John P. Almonte and Edgar F. Ames, East Syracuse-Minoa Central Schools
A S E Television Networks
• Peyton C. Watkins, Penfield
Town of Chili
of East Rochester
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Town of Ogden
Town of Gates
Village of Endicott
Town of Perinton
Town of Narcellus
Rome City School District
Town of Newark. Valley
Town of Kirkwood
ESPN, Inc.
Town of Richmond
Town of Clarendon
City of Corning
City of Port Dickinson
Village of Johnson City
Joni Lincoln, Port Byron Central School District
Town of Parma
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Jamesville-DeWitt Central School District
Town of Kirkwood
Town of Conklin
Town of Clifton Park
Board of Cooperative Educational Services of Cattaraugus, Alleghany, Erie and Wyoming
Counties
City of Rochester
Town of Stillwater
Town of Fenton
City of Elmira
Village of Horseheads
Town of Webster-
North Carolina
City of Lexington
Town of Weddington
FTCC Foundation, Inc., Fayettevi lle
University of North Carolina at Wilmington
.
Pembroke State University
Cumberland County Schools
i Town of Emerald Isle
Moore County Schools
City of Hamlet
Guilford County
City of High Point
Instructional Technology, Charlotte-Mecklenburg Schools
Centralina Council of Governments-
County of Moore, Department of Social Services
Town of Haw River
Town of Landis
Cleveland County
Carteret County Board of Education
Lumberton Area Chamber of Commerce and Visitors Bureau
Town of Southern Pines
Southeastern University
Town of Rockwell
Public Schools of Robeson County
. State Senator Luther H. Jordan, Jr.
Town of Chapel Hill
Shelby City Schools
Asheboro/Randolph Chamber of Commerce 8 Tourism Bureau
Guilford County Schools
City of Thomasville
City of Winston-Salem
Cleveland County Schools
Town of Cramerton
City of Kings Mountain
City of Burlington
City of Albemarle
Gaston County Schools
Town of Matthews
County of Jones
Cabarrus County
City of Asheboro
Charles F. McCraw, Guilford County Schools
Charles M. Lineberry, Jr.
Town of Ramseur
City of Randleman
John G. Redmond, North Carolina Council on Economic Education
Archdale-Trinity Chamber of Commerce-
City of Shelby
J. Parks Todd, Jr., North Carolina State Board of Community Colleges
Fayetteville Chamber of Commerce
City of Bessemer City
Grennsboro Chamber of Commerce
Ohio
Village of Marble Cliff
Norwood City Schools
WCET, Cincinnati
Museum Center, Cincinnati
Marguerite Shurte
City of Piqua
Municipality of West Milton
Immaculate Heart of Mary School, Cincinnati
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Gehenna-Je
Rudy Forsberg
Marian A. Spencer
Staff of Canton City School District
Elide Local Schools
Thomas Worthington High School, Worthington
Dick Lehmann, Westerville South High School, Westerville
Learning Materials Center, Rutherford B. Hayes High School, Delaware
Lara Gianessi, Fort Hayes Metropolitan Education Center, Columbus
Village of Obetz
S. Julia Deiters
City of Grwvdview Heights
Elida Senior High School
City of Akron
City of Columbus
Brenda Jackson, William Henry Harrison Junior School, Harrison
Terrace Guild, Cincinnati
Literacy Network of Greater Cincinnati
7-5/
Wellness Community, Cincinnati
East End Adult Education Center, Cincinnati
Camilla S. Huff, St. Veronica School, Cincinnati
Green Township
Ansonia Local School District
Newton Local School District
John E. Miller, The Troy Schools
Milton-Union Exempted Village Schools
Covington Exempted Village Schools
City of Bexley
Liam/Allen County Chamber of Commerce
Wendy E. Webb, Youngstown City School District
Eldonna H. Ashley, Worth Union School District
Miami East Junior High School
City of Akron
West Liberty-Salem Schools
John G. Olds, Northwestern College
Carrie Clark, Playhouse in the Park, Cincinnati
Kids Voting, Cincinnati
All About Kids, Cincinnati
Arts Consortium of Cincinnati
Oregon
Kathy Allen-Kirsch, Gregory Heights Middle School, Portland
Karen Gaddis-Philips, Sam Barlow High School, Gresham
Portland Public Schools
Pennsylvania
City of Reading
Tim Smith, Reading
Reading Area Community College
Alvernia College, Reading
Reading School District
Pottsville Area School District
Blue Mountain School District
Berks County intermediate Unit
Bellwood-Antis School Board
Moon Community Access Television
Greater Johnstown Committee
BT Financial Corporation
Moon Area School District
Representative Jim Lynch
Representative Richard A. Geist
Richland Senior High School, Johnstown
David Popp, Westmont Hilltop School District, Johnstown
Altoona Area School District
Bradford Cable Commission
United Way of Barks County
Representative Sheila Miller
Pennsylvania State University
Greater Johnstown/Cambria County Chamber of Commerce, Inc.
City of Altoona
Greater Johnstown School District
Franklin Area Chamber of Commerce
Franklin Area School District
Dattey Grove School District
Richland School District
Representative Samuel E. Rohrer
Sugarcreek Borough
Valley Grove School District
Barks Community Television
West Lebanon Township
South Carolina
Town of Pinewood
Sumter School District No. 17
City of Darlington
Town of Clover
Sumter County Administrator
City of Florence
Tennessee
Memphis City Schools
Germantown Area Chamber of Commerce
Collierville Area Chamber of Commerce
Randy Houston, First Tennessee Bank, Collierville
Beverly A. Holmgren, First Tennessee Bank, Bartlett
City of Bartlett
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City of Lakeland
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Texas
City of Hunters Creek Village
City of San Antonio
Fort Bend Independent School District
T.H. Rogers School, Houston
Luling Independent School District
City of Elgin
Robinson independent School District
Houston Councilman John W. Peavy, Jr.
City of Piney Point Village
Missouri City
City of McGregor
City of Round Rock
Cypress-Fairbanks Independent School District
City of Luling
Round Rock Chamber of Commerce
• El Paso Independent School District
Greater Austin Chamber of Commerce
City of Meadows
FOX 18, Wichita Falls
Ysleta Independent School District, El Paso
City of Bastrop
Hill Country Village
Town of Hollywood Park-
City of Castle Hills
Greater Houston Partnership
Congressman Bill Archer
City of Selma
City of Melotes
City of Bellmead
St. Paul's Episcopal Day School, Waco
Eanes Independent School District
City of Balcones Heights
City of Kirby
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City of Olmos Park
Greater Irving Chamber of Commerce
Councilwoman Cynthia White, Lewisville
City of Cibolo
City of Shavano Park
Spring Independent School District
City of West University Place
Helen S. Handler, Paul Revere Middle School
Elgin Independent School District
City of Converse- Late Filing
Lewisville Chamber of Commerce
Representative Peggy Hamric
City of Waco
Virginia
Greater Irving Chamber of Commerce
Poquoson City Public Schools.
Smithville Independent School District
West Virginia
West Virginia Cable Advisory Board
Wisconsin
Green Bay Area Chamber of Commerce
Action, Menasha
Joseph A. Rice, Milwaukee
Newtec Studio, Green Bay
Whitnall Middle School, Hales Corners
Oshkosh Area School District
Greater Milwaukee Education Trust
School District of Beloit
Marquette University High School
Kaukana, Wisconsin
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•
APPENDIX B
•
TABLE OF CONTENTS
40 Page
1. BACKGROUND AND SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 1
11. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT . . . . . . . . . . . . 4
A. Basic Service Tier Rate Relief . . . . . . . . . . . . . . . . . . . 4
1. Creation of a Low-Cost, Lifeline Basic Service Tier. . . . . . . 4
2. BST Price Cap . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Additions To Basic Service Tier . . . . . . . . . . . . . . . . . 6
B.Equipment Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
C.Resolution Of Existing CPST Rate Cases . . . . . . . . . . . . . . . . 8
D.Migrated Product Tiers . . . . . . . . . . . . . . . . . . . . 9
E.Customer Refunds and CPST Rate Reductions . . . . . . . . . . . . . . . 11
F.lnfrastructum Upgrade Requirement . . . . . . . . . . . . . . . . . . 12
1. Upgrade Requirement. . . . . . . . . . . . . . . . . . . . . . 12
2. No Impairment Of Local Authority . . . . . . . . . . . . . . . . 13
3. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . 13
4. CPST Rates Subject To Price Cap . . . . . . . . . . . . . . . . . 14
5. Failure To Meet Target . . . . . . . . . . . . . . . . . . . 15
6.• Adjustments To Systems Subject To Contract . . . . . . . . . . . 15
G.BST And CPST Rate Stability . . . . . . . . . . . . . . . . . . . . . . 16
H.Additional Consumer Benefits . . . . . . . . . . . . . . . . . . . . . 17.
1. Service To Public Schools . . . . . . . . . . . . . . . . . . . . 17
2. Home Wiring . . . . . . . . . . . . . . . . . . . . . . . . . . 19
I.Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . 20
1. Modification And Termination . . . . . . . . . . . . . . . . . . 20
2. Authority To Enforce Contract . . . . . . . . . . . . . . . . . . 21
3. All Necessary Waivers And Preemptions Deemed Granted . . . . . . 23
4. Effect On Other Proceedings . . . . . . . . . . . . . . . . . . . 24
5. No Admission Of Wrongdoing . . . . . . . . . . . . . . . . . . . 25
6. Contract In Public Interest . . . . . . . . . . . . . . . . . . . 25
7. Legal Challenges . . . . . . . . . . . . . . . . . . . . . . . . 25
8. Effective Date And Tenn . . . . . . . . . . . . . . . . . . . . . 26
9. Public Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11. Severabi t i ty . . . . . . . . . . . . . . . . . . . . . . . . . 28
k
12. Entire Understanding . . . . . . . . . . . . . . . . . . . . . . 29
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SOCIAL CONTRACT FOR TIME WARNER CABLE
1. BACKGROUND AND SUMMARY.
The "Social Contract" set out in this document (the "Contract") relates to certain
services and equipment offered by Time Warner Cable ("TWC") actually or potentially
subject to reputation under the terms of the applicable provisions of Title VI of the
Communications Act of 1934, as amended ("Act").
The Federal Communications Commission ("FCC" or "Commission") finds that this
Contract will advance the public interest by: (i) assuring fair and reasonable rates for
TWC's cable service customers; (ii) facilitating the creation of a tow-cost, lifeline basic
service level; (iii) improving TWC's cable service by substantially upgrading the channel
capacity and technical reliability of its cable systems; and (iv) reducing the administrative
burden and cost of regulation for local governments, the FCC and TWC.
The Contract has been negotiated between TWC and the FCC in accordance with the
FCC's authority to consider and adopt "social contracts" as an alternative to other regulatory
approaches applicable to cable television rates, as modified and amplified in the order
adopting the Continental Social Contract, and its authority to regulate TWC's cable
services under the Act, particularly in light of the Statement of Policy set forth in Section
2(b) of the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No.
102-385, 106 Stat. 1460 (01992 Cable Act"). Except as otherwise provided for herein, this
Contract covers all of TWC's cable systems as of the Publication Date (as hereinafter
•
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I -(P(P
defined). Until such time as there is a final decision permitting the transfer of the Laredo,
Texas cable television franchise to TYC, this Contract shall not apply to the affected cable
system serving Laredo, Texas.
11. DEFINITIONS.
The following terms shall have the meanings set forth below. Certain other terms are
defined elsewhere herein.
A. "Basic Service Tier" or "BST" means the cable service level which includes
the signals of any local television broadcast stations and any public, educational or
governmental access channel required by the relevant franchise to be carried on the BST.
B. "Cable Programming Service Tier" or "CPST" means any tier of video
programming service, but shall not include (i) video programming carried on BST; (ii) video
programming when offered on a per channel, multiplexed, a la carte or per program basis;
(iii) any Migrated' Product Tier; or (iv) any New Product Tier (UMPT") as defined by the
Going Forward Rules and 47 C.F.R. ^U 76.987.
C. "Cost" means that the prices so designated have been designed to recover
actual costs, including a reasonable rate of return as defined in the FCC Cost of Service
Order, supra, at ^T 207.
D. "Current Rates" means those TYC system rates that are in effect as of the
Publication Date, or rates that will become effective after the Publication Date and for which
notice was given to subscribers on or before the Publication Date.
E. "CVI" means Cablevision Industries Inc., its subsidiaries and affiliates.
0
F. "Effective Date" means the date on which the FCC releases an order
approving this Contract.
G. "Eligible Subscribers" weans those CPST subscribers to any of TWC's cable
systems listed on Appendix A to this Contract at the time Refunds are issued.
H. "Going Forward Rules" weans the FCC's rules adopted in the Sixth Order on
Reconsideration, 76 RR 2d 859 (1994), including all subsequent clarifications and
amendments.
1. "Nigrated Product Tier" or "MPT" weans (a) a tier consisting of up to four
services moved from a system's existing BST or CPST(s) as described in Section III.D.S. or
(b) any Superstation Tier or any tier consisting of those services remaining on a Preferred
Tier, as defined in Section III.D.1., after any excess channels have been shifted to CPST as
described in Section 111.0.3.
J. "Publication Date" weans the date on which the Commission releases its initial
Public Notice relating to this Contract.
K. "Refund" weans a prospective bill credit issued to Eligible Subscribers.
L. "Time Warner Cable" or "TWC" weans the collective reference to Time
Warner Entertainment Company, L.P. ("TWE"), TWI Cable Inc. ("TWI Cable") and Time
Warner Entertainment-Advance/Newhouse Partnership ("TWE-A/N"), or any subsidiary,
division or affiliate thereof, or, where consistent with the context, any cable system owned or
managed by TWE, TWI Cable or TWE-A/N, except where particular provisions of this
Contract specify a more limited scope.
0
III. TERMS AND CONDITIONS OF THE SOCIAL CONTRACT.
A. Basic Service Tier Rate Relief. i
1. Creation of?a Low-Cost, Lifeline Basic Service Tier.
a. In order to provide its subscribers with the option to purchase a
low-cost BST, no later than six months after the Effective Date, TWC wilt reduce its BST
rates on systems serving at least 85% of TWC's total subscribers to a level 10% below the
Current Rates. In any system where the BST rates are initially reduced by 10% as described
above, but where BST rates are pending review on the Publication Date, TWC will reduce
its BST rates further by 10% from the level ultimately determined to be reasonable, after
such determination is no longer subject to review or appeal. TWC my increase its CPST
rate(s) in any system by an amount necessary to recoup the reduction in revenues due to the
10% adjustment in the BST rate in that system. Such adjustment to CPST rates shall be
submitted to the FCC for review. A local franchising authority ("LFA") way elect not to
have TWC implement the BST rate reduction and corresponding CPST adjustment described
in this paragraph in its franchise area by providing notice to TWC and the Commission no
later then 45 days following the Effective Date. Such notice shall (a) be in writing, (b) be
addressed to the Office of the Secretary, Federal Communications Commission, 1919 M
Street, M.W., Washington, D.C. 20554, with a copy to Time Warner Cable, 300 First
Stamford Place, Stamford, CT 06902-6732, attention: General Counsel, (c) identify the local
franchising authority, the community unit identification txiaber for the franchise area, and
(d) reflect the clear intent to not have TWC implement the BST rate reduction described in
Section III.A.1.a of this Contract. However, such notice need not meet any other
requirements and my be in letter form. An election by a LFA to opt out of the provisions
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of this paragraph shall not otherwise affect the applicability of the remaining provisions of
this Contract in such community.
b. In order to achieve its goal of creating low-cost BSTs, TWC
wilt restructure the BST on the remaining systems where the BST has not been reduced by
10% as described above so as to create a lifeline-type service. Such restructuring will
involve shifting channels from the BST to an existing or newly created CPST (or MPT as
permitted by Section III.D.5.) and not to any service level which would not be subject to rate
review upon the receipt of a valid complaint under current FCC rules. Such restructuring
will not be Im, , by the FCC to be a "fundamental change" of any affected service tier.
At the time of such restructuring, the BST rate will be reduced by an amount equal to the
percentage of the BST channels shifted to CPST. Where the BST channels are shifted to a
newly created CPST, the rate for the CPST wilt be equal to the amount of the reduction in
the BST rate. Where the BST channels are shifted to an existing CPST, the rate of the
existing CPST wilt be increased by an amount necessary to recoup the reduction in revenues
resulting from the reduction in the BST rate as described above. The 10% BST rate
reduction, with CPST offset, wilt be implemented upon restructuring of such remaining
systems. Nothing herein shall be deemed to affect any otherwise enforceable franchise
provision relating to programming services to be provided by TWC.
2. BST Price Cap.
After implementation of the 10% BST rate reduction described above, all such
reduced BST rates will be subject to a price cap, even in currently unregulated TWC
systems. TWC wilt continue to be permitted to adjust BST rates for changes in external
costs and inflation, subject to any necessary LFA approval. The BST rate reduction referred
•
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to above will have no adverse effect on any Form 1210 BST rate adjustment request which
may be pending before'an LFA as of the Publication Date or thereafter. Nothing herein shall
authorize review of the reasonableness of any BST rate adjustments in communities where
the LFA has not elected to certify in accordance with Section 76.910 of the Commission's
rules.
3. Additions To Basic Service Tier.
TWC shall not add any additional channels to any BST for the term of this
Contract, except where required by applicable law, regulation or contract Lawfully entered
into pursuant to such law or regulation, or to provide additional Local origination channels or
other non-satellite delivered channels. In the event that the FCC's must-carry rules are
repealed or rendered invalid or inapplicable to TWC by a court of competent jurisdiction,
TWC will have the right to substitute any programming service not then carried by such
system for up to an average (weighted by BST subscribers) of three local television broadcast
stations deleted from carriage per system covered by this Contract, but no more than five
such substitutions on any given system, even if more than five television broadcast stations
are deleted. Such substitutions shall have no impact on BST rates other than due to the net
change in programming costs. In the absence of must-carry requirements, however, any
local television broadcast stations which TWC continues to carry will be carried on the BST.
Any such changes to BST will be made only upon provision of thirty days advance notice to
the Commission and to affected LFAs and subscribers. Upon receipt of any necessary LFA
approval, TWC will be permitted to implement appropriate BST rate adjustments to reflect
any such added or substituted channels. Such adjustments (other than adjustments to BST
9
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required by any retransmission consent agreement), shalt not be subject to the annual BST
adjustment limitation set forth in Section IIl.G.1.
B. Equipment Rates.
TWC will be permitted to establish a blended rate, averaged for each of the
following equipment basket categories: (1) hourly service charge, (2) installations, (3)
remote control devices, (4) non-addressable converters, (5) addressable converters, (6) other
leased equipment, and (7) customer tier changes, by geographic region as reflected on
Appendix B to this Contract (and any reasonable modifications to such regions).. Equipment
rates will be adjusted annually to reflect changes in regional equipment Costs in each
category. At least thirty days prior to implementation of the first CPST adjustment
authorized pursuant to Section III.F.4., but not sooner than December 1, 1995, TWC will
submit a single Form 1205, or equivalent reasonably acceptable to the Commission, for each
region to the FCC, and wilt submit annual updates to such filings thereafter for Commission
review. Any data required to support such ennusl equipment rate adjustments may be based
on the four most recent available quarterly financial figures. TWC may begin charging
revised equipment and installation rates.to customers based upon the updated filing upon
thirty days' notice. These revised equipment and installation rates will be subject to refund if
the Commission later concludes that lower region-wide rates are called for by such filings
and applicable rules. Such region-wide equipment and installation charges as TWC
establishes and the Commission approves pursuant to this Contract shall be subject to
enforcement by local franchising authorities. Should any LFA find that TWC's equipment
and installation rates charged exceed those permitted by the Commission, the LFA may order
7--7Q-
TWC to make refunds of any excess charges as necessary to comply with the equipment and
installation charges permitted by the Commission.
C. Resolution Of Existing CPST Rate Cases.
1. All CPST cases or complaints currently pending before the Commission
are resolved pursuant to and as a result of the adoption of this Contract, as set forth in
Appendix A to this Contract.
2. The Commission has reviewed TWC's pending CPST filings. In light
of its review, the covenants and representations contained in this Contract, and in express
reliance thereon, and in order to conserve Commission resources, avoid litigation costs, and
achieve the other benefits to the public contained in this Contract, the Commission agrees to
resolve all CPST cases and complaints involving TWC currently pending before it.
3. In addition to those CPST rates which are subject to proceedings that
are being settled as set forth in Appendix A to this Contract, all other Current Rates, as
adjusted for inflation and changes in external costs as of the Publication Date, charged by
TWC for CPSTs are deemed reasonable under the Act and the CommissiaW s rules.
4. At such time as TWC makes its first CPST rate adjustment authorized
by this Contract, such increase shall be netted against any Current Rate which requires
reduction in accordance with the CPST settlements approved by this Contract, provided,
however, all such required reductions to Current Rates shall be implemented no later than the
final date for issuance of Refunds pursuant to Section III.1.8.d of this Contract.
5. BST rate disputes will continue to be resolved in the ordinary course,
pursuant to applicable FCC rules.
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D. Migrated Product Tiers.
1. The Commission and TWC acknowledge (i) that certain TWE-A/N
systems (the "Migration Systems") have been providing collective offerings of a to carte
channets which were created between April 1, 1993 and September 30, 1994 and which
consist of one or more (a) tow-priced collective offerings, containing primarily superstations,
at an average price of less than $0.29 per chamel, excluding copyright fees (a "Superstation
Tier"), and (b) low-penetrated collective offerings predominantly containing channels which
had been affirmatively marketed as a separate tier before being offered on an a Is carte basis
(a,"Preferred Tier") and (ii) that such offerings provided by such Migration Systems
cumulatively contain in excess of six channels migrated from BST and/or CPST.
