Rancho Palos Verdes City Council
   

SEPTEMBER 5, 2006 RANCHO PALOS VERDES CITY COUNCIL - CABLE FRANCHISE FEE REVIEW SEPTEMBER 5, 2006 RANCHO PALOS VERDES CITY COUNCIL - CABLE FRANCHISE FEE REVIEW SEPTEMBER 5, 2006 RANCHO PALOS VERDES CITY COUNCIL - CABLE FRANCHISE FEE REVIEW



TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DENNIS McLEAN, DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY

DATE: SEPTEMBER 5, 2006

SUBJECT: CABLE FRANCHISE FEE REVIEW

Staff Coordinator: Kathryn Downs, Deputy Director of Finance & Information Technology

RECOMMENDATION

1. Approve the attached professional services agreement with Communications Support Group, Inc. for an amount not to exceed $25,000 to conduct a review of franchise fee calculations and remittances from Cox Communications, Inc.

2. Authorize the Mayor and the City Clerk to execute the professional services agreement with Communications Support Group, Inc.

3. Adopt Resolution No. 2006- , amending Resolution 2006-41, the budget appropriation for FY06-07, to increase budgeted appropriations in the General fund.

BACKGROUND AND DISCUSSION

On October 17, 2000, the City entered into a nonexclusive franchise agreement (“agreement”) with Cox Communications, Inc. (“Cox”) to operate a cable television system in the City. As part of the agreement, Cox remits to the City five percent of annual revenue received for providing cable service within the City. The City collected a total of $458,938 from Cox for the FY05-06 franchise fee. Section 10.9 of the agreement provides the City the right to review Cox’s records related to calculation of the franchise fee and requires Cox to keep the supporting records for three years.

To date, the City has not yet exercised its right to review the support for franchise fee calculations and remittances. Staff desires to hire a consultant to perform a review of Cox’s franchise fee calculations and remittances for three years (2003 through 2005).

The City is not required to obtain bids for a franchise fee review, as the City’s purchasing ordinance (Municipal Code subsection 2.44.060) provides an exclusion to bid procedures for financial advisors and other similar licensed professionals. However, Staff made informal inquiries with seven leading CPA firms in Southern California who specialize in audits of governmental agencies. One firm did not have specific experience reviewing cable company franchise agreements, two of the firms do not perform franchise fee reviews unless the City is an existing client, two of the firms do not perform franchise fee reviews, and one firm is too busy to perform this review until Spring 2007.

Diehl, Evans & Company, LLP (“DE&CO”), a CPA firm based in Irvine, has proposed to work as a subcontractor to Communications Support Group, Inc. (“CSG”), a consulting firm based in Costa Mesa, to complete this review. DE&CO is one of the leading governmental accounting and auditing firms in California, and CSG specializes in cable franchise reviews. In the past three years, CSG and DE&CO have jointly performed cable franchise fee reviews for twenty-eight cities in Southern California including Hawthorne, Lawndale, Long Beach, Pasadena, and Santa Ana. In addition, DE&CO has specifically reviewed Cox Communications franchise fees for eight cities in Southern California including Laguna Beach, San Clemente, and Rancho Santa Margarita. Staff believes that both CSG and DE&CO are well qualified to complete this engagement.

Cities that have engaged CSG during the past three years have found, on average, that franchise fees have been underpaid by 1.5% to 3%. Staff expects that a three-year audit may uncover unpaid franchise fees ranging from $0 to about $50,000.

The scope of services is included with the attached professional services agreement. Based on the informal inquiries, Staff found the proposed fee of $25,000 to be competitive for the scope of services. The expected completion date for the review is in February 2007. Staff expects to report the results to City Council in March 2007.

FISCAL IMPACT

The FY06-07 budget does not include an appropriation for a cable franchise fee review. Therefore, Staff requests a General fund budget adjustment in the amount of $25,000. The FY06-07 Statement of Estimated General Fund Reserves is presented in Attachment A to this staff report.

Respectfully submitted,

Dennis McLean
Director of Finance and Information Technology

Reviewed by,

Les Evans
City Manager

PROFESSIONAL SERVICES AGREEMENT
FOR FRANCHISE FEE REVIEW SERVICES

THIS AGREEMENT is made and entered into this ___ day of September, 2006, by and between the CITY OF RANCHO PALOS VERDES, a municipal corporation, hereinafter referred to as “CITY”, and COMMUNICATIOINS SUPPORT GROUP, INC., hereinafter referred to as “CONSULTANT”.

IN CONSIDERATION of the covenants hereinafter set forth, the parties hereto mutually agree as follows:

ARTICLE I

SCOPE OF CONSULTANT’S SERVICES

CONSULTANT shall perform agreed upon procedures that are set forth in Exhibit “A” to this Agreement, which is attached hereto and incorporated herein by this reference.

