Rancho Palos Verdes City Council
   

October 17, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-UTILITIES/MAINTENANCE COSTS FOR THE PVNET MODULAR BUILDING October 17, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-UTILITIES/MAINTENANCE COSTS FOR THE PVNET MODULAR BUILDING October 17, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-UTILITIES/MAINTENANCE COSTS FOR THE PVNET MODULAR BUILDING



TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: CITY MANAGER

DATE: OCTOBER 17, 2006

SUBJECT: UTILITIES/MAINTENANCE COSTS FOR THE PVNET MODULAR BUILDING

RECOMMENDATION

Receive and file this report and the timeline of events compiled by Councilman Gardiner that is attached.

BACKGROUND

Councilman Gardiner has provided a summary of Channel 33 events and related PVNet facilities use and portable building agreement to further amplify the various relationships between PVNet and Channel 33. That summary is attached to this report by the City Manager.

At their meeting of September 5, 2006, the City Council approved a budget adjustment of $15,150, primarily to fund annual utilities and maintenance costs for the PV on the Net modular building, as required by an agreement approved by the City Council on June 20, 2006. In addition, the Council (on September 5, 2006) was asked to approve a one-time charge of $26,800 for upgrades of electrical and utility services, primarily to accommodate the PV on the Net modular building. The City Council directed staff to report on how the cost of these services had escalated from the figure of $5,000 that was estimated in the June 20, 2006 staff report.

On May 6, 2003 the City Council approved an agreement with PV on the Net for the Lease of the Cable Television studio. A copy of the May 6, 2003 staff report (with Agreement) is attached. At that time it was staff’s understanding that without the offer from PV on the Net to equip and operate the studio, the City Council may not have been able to fund this project. The term of the studio lease was for a period of five years, but could be terminated by either PV on the Net, or the City upon 90 days notice. After receiving notice of termination PV on the Net would have180 days to remove equipment and vacate the premises.

On November 15, 2005 the City Council conceptually approved the addition of a 320 square foot PVAN building and a 960 square foot PV on the Net building to be constructed adjacent to one another near the cable studio. The cost of extending electrical utilities to the two buildings was to be shared equally by the City and PV on the Net and was estimated at about $3,500 apiece.

At the Cable TV Committee meeting of February 3, 2006 TV Manager Holt reported that she had met with SCROC representatives who expressed an interest in using the City Cable TV studio as a classroom for formal training of students. She asked if there was a scenario under which PV on the Net would allow this use of the studio. It was agreed that Ted Vegvari and Gabriella Holt would meet with the SCROC superintendent to try to work out a SCROC/PVNet/City/PVHS partnership for use of the studio.

Unfortunately, after several months of trying to work out this partnership, it was agreed that it would be best for all if PV on the Net would give up the remaining two years of their lease and vacate the studio by September 1, 2006. The City Manager accepted the task of attempting to work out such an arrangement. There were three goals that the City Manager felt he was tasked with:

  1. Obtain City control of the studio by September 1st.
  2. Make PV on the Net whole for the value of their investment in time, materials and equipment expended in setting up the studio.
  3. Attempt to find a win-win solution, or at least avoid any conflicts.

DISCUSSION

Discussions with Ted Vegvari on a equitable exit strategy revealed that he would be willing to give up the remaining two-years of PV on the Net’s studio lease, as well as donate lights, cameras and other studio equipment if the City would be willing to provide PV on the Net a site for a modular building, and maintain it as if the City owned it, for a minimum period of three years. The terms offered by Mr. Vegvari were discussed by the Cable TV Committee and (the City Manager felt) were acceptable to the Committee.

The Cable TV Committee, at their meeting of June 9, 2006, received a draft of the proposed lease agreement. There are no minutes of that meeting and the City Manager does not recall any discussion of the agreement other than a generally expressed appreciation that PV on the Net would be out of the studio in time to accommodate the SCROC classes scheduled to begin in early September. It was pointed out to the City Manager that it was urgent that both PV on the Net and SCROC have a commitment on the part of the City in order to plan their respective programs.

On June 20, 2006 the PV on the Net Lease Agreement, recommended (as understood by the City Manager) by the Cable TV Committee, was entered into between the City and PV on the Net. The new Lease Agreement stated that in exchange for the remaining two-year Cable TV Studio lease and the donation of cameras and lighting that were currently installed in the studio, the City would agree to:

  1. Allow PV On The Net to place a larger (than that originally proposed and conceptually approved by Council on November 15, 2005) modular building on City property, and
  2. Provide all the utilities, building maintenance and repairs for PV on the Net’s new modular building at no cost to PV on the Net.

