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CITY COUNCIL AGENDA ITEM NO. 15

Meeting Date: February 8, 2005

Subject/Title: Approve a Resolution finding and determining that Comcast of California IV, Inc. did not commit a material breach of franchise and terminating the proceeding relating thereto; approve a Resolution granting a franchise renewal to Comast of California IV, Inc. and making certain determinations in relation thereto.

Prepared by: Karen Chew, Assistant City Manager

Submitted by: Donna Landeros, City Manager
______________________________________________________________________________

RECOMMENDATION
Approve a Resolution finding and determining that Comcast of California IV, Inc. did not commit a material breach of franchise and terminating the proceeding relating thereto; approve a Resolution granting a franchise renewal to Comast of California IV, Inc. and making certain determinations in relation thereto.

PREVIOUS ACTION
On June 28, 1983, by Resolution No. 83-33, the City of Brentwood issued to Televents of East County, Inc., a Nevada corporation, a license to operate a cable television system.
On June 23, 1998, by Resolution No. 98-119, the City of Brentwood extended the term of the Cable Television Franchise with Televents of East County, Inc., a Nevada corporation, until September 30, 1998.
On September 8, 1998, by Resolution No. 98-160, the City of Brentwood granted a Cable Television Franchise to Televents of East County, Inc., a Nevada Corporation, until September 30, 2001.
On November 13, 2001, by Resolution No. 2408, the City of Brentwood granted a Cable Television Franchise with Televents of East County, Inc., a Nevada corporation, from October 1, 2001 through September 30, 2003.
On November 26, 1968, the City Council adopted Ordinance No. 181 (an Ordinance Providing for the Granting of Franchises, etc.), codified as Chapter 5.24 of the Municipal Code.
On March 26, 2002, the City Council adopted Ordinance No. 700 repealing Chapter 5.24 and adopting a new Chapter 5.24.
On May 28, 2002, the City Council adopted Ordinance No. 705, repealing Chapter 5.24 and adopting a new Chapter 5.24.
On December 9, 2003, the City Council adopted Resolution No. 3051 (the “Resolution”) notifying Comcast of California IV, Inc. of its intent to terminate the Franchise and seek other remedies due to alleged material franchise breach set forth therein.
On January 13, 2004, the City Council held a duly-noticed public hearing (the “Hearing”) relating to the notice provided by Resolution No. 3051.

BACKGROUND
The City Council Subcommittee and staff have worked on this issue diligently for years as can be seen from the previous actions listed above. On November 3, 2004, the former City Manager, Assistant City Manager and Attorney Bill Marticorena met with Johnnie Giles and Jeff Smith of Comcast to negotiate the franchise renewal contained in the attached Franchise Agreement.

This agreement concludes these lengthy negotiations in an acceptable outcome for the City, our residents and Comcast. Section 9 of the Agreement outlines the public services begin brought to the community by Comcast through this Agreement.

FISCAL IMPACT
$850,000 from Comcast to fund PEG equipment and a continued 5% franchise fee paid by Comcast. The $850,000 will be paid over the first seven years of the fifteen year contract.

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD, CALIFORNIA FINDING AND DETERMINING THAT COMCAST OF CALIFORNIA IV, INC., DID NOT COMMIT A MATERIAL BREACH OF FRANCHISE AND TERMINATING THE PROCEEDING RELATING THERETO

WHEREAS, on June 28, 1983, by Resolution No. 83-33, the City of Brentwood issued to Televents of East County, Inc., a Nevada corporation, a license to operate a cable television system; and
WHEREAS, on June 23, 1998, by Resolution No. 98-119, the City of Brentwood extended the term of the Cable Television Franchise with Televents of East County, Inc., a Nevada corporation, until September 30, 1998; and
WHEREAS, on September 8, 1998, by Resolution No. 98-160, the City of Brentwood granted a Cable Television Franchise to Televents of East County, Inc., a Nevada Corporation, until September 30, 2001; and
WHEREAS, on November 13, 2001, by Resolution No. 2408, the City of Brentwood granted a Cable Television Franchise with Televents of East County, Inc., a Nevada corporation, from October 1, 2001 through September 30, 2003; and
WHEREAS, on February 28, 2002 and on December 6, 2002, the City of Brentwood was notified by AT&T Corporation and Comcast Corporation that their merger did not change the holder of the cable television franchise or act to dissolve the corporation or transfer any of its assets; and
WHEREAS, on July 23, 2003, Comcast of California IV, Inc., submitted to the City of Brentwood an application for a renewal of the cable television franchise; and
WHEREAS, on November 18, 2003, Comcast of California IV, Inc. delivered documents to the City showing that it is a Wyoming corporation; and
WHEREAS, on November 26, 1968, the City Council adopted Ordinance No. 181 (an Ordinance Providing for the Granting of Franchises, etc.), codified as Chapter 5.24 of the Municipal Code; and
WHEREAS, on March 26, 2002, the City Council adopted Ordinance No. 700 repealing Chapter 5.24 and adopting a new Chapter 5.24; and
WHEREAS, on May 28, 2002, the City Council adopted Ordinance No. 705, repealing Chapter 5.24 and adopting a new Chapter 5.24; and
WHEREAS, on December 9, 2003, the City Council adopted Resolution No. 3051 (the “Resolution”) notifying Comcast of California IV, Inc. of its intent to terminate the Franchise and seek other remedies due to alleged material franchise breach set forth therein; and
WHEREAS, the City Council of the City of Brentwood, California held a duly-noticed public hearing (the “Hearing”) on January 13, 2004 relating to the notice provided by Resolution No. 3051; and
WHEREAS, The City Council of the City of Brentwood continued the public hearing to this date.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brentwood that it desires to close the public hearing and affirmatively find that neither Comcast of California IV, Inc., nor any of its current or former parent companies, nor any of its or their directors, officers, employees, attorneys, agents or representatives, committed a material breach of franchise based upon the grounds set forth in Resolution No. 3051 and does hereby resolve as follows:
1. The Recitals are deemed true and correct.
2. The Hearing is hereby closed and all evidence submitted therein is hereby deemed admitted.
3. Based upon the evidence and legal arguments presented at the Hearing, it is hereby determined that Comcast of California IV, Inc., nor any of its current or former parent companies, nor any of its or their directors, officers, employees, attorneys, agents or representatives, committed a material breach of franchise based upon the alleged acts, omissions, and theories set forth in Resolution No. 3051.
4. The franchise breach proceeding established in Resolution No. 3051 is hereby terminated without a finding of material breach.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 8th day of February, 2005 by the following vote:

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD, CALIFORNIA GRANTING A FRANCHISE RENEWAL TO COMCAST OF CALIFORNIA IV, INC. AND MAKING CERTAIN DETERMINATIONS IN RELATION THERETO

WHEREAS, on June 28, 1983, by Resolution No. 83-33, the City of Brentwood, California (the “City”) issued to Televents of East County, Inc., a Nevada corporation, a license to operate a cable television system; and
WHEREAS, on June 23, 1998, by Resolution No. 98-119, the City extended the term of the license with Televents of East County, Inc., a Nevada corporation, until September 30, 1998; and
WHEREAS, on September 8, 1998, by Resolution No. 98-160, the City granted a cable television franchise to Televents of East County, Inc., a Nevada corporation, until September 30, 2001; and
WHEREAS, on November 13, 2001, by Resolution No. 2408, the City granted a cable television franchise to Televents of East County, Inc., a Nevada corporation, from October 1, 2001 through September 30, 2003; and
WHEREAS, on July 23, 2003, Comcast of California IV, Inc. (“Comcast”), a successor-in-interest to Televents of East County, Inc., submitted to the City an application for a renewal of its cable television franchise; and
WHEREAS, on November 26, 1968 the City Council adopted Ordinance No. 181, codified as Chapter 5.24 of the Municipal Code; and
WHEREAS, on March 26, 2002, the City Council adopted Ordinance No. 700, repealing Chapter 5.24 and adopting a new Chapter 5.24; and
WHEREAS, on May 28, 2002, the City Council adopted Ordinance No. 705, repealing Chapter 5.24 and adopting a new Chapter 5.24 (the “Ordinance”); and
WHEREAS, Comcast submitted a formal written proposal for renewal on July 23, 2003 (the “Renewal Proposal”); and
WHEREAS, the City has conducted hearings and other proceedings relating to the Renewal Proposal; and
WHEREAS, the City Council has reviewed the legal, technical, and financial qualifications of Comcast to provide cable television services within the City pursuant to a renewed franchise agreement.
NOW, THEREFORE, BE IT RESOLVED by the City Council as follows:

