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08/16/2004 CONF MTG - 4587� � CffY OF FRIDLEY CITY COUNCIL CONFERENCE MEETING August 16, Zoo4 - 6:0o p.m. Fridley Municipal Center Meeting Room � Cable Franchise. 2. Guardian and St. William's Cases. 3. 2:00 a.m. Extended Hours for Beer and Alcohol Sa1es. 4. Admission Fees at Springbrook Nature Center. 5. Additional Levy Authority. 6. Norton Avenue Repaving Petition. 7. School District 14's Request to Modify Fridley's Sign Code. Adj ourn. �.,�� i��;; �' �`:� %��\\ � �� ; ', i� , , ,�E� , ��,► � Fridley Police Department Memorandum To: Bill Burns, City Manager From: Don Abbott Date: August 12, 2004 Re: 2:00 a.m. Extended Hours for Beer and Alcohol Sales This memo will summarize the proposed changes in the Fridley City Code to allow for licensed establishments to apply for Extended Hour permits for beer and alcohol sales. The actual proposed changes to our relevant ordinances are presented in the attachments. These changes were completed at the direction of Council and involved Finance Director Rick Pribyl, City Clerk Deb Skogen, City Attorney Fritz Knaak, and myself. Staff met with several Liquor Licensees at Council's direction to review these changes in the ordinance. In addition, Don Abbott met with the Chaputs at the Main Event to discuss their interest in remaining open past 2:00 a.m. for additional food sales. The proposed ordinance changes are summarized as follows: Establishments currently licensed, or applying for licenses, to sell Beer under Chapter 602, Intoxicating Liquor under Chapter 603, and On-Sale Clubs will all be eligible to apply for a Late Hour license endorsement. This will allow off-sale of non-intoxicating malt liquor (3.2 beer) by grocery and convenience stores. 2. Late hour license endorsements will be available for Sunday sales as well, in effect permitting 2:00 a.m. closing seven nights per week. 3. Establishments holding Intoxicating Liquor licenses under Chapter 603 will be required to meet the 40% food sales on an annual basis and will be required to provide the city with a certified report showing this compliance on a semi-annual basis. 4. The ordinance will "sunset" on April 30, 2006, requiring affirmative action by Council to continue allowing late hour (2:00 a.m.) liquor and beer sales. 5. The time for all patrons to be off the premises of establishments holding Late Hour license endorsements is extended to 2:30 a.m. from the current 1:30 a.m., on the nights they are open until 2:00 a.m. 6. No authorization for additional food sales after the 2:00 a.m. bar closing is recommended at this time. State law requires that liquor licensees must lock up all liquor and beer to remain open to sell food. Such activity would require additional monitoring by police to insure that no alcohol was being consumed with the food during the additional hours. This would also lead to persons driving home at even later hours. This would likely require additional police resources beyond 2:30 a.m. 7. Staff is recommending no City fees at this time. This issue to be reviewed at such time that Council considers the ordinance extending late hour sales beyond April 30, 2006. Ordinance AN ORDINANCE AMENDING THE FRIDLEY MUNICIPAL CODE BY ALLOWING CERTAIN HOLDERS OF LIQUOR LICENSES TO SELL INTOXICATING LIQUOR UNTIL 2:00 A.M. The City Council of the City of Fridley, Minnesota, hereby ORDAINS: That Chapter 602 of the Fridley City Code shall be amended to include the following language: 602.02 LICENSES REQUIRED 6. Late Night License Endorsement An On-Sale license mav be amended to include a Late Ni�ht License Endorsement subject to the terms and conditions im�osed by the City Council within its discretion and otherwise in accordance with the provisions of this Chapter. No person may sell anv beer under an�permit issued pursuant to this chapter after 1:00 a.m. without first obtainin� a Late Ni�ht License endorsement. No Late Ni�ht License Endorsement shall be effective after Apri130, 2006. . 602.05 GRANTING OF LICENSES � 3. Late Night License Endorsement. An On-Sale license may be amended to include a Late Night License Endorsement su�ect to the terms and conditions imposed bv the City Council within its discretion and otherwise in accordance with the provisions of this Chapter. An application for a Late Ni�ht License Endorsement shall be made at the same time as, but separate from, an initial license or license renewal. No Late Night Endorsement granted by the City of Fridley will be effective after Apri130, 2006. 602.09 HOURS 3. Notwithstandin� the foregoing, a sale of beer or 3.2 percent malt liquor mav occur on a licensed premises between the hours of 1:00 AM and 2:00 AM if the licensee has been granted by the City a Late Hour Endorsement for that license. No sale of beer or 3.2 percent intoxicatin�quor for consumption on anv license premises for which a Late Hour Endorsement has been �ranted by the Citv shall occur between 2:00 AM and 8:00 AM on the davs of Mondav throu�h Saturday. It shall be unlawful for any persons or customers, other than the licensees or their employees, to remain on a licensed premises for which a Late Hour Endorsement has been granted by the City nor shall there be any consumption b�y persons, includin� the licensees and their emplovees on such premises, more than one half-hour after closing of operations for that dav and in no event, later than 2:30 AM. That Chapter 603 of the Fridley City Code shall be amended to include the following language: 603.02 LICENSE REQUIRED No person, except wholesalers or manufacturers to the extent authorized under State License, shall directly or indirectly deal in, sell, or keep for sale any intoxicating liquor without first having received a license to do so as provided in this Chapter. No person shall sell any intoxicating liquor on Sundays without obtaining a separate license for Sunday sales, as required by Minnesota State Statutes. No person shall sell any intoxicatin�liquor after 1:00 a.m. without obtainin a special Late Hour License Endorsement for an existing liquor license as provided in this Chapter. No Late Hour License Endorsement ar n�ted pursuant to this Chapter will be effective after Apri130, 2006. 603.06 SUNDAY AND LATE HOUR LIQUOR SALES The annual license fee for "Sunday Liquor Sales" shall be provided in Chapter 11. The annual fee for a license endorsement for Late Hour Liquor sales after 1:00 a.m., but before 2:00 a.m., shall be provided in Chapter 11. These fees are in addition to the fee charged for an "on-Sale" license. All provisions of this Chapter pertaining to the "on- Sale license shall apply to the "Sunday Liquor Sales" license, and the Late Hour Endorsement, insofar as practicable. 603.07 GRANTING OF LICENSES 2. Renewal Licenses B. At the earliest practicable time after application is made for a renewal of an "on-sale" license, and in any event prior to the time the application is approved by the City Council, the applicant shall file semiannuallv with the City Clerk a statement made by a Certified Public Accountant that shows the total gross sales and the total food sales. A foreign corporation shall file a current Certificate Authority. 603.10 CONDITIONS OF LICENSE � 19. At the time of application for renewal of application of an "on-sale" license and any Late Hour Endorsement to that license, the applicant shall submit proof to the City that the minimum percentage provided in Section 603.10.18 of the gross sales, derived from the sale of food and intoxicating liquors of the establishment, for which the "on-sale" license or any Late Hour Endorsement to that license, is to be used, is in the serving of food. "Proof' for purposes of this section, shall consist of not less that a statement of accuracy, attested to by a certified public accountant, accompanying a verifiable, semiannual report of sales receipts based upon acc�table and recognized accounting and bookeepin� standards. Separate statements are required for a license renewal and the renewal of any Late Hour Endorsement to that license. 603.11 HOURS OF OPERATION 2. Notwithstandin� the foregoing, a sale of intoxicating liquor for consumption may occur on a licensed premises between the hours of 1:00 AM and 2:00 AM if the licensee has been granted by the Citv a Late Hour Endorsement for that license. No sale of intoxicating liquor for consumption on any license premises far which a Late Hour Endorsement has been granted bv the City shall occur between 2:00 AM and 8:00 AM on the days of Mondav throu�h Saturdav. It shall be unlawful for an�persons or customers, other than the licensees or their employees, to remain on a licensed premises for which a Late Hour Endorsement has been granted by the City, nor shall there be anv consumption bv any persons, includin�the licensees and their employees on such premises, more than one half-hour after closin� of operations for that dav and, in no event, later than 2:30 AM. That Chapter 606 of the Fridley City Code shall be amended to include the following language: 606.02 LICENSES REQUIRED No person shall sell, deal in or dispose of by gift, sale or otherwise, any liquor without first having obtained a license to do so from the City Council; provided, however, that this section shall not prohibit the given or serving thereof to guests in a private home, shall not prohibit the sale thereof by a manufacturer or distributor to a person holding a license thereunder, and shall in no way effect the operation of the municipal liquor stores. In addition to the foregoing, no person shall sell any intoxicating liquor after 1:00 a.m. without obtainin�special Late Hour License Endorsement for an existing liquor license as provided in this Chapter. No Late Hour License Endorsement rg anted pursuant to this Chapter will be effective after Apri130, 2006. 606.03 SUNDAY LIQUOR AND LATE HOUR SALES No person or organization shall sell any intoxicating liquor on Sundays without obtaining a separate license for said Sunday sales. The annual license fee for "Sunday Liquor Sales" shall be as provided in Chapter 11. The annual fee for a license endorsement for Late Hour Lic�uor Sales after 1:00 a.m., but before 2:00 a.m. shall be provided in Chapter 11. These fees are in addition to the fee charged for an "On-Sale" license. All provisions of the Chapter pertaining to the "On-Sale" license shall apply to the "Sunday Liquor Sales" license, and the Late Hour Liquor Sales endorsement, insofax as practicable. 606.11 HOURS OF OPERATION 3. Notwithstandin� the foregoin�, a sale of intoxicating liquor for consum�tion may occur on a licensed premises between the hours of 1:00 AM and 2:00 AM if the licensee has been ��anted by the City a Late Hour Endorsement for that license. No sale of intoxicatin�liquor for consumption on any license premises for which a Late Hour Endorsement has been granted by the City shall occur between 2:00 AM and 8:00 AM on the davs of Monda t�gh Saturday. It shall be unlawful for an�persons or customers, other than the licensees or their em�loyees, to remain on a licensed �remises for which a Late Hour Endorsement has been granted bv the City, nor shall there be any consumption b�y persons, including the licensees and their employees on such premises, more than one half-hour after closure of operations for that day and, in no event, later than 2:30 AM. Adopted this day of , 2004. Mayor Attest: City Clerk PM KNAAK AND KANTRUD PA FAX N0, 6514909018 FCNAA�� '� hAN'1'I�iJll, P.A. Atrqrncys nt L�tw I�rc�icric 4V, Knstnk�: I l. /1L•m �.,zniru�J•4•�` '"ALcr, /,ir•t��tar�d rn 11'i r�'ntl,sht <� (�nlurririn � a!t'nt�� ll•� O�,al�Jir•,! r1l�l�' Ci��r! N�a1lrc�l �SQU'l�Villaw [.,akc Plv�l., Suitc �SO0 V<<clnuislici��hts, MN 55110 'i'�:Icpl�c,i,�: (GS I) 490•9078 1'acsin�ilr: (651) 49U-15$0 Memorandum Daic: AU�;USt a i, 2004 �� ±� '1'c�: 17r. Willia�i� �3uro�s, City M�uiagGrr,��;�y'C/� ]�rc»�i: I�rucl�ric W. Kn<i1k, l�ridl�;y City Attorncy : I�IL RT?: Czble l�ranchis� C;o�.ineil I)oeument lteview a�ui Slatus P, Ol O/'C'vtu�sc�l n��,a��iw. i:�,i�i��• Josc��h T3. Mu�:Sh:ill K;ill�y Kricicr il�u�l �1��,�,��,,�� M. ��<<�i�.y, r.n. I li�.lvc f�nv�rcled to you by way of cmail attachme»ts 1 number of documcnts far the Couneil to coiisider �nd rovicw al ils t�listist lfi conference session, ln pari�icular, you should havc rcccivcd fi•orn me �t co�nz�t�lcd draft of 1) thc l�oim<<l N4�cis Asscssiiicnt; 2) tlae Request 1br Formal it.encwf�l l'ror�sal fi�r a C1ble rr�ncliise jn tl�c City; 3) a draft of the Fr�nchise Ordinai�ce as t�rc�l�ostd; ��c1cl 4) tl�c CllG13 Needs Ttei�orl. A separatc group of att�icl�menls sliould also }iavo becii sciit ta you thai are thc I:xcc;1G� SPre�dshcet appcndices to the Neecls Re�ort. �Il ol'tl��is is rcqtiircd doc;timent��tion 1'or lhe Formal Rcnewal process. it is im��orttU1t l0 r�i��ulser thlt cl�is proccss was be�;�ui as tlie result of a demand by Time-Warr�cr. Evidcntly, lhir� is now somc b��cktrackinb �a1ng on in r�n effort to make this secm 1s thou�h thc City iniiil�ed this proczss. '1'hc l��nrin,�l R�7��w11 Proccss rcquires the City to determinc wliat its cablo-rclatcd nccds ��rc. t tavin�; cionc tlilt, ll�c C;ity ll�en scilds aut a Itcquest far a pronosal an thc part of thc cnblc C0111J)i111Y tU il(�(�I'�Sti lt1ASC 11CCCIS 15 �)81�t of a renewed cabl� i'raiichisc. Thc City�S SCtl0I1S t0 1I115 lioint wotild bc b;�scci uport a stucly ancl analysis of its cable 1'rai�chisc nccds. '1"hc cloCUmpnts ��rovicJcd t� you would be thc blsis of a C3ly C;ouncil action during its August 23, ?UO•4 mc�[in�, !1l t.hat mcctinb, thc Council, to move thc �,roccss forward, would nced to acccrt the G(�CF3 rcpori and �do�at thc� l�ormal Needa ASSt;ssment, Bascd on tl�at adoption, it eould lhcn ��dcyl�i. lhc; rornl.jl Rcncw�l7'roposal. Ur�d�r sc�lrnt� cover w� have pravidcd a su��;ested schedule for lhc Fom�al Rericvval proccss ovr.r thc nc:xt scv�r�tl monilts. Ir Wt111�C� 1)C Ill}� 1l1lCL1t1011 t0 j)1'Ovl(�1;, with Mr, C;rogan, 2115W�T5 t0 illly c1llGSllOItS 111at 1�1C COl1t1CtI t»ny h�vc, in addition to an o��orlunity to rcvicw the prol�used dac�inrcnts, at th� Aubust 1 G, 20U�4, CUl'I�t".C�l1GC »��etiiz�. �Vc c1n cx��cct (:hat `1'imc W�ri�er will be prcccnt through repres�nlativcs at ihat izzcctii��. FORMAL RENEWAL PROCESS TIMELINE City of Fridley, Minnesota Date Description August 16 and 24, 2004 City Council considers and take action on Formal Needs Assessment Report and Request for Formal Renewal Proposal November 30, 2004 March 30, 2005 TBD TBD TBD Time Warner response due City reviews Time Warner's proposal and either accepts or rejects - Statute provides a four month window for review If rejected Time Warner may request administrative hearing Administrative Hearing Time Warner entitled to judicial review if necessary SUMMARY OF THE CABLE TELEVISION FRANCHISE RENEWAL PROCESS IN THE CITY OF FRIDLEY, MINNESOTA Time Warner, Inc., d/b/a Time Warner Cable ("TWC") sent a letter dated 7une 19, 2000 to the City of Fridley, Minnesota ("City") requesting renewal of its cable television franchise. For nearly two and one-half years the City and TWC engaged in good faith, informal negotiations in hopes at arriving at a new franchise agreement. On November 18, 2003, TWC sent a letter to the City requesting that the parties proceed with the renewal under the "formal" process of the Cable Act. In response to TWC's November 18, 2003 correspondence and in accordance with the Cable Act, the City has prepared a Formal Needs Assessment ("Needs Assessment") which includes reports necessary to discuss and identify the needs and interests of the City and to evaluate the existing cable system operated by TWC. The "formal" renewal process under the Cable Act is a four-stage process. In the first stage, a city must conduct a proceeding to identify future, cable-related needs and interests of the community, and to review the past performance of the cable operators serving the community. Once that proceeding is complete, the city may issue a RFRP. Because each renewal proposal is evaluated on its own merits, this RFRP cannot simply be a competitive bidding document. The Cable Act also states that "A franchising authority may establish and enforce customer service requirements of the cable operator, and construction schedules and other construction- related requirements, including construction-related performance requirements, of the cable operator." 47 U.S.C. § 552. The City believes that this language permits the City to establish these requirements unilaterally in a franchise (or through a regulatory ordinance), along with various other requirements established pursuant to the City's police and other governmental powers. In the next stage of the renewal process, the cable operator must submit a renewal proposal in response to the city's RFRP. "Any such proposal shall contain such material as the franchising authority may require." 47 U.S.C. § 546(b). If an operator submits a timely and proper response, the City has four months to evaluate the proposal, and decide whether to grant renewal based on the proposal or to preliminarily deny renewal, 47 U.S.C. § 546(c). Finally, if franchise renewal is preliminarily denied, and a cable operator desires it, the city must commence an administrative proceeding. The four issues that are considered at that proceeding are whether: a. the cable operator has substantially complied with the material terms of the existing franchise and with applicable law; b. the quality of the cable operator's service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs; c. the cable operator has the financial, legal, and technical ability to provide the services, facilities, and equipment as set forth in the cable operator's proposal; and d. the cable operator's proposal is reasonable to meet the future cable-related community needs and interests, taking into account the cost of ineeting such needs and interests. The City has developed certain renewal requirements consistent with the Cable Act. As contemplated by the Cable Act, the City has prepared a document requesting that TWC submit a proposal showing how TWC intends to satisfy the City's future, cable-related needs and interests in any renewal term. The requirements that the City recommends for adoption are reflected in the Request for Formal Renewal Proposal ("RFRP"), attached to the Needs Assessment. In the RFRP, TWC is asked to explain why TWC believes it should be entitled to renewal and is required to provide certain information that the City will use in evaluating any proposal. The City retained Richard Nielsen of CBG Communications, Inc. ("CBG") to conduct a review of the City's access programming. CBG prepared a report on cable-related government access which includes a needs study for the City, dated June 4, 2004. The report concluded significant capital equipment needs for local programming in the City. The City also retained Mark Gibbs, a CPA with the firm HLB Tautges Redpath, Ltd. ("Tautges") to conduct an audit of TWC's franchise fee payments to the City and prepare a report of the findings and a summary of recommendations. The City staffgathered information from subscribers through phone calls and letters, and reviewed CBG's findings in light of its own familiarity with the City. The Needs Assessment is being submitted to meet one of the City's important responsibilities under the Cable Act. Consistent with the Cable Act, the Needs Assessment identifies the needs and interests, and the accompanying RFRP identifies the requirements that must be satisfied in a proposal, in accordance with the Cable Act sections quoted above. In addition to restating some of the key points of this report, the RFRP identifies a"model cable communications franchise ordinance" that could satisfy the requirements that the City recommends should be established. Draft for discussion purposes only ORDINANCE NO. AN ORDINANCE ADOPTING CERTAIN CABLE-RELATED NEEDS AND 1NTERESTS OF THE CITY OF FRIDLEY AS IDENTIFIED IN THE STAFF REPORT AND RELATED REQUIKEMENTS SET FORTH THERElN; AUTHORIZING THE ISSUANCE OF A REQUEST FOR FORMAL RENEWAL PROPOSAL FOR A CABLE FRANCHISE, AND CLOSING THE 1NITIAL STAGE OF FORMAL FRANCHISE RENEWAL PROCEEDINGS SECTION 1. Time Warner, Inc., d/b/a Time Warner Cable ("TWC"), currently operates a cable system for the provision of cable service in the City of Fridley, Minnesota ("City"). SECTION 2. The City commenced a proceeding to review the past performance of TWC, and to ascertain the future, cable-related needs and interests of the community. SECTION 3. The City staff has prepared and the City Council has received a"Formal Needs Assessment Report" ("Report") identifying the cable-related needs and interests of the community, and recommending requirements to be included in a Request for Formal Renewal Proposal for a Cable Franchise, consistent with federal law. SECTION 4. The City Council concludes that the cable-related needs and interests of the City are accurately identified by the Report. SECTION 5. The Report is hereby adopted by the City Council as its ascertainment of the cable-related needs and interests of the community. The City Council further adopts the requirements as set forth in the Report. SECTION 6. The City Council hereby closes the ascertainment of cable-related needs and interests and the review of the past performance of the operator contemplated by 47 U.S.C. §546(a). SECTION 7. The City Council hereby establishes that the deadline for submission of responses to the Request For Formal Renewal Proposal for a Cable Franchise shall be November 30, 2004. SECTION 8. The City Manager and City Attorney are authorized to issue such notices as may be required to comply with the franchise renewal process. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 16th DAY OF AUGUST, 2004. ATTEST: CITY OF FRIDLEY, MINNESOTA Scott J. Lund, Mayor � s r a :<:«'.:::: � � ��.�.�.� �.�..�. �.��<��. � �.� � �. �. � � ........ n.. � �n!a,?e1pi;Jc U�i�v: i3 (::�r.�a:u ;t:ad, +cit<.3i�1.�Pa::(�, ln 1�p�11 l'F ;C.lii) f£4�^4^0 �! (�:.:i F:S�JS .7:� Sr. [&ufO�uY: .-ih (. i+eS,:r,xr, tiuErc S. i,, 5:. Ln:l.:v.^: 551U1. Pf (lSll;�'�yt13d0 F? I!•5:�13�9.b�9 w,w ce:rar.cna�oica�:�;na.:»:n REPORT ON THE CABLE-RELATED GOVERNMENT ACCESS NEEDS STUDY FOR THE CITY OF FRIDLEY August 1, 2004 Dick Nielsen Senior Engineer CBG Communications, Inc. �- CABLE-RELATED GOVERNMENT ACCESS NEEDS ASSESSMENT FOR THE CITY OF FRIDLEY Overview On behalf of the City of Fridley (City) CBG Communications, Inc. (CBG) has conducted a review of the needs related to Government Access programming in the City. The study was conducted as part of cable franchise renewal proceedings with the local cable television provider, Time Warner Cable. The results of the needs study are presented in the following report and provide information to the City regarding issues of signi�cance primarily related to equipment needs for the Government Access Channel. The key recommendations and observations discussed herein are based on the following data collection. � On-site visit to government access facilities. • Interviews with local educators. • Interviews with government access representatives. • Interviews with City and educational agencies that are current users of the Institutional Network (I-Net). The following points detail CBG's conclusions, recommendations and observations based on the data collected. 1 0 � Government Access Needs Assessment Introduction The City of Fridley serves as manager and operator of government access programming, Channel 17, in the City. The mission of the government access channel is to provide information to the community pertaining to governmental issues, policies, programs and services. An on-site visit to the City's government access facilities and an analysis of the City's Access equipment inventory was conducted, as well as an interview with key staff at the City Hall facility. This report summarizes the findings of our government access assessment. The goals of government access in the City are to disseminate accurate and up-to-date information about City services, events, issues, problems and opportunities; and to enable informed citizens to observe and participate in the decision processes of their local government. This goal is clearly fostered by effective government access operations via the cable system. Findings Facilities The government access headend and production facility is located at the City Hall building. This includes a small master control, editing center, control room and a board room which can be configured as a small malceshift studio allowing for meetings and talk shows to be taped or telecast live. Currently, City Council and other meetings taking place in the board room can be produced from the control room. The control room is located near the board room and is the origination point where meeting programs are produced, taped and also fed live to Time Warner's Headend or Hub for insertion onto the subscriber cable system. � Government access programming also includes character generated bulletin board content when the channel is not cablecasting live or recorded video programming. These valuable messages and community alerts serve an important function for the City as it provides residents with information that often makes them aware of City provisions and activities. One full time employee, in addition to the City Manager, is utilized for shooting government access productions. Much of the equipment support for government access has in the past been funded through franchise fee revenues. Other equipment has been purchased using PEG support funds established during the current franchise. Programming Four types of programming are regularly aired on the government access channel: regular scheduled programming (such as government meetings), special programming (documentaries, public service announcements, interviews with citizens and public of�cials), city bulletin board information and imported, government-oriented programming. Regularly scheduled programming includes live cablecasting and taped replays of the City Council meetings, other Board and civic meetings, and programming covering City department events and services on Municipal Television Channel 17. General Technolo�y Up�rades It is necessary to assess the overall quality of the Fridley government access equipment not only in terms of current functionality, but also in terms of how well it meets the needs of the producers over the projected life of a new franchise agreement. In order to address these needs, some general technology improvements are necessary. According to City Staff, the current established facilities and programming are meeting the immediate demands of Fridley government access. However, improvements in picture and audio quality are needed, as well as potential expansion of government access programming opportunities during the next franchise term. As television programmers continue to improve picture and sound quality on other cable channels through the use of digital equipment, the City will be required to update and upgrade its own existing analog equipment. This update of equipment is critical from a quality standpoint, as well as from a practical standpoint. Specifically, digital video and audio production equipment transitions are ultimately required as analog equipment becomes obsolete during a lengthy franchise term. With needed updating in the near future, the City should consider the following conclusions and recommendations regarding Government Access during franchise renewal discussions with Time Warner: Tane Formats A variety of tape formats is currently in use at the Fridley Government Access facility. For the most part, producers working within the facility choose between S-VHS or VHS formats. While it is important to keep a variety of formats in place for duplication and playback purposes, the accompanying equipment matrix proposes the replacement of all S-VHS equipment in the control room and cablecast functional areas with DV, Mini-DV, and DVD technology. Based on our experience and a review of industry trends, we have concluded that the DV tape format (Mini-DV, DVCam, DVCPro, DVD) is far superior to that of analog VHS and S-VHS formats. Tests done by video engineers and published in the past few years state that the quality of DV formats in critical criteria such as signal to noise ratio, luminance and chrominance outputs are from 50% to 82% better than the S- VHS tape format. The DV studies also conclude that S-VHS formats produce video with significantly impaired image quality compared with DV formats. These studies also indicate that the DV tape format is much more robust and holds up much better over multi-generational use than S-VHS. Graphics and Editing The equipment used for Council, Commission and other meetings carried live over the cable system will need to be updated during the course of the franchise to provide for digital video production and transmission. As digital improvements are made, consideration should also be given to ways in which live meeting coverage could be enhanced, such as incorporation of presentations made using graphical software. Overall, the City will want to continue to update its current production location to integrate the latest technology throughout the course of a renewed franchise. As the City improves its capacity to carry meetings, it will also want to enhance its ability to generate produced and post-produced programming through the use of digital video equipment and non-linear editing stations. The upfront costs of digital video equipment continue to decrease, and the long term value of generating better looking pictures and sound, along with the more efficient use of time spent editing, merits the initial expense of updating camera, editing and other equipment. Additionally, as noted in Appendix A, much of the existing equipment is in need of replacement. In addition to production and editing equipment, the City will also want to continue to improve its video character generation system to further enhance its capabilities to create a wide variety of highly graphical messages that engage residents to read and act upon the civic material placed on Channel 17. Council Chambers The City Council Chambers are utilized for a large portion of the programming on Municipal Channel 17. As stated earlier, the Council Chambers are not only used for live meetings but the chambers can be transformed into a makeshift studio. Because of this, the equipment utilized for productions needs to be evaluated and upgraded as necessary. Exhibit A includes replacement and upgrades to the lighting in the chambers. This will enhance the quality of the video originating in the chambers. For example, digital cameras have a very difficult time shooting an image above 95 IRE (IRE is a unit of measurement of video brightness levels, where 7.5 IRE represents Picture Black and 100 IRE represents Picture White). As a result, images may look "washed out" and not of broadcast quality if improper lighting is used. It is CBG's opinion that a professional lighting designer would need to evaluate the actual needs for the chambers. Replacing the cameras in the chambers with new digital cameras will enhance the quality and clarity of the chamber output. Quality video capturing is the cornerstone of all chamber based productions. This investment in top notch, quality cameras is essential to the productivity of its operations. Master ControUPlavback Creating a beneiicial, long-range plan for enhancing current playback equipment is an important consideration. Because equipment failures and process breakdowns can directly reflect on channel quality, extra care must be taken to ensure that the playback area is as reliable as possible. Consistent with a growing trend in the Access Community, there is an interest in providing programming continuously, 24 hours a day, seven days a week. As channel programming increases, the manual process of sorting and handling tapes and the heavy use of tape decks will begin to become error-prone. Employees will continue to need to be available for loading tapes into playback decks, even during overnight hours. The tape decks themselves will receive heavier use and thus be more prone to equipment failure and increased service. Therefore, we recommend that the optimum migration path for playback over the system would be to use a digital video server. A video server would not only take the place of many videotape players, but would also vastly reduce, over time, the need for the manual handling of videotapes in the playback area. Further, it would reduce the service dollars needed to repair and replace conventional video tape players. Many public and government access facilities have turned to turnkey video server technologies to handle playback and master control functions. They are flexible enough to operate 24 hours a day, 7 days a week. They are cost effective, provide proficient 0 router switch control and event scheduling for playback, and offer video program catalog software, security for multiple users, and error pager notification. They also offer upgrade paths that could become desirable in the future, such as webcasting possibilities. The server should also be networkable. This would enable production staff to input video files directly over an area network into the server, keeping them in a digital format. Channel Capacity Fridley government access currently programs one of the three access channels. Our review indicates that, at a minimum, this channel should be maintained. If a lengthy renewed franchise term is proposed, potential expanding needs could warrant additional channel capacity in the future. Expansions beyond this initial and reserved capacity could be provided through additional channels gained when analog services are converted to digital offerings. For this reason, we recommend that the City be continuously allocated a portion of the spectrum pertaining to the three existing Public, Educational and Government (PEG) access channels (18 MHz), that could then be utilized to provide a significantly increased number of access channels as the spectrum may be converted to digital carriage (i.e., one analog access channel equals potentially eight digital access channels). If the use of such capacity is combined with video-on- demand, interactive television and other new technologies, the City should be able to meet a wide range of targeted subscriber interests in government access content, both now and in the future. Conclusions, Recommendations and Observations The current established facilities and programming are meeting the immediate minimum demands of Fridley government access. However, decreasing reliability of aging equipment and the difficulty getting non operable equipment repaired combined with needed improvements in picture and audio quality during the next franchise term, warrant an upgrade of the equipment in the near term. 7 The equipment used for Council, Commission and other meetings carried live over the cable system will need to be updated during the course of the franchise to provide for digital video production and