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09-12-83 agenda~13F CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 311 Agenda September 12, 1983 The Honorable Mayor and Memb^rs of the City Council City of Richf field Council Members: Subject: Public Service Agreement with Greater Minneapolis Day Care Association In June, 1983, the. city council approved an allocation of $17,814 for sliding fee day care services. This action was part of setting the budget for Year IX Community Development Block Grant (CDBG) funds. Since then, staff has worked with the Greater Minneapolis Day • Care Association to develop an agreement for the program. tinder the proposed agreement, the agency would use the money during the next year to assist Richfield residents having a household income of 60 to 90 percent of the state median income. The agency would charge 7% of the. amounts used for its administrative costs.. The agreement has been reviewed and approved by the City Attorney's office. The agreement would go into effect on September 15, 19.83, and provide immediate assistance to eligible residents. The city will assist in publicizing the availability of these funds. It is recommended that the city council authorize the .Mayor and Acting City Manager to execute the agreement as proposed. Relpectf ly submitted, ~ ~ Thomas A. Morgan, Jr. Acting City Manager TAM/eja ~#/ CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 31p Agenda September 12, 1.983 The Honorable Mayor and Members of the City Council City of Richf field Council Members: Subject: Presentation by Gertrude Ulrich, Representa- tive to Metropolitan Council Ms. Gertrude Ulrich, Richfield resident. who serves as a representative to the Metropolitan Council, has requested an opportunity to address the city council regarding her role and committee-.=assignments f~'° phis -body .__ -., This will also give the c~~y.council an opportunity to express to Ms. Ulrich any comments or concerns they may have regarding the role of the Metropolitan Council in the Metropol- itan Area. This item has been scheduled for the September 12, 1983 city council meeting. Respectfully submitted, Thomas A. Morgan, Jr. Acting City P~Ranager TAM/eja LI CITY OF RICHFIELD, MINNESOTA. Off ice of City Manager Council Letter No. 309 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richf i:eld ..Council Members: Subject: Public Hearing for Building Permit Request 1325 West 68th Street The city council set a public hearing for September 12, 1983 for the purpose of determining whether a building permit should be issued to Mr. Mark Banwart for a parcel of land that he has acquired adjacent to Interstate 35W on the south side of 68th Street and east of Humboldt Avenue. The city council is holding this public hearing in response to a letter submitted by Mr. David Johnson, 1401 W. 68th Street who is challenging the opinion of the city attorney that the property in question is buildable. This specific request is sent to the city council in its role~as Board of Adjustment and Appeals. The subject property has a total area of approximately 10,250 square feet. Of this total area, approximately 8,190 square feet is included in an easement that was obtained by the Minnesota Department of Transportation for highway and drainage purposes for Interstate 35W. The remaining 2,060 square feet (approximately 20% of the lot) does not contain easements and is the area for which Mr. Banwart owns. surface rights. Mr. Banwart has contacted the Minnesota De- partment of Transportation in an attempt to have them reconvey a parcel of land with an area of 1,250. square feet, located immediately east of the 2,.060 square foot parcel mentioned previously. This property is located in the R-Residential zone and, as such, requires a minimum lot area of 6,750 square feet, a minimum lot width of 50 feet, maximum lot coverage of 25°s, front setback of 30 feet, a rear setback of 25 feet, and sideyard setbacks of five feet. This situation is somewhat unique in terms of a permit request to build on a parcel of this nature in the City of Richfield. Sev- eral questions, therefore, need to be answered prior to a decision being rendered by the city council. The zoning ordinance makes several references to lot area, lot coverage, and setbacks from lot lines, but does not specifically def ine what constitutes a "lot". The question is particularly con- fusing as a result of the extensive easements owned by the State of Council Letter No. 309 -2- September 12, 1983 Minnesota which cover approximately 8.0 percent of the lot.. Clearly, if the total interest owned by Mr. Banwart was a lot of 2,060 square feet, there would be no doubt that. the lot would be considered to be unbuildable. In attempting to resolve this issue, the city council should consider not only the provisions of the zoning ordin- ance, but also the city's adopted comprehensive plan as well as certain provisions of the Minnesota State statutes. The general land use policies of the comprehensive plan call for the preservat-ion and enhancement of the predominantly residential character of the community and indicate the city should maintain the compliance of development with the intent, if not the letter, of regulations established by-the city council to guide and direct development within the community. Based upon the aforementioned policies, it-could be argued that to allow a dwelling unit to be built on a 2,100 or even 3,350 square foot .lot would be inconsistent with the .character of resi- dential development in that area, in that the other residential lots are two to three times as large as the subject property. The purpose. of the zoning ordinance is to regulate land de- velopment in order to promote the health, safety, order, convenience, prosperity a.nd general welfare of the community by regulating the lo- cation, size, use and height of buildings as well as the arrangement of buildings and lots within the community. It can also be argued that allowing a structure to be located on a lot that is this • small. is inconsistent with the intent of the zoning ordinance, There is also a very significant procedural matter which appears to not have been complied with relative to-the. proposed re- conveyance of property from 'the State of Minnesota to Mr. Banwart. Section 462.35.6 (2) of the Minnesota Statutes (1982) sets forth the following requirement: After a comprehensive municipal plan or section thereof has been recommended by the planning agency, and a copy filed with the governing body, no publicly owned inter- est in real property within the municipality shall be acquired or disposed of, nor shall any capital improve- ment be authorized by the municipality or special dis- trict or agency thereof or an.y other political subdivision having jurisdiction with the municipality until after the planning agency has reviewed the proposed acquisition, disposal, or capital improvement and reported in writing.. to the governing body or other special district or agency or political subdivision concerned, its findings as to compliance of the proposed acquisition, dispos=l or im- provement with the comprehensive municipal plan..... This,- then, leads to the question of when real property is to be acquired or disposed of within the corporate limits of Rich- field for interstate highway purposes, must the Richfield City Council refer the action to the Richfield Planning Commission for review prior to the time of acquisition or disposition by the State of rinnesota? Council Letter No. 3.09 -3- September 12, 1983 In an opinion written by the Minnesota Attorney General and dated December 9, 1971, the same question was raised by the City of-Minneapolis relative to the acquisition of property by the State of Minnesota for highway or interstate purposes. In that opinion, the Attorney~General indicated that the Planning Commission had the right to review any proposed acquisition or disposal of public land within the municipality and advise the governing body whether the acquisition or disposition was.con- sistent with the. comprehensive municipal plan. The op in inn also further states that there was no .question that the compre- hensive municipal plan did relate to, among other things, trans- portation. This is true not only with the Minneapolis plan, but is also clearly true with the Richfield plan. Therefore, it is .our recommendation that before the prop- erty can even be reconveyed from the State of Minnesota to Mr. Banwart that the provisions of the state municipal planning statute must be complied with and that this reconveyance of property inter- est should be referred to the Richf field Planning Commission for review and. comment. It is recommended that the city council hold a public hear- ing on September 12, 1983 as published, and, that after taking testimony the city council refer the matter to the Planning Commission for review and comment back to the .city council relative to con- sistency with the comprehensive plan as required by state statute. It is further recommended that the city council continue the public hearing to the regular council meeting of November 13, 1983. (According to state statutes, the planning commission has 45-days to review the matter and .make a recommendation to the city council. The first regular council meeting after the expiration of the 45 day period would be November 14). It is also recommended that the city .council not take final action on this matter until review and comment by the Planning Commission and comments from-persons interested in this issue. Respectfully submitt~d, ~T ~ ~ rl Thomas A. Morga , ~~ Acting City Manager TAM/eja .. ., ., ... _.. sounu ~~~L . ~~ ~~ .e z- r-.~ ,-- ,: --~~- BOULEVARD 14. AREA .-~•--~. ,~ r. ~J ~/ ~ ~~ 124.1` 2 ~' ~' :•z• ~~• '+:•:•' K •:~: ' :~':•:•' ~~ :t.' :'~ •.ci.• ~• 1. ':~. Y... .t ~•i•~ .~:•.. - .Y: .r. ,~., :;.~: •: : •:~r ..:.:.:.:.:.:. . :;~, ::.:. :,'•~. . •. ;.~. . .{ •~. ~.y r}~} ~,,+ 4 '~' ::~:. :t 'O• :' . 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Members of the City Council City of Richfield Council Members: Subject: Request for Off-Street Parking Permit 6511-13 Cedar Avenue The property at 6511-13 Cedar Avenue has recently been pur- chased by Mr. .Vince Walters, the owner of Hub Office Products Company, currently located at 6540 Lyndale Avenue. Mr. Walters intends to rent out the structure until such time as he will newel to relocate his business due to the proposed development of the "Godfather Block". In reviewing the site at 6511-13 Cedar Avenue, the city staff could find no record of an off-street parking permit being approved by the city for the existing parking spaces on the site. Mr. Walters subsequently applied for an off-street parking permit. The staff has reviewed the proposal and found the fallowing: 1. No improvements are being proposed at -this time other than restriping the parking area. 2. There will be a sufficient number of parking stalls provided for the projected use of the building, which will continue to be a combination of office, commercial, and warehouse uses. 3. The existing. and proposed parking area does not-meet current city off-street parking guidelines for driving aisle width or perimeter curbing. The parking area in front of the building is narrow. There is insuff icient width to provide 90o parking stalls and a 22 foot-wide driving aisle. Because of this, a 40 foot driveway has been constructed in the past to allow direct access to the parking stalls from Cedar Avenue. This design can -cause traffic safety problems, but has existed for a number of years. 4. There is no perimeter curbing on a portion. of the parking area at the rear of the building. Mr. Walters has in- dicated that he would like to expand the rear parking lot to the north at some future date. Council Letter No. 308 -2- It is recommended that the city layout and authorize the execution of with the stipulation that all parking into compliance with city off-street amended off-street parking agreement parking lot expansion occurs. September 12, 1983 council approve the proposed an off-street parking contract areas, on the site be brought parking guidelines and an be obtained when any future Respectfully submitted, Thomas A. Morgan,i Jr>. Acting City Manager TAM/ e j a RESOLUTION NO. RESOLUTION OFF-STREET No. 83-6, APPROVING LAYOUT AND CONTRACT FOR PARKING IN ACCORDANCE WITH APPLICATION CONTRACT No. 2355 Vincent H. Walters 6540 Lyndale Avenue South Richfield, Mn 55423 Location: 6511-13 Cedar Avenue South Use: Parking Lot. BE IT RESOLVED by the City Council of the. City of Richfield, Minnesota as follows: 1. .That the proposed geometric layout of the off-street parking as contained in Off-Street .Parking Application No. 83-6, Contract. No. 2355 is hereby approved subject to and upon completion of performance of the contract for such off-street parking as hereinafter authorized. 2. That the proposed off-street .parking contract for the improvement of said off-street parking, bearing Contract No. 2355 be placed on file and that the manager be authorized to sign said contract .and the clerk be authorized to seal the same for and on behalf of .this city . 3. That the off-street parking operator provide the City of Richfield with Surety in the form of cash, passbook saving withdrawal authority, or performance bond in an amount to be determined by the community development director and city manager, to ensure the off-street parking lot is constructed within the terms and regulations of the Off-street Parking Agreement with the stipulation that all parking areas on the site be brought into compliance with city off-street parking guidelines and an amended off-street parking agreement be obrained when any future parking lot expansion occurs. 4. That responsibility for the proper upkeep and maintenance of said off-street parking lot shall remain the responsibility of the off-street parking lot operator in accordance with Ordinance Code 4.05. Adopted by the City Council of the City of Richfield this 12th day of September, 19.83. John Hamilton, Mayor ATTEST: Sylvia K. Bergh, City Clerk • i i t c ~`~~ ~~N~ ,y~ ~s . ~ ~~` ~~~- ~v .