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HomeMy WebLinkAbout2015-001 Council Resolution• CITY OF LINO LAKES RESOLUTION NO. 15-01 CONDITIONALLY GRANTING CONSENT TO THE TRANSFER OF CONTROL OF CABLE TELEVISION FRANCHISE AND CABLE TELEVISION SYSTEM FROM COMCAST CORPORATION TO GREATLAND CONNECTIONS, INC. WHEREAS. the North Metro Telecommunications Commission (`NMTC-). a Joint Powers Commission comprised of the municipalities of Blaine. Centerville. Circle Pines. Ham Lake. Lexington. Lino Lakes and Spring Lake Park. Minnesota ("Member Cities"):: and WHEREAS, Comcast of Minnesota. Inc.. ("Franchisee") holds a franchise (the 'Franchise") with each of the Member Cities to operate a cable television system (the '`System'') in each respective member city pursuant to a franchise ordinance (the "Franchise Ordinance'"); and WHEREAS, Section 10.5.1 of the Franchise Ordinance requires the City's prior consent to a fundamental corporate change. including a merger or a change in Franchisees parent corporation: and WHEREAS, the NMTCs Joint Powers Agreement includes the power to administer and enforce the Franchise; and WHEREAS. after a series of transfers. Comcast of Minnesota. Inc.. was approved by the NMTC and/or the Member Cities as the Franchise holder, pursuant to prior transfer resolutions (the "Prior Transfer Resolutions"). The Prior Transfer Resolutions. the Franchise. the Franchise Ordinance. and the Franchise Settlement Agreement together with any applicable resolutions. codes. ordinances. acceptances. acknowledgments. guarantees. amendments. memoranda of understanding, social contracts and agreements. are collectively referred to as the 'Franchise Documents:" and WHEREAS. Comcast of Minnesota. Inc.. is an indirect. wholly-owned subsidiary of Comcast Corporation (`Comcast); and WHEREAS. Comcast. as the ultimate parent corporation of Franchisee. has agreed to divest and transfer the Franchise and Cable System to Midwest Cable, Inc.. in a process described in the Transfer Application (the "Proposed Transaction'"): and WHEREAS, immediately following the closing of the Proposed Transaction. Midwest Cable. Inc.. will be renamed GreatLand Connections. Inc.. and. for the purposes of this Resolution. the transfer applicant will be referred to as '`GreatLand'' throughout; and WHEREAS. Comcast filed a Federal Communications Commission Form 394 with the NMTC on June 18. 2014. together with certain attached materials, which documents more fully describe the Proposed Transaction and which documents. with their attachments, contain certain promises. conditions. representations and warranties (the "Transfer Application"): and • • • WHEREAS, under the Proposed Transaction. the Franchise and Cable System will stay with Franchisee, and its ultimate parent company will be GreatLand: and WHEREAS, under the Proposed Transaction. the ultimate ownership and control of the Franchisee and the System will change. and it requires the prior written approval of the Member Cities: and WHEREAS. Comcast. through its subsidiaries. provided written responses to some of the data requests issued by the NMTC, including directing the representatives of the NMTC to publicly filed and available information, and information posted to Comcast Corporation and other websites (the "Data Request Responses"); and WHEREAS, the NMTC reviewed the Transfer Application and considered all applicable and relevant factors: and WHEREAS, in reliance upon the representations made by and on behalf of Comcast of Minnesota. Inc.. Comcast. and GreatLand. to the NMTC. the NMTC recommended that the Member Cities grant consent to the Proposed Transaction. so long as those representations are complete and accurate: and WHEREAS, the City's approval of the Proposed Transaction is therefore appropriate if the Franchisee will continue to be responsible for all acts and omissions, known and unknown. under the Franchise Documents and applicable law for all purposes. including (but not limited to) franchise renewal. NOW, THEREFORE, BE IT RESOLVED by the City_ Council of the City of Lino Lakes as follows: Section 1. The City consents to and approves of the Transfer Application in accordance with the Franchise Ordinance. subject to the following conditions: Neither the Franchise. nor any control thereof. nor the System. nor any part of the System located in any municipal public rights-of-way in the City or on municipal property, shall be assigned or transferred. in whole or in part. without filing a written application with the NMTC and obtaining prior written approval of such transfer or assignment. but only to the extent required by applicable law. 1.2 The City's approval of the Transfer Application is made without prejudice to. or waiver ofits and/or the NMTC's right to fully investigate and consider during any future franchise renewal process: (i) Franchisee's financial. technical. and legal qualifications: (ii) Franchisee's compliance with the Franchise Documents, except as set forth in the Franchise Settlement Agreement: and (iii) any other lawful, relevant considerations. 1.3 The approval of the Transfer Application is made without prejudice to, or waiver of, any right to consider or raise claims based on Franchisee's defaults, any failure to provide • • • reasonable service in light of the community's needs, or any failure to comply with the terms and conditions of the Franchise Documents. or with applicable law. except as set forth in the Franchise Settlement Agreement. 