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HomeMy WebLinkAboutR-88-0711J-88-705 7/7/88 RESOLUTION NO. `�'�"' r 11 A RESOLUTION APPROVING AN AGREEMENT BETWEEN MIAMI TELE-COMMUNICATIONS, INC. AND THE CITY OF MIAMI TO RESOLVE OUTSTANDING ISSUES IN DISPUTE; PROVIDING TERMS OF APPROVAL OF THE INSTITUTIONAL CABLE NETWORK (I -NET) AND THE RELEASE OF $500,000 FROM THE SECURITY FUND; PROVIDING FOR THE SETTLEMENT OF OUTSTANDING PENALTIES CURRENTLY ASSESSED AGAINST THE CABLE LICENSEE; FURTHER PROVIDING FOR RESUMPTION OF LICENSE FEE PAYMENTS TO THE CITY AND INTEREST ON THE BALANCE OF PREPAID LICENSE FEES. WHEREAS, the City Manager has undertaken negotiations with Miami Tele-Communications, Inc. in an effort to resolve a number of outstanding cable issues and to avoid the possibility of costly and lengthy litigation; and WHEREAS, these issues include: (1) terms of approval of completion of the cable system, including the I -Net, by the City Manager and release of $500,000 from the Security Fund; (2) settlement of outstanding penalties currently before the Arbitration Panel; and (3) resumption of license fee payments and reduction of interest on the balance of prepaid license fees; and WHEREAS, approval of the Agreement will result in benefits to the City of Miami including the resumption of license fee payments retroactive to January 1, 1988 and the reduction of credits due to the cable company; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The Agreement between Miami Tele- Communications, Inc. and the City of Miami is hereby approved in substantially the form as attached hereto. CITY C01,11111ISSION MEETINC OF JUL 190d [f.sOLU710% NO. 9S-711.1 REMARKS. I Seotion 2. This Resolution immediately upon adoption. PASSED AND ADOPTED this 21st day of ATT MATTY HIRAI CITY CLERK PREPARED AND APPROVED BY: A. Q NN J)a III DEPUTY Ct ATTORNEY APPROVED AS TO FORM AND CORRECTNESS: j V iWu • � ++ CITY TTORNE AQJ:bss:M746 -2- shall be arreotive VIER L. Wall 2, MAYOR 9Q"ii 1. . ■nnrrhar.iv THIS AGREEMENT, executed on the day of , 1988, by and between the CITY OF MIAMI (hereinafter "CITY"), a Florida corporation and MIAMI TELE-COMMUNICATIONS, INC. (hereinafter "MTCI"), a Florida corporation. WHEREAS, the City and MTCI have more clearly defined certain operating procedures to help establish a better working relationship between the parties; and WHEREAS, the City and MTCI desire to create a more economical environment for both parties; and WHEREAS, there are certain issues of concern by the City requiring resolution: NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other valuable consideration, the City and MTCI, parties hereto, agree as follows: (1) MTCI shall be compensated by the City for the time value of money for license fees prepaid pursuant to Section 901 of the License Ordinance through June 30, 1984. It is agreed between the parties that the time value of money shall accrue at the annual rate of One Dollar ($1.00) per year. The amount of interest accrued through December 31, 1987 is Seven Dollars ($7.00). (2) The balance of the prepaid license fees, less fees earned by the City, and other contributions is $918,743 as of December 31, 1987. The amount of $450,000 which MTCI owes for payments pursuant to Section 406 of the License Ordinance through October 1, 1986 will be credited to the benefit of the City in the form of a deduction from the amount of prepaid license fees. The remaining amount of prepaid license fees, $468,743, will be held in escrow and will be applied to the license fee liability in the final year of the license term. Interest will continue to accrue at the annual rate of four percent (0) per year. 919-'711. "A • (3) License fees for the years 19AA-1995 will be paid as they become due as specified in the City of Miami Ordinance No. 9332- (4) The remaining locations of the I -Net as listed in Attachment A, will be constructed and activated as follows: ( a ) locations listed under the heading Priority A, will be completed by June 30, 1988; ( b ) locations listed under the heading Priority ©, will be completed by July 30, 1988. This will complete the I -Net system for the City, The Miami Marine Stadium, the Port of Miami, and Watson Island are specifically excluded by reference herein. MTC1 shall credit the City in the amount of $825,000 as compensation for the cost to the City of