19. Cable & video services ordinanceCity Hall
10300 Torre Avenue
Cupertino, CA 95014-3255
{408) 777-3212
FAX: (408) 777-3366
CUpERTINO
OFFICE OF THE CITY MANAGER
SUMM~-RY
Agenda Item No. ~ c1
Meeting Date: June 16, 2009
SUBJECT
Consider approving revisions to Title 6 Chapter 6.28 "Governing the Provision of Cable
and Video Services in the City", of the City of Cupertino Municipal Code.
RECOMMENDATION
Staff recommends that the City Council adopt an ordinance of the City of Cupertino
amending Chapter 6.28, Governing the Provision of Cable Services in the City, of Title 6,
Franchises, of the City of Cupertino Municipal Code. .
EXECUTIVE SiIMMARY
In September 2006, the Governor signed into law the Digital Infrastructure and Video
Competition Act of 2006 ("DIVCA"} that alllows video service providers to obtain a
state-issued franchise to provide video services in a local community. Cupertino's
Municipal Code Chapter 6.28, which governs the provision of cable and video services in
the city, was updated in 1995, prior to DIVCA''s enactment.
The amendments to the ordinance proposed herein will. put the City of Cupertino
Municipal Code into compliance with state lave.
BACKGROUND
Munici,~al Code
The city has had a section of its municipal cocie, Chapter 6.28, which governs how cable
service providers provide services in the City of Cupertino. Up until 2006, the city was
the sole local franchising authority for those c+~mpanies wishing to provide cable services
using city rights-of--way. With the passage o:f AB 2987 and the signing of DIVCA into
law in September 2006, cable /video service providers can now obtain a franchise to
provide video services in a local jurisdiction from the State of California. As the Council
is awaze, AT&T is providing video services now in the City of Cupertino under a state
fi anchise agreement.
Chapter 6.28 of the Municipal Code was last: amended in 1995 in conjunction with the
approval of a successor cable franchise agreement with Comcast. Given the adoption of
DIVCA into state iaw, however, the city's ordinance needs to be amended to reflect the
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state law and the fact that a video service provider can provide services in the City of
Cupertino either under a state or a local franchise.
ANALYSIS
Municipal Code
The changes to the municipal code were performed in conjunction with assistance from
Brian Grogan, Attorney with Moss & Barnett LLP. Mr. Grogan has assisted the city in
its negotiations with Comcast for a variety of compliance legal issues since 2003, and
provided legal advice as the city negotiated the so-called Gap Agreement with AT&T in
2006 that allowed them to provide video services in the City of Cupertino prior to the
implementation of DIVCA. Mr. Grogan is well versed in the city's existing franchise
agreements and the provisions of DIVCA.
The changes to the ordinance are summarized as follows:
Recognize that cable, video, and such services are entitled "cable services" and
"video services" for purposes of the ordinance
• Reflect the fact that video service providers must obtain a state franchise under
the terms of current state and federal law
• Reflect the provisions of DIVCA that impact state franchise holders and how
their franchise agreements play into the city's ordinance provisions
• Reasserts a franchise fee of 5% of gross revenues, existing on the books and in
compliance with DIVCA provisions
• Establishes a Public, Education and Government (PEG) fee of 1% of gross
revenues in accordance with DIVCA provisions
Of key concern to all cities as part of the enactment of DIVCA was a city's right to
protect and dictate the circumstances of use of the rights-of--way. This ordinance, in
Section 6.28.080, refers to "all applicable laws", which by reference includes the
provisions of Title 14, Chapter 14.08 "Obstruction of Streets", and Title 16, Chapter
16.04, "Building Code", which sets forth the circumstances under which a video service
provider is allowed to use municipal rights-of--way through encroachment permit
processes, building permitting, etc. This key interest is maintained in the amended
ordinance.
Financial Impact
The City of Cupertino is currently collecting a franchise fee of 5% of gross revenues
from Comcast, and from AT&T. Neither is currently paying a PEG fee. As part of the
1995 franchise negotiations, TCI paid $3 million up front in lieu of a PEG fee for the
duration of the local cable franchise. The recommended ordinance establishes a PEG fee
of 1% of gross revenues that may only be used for capital expenditures, in accordance
with DIVCA provisions.
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RECOMMENDATION
Staff recommends that the City Council:
1. Introduce and pass to second reading, an ordinance of the City of Cupertino
amending Chapter b.28, Governing the Provision of Cable Services in the City, of
Title 6, Franchises, of the City of Cupertino Municipal Code.
