CR 12-20-04 07
DATE: TO: FROM: COUNCIL AGENDA REPORT DECEMBER 20, 2004 MAYOR AND TOWN COUNCIL DEBRA J. FIGONE, TOWN MANAGER MEETING DATE: 12/20/04 ITEMNO.! 7 SUBJECT: ADOPT RESOLUTION AMENDING AN AGREEMENT
WITH MILLER AND VAN EATON FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTANT SERVICES RECOMMENDATION: Adopt resolution (Attachment No.1) amending the Agreement for Cable. Television Franchise
Renewal Consultant Services. BACKGROUND: On October 20, 2003, the CoUncil adopted a resolution to extend the attached agreement (Attachment No.2) for cable franchise renewal consultant
services with Miller and Van Eaton to prepare for renewal negotiations with Comcast. Since that time, staff and the consultant have developed negotiation strategies based on further
review ofthe draft cable-related needs assessment. Renewal negotiations with Comcast officially began in August 2004. DISCUSSION The existing agreement for cable television franchise
renewal consultant services will expire on December 31,2004. Given that the Town is in the the early stages ofthe negotiation process, additional time is needed to renewal
discussions. Therefore, it is recommended that the Council extend the agreement terms for 12 months, effective December 31,2004 to December 31, 2005. As Council is aware, it is difficult
to predict the completion ofthe renewal process given its lengthy and sometimes unpredictable nature. Stl:\-ff and the consultant will continue to work efficiently to expedite the renewal
process while keeping the community's needs and interests a top priority. N:\MGR\JHaruyarna\StaffRepo Reviewed by: "-Revised: 12/1/04 Refonnatted: 6/21/02 Assistant Town Manager 9:25
am ance
PAGE 2 SUBJECT: ADOPT RESOLUTION AMENDING AN AGREEMENT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTANT SERVICES December 20,2004 FISCAL IMPACT: There is no direct fiscal impact to
the Town if Council amends the agreement to reflect a 12-month term extension. Approximately $80,000 has been budgeted in the FY2004/05 operating budget for renewal negotiations. However,
given the technical and lengthy nature ofthe renewal process and potential for protracted negotiations, additional funding may be required. As the'renewal project progresses, staff will
evaluate the need for supplemental funding and address it during the FY 2005/06 budget process, if necessary. CONCLUSION: Staff recommends that Council approve the attached resolution
amending the Town's existing agreement with Miller and VanEatonfor cable franchise renewal consultant services. The proposed amendment would extend the agreement terms for an additional
12 months. Attachments: AttachmentNo. 1: Resolution Approving anAmendmentto the Agreement with Miller and Van Eaton for Cable Franchise Renewal Consultant Services Attachment No.2: Agreement
for Cable Television Franchise Renewal Consultant Services Attachment No.3: Cable Television Renewal Negotiation Process Staff Report without Attachments (for information only) Distribution:
William Lowery, Miller and Van Eaton, 400 Montgomery Street,.Suite 501, San Francisco, CA 94104
RESOLUTION NO. RESOLUTION OF THE TOWN OF LOS GATOS APPROVING AN AMENDMENT TO THE AGREEMENT WITH MILLER AND VAN EATON FOR CABLE TELEVISION FRANCmSE RENEWAL CONSULTANT SERVICES WHEREAS,
on March 31,2005 the Town ofLos Gatos Cable Television Franchise Agreement with Comcast will expire; and WHEREAS, the Town of Los Gatos is preparing to enter into cable television franchise
renewal negotiations with Comcast; and WHEREAS, cable television franchise renewal negotiations are highly technical, labor intensive, and require special expertise due to the complex
laws that govern the process andthe many opportunities to enhance services to the community; and WHEREAS,the Town has entered into an agreement with Miller andVan Eaton for Cable Television
Franchise Renewal Consultant Services; and WHEREAS, the terms ofTown's existing agreement with Miller and VanEaton must be amended to reflect a completion date ofDecember 31, 2005 to
continue renewal negotiations. RESOLYED, bythe Town Council ofthe TownofLos Gatos, CountyofSanta Clara, State ofCalifornia, to approve the amendment ofthe agreement with Miller and VanEatonfor
Cable FranchiseRenewal Consultant Services (Exhibit A) and authorize the Town Manager to execute said amended agreement on behalfofthe Town ofLos Gatos. PASSED AND ADOPTED at a regular
meeting of the Town Council of the Town of Los Gatos, California, held on the 20th day ofDecember, 2004 by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR
OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: CLERK ADMINISTRATOR LOS GATOS, CALIFORNIA . N:\MGR\JHaruyama\StaffReports\cableagtresoextend05.wpd ,r--+ ATTACHMENT 1
EXHIBIT A AMENDMENT TO AGREEMENT This AMENDMENT TO AGREEMENT is entered into this__day of , 2004, by and between the Town ofLos Gatos, State ofCalifornia, herein called "Town," and Miller