~ { _ 'Y1 .r l i ~~ I,0. i' ~!o CITY OF RICHFIELD, MINNESOTA Off ice of C ity Manager Council Letter No. .307 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richfield Council Members: Subject: Application for Appointment to Human. Rights Commission At the present time,. there are two vacancies on the Richfield Human Rights Commission. One vacancy is for a term to be filled by a high school student, the other is an unexpired three-year adult term to fill the vacancy created by the resignation of Ronald McGinnis. Attached to this council letter is a copy of an application from Mr. Al Moore II, who has expressed an interest in being appointed to this commission. Mr. Moore has applied for a term which will expire on January 31, 1986. This application has been placed on the September 12, 1983 city council agenda for council consideration and action. Respectfully submitted, ~~ M^w/J Thomas A. Morga~~1 Acting City Manager TAM/ e j a CITY OF RICHFIELD, MINNESOTA • Office of City Manager Council Letter No. 306 Agenda September 12, 19x3 The Honorable Mayor .and Members of the City Council City of Richf field Council Members: Subject: Amended Off-Street Parking Permit, Lyndale Garden Center. Mr. Burt Rutman has requested an amended off-street parking permit to allow some alterations in the parking area' at the Lyn- dale Garden Center. The alterations are aimed at increasing the number of parking spaces available on the site and to provide sme~other traffic flow on the site. Specific improvements include the construction of an additional row of parking along the south edge of the north parking area, to provide an additional 26 park- ing spaces, and the widening of the driving aisles in the area of the main entrance to the site. The driving aisle widening would result in the loss of five existing parking spaces so the net parking stall gain would be 21 spaces. City staff has reviewed the proposed changes and find them to be consistent with the city°s off-street parking guidelines. The additional parking stalls will help during peak periods when parking shortages occur. It is, therefore, recommended that the city council approve the. revised layout as presented. Respectfully submitte , ~ ~-~w-cam f i'. / ~'l~, t~.,-- Thomas A. Morgan; Jr Acting City Manager TAM/eja f ' :2 i 0 b ~-c°a~~`'~ ~~ .~~ ~C Syr _:'nN, _ _ -c rc~•~ J ...:/cam .7 ~Nr, sic- ..-.-- ------ . _. ----_ /.~~ ~ .. ~„r 41eot5 ,t+Q bt' ~i„~ t ~~f 1 N{ I ~ "r'y+ ~ L~f w - oti .11 ~ ~whodU ~~ .; GJ ~ a 6°~' ~' w ~'~, A,, , W .~ ~. 7, ~ •' ~~' ~.~ J, ~, ~,. :,.~,~, ti -~ . ~~ ~~ y l ~ /Y ~. /, ... . y ' / ~ '~i \ .\.~'~ ~ r \1 _} , ~.~ ~- aQ.t~-Si~L' . s _ ail i alb ~ t~ I 1nN~ ~4nri1 n ~ aio. - , ,~j-d,ON ,0551 t 6tiQ~ ' ;~, t .:(--"_' ~Il?orl ~ ~~ _ , ~~ t _Z' .:'Y ~ / , w ~ .--~~, I ~ V+AF]9o~9 ~d0t~e I~MO.I~v • _ , y `a^~41`7 J.`v' jdd-3 _ _ - - Ibb'U+.'~~ a cur. ' '..+' ~ ,,;/~~~ - i _ ~ --- ~ ~ gdYf9c'K~ /~ t I T ~~~i 11 ~ ~_' t~yF s~awandd- ~-- ~ ov ~ ~1, - -- I 2 --~---- - - ~ ~ r - -- - _ i ~ o ~ _. ~ I~ - -- ' ~ . 4?!1`d(VtWrt~ S~hMS 9Ntll~dd ~~ - --- -- -i ~3 ; ~ - _ ~ / i ~µ - j i :N. ~ L .. ~ 'may I~ ~~ ,~ CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 305 Agenda September 12, 1983 The Honorable Mayor and Members. of the City Council City of Richfield Council Members: Subject: Approval of Minutes, Tabulation of Bids, and Award Of Contract for Joint Cleaning and Re- Sealing of 76th Street, Lyndale Avenue to Penn Avenue- On September 6,-1983 bids were opened for joint cleaning and resealing of the concrete surface of 76th street, Lyndale Avenue to Penn Avenue. Six bids were received for this work. The bid minutes and tabulations are attached for council review. The 1983 street division bud~}et`includes an appropriation of - -_. $55,000 for-'-this project. • Cleaning debris from the joints removes inflexible material that can cause the joint to erupt during times of expansion. After cleaning, the joints are resealed with material that.ex pands and contracts with the pavement surface. .This also will reduce water intrusion into the pavement base, which weakens the street surf ace. Because the low bid of Allstate Paving, Inc. was below the cost estimates prepared by city staff, it is feasible to include additional joint cleaning and resealing under this contract by means of a change order addition. Because of the very favorable bid, it is recommended that the city council approve a change order to increase the joint cleaning and resealing contract to include 76th Street between Penn Avenue and Sheridan Avenue. The low bid was submitted by Allstate Paving, Inc. of Maple Grove, .Minnesota. It is is recommended that the city council take the following action: 1. Accept the bid minutes and pass the attached resol- ution to award the contract to Allstate Paving, Inc. of Maple Grove, NiN in the amount of $41,880. 2. Authorize a change order in the amount of $11,40-0; • Council Letter No. 305 -2- September 12, 1983 to this contract. to include 76th .Street between Penn Avenue and. Sheridan Avenue. Respectfully submitte , 1, Thomas A. Morgan, Jr. Acting City Manager TAM/eja • • CITY OF RICHFIELD Bid Opening September 6, 1983 Joint Cleaning and Resealing of Reinforced Concrete Pavement Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative Staff was called by Sylvia Bergh; City Clerk, who announced that the purpose of the meeting was to receive, open and read aloud,. bids for Joint Cleaning and Resealing of Reinforced Concrete Pavement, as advertised in the official newspaper on August 24, 1983. Present: Don Fondrick, Community Services Director Steven Devich, City Manager Designee Michael Eastling, City Engineer Marshall Raaen, Technical Operations Coord. Art Bailey, Engineering Dept.. Representative Tom Ferber, Engineering Dept. Representative Sylvia K. Bergh, City Clerk The following bids were submitted and read aloud: BIDDER BID SECURITY AMOUNT Arcon Construction, Minneapolis 5% Bid Bond $65,909.40 Allstate Paving, Maple Grove 5% Bid Bond $41, 880.00 Highway Services, Inc Minneapolis 5% Bid Bond $45, 656.50 ~' Arnold Beckman, Inc Golden Valley 5% Bid Bond $74, 650.00 Progressive Contractors, Inc ,.Osseo 5% Bid Bond $61 767.50 Concrete Curb Co., Burnsville __ 5% Bid Bond $48, 422.70 The City Clerk announced that the bids would be tabulated and considered at the regular city council meeting of September 12, 1983. Sylvia K. Bergh City Clerk RESOLUTION NO. RESOLUTION ACCEPTING BID AND AWARDING CONTRACT FOR JOINT CLEANING AND RESEALING, Bid No. 83-8 WHEREAS, :pursuant to an advertisement for bids for joint cleaning and resealing of non-reinforced concrete pavement on 76th Street between Lyndale Avenue and Penn Avenue, bids were received, opened and tabulated according to law; AND WHEREAS it appears that Allstate Paving, Inc. of Maple Grove, Minnesota, is the lowest .responsible bidder, NOW THEREFORE, be it resolved by the city council of Richfield, Minnesota: 1. That the bid of Allstate Paving, Inc. of Maple Grove, Minnesota for construction of above mentioned project with estimated construction cost of $41,880.00, is hereby accepted; 2. That the mayor and clerk are hereby authorized to enter into a contract with Allstate Paving, Inc. of Maple Grove, Minnesota, in the name of-the City of Richfield for such improve- ment according to the plans and specifications; 3. The city clerk is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. Passed by the city council of the City of Richfield this 12th day of September, 1983. John Hamilton, Mayor ATTEST: Sylvia K. Bergh, City Clerk ~ i~ CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 304 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richf field Council Members: Subject: Requests for Renewal of Residential Kennel Licenses. There are six requests for residential kennel licenses listed on the September 12, 1,983 city council agenda. Inspection reports covering each application are attached to this council letter. Kennel Licenses - Dogs Roszella Harding, 7139 Columbus Avenue - four dogs; • Dale and Esther Lyddon, 6733 10th Avenue - three dogs; Myrtle Wickstrom, 6726 Chicago Avenue - three dogs. All are renewals of kennel licenses granted in 1982. Kennel Licenses - Cats Teresa Eccleston, 7526 Portland Avenue - three cats; Garnette Kelber, 6314 14th .Avenue - eleven cats; Richard Burtis, 7325 Fremont Avenue - four cats. All are renewals of kennel licenses granted in 1982. Request for Fee Waiver Mr. Burtis has also requested that the city council waive the $43 fee as provided in city ordinance. Mr. Burtis received a fee waived kennel license in 1982.. Staff has reviewed the requests for residential kennel licenses and recommends their approval as requested. However, with regard to the request from Mr. Burtis to have the fee waived, staff recommends that the fee not be waived. The city incurs the cost of inspection for the license application and responding to any complaints that might arise due to the • keeping of more than two animals. We believe the city's cost should be covered in all cases, particularly since the residential Council Letter No. 304 -2- September 1.2,.1:983 kennel license conveys a special privilege to its holder. It is, therefore, recommended that the city council at its meeting of September 12, 1983 take the following actions: 1. Approve the residential kennel licenses as requested. 2. Deny the request of Mr. Burtis to have his license fee waived. Respectfully submitt , 1 Thomas A. Morgan, Jr. Acting City Manager TAM/eja cc: City Clerk • KENNEL. LICENSE APPLICATION INSPECTION • Name Roszella V. Harding Address 7139 Columbus Avenue Number of Animals : 4 dogs .~~eats Breed: Pekingese Are animals currently licensed? xxxx yes no Number of residents occupying dwelling One Is yard enclosed with a fence in good repair?.Yes x No Wili fence keep animals on owner's property? Yes x No Is yard. kept clean and free of animal droppings, etco? ~`es x NO Is garbage stored in covered metal container? Yes x No Are pets kept for breeding purposes? Yes No x How are pets exercised? (Where - areawise) backyard Are there unpleasant odors present? Yes - No x have all .abutting property owners signed a petition of approval for a kennel license for this number of animals? Yes~No If .not, why not? Additional Comments: Very Clean Inspected By #327 Date. 7-6-83 KENNEL LICENSE APPLICATION INSPECTION. Name Dale and Esther Lyddon Address 6733 10th Avenue Number of Animals 3; dogs Eats Breed: German Wirehaired Pointers Are anima]a currently licensed? x yes no Number of residents occupying dwelling Two Is yard enclosed with a fence in good repair? Yes~xx,No Will. fence keep animals. on owner's property? Yes xx No Is .yard kept clean and free of animal droppings, etc:? Yes xx No Is garbage stored in covered metal container? Yeses No • Are pets kept for breeding purposes? Yeses No How are pets. exercised? (Where - areawise) Backyard and for runs on leash Are there unpleasant odors present? Yes No xx have all abutting property owners signed a petition of approval for a kennel license for this number of animals? Yes No xx If "not, why not? resident at673~ 11th-P~venue signed the petition. Resident at 6739 10th Avenue has no contact with ~. _ , -- . n.. _.. neic~hbc~rs, resident at 6727. 10th Avenue afraid of"~aoE~s. Well .kept area and facilities. Inspected. By M. McKaieg #327 Date 6-22-33 • KENNEL LICENSE APPLICATION INSPECTION Name MYrt1e Wickstrom Address 6726 Chicago Avenue Number of Animals : 3 dogs :eats Breed: Malmute, Golden Retriever-Lab, Golden Setter Are animals currently licensed? ~~ yes ~ no Number of residents occupying dwelling Three Is yard enclosed with a fence in .good repair? Yes xx No Will fence keep animals on owner's property? Yes xX No Is yard kept clean and free of animal droppings, etc:? Yes xx No Is garbage stored in covered metal container? Yes XX No. • Are pets kept for breeding purposes? Yes No xx How are pets. exercised? {Where - areawise} Backyard Are there unpleasant odors present? Yes No xx have all. abutting property owners signed a petition of approval for a kennel license for this number of animals? Yes No xx If not., why not? Slight domestic problem with resident at 6720. Requested high wood fence between dwellings in 1981. The fence ` was erected as requested. Other property owners signed petition. Additional Comments: Inspected#~y7 #327 Date 7-6-83 KENNEL LICENSE APPLICATION INSPECTION Name Teresa Eccleston Address 7526 Portland Number of Animals: dogs Three seats Breed: two siameese, 1 tabby Are. animals. currently licensed? xx yes no Number of residents occupying dwelling tin Is yard enclosed with a fence in good repair? Yes No xx No fer3ce Will fence .keep animals on owner's property? Yes ;~., No Is yard kept clean and free of animal droppings, etc.? Yes x No Is garbage .stoned in covered metal container? Yes No xx _r,___ Are pets kept for breeding purposes? -Yes No xx ..„.,. How are pets exercised? {Where - areawise) outside on leash Are there unpleasant odors present? Yes No xx Have all abutting property owners signed a petition of approval for a kennel license for this number of animals? Yes xx No If not, why not? Additional Comments: Two elderly residents, only let cats out on leashes. Will purchase garbage containers. Fence not .:necessary as cats are kept on leash when out of doors. Inspected By #327 Date 6-22-83 KENNEL LICENSE APPLICATION INSPECTION Name Garnette W. Kelber Address 6314 14th Avenue Number of Animals: dogs 11 -Eats Breed: 5-siamese, 6-himilayan Are animals currently licensed? xx yes no Number. of residents occupying dwelling .one Is yard enclosed with a fence in good repair? Yes xx No Will fence keep animals on owner's property? Yes XX No Is yard kept clean and .free.. of animal droppings, etc:? Yes ~_ No Is garbage stored in covered metal container? Yeses No • Are pets kept for breeding purposes? Yes No ....._ How are pets exercised? {Where - areawise}: Fenced in kennel adjacent to north side of house, partially t;ZP~_ Are there unpleasant odors present? Yes xx No have all abutting property owners signed a petition of approval for a kennel license for this number of animals? Yes xx No If not, why not? Additional Comments: .Had kennel .license for many years. Has reduced number of cats considerably. Inspected By #320 Date 8-3-83 • KENNEL LICENSE APPLICATION INSPECTION Name Richard.B~rtis Address 7325 Fremont Avenue Number of Animals: dogs 4 Eats Breed: 3-shorthair domestic 1-longhair domestic -neutered Are animals currently licensed? xx yes. no Number of residents occupying dwelling Four Is yard enclosed with a fence in good repair? Yes No_ ~~^ Will fence keep animals on owner's property? Yeses No Is yard kept clean and free of animal droppings., etc:? Yes ~ No Is garbage stored in covered metal container? Yes xx No Are pets kept for breeding. purposes? Yes No xx How are pets exercised? {Where - areawise) Backyard area; fenced in kennel area Are there unpleasant odors present? Yes No xx have all abutting property owners signed a petition of approval for a kennel license for this number of animals? Yes No xx If not, why not? letter attached two residents signed petition, letter attached re third Additional Comments: ' Inspected By #320 Date 8-31/83 7325 Fremont Ave. S. Richfield, Mn. 5523 August 16, 1983 " City of Richfield 6700 Portland Ave. S. Richfield,. IVin. 5523 Attn.: hicensing .Dear friends : *.