CITY OF SIMI VALLEY MEMORANDUM

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1 CITY OF SIMI VALLEY MEMORANDUM AGENDA ITEM NO. 8A March 20, 2017 TO: FROM: City Council SUBJECT: CONSIDERATION OF A SIMI VALLEY MUNICIPAL CODE AMENDMENT TO CHAPTER 10 OF TITLE 5 REAUTHORIZING THE FEE TO SUPPORT THE CITY S PUBLIC, EDUCATIONAL, AND GOVERNMENTAL (PEG) ACCESS CHANNEL FACILITIES, AND INTRODUCTION OF AN ORDINANCE STAFF RECOMMENDATION It is recommended that the City Council introduce the attached ordinance (page 4) to reauthorize the fee to support the City s Public, Educational, and Governmental (PEG) access channel facilities codified in Section of the City of Simi Valley Municipal Code. CITY MANAGER S RECOMMENDATION The City Manager recommends introduction of the ordinance to reauthorize the fee to support the City s PEG access channel facilities fee. BACKGROUND AND OVERVIEW The Digital Infrastructure and Video Competition Act (DIVCA), also known as AB 2987 (Public Utilities Code 5800 et seq.), went into effect on January 1, This State law created a streamlined process for franchising cable television and video operations in California by shifting franchising authority away from cities and counties to the State, with the Public Utilities Commission (PUC) becoming the sole authority for granting new franchises. In accordance with this law, the City imposes a 1% Public, Educational, and Governmental access fee on all statefranchised video service providers operating within the City to support PEG programming facilities, by means of its ordinance codified in Simi Valley Municipal Code Section Although the statutory language is not entirely clear, numerous municipalities throughout the State have interpreted the relevant language such that unless a city s ordinance were reauthorized, the 1% PEG access fee may expire on March 30, , subject to court interpretation of the States statute. 1 California Public Utilities Code Section 5870(n) provides, in pertinent part: A local entity may, by ordinance, establish a fee to support PEG channel facilities If no such fee exists, the local entity may establish the fee at any time. The fee shall not exceed 1 percent of the holder's gross revenues Notwithstanding this limitation, if, on December 31, 2006, a local entity is imposing a separate fee to support PEG channel facilities that is in excess of 1 percent, that entity may, by ordinance, establish a fee no greater than that separate fee, and in no event greater than 3 percent, to support PEG activities. The ordinance shall expire, and may be reauthorized, upon the expiration of the state franchise.

2 2 FINDINGS AND ALTERNATIVES DIVCA requires State franchise holders to offer at least three PEG channels to each community in which they operate. DIVCA also authorizes cities to adopt an ordinance imposing a fee on State franchise holders to support PEG programming facilities. The City Council established such a fee on June 18, 2007 by adopting Ordinance No (codified in Municipal Code Section ) to require video service providers who have been issued State franchises to pay the City a PEG access fee of 1% of the video service provider s gross revenues. DIVCA also provides that certain ordinances adopting a PEG access fee shall expire, and may be reauthorized, upon the expiration of the State franchise, Public Utilities Code section At this time, the law is unclear as to whether the expiration clause applies to the City s ordinance. A reasonable argument can be made that the clause does not apply; however, in an abundance of caution it is recommended that this ordinance be reauthorized. The City s intention, based on the interpretation that the 1% fee does not expire, is to continue to collect the 1% fee, even if there is a gap between the expiration of a particular franchise and this reauthorization. Pacific Bell Telephone Company d/b/a AT&T California (AT&T) received a State video franchise to operate within the City on March 30, This franchise will expire on March 30, Assuming the expiration clause does apply to the City s ordinance, the City s PEG fee imposed on AT&T therefore would expire on March 30, 2017, unless the City Council reauthorizes the fee. Moreover, Time Warner NY Cable LLC d/b/a/ Time Warner Cable (Time Warner) received the second State video franchise to operate within the City on January 2, This franchise will expire on January 2, Assuming the expiration clause does apply to the City s ordinance, the City s PEG fee imposed on Time Warner therefore would expire on January 2, 2018, unless the City Council reauthorizes the fee. Because authority for State franchises lies with the State, the City might not be made aware in a timely manner of additional franchises whose franchise with the State may be expiring. Inasmuch as each State video franchise expires independently on different dates; and to prevent a lapse in the authorization to collect PEG access fees; therefore, the City continually authorizes the 1% PEG access fee collection pursuant to California Public Utilities Code Section 5870 for all State video franchises that operate in the City, regardless of the franchise expiration dates, and regardless whether a State video franchise currently operates within the City.

