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HomeMy WebLinkAboutMINUTES - 09262000 - SD5 .;erR•r'►iF ren TO: BOARD OF SUPERVISORS +C}NTRA FROM: Phil Batchelor, County Administrator ; COSTA DATE: September 21, 2000 Y=.',r . COUNTY SUBJECT: Transfer of Ponderosa Cable Systems, Ltd. SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONN: CONSIDER action on the regquest of Ponderosa Cable Systems, Ltd. to transfer its cable television license to Seren Innovations, Inc. FINANCIAL.IMPACT: In the event and agreement is reached, Seren will reimburse the County for all fees and costs associated with reviewing the Transfer Application and the proposed transaction. Monies will be submitted directly to Miller& Van Eaton for unpaid expenses and to the Community Access Trust Fund to replace monies used for expenses to date. BACKGROUNDIREASON(S) FOR RECOMMENDATION(S): On June 26, 2000, Ponderosa Cable Systems, Ltd. and Seren Innovations, Inc. jointly submitted to the County an application for approval of the transfer of Ponderosa's cable television license. The application was not complete however until June 30, 2000 when the $1,000 application fee required by Section 58-4.020 (a)was received. Staff has been working with Matthew Ames from Miller& Van Eaton , P.L.L.C. on a new application from Seren with the cities of Clayton, Danville and Pleasant Hill. The City of Danville and the County agreed to also consult with Mr. Ames and coordinate the transfer agreement. Since the County was on a ninety day deadline and Seren would not agree to extend the time to resolve some outstanding issues until the 120 day deadline established by Federal law, the attached resolution conditioning the transfer is proposed for Board approval. This resolution preserves the County's rights to assure the citizens in the Ponderosa service area receive service consistent with the requirements in the County Cable Television Ordinance and to receive appropriate compensation for the use of its rights of way. CONTINUED ON ATTACHMENT: e YES SIGNATURE: _ RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF BOARD COMMITTEE —APPROVE —OTHER SIGNATURE(S): ACTION OF BOARD ON w Member 20Q0 APPROVED AS RECOMMENDED X_OTHER IT IS BY THE BOARD ORDERED that consideration of the above matter is CONTINUED for thirty days. VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A X UNANIMOUS(ABSENT ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ATTESTEDSeptember 26, 2000 PHIL BATCHELOR,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR cc:CAO Saran Innovations,Inc. Ponderosa Cable Systems,Ltd. BCC!BEPUTY RESOLUTION NO. 2000/ RESOLUTION OF THE COUNTY OF CONTRA COSTA, CALIFORNIA GRANTING SUBJECT TO CONDITIONS THE APPLICATION OF PONDEROSA CABLE SYSTEMS LIMITED TO TRANSFER THE FRANCHISE AND CABLE TELEVISION SYSTEM OPERATED WITHIN THE COUNTY OF CONTRA COSTA The following Resolution is now offered and read: WHEREAS, the provision of cable television service in the County of Contra Costa(the "County") is governed by Chapter 58 of the Code of the County of Contra Costa, as it may have been amended from time to time (the"Cable Ordinance"); and WHEREAS, Ponderosa Cable Systems Limited("Ponderosa")holds a franchise ("the Franchise") to operate a cable television system in the County,pursuant to the Cable Ordinance and Resolution No. 82/781, as amended; and WHEREAS,the Franchise will expire on November 30, 2001; and WHEREAS, the owners of Ponderosa have entered into an agreement which would result in the transfer of the Franchise held by Ponderosa and the cable television system owned and operated by Ponderosa in the County, to Seren Innovations, Inc. ("Seren") (which transaction is referred to as the "Proposed Transaction"); and WHEREAS, Section 58-4.028 of the County Code requires the County's prior consent to a transfer affecting the Franchise; and WHEREAS, on June 26, 2000, Ponderosa and Seren, (together, the "Companies"),jointly submitted to the County an application for approval of the transfer of the Franchise on Federal Communications Commission("FCC")Form 394,together with certain attached materials, which materials describe the Proposed Transaction("Transfer Application"),but without the $1000 application fee required by Section 58-4.020(a)of the County Code; and WHEREAS, on June 30,2000, Seren delivered the required application fee to the County, thereby completing the application; and WHEREAS, Section 58-4.028(f) of the County Code provides that the County shall act on any transfer application within 90 days of receipt of a completed application; and WHEREAS, Section 58-4.028(f)has been preempted by federal law, which requires franchising authorities to act on transfer applications within 120 days, or they will be deemed approved; and WHEREAS, the ability of cable subscribers in the County to contact Ponderosa and speak with a knowledgeable customer service representative is and has been of great concern to the County; and WHEREAS, Section 58-14.016 of the County Code requires Ponderosa to "have on duty a sufficient number of customer service representatives available to handle customer service calls during all hours that the business office is open" and to provide after-hours telephone answering capability; and WHEREAS, Section 58-14.010 of the County Code requires Ponderosa to respond to complaints within specified time periods; and WHEREAS,the County has received repeated complaints from subscribers regarding subscriber inability to contact Ponderosa or to receive responses to complaints; and WHEREAS, despite the County's communications to Ponderosa regarding subscriber inability to contact Ponderosa or to receive responses to complaints, Ponderosa has to date not remedied the situation; and WHEREAS,Ponderosa has failed on numerous occasions to restore service to customers, with delays lasting several days; in addition, Ponderosa has refused to provide repair service on weekends; and WHEREAS, Section 58-6.008 of the County Code