transmission. As digital improvements are made, consideration should also be given to ways in which live meeting coverage could be enhanced, such as incorporation of presentations made using graphical software. Overall, the City will want to update its current production locations to integrate the latest technology throughout the course of a renewed franchise. The City will want to enhance its ability to generate produced and post-produced programming through the use of digital video equipment, non-linear editing stations and an upgraded video character generator. Generating better looking pictures and sound will help to increase the viewing experience of Time Warner subscribers and thus increase the value of channel 17. Updating camera, editing and other equipment will not only improve the quality of productions but will also increase the productivity of the production staff. Appendix A spells out the equipment and estimated associated costs of replacement and improvement of the City's production and playback equipment. Inherent to future digital video programming is the need to repurpose that material for alternative delivery systems. Extensive progress has been made in the efficient and effective streaming of video over an Internet Protocol-based system. The City might consider expanding government programming into a dual television/web-streaming environment. This would allow a new audience of users to reach both current and archived government access programming (potentially in an on-demand fashion) and in turn, can increase participation in public processes. These conclusions and recommendations are based on an analysis of the information provided by City department staff and on-site observarions of facilities and equipment. A Government Access Equipment Upgrade and Replacement Plan is included as Appendix A and details specific proposed equipment and timings of implementation in order to meet the production needs demonstrated herein. The findings, conclusions and recommendations presented in this report are a strong foundation for the City related to its franchise renewal negotiations and in continuing the City's long-term effectiveness in the delivery of government access programmmg. Educational Access CBG was not asked specifically to assess the current and future needs related to Educational Access. We did however meet with representatives of Fridley High School and we also took a tour of their facilities. It is apparent that Fridley High School is a key player in providing programming for the Educational Access channel. Fridley High School provides the Master Control functions for channel 14. They provide text messages and taped programs on a 24/7 basis. Similar to the government access facilities at City Hall, Fridley High School's existing facilities are meeting the needs at a minimal level today. Although CBG did not review these facilities in detail a few needs did become apparent: The school uses a transformed classroom for a studio. This room has no permanent lighting for productions. In order to increase the quality of the schools productions, permanent lighting should be installed. During a lengthy franchise term, these facilities will need to be upgraded to migrate to a digital format in the same manner as the Government access equipment and will also need to have equipment maintenance and replacement schedules. Another concern is that of Local Origination (LO). City staff inentioned that a need is being fulfilled by Time Warner's LO department. Primarily, the LO department tapes school events such as sporting events and graduation ceremonies for future playbacic on L.O. channel 16. The City should consider this need and how it might be filled should Time Warner's LO cease production in the City of Fridley. CBG was not asked to evaluate LO's impact or what the impact might be if indeed production is ceased by Time � Warner. However, we suggest considering what group, if any, might continue this programming or replace this lost programming. This would potentially present an entirely new set of needs based on production facilities and equipment alone. Institutional Network (I-Net) Needs CBG was not specifically asked to review the current status or the future needs of Fridley institutions regarding an I-Net. However in the course of our Access evaluations it became clear that an existing I-Net Cable (separate from the A-Cable subscriber network) that provides Institutional Network connections to a variety of facilities is currently being used by the City and Schools and the needs relating to the I-Net will not only remain but will likely increase. Both the City, Municipal Channel 17, and the Schools Channel 14, utilize the I-Net to transport programming to Time Warner for insertion onto the subscriber system. School District 14 utilizes the I-Net to transport programming such as meetings and important announcements between their 5 facilities for real time distribution of this information. District 14 also utilizes the I-Net to transport Data between Fridley High School, Hayes Elementary and Stevenson Elementary. Currently this is done utilizing Zenith Channel Mizer cable modem equipment which does not rely on the DOCSIS (Data Over Cable Service Interface Specification) platform and realizes a maximum throughput of 2 Mbps. This technology is approximately 10 years old and is very much obsolete. Channel Mizer equipment has not been supported by the manufacturer for approximately 5-6 years. Although this has served a need in the past, reliability and throughput are increasingly an issue for the District. In conversations with School officials, the schools' needs are more in line with a 100Mbps throughput between facilities. The I-Net has been and will continue to be essential in order to meet the levels of expressed needs and interests related to educational access programming and data 10 transportarion. Two-way video delivery between schools and over the cable system is currently utilized between the 5 Independent School District 141ocations in the City. As mentioned above, School District 14, speciiically Fridley High School, performs the "Master Control" functions for the Educational Access Channel 14 for the Time Warner Fridley Subscriber System. The I-Net is currently used to transport this channel to Time Warner for insertion on the subscriber network. Increased reliability and quality of channel 14 will become more important going forward for the same reasons mentioned in the Governxnent Access portion of this report. In addition to the video delivery capabilities of the I-Net, Fridley High School, Hayes Elementary School and Stevenson Elementary School are currently using the coax I-Net for Data transportation. CBG has reached the conclusion that an advanced Institutional Network would be a tremendous resource for the educational and governmental entities within the City. Current use of, and prior attempts to use, the I-Net are evidence of the need to communicate, both between an organization's own facilities, and also to the Time Warner Headend or Hub for insertion of the government and educational access channels onto Time Warner's subscriber network. Specifically, we recommend that the City, during its franchise renewal discussions should work with the Schools and Time Warner to determine the most cost-effective network architecture. It is likely that some connections and upgrades could be made cost-effectively immediately at the beginning of a new franchise term. 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'2 � E m c'�i 'c °- � E c°'o c"i '�2 o c_ ?� o UO�v �QN»� cf4i m a��j c�i � c��55 °? o ° a �n N N O �� O tp � N t0 � V V N � ai� Q ¢ ¢ = a°t`�7 U U U E O O O C � R N� N N N � O � E y :- �X l9 l4 .. C �a a a a > w c ; o > z U � a rn rn rn rn °o°orn N N � C r (n Y V l0 l4 � O °� l�4 N � � O G) U _� � E E r 'c E d ° � " m m o� o � �o — a v U U � � V �. " 'o co W o 0 0 �o �O o Y V> � a�i a� a� a� .' °�.`c tn F- > > > > > O I� > � a� d d a� � a� � � a� d d U` U U U U U V U {U� U � U � Q � Q � � � V� N (� � N (O t� N Ol O N N N N N N N N N fh fh � `o � rn c0 a U G C .� c E E 0 U C7 m U FORMAL NEEDS ASSESSMENT REPORT City of Fridley, Minnesota July 21, 2004 . TABLE OF CONTENTS A. EXECUTIVE SUMMARY ...........................................................................................1 B. SUMMARY OF COMMUNITY CABLE-RELATED NEEDS AND INTERESTS ...1 C. BACKGROUND AND PURPOSES OF THIS REPORT ............................................2 D. IDENTIFICATION OF FUTURE, CABLE-RELATED NEEDS AND INTERESTS6 E. SUPPORT FOR PUBLIC, EDUCATIONAL AND GOVERNMENT USE. ............13 F. �RANCffiSE CONDITIONS AND OTHER REGULATORY ISSUES ..................15 EXHIBIT A TIME WARNER CABLE LETTER DATED JUNE 19, 2000 ......... A-1 EXHIBIT B GROSS REVENUE AUDIT .............................................................. B-1 EXHIBIT C NEEDS AND INTERESTS ASCERTAINMENT ............................. C-1 EXHIBIT D REQUEST FOR RENEWAL PROPOSAL ("RFRP") .....................D-1 i A. EXECUTIVE SUMMARY Time Warner, Inc., d/b/a Time Warner Cable ("TWC"), sent a letter dated June 19, 2000 (attached hereto as E�ibit A) to the City of Fridley, Minnesota ("City"), requesting renewal of its cable television franchise. The City must decide whether to grant or deny this request. For nearly two and one-half years the City and TWC engaged in good faith, informal negotiations pursuant to 47 U.S.C. § 546(h) in hopes at arriving at a new franchise agreement. On November 18, 2003, TWC sent a letter to the City which provided as follows: There are still major differences in "deal points" that exist betrveen the City and Time Warner Cable in the "informal " franchise renewal discussions we have had these last several years. In light of these d�erences and the failure to resolve these differences in the "informal " process, Time Warner Cable is requesting that we revert back to and proceed with the renewal under the `formal " process of the Cable Act. In response to TWC's November 18, 2003 correspondence and in accordance with the Federal Cable Act (47 U.S.C. § 546), the City has prepared a Formal Needs Assessment ("Needs Assessment") which includes reports necessary to discuss and identify the needs and interests of the City and to evaluate the existing cable system operated by TWC. The City retained Richard Nielsen of CBG Communications, Inc. ("CBG") to conduct a review of the City's access programming and Mark Gibbs, a CPA with the firm HLB Tautges Redpath, Ltd. ("Tautges") to conduct an audit of TWC's franchise fee payments to the City. In addition to identifying needs and interests, as part of the preparation of this report, the City has developed certain renewal requirements consistent with the Cable Act 47 U.S.C. § 546. As contemplated by the Cable Act, the City has prepared a document requesting that TWC submit a proposal showing how TWC intends to satisfy the City's future, cable-related needs and interests in any renewal term. The requirements that the City recommends for adoption are reflected in the Request for Renewal Proposal ("RFRP"), attached hereto as Exhibit D. In the RFRP, TWC is asked to explain why TWC believes it should be entitled to renewal and is required to provide certain information that the City will use in evaluating any proposal. The City believes that these reports are accurate and this report adopts the needs and interests identified in those reports. In connection with the issuance of this report, the City Council has: 1. Adopted the findings of this report, the City's studies referenced in this report, and the draft RFRP with respect to the needs and interests of the community. 2. Authorized the issuance of the RFRP as attached to this report with a deadline for response of November 1, 2004. B. SUMMARY OF COMMUNITY CABLE-RELATED NEEDS AND INTERESTS As part of the renewal process, the following studies were performed. 1. CBG prepared a report on the cable-related government access which includes a needs study for the City of Fridley, dated 7une 4, 2004. The report concluded significant capital equipment needs for government access programming in the City. 2. Mark Gibbs, a CPA with the firm HLB Tautges Redpath, Ltd. ("Tautges") conducted an audit of TWC's franchise fee payments to the City and prepared a Gross Revenue Audit Report dated Apri128, 2004 ("Audit Report"). The Audit Report (attached hereto as E�ibit B) includes the audit procedures and findings as well as a summary of recommendations. 3. The City staffgathered information from subscribers through phone calls and letters, and reviewed CBG's findings in light of its own familiarity with the City. C. BACKGROUND AND PURPOSES OF THIS REPORT Why renewal is important and why this report is being submitted. Cable television systems operate pursuant to franchises issued by local governments. A franchise authorizes a cable operator to provide cable service, and to occupy public rights-of-way for that purpose. The franchise sets out the terms and conditions under which service is to be provided. Cable service in this City is provided by TWC. The original franchise term under the existing franchise expired on May 16, 2003. When a franchise is about to expire, a City has an opportunity to review the performance of the cable operator, and ensure that the cable operator will meet the cable-related needs and interests of the community for the future. The opportunity is rare because franchises are issued for periods of years. At the time of renewal, the City can establish requirements for system upgrades to ensure that the community has adequate infrastructure. The City can ensure that everyone has real opportunities to originate, as well as receive programming. The City can ensure that service will be reliable and that the cable operator will be in a position to bring the benefits of advances in cable technology into homes and schools. This report is intended to look to the past, and to identify what is needed for the future; based on this information, the City may ultimately determine whether or not TWC may continue to operate in the City. Cable systems once served merely to retransmit broadcast television signals. They have now, however, become "a dominant nationwide video medium,"1 with many companies rebuilding or poised to rebuild their systems into "electronic information highways." In fact, even though the broadcast networks' audience share had steadily declined, cable network viewing shares have continued to increase.2 The development of these electronic highways has the potential to significantly change the way people live, work, and interact with each other by providing users access to vast quantities of information, t H. Rep. No. 862, 102d Cong. 2d Sess. at 50, reprinted in 1992 U.S.C.C.A.N. 1231, 1232 (1992). 2 According to the NCTA, cable network's share of the viewing audience has increased approximately 118% in the last 10 years. NCTA website, www.ncta.com/broadband. 2 services and entertainment in a variety of forms. As a result, a local government has a compelling interest in ensuring that a cable system is adequately designed and constructed to help satisfy the community's cable-related needs and interests; that good service is provided for the price paid; that services are available to all; and that the flow of information is not monopolized by the companies that own the cable networks. These interests are reflected in federal, state and local law.3 The foregoing interests are particularly strong because, in order to operate, cable systems must occupy scarce and valuable public property - property that the public effectively pays to acquire and maintain. TWC's cables are on poles and underground in rights-of- way throughout the City. The City, as trustee of the public's interest in this property, has a compelling interest in ensuring that the companies use this public property in a way that benefits the entire community. This means, among other things, that the City must ensure that public property is used in optimal ways, and that the public receives fair compensation - in the form of franchise fees and other conditions - for the use of its public property to provide cable service. As a matter of law, these interests and others are protected, in part, through the franchising process. Many in the community no doubt want the City simply to put the franchise up for competitive bid and then award franchises to the best cable operator. That, however, is not an option. In 1984, the federal government passed a law that was intended to provide cable operators with a fair opportunity to obtain renewal. To that end, the 1984 federal law - the "Cable Acti4 - establishes two possible ways a community can respond to a request for franchise renewal: informal renewal negotiations and the statutory formal renewal process. Under the informal process, Congress contemplated that the City and a cable operator will meet informally and attempt to resolve franchise issues through negotiation.s If the issues are resolved a City can, after providing the public with an opportunity for comment, adopt a renewal franchise. An informal proposal can be rejected at any time. The City and TWC engaged in good faith informal negotiations for several years and were unable to reach agreement. Alternatively, either the cable operator or the City can invoke the more formal renewal procedures set out at 47 U.S.C. § 546(a)-(g). These "formal" procedures give a cable operator the opportunity for a fair hearing on its renewal proposal. At the same time, the procedures ensure that a City can deny renewal if a cable operator has performed poorly in the past, or is not qualified, or is not willing make a reasonable proposal for meeting the community's needs and interests for the future. Under the formal process, the City is 3 Forfederal law, see, e.g., 47 U.S.C. §§ 544 (requiring facilities and equipment); § 546(c)(1)(D) (sadsfying community's cable-related needs and interests); § 543 (ensuring reasonable rates); § 541(a)(3) (anti-redlining); § 531 (access channels). For state law Minnesota Statutes Chapter 238 and particularly 238.084, and for local law the Code of Ordinances for the City of Fridley. ° 47 U.S.C. § 521 et. seq. 5 47 U.S.C. § 546(h). given authority to define what the needs and interests of the community are. It is up to the cable operator to then submit a proposal that is reasonable to meet the community's cable-related needs and interests, taking into account the costs of ineeting those needs and interests (the focus is the entire community, not just the individual subscriber currently receiving service). The legislative history of the 1984 Cable Act explains: The ability of a local government entity to require particular cable facilities (and to enforce requirements in the franchise to provide those facilities) is essential if cable systems are to be tailored to the needs of each community [and the legislation] explicitly grants this power to the franchising authority.6 More specifically, the formal renewal process under the Cable Act is a four-stage process. In the first stage, a City must conduct a proceeding to identify future, cable-related needs and interests of the community, and to review the past performance of the cable operators serving the community. � Once that proceeding is complete, the City may issue a Request for Renewal Proposals ("RFRP"). Because each renewal proposal is evaluated on its own merits, this RFRP cannot simply be a competitive bidding document.$ The Cable Act specifically allows the City to establish the following requirements in an RFRP: a. "that channel capacity be designated for public, educational or government use, and channel capacity on I-Nets be designated for educational or governmental use, and may require rules and procedures for the use of channel capacity designated...." 47 U.S.C. §531(b). b. "for facilities and equipment." The legislative history explains that this includes requirements for I-Nets, studios, equipment for public, educational and government use, two-way networks, and so on. 47 U.S.C. §544. The Cable Act also states that "A franchising authority may establish and enforce customer service requirements of the cable operator, and construction schedules and other construction-related requirements, including construction-related performance requirements, of the cable operator." 47 U.S.C. § 552. The City believes that this language permits the City to establish these requirements unilaterally in a franchise (or ° 1984 House Report at 26, 1984 U.S.C.C.A.N. at 4663. Congress intended that: "the franchise process take place at the local level where [local] officials ha�e the best understanding of local communications needs and can require cable operators to tailor the cable system to meet those needs." 1984 House Report at 24, 1984 U.S.C.C.A.N. at 4661. However, the Cable Act does not give local governments unlimited authority to impose conditions on cable operators. For example, it limits local authoriry to require an operator to carry a specific programming service. ' 47 U.S.C. § 546(a). $ 47 U.S.C. § 546(b). through a regulatory ordinance), along with various other requirements established pursuant to the City's police and other governmental powers. In the next stage of the renewal process, the cable operator will submit a renewal proposal in response to the City's RFRP. "Any such proposal shall contain such material as the franchising authority may require." Id. If an operator submits a timely and proper response,9 the City has four months to evaluate the proposal, and decide whether to grant renewal based on the proposal or to preliminarily deny renewal. 47 U.S.C. § 546(c). Finally, if franchise renewal is preliminarily denied, and a cable operator desires it, the City must commence an administrative proceeding. The four issues that are considered at that proceeding are whether: a. the cable operator has substantially complied with the material terms of the existing franchise and with applicable law; b. the quality of the cable operator's service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs; c. the cable operator has the financial, legal, and technical ability to provide the services, facilities, and equipment as set forth in the cable operator's proposal; and d. the cable operator's proposal is reasonable to meet the future cable-related community needs and interests, taking into account the cost of ineeting such needs and interests. This report is being submitted to discharge one of the City's important responsibilities under the Cable Act. With the submission of this report, the City should be prepared to end step one of the formal process. This report reviews the past performance of the cable operator and identifies cable-related needs and interests. Consistent with the Cable Act, this report identifies needs and interests, and the accompanying RFRP identifies the requirements that must be satisfied in a proposal, in accordance with the Cable Act sections quoted above. In addition to restating some of the key points of this report, the RFRP identifies a"model franchise" that could satisfy the requirements that the City recommends should be established. While this report identifies needs and interests broadly, not every need and interest identified has been translated into a requirement that is included in the RFRP. That is because the federal law includes some limitations on what may be required in an RFRP. 2. How the ascertainment was conducted, and how we arrived at our conclusions on cable-related needs and interests. 9 The proposal must be submitted by a deadline established by the City. If the operator fails to do so, then its rights are ended. As part of the renewal process, the City performed two studies. CBG developed a "Report on the Cable-Related Government Access Needs Study for the City of Fridley" (the "CBG Report") and HLB Tautges Redpath, Ltd. ("Tautges") conducted an audit of TWC's franchise fee payments to the City ("Audit Report"). 3. Structure of the report. The remainder of this report is divided into several parts. In the next part we summarize the City's key future, cable-related needs and interests that have been identified and, where appropriate, the requirements that are associated with those needs and interests. Attached to this report please find a draft RFRP and a Model Cable Television Franchise Ordinance. D. IDENTIFICATION OF FUTURE, CABLE-RELATED NEEDS AND INTERESTS Developments in the industry. The cable industry is changing dramatically. What was once an industry primarily focused on delivering television signals to the home is developing into an industry that is providing a critical part of the "information highway" that is changing the way the people receive information, shop and communicate. Cable now delivers a wide variety of two- way cable services through modern, upgraded cable systems. Cable services will increasingly be showcased through the continued advancement of other significant technological advances, such as digital compression, interactive video, and high- definition television (HDTV). The potential impact of an advanced cable system on a community cannot be underestimated. For example, in schools accessing the Internet via an advanced cable system's superior bandwidth allow students and teachers to download at speeds "50 to 100 times faster than telephone-based modem technologies."10 The benefits of this technology are not just confined to the schools. An advanced cable system can provide a small business with high-quality, high-speed access to the Internet Beyond the Internet, a two-way cable system permits local businesses to interact with local governments and other institutions in ways that save time and cut costs. The benefits of advanced cable are not just limited to providing new ways to "surf the web." New programming services are developing every year. According to a graph produced by the NCTA, in 1993, there were approximately 100 national cable video networks; by 2003, there were well over 300. However, in order to fully achieve the promise of cable technology, companies such as TWC must upgrade their networks, to increase capacity, reliability, and responsiveness. This typically requires a system rebuild to take advantage of "fiber optic" technology, which is "an ideal medium for transmitting vast amounts of information — data, graphics, and even video — at high speed."11 'o NCTA "High Speed Internet Access via Cable," www.ncta.com/broadband. " NCTA "High Speed Internet Access via Cable," www.ncta.com/broadband. � There are several reasons why development of information highways ultimately depends on development of fiber-based cable systems. Traditional all-coaxial cable systems have the capacity to transmit large amounts of information, but fiber optic technology provides much greater useable capacity or "bandwidth" -- at least 10 times the capacity now, and as equipment improves, the difference in the capabilities of the two types of systems will become even more dramatic. This additional capacity is critical now for potential high- volume users such as schools, businesses and government. Signals lose strength significantly as they travel through coaxial cable. As one adds more electronics to increase the capacity of a coaxial system, the system suffers even higher signal losses. To compensate for these losses, which are almost non-existent for fiber optic cable, the coaxial cable signals have to be amplified at regular intervals,12 and every amplifier distorts the signal. In addition, these amplifiers require regulax maintenance and "tweaking" in order to operate most efficiently and effectively; reliable high-quality upstream transmissions are particularly hard to maintain. For this reason and others there are often much higher maintenance costs associated with coaxial, compared to fiber optic cable. And, because each amplifier is a potential "failure point," all-coaxial systems suffer from more outages than well-built fiber-based systems, which require many fewer amplifiers. This makes a difference for the home subscriber, and an even more significant difference for the potential business user, who is often less able to tolerate system failures or signal errors when transmitting video or data. This does not mean that fiber must immediately be brought directly to every building and home. For residential service, most cable systems being built today use fiber trunk lines to carry signals into neighborhoods to a point called a"node." At the node signals are routed onto the wires from which individual locations are served. While it is considered cost-effective to use fiber as a"backbone" for cable systems, there is a significant question as to whether it is necessary or cost effective to use fiber to carry signals from the trunk all the way to the home. So long as the distance the co�ial cable must carry the signal is limited (so that the system does not use many amplifiers), a system using a combination of coaxial and fiber can deliver high-quality signals to the home, and provide enough two-way capacity to send video and data from the home to various locations on the cable system. Many modern cable systems being built today have limited node size, in anticipation of future consumer demand for advanced services requiring increased bandwidth. By contrast, it makes sense to bring fiber all the way to any building containing high- volume users, and to eliminate any coaxial cable when the capacity available on coaxial links is inadequate to satisfy the location's known needs. Thus, trends in the industry suggest that, for now, it makes sense to build high-capacity fiber systems to 1z- It is not uncommon for amplifiers to be required every 2000 feet in a traditional system. neighborhood nodes; to serve residences from those nodes using coaxial cable; and to serve other high-demand users from the node using fiber optic cable.13 In addition to being upgraded to incorporate fiber, the cable industry is concluding that systems need to be two-way activated. Two-way activation is required for providers to be able to readily offer many advanced, interactive television services — services in which the set top interacts with a server.14 Cable companies are developing interactive television services which rely on two-way activation, including Interactive Program Guides; Personal Video Recorders; which will deploy features offered by companies like TiVo into the cable set-top box; Video on Demand; Enhanced TV Services which allow consumers to obtain more information about programs and commercials they are watching, for example; access to the Internet over the television set; and locally-oriented interactive sites which "offer customers information which is not available on the Internet but which provides an "Internet-like" interactive experience." Interactive television provides a unique opportunity for PEG providers to better serve the community as well. In fact, because of the very nature of PEG — public access allows viewers to actively participate in creating programming, government access allows for increased citizen involvement and participation in government; and educational access involves participation by students in learning — PEG and interactive television "compliment each other because both focus on a specialized interactive community of specific interests in a specific geographic area.i15 One application is the interactive Council meeting, which allows viewers at home to participate in Council meetings by text, voice, or video link, depending on technical capabilities. There are several other applications, such as GIS mapping services and enhanced interactive distance learning, as well as enhanced interactive service for government information that is not available on the web. Interactive television functionality can be provided for analog or digital television channels and if the technology is present on the system then PEG programmers can utilize the technology to enhance the services they provide to their communities. Finally, the cable industry is discovering that higher capacity systems are required in order to provide advanced services adequately,16 in order to meet subscriber demand for analog and digital services, and in order to prepare for high definition television. Traditionally, television has been delivered via an analog signal. However, there are significant advantages to delivering video in a digital format. It allows delivery of brilliant, high-definition signals of substantially better quality than the signal delivered to today's televisions. A digital signal can also include multiple layers of information that a viewer can select and manipulate as desired -- for example, a video news program could carry with it additional text information on a story that could be called up interactively. 13 Where the high-capacity user also wishes to receive more traditional cable services, it may make sense to provide a fiber drop and a traditional coaYial drop to that user. 14 Ellis, Lesiie, "In-Band, Out-of-Band, Whatever it Takes," Multichannel News, May 28, 2001. 's Affllerbach, Andrew, "Interacrive PEG: A Technical Strategy for Implementation", Communitv Media Review, the Journal of the Alliance for Community Media, Winter 2000. 16 Ellis, Leslie, Broadband Week. `?Uew Snags Plague Upstream Path, " January 25, 1999; Chiddi�c, Jim, Gall, Donald, Slumirak, Gerry, `A Migration Strategy to High Capacity Return on HFC. ". A viewer could order desired products instantaneously. The FCC views digitization as so important that it is requiring all broadcasters to begin delivering digital services on an accelerated schedule and to abandon analog transmissions by the year 2006. As the FCC has described it, "the arrival of digital television ("DTV") ... promises to be one of the most significant developments in television technology since the advent of color television in the 1950's. DTV has the capability to provide clearer and sharper, cinema- like pictures as well as multi-channel, CD-quality sound. It can provide new uses such as multiple video programs or other services on a single television channel, including data services. The use of DTV technology will also allow television to enter the digital world of the personal computer and the internet." FCC Office of Engineering and Technology, November 1998.17 While digital signals can be delivered via coaxial cable, a one-way co�ial system simply is not in a position to deliver the full advantages offered by digitization to a community. Accordingly, the cable industry is busily upgrading systems fihroughout the country. The National Cable and Telecommunications Association, the trade group for the cable industry, reports that by the end of 2000, 92% of consumer homes were passed by high- capacity plant offering bandwidth for delivery of digital TV, high-speed data services, and HDTV programming, and of these homes, 81% were served by 750 MHz systems, "positioning cable to compete more effectively with DBS companies, which typically offer more than 200 channels." The NCTA estimated that the average cable customer now receives 95 channels.l$ Moreover, local franchising authorities ("LFAs") in many communities are taking advantage of the advances in technology to require cable operators to provide "institutional networksi19 and to devote significant two-way capacity for PEG use of the system. These requirements can include requirements, for example, for linking schools, libraries and government agencies together, and providing links to the Internet. The goal is not simply to allow these agencies to communicate more effectively internally (or with one another). The goal is to obtain the resources required to provide better services to the public. The potential benefits of advanced networks to communities are widely recognized, particularly when connected to other communications networks, such as the Internet. As former Vice President Gore noted, in commenting on the cable industry's commitment to connect all schools and libraries to the Internet: "By connecting our libraries, citizens, young and old, literally will have the future at their fingertips! They will be able to enjoy the marvels of the Internet, which I invented, in the convenience of their local library. And they will have access to vast resources, such as the entire Library of Congress, in the " In a Report and Order and Further Notice of Proposed Rulemaking released on January 19, 2001, the Commission reiterated the mandate to "speed the transition" of DTV and provided "incentives" for commercial broadcasters to accomplish the transition by December 3 l, 2004. i8 National Cable Television Association, Cable T[�Handbook, 2001, available at www:ncta.com. 19 Institutional networks are communications networks constructed by cable operators to provide service primarily to non-residential customers. 