HomeMy WebLinkAboutM-84-0458CITY Or Film!!, F!_o$ mik,
TO: Honorable Mayor and
Members of City Commission
FROW Howard V . Gary
City Manager
SUMMARY OF REPORT
DATF: April 9, 1984 FILE:
SUBJECT: Repo): t on penalty negotiations
with Miami Cablevision
REFERENCES -
ENCLOSURES: Exhibits
This report contains the following sections:
Section 1.
Section II.
Section III.
Section IV.
Section V.
Findings of fact and conclusions on the service
cross -connections issues;
Issues for negotiations concerning cross -
connections together with tables setting
forth the cost estimates of the City and
Miami Cablevision;
A table describing the financial ability of
Miami Cablevision to fund the correction/
modification of cross -connections;
The proposal of the City Manager to settle
the cross -connection and interactive service
to residential :subscribers issues; and
Recommendation and conclusion.
SUMMARY OF• RECOb'1.1,4ENDED SETTLE11ENT PROPOSAL
1. 75 miles of streets within one year.
2. 10 miles of streets per year until end of license;
anything over -- in year 15.
3. Recommended penalties -- see EXHIBIT 2, page 15.
4. Additional elements including construction standards,
review and approval by City --.see page 11.
84-456
NO-r- `0 Al
rVW
llonorabl.n i9avo*-- at. _,, Page ? April 9, 1984
Members o ' C ,t; y' Commission
i_on
I. Findi.nris of face ind conclusions on the service cross-.
After closely revi.et,,i.ng and consi.d^ri.ng them allegations
made by rjj irii. Cabl.evision, as 't,{el.l as the information
provided by City staff, the City Manager has nade the
following findings of: fact and conclusions regarding
the issue of service cross -connections.
1. Miami. Cablevision asserts that it is being fined for not
constructing its cable lanes can both sides of the streets,
and that when the cable RFP eas issued by the City, it did
not contain this specification.
• The Department of Public Works (DPW) ha. never required
the licensee to build on both sides of the street. DPW's
position is that the licensee should follow the utility lines
that have been rebuilt to minimize unsightly cross -connections
over recently rebuilt streets.
Further, the RF'P included a copy of the enabling ordinance
which required the licensee to construct the system parallel
to utility wires whenever possible. That ordinance also
provided that the City could reasonably designate where
a licensee's facilities are to be placed within the public
rights -of -way, and/or easements of the City when required
by the City because of public improvements.
2. Miami Cablevi-'on states that there eras no notification to
bidders during the cable hearings regarding cross -connections.
• As set forth above, the nr r notified all api-,)licants that
construction of the cable system must be parallel to
(folloi,/go ajoiiq x•r.a_tlj) utility linca anti ghat cable
facilities nw t• be moved at licensee c),penrc to accom-
modate public improvement.,. The licon'se 017dinance which
was accopted by the licensee contained the; x,.,;urtc provisions.
3. Miami Cablevision states that it did notaccept the license
contingent on constructing both sides of the street nor did
it agree to this.
• The licensee accepted the requirements of the ordinance
which included the requirement that the cable system
parallel the utilities. For example, if the utilities
make one crossing per block, so should the licensee.
84-458
Honorable Mayor:And
Members of City Commission Page 3 April 9, 1984
4. Miami Cnblevision states that the maps given to the City
showing five milns of proposed cable construction showed
construction on one side of the street.
These maps were reviewed in February and March 1902
by the City'n engineering consultant, Atlantic Research,
Inc. As is documented in Exhibit I (attached), there
are no cable crossings in violatinni of the City's
ordinance shown on these maps. No one reviewing the
five mile design submission could conclude that the
cable operator was intending to disregard the rehabil-
itation policies of the City in future plant construction.
In fact, the small design area submitted in the rehabil-
itation area shows compliance with City policy of
paralleling existing crossings.
5. Miami Cablevision argues that the City Manager gave it
written notice to proceed constructing on only one side
of the street.
• The City Manager gave Miami Cablevision permission to
commence construction in accordance with the provisions
and terms of the license ordinance. Notice to proceed
with construction was not contingent upon construction
on only one side of the street, nor did such notice
authorize in any way noncompliance with the City's
street improvement policy.
