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HomeMy WebLinkAbout2017-05-09; City Council; ; Adoption of Resolution authorizing the City Manager to request Cox Communications, California, LLC, continue to collect and remit Public, Education and Government (PEG) fCA Review PJ,(.,, 9 CITY COUNCIL Staff Report . Meeting Date To: From: Staff Contact: Subject Recommended Action May 9, 2017 Mayor and City Council V Kevin Crawford, City Manage~ll Jessica Padilla Bowen, Community Relations Manager jessica.padillabowen@carlsbadca.gov or 760-434-2845 Adoption of Resolution authorizing the City Manager to request Cox Communications, California, LLC, continue to collect and remit Public, Education and Government (PEG) fees an behalf of the City of Carlsbad Adopt a Resolution authorizing the City Manager to request Cox Communications, California, LLC, continue to collect and remit Public, Education and Government (PEG) fees on behalf of the City of Carlsbad for an additional 10 years. Executive Summary The California Public Utilities Commission recently renewed its franchise agreement with Cox Communication so the company can continue to provide video service in the City of Carlsbad. To continue to collect fees from the cable company to support local programming, the city must make formal request in the form of a City Council resolution. Discussion In 2006, the California Legislature adopted the Digital Infrastructure and Video Competition Act (DIVCA), which established a state video franchising process. Previously, local municipalities were in charge of cable franchise agreements. Under the new process, the California Public Utilities Commission has the exclusive authority to issue state video franchises. Currently, three video service providers operate in the City of Carlsbad: Charter Spectrum (formerly Time Warner), AT&T U-Verse and Cox Communications. As part of the franchise agreements with the state, video service providers are required to pay the city 1 percent of their gross revenues from basic cable subscriptions. These fees are referred to as "PEG" fees, which stands for public, educational and government programming. The City of Carlsbad uses the PEG fees to provide government programming on a dedicated cable channel. The California Public Utilities Commission has approved and issued a renewed 10 year state video franchise for Cox Communications, which took effect April 27, 2017. Under DIVCA, municipalities must make a formal request to continue to receive PEG fees when a state franchise is renewed. Fiscal Analysis In fiscal year 2015-16, the City of Carlsbad received $1,009 in PEG fees from Cox. Next Steps Item #6 May 9, 2017 Page 1 of 8 Upon approval of this resolution, city staff will notify Cox of the approval and continue receiving PEG funding. Environmental Evaluation (CEQA) The proposed action is exempt from the California Environmental Quality Act (CEQA). Exhibits 1. Resolution authorizing the City Manager to request Cox Communications, California, LLC, continue to collect and remit Public, Education and Government (PEG) fees on behalf of the City of Carlsbad for an additional 10 years. 2. Cox renewed state video franchise certificate. 3. Letter from Cox requesting reauthorization of PEG fees. Item #6 May 9, 2017 Page 2 of 8 RESOLUTION NO. 2017-076 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY MANAGER TO REQUEST COX COMMUNICATIONS, CALIFORNIA, LLC, CONTINUE TO COLLECT AND REMIT PUBLIC, EDUCATION AND GOVERNMENT (PEG) FEES ON BEHALF OF THE CITY OF CARLSBAD FOR AN ADDITIONAL 10 YEARS. EXHIBIT 1 WHEREAS, the City Council of the City of Carlsbad, California, has determined that the California Public Utilities Commission has approved and issued a renewed 10-year state authorized video franchise certificate for Cox Communications, California, LLC, to provide video service in the City of Carlsbad beginning April27, 2017; and WHEREAS, the City of Carlsbad is currently collecting a Public, Education and Government (PEG) fee from Cox per California's Digital Infrastructure and Video Competition Act; and WHEREAS, Cox has requested authorization from the City of Carlsbad in the form of a new or reauthorized ordinance and/or resolution to continue collecting and remitting PEG fees under the new franchise term. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the City Council authorizes the City Manager to request Cox Communications, California, LLC, to continue to collect and remit Public, Education and Government (PEG) fees on behalf of the City of Carlsbad for an additional 10 years. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 9th day of May, 2017, by the following vote, to wit: AYES: M. Hall, K. Blackburn, M. Schumacher, C. Schumacher, M. Packard. NOES: None. ABSENT: None. Item #6 May 9, 2017 Page 3 of 8 ---------------------·-···----·-····· STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION '-05 VAN NfSS AVE NU[ SAN FRANCISCO. CA 9410?, 3298 Decemher 30. 2016 Esther Northrup Senior Director. State Regulatory A ftairs Cox ('ommunications 5887 Copley Drive. Suite 300 San Diego. CA 92111 Dear Ms. Northrup: ·······-·····----··-------------, EXHIBIT 2 Edmund G. Brown Governor The Commission has determined that the application for the n.:newal of a state video franchise suhmittcd hy Cox Communications on Dcccmhcr 6. 2016 is complete. and accordingly issues the enclosed state franchise certificate. Should you have any questions. please contact Glenn Scmow at 415. 