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1986-2521665L NO 6 'o( c;L AN ORDINANCE APPROVING AN AGREEMENT BETWEEN THE CITY OF DENTON AND CTIC ASSOCIATES FOR PROFESSIONAL SERVICES, APPROVING THE EXPENDITURE OF FUNDS THEREFORE, AND PROVIDING FOR AN EFFECTIVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City Council hereby approves and authorizes the Mayor and City Secretary to execute and attest, respectively, the agreement between the City of Denton, and CTIC Associates, providing for professional services relating to the evaluation of cable television service under the terms and conditions being contained in said agreement which is attached hereto and made a part hereof SECTION II That the City Council authorizes the expenditure of funds in the manner and amount as specified in the Agreement SECTION III That this ordinance shall become effective immediately upon its passage and approval ~,~J PASSED AND APPROVED this the A? day of 1986 RAY ST NS, MAYOR CITY 0 DENTON, TEXAS ATTEST RPT CH LO L EN, CITY ISEC CI Y OF D NTON, TEXAS APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY CITY OF DENTON, TEXAS BY 1665L THE STATE OF TEXAS S COUNTY OF DENTON S AGREEMENT BETWEEN THE CITY OF DENTON AND CTIC ASSOCIATES This agreement is entered into this day of , 1986, by the City of Denton, Texas--T-Rereinafter-reed "City"), and CTIC Associates, a for-profit corporation organized and existing under the laws of the Commonwealth of Virginia, having its principal place of business at 1500 North Beauregard Street, Suite 205, Alexandria, Virginia 22311, (hereinafter referred to as "CTIC") ARTICLE I SERVICES OF CTIC 1 In General CTIC agrees to perform professional services in connect- i-'on with this agreement which will be made on the basis of CTIC's experience and qualifications and shall repre- sent CTIC's best judgment as an experienced and qualified professional CTIC's services shall include the provision of analytic and technical advice to the City of Denton, subject to the terms and conditions of this Agreement 2 Scope of Work CTIC agrees to provide assistance to the City by performing the tasks set forth herein It is understood and agreed between the parties that Harold Horn will personally be responsible for all phases set forth herein except that the Engineering Review Services specified herein shall be the responsibility of William Kohutanyez, Director of Technical Services PHASE 1 INTRODUCTORY WORK SESSION In order to assure that all parties fully understand the proposed project and its various phases, CTIC will start the project with an introductory work session with all appropriate municipal officials The session is needed to permit the consultant to quickly become familiar with all local concerns and specific circum- stances that might affect the proposed tasks or change the level of effort initially anticipated for each proposed work phase PHASE 2 PERFORMANCE EVALUATION The objective of this phase is to provide the City with factual information about the past performance of the cable operator, and the extent to which it has complied with the terms of the franchise CTIC's approach will address the informational requirements of the Cable Communications Policy Act of 1984 and develop much of the technical and operating information through on-site visits Upon receipt of this information, CTIC will undertake the evaluation of Sammons' performance and its compliance with the Franchise To the extent appropriate, CTIC will also be looking for compliance of the predecessor company, Cox Cable Communications, Inc a Engineering Review of Existing System The technical review will take into account compliance with all areas of the Franchise, including service, operational and technical performance standards, line extensions, ordinance compliance and identification of problem areas This informa- tion will be developed by CTIC's senior technical analyst through an on-site evaluation of the Denton system while he is determining the causes and extent of any technical or operating problems that may exist His report will suggest possible remedies that may be needed to assure improved reliability and acceptability of signal quality, and other system improvements where needed The on-site evaluation will include an engineering appraisal of the system design, quality of received television signals, whether off-air, microwave, or locally originated, the possible excessive deterioration of amplifiers, construction practices, maintenance procedures, and most importantly, the quality of signals as delivered to subscribers by the system The evaluation will also include a report on the merits of the installation of above ground pedestal boxes as opposed to the merits of underground amplifier boxes and how each affects cable reception and quality of service Other documentation of the system will be reviewed such as maintenance and repair procedures and maps, service orders and complaint logs Such information will assist the City in understanding problems the cable operator may be having and will provide a factual basis for any negotiations that may be necessary There is often a combination of factors both within and beyond the control of a cable