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03-28-84SpMtg ~ARCR~28~I984 A Special Meeting of the City Council of the City of belray Beach, Florida, was called to order by Mayor Willard V. Young in the Council Chambers at City Hall at 7:00 P.M., Wednesday, March 28, 19~4. Roll call showed: Present - Council Member Malcolm T. Bird Council Member Doak S. Campbell Council Member Arthur Jackel Council Member Edward L. Perry mayor Willard V. Young Absent - None Also present were - City Manager James L. Pennington, and City Attorney Herbert W.A. Thiele. Mayor Young called the meeting to order and announced that this meeting has been called for the purpose of (1) holding a public hearing for Cable Franchise application. Dennis Chambers, President of Denntronics Cable, Inc., stated he would like to briefly go over the background of Denntronics; hopefully Council has had the opportunity to look over the material submitted by their company in the past week. Denntronics has been in Palm Beach County since 1974, they went into the cable business in 1981 and were awarded a Palm Beach County license to serve western Delray in the County and western Lake Worth in 1982. They are presently serving a little over 5,000 subscribers with basic cable in those areas. He presented the credentials of the officers of the corporation. ~. Chambers advised they are one of the few companies in the area and, in fact nationwide, that is locally owned, operated and managed. Mr. Chambers presented Council with the initial three-year construction plan. It encompasses roughly the boundaries of 1-95 on the east and Military Trail on the west running along the north and south borders of the City, basically the two canals. This is the initial area that they intend to wire and they propose this will take approximately three years. The designer of the system is Scientific Atlanta, one os the leading manufacturers in the country. They have amended their application to say that as service is requested they will branch out and go into any part of the City that would like to see their service. ~. Chambers advised they are presently servicing the area west of Military Trail with three satellite dishes up and operating, a 50 foot tower and the off air equipment and satellite equipment necessary to deliver the signals. With reference to overlapping of franchises and the exist- ence of more than one company, Mr. Chambers stated to his knowledge there has never been any trouble with doing this and it results in better competition. Mr. Chambers outlined the proposed channel alignment which will be a basic cable at a price of $8.00 and includes 20 channels. He presented charts depicting various marketing and competition concepts. Mr. Chambers displayed the set top converter they will be offering. Upon question by Mr. Campbell as to whether Denntronics is ultimately willing to wire the entire City within the same franchise terms as far as the limitations of the expiration date, Mr. Chal~bers stated that there was a five-year period in the last one and the City is more congested than it was in 1974 and 1976; he would ask that they have a reasonable time period put on them and the other factor is to make sure there are people requesting service. They have had numerous re- quests to come across Military Trail and serve the people of Delray Beach. Mr. Campbell inquired what is to prevent DenntronZcs from wiring the easiest areas in that first geographical area between 1-95 an~ Military Trail and not going forward and wiring the remaining parts of the City. ~. Chambers answered they are anxious for customers and they are not going to take this on just to wire 100 or 200 units. This is not cherry picking; he does not believe an 18 square mile area taking in 50% of the City comes under that definition. Mr. Campbell inquired if they would have any problem with a performance bond or an increase thereof. Mr. Chambers replied, no. Upon question by Mr. Campbell regarding the areas of the City where it might not be economically feasible to go into, Mr. Chambers stated the only thing they could not start off by doing is the opposite end of A-1-A or U.S. 1 at the north- ern or southern tip of the City. Carl Foster, representing Nationwide Cable, outlined what they offer the cable companies with regard to advertising by the local communities and businesses. Allan Hoffman, attorney, and one of the principals of Denn- tronics, addressed Council on the economics of the cable television system. He stated they do not really intend to buy any customers in the City of Delray franchise. He advised their cost to wire out to a cus- tomer, because they have a complete in-house construction crew which does all of their cabling, wiring, etc., is down to about $400. Don Bushawn, certified financial planner, addressed Council on the financial capabilities of Denntronics. Upon question by Mayor Young, Mr. Bushawn stated with this growth and strong management it will be possible to maintain, in the foreseeable future, not only the ser- vices at the same cost, but possibly add more services without raising the base customer cost. A public hearing was held having been legally advertised in compliance with the laws of the State of Florida and the Charter of the City of Delray Beach, Florida. David Baker, attorney for Fairbanks Cable of Florida, aka Leadership, introduced Mr. Walls, chief consultant to the system since 1978, Gene Strickland, manager of the system since prior to 1978 and Roger Snowden, Vice-President of Fairbanks. Mr. Baker advised that contrary to the point made by the applicant regarding the management of Leadership, the management has been essentially the same since 1978. Also, it was implied Fairbanks bought its customers and the system has not grown; when Fairbanks acquired the system in 1981, the wiring of the City was not complete, and now it is complete. Mr. Baker presented a map showing the areas where Leadership's wires are and the two small areas which they feel are economically unfeasible