1. The Recitals are hereby deemed to be true, correct, and accurate.
2. The Renewal Proposal is hereby deemed timely filed.
3. That agreement entitled “Franchise Agreement” by and between the City of Brentwood, California and Comcast of California IV, Inc., dated February 1, 2005, a copy of which is attached hereto as Exhibit A, is hereby deemed approved pursuant to the provisions of the Ordinance. The Mayor and the City Manager are hereby authorized and directed to execute and deliver said Franchise Agreement on behalf of the City.
4. The Franchise Agreement shall be deemed effective upon the receipt by the City of a written acceptance of Comcast, in a form acceptable to the City Attorney, in which Comcast accepts the Franchise Agreement and the Ordinance, and all of the terms and conditions thereof, without reservation or condition (the “Acceptance”). If the Acceptance is not provided to the City within thirty (30) days of the date of adoption of this Resolution, the approvals and recitals set forth herein shall become void ab initio.
5. Subject to the satisfaction of paragraph 4 above, the formal renewal proceeding initiated by the City pursuant to U.S.C. § 546 is hereby terminated, the City having found that there is no basis upon which to deny Comcast renewal of its franchise in accordance with the Franchise Agreement.
6. This Resolution shall become effective upon its date of adoption.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 8th day of February, 2005 by the following vote:



FRANCHISE AGREEMENT
(Comcast/City of Brentwood, California)


This Franchise Agreement (hereinafter, the “Agreement” or “Franchise Agreement”) is made between the City of Brentwood, California (“City”) and Comcast of California IV, Inc. (hereinafter, the “Grantee”).
Grantee currently provides cable television services in the City pursuant to a franchise granted by the City (Resolution No. 83-33, as amended and extended) and the City and Grantee desire to renew that franchise for an additional term as provided for herein.
The City, having determined that the financial, legal, and technical ability of the Grantee is reasonably sufficient to provide services, facilities, and equipment necessary to meet the future cable-related needs of the community, desires to enter into this Franchise Agreement with the Grantee for the construction and continued operation of a cable system on the terms and conditions set forth herein.

SECTION 1
Definition of Terms

1.1 Terms. For the purpose of this Franchise Agreement, the following terms, phrases, words, and abbreviations shall have the meanings ascribed to them below. Consistent with Section 2.5 of this Franchise Agreement and Section 5.24.100 of the Ordinance, in the event a term, phrase, word or abbreviation is defined both in this Franchise Agreement and the Ordinance, the definition provided in this Franchise Agreement shall supercede and control any definition provided in the Ordinance. Unless otherwise defined herein, any term not defined herein shall have the meaning assigned to such term in the Cable Act.

“Basic Service” means the lowest service tier provided by the Grantee as required under 47 U.S.C. § 543 (b)(7). Basic Service does not include expanded basic tiers of service, optional programming and satellite service tiers, a la carte services, per channel, per program, or auxiliary services for which a separate charge is made.

“Cable Act” means Title VI of the Communications Act of 1934, as amended from time to time, 47 U.S.C. Sections 521 et seq.

“Cable Service” means: (A) the one-way transmission to Subscribers of (i) video programming, or (ii) other programming service, and (B) Subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service.

“Cable System” means a facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide Cable Service which includes video programming and which is provided to multiple Subscribers within a community, but such term does not include (A) a facility that serves only to retransmit the television signals of one or more television broadcast stations; (B) a facility that serves Subscribers without using any public right-of-way; (C) a facility of a common carrier which is subject, in whole or in part, to the provisions of Title II of the Cable Act, except that such facility shall be considered a Cable System (other than for purposes of Section 621(c)) to the extent such facility is used in the transmission of video programming directly to Subscribers, unless the extent of such use is solely to provide interactive on-demand service; (D) an open video system that complies with section 653 of the Cable Act; or (E) any facilities of any electric utility used solely for operating its electric utility systems.
“City” means the City of Brentwood, California, or the lawful successor, transferee, designee, or assignee thereof.

“Control” or “Controlling Interest” shall mean actual working control or ownership of a Cable System in whatever manner exercised. A rebuttable presumption of the existence of Control or a Controlling Interest shall arise from the direct ownership by any person or legal entity (except underwriters during the period in which they are offering securities to the public) of more than Fifty Percent (50%) of a Cable System. A change in the Control or Controlling Interest of a legal entity which has Control or a Controlling Interest in a Grantee shall constitute a change in the Control or Controlling Interest of the Cable System under the same criteria. Control or Controlling Interest as used herein may be held simultaneously by more than one person or a legal entity. Notwithstanding the above, there shall be deemed no change in Control resulting from any transaction in which the ultimate controlling parent entity remains the same.
“Effective Date” means ____, 200__.
“FCC” means the Federal Communications Commission, or successor governmental entity thereto.
“Franchise” means this authorization to construct and operate the Cable System, and any renewal or extension hereof.
“Franchise Agreement” or “Agreement” shall have the meaning set forth in the preamble hereof.
“Franchise Area” means the present legal boundaries of the City as of the Effective Date, and shall also include any additions thereto, by annexation or other legal means.
“Grantee” shall have the meaning set forth in the preamble hereof.
“Gross Revenues” means all revenue collected by the Grantee from the operation of the Cable System to provide Cable Services within the City. Gross Revenues shall include, without limitation: periodic fees charged Subscribers for any basic, optional, premium, per-channel or per-program service; franchise fees; installation and reconnection fees; leased channel fees; converter rentals and/or sales; program guide revenues; upgrade, downgrade or other change-in-service fees; local advertising revenues received by the Cable System, revenues from home shopping; revenues from the sale, exchange, use or transmission of any programming developed on the Cable System for community or institutional use; and payments from programmers to carry video programming; provided, however, that this shall not include any taxes on services furnished by the Grantee herein imposed directly upon any Subscriber or User by the state, local or other governmental unit and collected by the Grantee on behalf of the governmental unit or any franchise fees or other fees collected by Grantee and then paid to the City. For purposes of this Agreement, “Gross Revenues” shall be defined with reference to generally accepted accounting principles (GAAP).

In the event that Grantee, or an Affiliate on Grantee’s behalf, shall bundle, tie or combine Cable Services (which are the subject of this definition of Gross Revenues and the franchise fee obligations of this Franchise) with non-Cable Services (which are not subject to the franchise fee provision of this Franchise), for the purposes of Gross Revenues and franchise fee calculations, Grantee shall make the allocations on a pro rata basis and, upon City’s request, shall set forth that basis on a statement or worksheet accompanying its franchise fee payment to City, and City may review the allocation as part of any franchise fee audit undertaken pursuant to this Franchise. Grantee shall not cause revenue to be received by an Affiliate for the purpose of evading any obligations resulting from this definition.

