1985-13BILL PLO. 1985-13
TRAPJSITORY ORDINANCE: NO _. ,-17.20.
AN ORDINANCE RELATING TO CABLE
TELEVISION SERVICE, PROVIDING FOR
MODIFICATION OF THE REQUIREMENTS
OF THE CITY'S CABLE COMMUNICATIONS
ORDINANCE
THE CITY OF RICHFIELD DOES ORDAIN :
SECTION 1. SHORT TITLE.
This ordinance shall be known as the "CATV Relief Ordinance."
SECTION 2. BACKGROUND AND PURPOSE.
The City.-has granted a cable television franchise through
the adoption of city ordinance code sections 3.33 ,
the Cable Communications Ordinance (hereinafter called the
"Franchise") . The cities of Edina Hopkins ,
Eden Prairie and Minnetonka (the "Other Cities") have
adopted similar ordinances, all with the same franchise Grantee.
Through the Southwest Suburban. Cable Commission ("SWSCC"), a
joint powers organization, the City and the Other Cities have
undertaken to supervise Grantee's compliance with these ordinances.
Since the adoption of the Franchise Grantee has constructed and
is operating a cable communications system in City and the Other
Cities. Grantee has approached the City indicating that it is
experiencing serious financial difficulties and would be unable
to pay the franchise °fee due and payable on Nove_*nber 1, 1984.
Grantee requested a temporary reduction of its Franchise
obligations to allow for its financial recovery.
City authorized the SWSCC to review Grantee's request and make
recommendations for an appropriate response. SWSCC retained
a financial consultant to assist in analyzing Grantee's financial
condition, held several public meetings, and conducted a thorough
review of Grantee's request. SWSCC determined that Grantee is
experiencing serious financial difficulties caused by such
adverse factors as higher than anticipated construction and
operating costs, lower than projected market penetration, in-
ability to obtain long-term financing at projected rates and
other industry, economic and technological changes. SWSCC also
concluded that Grantee cannot secure needed refinancing of its
long-term debt, cannot continue to provide the present level
of service and cannot become an economically viable enterprise
unless the City grants a period of relief from some of the
requirements of the Franchise.
SWSCC recommends that the City grant temporary amendments
to the Franchise, reducing the franchise fee payable now
and in the future, eliminating the required performance bond,
and modifying the provisions for local programming. In
return, Grantee would execute a Performance Agreement pro-
viding a means for monitoring Grantee's financial condition,
assuring an adequate level of local programming, and providing
for certain other matters related to Grantee°s requested
relief.
The City has reviewed SWSCC's recommendations and has considered
the option of requiring full payment of the past due franchise
fee through use of Grantee's letter of credit, performance bond,
and parent company performance guarantees. Grantee represents,
however, that if the City and the Other Cities seek payment of
past due franchise fees through resort to such securities, this
would only make it more difficult for Grantee to solve its '
financial problems and would be counterproductive to any effort
to provide relief to Grantee:
In adopting this ordinance the City relies upon the represen-
tations of Grantee and seeks to provide a means by which the
public can continue to receive approximately the same level
of service while affording Grantee a reasonable opportunity for
financial recovery. The ultimate purpose of this ordinance is
to secure, at a later time during the r^ranchise term, the full
public benefits provided for in the Franchise.
SECTION 3. RELATIONSHIP TO CABLE COMP~iLNICATIONS ORDINA,'~1CE.
This ordinance does not permanently-amend any provision of the
Cab 1e Communications Ordinance {the "Franchise") but provides
that certain provisions of that ordinance are modified for a
period of time ,as provided in this Relief Ordinance. Except
as expressly modified in this ordinance, the provisions of the
Franchise remain in full force and effect.
SECTION 4. DEFINITIONS.
Subdivision 1. The definitions J.n the Franchise also apply
to this ordinance.