The staff report (with Agreement) of June 20, 2006 is attached. Although Exhibit A to the Agreement described the location and size of the new PV on the Net modular building, there was no discussion of the size of the building in the staff report. In order to get the agreement before the City Council as soon as possible, no new maintenance and utility cost estimates were prepared. The staff report stated that the annual fiscal impact to the City of the lease agreement would be $5,000. This figure was an estimate of the cost of building maintenance, including custodial service. The cost of extending utilities to the PV on the Net building that was formerly (under the November 15, 2005 conceptual agreement) to be borne by PV on the Net, but would now be a cost to the City, was overlooked. No allowance for the annual cost of utilities was included as the City Manager felt that energy costs could be absorbed in the $110,000 already budgeted for electricity for all City buildings.

As the City Council is aware, the building actually approved on June 20, 2006 was 1440 square feet. When the Public Works Department generated new estimates for the custodial service for the building, the cost rose to $6,500 annually. The annual cost of energy (primarily for air conditioning) is now estimated at $8,500, although it appears that the size and energy demand of the air conditioners for the 1440 square foot building and the 960 square foot building are identical. The total annual maintenance budget for the 1440 square foot building was re-estimated in August at $10,000 and the utilities/telephone/alarm system budget (previously thought to be negligible) was added into the budget at $10,150.

The Council asked "why were the costs more than those estimated in the June 20, 2006 Staff Report and how can we address issues like this in the future?"

The answer to the first part of the question….why were the costs more…?

    • The project was urgency driven. The focus of the City Manager was to have the studio available to SCROC by September 1 and the costs of maintenance and upgrades were hastily assumed rather than carefully calculated.
    • The significance of the 50% increase in the size of the modular building was a point overlooked by everyone until after the agreement was executed; although the size of the building did not seem to be the primary factor in the cost increases.
    • The original estimates (in the November 15, 2005 Staff Report) for extending electrical utilities to the PV on the Net modular were inadvertently not included in the June 20, 2006 staff report.
    • The original estimates by various contractors made in October of 2005 turned out to be much lower than the final written bids in August 2006.

The answer to the second part of the question…how can we avoid issues like this in the future…?

    • All projects have three major components: Quality of the finished product, time to complete and cost. All aspects need to be given equal emphasis. A focus on time (or urgency) is often a warning that quality control or cost control will be sacrificed.
    • Projects should all be accompanied by current written cost estimates/or actual bids, prepared by qualified professionals.

Respectfully submitted

Les Evans

City Manager

Attachments: Timeline of Events provided by Councilman Gardiner

City Council Staff Report - May 6, 2003

City Council Staff Report - November 15, 2005

City Council Staff Report - June 20, 2006

City Council Staff Report - September 5, 2006

Summary of Channel 33 Timeline of Events
And related PVNET Facilities Use and Portable Building Agreement

September 17, 2002 (Council Meeting)

City Council establishes a Cable TV ad hoc subcommittee;

November 5, 2002 (Council Meeting)

Council directs staff to conduct a workshop with interested parties regarding utilization of an educational access channel and what resources may be offered to support the channel;

December 17, 2002 (Cable Committee Meeting)

As a result of the workshop Cable ad hoc subcommittee made following recommendations that were approved by City Council:

  1. Adopt Resolution No. 2002 - 106; directing Cox Communications to establish an educational access channel pursuant to Exhibit E, Section I(C)(1) of the October 17, 2000 Cable Television Franchise Agreement on the local cable television network.
  2. Establish a start-up date of May 1, 2003 for launching the channel.
  3. Approve use of the old Cable TV studio on City Hall property for filming and editing.
  4. Establish a budget of $125,000 for re-furbishing the studio and purchasing of camera and editing equipment.
  5. Establish an annual budget of $70,000 for operating the studio.

February 18, 2003 (Council Meeting)

City Council places on hold December 17, 2002 (4) and (5) above; (no $125,000 and no $70,000)

March 4, 2003 (Council Meeting)

Proposal received from PVNET to operate studio at no cost to City as well as provide equipment for production – based on the proposal the City Council approved:

  1. Authorize the expenditure of $25,000 of Building Replacement Funds for the rehabilitation of the former Cable Television Building.
  2. Authorize the expenditure of $10,000 of General Fund reserves for the purchase of television production equipment.
  3. Authorize the inclusion of $10,000 in studio operating funds in the FY 2003-04 City budget.
  4. COX Communications designates Channel 33 as the new RPV CityTV educational access channel.