“Normal Business Hours” for purposes of Section 6.1 shall mean those hours during which similar businesses in the City are open to serve customers not to exceed twelve (12) hours on any weekday and eight (8) hours on the weekend. In all cases Normal Business Hours shall include some evening hours at least one night per week, and/or some week end hours.
“Normal Operating Conditions” for purposes of Section 6.1 shall mean those service conditions that are within the reasonable control of the Grantee. Those conditions that are not within the control of the Grantee include, but are not limited to: natural disasters, civil disturbances, power outages, telephone network outages, labor disputes, vandalism and severe or unusual weather conditions. Those conditions that are ordinarily within control of the Grantee include, but are not limited to, special promotions, pay-per-view events, rate increases, regular peak or season demand periods, and scheduled or regular maintenance or upgrade of the Cable System.
“Ordinance” means Ordinance No. 705 as adopted by the City on May 28, 2002 as revised by Ordinance No. ___, adopted by the City on ______________, 2003.
“Person” means any natural person or any association, firm, partnership, joint venture, corporation, or other legally recognized entity, whether for-profit or not-for profit, but shall not mean the City.
“Service Area” means that portion of the Franchise Area that Grantee is required to serve pursuant to Section 4.1 of this Franchise Agreement.
“Service Interruption” is the loss of either picture or sound on one or more cable channels.
“Street” means the surface of and all rights-of-way and the space above and below any public street, road, highway, freeway, lane, path, public way or place, sidewalk, alley, court, boulevard, parkway, drive or easement now or hereafter held by the City for the purpose of public travel and shall include other easements or rights-of-way as shall be now held or hereafter held by the City which, within their proper use and meaning, shall entitle the Grantee to the use thereof for the purposes of installing poles (but only in accordance with the requirements of the City’s Engineering Department, including applicable fees), wires, cable, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, attachments, and other property as may be ordinarily necessary and pertinent to a Cable System.
“Subscriber” means a Person or user of the Cable System who lawfully receives Cable Service therefrom with the Grantee’s expressed permission.
“User” means a party utilizing a public, educational or government access channel for purposes of production or transmission of material to Subscribers, as contrasted with receipt thereof in the capacity of a Subscriber.
SECTION 2
Grant of Authority

2.1. Grant of Franchise. The City hereby grants to the Grantee under the Cable Act a nonexclusive Franchise, which authorizes the Grantee to construct, and operate a Cable System in, along, among, upon, across, above, over, under, or in any manner connected with Streets within the Franchise Area, and for that purpose to erect, install, construct, repair, replace, reconstruct, maintain, upgrade or retain in, on, over, under, upon, across, or along any Street and all extensions thereof and additions thereto, such poles, wires, cables, conductors, ducts, conduits, vaults, manholes, pedestals, amplifiers, appliances, attachments, and other related property or equipment as may be necessary or appurtenant to the Cable System. Nothing in this Franchise shall be construed to prohibit the Grantee from offering any service over its Cable System that is not prohibited by federal, state or local law.

2.2. Term of Franchise. The term of the Franchise granted hereunder shall be for an initial term of fifteen (15) years, commencing upon the Effective Date of the Franchise, unless the Franchise is renewed or is lawfully terminated in accordance with the terms of this Franchise Agreement.

2.3. Renewal. Any renewal of this Franchise shall be governed by and comply with the provisions of Section 626 of the Cable Act, as amended.

2.4. Competitive Equity. The Grantee acknowledges and agrees that the City reserves the right to grant one or more additional franchises to provide Cable Service within the Franchise Area; provided, however, that no such franchise agreement shall contain terms or conditions, taken as a whole, more favorable or less burdensome to the competitive entity than the material terms and conditions herein, including, but not limited to, franchise fees; insurance; system build-out requirements; performance bonds or similar instruments; public, education and government access channels and capital support; customer service standards; required reports and related record keeping; liquidated damages and other sanctions; and universal service.

2.5 Applicable Law/Conflict of Laws.
2.5.1 The Grantee acknowledges that its rights hereunder are subject to the lawful exercise of the City’s police power to adopt and enforce ordinances of general application that are necessary to the safety and welfare of the public; and it agrees to comply with all applicable general laws and ordinances enacted by the City pursuant to such power.

2.5.2 Any conflict between the provisions of this Franchise Agreement and any current or future lawful exercise of the City's police powers shall be resolved in favor of the latter, except that any such exercise that is not of general application in the jurisdiction or applies exclusively to the Grantee or Cable System which contains provisions inconsistent with this Franchise Agreement or the Ordinance, shall prevail only if it is determined that the City has lawfully found such exercise to be necessary in light of a danger to health, safety or general welfare of the public or if such exercise is mandated by law.

2.5.3 Any conflict between the Ordinance and this Franchise Agreement shall be resolved in favor of the latter. Any conflict between any other City ordinance and this Franchise Agreement shall be resolved in favor of this Franchise Agreement except to the extent such ordinance constitutes a lawful exercise of the City’s police power applicable to a Grantee under this Section 2.5.

2.6 Franchise Costs. Each party shall bear its own costs with respect to the awarding, modification, renewal, and enforcement of this Franchise, including any costs for consultants or attorneys, and Grantee retains all rights to pass through or otherwise treat any franchise expenses or costs in the manner permitted by federal law. The City may require Grantee to pay or reimburse the City for all or some portion of its reasonable out-of-pocket expenses, including attorneys’ and consultants’ fees and costs incidental to the transfer of its Franchise up to a maximum of $5,000.

SECTION 3
The System
3.1. System Upgrade.

3.1.1 Upgrade Elements. By no later than June 30, 2004, Grantee shall fully upgrade the cable system throughout the Service Area. Upon completion of the upgrade, the Cable System shall be designed and constructed to have (i) a minimum bandwidth of 860 MHz, (ii) active components with a minimum capacity of 860 MHz and passive components with a minimum capacity of one GHz and (iii) two-way capability. Grantee’s failure to complete such upgrade by that date shall constitute a substantial default of a material provision of the Franchise under section 10.4.2 hereof. Grantee shall provide emergency alert capability pursuant to FCC rules. Upon completion of the upgrade, the System shall have the following back-up power:

headend: continuous auto-start
hubs: continuous
nodes and trunk stations: three hours

In addition, Grantee shall provide adequate mobile generators, monitoring systems and personnel so that Grantee is able to detect outages and place mobile generators before loss of fixed back-up power in cases where subscribers have power.
Notwithstanding anything in the Ordinance or any other provision to the contrary, and subject to applicable state and federal law, Grantee shall not be required to upgrade, rebuild, enhance or implement other technical changes to the Cable System except as expressly provided by this Franchise Agreement.
The City hereby acknowledges that Grantee has satisfied all of the requirements of this Section 3.1.2.

3.1.2 Permits and General Obligations. The Grantee shall be responsible for obtaining, at its own cost and expense, all permits, licenses, or other forms of approval or authorization necessary to upgrade, operate, maintain or repair the Cable System, or any part thereof, prior to the commencement of any such activity. The City shall reasonably cooperate in the processing of all permits for which completed applications are filed. Construction, installation, and maintenance of the Cable System shall be performed in a safe, thorough and reliable manner using materials of good and durable quality. All transmission and distribution structures, poles, other lines, and equipment installed by the Grantee for use in the Cable System in accordance with the terms and conditions of this Franchise Agreement shall be located so as to minimize the interference with the proper use of the Streets and the rights and reasonable convenience of property owners who own property that adjoins any such Street. Grantee shall comply with generally applicable regulations lawfully adopted pursuant to the generally applicable police powers of the City.

3.1.3 Video-On-Demand. Grantee shall provide video-on-demand throughout the entire franchise area within two (2) years of the Effective Date of this Franchise Agreement.

3.1.4. Future Cable Services.

(a) The Grantee shall offer materially the same Cable Services over the Cable System serving the City as are offered on a commercial basis over any other cable system owned and operated by the Grantee or any of its parent companies, subsidiaries or affiliates within a 50 mile radius of the City and serving 150% or less than the number of cable subscribers served by the Grantee in the City (a “Comparable Community”). The Grantee shall not be obligated to offer any Cable Services pursuant to this provision if it determines that it is commercially impractical or technically infeasible to do so. Grantee shall make all information upon which such determination was based available to the City upon request. Nothing in this provision shall impose any obligation upon Grantee to deploy any particular technology, method of transmission, equipment, facilities or software for use with the Cable System.

(b) Within sixty (60) days of any written request of the City, the Grantee shall provide the City with non-confidential information regarding the Cable Services it is then offering in the City and in Comparable Communities, together with any information regarding any decision not to deploy certain Cable Services within the City. Within sixty (60) days of its receipt of such information, the City shall identify in writing any material Cable Services that are then deployed in Comparable Communities and that it desires to be deployed in the City, and for which the Grantee has not reasonably demonstrated commercial impracticality or technical infeasibility. Thereafter, the Grantee and the City shall negotiate and agree upon a reasonable period of time by which such identified Cable Services shall be deployed in the City.

