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03/14/2005 - 00026774CITY COUNCIL MEETING CITY OF FRIDLEY MARCH 14, 2005 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:30 p.m. PLEDGE OF ALLEGIANCE: Mayor Lund led the Council and audience in the Pledge of Allegiance to the flag. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember-at-Large Barnette Councilmember Billings Councilmember Bolkcom MEMBERS ABSENT: Councilmember Wolfe OTHERS PRESENT: William Burns, City Manager Fritz Knaak, City Attorney Scott Hickok, Community Development Director Jon Haukaas, Public Works Director Rebecca Brazys, Recording Secretary APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of February 28, 2005. APPROVED NEW BUSINESS: 1. Receive the Minutes from the Planning Commission Meeting of March 2, 2005. RECEIVED. 2. First Reading of an Ordinance Changing the Street Name of Rainer Pass to Rainier Pass. FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 2 Dr. Burns, City Manager, explained that Dr. Ed Anderson, 5164 Rainer Pass, has written asking the City to correct the spelling of Rainer Pass to Rainier Pass. The City of Columbia Heights recently changed the name of their portion of this street. Staff recommends Council's approval. APPROVED 3. Resolution Receiving Final Plans and Specifications and Ordering Advertisement for Bids: Neighborhood Street Improvement Project No. 2005-1. Dr. Burns, City Manager, stated this year's project is scheduled four Ward 3 neighborhoods and will cover 3.5 miles of streets. The estimated cost of the project is $2.2 million. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 2005-14. 4. Resolution in Support of an Application for a Minnesota Lawful Gambling License for Fridley Totino Grace High School (Sharx Night Club) (Ward 3). Dr. Burns, City Manager, explained that this resolution is in support of an application for a Minnesota lawful gambling license that will allow Totino Grace High School to continue to sell pull tabs at Sharx Night Club. This is a two-year renewal that will run between April 1, 2005, and March 31, 2007. Staff recommends Council's approval ADOPTED RESOLUTION NO. 2005-15 5. Commission Appointment. Dr. Burns, City Manager, stated staff is recommending the appointment of Del Jenkins to the Environmental Quality and Energy Commission. The appointment is to a vacant term that expires April 1, 2007. APPROVED. 6. Claims (120689 — 120896). APPROVED. 7. Licenses. APPROVED AS SUBMITTED AND AS ON FILE. MOTION by Councilmember Barnette, seconded by Councilmember Bolkcom, to adopt the proposed consent agenda. FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 3 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to adopt the proposed agenda. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM (VISITORS): Consideration of items not on agenda — 15 minutes. There were no comments presented. OLD BUSINESS: 8. Resolution of the City of Fridley, Minnesota, Denying Renewal of Time Warner, Inc.'s Cable Television Franchise (Tabled February 28, 2005). MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to remove this matter from the table for discussion. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Knaak, City Attorney, stated this matter was tabled because Time Warner requested an opportunity to present their proposal directly to Council. That motion was subject to certain rules because we are in the middle of a formal renewal process. Based on that, Dr. Burns submitted a letter to Time Warner that indicated what the presentation would be limited to. Time Warner is basically summarizing its proposal to Council. Councilmember Bolkcom stated this presentation is not intended to be a time to negotiate, modify or amend the Time Warner proposal. Mr. Knaak agreed. He said Time Warner has requested an opportunity to present the proposal already submitted to Council. Ms. Kim Roden, Vice President of Public Affairs for Time Warner, invited the division president to give an overview of the Time Warner proposal. Mr. Mike Munley, President of the Minnesota Division for Time Warner Cable, assured Council that Time Warner values its relationship with Fridley and looks forward to continuing it for many years. The system Time Warner is proposing is a modern, high quality co-ax system with a minimum capacity of 860 megahertz. The cable system is fully two-way activated to support interactive services and is designed for optimum FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 4 reliability and flexibility. With over 300 channels of programming, it will provide one of the largest and diversified lineups available in the country. Digital cable was launched in 2000 giving Fridley residents more choice, convenience and control including an interactive cable guide. Digital cable gives parents the ability to block channels by rating, programming or channel. Originally, digital cable included 13 channels. It has since been expanded to 42 channels. With the launch of digital cable, Time Warner has extended their pay-per-view offerings to 48 channels, offered multiple screens of premium channels, and added 40 digital music channels. In 2002, they introduced I control which allows customers to order programming at the touch of a button on their remote control. It allows them to start a movie or program immediately, stop, pause, rewind or fast forward. I control movies on demand was followed by On Command services for premiums such as HBO, Cinemax, Showtime and the Movie Channel. In 2002, Time Warner became the first Minnesota cable system to offer digital recorders. In 2003, they launched