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HomeMy WebLinkAboutcc min 1991/03/21 MINUTES OF A SPECIAL MEETING OF THE CITY COUNCIL OF THE CrlY OF CHULA VISTA, CALIFORNIA Thursday, March 21, 1991 Council Conference Room 4:50 p.m. City Hall CALL TO ORDER 1. ROLL CALL MEMBERS PRESENT: Mayor Pro-Tempore Moore; Councilmembers Malcolm, Rindone and Nader MEMBERS ABSENT: None ALSO PRESENT: City Attorney Boogaard; Deputy City Manager Thomson ® MoratoriumonTrenchFees-Ultronics: CityAttorneyBoogaardreportedthatattheTuesday, March 19, 1991, Council meeting, Council directed him to evaluate the request from Ulrronics 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 f'mdings: (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 denied access to the balance of Rancho del Rey. VOTE ON THE MOTION: The motion carried. (The vote was 3-1; Cotmeilman Rindone voting no.) 1. ORDINANCE A: PROHIBITING THE CHARGING OF FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING AC(ZSS TO MAIN UTHXrY TREN(~tES 2. ORDINANCE A-l: PROHIBITING, AS AN URGENCY MA-t-rEY,. THE CHARGING OF FEES TO CABLE OPERATORS AS A CONDITION TO OBTAINING AC(ZSS TO MAIN UTILITY TREN(]iES 3. ORDINANCE B: LIMITING THE AMOUNT OF TRENCH ACCESS FEES A DEVELOPER MAY (2-IARGE TO CABLE OPERATORE IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TRENCHES 4. ORDINANCE B-l: LIMfrING, ASANURGENCYMATrhR, THEAMOUNTOFTRENCHACCESS FEES A DEVELOPER MAY CHARGE TO CABLE OPERATORS IN ORDER TO OBTAIN ACCESS TO MAIN UTILITY TREN(]iES MINUTES March 21, 1991 Page 2 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-l); and two of the ordinances provide for a limited trench access (B and B-l). He referred to a report he presented to Council on January 15, 1991, which set forth his legal concerns with regard to this ma~ter. 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 presupposed that there is a tremendous mount of litigation, risk and damages to the City of Chula Vista. Mr. Altbaum stated he has added language to his indemnity agreement that court action be pursued immediately by the City which would be paid for by his firm to fred 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 he has a concern with the indemnity issue and he is not satisfied with rushing consideration of this issue. 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 there 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. Altbaum by March 22. Mr. Elliott is wring 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 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 fried by Ultronics in February 1988 challenging the agreement and contending that they had a right to flee 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 MINUTES March21, 1991 ~3 cable operator, subscriber, or both. No cable company had a right to flee trench access and the developer had a right, under the Federal Cable Act, to collect their costs. A State Court action was fried 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 judgemeat. 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 Januan/15 memo which is die 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 pohcy 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. The 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/Malcelm) moved that Ordinance A be placed on fast 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 indiated by Mr. Altbaum, was the fact that the trench access agreement needs to be submitted by tomorrow. Councilman Rindone commented the Council would have to deEme a public policy as 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 violated 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. MINUTES March 21, 1991 Page 4 Cotmdlman Nader stated there are several points of discussion he would want to raise before final adoption ofthe ordinance. The reason he put the motion on the~oor 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. Cl'he vote was 2-2; Mayor Pl'o-Tempore Moore voting no and Cou~e~lm an Rindone voting 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. Sandra Chase Secretary to the Redevelopment Agency