3.2. Conditions on Street Occupancy.

3.2.1. New Grades or Lines. If the grades or lines of any Street within the Franchise Area are lawfully changed at any time during the term of this Franchise Agreement, then the Grantee shall, upon reasonable written notice from, and after consultation with, the City and at no cost and expense to City, protect or promptly remove, alter or relocate the Cable System, or any part thereof, so as to conform with any such new grades or lines. If public funds are available to any Person using such street or public right-of-way for the purpose of defraying the cost of any of the foregoing, the City shall, upon written request of the Grantee, cooperate with Grantee in Grantee’s undertaking to obtain such funds. In no event shall Grantee be obligated to absorb costs of any such removal, alteration or relocation of Grantee’s Cable System which is done at the request of or for the benefit of any non-governmental right-of-way occupant or use.

3.2.2. Relocation at Request of Third Party. The Grantee shall, upon reasonable prior written request of any Person holding a permit issued by the City to move any structure, temporarily move its wires to permit the moving of such structure; provided (i) the Grantee may impose a reasonable charge on any Person for the movement of its wires, and such charge may be required to be paid in advance of the movement of its wires; and (ii) the Grantee is given not less than ten (10) business days advance written notice to arrange for such temporary relocation.

3.2.3. Restoration of Streets. If in connection with the construction, operation, maintenance, or repair of the Cable System, the Grantee disturbs, alters, or damages any Street, the Grantee agrees that it shall at its own cost and expense replace and restore any such Street to a condition reasonably comparable to the condition of the Street existing immediately prior to the disturbance.

3.2.4. Safety Requirements. The Grantee shall, at its own cost and expense, undertake all necessary and appropriate efforts to maintain its work sites in a safe manner in order to prevent failures and accidents that may cause damage, injuries or nuisances. The Grantee shall comply with applicable FCC technical standards as well as all applicable federal and state safety regulations, the National Electrical Code and the National Electric Safety Code. The Cable System shall not unreasonably endanger or interfere with the safety of Persons or property in the Franchise Area.

3.2.5. Trimming of Trees and Shrubbery. The Grantee shall have the authority to trim trees or other natural growth overhanging any of its Cable System in the Franchise Area so as to prevent contact with the Grantee’s wires, cables, or other equipment. All such trimming shall be done at the Grantee’s sole cost and expense. The Grantee shall reasonably compensate the City for any damage caused by such trimming, or shall, in its sole discretion and at its own cost and expense, reasonably replace all trees or shrubs so damaged. Such replacement shall satisfy any obligations the Grantee may have to the City pursuant to the terms of this Section 3.2.5. Grantee shall notify City in advance of any major trimming of trees.

3.2.6. Aerial and Underground Construction. If all of the transmission and distribution facilities of all of the respective public or municipal utilities in any area of the Franchise Area are underground, the Grantee shall place its Cable Systems’ transmission and distribution facilities underground; provided that such facilities are actually capable of receiving the Grantee’s cable and other equipment without technical degradation of the Cable System’s signal quality. City shall require public or municipal utilities to provide the Grantee with written notice of any undergrounding planned by such utility within the City or any area to be annexed by the City. In any region(s) of the Franchise Area where the transmission or distribution facilities of the respective public or municipal utilities are both aerial and underground, the Grantee shall have the sole discretion to construct, operate, and maintain all of its transmission and distribution facilities, or any part thereof, aerially or underground. Nothing in this Section 3.2.6. shall be construed to require the Grantee to construct, operate, or maintain underground any appurtenances which are customarily ground-mounted, such as customer taps, line extenders, system passive devices, amplifiers, power supplies, pedestals, or other related equipment.

SECTION 4
Service Obligations

4.1. Service Area Requirement. Upon conclusion of the Cable System upgrade, the Grantee shall provide Cable Service to every existing residential dwelling unit within the Franchise Area as of the effective date of this Franchise Agreement, and any future dwelling unit or annexation area upon reaching the minimum density of at least thirty (30) residential dwelling units per mile measured from Grantee’s existing distribution cable. The Grantee shall offer Cable Service to all new homes or previously unserved homes located within 150 feet of the Grantee’s distribution cable. Grantee shall offer service at standard installation charges to all non-residential buildings within 150 feet of Grantee’s existing distribution cable. Grantee shall offer service to all non-residential buildings beyond 150 feet of Grantee’s existing distribution cable but may impose an additional charge for such buildings. Notwithstanding anything in the Ordinance or any other provision to the contrary, Grantee shall not be required to provide service to any residential dwelling unit that does not meet the density requirements of this Section 4.1. Commercial buildings will be provided commercial Cable Service upon agreeing to meet Grantee’s policies, including line extension costs, if applicable.

The Grantee may elect to provide Cable Service to areas not meeting the above density standards. The Grantee may impose an additional charge in excess of its regular installation charge for any service installation requiring a drop in excess of the above standards. Any such additional charge shall be computed on a time plus materials basis to be calculated on that portion of the installation which exceeds the 150 foot standard set forth above. In no event shall Grantee be required to provide Cable Service to dwelling units not meeting the 30-home density requirement or the 150-foot standard set forth in this Section 4.1.

4.2. No Discrimination. Neither the Grantee nor any of its employees, agents, representatives, contractors, subcontractors, or consultants, nor any other Person, shall discriminate or permit discrimination between or among any Persons in the availability of Cable Services provided in connection with the Cable System in the Franchise Area or between or among channel Users of the System on the basis of race, color, religion, national origin, sex, marital status, sexual preference or age. It shall be the right of all Persons to continuously receive all available services provided on the Cable System so long as such Person’s financial or other obligations to the Grantee are satisfied.

4.3. New Developments. The City shall require developers to provide the Grantee with written notice of the issuance of building or development permits for planned developments within the Franchise Area requiring undergrounding of cable facilities.

4.4. Prohibition against Reselling Service. No Person shall resell, without the express prior written consent of the Grantee, any Cable Service, program or signal transmitted over the Cable System by the Grantee.


SECTION 5
Fees and Charges to Subscribers

5.1. Rates, Fees, Charges. All rates, fees, charges, deposits and associated terms and conditions to be imposed by the Grantee or any affiliated Person for any Cable Service as of the Effective Date shall be in accordance with the FCC’s rate regulations. Before any new or modified rate, fee, or charge is imposed, the Grantee shall follow the applicable FCC notice requirements and rules and notify affected Subscribers, which notice may be by any means permitted under applicable law. Except to the extent otherwise expressly permitted by applicable law, the Grantee shall provide Cable Service to each resident in the Franchise Area in accordance with a uniform rate structure throughout the Franchise Area. The preceding requirement shall not prevent the Grantee from using bulk, commercial, promotional and other rates in accordance with federal law.


SECTION 6
Subscriber Service Standards; Subscriber Bills;
and Privacy Protection

6.1. Subscriber Service Standards. Notwithstanding anything in the Ordinance or any other provision to the contrary, and subject to applicable federal law, the customer service standards applicable to Grantee’s provision of Cable Service pursuant to this Franchise Agreement shall be as follows:

6.1.1. The Grantee shall make available at all times to its Subscribers a local or toll-free telephone access line and shall have knowledgeable, qualified representatives available to respond to customer telephone inquiries regarding service and repairs during Normal Business Hours.

6.1.2 Under Normal Operating Conditions, telephone answer time including wait time and the time required to transfer the call, shall not exceed thirty (30) seconds. This standard shall be met no less than ninety percent (90%) of the time as measured on a quarterly basis.

6.1.3. Under Normal Operating Conditions, the customer shall receive a busy signal less than three percent (3%) of the total time that the office is open for business.

6.1.4 Under Normal Operating Conditions, each of the following standards shall be met no less than ninety-five percent (95%) of the time as measured on an annual basis.

(1) Standard installations shall be performed within seven (7) business days after an order has been placed unless otherwise agreed to by the customer. A standard installation is one that is within one hundred fifty (150) feet of the existing Cable System.