~"«~"" ~_ Enclosed is my application for a residential kennel license. This license will cover our four cats.. It is, also my requestthat the City council waive the fee for my license," since we in no way have a business, but. -:just own our cats for pleasure.. .The two neighbors adjacent to us have signed our application. On August 15, I called Mr. Atherton, who lives behind us. I requested time to come over and • explain the nature of the application, which we had dis-" cussed briefly before we went on vacation. Mr. Atherton said that he was not interested in signing this application. When I asked why he took. this position, Mr. Atherton said that he did not like the fact that three or four .cats were in his back yard during the day. I explained to Mr. Atherton that our cats were never loose. The two cats we own who do go outside stay in their enclosed compound at all times. Mr. Atherton was not accepting of this explana- tion. He just said that he did not care to sign, and that .the Council should handle it. I can see no reasonable basis for his failure to endorse our application. I therefore request that the license be issued, without a fee, as stated above. Thank you for your assistance. If further information is .needed, please advise me. Sincerely, ~° Richard Burtis • $k~3~ CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 303 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richf field Council Members: Subject: Approval of Minutes, Tabulation of Bids and Award of Contract for Concrete Sidewalk and Curb and Gutter Repair On September 6, 1983 bids were opened for concrete sidewalk and curb and gutter repair. Seven bids-were received for this work. The bid minutes-and tabulations are attached for council review. An appropriation for this project is included in the 1983 street division operating budget. Attached to this council letter is a map showing the area • where the repair work will take place. The work will include replacement of sidewalk panels damaged by tree roots, settled curb and gutter sections, and settled curb and gutter at catch basin locations . The low bid was from Concrete Curb Company of Burnsville, MN in the amount of $21,495. It is recommended that the city council take the following actions: 1. Accept the bid minutes; 2. Pass the attached resolution to award the contract to Concrete Curb Company of Burnsville, Minnesota in the amount of $21,495. Respectfully submitte , .~ 6h~-raa~ T ~ Thomas A. Morgan', Jrl Acting City Manager TAM/eja CITY OF RICHFIELD Bid Opening September 6, 1983 Concrete Sidewalk and Curb & Gutter Repair Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative Staff was called by Sylvia Bergh, City Clerk, who announced that the purpose of the meeting was to receive, open and read aloud, bids for Concrete Sidewalk and Curb and Gutter Repair, as advertised in the official newspaper on August 24,.1983. Present: Don Fondrick, Community Services Director Steven Devich, City Manager Designee Michael Eastling, City Engineer Marshall Raaen, Technical~Operations Coord. Art Bailey, Engineering Dept.. Representative Tom Ferber, Engineering Dept. Representative Sylvia Bergh, City Clerk The following bids were submitted and read loud: BIDDER BID SECURITY AMOUNT • Hoblo, Inc. 5% Bid Bond $35,835.00 Adcon, Inc 5% Bi.d Bond $24,109.00 Arcon Construction 5% Bid Bond $21 ,930.00 Victor Carlson & Sons 5% Bid Bond $24, 379.00 Minnesota State Curb & Gutter Corp. 5% Bid Bond $24 ,975.00 Halvarsen Construction 5% Bid Bond $24, 247.50 Concrete Curb Co 5% Bid Bond $21, 495.00 The City Clerk announced that the bids would be tabulated and considered at the regular city council meeting of September 12, 1983. Sylvia K. Bergh City Clerk RESOLUTION No. RESOLUTION ACCEPTING BID AND AWARDING CONTRACT FOR CONCRETE SIDEWALK AND CURB AND GUTTER REPAIR Bid No. 83-7 WHEREAS, pursuant to an advertisement for bids for the 1 construction of approximately 1,100 square feet of concrete sidewalk and approximately 1,000 lineal feet of curb and gutter and appur- tenant work at various locations, bids were received, opened and tabulated according to law; AND WHEREAS it appears that Concrete Curb Compnay of Burnsville, Minnesota, is the lowest responsible bidder, NOW THEREFORE, be it resolved by the city council of Richfield, Minnesota: 1. That the bid of Concrete Curb Company of Burnsville, ?i: Minnesota, for construction of above mentioned project with estimated construction cost of $21,495:00 is hereby accepted; 2. That the mayor and clerk are hereby authorized to enter into a contract with Concrete Curb Company of Burnsville, Minnesota, in the name of the City of Richfield for such . improvement according to the plans and specifications; 3. The city clerk is hereby authorized and directed to return forthwith to. all bidders the deposits made with their bids, except that the deposits of the successful bidder and. the next lowest bidder shall be retained until a contract has been signed. Passed by the city council of the City of Richfield this 12th day of September, 1983.. John Hamilton, Mayor ATTEST: Sylvia K. Bergh, City Clerk • H ~i a W a W H H .7 A Z ~i U A Z .Yi Qi W Q H W H W a U ~.. U P+ £Z NSIONr1S P~ ZZ l• Iz 4tOZ V i 67 MOll3d~NOl '3Ar ar030 Vt 81 Vt 11 41 91 NO1flNIW00'IB Vl SI 4t b1 V I £I VI ZI VI 11 Yt 01 1011'13 Oflr01N0 snaemos Xard ONrlMrO '3nr aNrltaoa vi9 VIb NO1NIl0 P+f o~ z SN3A3iS Isl '3Ar 1311O01N 1130SIr1A N1a0M1N3M AanBSllld 1NVSr31d ONrafl 131aaVN Ol3ldarfl '3AV 3lrONAI NOIaOIr 1NtlAa8 xr~lfl~ 1NOdna NOSa3W3 J.NOW3ad aaralfl lOlOBWON flN1Atl1 s3Wrr XONX NvflOl, NvfltlOW NO1M3N a3AIl0 3AV NN3d N33 n0 ll3SS0a Nv01a3N5 srwolll NOldn LN3~NIA -NanBNSrM '3nv S3Xa3x >~ r N h S Z ~ o c'° ~ N O C V Z 2 Q ~ ~ H W ~2 O ~.. 7 } ~U ~ _' 2 c~ V n. ^' W az W S MOll3lflN01 3nr ar03~ v/ el 41 11 4t 91 NO1flNIN001B VI SI 41 bl 4t £I Vl ZI VI II Y! 01 101113 OflV'OINO snewmoa Xard ONrlxrO '3nr ONr11a0d v+£ W4 NOLNIlO P+f oY z SN3A31S '3AV 1311001N 1130S1r~8 N1aoMiH3M AanBSllld 1NtlSr3ld ONrbfl 131aarN Ol3ldtlrfl '3Ar 3lrONAI NOIa01r 1NYAtlB xrdlo~ lnoena NOSa3W3 uaw3ad aaralfl 10108wnN flN1Aa1 s3wrr XONX NVfl01 NrfltlOW NOlM3N a3A110 '3Ar NN3d N33n0 ll3SS0a Nr01a3NS StlWONl NOldn LN30NIA NanBNStlM '3nv S3Xa3X H N dl P .- ~ n UI N N N N VI N N h VI N N N N < = r ~ € a a ~ m r m m o o= a n o h ~ tp to ~O ~O ~p m P r n n P r P h A .~ i 3 ~ CITY OF RICHFIELD, MINNESOTA Office of City Manager • Council Letter No. 302 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richfield Council Members: Subject: Ordinance Amendment Relating to Definition of Permanent Employee, First Reading. There is an item on the September 12, 1983 city council agenda providing for city council consideration of an ordinance amendment modifying the definition of the designation "Permanent Employee." A copy of the proposed ordinance amendment is attached to this letter. The ordinance amendment is basically a "housekeeping" amend- ment which clarifies the intent of the designation permanent em- ployee as it is used throughout the personnel ordinance. In the /~ ordinance, the term "permanent" is used to differentiate between this category of employees and probationary or seasonal employees. Further, the permanent designation is not meant to convey to the employee any rights~or implication of tenured employment. It is recommended that the city council give first reading consideration to this ordinance amendment, and schedule the second reading and public hearing for the September 26, 1983 city council meeting. Respectfully submitted, ~ 'ti`°~ , ~.~ ~. ~ . Thomas A. Morgan, Jr. Acting City Manager cc: Administrative Services Director Personnel Manager TAM/eja • • AMENDMENT TO CHAPTER II SECTION 2.29 OF THE ORDINANCE CODE OF THE CITY OF RICHFIELD CITY OF RICHFIELD DOES ORDAIN: Chapter II, Section ?_.29 of the Ordinance Code of the City of Richfield relating to definitions is hereby amended in the following respect: 1. By amending Section 2.29, subd. 22 thereof, to read as follows "Permanent employee" means either a full-time employee or a part-time employee who works a minimum of forty hours per bi-weekly .payroll period on a regular basis throughout the year, and who has completed a designated probationary period. i'erma~e~t-emp~epees-have-~e-8ef~.~tte-er~d-ef-ern}~~ey~ne~t dste- The term "permanen shall not be used to define duration of employment with the City, nor is it meant~to convey to the employee any rights or implication of tenured __ - -- employment. Fassed by the City Council of the-City of Richfield, MN, • this day of , 1983. John Hamilton Mayor ATTEST: Sylvia K. Bergh City Clerk CITY OF RICHFIELD, MINNESOTA ~ v • Off ice of City Manager Council Letter No. 301 Agenda September 12, 1983 The Honorable Mayor and Members of the City City of Richfield Council Members: Council Subject: • Certification of Delinquent Sewer and Water Utility Accounts There is a resolution on the September 12, 1983 city coun- cil agenda designating the annual accumulation of unpaid water and sewer utility accounts. Although the Richfield utility ordinance places unpaid water and sewer charges as a lien against the property, some homeowners have traditionally chosen to have the charges cer- tified and included in their annual property tax billing. A $20 certification charge (preparation for certification to taxes of delinquent accounts) shall be charged against each delinquent=_:account as authorized by Ordinance 8.12, subdivision 12. The attached resolution represents those delinquent accounts which have occurred from from August 31, 1982 through August 31, 1983. It is recommended that the city council adopt this resolution certifying delinquent water and sewer accounts. Respectfully submitted, M-- Thomas A. Morgan, J . Acting City Manager cc: Finance Coordinator TAM/eja • RESOLUTION NO. • RESOLUTION CERTIFYING UNPAID SE41ER-AND WATER SERVICE CHARGES Ta THE COUNTY AUDITOR TO BE COLLECTED WITH OTHER TAXES ON-SAID PROPERTIES WHEREAS, Ordinance Code 8.23 establishes rules, rates and charges for water service in the City of Richfield, and WHEREAS, Minnesota Statutes 44.075, Subd. 3, provides that all delinquent water service charges not paid may be certified to the County Auditor with the taxes against such property, and shall be collected with other taxes on such property, and WHEREAS, Ordinance Code 8.12 establishes rules, rates and charges for sanitary sewer servicesin the City of Richfield, and WHEREAS, Subd. 12 thereof provides that all sewer service charges. not paid within fifteen (15) days after the quarterly due date may be certified to the County Auditor with taxes against such property, and shall be collected with other taxes on such property,. and WHEREAS, an assessment-roll .has been prepared specifying .the amounts wtni~¢h 's:h~.lli~beceettzfidd against each particular property. • NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield, Minnesota, that 1. There is hereby determined to be a-total uncollected amount for water and sanitary sewer service of $ 56,178.27 2. That a $20,00 Certification charge shall be levied against each delinquent account; such. charges totalimgg$13,140.00 3. .That such amount is hereby certified to the County Auditor for collection with other taxes on said properties. 4. .That a copy of this resolution shall be sent to the Hennepin County Auditor. Passed by the City Council of the City of Richfield this 12th day of September, 1983. ATTEST: John Hamilton Mayor Sylvia K. Bergh City Clerk .~ 5 CITY OF RICHFIELD, MINNE-SOYA Office of C ity Manager Council Letter No. 300 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richfield Council Members: Subject: Proposed Amendment to Taxicab Drivers License Ordinance. Second Reading. At the August 22, 1983 city council meeting, the city council gave first reading approval to an ordinance revision to the licensing criteria for taxicab and taxicab drivers, and scheduled the second reading and public hearing for the September 12, 1983 city council meeting. The ordinance has been amended to require that each applicant complete a health history statement in lieu of a physician's certificate. This would still avail the city the opportunity to assess the fitness of the applicant., but would not place additional financial burden on the majority of the applicants. A copy of the ordinance amendment and a copy of the health Ystory statement is attached to this council letter. This item has been scheduled for a public hearing at the September 12, 1983 city council meeting. It is recommended that the city council hold the public hearing and approve the ordinance amendment. Respectfully .submitted, / 1-I~s~w~ail ~-. ~ ~ Thomas A. Morgan; Jr~ Acting City Manager TAM/eja AMENDMENT TO CHAPTER VI, SECTION 6..21 OF THE ORDINANCE CODE OF THE CITY OF RICHFIELD City of Richfield Does Ordain: Chapter VI, Section 6.21 of the Ordinance Code of the City of Richfield dealing with the licensing and regulation of. taxicab drivers is hereby amended by amending paragraph (3) of subdivision 4 thereof to read as follows: - "(3) He shall- furnish a ee~tifieate-lip-a liee~eeel-}~hyeie~a~ statement on the form provided by the city shew~e~~ attesting that he is in good physical condition, has good eyesight and is not subject to any disease or infirmity of body or mind which might render him unfit to operate a taxicab. In addition to such statement, the applicant shall furnish, if required to do so by the city, additional information concerning his physical condition, eyesight or health including a physician's certificate." Passed by the City Council of the City of Richfield, Minnesota this. day of , 1983. • John Hamilton, Mayor ATTEST: Sylvia K. Bergh, City Clerk • RICHFIELQ PUBLIC SAFETY TAXI DRIVER HEALTH STATEP~ENT •s_ Date Name Of Applicant Address Home• Phone HEALTH HISTORY: Business Phone Date Of Birth Age Height ~Jei ght Have you-been treated within the .last year for any of the following? 1. Eye Problems Yes No If yes, explain Is your eyesight .at least / corrected? Yes No 2. Heart Problems .Yes No If yes, explain 3. Mental :or Nervous Problems Yes fJo If yes, explain 4. Alcohol Abuse Yes No If yes, explain 5. Drug Abuse Yes No If yes, explain 6. EpilepsyjSeizures Yes No If yes, explain 7. Are you currently .taking prescribed medication? Yes No If yes, what kind and for what reason 8. I certify that I have good eyesight and am not now subject to any disease or infirmity of body or-mind which might render me unfit to operate a taxi cab.. The above answers are true and complete and are given as a condition for obtain- ing a license to operate a taxicab in the City of Richfield. Any false or in- complete statements or failure to reveal a medical condition may be reason to deny or revoke the requested license. Signature of Applicant License may be issued Doctor's Certificate Require d License Investigator .