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City Council Ordinance 537ORDINANCE NO. 537 CITY OF MONTICELLO WRIGHT COUNTY, MINNESOTA AN ORDINANCE GRANTING A FRANCHISE TO BRIDGE WATER TELEPHONE COMPANY D/B/A TDS TELECOM TO CONSTRUCT, OPERATE, AND MAINTAIN A CABLE SYSTEM AND PROVIDE CABLE SERVICE IN THE CITY OF MONTICELLO, MINNESOTA RECITALS This Cable Franchise Ordinance ("Franchise") is made and entered into by and between the City of Monticello, a municipal corporation of the State of Minnesota ("City") and TDS Bridge Water Telephone Company d/b/a TDS Telecom ("TDS"). 2. Pursuant to Minnesota Statutes Chapter 23 8, in particular §23 8.08 and City Ordinance No. 419 ("Cable Ordinance"), the City is authorized to grant and issue a non-exclusive franchise authorizing TDS to provide cable service and construct, operate, and maintain a cable system in the City subject to Chapter 23 S. 3. Upon evaluation of TDS's technical, financial, legal qualifications, completion of franchise negotiations, and as a result of a public hearing, the City finds that it is in the best interests of the City and its residents to grant and issue the Franchise to TDS. 4. This Franchise is nonexclusive and is intended to comply with applicable laws and regulations. Any applicable requirement established by Minn. Stat. 238.084 or other state or federal law not expressly incorporated in this Franchise shall be deemed incorporated by reference as though fully set forth herein. 5. This Franchise is not intended to grant a franchise to TDS on terms that are more favorable or less burdensome than those in the existing cable franchise with Charter Communications, FiberNet, or any future franchisee. Should Charter Communications, FiberNet or any future franchisee believe that any cable franchise issued by the City is more favorable or less burdensome than those in an existing franchise, that franchisee shall have the right provided by Ordinance 419 to petition the City Council for franchise amendments to relieve the franchisee of provisions making its franchise less favorable or more burdensome. Those proposals may include requests for amendments to either their franchise or this Franchise, and the City Council reserves the right to amend this ordinance or to seek to amend other franchise ordinances to comply with this standard. THE CITY COUNCIL OF THE CITY OF MONTICELLO HEREBY ORDAINS: SECTION 1. GENERAL PROVISIONS Section 1.1 Definitions. Unless otherwise defined herein, the terms, phrases, and words contained in this Franchise have the meaning provided in the Cable Ordinance. Terms, phrases and words contained in this Franchise that are not defined here or in the Cable Ordinance will have their normal and customary meaning. ORDINANCE NO. 537 Section 1.2 Written Notice. All notices, reports, or demands required to be given in writing under this Franchise or the Cable Ordinance must be delivered personally to the General Manager of TDS or the City Administrator or deposited in the United States mail in a sealed envelope, with registered or certified mail postage prepaid thereon, addressed to the party to whom notice is being given, as follows: If to City: City of Monticello Attn: City Administrator 505 Walnut Avenue, Suite 1 Monticello, Minnesota 55362-8822 With copies to: Chair, Sherburne/Wright Counties Cable Communications Commission c/o City of Buffalo 212 Central Avenue Buffalo, Minnesota 55313 If to TDS: TDS Telecom Attn: Manager - Video Services 525 Junction Road Madison, WI 53717 Such addresses may be changed by either party upon notice to the other party given as provided in this Section. SECTION 2. GRANT OF FRANCHISE Section 2.1 Grant. a. TDS is authorized to erect, construct, operate and maintain in, along, across, above, over and under the rights-of-way, now in existence and as may be created or established during the term of this Franchise any poles, wires, cable, underground conduits, manholes, and other conductors and fixtures necessary for the maintenance and operation of a Cable System in the City. Nothing in this Franchise shall be construed to prohibit TDS from offering any service over its Cable System that is not prohibited by federal, state or local law. b. This Franchise is granted pursuant to the Cable Ordinance. By accepting this Franchise, TDS agrees to be bound by the terms of the Cable Ordinance and this Franchise. In the event of any conflict between the provisions of this Franchise and the Cable Ordinance, the provisions of this Franchise shall govern. C. This Franchise shall be nonexclusive and City may grant additional franchises at any time. The City will not grant an additional franchise on terms and conditions more favorable or less burdensome than those in this Franchise. The City may impose additional terms and conditions in any additional franchise. d. In the event the City grants an additional franchise that TDS believes is more favorable or less