6. Miami Cablevision states that the Dopartment of Public Works
did not notify it regarding construction on "both sides of
the street" until one and one-half years after the license
was awarded.
• First, DPW has nevor roquired the licensee to build a
double systcm. Tho company was rcquired to follow the
utilitics, limiting crossings to a minimum of one or
two per block. Second, construction of the cable system
did not begin until May 1982 -- the headend only.
Through the late fall of 1902, the licensee constructed
trunk and feeder network, not service connections.
Five miles of active plant with sixty subscribers was
in place by December 31, 1982. Thus, the first oppor-
tunity of DPW to observe the licensee's practice of
cross -connections to subscribers' homes did not occur
until December 1982. In December 1982, DPW notified
the licensee regarding the City's highway improvement
policy and met with the licensee to discuss this policy.
Notwithstanding these discussions, the licensee has
continued for over a year to construct the system in
disregard of the City's highway improvement policy.
Additionally, it is standard practice throughout the
cable industry that prior to any CATV system construction,
84-456
Honorable Mayor and
Members of City Commission Page 4
April 9, 1984
a cable company `•-,ill request a meeting with the munici-
pal_ department of public works to discuss the necessary
permits and municipal_ policies regarding construction
in the public rights--of-way. Consistent with this
practice, it -was incumbent upon the licensee to meet
with DPW to find out the applicable policies and permits
of the City.
The City Manager_ determined to impose penalties on
the licensee only after there existed clear grounds for
doing so and after_ concluding that it would be inconsis-
tent with the responsibilities of the City Manager to
do otherwise.
7. Miami Cablevision argues that the aerial construction of
its system is 90% completed and is constructed on one side
of the street.
As noted above, Miami Cablevision continued to construct
the system for over a year after DPW notified the licensee
of its cross -connections in violation of the City's street
improvement policy. When DPW met with the licensee in
December 1982, less than 5% of the cable plant was built.
Thus, DPW raised the flag early. By disregarding this
clear warning, Miami Cablevision accepted the risks of
noncompliance.
8. Miami Cablevision contends that it is not aware of any other
city that has "mandated that its cable system be constructed
on both sides of the street."
• The City of Miami has not mandated that the licensee
construct on both sides of the street. In fact, the
City has required the licensee to comply with its street
cleanup program in less than 10% of the cable system.
This program requires the licensee to keep crossings
at a minimum, such as the telephone and electric utilities
have done. All cities have road projects of some kind.
Some cities require the use of all rear easements (e.g.,
Coral Gables). Some cities require all new construction
to be buried (e.g., Miami Beach). The City of Miami
chose a less expensive procedure for improving its streets.
Miami Cablevision has chosen not to comply.
84-45t
-co
nu _
Honorable Mayor and
Members of City Commission Page 5 April 9, 1984
II. Issues
The fundamental issues concerning cross -wiring are:
(1) the number of miles in which the Company must
modify its plant and when that modification shall take
place, and (2) the cost of the modification.
9 Mileage/Time Period. Miami Cablevision contends that
the City is requiring it to modify 270 miles or nearly
50% of its aerial system over the next three years.
This is not and never has been the City's position.
The City's position is that the Company must modify
immediately the cable in the 75 miles of streets which
the City has already rehabilitated. The 75 miles of
streets represents approximately 1096 of the system's
plant. In the future, the Company would have to modify
an average of 10 miles of streets per year for the 13
years remaining in the license term. The 10 miles
represents less than 2% of the aerial plant on an
annual basis.
. Cost. The Company contends that it will cost $15.2
million over the next 13 years to modify its plant as
required by the City. This figure is wrong for several
reasons: (1) The figure is based on incorrect mileage
assumptions; and (2) the figure is based on the incorrect
assumption that both sides of the street must be built
in every block. The City has repeatedly advised the
Company: (1) that the mileage is 75 miles now and an
average of 3.0 miles in the future per year and (2) that
the Company may cross each block one or two times where
the utilities cross.
Based on the per mile costs in the Company's contract with
its construction subcontractor, the City estimated the
total cost of modification over the next 13 years to be
$3.4 million: $1.3 million to clean up the 75 miles plus
$2.08 million to modify plant at an average rate of 10 miles
per year.
