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HomeMy WebLinkAboutAgenda Packet 1991/03/21 . . . MINUTES OF A SPECIAL MEETING OF THE CIlY COUNCIL OF THE CIlY OF CHULA VISTA, CALIFORNIA Thursday, March 21, 1991 5:55 p.m. council Conference Room ci tv Hall CALL TO ORDER 1. ROLL CALL MEMBERS PRESENT: Mayor Pro Tempore Moore; Couhcilmembers Malcolm, Rindone and Nader MEMBERS ABSENT: None ~ City ALSO PRESENT: City Attorney Manager Thomson Deputy Boogaard; City Attorney Boogaard reported that at the Tuesday, March 19, 1991, Council meeting, Council directed him to evaluate the request from Ultronics to consider a moratorium on trench access fees. This item was not placed on an agenda. As a result, in order for the Council to discuss this item at this time, it is necessary that the Council make one of the following two findings: (1) it is either an emergency situation requiring a unanimous vote or (2) the matter arose after the preparation of the agenda requiring a two-thirds vote. MOTION MS (Malcolm/Nader) find that the need to take action arose subsequent to the agenda being posted. Councilman Rindone noted concern with the motion stating he believed this item was discussed previously at the City Council meeting. He believes the reason for considering the item would fall more into the emergency category. Mr. Altbaum of Ultronics stated there was a court decision that he and the city were informed of after the agenda was posted. In addition, there is a letter from McMillin Development demanding a signature on a trench access agreement by March 22, or he will be denied access to the balance of Rancho del Rey. VOTE ON THE MOTION The motion carried. (The vote was 3-1; Councilman Rindone voting no.) 1. ORDINANCE A PROHIBITING THE CHARGING OF FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES I-I ,- ~;W {- ':-~-';' ;~:- .-'- \ Citv Council Minutes' -2- March 21. 1991 --I . . 2. ORDINANCE A-I PROHIBITING, AS AN URGENCY MATTER, THE CHARGING OF FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES 3. ORDINANCE B LIMITING THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES 4. ORDINANCE B-1 LIMITING, AS AN URGENCY MATTER, THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES Mr. Boogaard stated he presented an agenda report that proposes four ordinances. Two of the ordinances provide for prohibiting charging trench access fees (A and A-I); and two of the ordinances provide for a limited trench access fee (B and B-1). He referred to a report he presented to Council on January 15, 1991 which set forth his legal concerns with regard to this matter. The Council direction at that time was to evaluate Mr. ~ Altbaum's proposed indemnity agreement, financial strength, choice of attorney, and to report back. Mr. Boogaard stated the city Attorney's Office drafted a proposed indemnity agreement differing from the agreement submitted by Mr. Altbaum's attorney. He referred to ten points highlighting the differences between the two agreements. He recommended that if the Council, given consideration to the public policy issues involved in a prohibition of trench access fees, decides that is a good public policy to adopt, then the Council could adopt it through the following course of action: receive the signed indemnity agreement, the guaranteed bond, and then enact the ordinance. Mr. Altbaum stated the indemnity agreement proposed by the City Attorney is very strict and presupposes that there is a tremendous amount of litigation, risk and damages to the City of Chula Vista. Mr. Altbaum stated he has added language to his indemnity agreement that a court action be pursued immediately by the City which would be paid for by his firm to find out whether or not the ordinance is legal. He is offering a $200,000 bond which should be more than adequate for this action. Mayor Pro Tempore Moore commented that indemni ty issue and he is not consideration of this issue. he has a concern with the satisfied with rushing --, :. . . Citv Council Minutes -3- March 21. 1991 Mr. Altbaum stated he is proposing that the ordinance be put on first reading tonight and that upon presentation of the $200,000 bond that the second reading be-done. Craig Beam, attorney representing EastLake Development, 110 W. A street, San Diego, CA 92101, commented that the Cable Act of 1984 assures trench access and there is not an issue of access being denied in this case. Rather, it is a question of cost associated with access. In addition, the Cable Act requires cable operators pay compensation to developers with respect to trenching. There are existing agreements between the cable operators in Chula Vista and various developers. In his opinion, what is being proposed is that those contracts be abrogated by an ordinance. Mr. Beam further commented that one cable company is asking for this particular ordinance and tnere has not been any indication that the other cable companies would abrogate their existing understandings with EastLake. Therefore, it is one cable company that is seeking a cost advantage associated with the ordinance if it should go through. Should the City adopt the ordinance and it results in a cost advantage to Ultronics, the cost advantage to Ultronics does not go to the subscribers for the reason that Chula vista cannot regulate the rates. It becomes additional profit to the cable operator seeking that cost advantage. Mr. Beam added that the present costs being charged at this time are less than the cost being borne by the developer. Ed Elliott, representing McMillin Development, commented with regard to the agreement required from Mr. Al tbaum by March 22. Mr. Elliott is trying to respond to a condition on a Subdivision Map. The condition is that it is necessary to have an agreement with the franchise television operators within the City that want to serve that subdivision in the future. The condition also requires that it be approved by the City Attorney prior to Final Map recordation. That procedure is well underway. He is not asking for money at this time; he is only trying to satisfy the condition. Ms. Arlene Prater, attorney representing McMillin, 501 W. Broadway, San Diego, commented that McMillin has been involved in two lawsuits with Ultronics, one in Federal Court and one in state Court. In both cases, McMillin has prevailed in upholding the agreements by which McMillin has imposed the trench access fees. The first case was filed by Ultronics in February 1988 challenging the agreement and contending that they had a right to free access to the trench. Ms. Prater reported that the Federal Court of Appeals stated that the Federal Cable Act requires that the cost of installation, construction, operation, etc. be borne by the cable operator, subscriber, or both. No cable company had a right to free trench access and the developer had a right, under the Federal Cable Act, to collect their costs. A State I-~ - citv council Minutes -4- March 21. 1991 court action was filed on behalf of McMillin with regard to an agreement entered into with Ultronics in 1988. The court found that the agreement was proper and found that the amount imposed by McMillin for the trench fee was reasonable and granted judgement. Ms. Prater further stated that they urge the Council not to adopt any ordinance. Mr. Boogaard stated that the legal risks cited are the same that he pointed out in his January 15 memo which is the reason why he recommended against the adoption of an ordinance. Councilman Malcolm questioned if McMillin Development charges trench fees anywhere else in the County. Mr. Elliott responded they did collect fees in their poway development. Councilman Malcolm asked if it was McMillin's policy to charge all cable operators a trench access fee throughout the County on all subdivisions. Mr. Elliott responded that this is correct because they have moved to wiring their own houses instead of having the cable contractor wire the houses. Don Channel, representing Cox Cable, 5159 Federal Boulevard, San Diego, responded to questions. He stated Cox Cable has paid trench access fees in poway and they have paid other developers ~ in other parts of the County for trench fees. They have done this for a number of years. They also have received free trench access in some cases. MOTION Mayor Pro Tempore Moore moved that the Council not consider proposed ordinances A-1 and B-1 (urgency items). The motion died for lack of a second. MOTION MS (Nader/Malcolm) moved that Ordinance A be placed on first reading. Councilman Nader pointed out there would be a period of time before the Ordinance would be considered for its second reading in which there will be more time for discussion. The City Attorney would be able to determine if the issues of concern can be worked out. By placing the ordinance on first reading, it does not mean the Council is bound to passing it on the second reading. Responding to questions of Councilman Rindone, Mr. Boogaard stated the proposed ordinance would only operate for new trench access fees charged. The major sense of urgency, as indicated by Mr. Altbaum, was the fact that the trench access agreement needs to be submitted by tomorrow. ~ :. . . Citv Council Minutes -5- March 21. 