Loading...
Ord 1809 - AMENDING CHAPTER 9 OF THE TOWN CODE RELATING TO CABLE TELEVISIONORDINANCE 1809 AN ORDINANCE OF THE TOWN OF LOS GATOS AMENDING CHAPTER 9 OF THE TOWN CODE RELATING TO CABLE TELEVISION THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES HEREBY ORDAIN: SECTION I Section 9.20.130 of Article II of Chapter 9 of the Town Code is hereby amended to read as follows: Section 9.20.130 - Gross revenues. "Gross revenues" means all cash, credits, property of any kind or nature or other consideration derived directly or indirectly by a Franchisee, its affiliates, subsidiaries, parent, and any other person or entity in which the Franchisee has a financial interest or which has a financial interest in the Franchisee, arising from or attributable to operation of the Cable Television System within the franchise area including, but not limited to: (1) revenue from all services provided on the Subscriber Network and Institutional Network (including Leased Access fees); (2) advertising revenues; (3) revenue from the use of studio facilities, production equipment and personnel; (4) revenue from installation, connection and reinstatement and the provision of subscriber and other services; and (S) the sale, exchange or cable cast for a value of any programming developed for community use or institutional users. "Gross Revenues" shall include, valued at retail price levels, the value of any goods, services or other remuneration in non - monetary form received by the Franchisee or others described above in consideration for performance by a Franchisee or others described above of any advertising or other service in connection with the Cable Television System. "Gross Revenues" shall not include: (1) any taxes or services furnished by the Franchisee which are imposed directly upon any Subscriber or User by the United States, State of California or local agency and collected by the Franchisee on behalf of the government, or any copyright or other fee collected on behalf of the Federal Copyright Tribunal or similar or successor entity; (2) revenue received directly from the Franchisee by an affiliate, subsidiary or parent of the Franchisee or any other person or entity in which the Franchisee has a financial interest in the Franchisee, when the revenue received has already been included in reported Gross Revenue as received by the Franchisee; (3) revenue received for refundable deposits. 1 SECTION II Section 9.30.030(b) of Article III of Chapter 9 of the Town Code is hereby amended to read as follows: (b) Ownership or control. The Grantee shall promptly notify the Grantor of, and obtain the express written consent from grantor for: (1) any change in, or transfer of, or acquisition by, any other party of any ownership interest in the Grantee, including changes of interest in any limited partnership interests or lower tier limited partnership interests. (2) sale, exchange or transfer of any system assets having a value in excess of fifty thousand dollars ($50,000) not in the normal course of business. All asset sales during any twelve (12) consecutive months shall be aggregated in determining the value of assets sold under this section. Section 9.30.030(g) of Article III of Chapter 9 of the Town Code is hereby added to read as follows: (g) Any request for a transfer of ownership or control shall be accompanied by a nonrefundable transfer application fee of twenty -five thousand dollars ($25,000) which shall not be in lieu of any franchise fee hereunder. SECTION III Section 9.30.045(a) of Article III of Chapter 9 of the Town Code is hereby amended to read as follows: (a) Annual Franchise Payment. Grantee shall pay to the Town five percent (5 0 1o) of its gross annual revenues derived from all operations within the Town of Los Gatos as a franchise fee. Franchise payments required hereunder shall be in lieu of any business license, occupation, tax or similar levy. Section 9.30.045(d) of Article III of Chapter 9 of the Town Code is hereby amended to read as follows: (d) Payments due the Grantor under this provision shall be computed quarterly, for the preceding quarter, as of March 31st, June 30th, September 30th, and December 31st. Each quarterly payment shall be due and payable no later than thirty (30) days after the dates listed in the previous sentence. Each payment shall be accompanied by a brief report showing the basis for the computation and such other relevant facts as may be required by the Grantor, provided that any adjustment resulting from the fourth quarterly report shall be reflected in the payment next due. Grantee shall include certification with each quarterly franchise fee payment, that the payment has been calculated on all revenues received in accordance with Section 2 9.20.130 of the Town Code and in accordance with any additional provisions of the franchise. Section 9.30.045(e) is hereby added to the Code to read as follows: (e) Grantee shall, within ninety (90) days after the expiration of each and every calendar year or portion thereof during which