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HomeMy WebLinkAboutRes 92-104 Palmer Cablevision's Transfer of Ownership INTEROFFICE MEMORANDUM CITY OF PALM DESERT DATE : NOVEMBER 12 , 1992 TO: CITY MANAGER, HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL FROM: ASSISTANT CITY MANAGER SUBJECT: PALMER CABLEVISION' S REQUEST FOR TRANSFER OF OWNERSHIP Recommendation: That the City Council authorize the transfer of the City' s Cable Franchise from Palmer Cablevision to Colony Communication, Inc . , with the conditions as outlined in this report . Background: Palmer Cablevision has recently requested a transfer of ownership of the City' s cable television franchise agreement to Colony Communication. The company seeking approval to be the new franchise holder is the firm who has been managing Palmer for the past year and a half. The firm is Colony Communications, Inc . out of Providence, Rhode Island, which is a division of the parent company, Providence Journal . In accordance with the transfer provisions of the franchise agreement and the City' s cable ordinance (Ordinance 318 ) , Palmer Cablevision is required to submit certain information on Colony Communications to enable the City to evaluate the new operator. In addition to the evaluation of Colony Communications that the City has undertaken, there are a few remaining franchise compliance issues that need to be resolved with Palmer before we can recommend granting this transfer of ownership. We feel that these issues need to be addressed to the satisfaction of the City prior to a transfer or should be made requirements of a conditional transfer. The first item is the issue of rate regulation. The initial regulations promulgated under the 1984 Cable Act prevented the City from regulating Palmer' s cable rates for the basic service package that is in the franchise agreement . However, since the Federal Communications Commission (FCC) approved revised standards for effective competition in 1991 , the City' s position is that the City has regained the right to regulate cable rates . As soon as the revised FCC regulations became effective, we met with representatives of Palmer Cablevision to discuss the new standards for effective competition. General Manager Steve Merritt agreed at the time that given these new standards, they were regulated. Soon thereafter, however, the City received a letter from Palmer' s attorney stating that they, in fact, believe they should not be regulated by the City. The City' s position continues to be that since the FCC issued the revised standards, Palmer Cablevision is not free to increase rates unless it receives approval in accordance with the franchise agreement . Now that the 1992 Cable Act ( S. 12 ) has received approval, we will have even more latitude in enforcing rate regulation, and securing proper consumer protection for our cable television subscribers . The Federal Communications Commission (FCC) has six months in which to develop the specific provisions to cover these areas . The second issue involves whether Palmer is authorized to offer "Bulk Service Agreements" , which Palmer claims the City has no jurisdiction over and which exempts these agreements from the terms of the franchise agreement . These agreements are being negotiated with the owners of apartments of ten or more units and country clubs . Palmer' s attorney contends in a letter to the City that these volume discount programs are exempt from regulation since these agreements are between the Cable Company and private owners of multi-unit dwellings . The City feels that such bulk service agreements have to comply with provisions of Ordinance 318 and the franchise agreement . Thirdly, we disapprove of the manner in which Palmer has implemented a two-month billing system, which generates a lot of complaints to the City and causes accounting frustrations for many of their cable television subscribers. The late charge Palmer charges its customers is also unacceptable, and needs to be resolved to our satisfaction. Finally, per Section 14 . 01 . 040 (b) Transfer of Ownership or Control (a) Transfer of Franchise and (b) Ownership or Control of Ordinance 318 , items 1-3 , Palmer is to provide financial statements, personnel records, balance sheets, etc . , before such a transfer is considered for approval . The City has requested this information, and was submitted to our City Council members, City Manager, our Attorney, and City staff . Staff and our Attorney have both reviewed this information, and meets with our approval . However, we still feel adamant about resolving the other remaining franchise compliance issues for this reason, we recommend that the approval of the requested transfer be made subject to the following conditions : 1 . Colony shall execute and become a party to the franchise agreement . 2 . Colony shall enter into an agreement with the City providing for the following: 2 a. Colony, pursuant to its voluntary offer to the City, shall not increase its basic cable services subscriber rate by more than 5% per year until the new FCC rate regulations become effective . For the purposes of this 5% limit, the basic services rate shall consist of all charges billed to the subscriber for such services ( including but not limited to franchise fees) . In consideration for Colony' s agreement to limit any annual increases to 5% until the new FCC regulations become effective, Palmer will not be required to conduct the signal availability study agreed to in our meeting of July 24, 1992 . b. All bulk service contracts shall be subject to and comply with the provisions of the franchise agreement and Ordinance No. 318 . c . Late payment charges shall be revised by Colony to be similar to and consistent with the late payment charges billed by other utilities in the City. -11L Carlos L. Ortega Assistant City Manager CLO:RLJ:mh ---(il • a. Colony, pursuant to its voluntary offer to the City, shall not increase its basic cable services subscriber rate by more than 5% per year until the new FCC rate regulations become effective . For the purposes of this 5% limit, the basic services rate shall consist of all charges billed to the subscriber for such services ( including but not limited to franchise fees) . In consideration for Colony' s agreement to limit any annual increases to 5% until the new FCC regulations become effective, Palmer will not be required to conduct the signal availability study agreed to in our meeting of July 24 , 1992 . b. All bulk service contracts shall be subject to and comply with the provisions of the franchise agreement and Ordinance No. 318 . c . Late payment charges shall be revised by Colony to be similar to and consistent with the late payment charges billed by other utilities in the City. kZ-4l Carlos L. Ortega Assistant City Manager CLO:RLJ:mh CITY COUNCIL, ACTION: • APPROVED DENIED RECEIVED OTHER RFsolution No . 92-104 adopted, amended to delete 2b § c,_ but add h the City will continue to work with the company to try MEETING uY4 1_; ���/� and develop an equitable service AYES: contract offering for all citizens NOES: r) _nAJLL-10! ABSENT: — - - ABSTAIN: VERIFIED BY: Original on File itch City Clerk' s Office 3