HomeMy WebLinkAbout14.C. Cable Franchise Renewal-Ord. No. 709-tabled 7/6/04
/ '-/1 C.
MEMORANDUM
TO: Mayor & City Council CONSENT
Telecommunications Commission
Mark McNeill, City Administration
FROM: Tracy Schaefer, Assistant to the City Administrator
DATE: July 20, 2004
RE: Time Warner; Franchise Renewal- Ordinance No. 709
INTRODUCTION
City staff is recommending the adoption of Ordinance No. 709 - Time Warner's 15-year cable
franchise.
BACKGROUND
On July 6, City Council tabled the adoption ofthe Time Warner cable franchise Ordinance No.
709 to further clarify Section lO.1.D, to determine the most appropriate language for the
bundling of Time Warner's cable and telecommunication services and how, if Time Warner
discounted such services, the Shakopee's 5% gross revenue would be calculated.
This was in response to city staffs concerns that Time Warner may "bundle" cable services that
are subject to franchise fees with telephone and Internet services that are arguably not subject to
franchise fees. If Time Warner advertised a single fee for a package ofthese services, the City
and Time Warner may dispute what portion of the fee should be allocated to cable service and
subject to the franchise fee. Specifically, Time Warner, in the future under their proposed
language, could allocate relatively little of the package fee to cable service thus reducing the
franchise fee payment to the City.
At the time, staff presented different proposals, but Time Warner would only agree to account
for cable revenues in accordance with generally accepted accounting principles (GAAP). Time
Warner had not explained sufficiently to city staffhow GAAP adequately addressed the issue.
STATUS
After several exchanges of different proposals between the city and Time Warner, Shakopee's
city and legal staff as well as Time Warner have agreed upon the below language for section
10.l.D. that will further clarify the bundling issue:
In addition to Cable Service, the Grantee (either by itself or through one or more affiliates) may
provide information and telecommunications services. For purposes of calculating the
Franchise Fee when the Grantee packages or "bundles" Cable Services with other services not
subject to franchise fees, the Grantee shall allocate revenues and compute the Franchise Fee due
pursuant to this Franchise in accordance with EITF 00-21 or such subsequently issued generally
accepted accounting principles ("GAAP") which amend or supercede EITF 00-21, or as
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otherwise required by applicable law. In the event EITF 00-21 is amended or superceded, the
Grantee will notifY the City of such change in its Franchise Fee report required by Section
10.1 C.
To break down the language for Council in less technical terms, the agreement would mean:
1) If Time Warner Cable or any of its affiliates i.e.: Time Warner Inc., etc. provides cable,
information (data) or telecommunication (V oIP) services, TW will be subjected to the
"bundling requirement." Staff wanted to make sure the term affiliates was included,
because Time Warner has numerous affiliates that could offer these services and if this
language was not added, the bundling language may potentially not be subjected to the
agreement, thus affecting future gross revenues.
2) If Time Warner, or its affiliates, chooses to offer discounted bundled services which may
or may not be subject to franchise fees (5% Gross Revenues), Time Warner will follow
the accounting practices ofGAAP specifically outlined in EITF 00-21. EITF 00-21 isthe
most applicable section of GAAP that will properly calculate and distribute the correct
franchise amount to the city of Shako pee. City and legal staffhave reviewed this section
and have also consulted with outside CP As and all are in agreement that this section
applies and will allow the city of Shakopee to address its bundling concerns.
Council may ask... well how do we know if they are in compliance? An outside
accounting firm would need to be hired to perform an audit, which we have the right to
do under the renewal franchise, if staff felt that the applicable formulas were not being
used.
Roughly two years ago, city staff hired a company to perform a general audit ofTW's
books and the audit indicated Time Warner was complying with the franchise, so if
Council chooses an audit, paid for by the Telecommunications Fund, could be done at
any time in the future to check compliance.
3) In the event EITF 00-21 is amended or superceded, the Grantee will notify the City of
such change in the franchise fee report required by Section 10.1 C. To make sure that
Time Warner stays current with all applicable laws, city and legal staffhave agreed that
it is appropriate, if the FCC, courts or a higher authority, changes EITF 00-21 or another
applicable law, that Shakopee will honor the new law. It simply means that if the
"formula method" is updated or changed that Time Warner would comply with the latest
"formula method." Staff felt that was a fair compromise, since higher authorities like the
FCC or court rulings many times supercede city contracts/ordinances anyway. This will
allow Time Warner to stay in compliance and the city to have an understanding of the
formula that will be used to calculate the bundling of cable, information and
telecommunication services. If the law changes, Time Warner must inform the city of
any changes.
In addition to the bundling calculation issue, Councilor Lehman contacted me and inquired if
Time Warner applies say a $5 discount tp all three services, ifthe $5 discount would also apply
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to just the standard cable service, since it was the first service offered in Shakopee. I consulted
with Time Warner staff and they have no intentions of adding such language to our agreement.
Time Warner does not have any franchises with such language. City staff also checked and
could not find another cable company that has agreed to such terms. At this time, unless Council
directs otherwise, city staff would not recommend pursing this item.
RECOMMENDATION
After several years and many drafts, city staff is satisfied with the attached recommended cable
franchise document. Although city staff was unable to negotiate all "wished" city items, it isa
fair franchise that will serve Shakopee residents well for the next 15 years.
ACTION
Offer Ordinance No. 709, the renewal ofthe 15-year Time Warner cable franchise, and move its
adoption.
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MEMORANDUM
TO: Mayor & City Council
Telecommunications Commission
Mark McNeill, City Administration
FROM: Tracy Schaefer, Assistant to the City Administrator
DATE: July 6, 2004
RE: Time Warner; Franchise Renewal- Ordinance No. 709
INTRODUCTION
City staff is eager to present the Telecommunications Commissions recommended Ordinance
No. 709 to adopt the Time Warner's 15-year cable franchise.
BACKGROUND
The City has been negotiating in the informal process with Time Warner for several years. The
prior franchise ordinance, Ordinance No. 100 as amended (codified as Chapter 15), expired on
February 26,2003. In order to continue negotiations, the City notified Time Warner that it may
continue to operate in compliance with the terms of the franchise, other agreements between the
parties, and applicable state and federal laws. Time Warner believes its franchise rights and
obligations have been extended by law because the parties are engaged in renewal proceedings
and the City has not denied or rejected the renewal request.1
STATUS
After numerous drafts and years of informal negotiation, Time Warner forwarded a draft
franchise dated March 8, 2004. Time Warner officials indicated that this represented a non-
negotiable, final offer. On May 5, 2004 the Telecommunications Commission reviewed the said
draft cable franchise and requested some minor changes be made and incorporated for the cable
franchise for Council's adoption. Since Time Warner was in agreement on most of the issues,
city staff and Time Warner worked out the final details in order to provide City Council with
Ordinance No. 709.
FRANCHISE HIGHLIGHTS
Rather than attempting to dissect the entire franchise, city staff is presenting the highlights of the
main areas of concern and/or changes with the cable franchise document.
1 State law, Minn. Stat. S 238.08, Subd. 1, requires "a franchise or. extension permit of any cable communications
system providing service within the municipality." Minn. Stat. S 238.16, Subd. 2 provides: "[a]ny person violating
the provisions of this chapter is guilty of a gross misdemeanor. Any sentence imposed for any violation by a
corporation shall be served by the senior resident officer ofthe corporation."
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1. Franchise Ordinance- City representatives initially drafted a franchise for negotiation
purposes. Time Warner subsequently presented the franchise document that had been recently
adopted by the City of Chaska.
In an effort to move negotiations forward, City staff worked from the Chaska document and
made improvements and changes to meet the City of Shakopee's current and future cable
demands.
Attached is a copy of the franchise document that the Telecommunications Commission and city
staff request that the City Council will consider for adoption.