During the negotiation meetings, the Company provided the
City staff for the first time with per mile cost estimates
for the modification. These costs are significantly higher
than the figures upon which the City relied for its original
cost estimate of the modification. Even multiplying the
Company's new, higher cost estimates by the correct mileage,
the cost to the Company over the next 13 years would be
$6.9 million. This is $8.3 million less than the Company's
original estimate of $15.2 million, representing a savings
to the Company of more than 50%.
84-"45c
4---
Honorable Mayor and
Members of City Commission Page 6
April 9, 1984
The City believes that the' Company's new cost estimates,
provided to the City during the negotiation meetings, are
on the high side and that it will not cost the Company
$ 6.9 million to modify its plant. The City further
believes that the original costs calculated by City staff
are reasonable estimates for which the system could be
modified. However_, the City does not control the
Company's costs, its subcontractors, or its construction
practices. In addition, the City staff did not know that
the Company's subcontractors would increase their construction
price, as the Company now asserts. Accordingly, the cost
of modification may be higher than the estimates prepared
by City staff based on the Company's previous per mile
costs.
The City proposes to work with the Company to minimize the
cost of modification. The City must be able to review and
approve plans which contain the following detail prior to
and after modification: cost, design, maps, and beginning
and completion dates on a block by block basis.
Set forth below are charts and tables containing the Company's
cost estimates based on its erroneous mileage assumptions
and on the correct mileage; the City's original cost estimates
and those estimatcs adjusted at a rate of 10% per year; and
the Company's annual capital outlays under the City's and
the Company's cost estimates.
84i-456
I. Citv Cost r-S 'r-:1t:cn �Mi�aar�Sn.� �"58��!!�" 3,�.�. �tr. � fp(-.t nr nr 10% An(i (:'j.ty host
75 miles nlrenAy Yo7li bi.l.i.tntted 3,300,000
50 acddit%onnl mi.l.i-p key 1908 971.,720 800,000
80 additional miles. by 1996 2,946,760 1, 2801000
TOTAL $ 5,218,480 $ 3,380,000
2. Company cast estimates
270 miler in 3 years plus replacement m $ 15.2 million
3. Annual capital budget from 1984 through expiration of license (1996)
,.Company
Company
.City Eat.
City twat.
per mile cost x
per mile cost
x per mile cost
r--r mile cost
Company mileage
City Kileagc
x City Rile--'70
x Citytue.-Mr.
ill s sted
Unadjusted
1984
$ 5t366,000
S 1,846,332
W lo300,000 ($
11300,000
( 160,000 (
160,000
1985
% 688,000
421,752
170,600
160,000
1986
441,000
421,752
193,600
160,000
1987
29,Ot10"
421,752
212,960
160,000
1988
411,111
421,752
234,560
160,000
1989
411,111
421,752
257,680
160,000
1990
411,111
421J52
283,440
160,000
1991
411,111
421,752
311,790
160,000
1992
411,111
421J52
342,970
160,000
1993
411,111
421,752
377,260
160,000
1994
411,111
421,752
414,990
160,000
1995
411,111
421,752
456,490
160,000
1996
4111111
421,752
502,140
160,000
iL
$15,223,999
$6,907,356
$5,218,480
$3,380,000
'The y's fib are I=W on = ificat:icn of the system in 3 ypam (1984-1986) .
Beginning in year 4 (1997) dumugh the end of the liow= tam., the y's costs are for
rcplacc=nt of plant. lbr c=parisw , tho chaxt tbum & the total replacmmt
cat averaged fram 1988 to the end of the lido tem. Al tha c,aTany provided the
City with a total replaom=t cat from 1908 thresh the aA of the lice tern, the
o=vany naver providcd to the City " annual breakdcwn of C=tz for that tim period. It
should be noted, hagawr, that: the carpany hsz stated thet the trap: of the replaccwnt costs
will occur in the last three: yeas (1994 - 1996) of the tom.
Mse two estimated costs for 1984 arcs $1,300,000 for srodification of plant in 75 miles
already rehabilitated and $160,000 for modification of plant in average of 10 miles per
year.