high definition TV and currently have 17 high definition channels which is more than any operator in the state. Mr. Munley further explained that Time Warner is proposing a 10-year franchise renewal term with a 5-year extension based on meeting certain incentives. They are seeking a non-exclusive franchise to serve the entire City of Fridley. They will provide an emergency link system that complies with FCC rules and regulations. One of the key parts of their proposal is the reduction in rates. They conducted a survey in October of last year and the number one concern of Time Warner customers in Fridley was for a lower price. The proposal before the Council this evening addresses this desire and all Fridley customers will see a reduction of approximately $1.00 per month if Council approves the proposal. This is a about a 1% decrease in rate for basic customers and 2.25% decrease for standard customers. They will dedicate a total of three channels for public, educational and government access in Fridley. Additional channels will be made available in accordance with state law. If there's a need for more channels, they will make more available. Time Warner Cable will provide a return path and playback system for the public access channel from City Hall. They will maintain return paths from Fridley High School and City Hall to accommodate programs that originate from those sites. Mr. Munley stated that Time Warner will also make a one-time grant for public access in the amount of $390,000 for capital needs. The City may spend this money as it deems best provided it is used for capital support for public access. They are also prepared to offer their expertise and purchasing power to the City in the spending of the grant funds. Time Warner further proposes to maintain the institutional network; any cost to repair and any maintenance issues. They are also offering to make their Roadrunner business class available to the City at a 20% discount. Upon request from the City, they have offered to build an I-net at the City's cost; defined as Time Warner's time and materials and the permitted FCC return. Mr. Munley stated Time Warner will provide one service drop to each public school, City government building and new sites within 125 feet of their system. Each of these locations will receive standard cable service for free. Those sites that currently receive FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 5 free service will continue to receive free service under the new proposal. As far as payments to the City, Time Warner will pay a franchise fee to the City in the amount of 5% gross revenues received from cable services to the City. In 2004, this totals approximately $174,000. With respect to financial investments, Time Warner has demonstrated over the past franchise term a commitment to continue investment in the cable TV system in Fridley, with such services as digital television, video on demand, digital video recorders, cable modem service, high definition TV and digital phone service recently launched. None of these were requirements of the franchise but they made good business sense for Time Warner. Time Warner and their customers have contributed nearly $900,000 to the City of Fridley since 1999 in the form of franchise fees. Time Warner has been providing drops and free cable service to Fridley public schools since the early 1980s. They currently have five schools receiving free cable service in Fridley. They provide over 500 hours of copyright cleared, commercial-free educational programming each month at no cost. In summary, Mr. Munley explained that Time Warner is proposing a 10-year term with a 5-year extension based on meeting certain incentives. The incentives are basically if Time Warner's system is deemed state-of-the-art, there would be a 5-year extension on the original 10-year term. All Fridley customers upon approval will receive a$1.00 reduction in their monthly cable bill. Time Warner Cable will make a$390,000 grant to support the capital needs to the customers in Fridley, and they will continue to pay their 5% franchise fee. They believe their proposal reasonably meets the needs and interests of the City taking into account the costs and their customers' willingness to fund the various items contained the in the City's request for renewal proposal. Mayor Lund clarified that this is not a time to negotiate any changes or have a debate on this matter but was simply an opportunity for Time Warner to present their proposal to the Council. Councilmember Bolkcom asked if there had been any negotiations with Time Warner since they requested the formal process in November. Mr. Knaak responded that the answer would be no. Councilmember Bolkcom asked if the formal process stops the City and Time Warner from further negotiations. Mr. Knaak responded it does not. Mayor Lund asked Mr. Munley if there is anything new forthcoming from Time Warner and what they were asking from Council at this meeting. Mr. Munley stated he is present for two reasons; to talk about Time Warner's proposal and to discuss the next step. Time Warner has over 3,200 franchises across the country and to his knowledge they have only gotten to this part of the process about a dozen times. If Council votes against their proposal this evening, they will enter into FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 6 what will be a very time consuming and expensive process for both Time Warner and the City Council. They are suggesting that there be some formal negotiations. Time Warner does not believe there have been actual negotiations with the