any franchise hereunder is in effect, file with the Grantor a statement prepared by an independent, duly licensed, California certified public accountant, setting forth, and certifying the accuracy of, the total gross revenues received by the respective Grantee hereunder for such calendar year or portion thereof. SECTION IV Section 9.30.050(a)(6) of Article III of Chapter 9 of the Town Code is hereby added to read as follows: (a)(6) If the Grantee fails within ten (10) days of such to notify the Town of any transfer of ownership, or entity restructuring, including any change of ownership or any increased or decreased ownership of any general partner or limited partner directly or indirectly owning an interest in Grantee. Section 9.30.050(a)(7) of Article III of Chapter 9 of the Town Code is hereby added to read as follows: (a)(7) If Grantee fails to maintain a level of subscriber complaints below three percent (3 %) in any calendar month, as defined in the franchise Agreement. SECTION V Section 9.40.055 of Article IV of Chapter 9 of the Town Code is hereby amended to read as follows: Section 9.40.055 - Rate change procedure. Where Grantor shall have the right to regulate rates and charges of Grantee, the following procedures shall apply unless otherwise provided in the Franchise Agreement: (a) Within forty -five (45) days of the filing of a completed petition for rate change (defined herein as a petition containing all information required pursuant to section 9.40.055(e)), the Grantor shall hold an appropriate public hearing to consider the proposed rate change, at which hearing all persons desiring to be heard, including the Grantee, shall be heard on any matter, including but not limited to the performance of the franchise, the Grantee's services, and the proposed new rates. 3 (b) Upon notice of any public hearing, the Grantee shall notify its subscribers of the time, place, and subject matter of the public hearing by announcement on a least two channels of its system between the hours of seven p.m. and nine p.m., for at least five (5) consecutive days prior to the hearing. In addition, notice of any public hearing shall be published in a newspaper of general circulation in the Town of Los Gatos at least once during the week prior to the hearing. (c) Within thirty (30) days after said hearing, the Grantor shall render a written decision on the Grantee's petition, either accepting, rejecting, modifying or deferring the same and reciting the basis of its decision. The Grantor shall consider, but not be limited to, the following factors in approving or disapproving the petition: (1) Grantee's substantial fulfillment of all material requirements of the franchise. (2) Quality of signal and service, as indicated by the number and type of service complaints, Grantee's response to complaints, and the result of periodic system performance tests and the annual reviews specified in section 9.40.035. (3) Channel capacity and prevailing rates for comparable services in other cable systems of similar size and complexity, relevant demographic characteristics and franchise terms and conditions. (4) Historical cash flow generated from system and historical rate of return on Grantee's equity, as compared to businesses of equivalent, lower or higher risk. For the purposes of this ordinance, the rate of return on equity shall be defined as the net, after -tax profit divided by the equity portion of Grantee's investment in tangible assets. The investment shall be defined as the cumulative cost of tangible assets such as plant, property and equipment, less the cumulative depreciation charges, plus working capital, which shall be defined as equivalent to three months total operating expenses. The rate of return shall be calculated on a cumulative basis for all system revenues and costs, derived from the franchise area, including services such as pay - television that may be exempt from local rate regulation. Upon request of Grantor, Grantee shall promptly provide, from the Grantee, its parent company and any subsidiary company, all information as shall be reasonably necessary to determine system financial information. (5) Performance of Grantee in introducing new services and expanding the cable system's capability, as compared to other systems of similar size and complexity, relevant demographic characteristics and franchise terms and conditions. 