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08/23/2004 - 4586OFFICIAL CITY COUNCIL AGENDA CITY COUNCIL MEETING AUGUST 23, 2004 -_ M � x � CffY OF FRIdLEY FRIDLEY CITY COUNCIL MEETING OF AUGUST 23, 2004 7:30 p.m. — City Council Chambers Attendance Sheet Please �rint name address and item number vou are interested in. Print Nam+e (Clearly) ' Address Item 'No. � � �� - � �` �� `� � , �_ � G!j % �!p'`,i; " � - G `' �%�� ( ' :�v � S. �� v.� � �� n'�,�,.. �C�I� , I�� , _ �G � .� .�. � .� 2� :�,�� :� c 3 � � � � �. �, � � ��. �s— � � � :a.;V i. � �� ! �1. �� .�_ �, c.'� � i � '' �' i.� -(„!. � '� � " � � `� � +�»�� ` �3'�.(/ � ,r� '�C� � � � � C��3 C�� c��i/ Z�/ ''� l� �:a _5'� c�-�?,� �� j � � � ,s. -) r� '� �'��l `� l 1� n�'�Ci �.�� S�j �� ., , 1 ��, � ' ^ � `; ��.L �::L �i J / % C � � � r., , � .� ��c�� '�C�'��t I�� j� -1 � �, , , ��2��c%� � � � �� :�`-�'� �(�� -��---� �{,.� � �.� � 2 � �'� �Ip ''7L� 1 1��] /[ �/ �/ p �V�� J�i{� �rlV� �'{I�L�✓` � V'�." �� /CY�J/: r � � � _ ✓� � �� JY-rc � �� , I� �' � -- i�% �1 �.� � ✓t-�.' 7— �� , � r�-� c-., j� 7�f�� L�i.� ' l �� t r . 7 � � .� � �. }�� 7 � � � � �� , � � CITY COUNCIL MEETING OF AUGUST 23, 2004 CliY OF FRIDLEY The City of Fridley will not discriminate against or harass anyone in the admission or access to, or treatment, or employment in its services, programs, or activities because of race, color, creed, religion, national origin, sex, disability, age, marital status, sexual orientation or status with regard to public assistance. Upon request, accommodation will be provided to allow individuals with disabilities to participate in any of Fridley's services, programs, and activities. Hearing impaired persons who need an interpreter or other persons with disabilities who require au�ciliary aids should contact Roberta Collins at 572-3500 at least one week in advance. (TTD/572-3534) PLEDGE OF ALLEGIANCE. APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of August 9, 2004 NEW BUSINESS: 1. Variance Request, VAR #04-12, by Applebee's Internationai, to Reduce the Front Yard Setback from 80 Feet to 79.5 Feet, to Reduce the Side Yard Setback on a Corner Lot from 80 Feet to 59.5 Feet, and to Reduce the Parking Setback ` from the Street Right-of-Way from 20 Feet to 11 Feet on the North Side of the Lot and from � 20 Feet to 8.5 Feet on the West Side of the Lot. All Variances will Allow for the Construction of a New Applebee's Restaurant, Generally Located at 5277 Central Avenue N.E. (VVard 1) - .............................................................. 1 1 FRIDLEY CITY COUNCIL MEETING OF AUGUST 23, 2004 PAGE 2 APPROVAL OF PROPOSED CONSENT AGENDA: NEW BUSINESS (CONTINUED): 2. Approve Amendment to Section 8 Housing Assistance Payments Program Contract for Administrative Services Between the City of Fridley and the Metropolitan Council .................................................................. � << �� ,a : , �rz �. / . 3. Resolution Ordering Preliminary Plans, �� Specifications and Estimates of the Costs � Thereof: Neighborhood Street Improvement 12 - 15 Pro�ect No. ST. 2005 — 1 .................................................................................... 16 - 18 4. Resolution Receiving the Feasibility Report and �� -� l� Calling for a Public Hearing on the Matter of � Construction of Certain Improvements: Neighborhood`� Street Improvement Project No. ST. 2005 — 1 ................................................... 19 - 21 5. Appointments — City Employees ........................................................................ 22 6. Claims ....................................................................................................... 23 0 7. Licenses ....................................................................................................... 24 - 27 FRIDLEY CITY COUNCIL MEETING OF AUGUST 23, 2004 _ PAGE 3 ADOPTION OF AGENDA. OPEN FORUM (VISITORSi: Consideration of Items not on Agenda — 15 Minutes OLD BUSINESS: `,, t!0 8. Variance Reque , VAR #04-11, by Park Construction, to Allow a Portion of the Parking i Lot to Remain Gravel for the Purpose of Storing �� Tracked Vehicles, Generally Located at 30 — 81St Avenue N.E. (Ward 3) (Tabled August 9, 2004) ................................................. 28 - 29 c, � ` 9. Resolution to Vacate Unimproved Portions of � u ; Ely Street and the Alley Way Between Ely Street �,� and Liberty Street, Generally Located at 30 — 81St � � Avenue N.E. (Vacation Request, SAV #04-01, by Park Construction) (Ward 3) (Tabled August 9, 2004) ....................................... 30 - 32 10. Preliminary Plat Request, PS #04-04, by Park J� Construction, to Replat Multiple Parcels to Create One Lot, to Allow Petitioner to Develop � the Property Generally Located at 30 — 81St ` Avenue N.E. (Ward 3) (Tabled August 9, 2004) .................................................. 33 - 34 NEW BUSINESS: � 11. First Reading of an Ordinance Amending the Fridley , Municipal Code by Allowing Certain Holders of �� Liquor Licenses to Sell Intoxicating Liquor Until 2:00 A.M. ....................................................................................................... 35 - 39 F'RIDLEY CITY COUNCIL MEETING OF AUGUST 23, 2004 PAGE 4 NEW BUSINESS (CONTINUED): 12. Receive Referendum Petition 2004-1 Requesting the Fridley City Council to Submit Ordinance No. 1196 tothe Electorate ................................................................................................... 40 13. Resolution Declaring an Election to Approve or ��2 Disapprove Ordinance No. 1196, an Ordinance �I� Amending Section 7.02, Power and Taxation, � p0 of the Fridley City Charter ...................................v............................................. 41 - 44 c� � U L� 14. Resolution Certifying Proposed Tax Levy Z p Requirements for 2005 to the County of Anoka ................................................. 45 - 46 �� 1 �� 15. Resolution Adopting the Proposed Budget for ��d theFiscal Year 2005 .......................................................................................... 47 - 49 � , �j; 16. Resolution Adopting Certain Cable-Related ��U`� Needs and Interests of the City of Fridley as Identified in the Staff Report and Related Requirements Set Forth Therein, Authorizing the Issuance of a Request for Formal Renewal Proposal for a Cable Franchise, and Closing the Initial Stage of Formal Franchise Renewal Proceedings....................................................................................................... 50 - 144 17. Informal Status Reports ADJOURN. .................................................................................... 145 MINUTES OF THE FRIDLEY CITY COUNCIL MEETING OF AUGUST 9, 2004 FRIDLEY CITY COUNCIL MEETING AUGUST 9 2004 Paqe 2 of 17 2. Variance Request, VAR #04-11 by Park Construction to Allow a Portion of the Parking Lot to Remain Gravel for the Purpose of Storing Tracked Vehicles, Generally Located at 30-81St Avenue N.E. (Ward 3). Dr. Burns, City Manager, explained that Park Construction would like to store their tracked vehicles on gravel. The Appeals Commission approved this variance at their July 14 meeting subject to eight stipulations. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 3. Resolution to Vacate Unimproved Portions of Ely Street and the Alley Way between Ely Street and Liberty Street, Generally Located at 30 - 815t Avenue N.E. (Vacation Request, SAV #04-01, by Park Construction) (Ward 3). Dr. Burns, City Manager, stated the Planning Commission approved this request at their July 21, 2004, meeting subject to ten stipulations. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 4. Preliminary Plat Request, PS #04-04, by Park Construction to Replat Multiple Parcels to Create One Lot to Allow the Petitioner to Develop the Property Generally Located at 30 - 81St Avenue N.E. (Ward 3). Dr. Burns, City Manager, stated the Planning Commission approved this request at their July 21, 2004, meeting subject to ten stipulations. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 5. Approve Professional Services Agreement and Proposal for Engineering Services between the City of Fridley and WSB & Associates, Inc. for the Springbrook Watershed Implementation Project. Dr. Burns, City Manager, stated this agreement authorizes the preparation of topography data and design alternatives associated with the stream bank stabilization portion of the project. The work will be completed in two phases. In Phase 1, WSB will prepare the contour mapping and the analysis of various alternatives for restoration of flow patterns and stream banks at the Springbrook Nature Center. In Phase 2, WSB will complete the wetland delineation, prepare permit applications and complete the final design. Phase 1 will cost $8,000 and Phase 2, if necessary, will cost $16,300. It may be determined that Phase 2 is not necessary, but staff is asking Council to give them the authority to complete both phases if necessary. This project is totally grant funded FRIDLEY CITY COUNCIL MEETING AUGUST 9 2004 Paqe 3 of 17 and is a multi-city project under the direction of the Springbrook Watershed Project Advisory Committee. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 6. Receive Bids and Award Project for the Marian Hills Reservoir Project No. 356. Dr. Burns, City Manager, stated the low bidder for this project was Natgun Corporation of Wakefield, Massachusetts, with a base bid amount of $1,018,000. The estimate for this project was $550,000 more than identified in the 2002 Water Systems Study. The Public Works Director said the disparity is attributable to sky-rocketing costs for steel and concrete. Also, the original estimate did not take into account the very tight timeframe for completion of the project. Staff recommends approval of the base bid together with Alternate No. 4(soil correction at $34.50 per cubic yard) and Alternate No. 5($9,060 for City logo sign). THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 7. Approve Change Order No. 1 to the Marion Hills Reservoir Project No. 356. Dr. Burns, City Manager, stated the change order is for $37,500 for overtime needed to accelerate the construction schedule. The alternative to this would be to pay $90,000 for heating of concrete mix should an early winter set in. Staff recommends Council's approval. THIS ITM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 8. Approve Request to Restrict Parking on the East Side of Stinson Boulevard from 68th Avenue to 69th Avenue; and Approve Request for Additional Parking Restrictions on Lynde Drive between Polk Street and Fillmore Street. Dr. Burns, City Manager, said the City Fire Marshall recommends establishing a no parking lane on the east side of Stinson Boulevard to prohibit parking 24 hours a day. Also, in response to a petition from residents on Lynde Drive, staff recommends parking restrictions on Lynde Drive between 12:00 a.m. and 9:00 a.m. for the portions of Lynde Drive between Polk Street and Fillmore Street. APPROVED. 9. Resolution Designating Polling Places and Appointing Election Judges for the 2004 Primary and General Elections. FRIDLEY CITY COUNCIL MEETING AUGUST 9, 2004 Paae 4 of 17 Dr. Burns, City Manager, presented a resolution appointing election judges for the 2004 election. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 10. Appointments — City Employees: Dr. Burns, City Manager, stated staff recommends the appointment of Brian Wierke to replace Captain Lynne Tellers Banks. Brian joined the Fridley Police Department in 1995. Since then, he has served as a patrol officer, a DARE instructor, a school resources officer, a detective, a member of the department's Problem Response Team, a Neighborhood Resource Officer, and a patrol sergeant. He holds a BS degree in criminal justice from Minnesota State University and a Master's of Management Administration from Metropolitan State University. Dr. Burns stated staff recommends the appointment of Greg Salo to the SergeanYs position being vacated by Brian Wierke. Greg has been a Fridley police officer since 1994. He has been a patrol officer, member of the Problem Response Team, a Neighborhood Resource Officer, a field training officer, and a Community Emergency Response Team instructor. Greg has also served as a temporary sergeant. He holds an Associate's Degree in Law Enforcement from North Hennepin Community College. APPROVED THE APPOINTMENTS OF BRIAN WIERKE TO CAPTAIN AND GREG SALE TO SERGEANT IN THE FRIDLEY POLICE DEPARTMENT. 11. Claims: APPROVED CLAIM NOS. 117566 THROUGH LL7809. 12. Licenses: APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. 13. Estimates: APPROVED THE FOLLOWING ESTIMATES: Northwest Asphalt, Inc. 1451 Stagecoach Road Shakopee, MN 55379 2004 Street Improvement Project No. ST. 2004 —1 EstimateNo. 3 ................................................................................ $ 54,499.05 FRIDLEY CITY COUNCIL MEETING AUGUST 9 2004 Paqe 5 of 17 Midwest Asphalt Corporation 5929 Baker Road Suite 420 Minnetonka, MN 55345 Hickory Drive Watermain Replacement Project No. 350 EstimateNo. 5 ................................................................................ $ 22,040.53 Ron Kassa Construction, Inc. 6005 — 250t" East Elko, MN 55020 2004 Miscellaneous Concrete Repair Project No. 355 EstimateNo. 2 .............................................................................. $19,609.99 Councilmember Bolkcom requested that Items 2, 3, 4, 5, 6, 7 and 9 be removed from the Consent Agenda. MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adopt the consent agenda with the removal of Items 2, 3, 4, 5, 6, 7 and 9. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF AGENDA: MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adopt the agenda with the addition of Items 2, 3, 4, 5, 6, 7 and 9. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM: Mr. Lenny Brandt, 190 Craigbrook Way, asked if Springbrook signs are available at the Nature Center. Dr. Burns, City Manager, said there should not be any signs at the Springbrook Nature - Center and offered to check into the matter and let Mr. Brandt know. Mr. Brandt asked if the vote fails in November, would the Springbrook Nature Center still be open and maintained. Mayor Lund stated it would be open and maintained. FRIDLEY CITY COUNCIL MEETING, AUGUST 9 2004 Page 6 of 17 Mr. Brandt asked if this is a vote on Springbrook Nature Center or a vote on staff for the interpretive center. Mayor Lund stated it would be a vote on continuing the operation of the interpretive center building, the paid staff, and the educational programming. If the vote fails, the programming will not continue. Dr. Burns said the ballot issue is asking the voters if they want to fund the programming Councilmember Wolfe stated it is not true that the park will be gone if the vote does not pass. It will still be open for everyone to use if the vote fails. Mr. Brandt asked if there are any regulations (city, state or federal) that govern misleading signs and literature for a ballot issue. Mr. Knaak said there were and if there was any material misstatement of fact, the person making that statement could be held criminally accountable. Mr. Brandt asked who was responsible for correcting misleading signs and literature. Mr. Knaak stated this is an area where prosecution is done very cautiously because of the right of free speech. Mr. Brandt referred to statements in the Sun Focus claiming the upcoming ballot vote will save the Springbrook Nature Center. Mr. Knaak stated if Mr. Brandt is asking whether such a statement is criminal, the answer is no. Because such a statement was open to interpretation, he did not think it could be successfully prosecuted. Mr. Brandt disagreed with Mr. Knaak and asked for a final answer on this matter. Councilmember Billings suggested that Mr. Brandt speak to the County Attorney. Mr. Knaak said if Council directs him to do so, he will look into the matter for Mr. Brandt. Councilmember Bolkcom asked if there needs to be a formal resolution to authorize Mr. _ Knaak to investigate this matter at the City's expense and, if so, how long will such research take. 0 Mr. Knaak offered to do this pro bono. Councilmember Bolkcom expressed concern that the proponents of Springbrook may demand similar assistance from the City Attorney at the next Council meeting. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Page 7 of 17 Councilmember Billings said the more often Council discusses this, the more often there is communication to the citizens of Fridley that emphasizes the fact that the signs are misleading. Councilmember Wolfe asked if the $275,000 will increase each year as the value of homes goes up. Dr. Burns stated it will increase to the point that the limited market values established by the State of Minnesota are present. Councilmember Wolfe asked if City employees get a raise would that cause an increase. Dr. Burns said it would contribute to the increased costs at the Nature Center and toward an increase of the levy to the extent it is consistent with the limitations of the City Charter. Councilmember Bolkcom commented that Council must be careful how this is presented because there is a limit to the amount of the increase. Councilmember Barnette said he appreciates the offer Mr. Knaak made to research this matter pro bono and he would like to see the response. It was important for Council to correct misinformation. Mr. Don Anderson, 7304 West Circle N.E., asked if Sharks will be reopening their nightclub. Council was not aware the nightclub was closed and suggested that Mr. Anderson contact the owners. NEW BUSINESS: 2. Variance Request, VAR #04-11 by Park Construction to Allow a Portion of the Parking Lot to Remain Gravel for the Purpose of Storing Tracked Vehicles, Generally Located at 30-815t Avenue N.E. (Ward 3). 3. Resolution to Vacate Unimproved Portions of Ely Street and the Alley Way � between Ely Street and Liberty Street, Generally Located at 30 - 81st Avenue N.E. (Vacation Request, SAV #A4-01, by Park Construction) (Ward 3). . 4. Preliminary Plat Request, PS #04-04, by Park Construction to Replat Multiple Parcels to Create One Lot to Allow the Petitioner to Develop the Property Generally Located at 30 - 81St Avenue N.E. (Ward 3). FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 8 of 17 Councilmember Bolkcom asked to discuss all three of the Park Construction items at the same time. She had some questions for the petitioner but he was not present. Mr. Hickok stated the petitioner was aware that this matter was on tonight's agenda. Councilmember Bolkcom stated she understands the need for the gravel area for tracked vehicles but was concerned about other storage on the gravel area. She was also concerned about the dust created by the gravel. Some of the neighbors are concerned about the dust and the vehicle backup noise associated with this business. Mr. Hickok explained that there are currently materials stored on the property that they can remove and the owners have been instructed not to bring any more materials in until the plat has been approved. Councilmember Bolkcom asked if there were plans to do rock crushing on this property. Mr. Hickok stated the owner has not discussed crushing on this site. Councilmember Barnette asked if they have done crushing on this site. Mr. Hickok explained there was a business in that area does have a special use permit for rock crushing, but that does not transfer in any way to the Park Construction. Councilmember Bolkcom was concerned about approving any variance when the petitioner was not present to answer questions. Councilmember Barnette asked if the petitioner can proceed with the building on the northern portion of the site. Mr. Hickok explained the petitioner needs a minimum of 1'/ acres in the M-3 district in order to construct the building. They do have in excess of that and without platting the property or without any official action from the Council, the petitioner can build their building. Councilmember Barnette asked if Mr. Hickok will contact the petitioners and advise them to be present at the next meeting. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to table .. consideration of Variance Request, VAR #04-11, to extend the review period for City Council action an additional 60 days and to notify the petitioner in writing of the 60-day extension as soon as possible. ' UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. . v FRIDLEY CITY COUNCIL MEETING AUGUST 9 2004 Paqe 9 of 17 MOTION by Counciimember Bolkcom, seconded by Councilmember Wolfe, to table consideration of Vacation Request, SAV #04-01, to extend the review period for City Council action an additional 60 days and to notify the petitioner in writing of the 60-day extension as soon as possible. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom, seconded by Councilmember Wolfe, to table consideration of Preliminary Plat Request, PS #04-04, to extend the review period for City Council action an additional 60 days and to notify the petitioner in writing of the 60- day extension as soon as possible. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. Approve Professional Services Agreement and Proposal for Engineering Services between the City of Fridley and WSB & Associates, Inc. for the Springbrook Watershed Implementation Project. Councilmember Bolkcom said this had nothing to do with the Springbrook Nature Center but addressed the management of the water that goes through Springbrook Nature Center. She asked why staff is requesting Council's approval of both phases when the second phase may not be necessary. Ms. Jones, Environmental Planner, explained the advisory committee related to this project is the same group of people who have been involved with this project since 1997 when it began. The advisory committee has already received the proposal from WSB and agreed to approve the entire proposal. However, this group is very cautious and saw that there was a possibility that a couple of the tasks may not need to be completely done. They asked the consultant to put language in the proposal that gave the advisory committee an out on those tasks if they were not necessary. The advisory committee may or may not decide to go ahead with some of the design projects. They are a month behind on this component of the project. They worked with Anoka Conservation District to do the contour mapping before the trees leafed out. Unfortunately, after the trees leafed out, they discovered their information was not complete enough for the consultant to proceed. This particular project has to be completed this winter when the ground is frozen so there is no damage to vegetation in Springbrook Nature Center. They would like to give the advisory committee the approval to complete this proposal knowing that they will not do those portions of the proposal that are not necessary. Councilmember Bolkcom asked why they could not appear before Council for the second phase if it is deemed necessary. She was reluctant to give a blanket approval. FRIDLEY CITY COUNCIL MEETING, AUGUST 9. 2004 Paqe 10 of 17 Ms. Jones stated she understands the concerns but it is very difficult to get the large number of people on the advisory committee together for a meeting in a timely manner prior to a future Council meeting. They wanted to be ready to start soliciting proposals as early as September 1. Councilmember Bolkcom asked who makes the decision to proceed with the second phase if the advisory committee does not reconvene. Ms: Jones stated the committee would not meet before mid-August and the consultant would have to prepare more design materials which would be difficult to complete by September 1. They will be coming back to Council with the bid proposals before construction begins. Mr. Haukaas stated the advisory committee is asking Council to trust them to evaluate what comes back and make that determination whether to proceed with Phase II. What is before Council at this time is WSB's portion of the contract and any construction would be addressed under separate contracts. Mr. Hickok stated the advisory committee has been extremely careful. Councilmember Bolkcom stated again that she wants it very clear that this has nothing to do with the Springbrook Nature Center but is a separate discussion regarding water management only. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to approve the Professional Services Agreement and Proposal for Engineering Services between the City of Fridley and WSB & Associates, Inc. for the Springbrook Watershed Implementation Project. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. Receive bids and award project for the Marion Hills Reservoir Project No. 356. Councilmember Bolkcom stated she was surprised by the million dollar price tag for this project. She would like an explanation on why the timeframe has to be so short and why overtime is necessary. Mr. Haukaas, Public Works Director, stated the tank provides pressure to everything east of Highway 65. The only way we are going to get through the construction process is to artificially inflate that pressure through pumping. The pumps are only designed for the City's high elevation area which is south of I-694 and Highway 65 which is a very small area. They will be running the pumps beyond their original design to get through the construction project. Also, they are trapped befinreen the high usage during the summer months and the cold of winter and have instructed the contractor not to start FRIDLEY CITY COUNCIL MEETING AUGUST 9, 2004 Paae 11 of 17 before Labor Day. The cold weather costs were bid out separately because they were concerned that couid be an open-ended part of the project. They have a substantial completion date of December 20. The original budget for this project, $550,000, was based on an estimate from the consultant, but staff should have asked for more detailed information at that time. When they proceeded with requests for proposals, the estimate came back at $900,000 plus some demo costs and site work costs. The City could try limiting water usage, but that could create problems if the request is ignored or a fire emergency creates a high demand for water. Councilmember Bolkcom asked what the cost of this project does to the City's fund balances and whether other projects would be affected. Mr. Pribyl, Finance Director, said it would draw down the City's funds because they only anticipated and bonded for the $550,000 figure. The remainder would have to come from the capital expenses set aside for other infrastructure. The capital items coming up would have to be reevaluated. Mr. Haukaas explained that included in the bonding were improvements to the Commons Filter Plant which will still need to be done. Other projects that would require additional bonding or that would have to be delayed are water main improvement projects. The other two tanks that need to be cleaned and painted will require an additional bond issue a few years down the road. Mr. Pribyl explained the City can bond up to three years past the creation of projects. Based on this additional cost, they could put this together with the next bonding project as long as it is within the three-year window. Councilmember Bolkcom asked if staff is confident that the million dollar figure will get the job done. Mr. Haukaas stated both the consultant and the contractor are confident that this will get the job done. He also explained what the City is buying is a finished product and this is the price for the finished product. Councilmember Barnette questioned the penalty for going beyond the completion date. Mr. Haukaas stated the penalty is $1,250 per day. Councilmember Bolkcom questioned if we really need a logo on the tower at a cost of $9,000. Mr. Haukaas stated it is purely to promote the City of Fridley. Councilmember Barnette asked if this is an essential project or is repairing the existing tower an option. � � � � �, �� FRIDLEY CITY COUNCIL MEETING. AUGUST 9, 2004 Page 12 of 17 Mr. Haukaas explained they did evaluate that option but the repair costs were in excess of $650,000 and those repairs would only last about 15 years. MOTION by Councilmember Bolkcom, seconded by Councilmember Wolfe, to receive the bids for the Marion Hills Reservoir Project No. 356 and award the project to Natgun Corporation for a total price of $1,018,000 plus Alternate #4 which is soil corrections at $34.50 per cubic yard. Dr. Burns asked if the soil corrections are in addition to the $1,018.000 figure. Mr. Haukaas stated they were. Councilmember Billings said the $9,060 for the City logo was not included. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. Approve Change Order No. 1 to the Marion Hills Reservoir Project No. 356. MOTION by Councilmember Bolkcom, seconded by Councilmember Billings, to approve Change Order No. 1 to the Marion Hills Reservoir Project No. 356 for a contract addition paying for overtime work in the amount of $37,500, to accelerate the construction schedule. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 9. Resolution No. 2004-38 Designating Polling Places and Appointing Election Judges for the 2004 Primary and General Elections. MOTION by Councilmember Bolkcom, seconded by Councilmember Billings, to adopt Resolution No. 2004-38 Designating Polling Places and Appointing Election Judges for the 2004 Primary and General Elections. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to amend the motion to read "Resolution No. 2004-38 Appointing Election Judges for the 2004 Primary and General Elections." Councilmember Bolkcom said the reason for the amendment is because the polling places were approved by Council at a previous meeting. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 13 of 17 14. Approve Extension of Curbside Recycling Contract between the City of Fridley and BFI. Ms. Jones, Environmental Planner, stated this contract is due to expire March 31, 2005. Staff feels strongly that the City should consider extending the current contract with BFI based on the quality of service that BFI has provided. BFI has been working hard to correct some issues with multi-family services, but there has been as much as a three- month period of time with no missed collections for the single family service. She stated they also reviewed market prices and determined the price on the existing contract is very good. BFI has also done some extra things they were not required to do, including a canned food drive, safety camp participation and `49er Days participation. Ms. Jones said they consulted with the City Attorney regarding this contract and were advised that because this is a service, the City does not have to bid out the contract. As long as Council feels that the terms of the contract extension are reasonable, the contract can be extended. She consulted with her recycling industry contacts to get a feel for what new things are happening in the marketplace and found out about the revenue sharing. She also consulted with the City's Environmental Quality and Energy Commission. They were interested in seeing the City pursue revenue sharing and extending the existing contract. Revenue sharing is the City sharing with the contractor the value of the revenues of the recyclable materials when they are marketed. Market prices have driven prices up to an all-time high, so it was attractive for the City to pursue revenue sharing at this time. Cities that currently have 100% revenue sharing have reduced their costs by 50%. Ms. Jones said traditionally the market values did not justify the risk and the City's contractors never offered revenue sharing. Another factor is up until a couple of years ago when the solid waste ordinance was changed, the City Council had to go through an ordinance amendment every time they wanted to adjust the rates that the customer pays. Now it can be done by resolution which makes it easier to adjust the fees. Since then, however, they have been inhibited by the Charter Amendment limitations. Another big factor is the way the County funding system works. With respect to the money that residents pay on their garbage bills that goes back to the state, the state keeps about half and the other half goes back to the county. The way Anoka County does their funding system for the recycling grant money is the City has to basically deficit spend in order to capture that money, which we have always had great difficulty in doing. That is why we came up with the service exchange fund to be involved in a revenue sharing contract. Instead of the contractor paying the City the value of those revenues on a monthly basis or taking a discount on the City's service bill, the City would request the revenue sharing go into a credit account where funds could accumulate up to one year and draw down that fund within six months. The City could use this service exchange fund to provide recycling-related services on possibly things the City has cut from the recycling budget such as recycling events or conducting informational mailings. This would allow the City to capture more of the County funding dollars. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 14 of 17 Ms. Jones said BFI submitted three proposals. All of the options would keep the service the same--a two-sort system picked up weekly. Option 1 would provide no revenue sharing and would keep the service and price the same at $2.18 per household per month for 2005 and then would go up 2% annually in the years after that. Option 2 involves 50% revenue sharing over a base $50 processing fee (so that the contractor is guaranteed their costs for processing that material) with a rate of $2.28 per household per month for single family. Option 3 is 100% revenue sharing with the same base with a proposed rate of $2.40 per household per month for single family. Ms. Jones stated staff checked to see how Fridley's rates compared to other communities. After checking all of Anoka, Hennepin and Ramsey counties, she was unable to find a contract that provided a good basis for comparison. She found Edina and Wayzata were the most comparable and their rates were much higher. She was unable to find any comparables to Option 2 but did find two comparables to Option 3 and their rates were similar. Ms. Jones said with the 100% revenue sharing option, there is a potential for the City to capture $110,000 in revenues in a year. The City could go with Option 1 to play it safe, but the contractor would keep the $110,000. Staff feels the City should try to capture the $110,000. BFI does not care if the City takes the revenue sharing as a cash payment, a discount off the monthly bill, or if it is done as a service exchange fund. If the City took cash payments, it would not qualify for any of the County's recycling funds for the next couple of years ($61,000 per year). However, the City would still come out ahead if they reached that level of revenue and add $30,000 at the end of the year to the special revenue fund. Staff recommends the City pursue Option 3. It is risky, because there is the possibility that if a world-wide catastrophe happened we would not obtain those revenues and would need to increase the costs to the residents by 5.5%. If we do get the revenues, we can reduce the rate in later years. Staff wants to make sure Council understands that if the revenues are not received, the fees would have to be increased in 2005 and again in 2006. If Council is uncomfortable with the risk in revenue sharing, staff feels comfortable that Option 1 is still a very good choice for the City because of the attractive pricing level. The recent change made to the City Charter would permit the City to not increase the fees that the residents pay in 2005 under that scenario. Whichever option the Council chooses, staff feels strongly that a five-year contract be pursued, because it helps in long-range planning. Councilmember Billings stated the question has been asked why a weekly pickup is necessary. � Ms. Jones replied that the City has surveyed the residents a number of times on this particular question and have heard that the residents are extremely satisfied with the � service the way it is. In 1997 when the City switched from twice a month to a weekly service, there was a substantial increase in the tonnage collected. Currently more than half the residents set out recycling every week. In addition there are large families and day cares in private homes that need the weekly service. FRIDLEY CITY COUNCIL MEETING AUGUST 9 2004 Paqe 15 of 17 Councilmember Bolkcom stated with a ballot question on this issue coming up in November and with this contract not expiring until March, she questioned the urgency to proceed with it now. Ms. Jones explained they are actually a little behind in the process because if the Council chooses to solicit bids, that should be done by September 1. A new company would need at least a six-month lead time. Councilmember Bolkcom asked if Ms. Jones has discussed this with the County. Ms. Jones stated she and Mr. Hickok contacted Anoka County staff to discuss this issue and to see if an exception could be made for Fridley due to the City Charter limitations. The County staff would not meet with them, but encouraged staff to pursue revenue sharing and actually came up with the service exchange idea. Ms. Jones stated she would still like to work with Anoka County on this issue. Councilmember Bolkcom asked what would prevent Anoka County from pulling the recycling funds if the City goes to the revenue sharing program. Mayor Lund asked about the service exchange fund. Ms. Jones stated it was the County's idea to do the service exchange fund. She also stated there is nothing in our County contract that would prohibit the City from participating in revenue sharing because it would not be cash revenue. She said they had a few discussions with BFI about how to utilize the service exchange funds and staff believes they would not have any problem using the $110,000 a year. In 1995, the City spent over $400,000 in a massive clean-up effort. They have also considered using the funds to do recycling educational mailings, drop-off coupons and replacing recycling containers at apartment buildings. Councilmember Bolkcom asked if it would not be best to go out for bid on the recycling contract. Ms. Jones stated that after looking at what was in the market and after having done this a number of times, she found that when you go out for proposals, those proposals will be in the mid-range of the marketplace. The current contract is at or below what she is seeing in the marketplace so she did not expect to get a better price. In light of the limitations on raising the rates to residents, the City needs to be careful about going out for proposals. She did not think it would be a wise move for the City. Mr. Hickok, Community Development Director, said that Ms. Jones is the president of the Association of Recycling Managers and has her finger on the pulse of what the market is doing, not only in the metro area, but out-state as well. He said the City could not do any better than it was as far as the contract with BFI. Also, going with a new company creates problems as there will be a learning curve with new trucks and new d rivers. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 16 of 17 Ms. Jones added that BFI wants Fridley's business which is why they are offering Option 1. Councilmember Wolfe stated two weeks of recycling sitting around in the summer is not desirable and he would prefer the weekly pickup schedule. Mr. Tom Chovan, General Manager of BFI in Blaine, stated BFI will do whatever it takes to keep this contract and try to extend it. The City knows the level of service BFI provides and if they go out for bid, they will not have that knowledge with a new company. Mayor Lund stated he is intrigued by Option 3 but he would like to see a bid for every other week to see if there is any significant savings. Councilmember Billings asked Mr. Chovan what he thought of the every other week pickup. Mr. Chovan responded that BFI has some biweekly contracts and they are more expensive than Fridley's rate. He explained the concern is what BFI would do with the equipment on those weeks they are not servicing that customer. � �� Councilmember Wolfe stated BFI has provided good service and there have been few . A�' complaints. (1��., Councilmember Bolkcom stated the revenue sharing seems like a good idea but she is concerned that the County would not allow the City to proceed with this option and still collect County recycling funds. Ms. Jones stated the contract protects the City from the County counting the $110,000 in services as revenue. Mayor Lund stated he would like some clarification from the County on their position regarding the revenue sharing option. Councilmember Bolkcom asked if Council can get out of the five-year contract earlier if the revenue sharing option is not successful. Mr. Chovan stated BFI would have no problem at any time if the recycling market collapses renegotiating with the City and going back to a flat fee. � Mr. Knaak said he reviewed the contract and the contingency they are now discussing was not provided for and would have to be added. Councilmember Bolkcom stated she has no problem approving the extension if at the next Council meeting there could be some language worked out with BFI that would address some of the concerns. � FRIDLEY CITY COUNCIL MEETING. AUGUST 9, 2004 Paqe 17 of 17 Councilmember Barnette stated he. feeis comfortable accepting Mr. Hickok's and Ms. Jones' professional opinion. He likes the idea of writing into the contract a"bail out" for the City. MOTION by Mayor Lund, seconded by Councilmember Wolfe, to table this item until such time that staff can bring it back with some negotiation with BFI for Option 3. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 15. Informal Status Reports: Dr. Burns, City Manager, asked Mr. Pribyl to respond to comments made by Mr. Eisenzimmer at the previous Council meeting. Mr. Pribyl, Finance Director, stated Mr. Eisenzimmer spoke during the Open Forum on July 26 regarding the Charter Amendment. Staff was concerned about some of the comments Mr. Eisenzimmer made. After reviewing the tape, staff was unable to determine what his concern was. He wanted it made clear that the City is in full compliance with the Charter Amendment as far as the actual rates or percentages of increase. Councilmember Barnette stated on August 19, a Fridley Community Housing Policy forum will held. This will be the first in a series of four meetings to be held at 7:00 p.m. at the Fridley Community Center. He urged all citizens who have an interest in the future of Fridley to attend these meetings. Councilmember Bolkcom thanked everyone for the success of National Night Out. ADJOURNMENT MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MEETING ADJOURNED. Respectfully submitted by, Rebecca Brazys Recording Secretary Scott J. Lund Mayor � � CfTY OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 Date: August 16, 2004 To: William Burns, City Manager ``�'�� From: Scott Hickok, Community Development Director Paul Bolin, Planning Coordinator Stacy Stromberg, Planner Subject: Variance Request, VAR #04-12, Applebee's International M-04-107 INTRODUCTION Landform, on behalf of Applebee's Internation�l, is seeking three variances that will reduce the front yard, side yard, and parking from a street right-of-way setbacks. Granting the variances will allow for the construction of a new 4,810 square foot Applebee's restaurant at the existing Ground Round restaurant site, which is located at 5277 Central Avenue. The first variance is to reduce the front yard setback on the north side (53�d Avenue) of the property from 80 feet to 79.5 feet; 2. The second variance is to reduce the side yard setback on a corner lot on the west side (Central Avenue) of the property from 80 feet to 59.5 feet; 3. The third variance is to reduce the parking setback from a street right-of-way from 20 feet to 11 feet on the north side (53�d Ave) and from 20 feet to 8.5 feet on the west side (Central Ave). The property is zoned C-3, General Shopping, as are the properties to the north, south and east. It is located in the southeast corner of the intersection of Central Avenue and 53�d Avenue. Prior to the restaurant being constructed in 1965, the property owner was granted a variance from 80 feet to 70 feet. In 1983, three variances were approved, to reduce the front yard setback from 80 feet to 75 feet, to reduce the side yard setback from 80 feet to 60 feet, and to reduce the parking setback requirements from 20 feet to 5 feet to construct a 525 square foot solarium addition on the southwest corner of the restaurant. 1 The front yard setback variance and the parking setback variance that were granted in 1983, were a result of the right-of-way taking for the intersection expansion on Hwy 65, therefore, granting those variances recognized the existing non-conformities on the property. The side yard setback was an additional variance to allow the construction of the solarium. APPEALS COMMISSION RECOMMENDATIONS At the August 11, 2004, Appeals Commission meeting, a public hearing was held for VAR #04-12. After a brief discussion, the Appeals Commission recommended approval of all three variance requests, with the stipulations as presented by staff. THE MOTION CARRIED UNANIMOUSLY. PLANNING STAFF RECOMMNEDATION City Staff recommends concurrence with the Appeals Commission. STIPULATIONS 1. Petitioner shall obtain all necessary permits prior to construction. 2. Petitioner shall submit a landscape plan to be reviewed and approved by City staff prior to issuance of a building permit. 3. Petitioner shall submit a sign plan to be reviewed and approved by City staff prior to issuance of a building permit. 4. Grading and drainage plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 5. Utility plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 6. Storm sewer treatment device maintenance agreement shall be filed prior to issuance of a building permit. 2 City of Fridley Lan VAR #04-12 GENERAL INFORMATION Appiicant: Applebee's International Landform 4551 West 107th Street 510 1 St Ave North Overland Park KS 66207 Mpls MN 55403 Requested Action: • Variance to reduce the front yard setback ■ Variance to reduce the side yard setback on a corner lot • Variances to reduce the parking setback from a street right-of-way. Existing Zoning: C-3 (General Shopping) Location: 5277 Central Avenue Size: 43,880 sq. ft. 1.0 acre Existing Land Use: Ground Round restaurant Surrounding Land Use & Zoning: N: Menards & C-3 E: Menards Plaza & C-3 S: TCF Bank & C-3 W: Central Avenue & ROW Comprehensive Plan Conformance: Consistent with Plan Zoning Ordinance Conformance: • Section 205.15.3.C.(1) requires an 80 foot front yard setback from any public right-of- way. ■ Section 205.15.3.C.(2) ((b)) requires an 80 foot side yard setback on a corner lot. • Section 205.15.5.D.(5) ((a)) requires that all parking and hard surface areas be no closer than 20 feet from any street right-of-way. Zoning History: 1965 — Restaurant built. 1973 — Remodel building. 1977 — Building addition. 1979 — Remodel building. 1983 — Building addition. 1991 — Remodel exterior. 1994 — Remodel interior. 1997 — Remodel building. 2000 — Replace damaged solarium. Legal Description of Property: That part of Lots 1, 2, and 3, Auditors Subdivision #153 Public Utilities: Buildina is connected. d Use Application August 11, 2004 SPECIAL INFORMATION Transportation: 53�d Avenue provides access to the property. Physical Characteristics: Lot consists of building, parking lot, and landscaping. SUMMARY OF PROJECT Landform on behalf of Applebee's International is seeking three variances to: • Reduce the front yard setback (53�d Ave) from 80 feet to 79.5 feet; • Reduce the side yard setback (Hwy 65) on a corner lot from 80 feet to 59.5 feet; • Reduce the parking setback from a street right-of-way from 20 feet to 11 feet on the north side of the property and from 20 feet to 8.5 feet on the west side of the property. All variances will allow for the construction of a new 4,810 square foot Applebee's restaurant. �� SUMMARY OF HARDSHIP "The need for the requested variances are caused by the size and shape of the parcel and compounded by the pub/ic right-of-way frontage setback requirements. The parcel has frontage on two public streets, which requires an 80-foot building setback in those locations. These increased setbacks limif the opportunities for alternative site layouts. The variances are needed to also mitigate for previous right-of-way acquisitions that reduced the lot size. "" — See attached hardship statement. SUMMARY OF ANALYSIS City Staff has no recommendation, as similar variances on this site have been granfed in the past. CITY COUNCIL ACTIONI 60 DAY DATE City Council — August 23, 2004 60 Day — September 6, 2004 Staff Report Prepared by: Stacy Stromberg VAR #04-12 REQUEST Landform, on behalf of Applebee's International, is seeking three variances that will reduce the front yard, side yard, and parking from a street right-of-way setbacks. Granting the variances will allow for the construction of a new 4,810 square foot Applebee's restaurant at the existing Ground Round restaurant site, which is located at 5277 Central Avenue. 1. The first variance is to reduce the front yard setback on the north side (53�d Avenue) of the property from 80 feet to 79.5 feet; 2. The second variance is to reduce the side yard setback on a corner lot on the west side (Central Avenue) of the property from 80 feet to 59.5 feet; 3. The third variance is to reduce the parking setback from a street right-of-way from 20 feet to 11 feet on the north side (53�d Ave) and from 20 feet to 8.5 feet on the west side (Central Ave). HARDSHIP STATEMENT "The need for the requested variances are caused by the size and shape of the parcel and compounded by the public right-of-way frontage setback requirements. The parcel has frontage on fwo public streefs, which requires an 80-foot building setback in those locations. These increased setbacks limit the opportunities for alternative site layouts. The variances are also needed to mitigate for previous right-of-way acquisitions, when Mn/DOT acquired additional righf-of-way for Hwy 65, which reduced the lot size. The proposed redevelopment for this parcel will improve the appearance of this key intersection, reduce the non-conformity of the existing building and add to the City tax base by increasing the value of the property."