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HomeMy WebLinkAboutNS-2774 - Adding Division 6 to Chapter 15 of Santa Ana Municipal Code, Regarding State Franchised Video Service ProvidersORDINANCE NO. NS-2774 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA ADDING DIVISION 6 TO CHAPTER 15 OF THE SANTA ANA MUNICIPAL CODE, REGARDING STATE FRANCHISED VIDEO SERVICE PROVIDERS THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN AS FOLLOWS: Section 1: The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. The Legislature of the State of California has adopted the Digital Infrastructure and Video Competition Act of 2006 (DIVCA) effective January 1, 2007,and B. DIVCA establishes a regulatory structure for the State to grant franchises for the provision of video service including cable television service and open-video systems, and C. Pursuant to DIVCA the City of Santa Ana acquires certain rights and responsibilities with respect to state video franchise holders ("State Franchisees"), and D. Included in such rights is the requirement that the City receive a state franchise fee as compensation for the use of the public rights-of-way for the provision of video services, and E. DIVCA requires that the City establish, by ordinance, financial support provisions for Public, Educational and Government (PEG) channel facilities, and F. DIVCA requires that the City adopt a schedule of penalties for any material breach by a State video franchise holder for violation of customer service and protection standards that the City is permitted to enforce, and G. The City may examine the business records of a State Franchisee to the extent reasonably necessary to ensure financial accountability, and H. The City will retain authority, without change, over the existing cable franchise until such time as the franchisee no longer holds a City franchise, or is no longer operating under a current or expired franchise, and All provisions of the Santa Ana Municipal Code which are repeated herein are repeated solely in order to comply with the provisions of section 418 of Ordinance No. NS-2774 Page 1 of 9 the Charter of the City of Santa Ana. Any such restatement of existing provisions of the Code is not intended, nor shall it be interpreted, as constituting a new action or decision of the City Council, but rather such provisions are repeated far tracking purposes only in conformance with the Charter. Section 2: Section 15-255 of the Santa Ana Municipal Code is hereby amended to provide that it is lawful to operate a cable television system in the City pursuant to a State Video Franchise, such that it reads as follows (new language in bald, deleted language in strikeout for tracking purposes only): Sec. 15-255. Franchise terms and conditions. (a) Franchise purposes. A franchise granted by the city under the provisions of this division 2 may authorize the grantee to do the following: (1) To engage in the business of providing cable television services that are authorized by law and that grantee elects to provide to its subscribers within the designated franchise service area. (2) To erect, install, construct, repair, rebuild, reconstruct, replace, maintain, and retain, cable lines, related electronic equipment, supporting structures, appurtenances, and other property in connection with the operation of the cable system in, on, over, under, upon, along and across streets and public ways within the designated franchise service area. (3) To maintain and operate the franchise properties for the origination, reception, transmission, amplification, and distribution of television and radio signals, and for the delivery of cable services and such other services as may be authorized by law. (b) Franchise required. (1) It is unlawful for any person to construct, install, or operate a cable television system within any street or public way in the city without first obtaining either a City franchise under the provisions of this division 2, or a State Video Franchise under division 6 of this Chapter 15. (2) The city council finds and determines that certain multichannel video programming distributors and video providers, as those terms are defined in section 15-268 of division 6, provide cable service, including video programming, to subscribers within limited geographic areas where multifamily dwelling complexes and congregate-living complexes are located. That cable service, including video programming, is sometimes provided, in whole or in part, by the transmission of signals over wires or lines that are owned or controlled by telecommunications service providers or other public utilities and that are within or cross streets or public ways within the boundaries of a local franchising authority. The Ordinance No. NS-2774 Page 2 of 9 multichannel video programming distributor or video provider may obtain from the telecommunications service provider or other public utility, by lease, license, or similar contractual arrangement, the right to use those wires or lines in order to provide cable service, including video programming, to subscribers or customers within the multi-family dwelling complexes and congregate-living complexes referenced above. The city council further finds and determines that these contractual arrangements for signal transmission facilitate the provision of cable service, including video programming, and create a nexus between that cable service and the use of the streets and public ways of the city. Consequently, to the maximum extent authorized under California law, it is the intent of the city council to subject multi-channel video programming distributors and video providers that intend to use this signal-transmission methodology to the franchise requirements set forth in this division 2, subject to such waivers and modifications of those requirements as may, in the discretion of the city council or its designee, be warranted in view of the limited geographic area that is proposed to be served. (c) Term of the franchise. (1) A franchise granted under this division 2 will be for the term specified in the franchise agreement, commencing upon the effective date of the ordinance adopted by the city council that authorizes the franchise. (2) A franchise granted under this division 2 may be renewed upon application by the grantee in accordance with the then-applicable provisions of state and federal law and of this division 2. (d) Franchise service area. A franchise is effective within the territorial limits of the city, and