COST SHARING POLICY FOR COMCAST CABLE SYSTEM CONSTRUCTION FOR STREETS WHICH DO NOT MEET MINIMUM DENSITY REQUIREMENTS

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1 AGENDA ITEM #6.B TOWN OF LOS ALTOS HILLS Staff Report to the City Council August 18, 2016 SUBJECT: FROM: COST SHARING POLICY FOR COMCAST CABLE SYSTEM CONSTRUCTION FOR STREETS WHICH DO NOT MEET MINIMUM DENSITY REQUIREMENTS Carl Cahill, City Manager C.C... RECOMMENDATION: That the City Council: Approve the attached resolution authorizing a voluntary Town cost sharing policy with residents on streets that do not meet minimum density requirements for cable service as stipulated in the Cable System Franchise Agreement. BACKGROUND: On November 18, 2004, The Town granted a nonexclusive franchise to Comcast Corp. to construct, operate and maintain a cable system within the Town. Cable system is defined in the Franchise Agreement as "the Grantee's facility, consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment that is designed to provide Cable Service which includes video programming and which is provided within the Franchise Area." Section 4 of the Franchise Agreement requires Comcast to make Cable Service available to every residential dwelling unit within the Franchise Area where the minimum density is at least 30 dwelling units per strand mile in areas served by overhead utilities and 60 dwelling units per strand mile served by underground utilities. The Agreement states that Comcast may elect to provide cable service to areas that do not meet minimum density requirements. The Agreement allows Comcast to impose a customer contribution charge that is in proportion to the shortfall in the minimum required density. For example, if a street served by underground utilities has density of only 30 residential units per strand mile or half the required minimum density, Comcast may impose a customer contribution equal to half of the construction cost required to install the Cable System infrastructure for that street or street segment. According to Comcast Director of Government and Regulatory Affairs, Lee-Ann Peling, the customer contribution charge applies only to construction. There are no additional maintenance or operation charges. Customers on these streets would pay the same cable service fees and any installation charges as any other customer. On July 21, 2016, a resident of Julietta Lane spoke under presentations from the floor and requested financial support from the Town to help pay for the required customer contribution. The City Council, noting that funds in the amount of $1 OOK were designated for this purpose in the adopted FY 2016/17 Budget, directed staff to draft a

2 cost sharing policy with the purpose of assisting residents of streets that do not meet minimum density requirements for Cable Service installation. DISCUSSION Staff is proposing a cost sharing policy that would match one dollar from the Town for every three dollars contributed by Town residents for the required customer contribution cost. Based on construction estimates and customer contribution costs received from Comcast this past year for five streets and assuming a 1 :3 match, the Town's contribution per unserved street is estimated to be in most cases under $15,000 and could be approved administratively. For Town support requests exceeding $15,000, review and approval by the City Council would be required. A copy of the proposed Cost Sharing Policy is attached. ALTERNATIVE The City Council could consider greater levels of support including a 1 :2 match or 1: 1 match with minimal revision to the proposed policy. FISCAL IMPACT Staff has asked Comcast for a list of streets in Town not currently served by Comcast. According to our Comcast representative, the construction department is working on a list. Comcast also does not have a total buildout cost at this time. Comcast believes that cable service is presently available to most Town residents. In the past year, residents on five streets including Julietta Lane, Byrne Park Lane, Deer Springs Way, Christopher's Lane and a portion of Saddle Mountain Drive have made inquiry with the Town on what it would take to get Comcast service to their homes. In all cases staff followed up with Comcast and obtained construction estimates that were then forwarded to the inquiring residents. So far, only residents on one street, Julietta Lane, have organized and raised substantial funds toward the construction cost for cable service. Assuming a 1 :3 match, sufficient funds are authorized in the Budget to provide support to at least the five streets where residents have contacted the Town this year on the matter cable system construction costs. ATTACHMENTS 1. Resolution authorizing Cost Sharing Policy 2. Cost Sharing Policy 2

3 Attachment 1 RESOLUTION NO. -16 A RESOLUTION OF THE CITY COUNCIL OF THE TOWN OF LOS ALTOS HILLS ADOPTING A COST SHARING POLICY FOR THE CONSTRUCTION OF COMCAST CABLE SYSTEM INFRASTRUCTURE WITHIN PUBLIC WAYS WHEREAS, In exchange for a non-exclusive franchise in the Town to construct, operate and maintain a Cable System, Comcast Corp is obligated to make cable service available to every residential dwelling unit within the Franchise Area where the number of dwelling units meet minimum density requirements; and WHEREAS, Access to Comcast cable services is not presently available to residences on Public Ways within the Franchise Area which do not meet the minimum density requirements as defined in Section 4.1 of the Franchise Agreement unless they contribute substantially to the construction cost of such service; and WHEREAS, Residents have requested supporting funds from the Town to assist with payment of the customer contribution for the cable system construction cost; and WHEREAS, The City Council designated funds in the FY2016/17 Budget for this express purpose; and WHEREAS, The City Council believes that it is in the public's interest to have cable service available to all residents for better access to public safety information, more opportunity for civic engagement, and enhancing public education and digital literacy. NOW, THEREFORE BE IT RESOLVED, that the City Council of the Town of Los Altos Hills does hereby adopt the Cost Sharing Policy for the construction of Comcast Cable System infrastructure and its provisions, attached hereto as Exhibit A. The above and foregoing resolution was passed and adopted by the City Council of the Town of Los Altos Hills at a regular meeting held on the 18th day of August, 2016 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: John Harpootlian, Mayor Deborah Padovan, City Clerk Resolution No. -16 Page I

4 Attachment 2 TOWN OF LOS ALTOS HILLS Fremont Road Los Altos Hills, CA Phone: (650) LOS ALTOS HILLS CALIFORNIA draft COST SHARING POLICY FOR THE CONSTRUCTION OF COMCAST CABLE SYSTEM INFRASTRUCTURE WITHIN PUBLIC WAYS Town of Los Altos Hills (hereinafter "Town") Approved by City Council xx/xx/2016 Background In accordance with Section 4 of the Cable System Franchise Agreement ("Franchise Agreement") between the Town and Comcast, dated November 18, 2004, in exchange for a nonexclusive franchise in the Town to construct, maintain and operate a cable system, Comcast is obligated to make cable service available to every residential dwelling unit in the areas where the number of dwelling units meet minimum density requirements. Currently, most Town residents have access to Comcast cable service. However, certain residences within the Franchise Area do not meet the minimum density requirements as defined in Section 4.1 of the Franchise Agreement and do not presently have access to Comcast cable services, nor do they have access to reliable alternative service providers. Per the terms of the Franchise Agreement, residents must contribute to the cost to construct the infrastructure necessary to deliver services on their street. Consequently, some homeowners I residents have requested Town assistance including supporting construction funds for Comcast cable services for their residences. Purpose The City Council believes that it is in the public's interest to have adequate cable services available to all residents for better access to public safety information, more opportunity for civic engagement, and enhancing education and digital literacy. The purpose of this policy is to establish a means by which the Town can provide limited financial support for the construction of Comcast cable system equipment within public ways as defined in Section 1.12 of the Franchise Agreement. Eligibility This program applies only to the installation of Comcast cable system equipment within public ways. This program applies only to areas where residential dwelling units do not meet minimum density requirements established under Section 4.1 "General Service Obligation" of the Franchise Agreement and to Section of the Franchise Agreement regarding residences that are located along private streets. Cable system construction must be completed by Comcast-approved contractors and construction and maintenance of the system must conform to the provisions of Section 3 of the Franchise Agreement.

5 Cost Sharing Policy for Comcast Cable System Construction Page2 Cost Sharing If an application for supporting funds is approved by the Town, the Town will contribute a maximum of one dollar (25%) for every three dollars (75%) contributed by residents toward the customer contribution cost of constructing new cable system infrastructure established in accordance with Franchise Agreement Section 4 "Service Obligations." The Town's maximum contribution for any single project shall be $15,000, except as otherwise approved by the City Council. For this purpose, "project" shall mean cable system infrastructure constructed in public ways for the benefit of the public residing within the franchise area. Customer contribution shall mean that portion of the project construction cost which is the payment obligation of the resident-customer. Procedure One or more residents of a particular eligible street desiring cable broadband service may request that the Town Public Works Department obtain a project construction cost estimate in writing from Comcast. Usually this takes Comcast four to six weeks from date of request to provide this estimate to the Town. The Town will forward a copy of the cost estimate to residents. Upon receipt of the Comcast-prepared project cost estimate, which will specify the customer contribution amount, residents may request supporting funds from the Town and shall submit their request for such funds to the Town on a Town-approved application form. Supporting fund requests are subject to availability of budgeted funds and will be disbursed on a first-come, firstserved basis. The City Manager of the Town shall review and consider for approval supporting funds requests within 30 days and may request any relevant supporting documentation as necessary. Supporting funds requests of$15,000 or less may be approved by the City Manager. However, any funds request may be forwarded to the City Council for review and consideration and all supporting funds requests in excess of $15,000 shall require City Council review and approval. The Town's supporting funds amount shall not exceed 25% of the residents customer contribution cost for construction of the cable system based on the project construction cost estimate prepared by Comcast. If the supporting funds request is approved, applicants shall have ten (10) business days from date of approval by the Town to deposit their 75% share of the required customer contribution with Comcast. The City Manager and Public Works Department staff will work with residents in facilitating communications with Comcast. The Town shall remit its share of the customer contribution to Comcast upon receipt of invoice from Comcast and notification that the 75% resident customer contribution has been received.

6 Cost Sharing Policy for Comcast Cable System Construction Page 3 Ineligibility For this program, eligible contribution costs for supporting funds shall be amounts paid directly to Comcast for cable system construction and shall NOT include: 1) cable service installation costs from the Public Way to any residence, 2) costs or expenses incurred directly by property owner residents beyond the customer contribution cost, 3) reimbursements of similar costs previously incurred by other property owner residents, 4) costs for extended warranty, future maintenance, or future enhancements to the cable service or system infrastructure, or 5) other costs deemed ineligible by the Town's City Manager. Miscellaneous Provisions Exceptions to this policy shall be subject to review and approval of the City Council. The Town reserves the right to terminate or make changes to the provisions of this policy at any time. If all budgeted supporting funds are committed prior to the end of a given fiscal year, the City Council may approve an additional contribution of supporting funds at its discretion. The Town is not responsible for cable system project design, project cost estimates, project construction, project management and billing services, warranty, future enhancements or any other costs billed directly to the property owner resident by the cable service provider. Pursuant to Section 4.5 of the Franchise Agreement, no property owner resident may resell the cable broadband internet service enabled by this agreement without prior written consent of Comcast. It is possible that a resident may gain access to the Comcast cable system although they did not contribute to the initial cost of constructing the related infrastructure in the Public Way. Such residents have no obligation to pay or reimburse either the property owner, residents or the Town for the original construction cost this infrastructure. Any questions or concerns can be directed to the Town's City Manager or Public Works Department l