San Bernardino Municipal Code Art. II Procedures for Granting, Renewing and Transferring Franchises for Cable…

It is unlawful for any person to construct, install, maintain or operate a cable television system within any street or public way in the city without first obtaining a franchise under the provisions of this article or, if applicable, under the provisions of the Digital Infrastructure and Video Competition Act of 2006; provided, however, that any cable operator authorized to provide cable service under a franchise granted by the city prior to the effective date of this chapter may continue to exercise that authority until the expiration or termination of that franchise.

Statutory reference:

Digital Infrastructure and Video Competition Act of 2006, see Cal. Stats 2006, Assembly Bill No. 2987, Ch. 700 codified at Cal. Public Utilities Code, §§ 5800 et seq.

Subject to applicable law, the city may, by ordinance or resolution, grant a franchise to any person, whether or not operating under an existing franchise, or who elects to provide cable service pursuant to the provisions of this chapter. The franchise shall be subject to all ordinances and regulations of general application now in effect or subsequently enacted, including, without limitation, those related to encroachment permits, business licenses, zoning and building.

(A) The term of the franchise or of any franchise renewal shall be established in the franchise agreement.

(B) A franchise may be renewed by the city upon application of the grantee pursuant to procedures established by the city, subject to applicable federal and state law. In the event the city does not establish such renewal procedures, the franchise renewal procedures set forth in federal law shall apply.

(A) A franchise granted under this chapter shall be non-exclusive.

(B) The grant of a franchise, right or license to use public rights-of-way for purposes of providing cable service shall not be construed as a right or license to use such public rights-of-way for any other purpose.

(C) Any right or privilege claimed by a grantee under a franchise in public rights-of-way or other public property shall be subordinate to any prior or subsequent lawful occupancy or use thereof, or easement therein, by the city or other governmental entity.

(D) A franchise granted under this chapter shall not relieve a grantee of any obligation to obtain pole space from any city department, utility company or others maintaining poles in the public rights-of-way.

(A) Subject to any restrictions that are mandated by state or federal law, neither the granting of any franchise nor any provisions of this chapter shall be construed to preclude the city from granting additional franchises.

(B) By its acceptance of a franchise, a grantee agrees to comply with all lawful ordinances and regulations of general application now in effect or subsequently enacted; provided, however, that such ordinances and regulations shall not materially affect grantee’s rights or obligations under the franchise.

(C) Neither the granting of a franchise, nor any provisions of this chapter, shall constitute a waiver or bar to the city’s lawful exercise of any governmental right or power.

(D) This chapter shall not be construed to impair or affect, in any way, the right of the city to acquire the grantee’s property through the exercise of the power of eminent domain, in accordance with applicable law.

(E) The Mayor and City Council may do all things necessary in the exercise of its jurisdiction under this chapter and may determine any question of fact that may arise during the term of any franchise granted under this chapter.

(F) Any right or power in, or duty imposed upon, any officer, employee, department or board of the city shall be subject to transfer by the city to any other officer, employee, department or board of the city.

(Ord. MC-1484, passed 4-18-2018)

(A) 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 written consent of the Mayor and City Council. Any attempt to sell, transfer, lease, assign or otherwise dispose of the franchise without the written consent of the Mayor and 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 section.

(B) The requirements of division (A) above apply to any change in control of the 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 the grantee is a partnership or a corporation, prior authorization of the city is required where ownership or control of 25% or more of the partnership interests or of the voting stock of the corporation, or any company in the tier of companies controlling the grantee, whether directly or indirectly, is acquired by a person or a group of persons acting in concert, none of whom, individually or collectively, owns or controls those partnership interests or that voting stock of the grantee, or the grantee’s upper tier of controlling companies, as of the effective date of the franchise.

(C) Unless precluded by federal law, the grantee must give prior written notice to the city of any proposed 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 will take place, and the provisions of this section that require the prior written consent of the Mayor and City Council to that change in control of ownership will apply.

(D) For the purpose of determining whether it will consent to an acquisition, transfer or change in control, the city may inquire about the qualifications of the prospective transferee or controlling party, and the grantee must assist the city in that inquiry. In seeking the city’s consent to any change of ownership or control, the 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 remedy all then-existing defaults and deficiencies, and during the remaining term of the franchise, to operate and maintain the cable system and to comply with all franchise requirements. If the legal, financial and technical qualifications of the proposed transferee are determined to be satisfactory, then the city will consent to the transfer of the franchise.

(E) 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 the 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 ensure 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, it will have the right to petition the city to transfer the franchise to another grantee.

(F) Unless prohibited by applicable law, the 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, as provided for in § 14.08.15.

(Ord. MC-1484, passed 4-18-2018)

(A) The franchise service area shall be established in the franchise agreement.

(B) Territory annexed to the city that is not within the service area of a franchised or licensed cable operator at the time of annexation may be included within the franchise service area of an incumbent cable operator, as determined by Mayor and City Council resolution.