City of Fridley for a couple of years. He suggested that the Mayor appoint a Council person to negotiate with Time Warner. He said he would be personally involved to see if this can be worked out. He suggested the timeframe be extended for 30 days and that Council not take action to deny Time Warner's proposal tonight. If the Council takes that action, it starts a quasi-judicial process which is expensive and time consuming. Councilmember Barnette questioned why this request was not presented earlier in the process. Mr. Munley claimed Time Warner has been trying to have discussions with Council. Ms. Roden stated she repeatedly requested an opportunity to have a dialogue with the Council but has been told by City staff that there was a negotiating committee and that Time Warner was not to come before Council. She tried to be respectful of staff's wishes with the exception of the one Council work session she chose to attend when this item was on the agenda. She thought that her presence at that work session would give her a chance to explain Time Warner's proposal to Council. Beyond her statements tonight, Ms. Roden indicated there is a paper file that will support her claims. Letters were sent as early as August requesting that the City not force this process. Time Warner finally asked for the formal process in November because they did not feel they were making any progress with the City's negotiating team. She added that she has believed for a long time that if policy makers were added to the City's negotiating team some progress might have been made. She stated the City has an option to add 30 days, and she thought it would be useful to try and get this done through the informal process. If after that period of time, no progress has been made, the formal process can proceed. Councilmember Barnette asked Mr. Knaak if there was a request from Time Warner to include Council members in the negotiation process. Mr. Knaak stated he is not aware of any such request. Dr. Burns stated he is not aware of such a request. Ms. Roden said she spoke with Dr. Burns on many occasions and asked to attend the Council meetings but Dr. Burns made it very clear that he would perceive that as being not respectful to him. Councilmember Barnette asked if Time Warner had voiced this request after November. Ms. Roden explained that when they requested the formal process in November they brought a substantial amount of written material for the City to review. Time Warner knew it would take the City a fair amount of time to review all this material and assumed FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 7 the City would contact Time Warner when they were done. They received no such contact. When she saw the matter starting to show up on Council's agenda she felt it would be important to attend. They were never invited by staff to attend. Mayor Lund asked the City Attorney what the negatives would be with continuing this matter for 30 days and/or changing the membership of the City's negotiating team. Mr. Knaak responded that one of the advantages/disadvantages of negotiating with a public entity such as this one is trying to define who is going to be the negotiating team on the other side. That is something that the City did as a matter of policy some time ago. In negotiations, if one party is able to persuade the other side that the problem with the negotiations is the negotiators and the negotiators are changed, a significant concession has been made. As far as the 30-day time extension, the formal process in the federal statute does not allow a lot of leeway at this point. Time Warner has made its proposal and the Council can either "green light or red light" that proposal; they cannot state likes and dislikes or request changes. It is either yes or no and until Council does that, they are kind of in limbo procedurally under the statute. There was plenty of time prior to this for negotiations to occur. After discussing this with the City's consultant, Mr. Grogen, it is his understanding that typically there is a substantial amount of time for the parties to negotiate after this action is taken. Council has a decision to make under the process, and that is to accept or deny Time Warner's proposal. If Council accepts the proposal, there is no reason for further negotiations. If Council does not accept the proposal or there are issues the Council does not like about the proposal, what Council should do is reject the proposal. If Council were to decide tonight not to accept Time Warner's proposal preliminarily, it would seem that there might be an opportunity for the parties to sit down before significant expenditures are made. Mr. Munley stated that Time Warner believes there is a third option and that is to suspend the clock. If Council takes a vote on the resolution to deny, they are forcing Time Warner to protect their shareholders, protect their assets, and prepare for the quasi-judicial position. Councilmember Bolkcom questioned why Time Warner is "drawing a line in the sand" over this issue. She senses a threat from Time Warner that either Council extend this matter and put one of the Council members on the negotiating team or Time Warner will stop negotiating and take this matter through the formal process. Mr. Munley stated if Council wants to negotiate, they should stop the process now, not go to the formal process. He did not want to mislead Council that if they vote to deny the proposal tonight, negotiations cannot continue. If the City really wants to negotiate, he suggested they stop the clock and try to negotiate. Councilmember