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ITEM 4.1 Charter CommunicationsW OtsTe F o MINNESOTA V DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE: Legal Andy MacArthur, City Attorney February 9, 2015 PRESENTER(s): REVIEWED BY: ITEM #: City Attorney City Administrator Johnson 4.1 AGENDA ITEM DETAILS RECOMMENDATION: Staff recommends that the attached letter be approved and transmitted to Charter Communications relative to the requested Franchise renewal. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No. No. BACKGROUND/JUSTIFICATION: The City received the attached correspondence from Charter Communications relative to the current cable franchise which expires November 21, 2017. Under Federal Law the cable companies need to make the initial renewal request three years prior to the expiration date of the Franchise. The City must invoke the renewal procedure under the Federal statute within six (6) months after receipt of request for renewal by the operator. There is an extensive formal procedure for the franchise renewal. The parties can also enter into an informal process, which is what is suggested in the letter. The City has until May 9 to commence the formal Federal procedures. In the meantime, Charter has requested a meeting to discuss the Franchise renewal procedure. The attached letter acknowledges receipt of their request and agrees to meet with Charter regarding Franchise renewal. It would be best to have at least one Council Member involved in these discussions and any subsequent negotiations with Charter. I am requesting that the Council approve the attached letter response to Charter to be sent out on City letterhead. I am also requesting that the Council consider appointing one or more Council Members to be involved in initial discussions and ongoing negotiations regarding the Franchise renewal. SUPPORTING DOCUMENTS: x ATTACHED ❑ NONE • Letter from Charter. • Proposed letter to Charter. • Federal statutes related to renewal. MOTION: (Please word motion as you would like it to appear in the minutes.) Motion to approve attached letter response to Charter Communications. BUDGET INFORMATION FUNDING: BUDGETED: ❑ YES NA o NO ACTION TAKEN ❑ APPROVED AS REQUESTED ❑ DENIED ❑ TABLED ❑ OTHER (List changes) COMMENTS: (C h a r ter COMMUNICATIONS December 9, 2014 CERTIFIED ACAJURETURN RECEIPT Mr. Michael Robertson, City Administrator City of Otsego City Hall 13400 90th Street NE Otsego, MN 55330 Re: City of Otsego Franchise Renewal CUID MN 0502 Dear Mr. Robertson: CC VIII Operating, LLC, lka Charter Communications ("Charter") has appreciated the opportunity to serve the City of Otsego and its residents over the years. Therefore, as we are sure you can appreciate, Charter Communications is taking the proper steps well in advance toward the renewal of our franchise agreement with you, which is due to expire on November 21, 2017. We are now looking forward to the renewal of our franchise. As you may know, Section 626 of Title VI of the Communications Act of 1934, as amended (the "Cable Act") contains provisions that detail a procedure for the renewal of franchises. In order to comply with these provisions, Charter requests that the City of Otsego commence renewal proceedings in accordance with the requirements of Section 626(a) through (g) of the Cable Act. However, Section 626(h) of the Cable Act provides for renewal of franchises without going through the extensive, formal procedure specified in Sections 626(a) through (g). We believe that this informal process ' may be preferable for all concerned. We would like to meet with you at your earliest convenience to discuss the renewal proceedings outlined in the Cable Act. We look forward to meeting with you in the near future and to a continuing, mutually beneficial relationship. Very truly yours, CC VIII Operating, LLC Ika Charter Communications LeeAnn Herrera Director Government Relations MN/NE KMA Charter cc: Owen Imachukwu Angela Dierolf LH/bo 952-367-4233 116900 Cedar Avenue LeeAnn.Herrera@charter.com Rosemount, MN 65068 February 10, 2015 LeeAnn Herrera Director Government Relations Charter Communications 16900 Cedar Avenue Rosemount, MN 55068 RE: CITY OF OTSEGO- Franchise Renewal Dear Ms. Herrera: The City of Otsego acknowledges receipt of your correspondence dated December 9, 2014 and received by the City on December 11, 2014. In that letter you officially request that the City commence renewal proceedings in accordance with Section 626 (a) through (g) of Section 626 of Title VI of the Communications Act of 1934. You further suggest that the City consider going through the more informal procedures as set forth in Section 626(h) of the Act. You have suggested that the parties meet to discuss the renewal procedure. Prior to making a decision as to how to proceed under the Act, the City does wish to meet with Charter representatives regarding renewal. The meeting would take place at the Otsego City Hall at date in the near future agreeable to both parties. The City will need a couple of weeks prior to the meeting to review the current franchise and to identify any issues with current cable service and the Franchise. Could you please provide us with dates that you have available for such a meeting in late February or early March? If you have any questions please feel free to contact me. Very truly yours, Lori Johnson OTSEGO CITY ADMINISTRATOR Communications Act of 1934 (2) such service is available to the operator only upon the payment of a royalty required under section 801(b)(2) of title 17, United States Code, which the cable operator can document -- (A) is substantially in excess of -the amount of such payment required on the date of the operator's offer to provide such service, and (B) has not been specifically compensated for through a rate increase or other adjustment. (d) Notwithstanding subsections (a) and (b), a cable operator may take such actions to rearrange a particular service from one service tier to another, or otherwise offer the service, if the rates for all of the service tiers involved in such actions are not subject to regulation under section 623. (e) A cable operator may not obtain modification under this section of any requirement for- services relating to public, educational, or governmental access. (f) For purposes of this section, the term "commercially impracticable" means, with respect to any requirement applicable to a cable operator, that it is commercially impracticable for the operator to comply with such requirement as a result of a change in conditions which is beyond the control of the operator and the nonoccurrence of which was a basic assumption on which the, requirement was based. SEC. 626. [47 U.S.C. 5461 RENEWAL. (a)(1) A franchising authority may, on its own initiative during the 6 -month period which begins with the 36th month before the franchise expiration, commence a proceeding which affords the public in the franchise area appropriate notice and participation for the