2. Franchise Term- Time Warner requested a 15-year franchise term. This is the longest
term permitted by Minnesota law. A long term is typically linked to a significant system
upgrade requirements. Time Warner recently upgraded its system and met requirements. City
staff concurs with the fifteen (15) year franchise term due to the length and complexity of such
negotiations.
3. Institutional Network (I-Net)- The prior franchise required Time Warner to provide an
institutional network permitting more than 20 City sites to communicate data and video. Federal
law would permit the City to require the continued provision of this I-Net. Time Warner
strenuously resisted continuing the I-Net requirement. The City ultimately elected to construct
its own I-Net in cooperation with the County and school district, which has been an extremely
successful venture.
In cable franchise Section 7.5, Time Warner has agreed to maintain the current live video feeds
from City Hall, the Community Center, and Central Elementary. This would meet our current
needs to broadcast community meetings and these are the only current sites that are "used" for
live video return. Many of the previous 20 locations were churches and private institutions that
are not needed for communicating with our residents.
In addition to the live cablecast origination points at City Hall, Community Center and Central
Elementary, Time Warner would also provide two dark fibers connecting Vierling Fire Station
and the High School.
City staff negotiated receiving two strands of dark fiber to connect the Vierling Drive Fire
Station with the city's current I-Net. Section 6.6 outlines that fiber would run, aerial and
underground, from the high school to Vierling Fire Station at a cost to the city of $11 ,000. Dark
fiber is used as a high speed tool to connect the fire station to the high school that will allow
connection of the city's computer network to transmit video, voice and data. The school district
and county support the city's decision to expand the I-Net with the Time Warner owned and
maintained fiber.
Time Warner would construct, maintain and own the 2 dark strands of fiber, but the city would
have exclusive 100% use for 15 years ofthe said fiber. We would be responsible for the hook-
up and light up of the fiber, which would be additional minimal costs from the
Telecommunications Fund.
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The additional fiber will be a huge asset to the community, since the fire station would be able to
access the complete city network, implement VOIP (Voice Over Internet Protocal/Telephony),
meet video needs and allow for easier and better maintenance of the fire station computer
network.
Although the city would need to pay $11,000 from the Telecommunications Fund, city staff
received quotes from fiber vendors that would charge us between $70,000 - $100,000 for the
same service or $18,000/year to lease. Staff estimates with disconnecting the current Road
Runner service and other cost savings, the additional two strands of fiber would pay for
themselves in less than four years. Such savings would be realized in the city's general fund-
fire department, but paid for with cable franchise fees from the Telecommunications Fund.
4. PEG Access Support (Public, Educational. Govemment)- Under the prior franchise, Time
Warner was required to provide three PEG access channels, equipment, and facilities and to
manage PEG access programming and production. One channel is used for government services
like broadcasting City Council meetings, one for public purposes to broadcast community events
or public service announcements and one for education to broadcast educational activities.
Currently, the city actively uses both the public and government channels and has offered use of
the education channel to the school district; however, they have chosen to broadcast their
programs on the public channel.
In 1996, Time Warner negotiated a transfer of these obligations to the city. In consideration for
this transfer, Time Warner agreed to pay a fee of $.40 per subscriber, per month to support
operations, along with approximately $12,000 annually to offset rent/studio and equipment
maintenance expenses.
TW has agreed to continue the AO/subscriber PEG fee; however, is unwilling to continue the rent
and equipment maintenance grants. In order to gain other areas of great importance, city staff
agreed that it would recommend not to pursue the $12,000 annual funds from rent and
equipment. Nationally, it has become the trend that cable companies will no longer award and/or
continue such programs. This was a practice much more common in the beginning phases of
cable than the competitive environment the cable companies currently face.
5. Service to Public Institutions - The prior franchise required free cable connections and
service to a number of public institutional sites. Time Warner seeks to reduce the number of
sites. For purposes of negotiation, City staffhas generally agreed. Exhibit A outlines the
institutions that will continue to receive free cable service and a portion of new or relocated
building site construction costs. It consists of public schools, municipal buildings and SPUC.
Institutions like County buildings, hospitals, churches and the like have been removed.
New language was added to Section 6.2 to clarify cost responsibility of new or relocated school
or government buildings. The current franchise maintains that "Time Warner will initially
provide cable service to... " The problem with such language is that when the school constructed
Sun Path and Red Oak, Time Warner wanted them to pay for the costs of over $ 15,000/site.
Additionally, the same scenario occurred during the city's police department and library
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constructions. All four buildings currently do not have cable, so staff sought a solution to hook-
up cable and clarify the boundaries for future cable hook ups.
In Section 6.2 - Time Warner is willing to extend plant 125 feet to accommodate new or
relocated sites. This language will help us with future understandings with new or relocated
buildings and as in accordance with FCC guidelines.
With that in mind, in Section 6.2 E, Time Warner has agreed to hook-up both Sun Path and Red
Oak for $3,000, which will be the responsibility of the school district. The library will be
hooked up for FREE and the police department for $8,288. I would recommend to the City
Council that such funds come from the police department building construction contingency fund
and not the Telecommunications Fund, since the cabling is a part of the permanent structure of
the building.
6. Customer Service- The prior franchise contained detailed customer service obligations.
Time Warner seeks to be obligated to comply with the FCC's customer service standards. The
FCC's order on customer service regulations states:
Ifthere are other areas of concern [not addressed in the FCC's standards]... the statute
and our rules allow the franchising authority to address those issues. The franchising
authority, local or state government is thus free to craft additional requirements, which
best meet, the unique needs of the particular community.
Better customer service language has been added. This language would make it clear that the
City hasn't waived its right to add regulation as needed later. "The City reserves whatever right
it may have to adopt customer service standards. The Grantee, by entering into this agreement,
does not agree or acknowledge that the City has any such right." Time W arnerinitially wanted
us to waive our FCC rights to adopt more stringent customer service regulations than the FCC
outlines.
7. Drop Fees- Time Warner has constructed a significant amount of new plant in recent
years and has been required to pull associated permits. However, for purposes of negotiation
City staffhas agreed to consider allowing Time Warner to offset its permit
payments for "drops" (drops are how Time Warner hooks up each individual customer), but not
trunk or mainline cable ROW fees, from its franchise fee payments to the City. Each fee is
roughly $45/permit and amounts to a few thousand dollars a year to the city's general fund. I
would recommend that Time Warner still continue to pay such permit fees, as to keep us in
accordance with state permit regulations, and have such amounts deducted from the franchise fee
payments.
Other Time Warner communities, including Edina, Minnetonka have also recently adopted
waivers of "drop fees," to avoid "double taxation" since Time Warner, unlike some other
utilities, pays ROW permit fees and franchise fees.
8. Local Office- The prior franchise required Time Warner to maintain an office in the City.
For purposes of negotiation, City staffhas agreed to consider allowing Time Warner to move its
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office to any location within 12 miles of the City's northern border. Time Warner would save
considerable amounts for rent and staffing/salaries by consolidating its offices. Time Warner
would establish a regional office. Timing could not be better, sincethe current Time Warner
office is located in the Old Kmart Mall, which is being converted to the Minnesota School of
Business - Shakopee Campus.
Although the office may not be located in Shakopee, with new technologies like voicemail, email
and web services, city staff felt customers would still receive good service and if needed, could
visit the regional office. 12 miles of the northern border was negotiated, because staff did not
want residents to have to travel to downtown Minneapolis.
9. Pole Attachments- Time Warner has continually requested the City's assistance in
resolving pole attachment issues between the company and SPUC. Time Warner has refused to
agree on a franchise until the pole issues were resolved. It appears that the pole rental issues will
be resolved. SPUC has adopted a new resolution that will charge $5.26/po1e with annual
inflation adjustments, this agreement will be signed and put into effect at the same time of the
signing of the City's cable franchise doc.ument.