Bolkcom pointed out that Time Warner started the clock back in November when they requested the formal process. FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 8 Mr. Munley stated Time Warner requested the formal process to force the issue because for three years they got nowhere with the City. Councilmember Billings questioned the time period in which the City must hold an administrative hearing if and when they deny Time Warner's proposal. He stated it is his understanding that the hearing simply must be held within a reasonable period of time. Mr. Munley stated he has not gone through the process himself, but he believes that there is a reasonable amount of time. Councilmember Billings stated that as he understands it the 120-day period that began November 30 is spelled out in federal law. The 30-day extension proposed by Time Warner makes him a little uneasy because federal law specifically states 120 days. He explained that he feels much more comfortable with mutually agreeing that in the first 30 to 45 days after Council takes action that neither the City nor Time Warner will take any action towards the formal hearing. Thus, the reasonable period of time would begin after that 30 to 45 day period. Mr. Munley stated that he understands what Councilmember Billings is saying, but this has been used many times in different instances across the country. If Council votes to deny their proposal, Time Warner would feel obligated to go down both paths by protecting themselves on the formal proposal and still having informal discussions. They would have to protect their shareholders and assets. Councilmember Billings stated it also makes him uncomfortable that Time Warner is asking the City to restructure its negotiating team and suggesting who the City should put on their team. Time Warner is not asking the City if they would like to decide who is on Time Warner's negotiating team. He does understand Time Warner's desire to be negotiating with the policy makers for the City. Mr. Munley explained that Time Warner is basically saying let's expand both sides and see if we can work something out. Councilmember Billings stated he would like to see this logjam broken. Mayor Lund said that after three years, it seems unreasonable for Time Warner to request a 30-day extension. He wants to save the City and the taxpayers money rather than fighting with Time Warner, but it appears Time Warner is not willing to give anything. Mr. Munley stated that the proposal Time Warner has presented to the City of Fridley is a lot more generous than what has been presented to other cities in the area. Councilmember Barnette commented that he has no obligation to Time Warner; his obligation is to the residents of Fridley. Council has entrusted the City's negotiating FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 9 group to negotiate for Council. He has no interest in getting into negotiations personally because he does not understand the cable industry that well. He supports the City's negotiating team. He did not understand why nothing has happened with the negotiations since November. Mr. Munley explained that Time Warner submitted their proposal to the City but heard nothing back. Mr. Knaak stated the formal proposal was made and the next step was for the City to respond. The City was advised that routinely there is some discussion or dialogue but nothing was forthcoming. Council is at the point now where they either like the Time Warner proposal or they do not. Councilmember Bolkcom stated she does not understand why Time Warner is still refusing to negotiate if Council votes against their proposal this evening. She also objected to the claims by Time Warner that the City Council has not been involved in this process because they have had frequent discussions with City staff who have participated in the negotiations on this matter. Mr. Munley stated the reason Time Warner attorneys would need to be brought into this immediately after a denial by Council is because there is a clock ticking. They have to get this done in a reasonable period of time. Ms. Roden commented that there is actually two parts to Time Warner's position. One would be to extend this matter for 30 days. The other piece to it is Time Warner has not been able to reach an agreement with the people who have been involved in negotiations for the City. Time Warner is suggesting that it might be helpful to add people to the equation on both sides. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to adopt Resolution 2005-16. UPON A VOICE VOTE, COUNCILMEMBER BARNETTE, COUNCILMEMBER BILLINGS AND COUNCILMEMBER BOLKCOM VOTING AYE AND MAYOR LUND VOTING NAY, MAYOR LUND DECLARED THE MOTION CARRIED ON A 3 TO 1 VOTE. Councilmember Billings repeated his offer that neither party proceeds with the formal process for 45 days. Mr. Munley stated that is not agreeable to Time Warner. He added they would be more than happy to have informal negotiations with the City at any time, but they do need to protect their assets. FRIDLEY CITY COUNCIL MEETING OF MARCH 14, 2005 PAGE 10 NEW BUSINESS: 9. Informal Status Reports. Councilmember Bolkcom reported that the Empty Bowls fundraiser held at the Fridley Community Center was a success and raised over $6,000 for SACA. Councilmember Bolkcom reported that the Home and Garden Show was also a success and was well attended. ADJOURN MOTION by Councilmember Barnette, seconded by Councilmember Bolkcom, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:35 PM. Respectfully submitted by, Rebecca Brazys Recording Secretary ������ Scott J. Lund Mayor