April 14, 2003 (Cable Committee Meeting)

Another proposal submitted to the cable committee from PVNET to provide all the operational and technical support for the new channel, and the Committee recommends that the City of RPV enter into an agreement with PVNET to formalize the arrangement where PVNET provides services to the City in exchange for use of the studio as a "quid pro quo";

May 6, 2003 (Council Meeting)

City Council approves formal lease agreement with PVNET for the use of the RPV Cable TV Studio (see attachment A);

Lengthy Negotiations with COX about Channel 33 – unsuccessful

February 26, 2005 (Council Budget workshop)

Staff recommendation includes the following proposal to the City Council from PVNET to provide continued operational and technical support:

    1. Finalize understanding with PV on the Net for "quid pro quo" continued technical support and what rate the City will pay for programming over that amount.
    2. Issues before the Council will include: (1) Amount of programming that PV on the Net will provide at no cost to the City. (2) Understanding of how PV on the Net will schedule programming requests. (3) Rates to be charged to other entities to utilize the Channel 33/PV on the Net facilities and services (a price list recommendation to the City Council). On these issues, Ted Vegvari has submitted the following information:

PVNET's understanding is that the "quid pro quo" arrangement from May 6, 2003 calls for approximately 12 City Talk Shows of varying lengths and approximately 16 PSAs per year. (From the February 26, 2005 staff report)

PVNET proposes that the hourly rate for additional productions and services be set as follows:

    • $20/hour for interns
    • $40/hour for PVNET staff
    • $0 for volunteers


PVNET will make it's best effort to not charge the City of RPV for additional productions and services.

PVNET proposes charging a flat rate of $45/hour for other clients, and at PVNET's discretion not charging for services on a case-by-case basis.

c) The subcommittee needs to develop a three-year plan for consideration by the City Council including both a three-year plan for developing programming and a three-year plan for developing equipment and technical improvements. For instance will we start with an automated Reader Board or simply a DVD player?

The Fiscal Year 2004-05 Channel 33 budget includes $10,000 for professional services and $41,500 for the cable connection to the studio. To date expenditures for professional services are $3,414.

Regarding future equipment and technical improvements, Ted Vegvari has submitted the following:

Year 1

Budget $70,000 for an office trailer behind the studio. There is so little space in the studio we cannot store sets and equipment. PVNET recommends permanently installing the CH33 scheduling and broadcast equipment in the trailer. Lead-time to procure and install a trailer is 60 days.
Budget $5,000 to procure stopgap solution/equipment to broadcast content.
Provide $25,000 operating budget with a carry forward of unused dollars.


Year 2

$150,000 for scheduling/broadcast/reader board system/equipment and satellite dishes.
$25,000 operating budget with a carry forward of unused dollars.

Year 3

$150,000 for upgrades, maintenance of scheduling and broadcasting equipment
$25,000 operating budget with a carry forward of unused dollars.

    1. The recommendation to Council should be for an initial trial period of six months once we have a connection to Channel 33, with a scheduled milestone review at the end of the that period.
    2. The City also needs to define the legal issues associated with allowing outside agencies using our cable studio facilities and broadcasting their productions on Channel 33.

    1. Discuss policies regarding utilization and non-politization of the channel.

Council approves all items that do not cost the City any money and tabled any additional expenditures related to the Channel until budget deliberations are complete.

Manager, City TV position and appointment approved.

Channel to date is not operational.

May 31, 2005 (Council Meeting)

City Council approves budget appropriation of $25,000 for RPV CityTV CH 33 operations, $10,000, previously allotted from General Fund Reserves on March 4, 2003, have not been expended for broadcast equipment.

Connection between City of RPV studio and COX Communications headend complete and Channel has capacity to broadcast.

Static Graphic Display Commences

August 28, 2005 (Council Meeting)

City holds live council meeting broadcast from the RPV TV studio to test studio broadcast capability– PVNET provides technical support – Broadcast successful – Channel fully operational;

September 2005 through October 2005

Channel incapable of broadcasting content submitted by RPV City TV General Manager. Broadcast system provided by PVNET inadequate to handle City Council directed programs and production broadcast needs. Equipment options are explored.

October 3, 2005 (Cable Committee Meeting)

The cable committee recommends the purchase of the Princeton Server Group (PSG) B1000 broadcast scheduling system (after the committee reviewed bids from PSG $9999 all inclusive and D.Co Marketing, Inc. $20,000) for $9999 from the initial March 4, 2003 City Council allotment of $10,000;

December 9, 2005

Receipt of PSG B1000, installation and testing complete. Channel 33 officially launches. Video Bulletin Board airs.