10. Bundling of Information Services & Cable Services- Time Warner recently announced
plans to introduce telephone services. Time Warner's telephone service (VOIP)revenues will
not be subject to franchise fees. Time Warner previously introduced "cab1e modem" service and
argued that these revenues were also not subject to franchise fees under the City's franchise. The
City disputed this interpretation and ultimately entered into a settlement agreement with Time
Warner. Depending on the outcome of a pending FCC rulemaking, in the future. Time Warner
may be required to pay a franchise fee on these revenues.
City staffis concerned that Time Warner may "bundle" cable services that are subject to
franchise fees with telephone and internet services that are arguably not subject to franchise fees.
If Time Warner advertises a single fee for a package of these services, the City and Time Warner
may dispute what portion of the fee should be allocated to cable service and subject to the
franchise fee. Specifically, Time Warner may allocate relatively little of the package fee to cable
service thus reducing the franchise fee payment to the City.
Staff has presented several proposals to clarify Time Warner's franchise fee obligation. For
example, the City proposed that Time Warner be required to allocate an equivalent amount to
cable service regardless of whether the customer purchases only cable service or a package of
services. Time Warner has rejected all ofthe City's proposals. Time Warner will only agree to
account for cable revenues in accordance with generally accepted accounting principles (GAAP).
Time Warner has not explained sufficiently to city staffhow GAAP adequately addresses this
issue and City staff does not believe that it does.
11. Franchise Fees - The city will continue to receive 5% of gross revenues from Time
Warner on cable services, not information services like cable modems. With the increased
population and potential for new customers, staff feels confident that between the 5% franchise
fees and the AO/subscriber PEG fee that the city's Telecommunications needs can be met.
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RECOMMENDATION
After several years and many drafts, city staff is satisfied with the attached Telecommunications
Commission and city staff recommended cable franchise document. Although city staff was
unable to negotiate all "wished" city items, it is a fair franchise that will serve Shakopee
residents well for the next 15 years.
ALTERNATIVES
1) Propose a counter franchise to Time Warner.
2) Table the 15-year Time Warner cable franchise.
3) Enter into the formal process with Time Warner.
ACTION
Offer Ordinance No. 709, the renewal ofthe 15-year Time Warner cable franchise, and move its
adoption.
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ORDINANCE NO. 709
CITY OF SHAKOPEE CABLE TELEVISION FRANCHISE ORDINANCE
EXHffiITS
Exhibit A -Services to Institutions.... ................................................................... ..19
Exhibit B - Service Area Map ............................................................................. ..20
Exhibit C - FCC Customer Service Standards.... .... ... ... ... ...... ..... ......... ... .... ........ ... .... ..21
Exhibit D - Time Wamer Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . ..23
ORDINANCE NO. 709
FRANCHISE ORDINANCE
This Franchise, made and entered into this_ day of _, 2004, by and between the City
of Shakopee ("City"), a municipal corporation of the State of Minnesota, and Time Warner Cable
Inc., d/b/a Time Warner Cable ("Grantee").
WITNESSETH
WHEREAS, Grantee has operated a Cable System in the City pursuant to a cable franchise
ordinance ("Franchise"); and
WHEREAS, Grantee has requested renewal of its Franchise and has upgraded its System to
a modem design as described herein at substantial cost; and
WHEREAS, the City is authorized to renew or grant one or more nonexclusive revocable
Franchises to operate, construct, maintain and reconstruct a Cable Television System within the City
and replace the Franchise, including amendments and agreements relating to it, beginning with the
effective date of this renewed Franchise.
WHEREAS, the City, reviewed the legal, teclmical and financial qualifications of Grantee
and after proper public' notice, has determined that it is in the best interest of the City and its
residents to renew its Franchise with Grantee,
NOW, THEREFORE, the City hereby grants to Grantee renewal of its Franchise in
accordance with the provisions of the Shakopee City Code and this Ordinance.
SEe. 1. RENEWAL OF GRANT OF FRANCmSE.
This Franchise supercedes and replaces the franchise previously held by Grantee, including
Ordinance Nos. 100, 164, 166, 194,242,308,344,453, and 641, and all other amendments thereto,
together codified as City Code, Chapter 15 and Chapter 25.06.
This Franchise constitutes a nonexclusive grant of authority to Grantee to construct, maintain,
extend, and operate a Cable System to provide Cable Service and other lawful service in Rights-of-
Way in the City. Grantee's rights are subject to the police powers of the City. Grantee shall
comply with any City ordinances of general applicability governing use of Right-of- Way and all
generally applicable building, electrical and zoning codes currently or hereafter in force in the
City. Grantee shall further comply with all state and federal laws, rules, and regulations
applicable to the operation of Cable Systems or the provision of Cable Service. In the event of
any conflict between the terms and conditions of this Franchise and any generally applicable
ordinance including the Right-of-Way ordinance, the terms of such generally applicable
ordinance shall control.
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This Franchise complies with the Minnesota franchise standards set forth in Minn. Stat.
S 238.084.
SEe. 2. SHORT TITLE.
This Franchise shall be known and cited as the "City of Shakopee Cable Franchise." Within this
document it shall also be referred to as "this Franchise" or "the Franchise."
SEe. 3. DEFINITIONS.
For the purpose of this Franchise, the following terms, phrases, words and their derivations shall
have the meaning given herein. When not inconsistent with the context, words used in the
present tense include the future tense, words in the plural nun1ber include the singular number,
and words in the singular number include the plural number. The words "shall" and "will" are
mandatory and "may" is permissive. Words not defined shall be given their common and
ordinary meaning.
"Access Channel" means a video channel provided by Grantee to permit cable casting of public,
educational, governmental and other public interest programming.
"Basic Cable Service" means any Cable Service tier that includes the lawful retransmission of
local television broadcast signals and any Public, Educational, and Governmental Access
programming required by this Franchise to be carried on the basic tier. Basic Cable Service as
defined herein shall be consistent with 47 D.S.C. S 543(b )(7);
"Cable Act" means the Cable Communications Policy Act of 1984 (codified at 47' D.S.C.
SS 521-611), as amended by the Cable Television Consumer Protection and Competition Act of
1992, and the Telecommunications Act of 1996, as may, from time to time, be amended.
"Cable Service" or "Service" means: the one-way transmission to Subscribers of (i) video
programming and/or (ii) other programming service and Subscriber interaction, if any, which is
required for the selection or use of such video programming or other programming service.
"Cable System" or "System" means a system which operates the service of receiving and
amplifying video programs broadcast by one or more television stations and other programs, and
distributing those programs by wire, cable, microwave or other means, whether the means are
owned or leased, to persons who subscribe to the service.
"Channel" means a portion of the electromagnetic spectrum or fiber optic capacity that is
capable of carrying one video signal, in either analog or digital. form.
"City" means the City of Shakopee, Minnesota.
"Converter" means an electronic device that converts signals to a frequency not susceptible to
interference within the television receiver of a Subscriber and, through the use of an appropriate
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Channel selector, permits a Subscriber to view all authorized Subscriber signals delivered at
designated converter dial locations.
"Drot''' means the cable that connects the ground block to the nearest feeder cable of the System.
"FCC" means the Federal Communications Commission or a designated representative.
,
"Franchise" means this Cable Franchise Ordinance and the rights and obligations extended
herein by the City to the Grantee to own, lease, construct, maintain, or operate a Cable System in
the Rights-of-Way in the City for the purpose of providing Cable Services.
"Franchise Fee" means any tax, fee, or assessment of any kind imposed by the City or other
governmental entity on the Grantee solely because of its status and activities as such. The term
"Franchise Fee" does not include: (i) any tax, fee, or assessment of general applicability
(including any such tax, fee, or assessment imposed on both utilities and cable operators or their
Services but not including a tax, fee, or assessment that is unduly discriminatory against cable
operators or cable Subscribers); (ii) capital costs that are required by the Franchise to be incurred
by the Grantee for PEG Access equipment and facilities or the provision of "dark fiber"; (iv)
requirements or charges incidental to the award or enforcement of a Franchise, including
payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or
liquidated damages; or (v) any fee imposed under Title 17 ofthe United States Code.
