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HomeMy WebLinkAboutReso - CC - 003-2007RESOLUTION NO. 3-2007 A RESOLUTION OF THE COUNCIL OF THE CITY OF BURLINGAME, CALIFORNIA, ESTABLISHING CONDITIONS FOR THE APPROVAL OF A TRANSFER OF A CABLE TELEVISION FRANCHISE FROM RCN TELECOM SERVICES, INC. TO ASTOUND BROADBAND, LLC. WHEREAS, RCN Telecom Services, Inc. ("Franchisee") owns and has a franchise to maintain a cable system ("System") in the City of Burlingame ("City"); and WHEREAS, Franchisee has a franchise to provide cable service in the City pursuant to the terms of a cable system franchise ("Franchise") granted to Franchisee on August 7, 2000, and effective August 18, 2000; and WHEREAS, City actions on January 5, 2003 (1st Amendment), October 4, 2004 (2"d Amendment) and January 3, 2005 (3rd Amendment) amended certain terms of the Franchise; and WHEREAS, Franchisee and Astound Broadband, LLC ("Astound" or "Transferee") are parties to an asset purchase agreement ("Purchase Agreement") pursuant to which the System and the Franchise are to be transferred to Astound; and WHEREAS, on September 21, 2006, the City received an F.C.C. Form 394 requesting a transfer of the Franchise from Franchisee to Transferee; and WHEREAS, the City has one hundred twenty (120) days from the receipt of a complete F.C.C. Form 394 to act upon the transfer request or the request automatically is deemed to have been approved; and WHEREAS, the one hundred twenty (120) day review period expires on January 19, 2007, since the FCC Form 394 was received by the City on September 21, 2006; and WHEREAS, the Franchise cannot be transferred or assigned without the City Council's consent; and WHEREAS, federal regulations permit the City to evaluate the legal, technical and financial qualifications of Transferee to operate the Franchise; and - 1 - WHEREAS, the legislative history of the Federal Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") further indicates that Congress intended that local franchising authorities consider such information as the effect of the transfer or sale on rates and subscriber services and the Transferee's plans for expanding or eliminating services to subscribers when assessing an application for transfer of a cable system franchise; and WHEREAS, the United States Court of Appeals for the Ninth Circuit, in a case involving the County of Santa Cruz, California and Charter Communications, found that local cable franchising authorities should be afforded broad deference in legislative acts in their role as stewards of the public good; and WHEREAS, the City, as steward of the public good, believes that the transfer will be in the best interest of its residents and potential System subscribers provided the transfer is conditioned in order to safeguard the interests of its residents and potential System subscribers; and WHEREAS, the City desires to proceed with the proposed transfer on the terms and conditions set forth herein. NOW, THEREFORE, the City Council of the City of Burlingame does hereby resolve, determine and order as follows: Section 1. The City hereby, consents to the transfer, subject to the following conditions: 1. Astound Broadband, LLC, the Transferee, is owned and controlled as indicated in Exhibit A attached hereto. To the extent required by Section 2.6 of the Cable Television Franchise between the City and RCN, any change of ownership or control of Transferee from the ownership and control indicated in Exhibit A shall be subject to prior City review and consent. 2. The City expressly reserves any and all rights that it may possess under the Franchise and applicable law with respect to any non-compliance issues on the part of Franchisee, whether known or unknown, which exist prior to the effective date of this transfer and Transferee reserves any and all rights and defenses with respect to any such non-compliance issues. -2- In reserving such rights, the City confirms that the Franchisee is materially in compliance with the provisions of the Franchise and there exists no fact or circumstance known to the City which constitutes, or which, with the passage of time or the giving of notice or both, would constitute a material default or breach under the Franchise or would allow the City to cancel or terminate the rights hereunder, except upon the expiration of the full term of the Franchise. 3. The transfer is expressly contingent upon Transferee reimbursing the City for the consultant's costs incurred in the processing of the request for transfer, not to exceed the maximum amount of $20,000 indicated in the "Change of Ownership Consent Agreement" attached to this Resolution as Exhibit A. Said reimbursement shall be provided within thirty (30) calendar days of Franchisee's receipt of an itemized invoice detailing the consultant's costs. 