— ALSO SEE ATTACHED HARDSHIP STATEMENT. SITE DESCRIPTION AND HISTORY The property is zoned C-3, General Shopping, as are the properties to the north, south and east. It is located in the southeast corner of the intersection of Central Avenue and 53�d Avenue. Prior to the restaurant being constructed in 1965, the property owner was granted a variance from 80 feet to 70 feet. In 1983, three variances were approved, to reduce the front yard setback from 80 feet to 75 feet, to reduce the side yard setback from 80 feet to 60 feet and to reduce the parking setback requirements from 20 feet to 5 feet to construct a 525 square foot solarium addition on the southwest corner of the restaurant. ThE front yard setback variance and the parking setback variance that were granted in 1983, were a result of the right-of-way taking for the intersection expansion on Hwy 65, therefore, granting those variances recognized the existing non-conformities on the property. The side yard setback was an additional variance to allow the construction of the solarium. � ANALYSIS Front Yard Setback Variance The front yard setback variance request for the north side of the property is to reduce the setback from 80 feet to 79.5 feet. The existing Ground Round building is setback at 75 feet; thus, this variance request will allow more of a front yard setback than the existing setback. The reason for the 0.5 foot variance request is to allow a sidewalk on the southwest sides of the building, which will help provide easy access to the trash enclosure and delivery trucks. Side Yard Setback Variance on a Corner Lot The side yard setback variance request on the west side of the building will be reduced from 80 feet to 59.5 feet. An 80 foot setback is required because the property is located on a corner. The existing Ground Round building received a variance in 1983 that reduced the setback to 60 feet; however, the building is currently setback at approximately 56 feet, from the west property line. Granting the current variance request will allow for an additional side yard setback than what currently exists on the site. This additional space will allow for adequate open space needed for landscaping and parking. � View from Central Avenue — Side yard setback on a Corner Lot Parkinq Setback from a Street Riqht-Of-Wav The petitioner is also seeking a variance to reduce the parking setback from a street right-of-way. The required setback from any street right-of-way is 20 feet. The petitioner is seeking to reduce the setback from 20 feet to 11 feet on the north side (53rd Avenue) of the property and from 20 feet to 8.5 feet (Central Avenue) of the property. The variance granted in 1983, reduced the parking setback for this property from 20 feet to 5 feet. In order for the petitioner to meet the parking requirement of 1 stall per every 100 square feet of building space, the proposed parking setback variances need to be granted. The new Applebee's restaurant will be a reduction in the size of the current Ground Round restaurant and will require 48 parking stalls. The petitioner will be providing 57 standard stalls and 3 handicapped, which will meet the City's requirements. Applebee's also have a lease agreement with the adjacent Skywood Mall that allows a cross parking agreement, if additional parking is needed for the restaurant. All other code requirements, including but not limited to, lot coverage, parking stall size and drive aisle width will be met. RECOMMENDATIONS City Staff has no recommendation, as these requests are wifhin previously granted dimensions on fhis site. Similar variances granted in the past include the following: 0 Front Yard Setback — Variance granted in 1983 to reduce the front yard setback from 80 feet to 75 feet to recognize an existing non-conformity. Side Yard Setback — Variance granted in 1983 to reduce the front yard setback from 80 feet to 60 feet to allow the addition of a solarium. Parking Setback from a Street Right-of-way — Variance granted in 1983 to reduce the parking setback from 20 feet to 5 feet to recognize an existing non-conformity. STIPULATIONS If the Appeals Commission were to recommend that the Council grant these variances requests, staff recommends that the following stipulations be attached. 1. Petitioner shall obtain all necessary permits prior to construction. 2. Petitioner shall submit a landscape plan to be reviewed and approved by City staff prior to issuance of a building permit. 3. Petitioner shall submit a sign plan to be reviewed and approved by City staff prior to issuance of a building permit. 4. Grading and drainage plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 5. Utility plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 6. Storm sewer treatment device maintenance agreement shall be filed prior to issuance of a building permit. % CITY OF FRIDLEY APPEALS COMMISSION MEETING AUGUST 11, 2004 CALL TO ORDER Chairperson Kuechle called the August 11, 2004 Appeals Commission meeting to order at 7:30 p. m. ROLL CALL Members present: Brad Sielaff, Gary Zinter and Larry Kuechle Members absent: Kenneth Vos and Blaine Jones Others present: Stacy Stromberg, Planner Rebecca Brazys, Recording Secretary Christine Moss, Landform APPROVAL OF MINUTES OF JULY 14 MINUTES MOTION by Mr. Zinter, seconded by Mr. Sielaff, to approve the minutes of the July 14th meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON KUECHLE DECLARED THE MOTION CARRIED UNANIMOUSLY. Chairperson Kuechle introduced the newest member of the Appeals Commission, Mr. Brad Sielaff. Mr. Sielaff stated he was on the Environmental Quality Commission for 17 years and was on the Planning Commission for 10 years. Most recently, Mr. Sielaff served on the Cable Commission. PUBLIC HEARINGS: 1. PUBLIC HEARING: VARIANCE REQUEST, VAR #04-12 by Applebee's International. Consideration of a variance to reduce the front yard setback from 80 feet to 79.5 feet, and to reduce the side yard setback on a corner lot from 80 feet to 59.5 feet, and to reduce the parking setback from street right-of- way from 20 feet to 11 feet on the north side of the lot and from 20 feet to 8.5 feet on the west side of the lot. All variances will allow for the construction of a new Applebee's Restaurant, generally located at 5277 Central Avenue NE. MOTION by Mr. Sielaff, seconded by Mr. Zinter to open the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON KUECHLE DECLARED THE PUBLIC HEARING OPENED AT 7:34 PM. Ms. Stromberg stated that Landform, on behalf of Applebee's International, is seeking three variances to reduce the front yard setback (53`d Avenue) from 80 to 79.5 feet; reduce the side yard setback (Hwy 65) on a corner lot from 80 to 59.5 feet; reduce the parking setback from a street right-of-way from 20 to 11 feet on the north side of the property and from 20 feet to 8.5 0 • CITY OF FRIDLEY APPEALS COMMISSION MEETING. AUGUST 11, 2004 Page 2 of 5 feet on the west side of the property. All variances will allow for the construction of a new 4,810 square foot Applebee's restaurant. Ms. Stromberg explained the petitioner submitted the following summary of hardship "The need for the requested variances are caused by the size and shape of the parcel and compounded by the public right-of-way frontage setback requirements. The parcel has frontage on two public streets, which requires an 80 foot building setback in those locations. These increased setbacks limit the opportunities for alternative site layouts. The variances are also needed to mitigate for previous right-of-way acquisitions when MN/DOT acquired additional right of way for Highway 65, which reduced the lot size. The proposed redevelopment for this parcel will improve the appearance of this key intersection, reduce the non-conformity of the existing building, and add to the City tax base by increasing the value of the property." Ms. Stromberg reviewed the site description and history stating the property is zoned C-3, General Shopping, as are the properties to the north, south, and east. It is located in the southeast corner of the intersection of Central Avenue and 53`� Avenue. Prior to the restaurant being constructed in 1965, the property owner was granted a variance from 80 feet to 70 feet. In 1983, three variances were approved to reduce the front yard setback from 80 feet to 75 feet, to reduce the side yard setback from 80 to 60 feet and to reduce the parking setback requirements from 20 to 5 feet to construct a 525 square foot solarium addition on the southwest corner of the restaurant. Ms. Stromberg explained that the front yard setback variance and the parking setback variance that were granted in 1983 were a result of the right-of-way taken for the intersection expansion on Hwy 65, therefore granting those variances recognized the existing non-conformities on the property. The side yard setback was an additional variance to allow the construction of the solarium. Ms. Stromberg also stated that the front yard setback variance request for the north side of the property is to reduce the setback from 80 to 79.5 feet. The existing Ground Round building is set back at 75 feet, thus this variance request will allow more of a front yard setback than the existing setback. The reason for the 0.5 foot variance request is to allow a sidewalk on the southwest side of the building which will help provide easy access to the trash enclosure and delivery trucks. Ms. Stromberg explained that the side yard setback variance request on the west side of the building will be reduced from 80 to 59.5 feet. An 80 foot setback is required because the property is located on a corner. The existing Ground Round building is currently set back at approximately 56 feet from the west property line. Granting the current variance request will allow for an additional side yard setback than what currently exists on the site. This additional space will allow for adequate open space needed for landscaping and parking. As far as the parking setback, Ms. Stromberg explained the petitioner is seeking a variance to reduce the parking setback from 20 feet to 11 feet on the north side (53�d Avenue) and from 20 feet to 8.5 feet on the west side of the property (Central Avenue). The variance granted in 1983 reduced the parking setback for this property from 20 feet to 5 feet. Ms. Stromberg explained that in order for the petitioner to meet the parking requirement of one stall per every 100 square feet of building space, the proposed parking setback variances need to be granted. The new Applebee's restaurant will be a reduction in the size of the current Ground Round restaurant and will require 48 parking stalls. The petitioner will be providing 57 � CITY OF FRIDLEY APPEALS COMMISSION MEETING. AUGUST 11, 2004 Page 3 of 5 standard stalls and 3 handicapped which wili meet the City's requirements. Applebee's also has a lease agreement with the adjacent Skywood Mall that allows a cross parking agreement, if additional parking is needed for the restaurant. All other code requirements, including but not limited to, lot coverage, parking stall size and drive aisle width will be met. Ms. Stromberg stated the staff has no recommendation as these request are within previously granted dimensions on this site. If approved, the staff recommends the following stipulations: 1. Petitioner shall obtain all necessary permits prior to construction. 2. Petitioner shall submit a landscape plan to be reviewed and approved by City staff prior to issuance of a building permit. 3. Petitioner shall submit a sign plan to be reviewed and approved by City staff prior to issuance of a building permit. 4. Grading and draining plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 5. Utility plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 6. Storm sewer treatment device maintenance agreement shall be filed prior to issuance of a building permit. Mr. Sielaff questioned what the landscape plans consist of. Ms. Stromberg replied that the petitioner is meeting the landscape requirements. Chairperson Kuechle asked if this is a separate lot and not part of a larger parcel. Ms. Stromberg replied that the property is its own lot. Chairperson Kuechle asked if staff has looked at what would fit on this lot in terms of alternatives. Ms. Stromberg stated the only way they could proceed without variances would be to erect a smaller building or possibly move a building to the southeast corner of the lot. Christine Moss, from LANDFORM representing Applebee's International, stated there is a landscape plan included in the presentation materiats and that it will be a big improvement to the site. This particular Applebee's Restaurant will be a new proto-type building. She presented pictures of a similar restaurant currently under construction in another area. This new building will have a new front area and tower design with a canopy over the front door area. This building will have 169 seats and the variances are necessary to make this site work for the building size. The existing Ground Round building will be torn down and the new building, she stated, will be a big improvement to the area. Chairperson Kuechle asked if it would be possible to reduce the number of parking spaces to try and get closer to meeting the setback requirements for parking. Ms. Moss explained they are actually reducing the setbacks from what is currently there. The Ground Round had 5 foot parking setbacks and this project is seeking 8 and 11 foot setbacks. Also, for a restaurant this size, they actually need 85 to 90 parking spaces, which they will have with the planned parking and the cross-parking in the adjacent lot. 10 CITY OF FRIDLEY APPEALS COMMISSION MEETING. AUGUST 11, 2004 Page 4 of 5 Chairperson Kuechle asked if the petitioner has any concerns about the stipulations recommended by City staff. Ms. Moss replied the stipulations are standard and Applebee's has already submitted for the building permit. Chairperson Kuechle asked what the distance is between the property line and the curb on Hwy. 65. Ms. Moss stated there is 10 feet of green space between the property line and the sidewalk along Central Avenue. MOTION by Mr. Zinter, seconded by Mr. Sielaff, to close the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON KUECHLE DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 7:51 PM. Mr. Sielaff commented this proposal is a big improvement over the current site. Mr. Zinter agreed and the variances will actually be less than what is there. Chairperson Kuechle stated the variances do not have a significant impact and he would support this petition. MOTION by Mr. Sielaff, seconded by Mr. Zinter, to approve Variance Request VAR #04-12 by Applebee's International, with the following stipulations: 1. Petitioner shall obtain all necessary permits prior to construction. 2. Petitioner shall submit a landscape plan to be reviewed and approved by City staff prior to issuance of a building permit. 3. Petitioner shall submit a sign plan to be reviewed and approved by City staff prior to issuance of a building permit. 4. Grading and drainage plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 5. Utility plan to be reviewed and approved by City engineering staff prior to issuance of a building permit. 6. Storm sewer treatment device maintenance agreement shall be filed prior to issuance of a building permit. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON KUECHLE DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. OTHER BUSINESS Ms. Stromberg stated the August 25th Appeals Commission meeting has been cancelled. The next meeting will be September 8, 2004. ADJOURNMENT: MOTION by Mr. Zinter, seconded by Mr. Sielaff, to adjourn. 11 � � Clll' OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 DATE: August 19, 2004 . �� TO. Will�am W. Burns, C�ty Manager ,�� FROM: SUBJECT: Scott J. Hickok, Community Development Director Paul Bolin, Planning Coordinator Pat Wolfe, Section 8 Housing Coordinator Section 8 Contract Extension INTRODUCTION In January 2000, the City of Fridley and the Metropolitan Council entered into a contractual agreement for provision of Section 8 Administrative services. The contract expiration date was to be June 1, 2004. On June 30, 2004, the Metropolitan Council contacted staff and asked to extend the contract through the end of the year (December 1, 2004). Beyond the term date, no modifications have been made to the contract. ELEMENTS Negotiations for a new contract are anticipated to occur in the last quarter of this year. Budget concerns nationwide have caused authorities to need additional time to work out the terms of the contracts between the fund distribution agencies and the administrators who deliver the services. Attached for your convenience is the contract extension language that has been provided by the Metropolitan Council and is recommended for approval by our staff. RECOMMENDATION Staff recommends extending the contract through to December 31, 2004. This will allow both City Staff and the Metropolitan Council time to work through the details on a new contract that will then take effect in January 2005. Of course the new contract will be back before the City Council for review and approval prior to the expected effective date of that new contract. M-04-114 12 � Metropolitan Council Metro HRA Housiag and Redevelopment Authority June 30, 2004 Scott Hickok, Planning Coordinator City of Fridley 6431 University Av. N.E. Fridley, MN 55432 Re: Section 8 Housing Assistance Payments Program Contract for Administrative Services Dear Mr. Hickok: As you may know, the City of Fridley and the Metropolitan Council have a contract that provides for Section 8 administrative services to be performed by the City of Fridley. This contract carries an expiration date of June 1, 2004. You may be aware that housing authorities nationwide have been faced with serious budget concerns related to administration of the Section 8 program. These concerns have kept us from moving forward at an earlier date to propose/negotiate a new contract with the City. We are, therefore, proposing an extension of the existing contract to December 31, 2004. Enclosed are two copies of an amendment to the current contract. We are asking that you sign both copies and retum at your earliest convenience. We will soon be back in touch with you to move forward in negotiating a new contract with the City of Fridley. Let me take this opportunity to thank you and your staff for your services to date. If you have any questions, please call me at 651-602-1600. Sincerely, � �� Kathy Kline Program Operations Supervisor Metro HRA Enclosures www.metrocouncil.org Metro Info Line 602-1888 230 East Fifth Street • St. Paul, Minnesota 55101-1�2� •(651) 602-1428 • Fax 602-1313 • TTY 291-0904 An Equal Opportunity Employer Contract No. C-99-67 AMENDMENT TO SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM CONTRACT FOR ADMINISTRATIVE SERVICES CITY OF FRIDLEY THIS AGREEMENT is made and entered into by and between the Metropolitan Council ("Council") and the City of Fridley ("Contractor"). WHEREAS, on January 24, 2000 the Council and the Contractor entered into a contract identified as Council Contract No. C-99-67 under which the Contractor agreed to perform within the City of Fridley and other jurisdictions located in Anoka, Hennepin and Ramsey Counties certain Section 8 program administrative services in conjunction with the operation of the Council's Section 8 housing assistance program; and WHEREAS, pursuant to Paragraph 5.01 of Contract No. C-99-67 the contract expired June 1, 2004; and WHEREAS, the parties mutually agree that the contract should be continued and extended beyond its June 1, 2004 expiration date. NOW THEREFORE, pursuant to Paragraph 6.03 of Contract No. C-99-67 and in consideration of the promises and covenants contained in this agreement, the Council and the Contractor agree Contract No. C-99-67 shall continue beyond its June 1, 2004 expiration date and shall be extended and amended as follows: Article V, CONTRACT TERM, Paragraph 5.01, Period of Performance, is amended to read as follows: 5.01 Period of Performance. 'This contract is effective on the date this contract is finally executed by the Council and shall continue until the earlier of the following: termination of Section 8 program funding by HUD; termination of this contract by either party pursuant to paragraph 5.02 of this contract; or December 31, 2004. As provided in paragraph 3.01, the ongoing administrative fee described in paragraph � 3.01(a) shall be payable retroactive to June 1, 1999. Except for this amendment, the provisions of Contract No. C-99-67 shall remain in force and effect without change. IN WITNESS WHEREOF, the Council and the Contractor have caused this agreement to be executed by their duly authorized representatives. This amendment is effective on the date of final execution by the Council. Page 1 o�2�Pages � Approved as to form: Associate General Counsel C9967A METROPOLITAN COUNCIL : Regional Administrator Date: CITY OF FRIDLEY By: Its: Date: By: Its: Date: Page 2 0�� Pages osioa //�/ AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 CI17 OF FRIDLEY TO: William W. Burns, City Manager�� il� FROM: Jon 11.71aukaas, Public Works Director DATE: August 19, 2004 SUBJECT: ST 2005-1 Street lmprovement Project PW04-061 The attached resolution orders the feasibility report, preliminary plans and specifications, and a preliminary estimate of costs for the 2005 neighborhood street reconstruction project On February 9, 2004, the City Council approved a contract with SEYI to perform these senrices. We found that an official resolution ordering the items has not yet been adopted by the City Council. This action corrects that oversight Recommend the City Council adopt the attached resolution ordering preliminary plans, specifications and estimates and preparing a feasibility report on the project Jfiti:cz Attachment I�� RESOLUTION NO. 2004 - RESOLUTION ORDERING PRELIMINARY PLANS, SPECIFICATIONS AND ESTIMATES OF THE COSTS THEREOF: NEIGHBORHOOD STREET IMPROVEMENT PROJECT NO. ST. 2005 - 1 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fridley as follows: 1. That it appears in the interests of the City and of the property owners affected that there be constructed certain improvements to-wit: Street improvements, including grading, stabilized base, hot-mix bituminous mat, concrete curb and gutter, water and sanitary sewer repairs, storm sewer system, landscaping, and other facilities located as follows: 2nd Street - Mississippi Street to Rice Creek Terrace 67th Avenue - 2"d Street to University West Service Road Bellaire Way - Alden Way to Park Property Bellaire Way - Alden Way to Pearson Way Chesney Way - East River Road to 355' west Craig Way - East River Road to cul-de-sac Craigbrook Way - Alden Way to East River Road Fairmont Circle - East River Road to East River Road Firwood Way - Pearson Way to 79th Way Glen Creek Road - Logan Parkway to East River Road Ironton Street - Hugo Street to Ashton Avenue Logan Parkway - Riverview Terrace to East River Road Logan Parkway - Riverview Terrace to Glen Creek Road Loqan Parkway - Logan Parkway to Glen Creek Road Main Street - Mississippi Service Road to Rice Creek Terrace Pearson Way - East River Road to Firwood Way Plaza Cur - 67th Avenue to University Service Road West Rice Creek Terrace - Main Street to University West Service Road Rickard Road - East River Road to Alden Way Riverview Terrace - 71-1/2 Way to Logan Parkway Ruth Street - Ruth Circle to Hugo Street Ruth Circle - Ruth Street to Ruth Street Service Road-Railroad - Liberty Street to Ely Street Stonybrook Way - Alden Way.to East River Road Talmadge Way - West cul-de-sac to east cul-de-sac That the work involved in said improvements listed above shall hereafter be designated as: NEIGHBORHOOD STREET IMPROVEMENT PROJECT NO. ST. 2005-1. ' 2. That the Public Works Director, Jon H. Haukaas, City of Fridley, MN, is hereby authorized and directed to draw the preliminary plans and specifications „ and to tabulate the results of his estimates of the costs of said improvements, including expenses incurred (or to be incurred) in connection therewith, or the financing thereof, and to make a preliminary report of his findings stating therein whether said improvements are feasible and whether they can best be made as proposed, or in connection with some other improvements (and the estimated cost as recommended), including also a description of the lands or � area as�may receive benefits therefrom and as may be proposed to be assessed. 17 Resolution No. 2004 - Page 2 3. That said feasibility report of the Public Works Director shall be furnished to the City Council. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 23rd DAY OF AUC;[JST 2004. ATTESTED: DEBRA A. SKOGEN - CITY CLERK � SCOTT J. LUND - MAYOR . � L cm aF FRIDLEY TO: FROM: DATE: SUBJECT: AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 William W. Bums, City Manager �� Jon �kaas, Public Works Director August 19, 2004 ST 2005-1 Street Improvement Project PW04-062 The attached resolution accepts the Feasibility Report for the 2004 l`leighborhood Street Improvement Project prepared by the City"s consultant, SEFi. We have been working with SEIi over the past several months to study the project area and compile this report The project encompasses several neighborhoods throughout the City and totals approximately 3.8 miles of streets. The proposed streets are identified in the report but generally includes Ruth Circle, Fairmont Circle, a piece of Ironton Street, Talmadge Way, the Craigway neighborhood, the Logan Park neighborhood, and the area north and west of liolly Center. A newsletter and survey questionnaire was sent to all of the residents in the project area. We had an excellent response receiving approximately 47% of the questionnaires back An open house is planned for the week of September 13, 2004. The plan layout and responses to the survey questions will be presented at this meeting. City staff, as well as the consultant will be present to answer any questions. The resolution establishes a public hearing for the project before the City Council at its September 27, 2004 meeting. The preliminary assessment list will be adopted at this time based on existing City policy. Recommend the City Council adopt the resolution to receive the Feasibi(ity Report and establish a public hearing for the 2005 I`leighborhood Street Improvement Project � Jt1Fi:cz - Attachment 19 RESOLUTION NO. 2004 - RESOLUTION RECEIVING THE FEASIBILITY REPORT AND CALLING FOR A PUBLIC HEARING ON THE MATTER OF CONSTRUCTION OF CERTAIN IMPROVEMENTS: NEIGHBORHOOD STREET IMPROVEMENT PROJECT NO. ST. 2005 - 1 WHEREAS, the construction of certain improvements is deemed to be in the interest of the City of Fridley and the property owners affected thereby. WHEREAS, Resolution No. 2004 - adopted on the 23rd day of August, 2004, by the City Council, ordered the feasibility report and estimates of the costs thereof for the improvements in this project. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Fridley as follows: 1. That the feasibility report and preliminary plans prepared by the City's consultant SEH and submitted by the Public Works Director, is hereby received and accepted. 2. That the City Clerk shall act to ascertain the name and address of the owner of each parcel of land directly affected or within the area of lands as may be proposed to be assessed for said improvements, and calculate estimates of assessments as may be proposed relative thereto against each of said lands. 3. That the area proposed to be assessed for said improvements and each of them as noted in said notice are all the lands and areas as noted in said notice: Al1 of the same to be assessed proportionately according to the benefits received. 4. That the estimates of assessments of the Clerk shall be available for inspection to the owner of any parcel of land as may be affected thereby at any public hearing held relative thereto, as well as at any prior time reasonable and convenient. � 2� Resolution No. 2004 - Page 2 5. That a public hearing be scheduled for September 27, 2004 and that all property owners whose property is liable to be assessed with the making of the improvements and constitute 100 percent of the property owners who will benefit from the improvement be notified of the public hearing under the normal procedures set forth in Minnesota Statutes Chapter 429. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDI�EY THIS 23rd DAY OF AUGUST 2004. ATTESTED: DEBRA A. SKOGEN - CITY CLERK � 21 SCOTT J. LUND - MAYOR � � CffY OF FRID�LE7 Name Paul Bolin Allison Suess Mike Monsrud AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 Position Ass't Exec. HRA Dir. Exempt Patrol Officer Non-Exempt Sergeant Non-Exempt Appointments Starting SalaN $67,329.60 per year $16.92 per hour (2003 Contract) $31.41 per hour (2003 Rate) 22 Starting Date Aug. 24, 2004 Sept. 7, 2004 Sept. 3, 2004 Replaces Grant Fernelius Jim Moore Mike Trancheff � � � AGENDA ITEM COUNCIL MEETING OF AUGUST 23, 2004 CffY O�F FRIDLEY CLAIMS 117812 -117985 23 � ; I � � CITY OF FIkIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 LICENSES Tvne of License : FOOD ESTABLISHMENT Mojo's Pizza, LLC John Bergman 6522 University Av. NE Fridley, MN 55432 � Approved By: Community Development Public Safety Director Fire Inspector � � City of Fridley AGENDAITEM City Council Meeting Of Monday, August 23, 2004 Gas Services Minnesota Heating 8� Air Cond Inc 10701 93 Ave N Ste B Maple Grove MN 55369- General Contractor-Commercial Moghul 8� Moghul 648 lona Lane Roseville MN 55113- General Contractor-Residential A A Contracting Inc (20122824) 12425 53 St N Stillwater MN 55082- Advance Companies Inc (4423) 6400 Central Ave NE Fridley MN 55432- All City Construction LLC (20458729) 945 Broadway St NE Minneapolis MN 55413- Champion Patio Rooms (20368359) 7155 W Commerce Cir NE Fridley MN 55432- DeMars Mike Construction (6614) 8401 166 Cir NW Ramsey MN 55303- Friedges Ken Construction (20042811) 16020 St Francis Lane Prior Lake MN 55372- � Jeff Sturges Bashir Moghul Mohammad Thabet Larry Trapp Steve Stanford David Haynes Mike DeMars Ken Friedges 25 Approved Bv: Ron Julkowski Building Official Ron Julkowski Building Official State of MN State of M N State of M N State of M N State of M N State of M N � Hedtke Todd Siding Spec LP (20335959) 1208 Trappers Path Todd Hedtke Buffalo MN 55313- J D Roofing Construction Inc (20219241) 11345 Uplander St Jack Buszta Coon Rapids MN 55433- Mack � Myre for Hire (7143) 2570 Valiey View Ave Mike Kinmounth Mapiewood MN 55119- Patio Enclosures Inc (1676) 2123 Old Hwy 8 Karl Rinas New Brighton MN 55112- Rice Craig Construction (20073595) 5865 135 St N Craig Rice Hugo MN 55038- Roof Company NA Inc (20172153) 6364 Juneau Ln Perry Hartwig Maple Grove MN 55311- Standard Construction Services (20319453) 595 N Snelling Ave Chad Liddicoat St Paul MN 55104- Windows American of MN Inc (20248265) 559 Shoreview Park Rd Rhonda Steffes Shoreview MN 55126- Heatinq Minnesota Heating 8� Air Cond Inc 10701 93 Ave N STE b Maple Grove MN 55369- Jeff Sturges C�'J Approved By: State of M N State of M N State of MN State of M N State of M N State of M N State of M N State of M N Ron Julkowski Building Official � � Plumbinq Minnesota Pibg 8 Htg Inc 1420 W 3 Ave Shakopee MN 55379- North Star Plumbing 8� Heating Co 62 South Hamline Ave St Paul MN 55106- Weld & Sons Plumbing 315 Juneau Lane Plymouth MN 55447- Whelan Davis Co Inc 7872 12 Ave S Bloomington MN 55425- � � Paul Sullwold Richard Fischer Donald Weld Mike Whelan 27 Approved Bv: State of MN State of M N State of M N State of M N � ` ClTY OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 Date: August 18, 2004 � To: William Burns, City Manager �� 1 ` From: Scott Hickok, Community Development Director Paul Bolin, Planning Coordinator Stacy Stromberg, Planner Subject: Variance Request, VAR #04-11, Park Construction M-04-113 INTRODUCTION The petitioner, Bruce Carlson, of Park Construction Company, is seeking a variance to allow his tracked construction vehicles to be parked / stored on a gravel surFace. Due to the weight and design of these vehicles it is not possible to store them on a typical hard surface (asphalt) without damaging the surFace. Through many discussions with Park Construction and the City Staff's knowledge of tracked construction vehicles and heavy equipment, it was determined that asphalt paving would not hold up to the wear and tear generated by this equipment. The proposed gravel area has been designated on the site plan and has been sized to accommodate Park's heavy equipment accordingly. Park will provide the code required paving, curb, & gutter for the areas in which it will be parking wheeled vehicles. PAST COUNCIL ACTIONS At the August 9, 2004, City Council meeting, variance request #04-11 was tabled, as the petitioner failed to appear at the meeting. Staff had reminded the petitioner numerous times of the Council meeting, and has since contacted them by phone and letter making them aware that their items will now go before the Council on August 23, 2004. APPEALS COMMISSION RECOMMENDATIONS At the July 14, 2004, Appeals Commission meeting, a public hearing was held for VAR #04-11. After a brief discussion, the Appeals Commission recommended approval of variance request, #04-11, with the stipulations as presented by staff. THE MOTION CARRIED UNANIMOUSLY. � • PLANNING STAFF RECOMMNEDATION City Staff recommends concurrence with the Appeals Commission. STIPULATIONS 1. Petitioner shall obtain all necessary building permits prior to construction. 2. Landscape plan meeting all code requirements shall be submitted and approved prior to the issuance of any building permits. 3. Petitioner to install code required hard surface drive, curb, gutter, and parking area as indicated on site plan dated 7/9/04. 4. Gravel parking/storage area to be defined and maintained as indicated on site plan dated 7/9/04. 5. Variance approval is dependent upon approval of Street Vacation, SAV#04-01 and Plat #04-04. 6. Grading, drainage, and storm ponding to be reviewed and approved by Public Works Director prior to issuance of a building permit. 7. Site must meet Fire Marshall's standards for sprinklering, water supply, and fire access. 8. Fire access lane / drive aisle shall be striped on bituminous area and kept open at all times. 29 � � CRY OF FRIDLE7 Date To AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 August 18, 2004 City Manager\[ � U�� William Burns, From: Scott Hickok, Community Development Director Paul Bolin, Planning Coordinator Stacy Stromberg, Planner Subject: Vacation Request, SAV #04-01, Park Construction M-04-112 INTRODUCTION The petitioner, Bruce Carlson of Park Construction Company, is seeking to vacant unimproved portions of Ely Street and the alley way between Ely Street and Liberty Street, which will allow the petitioner to use the property located at 30 - 81 St Avenue for his construction business. PAST COUNCIL ACTION At the August 9, 2004, City Council meeting, vacation request #04-01 was tabled as the petitioner failed to appear at the meeting. Staff had reminded the petitioner numerous times of the Council meeting, and has since contacted them by phone and letter making them aware that their items will now go before the Council on August 23, 2004. PLANNING COMMISSION RECOMMENDATION At the July 21, 2004, Planning Commission meeting, a public hearing was held for SAV #04-01. There was some discussion between the petitioner's representative, Dick Carlson, the Commission and Staff regarding stipulation #10, pertaining to outdoor storage on the southern lots. It was agreed that the existing outdoor storage could remain or be removed; however, new material couldn't be added to the site. The Planning Commission, then, recommended approval of vacation request, SAV #04-01, with a modification to stipulation #10 and the rest of the stipulations as presented. THE MOTION CARRIED UNANIMOUSLY. PLANNING STAFF RECOMMNEDATION City Staff recommends concurrence with the Planning Commission. STIPULATIONS 1. Utility easements as required by the Metropolitan Council to be shown and dedicated on final plat. 30 2. Petitioner to be in charge of all water and sewer connection fees. 3. Petitioner shall obtain all necessary building permits prior to construction. 4. Landscape plan meeting all code requirements shall be submitted and approved prior to the issuance of any building permits. 5. Petitioner to install code required hard surface drive, curb, gutter, and parking area as indicated on site plan dated 7/9/04. 6. Gravel parking/storage area to be defined and maintained as indicated on site plan dated 7/9I04. 7. Grading, drainage, and storm ponding to be reviewed and approved by Public Works Director prior to issuance of a building permit. 8. Site must meet Fire Marshall's standards for sprinklering, water supply, and fire access. 9. Fire access land/drive aisle shall be striped on bituminous area and kept open at all times. 10. Petitioner to vacate remaining streets and alleys and replat property to incorporate the Met Council and Syveron/Daniels parcels within 2 years of the preliminary plat approval for Lot 1, Block 1, Park Shop. Southerly lots owned by the Carlson's shall not be used for "Park" or other operations until aforementioned approvals have been granted except for the removal of existing material. 31 RESOLUTION NO. _ RESOLUTION TO VACATE UNIMPROVED PORTIONS OF ELY STREET AND THE ALLEY WAY BETWEEN ELY STREET AND LIBERTY STREET, GENERALLY LOCATED AT 30 81ST AVENUE NORTHEAST. WHEREAS, this portion of Ely Street and alley way befinreen Ely Street and Liberty Street is unimproved right-of-ways and is not used by the general public; and WHEREAS, Ciry Public Works Staff indicates that there is no longer a reason to keep these unimproved right-of-ways; and WHEREAS, a public hearing was held on this matter by the Planning Commission on July 21, 2004. NOW, THEREFORE, BE IT RESOLVED that the City of Fridley vacate the following: 1. Elv Street Vacation Leqal Description: That portion of the north half of Ely Street, formerly Roosevelt Avenue, as dedicated in "Spring Brook Park, Anoka County, Minn.", lying easterly of Burlington Northern, Inc. (formerly Northern Pacific Railroad) easterly right-of-way line, and that part of the south half of said Ely Street lying easterly of the northerly extension of the west line of Lot 33, Block 12, all according to the recorded plat thereof, Anoka County, Minnesota. 2. Block 12 Allev Vacation Leqal Description: That part of the north half of the public alley in Block 12, as dedicated in "Spring Brook Park, Anoka County, Minn.", according to the recorded plat thereof and situate in Anoka County, Minnesota lying easterly of the southerly extension of the west line of Lot 33, said Block 12. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 23�d DAY OF AUGUST, 2004. ATTEST: DEBRA A. SKOGEN - CITY CLERK 32 SCOTT LUND - MAYOR � � CffY OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 Date: August 18, 2004 �� To: William Burns, City Manager �� From: Scott Hickok, Community Development Director Paul Bolin, Planning Coordinator Stacy Stromberg, Planner Subject: Preliminary Plat Request, PS #04-04, Park Construction M-04-111 INTRODUCTION The petitioner, Bruce Carlson of Park Construction Company is also seeking to replat multiple parcels together with the vacated street and alley way, to create one lot, which will allow the petitioner to develop the property located at 30 - 81 St Avenue NE. PAST COUNCIL ACTION At the August 9, 2004, City Council meeting, plat request #04-04 was tabled as the petitioner failed to appear at the meeting. Staff had reminded the petitioner numerous times of the Council meeting, and has since contacted them by phone and letter making them aware that their items will now go before the Council on August 23, 2004. PLANNING COMMISSION RECOMMENDATION At the July 21, 2004, Planning Commission meeting, a pub�ic hearing was held for PS #04-04. There was some discussion between the petitioner's representative, Dick Carlson, the Commission and Staff regarding stipulation #10, pertaining to outdoor storage on the southern lots. It was agreed that the existing outdoor storage could remain or be removed; however, new material couldn't be added to the site. The Planning Commission, then, recommended approval of plat request, PS #04-04, with a modification to stipulation #10 and the rest of the stipulations as presented. THE MOTION CARRIED UNANIMOUSLY. PLANNING STAFF RECOMMNEDATION City Staff recommends concurrence with the Planning Commission. STIPULATIONS 1. Utility easements as required by the Metropolitan Council to be shown and dedicated on final plat. 2. Petitioner to be in charge of all water and sewer connection fees. 33 3. Petitioner shall obtain all necessary building permits prior to construction. 4. Landscape plan meeting all code requirements shall be submitted and approved prior to the issuance of any building permits. 5. Petitioner to install code required hard surface drive, curb, gutter, and parking area as indicated on site plan dated 7/9/04. 6. Gravel parking/storage area to be defined and maintained as indicated on site plan dated 7/9/04. 7. Grading, drainage, and storm ponding to be reviewed and approved by Public Works Director prior to issuance of a building permit. 8. Site must meet Fire Marshall's standards for sprinklering, water supply, and fire access. 9. Fire access land/drive aisle shall be striped on bituminous area and kept open at all times. 10. Petitioner to vacate remaining streets and alleys and replat property to incorporate the Met Council and Syverson/Daniels parcels within 2 years of the preliminary plat approval for Lot 1, Block 1, Park Shop. Southerly lots owned by the Carlson's shall not be used for "Park" or other operations until aforementioned approvals have been granted except for the removal of existing material. � � � C(TY OF FRIDLEY To: From: Date: Re: AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 William W. Burns, City Manager �{�� Don Abbott, Public Safety Director August 19, 2004 First reading of an ordinance amending Chapters 602, 603, and 606. This memo provides for the first reading of ordinance revisions amending Chapter 602, Chapter 603, and Chapter 606 of the Fridley City Code. This will allow establishments licensed for on-sale beer, on-sale liquor, and on-sale clubs to apply for permits to extend their hours of sale unti12:00 a.m. The changes in the ordinance are attached and are as discussed at the Fridley City Council Conference Meeting of August 16, 2004. The ordinance changes are summarized as follows: 1. Establishments currently licensed, or applying for licenses, to sell Beer under Chapter 602, Intoxicating Liquor under Chapter 603, and On-Sale Clubs regulated by Chapter 606 will all be eligible to apply for a Late Hour License Endorsement. This will not 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, 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. The ordinances provide for the collection of fees as specified in Chapter 11, however no City fees are being added to Chapter 11 at this time. Staff recommends approval. 35 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 Ni�ht License Endorsement An On-Sale license may be amended to include a Late Ni�ht License Endorsement subject to the terms and conditions imposed by the City Council within its discretion and otherwise in accordance with the provisions of this Chapter. No person may sell any beer under an�permit issued pursuant to this chapter after 1:00 a.m. without first obtaining a Late Hour License endorsement. No Late Night License Endorsement shall be effective after Apri130, 2006. 602.05 GRANTING OF LICENSES � 3. Late Night License Endorsement. An On-Sale license mav be amended to include a Late Night License Endorsement subject to the terms and conditions imposed by the City Council within its discretion and otherwise in accordance with the provisions of this Chapter. An application for a Late Hour License Endorsement shall be made at the same time as, but separate from, an initial license or license renewal. No Late Hour Endorsement r� y the City of Fridley will be effective after Apri130, 2006. 602.09 HOURS 3. Notwithstanding 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 intoxicating liquor for consumption on anY 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 days of MondaYthrough Saturday. It shall be unlawful for anv persons or customers, other than the licensees or their emplovees, to remain on a licensed premises for which a Late Hour Endorsement has been �ranted by the City, nor sha11 there be any 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 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 anv intoxicating liquor after 1:00 a m without obtaining a special Late Hour License Endorsement for an existin� lictuor license as provided in this Chapter No Late Hour License Endorsement �ranted 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 Sa1es" sha11 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 axe 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 semiannually 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 an 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 accuracv, attested to bv a certified public accountant accompanYing a verifiable semiannual report of sales receipts 37 based upon acceptable and reco�nized accountin� and bookeeping 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 licensedpremises between the hours of 1:00 AM and 2:00 AM if the licensee has been �ranted bv the City a Late Hour Endorsement for that license. No sale of intoxicating liquor for consumption on any license premises for which a Late Hour Endorsement has been �ranted by the City shall occur between 2:00 AM and 8:00 AM on the days of Monday through Saturday. 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 bv the Citv, nor shall there be anv consum tip on b�any persons, includin� the licensees and their em�lovees 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 intoxicatin�quor after 1:00 a.m. without obtaining a 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. m 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 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 the Chapter pertaining to the "On-Sale" license shall apply to the "Sunday Liquor Sales" license, and the Late Hour Liquor Sales endorsement, insofar as practicable. �. 606.11 HOURS OF OPERATION 3. Notwithstanding the fore�oing 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 bv the City a Late Hour Endorsement for that license. No sale of intoxicatin� liQUOr for consumption on an.y license premises for which a Late Hour Endorsement has been �ranted bv the City shall occur between 2:00 AM and 8:00 AM on the davs of Mondav through Saturdav It shall be unlawful for anv persons or customers other than the licensees or their emplovees to remain on a licensed premises for which a Late Hour Endorsement has been granted by the Citv nor shall there be anv consumption bv an�persons, includin� the licensees and their emplovees on such premises more than one half-hour after closure of o�erations for that day and, in no event, later than 2:30 AM. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS DAY OF , 2004. ATTEST: DEBRA A. SKOGEN, CITY CLERK First Reading: Second Reading: Publication: SCOTT J. LUND, MAYOR 39 � � CffY OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF August 23, 2004 � TO: William W. Burns, City Manager �� u FROM: DATE: .I� Rick Pribyl, Finance Director ��'C Deb Skogen, City Clerk August 18, 2004 Receipt of Referendum Petition for Reconsideration of Ordinance No. 1196: An Ordinance Amending Chapter 7 of the Fridley City Charter, and According to Minnesota Statutes, Section 410.12, Subd. 7, the City Charter may be amended by ordinance. After holding a public meeting seeking input, the Fridley Charter Commission drafted an amendment to the Charter in ordinance form and forwarded it to the City Council for their adoption. The City Council adopted Ordinance No. 1196 on June 28 and the ordinance was published in the legal newspaper, the Fridley Sun Focus, on July 8, 2004. The ordinance would become effective 90 days after publication unless a referendum petition was received within 60 days after publication. A referendum petition was received by the City Clerk on August 6 requesting the City Council send the ordinance to the electorate for their approval or disapproval. Because this is an ordinance amending the City Charter, the Minnesota Statutes supercedes the Charter in this matter. The City Clerk found the petition to be sufficient with the signatures of 460 registered voters, more than the required 2% of the total number of votes cast in the city at the last state general election in 2002. Staff discussed the information with the City Council on August 9, 2004. The City Council discussed the petition and requested staff to return on August 23`d with the petition and a resolution declaring the ordinance be sent to the electorate at the next general election. Staff recommends a motion receiving Referendum Petition 2004-1 requesting the Fridley City Council submit Ordinance No. 1196 to the electorate for their approval or disapproval. �� CffY OF FRIDLEY To: From: Date: Re: AGENDA ITEM CITY COUNCIL MEETING OF August 23, 2004 William W. Burns, City Manager Richard D. Pribyl, Finance Director �'� Debra A. Skogen, City Clerk August 18, 2004 A RESOLUTION DECLARING AN ELECTION TO APPROVE OR DISAPPROVE ORDINANCE NO. 1196, AN ORDINANCE AMENDING SECTION 7.02 POWER AND TAXATION OF THE FRIDLEY CITY CHARTER On June 28, 2004, the City Council approved Ordinance No. 1996, reviewed and approved by the City's Charter Commission, that would amend the Fridley City Charter to permit the City to pass through the full amount of any sewer, recycling and other utility charge increases at their actual cost to the City if those exceeded the lesser of 5% or the rate of inflation. The Fridley Charter currently would require voter approval of any such increase before it could become effective. Expenses for any such utility cost increases would otherwise have to be born by other revenues of the City, including general property taxes. A Petition objecting to the adopted ordinance signed by 460 voters was brought,, suspending the Ordinance until the City Council could bring the matter to the voters for their approval. Referendum Petition 2004-1 requesting reconsideration of Ordinance No. 1196, an Ordinance Amending Section 7.02 of the Fridley city Charter was received by the City Clerk on August 6, 2004, and found to be sufficient according to Section 410.12 of the Minnesota State Statutes. The Fridley City Council shall receive this petition in a separate motion. On August 9, 2004, during discussions with staff and the City Council, it was determined the best course of action would be to place the question on the ballot to let the electorate approve or disapprove the ordinance. Minnesota Statutes requires 51% of those voting on the question to vote in the affirmative for the ordinance to be approved. Staff recommends the City Council adopt a resolution declaring an election to approve Ordinance No. 1196: An OrdYnance Amending Section 7.02 Power and Taxation of the Fridley City Charter to be held in conjunction with the November 2, 2004 general election. �� RESOLUTION NO. 2004- A RESOLUTION DECLARING AN ELECTION TO APPROVE OR DISAPPROVE ORDINANCE NO. 1196, AN ORDINANCE AMENDING SECTION 7.02 POWER AND TAXATION OF THE FRIDLEY CITY CHARTER WHEREAS, the City of Fridley has received Referendum Petition No. 2004-1, a referendum petition proposing the repeal of Ordinance No. 1196: An Ordinance Amending Section 7.02 Power and Taxation, of the Fridley City Charter; and WHEREAS, under applicable law and by virtue of receiving Referendum Petition No. 2004-1, Ordinance No. 1196 is suspended until such time as the City Council establishes an election to occur to determine whether to sustain or repeal the ordinance; and WHEREAS, the City Council desires to place the question on the ballot for the next general election to be held on November 2, 2004; and WHEREAS, the City Clerk is authorized and directed to cause printed ballots to be prepared for the use in said election in which the question shall be stated in substantially the following form: On June 28, 2004, the City Council approved an Ordinance, reviewed and approved by the City's Charter Commission, that would amend the Fridley City Charter to permit the City to pass through the full amount of any sewer, recycling and other utility charge increases at their actual cost to the Ciry if those exceeded the lesser of S% or the rate of inflation. The Fridley Charter currently would require voter approval of any such increase before it could become effective. Expenses for any such utility cost increases would otherwise have to be born by other revenues of the City, including general property taxes. A Petition objecting to the adopted ordinance signed by 460 voters was brought, suspending the Ordinance until the City Council could bring the matter to the voters for their approva� Shall the following ordinance be approved? ORDINANCE NO. 1196 AN ORDINANCE AMENDING SECTION 7.02, POWER OF TAXATION OF THE FRIDLEY CITY CHARTER The Fridley City Council hereby finds after review, examination and recommendation of the Charter Commission that Section 7.02, Power of Taxation, of the Fridley City Charter be hereby amended and ordain as follows: Fridley City Charter Chapter 7. Taxation and Finances Section 7.02 POWER OF TAXATION Any other fees created, or increased beyond the limits set forth in subsection 1, shall require voter approval as stipulated in subsection 2. A. For the purposes of this subsection, "fees" includes sales and use taxes, utility charges other than water, storm water and sanitary sewer), ��,'='_=�b `=�, gas and electric franchise fees and any other fee that produces a tax burden or direct fmancial obligation for all property owners and/or residents of Fridley. (Ref Ord 1152) 42 B. For the purposes of this subsection, the term "fees" does not include: Water, storm water and sanitarv sewer char�es; recvcling fees; Parks and Recreation Department participation fees, charges for photo-copying, sales of municipal liquor store products, or civil and criminal fines and other charges collected in cases of restitution or violation of law or contract. The term "fees" also does not include rental housing fees, building permit fees, liquor license fees, the ea�tension or transfer of cable television service authority to additional service providers for which fees are already being charged, fees for the operation of junk yards, annual license fees for the operation of pawn shops and other regulated business, and any other charge for services, including health and safety related Code enforcement, and other goods, services or materials routinely provided by the City to its citizens or other members of the public which, by law, must be limited to the actual cost of the service being provided. The term "fees" shall not include any special assessments made under Minnesota Statutes Section 429. YES NO NOW, THEREFORE, BE IT RESOLVED that the City Clerk shall cause notice of said election to be given to the Anoka County Auditor within 53 days of said election and that notice of said election be published in the ofFicial newspaper of the City for at least three weeks prior to said election. BE IT FURTHER RESOLVED that the election shall be held at the usual polling locations for the state general election, as set forth in Exhibit "A," and that said election shall be held and conducted in accordance with the Minnesota State Statutes applicable to municipal elections and the provisions of the Home Rule Charter. BE IT FURTHER RESOLVED that the City Council shall meet within seven days from said election as required by law for the purpose of canvassing said election and declaring the results thereof. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 23� DAY OF AUGUST 2004. ATTEST: Debra A. Skogen, City Clerk �� Scott J. Lund, Mayor CITY OF FRIDLEY POLLING LOCATIONS WARD 1 PRECINCT 1 Grace Evangelical Free Church 755 73rd Avenue Northeast WARD 1 PRECINCT 2 Hayes Elementaty School 615 Mississippi Street Northeast WARD 1 PRECINCT 3 Fridley Municipal Center 6431 University Avenue Northeast WARD 1 PRECINCT 4 WARD 2 PRECINCT 1 WARD 2 PRECINCT 2 WARD 2 PRECINCT 3 WARD 2 PRECINCT 4 WARD 2 PRECINCT 5 WARD 3 PRECINCT 1 WARD 3 PRECINCT 2 WARD 3 PRECINCT 3 WARD 3 PRECINCT 4 Fridley Community Center 6085 7"' Street NE Woodcrest Elementary School 880 Osborne Road Northeast Knights of Columbus 6831 Highway #65 Northeast St. Philip's Lutheran Church 6180 Highway #65 Northeast North Park School, Gym A 5575 Fillmore Street Northeast North Park School, Gym B 5575 Fillmore Street NE Springbrook Nature Center 100 85th Avenue Northeast Redeemer Lutheran Church 61 Mississippi Way Northeast Stevenson Elementary School 6080 East River Road Fridley Covenant Church 6390 University Avenue Northeast ii Exhibit A � � CfTY OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 TO: WILLIAM W. BURNS, CITY MANAGER�f��° u FROM: RICHARD D. PRIBYL, FINANCE DIRECTOR �� CRAIG A. ELLESTAD, ACCOUNTANT SUBJECT: RESOLUTION CERTIFYING THE PROPOSED TAX LEVY REQUIREMENTS FOR 2005 TO ANOKA COUNTY DATE: August 18, 2004 In conformance with Chapter 275, Section 065 of the Minnesota Statutes, attached is a resolution certifing the proposed tax levy requirements to the Anoka County Auditor. Chapter 275 requires the City to certify its proposed tax levy requirements prior to September 15. The staff is recommending a 2005 proposed tax levy of $8,067,949. This is a 20.2% increase from what was approved last year or 24.4% if the SNC levy is approved. The make-up of this is $6,483,745 110,220 648,384 550,600 7 792 949 Certifed to County for 2004 1.7% inflation amount Loss of 2005 LGA allowed to be levied back Loss of 2004 LGA not levied back in 2004 2005 Proposed Ta�c Levy Add-on levy subj ect to approval by voters for 275,000 SNC 8 067 949 Tota12005 Proposed Levy We request the City Council pass the attached resolution to certify the proposed tax levy requirements. � �'1� Attachment � RESOLUTION NO. - 2004 A RESOLUTION CERTIFYING PROPOSED TAX LEVY REQUIREMENTS FOR 2005 TO THE COUNTY OF ANOKA WHEREAS, Chapter Seven, Section 7.02 of the Charter of the City of Fridley, grants the City the power to raise money by taxation pursuant to the laws of the State of Minnesota; and WHEREAS, Minnesota Statute Chapter 275, Section 065 requires the City to certify its proposed tax levy requirements to the County Auditor; and WHEREAS, in prior years, the City of Fridley received $2,045,663 in local government aid, which funds were applied to its operating budget and which resulted in a net tax reduction for its residents; and WHEREAS, the first special session of the Minnesota Legislature, in enacting Chapter 21 Article 5 reduced local governament aid to the City of Fridley in the amount of $1,752,009, which reduction in aid would significantly reduce the funds available to the city to meet its obligations; and WHEREAS, the Fridley Ciry Charter expressly limits any levy increase in any given year to the lesser of 5% or the rate of inflation absent express voter approval; and WHEREAS, the Minnesota Legislature expressly overrode local charter provisions when it provided that any reduction in state aid that was the result of its legislation could be made up by local governments through a property tax levy upon approval of the City Council; and WHEREAS, chapter 127, Article 2, Section 17 of the Minnesota 2003 Session Laws exempts the City from the tax levy charter restrictions to allow the city to levy up to 100% of the LGA loss; and WHEREAS, Minnesota Statutes Section 275.73 provide for this levy to be calculated under net tax capacity. NOW THEREFORE, BE IT RESOLVED, that the City of Fridley certify to the County Auditor of the County of Anoka, State of Minnesota, the following proposed tax levy to be levied in 2004 for the year 2005. GENERAL FUND General Fund General Fund (Additional Levy for Springbrook Nature Center) CAPITAL PROJECT FUND Capital Improvement Fund - Parks Division AGENCY FUND Six Cities Watershed Management Organization Stonybrook Creek Sub-Watershed District TOTAL ALL FUNDS PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 23rd DAY OF AUGUST, 2004. ATTEST: DEBRA A. SKOGEN - CITY CLERK i� $ 7,280,349 $ 275,000 497, 500 6,200 8,900 $ 8,067,949 SCOTT J. LUND - MAYOR � � QTY OF FRIDLEY TO: FROM: AGENDA ITEM COUNCIL MEETING OF AUGUST 23, 2004 WILLIAM W. BURNS, CITY MANAGER �� RICHARD D. PRIBYL, FINANCE DIRECTOR '�� CRAIG A. ELLESTAD, ACCOUNTANT SUBJECT: RESOLUTION ADOPTING A PROPOSED BUDGET FOR THE FISCAL YEAR 2005 DATE: August 18, 2004 In conformance with Chapter 275, Section 065 of the Minnesota Statutes, attached is the 2005 proposed budget. Chapter 275 requires the City to certify a proposed budget to the County Auditor prior to September 15. We request the City Council pass the attached resolution and adopt the 2005 proposed budget. Remember that the levy resolution must be adopted prior to adopting the budget. RDP/ce Attachment 47 RESOLUTION NO. 2004- A RESOLUTION ADOPTING THE PROPOSED BUDGET FOR THE FISCAL YEAR 2005 WHEREAS, Chapter 7, Section 7.04 of the City Charter provides that the City Manager shall prepare an annual budget; and WHEREAS, the City Manager has prepared such document and the City Council has met several times for the purpose of discussing the budget; and WHEREAS, Chapter 275, Section 065 of Minnesota Statutes requires that e City shall hol�public � hearing to adopt a budget; and ` �� ,� � 9�� V �� "'�v�� n�b� - WHEREAS the Ci Council �s 14e1� ltc CYV c I e t e ��,s--� , ri � ��s��-�.� pr r' te• . Ob�� NOW THEREFORE, BE IT RESOLVED that the GENERAL FUND Taxes Current Ad Valorem Voter Approved - SNC Levy Deliquent, Penalties, Forfeited Licenses and Permits Licenses Permits Intergovernmental: Federal State- Local Government Aid All Other Charges for Services: General Government Public Safety Public Works Community Development Recreation Naturalist Fines and Forfeits Special Assessments Interest on Investments Miscellaneous Revenues Other Financing Sources: Sales of General Fixed Assets Liquor Fund Closed Debt Service Fund Police Activity Fund Utilities ESTIMATED REVENUE budget be adopted and approved: APPROPRIATIONS Legislative: $ 7,280,349 City Council 275,000 Planning Commissions Other Commissions 42,000 City Management: General Management 240,880 Personnel 372,300 Legal Finance: 3,200 293,654 587,282 879,890 166,985 12,000 47,100 214,700 89,700 180,000 3, ] 00 150,000 l 55,700 25,000 500,000 250,000 431,700 35,600 TOTAL REVENUES AND OTHER FINANCING SOURCES 12,236,140 � • � Elections Accounting Assessing MIS City Clerk/Records Police: Police Civil Defense Fire: Fire Rental Inspections Public Works: Municipal Center Engineering Lighting Park Maintenance Street Maintenance Garage Recreation: Recreation Naturalist Community Development Building Inspection Planning $ 109,541 200 0 254,700 169,511 347,237 1,302 671,342 161,389 250,504 135,334 4,111,015 15,517 962,191 120,947 236,327 482,053 193,600 888,132 964,264 361,563 795,479 268,702 288,792 349,934 Fund Balance: General Fund Reserve TOTAL GENERAL FUND SPECIAL REVENUE FUNDS Cable TV Fund Grant Management Fund Solid Waste Abatement Fund Police Activity Fund Fund Balance TOTAL SPECIAL REVENUE FUNDS CAPITAL PROJECTS FUND Capital Improvement Fund Taxes-Current Ad Valorem Interest on Investments Park Fees Fund Balance TOTAL CAPITAL PROJECTS FUND AGENCY FUND Six Cities Watershed Fund Taxes-Cunent Ad Valorem TOTAL AGENCY FUND TOTAL ALL FUNDS 34,469 $ 12,270,609 $ 182,000 102,704 283,290 23,000 422,694 $ 1,013,688 $ 497,500 139,129 10,000 2,163,371 $ 2,810,000 6,200 $ 6,200 $ 16,100,497 Reserve: Emergency Nondeparhnental: General Capital Improvement Streets Capital Improvement Parks Capital Improvement 100,000 31,033 $ 12,270,609 $ 125,435 85, ] 76 314,794 488,283 $ 1,013,688 $ 867,000 1,820,000 123,000 $ 2,810,000 Six Cities Watershed 6,200 $ 6,200 $ 16,100,497 PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 23rd DAY OF AUGUST 2004. ATTEST: DEBRA A. SKOGEN - CITY CLERK �• SCOTT J. LUND - MAYOR � � GiY OF FRIDLEY AGENDA ITEM CITY COUNCIL MEETING OF AUGUST 23, 2004 �� To: William W. Burns, City Manager �r�► From: Date: Re: Brian Strand, Cable Administrator August 19, 2004 Resolution Adopting Cable-Related Needs The following resolution adopts certain cable-related needs and interests and related requirements and authorizes the issuance of a request for formal renewal proposal for a cable franchise. Attachments include: 1. Request for Formal Renewal Proposal (RFRP) dated August 16, 2004, which will begin the next stage of the formal renewal process; 2. Formal Needs Assessment Report dated July 21, 2004; and, 3. CBG Communications' Report on the Cable-Related Government Access Needs Study for Fridley dated August 1, 2004. �� RESOLUTION NO. RESOLUTION ADOPTING CERTAIN CABLE-RELATED NEEDS AND INTERESTS OF THE CITY OF FRIDLEY AS IDENTIFIED IN THE STAFF REPORT AND RELATED REQUIREMENTS SET FORTH THEREIN, AUTHORIZING THE ISSUANCE OF A REQUEST FOR FORMAL RENEWAL PROPOSAL FOR A CABLE FRANCHISE, AND CLOSING THE I1vITIAL STAGE OF FORMAL FRANCHISE RENEWAL PROCEEDINGS WHEREAS, 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"); and WHEREAS, 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; and WHEREAS, 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; and WHEREAS, the City Council concludes that the cable-related needs and interests of the City are accurately identified by the Report. NOW, THEREFORE, IT IS RESOLVED THAT the aforesaid Formal Needs Assessment Report is hereby adopted by the City Council as its ascertainment of the cable-related needs and interests of the community. The City Council fiuther adopts the requirements as set forth in the Report; and IT IS FURTHER RESOLVED THAT 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); and IT IS FURTHER RESOLVED THAT the City Council, based upon the adopted Formal Needs Assessment Report, hereby adopts and authorizes the Request For Formal Renewal Proposal in the form presented to it as drafted by City Staff; and IT IS FURTHER RESOLVED THAT 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; and IT IS FURTHER RESOLVED THAT the City Manager and City Attorney are authorized to issue such notices as may be required to comply with the franchise renewal process under State and Federal law. 51 � PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS DAY OF AUGUST, 2004. ATTEST: DEBRA A. SKOGEN - CITY CLERK 52 SCOTT J. LUND - MAYOR REQUEST FOR FORMAL RENEWAL PROPOSAL FOR A CABLE FRANCHISE City of Fridley, Minnesota 6431 University Avenue Northeast Fridley, Minnesota 55432 August 16, 2004 APPLICANT'S RESPONSE TO THIS REQUEST FOR FORMAL RENEWAL PROPOSAL MUST BE RECENED AT THE ABOVE ADDRESS BY 4:00 P.M. ON NOVEMBER 30, 2004 53 TABLE OF CONTENT5 I. INTRODUCTION .............................................................................................................1 Invitation to Submit Proposals ......................................................................................... l Principles Embodied in the Request For Formal Renewal Proposal ........................... 2 Format of the RF12P; Evaluation of Responses .............................................................. 3 Submission of Proposal and Additional Information .................................................... 4 FurtherInformation ......................................................................................................... 5 CableFranchise ................................................................................................................. 5 II. APPLICATION FORMS - INSTRUCTIONS AND VERIFICATION ....................... 6 Instructions........................................................................................................................ 6 Identification of Applicant ............................................................................................... 7 Applicant's Affidavit ......................................................................................................... 7 Executive Summary of Proposal ...................................................................................... 8 III. APPLICATION FORMS ................................................................................................. 9 Form I Background and Legal Qualifications ..................................................... 9 Form II Ownership Disclosure ............................................................................. 11 Form III Financial Qualifications and Information ............................................. 14 Form IV General Questions Regarding Technical Qualifications ...................... 25 Form V Proposal for System Design and Construction ..................................... 26 Form VI Educational and Government Use ......................................................... 27 Form VII Video and Information Services ............................................................ 29 Form VIII Interactive Services ................................................................................. 29 Form IX Narrative Summary of Responsiveness to Local Needs and Interests 29 FormX Franchise Term ....................................................................................... 30 Form XI Miscellaneous Information ..................................................................... 30 IV. MODEL CABLE FRANCHISE ORDINANCE ............................................................. 1 i 54 CITY OF FRIDLEY, MINNESOTA REQUEST FOR FORMAL RENEWAL PROPOSAL FOR CABLE FRANCHISE I. INTRODUCTION A. Invitation to Submit Proposals Pursuant to 47 U.S.C. § 546(a-g), with this request for formal renewal proposal ("RFRP") the City of Fridley, Minnesota ("Cit�') invites Time Warner, Inc. d/b/a Time Wamer Cable ("TWC") to submit a cable franchise formal renewal proposal describing the cable-related facilities, equi�ment, and services that it proposes to provide in the City during a franchise renewal term. While this RFRP is specifically designed for a cable franchise formal renewal proposal, the City also invites any other interested party to submit a proposal for a cable franchise using the attached forms by the deadline established herein. Applicants other than TWC responding to the RFRP may read RFRP language such as "upgrades," "rebuilds" and "renewal term" as applying equally to proposals for a new system with a new initial term. If an Applicant submits a complete proposal by the deadline that the City has established, the proposal will be evaluated in accordance with applicable provisions of federal and local law. In determining whether a cable franchise renewal should be granted, the City will consider, for example, whether the Applicant's past performance justifies renewal; whether an Applicant has the financial, technical and legal qualifications to perform as promised during a renewal term; and whether the Applicant has submitted a proposal that is reasonable to meet future, cable- related needs and interests of this community, considering the cost of ineeting those needs and interests. The City is seeking a proposal that: 1. describes, in detail, what services, facilities and equipment the Applicant proposes to provide during a renewal franchise term; 2. demonstrates that Applicant's proposal will satisfy community cable-related needs and interests capably, creatively, economically, responsibly and in a manner that will provide the benefits of cable communications technology to the residents, insritutions, organizations, and businesses in the City now and for any franchise term; 3. shows that Applicant is financially, technically, and legally qualified to hold a renewal cable franchise; and 4. explains why the Applicant believes that renewal is warranted in light of its past performance. � This RFRP will generally refer to Time Warner, Inc. d/b/a Time Warner Cable and all of the predecessor companies which have operated pursuant to the cable franchise issued by Ordinance No. 904 as "TWC." 55 B. Principles Embodied in the Request for Formal Renewal Proposal The following principles are embodied in the RFRP: 1. The City has conducted a detailed review to identify future, cable-related needs and interests. Among other things, the City commissioned special studies; reviewed its own records, and collected information that bears upon cable-related needs and interests. Developments in the industry, generally, were reviewed, as were the results of renewals in others communities. Consumer satisfaction with cable service was considered. Information from the cable operator was reviewed and the City conducted hearings where comments were received from the public. 2. A critical concern was that all parts of the cable system remain state-of-the art. In any renewal term, advanced cable infrastructure needs to be available in all parts of the City, and the cable system needs to serve any entity that desires cable services. A cable system should employ state-of-the-art technology so that optimal use is made of the City's rights-of-way and private property, and so that subscribers are in a position to benefit from advances in cable technology. 3. It is also critical that government and educational institutions have the opportunity to use Applicant's cable system. The City therefore requires the Applicant to describe its proposals for public, educational and governmental ("PEG") use in detail, and to explain how it would ensure that the PEG channels and resources promised will be managed in a way that ensures that the needs and interests of the community will be met. 4. High-quality cable service should be available throughout the City to anyone requesting service, on non-discriminatory terms. 5. With the issuance of a cable franchise, Applicant is granted a special right to use the public rights-of-way that is not available to all. The City believes that any grant of a cable franchise can have a substantial effect on the quality of life in the community and upon other potential users of the rights-of-way. Therefore, the City has invoked its right to manage the uses of its public rights-of-way in order to establish a firm and enforceable franchise that adequately protects the public interest. 6. The promises made in any proposal should be enforceable from both a legal and a practical standpoint. Therefore, in evaluating the adequacy of a proposal, the City will, for example, give little weight to promises that are phrased in a way that allows an Applicant to escape or avoid obligations, that are so vague as to be unenforceable, or that are so vague as to allow the operator to avoid obligations while disputing terms. The City does not generally engage in binding arbitration, and will not accept a proposal that makes the cable operator's obligations contingent upon an arbitrator's decision. Similarly, Applicant should not seek to add to a superficially conforming proposal conditions that would render the proposal unworkable or cause it to fail to meet the City's needs and interests. Provisions in this RFRP which require the City's approval or 56 direction will be exercised by City in a reasonable manner consistent with all applicable laws. C. Format of the RFRP; Evaluation of Responses This RFRP is being issued pursuant to applicable law. It is intended to satisfy all requirements of the Cable Communications Policy Act of 1984, as amended by the Cable Television Consutner Protection and Competition Act of 1992 and the Telecommunications Act of 1996, 47 U.S.C. § 521 et seq. The City reserves the right to modify this RFRP, including the extension of due dates or deadlines established as part of this RFRP and/or request additional information or clarifications from Applicants. Sections I-III will summarize the critical needs and interests identified by the City for which requirements may be established consistent with the Cable Act. Those sections also identify the requirements that the City has established with respect to those needs and interests. The Cable Act allows the City to establish requirements in an RFRP: 1. "that channel capacity be designated for public, educational or government use, and channel capacity on institutional networks 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). 