1991 Councilman Rindone commented the Council would have to define a public policy has to how that would benefit the City for the purpose of introducing an ordinance. He does not think the City Council has had a discussion on this other than the confidential memo of the City Attorney. Councilman Rindone further stated that Attorney Craig Beam indicated that not all indemnities are enforceable. Mr. Boogaard responded that to the extent they violate public policy they have been held to be unenforceable but he put as much protective language into the ordinance as he could. Councilman Rindone stated the city Attorney's recommendation on the confidential memo prepared for Council this evening also indicated the city Attorney would not support or would not recommend the introduction of any ordinance unless there was an agreement to the terms of the indemnity agreement as proposed. Therefore, this motion would be contrary to the recommendation of the city Attorney. Mr. Boogaard stated this is correct and that he recommended receiving the signed indemnity agreement before the introduction of the ordinance. Councilman Nader stated there are several points of discussion he would want to raise before final adoption of the ordinance. The reason he put the motion on the floor is that it allows that discussion to take place free of time constraints before the ordinance goes into effect. He would not vote in favor of the second reading unless there is a satisfactory indemnity agreement signed and some of the other points are answered. This motion keeps the issue alive until that time. VOTE ON THE MOTION The motion failed. (The vote was 2-2; Mayor Pro Tempore Moore voting no and Councilman Rindone voting no.) ADJOURNMENT at 6:35 p.m. to the regular meeting of Tuesday, April 2, 1991 at 6:00 p.m. in the City Council Chambers ~~/ rO~.v~ Sandra Chase Secretary to the Redevelopment Agency /-3 "'\ . . . Council Agenda Report Item: Meeting Date: March 21, 1991 Item Title: The following ordinances are presented in the alternative: 1. Ordinance A - PROHIBITING THE CHARGING OF FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES (Introduce, 3 Affirmative Votes Required). 2. Ordinance A-1 - PROHIBITING, AS AN URGENCY MATTER, THE CHARGING OF FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES (Introduce and Adopt, 4 Affirmative Votes Required). 3. Ordinance B - LIMITING THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. (Introduce, 3 Affirmative Votes Required). 4. Ordinance B-1 - LIMITING, AS AN URGENCY MATTER, THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. (Introduce and Adopt, 4 Affirmative Votes Required) Submitted by: Bruce M. Boogaard, City Attorney 4/sths Vote: Varies. See specific ordinance. Recommendation: If the Council finds that a strong public purpose is served by adopting one of the proposed ordinances independent of the fact that Ultronics is proposing to indemnify the City, then they should adopt one of the ordinances attached as Exhibit A, explained below. otherwise, they should not adopt any ordinance. If the Council is inclined to adopt one of the attached ordinances, it is my recommendation that they not do so until the Indemnity Agreement attached as Exhibit B has been signed, and a bond has been issued to the favor of the City, its councilpersons cab1320.wp March 19, 1991 A113 re Trench Access Fee page 1 I-If . " , ana officers in a form satisfactory to the City Attorney. Boards and Commissions Recommendation: None. McMillan, Eastlake, Sunbow, other developers, and all cable providers have been notified. Discussion: Backqround: At the City Council meeting of March 19, 1991, during Oral Communications, Mr. Altbaum renewed his request for a law prohibiting residential developers from imposing a fee as a condition of access to the main utility trench ("Trench Access Fee Prohibition" or alternatively "Prohibition"). This matter was previously before the Council on January 15, 1991 under the cover of an agenda bill, a copy of which is attached as Exhibit C, wherein the City Attorney recommended against the adoption of any form of four versions of a Prohibition for a variety of reasons provided therein, one of which included the adverse cost risks to the City. It is recommended that you review said report at this time. The concerns expressed therein are incorporated herein by reference. At the meeting of January 15th, Mr. Altbaum verbally offered the City an indemnity on the condition that the City use his choice of attorney. At that offer, the Council directed the City Attorney to evaluate the financial standing of Mr. Altbaum and choice of attorney, and if acceptable, return to the City Council with his report and recommendation. This report is intended to address that directive. cabl320.wp March 19, 1991 Al13 re Trench Access Fee Page 2 /-5 , , Ordinance Choices. The four alternative ordinances are 15, 1991 report attached as Exhibit synopsis of the four choices: Variable Features. presented in the January The following is a brief Do you want the Ordinance adopted as a regular ord- inance, effective 30 days after second reading? Do you want the Ordinance adopted as an urgency ord- inance, effective immediately? I Do you want a total prohibition of any fee? Adopt Ordinance A. Adopt Ordinance A-1. Do you want to limit the maximum charge to $.50 per linear foot? Adopt Ordinance B. Adopt Ordinance B-1. Common Features. Except for the foregoing variables, all ordinances have the following common features: A. The ordinance prohibits everybody, not just developers, from charging a trench access fee. B. The prohibition protects only cable operators franchised by the city Council, not operators who are operating without a City-issued franchise. C. The prohibition applies only to charging for access to the "Main utility Trench". If a dedicated trench is required to house only cable, or limited utility trench is dug that does not house electricity and gas utilities, the developer is not precluded from charging for access to such limited utility trench. D. All ordinances provide for a private cause of action, so that an aggrieved cable operator can enforce the provisions of the ordinance by civil action, if they cabl320.wp March 19, 1991 A113 re Trench Access Fee Page 3 J-h , " , , desire. ' Indemnitv Aareement. The City Attorney's Offic~ has drafted a proposed indemnity aqreement attached as Exhibit B. It achieves the fo110winq important objectives, as contrasted to the indemnity proposed by Mr. A1tbaum, a copy of which is attached as Exhibit D. 1. Not only is the City indemnified, but so also are its elected officials, appointed officers, employees and other aqents ("Indemnitees"). 2. Not only is U1tronics indemnifyinq the Indemnitees, but so also is Chu1a vista Cable, and Mr. A1tbaum. 3. The indemnity not only applies to costs of defense of 1itiqation, but also to any adverse judqments, attorney fees award, cost orders, etc. 4. The aqreement qives the Council the discretion to adopt any type of trench access fee requ1ation and have the indemnity apply, not a specific one, but at the same time, assures the City that if any of the above four are adopted, the indemnity will app1y.2 5. The Indemnity particularly indemnity. specifies the losses with which I am concerned, without 1imitinq the 6. The City is not required to adopt the ordinance by the aqreement, and can modify it, or repeal it entirely without loss of the indemnity durinq the period of time the ordinance was effect. 7. The Indemnity applies not just to the act of 1. Mr. A1tbaum submitted a proposed ordinance which proposed to limit the riqht of the private cause of action to actions seekinq declaratory and/or injunctive relief, but not monetary damaqes. In a conversation with his attorney, it was requested that chanqe be eliminated. with the elimination, there is no substantial difference between the ordinance proposed by Mr. A1tbaum and Ordinance A-l submitted herewith. Therefore, Mr. A1tbaum's proposed ordinance has not been attached. 2. This is more consistent with the concept that the City should not contract for the adoption of ordinances. cab1320.wp March 19, 1991 Al13 re Trench Access Fee paqe 4 1-1- , , enacting the ordinance, but also to the act of enforcing the ordinance. 8. The indemnity is good for 5 years. 9. The Indemnitors are required to performance under the agreement with or bond in $200,000 increments.3 10. The Indemnitors are required to provide a legal defense to Indemnitees by the law firm of Adams, Duque & Hazeltine, or other comparable law firm, as approved by the City Attorney. secure their a cash deposit Collateral Considerations. As a collateral matter, Chula vista Cable is in default in the payment of franchise fees in excess of $5,000 including penalties, and has asserted, as a defense or offset, that the City is responsible to pay its possessory interest taxes for the issuance of the franchise. The Council may wish to pursue this matter separately, or impose as a further condition of consideration o~a Prohibition, the payment of all franchise fees and waiver of any claim of offset. Conclusion: I am sure that the Council wholly adopts the following policy, and accordingly it should go without saying. However, to the extent that this report constitutes a public record of my departmental policies, I would like to state my position for the record on the philosophical issue involved in this matter: This Office believes that the enactment of legislation should be done to advance a legitimate public purpose or governmental interest, and not simply because we are indemnified from the consequences of doing so. A good public purpose can be advanced by this legislation, but it is appropriate that each Councilperson voting to enact such legislation individually believe that the public purpose is so advanced. 