2005 AGN APR 05 I02 (5/17/05 #4)

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replace its PEG broadcasting equipment and repair or replace items that break or become obsolete. • Adelphia must provide the City with copies of operating reports, books and records. The City can audit Adelphia's books at any time; if a revenue shortfall of more than 5% is discovered, Adelphia pays for the audit and repays the shortfall, with interest. • The City can impose daily penalties for violations of technical standards, customer service requirements, or any provision of the franchise agreement. The City Attorney's office has advised that the City is limited by federal law with regard to the amount of the franchise fee and the provision of PEG funds, and that a revocation of Adelphia's franchise or a refusal to renew it would be legally complicated and difficult to achieve. Based on these limitations, as well as the extensive negotiations with Adelphia that produced the draft agreement, City staff believe that the draft agreement is the most favorable deal the City is likely to get from Adelphia. The City Council should also be aware that Adelphia has declared bankruptcy and Adelphia's cable system is in the process of being sold. It is not known who will emerge as the owner of Adelphia's Colton system, but the sale is anticipated to occur shortly. If the City has no franchise agreement in place when the sale is consummated, franchise negotiations would likely have to start over with the new buyer. Section 5.06.2 10 of the Municipal Code establishes certain procedural requirements for the award of cable franchises. However, Section 5.06.230 allows the City Council to waive these requirements in the case of renewal of an existing franchise. The requirements are aimed at providing the City with information about the franchisee and the proposed cable system, but the City either already has this information or can obtain it pursuant to the franchise agreement. Accordingly, staff recommends that the City Council waive these requirements, as authorized by Section 5.06.230 of the Municipal Code. ALTERNATIVES: Reject the staffs request for approval of the draft cable television franchise agreement, and direct staff to engage in further negotiations with Adelphia. This would continue the currently existing situation, in which Adelphia is operating under an expired franchise agreement. FISCAL IMPACT: Positive fiscal impact through Adelphia's contribution of up -front and ongoing financial support for public access television. Franchise fees will remain unchanged. ENVIRONMENTAL IMPACT: None.