Notwithstanding the services described above, the CITY may request, and CONSULTANT may agree to perform, other services. The scope of such other services and compensation shall be agreed to in writing, signed by both parties and shall become a part of this Agreement.

ARTICLE II

PERFORMANCE OF SERVICES

CONSULTANT shall perform all services and duties pursuant to this Agreement in a professional and timely manner, at the direction of the Director of Finance & Information Technology, or his designee. All directives, instructions, or other communications from CITY to CONSULTANT shall be through only the Director of Finance & Information Technology, or his designee.

ARTICLE III

TERM

This Agreement shall commence on September __, 2006, and shall terminate upon completion of the services listed in Exhibit A, unless otherwise extended in writing by the parties hereto.

ARTICLE IV

COMPENSATION FOR SERVICES

CITY shall pay CONSULTANT for review services rendered and costs incurred pursuant to this Agreement in accordance with the amounts set forth in Exhibit “A”. Notwithstanding any and all provisions of this Agreement, in no event shall compensation for the services exceed $25,000, unless authorized in writing by the CITY and approved by the CITY Council.

All payments due CONSULTANT shall be paid to:

Communications Support Group, Inc.
Attn: John Risk
2850 Mesa Verde Drive East, Suite 118
Costa Mesa, CA 92626

CONSULTANT will submit invoices monthly for the percentage of work completed in the previous month. CITY agrees to pay all undisputed invoice amounts within thirty (30) days of receipt of the invoice. CITY agrees to use its best efforts to notify CONSULTANT of any disputed invoice amounts within ten (10) days of the receipt of each invoice. However, CITY’S failure to timely notify CONSULTANT of a disputed amount shall not be deemed a waiver of CITY’S right to dispute such amount or percentage.

ARTICLE V

PERSONNEL

CONSULTANT shall provide all personnel necessary to properly perform the services and duties required under this Agreement, and shall at all times direct such personnel in the performance of such services and duties. John Risk shall serve as the principal liaison between CITY and CONSULTANT.

ARTICLE VI

DUTIES OF CITY

CITY shall provide or make available to CONSULTANT, without charge or expense, all information, data, records, maps, reports, plans, equipment, or other material in its possession necessary for carrying out the services and duties contemplated under this Agreement.

ARTICLE VII

OWNERSHIP OF DOCUMENTS

CITY and CONSULTANT agree that all records, data, reports or other documentation prepared by CONSULTANT, in response to, or as a result of the performance of this Agreement shall be the sole property of CONSULTANT. CITY and CONSULTANT acknowledge and agree that all records, data, reports or other documentation prepared by CONSULTANT pursuant to this Agreement shall be retained by CONSULTANT for at least two years after the date of the final report.

ARTICLE VIII

CONFLICT OF INTEREST

A. All information gained by CONSULTANT in performance of this Agreement shall be considered confidential and shall not be released by CONSULTANT without CITY’S prior written authorization excepting that information which is a public record and subject to disclosure pursuant to the Public Records Act (Government Code Section 6250 et seq.). CONSULTANT, its officers, employees, agents, or subcontractors, shall not voluntarily provide declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning CITY or cooperate in any way with a party who may be adverse to CITY or whom CONSULTANT reasonably should know may be adverse in any subsequent litigation. CONSULTANT shall incur no liability under this Agreement for materials submitted by it, which are later released by CITY, its officers, employees, or agents. CONSULTANT shall also incur no liability for statements made by it at any public meeting, or for any document released by it for which prior written CITY authorization was obtained.

If CONSULTANT or any of its officers, employees, or subcontractors does voluntarily provide information in violation of this Agreement, CITY has the right to reimbursement and indemnity from CONSULTANT for any damages caused by CONSULTANT’S conduct, including without limitation reasonable attorney’s fees.

CONSULTANT shall promptly notify CITY should CONSULTANT, its officers, employees, agents or subcontractors be served with any Summons, Complaint, Subpoena, Notice of Deposition, Request for Documents, Interrogatories, Request for Admissions or other discovery requests from any party regarding this Agreement and the work performed hereunder, CITY retains the right, but not the obligation, to represent CONSULTANT and/or to be present at any deposition, hearing, or similar proceeding. CONSULTANT agrees to cooperate fully with CITY and to provide CITY with the opportunity to review any response to discovery requests provided by CONSULTANT. However, CITY’S right to review any such response does not imply or mean the right by CITY to control, direct, or rewrite said response.

