Loading...
ORDINANCE 85-851 .. . . ? ORDINANCE NO. 85-551 AN ORDINANCE RELATING TO CABLE TELEVISION SERVICE, PROVIDING FOR MODIFICATION OF THE REQUIREMENTS OF THE CITY'S CABLE COMMUNICATIONS ORDINANCE THE CITY OF HOPKINS DOES ORDAIN: SECTION 1. SHORT TITLE. Th~s ordinance shall be known as the "CATV Relief Ordinance." SECTION 2. BACKGROUND AND PURPOSE. The C~ty has granted a cable television franchise through the adoption of city ordinance code sections the Cable Communications Ord~nance (hereinafter called the ("Franchise"). The cities of Eden Prairie , Edina , Minnetonka and Richfield (the "Other Cities") have adopted slmllar ordinances, all wlth the same franchise Grantee. Through the Southwest Suburban Cable Commission ("SWSCC"), a joint powers organlzation, the City and the Other Cities have undertaken to supervise Grantee's compliance with these ordlrtances. Since the adoptlon of the Franch~se Grantee has constructed and is operatlng a cable communicat~ons system in City and the Other Cities. Grantee has approached the Clty ind~cating that it is experiencing serious financial d~fficulties and would be unable to pay the franch~se fee due and payable on November 1, 1984. Grantee requested a temporary reductlon of its Franchise obllgat~ons to allow for its flnanc~al recovery. Clty authorlzed the SWSCC to reVlew Grantee's request and make recommendations for an appropr~ate response. SWSCC retained a financial consultant to asslst In analyzlng Grantee's f~nancial cond~tlon, held several publlC meet~ngs, and conducted a thorough reVlew of Grantee's request. SWSCC determlned that Grantee ~s exper~enc~ng ser~ous f~nanc~al d~fflcultles caused by such adverse factors as h~gher than antlclpated construct~on and operatlng costs, lower than projected market penetratlon, in- ability- to obta~n long-term f~nancing at projected rates and other lndustry, econom~c and technologlcal changes. SWSCC also concluded that Grantee cannot secure needed ref~nancing of its long-term debt, cannot contlnue to provlde the present level of serv~ce and cannot become an economlcally vlable enterpr~se unless the City grants a per~od of rellef from some of the . e ~ requirements of the Franchise. SWSCC recommends that the City grant temporary amendments to the Franchlse, reducing the franchise fee payable now and in the future, eliminating the required performance bond, and modlfYlng the provisions for local programming. In return, Grantee would execute a Performance Agreement pro- vidlng a means for monitorlng Grantee's financial condition, assurlng an adequate level of local programrnlng, and providing for certain other matters related to Grantee's requested rellef. The City has reviewed SWSCC's recommendations and has considered the option of requlring full payment of the past due franchise fee through use of Grantee's letter of credit, performance bond, and parent company performance guarantees. Grantee represents, however, that if the City and the Other Cities seek payment of past due franchlse fees through resort to such securities, thls would only make it more difficult for Grantee to solve its flnanclal problems and would be counterproductive to any effort to provlde rellef to Grantee. In adopting thlS ordinance the City relies upon the represen- tations of Grantee and seeks to provide a means by which the publlC can continue to recelve approximately the same level of servlce while affording Grantee a reasonable opportunity for financial recovery. The ultimate purpose of this ordinance is to secure, at a later time during the Franchise term, the full public benefits provided for ln the Franchise. SECTION 3. RELATIONSHIP TO CABLE COMMUNICATIONS ORDINANCE. ThlS ordinance does not permanently amend any provision of the Cable Comrnunlcations Ord~nance (the "Franchlse") but provides that certaln provisions of that ordlnance are modifled for a perlod of tlffie as provided ln thlS Relief Ordinance. Except as expressly mod~fled in thlS ordlnance, the provlsions of the Franchlse remaln ln full force and effect. SECTION 4. DEFINITIONS. Subdlvision 1. The deflnlt~ons in the Franchise also apply to thls ordlnance. . Subd. 2. In addition, the following words and phrases shall have the meanlngs glven them: (1) "Existing indebtedness" means an 518,000,000 loan made to Grantee to Toronto Domlnlon Bank of Toronto, Capada under loan documents dated Aprll 1, 1982. - 2 - . ~ (2) "Franchlse" means the Cable Communications Ordlnance as now or hereafter amended. (3) "Local Programming Obligations" means, for the purpose of th~s ordlnance, Grantee's obligatlons under the Franchise and the Offering for cablecast access, communlty access and local orlginatlon programming. (4) "Performance Agreement" means a contractual agreement between Grantee, Clty and SWSCC providlng a means for monltorlng Grantee's financial condition, assurlng an adequate level of local programming, and providlng for certain other matters related to Grantee's requested relief. SECTION 5. RELIEF GRANTED. While this ordinance is in effect the obllgatlons of Grantee are modlfled to the extent provided in this sectlon. Subdivlslon 1. Franchise Fees - Percentage. Commencing with Grantee's fiscal year 1985 the annual franchise fee is reduced from 5% of Gross Revenues to 3%. Such annual fees shall be pald to City In equal quarterly payments on or before the flrst day of each of the months of November, February, May and August next following the end of Grantee's fiscal year. If thlS ordinance terminates during any of Grantee's fiscal years, the franchise fee shall be restored to the rate of 5% of Gross Revenues at the end of the calendar month in which terminatlon occurs. The restored rate of 5% and the reduced rate of 3% shall be appl~ed respectlvely to the Gross Revenues collected only ln the months during WhlCh each rate was in effect. The fees . accruing at the restored rate shall be pald in accordance with the terms of the Franchlse. The fees accrulng at the reduced rate shall be pald ln equal quarterly installments in accordance with the terms of thlS ordlnance. Subd. 2. Past Due Franch~se Fees. The 1984 franchise fee in the amount of S 38,169 payable on or before November 1, 1984 shall be deemed fully d~scharged and pald if, but only lf, Grantee pays the sum of $22,901 to the C~ ty, in four equal payments on or before June 1, June 15, August 15 and October 15, 1985. S~bd. 3. Letters of Credlt. The City Council may by resolution reduce the required amount of the Letter of Credit below 550,000 lf ln lts sole dlscretlon lt determlnes that a lesser amount ~s reasonable and adequate to protect the public. It may thereafter, by resolut~on, requlre the amoupt of the Letter of Credlt to be lncreased or fully restored to the amount of 550,000. Grantee shall comply w~th th~s requlrement with~n " - 3 - , . s~xty days after wr~tten not~ce has been given by the Clty. Subd. 4. Performance Bond. The Grantee may dispense with the $300,000 performance bond required by the Franchise. The City Council may thereafter by resolution requlre that such bond, or a slmilar bond in a lesser amount, be provided by Grantee. Grantee shall comply with this requirement wlthin sixty days after written notice has been given by the City. Subd. 5. Local Programming Obligations. Grantee shall expend at least 1% of its annual Gross Revenues each fiscal year in fulfilling its Local Erogramrning obligat~ons under the Franchise for publlC, governmental, and educational access, but it shall not be obligated to expend more than that amount for such access. That amount shall not include any costs of operation or adm~nistration not dlrectly related to the pro- vis~on of local programm~ng. This expend~ture shall be in complete sat~sfaction of Grantee's total Local Prograrnmlng Obllgatlons durlng the period of this ord~nance. SECTION 6. PROVISIONS. AUTOMATIC TERMINATION OF RELIEF ORDINANCE The provisions of this ordinance, and the relief herein granted, shall cease to be effective, automatically, upon the occurrence of the earliest of any of the follow~ng events: Subdlv~slon 1. Fallure of the Grantee to complete refinancing its Existlng Indebtedness by December 31, 1987 ln accordance wlth Article II, Section 4 of the Franchlse. Subd. 2. The end of the next month after Grantee has collected cumulative Gross Revenues ~n the amount of one hundred m~lllon dollars as measured from September 1, 1984. The determ~natlon of cumulative Gross Revenues shall be based upon