2. Any Superstation Tier offered by a Migration System shalt be treated as
a separate MPT. The initial price of such MPT will be based on the Current Rate of the
Superstation Tier. Where neighboring TWC systems each offer an NPT or MPT consisting
primarily of superstations and such MPT or MPT would be priced differently under the
Commission's regulations and this Contract, an adjustment may be made between or among
such Current Rates on a revenue neutral basis so that a uniform rate for such NPTs/MPTs
may be established. In selecting services to be returned to a CPST in accordance with
paragraph 3 below, the Migration System serving Charlotte, North Carolina and surrounding
areas my move services from a Superstation Tier in an effort to achieve a more uniform
line-up among such adjacent NPTs and MPTs. All such uniformly priced NPTs/MPTs shall
be subject to the price cap set forth in paragraph 7 below.
3. Any Migration System shalt select services from the Preferred Tier(s)
to return to a CPST so that the cumulative nu. r of migrated services remaining on any
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Preferred Tier(s) and any Superstation Tier is no greater than six. The subscriber's bill shall
be adjusted by no more than 25 cents per such channel returned to the CPST. The services
not returned to a CPST from the Preferred Tier(s) shall be offered as a single MPT, separate
from any Superstation Tier. The initial price of any such MPT wilt be based on the Current
Rate of the Preferred Tier(s), reduced by an amount equal to the percentage of channels
shifted to a CPST. Eligible Subscribers shall be issued a CPST Refund as reflected in
Appendix A.
4. on its own motion, the Cable Services Bureau, consistent with the
terms set forth herein, hereby reconsiders any Letter of Inquiry ("LOIN) rulings involving
any Migration System (LO1-93-24; LOI-93-32; LOI-93-47; LOI-93-48), and TYE-A/W
hereby petitions to withdraw its Applications for Review of such LOI rulings and such
petitions are hereby granted by the Commission. The principles in this Section III.D.
relating to the unregulated treatment, for benchmark calculation purposes, of up to six
migrated channels, as incorporated in such reconsidered LOl rulings, shall be binding on any
LFA decision relating to BST rates charged by any Migration System.
5. on each of its systems which does not, as of the Publication Date, offer
a collective offering of a to carte channels created between April 1, 1993 and September 30,
1994, TYC may move a maximum of four existing BST or CPST services to a single MPT
per system. TYC will set the initial rate for any new MPT created pursuant to this
paragraph at the same level, on a per channel basis, that is set for that franchise's CPSTs
under the Contract. The rates for any BST or CPST from which such channels are moved
shall be reduced on a per channel basis so that the initial creation of any such MPT shall be
revenue neutral.
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6* TYC may not require the subscription to any tier, other than the BST,
• as a condition for subscribing to an MPT, and may not require subscription to an MPT as a
condition for subscribing to a CPST. Because the restructuring involved in the creation of
MPT(s) as described herein does not fundamentally change the service provided to
subscribers, TYC wilt not be required to re-market any of the affected services to existing
subscribers. Any services migrated may be offered on an a Is carte basis as well as in a
package.
7. For the period prior to April 1, 1997, the price of any MPT established
pursuant to this Section III.D. may be adjusted solely to reflect unrecovered inflation and
external cost increases, including that currently accrued but uncharged, in the manner
permitted by the Commission's rules for CPSTs. There wilt be no limitation on the number
of new services TYC may add to an MPT. The price of any such MPT may be increased to
reflect new services added to the MPT by an amount not to exceed S.20 per added channel,
plus the actual license fee(s) for the added channel(s).
8. on or after April 1, 1997, TYC may convert any MPT into an NPT,
as defined in 47 C.F.R. "U 76.987, including subsequent clarifications or amendments.
Because customers will be able to subscribe to CPST(s) and an MPT on a stand-alone basis,
as of April 1, 1997 the Commission will regulate MPT rates in the same manner in which
the Commission currently regulates NPT prices. Such NPTs mitt be treated as all other
NPTs under the Commission's rules, provided such NPT is offered without a buy-through
requirement of any tier other than the BST.
E. Customer Refunds and CPST Rate Reductions. Pursuant to the settlement
of TYC's existing CPST rate cases as described in this section, TYC wilt provide Refunds,
0
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which in the aggregate total in excess of S4.7 Million, plus interest computed in accordance
with FCC requirements for subscriber refunds, and shall implement CPST rate reductions, on
the terms and conditions, and in the roamer, set forth below.
1. In settlement of all CPST complaints involving the review of an FCC
Form 393 and/or FCC Form 1200 submitted by TWC which are pending as of the
Publication Date, TWC will provide a Refund to each Eligible Subscriber as set forth in
Appendix A to this Contract.
2. TWC agrees to waive its right to a credit for the franchise fee paid to
the LFA on the CPST Refund amount.
3. Communities which receive CPST reductions to Current Rates, in
accordance with section III.C.4. of this Contract, are set forth in Appendix A to this
Contract.
F. Infrastructure Upgrade Requirement.
1. Upgrade Requirement.
TWC will upgrade all its cable systems so as to meet the following technical
standards: each TWC cable system with a present capacity of at least 550 MHz will have a
bandwidth capacity of at least 750 MHz within five years after the Effective Date; all other
TWC cable systems will have a bandwidth capacity of at least 550 MHz within five years
after the Effective Date. At least 50% of all TWC subscribers will be served by a system
with a capacity of at least 750 MHz, of which at least 200 MHz is expected to be allocated
to digital distribution. Fiber-to-the-node architecture will be deployed to improve signal
quality and reliability of such systems. At least 60% of the new analog services added
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during the term of the Contract will be added to the CPST and not to BST, NPT or "PT*
on average (weighted by CPST subscribers), CPST service offered on the upgraded systems
will contain at least 15 additional channels by the end of the Contract. TWC agrees to invest
S4 Billion in capital costs in connection with the upgrade of its cable systems. At least 60%
of all capital expended in connection with the upgrade commitment described herein shall be
applied for the benefit of BST and CPST subscribers. TWC has selected, and will select, its
systems to be upgraded without discrimination based on socio-economic status.
2. No Impairment Of Local Authority.
Nothing herein shall restrict the legal authority of LFAs to negotiate upgrades
for their particular franchise areas which exceed the scope of this Contract.
3. Reporting Requirements.
No later than 90 days following the end of each calendar year during all of
which the Contract is in effect, and within 90 days following the end of the last month
following expiration of this Contract other than calendar year end, TWC will provide a
progress report to the FCC, for the year or such shorter period then L4 during which this
Contract was in effect, setting forth the extent of progress TWC has made to upgrade
systems in compliance with Section III.F.1.; the rxw?ber of BST and CPST subscribers
benefitting from such upgrades; system reliability and service improvements resulting from
such upgrades completed during the previous calendar year; and TWC's projected system
upgrade activities during the following year of the Contract. Such report will be served on
each LFA. The FCC reserves the right to inspect the books and records of TWC and
interview corporate employees for the purpose of determining compliance with this Contract.
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4. CPST Rates Subject To Price Cap.
a. Beginning January 1, 1996, TWC will be permitted to increase
the monthly rates for the most highly penetrated CPST an each of its systems by $1.00
during each year of this Contract. These rate increases have been established at a level
designed to recover solely those costs allocable to BST and CPST subscribers.
b. During the life of this Contract, the only other permitted
increases to CPST rates will be for inflation and increases in external costs. In particular,
during the term of this Contract, TWC wilt not avail itself of any additional per-channel
adjustment permitted by the Going Forward Rules for any programming services added to the
CPST after the Effective Date hereof. Except as to TWC system which had already
commenced a roll out of the addition of channels to CPST and associated per charnel
adjustments pursuant to the Going Forward Rules prior to the Publication Date, any per
channel adjustments implemented pursuant to the Going Forward Rules by any TUC systems
for services added by such systems after the Publication Date, but prior to the Effective
Date, shalt be netted against the initial CPST adjustment authorized by Section III.F.4.8.
above. Upon implementation of any such initial CPST adjustment, net of any per channel
adjustment taken by such TWC systems which have added services after the Publication
Date, such TWC system will be allowed to concurrently adjust CPST rates to reflect any
license fees not already passed through to subscribers associated with any such services
added to such systems after the Publication Date. TWC will not seek to pass through to
subscribers any additional capital costs relating to the upgrade requirement in this Contract
pursuant to any provision of the Commission's rules, including, but not limited to, any rules
or policies adopted by the Commission relating to the pass through of external costs, upgrade
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incentives, or cost-of-service. TWC reserves the right to seek to pass through additional
10 capital costs associated with any upgrodes;,specified by any franchise agreement, local law,
regulation or ordinance which exceed the requirements of this Contract. Nothing herein shall
affect the ability of TWC to implement any New Product Tier ("NPT"), add channels to any
such NPT, or establish rates for any such NPT, subject to the FCC Going Forward Rules, or
to implement any MPT permitted by the terms of this Contract.
5. Failure To Meet Target.
If TWC fails to meet the upgrade requirement so as to provide the bandwidth
capacities described in Section III.F.1. of this Contract within the term provided for therein,
the then existing CPST subscribers to the cable systems as to which such commitment has
not been met will be entitled to refunds (in the form of prospective bill credits) of the
increases (net of inflation and external cost adjustments) in CPST rates taken under Section
III.F.4.a. of this Contract, plus interest computed in accordance with FCC requirements for
subscriber refunds, and a liquidated damages penalty of 15% of such refund amount.
6. Adjustments To Systems Subject To Contract.
a. TWC shall include any cable systems acquired from CVI within
the provisions of this Contract, provided that the CPST settlement provisions of this contract
shall not apply until any applicable settlements are mutually agreed upon between TWC and
the Commission. Addition of any other TWC systems within the provisions of this Contract
shall be subject to FCC approval, which will be expeditiously decided and not be
unreasonably withheld. Each LFA representing any such system to be added to the
provisions of this Contract shall be served with a copy of the Contract and shall be afforded.
a 45-day opportunity to opt out of the lifeline BST provisions in accordance with Section
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III.A.1.a. of this Contract. The provisions of this Contract will become effective as to any
such additional system upon such notification to affected IFAs, which date shalt become the
Publication Date as to such system, and the provisions of this Contract shall extend for a
period of five years from that dote.
b. In the event of a sale of any system during the period of
applicability of this Contract, the purchaser my elect, with the concurrence of the FCC, for
the provisions of this Contract to continue to apply to such system. Such FCC concurrence
shalt be expeditiously decided and not be unreasonably withheld. In the event the purchaser
elects not to have the provisions of this Contract apply to any such system, the CPST
subscribers to such system shall be eligible for the refunds calculated pursuant to Section
III.F.S. in the event the upgrade commitment described in Section III.F.1. has not been
completed prior to the consummation of such sale.
C. The upgrade capital costs set forth in Section III.F.1. of this
.Contract shalt be adjusted, as mutually agreed to by TWC and the Commission, to reflect
any addition or deletion of systems subject to this Contract. The approval from the
Commission of such adjustment shall be expeditiously decided and not be unreasonably
withheld.
G. BST And CPST Rate Stability.
1. In the event the FCC establishes regulations allowing annual
adjustments to BST and CPST rates, with procedures designed to reduce regulatory tag,
TWC agrees to be bound by such regulations and to elect to adjust BST and CPST rates on
an annwt basis pursuant to such regulations, provided, however, TWC shall not be delayed
in implementing its annual adjustments to CPST rates as set forth in Section III.F.4. due to
regulatory lag related to the BST rate approval process.
2. TWC wilt not elect to file cost-of-service showings to justify BST or
CPST rate levels above the level authorized by this Contract for any system subject to this
Contract for the term hereof.
H. Additional Consumer Benefits.
1. Service To Public Schools.
a. TWC shall offer service connections at one outlet in 100% of
the public schools (Grades K-12) located within 200 feet from the activated plant of its cable
systems. Such connections mitt be made free of charge and as promptly as possible to all
such schools requesting connections. TWC will offer such service connections to any other
such public schools located within its franchised service areas at Cost. If any internal wiring
installation is requested to serve additional outlets in such schools, it will be provided at
TWC's Cost of materials and labor at the applicable Hourly Service Charge; provided,
however, that such internet wiring wilt be provided without charge if TWC is able to
coordinate with other comparable electrical wiring installation in cases of new construction or
substantial rehabilitation of existing schools. Any such public school may elect to install its
own internal wiring and to bear the cost thereof. BST and CPST service will be provided to
each outlet in such schools free of any charges.
b. TWC shall offer service connections, including any requested
internal wiring for additional outlets, at Cost to any private Secondary School as defined bye
and which r 1 of the Elementary and Secondary EducaSlon
A t of 1965 20 U S C "U 241a et sa; , m7d which is located within 200 feet from the
activated plant of its cable systems. BST and CPST service will be provided to each outlet
in such schools free of any charges. TWC wilt offer such service connections to any other
such private Secondary Schools located within its franchised service areas at Cost. Any such
private Secondary School may elect to install its own internal wiring and to bear the cost
thereof.
C. TWC will provide a free monthly educational program listing to
each connected school. Additional copies of such program listings will be provided, if
requested by a school, at Cost. Such educational program Listing will identify and describe
programming on the TWC system that is appropriate for use in the classroom and will
provide suggested curriculum support ideas.
d. TWC will develop and provide to connected schools materials
for teachers that explain the educational applications of TWC's broadband cable systens.?
The materials wilt include a self-explanatory notebook and video. one copy of such
materials will be provided at no charge to all school districts with connected schools in
franchise areas served by TWC. Additional copies of such materials wilt be provided, upon
request, at Cost.
e. Upon successful development by TWC and Time Inc. of an on-
line service for personal computers, TWC mitt provide each connected school with a free
connection to this on-line service to the extent it is available on the local TWC cable system.
Upon request, each connected school wilt receive one free modem and free access to the
TWC/Time Inc. on-line service for use during the school year. Additional modems will be
made available, upon request, at Cost. Free access to the TWC/Time Inc. on-line service
will be provided through each such modem for use during the school year. In addition,
TWC will sponsor a workshop in each franchise area to educate teachers about the
TWC/Time Inc. on-line service and to provide then with an opportunity for hands-on
training.
f. To the extent a local franchise agreement contains an obligation
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to provide corrections to schools as agreed to herein, TWC agrees not to seek to recover any
such costs for these corrections as external or other costs.
2. Name Wiring.
a. Prior to a customer's termination of cable service, TWC will
not restrict the ability of a customer to remove, replace, rearrange or maintain any cable
wiring located within the interior space of the customer's dwelling unit, so long as such
actions do not interfere with the ability of such TWC system to meet FCC technical
standards or to provide services to, and collect associated revenues from, that customer or
any neighboring customer in a multiple dwelling context.
b. TWC will provide customers with a notification upon
commencement of service, and srrualty thereafter, advising them of their rights relating to
home wiring. Such notice will advise customers that they my either (i) remove, replace,
rearrange or maintain the home wiring themselves, (ii) select a qualified third party
contractor, or (iii) request the TWC system provide such service at standard hourly
installation rates, plus materials at Cost.
C. Such notice will inform customers that if any home wiring is
improperly installed or rearranged by anyone other than TWC, and any harmful or improper
signal leakage occurs as a result, the customer my be held responsible for the Cost of
rectifying the problem. Pursuant to FCC rules, TWC recognizes that it is required to
terminate service to any location where signal leakage problems are not corrected.
d. TWC customers will be encouraged to use high quality hook
wiring materials to avoid signet leakage and to maintain signal quality. Such notice will
offer to supply such materials to subscribers at Cost.
e. TWC will provide a model of this notice to the FCC for
approval prior to its dissemination to its customers, such approval not to be unreasonably
withheld.
1. Miscellaneous Provisions.
1. Modification And Termination.
a. Except as otherwise provided herein, this Contract may not be
terminated or modified without the mutual agreement of TWC and the Commission.
b. TWC my petition the Commission to modify or terminate this
Contract based on any relevant change in applicable taws, regulations or circumstances.
TWC will serve a copy of any such modification or termination petition, and the FCC Public
Notice relating thereto, on the LFAs for the affected systems. In no event shall TWC be
required to make more than one mailing to each LFA for any given modification or
termination request. Interested persons will have 30 days after the FCC releases an
appropriate Public Notice to comment and 15 days for reply comments before the FCC acts
on any such TWC petition. The FCC's consent to any such termination or modification
petition shall be demonstrated by an order issued by the FCC's Cable Services Bureau or at
the FCC's option by the Commission itself. The FCC shall act expeditiously on such
petition and grant of the petition shall not be unreasonably withheld.
C. in the event of any changes to the provisions of the Act or any
material changes to the FCC rules thereunder relating to rates (BST, CPST or equipment)
that are favorable to TWC, any TWC system may elect to be relieved from the relevant rate
provisions (Sections III.A.2., III.A.3., III.B., III.D., III.F.4. and III.G.) of this Contract
accordingly, but shall remain bound by all other provisions of this Contract. In the event
any such system elects to be relieved from such contract provisions in favor of such
favorable regulatory provisions such system will only be allowed to recover any incremental
amount that results under such favorable regulatory provisions in excess of any amount
already recovered pursuant to Section III.F.4.a. of this Contract. Nothing herein shall
restrict the ability of any TWC system to adjust CPST rates in the event CPST rates are not
regulated based upon changes to the Act or FCC regulations.
d. The Commission expressly recognizes that TWC has relied on
the current federal law and FCC regulations governing cable television programming and
rates in entering into this Contract, and that the Contract represents an accommodation
between the FCC and TWC that generates substantial public interest benefits. Consequently,
the Commission agrees not to find any CPST or equipment rate adjustments implemented in
accordance with this Contract to be "unreasonable" under any subsequently-modified FCC
regulations or under any subsequently-modified applicable statute, to the extent the
Commission has discretion under such statute in determining whether any such rate
adjustments are unreasonable.
2. Authority To Enforce Contract.
a. Nothing in this Contract shall restrict the ability of LFAs to
enforce the provisions of otherwise valid local franchise agreements, local laws, regulations
and ordinances that are not the subject of or affected by the terms of this Contract, except
that LFAs may not regulate rates or order refunds for the services and equipment subject to
this Contract except in accordance with the terms of this Contract. Nothing herein shall
affect the enforceability of any otherwise valid preexisting local franchise agreement,
ordinance, local law or regulation which provides benefits which exceed those provided in
this Contract relating to system upgrades or the wiring of schools, nor shall LFAs be
restricted in their authority to negotiate for such additional benefits after the Effective Date
of this Contract. It is not the intent of either the FCC or TWC that this Contract create any
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judicially enforceable rights in any other parties. This Contract shall be enforceable against
TWC by the FCC exclusively and no other party my seek to enforce this Contract as a third
party beneficiary or otherwise, except that subscribers to TWC system which increase their
CPST rates will still have the right to file complaints with the FCC to the extent permitted
under applicable FCC rules.
b. For purposes of the Commission's authority to enforce any
provision of this Contract against TWC, including enforcement actions brought in U.S.
District Court, TWC agrees that any breach of this Contract by TWC shall be considered the
equivalent of a violation of an order of the FCC, entitling the Commission to exercise any
rights and remedies attendant to the enforcement of a Commission order. However, aside
from this limited purpose, TWC and the FCC agree that a breach of this Contract by TWC is
not to be considered by any other party as the equivalent of a violation of an otherwise-valid
FCC regulation or FCC order. In particular, any failure to comply with this Contract shall
not be a basis for any denial of a franchise renewal by, or other enforcement action of, any
LFA.
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3. All Necessary Waivers And Preemptions Deemed Granted.
a. in addition to the specific waivers of the Commission's rules
identified in the Contract, the Commission' order adopting this Contract shall affirmatively
state that any and all waivers of the Commission's rules, and any and all modifications to
Commission forms, necessary to effectuate the terms of this Contract are deemed to be
granted thereby. The Commission finds that the concurrent exercise of non-federal
regulatory authority over the subject matter of this Contract is an impermissible interference
with the FCC's regulatory authority and with its ability to accomplish its objectives in
entering into this Contract. Accordingly, the Commission hereby expressly preempts any
state or local law, regulation, ordinance or franchise that is inconsistent or conflicts with this
Contract. The Commission will not assert in any proceeding that TWC's compliance with
the terms of the Contract violates any Commission rule or order and, in any proceeding
before the Commission brought by a third party, a showing by TWC that it has complied
with the terms of the Contract shall constitute a defense to any claim that TWC's actions in
meeting the terms of the Contract constitute a violation of any applicable Commission rule or
order.
b. CPST rate increases referenced in Section III.F.4. of this
Contract will not be subject to prior FCC approval pursuant to Section 76.960 of the FCC
rules or otherwise, even if an adverse decision has been issued by the FCC as to any TWC
CPST rate in the year prior to the Publication Date. Subscribers to TWC systems which
increase their CPST rates still have the right to file complaints with the FCC to the extent
permitted under applicable FCC rules.