~~3~ CITY OF RICHFIELD, MINNESOTA • - Off ice of C ity Manager Council Letter No. 299 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richf field Council Members: Subject: Purchases in Excess of $2,650 By resolution of .the city council, the city council must approve the purchase of merchandise, materials, equipment or construction when the amount exceeds $2,650. There are three items on the council agenda for September 12, 1983. Sandblasting Outdoor Swimming Pool The 1983 budget includes an item for the sandblasting of • the large pool and the wading pool at the Richfield Municipa l Outdoor Swimming Pool. Three quotations were received for the work which is to have the facilities suitable for painting follow- ing the sandblasting and to clean up the sand .used in the pro- cedure. Baker Pools of Pools, Inc. quoted $22,580; American Sandblasting, Inc. quoted $6,550 and A-ABCO Contractors quoted $6,240. It is recommended that the city council authorize the work to be done by A-ABCO Contractors in the amount of $6,240. Liquor-Operations Cash Register Communications Equipment ,The adopted 1983 budget for liquor operations includes funds for the purchase and installation of communications equip- ment to provide direct interface between the electronic cash registers at the three liquor stores and the city's central computer. While the computer system has handled inventory and sales data for some time, it has required certain manual entry and editinq_ operations. The direct link provided by the proposed communications equipment will allow direct input of inventory and sales data (thereby eliminating a manual operation), provide more timely and accurate information, and reduce the likelihood of errors. Council Letter No. 299 -2- September .12, 1983 The proposed improvements have been studied extensively • by the data processing division and liquor operations. It has been found that the original vendor of the electronic cash registers, Retail Data Systems (formerly Minnesota Cash Register) is the only vendor having-compatible equipment; software, and technical assistance available to satisfactorily accomplish the improvements. It is, therefore, recommended that the city council auth- orize the purchase of the information transfer units, telephone modems and labor in the amount of $4,993. One Ton Truck Cab and Chassis The 1983 budget for the central garage includes replacement of a fully depreciated vehicle known as the sign truck, a vehicle. equipped and stocked to work wtY street and other signs. Although four vendors were contacted, only two submitted quotations. Brook- dale Ford quoted $9,044 and GMC Truck and Coach Operation quoted $8,850. It is recommended that the city council authorize the purchase of a 1984 GMC one ton cab and chassis per city specifications in the amount of $8,850 from GMC Truck and Coach Operation, a division of General Motors Corporation. • Respectfully submitte , ~ I+~...H ~', ~ .~, Thomas A. Morgan J~ Acting City Manager TAM/eja • ~~ CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 298 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of R ichf ie ld Council Members: Subject: Assessment Rolls for Diseased Tree, Nuisance Abatement and Weed Destruction There-are several resolutions on the September 12, 1983 city council agenda certifying special assessments to Hennepin County. These resolutions provide for the following certifica- tion: 1. Resolution certifying special assessments for weed destruction. This is a one-year assessment at 8% penalty. 2. Resolution levying special assessments for nuisance abatement. This is a one-year assessment at no interest or penalty. 3. Resolution levying special assessments for abate- ment of diseased trees. This is the assessment roll for diseased tree removal on private property which has been performed by the city at the request of the property owner. The assessment is certified at the city's actual cost of the tree removal. This abatement is spread over three years at the rate of 8% per annum. It is recommended that the city council adopt the resolu- tions certifying these special assessments. Respectfully submitte , ~ I~~a-il 7'T_ a.w Thomas A. Morgan, Jr. -Acting City Manager .TAM/eja cc: Finance Coordinator RESOLUTION N0. RESOLUTION LEVYING SPECIAL ASSESSMENT FOR WEED DESTRUCTION BE IT RESOLVED by the City Council of the City of Richfield, Hennepin County, Minnesota, as follows: 1. That the following described.properties are hereby specially assessed in the following amounts for expenses incurred by the City in connection with abatement for weed estruction pursuant to the provisions of Minnesota Statutes, 1969, Chapter 715. Sec. 17.271. to wit: PROPERTY ID ADDITION N0. ADDR'ESS AMOUNT 26-028-24-12-0152 45225 6208 13th Ave. So. $ 45.00 2. 'That the above listed assessment be spread over a period of_one (1) year at the rate of 8% interest per annum. 3. That the City Clerk is hereby authorized and directed to certify a copy of this regelution to the County Auditor of Hennepin County, Minnesota. Passed by the City Council of the City of Richfield, Minnesota, this 12th day of September, 1983. John Hamilton Mayor ATTEST: Sylvia K. Bergh City Clerk • RESOLUTION N0. RESOLUTION LEVYING SPECIAL ASSESSMENT FOR NUISANCE ABATEMENT BE IT RESOLVED by the City Council of the City of Richfield, Hennepin County, Minnesota, as follows: 1. The following described properties are hereby specially assessed in the following amounts for expenses incurred by the:~ity in connection with abatement of a nuisance health hazard pursuant to the provisions of Minnesota Statutes, Section .145.23, to wit: PROPERTY ID DIVISION NO ADDRESS AMOUNT 28-028-24-22-0069 46065 6316 Logan Ave. So. $ -65.82 35-028-24-14-0002 44835 7301 18th Ave. So. 49.95 25-028-24-23-0038 -45880 1916 D 66th Street 84.25 34-028-24-41-0059 44834 7444 4th Ave. So. 3,010.00 Total $3y~.210.02 2. The above special assessments is to be spread over one year at no interest. 3. The City Clerk is hereby authorized and directed to certify a copy of this resolution to the County Auditor of Hennepin County, Minnesota. Passed by the City Council of the City of Richfield, Minnesota, this 12th day of September, 1983. John Hamilton Mayor ATTEST: Sylvia K. Bergh City Clerk RESOLUTION N0. RESOLUTION LEVYING SPECIAL ASSESSMENTS FOR ABATEMENT OF DISEASED TREES WHEREAS,. Ordinance Code 4.11 .establishes rules and regulations with reference to the abatement of diseased trees on private property in the City of Richfield by tree removal, and WHEREAS, Minnesota ,Statutes 429.101 provides that all unpaid or special charges for such tree removal may be certified to the County Auditor with the taxes against such property, and shall be collected wit h other taxes on such property, and .WHEREAS,. an a~sseesm~etit roll has been prepared specifying the amounts which shall be certified against each particular property. Nt7~, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield as follows: 1. That the following described properties are hereby specially assessed in .the following amounts for expenses incurred by the City in connection with abatement or removal of diseased trees pursuant to Minnesota Statutes 429.101: PROPERTY ID ADDITION CODE NO ADDRESS AMOUNT 27-028-24-41-0018 45810 6625 5th Avenue So. $ 563.99 . 28-028-24-32-0096 45355 2007 W Forest Dr. 1,953.86.. 28-028-24-13-0011 44828 6449 Girard Ave. 210.84 25-028-24-23-0022 45880 6520 19th Ave. .363.69 33-028-24-23-0096 46901 7349 Penn Ave. 247.74 28-028-24-31-0089 46470 6625 Irving Ave. 458.56 25-028-24-22-0035 45880 6344 20th Ave. 305,12 33-028-24-11-0016 46970 7049 Oak Grove 194.25 33-028-24-42-0129 45605 7544 Dupont Ave. 257.25 27-028-24-42-0121 46670 6719 Second Ave. 551.25 34-028-24-34-0006 46530 7626 Nicollet Ave. 194.25. 27-028-24-43-0073 46290 6921 Nicollet Ave. 98.75 26-028-24-14-0065 45621 6444 Cedar Ave. 42.00 25-028-24-23-0067 45880 ~ 6421 Cedar Ave. 341.25 29-028-24-41-0034 46790 6624 Russell Ave. 288.75 29-028-24-42-0138 46790 6733 Vincent Ave. 203.91 35-028-24-12-0077 46007 7127 14th Ave.. 261.44 33-028-24-14-0120 46970 7124 Oak Grove Blvd. 454.91 35-028-24-41-0008 44835 7414 18th Ave. 203.12 29-028-24-43-0072 46793 6801 Washburn Ave. 142.92 34-028-24-34-0042 46530 7633 Pillsbury 759.37 27-028-24-13-0070 46830 6509 1st Ave. 217.70 27-028-24-21-0062 45910 6306 Nicollet Ave. 151.87 27-028-24-32-0091 45740 6700 W Pleasant Ave. 151.87 27-028-24-32-0085 45740 6725 Harriet Ave. 476.98 TOTAL 09 ~ 6 2. That the above listed assessments be spread over a period of three . years at the rate of 8% per annum. 3. That the City Clerk is hereby authorized and directed to certify a copy of this resolution to the County Auditor of .Hennepin County, Minnesota. Passed by the City Council of the City of Richfield, Minnesotan this 12th day of September, 1983. John Hamilton Mayor ATTEST: Sylvia K. Bergh City Clerk ~ ~ CITY OF RICHFIELD, MINNESOTA Off ice of City .Manager Council Letter No. 297 Agenda September 12, 1983 The Honorable Mayor and Members of the City Council City of Richfield Council Members: Subject: Public Hearing for An Ordinance Amending the Cable TV Franchise to Adjust Certain Rates, First Reading. A public hearing has been scheduled for the meeta.ng of September 12, 1983 for the purpose of ordinance-amending the cable TV franchise, which certain rate increases requested by the cable TV ota Cablesystems-Southwest. The following is a brief chronology and sums leading to this public hearing: city council considering an would allow company, Minnes- nary of actions 1. Minnesota Cablesystems-Southwest submitted a "Rate .Adjustment Proposal", dated June 24, 1983 to the cities of Eden Prairie, Edina, Hopkins, Minnetonka, and Richfield, which are the members of the South- west Suburban Cable Commission (SWSCC). 2. The Operating-Committee (city managers) of the SWSCC met on July 7, 1983 to discuss the process of con- e 'sidering the proposed rate increases. The cable administrator and attorney were directed to prepare a recommended process for doing so, including secur- ing an independent expert review of the financial aspects of the proposal. 3. On August 3, 1983 the Operating Committee met and approved the procedures to consider the proposal, including: a. A formal public hearing with sworn testimony to take place before the SWSCC, thereby mini- mizing the need for extensive hearings in each city. b. Consideration of a study and testimony to be prepared by .the Cable Television Information Center (CTLC), an independent consultant, con- cerning the rate increase proposal. Council Letter No. 297 -2- September 12, 1983 c. Advertisement of the SWSCC public hearing to take place August 17, 1983 through the cable system itself, the Minneapolis Star and Tribune, and local newspapers. 4. The SWSCC public hearing was held on August 17, 1983 at 7:00 p.m. at Edina City Hall. Sworn testimony was presented by Gary Mizga on behalf of the company, SWSCC administrator Ralph Campbell, and the repre- sentative from CTIC. Questions by SWSCC members followed. No members of the general public spoke at the hearing. After .the close of the hearing, the SWSCC directed its attorney to prepare findings of fact and a proposed ordinance which would allow the rates to be increased. 5. On August 24, 1983, the SWSCC met and took action to recommend favorable consideration of the findings of fact and proposed ordinance by each of the five member cities. As indicated in the attached ordinance amendment, the company's proposed rate increases would raise Tier 3 monthly charges from $5.95 to $6.50;. increase monthly coverter rental charges by $1.00 - from $3.00.,.$4.50, and $5.00 to $4.00, $S.SO and $6.00, increase above ground installation charges from $19.95 to $24.95, and raise certain other charges for extra outlets and reconnection. Rates for Tier 1 and Tier 2 service, the lower levels of service, would not change. Rates for premium pay services. (HBO, Movie Channel, etc.) are not. regulated by the cities and are, there- fore, not affected by the ordinance. The company's justification for the proposed rate increase focuses primarily on the following items: 1. Higher converter costs 2. Higher interest rates 3. More mileage than was originally expected 4. Lower market penetration rates 5. Increases in hardware and labor costs The company. has stated that the increase would help reduce anticipated losses in 1984 and 1985, and will put the company in a better position to raise financing in the next two years to offset its cash deficiency. According to the CTIC Report, the effect of this rate in- crease along with earlier increases in premium pay services for the "average subscriber" would be as follows: Council Letter No. 297 -3- September 12, 1983 Before After Increase Increase Basic service charge (Tier 3~ -with remote converter) $10.45 $12.00 Premium pay services (average of 1.8 services) Additional Outlet (Tier 3 with 13.5.0 16.11 remote converter) 1.10 1.36 'TOTAL $25.05 $29.47 Including the recent premium pay service increase and the proposed basic rate increases., the "average subscriber" could expect to pay 17.6 more in monthly charges. As noted earlier, CTIC was hired by the SWSCC to analyze the proposed rate increase. CTIC examined the proposal, the company's original proposal for the franchise, .and the audited financial statements of the company. .CTIC reached the conclusion that the "proposed rate increase is justifiable and merited." It also noted, however, that the company's suggestion that another rate increase in the near future may not be merited. City staff .has reviewed all of the material submitted with regard to the proposed rate increase. During the SWSCC consider- ation of the increase questions were raised concerning the effects of additional borrowing by the company, interest rates,. and oper- ating costs. While it is believed the proposed rate increase may be justified, staff shares the CTIC concern about the merit of other increases in .the near future. Because this is the first basic rate increase since the granting of the franchise, we believe. the company and the cities will have to closely monitor the effects of the'ncrease on subscribers and the level of cable services provided by the company.. Richfield is represented on the SWSCC by Council Member Bence and the Assistant City Manager, Ron Rankin. They will be able to respond to any questions regarding the SWSCC's consider- ation of the rate increases. Representatives of Minnesota-Cable- systems-Southwest will also be present