RES-1989-370
RESOLUTION NO. 89R-370
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM
(i) APPROVING CERTAIN FINDINGS OF FACT IN CONJUNCTION
WITH THE DENIAL OF AN APPLICATION OF EMPIRE CABLE
TELEVISION, INC. ("EMPIRE") FOR A NON-EXCLUSIVE CABLE
TELEVISION FRANCHISE TO SERVE CERTAIN PORTIONS OF THE
CITY OF ANAHEIM LOCATED IN THE EAST ANAHEIM HILLS AREA,
NAMELY, THE SUMMIT, THE HIGHLANDS, AND SYCAMORE CANYON
DEVELOPMENTS AND A NEGATIVE DECLARATION RELATING TO SAID
APPLICATION, AND (ii) APPROVING CERTAIN FINDINGS OF FACT
IN CONJUNCTION WITH THE APPROVAL OF A STAFF-INTRODUCED
APPLICATION GRANTING A NON-EXCLUSIVE CABLE TELEVISION
FRANCHISE TO EMPIRE TO SERVE CERTAIN PORTIONS OF THE CITY
OF ANAHEIM LOCATED IN THE EAST ANAHEIM HILLS AREA,
NAMELY, THE SUMMIT, THE HIGHLANDS, AND SYCAMORE CANYON
DEVELOPMENTS AND A NEGATIVE DECLARATION IN RELATION TO
SAID APPLICATION.
WHEREAS, Empire Cable Television, Inc. ("Empire") filed
an Application with the City of Anaheim to be granted a franchise
to construct and operate a cable television system to serve
certain portions of the City of Anaheim located in the East
Anaheim Hills area, as more particularly described in said
application, namely, the Summit, the Highlands, and Sycamore
Canyon Developments (hereinafter the "Empire Application"); and
WHEREAS, at its regularly scheduled meeting of April 11,
1989, the City Council of the City of Anaheim ("City Council")
adopted Resolution No. 89R-llS declaring its intention to grant a
non-exclusive franchise for cable television to Empire pursuant to
the Empire Application; and
WHEREAS, at its regularly scheduled meeting of May 9,
1989, the City Council conducted a duly noticed public hearing
upon the Empire Application; and
WHEREAS, at its regularly scheduled meeting of May 9,
1989, the City Council denied approval of a Negative Declaration
for the Empire Application; and
WHEREAS, at its regularly scheduled meeting of May 9,
1989, the City Council denied the Empire Application without
prejudice; and
WHEREAS, at its regularly scheduled meeting of May 16,
1989, the City Council granted Empire's request for
reconsideration and adopted its Resolution No. 89R-182 scheduling
a new public hearing on the Empire Application for June 13, 1989;
and
WHEREAS, at its regularly scheduled meeting of June 13,
1989, the City Council held a duly noticed public hearing upon the
Empire Application and continued said hearing to July 25, 1989;
and
WHEREAS, at its regularly scheduled meeting of June 20,
1989, the City Council adopted Resolution No. 89R-242 declaring
its intention to grant a non-exclusive franchise to construct and
operate a cable television system for certain portions of the City
of Anaheim located in the East Anaheim Hills areas, namely the
Summit, the Highlands, and Sycamore Canyon Developments, pursuant
to an application and accompanying franchise ordinance prepared by
City staff (hereinafter the "Staff Application"); and
WHEREAS, at its regularly scheduled meeting of July 25,
1989, the City Council held duly noticed public hearings upon the
Empire Application and the Staff Application; and
WHEREAS, all of the evidence, including but not limited
to oral testimony and written documents, previously submitted in
relation to the Empire Application was reintroduced and
incorporated into the public hearing upon the Staff Application;
and
WHEREAS, all interested parties, including but not
limited to Empire, City staff, and M.L. Media Partners, L.P. ("ML
Media"), the holder of the existing City-wide cable television
franchise, and the public were given the opportunity to present
written and oral evidence in relation to both Applications; and
WHEREAS, Empire, ML Media, the City staff, and the public
did give testimony and present evidence regarding both
Applications; and
WHEREAS, at its regularly scheduled meeting on July 25,
1989, the City Council affirmed its earlier decision to deny the
Empire Application and denied approval of the Negative Declaration
in relation thereto; and
WHEREAS, at its regularly scheduled meeting on July 25,
1989, the City Council approved the Negative Declaration in
relation to the Staff Application and granted the Staff
Application; and
WHEREAS, at its regularly scheduled meeting on July 25,
1989, the City Council introduced Ordinance No. 5057 granting to
Empire Cable Television, Inc., a non-exclusive franchise to
construct and operate a cable television system within certain
portions of the City of Anaheim pursuant to the Staff Application,
and
WHEREAS, Empire, through its attorneys of record, did
agree to accept the terms and conditions of the Staff Application
during the public hearing of July 25, 1989; and
WHEREAS, at its regularly scheduled meeting on August 1,
1989, the City Council adopted Ordinance No. 5057; and
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WHEREAS, Empire has filed its written acceptance of the
franchise granted pursuant to the Staff Application in accordance
with Section 1403 of the Anaheim City Charter; and
WHEREAS, at its regularly scheduled meeting on August 15,
1989, the City Council denied the request of ML Media for
reconsideration of the approval of said franchise; and
WHEREAS, the City Council of the City of Anaheim now
desires to make factual findings regarding its denial of the
Empire Application and its grant of the Staff Application.
NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE CITY COUNCIL
OF THE CITY OF ANAHEIM AS FOLLOWS:
SECTION 1.
THE APPLICATION OF EMPIRE CABLE TELEVISION, INC. TO
CONSTRUCT AND OPERATE A CABLE TELEVISION SYSTEM WITHIN CERTAIN
PORTIONS OF THE CITY OF ANAHEIM l"EMPIRE APPLICATION") AND THE
NEGATIVE DECLARATION IN RELATION THERETO WAS DENIED FOR THE
FOLLOWING REASONS:
A. Based upon substantial evidence contained in the
record, the City Council hereby finds that the grant of the Empire
Application could result in significant and material physical
disruption to public property for the following reasons:
1. Traffic congestion and access to City streets and
highways during non-simultaneous overbuilds constitute real and
significant problems in the Anaheim community. Despite
minimization efforts, non-simultaneous overbuilds will result in
increased traffic congestion and limited access to both arterial
and secondary streets and highways.
2. The installation of multiple cable television
systems in underground areas, unless simultaneously constructed
while trenches are open, will result in an unacceptable level of
noise, traffic congestion, sidewalk blockage, and aesthetic
unsightliness.
3. The installation of multiple cable systems
subsequent to the closing of public and private streets will
impair the integrity of such streets by weakening street stability
and integrity due to saw cuts and pit bores. Minimization
techniques cannot repair the damage done to public rights-of-way
by the trenching and pit boring inherent in non-simultaneous
overbuild cable television and construction.
4. Absent minimization measures not contained in the
Empire Application, there exist a significant possibility that
Empire will be able to foreclose other franchised cable operators
from access to utility trenches during subdivision construction
thus forcing non-simultaneous overbuild construction.
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5. The Empire Application does not ensure that all
franchise cable operators possess access to utility trenches
during subdivision construction.
6. The grant of a cable television franchise which
facilitates or encourages after-the-fact overbuild construction
could produce a significant and material adverse effect upon the
environment.
B. The Empire Application, and the terms and conditions
therein, should be rejected based upon the following deficiencies:
(1) Failure to provide guaranteed interconnection of
public, educational, and governmental ("PEG") programming to the
Empire Franchise area thus potentially disenfranchising residents
residing therein from PEG programming available to other Anaheim
residents.
(2) Failure to impose franchise obligations which are
reasonably proportionately equal to those imposed upon ML Media
pursuant to its existing franchise with the City.
(3) Failure to provide PEG programming equipment and
facilities to residents of the proposed service area relatively
equivalent to that provided by ML Media to Anaheim residents
located in other areas of the City.
(4) Failure to provide adequate reimbursement of the
City's costs of the franchising process.
(5) Failure to provide adequate consumer service
standards.
(6) Failure to mitigate the environmental concerns
stated in Subparagraph A above.
(7) Failure to provide a legal structure to ensure free
and open competition in the cable television market located within
the Empire service area.
C. Based upon the factual findings contained in
Subparagraph A above, City Council of the City of Anaheim
determines that the Empire Application constitutes a "project"
within the meaning of the California Environmental Quality Act
(IICEQA") and concludes that said project could have a significant
effect upon the environment.
SECTION 2.
