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CITY COUNCIL AGENDA ITEM 3A STAFF ORIGINATOR: Jeff Karlson, City Administrator MEETING DATE: December 28, 2015 TOPIC: Consider 2nd Reading and Adoption of Ordinance No. 13-15, CenturyLink Franchise Ordinance VOTE REQUIRED: 3/5 INTRODUCTION Staff is requesting City Council consideration of a second reading of Ordinance No. 13-15, approving a Cable Television Franchise with CenturyLink. The first reading was approved December 14, 2015. BACKGROUND On February 12, 2015, the North Metro Telecommunications Commission ("NMTC") received a cable franchise application covering each member city from CenturyLink. Comcast Cable currently has a non-exclusive franchise agreement with the City, which means the City Council may grant additional franchises to provide cable service in the City. A public hearing on the application was held on February 18, 2015. Following the public hearing, staff prepared a Staff Report ("Report"), which recommended that the NMTC receive and file the Report and direct staff to negotiate a cable franchise with CenturyLink. On April 15, 2015, the NMTC adopted the recommendation. The NMTC's outside attorney, Mike Bradley, Bradley Hagen & Gullikson, LLC, in consultation with NMTC Executive Director, Heidi Arnson, engaged in cable franchise negotiations with CenturyLink. The attached cable franchise is the product of those negotiations. In reviewing the CenturyLink cable franchise, there are two primary issues to consider. The first is whether federal law preempts Minnesota's 5 -Year Build Statute. Minnesota Statues Section 238.084, subdivision 1(m) requires all initial franchises to have a provision that requires a cable operator build out its cable system at a rate of 50 plant miles per year and its cable system be substantially complete within 5 years. As the Report indicated, CenturyLink claims that this 5 - Year Build Statute is an unlawful barrier to entry and is preempted by federal law and an FCC decision referred to as the 621 Order. The Report also indicated that there is no case law in Minnesota directly addressing preemption of the 5 -Year Build Statute. The Report concluded that CenturyLink has a good faith basis on its preemption claim and is willing to indemnify the City related to any litigation surrounding the grant of a franchise to CenturyLink. CenturyLink refused to incorporate the language of the 5 -Year Build Statute in the proposed franchise, based on its preemption argument. As described below, the proposed CenturyLink franchise ordinance