3 3 FINANCIAL IMPACT The proposed ordinance would reauthorize the City s PEG fee and therefore preserve funding available to support PEG programming facilities. For Fiscal Year , PEG fees amounted to $132,300. If the City Council does not reauthorize the PEG access support fee, there is some risk that the City will not receive further PEG access fees from video service providers operating under State franchises within the City. The following alternatives are available to the City Council: 1. Introduce the attached ordinance to reauthorize the fee to support the PEG access channel facilities. 2. Do not introduce the attached ordinance to reauthorize the fee to support the PEG access channel facilities Staff recommends Alternative No. 1. SUGGESTED CITY COUNCIL MOTION I move to introduce Ordinance No for first reading. SUMMARY In accordance with State law, the City imposes a 1% Public, Educational, and Governmental (PEG) access support fee on all state-franchised video service providers operating within the City to support PEG programming facilities. Unless this ordinance is reauthorized, there is a risk that the 1% PEG access fee imposed on AT&T will expire on March 30, 2017, and the 1% PEG access fee imposed on Time Warner will expire on January 2, The proposed ordinance would reauthorize the City s PEG fee and therefore preserve funding available to support PEG programming facilities. Sommer Barwick, Director Prepared by: Anna Medina, Deputy Community Services Director INDEX Page Ordinance....4

4 4 ORDINANCE NO AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SIMI VALLEY REAUTHORIZING THE FEE TO SUPPORT THE CITY S PUBLIC, EDUCATIONAL, AND GOVERNMENTAL (PEG) ACCESS CHANNEL FACILITIES WHEREAS, Section 5870(n) of the Public Utilities Code, which was enacted as part of the Digital Infrastructure and Video Competition Act of 2006, authorized the City to adopt an ordinance establishing a fee on state-franchised video service providers to support Public, Educational, and Governmental (PEG) access channel facilities; and WHEREAS, the City adopted an ordinance establishing such a fee, which is codified in Section of the Municipal Code; and WHEREAS, some municipalities throughout the state have reached the conclusion that ordinances authorized under Section 5870(n) of the Public Utilities Code shall expire, and may be reauthorized, upon the expiration of a state franchise, although a reasonable interpretation is that the 1% PEG fee does not expire; and WHEREAS, in an abundance of caution the City wishes to unambiguously reauthorize the PEG fee, although it may not be necessary; and WHEREAS, the first state franchise to include the City, California Video Franchise Certificate Franchise No granted to Pacific Bell Telephone Company d/b/a AT&T California (AT&T), will expire on March 30, 2017; and WHEREAS, the second state franchise to include the City, California Video Franchise Certificate Franchise No granted to Time Warner NY Cable LLC d/b/a/ Time Warner Cable (Time Warner), will expire on January 2, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SIMI VALLEY DOES ORDAIN AS FOLLOWS: SECTION 1. Municipal Code Section is amended to add a new subsection (d), which will read as follows: The City s interpretation of Section 5870(n) of the Public Utilities Code is that the 1% fee to support PEG channel facilities authorized by that code section does not expire upon the expiration of any particular state franchise holder. However, to the extent any court or reviewing authority finds otherwise, City Council hereby reauthorizes the fee on state-franchised video service providers to support Public, Educational, and Governmental access channel facilities, referenced in subsection (b), above, which fee shall remain unchanged and in full effect as to all state-franchised video service providers. SR4-Programs & Facilities Ordinance

5 5 ORD. NO City Council hereby reauthorizes the fee on the following state-franchised video service providers to support Public, Educational, and Governmental access channel facilities, referenced in subsection (b), above, which fee shall remain unchanged and in full effect as to: (1) Pacific Bell Telephone Company d/b/a AT&T California (Franchise No. 0002), scheduled to expire on March 30, 2017; and, (2) Time Warner NY Cable LLC d/b/a/ Time Warner Cable (Franchise No. 0005), scheduled to expire on January 2, City Council hereby reauthorizes the fee on any additional statefranchised video service providers that will be operating in the City of Simi Valley to support Public, Educational, and Governmental access channel facilities, referenced in subsection (b), upon the expiration of that state franchise, which fee shall remain unchanged and in full effect. SECTION 2. If any section, subsection, subdivision, sentence, clause, phrase or portion of this Ordinance or the application thereof to any person or place, is for any reason held to be invalid or unconstitutional by the final decision of any court of competent jurisdiction, the remainder of this Ordinance shall remain in full force and effect. SECTION 3. The City Clerk shall cause this ordinance or a summary hereof to be published in a newspaper of general circulation, published in the County of Ventura and circulated in the City, and if applicable, to be posted, in accordance with Section of the California Government Code; shall certify to the adoption of this ordinance and shall cause a certified copy of this ordinance, together with proof of publication, to be filed in the Office of the Clerk of this City. SECTION 4. This ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (31st) day after its passage. Attest: PASSED and ADOPTED this Ky Spangler, Deputy Director/City Clerk Approved as to Form: Robert O. Huber, Mayor of the City of Simi Valley, California Approved as to Content: Lonnie J. Eldridge, City Attorney Eric J. Levitt, City Manager SR4-Programs & Facilities Ordinance Sommer Barwick, Director