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07/07/1992 - City Council Special 4 f S AGENDA SPECIAL CITY COUNCIL MEETING Tuesday July 7, 1992 4:30 p.m. I. ROLL CALL/ADOPT AGENDA II. PERSONNEL ITEMS III. CABLE SYSTEM OWNERSHIP TRANSFER • IV. CEDARVALE UPDATE V. OTHER BUSINESS VI. ADJOURNMENT • • • • MEMO TO: HONORABLE MAYOR AND CITY COUNCILMEMBERS FROM: CITY ADMINISTRATOR HEDGES DATE: JULY 2, 1992 SUBJECT: SPECIAL CITY COUNCIL MEETING/JULY 7, 1992 A Special City Council meeting was scheduled for Tuesday, July 7, 1992 at 4:30 p.m. in Conference Rooms A and B to discuss the following items: Personnel Items Cable System Ownership Transfer Cedarvale Update Other Business Personnel Items As a follow-up to the June 16 special workshop session, the City Administrator and Assistant to the City Administrator Duffy and John Roszak will provide a continuation of discussion and update on personnel items. It is also the intent of the City Administrator to coordinate a meeting time for the Personnel Committee consisting of City Councilmembers Awada and • McCrea to meet on certain personnel matters that were deferred to that Committee for additional analysis by the City Council. Hopefully, a date can be selected on Tuesday for a future Committee meeting. Cable System Ownership Transfer Eagan members of the Joint Burnsville/Eagan Cable Commission will be present to discuss the proposed transfer of cable system ownership from North Central Cable Communications Corporation to Meredith/New Heritage Strategic Partners. The final public hearing will be held by the Commission Thursday, July 9. After that public hearing is closed, a recommendation will be made to both the Cities of Burnsville and Eagan to approve the transfer of ownership. For additional information and an update on the proposed transfer of cable ownership, refer to a memo prepared by Cable Coordinator Reardon enclosed on pages 3 through for your review. This is also an opportunity for the City Councilmembers to share any other thoughts or input with the Cable Commission members. Cedarvale Update It was requested that the Cedarvale study and the City's role in the Cedarvale Greater Area redevelopment be placed on the next City Council workshop for general discussion. It may be that with the personnel items and cable system ownership transfer, time will not permit an indepth discussion on these items. If time does not permit, this item could be scheduled at a future workshop session given the fact that the City staff and Economic Development Commission would not proceed with any further commitments to the Cedarvale study until the Council has had an opportunity to further discuss this matter. Other Business There is no additional business at this time. Meal Order Due to the scheduling of the special workshop, followed by a regular City Council meeting, a sandwich will be provided for each City Councilmember. The meal will be ordered from Al Bakers. If you have a certain selection that you would prefer, contact Karen by noon Tuesday or she will select the meal you chose for the last work session. /S/ Thomas L. Hedges City Administrator • • c2 111 MEMO TO: BURNSVILLE/EAGAN CABLE COMMISSION ASSISTANT TO THE CITY MANAGER HANSEN ASSISTANT TO THE CITY ADMINISTRATOR HOHENSTEIN FROM: CABLE COORDINATOR REARDON DATE: JULY 1, 1992 SUBJECT: TRANSFER OF CABLE SYSTEM OWNERSHIP UPDATE BACKGROUND In February, 1992, the Commission and Cities received from North Central Cable Communications Corporation (CTVNC) notification of the company's intent to transfer ownership of the system to Meredith/New Heritage Strategic Partners L.P. The Member Cities designated the Cable Commission to act, on behalf of the Cities, as the official advisory body regarding the transfer. As a result, the Commission conducted a public hearing at its April meeting and has continued the hearing each subsequent meeting until its forthcoming July 9 meeting. During this time, the Commission and staff have retained the consulting services of Public Knowledge (financial analysis) and Communications Support Corporation (technical compliance and inspection) . In addition, Legal Counsel Creighton, on behalf of the Cable Commission, has submitted two separate "Municipal • Requests for Information" to Meredith/New Heritage. Both consultants' reports and findings, and M/NH's responses have been previously submitted for your review. In addition to the legal, technical, financial and character review there have been other issues or items which the -Commission/Cities/ staff felt needed to be resolved or addressed prior to an approval of the transfer. The status on these items will be discussed under "Discussion" in this memorandum. It is anticipated, pending Legal Counsel Creighton's forthcoming opinion on the transfer, available July 6, that the Commission will close the public hearing at the July 9 meeting and recommend that both Member Cities approve the transfer of ownership. According to State statute, upon the closure of the public hearing, the Member Cities have 30 days to either approve or deny the transfer. DISCUSSION Based on discussion with the Commission, Member Cities and staff's own review, the following transfer of ownership issues were proposed for CTVNC's consideration: • Local Programming Equipment Replacement • Reimbursement of Litigation Expenses • Gross Revenue Audit Findings and Reimbursement of Alleged Overpayment of Sales Tax • Provision of Automated