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03-297Resolution No. 03 -297 RESOLUTION AUTHORIZING EXECUTION OF A FRANCHISE EXTENSION AGREEMENT WITH COMCAST OF ILLINOIS /WEST VIRGINIA, LLC BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that David M. Dorgan, City Manager, and Dolonna Mecum, City Clerk, be and are hereby authorized and directed to execute a Franchise Extension Agreement on behalf of the City of Elgin with Comcast of Illinois /West Virginia, LLC to extend the term of the franchise to April 30, 2004, a copy of which is attached hereto and made a part hereof by reference. s/ Ed Schock Ed Schock, Mayor Presented: October 22, 2003 Adopted: October 22, 2003 Vote: Yeas 6 Nays: 0 Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk December 18, 2003 MEMORANDUM TO: Loni Mecum, City Clerk FROM: Richard G. Kozal, Corporation Counsel SUBJECT: Franchise Extension Agreement with Comcast of Illinois /West Virginia LLC Attached for the city clerk's files find an executed original of the franchise extension agreement between the City of Elgin and Comcast of Illinois/West Virginia, LLC. RGK mg Attachment �V AF ECC a 0 i P� IFO FOw�. City of Elgin Item No. P\ October 13, 2003 nu1u L TO: Mayor and Members of the City Council " r FINAWIU LY STNBLE CITYC /_'NEfWMENT FROM: David M. Dorgan, City Manager EF FIC IENTS KES. ANDO W UTY INFMSTRIICTUM Sean R. Stegall, Assistant City M nager Becky Sletten, Public Information Officer SUBJECT: Extension of the Franchise Agreement with Comcast, Inc. 4111111*1i "9z1 The purpose of this memorandum is to provide the Mayor and members of the City Council with information to consider a third extension of the franchise agreement by, and between, the City of Elgin and Comcast, Inc. BACKGROUND Last year, the City began preliminary discussions with AT &T Broadband regarding the renewal of the cable franchise. That agreement was to expire on December 9, 2002. During this time, and over the past several years, issues relating to the renewal process have become increasingly complex due to the customer service performance of AT &T, the technical aspects of Elgin's aging cable infrastructure, and the lack of cable internet services. Due to the aforementioned, the City retained the services of Stuart Chapman of Municipal Services Associates, Inc., (MSA). Along with Mr. Chapman, Assistant City Manager Stegall and Assistant Corporation Counsel Kozal have been working on the renewal process. The City and Franchisee agreed to extend the term of the franchise until June 9, 2003. AT &T was purchased by Comcast in early 2003, and with that purchase came major changes including the elimination of all local programming and a major infrastructure rebuild scheduled to take place in 2003 and 2004. As a result, the City and Franchisee desired to extend the term of the franchise contract until October 29, 2003, to allow both parties an appropriate amount of time to come to a resolution. Extension of the Franchise with Comcast, Inc. October 13, 2003 Page 2 Over the last few months, several things have transpired that have led us to conclude that another extension of the franchise negotiations would be in the best interest of the City. Some of these issues include Comcast's ongoing infrastructure rebuild, changes in negotiating staff at Comcast, continued customer service issues, and the creation of a local programming committee. Though Comcast's rebuild is moving along very well, it will not be completed until sometime in early 2004. With these upgrades will come major changes in service to the community. Due to the complex and technical nature of all of these items, we are asking Council to consider a six (6) month extension of the franchise to April, 2004. This will allow the city additional time for negotiations and to form an agreement that will reflect the best possible interests of the City, as well as allow time for public review. GROUPS /INTERESTED PERSONS CONTACTED The City has worked very closely with several neighborhood groups and other units of governments to discuss concerns regarding local programming. Furthermore, two (2) public hearings were held regarding the matter in spring of 2003. In addition, a Local Programming Committee has been established by Councilmember Juan Figueroa. This committee is looking into programming options, funding, equipment needs, and other local access issues. np- FINANCIAL IMPACT The 2003 General Fund Budget includes $465,000 (account number 010 - 0000 - 604.03 -13) in franchise fees from Comcast. It is estimated that the entire 2003 budget amount will be collected by the end of the year. Extending the franchise agreement for the additional six months should have no adverse effect on the franchise fees budgeted in the next year. GAL IMPACT A renewal agreement with Comcast, Inc. extending the term an additional six (6) months will need to be prepared. Extension of the Franchise Agreement with Comcast, Inc. October 13, 2003 Page 3 ALTERNATIVES 1. To- not extend the contract and enter into Comcast's proposed agreement which is, at this point, inadequate. 