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Ordinance No. 1213ORDINANCE NO. 1213 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF VERNON, CALIFORNIA, ADDING CHAPTER 15 TO THE VERNON MUNICIPAL CODE TO ESTABLISH FRANCHISE FEES, PEG FEES; AND CUSTOMER SERVICE PENALTIES.FOR STATE FRANCHISE HOLDERS PROVIDING VIDEO SERVICE WITHIN THE CITY OF VERNON WHEREAS, the Digital Infrastructure and Video Competition Act of 2006 (Pub. Util. Code 5800 et seq., "DIVCA") went into effect on January 1, 2007; and WHEREAS, under DIVCA, the State of California is the "sole franchising authority" for new video service providers within the City of Vernon ("City"); and WHEREAS, the City, although not the franchising authority for state franchises, has certain rights and responsibilities with respect to the new state video franchise holders; and WHEREAS, the City intends to require franchisees to pay the City a fee of five percent (5%) of gross revenues from each state video franchisee which operates within the City for use of the public rights -of -way unless the City opts to waive collection of the fee; and WHEREAS, the City does not currently opt to waive the collection of the five percent (5s) franchise fee; and WHEREAS, the City may authorize the audit of the business records of a.state video franchisee once annually to ensure compliance with.the payment of the franchise and PEG fees; and WHEREAS, the City may establish and enforce penalties against state video franchisees for violations of customer service rules consistent with state law; and WHEREAS, this ordinance does not establish a "tax" within 090913444 the meaning of Article XIII C, section 1, subdivision (e) for the reasons set forth in the staff report. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF VERNON HEREBY ORDAINS: SECTION 1: Findings. The City Council of the City of Vernon hereby finds and determines that all of the foregoing recitals are true and correct. SECTION 2: Code Amendment. Chapter 15 of the Code of the City of Vernon is hereby added to read as follows: "CHAPTER 15 STATE VIDEO TABLE OF CONTENTS Section 15.1 Purpose and Application.. Section 15.2 State Video Franchise and PEG Fees. Section 15.3 Audit Authority. Section 15.4 Customer Service Penalties. Section 15.5 City Response to State Video Franchise Applications. Section.15.1. Purpose and Application. This Chapter is designed to regulate video service providers holding state video franchises and operating within the City pursuant to that franchise. On January 1, 2007, the State of California became the sole authority with power to grant state video franchises pursuant to the Digital Infrastructure and Video Competition Act of 2006 ("DIVCA"). Pursuant to DIVCA, the City of Vernon shall receive a franchise fee and a fee for public, educational and/or government - 2 - 090913444 (PEG) purposes from all state video franchise holders operating within the City. Additionally, the City intends to exercise its authority to establish and enforce penalties, consistent with state law, against all state video franchise holders operating within the City for violations of customer service standards. Section 15.2. State Video Franchise and PEG Fees. (a) Any state video franchise holder operating within the boundaries of the City shall submit a fee to the City equal to five percent (50) of the "gross revenue" of that state video franchise holder. Gross revenue, for the purposes of this chapter, shall have the definition set forth in California Public Utilities Code § 5860. (b) Any state video franchise holder operating within the boundaries of the City shall submit a PEG fee to the City, or the City's designee, for support of Public, Educational, and/or Governmental, (PEG).purposes that are consistent with state and federal law. The PEG fee shall be one percent (1%) of the "gross revenue" of that state video franchise holder. Section 15.3. Audit Authority. Not more than once annually, the City Administrator, or the City Administrator's designee, may examine and perform an audit of the business records of a holder of a state video franchise to ensure compliance.with Section 15.2. Section 15.4. Customer Service Penalties. (a) The holder of a state video franchise shall comply with all applicable state and federal customer service and - 3 - 090913444 protection standards pertaining to the provision of video service. (b) The City Administrator, or the City Administrator's designee, shall monitor the compliance of state video franchise holders with respect to state and ..federal customer service and. protection standards. The City Administrator, or the City Administrator's designee, will provide the state video franchise holder written notice of any material breaches of applicable customer service standards, and will allow the state video franchise holder 30 days from the receipt.of the notice to remedy the specified material breach. Material breaches not remedied within the 30 day time period will be subject to