"Grantee" means Time Warner Cable Inc. or its lawful successors, transferees, or assignees.
"Gross Revenues" means all revenues received directly or indirectly by the Grantee, arising from or
in connection with the provision of Cable Service in the City including subscriber revenues
(including pay TV), franchise fees, advertising income, home shopping program revenues and
rentals of subscriber equipment, accounted for as earned in accordance with generally accepted
accounting principles. Grantee is not required to include revenues recorded as earned but which are
deemed uncollectible, but it must include recoveries previously deemed uncollectible. This
definition of gross revenues also does not include sales, excise or other taxes collected by Grantee on
behalf of federal, state, county, city or other governmental unit. Funds collected by Grantee to
support public, educational and governmental access programming are also excluded from the
definition of gross revenues.
"Lockout Device" means a mechanical or electrical accessory to a Subscriber's terminal that
inhibits the video or audio portions of a certain program or certain Channel(s) provided by way
of a Cable System.
"Person" means any corporation, partnership, proprietorship, individual, organization,
governmental entity or any natural person.
"Right-of-Way" means the area on, below, or above a public roadway, highway, street, cartway,
bicycle lane, and public sidewalk in which the local government unit has an interest, including
other dedicated rights-of-way for travel purposes and utility easements of local government
units. Right-of-Way does not include the airwaves above a Right-of-Way with regard to wireless
or other nonwire telecommunications or broadcast service.
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"Subscriber" means any Person who or which elects to subscribe for any purpose to Cable
Service provided by a Grantee by means of, or in connection with, the Cable System, and whose
premises or facilities are physically wired and lawfully activated to receive Cable Service from
Grantee's Cable System, including Persons who receive Cable Service without charge according
to the terms of the Franchise Agreement.
SEC. 4~ EFFECTIVE DATE AND TERM OF RENEWAL.
This Franchise shall corrimence on the effective date described in Section 20 and shall expire fifteen
(15) years thereafter.
SEe. 5. WRITTEN NOTICE.
All notices, reports or demands required to be given in writing under this Franchise shall be deemed
to be given when delivered personally to any officer of Grantee or City's Administrator of this
Franchise or via registered or certified mail postage prepaid thereon, addressed to the party to which
notice is being given, as follows:
Ifto City: City Administrator
City of Shakopee
129 South Holmes Street
Shakopee,MN.55379
If to Grantee: Division President
Time Warner Cable
801 Plymouth Avenue N.
Minneapolis, MN 55411
With a copy to:Vice-President, Govt. Affairs
Time Warner Cable
801 Plymouth Avenue N.
Minneapolis, MN 55411
Such addresses may be changed by either party upon notice to the other party given as provided in
this section.
SEe. 6. DESIGN PROVISIONS.
6.1 System Design.
A. Grantee has constructed and will provide for the term of this Franchise a
System with at least a capacity of750 MHz with the capability of providing a
minimum of 75 channels of video programming. Grantee's System shall
comply with the FCC's technical standards (47 CFR 76.601 to 76.617), as
may be amended or modified from time to time.
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B. City shall have the right to inspect all System construction work
performed by Grantee.
6.2 Service to Schools and Government BuiIdine:s.
A. Grantee shall provide one outlet, one Converter, if needed, and Basic Service
and the most highly penetrated tier of Cable Programming Service to those
facilities identified in Exhibit A.
B. If, after tlle effective date of this Franchise, a facility is constructed or
relocated at a site that is over one hundred and twenty five (125) feet from
Grantee's then existing System (i.e. requiring a drop in excess of 125 feet),
the facility shall be responsible for all equipment, construction costs and
additional wiring beyond the first one hundred and twenty five (125) feet.
The first one hundred and twenty five (125) feet shall be Grantee's
responsibility.
C. All internal wiring cost beyond tlle one outlet that Grantee agrees to provide
shall be the responsibility of the school or municipality.
D. The fmancial responsibility for any additional Converters desired by the
school or municipality shall be their responsibility.
E. Notwithstanding section 6.2A above, Red Oak and Sun Path elementary
schools will contribute three thousand dollars ($3,000.00) toward the cost of
the Grantee's extension of service to such schools.
6.3 Lockout Device.
Grantee shall provide, for sale or lease, a Lockout Device to Subscribers, upon
request.
6.4 Standby Power.
Grantee shall maintain standby power at the headend and any hubs.
6.5 Periodic Review Provisions.
The City may request a performance review at the fifth and tenth anniversaries of
this Franchise. In conducting such reviews, the City shall undertake the following
process:
A. The City and the Grantee shall undertake a review of the Cable System and
Franchise. This review shall, at a minimum, take into account the following:
1. Characteristics of the existing System;
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2. The state-of-the-art;
3. Additional benefits provided to customers by System improvements;
4. The market place demand for System improvements; and
5. The financial feasibility of System improvements. taking into account
the cost.
B. The City shall hold a public hearing to enable the general public and Grantee
to comment and to present evidence.
C. As a result of any review based on this Section, the City may request that the
Grantee enter into good faith negotiations to amend this Franchise as
necessary .
6.6 Dark Fiber
Grantee will install and maintain two dark fibers between the Vierling Fire Station
and Shakopee Senior High School for continuous City use. City shall reimburse
Grantee's actual installation costs up to a total of eleven thousand dollars ($
11,000.00), with the balance of the costs being the responsibility of Grantee. City
shall be responsible for any and all end user equipment necessary to light or use the
fiber connection.
SEe. 7. PUBLIC. EDUCATIONAL AND GOVERNMENTAL ACCESS PROGRAMMING.
7.1 Access Channels.
A. Grantee shall provide three (3) Access Channels. These channels shall be
provided in addition to carriage of Regional Channel Six. The City shall, in
its discretion, program and operate the Access Channels cablecast on the
System.
B. The Access Channels are, currently located at the following channel
designations: 14, 15, and 16. In the event the Grantee changes the Access
Channel designations (numbers), the Grantee shall, to the extent possible,
provide sixty (60) days prior written notice of such change(s) to the City.
In addition, the Grantee shall provide reasonable notice of such change(s)
to Subscribers via, for example, bill stuffers or a channel crawl.
C. Grantee shall provide to each of its Subscribers who receive all or any part of
the total Cable Services offered on the System, reception of each Access
Channel.
D. Grantee shall provide at least one specially designated access channel
available for lease on a first come, nondiscriminatory basis by commercial
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and noncommercial users. This Section is not applicable to Subscribers
receiving only alarm system services or only data transmission services for
computer operated functions. The VHF spectrum shall be used for at least
one of the specially designated noncommercial public Access Channels
required.
E. Whenever any of the Access Channels are in use during 80 percent of the
weekdays (Monday-Friday), for 80 percent of the time during any
consecutive three hour period for six weeks running, and there is demand for
use of an additional channel for the same purpose, Grantee shall then have
six months in which to provide a new specially designated access channel for
the same purpose at no additional cost to Subscribers.
F. City shall, at times throughout the life of this Franchise, maintain in place
rules governing the use of Access Channels on the System. and make the
Access Channels and programming equipment available for public,
educational, and governmental access ("PEG Access") programming as
City deems appropriate.
7.2 Fundin2" for PEG Access.
A. Grantee shall collect Forty cents ($.40) per Subscriber, per month and shall
remit said amounts collected to the City on a quarterly basis to be used solely
for PEG Access. Such amounts are separate from and in addition to
Franchise Fees. Grantee shall have no additional obligation for PEG Access
equipment maintenance or studio support, including rent reimbursement.
B. In the event that other franchisees) is/are approved by the City, the other
grantee(s) shall be subject to the same requirements for the funding of PEG
Access as the Grantee herein.