3. Except for a information has been the absence of a information. proposal received bond can to offer a bond, no financial and the strength of an indemnity in not be evaluated without such cab1320.wp March 19, 1991 Al13 re Trench Access Fee Page 5 1-1 J '; , , The Indemnity Agreement requires that the City be provided a bond guarantying the indemnity. If the Indemnity Agreement is acceptable to the Council and to the Indemnitors, Mr. Altbaum should be so advised to provide the bond pursuant to the Indemnity Agreement. only after the Indemnity Agreement has been properly executed and notarized, and the bond has been provided should the Council consider the enactment of one of the four ordinances provided, and then only if they believe that an important public purpose is served. Fiscal Imoact. Indefinable. cab1320.wp March 19, 1991 Al13 re Trench Access Fee Page 6 1-'1 I J ~ . . Exhibit A: Exhibit B: Exhibit c: Exhibit 0: cabl320.wp March 19, 1991 Exhibit List to Council Agenda statement Four Ordinances Offered in the Alternative. Ord. A Ord. A-1 Ord. B Ord. B-1 Full Prohibition. Full Prohibition on an Urgency Basis. Limited Prohibition ($.50 I linear foot). Limited Prohibition on an Urgency Basis. Indemnity Agreement. January 15, 1991 Council Agenda Report. Altbaum's Proposed Indemnity Agreement. Al13 re Trench Access Fee Page 7 /-/0 ORDINANCE NO. A ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PROHIBITING THE CHARGING FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the city of Chula vista have recently adopted the practice of charging Chula vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main utility Trench") prepatory to providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, in order to place utilites underground in the Main utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City'S authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the fair and proper cost distribution policy choice is one in which the cost of the trench is spread to the home buyer benefitting by the existence of the trench and not the cable subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the city of Chula Vista. As a result of that, the City Council hereby finds and determines that the Main utility Trench is a municipal asset and is therefore subject to the control and ownership of the city. It is not an asset from which persons, other than the City, should benefit; orda.wp March 19, 1991 Prohibition Against Trench Access Fees Page 1 EX~\ 8 p' /-11 t? - L.! ot~~1L<I , , . WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the City Council finds a purpose in allowing its residents to franchised cable operators; and, legitimate governmental have freer access to WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the City Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; and, WHEREAS, the city Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the city and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the City Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: section 1. Main utility Trench Access Fees Prohibited. No individual, partnership, firm, corporation, or trust may charge a community antenna television ("CATV") cable provider authorized to provide CATV service within the city of Chula vista by the City Council ("Cable Operator") any fee for the right of access to, or the right to lay cable conduit or cable in, a Main Utility Trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. Section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce such conditions, but is not compelled to do so. hay eaase af aet-leR Baall iRell:ilse reaseftasle at.t!.erfley' s fees BRa ees'ts orda.wp March 19, 1991 Prohibition Against Trench Access Fees Page 2 I -/:2. , , awarded ~e ~Be ,re~ailiHg party. ' Section 3. Effective Date. This ordinance shall take and be in full force and effect on the thirtieth path) day from "and after the adoption hereof by three affirmative votes of the City Council. Presented by: Lyman Christopher Finance Director Approved as to form by: Bruce M. Boogaard City Attorney orda.wp March 19, 1991 Prohibition Against Trench Access Fees Page 3 /'13 , i) , > , Endnotes 1. The inclusion of this paragraph is a close call, but it is the recommendation of this office to exclude it on the basis that courts have typically implied a reciprocity to attorneys fees, and that it might be the basis for some future court awarding attorneys fees against the City in a test of the ordinances validity. orda.wp March 19, 1991 Prohibition Against Trench Access Fees Page 4 /-1" . ORDINANCE NO. A-l ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PROHIBITING, AS AN URGENCY MATTER, THE CHARGING FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have recently adopted the practice of charging Chula Vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main utility Trench") prepatory to providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, in order to place utilites underground in the Main utility Trench; and, WHEREAS, the Charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City's authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the fair and proper cost distribution policy choice is one in which the cost of the trench is spread to the home buyer benefitting by the existence of the trench and not the cable subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the City of Chula vista. As a result of that, the city Council hereby finds and determines that the Main utility Trench is a municipal asset and is therefore subject to the control and ownership of the City. It is not an asset from which persons, other than the City, orda-l.wp March 19, 1991 Urgency Prohibition Against Trench Access Fees Page 1 1-15 sh9Uld benefit; WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the City Council finds a legitimate governmental purpose in allowing its residents to have freer access to franchised cable operators; and, WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the City Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; and, WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), section 541 (2) (B) was to distribute a cost of installation as between the City and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the city Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Main Utility Trench Access Fees Prohibited. No individual, partnership, firm, corporation, or trust may charge a community antenna television ("CATV") cable provider authorized to provide CATV service within the City of Chula Vista by the City Council ("Cable Operator") any fee for the right of access to, or the right to lay cable conduit or cable in, a Main Utility Trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. Section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce such conditions, but is not compelled to do so. hAy ea~Be orda-l. wp March 19, 1991 Urgency Prohibition Against Trench Access Fees Page 2 I -lID af. ae'Eiea aha!! iRel1:ide reaseBasle atterFley' s feea aRd aeet.s a~aE'ded ~e ~e pre~ailiRg party. ' Section 3. Immediate Effective Date; Urgency Finding. The City Council finds that it is necessary in order to protect and preserve the public peace, health, safety, and welfare from immediate violation and injury, to introduce and adopt this ordinance at one and the same meeting. Specifically, the City Council finds that the imposition of trench access fees on at least one of its franchised cable operators will seriously threaten the ability of the operator to economically survive, and thereby remove an effective cable competitor from providing a necessary utility to its residences. Accordingly, this ordinance shall take and be in full force and effect immediately upon the introduction and adoption thereof, by the four affirmative votes of the City Council. Presented by: Approved as to form by: Lyman Christopher Finance Director Bruce M. Boogaard city Attorney orda-1.wp March 19, 1991 Urgency Prohibition Against Trench Access Fees Page 3 I-I r Endnotes 1. The inclusion of this paragraph is a close call, but it is the recommendation of this office to exclude it on the basis that courts have typically implied a reciprocity to attorneys fees, and that it might be the basis for some future court awarding attorneys fees against the city in a test of the ordinances validity. orda-l. wp March 19, 1991 Urgency Prohibition Against Trench Access Fees Page 4 I-I t ORDINANCE NO. B ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LIMITING THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have recently adopted the practice of charging Chula Vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main utility Trench") prepatory to providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, in order to place utilites underground in the Main utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City's authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, the Council hereby finds and determines that the fair and proper cost distribution policy choice is one in which the cost of the trench is shared between the home buyer benefitting by the existence of the trench and the entire cable subscriber base; and, WHEREAS, the Staff has determined, and Council hereby finds, that permitting a Main Utility Trench Access Fee of $.50 per linear foot is currently a fair distribution of costs between the home buyer and the subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the ordb.wp March 19, 1991 Ord. Limiting Trench Access Fees to $.50 Page 1 /-1' City of Chula Vista. As a result of that, the City Council hereby finds and determines that the Main utility Trench is a municipal asset and is therefore subject to the control and ownership of the City. It is not an asset from which persons, other than the City, should benefit; and, WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the City Council finds a purpose in allowing its residents to franchised cable operators; and, WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, legitimate governmental have freer access to WHEREAS, the city Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the City and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the City Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Limitation on Main utility Trench Access Fees. No residential property developer, whether an individual, partnership, firm, corporation, or trust, may charge a community access television ("CATV") cable provider authorized to provide CATV service within the City of Chula Vista by the City Council ("Cable Operator") a fee greater than $.50 per linear foot of trench for the right of access to, or the right to lay cable conduit or cable in, a utility trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. ordb.wp March 19, 1991 Ord. Limiting Trench Access Fees to $.50 Page 2 I a JO . Section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The city itself also has the right to enforce such conditions, but is not compelled to do so. Afty eaaee sf aet.isR aRall iftsll:uie reaa8Rasle at.terllsy' s fees and eeat.a awarded ~e ~e ,re7ailiftg part.y_ ' Section 3. Effective Date. This ordinance shall take and be in full force and effect on the thirtieth (30th) day from and after the adoption hereof by three affirmative votes of the City Council.2 Presented by: Approved as to form by: Lyman Christopher Finance Director Bruce M. Boogaard City Attorney ordb.wp March 19, 1991 Ord. Limiting Trench Access Fees to $.50 Page 3 I-~I Endnotes 1. The inclusion of this paragraph is a close call, but it is the recommendation of this office to exclude it on the basis that courts have typically implied a reciprocity to attorneys fees, and that it might be the basis for some future court awarding attorneys fees against the City in a test of the ordinances validity. 