9 time it takes to click the mouse. Providing access through our nation's libraries is a critical part of this effort. Recent studies have shown that many Americans, particularly low-income, Blacks, Hispanics and Native Americans, lack access to computers and the Internet at home. If we are to connect all Americans, technological resources must be available in public places, such as our schools and local libraries. We must provide all Americans, no matter what race or age, location, or income level with the tools to explore new worlds or find new jobs!"Zo Of course, not every system will go "high-tech" -- at least not immediately. For some small systems situated in rural, isolated locations, for example, the cost of providing a high-capacity connection to every customer may be prohibitive. But, general industry trends suggest that that there are needs and interests in having (1) high-capacity, reliable, high quality, fiber-based (or equivalent) cable systems, with activated, interactive capabilities; (2) a system that includes an I-Net and that devotes a significant amount of capacity for PEG use; (3) a system interconnected to other telecommunications systems, including other local cable systems and the Internet. Further, because of the importance of these systems, a community would be remiss if it did not ensure that all of its citizens have an opportunity to take advantage of system benefits.zl 2. The ascertainment in Fridley. The City's work in ascertaining cable-related needs and interests confirms these points. Indeed, the ascertainment confirms that there is a great need and interest in having advanced cable systems providing service throughout this community. a. The community. The City of Fridley is currently home to 27,449 residents, encompassing 11,328 households.22 Of those, an estimated 5,207 subscribe to TWC cable television services, or about 46% of households. b. Access Programming. See report prepared by CBG attached as E�ibit C. c. Recommendations Regarding Gross Revenue Audit Findings. (i) Comparison of Detailed Billing, Reports to Franchise Fee Summary Tautges recommends the City ascertain receipt of the underpayments listed in procedure 2. 20 National Cable Television Association, "Cable's High Speed Education Connection." 21 During the 1993 House Oversight Hearings, Chauman Markey stated that "it is essential for the narion to upgrade its telecommunications systems so that digital signals can travel without interruption not just between institutions, but also to the home ... we must promote this technological advance." 22 Based on 2000 Census data. 10 (ii) Review the Allocation of Home Shonnin� Revenues — Procedure No. 3 Tautges recommends the City request detail of the Home Shopping revenues on a quarterly basis, since the monthly amounts have considerable fluctuation. Tautges further recommends the City inquire as to why home shopping revenue was not received for QVC for November and December 2003. (iii) Review Cash Recei�t Led�ers - Procedure No. 4 Tautges recommends the City find out why certain accounts are not included in the franchise fee revenue calculation. (iv) Financial Information — Procedure No. 6 Tautges recommends the City ask why a certified gross revenue statement certified by an independent CPA was not provided. (v) Testing reports on the Franchise Fee Worksheets— Procedure No. 7 Tautges recommends the City request Time Warner prepare monthly detail of bad debt expense with its quarterly franchise fee remittances. (vi) Other Revenue — Account 4699-0000 — Procedure No. 7 Tautges recommends the City request detail of the "other" amounts on a quarterly basis and determine if the amount listed is deductions from revenue, or should be treated as expenses. (vii) Franchise Fee Bill Test— Procedure No. 13 Tautges recommends the City request a larger series of customer bills and test to verify that customers are being charged the correct amount on their bills. (viii) General Trend Anal�is — Procedure No. 14 Tautges recommends the City inquire with Time Warner as to reason for the large decrease in basic subscribers between December 2003 (5731) and 7anuary 2004 (5227). c. Miscellaneous. (i) Under the Cable Act, there are a number of areas where a community must establish requirements in an RFRP; a number of places where requirements cannot be established; and some areas where the community may act unilaterally. In this case, we propose to establish requirements in an RFRP, as contemplated by the Cable Act. To this end, we have developed a Model Cable Communications Franchise Ordinance which establishes certain contractual obligations TWC would be required to assume. The provisions that are included in the Model Cable Communications Franchise Ordinance are justified by the City's needs and interests, although in the City's view, certain requirements are not subject to the Cable Act's "needs and interests" test (the requirements involve an exercise of the City's basic police and governmental powers). Among other things, the City concludes: a. The City is concerned that a long franchise term may not serve the public interest, both because the system may become outdated, and because PEG and I-Net requirements may need to be revisited. Changes in law could also require that some obligations 11 be changed. Also, because the Cable Act protects a cable operator against unfair franchise denial, a shorter term may be more reasonable. The City recommends that the City granta a term of ten (10) years if all the needs and interests identified in this report are adequately met. However, the City would recommend that the franchise be shorter to the extent that these needs and interests are not met. b. A five percent (5%) franchise fee should continue to be charged. This is now a standard part of the "rent" that is charged to cable operators for use of the City's val�uable rights-of-way. By charging rent, we ensure that the cable operator pays a fair amount to use the rights-of-way. A franchise should establish a broad definition of gross revenues which ensures that the cable operator pays the franchise fee based on all revenue which the City is entitled to collect the five percent (5%) fee on. As the five percent (5%) fee limit is a form of "rent," the City should also have the right to increase the fee if the law changes. c. A franchise should include provisions that ensure that the grantee will comply with its obligations, and which ensure that the City bears no cost as a result of the use of the rights-of-way by the cable operator. d. A franchise should ensure that the cable operator will use the rights-of-way in a manner that minimizes the risk of damage and undue interference with public and private property. The franchise should ensure that the cable operator's use is secondary, and therefore should be clear that no property rights or any other implied rights are being granted. The franchise should be subject to conditions that ensure the goals of the City can be satisfied without undue public burden. e. A franchise should ensure that a cable operator will not discriminate against potential subscribers, employees or subcontractors on any unlawful ground. f. The system should be required to provide good customer service. Rates shall be subject to regulation to the extent not prohibited by law. g. The City should have the tools to monitor and enforce franchise and ordinance requirements. A franchise should provide those tools, and should require the cable operator to comply with such requirements, including those with which the cable operator disagrees, unless and until the cable operator has obtained relief in a court of competent jurisdiction. h. A franchise is personal in nature and based on an assessment of the unique financial, legal, and technical 12 qualifications of the individual cable operator, along with that cable operator's history of performance. Thus, the franchise should ensure that no one may succeed the grantee's rights, by any means, without the City's permission. i. The grantee should be subject to the ongoing exercise of the City's police, regulatory and other powers. The City needs the ability to respond to changing circumstances over time. E. SUPPORT FOR PUBLIC, EDUCATIONAL AND GOVERNMENT USE. 1. PEG requirements take several forms.23 Franchising authorities can require operators to designate channels for PEG use in an RFRP. LFAs can establish requirements for equipment and facilities -- for example, requirements for studios and cameras. Franchising authorities can establish rules for the management and use of the facilities and channels devoted to PEG use. LFAs can enforce promises for services made by a franchise applicant. In any event, before issuing a Franchise, a LFA can insist that the cable operator "provide adequate PEG access channel capacity, facilities or financial support.i24 2. General trends As Congress noted when it first passed cable legislation: One of the greatest challenges over the years in establishing communications policy has been assuring access to the electronic media by people other than the licensees or owners of those media. The development of cable television, with its abundance of channels, can provide ... the meaningful access that ... has been difficult to obtain. Almost all recent franchise agreements provide for access by local governments, schools, and non-profit and community groups over so-called "PEG" (public, educational and governmental) channels. Public access channels are often the video equivalent of the speaker's soapbox or the electronic parallel to the printed leaflet ... PEG channels also contribute to an informed citizenry by bringing local schools into the home and by showing the public local government at work.25 23 1984 House Report at 68, 1984 U.S.C.C.A.N. at 4705 (franchising authorities may require, among other things, "satellite earth stations, uplinks, studios and production facilities, vans and cameras for PEG use"). z4 47 U.S.C. §541(a)(4). 13 While there are certainly many communities that have no PEG channels, communities that have concluded that PEG requirements serve important community needs and interests often require three or more channels. That is because the programming interests of the PEG entities that use the channels are diverse. Separating the channels by use allows different user groups to schedule and develop programming of a particular type, and ensures that viewers have a general idea as to the type of programming that will be available on each channel. In addition, providing for adequate access from the outset avoids potential subscriber disruption that could occur if a community begins with too few channels and must displace channels in order to obtain adequate capacity. If it turns out that there is not enough programming the cable operator can use the PEG channel capacity for its own purposes. The PEG channels can be used to transmit voice, data and video signals to subscribers. It is recognized, however, that channels alone are not enough. Resources must also be available to enable potential users to produce programming The channels need to be publicized; potential users needs to be trained; equipment and facilities need to be available to produce good quality programming (audio and video must be satisfactory); equipment and facilities need to be available to edit programming; necessary facilities and equipment need to be in place in order to send signals to the headend from origination points, and then to subscribers via the headend. It is difficult for access to succeed without these resources. Many franchise agreements contain commitments by cable operators to provide support for PEG access in addition to providing a 5% franchise fee to the community. PEG use is changing as cable technology changes. Access centers originally were concerned with the provision of video programming, just as cable operators focused on the provision of video programming. A number of access centers are now evolving into community media centers which provide opportunities to take advantage of the Internet and cable's new technical capabilities to provide diverse, multimedia information to the home (and to provide everyone in the community the opportunity to participate in the Information Age). In sum, the developments in communities that have determined that PEG access can serve important community needs and interests suggests that (a) multiple channels should be devoted to PEG use; (b) operators should provide substantial support for PEG access in addition to the franchise fee; and (c) PEG access requirements should be structured to enable the community to take full advantage of advances in cable technology, including advances in interactivity and in digital capacity. 3. The ascertainment in Fridley showed that there is a strong need and interest in this community in making public, educational and governmental access programming of the cable system a high priority. The I-Net is also a high priority, in that, among other things, it will facilitate the use of the system for public, educational and government access programming. 25 1984 House Report at 30, 1984 U.S.C.C.AN. at 4667. 14 F. FRANCHISE CONDITIONS AND OTHER REGULATORY ISSUES In addition to the matters already discussed, a renewal franchise agreement must contain a number of provisions in order to ensure that franchise requirements are properly implemented. In addition, both the franchise agreement and local law must contain provisions to protect the City and its citizens, including cable subscribers, and to enable the City to manage its public rights-of-way fairly and effectively. The City believes that it has the authority to establish these conditions unilaterally. However, it is also the case that these conditions serve paramount public needs and interests. The following brief discussion of certain key provisions is intended to elaborate on some of the reasons underlying those provisions. This discussion is not intended to be comprehensive. Scope of Grant Federal law draws a distinction between cable systems and telecommunications systems, and suggests that to the extent telecommunications systems are authorized and regulated by local governments, this ought to be done separately from a cable franchise.26 In particular, changes in the Cable Act made by the Telecommunications Act of 1996 indicate that the federal Cable Act does not apply to the provision of telecommunications services by a cable operator; that a cable operator is not required to obtain a franchise under the federal Cable Act for the provision of telecommunications services; and that a franchising authority may not impose any requirement under the federal Cable Act that has the purpose or effect of prohibiting, limiting, restricting, or conditioning the provision of a telecommunications service by a cable operator or its affiliate.27 By restricting these prohibitions to franchises issued under the federal Cable t3ct, however, Congress indicated its intent to permit state and local governments to require appropriate compensation and to manage their public-rights-of-way through instruments other than cable franchises issued under the federal Cable Act.28 Thus, it appears to be the intent of Congress that the two be treated separately. For this reason, among others, any renewal franchise for TWC will only authorize the cable operator to use the City' public rights-of-way for the provision of cable service and to provide such other services as are required to meet its PEG obligations (including PEG obligatioris related to the I-Net). TWC may well have the right and authority to provide other services over its system in the City although those services are not governed by a cable communications franchise. 2. Conditions on Use of Public Rights-of-Way One purpose of the franchising process is to protect public property used by private entities from harm and to ensure that the property can be used by others. For example, a grantee may need to cut open a road or bore under it to install or repair a line. Improper restoration can leave a permanent bump or depression in the road, or even Z6 See e.g., 47 U.S.C. §§ 3(43)-(46), 522(6)-(7). Z� See 47 U.S.C. § 541(b)(3). 28 Cf. 47 U.S.C. § 253(c) (recognizing state and local governments' right to manage the public rights-of-way and to require fair and reasonable compensation). 15 cause it to collapse. This is an important public safety issue. Thus, franchises in the City must be subject to conditions regarding the use of the public rights-of-way. It is essential that a renewal franchise continue to protect municipal property and make it safe and available for multiple users, including other utilities. Moreover, use standards and requirements change over time, as do the City's planning goals. The placement of these private facilities in the right-of-way must not be allowed to interfere with the implementation of these new standards, or permit cable grantees to avoid rules or fees that are imposed in connection with various activities in the rights-of-way. Finally, the use of the rights-of-way cannot be allowed to interfere with any public projects. Accordingly, grantees should be required to meet certain minimum standards for use of the rights-of-way to satisfy these goals, and the City must have the flexibility to establish new standards and procedures over time. 3. Term The length of the franchise is primarily a function of allowing the cable operator sufficient opportunity to earn a return on its required investment, while ensuring that (a) the cable operator's performance will be evaluated within a reasonable period of time, so that the cable operator has incentives to maintain its perFormance at a high level, to ensure that its franchise can be renewed; and (b) to allow the community to reevaluate franchise requirements, in light of changes in technology. Several recent franchises have been granted for terms of 5-15 years. Minnesota Statutes prohibit a franchise term of more than 15 years.29 The City believes a ten (10) year franchise is appropriate given the needs and interests identified. 4. City's Exercise of Police Powers and Modification of Applicable Rules and Ordinances The City has the legal authority to utilize its police and other powers to secure and promote the public health, safety, and general welfare of its residents, and to adopt appropriate regulations of businesses over which it has jurisdiction. In particular, because of the technical, economic and regulatory volatility of the cable industry, the City must have regulatory flexibility if it is to meet its duty to the public while still granting renewal franchises. Accordingly, any renewal franchise must preserve the City's police powers and regulatory flexibility to the maximum extent possible. 5. Reports and Records The franchise is subject to provisions regarding books, records, inspections, reports, and similar requirements. In a new franchise term, the ability of the City to obtain records and reports should not be in doubt and is critical to the effective enforcement of the franchise. 6. Customer Service Provisions 29 Minnesota Statutes Section 238.084. 16 The failure of cable operators to provide good customer service received national recognition in the 1992 amendments to the Cable Act and the minimum customer service standards adopted by the FCC.30 Those federal standards, however, recognize that additional or more stringent standards may need to be adopted by particular localities, based on specific conditions and on the behavior of particular cable companies.31 7. Franchise Fees Franchise fees are imposed to help compensate cities for use of their public rig�hts- of-way, property that was acquired and is maintained by each community as a whole. 2 However, franchise fees are subject to a form of federal "rent control" that prevents cities from simply charging the fair value of the property that the cable companies use. Charging less than the maximum amount allowed by law would effectively mean that everyone subsidizes cable's use of the rights-of-way. While the City recognizes that cable subscribers would prefer not to have a franchise fee — because operators itemize the fee on bills, the City also notes the following. First, it is fair to those who DO NOT subscribe to cable to ensure that the companies pay for the public property that they use. Second, the City Council may choose to designate a portion of increased franchise fees — to the extent that the amount collected increases due to, for example advanced services and/or increase in subscribership — to fund public, educational and governmental access operational expenses that will provide substantial benefits to subscribers and to the community at large. Thus, the best approach to the franchise fee is to continue to charge the maximum permitted fee, which for now is 5% of gross revenues. The City's experience over the last term suggests that the franchise fee definition should be clear and broad, and consistent with the federal rent limitations. It also further suggests that it should have the clear ability to review all of the cable operators's financial data. Insurance Requirements; Indemnification; Bonds; Letters of Credit; No Recourse Franchises typically include provisions that are designed to (a) ensure that the City, and the City's citizens, bares no risk as a result of a grantee's use of rights-of-way; and (b) ensure that the grantee complies with applicable requirements, and if it does not, the City can complete the required work and obtain compensation for the damages caused. As to the first point, the grantee can cause damage to public and private property when it is in the rights-of-way. It can create hazards that may lead to lawsuits. It should be clear that the City should bear no risk associated with such suits, and what is more, the City has an interest in assuring that the cable operator has the insurance and other protections in place so that it can be held responsible for the damage that it causes. In addition, the City needs to enter and use the rights-of-way constantly. The use by the cable operator is an important use, but that use is secondary to other uses. If, by reason of allowing a cable operator to use the rights-of-way, the City were exposed to 3o See 1992 Act, sec. 2(b)(4)-(5); 47 U.S.C. § 552; 47 C.F.R. § 76.309. 31 47 C.F.R. § 76.309(b). 3z See, e.g., Citv of Dallas v. F.C.C., 118 F.3d 393 (5�' Cir. 1997) 17 liability if it caused damage to the cable operator's property, the City's potential liability would be enormous and its ability to use its own property limited. In commercial leases, landlords usually require tenants to assume all risks that flow from the occupancy of the building: a landlord doesn't, for example, agree typically to compensate the tenant for business losses if a roof leaks. The City cannot afford to assume any risks associated with the use of the rights-of-way by a cable operator. Performance guarantees, in the form of letters of credit and bonds, ensure that work that the cable operator promises to perform is perFormed. If the City's only remedy is a lawsuit, the benefits that are promised will inevitably be delayed and may in many cases be deferred forever. By ensuring that there are funds available the City ensures that the benefits promised are delivered. 9. Liquidated Damages As a related matter, there are a number of franchise requirements where noncompliance could significantly reduce the benefits of the franchise, and thus harm the City, but where the amount of damages is hard to estimate. Because of this, it is essential to include liquidated damages amounts, and to make it clear that those damages apply from the time a breach occurs. This ensures that the cable operator is not rewarded for non-compliance, and ensures that it does not adopt a policy of only complying when caught. 10. Termination The City must also have available more serious remedies -- revocation or shortening the term of a franchise -- in the event of a serious breach of performance. Any business relationship depends upon a satisfactory working relationship between the parties; no working relationship can be established and maintained if the grantee lies or attempts to deceive, refuses to comply with key provisions of law or its agreed upon obligations, or repeatedly violates law or its agreed upon obligations. At the same time, it is important that subscribers not be disadvantaged if a franchise must be revoked. Therefore, a cable operator must be required to ensure continuity of service for a reasonable time until a new cable operator begins to offer service. Any renewal franchise must be subject to these provisions. 11. Abandonment Any renewal franchise would be granted in return for each grantee's promise to provide service throughout its franchise area in accordance with a franchise agreement. Thus, a renewal franchise must ensure that if for any reason the cable operator stops providing service in accordance with the franchise over all or a part of its system, the City is able to take action to ensure that service continues. In addition, if property is abandoned, the City must be able to ensure that it is either removed, or that the City can take ownership of the property. There is enormous potential risk to the City if property remains in the right-of-way, it is no longer subject to a franchise, and the City does not have the right to dispose of that property as it sees fit (during construction or excavation projects, for example). 12. Relationship of Remedies 18 The remedies available under a renewal franchise should not be exclusive. The public's compensation for harm suffered should be as complete as possible; therefore, remedies should be available singly or in combination. 13. Transfers The City's decision to grant a renewal franchise is based on the expectation that the entity to who the franchise is granted will be the entity that will perform the franchise requirements. In effect, the decision to grant a renewal franchise is a decision to ensure the City's needs and interests are met for the duration of a renewal franchise. Any transfer may affect these and other conditions, and the City may have chosen to deny a franchise to the transferee had it applied. Thus, the City must have the opportunity to review a transfer, to determine the likely impact on the performance of franchise requirements and the community, and to grant, grant with conditions or deny the transfer based on the reasonably predicted impact. For similar reasons, the term "transfer" should be broadly construed to include transactions they may result in the transfer of all or a portion of the grantee's interests in the cable system or the franchise, change in the control of the franchise itself, or similar results however achieved. This is so because a change of control, as well as a change in the actual holder of the franchise can have enormous consequences for the community. In some cases, the effect may be beneficial by increasing the financial resources available to the community. But a merger could also have the reverse effect, and could result in the transfer of the franchise to an entity that is simply not prepared to satisfy its franchise obligations. While the City could always seek to enforce the franchise, a change that effectively increases the cost to the City of obtaining its contractual benefits harms the City and subscribers. The City has a substantial interest in avoiding these adverse effects. For this reason, the City has devised a transfer procedure that uses standards for measuring changes in control that are consistent with standards set forth in state and federal law. In addition, the City has developed factors that will be considered in determining whether to grant a transfer which goes to the basic question of determining whether (a) performance is likely to be affected; and (b) whether there is likely to be an adverse impact on the City or the public. The fact that the City makes an adverse determination on any point does not mean a transfer will be denied, but it does mean that the City will be in a position to establish transfer conditions to avoid adverse effects (this might include requirements for corporate guarantees, for additional bonds, or resolving compliance and non-compliance issues so that there is no misunderstanding as to what is and is not required). 14. Severability A cable television grantee will enjoy special rights to use the City's unique rights- of-way. To ensure that a cable operator does not essentially convert what is valuable City property to private purposes, the City imposes conditions on the grantee's use of the rights-of-way. This ensures, among other things, that the community at large shares in the benefits which flow from the franchise grant. The grant would not be made if those benefits were not received. Therefore, any franchise agreement must include a provision that makes it clear that if material provisions of the agreement are unenforceable, the City can void or reconstitute the franchise. The cable companies should not be able to retain 19 the benefits of a franchise agreement without providing the corresponding benefits to this community. 15. Compliance with Applicable Laws ' Many matters governing the operation and business practices of a cable operator are addressed by federal, state and local laws and regulations. The City's grant of any franchise is based on the assumption that a grantee would comply with such laws and regulations. 16. Rate Regulation In 1992, Congress determined that it was necessary to protect subscribers from unreasonable rates for cable service and equipment. The current Cable Act and the FCC's implementing regulations, place significant limitations on local governments to regulate service rates. Nonetheless, it is important that the City retain the right to regulate rates where the law permits. 17. Non-Discrimination The need for provisions prohibiting discrimination among subscribers or persons requesting service is expressly recognized by federal law.33 Federal law also establishes general EEO requirements for cable. These provisions not only establish federal standards, but also permit establishment of additional local requirements. Companies using public property, and obtaining the sorts of benefits from the public that are being provided through the franchise should be subject to the City's general rules regaxding non-discrimination, to ensure that the public property is not effectively converted to private use. 33 See 47 U.S.C. §§ 541(a)(3), 543(e). 2� EXHIBIT A TIME WARNER CABLE LETTER DATED JUNE 19, 2000 Kim M Rodnn 80( Ptymnllth Aven�c Narth Minqeapofix Mlnnuota SS411 bl'1/522-5200 tnx 6�zn2�•�cz6 /� TtME WAftN�R �: CA$LE 7uno l9, 2400 :. � ! Mr. w;lrwm i3urns ;,�;M1 � � � ; , m3��k � w«r�. . .: . . Ciry Mansger �`TM � . , .. b . i . . ., � , , . . . ... L;ity of Fridley " ' 6431 Univ¢�rsityAvenuaNE , Fridley, MN' S5432-4303 � Dear Wllliam: . �yd I�e�,e yaen pkasod to have provided oabla tatcvuioa savica to Fridley since ws 1u�n ta opnrate tho system in August of 1994. We b�{ieva that we have be�en tesponsive ia mosting ti�o Ca61��v� � valoa�the good work►2eng �relationship we 6ave un' huI'ri�and '��ta elected officials. • As yon may know, our franobiae to provtde cabk talavisIon sarvice witl expice on MeY 16, 2003. Accordingly, Tima Wamor lna. (d.b.a Tinu Warner cabie) herdry g'rvos not�e tb8t h seeis reaewal ef its cabla tvZevision frenc6ise punuant Eo the provisions of 47 U'.S.C- 54G and requesds cominaneemept of renewal praceadi�gs P�rsvant to 47 U.9.C. 546(a). l wifi be cantacting you sht+rtly tu schadule a meeting at whic6 time wa cen discuss �e renewat and a schCdule in more datoil . As alwqys. please do �ot hositat� to contact ma shoutd yeu have any quest�ous re�a[ding ti�e renawal ar our sa�vlca in gene�al. � 5 re , � � Ki Roden Presiden oFPu6lie Affaiis & Cusfomer Service , . ca: L,au,oe I,aupold, Time Warner Ca6le � 9il1 Clumpa, City af pridley Fciiz Knaak, City Actomey ATu�rc �mee InaCnmpnny A-1 , �-neo EXHIBIT B GROSS REVENUE AUDIT . , . , � � � Tautges Redpath, Ltd. Certified Public Accountants and Consultants INDEPENDENi' ACCOUNTANTS REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of the City Council City of Fridley, Muu�esota We have performed the procedures enumerated below, which were agreed to by the City of Fridley solely to assist in evaluating the &anchise fee revenue cal culation, as prepared by Time Wamer Cable for accuracy and completeness. This agreed-upon procedures engagement was conducted in accardance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties speciiied in tlus report. Consequenfly, we make no representafion regarding the sufficiency of the procedures described below either for the purpose for wluch itiis report has been requested or for any other purpose. The procedures we performed are summarized as items 1 thru 15 under "Procedures and Results" on the following pages of tlus report. We were not engaged to, and did not, conduct an examinafion, the objective of which would be the expression of an opinion on Tirne Warner Cable's franchise fee revenue calculation. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our aitention that would have been reported to you. This report is intended soleiy for the information and use of the City oP Pridley and is not intended to be and should not be used by anyone other than those specified parties. Apri128, 2004 �(c.