THE STAFF APPLICATION GRANTING A FRANCHISE TO EMPIRE
CABLE TELEVISION, INC. TO CONSTRUCT AND OPERATE A CABLE TELEVISION
SYSTEM WITHIN CERTAIN PORTIONS OF THE CITY OF ANAHEIM l"STAPF
APPLICATION") AND THE NEGATIVE DECLARATION RELATING TO SAID
APPLICATION WAS APPROVED FOR THE FOLLOWING REASONS:
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A. Based upon the mitigation provisions contained in
Section 33 of the Ordinance accompanying the Staff Application, it
is hereby determined that the grant of the Staff Application will
not have a significant effect upon the environment.
B. Because the Ordinance contained in the Staff
Application resolves and corrects all of the deficiencies in the
Empire Application, as specified in Section I(B) above, the
approval of said Application and Ordinance is in the public
interest.
C. ML Media, the City's existing cable television
franchisee, has not demonstrated that the grant of the Staff
Application will produce an unreasonable financial burden upon it
or produce a confiscatory rate of return to it and the City
Council concludes it will not.
D. The ML Media franchise is, by its terms,
non-exclusive, and ML Media, in accepting the Anaheim franchise,
assumed the risk of overbuild competition.
E. ML Media has failed to produce sufficient credible
evidence to conclude that overbuild competition in certain
portions of the City will necessarily lead to higher rates,
reduced services, diminished customer service standards, or
decreased PEG or local origination programming.
F. At the time ML Media sought and obtained a transfer
of the City's cable television franchise from its predecessor in
interest, it was foreseeable, or should have been foreseeable due
to the change in economics of the cable television industry and
the increase in system purchase prices, that overbuild competition
could exist in the City of Anaheim.
G. ML Media has failed to produce sufficient credible
evidence to conclude that the grant of the Staff Application,
either alone or in conjunction with other factors, will produce
either an unreasonably low rate of return to ML Media upon its
entire operations or an unfair advantage to Empire in competing
for cable television subscribers within its proposed service area,
and the City Council concludes it will not.
H. The Kane Reese Associates, Inc. Report ("Kane Reese
Report"), the economic study submitted by ML Media and which
contains assumptions which may prove to be unduly pessimistic,
itself concludes that the grant of the Staff Application will not
necessarily produce an Internal Rate of Return ("IRR") which is
either confiscatory or outside the realm of reasonableness,
assuming that an IRR is an appropriate measurement standard.
I. Any economic detriments incurred by ML Media as a
result of the grant of the Staff Application are outweighed by the
public benefits associated with cable television competition
including, but not limited to, improved service quality and
reduced rates.
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SECTION 3.
A FIVE PERCENT FRANCHISE FEE CONSTITUTES A REASONABLE
MEASURE OF THE MINIMUM COMPENSATION TO BE PAID TO THE CITY OF
ANAHEIM FOR THE FRANCHISE RIGHTS GRANTED TO EMPIRE CABLE
TELEVISION, INC. PURSUANT TO THE STAFF APPLICATION IN THAT THE
CITY COUNCIL OF THE CITY OF ANAHEIM FINDS THAT THE ECONOMIC VALUE
OF THE FRANCHISE RIGHTS GRANTED TO EMPIRE ARE EQUAL TO OR IN
EXCESS OF FIVE PERCENT OF GROSS REVENUES BASED UPON THE METHODS OF
DbTbRMINATION CONTAINbD IN THb STAff RbPORT.
THE FOREGOING RESOLUTION is approved and adopted by the
City Council of the City of Anaheim this 22nd day of August, 1989.
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CITY CLERK OF ~[c~AHEIM
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CLERK
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF ANAHEIM )
I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that
the foregoing Resolution No. 89R-370 was introduced and adopted at a regular
meeting provided by law, of the City Council of the City of Anaheim held on
the 22nd day of August, 1989, by the following vote of the members thereof:
AYES: COUNCIL MEMBERS: Daly, Ehrle, Pickler, Kaywood and Hunter
NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: None
AND I FURTHER certify that the Mayor of the City of Anaheim signed said
Resolution No. 89R-370 on the 23rd day of August, 1989.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
City of Anaheim this 23rd day of August, 1989.
~~ 7r ~.
CITY CLERK OF THE CITY OF ANAHEIM
(SEAL)
I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that
the foregoing is the original of Resolution No. 89R-370 duly passed and
adopted by the Anaheim City Council on August 22, 1989.
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CITY CLERK OF THE CITY OF ANAHEIM