the following penalties to be imposed by the City: (1) For the first occurrence of a violation, a fine of up to $500.00'may be imposed for each day the violation remains in effect, not to exceed $1,500.00 for each violation. (2) For a second violation of the same nature within 12 months, a fine of up to $1,000.00 may be imposed for each day the violation remains in effect, not to exceed $3,000.00 for each violation. (3) For a third or further violation of the same nature within 12 months, a fine of up to $2,500.00 may be imposed for each day the violation remains in effect, not to exceed $7,500.00 for each violation. (c) A state video franchise holder may appeal a penalty assessed by the City Administrator to the City Council - 4 - 090913444 within 60 days of the initial assessment. The City Council shall hear all evidence and relevant testimony and may uphold, modify or vacate the penalty. The City Council's decision on the imposition of a penalty shall be final. Section 15.5. City Response to State Video Franchise Applications. (a) Applicants for state video franchises within the boundaries of the City must concurrently provide complete copies to the City of any application or amendments to applications filed with the California Public Utilities Commission (PUC). One complete copy must be provided to the City Administrator. (b) Within 30 days of receipt, the City Administrator will provide any appropriate comments to the PUC regarding an application or an amendment to aft application for a state video franchise." SECTION 3: Severability. If any chapter, article, section, subsection, subdivision, paragraph, sentence, clause, phrase, or word in this Ordinance or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any court of competent jurisdiction, such decision shall not :affect the validity or effectiveness of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have adopted this Ordinance and each chapter, article, section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more chapters, articles, sections, subsections, subdivisions, paragraphs, sentences, clauses, - 5 - 090913444 phrases or words be.declared unconstitutional, or invalid, or ineffective. SECTION 4: Book of Ordinances. The Interim City Clerk, or Deputy City Clerk, shall attest and certify to the adoption of this Ordinance and shall cause this Ordinance and the Interim City Clerk's, or Deputy.City Clerk's, certification to be entered in the Book of Ordinances of the Council of this City. The Interim City Clerk, or Deputy City Clerk, shall.cause this ordinance to be published or posted as required by law. SECTION 5: This Ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (31st) day after its passage'. APPROVED AND ADOPTED this 1st day of October, 2013. Name:: W Michael McCormick Title: Mayor T ST- I j Dana. Reed Inte im City Clerk i y APPROVED AS TO FORM: Scott E. Porter, Deputy City Attorney - 6 - 090913444 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, DANA REED, Interim City Clerk of the City of Vernon, do hereby certify that the foregoing Ordinance, being Ordinance No. 1213, was duly and regularly introduced at a meeting of the City Council of the City of Vernon, held in the City of Vernon on Tuesday, September 17, 2013, and thereafter adopted at a meeting of said City Council held on Tuesday, October 1, 2013, by the following vote: AYES: Councilmembers: Mayor McCormick, Mayor Pro-Tem Davis, Maisano, Martinez, Ybarra NOES: Councilmembers: None ABSENT: Councilmembers: None And thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this day of October, 2013, at Vernon, California. Da Reed Interim City Clerk (SEAL) -7- CITY CLERK'S OFFICE INTEROFFICE MEMORANDUM DATE: October 3, 2013 TO: Carlos Fandino, Director of Light & Power William Fox, Finance Director Mark Whitworth, City Administrator FROM: Deborah Juarez, Records Management Assistant RE: Ordinance No. 1213 — An Ordinance of the City Council of the City of Vernon, California, Adding Chapter 15 to the Vernon Municipal Code to Establish Franchise Fees, PEG Fees, and Customer Service Penalties for State Franchise Holders Providing Video Service Within the City of Vernon Transmitted herewith is a copy of Ordinance No. 1213 referenced above, which was approved by City Council on October 1, 2013. Thank you. Attachment c: Ana Barcia Anthony Serrano Ordinance No. 1213 RECEIVED SEP 11 2013 CITY CLERK'S OFFICE STAFF REPORT LIGHT & POWER DEPARTMENT DATE: September 17, 2013 TO: Honorable Mayor and City Council FROM: Carlos Fandino, Director of Light & Power SEP 10 2013 CITY ADMINISTRATION RE: Ordinance No. 1213 adding Chapter 15 to the Code of the City of Vernon to establish franchise fees, PEG fees, and .customer service penalties for state franchise holders providing video service within the City of Vernon Recommendation It is recommended that the City Council: 1. Find that approval of the ordinance is exempt under the California Environmental Quality Act (CEQA) in accordance with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on the environment, because the mere collection of fees and penalties will have no significant effect on whether AT&T or any other company provides video service in Vernon; and ' 2. Hold the first reading of, and subsequently adopt, Ordinance No. 1213 to establish franchise fees, PEG fees, and customer service penalties for state franchise holders providing video (cable TV) service within the City of Vernon. Backaround This ordinance is in accordance with state law which became effective January 1, 2007 — the Digital Infrastructure and Video Competition Act of 2006 ("DIVCA"). DIVCA establishes the California Public Utilities Commission ("CPUC") as the sole franchising authority for new video service providers in California but delegates certain rights and responsibilities to local authorities. However, cities must pass an ordinance before the cities may take certain actions to regulate state video franchise holders. On March 30, 2007, AT&T California obtained a state franchise to provide video service in the overwhelming majority of California jurisdictions, including Vernon. On August 1, 2013 AT&T California provided Vernon with formal written notice that it would begin providing video service within Vernon on or after August 11, 2013. This ordinance proposes to add Chapter 15 to the Municipal Code to regulate AT&T California, and any other new video service provider in the City. Discussion The primary impact of DIVCA on the City is that as of January 2, 2008, the City could no longer issue new cable franchises. Instead, the CPUC became the sole franchising authority for video service providers in the State. With regards to all video service providers with state franchises, DIVCA imposes a franchise fee of five percent (5%) of "gross revenues" (which term is defined by DIVCA), unless the City opts to lower the franchise fee. This ordinance, as drafted, confirms that the City will impose the full 5% fee, as is customary throughout the state. DIVCA also authorizes the City to collect an additional fee to support Public, Educational, and/or Governmental ("PEG") programming. Currently, PEG fees can only be expended to pay for "capital costs" associated with PEG support. These costs can include purchase of or maintenance of PEG facilities and equipment. It is likely that in the few years, federal legislation will be passed to broaden how PEG funds may be expended. The language of this ordinance is drafted broadly to avoid needing to amend the ordinance should this occur. Cities must also monitor customer service standards for state video franchisees, but are limited to enforcing only those standards enumerated in DIVCA. A city may only impose fines for violations of those standards if the city enacts an ordinance or resolution establishing the fine schedule. The amount of each fine is limited by DIVCA. This ordinance establishes fines consistent with the maximum fines permitted by DIVCA. This ordinance authorizes the City Administrator (or the City Administrator's designee) to authorize an audit of any state franchisee's records up to once per year to ensure compliance with the City's ordinance. This ordinance complies with the requirements of Article XII C section 1, subd. (e) (Proposition 26), because the ordinance does not establish a "tax." First, it is the California Public Utilities Commission, and not the city that establishes the franchise fee and the franchise fee of 5% is a charge for the use of the city's property. Second, the PEG fee is not a tax, by definition, because the city will use the 1 % fee only for the reasonable "capital costs" the city incurs relating to the provision of public, educational, and governmental video services, as that term is defined in federal law, and because the charge is only imposed for a specific government service or product provided directly to the payor that is not provided to those not charged. Third, the fines and audits authorized by this ordinance are not taxes, because fines are expressly exempted from the definition of a tax, and the payments applicable to the audit would only apply if there was a violation of law. Fiscal Imnact It is expected that AT&T will begin providing video service in the City pursuant to a state franchise, if it has not yet already done so. If the City does not enact this ordinance, then potentially, AT&T may assert that it does not have to pay the PEG fee, or be subject to any customer service violations until such time as an ordinance is adopted. That stated, it is clear that the franchise fee would still have to be paid, because the fee was established by the state. CITY OF VERNON CITY COUNCIL MEETING SEPTEMBER 17, 2013 ORDINANCE NO. 1213 SUMMARY (Adding Chapter 15 to the Vernon Municipal Code to establish Franchise Fees, Peg Fees, and Customer Service Penalties) A CERTIFIED COPY OF THE FULL TEXT OF PROPOSED ORDINANCE NO. 1213 IS AVAILABLE IN THE OFFICE OF THE CITY CLERK LOCATED AT 4305 SANTA FE