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4. Effect On Other Proceedings.
a. The Commission agrees that it will not institute, on its own •
motion, any proceedings against TWC based upon the information obtained during the
consideration of the Contract. In addition, in the absence of additional facts, the
Commission agrees that any allegations and other circumstances involved in consideration of
this Contract or settlement of the pending rate cases will not be used against TWC with
respect to any future proceedings at the Commission. Nor way they be used against TWC as
evidence of any refund liability due subscribers in any proceeding conducted by any LFA.
b. This Contract is intended to resolve the CPST complaints being
settled in accordance with Section III.C.; to provide certainty regarding the CPST rate
adjustments determined to be reasonable in accordance with Section III.F.4., and to
otherwise cover those matters expressly set forth herein. The Commission and TWC
acknowledge the existence of various lawsuits to which they are both parties. The
Commission and TWC.agree that this Contract shall have no effect on any pending lawsuit to
which TWC is a party or, subject to Section II1.1.7., on any future challenges to the
Coemissiones regulatory authority that TWC my elect to initiate, other than a challenge to
the Commission's regulatory authority to enter into and enforce this Contract.
C. The Commission expressly recognizes that this Contract is of
limited duration and scope, and way be modified or terminated before its term has ended as
provided for in Section JII.1.1. of this Contract. Accordingly, the Commission and TWC
agree that this Contract does not moot any legal challenge or defense relating to any
provision of the Act or to the Coamission's regulatory authority that TWC has brought or
may bring in the future, other than a challenge to the Commission's regulatory authority to
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enter into and enforce this Contract. The Commission will not seek to dismiss any such
legal challenge on grounds that this Contract renders such challenge moot and will actively
oppose any assertion in court that this Contract moots any such challenge.
5. No Admission Of Wrongdoing.
This settlement is without a finding by the Commission of any wrongdoing by
TWC or any of its systems, subsidiaries or affiliates. Neither this Contract nor any aspect of
the settlement contained herein constitutes an admission by TWC of any violation of, or
failure to conform to or comply with, any law, rule or policy applicable to TWC or any of
its systems, subsidiaries or affiliates.
6. Contract In Public Interest.
In consideration of the Commission entering into this Contract, and resolving
and terminating pending CPST cases and complaints in accordance with the terms of this
Contract, TWC hereby agrees to the terms, conditions and procedures contained in this
Contract. TWC and the Commission each acknowledge that it believes this Contract, and the
terms, conditions and procedures hereof, provide for and will facilitate a fair and expeditious
resolution of the cases and complaints that are the subject hereof in a manner that serves the
public interest.
7. Legal Challenges.
a. TWC waives any right it way have to any judicial review or
appeal, or any other right to otherwise challenge or contest the validity of any order by the
Commission,adopting this Contract, or to use this Contract as evidence in any such
proceeding. TWC agrees that the provisions of this Contract shall be incorporated by
reference in the Commission's order formally approving this Contract. TWC and the
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Commission agree that they wilt each actively defend, before any forum, any Commission
order adopting the provisions of this Contract against any appeal of or other legal chatlenge
by any third party to any such order. TYC and the Commission each agree that they will
reasonably cooperate with the other in any such defense of the Contract and any such order.
b. If the Commission, or the United States on behalf of the
Commission, brings an action in any United States District Court to enforce the terms of any
Commission order adopting this Contract, TYC agrees, subject to the terns of the
immediately preceding paragraph, that it will not contest the validity of such Commission
order, or the Commission's authority to enter into the Contract. TYC reserves the right, in
defense of such an enforcement action, to demonstrate that it has complied with the
provisions of the Contract or to assert its own interpretation regarding any performance
obligations imposed by the Contract which my be subject to dispute.
8. Effective Date And Term.
a. The term of this Contract shall commence on the Effective Date
and, subject to Section 11I.1.1, above regarding modification and termination and Section
III.F.6. above regarding adjustments to systems covered, shall continue in effect for five CS)
years.
b. TYC and the Commission agree to execute this Contract as of
the Effective Date promptly upon issuance by the Commission of an order approving this
Contract.
C. The Commission and TYC expressly acknowledge and agree
that the effectiveness of this Contract is contingent upon resolution and termination of TYC's
CPST proceedings; issuance by the Commission of an order approving the Contract, and
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TIIC's compliance with the terms, conditions, and procedures set forth in the Contract. If
this Contract is not approved by Commission order and accepted by TWC, or if the Contract
is otherwise rendered invalid, in whole or in part, by final order of any court of competent
jurisdiction, the Contract or such part my not be used in any fashion by the FCC in any
legal proceeding.
d. TWC may commence any necessary or appropriate actions to
initiate the rate adjustment processes embodied in this Contract at any time after the Effective
Date, provided, however, as to any system listed on Appendix A, TWC shall not implement
any rate adjustment pursuant to Section III.F.4.a. of this Contract unless the Refund provided
for in Section III.E. has been issued as to such system, or the issuance of such Refund begins
simultaneously with such rate adjustment. All Refunds will be issued within six months of
the first rate adjustment implemented pursuant to Section III.F.4.a. To facilitate prompt
initiation of the refunds and rate adjustments authorized by this Contract, any local franchise
agreement or any state or local law or regulation is preempted on a one-time basis to the
extent that it requires TWC to give advance notice of rate and service changes to subscribers.
Such notice shall be provided by the best means practicable, such as newspaper
announcements and/or on-screen messages. Such preemption shall be limited to the period
prior to February 1, 1996. If TWC is unable to commence implementation of such refunds
and rate adjustments by January 1, 19%, but commences such implementation on or before
February 1, 19%, it shall provide at least thirty days notice to LFAs and subscribers. If any
subscribers cancels his or her subscription to the relevant CPST within thirty days after the
date of the first bill reflecting the CPST adjustment authorized by this Contract, TWC will
refund to that subscriber the incremental amount attributable to such increase.
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9. Public Notice.
The Commission will issue promptly a Public Notice in which the Commission
proposes to. adopt the Contract as a final order, and shalt provide interested parties with
thirty (30) days to comment on the Contract and an additional fifteen (15) days in which to
file reply comments.
10. Force Majeure.
TWC shall not be deemed in breach of its commitments under this Contract in
the event of any delay or failure in performance by any TWC system from any cause beyond
its reasonable control and without its fault or negligence, including, but not limited to, acts
of God, acts of civil or military authority, goverment regulations, embargoes, epidemics,
war, terrorist acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, strikes, power blackouts, unusually severe weather conditions, or inability to secure
local permits after all diligent efforts by TWC to secure such permits.
11. Severability.
if any provision, clause or part of this Contract is invalidated by order of any
court having proper jurisdiction over the subject matter of this Contract, the remainder of
this Contract shall not be affected thereby and shall remain in full force and effect; provided,
however, that, if either party reasonably determines that such invalidation is material to this
Contract, the parties shall negotiate in good faith to reconstitute the Contract in a form that
is, to the maximum extent possible, consistent with both the original intent of both parties in
entering into this Contract and the rationale of such invalidation order.
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11, Entire Understanding,
This Contract and its appendices, as either or both may be amended in
accordance with the terms herein, constitute the entire agreement between TYC and the
Commission with respect to the subject matter of this Contract and supersede all prior
agreements and understandings, whether oral or written, between TWC and the Commission
with respect to the subject matter of this Contract. No representation, warranty, promise,
inducement, or statement of intention has been made by TYC or the Commission which is
not embodied in this Contract, and neither party shall be bound by, or be liable for, any
alleged representation, warranty, promise, inducement, or statement of intention not
embodied in this Contract or its appendices.
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IN WITNESS WHEREOF, this Social Contract has been duly executed and delivered
by or on behalf of the parties hereto as of the Effective Date as defined herein.
T114E WARNER ENTERTAINMENT COMPANY, L.P. FEDERAL COMMUNICATIONS COMMISSION
By: By:
Name: Name:
Title: Title:
TWI CABLE INC.
By:
Name:
Titie:
T114E WARNER ENTERTAINMENT-
ADVANCE/NEWHOUSE PARTNERSHIP
By: Time Warner Entertainment Company, L.P.
Managing Partner
By:
Name:
TitIe:2838
1.51
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APPENDIX A
COMMUNITY CUID REFUND
Rockledge. . . . . . .FL0007 . . . . . . . . . $5,171
Indian Harbor Beach . . . . . . . .FL00D9 . . . . . . . . . .2,384
Melbourne . . . . . . . . . . . . . FLOO13 . . . . . . . . . 14,362
Melbourne . . . . . . . . . . . . . FLOO14 . . . . . . . . . 30,759
Volusia County . . . . . . . . . .FL0015 . . . . . . . . . 12,505
Palm Bay* . . . . . . . . . . . . .FLOO17 . . . . . . . . . 89,135
West Melbourne . . . . . . . . . .FL0021 . . . ... . . . . .2,198
Cape Canaveral . . . . . . . . . .FLO163 . . . . . . . .1,557
Met bourne . . . . . . . . . . . . . FLO165 . . . . . . . . 717
Or t ando. . . . . . . . . . . . FLO181 . . . . . . . 18,770
St. Petersburg . . . . . . . . . .FLO196 . . . . . . . 63,508
Brooksville. . . . . . . . . . . .FLO240 . . . . . . . . . .3,270
Or t ando . . . . . . . . . . . . . . F LO252 . . . . . . . . . 34,089
Lakeland . . . . . . . . . . . . .FL0290 . . . . . . . . . .6,200
Brooksvi t le. . . . . . . . . . . .FL0312 . . . . . . . . . .6,500
Brooksville. . . . . . . . . . . .FLO314 . . . . . . . . . .8,217
Sandford . . . . . . . . . . . . .FLO322 . . . . . . . . . 14,787
Brooksville. . . . . . . . . . . .FL0597 . . . . . . .3,107
Belleview . . . . . . . . . . . . .FLO622 . . . . . . .7,763
Salem . . . . . . . . . . . . . . .MA0063 . . . . . . . 11,274
Mel rose. . . . . . . . . . . . .MAO097 . . . . . . . . . .5, 5,080
Stoneham . . . . . . . . . . . . .MA0101 . . . . . . . . . . 322
Kansas City. . . . . . . . . . . .M00198 . . . . . . . . . 78,801
Jackson* . . . . . . . . . .MS0080 . . . . . . . . .164,400
Ctinton* . . . . . . .MS0128 . . . . . . . . . 54,208
Salisbury, including:. . . . . . .N00015 . . . . . . . . . 22,981
East Spencer. . . . . . . . . .NC0285
Spencer .NCO158
Granite Guarry. .MC0407
Rowan County (central). . . . .MC0385
Rockwell. . . . . . . . . . . .MC0677
Faith .MC0676
Cleveland . . . . . . .MC0574
Witmington, including: . . . . . .M00016 . . . . . . . . .106,115
Wrightsville Beach. . . . . . .M00041
New Hanover County. . . . . . .MC0140
Leland . . . . . . . . . . . . .MC0695
Navasa. . . . . . . . . .MC0692
Shelby, including: . . . . . . . .N00027 . . . . . . . . . 20,516
Cleveland County. . . . . . . .MC0279
POLkville . . . . . . . . . . .MC0521
*CPST rate reduction required.
0
-7--qa
Patterson Springs . . . . . . .MC0522
Lawndale. . . . . . . . . . . .MC0523
Fallston. . . . . . . . .NC0524
Boiling Springs . . . . . . . .MC0529
Grover . . . . . . . . . . . . .MC0694
Earl . . . . . . . . . . . . . . NCO693
Waco . . . . . . . . . . . . . . MC0756
Lattimore . . . . . . . . . .NCO757
Mooresboro. . . . . . . . . . .MC0816
Belwood . . . . . . . . . . . .MC0839
Casar .
* .MC0843
including:
Wilmington-Southport, .NC0167 . . . . . . . . . 29,732
Caswell Beach . . . . . . . . .MC0228
Holden Beach. . . . . . . . . .MC0294
Long Beach. . . . . . . .MC0227
Ocean Isle Beach. . . . . . . .MC0270
Yaupon Beach. . . . . . .NCO172
Boiling Springs Lakes . . . . .MC0862
Brunswick County. . . . . . . .MC0229
MorehoW City, including:. . . . .MC0168 . . . . . . . . . 39,706
Atlantic Beach. . . . . . . . .MC0197
Beaufort. . . . . . . . . . . .MC0196
Cape Carteret . . . . . . . . .NC0200
Ceder Point . . . . . . . . . .MC0815
Cartaret County . . . . . . . .MC0202
Emerald Isle. . . . . . . . . .MC0199
Newport . . . . . . . . .MC0201
Pine KnoU Shores . . . . . . .NCO198
Swansboro . . . . . . . . .NC0203
Indian Beach. . . . . . . . . .NCO282
Onslow County . . . . . . . . .MC0384
Craven County . . . . . . . . .NC0205
Havelock. . . . . . . . . . . .MC0170
Maysville . . . . . . . . .MC0585
Pollocksville . . . . . . . . .MC0583
Jones County. . . . . . . .MC0584
Kannepolis, including: . . . . . .MC0193 . . . . . . . . . 41,358
Cabarrus County . . . . . . . .MC0174
China Grove . . . . . . . . . .NC0284
Concord . . . . . . . . . . . .MC0173
Harrisburg. . . . . . . . . . .MC0287
Landis. . . . . . . . . . .MC0288
Rowan County. . . . . . . .MC0194
Mt. Pleasant. . . . . . . . . .MC0455
i
E
Albemarle, including:. . . . . . .NC0286 15,990
16 Stanly County . . . . . . . . .NC0515
Norwood .NC0519
Mt. Gilead. . . . . . . . . . .MC0530
Locust. . . . . . . . . . . .NC0518
Richfield . . . . . . . . . . .NC0508
Oakboro . . . . . . . . . .NC0517
New London. . . . . . . . . . .NC0507
Stanfield . . . . . . .NC0520
Mecklenburg, including:. . . . . .NC0405 . . . . . . . . .121,204
Charlotte . . . . . . . . . .NC0755
Mint Mitt . . . . . . . . . . .NC0504
Pineville . . . . . . . . . . .NC0505
Matthews. . . . . . . . . . . .NC0691
Waddington. . . . . . . . . . .NC0720
Lancaster County. . . . . . . .SC0372
Cabarrus County . . . .NC0174
Wilmington-Burgaw, including:. .•.NC0408 . . . . . . . .8,719
Pander County . . . . . . . . .NC0409
Waddington . . . . . . . . . . . .NC0720 . . . . . . . .3,042
Lincoln . . . . . . . . . . . . . . ME0032 . . . . . . . . .233, 233,263
Nashua . . . . . . . . .UN0034 . . . . . . . 60,935
Fort Lee, including: . . . . . . .NJ0082 . . . . . . . . .129,719
Cliffside Park. . . . . . . . .NJ0232
Edgewater . . . . . . . . . . .NJ0092
Englewood . . . . . . . .NJ0251
Englewood Cliffs. . . . . . . .NJ0208
Fairview. . . . . . . . . . . .NJ0253
Guttenberg. . . . . . . . . . .NJ0338
Leonia. . . . . . . . . . . .NJ0431
Little Ferry. . . . . . . . . .NJ0339
Moonachie . . . . . . . .NJ0427
Palisades Park. . . . . . . . .NJ0252
Ridgefield. . . . . . . . .NJ0203
Ridgefield Park . . . . . . . .NJ0254
Teterboro . . . . . . . . NJO484
Upper Manhattan* .NY0104 104
. .
.
.599,837
Binghamton, including: . . . .MY0133 .
• .
•
.219,198
Town of Binghamton. . . . . . .NY0132
Chenango. . . . . . . . . . . .NY0134
Conklin . . . . . . . . . . . .NY0135
Dickinson . . . . . . . . . . .NY0136
Fenton. . . . . . . . . . . . MY0137
Kirkwood. . . . . . . . . . . .NY0139
*CPST rate reduction required.
1)-,qq
Maine . . . . . . . . . . . NY0251
Nanticoke . . . . . . . . . . . NY0983
Owego . . . . . . . . . . . . . NY0403
Union . . . . . . . . . . . . . NY0402
Vestal. . . . . . . . . . . . NY0260
Newark Vly. . . . . . . . . . . NY1650
Endicott. . . . . . . . . . . NY0249
Johnson City. . . . . . . . . . NY0138
Port Dickinson. . . . . . . . . NY0140
Lower Manhattan. . . . . . . . NY0234 . . . . . . . .180,360
Col oni e . . . . . . . . . . . . . . NY0336 . . . . . . . . .4, 4,219
Albany . . . . . . . . . MY0338 . . . . . . . .6,141
E. Syracuse, including:. . . . . . NY0329 . . . . . . . . .300,822
Brutus. . . . . . . . . NY0955
Town of Camillus. . . . . . . . NY0333
Town of Cato. . . . . . . . . . NY1501
Cicero . . . . . . . . . . . . . NY0372
Clay . . . . . . . . . . . . . . MY0373
De Witt . NY0328
Town of Elbridge. . MYO883
Geddes . . . . . . . . . . . . . NY0327
Ira . . . . . . . . . . . . NY1504
LaFayette . . . . . . . . . . NY0881
Lysander. . . . . . . . . . NY1367
Town of Manlius . . . . . . . . NY0330
Town of Marcellus . . . . . . . NY0847
Mentz . . . . . . . . . . . . . NY1366
Onondaga. . . . . . . . . . . . NY0707
Ot i sco . . . . . . . . . . . . . NY1533
Pompey . . . . . . . . . . . . . NY 1057
Salina. . . . . . . . . . . . NY0346
Skaneateles . . . . . . . . . NY1211
Town of Tully . . . . . . . . . NY1368
Van Burken. . . . . . . . NY0715
Village of Camillus . . . . . . NY0334
Village of Cato . . . . . . . . NY1503
Village of Elbridge . . . . . . NY0884
Fayetteville. . . . . . . . . . NY0332
Jordan. . . . . . . . . . . . NY0882
Liverpool . . . . . . . . NY0326
Village ofManlius . . . . . . . MY0369
Village of Marcellus. . . . . . NYO848
Meridian. . . . . . . . . . . NY1502
Minos . . . . . . . . . . . . . NY0331
N. Syracuse . . . . . . . . . . NY0546
Phoenix . . . . . . . . . . . . NY0720
0
0
0
7-91-5-
Port Byron. . . . . . . . . . .MY0981
Solvay.
. .MY0671
Village of
Tully. .MY1194
Weedsport • - .MY0915
Troy, including: . . . . . . . . .NY0352 . . . . . . . . .182,844
Cohoes. . . . . . . . . . .NY0582
Mechanicville . . . . . . .NY0643
Brunswick . . . . . . . . .NY0509
Clifton Park. . . . . . . . . .NY0668
E. Greenbush. . . . . . . . . .NY0596
Ha l fmoon. . . . . . . . . . . . NY0742
Pittstown . . . . .NY1534
Town of Schaghticoke. . . . . .NY0796
Town of Stillwater. . . . . . .NY0836
Town of Waterford . . . . .NY0589
Village of Schaghticoke . . . .MY09%
Village of Stillwater . . . . .NY0837
Valley Falls. . . . . .NY1167
Village of Waterford. . . . . .MY0588
Penfield . . . . . . . . . . . . .MY0414 . . . . . . . . . .6,662
Gates . . . . . . . . . . . . . . . MY0415 . . . . . . . . . .5, 5,089
Greece . . . . . . . . . . . .MY0416 . . . . . . . . . 21,079
Rochester . . . . . . . . . . . . . MY0769 . . . . . . . . . 42,908
Ogden. . . . . . . . . . . .NY1062 . . . . . .2,704
Brooklyn/Cueens* . . . . . . . . .NY1340, 1280, 1281, 14021,210,552
Irondequoit. . . . . . . . . . . .MY0751 . . . . . . . . . 13,789
Perinton . . . . . . . . . . . . .NY0413 . . . . . . . . . .9,787
Brighton . . . . . . . . . . . . .MY0764 . . . . . . . . . .8,071
Columbus . . . . . . . . . . . .ON0239 . . . . . . . . . 32,330
Westerville. . . . . . . . . . . .ON0517 . . . . . . . . . .3,727
Columbus . . . . . . . . . . . . .ON0532 . . . . . . . . . .1,703
Reading . . . . . . . . . . . . . . PA0006 . . . . . . . . . 34,753
Shillington. . . . . . . . . . . .PA0011 . . . . . . . . . .1,821
Monroeville* . . . . . . . .PA1775 . . . . . . . . . 25,324
Florence, including: . . . . . . .SC0015 . . . . . . . . . 97,072
Darlington. . . . . .
Darlington County . .SC001
.SC0115
Florence County . . .SC0057
Ouinby. . . . . . . . . . .SC0191
Tiaimonsville. . . . . . . . . .SC0192
Sumter, including: . . . . . . . .SC0017 . . . . . . . . . 58,020
Shaw AFB. . . . . . . . . . . .SC0102
Sumter County . . . . . . . . .SC0116
*CPST rate reduction required.
0
-13 Pinewood412
. . . . . . . . . . . .SCO390
Nsyesville. . . . . . . . . . .SCO431
Austin . . . . . . . . . . . .TX0029 . . . . . . . . .111,633
Wichita Falls. . . . . . . . . .TX040 . . . . . . . . . 16,033
Leander . . . . . . . . . . . . . . TX 1422 . . . . . . . . . . 7,533
Reston . . . . . . . . . .VA0046 . . . . . . . 17,421
Williamsburg*. . . . . . . . . . .VA0074 . . . . . . . . . 23,940
Green Bay. . . . . . . . . . .W10234 . . . . . . . . . 37,857
Greenfield . . . . . . . . . . . .W10323 . . . . . . . .4,903
Nale's Corner. . . . . . . . . . .W10420 . . . . . . . . . .1,823
Charleston . . . . . . . . . . . .WV0104 . . . . . . . 5,762
94,768,081
*CPST rate reduction required.
28381.51
11
-7- 9 7
•
C?