2. "for facilities and equipment." The legislative history explains that this includes requirements for institutional networks, 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 (1) customer service requirements of the cable operator; and (2) construction schedules and other construction-related requirements, including construction-related performance requirements of the cable operator." The City believes that this language permits the City to establish these requirements unilaterally, and the City does propose to unilaterally establish customer service requirements and conditions related to the use of streets and roads. However, the City has included as part of the RFRP certain construction requirements related to the timing of system construction and the area to be served by the Applicant. To the extent that the franchising authority has the right to require that any franchise be subject to certain conditions (such as . customer service conditions), it is the City's view that an unwillingness to accept these conditions also justifies non-renewal. To aid the Applicant and so that there is no misunderstanding as to the intent of particular requirements we have set out a Model Franchise for satisfying the minimum requirements. The Model Franchise is based substanrially on the existing franchise presently held by TWC. Applicant is not required to follow the Model Franchise in every respect. If Applicant proposes a cable system that differs from the Model Franchise, however, Applicant must explain in detail why it has departed from the Model Franchise suggested by the City, and demonstrate how the Applicant's proposal will meet the needs and interests embodied in the Model Franchise. If the change would result in some needs and interests not being satisfied, the Applicant must explain 5% in detail why it believes that the change is justified and provide supporting documentation. Applicant must include with its proposal all information on which it intends to rely in making that demonstration. In addition, Applicant is cautioned that meeting the minimum requirements may be necessary, but not enough to obtain renewal. The Cable Act's legislative history explains that, in evaluating the adequacy of a renewal proposal submitted in response to an RFRP, the issue is whether "the equipment, facilities, and services proposed...are reasonable in light of the future cable-related community needs and interests, taking into account the cost of ineeting such needs and interests." H. Rep. 934, 98th Cong. 2d. Sess. at 74, reprinted at 1984 U.S.C.C.A.N. 4655 (1984). In evaluating a proposal the City will also consider whether Applicant's proposal will, in practice, satisfy the future cable-related needs and interests of the community. For example, an Applicant cannot satisfy the facilities and equipment requirements by "providing" them under conditions that may impede their use. An Applicant may be deemed not to have "provided" the required facilities and equipment for PEG use if under its proposal, for example: (1) PEG use of facilities or equipment would be subordinate to other uses; (2) there would be a charge for the use of the equipment and facilities or channels; (3) the equipment or facilities generally would not be available for PEG use at all times; or (4) there are conditions on use of such facilities or equipment beyond the conditions that are imposed by the Cable Act. It is up to the Applicant to submit a proposal consistent with the foregoing. Applicant is encouraged not only to meet but to exceed the requirements of the RFRP in order to ensure that the cable-related needs and interests of the City are satisfed.2 Section III includes application forms which Applicant is to use in submitting its proposal and identifies materials and information the City requires an Applicant to provide in its response. An application must be responsive to, and be submitted in the format required by, this RFRP and must include all required information. The City reserves the right to reject a nonconforming application or to require Applicant to provide supplemental information or an amended proposal if the Applicant's filing does not conform to the requirements of this RFRP. No proposal shall be considered submitted to the City until all information required by this RFRP has been furnished to the City. D. Submission of Proposal and Additional Information Applicant shall submit an original and twelve (12) copies of its proposal to the City on the date and at the place indicated on the cover page of this RFRP, in accordance with the instrucrions set forth in this Introduction and in Section II. In addition, Applicant shall provide an Execurive Summary of its proposal, which shall not exceed fifteen (15) pages (double- spaced). Applicant shall provide fifteen (15) copies of the Executive Summary to the City. Applicant shall also provide a copy of its proposal and Executive Summary on a computer 2 The needs and interests identified by the City are more fully described in "The City of Fridley Needs Assessment Report" and in the reports referenced therein. • � diskette, with documents in Microsoft Word, Excel, and FileMaker Pro as appropriate for word processing, spreadsheet, and database components. Applicant has an obligation to update the information required under the heading "Identification of Applicant" and the information required by Forms I and II if the information provided changes while the Application is pending. If Applicant discovers an error in its submission, the City shall be noti�ed of the error as soon as possible. If there is a material change in the financial position of the Applicant or any parent company, Applicant all should notify the City of the change promptly and describe the change in detail. Applicant will be expected to respond to any requests for additional information concerning the proposal fully and promptly, in accordance with the deadlines specified in such requests. Applicant's proposals may be rejected, consistent with applicable law, if Applicant fails to provide information required in the form requested or submits false, misleading or incomplete information. If the City deternunes that a renewal franchise should be granted, the terms of the proposal will be incorporated into a franchise agreement, as discussed below. E. Further Information Questions concerning this RFRP should be submitted in writing no later than 4:00 p.m., November 30, 2004 to Dr. William Burns, City Administrator at 6431 University Avenue, Fridley, Minnesota 55432. All responses will be issued in writing. However, an Applicant must submit a response to this RFRP by the deadline, regardless of whether the questions asked have been answered. F. Cable Franchise As noted above, the terms of an acceptable proposal will be incorporated in a final franchise. The franchise will include other provisions which the City may establish (consistent with the Cable Act), including, but not limited to, provisions regarding the following: l. standards for operation within the City, including standards for use of public rights-of-way; 2. franchise fees; 3. rates; 4. PEG channels, facilities and equipment; 5. Institutional network; 6. franchise transfers; and 7. enforcement provisions, including requirements for letters of credit, liquidated damages provisions, and provisions for revoking a franchise. 59 For Applicant's information, the City is including a proposed Model Franchise as an attachment to this RFRP. The proposed Model Franchise is intended to serve as a model for the final franchise that will be entered into with the City. Applicant should assume that the terms of its proposal, if found acceptable, will be incorporated in a franchise using the language and structure of the attached proposed Model Franchise. Applicant need not discuss the terms set forth in the Model Franchise if Applicant is willing to accept them, although comments on the Model Franchise are welcome. Applicant shall address the Model Franchise in its response if Applicant demands that changes be made to the Model Franchise as a condition of renewal, or if Applicant believes that a particular provision should have been part of the RFRP itself. If Applicant objects to any particular section of the Model Franchise, it shall identify the section and explain the basis for its objection, including proposed substitute language. The Applicant shall clearly state whether it is willing to accept the section as proposed in the Model Franchise, assuming no amendments are made. If Applicant requires the City to add provisions to the Model Franchise, Applicant must submit language for each provision that it wants added, and explain why it is demanding that the language be added and provide support for the change. Applicant shall clearly state whether it is willing to accept the Franchise without the added language. For example, the Model Franchise is for a tenn of ten (10) years. If the Applicant insists upon a longer term its proposal shall include specific proof that a longer term is required. In determining whether Applicant is legally qualified, the City intends to consider whether the Applicant is willing to comply with a Franchise that is acceptable to the City. If Applicant insists on changes to the Franchise or on contract conditions that the City finds unacceptable, the City may deny the request for renewal. With respect to any provision of the Model Franchise to which the Applicant objects, a conditional response or a failure to state that the Applicant is willing to accept the condition as is will be assumed to mean that the Applicant is not willing to accept the condition, and Applicant's legal requirements and qualifications will be evaluated accordingly. Similarly, where Applicant does not object to a provision, Applicant must be willing to abide by the provision and enter into a franchise containing the provision. II. APPLICATION FORMS - INSTRUCTIONS AND VERIFICATION A. Instructions All questions must be answered and all requested information supplied in the order set forth in the application. Consistent with the Cable Act, there is no requirement under this RFRP that Applicant submit a proposal for specific or broad categories of video programming or other information services. A form is included in this section regarding such services in the event any are proposed. If Applicant makes no such service proposals, it may return blank pages. The application must be veri�ed by signing and returning the Application Form and Affidavit included in Section II(C), Applicant's Affidavit. Applicant may use the forms provided. Where that is impractical, forms of Applicant's design may be substituted if all requested information is clearly displayed. �� Applicant shall begin a new page wherever indicated. Applications shall be as concise as possible without sacrificing clarity and completeness. The �nancial pro forma information submitted must be based upon the requirements specified in this document. If Applicant deviates from those requirements, an additional separate pro forma (which is based on the deviations and explains their impact, in detail) shall be submitted. Applicant shall clearly differentiate between those elements in a proposal that it is willing to include in any final franchise; those needs and interests which it intends to satisfy through contractual agreements with others; and those which it expects to provide, but which it is not willing to commit to provide. B. Identification of Applicant Name of Applicant: Address of Applicant: (Street) (City, State, Zip Code) Telephone: (Area Code and Number) Date: Please provide the name and telephone number of a principal to whom inquiries should be made: Name: Telephone: (Area Code and Number) Authorized Signature: Date: C. Applicant's Affidavit 1. This application is submitted in response to the Request for Formal Renewal Proposal issued by the City of Fridley, Minnesota. Applicant has read and reviewed the RFRP in preparing its response. 61 2. The Applicant attests that it has reviewed and checked the information presented, as necessary to determine its accuracy, and represents that it is true, accurate and complete, as required to ensure that the representations explicitly or implicitly made are not misleading. 3. The Applicant recognizes that all representations are binding on it and that failure to adhere to any such representations may, at the City's option, result in revocation of any franchise that may be granted as a consequence of and in reliance upon this application. 4. The Applicant hereby gives the City permission to inquire into the legal, technical, financial and other qualifications of the Applicant by contacting any persons or organizations named herein as references or by any other appropriate and lawful means. 5. The undersigned has been duly authorized to make these representations on behalf of the Applicant. Firm Name: Affiant's Signature: Official Position: Date: Attest: D. Executive Summary of Proposal Applicant shall present a clear and concise narrative description of the cable system it proposes to provide. Please limit responses to a maximum of fifteen (15) pages (double-spaced). The following subject areas shall be covered in the Executive Summary: • Overview of proposal; • Ownership and management of system; • Financial commihnents; • System design and construction; • Program services and other service(s) (if proposed); • Public, educational and governmental access; • Institutional network (including network characteristics and capabilities); • The rates Applicant will be able to charge in light of its proposal, as an indication of the costs involved; and • Other. The purpose of this section is to provide the reader with an understandable overview of the proposal, not to discuss details that will be covered elsewhere in the application forms. 62 III. APPLICATION FORMS Form I. Background and Legal Qualifications Form I.A. Legal qualifications 1. Applicant shall answer the following questions "yes" or "no." For purposes of subsections 1(d)-( fl, the term "Applicant" refers to: the Applicant; its principals; any entity which owns or controls, is owned or controlled by, or is under common ownership with the Applicant; and any entity which is expected to control or be responsible for, through any arrangement, the management and operation of the cable system serving the City. The term "franchise" refers to a cable franchise, however nominated, or an open video system franchise, however nominated. The Applicant need not report any case or proceeding where final judgment was rendered ten (10) years or more prior to the date this RFRP was issued. Additionally, the Applicant need not report any franchise revocation that occurred ten (10) years or more prior to the date this RFRP was issued. (a) Is the Applicant authorized under Minnesota law to operate a business, including a cable television business, in the state? Yes No (b) Does the Applicant hold all federal and state licenses required for the operation of the system? Yes No (c) Does federal law prohibit the Applicant from holding the franchise? Yes No (d) Has the Applicant been found by a court or other entity of competent jurisdiction to have violated state or federal laws or regulations regarding, or to have engaged in acts which constitute: discrimination on the basis of race, sex or religion or any other prohibited ground; fraud; embezzlement; tax evasion; bribery; extortion; jury tampering; obstruction of justice (or other misconduct affecting public or judicial officers' performance of their official duties); false or misleading advertising; perjury; violations of laws prohibiting anticompetitive conduct or unfair trade practices (including, but not limited to, violations of the Sherman Act and state consumer protection laws); or racketeering or conspiracy to commit any of the foregoing offenses? Yes No (e) Has the Applicant ever had a franchise or FCC license revoked for cause where the revoked franchise or license was not reinstated? 63 Yes No (� Has the Applicant ever been found by a court or other entity of competent jurisdiction to have made misleading statements to a public body? Yes No 2. If the answer to any of questions 1(d)-(� is "yes," the Applicant shall specifically describe the facts and circumstances concerning the acts or omissions which led to the decisions, revocation, or findings specified in questions 1(d)-(fl. It shall identify with specificity each case, revocation, or fmding which led the Applicant to respond affirmatively to questions 1(d)-(�. If the Applicant believes the acts or omissions described in response to 1(d)-(� should not be considered in determining whether to grant or deny it a franchise it shall explain in detail the basis for this contention. In reviewing the information, the City shall consider: facts and circumstances which show that the acts or omissions are unrelated to the consideration of the Applicant's willingness to operate a cable system in accordance with lawful requirements; whether the Applicant has fully corrected all harms which flowed from the act or omission; whether the act or omission involved principals of the Applicant; and whether the Applicant has taken adequate steps to ensure that the act or omission will not recur. Particular weight will be given to any failure to correct harms flowing from any past misconduct. Form I.B. Applicant's Holdings and Present Subscriber Rates 1. Please list a11, present holdings (franchises and systems) in which the Applicant or any principal* owns five percent (5%) or more of equity interest. (If additional pages are needed, please reproduce this form). An Applicant that already holds a franchise need only list (1) systems where the franchise was renewed in the last three (3) years; (2) systems now being upgraded or rebuilt; and (3) systems where the franchise is scheduled to expire in the next three (3) years. * For purposes of this form, "principal" means any otticer or director ot appiicant, ana any person, firm, corporation, subsidiary, joint venture or other entity, that owns or controls five percent (5%) or more of the voting stock (or any equivalent voting interest of a partnership or joint venture) of Applicant. ** In a case of upgrade or rebuild, date first subscriber served by upgraded or rebuilt system. 10 •� 2. Please list other investments or affiliations, direct or indirect, with any media, entertainment or telecommunications enterprise serving the City in which the Applicant or any principal owns five percent (5%) or more of equity interest. Form II. Ownership Disclosure Form II.A. Ownership Information 1. OrQanizational Structure Sole Proprietorship Partnership Corporation Officers (if Corporation): Joint Venture Unincorporated Association Other (explain) President Vice President Secretary Treasurer If Sole Proprietorship, list: Owner If Partnership, list: General Partners Limited Partners (if applicable) 2. Business Structure a. If the Applicant is a corporation, please list all members of the Board of Directors, their principal affiliations and their addresses: 11 65 b. If the Applicant is a partnership, please list all members of any governing body or management committee, their principal affiliations and their addresses: Form II.B. Ownership Disclosures Please fully disclose: l. The names and positions of all City officers and employees known to the Applicant to have any interest in the entity submitting the application, and the extent of such interest; 2. The names of all officers of the Applicant (if not fully disclosed on Form II.A.) and the names and last-known addresses of all persons who have acted as attorney, broker, consultant, or agent of the Applicant with respect to the franchise application; 3. The name and position of each City officer, employee or immediate family member of any officer or employee to whom or on behalf of whom the Applicant, officer or board member of Applicant; any person in a senior management position for Applicant; and the person or persons who are primarily responsible for the operations of Applicant within the City, has made any gift, donation or political contribution of One Hundred and No/100 Dollars ($100) or more within three (3) years preceding the filing of the franchise application, the name of the donor, and the amount or value of the gift, donation or political contribution. As to elected city officials, this requirement includes disclosure of donations to their "principal campaign committees" and "authorized committees," as defined by 2 U.S.C. § 431. Form II.C. Stock Information Please answer the following if the Applicant is a corporation. 1. Is the Applicant a publiclv held corporation as defined by the rules and regulations of the 5ecurities and Exchange Commission? 2. Class of Stock [_�, Yes [_] No Stock of Corporation: Par Value Vote Per No. Shares No. Shares No. Shares Total No. Share Authorized Issued Subscribed Stockholders 12 �� 3. Does the Applicant have any other obligations or securities authorized or outstanding which bear voting rights either absolutely or upon any contingency? �] Yes [_� No If so, submit a statement of (a) the nature of such securiries, (b) the face or par value, (c) the number of units authorized, (d) the number of units issued and outstanding, (e) the number of units, if any, proposed to be issued, and (� the conditions of contingency upon which securities may be voted. 4. Is the Applicant's corporation directly or indirectly controlled by another corporation or legal entity? [_1 Yes [__] No If "yes," please explain. Nationality and State of Incorporation: Form II.D. Ownership Disclosure The Applicant must fully disclose all agreements and understandings with any person, firm, group, association or corporation with respect to the Fridley franchise or Applicant's cable system in the City. This includes agreements between local investors and national companies. This includes but is not limited to agreements to lease or sell part of the systems to any person; or to build or install facilities for others in conjunction with the construction of the cable system. Please append copies of any written agreements made regarding the ownership or control of the proposed system. Please outline any oral agreements or understandings regarding the ownership or control of the proposed system. If Applicant or any affiliate has sold or leased any part of the system, or capacity on the system to any person, it should identify what has been sold or leased; to whom; and for what purposes. If Applicant or any affiliate has had any discussions regarding the sale of the system or lease of the system, or capacity on the system to any person, it should disclose these discussions, and describe the status of those discussions. Form II.E. Limited Partnership 13 67 If the Applicant is a limited partnership, please describe the structure of the parinership and identify the general and limited partners and their principals. Form II.F. Additional Ownership Disclosures If, in response to Forms II.B.3 or II.E, the Applicant listed other partnerships or corporations that are owned, controlled or managed by another corporation or partnership, then additional forms for II.B.3 and II.E shall be provided for such corporations and partnerships. The same shall be done for each partnership or corporation identified in these additional forms and so on until the ultimate parent of all such entities is identified. Information previously provided on Form II.B need not be repeated here. Form III. Financial Qualifications and Information An important element of any response to this RFRP is an adequate demonstration of financial capability to perform. Clear, complete and documented financial information is required for the City to determine the qualifications of the Applicant. Form III.A. System Financing Plan Please attach a detailed description of the financing plan for any cable system construction proposed during the period covered by your response to this RFRP. Indicate the source and amount of financing required to complete the construction in each of these categories, including internally generated funds, newly issued equity, newly issued debt, and any other sources. Identify the issuer, and the anticipated terms of any new debt and equity to be issued. In describing the terms of financing, include interest rates, collateral, guarantees, terms and conditions. Documentation must be submitted which corroborates the commitment of funds (where applicable) and lists the name, address, title and telephone number of the appropriate contact person for each organization involved in funding debt or equity. Copies of financing agreements are to be submitted or otherwise made available for inspection at the location indicated in the Instructions. Attach separate pages as necessary. 14 •i Form III.B. Applicant's Financial Statements 1. Please attach audited �nancial statements, including statements of income, balance sheets and cash flow statements, together with any notes necessary to the understanding of the financial statements, for the last five (5) fiscal years for the Applicant's cable system within the City. If audited information is not available unaudited information is to be provided and certified as correct by the Applicant's Chief Financial Officer. In addition, Applicant shall provide separate information for any affiliate or parent company where necessary to understand the statements for Applicant's system in the City, or where the debt, interest or other obligations or assets or revenue or expenses of such affiliate or parent company are in any way allocated to Applicant's system in the City. Any compensation received by Applicant's owners or related parties from the Applicant - whether in the form of salary, dividends, in-kind payments, fringe or personal benefits, stock options, or otherwise - shall be disclosed as to type and amount in each year. 2. For the last three (3) fiscal years and for each of the entities indicated above, to the extent not provided in the statements identified above, identify: (a) Revenue by type. (e.g., basic service, other tier service, pay service, pay-per-view service, equipment rental, installation, advertising, itemized franchise fees or other fees, etc.) and expenses by type (e.g., programming costs, plant maintenance and technical expenses, marketing expenses, customer service expenses, franchise fee expenses, etc.) (b) Distribution plant miles, homes passed, subscribers, listed separately, for each service tier, and pay units (at year end and at previous year end if not already included). As part of your response to this Form, please provide the historical financial data requested above in the same format used in your response to Form III.C. Form III.C. Pro Forma Financial Projections The Applicant shall furnish tables following the format below and shall provide the requested pro forma projections for the Applicant's operations within the City for the proposed franchise term (see Form X) assuming franchises for the territories specified in this RFRP are awarded on December 31, 2004.3 If the system's assumed revenues or expenses will reflect an allocation of assumed expenses or revenues for some other entity, including, but not limited to, overhead allocations and management fees, pro forma projections for such other entity should be provided as well. The pro forma projections shall include approximately the same line-item level of detail indicated on the attached forms, but particular details of presentation may differ if the Applicant believes that alternatives are more appropriate given its internal accounting practices. 