at the September 12 meeting. Enclosed for the council's examination are: 1. The franchise criteria for rate increases; 2. The CTIC report 3. The SWSCC Findings of Fact 4. The proposed ordinance amendment St is recommended that the city council hold the public hear- ing and subsequently approve the first reading of the ordinance amendment. Respectful-ly submitted' 14 r~~w-. Thomas A. Morgan, Jr~ Acting City Manager (a) The ability of .the Grantee to render System services and to derive a reason- able profit therefrom under the existing .rate schedule and proposed rate. sched- ' ule; (b) The revenues and profits derived from ~• System services; (c) Tax benefits received by Grantee, its partners or shareholders, as the result of their investment in the System; (d) Cash flow derived from System services; (e) The efficiency of Grantee;. (f) The. quality of the .service offered by Grantee; , (g) The original cost of the System, less depreciation; •(h} A fair rate of return with respect to investments having similar risks to that of providing cable communication servi- ces; {i)_ The extent to which Grantee has. adhered to the terms of this Franchise; (j) Fairness to residents and subscribers; . (k) Capital-expenditures by Grantee in pro- viding updated technology and service to subscribers; ~, , 44 o ~~ (1) The extent to which Grantee .has then pro-. vided service to schools, hospitals, libraries, publicly owned or leased buildings and. similar.. institutions ' within City; (m) Such other factors as City may deem rel- evant. • • ANALYSIS OF THE PENDING RATE INCREASE PROPOSAL OF MINNESOTA CABLESYSTEMS-SOiTTHWEST August 9, 1983 PREPARED BY CTIC ASSOCIATES 1800 North Kent Street Suite 1001 Arlington, Virginia 22209 (703) 528-6838 [7 ANALYSIS OF THE PENDING RATE INCREASE OF MINNESOTA CABLESYSTEMS-SOUTHWEST I. INTRODUCTION CTIC Associates has been hired by the Southwest Suburban Cable Commission to examine the rate increase request of Minnesota Cablesystems-Southwest. Minnesota Cablesystems-Southwest (hereinafter referred to as MCS) is seeking rate increases for .its. Tier IiI basic 'service offering, its interactive service offering, its Zenith converter rental fees, its installation charges, its FM' service rate, and additional outlet charges. These service charges are within the rate regulatory authority of local government. MCS has also recently increased the rates it charges for its pay service offerings.. ' Our analysis of the rate increase request focuses on MCS's financial justification for these increases. We have reviewed Minnesota Cablesystems- 'Southwest Rate Adjustment Proposal dated June 24, 1983. In addition, ~ have reviewed the. original proposal of MCS to the-city prior to the award of the. franchise in order to compare how original_,ex~ectations_match with actual results. MCS has. provided a very .detailed and thorough presentation to support its rate increase request.. We believe this presentation has provided sufficient information upon which to base a financial analysis of its rate increase request. The ,.audited financial statements of the operator have been included to support its figures. I-2 Accordingly, is the Franchise Agreement (Section VI 4 [D]) there are 13 criteria for justifying a_rate increase. Our analysis examines several of the 13 criteria (listed below according to their subsection in the franchise agreement):. a) Ability to Render System Services and Derive a Reasonable Profit Therefrom Under Existing and Proposed Rate Schedules b) Revenues and Profits Derived from System Services c) Tax Benefits Received d) Cash flow Derived from System Services e) Original Cost of the System, Less Depreciation f) A Fair Rate of Return with Respect to investments Having'Similar .Risks to that of Providing. Cable Communications Services g) Capital- Expenditures-bq Guarantee in Providing Updated Technology and Services to Subscribers • :.~ . _.a As is well defined in the franchise agreement, a thorough evaluation of a rate increase request examines not only-financial considerations but also addresses operator compliance with the terms of the ordinance (criteria i and 1), efficiency of the operator (criteria e), quality of service (criteria f) and fairness of the increase to residents and subscribers (j). Our analysis does not specifically address these criteria since they require examination of areas which are most effectively. and efficiently analyzed. by the local au- thorities. This report is organized as follows: 1) Section II summarizes the op- erator's.rate increase request and justification for the increase; 2) Section I-3 III reviews the financial performance of the operator in the principal cafe- . gories of revenues,. expenses and capital expenditures and compares these results with original expectations; and, 3) Section IV examines system profit- . ability and how the rate increases will affect future financial performance. • i II. SUMMARY OF PROPOSED RATE INCREASES AND MINNESOTA CABLESYSTEMS-SOUTHWEST'S ,JUSTIFICATION' FOR THE RATE INCREASE S Table 1 summarizes the-proposed rate increases and the percent increase in the' rates for the currently offered service. TAB LE 1 SUMMARY OF RATE CHANGES Current Proposed Percent Service, Rate Rate Change Monthly Fees Tier 1 - - No change -Tier 2 (Including converter) $ 5.45 $ 5.45 No change Tier 3 a) Including set top coa- $ 8.95 $10.50 17.3 percent verter b) Including remote coa- $10.45 $12.00 14.8 percent venter Tier 3 Interactive (Including-converter) $10.95 $.13.50 23.3 percent FM $ 1.95 $ 2.50 28.2 percent Installation Fees Aerial drop. $19.95 $24.95 25.1 percent Underground drop $34.95 $39.95 i 14.3 percent FM/Additional Outlet $10.00 $15.00 . 50.0 percent II-2 . TABLE 1 (Continued) SiJMMARY OF RATE CHANGES Current Proposed Percent Service Rate Rate Change. Converter"(Monthly) Oak Tier II $ 1.50 - No change Set Top. Tier III with remote. $ 3.00 $ 4.00 33.3 percent Set Top Tier III $ 4.50 $ 5.50 22.2 percent Enhanced Converter with Key Lock and Remote $ 5.00 $ 6.00 20 percent Additional Outlets Tier II (includingcon- vertex) $ 3.45- $ 3.45 No change Tier III (including set top converter).. $ 6.95 $ 8.95 28.8 percent Change of service $14.95 $.19.95 33.4 percent Reconnect $14.95 $19.95 33.4 percent MCS is proposing no .change in the rates offered for its Tier l and Tier 2 service. Tier l will remain a no monthly charge service. The monthly charge for Tier 2 remains at $3.95 per month plus a $1.50 charge for renting-the Oak converter. The. Tier. III basic service rate is proposed to increase from $5.95 per month to $b.50 per month or 9.2 percent.- The Tier III converter rental fees are targeted to increase from $3.00 per month to $4.00 per month or 33 percent for the set top converter; from $4.50 per month to $5.50 per month or II-3 • 22 percent for the set top converter with remote control; and from $5.00 per month to $b.00 per month or 20 percent for the enhanced converter with a keylock and remote control. Since all Tier III subscribers require a converter, the combined impact of the monthly fee increase and converter rental fee increase for Tier III subscribers is 17.3 percent for Tier IIZ subscribers selecting the set top model;. 14.8 percent for Tier LII subscribers selecting the converter with remote control; and I4.2 percent increase for those Tier III subscribers selecting the enhanced converter. Currently 99 percent of all subscrrbers select Tier III services. Of those subscribers, 97 percent select the converter model with remote control. As such, most subscribers will experience a basic service rate increase from • $10.45 per month to $12.00 per month or 14.8 percent. MCS is also proposing a rate increase of 23.3 percent for the interactive Tier III service. To date, this service is unavailable due to equipment dif- ficulties MCS is having with the two-way amplifiers required. for providing. this service. MCS is proposing a 25.1 percent increase in aerial installation fees and a 14.3 percent' increase in underground installation fees. Currently 80 percent of plant has been aerial construction. MCS is proposing a 28.2 percent increase in the FM service monthly charge; an increase from $1.95 per month to $2.50 per month. MCS has not . provided any data. on the number of subscribers who would be affected by this proposed increase. Installation fees for FM service are proposed to increase from $10.00 to $15.00. • .,.. IZ-4 Changes for additional outlets are proposed for Tier III only. The monthly fee for the additional outlet of Tier III is $3.95 plus converter charge. The new rate would be $4.95 plus converter charge. Subscribers desiring an additional outlet of Tier III with the remote control converter would be paying $10.45 instead of $8.45 or 23.7 percent more. Instead of receiving a $2.00 per, month discount off first set charges,. these subscribers would be receiving a $1.55 per month discount off of first set charges. G~rreatly approximately 13 percent of all subscribers appear to be selecting an additional outlet of cable service. MCS does not indicate which level of .service subscribers select, but given the percentage of subscribers selecting a first set of Tier III (99X), it is reasonable to assume that most of these additional outl,~t subscribers are on the Tier III level and .most select the remote control covverter. MCS has increased the installation fee for addi- • tional outlets from $10.D0 to $15.00. Finally, MCS proposed increases in-change of service or upgrade charges from $14.95 to $19.95 or 33.4 percent.. Reconnect charges .for subscribers who have had service disconnected for some reason have increased from $14.95 to $19.95 also. In sum, the average subscriber {a Tier III subscriber with a remote control converter) will see his or her basic monthly charge increase close to 15 percent, from $10.45 per month to $1.2.00 per month in addition to any premium. pay option selected. Premium pay options have recently increased in coat from $:7.50 per month to $8.95 per month. (The Disney Chancel and Spec- from Sports Channel are slightly higher). •' II-5 Currently the average basic subscriber selects 1.80 pay services. In • other words for every basic subscrrber there is 1.80 pay services selected. An effective way of examining the. impact of .the. proposed rate increases is to approximate a monthly subscriber bill representing the average subscriber expenditure. Before Increase Basic Service Charge (Tier III with remote converter) Pay Service Option Additional Outlet (Tier ZII with remote converter) • $10.45 7.50 % 1.80 = 1.3.50 8.45 % .13 = 1.10 $25.05 After. Increase $12.00 8.95 X 1.80 = 16..11 10.45 X .13 1.35 $29.47 As such, including the recent pay increase and proposed basic rate increases, the average subscriber can be estimated to expect a 17.6 percent increase in average monthly fees for services purchased... MCS's justification for the proposed rate increase focuses primarily on the following points: TOTAL 1) Higher converter costs 2) Higher:. interest rates 3) More mileage than was originally expected 4) Lower market penetration rates 5) Increase in hardware and labor costs. These factors will be further addressed in the next section of this report.. ~~ - .~ II-6 • All of these factors combined have led to a position where cumulative losses at the end of fiscal 1983 are. projected to be $4.4 million (with or without the rate increase). MCS also indicates that in order to fund Sonstruc- Lion, approximately $3.34 million in additional partnership equity capital was .invested over the level of equity-capital originally planned. MCS states that the rate increase-proposed will result in a $260,000 decline in .projected losses for 1984 and a $530,000 decline in projected losses for 1985.. MCS's projections show no expectations. of profit over the next five years. The primary goal. of the rate increase request appears to be to reduce. projected losses and minimize the need for debt capital. III. FINANCIAL PERFORMANCE In this section we will- campare how the actual and currently .expected financial performance of the company compares with .the original projections provided Ya its proposal prior to the award. of the franchise. For the purposes of this analysis,. we are assuming that the first year of MCS projections in its original proposal coincides with fiscal 1981. We are. aware that there maq be some descrepancies in terms of months covered in the firstyear of the projections. However, we do .believe- that the comparison is a useful tool. + - A. REVENUES AND SUBSCRIBERSHIP Table 1 presents a comparison of actual and currently projected levels of subscribership with originally forecasted levels of subscribership. hi its original .forecast, MCS assumed that revenues would be achieved during the first year of operation. In fact, while system construction began in early 1981,, the first subscriber was not served until December of 1981, part of fisca1.1982. Zhe level of basic service subscribership expected for 1983 is about 5 percent higher than originally forecasted. However, this represents a'lower overall penetration rate since the number of households passed by cable is greater than originally estimated. More notable is MCS more conservative attitude toward future subscriber growth. MCS expects a 1S percent ..growth in subscribership between 1983 and 1984 compared with a 28 [7 III-2 percent increase originally forecasted. An eight percent increase in sub- scribership is now forecast between 1984 and 1985 compared with an 12 percent increase originally forecast. MCS comments in its presentation that inability to gain access to a large number of apartment buildings is a major reason for these lower subscriber e$pectations. Pay: subscription has proven to be much higher than originally forecasted by MCS. In its original projections, MCS assumed the average subscriber would select 1.19 pay services. Actual results show that the average subscriber is selecting close to two pay services each. Levels of pay units purchase are close to 57 percent higher than originally forecast for 1983. . _. __ TABLE 1 _ __ SUBSCRIBERSHIP Current Results and ~ Revised Projections Original Forecasts 1981' 1982. 1983 1984 I98S 1981 1982 1983 1984. 1985 1) Basic .Subscribers - 13434 26360 30300 32826. 2908 -12938 25206 32221 36023.. 