2. To extend the contract and enter into Comcast's proposed agreement. RECOMMENDATION It is recommended that the City Council authorize an additional six (6) month extension of the current agreement by and between the City and Comcast, Inc. Respectfully submitted for City Council consideration. BS Attachment A FRANCHISE EXTENSION AGREEMENT The undersigned duly authorized agents of the City of Elgin, an Illinois municipal cor- poration (the "City "), and Comcast of Illinois /West Virginia, LLC, including its succes- sors and assigns (the "Franchisee "), having the authority to make the representations and agreement contained herein, do hereby stipulate and agree as follows: 1. A cable television franchise was granted by the City to Consolidated Cable Utili- ties, Inc. pursuant to Ordinance No. 5 -935 (the "Franchise "), as amended by Or- dinance No. 56 -84, which among other things transferred the Franchise to Centel Cable Television Company of Illinois, and as further amended by Ordinance No. 55 -94, providing for the construction, operation and maintenance of an insti- tutional cable network in the City. By Resolution adopted 27 September 1989 (the "Resolution "), the City authorized the transfer of the Franchise to Jones Inter - cable, Inc. ( "Jones ") or to any affiliate of Jones, as that term is defined in the 27 September 1989 Resolution. By notice provided to the City dated 19 December 1989, Jones transferred the Franchise to Cable TV Fund 15 -A, Ltd., an affiliate of Jones. The Franchise expired on or about 9 December 1999, and on 25 September 1999, the City and Cable TV Fund 15 -A, Ltd. extended the term of the Franchise until 9 December 2002. The City, pursuant to Resolution No. 99 -27, consented to the transfer of the Franchise by Cable TV Fund 15 -A, Ltd. to TCI of West Vir- ginia, Inc. on 27 January 1999. And by notice on 31 July 2001, the City was ad- vised that TCI of West Virginia, Inc. a subsidiary of AT &T Broadband, LLC, was transferred to another subsidiary of AT &T, AT &T Broadband of West Virginia, LLC. AT &T Broadband of West Virginia, LLC has since transferred its interest in the Franchise to Comcast of Illinois /West Virginia, LLC. The current Franchisee is Comcast of Illinois /West Virginia, LLC. 2. The City and Franchisee have been engaged in informal renewal negotiations in accordance with Section 626(h) of Title VI of the Communications Act of 1934, as amended (47 USC 521, et seq.). The amount of time required to conclude negotia- tions and allow for public review will extend beyond the 9 December 2002 fran- chise expiration date and it is in the public interest to extend the current fran- chise for an additional period of time so that cable service to the public will not be interrupted. The City and Franchisee agreed to extend the term of the Fran- chise until 9 June 2003 pursuant to a Franchise Extension Agreement dated 4 December 2002, and then agreed to extend the term of the Franchise until 24 October 2003 pursuant to a Franchise Extension Agreement dated 28 May 2003. Additional time, however, will be required to conclude negotiations and al- low for public review. The City and Franchisee desire to and do hereby agree to extend the term of the Franchise until 30 April 2004. 3. During the extension period, the City and Franchisee shall work together in good faith and diligently continue their informal Franchise renewal negotiations pur- suant to the procedures contained in Section 626 of Title VI of the Communica- tions Act of 1934, as amended (47 USC 521, et seq.). 4. Notwithstanding the foregoing, by entering into this Agreement, the City and Franchisee continue to reserve all rights under Title VI of the Communications Act of 1934, as amended, and do not waive any rights related thereto. The undersigned hereby agree to an extension of the Franchise under the terms and subject to the stipulations as set forth above. Dated this 22nd day of October, 2003. City of Elgin City Manager ATTEST: City Clerk Comcast of Illinois/ West Virginia, LLC By: