Costa Mesa Municipal Code § 19-04 Authority and findings

(a) In accordance with applicable federal and state law, the city is authorized to grant one or more nonexclusive franchises to construct, reconstruct, operate, and maintain cable television systems within the city limits.

(b) The city council finds that the development of cable television and related telecommunications services may provide significant benefits for, and substantial impacts upon, the residents and the business community of the city. Because of the complex and rapidly changing technology associated with cable services, the city council further finds that the public convenience, safety, and general welfare can best be served by establishing regulatory powers to be exercised by the city. This Article 2 is intended to specify the means for providing to the public the best possible cable television and related telecommu-nications services, and every franchise issued in accordance with this Article 2 is intended to achieve this primary objective. It is the further intent of this Article 2 to adopt regulatory provisions that will enable the city to regulate cable television and related telecommunications services to the maximum extent authorized by federal and state law.

(Ord. No. 98-18, § 1, 6-15-98)

(a) Franchise purposes. A franchise granted by the city under the provisions of this article may authorize the grantee to do the following:

(1) To engage in the business of providing cable service and such other telecommunications services as may be authorized by law and which grantee elects to provide to its subscribers within the designated franchise service area.

(2) To maintain and operate the franchise properties for the origination, reception, transmission, amplification, and distribution of television and radio signals, and for the delivery of cable services and such other services as may be authorized by law.

(3) To erect, install, construct, repair, rebuild, reconstruct, replace, maintain, and retain, cable lines, related electronic equipment, supporting structures, appurtenances, and other property in connection with the operation of the cable system in, on, over, under, upon, along and across streets or other public places within the designated franchise service area.

(b) Franchise required. It is unlawful for any person to construct, install, or operate a cable television system or any video system within any street or public way in the city without first obtaining either a franchise with the State of California pursuant to the Digital Infrastructure and Video Competition Act of 2006 or a franchise under the provisions of this article.

(c) Term of the franchise.

(1) A franchise granted under this article will be for the term specified in the franchise agreement, commencing upon the effective date of the ordinance or resolution adopted by the city council that authorizes the franchise.

(2) A franchise granted under this article may be renewed upon application by the grantee in accordance with the then-applicable provisions of state and federal law and of this article.

(d) Franchise territory. A franchise is effective within the territorial limits of the city, and within any area added to the city during the term of the franchise, unless otherwise specified in the ordinance or resolution granting the franchise or in the franchise agreement.

(e) Federal or state jurisdiction. This article will be construed in a manner consistent with all applicable federal and state laws, and it applies to all franchises granted or renewed after the effective date of this article, to the extent authorized by applicable law.

(f) Franchise non-transferable.

(1) Grantee may not sell, transfer, lease, assign, sublet, or dispose of, in whole or in part, either by forced or involuntary sale, or by ordinary sale, contract, consolidation, or otherwise, the franchise or any of the rights or privileges therein granted, without the prior consent of the city council and then only upon such terms and conditions as may be prescribed by the city council, which consent may not be unreasonably denied or delayed. Any attempt to sell, transfer, lease, assign, or otherwise dispose of the franchise without the consent of the city council is null and void. The granting of a security interest in any assets of the grantee, or any mortgage or other hypothecation, will not be deemed a transfer for the purposes of this subsection.

(2) The requirements of paragraph (1) of this subsection apply to any change in control of grantee. The word "control" as used herein is not limited to the ownership of major stockholder or partnership interests, but includes actual working control in whatever manner exercised. If grantee is a corporation, prior authorization of the city council is required where ownership or control of 50% or more of the voting stock of grantee is acquired by a person or a group of persons acting in concert, none of whom, singularly or collectively, owns or controls the voting stock of the grantee as of the effective date of the franchise.

(3) Grantee must notify the city in writing of any foreclosure or judicial sale of all or a substantial part of the grantee's franchise property. That notification will be considered by the city as notice that a change in control of ownership of the franchise has taken place, and the provisions of this paragraph that require the prior consent of the city council to that change in control of ownership will apply.

