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07/21/2015 - City Council RegularAGENDA EAGAN CITY COUNCIL EAGAN MUNICIPAL CENTER BUILDING JULY 21, 2015 6:30 P.M. I. ROLL CALL AND PLEDGE OF ALLEGIANCE II. ADOPT AGENDA III. RECOGNITIONS AND PRESENTATIONS IV. CONSENT AGENDA (Consent items are acted on with one motion unless a request is made for an item to be pulled for discussion) A. APPROVE MINUTES B. PERSONNEL ITEMS C. APPROVE Check Registers D. APPROVE Contracts E. APPROVE July 1, 2015 to July 1, 2016 General Insurance Renewal F. AWARD Contract 15-15, Yankee Doodle Road (CSAH 28)/ Promenade Avenue/ O'Leary Lane Intersection Improvements G. Item removed H. APPROVE Final Payment, City Contract 15-13 (Pond JP -47.2 Sludge Removal) I. APPROVE Storm Water Management Operations & Management Agreement with Prime Therapeutics J. APPROVE Telecommunications Lease Amendment Agreements with T -Mobile K. RECEIVE Petition to vacate Public Drainage & Utility Easement, Lot 14, Block 1 Prettyman Heights (1579 Skyline Trail), and Schedule a Public Hearing to be held August 18, 2015 L. AWARD Contract 15-18, Deerwood Elementary WQ Improvements - Sump Manhole Retrofit Project V. PUBLIC HEARINGS A. PUBLIC HEARING to consider applications received for a cable franchise VI. OLD BUSINESS VII. NEW BUSINESS VIII. LEGISLATIVE/ INTERGOVERNMENTAL AFFAIRS UPDATE IX. ECONOMIC DEVELOPMENT AUTHORITY - (There are no EDA items at this time) X. ADMINISTRATIVE AGENDA A. City Attorney B. City Council Comments C. City Administrator D. Director of Public Works E. Director of Community Development XI. VISITORS TO BE HEARD (for those persons not on the agenda) XII. CLOSED SESSION XIII. ADJOURNMENT 40klo City of Evan ma TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS FROM: CITY ADMINISTRATOR OSBERG DATE: JULY 17, 2015 SUBJECT: AGENDA INFORMATION FOR JULY 21, 2015 CITY COUNCIL MEETING ADOPT AGENDA After approval is given to the July 21, 2015 City Council agenda, the following items are in order for consideration. Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA The following items referred to as consent items require one (1) motion by the City Council. If the City Council wishes to discuss any of the items in further detail, those items should be removed from the Consent Agenda and placed under Old or New Business unless the discussion required is brief. A. Approve Minutes Action To Be Considered: To approve the minutes of July 7, 2015 regular City Council meeting as presented or modified. Attachments: (1) CA -1 July 7, 2015 Minutes MINUTES OF A REGULAR MEETING OF THE EAGAN CITY COUNCIL Eagan, Minnesota JULY 7, 2015 A Listening Session was held at 6:00 p.m. prior to the regular City Council meeting. Present were Mayor Maguire, Councilmembers Bakken, Fields, Hansen and Tilley. A regular meeting of the Eagan City Council was held on Tuesday, July 7, 2015 at 6:30 p.m. at the Eagan Municipal Center. Present were Mayor Maguire, Councilmembers Bakken, Fields, Hansen and Tilley. Also present were City Administrator Osberg, Director of Communications Garrison, Director of Community Development Hohenstein, City Planner Ridley, Public Works Director Matthys, Parks and Recreation Director Johnson, Police Chief McDonald, Fire Chief Scott, and Executive Assistant Stevenson. AGENDA Councilmember Hansen moved, Councilmember Tilley seconded a motion to approve the agenda as presented. Aye:5 Nay:0 RECOGNITIONS AND PRESENTATION There were no recognitions and presentation to be heard. CONSENT AGENDA Councilmember Fields moved, Councilmember Tilley seconded a motion to approve the Consent Agenda as presented: Aye: 5 Nay: 0 A. It was recommended to approve the minutes of June 9, 2015 Special City Council meeting, and June 16, 2015 regular City Council meeting as presented or modified. B. 1. It was recommended to authorize the hiring of temporary/seasonal employees. 2. It was recommended to authorize the hiring of Parks & Recreational summer seasonal employee Anthony Bergren-Salina. 3. It was recommended to authorize the hiring of full time temporary building inspector. C. It was recommended to approve the check registers dated June 12, 19, and 26, 2015. D. It was recommended to approve the ordinary and customary contract for Microsoft Corporation. E. It was recommended to approve the determination that the Conditional Use Permit for outdoor storage at 1090 Gemini Road has lapsed due to failure to construct the improvements. F. It was recommended to approve a Final Planned Development upon approximately 17 acres located south of Cliff Road and east of Pilot Knob Road, and a Final Subdivision (Dakota Path 4th Addition) to create 35 single-family lots and two outlots upon approximately 45 acres located south of Cliff Road and east of Pilot Knob Road. G. It was recommended to adopt the Findings of Fact, Conclusions & Resolution of Denial of a request for a Variance to allow an eight foot residential fence. H. It was recommended to approve an agreement allowing HealthEast Transportation to continue to house two ambulances at fire stations. City Council Meeting Minutes July 7, 2015 2 page I. It was recommended to approve a resolution to accept a donation from a citizen in the amount of $100 for the Fire Department and authorize the necessary budget adjustment. J. It was recommended to approve a resolution calling for a public hearing on Monday, August 3, 2015 on a proposal to adopt a five-year capital improvement plan under Minnesota Statutes, Section 475.521. K. Item was removed. L. It was recommended to approve the Joint Powers Agreement with the Dakota County Transportation Department for Project 1185 (Cliff Road Signal Interconnect — Dakota County Project 32-80) within County right-of-way in the City of Eagan and authorize the Mayor and City Clerk to execute all related documents. M. It was recommended to approve the final payment for Contract 14-02 (Central Maintenance Backup Power) in the amount of $52,760.00 to Power Secure Inc., and accept the improvements for perpetual City maintenance subject to warranty provisions. N. Item was removed. 0. It was recommended to receive the bids and award Contract 15-14 (Blackhawk Middle School/Deerwood Elementary Stormwater Management, Phase 2) to Mark's Bobcat Service in the base bid amount of $25,779.10, and authorize the Mayor and City Clerk to execute all related documents. P. It was recommended to authorize the Eagan Lions Club to place Lions Club signs on specified Welcome to Eagan signs as approved by Public Works staff, Dakota County or the Minnesota Department of Transportation (MnDOT). Q. It was recommended to approve an Agreement with the Minnesota Department of Health (MDH) for a Source Water Protection (Wellhead Protection Plan) Implementation Grant and authorize the Mayor and City Clerk to execute all related documents. R. It was recommended to approve a temporary on -sale liquor license and waive the license fee for Faithful Shepherd Catholic School's Septemberfest on September 18-20, 2015 at 3355 Columbia Drive. S. It was recommended to adopt a resolution approving an Exempt Permit for Faithful Shepherd Catholic School to conduct a raffle on September 18-19, 2015 at Faithful Shepherd Catholic School, 3355 Columbia Drive. T. It was recommended to approve a Sound Amplification Permit for an outdoor event with electronic sound system/audio equipment use after 10 p.m. located at 3355 Columbia Drive, and a Waiver of Fee for a Sound Amplification Permit for the 12th annual SeptemberFest school fundraiser for Faithful Shepherd. U. It was recommended to direct the City Attorney's Office to prepare an ordinance amendment to City Code Chapter 5 regarding storage requirements for on -sale liquor licenses. V. It was recommended to accept the resignation of John Radmer from the Energy and Environment Advisory Commission and appoint alternate Thomas Craft to complete the term in place of John Radmer. W. It was recommended to approve a resolution to accept a multi -event partnership donation from The Urgency Room of $6,500 for Eagan Streets Alive $5,000 and Eagan Market Fest $1,500 and direct the Mayor and City Clerk to sign the appropriate document. X. It was recommended to authorize the submission of a POP Club, Power of Produce Grant from the Farmer's Market Coalition for Eagan Market Fest. Y. It was recommended to approve a professional services agreement with Oertel Architects for services associated with Project No. 1206, Central Maintenance Facility Renovations, and authorize the Mayor and City Clerk to execute all related documents. City Council Meeting Minutes July 7, 2015 3 page Z. It was recommended to approve a professional services agreement with CNH Architects for services associated with Fire Station One. AA. It was recommended to authorize preparation of plans and specifications for Project No. 1206, Central Maintenance Facility Renovations. BB. It was recommended to appoint both Ehlers and Northland Securities as fiscal services consultants for development/redevelopment advisory services. CC. It was recommended to authorize preparing plans and specifications for the Fire Station One Project. DD. It was recommended to approve Access Eagan non-exclusive Access and Use Agreement with the IP Guys.net LLC dba OneNet USA and authorize the Mayor and City Clerk to sign; and further authorize the Director of Communications or IT Manager to execute all necessary work and pricing schedules to implement the subsequent fiber connections with the concurrence of the City Attorney. EE. It was recommended to approve the Memorandum of Understanding with Qwest Corporation doing business as CenturyLink QC and the City of Eagan related to the installation of fiber optic facilities in the Right -of -Way. PUBLIC HEARINGS Tesseract Addition Easement Vacation Tesseract Place Right -of -Way Vacation City Administrator Osberg introduced the item noting the Council is being asked to close the public hearing to vacate public easements on Outlot A & Lot 1, Block 1, Tesseract Addition, and to vacate Tesseract Place public right-of-way, and continue action to coincide with future City Council consideration of the Tesseract 2nd Addition final plat. Public Works Director Matthys gave a staff report. Mayor Maguire opened the public hearing. There being no public comment, Mayor Maguire turned the discussion back to the Council. Councilmember Fields moved, Councilmember Hansen seconded a motion to close the public hearing to vacate public easements on Outlot A & Lot 1, Block 1, Tesseract Addition, and to vacate Tesseract Place public right-of-way, and continue action to coincide With future City Council consideration of the Tesseract 2nd Addition final plat. Aye: 5 Nay: 0 OLD BUSINESS There were no old business items to be heard. NEW BUSINESS Comprehensive Guide Plan Amendment & Rezoning — Wyatt Sharing & Caring, LLC City Administrator Osberg introduced the item noting the Council is being asked to approve a Comprehensive Guide Plan Amendment from Special Area/Office Service to Special Area/Limited City Council Meeting Minutes July 7, 2015 4 page , Industrial and a Rezoning from A, Agriculture to 1-1, Limited Industrial for approximately 33 acres for property located at 3430 Highway 55. . City Planner Ridley gave a staff report. Gary Tushie, Tushie Montgomery Architects and Peter Deanovic, applicant, were available for questions. Mayor Maguire opened the public comment. There being no public comment, Mayor Maguire turned the discussion back to the Council. Councilmember Tilley moved, Councilmember Hansen seconded a motion to approve a Comprehensive Guide Plan Amendment from Special Area/Office Service to Special Area/Limited Industrial for approximately 33 acres located at 3430 Highway 55. Aye: 5 Nay: 0 Councilmember Tilley moved, Councilmember Hansen seconded a motion to approve a Rezoning from A, Agriculture to 1-1, Limited Industrial for approximately 33 acres located at 3430 Highway 55. Aye: 5 Nay: 0 , LEGISLATIVE / INTERGOVERNMENTAL AFFAIRS UPDATE There was no legislative/intergovernmental affairs update. ADMINISTRATIVE AGENDA CITY COUNCIL Councilmember Fields noted Eagan's July 4th Funfest was a hit, and that Eagan will be celebrating its 501h next year. Mayor Maguire thanked the volunteers that organizing the event. Councilmember Hansen noted he attended the Funfest Ambassadors Coronation event last night, and thanked the outgoing Ambassadors and welcomed the new Ambassadors. There were no visitors to be heard. VISITORS TO BE HEARD ADJOURNMENT Councilmember Tilley moved, Councilmember Hansen seconded a motion to adjourn the meeting at 6:48 p.m. Aye: 5 Nay: 0 Date Mayor City Clerk Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA B. Personnel Items Item 1 Action to be Considered: Accept the resignation of Linda Dralle, Systems Analyst, with the Utilities Division of Public Works. Authorize replacement with a Clerical Technician 4. • The current position is classified as a Level 6 non exempt, non union. Based on the revised job description and responsibilities, staff proposes reclassifying to a Clerical Technician 4, union- eligible. Item 2 Action to be Considered: Authorization to ratify the collective bargaining agreement between the City of Eagan and the Teamsters Public Works and Parks Maintenance Workers Unit, Local #320. • The City and the Teamsters reached a Tentative Agreement for January 2015 – December 2015. • Highlights of the agreement include the following: Wages: January 1, 2015 – an additional 1% increase above the 2014 wages. April 1, 2015 – an additional 1% above the January 1, 2015 wages. These 2015 wage changes are consistent with settlement agreements between the Teamsters Clerical Unit, Local 320, Law Enforcement Labor Services Local 185 and Law Enforcement Labor Services Local 160. The percentage increase is also representative of what non union employees received in 2015. Health Insurance: Employer and Employee Insurance premium contributions agreed upon are consistent with the Teamsters Clerical Unit, Local 320, Law Enforcement Labor Services Local 185 and Law Enforcement Labor Services Local 160 and non union employees. All other modifications are available in the full Labor Agreement and are available for review in the City Administrator’s office. Item 3 Action to be Considered: Approve hiring of the following seasonal employees: • Monica Peterson, Guest Services ECC • Robert Dreas, Guest Services ECC • Marie Merwin Guest Services ECC • Julie R Andersen, Consessions Civic Arena • Sophia Lundquist, Pool Attendant Cascade Bay • Madison Segar, Pool Attendant Cascade Bay • William Weichelt, Pool Attendant Cascade Bay Item 4 Action to be Considered: Accept the resignation of Luann Bayer, full time Police Clerical Technician 4, and authorize replacement. Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA C. Ratify Check Registers Action To Be Considered: To ratify the check register dated July 3, 2015 as presented. Attachments: (1) CC -1 Check register dated July 3, 2015 Agenda Information Memo July 21, 2015, Eagan City Council Meeting CONSENT AGENDA D. Approve Contracts Action To Be Considered: To approve the ordinary and customary contracts listed below. Facts: ➢ The contracts listed below are in order for Council approval. Following approval, the contracts will be electronically executed by the Mayor and City Clerk. Contracts to be approved: Contract with Hartman Companies, Inc. for installation of a silt drainage system at Thresher Fields ➢ Memorandum of understanding with Health Is Love Organization, LLC. for a health and wellness activity at Market Fest ➢ Agreement with KAW (Kids Around the World) to declare the existing play equipment at Woodhaven Park as surplus and approve the donation of said equipment from Woodhaven Park playground to be recycled and reused in a developing country yet to be identified Attachments: (0) The contracts are available from the City Clerk's Office. Agenda Information Memo July 21, 2015, Eagan City Council Meeting CONSENT AGENDA E. Approve July 1, 2015 to July 1, 2016 General Insurance Renewal Action To Be Considered: To approve the general insurance renewal for the period of July 1, 2015 to July 1, 2016. Facts: ➢ The City has received renewal information for its general insurance coverage. The renewal proposed has been assembled through the efforts of Ron Youngdahl and Carl Bennetsen of Northern Capital Insurance Group, the City's insurance representative. General insurance coverage includes buildings and contents, equipment, automobile, general liability and numerous other smaller areas of risk exposure. ➢ Official quotations were not solicited, but other markets have been reviewed through the years. The general conclusion is that there are no providers who can match the League of Minnesota Cities Insurance Trust (LMCIT) for both price and coverages. Consequently, only one quote from the LMCIT is being presented to the City Council for consideration. ➢ The insurance renewal is being presented to the Council partway through the renewal period due to LMCIT processing delays. Appropriate coverage was bound and has been maintained since the July 1, 2015 renewal date. ➢ Consistent with the 2014-2015 policy, the 2015-2016 policy maintains a $50,000 per occurrence deductible and a $150,000 general aggregate deductible. ➢ The 2015-2016 insurance premium is 6 percent higher than the 2014-2015 insurance premium. The majority of this increase is due to additional property coverage costs for the Cedar Grove parking ramp and coverage adjustments to existing properties after a LMCIT appraisal. ➢ Per the conclusion reached by the City Council on May 5, 2015, the renewal approval includes not waiving the monetary limit on tort liability. Attachments: CE -1 Premium Breakdown General Insurance Renewal Premium Breakdown Coverage 2014-2015 2015-2016 Increase/(Decrease) Amount iPercent Property $112,924 $132,031 $19,107 16.92 Municipal Liability $181,617 $183,543 $1,926 1.06 Automobile Liability & Damage $44,495 $45,485 $990 2.22 Mobile Property $8,206 $8,423 $217 2.64 Blanket Bond $1,980 $1,957 ($23) (1.16) Fireworks $225 $225 $0 0 Equipment Breakdown $21,489 $22,399 $910 4.23 Total premiums $370,9361 $394,0631 $23,127 6.23 Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA F. Contract 15-15, Yankee Doodle Road/Promenade Avenue/O'Leary Lane Intersection Improvements Action To Be Considered: Receive the bids and award Contract 15-15 (Yankee Doodle Road/Promenade Avenue/O'Leary Lane - Intersection Improvements), to S.M. Hentges & Sons, Inc., for the bid amount of $1,082,293.25, and authorize the Mayor and City Clerk to execute all related documents. Facts: ➢ Contract 15-15 provides for traffic signal and roadway improvements for the Yankee Doodle Road (CSAH 28)/Promenade Avenue and Yankee Doodle Road/O'Leary Lane intersections as a joint project between the City and Dakota County. The contract also provides for the removal and replacement of the sidewalk along the south side of Yankee Doodle Road, from Denmark Avenue to 350 feet east of O'Leary Lane. ➢ On June 17, 2014, the City Council approved the comprehensive guide plan amendment, and preliminary subdivision of CityVue Commons, a 10 -acre mixed-use development, located on the former Blue Cross/Blue Shield property on the southern leg of the Yankee Doodle Road/Promenade Avenue intersection. With the anticipated timing of this redevelopment, the City Council approved advancing the signal and intersection improvements from 2016 to 2015 in concurrence with the Dakota County Transportation Department. ➢ On February 3, 2015, a public hearing was held for Project 1174, Yankee Doodle Road/ Promenade Avenue/O'Leary Lane Intersection Improvements. The approval also included an eastbound right -turn lane on eastbound Yankee Doodle Road at O'Leary Lane, and the median closure on Yankee Doodle Road at O'Leary Lane. ➢ On April 21, 2015, the City Council approved a joint powers agreement with Dakota County for the removal and replacement of the sidewalk along the south side of Yankee Doodle Road, from Denmark Avenue to 350 feet east of O'Leary Lane, as identified in the City's 2015-2019 Capital Improvement Program. ➢ On May 19, 2015, the plans and specifications were presented to the City Council for their approval with all the construction activity designated to occur within the existing public right-of-way or easements. ➢ All bids have been reviewed for compliance with the bid specifications and accuracy on unit price extensions and summations. The base bid of $1,082,293.25 from S.M. Hentges & Sons, Inc., has been reviewed by the Public Works Department and is in order for favorable Council action. Attachments: (1) CF -1 Bid Summary BID SUMMARY YANKEE DOODLE ROAD (CSAH 28)/ PROMENADE AVE/ O'LEARY LANE CITY CONTRACT 15-15 Bid Date/ Time: 10:30 a.m., Thursday, June 25, 2015 Contractors Total Base Bid 1. S.M. Hentges & Sons, Inc. $1,082,293.25 2. McNamara Contracting, Inc. $1,175,188.44 3. Bituminous Roadways, Inc. $1,183,956.30 4. Max Steininger, Inc. $ 1,213,492.65 *$130,000 estimated for signal pole/ mast arm purchase subtracted. The City to purchase traffic signal materials separately for installation by 15-15 Contractor. Low Feasibility Report Over/Under Engineer's Over/Under Item Base Bid (FR)/ C1 P/ JPA FR Estimate Estimate Eng Estimate Estimate YDR Turn lanes/ $ 872,120.27 $ 812,225* +7.5% $757,780 +15.1% Median Closure EB Right turn lane $ 65,573.69 NA NA $59,360 +10.5% YDR/ O'Leary Lane Sidewalk/ Trail $86,616.10 $ 54,000 +60% $109,965 +21.2% Rem/ Replace Street Lighting $ 58,283.20 NA NA $55,205 +5.6% Totals $1,082,293.25 NA NA $982,310 +10.2% Signal/ Cabinet Material Purchase NA $ 130,000 NA $ 130,000 NA (Aug. 3 Award Consideration) *$130,000 estimated for signal pole/ mast arm purchase subtracted. The City to purchase traffic signal materials separately for installation by 15-15 Contractor. Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA H. Contract 15-13, Pond JP -47.2 Alum Sludge Removal Action To Be Considered: Approve the final payment for Contract 15-13 (Pond JP -47.2 — Alum Sludge Removal) in the amount of $85,160.000 to New Earth USA, LLC and accept the improvements for perpetual City maintenance subject to warranty provisions. Facts: A Pond JP -47.2 (sediment basin), and the associated alum feed system, was built in 2010 as an extension of the Hurley Lake Storm Lift Station to remove phosphorous from the storm water prior to entering Fish Lake. The pond accumulates solids as part of the operation and needs to be cleaned every 3-5 years. Contract 15-13 provided alum sludge removal at Pond JP -47.2. The project was programmed for 2015 in the City's 5 -Year Capital Improvement Program (2015-2019). ➢ These improvements have been completed, inspected by representatives of the Public Works Department, and found to be in order for favorable Council action of final payment and acceptance for perpetual maintenance subject to warranty provisions. Attachments: (0) Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA Approve Stormwater Management System Maintenance Agreement — Prime Therapeutics Action To Be Considered: Approve a Stormwater Management System Maintenance Agreement with Upwind, LLC, owners of the Prime Therapeutics site at 2655 Eagan Woods Drive, and authorize the Mayor and City Clerk to execute all related documents. Facts: ➢ Upwind LLC, the owner of 2655 Eagan Woods Drive proposes to add approximately 1.12 acres of new impervious parking lot surface to the site. The scale and type of proposed work requires a grading permit. ➢ To meet Sec. 4.34 stormwater requirements for the addition of impervious surface, the applicant proposes an underground stormwater infiltration system to be installed beneath the new parking lots. Stormwater overflow is connected to the public stormwater management system. ➢ The City requires a long-term maintenance agreement with the Owner to ensure continued and proper functioning of the private stormwater management system, which is connected to the public stormwater management system. ➢ This agreement has been drafted and reviewed by the City Attorney's Office and Public Works Department personnel, which includes exhibits provided by the Owner's Consulting Engineer. ➢ The Owner has reviewed and signed the agreement. ➢ The City Attorney and Public Works Department personnel find the agreement to be in order for favorable Council consideration. Attachments: (0) Agenda Information Memo July 21, 2015 Eagan City Council Meeting 14Is] ► M V11iT ►1 e J. Approve Telecommunications Lease Amendment Agreement — T -Mobile Action To Be Considered: Approve telecommunication lease amendments with T -Mobile Central LLC, for antenna upgrade installations on designated water reservoir sites and authorize the Mayor and City Clerk to execute all related documents. Facts: ➢ The City has received applications from T -Mobile Central LLC for the upgrades of wireless communication system antennas on each of the following water reservoir sites: Yankee Doodle Water Tank — 760 Yankee Doodle Road Deerwood Water Tank -1-35E and Deerwood Drive ➢ These applications have been reviewed by the City's Engineering Consultant, Radio Communication Consultant, City Attorney's Office and Public Works Department personnel and found to be consistent with other past lease agreements and in order for favorable Council consideration.. Attachments: (0) Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA L. Contract 15-18, Deerwood Elementary Water Quality Improvements Action To Be Considered: Receive the bids and award Contract 15-18 (Deerwood Elementary School — Sump Manhole Retrofit Project) to Minnesota Dirt Works, for the bid in the amount of $13,300.00, and authorize the Mayor and City Clerk to execute all related documents. Facts: ➢ Contract 15-18 provides for the installation of a sump manhole structure for stormwater runoff treatment on the south edge of the campus of Deerwood Elementary School, within the existing drainage and utility easement. ➢ The sump manhole structure will capture sediment in the stormwater runoff from the 3.82 -acre impervious drainage area of the south parking lot for Deerwood Elementary/Black Hawk Middle School, which drains directly to BP -4, within the Blackhawk Lake watershed. Sediment from this drainage area currently deposits into BP -4 (a stormwater wetland) at the base of a steep wooded slope that cannot be safely accessed for sediment delta maintenance. Capturing sediment within the sump manhole structure would reduce sediment inputs to BP -4 and simplify future sediment removal maintenance. ➢ Contract 15-18 is an integral part of the 2013-2016 Blackhawk Lake Protection Project (Project), which will enhance community stewardship of lakes and watersheds by implementing activities and improvements at Independent School District (ISD) 196 schools for the benefit of Blackhawk Lake. In 2013, the Minnesota Pollution Control Agency awarded the City of Eagan a $46,500 grant for these types of improvements. ➢ On June 4, 2013, the City Council authorized Water Quality improvements for the Blackhawk Lake watershed as part of the 2014-2018 Capital Improvement Plan (CIP). ➢ On July 10, 2015, bid quotes were obtained for Contract 15-18. All bids have been reviewed for compliance with the bid specifications and accuracy on unit price extensions and summations. The low bid of $13,300.00 from Minnesota Dirt Works has been reviewed by the Public Works Department and found to be in order for favorable Council action. Attachments: (1) CL -1 Bid Summary BID SUMMARY DEERWOOD ELEMENTARY WATER QUALITY IMPROVEMENTS CITY CONTRACT NO. 15-18 Bid/Quote Date: Friday, July 10, 2015 Engineer's Estimate: $15,000 Bidders 1) Minnesota Dirt Works, Inc Total Base Bid Over/Under Estimate 13.300.00 -11.3 2) G.F. Jedlicki, Inc. $ 19,720.00 +31.5% Agenda Information Memo July 21, 2015 Eagan City Council Meeting CONSENT AGENDA K. Prettyman Heights- Easement Vacation Action To Be Considered: Receive the petition to vacate a portion of a public drainage and utility easement on Lot 14, Block 1 Prettyman Heights (1579 Skyline Trail), and schedule a public hearing to be held on August 18, 2015. Facts: ➢ On July 10, 2015, City staff received a petition from Sean and Nichole Schendel, property owners of Lot 14, Block 1 Prettyman Heights, requesting the vacation of an existing drainage and utility easement on their property at 1579 Skyline Trail, north of Lone Oak Road and east of TH 13, in northwest Eagan. The purpose of the request is to allow the homeowners to construct an in - ground pool in the backyard of this property. ➢ The request would vacate a portion of an existing drainage and utility easement on the property. The vacation of the easement would address the portion in excess of the standard drainage and utility easements adjacent to the property lines. The portions of the easements remaining will adequately address all necessary public drainage and utility easements on this property. ➢ Notices for a public hearing will be published in the legal newspaper and sent to all potentially affected and/or interested parties for comment prior to the public hearing. Attachments: (2) CK -1 Location Map CK -2 Legal Description Graphics CITY OF EAGAN Proposed Easement Vacation Location Map City of Eapn Lot 14, Block 1, Prettyman Heights Fig. 1 7/15/2015 494 MENDOTA HEIGHTS N EASEMENT m VACATION O LOCATION Y o LONE OAK- RD. - DOODLE RD. zaYANKEE Y Q Z W Q W N' i Mh DIFFLEY RD. 30 30 Q W ` Lu CITY OF EAGAN Proposed Easement Vacation Location Map City of Eapn Lot 14, Block 1, Prettyman Heights Fig. 1 7/15/2015 70.0' � LO 1 10, ' Lot 14 Block 1 I 9 W Z J Easement Vacation Description All that part of the existing drainage and utility easement over and across Lot 14, Block 1, Prettyman Heights, Dakota County, Minnesota, lying west of the following described line: Commencing at the northest corner of said lot 14, thence easterly along the north line of said lot 14 a distance of 70.00 feet to the point of beginning, thence South 5 degrees 09 minutes 23 seconds West a distance of 97.17 feet to a point on the south line ofsaid lot 14 and there terminating. Excepting the north & south 5.0 feet and west 10.0 feet thereof said lot 14. Proposed Drainage & Utility Easement Vacation Lot 14, Block 1, Prettyman Heights, Dakota County City of Eagan D `4 4/8/2013 Agenda Information Memo July 21, 2015, Eagan City Council Meeting PUBLIC HEARING A. PUBLIC HEARING to consider applications received for a cable franchise Actions To Be Considered: ➢ Receive public comments and consider closing the public comment period or leaving it open until the next regularly scheduled City Council meeting. ➢ Adopt or modify the draft resolution establishing findings of fact regarding Centuryl-ink's legal, technical and financial qualifications as a potential cable provider in Eagan. ➢ To provide staff with any other recommendations based on the City Council's review of Centuryl.ink's report, the review of qualifications and public comments received. Facts: ➢ CenturyLink requested a cable communications franchise from the City of Eagan. ➢ On June 2, 2015 the Eagan City Council directed publication of a public Notice of Intent to Consider Applications for a Cable Franchise, which would also include a Request for Proposals Pursuant to this request. ➢ The City prepared the necessary documents to comply with the franchising procedure required under Minnesota law and on June 12 and 19, 2015, the City published a public Notice of Intent to Consider Applications for a Cable Franchise as well as a Request for Proposals. Copies of these documents were sent to the current cable operator, Comcast, and to CenturyLink. On July 1, 2015, the City received an application from CenturyLink. ➢ It is now time to hold the mandated public hearing, for two purposes: 1) To receive any public comment regarding the application received from CenturyLink; and 2) To consider the legal, technical and financial qualifications of the Applicant. No decision is required the night of the public hearing, but may be made if the Council so desires. ➢ Director Garrison will introduce the item followed by a presentation by the City's cable franchise attorney, Brian Grogan, will present an overview of the franchising process and review a report regarding the qualifications of CenturyLink. ➢ Representatives of CenturyLink are expected to testify regarding the application submitted, and will be available to answer questions that the City Council may have or that arise from subsequent Public Hearing comments. ➢ Representatives of Comcast, the incumbent cable operator, are welcome to speak although Comcast has not participated in hearings before other Twin City municipalities. While staff received previous direction from the City Council on June 2nd to begin franchise negotiations with Centurylink regarding franchise terms, legal counsel believes it is advisable following closing the public hearing and a determination regarding qualifications to again repeat that direction as part of any adopted final resolution. Attachments: (4) PHA -1 Qwest Broad band/Centurylink application for a competitive cable franchise PHA -2 Qualifications Report prepared by Moss& Barnett PHA -3 Copy of Competitive Franchising PowerPoint, Brian T. Grogan, PHA -4 Draft City of Eagan resolution adopting findings of fact and directing next steps 7'e `177 Centu ryLi n ke j. Patrick Haggerty Director of State Regulatory and Legislative Affairs Phone 651-312-5630 DELIVERED VIA COURIER AND E-MAIL July 1, 2015 Tom Garrison Communications Director City of Eagan 3830 Pilot Knob Road Eagan, MN 55122 Re: Application of Qwest Broadband Services, Inc. d/b/a CenturyLink for Cable Communications Services Franchise in Eagan, Minnesota Dear Mr. Garrison: In response to the City of Eagan's published notice of Intent to Franchise and Request for Proposal, enclosed please find a copy of Qwest Broadband Services, Inc., d/b/a Centuryl-ink's notarized application for a cable communications franchise in the City of Eagan, Minnesota. An electronic copy will be sent via email. Trade Secret information has been redacted from these copies. Your counsel, Brian Grogan, has been served with one copy that contains Trade Secret information as well as a public version. Also enclosed is a check in the amount of $10,000 for the application fee. Please do not hesitate to contact me or any other designated representative of the Company if you have any questions. CenturyLink looks forward to working with and bringing facilities based video competition to the City of Eagan. Cc: Brian Grogan, Esq. truly yours, Patrick Haggerty PUBLIC DOCUMENT 200 South 5th Street, Room 2200 Minneapolis, MN 55402 TRADE SECRET DATA www.centurylink.com HAS BEEN EXCISED CITY � [�7 �:G_<<►_1► I APPLICATION OF QWEST BROADBAND SERVICES, INC. D/B/A CENTURYLINK FOR A COMPETITIVE CABLE FRANCHISE Qwest Broadband Services, Inc., d/b/a CenturyLink ("CenturyLink") respectfully files this application for a competitive cable communications franchise with the City of Eagan pursuant to the City of Eagan Notice and Request for Proposals dated June 12th, 2015. Background: Overview of CenturyLink CenturyLink Improves Lives At CenturyLink, our vision is to improve the lives of our customers. Through our products and services, we help strengthen businesses and connect communities to each other and the world. CenturyLink's Unifying Principles We have established certain fundamental values that are the foundation for how we interact with our partners, our customers and with one another. We call these values our Unifying Principles, and they bring together our beliefs into a cohesive philosophy that guides our actions in all matters, including our greater social responsibility in the communities where we live and work. The Unifying Principles are Fairness, Honesty and Integrity, Commitment to Excellence, Positive Attitude, Respect, Faith and Perseverance. CenturyLink in Minnesota QBSI/EAGAN Application - JULY Page 1 CenturyLink in Minnesota employs approximately 3,000 people with the majority of those jobs located in the Twin Cities metropolitan area. More than half of CenturyLink employees in the Twin Cities are represented by U the Communications Workers of America Union. This includes �W approximately 500 network technicians, 200 of whom are being cross- trained to support Prism. Success in the market will trigger hiring more �U W skilled technicians in the future to support Prism CenturyLink also employs WIm approximately 100 network engineers in the Twin Cities who work in partnership with the network operations team to plan, build and deploy Ir service. CenturyLink's network operations team supports the new headend facility, located in Golden Valley. QBSI/EAGAN Application - JULY Page 1 Employees in the Twin Cities also include business sales, marketing, regulatory affairs, public policy, customer service and administrative support. Employees are located across the Twin Cities in central office neighborhood locations and at three main corporate campus locations: • CenturyLink, 200 S. 5th Street, downtown Minneapolis • CenturyLink, 2800 Wayzata Blvd, Bryn Mawr, Minneapolis • CenturyLink, 70 W. 4th Street, downtown St. Paul Many CenturyLink employees have worked with the company for decades experiencing early innovations as a telephone company and the current day transformation into a technologically -sophisticated service provider to local communities and Minnesota's largest companies. With a statewide payroll that exceeds $195 million each year, CenturyLink is a proud contributor to jobs and the economy in the state. CenturyLink in the Community, Sustainability and Commitment to Diversity CenturyLink is committed to strengthening and improving the communities it serves, not only through jobs, products and services, but also through philanthropic support of local community agencies, events and initiatives. We focus our philanthropic and volunteer efforts on K-12 education and programs that support youth; technology -focused initiatives; and locally - driven efforts that strengthen communities and make them better places to live. Through our involvement in efforts ranging from environmental stewardship to community investment, we further our commitment to improve lives by being a good citizen and neighbor in the communities where we work and live. Since 2007, the CenturyLink Clark M. Williams Foundation (previously Qwest Foundation) has awarded $800,000 to innovative Minnesota teachers working to improve STEM learning and access to technology in schools statewide. The Minnesota Business Partnership assists CenturyLink by administering the program. Together, we are helping to build awareness around STEM education and preparing Minnesota's future workforce for STEM careers. CenturyLink awards scholarships in partnership with local organizations to advance the opportunities of their stakeholders. Scholarships recipient organizations include: CenturyLink STEM scholarship via Minnesota High Tech association. QBSI/EAGAN Application - JULY Page 2 ■ Pacer Center Excite Technology Camp for Girls scholarship. ■ Minneapolis Urban League general education scholarships. • University of St. Thomas, ThreeSixty program scholarship. • CenturyLink helps provide a state-of-the-art fan experience at Target Field as the Official Communications Provider for the Minnesota Twins and Target Field. CenturyLink's sponsorship also includes working with the Twins and the Metro Area Library Association to support the summer reading program. • Through our Matching Time Grant program, Minnesota employees volunteering time to a non-profit agency can earn a CenturyLink Foundation grant for that organization. • Our employees can further their community support through our annual CenturyLink All Employee Volunteer Day, Employee Giving Campaign supporting the Greater Twin Cities United Way and our Annual Food Drive supporting Second Harvest Heartland. • We are committed to environmental sustainability through programs that include waste recycling, green information technology, and procurement policies and practices. • CenturyLink provides incentives for employees in certain communities to make use of public transit or green commuter programs. • Our Ethics and Compliance Program provides employees with guidance in making ethical business decisions and provides mechanisms for employees to report concerns. • We have a Supplier Code of Conduct that establishes expectations for our contractors and vendors regarding ethical business practices. • CenturyLink's Privacy Policy protects our customers' information and keeps our customers informed about the information we collect and the choices they have regarding that information. • Diversity is celebrated and promoted through our Employee Resource Groups, recruiting, global supply chain and community outreach. CenturyLink Lifeline & Internet Basics CenturyLink participates in Lifeline, which provides certain discounts to qualified subscribers on monthly service. The program is designed to help low income households with needed phone services. Lifeline is available to qualifying customers in every U.S. state. Qualifications vary by state. Residents of American Indian and Alaskan Native tribal lands may qualify for up to an additional $25 of enhanced Lifeline support monthly. They may also qualify for the Link -Up program, which helps consumers pay the initial installation costs of getting telephone service. Link -Up provides a credit of up to $100 of the initial installation charges for tribal customers. QBSI/EAGAN Application - JULY Page 3 CenturyLink supports the Federal Communications Commission's goal of bringing high-speed Internet to economically -disadvantaged households. We work with nonprofit partners throughout our state to engage communities in the CenturyLink Internet Basics program which provides qualifying low-income Minnesotans service at a reduced rate. CenturyLink has conducted training programs and awareness building around Internet Basics through the Minneapolis Urban League. We have created partnerships with the Minneapolis Public Schools and PC's for People to distribute hundreds of computers to low-income families and provide information to families on the opportunities offered through CenturyLink Internet Basics. CenturyLink, the applicant, is a Delaware corporation, in good standing and authorized to do business in the State of Minnesota. The following responds directly to the requested information set forth in the Request for Proposals: A. Plans for channel capacity, including both the total number of channels capable of being energized in the system and the number of channels to be energized immediately. Applicant's underlying switched digital IP based technology allows for an almost unlimited channel capacity. While a final channel lineup has not been finalized at this time, please see "Exhibit A - channel lineup and programming packages" from another jurisdiction CenturyLink offers Prism'" service. CenturyLink will provide the Commission with a copy of the actual channel lineup prior to launching service. It should be noted that currently CenturyLink offers more channels in HD than any other MVPD nationally. It also provides a robust library of Video on Demand content. B. A statement of the television and radio broadcast signals for which permission to carry will be requested from the Federal Communications Commission. Franchisee will make all appropriate filings and preparations prior to the turn up of its video service including (1) filing a community registration with the FCC via FCC Form 322; (2) providing notice to local broadcasters and requesting either must -carry or retransmission consent election. In the Twin Cities area, Applicant will negotiate retransmission agreements with the following stations: KARE, KMSP, KSTC, KSTP, WCCO, WFTC, and WUCW. The following stations will be carried via a must carry election by the station: KPXM and KTCA. And (3) registration of any antennas required to provide service. QBSI/EAGAN Application - JULY Page 4 In its existing markets, Franchisee complies with many additional federal requirements in providing its Prism' service, including all of the FCC requirements applicable to multichannel video programming distributors (such as equal employment opportunity and set-top box requirements), the FCC requirements applicable to EAS participants that are wireline video service providers, other FCC requirements applicable to provision of PrismT"' (such as receive -only earth station license requirements and annual regulatory fees for IPTV providers), and the Copyright Office requirements for cable systems filing semi-annual copyright statements of accounts and paying statutory license fees. Franchisee does not file an FCC Form 327 relating to CARS microwave facilities because Franchisee does not use such facilities in connection with the provision of Prism'. Similarly, Franchisee does not file FCC Form 320 and FCC Form 321 as they relate to the use of aeronautical frequencies that are not applicable to the IPTV technology. C. A description of the proposed system design and planned operation, including at least the following items: Description of the Technology and Infrastructure: CenturyLink will deploy its cable communications service, PrismT1, over facilities owned by an affiliated company, Qwest Corporation, d/b/a CenturyLink (QC). Prism is a switched digital service and is Ethernet based (it is not a QAM based, broadcast service). The fact that the service is switched digital and Ethernet based enables CenturyLink to offer unique features and functions, e.g., warp channel change, not generally available over more traditional cable systems, as more fully detailed below. Currently, two network architectural designs are used to deliver Prism" to subscribers: fiber to the node (FTTN) and fiber to the premises (FTTP), but the quality of the cable communications service is of the same high, technical quality regardless of the underlying network architecture. For FTTN, CenturyLink deploys fiber from a serving central office to a remote terminal in a neighborhood. The remote terminal houses the electronics (currently VDSL2) and such electronics create a broadband stream to individual addresses of up to 40Mpbs (80Mpbs if using pair bonding) over a copper subloop. For FTTP, there is fiber connectivity from the serving central office to a distinct address/location via an optical loop terminal (OLT) and this fiber connection will support broadband speeds of up to One Gbps. A set-top box is required for each television in a home to receive PrismTM. CenturyLink recently introduced a wireless set top box which enables the end user to move PrismT"^ to any location such as the patio or garage. QBSI/EAGAN Application - JULY Page 5 QC is the traditional telecommunications provider in the City of Eagan. It has and will continue to pull all necessary permits and comply with all local rules, codes and ordinances associated with access to and presence in the public rights of way. Please see Exhibit B (TRADE SECRET). 