Appleton/Green Bay,
Bakersfield, CA
Birmingham, AL
Boston, MA
Eastern Pennsylvania
Florida Divisions
Hawaii Division
APPENDIX B
REGIONAL EQUIPMENT AREAS
WI Milwaukee, WI
Minneapolis, MN
National Division - East
National Division - West
Division Maine Division
Illinois/Indiana Division
Indianapolis, IN
Jackson/Monroe, MS
Kansas City, MO
Lincoln, WE
Los Angeles, CA
Memphis, TN
New York City Division
New York State Divisions
North Carolina Divisions
Ohio Divisions
Portland, OR
San Diego, CA
Shreveport, LA
Texas Divisions
Western Pennsylvania Division
•
-7-1?1U
0
•
588638
Franchise Agreement Ordinance
October 16, 1996 - Page 23
EXHIBIT C
PARAGON CABLE INITIAL PROGRAADUliG
• RESOLUTION NO.
RESOLUTION APPROVING SUMMARY PUBLICATION OF AN
AMENDMENT TO APPENDIX E OF THE RICHFIELD CITY CODE
WHEREAS, the City has adopted the above-referenced amendment to the Richfield City
Code; and
WHEREAS, the verbatim text of the amendment is lengthy, and the expense of
publication of the complete text is not justified.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield
that the following summary is hereby approved for official publication:
SUMMARY PUBLICATION
BILL NO.
AN ORDINANCE AMENDING APPENDIX E OF THE RICHFIELD
CITY CODE BY REPEALING SECTION E2, THE CABLE
COMMUNICATIONS FRANCHISE ORDINANCE, AND
SUBSTITUTING THEREFORE A CABLE TELEVISION FRANCHISE
AGREEMENT ORDINANCE BETWEEN THE CITY OF RICHFIELD
AND KBL CABLE SYSTEMS OF THE SOUTHWEST, INC.
(SUMMARY PUBLICATION)
The above referenced actions have been taken pursuant to the authority of Minnesota
Statutes, section 462.357. This summary of the amendment is published pursuant to section 3.12
of the Richfield City Charter.
The Cable Television Franchise Agreement Ordinance ("Agreement Ordinance") grants
a cable franchise to KBL Cable Systems of the Southwest Inc. d/b/a Paragon Cable ("Grantee")
for 15 years. It also provides the effective date for the renewal.
The Agreement Ordinance specifies that Grantee will upgrade the current cable system
to a capacity of 750 MHz with 550 MHz reserved for providing the delivery of up to 79 analog
cable channels (the present system has a capacity of 58 analog channels). The technical
IS operations of the system shall also be upgraded and the Grantee shall provide standby power for
the cable system. Grantee agrees to extend service to any residences receiving City water and
`?_/00
sewer services. Parental control provisions shall be available to subscribers upon request.
Under the Agreement Ordinance, Grantee shall provide a free connection and specified free
cable services to public schools and municipally owned buildings. Free installation and service
shall also be provided to private schools until the year 2000.
A provision in the Agreement Ordinance allows the City to engage the Grantee in a
periodic review process to determine whether the cable system is state-of-the-art. Such a review
includes at least two public hearings to obtain public comment. Provisions in the Agreement
Ordinance also permit the City to require subscriber surveys.
The Agreement Ordinance requires the Grantee to provide four public, educational and
governmental access channels. Grantee shall also provide leased access channels and Metro
Cable Network, Channel six, as required by law.
Under the Agreement Ordinance, Grantee will combine the three existing public,
educational and governmental access facilities into one large facility located in Eden Prairie.
The Grantee is required to file a transition plan with the City describing this process. The
combined facility will feature a studio with audience participation capacity, two separate editing
suites, storage space, regular hours including evening and weekend hours, and it will be
wheelchair accessible.
Grantee will provide at least $200,128 in funding for the facility during the first year.
. After the first year, the Grantee shall provide sufficient financial and in-kind support to maintain
a substantially equivalent level of services, facilities and equipment in the remaining years of the
Agreement Ordinance.
The Agreement Ordinance requires the Grantee to assist the City in providing live City
Council meetings, reruns of government access programming and character generated
programming on the government access channel. Grantee shall also assist the City in replaying
tapes in pre-arranged time slots and it will switch to C-SPAN 2 or other comparable
programming when the government access channel is not carrying live or taped government
access programming.
The Agreement Ordinance requires Grantee to pay a franchise fee of five percent.
Grantee must maintain a bond of $300,000 until the system upgrade is complete and then the
City may reduce the bond to $100,000. Several provisions specify penalties in the event of non-
compliance with the franchise and the procedures to enforce those penalties.
In consideration of the Grantee's investment of $20 million to rebuild the systems for the
Cities of Eden Prairie, Edina, Minnetonka, Hopkins and Richfield, MN, the Agreement
Ordinance contains a competition adjustment provision that relieves the Grantee of certain
franchise fee and public, educational and government access obligations within a city if a wired
competitor offers video programming services in that city.
The amendment will be effective January 1, 1997, except that the amendment will be null
. and void if the City's existing cable franchisee does not execute a Franchise Agreement
/)-/C)/
Ordinance by December 25, 1996.
Copies of the amendment are available for public inspection in the office of the city clerk
during normal business hours.
Dated:
BY ORDER OF THE CITY COUNCIL
Thomas P. Ferber, City Clerk
Passed by the City Council of the City of Richfield, Minnesota this day of
1996.
Martin J. Kirsch, Mayor
ATTEST:
•
Thomas P. Ferber, City Clerk
40
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 346
Agenda November 25, 1996
Issue Statement:
Public hearing and second reading of an ordinance to regulate the granting of
franchises to operate and maintain a cable system in this City; adoption of a resolution
approving summary publication.
Background:
The City of Richfield is currently a member of the five-city Southwest Suburban Cable
Commission (SWSCC) which administers the current provisions of the cable franchise
ordinance with Paragon Cable. The SWSCC includes the cities of Richfield, Eden
Prairie, Hopkins, Edina and Minnetonka. The franchise ordinance currently in effect will
expire December 31, 1999. Paragon and members of the Commission have
determined that it was in both the SWSCC's and Paragon's best interest to consider
early refranchising of the franchise ordinance in order to allow Paragon to upgrade the
cable system in the southwest area. Basically, this upgrade would provide for an
increase in channel capacity from 58 to 79 channels and an improved picture quality.
In undertaking this process, the SWSCC elected to proceed in fashioning two model
ordinances that will ultimately be considered for adoption by each of the five cities. The
first ordinance under consideration is the Master Regulatory Ordinance that would
govern any operator that would come within the City of Richfield providing cable
television services. The ordinance, in essence, updates the regulatory requirements
that have been in place with the City since the City of Richfield initially dealt with the
cable television issue in about 1980 and includes modifications and additions that
reflect the Minnesota Cable Act, The Federal Cable Act of 1984, The Federal Cable Act
of 1992 and the Federal Telecommunications Act of 1996. In summary, this regulatory
ordinance gives the City the authority to grant franchises to qualified operators; to
establish technical standards directed by the Federal Communications Commission;
details customer service standards for all operators; sets construction standards;
governs what occurs in city right-of-ways; and allows the City to review transfers of
ownership and related authority.
The SWSCC has approved the ordinance and first reading of this regulatory ordinance
was approved on October 28, 1996.
In conjunction with the second ordinance consideration staff is recommending that the
Council adopt a resolution approving the publication of a summary of the new
ordinance rather than the entire lengthy document. The summary has been prepared
by legal counsel for the SWSCC. A representative from legal counsel to the SWSCC
will be in attendance at the November 25 meeting to answer any specific questions that
members of the City Council may have regarding the proposed regulatory ordinance.
W
Recommended Motion:
Conduct a public hearing, approve second reading consideration of the ordinance to
regulate the granting of franchises to operate and maintain a cable system in the City;
setting forth conditions accompanying the granting of a franchise; providing for use of
the system; and prescribing penalties for the violation of its provision; and adopt a
resolution approving summary publication.
Basis of Recommendation:
1. The draft ordinance has been carefully fashioned by legal counsel to the SWSCC
with input from individual members of the SWSCC.
2. The regulatory ordinance forms the basis from which the City may deal with any
potential cable operator in the City of Richfield, incorporating current Minnesota
cable law, the Federal Cable Act as amended and the Telecommunications Act of
1996.
3. The regulatory ordinance is necessary as a basis to move forward with granting a
franchise ordinance to Paragon Cable as part of the early renewal process.
4. The ordinance has been approved by the SWSCC and recommended for approval
to each city.
0 5. A resolution approving summary publication would avoid a very costly publication
that would be no more informative than the summary publication.
Alternative Recommendation:
1. The City Council could decide to delay final consideration of this regulatory
ordinance.
2. The City Council could decide not to approve this ordinance.
3. The City Council could decide not to approve summary publication.
Discussion/Decision Mode:
Consideration of this ordinance for second reading is set for November 25, 1996. It is
anticipated that each of the five cities of the SWSCC will have considered and voted on
this ordinance by the end of November.
R p c ully submitted,
Ja s D. Prosser
City Manager
0 JDP:cak
6,z
0 RESOLUTION NO.
RESOLUTION APPROVING SUMMARY PUBLICATION OF AN
AMENDMENT TO THE RICHFIELD CITY CODE BY ADDING SECTION
726
WHEREAS, the City has adopted the above-referenced amendment to the Richfield City
Code; and
WHEREAS, the verbatim text of the amendment is lengthy, and the expense of
publication of the complete text is not justified.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield
that the following summary is hereby approved for official publication:
SUMMARY PUBLICATION
BILL NO.
AN ORDINANCE AMENDING THE RICHFIELD CITY CODE BY ADDING
SECTION 726; REGULATING THE GRANTING OF FRANCHISES TO
OPERATE AND MAINTAIN A CABLE SYSTEM IN THE CITY; SETTING
FORTH CONDITIONS ACCOMPANYING THE GRANT OF FRANCHISE;
PROVIDING FOR REGULATION AND USE OF THE SYSTEM; AND
PRESCRIBING PENALTIES FOR THE VIOLATION OF ITS PROVISIONS.
(SUMMARY PUBLICATION)
The above referenced actions have been taken pursuant to the authority of Minnesota
Statutes, section 462.357. This summary of the amendment is published pursuant to section 3.12
of the Richfield City Charter.
The Cable Television Regulatory Ordinance ("Regulatory Ordinance") provides the
franchising process and requirements for all cable operators within the City of Richfield. It
defines the terms used within the documents. It also outlines the authority that the City of
Richfield has to grant cable franchises.
The Regulatory Ordinance provides an application process for new applicants and a
renewal process for current applicants. The Regulatory Ordinance specifies that no franchise
?-3
can be granted for a period of time longer than 15 years. It also describes the franchise
territory.
Within the Regulatory Ordinance, franchise administration procedures are outlined. The
Regulatory Ordinance specifies that the City Manager or the City Manager's designee is
responsible for cable administration. Under the Regulatory Ordinance, the City is authorized
to delegate its rights regarding administration of the Regulatory Ordinance. During emergencies
or disasters, the City is authorized to use the Grantee's emergency alert system.
The Regulatory Ordinance provides construction requirements that outline the
responsibilities of a Grantee during the construction of a cable system and specifies the process
for the movement of or removal of the Grantee's equipment at the request of the City or another
person. Additional construction issues addressed by the Regulatory Ordinance include
interconnection with adjacent systems, abandonment of the cable system and removal of the
cable system. The Regulatory Ordinance incorporates the Federal Communications
Commission's technical standards by reference.
To address customer service issues, the Regulatory Ordinance incorporates the Federal
Communications Commission's customer service standards and includes additional customer
service standards regarding outages, subscriber complaints, subscriber practices, local offices,
subscriber charges, rate regulation and the rights of individuals. It also requires each Grantee
to maintain a local office.
The Regulatory Ordinance requires each Grantee to provide public, educational and
governmental access programming and facilities consistent with state and federal law.
Provisions within the Regulatory Ordinance allow the City to review Grantee's records
and books. The Regulatory Ordinance also specifies the documents and records that each
Grantee must provide annually including an Annual Performance Review.
The Regulatory Ordinance provisions state that the City has the right to review transfers
of ownership and to match a bona fide purchase offer for an asset sale of the system. Additional
provisions govern the City's right to purchase the cable system upon forfeiture, revocation or
expiration.
To minimize litigation, the Regulatory Ordinance contains mediation procedures. The
Regulatory Ordinance also affirms the City's right to assess a franchise fee.
To protect the City, the Regulatory Ordinance includes provisions detailing the Grantee's
liability for damages and penalties, the Grantee's responsibility for indemnifying the City,
requirements for security funds, and insurance requirements.
The Regulatory Ordinance contains extensive default provisions including requirements
for the continuation of cable services if a franchise is terminated or if it is not renewed, and
foreclosure and receivership procedures. Additional provisions in the Regulatory Ordinance
include a Force Majeure provision allowing exceptions for events beyond the Grantee's control,
(,-4
a severability procedure and an effective date provision.
The amendment will be effective January 1, 1997, except that the amendment will be null
and void if the City's existing cable franchisee does not execute a Franchise Agreement
Ordinance by December 25, 1996.
Copies of the amendment are available for public inspection in the office of the city clerk
during normal business hours.
Dated:
•
BY ORDER OF THE CITY COUNCIL
Thomas P. Ferber, City Clerk
Passed by the City Council of the City of Richfield, Minnesota this day of
1996.
Martin J. Kirsch, Mayor
ATTEST:
Thomas P. Ferber, City Clerk
596451
0
•
CABLE TELEVISION
REGULATORY ORDINANCE
CITY of
0 RICHFIELD, MINNESOTA
Prepared by:
•
Adrian E. Herbst, Esq.
Theresa M. Harris, Esq.
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402
Telephone: (612) 347-7000
Fax: (612) 347-7077
With the assistance of:
The Southwest Suburban
Cable Commission
BILL NO.
0 AN ORDINANCE AMENDING THE RICHFIELD CITY CODE BY
ADDING SECTION 726; REGULATING THE GRANTING OF
FRANCHISES TO OPERATE AND MAINTAIN A CABLE SYSTEM IN
THE CITY; SETTING FORTH CONDITIONS ACCOMPANYING THE
GRANT OF FRANCHISE; PROVIDING FOR REGULATION AND USE OF
THE SYSTEM; AND PRESCRIBING PENALTIES FOR THE VIOLATION
OF ITS PROVISIONS.
THE CITY OF RICHFIELD DOES ORDAIN:
Section 1. The Richfield City Code is amended by adding a Section 726 to read as
follows:
726.01. Statement of Intent and Purpose. The City, pursuant to applicable
federal and state law, is authorized to grant one or more nonexclusive cable television
franchises to construct, operate, maintain and reconstruct Cable Television Systems
within the City limits.
The City Council finds that the development of Cable Television Systems has
the potential of having great benefit and impact upon the residents of Richfield.
Because of the complex and rapidly changing technology associated with cable
television, the City Council further fords that the public convenience, safety and
general welfare can best be served by establishing regulatory powers which should be
vested in the City or such Persons as the City shall designate. It is the intent of this
Ordinance and subsequent amendments to establish minimum requirements regarding
the granting of cable television franchises consistent with Minnesota and federal law
recognizing that these laws and the requirements of local government are continuously
changing, and to provide for and specify the means to attain the best possible cable
television service to the public. Any franchises issued pursuant to this Ordinance
shall be deemed to include this intent as an integral part thereof.
726.03. Title.
This Ordinance shall be entitled, "Cable Regulatory Ordinance."
726.05. Definitions. Subdivision 1. For the purpose of this Ordinance, the
following, terms, phrases, words, derivations and their derivations shall have the
meanings given herein. When not inconsistent with the context, words used in the
present tense include the future tense, words in the plural number include the singular
number and words in the singular number include the plural number.
• Subd. 2. "Access Channels" shall mean those Channels which, by the terms
of this Ordinance or the Franchise Agreement, are required to be kept available by
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the Minnesota Cable Communications Act for partial or total dedication to public
access, educational access, or local government access.
Subd. 3. "Affiliate" shall mean any person controlling, controlled by or under
common control of a Grantee of a franchise issued pursuant to this Ordinance.
Subd. 4. "Applicant" means any person that applies for a Franchise under this
Ordinance.
Subd. 5. "Application" or "Proposal" are synonymous for the purposes of this
Ordinance. An Application or Proposal means the process by which the Applicant
submits a request and indicates a desire to be granted a franchise for all, or a part, of
the City. An Application or Proposal includes all written documentation, including
official city council minutes concerning the construction, detailed description of
services to be provided, the area to be served within the City, the portion of Street to
be used, rendering of services and the manner thereof, rates and charges,
maintenance, or any other matter pertaining to the proposed Cable Communications
System.
Subd. 6. "Basic Cable Service" means any service tier which includes the
retransmission of local television broadcast signals. This definition shall be deemed
to change pursuant to any changes in applicable federal law and shall be interpreted in
to a manner consistent with the rules of the Federal Communications Commission.
Subd. 7. "Cable Communications System," "Cable Television System,"
"Cable System," "CATV" or "System", shall mean a System of coaxial cables or
other electrical conductors and equipment used or to be used to originate or receive
television or radio signals directly or indirectly off the air and to transmit them via
cable or fiber optics to Subscribers for a fixed or variable fee, including the
origination, receipt, transmission, and distribution of voices, sound signals, pictures,
visual images, digital signals, telemetry, or any other type of closed circuit
transmission by means of electrical impulses, whether or not directed to originating
signals or receiving signals off the air.
Subd. 8. "Cable Service" shall mean (a) the one-way transmission to
subscribers of (i) Video Programming or (ii) Other Programming Service, and (b)
subscriber interaction, if any, which is required for the selection or use of such video
programming or other programming service. For the purposes of this definition,
"video programming" is programming provided by, or generally considered
comparable to programming provided by a television broadcast station; and, "other
programming service" is information that a cable operator makes available to all
subscribers generally.
Subd. 9. "City" shall mean the City of Richfield, a municipal corporation in
is the State of Minnesota.
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Subd. 10. "Connection" means the attachment of the drop to the first radio or
television set of the subscriber.
Subd. 11. "Converter" means an electronic device, which converts signals to
a frequency not susceptible to interference within the television receiver of a
subscriber, and by an appropriate channel selector also permits a subscriber to view
all signals included in the basic service delivered at designated converter dial
locations.
Subd. 12. "Council" shall mean the governing body of the City.
Subd. 13. "Drop" shall mean the cable that connects the subscriber terminal
to the nearest feeder cable of the cable.
Subd. 14. "FCC" means the Federal Communications Commission, or a
designated representative.
Subd. 15. "Franchise" means the non-exclusive right and authority granted to
an Applicant by a Franchise Agreement Ordinance to construct, maintain and operate
any part of a Cable Communications System described in the Application, through use
of the public Streets, public utility easements or other public rights-of-way or public
places in the City. The Franchise shall describe in detail all requirements applicable
to the Franchise including all applicable requirements of federal, state and local laws.
Subd. 16. "Franchise Agreement Ordinance" or "Franchise Agreement"
means the ordinance adopted by City granting a Franchise to an Applicant.
Subd. 17. "Grantee" shall mean any Person to whom a Franchise is granted
pursuant to this Ordinance and any lawful successor or assignee of the original
Grantee.
Subd. 18. "Gross Revenues" shall mean all revenues received directly or
indirectly by the Grantee, arising from or in connection with the provision of Cable
Service in the City and consistent with local, state and federal law, including, but not
limited to, Subscriber revenues (including Pay TV), advertising income, home
shopping programs, rentals of equipment, antenna or signal space, and any and all
other Gross Revenues received by the Grantee from the provision of Cable Service in
the area under the jurisdiction of the City. Grantee is not required to include
revenues recorded as received but which are "bad debt," but it must include any
recoveries of bad debt. This definition of gross revenues also does not include any
sales, excise or other taxes collected by Grantee on behalf of federal, state, county,
city or other governmental unit. Funds collected by Grantee to support public,
educational and governmental access programming are also excluded from the
definition of Gross Revenues.
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Subd. 19. "Minnesota Cable Communications Act" means the provisions of
Minnesota law governing the requirements for a cable television franchise as set forth
in Minn. Stat. § 238, et. seq., as amended.
Subd. 20. "Ordinance" means this Ordinance concerning the granting of
Franchises in and by the City for Cable Communications Systems.
Subd. 21. "Person" means any natural person and all domestic and foreign
corporations, closely-held corporations, associations, syndicates, joint stock
corporations, partnerships of every kind, clubs, businesses, common law trusts,
societies and/or any other legal entity.
Subd. 22. "Street" shall mean the surface of and the space above and below
any public Street, road, highway, freeway, lane, path, public way, alley, court,
sidewalk, boulevard, parkway, drive or any easement or right-of-way now or
hereafter held by City which shall, within its proper use and meaning in the sole
opinion of City, entitle Grantee to the use thereof for the purpose of installing or
transmitting over poles, wires, cables, conductors, ducts, conduits, vaults, man-holes,
amplifiers, appliances, attachments and other property as may be ordinarily necessary
and pertinent to a System.
Subd. 23. "Subscriber" shall mean any person or entity receiving service
40 provided by a Grantee pursuant to the authority of a Franchise.
Subd. 24. In the event the meaning of any word or phrase not defined herein
is uncertain, the definitions contained in applicable State or Federal law shall apply.
726.07. Authority to Grant Franchises.
Subdivision 1. The Council is empowered and authorized to issue, in
accordance with the City Charter, non-exclusive Franchises to install, construct,
operate and maintain Cable Communications Systems in the City's Streets, as well as
to regulate these activities.
