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Home My WebLink AboutD-1 Staff Report - Ordinance PEG Fee ReauthorizationSCHEDULED ITEM D-1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: DON PENMAN, INTERIM CITY MANAGER FROM: LOUIE F. LACASELLA, SENIOR MANAGEMENT ANALYST DATE: OCTOBER 16, 2017 SUBJECT: FIRST READING OF ORDINANCE REAUTHORIZING AND AMENDING ORDINANCE NO. 09-O1 INCLUDING THE FEE PAID TO THE CITY BY STATE VIDEO FRANCHISE HOLDERS FOR PUBLIC, EDUCATIONAL, AND GOVERNMENTAL ACCESS PURPOSES SUMMARY: In 2006, the Digital Infrastructure and Video Competition Act was signed into law and codified at California Public Utilities Code section 5800, et seq., (“DIVCA”). DIVCA established a state video franchising system that replaced local cable franchising, but left some limited local authority over state video franchise holders. In 2009, the City adopted Ordinance No. 09-01, implementing its limited authority over state video franchise holders pursuant to DIVCA which included adoption of a public, educational, and governmental (PEG) fee payable by state video franchise holders in the amount of one percent of gross revenues. The proposed action waives further reading, reads by title only and introduces the Ordinance No. 2017-11. RECOMMENDATION: Staff recommends the City Council take the following actions: 1) Waive further reading, read by title only and introduce the following Ordinance No. 2017-11: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA REAUTHORIZING ORDINANCE NO. 09-01 INCLUDING THE FEE PAID TO THE CITY BY STATE VIDEO FRANCHISE HOLDERS FOR PUBLIC, EDUCATIONAL, AND GOVERNMENT ACCESS PURPOSES DISCUSSION: In 2006, the Digital Infrastructure and Video Competition Act was signed into law and codified at California Public Utilities Code section 5800, et seq., (“DIVCA”). DIVCA established a state video franchising system that replaced local cable franchising, but left some limited local authority over state APPROVED COUNCIL MEETING 10/16/2017 Reauthorizing PEG Fee Ordinance October 16, 2017 Page 2 video franchise holders. In 2009, the City of Azusa adopted an ordinance (Ordinance No. 09-01) implementing its limited authority over state video franchise holders pursuant to DIVCA which included adoption of a PEG fee payable by state video franchise holders in the amount one percent of gross revenues. Azusa currently collects PEG fees from Charter Communications (now Spectrum) and Frontier California (formerly Verizon California). Under DIVCA, state video franchises are issued by the California Public Utilities Commission (“CPUC”) and have a stated term of 10 years. The CPUC has already grant ed renewal of the Frontier state franchise effective on March 8, 2017. The state video franchise held by Charter will expire, and is expected to be renewed by the CPUC, effective January 2, 2018. The provisions of DIVCA authorizing local entities to establish a PEG fee by ordinance also include language indicating that an ordinance establishing a PEG fee shall expire, and may be reauthorized, upon the expiration of the state franchise. Many communities, like Azusa, have more than one DIVCA franchise holder with franchises that expire and are renewed at different times. The reauthorization requirement is ambiguous and subject to different interpretations as to its meaning and application . There is no CPUC guidance or case law addressing this issue, and the legislative history of DIVCA does not appear to provide any clarification regarding the proper reading and application of the reauthorization language. However, Ordinance No. 09-01 does not specifically address reauthorization, and so, to the extent any action may be required of Azusa under DIVCA, it is advisable out of an abundance of caution that Azusa adopt an ordinance reauthorizing and amending Ordinance No. 09-01, so that state video franchise holders continue to pay PEG fees now and continue to pay PEG fees as each state video franchise expires and is renewed by the CPUC in future years. If approved , this ordinance will reauthorize Ordinance No. 09-01 and amend it to provide for future reauthorizations that will occur automatically without further action by the City, effective as of the same date as the relevant DIVCA franchise expires/renews. As a reminder, PEG fees can only be used by the City for capital and equipment purchases related to programing. ENVIRONMENTAL DETERMINATION: The Ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Code of Regulations CEQA Guidelines Section 15061(b)(3) in that there is no possibility it may have a significant effect on the environment. FISCAL IMPACT: The City currently receives approximately $45,000 per year in PEG fees from Frontier and Charter. If the ordinance is not adopted, Frontier and/or Charter may stop paying PEG fees to the City based on a claim that reauthorization is required due to the expiration and renewal of their state video franchises. Prepared by: Reviewed and Approved: Louie F. Lacasella Don Penman Senior Management Analyst Interim City Manager Attachments: 1) Ordinance No. 2017-11 1 ORDINANCE NO. 2017-11 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA REAUTHORIZING AND AMENDING ORDINANCE NO. 09-01 INCLUDING THE FEE PAID TO THE CITY BY STATE VIDEO FRANCHISE HOLDERS FOR PUBLIC, EDUCATIONAL, AND GOVERNMENT ACCESS PURPOSES WHEREAS, in 2006, the Digital Infrastructure and Video Competition Act was signed into law and codified at California Public Utilities Code section 5800, et seq., (“DIVCA”); and WHEREAS, DIVCA