to serve; a third area is where the residents have not seen fit to grant easements. Mr. Baker advised that the only reason the application for Denntronics was made was because of a dispute that arose with the City over the location of an earth station in the Pines of Delray and, es- sentially, the City is being asked to solve a problem which Denntronics has created for itself in a private development. He stated in the past Leadership has offered to build and maintain a system in both the Pines and Country Manors at a very competitive price. Mr. Baker advised a review of Denntronics' application reveals inadequate capital to expand to the extent offered and shows no source of additional funds; he pointed out it costs between $12,500 and $20,000 and even more to lay a mile of cable. Also, there have been no firm details of the public offering included in the application and none given to Council. Mr. Baker requested that Council ask themselves: regarding the slow wiring of Denntronics of only portions of the City and building out at a very uncertain rate, if they were coming tonight as the first franchise holder, would Council grant the franchise under those circum- stances? Mr. Baker believed the people of Delray Beach would be very concerned. Denntronics has already caused the City a substantial amount of conflict regarding the building of an earth station without a permit; it is that very omission that has forced them to apply for a franchise. He understands some of the residents have objected to the earth station and have, in fact, brought a proceeding before the State Department of Business Regulation to resolve this. - 2 - 03/28/84 In summation, Mr. Baker advised Leadership stands ready, willing and able to serve those areas subject to the Denntronics appli- cation. Discussion followed with regard to areas on the beach and the Greenwood subdivision where the wiring would not be economically feasible. George Connolly, President, Pines of Delray, stated that as he recalls during their contract negotiations with Denntronics he did call Leadership; Leadership advised that they would have to put in their own cable system and that the Pines system would not be satisfactory. Also, Leadership's quote was much higher than what they were paying. Mr. Connolly advised they are in support of Denntronics; he represents 684 unit owners, with the exception of the dissenters here tonight. N6~a-Bahh6~, 4130 N.W. 10th Street, spoke on behalf of the owners in the Greenwood Development. She is not here to speak for or against Denntronics; she is here to say that Leadership is in viola- tion of their contract as she explained to Council at the last meeting she attended. Leadership's franchise does not say they have the option to not service those areas which are economically unfeasible; they have a franchise which states that they will service the entire City. She and her neighbors are part of that City and they are being denied Cable TV. Homes within 1/8 mile of their homes have Cable TV and it has been mentioned that they will service Country Manors which is west of her. Leadership has a franchise that says they will service the City and that is what they should be required to do. If they cannot do that, it is up to Council to do something about it. Upon question by Hr. Bird, Mrs. Bannoura replied that there are six occupied homes, a seventh will be occupied shortly, and about eight are under construction. Regardless of how many, Leadership should be required to service them as their franchise says. If Denntronics is willing to come in and service them, maybe they are the ones that should be allowed to do it. ~er~h-F~ld~h, Pines of Delray East, made reference to unethical business practices of Denntronics and advised that the unit owners of the Pines of Delray are in litigation with the Pines Board of Directors because of the satellite dish installed and leased from Denn- tronics. He made reference to the hearing held on March 6, 1984 in West Palm Beach. Mayor Young asked ~. Feldman to step down as it is out of order to discuss the litigation at this time and his comments are not germane to the subject at hand tonight. Mr. Feldman urged Council to deny any partial franchise to Denntronics Cable TV. The following people spoke in support of the Denntronics franchise: ~A~t~ihO, Country Manors resident; ~%~B~I~G%~'Khl~h, Pines of Delray resident, noting that the few dissidents are the ones that view the dish; Mr~%~h~Ch&~l~, Pines of Delray resident. The public hearing was closed. Mr. Bird stated that he feels the Councils which served before them drafted an ordinance which was non-exclusive and intended that the free enterprise system be served. Mr. Bird moved to authorize the additional franchise, in keeping with the non-exclusivity of the existing one, to begin the service to some customers within the City within six months from this date, a significant number within that area to be served no later than the 1st of the new year, to comply with all the requirements of the current franchise, that they shall service all of the areas west of 1-95, between the L-30 on the North and the C-15 on the South within the - 3 - 03/28/84 City of Delray Beach with that service substantially to be completed by September 1, 1987, and that substantial progress be completed toward servicing the balance of the City' by February 28, 1989, and that this franchise shall expire subject to renewal on February 28, 1989, which is the same date as the Leadership franchise, seconded by Mr. Perry. Before roll call the following discussion was had: Upon question by Mr. Jackel, Mr. Bird replied that he feels six months is an adequate amount of time for them to have performed enough cabling to show good faith. They are talking about the area which they propose to be their starting point; the area west of 1-95. By September 1, 1984, they should have a clear indication as to whether Denntronics is out to service the citizens or to serve themselves. As that becomes clear to Council, he