andVan Eaton, herein called "Consultant." RECITALS A. Town and Consultant entered into an agreement for cable television franchise renewal consultant services on May 12, 2003, a copy
of which is attached hereto as Attachment 2 and incorporated herein by reference. B. Giventhe technical and complexnature ofthe cable television franchise agreementrenewal process, an
extension is necessary to prepare for negotiations with the Town's cable operator. AMENDMENT 1. Paragraph 1 ofthe Agreement is hereby amendedto reflect a completion date ofDecember31,
2005. 2. All other terms and conditions ofthe Agreement dated May 12, 2002 remain in full force and effect. , IN WITNESS WHEREOF, the Town and Consultant have executed this Agreement
as of the date indicated on page one (1). Town ofLos Gatos, by: Debra J. Figone, Town Manager Town ofLos Gatos Approved as to Forin: Orry P. Korb, Town Attorney ATTEST: Marlyn J. Rasmussen,
Clerk Administrator Revised: 3/19/02 N:\MGRllHaruyama\StaffReports\cableamendment2004.wpd Miller and VanEaton, by: (Signature) (Print Name)
()O··.·ji'{CE OF THE TOWN CLERK ':GR 02.069 (HH-----,...------------AGREEMENT FOR CABLE TELEVISION FRANC:ff.rSE RENEwAL CONSULTANT SERVICES ?'l1'(; THIS AGREEMENT is entered into this
l::3!!day of ,2002, by and between the Town of LosGatos, State of California, herein called the Miller arid Van Eaton, L.L.P, engaged in providing cable television
franchise renewal.consulting services herein called the "Consultant". RECITALS A. The Town is considering undertaking activities to conduct cable television franchise renewal proceedings
and negotiations. B. The Town desires to engage a Cable Television Franchise Renewal Consultant to provide consulting services in conjunction with cable television franchise renewal
process, of Consultant's experience and, qualifications to perform the desired work. C. The Consultant represents and affirms that it is qualified and willing to perfOmi
the desired work pursuant to this Agreenil:mt. .. . AGREEMENTS NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. Scope of Services. The Consultant shaH provide the following services
listed below. A. Conduct renewal work in four (4) broad phases: (l) planning; (2) information gathering; (3) establishment ofrenewal goals; (4) and implementation ofthose goals as further
explained in Consultant's "A Proposal to the Town of Los Gatos, California for Cable Television Franchise Renewal Services" (attached hereto as Exhibit "A" and incorporated by reference
herein). B. As Town staff directs, provide with one or more ofthe following tasks: 1. Assessment of cable-related community needs; 2. Past performance review; 3.
Technical review; 4. Legal assistance regarding cable franchise issues; 5. Drafting ofnew franchise agreement; 6. I-net planning and report; Revised: 3/19/02 Page 1 N:\MGR\JHaruyama\cable
television renewal\millervaneatonrenewaicontract.wpd I ATTACHMENT 2
7. Update ofthe Town's cable television franchise ordinance; 8. Provision ofengineering assistance as it relates to cable television negotiations; and
9. Development of a negotiation strategy to assistance the Town with renewal negotiations. C. Work regarding the' development of a negotiation strategy for renewal negotiations shall
include the following: 1. Consultant shall Identify a negotiating team, including a Consultant team leader and members ofthe Town staff Consultant will be responsible for coordinating
team meetings and reviewing analysis of the needs assessment reports, and developing specific negotiating goals and priorities. 2. Consultant shall develop a strategy for achieving the
goals identified. 3. Consultant shall conduct all negotiations. After each session, Consultant will debrief the negotiating team, re-evaluate strategy, and reconsider
negotiation goals as required to achieve the best results. 4. Throughout the negotiation, other members ofthe negotiation team will provide the technical and analytical support required
to respond to proposals made by the' operator. 5. Consultant will work with the cable operator to establish the principles which will provide the basis for agreement. Based on this agreement,
Consultant shall revised the'draft franchise agreement and ordinance to reflect the final deal. 2. Time ofPerformance. The services ofthe Consultant are to COmlIlence upon the exeQution
ofthis Agreement and issuance ofa Town purchase order, with all work to be completed by May 1, 2003. 3. Compliance with Laws. The Consultant shall comply with all applicable laws, codes,
ordinaiices, and regulations ofgoverning federal; state and local laws. Consultant represents arid warrants to Town that it has all licenses, permits', qualifications and approvals of
whatsoever nature which are legally required for Consultant to practice its profession. Consultant represents and warrants to Town that Consultant shall, at its sole cost and expense,