burdensome than in this Franchise, TDS shall have a right to 2 ORDINANCE NO. 537 petition for franchise amendments to relieve TDS of provisions making its Franchise less favorable or more burdensome. TDS shall file a petition that: 1. Identifies the competitor(s); 2. Identifies the basis for TDS's belief that certain provisions of the additional franchise are more favorable or less burdensome than its existing Franchise; 3. Identifies the franchise provisions to be amended. Section 2.2 Franchise Term. This Franchise is granted for a term that will expire on March 29, 2020 (the "Expiration Date"), unless sooner renewed or revoked. The Expiration Date matches the expiration date for the other franchised cable operators in the City and it is the City's intent to address franchise renewal requests of Charter, FiberNet and TDS at the same time prior to the Expiration Date. Any renewal of this Franchise shall be performed in accordance with applicable federal, state and local laws and regulations. Pursuant to 47 U.S.C. 546, TDS shall provide notice of its intent to seek renewal of this Franchise 36-30 months prior to the Franchise Expiration Date. Section 2.3 Service Area. a. This Franchise is granted for the corporate boundaries of the City, as it exists from time to time, subject to the density requirement of Section 2.3.b below. The City will notify TDS in writing in the event the City annexes any areas that TDS will be required to serve. b. TDS will extend its Cable System and offer cable service, within a reasonable time, after a request for service, to areas with a density of at least nine (9) residential units per one-quarter (1/4) cable mile of system, as measured from the nearest Cable System trunk line or distribution cable as of the date of such request for service. Where the density is less than that specified above, TDS may require that persons requesting service pay a portion of the cost of the capital cost of the line extension in advance. TDS shall provide a free written estimate of the total cost for extension and the required payment amount within fifteen (15) days of the request for service. The charge for installation or extension for each person requesting service shall not exceed a pro rata share of the actual cost of extending the service. Subscribers shall also be responsible for any standard/non-standard installation charges to extend the Cable System from the tap to the residence. SECTION 3. SYSTEM Section 3.1 System Capacity. TDS currently operates and maintains a communications system which provides telecommunications and information services to residents and businesses ("Telecommunications Network") within the City pursuant to authority prescribed in the Certificate of Need issued by the Minnesota Public Utilities Commission. Utilizing its Telecommunications Network, Grantee shall maintain and operate within the City an Internet Protocol television (IPTV) application through which Internet television services are ORDINANCE NO. 537 delivered using the architecture and networking methods of Internet Protocol over a packet - switched network infrastructure system, generally referred to in this Franchise herein as a "Cable System" providing a minimum of at least 75 video programmed channels throughout the term of this Franchise. The Cable System must have return capability and permit "narrowcasting" as provided in Section 4.2(c) unless sufficient channels are available as specified in that Section. TDS acknowledges that this Franchise is granted pursuant to Minnesota Statutes Chapter 238. TDS agrees to be bound by Chapter 238 unless preempted by applicable state or federal law. Section 3.2 Construction Deadline. Except for TDS's Cable System extension obligations pursuant to Section 2.3, system construction is substantially complete. Except as otherwise required by a Right -of Way Ordinance, TDS will use best efforts to complete any Cable System extension and construction of new facilities for new developments contemporaneous with installation of other utilities. The City shall provide reasonable and timely advance written notice of the location of all new developments to TDS. SECTION 4. COMMUNITY SERVICES Section 4.1 Commercial Video Programming. TDS will provide broad categories of video programming, including news, sports and entertainment. Section 4.2 PEG Access Facilities. a. Access Channels. TDS must dedicate a minimum of two (2) channels for PEG Access programming. The two (2) PEG Access Channels must be cablecast on the Basic Cable Service tier. All subscribers who receive Cable Services offered on the Cable System must receive the PEG Access Channels at no additional charge. Nothing herein shall diminish the City's rights to secure additional channels pursuant to Minn. Stat. § 238.084, Subd. 1(z), and applicable FCC regulations. b. Responsibility for PEG Access. The City will operate, administer, and manage PEG Access programming pursuant to this Section 4.2. The City will be responsible for the channel currently used for public access programming. The City may delegate its PEG Access authority and responsibilities to the Commission. TDS acknowledges that the Commission may coordinate the expenditure of Franchise Fees and PEG Capital Fees by and among the Commission's member municipalities. Nothing herein shall obligate the City to make equipment or channels available for public access programming or to any particular programmer. C. Narrowcast. If in the future TDS serves areas outside the City, at least one (1) PEG Access Channel must permit the City to provide "narrowcast" programming of events; i.e. permits a program to be cablecast on such channel for viewing solely by City residents while residents in adjoining townships or cities served by TDS simultaneously view other programming on that channel. This provision may be waived by the City if TDS provides sufficient channels to allow all served areas to view all programmed events. d. Live Origination. TDS must ensure that live programming may be originated and cablecast from the public institutional sites listed in Exhibit A attached 11 ORDINANCE NO. 537 hereto provided however, that TDS shall only be required to pay the cost of the first one hundred and fifty (150) feet of any new system construction necessary to permit live origination at such site and shall not be required to provide end-user equipment. The City may designate additional live programming sites. The City shall pay any additional, actual construction costs prior to additional construction and shall be responsible for the provision of end-user equipment. TDS must ensure that the system meets the technical standards attached hereto as Exhibit B at all live origination sites. TDS must further ensure that the City can "narrowcast" programming originated from all of the sites designated pursuant to this paragraph unless TDS provides sufficient channels to allow all served areas to view all programmed events. e. PEG Access Capital Support. In addition to the requirements of Section 4.2(a) -(d) above, the City may require TDS to collect and remit a PEG Capital Fee of up to eighty-five cents ($.85) per subscriber, per month to support community programming. TDS shall remit such payments on the same schedule as the Franchise Fee. All amounts paid shall be subject to audit and recomputation and acceptance thereof does not constitute an accord that amounts paid are correct. TDS must be notified in writing on or before October 1 st of the amount of the PEG Capital Fee to be effective on January 1 st of the following year. If the City fails to provide the written notification required herein by October 1 st, then the PEG Capital Fee for the following calendar year shall remain as set the previous year. TDS may itemize any PEG Capital Fee on subscriber's bills. Payment by TDS must be separate from and in addition to any Franchise Fee. The City, TDS and other cable franchisees shall jointly fund and sponsor a subscriber survey approximately during the fifth and tenth years of the FiberNet franchise for the purpose of assessing subscriber satisfaction with PEG Access programming and the levels of financial support that subscribers are willing to provide. Upon completion of the survey, the City and TDS shall meet to discuss the level of support for PEG Access programming and enter into good faith discussions regarding revisions to this Section that may be appropriate in light of the survey. f. Use of PEG Capital Fee. The City and TDS agree that the City will expend the PEG Capital Fees solely for capital costs (consistent with GAAP) associated with PEG Access. Historically the City has provided, on an annual basis, substantial financial support for PEG Access programming. In consideration for TDS's obligation to remit the PEG Capital Fee, the City agrees to provide financial support for PEG Access that is equivalent to the amount of PEG Capital Fees collected and provided to the City. By March 31 st of each year, the City shall provide TDS with an annual report of any expenditures of the PEG Access Capital Fee to insure such fees are used for capital costs related to PEG Access. The annual report shall also demonstrate how the City fulfilled its requirement to provide matching support for PEG Access. Based on the report, TDS may send a written notice to the City alleging that the City failed to demonstrate that the PEG Capital Fee was used for capital or that matching PEG Access support was provided. The City shall have thirty (30) days after receipt of the written notice to provide additional information demonstrating compliance with the requirements of this Section. If TDS continues to allege that the City has not complied with its obligations herein, TDS may provide written notice of its intent to reduce and/or discontinue collecting and remitting 5 ORDINANCE NO. 537 the PEG Capital