2) Basic. Penetration - 42 45 50 52 40 45 50 55 60 3) Pay Service Units - 28891 46979 53454 58500 3461 15389 29969 38334 42877 4) Pay Service to Basic Subscriber Ratio - 2.15 1.78 1.76 1.78 1.19 1.19 1.19 1.19 1.19- Table 2 presents comparison of actual and currently project levels of revenue with originally forecasted levels of revenue. MCS original projections assumed basic service rate increases equal to 5 percent per year in 1984 and 1985. III-3 Despite the less optimistic subscriber forecasts for 1984 and. 1985, total revenues forecasted (with or without the proposed rate increases) are actually higher. MCS earned-no revenue in 1981 compared with its original estimate $427.,000.. In addition, revenues earned in 1982 are less than half of what was originally forecasted for 1982. This is because-fiscal 1982 was the first year of actual marketing and subscribership. However, beginning in 1983 the revenue outlook is higher than originally forecasted.. Fiscal 1983 revenues are expected to be 9 percent higher than originally assumed. Without the pro- jected rate increase, 1984 revenues are expected to be 29 percent higher than originally forecasted and 1985 revenues are now forecasted to-be 24 percent higher than originally estimated. With the increase, projected revenues would be 33 percent and 30 percent higher for 1984 and-1985 respectively, TABLE 2 = _: _ .~. _ - REVEN~JES, $OOOs _ Current Results and Revised Projections Original Forecasts. .1981 1982 1983 1984 1985 1981 1982 1983 1984 1985 1) Basic Subscribers (.including..add'1 outlet. and conver- ter rental) - 2) Pay Service - 3) Installation - 562. 2923 3912a 4282a 4208b 4857b 864 35.28 6275 7243 45 64 207a 225a 221b 25bb 153 1370 .2568 138 1330 2591 78 209 215 3585' 4205 3407 3784 3480 4087 281 .320 4) Other - 14 20 20 20 29 222 516 736 909 TOTAL - 1485 6535 10415a 11770a 427* 3131 5990 ~80~87 l952~ 10724b 12376b ~,~325 Z2.'~~ a. Without increase b. With increase *Total presented in the original proposal do aot_match sum of individual items far year 1. III-4 • The reasons for these higher levels of revenues can be partially at- tributed to the fact that 99 percent of subscribers are selecting the top tier of basic .service. Original projections showed only 75 percent of subscribers at the top tier of service. Average monthly basic service revenue per sub- scriber was $9.24 in 1983. .Original forecasts showed a monthlq basic revenue of $8.82. In addition the higher level of pay service subscription results in paq service .revenues for 1983 which are 36 percent higher than originally forecasted.- Total projected pay service revenues for 1984 and 1985 are 79 percent higher .than originally estimated. Certain categories of revenues have fallen below original expectations. Revenues from installations are considerably lower than originally estimated, especially over the first few years of operation.. Part of this lower Level of revenue may be attributable to the fact that-MCS has offered longer free • installation periods to subscribers in new service areas; from the originally estimated 30 days to 60'and even 120 days. In addition, in-its original proposal, MCS assumed substantial revenue from interactive servcices and institutional network services. Since neither interactive or institutional network services are available, no revenue is derived therefrom. In its original proposal, MCS assumed $482,200 in average annual revenues from those services over the first five years. Currently MCS projects only $20 thousand per year from other sources. We are somewhat surprised that MCS is not earning more income from the sale of advertising time not only on the locally originated channels but from "spots" available on some of the satellite services such as ESPN. We would expect to see MCS earning at least $60 thousand per year from this source. • III-5 . Cumulative revenues through 1985 would total $30.2 million without the rate increase and $31.1 million with the rate increase. Cumulative revenue as original forecast through 1985 was $27.2 million. In terms of total revenue, MCS is in a-better position over the next few years than originally forecasted even without the rate increase. However, over the first two years of opera- tion (1981 and 1982) total revenue was considerably below expectations. The proposed rate increase would yield an additional $900 thousand in revenues for MCS over the nest two years. B. OPERATING EXPENSES The following-table shows how operating expenses compare with original. • forecasts for 1983 and 1985: $000's Current _ Original Projections Forecasts 1983 1984 1983 1984 Plant 1494 1845 804 1199 _.. _ __ Programming ' ---~ 2077 4317 1831 2704 - GSA 2397 3264 1472 2126 TOTAL 5968 9426 4107 6029 MCS's rate proposal does not provide much explanation as to why operating expenses. are so much higher than originally forecasted. Examining their break- out of operating expenses reveals higher costs in most every category. Two III-6 principal causes for the higher costs. can be related to pay cable expense and higher salary expense. In addition MCS is maintaining 745 miles of plant compared. to the 690 miles originally estimated. In MCS's 1983 :budget, salaries constitute the largest expense by far. In 1983, MCS"..expects to pay $2.4 million for salaries and personnel related ex- peases. Overall, MCS's expenses appear similar to industry averages for new systems and reflect substantial support for local programming. MCS does re- port a Fairly high level of bad debt expense for 1983,. at close to 3 percent of total revenues. Typically bad debt expenses averages between 1 and 2 percent of total revenues. Five percen of gross revenues goes to Minnesota Cablesystems, Inc., the general partner as a management fee. In 1983, this amount will equal $355 thousand. ~_~ the following table companies the originally forecasted operating margin (revenue less expenses) w h the currently forecasted operating margins for 1981 through 1985. Currently Originally Forecasted Forecasted 1981 - (1360) 1982. (303) (106) 1983 567 1329 1984 2141a/2404b 2415 .1985 Z417a/2950b 3026 Cumulative 4822a/5618b 5304 a. Without rate increase b. With rate increase IZI-7 In its original forecasts, MCS did expect negative operating income over the first two years of operation. Ia addition, MCS did not expect to be in a position of positive cumulative operating income until 1984. By the end of 1983, MCS will. be 3a a position of positive cumulative operating income. By the end of 1985, cumulative operating Income without the increase would be 10 percemt below original foreasts and with the increase would be about 6 percent higher than the original forecasts. C. CAPITAL EXPENDITURE One. of the principal. justifications used by MCS for its. proposed rate increase is higher capital costs. At the end of 1982, MCS had invested $18 million to construct-the system. Another $5 million is planned for 1983 for a total of $23 million. Original forecasts showed cumulative capital expen- diture at the end of the third year at $18.6 million. MCS states that by the end of fiscal 1985, a total of $27.6 million will be invested. The original forecast for the first five years estimated $20.1 million. These; higher costs can. be attributed. to: 1) More plant miles than were originally forecasted; 2) higher per mile construction costs; 3) higher converter costs; and - 4) design. changes. MCS's original proposal assumed 690 miles of plant of which b24 miles would be aerial plant and b6 miles would be underground construction. MCS • ' III-8 • stales that .during construction, it was discovered. that there were actually more miles to be built than was originally indicated in the instructions to the applicants. By the end of fiscal 1983, MCS will have constructed. 595 miles of aerial plant and. 150 miles of underground plant for a total of 745 miles. While aerial. mileage is actually less than forecasted, underground pleat is much more expensive to build than aerial plant - of tea 2 to 3 times more expensive. The average costs per mile of plant in the origaal proposal was estimated to be around $13,000. To date, the average per mile cost of new plant coastruc ion is the MCS system has been $17,830, close to 39 percent higher. In addition, MCS plans to construct another 50 miles of plant over the next two years,. thirty of which would be underground plant. Another principal cause for higher costs has been related to converters. In its original proposal, MCS had planned to use the Scientific Atlanta Descrambler-Converter with an estimated $70 per unit cost. Because the Scientific Atlanta Converter was not available at the time of construction, MCS decided to use the Zenith Z-TAC addressable converter which costs around $150 per unit. The Z-TAC unit is highly regarded for its reliability and is one of the most popularly proposed converters in recent franchising. efforts. As MCS states, it could have chosen a less expensive, less sophisticated model. However, the Z-TAC does allow for many operator benefits is terms of tier security and reducing the risk of signal theft. The decision to use the Z-TAC has meant an additional $3.l million in capital spending. Because almos all ..subscribers. require .the Z-TAC since they select Tier ZII, MCS is III-9 investing more on converters for the top tier of service ,than was originally estimated. Because of the decision to .use Z-TAC, additional capital was required to upgrade the headend equipment to use Zenith suppression equipment rather than Scientific Atlanta equipment. MCS states that higher headend cost can also be attributed to the adds- tioa of one earth station above the original plan o£ 2 earth stations.. .This allows for greater diversity of satellite signal choice. All of these factors combined have resulted is much higher capital investment than was originally planned. We believe MCS: has pravided ample support for the. concept that this added cost was necessary and beneficial to the sgstem and its subscribers. • D ~, C N INAN I G PLAN AND RELATED .COSTS There has been substantial changes in MCS financing plan. These-changes can be best summarized in the following table. O$ QO,s Original Proposal Actual & Projected Equity. Debt Equity Debt 1981 4982 5100 4990 - 1982 374 9400 4010 9500 1983 (180) 2800 - 6000 1984 254 400 - 1500 1985 230 300 - 1000 • TOTAL 5660 18000 9000 18000 III-10 • MCS has arranged long-term financing with two banks for the amount. of $18 million. Its original plan was to draw down most of this financing over the first two gears. Since MCS's financing costs are tied to the prime rate, the decision to delay draw down until year 2 was probably based on the. high interest rates experienced is 1981 and most of 1982. Instead of using the debt capital in 1981 and most of 1982, MCS chose to make a substantial additional equity investment in 1982. Originally, the partnership planned to invest $4,982,00 in 1981 and an additional $678,000 over the next four years. Instead, the partnership invested $4,990,000 is 1981 and another $4,Oi0,000 in 1982. No additional equity capital investment is planned in the near future. In 1982, MCS borrowed $9.5 million against the line of credit. An addi- tional $6 milliom is scheduled for 1983. An additional $1.S million will be • borrowed in 1984 and $1.0 million additional debt is scheduled for 1985. The total amount of debt financing planned ($18 million) is the same as originally scheduled. An additional $3.34 million in equity capital has been made. as of August. 31, 1982, the capital contributions of the partners have been as follows: Minnesota Cablesystems, Inc. - $7,302,500 - 81X Limited Partners - 1,697,500 - 19X Due-to the purchase of certain limited partner shares in 1982, Minnesota Cablesystemsy, Inc. now hold 82.18X interest in the limited partnership. According to the partnership agreement, losses, profits and tax benefits are distributed between the general and limited partner according. to the percent III-11 • of interest held by each. As of August 31, 1982.,. Minnesota Cablesystems, Inc. had been allocated $4,114,849 in taxable losses and $1,221,679 in investment tax credits, The. limited partners have been allocated $1,041,229 in taxable losses and $307,413 is investment tax credits. Interest expense associated with the debt capital began to accrue in 1982. .Total interest in I982,was $772,bO5 of which .$491,.993 was capitalized. .Interest expense for 1983 is projected to be $2.083 million, averaging approxi- mately 13.4 percent on the. outstanding debt of $15.5 million for 1983. Pro- jected interest expense for 1984 is $2.415 million, average 14.2 percent of outstanding debt (projected at $ll million). Interest expense for 1.985 is projected to be $2.307 million or about 13 percent. Interest expense is obviously difficult to predict given the substantial fluctuations is the prime rate over the past few years. Over the. past year, MCS should not have paid much more than 12.5 percent on its outstanding balances. Assuming the prime irate does. not flucuate much above 11.5 percent (it is_currentlq at 11 percent) MCS should no*_ be paying higher interest cost. than it originally forecasted.. in fact, MCS has not to date paid as much interest as it originally estimated. Projected levels of interest expense are only siightly above levels originally forecasted. Principal repayment on debt capital is projected to begin in 1986. Prin- cpal repayments~amouat to $1,000,000 in 1986; $1,500,000 in 1987; $2,000,000 in 1988; $3,000,000 in 1989; $5,000,000 in 1990; and, $5,500,000 is 1991. Assuming the interest rate does not increase substantially over the neat few years, interest expense should begin to decline in 198b. III-12 . E. SUMMARY Current levels of total revenue and forecasted levels of revenue with or without the rate increase compare favorably with original estimates. This is inspire of less optimistic expectations for subscriber growth in the. near future. Revenues. have been higher than originally forecasted because a greater percentage of the. subscriber base selects .the most expensive tier option and because more pay services are being purchased than. originally estimated. Operating expenses are substantially higher than originally estimated. This can probably be attributed to a combination of larger plant size, infla- --- -_ Lion, higher pay cable expenses and original underestimation of personnel costs. • The combination of somewhat. higher revenues and substantially higher .operating expenses ha$ meant that operating income over the first three gears of operation is low. However, original forecasts show a cumulative negative operating income. at the end of, 1983. Current results show a postive operating income. Fore- casts for operating income over 1984 and 1985 would be below original fore- casts without the rate increase and slightly above original forecasts with the increase. higher capital-costs are a principal justification for the rate increase.. By the end of 1983, MCS will have invested $4.4 million more than it originally planned. By the end of 1985, MCS will be $7.5 million over the projected