2. Staff could not justify an emergency sufficient to make the ordinance effective immediately. If Council can, an ordinance will be available providing for immediate effectiveness. ordb.wp March 19, 1991 Ord. Limiting Trench Access Fees to $.50 Page 4 , - d;}. ORDINANCE NO. B-1 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LIMITING, AS AN URGENCY MEASURE, THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have recently adopted the practice of charging Chula Vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main utility Trench") prepatory to providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, in order to place utilites underground in the Main utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City'S authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, the Council hereby finds and determines that the fair and proper cost distribution policy choice is one in which the cost of the trench is shared between the home buyer benefitting by the existence of the trench and the entire cable subscriber base; and, WHEREAS, the Staff has determined, and Council hereby finds, that permitting a Main utility Trench Access Fee of $.50 per linear foot is currently a fair distribution of costs between the home buyer and the subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the ordb-l. wp March 19, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 1 1-~3 1] ;/ City of Chula Vista. As a result of that, the city council hereby finds and determines that the Main utility Trench is a municipal asset and is therefore subject to the control and ownership of the City. It is not an asset from which persons, other than the city, should benefit; and, WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the City Council finds a purpose in allowing its residents to franchised cable operators; and, legitimate governmental have freer access to WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the city Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the city and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the City Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public Utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: section 1. Limitation on Main Utility Trench Access Fees. No residential property developer, whether an individual, partnership, firm, corporation, or trust, may charge a community access television ("CATV") cable provider authorized to provide CATV service within the City of Chula vista by the city Council ("Cable Operator") a fee greater than $.50 per linear foot of trench for the right of access to, or the right to lay cable conduit or cable in, a utility trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. ordb-1. wp March 19, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 2 I-~ 'f Section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce such conditions, but is. not compelled to do so. Section 3. Immediate Effective Date; Urgency Finding. The City Council finds that it is necessary in order to protect and preserve the public peace, health, safety, and welfare from immediate violation and injury, to introduce and adopt this ordinance at one and the same meeting. Specifically, the City Council finds that the imposition of unregulated trench access fees on at least one of its franchised cable operators will seriously threaten the ability of the operator to economically survive, and thereby remove an effective cable competitor from providing a necessary utility to its residences. Accordingly, this ordinance shall take and be in full force and effect immediately upon the introduction and adoption thereof, by the four affirmative votes of the City Council. Presented by: Approved as to form by: Lyman Christopher Finance Director Bruce M. Boogaard City Attorney ordb-l. wp March 19, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 3 ,1-~5 J 1-2' ordb-1.wp March 19, 1991 Endnotes Urgency Ord. Limiting Trench Access Fees to $.50 Page 4 J-~h . Agreement Between the City of Chula vista and Martin Altbaum, Chula Vista Cable, and Ultronics for Indemnity This Agreement, effective as of March 21, 1991, ("Agree- ment") between the city of Chula Vista, a chartered municipal corporation ("City") as the first party, and Martin Altbaum ("Altbaum"), Chula Vista Cable, a California General Partnership whose partners consist of Martin Altbaum and ("CV Cable") and Ultronics, Inc., a California corporation ("Ultronics"), all three of which shall be herein referred to jointly as "Indemnitors", as the second party, dated March 12, 1991 for the purposes for reference only, and effective as of the date last executed by the parties, is made with reference to the following facts: Whereas, certain developers developing property within the City of Chula vista have recently undertaken the practice of charging cable operators with a fee ("Trench Access Fee") in order to lay its own cable conduit and wires and equipment in utility trenches housing electricity, gas, and usually telephone utilities ("Main utility Trench"); and, Whereas, the Indemnitors have requested the city to consider the enactment an ordinance which will regulate and/or prohibit the charging of Trench Access Fees to cable operators ("Trench Access Fee Regulatory Ordinance"); and, Whereas, Indemnitors recognize that such an ordinance as may be enacted by the City may be different than the ordinance which Ultronics submitted to the City council for consideration, and despite such differences and despite such ordinance as the City Council may enact, is willing to agree as herein provided; and, Whereas, the City believes that there is a substantial general public benefit to be served by the enactment of such an Ordinance, and a specific benefit to Imdemnitors; and, Whereas, the City is concerned that the passage of such an Ordinance may expose City, its officers and elected officials, to potential litigation and damages over the enforceability and/or terms of the Ordinance thereby threatening to deplete the resources of the City; Now, therefore, in consideration of the deliberation by the City council on the enactment of a prohibition or limit of trench access fees by ordinance, and $1.00, payment of which is hereby made by crediting the amount, if any is due, of franchise fees indemn2.wp March 19, 1991 Altbaum Indemnity Page 1 [:Xt-lIBIT I-~T J3 which Indemnitors owe City, the parties agree as follows: 1. Indemnitv. In the event that City shall, prior to June 30, 1991, enact a Trench Access Fee Regulatory Ordinance on either a regular or urgency basis, then Indemnitors, and each of them, jointly and severally, agree to indemnify and hold harmless the City of Chula Vista, its elected officials, officers, employees and agents ("Indemnitees") from any claims, attorneys fees, actions, proceedings, adverse judgments, adverse verdicts, settlement agreements, damage awards, adverse orders, attorney fee awards or orders, cost orders, losses, or any other similar expenditures ("LosS") against Indemnitees, or any of them, as a result of enacting or enforcing, or in any way connected to, the enactment or enforcement of, any such Trench Access Fee Regulatory Ordinance. A. Without limitation as to the types of ordinances which will qualify as a Trench Access Fee Regulatory Ordinance, an ordinance which is substantially in one of the form or forms set forth in the attached Exhibit A shall be deemed to be a qualifying Trench Access Fee Regulatory Ordinance. B. Without limitation as to the types of Losses to which the indemnity duty of Indemnitors applies, the following types of Losses are specifically included: i. A claim for damages, a settlement agreement to pay damages, a damages award, judgment or order, or a payment of same, based, in whole or in part, on the theory of inverse eminent domain. 11. A claim for attorneys fee or costs, or an attorneys fee or cost award, judgment or order based, in whole or in part, on a theory of deprivation of a federally-protected civil right. iii. A claim for damages, a settlement agreement to pay damages, a damages award, judgment or order, or a payment of same, based, in whole or in part, on the theory that the Trench Access Fee Regulatory Ordinance is illegal as the arbitrary exercise of police power, or as a violation of the Subdivision Map Act; or as a violation of the Cable Communication Act of 1984, as amended. 2. Aareement to Defend Indemnitees. indemn2 . wp March 19, 1991 Altbaum Indemnity Page 2 J-~i In the event that City shall, prior to June 30, 1991, enact a Trench Access Fee Regulatory Ordinance on either a regular or urgency basis, and in the event that any person shall bring a claim, action, writ, petition, or other proceeding ("Claim") against Indemnitees, or any of them as a result of enacting, or in any way connected to, the enactment of, any such Trench Access Fee Regulatory Ordinance, then Indemnitors, and each of them, jointly and severally, agree to provide Indemnitees, or any of them, upon tender of defense in writing to Indemnitors, with a competent legal defense to such Claim, including appeals therefrom, from the law firm of Adams, Duque & Hazeltine, or a law firm, which in the opinion of the City Attorney for City, is of comparable reputation. 