1.4 Subject to the Franchise Settlement Agreement. the NMTC and the City waive none of their rights with respect to the Franchisee's compliance with the terms. conditions. requirements and obligations set forth in the Franchise Documents and in applicable law. The City's approval of the Transfer Application shall in no way be deemed a representation by the City or the NMTC that the Franchisee is in compliance with all of its obligations under the Franchise Documents and applicable law. 1.5 After the Proposed Transaction, GreatLand and Franchisee will be bound by all the commitments. duties. and obligations. present and continuing. embodied in the Franchise Documents and applicable law. The Proposed Transaction will have no effect on these obligations. 1.6 GreatLand shall provide an executed written certification in the form attached hereto within thirty (30) days after consummation of the Proposed Transaction. guarantying the full performance of the Franchisee. GreatLand shall provide the NMTC and the City with written notification that the Proposed Transaction closed within ten (10) days after the closing: 1.7 GreatLand will comply with any and all conditions or requirements applicable to GreatLand set forth in all approvals granted by federal agencies with respect to the Proposed Transaction and Transfer Application (including any conditions with respect to programming agreements), such conditions or requirements to be exclusively enforced at the federal level; 1.8 GreatLand shall provide a written guarantee in the form attached hereto within thirty (30) days of the effective date of this Resolution specifying that subscriber rates and charges in the City will not increase as a result of the costs of the Proposed Transaction; 1.9 After the Proposed Transaction is consummated, GreatLand and Franchisee will continue to be responsible for all past acts and omissions. known and unknown. under the Franchise Documents and applicable law for all purposes. including (but not limited to) Franchise renewal to the same extent and in the same manner as before the Proposed Transaction. subject to the terms of the Franchise Settlement Agreement. 1.10 Nothing in this Resolution amends or alters the Franchise Documents or any requirements therein in any way. and all provisions of the Franchise Documents remain in full force and effect and are enforceable in accordance with their terms and with applicable law. The Proposed Transaction shall not permit GreatLand and Franchisee to take any position or exercise any right with respect to the Franchise Documents and the relationship thereby established with the NMTC and the City that could not have been exercised prior • • • to the Proposed Transaction. 1.12 GreatLand assures that it will cause to be made available adequate financial resources to allow Franchisee to meet its obligations under the Franchise Documents. including without limitation operational and customer service requirements. 1.13 The City is not waiving anv rights it may have to require franchise fee payments on present and future services delivered by GreatLand or its subsidiaries and affiliates via the cable system; 1.14 The City is not waiving any right it may have related to anv net neutrality, open access. and information services issues; 1.15 Receipt of any and all state and federal approvals and authorizations; 1.16 Actual closing of the Proposed Transaction consistent with the transfer application: and Section 2. If any of the conditions or requirements specified in this Resolution are not satisfied. then the City's consent to. and approval of. the Transfer Application and Proposed Transaction is hereby DENIED and void as of the date hereof. Section 3. If any of the written representations made to the NMTC in the Transfer Application proceeding by (i) Comcast of Minnesota. Inc.. (ii) Comcast or (iii) GreatLand. (i)) any subsidiary or representative of the foregoing prove to be materially incomplete. untrue or inaccurate in any material respect. it shall be deemed a material breach of the Franchise Documents and applicable law. and subject to the remedies contained in the Franchise Documents and applicable law. Section 4. This Resolution shall not be construed to grant or imply the City's consent to any other transfer or assignment of the Franchises or any other transaction that may require the City's consent under the Franchise Ordinances or applicable law. The City reserves all its rights with regard to an such transactions. Section 5. This Resolution is a final decision on the Transfer Application within the meaning of 47 U.S.C. § 537. Section 6. The transfer of control of the Franchise from Comcast to GreatLand shall not take effect until the consummation of the Proposed Transaction. Section 7. This Resolution shall be effective immediately upon its adoption by the City. • • • Adopted by the Council of the Cit) of Lino Lakes this 12th day of January. 2015. The motion for the adoption of the foregoing resolution was introduced by Council Member Stoesz and was duly seconded by Council MemberRaffertyand upon vote being taken thereon. the following voted in favor thereof: Stoesz, Rafferty, Kusterman, Reinert The following voted against same: none (Absent - Roeser) ATTEST: Julianre Bartell, City Clerk Teff Reinert. a� o • • • Attachment 1 Form of Guaranty of Performance GUARANTY OF PERFORMANCE GreatLand Connections. Inc.. as the ultimate parent entity of Comcast of Minnesota. Inc.. the Franchisee. upon closing of the proposed transaction (as defined in City of Resolution No. ) certifies that it has sufficient financial resources and will at all times make available all necessary financial resources to ensure that the Franchisee has the capability to operate and maintain the System in accordance with the Franchise and applicable laws. regulations codes and standards. and to fully comply at all times with the Franchise. and applicable laws. regulations. codes and standards and guarantees such performance. GreatLand Connections. Inc.. agrees that any failure to adhere to this guaranty shall be deemed a violation of the Franchise held by the Franchisee. EXECUTED as of GreatLand Connections, Inc. By: Name: Title: Address: Attachment 2 Form of Guaranty Regarding Rates GUARANTY REGARDING RATES GreatLand Connections. Inc.. upon closing of the proposed transaction (as defined in City of Resolution No. ). guarantees that rates and charges for cable service offered by . the Franchisee in the NMTC will not increase as a result of the cost of the proposed transaction. GreatLand Connections. Inc.. agrees that any failure to adhere to this guaranty shall be deemed a violation of the Franchise held by the Franchisee. EXECUTED as of GreatLand Connections, Inc., By: Name: Title: Address: • • • • CITY COUNCIL AGENDA ITEM 3A STAFF ORIGINATOR: Jeff Karlson MEETING DATE: January 12. 2015 TOPIC: Cable TV Franchise Settlement Agreement VOTE REQUIRED: 3/5 BACKGROUND The Cable Franchise between Comcast and the City is presently set to expire in November. 2017. Comcast recently sent correspondence requesting the franchise be renewed. Comcast also recently filed an application with the North Metro Telecommunications Commission (the "NMTC") requesting that its franchise be transferred to Midwest Cable. There also remains pending certain franchise compliance issues and certain needs and interests of the NMTC that need to be addressed. Mike Bradley. attorney for the NMTC. in consultation with NMTC leadership, negotiated a Franchise Settlement Agreement with Comcast that addresses several of these issues. The following are some highlights of the Agreement: • Cable Franchise to be extended through December 31. 2020. This will allow the NMTC to avoid the costs of a typically expensive renewal process for another 3 years. allowing it to focus its resources on its member cities' needs. • A MOU from 1996 will also be extended through December 31. 2020. The MOU contains a financial commitment from Comcast for the support of the NMTC. It results in approximately $800,000 of funding per year. • In the event the Franchise rolls over past the expiration date. the MOU will do the same. This helps to ensure the Member Cities that the funding for the NMTC will not end until a renewed franchise is agreed upon. • NMTC upon 90 days' notice will receive one high definition (HD) channel (replacing a standard definition (SD) channel) with provisions for channel placement and quality. NMTC currently has no HD channels. This will give HD subscriber's access to NMTC programming with the best signal quality. • NMTC will have the option after 12 months to replace an additional SD channel with an HD channel, giving the NMTC 2 HD channels and 4 SD channels. • NMTC will have access to the Electronic Programming Guide. which will allow viewers to view programming information of the NMTC across multiple platforms. • • • • Comcast will pay NMTC approximately $31.000 for a franchise fee underpayment. NMTC benefitted from findings by another of Mr. Bradley's clients without having to expend any additional resources on a financial expert. • Comcast will provide 3 digital converters to all municipal locations receiving complementary drops and outlets. Comcast will also provide an additional 30 HD boxes to be placed at municipal locations at NMTC's discretion. This should cover all of the outlets at municipal locations currently receiving complementary service. • Small refund of approximately $20.000 total to cable subscribers. • Payment of legal fees associated with the transfer application. • Comcast will be relieved of its commitment to provide Universal PEG Service in the future. but existing Universal PEG Service subscribers will be grandfathered. There are only 81 such subscribers and Comcast recovers the cost of providing the service out of the PEG fee currently'. • Consent to the Transfer Application. Comcast has submitted an application requesting that the NMTC approve a transfer of the Comcast franchise to Midwest Cable. Midwest Cable will do business as GreatLand. The attached resolution was negotiated with both Comcast and GreatLand. The resolution lists several contingencies. including the actual closing of the proposed transaction. receipt of necessary federal approvals, executing a guaranty' of perfonrnance and executing a guaranty regarding rates. Mike Bradley has prepared a Cable Television Franchise Ordinance Amendment for the City'. It extends the existing Cable Television Franchise Ordinance through December 31. 2020 and updates the PEG channel commitments of Comcast consistent with the Franchise Settlement Agreement. 11 also requires Comcast's acceptance. RECOMMENDATION The staff recommendation is to: (1) approve Resolution No. 15-01. Granting Conditional Transfer from Comcast to GreatLand Connections, Inc.: and (2) approve First Reading of Ordinance No. 01-15. Cable Television Franchise Ordinance Amendment. ATTACHMENTS Resolution No. 1-01. Conditional Transfer Approval Resolution Ordinance No. 01-15. Franchise Amendment Ordinance