in- vestment. The higher capital costs .have been substantiated by MCS as neces- sary and beneficial to subscribers and are primarily atributable to more plant:... III-13 • miles than originally estimated, higher construction costs, higher converter costs, .and necessary design changes. The. additional capital costs have required a higher level of equity capital investment. Originally the partners planned to invest $5.660 million. To date $9 million ha been invested. The amount of debt financing has not been changed; it remains projected at $18 million. however, MCS had delayed drawing down its debt capital until 1982, saving considerable interest expense in 1981 and 19$2. Total interest expense paid to date is less than origi- Wally estimater3., Assuming the prime race does not fluctuate much higher than 11.5 percent over. the next few years, interest expense should rema~.n similar to levels originally forecasted. Overall,-the rate increase will improve cash flow by around $900,000 over the next two years and assist the operation in beginning. debt service scheduled fore 1986. s IV. SYSTEM PROFITABILITY The following table compares net income with and without the rate in- crease and with the original projections. NET INCOME $000's Actual .Projected With Without Increase Increase Ori ginal Proposal 1981 - - (2161) 1982 (1056) (1056) (2692) 1983 (3391) (3391) (2.690) 1984 (2049) (2395) {1856) • 1985 (1516) (2132) (1350) Cumulative (8012) (8974) (10749) The-MCS operation reports no loss for 1981 because it incurred no reve- nues and all expense were capitalized. As is evidenced, MCS expected to be operating with a cumulative net loss at this point in time in its operation. While this position appears very critical, in fact it is the "norm" for cable operations. Most cable system experience substantial losses in early years. Positive cash flow is usually not experience until the third or fourth year of operation and postive net income may not be experienced until the sixth or seventh-`year. These situations are not completely remedied by rate increase since system profitability is as much a function of reaching a mature level of N-2 • subscriber participation an+d completion of construction expense as rates charged.. Ia addition, because of large debt requirements, interest expense in the early years is often the largest expense item. As debt capital is repaid, system profitability should greatly improve. This system should achieve postive cashflow with or without a rate increase by 1985. The rate increase would definitely improve the cashflow situation and perhaps hasten repayment of long-term debt therefore lowering interest costs. Because. MCS is a limited partnership, system profitability should not be measured simply as positive-net income... A cable television system offers its investors substantial tag savings through allocation of system losses and __ _. investment tag-credits. B4en though the system is operating at a substantial • loss, its investors are earning a return through tax benefits. On page 71 (Schedule $) of its rate increase proposal., MCS provides the tag implications to its limited partners and provides a calculation of return -_ ___ on investment.. We believe this presentation is misleading in that it does not assume the value of the limited partnership interest itself and measures only the net cash gain over the original investment. Any internal rate of return calculation of this type must. assume a value of the asset at the end of .the cashflow period. For the sake of this example we assume that the limited partners will sell their interest at the end of the fifth year. We use a conservative market valuation of $800 per subsciiber Less outstanding indebtedness. Many systems are sold for as much as $1000 per subscriber. An $800 per subscriber valuation would result in a market value IV-3 of $26 million. Removing outstanding indebtedness, which would be $18 mil- lion is debt at the end of 1985, would leave a valuation of $8 million. The general partners value would be $6.576 million and the limited partners valuation would be $1.424 million. The internal rate of return calculation, assuming a 50 percent tan rate and full utilization, for both the no rate increase and rate increase assumptions would be as follows: Limited Partner Cash Flow and. Internal Bate of Return $000's (6%) Cash Flow Present Value No Rate Adjustment Investment 1604 1604 'Tax Savings (20X) 63 59 . -- ..v - ._: _ ____..198-2°mTax°"Savings- 765 6$1 1983 Tax Savings 377 317 1984 Tax .Savings 252 200 1985- Tax Savings 198 148 Market Value (198b)' 1424 982 Internal Rate of Return 10.6X (6X) Cash Flow Present Value Rate Adjustment. Investment 1604 1604 1981 Tax Savings (20X) 63 59 1982 Tax Savings 765 681 1983 Tax Savings 377 .317 iv-4 • Limited Partner Cash Flow and Internal Rate. of Return $000's (Continued) (6X) Cash Flow Present Value Rate Adjustment (Continued) 1984 Tax Savings 229 181 1985 Tax Savings 151 113 Market Value 1424 982 Internal Rate of Rs turn lO.OX As is evidenced, the limited partners return on investment would average around 10 to 11 percent over the five gear period assuming they sold their interest at a very conservative valuation. A $1000 per subscriber valuation less outstanding indebted:aess given the .same cash flow. projections would yield limited partner investors an l$.6 percent internal rate of return over the same period. 1~e rate of return to the general partner can also be estimated using this approach.. However, MCS has indicated that the general partner's parent company, Rogers Cablesystems, Inc., cannot presently utilize the tax savings flowing from the MCS system for several years because it has several cable systems under construction and also operating at a loss. Since we have not reviewed the operating information on the other Roger's operations we cannot estimate 'when these tax savings could be utilized. Of course, these is a firm limit on how long a company can hold onto these tax savings. Unused invest- meat tax credits can be carried forward for 15 years. Unused taxable losses IV-5 can be carried forward. for seven years. If the general partner were able to use all tax. savings in 1986, given the same assumptions concerning market valuation at $800 per subscriber, it-would acheive as internal rate of return as follows: General Partner Cash Flow and Internal Rate of Return $000's (6X) Tax Savings Cash Flow Present Value Used No Rate Adjustment Investment. 7398 7398 - 19$1 Tax Savings (20X) 252 237 - 1982 Tag Savings 3060 2723 - 1983 Tax Savings 1508 1267 - a 1984:: Tax S vings.. 1008 798 - 1985 Tax Savings 792 562. - 198b Present Value of Accumulated Tax Benefits 4585 Discounted Market Value of Interest 'in Partnership 4415 _..._._.... _:. :._; ..__w -To-tat- Cash Flow 9000 Internal Rate- of Return 3.3X As is evidenced, the inability of the parent company to use the tax sav ngs _for several years seriously diminishes the rate of r eturn to that partner.. Another' profitability measure used is return on net investment. This relates return to both debt and equity capital to the value of assets they created. It relates net income plus interest (the return of debt :capital) IV-6 to the book value-of assets.., Without. the rate increase, the MCS operation shows a negative rate of return of (9X) on fixed assets-:between 1982 and 1985. With the rate increase, an average rate of return on fixed assets is negative (SX)• It will take several years for this system to achieve a positive and reasonable rate of return oa fixed assets. Overall, we can conclude that the system offers profitability at this time Daly to the limited partners who can fully benefit from the taa savings. of .the losses and inves meat tax credits.. The proposed rate increase will not immediately have any substantial effect on system profitability. The princi- pal benefit of the rate increase will be to hasten positive cash flow>in order to ensure that debt service or principal repayment can begin on schedule in 1985. . ~~ • V. CONCLIISIONS Overall, we believe MCS has presented a strong argument for the proposed rate. increase. Its proposal is detailed and its facts nave been substantiated with audited statements. We estimate that the proposed increase (.outlined in Section II) will cause as increase of 17.6 percent on the average subscriber's bill of ser- vices.. This may appear contrary to MCS's claim of 9 percent.. However,. MCS` considered oalq the 55 cent increase in Tier IIL charges in that percentage. In its; proposal, MCS alludes to the need. for another rate increase in the near future (see page 4b of proposal). We do question whether subscribers will accept two such substantial rate increase in close proximity... We• believe- the currentl y proposed rate increase is justifiable and merited., It will not bring net income up to a positive level but. should help diminish the current working capital. deficiency and allow the company to more comfortably begin debt service scheduled for 1986. The level of earnings currently experience is not substantially worse than originally forcasted. However, because of the larger capital investment, the revenue requirement needs-to be higher for any given level of return to be achieved. Only the limited partners appear to be achieving a positive return due to their ability to utilize- the tax benefits from operational losses and investment tax credits. ~' RESOLUTION OF FINDINGS OF FACTS, AND RECOMMENDATIONS OF THE SOUTHWEST ..SUBURBAN CABLE COMMISSION: (HEREINAFTER "COMMISSION") WHEREAS, the Commission was formed by the City Councils of Eden Prairie, Edina., Hopkins, Minnetonka and-Richfield, Minne-sofa (hereinafter "Parties") in May, 1982, to coordinate the admi- nistraton and .enforcement of the respective cable communications franchises of the Parties; to report and recommend to the Parties relative to the operation of their respective cable communications franchisees; and to perform such other duties as are required; and WHEREAS, based upon the authority granted to it pursuant to Article VII, Section 3, subdivision Q, the Commission is to advise and recommend to the Parties as to all requested rate: or charge changes; obtain from the cable communications franchisees and from any other course, such information relating to rates, costs and service levels as any Party is entitled to obtain; and conduct hearings as the Commission deems appropriate; NOW,; THEREFORE, BE IT RESOLVED, at a meeting of the Commission,.. that the Commission does hereby .make the following: I. FINDINGS AND CONCLUSIONS 1. The Parties have received a request-for a rate adjustment: as set forth with supporting documentation and justification in a document entitled Minnesota Cablesystems-Southwest Rate Adjustment Proposal (hereinafter "Proposal") dated June 24, 1983. 2. Th a Commission Attorney met on Friday, July 29, 1983, with the Parties' attorneys to discuss the process for reviewing -1- the-Proposal- and preparing, if nedessary, a franchise ordinance amendment. 3. In a memorandum to the Commission's Operating Committee and Commission dated August 4, 1983, the Commission Attorney recommended a process for the Commission to follow in preparing a recommendation on the Proposal. The process was approved by the. Operating Committee and recommended to the Commission. 4. The Commission at a regular meeting on Wednesday, August 17, 1983, reviewed. the. proposed process and received an explana- tion of the process from the Commission Attorney, 5. The Commission received a memorandum from its Attorney dated August 17, 1983, regarding the issue of whether Minnesota . has completed construction of the Initial Service Area. The Attorney cited Article:VI, Section 4C(2) of the ordinance which states that a rate change may not be approved until two years after commencement of construction or upon completion of all construction required by Article V, Section 1, whichever is later in the opinion of the City. 6. The Attorney, in the above described memorandum, reported that an area exists on Oakdale Avenue in Edina that is not yet completed. The Attorney further reported that Minnesota's response to this area of non-compliance is that a private easement is necessary to serve that area and that dif- ficulties have arisen regarding those negotiations. 7. On August 17, 1983, at 7:00 p.m. the Commission held a public hearing, after publishing notice and by further providing -2- notice over the cable system channels as provided for in the franchises, at the City of Edina regarding the Proposal. 8. Prior to starting the hearing the Commission Chairman asked the Commission Attorney to review for the public in attendance the hearing process. This was done. Also, the Commission Attorney asked the Attorney for the company to stipu- late on the record to the following: A. The company accepts- the-process; B. The company waives the two week time period within which a City, pursuant to the franchise Section 4 Subdivision D(4)(d), is required to schedule a public hearing on the request; C. The company agrees- to be bound by the record and proceedings before the Commission. Mr. Popham, Attorney for the company, agreed to this stipules- . tion, and added only that his company would provide informal pre- sentations at the hearings before each city. 9. The Commission received oral testimony from Gary Mizga, Executive Vice President and Regional Manager for Minnesota. Mr. Mizga introduced the following Exhibits: ' A. Schedule of Delivery of Rate Adjustment. Document to Southwest Officials (attached hereto as Minnesota Exhibit 1); and B. Cablesystems-Southwest's response to the SWSCC's chart entitled "Areas of Non-Compliance with Ordinance and Offering" (attached hereto as Minnesota Exhibit 2); and -3- C. Minnesota Cablesystems-Southwest's Rate Adjustment Proposal of June 24, 1983; with. errata letter dated July 18, 1983 (attached hereto as Minnesota Exhibit 3). 10. According to Minnesota Cablesystems-Southwest. (hereinafter "Minnesota") the proposed adjustment is necessary because of unexpected cost increases including:high interest rates, costs associated with the build for-the additional miles of plant to accomodate new subdivisions which were built up be- tween the writing of the proposal and actual build, as well as mileage not included in the original estimates, doubling of con- verter costs, and .lower than expected revenue because of market penetration difficulties associated with gaining access to multi- unit buildings and the general economic climate. • 11. According. to Minnesota, at current subscriber rate levels, losses will reach $9 Million by the. end of 1985. For the fiscal period just ended; almost $500,000 was lost from opera- tions. An extra $4 Million of equity has been. injected in order to relieve-the pressures of higher plant, equipment and interest costs. 