(2) Excluding those situations that are beyond its control, the Grantee shall respond to any Service Interruption promptly and in no event later than twenty-four (24) hours from the time of initial notification. Grantee shall respond to all other service problems within thirty-six (36) hours during the normal work week for that Cable System. The appointment window alternatives for installations, service calls, reconnects and other related activities will be: "morning" or "afternoon"; not to exceed a four-hour "window" during Normal Business Hours for the Cable System, or at a time that is mutually acceptable. The Grantee shall schedule supplemental hours during which appointments can be scheduled based on the needs of the community. If at any time an installer or technician is running late, an attempt to contact the customer shall be made and the appointment rescheduled as necessary at a time that is convenient to the customer.

6.1.5 Upon notification by a Subscriber of a Service Interruption, Grantee shall give the Subscriber a credit for one day of the affected service if service is interrupted for more than four (4) hours in any one day and the Service Interruption is caused by Grantee.

6.1.6 The Grantee shall provide written information for each of the following areas at the time of installation and at any future time upon the request of the Subscriber:

(1) Products and services offered

(2) Prices and service options

(3) Installation and service policies

(4) How to use the Cable Services

6.1.7 Credits shall be issued promptly, but no later than the Subscriber's next billing cycle following the resolution of the request and the return of the equipment by the Subscriber if service has been terminated.

6.1.8 The Grantee shall give the City and Subscribers a minimum of thirty (30) days advance notice of any rate or channel change.

6.1.9 The Grantee shall maintain and operate the Cable System in accordance with the applicable FCC technical standards which are hereby incorporated herein.

6.1.10 The Grantee shall keep a monthly service log that indicates the nature of each service complaint received in the last twelve (12) months, the date and time each complaint was received, the disposition of each complaint, and the time and date thereof. This log shall be made available for periodic inspection by the City.

6.1.11 The Grantee shall maintain a local office in the Franchise Area for the purpose of receiving and resolving all complaints regarding the quality of service, equipment malfunctions, billing questions, and similar matters. In addition, Grantee shall publish a toll free or local telephone number at which complaints may be taken by other Grantee representatives.

6.1.12 Bills will be clear, concise and understandable.

6.2. Subscriber Bills. Subscriber bills shall be designed in such a way as to present the information contained therein clearly and comprehensibly to Subscribers, and in a way that (A) is not misleading, (B) does not omit material information, and (C) does not mischaracterize any information. Notwithstanding anything to the contrary in Section 6.1, above, the Grantee may, in its sole discretion, consolidate costs on Subscriber bills as may otherwise be permitted by Section 622(c) of the Cable Act (47 U.S.C. §542(c)).

6.3. Privacy Protection. The Grantee shall comply with Section 631 of the Cable Act and regulations adopted pursuant thereto.


SECTION 7
Oversight and Regulation by City

7.1 Franchise Fees. The Grantee shall pay to the City franchise fees in an amount equal to five percent (5%) of annual Gross Revenues actually received from the operation of the Cable System to provide Cable Service in the Franchise Area; provided, however, that Grantee shall not be compelled to pay any higher percentage of franchise fees than any other cable operator providing service in the Franchise Area. The payment of franchise fees shall be made on an quarterly basis and shall be due forty-five (45) days after the close of each calendar quarter. Each franchise fee payment shall be accompanied by a certified report from a representative of the Grantee, which shows the basis for the computation of all Gross Revenue actually received from the operation of the Cable System for the provision of Cable Service in the Franchise Area during the period for which such franchise fee payment is made. If the franchise fee payment is not actually received by the City on or before the applicable due date set forth in this Section 7.1, interest shall accrue on the outstanding amount at rates published by the Internal Revenue Service for tax refunds and additional tax payments for the period of delinquency.

7.2. Franchise Fees Subject to Audit.

7.2.1. Upon at least thirty (30) calendar days prior written notice, during Normal Business Hours, the City shall have the right to inspect the Grantee’s financial records used to calculate the City’s franchise fees, and the right to audit and to re-compute any amounts determined to be payable under this Section; provided, however, that any such audit shall take place within three (3) years from the close of each Grantee fiscal year that is subject to the audit, after which period any such payment shall be considered final.

7.2.2. Upon the completion of any such audit conducted by the City, the City shall provide to the Grantee a final audit report, which sets forth the City’s findings in detail, including any and all substantiating evidence. The Grantee shall have thirty (30) days from the receipt of the audit report to provide the City with a written response to the audit report, including any substantiating evidence. Any “Final Settlement Amount(s)” due to the City as a result of such audit shall be paid to the City by the Grantee within thirty (30) days from receipt of written notice of the Final Settlement Amount from the City. For purposes of this Section 7 the term “Final Settlement Amount(s)” shall mean the agreed upon underpayment, if any, to the City by the Grantee as a result of any such audit. The City and the Grantee shall bear equally the expense of any inspection or audit of the Grantee’s books and records. However, if the results of an audit show an underpayment of franchise fees, the Grantee shall reimburse the City for its reasonable and actual costs of the audit, not to exceed ten thousand dollars ($10,000).

7.3. Technical Standards. The Grantee shall comply with all appropriate technical standards of the FCC as published in subpart K of 47 C.F.R. § 76. To the extent those standards are altered, modified, or amended during the term of this Franchise, the Grantee shall comply with such alterations, modifications or amendments within a reasonable period (as defined by the FCC) after their adoption by the FCC. Grantee shall file with the City any technical or performance tests for the Cable System required to be filed with the FCC, including but not limited to, the “Cumulative Leakage Index” test. Notwithstanding anything in the Ordinance or any other provision to the contrary, except as expressly set forth in this Franchise Agreement, the City may not impose technical standards, testing requirements or technology requirements with respect to the Cable System beyond the enforcement of FCC technical standards as provided under this Section 7.4. City shall have a right to utilize an engineering technical consultant to confirm compliance with capacity requirements set forth in Section 3.1, and City shall be entitled to all contractual or other remedies associated with any noncompliance with the capacity requirements of Section 3.1.

7.4. Maintenance of Books, Records, and Files.

7.4.1. Books and Records. Throughout the term of this Franchise Agreement, upon reasonable prior written notice of at least five (5) business days (excluding holidays) unless otherwise agreed to by the parties, the Grantee shall make available for the City’s review books and records as required by and pursuant to Section 5.24.310 of the Ordinance. All such documents required to be made available under Section 5.24.310 shall be retained by the Grantee for a minimum period of three (3) years.

7.4.2. File for Public Inspection. Throughout the term of this Franchise Agreement, the Grantee shall maintain at its business office, in a file available for public inspection during normal business hours, those documents required pursuant to the FCC’s rules and regulations.

7.4.3. Proprietary Information. Notwithstanding anything to the contrary set forth in the Ordinance, this Section 7 or any other provision, the Grantee shall not be required to disclose information which it reasonably deems to be proprietary or confidential in nature. To the extent Grantee does submit information in document form that it deems proprietary and confidential, Grantee shall clearly so label such document, or part thereof. To the maximum extent authorized under California law, the City agrees to treat any information disclosed by the Grantee as confidential and only to disclose it to employees, representatives, and agents of the City that have a need to know, or in order to enforce this Franchise Agreement and who agree to maintain the confidentiality of all such information. To the extent the City believes that such information must be further disclosed under applicable law, prior to any such disclosure, City will provide Grantee at least five (5) business days advance notice. The Grantee shall not be required to provide Subscriber information in violation of Section 631 of the Cable Act. For purposes of this Section 7 the terms “proprietary or confidential” include, but are not limited to, information relating to the Cable System design, Subscriber lists, Cable Service and marketing plans, financial information unrelated to the calculation of franchise fees or rates pursuant to FCC rules, or other information that is reasonably determined by the Grantee to be competitively sensitive.

7.5. Transfer of a Franchise

7.5.1 Notwithstanding Section 5.24.300 of the Ordinance or any other provision to the contrary, the City’s authority to review any Transfer of ownership or control of the Cable System or Franchise shall be limited to and in accordance with this Section 7.5.