3 The City recognizes that the franchise may not be awazded on December 31, 2004. In part we chose that date for purposes of convenient analysis. In addirion, the term proposed is based on the needs and interests of the City now, assuming the franchise is issued upon expiration. The longer the renewal process takes, the shorter the term may be. 15 �J Key assumptions supporting the projections shall be documented and submitted as notes to the pro formas. In particular, assumptions regarding upgrades, PEG requirements, franchise fee expenses, and any other franchise requirements shall be clearly identified and treatment of associated costs or revenues in the financial projections shall be highlighted or explained. Financial pro formas shall be based upon RFRP requirements. If the application deviates from those requirements, submit separate and additional pro formas showing the financial impact of each difference. Please provide the following financial projections for each vear of the proposed franchise term. 1. REVENUES YEAR 1 YEAR 2 YEAR 3 fto end of terml Households in ranchise area: - total - homes assed Be innin subscribers Net subscriber rowth Penetration ercenta e New subscriber connects Household reconnects Subscriber disconnects Number of basic subscribers Number of subscribers for other tiers Number of remium units Number of a- er-view units sold Revenue er subscriber: Basic Other tiers Premium Number of subscribers for each remium service offered Monthly rate for each premium service offered Pay- er-view Converter/remotes Extra outlets Installation FNI Advertising Home Shop ing Other (S ecify* * * TOTAL Revenue (annual $ total): 16 I� 1. REVENUES YEAR 1 YEAR 2 YEAR 3 to end of term Basic Other tiers Premium Pa - er-view Converter/remotes Extra outlets Installation FM Advertisin Home Sho in Other S ecif ** TOTAL Attach information explaining the assumptions upon which these projections are made. 2. STATEMENT OF INCOME YEAR 1 YEAR 2 YEAR 3 fto end of terml Revenues eratin Ex enses Pro ammin Technical & Plant Marketin Administration & General Other O eratin Ex enses TOTAL OPERATING EXPENSES O eratin Income Less De reciation Amortization Interest on Debt to Corporate Parent/related entities Other Interest Other Ex enses/(Income) Net Income before Income Taxes Income Taaces Income Tax Credit After-Tax Net Income Attach information explaining the assumptions upon which these projections are made. 3. BALANCE SHEET YEAR 1 YEAR 2 YEAR 3 Current Assets 17 71 3. BALANCE SHEET YEAR 1 YEAR 2 YEAR 3 jto end of terml Cash Cash E uivalents s eci Accounts Receivable Invento Pre aid Ex enses Other s eci ) Sub-Total Pro e, Plant & E ui ment Land Buildin s Leasehold Im rovements, Furniture, Fixtures Cable Plant E ui ment Other s eci Less Accumulated De reciation Sub-Total Other Assets (s ecify) TOTAL ASSETS Current Liabilities Accounts Payable Accrued Liabilities Subscriber Pre a ents, De osits Notes Pa able - Co orate Parent Notes Pa able — Other Other s eci Sub-Total Lon -term Debt - Co orate Parent Long-term Debt — Other Other Liabilities s eci Stockholders' E uity TOTAL LIABILITY AND EQUITY Attach information explaining the assumptions upon which these projections are made. 4. STATEMENT OF CASH FLOWS YEAR 1 YEAR 2 YEAR 3 to end of term Cash flows from o eratin activities: Net income Adjustments to reconcile net income to net cash provided by operating activiries: De reciation and amortization is %2 4. STATEMENT OF CA5H FLOWS YEAR 1 YEAR 2 YEAR 3 to end of term Changes in current assets and liabilities non-cash Other (s eci Net cash provided by operating activities Cash flows from investin activities: Capital expenditures for property and e ui ment Other s eci Net cash provided by investing activities Cash flows from financin activities: Proceeds from borrowings - corporate arent Repayment of borrowings - corporate arent Proceeds from borrowings - unrelated third arties Repayrnent of borrowings - unrelated third arties Proceeds from issuance of stock or other e ui Dividends Other (s eci Net cash provided by financing activities Net change in cash Beginnin cash Endin cash Su lemental disclosures: Cash paid for interest Cash paid for income taxes Attach information explaining the assumptions upon which these projections are made. 5. ANTICIPATED CAPITAL YEAR 1 YEAR 2 YEAR 3 EXPENDITURES jto end of term] Antennas, Towers, Microwave Facilities Headend and Hubs/Nodes Cable Plant - Subscriber Network Distribution Plant Rebuild/IJ ade of Distribution Plant Extensions 19 73 5. ANTICIPATED CAPITAL YEAR 1 YEAR 2 YEAR 3 EXPENDITURES to end of term Re lacement Subscriber dro s Cable Plant -- Institutional Network Distribution Plant Rebuild/U ade of Distribution Plant Extensions Re lacement Drops Interface E ui ment Converters New Re lacements Buildin s and Land Leasehold Improvements, Furniture & Fixtures Pro am Ori 'nation Local Ori ' ation Access Facility Other Access E ui ment Test E ui ment, S ares, Tools Vehicles Data Processin E ui ment Other (specify) Ca italized Overhead TOTAL Attach information explaining the assumptions upon which these projections are made. 20 74 Attach information explaining the assumptions upon which these projections are made. 7. PROGRAMMING EXPENSES YEAR 1 YEAR 2 YEAR 3 [to end of terml Salaries Payroll Taxes Overtime Benefits Buildin s/Rent Maintenance Vehicle Expense Premium Pro amming Expenses Expanded Basic Programming Expenses Basic Pro amming Expenses Royalty Pa ents Program Guides Other Programming Expenses (s eci TOTAL Attach information explaining the assumptions upon which these projections are made. 21 75 Attach information explaining the assumptions upon which these projections are made. Attach information explaining the assumptions upon which these projections are made. 22 76 10. ADMIlVISTRATIVE AND YEAR 1 YEAR 2 YEAR 3 GENERAL [to end of termj Salaries Overtime Pa oll Taxes Benefits Data Processing Buildin s/Rent Maintenance Vehicle Ex ense Utilities Phone Li ht, Heat/AC Power State and Local Taxes Franchise Fee Postage Statione & Su lies Training, Travel & Entertainment Professional Services Services Purchased Insurance Bad Debts License & Permit Fees Mana ement Fee: B Reci ient By Parent Co orate Allocation Other s eci ) TOTAL Attach information explaining the assumptions upon which the projections are made. 11. OTHER OPERATING EXPENSES (specify) Attach information explaining the assumptions upon which these projections are made. 12. EMPLOYEE ESTIMATES List by category, by title, and by year the total estimated number of employees that will be employed to provide service in the City. If these employees will also provide service to other franchise areas, identify these areas and the number of subscribers in each. Identify any plans to increase the number of employees during any rebuild or upgrade of a system serving any of these listed franchise areas. 23 77 For example: Attach information explaining the assumptions upon which the projections are made. Form III.D. Financial Goals A. Attach a brief narrative describing the Applicant's financial goals for the cable system in the City. If the system does not meet these goals, describe how the Applicant will improve financial performance. Any discussion should include, at a minimum, operating assumptions such as rate increases, interest rates, sources of revenue, marketing and operational changes. Include in the narrative your historical rates of return, on investment for the system, your target rates of return on new cable system investments and your target rate of return for your investment in the system. Explain how these rates were arrived at, and the methodology that you will use in comparing the actual results to these targets. Attach separate pages as necessary. B. Identify any plans that Applicant or its parent companies has to dispose of the cable system directly (by sale of the system) or indirectly (by merger, spin-off, or any other mechanism that results in a change in control of Applicant or its parents). Form III.E. Applicant's Accountants Each Applicant shall provide the name, address, title and telephone number of an appropriate contact person for Applicant's internal financial staff involved in preparing the historical and projected financial statements, as well as any outside accounting firm utilized by the Applicant in preparing the statements. Name: Title: Address: 24 �� Telephone Number: Form IV. General Questions Regarding Technical Qualifications The Applicant shall submit information responsive to the questions below, and such other information as may show that the Applicant is capable of constructing and operating a system that, consistent with the requirements of this RFRP and the Cable Act, meets the needs and interests of the community. Form IV.A. Previous Experience 1. I3as the Applicant ever operated a cable system of the type that it proposes to provide in accordance with this RFRP? �1 Yes [__] No If the answer is "yes," please describe that previous experience by identifying the location of the system and a person who can answer additional questions regarding that system. 2. Please explain why Applicant believes it should be found to have the requisite technical expertise to operate the system. After providing this explanation, explain in detail: (a) What steps Applicant has taken, if any, to inspect system drops on a comprehensive basis to deternune whether those drops need to be replaced? (b) What procedures, rules, and customer service quality controls are in place? 3. Please provide copies of the last two (2) FCC technical standards tests conducted, and if not shown clearly on the report, state the date the tests were conducted; provide information showing what steps the company had taken to ensure the testing equipment was accurate, and the date those steps were taken; and provide any additional relevant information concerning the system. Form IV.B. Summary of Access Operations Please specify the support, if any, that Applicant proposes to provide to the entity responsible for managing PEG access for each year of the renewal term (not including amounts that would offset the cable franchise fee owed to the City). 25 79 Form V. Proposal for System Design and Construction Form V.A. Performance Standards and Testing 1. Please describe the Applicant's testing program for the institutional network and the subscriber network, including a summary of procedures for initial proof of performance tests, acceptance tests, continuing tests, tests in response to subscriber complaints, and other tests planned. Test procedures should be submitted for all parameters to be tested. Z. Please list the key technical performance standards that will be met by the insritutional network and the subscriber network. Include for both the forward and reverse system any parameters for: Bandwidth: Carrier-to-Noise Ratio Carrier-to-Cross Modulation: Carrier-to-Composite Triple Beat: Hum: In-Channel Frequency Response: System Frequency Response: Signal Leakage: Signal Levels (peak-to-valley, variation over time): Signal-to-Noise: Bit Error Rate: Color Tests (chrominance-luminance delay inequality): Digital video specifications (as adopted in industry practice): Form V.B. System Maintenance Procedures 1. Describe the practices and procedures proposed for routine preventive maintenance, including the type and frequency of system inspection and testing, and the number and qualifications of technical staff by category (headend, system, line, universal rep.) and service facilities. 2. Attach any corporate maintenance procedures that the Applicant proposes to follow during the term of the franchise. 26 �� Form VI. Educational and Government Use Form VI.A. EG Use Channel Capacity Please describe: 1. The number of forwardldownstream channels to be provided, channel number and tier assigned, and date of availability for each PEG channel proposed or, in the alternative, the percentage of the cable system's maximum channel capacity to be provided for PEG use (including storage capacity on video and computer servers). 2. The spectrum space to be provided for reverse/upstream access uses, and the manner in which the Applicant proposes to provide reverse/upstream capability from locarions specified by the City. This description should also delineate the specific equipment to be provided which is associated with signal transmission (i.e., modulators and demodulators). 3. The method (e.g., �ber or coaxial cable) by which the access facilities and the headend will be linked. The description should include the channel capacity in both forward and reverse directions to be provided between the locations; and the equipment that will be provided to activate the links and to route or switch signals. 4. The conditions, if any, under which channel location will be changed. The conditions under which additional capacity will be provided. 6. Whether the links and equipment provided will permit the entity responsible for managing a channel to: a. view the signal before it is transmitted to subscribers; b. receive signals originated from distant locations and place these signals on the proper channel; 27 � c, receive feeds from other locations and select between feeds to program a channel. _ d. send feeds to other entities responsible for programming channels. Form VI.B. Access Management 1. Describe the manner in which the Applicant proposes to cooperate and coordinate with any access management entity designated by the City. 2. Please identify any restrictions on PEG or institutional network use demanded by the Applicant as a condition of providing PEG or institutional network channel capacity, facilities or equipment. Form VI.C. Access Facility and Equipment 1. How much does the Applicant plan to contribute for and in support of facilities or equipment for access (1) above and beyond any costs associated with constructing the cable system (including the institutional network and the links between and among access centers and the headend); and (2) above and beyond the franchise fee? 2. If the Applicant does not propose a capital contribution above and beyond the franchise fee: a. Describe any access facility or facilities proposed by the Applicant including: location; size (square footage); proposed layout of and type of work areas within a facility (i.e., studio, control room, editing suites, off'ice space, etc.); availability of parking; handicapped accessibility; ability to expand in the future, if needed; and any other information which will clearly and concisely describe the facility or facilities proposed for any PEG use by the Applicant. b. Describe any equipment packages that the Applicant proposes to provide for PEG purposes. The Applicant must set forth the proposed capital equipment budget for the initial equipment package and a budget outlining the replacement schedule for equipment during the term of the franchise. The Applicant should provide detailed equipment lists, and indicate whether the equipment is new or used. If used equipment is proposed, 2s �. provide the age of the equipment, and a certification from an independent engineer as to the condition of the equipment. 3. When would the support identified above be provided? 4. Describe the conditions under which the Applicant would agree to be bound to provide additional channels, facilities or equipment for PEG use. Form VI.D. Access Services 1. Please describe the access services the Applicant proposes to provide, or any contribution that Applicant proposes to make to support PEG operations. The Applicant should separately identify each access service it proposes to provide (e.g., training, facilitation, outreach, etc.); who will provide the service; the staff devoted to the service; and the times the service would be available. The description should include any annual budget for the delivery of any access services. The Applicant should assume any such services will be provided in addition to, and not as a part of, the franchise fee paid to the City. Form VII. Video and Information Services If the Applicant desires to promise to provide certain broad categories of video and other information services to subscribers as part of its proposal, or demonstrate the manner in which it proposes to deliver a greater variety of programming, it should describe those categories here. Form VIII. Interactive Services If the Applicant desires to promise to provide certain broad categories of interactive cable services to residential and business subscribers, it should describe them here. Form IX. Narrative Summary of Responsiveness to Local Needs and Interests 1. Describe in narrative form your concept of the cable system (subscriber network and institutional network) proposed for the City, including anticipated system development over the life of the franchise. Describe and emphasize particularly those features which are not included in any other section of the RFRP which the Applicant desires the City to consider in evaluating the proposal. 29 �� 2. If the Applicant proposes to provide any other service, facility or equipment which the Applicant may wish to contend is relevant in determining whether the Applicant's proposal meets the cable-related needs and interests of the community, describe the service, facility or equipment in complete detail; describe how it will be provided, under what circumstances and for what charge. 3. Emphasis should be given to explain why the Applicant believes its proposal is reasonable to meet the cable-related needs and interests of the community, taking into account the cost of ineeting such needs and interests. 4. Is the Applicant proposing to provide a system that conforms to the model in this RFRP? If not, identify each and every deviation from the model and the specific reasons for each deviation. 5. Please identify any need and interest identified in the Report or RFRP which Applicant was required to sarisfy which Applicant has not satisfied, or explain why Applicant believes that need and interest does not need to be satisfied. If Applicant bases its decision in whole or in part on the cost of ineeting the need and interest, it should start the cost of satisfying the need and interest; explain why the cost is too high; and provide supporting documentation. Form X. Franchise Term In the space below, the Applicant shall: (1) state the franchise term it seeks; and (2) describe why it believes the proposed franchise term is appropriate, considering expected changes in cable technology. If the Applicant claims that the franchise term it proposes is required for financial reasons, it shall describe in detail those financial reasons, and provide any documentation required (including, for example, iinancial projections and depreciation schedules) to substantiate that claim. If the Applicant has already provided the documentation in Form III, it may reference that information. Form XI. Miscellaneous Information Form XI.A. Analysis and Studies of Demand for Cable Services The Applicant shall attach copies of any analysis, evaluation or study of demand for cable service in the City, and any analysis, evaluation or study of demand for cable services elsewhere which the Applicant believes is relevant to evaluating whether its proposal is 30 •� • reasonable to meet the future cable-related needs and interests of the community, taking into account the cost of ineeting those needs and interests. Form XI.B. Surveys 1. The Applicant shall attach a copy of any survey of City residents, businesses or subscribers conducted within the last three (3) years regarding cable services, faciliries or equipment; or regarding subscriber willingness to pay for any cable service, facility or equipment (including access services, facilities or equipment). The Applicant shall also attach any reports, analyses, studies or other documents regarding such a survey. 2. The Applicant sha11 attach a copy of any survey of City residents, businesses or subscribers conducted within the last three (3) years regarding a need or interest in voice, video or data services (other than video programming services). Form XI.C. Compliance Has the Applicant been informed that it is out of compliance with any provision of an existing franchise with the City? Yes No If the answer is "yes," will the Applicant take steps to bring itself into compliance? Yes No If the answer is "yes," describe those steps. If the answer is "no," please explain in detail any Applicant believes its request for renewal should not be denied, based upon past performance, and provide supporting documentation. Please attach any additional information necessary to respond to the RFRP. END OF APPLICATION FORMS 31 �� ATTACHMENT 1 MODEL CABLE FRANCHISE ORDINANCE Attachment 1 i• FORMAL NEEDS ASSESSMENT REPORT City of Fridley, Minnesota July 21, 2004 m. A. B. C. D, E. F. TABLE OF CONTENTS EXECUTIVESUMMARY ...........................................................................................1 SUMMARY OF COMMUNITY CABLE-RELATED NEEDS AND INTERESTS...1 BACKGROUND AND PURPOSES OF TffiS REPORT ............................................2 IDENTIFICATION OF FUTURE, CABLE-RELATED NEEDS AND INTEREST56 SUPPORT FOR PUBLIC, EDUCATIONAL AND GOVERNMENT USE . ............13 FRANCHISE CONDITION5 AND OTHER REGULATORY ISSUES ..................15 9 :11: •1 EXHIBIT B EXHIBIT C EXHIBIT D TIME WARNER CABLE LETTER DATED JUNE 19, 2000 ......... A-1 GROSSREVENUE AUDIT .............................................................. B-1 NEEDS AND INTERESTS ASCERTAINMENT ............................. C-1 REQUEST FOR RENEWAL PROPOSAL ("RFRP") .....................D-1 � .. •. A. EXECUTIVE SUMMARY Time Warner, Inc., d/b/a Time Warner Cable ("TWC"), sent a letter dated 7une 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 d�erences in "deal points" that exist between the City and Time Warner Cable in the "informal " franchise renewal discussions we have had these last several years. In Zight 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 ofNovember 30, 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 August 1, 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 Exhibit B) includes the audit procedures and findings as well as a summary of recommendations. 3. The City staff gathered information from subscribers through phone calls and letters, and reviewed CBG's findings in light of its own familiaxity with the City. C. BACKGROUND AND PURPOSES OF THIS REPORT 1. 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.Z 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, ' 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 90 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 axe 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 axe 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 Acts4 - 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 For federallaw, see, e.g., 47 U.S.C. §§ 544 (requiring facilities and equipment); § 546(c)(1)(D) (satisfying 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. 4 47 U.S.C. § 521 et. seq. 5 47 U.S.C. § 546(h). 391 � 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.g 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 6 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] o�cials have 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 condirions on cable operators. For example, it limits local authority to require an operator to carry a specific programming service. � 47 U.S.C. § 546(a). 8 47 U.S.C. § 546(b). 4 92 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 preliminaxily 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. 5 93 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 ne�rt 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 (�-IDTV). 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 10 NCTA "High Speed Internet Access via Cable," www.ncta.com/broadband. " NCTA "High Speed Internet Access via Cable," www.ncta.com/broadband. ' •i 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 coa�cial 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 interva1s,12 and every amplifier distorts the signal. In addition, these amplifiers require regular 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 coaxial 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 coa�cial 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 12- It is not uncommon for amplifiers to be required every 2000 feet in a traditional system. ' 95 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 lugh-capacity user also wishes to receive more traditional cable services, it may make sense to provide a fiber drop and a traditional coaxial drop to that user. 'a Ellis, Leslie, "In-Band, Out-of-Band, Whatever it Takes," Multichannel News, May 28, 2001. 's Afflerbach, Andrew, "Interactive PEG: A Technical Strategy for Implementation", Communitv Media Review, the Joumal of the Alliance for Community Media, Winter 2000. 16 Ellis, Leslie, Broadband Week. "New Snags Plague Upstream Path, " January 25, 1999; Chiddix, 7im, Gall, Donald, Shimirak, Gerry, `A Migration Strategy to High Capacity Return on HFC. ". 8 96 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 throughout 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.18 Moreover, local franchising authorities ("LFAs") in many communities are taking advantage of the advances in technology to require cable operators to provide "institutional networks"19 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, particulaxly 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 Rulemaldng released on January 19, 2001, the Commission reiterated the mandate to "speed the hansition" of DTV and provided "incentives" for commercial broadcasters to accomplish the transidon by December 31, 2004. 'g National Cable Television Association, Cable Tf�Handbook, 2001, available at www.ncta.com. '9 Institutional networks are communications networks constructed by cable operators to provide service primarily to non-residential customers. 