1. The general area for location of antenna and headend, if known; CenturyLink has two "super head ends", one located in Columbia, Missouri and one in Littleton, Colorado and each super head end has a satellite "farm" used to download national content. These two super head ends provide redundancy, i.e., should an emergency interrupt service at one super head end, and then the other head end will be used to provide the national content. The national content is encoded and then deployed over diverse 10 Gig fiber circuits to the local head where the local content, including public, educational and government access channels, is inserted for ultimate delivery to end users. The City of Eagan will be served out of the super head end in Columbia, Missouri and the local head end will be located in Golden Valley, Minnesota. CenturyLink will pick up the local broadcast signals via fiber circuits and will also capture those signals by antennae located at the local head end as a back-up, precautionary measure. 2. The schedule for activating cable and two-way capacity; While an exact launch date has yet to be determined, we are working diligently to complete all necessary work and required testing and operational readiness reviews to offer service to customers upon successful execution of a Franchise Agreement. Applicant will meet with the City to share the actual launch date when it becomes finalized. 3. The type of automated services to be provided; As noted above, we have attached a sample channel line up from another market. This illustrates the vast selection of content available to subscribers. Because our system is IP based, we offer unique applications available via the television set such as access to Picasa.ln addition, search and streaming services are available which enable viewers to search for the cheapest gasoline within a specified area or to stream selected stock market quotes. We also have an ever increasing video on demand library. Prism'" is a state of the art offering and its features and functions also include, but are not limited to: (1) whole home DVR; (2) warp speed channel change; QBSI/EAGAN Application - JULY Page 6 (3) find -it fast navigation, (4) multi-view (4 shows on one screen); (5) personal media sharing; (6) interactive news and information dashboard; (7) Prism"' on the Go (select content available over mobile devices such as smart phones and tablets); and (8) advanced parental controls. By going to the following URL, you can "experience" the features and functions of Prism"' through a short demonstration: httl2:llwww.centurylink.com/12rismty/ffindex.htm]. 4. The number of channels and services to be made available for access cable broadcasting; and Applicant will carry the same number of PEG stations as the incumbent. Further, Applicant is willing to carry any of the PEG stations in High Definition ("HD") format if the entity originating the signal provides that signal to Applicant in HD. Applicant will down convert the HD signals to standard definition ("SD") for those customers who may not subscribe to an HD package. S. A schedule of charges for facilities and staff assistance for access cable broadcasting; Franchisee will make all franchised cities' access channels available to its subscribers. For purposes of acquiring the signal, Franchisee will pick up the particular City's Access Channel signals at the point(s) of origination via a fiber facility and transport such content back to the local VSO for insertion in the channel lineup. At the point(s) of origination, Franchisee will need rack space and power for its equipment to receive the signal(s) handed off by the City to Franchisee. Franchisee will pay for all facilities and equipment located on its side of the demarcation point where the City will hand off its content to Franchisee and as is industry practice, the City will be responsible for all equipment on its side of the demarcation point. One of the features available on Prism" is "multi-view" -- we create a single channel/landing page for a category of shows, e.g., news, and make all the news channels available using picture in a picture technology. The end user can then click on the channel he or she wants to watch or watch four simultaneously. You can see a quick demonstration of this feature by clicking on the following URL: http://www.centurylink.com/prismty/#prism-tv-virtual-test-drive.html. We will use this same technology to create a "multi-view" (also referred to as "mosaic") for the City's Access Channels. In other words, we will work with the City to assign a channel placement/number for the Access Channel mosaic so that all of the franchised City's Access Channels will be available QBSI/EAGAN Application - JULY Page 7 on the "landing page" and an end user merely needs to click on the specific channel/picture in a picture to be seamlessly taken to the selected Access Channel in full screen view. Because each of the Access Channels has its own dedicated channel assignment, the channels are offered in the same video and audio quality as all other channels and can be recorded if so desired by an end user. Further, access to the City's Access Channels will not be limited to residents of a particular City. Rather, Prism"' subscribers throughout the area will have access to the various City's Access Channels and City residents will have access to other Cities' or Cable Commissions' Access Channels. This opens a vast array of viewing options for citizens. Franchisee is willing to make all the franchised City's access channels available in high definition if the City hands them to Franchisee in that format. If so, Franchisee will down convert all such HD Access Channels to SD so they can be viewed by any end user not capable of receiving HD signals. As this relates to the multi-view screen for the Access Channels, Applicant's middleware will automatically know if a subscriber needs to see the channel in SD or HD and will automatically route the end user to the channel with the proper format. With respect to video on demand, Franchisee will offer the cities a specified amount of space on its VOD servers, as will be specified in the franchise. This will enable viewers to go into the VOD library and to view, on an on - demand basis, any Access Channel content that the City has handed to Franchisee for storage on its VOD servers. Such VOD content hand off has a common industry standard which will be shared with the City when the terms of the franchise are negotiated and finalized. D. 'Perms and conditions under which particular service is to be provided to governmental and educational entities. Applicant will provide at no charge expanded basic service to all government buildings, schools, and public libraries located within its service footprint so long as those locations are capable of receiving service from Applicant and no other cable provider is providing service at such locations. QBSI/EAGAN Application - JULY Page 8 E. A schedule of proposed rates in relation to the services to be provided and a proposed policy regarding unusual or difficult connection of services. Final rates have yet to be determined, please see "Exhibit C- sample PrismTm rates" which are offered here for illustrative purposes. CenturyLink will provide Prism service to all qualified households within seven days. CenturyLink does not have "non-standard" installation, i.e., the provision of service at an additional construction cost to the subscriber. Qualification for Prism' service is purely a technical issue — it is not possible to pay an additional amount to qualify for the service. F. A time schedule for construction of the entire system with the time sequence for wiring the various parts of the area requested to be served. Applicant is still finalizing its initial footprint for the deployment of cable services within the City of Eagan service area. Applicant's planned deployment is highly confidential. Pursuant to an executed franchise agreement(s), Applicant will meet regularly with the City and the Commission to discuss where service is available and any plans for additional deployment. Applicant is the second entrant into the wireline video market in the City of Eagan. As a second entrant, investment in and expansion of Applicant's Cable System should be driven by market success, and not a contractual requirement for ubiquitous coverage. The following sets forth some critical background with respect to deployment of both telecommunications and cable infrastructure. Initially, local telephone companies were granted monopolies over local exchange service in exchange for taking on a provider of last resort obligation- a duty to provide service - to customers in its service territory. Similarly, with respect to video services, the City of Eagan has given the incumbent video provider (and its predecessors) a monopoly over facilities based video. In exchange for making the capital investment to deploy facilities, the incumbent cable company got 100 percent of the customers who wanted cable television. Subsequently, with respect to telephone services, the federal and local governments effectively eliminated the local telephone monopolies and fostered robust competition. It should be noted that in doing so, the telecom second entrant had absolutely no obligation to build any facilities or to serve any particular location(s) at all. As the FCC noted, imposing build -out requirements on new entrants in the telecommunications industry would constitute a barrier to entry (13 FCC Rcd 3460, 1997). Cable companies were free to enter the telecom market on terms that made business and economic sense to them. This very environment was the catalyst for robust QBSI/EAGAN Application - JULY Page 9 wireless and wireline competition and the proliferation of higher broadband speeds. Congress became concerned about the lack of competition in the video world and in 1992 amended federal law to prohibit a local franchising authority from "unreasonably[y] refus[ing] to award an additional competitive franchise." 47 U.S.C. § 541(a)(1) provides a direct avenue for federal court relief in the event of such an unreasonable refusal. 47 U.S.C. § 555(a) and (b). Until the advent, however, of state statutes granting statewide cable franchises without a mandatory build requirement (e.g., Florida) or progressive cities willing to grant competitive franchises, cable monopolies continued to the detriment of consumers and competition. Level playing field requirements are just one example of barriers to competitive entry erected by cities at the behest of the cable monopolies. Courts have ruled, however, that "level playing field" provisions do not require identical terms for new entrants. See, for example, Insight Communications v. City of Louisville, 2003 WL 21473455 (Ky. Ct. App. 2003), where the court found: There will never be an apple -to -apple comparison for Insight and other franchisee simply because Insight is the incumbent which in its own right and through its predecessors has been the exclusive provider of cable services in the City of Louisville for almost thirty years. No new cable franchisee can ever be in the same position as a thirty-year veteran. See also, In Cable TV Fund 14-A, Ltd. v City of Naperville (1997 WL 209692 (N.D.111); and New England Cable Television Assn, Inc. v. Connecticut DPUC 717 A.2d 1276 (1998). In sharp contrast to the monopoly provider, a second entrant faces a significant capital outlay with absolutely no assurance of acquiring customers; rather, it must compete with the monopoly incumbent and win each and every customer over. As Professor Thomas Hazlett of George Mason University has explained, "[i]ncumbents advocate build -out requirements precisely because such rules tend to limit, rather than expand, competition." The federal Department of Justice has also noted that "...consumers generally are best served if market forces determine when and where competitors enter. Regulatory restrictions and conditions on entry tend to shield incumbents from competition and are associated with a range of economic inefficiencies including higher production costs, reduced innovation, and distorted service choices." (Department of justice Ex Parte, May 10, 2006, FCC MB Dkt. 05-311). QBSI/EAGAN Application - JULY Page 10 The fact is that the incumbent cable provider has (1) an established market position; (2) all of the cable customers; and (3) an existing, in-place infrastructure. These disparate market positions make imposing a build -out requirement on a competitive entrant bad public policy. Under the guise of "level playing field" claims, incumbent cable operators seek to require new entrants to duplicate the networks the incumbents built as monopolies, knowing that such a requirement will greatly reduce, if not eliminate, the risk of competitive entry. In 2007, the FCC issued its findings with respect to facilities based video competition and held as follows: (1) with respect to level playing field requirements, the FCC stated that such mandates "unreasonably impede competitive entry into the multichannel video marketplace by requiring local franchising authorities to grant franchises to competitors on substantially the same terms imposed on the incumbent cable operators (Para. 138); and (2) with respect to mandatory build out, the FCC held that "an LFA's refusal to grant a competitive franchise because of an applicant's unwillingness to agree to unreasonable build out mandates constitutes an unreasonable refusal to award a competitive franchise within the meaning of Section 621(a)(1) [47 U.S.C. § 541(a)(1)]." Those two FCC holdings alone should put this entire matter to rest - level playing field requirements and unreasonable mandatory build requirements are barriers to competitive entry in the cable market and violate the federal Cable Act and the FCC's order. Minnesota, however, codified its requirements in a state law and the FCC expressly declined to "preempt" state laws addressing the cable franchising process. It is clear, however, that the FCC did not intend to protect the Minnesota statute which mandates the imposition of barriers to entry on each and every local franchising authority. As various providers were trying to enter the competitive cable market and encountering barriers such as level playing field requirements and mandatory build out provisions, many states passed statutes to facilitate competitive entry and to prevent local franchising authorities from erecting barriers to entry. Such laws were passed in 26 states including Florida, Missouri and North Carolina, where CenturyLink has taken advantage of the streamlined process to enter a market without a mandatory build obligation. These laws have facilitated competitive entry as evidenced, for example, by the presence of four facilities based competitors in the Orlando, Florida market, including CenturyLink and Comcast. As such, these state laws are aligned and not in conflict with the FCC's and Congress' policies for promoting competition in the video distribution market. QBSI/EAGAN Application - JULY Page 11 Minnesota's cable law, however, is quite the opposite. Minnesota's cable act dates back to the 1970s and directs each local franchising authority to impose not only a level playing field across a broad range of issues (many of which Franchisee does not oppose), but also a five year mandatory build out requirement. Both of these provisions have been deemed to be barriers to entry by the FCC. The incontrovertible fact is that the law has been extremely successful in barring cable communications competition in the City of Eagan: The City of Eagan has not experienced any facilities based competition because of the barriers to entry Minnesota codified in Chapter 238. In support of this position, that the FCC's 2007 Order preempts Minn. Stat. Chapter 238, Franchisee notes the following: • Conflict preemption: State law may be preempted without express Congressional authorization to the extent it actually conflicts with federal law where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" English v General Elec. Co., 496 U.S. 72,79 (1990). • Whether state law constitutes a sufficient obstacle is a matter of judgment to be informed by examining the federal statute as a whole and identifying its purpose and intended effects. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363,372 (2000). • Minn. Stat. § 238.08 mandates terms that each municipality must implement in granting a new or renewed cable franchise. • Minn. Stat. § 238.084 sets forth the required contents of a franchise ordinance and sets forth very precise requirements in an initial franchise about the build: commence build within 240 days; must construct at least 50 plant miles per year; construction throughout the franchise area must be substantially completed within 5 years of granting the franchise; and these requirements can be waived by the franchising authority only upon occurrence of unforeseen events or acts of God. • Section 621(a)(1) initially gave local authorities the authority to grant franchises, but this broad grant resulted in exclusive franchises/monopolies. Congress "believe[d] that exclusive franchises are contrary to federal policy ... which is intended to promote the development of competition. H.R. Conf. Rep. No. 102- 862, at 77 (1992) • Legislative history clearly supports that Congress was focused on fostering competition when it passed the 1992 Act. Qwest Broadband Servs. Inc. v. City of Boulder,151 F. Supp.1236,1244 (D. Colo. 2001). QBSI/EAGAN Application - JULY Page 12 In its 2007 order, the FCC found that "an LFA's refusal to grant a competitive franchise because of an applicant's unwillingness to agree to unreasonable build out mandates constitutes an unreasonable refusal to award a competitive franchise within the meaning of Section 621(a)(1)." The FCC order, however, targeted local and not state laws. Arguably, the Minnesota build requirements set forth in Section 238.084(m) are in conflict with Section 621(a)(1) and are, therefore, preempted. In the Boulder case, the court applied Section 621's prohibition on unreasonable refusals to grant franchises to find conflict preemption where local rules required voter approval for any new franchises. The mandatory build out in the Minnesota statute could be considered a de facto "unreasonable refusal" to grant a franchise and thus conflict with the pro -competition purpose set forth in 621(a)(1). In upholding the FCC's ruling, the Sixth Circuit stated that "while the [FCC] characterized build out requirements as 'eminently sensible' under the prior regime in which cable providers were granted community -wide monopolies, under the current, competitive regime, these requirements 'make entry so expensive that the prospective ... provider withdraws its application and simply declines to serve any portion of the community." Alliance for Cmty Media v. FCC, 529 F.3d 763, 771 (6th Cir. 2008). The FCC ruling targeted local rules and actions and the FCC refrained from preempting state regulation because it lacked "a sufficient record to evaluate whether and how such state laws may lead to unreasonable refusals to award additional competitive franchises." FCC Cable Franchising Order (FCC 06-180, at n.2 & 1126). That is not to say, however, that upon full consideration, the FCC would not find the Minnesota mandatory build requirements to constitute an unreasonable refusal under Section 621. o The franchising laws which were being enacted about the time of the FCC order facilitated competitive entrants into the facilities based video market. o In sharp contrast, the Minnesota statutes mandates individual cities and commissions to include onerous build out schedules which, standing alone, would run afoul of the FCC's order. It should also be noted that at least two cities in Minnesota have chosen to award competitive franchises to second entrants without satisfying all the mandates of Chapter 238. See Mediacom Minnesota, LLC v. City of Prior Lake, QBSI/EAGAN Application - JULY Page 13 Minn. Ct. of Appeals, A09-1379 (Unpublished decision, Filed June 22, 2010). In October 2014, the City of Owatonna awarded a competitive franchise to a second provider, and the franchise did not contain the five year build requirement set forth in Chapter 238. Rather, it contained a market success model expressly endorsed by the FCC. The competitor will provide service to 25 percent of the City of Owatonna and will have no further obligation to enable the provision of cable communications services until 48 percent of households in the footprint subscribe