Fee. If the City disputes TDS's actions, it may initiate any enforcement action under the Cable Ordinance it deems appropriate. g. Access Rules. The City may implement rules governing PEG Access channels and programming. h. Parity of Obligations. The City will impose equivalent PEG Access obligations on any other franchised provider of Cable Service in the City to the extent provided by law. Section 4.3 Drops and Service to Public Buildings. a. TDS must provide monthly Basic Cable Service and Cable Programming Service (excluding pay -per -channel or pay -per -program) and install one (1) Drop and one (1) outlet without charge to the public institutional sites listed in Exhibit A attached hereto. The programming provided by TDS is not for public display. The City shall hold TDS harmless for any copyright, or other penalties, incurred due to improper use of free service. TDS shall not be required to provide converters. b. TDS must provide a Drop, outlet and Basic Cable Service and Cable Programming Service to such other accredited public schools or public administration buildings as the City may subsequently designate, provided however, that TDS shall only be required to pay the cost of the first one hundred and fifty (150) feet of any necessary Cable System construction. The City or institution shall pay any additional actual construction cost. TDS will have a reasonable time from the designation of additional sites to complete extension. Additional Drops and/or outlets at institutional locations must be provided by TDS at the cost of TDS's time and material. Alternatively, institutions may add outlets at their own expense. Section 4.4 Drop Box. TDS must maintain a local drop box for receiving subscriber payments in the City. SECTION 5. ADMINISTRATION PROVISIONS Section 5.1 Franchise Fee. a. TDS shall pay a Franchise Fee to the City in an amount equal to five percent (5%) of its gross revenues. TDS shall remit Franchise Fee payments to the City on a quarterly basis within 60 days of the close of the preceding calendar quarter. Payments shall be based on gross revenues generated during the preceding quarter. b. Each Franchise Fee payment must be accompanied by a report in form reasonably acceptable to City detailing the computation of the payment. All amounts paid are subject to audit and recomputation by the City, and acceptance of any payment must not be construed as an accord that the amount paid is in fact the correct amount. In accordance with Minn. Stat. § 541.05, any action to recover Franchise Fees must be commenced within six (6) years of receipt of the Franchise Fee payment or due date for such payment. ORDINANCE NO. 537 C. In the event that any Franchise Fee payment or recomputed payment is not made on or before the dates specified herein, TDS shall pay an interest charge, computed from such due date, at the annual rate of one percent over the prime interest rate. Section 5.2 Rules of TDS. TDS may promulgate such rules, terms and conditions governing the conduct of its business provided that such rules, terms and conditions must not be in conflict with the provisions of this Franchise, the Cable Ordinance, or applicable laws or regulations. SECTION 6. INDEMNIFICATION, INSURANCE, BONDS AND SECURITY FUND Section 6.1 Indemnification. By acceptance of this Franchise, TDS agrees to indemnify, defend, and hold the City harmless in accordance with the Cable Ordinance. Section 6.2 Insurance. At the time of acceptance of this Franchise, TDS will file with the City a Certificate of Insurance in accordance with the Cable Ordinance. TDS must maintain such insurance for the entire term of this Franchise. The insurance for TDS may be purchased and maintained jointly with the City's other insurance coverage. Section 6.3 Security for Performance. a. At the time of acceptance of this Franchise, TDS shall deliver to City a performance bond, in form and substance acceptable to City, from a National or State bank approved by City, in the amount of $50,000. b. The performance bond shall ensure TDS's faithful performance in accordance with the terms of this Franchise, the Cable Ordinance, and applicable laws and regulations. After providing TDS with notice and an opportunity to cure in accordance with Section 14 of the Cable Ordinance, the City may draw on the performance bond in the event TDS fails to comply with any law, ordinance or regulation, to compensate the City for any damages or loss suffered by the City as a result, and further guaranteeing payment by TDS of claims, liens and fees due the City which arise. In the event this Franchise is revoked or the rights hereunder relinquished or abandoned by TDS, the City is entitled to collect any resultant damages, costs or liabilities incurred by the City. C. The City and TDS acknowledge that it may be difficult or impossible to accurately quantify actual damages or losses suffered by the City due to a violation or unsatisfied obligation under this Franchise, the Cable Ordinance, or applicable laws or regulations. Such violations or unsatisfied obligations may, however, be presumed to harm the City and the public's interest. Accordingly, the City may, in its reasonable discretion, collect liquidated damages in an amount of up to Two Hundred and Fifty Dollars ($250.00) per violation of any provision of this Franchise, the Cable Ordinance, or applicable laws or regulations. Each violation may be considered a separate violation for which separate liquidated damages can be imposed. d. In the event the City will make any claim against the fund, the City must comply with Section 14 of the Cable Ordinance governing enforcement of this Franchise. 7 ORDINANCE NO. 537 e. The City's rights herein are in addition to all other rights the City may have and the City's exercise of such rights does not constitute an exclusive remedy nor limit any other right. Section 6.4 Construction Security. a. TDS shall comply with Minnesota Statutes §574.26 when undertaking any construction projects or entering into any construction contracts. Any performance or payment bonds obtained shall name the City of Monticello as well as TDS. b. If TDS or any of its contractors fail to perform in accordance with the terms of this Franchise, the Cable Ordinance, and applicable laws and regulations, the City may draw on the performance bond established in Section 6.3. In the event the City will make any claim against the performance bond, the City must comply with Section 14 of the Cable Ordinance governing enforcement of this Franchise. C. The City's rights pursuant to this Section are in addition to all other rights the City may have. Any action with respect to the security fund does not constitute an exclusive remedy nor limit any other right. SECTION 7. MISCELLANEOUS REQUIREMENTS Section 7.1 Amendment of Franchise Ordinance. TDS and the City may mutually agree, from time to time, to amend this Franchise. Any changes, modifications or amendments to this Franchise must be made in writing, signed by the City and TDS. Nothing herein is intended to expand or diminish the rights given to City under state law. The City reserves its lawful rights, including its police powers and ordinance -making authority. Section 7.2 Force Majeure. In the event TDS's performance of this Franchise is prevented due to a cause beyond its reasonable control, such failure to perform must be excused for the period of such inability to perform. Section 7.3 Severability. If any term, condition or provision of this Franchise or the application thereof to any person or circumstance is held, to any extent, invalid, preempted or unenforceable, the remainder and all the terms, provisions and conditions herein must, in all other respects, continue to be effective provided the loss of the invalid, preempted or unenforceable provisions do not substantially alter the agreement between the parties. In the event a law, rule or regulation is subsequently repealed, rescinded, amended or otherwise changed so that the Franchise provision which had been held invalid, preempted or modified is no longer in conflict therewith, such Franchise provision will return to full force and effect and thereafter be binding upon thirty (30) days written notice to TDS. Section 7.4 Nonenforcement by City. TDS is not relieved of its obligations to comply with this Franchise or the Cable Ordinance due to any failure or delay of the City to enforce prompt compliance. The City and TDS may each only waive its rights by expressly so stating in writing. P ORDINANCE NO. 537 Section 7.5 Rights Cumulative. All of the City's and TDS's rights and remedies pursuant to this Franchise are in addition to and not exclusive of any and all other rights and remedies available to the City or TDS. Section 7.6 Work Performed by Others. All obligations of this Franchise apply to work performed by any agent, subcontractor or other person performing any work or services on behalf of TDS pursuant to this Franchise to the extent applicable, however, in no event will any such person obtain any rights to maintain and operate a Cable System or provide Cable Service. Section 7.7 Entire Agreement. This Franchise sets forth the entire agreement between the parties respecting the subject matter hereof. All agreements, covenants, representations, and warranties, express and implied, oral and written, of the parties with regard to the subject matter hereof are contained herein. No other agreements, covenants, representations or warranties, express or implied, oral or written, have been made by any party to another with respect to the matter of this Franchise. All prior and contemporaneous conversations, negotiations, possible and alleged agreements, representations, covenants and warranties with respect to the subject matter hereof are waived, merged herein and therein and are superseded hereby and thereby. Section 