7.5.2 Neither the Franchise nor Cable System shall be sold, assigned, transferred or disposed of either by involuntary or voluntary sale, merger, consolidation, or otherwise hypothecated in any manner, nor shall title thereto, either legal or equitable, Control thereof, pass to or vest in any Person or entity, nor shall Control of or a Controlling Interest in the Franchise or Cable System be changed (hereinafter a “Transfer”) without the prior written consent of the City. Any Transfer without the prior written consent of the City Council shall be a substantial default of a material provision for which the City may seek remedies pursuant to the procedures set forth in Section 10.4 of this Franchise. A rebuttable presumption that a Transfer of Control or of a Controlling Interest has occurred shall arise upon the acquisition or accumulation in any manner by any Person or group of Persons of more than Fifty Percent (50 %) of the voting interests of the Grantee or of a Controlling Interest.

7.5.3 Without the City's prior consent, the Grantee may (among other things): (i) grant a security interest in, or make a collateral assignment of, the Franchise and the Cable System for the purposes of securing indebtedness; and (ii) transfer or assign the Franchise and the Cable System to a wholly owned subsidiary of the Grantee or of Comcast Corporation or any subsidiary thereof, and such subsidiary may transfer or assign the Franchise and the Cable System back to the Grantee without such consent, providing that such assignment is without any release of liability of the Grantee. However, no party may take control of the Franchise or the Cable System without the City's prior consent according to this section.

7.5.4 The Grantee shall promptly notify the City of any Transfer of, or acquisition by any other Party of Control of, or a change in a Controlling Interest in, the Grantee, the Franchise or the Cable System.

7.5.5 Subject to applicable federal law, any proposed assignee, transferee or acquirer of Control or a Controlling Interest in the Grantee, the Franchise or the Cable System must demonstrate the requisite legal, technical and financial qualifications and proposed resulting franchiseholder must agree to comply with all provisions of the Franchise. The City shall have one hundred and twenty (120) days to act upon any request for approval of a Transfer submitted in writing that contains or is accompanied by all such information as is required in accordance with FCC regulations this Franchise Agreement and the City’s Ordinance. The City shall be deemed to have consented to a proposed Transfer if its refusal to consent (including the reasons therefore) is not communicated in writing to the Grantee within one hundred and twenty (120) days following receipt of written notice together with all the required information, unless the requesting party and the City agree to an extension of time. The City shall not unreasonably withhold consent to a proposed Transfer.

7.5.6 The consent or approval of the City to any Transfer of Control of, or a Controlling Interest in, the Grantee, the Franchise or the Cable System shall not constitute a waiver or release of the rights of the City in and to the Streets, and any Transfer shall be expressly subordinate to the terms and conditions of this Franchise Agreement.

7.5.7 In no event shall a Transfer of Grantee, Franchise or Cable System be approved without the resulting franchiseholder agreeing in writing to abide by all terms and conditions of the Franchise Agreement.

7.5.8 Notwithstanding anything to the contrary in this Ordinance, all City review of any Transfers shall be in accordance with and subject to this Section and applicable federal law.


SECTION 8
Insurance and Indemnity

8.1. Insurance. Throughout the term of this Franchise Agreement, the Grantee shall, at its own cost and expense, maintain the following forms of insurance and provide the City certificates of insurance designating the City and its officers, boards, commissions, councils, elected officials, agents and employees as additional insureds and demonstrating that the Grantee has obtained the insurance required in this Section 8:

Comprehensive General Liability: combined single limit of not less than Two Million Dollars ($2,000,000.00) per occurrence and Five Million Dollars ($5,000,000) in the annual aggregate;
Comprehensive Automobile Liability: combined single limit of not less than Two Million Dollars ($2,000,000.00) per occurrence and Five Million Dollars ($5,000,000) in the annual aggregate;

Such policies shall be non-cancelable except upon thirty (30) days prior written notice to the City. The Grantee shall provide workers’ compensation coverage in accordance with applicable law.

8.2. Indemnification.

8.2.1 Disclaimer of Liability. The City shall not at any time be liable for injury or damage occurring to any person or property from any cause whatsoever arising out of Grantee’s construction, maintenance, repair, use, operation, condition or dismantling of the its Cable System or due to the act or omission of any person or legal entity other than the City or those persons or legal entities for which the City is legally liable as a matter of law.

8.2.2 Indemnification. The Grantee shall, at its sole cost and expense, indemnify and hold harmless the City, its respective officers, boards, departments, commissions and employees (hereinafter referred to as “Indemnitees”), except to the extent of the gross negligence or willful misconduct of the City, from and against:

(1) Any and all liabilities, obligations, damages, penalties, claims, liens, costs, charges, losses and expenses (including, without limitation, reasonable fees and expenses of attorneys, expert witnesses and consultants), which may be imposed upon, incurred by or asserted against the Indemnitees by reason of any act or omission of the Grantee, its personnel, employees, agents, contractors or subcontractors, resulting in personal injury, bodily injury, sickness, disease or death to any person or damage to, loss of or destruction of tangible or intangible property, libel, slander, invasion of privacy and unauthorized use of any trademark, trade name, copyright, patent, service mark or any other right of any person, corporation or other legal entity, which may arise out of or be in any way connected with the construction, installation, operation, maintenance or condition of the Cable System caused by Grantee, its subcontractors or agents or the Grantee's failure to comply with any federal, state or local law.

(2) Any and all liabilities, obligations, damages, penalties, claims, liens, costs, charges, losses and expenses (including, without limitation, reasonable fees and expenses of attorneys, expert witnesses and consultants) imposed upon Indemnitees by reason of any claim or lien arising out of work, labor, materials or supplies provided or supplied to Grantee, its contractors or subcontractors, for the installation, construction, operation or maintenance of the Cable System. Upon written request by the City, such claim or lien shall be discharged or bonded within fifteen (15) days following such request.

(3) Any and all liabilities, obligations, damages, penalties, claims, liens, costs, charges, losses and expenses (including, without limitation, reasonable fees and expenses of attorneys, expert witnesses and consultants), which may be imposed upon, incurred by or asserted against the Indemnitees by reason of any financing or securities offering by Grantee or an affiliate thereof for violations of any laws, statutes or regulations of the State of California or of the United States, including those of the Securities and Exchange Commission, whether by the Grantee or otherwise; excluding therefrom, however, claims which are based upon and arise out of information supplied by the City to the Grantee in writing and included in the offering materials with the express written approval of the City prior to the offering.
(4) Notwithstanding Section 5.24.170(c) of the Ordinance or any other provision to the contrary, Grantee does not assume any risk or provide any indemnity except as expressly provided in this Section 8.2 or elsewhere in this Franchise Agreement.
8.2.3 City Indemnification. At its sole cost and expense, the City shall indemnify and hold harmless Grantee for any and all liabilities, obligations, damages, penalties, claims, liens, costs, charges, losses and expenses (including, without limitation, reasonable fees and expenses of attorneys, expert witnesses and consultants), which may be imposed upon, incurred by or asserted against the Grantee by reason of the gross negligence or willful misconduct of the City or its officials, boards, departments, commissions, employees, designees or other agents of any kind.
8.2.4 Defense of Indemnitees. In the event any action or proceeding shall be brought against any or all of the Indemnitees by reason of any matter for which the Indemnitees are indemnified hereunder, the Grantee shall, upon notice from any of the Indemnitees, at the Grantee's sole cost and expense, defend the same; provided further, however, that the Grantee shall not admit liability in any such matter on behalf of the Indemnitees without the express written consent of the City Attorney or the City Attorney's designee. If the City determines that it is necessary for it to employ separate counsel, the costs for such separate counsel shall be the responsibility of the City.
8.2.5 Notice, Cooperation and Expenses. The City shall give the Grantee reasonably prompt notice of the making of any claim or the commencement of any action, suit or other proceeding covered by the provisions of this section. Nothing herein shall be deemed to prevent the City from cooperating with the Grantee and participating in the defense of any litigation by the City’s own counsel at the City's own expense. No recovery by the City of any sum under the bond shall be any limitation upon the liability of the Grantee to the City under the terms of this Section, except that any sum so received by the City shall be deducted from any recovery which the City might have against the Grantee under the terms of this Section.

SECTION 9
Public Services

9.1. Public, Educational and Governmental (“PEG”) Access. Notwithstanding Section 5.24.350 of the Ordinance or any other provision to the contrary, Grantee shall not be required to provide any PEG capacity, equipment, facilities or support except as expressly set forth in this Franchise Agreement.