7.3 Re2"ional Channel Six.
Standard VHF Channel six (6) shall be designated for usage as a regional channel,
currently known as Metro Cable Network, and shall be made available to Subscribers
without charge except for the applicable Basic Service fee. This provision shall
remain in effect as long as a regional channel is required by state law.
7.4 Live Cablecast Oril!ination Points.
Grantee shall ensure that its System is constructed and configured to permit the City
or its designee to continue to insert live programming, replay recorded programming,
or transmit character generated programming from the existing locations at City Hall,
the Community Center and Central Elementary. The City may designate an
alternative site(s) to replace one or more ofthe existing sites listed above from which
live programming, replay programmmg or transmit character generated
programming may be inserted; provided, however, that the City shall be solely
7
responsible for, and shall reimburse the Grantee for, any and all costs (including, but
not limited to, time and materials, reasonable overhead costs, permitting fees,
additional pole attachment fees, etc) incurred by the Grantee in providing this service
to such alternative site(s). The Grantee may require payment in advance (subject to a
true-up upon completion ofthe work). Following receipt of the payment the Grantee
shall commence any necessary work and the alternative site shall be made available
to the City within a reasonable period of time (taking into accounts such factors as
the amount of or nature of the work to be done, weather conditions, permitting
delays, utility make-ready, etc.). The Grantee shall have no obligation to provide
more than three (3) live origination sites at anyone time. Any written notice from
the City designating an alternative live origination site shall also designate the
origination site being replaced. Upon activation of the newly designated origination
point the Grantee shall have no further responsibility for the origination site being
replaced.
SEe. 8. PERIODIC CUSTOMER SURVEYS.
8.1 The Grantee shall, upon request of the City and at times mutually agreed upon by the
parties, but no more frequent than once every three years, conduct a random survey of
a representative sample of Subscribers. Each questionnaire shall be prepared and
conducted in good faith so as to provide a reasonably reliable measure of customer
satisfaction with: (1) . audio and signal quality; (2) response to customer complaints;
(3) billing practices; (4) programming; and (5) installation practices;
8.2 The survey shall be conducted in conformity with standard research procedures
conducted by an independent person in the business of regularly conducting such
surveys. The survey shall consist of a sample size sufficient to yield a margin of
error of plus or minus six percent or less of the total customer base.
8.3 The Grantee shall report the results of the survey and any steps the Grantee may be
taking in response to the survey within 60 days ofthe completion of the survey.
8.4 Notwithstanding anything to the contrary, the Grantee shall be under no obligation to
conduct a survey at any time the Grantee is deemed subject to effective competition
under then applicable state or federal law.
SEC. 9. LINE EXTENSION POLICY.
9.1 Upon the effective date of this Franchise, the Grantee shall offer Service to all areas
of the City. The Grantee shall extend the System to any residences within the City
requesting Service provided there are at least thirty (30) homes per mile of required
new System construction (or the equivalent thereof), and the requesting residence is
within 125 feet of the System as extended.
9.2 In those instances involving an extension of the Cable System to areas not meeting
the minimum density of thirty (30) homes per mile (or the equivalent thereof), the
Grantee will extend the System and bear that portion of the cost of extending the
8
Cable System to areas not meeting the minimum density and the requesting
Subscribers shall bear the incremental cost. As an example, if the density in an area
were fifteen (15) homes per mile, the Grantee would pay one-half (1/2) of the
costs of extending the Cable System and those Persons requesting Cable Service
would pay the remaining one-half (1/2).
9.3 In those instances involving Drops in excess of 125 feet, the Grantee shall bear that
portion of the cost of constructing the first 125 feet and the requesting Subscriber
shall bear the remainder.
9.4 The City recognizes that in some instances the Grantee may need the permission of
private property owners to extend Service. If the Grantee is unable to obtain such
permission on reasonable terms, the Grantee shall be under no obligation to extend
Service.
9.5 Attached hereto is as Exhibit B is a map of Grantee's System as of the effective date
ofthis Franchise.
SEC. 10. GENERAL FINANCIAL AND INSURANCE PROVISIONS.
10.1 Payment to City.
A. Grantee shall pay to the City a Franchise Fee in an amount equal to five
percent (5%) of annual Gross Revenues.
B. The foregoing payment shall be compensation for use ofthe Rights-of-Way.
C. Payments due the City under this provision shall be computed at the end of
each calendar quarter. Payments shall be due and payable for each quarter
not later than 60 days from the last day of the quarter. Each payment shall be
accompanied by a brief report showing the basis for the computation.
D. In addition to Cable Service, the Grantee (either by itself or through one or
more affiliates) may provide information and telecommunications
services. For purposes of calculating the Franchise Fee when the Grantee
packages or "bundles" Cable Services with other services not subject to
franchise fees, the Grantee shall allocate revenues and compute the
Franchise Fee due pursuant to this Franchise in accordance with EITF 00-
21 or such subsequently issued generally accepted accounting principles
("GAAP") which amend or supercede EITF 00-21, or as otherwise
required by applicable law. In the event EITF 00-21 is amended or
superceded, the Grantee will notify the City of such change in its
Franchise Fee report required by Section 10.1 C.
E. No acceptance of any Franchise Fee payment shall be construed as an accord
that the amount paid is in fact the correct amount, nor shall such acceptance
of payment be construed as a release of any claim the City may have for
9
further or additional sums payable under the provisions of this Franchise. All
amounts paid shall be subject to audit and recomputation by the City. For
purposes of conducting such an audit, the City or its agents may inspect
Grantee's books or records relating to calculation of Gross Revenues and
Franchise Fees upon ten (10) days written notice.
F. In the event any payment is not made on the due date, interest on the amount
due shall accrue from such date at the annual rate of 12%.
G. The requirements herein in no way modify or limit the parties' agreement
dated December 17, 2002 entitled, "Settlement Agreement" relating to Time
Warner Cable transfer.
H. Notwithstanding anything to the contrary, Grantee shall be entitled to a credit
on Franchise Fee payments to the City for any fees charged for or associated
with installation of Drops in the City. No credit shall be.given for permit fees
associated with trunk, mainline or feeder cable unless so provided under
applicable state or federal law.
10.2 Bonds.
A. At the commencement of this Franchise, Grantee shall maintain with City a
performance bond in the sum of $50,000 in such form conditioned upon the
faithful performance by Grantee ofthis Franchise.
R The rights reserved by City with respect to the bond are in addition to all
other rights the City may have under this Franchise or any other law.
C. City may, in its sole discretion, reduce the amount of the bond.
10.3 Security Fund.
A. In the: e:ve:nt the: Grantee is given notice of a material non-compliance with
this Franchise pursuant to Section lO.3F of this Franchise, upon reasonable
request from City, the Grantee shall within ten (10) days thereof deposit into
a bank account, established by the City, and maintain on deposit the sum of
Ten Thousand and 00/100 Dollars ($10,000.00) or deliver to the City a letter
of credit in such amount which shall be a Security Fund for the faithful
performance by it of all the material provisions of this Franchise which are
subject of such notice. Interest on this deposit shall be paid to Grantee by the
bank on an annual basis. Grantee will be provided, at a minimum, due
process and opportunity to cure as set forth herein or as otherwise provided in
applicable law. The security may be terminated by the Grantee upon the
Resolution of the alleged non-compliance. The obligation to establish the
security fund required by this paragraph is unconditional. The fund must be
established whenever Grantee is given the notice required, even if Grantee
disputes the allegation that it is not in compliance.
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B. Provision shall be made to permit the City to withdraw funds from the
Security Fund. Grantee shall not use the Security Fund for other purposes
and shall not assign, pledge or otherwise use this Security Fund as security
for any purpose.
C. Within ten (10) days after notice to it that any amount has been withdrawn by
the City from the Security Fund pursuant to (A) of this section, Grantee shall
deposit a sum of money sufficient to restore such Security Fund to the
required amount.