Submitted by:
Dick Kitson ~
Public and Environmental Affairs Director
Attachment A: Ordinance No. 09- ~0~5
Approved for Submission to the
City Council:
~~~~
David W. Knapp
City Manager
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DRAFT
ORDINANCE N0.09-2045
ATTACHMENT A
AN ORDINANCE OF THE CITY OF CUPERTINO AMENDING CHAPTER 6.28,
GOVERNING THE PROVISION OF CABLE SERVICES IN THE CITY, OF TITLE 6,
FRANCHISES, OF THE CUPERTINO MUNICIPAL CODE
Chapter 6.28 to Title 6 of the Cupertino Municipal Code shall be amended as
follows:
Title 6 FRANCHISES
Chapter 6.28 GOVERNING THE PROVISION OF CABLE AND VIDEO
SERVICES IN THE CITY
6.28.010 Short title.
This chapter shall be known and may be cited as the City of Cupertino,
California Video Services Ordinance.
6.28.020 Intent and purposes.
A. It is the intent of the city and the purpose of this chapter to
regulate video service providers holding state video franchises and
operating within the city.
6.28.030 Grant of authority-- Franchise required.
A. No person may construct or operate a cable system or provide
video service in the city without having been issued a state franchise in
accordance with the California Public Utilities Code, Division 2.5
{commencing with Section 5800) -The Digital Infrastructure and Video
Competition Act of 2006, acid as it may be amended. (Ord. 382 § 1 (part},
1991}
B. Any Person that has been issued a state franchise ("a state
video franchise holder") shall comply with all applicable provisions of this
Chapter unless such provisions aze specifically preempted by state law.
6.28.040 Police power.
A. A state video franchise holder shall at all times be subject to
and shall comply with all generally applicable laws. A state video
franchise holder shall at all times be subject to all exercise of the police
power of the city.
B. Except as may be specifically provided in this chapter, the
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failure of the city, upon one or more occasions, to exercise a right or to
require compliance or performa~sce under this chapter shall not be deemed
to constitute a waiver of such right or a waiver of compliance or
performance. (Ord. 3 82 § 1 {part), 1991)
6.28.050 Franchise fee and PEG fee.
A. Any state video franchise holder operating within the
boundaries of the city shall pay .a fee to the city equal to five percent {5%}
of the gross revenue of that state: video franchise holder.
B. Any state video franchise holder operating within the
boundaries of the city shall also pay the city a fee equal to one percent
{1%} of the gross revenue of that state video franchise holder, which fee
shall be used by the city for any Public, Educational, and/or Governmental
(PEG} purposes consistent with state and federal law.
C. Any state video franchise holder that has held a locally issued
franchise agreement shall, consistent with Public Utilities Code § 5870,
continue to fully provide and support PEG channel facilities and
institutional networks and to provide cable services to community
buildings to the maximum extent permitted by law.
D. Gross revenue, for th.e purposes of A and B above, shall have
the definition set forth in Califo~:~nia Public Utilities Code § 5860.
6.28.060 Audit authority.
Not mare than once annually, the City Manager or the City Manager's
designee may examine and perform an audit of the business records of a
holder of a state video franchise in accordance with California Public
Utilities Code § 58b0, to ensure compliance with Section 6.28.050 above.
6.28.070 Customer service requirements.
A. A state video franchise holder shall be subject to the City's
right to enforce compliance with all applicable state and federal customer
service and protection standards.
B. The a state video franchise holder~shall be subject to the
following penalties and enforcement procedures for any material breach of
the provisions cited in subparagraph 6.28.070 A above:
1. The City shall provide a state video franchise holder with
written notice of any alleged material breach and shall allow thirty
(30} days from the date of receipt of said notice for a video service
provider to remedy the specified material breach. A "material
breach" shall mean any :>ubstantial and repeated failure of a video
service provider to comply with service quality and other specified
standards referenced in subparagraph b.28.150 A above. A video
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service provider shall not be subject to penalties or held in breach
when the alleged material breach was caused by an act of god or
events beyond the reasonable control of the video service provider.
2. If the specified material breach is not remedied with thirty (30)
days, the City shall have the right to impose a monetary penalty of
five hundred dollars ($500) per day for each material breach not to
exceed one thousand five hundred dollars ($1500} for each
occurrence of a material breach.