Subd. 2. The Council has determined that the granting of Franchises for
Cable Communications Systems in the City will promote the public interest, enhance
the health & welfare and safety of the public and stimulate commerce by assuring
that: (1) Cable Communications Systems are responsive to the needs and interests of
the City and its residents; (2) Cable Communications Systems provide, and are
encouraged to provide the widest diversity of information and service to the public;
and (3) there is an orderly process for the granting or renewal of Franchises, and
oversight of the services provided pursuant to Franchises.
Subd. 3. No person shall construct, operate, maintain, or continue to operate
or maintain a Cable Communications System which occupies any part of the City's
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• Streets, without the authority of a Franchise granted by the City pursuant to this
Ordinance.
Subd. 4. No provision of this Ordinance shall be deemed or construed to
require the granting of a Franchise by the City.
Subd. 5. Any Franchise granted must comply with the Minnesota Cable
Communications Act standards.
Subd. 6. Grantee's rights are subject to the police power of City to adopt and
enforce ordinances necessary to the health, safety and welfare of the public of general
applicability.
Subd. 7. Both the City and the Grantee expressly reserve any and all rights
that either may have under applicable state and federal law including but not
necessarily limited to, the Cable Communications Policy Act of 1984, as amended,
and the rules and regulations of the FCC. Neither adoption of this Franchise by the
City nor acceptance by the Grantee shall be construed as a waiver, modification,
termination or discharge of any right that either the city or the Grantee may now or
hereafter have.
Subd. 8. Except as may be based upon public health, safety and welfare
• requirements of general applicability or where required by federal or state law or
rules, no modification or amendment to the Regulatory Ordinance or the franchise
agreement ordinance shall be effective unless in writing and signed by both the City
and Grantee.
726.09. Application for Franchise.
Subdivision 1. Each Applicant for a Franchise, including the renewal of a
Franchise consistent with state and federal law, requesting permission to construct,
operate or maintain any Cable Communications System in the City shall file an
Application with the City in a form and containing such information as is requested
by the City. The contents of such Application may vary, according to the nature of
the proposed Cable Communications Systems. However, an Initial Application shall
contain, at a minimum, the following information.
(a) The name, address and telephone number of the Applicant. If the
Applicant is a partnership, the home and business address of each partner shall also
be set forth. If the Applicant is a corporation, the Application shall state the names
and addresses of its directors, main officers, major stockholders and associates and
the names and addresses of parent or subsidiary companies.
(b) A statement setting forth in its entirety any and all agreements and
• understandings, whether formal or informal, written, oral or implied, existing or
proposed to exist between the Applicant and any Person who proposes to have an
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ownership interest with respect to the proposed Franchise or to the proposed Cable
Communications System. If a Franchise is granted to a Person acting as a
representative of another Person and such information is not disclosed in the original
Application, the Franchise shall be deemed void and of no force and effect.
(c) Financial statements, as determined by the Council, prepared by a
certified public accountant, or person otherwise satisfactory to the Council, showing
Applicant's financial status and financial ability to complete the construction and
installation of the proposed Cable Communications System and/or continue the
operation of the existing Cable Communications System.
(d) A statement describing the Cable Communications System and
specifying the type and capacity of the Cable Communications System proposed to be
construed, installed, maintained or operated by the Applicant and the proposed or
existing location of the Cable Communications System.
(e) A description of all previous experience of the Applicant in
providing Cable Communications System service and in related or similar fields.
(f) Any other details, statements, information or references pertinent to
the subject matter of such Application which shall be required or requested by the
Council, or by any provision of any other ordinance of the City.
• The City reserves the right to modify the Application in a renewal process to
accommodate information regarding the Applicant that is already in the possession of
the City. Any renewal of a Franchise shall comply with applicable federal, state or
local law.
Subd. 2. Prior to the issuance of a Franchise, the City shall hold a public
hearing, following reasonable notice to the public, at which Applicant and its
Application shall be examined and the public and all interested parties afforded a
reasonable opportunity to be heard. The City reserves the right to seek
reimbursement of its costs to the extent permitted by applicable state and federal law.
The preceding statement does not constitute an agreement by any Applicant to
reimburse the City for the cost of the Application process.
Subd. 3. In making any determination hereunder as to any Application, the
City shall consider the impact on the Streets with the addition of the proposed Cable
Communications System, the needs of the City and the legal, technical and financial
qualifications of the Applicant. For initial franchises, the City shall give due
consideration to the quality of the service proposed; experience, character,
background and the financial responsibility of any Applicant and its management and
owners; willingness and ability to abide by policy conditions; Franchise limitations
and requirements; and any other considerations deemed pertinent to the Council for
Is safeguarding the interest of the City and the public. For a renewal of a Franchise,
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the City shall also consider the factors identified in the Cable Communications Policy
Act of 1984, as amended.
Subd. 4. The City may require the Applicant for an initial franchise to
reimburse the City for its reasonable costs to review the Application including costs
for technical assistance to aid the City in understanding the nature and effect of the
Application.
726.11. Acceptance and Duration of Franchise.
Subdivision 1. Any Franchise granted pursuant to this Ordinance shall be in
the form of a Franchise Agreement Ordinance between the City and the Grantee
which shall comply with all specifications of this Ordinance.
Subd. 2. Any Franchise granted pursuant to this Ordinance shall become
effective in accordance with the terms and conditions approved by the Council,
provided that a Grantee has filed with the City Clerk a written instrument addressed
to the Council accepting the Franchise, within the time specified by the City Council,
and agreeing to comply with all provisions of this Ordinance and the Franchise.
Subd. 3. The term of a Franchise shall be stated in the Franchise Agreement
Ordinance, but shall in no event exceed 15 years.
• 726.13. Franchise Territory.
Any Franchise shall be valid within all territorial limits of the City, and within any
area added to City during the term of a Franchise, unless otherwise specified in the
Franchise Agreement Ordinance.
726.15. Franchise Administration.
Subdivision 1. Administrator. The City Manager or the City Manager's
designee shall be responsible for the continuing administration of a Franchise. The
administrator may be changed by City from time to time by written notice given to a
Grantee.
Subd. 2. Advisory body. The City may appoint an advisory body to monitor
the performance of a Grantee in executing the provisions of a Franchise. The
advisory body shall perform all functions required of it by the City and applicable
laws, ordinances, rules and regulations.
Subd. 3. Delegation of Authority by the City.
a. The City reserves the right to delegate and redelegate from time to
is time any of its rights or obligations under a Franchise to any body or organization.
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b. Any delegation by City shall be effective upon written notice by
City to a Grantee of such delegation.
c. Upon receipt of notice by a Grantee of City's delegation, a Grantee
shall be bound by all terms and conditions of the delegation not in conflict with a
Franchise.
d. Any such delegation, revocation or redelegation, no matter how
often made, shall not be deemed an amendment to a Franchise or require any consent
of a Grantee.
Subd. 4. Nonenforcement by City. A Grantee shall not be relieved of its
obligation to comply with any of the provisions of a Franchise by reason of any
failure of the City or to enforce prompt compliance.
Subd. 5. Administration of Franchise.
a. The City shall have continuing regulatory jurisdiction and
supervision over the System and a Grantee's operation under a Franchise. The City
may issue such reasonable rules and regulations concerning the construction,
operation and maintenance of a System as are consistent with the provisions of a
Franchise.
b. A Grantee shall construct, operate and maintain a System subject to
the supervision of all the authorities of the City who have jurisdiction in such matters
and in strict compliance with all laws, ordinances, departmental rules and regulations
affecting the System.
c. A System and all parts thereof shall be subject to the right of
periodic inspection by the City where reasonably necessary to the enforcement of a
Franchise and provided that such inspection shall not interfere with the operation of a
System and such inspections take place during normal business hours.
Subd. 6. Emergency Use. In the case of any emergency or disaster, a
Grantee shall, upon request of the City or emergency management personnel, make
available to the City its emergency alert system and related facilities for use during an
emergency or disaster period in accordance with Section 47 C.F.R. § 11.
Subd. 7. Controlling Law. A Franchise shall be construed and enforced in
accordance with the substantive laws of the State of Minnesota except to the extent the
Supremacy Clause of the United States Constitution requires application of federal
law.
Subd. 8. Ca Lions. The paragraph captions and headings in a Franchise are
for convenience and reference purposes only and shall not affect in any way the
ID meaning of interpretation of a Franchise.
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Subd. 9. Calculation of Time. Where the performance or doing of any act,
duty, matter, payment or thing is required hereunder and the period of time or
duration for the performance is prescribed and fixed herein, the time shall be
computed so as to exclude the first and include the last day of the prescribed or fixed
period or duration of time. When the last day of the period falls on Saturday, Sunday
or a legal holiday, that day shall be omitted from the computation and the next
business day shall be the last day of the period.
726.17. Construction of System.
Subdivision 1. A Grantee shall, at least 60 days prior to any construction
regarding the System in the City, provide notice to representatives of the City of the
following: (1) The nature of the work to be undertaken; (2) the estimated schedule
for said work; (3) steps to be taken to minimize disruption to public; and (4) steps to
be taken to notify the residents and others of said work.
Subd. 2. A Grantee shall not open or disturb the surface of any Streets
without first obtaining a permit from City for which permit City may impose a
reasonable fee to be paid by a Grantee. The lines, conduits, cables and other
property placed in the Streets shall be located in such part of the Street as shall be
reasonably determined by the City. In so determining the location in such part of the
Street, the parties shall take into account the health, safety and welfare considerations
together with the technical parameters of the System design. A Grantee shall, upon
completion of any work requiring the opening of any Streets, restore the same,
including the pavement and its grounds to as good a condition as formerly and in a
manner and quality approved by City, and shall exercise reasonable care to maintain
the same thereafter in good condition. Such work shall be performed with diligence
and due care, and if Grantee shall fail to perform the work promptly, to remove all
dirt and rubbish and to put the Street back into the condition required hereby, City
shall have the right to give written notice to Grantee regarding the condition of the
Street. Grantee shall have 30 days from the receipt of written notice from the City to
put the Street into the condition required hereby or reach an agreement with the City.
Such work shall be performed with diligence and due care, and if Grantee shall fail to
perform the work promptly, to remove all dirt and rubbish and to put the Street back
into the condition required hereby, the City shall have the right following 30 days
written notice to a Grantee to put the Street back into good condition at the expense of
the Grantee. A Grantee, upon demand, shall pay to the City the cost of such work
done or performed including its administrative and overhead plus an additional ten
percent as liquidated damages.
Subd. 3. All wires, conduits, cable and other property and facilities of a
Grantee shall be so located, constructed, installed and maintained as not to endanger
or unnecessarily interfere with the usual and customary trade, traffic and travel upon,
or other use of, the Streets of City. A Grantee shall keep and maintain all of its
property in good condition, order and repair so that the same shall not menace or
endanger the life or property of any person. A Grantee shall keep accurate maps and
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records of all of its wires, conduits, cables and other property and facilities located,
constructed and maintained in the City.
Subd. 4. All wires, conduits, cables and other property and facilities of a
Grantee, shall be constructed and installed in an orderly and workmanlike manner.
All wires, conduits and cables shall be installed, where possible, parallel with electric
and telephone lines. Multiple cable configurations shall be arranged in parallel and
bundled with due respect for engineering considerations.
Subd. 5. A Grantee shall at all times comply with all applicable laws,
ordinances, rules, regulations and codes, federal, state and local. In any event, the
installation, operation or maintenance of System shall not endanger or interfere with
the safety of persons or property in the City.
Subd. 6. Whenever City shall undertake any public improvement which
affects a Grantee's equipment or facilities, City shall, with due regard to reasonable
working conditions and with reasonable notice, direct a Grantee to remove its wires,
conduits, cables and other property located in Streets. A Grantee shall relocate or
protect its wires, conduits, cables and other property at its own expense. If the City,
from its own funds, reimburses any non-municipally owned utility for relocating its
property at the City's request, the City shall reimburse Grantee in a substantially
similar manner.
Subd. 7. To the extent a Grantee plans to construct or rebuild its System, it
shall comply with the following minimum requirements:
a. A Grantee shall construct underground in any area where both
electrical and telephone has been installed underground.
b. A Grantee shall change from aerial to underground, at its own
expense, in any area where both electrical and telephone are hereafter changed from
aerial to underground. If the City, from its own funds, reimburses any non-
municipally owned utility for relocating its property at the City's request, the City
shall reimburse Grantee in a substantially similar manner.
c. A Grantee shall change from aerial to underground, when both
electrical and telephone are similarly required, without cost to City, whenever
requested by City, which request can be made for a certain area or areas or for the
entire System. If the City, from its own funds, reimburses any non-municipally
owned utility for relocating its property at the City's request, the City shall reimburse
Grantee in a substantially similar manner.
d. To enable a Grantee reasonable opportunity to change its wiring
from aerial to underground, and also to allow it to pre-wire all new subdivisions or
new development areas, City shall arrange for the Grantee to receive timely notice of
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a new Franchise granted for Cable Services, but in no event shall City have any
liability for failure to arrange for notice of the following:
e. Any changes of which City has knowledge of, or which City may order,
regarding a change from aerial to underground of any line (telephone or electrical)
within its boundaries.
1. Any underground trenching that may be pending.
2. New subdivisions and development. All of such subdividers or
developers shall be notified of a Franchise and a System.
726.19. Work Performed by Others.
Subdivision 1. A Grantee shall give notice to City specifying the names and
addresses of any entity, other than a Grantee, which performs construction services
pursuant to a Franchise, provided, however, that all provisions of a Franchise remain
the responsibility of a Grantee.
Subd. 2. All provisions of a Franchise shall apply to any subcontractor or
others performing any work or services pursuant to the provisions of a Franchise.
726.21. Conditions on Use.
Subdivision 1. A Grantee shall not place poles or other fixtures where the
same will interfere with any gas, electric or telephone fixture, water hydrant or main.
Subd. 2. A Grantee, at the request of any person holding a building moving
permit and with not less than five business days advance notice, shall temporarily
remove, raise or lower its wires, conduits and cables. The expense of such
temporary removal, raising or lowering of wires, conduits and cables shall be paid by
person requesting the same, and Grantee shall have the authority to require such
payment in advance of any required work taking place.
Subd. 3. A Grantee shall have the authority, to the extent the City has
authority to grant the same, to trim trees upon or overhanging any Street so as to
prevent the branches of such trees from coming in contact with the wires, conduits
and cables of a Grantee. All trimming shall be done under the supervision and
direction of City and at the expense of a Grantee.
Subd. 4. Nothing contained in a Franchise shall relieve any Person from
liability arising out of the failure to exercise reasonable care to avoid injuring a
Grantee's facilities while performing any work connected with grading, regrading or
changing the line of any Street or public place or with the construction or
reconstruction of any sewer or water system.
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726.23. Use of Grantee's Facilities.
A Grantee is authorized to use Streets to construct, operate and maintain a Cable
Television System and to provide Cable Services in the City. All uses by Grantee or
others authorized by Grantee shall be subject to applicable permits, licenses,
certificates or franchises as may be required by the City, state or federal law or rules.
726.25. Failure to Complete Work.
Upon the failure, refusal or neglect of a Grantee to cause any work or other act
required by law, this Ordinance or a Franchise to be properly completed or
performed, after notice to a Grantee the City may cause work or other activity to be
completed or performed, in whole or in part, to the satisfaction of the City. Upon so
doing, the City shall submit to a Grantee an itemized statement of the cost thereof. A
Grantee shall, within 30 days after receipt of the statement, pay to the City the entire
amount thereof.
726.27. Technical Standards.
Subdivision 1. A Cable System shall be designed, constructed and operated so
as to meet those technical standards promulgated by the Federal Communications
Commission relating to Cable Television Systems contained in part 76 of the Federal
Communications Commission's rules and regulations relating to Cable Television
Systems and found in Code of Federal Regulations, Title 47, Sections 76.601 to
76.630. The City shall be able to enforce these standards to the extent allowable
under local, state or federal law. Any tests required by the Federal Communications
Commission pursuant to these rules must be filed with the City upon request.
Subd. 2. A Grantee shall perform additional tests if requested by City. The
tests may be done at such times as is determined by City, with notice to a Grantee.
All expenses for all such tests shall be paid by City, unless otherwise agreed upon.
726.29. Interconnection.
Subdivision 1. A System shall be designed to be interconnected with other
adjacent Systems. At a minimum, a System shall be capable of interconnecting the
access. channel programming to other adjacent systems. Grantee shall not be required
to provide more access channels as a result of interconnecting with another system
than the number of channels required by the franchise agreement ordinance.
Subd. 2. The City may request a Grantee to negotiate interconnecting the
Subscriber Network with other adjacent Systems in the general area. A Grantee shall
use its good faith to negotiate such interconnection and shall keep the City informed
of the progress of any negotiations.
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726.31. Removal or Abandonment of A System.
Subdivision 1. In the event that: (1) the use of any System is discontinued for
any reason for a continuous period of 12 months; or (2) any System has been installed
in a Street without complying with the requirements of this Ordinance and a
Franchise, a Grantee, at its expense shall, at the demand of the City remove promptly
from the Streets all of a System other than any which the City may permit to be
abandoned in place. In the event of any such removal Grantee shall promptly restore
to a condition as nearly as possible to its prior condition the Street or other public
places in the City from which a System has been removed.
Subd. 2. A System to be abandoned in place shall be abandoned in the
manner prescribed by the City. A Grantee may not abandon any portion of a System
without having first given three months written notice to the City. A Grantee may
not abandon any portion of a System without compensating the City for damages
resulting from the abandonment.
Subd. 3. At the termination or expiration of the term for which a Franchise is
granted and following a denial of renewal, or upon its revocation, as provided for, the
City shall have the right to require a Grantee to remove within two years, at a
Grantee's expense, all or any portion of a System from all Streets within the City. In
so removing a System, a Grantee shall refill and compact at its own expense, any
excavation that shall be made and shall leave all Streets and private property in as
good a condition as that prevailing prior to a Grantee's removal of a System, and
without affecting, altering or disturbing in any way electric, telephone or utility,
cables wires or attachments. The City, or its delegation, shall have the right to
inspect and approve the condition of such Streets after removal. The security fund,
insurance, indemnity and penalty provision of a Franchise shall remain in full force
and effect during the entire term of removal. The insurance and indemnity provisions
of this Ordinance in Sections 726.63 and 726.67 shall survive any termination or
revocation.
Subd. 4. If a Grantee has failed to complete such removal within the time
given after written notice of the City's demand for removal is given, the City shall
have the right to exercise one of the following options:
a. Declare all right, title and interest to a System to be in the City or
its designee with all rights of ownership including, but not limited to, the right to
operate a System or transfer a System to another for operation by it; or
b. Declare a System abandoned and cause a System, or such part
thereof as the City shall designate, to be removed at no cost to the City. The cost of
said removal shall be recoverable from the security fund, indemnity and penalty
section provided for in the Franchise, or from a Grantee directly.
11
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Subd. 5. Upon termination of service to any Subscriber, a Grantee shall
promptly remove all its facilities and equipment from a dwelling of a Subscriber who
owns such dwelling upon his or her written request, except as provided by applicable
state and federal law. Such Subscribers shall be responsible for any costs incurred by
a Grantee in removing the facilities and equipment.
726.33. Customer Service Standards.
Subdivision 1. At all times, a Grantee shall meet the requirements of the
Federal Communications Commission regulations on Consumer Service Obligations.
A Grantee shall comply with the Customer Service Obligations of the Federal
Communications Commission as such standards may from time to time be amended.
Subd. 2. A Grantee shall begin actions to correct service or maintenance
problems no later than 24 hours after it is notified of a System outage for 95 % of
Subscribers. A Grantee shall bear the costs of making any repairs, adjustments, or
installations, unless the Subscriber caused the damage necessitating the repairs or
maintenance. A Grantee may charge for service.
a. Subscriber Complaints to the City.
b. Subscribers shall direct all complaints regarding service to a
• Grantee.
c. If such complaints are not rectified within seven days from the date
the complaint is made, the Subscriber may file a complaint with the City.
d. The City shall maintain a record of all complaints it receives.
e. If, at any time after receipt of a complaint, the City believes that
the complaint may constitute a violation of a Franchise, or local, state or federal law,
the City may notify a Grantee regarding the complaint.
L If the City and a Grantee cannot resolve the complaint within seven
days after the date that the Subscriber files a complaint with the City, the City may
issue a written notice specifying. the nature of the. complaint and ordering a Grantee to
appear at the next regularly scheduled meeting or other appropriate public forum, as
determined by City.
g. If the City and Grantee fail to rectify the complaint, the City may
begin default procedures as specified in Section 726.69.
726.35. Programming Provisions.
A Grantee shall identify its initial services in an Exhibit attached to a Franchise
Agreement Ordinance.
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726.37. Subscriber Practices.
Subdivision 1. There shall be no charge for disconnection of any installation
or outlet. If any subscriber fails to pay a properly due monthly subscriber fee, or any
other properly due fee or charge, a Grantee may disconnect the subscriber's service
outlet, provided, however, that such disconnection shall not be effected until after the
later of. (i) 45 days after the original due date of said delinquent fee or charge; or (ii)
ten days after delivery to subscriber of written notice of the intent to disconnect. If a
subscriber pays before expiration of the later of (i) or (ii), a Grantee shall not
disconnect. After disconnection, upon payment in full of the delinquent fee or charge
and the payment of a reconnection charge, a Grantee shall promptly reinstate the
subscriber's cable service.