12. The proposed rate adjustment, according to the proposal, would provide the following financial benefits: A. 1984 losses would decline by almost $260,000; B. 1983 losses would follow suit by $530,000; and C. An economic foundation would be provided allowing the company to raise additional financing. -4- 13. Mr. Mizga testified that Minnesota was aware of problems with a private easement on Oakdale Avenue in Edina, that Minnesota has been in continuous contact with residents in that area. .and that certain developments in St. Louis Park would now make it possible to service the Oakdale Avenue area without securing the private easement. 14. The Commission Attorney and the Commission itself were pro-. vided an opportunity to question Mr. Mizga. 15. Mr. Ralph Campbell III, Franchise. Administrator (hereinafter "Administrator"), presented- oral testimony regarding his reports to the Commission. The following Exhibits were introduced. by Mr. Campbells A. Rate Increase Ordinance Criteria. Report (attached . hereto as Commission .Exhibit 1); B. Financial Analysis Rate Increase. Proposal (attached hereto as Commission Exhibit 2); C. Cooper Associate, Inc. Technical Evaluation dated June 8, 1983, (attached hereto as Commission Exhibit 3). 16. The Administrator addressed the proposed:. rate adjustment_ in light of its fairness to residents and subscribers and the extent 'to which Minnesota has provided service to Schools, Hospitals,.. Libraries, Publicly Owned or Leased Buildings and similar institutions within the Cities. 17. With respect to the issue of fairness. to residents and. subscribers, the Administrator concludes Minnesota has been fair. -5- Complaints have been relatively few compared to the high number • of residents and subscribers. The Administrator's report also illustrated additional steps being taken by .Minnesota; to deal more effeetieely and fairly with subscribers. 18. With respect to the issue of service to public buildings and similar institutions, the Administrator reports. that Minnesota stands in ,substantial compliance with this criterion. 19. The Administrator's_report also. documented the quality of service offered by Minnesota and the extent to which Minnesota has adhered to the terms of the Franchise. The Administrator's report was supplemented by a performance evaluation prepared by Cooper and Associates... The areas. of non-compliance: were accom- panied by a response from Minnesota. 20. Minnesota, the Commission Attorney and the Commission:. "" itself were provided an opportunity to question Mr. Campbell. 21. The Commission retained the consulting firm of the Cable Television Information Center (hereinafter "CTIC") to prepare a financial analysis of the proposal. CTIC submitted its analysis, entitled ANALYSIS OF THE PENDING RATE INCREASE PROPOSAL OF MINNESOTP, CABLESYSTEMS-SOUTHWEST (hereinafter "Analysis"), dated August 9, 1983.. 2.2. The Commission also received oral testimony from Deborah Love-Heilig of CTIC regarding the Financial Analysis prepared by CTIC.. Introduced as an Exhibit at this; time was the Analysis OF THE PENDING RATE INCREASE PROPOSAL OF MINNESOTA CABLESYSTEMS-SOUTHWEST (attached hereto as Commission Exhibit 4). -6- 23. The Analysis casts showed cumulati 1985 a total. of $2.7.6 forecast. for the same 24. These higher attributed to: illustrates-that original company fore- ve capital expenditure at the end of fiscal Million will be invested. The original period was $20.1 Million. costs, according to the Analysis, can be A. More plant miles than were originally forecasted; B. Higher per mile construction costs; C. High converter costs;. and D. Design.. changes. According. to the Analysis, Minnesota has provided ample sup- port for the concept that the added cost was necessary and bene- ficial to the system and its subscribers. • 25. CTIC states that Minnesota's original proposal assumed 690 miles of plant of which 624 miles would be aerial plant and~66 miles would be underground construction. Minnesota reports that by the end of fiscal 1983, Minnesota will have constructed 595 miles of aerial plant and 150 miles of underground plant for a total of 745 miles. To date, the"average per mile cost of new .plant construction for Minnesota has been close to $17,830, close to 39 percent higher. 26. CTIC also states that in its original proposal, Minnesota had planned to use Scientific Atlanta Descrambler-Converters with an estimated cost of $70 per unit. Because the Scientific Atlanta .Converter was not available at the time of construction, -7- Minnesota decided to use the Zenith Z-TAC addressable converter which costs approximately $150 per unit. According to CTIC, the Z-TAC allows for many operator benefits in terms of their security and reducing signal theft but has meant an additional $3.1 Million in capital spending. 27. CTIC reports further that the decision to use Z-TAC convey- . ters also required upgrading of headend equipment. Additional. higher headend cost can be attributed to the. addition of one earth station above the original. plan of two earth stations. This provides for a greater diversity of satellite signals. 28. CTIC reports that the system offers. profitability at this time only to the limited partners who can fully benefit from- the tax savings of the losses and investment tax credits. The ;~ proposed rate increase, according to CTIC, will not immediately have any effect on system profitability. According to the Analy- sis, the principal benefit of the rate increase will be to hasten positive cash flow'in order to ensure that debt service or repayment can begin on schedule in 1986. 2:9.. -CTIC concludes that-_ it.--finds. _the:...psoposed rate adjustment is justifiable and merited. 30. Minnesota,. the Commission Attorney and the Commission itself were provided an opportunity to question Ms. Love-Heilig. The Commission asked Deborah Love-Heilig to review each of the standards for reviewing a rate change request in the franchisee ordinance. Ms. Love-Heilig then reviewed each of those standards. 31. An opportunity was provided for members of the public to comment on the proposed rate adjustment. No public comments were .received. 32. Based on the foregoing, it is the Commission's finding that the proposed rate adjustment is justifiable and merited; that the standards for reviewing-a proposed rate change have been considered and properly addressed; that the failure of Minnesota to wire certain areas of Oakdale Avenue in Edina are being ade- quately and timely resolved; and the members of the public have been afforded reasonable notice and an opportunity to be heard on the proposed rate adjustment. II. RECgMMENDATIONS A. The Council should accept this report from the CommssYOn: ,-.. B. The Council should adopt the. ordinance set forth allowing Minnesota to implement its rate adjustment. • -9- ` ORDINANCE NO. AN ORDINANCE OF CITY -0F RICHFIELD AMENDING THE CABLE. COMMUNICATIONS FRANCHISE ORDINANCE NO.1980-33 ", EXHIBIT B, PARAGRAPH I, SUBPARAGRAPHS Al, A3, B, C, D, E AND H1 AND H4 TO CHANGE THE RATES AND CHARGES FOR INSTALLATION, MONTHLY RATES, CONVERTER, RECONNECTION, EXTRA OUTLETS, .COMMERCIAL RATES, FM SERVICES. AND PREMIUM SERVICES AND PROVIDING FOR THE EFFECTIVE TIME OF THIS ORDINANCE. The .City Council. of the City of Richfield ordains: SECTION 1. Ordinance No.1980-33, Exhibit B is amended to read:. Subdivision 1. Paragraph I.A.l. is amended to read: I. SUBSCRIBER NETWORK A. Basic Rates. 1. TIERS Standard 150 Ft. Aerial Seniors & Installation Monthly Homebound First Outlet). TIER.1 Universal Service. $ ~3-,~ Free Free Converter not re- 24.95 quired for this- service. TIER 2 Family Service. Subscriber owns $i~~}S $ 3.9.5 $ 3.36 converter 24.95 Subscriber rents $ 1~5~ Various Various converter from 24.95 Grantee.. TIER-3 Full Service. Subscriber .owns $ ~9~ ~4§ x.-0`6 converter 24.95 6.50 5.52 Subscriber rents converter from $ 3-r3-~ *Various *Various Grantee 24.95 -1- TIER 3 Expanded Service.. (Expanded)(Included converter 'and unit) $ i~•~ $ }9-~ 24.95 13.95 Subdivision 2. Paragraph I.A.3. is amended to read~as $ ~-3-~ 13.25 follows: 3. Subscribers will have the option of renting various types of converters as follows: Grantee Converter Rate Schedule Initial Monthly Description Rate 1 D 1 ....-.L _ _ PYw ...1 .~ $ ~~ 7 Vii. OAK L-35 1.50 Z T~'C: -'~-~~b 1-c - - r 1- - -- 3-a-9~A~ ~.-1 ~2. ZENITH Z-TAC A. Set-top converter 4.00 B. Set-Top Converter with remote control including remote 5.50 volume ._ C: Enhanced Set-Top converter with enhanced remote control in- 6.00 eluding remote volume muting., favorite channel. The rental rate shall be added to the appropriate base rate shown in the table above if the subscriber rents the converter from Grantee. Subscribers may choose to rent or buy converters. from sources other than the Grantee, however, a Grantee converter or descrambler will be necessary for premium services. -2- Subdivision 3. Paragraph I.B. is amended to read as follows: B. Extra Outlets.. * Installation (At time of initial Installation) Monthly TIER 1 Converter not required $3-8:-A$ each Free 15.00 TIER 2 Subscriber owns converter $~8-:98 each $1.95 each 15.00 Subscriber rents COriVt'rter $3-A-.-88 each **Various 15.00 TIER 3 Subscriber owns converter $~A-.~8~ each $3-A-~ each 15.00 4.95 Subscriber rents converter from Grantee $~A~-98~ **Various 15.00 * Each outlet installed after the initial installation. will be $i-4- $ 9.95 each. ** Same Converter rental option as provided for under Section IA of thin Exhibit B. Subdivision 4. Paragraph I.C. is amended to read as follows: C. Reconnection. Charges for reconnection of exi sting installations shall be $~4-9rr $19.95 for each reconnection regardless of the number of outlets. Subdivision 5. Paragraph I.D. is amended to read as follows: D. Commercial Rates For Subscriber Network Services. These rates will be subject to negotiation and will depend on the number of outlets required and the type of services selected. A typical commercial rate for department store requesting 10 outlets on TIER 3 with no converters and no premium pay would be: -3- Installation (at cost on time and material basis) Monthly Rate lst outlet $3~-~ $20.00 2nd outlet $3-9-:~$ 15.00 3rd outlet $ ~5-9~~ 10.00 Additional outlets $ 4-9a 9.00 >Subdivision 6. Paragraph I.E. is amended to read as follows: E. FM Rates. FM service 3~ i~~~rd~-=~~e~-r-a~~-~s~e;~~ ¢s-~= rates shall be $10.00 for installati©n and $2.50 per month. FM service shall be available only on TIER 2 and TIER 3 and not available on TIER 1. Subdivision 7. Paragraph I.H.1. is amended to read as- follows: H. Premium Services. 1. Premium service rates shall be as follows: • MONTHLY Home Box Office ~~8 8.95 CINEMAX ~.-5$ 8.95 The- Movie Channel 8.95 Showtime ~~ 8.95 Premiere ~-.~.~8 8_.95 HTN plus 8.95 Bravo 8.95 The Disney Channel 9.95 Spectrum Sports 9.95 Subdivision 8. Paragraph I.H.4. is amended to read as follows: 4.- Lnstallation for premium services shall be free with the intital installation of TIER 2 or 3 service. Thereafter, any number of .premium services added at the same time shall be added -4- at a maximum cost of $~4-3r 19.95. SECTION 2. Process for Adoption and Acceptance.. Subdivision 1. Adoption by Other Member Cities and Cancellation. That notwithstanding any other provision of this Ordinance, if all of the Cities of Eden Prairie, Edina, Hopkins, Minnetonka and Richfield do not .adopt a similar franchise. Ordinance amendment then those that have may cancel-the Franchise. Ordinance amendment adopted by it.' This right of cancellation must be exercised within thirty (30) day after all Cities have acted on a similar amendment.. Subdivision 2. Time for Adoption and Acceptance. Grantee shall have thirty (30) days from the last date of adoption of a similar franchi a Ordinance amendment by all of the .Cities listed • in Section 9 of this Ordinance, to accept this franchise Ordinance amendment in form and substance acceptable to City. However,- in no event will acceptance occur later than ninety {90) days after the adoption of this franchise Ordinance amendment unless the time for acceptance is extended by City. Such accep- tance by Grantee shall be deemed the grant of this franchise Ordinance amendment for all purposes. Subdivision 3. Requirements with Acceptance. With its acceptance, Grantee also shall deliver to City ~an opinion from its legal counsel, acceptable to City, stating that this. franchise Ordinance amendment has been duly accepted by Grantee, that the said Ordinance, as amended by this Franchise Ordinance • -5_ amendment is enforceable against Grantee, and the corporations • which signed the Agreement of joint and several liability dated Janusry 9, 1981 related to the franchise granted by the said Ordinance,-in accordance with its terms, and which opinion shall otherwise bs in form and substance acceptable to City. Subdivision 4 Effectiveness of Ordinance. That. this " Ordinance shall be in full force and effect upon adoption and publication and acceptance in writing by Grantee. Passed and .adopted this day of 1983. CITY OF RICHFIELD MINNESOTA • By Mayor And Manager • -6- RESOLUTION NO. 8.24.83-1R A RESOLUTION OF THE SOUTHWEST SUBURBAN CABLE COMMISSION ADOPTING FINDINGS AND RECOMMENDING CERTAIN RATE CHANGES BE APPROVED BY-ITS MEMBER CITIES WHEREAS, the Southwest Suburban Cable Commission (SWSCC) is a joint powers entity organized pursuant to a Joint Powers Agreement entered into between the Cities. of Eden Prairie, Edina, Hopkins, Minnetonka and Richfield; and WHEREAS,. the SWSCC has.. undertaken a process of reviewing cer- tain rate changes to the Franchises granted by its Member Cities to Cablesystems Southwest; and WHEREAS, the process of the SWSCC has included a comprehen- sive study of the proposed rate changes, an in-depth hearing and public hearing and deliberation and review of Findings; and WHEREAS,. the SWSCC desires to recommend approval of the requested rate changes and to transmit to its Member Cities for review and approval, its Findings, and a proposed Ordinance, and the recordand. exh ibits of its proceedings. NOW ,;`THEREFORE, at a meeting of the SWSCC on August 24, 1983, on motion by' Redpath and seconded by Cotton ~ the following was resolved: 1. That. the attached Findings and proposed Ordinance were approved. 2. That the Administrator of the SWSCC is hereby directed to transmit to the Administrator of each City, the Findings and proposed Ordinance and a record of the proceedings of the SWSCC. DATED : Z~~7~~~ ~ ! U~~ SOUTHWEST SUBURBAN CABLE COMMISSION C.~rC~ By 1,~. C. W ne Courtney Its:. airman