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HomeMy WebLinkAboutORDINANCE 3767 - ESTABLISH PEG FEES FOR STATE FRANCHISED VID PROOF OF PUBLICATION STATE OF CALIFORNIA) ) ss. COUNTY OF ORANGE } am a Citizen of the United States and a CITY OF HUNTINGTON BEACH LEGAL NOTICE resident of the County aforesaid; I am ORDINANCE NO.jW, over the age of eighteen years, and not a Adopted by the City Council on APRIL 16,2007 party to or interested in the below entitled "CITY OF HUNTINGTON matter. I am a principal clerk Of the BEACH EFEES FOR STATE IRANG HUNTINGTON BEACH INDEPENDENT, SE VII EHISED ROVIDDERS" SYNOPSIS: a newspaper of general circulation, THE PUBLIC; EDUCA- �+ TION"AND GOVERN- printed and published in the City of FEE FEE IS (PEG) SUPPORT REOUIRED TO BE UTILIZED Huntington Beach, County of Orange, I CONSISTENT IWITH FED- ERAL State of California, and that attached LACE EAND T16N� i FUNDING THT IS,CUR- Notice is a true and complete co as RENTLY USED TO'SUP- PORT P copy. as y, PORT HBTV-3,AS WELL was printed and published in the AS GREATLY GOVERNMENT C PRO- GRAMMING � Huntington Beach issue of said ICBLE OT CAVIL SION AUTHORITY j newspaper to wit tyi i e Iv i3Otis1 01. I(PCTA)MEMBER CITIES. ; THE ONE PERCENT I (1%)PEG SUPPORT FEE WIL BE NEW REVENUE !THAT CAN BE USED TO OFFSET EXISTING CITY EXPENDITURES ON APRI L 2 6,•ZOO 7 'GOVERNMENT "R AND/ 'PROGRAMMING AND/ ' OR AUGMENT ADDI TIONAL GOVERNMENT ACCESS PROGRAM- THE FULL TEXT OF THE ,ORDINANCE AS AVAIL- ABLE IN THE CITY ''CLERK'S OFFICE. PASSED AND ADOPTED' ,by the City Council of declare, under penalty of perjury, that Beachiat of eg eet, ingthe foregoing is true and correct. ,by thelfol ow ng April6roll2007 calk vote: AYES: Bohr, Carchio, Coerper, Green, Hansen, Executed on APRI L 2 6, 2 0 0 7 NOES: None ABSENT: Cook : �- at Costa Mesa, California. This ordinance is of fective;30 days after'_ adoption. ' CITY OF' HUNTINGTON BEACH2000 MAIN STREET i HUNTINGTON BEACH, ® CA 92648 - Signature •714-536-5227 ' :7 JOAN L.,FLYNN;' CITY CLERK Published 'Huntington l Beach Independent April 26,2007 044-361 ✓ .� Council/Agency Meeting Held: _ Deferred/Continued toAm� fit Appr ved Co ditio a 1 Arprov_ d ❑ Denied Ci erk's ignatu Council Meeting Date: 4/2/2007 Department Number: AD 07-10 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND ClTy,CQUNCIL MEMBERS SUBMITTED BY: PENE�OPE CU BRETH-GRA , D A, City Administrator PREPARED BY: PAUL EMERY, Deputy City Administrator SUBJECT: Ordinance Establishing PEG Fees for State Franchised Video Providers Statement of Issue,Funding Source,Recommended Action,Alterative Ac tion(s),Analysis,Environmental Status,Attachment{s) Statement of Issue: The attached Ordinance is proposed for adoption. Funding Source: None required Recommended Action: Motion to: �i2DlNAr��/va. 3-76 7- Approve the attached Ordinance regarding fees paid by state franchised video service providers. Alternative Action(s): Do not approve the attached ordinance, which would mean the City may not be able to collect the State Franchise fees for Public, Education and Government (PEG). REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 4/2/2007 DEPARTMENT ID NUMBER: AD 07-10 Analysis: Local governments have traditionally received compensation for the use of the public right- of-way by cable television companies for the provision of video services in a community. Currently, the City of Huntington Beach receives 5% of the gross revenues from Time Warner Cable through its membership in the Public Cable Television Authority (PCTA), a joint powers authority including the cities of Westminster, Fountain Valley, and Stanton. Franchise fee revenues received by the City of Huntington Beach were approximately $2,282,717.80 for calendar year 2006. Federal and California law prohibits the collection of franchise fees on Internet or telephone services provided by cable television companies. Federal law also allows for local franchise authorities to negotiate additional revenues from cable operators for the support of public, educational, and government (PEG) access channels such as HBTV-3. Typical contemporary franchise agreements establish additional funding for local cable companies to provide capital and operational support for PEG access through production studios, video equipment, and production operational support. The existing franchise agreement with Time Warner Cable does not currently require PEG access channel support with the exception of public access channel management. However, seeking such support has been the policy of PCTA member cities for any future negotiations with video service providers. In September 2006, the Governor signed AB 2987, the Digital Infrastructure and Video Competition Act of 2006, establishing state franchising of wireline video service providers. This law allows competitive