9 97 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!"20 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.21 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 Exhibit C. Recommendations Regarding Gross Revenue Audit Findings. (i) Comparison of Detailed Billin� Re�orts to Franchise Fee Summarv 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, Cl�airman Markey stated that "it is essential for the nation 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 98 (ii) Review the Allocation of Home Shop�ing 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 Receint Ledgers - 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) Testin� reports on the Franchise Fee Worksheets— Procedure No 7 Tautges recommends the City request Time Warner prepare monthly detail of bad debt e�ense 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 Analvsis — 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 January 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 axe 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 99 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 12100 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. 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 Z3 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"). 24 47 U.S.C. §541(a)(4). 13101 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. ZS 1984 House Report at 30, 1984 U.S.C.C.A.N. at 4667. 141 �2 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 Act, however, Congress indicated its intent to pernut 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 obligations 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). 27 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). 15103 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 ma�mum e�ent possible. 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. 16104 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 standaxds 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 ri�hts- of-way, property that was acquired and is maintained by each community as a whole. Z 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 chaxge 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. 8. 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). 32 See, e.g., Citv of Dallas v. F.C.C., 118 F.3d 393 (5`� Cir. 1997) 171 �5 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 haxm 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 18106 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 19107 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 regarding 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). 20 10g EXHIBIT A TIME WARNER CABLE LETTER DATED JUNE 19, 2000 Kim M Roden 80/ Ptypuwth Avewc North Mi�vjeapo►it, M(nneiotc SS411 N�/522�3700 i?VX 6R621•7616 �TfME WARNER C BLE r�,►e i9, 2000 Mr. WiCI'�am 9ua»s City Manager (,�cy of Fridley 6431 [JnivorsityAvenuaNB Fridley, MMt 55432-4303 De� Wiltiam: . Vl�e l�eve beea pleosad to have ptoviaed cabla iaiCVisiaa savice to Fridloy siuu ws lugan m opr.rete tho syatom in Aagnst of 1994. We betiyvo that we have been raponsive in moetiag tIw cahla tnlovlsion related aeeds end iaterests of ow enstamtrs in your commuoity4 7nst as impartantlY. wo vatue the geod wor�cing rolatiansbip we 6ave arith Ifridlcy and its deaed ofiicisls. • , As yon may k,ww, ouc frenob+se m provido csbte tatavisFon urvice will � na� �� . �� Accarding�y. Tuns Wamu Ina. (db.a Time Warner Cabio) herebY B roncwa( of fts csble tojevisitm 6enchise P'+n►�a"t t° th° Pr°visions of 47 U'.S.C. 54b And requests commaneemepd of renewa! procaedings Parsaant to 47 D.9.C. 546(s). l yy(p be oontaChng yau shoR[y to schedula a meeting at whic6 time we cen di�uu the renewel apd a achodule in moro dotnil. . As alwRys. P1s�se do aot 6asitate to contact n+a should you have any questions regarding the reaawa3 or our se�vke in generaf. � 3 e , %� • �C�J � Ki RAden Presiden of Puhlie Affaits & Cusfomot Service . . c�: �e ��t�, Tw� w�e� ce5t� •• B9lt Clumpa, City of rridtey FdFz Knaak, City Attamay A7ime Warner InoC�unpany A-11 �9 EXHIBIT B GROSS REVENUE AUDIT , , � � � Tautges Redpath, Ltd. Certified Public Accountants and Consultants INDEPENDEN'i' ACCOUNTANTS REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of the City Council City of Fridley, Minnesota We bave gerformed the procedures enumerated below, wlvch were agreed to by the City of Fridley solely to assist in evaluating the franchise fee revenue caleularion, as prepared by Time Wamec Cable for accuracy and completeness. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Ins6tute of Certified Public Acco.untants, The sufficiency of these procedures is solely the responsibiGty of those parties specified in tlris report. Consequenfly, we make no representation regarding the suf�iciency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedLUes we performed are summarized as items l ttuu 15 under "Procedures and Results" on the following pages of ttvs report. We were not engaged to, and did not, conduct an examination, the objective of which would be the expression of an opinion on Time Wamer Cable's franchise fee revenue calculation. Accordingly, we do not express such an opinion. Aad we perFormed additional pmcedures, other matters might have come to our attention that would have been reported to you. TJus report is intended solely for the information and use of the City of Fridley and is not � intended to be and should not be used by anyone other than those specified parties. April 28, 2004 �(� l� ��h �� • HLB TAUTGES REDPATH, LTD. Certified 1'ublic Accountants - White Bearlake 0/fice: 4810 White Bear Par(cway, White Bear lake, Minnesota 55t 10, USA Telephone: fi51426 70� Fax 651426 5004 Has6ngs Office:1303 Soutfi Frontage Road, Suite 13, Hastings, MN 55033, U5A Telephone: 551480 4990 Fax: 651 426 5004 NLBTautpm HWpa�h, Ltl. is a mwober of� 6xemafiontl. A waldwide agankatlm of xauminp fumsaad 6nsinass aduiaea B-1110 Procedures and Results 1) Conducted a review of the accounting system controls over the revenues �d cash receipis transaction cycle and tFie financial reporting cycle. • We obtained an understanding of accounting system controls, billing processes, month-end cut-offs, and the cash receipts �ansaction cycle and reporting cycle from Time Wamer personnel. 2) Compazed all subscn'ber fees, including installation/reco�ection charges, pay-per- view, remote control, guides, eta, from detailed billings/receipts reports to fra.nchise fee swnmary reports for April, May and Iune of 2003. Noted the following exceptions: • Pay per view and insYalla6on revenues did not agree between the billings/receipt reports and the franchise fee sun�unaxy reports as follows: nmounc Amomrt Time Wamer Submitted Submitted Reports Over (mider) Apn7Pay-Per-�ew $9,013 514,010 (54,997) May Pa�Pa-wew 5,929 6,034 (105) June Pay-Per-�ew 8,057 10,435 (2,378) Subtotal 22,999 30,479 (7,480) � Aprillnstallation 440 625 (18� May InstalFation 582 439 143 . June Installation 582 472 110 - Subtotal 1,604 I,536 68 Toml � $24,603 S32,015 (a7,412) The total due to Fridley, based upon 5% franchise fees, is $371. Time Warae�r expects to pay the City, with 12% APR intezest, $404 along with the 1'` quarter 2004 payment 2 B-� 11 �roceaures ana rcesuns • Advertising sales did not agree between the billings/receipt reports and the francluse � fee summary reports. Below is the calculation of the differeace and the axnount undec paid: Franc}vse Fee Summary Report B�7lings/Receipts Reports Di#%rence Franchise Fee % Under Payment 524,599 $21,508 $3,U91 5% $155 Recommendation• We recommend the City ascertain that payments have been received for 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 oiher Minnesota cities using Time Warner. An analysis of home shopping revenue for 2003 is presented as follows: 2003 Homc Shoppuig Revenues 4608-0000 4608-0005 HSN QVC Total January $1,376 $ - $1,376 February 1,455 5,153 6,608 ]vlarch 1,406 4,239 5,645 April 1,417 3,620 5,037 May 6,000 - 6,000 7ime {3,150) 8,278 5,128 Juiy 1,287 - 1,287 August 1,358 8,307 9,665 September 1,274 3,821 5,095 Octobcr 1,421 8,610 10,031 November 6,103 - 6,103 Decembcr 6,112 - 6,112 Total -$� 42,028 68,087 3 B-3112 Procedures and ResuJts With QVC, the months with no income (January, May, July, November, and December) are because QVC does not remit revenue to Time Warner Cable on a monthly basis. With HS1V, the negative amount in Jtme is due to May being recorded as an estimate and then being adjusted in June. Recommendation• We recommend the City request detail of the T-Tome Shopping revern:es on a quarterly basis, since their 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. 4) Compared cash receipt ledgers 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 receipts. See item 7 for description of testing and recommendations on "other" revenue. Per secrion 405.03 of the Cable Coxnmunications Franchise Ordinance, gross revenues aze defined as: The anr�ual gross revenues of Grantee from all sources of operations of the system within the City including, but not dimited to, Basic Service monthly fees, pay television fees, installation and reconnection fees, a»d advertising revenues. This ternz does not include any sales, excise or other tc�r collected by Grantee on behalf of the srate, city or other governmental unit. The term does rtot include any bad debt of Grantee so long as the bad de8t is eqval to o� less thmt iwo percent (2%) of the �nual Gross Rever�ues, A franchise fee shall be imposed on that portion of bad debt in excess of two (2%) of the annual Gmss 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 worksheei "Franchise Fee Bill Testing" for accounts that were not observed during testing. 4 B-4113 � Procedures and Resu/ts Recommendat3on: We reviewed Time Warner's ARB028 report and found that the majority of accrnmts were not included in the franchise fee revenue calculation. We recammend the City inqvire as to why such accounts aze not included 5} Compared cash receipts reflected on bank account statements witli (a) cash receipts recorded on cash deposit records, (b) cash receipts posted to the general iedgers and (c) cash receipts posted to the billings/receipts (francirise accountin� 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 retizins, and financial statements of Time Warner and perform a reconciliation, to tlae extent practicable, of revenues reported in the financial information with revenues reIIected in the detail recoiids of the franchise company. • This would be a full audit test item, it is impractical to attempt to do this as part of the desk review. Time Warner did not provide us with financial statements of Time Wamer, thay only provided us with financial information related to ti�e City's franchise. • The franclrise ordinance item 405.08 (3)(G) requires Time Wamer to provide the City with a certification of the Gross Revenues for the preceding year prepared by an independent Certified Public Accountan� For the year we tested (2003), Time Warner did provide certain items required by 405.08(3)(G) in a letter dated Mazch 28, 2004. However, the financiai informa#ion provided consisted of three unaudited financial statements and did not contain a certification 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 conszder having Time Warner pay for the cost of the gross revenue audit in lieu of providing a certified gross revenue statement. 5 B-�l 14 � s .1 Procedures and Resulfs � Tested the reporting of bad debtc, refunds, other ac►d NSF checks on. the francluse fee worlcsheets. • This has been done by trend analysis for bad debts as follows: 2003 2002 ls[Qusrter 2.01% 0.78% Zud Querter 1.91% 2.18% 3rd Qusrtet 0.72% 1.75'/0 4th Qua:ter 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 basas, there were some large �pikes. 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 high as 2.85% in the foUrth quarter. The amounts listed for bad debt expense for February 2002 and February 2003 were the exact same number. Sarne 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 detaa7 of bad debt expenses. • Other Revenue (Expense): The fianchise fee calculation sheet has a"Schedule of Others Revenues by Service" that is either a deduction or an addition to fiancluse fees. Time Warner indicated these items generally represeni refunds, credits to customers for power outages or other service outages, installation problems, pricing adjusiments, etc., wluch are to be expected and aze most likeIy reasonable. sl� : • ��J Procedures and Results • Other Revenue — account 4699-0000 Other revenue account number - 4699-0000 was as follows for 2003: Janaary February MazcL April May June 7uly August Septembex October November Aece�ber Total Recommendatian• 4699-0000 Other Revenue ($18,686) (8,687) (9,602) (9,732) (12,631) (8,795) (11,215) {13,960) (7,036) (13,439) (11,468) (17,635) ��S We recommend Time Warner Cable provide an itemized description of the other revenue amounts_ If these items are expenses they shon]d not be deducted from the catcularion of franclrise fee revenue. Any month that has an `bther revenue° amount of more than $3,000 should have an explanation included iu the quarterly remittance to the City. The francluse ordinance does not allow for a deduction for enpense items in tiie gross revenue calculation. (see francluse ordinance, 445.03 #12 "Gross Revenues'� We recommend the City request detail of the `bther" amounts on a quarterly basis and determine if the a4nounts tisted above are deducHons from revenue, or should be tc�eated as expenses. 8) Compared all 2003 and 2002 franchisp fee worksheets with franchise fee payment sch.edules submitted to the franchise auti�ority. 7 B-�116 Procedures and Resu/fs Noted the following exceptions: • For 2002, Time Wamer was unable to p�rovide backup for pay per-view and installation revevues. We did not inquire about these amounts further as we tesied a11 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 broughi to our attention by Tune Warner that bad debt expense was not reported correcfly for the 1� quarter of 2003. $816 will be paid back to City with the 1$` quarter 2004 paymen� 9) Test methodology of iden6fying new, disconnect, change of service, bulk accounts and full sezvice in a tixneIy manner. • On our client-to-prepare listang, t�ey indicated that the Time Wamer staff accountants would be abte to provide us with this information. The Time Warner staff accounfants gave us a general understauding of how the process works, and the methodology of the pmcess was reesonable. 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: "While it is irue that varlous cable programmf»g nehvorks have o„�"ered "launch feer" in erchange for c�miage by a cable television operator, avr pnlicy har beerr not to nccept `7eunch jees" 6ut rather fo negotiate the lowest possible lice�xse fee with the programmer in order to keep ourmonthly rates reasonable. " We Imow &om experience with cable companies that launch fees are a common contract negotiadon provision. However, if Time Wamer does not have launch fee provision as part of theu cable programming contracts then it is not an issue. ��.�. � B- 1 1 / rroceaures ana rcesurc� We also reques#ed contracts or agteements between Tim.e Wamer and the cable programming networks. The Company responded as follows: "Ymr had requecied conbncls or agreementc behveen AOL Tbt�e YParner o»d the p>ogrammer for rmy launck fee or markeaing reimbursement agreement entered into in 2002 or 2003. rtAsuch cotebact negotiafions are at the corporate level and not at the �vision level 77eerefor� we do not have posscssion of these confrads. " Recommendation: In previous audits with cable commissions, we have recommended that the City request an affirmative statement from Time Warner that they do not have any launch fees. The above e�cplanation from the Company states that it is their `�olicy" not to accept launch fees. It does not actually state that they do not have a launch fee provision in their programming network contracts. 11) Marketing Reimbursements Regarding mazketing reimbursements, the Company responded as foliows: `7n some tsstances a cable-programmrr+g ttetwork has agreed to share (or underwrite) tke cost of promoting a new service or markeJing an existing service 6y sharfng in our markeHng efforts. This marketing support, sometimes referred eo os co-op supporr, (collectively 'Marketing SSqvport ) is a traditional industry pracilce intended lo support marketing campaigns that benefu both the cable programming nelwork and the ca61e operator, For example, marketi»g Sirpport allaws TfVC m be bnth more e,jJFcieat (by pooling marketing dollars ivith the programmer) and e„�'ective (by largefing ads to our cuslomera) as we market our service. lt rs gerrerally adrnowledged tkat Marketing Suppon coxtributes lo cvstomer retention and growih, bolh of which have a posiiive in�luence on Gross Revenues upon which franchise fees are paid In an ever inereasingly crompetitive environment with DBSproviders, we must crontimrously seek ways to anphasize 1he value of ow service. Markeiing Support allaws us to meet lhis competilive challenge by effecttvelypromoting rhe servrce to new and oristfng customers while minimizing our direct out-of-pockei expenres thereby lreeping our monthly rates reasonable. Markzling Support is hot revenue derived from the operation of the ca6le system but rather is a reduction to a cast or an ag�o�.re thnt TWC would not necessarily have incurred Mcn'lreting Supporx as noted above, contributes w customer reeextiort and growth, both ojwhich have a parilive inJluence on Gross Revenues upon which the frarrchise fee rs pairL " � B-�l 18 Procedures and Resu/ts The company also stated that there were no launch fees or marketing reimbursements received in 2003. Generally accepted accounting principles (GAAP) deSne revenue as "in�lows or other enhancemerrts of assets of an entity or sett7emenis of its liabilities (or a combination of both), from delivering or,producinggoodr, rendering services, or other activities that constitute the entity's ongoing major or central operations. " Launch fees, mazketing reimbursements and rebates meet the definition of revenue above, as they are all "activities that constitute the entity's ongoing major or central operations." Emerging Issues Task Force Statement 01-14 fiuther supports this classification of such items as revenue. The Task Force "agreed that income statemenr characserization 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 that Time VJarn�ear provide an accounting standazd that supported their characterization of both launch fees and maz'keting reimbursements as an offset to expense rather than: a revemue itenn. Time Watner has provided their iaterpretation of an accounting standard on this matter_ While we do not agree with this intexpretaxion, we do not wish to pursue this matter any ftuther at this poin� 12) . Multi Dwelling Units (1VIDU's)Bulk Billings and Commercial Accounts We also requesied explanation and examples of bulk billings, MDU's and commercial accounts. Specifically, we are intexested an whetlaer,a bulk unit — apartment, hoteI, etc. is considered on subscriber or muitiple subscribers. This information was provided to us and the numbers aze relatively minimal and do not warrant fuzther investigation at this poin� Recommendation• No furtlaer aaalysis warxanted. 10 B-1o119 Procedures and Results 13) Franchise Fee Bill Test We requested and obtained 15 random bills sent to cable customers in 2003. We tested these bills to verify the S% &anclrise caIculation 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 Wamer, the access fee should be included in the calculation. 1fie franchise fee does not appear to be included in fhe calcUlation on bills 2, 6, 7, 8 and 12. Also, bills 1 and 3 had differences of $.17 aad $.03, respectively. It appears Digital Converter Reatal at �6.65 each, Digital Remote Rental at $.30 each, Cable Guide and Navigator fees are not included in the calculadon. Time Warner also indicated that cable guide is not included in the franchise fee calculation but we are unclear as to why ttus would be. Recommendation• We recommend 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, Cabla Guide and Navigator revenues are accwately charged to customers on customer bills. B-11120 11 Procedures and Resu/fs 14) General Trend Analysis The amawit of basic subscribers for Fridley hes dropped considerably since 7anUary 2002. A sumznary of basic subscribers by month since January 2002 is as follows: 2002, 2003 and 2004 Basic Sabscriber Activity (Source: Time Werner Cahle) 2002 2003 2004 Jannary 6077 5912 5227 Fabruazy 6033 SS55 5209 March 6010 5882 5207 Apri1 5983 5938 May 5966 5941 hme 5975 5938 July 5987 5889 Augast 5943 5838 September 5953 5789 Ociobec 5910 5751 1Vovember 5895 5732 December 5910 5731 Average 5970 5849 5214 �� •Recommendation• We recommend the City inquire with Time Warner as to reason for the large decrease in basic subscribers betaveen December 2003 (5731) and 3anuary 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 d�ision malang information on this matter. 12 B-1� 21 � - Summary of Recommendatlons Comnazison of Detailed Billina Renorts to Franchise Fee Snn�masv 1. We recoinmaxcnd the City ascertain receipt of the underpayments listeci in procedure 2. (page 3) Review the Allocation of Home Sho�ina 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 - Procedure No. 4 3. We recommend the City find ont why certain accounts are not included in the franchise fee revenue calculation. (page 5) Financia] Information — Procedure No. 6 4. We recommend the City ask why a certified gross revenue statement certified by an independent CPA was not pmvided. {page � Testing reports on the Francluse Fee Worksheets— Procedure No. 7 5. We recommend the City reqnest Time Warner prepare monthly detail of bad debt expense with its quarterly franchise fee remittances. (page � Oti�er Revenue — Account 4699-0000 — Procedure No. 7 : 6. We recomtnend the City request detail of the "other" amounts on a quarterly basis and deteIInine if the amount listed ie deductions ftom revemie, or should be treated as expenses. (page 'n Pxanchise Fee Bill Test Procedure No. 13 7. We recommend the City request a larger series of customer bills and test to verify that custonaers are being charged. the correct amount on their bills. (page 11) General Trend Analvsis — Procedure No. 14 8. We recommend the City inquire with Time Wamer as to reason for the large decrease in basic subscn'bers between December 2003 (5731) and January 2004 (522�. 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O N � t+ � rn �.°: g ��°nav°i °m a a � � . � o .�.j' � od . . � � �c o �i c o°°. � v H {iJ t � � `� � �o � � �m � C�D �� a � n �� .�� v � � �i �i o e°'a ' .� � R`a ��.�� q>q��s � � � � �gg�gg �t�. � � ��g . � u " � � � � � r� W r�uio�awC�qv�ixr�i,��C1Ciz � a a B-14123 � � N a � i � e 1 � � � e v .� c s Q � � C � � � � a a Q n � � a�` .-. n � O v n € � w w � w � a a z � g � ri p G N � ' h M � O vf f i O v� � N � vl �] C vi � C Y1 C a � o e h i o � � � � O .- h n b vi e s� V1 h o � Vi � x C r IT. :p W � o � W C' �� i � � i p i ri ' . �1 � , �! �i I.+ O ' a o i � e Q O j .. C a d 0 .� � �.�i Hf � � e ai e b � f`1 O h � lY O � 0 Y -7 � � � 'v a � �'' C �� EXHIBIT C NEEDS AND INTERESTS ASCERTAINMENT c-'i 24 ��l:�:ll: 1. REQUEST FOR RENEWAL PROPOSAL ("RFRP") D"�125 .;; r r, ;'f.:,; , ...:: „ �� ;'' ::F:<;� � � ��..��..�.��.��,��,��.� �.��* ....ff.. Cbx�a,:<lo.+,:e U,�iox• ;3 c:i�r.o,::< Ra<l, 3ui.<9t 1.. h:4:1:, !n l."?t)1 l'i :(iiiil AR4^4i0 :! (0i`vi RY�)ti :7[� .ti:. Rrultl�n.•r.: .�S!i (;:�i+e tia:�r, tiuirc iji�, 4. i'.rr.l.: ..{ 7516J. 1`: {C5.11 j;'9�aYft1C{ :c: iti;::) ifq.ry9:N wxN ['�:�.'�):Clt:l�n:['A!'�::I+K:Y1:11 REPORT ON THE CABLE-RELATED GOVERNMENT ACCESS NEEDS STUDY FOR THE CITY OF FRIDLEY August 1, 2004 126 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 significance primarily related to equipment needs for the Government Access Channel. The key recommendations and observarions 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. 127 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 governxnent. 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 makeshift 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. 128 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 cunent franchise. Pro�rammin� 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 off'icials), city bulletin board informarion 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 Technologv Upgrades 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 129 � 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: Tape 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 duplicarion 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. 4 130 Grauhics and EditinE 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 131 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 beneficial, 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 rnanual 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 0 132 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 Cauacitv 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 diff'iculty 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. 7 133 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 observations of facilities and equipment. A Government Access Equipment Upgrade and Replacement Plan is included as Append'uc 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 134 negoriations and in continuing the City's long-term effectiveness in the delivery of government access programming. 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 playback 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 � 135 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 10 136 transportation. Two-way video delivery between schools and over the cable system is currently utilized between the 5 Independent School District 14 locations in the City. As mentioned above, School District 14, specifically 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 Government 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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