D. In addition to recovery of any monies owed by Grantee to City or damages to
City as a result of any acts or omissions by Grantee pursuant to the Franchise
which are the subject of the notice set forth in Section 10.1 A, City in its sole
discretion may charge to and collect from the Security Fund $100 per day for
each day, or part thereof, for non-compliance with any material provision of
this Franchise.
E. If Grantee fails to pay to the City any generally applicable taxes due and
. unpaid; or fails to repay to the City, any damages, costs or expenses which
the City shall be compelled to pay by reason of any act or default of the
Grantee in connection with this Franchise; or fails, after 30 days notice of
such failure by the City, to comply with any material provision of the
Franchise which the City reasonably determines can be remedied by an
expenditure of the security, the City may then withdraw such funds from the
Security Fund. Payments are not Franchise Fees as defined in Section 10.1
of the Ordinance.
F. Whenever the City has reason to believe that Grantee has allegedly violated
one or more material terms, conditions or provisions of this Franchise for
which an enforcement action is to be considered, a written notice shall be
given to Grantee. The written notice shall describe in reasonable detail the
alleged violation so as to afford Grantee an opportunity to remedy the
violation. Grantee shall have 30 days subsequent to receipt of the notice in
which to correct the violation before the City may require Grantee to make
payment of penalties, and further to enforce payment of penalties through the
Security Fund.
G. Grantee may, within 10 days of receipt of notice, notify the City that there is
a dispute as to whether a violation or failure has, in fact, occurred. Such
notice by Grantee shall specify with particularity the matters disputed by
Grantee and shall stay the running of the above-described time. The City
shall hear Grantee's dispute at the next regularly scheduled or specially
scheduled Council meeting or at another time mutually agreed upon by the
parties. Grantee shall be entitled to the right to require the production of
evidence and to question witnesses. The City shall determine if Grantee has
11
committed a violation and shall make written findings of fact relative to its
determination.
H. If after hearing the dispute, the claim is upheld by the City, then Grantee shall
have 30 days within which to remedy the violation before the City may
require payment of all penalties due it or the Grantee may appeal such
decision to a court of competent jurisdiction.
I. The time for Grantee to correct any alleged violation shall be extended by the
City if the necessary action to correct the alleged violation is of such a nature
or character as to require more than 30 days within which to pelform,
provided Grantee commences corrective action within 15 days and thereafter
uses reasonable diligence, as determined by the City, to correct the violation
1. If City draws upon the Security Fund delivered pursuant hereto, in whole or
in part, Grantee shall replace the same within three days and shall deliver to
City a like replacement Security Fund for the full amount stated in Paragraph
A of this section as a substitution of the previous Security Fund.
K. If any Security Fund is not so replaced, City may draw on said Security Fund
for the whole amount thereof and hold the proceeds, without interest, and use
the proceeds to pay costs incurred by City in performing and paying for any
or all of the obligations, duties and responsibilities of Grantee under this
Franchise that are not performed or paid for by Grantee pursuant hereto,
including attorneys' fees incurred by the City in so performing and paying.
The failure to so replace any Security Fund may also, at the option of City, be
deemed a default by Grantee under this Franchise. The drawing on the
Security Fund by City, and use of the money so obtained for payment or
performance of the obligations, duties and responsibilities of Grantee which
are in default, shall not be a waiver or release of such default.
L. The collection by City of any damages, monies or penalties from the Security
Fund shall not affect any other right or remedy available to City, nor shall
any act, or failure to act, by City pursuant to the Security Fund, be deemed a
waiver of any right of City pursuant to this Franchise or otherwise.
M. No penalty or sanction of any kind, including revocation or termination, may
be imposed when the action or omission is due to acts of God or reasons
beyond the control of the Grantee.
SEc.n. RATES.
Current subscriber rates and the standard form of subscriber contracts shall be available for
inspection at all times. The City reserves the right to regulate rates to the extent provided by
law.
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SEC. 12. COMPETITION ADJUSTMENT.
12.1 Additional Franchises.
This Franchise is nonexclusive. The City shall not grant a Franchise to another
Grantee to operate a Cable System on terms and conditions which are less
burdensome or more favorable than the terms and conditions. of this Franchise.
12.2 Competition.
A. If another Multichannel Video Programming Distributor operates in the
City's rights-of-way without City authorization, either in the form of a Franchise
or other legally required authorization, and the City has clear and express
authority under applicable laws to mandate a Franchise or other legally required
authorization on that Multichannel Video Programming Distributor but fails to do
so, then Grantee shall not be required to comply with those terms of this
Franchise which are not also imposed upon the Multichannel Video Programming
Distributor.
B. If the City makes a decision to commence construction and operation of a
Cable System in the City, or should construction of a Cable System by the City
commence without an. identifiable final decision, then Grantee may seek
modification of this Franchise as of the date of the final decision to commence
constmction and operation, or at the commencement of construction if it begins
without an identifiable final.decision, in the manner described below:
1. Notwithstanding any provision to the contrary contained in this Franchise,
Grantee shall not be required to provide the City with proprietary information
or to respond to requests for information that require it to release proprietary
information where it reasonably believes that the release of such information
would provide the City a competitive advantage.
2. Any audits of Franchise Fees must be conducted by an independent auditor
who has agreed in advance in writing not to disclose any portion of Grantee's
books and records or other proprietary information to the City, other than the
aggregate' amount of Gross Revenues (without disclosing the amounts of
underlying categories of Gross Revenues) used to calculate the Franchise
Fees payable hereunder; and
3. If Grantee shall be required to move, relay, or relocate any of its facilities in
connection with the construction or preparation for construction of a Cable
System by the City (regardless of whether any such removal, relaying, or
relocation is required under the terms of this Franchise, or under any
applicable pole attachment agreement to which Grantee and the City are
parties), then the City shall be obligated to pay all of Grantee's reasonable
costs for labor and materials to effect such work.
If the City and Grantee cannot mutually agree on appropriate modifications
13
to this Franchise as outlined above, Grantee may seek resolution of such
matter in a court of competent jurisdiction.
SEC. 13 REPAIRS AND MAINTENANCE/CONSUMER PROTECTION.
Consumer Complaints. Any person may file complaints regarding quality of
service, equipment malfunction, billing disputes, or other matters pertaining to the
Cable System by contacting the Grantee during normal business hours.
A. Local Office. Grantee shall maintain a customer payment center in the
City, or within twelve (12) miles of the City's northern border, which shall
pernlit Subscribers to pay their bills, pick up and return converter boxes
and comparable items and receive information on the Grantee and its
services.
B. Repairs and Maintenance. Grantee shall maintain a publicly listed
toll-free or local telephone line. Calls about Service problems during
normal business hours will be handled by the Grantee's Customer Service
Representatives (CSRs). When possible, problems will be resolved over
the phone. Subscribers may be charged for on-site service calls.
C. Grantee shall, at all times, comply with the FCC rules regarding customer
service. A copy of the current rules is set forth as Exhibit C. The City
reserves and does not waive its rights, if any, to adopt additional or
modified consumer protection requirements. Grantee reserves the right to
challenge any additional or modified requirements including City's right
to adopt such requirements.
SEe. 14 SUBSCRIBER PRIVACY
The following provisions regarding subscriber privacy shall govern unless
otherwise governed under federal law. No signals of a Class IV cable
communications channel may be transmitted from a subscriber terminal
for purposes of monitoring individual viewing patterns or practices
without the express written permission of the subscriber. The request for
such permission shall be contained in a separate document with a
prominent statement that the subscriber is authorizing the permission in
full knowledge of its provisions. Such written permission shall be for a
limited period of time not to exceed one year which shall be renewed at
the option of the subscriber. No penalty shall be invoked for a subscriber's
failure to provide or renew such authorization. The authorization shall be
revocable at any time by the subscriber without penalty of any kind
whatsoever. Such permission shall be required for each type or
classification of Class IV cable communications activity planned for the
purposes of monitoring individual viewing patterns or practices.