(C) Territory annexed to the city that is included within the service area of a franchise or license issued by a local franchising authority other than the city is subject to the following provisions.

(1) If the franchisee or licensee has not commenced construction or installation of a cable system before the annexation becomes effective, then all rights acquired by a cable operator under that franchise or license will terminate by operation of law.

(2) If the franchisee or licensee has commenced construction or installation of a cable system before the annexation becomes effective, then that franchisee or licensee may continue to provide cable service to the annexed territory in accordance with the terms and conditions of the existing franchise or license; provided that all obligations thereunder, including the timely payment of franchise fees and PEG support fees, if any, shall be due and owing to the city by operation of law.

(Ord. MC-1484, passed 4-18-2018)

(A) An application for the grant of a new franchise may be submitted by any person pursuant to the requirements of this chapter and subject to the terms of the city’s schedule of fees, as such schedule may, from time to time, be amended. The city may, by advertisement or any other means, solicit applications for a new franchise by issuing a request for proposals.

(B) An application for a new franchise to construct, install, operate or maintain a cable system in the city shall be filed with the Department of Finance and Management Services and shall be on forms prescribed by the city. The city reserves the right to waive all application formalities where the city determines that the best interests of the city would be served by such waiver.

(C) Unless waived in writing by the city, all applications for a franchise shall contain the following:

(1) The name, address and telephone number of the applicant;

(2) A detailed statement concerning the applicant’s business entity, including, but not limited to, the following:

(a) The names and business addresses of all officers and directors;

(b) The names and business addresses of all persons having an ownership interest of 5% or more in the applicant and the respective ownership interest of each such person; and

(c) The names and addresses of any parent or subsidiary of the applicant, namely, any other business entity owning or controlling applicant in whole or in part, or owned or controlled in whole or in part by the applicant, and a statement describing the business of any such parent or subsidiary, including, but not limited to, cable systems owned or controlled by the parent or subsidiary, and the geographic areas served.

(3) A description of the applicant’s previous experience in providing cable service or similar communications services;

(4) A detailed financial statement of the applicant, certified by an independent certified public accountant, for the fiscal year preceding the date of the application. The city may require a statement from an independent certified public accountant, or a recognized lending institution, certifying that the applicant has sufficient financial resources available to construct and operate the proposed cable system in the city;

(5) A detailed pro forma financial plan for the operation of the cable system during the term of the proposed franchise, in a format prescribed by the city;

(6) A description of any cable system franchises awarded to the applicant, its parent or subsidiary, including the location and term of these franchises, the status of their completion, the total cost of completion of each cable system and the amount of applicant’s and its parent’s or subsidiary’s resources committed to the completion of these cable systems;

(7) A detailed description of the applicant’s proposed plan of operation which shall include, but not be limited to, the following:

(a) A detailed map that describes all areas of the city proposed to be served, and a proposed schedule for the construction of the cable system and the installation of all equipment necessary to become operational throughout the area to be served;

(b) A schedule setting forth all proposed classifications of rates and charges to be paid by subscribers, including installation and other service charges;

(c) A description of the equipment and operational standards proposed by the applicant;

(d) A description of the applicant’s plan to provide public, educational and governmental access channel capacity, services, facilities and equipment, including a description of the method to be used by the applicant in reserving and inserting PEG programming; and

(e) A description of the applicant’s plans to address the city’s institutional network needs.

(8) A copy of any existing agreement covering the proposed franchise service area between the applicant and local telephone or electric utilities that provides for applicant’s use of any facilities of that utility, including, but not limited to, poles, lines or conduits; and

(9) Any additional information that the city deems to be reasonably necessary to evaluate the applicant’s qualifications.

(D) The applicant’s failure to comply with the requirements of this section may be grounds for rejection of an application at the city’s sole discretion.

(Ord. MC-1484, passed 4-18-2018; Ord. MC-1625, passed 2-21-2024)

(A) The city may make such investigation as it deems necessary to determine the ability of an applicant to satisfactorily perform its obligations under a franchise. The applicant shall timely furnish to the city such additional information as the city may request.

(B) Upon receipt of a complete application, and following the city’s investigation and review of that application, the City Manager shall prepare a report and make recommendations to the Mayor and City Council concerning the application.

(C) The Mayor and City Council shall hold a noticed public hearing on the application. Written notice shall be given to the applicant at least ten days prior to the hearing by United States mail, postage prepaid, and by publication once in a newspaper of general circulation within the city. Within 60 days after the close of the hearing, unless an extension of time is mutually agreed upon by the city and the applicant, the Mayor and City Council shall make a written decision on whether the franchise should be granted, and if granted, subject to what conditions.

(D) In determining whether to grant an application for a new franchise, the city may consider all factors that affect the interests of the community, including, but not limited to, the quality of the proposed cable service; the areas to be served; the rates to be charged; the amount of franchise fees to be generated; the experience, character, background, performance history and financial responsibility of an applicant (and its management and owners); the technical performance and quality of equipment; the applicant’s willingness and ability to meet construction requirements; and all other matters deemed relevant by the city to protect the interests of the city and the public.