January 6, 2006

CH 33 fully operational. Cablecasting locally generated and pre-produced programming with programming from 6 am to 12 pm and VBB from midnight to 6 AM, 24/7. Program guide changes weekly.

February 3, 2006 (Cable Committee Meeting)

Ad hoc cable committee discusses better utilization of studio to meet local programming needs. Cable committee recommends exploring other opportunities. Southern California Regional Occupational Center (SCROC) has expressed interested in conducting a Broadcast Journalism Course in the studio as a satellite center for SCROC.

March 2, 2006 (Cable Committee Meeting)

After much discussion, the Ad hoc cable committee recommends General Manager of RPV City TV draft a preliminary Memorandum of Understanding (MOU) for SCROC, the City and PVNet outlining how to utilize studio for a Broadcast Journalism Course when not in use and how all three will participate. MOU to include PVNET as technical support, City of RPV studio lease agreement and a redraft PVNET’s current lease agreement for use of the studio to accommodate the new proposal for studio use. Results to be submitted to city council for decision.

April 13, 2006 (Cable Committee Meeting)

Draft MOU presented by manager city TV. After much discussion of the draft MOU agreement, the ad hoc cable committee recommends that PVNet bring forward a redraft of the PVNet lease agreement with the city formalizing the committee MOU discussion as they impact PVNet to wit vacating the studio M-F but continue using the studio on Sat and Sun and continue to provide City Talk and PSAs and place excess production equipment in the new PVNet modular. The General Manager of RPV City TV will bring a draft of a finalized MOU outlining the agreement among the parties (SCROC, City of RPV and PVNET) and both will be presented to the city council for a decision.

May 11, 2006 (Cable Committee Meeting)

MOU presented reflecting the agreement among the parties.

Draft of new lease between PVNet and City distributed showing PVNet to vacate studio M-F, move equipment out, etc., and showing a joint lease agreement for studio and modular with city as previously discussed in the 13 April meeting plus some additional items added by PVNet.

Prior to any committee discussion, PVNet for the first time indicates desire to pull out of MOU agreement with SCROC and the CITY and vacate the studio completely if the city in return will permit PVNet to place a modular portable building behind the studio rent free for 3.5 years. PVNet presents an entirely new proposal which would cancel the lease for the studio and replace it with a lease for the modular only and eliminate any obligations for city talk and PSA production.

After much discussion, the cable committee decides that PVNet’s new proposal should be presented in writing which shows the separation of the studio lease and its vacation, equipment to be left behind, and other points, and a separate new Lease for a Portable building between the city and PVNet. The lease should show:

    1. Tenant (PVNET) will relocate equipment, materials, storage, parts, and computers to Tenant’s portable building located adjacent to make more interior space available in Studio for Landlord’s use;
    2. Tenant will have full relief of any commitment or obligation to provide programming or services to the City in the existing lease agreement including production of RPV City Talks and PSA’s;
    3. Leave existing equipment used for recording City Talks in the Studio for use by Landlord (approximate value $35,000) to be subsequently itemized in an addendum;
    4. Allow PVNet to place a portable building next to Studio with a lease through December 31, 2009 (18 month extension from lease expiration on current Studio lease);
    5. Landlord will provide reasonable custodial and cleaning services of the portable building.

June 9, 2006 (Cable Committee Meeting)

PVNET presents revised DRAFT lease for Portable Building Lease between the City and PVNet. After some discussion the Cable committee determined that the Portable Building Lease was outside the charter of the cable committee since use of the Studio and provisions for operation and production services to the City of RPV and for RPV City TV were no longer included in the lease agreement. It was determined that the cable committee would not review the redrafted lease and instead agreed the City Manager and PVNET would formalize the lease and move it forward to the City Council for approval.

The Mayor, who was in attendance at this meeting, asked "What costs will be borne by the City for the terms specified in the Portable Modular lease?" The answer was "no cost to the city."

The committee then focused on making the studio ready for the SCROC Class in September and the SCROC lease agreement/MOU.

20 June 2006 (City Council Meeting)

SCROC lease/MOU approved

PVNet agreement approved. (Canceling lease agreement with studio and creating a lease for the Portable with the City.)

5 Sep 2006 (City Council Meeting)

City Council told that portable agreement would require $41,000 in funding for year 1. Approved expenditure.