to its service. Finally, nothing in the FCC's Order on Reconsideration released in January of this year alters the above analysis. G. A statement indicating the applicant's qualifications and experience in the cable communications field, if any. CenturyLink has been offering Prism'" since 2008, when it initially launched its service in Lacrosse, Wisconsin, and has continued to expand its Prism" footprint since that time. Prism" is currently available in 14 markets. The attached Exhibit D is a list of the jurisdictions in which CenturyLink offers Prism"' pursuant to either statewide franchise statutes or locally negotiated, competitive franchises. In addition, the Company offers an analog product in smaller markets in Wisconsin and Iowa. CenturyLink has upgraded and/or deployed new facilities, including fiber to the premises, so that it is capable of offering service to over 2.4 million homes. CenturyLink has approximately 240,000 Prism" customers and continues to bring on new subscribers daily. Tyler Middleton is the Vice President of Operations for Minnesota. His team includes more than 500 technicians, 200 of whom are being cross -trained to install and support Prism. There is a wide array of employees performing various functions in support of Prism"' in the Twin Cities, including approximately 100 engineers who will be working under Mr. Middleton's leadership to design and support the infrastructure that enables PrismTM. Trent Clausen is the Vice President of Construction for the Midwest Region. He has held a variety of leadership positions in the network organization over the past 16 years, including positions managing and leading capital planning, field construction, local engineering, dispatch operations, and installation and maintenance operations. His team successfully upgraded the network in Omaha to support the launch of PrismT"' there in 2013 and will be responsible, working closely with Mr. Middleton's team, to construct the network to support PrismT" in Minneapolis and the Twin Cities metropolitan area. QBSI/EAGAN Application - JULY Page 14 There are three essential corporate divisions which support the provision of Prism" to end users: Global Operations and Shared Services, Global Markets and Product Development and Technology. The Global Operations and Shared Services organization is led by Executive Vice President Maxine Moreau. A 30 -year veteran of telecommunications, Maxine Moreau brings a depth of knowledge and experience in network services, operations, IT and process improvement to her role as Executive Vice President of Global Operations and Shared Services. She is responsible for operational excellence through the end-to-end planning, engineering, construction, operation and maintenance of CenturyLink's global network, as well as regional operations and hosting data centers. Moreau oversees network enablement that currently provides commercial 100Gbps services to businesses for high -bandwidth needs as well as the deployment of 1Gbps fiber networks in certain markets, including Minneapolis for both consumer and business customers. Members of her team will staff the VSO in Golden Valley. Maxine Moreau's team is responsible for the engineering, planning and deployment of all network infrastructure, including the infrastructure on a national and local basis for the delivery of Prism"'. In addition, organizations responsible for data and video operations report up to Maxine. These centers, from an operational perspective, constantly monitor and repair, if necessary, the entire network including the facilities used in the provision of Prism" The Global Markets organization is led by President Karen Puckett. With 30 years of telecommunications experience, Karen Puckett is an industry veteran with proven success in the integration of complex operations, the achievement of industry-leading financial and operational performance, and the creation of a company culture that is focused on accountability, innovation and growth. As CenturyLink's Chief Operating Officer, Puckett is responsible for the company's financial and operational performance in the business and consumer segments. She leads marketing, sales, service delivery, care and customer experience initiatives for all business and consumer customers and the implementation of the local operating model in the company's local service areas in 37 states. Puckett has been at the forefront of CenturyLink's transformation from a local telephone exchange company serving rural and mid-sized markets to an industry leader in advanced communications services with customers throughout the United States and overseas. Her visionary leadership has been instrumental in the company's ability to thrive in the new arenas of cloud, data hosting and managed services, as well as facilities based switched digital video service while maintaining its focus on operational excellence and financial strength. QBSI/EAGAN Application - JULY Page 15 Puckett led the 2001 companywide realignment to the local operating model, placing decision making closer to the customer and making the company more responsive to the marketplace. The model has consistently resulted in financial and operational improvements as CenturyLink has acquired new markets. As it relates to Prism, Karen Puckett's organization owns the customer experience in terms of sales and repairs. There are five call centers which provide support for consumer sales, including Prism"'. These centers are located in Sioux City, Iowa; Idaho Falls, Idaho; Boise, Idaho; Midvale, Utah; and Phoenix, Arizona. The Product Development and Technology organization is led by Executive Vice President and Chief Technology Officer, Aamir Hussain. Hussain is an experienced senior technology executive with more than 23 years of proven success in the implementation of global technology operations, operationalization of complex technology, infrastructures, and business solutions while driving capital cost efficiencies in the business. Hussain and his team are responsible for the design and delivery of next generation products, services and technologies critical to achieving CenturyLink's strategic growth priorities, including Prism. Hussain has a diverse background in data, security, voice, video and wireless technologies. Prior to joining CenturyLink, he held senior leadership roles at Liberty Global, Covad, TELUS and Qwest. Hussain sits on several startup and non-profit boards, is technical advisor to technology companies and holds 11 patents in Telecommunications. In addition, he has completed leadership, innovation and strategy training from Harvard, the INSEAD institute in France and the International School of Business Management in Switzerland. Aamir's team is charged with constantly working to implement new technologies and innovations to enhance the customer experience across the entire suite of CenturyLink products, including Prism. Glenn Garbelman serves as the Vice President of the Video Operations at CenturyLink, and is based in Monroe, Louisiana. He currently has day-to- day operational responsibility for all video services, which is currently serving 240,000 Prism"' customers with more than 150 employees on his team. Prior to joining CenturyLink, he was part of a large communications company that successfully launched and supported IPTV video in over 70 markets throughout the United States. He has more than 25 years of experience in the industry with the last 10 focused on video products and services over an IP network. Sandeep Bhalla is the Director of Video Technical Operations. Responsible for the daily operations of CenturyLink Video Services, Sandeep oversees the QBSI/EAGAN Application - JULY Page 16 Video Operations staff and ensures the integrity of operations and processes. With 19 years of technical experience and 10 years of video, Sandeep has served as a CenturyLink representative to national and international forums related to next generation video services. Prior to joining CenturyLink, Sandeep was a Manager of Head End Implementation for a large communications company. Sandeep holds a BA from the University of California Berkley. Charles Becker is the Manager Video Operations IPTV responsible for all headends based out of Denver, Colorado. The Video Headend Team is responsible for the operation and acquisition of all video content served by the Prism platform both local and national. The team maintains and operates 17 headends located in 13 states across the country. This team supports new market builds, preventative maintenance, outage resolution and proactively supports the video monitoring teams in outage resolution. Charles is a 35 year veteran of the video industry and 9 year employee of CenturyLink. Steve Epstein is a Senior Lead Engineer -Managing for CenturyLink. Steve was the initial member of the CenturyLink Video team and brings 35 years of broadcast experience to CenturyLink. In addition to being Chief Engineer at several television stations, Steve was the technical editor of Broadcast Engineering magazine. Steve is an SBE certified professional broadcast engineer and holds a BS in Broadcasting. H. An identification of the municipalities (including contact information for the municipal officials in each community) in which the applicant either owns or operates a cable communications system, directly or indirectly, or has outstanding franchises for which no system has been built. Please see Exhibit D for a list of jurisdictions Applicant or affiliate of Applicant holds a cable franchise agreement pursuant either to local agreement or statewide franchise authority. I. Plans for financing the proposed system, which must indicate every significant anticipated source of capital and significant limitations or conditions with respect to the availability of the indicated sources of capital. This information should include: 1. Current financial statement Applicant's ultimate parent company is CenturyLink, Inc. CenturyLink's most recent Form 10-K (along with all other SEC filings) may be found here: http:/Iir.centurylink.com/docs.asl2x?iid=4057179 QBSI/EAGAN Application - JULY Page 17 2. Proposed sources and uses of funds for the construction project Applicant's ultimate parent company is CenturyLink, Inc. which is a Fortune 500 Company (currently around Fortune 150) with annual operating revenues exceeding 18 Billion Dollars in 2013. Applicant does not require any unique or additional funding sources (i.e. special notes or bonds) in order to deploy its Prism'" service in this, or any other market. 3. Financial budgets for the next three (3) years; See response to I (4) below 4. Documentation regarding the commitment of funds; and As a publicly traded Company, CenturyLink releases a very limited amount of forward-looking information for the company as a whole, but it does not provide forward-looking information at the individual market level because it could lead to incorrect or inappropriate assumptions or conclusions by its current and potential investors regarding the business as a whole. Given the extremely sensitive nature of the information contained in the requested proforma, applicant cannot file this information as part of its application. S. Any other information that applicant determines would be useful in evaluating its financial qualifications. Please see response to I (1) above J. A statement of ownership detailing the corporate organization of the applicant, if any, including the names and addresses of officers and directors and the number of shares held by each officer or director, and intercompany relationship, including the parent, subsidiary or affiliated company. Applicant's ultimate parent company is CenturyLink, Inc., a Louisiana corporation headquartered in Monroe, Louisiana, and, through its subsidiaries, owns 100% of Qwest Broadband Services, Inc. d/b/a CenturyLink. Amore detailed corporate structure is depicted on the attached Exhibit E. On April 21, 2010, CenturyLink, Inc. reached an agreement to purchase Qwest Communications International, Inc. ("QCII") through a tax-free, stock -for -stock transaction. Under the terms of the parties' merger agreement, CenturyLink, Inc. is the ultimate parent of QCII and the subsidiaries that were under QCII. At the time of the merger between CenturyLink and Qwest Communications International, Inc., Franchisee was a wholly-owned subsidiary of Qwest Services Corporation, Inc. as was Qwest Corporation, the entity which places facilities in the City's public rights of way pursuant to the City's ordinances and associated rules. Further, at merger, Franchisee was a member of the National Cable Television Cooperative ("NCTC") as was the CenturyLink entity which QBSI/EAGAN Application - JULY Page 18 offers Prism in legacy CenturyLink markets, e.g., Florida. Because the NCTC expressly forbids more than one entity within a corporate family to belong to and directly obtain content from the NCTC and because any affiliated entity receiving content from the NCTC must be a wholly-owned subsidiary of the NCTC member, CenturyLink, Inc. moved Franchisee from being a subsidiary of Qwest Services Corporation to being a subsidiary of CenturyTel Broadband Services, LLC. As provided in the original application filed with the City, the following sets forth the officers and directors of Franchisee. This group of officers and directors do not own any shares of the franchisee. Qwest Broadband Services. Inc. (Delaware Domestic) Directors: R. Stewart Ewing, Jr. Stacey W. Goff Officers: Chief Executive Officer and President Glen F. Post, III President Global Markets Karen A. Puckett Executive Vice President and Chief Financial Officer R. Stewart Ewing, Jr. Executive Vice President, General Counsel Stacey W. Goff President IT Services and New Market Development Girish Varma Vice President - Public Policy and Government Relations James P. Campbell President - Wholesale Operations William E. Cheek Executive Vice President - Controller and Operations David D. Cole Support Executive Vice President - Network Services Maxine Moreau Vice President and Treasurer Glynn E. Williams, Jr. Vice President Jonathan J. Robinson Secretary Kay Buchart Assistant Secretary Joan E. Randazzo Assistant Secretary Meagan E. Messina K. A notation and explanation of omissions or other variations with respect to the requirements of the proposal. None at this time QBSI/EAGAN Application - JULY Page 19 Respectfully Submitted, Qwest Broadband Services, Inc. d/b/a CenturyLink By: Patrick Haggerty Subscrilyed and sworn to before me This � day of July, 2015 /� O'&'AA M - &4-" Notary Public My Commission Expires: To-- 0;10 QBSI/EAGAN Application - JULY Page 20 Prism- Complete Exhibit A CenturyLink,prl�r Contact CenturyLink Sales: 877-299-0172 Phoenix Channel Lineup Support: 866-314-4148 Prism- Essential 3 3TV (KTVK) 1129FX HD 1045 My Network TV HD (KUTPDT) 1003 3TV HD (KTVKDT) 129 FX 1266 National Geographic Channel HD 1167 A&E HD 1131 FXX HD 266 National Geographic Channel 167 A&E 131 FXX 12 NBC(KPNX) 15 ABC.(KNXV) 4004 Galavislon HD 1012 NBC HD (KPNXDT) 1179 ABC Family HD 3004 Galavlsion 1640 NBC SN HD 179 ABC Family 36 GetTV (KFPHDT2) 640 NBC SN 1015 ABC HD (KNXVDT) 1641 Golf Channel HD 20 NBC Weather Plus (KPNXDT2) 1796 AMC HD 641 Golf Channel 1630 NFL Network HD 796 AMC 1176 Hallmark Channel HD 630 NFL Network 16 Antenna TV (KNXVDT2) 176 Hallmark Channel 629 NFL RedZone (Pay Per View) 1105AXS TV 1106 HDNet Movies 1629 NFL RedZone HO (Pay Per View) 13 AZ -TV (KAZT)- 1451 HGTV HD 1638 NHL Network HD 1013 AZ -TV HD (KAZTDT) 451 HGTV 638 NHL Network 41 Aztecs America (KPDFCA) 271 History 1314 Nickelodeon HD 310 Baby First TV 1203 HLN HD 314 Nickelodeon 1156 BET HD 203 HLN 1368 Oxygen HD 156BET 1422 Home Shopping Network HD 368 Oxygen 1222 Bloomberg HD 19 Home Shopping Network 1683 PAC 12 Arizona HD 222 Bloomberg 422 Home Shopping Network 683 PAC 12 Arizona 327 Boomerang 1261 ID HD 106 Pay Per View Events HD 1182 Bravo HD 261 ID 1101 Pay Per View Events HD 182 Bravo 51 ION (KPPX) 101 Pay Per View Events 1650 BTN HD 1051 ION HD (KPPXDT) 6 PBS Eight (KAET) 650 BTN 1428 Jewelry Television HD 1008 PBS Eight HD (KAETDT) 1651 BTN2 HD 17 Jewelry Television 8006 Phoenix Educational Access 651 BTN2 428 Jewelry Television 8005 Phoenix Government Access 1652 BTN3 HO 1168 Justice Central HD 8014 Final County Government Access 652 BTN3 168 Justice Central 9161 Premier League Extra Time 1 HD 1230 C -SPAN HD 4 KPHO Weather Now (KPHODT2) 9151 Premier League Extra Time 1 230 C -SPAN 1381 Lifetime HD 9162 Premier League Extra Time 2 HD 1231 C-SPAN2 HD 361 Lifetime 9152 Premier League Extra Time 2 231 C-SPAN2 364 Lifetime Real Women 9163 Premier League Extra Time 3 HD 1327 Cartoon Network HD 1362 LMN HD 9153 Premier League Extra Time 3 326 Cartoon Network 362 LMN 9164 Premier League Extra Time 4 HD 5 CBS (KPHO) 5129 MC ?70s 9154 Premier League Extra Time 4 1005 CBS HD (KPHODT) 5128 MC ?80s 9165 Premier League Extra Time 5 HD 411 CenturyLink Information 5127 MG ?90s 8155 .Premier League Extra Time 1411 CenturyLink Information 5116 MC Adult Alternative 90 .Prism Applications 8015 City of Casa Grande 5115 MC Alternative 92 Prism Games 8003 City of Chandler Educational Access 5146 MC Blues 301 .Prism Kids 8002 City of Chandler Government Access 5134 MC Classic Country 201 Prism News 8004 City of Gilbert Government Access 5118 MC Classic Rock 11 Prism PEG Channels 8007 City of Glendale Government Access 5149 MC Classical Masterpieces 601 Prism Sports 8008 City of Madcopa Government Access 5135 MC Contemporary Christian 1420 QVC HD 8010 City of Mesa Educational Access .5133 MC Country Hits 18 QVC 801 City of Mesa Government Access .5103 MC Dance 420 QVC 8009 City of Peoria Government Access 5148 MC Easy Listening 1799 Reelz Channel HD 8001 City of Scottsdale Government Access 6111 MC Gospel 799 Reelz Channel 8013 City of Surpdse Government Access 6105 MC Hip -Hop and R&B 1424 ShopHQ HD 8012 City of Tempe Government Access 5107 MC Hip -Hop Classics 424 ShopHQ 1526 CMT HD 5101 MC Hit List 1146 Spike TV HD 526 CMT 5104 MC India 146 Spike TV 1216 CNBC HD 5145 MC Jazz 1337 Sproul HD 216 CNBC 5124. MC Kidz Onlyl 337 Sprout 1202 CNN HD 5150 MC Light Classical 1152 Syfy, HO 202 CNN 5120 MC Love Songs 152 Syry 1141 Comedy Central HD 5114 MC Metal 21 7BN (KPAZ) 141 Comedy Central 5138 MC Mexicana 1560 TBN HD 48 Daystar(KDTP) 5137 MC Musics Urbana 560 TSN 1121 Discovery Channel HD 5122 MC Party Favorites 1113 TBS HD 121 Discovery Channel 5131 MC Pop Country 113 TBS 1303 Disney Channel HD 5121 MC Pop Hits 5123 Teen MC 303 Dlsney Channet 5136 MC Pop Latino 39 Telemundo (KTAZ) 9999 DVR 5102 MC Pop Rhythmic 3007 Telemundo (KTAZ) 8016 Dysart Schools Educational Access 6109 MC R&B Classics 1039 Telemundo HD (KTAZOT) 1134 EI HD 5110 MC R&B Soul 6 The CW (KASW) 135 EI $106 MC Rap 1006 The CW HD:(KASWDT) 9 Eight Life (KAETDT2) 5112 MC Reggae 1225 The Weather Channel HD 7 Eight World (KAETOT3) 5117 MC Rock Hits 225 The Weather Channel 603 ESPN Classic 5113 MC Rock 2 This TV (KTVKDT2) 1602 ESPN HD 5140 MC Romances 1251 TLC HD 27 ESPN 5147 MC Singers & Swing 251 TLC 602 ESPN 5144 MC Smooth Jazz 1109 TNT HD 1606 ESPN2 HD 5119 MC Soft Rock 109 TNT 28 ESPN2 5130 MC Solid Gold Oldies 1255 Travel Channel HD 606 ESPN2 5141 MC Sounds of the Seasons 255 Travel Channel 1562 EWiNHD 5143 MC Soundscapes 1164 truTV HD 562 EWTN 5142 MC Stage & Screen 165 truTV 40 Exltos (KTAZDT2) 5108 MC Throwback Jams 1139 TV Land HD 1453 Food Network HD 5132 MC Today?s Country 139 TV Land 453 Food Network 5125 MC Toddler Tunes 44 TV44 (KPHELD) 10 FOX (KSAZ) 5139 MC Tropicales 35 UniMas (KFPH) 1010 FOX HD (KSAZDT) 5126 MC Y2K 4005 UnWas HD 1210 FOX News Channel HD 14 MB -TV (KAZTDT2) 33 UnivIslon (KTV W) 210 FOX News Channel 1634 MLB Network HD 1033 Univislon HD (KTVWDT) 1620 FOX Sports 1 HD 634 MLB Network 1125 USA Network HD 620 .FOX Sports 1 46 Movies[ (KUTPDT2) 125 USA Network 9002 FOX Sports Pay Per View HD 1215 MSNBC HD 1102 Velocity HD 9001 FOX Sports Pay Per View 215 MSNBC 1519 VH1 HD 1762 FS Arizona HD 1503 MTV HD 519 VH1 1763 FS Arizona Plus HD 503 MTV 1 Video On Demand 763 FS Arizona Plus 193 Mun2 1180 WGN HD 762 FS Arizona 45 My Network TV (KUTP) 180 WGN Prism- Complete Exhibit A Includes Prism" Essential Plan channels 1259American Heroes Channel HD 381 Esquire TV 505 MTV2 259 American Heroes Channel 1211 FOX Business Network HO 315 Nick 2 1253 Animal Planet HD 211 FOX Business Network 1320 Nick Jr HD 253 Animal Planet 647 FOX College Sports Atlantic 320 Nick Jr 1188 BBC America HD 648 FOX College Sports Central 1316 Nicktoons HD 188 BBC America 649 FOX College Sports Pacific 316 Nlcktoons 567 BYU TV 1621 FOX Sports 2 HD 1185 NUVOty HD 1643 CBS Sports HD 621 FOX Sports 2 185 NUVOty 643 CBS Sports 1535 Fuse HD 1256 Oprah Winfrey Network HD 515 Centric 535 Fuse 257 Oprah Winfrey Network 153 Chiller 1792 FX Movie Channel HD 1680 Outdoor Channel HD 161 Cloo 792 FX Movie Channel 660 Outdoor Channel 527 CMT Pure Country 1272 FYI HD 1531 Ovation HD 1456 Cooking Channel HD 272 FYI 531 Ovation 456 Cooking Channel 1529 Great American Country HD 1258 SCIENCE HD 1465 Destination America HD 529 Great American Country 258 SCIENCE 465 Destination America 1174 GSN HD 1642 Sportsman Channel HD 1335 Discovery Family HD 174 GSN 642 Sportsman Channel 335 Discovery Family 1274 H2 HD 322 Teen Nick 1307 Disney Junior HD 274 H2 507 Tris 307 Disney Junior 1794 Hallmark Movies & Mysteries HD 1790 Turner Classic Movies HD 1305 Disney XD HD 794 Hallmark Movies & Mysteries 790 Turner Classic Movies 305 Disney XD 1797 IFC HD 1157 TV One HD 1454 DIY Network HD 798 IFC 157 TV One 454 DIY Network 664 Inspiration Network 1104 Universal HD 1604 ESPN News HD 466 Life 521 VHt Classic 604 ESPN News 184 Logo 522 VH1 Soul 1605 ESPNU HD 509 MTV Hits 1372 WE tv HO 605 ESPNU 510 MTV U 373 WE tv 1380 Esquire TV HD 1505 MTV2 HD 132 Youtoo America Prism- Preferred Includes Prism- Complete Plan channels 220 Al Jazeera America 1172 MyDestinallon.TV HD 1852 Showtime HD (E) 159 ASPIRE 172 MyDestinatlon.TV 1853 Showtime HD (W) 1470 AWE HD 1264 NASA TV HD 864 Showtime Next (E) 470 AWE 264 NASATV 865 Showtime Next(W) 1219 BBC World News HD 1267 Nat Geo Wild HD 1864 Showtime Next HD (E) 219 BBC World News 267 Nat Geo Wild 1865 Showtime Next HD (W) 1540 Blue Highways TV HD 1209 One America News Network HD 880 Showtime On Demand 540 Blue Highways TV 209 One America News Network 1880 Showtime On Demand 1232 C-SPAN3 HD 1678 Outside TV HD 856 Showtime Showcase (E) 232 C•SPAN3 678 Outside TV 857 Showtime Showcase (W) 1169 Cars.TV HD 1684 PAC 12 Bay Area HD 1856 Showtime Showcase HD (E) 169 Cars.TV 684 PAC 12 Bay Area 1857 Showtime Showcase HD (W) 217 CNBC World 1686 PAC 12 Los Angeles HD 866 Showtime Women (E) 205 CNNI 685 PAC 12 Los Angeles 867 Showtime Women (W) 1142 Comedy.TV HD 1686 PAC 12 Mountain HD 1866 Showtlme Women HD (E) 142 Comedy.TV 686 PAC 12 Mountain 1867 Showtime Women HD (W) 1163 Crime & Investigation HD 1687 PAC 12 Oregon HD 118 Smithsonian Channel (E) 163 Crime & Investigation 687 PAC 12 Oregon 119 Smithsonian Channel (W). 