25F - CABLE AUDIT SRVS - Laserfiche WebLink

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REQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: AUGUST 1, 2011 TITLE: AGREEMENT WITH COMMUNICATIONS SUPORT GROUP FOR CABLE AUDIT SERVICES CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on 1St Reading ? Ordinance on 2nd Reading ? implementing Resolution ? Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute the attached amendment to agreement with Communications Support Group for cable audit services in an amount not to exceed $60,000, for a total not to exceed amount of $78,000, subject to non-substantive changes approved by the City Manager and City Attorney. DISCUSSION On January 25, 2011, the City entered into an agreement with Communications support group to perform a cursory franchise fee and specialized Public, Education and Government (PEG) fee review of both Time Warner Cable (TWC) and AT&T California (ATT). This Phase 1 review was designed to better understand how both companies have been remitting franchise fees and PEG fees and determine if there was potential to recover additional unpaid fees. Phase 1 was also intended to provide information to the City that would assist in determining the costs and benefits of proceeding with a full audit. The cost for Phase 1 of the project was $18,000. On June 23, 2011 Communications Support Group submitted a preliminary procedures review that addressed the findings in Phase 1 of the project. This report lists potential unpaid franchise fee revenue of $77,000 and potential unpaid PEG revenue of $427,000. These amounts are one time monies that are in addition to the quarterly franchise fees and PEG fees that are remitted to the City. They City receives approximately $1,175,000 in franchise fee annually. In addition, as Part of Phase 1, Communications Support Group helped clarify the amount of PEG fees owed the City. The City projects approximately $232,000 in PEG fees annually. On June 24, 2011, Communications Support Group submitted a proposal for Phase 2 of the project, which includes a full three-year audit of TWC and a one-year audit of ATT. By completing Phase 2 of the project, the City will maximize its ability to recover up to $504,000 in unpaid franchise fees and PEG fees. In addition, the audit will help the City better understand TWC's and ATT's accounting practices to help ensure that the City is collecting all the quarterly franchise fees and PEG fees that it is owed. Franchise fees are fees paid into the General Fund and PEG fees are fees paid into Fund 21 and restricted for PEG capital and equipment purchases. 25F-1