purpose of (A) identifying the future cable -related community needs and interests, and (B) reviewing the performance of the cable operator under the franchise during the then current franchise term. If the cable operator submits, during such 6. -month period, a written renewal notice requesting the commencement of such a proceeding, the franchising authority shall commence such a proceeding not later than 6 months after the date such notice is submitted. (2) The cable operator may not invoke the renewal procedures set forth in subsections (b) through (g) unless -- (A) such a proceeding is requested by the cable operator by timely submission of such notice; or (B) such a proceeding is commenced by the franchising authority on its own initiative. (b)(1) Upon completion of a proceeding under subsection (a), a cable operator seeking renewal of a franchise may, on its own initiative or at the request of a franchising authority, submit a proposal for renewal. (2) Subject to section 624, any such proposal shall contain such material as the franchising authority may require, including proposals for an upgrade of the 291 Communications Act of 1934 cable system. (3) The franchising authority may establish a date by which such proposal shall be submitted. (c)(1) upon submittal by a cable operator of a proposal to the franchising authority for the renewal of a franchise pursuant to subsection (b), the franchising authority shall provide prompt public notice of such proposal and, during the 4 - month period which begins on the date of the submission of the cable operator's proposal pursuant to subsection (b), renew the franchise or, issue a preliminary assessment that the franchise should not be renewed and, at the request of the operator or on its own initiative, commence an administrative proceeding, after providing prompt public notice of such proceeding, in accordance with paragraph (2) to consider whether -- (A) the cable operator has substantially complied with the material terms 6f -the existing franchise and -with applicable lave; (B) the quality of the operator's service, including signal quality, response to consumer complaints, and billing practices, but without regard to the mix or quality of cable services or other services provided over the system, has been reasonable in light of community needs; (C) the operator has the financial, legal, and technical ability to- provide oprovide the services, facilities, and equipment as set forth in the operator's proposal; and (D) the operator's proposal is reasonable to meet the future cable - related community needs and interests, taking into account the cost of meeting such needs and interests. (2) In any proceeding under paragraph (1), the cable operator shall be afforded adequate notice and the cable operator and the franchise authority, or its designee, shall be afforded fair opportunity for full participation, including the right to introduce evidence (including evidence related to issues raised in the proceeding under subsection (a)), to require the production of evidence, and to. -question witnesses. A transcript shall be made of any such proceeding. (3) At the completion of a proceeding under this subsection, the franchising authority shall issue a written decision granting or denying the proposal for renewal based upon the record of such proceeding, and transmit a copy of such decision to the cable operator. Such decision shall state the reasons therefor. (d) Any denial of a proposal for renewal that has been submitted in compliance with subsection (b) shall be based on one or more adverse findings made with respect to the factors described in subparagraphs (A) through (D) of subsection (c)(1), pursuant to the record of the proceeding under subsection (c). A franchising authority may not base a denial of renewal on a failure to substantially comply with the material terms of the franchise under subsection (c)(1)(A) or on events considered under subsection (c)(1)(B) in any case in which a violation of the franchise or the events considered under subsection (c)(1)(B) occur after the 292 Communications Act of 1934 effective date of this title unless the franchising authority has provided the operator with notice and the opportunity to cure, or in any case in which it is documented that the franchising authority has waived its right to object, or the cable operator gives written notice of a failure or inability to cure and the franchising authority fails to object within a reasonable time after receipt of such notice. (e)(1) Any cable operator whose proposal for renewal has been denied by a final decision of a franchising authority made pursuant to this section, or has been adversely affected by a failure of the franchising authority to act in accordance with the procedural requirements of this section, may appeal such final decision or failure pursuant to the provisions of section 635. (2) The court shall grant appropriate relief if the court finds that -- (A) any action of the franchising authority, other than harmless error, is not in compliance with the procedural requirements of this section; oP (B) in the event of a final decision of the franchising authority denying the renewal proposal, the operator has demonstrated that the adverse finding of the franchising authority with respect to each of the factors described in subparagraphs (A) through (D) of subsection (c)(1) on which the denial is based is not supported by a preponderance, of the evidence, based on the record of the proceeding conducted under subsection (c). (f) Any decision of a franchising authority on a proposal for renewal shall not be considered final unless all administrative review by the State has occurred or the opportunity therefor has lapsed. (g) For purposes of this section, the term "franchise expiration" means the date of the expiration of the term of the franchise, as provided under the franchise, as it was in effect on the date of the enactment of this title. (h) Notwithstanding the provisions of subsections (a) through (g) of this section, a cable operator may submit a proposal for the renewal of a franchise pursuant to this subsection at any time, and a franchising authority may, after affording the public adequate notice and opportunity for comment, grant or deny such proposal at any time (including after proceedings pursuant to this section have commenced). The provisions of subsections (a) through (g) of this section shall not apply to a decision to grant or deny a proposal under this subsection. The denial of a renewal pursuant to this subsection shall not affect action on a renewal proposal that is submitted in accordance with subsections (a) through (g). (i) Notwithstanding the provisions of subsections (a) through (h), any lawful action to revoke a cable operator's franchise for cause shall not be negated by the subsequent initiation of renewal proceedings by the cable operator under this section. SEC. 627. [47 U.S.C. 5471 CONDITIONS OF SALE. 293 -