HomeMy WebLinkAboutItem 06.nCITY OF LAKEVILLE
DAKOTA COUNTY, MINNESOTA
Material Franchise Violation
Marcus Cable Partners L.P.
d/b /a Ch— Comm—i— tions( "Charter ")
FINDINGS OF FACT AND DECISION
On November 4, 2013, the Lakeville City Council met at a special meeting and
conducted a public hearing to consider whether Charter is in material violation of the Cable
Franchise Agreement for nonpayment of educational and governmental access fees. Charter
was given mailed notice of the hearing and an opportunity to present evidence. Charter was
represented by attorney Jane Bremer and the City was represented by attorney Brian T.
Grogan. The City Council now makes the following Findings of Pact and Decision:
FINDINGS OF FACT
1. On November 1, 1998, the City of Lakeville ( "City ") and Marcus FiberLink,
L.L.C. ( "FiberLink "), a company affiliated with Charter, entered into a Telecommunication
Capacity Lease Agreement (`Lease Agreement ") to provide for the construction of a
telecommunication network in the City whereby the City would pay FiberLink to build a
network for the City's use.
2. On November 2, 1998, the City of Lakeville (`City ") and Marcus Cable Partners,
L.P. entered into a Cable Television Franchise Agreement ("Franchise"'). On November 2, 1998,
the City adopted Resolution No. 98 -236 (`Resolution ") approving the transfer of control of
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Charter and the Franchise and on January 22, 1999, pursuant to the Resolution, the transfer of
control was completed.
3. Exhibit E, Paragraph 2 of the Franchise provides:
Educational Governmental Access Operating Support
Grantee (Charter) shall collect on behalf of City an initial per subscriber
fee of fifty cents ($.50) per month solely to fund educational and
governmental access — related expenditures (hereinafter "EG Access Fee ").
4. There is no dispute that throughout the term of the Franchise Charter did not remit
to the City the required EG Access Fee as set forth in Exhibit E, Paragraph 2 of the Franchise
until the City received a check dated October 18, 2013 in the amount of $10,977.50 for EG
Access Fees due for July and August of 2013
5. The Franchise has never been amended. On April 12, 1999, the City Council held
a work Session which was a Special Meeting. On the agenda was Item No. 6: "consider payment
option for construction fee within tiie T elecommiunicat Capacity Lease Agreement." The
construction fee was discussed and at a subsequent meeting the City council approved execution
of an amendment to the Lease Agreement concerning the fees to be paid by the City to
FiberLink. The amendment to the Lease Agreement was dated August 17, 1999. Although it
was not on the agenda, in conjunction with item No. 6 the Council also discussed the EG Access
Fee. A "recommendation" was made not to implement the EG Access Fee, but no action was
taken by the City Council and the Franchise was never amended. At the work session, action
could not have been taken on the EG Access Fee because it was a special meeting and only items
on the special meeting agenda can be acted on and further action can not be taken at work
session other than direction to City Staff.
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6. On February 4, 2011, the City received a letter from Charter requesting that the
City commence franchise renewal proceeding in accordance with the requirements of the Cable
Act (47 U.S.C. 546(a)). The Cable Act requires the City to review Charter's past performance
under the
7. The City conducted a review to verify that Charter had remitted all required fees
due the City under the Franchise. The review uncovered that Charter had not collected and paid
to the City the EG Access Fee.
8. By letter dated November 16, 2012, the City notified Charter that the required EG
Access Fees had not been paid.
9. By letter dated July 3, 2013, resent on July 31, 2013, the City sent Charter notice
of noncompliance with the Franchise for not paying the EG Access Fee.
10. By letter dated October 18, 2013, Charter was notified that the City Council
would conduct a public hearing on November 4, 2013 to deternalne whether Charier was in
material breach of the Franchise.
11. Enforcement of the Franchise is governed by Section 3.9 of the Franchise and
Title 3 Chapter 11 of the City's Municipal Code, specifically Section 3- 11 -30.
12. Section 3.9(c) of the Franchise provides that in determining whether a violation or
breach is "material" the City shall consider:
• The reliability of the evidence of the violation or breach;
• The nature of the violation or breach;
The damage, if any, caused thereby to the City, the City's residents
or subcontractors;
• Any justifying or mitigating circumstances; or
• Such other matters as the City may deem appropriate
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13. The unpaid EG Access Fee from November 16, 2006 to June 30, 2013 is
$469,341.00, prior to computation of interest. This amount was calculated as follows:
Year
Subs
Fees
Due Date
2006
° 1 1,466
$ 8,599.50
1 1/30/2007
2007
11,667
$70,002.00
9/14/2007
2008
11,667
, $70,002.00
9/14/2008
2009
11,886
$71,316.00
9/14/2009
2010
11,885
$71,310.00
9/14/2010
Lille
11,545
$69,270.00
9/14/2011
2012
11,457
$68,742.00
9/14/2012
i 2v13
11,457
' $34,371.vv
5115i2 0 13)
2013
11,457
$ 5,728.50
10/30/2013
TOTAL
$469,341.00
14. The nonpayment of the EG Access Fee is a material violation of the Franchise:
• The evidence is reliable as the Franchise is clear and no amendment was
ever approved by the City Council modifying the EG Fee obligation.
The EG Fee represents a significant level of consideration under the
Franchise.
° The City incurred damage given that the EG Fee would have provided
valuable funding for the City to use for educational and governmental
programming that, as a result of the violation, the City was required to
fund fiom other sources.
° There is no justification, for Charter's failure to comply with the plain and
unambiguous requirements of the Franchise.
DECISION
Charter has committed a material violation of the Franchise by nonpayment of the EG
Access Fee.
Dated: , 2013.
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