9.1.1 Grantee shall provide the City, or its designee, during the term of the Franchise Agreement with the following five (5) analog channels for PEG-related purposes: two (2) initially for Public Access and Government Access; one (1) channel for Educational Access upon the City’s certification to Grantee that the City, or its designee, has a plan and budget to implement educational programming; two (2) additional channels after five (5) years from the Effective Date of this Franchise Agreement, provided that the prior activated access channels each have been programmed with locally provided original, non-duplicative programming (excluding billboards and text screens) on average at least thirty (30) hours per week over a twelve (12) week period preceding such date of request.

9.1.2 All PEG channels shall be used solely for the distribution of non-commercial public, educational or governmental programming. Grantee reserves the right to use any PEG channel capacity not used by the City to the extent permitted under federal law. The City shall be solely responsible for the management, administration and programming of all PEG channels.

9.1.3 Grantee shall provide City with four (4) modulators and shall also establish the capability to transmit signal from the City’s playback facility at the Brentwood Education and Technology Center presently located at 101 B Sand Creek Road to Grantee’s headend.

9.1.4 Grantee shall make available to the City its channel line-up solely for the purpose of identifying the location and designation of each PEG channel and the identity of adjacent channels.

9.2 Service to School Buildings. The Grantee shall provide free “Basic” and “Expanded Basic” tier Cable Service, and free installation of one outlet to each K-12 public and private school accredited by the State of California and located in the Franchise Area within 150 feet of the Grantee’s distribution cable.

9.3 Service to Governmental and Institutional Facilities. The Grantee shall provide free “Basic” and “Expanded Basic” tier Cable Service and free installation of one outlet to each non-residential municipal building located in the Franchise Area within 150 feet of the Grantee’s distribution cable.

9.4 PEG Funding. Grantee shall provide the City with PEG capital funding through the following payments: (i) $400,000 payable within 60 days following the Effective Date of this Franchise Agreement; (ii) $200,000 payable at the later of two (2) years following the Effective Date of the Franchise Agreement, or when the City commences construction of its new City Hall; (iii) $150,000 payable five (5) years following the Effective Date of the Franchise Agreement, and (iv) $100,000 payable either seven (7) or eight (8) years following the Effective Date of the Franchise Agreement, provided that there are then at least 11,000 subscribers to the Grantee’s Cable Service. The City shall use all such funding for capital costs that are required to be incurred in connection with the PEG access equipment and facilities. Upon request of the Grantee, the City will periodically certify that it has used these funds solely for the purposes contemplated herein. Grantee shall have the right to audit the use of all such capital funding to confirm Grantee’s appropriate use of thereof.

SECTION 10
Enforcement and Termination of Franchise

10.1 Notice of Violation or Default. In the event the City believes that the Grantee has not complied with the material terms of the Franchise, it shall notify the Grantee in writing with specific details regarding the exact nature of the alleged noncompliance or default.

10.2. Grantee’s Right to Cure or Respond. The Grantee shall have thirty days from the receipt of the City’s notice described in Section 10.1, above: (A) to respond to the City, contesting the assertion of noncompliance or default, or (B) to cure such default, or (C) in the event that, by nature of the default, such default cannot be cured within the thirty day period, initiate reasonable steps to remedy such default and notify the City of the steps being taken and the projected date that they will be completed.

10.3. Public Hearings. In the event the Grantee fails to respond to the City’s notice described in Section 10.1. above, disputes the notice, or in the event that the alleged default is not remedied within thirty days or the date projected pursuant to Section 10.2., above, the City shall schedule a public hearing to investigate the default. Such public hearing shall be held at the next regularly scheduled meeting of the City that is scheduled at a time, which is no less than ten (10) business days therefrom. The City shall notify the Grantee in writing of the time and place of such meeting and provide the Grantee with a reasonable opportunity to be heard.

10.4. Enforcement. Subject to applicable federal and state law, in the event the City, after such meeting, determines that the Grantee is in default of any provision of the Franchise, the City may:

10.4.1. seek specific performance of any provision, which reasonably lends itself to such remedy, as an alternative to damages or seek other equitable relief; or

10.4.2. in the case of a substantial default of a material provision of the Franchise, declare the Franchise Agreement to be revoked in accordance with the following:

(i) The City shall give written notice to the Grantee of its intent to revoke the Franchise on the basis of a pattern of noncompliance by the Grantee, including one or more instances of substantial noncompliance with a material provision of the Franchise. The notice shall set forth with specificity the exact nature of the noncompliance. The Grantee shall have ninety (90) days from the receipt of such notice to object in writing and to state its reasons for such objection. In the event the City has not received a satisfactory response from the Grantee, it may then seek termination of the Franchise at a public hearing. The City shall cause to be served upon the Grantee, at least ten (10) days prior to such public hearing, a written notice specifying the time and place of such hearing and stating its intent to request termination of the Franchise.

(ii) At the designated hearing, the City shall give the Grantee an opportunity to state its position on the matter, present evidence and question witnesses, after which it shall determine whether or not the Franchise shall be revoked. The public hearing shall be on the record and a written transcript shall be made available to the Grantee within ten (10) business days. The decision of the City shall be in writing and shall be delivered to the Grantee in the manner set forth in Section 11.2 herein. The Grantee may appeal such determination to an appropriate court or pursue any lawful recourse or remedy.

(iii) The City may, at its sole discretion, take any lawful action that it deems appropriate to enforce its rights under the Franchise in lieu of revocation, including seeking as damages the costs of determining any non-compliance by Grantee. Notwithstanding Section 5.24.390 of the Ordinance or any other provision to the contrary, and subject to applicable federal law, the Franchise may not be revoked, forfeited or terminated except as provided in this Section 10.

10.5. Technical Violation. The City agrees that it is not its intention to subject the Grantee to penalties, fines, forfeitures or revocation of the Franchise for so-called “technical” breach(es) or violation(s) of the Franchise, which shall include, but not be limited, to the following:

10.5.1. in instances or for matters where a violation or a breach of the Franchise by the Grantee was good faith error that resulted in no or minimal negative impact on the Subscribers within the Franchise Area; or

10.5.2. where there existed circumstances reasonably beyond the control of the Grantee and which precipitated a violation by the Grantee of the Franchise, or which were deemed to have prevented the Grantee from complying with a term or condition of the Franchise.

10.6 Performance Bond.

10.6.1 Within thirty (30) days after the Effective Date, the Grantee shall deposit with the City a bond in the amount of five-hundred thousand dollars ($ 500,000). The form and content of such bond shall be approved by the City Attorney. Notwithstanding Section 5.24.140 of the Ordinance or any other provision to the contrary, this instrument shall be used solely to ensure the faithful performance of the Grantee of all lawful provisions of the Franchise, and to ensure the payment by the Grantee of any fees, claims, liens or taxes due the City which arise by reason of the construction, operation or maintenance of the Cable System pursuant to the Franchise.

10.6.2 The bond shall be maintained at the amount established above until such time as the System Upgrade provided for under Section 3 of this Franchise Agreement is complete and the Construction Violations as defined in Section 11.1 are correct, at which time the amount of the bond shall be decreased to fifty thousand dollars ($50,000). The bond shall remain in place in the amount of $50,000 for the rest of the term of the Franchise, even if amounts have to be withdrawn pursuant to this Franchise Agreement.

10.6.3 The bond shall contain an endorsement agreeing that the bond may not be reduced or canceled by the surety nor the intention not to renew be stated by the surety until thirty (30) days after receipt by the City, by registered mail, of a written notice of such intention to reduce, cancel or not renew. In the event the City receives a thirty (30) day notice from a surety, it shall have the right to demand payment from the bond unless Grantee provides appropriate assurance that a replacement bond will be presented before the expiration of the thirty (30) day period. The sufficiency of such assurance shall be determined by the City in its sole discretion. This section shall not apply if the City and Grantee agree that a bond is no longer required.

10.6.4 At any time during the term of the Franchise, the City may waive the requirement for a Grantee to maintain a performance bond.

10.7 Construction Bond. Grantee shall not be required to file or maintain a construction bond with respect to the Cable System or its performance under this Franchise Agreement and the Ordinance.

