HomeMy WebLinkAboutApprove for introduction Ordinance No. 4130 re-establishing Dept. ID AD-17-008 Page 1 of 2
Meeting Date:3/6/2017 —y
3/24/2-0I 7 - �/o7ZF.
_ CITY OF HUNTINGTON BEACH
REQUEST FOR. CITY COUNCIL ACTION
r
MEETING DATE: 3/6/2017
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Antonia Graham, Assistant to the City Manager
SUBJECT: Approve for introduction Ordinance No. 4130 re-establishing Fees for State
Franchised Video Service Providers as part of the City's membership on the joint
powers authority of the Public Cable Television Authority (PCTA)
Statement of Issue:
As part of our membership on the joint powers authority of the Public Cable Television Authority
(PCTA), every ten (10) years the City must approve an Ordinance that reauthorizes local
governments to establish and collect Public, Educational, and Government Access (PEG) fees from
a cities' cable and video TV operators. The City Council previously adopted Ordinance No. 3767
on April 16, 2007.
Financial Impact:
If the City does not re-establish the collection of PEG fees from our cable providers, the City could
lose the PEG fees that are remitted to PCTA quarterly and are used to enhance access for our
residents to government and educational programming and access to City Council meetings and
other government services.
Recommended Action:
Approve for introduction Ordinance No. 4130, "An Ordinance of the City of Huntington Beach Re-
Establishing Fees for 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 Access (PEG) and direct staff
accordingly.
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 Frontier Communications
(formerly Verizon) and Spectrum/Charter (formerly Time Warner Cable) through its membership in
the Public Cable Television Authority (PCTA). PCTA is a joint powers authority that includes the
cities of Fountain Valley, Stanton, and Westminster. Franchise free revenues received by the City
of Huntington Beach totaled $3,037,641.29 in calendar year 2016; these funds are deposited
quarterly into the General Fund. Federal and California law prohibits the collection of franchise fees
on Internet or telephone services provided by cable television companies.
HB -169- Item 13. - 1
Dept. ID AD-17-008 Page 2 of 2
Meeting Date:3/6/2017
Federal law also allows for local franchise authorities to negotiate additional revenues from cable
operators for the support of 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 agreements with Frontier Communications and
Spectrum/Charter do not currently require PEG access channel support with the exception of public
access channel management. In 2016, PCTA received approximately$617,000 in PEG fees.
In September 2006, then Governor Schwarzenegger signed AB 2987, Digital Infrastructure and
Video Competition Act of 2006 (DIVCA), 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 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.
DIVCA Section 5870 states that the fee to support PEG channel facilities "may be reauthorized
upon the expiration of the state franchise," but does not explicitly require local agencies to
reauthorize these fees via ordinance. Because Section 5870 refers to an ordinance elsewhere —
and because substantial funding could be lost unless the 1% fee is reauthorized - Rutan & Tucker
(the firm that represents PCTA) has advised PCTA to proceed with the reauthorization via an
ordinance, and also encourages each PCTA member city to establish a similar ordinance. The
ordinance will become effective 30 days following adoption. Failure to take such action may result
in the loss of PEG revenue.
The 1% PEG support fee will continue be used to offset PCTA expenditures on government access
programming and/or augment additional government access programming. At any given time, the
PCTA Board could vote on directing the PEG funds directly to each member city as opposed to the
current practice.
Environmental Status:
Not applicable.
Strategic Plan Goal:
Improve quality of life
Attachment(s):
1. Ordinance No. 4130, "An Ordinance of the City of Huntington Beach Re-Establishing Fees
for State Franchised Video Service Providers"
Item 13. - 2 HB -1 70-
ORDINANCE NO. 4130
AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH
RE-ESTABLISHING FEES FOR STATE FRANCHISED
VIDEO SERVICE PROVIDERS
WHEREAS, the Legislature of the State of California has enacted the Digital
Infrastructure and Video Competition Act of 2006 set forth in Public Utilities Code section 5800
et seq., which authorizes State Franchises; 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 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
Pursuant to the Digital Infrastructure and Video Competition Act of 2006 ("Act"), the
City of Huntington Beach and the Public Cable Television Authority ("PCTA") acquire certain
rights and responsibilities with respect to state video franchise holders ("State Franchisees"); and
The PCTA adopted an ordinance on March 14, 2007, wherein the PCTA agreed to
impose certain fees on cable providers within the PCTA's jurisdiction; and
Included in such rights is the requirement that the City of Huntington Beach, 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
On April 16, 2007, City adopted an ordinance establishing fees for State Franchised
video service providers; 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
17-5650/153050/RLS 2/16/17/DO 1
ORDINANCE NO. 4130
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;
Some State Franchises within the PCTA's jurisdiction will expire and are expected to be
renewed in 2017; and
Public Utilities Code section 5870(n) provides that the PEG fees must be reauthorized
upon the expiration of an applicable State 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
5 840(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
Support Fee equal to one percent (1%) of gross revenues to be used in a manner consistent with
law as provided in Section 5870(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.
17-5650/153050/RLS 2/16/17/DO 2
Ord. No. 4130
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, 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 March 6, 2017, and was again read to said City
Council at a Regular meeting thereof held on March 20, 2017, and was passed and
adopted by the affirmative vote of at least a majority of all the members of said City
Council.
AYES: O'Connell, Semeta, Delgleize, Hardy, Brenden, Peterson
NOES: None
ABSENT: Posey
ABSTAIN: None
I,Robin Estanislau,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 Wave on March 30,2017.
In accordance with the City Charter of said City.
Robin Estanislau, City Clerk City Clerk and ex-officio Clerk
Senior Deputy ity Clerk of the City Council of the City
of Huntington Beach, California
ORDINANCE NO. 4130
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 20th day of March , 20 17
LA &�I AiA
Mayor
ATTEST: APPROVED A ORM:
"z &
City Clerk City Attorney uvcp 31 ti I I ?
REVIEW N APPROVED: INITIATED AND APPROVED:
C' n ger aAssist t City Manager
17-5650/153050/RLS 2/16/17/DO 3
N
L
v o
nA cn
0
m O \ w
p -0
Lu U
O CL Co
to o
4-' �_ — O O
O E � .
� 1p
O 4O � �} O
qA 4A
0- c N O a1 r
c6 � . Q
4—J chin +�—, +� U . \ —
� - o
E Co ,^ U E U O. •cn
4-J . . /r }
a--+ C6 bn
> U
bn
O
v O O O
0 0 U.
U N on
=3:
O -'
ro
O N '
is �
0 . O c Q t N ca
L > c 0", x -0