A. No information or data obtained by monitoring transmission of a signal
from a subscriber terminal or any other means, including but not limited to
14
lists of the names and addresses of such subscribers or any lists that
identify the viewing habits of subscribers shall be sold or otherwise made
available to any party other than to Grantee and its employees for internal
business use, or to the subscriber who is the subject of that information,
unless Grantee has received specific written authorization from the
subscriber to make such data available.
B. Written permission from the subscriber shall not be required for
conducting system wide or individually addressed electronic sweeps for
the purpose of verifying Cable System integrity or monitoring for the
purpose of billing. Such information shall be kept confidential by
Grantee,' consistent with clause 1 of this section.
C. For the purposes of this provision, a Class N cable communications
channel means a signaling path provided by Cable System to transmit
signals of any type from a subscriber terminal to another point in the com-
munications system.
SEC. 15 INDEMNIFICATION AND LIABILITY INSURANCE.
A. The Grantee shall indemnify and hold harmless the City, the City Council
and all City employees and commissions, from any suit, claim or demand
whatsoever which may be asserted or recovered against it based upon or
arising out of the exercise of this Franchise or Grantee's construction,
maintenance, or operation of the System or any part thereof provided that
such suit, claim, or demand is not based upon the City's own intentional or
negligent conduct. The City agrees to notify Grantee, in writing and
within forty-eight hours, (unless notification within forty-eight hours
would be unreasonable due to extraordinary circumstances), of any claim
or suit against the City for which Grantee may be required to indemnify
the City. In the event Grantee is required to defend the City in connection
with this'section, the City agrees to tender control of its defense to Grantee
and Grantee shall have the right to select defense counsel. The City
agrees to cooperate in its own defense. Nothing herein waives or restricts
any limitation on City's liability pursuant to Minnesota Statutes 466.
B. Liability insurance - Grantee shall maintain throughout the term of this
Franchise public liability, property damage and liability insurance policies
naming the City, the City Council and all City employees and
commissions, as named additional insureds. :
$1,000,000.00 for property damage to anyone person,
$1,000,000.00 for property damage in anyone occurrence,
$1,000,000.00 for bodily injury to anyone person,
$1,000,000.00 for bodily injury in anyone occurrence,
15
The insurance shall be obtained from a company licensed to do business in
Minnesota. The Grantee shall provide a certificate of coverage to the City.
The policy shall state that the City shall be notified in writing by the
insurer 30 days in advance of any cancellation or termination of any such
policy.
SEC. 16 ADMINISTRATION.
The Shakopee City Administrator is responsible for the continuing
administration of the Franchise.
SEC. 17 REDRESS.
In the event the Grantee fails to perform and carry out any material
provision of this Franchise, attempts to evade the provisions of the
Franchise, or practices fraud or deceit upon the City (collectively, a
"Breach") the City may enforce or terminate the Franchise. The City shall
give Grantee written notice of the specific provision(s) violated or that
Grantee has failed to perform. After written notice has been given to the
Grantee, the Grantee shall have 30 days time in which to remedy any
failure. If the Grantee has not cured any failure upon the expiration of the
30-day period, the City may take such steps as it deems necessary to
enforce the Franchise; provided, however, that before the Franchise may
be terminated, the Grantee shall be provided with an opportunity to be
heard before the City Council to contest the City's determination.
SEC. 18 TRANSFER OR ASSIGNMENT.
A. "Fundamental corporate change" means the sale or transfer of a majority
of a corporation's assets; merger, including parent and its subsidiary
corporation; consolidation; or creation of a subsidiary corporation.
B. A sale or transfer of this Franchise, including a sale or transfer by means
of a fundamental corporate change, or a mortgage, lease, or assignment of
the Franchise, requires the prior written consent of the City by resolution
of the Council in accordance with all terms and conditions set forth in said
resolution, which consent shall not be unreasonably withheld. This
provision shall not prohibit the use of the System as collateral for loans.
C. Notwithstanding the foregoing, for purposes of permitting internal
corporate restructuring or consolidation, the City hereby consents to any
sale or transfer of this Franchise to any Person controlling, controlled by
or under common control with the Grantee. F or purposes of this
paragraph, the word "control" means the authority to make or exercise
decisions regarding the day-to-day operation of the business (i.e. decisions
regarding programming, rates, customer service, etc.).
16
SEC. 19 RIGHT TO PURCHASE.
A. If the System is offered for sale, the City shall have the non-exclusive
right to purchase the System under the following conditions:
1. Grantee shall immediately notify the City in writing in the event it
receives an offer from a third party to purchase the System. Within
30 days after the City receives such notice, the City shall notify Grantee
whether the City intends to purchase the System.
2. If the City elects to purchase the System, the price, terms and conditions
of the City's purchase shall be the same as those set forth in the offer. If
the City fails to offer to purchase the System on terms and conditions
which match or exceed those of the offer within 30 days after the City
receives notification of the bona fide offer, then Grantee is free to sell the
System.
3. The City's rights pursuant to this section are not triggered by the sale or
transfer of stock that creates a new controlling interest in the Grantee and
are not triggered by any fundamental corporate change in the Grantee.
SEC. 20. ACCEPTANCE SECTION.
A. Grantee shall accept this Franchise within 30 days of adoption by City. Such
acceptance by Grantee shall be deemed the grant of this Franchise' for all
purposes.
B. Upon acceptance of this Franchise, the prior Franchise shall be replaced and
Grantee shall be bound by all the terms and conditions contained in this
Ordinance.
C. At the time of acceptance, Grantee shall provide a copy of its initial services
which shall be attached hereto as Exhibit D .
D. The effective date of this Franchise shall be the date set forth below.
SEC. 21. MISCELLANEOUS
A. Grantee shall not be relieved of its obligation to comply with any of the
provisions of this Franchise by reason of any failure of the City to enforce
prompt compliance.
B. Upon request, the Grantee shall:
17
1. allow the City, where necessary for the enforcement of this Franchise or to
evaluate Grantee's compliance with this Franchise, to inspect its books
and records related to operation of the System including communications
or filings with regulatory authorities;
2. furnish to City such additional reports with respect to System operations
as may be necessary to ensure Grantee's compliance with this Franchise.
C. Both the City and Grantee expressly reserve any and all rights that either may
now have or be hereafter granted under applicable state and federal law.
Nothing in this Franchise shall be deemed to be or construed as a waiver,
right, release or surrender of any right by the City or the Grantee.
SEe. 22. SUMMARY Summary Approved. The City Council hereby determines that the text
of the summary ordinance marked "Official Summary of Ordinance 709," a copy of which is
attached hereto, clearly infornls the public of the intent and effect of the ordinance. The Council
further determines that publication of the title and such summary will clearly inform the public
of the intent and effect of the ordinance.
SEe.23.POSTING AND FILING A copy of this ordinance is filed in the office of the City
Clerk and a copy is provided to the Shakopee Public Library for posting and filing, at which
locations a copy is available for inspection by any person during regular business hours.
SEe.24 TITLE The City Clerk shall publish the title of this ordinance and the official summary
in the official newspaper with notice that a printed copy of the ordinance is available for
inspection by any person during regular office hours at the office of the City Clerk and Shakopee
Library.
SEe.25 EFFECTIVE DATE This ordinance becomes effective from and after its passage and
publication.
Adopted in session of the City Council of the City of Shakopee, Minnesota, held
this day of ,2004.
Mayor ofthe City of Shakopee
ATTEST:
City Clerk
18
IN WITNESS WHEREOF, Grantee has executed this Franchise the date and year first above
written.
TIME WARNER CABLE INC.
D/B/N TIME WARNER CABLE.
By
(Corporate Seal) Date:
STATE OF )
)
COUNTY OF )
The foregoing instrument was acknowledged before me on ,2004,
by the of the City of Shakopee, on behalf of the
City.