(4) For the purpose of determining whether it will consent to an acquisition, transfer, or change in control, the city may inquire as to the qualifications of the prospective transferee or controlling party, and grantee must assist the city in that inquiry. In seeking the city's consent to any change of ownership or control, grantee or the proposed transferee, or both, must complete Federal Communications Commission Form 394 or its equivalent. This application must be submitted to the city not less than 120 days prior to the proposed date of transfer. The transferee must establish that it possesses the legal, financial, and technical capability to operate and maintain the cable system and to comply with all franchise requirements during the remaining term of the franchise. If the legal, financial, and technical qualifications of the applicant are satisfactory, the city will consent to the transfer of the franchise. The consent of the city to that transfer will not be unreasonably denied or delayed.

(5) Any financial institution holding a pledge of the grantee's assets to secure the advance of money for the construction or operation of the franchise property has the right to notify the city that it, or a designee satisfactory to the city, will take control of and operate the cable television system upon grantee's default in its financial obligations. Further, that financial institution must also submit a plan for such operation within 90 days after assuming control. The plan must insure continued service and compliance with all franchise requirements during the period that the financial institution will exercise control over the system. The financial institution may not exercise control over the system for a period exceeding one year unless authorized by the city, in its sole discretion, and during that period of time it will have the right to petition the city to transfer the franchise to another grantee.

(6) Grantee must reimburse the city for the city's reasonable review and processing expenses incurred in connection with any transfer or change in control of the franchise. These expenses may include, without limitation, costs of administrative review, financial, legal, and technical evaluation of the proposed transferee, consultants (including technical and legal experts and all costs incurred by these experts), notice and publication costs, and document preparation expenses. The total amount of these reimbursable expenses may be subject to maximum limits that are specified in the franchise agreement between the city and the grantee. No reimbursement may be offset against any franchise fee payable to the city during the remaining term of the franchise.

(g) Geographical coverage.

(1) Grantee must design, construct, and maintain the cable television system so as to have the capability to pass every dwelling unit in the city, subject to any service-area line extension requirements of the franchise agreement; provided, however, that if additional territory is annexed to the city after the effective date of a cable television franchise agreement, and an incumbent cable operator is then serving that annexed territory, the grantee will not be required to overbuild in order to provide cable service to dwelling units in that territory.

(2) After service has been established by activating trunk or distribution cables for any service area, grantee must provide service to any requesting subscriber in that service area within 30 days from the date of request, provided that the grantee is able to secure on reasonable terms and conditions all rights-of-way necessary to extend service to that subscriber within that 30 day period. Service to prospective subscribers residing in multiple dwelling units need only be provided if, after evaluating terms and conditions for access that may be imposed by an owner or manager of such multiple dwelling units, a grantee determines that those terms and conditions are reasonably acceptable.

(h) Nonexclusive franchise. Every franchise granted is nonexclusive. The city specifically reserves the right to grant, at any time, such additional franchises for a cable television system, or any component thereof, as it deems appropriate, subject to applicable state and federal law. If an additional franchise is proposed to be granted to a subsequent grantee, a noticed public hearing must first be held in accordance with the provisions of Government Code Section 53066.3.

(i) Multiple franchises.

(1) The city may grant any number of franchises, subject to applicable state and federal law. The city may limit the number of franchises granted, based upon, but not necessarily limited to, the requirements of applicable law and specific local considerations, such as:

(a) The capacity of the public rights-of-way to accommodate multiple cables in addition to the cables, conduits, and pipes of the existing utility systems, such as electrical power, telephone, gas, and sewerage.

(b) The benefits that may accrue to subscribers as a result of cable system competition, such as lower rates and improved service.

(c) The disadvantages that may result from cable system competition, such as the requirement for multiple pedestals on residents' property, and the disruption arising from numerous excavations within the public rights-of-way.

(2) The city may require that any new grantee be responsible for its own underground trenching and the associated costs if, in the city's opinion, the rights-of-way in any particular area cannot reasonably accommodate additional cables.

(Ord. No. 98-18, § 1, 6-15-98; Ord. No. 07-20, § 1, 12-4-07)

(a) Filing of applications. Any person desiring an initial franchise for a cable television system must file an application with the city. A reasonable nonrefundable application fee in an amount established by resolution of the city council must accompany the application. That application fee will cover all costs associated with reviewing and processing the application, including without limitation costs of administrative review, financial, legal, and technical evaluation of the applicant, consultants (including technical and legal experts and all costs incurred by those experts), notice and publication requirements, and document preparation expenses. If those costs exceed the application fee, the applicant must pay the difference to the city within 30 days following receipt of an itemized statement of those costs.