keep in effect or obtain at all times during the term ofthis Agreement any licenses, permits, 'and approvals which are legally required for Consultant to practice -its profession. Consultant
shall maintain a Town ofLos Gatos business license pursuant to Chapter 14 of the Code of the Town ofLos Gatos. 4. Sole Responsibility. Consultant shall be responsible for employing or
engaging all persons necessary to perform the services under this Agreement. Revised: 3/19/02 Page 2 N:\MGR\JHaruyama\Projects\cable television renewal\rniIIervaneatonrenewalcontract.wpd
5. InformationJReport Handling. All documents furnished to Consultant by the Town and all reports and supportive data prepared bythe Consultant under this Agreement are the Town's property
and shall be delivered to the Town upon the completion ofConsultant's services or at the Town's written request. All reports, information, data, and exhibits prepared or assemble4 by
Consultant in connection with the performance ofits services pursuant to this Agreement are confidential until released bythe Townto the public, and the Consultant shall not make any
of the these documents or information available to any individual or organization not employedbythe Consultant or the Town without the written consent ofthe Town before such release.
The Town acknowledges that the reports to be prepared by the .Consultant pursuant to this Agreement are· for the purpose of evaluating a defined project, and Town's use of the information
contained in the reports prepared by the Consultant in connection with other projects shall be solely at Town's risk, unless Consultant expressly consents to such use in writing. Town
further agrees that it will not appropriate any. methodology or technique of Consultant which is and ·has been confirmed in writing by Consultant to be a trade secret of Consultant.
6. Compensation. Compensation for Consultant's professional services shall not exceed $100,000, unless additional services are required and mutually agreed upon by the Town .Manager
and Consultant. Billing shall be accompanied by a detailed explanation ofthe work performed by whom at what rate and on what date. Also, plans, specifications, documents or other pertinent
materials shall be submitted for Town review, even ifonly in partial or draft form.. Payment shall be net thirty (30) days. All invoices and statements to the Town shall reference the
Town's purchase order number and be addressed as follows: Invoices: Town ofLos Gatos Attn: Accounts Payable P.O. Box 655 Los Gatos, CA 95030 Statements: TownofLos Gatos Attn: FInance
Department P.O. O. Box 655 Los Gatos, CA95030 7. Availability ofRecords. Consultant shall maintainthe records supporting this billing for not less than three years following completion
ofthe work under this Agreement. Consultant shall make these records available to authorized personnel ofthe Town at the Consultant's offices during business hours upon written request
ofthe Town. 8. ProjectManager. TheProject Managerfor the Consultantfor thework underthis Agreement shall be Jenny Haruyama, Town ofLos Gatos Administrative Analyst and William Lowery
ofMiller and VanEaton, L.L.P. Revised: 3/19/02 Page 3 N:\MGR\JHaruyama\Projects\cable television renewal\millervaneatonrenewalcontract.wpd
9. Assignability and Subcontracting. The services to be performed under this Agreement are unique and personal to the Consultant. No portion of these services shall be assigned or subcontracted
without the written consent ofthe Town. 10. Notices, Any notice required to be given shall be deemed to be duly and properly given if mailed postage prepaid, and addressed to: To Town:
. Orry P. Korb Town Attorney 110 E. Main Street Los Gatos, CA 95030 To Consultant: William Lowery Miller and VanEaton, L.L.P. 400 Montgomery Street, Suite 501 San Francisco, CA 94104
or personally delivered to Consultant to such address or· such other address as Consultant designates in writing to Town.· 11. Independent Contractor. It is Understood that the Consultant,
in the performance ofthe work and services agreed to be performed, shall act as and be an independent contractor and not an agent or employee ofthe Town.· As an independent contractor
he/she shall not obtain any rights to retirement benefits or other benefits which accrue to Town employee(s). With prior written consent, the Consultant may perform some obligations
under this Agreement by subcontracting, but may not delegate ultimate responsibility for performance or assign or transfer interests under this Agreement. Consultant agrees to testify
in any litigation brought regarding the subject ofthe work to be performed underthis Agreement. Consultant shall be compensated for its costs and expenses in preparing for, traveling