Notary Public
STATE OF )
)
COUNTY OF )
The foregoing instrument was acknowledged before me on ,2004,
by the of Time Warner Cable Inc., d/b/a Time
Warner Cable, on behalf of the company.
Notary Public
19
Official Summary of Ordinance No. 709
The following is the official summary of Ordinance No. 709, renewal ofthe Time Warner Cable
Franchise, approved by the City Council of the City of Shakopee, Minnesota on July 20, 2004.
Ordinance No. 709 - Renewal ofthe Time Warner Cable Franchise
1 Franchise Term- Time Warner has been issued a 15-year franchise term.
2. Institutional Network (I-Net)- Time Warner has agreed to maintain the current live video
feeds from City Hall, the Community Center, and Central Elementary.
In addition to the live cab1ecast origination points at City Hall, Community Center and Central
Elementary, Time Warner would also provide two dark fibers connecting Vierling Fire Station
and the High School.
3. PEG Access Support (Public, Educational. Government)- Under the prior franchise, Time
Warner was required to provide three PEG access channels, equipment, and facilities and to
manage PEG access programming and production. One channel is used for government services
like broadcasting City Council meetings, one for public purposes to broadcast community events
or public service announcements and one for education to broadcast educational activities.
TW has agreed to continue the AO/subscriber PEG fee; however, is unwilling to continue the
rent and equipment maintenance grants.
4. Service to Public Institutions - Public schools, municipal buildings and SPUC will
receive free cable service. Institutions like County buildings, hospitals, churches and the like
have been removed.
Time Warner is willing to extend plant 125 feet to accommodate new or relocated sites. This
language will help us with future understandings with new or relocated buildings and as in
accordance with FCC guidelines.
Time Warner has agreed to hook-up both Sun Path and Red Oak for $3,000, which will be the
responsibility of the school district. The library will be hooked up for FREE and the police
department for $8,288.
5. Customer Service- The prior franchise contained detailed customer service obligations.
Time Warner seeks to be obligated to comply with the FCC's customer service standards.
6. Drop Fees- Time Warner will subtract the amount of drop fees from the franchise
revenue the city receives.
7. Local Office- Time Warner will maintain a customer service off 12 miles of the city's
northern border.
8. Franchise Fees - The city will continue to receive 5% of gross revenues from Time
20
Warner on cable services, not information services like cable modems. The city will also
receive AO/customer/month for public, educational and government purposes. (PEG)
9. Bundling Standard - Time Warner will comply with GAAP section EITF 00-21 when
offering bundling and/or discounted infornlation, telecommunication and cable services
to Shakopee residents to ensure a fair and equitable method of calculation.
A printed copy of the ordinance is available for inspection by any person at the office of the City
Clerk and the Shakopee Public Library.
21
EXHIBIT A
CABLE SERVICE TO INSTITUTIONS
Grantee shall provide a Drop, outlet and Basic Service and the most highly penetrated cable
programming service tier at no cost to each of the following institutions:
. Shakopee High School
. Shakopee Jr. High School
. All Public Elementary Schools
. Shakopee City Hall
. Shakopee School District Service Center
. Shakopee Public Library
. Shakopee Fire Stations
. Shakopee Police Station
. Shakopee Public Works
. Shakopee Public Utilities Commission Headquarters
. Shakopee Senior Citizen High Rise (to the Common Room; subject to Grantee
securing an acceptable easement)
. Shakopee Community Center
. Shakopee Community Center Studio
As referenced in Section 6.2(B), if any of the above facilities is over one hundred and twenty five
(125) feet from Grantee's then existing System (i.e. requiring a drop in excess of 125 feet), the
facility shall be responsible for all equipment, construction costs and additional wiring beyond the
first one hundred and twenty five (125) feet. The first one hundred and twenty five (125) feet shall
be Grantee's responsibility.
Cable Service provided herein shall be utilized for non...commercial purposes. Users shall hold
the Grantee harmless from any and all liability or claims arising out of their use of Cable
Service, other than for those claims arising out of improper installation or faulty equipment.
22
EXHmIT B
SERVICE AREA MAP
23
EXHmIT C
FCC CUSTOMER SERVICE STANDARDS
~76.309 Customer service obligations.
(1) Cable system office hours and telephone availability--
(i) The cable operator will maintain a local, toll-free or collect call telephone access line which
will be available to its subscribers 24 hours a day, seven days a week.
(A) Trained company representatives will be available to respond to customer telephone
inquiries during normal business hours.
(B) After normal business hours, the access line may be answered by a service or an automated
response system, including an answering machine. Inquiries received after nOffi1al business
hours must be responded to by a trained company representative on the next business day.
(ii) Under normal operating conditions, telephone answer time by a customer representative,
including wait time, shall not exceed thirty (30) seconds when the connection is made. lfthe call
needs to be transferred, transfer time shall not exceed thirty (30) seconds. These standards shall
be met no less than ninety (90) percent of the time under normal operating conditions, measured
on a quarterly basis.
(iii) The operator will not be required to acquire equipment or perform surveys to measure
compliance with the telephone answering standards above unless an historical record of
complaints indicates a clear failure to comply.
(iv) Under normal operating conditions, the customer will receive a busy signal less than three
(3) percent of the time.
(v) Customer service center and bill payment locations will be open at least during normal
business hours and will be conveniently located.
(2) Installations, outages and service calls. Under norn1al operating conditions, each of the
following four standards will be met no less than ninety five (95) percent of the time measured
on a quarterly basis:
(i) Standard installations will be performed within seven (7) business days after an order has
been placed. "Standard" installations are those that are located up to 125 feet from the existing
distribution system.
(ii) Excluding conditions beyond the control of the operator, the cable operator will begin
working on "service interruptions" promptly and in no event later than 24 hours after the
interruption becomes known. The cable operator must begin actions to correct other service
problems the next business day after notification of the service problem.
(iii) The "appointment window" alternatives for installations, service calls, and other installation
activities will be either a specific time or, at maximum, a four-hour time block during nom1al
business hours. (The operator may schedule service calls and other installation activities outside
ofnornlal business hours for the express convenience of the customer.)
24
(iv) An operator may not cancel an appointment with a customer after the close of business on
the business day prior to the scheduled appointment.
(v) Ifa cable operator representative is running late for an appointment with a customer and will
not be able to keep the appointment as scheduled, the customer will be contacted. The
appointment will be rescheduled, as necessary, at a time which is convenient for the customer.
(3) Communications between cable operators and cable subscribers --
(i) Refunds -- Refund checks will be issued promptly, but no later than either--
(A) The customer's next billing cycle following resolution of the request or thirty (30) days,
whichever is earlier, or
(B) The retum of the equipment supplied by the cable operator if service is terminated.
(ii) Credits -- Credits for service will be issued no later than the customer's next billing cycle
following the determination that a credit is wan-anted.
(4) Definitions --
(i) Normal business hours -- The teml "nomlal business hours" means those hours during which
most similar businesses in the community are open to serve customers. In all cases, "normal
business hours" must include some evening hours at least one night per week and/or some
weekend hours.
(ii) Normal operating conditions -- The term "normal operating conditions" means those service
conditions which are within the control of the cable operator. Those conditions which are not
within the control of the cable operator include, but are not limited to, natural disasters, civil
disturbances, power outages, telephone network outages, and severe or unusual weather
conditions. Those conditions which are ordinarily within the control of the cable operator
include, but are not limited to, special promotions, pay-per-view events, rate increases, regular
peak or seasonal demand periods, and maintenance or upgrade of the cable system.
(iii) Service interruption -- The tenn "service intemlption" means the loss of picture or sound on
one or more cable channels.
25
EXHIBIT D
TIME WARNER PROGRAMMING
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EXHIBIT D
TIME WARNER PROGRAMMING
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EXHIBIT D
TIME WARNER PROGRAMMING
28