84-4 56
cc
Q
0
W
0
J
J
cr
Ul
n
9�
19J1
iC UMUL.ATJVfi
CAPJrAL EX?ENOIT'VAES
-- — i _. - -I . - - -- --- -_p - -- .-- _ 4 - . -
mom
PAI
VMSr
/!!/
Ives !tom r 990 I !!d P"!!3 I9" 14
Honor,%blP t-'Avoy.
Hembf!,rs of r-It-v Commipsion t $Age 9 April 9, 1964
An demonstrAt-a thn'-company can afford to Modify
its plant to c(ri-n-ply "Jth the City's street Ovrovement policy.
1. ordinance
Conatruct ion cont required
by Section 301 of the ordinnnce $45,000t000
Less funds (conntruction, hoadend,
*quipmant) expendod by t1ianl
Cablevision to dntn an per
1983 annual report $17,300,000
TOTAL AVAILABLE UNDER ORDINANCE
FOR RM--AINING CONSTRUCTION $25,700,000
2. Bank Loan
Total bank loan of Miami Cablevision $31,600,000
Total equity required by bank loan
docuranntn $170900,000
Total funds rva.tInblo; undcr
bank lo,zn $49,500,000
Leah
I �- (coiirtructian, licadend,,
J.�y J'jrjMi
Cabloviric) to $17,300,000
TOTAL FUNDS AVAILABLE UNDER
BANK LOAN
$321200o000
S -456
ji 4
Honorable 14-ayor And
Members of city commission Page 10 April 9, 1984
,�.
IV. Recommmna,70 S-_ tlp M�nt pro "I
As directed by the city Commission, the City Manager and
Miami Cablevision (t.he "Company") have had a number of
meetings to discusn the nnttlnr-nt of the issuers of ser-
vice cross -connections And tho provision of interactive
services to residential stibscribers. At the last; meeting
of the City And tho Company on larch 27, 1904p the City
Manager and the Company discunscd the following principles
of a proposed settlement:
1. The City anticipates that it will rehabilitate an
average of 10 miles of ntreetn per year under the high-
way improvemant program. minmi Cablevinion hhall correct/
modify service cross -connections in thes-c 10 miles of
rehabilitated streets per year, beginning in 1904 and
extending throughout the 13 yearn remaining in the
license term, provided that in any year that the City
rehabilitates less than 10 miles per year, the Company
shall ba required to correct service crone -connections
only in the number of miles actually rehabilitated by
the City.
2. If the City rehabilitates more than 10 miles of streets
per year, the Company shall be required to correct/
modify service cross-conncctiona in no more than 10
miles of rchabilitated strcctn, provided that the Com-
pany must move its cables to the nci-: utility poles as
soon an the poles are available in "all strcets rehab-
ilitated each yojr, rzo tilat tile utiliticn can remove
their old polcs. Tho nuri-I)er of milco rollrd,)-ilitated in
excess of 10 givcy, Irecir i3liall Lic placed
in a pool c),yl c,, basic over the term of, the
license. 3,11 t-tilc )-zipt, year of the term of the license
(1996), tlic,, Coi-fipany shall correct/modify all service
cross-connectionn in: (a) the street miles accumulated
in the pool. &nd (b) the street miles rehabilitated by
'the City in 1996.
3. By April 2, 1905, the Company must correct/modify
service cross -connections in the 75 miles of streets
already rehabilitated by the City. The City shall not
approve completion of construction until the Company
has corrected/modified the service crops -connections
in the 75 miles and the City has approved such corrections/
modifications.
84-456
Honorable Mayor and
Members of City Commission Page 11 April 9, 1.984
4. The Company .shall correct/modify its plant as des-
cribed in paragraphs 1--3 above, at its own expense.
5. Failure of the Company to comply with the requirements
of the agreement between the City and the Company shall
trigger automatically the penalties specified in the
license ordinance. The process of automatic penalties
will be similar to that specified in the amendment to
the license approving a revised construction schedule.