within any area added to the city during the term of the franchise, unless otherwise specified in the article granting the franchise or in the franchise agreement. (e) Federal or state jurisdiction. This division 2 will be construed in a manner consistent with all applicable federal and state laws, and it applies to all franchises granted or renewed after the effective date of this article, to the extent authorized by applicable law. (f) Franchise non-transferable (1) Grantee may not sell, transfer, lease, assign, sublet, or dispose of, in whole or in part, either by forced or involuntary sale, or by ordinary sale, contract, consolidation, or otherwise, the franchise or any of the rights or privileges therein granted, without the prior written consent of the city council and then only upon such terms and conditions as may be prescribed by the city council, which consent may not be unreasonably denied or delayed. Any attempt to sell, transfer, lease, assign, or otherwise dispose of the franchise without the written consent of the city council is null and void. The granting of a security interest in any assets of Ordinance No. NS-2774 Page 3 of 9 the grantee, or any mortgage or other hypothecation, will not be deemed a transfer for the purposes of this subsection. (2) The requirements of subsection (1) apply to any change in control of grantee. The word "control" as used herein is not limited to the ownership of major stockholder or partnership interests, but includes actual working control in whatever manner exercised. If grantee is a partnership or a corporation, prior written authorization of the city council is required where ownership or control of twenty (20) percent or more of the partnership interests or of the voting stock of grantee, or any company in the tier of companies controlling the grantee, whether directly or indirectly, is acquired by a person or a group of persons acting in concert, none of whom, individually or collectively, owns or controls those partnership interests or that voting stock of the grantee, or of grantee's upper tier of controlling companies, as of the effective date of the franchise. (3) Grantee must give prior written notice to the city of any proposed foreclosure or judicial sale of all or a substantial part of the grantee's franchise property. That notification will be considered by the city as notice that a change in control of ownership of the franchise will take place, and the provisions of this paragraph that require the prior written consent of the city council to that change in control of ownership will apply. (4) For the purpose of determining whether it will consent to an acquisition, transfer, or change in control, the city may inquire as to the qualifications of the prospective transferee or controlling party, and grantee must assist the city in that inquiry. In seeking the city's consent to any change of ownership or control, grantee or the proposed transferee, or both, must complete Federal Communications Commission Form 394 or its equivalent. This application must be submitted to the city not less than one hundred and twenty (120) days prior to the proposed date of transfer. The transferee must establish that it possesses the legal, financial, and technical capability to remedy all then-existing defaults and deficiencies, and, during the remaining term of the franchise, to operate and maintain the cable system and to comply with all franchise requirements. If the legal, financial, and technical qualifications of the proposed transferee are determined to be satisfactory, then the city will consent to the transfer of the franchise. (5) Any financial institution holding a pledge of the grantee's assets to secure the advance of money for the construction or operation of the franchise property has the right to notify the city that it, or a designee satisfactory to the city, will take control of and operate the cable television system upon grantee's default in its financial obligations. Further, that financial institution must also submit a plan for such operation within 90 days after assuming control. The plan must ensure continued service and compliance with all franchise requirements during the period that the financial institution will exercise control over the system. The financial Ordinance No. NS-2774 Page 4 of 9 institution may not exercise control over the system for a period exceeding one year unless authorized by the city, in its sole discretion, and during that period of time it will have the right to petition the city to transfer the franchise to another grantee. (6) Grantee must reimburse the city for the city's reasonable review and processing expenses incurred in connection with any transferor change in control of the franchise. These expenses include, without limitation, costs of administrative review, financial, legal, and technical evaluation of the proposed transferee, consultants (including technical and legal experts and all costs incurred by these experts), notice and publication casts, and document preparation expenses. No reimbursement may be offset against any franchise fee payable to the city during the term of the franchise. (g) Geographical coverage. (1) Unless otherwise provided in the franchise agreement, grantee must design, construct, and maintain the cable television system to have the capability to pass every dwelling unit and commercial building in the city, subject to any service-area line extension requirements set forth in the franchise agreement. (2) After service has been established by activating trunk or distribution cables for any service area, grantee must provide service to any requesting subscriber within that activated part of the service area within seven (7) days from the date of request, provided that the grantee is able to secure on reasonable terms and conditions all rights-of-way and permits necessary to extend service to that subscriber within that seven- day period. (h) Nonexclusive franchise. Every franchise granted is nonexclusive. The city specifically reserves the right to grant, at any time, such additional franchises for a cable television system that it deems appropriate, subject to applicable state and federal law. If an additional franchise is proposed to be granted to a subsequent grantee, a noticed public hearing must first be held if required under the provisions of Government Code Section 53066.3. (i) Multiple franchises. (1) The city may grant any number of franchises, subject to applicable