video service providers, including local telephone companies, seeking to provide service to obtain a franchise directly through the state starting April 2007. This law also contains provisions for the conversion of incumbent cable television service providers to statewide franchises. Provisions of AB 2987 provide for the continued receipt of franchise fees (called state franchise fees under the Act) by local governments from state franchised video service providers. Franchise fees paid by state franchised video service providers are to be paid quarterly and based on 5% of gross revenues as defined under the Act. Payments are to be accompanied by a statement explaining the basis of calculating the franchise fee within each jurisdiction and are subject to auditing and late payment charges by local entities. In addition to the payment of franchise fees by state franchised video service providers, the new law allows for local entities to maintain, or initiate, monetary support for public, educational, and government access (PEG) channels through the adoption of an ordinance establishing such support. For entities that currently do not have monetary payment obligations for PEG support, the Act establishes a cap of 1% of gross revenues for such support. The receipt of the 5%franchise fee from state franchised video service providers is mandated under state law with no additional action necessary by local entities. In order to initiate the additional 1% in PEG support fees, local entities are required to enact an -2- 3/19/2007 2:11 PM REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 4/2/2007 DEPARTMENT ID NUMBER: AD 07-10 ordinance establishing this fee. The PCTA is currently passing its own ordinance mandating the PEG access support fee for all PCTA member cities from state franchised video service providers. Due to potential vagueness in the nature of the text of the new state law, it is being recommended that each PCTA member city adopt a similar ordinance codifying this fee. Submitted for Council action is an ordinance for establishing the 1% PEG support fee, as well as confirming the city's ability to receive the 5%franchise fee and authority to audit fees received from state franchised video service providers. Although prompted under the new state law, the establishment of the 1% PEG fee is consistent with the policy of the PCTA to provide for funding of PEG access activities. It is also consistent with a number of the local franchising authorities throughout the region who have negotiated additional PEG support under their cable television franchise renewals. Similar support would typically be sought if the PCTA were negotiating a local franchise with a cable television service provider. The PEG support fee is required to be utilized in ways consistent with federal law and may replace existing funding that is currently used to support HBTV-3, as well as greatly increase government programming for all PCTA member cities. The 1% PEG support fee will be new revenue that can be used to offset existing city expenditures on government access programming and/or augment additional government access programming. Because Time Warner will not fall under the state franchise until 2008 and because we do not know what Verizon's fees for video service will be—we can not estimate the revenue that the city will gain. Environmental Status: None Attachmeq sl: City Clerk's Page Number No. Description 1. Ordinance establishing PEG fees for State Franchised Video Providers -3- 3/19/2007 2:11 PM ATTACHMENT # 1 ' ORDINANCE NO. 3767 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH ESTABLISHING FEES FOR STATE FRANCHISED VIDEO SERVICE PROVIDERS WHEREAS, pursuant to the 2004 Restated and Amended Joint Powers Agreement, the City of Huntington Beach ("City") is a member of the Public Cable Television Authority ("PCTA") for the purposes of exercising the common powers of its member cities relating to cable television; video service providers, and open video systems, and Effective January 1, 2007, the State of California("State")has the authority to grant state franchises for the provision of video service including cable television, video service providers, and open video systems, and Pursuant to the Digital Infrastructure and Video Competition Act of 2006 ("Act"), the City and PCTA acquire certain rights and responsibilities with respect to state video franchise holders, and Included in such rights is the requirement that the City, through the PCTA,receive a state franchise fee as compensation for the use of the public rights-of-way for the provision of video services, and All current cable television franchisees pay a franchise fee equal to five percent (5%) of Gross Revenues, and Pursuant to the Act, local entities may, by ordinance, establish a fee for