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Home My WebLink About3 - State Video FranchisesCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 3 May 8, 2007 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Robin Clauson, City Attorney ext. 3131, rclauson @city.newport- beach.ca.us Aaron C. Harp, Assistant City Attorney ext. 3131, aharp @city.newport- beach.ca.us SUBJECT: ADDING CHAPTER 5.43 TO TITLE 5 OF THE NEWPORT BEACH MUNICIPAL CODE PERTAINING TO STATE VIDEO FRANCHISES ISSUE: Should the City Council adopt an ordinance which implements the Digital Infrastructure and Video Competition Act of 2006? RECOMMENDATION: Introduce Ordinance No. 2007- _ and pass to second reading. DISCUSSION: The Digital Infrastructure and Video Competition Act of 2006 (AB 2987) authorizes the California Public Utilities Commission ( "PUC ") to issue statewide franchises to, among others, telephone companies wishing to enter the video business. Much of AB 2987 is self implementing, however, to ensure collection of the five percent (5 %) franchise fee, the one percent (1 %) PEG fee, and to enforce the state- mandated customer service standards, the City must undertake certain formal adoptions pursuant to the statute. One of the most important provisions of the proposed ordinance is the imposition of a one percent (1 %) Public, Educational and Government ("PEG") fee which can be collected in addition to the five percent (5 %) franchise fee. AB 2987 has not changed existing law which allows. the entirety of the franchise fee to be utilized for general fund purposes. However, the one percent (1 %) PEG fee can only be utilized for PEG - related purposes in a manner consistent with federal and state law and should be treated as a segregated fund with use restrictions. Upon the effective date of the Ordinance, the statewide franchisee will be required to collect the one percent (1 %) PEG fee in addition to the five percent (5 %) franchise fee, and may, and probably will, list it as a line item Adding Chapter 5.43 to Tile 5 of the Newport Beach Municipal Code May 8, 2007 Page 2 upon the subscriber's bill. Unless the City Council adopts an ordinance imposing the one percent (1 %) PEG fee, it will not be collected by the statewide franchisee. Environmental Review: This is not a project under CEQA. Public Notice: Public notice was provided in accordance with all applicable laws. Prepared by: (: !/t-- Aaron. Harp, Assistant City Attorney Attachments: Ordinance Submitted by: Robin Clauson, City Attorney AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, ADDING CHAPTER 5.43 TO TITLE 5 OF THE NEWPORT BEACH MUNICIPAL CODE PERTAINING TO STATE VIDEO FRANCHISES NOW THEREFORE, the City Council of the City of Newport Beach, California, HEREBY ORDAINS as follows: SECTION 1: Chapter 5.43 of Newport Beach Municipal Code is hereby added to read as follows: Sections: 5.43.010 Definitions. 5.43.020 Purpose; Authority. 5.43.030 State Video Franchise Fees. 5.43.040 Audit Authority. 5.43.050 Customer Service Penalties Under State Franchises. 5.43.060 City Response to State Franchise Applications. 5.43.010 Definitions A. For the purposes of this chapter, the following words, terns, phrases, and their derivations have the meanings given herein. Terms defined in the Digital Infrastructure and Video Competition Act of 2006 shall have the same meanings herein unless expressly defined otherwise. When not inconsistent with the context, words used in the present tense include the future tense, and words in the singular number include the plural number. "City" means the City of Newport Beach. "Gross Revenue" shall have the definition set forth in California Public Utilities Code section 5860. "PEG" means Public, Educational and Government. "PUC" means the California Public Utilities Commission. "State Franchise(s)" means a franchise that is issued pursuant to the Digital Infrastructure and Video Competition Act of 2006. "State Franchisee(s)" means any holder of a State Franchise. B. Words, terms, or phrases not defined herein shall first have the meaning as defined in Digital Infrastructure and Video Competition Act of 2006 and then special meanings or connotations used in any industry, business, trade, or profession where they commonly carry special meanings. If those special meanings are not common, they will have the standard definitions as set forth in commonly used and accepted dictionaries of the English language. 5.43.020 Purpose; Authority. Effective January 1, 2007, the PUC has the authority to grant State Franchises to provide video service. Pursuant to the Digital Infrastructure and Video Competition Act of 2006, the City has been given certain rights and responsibilities with respect to State Franchisees. These Include, but are not limited to, the receipt of a franchise fee and a fee for PEG purposes, both based on a percentage of the Gross Revenues of the State Franchisees, as well as the establishment and enforcement of penalties for violations of customer service rules. The purpose of this Chapter is to exercise the rights, responsibilities, and authority granted the City by the Digital Infrastructure and Video Competition Act of 2006. 5.43.030 State Video Franchise Fees. A. Any State Franchisee operating within the boundaries of the City of Newport Beach shall pay a fee to the City equal to five percent (5 %) of the Gross Revenue of that State Franchisee. B. Any State Franchisee operating within the boundaries of the City of Newport Beach shall pay an additional fee to the City equal to one percent (1 %) of the Gross Revenue of that State Franchisee, which fee shall be used by the City for PEG purposes consistent with state and federal law. 5.43.040 Audit Authority. Not more than once annually, the City may examine and perform an audit of the business records of a State Franchisee to ensure compliance with Section 5.43.030. 5.43.050 Customer Service Penalties Under State Franchises. A. State Franchisee(s) shall comply with all applicable state and federal customer service and protection standards pertaining to the provision of video service. B. The City Manager, or his /her designee, shall monitor the compliance of State Franchisee(s) with respect to state and federal customer service and protection standards. The City Manager, or his /her designee, shall provide the State Franchisee(s) written notice of any material breaches of applicable customer service standards, and shall allow the State Franchisee(s) thirty (30) days from the receipt of the notice to remedy the specified material breach. Material breaches not remedied within the thirty (30) day time period shall be subject to the following penalties by the City Manager, or his/her designee. 1, For the first occurrence of a violation, a fine of $500.00 shall be imposed for each day the violation remains in effect, not to exceed $1500.00 for each violation. 2. For a second violation of the same nature within 12 months, a fine of $1,000.00 shall be imposed for each day the violation remains in effect, not to exceed $3,000.00 for. each violation. C. A State Franchisee may appeal a penalty assessed to the City Council within sixty, (60) days. After relevant speakers are heard, and any necessary staff reports are submitted, the City Council will vote to either uphold or vacate the penalty. The City Council's decision on the imposition of a penalty shall be final. -2- 5.43.060 City Response to State Franchise Applications. A. Applicants for State Franchises within the boundaries of the City of Newport Beach must concurrently provide complete copies to the City of any application or amendments to applications filed with the PUC. One complete copy must be provided to the City Clerk, and one complete copy to the City Manager. B. The City Manager shall provide any appropriate comments to the PUC regarding an application or an amendment to an application for a State Franchise. SECTION 2: If any section, subsection, sentence, clause or phrase of this ordinance is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. SECTION 3: The Mayor shall sign and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the same to be published once in the official newspaper of the City, and it shall be effective thirty (30) days after its adoption. SECTION 4: This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach, held on the _ day of 2007, and adopted on the _ day of 2007, by the following vote, to wit: AYES, COUNCILMEMBERS NOES, COUNCILMEMBERS ABSENT COUNCILMEMBERS MAYOR ATTEST: CITY CLERK -3-