AVENUE, VERNON, CALIFORNIA. Ordinance No. 1213 was duly introduced at a regular meeting of the City Council of the City of Vernon held on September 17, 2013. Ordinance No. 1213 is scheduled to be approved and adopted by said Council at a regular meeting to be held on October 1, 2013. On October 1, 2013, the City Council of the City of Vernon is proposing to adopt Ordinance No. 1213 adding Chapter 15 to the Vernon Municipal Code to establish Franchise Fees, Peg Fees, and Customer Service Penalties for State Franchise Holders Providing Video Service within the City of Vernon. Dana Reed, Interim City Clerk of the City of Vernon, does hereby certify that Ordinance No. 1213 was duly introduced to the City Council of the City of Vernon at a regular meeting held on September 17, 2013, and said Ordinance is scheduled to be approved and adopted at a regular meeting of the City Council to b eld on October 1, 2013. Dated: ���Y- A DanYReed, Interim City Clerk PROOF OF PUBLICATION (2015.5 C.C.P.) STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am a citizen of the United States and a resident of the County aforementioned; I am over the age of eighteen years, and not a party to or interested in the above -entitled matter. I am the principal clerk of the printer of EASTERN GROUP PUBLICATIONS' EASTSIDE SUN, MEXICAN AMERICAN SUN, NORTHEAST SUN, BELL GARDENS SUN, VERNON SUN, COMMERCE COMET, CITYTERRACE COMET, MONTEBELLO COMET, MONTEREY PARK COMET, E.L.A. BROOKLYN BELVEDERE COMET AND WYVERNWOOD CHRONICLE, newspapers of general circulation, printed and published THURSDAYS in the County of Los Angeles, and which newspaper has been adjudicated a newspaper of general circulation by the Superior Court of the County of Los Angeles, State of California, under the date of JUNE 21, 1966, CASE NUMBER 884861; that the notice, of which the annexed is a printed copy (set in type not smaller than nonpareil), has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to -wit: SEPTEMBER 26, all in the year 2013. I certify (or declare) under penalty of perjury that the foregoing is true and correct. Dated at LOS ANGELES, California, this 26hday of SEPTEMBER, 2013. This space is for the County Clerk's Filing Stamp CITY OF VERNON Proof of Publication of City of Vernon City Council Meeting September 17, 2013 Ordinance No. 1213 Summary (Adding Chapter 15 to the Vernon Municipal Code to Establish Franchise Fees, Peg Fees, and Customer Service Penalties Signature CITY OF VERNON CITY COUNCIL MEETING OCTOBER 1, 2013 ORDINANCE NO. 1213 SUMMARY (Adding Chapter 15 to the Vernon Municipal Code to establish Franchise Fees, Peg Fees, and Customer Service Penalties) A CERTIFIED COPY OF THE FULL TEXT OF ADOPTED ORDINANCE NO. 1213 IS AVAILABLE IN THE OFFICE OF THE CITY CLERK LOCATED AT 4305 SANTA FE AVENUE, VERNON, CALIFORNIA. On October 1, 2013, the City Council of the City of Vernon approved and adopted Ordinance No. 1213 adding Chapter 15 to the Vernon Municipal Code to establish Franchise Fees, Peg Fees, and Customer Service Penalties for State Franchise Holders Providing Video Service within the City of Vernon. I, Dana Reed, Interim City Cleric of the City of Vernon, do hereby certify that Ordinance No. 121.3 was duly approved and adopted by the City Council of the City of Vernon at a regular meeting held on October 1, 2013, and passed by said Council by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: Dated: 16 - �— / d McCormick, Davis, Maisano, Ybarra, and Martinez None None Interim City Clerk PROOF OF PUBLICATION (2015.5 C.C.P.) STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am a citizen of the United States and a resident of the County aforementioned; I am over the age of eighteen years, and not a party to or interested in the above -entitled matter. I am the principal clerk of the printer of EASTERN GROUP PUBLICATIONS' EASTSIDE SUN, MEXICAN AMERICAN SUN, NORTHEAST SUN, BELL GARDENS SUN, VERNON SUN, COMMERCE COMET, CITYTERRACE COMET, MONTEBELLO COMET, MONTEREY PARK COMET, E.L.A. BROOKLYN BELVEDERE COMET AND WYVERNWOOD CHRONICLE, newspapers of general circulation, printed and published THURSDAYS in the County of Los Angeles, and which newspaper has been adjudicated a newspaper of general circulation by the Superior Court of the County of Los Angeles, State of California, under the date of JUNE 21, 1966, CASE NUMBER 884861; that the notice, of which the annexed is a printed copy (set in type not smaller than nonpareil), has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to -wit: OCTOBER 03, all in the year 2013. I certify (or declare) under penalty of perjury that the foregoing is true and correct. Dated at LOS ANGELES, California, this 03� day of OCTOBER, 2013. This space is for the County Clerk's Filing Stamp CITY OF VERNON Proof of Publication of City of Vernon CitvCouncil Meetin October 1, 2013 Ordinance No. 1213 Summary (Adding Chapter 15 to the Vernon Municipal Code to Establish Franchise Fees, Peg Fees. and Customer Service Penalties) �ture