feels it would be appropriate to revisit the issue but he cannot specify a date for review. Council discussion followed regarding the isolated areas of the City that want Cable service, such as Greenwood. Mr. Perry stated that he is in favor of the free enterprise system; however, the one concern he has is that he hopes Denntronics will treat the City a little bit more kindly than they were treated a few months ago. Upon question by Mr. Perry regarding the motion, Mr. Bird advised that they are looking for some substantial additional demon- stration of service by December beyond what had already been done. In evaluating the performance of the company, they would have to discount those homes already under service because of the dish. For the record, Mr. Chambers stipulated to that. The City Attorney asked if the motion is acceptable to Denntronics. Mr. Chambers replied, yes; it is their intention to wire the major border arteries initially. Mr. Campbell objected to the word "substantial". There would be inequality to use the word substantial for Denntronics as the milestone of the current ordinance is total City service. Mr. Bird modified the motion to take out the word "substan- tial'' by the end of the franchise. Mr. Campbell stated he would like to see an increase in the amount of the bond required. Mr. Bird noted that that is one of the staff items he wanted to address later. Mr. Campbell, in trying to be fair, stated that if they are going to allow Denntronics to come into the City, conversely, Leadership should be able to go into Pines of Delray. If Denntronics wants to come into the City on an equal basis with Leadership, he feels it should be on an equal basis throughout the City and Denntronics should not be allowed any pockets of exclusivity. Mr. Bird amended his motion to eliminate the word "signifi- cant" as it applies to the balance of the City and have that portion of his motion to read "would service the balance of the City by February 28, 1989". Mr. Perry amended his second. Upon question by Mr. Bird, a gentleman from the Pines of Delray advised that the arrangement with Denntronics is a contract. Mr. Hoffman stated that they do not control the developments or the easements. Any easements they negotiate will be negotiated for the City of Delray Beach rather than for Denntronics. They would then be available to Leadership or Denntronics. He feels an ordinance should be put into effect that when a utility company or any company negotiates an easement or the City grants a PUD, that the easement is to the City of Delray Beach. This way they will never have a problem as to who can or cannot go into a development. - 4 - 03/28/84 Mr. Bird asked if Denntronics would give up their contract rights with Pines of Delray in the spirit of competition and in non- exclusivity of franchise agreement. Mr. Hoffman stated that they do not have an exclusive contract with the Pines; Pines could allow Leadership to come in tomorrow if they want to. On the other hand, Leadership probably has a basketful of agreements already made with large develop- ments which are exclusive. He would like to see it equal. Mr. Chambers stated that he appreciates Council's attempts to be fair; however, he does not think Council can put itself in the position of dealing for private developments. He feels the arrangements that are made with regard to private developments are up to those pri- vate developments and the arrangements that the City should make for its franchise holders have to do with City easements. The City's right to regulate Cable TV comes from the use of public easements, not the use of private easements in these developments. Mr. Campbell asked if they mind a cable company having the ability to bind a development. Mr. Chambers replied that for a reasonable period of time it is an under- standable objective to get a return on your investment. Mr. Jackel stated that as he understands it, Denntronics, over the next five years, will be allowed to perform their services with the intent of wiring the whole city and it will be done in stages. By January 1, 1985 they should have wired a significant number of areas to show their good intentions. Mr. Bird stated that the motion will put Denntronics on the same time frame which they required of Leadership, recognizing Mr. Chambers' point that the City is considerably larger now, so too is the prize. Upon question by Mr. Campbell, the City Attorney suggested they set the bond amount in a separate motion. Upon question by the City Attorney, Mr. Hoffman stated that he is a little confused as to the intent of the motion; franchises are generally granted on a fifteen year basis. They would like to see some input, such as requests for service, as a condition for wiring. Mr. Bird stated that he cannot grant a fifteen year franchise as he does not want to bind the hands of the Council which five years from now will review this situation. In 1989, that Council will certainly take fair performance into account in its evaluation. If Denntronics were not granted a continuation, they would probably be granted a reasonable compensation. Mr. Chambers stated he is concerned over doing a job this size in a five year period and might need some time to evaluate the situation. Mr. Bird stated that he understands the concern and would be willing to consider an alternative; possibly, everything west of Swinton to the City line. The City Attorney stated, as he understands it, the motion intends that they would be granted a franchise for the entire City, that they would have commenced construction by January 1, 1985, that they would have all of that area west of 1-95 wired by September 1, 1987, and the area of 1-95 to Swinton by February 28, 1989, as to the area east of Swinton to have taken steps to commence wiring there. Council discussion followed relative to growth of the City over the next five years, the required wiring areas for this franchise and what is expected from Denntronics as of January 1, 1985. Council