CITY warrants that CONSULTANT will have fully met the requirements of this provision by obtaining CITY’S written approval prior to providing documents, testimony, or declarations; consulting with CITY before responding to a Subpoena or court order; in the case of depositions upon providing Notice to CITY of same; or providing CITY opportunity to review discovery responses prior submission. For purposes of this section, a written authorization from CITY shall include a “faxed” letter.

B. CONSULTANT covenants that neither it nor any officer or principal of its firm have any interest, nor shall they acquire any interest, either directly or indirectly, which will conflict in any manner or degree with the performance of their services hereunder. CONSULTANT further covenants that in the performance of this Agreement, no person having such interest shall be employed by it as an officer, employee, agent, or subcontractor. CONSULTANT and its officers, employees, associates and sub-consultants, if any, will comply with all conflict of interest statutes of the State of California applicable to CONSULTANT’S services under this agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, et. Seq.) and Government Code Section 1090.

ARTICLE IX

INDEMNIFICATION AND INSURANCE

A. Indemnification. CONSULTANT will defend, indemnify and hold harmless CITY, its City Council, Boards, Commissions and its officers, employees and agents (collectively “CITY”), against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of CONSULTANT, its agents, officers or employees, in performing any of the services under this Agreement. CITY will indemnify and hold harmless CONSULTANT, its agents, officers or employees against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of CITY personnel or its other agents or if CONSULTANT is named as a party in a lawsuit simply because CONSULTANT is performing work on CITY’S behalf and there is no allegation of any wrongdoing on the part of the CONSULTANT.

B. General Liability. CONSULTANT shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Commercial General Liability Insurance, with minimum limits of one million dollars ($1,000,000.00) for each occurrence and two million dollars ($2,000,000.00) in the aggregate, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by CONSULTANT. An insurer admitted in the State of California and rated in Best’s Insurance Guide with a rating A VII or better shall issue said policy or policies.

C. Worker’s Compensation. CONSULTANT agrees to maintain in force at all times during the performance of work under this Agreement worker’s compensation insurance as required by the law. CONSULTANT shall require any subcontractor similarly to provide such compensation insurance for their respective employees.

D. Notice of Cancellation.

i. All insurance policies shall provide that the insurance carrier shall not cancel the insurance coverage without thirty (30) days prior written notice to CITY. CONSULTANT agrees that it will not cancel or reduce said insurance coverage.

ii. CONSULTANT agrees that if it does not keep the aforesaid insurance in full force and effect, CITY may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, CITY may take out the necessary insurance and pay, at CONSULTANT’S expense, the premium thereon.

E. Certificate of Insurance. At all times during the term of this Agreement, CONSULTANT shall maintain on file with the City Clerk certificates of insurance showing that the aforesaid policies are in effect in the required amounts. The commercial general liability policy or policies shall contain an endorsement naming the CITY as an additional insured, which CONSULTANT shall maintain on file with the City Clerk.

F. Primary Coverage. The insurance provided by CONSULTANT shall be primary to any coverage available to CITY in relation to the services provided under this Agreement. The insurance policies (other that worker’s compensation and professional liability) shall include provisions for waiver of subrogation.

ARTICLE X

TERMINATION

A. If, at any time during the term of this Agreement, CITY determines, at its sole reasonable discretion, that CONSULTANT is not faithfully abiding by any term or condition contained herein, CITY may notify CONSULTANT in writing of such defect or failure to perform; which notice must give CONSULTANT ten (10) days to cure the defect or failure to perform. If CONSULTANT has not performed the work or cured the defect to the satisfaction of CITY, CITY may terminate this Agreement immediately by written notice to the CONSULTANT to said effect.

B. If, at any time during the term of this Agreement, CONSULTANT reasonably determines that CITY is not abiding by any material term or condition contained herein, CONSULTANT may notify CITY in writing of such defect or failure to perform; which notice must give CITY thirty (30) days to cure the defect or failure to perform. If CITY has not cured the defect to the satisfaction of CONSULTANT, CONSULTANT may terminate this Agreement immediately by written notice to the CITY to said effect.

C. In said event, CONSULTANT shall be entitled to the reasonable value of its services performed from the beginning of the period in which the breach occurs up to the day of notice of termination, less any offset from such payment representing the CITY’S damages from such breach. CITY reserves the right to delay any such payment so as to permit a full and complete accounting of the cost of damages. In no event, however, shall CONSULTANT be entitled to receive compensation in excess of the amount provided in this Agreement.

ARTICLE XI

GENERAL PROVISIONS

A. Fair Employment Practices/Equal Opportunity Acts. In the performance of this Agreement, CONSULTANT shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940-48) and the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e-217), whichever is more restrictive.