263 DOD News 1686 PAC 12 Washington HD 1118 Smithsonian Channel HD (E) 932 ENCORE (E) 688 PAC 12 Washington 1119 Smithsonian Channel HD (W) 933 ENCORE (W) 1682 PAC12 Network HD 1791 Sony Movie Channel HO 938 ENCORE Action (E) 682 PAC12 Network 791 Sony Movie Channel 939 ENCORE Action (W) 1170 Pets.TV HD 902 Starz) (E) 1938 Encore Action HD (E) 170 Pets.TV 903 Starzi(W) 942 ENCORE Black (E) 1492 Pivot HD 908 Starz) Cinema (E) 943 ENCORE Black (W) 492 Pivot 909 StarzlCinema (W) 1942 Encore Black HD (E) 1787 PIxL HD 1908 Steal Cinema HD (E) 934 ENCORE Classic (E) 787 PIxl- 910 StarziComedy (E) 935 ENCORE Classic (W) 1458 Recipe.TV HD 911 Starz)Comedy (W) 1934 ENCORE Classic HD (E) 458 Recipe.TV 1910 Steal Comedy HD (E) 946 ENCORE Espanol 1916 Retroplex HD 904 Steal Edge (E) 944 ENCORE Family (E) 916 .Retroplex 906 StarzlEdge (W) 945 ENCORE Family (W) 1538 Revolt HD 1904 Sterzl Edge HD 1932 Encore HD (E) 538 Revolt 1902 Starz) HD (E) 1933 Encore HO(W) 1476 RFD TV HD 1903 StorziHD(W) 951 ENCORE On Demand 476 RFD TV 906 Starz) In Black (E) 1951 Encore On Demand 474 RLN 907 Starz) In Black (W) 936 ENCORE Suspense (E) 1607 SEC Network HD 1906 Starz) In Black HD 937 ENCORE Suspense (W) 1608 SEC Network Overflow 1 HD 912 Starz) Kids and Family (E) 1936 ENCORE Suspense HD (E) 608 SEC Network Overflow 1 913 Steal Kids and Family (W) 940 ENCORE Westerns (E) 1609 SEC Network Overflow 2 H 1912 Starz) Kids and Family HD 941 ENCORE Westerns (W) 600 SEC Network Overflow 2 931 Starz) On Demand 1133 ES.TV HD 607 SEC Network 1931 Starz) On Demand 133 ES.TV 1789 Shorts HD 575 The Word Network 890 FINE) .789 Shorts 882 TMC(E) 892 FIN On Demand 852 Showtime(E) 803 TMC(W) 1892 Flix On Demand 853 Showtime (W) 1882 TMC HD (E) 1656 Got TV HD 854 Showtime 2 (E) 1883 TMC HD (W) 656 GOITV (English) 855 Showtime 2(W) 888 TMC On Demand 672 HRTV 1854 Showtime 2 HD (E) 1888 TMC On Demand 1914 Indleplex HD 1855 Showilme 2 HD (W) 884 TMC Xtra (E) 914 Indieplex 860 Showtime Beyond (E) 885 TMC Xtra (W) 1590 Jewish Broadcasting Service HD 861 Showtime Beyond (W) 1684 TMC Xtra HD (E) 590 Jewish Broadcasting Service 1860 Showtime Beyond HD (E) 1885 TMC Xtra HD (W) 1147 MAVTVHD 1861 Showtime Beyond HD (W) 670 TVG 147 MAVTV 858 Showtime Extreme (E) 644 Universal Sports 1116 MGM HD 859 Showtime Extreme (W) 1644 Universal Sports HD 116 MGM 1858 Showtime Extreme HID (E) 1559 UP HD 276 Military History 1859 Showtime Extreme HD (W) 559 UP 1788 MOVIEPLEX HD 862 Showtime Family (E) 1679 Wodd Fishing Network HD 788 MOVIEPLEX 863 Showlime Family (W) 679 World Fishing Network Prism, Premium Includes Prism- Preferred Plan channels. 1840 5 Star Max HD 811 HBO Comedy (W) 812 HBO Zone (E) 840 5 Star Max 1810 HBO Comedy HD (E) 813 HBO Zone (W) 836 ActionMAX (E) 1811 HBO Comedy HD (W) 1812 HBO Zone HD (E) 837 ActlonMAX(W) 806 HBO Family (E) 1813 HBO Zone HD (W) 1836 AcflonMAX HD (E) 807 HBO Family (W) 1804 HBO2 HD (E) 1837 ACtionMAX HD (W) 1806 HBO Family HD (E) 1805 HB02 HD (W) 1846 Clnem7x HD 1807 HBO Family HD (W) 834 MoreMAX (E) 846 Clnem7x 1802 HBO HD (E) 835 MoreMAX (W) 832 Cinemax (E) 1803 HBO HD (W) 1834 MoreMax HD (E) 833 Cinemax (W) 814 HBO Latino (E) 1835 MoreMax HD (W) 1832 Cinemax HD (E) 815 HBO Latina (W) 1842 Movie MAX HD 1833 Cinemax HD (W) 1814 HBO Latino.HD (E) 842 MovIBMAX 850 Cinemax On Demand 1815 HBO Latino HD (W) 1844 Outer Max HD 1850 Cinemax On Demand 830 HBO On Demand 844 OulerMAX 802 HBO (E) 1830 HBO On Demand 838 ThrllenMAX(E) 803 HBO (W) 808 HBO Signature (E) 839 ThdllerMAX(W) 804 HBO 2(E) 809 HBOSignature(W) 1838 ThrillerMax HD (E) 805 HBO 2 (W) 1808 HBO Signature HD (E) 1839 ThdllerMax HD (W) 810 HBO Comedy (E) 1809 .HBO Signature HD (W) 3025 Cine Mexicano Premium Packages Available as Add-ons: Preferred and Premium plans Include select Add-on Channels. Cinemax Add-on Package 1840 5 Star Max HD 833 Cinemax (W) 1842 Movie MAX HD 840 5 Star Max 1832 Cinemax HD (E) 842 MovieMAX 836 ActionMAX(E) 1833 Cinemax HD (W) 1844 Outer Max HD 837 ACtionMAX (W) 850 Cinemax On Demand 844 OuterMAX 1836 ActionMAX HD (E) 1850 Cinemax On Demand 838 ThdllerMAX (E) 1837 ActionMAX HD (W) 834 MoreMAX(E) 839 ThrillerMAX(W) 1846 Clnem7x HD 835 MoreMAX(W) 1838 ThdllerMax HD (E) 846 Clnem7x 1834 MoreMax HD (E) 1838 ThdllerMax HD (W) 832 Cinemax (E) 1835 MoreMax HD (W) 1904 3146 Bandamax International -Al -Carte Add-on Package 3740 At Jazeera America 3682 Filipino on Demand 3703 TV Asia 3710 Bollywood Hits on Demand - 3802 Rai Italia 3680 TV Japan 3882 Channel One Russia 3704 Sony Entertainment Television Asia (SET 3832 TV5 Monde 3603 China Central TV 1910 Asia) 3702 Zee TV 3604 CTI-Zhong Tian Channel 3706 STAR India PLUS Start) Edge (E) 1938 Encore Action HD (E) 3681 The Filipino Channel 905 Starz)Edge (W) Paquete Latino Add-on Package ENCORE Black (E) 941 ENCORE Westerns (W) 1904 3146 Bandamax 3102 Discovery an Espanol 3056 La Familia Cosmovision 3053 Boomerang an Espanol 3103 Discovery Familia 3017 Latele Novels 3022 Cable Noticlas 3051 Disney an Espanol 3149 Ritmoson Latino 3054 Cartoon Network an Espanol 3052 Disney XD Espanol 3078 TBN Enlace 3025 Cine Mexicano 3302 ESPN Deportee 3143 Telehit 3127 Clne Sony 3077 EWTN an Espanol 3024 TV Chile 3202 CNN on Espanol 3303 FOX Deportee 3013 WAPA America 3128 De Pelicula 3304 GolTV ENCORE Family (E) 902 3129 De Pelicula Clasico 3104 History an Espanol 945 ENCORE Family (W) Starz/Encore Add-on Package 932 ENCORE (E) 1951 Encore On Demand 910 Starzl Comedy (E) 933 ENCORE (W) 936 ENCORE Suspense (E) 911 Staml Comedy (W) 938 ENCORE Action (E) 937 ENCORE Suspense (W) 1910 Starzl Comedy HD (E) 939 ENCORE Action (W) 1936 ENCORE Suspense HD (E) 904 Start) Edge (E) 1938 Encore Action HD (E) 940 ENCORE Westerns (E) 905 Starz)Edge (W) 942 ENCORE Black (E) 941 ENCORE Westerns (W) 1904 Starz) Edge HD 943 ENCORE Black (W) 1914 Indleplex HD 1902 Starzl HD (E) 1942 Encore Black HD (E) 914 Indleplex 1903 Starzl HD (W) 934 ENCORE Classic (E) 1788 MOVIEPLEX HD 906 Starz) In Black (E) 935 ENCORE Classic (W) 788 MOVIEPLEX .907 Starz) In Black (W) 1934 ENCORE Classic HD (E) 1916 Retroplex HD 1906 Starz) in Black HD 946 ENCORE Espanol 916 Retroplex 912 Slarzl Kids and Family (E) 944 ENCORE Family (E) 902 Startl.(E) 913 Starz) Kids and Family (W) 945 ENCORE Family (W) 903 Semi (W) 1912 Slarzl Kids and Family HD 1932 Encore HD (E) .908 Starz) Cinema (E) 931 Starz) On Demand 1933 Encore HD (W) 909 Starz) Cinema (W) 1931 Starz) On Demand 951 ENCORE On Demand 1908 Starz) Cinema HD (E) Showtime Add-on Package 890 Flix(E) 1858 Showtime Extreme HD (E) 1857 Showtime Showcase HD (W) 892 Flix On Demand 1859 Showtime Extreme HD (W) 866 Showlime Women (E) 1892 Fllx On Demand 862 Showtime Family (E) 867 Showtime Women (W) 852 Showtime(E) 863 Showtime Family (W) 1866 Showtime Women HD (E) 853 Showtime (W) 1852 Showtime HD (E) 1867 Showtime Women HD (W) 854 Showtime2(E) 1853 Showtime HD (W) 882 TMC(E) 855 Showtime 2(W) 864 ShowimeNext (E) 883 TMC(W) 1854 Showtime 2 HD (E) 865 Showtime Next (W) 1882 TMC HD E) 1855 Showtime 2 HO (W) 1864 Showtime Next HD (E) 1883 TMC HD �W) 660 Showtime Beyond (E) 1865 Showtime Next HD (W) 888 TMC On Demand 861 Showtime Beyond (W) 880 Showtime On Demand 1888 TMC On Demand 1860 Showtime Beyond HD (E) 1880 Showtime On Demand 884 TMC Xtra (E) 1861 Showtime Beyond HD (W) 856 Showtime Showcase (E) 885 TMC Xtra (W) 856 Showtime Extreme (E) 857 Showtlme Showcase (W) 1884 TMC Xtra HD (E) 859 Showtime Extreme (W) 1856 Showtime Showcase HD (E) 1885 TMC Xtra HD (W) HBO Add-on Package 802 HBO (E) 1806 HBO Family HD (E) 808 HBO Signature (E) 803 HBO (W) 1807 HBO Family HD (W) 809 HBO Signature (W) 804 HBO 2 (E) 1802 HBO HD (E) 1608 HBO Signature HD (E) 805 HB02(W) 1803 HBO HD (W) 1809 HBO Signature HD (W) 810 HBO Comedy (E) 814 HBO Latina, (E) 812 HBO Zone (E) 811 HBO Comedy (W) 815 HBO Latino (W) 813 HBO Zone (W) 1810 HBO Comedy HO (E) 1814 HBO Latino HD (E) 1812 HBO Zone HO (E) 1811 HBO Comedy HD (W) 1816 HBO Latino HD (W) 1813 HBO Zone HD (W) 806 HBO Family (E) 830 HBO On Demand 1804 HB02 HD (E) 807 HBO Family (W) 1830 HBO On Demand 1805 HBO2 HD (W) TRADE SECRET/PRIVILEGED INFORMATION CLASSIFICATION RATIONALE State: Minnesota Description/Title of Information: Application of Qwest Broadband Services, Inc. d/b/a CenturyLink for a Competitive Cable Franchise Agreement with the City of Eagan Trade Secret/Privileged Designation Rationale: Exhibit B to the Application of Qwest Broadband Services, Inc. d/b/a CenturyLink for a Competitive Cable Franchise Agreement with the City of Eagan contains information that is considered Trade Secret because (1) CenturyLink makes reasonable efforts to ensure its privacy and (2) the data derives actual or potential independent economic value because the information is not generally known to, and not being readily ascertainable by proper means by, other persons who can obtain value from its disclosure or use. For this reason, Exhibit B to the Application of Qwest Broadband Services, Inc. d/b/a CenturyLink for a Competitive Cable Franchise Agreement with the City of Eagan should be protected from public disclosure. Exhibit B In Its Entirety �r ' -• L O Gi L u O L � a � uu {�F �LL 12 LLL M I- LLL 0 U z O M L cg 0 E L m U w 7 0 U O O p O U U v> ® O c �' O c X00® 00 eOO ve 0 0 U a=i C U ® O C U,0 U O� W $ ��®E Uc_ O(D,WoF-w 00MLL M0wWUJUa""JO J Q N a+ N c >+ o 0 Q v 0 Y N 0'N Iy N � a) Q� a) N aj�Q`;U E< cN> oin X��UgiQmaicacaoaiaS��Qo-' CL �c ccaa=imcgNr L- •avU�a- caQ-� .c°s a) � � m 0 =$ 0 G =;.2 (a aa) M CL ®PO PC u E 0 V INTRODUCTION . . INTRODUCTIO : . . . . .� . 2?A»»©Z <�5.: 2?«?««� fly<� STATUTORY . �2«»�� �© �:� .. ..:....�.. . � PROCEDURE FOLLOWED 4. »17Y ................................................. � .. .� ...± INFORMATION REVIEWED ..... ..,�.. . ,.� .:..:.... z:. .©,,.. . .. yyyyy.:<, .z`:.. :<eeat;f ENTU LIN «±§zHNIC L QUALIFICATIONS .....°» >.y.. > cL«2 v ... §FINANCIAL L.»?±y ONS.. :S RECOMMENDATIONS .. «» °»::fm ; ENTITY DETAILS 2f* d «2(12:2 DELAWARE 22 »§2\S\# \ #© CORPORATIONS EXHIBIT I MINNESOTA SECRETARY *»2 1-, BUSINESS * $:°«2.2 EXHIBIT C MINNESOTA SECRETARY � F STATE . :±» LIEN FILING RECORD SEARCH N#2?+22§22 RECORD S ARC «ze<!r, . CASE < EXHIBIT ° + 9±§2f§+222#2±2#f SUMMARY ©© », . _� . . . »y\y>:» THE i'^«27CASE 2222ƒ+2 §«»:BITE CORPORATE PARENT GUARANTY EXHIBIT? PROPOSED RESOLUTION EXHIBIT G MOSS & «\Jf #}«\©+<S REQUEST FOR SUPPLEMENTAL NFO±««d*\ EXHIBIT a.:., v czyy.Rv.\ « < RESPONSE TO REQUEST FOR SUPPLEMENTAL J\<}, INFORMATION Sq&m, iUW001WOV"O k Qwest Broadband Services, Inc., d/b/a CenturyLink (hereinafter referred to as "CenturyLink") requested the issuance of a cable communications franchise from the City of Eagan, Minnesota ("City") to provide cable services in the City. The City contacted Moss & Barnett seeking input regarding the appropriate procedure to be followed to consider the award of a cable communications franchise to CenturyLink or any other applicant. Moss & Barnett reviewed state and federal statutory requirements with City representatives and developed a comprehensive franchise procedure to comply with applicable laws. This report will include a summary of Moss & Barnett's findings and recommendations. In accordance with Minnesota Statutes Section 238.081, the City published a Notice of Intent to F=ranchise and requested applications for a franchise from any interested applicants. Applicants were instructed to obtain from the City a Request for Proposal Official Application F=orm. Prior to the deadline for submitting applications the City received only one (1) application - from CenturyLink. Pursuant to Minnesota Statutes Section 238.081, the City held a public hearing to receive input from interested parties regarding CenturyLink's application. This report will review relevant statutory requirements that the City must follow in processing a request for a cable communications franchise. Thereafter, the report will review CenturyLink's legal, technical and financial qualifications to provide cable services in the City and address whether CenturyLink's application complies with State statutory requirements. Finally, this report will provide recommendations for the City Council's consideration in taking action with regard to CenturyLink's application. 28899200 A. Federal Regulatory Scheme: Competition Among Cable Television Providers and the Federal Cable Act The Cable Communications Policy Act of 1984, as amended by the Cable Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996 (hereinafter collectively referred to as the "Cable Act"), contains many provisions relevant to the application before the City. According to the Cable Act, one of its primary purposes is to: promote competition in cable communications and minimize unnecessary regulation that would impose an undue economic burden on cable systems.I Furthermore, 47 U.S.C. Section 541(a)(1) provides that a franchising authority may award one or more franchises within its jurisdiction. To that end, the Cable Act states: that a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to awed an additional competitive franchise? Any applicant whose application for a second franchise has been denied by a final decision of a franchising authority is not without recourse. The applicant may appeal an adverse decision pursuant to the provisions of Section 635 of the Cable Act. The Cable Act also provides that a city may require certain assurances from the prospective franchisee. Subsection 4 of 47 U.S.C. Section 541(a) provides that: in awarding a franchise, the franchising authority — a. shall allow the applicants cable system a reasonable period of time to become capable of providing cable service to all households in the franchise area; b. may require adequate assurance that the cable operator will provide adequate public, educational, and governmental access channel capacity, facilities, or financial support; and C. may require adequate assurance that the cable operator has the financial, technical, or legal qualifications to pr o vide cable service. 147 U.S.C. Section 521(b). 2 47 U.S.C. Section 541(a)(1) (emphasis added). 2 28899200 When Congress passed the 1992 amendments to the Cable Act, Congress suggested that it favors competition in the delivery of cable communications services. The Senate report that accompanied the amendments concluded that: Based on the evidence and the record taken as a whole, it is clear that there are benefits from competition between two cable systems. Thus, the Committee believes that local franchising authorities should he encouraged to award second franchises. Accordingly, [the Cable Act as amended], prohibits local franchising authorities from unreasonably refusing to grant second franchises.3 Federal Communications Commission Observations on Competition ir the Cable - •Industry The Federal Communications Commission's ("FCC's") annual competition reports in video markets have found that subscribers have generally benefited from "head-to- head" competition in the delivery of cable services. Benefits enjoyed by consumers as a result of the increased competition include: a. lower monthly charges for services and equipment; b. additional program offerings; C. access to alternative sources of telecommunications and Internet services; d. new digital services; and e. better customer service from the incumbent cable operator. The FCC completed rulemaking proceedings on competition in the video marketplace resulting in the FCC's issuance of what is now known as the FCC 621 Order.4 The Sixth Circuit affirmed the FCC 621 Order in 2008.5 In the 621 Order the FCC summarized the evidentiary record in the following manner: The record indicates that in today's market, new entrants face "steep economic challenges" in an "industry characterized by large fixed and sunk costs,"' without the resulting benefits incumbent cable operators enjoyed for years as monopolists in the video services marketplace. According to commentators, "a competitive video provider who enters the market today is in a fundamentally different situation" from that of the incumbent cable operator- '[wJhen incumbents installed their systems, they had a captive market," whereas new entrants "have to 'win' every 3 (emphasis added). S. Rep. No. 102-92., June 28, 1991, reprinted in 1992 U.S. Code Cong. & Admin. News 1133, 1141, 1146, 1151; H.Conf. Rep, No. 102-862, reprinted in 1992 U.S. Code Cong. & Admin. News 1231, 1259. 4 See In the Matter of Implementation of Section 612(a)(1) of the Cable Communications Policy Act of 1984,22 FCC Rcd 5101 (Mar. 5, 2007). 5 See Alliance for Community Media v. FCC, 529 F.3d 763 (6th Cir. 2008). 3 28899200 customer from the incumbent' and thus do not have "anywhere near the number of subscribers over which to spread the costs. " C. Minnesota Statutory and Judicial Treatment of Competition in the Cable Television Industry Minnesota Statutes In addition to the requirements contained in the Cable Act, Minnesota has several statutory provisions that must be carefully followed by the City when considering the award of a franchise. In particular, Minnesota Statutes Chapter 238.08, titled Franchise Requirement, states that a municipality must require a franchise or extension permit of any cable communications system providing service within the municipality. Further, Minnesota Statutes Section 238.081, franchise Procedure, provides a precise procedure to be followed by a municipality when requesting applications for a cable communications franchise. The text of Section 238.08 and Section 238.081 is set forth below to provide the City with the exact requirements of state law on this matter. Minnesota Statute Section 238.08, Franchise Requirement, provides in pertinent part: Subd 1. Requirement; conditions (a) A municipality shall require a franchise or extension permit of any cable communications system providing service within the municipality. (b) No municipality shall grant an additional franchise for cable service for an area included in an existing franchise on terms and conditions more favorable or less. burdensome than those in the existing franchise pertaining to: (1) the area served; (2) public, educational, or governmental access requirements; or (3) franchise fees. The provisions of this paragraph shall not apply when the area in which the additional franchise is being sought is not actually being served by any existing cable communications system holding a franchise for the area. Nothing in this paragraph prevents a municipality from imposing additional terms and conditions on any additional franchises. Sub. 2 tuber requirements. Nothing in this chapter shall be construed to prevent franchise requirements in excess of those prescribed unless such requirement is inconsistent vvith this chapter. Subd 3 Municipal operation. Nothing in this chapter shall be construed to limit any municipality from the right to construct, purchase, and operate a cable 4 2889920v1 communications system. /any municipal system shall be subject to this chapter to the same extent as would any nonpublic cable communications system. Subd 4 Fee, tax or charge. Nothing in this chapter shall be construed to limit the power of any municipality to impose upon any cable communications company a fee, tax or charge. Minnesota Statute Section 238.081, Franchise Procedure, provides in pertinent part: Subd X, Publication of Notice. The franchising authority shall have published once each week for two successive weeks in a newspaper of general circulation in each municipality within the cable service territory, a notice of intent to consider application for a franchise other than a franchise renewal pursuant to the United States Code, Title 47, Section 546. Subd' 2 Required information, The notice must include at least the following Information: (1) the name of the municipality making the request; (2) the closing date for submission of applications; (3) a statement of the application fee, if any, and the method for its submission; (4) a statement by the franchising authority of the desired services to be offered; (5) a statement by the franchisinq authority of criteria and priorities against which the applicants for the franchise must be evaluated; (6) a statement that applications for the franchise must contain at least the information required by subdivision 4; (7) the date, time, and place for the public hearing, to hear proposals from franchise applicants; (8) the name, address, and telephone number of the individuals who may be contacted for further information. Subs! 3 Other recipients of notice. In addition to the published notice, the franchising authority shall mail copies of the notice of intent to franchise to any person it has identit<ed as being a potential candidate for the franchise. Sub`J, 4 Contents of franchising proposal The franchising authority shall require that proposals for a cable communications franchise be notarized, and contain, but not necessarily be limited to, the following information: s 28899200 (1) Plans for channel capacity, including both the total number of channels capable of being energized in the system and the number of channels to be energized immediately; (2) A statement of the television and radio broadcast signals for which permission to carry will be requested from the Federal Communications Commission; (3) A description of the proposed system design and planned operation, including at least the following items: (i) the general area for location of antennae and the head end, if known; (ii) the schedule for activating two-way capacity; (iii) the type of automated services to be provided; (iv) the number of channels and services to be made available for access cable broadcasting; and (v) a schedule of charges for facilities and staff assistance for access cable broadcasting; (4) the terms and conditions under which particular service is to be provided to governmental and educational entities; - (5) a schedule of proposed rates in relation to the services to be provided, and a proposed policy regarding unusual or difficult connection of services; (6) a time schedule for construction of the entire system with the time sequence for wiring the various parts of the area requested to be served in the request for proposals; (7) a statement indicating the applicant's qualifications and experience in the cable communications field, if any; (6) an identification of the municipalities in which the applicant either owns or operates a cable communications system directly or indirectly, or has outstanding franchises for which no system has been built; (9) plans for financing the proposed system, which must indicate every significant anticipated .source of capital and significant limitations or conditions with respect to the availability of the indicated ,sources of capital; (10) a statement of ownership detailing the corporate organization of' the applicant, if any, including the names and addresses of officers and directors and the number of shares held by each ofi`icer or director, and intracompany relationship including a parent, subsidiary or affiliated company; and (11) a notation and explanation of omissions or other variations with respect to the requirements of the proposal. .Substantive amendments may not be made in a proposal after a proposal has been submitted to the franchising authority and before award of a franchise. 