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