to, and testifying in such matters at its then current hourly rates of compensation, unless such litigation is brought by Consultant or is based on allegations of Consultant's negligent
performance or wrongdoing. 12. Conflict ofInterest. Consultant understands that its professional responsibilities is solely to the Town. The Consultant has and shall not obtain any holding
or interest within the Town of Los Gatos. Consultant has no business holdings or agreements with any individual member ofthe Staffor management ofthe Town or its representatives nor
shall it enter into anysuch holdings or agreements. In addition, Consultant warrants that it does not presently and shall not acquire any direct or indirect interest adverse to those
of the Town in the subject ofthis Agreement, and it shall immediately disassociate itselffrom such an interest should it discover it has done so and shall, at the Town's sole d.iscretion,
divest itselfofsuch interest. Consultant shall not knowingly and shall take reasonable steps to ensure that it does not employ a person having such an interest in this performance ofthis
Agreement. Ifafter employment of a person, Consultant discovers it has employed a person with a direct or indirect interest that would conflict with its performance ofthis Agreement,
Consultant shall Revised: 3/19/02 Page 4 N:\MGR\JHaruyama\Projects\cable television renewal\milIervaneatonrenewalcontract.wpd
\. ) ...•--'-'" n. -.._./promptly notify Town of this employment relationship, and shall, at the Town's sole discretion, sever any such employment relationship. 13. Equal Employment
Opportunity. Consultant warrants that it is an equal opportunity employer and shall comply with applicable regulations governing equal employment opportunity. Neither Consultant nor
its subcontractors do and neither shall discriminate against persons employed or seeking employment with them on the basis ofage, sex, color, race, marital status, sexual orientation,
ancestrY, physical ormental disability, national origin, religion, or medical condition, unless based upon a bona fide occupational qualification pUrsuant to the California Fair Employment
& Housing Act. 14. Insurance. A. Minimum Scope ofInsurance: 1. Consultant agrees to have and maintain, for the duration of the contract, General Liability insurance policies insuring
him/her and his/her firm to.an amount not less than: .onemillion dollars ($1,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage. ii.
Consultant agrees to have and maintain for the duration ofthe contract, an Automobile Liability insurance policy ensuring himlher andhis/her staffto an amount not less than one million
dollars ($1,000,000) combined single· , limit per accident for bodily injury and property damage. 111. ConsUltant shall provide to the Town all certificates of insurance, with original
endorsements· effecting coverage. Consultant agrees that all certificates and endorsements are to be received and approved by the Town before work commences. IV. Consultant agrees to
have and maintain, for the duration of the contract, professional liabilitY insurance in amounts not less than $1,000,000 which is sufficient to insure Consultant for professional errors
or omissions in the performance ofthe particular scope ofwork under this agreement. B. General Liability: 1. The Town, its officers, officials, employees and volunteers are to be covered
as insured insured as respects: liability arising out of activities performed by or on behalf ofthe Consultant; products and completed operations of Consultant, premises owned or used
bythe Consultant. Thisrequirement does not apply to the professional liability insurance required for professional errors· and omISSIOns. Revised: 3/19/02 Page 5 N:\MGR\JHaruyama\Projects\cable
television.renewal\millervaneatonrenewalcontract.wpd
o 11. The Consultant's insurance coverage shall be primary insurance as respects the Town, its officers, officials, employees and volunteers. Anyinsurance or . self-:i:qsurances maintained
by the Town, its officers, employees or volunteers shall be excess of the Consultant's insurance and shall not contribute with it. 111. Any failure to comply with
reporting provisions of the policies shall not affect coverage provided to the Town, its officers, officials, employees or volunteers. . iv. The Consultant's insurance shall apply separately
to each insured against whom a claim is made or suit is brought, except with respect to the liinits of the insurer's liability. C All Coverages: Each insurance poliGY required in this
item shall be endorsed to state that coverage shall not be suspended, voided, cancelled, reduced in coverage or in limits except after thirty (30) days' prior Written notice by certified
mail, return receipt requested, has been given to the Town. Current certification of such insurance shall.be kept onfile at all times during the term ofthis agreement with the Town Clerk.