operator that affect a system's performance CTIC will want representatives of the operator to partici- pate in the tests and, in addition, requests the City to have a representative view the tests The important aspect of this is to have an independent witness, especially at tests being made at specific locations Once the on-site technical evaluation has been completed, CTIC's engineer will prepare a written analysis of the results b Financial Review of Existing System CTIC's examination will determine with the cooperation of the cable company the following kinds of information PAGE 2 What accounting practices have been utilized and to what extent have they been consistently followed over the years? This will include a comparison of the company's accounting assumptions to industry wide practices regard- ing such items as rates of depreciation, capitalization and expensing of costs, determination of capital structure and amortization of indebtedness How do the operating expenditures compare with industry norms Does the system appear from this that to be efficiently run or are some of the expenditures unusually high in comparison with similar type cable systems with similar signal problems and levels of penetration? What has been the rate of return and what is the projected rate of return assuming any proposed rate increases? CTIC will be requiring from the operator detailed financial information on both revenues, and expenditures and the characteristics and demographics of the system's subscribership The operator will be requested to provide a detailed breakdown of staffing, plant, origination, and administrative expenses Specific information on corporate overhead account- ing, depreciation methods, intercompany interest charges, and management fees will be requested Itemization of previous capital expenditures will also be requested Income statements, Balance Sheets, Cash Flow and Sources and Uses of Fund State- ments will be included in CTIC's requests for information In addition, the operator will be requested to provide several years of historical data in these areas (including those of its predecessor company, Cox Cable) Using the information provided by the operator and the resources of CTIC Associates, CTIC will prepare an evaluation of the financial performance and operating efficiency of the operator to date as well as examine the impact on system pro- fitability an subscriber rates of various degrees of system enhancement This analysis will help determine whether the system is financially capable of supporting modernization programs The new Federal Act requires an accurate base of financial information in order to evaluate the cost impact of community needs on the ability of the cable operator to earn a fair rate of return on its investment and the impact of these costs upon subscriber rates 3 WORK SESSION AND DEVELOPMENT OF RENEWAL PROPOSAL Once CTIC receives the information from the cable operator in Phase 2, the technical and financial analysis will be PAGE 3 completed within forty-five (45) days, and a comprehensive written report will be presented to the City at a work session with appropriate municipal officials The purpose of this session will be to discuss CTIC's find- ings and present its recommendations to the City and to relate these findings with the community needs identification process the City will be independently undertaking This session will discuss the City's identified needs and reach preliminary decisions regarding requirements to be made of the cable company in the City's request for proposals In addition, this work session will also focus attention on a revised generic ordinance which CTIC will prepare for Council consideration The work session is intended to develop the basis for an initial draft of requirements to be included in the City's Request for Proposal to the cable company and in a revised generic regulatory ordinance CTIC Associates will work with the City in the development of this Request for Proposal and the regulatory ordinance In addition to the City's statement of needs, the RFP will include a series of forms which will request a detailed financial pro formal, full technical specifications for any system upgrade and description of planned service improvements CTIC will assist the City with documentation of its needs and desires for future cable services as needed for inclusion in the RFP document PHASE 4 EVALUATION OF PROPOSAL Once the formal renewal proposal from the company has been received by the City, CTIC Associates will prepare a detailed evaluation of the proposal This will include an examination of the extent to which the company is committing itself to improved performance (if needed), system upgrading (if needed) and the extent to which company is meeting community needs A discussion of negotiation suggestions and strategy will also be presented PHASE 5 NEGOTIATION ASSISTANCE a Informal Negotiations Option Throughout the project CTIC assumes that the City and the company would initially attempt to use the "informal negotia- tions" permitted under the new Federal Act (Section 626H) If negotiations prove to be unsatisfactory for either party, the more formal process