3. City Riahts. A. city is not obligated in any way or manner to enact a Trench Access Fee Regulatory Ordinance in any particular form, or at all. B. In the event that a Trench Access Fee Regulatory Ordinance is enacted by the City, City has full authority and discretion to modify, repeal or revoke any such Trench Access Fee Regulatory Ordinance at any time, and without notice to Indemnitors. Any such modification, repeal or revocation shall not operate as any rescission of indemnification rights or duties hereunder, and such indemnification rights shall continue to protect the Indemnitees during such period of time a Trench Access Fee Regulatory Ordinance was in effect. C. In lieu of tendering Indemnitees' defense, or any of them, to Indemnitor, Indemnitee, or any of them, may, within their individual unlimited discretion, participate in the defense of any covered claim, action or proceeding in whole or in part, and upon doing so, the Indemnitor is only relieved as to their duty to provide a defense to said Indemnitee only, and only for so long as said Indemnitor chooses to participate. Indemnitee shall still have all other duties herein contained, including the duty to pay for any other Loss. 4. Securitv. A. ~. For the purpose of securing Indemnitors performance under this Agreement, Indemnitors shall provide the City, upon execution of this agreement, with either a cash deposit or bond ("Initial Bond") of a surety corporation which carries a Best Insurance Guide Rating of A;X, or better, irrevocably and unconditionally undertaking to guaranty the performance of indemn2.wp March 19, 1991 Altbaum Indemnity Page 3 I-~' Indemnitors' duties under this agreement in the principal amount of $200,000.00, in such form as shall be approved by the City Attorney. i. Riaht of citv to Demand Additional Securitv. At such time as the City determines, in its sole and unfettered discretion, that the amount of the cash deposit or Initial Bond is inadequate to sufficiently protect the City against all potential Loss, the city may so notify Indemnitors, and upon such notice, Indemnitors shall provide such additional cash deposit or bond ("Subsequent Bond(s)"} as city shall require, each of which shall be in $200,000 increments. B. Securitv Interest. In addition to the foregoing, Indemnitors hereby grant to the city a security interest in all of the assets of Chula vista Cable and Ultronics for the purpose of securing Indemnitors performance under this agreement, and shall execute such financing statements as may be required by the city. Nothing herein in this section shall be deemed to limit the duties of Indemnitors or the rights of the City to full and complete indemnity as herein provided, without limitation. 5. Subroaation. Indemnitors shall be subrogated, to the extent of any payments made by Indemnitors for Loss incurred by Indemnitors under this Agreement, to all of the rights of recovery of Indemnitee and Indemnitee shall execute all documents and take such other action as being necessary to enable Indemnitors to enforce such rights. 6. Successors. The rights and duties established by this agreement shall inure to the benefit and be binding upon each and all of the successors and assigns of each of the parties to this agreement. 7. ~. This Agreement shall be in effect for 5 years, except that if any indemnity rights have accrued to an Indemnitee during such period of time, such rights shall survive the term limitation herein stated, and shall continue in full force and effect. indemn2.wp March 19, 1991 Altbaum Indemnity Page 4 1-30 . 8. Notice. City shall, upon determination that it desires to take advantage of its rights hereunder, shall give written notice to Indemnitors, or any of them, of.a claim or other potential Loss made against Indemnitees, or any of them. Notice to Indemnitors shall be deemed to have been duly given upon receipt, or personally delivered to an officer of Ultronics on the next business day following overnight courier service, or on the third business day following mailing by United states, first-class mail, postage prepaid, and in all cases addressed as follows: Ultronics, Inc. 253 Third Avenue Chula Vista, Ca. 91910 Attn: President 9. Miscellaneous. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. This Agreement shall be interpreted, construed and enforced in accordance with the laws of the state of California. Headings of the sections and subsections of this Agreement have been inserted for convenience of reference only and do not constitute a part of this agreement. If any provision of this agreement shall be invalid and legally unenforceable, the same shall not affect in any respect whatsoever the validity and enforceability of the remainder of this Agreement. (End of Page. Next Page is Signature Page.) indemn2.wp March 19, 1991 Altbaum Indemnity Page 5 /-31 Signature Page to Agreement Between the city of Chula vista and Martin Altbaum, Chula vista Cable, and Ultronics for Indemnity Now therefore, the parties, having read and understood the term and conditions of this agreement, express their consent to the terms hereof by setting their hand hereto on the date set forth adjacent thereto. Dated: March 19, 1991 City of Chula vista by: Leonard M. Moore, its Mayor Pro Tem Attest: Beverly Authelet city Clerk Approved as to Form: Bruce M. Boogaard city Attorney Date: Martin Altbaum, individually Date: Chula vista Cable, a California General Partnership by: Martin Altbaum, General Partner Dated: Ultronics, Inc., a California corporation by: Martin Altbaum, President indemn2 . wp March 19, 1991 Altbaum Indemnity Page 6 J -3a . . . , Exhibit List to Agreement Between the City of Chula Vista and Martin Altbaum, Chula Vista Cable, and Ultronics for Indemnity Exhibit A: Attach Qualifying Trench Access Fee Regulatory Ordinances. indemn2.wp March 19, 1991 Altbaum Indemnity Page 7 1-33 ~,c\ , / ITEM TITLE: city council Meeting Public Version Item: 10 Meeting Date: January 15, 1991 1. Public Report- Legal and praGtical conse- quences of imposing or regu- lating Trench Access Fees imposed on cable operators by developers. 2 . Ordinance A - PROHIBITING THE CHARGING FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES (Introduce, 3 Affirmative Votes Required) . Ordinance A-1 PROHIBITING, AS AN URGENCY MATTER, THE CHARGING FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES (Introduce and Adopt, 4 Affirmative Votes Required) . 3 . NOT RECOMMENDED BUT OFFERED IN THE ALTERNATIVE 4. Ordinance B - LIMITING THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. (Introduce, 3 Affirmative Votes Required) 5. Ordinance B-1: LIMITING, AS AN URGENCY MEASURE, THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. (Introduce and Adopt, 4 Affirmative Votes Required) SUBMITTED BY: Bruce M. Boogaard, City Attorney This report, edited to delete confidential communications and attorney client workproduct, is a companion report to the report on cab1916a.wp January 11, 1991 Public Memo re Trench Access Fee Prohibition Page 1 -. fe. .~. I-~ 'f / /)p this Agenda submitted by the Director of Finance on the advisability of forming a Cable Television Commission. At the December 11, 1990 meeting, Council directed staff to evaluate the City's ability to regulate trench access fees that are paid to developers by the cable television providers. This report contains the advice of the City Attorney that the City should not attempt to regulate trench access fees, for a combination of reasons, some legal and some public policy reasons. However, if the Council so desires, 2 alternative ordinance forms of regulation are provided (each with an urgency alternative)--one prohibits trench access fees in the Main Utility Trench (Ordinance A), and the other limits it to $.50 per cable operator per linear foot of trench (Ordinance B). Recommendation: It is this Office's recommendation not to adopt any ordinance attempting to regulate trench fees. Backqround: Currently trench access fees are charged to cable television providers by developers in order to help cover their costs in digging a utility trench. For example, currently Eastlake is charging $1.00 per linear foot of trench per cable operator, and McMillian is charging $.75 per linear foot per cable operator. In theory, all other things being equal, the fees paid by the respective cable companies are then passed on to their existing subscriber base potentially resulting in an increase in monthly subscriber rates. An alternative (Ordinance A) to the above method is to require the developers to fully bear the costs of the trench access fees for cable television providers to the Main Utility Trench. In theory, all other things being equal, this would have the effect of distributing the costs to the benefitting home buyers instead of the cable companies subscriber base. Another alternative (Ordinance B) to the existing situation is to set a maximum trench access fee of $.50 per linear foot of Main Utility Trench per cable operator that can be charged by developers. Staff views this approach as a possible "mid-ground" between either having the developer bear full cost or the cable provider(s) bear full cost. cabl916a.wp January 11, 1991 Public Memo re Trench Access Fee Prohibition Page 2 ~ 1-35 ..... Ouest ion Presented: Does a municipal corporation have the authority to impose a prohibition of, or regulation on, trench access fees? This Office herein advises that the City should not adopt any ordinance attempting to regulate trench fees for legal and policy reasons. Summary of Leaal Obstacles: [Matter Omitted] Leaal Conclusions: This exercise of police power authority has not been previous- ly tested legally in the state of California, or in the nation as far as our research has di~closed, although Ultronics has demonstrated to this office about 6 other cities which have attempted to regulate trench access fees through the subdivision process--a procedure more legally defensible than that before the Council. [Matter Omitted] Unless the Council feels strongly that a legitimate and valuable public interest is served by the proposed prohibition, and as a result, desires to intervene in the private contractual relationship between developer and cable operator, it is this Office's advice, from [Matter omitted] a policy perspective, that we should refrain from involving ourself in this matter. Once we interject ourselves into this matter, we will or may become actually or practically committed to spending general fund dollars to enforce or support the ordinance, although I have attempted to mitigate such risk by creating a private cause of action. The likelihood of litigation, and hence the expenditure of general fund dollars, is heightened by the fact that there is no identifiable legal precedent, [Matter Omitted], and large sums of money are involved. Hence, this Office's advice not to involve the City in this matter. Alternatives: A. Consult with the Development Community. cab1916a.wp January 11, 1991 Public Memo re Trench Access Fee Prohibition Page 3 .