the support of public, educational, and government access ("PEG") channel facilities, and The City of Huntington Beach and the PCTA have been authorized to examine the business records of a State Franchisee to the extent reasonably necessary to ensure compensation is in accordance with state law, and The PCTA will retain authority, without change, over all PCTA cable franchises until such time as the parties thereto no longer hold a PCTA franchise, or are no longer operating under a current or expired franchise, NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby, ORDAIN AS FOLLOWS: Section 1: That State Franchisee(s) holders that offer video service within the jurisdictional boundary of the City of Huntington Beach will calculate and remit, a state franchise fee equal to five percent (5%) of gross revenues as provided in Sections 5860 and 5840(q)(1) of the Act. Section 2: That State Franchisee(s) holders that offer service within the jurisdictional boundaries of the City of Huntington Beach will calculate and remit, an additional PEG facilities 07-913/8702 1 Ordinance No. 3767 Support Fee equal to one percent (1%) of gross revenues to be used in a manner consistent with law as provided in Section 5800(n)of the Act. Section 3: The Franchise Fee and PEG Support Fee shall be remitted to the PCTA on a quarterly basis within 45 days after the end of each quarter for that calendar year. Each payment shall be accompanied by a detailed summary explaining the basis for the calculation of the Franchise Fee and PEG Support Fee. Section 4: Gross Revenues under Sections 1 and 2 above, shall be defined as is consistent with Section 5860 of the Act. Section 5: A late payment charge equal to the highest prime lending rate during the period of delinquency plus one percent (1%) will be applied to any payment made by a state video franchise holder for Franchise Fees and PEG Support Fees not received when due under Section 3 above. Section 6: Not more than once annually, the City of Huntington Beach and/or the PCTA may examine the business records of a State Franchisee(s) to the extent reasonably necessary to ensure compliance with the Act and this Ordinance. Section 7: Any Franchise Fee and PEG Support Fee levied and collected by the PCTA pursuant to this Act shall constitute a credit against any Franchise Fee or PEG Support Fee imposed herein. Section 8: This ordinance shall become effective 30 days after its adoption. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 16th day of April , 2007. ATTEST: a or n. li' A City qfjVrk INITIAT D PROVED: REVIEWED AND APPROVED: Deputy City Ad istrator-City Services ity Administrator APPROVED AS TO FORM: JCitAttorne 07-913/8702 2 Ord. No. 3767 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, JOAN L. FLYNN, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing ordinance was read to said City Council at a regular meeting thereof held on the 2nd day of April,2007,and was again read to said City Council at a regular meeting thereof held on the 16th day of April,2007,and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council. AYES: Bohr, Carchio, Coerper, Green, Hansen, Hardy NOES: None ABSENT: Cook ABSTAIN: None I,Joan L.Flynn,CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council,do hereby certify that a synopsis of this ordinance has been published in the Huntington Beach Fountain Valley Independent on April 26,2007. In accordance with the City Charter of said City Joan L. Flynn,City Clerk CilUClerk and ex-officio erk Deputy City Clerk of the City Council of the City of Huntington Beach, California RCA ROUTING SHEET INITIATING DEPARTMENT: Administration SUBJECT: Ordinance establishing PEG Fees for State Franchised Video Providers COUNCIL MEETING DATE: April 2, 2007 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached Not Applicable ❑ Resolution (w/exhibits & legislative draft if applicable) Attached Not Applicable Tract Map, Location Map and/or other Exhibits Attached Not Applicable Contract/Agreement (w/exhibits if applicable) Attached Si ned in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. Attached Approved as to form by City Attorney) Not Applicable ❑ Certificates of Insurance (Approved by the City Attorney) Attached Not Applicable Fiscal Impact Statement (Unbudgeted, over$5,000) Attached Not Applicable Bonds (If applicable) Attached Not Applicable Staff Report (If applicable) Attached Not Applicable Commission, Board or Committee Report (if applicable) Attached Not Applicable Findings/Conditions for Approval and/or Denial Attached Li Not Applicable ENpLANATO0N FOR NWOMG A7TACHNENTS REVIEWED RETURNED FORWARDED Administrative Staff Deputy City Administrator(Initial) ( ) �F City Administrator (Initial) ( ) City Clerk EXPLANATION FOR RETURN OF ITEM: (Below •. For Only) RCA Author: Payne