Subd. 2. Refunds to subscribers shall be made or determined in the following
manner:
a. If a Grantee fails, upon request by a subscriber, to provide any
service then being offered, a Grantee shall promptly refund all deposits or advance
charges paid for the service in question by said subscriber. This provision does not
alter a Grantee's responsibility to subscribers under any separate contractual
agreement or relieve a Grantee of any other liability.
b. If any subscriber terminates any. monthly service because of failure
of a Grantee to render the service in accordance with a Franchise, a Grantee shall
refund to such subscriber the proportionate share of the charges paid by the subscriber
for the services not received. This provision does not relieve a Grantee of liability
established in other provisions of a Franchise.
c. If any subscriber terminates any monthly service prior to the end of
a prepaid period, a proportionate amount of any prepaid subscriber service fee, using
the number of days as a basis, shall be refunded to the subscriber by a Grantee.
Subd. 3. Continued failure by a Grantee to provide services required by a
Franchise may, in the discretion of City, be cause for imposition of a penalty or
termination of a Franchise.
726.39. Local Office.
Each Franchise shall require that a Grantee maintain a local business office, as
described in a Franchise, or agent, which subscribers may access by telephone 24
hours a day, seven days a week, without incurring long distance toll charges, so that
complaints, questions or requests regarding the service provided pursuant to a
Franchise may be promptly reported to a Grantee.
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726.41. Subscriber Charges.
Current subscriber charges, the length and terms of residential subscriber contracts,
and the procedure by which subscriber charges are established shall be available
during normal business hours for public inspection.
726.43. Rate Regulation.
The City reserves the right to regulate rates for services offered over the Cable
System, to the extent not expressly preempted by federal and state law. A Grantee
shall be subject to the rate regulation provisions provided for herein, and those of the
FCC at 47 C.F.R., Part 76.900, Subpart N.
726.45. Rights of Individuals.
Subdivision 1. Discriminatory Practices Prohibited. In the performance of a
Franchise, a Grantee shall not discriminate against any person on the ground of or
because of race, creed, color, national origin or ancestry, sex, religion, sexual
preference, or political opinion or affiliation or age. A Grantee shall comply at all
times with all other applicable federal, state and City laws, and all executive and
administrative orders relating to non-discrimination.
Subd. 2. Subscriber Privacy.
a. No signals, including signals of a Class IV Channel, shall be
transmitted from a subscriber terminal except as required to provide a service
authorized by a Franchise and the Subscriber. A Grantee and any other Person shall
neither initiate nor use any procedure or device for procuring or storing information
or data from a subscriber's terminals or terminal by any means, without the prior
authorization of the affected Subscriber which shall not have been obtained from the
Subscriber as a condition of service. The request for such authorization shall be
contained in a separate document and identify the purpose for which the data or
information is being gathered or stored. After the first year of the authorization's
initial signing, a Grantee shall, for each year said authorization is in effect without
revocation, mail a notice to each authorizing Subscriber informing him or her of the
right to revoke said authorization. The authorization shall be revocable at any time
by the Subscriber without penalty of any kind whatsoever. A separate authorization
shall be required for each type or classification of data or information sought from a
Subscriber terminal.
b. A Grantee shall not, without the written authorization of the
affected Subscriber, provide to anyone data identifying or designating any Subscriber
other than where that third party is performing a service or task in furtherance of the
Grantee's business including, but not necessarily limited to, billing or telemarketing
functions. Any data authorized shall be made available upon request by and without
charge to the authorizing subscriber in understandable fashion, including specification
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of the purpose for which the information is being gathered and to whom and for what
fee the information is to be sold-.
Subd. 3. A Grantee shall not tap or monitor, arrange for the tapping or
monitoring, or permit any other person to tap or monitor, any cable, line, signal input
device, or Subscriber outlet or receiver for any purpose whatsoever, without the prior
written authorization of the affected Subscriber as required by Subdivision 2 of this
section.
Subd. 4. Nothing herein contained shall prohibit a Grantee from verifying
System operation and the transmission of signals to an affected subscriber or from
monitoring for the purpose of billing.
726.47. Public, Educational and Governmental Access.
Each Franchise shall include a requirement for public, educational and governmental
access programming and facilities consistent with state and federal law.
726.49. Grantee Records and Books.
Subdivision 1. Throughout the term of a Franchise, a Grantee shall maintain
books and records in accordance with normal and accepted bookkeeping and
accounting practices for the Cable Communications industry, and allow for inspection
of them at reasonable times at its designated office where necessary to enforcement of
a Franchise. The books and records to be maintained by a Grantee shall include the
following:
a. A record of all requests for service;
b. A record of all subscriber or other complaints, and the action taken;
c. A file of all subscriber contracts;
d. Grantee policies, procedures and company rules; and
e. Financial records.
Subd. 2. A Grantee shall file with City, at the time of its annual payment of a
Franchise Fee, as described in a Franchise, the following:
a. A copy of the most recent performance review for a Grantee
utilizing the Annual Performance Review Form attached hereto as Exhibit B.
b. A statement certified by an officer of Grantee showing, in such
detail as acceptable to City, the gross revenues of a Grantee for the preceding fiscal
year.
c. Current list of names and addresses of each officer and director and
other management personnel, and if a corporation, each shareholder having stock
ownership of three percent or more, and if a partnership, all general partners, and if a
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general partner is a corporation, the foregoing information shall be given as to the
corporate general partner.
d. If requested by City, a copy of each document filed with all federal,
state and local agencies during the preceding fiscal year not previously filed with
city.
e. A statement of its current billing practices.
L A current copy of its rules governing use of equipment and facilities
and public, educational and government access and leased access programming.
g. A current copy of its subscriber service contract.
h. A copy of any subscriber surveys conducted during the last calendar
year.
Subd. 3. City, its agents and representatives shall have authority where
necessary to enforcement of a Franchise to arrange for and conduct an inspection or
audit of the books and records of a Grantee. A Grantee shall first be given five days
notice of the inspection or audit request, the description of and purpose for the
inspection or audit, and description, to the best of City's ability, of the books, records
and documents it wants to review.
726.51. Transfer of Ownership.
Subdivision 1. A Franchise shall not be assigned or transferred, either in
whole or in part, or leased, sublet or mortgaged in any manner, nor shall title thereto,
either legal or equitable or any right, interest or property therein, pass to or vest in
any person other than an Affiliate of Grantee without the prior written consent of
City, which consent shall not be unreasonably withheld. Further, Grantee shall not
sell or transfer any stock or ownership interest so as to create a new controlling
interest except with the consent of City, which consent shall not be unreasonably
withheld.
Subd. 2. Any sale or transfer of Franchise, including a sale or transfer by
means of a fundamental corporate change, requires the written approval of City. The
parties to the sale or transfer of Franchise shall make a written request to City for its
consent. City shall reply in writing within 30 days of actual receipt of the request
and shall indicate its approval of the request or its determination that a public hearing
is necessary. City shall conduct a public hearing on the request within 30 days of
such determination if it determines that a sale or transfer of Franchise may adversely
affect the Grantee's subscribers.
Subd. 3. Unless otherwise already provided for by local law, notice of any
such hearing shall be given 14 days prior to the hearing by publishing notice thereof
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once in a newspaper of general circulation in the City. The notice shall contain the
date, time and place of the hearing and shall briefly state the substance of the action
to be considered by City. Within 30 days after the public hearing, City shall approve
or deny in writing the sale or transfer request.
Subd. 4. In a sale or transfer of only a Franchise, without the inclusion of the
System in which at least substantial initial construction has commenced, a Grantee
shall be required to establish to the sole satisfaction of City that the sale or transfer of
a Franchise is in the public interest.
Subd. 5. For purposes of this section, fundamental corporate change means
the sale or transfer of a controlling interest in the stock of a corporation or the sale or
transfer of all or a majority of a corporation's assets, merger (including a parent and
its subsidiary corporation), consolidation or creation of a subsidiary corporation. For
the purposes of this Section, fundamental partnership change means the sale or
transfer of all or a majority of a partnership's assets, change of a general partner in a
limited partnership, change from a limited to a general partnership, incorporation of a
partnership, or change in the control of a partnership.
Subd. 6. The word "control", as used herein, shall apply to the sale or
transfer of all or a majority of Grantee's assets or shares of stock, merger (including
any parent and its subsidiary corporation), consolidation, creation of a subsidiary
corporation of the parent company, or sale or transfer of stock in Grantee so as to
i create a new controlling interest. The term "controlling interest" as used herein is not
limited to majority stock ownership, but includes actual working control in whatever
manner exercised, including the creation or transfer of decision-making authority to a
new or different board of directors. Every change, transfer or acquisition of control
of a Grantee shall make the Franchise subject to cancellation unless and until City
shall have consented in writing thereto, which consent shall not be unreasonably
withheld. For the purpose of determining whether it shall consent to such change,
transfer or acquisition of control, City may inquire into the qualifications of the
prospective controlling party. The City reserves the right to seek reimbursement of its
costs for conducting an inquiry to the extent permitted by applicable state and federal
law. The preceding statement does not constitute an agreement by any party to
reimburse the City.
Subd. 7. In no event shall a transfer or assignment of ownership or control be
approved without transferee becoming a signatory to a Franchise.
Subd. 8. Any transferee of a Franchise shall be subordinate to any right, title
or interest of City.
Subd. 9. For information on the right of the City to purchase the cable system
during a transfer of ownership, see Section 726.53.
n
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Subd. 10. Notwithstanding anything to the contrary, no such consent or
approval shall be required for a transfer or assignment to any Person controlling,
controlled by or under the same common control as the Grantee.
726.53. Right to Purchase.
Subdivision 1. Transfer of Ownership. If at any time a Grantee receives a
bona fide purchase offer for an asset sale of a System which a Grantee is willing to
accept, a complete copy of such offer shall promptly be given to City and City shall
have the right to purchase a System according to the terms of that offer. City shall
exercise such right by submitting to a Grantee, within 60 days after City's actual
receipt of the bona fide offer, notice that City desires to purchase a System pursuant
to said offer. If City does not exercise such right a System may be sold, but only on
terms substantially similar to those terms submitted to City. If any substantive
changes are made in the purchase offer given to City, such purchase offer, as so
changed, shall again be given to City and City shall have 60 days from actual receipt
by City of the offer, as changed, within which to exercise its right to purchase a
System pursuant to the offer, as changed, all as above provided. If City does not
exercise its right to purchase a System pursuant to any offer given to City pursuant to
this paragraph, and a System is not sold to the buyer and on the terms set out in the
offer given to City, then the right of City to purchase a System shall continue, and all
subsequent purchase offers shall be given to City pursuant to this paragraph. Also,
the City's right to purchase pursuant to this paragraph shall survive every sale to a
buyer and shall continue and be binding upon every buyer of the System.
Subd. 2. Upon Forfeiture, Revocation or Expiration:
a. Upon forfeiture, revocation or termination of a Franchise, or at the
normal expiration and denial of any renewal of a Franchise term, City shall have the
right to purchase the System. Such right shall be exercised upon written notice to
Grantee given within 120 days after the occurrence of any such event.
b. In the event City elects to exercise its right to purchase the System
as provided in this Subdivision 2, the following shall then apply:
1. If a Franchise expires and the renewal of the Franchise is
denied and the City acquires ownership of the Cable System or effects a transfer of
ownership of the System to another Person, any such acquisition or transfer shall be
at fair market value, determined on the basis of the Cable System valued as a going
concern but with no value allocated to the Franchise itself, or
2. If a Franchise held by a Grantee is revoked for cause and
the City acquires ownership of the Cable System or effects a transfer of ownership of
the System to another Person, any such acquisition or transfer shall be at an equitable
price.
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3. A Grantee expressly waives its rights, if any, to relocation
costs that might otherwise be provided by law.
4. The date of valuation shall be no earlier than the day
following the date of revocation, forfeiture, expiration or termination of a Franchise
and no later than the date City makes a written offer for a System.
726.55. Mediation.
It either a Grantee or City asserts that the other is in default in the performance of
any obligation of a Franchise or in the event of a dispute relating to a right to
purchase or terms and conditions of it as described in Section 726.53 of this
Ordinance, the complaining party shall notify the other of the default or claim and the
desired remedy. The notification shall be written. Representatives of City and a
Grantee must promptly meet and attempt in good faith to negotiate a resolution. If
the dispute is not resolved within 30 days of the written notice, the City and a
Grantee may jointly select a mediator to facilitate further discussion. The City and a
Grantee will equally share the fees and expenses of this mediator. If a mediator is
not used, or if the City and a Grantee are unable to resolve the matter within 30 days
after first meeting with the selected mediator, either may commence an action in any
court of competent jurisdiction in Minnesota to interpret and enforce a Franchise or
for such other relief as may be permitted by law or equity, or either Grantee or City
may take any other action permitted by law.
726.57. Special Provisions.
Subdivision 1. As permitted by state and federal law, and specified in a
Franchise Agreement Ordinance, each Franchise may require a Grantee to provide
facilities and services to public schools and community colleges within the City, and
to fire and police stations and other buildings owned and controlled by the City used
for public non-residential purposes.
Subd. 2. System Maps and Layout - A Grantee shall have, at all times, up-to-
date route maps showing the location of the Cable Communications System adjacent
to the Streets. A Grantee shall make all maps available for review by the appropriate
City personnel.
Subd. 3. System Construction and Equipment Standards - The Cable
Communications System shall be installed and maintained in accordance with standard
good engineering practices and shall conform, when applicable, with the National
Electrical Safety Code and the FCC's Rules and Regulations.
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726.59. Franchise Fee.
Subdivision 1. As permitted by state and federal law, a Grantee may be
required to pay to the City a Franchise Fee as set forth in a Franchise, in
compensation for the use of the City's Streets pursuant to a Franchise.
Subd. 2. If a Franchise requires payment of a Franchise Fee, each such
Franchise shall authorize the City to audit a Grantee's financial records and
accountings relating to a Franchise Fee. A Grantee shall make available at its local
business office, upon reasonable request, such data as needed to conduct such audit in
accordance with generally accepted accounting principles.
Subd. 3. The City and its representatives shall have the right to inspect a
Grantee's financial records during normal business hours to determine whether a
Grantee has properly paid all sums due to the City pursuant to the terms of a
Franchise.
Subd. 4. Any neglect, omission or refusal of a Grantee to cooperate with the
City in reviewing its financial information for the purpose of auditing payment of a
Franchise Fee, or to pay a Grantee fee in full, at the time and in the manner provided
in the Franchise, which neglect, omission or refusal shall continue for more than 30
days following written notice thereof to a Grantee from the City, shall be grounds for
default of a Franchise as -provided for in Section 726.69 hereof.
726.61. Liabili .
Subdivision 1. A Grantee shall pay all damages and penalties which the City
may legally be required to pay as a result of granting a Grantee's Franchise.
Subd. 2. A Grantee shall pay all expenses incurred by the City in defending
itself with regard to all damages and penalties mentioned above. The expenses shall
include all costs, such as attorney's fees.
726.63. Indemnification.
Subdivision 1. Grantee shall indemnify, defend, and hold harmless the City
for all damages and penalties, at all times during the term of this Franchise, as a
result of the procedures for granting this Franchise, the. granting of this Franchise, or
Grantee's conduct or performance under this Franchise. These damages and penalties
shall include, but shall not be limited to, damages arising out of Personal injury,
property damage, copyright infringement, defamation, antitrust, errors and omission,
theft, fire, and all other damages arising out of Grantee's exercise of this Franchise,
whether or not any act or omission complained of is authorized, allowed or prohibited
by this Franchise.
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Subd. 2. In order for the City to assert its rights to be indemnified, defended,
or held harmless, the City must:
such right;
a. Notify Grantee of any claim or legal proceeding which gives rise to
b. Afford Grantee the opportunity to participate in and fully control
any compromise, settlement or other resolution or disposition of such claim or
proceeding, unless, however, the City, in its sole discretion, determines that its
interests cannot be represented in good faith by Grantee; and
c. Fully cooperate with the reasonable requests of Grantee in its
participation in, and control, compromise, settlement or resolution or other disposition
of such claim or proceeding subject to Subdivision 1 above.
d. Act reasonably under all circumstances so as to protect the
indemnitor against liability and refrain from compromising any of indemnitor's rights.
Subd. 3. In the event the City, in its sole discretion, determines that its
interests cannot be represented in good faith by Grantee, Grantee shall pay, upon
receipt of written demand from City, all reasonable expenses incurred by the City in
defending itself with regard to all damages and penalties mentioned in Subdivision 1
above. These expenses shall include, but not be limited to, all out-of-pocket
expenses, such as attorney's fees and costs and the reasonable value of services (as
determined by City, rendered by City or any employees, agents or representatives of
City; provided, however, the attorney fees shall not exceed (on an hourly basis) those
customarily charged for similar work in the Twin Cities Metropolitan area. of
Minnesota. City reserves the right to cooperate with a Grantee and participate in the
defense of any litigation either through intervention or otherwise.
726.65. Security Funds.
Subdivision 1. The City may require a Grantee_to file with the City Clerk,
concurrently with its acceptance of a Franchise and at a Grantee's sole expense, a
corporate surety bond, construction bond or letter of credit. Such bond or letter of
credit shall be in an amount specified in the Franchise Agreement Ordinance, issued
by a responsible company licensed to do business in Minnesota and conditioned upon
the faithful performance of the Grantee to meet its obligations under this Ordinance
and the Franchise Agreement Ordinance. The bond or letter of credit may be reduced
at the sole discretion of the franchising authority.
Subd. 2. The provisions of this Section shall not be construed to excuse
unfaithful performance by a Grantee or limit the liability of a Franchise under this
Ordinance or a Franchise for damages.
a
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726.67. Insurance.
• Subdivision 1. A Grantee shall maintain liability insurance covering its
obligations of indemnification provided for in or as a result of the exercise of a
Franchise covering both the City and a Grantee (and shall maintain said insurance
during the entire term of a Franchise) in the minimum amount of:
a. $500,000 for property damage to any one person;
b. $2,000,000 for property damage in any one act or occurrence;
c. $1,000,000 for personal injury to any one person; and
d. $2,000,000 for personal injury in any one act or occurrence.
Subd. 2. During the term of this Franchise, the Grantee shall maintain
insurance, as required by Subdivision 1 above, issued by a carrier or carriers with an
A.M. Best rating of "A-" or better. The Grantee shall maintain on file with the City
certificates of insurance together with written evidence of payment of required
premiums throughout the term of this Franchise. The above minimum amounts may
be changed from time to time by Grantee as requested by the City; provided,
however, the Grantee shall not be required to provide insurance in excess of what is
customarily provided by other cable television operators in the Twin Cities
metropolitan area.
Subd. 3. A Grantee shall immediately give notice to City of any threatened or
• pending litigation likely to affect this insurance.
Subd. 4. Neither the provisions of this section nor any damages recovered by
City shall be construed to, or shall, excuse unfaithful performance by a Grantee or
limit the liability of a Grantee.
Subd. 5. No recovery by City of any sum by reason of the Letter of Credit or
Bond required in a Franchise shall be any limitation upon the liability of a Grantee to
City under the terms of this section, except that the sum so received by City from
such Letter of Credit or Bond shall be deducted from a recovery under this section, if
for the same act or occurrence.
Subd. 6. All insurance policies maintained pursuant to a Franchise shall
contain the following endorsement:
It is hereby understood and agreed that this insurance policy may not be
cancelled nor the intention not to renew be stated until 30 days after receipt by
the City, by registered mail, of written notice of such intention to cancel or
not to renew.
Subd. 7. A Grantee shall provide worker's compensation insurance as
required by state law.
•
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Subd. 8. All such insurance coverage shall provide a 30 day notice to the City
Manager in the event of material alteration or cancellation of any coverage afforded in
said policies prior to the date said material alteration or cancellation shall become
effective.
726.69. Default.
Subdivision 1. City shall give written notice of default to a Grantee if City, in
its sole discretion, determines that a Grantee has:
a. Violated any provision of a Franchise or the acceptance hereof, or
any rule, order, regulation or determination of the City, state or federal government,
not in conflict with a Franchise;
hereof,
b. Attempted to evade any provision of a Franchise or the acceptance
c. Practiced any fraud or deceit upon City or subscribers;
d. Made a material misrepresentation of fact in the application for or
negotiation of a Franchise; or
e. Incurred a 12 month or more delay in the construction schedule.
Subd. 2. If a Grantee fails to cure such default within 30 days after the giving
of such notice (or if such default is of such a character as to require more than 30
days within which to cure the same, and a Grantee fails to commence to cure the
same within said .30 day period and thereafter fails to use reasonable diligence, in
City's sole opinion, to cure such default as soon as possible), then, and in any event,
such default shall be a substantial breach and City may elect to terminate the
Franchise. The City may place the issue of revocation and termination of a Franchise
before the governing body of City at a regular meeting. If City decides there is cause
or reason to terminate, the following procedure shall be followed:
a. City shall provide a Grantee with a written notice of the reason or
cause for proposed termination and shall allow a Grantee a minimum of 30 days
subsequent to receipt of the notice in which to correct the default.
b. A Grantee shall be provided with an opportunity to be heard at a
public hearing prior to any decision to terminate a Franchise.
c. If, after notice is given and an opportunity to cure, at a Grantee's
option, a public hearing is held, and the City determines there was a violation,
breach, failure, refusal or neglect, the City may declare by resolution the franchise
• revoked and of no further force and effect unless there is compliance within such
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period as the City may fix, such period may not be less than 30 days provided no
opportunity for compliance need be granted for fraud or misrepresentation.