� la� GC��,�h L�. HLB TAUTGES REDPATH, LTD. Certified Public Accountants . White BearLake Office: 4810 White Bear Parkway, White Bear lake, Minnesota 55110. USA Telephone: 651 426 7000 Fax 651 426 5004 Has6ngs Office:1303 South Frontage fload, Suite 13, Hastings, MN 55033, USA Telephone: 551480 4990 fax 651 426 5004 HLBTaNges Redpa�h. Ltd. h a momberd�l�matiannl. A wari6wide aganimdan Matcauntinp fmns aM business advisr�a. B-1 Procedures and Resu/ts 1) Conducted a review of the accounting system controls over the revenues and cash receipts transaction cycle and tEie financial reporting cycle. • We obtained an understanding of accounting system controls, billing processes, month-end cut-offs, and the cash receipfs transaction cycle and reporting cycle from Time Warner personnel. 2) Compazed aIl subscriber fees, including installation/reconnection charges, pay-per- view, remote control, guides, etc., from detailed billings/receipts reports to fra.nchise fee sumrnary reports for April, May and June of 2003. Noted the following exceptions: • Pay per view and insiallation revenues did not agree between the billings/receipt reports and the francluse fee stu�nmary reports as follows: Amount Amount Time Warner Submiited Submitted Reports Over (under) AprilPayPer-View $9,O13 514,010 ($4,997) May Pay-Per-View 5,929 6,034 (105) 7une Pay-Per-�ew 8,457 10,435 (2,378) Subtotai 22,999 30,479 (7,480) Aprillnstallation 440 G25 (185) May Instaliation 582 439 143 7une Installation 582 472 110 - Subtotal 1,604 I,536 68 Total • 324,603 532,015 ($7,412) The total due to Fridley, based upon 5% franchise fees, is $371. Titne Warne�r e�ects to pay the City, with 12% APR interest, $404 along with the t'` quarter 2004 payment. 2 : ►? rroceaures ana rceswrs • Advercising sales did not agree between the billings/receipt reports and the francluse � fee summary reports. Below is the calculation of the difference and the aznount undec paid: Franclvse Fee Summary Report $24,599 Billings/Receipts Reports $21,508 Difference $3,091 Franciuse Fee % 5% Under Payment $155 Recommendation• We recommend the City ascertain that payments have been received foi the under payments listed above. 3) Reviewed procedures for allocating and reporting home shopping revenues and analysis of the allocation between the City of Fridley and other Minnesota cities using Time w��. An analysis of home shopping revenue for 2003 is presented as follows: 2003 Home Shopping Revenues 4608-0000 4608-0005 HSN QVC Total January $1,376 $ - $1,376 February 1,455 5,153 6,608 March 1,406 4,239 5,645 April 1,417 3,620 5,037 May 6,000 - 6,000 June (3,15�) 8,278 5,128 7uty 1,287 - 1,287 August 1,358 8,307 9,665 : September 1,274 3,821 5,095 October I,42� 8,610 10,031 Nwember 6,103 - 6,103 December 6,112 - 6,112 Totat t, 5 42,028 E68,087 3 B-3 i Procedures and Results With QVC, the months with no income (January, May, July, Novetnber, and December) are because QVC does not remit revenue to Time Warner Cable on a monthly basis. With IiSN, the negative amount in June is due to May being recorded as an estimate and then being adjusted in June. Recommendation• We recommend che City request detail of the Home Shopping revenues on a quarterly basis, since their monthly amounts have considerable fluctuation. We also recornmend the City inquire as to why home shopping revenne was not received for QVC for November and December 2003. 4) Compared cash receipt ]edgers for potential revenues and general ledger expense accounts for credits, which may be revenue items. • The general ledger that we reviewed did not have cash receipts descnbed in detail. This is a step that would be performed in a full audit. The Minneapolis office did not have access to the detail information on cash receipfs. See item 7 for description of testing and recommendations on `bthe�' revenue. Per secrion 405.03 of the Cable Communications Franchise Ordinance, gross revenues are defined as: The annual gross revenues of Grantee from all sources of operations of the system within the City including, but not li»tited to, Sasic Service monthly fees, pay television fees, installation and reconnecrion fees, and advertrsittg revenues. This term does not include any sales, excise or other tcrxes collected by Grantee on behalf of the state, city or other governmental unit. The term does rrot i»clude any bad debt of Grantee so long as the bad debt is equal to or less than two percent (2%) of the anm�al Gross Revenues. A franchise fee shall he imposed on that portion of bad debt in ezcess of two (2%) of the annual Gross Revenues. Reviewed Time Warner's chart of accounts and detailed billing/receipt reports for the months of April, May, and June, 2003 for inclusion of all applicable revenue items. See the attached worksheet "Franchise Fee Bill Testing" for accounts that were not observed during testing. 4 B-4 � Procedures and Results Recommendation: We reviewed Time VJarner's ARB028 report and found that the majority of accounts were not included in the franchise fee revenue calcuiation. We recommend the City inquire as to why such accounts aze not included. 5) Compared cash receipts reflected on bank account statements with (a) cash receipts recorded on cash deposit records, (b) cash receipts posted to the general ledgers and (c) cash receipts posted to the billings/receipts (franchise accounting) reports. • This would be a full audit test item, it is impractical to attempt to do this as part of the desk review. � Obtained financial information, including general ledgers, tax ret�arns, and financial statements of Time Warner and perform a reconciliation, to tlxe extent practicable, of revenues re�orted in the financial information with revenues reflected in the detail records of the franchise company. • This would be a full audi.t test item, it is impractical to attempt to do this as part of the desk review. Time Warner did not provide us with financial statetnents of Tune Warner, they only provided us with financial information related tc� the City's franchise. • The franchise ord.inance itern 405.08 (3)(G) requires Time Wamer to provide the City with a certification of the Gross Revernzes for the preceding yeaz prepazed by an independent Certified Public Accountant For the year we tested (2003), Time Warner did provide certain items required by 405.08(3)(G) in a letter dated March 28, 2004. However, the financial information provided consis#ed of three unaudited financial statements and did not contain a cerfificafion of Gross Revenues prepared by an independent CPA as required by the franchise ordinance 405.08 (3)(G). Recommendation• We recommend the City inquire as to the reason that a certified gross revenue statement was not provided. The City could consxder having Time Warner paq for the cost of the gross revenue audit in lieu of providing a certified gross revenue statement_ 5 B-5 0 . �:, Procedures and Resulis � Tested the reporting of bad debts, refunds, other and NSF checks on the fianchise fee worksheets. • This has been done by trend analysis for bad debts as follows: 2003 2002 1stQuarter Z.Oi% 0.78% 2nd Quazter 1.91% 2. ( 8% 3rd Qusrter 0.72% 1.75% 4th Quaxter 2.92% 2.85% Avtrage 1.89% 1.88% Bad debt expense averaged 1.89% in 2003 and 1.88% in 2002. Both amounts appeared reasonable, however, on a quarterly basis, there were some large spikes. In 2003, bad debt expense was as low as 0.72% in the 3`� quarter and as high as 2.92% in the 4'" quarter. In 2002, bad debt expense was as low as 0.78% in the 1`� quarter ' and as tugh as 2.85% in the fourth quazter. The amounts listed for bad debt expense for February 2002 and February 2003 were the exact same number. Same for March 2002 and March 2003. 2002 2003 February 7,917.76 10,842.73 March 7,917.76 10,842.73 Recommendation• Bad debt at 2% or und�r appears reasonable. However, there appears to be inconsistency in how and when it was recorded by Time Warner. We recommend the City have Time Wamer provide monthly detail of bad debt expenses. • Other Revenue (Expense): The franchise fee calculation sheet has a"Schedule of Others Revenues by Service" that is either a deduction or an addition to franchise fees. Time Warner indicated these iiems generally represeni refunds, credits to customers for power outages or other service outages, installation problems, pricing adjustmenfs, etc., which are to be expected and aze most likeFy reasonable. :. s � Procedures and Results • _ Other Revenue — account 4699-0000 Other revenue account number - 4699-0000 was as follows for 2003: January February March April May 7une 7uly August 5eptembex October November Aecember Total Recommendatian• 4699-0000 Other Revem�e ($18,686) (8,687) (9,602) (9,732) (12,631) (6,795) (11,215) {13,960) (7,036) (13,439) (11,468) (17,635) �� We recommend T�me Warner Ceble provide an itzmized description of the other revenue am.ounts. If these items aze expenses tiiey should not be deducted from the calculation of franchise fee revenue. Any month that has au "other revenue" amount of more than $3,000 should have an explanation included in the quarterly remittance to the City. The franchise ordinance does noi allow for a deduction for expense items in the gross revenue calculation. (see franchise ordinance, 405.03 #12 "Gross Revenues'� We recommend t�e City request detail ofthe `bther" amounts on a quarterly basis and determine if the a�nounts Iisted above aze deductions from revenue, or should be treated as expenses. 8) Compared all 2003 and 2002 franchis� fee worksheets with &anchise fee payxnent schedules submitted to the franchise authority. M�r7 7 Procedures and Results Noted the following exceptions: • For 2002, Time Wamer was unable to provi.de backup for pay per-view and installation revenues. We did not inquire about 13�ese amounts further as we tesied all of the amounts for 2003. • As noted in number 2, pay-per-view and installation revenues did not carry forward properly. •. Upon the initiation of fieldwork, it was brought to our attention by Time'Warner that bad debt expense was not reported correctly for the 1� quarter of 2003. $816 will be paid back to City with the ls` quarter 2004 payment. 9) Test methodology of identifying new, disconnect, change of service, bulk accounts and full service in a timely manner. • On our client-to-prepare lisfing, they indicated that the Time Warner staff accountants would be abte to provide us with this information. The Time Warner staffaccountants gave us a general understauding of how the process works, and the methodology of the pmcess was reasonable. 10) Launch Fees As part of ouz desk review we inquired of Time Warner their method of accounting for launch fees and marketing reimbursements. Regarding launch fees, the Company responded: "YYhile it is true that vartous cable programming networks have ojj'ered "launch fees" in exchange for carriage by a cable television operator, ovr policy has beerr not to accept "Inunch ' fees" 6uf rather fo negotiate ihe lowest possibfe license fee with the programmer is order io keep our monthly rates reasonable. ° We know from experience with cable companies that launch fees aze a common contract negodation provision. However, if Time Warner does not have launch fee provision as part of their cable programming contracts then it is not an issue. __ _- I � Procedures and Results We also reques#ed contzacts or agreements between Time Warner and the cable pro�mming networks. The Company responded as follows: °You had requested contracts or agreements beriveen ADL 7"nne Worner and the ptogrammer for arry lar�nch fee or marketing reimbursement agreement entered into in 2002 or 1003. lfll such cond-act negotiaJiorrs are at the corpornte level, and �t at the division leveL Therefor� we do not have possession of these coretractc. " Recommendation: In previons sudits with cable commissions, we have recommended that the City request an affirmaiive statement from Time VJarner that they do not have any laimch fees. The above explanation from the Company states that it is their `policy" not to accept launch fees. It does not actually state that they do not have a launch fee provision in their programrriing netwark contracts. 11) Marketing Reimbursements Regarding marketing reimbursements, the Company responded as follows: '7n some tnstances a cable programming rretwork has agreed to share (or underwrite) rhe cost of promoting a new service or mc�keting an existing service by sharing in our markeH�g efforts. This marketing support, sometimes referred to as caop support, (collectively 'iNarketing SupporC) is a traditional industry practice intended to suppor! marketing campaigrrs ihai beneftt both the cable programming network and the ca61e operator, For example, markeii»g Supporc allows TfVC to be both more e„�cienl (by pooling marketing dollars ivith 1he programmer) and effective (by targeting adr to our customersJ as we market our service. It ir gerio�ally adrnowledged �hat Marketing Support conbi6utes to customer retenrion mid growth, both of which have a pasitive injluence on Gross Revenaes upon which franchise fees are paid In an ever increasingly competitive environment with DBS providers, we murt contim�m,rsly seek xay's to emphasize the vc�lue of our service. .�Iarketing Support allows us to meet this competitive challenge by effectively promoting the service to new and existing customers while minimizir�g our direct aut-bf-pockei e;cpenses thereby keeping our monthly rates reasonable. Markeiing Suppori is no1 revenue derived from ihe operation of the cable system buf rather is a reduction to a cost or an expense that TWC wouTd not necessarily have incurred Marketiug Suppor� as noted above, contributes ro customer reten[iorr and growth, both oJwhich have a positive influence on Gross Reverrues upon which Jhe frarrchrsefee ispaid. " 9 B-9 Procedures and Resu/ts The compauy also stated that there were no launch fees or marketing reixnbursements received in 20U3. Generally accepted accounting principles (GAAP) define revemie as "ix.Jlows or other enhanceme»ts of asseis of an enlity or settlemenis of its liabdlities (or a combination of both) from delivering or.producing goodr, rendering services, or other activities that constifute the entity's ongoing major or central operations. " Launch fees, marketing reimbursemenfs and rebates meet the definition of revenue above, as they are all "activities that constitute the endty's ongoing major or centtal operations." Emerging Issues Tastc Force Statement O1-14 further supports this classification of such items as revenue. The Task Force "agreed that income stafement characterization as revenue of reimbursements received for out-of-pocket expenses incurred is also consistent with the guidance in SOP 81-1. " Recommendation• In prior gross revenue audits, we had requested tl�at Time Warner provide an accounting standard that supported their characterization of both launch fees and marketing reimbursements as an offset to expense ratber tban a revenue item. Time Wazner has provided their interpretation of an accounting standard on thiis matter. W3ule we do not agree with this interpretation, we do not wish to pursue this matter any further at this poin�. 12} . Multi Dwelling Units (MDU's)Bulk Billings and Commercial Accounts We also requested explanation and examples of bulk billings, MDU's and commercial accounts. Specifically, we aze interested in whether a bulk unit — apartment, hoteE, etc. is considered on subscriber or multiple subscribers. This information was provided to us and the numbers are relatively minimal and do not war�ant furGher investigation at this point. Recommendation• No furthez analysis warranted. —._.._ . _. 10 B-l0 Procedures and Results 13) Franchise Fee Bill Test VJe requested and obtained 15 random bills sent to cable customers in 2003. We tested these bills to verify the 5% &ancluse caIculadon was accurate. See attached worksheet "Franchise Fee Bill Testing." Results• There appears to be an inconsistency regarding inclusion of the $1.41 access fee in the 5% franchise fee calculation. According to Time Warner, the access £ee should be included in the calculation. The $anchise fee does not appear to be included in the calculation on bills 2, 6, 7, 8 and 12. Also, bills 1 and 3 had differences of $.17 and $.03, respectively. It appeazs Digital Converter Rental at $6.65 each, Digital Remote Rental at $.30 each, Cable Guide and Navigator fees are not included in the calculation. Time Warner slso indicated that cable guide is not included in the franchise fee calculation but we are unclear as to why tlris would be. Recommendation• We recommand the City, request a larger series of customer bills to test and verify that the franchise fee, Digital Converter Rental at $6.65 each, Digital Remote Rental at $.30 each, Cable Guide and Navigator revenues are accurately charged to customers on customer bills. 11 B-11 Procedures and Resulfs 14) General Trend Analysis The amaune of basic subscribers for Fridley has dropped considerably since January 2002. A summary of basic subscn'bers by month since January 2002 is as follows: I 2ooz, zoos ana zooa sasic subscriber nehvity !i (Source: Time Wamer Ceble) 2002 2003 2004 Jsnuary 6077 5912 5227 Febrvary 6033 5855 5209 March 6010 5882 5207 APri1 5983 5938 May 59fi6 5941 June 5975 5938 July 5987 5889 August 5943 5838 September 5953 5789 Octobec 5910 5751 November 5895 5732 December 5910 5731 Average 5970 5849 5214 I� �I �Recommendation: We recommend the City inquire with Time Warner as to reason for the large decrease in basic subscribers between December 2003 (5731) and January 2004 (522'n. 15) Recommendation Regarding Full Audit Being Conducted We would like to present this report to the City to provide you with appropriate decision maldng information on this marter. 12 B-12 Summary of Recommendatlons Comvarisan of Detailed Billin� Renorts to Franchise Fee Summarv 1. We recoxnmend the City ascertain receipt of the underpayments listed in procedure 2. (page 3) Review the A1location of Home Shoppina Revenues — Procedure No. 3 2. We recommend the City request detail of the Home Shopping revenues on a quarterly basis, since the monthly amounts have considerable fluctuation. We also recommend the City inquire as to why home shopping revenue was not received for QVC for November and December 2003. (page 4) Review Cash Receipt LedQers - Pmcedure No. 4 3. We recommend the Ciry find out why certain accounts are not included in the franchise fee revenue calculation (page 5) Financial Information — Procedute No. 6 4. We recommend the City ask why a certified gross revenue statement cerlified by an independent CPA was not provided (page 5} Testing reports on the Franchise Fee Worksheets— Procedure No. 7 5. We recommend the City request Time Warner prepare monthly detail of bad debt expense with its quarterly franchise fee remittances. (page � Other Revenue — Account 4699-0000 — Procedure No. 7 6. We recommend the City xequest detail of the "other" amounts on a quarterly basis and determine if the amovnt listed is deductions from revenue, or should be treated as expenses. {page 7) Franchise Fee Bill Test Procedure No. 13 7. We recommend the City request a lazger series of customer bills and test to verify that cnstomers are being charged the correct aynount on the'u bills. (page 11) Genera7 Trend Analysis — Procedure No. 14 8. We recommend the City inquire with Time Warner as to reason for the large decrease in basic subscribers between December 2003 (5731) and January 2004 (522�. (page 12} '13 B-13 i # F1 � � � � �• ..� � R1 � A9 � �< � • � 7 � � �� .a t � � ,.�.. V � � V m # ,S� s i� a m� � ;� n 4A � � � Nz Gz� y^ y {� � � � y �� ° Wy p` ��p�� U C7 � fA. , gg o g�� O C � � � � � � � . . . Q � tV �ry vi N N � n fn � �`j � O � eF h � O O � i � � O N � � � � � � � � � � � �-. � V1 N !`! 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B-14 EXHIBIT C NEEDS AND INTERESTS ASCERTAINMENT G1 EXHIBIT D REQUEST FOR RENEWAL PROPOSAL ("RFRP") D-1 CABLE COMMUNICATIONS FRANCHISE ORDINANCE City of Fridley, Minnesota July 21, 2004 405.01. 1. 2. 405.02. 405.03. 405.04. 3. 4. 5. 6. 7. 8. 9. 10 11 12 13 405.05. 14. 15. 16. 17. 18. 19. 20. 405.06. 21. 22. 23. 24. 25. TABLE OF CONTENTS Page STATEMENT OF INTENT AND PiJRPOSE .....................................................1 Statement of Intent and Purpose ........................................................................... l Award Fee and Franchising Costs . .......................................................................1 SHORTTITLE . . . .. . . . . . . . . . . .. . . . . . . . . .. . . . . . . . . . . . . . . . . . . .. . ., . . . . . . . . ..... . . .. . . . . . . . . .... .. . . . . . . . .. . . . .. . . .. .1 DEFINITIONS....................................................................................................1 GRANT OF AUTHORITY AND GENERAL PROVISIONS .............................. 5 Grantof Franchise . .............................................................................................. 5 Criteriaof Selection . ............................................................................................ 5 Authority for Use of Streets . ................................................................................ 5 FranchiseTerm . ................................................................................................... 5 PreviousFranchises . ............................................................................................ 6 AreaCovered ....................................................................................................... 6 PolicePowers . ..................................................................................................... 6 Use of Grantee Facilities . ..................................................................................... 6 WrittenNotice . .................................................................................................... 6 Franchise Non-Exclusive . .................................................................................... 7 Compliancewith Laws ......................................................................................... 7 DESIGNPROVISIONS ......................................................................................7 SystemDesign . .................................................................................................... 7 Interconnection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 InitialService Area . ............................................................................................. 7 Provisionof Service ............................................................................................. 8 SpecialTesting . ................................................................................................... 8 SignalQuality . ..................................................................................................... 9 Test and Compliance Procedures . ........................................................................ 9 SERVICEPROVISIONS .....................................................................................9 Regulation of Service Rates . ................................................................................ 9 EmergencyAlert System ...................................................................................... 9 InstitutionalNetwork . .......................................................................................... 9 PEGAccess Channels . .......................................................................................10 Government Access Capital Support .................................................................. l l i � 26 27 405.07 28. 29. 30. 31. 32. 33. 34. 35. 36. 405.08. 37, 38. 39. 40. 41. 42, 43 , 405.09 405.10 44. 45. 46. 47. 48. 49. 50 51 52 53 54 PEG Access Equipment and Facilities ................................................................ l l LocalOrigination . . . . . . . .. . . . . . . . .. . . . . . . . . .. . . . . . . .. . . .. . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . . .. .. .12 CONSTRUCTION PROVISIONS .....................................................................12 Construction Standards . .....................................................................................12 Construction Codes and Permits .........................................................................12 Repair of Streets and Properiy ............................................................................13 Useof Existing Poles . ........................................................................................13 Undergrounding of Cable ...................................................................................13 Reservation of Street Rights ...............................................................................13 Trimmingof Trees . ............................................................................................14 Street Vacation or Abandonment . ......................................................................14 Movement of Facilities . .....................................................................................14 OPERATION AND MAINTENANCE . . . .. .... . .. . . . . . ... . .. .... .. .. .. . . .. .. . . . . . . . . ..... . .. . . .. .. .14 Open Books and Records . ..................................................................................15 Communications with Regulatory Agencies . ......................................................15 AnnualReport . ..................................................................................................15 AdditionalReports .............................................................................................16 Maps..................................................................................................................16 PeriodicInspection . ...........................................................................................16 Periodic Evaluation and Renegotiation Sessions . ...............................................17 CONSUNIER PROTECTION PROVISIONS ....................................................18 Consumer Protection and Service 5tandaxds . .....................................................18 Subscriber Complaint Practices ..........................................................................18 Subscriber Information . .....................................................................................19 BillingPractices .................................................................................................20 RebatePolicy ..................................................................................................... 21 Annual Subscriber Survey ..................................................................................21 GENERAL FINANCIAL AND INSURANCE PROVISIONS ...........................21 Paymentto City . ................................................................................................ 21 DiscountedRates . .............................................................................................. 22 NotFranchise Fees ............................................................................................. 23 Performance Bond . ............................................................................................ 23 SecurityFund ..................................................................................................... 23 ii 55. 56. 57. 58. 59. 60. 405.11. 61. 62. 63. 405.12. 64. 65. 66. 67. 405.13. 68. 69. 405.14. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 405.15 Penalties from Security Fund . ............................................................................ 24 Procedure for Imposition of Penalties ................................................................. 25 Damagesand Defense . ....................................................................................... 26 LiabilityInsurance . ............................................................................................ 26 City's Right to Revoke ....................................................................................... 27 Revocation Procedures ....................................................................................... 27 FORECLOSURE, RECEIVERSHIP AND ABANDONMENT . ........................29 Foreclosure. ...................................... .......... ........ ............................ ... ...... .......... 29 Receivership. ... . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . ... .. . . .. . . . . . .. . . . ... .. . . ... . . .. . . . . . . . . . . . . . . .. . . . . .. . . ... . . . 29 Abandonment. .. . . . . . . . . . . . . . .. ... . . . . . . .. . . . . . . . .. .. . . .. . . . . . . . . . .. .. . . . . .. ... .... . . .. .. . . . . .. . . . . . . . .... .. .. . . . 29 REMOVAL, TRANSFER AND PURCHASE . ..................................................29 Removal After Revocation or Expiration . .......................................................... 29 Sale or Transfer of Franchise . ............................................................................ 30 City's Right to Purchase System . ....................................................................... 30 Purchase by City Upon Expiration or Revocation ............................................... 31 RIGHTS OF INDIVIDUALS PROTECTED .....................................................31 Discriminatory Practices Prohibited . .................................................................. 31 SubscriberPrivacy . ............................................................................................ 31 MISCELLANEOUS PROVISIONS ..................................................................32 Compliancewith Laws ....................................................................................... 32 FranchiseRenewal . ............................................................................................ 32 Continuity of Service Mandatory . ...................................................................... 32 Work Performed by Others . ............................................................................... 32 Compliance with Federal, State and Local Laws . ............................................... 33 Nonenforcementby City . ................................................................................... 33 Administration of Franchise . .............................................................................. 33 Cable Television Advisory Commission . ........................................................... 34 Miscellaneous Violations ...................................................................................34 EmergencyUse .................................................................................................. 34 Construction. .... . .... ....... ... ................................................................. ................. 34 Captions. . . . . . . . . . . . . . . .... . . . .. . . . .. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . .. . . . . . . . . . 3 4 Calculationof Time . .......................................................................................... 35 EFFECTIVE DATE; PUBLICATION; AND TIME OF ACCEPTANCE .......... 35 iii � � 83. Publication; Effective Date . ............................................................................... 35 84. Time of Acceptance and Exhibits ....................................................................... 35 EXHIBIT A ACCESS CHANNEL CARRiAGE REQUIREMENTS ..................................1 iv � ORDINANCE NO. AN ORDINANCE GRANTING A FRANCHISE TO TIME WARNER, INC., DB/A TIlVIE WARNER CABLE, TO OPERATE AND MAlNTAiN A CABLE TELEVISION SYSTEM IN THE CITY OF FRIDLEY; SETTING FORTH CONDITIONS ACCOMPANYING THE GRANT OF THE FRANCHISE; PROVIDING FOR REGULATION AND USE OF THE SYSTEM; AND PRESCRIBING PENALTIES FOR THE VIOLATION OF THE PROVISIONS OF THIS ORDINANCE The City of Fridley does ordain that it is in the public interest to permit the use of public rights- of-way and easements for the construction, maintenance and operation of a Cable System under the terms of this Franchise; said public purpose being specifically the enhancement of communications within the City, the expansion of communications opportunities outside the City, and the provision of programming of a truly local interest. 405.01. STATEMENT OF INTENT AND PURPOSE Statement of Intent and Purpose. The City intends, by the adoption of this Franchise, to bring about the continued development and operation of a Cable System. This continued development can contribute significantly to the communications needs and desires of many individuals, associations and institutions. 2. Award Fee and Franchising Costs. Grantee shall reimburse the City for all costs, including attorney's fees and publication fees, expended in the soliciting, processing and awarding of the Franchise. Payment shall be made by Grantee at the time of acceptance of this Franchise as set forth in Section 405.15.02 hereof. 405.02. SHORT TITLE This ordinance shall be known and cited as the "City of Fridley Cable Television Franchise Ordinance." Within this document it shall also be referred to as "this Franchise" or "the Franchise." 405.03. DEFINITIONS For the purpose of this Franchise, the following terms, phrases, words and their derivations shall have the meaning given herein. When not inconsistent with the context, words used in the present tense include the future, words in the plural number include the singular number and words in the singular number include the plural number. The words "shall" and "will" are mandatory and "may" is permissive. Words not defined shall be given their common and ordinary meaning. 1. Basic Cable Service. Any Service tier which includes the lawful retransmission of local television broadcast signals and any public, educational, and governmental access programming required by the Franchise to be carried on the basic tier. 2. Cable Mile. A mile of cable bearing strand. 3. Cable Service or Service. A) The one-way transmission to Subscribers of (i) Video Programming or (ii) Other Programming Service, and B) Subscriber interaction, if any, which is required for the selection or use of such Video Programming or Other Programming Service. 4. Channel. A six (6) Megahertz (MHz) frequency band, which is capable of carrying either one standard video signal, a number of audio, digital or other non-video signals, or some combination of such signals. 5. Class IV Channel. A signaling path provided by the System to transmit signals of any type from a subscriber terminal to another point in the System. 6. City. The City of Fridley, a municipal corporation in the State of Minnesota or its delegations. The City Council is the authority of the City. 7. Complaint. Any verbal or written inquiry, allegation or assertion made by a Person, which requires subsequent corrective action to the System or any portion thereof, or raises an objection to the programming or business practices of Grantee. The term "Complaint" does not include an inquiry which is immediately answered by the Grantee. 