D; In addition to these policies, Consultant shall have and maintain Workers' Compensation insurance as required byCalifornialaw and shall provide evidence of such policy to the Town
before beginning services under this Agreement. Further, Consultant shall ensure that all subcontractors employed by Consultailt provide the required Workers' Compensation insurance
for their respective employees. 15. Indemnification. The Consultantshall save, keep and hold harmless indemnify and defend the Town its officers, agent, employees and volunteers from
all damages, liabilities, penalties, costs, or expenses in law or equity that mayat any time arise or be·set up because of damages to property· or personal injury· received by reason
of, or in the course of performing work which may be occasioned by a willful or negligent act or omissions ofthe Consultant, or any ofthe Consultant's officers, employees, or agents
or any subconsultant. 16. Waiver. No failure onthe part ofeither party to exercise anyright orremedy hereunder shall operate as a waiver of any other right or remedy that party may have
hereunder, nor does waiver of a breach or default under this Agreement constitute a continuing waiver of a subsequent breach ofthe same or any other provision ofthis Agreement. 17. Governing
Law. This Agreement, regardless of where executed, shall be governed by and construed to the laws of the State of California. Venue for any action regarding this Agreement shall be in
the Superior Court ofthe County of Santa Clara. Revised: 3/19/02 Page 6 N:\MGR\JHaruyama\Projects\cable television renewal\millervaneatonrenewalcontract.wpd
C) . 18. Termination ofAgreement. The Town and the Consultant shall have the rightto terminate this agreement with or without cause by giving not less than fifteen (15) days
written notice of termination. In the event of termination, the Consultant shall deliver to the Town all . plans, files, documents, reports, performedto date by the Consultant. In the
event of such termination, Town shall pay Consultant an amount that bears the same ratio to the maximum contract price as the work delivered to the Town bears to completed services contemplated
under this Agreement, unless such termination. is made for cause, in which event, compensation, if any, shall be adjusted in light of the particular facts and circumstances involved
in such termination. 19. Amendment. No modification, waiver, mutual termination, or amendment ofthis Agreement is effective unless made iIi writing and signed by the Town and the Consultant.
20. Disputes. In any dispute over any aspect of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, including costs of appeal. 21. Entire Agreement.
This Agreement constitutes the complete and exclusive statement ofthe Agreement between the Town and Consultant. No terms, conditions, understandings or agreements purporting to modify
or vary this Agreement, unless hereafter made in writing and signed by the party to be bound, shall be bmding on either party. INWITNESS WHEREOF,the Townand Consultant have executed
this as ofthe date indicated on page one (1). Town Manager Approved as to Form: b&tC-·?-:_··-. Town Attorney ATTEST: Consultant by: Print Name I Attorney,
Miller & Van Eaton, L.L.P. Title Revised: 3/l9/02 Page 7 N:\MGRVHaruyama\cable television renewal\millervaneatonrenewalcontract.wpd
. , DATE: /) ,. _/COUNCIL AGENDA REPORT February 19, 2002 /) MEETING DATE: 2/19/02 miM NO. \1 . TO: FROM: SUBJECT: MAYOR AND TOWN COUNCIL . ..DJIoo . . DEBRA FIGONE, TOWN MANAGER
'1 CABLETELEVISION FRANCHISERENEWAL NEGOTIATION PROCESS A. CONSIDER REPORT ON CABLE TELEVISION FRANCHISE RENEWAL NEGOTIATION PROCESS B. CONSIDER ADOPTING A RESOLUTION AUTHORIZJNG
THE TOWNMANAGERTO ENTERINTOANDEXECUTEA CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES WITH MILLER AND VAN EATON. RECOMMENDATION: 1. 2. Consider report on cable television
franchise renewal negotiation process; Consider adopting a resolution authorizing Town Manager to enter into and execute a contract for cable television franchise renewal consulting
services with Miller and Van Eaton. BACKGROUND: The Los Gatos cable system was onginally constructed in 1969, and was comprised of three (3) separate franchises granted by the Town ofLos
Gatos, the City ofMonte Sereno, and the County of Santa Clara. The operator ofthe Los Gatos,Gatos,cable system was Westinghouse Broadcasting and Cable, Inc. (Group W), a subsidiary of
Westinghouse Electric Corporation. In 1983, Group W sold its system to Hearst Cablevision (Hearst). OnMarch 31, 1983, the Town approved the transfer ofthe . franchise from Group W to
Hearst, and simultaneously granted an ofthe franchise for ten (10) years from the effective date ofthe transfer, thereby extending the franchise to March 31, 1993..
