SR-501-001-01
. -
JCilYOf
Santa Monica"
City Council Report
City Council Meeting: March 20, 2007
Agenda Item: g-C
To:
Mayor and City Council
From:
Kathryn Vernez, Assistant to the City Manager for Community &
Government Relations
Subject:
Request to Direct Staff to Prepare an Emergency Ordinance Implementing
Provisions of the Digital Infrastructure and Video Competition Act of 2006
Related to State Video Service Franchises Serving Santa Monica
Recommended Action
Staff recommends City Council direct staff to prepare an emergency ordinance
implementing provisions of the Digital Infrastructure and Video Competition Act of 2006
related to State video service franchises serving Santa Monica.
Executive Summary
Staff requests direction to draft an ordinance as necessitated by new State law which
became effective January 1, 2007, in order to protect and preserve the interests of the
City and its residents. This ordinance would implement provisions of the state's Digital
Infrastructure and Video Competition Act of 2006 (DIVCA), as codified in the California
Public Utilities Code, PUC Section 5800 et seq. In order for several advantageous
provisions of DIVCA to become operative locally, local governments are required to
adopt ordinances prescribing their applicability. Adoption of these provisions will allow
the City to:
1
1) obtain additional revenue equal to 1 % of a State franchise holder's gross
revenues for public, educational and government (PEG) purposes;
2) clarify the City's role in the collection of franchise fees;
3) apply penalties, although limited under DIVCA, for violations of DIVCA-
prescribed customer service standards;
4) impose time, place and manner restrictions on the use of City public rights-of-
way; and
5) provide a process for State franchise holders to appeal encroachment permit
denials.
Discussion
BackQround
Effective January 1, 2007, as a result of the passage of California Assembly Bill 2987 in
2006, DIVCA provides for a State video franchising process to be administered by the
California Public Utilities Commission. State franchising will largely supplant future City
video franchising authority. Under DIVCA, new video service providers have the ability
to apply for a State video franchise beginning March 2, 2007. In contrast, incumbent
cable operators applying for a State franchise must wait until January 2, 2008, at the
earliest, before a State-issued franchise may become effective. State franchise
applicants are required to designate which areas within the State they intend to serve,
with local jurisdictions named to be notified accordingly.
2
DIVCA affords the City the ability to retain revenue for PEG purposes, PUC Section
5870; collect franchise fees, PUC Section 5860; assess penalties for violations of
customer service standards, PUC Section 5900; and impose restrictions on the use of
City rights-ot-way PUC Section 5885. DIVCA also requires the City to provide a process
for State franchise holders to appeal encroachment permit denials, CPUC Section
5885(c}(4}.
The California Public Utilities Commission (CPUC) can issue a State franchise at any
time within 44 days after it receives an application. The CPUC approved a franchise for
Verizon on March 8, 2007, less than one week after Verizon submitted its application.
This ordinance will apply to any State video franchise holders. It is therefore in the City's
best interests to ensure that an ordinance is adopted as soon as possible in order to
preserve City rights as these new State video franchises come into effect. The proposed
ordinance when drafted will mirror ordinances recently adopted by the City of Los
Angeles and the County of Los Angeles.
Impact on Current Services
With the adoption of an ordinance, key City rights and requirements will be preserved
and be applicable to State-franchised video service providers operating in City
unincorporated areas. The full impact of DIVCA is unknown because it is a new law and
the California Public Utilities Commission has just begun to implement and reconcile
various portions of the law. Staff will continue to monitor and keep the Council updated
as appropriate.
3
BudqeUFinancial Impact
There will be no cost to the City. Adoption of an ordinance will provide the City with the
ability to obtain additional revenue from State video franchise holders for PEG support
in the amount of 1 % of gross revenues (PUC Section 5870). The City will continue to
receive franchise fees of 3%of cable operator gross revenue as well as 3% from the
new State franchise holders' gross revenues, Section 622(b) of the Cable Act of 1984
and PUC Section 5840.
Prepared by:
Kathryn Vernez, Assistant to the City Manager for Community and Government
Relations
Joseph Lawrence, Assistant City Attorney
~
athryn Ve nez
Assistant to the City Manager for
Community & Government Relations
4