~ 1-.310 / " .)"fr Nevertheless, if the Council desires to test this matter, the affected development community should be notified pursuant to our standard policy, and given more opportunity to comment. Sensing that the Council may wish to take action on this item quickly given the prior directive, we have given "publicly disclosable versions" of this report to the development community on the Friday prior to the Council meeting, the date of its finalization, but we may nevertheless receive objection that they have not had adequate time to study same. B. Select the Ordinance with the Best Chance of Success. If the Council feels that the urgency of this item outweighs the need to give more time for further study and consultation with the development community, care must be taken (1) to implement it in the manner which gives the city the best chance of success legally, and (2) to avoid costly litigation in enforcing and supporting it. By taking the following steps and precautions, the City would be in the best position to succeed, or at least, minimize its exposure: 1. identify, as the legitimate governmental purpose of such a prohibition, the proper distribution of this cost item (i.e., cost of digging the Main utility Trench") between two cost recovery systems (i.e., the home buyers directly benefitted by the trench v. the cable subscriber base); and, 2. identify, as a further legitimate governmental purpose, the advancement of communication; and, 3. identify, as a further legitimate governmental purpose, the advancement of competition among cable providers; and, 4. carefully relate the means of accomplishing this purpose to the purpose itself; and, 5. limit the prohibition to avoid constitutional pitfalls such as "confiscatory taking" of property (e.g., by limiting it to the Main utility Trench for which a developer is already contractually obligated to dig; by declaring that the public right of way, and the main utility trench located therein is the City's property, and not the developers; by permitting some cost recovery which is reasonable in relation to the cost of the trench ($.50, for example); and, 6. [Matter Omitted]. cab1916a.wp January 11, 1991 Public Memo re Trench Access Fee Prohibition Page 4 ~ r~.3 jl. 7. create a private cause of action so that the validity of the ordinance may be litigated between the cable operator and the developer. 8. [Matter Omitted]. 9. make a finding that the Cable Act provision was not intended to be preemptive of the Council's police power. Alternative Ordinances: The attached ordinances: Nos. A, A-I, B, and B-1, submitted in the alternative, achieve this cautious implementation approach, with our priority recommendation being Ordinance A--the non-urgent "midground" alternative of limiting the trench access charge to $.50 per linear foot. Allor these attached ordinances use the cautious implementa- tion approach, limiting the regulatory effort to the Main utility Trench, not supplemental trenches, create a private cause of action, and contain all the required recitals, with the following differences: Ordinance A: Prohibits a developer from charging any trench access fees. Ordinance A-I: The same as Ordinance A, except that it is effective immediately as an urgency item. Ordinance B: Limits the right of the developer to charge trench access fees to $.50 per linear foot per cable operator. Ordinance B-1: The same as Ordinance B, except that it is effectively immediately as an urgency item. Immediate Effective Date: As you will note immediately above, we have provided A-I and B-1 versions, differing from the parent versions by the immediate effective date for their adoption. Such requires 4 affirmative votes. Section 311 (d) of our Charter provides: "Any ordinance declared ~~he City Council to be necessary as an emergency measure for the preserving the public peace, health, safety, and general welfare and containing a statement of the reasons for its urgency, may be introduced and adopted cabl916a.wp January 11, 1991 Public Memo re Trench Access Fee Prohibition Page 5 ~ I-~V ,I! ,,- /..' ~, t at one and the same meeting if passed by at least four affirmative votes." The staff has not recommended an urgency version. Omitted] . Thank you for the opportunity to prepare this very challenging report. [Matter ctfUny ruce M. Boogaar City Attorney BMB/m cabl916a.wp January 11, 1991 Public Memo re Trench Access Fee Prohibition Page 6 ~ 1-~9 . .1... 3S' A ORDINANCE NO. A ORDINANCh OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PROHIBITING THE CHARGING FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have r "~ntly adopted the practice of charging Chula Vista cable operat ~s ("Cable Operators") a fee ("Trench Access Fee") for allowing ehe cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main Utility Trench") prepatory co providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main Utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, il. order to place uti lites underground in the Main Utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Op~rators involves a cost distribution policy choice within the subject matter of the City's authority to regulate the cable television industry; and, WHEREAS, the ,":t distribution policy choice is whether the cost of providing Sl..::h trench is more appropriately distributed to the existing SUbscl'iber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the fair and proper cost distribution policy choice is one in which the cost of the trench is spread to the home buyer benefitting by the existence of the trench and not the cable subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public r5ght of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the City of Chula Vista. As a result of that, the City Council hereby finds and determines that the Main Utility Trench is a municipal asset and is therefnre subject to the control and ownership of the City. It is not an ~set from which persons, other than the City, should benefit; orda.wp January 11, 1991 Prohibition Against Trench Access Fees Page 1 / JIJ-7 1- '10 WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the City Council finds a purpose in allowing its residents to franchised cable operators; and, legitimate governmental have freer access to WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the City Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; and, WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the City and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the city Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Main utility Trench Access Fees Prohibited. No individual, partnership, firm, corporation, or trust may charge a community antenna television ("CATV") cable provider authorized to provide CATV service within the City of Chula Vista by the City Council ("Cable Operator") any fee for the right of access to, or the right to lay cable conduit or cable in, a Main Utility Trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. Section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce, such condi~ions, but is not compelled to do so. .~y ::::: af ae't~efl shall ~flel\:;lEie :reaeeRaele a'tterflEY' s fees a orda.wp January 11, 1991 Prohibition Against Trench Access Fees Page 2 10- V I-~/ awarded te ~Re pre~a11iRg ~arty. 1 Section 3. Effective Date. This ordinance shall take and be in full force and effect on the thirtieth (30\ ' day from and after the adoption hereof by three affirmative Vu~es of the City Council. Presented by: Lyman Christopher Finance Director ! r Appu6~ed 8:;' :t form by: ~,(.t J n I 1'-(1 4.JM.. ( . Bruce M. Boogaa~d City AttorneY.J orda.wp January 11, 1991 Prohibition Against Trench Access Fees Page 3 ~ I -I/~ { "7.'0 . Endnotes 1. The inclusion of this paragraph is a close call, but it is the recommendation of this office to exclude it on the basis that courts have typically implied a reciprocity to attorneys fees, and that it might be the basis for some future court awarding attorneys fees against the City in a test of the ordinances validity. orda.wp January 11, 1991 Prohibition Against Trench Access Fees Page 4 16 '0 , 1-+'.3 ~'13SA. , ORDINANCE NO. A-1 ORDINANC~ OF THE CITY COUNCIL OF THE CITY OF CHULA VIS~~ PROHIBITING, AS AN URGENCY MATTER, THE CHARGING FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have recently adopted the practice of charging Chula Vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main utility Trench") prepatory to providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such ~renching or retrenching, a lawful condition of their development, in order to place uti lites underground in the Main Utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City's authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the fair and proper cost distribution policy choice