(E) The decision of the Mayor and City Council concerning the granting or denial of a franchise pursuant to this chapter shall be final.

(Ord. MC-1484, passed 4-18-2018)

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

(A) In its sole discretion, the city may limit the number of franchises granted at any one time based upon its consideration of all appropriate criteria, which shall include, but not be limited to, the following:

(1) The capability of the public rights-of-way to accommodate the facilities of any proposed additional cable systems; and

(2) The advantages and disadvantages that may result from additional cable system competition.

(B) The city may require that a grantee be responsible for its own underground trenching and any associated costs if, in the city’s opinion, the public rights-of-way in any area cannot reasonably accommodate the additional cables, machinery, equipment or other facilities contemplated in connection with the construction, maintenance and operation of a proposed new cable system.

(A) In connection with any application for a new franchise, a franchise modification requesting entry into a new area of the city, a franchise renewal or a franchise transfer, the applicant shall pay an application fee deposit equal to the city’s estimated costs in processing and reviewing the application, as such costs may be established, from time to time, by resolution of the Mayor and City Council. Such costs shall include all estimated administrative, consultant, noticing and document preparation expenses. No application shall be considered without payment of the application fee deposit. If the application fee deposit is less than the city’s actual costs, the applicant shall pay such additional costs to the city within 30 days after written notice from the city that such additional payment is required. If payment of such amount is not made within such time, the city shall cease all further proceedings related to the application. If actual costs are less than the application fee deposit, the remaining balance will be refunded to the applicant.

(B) Application fee deposits are exclusive of an applicant’s or grantee’s obligation to pay other costs and fees required by this chapter or the franchise agreement, including, without limitation, construction inspection fees, permit fees and franchise fees.

(Ord. MC-1484, passed 4-18-2018)

(A) In consideration for the privilege to use the city’s public rights-of-way in the operation of its cable system, and because the city will incur costs and expenses in regulating and administering the franchise, the grantee shall pay to the city a franchise fee in an amount equal to 5% of the grantee’s gross revenues, unless a greater amount is authorized by applicable law.

(B) The franchise fee shall be paid quarterly and must be received by the city not later than 45 days after the close of each calendar quarter.

(C) Concurrently with the payment of franchise fees, the grantee shall provide to the city a statement verified by a financial officer of grantee that sets forth gross revenues for the previous calendar quarter, listing every revenue source and describing gross revenue computations.

(D) (1) On an annual basis, the grantee shall file a statement certified by a financial officer that sets forth all gross revenues for the previous calendar year, listing every revenue source and describing gross revenue computations.

(2) If the city has any objections relating to that report, the city shall have 30 days to notify the grantee and to request additional information. The grantee shall have 30 days to provide additional information to resolve any objections to the city’s satisfaction.

(E) (1) At any time during the term of a franchise, the city has the right to conduct, or require the grantee to obtain, an independent audit by certified public accountants approved by the city of all records of the grantee related to gross revenue reports or computations. The grantee shall pay all costs of that audit. The grantee shall cooperate with any such audit and shall make readily available all information requested by the city without regard as to whether information is contained in documents (as defined in the Public Records Act) or other media in the possession or under the control of the grantee.

(2) The certified public accountants shall be required to certify in the audit that the grantee is in compliance with this chapter and the franchise agreement. The grantee shall maintain, in a readily accessible place, all relevant financial records for a minimum of four years after any payment period that such records pertain to.

(F) If any franchise fee payment is not made by the due date, interest shall be charged monthly at a rate of 1%. In addition, if any franchise fee is not paid in full within 15 days after the grantee’s receipt of notice from the city concerning the delinquency of that payment, a late fee in the amount of 5% of the delinquent amount shall be assessed.

Editor’s note:

Utility usage data is not subject to PRA requests, with certain exceptions under Cal. Gov’t Code, § 7927.410 (formerly Cal. Gov’t Code, § 6254.4).

Statutory reference:

Public Records Act, see Cal. Gov’t Code, §§ 7920.000 et seq.

(A) The provisions of a franchise agreement for the operation of a cable television system may relate to or include, without limitation, the following subject matters:

(1) The geographical area, duration and non-exclusive nature 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 as determined by the city to secure the performance of the grantee’s obligations under the franchise agreement;

(6) Requirements relating to 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, which requirements may include, without limitation, compliance with the statutes, rules and regulations set forth below in § 14.08.23;

(8) Requirements relating to the grantee’s support of local cable usage, including the provision of public, educational or governmental access channels; the coverage of public meetings and special events; interconnection requirements; and financial support for the required access channel facilities and activities that is consistent with this title;

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

(10) Requirements relating to record-keeping, accounting procedures, reporting, periodic audits, 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 those 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; and

(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 the city, 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 Mayor and City Council and provisions of this section, the provisions of the franchise agreement will control.

(Ord. MC-1484, passed 4-18-2018)