FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	CBO Analyst/Phone:
Information Technology	Tony Perez/386-0070	Jennifer Devore/615-1328

Legislation Title: AN ORDINANCE related to cable television; authorizing the Chief

Technology Officer to execute an Assignment of Cable Franchise Consent Agreement for the

purpose of implementing and administering the transfer of control, subject to conditions, of the

nonexclusive franchise agreement authorized by Ordinance 122514 and held by Broadstripe,

LLC, to WaveDivision I, LLC, a wholly-owned subsidiary of WaveDivision Holdings, LLC; and

ratifying and confirming prior acts.

Summary of the Legislation: This Council Bill authorizes a transfer of control of the cable franchise held by Broadstripe L.L.C. (“Broadstripe”) to WaveDivision I LLC (“Wave”), a cable operator headquartered in Kirkland, Washington.  Additionally, the legislation authorizes the Chief Technology Officer to enter into a Consent Agreement for the purpose of resolving outstanding franchise compliance issues with Broadstripe. The transfer of the franchise is subject to execution of the Consent Agreement, which protects the City’s interests by requiring, among other things, full payment of franchise fees and cable utility taxes, a performance guaranty from Wave’s parent company, and an obligation from Wave to assume all of Broadstripe’s liabilities, comply with all the terms of the franchise and applicable law, and reimburse DoIT for its costs in administering the transfer request.

Background:  Broadstripe provides cable services in certain areas of Seattle neighborhoods, including the Central District, Beacon Hill, downtown Seattle, and parts of Capitol Hill and Queen Anne, pursuant to a nonexclusive franchise agreement authorized by Ordinance 122514. Approximately 15,000 cable and Internet subscribers are served by Broadstripe.

On January 2, 2009, Broadstripe filed for protection under Chapter 11 of the federal Bankruptcy Code. The sale of Broadstripe’s assets to Wave is being conducted under the auspices of the bankruptcy court. On August 16, 2011, Broadstripe and Wave entered into a Purchase and Sale Agreement whereby Broadstripe agreed to sell to Wave the cable system within the City that Broadstripe owns and operates pursuant to the Franchise. 

In accordance with SMC 21.60.520, the City may not unreasonably refuse a request to transfer a franchise.  Council must make a decision to approve the transfer, approve it with conditions, or deny the transfer within 120 days or the request shall be deemed granted pursuant to federal regulations unless an agreement is reached to extend the date.  Legislation on this transfer must be effective by December 24, 2011.

To obtain Council approval, the proposed assignee (Wave) must demonstrate, among other things, financial responsibility and the ability to comply with the provisions of SMC Chapter 21.60 (Cable Communications Ordinance) and the franchise.  The Office of Cable Communications, with the help of legal, financial, and technical consultants, is conducting review and analysis of the transfer and will recommend approval with conditions upon satisfactory completion of the review. 

Please check one of the following:

____ This legislation does not have any financial implications.

(Please skip to “Other Implications” section at the end of the document and answer questions a-h. Earlier sections that are left blank should be deleted. Please delete the instructions provided in parentheses at the end of each question.)

__X__ This legislation has financial implications.

(If the legislation has direct fiscal impacts (e.g., appropriations, revenue, positions), fill out the relevant sections below.  If the financial implications are indirect or longer-term, describe them in narrative in the “Other Implications” Section. Please delete the instructions provided in parentheses at the end of each title and question.)

The Legislation may result in payments to the City from the reimbursement of the City’s transfer-related costs, reimbursement for any ascertainment survey conducted by the City or the recovery of any underpaid franchise fees.  That amount is to be determined by October 31, 2011.  Any reimbursements for costs incurred would go to the DoIT operating fund; any franchise fees collected would be placed in the Cable Fund with the rest of the franchise fee revenue.  Any revenues not anticipated would be appropriated in future legislation.

Appropriations:

(This table should reflect appropriations that are a direct result of this legislation.  In the event that the project/programs associated with this ordinance had, or will have, appropriations in other legislation please provide details in the Appropriation Notes section below. If the appropriation is not supported by revenue/reimbursements, please confirm that there is available fund balance to cover this appropriation in the note section.)

Fund Name and Number	Department	Budget Control Level*	2011 Appropriation	2012 Anticipated Appropriation
TOTAL

*See budget book to obtain the appropriate Budget Control Level for your department.

Appropriations Notes: 

Anticipated Revenue/Reimbursement Resulting from this Legislation:

(This table should reflect revenues/reimbursements that are a direct result of this legislation.  In the event that the issues/projects associated with this ordinance/resolution have revenues or reimbursements that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below the table.)

Fund Name and Number	Department	Revenue Source	2011 Revenue	2012 Revenue
TOTAL

Revenue/Reimbursement Notes:

Recovery of any underpaid franchise fees would be revenue to the Cable Television Franchise Subfund (00160).  Reimbursement of any City costs associated with the franchise transfer or ascertainment survey would be revenue to DoIT Fund (50410), from which expenses were paid.

Total Regular Positions Created, Modified, or Abrogated through this Legislation, Including FTE Impact:

(This table should only reflect the actual number of positions affected by this legislation.   In the event that positions have been, or will be, created as a result of other legislation, please provide details in the Notes section below the table.)

Position Title and Department	Position # for Existing Positions	Fund Name & #	PT/FT	2011 Positions	2011 FTE	2012 Positions*	2012 FTE*
TOTAL

* 2012 positions and FTE are total 2012 position changes resulting from this legislation, not incremental changes.  Therefore, under 2012, please be sure to include any continuing positions from 2011.

Position Notes: There will be no positions created as a result of this legislation.

N/A

Do positions sunset in the future? 

N/A

Spending/Cash Flow:

(This table should be completed only in those cases where part or all of the funds authorized by this legislation will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects).  Details surrounding spending that will occur in future years should be provided in the Notes section below the table.)

Fund Name & #	Department	Budget Control Level*	2011 Expenditures	2012 Anticipated Expenditures
TOTAL

* See budget book to obtain the appropriate Budget Control Level for your department.

Spending/Cash Flow Notes:

Other Implications:

a) Does the legislation have indirect financial implications, or long-term implications?

No.

b) What is the financial cost of not implementing the legislation?  If this legislation is not implemented, the City will not be able to resolve the issues listed in the Consent Agreement, e.g. potential collection of financial obligations found in franchise fee audit. 

c) Does this legislation affect any departments besides the originating department? 

No.

d)  What are the possible alternatives to the legislation that could achieve the same or similar objectives? None. The transfer could occur without Council approval, but that would negate the City’s opportunity to place conditions on the transfer that will benefit customers and protect the City’s interests.

e) Is a public hearing required for this legislation?  Yes. A Public Hearing on the proposed transfer is required by SMC 21.60.250 and has been scheduled for November 9, 2011, at 1:00 p.m. in Council Chambers.

f) Is publication of notice with The Daily Journal of Commerce and/or The Seattle Times required for this legislation? Yes. SMC 21.60.270 (D) requires publication of the proposed legislation for ten consecutive press days at the expense of the applicant (Wave).  SMC 21.60.270 (D) also requires the Ordinance to be published once in the official newspaper of the City at Wave’s expense within three days after the same shall have become law.

g) Does this legislation affect a piece of property? No.

h) Other Issues: At present we do not know the amount of money that will accrue to DoIT as a result of the Legislation. The amount of the funds will be determined after the City has completed its audit of Broadstripe franchise fee payments during 2006-2010 and once we know the full amount that Wave and Broadstripe will pay DoIT to reimburse its costs associated with administering the transfer request.