established a state video franchising system that replaced local cable franchising but also recognized the continued need to protect local revenues and control of public rights of way; and WHEREAS, DIVCA provides that state video franchises are issued by the California Public Utilities Commission (“CPUC”) and have a stated term of 10 years; and WHEREAS, DIVCA provides that a local entity may, by ordinance, establish a fee to support public access, educational and governmental (“PEG”) purposes payable by state video franchise holders; and WHEREAS, in 2009, the City of Azusa (“Azusa”) adopted Ordinance No. 09-01, adding Article XVI (State Video Services Franchises) to Chapter 22 of the Azusa Municipal Code (“Municipal Code”) in order to implement its limited authority over state video franchise holders pursuant to DIVCA, which included adoption of a PEG fee payable by state video franchise holders in the amount of one percent (1%) of gross revenues; and WHEREAS, Azusa currently collects PEG fees from two state video franchise holders, Frontier California (formerly Verizon California) and Charter Communications (now Spectrum); and WHEREAS, Frontier’s 10-year state video franchise was issued in 2007, expired and was renewed by CPUC effective on March 8, 2017; and WHEREAS, the state video franchise held by Charter will expire and is expected to be renewed by the CPUC effective on January 2, 2018; and WHEREAS, DIVCA provides that the ordinance establishing a PEG fee shall expire, and may be reauthorized, upon the expiration of the state franchise, but there is uncertainty as to what circumstance, if any, the provision applies to Azusa’s PEG fee; and WHEREAS, to the extent any action is required of Azusa, it is deemed to be in the best interests of Azusa to adopt an ordinance reauthorizing and amending Ordinance No. 09-01 including the PEG fee so that as each state video franchise expires and is renewed by the CPUC now and in future years, state video franchise holders continue to pay PEG fees. 2 NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA DOES ORDAIN AS FOLLOWS: SECTION 1. Incorporation of Recitals. The above recitals are true and correct and are incorporated herein by this reference. SECTION 2. To the extent reauthorization is required by law, Chapter 22, Article XVI (State Video Services Franchises) of the Municipal Code, including the PEG fee, is hereby reauthorized and amended by adding the following subsection (c) to Section 22-293: (c) To the extent reauthorization is required by law, this article, including the PEG fee specified in subsection (b) of this section in the amount of one percent (1%) of gross revenues, is automatically reauthorized as to each affected state video franchise holder upon the expiration of any state franchise. Any and all reauthorizations shall be effective for so long as such reauthorization is required by law. SECTION 3. CEQA. This Ordinance is not a project within the meaning of Section 15378 of the State of California Environmental Quality Act (“CEQA”) Guidelines, because it has no potential for resulting in physical change in the environment, directly or indirectly. The City Council further finds, under Title 14 of the California Code of Regulations, Section 15061(b)(3), that this Ordinance is nonetheless exempt from the requirements of CEQA in that the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. The City Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County of Los Angeles in accordance with CEQA Guidelines. SECTION 4. Custodian of Records. The documents and materials that constitute the record of proceedings on which this Ordinance is based are located at the City Clerk’s office located at 213 E. Foothill Blvd., Azusa, CA 91702. The custodian of these records is the City Clerk. SECTION 5. Severability. If any section, sentence, clause or phrase of this Ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are severable. The City Council of the City of Azusa hereby declares that it would have adopted this Ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. SECTION 6. Effective Date. This Ordinance shall become effective thirty (30) days following its adoption. 3 SECTION 7. Publication. The City Clerk shall certify to the adoption of this Ordinance. Not later than fifteen (15) days following the passage of this Ordinance, the Ordinance, or a summary thereof, along with the names of the City Council members voting for and against the Ordinance, shall be published in a newspaper of general circulation in the City of Azusa. PASSED, APPROVED AND ADOPTED by the City Council of the City of Azusa, California, at a regular meeting of the City Council held on the ____ day of ___________________, 2017, by the following vote: AYES: NOES: ABSENT: ABSTAIN: City of Azusa ________________________________ Joseph R. Rocha, Mayor ATTEST: ________________________________ Jeffrey Cornejo, City Clerk APPROVED AS TO FORM: BEST BEST & KRIEGER, LLP _______________________________ Marco A. Martinez, City Attorney 4 CERTIFICATION I, Jeffrey Cornejo, City Clerk of the City of Azusa, do hereby certify that the foregoing Ordinance No. ____ is the actual Ordinance No. ____ that was introduced at a regular meeting of said City Council on the _____ day of _______________, 2017 and was finally passed and adopted not less than five (5) days thereafter on the ____ day of _____________, 2017 by the following vote to wit: AYES: NOES: ABSENT: ABSTAIN: ______________________________ Jeffrey Cornejo, City Clerk