726.71. Continuity of Service.
Subdivision 1. It shall be the right of all Subscribers to continue receiving
services insofar as their financial and other obligations to a Grantee are honored. In
the event that a Grantee elects to rebuild, modify or sell the System, or the City gives
notice of intent to terminate or fails to renew a Franchise, a Grantee shall act so as to
insure that all Subscribers receive reliable service.
Subd. 2. In the event of a change of a Grantee, or in the event a new operator
acquires a System, a Grantee shall cooperate with the City's new Grantee or operator
in maintaining continuity of service to all Subscribers. During such period, a Grantee
shall be entitled to the revenues for any period during which it operates a System and
shall be entitled to reasonable cost for its services when it no longer operates the
System.
Subd. 3. In the event a Grantee fails to operate the System for three
consecutive days without approval of the City or without just cause, the City may, at
its option, operate the System or designate an operator until such time as a Grantee
restores service under conditions acceptable to the City or a permanent operator is
selected. This section shall not apply if the cable operator is unable to operate the
40 system due to Force Majeure as defined in Section 726.77. If the City is required to
fulfill this obligation for a Grantee, a Grantee shall reimburse the City for all
reasonable cost or damages in excess of revenue from the System received by the City
that are a result of a Grantee's failure to perform.
Subd. 4. A Grantee shall not allow its cable or other operations to interfere
with the television reception of Persons not served by a Grantee, nor shall a System
interfere with, obstruct or hinder in any manner, the operation of the various utilities
serving the residents of the City, as the facilities of such utilities exist at the time of
construction or extension of a Grantee's System.
726.73. Foreclosure and Receivership.
Subdivision 1. Foreclosure. Upon the foreclosure or other judicial sale of a
System, a Grantee shall notify the City of such fact and such notification shall be
treated as a notification that a change in control of a Grantee has taken place, and the
provisions of a Franchise governing the consent to transfer or change in ownership
shall apply without regard to how such transfer or change in ownership occurred.
Subd. 2. Receivership. The City shall have the right to cancel a Franchise
subject to any applicable provisions of state law, including the Bankruptcy Act, 120
days after the appointment of a receiver or trustee to take over and conduct the
business of a Grantee, whether in receivership, reorganization, bankruptcy or other
596426
Franchise Ordinance
November 13, 1996 - Page 26
&-3,2
action or proceeding, unless such receivership or trusteeship shall have been vacated
prior to the expiration of said 120 days, or unless:
a. Within 120 days after his election or appointment, such receiver or
trustee shall have fully complied with all the provisions of a Franchise and remedied
all defaults thereunder; and,
b. Such receiver or trustee, within said 120 days, shall have executed
an agreement, duly approved by the Court having jurisdiction in the premises,
whereby such receiver or trustee assumes and agrees to be bound by each and every
provision of a Franchise.
726.75. Compliance with Laws, Rules and Regulations.
Any of the provisions or terms of this Ordinance may be amended by the City in
order to be made consistent with any new or amended local, state or federal law,
rule, or regulation of governmental authorities with jurisdiction to regulate Cable
Communications Systems. The City and a Grantee shall conform to federal and state
laws and regulations as soon as they become effective. Where amendment to laws,
rules or other regulatory standards requires modification of any Franchise granted
pursuant to this Ordinance, the modifications necessary to effect compliance with such
laws, rules or regulations shall be made within one year of the effective date of such
change, or at the time of renewal of a Franchise, whichever occurs first.
726.77. Force LAaj eure.
Subdivision 1. In the event a Grantee's performance of any of the terms,
conditions or obligations required by this Ordinance or a Franchise granted hereunder
is prevented by a cause or event not within a Grantee's control, such inability to
perform shall be deemed excused and no penalties or sanctions shall be imposed as a
result thereof.
Subd. 2. For the purpose of this section, causes or events not within the
control of a Grantee shall include but not be limited to acts of God, strikes, sabotage,
riots or civil disturbances, restraints imposed by order of a governmental agency or
court, failure or loss of utilities, explosions, acts of public enemies and natural
disasters such as floods, earthquakes, storms, landslides, and fires.
726.79. Severability.
Subdivision 1. This Ordinance shall be construed in a manner consistent with
all applicable federal and Minnesota laws.
Subd. 2. If any section, subsection, sentence, clause, phrase or portion of this
Ordinance or any Franchise granted hereunder is for any reason held illegal, invalid
or unconstitutional by the decision of any court of competent jurisdiction, such
596426
Franchise Ordinance
November 13, 1996 - Page 27
b-33
portion shall be deemed a separate, distinct and independent provision, and such
holding shall not affect the validity of the remaining portions hereof or thereof.
Sec. 2. Effective Date. This Ordinance shall become effective on January 1, 1997
provided that KBL Cable Systems of the Southwest, Inc. (KBL) has executed a Franchise
Agreement Ordinance in compliance with this Ordinance before December 25, 1996. If KBL
has not executed a Franchise Agreement Ordinance pursuant to this Ordinance by
December 25, 1996, this Ordinance becomes null and void.
Sec. 3. Certification and Publication. The City Clerk shall certify to the passage
of this Ordinance and shall cause the same to be printed in accordance with the requirements
of the City and state law.
Adopted this day of , 1996.
Martin J. Kirsch, Mayor
•
•
ATTEST:
Thomas P. Ferber, City Clerk
596426
Franchise Ordinance
November 13, 1996 - Page 28
(o-34
EXHIBIT A
ANNUAL PERFORMANCE REVIEW
Check Where
Applicable
1. RATES AND CHARGES
No change
Changed
Notices sent to City and subscriber
Changes in rates and costs identified by attachment
Change "reasonable" and consistent with the standards
prescribed by the FCC
Other (describe in attachment)
2. PROGRAMS AND SERVICES
No change in programs and services
New programs and services added
Identify new programs and services
Other (describe in attachment)
3. CUSTOMER SERVICE
Customer service requirements complied with
Periodic subscriber satisfaction survey performed
Results of subscriber satisfaction survey with comment
on meeting needs identified (attached)
4. FILINGS WITH FCC
Summary of all filings with FCC described in attachment
596426
Franchise Ordinance
November 13, 1996 - Page 29
? 35
5. PERFORMANCE TEST IN FRANCHISE COMPLETED
Summary of performance test results (attached)
6. FRANCHISE FEE PAYMENTS MADE WITH REVENUE SOURCES
IDENTIN'IED (SUMMARY ATTACHED)
7. COMPLETION OF CONSTRUCTION
Upgrade/rebuild (summary attached)
New technologies incorporated into system
Channel capacity increased
Service extended to new areas
Other
8. NEW SERVICES
No Changes
• Services other than programming made available in the subscriber
network (summary attached)
9. TERMS AND CONDITIONS IN THE FRANCHISE
HAVE BEEN COMPLIED WITH
Summary attached of outlining incomplete matters requiring
action by Company
Company participated in planning studied and Cable Advisory
Committee activities (summary attached)
All insurance, bonds and deposits are updated and filed with City
Duplication of materials already filed with the City is not required with this filing.
Dated this day of , 19 by
Officer of Cable Company
596426
Franchise Ordinance
November 13, 1996 - Page 30
6-36
•
City of
Verification:
•
•
The above Annual Performance Review has been filed by
as required. The Office of Administrative Services for the City of has reviewed
the information and finds that the filing is complete /is not complete
The following matters are deemed incomplete and require further information and/of
compliance by
THE CITY OF
By:
Dated this day of , 19_.
596426
Franchise Ordinance
November 13, 1996 - Page 31
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 345
Agenda November 25, 1996
Issue Statement:
Public hearing and consideration of resolution regarding approval of Modification to the
Richfield Rediscovered Project Area Redevelopment Plan (Redevelopment Plan); and
approval of Modifications to the LHN and ILN Tax Increment Financing Plans (Tax
Increment Plans).
Background: Z
On November 12, 1996, the City Council adopted a resolution approving the sale of
$5,075,000 General Obligation Taxable Tax Increment Bonds, Series 1996. To
effectuate this sale, the Redevelopment Plan and Tax Increment Financing Plans, as
modified, must be approved. Future tax increments from the LHN and ILN districts will
be pledged to the bonds. Expenditure of the resources will be allowed to be made
within the overall redevelopment project area.
Attached to this letter is a copy of the Redevelopment Plan and Tax Increment Plans.
The Redevelopment Plan, at page 1, calls for the following modifications:
- Authorization to expend tax increments generated from the LHN Tax
Increment Financing District and ILN Tax Increment Financing District in the
Richfield Redevelopment Project Area toward the sale of bonds.
- Bonding authority not to exceed $6,000,000.
- Authorization to expend tax increments on land acquisition, demolition,
relocation, public improvements, site improvements and other qualified costs.
The boundary of the Richfield Redevelopment Project Area is not being modified. A
map indicating the project area boundary can be found at Appendix A of the Plans (third
page in from last page of plan document).
Modification to the LHN and ILN Redevelopment Project Area Plans and Tax Increment
Plans located at pages 2-4 call for the following changes:
- Authorization to expend tax increments generated from the LHN Tax
Increment Financing District and ILN Tax Increment Financing District in the
Richfield Redevelopment Project Area toward the sale of bonds.
Authorization to expend tax increments from the LHN Redevelopment Project
Area and Tax Increment Financing District for qualified activities in the budget
of any of the Tax Increment Financing Districts and the Richfield
Redevelopment Project Area.
5-I
- Authorization to expend tax increments from the ILN Redevelopment Project
Area and Tax Increment Financing District for qualified activities in the budget
of any of the Tax Increment Financing Districts and the Richfield
Redevelopment Project Area.
The boundary of the LHN and ILN Project Areas and LHN and ILN Tax Increment
Financing Districts are not being modified. A map indicating the location of the tax
increment financing districts can be found at Appendix B of the Plans (last page of plan
document).
Upon approval of the plans, award of the bonds will be made by the Council on
December 9, 1996.
Recommended Motion:
Following the public hearing, adopt the attached resolution which approves Modification
to the Richfield Redevelopment Project Area Redevelopment Plan and Modifications to
the LHN and ILN Tax Increment Financing Plans.
Basis of Recommendation:
1. The modified Plans were reviewed by legal counsel and Publicorp representatives
and are in conformance with applicable laws and regulations.
2. The HRA approved the modified Redevelopment and Tax Increment Plans on
October 21, 1996, subject to a finding by the Planning Commission as to its
conformance with the Comprehensive Plan of the City.
3. The Planning Commission found the proposed modifications to be in conformance
with the Comprehensive Plan of the City on October 29, 1996.
4. A notice of the City Council public hearing was published on November 12, 1996.
5. Hennepin County and Richfield School District were given proper notice of the
public hearing and estimate of fiscal and economic implication of the tax increment
financing district by letter dated October 22, 1996.
6. Approval of the modifications are necessary to obligate future tax increment
resources through the sale of taxable revenue bonds thus helping to preserve
local resources.
Alternative Recommendation:
1. Delay discussion.
2. Reject the modifications.
11
0 3. Provide for alternative means of preserving local revenue resources for
redevelopment.
Discussion/Decision Mode:
Approval on November 25, 1996 will allow the Council to award the bonds on
December 9, 1996.
Respectfully submitted,
Ja D. Prosser
Cit anager
JDPcak
•
•
153
0 RESOLUTION NO.
RESOLUTION APPROVING THE MODIFICATION TO THE REDEVELOPMENT
PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA AND
APPROVING THE MODIFICATIONS TO THE TAX INCREMENT FINANCING
PLANS FOR THE ILN AND LHN TAX INCREMENT FINANCING DISTRICTS,
LOCATED WITHIN THE RICHFIELD REDEVELOPMENT PROJECT AREA.
BE IT RESOLVED by the City Council (the "Council") of the City of Richfield, Minnesota (the
"City"), as follows:
Section 1. Recitals.
1.01. The Richfield Housing and Redevelopment Authority (the "Authority") has heretofore
established the Richfield Redevelopment Project Area (the "Redevelopment Project") and adopted the
Redevelopment Plan with respect thereto and has heretofore established the ILN and LHN Tax Increment
Financing Districts and adopted the Tax Increment Financing Plans with respect thereto.
1.02. Due to changes in the distribution of tax increments generated by the ILN and LHN Tax
Increment Financing Districts, it has been proposed that the Council modify the Redevelopment Project and
the ILN and LHN Tax Increment Financing Districts and approve and adopt the Modified Redevelopment Plan
(the "Modification") and the Modified Tax Increment Financing Plans therefor (the "Modified Plans"); all
pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections 469.001 through
469.047 (the "HRA Act") and 469.174 through 469.179 (the "TIF Act"), inclusive, as amended; all as
reflected in the Modified Plans, and presented for the Council's consideration
1.03. The Council has investigated the facts relating to the Modified Plans.
1.04. The City has performed all actions required by law to be performed prior to the modification
of the ILN and LHN Tax Increment Financing Districts and the adoption and approval of the proposed
Modification and Modified Plans relating thereto, including, but not limited to, notification of Hennepin
County and School District No. 280 and Intermediate School District No. 287 having taxing jurisdiction over
the property included in the ILN and LHN Tax Increment Financing Districts, a review of and written
comment on the Modified Plans by the City Planning Commission, and the holding of a public hearing upon
published notice as required by law.
1.05. Certain written reports (the "Reports") relating to the Modified Plans and to the activities
contemplated therein have heretofore been prepared by staff and submitted to the Council and/or made a part
of the City or Authority files and proceedings on the Modified Plans. The Reports include data, information
and/or substantiation constituting or relating to (1) the "studies and analyses" on why the modified Tax
Increment Districts meet the so-called "but for" test; and (2) the bases for the other findings and determinations
made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby
incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein.
E
5-4
Section 2. Findings for the Approval of the Modification and the Modified Plans.
2.01. The Council hereby finds that the Modification and the Modified Plans, are intended and, in
the judgement of this Council, the effect of such actions will be, to provide an impetus for redevelopment in
the public purpose and accomplish certain objectives as specified in the Modified Plans, which are hereby
incorporated herein.
2.02. The Council hereby reaffirms its finding of October 21, 1985 that the ILN Tax Increment
Financing District is a redevelopment district and hereby reaffirms its finding of October 15, 1975 that the
LHN Tax Increment Financing District is a tax increment financing district under the predecessor statute to
the HRA Act.
2.03. The Council further finds that the proposed redevelopment, in the opinion of the Council,
would not occur solely through private investment within the reasonably foreseeable future; that the Modified
Plans conform to the general plan for the development or redevelopment of the City as a whole; and that the
Modified Plans will afford maximum opportunity consistent with the sound needs of the City as a whole, for
the development of the ILN and LHN Tax Increment Financing Districts by private enterprise.
2.04. The Council further finds, declares and determines that the City made the above findings
stated in this Section and has set forth the reasons and supporting facts for each determination in writing,
attached hereto as Exhibit A.
Section 3. Approval of the Modification and Modified Plans.
3.01. The Modification and the Modified Plans, as presented to the Council on this date, including
without limitation the findings and statements of objectives contained therein, are hereby approved, ratified,
and adopted and shall be placed on file in the office of the City Clerk.
3.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to
proceed with the implementation of the Modified Plans and to negotiate, draft, prepare and present to this
Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose.
3.03 The City staff of the City are authorized to file the Modified Plans with the County and the
State Department of Revenue.
Dated: November _, 1996
Mayor
(Seal)
ATTEST:
City Manager
EXHIBIT A
RESOLUTION #
The reasons and facts supporting the findings for the adoption of the Modified Tax Increment Financing
Plans for the ILN and LHN Tax Increment Financing Districts as required pursuant to Minnesota Statutes, Section
469.175, Subdivision 3 are as follows:
Reaffirming the findings that the ILN and LHN Tax Increment Financing Districts are a redevelopment
district and a "pre-1979" tax increment financing district, respectively, as defined in Minnesota Statutes,
Section 469.174.
The development consists of redevelopment projects which the City Council finds to be in the public interest.
The ILN Tax Increment Financing District meets the statutory requirements of a redevelopment district as
previously found by the City and described in the original adopting resolution and original Tax Increment
Financing Plan for the ILN Tax Increment Financing District. The LHN Tax Increment Financing District
remains a district certified prior to August 1, 1979 under the predecessor statute to the HRA Act. In
accordance with Section 469.179, Subd. 2 of the TIF Act, the TIF Act applies to this district only with regard
to any new development or redevelopment activity that extends beyond the scope of the district's
redevelopment plan after May 1, 1988.
2. Finding that the proposed development, in the opinion of the Council, would not occur solely through
private investment within the reasonably foreseeable future and therefore the use of tax increment financing
is deemed necessary.
The proposed developments in the Modified Plans require certain necessary land acquisitions and other
improvements without which the developers could not construct the projects; and without the use of tax
increments as a source of revenue to assist with the financing of the land acquisition and other improvements,
the developers would not construct these developments in the City.
3. Finding that the ILN and LHN Tax Increment Financing Districts conform to the general plan for the
development or redevelopment of the municipality as a whole.
The Modified Plans have been reviewed by the Planning Commission and been found to conform to the
general development plan of the City.
4. Finding that the ILN and LHN Tax Increment Financing Districts will afford maximum opportunity,
consistent with the sound needs of the City as a whole, for the development of Richfield Redevelopment
Project Area by private enterprise.
The commercial/industrial development to be assisted by the ILN and LHN Tax Increment Financing
Districts will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the
development of the redevelopment project by private enterprise as it will enable the HRA to provide the
necessary projects for the City.
Draft as of Noivniber 18, 1996
Draft for Public Hearing
MODIFICATIONS TO THE REDEVELOPMENT PLAN
FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA
AND
MODIFICATIONS TO THE LHN COMMERCIAL IMPROVEMENT PROGRAM
FOR THE LHN REDEVELOPMENT PROJECT AREA
INCLUDING THE
TAX INCREMENT FINANCING PLAN FOR THE
LHN TAX INCREMENT FINANCING DISTRICT
AND
MODIFICATIONS TO THE ILN REDEVELOPMENT PLAN
FOR THE ILN REDEVELOPMENT PROJECT AREA
INCLUDING THE
TAX INCREMENT FINANCING PLAN FOR
ILN TAX INCREMENT FINANCING DISTRICT
Housing and Redevelopment Authority in and for the City of Richfield
Hennepin County
City of Richfield, Minnesota
J
HRA Adoption: October 21, 1996
City Council Public Hearing: November 25, 1996
City Council Adoption:
Prepared by:
PUBLICORP, INC. in association with EHLERS AND ASSOCIATES, INC.
2950 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4100
(612) 339-8291
5-8
• TABLE OF CONTENTS
(provided for references purposes only)
Modification to the Redevelopment Plan for
the Richfield Redevelopment Project Area ............................................ Page 1
Introduction ................................................................. Pagel
Statement of Public Purpose .................................................... Page 1
Statutory Authority ........................................................... Pagel
Statement of Goals and Objectives ............................................... Page 1
Estimated Public Costs ........................................................ Page 1
Boundary of the Richfield Project Area, Parcels in Acquisition, and Legal Description ....... Page 1
Modification No.8 to LHN Commercial Improvement Program
for the LHN Redevelopment Project Area ............................................ Page 2
Introduction ................................................................. Page 2
Statutory Authority Statement ................................................... Page 2
Map of Project Area, List of Parcels, and Legal Description ............................ Page 2
Public Purpose Statement ...................................................... Page 2
Statement of Goals and Objectives ............................................... Page 2
Public Costs and Financing ..................................................... Page 2
Modification No. 5 to Redevelopment Plan for ILN Redevelopment Project Area
and Modification No. 5 to Tax Increment Financing Plan for ILN Tax Increment Financing Distinct Page 3
Introduction ................................................................. Page 3
Modification No. 5 - Redevelopment Plan for ILN Redevelopment Project Area ............... Page 3
Statutory Authority Statement ................................................... Page 3
Map of Project Area List of Parcels. and Legal Description ............................ Page 3
Public Purpose Statement ...................................................... Page 3
Statement of Goals and Objectives ............................................... Page 3
Modification No. 5 - Tax Increment Financing Plan for ILN Tax Increment Financing District .... Page 4
Statement of Goals and Objectives ............................................... Page 4
Estimated Project Costs ........................................................ Page 4
Properties to be Included in the Tax Increment Financing District ....................... Page 4
APPENDIX A
Map and Description of Richfield Redevelopment Project
APPENDIX B
Maps of ILN and LHN Tax Increment Financing Districts
1?
5-?
Modification to the Redevelopment Plan for
the Richfield Redevelopment Project Area
October 21, 1996
Introduction
The following text represents a modification to the Redevelopment Plan for the Richfield Redevelopment
Project Area. The modified Redevelopment Plan represents a continuation of the goals and objectives set forth
in the original Plan. Generally, the substantive changes include the authority to spend tax increments generated
from the HRA's LHN Tax Increment Financing District and ILN Tax Increment Financing District in the
Richfield Redevelopment Project Area, specifically towards the sale of bonds. For further information, a
review of the Redevelopment Plan for Richfield Redevelopment Project Area dated June 14, 1993 is
recommended.
Statement of Public Purpose
See also the Statement of Public Purpose found in Section B of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
Statutory Authority
See also the Statutory Authority found in Section C of the Redevelopment Plan for the Richfield
Redevelopment Project Area, dated June 14, 1993.
Statement of Goals and Objectives
Additional goals and objectives can be found in Section D of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
is
Estimated Public Costs
This modification authorizes the HRA to expend tax increment from the ILN Tax Increment Financing District
and the LHN Redevelopment Project Area and Tax Increment Financing District for qualified activities
identified in the budget of any of the Tax Increment Financing Districts and the Richfield Redevelopment
Project Area. The HRA is requesting authority to issue bonds at this time, in an amount not to exceed
$6,000,000 and for uses including land acquisition, demolition, relocation, public improvements, site
improvements and other qualified costs.