In January 1990, Brenmor Cable Partners, L.P. (Brenmor) purchased Hearst. The Town approved the transfer of the franchise from Hearst to Brenmor, and simultaneously granted another ten
(10) year extension of the franchise, through March 31, 2003. Brenmor subsequently transferred the system to Tele-Communications Incorporation (TCl), and in 1999, TCl transferred the
franchise to . 'I . PREPARED BY: JENNY HARUYAMA, ADMINISTRATIVE ANAL N:\MGRVHaru . Reviewed by: ttomey ..x.
Finance Revised: 2/14/02 2:18 pm Refonnatted: 7/14/99 ATTACHMENT 3
PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES February 19,2002 AT&T Broadband
(AT&T). Because no further extensions were granted by way of these transactions, the Town's cable television franchise agreement with AT&T will expire on March 3 1, 2003. As a result
of the various transfers and extensions, the Town has never conducted cable franchise renewal proceedings. The Town's 2003 cable television renewal process will be the Town's first official
cable renewal. DISCUSSION: The cable television franchise renewal process presents local government with an opportunity to enhance its public comrtlunications infrastructure and to advance
the quality of life for its community,. The outcome ofthe renewal processnot only helps to identify and meet a community's unique cable-related needs, but can potentially influence and
improve its future communication abilities via voice, video and data. The following is a briefsummary ofthe required cable television· renewal processes. Cable Television Franchise Renewal
Proceedings Cable television renewal proceedings can be conducted one of two ways: formally or informally.. Theformalrenewalprocessisinitiated-either-byth-e-c-abh;operatorwh<Ysul5milszfWfitteffriofic
e·fo the franchising authority requesting the commencement of a formal renewal proceeding, or by the franchise authority who initiates the proceedings on its own.. The first stage ofthe
formal renewal process involves the identification of cable-related needs. This process is designed to allow the public and franchising authority an opportunity to identify future cable-related
communityneeds and interests and review the past performance ofthe cable operator. The ascertainment ofthese needs can be accomplished through a varietyof tools, such as public hearings,
surveys, focus groups or interviews. The second stage of the renewal process involves the submission of a renewal proposal upon the request ofthe franchise franchise authority or upon
the initiative ofthe cable operator. The franchise authority cannot require the submission of a formal proposal prior to the completion of the ascertainment proceedings. Once the proposal
is received by the franchise authority, it must decide to renew or preliminarily deny the proposal within four (4) months. If the renewal proposal is denied, the cable operator Cfui
request administrative proceedings, or the proceedings can begin upon the franchise authority's own initiative. Ifa franchise authority decides to deny the renewal, it must be based
on one (1) offour (4) f'lctors: ( •• If the cable operator has not complied with the material terms of the franchise and applicable law. If the quality of the cable operator's service
has not been reasonable in light of the community's needs.
PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER fNTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTfNG SERVICES February 19, 2002 • If the
cable operator does not have the financial, legal and technical ability to provide the services, facilities and equipment as set forth in the cable operator's proposal. • If the cable
operator's proposal is not reasonable in meeting the future cable-related community needs and interests. Ifthe franchise authority denies the renewal, the cable operator
must file an appeal in federal or state court within one hundred twenty (120) days of the' notice of the decision. The informal process, which is how most franchises ate renewed, can
be conducted at any time, Under this process, the franchising authority does not lose its ability to deny the proposed renewal. Once a successful franchise renewal has been negotiated,
the franchising authoritY must notify the public and provide an opportunity to comment on the renewal before it is finally granted. The informal and formal processes can and should workin
tandem. Under the informal process, a franchise authority can choose to incorporate all, some or noneofthe requirements under the formal process. After consulting with a reputable cable
television legal firm, staff recommends that the Townproceed with the informal renewal process, which is how most franchises are renewed. This process should include an assessment of
the community's needs and an examination cable operator's past performance. By taking these steps, the Town will be able to obtain the infQrmation it needs to be successful
at the negotiating table, and will be in a position to comply with formal proceedings if bargaining fails. Duration of Cable Television Franchise Renewal Negotiations Cable television
franchise renewal negotiations are highly technical, labor intensive, and require special expertise due to the complex laws that govern the process and the many opportunities to enhance
services to the community. Understanding this, the Townprovided funding in the FY200 12002 Operating Budget to support the upcoming negotiations. As the Council is aware, during the
months ofAugust 2001-November 2001, Town staffexplored an opportunity to extend its cable television franchise agreement withAT&T in exchange for a video production system. Unfortunately,
after four months of discussion, the Town and AT&T were unable to come to an agreement regarding the terms of the proposed extension. As a result, the Town is now prepared to enter into
official cable television franchise renewal negotiati2ns with AT&T. , The cable television franchise renewal process can take between twelve (12) months to three (3) years to complete.