8. Converter. An electronic device which converts signals to a frequency acceptable to a television receiver of a Subscriber and by an appropriate selector permits a Subscriber to view all Subscriber signals included in the Service. 9. Drop. The cable that connects the Subscriber terminal at a point designated by the Subscriber in the Subscriber's home to the nearest feeder cable of the System. 10. FCC. The Federal Communications Commission or a designated representative. 11. Franchise Administrator. The City Manager of the City or his designee who shall be responsible for the continuing administration of the Franchise. 12. Franchise Fee. Includes any tax, fee, or assessment of any kind imposed by the City or other governmental entity on Grantee or Subscriber, or both, solely because of their status as such. It does not include any tax, fee, or assessment of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services but not including a tax, fee, or assessment which is unduly discriminatory against cable operators or cable Subscribers); capital costs which are required by the Franchise to be incurred by Grantee for public, educational, or governmental access facilities; requirements or charges incidental to the awarding or enforcing of the Franchise, including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages; or any fee imposed under Title 17 of the United States Code. 13. Grantee. Time Warner, Inc., d/b/a Time Warner Cable, its agents, employees, lawful successors, transferees or assignees. 14. Gross Revenues. The annual gross revenues of Grantee from all sources of operations of the System within the City including, but not limited to, Basic Service monthly fees, pay television fees, expanded Basic Service tier and digital tier fees, installation and reconnection fees, franchise fees, late fees, home shopping fees, equipment rental fees and advertising revenues. This term does not include any sales, excise or other taxes collected by Grantee on behalf of the state, city, or other governmental unit. The term does not include any bad debt of Grantee so long as the bad debt is equal to or less than two-percent (2%) of the annual Gross Revenues. A franchise fee shall be imposed on, that portion of bad debt in excess of two percent (2%) of the annual Gross Revenues. 15. Installation. The act of connecting the System from the feeder cable to the subscriber terminal so that cable television service may be received by the subscriber. 16. Normal Business Hours. Those hours during which most similar businesses in City are open to serve customers. In all cases, "Normal Business Hours" must include some evening hours, at least one (1) night per week and/or some weekend hours. 17. Normal Operating Conditions. Those Service conditions which are within the control of Grantee. Those conditions which are not within the control of Grantee include, but are not limited to, natural disasters, civil disturbances, power outages, telephone network outages, and severe or unusual weather conditions. Those conditions which are ordinarily within the control of Grantee include, but are not limited to, special promotions, pay-per-view events, rate increases, regular peak or seasonal demand periods, and maintenance or upgrade of the Cable System. 18. Other Programming Service. Information that a cable operator makes available to all Subscribers generally. 19. Pay Television. The delivery over the System of pay-per-channel or pay-per-program audio-visual signals to Subscribers for a fee or charge, in addition to the charge for Basic Cable Service or Other Programming Services. 20. PEG. Public, educational and governmental. 21. Person. Is any firm, corporation, association, partnership, proprietorship, individual, limited liability entity or organization authorized to do business in the State of Minnesota, or any natural Person. 22. Public Property. Any real property owned by any governmental unit other than a Street. 23. Residential Unit. Any building, structure or portion thereof which is occupied as, or designed or intended for occupancy as a residence by one (1) or more individuals. The term Residential Unit is not limited to units occupied by Persons as their usual place of residence and includes units rented periodically or used only as seasonal homes. 24. Service Area or Franchise Area. The entire geographic area within the City as it is now constituted or may in the future be constituted. 25. Service Interruption. Any loss of picture or sound on one(1) or more Cable Channels. 26. Standard Installation. Installation which can be completed using a Drop of one hundred fifty (125) feet or less. 27. Street. The surface of and the space above and below any public Street, public road, public highway, public freeway, public lane, public path, public way, public alley, public court, public sidewalk, public boulevard, public parkway, public drive or any public easement or right- of-way now or hereafter held by the City which shall, within its proper use and meaning in the sole opinion of the City, entitle Grantee to the use thereof for the purpose of installing or transmitting over poles, wires, cables, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, attachments and other property as may be ordinarily necessary and pertinent to a System. 28. Subscriber. Any Person who lawfully receives Cable Service via the System. In the case of multiple ofFice buildings or multiple dwelling units, the Subscriber means the lessee, tenant or occupant not the building owner. 29. System or Cable System. A facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide Cable Service which includes Video Programming and which is provided to multiple Subscribers within a community, but such term does not include: A. a facility that serves only to retransmit the television signals of one (1) or more television broadcast stations; B. a facility that serves Subscribers without using a City Street; C. a facility of common carrier which is subject, in whole or in part, to the provisions of 47 U.S.C. § 201 et seq., except that such facility shall be considered a Cable System (other than for purposes of 47 U. S.C. § 541(c)) to the extent such facility is used in the transmission of Video Programming directly to Subscribers, unless the extent of such use is solely to provide interactive on-demand services; D. an open video system that complies with 47 U.S.C. § 573; or E. any facilities of any electric utility used solely for operating its electric utility systems. 30. Video Programming. Programming provided by, or generally considered comparable to programming provided by, a television broadcast station. 405.04. GRANT OF AUTHORITY AND GENERAL PROVISIONS Grant of Franchise. This Franchise is granted pursuant to the terms and conditions contained herein. Such terms and conditions shall be subordinate to all applicable provisions of state and federal laws, rules and regulations. 2. Criteria of Selection. The Grantee's technical ability, financial condition and legal qualifications were considered and approved by the City in full public proceedings and affording reasonable notice and a reasonable opportunity to be heard. 3. Authority for Use of Streets. A. For the purpose of operating and maintaining a System in the City, Grantee may erect, install, construct, repair, replace, relocate, reconstruct and retain in, on, over, under, upon, across and along the Streets within the City such lines, cables, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, pedestals, attachments and other properry and equipment as are necessary and appurtenant to the operation of the System, provided that a11 applicable permits are applied for and granted, a11 fees paid and all other City codes and ordinances are otherwise complied with. B. Prior to construction or alteration of the System or any portion thereof, Grantee shall, in each case, file plans with the City and receive written approval of such plans, which approval shall not be unreasonably withheld. C. Grantee shall construct and maintain the System so as not to interfere with other uses of Streets. Grantee shall make use of existing poles and other facilities available to Grantee. Grantee shall widely publicize proposed construction work prior to commencement of that work. Grantee shall individually notify in writing all residents affected by proposed underground work not less than forty-eight (48) hours prior to commencement of that work. Such notice shall include the Grantee's telephone number and the responsible employee of Crrantee. D. Notwithstanding the above grant to use the Streets, no Street shall be used by Grantee if the City, in its sole opinion, determines that such use is inconsistent with the terms, conditions or provisions by which such Street was created or dedicated, or presently used. 4. Franchise Term. This Franchise shall be in effect for a period of ten (10) years from the date of execution by City, unless sooner renewed, revoked or terminated as herein provided. Previous Franchises. Upon acceptance by Grantee as required by Section 405.15 herein, this Franchise shall supersede and replace any previous ordinance or other authorization granting a franchise to Grantee. Ordinance No. 904 is hereby expressly repealed. 6. Area Covered. This Franchise is granted for the corporate boundaries of the City, as they exist from time to time. In the event of annexation by the City, any new territory shall become part of the area covered. Access to Cable Service shall not be denied to any group of potential cable Subscribers because of the income of the potential cable Subscribers or the area in which such group resides. 7. Police Powers. Grantee's rights are subject to the police powers of the City to adopt and enforce ordinances necessary to the health, safety and welfare of the public. Grantee shall comply with all applicable general laws and ordinances enacted by the City pursuant to that power. 8. Use of Grantee Facilities. The City shall have the right to install and maintain, free of charge, upon the poles and within the underground pipes and conduits of Grantee, any wires and fixtures desired by the City, to the extent that such installation and maintenance does not interfere with existing and future operations of Grantee. 9. Written Notice. All notices, reports or demands required to be given in writing under this Franchise shall be deemed to be given when delivered personally to the Person designated below, or when five (5) days have elapsed after it is deposited in the United States mail in a sealed envelope, with registered or certified mail postage prepaid thereon, or on the next addressed business day if sent by express mail or overnight air courier addressed to the party to which notice is being given, as follows: If to City: City of Fridley 6431 University Avenue NE Fridley, Minnesota 55432 Attn: Cable Television Franchise Administrator 6 If to Grantee: Time Warner Cable Such addresses may be changed by either party upon notice to the other party given as provided in this section. 10. Franchise Non-Exclusive. The Franchise granted herein is non-exclusive. The City specifically reserves the right to grant, at any time, additional franchises for a System in accordance with state and federal law. 11. Compliance with Laws. This Franchise complies with the Minnesota franchise standards contained in Minnesota Statutes 238. This Franchise may also be modified or amended with the written consent of City and Crrantee as provided in Section 405.08.07 herein. 405.05. DESIGN PROVISIONS System Design. A. Grantee shall operate and maintain for the term of this Franchise a System providing a minimum of 750 MHz capacity. B. The technical standards used in the operation of the System shall comply, at minimum, with the technical standards promulgated by the FCC relating to Cable Systems pursuant to Title 47, Section 76, Subpart K of the Code of Federal Regulations, as may be amended or modified from time to time, which regulations are expressly incorporated herein by reference. 2. Interconnection. A. The System shall be designed to be interconnected with other systems. The standard VI�' Channel6 shall be designated for usage as a regional Channel. B. The City may request Grantee to negotiate interconnecting the institutional network or the Subscriber network or both with other adjacent System(s) in the Minneapolis/St. Paul metropolitan area. Grantee shall use its best efforts to negotiate such interconnection and keep the City informed of the progress of any negotiations. Initial Service Area. A. Residential units in areas with an average density of at least forty (40) units per Cable Mile or its equivalent, as measured from the nearest point of usable trunk, shall be provided service upon payment of the Standard Installation charges and applicable monthly fees. 7 B. In areas with an average density of less than forty (40) Residential units per Cable Mile the requesting party(s) shall bear a pro rata share of the total cost of time and materials for distribution plant up to the tap. Additional residents who subscribe during the twenty-four (24) month period immediately after the line extension area is activated shall bear their pro rata share and the initial Subscriber(s) shall receive a proportionate refund. Standard Installation rates shall apply after the twenty-four (24) month period has elap sed. C. Residential or non-residential areas which are not fully developed need not be cabled until twelve (12) months after receiving a request from the City to do so or twelve (12) months after the final grade is completed, whichever is later. D. The cost of any Installation exceeding Two Hundred Fifty Dollars ($250.00) in time and materials shall be borne by the requesting party in advance. 4. Provision of Service. After Service has been established by activating trunk and distribution cable for any area, Grantee shall provide Service to any requesting Subscriber within that area seven (7) days from the date of request. 5. Special Testing. A. At any time after commencement of Service to Subscribers, the City may require or may retain an independent engineer to perform additional tests, full or partial repeat tests, different test procedures, or tests involving a specific Subscriber's Drop. Such additional tests will be made on the basis of Complaints received or other evidence indicating an unresolved controversy or significant noncompliance, and such tests will be limited to the particular matter in controversy. B. The City shall endeavor to so arrange its requests for such special tests so as to minimize hardship or inconvenience to Grantee or to the Subscriber. C. If such special testing establishes that the System meets all required technical standards the City shall bear the expense for such special testing. D. If such special testing establishes that the System does not meet all required technical standards, Crrantee shall bear the expense for such special testing. 6. Signal Quality. The System shall produce a picture in black and white or color, depending upon whether color is being cablecast, that is undistorted and free from ghost images, and without degradation of color fidelity. The System shall produce a sound that is undistorted and of a consistent level on an audio receiver of average quality. 7. Test and Compliance Procedures. A. Grantee shall perform periodically, at intervals no greater than once a year, necessary tests to verify compliance with the technical standards. B. These tests shall be performed at six (6) locations approved by the City. C. The tests may, upon request of the City, be witnessed by representatives of the City. If one (1) or more of the locations tested fail to meet the performance standards, Grantee shall complete corrective measures and report to the City the corrective measures so taken. The entire test shall be repeated for the locations. Grantee shall bear the expense of all such testing. 405.06. SERVICE PROVISIONS Regulation of Service Rates. City may regulate rates for the provision of Cable Service, equipment, or any other communications service provided over the System in accordance with applicable federal law, in particular 47 C.F.R. Part 76 subpart N. In the event the City chooses to regulate rates it shall, in accordance with 47 C.F.R. § 76.910, obtain certification from the FCC, if applicable. The City shall follow all applicable FCC rate regulations and shall ensure that appropriate personnel are in place to administer such regulations. City reserves the right to regulate rates for any future services provided by Grantee over the Cable System to the extent permitted by law. 2. Emergency Alert System. Grantee shall maintain for use by the City a Scientific Atlanta Mode16120A ComAlert system or equivalent. This system shall be remotely activated by telephone and shall allow a representative of the City to override the audio on all Channels of the System in the event of a civil emergency or for reasonable tests. Institutional Network. A. Grantee shall maintain a minimum 440 MHz mid-split institutional network. B. The institutional network shall be designed and constructed so as to pass the following locations: (1) Stevenson Elementary School (2) Hayes Elementary School (3) Fridley Middle School (4) Fridley Senior High (5) Parkview Community Center (6) City Hall (7) Anoka County Library (Fridley Branch) Grantee shall provide one (1) free Drop from the Institutional network to each institution at a location selected by that institution. The institutional network shall be extended to pass other institutions at the expense of the requesting party. C. Grantee shall provide, and thereafter maintain, all necessary headend equipment to program seven (7) upstream and seven (7) downstream Channels. Grantee shall be under no obligation to purchase any additional headend equipment other than specified in the preceding sentence; provided, however, nothing contained herein shall prevent or restrict a user from purchasing, after consultation with Grantee, additional headend equipment. Grantee, shall thereafter maintain any equipment so purchased by a user and Grantee may charge the user for Grantee's actual cost of maintenance. D. The user of any Channel(s) on the institutional network shall be responsible for purchasing and maintaining any equipment necessary at the user's site. Grantee shall consult and cooperate with the user in order that compatible equipment will be purchased. E. The City and Grantee shall develop jointly an allocation of Channels on the institutional network including the terms and conditions for the use of any Channels. F. Notwithstanding anything to the contrary, Grantee shall be responsible for repairing, replacing and maintaining any equipment damaged by Grantee. 4. PEG Access Channels. A. Grantee shall continue to provide to each of its Subscribers who receive some or all of the Services offered on the System reception on at least one (1) specially designated noncommercial public access Channel available for use by the general public on a first- come, first-served nondiscriminatory basis; at least one (1) specially designated access Channel for use by local educational authorities; at least one (1) specially designated access Channel available for local government use; at least one (1) specially designated access Channel for use by the Anoka County Library; and at least one (1) specially designated access Channel available for lease on a first-come, first-served, nondiscriminatory basis by commercial and noncommercial users. The access channels shall be carried in accordance with Exhibit A attached hereto. The VI-� spectrum shall be used for one of these specially designated public access channels. No charges may be made for channel time or playback of prerecorded programming on at least one of the specially designated noncommercial public access channels required herein. Personnel, equipment and production costs may be assessed, however, for live studio presentations exceeding five (5) minutes in length. Charges for those production costs and any fees for 10 �- use of the public access channels must be consistent with the goal of affording the public a low-cost means of television access. B. Whenever specially designated noncommercial public access channel, the specially designated education access channel, the specially designated local government access channel, or the specially designated leased access channel required in paragraph A above is in use during eight percent (80%) of the weekdays, Monday to Friday, for eighty percent (80%) of the time during any consecutive three (3) hour period for six weeks running, and if there is demand for use of an additional channel for the same purpose, Grantee shall have six (6) months in which to provide a new specially designated access channel for the same purpose. C. Grantee and the City shall jointly establish rules pertaining to the administration of the specially designated noncommercial public access Channel. D. In the event Crrantee offers Subscribers the option of receiving programs on one (1) or more special service Channels without also receiving the regular Subscriber Services, Grantee may comply with the requirements of this section by providing the Subscribers who receive the special service only, at least one (1) specially designated composite access Channel composed of the programming of the specially designated noncommercial public access Channel, the specially designated education access Channel, and the specially designated government access Channel required in this section. Government Access Capital Support. .[Grantee shall provide a proposal to meet the Government access capital requirements set forth in the needy assessment.] 6. PEG Access Equipment and Facilities. A. Grantee shall continue to provide, maintain and replace all equipment presently made available for public access use. Such equipment shall include the following: [ Grantee to provide list of all equipment available for public access use — See Ezhibit B for list of equipment provided under existing franchise for local origination]. B. Grantee shall be responsible for insuring, maintaining, repairing, fixing and adjusting all equipment so purchased. All such equipment shall be replaced by Grantee unless Grantee establishes to the satisfaction of the City that demand does not exist for such equipment. C. Grantee shall provide and maintain a studio with minimum dimensions of twenty- eight (28) feet by thirty-eight (38) feet at the headend for public access use. The hours of studio use shall be set by the City or its designee. Grantee shall continue to provide, free of charge, that space at the headend for an access organization. 11 D. The local origination production equipment set forth in Exhibit B attached hereto shall be made available for access use subject only to those terms and conditions set forth in Exhibit B. 7. LocalOrigination.. A. The City and Grantee shall review the provision of local origination programming at the time of any periodic evaluation and renegotiation session in accordance with Section 405.08.07 hereof. 405.07 CONSTRUCTION PROVISIONS l. Construction Standards. A. All construction practices shall be in accordance with local, state and federal laws. B. All installation of electronic equipment shall be of a permanent nature, durable and installed in accordance with the provisions of the National Electrical and Safety Code and National Electrical Code as amended. C. Antennas and their supporting structures (tower) shall be painted, lighted, erected and maintained in accordance with all applicable rules and regulations of the Federal Aviation Administration and all other applicable state or local codes and regulations. D. All of Grantee's plant and equipment, including but not limited to the antenna site, headend and distribution system, towers, house connections, structures, poles, wire, cable, coa�ial cable, fi�ures and appurtenances shall be installed, located, erected, constructed, reconstructed, replaced, removed, repaired, maintained and operated, in accordance with good engineering practices, performed by experienced maintenance and construction personnel so as not to endanger or interfere with improvements the City may deem appropriate to make, or to interfere in any manner with the rights of any property owner, or to unnecessarily hinder or obstruct pedestrian or vehicular tr�c. E. Grantee shall at a11 times employ ordinary care and shall install and rnaintain in use commonly accepted methods and devices preventing failures and accidents which are likely to cause damage, injury or nuisance to the public. 2. Construction Codes and Permits. A. Grantee shall obtain all required permits from the City, before commencing any work requiring a permit, including the opening or disturbance of any Street or Public Property or public easement within the City. Grantee shall strictly adhere to all building and zoning codes currently or hereafter applicable to construction, operation or maintenance of the System in the City. 12 B. The City shall have the right to inspect all construction or installation work performed pursuant to the provisions of this Franchise and to make such tests as it shall find necessary to ensure compliance with the terms of the Franchise and applicable provisions of local, state and federal law. C. Nothing contained in this Franchise, shall be construed to give Grantee the authority to enter upon or work on private property in areas not encumbered with public easements without the permission of the property owner. Repair of Streets and Property. Any and all Streets or Public Property or private property which are disturbed or damaged during the construction, repair, replacement, relocation, operation, maintenance or reconstruction of the System shall be promptly repaired by Grantee, at its expense to a condition as good as that prevailing prior to Cnantee's construction. 4. Use of Existing Poles. Grantee shall not erect, for any reason, any pole on or along any Street in an existing aerial utility system without the advance written approval of the City. Grantee shall exercise its best efforts to negotiate the lease of pole space and facilities from the existing pole owners for all aerial construction. 5. Undergrounding of Cable. Cable shall be installed underground at Grantee's expense where both the existing telephone and electrical utilities are already underground. Previously installed aerial cable shall be placed underground when both the telephone and electrical utilities convert from aerial to underground construction. Grantee shall place cable underground in newly platted areas in concert with both the telephone and electrical utilities, unless this requirement is waived by the City. In the event that telephone or electric utilities are reimbursed by the City or any agency thereof for the placement of cable underground or the movement of cable, Grantee shall be reimbursed upon the same terms and conditions as the telephone or electric utilities. 6. Reservation of Street Rights. A. Nothing in this Franchise shall be construed to prevent the City from constructing, maintaining, repairing or relocating sewers, grading, paving, maintaining, repairing, relocating and/or altering any Street, constructing, laying down, repairing, maintaining or relocating any water mains or constructing, maintaining, relocating, or repairing any sidewalk or other public work. B. All such work shall be done, insofar as practicable in such a manner as not to obstruct, injure or prevent the free use and operation of the poles, wires, conduits, conductors, pipes or appurtenances of Grantee. 13 C. If any such property of Grantee shall interfere with the construction or relocation, maintenance or repair of any Street or public improvement, whether it be construction, repair, maintenance, removal or relocation of a sewer, public sidewalk, or water main, Street or any other public improvement, thirty (30) days notice shall be given to Grantee by the City and all such poles, wires, conduits or other appliances and facilities shall be removed or replaced by Grantee in such manner as shall be directed by the City so that the same shall not interfere with the said public work of the City, as determined by the City, and such removal or replacement shall be at the expense of Grantee herein. D. Nothing contained in this Franchise shall relieve any Person from liability axising out of the failure to exercise reasonable care to avoid injuring Grantee's facilities while performing any work connected with grading, regaxding, or changing the line of any Street or public place or with the construction or reconstruction of any sewer or water system. 7. Trimming of Trees. Grantee shall have the authority to trim trees upon and overhanging Streets, alleys, sidewalks and public places of the City so as to prevent the branches of such trees from coming in contact with the wires and cables of Grantee; provided, however, all trimming shall be done under the supervision and direction of the City, if requested by the City, and at the expense of Grantee. Street Vacation or Abandonment. In the event any Street or portion thereof used by Grantee shall be vacated by the City or the use thereof discontinued by Grantee, during the term of this Franchise, Grantee shall, at Grantee's expense, forthwith remove its facilities therefrom unless specifically permitted by the City to continue the same, and on the removal thereof restore, repair or reconstruct the Street area where such removal has occurred, and place the Street area where such removal has occurred to a condition similar to that existing before such removal took place. In the event of failure, neglect or refusal of Grantee, after thirty (30) days notice by the City to remove the facilities or to repair, restore, reconstruct, improve or maintain such Street portion, the City may do such work or cause it to be done, and the cost thereof as found and declared by the City, shall be paid by Grantee as directed by the City and collection may be made by any available remedy. 9. Movement of Facilities. In the event it is necessary temporarily to move or remove any of Grantee's wires, cables, poles, or other facilities placed pursuant to this Franchise, in order to lawfully move a large object, vehicle, building or other structure over the Streets of the City, upon two (2) weeks notice by the City to Grantee, Grantee shall move at the expense of the Person requesting the temporary removal such of his facilities as may be required to facilitate such movements. Any Service disruption provisions of this Franchise shall not apply in the event that the removal of Grantee's wires, cables, poles or other facilities results in temporary Service disruptions. 405.08. OPERATION AND MAINTENANCE 14 Open Books and Records. The City shall have the right to inspect, upon twenty-four (24) hours written notice at any time during Normal Business Hours all books, records maps plans, financial statements, service Complaint logs, performance test results, record of requests for Service and other like materials of Grantee which are reasonably necessary to monitor compliance with the terms of this Franchise. Grantee shall produce such books and records for City's inspection at Grantee's local office within the Service Area or at such other mutually agreed upon location within the Twin Cities metropolitan area. 2. Communications with Regulatory Agencies. Upon request by the City, Grantee shall provide copies of all petitions, applications, communications and reports submitted by Grantee or on behalf of or relating to Grantee to the FCC, Securities and Exchange Commission or any other federal or state regulatory commission or agency having jurisdiction in respect to any matters affecting the System authorized pursuant to this Franchise shall also be submitted simultaneously to the City. Copies of responses from the regulatory agencies to Grantee shall likewise be furnished to the City within fifteen (15) days of receipt of the response. Annual Report. On or before April 1, including the year in which the Franchise becomes effective, Grantee shall file with the City a copy of the following information regarding the System. A. A financial statement including an income statement, statement of operating expenses in detail, a cash flow statement and a balance sheet prepared in accordance with generally accepted accounting principles and certified by a financial officer of Grantee. B. A description of the Basic Cable Service then being offered at the end of the fiscal year together with a description of any changes made in the Basic Cable Service during the reported year. C. A compilation setting forth the results of any annual Subscriber survey. D. A current copy of the 5ubscriber Service information required in accordance with Section 405.09 hereof. E. A compilation summarizing the Complaints received during the reported year by category, and a discussion of any unresolved Complaints. F. A certification of the Gross Revenues for the preceding year prepared by an independent certified public accountant. 15 4. Additional Reports. Grantee shall prepare and furnish to the City, at the times and in the form prescribed, such additional reports with respect to its operation, affairs, transactions or property, which are reasonably necessary for the administration and enforcement of this Franchise. 5. Maps. Grantee shall maintain on file with the City at all times a current map or set of maps drawn to scale showing the System and all equipment installed or in place in Streets and other public places. 6. Periodic Inspection. . The City and Grantee shall, at the request of the City, undertake an inspection of the System to ascertain the System performance at randomly selected subscriber drops selected by the City. The request for such an inspection will be made on the basis of complaints received or other evidence indicating an unresolved controversy or problem. A. The City shall give written notice to Grantee of the City's intention to undertake an inspection of the System and the name of that person who will participate for the City. B. Grantee shall, within two (2) days of receipt of the City notice, select one person who will participate for Grantee and so notify the City. C. The representatives of the City and Grantee shall, within three (3) days of the selection of the Grantee representative, select a third representative who need not be trained in cable television technology. D. Within ten (10) days after the appointment of all representatives, the representatives shall commence an inspection of the System in accordance with the following procedures: (1) The representatives shall commence the inspection of the System at the headend by viewing all programmed channels or a representative portion thereof and, by a decision of the majority, assign a rating of one (1) to five (5) for each channel of programming. (2) The representatives shall then view the System performance at subscriber drops selected by the City. The representatives shall view all or a representative portion of the programmed channels at each location and, by a decision of the majority, assign a rating of one (1) to five (5) for each channel of programming so viewed. (3) In assigning a rating for each channel of programming so viewed, the representatives shall use the following scale: 16 � 1 - Poor picture, unusable 2- Fair picture, degradation a problem 3- Good picture, degradation noticeable 4- Very good picture, small amount of impairment noticeable 5- Excellent picture, no visible impairment E. E. The representatives shall prepare and submit to the City and Grantee a written report of its findings and any appropriate recommendation. Upon request of the City, Grantee shall report to the City, at a regular or specially scheduled meeting of the City, what steps are being taken to correct deficiencies noted in the report or why corrective measures are not necessary. Notwithstanding anything to the contrary, the City may use the report submitted by the representatives as a basis for ordering special testing of the System pursuant to Section 405.05 hereof. 7. Periodic Evaluation and Renegotiation Sessions. The field of cable communications is rapidly changing and may see many regulatory, technical, financial, marketing, and legal changes during the term of this Franchise. Therefore, in order to provide for a maximum degree of flexibility in this Franchise, and to help achieve a continued advanced and modern System, the following evaluation provisions will apply: A. The City reserves the right to adopt rules and regulations controlling the procedures asset forth below and the subjects for evaluation and renegotiation sessions. In the absence of any City action taken to exercise these rights, Grantee shall be subject to at least the procedures and subjects described in this section. B. The City may require, at its sole discretion, evaluation sessions at any time during the term of this Franchise; provided, however, there shall not be more than one (1) evaluation session during any calendar year. C. Topics which may be discussed at any evaluation and session include, but axe not limited to application of new technologies, the System performance, programming, access, municipal uses of cable, Subscriber complaints, amendments to this Franchise, judicial rulings, FCC rulings and any other topics the City or Crrantee deems relevant. D. During an evaluation session, Grantee shall fully cooperate with the City and shall provide without cost such information and documents as the City may request to perform the evaluation. E. If at any time during an evaluation the City determines that reasonable evidence exists of inadequate System performance, the City may require Grantee to perform tests and analysis directed toward such suspected inadequacies at Grantee's expense. Grantee shall fully cooperate with the City in performing such testing and any report prepared by Grantee shall include at least: 17 (1) A description of the problem in the System performance which precipitated the special tests. (2) The System component tested. (3) The equipment used and procedures employed in testing. (4) The method, if any, by which such the System performance problem was resolved. (5) Any other information pertinent to said tests and analysis which may be required by the City, or determined when the test is performed. If after receiving Grantee's report the City determines that reasonable evidence still exists of inadequate System performance, the City may enlist an independent engineer, at Grantee's expense, to perform tests and analysis directed towaxd such suspected inadequacies. F. As a result of an Evaluation and Renegotiation Session, the City or Crrantee may determine that a change in the terms of the Franchise may be required, that the System or Franchise requirements should be updated, changed or that additional services should be provided. If the change is consistent with the terms of this Franchise, the needs of the City and existing state-of-the-art (or due to regulatory, technical, financial, marketing, inflation or legal requirements) and implementation of a change would not unreasonably add to the cost of providing Cable Services, Grantee and the City will, in good faith, negotiate the terms of the change and any required amendment to this Franchise. Upon adoption of such a Franchise amendment, if one is required, the change will become effective and Grantee shall accept the same. In the event Grantee fails to negotiate a requested change of the City, the City may enforce the procedures of this section by any available remedy. 405.09. CONSUMER PROTECTION PROVISIONS Consumer Protection and Service Standards. The Grantee shall comply with the standards and requirements for customer service set forth below and shall comply with all applicable regulations relating to customer service obligations found in 47 C.F.R. § 76.309, as amended, that impose higher or additional customer service standards on a cable operator. Z. Subscriber Complaint Practices. A. Grantee shall maintain an office within the City which shall be open during Normal Business Hours and sta.ffed by a customer representative capable of receiving inquiries and bill payments. Grantee shall have a publicly listed toll-free telephone number and be so operated as to receive Subscriber Complaints and requests on a twenty- four (24) hour-a-day, seven (7) days-a-week basis. A written log available for the City inspection shall be maintained listing all Complaints and their dispositions. 18 B. Grantee shall render efficient service, make repairs promptly and interrupt Service only for good cause and for the shortest time possible. Such Service Interruptions, insofar as possible, shall be preceded by notice and shall occur during periods of minimum use of the System. A written log available for City inspection shall be maintained for all Service Interruptions. C. Under Normal Operating Conditions, telephone answer time by a customer representative, including wait time, shall not exceed thirty (30) seconds when the connection is made. If the call needs to be transferred, transfer time shall not exceed thirty (30) seconds. These standards shall be met no less then ninety percent (90%) of the time under Normal Operating Conditions, measured on a quarterly basis. (1) Grantee will not be required to acquire equipment or perform surveys to measure compliance with the telephone answering standards above unless an historical record of complaints indicates a clear failure to comply. (2) Under Normal Operating Conditions, the customer will receive a busy signal less than three percent (3%) of the time. D. Subscriber requests for maintenance or repairs received prior to 2:00 p.m., Monday through Friday, shall be performed the same day. E. Subscriber requests for maintenance or repairs received after 2:00 p.m. shall be performed within twenty-four (24) hours of the request. F. Service calls for maintenance or repair shall be performed at no charge; provided, however, if such maintenance or repair is required as a result of damage caused by the Subscriber then Grantee may charge according to its actual cost for time and material. G. If Grantee fails to correct a service problem within twenty-four (24) hours, Crrantee shall credit 1/30th of the monthly charge to the Subscriber for each twenty-four (24) hours or fraction thereof after the first twenty-four (24) hours during which a Subscriber is without Service, except to the extent that restoration of Service is prevented by strike, injunction or other cause beyond the control of Grantee. Subscriber Information. A. Grantee shall provide written information on each of the following areas at the time of Installation of Service, at least annually to all Subscribers, and at any time upon request: (1) Products and Services offered; (2) Prices and options for programming Services and conditions of subscription to programming and other Services; (3) Installation and Service maintenance policies; (4) Instructions on how to use the Cable Service; 19 (5) Channel positions of the programming carried on the System; and (6) Billing and Complaint procedures, including the address and telephone number of the City. B. Subscribers will be notified of any changes in rates, programming Services or Channel positions as soon as possible in writing. Notice must be given to Subscribers a minimum of thirty (30) days in advance of such changes if the changes are within the control of the Grantee. In addition, the Crrantee shall notify Subscribers thirty (30) days in advance of any significant changes in the other information required by this Section 405.09. Grantee shall not be required to provide prior notice of any rate changes as a result of a regulatory fee, Franchise Fee, or other fees, tax, assessment or chaxge of any kind imposed by any federal agency, state or City on the transaction between the operator and the Subscriber. 4. Billing Practices. A. Grantee shall notify each of its Subscribers, through the written service information, of its billing practices. The service information shall describe Grantee's billing practices including, but not limited to, the following: frequency of billing; time periods upon which billing is based, advance billing practices, security deposit requirements, charges for late payments or, returned checks, payments required necessary to avoid account delinquency, availability of credits for service outages, procedures to be followed to request for service deletions including the notice period a Subscriber must give to avoid liability for such services and procedures to be followed in the event of a billing dispute. B. Grantee shall notify all affected Subscribers not less than thirty (30) days prior to any change in the billing practices and such notice shall include a description of the changed practice. C. The Subscriber bill shall contain the following information presented in plain language and format: (1) Name and address of Grantee; (2) The period of time over which each chargeable, Service is billed including prorated periods as a result of the establishment and termination of Service; (3) The date on which individually chargeable services were rendered; (4) Each rate or charge levied; (5) The amount of the bill for the current billing period, separate from any balance due; (6) Any applicable credits on the date which they were applied; (7) Crrantee's telephone number and a statement that the Subscriber may call this number with any questions or complaints about the bill; and (8) The date on which payment is due from the Subscriber. 20 D. The account of a Subscriber shall not be considered delinquent until at least thirty (30) days have elapsed from the due date of the bill, which shall be a date certain and in no event a statement that the bill is due upon receipt, and payment has not been received by Grantee. The following provisions shall apply to the imposition of late charges on Subscribers: (1) Grantee shall not impose a late charge on a Subscriber unless a Subscriber is delinquent, Grantee has given the Subscriber written notice of the delinquency in a cleax and conspicuous manner, and the Subscriber has been given at least eight (8) business days from the mailing of the notice to pay the balance due. (2) A charge of not more than Fifteen Dollars ($15.00) may be imposed as a one-time late charge. (3) No late charge may be assessed on the amount of a bill in dispute. (4) Any charge for returned checks shall be reasonably related to the costs incurred by Grantee in processing such checks. 5. Rebate Policy. Grantee shall provide to Subscribers on or before October 1 of each year a written notice advising the Subscriber of Grantee's rebate policy and credits for outages of Service. 6. Annual Subscriber Survey. A. Upon the request of City, Grantee shall conduct a written survey of Fridley Subscribers in a form and manner approved by the City. Each questionnaire shall be prepared and conducted in good faith so as to provide reasonably reliable measures of Fridley Subscriber satisfaction with: (1) Signal quality, (2) Response to Subscriber complaints; (3) Billing practices; (4) Programming services; and (5) Availability of incoming telephone lines and telephone answering practices of Grantee. B. The survey shall be conducted in conformity with such requirements, including supervision and review of returned surveys, as the City may prescribe. Grantee may satisfy the requirements of this Section 405.09.06 through a telephone survey conducted by an independent Person in the business of regularly conducting telephone surveys. C. Upon completion of a survey, Grantee shall report in writing what steps Grantee is taking to implement the findings of the survey. 405.10. GENERAL FINANCIAL AND INSURANCE PROVISIONS Payment to City. 21 A. During the term of the Franchise, Grantee shall pay to the City a Franchise Fee in an amount equal to five percent (5%) of its annual Gross Revenues. The foregoing payments shall be compensation for use of streets and other public property. The amount is deemed fair and reasonable. B. Payments due the City under this provision shall be computed at the end of each quarter year for that quarter year. Payments shall be due and payable for each quarter or a portion of a quarter yeax on January 15, April 15, 7uly 15 and October 15. Each payment shall be accompanied by a brief report showing the basis for the computation and such other relevant facts as may be required by the City. C. No acceptance of any payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall such acceptance of payment be construed as a release of any claim the City may have for further or additional sums payable under the provisions of this Franchise. All amounts paid shall be subject to audit and recomputation by the City. In the event the City should conduct a review of Grantee's books and records pursuant to Section 405.08.01 of this Franchise and such review indicates a Franchise Fee underpayment of five percent (5%) or more, the Grantee shall assume all reasonable documented costs of such audit, and pay same upon demand by the City. D. With each Annual Report required pursuant to Section 405.08 Grantee shall provide the City with a certification of the Gross Revenues for the preceding year prepared by an independent certified public accountant. This certification shall be used to determine the exact amount of payments due the City and to correct any overpayments or underpayments by Grantee. E. In the event any Franchise Fee payment or other sum due is not received by the City on or before the due date, or is underpaid, Grantee shall pay in addition to the payment or sum due, interest from the due date at an annual rate equal to the maximum rate permitted under state law, or twelve percent (12%) if no such rate is legally specified. 2. Discounted Rates. If Grantee's Subscribers are offered what is, in effect, a discount for "bundled" services (i.e. Subscribers obtain Cable Services and some other, non-cable goods or service) then for the purpose of calculating Gross Revenues, the discount shall be applied proportionately to cable and non-cable goods and services, in accordance with the following example: Assume a Subscriber's charge for a given month for Cable Service alone would be $40, for local telephone service alone would be $30, and for high-speed service alone would be $30, for a total of $100. In fact, the three (3) services are offered in effect at a combined rate where the Subscriber receives what amounts to a twenty percent (20%) discount from the rates that would apply to a service if ��a purchased individually (i.e. $80 per month for all three (3) services). The discount (here, $20) for Gross Revenue computation purposes would be applied pro rata so that Gross Revenues for Cable Service are deemed to be $32 ($40 less 20% of $40). The result would be the same if the Subscriber received a$20 discount for telephone service on the condition that he or she also subscribes to Cable Service at standard rates. In no event shall G-rantee be permitted to evade or reduce applicable Franchise Fee payments required to be made to City due to discounted bundled services. Not Franchise Fees. Crrantee acknowledges and agrees that the Franchisee Fees payable by Grantee to City pursuant to this section shall take precedence over all other payments, contributions, services, equipment, facilities, support, resources or other activities to be provided or performed by Grantee pursuant to this Franchise and that the Franchise Fees provided for in this section of this Franchise shall not be deemed to be in the nature of a tax, and shall be in addition to any and all taxes of general applicability and other fees and charges which Grantee shall be required to pay to City and/or to any other governmental authority, all of which shall be separate and distinct obligations of Grantee. 4. Performance Bond. A. Thirty (30) days prior to initiation of a System upgrade affecting 25% or more of the system, Grantee shall furnish and file with the City a performance and payment bond, or a performance and payment bond together with such other security as is approved by the City. The bond shall run to the City in the penal sum of Five Hundred Thousand Dollars ($500,000.00). The bond shall be conditioned upon the faithful performance of Grantee of all terms and conditions of a System upgrade. The rights reserved to the City with respect to the bond or other security are in addition to all other rights the City may have under the Franchise or any other law. B. Following the completion of a System upgrade as determined by the City in accordance with Section 405.07, the requirement to maintain said bond referred to in (A) above shall be extinguished. C. The rights reserved by the City with respect to the bond are in addition to all other rights the City may have under the Franchise or any other law. D. The bond shall be subject to the approval of the City and shall contain the following endorsement: "It is hereby understood and agreed that this bond may not be cancelled without the consent of the City until sixty (60) days after receipt by the City by registered mail, return receipt requested, of a written notice of intent to cancel or not to renew." Security Fund. 23 A. At the time this Franchise is accepted, Grantee shall deposit into a bank account, established by the City, and maintain on deposit through the term of this Franchise, the sum of Ten Thousand Dollars ($10,000.00) as a common security fund for the faithful performance by it of all the provisions of this Franchise and compliance with all orders, permits and directions the City and the payment by Grantee of any claim, liens and taxes due the City which arise by reason of the construction, operation or maintenance of the System. Interest accrued on this deposit shall be paid to Grantee on an annual basis provided that a11 requirements of this Franchise have been complied with by Grantee. B. Provision shall be made to permit the City to withdraw funds from the security fund. Grantee shall not use the security fund for other purposes and shall not assign, pledge or otherwise use this security fund as security for any purpose. The City reserves the right, in its sole discretion, to reduce the required amount of the security fund. C. Within ten (10) days after notice to it that any amount has been withdrawn by the City from the security fund pursuant to (A) of this section, Grantee shall deposit a sum of money suff'icient to restore such security fund to the required amount. D. If Grantee fails to pay to the City any taxes due and unpaid, or, fails to repay to the City, any damages, costs or expenses which the City shall be compelled to pay by reason of any act or default of the Grantee in connection with this Franchise or fails, after ten (10) days notice of such failure by the City to comply with any provision of the Franchise which the City reasonably determines can be remedied by an expenditure of the security, the City may then seek to withdraw such funds from the security fund. 6. Penalties from Security Fund. In addition to any other remedies provided herein, penalties for violations of this Franchise are set forth below. As a result of any acts or omissions by Grantee pursuant to the Franchise, the City may charge to and collect from the security fund the following penalties: A. For failure to provide data, documents, reports or information or to cooperate or participate with the City during a renewal process or the System review, the penalty shall be Three Hundred Dollars ($300.00) per day. B. For failure to comply with any provision of this Franchise, for which a penalty is not otherwise specifically provided, the penalty shall be One Hundred Dollaxs ($100.00) per day. C. For failure to test, analyze, and report on the performance of the System following a request by the City the penalty shall be Two Hundred Dollars ($200.00) per day. D. For failure of Grantee to comply with the construction, operation or maintenance standards, the penalty shall be Two Hundred Dollars ($200.00) per day. 24 E. For failure to provide the Services Grantee proposed, the penalty shall be One Hundred Dollars ($100.00) per day. F. For failure to comply with all conditions of the City permits to disturb Streets, repair Streets, or other terms or conditions of the City, the penalty shall be Two Hundred Dollaxs ($200.00) per day. 7. Procedure for Imposition of Penalties. A. Whenever the City finds that Grantee has allegedly violated one (1) or more terms, conditions or provisions of this Franchise, a written notice shall be given to Grantee. The written notice shall describe in reasonable detail the alleged violation so as to afford Grantee an opportunity to remedy the violation. Grantee shall have ten (10) days subsequent to receipt of the notice in which to correct the violation before the City may resort to the security fund. Grantee may, within five (5) days of receipt of notice, notify the City that there is a dispute as to whether a violation or failure has, in fact, occurred. Such notice by Grantee to the City shall specify with particularity the matters disputed by Grantee and shall stay the running of the above-described time. (1) The City shall hear Grantee's dispute at a regularly or specially scheduled meeting. Grantee shall have the right to subpoena and cross-examine witnesses. The City shall determine if Grantee has committed a violation and shall make written findings of fact relative to its determination. If a violation is found, Grantee may petition for reconsideration. (2) If after hearing the dispute the claim is upheld by the City, Grantee shall have ten (10) days from such a determination to remedy the violation or failure. At any time after that ten (10) day period, the City may draw against the security fund all penalties due it. B. The time for Grantee to correct any alleged violation maybe extended by the City if the necessary action to correct the alleged violation is of such a nature or character to require more than ten (10) days within which to perform provided Grantee commences the corrective action within the ten (10) day period and thereafter uses reasonable diligence, as determined by the City, to correct the violation. C. The security fund deposited pursuant to this section shall become the property of the City in the event that the Franchise is cancelled by reason of the default of Grantee or revoked for cause. Grantee, however, shall be entitled to the return of such security fund, or portion thereof, as remains on deposit at the expiration of the term of the Franchise. D. The rights reserved to the City with respect to the security fund are in addition to all other rights of the City whether reserved by this Franchise or authorized by law, and no action, proceeding or exercise of a right with respect to such security fund shall affect any other right the City may have. 25 E. The City shall stay or waive the imposition of any penalties set forth above upon a finding that any failure or delay is a result of an act of God or due to circumstances beyond the reasonable control of Grantee. Damages and Defense. A. Grantee shall indemnify, defend and hold harmless the City for all damages and penalties, at all times during the term of this Franchise, as a result of Grantee's exercise of this Franchise. These damages and penalties shall include, but shall not be limited to,. damages arising out of personal injury, property damage, copyright infringement, defamation, antitrust, errors and omission, theft, fire, and all other damages axising out of Grantee's exercise of this Franchise, whether or not any act or omission complained of is authorized, allowed or prohibited by this Franchise such indemnification shall include, but not be limited to, reasonable attorney's fees and costs. B. In order for the City to assert its rights to be indemnified, defended, and held harmless, the City must: (1) Promptly notify Grantee of any claim or legal proceeding which gives rise to such right; (2) Afford Grantee the opportunity to participate in and fully control any compromise, settlement or other resolution or disposition of such claim or proceeding; unless, however, the City, in its sole discretion, determines that its interests cannot be represented in good faith by Grantee; and (3) Fully cooperate with the reasonable requests of Grantee, at Crrantee's expense, in its participation in and control, compromise, settlement or resolution or, other disposition of such claim or proceeding subject to paragraph (2) above. C. In the event the City, in its sole discretion, determines that its interest cannot be represented in good faith by Grantee, Grantee shall pay all expenses incurred by the City in defending itself with regard to all damages and penalties mentioned in paragraph A above. These expenses shall include all out-of-pocket expenses, such, as attorney's fees and costs. 9. Liability Insurance. A. Grantee shall maintain, throughout the term of the Franchise, liability insurance insuring Grantee and the City with regard to all damages mentioned in paragraph A of Section 405.10.06 hereof, in the minimum amounts of: (1) Two Million Dollars ($2,000,000.00) for body injury or death to any one (1) Person. 26 (2) Two Million Dollars ($2,000,000.00) for bodily injury or death resulting from any one (1) accident; (3) Three Million Dollars ($3,000,000.00) in the form of an umbrella policy. B. The following endorsements shall be attached to the liability policy: (1) The policy shall provide coverage on an "occurrence" basis. (2) The policy shall cover personal injury as well as bodily injury. (3) The policy shall cover blanket contractual liability subject to the standard universal exclusions of contractual liability included in the carrier's standard endorsement as to bodily injuries, personal injuries and property damage. (4) Broad form property damage liability shall be afforded. (5) City shall be named as an additional insured on the policy. (6) An endorsement shall be provided which states that the coverage is primary insurance and that no other insurance maintained by the City will be called upon to contribute to a loss under this coverage. (7) An endorsement stating that the policy shall not be canceled without thirty (30) days notice of such cancellation given to City. C. At the time of acceptance, Grantee shall furnish to the City a certificate evidencing that a satisfactory insurance policy has been obtained. Said certificate shall be approved by the City and such insurance policy shall show all properly executed endorsements. 10. City's Right to Revoke. In addition to all other rights which the City has pursuant to law or equity, the City reserves the right to revoke, terminate or cancel this Franchise, and all rights and privileges pertaining thereto, in the event that: A. Grantee substantially violates any provision of this Franchise; or B. Grantee attempts to evade any of the provisions of the Franchise; or C. Grantee practices any fraud or deceit upon the City or Subscriber; or D. Grantee becomes insolvent, unable or unwilling to pay its debts, or is adjudged a bankrupt; or E. Grantee materially misrepresents a fact in the application for or negotiation of, or renegotiation of, or renewal of, the Franchise. 11. Revocation Procedures. 27 In the event that the City determines that Grantee has violated any provision of the Franchise, or any applicable federal, state or local law, the City may make a written demand on Grantee that it remedy such violation and that continued violation may be cause for revocation. If the violation, breach, failure, refusal, or neglect is not remedied to the satisfaction of the City within thirty (30) days following such demand, the City shall determine whether or not such violation, breach, failure, refusal or neglect by Grantee is due to acts of God or other causes which result from circumstances beyond Grantee's control. A. A public hearing shall be held and Grantee shall be provided, with an opportunity to be heard upon fourteen (14) days written notice to Grantee of the time and the place of the hearing. The causes for ending revocation and the reasons alleged to constitute such cause shall be recited in the notice. Said notice shall affirmatively recite the causes that need to be shown by the City to support a revocation. B. If notice is given and, at Grantee's option, after a full public proceeding is held, the City determines there is a violation, breach, failure, refusal, or neglect by Grantee, the City shall direct Grantee to correct or remedy the same within such additional time, in such manner and upon such terms and conditions as City may direct. C. If after a public hearing it is determined that Grantee's performance of any of the terms, conditions, obligations, or requirements of Franchise was prevented or impaired due to any cause beyond its reasonable control or not reasonably foreseeable, such inability to perform shall be deemed to be excused and no penalties or sanctions shall be imposed as a result thereof, provided Grantee has notified City in writing within thirty (30) days of its discovery of the occurrence of such an event. Such causes beyond Grantee's reasonable control or not reasonably foreseeable shall include, but shall not be limited to, acts of God, civil emergencies and labor strikes. D. If, after notice is given and, at Grantee's option, a full public proceeding is held, the City determines there was a violation, breach, failure, refusal or neglect, then the City may declare, by resolution, the Franchise revoked and cancelled and of no further force and effect unless there is compliance within such period as City may fix, such period not to be less than thirty (30) days, provided no opportunity for compliance need be granted for fraud, misrepresentation, or violation of privacy rights. E. The issue of revocation shall automatically be placed upon the City Council agenda at the expiration of the time set by it for compliance. The City then may terminate Franchise forthwith upon finding that Grantee has failed to achieve compliance or may further extend the period, in its discretion. F. If the City, after notice is given and at Grantee's option, a full public proceeding is held and appeal is exhausted, declares the Franchise breached, the parties may pursue their remedies pursuant to Franchise or any other remedy, legal or equitable. 2s 405.11. FORECLOSURE, RECEIVERSHIl' AND ABANDONMENT. Foreclosure. Upon the foreclosure or other judicial sale of the System, Grantee shall notify the City of such fact and such notification shall be treated as a notification that a change in control of Grantee has taken place, and the provisions of this Franchise governing the consent to transfer, or change in ownership shall apply without regard to how such transfer or change in ownership occurred. 2. Receivership. The City shall have the right to cancel this Franchise subject to any applicable provisions of Minnesota law, including the Bankruptcy Act, one hundred and twenty (120) days after the appointment of a receiver or trustee to take over and conduct the business of Grantee, whether in receivership, reorganization, bankruptcy or other action or proceeding, unless such receivership or trusteeship shall have been vacated prior to the expiration of said one hundred and twenty (120) days, or unless: A. Within one hundred and twenty (120) days after his election or appointment, such receiver or trustee shall have fully complied with all the provisions of this Franchise and remedied all defaults thereunder; and B. Such receiver or trustee, within said one hundred and twenty (120) days, shall have executed an agreement, duly approved by the Court having jurisdiction in the premises, whereby such receiver or trustee assumes and agrees to be bound by each and every provision of this Franchise. Abandonment. Grantee may not abandon any portion of the System thereof without having first given three (3) months written notice to the City. Grantee may not abandon any portion of the System without compensating the City for damages resulting from the abandonment. 405.12. REMOVAL, TRANSFER AND PURCHASE. Removal After Revocation or Expiration. A. At the expiration of the term for which the Franchise is granted, or upon its revocation, as provided for, the City shall have the right to require Grantee to remove, at Grantee's expense, all or any portion of the System from all Streets and Public Property within the City. In so removing the System, Grantee shall refill the compact at its own expense, any excavation that shall be made and shall leave all Streets, Public Property and private property in as good a condition as that prevailing prior to Grantee's removal of the System, and without affecting, altering or disturbing in any way electric, telephone or utility, cables, wires or attachments. The City, or its delegation, shall have the right to 29 inspect and approve the condition of such Streets and Public Property after removal. The security fund, insurance, indemnity and penalty provision of the Franchise shall remain in full force and effect during the entire term of removal. B. If, in the sole discretion of the City, Grantee has failed to commence removal of the System, or such part thereof as was designated within thirty (30) days after written notice of the City's demand for removal is given, or if Grantee has failed to complete such removal within one (1) year after written notice of the City's demand for removal is given, the City shall have the right to exercise one of the following options: (1) Declare all right, title and interest to the System to be in the City or its delegator with all rights of ownership including, but not limited to, the right to operate the System or transfer the System to another for operation by it or (2) Declare the System abandoned and cause the System or such part thereof as the City shall designate, to be removed at no cost to the City. The cost of said removal shall be recoverable from the security fund, indemnity and penalty section provided for in the Franchise, or from Grantee directly. 