providing equivalent service to these three locations. In order to avoid any negative financial impact upon MTCI and its subscribers, this compensation will be due in the form of a credit to the City if and when the term of the license is extended to the original 15 years. (5) MTCI agrees to follow the plan to correct/modify service cross -connections in streets rehabilitated by the Department of Public Works as presented in Exhibit C of the September 16, 1987 Agreement. The City shall not make approval of completion of construction contingent upon correction/modification of the service cross -connections. (6) The City Manager will recommend that the City Commission release $500,000 from the Security Fund when the system is complete. It is understood between the parties that the system will be considered complete when the City receives a favorable report from its independent engineering consultant regarding MTCI's proof -of-performance of the subscriber system and when the I -Net is complete. (7 ) As part of the Agreement dated January 14, 1987, MTCI will maintain the "B" cable system in sound mechanical condition. More specifically, sound mechanical condition means that the "Q" cable system will be maintained in such a manner that all cable ends will be terminated to the appropriate hardware as designated by the system design. It will be required that the hardware 98-'711 . 1 consist of the applicable or appropriate housing or shell but not necessarily inclusive of the electronics that are an internal part of the housing or shell. It is understood that deterioration and weather impairment such as electrical storms could and would cause damage to these electronics, and that, it is more economically feasible to not necessarily place or maintain these electronics within the housing or shell until such a time that it is deemed economically feasible and necessary to activate the "B" cable system. (8) The following outstanding penalties and possible penalties against MTCI shall be treated as follows: (a) cross -connections penalty totalling $977,245 shall continue to be held in abeyance in accordance with the Agreement dated September 16, 1986; ( b ) imposition of penalties before the Arbitration Panel.totalling $467,500, composed of (1) Sec. 302(a) - $152,500, (2) Sec. 1002(4) - $130,000, (3) Sec. 1002(4) - $62,500, (4) Sec. 1002(4), $122,500 shall be withdrawn. It is further understood by MTCI that MTCI shall be subject to and bound by all terms and conditions of City of Miami Cable Television License Ordinance No. 9332, and all amendments thereto, including resolutions, agreements or other documents pertinent and applicable to the cable television system. CITY OF MIAMI, a municipal Corporation of the State of Florida ATTEST: Maatty RiFai, City ercf ss stan ecretary APPROVED AS TO FORM AND CORRECTNESS: BY: Cesar H. 6dio, y-7anager MIAMI TELE-COMMUNICATIONS, INC. BY: Vice President Jorge L. Fernandez, City Attorney 13 .It STATE bE FLORIDA COUNTY Or DARE DEFONE ME, an officer duty authorized to administer oaths and take acknowledgments, personally appeared _ , Vice President of Miami Tele-Communications, Inc. and that said individual, to me well known to be the person who executed the foregoing document, acknowledged before me, under oath, that he executed the same freely and voluntarily for the purposes therein expressed. WITNESS MY HAND AND OFFICIAL SEAL AT MIAMI, DADE COUNTY, FLORIDA THIS DAY OF , 1988. Notary Public State of Florida at Large My commission expires: �- 8--'7ILI . CITY OF MIAMI. FLORIDA 19 INTER -OFFICE MEMORANDUM TO DATE I ; A ��Q(� FILE J The Honorable Mayor and ` vv Members of the City Commission SUBJECT Agreement Between Miami Tele-Communi- cations, Inc. and the City of Miami FROM Cesar H. O d i o REFERENCES City Manager ENCLOSURES Agreement Recommendation: It is respectfully recommended that the City Commission adopt the attached Resolution approving the "Agreement" between Miami Tele- Communications, Inc. and the City of Miami in substantially the same form attached hereto. Negotiations: During the past few months, representatives of the City Manager's office, in conjunction with the City Attorney's office, have been meeting with representatives of Miami Tele-Communications, Inc. Pliami TCI) in an effort to resolve a number of outstanding cable issues. The attached Agreement is