28899200 Subdp S. Time limits to submit- application.. The franchising authority shall allow at least 20 days from the first date of published notice to the closing date for submitting applications. A5ubd 6 Public hearing on franchise. A public hearing before the franchising authority affording reasonable notice and a reasonable opportunity to be heard with respect to all applications for the franchise must be completed at least seven days before the introduction of the franchise ordinance in the proceedings of the franchising authority. Subd ,. Award of franchise. f=ranchises may be awarded only by ordinance. SOW 8 Costs of awarding franchisee Nothing in this section prohibits a franchising authority from recovering from a successful applicant the reasonable and necessary costs of the entire process of awarding the cable communications franchise. In addition to the above referenced state statutes, Minnesota Statutes Section 238.084 identifies the required contents of a franchise ordinance. Given that 'the City has an existing cable franchise with Comcast (the "Comcast Franchise") that complies with the requirements of Section 238.084, the City may, if it so determines, grant substantially the same ordinance to CenturyLink if the City finds that CenturyLink is a qualified applicant. In 'this proceeding the applicant, CenturyLinl<, was provided a copy of the Comcast Franchise. The reason for using substantially the same franchise as the base document to begin negotiations is to ensure that any and all entities providing cable communications service within the City are generally regulated in a similar manner. Both the Comcast Franchise and Minnesota Statutes Section 238.08 include provisions requiring some form of level playing field obligation which the City must consider before the award of a second, competitive cable franchise. Specifically, the Comcast Franchise at Section 2.2(d) contains a requirement that permits the City to grant competitive franchises: Section 2.2(d) Should any other multichannel video programming distributor ("MI/PD') over which the City has regulatory jurisdiction provide Cable Services in the current cable service area, the City shall not grant more favorable terms, taken as a whole, to such MVPD than are granted to the Grantee. 7 28899200 D. Judicial Treatment; The Minnesota Court of Appeals' Decision Regarding Minnesota's Cable Statutes and Competing Cable Television Franchises In its report accompanying the 1992 amendments to the federal Cable Act, the United States Senate observed that: In addition to mergers between an incumbent cable system and a potential competitor, incumbent cable systems often wage legal battles to prevent cities from awarding second franchises or building their own franchises.' In 1999, the Minnesota Court of Appeals addressed one of these "legal battles" referenced by the Senate Report. In In Re Application of Dakota Telecommunications Group, d/b/a Dakota Telecom. Inc., for a Cable Television franchise in Marshall, Minnesota (hereinafter "Dakota Telecom', the incumbent franchise, Bresnan Communications ("Bresnan"), challenged the City of Marshall's ("Marshall") grant of, a competing franchise to Dakota Telecommunications Group. Bresnan argued, among other things, that Marshall acted "arbitrarily and capriciously" when it granted the competing franchise and that Marshall violated Bresnan's due process rights. The Court of Appeals rejected Bresnan's arguments and generally determined that an incumbent franchisee may not challenge the general fitness of a competing franchise. In its opinion, it noted that Minnesota's cable statutes were "enacted to encourage such competition." The opinion further recognized that: Although [Minnesota's) Cable Act . . . intends to further the public's interest by only awarding franchises to responsible cable operators, it does not support an incumbent franchisee's attempt to secure a monopoly by challenging the fitness of new, competing franchises. 6 S. Rep. No. 102-92, June 28, 1991, reprinted in 1992 U.S. Code Cong. & Admin. News 1133, 1141, 1146, 1151; H. Conf. Rep. No. 102-862, reprinted in 1992 U.S. Code Cong. & Admin. News 1231, 1259. 8 28899200 PROCEDURE FOLLOWED BY CITY CenturyLink requested that the City institute the required proceedings to consider the award of a cable communications franchise to CenturyLink. After consultation with Moss & Barnett, a detailed procedure was prepared to comply with applicable state and federal laws regarding the processing of CenturyLink's request. The City Council authorized publication of a Notice of Intent to Franchise a Cable Communications System. The notice was published once each week for two successive weeks in the City's local newspaper of general circulation. The Notice was first published in the Sun Thisweek Burnsville/Eagan on June 12, 2015, and was thereafter published on June 19, 2015. Copies of the Notice of Intent to Franchise are available upon request from the City Clerk's office. The Notice of Intent to Franchise referenced the City's Request for Proposals - Official Application Form that was made available on request at the office of the City Clerk. Copies of the Notice of Intent to Franchise and Official Application Form were sent to Centuryl-ink as well as the incumbent cable operator, Comcast. A copy of the Official Application Form is available upon request from the City Clerk's office. Pursuant to Minnesota Statutes Section 2.38.081 the City established a deadline for submitting applications on July 3, 2015, at least twenty (20) days following the first date of publication. The City published a Notice of a Public Dearing to receive input on CenturyLink's application. The Public Dearing is scheduled for July 21, 2015 at 6:30 p.m. All interested parties will have an opportunity to comment. 9 28899200 Below is a listing of all information received and reviewed by Moss & Barnett. Each document listed below was reviewed and considered in the preparation of this report, and are hereby incorporated into this report by reference. The information contained within these documents is part of the City's record on which the City's decision is based. 1. Notice by the City of its Intent to Franchise a Cable Communication System published on June 12 and June 10, 2015. 2. The City's Request for Proposals -Official Application form. 3. Official Application submitted to City from CenturyLink. 4. Supplemental information requested from CenturyLink in response to questions raised by Moss & Barnett 5. CenturyLink's response to Moss & Barnett's request for supplemental information (see Financial Qualifications section for complete list of financial information reviewed). 10 28899200 OENTURYLINK'S LEGAL QUALIFICATIONS The legal qualifications standard relates primarily to an analysis of whether CenturyLink is duly organized and authorized to provide cable services within the City. We have reviewed and received the following information with respect to Qwest Broadband Services, Inc. as of the dates listed below and in the attached Exhibits: ® Delaware Incorporation/Good Standing. 'The Delaware Division of Corporations' Entity Details shows that Qwest Broadband Services, Inc. was incorporated on May 10, 1999 and is in good standing as of May 13, 2015. See attached Entity Details from the Delaware Division of Corporations attached hereto as Exhibit A. ® Minnesota Foreign Registration, Qwest Broadband Services, Inc. is registered as a foreign corporation in the State of Minnesota and is active and in good standing. Minnesota Business and Lien System, Office of the Minnesota Secretary of State Business Record Details dated May 13, 2015 attached hereto as Exhibit B. ® Minnesota UCC/Tax Lien/Judgment Search. Qwest Broadband Services, Inc. is riot subject to any UCC filing/tax lien/judgment in the State of Minnesota. Minnesota Business and Lien System, Office of the Minnesota Secretary of State UCC/tax lien filing record search and judgment record search attached hereto as Exhibit C. ® Civil Actions. Qwest Broadband Services, Inc. has been a party to a number of civil cases, including all of the cases listed on the PACED Case Locator summary for periods from formation to May 13, 2015. Qwest Broadband Services, Inc. was also a party in a bankruptcy matter that was dismissed on January 29, 2002. Qwest Broadband Services, Inc. is party to an active patent infringement case entitled United Access Technologies, LLC v. CenturvTel Broadband Services, LLC gt al. in the State of Delaware. PACER Case Locator Summary and the active Case Summary attached hereto as Exhibit D. 11 28899200 CENTIJRYLINK'S TECHNICAL QUALIFICATIONS The technical qualification standard relates to the technical expertise and experience of CenturyLink to provide cable services. This report offers no opinion related to the technology used by CenturyLink to offer cable services. CenturyLink is offering its Prism service in approximately fifty-eight (58) cities, within ten (10) states, including: Alabama, Arizona, Colorado, Florida, Iowa, Missouri, Nebraska, Nevada, North Carolina and Wisconsin. Currently, CenturyLink provides its Prism service to approximately 240,000 customers. In May 2015, we interviewed seven (7) cities in four (4) states where CenturyLink provides its Prism service in order to ascertain the following: 1. The nature and quality of the relationship between CenturyLink and the city; 2. Whether CenturyLink worked well with the city in resolving cable service problems; 3. Whether subscribers appear -to be satisfied with the services they receive from CenturyLink; and 4. The extent that CenturyLink supports public, educational and governmental access programming. The city official from each community listed below was contacted and asked the following questions. A summary of the interviews is provided below. Gulf Shores, ALMike Holly IT Director Glendale, AZ Mark Gibson, Construction Engineering Manager Colorado Sp pj�s, CO I Kathy Lake, Information Technology_ _ .___...._..�_______... r_._......__....... .__..._......___._....___.__._..._._._...............__.._,_.,...._........... _____.__-___.._..._.__ Denver, CO _ f Julie Martinez, Director Media Services Cagle CO Jon Stavney, Town Manager OmahaNG..................................................Buster _Brown...._C City .......................................... ........ _._..................... ........................ ........ .......................... .... Papillion, NE , Eliza Butler, City Clerk and Karla Rupiper, City Attorney SUMMARY OF INTERVIEWS 1. Approximately when (month/year) did your City award CenturyLink a cable franchise? Responses ranged from August 2011 to present. 12 28899200 2. What percentage of the City (approximately) did CenturyLink first provide cable service to? All cities responded that the details are outlined in the franchise, but some recalled 15=20 % initially. 3. Has CenturyLink expanded its service area to provide cable service to more subscribers since the grant of the franchise? All replied they were either unsure or yes, expansion has occurred since the city granted the franchise to CenturyLink. 4. Does the CenturyLink franchise require complete build out or a certain percentage of build out within a set period of time? All responses were a certain percentage with details outlined in the franchise. 5. What percentage of the City may be unable to subscribe to cable service from Centuryl-ink? Most cities were uncertain of this % however, one city replied 100% of city was served within 18 months. 6. Have there been any amendments to the Franchise granted to Centuryl-ink? If so, what was the reason for the franchise amendment? The majority of the responses were no. Most of these cities just recently granted franchises to CenturyLink. 7. Is there a local office for CenturyLink in your city? If not, how far away is the nearest CenturyLink office"? Most cities replied ")'es' and that it is required under the franchise to have a local office in the city. One city replied "No - however, the closest office is a 10 minute drive. " 8. Does the City have public, educational and governmental access channels? If yes, how many? Most replied "Yes ; one replied "No "and one replied "Unsure # of PEG channels responses ranged from 1-7 9. Does CenturyLink make the City's PEG access channels available on its cable system? 13 28899200 All cities with PCG channels replied "Yes' 10. Did the City have to spend any money on equipment or facilities to make its PEG channels available to CenturyLink? All cities with PCG channels replied "No' One city reported replacing all equipment with upfront dollars provided by CenturyLink. 11. Have there been any issues or concerns with the manner in which PEG channels are cablecast by CenturyLink? Are there any differences in the way subscribers obtain PEG channels on Centuryl-ink's system versus the cable system operated by the incumbent operator? No known issues reported. No differences reported. 12. Does CenturyLink provide PEG financial support? If yes, how much? Responses included amounts of $.20/sub/mo to $1.05/sub/mo. One city reported up to $1.80 upon advanced notice and another reported a % (unsure of number). 13. Does CenturyLink provide any other type of PEG financial support — such as upfront grants, in-kind services, particular equipment, etc.? Responses included upfront dollars, a one-time payment, a reasonable amount of on demand programming per state statute and one reported no financial support for PCG 14. Has the City received any complaints about CenturyLink's cable service? If so, what types of complaints are most often reported to the City? the majority of the cities interviewed received no customer complaints regarding CenturyLink. One city has a separate customer service ordinance applicable to cable operators, and another city reported some complaints were received when CenturyLink rolled out its Prism service but they seem to have had ample staff on board to resolve the issues. 15. Does the City receive any complaints about the construction of the CenturyLink cable plant in the right-of-way or placement of above ground cable facilities in the right- of-way? 14 28899200 7"he majority of the cities interviewed receive no complaints regarding ROW issues One city reported complaints related to phone and internet services 16. Does CenturyLink satisfactorily resolve subscriber complaints? Responses were "Yes -"'and that CenturyLink has plenty of staff. 17. Does CenturyLink pay its franchise fees to the City on time? Any issues regarding franchise fee payments by CenturyLink? All cities reported that franchise fees were paid on time. 18. How would you describe the City's relationship with CenturyLink? Are there any specific problems or concerns? Responses received were: 'good working relationship ; "no problems or concerns,"' and "good relationship, " 19. Do you think the City would seek to require any different franchise obligations on CenturyLink now that the City has experience observing CenturyLink's cable service in the City? One city replied that they will add security fund language to the next franchise. .Several cities replied that they are unsure as they recently renewed or signed the franchise. 20. Any other issues, concerns or compliments you would like to offer regarding CenturyLink's cable service offering in your City"? One City replied they would like the copper technology replaced with fiber to all residents. 15 28899200 CENTURYLINK'S FINANCIAL QUALIFICATIONS I. SCOPE OF REVIEW Qwest Broadband Services, Inc. d/b/a CenturyLink, ("QBSI"), a Delaware corporation, is an applicant for a competitive cable franchise agreement (hereinafter referred to as the "Franchise Agreement's for the City. CenturyLink, Inc. ("Centuryl-ink'�, a Louisiana corporation, indirectly wholly owns QBSI. QBSI operates cable television systems that provide cable services throughout the United States. QBSI has requested the City's approval of a competitive cable franchise agreement. At the request of the City, Moss & Barnett has reviewed selected financial information that was provided by QBSI and CenturyLink or publicly available to assess the financial qualifications of QBSI to obtain and operate a competitive cable franchise. The financial information that was provided or available through other public sources and to which our review has been limited, consists solely of the following financial information (hereinafter referred to collectively as the "Financial Statements': 1. Application of Qwest Broadband Services, Inc. d/b/a CenturyLink for a Competitive Cable Franchise dated July 3, 2015, along with such other exhibits as provided therewith (the "Application"); 2. Form 10-K for CenturyLink, Inc. filed with the Securities and Exchange Commission on February 24, 2015, for the fiscal year ended December 31, 2014; 3. Form 10-Q for CenturyLink, Inc. filed with the Securities and Exchange Commission on May 6, 2015 for the three-month period ended March 31, 2015; 4. The audited financial statements of CenturyLink, Inc. and subsidiaries as of December 31, 2014 and 2013, including Consolidated Balance Sheets as of December 31, 2014 and 2013, Consolidated Statements of Operations, Comprehensive (Loss) Income, Cash Flows and Stockholder Equity for the years ended December 31, 2014, 2013 and 2012, and the Independent Auditors' Report of KPMG LLP dated February 24, 2015; and 5. Such other information as we requested and that was provided by QBSI and CenturyLink relating to the Application. Our procedure is limited to providing a summary of our analysis of the Financial Statements in order to facilitate the City's assessment of the financial capabilities of QBSI to operate a cable system in the City. II. OVERVIEW OFWEST BROADBAND SERVICES, INC. Since 2008, Qwest Broadband Services, Inc., a Delaware corporation, has been providing cable video services and currently provides full video services under the 16 28899200 PrismTM platform to 14 markets in the United States,7 including in the States of Arizona, Colorado, Florida, Nebraska, Nevada, and North Carolina.$ QBSI's affiliates provide a broad range of other communication services including broadband, hosting and colocation, VoIP, Ethernet, Internet services, and voice services to residential and commercial customers in various markets in the United States.9 QBSI was formed on May 10, 1999 and is a wholly owned subsidiary of CenturyTel Broadband Services LLC, a Delaware limited liability company, which is wholly owned by CenturyLink, Inc.10 As of December 311 2014, QBSI passed approximately 2.4 million potential customers and served approximately 240,000 cable customers.11 CenturyLink employs approximately 3,000 employees in Minnesota with about 200 of the 500 network technicians trained in providing services to QBSI's PrismT`" cable television platform.12 QBSI's operational management team has practical experience in the cable industry. 13 Cable providers and telecommunication companies operate in a competitive environment and the financial performance of cable television operators, like QBSI, is subject to many factors, including, but not limited to, the general business conditions, programing costs, incumbent operators, digital broadcast satellite service, technology advancements, changes in consumer behavior, regulatory requirements, advertising costs, and customer preferences, as well as competition from multiple sources, which provide and distribute programming, information, news, entertainment and other telecommunication services. 14 QBSI has a limited operating history and is dependent upon CenturyLink for all of its funding and the financing of its operations. 15 The cable business is inherently capital intensive, requiring capital for the construction and maintenance of its communications systems. Each of these factors could have a significant financial impact on QBSI and its ability to operate a cable system in the City. III. FINDINGS Based upon the above information, we have analyzed the historical financial statements of QBSI's parent entity, CenturyLink, Inc., in evaluating the financial capabilities of QBSI. QBSI declined to provide us with its stand-alone financial statements or projected financial information for its future operations and the cost to integrate PrismTM into its existing infrastructure in the City. We specifically requested that QBSI provide information on QBSI's capital expenditures and cash flow budget (Moss & Barnett's request attached hereto as Exhibit G), but QBSI declined to provide that Application at p. 14. 8 Application — Exhibit D. 9 Form 10-K for CenturyLink, Inc. filed with the Securities and Exchange Commission on February 24, 2015 for the fiscal year ended December 31, 2014 ("Form 10-K'� at p. 6. 10 Application — Exhibit E. 11 Application at p.14. 12 Application at p. 1. 13 Application at pp. 14-17. 14 Form 10-K at pp. 17-27. 15 Application at p. 18. 17 28899200 information to US. 16 With respect to our request for projected financial information, QBSI stated "...it does not provide forward looking information at the individual market level because it could lead to incorrect or inappropriate assumptions or conclusions...". 17 Centuryl-ink's historical audited financial statements do not separately provide the financial information for QBSI. As such, we are reporting our Findings hereunder based upon CenturyLink's historical financial information. 