outlined in Section 626(a) through (g) could be initiated by either the City or the company CTIC will participate as a part of the negotiating team in order that its technical capabilities and negotiation experience can be readily available CTIC anticipates in its PAGh 4 cost estimate two two-day sessions may be needed to reach agreement A public hearing is also anticipated prior to finalization of any franchise agreement, which is anticipated would require the consultant's presence in Denton b Formal Negotiation Option If the informal negotiations fail to make progress, the City or the cable company may resort to formal procedures outlined in the Cable Communications Policy Act of 1984 If formal procedures are needed, the needs identification and system performance evaluation may not need to be repeated if both activities have been well documented and the public has been afforded an opportunity to participate If formal pro- ceedings and administrative hearings are needed, the City and CTIC Associates will negotiate the type and amount of assistance needed at that time PHASE 6 PREPARATION OF FRANCHISING AGREEMENT Upon conclusion of the informal or formal negotiations, CTIC will assist the City in the development of the franchising agreement between the City and the company that will include the results of the negotiations ARTICLE II AUTHORIZATION FOR CTIC TO OBTAIN TECHNICAL ASSISTANCE It 1s hereby agreed that although the analytic and technical advice to be provided under the terms of this agreement will be performed by CTIC, or its employees, CTIC shall have the auth- ority to retain outside technical assistance to help on this project as it deems necessary ARTICLE III CITY'S RESPONSIBILITIES The City's responsibilities in connection with this project shall be as follows 1 The City shall provide full information as to the require- ments for the project 2 Ms Julia Moore, Administrative Assistant, City of Denton, shall act as the City's representative with respect to the work to be performed hereunder Such person shall have complete auth- ority to transmit instructions, receive information, and inter- pret and define the City's policies and decisions with respect to the work covered by this agreement PAGE 5 ARTICLE IV PERIOD OF SERVICE This agreement shall commence and be effective upon execution by all parties and shall terminate upon completion of all work required under the terms and conditions of this agree- ment unless otherwise terminated in the manner provided below ARTICLE V TERMINATION Either party shall have the right to terminate this agree- ment by depositing to the other parties by United States first class mail, return receipt requested, postage prepaid, thirty (30) days written notice of termination or by notice personally delivered to Harold E Horn, President, CTIC, or Lloyd V Harrell, City Manager, City of Denton A termination notice to any party shall be addressed to such party at the address set forth above, unless a different address shall have been specified as the principal place of business of such party by written notice to the other party It is further understood and agreed that should the City terminate this agreement prior to comple- tion of all work specified in terms and conditions contained herein, the City shall be liable to pay time and expenses for work actually completed as of the date of termination of this agreement The City also has the right to change the scope of work by eliminating tasks or performing certain tasks in-house The City must notify CTIC in advance of changes in order to avoid potential charges for work in progress ARTICLE VI COMPENSATION CTIC Associates' charges for service are based on an established rate for professional time plus expenses The rate for project manager is $90 00 per hour, for project staff $70 00 to $80 00 per hour for both on-site and in-house professional time Travel expenses and printing will be billed at actual costs The following is CTIC's estimate of costs for conducting the study as outlined above The overall estimate of $27,840 00 will not be exceeded unless authorized by the City in writing PHASE 1 INTRODUCTORY WORK SESSION Advance Preparation - 4 hrs @ $90 00 $ 360 00 Conducting work session in Denton - 8 hrs @ $90 00 720 00 PAGE 6 Travel Airline $350 00 Car Rental - 1 day @ $55 00 55 00 Hotel - 1 day @ $70 00 70 00 Meals - 1 day @ $30 00 30 00 Taxi to and from Airports & Misc 60 00 565 00 Sub-Total Phase 1 $1,645 00 PHASE 2 PERFO RMANCE EVALUATION Staff Preparation Requests of Ca - 8 On-site technical of system - 30 Travel of Information ble Company hrs @ $70 00 560 00 evaluation hrs @ $80 00 2,400 00 Airline $350 00 Car Rental - 3 days @ $55 00 165 00 Hotel - 3 days @ $70 00 210 00 Meals - 3 days @ $30 00 90 00 Taxi to and from Airports $ Misc 60 00 875 00 Preparation of Written Technical Analysis - 12 hrs @ $80 00 960 00 Production, typing, misc costs 350 00 b Ninancial Review of Existing System Evaluate financial information supplied by company - 40 hrs @ $80 00 3,200 00 Production, typing, misc costs 350 00 Sub-Total Phase 2 $8,695 00 PHASE 3 WORK SESSION AND DEVELOPMENT OF RENEWAL PROPOSAL Preparation of Report and Developing Recommendations (Coordi- nating findings of engineering, financial services evaluation PAGE 7 reports and community needs assessment) Report development - 16 hrs @ $90 00 production - Prepare multiple copies - 20 set s @ $10 00 Present Workshop in Denton - 8 hrs @ $90 00 Preparation of RFP and generic ordinanc e Production, Typing, Misc Travel Airline $ 350 00 Car Rental - 2 days @ $55 00 110 00 Hotel - 2 days @ $70 00 140 00 Meals - 2 days @ $30 00 60 00 Taxi to and from Airports 4 Misc 60 00 Total Phase 3 PHASE 4 EVALUATION OF PROPOSAL Examine Engineering Information - 24 hrs @ $80 00 Financial Information - 20 hrs @ $80 00 Services Information - 10 hrs @ $70 00 Check overall compliance with City's RFP $ develop negotiation suggestions and strategy - 12 hrs @ $90 00 Production of Evaluation Report Sub-Total Phase 4 $1,440 00 350 00 $ 200 00 720 00 2,160 00 500 00 720 00 $6,090 00 $1,920 00 1,600 00 700 00 1,080 00 350 00 $5,650 00 PAGE 8 PHASE 5 NEGOTIATION ASSISTANCE (a) Informal Negotiation (Est two - two-day sessions) One session - 16 hrs @ $90 00 $1,440 00 Travel 720 00 Total Est Cost/Session $2,160 00 Two Sessions $4,320 00 One public hearing (combine with other scheduled meetings) Sub-Total Phase 5 $4,320 00 OPTIONAL (b) Formal Negotiation Session (optional) Assist City in con- ducting Administrative proceedings (No estimate made at this time ) PHASE 6 PREPARATION OF FRANCHISING AGREEMENT Assist City in Developing Franchise Agreement 2 days @ $90 00/hr $1,440 00 Travel not anticipated Sub-Total Phase 6 $1,440 00 ESTIMATED PROJECT TOTAL INFORMAL NEGOTIATIONS $27,840 00 ARTICLE VII PAYMENTS CTIC will bill the City on a monthly basis for services ren- dered to date and project elements completed to the City's satis- faction Payment is due, in full, thirty (30) days from the date of each invoice Payments made within fifteen (15) days of invoice date will receive a two (2) percent discount Accounts due over sixty (60) days from invoice date will be charged at a rate of one (1) percent per month for each month or part thereof overdue to cover finance charges made to CTIC by its bank ARTICLE VIII INDEPENDENT CONSULTANT AND CONFLICTS OF INTEREST It is expressly understood by the City that it will make any and all decisions with respect to all actions resulting from PAGE 9 CTIC studies and that CTIC shall act as an independent consultant giving advice and recommendations only CTIC warrants that neither the corporation nor its officers, directors, or share- holders now have or shall acquire, receive, or be promised during the term of this agreement any financial interest in any of the matters about which CTIC shall be making recommendations ARTICLE IX ASSIGNMENT OF AGREEMENT This agreement shall not be assigned without the prior written consent of all parties hereto ARTICLE X CONFIDENTIALITY GTIC shall consider its relationship with the City to be confidential and will not release documents, reports, or work product to any person other than an authorized agent of the CIty without the express authorization of its designated representative as defined in Article III ARTICLE XI INDEMNIFICATION It is expressly understood and agreed by the parties that CTIC agrees to indemnify and hold harmless the City from any and all damages, loss or liability, cost of expenses arising out of legal action occasioned by any error, omission or negligent act of CTIC or its employees with regard to the performance of this agreement, and CTIC will, at its cost and expense, defend and protect the City against any and all such claims The City agrees to indemnify and hold harmless CTIC from any loss, cost or expense occasioned by any negligent act of the City, and its employees in the performance of this agreement ARTICLE XII MISCELLANEOUS 1 Paragraph Headings The paragraph headings contained in this agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this agreement 2 Entire Agreement The foregoing constitutes the entire agreement etween tte parties and shall not be changed, modified, amended, extended, terminated, waived, or discharged except by an instrument in writing signed by the parties hereto 3 Severabilit If any provision in this agreement is finally eclare inconsistent with any ordinance, statute, or legal decision, by any court having jurisdiction over this agree- ment, such a decision shall apply only to that provision of this agreement, and CTIC shall have the option of either terminating PAGE 10 this agreement pursuant to Article V or performing the agreement under Article I CTIC must notify the City of its decision within ten (10) days from the date that the judicial decision becomes final 4 Counterparts This agreement may be signed in any number of counterparts with the same effect as if the signatures to each such counterparts were upon the same instrument IN WITNESS WHEREOF, the parties have caused this agreement to be executed on the day and year first above written CITY OF DENTON, TEXAS A~ RAY STE E , A 0 CTIC ASSOCIATES,` INC HAROLD E HORN, PRESIDENT ATTEST L ~~W J QNI I FEITWALTERS, DEPUTY C SEC ETARY COF ENTON, TEXAS ATTEST 1 e1~ vVje a Ko VlG F ~I~l7cf i~~u j APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY CITY OF DENTON, TEXAS BY i PAGE 11