PVNet Delivery on "Quid pro Quo" items

Item

Number Required to be delivered by PVNet

Actual Number Delivered by PVNet

Dollar Value of undelivered Items @ $400 Each

1 July 03 – 21 July 06 City Talks

36

23

$5,200

1 July 03 – 28 August 06 PSAs

48

5

$17,200

Summary of Benefit to PVNet of New Lease From City

Item

Dollar Benefit To PVNet

Remove Obligation for uncompleted City Talks and uncompleted PSAs

$22,400

PVNet Relieved of obligation to deliver 12 City Talks per year and 16 PSAs per year for the two remaining years of existing lease agreement

$22,400

PVNet obtains three year lease while giving up two year lease – gains one additional year of rent free space

Unk

Total market value to PVNET for forgiven obligations = $44,800

Equipment donated to RPV TV studio by PVNET estimated at $35,000.

Amount new PVNet portable reported in staff report to cost city: negligible

Amount revised expenses for PVNet portable in FY 2006/07: $41,000

Note: No agreement was executed between the City ad hoc cable committee and PVNET. The cable committee only recommended terms and conditions to City staff for approval by City Council. The Cable TV Committee cannot enter into agreements on behalf of the City Council as they are ADVISORY only, can only make recommendations, but it is the City Council who are the decision makers and enter into binding agreements. Moreover, once the issue of vacating the studio was resolved, the cable committee decided the details of the proposed lease between the City and PVNet were not in the prevue of the Cable Committee and the matter was no longer discussed by the cable committee.

Note: When the Director of PVNET was directly asked by the Mayor at the June 9, 2006 Cable Committee Meeting the following question: "What costs will be borne by the City for the terms specified in the Portable Modular lease?" the reply from PVNET was "None".

Note: The following productions have been completed as of date PVNET relinquished use of the Studio and was forgiven past and prior obligations to the City for production services:

July 1, 2003 through July 21, 2006 (quid pro quo 36 RPVCT owed to City: 23 completed – 13 uncompleted)

#1 - RPV CITY TALK "MEET THE MEDIA" WITH CHRIS BOYD (11/03)
#2 - RPV CITY TALK POINT VIEW (12/03)
#3 - RPVCT re: RPV Goals 2004/05 (5/04)
#4 - RPV CT Special Edition.."Florian's Gift...Tragedy to Triumph" (6/04)
#5 - RPV City Talk Special Edition...Update on Medicare Discount Card (6/04)
#6 - RPV City Talk NCCP (6/04)
#7 - RPVCT Pool Safety with Bob Jechart (7/04)
#8 - RPVCT #21 "RPV City Talk...Balancing the Budget" (9/04)
#9 - RPV City Talk...Traffic Calming 101 (9/04)
#10 - RPV City Talk...Proposed RPV Civic Center (10/04)
#11 - RPVCT #25 "The Making of RPV City Talk" (11/04)
#12 - RPVCT "City Hall and the Supreme Court" (2/05)
#13 - RPVCT..Update on Softball Fields and the Point Vicente Interpretive Center (3/05)
#14 – LIVE CTOL Test Launch of CH 33 (8/05) #15 - RPVCT "Energy Savings and Conservation" Marilyn Lyon and William Baker (11/05) #16 - RPVCT "Official launch of CH 33 on 12/9/05 and Next Steps" Dr. Gardiner (2/06)
#17 - RPVCT "NCCP Next Steps and PUMP" Hon. Tom Long and Barbara Dye (2/06)
#18 - RPVCT "Running Dry" Independent Filmographer, Jim Thebaut (3/06)
#19 – RPVCT "Update on City Goals" Mayor Wolowicz (3/06)
#20 - RPVCT "End of an Era for the PVPUSD" Dr. Ira Toibin (6/06)
#21 - RPVCT "PVPUSD Measure P funds and their use" Hon. John Addelman (6/06)
#22 - RPVCT "Future plans for RPV Civic Center and search for new City MGR" (7/06)
#23 - RPVCT "Assistance League" &"The Annex" Greg Allen and Kathy Gould (7/06)

July 1, 2003 through August 28, 2006 (48 PSA’s owed to City through PVNET quid pro quo 5 completed – 43 uncompleted)

#1 – PSA - CAll for Volunteers to Apply for RPV Advisory Committees and Planning Commission (12/03)
#2 – PSA - RPV PSA RE: Christmas Tree Recycling (12/03)
#3 – PSA - RPV Whale of a Day PSA (2/04)
#4 – PSA - RPV HHW Collection July 17, 2004 (6/04)
#5 – PSA - Palos Verdes Woman's Club Garden Tour (3/05)