is one in which the cost of the trench is spread to the home buyer benefitting t:" ~he existence of the trench and not the cable subscriber base; an", WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the City of Chula Vista. As a result of that, the City Council hereby finds and determines that the Main Utility Trench is a municipal asset and is therefore subject to the control and ownership of the City. It is not an asset from which persons, other than the City, orda-l.wp January 11, 1991 Urgency Prohibition Against Trench Access Fees Page 1 / 18 +I- I-f~ III I)v should benefit; WHEREAS, the charging of Trench Access operates as a constraint on the access of cable customer; and, Fees to Cable Operators cable operators to the WHEREAS, the City Council finds a purpose in allowing its residents to franchised cable operators; and, legitimate governmental have freer access to WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the city Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; and, WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the City and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the City Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Main utility Trench Access Fees Prohibited. No individual, partnership, firm, corporation, or trust may charge a community antenna television ("CATV") cable provider authorized to provide CATV service within the city of Chula Vista by the City Council ("Cable Operator") any fee for the right of access to, or the right to lay cable conduit or cable in, a Main Utility Trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. Section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce such conditions, but is not compelled to do so. ~RY ea~sc orda-1.wp January 11, 1991 Urgency Prohibition Against Trench Access Fees Page 2 I~/-~.s ef astian shall iflel\:uie reasBRaele atterftey I a fees aRe). eeat.a a~ardea te ~he prevailiR~,party. ' Section 3. Immediate Effective Date; Urgency Finding. The City Council finds that it is necessary in order to protect and preser~~ the public peace, health, safety, and welfare from immediate violation and injury, to introduce and adopt this ordinance at one and the same meeting. Specifically, the City Council finds that the imposition of trench access fees on at least one of its franchised cable operators will seriously threaten the ability of the operator to economically survive, and thereby remove an effective cable competitor from providing a necessary utility to its residences. Accordingly, this ordinance shall take and be in full force and effect immediately upon the introduction and adoption thereof, by the four affirmative votes of the City Council. } / Presented by: Apprpved a~ to,f:.orm by:.!' . 1~}vl;W ruce M. Boogaard City Attorney \) ~(/ Lyman Christopher Finance Director orda-1.wp January 11, 1991 Urgency Prohibition Against Trench Access Fees Page 3 ~'-Ih i .0 I t\ V Endnotes 1. The inclusion of this paragraph is a close call, but it is the recommendation of this office to exclude it on the basis that courts have typically implied a reciprocity to attorneys fees, and that it might be the basis for some future court awarding attorneys fees against the city in a test of the ordinances validity. orda-1.wp January 11, 1991 Urgency Prohibition Against Trench Access Fees Page 4 ~ 1-'-11- ~,,~S'& ORDINANCE NO. B ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LIMITING THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have recently adopted the practice of charging Chula Vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and \:ires in the main utility trench ("Main utility Trench") prepatory ~o providing customers with cable service; and, WHEREAS, the Staff has determined, and the Council hereby finds and determines that such bevelopers requiring the trenching or retrenching of the Main Utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, in order to place utilites underground in the Main utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City's authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyel Qr buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, the Council hereby finds and determines that the fair and proper cost distribution policy choice is one in which the cost of the trench is shared between the home buyer benefitting by the existence of the trench and the entire cable subscriber base; and, WHEREAS, the Staff has determined, and Council hereby finds, that permitting a Main Utility Trench Access Fee of $.50 per linear foot is currently a fair distribution of costs between the home buyer and the subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the ordb.wp January 11, 1991 Ord. Limiting Trench Access Fees to $.50 Page 1 ~ ,'~ I- 'II ,/ ~y city of Chula Vista. As a result of that, the City council hereby finds and determines that the Main Utility Trench is a municipal asset and is therefore subject to the control and ownership of the city. It is not an asset from which persons, other than the City, should benefit; and, WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the city Council finds a purpose ~n allowing its residents to franchised cable operators; and, legitimate governmental have freer access to WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the City Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the City and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the City Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Limitation on Main Utility Trench Access Fees. No residential property developer, whether an individual, partnership, firm, corporation, or trust, may charge a community access television ("CATV") cable provider authorized to provide CATV service within the City of Chula Vista by the City Council ("Cable Operator") a fee greater than $.50 per linear foot of trench for the right of access to, or the right to lay cable conduit or cable in, a utility trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. ordb.wp January 11, 1991 Ord. Limiting Trench Access Fees to $.50 Page 2 ~ J -~'7 .. Section 2. Pr~vate Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce such conditions, but is not compelled to do so. section 3. Immediate Effective Date; Urgency Finding. The City Council finds that it is necessary in order to protect and preserve the public peace, health, safety, and welfare from immediate violation and injury, to introduce and adopt this ordinance at one and the same meeting. Specifically, the City Council finds that the imposition of unregulated trench access fees on at least one of its franchised cable operators will seriously threaten the ability of the operator to economically survive, and thereby remove an effective cable competitor from providing a necessary utility to its residences. Accordingly, this ordinance shall take and be in full force and effect immediately upon the introduction and adcption thereof, by the four affirmative votes of the City Council. APprJed as to) form bY:F , I.l . . ~1M4 I II . ~~ fuv.L' !3ruce M. Boogaar City Attorney I J Presented by: Lyman Christopher Finance Director ordb-l. wp January 11, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 3 fHT 1-50/1-51 :!~ (l ;1. 't!>S &-1 ORDINANCE NO. B-1 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA LIMITING, AS AN URGENCY MEASURE, THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES. WHEREAS, certain and various persons responsible for developing property ("Developers") within the limits of the City of Chula Vista have recently adopted the practice of charging Chula vista cable operators ("Cable Operators") a fee ("Trench Access Fee") for allowing the cable operators the right to lay their own cable conduit and wires in the main utility trench ("Main Utility Trench") prepatory to providing customers with cable service; and, WHEREAS, the c;taff has determined, and the Council hereby finds and determines that such Developers requiring the trenching or retrenching of the Main Utility Trench are usually obligated by zoning or other lawfully imposed regulation, at their sole cost and expense, to do such trenching or retrenching, a lawful condition of their development, in order to place utilites underground in the Main utility Trench; and, WHEREAS, the charging of Trench Access Fees to Cable Operators involves a cost distribution policy choice within the subject matter of the City's authority to regulate the cable television industry; and, WHEREAS, the cost distribution policy choice is whether the cost of providing such trench is more appropriately distributed to the existing subscriber base of the Cable Operator or to the specific home buyer or buyers who will be served by, or who will have the opportunity to be served by, said trench; and, WHEREAS, the CuLlncil hereby finds and determines that the fair and proper cost distribution policy choice is one in which the cost of the trench is shared between the home buyer benefitting by the existence of the trench and the entire cable subscriber base; and, WHEREAS, the Staff has determined, and Council hereby finds, that permitting a Main Utility Trench Access Fee of $.50 per linear foot is currently a fair distribution of costs between the home buyer and the subscriber base; and, WHEREAS, Staff has determined, and Council hereby finds and determines, that the main utility trench, and the public right of way in which it is located, either has been at the time of trenching, or will be shortly thereafter, dedicated in fee to the ordb-l. wp January 11, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 1 -1&+' 1-5~ ,/ ~\'i ctty of Chula Vista. As a result of that, the City Council hereby finds and determines that the Main Utility Trench is a municipal asset and is therefore subject to the control and ownership of the City. It is not an asset from which persons, other than the City, should benefit; and, WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a constraint on the access of cable operators to the cable