703.4153. Sincerely . ... -....... ---1'imothy J. Sullivan Executive Director Item #6 May 9, 2017 Page 4 of 8 STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION 505 Van Ness Avenue www.cpuc.ca.gov San Francisco, CA 94102 CALIFORNIA VIDEO FRANCHISE CERTIFICATE1 FRANCHISE NUMBER: 0003 I) Franchise Holder: Name: Cox Communications Califixnia. LLC dha Cox Communications Address: 5887 Coplcv Drive, Suite 300 San Diego, California 92111 2) Application Date: December 6. 2016 3} Franchise Effective Date: April 27. 2017 4) Franchise Expiration Date: ,ipril 27,_2027 5) Affected Local Entitics2 Attached Issued at San Francisco this 30111 Day of Decenw..£r. 20lfi. ~~e:::,L_--=-.::l_~_J J 5 ,..,,.... Timothy J. Sullivan Executive Director 1 This Certificate constitutes a grant of authority to provide video service in the service EXHIBIT 2 area footprint requested in the Application referenced herein. including but not limited to authority to use the public rights-of-way in exchange for the franchise foe adopted in CAL. Pt rB. Urn .. Com: *. 5840( q), subject to the laws of this state. This grant of authority is subject to lawful operation of the cable service or video service by the applicant or its successor in interest. 2 The state video franchise granted herein may include all or part of the affected local entities' territory. For more information on the video service area covered by this franchise, contact the California Public Utilities Commission. Item #6 May 9, 2017 Page 5 of 8 STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION 505 Van Ness A venue San Francisco, CA 94 l 02 www.cpuc.ca.gov CALIFORNIA VIDEO FRANCHISE CERTIFICATE FRANCHISE NUMBER: 0003 Affected Local Entities for Franchise No. 0003, issued to Cox Communications California, LLC, dba Cox Communications on December 30, 2016: Aliso Viejo, City of Carlsbad. City of Chula Vista, City of Coronado. City of Dana Point. City of El Cajon, City of Encinitas. City of l~scondido, City of Goleta. City of Imperial Beach. City or Irvine. City of La Mesa. City of Laguna Beach. City of Laguna Hills. City of Laguna Niguel. City of Laguna Woods. City of Lake Forest City of I .cmon Grove. City of Los Angeles/San Pedro. City of Los Angeles, County of Mission Viejo, City of National City. City of Newport Beach. City of Oceanside. City of Orange. City of Orange, County of Palos Verdes Estates. City of EXHIBIT 2 Item #6 May 9, 2017 Page 6 of 8 ,-.------------------------------------------------------------- STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION 505 Van Nc~s Avenue San Francisco, CA 94102 www.cpucxa.gov CALIFORNIA VIDEO FRANCHISE CERTIFICATE FRANCHISE NUMBER: 0003 Affected Local Entities for Franchise No. 0003, issued to Cox Communications California, LLC, dha Cox Communications on December 30, 2016, continued: Pmvay, City of Rancho Palos Verdes. City of Rancho Santa Margarita. City of Rolling Hills. City of Rolling Hills Estates. City of San Clemente. City of San Diego. City of San Diego. County or San Juan Capistrano. City of San Marcos. City of Santa Barbara. City or Santa Barbara. County of Santee. City of Solana Beach. City of Tustin. City of Vista. City or EXHIBIT 2 Item #6 May 9, 2017 Page 7 of 8 cox. Via Email and USPS April 3, 2017 Kevin Crawford City Manager City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 EXHIBIT 3 5887 Copley Drive Son Diego, CA 92111, 7906 Subject: Cox Communications State Franchise Certificate and P.E.G. Fee Dear Mr. Crawford: As a follow up to Cox's letter dated February 28, 2017 regarding the reauthorization of P.E.G. Fees, I am writing to provide you additional information regarding our request. Cox's CA legal counsel has determined that we do not have the legal authority to continue collecting and remitting a P.E.G. Fee on behalf of the City of Carlsbad beyond the expiration of our original state franchise certificate of April 27, 2017. Cox's determination takes into consideration language from the Digital Infrastructure and Video Competition Act of 2006 (DJVCA) which states, "A state-issued franchise shall only be valid for 10 years after the date of issuance, and the video service provider shall illm!Y for a renewal of the state franchise for an additional 10-year period if it wishes to continue to provide video services in the area covered by the franchise after the expiration of the franchise." (Pub. Util. Code § 58SO(a)). Therefore, it is Cox's legal interpretation that our current state franchise certificate expires and therefore any previous ordinances and/or resolutions enabling P.E.G. Fees will expire with the expiration of Cox's origination certificate on April 27, 2017. Cox has been advised by our legal counsel to obtain authorization from the City in the form of a new or reauthorized ordinance and/or resolution to continue collecting and remitting P.E.G. fees under the new franchise term to avoid the potential of class action lawsuits on behalf of rate payers. Cox is cognizant of the process and timing for such authorization. As we work to avoid any disruption in the collection and remittance of the fee to the City, we ask that you let us know when the City will be agendizing this authorization. We appreciate our partnership with the City in serving the residents and businesses of Carlsbad. !£y(fi Oscar Urteaga Manager, Government Affairs Cox Communications In h,l'!llOH'i w,t!l th(• C·.'I~ C,.'.f.'..!'J'•,.,•<C_ r1i:~:r,,:~i. ,\1' ;,:,,"j Is'• !\fl('! c.>I\ Fo1,;~( Sk,,'.Hd-:.h1i; cl)lJ;'\:il l~'rldHfd 1.:.ur:.-.·r Item #6 May 9, 2017 Page 8 of 8