4. All terms of the Franchise agreement remain in full force and effect, including all terms contained in City of Burlingame actions dated January 5, 2003 (1St Amendment), October 4, 2004 (2nd Amendment) and January 3, 2005 (3d Amendment) amending and clarifying certain terms of the Franchise. 5. The Franchise agreement allows the City to require Franchisee to provide up to two (2) additional Public, Educational and Governmental ("PEG") access channels. These two (2) PEG access channels will be in addition to the two (2) PEG access channels currently provided. Transferee agrees to activate and provide one additional PEG access channel by not later than April 20, 2007. This access channel may be located on Transferee's digital service tier. No sooner than twenty four months after the incumbent cable operator implements a third PEG channel and following receipt of one hundred twenty (120) days advance written notice, the Transferee shall provide a fourth PEG channel. This channel may be located on Transferee's digital tier of service. Transferee shall not be required to carry the third and fourth PEG Channels on the Basic Service tier until Transferee converts its entire System to a digital format. 6. Transferee shall evidence acceptance of these conditions by signing a copy of the "Change of Ownership Consent Agreement," in substantially the same form as attached to this Resolution as Exhibit A, containing the conditions provided to Transferee and submitting the same to the City Clerk within sixty (60) calendar days of this approval. If Transferee fails to submit a signed copy of the "Change of Ownership Consent Agreement" to the City Clerk within said sixty (60) day period, or otherwise refuses to accept the conditions placed on the proposed transfer set forth herein, consent to the transfer shall be automatically withdrawn, effective the date of adoption of this Resolution, and the request to transfer shall be deemed denied. -3- Section 2. Other than with respect to the condition made in Section 1.2 above, if any sentence, clause, phrase or portion of any condition imposed in Section 1 hereof if for any reason held by a court of competent jurisdiction to be invalid or unenforceable, such decision shall not affect the validity of the remaining conditions placed on this transfer. The City Council of the City of Burlingame hereby declares that it would have adopted this Resolution and each and every condition set forth in Section 1 hereof separately, irrespective of the fact that one or more of these conditions may be declared invalid or unenforceable. Section 3. This Resolution shall be deemed effective for the purposes of the transfer upon adoption by the City Council. Section 4. Subject to the reservation of rights of Section 1(2) above, the City hereby releases Franchisee, effective upon the consummation of the transaction contemplated in the Purchase Agreement (the "Closing Date") from all obligations and liabilities under the Franchise that accrue on or after the Closing Date. Franchisee shall remain responsible for all obligations and liabilities under the Franchise that accrue up to the Closing Date. Transferee shall be responsible for any obligations and liabilities under the Franchise that accrue on or after the Closing Date. Section 5. The City Clerk shall certify to the adoption of this resolution and shall cause the same to be processed in the manner required by law, and shall transmit a certified copy of this Resolution and Exhibit A hereto to Franchisee, Transferee and Guarantor. /v M yor I, DORIS MORTENSEN, City Clerk of the City of Burlingame, do hereby certify that the foregoing resolution was introduced at a regular meeting of the City Council held on the 16th day of January„ 2007 , and was adopted thereafter by the following vote: AYES: COUNCILMEMBERS: sAYLocK, coHEN, KEicriRm, NAGEL, WMAHONY NOES: COUNCILMEMBERS: NdNE ABSENT: COUNCILMEMBERS: NONE City Clerk -4- CITY OF BURLINGAME EXHIBIT A: CHANGE OF OWNERSHIP CONSENT AGREEMENT Section 1 Terms used in this Change of Ownership Consent Agreement shall be as defined in Resolution No. 3-20az Section 2 The City hereby consents to the transfer described in City Resolution No. 3-2007 , subject to the following conditions: 1. Astound Broadband LLC, the Transferee, is owned and controlled as indicated in Figure 1 attached hereto. To the extent required by Section 2.6 of the Cable Television Franchise between the City and RCN, any change of ownership or control of Transferee from the ownership and control indicated in Figure 1 shall be subject to prior City review and consent. 