discussion was had relative to the progress made by Leadership since 1978. Mr. Lawrence Walls stated that he was the President of the Managing General Partner of Leadership Cablevision Associates which was the predecessor to Fairbanks Cable. He appeared before Council in 1978, at which time they made a commitment to the City to take over a system which had about 40 miles of cable plant and 1400 customers and to wire the remaining portions of the City as expeditiously as possible. Essen- tially, they wired all but 50 miles by 1981. Those commitments have been honored and he feels that counts for something. Upon question by Mr. Bird, he advised that they currently have 10,000 subscribers. - 5 - 03/28/84 Mr. Bird stated he can certainly accept Denntronics' concern as to the size of the job today as opposed to the size of the 3ob at the time that particular requirement was placed in the franchise agreement. Discussion was had as to the wording of the motion. The City Attorney suggested using the same dates but using the breakdown to be all of that area west of 1-95 north to south of the boundaries and a significant portion to be determined by the City Council by the end of the franchise renewal period, February 28, 1989; a significant portion meaning looking at the area east of 1-95 by itself. So, all of the area west of 1-95 and a significant portion of that area east of 1-95 are the two lines of demarkation. Council discussion followed as to the number of miles of cable and to the fairness of the two agreements. Mr. Campbell stated that they have heard enough input to- night and suggested they either table it for further study or go ahead and make a motion. He is not agreeable to the lines of demarkation and feels it should be all or nothing; i.e., the same contract as Leadership by 1989. Mr. Perry noted that Denntronics cannot run wires to someone who is already being serviced so they may find themselves excused ~rom having to serve large areas of the City anyway. Mr. Jackel stated that they cannot expect Denntronics to wire areas of the City where there are no requests for it. Mr. Bird restated the motion (currently on the floor, which has already been seconded and amended) as follows: service should begin within a period of six months to some subscribers within the City; that some significant effort in the west section should be accomplished by January 1, 1985; that they will comply with all of the requirements of the current franchise; they shall service all areas west of 1-95, the L-30 on the north, the C-15 on the south, by September 1, 19~7; they would service the balance of the City by February 28, 1989; that this non-exclusive franchise would expire subject to renewal on February 28, 1989, the same as Leadership's. At this point the roll was called to the motion (as stated above). Said motion passed unanimously. Mr. Bird suggested they direct staff to make some modifica- tions of clarification. It is not clear what constitutes a trigger to a service area; for example, does one person at the south end of Tropic Harbor trigger a requirement to string 20 miles of cable. He feels that an area, such as Greenwood as it exists today, if it has 25 or more residents, must be serviced if twenty-five percent of them require that service; in this case the trigger would occur at about six homeowners. He asks that this suggestion be given some consideration. Further, he feels the performance bond, presently $150,000, should probably be increased to $200,000. ~. Campbell stated that his only concern is that they have total equality; if they make any clarification with regard to Denntronics, the same thing should apply to Leadership. The City Attorney advised that in addition to 5~. Bird's suggestion, a suggestion has been made to use a lineal mile count; i.e., a double concept of identifiable geographic location and lineal miles; for example, when in any identifiable lineal mile of cable i~ more than 50% of the customers along that lineal mile request service, then that lineal mile must get service. This is a suggestion which Council may want to consider. Further discussion followed relative to minimum service requirements. Mr. Bird suggested they have this researched by staff and brought back to them for final action at a later date. The City Attorney suggested the following: that Council direct staff to draft an ordinance amendment that would accomplish those two functions: clarification of what triggers service and an increase in the performance bond to the $200,000 level and that they would invite input from the two franchise holders and would notify them when the first reading of that ordinance__~ --wguld come up and allow th~/~q/~ea~.u~ z~ ~ Mr. Bird suggested that this be brought back to them for their first workshop meeting in May with input having been received by the City Attorney's office. Mr. Bird moved that staff be directed to prepare an ordi- nance for workshop discussion for the first Tuesday in May to cover the subject of the trigger for service and the increase in performance bond, industry being advised that for whatever information they would like to provide to the City, it would be expected in the City Attorney's office not later than April llth at 5:00 P.M., two weeks from tonight, seconded by Mr. Perry. Said motion passed unanimously. Mayor Young declared the meeting adjourned at 9:00 P.M. City Clerk ATTEST: MAYOR The undersigned is the City Clerk of the City of Delray Beach and that the information provided herein is the minutes of the meeting of said City Council of March 28, 1984, which minutes were for- mally approved and adopted by the City Council on ~2~/~.zz~. NOTE TO READER: If the minutes that you have received are not completed as indicated above, then this means that these are not the official minutes of City Council. They will become the official minutes only after they have been reviewed and approved which may involve some amendments, additions, or deletions to the minutes as set forth above. - 7 - 03/28/84