Boundary of the Richfield Project Area, Parcels in Acquisition, and Legal Description
The boundary for Richfield Redevelopment Project Area is not being modified. References to the area in
which tax increments may be expended can be found Appendix A and Appendix B of the Redevelopment Plan
for Richfield Redevelopment Project Area, dated June 14, 1993, and attached hereto for convenience of
reference.
Page 1
5--ICS
• Modification No. 8 to LHN Commercial Improvement Program
for the LHN Redevelopment Project Area
(including the LHN Tax Increment Financing District)
October 21, 1996
Introduction
The following text represents a modification to the LHN Commercial Improvement Program for the LHN
Redevelopment Project Area to include references to the Redevelopment Plan for the Richfield Redevelopment
Project Area. The modified Commercial Improvement Program represents a continuation of the goals and
objectives set forth in the original Program. Generally, the substantive changes include the authority to spend
tax increments generated from the HRA's LHN Tax Increment Financing District and ILN Tax Increment
Financing District in the Richfield Redevelopment Project Area, specifically towards the sale of bonds. For
further information, a review of the Redevelopment Plan for Richfield Redevelopment Project Area dated
October 21, 1996 and the Commercial Improvement Program for the LHN Redevelopment Project Area
originally dated October 15, 1975 and last modified on October 21, 1996 is recommended.
Statutory Authority Statement
See also the Statutory Authority found in Section C of the Redevelopment Plan for the Richfield
Redevelopment Project Area, dated June 14, 1993.
Map of Project Area, List of Parcels, and Legal Description
The boundary for LHN Redevelopment Project Area is not being modified. References to the area in which
tax increments may be expended can be found Appendix A and Appendix B of the Redevelopment Plan for
Richfield Redevelopment Project Area, dated June 14, 1993.
Public Purpose Statement
See also the Statement of Public Purpose found in Section B of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
Statement of Goals and Objectives
Additional goals and objectives can be found in Section D of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
Public Costs and Financing
This modification authorizes the HRA to expend tax increment from the LHN Redevelopment Project Area
and Tax Increment Financing District for qualified activities identified in the budget of any of the Tax
Increment Financing Districts and the Richfield Redevelopment Project Area.
•
Page 2
'5-1 J
• Modification No. 5 to Redevelopment Plan for ILN Redevelopment Project Area
and
Modification No. 5 to Tax Increment Financing Plan for ILN Tax Increment Financing Distinct
June 14, 1993
Introduction
The following text represents a modification to the Redevelopment Plan for the ILN Redevelopment Project
Area and the Tax Increment Financing Plan for the MN Tax Increment Financing District to include references
to the Redevelopment Plan for Richfield Redevelopment Project Area. The modifications to the ILN
Redevelopment Plan and ILN Tax Increment Financing Plan represent a continuation of the goals and
objectives set forth in the original Redevelopment Plan and Tax Increment Financing Plan. Generally, the
substantive changes include the authority to spend tax increments generated from the HRA's LHN Tax
Increment Financing District and ILN Tax Increment Financing District in the Richfield Redevelopment
Project Area, specifically towards the sale of bonds. For further information, a review of the Redevelopment
Plan for Richfield Redevelopment Project Area dated October 21, 1996 and the Redevelopment Plan for the
ILN Redevelopment Project Area and Tax Increment Financing Plan for the ILN Tax Increment Financing
District dated October 21, 1985 and September 18, 1989 is recommended.
Modification No. 5
Redevelopment Plan for ILN Redevelopment Project Area
0 Statutory Authority Statement .
See also the Statutory Authority found in Section C of the Redevelopment Plan for Richfield Redevelopment
Project Area, dated June 14, 1993.
Map of Proiect Area List of Parcels. and Legal Description
The boundary for ILN Redevelopment Project Area is not being modified. References to the area in which tax
increments may be expended can be found Appendix A and Appendix B of the Redevelopment Plan for
Richfield Redevelopment Project Area, dated June 14, 1993.
Public Purpose Statement
See also the Statement of Public purpose found in Section B of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
Statement of Goals and Obiectives
Additional goals and objectives can be found in Section D of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
L
Page 3
5-/0 -
Modification No. 5
Tax Increment Financing Plan for ILN Tax Increment Financing District
Statement of Goals and Objectives
See also the Statement of Goals and Objectives found in Section D of the Redevelopment Plan for Richfield
Redevelopment Project Area, dated June 14, 1993.
Estimated Project Costs
This modification authorizes the HRA to expend tax increment from the ILN Tax Increment Financing District
for qualified activities identified in the budget of any of the Tax Increment Financing Districts and the
Richfield Redevelopment Project Area
Properties to be Included in the Tax Increment Financing District
The boundary for ILN Tax Increment Financing District is not being modified. References to the area in which
tax increments may be expended can be found Appendix A and Appendix B of the Redevelopment Plan for
Richfield Redevelopment Project Area, dated June 14, 1993.
?J
1]
Page 4
APPENDIX A
Map and Description of Richfield Redevelopment Project Area
Legal Description of Richfield Redevelopment Project Area Boundary
Starting at the intersection of the Richfield west city line and 66th Street, following east on 66th Street to
Queen Avenue, thence north to 65th Street, thence west to the rear lot lines of the properties on the east side
of Russell Avenue, thence north on said rear property lines to the north city line, thence east to Lyndale
Avenue, thence south to 63rd Street, thence east to Harriet Avenue, thence south to 64 '/2 Street, thence
continuing south on the property line between lots 4 and 5, Block 6, Lyndale Oaks Subdivision to the south
line of said subdivision, which is also the north line of Hauser's Second Addition. Thence continuing east on
said line and as extended to Pillsbury Avenue, thence north on Pillsbury Avenue to the south line of Block 6,
Rearrangement of Nicollet Homes Second Addition, thence east on said line to the rear lot line of the lots in
Block 8 of said addition, between Blaisdell and Nicollet Avenues, thence north on said line to 64th Street to
the rear lot line of the lots in Block 8, Town's Edge Subdivision, thence south to 65th Street, following the east
edge of First Federal Richfield Addition. Thence continuing east on 65th Street to First Avenue, thence south
to 66th Street, thence east to 11th Avenue, thence north to the north city line, thence east to Bloomington
Avenue, thence south to 63rd Street, thence east to 16th Avenue, thence south to the south border of Taft Park,
thence east to 18th Avenue, thence south to the intersection of the northerly lot line of Lot 10, Block 1,
Wexler's Addition and 18th Avenue South, thence in a lone along said northerly lot line as extended to the
west right-of-way line Cedar Avenue, thence west along said line to the west line of said lot, thence north to
the south right-of-way line vacated 67th Street. Thence west to 18th Avenue, thence south to Diagonal
Boulevard, thence east along the centerline of said boulevard, extended to T.H. 77, thence south to the south
city line, thence west to Know Avenue, thence north to the north line of Registered Land Survey #1037, thence
east to Interstate 35W, thence north to 73rd Street, thence west to Penn Avenue, thence south to 74th Street,
thence west to Sheridan Avenue, thence south to 76th Street, thence east to Penn Avenue, thence south to the
north Frontage Road of Interstate 1-494, thence west to Thomas Avenue, thence north to 76th Street, thence
west to the west city line, thence north to the point of beginning at 66th Street.
0
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APPENDIX B
Maps of ILN and LHN Tax Increment Financing Districts
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CITY OF RICHFIELD, MINNESOTA
Council Letter No. 344
Agenda November 25, 1996
Issue Statement:
Public hearing and consideration of an appeal to the Board of Adjustment and Appeals
regarding a variance denied by the Hearing Examiner for construction of a deck at 7015
Penn Avenue.
Background:
Larry Stein, the owner of 7015 Penn Avenue, applied for a setback variance to
construct a 9.5 by 18 foot deck 16 feet from the rear property line where 25 feet is
required. The proposed deck would be attached to an existing 12 by 14 foot deck
which is set back 26 feet from the rear property line.
The Hearing Examiner denied the variance with a finding that there was no undue
hardship which denied the applicant reasonable use of the property. The property is
currently used for a single-family home and has an existing deck. The applicant argues
that the additional deck space is necessary to provide access from the rear of the
house to the back yard.
The Hearing Examiner did conclude that there are unique circumstances affecting the
property as the house was required to be setback 17 feet more than the standard front
setback due to road right of way issues.
The Hearing Examiner also found that granting the variance would not alter the
essential character of the neighborhood. A neighbor did, however, testify at the public
hearing that they had some concerns about privacy if the deck was constructed 16 feet
from the property line.
Recommended Motion:
Deny the request for an appeal of the variance that was denied by the Hearing
Examiner on October 23, 1996, which would have allowed construction of a deck 16
feet from the rear property line.
Basis of Recommendation:
1. The Hearing Examiner found that only two of the four conditions necessary to
grant a variance are present: 1) there is no undue hardship denying the applicant
reasonable use of the property as the property is currently used for a single-family
home and there is an existing deck; 2) there are unique circumstances affecting
the property because the house was required to be set back 17 feet more than the
standard front setback; 3) granting the variance would not alter the essential
character of the neighborhood; and 4) because there is no undue hardship, the
variance is not the minimum necessary to alleviate any hardship.
q'I
0 2. The applicant currently has a deck and could attach steps to the deck to provide
access to the rear yard without infringing upon the rear yard setback.
3. Notice of the hearing was published in the Sun-Current and mailed to property
owners within 350 feet of the subject property.
Alternative Recommendation:
1. Approve the request for a variance with the stipulation that a landscape plan for
providing screening of the deck from the property to the rear be submitted to and
approved by the Community Development Director.
2. Approve the request for a variance with no stipulations.
Discussion/Decision Mode:
A public hearing is scheduled for 7:00 p.m. on Monday, November 25, 1996. The
hearing will be held in the Council Chambers of Richfield City Hall, 6700 Portland
Avenue.
Respectfully submitted,
James D. Prosser
City Manager
JDP:cak
C
7015 PENN AVENUES.
PROPOSED DECK ADDITION
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HOUSE
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DECK
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• • . PLANNING
ZONING NORTH
Community Dclreiapmartt DoQartrnaM SCALE: 1" = 25' DATE: 10-10-96
GARAGE
PROPERTY LINE
I 1-?
SITE PLAN
41-3
7015 PENN AVENUE S.
PROPOSED DECK ADDITION
•
0
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 343
Agenda November 25, 1996
Issue Statement:
Award of contract for 2,800 tons of quick lime for water treatment.
Background:
The chemical quick lime is used in the water treatment process to lower water hardness
and to produce soft water. Approximately 1,400 tons of quick lime are required each
year for treatment.
Bids were opened in a formal bidding process on November 7, 1996 for the purchase of
2,800 tons of quick lime. Bids were requested for a two year period. The results of the
bids are as follows:
Estimated
Vendor Unit Price Annual Cost
Cutler-Magner Company $63.43 $177,604
Western Lime Corp. $63.49 $177,772
Mississippi Lime Company $93.65 $262,220
Cutler-Magner Company bid a unit price of $63.43 per ton which is $.27 per ton less
than the last contract. The annual cost, based on estimated use, is $88,802.
Recommended Motion:
Approve the bid minutes/tabulation and award a two year contract for the purchase of
approximately 2,800 tons of quick lime to Cutler-Magner Company in the amount of
$63.43 per ton for total cost of $177,604.
Basis of Recommendation:
1. Quick lime is a necessary chemical required to reduce water hardness.
2. Cutler-Magner Company was the lowest bidder and meets all requirements.
3. The bid was $0.27 per ton less than two years ago.
4. There are funds available for the chemical purchase.
Alternative Recommendation:
Council may reject all bids and direct staff to readvertise; however, staff does not
believe a better price can be obtained.
City Manager
JDP:cak
Discussion/Decision Mode:
Council may choose to delay a decision on this item; however, City staff is requesting
approval to prevent interruption of delivery.
Respectf mitted,
James D. sser
36-1
CITY OF RICHFIELD, MINNESOTA
11
Bid Opening
November 7, 1996
11:00 a.m.
Water Treatment Chemicals
2,800 Ton Quick Lime
Bid No. 96-23
Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative Staff
was called by Thomas P. Ferber, City Clerk, who announced that the purpose of the
meeting was to receive, open and read aloud, bids for water treatment chmicals - 2,800
ton quick lime, city bid no. 96-23, as advertised in the official newspaper on October
23, 1996.
Present: Thomas Ferber, City Clerk
Steven Devich, Administrative Services Director
Cheryl Krumholz, City Manager Representative
•
•
The following bids were submitted and read aloud:
Bidder's Name/City Bid Security Total Bid Amount Unit
Cutler-Magner 5% Bid Bond $ 177,604.00 $ 63.43
Duluth, MN
Mississippi Lime 5% Bid Bond $ 262,220.00 $ 93.65
Management Co.
Alton, IL
Western Lime Corp. 5% Bid Bond $ 177,772.00 $ 63.49
West Bend, WI
The City Clerk announced that the bids would be tabulated and considered at the
November 25, 1996 City Council Meeting.
Thomas P. Ferber City Clerk
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 342
Agenda November 25, 1996
Issue Statement:
Award of contract for 400 tons of soda ash for water treatment.
Background:
The chemical soda ash is used in the water treatment process to lower water hardness
and to produce soft water. Soda ash is used to remove non-carbonate hardness of the
well water. Approximately 200 tons of soda ash are required each year for treatment.
A formal bidding opening was held November 7, 1996 for the purchase of 400 tons of
soda ash for a two year period. The results are as follows:
Vendor Unit Price Two Year Cost
Feed-Rite Controls, Inc. $178.69 $71,476
Feed-Rite Controls, Inc. submitted a bid in the amount of $178.69 per ton, $35,738
yearly and for a two year contract of $71,476. The bid is $1.31 per ton lower than two
years ago.
Recommended Motion:
Accept the bid minutes/tabulation and award a two year contract for the purchase of
approximately 400 tons of soda ash to Feed-Rite Controls, Inc. in the amount of
$178.69 per ton for total amount of $71,476.
Basis of Recommendation:
1. Soda ash is a necessary chemical required to soften water.
2. Feed-Rite Control, Inc. was the lowest bidder and meets all requirements, and
Feed-Rite Controls, Inc. has provided soda ash to the City for the last two years and
is a reliable vendor.
3. The bid was $1.31 per ton less than two years ago.
4. There are sufficient funds available for the chemical purchase.
Alternative Recommendation:
Council may reject the single bid and direct staff to readvertise; however, staff does not
believe a better price can be obtained.
Discussion/Decision Mode:
Council may choose to delay a decision on this item; however, the current contract
expires December 31, 1996.
Respe?tf. y submitted,
James . Prosser
City Manager
JDP:cak
3F- I
CITY OF RICHFIELD, MINNESOTA
•
Bid Opening
November 7, 1996
11:00 a.m.
Water Treatment Chemicals
400 tons of Soda Ash
City Bid No. 96-22
Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative Staff
was called by Thomas P. Ferber, City Clerk, who announced that the purpose of the
meeting was to receive, open and read aloud, bids for water treatment chemicals - 400
tons of soda ash, city bid no. 96-22, as advertised in the official newspaper on October
23, 1996..
Present: Thomas Ferber, City Clerk
Steven Devich, Administrative Services Director
Cheryl Krumholz, City Manager Representative
•
The following bids were submitted and read aloud:
Bidder's Name/City Bid Security Total Bid Amount
Hawkins Chemical Inc.
Minneapolis 5% Bid Bond $ 71,476.00
The City Clerk announced that the bids would be tabulated and considered at the
November 25, 1996 City Council Meeting.
Thomas P. Ferber City Clerk
0
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 341
Agenda November 25, 1996
Issue Statement:
Setting date of public hearing for consideration of the issuance of a new on-sale non-
intoxicating malt liquor license for Lan's Vietnamese Restaurant, 7545 Lyndale Avenue.
Background:
An application for a new on-sale non-intoxicating malt liquor license for Lan's
Vietnamese Restaurant, 7545 Lyndale Avenue, has been received by the City. City
ordinance provides that the City Council conduct a public hearing to consider all Non-
Intoxicating malt liquor license applications.
Recommended Motion:
Schedule December 9, 1996 as the date to hold a public hearing on the new application
for non-intoxicating malt liquor license for Lan's Vietnamese Restaurant of Richfield,
7545 Lyndale Avenue.
Basis for Recommendation:
1. A hearing must be scheduled and held before a new license may be considered.
0 2. The new process has been initiated.
3. Holding the public hearing on December 9, 1996 will provide ample time to
complete the licensing process.
Alternative Recommendation:
1. Schedule the hearing for another date; however, this may delay the licensing
process.
Discussion/Decision Mode:
Action to schedule the public hearing on December 9, 1996 will provide sufficient time
for legal publication of the hearing.
Respectfully submitted,
James Prosser
City Manager
JDP:cak
0
3E)
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 340
Agenda November 25, 1996
Issue Statement:
Setting date of public hearing for consideration of the issuance of a new on-sale wine
and non-intoxicating malt liquor license for Thompsons Fireside Pizza, 6736 Penn
Avenue.
Background:
An application for a new on-sale wine and non-intoxicating malt liquor license for
Thompsons Fireside Pizza, Inc., 6736 Penn Avenue, has been received by the City.
City ordinance provides that the City Council conduct a public hearing to consider all
Non-Intoxicating malt liquor license applications.
Recommended Motion:
Schedule December 9, 1996, as the date to hold a public hearing on the new
application for on-sale wine and non-intoxicating malt liquor license for Thompsons
Fireside Pizza, Inc. of Richfield, 6736 Penn Avenue.
Basis for Recommendation:
1. A hearing must be scheduled and held before a new license may be considered.
2. The new process has been initiated.
3. Holding the public hearing on December 9, 1996 will provide ample time to
complete the licensing process.
Alternative Recommendation:
1. Schedule the hearing for another date; however, this may delay the licensing
process.
Discussion/Decision Mode:
Action to schedule the public hearing on December 9, 1996 will provide sufficient time
for legal publication of the hearing.
Respectf4ft submitted,
Jame . Prosser
City Manager
0 JDP:cak
3c_
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 339
Agenda November 25, 1996
Issue Statement:
Setting date of hearing for the renewal of wine licenses.
Background:
The wine licenses for restaurant establishments will expire on January 1, 1997. City
ordinance provides that the City Council conduct a public hearing to consider all wine
license renewals.
Recommended Motion:
Schedule December 9, 1996 as the date to hold public hearings on the renewal of wine
licenses for Miller's Fireside Pizza, Silver Spoon Restaurant, Red Pepper Chinese
Restaurant, and The Frenchman's.
Basis for Recommendation:
1. Hearings must be scheduled and held before a renewal license may be
considered.
2. The renewal process has been initiated.
3. Holding the public hearings on December 9 will provide ample time to complete
the licensing process before January 1, 1997.
Alternative Recommendation:
1. Schedule the hearings for another date; however, this may delay the licensing
process.
Discussion/Decision Mode:
Action to schedule the public hearings on December 9, 1996 will provide sufficient time
for legal publication of the hearings.
Respectfully submitted,
Jame D. Prosser
City Manager
JDP:cak
E
se)
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 338
Agenda November 25, 1,996
Issue Statement:
Setting date of hearing for renewal of on-sale liquor licenses.
Background:
The on-sale liquor licenses for restaurant establishments will expire on January 1, 1997.
City ordinance provides that the City Council conduct a public hearing to consider all
liquor license renewals.
Recommended Motion:
Schedule December 9, 1996 as the date to hold public hearings on the renewal of
liquor licenses for Chi Chi's Mexican Restaurante, The Ground Round, Khan's
Mongolian Barbecue, American Legion Post No. 435, VFW Post No. 5555, Don
Pablo's, and Champps of Richfield.
Basis for Recommendation:
1. Hearing must be scheduled and held before a renewal license may be considered.
2. The renewal process has been initiated.
3. Holding the public hearing on December 9 will provide ample time to complete the
licensing process before January 1, 1997.
Alternative Recommendation:
1. Schedule the hearings for another date; however, this may delay the licensing
process.
Discussion/Decision Mode:
Action to schedule the public hearings on December 9, 1996 will provide sufficient time
for legal publication of the hearings.
Respectfully submitted,
I ?
Jame . Prosser
City Manager
JDP:cak
E
3)9
CITY OF RICHFIELD, MINNESOTA
Council Letter No. 337
Agenda November 25, 1996
Issue Statement:
Setting date of hearing for the renewal of pawnbroker and secondhand goods licenses.
Background:
The pawnbroker and secondhand goods licenses will expire on January 1, 1997. City
ordinance provides that the City Council conduct a public hearing to consider all
pawnbroker and secondhand goods license renewals.
Recommended Motion:
Schedule December 9, 1996 as the date to hold public hearings on the renewal of
pawnbroker and secondhand goods licenses for The Gun Shop and Pawnbroker and
Plaza Pawn.
Basis for Recommendation:
1. Hearings must be scheduled and held before a renewal license may be
considered.
2. The renewal process has been initiated.
3. Holding the public hearings on December 9 will provide ample time to complete
the licensing process before January 1, 1997.
Alternative Recommendation:
1. Schedule the hearings for another date; however, this may delay the licensing
process.
Discussion/Decision Mode:
Action to schedule the public hearings on December 9, 1996 will provide sufficient time
for legal publication of the hearings.
Respectfully submitted,
James . Prosser
City Manager
JDP:cak
0