Playback Equipment for the Member • Cities • Cable Line Extension to Public Buildings • Technical Compliance Issues Pending final written language and review by Legal Counsel Creighton, the following four issues have been proposed to be resolved as follows: Local Programming Equipment Replacement • The company will agree that it will be responsible for the remaining $403, 000 for equipment replacement, as projected in the original pro formas for Years 10-12 of the franchise. • The time frame for expenditures will be extended from Year 12 to Year 14, resulting in the company spending an "Annual Amount" of $88,600 to replace the equipment. • The company will provide a list of the proposed replacement equipment for each year, which shall be approved by the Commission prior to replacement. • If the company does not spend the Annual Amount in any one year, any unspent money will be added to the next year's allocation. • • If the company spends more than its Annual Amount in any given year, the Annual Amount in Year 14 shall be reduced by that sum. • Any already replaced equipment that requires replacement due to breakage, shall be replaced by the company and shall not impact the Annual Amount. • Reimbursement of Litigation Expenses • The company has agreed that it will reimburse to the Commission/ Cities all litigation expenses as billed in December, 1991. • The amount to be reimbursed is $36,397.85. Gross Revenue/Sales Tax • The company has agreed that they will "wash" this item. • According to the 1989 gross revenue audit of the company, the company owed $13,851 in additional franchise fees to the Cities. • According to CTVNC, the company had overpaid $38,947 in franchise fees during 1986-1988 by including sales tax in the gross revenue. • So as to more clearly define the payment of franchise fees to the Cities, legal counsels for both parties are currently redefining the "gross revenue" definition franchise language. The new 41/ • definition will come back to the Cities as a recommended amendment to the franchise. Provision of Automated Playback Systems • The company will agree to equip both Cities with automated playback systems. • The exact details involving the equipment will be resolved. • The company will furnish each City with the equipment upon the request of the individual City. Cable Line Extension to Public Buildings The fifth item discussed with the company is the extension of the institutional and subscriber networks to specific public buildings which were not originally listed in the franchise. It has been the company's position the franchise provides that line extension to any buildings not listed will only be extended at the expense of time and materials, unless the building is within 200 feet of existing cable. Staff has estimated there are approximately 15 buildings in the two Cities, either governmental or educational, which either currently do not have cable, or when constructed, will not be eligible for no-cost extension. • The company's position is that since the franchise is specific in this area, it is not in violation, and therefore not required to extend cable as requested. However, staff is hopeful that this issue will be resolved. Technical Compliance Issues As a result of Communications Support Corporation's technical inspection audit, concerns were raised regarding: the company's provision of a status monitoring system; an improved preventive maintenance schedule; and the provision of fully activated standby power on the cable lines as specified by the franchise. The Commission's Citizen/Company Relations Committee and staff have reviewed all three issues and have forwarded their recommendations to the Commission for its consideration at its July 9 meeting. In the interim, staff is currently addressing these items with the company and expects to have them resolved by July 9. CALENDAR OF EVENTS • July 7 - Eagan City Council Work Session - Coordinator Reardon, Legal Counsel Creighton & Eagan Cable Commission Members will be present at the Council 's work session to discuss the transfer of ownership and issues associated with it. • July 9 - Cable Commission Meeting - It is anticipated, pending Legal Counsel Creighton's opinion and final resolution of the transfer of ownership issues, that the Commission will close the public hearing and recommend the Member Cities approve the transfer of ownership. • July 13- Burnsville City Council Work Session - Coordinator Reardon, Legal Counsel Creighton & Burnsville Cable Commission Members will be present at the work session to address issues associated with the transfer of ownership. • Pending a July 9 closure of the public hearing, both Member City Councils will be required per State statute to either approve or deny the transfer of ownership within 30 days of that date. If the Cities cannot meet this time schedule. please notify me immediately and the Commission will not close its public hearing. • Aug 3 - Burnsville City Council Meeting - It is recommended that the Council consider either approval or denial of the transfer of ownership at this meeting. • Aug 4 - Eagan City Council Meeting - It is recommended that the Council consider either approval or denial of the transfer of ownership at this meeting. Closure . I will be in attendance at the above-referenced meetings. In the interim, if you have any questions or concerns, please do not hesitate to contact me. /. 4 IL Cable Coordin. or MR/vmd • 6