10.8 Security Fund

10.8.1 Amount. Commencing at such time as the Five Hundred Thousand Dollar ($500,000) bond required under Section 10.6.1 is decreased to Fifty Thousand Dollars ($50,000) pursuant to section 10.6.1, Grantee shall deposit with the City Manager the amount of Twenty Thousand Dollars ($20,000), which shall be provided in the form of an irrevocable, unconditional letter of credit in a form reasonably acceptable to the City Manager, or a cash deposit established at a financial institution located within the City in an interest-bearing account payable to the City as trustee for Grantee, with all interest distributed to Grantee. The letter of credit shall in no event require the consent of Grantee prior to the collection by the City of any amounts covered by such letter of credit. The amount of the letter of credit or cash deposit to be provided to the City Manager shall constitute Grantee’s Security Fund.

10.8.2 Purpose. The Security Fund shall serve as security for: (i) the faithful performance by Grantee of all terms and conditions of this Agreement; (ii) any expenditure, damage, or loss incurred by Grantee occasioned by Grantee’s failure to comply with all rules, regulations, orders, permits, and other directives of the City issued pursuant to this Franchise Agreement.; (iii) the payment by Grantee of all liabilities which the City has been compelled to pay or incur by reason of any act or default of Grantee, and all other payments due the City from Grantee pursuant to this Franchise Agreement; (iv) the loss of any payments required to be made by Grantee to the City which would have been received by the City but for Grantee’s failure to perform its obligations pursuant to this Franchise Agreement; and (vi) costs, losses or damages incurred by the City as a result of termination for cause due to a material breach. The withdrawal of amounts from the Security Fund shall not occur prior to Grantee’s being afforded notice, cure, due process, and appeal opportunities as described in Section 10.1 through 10.5 of this Franchise Agreement, and any such withdrawal shall constitute a credit against the amount of the applicable liability of Grantee to the City but only to the extent of said withdrawal.


10.8.3. Replenishment. Throughout the term of this Franchise Agreement, or for as long as Grantee operates the Cable System, whichever period is longer, and for at least ninety (90) days thereafter, Grantee shall maintain the Security Fund in the amount specified in Section 10.8.1. Within thirty (30) days after receipt of notice from the City Manager that any amount has been withdrawn from the Security Fund, as provided in Section 10.8.4, Grantee shall restore the Security Fund to the amount specified in Section 10.8.1, provided that said restoration obligation shall be suspended during the period of any judicial challenge by Grantee to the propriety of said withdrawal from the Security Fund. If a court determines that said withdrawal by the City was improper, the City shall restore the improperly withdrawn amount to the Security Fund or to Grantee such that the balance of the Security Fund equals the amount specified in Section 10.8.1, or to Grantee such that the balance of the Security Fund equals the amount specified in Section 10.8.1, together with interest from the date of the withdrawal, at the then prevailing rate applicable to judgments rendered against the City pursuant to State law.

10.8.4. Withdrawals. The City Manager, or his designee, may make withdrawals from the Security Fund and pay to the City such amounts for the satisfaction of obligations under Section 10.8.2, if Grantee fails to: (i) make any payment required by this Franchise Agreement within the time fixed herein; (ii) pay to the City, within fifteen (15) days after receipt of notice, any liabilities relating to the Cable System that are due and unpaid; (iii) pay to the City, within fifteen (15) days after receipt of notice from the City Manager, any damages, claims, costs or expenses which the City has been compelled to pay or incur by reason of any act of default of Grantee; or (iv) to comply, within fifteen (15) days after receipt of notice from Grantee, with any provision of this Franchise Agreement which the City Manager determines can be remedied by an expenditure of an amount in the Security Fund, then the City Manager may withdraw the amount thereof from the Security Fund and pay it to the City unless Grantee has, within fifteen (15) days after receipt of notice from the City Manager of any of said failures, cured the said failures or contested in writing the validity of the withdrawal.

10.8.5 Interest. Interest due on any payment required to be made by Grantee pursuant to Section 10.8.3 of this Franchise Agreement shall not begin to accrue for a period of thirty (30 ) days after receipt by Grantee of the notice of withdrawal from the Security Fund of the principal amount due, as provided in Section 10.8.4. Thereafter, if Grantee has not made the required restoration of the Security Fund, then interest on said amount shall accrue at the Prime Rate. The City Manager may withdraw from the Security Fund and pay to the City such interest periodically up to the date on which Grantee makes the required principal payment, provided that Grantee shall not be obligated to pay such interest on such principal payment to the extent such interest has been already withdrawn by the City Manager.

SECTION 11
Correction of Construction Violations

11.1 Construction Violations. Grantee shall inspect the entire Cable System and correct all construction violations, including without limitation, electrical code violations, pole clearance and spacing violations, grounding violations, and others (the “Construction Violations”), within six (6) months of the Effective Date of this Franchise Agreement.

11.2 Reimbursement of Expenses. Grantee shall pay all fees and expenses of any engineering consultant retained by the City for verification of compliance with technical requirement such as GO-95, National Electrical Code, and NEJG, in an amount not to exceed $35,000, and shall not credit this payment against the franchise fee.

SECTION 12
Miscellaneous Provisions

12.1 Force Majeure. The Grantee shall not be held in default under, or in noncompliance with, the provisions of the Franchise, nor suffer any enforcement or penalty relating to noncompliance or default (including termination, cancellation or revocation of the Franchise), where such noncompliance or alleged defaults occurred or were caused by strike, riot, war, earthquake, flood, tidal wave, unusually severe rain or snow storm, hurricane, tornado or other catastrophic act of nature, labor disputes, governmental, administrative or judicial order or regulation or other event that is reasonably beyond the Grantee’s ability to anticipate or control. This provision also covers work delays caused by waiting for utility providers to service or monitor their own utility poles on which the Grantee’s cable and/or equipment is attached, as well as unavailability of materials and/or labor to perform the work necessary.

12.2. Notice. All notices shall be in writing and shall be sufficiently given and served upon the other party by hand delivery, first class mail, registered or certified, return receipt requested, postage prepaid, or by facsimile with confirmed transmission and addressed as follows:

The City: City of Brentwood
150 City Park Way
Brentwood, CA 94513-1396
Attention: City Clerk

The Grantee: Comcast Cablevision of
General Manager

Facsimile: (___) ___-____

with a copy to: Comcast Cable Communications, Inc.
Division Vice President, Government Affairs

12.3. Entire Agreement. This Franchise Agreement, including all Exhibits, embodies the entire understanding and agreement of the City and the Grantee with respect to the subject matter hereof. All ordinances or parts of ordinances or other agreements between the Grantee and the City that are in conflict with the provisions of this Franchise Agreement are hereby declared inapplicable as to Grantee.

12.4. Severability. If any section, subsection, sentence, clause, phrase, or other portion of this Franchise Agreement or the Ordinance is, for any reason, declared invalid, in whole or in part, by any court, agency, commission, legislative body, or other authority of competent jurisdiction, such portion shall be deemed a separate, distinct, and independent portion. Such declaration shall not affect the validity of the remaining portions hereof, which other portions shall continue in full force and effect. Notwithstanding Section 5.24.420 of the Ordinance or any other provision to the contrary, in no event shall either party be required by the other to negotiate or accept any amendment, modification or alteration of this Franchise Agreement or the Ordinance as a result of such invalidity.

12.5. Governing Law. This Franchise Agreement shall be deemed to be executed in the State of California and shall be governed in all respects, including validity, interpretation and effect, and construed in accordance with, the laws of the State of California, as applicable to contracts entered into and performed entirely within the State.

12.6. Modification. No provision of this Franchise Agreement shall be amended or otherwise modified, in whole or in part, except by an instrument, in writing, duly executed by the City and the Grantee, which amendment shall be authorized on behalf of the City through the adoption of an appropriate resolution or order by the City, as required by applicable law.


IN WITNESS WHEREOF, this Franchise Agreement has been executed by the duly authorized representatives of the parties as set forth below, as of this ___ day of _____, 200_.

CITY OF BRENTWOOD

By: _________________
Name:
Title:

COMCAST OF CALIFORNIA IV, INC.

By:____________________
Name:
Title:
 

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov