HomeMy WebLinkAboutAgenda Statement 1980/05/13 Item 05, 05a
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COUNCIL AGENDA STATEMENT
Item '5, Sa
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Meet; n9 Date '-.51,.13/80
Public Hearing - Consideration to increase certain rates for Mission
Cable Television, Inc.
Resolution /00;1 Amending Resolution 8855 - Approving increased rates
SUBMITTED ~Director of Finance
ITEM TITLE:
(4/5ths Vote: Yes
No _L)
On February 28, 1980 Mission Cable Television, Inc., filed a letter of
request to increase certain rates with the City Manager, effective May
1, 1980. The effective date was subsequently changed to July 1, 1980.
Therefore, it is my
RECOMMENDATION: 1. That Council conduct a pub'li c heari ng
2. Approve 1 imited rate increase
BOARDS AND COMMISSION RECOMMENDATION: Not Applicable
DISCUSSION:
The present maximum monthly rates for 12 channel and 20 channel service in
Chula Vista i" $7.75 and $8.75 respectively. The monthly rates in both the
City and County of San Diego were the same as above until May 1, 1980 when
both the City Council and Board of Supervisors approved rate increases
equal to those now requested in Chula Vista.
Mission Cable Television, Inc., is requesting that the City approve a 1 imited
rate adjustment in the Company's basic monthly charge for residential sub-
scribers and non-transient conmercial subscribers, which include mobile home
parks, town homes, condominiums, and apartments. The non-transient commercial
subscribers are included because their rates are 60% of the primary residential
subscri ber ra tes. Thi s reques t does not i nc 1 ude an increase for a 11 other
categories of service, such as installation, construction or other charges
listed in the schedule of fees in Resolution 8855. (Schedule A)
Mission Cable Television, Inc., is requesting the City to approve a rate
increase in the Company's basic monthly charge for 12 channel service from
$7.75 to $8.50 and for 20 channel service from $8.75 to $9.60 effective
July 1, 1980. At the present time almost all of the Citys 18,044 subscribers
are served by the new 20 channel service.
As indicated in the letter dated February 28, 1980 from Mission Cable
Television, Inc., beth the City and County of San Diego approved a new
process for granting limited rate increases. San Diego's Rate Analyst,
Mr. Chett Chew, stated that their city had been looking for a mechanism to
provide a limited amount of rate relief without the necessity to do a com-
plete review and rate study every time an application was filed. I am sure
this was the case with the County of San Diego also.
/00'( I
Form A-113 (R~v. 11/79)
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Page 2, Item. ~~
Meeting of 5/13/80
After a thorough study and review by the Transportation and La~d Use Committee
of the City of San Diego, the City Council approved a formula which develops
a ratio of net operating expenses as a proportion of total expenses for
rate making purposes. This ratio is then applied to the change in the Consumer
Price Index for the period under review. It is further provided that regardc
less of the total increase in the Consumer Price Index and what the approved
formula would allow, the rate increase is still limited to no more than 10%
in any given 12 month period.
Schedule B indicates Mission Cable's operating expenses in Chula Vista in
August, 1977 the date of the last rate adjustment. The operating expenses
as indicated were 65% of their total expenses in Chula Vista. Schedule C
is a statement showing how the rates would be computed for Chula Vista.
This also shows that although 65% of the cost of living increase would allow
a 21.32% increase in our current rates, it is limited to a m~ximum of 10%.
It is my recommendation that Ordinance 882 be amended to allow approval of
interim rate increases by the City Manager. This approval would be bas2d
on the following guidelines;
1. Limited rate increases will apply to subscribers rates only' and'.may',not
b~,change~'mo~~'than'onte in ~hy 12~mbnth'period.
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2. Copies of financial data filed annually with the FCC should also be
filed,with the City of Chula Vi?-ta.
3. Any requests.by 'the Company'to chang~ other fees or charges as indicated
in Schedule A will require the normal submission of complete financial
data; public hearings, and approval by the City Council.
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It seems to me that although we allow the possibility of annu31 interim
rate increases, the Compan~ will prob~blybe requesting changes in all
fees over a three to five year period depending upon the extent of in-
flation, changing economic conditions, and comp~tition in the marketplace.
The procedures and conditions outlined above are basically what both the
City and County of San Diego are doing.
