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PUBLIC HEARING IMPLEMENTING PEG (PUBLIC, EDUCATIONAL AND GOVERNMENTAL ACCESS) SUPPORT FEE WITH STATE VIDEO FRANCHISE SERVICE PROVIDERS WITHIN THE CITY OF STOCKTON
recommended action
RECOMMENDATION
At the conclusion of the public hearing, it is recommended that the City Council approve a resolution authorizing the implementation of a 1% PEG (Public, Educational and Governmental Access) support fee with State video franchise service providers to use for facilities and equipment associated with the City of Stockton Government Access Channel 97 and broadcast of public meetings and information and appropriate first year revenue and expenditures.
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Summary
The 1984 Federal Cable Act (Section 542) requires video (cable) license holders to provide capital support for PEG equipment and facilities. Under the State of California Digital Infrastructure and Video Competition Act of 2006 (DIVCA), cities may require each franchise holder to pay a fee equal to 1% of its gross revenues, referred to as a PEG fee. On March 13, 2012, City Council adopted Stockton Municipal Code (SMC) Chapter 11.24 State Video Service Franchises, authorizing the City to implement a 1% PEG support fee (Attachment A). While authorization occurred with the 2012 ordinance adoption, implementation was postponed, pending the development of a plan for use of revenues.
The City of Stockton has developed a plan for complete replacement and expansion of Government Access Channel facilities and equipment required for the production and broadcast of Government Access television programming. Once video service providers are notified, the PEG support fee commences within 60 days. Revenues are estimated to be $448,000 annually. The cost of immediate needs associated with Channel 97 facilities and equipment replacement is estimated at $435,300 for Fiscal Year (FY) 2014-15.
The City’s Government Access Channel 97 facilities and equipment needs must be addressed concurrent with the relocation of City Hall and Council Chambers to prevent interruption of service. Current production and broadcast equipment is antiquated (analog) and failing. Equipment will be purchased and facilities placed to provide for continued operations of the Government Access Channel. Separate accounts will be set up to track revenues and expenditures including an internal service fund (ISF) account for the annual cost of scheduled equipment replacement. After the initial purchase of equipment, the City will add other equipment and develop studio facilities to support production and broadcast of programming.
DISCUSSION
Background
A 2006 state law established the California Public Utilities Commission (CPUC) as the sole franchising authority for video (cable) franchises with the Digital Infrastructure and Video Competition Act (DIVCA), which went into effective on January 1, 2007.
Until DIVCA, local municipalities adopted ordinances and granted franchises for cable providers serving the community. Prior to the expiration of local franchises, municipalities were required to adopt ordinances that reserve local jurisdiction rights and recognize State law. In compliance with State law and DIVCA, the Stockton City Council repealed Stockton Municipal Code (SMC) Chapter 11.24 Cable Television and adopted a new ordinance, SMC 11.24 State Video Service Franchises, on March 13, 2012. The ordinance went into effect, April 12, 2012. The PEG support fee was authorized with the adoption of the ordinance in 2012.
All PEG channels were formerly operated and programmed by the local cable franchise holder, most recently, Comcast. Government meetings were originally staffed, taped, and aired under the franchise agreement by the local cable operator. Stockton has produced programming for the Government Access Channel (previously Channel 42, now Channel 97) since 1999. The City of Stockton began both operation and programming of the Government Access Channel 97 in 2003. Comcast no longer programs or operates PEG channels in Stockton or other communities where local franchises have expired.
Present Situation
Stockton’s ordinance recognizes Comcast and AT&T as video service providers, authorized under State franchises by the CPUC, serving Stockton.
State law (DIVCA) preserves the 5% franchise fee collected for use of local public right-of-ways for the delivery of video services within this jurisdiction; maintains the City’s lead in California Environmental Quality Act (CEQA) compliance, if video projects require environmental review; provides the authority to examine or audit video service provider records; and reserves up to three (3) channels for Public, Educational, and Governmental Access use.
SMC 11.24 State Video Service Franchises authorizes the City to adopt video provider customer service standards and fines for video service provider material breaches. In addition, it provides the authority to charge video service providers a PEG support fee equal to 1% of the video providers’ gross revenues.
The City of Stockton is not currently receiving PEG fee revenues. Operational and equipment expenses are paid for from the City’s General Fund. Revenues from PEG fees cannot be used for on-going operational costs; however, PEG fees can be used for equipment and facilities costs associated with the production and broadcast of Government Access Channel programming, such as City Council Meetings and informational programs about City programs and services.
A survey of other cities typically compared to Stockton indicates that nearly all municipalities operating a government access television channel have a PEG fee, most are equal to 1% of gross revenues. PEG fees greater than 1% were in-place at that rate prior to DIVCA and have been grandfathered at the pre-DIVCA level:
|
City |
Fee |
City |
Fee |
|
Chula Vista |
1% |
Richmond |
1% |
|
Fairfield |
1% |
Palo Alto |
.88/month/acct |
|
Fremont |
1% |
Sacramento |
3% |
|
Fresno |
1% |
Salinas |
1% |
|
Gilroy |
3% |
San Bernardino |
1% |
|
Half Moon Bay |
1.5% |
San Jose |
1% |
|
Hayward |
1% |
San Mateo |
1% |
|
Livermore |
.50/month/acct |
Sunnyvale |
1% |
Current equipment used to produce and broadcast Government Access Channel 97 programming was purchased in 2003. Existing equipment is antiquated and failing, making production and programming difficult and time consuming. The equipment is analog and only transmits a signal with the assistance of digital converters installed by Comcast prior to the expiration of the local franchise agreement. The City’s General Fund is currently the only funding source for operational costs and the repair or replacement of equipment. When equipment breaks, for example, video recorders, cameras, editing equipment, or Council Chambers microphones, replacement equipment must be purchased from the City’s General Fund.