3. If a material breach has occurred, and the city has provided
notice and a fine or penalty has been assessed, and if a subsequent
material breach of the same nature occurs within 12 months, the
penalty shall be one thousand dollars ($1,000} for each day of each
material breach, not to exceed three thousand dollars ($3,000) for
each occurrence of the material breach. If a third or further
material breach of the same nature occurs within those same 12
months, and the city has provided notice and a fine or penalty has
been assessed, the penalty shall be increased to a maximum of two
thousand five hundred dollars ($2,500) for each day of each
material breach, not to exceed seven thousand f ve hundred dollars
($7,500) for each occurrence of the material breach.
4. A material breach for the purposes of assessing penalties shall
be deemed to have occurred for each day, following the expiration
of the thirty (30) day notice period, that any material breach has
not been remedied by the video service provider, irrespective of
the number of customers affected.
5. Any interested person may seek judicial review of a decision of
the city pursuant to section b.28.150 B in a court of appropriate
jurisdiction. For this purpose, a court of law shall conduct a de
novo review of any issues presented.
b. The state video service franchise holder may appeal any finding
of material breach or imposition of penalties to the city council.
Any appeal must be made within ten (10} calendar days of receipt
by the state video service franchise holder of the finding of
material breach or the imposition of penalties, and must be
submitted in writing to the city clerk and the city manager in order
to be placed on a city council agenda for consideration. Any appeal
must contain a detailed explanation of why the appellant believes
that the finding of material breach or the imposition of penalties
was inconsistent with statutory requirements.
7. The city and any state video service franchise holder may
mutually agree to extend the time periods specified herein. Any
such agreement shall be in writing and executed by the city
manager and an authorized representative of the state video
franchise holder.
8. Any penalty imposed on a state video franchise holder shall be
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paid to the city. As provided for in section 5900(g} of the
California Public Utilities Code, the city shall submit one half of
ail penalties received from a state video franchise holder to the
Digital Divide Account established by section 280.5 of the
California Public Utilities Code.
6.28.QSQ Use of streets.
A. To the maximum exl:ent permitted under state and federal law,
a state video franchise holder sb~all obtain any required permits and shall
otherwise comply with all applicable city code requirements governing
use of the public rights-of way.
B As provided by section 5885 of the California Public Utilities
Code, the city shall either approve or deny an application from a state
video service franchise holder fir an encroachment permit within sixty
(60) days of receiving a completed application.
1. For purposes of this :section, an "encroachment permit" means
any permit issued by the City relating to construction or operation
of facilities relating to tb~e provision of video service under a state
video service franchise.
2. An application for an encroachment permit is considered
complete when the applicant has complied with all statutory
requirements for such an application, including those of the
California Environment<<l Quality Act, Public Resources Cade
sections 21000 et seq., applicable provisions of this chapter, and
other applicable ordinances of the city.
3. Any city denial of an application for an encroachment permit
shall be in writing and shall contain a detailed explanation of the
reason for the denial.
4. An applicant whose application for an encroachment permit has
been denied may appeal the denial in the manner specified in
Chapter 1.16 of this code;.
Section 2. Severability. If any section, subsection, sentence, clause of phrase of
the Ordinance is for any reason held to be invalid, such decision shall not affect the
validity of the remaining provisions of this Ordinance. The City Council hereby declares
that it should have adopted the Ordinance and each section, subsection, sentence, clause
or phrase thereof, irrespective of the fact th~it any one or more sections, subsections,
sentences, clauses or phrases be declared unconstitutional.
Section 3. Taking Effect. This Ordin~unce shall take effect and be in force thirty
(30} days from and after its adoption.
Section 4. Posting. Within fifteen (IS;f days after the adoption of this Ordinance,
the City Clerk shall have it posted in three (3) public places designated by the City
Council.
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Publication Clause
The City Clerk shall cause this ordinance to be published at least once in a
newspaper of general circulation, published and circulated in the City within 15 days
after its adoption, in accordance with Government Code Section 36933, and shall certify
to the adoption of this ordinance and shall cause this ordinance and her certification,
together with proof of publication, to be entered in the Book of Ordinances of the Council
of this City.
INTRODUCED at a regular meeting of the Cupertino City Council the 16th day
of June and ENACTED at a regular meeting of the Cupertino City Council the day
of , 2009 by the following vote:
Vote: Members of the City Council
Ayes:
Noes:
Absent:
Abstain:
ATTEST:
City Clerk
APPROVED:
Mayor, City of Cupertino
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