HomeMy WebLinkAboutAgenda Statement 1987/07/21 Item 12 COUNCIL AGENDA STATEMENT
Item 12
Meeting Date 7/21/87
1 , _,i TITLE: Resolution ,/3 7- Of Intention to Grant a Cable Franchise to Ultronics,
Inc. and Setting a Public Hearing to Consider the Proposed Franchise
on August 18 , 1987
SUBMITTED BY: Assistant City Managerd (4/5ths Vote: Yes No x )
REVIEWED BY: City Manager
Ultronics, Inc. , a company located in La Mesa, California, has submitted a
request to the City seeking a cable t.v. franchise within the City of Chula
Vista. Mr. Martin Altbaum, a local businessman, is the president of Ultronics.
Article 12 of the City Charter prescribes the procedure the City Council must
follow whenever considering granting a franchise to any person, firm or corporation
furnishing the City or its inhabitants various utilities or services. That
charter procedure requires, as a first step in the process, the adoption of
a resolution of intention to hold a public hearing on the proposed franchise.
RECOMMENDATION: Adopt resolution setting public hearing for August 18 , 1987.
DISCUSSION:
Ultronics, Inc. , currently has installed a cable system at the Woodlawn apartments
located at 5535 Woodlawn Avenue. The system is comprised of two satellite
dishes and provides service to a 152 unit complex. The company would intend
to modify the existing equipment with application equipment, so they can
service other residents within the City. The current operation technically
violates the City Charter because of the absence of a franchise with the City,
but in deference to Mr. Altbaum and Ultronics, Inc. , his request for consideration
of the franchise was filed with the City early this calendar year, and his
request for a franchise has not been processed in a timely fashion.
The resolution of intention must prescribe, in addition to the date of the
public hearing, the name of the proposed grantee, the character of the franchise
and the terms and conditions upon which it is proposed to be granted. In
this instance, the proposed franchise will contain all the same terms and
conditions as the Cox Cable franchise, with the exception that the proposed
Ultronics franchise would prescribe a five percent (5%) franchise fee against
all gross receipts of the company, rather than the 3% fee currently in place
with Cox Cable T.V. , and its term would be for twenty three (23) years rather
than the twenty five (25) years provided in the Cox agreement. Providing
for a twenty three year agreement, the Ultronics franchise would expire approximately
at the same time as the Cox franchise (2010) .
The 5% franchise fee proposed for the Ultronics franchise complies with comprehensive
federal cable legislation adopted in 1984, whereby the maximum franchise fee
allowed is 5%. When the Cox franchise was modified in 1984, the City was
Form A-113 (Rev. 11/79)
Page 2, Item 12
Meeting Date 7/21/87
receiving only 3% on the basic service revenue and during the negotiation
process the 3% franchise fee was extended to include all pay service as well ,
with the City deriving an estimated additional revenue of about $70,000 per
year. The City would have liked to have increased the franchise fee on the
Cox franchise during this recent negotiation process, but we had little leverage
to make this materialize at that time. Most jurisdictions given the ability
when granting a new franchise are or will seek the maximum allowable under
federal legislation. We therefore feel it is appropriate, if this franchise
is granted, that it provide for the 5% franchise fee, while one might argue
the franchise should be the same as Cox' s.
FISCAL IMPACT:
If this franchise is approved, the City can anticipate receiving 5% of the
income on all services provided in the City. Initially, not more than $8,000-$9,000
per year will be derived from the Woodlawn apartments but, as additional facilities
are added, that figure should grow. It should be noted, however, Ultronics
will be a competing force with Cox Cable T.V. and, as was the case with Woodlawn
Apartments, the Ultronics system merely replaced Cox as the previous provider
so that any City revenue gained from Ultronics simply replaces that lost revenue
from Cox Cable.
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