the result of these meetings. Through negotiation, both the City and the cable licensee have benefited. The agreement will save the City over $1,500,000. No amendments to the Cable Television License Ordinance are necessary, and the possibility of costly and lengthy litigation has been avoided. Background: There have been no license fee payments to the City since June, 1984. As of that date, the City had received payments totalling $2,475,000, consisting of a minimum $225,000 per quarter. In July 1986, the City Commission amended the Cable Television License Ordinance to reflect changes in federal cable law. The amendment provided compensation to the company by the City for use of the prepaid license fees. The amount of interest agreed upon was the percentage the City receives on the liquid funds it invests, averaging 8% per annum. By December 31, 1987, the amount of accumulated interest was $851,349. The City would not receive license fee payments again until the amount of actual fees owed to the City by the company caught up with the amount of prepaid fees, plus the accrued interest and a credit to the company of $1,650,000 for access fees. Thus, actual cash payment of license fees to the City would not resume until 1994. The estimated accumulated interest by that time would be $913,740. l � -I )S--711 Honorabl a Mayor and -2- Members of the City Commission Benefits to the City: The agreement will mean: I. A reduction of $750,000 in the amount of interest due Miami TCI on the prepaid license fee balance. 2. The $1,650,000 access fee credit to Miami TCI will be reduced to $825,000. This amount will be credited to the City if and when the term of the license is extended to the original fifteen (15) years. 3. An immediate resumption of license fee payments retroactive to January 1, 1988. 4. $450,000 will be credited against the $918,743 prepaid license fee balance instead of crediting it to the interest on the prepaid license fee. Thus, the prepaid license fee balance will be reduced to $468,743 and future interest calculated against this reduced amount. Agreement The major issues addressed in the attached Agreement between the City of Miami and Miami TCI are as follows: I. Completion of the I -Net, including service to Port of Miami, Watson Island, and Miami Marine Stadium. The I -Net will be considered complete with the furnishing of service by July 30, 1988 to the City locations specified by the City, excluding the Port of Miami, Watson Island, and the Miami Marine Stadium. Miami TCI will credit $825,000 to the City as compensation for the cost to the City of provi- ding equivalent service to these locations if and when the term of the license is extended to the original 15 years. 2. Approval of completion of the cable system by the City Mana- ger and release of $500,000 from the Security Fund. The City Manager will recommend that the City Commission re- lease $500,000 from the Security Fund when the system is complete. (One million dollars will remain in the Security Fund.) It is understood between the parties that the cable system will be considered complete when the City receives a favorable report from its independent engineering consultant regarding the proof -of -performance of the subscriber system Honorable Mayor and -3- Members of the City Commission and when the I -Net is complete. The Company will complete its correction of cross -connections made in streets already rehabilitated by the Department of Public Works by November 1988 as previously agreed. 3. Penalties before the Arbitration Panel. Imposition of penalties before the Arbitration Panel totalling $467,500, composed of (1) Sec. 302(a) - $152,500, (2) Sec. 1002(4) - S130,000, (3) Sec. 1002(4) - $62,500, (4) Sec. 1002(4), S122,500 will be withdrawn. In each case, the violation resulting in a penalty has been corrected by Miami TC I . 4. Resumption of license fee payments and reduction of interest on the balance of prepaid license fees. License fees for the years 1988-1995 will be paid by Miami TCI as they become due, and the amount of interest will be $1 per year on the prepaid amount through December 31, 1987. Thereafter, interest will accumulate at 4% on the prepaid fee balance. Actual license fees in the final year of the license will be applied against the prepaid fee balance and accumulated interest. CHO:CFS:MSS 3 NS-711.