2. The City expressly reserves any and all rights that it may possess under the Franchise and applicable law with respect to any non-compliance issues on the part of Franchisee, whether known or unknown, which exist prior to the effective date of this transfer and Transferee reserves any and all rights and defenses with respect to any such non-compliance issues. In reserving such rights, the City confirms that the Franchisee is materially in compliance with the provisions of the Franchise and there exists no fact or circumstance known to the City which constitutes, or which, with the passage of time or the giving of notice or both, would constitute a material default or breach under the Franchise or would allow the City to cancel or terminate the rights hereunder, except upon the expiration of the full term of the Franchise. 3. The transfer is expressly contingent upon Franchisee reimbursing the City for the consultant's costs incurred in the processing of the request for transfer, not to exceed the maximum amount of $20,000 indicated in this Change of Ownership Consent Agreement. Said reimbursement shall be provided within thirty (30) calendar days of Transferee's receipt of an itemized invoice detailing the consultant's costs. 4. The Franchise agreement allows the City to require Transferee to provide up to two (2) additional Public, Educational and Governmental ("PEG") access channels. These two (2) PEG access channels will be in addition to the two (2) PEG access channels currently provided. Transferee agrees to activate and provide one additional PEG access channel by not later than April 20, 2007. This access channel may be located on Transferee's digital service tier. No sooner than twenty four months after the incumbent cable operator implements a third PEG channel and following receipt of one hundred twenty (120) days advance written notice, the Transferee shall provide a fourth PEG channel. This channel may be located on Transferee's digital tier of service. Transferee shall not be required to carry the third and fourth PEG Channels on the Basic Service tier until Transferee converts its entire System to a digital format. 5. Transferee shall evidence acceptance of these conditions by signing a copy of this "Change of Ownership Consent Agreement," and submitting the same to the City Clerk within sixty (60) calendar days of the Closing Date. If Transferee fails to submit a signed copy of this "Change of Ownership Consent Agreement" to the City Clerk within said sixty (60) day period, or otherwise refuses to accept the conditions placed on the proposed transfer set forth herein, consent to the transfer shall be automatically withdrawn, effective the date of adoption of City of Burlingame Resolution No.3-2007_, and the request to transfer shall be deemed denied. Section 3 Other than with respect to the promise made in Section 2(3) above, if any sentence, clause, phrase or portion of any condition imposed in Section 2 hereof if for any reason held by a court of competent jurisdiction to be invalid or unenforceable, such decision shall not affect the validity of the remaining conditions placed on this transfer. The City Council of the City of Burlingame hereby declares that it would have entered into this "Change of Ownership Consent Agreement" and each and every condition set forth in Section 2 hereof separately, irrespective of the fact that one or more of these conditions may be declared invalid or unenforceable. Section 4 Subject to the reservation of rights of Section 2(2) above, the City hereby releases Franchisee, effective upon the consummation of the transaction contemplated in the Purchase Agreement (the "Closing Date") from all obligations and liabilities under the Franchise that accrue on or after the Closing Date. Franchisee shall remain responsible for all obligations and liabilities under the Franchise that accrue up to the Closing Date. Transferee shall be responsible for any obligations and liabilities under the Franchise that accrue on or after the Closing Date. MOOM Section 5 This Agreement shall be effective upon the Closing Date at which time Franchise and System ownership shall have transferred from Franchisee to Transferee. "City" City of Burlingame, CA Terry Nagel, Mayor Attest: Doris Mortensen, City Clerk Approved as to Form: Larry Anderson, City Attorney "Transferee" Astound Broadband, LLC M Its: Date: Exhibit A — Figure I WattOWsWri IL LLC jv, LLC L�l Inn ur: A�kwm WaNDN6AIlli LEC AA," Rmoa�4 LLC KV ,dm,.t: 13, XY Ik" Rb� �:2fkN4'66M q1 MOO.& ---I W Wave 1,03309 llubdiffV, ILC WattOWsWri IL LLC jv, LLC L�l Inn ur: A�kwm WaNDN6AIlli LEC AA," Rmoa�4 LLC KV ,dm,.t: 13, XY