audited f~nanclal statements for perlods for WhlCh they are ava~lable and upon Grantee's operatlng reports for per~ods for WhlCh aud~ted statements are not then avallable. Grantee shall prov~de C~ty wlth its financlal statements and financlal operating reports promptly after they are prepared. Subd. 3. March 1, 1992. Subd. 4. Payment, discharge, or satisfactlon of the Existing Indebtedness, except through ref~nanclnq as provlded ln Artlcle II, Sect~on 4 of the Franchlse. Subd. 5. Payment, discharge, or satlsfactlon of the lndebtedness arlslng from the reflnancing provlded in Article II, Sect~on 4 of the Franchise. - 4 - e Subd. 6. Failure of the Grantee to restore or replace the full required amount of the Letter of Credit as prov~ded in Article VIII, Section 4, paragraph H of the Franchise. Subd. 7. Fallure of the Grantee to pay the fees as requ~red ln Section 5, Subd. 2 of this ordinance. Subd. 8. Failure of the Grantee to restore, replace or increase either a Letter of Credit or bond wlthin sixty days of wrltten notice by the City, as prov~ded in Section 5, Subdivlsions 3 and 4 of this ordinance. Subd. 9. A holding or determinatlon by any court or agency that any term, condition or provision of thlS Rellef Ordlnance is invalid or unenforceable, as a result of any action taken by Grantee or anyone acting on Grantee's behalf seeking such determinatlon. Subd. 10. Sale or transfer of all or substantlally all of the System to a person or entity other than a parent, subsidlary, related corporat1on, aff~liated corporation, partner or j01nt venturer of Grantee or any parent of Grantee. Subd. 11. Termination of the Franchise. SECTION 7. OTHER TERMINATIONS. ThlS ordinance may also be terminated for cause, under the same procedures for term~natlon as are conta~ned ~n the Franchise, for the following reasons: , Subdivlsion 1. All grounds for termination provlded ln the Franch~se, except to the extent that Grantee's performance obl~gat~ons are modlfled in this ordinance. Subd. 2. The purchase by Grantee, its general partner, or any parent, subs~d~ary, aff~llate or other related corporation of Grantee or its general partner, of a cable communlcat~ons system or any part thereof or lnterest there~n, located wlth~n the seven-county metropolltan area as defined ~n Mlnnesota Statutes, Sect~on 473.121, Subd. 2. For thlS purpose the def~nltlon of a cable communlcatlons system shall be as that term is currently deflned by the Board. Such a purchase shall not be grounds for termination of this ord~nance, however, if the Grantee demonstrates to the reasonable sat~sfactlon of the Clty that the purchase (1) wlll not lmpalr the operat~ng cash flow or financial posltion of Grantee and (2) will involve lndependent f~nancing of the purchase wlthout resort to the assets of the System. - 5 - , . ll.f' . Subd. 3. Fallure of the Grantee to comply with any of the provisions of the Performance Agreement. SECTION 8. REQUESTS FOR FURTHER RELIEF. No request by the Grantee for any further rellef from the requ~rements of the Franchlse, lncludlng a request for an extenslon of the term of thlS ordlnance, shall be consldered by the Clty unless that request lS made ln wrlting prlor to September 1, 1990. The C1ty shall have no obllgatlon what- soever to cons~der or grant any such request, and any response to such request shall be at the sole dlscretlon of the City. SECTION 9. ACCEPTANCE OF THIS RELIEF ORDINANCE; PROVIDING OF GUARANTEES. ThlS ord~nance shall be effectlve ~n accordance wlth the provlslons of Art~cle XIV of the Franchlse lncludlng dellvery to the Clty of the acceptance, oplnlon of legal counsel, guarantees and other documents as requlred by sa~d Artlcle XIV; provlded further, however, that it shall become effectlve only lf all of the Other C~tles adopt an ord1nance slmllar to th1s ordlnance withln 90 days after adoptlon of thlS ordlnance. Also, thlS ordlnance shall not become effectlve until Grantee, City, SWSCC and the Other Cltles have executed and dellvered the Performance Agreement and contractual documents attached thereto as exhibltS. Passed by the Clty Councll of the Clty of HOPKINS Mlnnesota th1s 22nd day of May , 1985. -1:fl~,1i!;!1/\ yor "- ATTLST: J. Scott Renne, C1ty Clerk Clty Clerk -6-