6. The Company will be required to submit plans for
modification on a block by block basis for approval by
the City. The plans for modification of existing
plant shall include the following details:
a) Date of submission of design plans showing all
subscriber drops for each geographical area to
the Department of Public Works for its approval;
b) Start-up date of modifications;
c) Projected date of completion for each location;
d) Procedure by which service to subscribers in each
geographic area will be transferred from the old
to new section when applicable;
e) Estimated cost to modify each location;
f) Submission of as -built maps of each area with
documentation of actual cost for each area.
7. The Company must comply with the following construction
standards:
a) All cables crossing roadways must be raised to
conform to the standards specified in the National
Electric Safety Code.
b) No cables or wires may be attached to "street light
only" poles.
c) All service crossings must follow utilities' cross-
ings, limiting crossings to 1 or 2 per block.
d) Rear easements shall be used whenever available.
84-458
_NN
M
Honorable Mayor and
Members of City Commission Page 12 April 9, 1984
8. The Company shall acknowledge that it has violated
Section 605(b) of the license ordinance in failing
to install. cables parallel. to existing telephone and
electric wires whenever possible and than the City has
correctly applied the pertinent provisions of the
license ordinance to the cross --connections issue.
The following points were discussed concerning penalties
on the issues of cross -connections and interactive services
to residential subscribers in consideration of the Company's
agreement to settle, as described above:
1. The City will return to the security fund one-half of the
penalties on the issue of service cross -connections.
As required by the license ordinance, the Company shall
replenish the security fund in the amount of any penalties
not returned to the fund by the City.
2. The City will not retain penalties in connection with
the issue of providing interactive services to resident-
ial subscribers. The Commission will hold a public hear-
ing no later than December 31, 1984, to determine whether
to defer the implementation of the provision of inter-
active services to residential subscribers.
3. The City will retain penalties for failure to replenish
the security fund in the amount of penalties on the issue
of service cross -connections.
4. The City will retain interest calculated on one-half of
the penalties on the issue of service cross -connections.
A schedule showing a breakdown of the penalties is attached
as Exhibit 2 (page 15).
V. Recommendation and Conclusion
The City Manager recommends that the foregoing principles
in Section IV above be accepted as a total package to
settle all issues relating to cross -connections and inter-
active services to residential subscribers.
84-458
- a
.".._. ., :�.
EXHIBIT 1
Howard V. Gary #wrot: re-bri'sIry �4, 1904 mot!
City ftnage'r
S -ATMIMMAT PY CM,"vfULTXNG ENGINZER
T
Merry Sup sm-0- I ler 0*960
AALSIAtOnt tO City PAMA"t
for Cable Comm—nications S7ATT'XI =,11
Mr. Danni-P 21mmman, the City 'a Conmulti.nq Engineers has provided
the attached statemnt.
*act
a
V.-
84-456
4
Page 14 e.-brx)ary 24, 1964
There are no cable crossings -in violation of the City's
ordinance shown on the 5-mile raps PubmittP4 by the
cable company on March 31, 1902.
The cable cromminga mho on thn 5-mile subminpion by
the cable corpany arc in cor-mlianco "Ath the ordinance
in that they are nhon-,n "rAllnl to the exinting "tilities.
There nre no niibncrihar drop cnblen Phown on the 5-mile
submitted mmpn to Indicate the cornpanyls disregard for
crossing policy. In the subminniont 1341 foot of design
are shown in n rohnbilitntion area. "la rehabilitation
design nhcn cnbla crossing tho ntraotn with power and
telephone in compliance iiith the City rchabilitation
policies.
No ono rovi",zing tho five -mile donign subminnion could
conclude that tho cable operator was intending to
disregard tho rehabilitation polician of tho City of Hiani
in future plant construction. In facto the small design
area submitted in the rehabilitation area shows compliancis
with City policy of paralleling existing crossings.
n
tA.
i1wNSULTING SKINS=
H4-450'
Page 15
Schedule of Penalties
Cumulative penalties assessed for
violation of Section 301(a)-
Interacti_ve Services to Subscribers:
Cumulative penalties assessed for
violation of Section 605(b) --
Parallel, Installation of Cables and
Wires to Existing Telephone and
Electrical Wires:
Cumulative penalties assessed for
violation of Section 1001(d) -
Failure to Replenish the Security
Fund .