2. Sale or Transfer of Franchise. A. This Franchise shall not be sold, assigned or transferred, either in whole or in part, or leased or sublet in any manner, nor shall title thereto, either legal or equitable or any right, interest or property therein pass to or vest in any Person without prior written approval from the City.. B. The provisions of this section shall apply to the sale or transfer of all or a majority of Grantee's assets, merger (including any parent and its subsidiary corporation), consolidation, creation of a subsidiary corporation or sale or transfer of stock in Crrantee so as to create a new controlling interest The term "controlling interest" as used herein is not limited to majority stock ownership, but includes actual working control in whatever manner exercised. C. In reviewing a request for sale or transfer pursuant to paragraph (A) above, the City may inquire into the legal, technical and financial qualifications of the prospective controlling party, including the adequacy of the support for local programming and Grantee shall assist the City in so inquiring. The City may condition said transfer upon such terms and conditions as it deems reasonably appropriate; provided, however, the City shall not unreasonably withhold its approval. In no event shall a transfer or assignment of ownership or contral be approved without the transferee becoming a signator to this Franchise. 3. City's Right to Purchase System. The City shall be entitled to a right of first refusal of any bona fide offer to purchase the System made to Grantee. Bona fide oi%r as used in this section means a written offer which has been � � accepted by Grantee subject to the City's rights under this Franchise. The price to be paid by the City shall be the bona fide offer including the same terms and conditions as the bona fide offer. The City shall notify Grantee of its decision to purchase within sixty (60) days of the City's receipt from Grantee of a copy of written bona fide offer. 4. Purchase by City Upon Expiration or Revocation. A. At the expiration of this Franchise, the City may in lawful, manner and upon the payment of fair maxket value, determined on the basis of the System valued as a going concern exclusive of any value attributable to the Franchise itself, lawfully obtain, purchase, condemn, acquire, take over and hold the System. B. Upon the revocation of this Franchise, the City may in lawful manner, and upon the payment of an equitable price lawfully obtain, purchase, condemn, acquire, take over and hold the System. 405.13. RIGHTS OF INDIVIDUALS PROTECTED Discriminatory Practices Prohibited. Grantee shall not deny Service, deny access, or otherwise discriminate against, Subscribers, programmers or general citizens on the basis of race, color, religion, national origin, sex or age. Crrantee shall comply at all times with all other applicable, federal, state and local laws, and all executive and administrative orders relating to nondiscrimination. 2. Subscriber Privacy. A. No signal of a Class IV cable communications channel may be transmitted from a Subscriber terminal for purposes of monitoring individual viewing patterns or practices without the express written permission of the Subscriber. The request for such permission shall be contained in a separate document with a prominent statement that the Subscriber is authorizing the permission in full knowledge of its provisions. Such written permission shall be for a limited period of time not to exceed one (1) year which shall be renewed at the option of the Subscriber. No penalty shall be invoked for a Subscriber's failure to provide or renew such authorization. The authorization shall be revocable at any time by the Subscriber without penalty of any kind whatsoever. Such permission shall be required for each type or classification of Class IV cable communications activity planned for the purpose of monitoring individual viewing patterns or practices. B. No lists of the names and addresses of Subscribers or any lists that identify the viewing habits of Subscribers shall be sold or otherwise made available to any party other than to Crrantee and its employees for internal business use, and also to the Subscriber subject of that information, unless Grantee has received specific written authorization from the Subscriber to make such data available. Such written permission shall be for a limited period of time not to exceed one (1) year which may be renewed at the option of the Subscriber. No penalty shall be invoked for a Subscriber's failure to provide or 31 renew such authorization. The authorization shall be revocable at any time by the Subscriber without penalty of any kind whatsoever. C. Written permission from the Subscriber shall not be required for the conducting of the system-wide or individually addressed electronic sweeps for the purpose of verifying the System integrity or monitoring for the purpose of billing. Confidentially of such information shall be subject to the provision set forth in paragraph (B) of this section. D. Subscribers and non-Subscribers may request to be put on a list to prevent solicitations from Grantee. 405.14. MISCELLANEOUS PROVISIONS Compliance with Laws. Grantee and the City shall conform to all state laws and rules regarding cable television not later than one (1) year after they become effective unless otherwise stated. Grantee and the City shall conform to all state and federal laws and rules regarding cable television as they become effective, unless otherwise stated. Grantee shall also conform with all the City ordinances, resolutions, rules and regulations heretofore or hereafter adopted or established during the entire term of the Franchise. 2. Franchise Renewal. This Franchise may be renewed in accordance with applicable state and federal law. Continuity of Service Mandatory. Upon expiration or the termination of this Franchise, the City may require Grantee to continue to operate the System for an extended period of time not to exceed six (6) months. Grantee shall, as trustee for its successor in interest, continue to operate the System under the terms and conditions of this Franchise. In the event Grantee does not so operate the System, the City may take such steps as it, in its sole discretion, deems necessary to assure continued Service to Subscribers. 4. Work Performed by Others. A. Grantee shall give notice to the City specifying the names and addresses of any other entity, other than Grantee, which performs services pursuant to this Franchise, provided, however, that all provisions of this Franchise shall remain the responsibility of Grantee, and Grantee shall be responsible for and hold the City harmless for any claims and liability arising out of work performed by Persons other than Grantee. B. All provisions of this Franchise shall apply to any subcontractor or others performing any work or services pursuant to the provisions of this Franchise. 32 5. Compliance with Federal, State and Local Laws. A. If any federal or state law or regulation shall require or permit Grantee to perform any service or act or shall prohibit Grantee from performing any service or act which may be in conflict with the terms of this Franchise, then as soon as possible following knowledge thereof, either party notify the other of the point of conflict believed to exist between such law or regulation. Grantee and City shall conform to state and federal laws and regulations and rules regarding cable communications as they become effective. B. If any term, condition or provision of this Franchise or the application thereof to any Person or circumstance shall, to any e�rtent, be held to be invalid or unenforceable, the remainder hereof and the application of such term, condition or provision to Persons or circumstances other than those as to whom it shall be held invalid or unenforceable shall not be affected thereby, and this Franchise and all the terms, provisions and conditions hereof shall, in all other respects, continue to be effective and to be complied with. In the event that such law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed so that the provision which had been held invalid or modified is no longer in conflict with the law, rules and regulations then in effect, said provision shall thereupon return to full force and effect and shall thereafter be binding on Grantee and the City. C. Notwithstanding anything to the contrary, in the event that any court, agency, commission, legislative body or other authority of competent jurisdiction (i) declares Sections 405.06 or 405.10.01 invalid, in whole or in part, or (ii) requires Grantee either to (a) perform any act which is inconsistent with any of the said sections or, (b) cease performing any act required by said sections, Grantee shall immediately notify the City. Such notice shall state whether Grantee intends to exercise its rights pursuant to such declaration or requirement. If the City determines within six (6) months of receiving such notice that said declaration or requirement has a material and adverse effect on the Franchise, the City may declare the Franchise terminated. 6. Nonenforcement by City. Grantee shall not be relieved of its obligation to comply with any of the provisions of this Franchise by reason of any failure of the City or to enforce prompt compliance. 7. Administration of Franchise. A. The City shall have continuing regulatory jurisdiction and supervision over the System and the Grantee's operation under the Franchise. The City may issue such reasonable rules and regulations concerning the construction, operation and maintenance of the System as are consistent with the provisions of the Franchise. B. Grantee shall construct, operate and maintain the System subject to the supervision of all the authorities of the City who have jurisdiction in such matters and in 33 strict compliance with all laws, ordinances, departmental rules and regulations affecting the System. C. The System and all parts thereof shall be subject to the right of periodic inspection by the City provided that such inspection shall not interfere with the operation of the System and such inspections take place during Normal Business Hours. 8. Cable Television Advisory Commission. The City may provide for an ongoing cable television advisory commission. The specific nature and composition of the commission shall be determined by the City. 9. Miscellaneous Violations. A. From and after the acceptance of the Franchise, it shall be unlawful, for any Person to establish, operate or to carry on the business of distributing to any Persons in the City any television signals or radio signals by means of System using City Streets unless a Franchise therefore has first been obtained pursuant to the provisions of an ordinance, and unless such Franchise is in full force and effect. B. From and after the acceptance of the Franchise, it shall be unlawful for a.ny Person to construct, install or maintain within any Street in the City, or within any other Public Property of the City, or within any privately owned area within the City which has not yet become a public Street but, is designated or delineated as a proposed public Street on any tentative subdivision map approved by the City, or the City's official map or the City's major thoroughfare plan, any equipment or facilities for distributing any television signals or radio signals through a System, unless a franchise authorizing such use of such Street or property or areas has first been obtained. 10. Emergency Use. In the case of any emergency or disaster, Grantee shall, upon request of the City, make available its System and related facilities to the City for emergency use during the emergency or disaster period. 11. Construction. This Franchise shall be construed and enforced in accordance with the substantive laws of the State of Minnesota and without reference to its principals of conflicts of law. 12. Captions. The paragraph captions and headings in this Franchise are for convenience and reference purposes only and shall not affect in any way the meaning of interpretation of this Franchise. 34 � 13. Calculation of Time. Where the performance or doing of any act, duty, matter, payment or thing is required hereunder and the period of time or duration for the performance or during thereof is prescribed and fixed herein, the time shall be computed so as to exclude the first and include the last day of the prescribed or fixed period or duration of time. When the last day of the period falls on Saturday, Sunday or a legal holiday that day shall be omitted from the computation. 405.15. EFFECTIVE DATE; PUBLICATION; AND TIME OF ACCEPTANCE Publication; Effective Date. This Franchise shall be signed by the Mayor or acting Mayor and attested by the City Clerk. The Franchise shall be published in accordance with the requirements of the City and shall take effect upon acceptance by Grantee. 2. Time of Acceptance and Exhibits. A. Grantee shall have thirty (30) days from the date of adoption of this Franchise to accept this Franchise in form and substance acceptable to the City. Such acceptance by Crrantee shall be deemed the grant of this Franchise for all purposes. In the event acceptance does not take place within thirty (30) days or such other time as the City might allow, this Franchise shall be null and void. B. Upon acceptance of this Franchise, Grantee shall be bound by all the terms and conditions contained herein. Grantee shall provide all Services and offerings specifically set forth herein to provide Cable Services within the City. C. With its acceptance, Grantee also shall deliver to the City a certified resolution of Grantee evidencing its power and authority to accept the Franchise. Such documents shall also describe the officers authorized to accept on behalf of Grantee. D. With its acceptance, Grantee shall also pay all costs and expenses incurred by the City in connection with the renewal process. The City shall provide an itemized statement to Grantee. Costs or expense of the City not identified at that time shall be paid promptly by Grantee upon receipt of an itemized statement from the City. It is the intent of the City and Grantee that the City be reimbursed for all costs and expenses in connection with the granting of the Franchise including any subsequent expenses due to delays or litigation pertaining to the grant of the Franchise. E. With its acceptance, Grantee shall also deliver any security deposit, insurance certificates, performance bonds and access capital grants required herein. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS DAY OF , 2004. 35 ATTEST: CITY OF FRIDLEY, MINNESOTA By: By: Its: City Clerk Its: Mayor Public Hearing: , Second Reading: , First Reading: , Publication: , ACCEPTED: This Franchise is accepted, and we agree to be bound by its terms and conditions. TIl�� WARNER, INC., DB/A �IlVIE WARNER CABLE Date: , 2004 By: Its: SWORN TO BEFORE ME this _ day of , 2004. NOTARY PUBLIC 36 EXHIBIT A ACCESS CHANNEL CARRIAGE REQUIltEMENTS A. The access services shall be carried in accordance with the following: Access Service Channel Location 1. Public Access 2. Educational Access 3. Governmental Access 4. Library Access B. Any realignment of any access service(s) shall require the prior approval of the City; provided, however, if the City does not object within sixty (60) days of a written request for an access service realignment submitted in writing by Grantee the City shall be deemed to have consented. C. Notwithstanding anything to the contrary, no consent shall be required of the City when a realignment of one (1) or more access services is required by federal or state law in order for Grantee to carry a service on one of those Channels previously designated for access service. A-1 � .�:11:7��:� EQUIl'MENT AVAILABLE FOR PUBLIC ACCESS USE ACCW EQUIl'MENT INVENTORY 3/88. STUDIO "A" OWNER ITEM ACCW B&W 19" MOTTITORS (3) REARSCREEN (SLIDE/FILM PRO� RADIANT SET CHAIRS (2 BLUE, 2 YELLOV� SET RISERS' 4'x8'x8" BRN CARPET (3) GREY SWIVEL OFFICE CHAIRS (4) OPEN WOOD SHELVES 20"x8"x32", 42"xl9"x43" NEWS DESK (GREY CARPET) (2) BLACK WOOD CARD STAND BLUE METAL CARD STAND BANQUET TABLE 30"x8" (BLUE) GAME SHOW PODNM 41 "xl l l"x44" (BLIJE/WHITE), GREY METAL TABLE 34"X45x31 5 STEP 42" WIDE AUDIENCE BLEACHER BLUE ARC COUNTER 16"x63 "x29" CHROME DISPLAY CARD STAND 22�,8x66 RED ARCH 7' x45" 4x8 FLATS (10) 4x8 FLAT FRAlV�S (10) FIREPLACE/OVEN SET PIECE 9x4 SEE LIGHT INVENTORY ON SEPARATE EXHIBIT ACCW EDIT SYSTEM DESK 67x18x26 FLOOR MIC STANDS (2) �.��7.� �,�� . NORTEL TELEX INTERCOM HEADSETS (PTT) (3) TELEX INTERCOM HEADSETS (2) PANASOIVIC VHS EDIT VCRs PANASO1vIC VHS EDIT CONTROLLER PANASO1vIC U-MATIC VCR PANASOTTIC COLOR MOIVITORS PANASONIC COLOR MO1vITORS PANASOlvIC SPEC EFF GENERATOR PANASOIVIC COLOR CAMERAS PANASOTIIC CAMERA VIEWFINDERS PANASOrTIC CAMERA REM CNTRL Ul�TITS TEKTRONIX WAVEFORM MONITOR B-1 M/N PCA JM 345B ATLAS ATLAS CS-83 CS-81 NV-8500 NV-A500 NV-9200A CT-110MA CT-110MA WJ-SSOOE WV-3990E WV-3805A WV-3806B 528 S/N 64GCD NA NA B3HL00259.239 3D150013 B2HL0050 KB2640697.705 KB2640697.943 43A00357 34A11351.379 34205495.83 B227567 SHURE AUDIO MIXERS JVC STEREO AUDIO CASSETTE DECK FOR-A TIlVlE BASE CORRECTOR KNOX CHARACTER GENERATOR UNIMEDIA COLOR MO1�lITOR CONRAC B&W MOrTITORS RADIO SHACK AUDIO AMPLIFIER TRU-TONE ELECTROrIICS AUDIO AlVIl'LIFIER DYNAIR lx6 VIDEO ROUTER ACCW BLACK OFFICE CHAIR GREY METAL TABLE-34x60x31 YELLOW WOODEN SHELVES lx6 STEEL MII,K CRATE (2). LP RECORDS (4p) AUDIO CASSETTE TAPES (31) SONY AUDIO NII�R NORTEL PANASONIC VHS EDIT VCRs PANASOr]IC VHS EDIT CONTROLLER PANASOTIIC COLOR MOrTITORS TOSHIBA AUDIO CASSETTE DECK JVC TURNTABLE EQUIl'MENT RACK 22x13x35 TAPE LIBRARY ROOM ACCW WOOD SHELVES 94 xl l x77 GREY METAL TABLE 4534x31 STEEL SHELF LJNIT 12x31x42 MEMBERSHII' FILE BOX BROWN FLORESCENT DESK LAMP GREY STEEL SHELF 1x3x3 WOOD COMPUTER DESK 32�Ox27 N�LAND AM/FM STEREO RECEIVER NORTEL PANASO1vIC VHS VCRs SONY U-MATIC VCRs SONY U-MATIC VCR SONY U-MATIC REALISTIC AM/FM TUNER UNIlVIEDIA CQLOR TV/MONITORS UNIlVIEDIA COLOR MOl�1ITOR CONRAC B&W MOTIITORS GBC/II�EGAMI B&W MOIVITORS DYNAIR VIDEO DISTRIBUTION AMP B-2 M-67.267 (2) TEMP. KD-V33 FA-410 K128B LTMT-1204 ENA-9 09840261 940133 05557 336405 254121.196 254230.325 254598.599 SA-10 31- 1982B 61288 VS-6A 067856K2 NV-8500 NV-A500 CT-1 l OMA PC-610 QL-A200 NA 305 NV-8200 VP-5000 VO-2800 VO-2860A IM-90 UMI-1701 UNII-1204 ENA-9 MV-SA PS1053D MX-14 B3HL00268.0 3D060021 KB2640730.27 4573000785 K06801753 NA NA JOHG503 30-123 10144.13 840 10093 15017 0110587 565617.586593 1073102 168118.170486 6146.59.7969 ACCW AT&T NORTEL ACCW DYNAIR 2x12 A/V ROUTING. SWITCHER DYNAIR 12x10 A/V ROUTING SWITCHER DYNAIIZ SPEC EFF GENERATOR TEKTROI�TIX COLOR MONITOR TEKTROI�TIX TEST SIMAL GENERATOR VDS VIDEO TEXT DISPLAY GRALAB DARKROOM TIlVIER GREY METAL DESKS 34x60x31, 34x60�9, 45x30�9 WOODEN DESK STANDS SSxl 1x19 (2) BLACK OFFICE CHAIRS (2) HON 4 DRAWER FILE CABINET 18x28x52 DUOFONE ANSWERING MACHINE TEXAS INSTRUMENTS CALCULATOR IBM SELECTRIC TYPEWRITER TELEPHONES (2) SANYO COLOR TV WOODEN SHELVING LTNIT 16"x81x29"_ 12"x81x59" PANASOIVIC BATTERY PACK (11) NORTEL ELECTRO VOICE ONINI H-H MIC ELECTRO VOICE ONIl�TI H-H MIC ELECTRO VOICE ONIl�TI H-H MIC ACCW ELECTRO VOICE OMNI H-H MIC ELECTRO VOICE OMNI H-H MIC ELECTRO VOICE ONINI LAV MIC ELECTRO VOICE OMNI LAV MIC85 ELECTRO VOICE OMrII T-T MIC ELECTRO VOICE OM1VI T-T MIC ELECTRO VOICE OM1�I T-T MIC ELECTRO VOICE ONINI T-T MIC SONY OMI�II T-T MIC CALRAD SUPER CARDIOD MIC CAMERA EXTENSION.CORD (1) AC EXTENSION CORDS (YELLOV� (4) PORTABRACE SOFTSIDE VHS CASE (1) MIC EXTENSION CORD 15' (1) XLRJ TO PHONEP 5.5' XLRJ TO MINI PHONEP 15' MIC CORD 15' BROWN (5 ) XLRJ TO PHONE P 12' CAR BATTERY CORD (1) BNCP TO BNCP 3' RFP TO RFP 4', 5' �L:3c3 VS 153A 650 146 KB-2000 300 B101899 B061D01 130259 TAD-114 TI-5030 71 91062 V72510026 LCS-2012V 635A "#1" 635A "#2" REPLACED "#3" BELOW 635A 63 SA 85 SS CO-90 CO-90 CO-90 CO-90 ECM 150 10-10 "#4" "#5" "#9" "#10" "#G" ON ORDER ��#H„ ��#r, «#�, "#K" Replaces "#3" NORTEL ACCW NORTEL NORTEL ACCW RFP TO RFP PUSH ON 5' (3) RFP TO RFP. PUSH ON 2' (2) MINI PHONEP TO PHONO P PHONOP TO PHONOP RADIO SHACK TELEPHONE AMPLIFIER (FOR CALL-IN SHOW) VCR REMOTE CONTROL iJNITS (3) VIDEO/AUDIO HEAD DEMAGNETIZER DYMO LABEL GUN BERKEY 650 WATT 3 LIGHT KIT BOGDEN TRIl'OD W/CARRYING BAG (4) PORTABLE CAMERA #1/UNREPAIRABLE VIDEOTAPE RECORDER #1 POWER SUPPLY #1 CAMERA CASE VTR CASE PORTABLE CAMERA #2 VIDEOTAPE RECORDER #2 POWER SUPPLY #2 CAMERA CASE VTR CASE PORTABLE CAMERA #3 VIDEOTAPE RECORDER #3 POWER SUPPLY #3 CAMERA CASE VTR CASE PORTABLE CAlV�RA #4 VIDEOTAPE RECORDER #4 POWER -SUPPLY #4 CAMERA CASE VTR CASE PORTABLE CAMERA #5 VIDEOTAPE RECORDER #5 POWER SUPPLY #5 CAMERA CASE VTR CASE PORTABLE CAMERA #6 VIDEOTAPE RECORDER #6 POWER SUPPLY #6 CAlV�RA CASE VTR CASE PORTABLE CAMERA #7 CAMERA CASE PORTABLE CAlVIERA #8 CAMERA CASE PORTABLE CAMERA #9 ;, WV3100 KV8410 NY 855 WV3320 NV8410 NV B55 WV3400 KV8420 NB B58 WV3400 NV8420 NV B58 WV3400 KV8420 NV B58 WV3240 NV8420 NV B58 WV3040 WV3040 WV3010 121245 HOHA20161 HOA3 962YD 041053 H1HB00497 Gl A9249YD 34B04441 D3HB01724 D3YA19333 34804314 D3HB01010 D3YA19296 34B04447 D3HB01259 D3YA19091 4YB05666 ASHB00256 H4YA3 0876 47B 12910 4XB 13053 49B 11544 CAMERA CASE The Local Origination Studio/Control Room is available for ACCW use when: - Neither the studio or control room is in use by Nortel. - Arrangements are made prior to the day of production. - Use of studio and control room "B" is supervised by ACCW staff from start to end of reserved time. - The equipment does not leave studio and control room "B." Local Origination Production equipment, designated for use in studio/control room "B" is available for ACCW- use in control room/studio "A" under the following conditions: - The equipment is requested by ACCW staff. - The equipment is for temporary replacement of studio/control room "A" equipment which is out for repair or waiting for repair; or - The equipment is for use in a production produced by ACCW staff, municipal channel staff, or educational access staff. -The equipment is installed by Nortel staff. - The equipment is not in use, nor would it conflict with a scheduled use by Nortel staff. - The equipment does not leave studio/control room "A." The Local Origination 3/4" editing system when not in use, or scheduled for use is available for ACCW staffuse, under the following conditions: - ACCW staffuse request is made prior to the day requested. - ACCW staffwill be the only non-Nortel people present during use, and ACCW staffwill not leave the equipment unattended in an unlocked area. - The equipment does not leave studio "B." Nortel production equipment, listed as currently not in use, is available to ACCW use under the following conditions: - The request for use is made by ACCW staff. - The equipment is used for temporary replacement of studio production equipment gone for repair, or under repair. - The equipment does, not leave the building. STUDIO "B" PRODUCTION EQUIPMENT 1N CONTROL ROOM OWNER ITEM M/N PANASONIC SEG PANASOrTIC TRIPLE B/W MONITOR SHURE 4 CHL AUDIO MIXER PANASOlvIC VHS EDITOR VAC INTERCOM SYSTEM CONRAC DOUBLE B&W MOrTITORS � WJSSOOB WV5200BU M267 NV8500 ENA9 S/N 34A09852 33204420.1, 2 254319,263637 SONY CAMERA CONTROL L7NIT (3) SONY CAMERAPOWER SUPPLY (3) WINSTEAD 22" EQUIPMENT RACK (2) PANASOl�]IC B/W RCVR/MOTTITOR SONY RCVR/MONITOR CONRAC B/W MONITOR TEKTROIVIX WAVEFORM MOlvITOR TEKTROI�IX VECTORSCOPE KNOX CHARACTER GENERATOR SONY TIE TAC ONIl�II MIC (4) SONY ELECTRET CONDENSER T-T MIC SONY COLOR CAMERA SONY CAMERA STUDIO VIEWFINDER QUICKSET TRIPOD HEAD QUICKSET TRIPOD (2) QITICKSET TRIl'OD DOLLY (2) QUICKSET TRIPOD/HEAD/DOLLY FOR LIGHTS, SEE SEPARATE ATTAC�IlVIENT ALLEN-TEL INTERCOM HEADSETS TELEX INTERCOM HEADSETS ELECTRO VOICE HANDHELD ONINI NIIC SHURE HANDHELD ONINI MIC REALISTIC TIE TAC ONINI MIC ELECTRO VOICE LAVELIERE ONINI MIC SONY HANDHELD CARDIOID MIC CCU1800 CMA7 VN4130 CVM1250 ENA9 528 520A K128 ECM16T ECM44B DXC 1800 � � �� 4-72852-3 5AMSON 7301 SAMSON DOLLY HUSKY 5- 95542-2 52AT-1- KKY-15'-3- A-161 A-IS (5) CS-81 (5) 635A (3) 5795 5-98 11365, 10451, 10211 11820, 11819, 12844 511552 254139 8239277 B363955 NA 2000152, 3, 406 14205, 11294, 13080 011317, 8 06834483.71 NORTEL PRODUCTION EQUIl'MENT CURRENTLY NOT 1N USE STORED ON STUDIO "B" SHELVES OWNER ITEM M�N S�N SWITCHCRAFT 26x2 PATCHBAYS (3) SWITCHCRAFT 14 PURPLE VIDEO B-6 CABLES SWITCHCHAFT 3 BLACK VIDEO CABLES SWITCHCRAFT B AUDIO CARIES FOR ABOVE TEKTRON IX WAVEFORM MOTTITOR PANASOrTIC EDIT CONTROLLER MCMARTIN AUDIO MIXER SONY 3/4" VCR SONY 3/4" VCR BEI CHARACTER GENER.ATOR SHURE AUDIO MIXER PANASONIC SEG (2) AUDIOMAX AUDIO COMPRESSOR VOLUMAX AUDIO LIlVIITER SIGMA VIDEO DA 1 IN/6 OUT (2) BALL/MIRATEL B/W 9" MOIVITOR SHURE DESKTOP MIC STAND ATLAS DESKTOP MIC STAND ATLAS FLOOR MIC STAND ATLAS FLOOR MIC STAND . DYNAIR AUDIO PRE-AMP DYNAIR 3x V/A PASSIVE SWITCHER DYNAIR 6x V/A PASSIVE SWITCHER AEROVOX BULK ERASER KODAK 16NIM TV PROJECTOR IN ACCW EQUIPMENT ROOM RYAN AUDIO DA: 21N/8 OUT IN ACCW EDIT ROOM RAPID-Q AUDIO CART RECORD MACHINE RAPID-Q AUDIO CART PLAY MACHINE DYNAIR.8 OF 12 CH. 4 OUTPUTS @ DYNAIR SEG STORED IN STUDIO "B" PANASOTTIC CCU PANASOTTIC CCU PANASOlVIC CCU PANASOl�IIC CAMERA PANASOIVIC CAMERA B-7 528 NV 1960 ACCU- FIVE V02800 V02860 CG410 M267 W74600 4440A 4000A VDA-100A 8227563 HOA0560D 1 890658 13014 2125 911498, 1 5830 3484 5830019 AD-280A C0036561 VS-203A 04661420 VS-206A 111482E5 710 TV-12M6 PS 1053D WV-3702 WV-3702 WV-3702 WV-3700 WV-3700 VS 153A 881585.738 8Y4310, 8X3406 892592 892592, 9Y4303 881585,881738 PANASOr1IC POWER SUPPLY PANASOTTIC POWER SUPPLY PANASONIC POWER SUPPLY PANASOl�IIC POWER SUPPLY PANASOr]IC SEG (2) PANASOrTIC EDIT CONTROLLER PANASOTTIC EDIT CONTROLLER TEKTRONIX EDIT CONTROLLER NO NASCO 6-INPUT A/V SWITCHER CB S VOLUMAX LIMITER CB S AUDIOMAX LIMITER VIDEO AIDS INTERCOM STATION (2) VIDEO AIDS INTERCOM CONTROL STATION NVB50 NVB50 NVB50 NVB40 WJ-4600 NVA950 NV-A960 528 4000-A 4440-A PL-1 PLS-1 JBA1 lOSYD LBA133BYD LBA1370YD B 13BWE.EBA3496TY 911491.98 LBA1291YD HOA0560DI B227563 3484 5830 THIS INVENTORY OF EQjJIPMENT, MADE AVAII.ABLE FOR PUBLIC ACCESS USER, UNDER THE CONDITIONS STATED, DOES NOT REFLECT NORTEL PRODUCTION EQUIl'MENT CURRENTLY STORED AT THE FRIDLEY CIVIC CENTER, FOR USE IN CITY COUNCIL MEETING COVERAGE. IT WII..D REMAIN IN USE THERE UNTIL IT IS SUPERCEDED BY MUNICIPAL CHANNEL PRODUCTION EQUIl'MENT. STUDIO "A" AND "B" LIGHTING INVENTORY (ALL MFG LIGHT # TYPE OF LIGHT MODEL # Ol FOCUSABLE GREY SCOOP 4291 02 FOCUSABLE GREY SCOOP 4291 03 FOCUSABLE GREY SCOOP 4291 04 FOCUSABLE GREY SCOOP 4291 OS FOCUSABLE GREY SCOOP 4291 06 FOCUSABLE GREY SCOOP 4291 07 FOCUSABLE GREY SCOOP 4291 08 FOCUSABLE GREY SCOOP 4291 09 FOCUSABLE GREY SCOOP 429.1 10 FOCUSABLE GREY SCOOP 4291 11 FOCUSABLE GREY SCOOP 4291 12 FOCUSABLE GREY SCOOP 4291 13 NON FOCUS GREEN SCOOP 4271 14 NON FOCUS GREEN SCOOP 4271 15 NON FOCUS GREEN SCOOP 4271 16 NON FOCUS GREEN SCOOP 4271 17 NON FOCUS GREEN SCOOP 4271 18 NON FOCUS GREEN SCOOP 4271 19 5.5" FRESNEL 3342 20 5.5" FRESNEL 3342 21 5.5 "FRESNEL B-8 By CENTURY-STRAND) LAMP WATT LAMP M/N 1000 EGK, 7 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK,J 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, 7 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, J 1000 EGK, J 500 BTM 500 BTM 3342 500 22 5. 5 "FRESNEL 23 5.5" FRESNEL 24 5.5" FRESNEL 25 5.5" FRESNEL 26 5.5" FRESNEL 27 5.5" FRESNEL 28 5:5" FRESNEL 29 5.5" FRESNEL 30 5.5" FRESNEL 31 5.5" FRESNEL 32 5.5" FRESNEL 33 8" FRESNEL 34 8" FRESNEL 35 8" FRESNEL 36 8" FR.98NEL 37 ELLII'SOIDAL SPOT 3 8 MINI-BROAD (GREEl� 3 9 MINI-BROAD (GREEl� 40-45 MINI BROAD (GREEl� SUPPORT EQUIPMENT 3342 3342 3342 3342 3342 3342 3342 3342 3342 3342 3413 3413 3413 3413 2321 3342 500 2000/1000 2000/1000 2000/1000 2000/1000 500 1000 1000 1000 500 500 500 500 500 500 500 500 500 BTM BWBVW BWBVW BWBVW BWBVW EGC, D FH1V� CM FHM, CM FHM,CM 16"x16" GEL/SCRIM FRAMES 38 7.5"x7.5" GEL/SCRIMFRAMES 16 26"- 36" SAFETY CABLE (37) 10"x10" GEL/SCRIM FRAMES O1 8'-12' 20amp EXT: CORDS (11) 10"x10" BARNDOORS 04 KLIEGL BROS. PANTOGRAPH 7.5"x7.5" BARNDOORS O1 M/N 111CLANIP M/N 1850 (6) 18 SCOOPS 14 Small Fresnels 4 Large Fresnels 1. Ellipsoidal 6 Pantographs 14 ft. ladder 12 ft. ladder 11 20 amp extension cords curtains B-9 � I1: LOCAL ORIGINATION EQUIPMENT AVAILABLE FOR PUBLIC ACCESS USE LOCAL ORIGINATION EQUII'MENT INVENTORY 1/7/88 The Local Origination Studio/Control Room is available for ACCW use when: - Neither the studio or control room is in use by Nortel. - Arrangements are made prior to the day of production. - Use of studio and control room "B" is supervised by ACCW staff from start to end of reserved time. The equipment does not leave studio and control room "B". Local Origination Production equipment, designed for use in studio/control room "B" is available for ACCW use in control room/studio "A" under the following conditions: - The equipment is requested by ACCW staff. - The equipment is for temporary replacement of studio/control room "A" equipment which is out for repair or waiting for repair; or - The equipment is for use in a production produced by ACCW staff, municipal channel staff, or educational access staff. - The equipment is installed by Nortel staff. - The equipment is not in use, nor would it conflict with a scheduled use by Nortel staff. - The equipment does not leave studio/control room "A." The Local Origination 3/4" editing system when not in use or scheduled for use is available for ACCW staff use, under the following conditions: - ACCW staffuse request is made prior to the day requested. - ACCW staffwill be the only non-Nortel people present during use and ACCW staff will not leave the equipment unattended in an unlocked area. - The equipment does not leave studio "B." Nortel Production equipment, listed as currently not in use, is available to ACCW use under the following conditions: - The request for use is made by ACCW staff. - The equipment is used for temporary replacement of studio production equipment gone for repair or under repair. - The equipment does not leave the building. STUDIO "B" PRODUCTION EQLJIPMENT IN CONTROL ROOM BRAND MIN SIN ITEM NOTE PANASOrTIC WJSSOOB SEG G1 PANASOl�IIC SH[JRE PANASOIVIC VAC CONRAC SONY SONY SONY SONY SONY SONY WINSTEAD WINSTEAD PANASOIVIC SONY CONRAC TEKTROI�TIX KNOX SONY SONY WVSZOOBU M267 NV8500 ENA9 CMA7 CMA7 CMA7 VN4130 CVM1250 ENA9 528 K128 ECM16T ECM16T TRIl'LE B/W MOIVITOR 4 CHL AUDIO NIA�R VHS EDITOR INTERCOM SYSTEM DOUBLE B&W MONITORS CAMERA CONTROL iJNIT CAMERA CONTROL iJNIT CAMERA CONTROL UrTIT CAMERA POWER SUPPLY CAMERA POWER SUPPLY CAlV�RA POWER SUPPLY 22" EQiJIl'MENT RACK 22" EQUIl'MENT RACK B/W RCVR/MOTTITOR RCVR/MO1vITOR B/W MOIVITOR WAVEFORM MONITOR CHARACTER GENERATOR TIE TAC ONINI MIC TIE TAC OMNI MIC SONY ECM16T TIE TAC ONINI NIIC SONY ECM16T TIE TAC ONIl�TI MIC SONY ECM44B ELECTRET CONDENSER MIC SONY ECM44B ELECTRET CONDENSER MIC SONY ECM44B ELECTRET CONDENSER MIC STUDIO "B" PRODUCTION EQUIPMENT IN STUDIO SONY DXC1800 COLOR CAMERA 4" VF lOXl LENS SONY DXC1800 COLOR CAMERA 4" VF IOXl LENS SONY DXC1800 COLOR CAMERA 4" VF 6X1 LENS QUICKSET 4-72852-3 TRIPOD HEAD QUICKSET QUICKSET QUICKSET QLTICKSET CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY CENTURY 4-72852-3 SAMSON 7301 SAMSON 7301 HUSKY TRIPOD HEAD TRIPOD W/DOLLY TRIPOD W/DOLLY TRIl'OD/I�AD/DOLLY SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL FRESNEL LIGHT SMALL SCOOP LIGHT SMALL SCOOP LIGHT SMALL SCOOP LIGHT SMALL SCOOP LIGHT G2 CENTURY PANTOGRAPH BLUE CURTAIN 25'x10' 12' WOODEN STEP LADDER ALLEN-TEL INTERCOM HEADSETS TELEX INTERCOM HEADSETS ELECTRO 635A HANDHELD ONINI MIC VOICE ELECTRO 635A HANDHELD OMNI MIC VOICE ELECTRO 635A HANDHELD OMNI MIC VOICE ELECTRO 635A HANDHELD ONIl�]I MIC VOICE SHURE 579SB HANDHELD ONIlVI MIC REALISTIC TIC TAX ONINI MIC ELECTRO LAVELIERE ONIl�TI NIIC VOICE NORTEL PRODUCTION EQUII'MENT CURRENTLY NOT 1N USE STORED ON STUDIO "B" SHELVES SWITCHCRAFT 26x2 PATCHBAY SWITCHCRAFT 26x2 PATCHBAY SWITCHCRAFT 26� PATCHBAY SWITCHCRAFT 14 PURPLE VIDEO CABLES FOR SWITCHCRAFT SWITCHCRAFT TEKTROl�]IX PANASOTTIC JVC MCMARTIN SONY SONY BEI REALISTIC SHURE PANASONIC AUDIOMAX AUDIOMAX PANASONIC PANASOI�TIC PANASOrIIC 528 NV 1960 KDV33 ACCU-FIVE V02800 V02860 CG410 M267 WJ4600 4440A 4000A VW3700 WV3700 WV3700 PANASOlvIC VW3700 ABOVE 3 BLACK VIDEO CABLES FOR ABOVE 8 AUDIO CABLES FOR ABOVE WAVEFORM MOrTITOR EDIT CONTROLLER AUDIO CASSETTE DECK AUDIO MIXER 3/4" VCR 3/4" VCR CHARACTER GENERATOR TIMER AUDIO NIIXER SEG AUDIO COMPRESSOR AUDIO LIMITER COLOR CAMERA 6x1 LENS, POWER SUPPLY COLOR CAMERA-6x1 LENS, POWER SUPPLY COLOR CAMERA 6xl LENS, POWER SUPPLY COLOR CAlV�RA 6xl LENS, POWER C-3 SIGMA VDA-100A SIGMA VDA-100A BALL/MIRATEL SH[JRE ATLAS ATLAS ATLAS SUPPLY VIDEO DA 1 IN/6 - OUT VIDEO DA 1 IN/6 - OUT B/W 9" MONITOR DESKTOP MIC STAND DESKTOP MIC STAND FLOOR MIC STAND FLOOR MI C STAND D�� AUDIO PRE-AMP D�� 3x V/A PASSIVE SWITCHER D�� 6x V/A PASSIVE SWITCHER AREOVOX 710 BULK ERASER NORTEL PRODUCTION EQUIPMENT CURRENTLY NOT IN USE STORED ELSEWHERE IN ACCW EQUIPMENT ROOM RYAN AUDIO DA: 2 IN/8 OUT IN ACCW EDIT ROOM �'ID-Q AUDIO CART RECORD MACHINE �'ID-Q AUDIO CART PLAY MACHINE IN CONTROL ROOM "A" CABLECAST AREA. DYNAIR PS 1053D 8 OF 12 CH. 4 OUTPUTS @ DYNAIR VS153A SEG C-4 OPERATING RULES Local Origination Mobile Production Van In the event Grantee provides a mobile production van in any one or more of its cable television systems located in the Twin Cities Metropolitan area, then Crrantee shall provide Fridley access users the opportunity to utilize the mobile production van in accordance with the following operating rules. Schedulin�: 1. Request for scheduling a production using the Local Origination Mobile Production Van must be made in writing to Grantee's Program Producer. 2. Scheduling will be on a first-come first-serve basis. 3. In the event that two (2) or more requests are received for productions on the same day, the following priority will apply in granting requests: A. Local Origination - St. Louis Park and Fridley B. St. Louis Park Access C. Bloomington and Fridley Access 4. Crrantee's Local Origination will always have first priority on use of the van. Rules of Van Operation. l. All users of the equipped mobile van must be certified in its operation by the Grantee Cable TV Production Department. Grantee will conduct workshops when needed to grant certification. 2. The appropriate Access Coordinator must be in attendance at all times during use of the mobile van. 3. Grantee Cable personnel will accompany the van during all remote productions using the mobile van. Grantee Cable employees only, will be permitted to drive the van. 4. At all times during a production using the mobile van, the Access group and Access Coordinator will be responsible for the actions of the group as a whole. Any inappropriate behavior, use of alcohol, or other drugs or the use of foul language will not be tolerated and will be considered reason to deny future use of the van. 5. The Access Coordinator is responsible to provide adequate help and assistance in loading and unloading equipment from the van. Unless previously arranged with Grantee's Program Producer, Grantee's employee will only drive the van to and from the production. Dama e to E�ui ment. l. The Access group, which is permitted to use the mobile van, will have sole responsibility for any damage which occurs to the equipment contained herein. 