S.ubd. 2. In addition, the following words and phrases shall
have the meanings given them:
(1) `°Existing Indebtedness" means an $18,000,000 loan :::ade
to Grantee by Toronto Dominion Bank of Toronto, Canada .under
loan documents dated April 1, 1982.
-2-
(2) "Franchise" means the Cable Communications Ordinance
as now or hereafter amended.
(3) "Local Programming Obligations" means, for the purpose
of this ordinance, Grantee's obligations under the Franchise
and the Offering as defined in the Franchise for cablecast access,
community access and local origination programming.
(4) "Performance Agreement" means the contractual agreement
to be entered into by Grantee, City and SWSCC providing a means for
monitoring Grantee's financial condition, assuring an adequate
level of local programming, and providing for certain other
matters related to Grantee's requested relief.
SECTION 5. RELIEF GRANTED.
While this ordinance is in effect the obligations of Grantee
are modified to the extent provided in this section..
Subdivision 1. Franchise Fees - Percentage.
Commencing with Grantee's fiscal year 1985 the annual franchise
fee is reduced from 5% to 3% of Gross Revenues. Such annual
fees shall be paid to the City in equal quarterly payments on or
before the .first day of each of the months of November, February,
May and August next following the end of Grantee's fiscal year.
If this ordinance terminates during any of Grantee's fiscal years,
the franchise fee shall be restored to the rate of 5% of Gross
Revenues at the end of the calendar month in which termination
occurs. The restored rate of 5% and the reduced rate of 3% shall
be applied respectively to the Gross Revenues collected only in
the months during which each rate was in effect. The fees
accruing at the restored rate shall be paid in accordance with
the terms'of the Franchise. The fees accruing at the reduced
rate shall be paid iri equal quarterly installments. in accordance
with the terms of this ordinance.
Subd. 2 Past
fee in the amount of
1984 shall be deemed
if, Grantee pays the
equal payments on or
October 15, 1985.
Due Franchise Fees. The 1984 franchise
$ 85,561 payable on or before November 1,
fully discharged and paid if, but only
sum of $51.336 to the City, in four
before June 1, June 15, August 15 and
~Subd. 3. Letters of Credit. The City Council may by
resolution reduce the required amount of the Letter of Credit
below $50,000 if in its sole discretion it determines that a
lesser amount is reasonable and adequate to protect the public
interest. It may thereafter, by resolution, require the amount
of the Letter of Credit to be increased or fully restored to the
amount of $50,000. Grantee shall comply with this requirement
-3-
within sixty days after written notice has been given by the "
City.
Subd. 4. Performance Bond. The Grantee may dispense
with the $300,000 performance bond required by the Franchise.
The City Council may thereafter by resolution require that
such bond, or a similar bond in a lesser amount, be provided
by Grantee. Grantee shall comply with this requirement
within sixty days after written notice has been given by the
City.
Subd. 5. Local Programming Obligations. Grantee shall
expend at least to of its annual Gross Revenues each fiscal
year in fulfilling its Local Programming Obligations under
the Franchise for public, governmental, and educational access,
but it shall not be obligated to expend more than that amount
for such access. That amount shall not include any costs of
operation or administration not directly related to the pro-
vision of such access. This expenditure shall be in complete
satisfaction of Grantee's total Local Programming Obligations
during the period of this ordinance.
SECTION 6. AUTOMATIC TERMINATION OF RELIEF ORDINANCE
PROVISIONS.
The provisions of this ordinance, and the relief herein granted,
shall cease to be effective, automatically, upon the occurrence
of the earliest of any of the following events:
Subdivision 1. Failure of Grantee to complete refinancing
its Existing Indebtedness by December 31, 1987 in accordance
with Article II, Section 4 of the Franchise.
Subd. 2. The end of the next month after Grantee has
collected cumulative Gross Revenues in the amount of one
hundred million dollars as measured from September 1, 1984.
The determination of cumulative Grass Revenues shall be based
upon audited financial statements for periods for which they
are available and upon Grantee's operating reports for periods
for which audited statements are not then available. Grantee
shall provide the City with its financial statements and finan-
cial operating reports promptly after they are prepared.