In my opinion, this limited rate adjustment method seems reasonable and is
an efficient manner to provide timely relief in a period of ever increasing
cost of operation, If this rate increase is approved, it will be identical
to rates now in effect in the City of San Diego, County of San Diego, and
the cities of La ~lesa, El Cajon, Imperial Beach., National City and Lemon
Grove.
FINANCIAL IMPACT:
Not Applicable
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by the City Council of
Chula Vista, California
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Schedule A
RATES FOR CABLE SERVICE
CHARGE CURRENT PROPOSED
RATES RATES
Individual Service
Primary Service
12 Channel System $7.75 $8.50
20 Channel System ~$8. 75 $9.60
Addit i ona 1 Outlets (Including FM) $1.75 $1. 75
Commercial Service
Non-Transient
12 Channel System
20 Channel System
Additional Outlets
$4.65 per outlet
$5.25 per outlet
$5.10
$5.75
$1. 05
Transient
Negoti a ted
Same
T . V. Dea 1 e'rs
-0-
Same
Installation Charges
Initial Installation (Aerial)
Underground Insta11ation (50' or less)
Reconnect (Includes prewired units)
Converter only installation
Additional outlets (Including FM)
Move or Modify Outlets
Commercial Installations
$15.00
Time & Materials
$ 7.50
-0-
$10.00
$ 7.50
Time & Materials
Same
Same
Same
Same
Same
Same
Same
Construction Charges
Abnormal Installations
Install prewiring
Extend distribution lines
Time & Materials
Negotiated
Time & Materials
Same
Same
Same
Special Charges
Converter Deposit
Delinquent Account, Collection at door
$12.00
$ 5.00
Same
Same
Surcharges
Federal State and/or City fees or Prorate of Actual
taxes on Subscribers Service or
Gross Receipts (exclusive of income or
property taxes and franchi se fees) /0 o<g7
Public Broadcasting and/or copyright fees fJ_ Prorate of Actual
M1.~~nx,
Same
Same
Schedul e B
t'IISSION CABLE OPERATING EXPENSES AS A PROPORTION OF TOTAL EXPENSES
Deductions from Total Expenses
Base Year
1977
$1 ,012,945
267,213
16,611
66,102
$ 349,926
Tota 1 Expenses (1)
Less: Depreciation & Amortization
Interest Expenses
Income Taxes
Net Operating Expenses
$ 663,019
Net Operating Expenses as a
Proportion of Total Expenses for
Rate Making Purposes
0.65
(1) All expense Tlgures are based on Council findings from
August 1977 rate increase hearings
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Schedule C
t.IETHOO OF C0i1PUTATlON FOR NE,I RATES
1) The increase in the Consumer Price Index from November 1977 U86.6)
to November 1979 (247.8) is 61.2 points or 32.8%.
2) 65% of 32.3% = 21.32%
3) $7.75 x 10%=$.775+ $7.75 = $8.525
4) New rate $8.50
5 ) $8.75 x 10% = 5.875 + 58.75 = $9.625
6) New rate $9.60
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NOTICE of HIAIING
CITY COUNCIL OF CHULA VISTA, CALIFORNIA
NOTICE IS HEREBY GIVEN THAT THE CITY COUNCIL OF CHULA VISTA, CALIfORNIA
WILL HOLD A PUBLIC HEARING TO CONSIDER THE REQUEST OF MISSION CABLE TV
FOR AN INCREASE IN THE FOLLOWING RATES:
'- "Individual -Service
Present Monthly
Charge
Proposed Monthly
Charge
12 Channel Service
20 Channel Service
$7.75
8.75
$8.50
9.60
",d ,. '-' _,"~' ':. ",,,. . "" ,.
". "Non~Trans-ient.Connnercial
Apartments, Mobilehome Parks,
Condominiums, Townhouses, etc.
12 Channel Service"
20 Channel Service
$4.65
5.25
$5.10
5.75
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No other increases are requested in the basic schedule of charges
in City Council Resolution No. 8855.
THE PUBLIC HEARING WILL BE HELD ON MAY 13, 1980 AT 7:00 P.M. IN THE COUNCIL
CHAMBER, PUBLIC SERVICES BUILDING, 276 FOURTH AVENUE, CHULA VISTA. Anyone
desiring to be heard may appear.
Dated: April 28, 1980
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Jennie ~1. Fulasz,' CMC,
City Cle
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