However, the average cable television franchise renewal process is eighteen (18) months. Given the Town's time frame to conduct and complete its cable television franchise renewal process,
staff, with the assistance of a cable television legal.fir'm, has developed' an ambitious time line (Attachment 1) to complete the renewal process within twelve .e12) months.
. , PAGE 4 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORlZE TOWN MANAGER TO ENTER fNTO AND EXECUTE .CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTfNG SERVICES February 19,2002 However,
it is important to note that due to the lengthy, and sometimes unpredictable nature of the renewal process, it may be necessary to extend the cable television franchise agreement if
an agreement has not been reached by the March 31, 2003 expiration date. This is not an uncommon occurrence, and if an extension is warranted, staff will advise Town Council accordingly.
It is important to note that in'December 2001 , AT&T announced its plan to merge with Comcast Corporation(Comcast). The merger would result in a new company, AT&T Comcast, making it
one of the nation's largest broadband services network. AT&T Comcast would serve more than 22 million subscribers. The merger is to federal regulatory review by the Securities
Exchange Commission (SEC) and the FCC, approval by both companies' shareholders, and other legal conditions. Ifthe merger meets federal regulatory criteria and is approved by AT&T and
Comcast shareholders, the merger will require the Town Council's consent as required bythe Los Gatos Cable Television Franchise Ordinance. The merger is expected to be complete by the
end of 2002, and should not adversely impact the Town's cable television franchise renewal process, although it may be a factor that leads to an'extension beyond the March 31, 2003 expiration
date: Town costs associated withfhe transfer ofthe franchise will be recouped through the Town's nonrefundable $25,000 transfer application fee required by the Los Gatos Cable Television
Franchise Ordinance. Cable Television Franchise Renewal Opportunities and Limitations Cable Television Franchise Renewal Opportunities The cable television franchise renewal process
presents a number of opportunities for local government to enhance its existing public infrastructure and plan for future communication needs. Adequate planning and preparation is important
for the renewal process as many cable television franchise terms range between ten (10) and fifteen (15) years, although some have been as short as five (5) years. The renewal process
helps municipalities ensure that the existing cable system is upgraded appropriately; require channels to be set aside for public, educational and government access; request support
for those channels (studios and equipment); and require that the cable operator provide an institutional network (I-Net), which can serve as a modern telecommunications/communications
link for schools, libraries and government. Although the Town currently has an I-Net that connects all of its facilities together, the Town would still explore the opportunity to expand
its existing I-Net to schools or other appropriate government institutions. The cable television franchise renewal process can also help a municipality ensure that all parts of the community
have access to cable service, and that any future upgrades are done within a reasonable period of time. Los Gatos is one of few communities served by AT&T that has an
" f"""'\ ! ) PAGE 5 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES February 19,
2002 upgraded system which provides cable modem internet service. During the renewal'process, staff will endeavor to work with AT&T to ensure future upgrades of Los Gatos system, keeping
it technologically viable. In addition, franchise duration tenus, customer service standards, channel capacity requirements, franchise fee requirements, and procedures for reviewing
cable operator performance can be established during the renewal process. It is important to underscore that the cable operator cannot "pass through" all ofthe additional ancIJor enhanced
service requests as a result of the renewal process. Cable operators are only entitled to pass through the increase in its external costs to subscribers, and although some franchise
requirements, such as PEG (Public, Educational and Govern:ment) access and I-Nets are considered external costs, not all are. All renewal· franchise requirements do not necessarily result
in rate increases, depending in part on what was required under the prior franchise. In several recent with other cities, for example, operators have agreed that only
a small part of the total renewal franchise requirerp.ents are eligible for rate pass-through under Federal Communications Cortunission (FCC) rules.. Cable Television Franchise Renewal
Limitations· '.1' However, there are. some things that a municipality cannot require through the cable television franchise renewal process. Examples of these restrictions include the
requirement of specific television type oftransmission technologies used by the cable operator. Additionally, franchise authorities cannot mandate service rates
or franchise fee percentage requirements, other than what is required by the federal government. The franchise fee is currently 5%. It is anticipated that the Town will receive approximately
$245,000 annually in franchise fee revenue for FY 2002-'2003. Cable Television Franchise Renewal Legal and Consulting Services Cable Television Franchise Renewal Legal and Consulting
Contract To negotiate and bring forward a comprehensive and effective cable television franchise agreement for Council consideration, the Town will need to retain a law firm that specializes,
in cable television/telecommunication issues. The Towil Manager's Office has identified Miller;.and Van Eaton as a candidate to handle the Town's cable-related legal and consulting services
as 4escribed above. Miller and Van Eaton has a depth of expertise representing on telecommunications issues, including cable television franchise renewals
and ordinances, public right-of-way (POW) leases, cellulartowers, I-Nets and enforcement matters. Present and past clients of Miller and VanEaton include the cities of Santa Clara, Mountain
View, Campbell, Los Altos, Oakland, Union City, Palo Alto, Alameda and San Jose.