B. Non-discrimination. CONSULTANT shall not discriminate as to race, creed, religion, gender, color or national origin in the performance of its services and duties pursuant to this Agreement, and will comply with all rules and regulations of the CITY relating thereto.
C. Legal Action.

i. Should either party to this Agreement bring legal action against the other, the case shall be handled in Los Angeles County, California,
and the party prevailing in such action shall be entitled to reasonable attorney’s fees, which shall be fixed by the judge hearing the case, and such fee shall be included in the judgment.

ii. Should any legal action about a project between CITY and a party other than CONSULTANT require the testimony of CONSULTANT when there is no allegation that CONSULTANT was negligent, CITY shall compensate CONSULTANT for its testimony and preparation to testify at the hourly rates in effect at the time of such testimony.

D. Compliance with Applicable Law. CONSULTANT and CITY shall comply with all applicable laws, ordinances and codes of the Federal, State and local
Governments.

E. Assignment. This Agreement shall not be assignable by either party without the prior written consent of the other party. Notwithstanding the foregoing, CONSULTANT may use the services of persons and entities not in its employ, when it is appropriate and customary to do so upon prior approval by CITY. CONSULTANT’S use of others for CITY shall not unreasonably restrict additional services, provided CONSULTANT notifies CITY in advance.

F. Independent Contractor. CONSULTANT is and shall at all times remain, as to CITY, a wholly independent contractor. Neither CITY nor any of its agents shall have control over the conduct of CONSULTANT or any of CONSULTANT’S employees, except as herein set forth. CONSULTANT expressly warrants not to, at any time or in any manner, represent that it, or any of its agents, servants or employees, are in any manner the agents, servants or employees of CITY, it being distinctly understood that CONSULTANT is, and shall at all times remain to CITY, a wholly independent contractor and CONSULTANT’S obligations to CITY are solely such as are prescribed by this Agreement.

G. Titles. That titles used in this Agreement are for general reference only and are not part of this Agreement.

H. Extent of Agreement. This Agreement and Exhibit “A” hereto represent the entire and integrated Agreement between CITY and CONSULTANT and supersede all prior negotiations, representations or Agreements, written or oral. This Agreement may be modified or amended only by a subsequent written Agreement signed by both parties.
G. Legal Construction

i. This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced and governed under the substantive laws of the State of California.

ii. This Agreement shall be construed without regard to the identity of the persons who drafted its various provisions. Each and every provision of this Agreement shall be construed as though each of the parties participated equally in the drafting of same, and any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement.

iii. The article and section, captions and headings herein have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.

iv. Whenever in this Agreement the context may so require, each gender shall be deemed to refer to and include any other gender and the singular shall refer to and include the plural.

J. Notices. All notices pertaining to this Agreement shall be in writing and addressed as follows:

If to CONSULTANT:

John Risk
Communications Support Group, Inc.
2850 Mesa Verde Drive East, Suite 118
Costa Mesa, CA 92626

If to CITY:

Dennis McLean, Director of Finance & Information Technology
City of Rancho Palos Verdes
30940 Hawthorne Boulevard
Rancho Palos Verdes, CA 90275

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

 

COMMUNICATIONS SUPPORT GROUP, INC.

By: _____________________________


_____________________________
(Title)

Dated: _____________________________

CITY OF RANCHO PALOS VERDES

By: _____________________________
Mayor

Dated: _____________________________

Attest:

__________________________
City Clerk

RESOLUTION NO. 2006-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES, AMENDING RESOLUTION 2006-41, THE BUDGET APPROPRIATION FOR FY06-07, FOR A BUDGET ADJUSTMENT TO THE CITY'S GENERAL FUND

WHEREAS, Section 3.32 of the Rancho Palos Verdes Municipal Code provides that all expenditures in excess of budgeted allocations must be by supplemental appropriation of the City Council: and

WHEREAS, on June 6, 2006, the City Council of the City of Rancho Palos Verdes adopted Resolution 2006-41, approving a spending plan and authorizing a budget appropriation for FY06-07: and

WHEREAS, the City Council desires to hire a consultant to perform a cable franchise fee audit, and the City Council desires that the FY06-07 budget be adjusted.

BE IT, THEREFORE, RESOLVED BY THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES:

The following increases be made to the FY06-07 budget:
Finance Professional Services #101-2020-411-32-00 $25,000

PASSED, APPROVED, AND ADOPTED THE 5th DAY OF SEPTEMBER 2006.

___________________________
MAYOR
ATTEST:

______________________
CITY CLERK

State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes )

I, CAROLYNN PETRU, City Clerk of The City of Rancho Palos Verdes, hereby certify that the above Resolution No. 2006- was duly and regularly passed and adopted by the said City Council at regular meeting thereof held on September 5, 2006.
_____________________________
CITY CLERK
CITY OF RANCHO PALOS VERDES