7.8 Termination and Abandonment. Notwithstanding anything found in Sections 11.2, 11.3 (d), 14.1 or 14.2 of the Cable Ordinance, TDS shall not be required to remove its Telecommunications Network or to relocate the Telecommunications Network or any portion thereof, or to sell any right, title and interest in its Telecommunications Network to the City, -as a result of any termination, revocation or forfeiture of this Franchise or abandonment of the Cable System provided the Cable System or Telecommunications Network is being used or is usable by TDS for the provision of Telecommunications Services or broadband services as defined by applicable state and federal law. TDS shall have the right to terminate this Franchise upon ninety (90) days advance written notice to the City ("Termination Date") and any such termination shall not impact TDS right to continue the provision of Telecommunications services and broadband services over the Telecommunications Network. In the event the Franchise is terminated, TDS shall be responsible to remit payment to the City up to the Termination Date for all PEG fees required under Section 4.2 and all franchise fees required under Section 5.1. In addition, if TDS enters into any binding commitments with FiberNet or Charter Communications for the provision of additional PEG capital grants or PEG equipment purchases not otherwise specified in this Franchise, TDS will honor such commitments made prior to the Termination Date. SECTION 8. ACCEPTANCE OF FRANCHISE Section 8.1 Publication and Effective Date. This Franchise will be effective on the date of acceptance by TDS. This Franchise shall be enacted and published in accordance with applicable local and Minnesota law. Section 8.2 Time for Acceptance. 9 ORDINANCE NO. 537 a. TDS must accept this Franchise within sixty (60) days of enactment by the City, unless the time for acceptance is extended by the City. Acceptance by TDS will be deemed the grant of this Franchise for all purposes. b. Upon acceptance of this Franchise, TDS and City will be bound by all the terms, conditions and obligations contained herein. Section 8.3 Manner for Acceptance. TDS must accept this Franchise in the following manner: a. The Franchise must be fully executed and acknowledged by TDS and delivered to the City. b. TDS must also deliver any construction bond and insurance certificates required herein that have not previously been delivered, with its acceptance. Section 8.4 Failure to Accept. In the event TDS does not timely accept this Franchise in accordance with the requirements herein, this Franchise and all rights granted herein are null and void. ADOPTED BY the Monticello City Council this 26th of September, 2011. CITY OF MONTICELLO r Mayor Clint Herbst ATTEST: Cit ' trator Jeff O'Neill ACCEPTED: This Franchise is accepted and TDS Monticello agrees to be bound by its terms and conditions. Date: Aloonher,), , 2011 10 Bridge Water Telephone Company d/b/a TDS Telecom )A- T ®esti ORDINANCE NO. 537 EXHIBIT A (Live Origination and Free Service Sites) Monticello Municipal Liquor Store Ellison Park Swan Park Monticello Public Library Xcel Ballfield Complex Soccer Park Hockey Arena City Hall/Community Center High School 545 Hwy 25 Monticello 55362 825 East River Street Monticello 55362 121 Mississippi Drive Monticello 55362 200 6th Street west Monticello 55362 2171 W. River Street Monticello 55362 5550 School Blvd. Monticello 55362 1000 East Broadway Monticello 55362 505 Walnut Street Monticello 55362 5225 School Blvd. Monticello 55362 11 Drop Live/Drop Live/Drop Live/Drop Live/Drop Live/Drop Live/Drop Live/Drop Live/Drop ORDINANCE NO. 537 EXHIBIT B (Technical Standards- Live Origination Sites) With respect to all sites listed in Exhibit A, the Cable System shall meet or exceed the following requirements: The Cable System shall operate in conformance with the technical standards promulgated by the FCC pursuant to Title 47, Sections 76.601 to 76.617, as may be amended or modified from time to time. 2. The Cable System shall be capable of continuous 24-hour operation without signal degradation. 3. The Cable System shall be capable of operation without failure, material performance changes or signal degradation over an outdoor temperature range of -40 degrees F to +130 degrees F and over a variation in supply voltages from 105 to 130 volts AC. 4. The Cable System will provide access channel connections up to the demarcation point, both upstream and downstream, without material signal degradation or deterioration and with signal quality equal to or better than any other channels. Material signal degradation or deterioration where any signal problem including ghosting or other audio or visual distortion or interference is apparent without special testing. TDS shall not be responsible for technical problems deriving from facilities or equipment located beyond the demarcation point, within the institutional site. 12