Current Status
The City’s Government Access Channel currently only broadcasts on Comcast Channel 97. Due to cost and equipment space limitations, the Government Access Channel does not currently broadcast on AT&T-Uverse. Citizens who are not Comcast subscribers can only participate in City meetings by viewing the streaming option on the City’s website or by attending in person.
Channel 97 equipment provides both video and audio feeds to the Granicus system; Granicus recordings are recognized as the official record of City meetings. City Council Meetings are broadcast live on Channel 97 and streamed on the website using Granicus. The broadcast and streaming of City meetings is critical to government transparency and the City’s public image.
The City’s current Government Access Channel equipment is over a decade old. The equipment is at the end of its useful life and replacement parts and repair services are no longer available. If broadcast components fail, the City’s Government Access Channel 97 will “go dark.”
• Channel 97 equipment is obsolete, designed specifically for the current serving arrangement in the existing Council Chambers, and it cannot be relocated and installed in another location, as it is no longer supported by vendors.
• The analog equipment does not produce or transmit High Definition (HD) signals, as required by the Federal Communication Commission (FCC), without the use of the digital converters installed by Comcast several years ago.
• Field cameras and post-production editing equipment and software are also obsolete, fragile, and cannot be repaired, because the equipment is no longer supported by manufacturers and suppliers.
Government Access Channel Equipment
Implementation of the PEG fee provides a critical funding source for Government Access Channel facilities and equipment needed for the programming and broadcast of City meetings and information about City programs and services.
The City has worked with a vendor that has extensive experience in providing equipment to PEG channel operations in other municipalities. The vendor has analyzed operations and equipment and conducted field visits to both the existing Council Chambers and the space designated for Council Chambers at 400 E. Main Street, Stockton. New equipment can be installed at the current City Hall and moved to 400 E. Main when City Hall is relocated.
Current equipment and facilities needs for the City’s Government Access Channel are estimated to be $$435,275.44 for components required in Council Chambers to broadcast meetings, as well as equipment required for producing original programing. New equipment will also facilitate Closed Captioned Service for hearing impaired viewers.
The following is a list of replacement equipment needed to maintain the current level of operations. Also included are the costs of facilities required to operate and broadcast Channel 97 at the new City Hall:
Council Chambers Equipment $93,500
• Cameras, monitors, cabling, audio
Control Room Equipment 62,400
• Video switching, monitoring, cabling, converters, battery
back-up/surge protection, furniture and racks
Channel Playback, Closed Captioning & Bulletin Board 40,800
• Channel playback, scheduling and signage, closed captioning
equipment
Field Equipment 69,200
• Cameras, audio, lighting and background, prompters and software
Installation 99,400
• Estimated at 25% of equipment cost, plus raw cable, connectors
and other supplies
Transport Facilities to Video Service Providers 70,000
• Fiber extension
Estimate Total $435,300
PUBLIC NOTICE
A public notice was published in The Record on March 14, 2015.
Conclusion
Implementation of the PEG fee, which will facilitate continued operation of the Government Access Channel, is critical to providing open, transparent government. With Council approval, Comcast and AT&T will be notified and the PEG fee will be implemented within 60 days. Revenue will be received in quarterly installments from the video service providers.
The City will issue a request for proposal (RFP), develop a replacement schedule based on the life expectancy of the equipment purchased, and determine budget needs for future years. Channel 97 facilities and equipment expenses beyond the initial purchase will depend on the City’s ability to support operational costs, which cannot be paid for from PEG fees, and the associated need for additional facilities and equipment.
Equipment and facilities purchased with PEG fee revenues will facilitate the continued broadcast of City meetings and production of programming for the City of Stockton Government Access Channel. The PEG support fee will also provide the equipment necessary to broadcast on both Comcast and AT&T-Uverse, which are the State franchisees authorized to provide video services in Stockton.
Summary
Pursuant to Stockton Municipal Code Section 11.24 State Video Franchise Services:
1. Current City ordinance authorizes a 1% PEG support fee, as permitted under California Public Utilities Code Section 5870(n).
2. PEG support fee will be implemented within sixty (60) days of written notice to State Franchise holders, i.e., Comcast and AT&T.
3. FCC regulations distinguish PEG fees from franchise fees and the Federal Cable Communications Policy Act of 1984 restricts the use of PEG fees to facilities and equipment.
4. PEG support fee revenues will be used for equipment and facilities associated with the City of Stockton Government Access Channel.
5. Implementation of the 1% PEG support fee will not impact the 5% franchise fee that provides approximately $2.240 million in annual General Fund revenue from State franchise holders’ gross revenues.
FINANCIAL SUMMARY
PEG support fee revenues are estimated to be $448,000 annually. The first year revenue and expenditure are anticipated to be $45,000 and will be appropriated in separate accounts (020-0134) in FY 2014-15 as proposed per accompanying resolution. Future years will be budgeted through the annual budget development process. All operational costs, such as dedicated staff and any on-going expenses related to operation of the Government Access Channel, will continue to be paid out of the existing Non-Departmental General Fund.
Attachment A - SMC Chapter 11.24 State Video Service Franchises (Ordinance 2012-03-13-1601)