state and federal law. The city may limit the number of franchises granted, based upon, but not necessarily limited to, the requirements of applicable law and the following specific local considerations: a. The capacity of the public rights-of-way to accommodate multiple cables in addition to the cables, conduits, and pipes of the existing utility systems, such as electrical power, telephone, gas, and sewerage. Ordinance No. NS-2774 Page 5 of 9 b. The benefits that may accrue to subscribers as a result of cable system competition, such as lower rates and improved service. c. The disadvantages that may result from cable system competition, such as the requirement for multiple pedestals on residents' property, and the disruption arising from numerous excavations within the public rights-of-way. (2) The city may require that any new grantee be responsible for its own underground trenching and the associated costs if, in the city's opinion, the streets or public ways in any particular area cannot reasonably accommodate additional cables. Section 3: Division 6 is added to Chapter 15 of the Santa Ana Municipal Code to read in full as follows: Chapter 15. Division 6. Regulation of State Video Franchise Holders Section 15. 270 Purpose and Authority This Chapter is designed to regulate video service providers holding state video franchises and operating with the City of Santa Ana. As of January 1, 2007, the State of California has the sole authority to grant state video franchises pursuant to the Digital Infrastructure and Video Competition Act of 2006 ("the Act"). Pursuant to the Act, the City of Santa Ana shall receive a franchise fee and a fee for public, educational and government (PEG) purposes from all state video franchise holders (hereinafter "State franchisee") operating within the City. Additionally, the City has the responsibility to establish and enforce penalties, consistent with state law, against all State franchisee's operating within the City for violations of customer service standards set by the State. Section 15.271 State Video Franchise and PEG Fees a. A State franchisee that offers video service within the boundaries of the City of Santa Ana, shall calculate and remit a state franchise fee equal to five percent (5%) of the gross revenue of that State franchisee. b. A State franchisee that offers video service within the boundaries of the City of Santa Ana shall calculate and remit, a fee equivalent to one percent (1%) of that State franchisee's gross revenue, for the support of public, educational and governmental (PEG) access facilities and activities within the local franchise service area. c. The state franchise fee and PEG support fee shall be remitted to the City of Santa Ana on a quarterly basis within 45 days after the end of each quarter Ordinance No. NS-2774 Page 6 of 9 for that calendar year. Each payment shall be accompanied by a detailed summary explaining the basis for the calculation of the state franchise fee and PEG support fee. Payments shall be sent to the Santa Ana Parks, Recreation and Community Services Agency. d. Gross revenue, for the purposes of (a) and (b) above, shall have the definition set forth in California Public Utilities Code §5860. e. Not more than once annually, the City Manager or his designee may examine and pertorm an audit of the business records of a State franchisee(s) to the extent reasonably necessary to ensure compliance with the Act and this Ordinance. Section 15.272 "Customer Service Penalties Under State Video Franchises" a. The holder of a state video franchise shall comply with all applicable state and federal customer service and protection standards pertaining to the provision of video services. b. The city manager, or the city manager's designee, shall monitor the compliance of State Franchisee's with respect to state and federal customer service and protection standards. The city manager will provide the State Franchisee written notice of any material breaches of applicable customer service standards, and will allow the State Franchisee 30 days from the receipt of the notice to remedy the specified material breach. Material breaches not remedied within the 30-day time period will be subject to the following penalties to be imposed by the City: (1) For the first occurrence of a material breach, a fine of $500.00 shall be imposed for each day the material breach remains in effect, not to exceed $1,500.00 for each material breach. (2) For a second material breach 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 material breach. (3) For a third or further violation of the same nature within 12 months, a fine of $2,500.00 shall be imposed for each day the material breach remains in effect, not to exceed $7,500.00 for each occurrence of the material breach. c. Decisions by the city manager to assess monetary penalties against a State franchisee are final. The State franchisee or any person aggrieved by a decision of the city manager may appeal that decision in writing to the city council in accordance with the procedures specified in chapter 3 of this Code. The appeal letter must be accompanied by the fee established by the city council for processing the appeal. d. Any fine imposed on a State franchisee shall be paid to the City. As provided for in the California Public Utilities Code §5900(g), the City shall submit one half of all fines received from a state video franchise holder to the Digital Divide Account established by California Public Utilities Code §280.5. Ordinance No. NS-2774 Page 7 of 9 Section 4. If any section, subsection, sentence, clause, phrase or portion of this ordinance is far any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. Section 5. This ordinance shall take effect 30 days after its adoption by the City Council. ADOPTED this 2"d day of September, 2008 APPROVED AS TO FORM: JOSEPH W. FLETCHER, City Attorney By: ~.-~!1n~? aura Sheedy Assistant City Att rney AYES: Councilmembers: Alvarez. Benavides. Bustamante Martinez Pulido. Sarmiento. Tinaiero (7) NOES: Councilmembers: None (0) ABSTAIN: Councilmembers: None (0) NOT PRESENT: Councilmembers: None (0) Ordinance No. NS-2774 Page 8 of 9 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS-2774 to be the original ordinance adopted by the City Council of the City of Santa Ana on September 2, 2008, and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: ~ 3 c~J~ ~~~~`~` r-'`'-~-~ Patricia E. Healy Clerk of the Council City of Santa Ana Ordinance No. NS-2774 Page 9 of 9