2. Prior to the use of the van, the Access Coordinator and a Grantee Cable employee will inspect the van's equipment and note the conditions which exist prior to use. Following the production the Access Coordinator and a Grantee Cable employee will again inspect the equipment to insure that no additional da�ages have occurred. 3. If damages to the equipment occurs, Grantee's Program. Producer will be responsible for assessing the dollar amount of the damage, determining if repair or replacement is necessary and invoicing the Access entity. Time Limitations. 1. Grantee reserves the right to limit use of the van to insure that scheduling conforms to previously mentioned guidelines and is conducted fairly and responsibly. Grantee reserves the right to deny use of the mobile production van should it be found that an access group continually returns the van with misused or damaged equipment, in an unclean condition, or if supervision of the group using the van for production purposes is not adequate. Grantee reserves the right to modify the van rules as conditions necessitate. GREENE ESPEL MEMORANDUM PROFESSIONAL LIMITED LIABII.ITY PARTNERSHIP SUrrE 1200 200 SOUTH SIXTH STREET MINNEAPOLIS� MINNESOTA 55402 (612) 373-0830 FAx (612) 373-0929 PRIVII.EGED AND CONFIDENTIAL TO: Mayor Lund and Members of the Fridley City Council C: Bill Burns, Scott Hickok, Paul Bolin, and Fritz Knaak ,:�� FROM: John M. Baker DATE: August 12, 2004 RE: Post-trial, Pre-ruling Settlement Proposal from Cruardian Building Products Distribution Our File No: 2043-244 Mayor Lund and Members of the City Council: Summary Guardian Business Products Distribution ("Guardian") operates a building materials yard on Main Street that has significantly more outdoor storage than the City's current ordinances permit. Last year, before any enforcement action began, Guardian sued the City, contending its outdoor storage should be grandfathered in, under the theory that it was a prior lawful nonconforming use. That case was tried to the Court in May, and a ruling is expected this fall. In mid-July we received a settlement proposal from Guardia.n, and have agreed to forward it to the Council for its consideration. A copy of this settlement proposal is attached. Staff does not believe that the City should agree to Guardian's settlement proposal, or substitute the framework reflected in tha.t settlement proposal for the framework that the City has used in its previous settlement proposaLs. While the Guardian proposal may prevent the business from leaving the community, it does not achieve the City's objective of obtaining compliance with its ard'mances. Ra.ther, staff suggests that the Council authorize us to formally tender a variation on the settlement proposal made by the City last spring (which Guardian then rejected). Under the recommended variation, Guardian would be required to cease using the east side of the property far outdoor storage by May 10, 2005 and would be required to comply with current ordinances in full by May 10, 2006. Case Background As the Council will recall, City staff engaged in comprehensive code enforcement, first in residential areas, and later in commercial and industrial areas. As part of tha.t process it became apparent that many businesses, including Guardian, were well out of complia.nce with the City's screening, special use permit, and other requirements for outdoor storage. The Council then softened its outdoor storage requirements somewhat, but not to Guardian's satisfaction. Guardian has never fully screened its outdoor storage activities. Nor has it ever sought or received a special use permit for those activities. The total amount of square footage used by Guardian for outdoor storage greatly exceeds 50 percent of the size of its enclosed space, which is the limit that the Council adopted in early 2003. The sole focus of Guardian's suit is its claim that outdoor storage is a la.wful nonconforming use, and that the nature and extent of such activities have not cl�anged on the property since 1962. The investigation started by sta.� and completed with our assistance, showed that Guardian's claim to nonconfornung use status was factually and legally invalid, so we vigorously defended the suit. There is a special dimension to this dispute that transcends the legal questions involved. Guardian has indicated that, if it is forced to reduce its outdoor storage activities to the levels required by the City's current ordinances, it will exercise a.n escape clause in its lease and close down its operations on the site. Guardian currently employs about 50 people at this site. The infornlal comments of the judge who will decide the case have suggested that he is looking for a"middle ground," such as pernutting current outdoor storage activities to continue on the west and south sides of the building, but not on the east side. While we think the City's position is strong on all sides of the building, it is especially strong on the east side. However, we think part of the judge's motivation to find a middle ground comes from a desire to preserve jobs. There is another potential "middle ground" that would concern us even more. It is possible that the judge would find that their use is not a lawful nonconforming use, but simply require them to more completely screen their existing outdoor storage (rather than to reduce it). Both sides filed written closing arguments and proposed findings on July 6. The judge has indicated that he'll likely need the full 90 days to issue his decision, which suggests we should not expect a ruling until late September or early October. The City's Previous Settlement Positions Until this most recent offer was received, the last settlement discussions between counsel for the parties occurred on the morning the trial began. Those discussions occurred at the direction of the judge, who did not want to begin the trial until all settlement efforts had been e�iausted. In those discussions, we indicated tha.t we would be willing to recommend to the Council a settlement that included the following parameters: Guardian would fix the slats in the cha.in-link fence and e�end those slats around the property. (They are currently only on a portion of the east side.) 2 • Outdoor storage would never exceed 12 feet in height. • Guardian would either fully comply with the City's ordinances, or vacate the site, by May 10, 2006. (The Council had previously proposed a full compliance date at the end of 2005.) • Guardian would keep at least 40 jobs at the site during the period before full compliance with the City's ordinances was required. • Guardian would cease using the east side of the property for outdoor storage by May 10, 2005. (The east side of the business adjoins a public right of way and residential neighborhood, and is the area in which its claim to prior lawful nonconforming use status is the weakest. The Council had previously authorized us to propose that by the end of 2004, Guardian would cease outdoor storage activities on the east side and reduce its outdoor storage activities to 75 percent of its enclosed space by the end of 2004.) • Within a month, Guardia.n would retain an industrial logistics e�ert to advise it regarding consolidation of its own outdoor storage operations. Gua.rdia.n rejected this approach, and the rem�ir�g settlement discussions were not productive, so the trial resumed. It never became necessary for us to make these recornmendations to the Council because even if the Council were to authorize them, Guardian indicated prior to trial that it would not accept them. The Latest Settlement Proposal Guardian's previous settlement proposals were unattractive to the City for several reasons. First, they set the date for compliance in 2007, only siY months before its lease on the site would end. Second, Guardian was unwilling to curtail its outdoor storage activities at an earlier point on the east side. As the new Guardian settlement proposal reflects, Guardian is now willing to agree to take its "inventory storage" out of the east side. While they want to continue to load and unload on the east side (with the abiliiy to place materials outside for up to 48 hours), they're also offering to fully screen the east side, and with a wooden fence. They are also willing to limit their hours of operation so that loading operations are not taking place between midnight and 5 a.m. At a mediation earlier this year it was the mediator's impression that Guardian hoped to leave the City eventually, even if this dispute were resolved. `That prediction made the City less willing to make concessions now accommodate Guardian. Guardian contends that this was a misperception, and that it would prefer to stay. Consistent with that position, Guardian's new settlement position includes an offer by Guardian to stay for the fizll term of their lease (i.e. unti12008) and to make their best efforts to stay for an additional five years. The Guardian proposal really doesn't do much to limit their storage activities on the west and to the south, and does not enforce the 50 percent rule against them Under previous proposals, the City would at least have achieved compliance by 2007 (perhaps by causing Guardia.n to leave town). The different approach reflected in this offer would prevent the City from obtaining compliance but do more to keep Guardian's jobs in the community. Staff is cancerned that Guardian's distinction between inventory storage and temporary storage will be difficult for the city to enforce without creating a great burden for staffto keep track of how long particular stock or palettes have remained in one place. The City's Options The City has several options at this point: It could decline the offer, not make a counteroffer, and await the judge's ruling. Under these circumstances, we would predict that there will be a split decision. While the judge may require them to vacate the east side, his earlier comments suggest that he will not require them to curtail their storage activities on the west and south side. Moreover, he is unlikely to require immediate complia.nce, and Guardian could fiu ther delay compliance through an appeal. It is also possible that the reasons tha.t the Court gives for refusing to require Guardian to curtail its options on the west and the south are then used against the City by Wallboard (or others in future nonconforming use disputes with the City). • At the opposite extreme, the City could add details to Guardian's offer (such as deadlines for compliance) but otherwise largely accept Guardia.n's approach. If this were to occur, it is likely that you would receive a request for similar treatment by Wallboard. • The Council could formally authorize the terms tha.t we discussed with Guardian on the first day of trial as a potential recommendation, and make whatever modifications to those terms that the Council believes are necessaty. Staffrecommends the third option. We believe that the trial went well, and are concemed that any flexibility that the City shows to Guardian will be e�ected by others with similar disputes now or in the future. Wbile Guardian may indeed leave rather than comply, staffbelieves that this location is an attractive one for new businesses, and that the site is unlikely to remain vacant for a prolonged period. n � #. �. >� C�ORSEY pt7RS[Y & WHITN�Y L4P MICHAEL DRYSpAL,E (612) 3A0-8852 FAX (612) 340,88po dNsdele.mld�ael�dorsey.00m Ju(y 15, 2p04 VIA �ACSIM( 8� US AtL John Baker, Esq. priviteaed ar�d Gonfldential5ettlement Greene Espe1 P.L.L.P, Off�r Pursuant to Fed. R. Evid 408 200 Ss�uth Sixth Streef Suite 1200 Minn�apolis, MN 55402 Re: Guardian (ndustries C�rp v Gitv of Fridley Dear John: As we discussed, Guardian is prepared to take one last run at settlemerrt. It appears elear from the Judge's comments that neither parly is Iikely to get every�ing it wants in a judgment, and thus it remains in the parties' interests to work out a solution. In the various prior negotiations, it appeared that one of the reasons the City was unwilling to accept a lon�ar "comply or move" timeline was the perception that Guardian wauid simpiy move at the end of the pe�iod, taking ifs jobs with it and not providing enaugh benef#s in retum for the City's concessions. ln tfiat Vein, Guardian has prepared a revised pro�sal that addresses many of the Ciiy's cornp�iance concem5� commlt5 to � ionger residency. and provides additiona! measures beyond what is required by Cit}r zoning faw. As part of a settlement, Guardian is prepared to take the fallowing steps_ 1} entirely replace the chain link slatted fence an the East sfde of the property with a solid wooden fence, further extending 20p' alang the North and South sides (this woutd a{so have the effect of screening the parkirtg area�; 2) plant misCellaneaus shrubs and trees inside the remaining fencing on all.sides to fill in any gaps in the existing pl�ntings; a�d . 3) cease inventory storage of buitding materials on the East side (Areas B� C). These provisions would exceed the screenirtg requirements t�f th� currer�t ordinance. Plantings would subject to City review and approval. In addition, Guardian is further prepared to: DORSEY & WHITNEY LLP - WWW.DORSEY,COM • 7 612,340.26�0 • F 612.340_�g68 SUITE 15Q0 • 5U SOUTH SIXTH STREET • MiNNEAPOLIS, MINtdESOTA 55402-1496 U�A CANAOA FUROPE A3IA �J O7/15/04 TflU 15:31 FAX 612 34Q 8800 DORSEX �HITTiBY LLP [� 003 / Y �, >� dC7RSEY John Baker, Esq, July 15� 20Q4 Page 2 1) cotnmit to confinued operations at the faciliiy through the lease period (June 2048} and use its best efforts to negotfate a lease extension for at least another five years after that, including a rninimum an-site employment of 35 employees; 2) refr�in frarn loading and unloading befinreen the hours of 12:00 a.rn. and 5:00 a.m. each day; and 3) install a screened electronic gate at the driveway used for ac�ess to the loading dacks, to ensure that ihe gate is apened as little as possible. These measures go beyond anything required in Gty Ordinances, and provide a Jong- term jab commitment #hat one would hope would be attracqve ta the City. In exchange, Guardian would require the fatlowing v�riations from the Ordinance r�qUirements as articulated at trial: 1} G�ardian would be aAowed to temporarfly (not to exceed 48 hours) place building materials in conjunotion with loading and unloa'ding trucks alang the East fence between the North Side and the sauthem driveway. To ensure compiete sceeening of these materials, Guardian would instafl a shelf at 54" height on the inside of the fence and side walts at the driveways_ The materisis wou{d thus be fuliy enciosed except from the west, and campietely invisible t� persons on Main Str�et or the neighbaring properties; 2) Guardian would be a{lowed to store materials on the South (Area D) and West (Area F) Sides up to such height as wauld be screened fram the raitway; and 3) Guardian would nat be subject to the 50°� foo�rint requirement. Ali provisians wouid be rat�ied in a wr�tten stipulation executed by the Court. As you know, the judge has strongly hinted that he will find operations on the West an[i South Sides to be grandfathered, which means that concessions on the West and Sauth Sides do not represent much of a sac�ifice for the City. As for the temporary storage on the East Side, the volume of materiai would be significanfily reduced frorn existing levels, it would he fully scr�ened, and givsn the lack of definition of a time threshald for "storage" in the Ordinance, it is entirely possibls that temporary plac�ment might not be considered "storage" at aU. We hope the Ciry Counal will respond to this propQSal favorab[y. If yo� have questions or carnm�nts prior to relaying it, ptease call. � Very truly your %► " 1�`-�`U'�` "`�`'�'.� Michael �rysdale DQRSEY & WHtYMEY 4LP GREENE ESPEL MEMORANDUM PROFESSIONAL LII►ZTI'ED LIABII.ITY PARTNERSHIP SUITE 1200 200 SoUTH St7tTH STREET MINNEAPOLIS� MINNESOTA 55402 (612) 373-0�30 Fnx (612) 373-0929 PRIVILEGED AND CONFIDENTIAL TO: Mayor Lund and Members of the Fridley City Council C: Bill Burns, Scott Hickok, Paul Bolin, and Fritz Knaak A�� FROM: John M. Baker DATE: August 12, 2004 RE: Upcoming Mediation in Church of St. William v. City of Fridley (Brandes Place Limited Partnership, Intervenor) Our File No: 2043-259 Mayor Lund and Members of the City Council: Summary There is a mediation scheduled in this matter for August 25, 2004. Because the City is a minor player in this dispute, we hope that the mediation succeeds in bringing the other parties together in a way that does not require any further action from the City or the Council. Our recommendation is that the Council not provide us with authority to make any significant concessions as part of the mediation. Case Background This lawsuit arises from the dispute between the Church of St_ William and Brandes Place Limited Partnership about whether Brandes Place may move forward to acquire a portion of the property owned by the Church in order to construct an affordable housing project. The suit was filed by the Church against the City in an effort to vacate the final plat for the proposed project, under the theory tha.t the Archbishop lacked authority to act far the Church when he signed the final plat last December prior to its approval by the City. The Church contends the iu�ar�mous support of its Board is needed before the Archbishop could sign the plat and before the Church can formally convey the property to Brandes Place. Because the Board is divided rather than united regarding the project, the Church contends that the project may not move forward. Brandes Place was not originaliy a party to the suit, but was allowed by the Court to intervene. It has filed its own claims against the Church, and essentially seeks an order from the Court requiring the Church to allow it to close on the property pursuant to its purchase agreement. The Church contends tha.t the rights of Brandes Place under the purchase agreement expired at the end of 2002, but Brandes Place disagrees. The suit has been relatively quiet, but in ihe last month has become active for several reasons. First, the Pawlenty Administration and the Archbishop have made a joint effort to seek mediation of the dispute. According to Tim Marx, Cominissioner of the Minnesota Housing Finance Agency, projects of this kind fit in with the governor's objective of reducing homelessness in Minnesota. Because the M��A was intended to be a significant source of financing, the agency is very interested in finding a way to resolve this dispute. Second, the ne� important step in the case is preparation of briefs seeking judgment as a matter of law. We've convinced the Court to sequence activities so that the parties aren't required to file briefs until after the mediation has occurred. However, under the timetable imposed by the Court earlier this month, the Church's opening brief is due two days after the date of the mediation, which creates a special incentive for them to resolve the case at the media.tion. The Church has served two sets of discovery requests on the City which have increased the cost and the burden of this suit to the City, and has indicated it may wish to take a deposition of the City's public works director. Under the Court's timetable, these expenses must be incurred before the mediation begins. Basis for our Recommendation From our point of view the City is a minor player in this suit. While the City approved the final plat and did so with the belief that it was lawful to do so, the central dispute is whether Brandes Place may clase on the properiy. If it cannot, then the fact that the City has approved a final plat is almost meaningless, because without a closing the project will not go forward. If, however, Brandes Place is entitled to close on the property, then whatever flaws e��isted in the final plat approval can be cured once Brandes Place closes on the property. In certain respects, the City has nowhere to go but backwards. By approving the plat, the City has essentially gotten out of the way of the ability of the Church and Brandes Place to resolve their differences. We think they can and should do so without the need for any further decisions by the City Council. Conversely, if the City were to decide, for example, that it will vacate the plat in exchange for a dismissal of the claims of the Church against the City, tha.t would not resolve the litigation. In that setting, Brandes Place would ha�e to go forward in litigation with its claims against the Church, and if Brandes Place were successful in those claims, the question of final plat approval would be back befare the City Council again. To put it another way, any concessions that the City might make regarding plat approval would make it more difficult, not less difficult, for the dispute as a whole to be resolved. While we would prefer the mediation to succeed, the downside to the City of ha.ving the litigation go forward is limited. It does not have damages exposure that we can see. The downside involves the litigation costs and staff time arising from the process leading up to a decision by the court on whether or not the plat should be vacated and whether or not the Church and Brandes Place must close on the conveyance of the property. We've indicated that the City will abide by whatever � � decision the Court will make on those questions. This downside does not justify asking the Council to authorize any serious concessions at this point. It is possible that Brandes Place and the Church are able to resolve their differences, but in ways that require some changes in the nature of the project. At this point we can only guess about what changes, if any, might be agreed upon between the Church and Brandes Place. Rather than seeking authority from you at this point to accept or reject changes, we would prefer to indicate to the mediator our willingness to present to the Council any changes to previous approvals issued by the City if they are part of a complete resolution of this ma.tter. It's possible that the Church may raise, as part of the mediation, its objection to the anticipated costs of its share of assessments arising from the milling and repaving of the frontage road that occurred earlier this year. (It raised an objection in writing with the City in January 2004.) We do not recommend that the Council authorize us to make any concessions regarding those assessments as part of the mediation of this lawsuit. Rather, we recommend that the Council treat the Church like any other party objecting to assessments, without regard to its commencement of this suit. 3 Memo to: The Mayor and Council � From: William W. Burns, City Manager �� Subject: Admission Fees at Springbrook Date 8-12-04 Steve has asked that we discuss the SNC fee issue. In response to his request, we have placed it on Monday's conference agenda. Jack will be there to respond to any questions. I also think it may be wise to discuss your position on the future of Springbrook operations if the levy fails. Based on the discussions I'm hearing, you seem to be saying individually that you witl discontinue SNC operations at the end of this year if the levy fails. At the same time, you have never addressed the issue either formalty or informally as a group. I'm raising the issue for purposes of writing the October newsletter article. Jack Kirk has also prepared an FAQ for his staff. One of the questions asks what will happen if the levy is defeated. His answer is that the operations witl be shut down. Before he and his staff say that, however, I want to make sure that that is the position of Council. There are also some other reasons for clarifying Council's position on this issue. First, if we do not, and the levy fails, the Council will more than likely be asked by someone to use fund balances or some combination of fund balances and new revenue sources to keep the SNC going at least another year. While this may happen under any circumstances, I think it will be easier to say no and to end the debate on this issue if we establish clearly that the voters will decide before they decide. I also think clarity on this issue could help the passage of the levy. If voters are led to believe that Council will somehow use fund balance to support the SNC operations in the event that the levy fails, they will be less likety to vote for it. While there may be some good reasons not to clarify your position on this issue, I can't think of any. In any event, I thought I'd share my thoughts with you. Thanks for listening. MEMORANDUM � � FINANCE DEPARTMENT 'O RICHARD D. PRIBYL CITY OF FRIDLEY Fan°i FrNaNCEVrnECTOR TO FROM: RE: t �.d WILLIAM W. BURNS, CITY MANAGER�t�,j RICHARD D. PRIBYL, FINANCE DIRECTOR ADDITIONAL LEVY AUTHORITY DATE: AUGUST 12, 2004 This memo is intended to make the City Council aware of a one-time opportunity that will expire after 2005. As everyone recalls, the LGA cuts have had a tremendous impact on the City of Fridley and all other local governments in the State of Minnesota. The City of Fridley has had a particular problem in that we are restricted by our local levy limit that the charter imposes on the levy authority. In the special legislative session of the State Legislature in 2003, the two cities that have charter limitations related to levy authority were granted a two-year window of opportunity to levy back the LGA losses. The language is shown below: "Allows a municipality to exceed its municipal charter limit or referendum requirements for levy increases if the increased levy is needed to offset reduction in City LGA. The increased levy may not exceed the amount allowed under the state levy limit provisions. Effective for levies payable in 2004 and 2005 only. " For the Budget year of 2005 we have proposed a levy that would increase above the 2004 levy by the following: $6,483,745 2004 Levy Add $ 110,220 1.7% allowed by the City Charter Add $ 648,384 LGA Loss as compared to 2004 Add $ 275,000 Springbrook Levy 7 517 349 Total proposed levy for 2005 We have found that a one-time opportunity exists to levy up to a additional $550,600 for 2005. This is done, by using the 2003 Certified LGA amount as the base in which we would measure the LGA loss. By using this tool it would increase the base in which the charter amendment imposes its future limitations. The City would have the one time opportunity to balance the budget with this levy and use this increased levy to raise the charter levy base for future years. The LGA loss is the Governor's method of no tax increase at the state level, but effectively moved the tax increase to all local units of government. RDP/me Attachment )� � lGA Loss Historv 2003 - 2005 2003 2,445,663 2003 Origina! certification (Base) 733 122 Adjusted/changed LGA as of 7/17/03 1,312,549 2004 942,038 2004 Certicfication 2,045,663 2003 Original LGA (Base} minus 942.038 2004 LGA = 1,103,625 Difference/Loss in LGA X 60% {Special Session 1- 2003 Legisative Session Article 7: Levy Limits) 662 76 Amount that can be levied back for 2004. -109.150 Amount that we couldn't levy back because of levy limits. 5 3 0 Net amount of LGA loss levied back. Calculation of LGA loss not levied back 441,450 40% X 1,103,625 109.150 That part of the 60% that we were not able to levy back due to Levy limits. 550 600 2005 293,654 2005 Certicfication 942,Q38 2004 LGA minus 293,654 2005 LGA = 648,384 Difference/Loss in LGA X 100% 648 384 Amount that will be levied back for 2005 and will be. —► 441.450 Amount available from 2004 that could be levied back. $1,089,834 Sub-Total —► 109.150 Amount available from 2004 that could be levied back. 2,045,663 293,fi54 $1,752,U09 553,025 648.384 1 20�409 441,450 109,150 $'l,752,QQ9 1.198.984 TOTAL available LGA loss that could be levied back in 2005. 2003 LGA (Base) 2005 LGA Total Loss In LGA 2004 LGA Loss Levied Back In 2004 2005 LGA Loss We Are Leving Back In 2005 LGA Loss Being Levied Back 2004 LGA Loss We Could Levy Back In 2005 2004 LGA Loss We Could Levy Back In 2005 8/12/2004 Simpler Expanation City of Fridley TO: William W. Burns, City Manager FROM: Jon t�I. t-la�ukaas, Public Works Director DATE: August 2, 2004 SUBJECT: I`lorton Avenue Repaving Petition PW04�057 We received a petition from the residents of I`Iorton Avenue requesting the City repave their street The petition has been signed by 26 people representing 23 of the 54 properties on I`lorton Avenue. tlowever, only seven of the petitioners are properky owners with the rest of the signatures from tenants of the rental properties. Several people on this street have expressed the opinion that the recent housing construction is the blame for the condition of the str-eet liowever, our inspection and street ratings indicate that the condition and degradation of I`(orton Avenue is consistent with other streets of the same age and section. 1`lorton Avenue was originally consh-ucted in 1968 with concrete curb and gutter, 4 in. of gravel base, and l�l/2 in. of asphalt It has had three sealcoats since that time. The section we currently use as our standard and build�to is 6 in. of gravel base, 2 in. of base course asphalt, and 1-I/2 in. of wear course asphalt The petition also requests the City reconstruct the street at no cost to the residents. We estimate the reconstruction cost to be approximately �60,000. The assessment policy used for this project may set precedent for our next round of reconstruction projects. The next round would focus on streets of similar section to 1`forton Ave; i.e., streets with I-1/2 in. of asphalt over 4�in. of gravel reconstructed to 3�1/2 in. of asphalt over 6-in. of gravel. The City simply cannot afford to reconstruct all such streets in a timely manner without some contribution by the residents. We are recommending that if this project or another similar project is approved, the City Council partially assess the project As a minimum, we are recommending that the three items associated with the replacement of the most visible portion, the resurfacing, be used to calculate the assessable portion of the cost, These items are the removal of existing asphalt, the tack oil for between the two new asphalt layers, and the wear course of asphalt This cost would then be divided on a front foot basis similar to our current policy. For a typical project such as this one, this equates to approximately �8 to S�9 per fi-ont foot Recommend this item be discussed with the City Council at the August 16, 2004 conference session. , �� COMMUNITY DEVELOPMENT ,:.��, DEPARTMENT DEVELOPMENT DIRECTOR Memorandum DATE: August 12, 2004 TO: William W. Burns, City Manager FROM: Scott J. Hickok, Community Development Director SUBJECT: School District 14 Request to Modify 45-Second Rule INTRODUCTION Earlier this year, staff received notice that School District 14 would like to have a portion of the Fridley Sign Code revisited by Council. That contact was by letter and asked specifically for consideration of an amendment to the 45-second requirement for message changes, as outlined in our electronic sign portion of the Fridley Sign Code. Staff elected to await the outcome of Dr. Dahl petition to the Minnesota Supreme Court in his electronic sign case, since the Supreme Court outcome could have a bearing on the matter at hand. It is now staff's recommendation that Council select one of 3 options relative to the District's request. These options are: 1) Allow the 45-second ordinance to stand until the end of a 3-year trial period (from the date of its adoption) and then have City staff initiate a review of the ordinance to see if it is working and change if appropriate at that time, 2) Ask the School District to make a formal request by application and pay the appropriate fees for Council consideration of a text amendment, 3) Adjust the time change sequence now as the Council sees fit. ELEMENTS As you now are aware, the Minnesota Supreme Court rejected the petition by Dr. Dahl to have his case heard. The Court of Appeals had already supported the City's position and concluded that enforcement of motion and movement on a reader board sign is within the City's right to enforce to assure health, safety, and welfare of the community. Consequently, we have now moved on to the School DistricYs question. Upon reviewing the District's request and briefly analyzing the matter, staff has concluded that it may simply be too soon to know whether the 45-second change is working for everyone or not. We've had very few complaints about 45 seconds. The ordinance was adopted on February 24, 2003. At the time of adoption of this ordinance, some people, including you the City Manager thought a sunset date or a date to re-evaluate the ordinance would be appropriate, since there was no real science to our decision to have a change every 45 seconds. Though everyone agreed that the intent was to keep the signs from being distracting and changing too often, there were many ideas about what woutd be the correct time. To properly evaluate a request such as this, staff needs to dedicate more time. Time, which we know has a price tag attached to it. If the District would like to initiate a change before the 3-year window that staff is using to monitor the 45-second rule, the District could submit a text amendment application, the fee of $1500.00, their supporting research documentation, and their recommendation for language that would amend the Code if approved by Council. This would coincide with what we've done in the past. You may recall that when Dr. Dahl requested an School District 14 Request August 12, 2004 PAGE 2 amendment to the Sign Code, this is precisely the procedural route that he was required to follow. Consistency is very important and for that reason the District should follow the same process if they choose to move sooner than the City's timeline. Also, staff, the Planning Commission and Council have already determined that 45-seconds is appropriate. If the School District, or anyone else disagrees with a requirement, the burden of research, amendment drafting, and ultimately the actual request should be the School District's obligation. Finally, if Council is so inclined and has a number that they would like to approve, other than 45 seconds, we could initiate a text amendment at this time to do so. RECOMMENDATION Unless otherwise directed, staff will contact the appropriate School District representatives and inform them that the issue is scheduled for evaluation in February of 2006. This will allow staff a period of time to monitor the impact of a 45-second rule. We will also inform the District that a formal text amendment can be made sooner, however, the cost of that process and burden of supporting research would be borne by the District.