Interest on the penalties assessed_:
Cross -Connections:
Interactive Services:
TOTAL
Recommended Settlement Proposal
1/2 of Cross -Connections Penalty
Failure to Replenish Security Fund
Interest Accumulated on 1/2 of
Cross --Connections Penalty
htow jm
Savings to the Company as a result
of Recommended Settlement:
e EXHIBIT 2
As of 4/5/84 As of 4/10/84
$ 215,000.00 $ 227,500.00
215,000.00
140,000.00
227,500.00
152,500.00
4,018.00 4,632.00
4,018.00 4,632.00
$ 578,036.00 $ 616,764.00
As of 4/5/84 As of 4/10/84
$ 107,500.00 $ 113,750.00
140,000.00 152,500.00
2,009.00 2,316.00
$ 249,509.00 $ 268,566.00
As of 4/5/84 As of 4/10/84
$ 328,527.00 $ 348,198.00
64-456
PROPOSAL RESOLVING
MIAMI CABLEVISION CONSTRUCTION DISPUTE
I. BACKGROUND FACTS
1. Wlien the Company commenced its construction in 1982,
the City's engineer consultant approved the basic system design
plan, clearly shown in the construction plans for the first five
miles of the system, initially submitted to the City's engineer.
2. It was not until over a year later that the Public
Works Department issued a "Cease and Desist", at a time when a
substantial portion of the cable system was already completed.
It was not until November 30, 1983, almost a year and a half
I
after construction began, that the City Manager began invoking
's
penalties for the existence of cross-overs.
3. The Public Works Department and the City's cable staff
now state that the Company is obligated to minimize, and elim-
inate where possible, street cross -avers for customer connections.
This is part of a "beautification policy" verbally adopted by the
Public Works Department Director. This "policy," is not part of
,j
any written Jaw or rule applicable to cable TV. The street
i
�i improvement projects mandate the relocation of utility and cable
1
i lines to accommodate new set -backs, but these projects do not
'! specify a requirement to eliminate customer service cross-overs;
ij nor was this "policy" made a part of the original cable RFP.
:1
4. To redesign its construction so as to accomplish what
,f
! the City's cable TV staff now wants would require a material
redesign and reconstruction of the cable distribution system,
at a cost of from 12 to 15 million dollars. Inherent in the
1
l
84-45r�
requirement to minimize customer service cross-overs, as mandated
by the City Manager, is a requirement to construct lines on both
sides of the street or materially modify the CATV plant. chile
some pockets of the system may be so constructed, it is unheard
of in the cable TV industry to require this type of system design
construction throughout an entire system. No cable TV company
would ever bid on such a design plan because the required rates
to subscribers would be exorbitant, making cable TV unmarketable.
5. Customer cross -over lines do not violate the license
ordinance requirement that all cables and wires must be "parallel"
to existing utility lines. The Company does follow the utility
lines throughout the entire City and is parallel to the utility
lines on the side of the street where the cable distribution
system is constructed. Customer service connections (the cross-
over lines) have never been considered in the cable TV industry
to be part of the trunk and distribution system, and these lines
have always customarily crossed streets to serve customers.
6. The cable license ordinance contains a provision that
the
City can "reasonably"
designate where
Licensee'-- facilities
are
placed within
public rights -of -way
and
public easements. Re-
quiring a system redesign and reconstruct for a material portion
of the city (the street improvement projects will continue
throughout the license period) makes this requirement totally
unreasonable. The additional cost of from 12 to 15 million
dollars was never contemplated in the construction loan approved
by the City Commission, or in the system design plan. The cable
license ordinance does not authorize this unreasonable mandate.
2
]
W
II. THE PROPOSED SETTLEMENT
Although the Company believes strongly it would prevail in
any litigation regarding the City Manager's construction mandate
described above, the Company is nevertheless willing to compro-
mise and settle this matter, in the interest: of cooperating with
the city Commission and Public Work's desire to improve beautifi-
cation of the city, and in the further interest of avoiding pro-
longed litigation, which can only cause ultimate harm and expense
to cable TV subscribers. The Company is therefore willing to
accept the following proposal, proposed by several commissioners,
and, in part, by the City Manager_, but does not waive its rights
to contest the entire issue if the matter is not settled.