1. Analysis of Financial Statements. Federal law and FCC regulations provide franchising authorities, such as the City, with limited guidance concerning the evaluation of the financial qualifications of an applicant for a cable franchise. In evaluating the financial capabilities of a cable operator, we 'believe it is appropriate to consider the performance of an applicant based on the applicant's historical performance and its projected or budgeted financial information along with its financial capabilities (for funding and financing its entire operation). We were not provided with this information for QBSI. As such, we believe a general review of CenturyLink's financial information may provide some insight into the general financial operations of CenturyLink with respect to the Application, but we note that there are many unanswered questions regarding QBSYs operations going forward. 18 As noted above, Centuryl-ink's and its subsidiaries' operations include both cable television video services and non -cable television services. According to CenturyLink's Financial Statements, QBSI's customers represent a small portion of CenturyLink's overall customers.19 The CenturyLink financial information discussed below includes all of the CenturyLink operations, including the non - cable television video services. We have analyzed Centurylsink's Financial Statements as of March 31, 2015 and as of December 31, 2014 and 2013 in providing the information in this Section. 2. Specific Financial Statement Data and Analysis. a. Assets. CenturyLink had (i) current assets of $3,468 million, $3,576 million, and $3,907 million; (ii) working capital of a negative $1.11 million, a negative $342 million, and a negative $502 million; and (iii) total assets of $49,52.0 million, $50,147 million, and $51,787 million as of 16 Correspondence to author from Patrick Haggerty, Director of State Regulatory and Legislative Affairs of CenturyLink, received on July 9, 2015 (attached hereto as Exhibit H) CCorrespondence'� at p. 2. v Id 18 Correspondence at pp. 1-2. 19 Form 10-Q for CenturyLink, Inc. filed with the Securities and Exchange Commission on May 6, 2015 for the three month period ending March 31, 2015 ("Form 10-Q'� at p. 21 and Application at p. 1. 18 2889920vl March 31, 2015 and December 31, 2014 and 2013, respectively.70 Working capital, which is the excess of current assets over current liabilities, is a short-term analytical tool used to assess the ability of a particular entity to meet its current financial obligations in the ordinary course of business. The working capital trend shows a slight decrease in the negative working capital from December 31, 2013 to March 31, 2015, which suggests that CenturyLink's cash flow may be getting stronger. CenturyLink's current ratio (current assets divided by current liabilities) as of March 31, 2015, of 0.97/1.0 is near the generally recognized standard of 1:1 for a sustainable business operation .21 As of March 311 2015, CenturyLink had $155 million of cash on its balance sheet.22 Approximately one-third of its cash is held off shore and is subject to restrictions on usage.23 As noted above, QBSI did not provide us with any budget of cash flow or cost with respect to its expansion of the I_riSMTM service or any of its other potential cash capital needs. As such, it is difficult to predict what amount of free cash on hand is needed to bring the PrismTM system online in the City (and other cities in which QBSI is rolling out its video service). We also note that approximately fifty-five percent (55%) of CenturyLink's assets are comprised of its intangible Goodwill.24 b. Liabilities CenturyLink's Financial Statements report (i) current liabilities of $3,579 million, $3,918 million and $4,409 million; (ii) long- term debt of $20,254 million, $20,121 million and $20,181 million; and (iii) deferred obligations of $10,922 million, $11,085 million and $10,006 million as of March 31, 2015 and December 31, 2014 and 2013, respectively.25 According to CenturyLink, it has $1.7 billion available on its $2 billion revolving credit facility as of March 31, 2015 (which matures on December 31, 2019).26 CenturyLink's credit facilities include affirmative and negative covenants, that if violated, could result in a cascade of defaults under its debt obligations and an immediate cash and/or financing needs .27 According to the Financial Statements, CenturyLink is not in default of these requirements at the current time .28 CenturyLink has in excess of $2.5 billion of debt maturing in the next 3 years which if not paid or refinanced could have a significant impact on the financial 20 Form 10-K at p. 69 and Form 10-Q at p. 5. 21 Form 10-Q at p.5. 22 Form 10-Q at p. 30. 23 Form 10-Q at p. 30. 24 Id 25 Form 10-K at p. 69 and Form 10-Q at p. 5. 26 Form 10-Q at pp. 30 and 32. 27 Form 10-Q at p. 32. 28 Id 19 28899200 viability of CenturyLink.29 Any additional debt, including by drawing on its available revolving credit facility, will require CenturyLink to generate additional cash flow, including through its operations, to fund its debt service. C. Income and Expense. CenturyLink's Statements of Operations report (i) revenue of $4,451 million, $18,031 million and $18,095 million; (ii) operating expenses of $3,802 million, $15,621 million and $16,642 million; and (iii) net income (loss) of $192 million, $772 million and ($239) million for the three-month period ending March 31, 2015 and the years ending December 31, 2014 and 2013, respectively.30 CenturyLink is reporting net income in 2015 and 2014.31 The ability to generate cash is important for CenturyLink due to its leveraged operations. With the expansion of PrismTM, CenturyLink may be required to incur significant expenditures for the assimilation of its video services into its existing platform along with additional programing costs to obtain and maintain its programming in the future. Over the last 3 years, CenturyLink has been able to generate cash flow from operations to cover its investing and financing activities.32 IV. SUMMARY We are not aware of any state or federal standards by which to assess the financial qualifications of a competitive cable operator seeking an initial franchise in the City. The FCC has provided a minimal standard to consider when assessing the qualifications of a prospective transferee when a cable system is sold or control of the franchise changes. This FCC financial qualification standard is found in FCC Form 394. Using the FCC Form 394 to establish an absolute minimum standard of financial qualifications that a proposed applicant must demonstrate in order to be qualified to obtain and operate a cable system, QBSI has the burden of demonstrating to the City's satisfaction that QBSI has "sufficient net liquid assets on hand or available from committed resources" to obtain and operate the system in the City, together with its existing operations, for three (3) months. This minimum standard is not easy to apply to a company that is in aggressive growth mode and expanding its operations. Based solely on CenturyLink's (QBSI's indirect parent entity) financial information that we reviewed, CenturyLink appears to have sufficient funding to finance, operate and bring its cable system online in the City. Based on the foregoing and limited strictly to the financial information analyzed in conducting this review, we do not believe that QBSI's request for application for a Competitive Cable Franchise in the City can reasonably be denied based solely on a lack of financial qualifications of QBSI and 29 Form 10-K at p. 82. 30Form 10-K at p. 68 and Form 10-Q at p. 4. 31 IQr 32 Form 10-K at p. 70 and Form 10-Q at p. 6. 20 28899200 CenturyLink. Due to the many uncertainties and lack of information regarding the proposed funding and future operations, there is not enough information that has been made available to make any conclusions regarding the financial qualifications of QBSI to operate a system serving the City. The determination as stated above is based solely upon the CentuNLink Financial Statements. In the event the City elects to proceed with approving the issuance of a competitive cable franchise, the assessment of QBSI's, and its parent entity CenturyLink's, financial qualifications should not be construed in any way to constitute an opinion as to the financial capability or stability of QBSI or CenturyLink to (i) operate under a competitive Franchise Agreement, and (ii) operate its other operations. The sufficiency of the procedures used in making an assessment of QBSI's and CenturyLink's financial qualifications and its capability to operate a competitive system in the City is solely the responsibility of the City. Consequently, we make no representation regarding the sufficiency of the procedures used either for the purpose for which this analysis of financial capabilities and qualifications was requested or for any other purpose. Lastly, in order to ensure compliance with its obligations to operate the cable system in the City and since we have based all of our analysis on CenturyLink's Financial Statements, the parent entity, the City may seek to require a corporate parent guaranty as part of issuing a competitive Franchise Agreement to QBSI in a form as set forth in Exhibit E or as otherwise mutually agreeable to QBSI and the City. 21 28899200 Based on our review of CenturyLink's legal, technical and financial qualifications, we believe that the City cannot reasonably withhold approval of CenturyLink's request for a cable communications franchise. We recommend the City consider adoption of the attached resolution which will establish findings of fact regarding CenturyLink's qualifications. If the City adopts the resolution attached as Exhibit F, the City will then be in a position to consider the grant of a franchise to CenturyLink at a future City Council meeting, assuming mutually acceptable franchise terms can be reached with CenturyLink. 22 28899200 EXHIBIT A ENTITY DETAILS FROM THE DELAWARE DIVISION OF CORPORATIONS Entity Details Ma'UMV. 3040574 r jrrfjjL.qn_jjat (rnm/dd1yyyv) � t m QWE BROADBAND SERVICES, INC. U-14LUU-11L CORPORATION Ln amy, 1'yj 2 c GENERAL DOMESTIC State; or, STANDING Status Date: 05(10x(1999 TAX INFORMATION 1,?."� I 11 jLwj Lr)L� L#,� Ll 2014 Tax Dw": *0-00 $175,00 100 NorrIC; THE CORPORATION TRUST COMPANY Addrpss: CORPORATION TRUST CENTER 1209 ORANGE ST cfty: WILMINGTON county, NEW CAST4V State: DE Postal Code., 19801 Phone: (302)658-7581 NO—of Ly!–Ilv.-Dum' (mal(ddlyyyy) FlfitvIM, aw L�iit! p An UT —S (motdWyyyy) A}I I a I I d I I me n t 07/0/2000 !7:00 070-7/2000 Domcstic Former Nan= US WESTDROADBARD SERVICES, 3NC, 2 02505 Keit per; Surviqir 2 02/2W2000 13:00 02505 Mergpr; Survivor 2 1212911999 16;30 001/1999 4 0240 AmendmenL; Domes"Ic' 16s3r' oqw/iqtjS Former No mW. V S 1051 CAINx VEW URE% INC. I marp (mlawafe StoCk CA, 7 o"VI(ki 1999 12..;30 0>/ I Cf/1 <,199 A-1 2889920vl EXHIBIT MINNESOTA SECRETARY OF STATE BUSINESS RECORD DETAILS 1�4i rYesot.a .. Business w -id L7( -.n ystf-jn, Office of t3)(:,. Minnc,,s eta Secretall, of State �'rari�:ta;aicir 3usiness Record Details Minnesota Business Name Q11 EST BROADBAND SERVICES, INC- Business i's , Business Type MN Statute Business Corporation (Froreirvinl $0 File Number Home Jurisdiction 980ou Delaware Filing 'Gate Status 07/1311999 ,fictive 0 In Good Standing Renewal Clue Date Registered Office ,Address 1213 112 016 100 5 5th Str F#1075 USA Registered Agent(a) Odie! iixecutive Officer C 'T' Gorporaticn S1 -<tem IncGlen r_ Post, III 100 CenturyL.Ink. Drive Monroe, LA 71203 t, ., A l-ittnrg History Filing History Select the itoin(s) you would like to artier; Owe.. sel t.. i Filling gate, Filing 07113/1099 Original Filing w Business Corponatiort (Foreign) B-1 28899200 Effective Tate X 7 1311 usiness Corporaflon. Busitiess Name 05012000, Bu.sMess 'Clorporation (Foreign) Business Name 04)1011200.7 R . 0 i s, 1, e r e. ul cel n n t (". 4 �t � r iii? , i 3 1 a ) m Ruqifte,4� Corooration fforeip) f, Copyrighi ;l 65 &ato ofof Minnegota k I I rigbts reserved B-2 2889920vl EXHIBIT C MINNESOTA SECRETARY OF STATE UCC/TAX LIEN FILING RECORD SEARCH AND JUDGMENT RECORD 'dinne. gota Business and Lion System, Office of the Minnesota Secretary of State Traji -i a, cdof JCC / Tax Lien Filing Record Search )) Debtor Name Search Results No results nwiching search ufterla, >ata current through 15/8420-15 SAW PN(� Fh.is ser,,arch was performed on 5/1312015 vdtfi the followha goarch parameters., 5 ARCH: UCC Debtor Name 4AMM Qwest Broadband NCLUDF LAPSED MUNGS: No 'IM None Speced )ATE RANGE� None Specified 000yrighty 015 f. seoretwy Q1 Sfale ref Nflonesoko I AR rights reserved. C-1 2889920vl \4i.nnesota Business and UeTi ' i� ystein, Office of the Minnesota Secretary of State Tfamachur ................. ........... . .......... .... - . ..... ............ JCC / Tax Lien Filing Record Search )> Debtor Name Search Results No remift.- rn itching search critraria. )ata current throuf jh SMW15 5:00 PM rbis search v4,az performed on 511312015 with the followivig saorch parameters: EAR H: Tax LiFnDebtor Name q.AME* Qwcst Broadband Service,% 'ITY: 1, Jone SpQoiffod. TATE RANGE: None Specified Cor,yrlqht=,r) 1 $v.Crelzary tINS'tato, of Min neso I a I All rights re,-,erved *TP M w, I Cw, f I writ rpt INN,r ,"91 '3'eamh Moui New, Jt �&,kjm d Sc? a if,-- I I fafinf, 8C r, A1* M 'IS Senrch Help. , la� WC, Reco Caunt: 0 EX-tvA Name: oft Party Sefirch Modo; Business Narno Business Ngime.- CD v �was�. BroadharnIU, r, bj 's Show Iriaotivo and 8 1-tifled No.jvd.yment,3 matched your E;aaTch offtarls. G-2 2889920vl EXHIBIT D PACER CASE LOCATOR SUMMARY AND THE ACTIVE CASE SUMMARY PAC E R kit 0mirt, Typv,7, PAgy �kvarvh APPolfago RwAmits wr cas-e Loczac,"r vk-1 May U Ukvl,16 101's NOS Ewa Filud Iftula Chafer: mWIMIA, 1.I2001 ikafw, vttHl"Ch:f Fa, C."un T}apo malty sowdt Nquip cnvevt Noufflumd. Ail Ikum, Vzqe-,-, I itcae WWI JI qu Rosulft; (Wovogo 5 , rv� Go* Gk"'-poorkmol M env* qj FWLEIfV Lint* to f4wp-<A wwwwoo Im, oxfj 1 Q%vil Dmwj1')wIfJ 1Smrvkv,1 lut Oki WaRAAO 2.JJLqDRt af vd9gall Emly d judqrmwn Wip"n, at id v Owmf Vnod m54 wgi,Adlinfirpti 1'aiJwdffgfes lim n-lipt UbAMW$ W 14 I021ff1,V1k11%' 01,41 ftmift Ilfwow V' D*mt 4-W-417.7 IV0oh.kfPd s&wkft, bit jp.I* v".3'e oup INVIOL12,1011 oKrAQ0jM zwu, Ki Al �J, 014 01 r""Wev Im. M115201, Rump 0,wg Nw&Anz� �'-rmez Al rkad� Rap�, i Wi (A NA1 I w 111 Graiw,aw v- ol I em Oweasmadbarf. -swum, km• ON LmtR1smGUFAj:j rela 10,w flum 0- aq. V, Grm mmCommmk-a Vol frew In a1 surkion h:z (;-silt? AZALSZN61.2�21 Wf,wd kaot Th-MMVml LLC -LLC -c. amitifyTC iWn.kififind Scivize, I.LC'M a] 5 ovml 0 *!NJ Jun 11 d *Ifm kxm� hrm, 10�� 8A MARKIN W2 1011 A KM2 fa&ri` Liconiiing L.P (mmi amw1hiffid Gurmuasluc (&-I! wawdw 900W 01 W V. fAYAW 11w-mommol kiv d a ovaol 15mobbW "I'044.1m Im, (cp"I rAwvrl. In re Kw, w4m4ko opt v,'4-,fgjJ L4; to v WA51 pmwtunwl Stfvinm Inc Iff") OWAISI; 212017.sk1-21 m- virlim"N17, III 1A KAM?, fff'Em"nim C'm VW.gnvI1q IlWenl lAvallon 10 GwA&I S-to.mft Svvkwu inc- id o drduMIER cw 11191'ateMpi A-0111 A, K01Y, W—N-Alw UwftMv., L.R. Y.'Tlmo. Vk*rif)r C*Y.- lw.,K & owout azandwy-4 lu., 011)"111-1; W16 Rulfuld A Kul; fit, 1. 1 ef,,hndapy E 2 C n i I. P Y Time.v,1%j;4# rwf G* 'I doft 1'}'3fl11,30 NX -1 eirW pol vKjoy R AJ ri fiki A PA v T60 I I I ul D. it y 4ce n 5 hg, L, P. Y. fi I n a Vskmv, (,,,Lq n I u r. a I al Nmi orlwo.boml 1.20mout bimvpuv�iwd 10). wdem, 41=,aAM:We 0r;nMz011 QAMM'012 Gr "arwAl 0 ho V, umo R! coffiffwftO Ji,AF Cu. mjt4ny LLC. A a! D-1 28899200 APPolfago RwAmits NOS Ewa Filud Iftula 1.I2001 ikafw, M DMO&I Bmwiland Inc, 0q, itcae WWI JI qu (Wovogo 5 , rv� Go* Gk"'-poorkmol M to f4wp-<A wwwwoo Im, oxfj 10,ofe V. Wip"n, at id v Owmf n-lipt UbAMW$ W 14 I021ff1,V1k11%' Ilfwow D*mt 4-W-417.7 II Aff Cft,n T,50*9, Rump 0,wg Nw&Anz� �'-rmez Al rkad� Rap�, i I em D-1 28899200 Access TechnuloOeSUX V, CCflWVYTd1 11roadband Services L.LC cc ft. Leonard P, Stark, presiding, Mau filedi 04215!2011 Date of last filing?. 05,106/2015 Ca s e S n m in xi'y Office- Willer agwri File(h MI'l 5/2011 ,Iujy Demind., Plaintiff Dentand: Nature of Suitt830 Cause.- 35-.271 Jurisdiction: Fe&ml Question Disposition- ("ounty; XX US,, OuW& State Terminalkh, Origin: 4 Reopencit U`2512015 Lead Cnw None: Relatvl Case: None Other CourtCamet !4-13 :147[l Defen(lant Custody Statusi Cm.atrl,mn-eidcrrnan( tliannemari-is, Flags: lv1E!,):!.A'.I'ION-(',IB,f'A'1-1.-,-N'I' Plaknfiffi United Awess nepresented Stamadog Stamoulis Phone!(302) 999-1540 Tecbnolm�icsl �.Mm-n aw,cO I —11C, by ElBait. u U I s Ad e 1 flea miff- Uifted Acoctm% re pr Richard Charks Phorie-,102-999-1540 Technologies LLC by Weinblau Korai hmeiriblattf, qwde1awx*m Defendant. CvnturyTel repres,,ented Gw5 William Lipkin Phone t(302'1657-4903) Broadbamd, Swviccs LLC by Fax!, (302) 657 -4901 leu nsil; Defendqm CemituryTel represenivA Man NeidermanPftorw�:(' )02) 657-4920 Broadban(I Services LLC by (Designation .err nil: Remined) Defendant: Century'rel represented BenjIVIDiD A. Swj.ythi PhonvO02-984-6301) Broadband Scrvices LL,(' Defendant: Qwest Corporation Defendant: Qvvesl Corporation Defibndllnt�t Qwe'st Corr)(Mation. Caunter Claimant- Qwest Cc,jrporatioll Couitter (Immant, tai eqt Corporation Cowlter Chahmint: Cetitary-I'd Broadband Sun,ices LUC Counter CIRitna-ra- Con.tuvyTel Broadbantl servicx's JjC 28899200 4), Em;WL represented Ga q Wiffiemi Lipkin Phone:002)657-490.3 by l=am, (302) 657"4901 Em a4h glipkin.@ock erL1qenmans,cxn-.n presented Mact. Neidernian Pho.ue.(302) 657-4920 by (Designation Cm.atrl,mn-eidcrrnan( tliannemari-is, reprewn ted Beiliamin A. San} h 11.ho.nc.302-984-6300 by Email. mprtmented Malt Neidern . i,ru.) 11honen',302) 65,4920 by (De.gim1ftd,011 Email - Retained) represented Benjanain A, Smyth, l"hane-,302-984-6300 represented lAwt Neiderman Phan e,. (302),6574920 by (Designa-flon Email, represen.ted Bci1taniin k Sinyffi Phone.O a2—x)84-1w 1 00 by E In 11 i P lysnn�Y D-2 Cauliter DoTendallf; United Acmn Tecb,i-mlogies' LLC Counter Defeladmil: Ufflited LI,C 2889920vl represented E ni a i.1 - 'q'fall . oulis(WISwolelaw.cotra rprossentod Richaric Charlos Phonv:302-999-15.40 lky Weinblali 1"Imaili woinblamwdelaw,com CER PAS 'etwice Center 0511 li'20 1: 5 11 -15-56 .111 bloo,662-92,54' killCilent C itle 46687.7 'umXAscSplSli.��W,>.��..��..µ.���.®... i y 111PS -„w_„ee���: Ec(, D-3 SAMPLE - FOR DISCUSSION PURPOSES ONLY EXHIBIT '4. E-1 2889920vl SAMPLE - FOR DISCUSSION PURPOSES ONLY THIS AGREEMENT is made this day of , 201 (this "Agreement"), by and among CenturyLink, Inc., a Louisiana corporation (the "Guarantor"), the City of Eagan, Minnesota ("Franchising Authority', and Qwest Broadband Services, Inc., a Delaware corporation ("Company's. WHEREAS, on Ordinance No. WITNESSETH 20� the Franchising Authority adopted granting a Competitive Cable -television Franchise to the Company (the "Franchise"), pursuant to which the Franchising Authority has granted the rights to own, operate, and maintain a competitive cable television system in the City ("System"); and WHEREAS, pursuant to Resolution No. dated , 2015, Franchising Authority conditioned its consent to the issuance of a Competitive Cable Franchise Agreement on the issuance by Guarantor of a corporate parent guaranty guaranteeing certain obligations of the Company under the Franchise; and WHEREAS, the Company is indirectly wholly owned by Guarantor, as the parent entity of a consolidated group which includes the Company. NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, in consideration of the approval of the issuance of a Competitive Cable Franchise Agreement, Guarantor hereby unconditionally and irrevocably agrees -to provide all the financial resources necessary for the observance, fulfillment and performance of the obligations of the Company under the Franchise and also to be legally liable for 1 28899200 SAMPLE - FOR DISCUSSION PURPOSES ONLY performance of said obligations in case of default by or revocation or termination for default of the Franchise. This Agreement, unless terminated, substituted, or canceled, as provided herein, shall remain in full force and effect for the duration of the term of the Franchise. Upon substitution of another Guarantor reasonably satisfactory to the Franchising Authority, this Agreement may be terminated, substituted, or canceled upon thirty (30) days prior written notice from Guarantor to the Franchising Authority and the Company. Such termination shall not affect liability incurred or accrued under this Agreement prior to the effective date of such termination or cancellation. CenturyLink, Inc. Its: STATE OF _) ) ss. COUNTY OF ) The foregoing instrument was subscribed and sworn to before me this .� day of 20by _ , the of 2 28899200 F-1 2889920vl Regarding Findings of Fact with Respect to the Proposal of Qwest Broadband Services, Inc. d/b/a CenturyLink, Inc. for a Cable Communications Franchise RECITALS: 1. Qwest Broadband Services, Inc., d/b/a CenturyLink, Inc. ("CenturyLink") requested that the City of Eagan, Minnesota ("City") commence proceedings to consider the award of a cable communications franchise to CenturyLink. 2. Minnesota Statutes Section 238.08(x) mandates that a city require a franchise for any cable communication system providing service within the city. 3. Federal law at 47 U.S.C. Section 541(x) provides that a city "may not unreasonably refuse to award an additional competitive franchise." 4. The City retained the law firm of Moss & Barnett, a Professional Association, to assist the City in conducting the procedure required under Minnesota Statutes Section 238.081 and reviewing any applications submitted to the City. 5. The City followed the franchise procedure required by Minnesota Statutes Section 238.081 by publishing once each week (June 12, 2015 and June 19, 2015) for two successive weeks in the SunThisweek Burnsville/Eagan a Notice of Intent to Franchise a Cable Communications System. 6. The Notice stated all eight (8) criteria outlined in Minnesota Statutes Section 238.0811 Subd. 2. 7. In addition to the published Notice, the City provided copies of the Notice of Intent and the Official Application Form to CenturyLink and to the City's existing cable operator, Comcast of Minnesota, Inc. ("Comcast"). 8. The City's Official Application Form required that proposals for a cable communications franchise contain responses to each of the items identified in Minnesota Statute Section 238.081, Subd. 4. 9. The City's closing date for submission of applications was set for July 3, 2015 which complied with the statutory minimum of twenty (20) days from the date of first publication. 