(b) Applications—Contents. An application for an initial franchise for a cable television system must contain, as applicable:

(1) A statement as to the proposed franchise service area.

(2) A resume of the applicant's prior history, including the experience and expertise of the applicant in the cable television and telecommunications industry.

(3) A list of the partners, general and limited, of the applicant, if a partnership, or the percentage of stock owned or controlled by each stockholder, if a closely-held corporation. If the applicant is a publicly-owned corporation, each owner of 10% or more of the issued and outstanding capital stock must be identified.

(4) A list of officers, directors, and managing employees of the applicant, together with a description of the background of each person on that list.

(5) The names and addresses of any parent or subsidiary of the applicant, or any other business entity owning or controlling applicant in whole or in part, or that is owned or controlled in whole or in part by the applicant.

(6) A current financial statement of the applicant verified by a certified public accountant or otherwise certified to be true, complete, and correct to the reasonable satisfaction of the city.

(7) The proposed construction and service schedule, the proposed rate structure for cable services, and the proposed commitment to provide public, educational, and governmental access channel capacity, services, facilities, and equipment.

(8) Any additional information that the city deems to be reasonably necessary.

(c) Consideration of initial applications.

(1) Upon receipt of an application for an initial franchise, the city manager or the city manager's designee must prepare a report and make recommendations to the city council concerning that application, including without limitation the applicant's legal, financial, and technical qualifications.

(2) A public hearing will be noticed prior to any initial franchise grant, at a time and date approved by the city council. Within 30 days after the close of the hearing, the city council will make a decision based upon the evidence received at the hearing as to whether the franchise should be granted, and, if granted, subject to what conditions. The city council may grant one or more franchises, or may decline to grant any franchise.

(d) Franchise renewal. Franchise renewals will be processed in accordance with then-applicable law. The city and grantee, by mutual consent, may enter into renewal negotiations at any time during the term of the franchise.

(Ord. No. 98-18, § 1, 6-15-98)

(a) The terms and provisions of a franchise agreement for the operation of a cable television or related telecommunications services may relate to or include, without limitation, the following subject matters:

(1) The nature, scope, geographical area, and duration of the franchise.

(2) The applicable franchise fee to be paid to the city, including the percentage amount, the method of computation, and the time for payment.

(3) Requirements relating to compliance with and implementation of state and federal laws and regulations pertaining to the operation of the cable television system.

(4) Requirements relating to the construction, upgrade, or rebuild of the cable television system, as well as the provision of special services, such as outlets for public buildings, emergency alert capability, and parental control devices.

(5) Requirements relating to the maintenance of a performance bond, a security fund, a letter of credit, or similar assurances to secure the performance of the grantee's obligations under the franchise agreement.

(6) Requirements relating to comprehensive liability insurance, workers' compensation insurance, and indemnification.

(7) Requirements relating to consumer protection and customer service standards, including the resolution of subscriber complaints and disputes and the protection of subscribers' privacy rights.

(8) Requirements relating to the grantee's support of local cable usage, including the provision of public, educational, and governmental access channels, the coverage of public meetings and special events, and financial or technical support for public, educational, and governmental access channels.

(9) Requirements relating to construction, operation, and maintenance of the cable television system within the public rights-of-way, including compliance with all applicable building codes and permit requirements of the city, the abandonment, removal, or relocation of facilities, and compliance with FCC technical standards.

(10) Requirements relating to recordkeeping, accounting procedures, reporting, periodic audits, and performance reviews, and the inspection of grantee's books and records.

(11) Acts or omissions constituting material breaches of or defaults under the franchise agreement, and the applicable penalties or remedies for such breaches or defaults, including fines, penalties, liquidated damages, suspension, revocation, and termination.

(12) Requirements relating to the sale, assignment, or other transfer or change in control of the franchise.

(13) The grantee's obligation to maintain continuity of service and to authorize, under certain specified circumstances, the city's operation and management of the cable system.

(14) Such additional requirements, conditions, policies, and procedures as may be mutually agreed upon by the parties to the franchise agreement and that will, in the judgment of city staff and the city council, best serve the public interest and protect the public health, welfare, and safety.

(b) If there is any conflict or inconsistency between the provisions of a franchise agreement authorized by the city council and provisions of this Article 2, the provisions of the franchise agreement will control.

(Ord. No. 98-18, § 1, 6-15-98)