customer; and, WHEREAS, the City Council finds a purpose in allowing its residents to franchised cable operators; and, legitimate governmental have freer access to WHEREAS, the charging of Trench Access Fees to Cable Operators operates as a limitation of competition among cable operators; and, WHEREAS, the City Council finds a legitimate governmental purpose in promoting competition among cable operators in order to provide higher quality, lower costs cable service; WHEREAS, the City Council finds that the legislative intent of the Cable Communications Act of 1984 ("Cable Act"), Section 541 (2) (B) was to distribute a cost of installation as between the City and the cable operator, and was not intended to apply as between the cable operator and a property developer, and therefore finds that the Cable Act has not preempted its authority in this matter; and, WHEREAS, the authority of the City Council to regulate the cost of trenching as between the cable operator and a developer is akin to the authority of other regulatory agencies, such as the Public Utilities Commission; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Limitation on Main Utility Trench Access Fees. No residential property developer, whether an individual, partnership, firm, corporation, or trust, may charge a community access television ("CATV") cable provider authorized to provide CATV service within the City of Chula Vista by the City Council ("Cable Operator") a fee greater than $.50 per linear foot of trench for the right of access to, or the right to lay cable conduit or cable in, a utility trench designed and/or constructed to provide either the electric, gas or telephone utility, or all or any combination of such utilities. ordb-1.wp Urgency Ord. Limiting Trench Access Fees to $.50 January 11, 1991 Page 2 /0 - ,"-0 I-53 . section 2. Private Cause of Action. This ordinance shall be enforceable as a private cause of action by aggrieved parties. The City itself also has the right to enforce such conditions, but is not compelled to do so. hfty ea~se af ae'tieft saall iflall::lse reaaenaele a~ter:t\ey' 5 fees alui aeato avaraea ~e the pFe7aili:t\~ party. 1 section 3. Immediate Effective Date; Urgency Finding. The City Council finds that it is necessary in order to protect and preserve the public peace, health, safety, and welfare from immediate violation and injury, to introduce and adopt this ordinance at one and the same meeting. Specifically, the City Council finds that the imposition of unregulated trench access fees on at least one of its franchised cable operators will seriously threaten the ability of the operator to economically survive, and thereby remove an effective cable competitor from providing a necessary utility to its residences. Accordingly, this ordinance shall take and be in full force and effect immediately upon the introduction and adoption thereof, by the four affirmative votes of the City Council. Approved as to ,'form by: /- I' , /; \}~IM V~, IJ,~ ~. Bruce M. Boogaard / City Attorney Presented by: Lyman Christopher Finance Director "."j ordb-1.wp January 11, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 3 /C-z.1 1- 5 4 / t11 , . Endnotes 1. The inclusion of this paragraph is a close call, but it is the recommendation of this office to exclude it on the basis that courts have typically implied a reciprocity to attorneys fees, and that it might be the basis for some future court awarding attorneys fees against the City in a test of the ordinances validity. . --... -. .." ~ *--., ...... ordb-l. wp January 11, 1991 Urgency Ord. Limiting Trench Access Fees to $.50 Page 4 ~ /-505 1 !'lHR-~4-'91 1~': 12 ID: TEL 1,10: t1930 POb " . \ I ~ .. DRAFT 3/14/91 PRIVILEGEO AND CONFIDENTIAL ATTO~EY-CLIENT PRIVILEGE INDEMNITY AGREEME~T f 1 THIS INDEMNITY ACREEMENT (-AgreementM) is entered into as of March _, 1991 between ULTRONICS, INC. (Ml,11tronicfltr), a California corporation, and The City of Chula Vista, its officials, employees and all others acting on its behalf (collectively HIndemniteeW), with reference to the following facts: A. Like all other cable television oper~tor$ providing service within the City of Chula Vista, UltronicG has on one occasion in the past been forced to pay a fea to certain developers of real property in order to lay its own cable conduit and ....ires in main utility trenches (MTrench Accef:E: Fee") controlled by such developers in ordur to provide its customers with cable television sorvice. Ultronics forosees that it, and all other cable television operators, will be forced to continue paying such 1ees in ever increasing rates to such residential developers. B. Indemnitee is contemplating the paggnge of an ordinance entitled "ORDINANCE 0.1" 'l'lll:: C1TY COUNCIL OF THE CITY OF CHULh VIS'!'A Pil.OlilBI'l'ING 'l'HF: CHARGING }-'1:;1::5 TO CARLE OPF.RA'1'ORS 1\5 1\ CONDrrION TO OBTAIN ACCESS TO MAIN UTILI'l'Y TRENCHES,. (the "OrdinanceW) which, if enacted, would relieve Ultroniclol and all other cable operators 01 the Obligations to pay thp. Trench Accer,s Fec. Indemnitee is inclined to enact such ordinance in order to encouri\ge the ctevc>lopment of c<1blc televiFiion flervice to its oi tizens. However, In(j(,mni tee is concerned tha~ the passage ot the Ordinanco would expot'ie it to po~entil\l litigation over the enforceability nnd/or terms of the Ordinance thereby threatening to deplete the general !und by paymen~ of legal expenccs and cocts associated wit.h any such litigation. C. Ultronics desires to provide Indemnite:c ....ith certain indemnity rights as a~e set forth herein in order to avoid any concern on the part of Indemnitee in enacting the Ordinance. NOW, THEREFORE, IN CONSIDF.lU\TION OF t.h~ foregoing factr. and in order to encourage Indclnni tC,{I to enact the OrdinancE', UltronicG horeby agrees 1.\9 follows: 1 I I U\+\ 16 1""( /- S ID ]) MAP-14-'91 12:13 ID: TEL HO: tt930 PO? . (". J> ~ ".. . 1. Defense of L1tiqatiQn. In the event Indemnitee enacts the Ordinance, and any person institutes litigation which challengeG the enforceability of the Ordinance or 1n any way disput~a the scopo, content, or applicability of the Ordinance, UltronicR aryrees to provide Indemnitee, and each of them, with legal counsel who should be &elected by Ultronics to defend Indemnitee, and each of them, in any and all SUCh litigation without cost or Oxpenae to Indf.lInnite(" and each of them. 2 . .s..IJJ2z:.QMt.i2n . Ultronics shall be subrogllted, to the extent of any payments made by Ultronlcs to legal counsel for fees or disburccmenta incurred by such counsel under thi& Agreenlent, to all 01' the rights ot recovery 01' Indemnitee and lndemnitel.' shi\ll execute all documents and take such other action as being necesBary to enable Ul~ronics to enforce such rights. 3.. L i m :t1AtiO.M~JM<,rnn :tb-'LQ.tM.I:.Jii5..{Ll.11~.e.!!Ll'L~.ct. Ultronics shall not be liable under this Agreement for any amount for which payment is actuillly made to Indemnitee, and each of them, undor a valid and COllectible insurance policy issued to Indemnitee or from any other source. 4. ful.PU.$.ent.!.\..w.ru; of IT\.ct.\;l1l\T.lt~{!.. Indemnitee, and each of. them, hereby rflprr:>sent and warrant to Ultronics thl.\t Indemnitee, and each of tht'm, are' not currently involveo, in any capacity Whatsoever, in any active or actually threatened 11 tigation with any person concerning the matterG covered within the proposed Ordinance. 5.. l'.li'rm: Notic..~.. This Agreement Shall be in effoct for Il. period of one (1) year from the date appearing on the first page hereof. 1ndemnitca nhall give written notice to Ultronics as Boon as practicable 01' any cll:\im or lawsuit made against Indemnitue that is or may b.., covered by this Agree~cnt. Notice to Ultronics shall be deomed to have boen duly given upon receipt, or personally delivered tc? an officer of Ultr.on1oG on the next business day following ovarn~qht -2- I-S~ .~ i I. u ! , .~, I1AP-1-l-'91 12: 101 ID: TEL tlO: I=l':l..:,lj t-'Ut:i ~ J t I- '\ 11" " courier service, or on the third business day following mailing by united Sta~ea, first-class mail, poatage prepaid, and in all C~8eB addrecsed as follows: TJltronic5l, Inc. 253 Third Avenue chula Vi~ta, CA 92010 Attn: President With a copy to: Adams, Duque & Hazeltine 777 South Figueroa Street lOth Floor Los Angelos, CA 90017 Attn: C. Forrest B~nnan, Esq. 6 . .c..Q.Qp.e.I:~tU9J1. Indemnitee shall give t:rltronics such information and oooperation as Ultronics may reasonably requep.t in order to comply with thiG Agreement. 7. ~.i.tration. Any claim or controversy arising out of or relating to this Agreement or breach thereof, including any claim or controversy as to the arbitrability of any claim or controversy, shnll be c;ettled by arbitl:"l\tion to be conducted in LOB Anqoles count.y, California in accordance with the commercicl arbitration ruleS of the American Arbitration A~cociation, and judgment upon the nward rendered by the arbitrators therein, may b~ entered in any court having juriscl.iction thereof. 8. l:;!l.t1..Q.elll\Mo~. This Agreement may be executed in one or more counterparts, each of whieh &hall be deemed an oriqinal, and all of which together shall constitute one instrument. Thio Agreement shall be intorpreted, construed and enforced in accordance. with tho laws of the State of California. Headingr. of the section/; !\nd subsections of this Agreement have be on inserted tor convenience of r.eference only and do not constitute a part or this agreement. -3- 1-5' I'1AR-14-'91 12: 14 rD: TEL 110: l=!'330 P09 < \. '^ II. " l > ," . \ If any provision of this aqreement shall be invalid and legally unenfore$able, the same shall not affect in any respect whatsoever the validity and enforceability of the remainder of thie Agreement. ! IN WITNESS WHEREOF, ul tronics has executed thi$ Agreement effected as the date first set tor~h above. ULTRONICS, INC. By: President The foregoing is hereby accepted as of 1991. CITY OF CHULl>. VISTA By: 'l'itla: l. -4- /-5Cj