28899200 10. Upon the deadline for submitting applications, July 3, 2015, the City received only one (1) application, from CenturyLink. 11. The City Council determined to call a Public Hearing to consider the application received from CenturyLink at its regularly scheduled July 21, 2015 meeting. 12. All interested parties were provided an opportunity to speak to the City Council and to present information regarding this matter. 13. The City carefully reviewed all information and documentation presented to it regarding CenturyLink's proposal and qualifications to operate a cable communications system within the City. 14. Based on information and documentation made available to the City and the report dated July 10, 2015 prepared by Moss & Barnett with respect to CenturyLink's application, the City Council has reached conclusions regarding CenturyLink's legal, technical and financial qualifications. NOW THEREFORE, the City of Eagan, Minnesota hereby resolves as follows: 1. The City hereby finds that CenturyLink's application of July 1, 2015 complies with the requirements of Minnesota Statute Section 238.081. 2. The City finds that CenturyLink possesses the requisite legal, technical and financial qualifications to operate a cable communications system within the City. 3. City staff is authorized to negotiate with CenturyLink to attempt to reach mutually acceptable terms for a cable television franchise to be introduced to the City Council for consideration and action. 4. The City finds that its actions are appropriate and reasonable in light of the mandates contained in Chapter 238 of Minnesota Statutes and applicable provisions of federal law including 47 U.S.C. Section 541(a). 2 28899200 PASSED AND ADOPTED this day of 12015 CITY OF EAGAN, MINNESOTA Mike Maguire, Mayor ATTEST: Christina Scipioni, City Clerk The motion for the adoption of the foregoing resolution was duly seconded by Member and upon the vote being taken thereon, the following voted in favor: N v , and the following voted against the same: _ WHEREUPON, said resolution was declared duly passed and adopted and was signed by the Mayor and his signature attested by the City Clerk. 28899200 EXHIBIT G MOSS& BARNETT'S REQUEST FOR SUPPLEMENTAL INFORMATION 3uly 8, 2015 Mr, Patrick Haggerty Director ofState Regulatory and Legislative Affairs Contuk 200 South Fifth Street, Room 2200 Minneapolis, MN5S@OZ RE; Qwest Broadband Services, Inc d/b/a {enturyLlnk- Response to Notice of Intent and Request for Proposals Dear Patrick, As you know, Moss& Barnett has been retained bythe City of Eagan, Minnesota ("City") to review Qwest Broadband Services, Inc.'s, d/b/a Centuryl-Ink, Response to the City's Notice and Request for Proposals for acompetitive cable franchise C'Appl|oadon"). Yuri Berndt ofMoss & Barnett is oaabt|ng In the review nfCenturyLink's financial qualifications to advise the City regarding CenuryLhk's vvomU qualifications as required by applicable law. The below questions are based 1npart unMr. Bamdts financial review, 1. The CenturyLink 2014 Form 10'K("Fnnn 10+K.1 states that Centnr4jnk may need to obtain additional financing under certain circumstances. Please provide copies ofany commitments from the financial institutions and lenders that will provide financing to CenturyLink along with the expected (ann4 covenants and conditions of the credit facilities (including potential interest ratacbangesand the debt Uenn). 2. The Form 1O-Krefers tnthe budgeting pru*ae and infbnnabno. Please provide ocopy ofConturyUnk'smost current budget that was reviewed byits Board ofDirectors. 3. Please provide 2815 and 2016 projected Pm Forma Statements of Cosh Flaws and Income for CmnturyUnk (including any potential future dividend distributions to its shareholders), 4. Please provide a list of Centuryl-ink's significant capital outlays that will or are projected to occur within two years of, the Application dote both in the Minnesota region and throughout the entire CeMmryUnkbmmdbond system, For 2015, is than any additional outlays that are not covered |nthe Form 1U -K? 5. Please provide projected Pro Forma balance Sheets for Centutyl-Ink as of December 31, 201Sand 2O1b. 6. Please provide |nh`nnoUon regarding any tronsacbmns/events or acquisitions after the Application date that will affect the financial capabilities uf Century1ink. ----------- G-1 28899200 Mr. Patrick Haggerty Moss & Barnett July 8, 2015 Page 2 7. According to the Form 10-K, $350 million of debt matured on February 17, 2015 and $92 million will mature on June 15, 2015. What accommodations have been made for the maturation of this debt (and of the other debt maturing in 2015, 2016 and 2017)? 81 Please provide an estimate of CenturyLink's first year implementation costs that is projected to be incurred by Centuryl-Ink as part of offering broadband services (i.e. new personnel cost, servicing costs, programming costs, hardware cost, etc.) to the Minnesota region and other new broadband service areas. Now do these amounts compare to other areas where Centuryl-ink has already introduced broadband services? 9. Please provide any applicable information to help explain any future plans CenturyLink may have regarding the implementation of new technologies into its broadband -system and the related projected costs, 10. Does CenturyUnk have any plans to add new services to its existing broadband system? Please describe any potential. services which Centuryl-ink may consider providing over the system in addition to services currently being offered In other locations and the projected incremental cost of the new services, Finally, Exhibit D of the Application provides a list of markets where Prism is currently offered pursuant to a state or local franchise. Please provide the name, title and contact Information, of individuals In each market where Prism is currently offered, If your written response is provided in hard copy, please provide three (3) copies to: Vian T. Grogan, Esq. Moss & Barnett 150 South Fifth Street, %!to 1200 Minneapolis, MN 55402 If your written response is provided in electronic form, please provide to Brian Grogan at Brian.GroganQlawmoss.com, Thank, you for your assistance in providing timely answers and documentation, Please note that the City cannot fully consider the Application until all questions have been answered and appropriate information provided. With this is mind, the sooner the City receives a reply from Centuryl-ink to the above questions, the sooner the review can be completed. G-2 28899200 Mr, Patrick Haggerty Moss & Barnett July 8, 2015 Page 3 The City resemles the right to request additional information in the future. Very truly yours, Brian T. Grogan Attorney at Law P: (612) 877-5340 Brian. Grog- a@.-j4Mqs%corn STG/tIh I- Wv� cc: Tom Garrison, Communications Director, C4 of Eagan Yuri B. Bemdt,, Esq,, Moss & Barnett 288"1,9vt G-3 2889920vl EXHIBIT H �"i4l, Scut. ViA F, Nfail. Wirt _L Gr ttt, Esq. , m; &Rtsts cm 150 South 5's 9mcd �1r[t 3.203 g, I"'42 55402 `_, entry Unk- ,-ri tt'4'RW4 aftd Lagtgumw Maim Murm C61-212-5635 Re: Qhvcm Btua-dNwid cy st: . Inc, ti -V'_ C e'nuiryLinV5 Regxmise tv the C ky of i co's NoiR and REm7(lest rirr Pg DMI Rrian., Thu k1flovV ng, ikf pouds 10 1he, o,Cfx6xim � oml 1 k`ikiiP icrC+t lo like (WOJ July 4, 201 S. W11vt r spect to '€omm" :3 lkr=.ss,f 18 4afonh W ymu 3 t, (" € uryl, An reapect y ti€mas you to data f6ltowing mmu- mini €aa its initial, ReVow to VIC Nofiw and Reqmvsi Aw 1:1tfit mat € t umnt 1a1r. st"ln= Stalumcm Applfiumt's tttrtri me pa re mi-uir[lgimy 3a C ntuftyUr . Iiic,. 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Ceatrrcyl.ink m4f[ wi y the ty of Emgmil in Cft (:nmtit unpi °rmma in the fartrsrr, no t l«tm,0t0� hic t afficas Tim delivery of Ptimto Ond M -cm , Responflilkg't€'# Quo tim 0. 11-1case ncc P-Olibil D 44 hit"kl'aa o v r"be'd to ( entity- LbIWS origi,rte:' response §0 the City of EapE! s #to13'Vu aa -d t'eittt`sl 'far lmaSv,;kam;€FFC7F5-. P -11C IC, M, me Y,..rizif¢= F€ nccrv, i�, ilay ;i di#imm1. in t.ounatka yoga.m=2a'.. fh3fat'l. t Liiik, VW�k truly youn, ;,5 a F Patrick, 1-18,g AM) 45�Ah EIh 2200 Mknm {l.« Ah NIN rZA02 H-2 2889920v1 s • s tc r1i 9 9 P 0 C Q) o� 1 i' t 1' 4 13 r`� IZ- • 1; • 0 Ol 0 fu 4• 0 u 0 u 1 0 ro � _. 4-1 fu • IZ- 1; 0 fu 4• 0 1 � _. 4-1 fu • u ii 0 fu t': i, s _u 0 N x-1 CITY OF EAGAN, MINNESOTA RESOLUTION NO. Regarding Findings of Fact with Respect to the Proposal of Qwest Broadband Services, Inc. d/b/a CenturyLink, Inc. for a Cable Communications Franchise RECITALS: 1. Qwest Broadband Services, Inc., d/b/a CenturyLink, Inc. ("CenturyLink") requested that the City of Eagan, Minnesota ("City") commence proceedings to consider the award of a cable communications franchise to CenturyLink. 2. Minnesota Statutes Section 238.08(a) mandates that a city require a franchise for any cable communication system providing service within the city. 3. Federal law at 47 U.S.C. Section 541(a) provides that a city "may not unreasonably refuse to award an additional competitive franchise." 4. The City retained the law firm of Moss & Barnett, a Professional Association, to assist the City in conducting the procedure required under Minnesota Statutes Section 238.081 and reviewing any applications submitted to the City. 5. The City followed the franchise procedure required by Minnesota Statutes Section 238.081 by publishing once each week (June 12, 2015 and June 19, 2015) for two successive weeks in the SunThisweek Burnsville/Eagan a Notice of Intent to Franchise a Cable Communications System. 6. The Notice stated all eight (8) criteria outlined in Minnesota Statutes Section 238.081, Subd. 2. 7. In addition to the published Notice, the City provided copies of the Notice of Intent and the Official Application Form to CenturyLink and to the City's existing cable operator, Comcast of Minnesota, Inc. ("Comcast"). 8. The City's Official Application Form required that proposals for a cable communications franchise contain responses to each of the items identified in Minnesota Statute Section 238.081, Subd. 4. 9. The City's closing date for submission of applications was set for July 3, 2015 which complied with the statutory minimum of twenty (20) days from the date of first publication. 10. Upon the deadline for submitting applications, July 3, 2015, the City received only one (1) application, from CenturyLink. 11. The City Council determined to call a Public Hearing to consider the application received from CenturyLink at its regularly scheduled July 21, 2015 meeting. 12. All interested parties were provided an opportunity to speak to the City Council and to present information regarding this matter. 13. The City carefully reviewed all information and documentation presented to it regarding CenturyLink's proposal and qualifications to operate a cable communications system within the City. 14. Based on information and documentation made available to the City and the report dated July 10, 2015 prepared by Moss & Barnett with respect to CenturyLink's application, the City Council has reached conclusions regarding CenturyLink's legal, technical and financial qualifications. NOW THEREFORE,, the City of Eagan, Minnesota hereby resolves as follows: 1. The City hereby finds that CenturyLink's application of July 1, 2015 complies with the requirements of Minnesota Statute Section 238.081. 2. The City finds that CenturyLink possesses the requisite legal, technical and financial qualifications to operate a cable communications system within the City. 3. City staff is authorized to negotiate with CenturyLink to attempt to reach mutually acceptable terms for a cable television franchise to be introduced to the City Council for consideration and action. 4. The City finds that its actions are appropriate and reasonable in light of the mandates contained in Chapter 238 of Minnesota Statutes and applicable provisions of federal law including 47 U.S.C. Section 541(a). PASSED AND ADOPTED this day of , 2015 CITY OF EAGAN, MINNESOTA Mike Maguire, Mayor ATTEST: Christina Scipioni, City Clerk The motion for the adoption of the foregoing resolution was duly seconded by Member and upon the vote being taken thereon, the following voted in favor: _ ; and the following voted against the same: WHEREUPON, said resolution was declared duly passed and adopted and was signed by the Mayor and his signature attested by the City Clerk. Christina Scipioni From:Tom Garrison Sent:Wednesday, July 22, 2015 9:28 AM To:Christina Scipioni Subject:FW: Comcast & cable competition For inclusion in the public record comments, noting particularly the request that franchises with either CenturyLink or Comcast include senior and disabled discount packages. Also, please make sure the Comcast letter regarding CenturyLink is included in the comments as well. Thanks. Tom Garrison Tom Garrison |Communications Director | City of Eagan City Hall | 3830 Pilot Knob Road | Eagan, MN 55122 | 651-675-5008 (office) | 651-470-1692 (cell) | tgarrison@cityofeagan.com THIS COMMUNICATION MAY CONTAIN CONFIDENTIAL AND/OR OTHERWISE PROPRIETARY MATERIAL and is thus for use only by the intended recipient. If you received this in error, please contact the sender and delete the e-mail and its attachments from all computers. From: goersjrt1@aol.com \[mailto:goersjrt1@aol.com\] Sent: Tuesday, July 21, 2015 3:15 PM To: Tom Garrison Subject: Comcast & cable competition Tom, I'm sending this to you about our conversation this afternoon regarding Comcast for your meeting this evening. There was an article in the Pioneer Press on 15 July 2015 regarding discounts for senior citizens, persons with disabilities and persons who are economically disadvantaged from Comcast. My husband and I are both senior citizens and I'm disabled and in a wheelchair. We sure could use some additional discounts as mentioned above. Our monthly bill with Comcast is $206.00 which is utterly outrageous. I definitely welcome competition. Comcast is dominate in the Twin Cities area. A new competitor would help lower costs for the same services. I'm in favor of Century Link to give Comcast competition. I hope Century Link will offer discounts for bundled services, senior citizens and persons with disabilities. I hope this information will help for your meeting this evening. Don't hesitate to contact me if you need more information. My email address is goersjrt1@aol.com or call me at 651-452-6844. Sincerely yours, Nancy Goers 1 a1% COMCAST July 20, 2015 Mr. Torn Garrison Communications Director City of Eagan 3830 Pilot Knob Road Eagan, MN 55122 Re: CenturyLink Video Franchise Application Dear Mr. Garrison: In June, the City of Eagan ("the City") issued a Notice of Intent to Consider Applications for a Cable Franchise (herein the "Notice"). The Notice states that the City will hold a public hearing on July 21 regarding all applications that they receive. It is our understanding that this public hearing is to establish the record for the City's vote regarding whether they will commence franchise negotiation discussions, and under what teens, with the applicants based on the applicants' responses to the Notice. I am writing to provide you with Comeast's position in regard to the process going forward and limited record in. front of you today. At the outset, let me state clearly that Comcast welcomes a fair androbust competitive marketplace made up of responsible competitors, and we do not oppose the granting of an equitable cable franchise to CenturyLink. Consumers can choose from numerous video options today, including Comcast, DirectTV, DISH Network, and "over the top" -services like Netflix, Amazon, Apple TV and Hulu. This fiercely competitive landscape is challenging, but it brings out the best in each company — at least when competitors face a level. playing field that treats similar providers in a similar manner. I. Comeast's Interest in This Proceeding. Comcast has made substantial financial investments in its cable system over the years to serve the City with a state-of-the-art network. In order to provide cable services and locate its cable system within public rights-of-way, Comcast has operated under a cable franchise issued by the City in December of 1999. The Franchise Agreement has required much of Comcast, including notably: • A requirement that Comcast offer cable service to customers throughout the City of Eagan, specifically to every residential dwelling unit within 250 feet of Comcast's feeder cable and to any new development with. a density equivalent to thirty-five (35) dwelling Mr. Tom Garrison July 20, 2015 Page 2 of 3 units per mile of feeder cable when aerial construction is required and at least forty (40) dwelling units per mile when ruiderground construction is required (Comeast Franchise Section 4(6)(a) and 4(6)(b)); A PEG Access Capital Grant of $150,000 separate from the PEG fee (Comcast Franchise Section 6(4)); and Courtesy cable services to at least 36 schools, municipal buildings and government offices in the City (Comcast Franchise Section 7(9) and Exhibit A). CenturyLink's franchise application either rejects or is silent regarding whether and to what extent it will agree to many of the franchise obligations that have been required of Comeast. II. Level Playing Field Requirements and the FCC's 621 Order. Minnesota's extensive cable franchising statutory scheme is clear that: "No municipality shall grant an additional franchise for cable service for an area included in an existing franchise on terms and conditions more favorable or less burdensome than those in the existing franchise pertaining to: (1) the area served; (2) public, educational, or governmental access requirements; or (3) franchise fees." Minn. Stat. § 238.08, subd. 1(b). Since "applicant is still finalizing its initial footprint for the deployment of cable services within the City of Eagan service area," the applicant did not provide any information regarding the area it is proposing to serve. Comcast, therefore cannot comment on if CenturyLink's franchise proposal is "snore favorable or less burdensome" than Comcast's franchise obligations. It is concerning, however, that it does not appear that CenturyLink's buildout commitment will be consistent with the Minnesota Cable Act. Even more concerning is that CenturyLink hasn't accepted even the minimal obligations that has made in its own applications. For example, in the application submitted to the City of Minneapolis, CenturyLink proposed an initial 30% buildout; in the actual franchise, however, CenturyLink committed to only building 15% of city. We want to be very clear that the FCC's 621 Orders that CenturyLink relies upon in its response does not preempt Minnesota's Cable Act. As recently as January 2015 the FCC explained again: We clarify that those rulings were intended to apply only to the local franchising process, and not to franchising laws or decisions at the state level.' It is inaccurate to say that the City must choose between following state law and policy or following federal law and policy — the two coexist. The FCC expressly allows build out requirements in franchise agreements so long as they are "reasonable." What constitutes "reasonable" is left to the franchising authority to determine. 'Implementation of Section. 621(a)(]) of the Cable Communications Policy Act of 1984 as amended by the Cable Television Consumer Protection and Competition Act of 1992, Order on Reconsideration, at para.? (rel. Jan 21, 2015). Mr. Tom Garrison July 20, 2015 Page 3 of 3 While we have not yet seen an actual draft CenturyLink franchise, we expect it to contain a reasonable full-service requirement — consistent with Minnesota law and the FCC's 621 Order — so that, eventually, all neighborhoods in Eagan would have the same availability of service and access to cable competition, and so that all providers bear similar obligations. Imposing reasonable, binding, and enforceable requirements to serve the entirety of the City will protect competitive and consumer equity and prevent selective service deployment. It will equalize the investment that all providers will be required to make in return for access to the public rights of way. It will ensure that competition develops according to which provider can best serve subscribers and not according to which provider enjoys the most advantageous regulatory requirements. IV. Conclusion. Again, Comcast does not oppose CenturyLink's entry into the local market. We are concerned that competing providers who make use of the same rights-of-way as Comcast, and who are subject to the same federal .law, the same state law and the same local regulatory authority, should be held to the same reasonable level of due diligence and procedure, as well as member city-wide service requirement standards, similar to what Comcast has been held to. There are many factual and legal questions raised by CenturyLink's franchise application. Comeast has important interests at stake in this proceeding and requests that the City of Eagan establish a fair, orderly, and open process that allows for meaningful public review and input. Again, thank you for the opportunity to share our views with you on this important issue. Please do not hesitate to contact me if you have any questions, or if you need any additional information. .S rN, Y, r 611.rte nmett V C ' eman f �" Vice President Government Affairs Tom Garrison From: goersjrtl@aol.com Sent: Tuesday, July 21, 2015 3:15 PM To: Tom Garrison Subject: Comcast & cable competition Tom, I'm sending this to you about our conversation this afternoon regarding Comcast for your meeting this evening. There was an article in the Pioneer Press on 15 July 2015 regarding discounts for senior citizens, persons with disabilities and persons who are economically disadvantaged from Comcast. My husband and I are both senior citizens and I'm disabled and in a wheelchair. We sure could use some additional discounts as mentioned above. Our monthly bill with Comcast is $206.00 which is utterly outrageous. I definitely welcome competition. Comcast is dominate in the Twin Cities area. A new competitor would help lower costs for the same services. I'm in favor of Century Link to give Comcast competition. I hope Century Link will offer discounts for bundled services, senior citizens and persons with disabilities. I hope this information will help for your meeting this evening. Don't hesitate to contact me if you need more information. My email address isoq ersirt1@aol.com or call me at 651-452-6844. Sincerely yours, Nancy Goers