4 (6) The original cost of the system less depreciation determined on a straight line, actual life basis. (d) If the Grantor fails to render a written decision either accepting, rejecting, modifying or deferring Grantee's petition within seventy -five (75) days of the proper submission of Grantee's completed petition pursuant to subsection (c) above, the Grantee shall thereafter be entitled to put its proposed new rates into effect. (e) The Grantee's petition for a rate increase shall include, but not be limited to, the following financial reports, which shall reflect the operations of the system: (1) Balance Sheet for current year and previous five (5) years; (2) Income Statement for current year and previous five (5) years; (3) Statement of Sources an Application of Funds; (4) Detailed Supporting Schedules of Expenses, Income, Assets, Liabilities, Capital Expenditures and other items as may be required; and (5) Statement of Current and Projected Subscribers and Penetration. The Grantee's accounting records applicable to the system shall be available for inspection by the Grantor at all reasonable times. The documents listed above shall be prepared in accordance with generally accepted accounting principles consistently applied, and shall include sufficient detail and /or footnotes as may be necessary to provide the Grantor with the information needed to make accurate determinations as to the financial condition of the system. Annual financial statements shall be audited by an independent Certified Public Accountant and shall be certified as accurate by an officer of Grantee. (f) Schedule of Rates. Grantee shall maintain and file with the Grantor a complete schedule of subscriber rates and nonrecurring charges and deposits, including all fees and charges for services not subject to approval by the Grantor. (g) Disconnections. There shall be no charge for disconnection from the system. However, if a subscriber has failed to pay properly due monthly fees or if a subscriber disconnects for seasonal periods, the Grantee may require, in addition to full payment of any delinquent fees, a reasonable fee for reconnection. (h) No Consideration Beyond Schedule. The Grantee shall receive no consideration whatsoever for or in connection with its provision of service to its subscribers other than as set forth in this section or as filed with and /or approved by the Grantor. 5 (i) Submission of Rate Increase Requests. Where the provisions of this section 9.40.055 are applicable, and except as may be expressly provided to the contrary in the Franchise Agreement, Grantee shall not submit a request for rate increases earlier than twelve (12) months after the prior request, if the request has been granted. SECTION VI Section 9.60.010 of Article VI of Chapter 9 of the Town Code is hereby amended to read as follows: Section 9.60.010 - Reports - Requirements. On or before April 30th of each year during the term of a Franchise Agreement, and within thirty (30) days following expiration or termination of the franchise, all franchisees shall submit a written report to the Town Manager, in a form reasonably satisfactory to the Town Manager, which shall include the following information regarding the previous calendar year: (a) A summary of activities in the development of the system, including, but not limited to, services begun or discontinued, total number of subscribers, homes passed, subscribers added or discontinued and institutional network development and user participation, all in accordance with the provisions of this Chapter and the Franchise Agreement. (b) A list of all service related complaints received and system "downtime" experienced during the reporting period. All such submitted data shall include service request disposition and response time. For the purpose of this provision, certified copies of the "complaint" log book reflecting all such incidents will be required. Said report shall include a summary by category of complaints. (c) A financial statement verified by an officer of Grantee showing by each category the gross annual receipts of Grantee for the prior calendar year applicable to its business conducted pursuant to the franchise. Said financial statement shall be in sufficient detail to enable the Town Manager to determine the accuracy of the franchise fee paid by Grantee. In the event that a Grantee shall be a publicly held company or shall otherwise prepare for public distribution certified annual financial statements, a copy of said certified financial statement shall be provided to Town with the general financial statement. Said financial statement will include certification by an independent, duly licensed, California certified public accountant that franchise payments are based on all revenues collected, as defined within the franchise area in section 9.20.130. (d) A current statement of construction costs by category. 6 (e) A copy of Grantee's annual report, if any, for the most recent period for which it has been prepared. (f) A full schedule of all subscriber and user rates, and all fees and charges for all cable services provided. (g) A report on any system expansions having occurred during the preceding calendar year and, if the Franchise Agreement so requires, a report as to the status and timeliness of any improvements required by the Franchise Agreement to be made by Grantee and any other reports required by the Franchise Agreement. (h) A full schedule of all subscriber and user rates, advertising rates, leasing rates, fees and charges for all cable services provided under the Franchise Agreement. (i) The reports submitted pursuant to this section shall be available for public inspection in the office of the Town Clerk during Town business hours. 