PAGE 6 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONS ULTING SERVICES February 19, 2002 Cable Television
Franchise Renewal Contract Services The types of services required for the cable television franchise renewal process will include a number oftasks such as an asseSsment ofcable-related
community needs; a pastperfonnance review of the cable operator; a teclmical review of the cable operator; legal assistance regarding cable television franchise issues; development of
a new cable television franchise agreement; I-Net planning if applicable; development ofa negotiation strategy and assistance with negotiations; and assistance in preparing an updated
cable television ordinance. , One ofthe most important services required for the cable television franchiserenewal process is the assessment orcable-related community needs; The needs
assessment lays the foundation for the Town's negotiating strategy, and helps to ensure that that the community's needs are addressed by the cable operator. Should the Town find that
the cable operator's proposal is not reasonable in meeting the future cable-related community needs and interests, it has legal grounds to deny the cable renewal. CAs noted in the attached
contract, Miller and Van Eaton will be using the serVices of The Buske Group to perfonn a cable-related needs assessment. The Buske Group, with oversight and coordination by Town staff,
will identify key organizations and individuals outside of the local government who may be affected by the future design and services ofthe cable system..Such needs and interests may
include potential special uses ofthe cable system as needed by stakeholders such as businesses, schools, non-profit organizations, and other similar institutions. Telephone surveys,
focus groups, and questionnaires will be used to identify the proposed uses ofthe cable system and cable-related needs of the community. It is important to note that if the stakeholders
have limited availability, or are unable to efficiently articulate their needs, the renewal time line may be impacted. However, Miller and Van Eaton, The Buske Group, and staffwill.make
every effort to work with the stakeholders' schedule to help identify their cable-related concerns and needs. Cable Television Franchise Renewal Contract Cost Approximately $100,000
was included the FY 2001-2002 Operating Budget for cable television franchise renewal legal and consultant services. The project cost estimate for the renewal process ,as outlined in
the attached proposal (Attachment 2) is between $87,000 -$'125,000, and is anticipated not to exceed $100,000. Additional expenses, including travel, photocopies, telephone calls, and
computerized legal research expenses are estimated to be no more than $5,000. Should unforseen issues or protracted negotiations increase the cost ofthe contract, additional funding
is available in the Town Manager's Contingency Fund.
" (3 PAGE 7 MAYOR AND TOWN COUNCIL SUBJECT: AUTHORIZE TOWN MANAGER TO ENTER INTO AND EXECUTE CONTRACT FOR CABLE TELEVISION FRANCHISE RENEWAL CONSULTING SERVICES February 19,2002 FISCAL
IMPACT: Funding in the amount of$100,000 hasbeen included in the FY 2001-2002 Operating Budget tor the cable television franchise renewal process. Funding for additional expenses {travel,
telephone, and/or additional legal research)is available through the Town Manager's Contingency Fund, and are estimated not to exceed $5,000. Ifunforseen issues or protracted negotiations
increase the cost ofthe contract, additional funding is also available through the Town Manager's Contingency Fund. Attachments Attachment I: Proposed Cable Television Franchise Renewal
Time Line and Process· Attachment 2: Proposal for Cable Television Franchise Legal and Consulting Services (Miller and' VahEaton) Attachment 3: Resolution Authorizing the Town Manager
to Enter into and Execute a Contral;:t for Cable Television Franchise Renewal Consulting Services with Miller and Van Eaton. Distribution List Town Department Heads George Sampson, KCAT
.