Subd. 3. March 1, 1992.
Subd. 4. Payment, discharge, or satisfaotion of the
Existing Indebtedness, except through refinancing as provided
in Article II, Section 4 of the Franchise.
Subd. 5. Payment, discharge, or satisfaction of the
indebtedness arising from the refinancing provided in Article
II, Section 4 of the Franchise.
-a-
Subd. 6. Failure of the Grantee to restore or replace
the full required amount of the Letter of Credit as provided
in Article VIII, Section 4, paragraph H of the Franchise.
Subd. 7. Failure of the Grantee to pay the fees as
required in Section 5, Subd, 2 of this ordinance.
Subd. 8. Failure of the Grantee to restore, replace or
increase either a Letter of Credit or bond within sixty days
of written notice by the City, as provided in Section 5,
. Subdivisions 3 and 4 of this ordinance. -
Subd. 9. A holding or determination by any court or
agency that any term, condition or provision of this Relief
Ordinance is°invalid or unenforceable, as a result of any action
taken by Grantee or anyone acting- on Grantee's behalf seeking
such determination.
Subd. 10. Sale or transfer of all or substantially all '
of the System to a person or entity other than a parent,
subsidiary, related corporation, affiliated corporation, partner
or joint venturer of Grantee or any parent of Grantee.
Subd. 11.
SECTION 7.
This ordinance
same procedure
Franchise, for
Termination of the Franchise.
OTHER TERMINATIONS.
may also be terminated for cause, under the
s for termination as are contained in the
the following reasons:
Subdivision 1. All grounds for termination provided in
the Franchise, except to the extent that Grantee's performance
obligations are modified in this ordinance.
Subd. 2. The purchase by Grantee, its general partner,
or any parent, subsidiary, affiliate or other related
corporation of Grantee or its general partner, of a cable
communications system or any part thereof or interest therein,
located within the seven-county metropolitan area as defined
in Minnesota Statutes, Section 473.121, Subd. 2. For this
purpose the definition of a cable communications system shall
be as-that term is currently defined by the Board.
Such a purchase shall not be grounds for termination of this
ordinance, however, if Grantee demonstrates to the reason-
able satisfaction of the City that the purchase (1) will
not impair the operating cash flow or financial position
of Grantee and (2) will involve independent financing of the
purchase without resort to the assets of the System.
-5-
Subd. 3. Failure of-the Grantee to comply with any
of the provisions of the Performance Agreement.
SECTION 8. REQUESTS FOR FURTHER RELIEF.
No request by the Grantee for any further relief from the
requirements of the Franchise, including a request for an
extension of the term of this ordinance, shall be considered
by the City unless that request is made in writing prior to
September 1, 1990. The City shall have no obligation what-
soever to consider or grant any such request, and any response
to such request shall be at the sole discretion of the City.
SECTION 9..- ACCEPTANCE OF THIS RELIEF ORDINANCE; PROVIDING
OF GUARANTEES.
This ordinance shall be effective in accordance with the
provisions of Article XIV of the Franchise including delivery
to the City of the acceptance, opinion~of legal counsel, '
guarantees and other documents as required by said Article
XIV; provided further, however, that it shall become effective
only if all of the Other Cities adopt an ordinance similar to
this ordinance within 90 days after adoption of this ordinance.
Also, this ordinance shall not become effective until Grantee,
City, SWSCC and the Other Cities have executed and delivered
the Performance Agreement and contractual documents attached
thereto as exhibits.
Passed by the City Council of the City of_ RICHFIELD
Minnesota this ]:0th day of June 1985.
ATTEST:
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(A) The newspaper has complied wRh all of the. requirements constituting qualification as e', qualified
newspaper, as provided by Minnesota Statute 331A.02, 331A.07, and other applicable laws, as amended.
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My commission expires July 2,198$
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