0) Franchisee shall file simultaneously with the Town a copy of any document franchisee files with the FCC or any other state or federal regulatory agency having jurisdiction over cable television and relating to the franchise area and any document filed with the Securities and Exchange Commission required in connection with the sale, transfer or merger of franchisee, its stock or assets, if it relates to the franchise area. (k) To the extent that the Town shall in its reasonable judgment determine that it does not have accurate information to assess whether or not the franchise fee has been computed correctly, or to determine whether performance or engineering requirements of a franchise under this Chapter or a Franchise Agreement have been complied with, the Town may request such information from franchisee as shall be reasonably necessary to make such determination. All books and records of franchisee with respect to franchisee's costs of operating and its determination of the franchise fee payable pursuant to this Chapter shall be kept in accordance with generally accepted accounting principles. (1) The reports required to be filed by this section shall be examined by the Town Manager for compliance with the requirements of the Franchise Agreement in this chapter. The Town Manager shall inform the franchisee in writing within a reasonable time after receipt of the reports required to be submitted in accordance with this section if the Town Manager determines same are not in compliance with those requirements. A franchisee shall thereafter, within a reasonable time of receipt of said notification from the Town manager, submit amended reports to the Town Manager. 7 (m) A franchisee shall be responsible for all subscriber and user complaint resolution and shall maintain a written record or "log" listing the date and time of customer complaints, describing the nature of the complaints and when and what actions were taken by the franchise in response thereto. The log shall be kept at the franchisee's local office, reflecting the operations to date for a period of at least three years, and shall be available for inspection by the Town and the general public during regular business hours at the franchisee's local office. (n) An annual survey of subscribers which determines their programming preferences and comments on the quality of the signal and service. SECTION VII Section 9.70.010(1) of Article VII of Chapter 9 of the Town Code is hereby amended to read as follows: (1) Assess against the Grantee the following monetary sanctions, or the maximum sanctions allowed by state law, whichever are greater: (A) If the system has less than five thousand (5,000) subscribers, five hundred dollars ($500) for each day the violation continues. (B) If the system has more than five thousand (5,000) subscribers, one thousand dollars ($1,000) for each day the violation continues. The aforesaid assessments shall first be levied against the security fund, hereinabove provided, and collected by Grantor the amount of such assessment shall be deemed, without proof, to represent liquidation of damages actually sustained by Grantor by reason of Grantee's failure to perform. Such assessment shall not constitute a waiver by the Grantor of any other right or remedy it may have under the franchise or under applicable law, including without limitation, its right to recover from Grantee such additional damages, losses, costs and expenses, including actual attorney fees, as may have been suffered or incurred by Grantor by reason of or arising out of such breach of the franchise. This provision for assessment of damages is intended by the parties to be separate and apart from Grantor's right to enforce the provisions of the Construction and Performance Bonds provided for in section 9.50.010, and is intended to provide compensation to Grantor for actual damages. Section 9.70.010(4) of Article VII of Chapter 9 of the Town Code is hereby amended to read as follows: (4) Require Grantee to forfeit the security fund given pursuant to Section 9.50.015 and terminate the franchise pursuant to the procedures under Section 9.30.050(b). Etl SECTION VIII This ordinance takes effect 30 days after it is adopted. Within 15 days after this ordinance is adopted the Town Clerk shall cause it to be published once in a newspaper of general circulation published and circulated in the Town. This ordinance was introduced at a regular meeting of the Town Council of the Town of Los Gatos on December 18, 1989 and adopted by the following vote as an ordinance of the Town of Los Gatos at a meeting of the Town Council of the Town of Los Gatos on January 2, 1990. COUNCIL MEMBERS: AYES: Joanne Benjamin, Robert L. Hamilton, Brent N. Ventura, Mayor Thomas J. Ferrito NAYES: None ABSENT: Eric D. Carlson ABSTAIN: None SIGNED: MAYOR OF TOWN OF LOS GATOS LOS GATOS, CALIFORNIA C. ATTEST: CLERK OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA u MGR121889.0 Z