A. By April 15, 1985, the Company will complete modifica-
tion of service cross -connections in the 75 miles of streets
t
already rehabilitated by the City. These modifications shall be
as per the previous Public Works Department request to keep
customer: cross-overs in each block to a minimum.
B. The Company will commit to expend $300,000 per year for
public works projects, including road improvement projects and
minimizing customer service cross-overs. Any amount expended
less than the sum of $300,000 annually, by reason of lesser
public works projects, shall be a carry-over to the following
year, and shall be a continuing cumulative requirement, so that
at the end of a 13 year period, the total amount of $3,900,000
shall have been expended by the Company for such projects. Any
rehabilitation not completed as of the last year of the license
term (1996) shall be completed in the said last year of the
license term, or within the first two years of any renewal term.
- 3 -
84-45m
S
{
C. The Company will fully equip the studio facility of the
black local origination program group J.n an amount riot exceeding
$50, 000, which the Company represents will be sufficient to fully
and satisfactorily equip such studio for local origination
programming.
D. The amounts of all penalties shall be restored by the
City to the Security Fund, and applicable interest on the
previous amounts withdrawn as penalties, shall be reimbursed to
the Company.
Penalty payments are not negotiable. First of all, with
respect to the interactive service issue, the City Commission
made that policy over two years ago by the adoption of a resolu-
tion prohibiting the implementation of such service. As to the
construction issue, if the matter is settled in accordance with
the above, there is no admission of liability or "wrongdoing" by
either party, and thus, a penalty is not applicable.
The Company believes the foregoing fairly and equitably
resolves this controversy, if accepted in lieu of litigation.
(Nothing in this proposal should be construed as an admission of
facts against the interests of the Company in the event of any
litigation by reason of a failure of settlement.)
- 4 -
84-458
PROPOSAL
As you know, Miami Tele-Communications, Inc. ("MTCI") has been granted
certain exclusive rights to provide Black and Hispanic local origination
programming in Miami and to receive the revenues from such programming.
Specifically, under Article VI, paragraph 2 of the Revised Shareholders
Agreement, dated April I, I°32, and paragraph 25 of the Joint Venture
Agreement, do`nd October 6, 1931, between MTCI and Amerir_able of Greater
Miami Ltd., ("the Joint Venture Agreement"), MTCI is granted the right to
provide Black and Hispanic programming on two channels dedicated to this
purpose, and to receive the revenues that may be produced from advertising
aired in conjunction with this programming. The Revised Shareholders
Agreement further provides, in Article VI, paragraph 2, that these rights will be
assigned to an entity to be formed which will be owned fifty percent (50%) by
TCI-Taft and fifty percent (50°Jo) by the Miami S-roup Shareholders.
"Local origination programming" should be distinguished from "public
access programming" and "leased channels", all of which the Joint Venture is
obligated to provide under various sections of the license ordinance (the
"Ordinance") . Local origination programming (LO) is defined in paragraph 21,
section 102 of the Ordinance as "programming that is either produced by the
Licensee (the Joint Venture) or is ^btained from another source for transmission
on the Licensee's local origination channels."
The full extent of the Joint Venture's local origination programming
obligation is spelled out in section 404 of the Ordinance. For your convenience,
that section of the ordinance is reproduced as follows:
Section 404. Support for Local Origination Programming
(a) During the term of this license, the Licensee shall provide local
origination programming. The Licensee's commitment to local origination
programming shall include a commitment to undertake at least the
following:
(1) establish, equip and maintain broadcast quality studio facilities
and electronic field production and electronic news gathering mobile
facilities for local origination programming;
(2) ascertain community needs for local origination programming,
which ascertainment shall involve community and minority groups;
(3) hire staff with specific responsibility to develop and produce
local programs responsive to the needs of the community and to
participate in training programs;
(4) provide minority programming, including bilingual programming,
that reflects the social, economic and cultural experiences and
perspective of the Hispanic population, the black population and
other minority and linguistic groups within the City of Wami and
focuses on needs or interests of the particular minority groups with
whom the programs identify;
84-458