requires Ponderosa to maintain its insurance coverage up-to-date; and WHEREAS, the most recent insurance certificate provided to the County by Ponderosa expired on August 27, 2000; and WHEREAS, Section 58-10.006 of the County Code requires Ponderosa to "comply with all technical standards adopted by the FCC from time to time, as set forth in 47 CFR Section 76.605 or other applicable sections;"and WHEREAS, Ponderosa's own data has shown that it has failed to meet the FCC's signal quality standards set forth in 47 C.F.R. § 76.605; test data indicates that there are variations in a significant number of parameters which bear directly on the reliability of the system to deliver a consistent quality signal; and WHEREAS,material submitted to the County by Ponderosa indicates that Ponderosa is not in compliance with the FCC's technical signal leakage standards set forth in 47 C.F.R. § 76.611; in addition to meeting certain signal leakage standards, Ponderosa is required to conduct a serious of comprehensive measurements to assure compliance, establish and conduct a 2 procedure to monitor for cable system leafage on a continuous basis and to maintain a log of all leafage sources identified and the probable cause and repair action taken; and WHEREAS, for the reasons set forth above, the County believes that Ponderosa has failed to comply with the terms of the Franchise; and WHEREAS, although Seren has informed the County that it intends to build a new broadband communications system capable of providing non-cable communications services in addition to cable services, Seren has also informed the County that for some period of time Seren will continue to operate the present system under the Ponderosa name; and WHEREAS, to date Seren has failed to provide the County with adequate assurance that Seren will act promptly to cure Ponderosa's past failure to comply with the Franchise; and WHEREAS,without such assurance, the County believes that Seren may not have the requisite technical qualifications to operate a cable television system within the County; and WHEREAS, Seren has had very limited experience in the construction, operation and maintenance of cable television systems and only recently began operations in the state of California; and WHEREAS, on December 11, 1998, during the construction of what was then the only cable system operated by Seren, located in St. Cloud, Minnesota, a gas explosion occurred; and WHEREAS, Seren alleges that the accident was the fault of a contractor retained by Seren to install fiber optic cable; and WHEREAS,regardless of the direct cause of the St. Cloud accident, Seren was responsible for supervising the construction of the St. Cloud system and would also be responsible for supervising construction,maintenance and operations in the County; and WHEREAS, the County therefore believes that Seren may lack the requisite technical qualifications to control a cable television system within the County; and WHEREAS,prior to entering into its agreement with Ponderosa, Seren had submitted an application for a franchise to the County; and WHEREAS,the County recognizes the benefits that competition for the provision of cable services would bring to the County and its residents; and WHEREAS, Seren and the County have been negotiating the terms of a franchise which would contain provisions designed to address the County's concerns regarding technical qualifications and customer service described above, and are close to agreement on the terms of such a franchise; and 3 WHEREAS, the County has the authority to require compensation for the use of its rights-of-way with respect to any facilities located in the public rights-of-way within the County that will be used to provide non-cable communications services and that are not subject to Section 7901 of the California Public Utility Code; and WHEREAS, Seren has indicated that its ultimate intent is to build a broadband system to provide non-cable communications services in the County; and WHEREAS,before Seren may construct facilities capable of providing such non-cable communications services, Seren must enter into an agreement with the County; and WHEREAS, to date Seren has elected not to enter an agreement with the County whereby it would receive authorization to construct such facilities and agree to pay compensation to the County for the right to use public property in order to provide non-cable communications services; and WHEREAS, Section 58-10.002 of the County Code requires any franchisee to comply with"all provisions, regulations and conditions prescribed by federal, state, county and local law heretofore and hereafter enacted or established;" and WHEREAS, Seren's failure to recognize the County's authority to obtain compensation for the use of the public rights-of-way with respect to facilities used to provide non-cable communications services that are not subject to Section 7901 indicates that Seren may be unable or unwilling to comply with Section 58-10.002; and WHEREAS, if the County were to unconditionally consent to the Proposed Transaction, Seren might construe such consent as permitting Seren to rely on the Ponderosa Franchise for the authority to build its proposed new system and to use the public rights-of-way to provide non- cable communications services; and WHEREAS, Seren has made a proposal to the County regarding treatment of non-cable communications services, which the County is now considering, and the parties are continuing negotiations on that issue; and WHEREAS, Seren has represented to the County's outside counsel that Seren intends to operate the Ponderosa system only on an interim basis, and does not intend to rely on the Ponderosa Franchise to build its new broadband system or to provide non-cable communications services in the County; and WHEREAS, for all the foregoing reasons, unconditional approval of the Proposed Transaction at this time would not be in the public interest,but the County wishes to encourage Seren and the County staff to resolve the outstanding issues; and WHEREAS, the County's approval of the Proposed Transaction would be appropriate if Seren were to agree to take steps to satisfy the County's concerns regarding Ponderosa's failure to comply with the Franchise and Seren's technical qualifications. 4 NOW, THEREFORE, BE IT RESOL'V'ED AND ORDERED by the County of Contra Costa, as follows: Section 1. Based on the information provided by the Companies, the Board hereby finds that: (a) Seren intends to acquire the cable system owned by Ponderosa, and to operate that system until it completes a new broadband system capable of providing non-cable communications services in addition to cable service. At that time, Seren intends to cease operations under the Ponderosa Franchise,will not seek renewal of that Franchise, and will rely solely on its authority under a new franchise. (b) Ponderosa has failed to comply with customer service and technical standards required by the Franchise. To date, Seren has not demonstrated that it will operate the current cable system in a manner that would address the County's concerns regarding customer service and technical standards. Consequently,to the extent that Seren intends to operate the current system, Seren may be financially or technically unqualified to own and operate the system. (c) Seren also may not be technically qualified to control the Franchise, because Seren's limited technical experience raises public safety concerns,both with respect to operating the current cable system and building a new system. (d) Seren also may not be legally qualified to control the Franchise,because Seren's refusal to recognize the authority of the County to obtain compensation for the use of the County's rights-of-way in connection with non-cable communications services indicates that Seren may not comply with Section 58-10.002 of the County Code. (e) It would not be in the public interest for the County to grant Seren the right to install facilities intended to be used to provide non-cable communications services without first agreeing on the compensation to be paid for that right. Section 2. For the reasons set forth above,pursuant to Section 58-4.028 of the County Code, the request for approval of the Proposed Transaction is GRANTED, subject to the following conditions: (a) Within 30 days of the date of this Resolution, Seren shall present a plan satisfactory to the County Administrator describing how Seren proposes to resolve Ponderosa's current non-compliance with customer service and technical standards. Seren shall also take steps to remedy the expired insurance certificate and ensure compliance with the bonding requirements of the Franchise for any construction or maintenance that may be required by the plan. In addition, Seren shall acknowledge that it shall be responsible for all past acts or omissions, known or unknown, of Ponderosa related to the Franchise, including liability for any and all previously accrued but unfulfilled obligations to the County under the Franchise and applicable law, as if such acts or omissions had been those of Ponderosa. 5 (b) Neither Seren nor any entity controlled by or affiliated with Seren shall construct facilities capable of being used to provide non-cable communications services in the County without first obtaining authorization for such facilities from the County. (c) Seren shall reimburse the County for all fees and costs associated with reviewing the Transfer Application and the Proposed Transaction. Section 3. All terms and conditions of the Franchise shall remain in effect after the Proposed Transaction is consummated, except to the degree that it may be superseded by a new franchise agreement between Seren and the County. The County reserves all of its rights, in particular, and without limitation: (a) This Resolution shall not be construed to grant the County's consent to any future transfer of the Franchise or the Ponderosa system, or any change in ownership or control of the Franchise or the system, or to mean that the County's consent to any future transaction is not required. (b) The County waives none of its rights with respect to compliance with the terms, conditions, requirements and obligations under the Franchise. At no time will the Companies contend, either directly or indirectly,that the County is barred,by reason of the Proposed Transaction, from considering, or raising claims based on,Ponderosa's defaults, its failure to provide reasonable service in light of the community's needs, or its failure to comply with the terms and conditions of the Franchise or with applicable law. The County's approval of the Proposed Transaction is no way a representation by the County that Ponderosa is in compliance with all of its obligations under the Franchise. (c) Any consent given by the County to the Proposed Transaction is made without prejudice to, or waiver of, the County's right to fully investigate and consider the financial, technical, and legal qualifications of the Companies and any other relevant considerations during any future franchise renewal or transfer process. Section-4. If any of the conditions specified in Section 2 are not satisfied, then the County's consent to, and approval of, the Proposed Transaction is hereby DENIED as of the date hereof; provided, however, that the County Administrator shall have discretion to extend the time period or waive one or more of the conditions, if such an extension or waiver would be in the public interest. Sec ion 5. If any representations made to the County by Ponderosa or Seren prove to be incomplete, untrue or inaccurate in any material respect, it shall be deemed a material breach of the Franchise and the County shall have available to it all remedies provided under the Franchise and applicable law including,without limitation,revocation or termination of the Franchise. This Resolution shall be effective immediately upon passage. RESOLUTION NO. 2000/ 6