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HomeMy Public PortalAbout1985_05_01SPEC MINUTES OF SPECIAL MEETING OF LEESBURG TOWN COUNCIL RE TRANSFER OF CABLEVISION 393 SYSTEM TO PRIME CABLE, MAY 1, 1985. A special meeting of the Leesburg Town Council was held in the Council Chambers, 10 Loudoun Street, S.W. , Leesburg, Virginia on May 1, 1985 at 12:00 Noon, pursuant to Waiver of Notice signed by all members of Council. Present were Mayor Robert E. Sevila, Councilmembers Arl Curry, Marylou Hill, Brian T. Kelley, John W. Tolbert, Jr:. and Charles J. Williams; also Town Manager Jeffrey H. Minor, Assistant to Manager Stephen F. Owen, Director of Finance Paul E. York and Town Attorney George M. Martin. Absent from the meeting was Councilmember Charles A. Bos. Mayor Sevila called the meeting to order, stating that the purpose of this meeting is to consider the transfer of Catoctin Cable Communications, Inc. to Prime Cable of Maryland Limited Partnership. 85-62 - RESOLUTION - APPROVING CONSENT TO TRANSFER THE CATOCTIN CABLE COMMUNICATIONS, INC. CATV FRANCHISE TO PRIME CABLE OF MARYLAND LIMITED PARTNERSHIP. On motion of Mrs. Hill, seconded by Mr. Tolbert, the following resolution was proposed: WHEREAS, by ordinance No. 80-0-15 of the Town of Leesburg, Mayor and Council granted to Catoctin Cable Communications, Inc. a CATV Franchise on October 14, 1980; and WHEREAS, the Town of Leesburg entered into a Franchise Agreement with Catoctin Cable Communications, Inc. on October 14, 1980, evidencing the grant of the Franchise; and WHEREAS, Catoctin Cable Communications, Inc. has informed the Council that it has entered into an agreement pursuant to which it would transfer its cable television franchise in Leesburg, Virginia to Prime Cable of Maryland Lim - ited Partnership, a Delaware Limited Partnership; and WHEREAS, in accordance with Article III of the Town's aforesaid cable televi- sion ordinance, Catoctin Cable Communications, Inc. has requested the Council to consider its proposed transfer and adopt a resolution as required by said Article III, Section 5. 1-8 thereof to authorize the transfer of the Leesburg Cable Television Franchise from Catoctin Cable Communications, Inc. to Prime Cable of Maryland Limited Partnership; and WHEREAS, Prime Cable of Maryland Limited Partnership has filed the required ap- plication for consent to transfer of the Town of Leesburg's CATV franchise agreement, paid the required application fee and has provided proof that it possesses the requisite qualifications to construct, operate and maintain the CATV system in the Town of Leesburg; and WHEREAS, the Town of Leesburg Cable Television Advisory Commission has reviewed the application for consent to transfer of the franchise to Prime Cable of Maryland Limited Partnership and has recommended that the Council consent to the transfer. THEREFORE, RESOLVED by the Council of the Town of Leesburg in Virginia as fol- lows: SECTION I. Catoctin Cable Communications, Inc. is authorized to transfer its cable television franchise with the Town of Leesburg to Prime Cable of Mary- land Limited Partnership. SECTION II. This consent is granted under the conditions that Prime Cable of Maryland Limited Partnership agrees to comply with all the provisions of the aforesaid franchise agreement and the Cable Television Ordinance of the Town of Leesburg. SECTION III. Catoctin Cable Communications, Inc. and Storer Communications, Inc. are hereby released from any and all of their obligations to the Town of Leesburg under the aforesaid Cable Communication franchise from and after the date of the transfer of the franchise to Prime Cable of Maryland Limited Partnership. SECTION IV. The town manager is directed to inform Catoctin Cable Communica- tions, Inc. and Prime Cable of Maryland Limited Partnership of this action in writing by furnishing them with executed copies of thjis resolution authoriz- ing the transfer of the Cable Television Franchise for the Town of Leesburg to Prime Cable of Maryland Limited Partnership. 394 MINUTES OF MAY 1, 1985 SPECIAL MEETING. SECTION V. The transfer to Prime Cable of Maryland Limited Partnership is effective upon the express condition that all documents relating to the sale and transfer of the franchise are approved as to legal form by the Town At- torney, and the Town Manager certifies to Council that Prime Cable of Mary- land Limited Partnership has complied with all aspects of its application, including funding of the Limited Partnership. SECTION VI. This authorization for the transfer shall remain in effect for thirty days and, if the transfer is not consummated within said period, this authorization is void. Mr. Tolbert said he has received several calls asking if there will be any in- crease in rates. Mayor Sevila understood that there would be none until December of 1986 when the town' s power to regulate rates is taken over by the FCC. Mr. Winfield Kelly said these are projected through 1995. Mayor Sevila asked what obligations there are on the part of Storer and Catoctin Communications in Sec- tion III? Mr. Minor replied that they are set out in the regulatory ordinance in the franchise agreement. These are all lengthy documents and spell out the obligations of the franchise holders. One is to restore the disturbed areas for installation, etc. - he is confident that Prime will have the legal obligation and hopes they will perform. Mayor Sevila asked why it would not be in the town's best interest to just delete Section III and leave it to the landlord, who consents to an assignment of the leasehold to a new tenant, but he has the benefit of having his old tenant and the new tenant on the hook for any liabilities or covenants between the original tenant and the landlord? The town would have the added comfort of having an additional party to look to in case of default. Mr. Kelly would like the language to stay in even though they will look to Prime and they have agreed to do this. They very carefully looked at this and accepted it in the agreement with Storer - the agreement with Prime is from this date forward. Mr. Minor said the town can' t release the new franchise holder from any of the obligations, require- ments and restrictions of the original franchisee without going through public hear- ings, etc. of the original franchise process. The town wants to make it very clear to the public that, if the Council adopts this resolution, they are not curtailing, limiting or restricting any of the requirements Storer has with respect to servicing the system. Ten years from now they won' t look to Storer, they will have to look to Prime. Mayor Sevila felt it wise to keep Storer and Catoctin Cable in the agree- ment - especially while Prime is just forming. Mr. Ottingeralvised that Prime Cable has cablevision systems in eight different states - one being the City of Atlanta. The ordinance that was drafted after extensive public hearings in 1980 provides for all the protections for the Town of Leesburg - the mere assignment to Prime Cable means that Prime steps into the shoes of Storer - they accept all the responsibili- ties and liabilities - they will be liable for the system. He does not feel the town needs a guarantor nor a bond - you are asking Storer to make a guarantee. This is not what they are proposing to do - the contract is a contract for sale of all the assets. They feel Prime Cable can stand on its own - they are an experienced outfit. They have given the documentation to prove that. Lengthy discussion continued be- tween Mr. Ottinger and Mayor Sevila, with Mayor Sevila feeling the town should have the added protection of having Storer remain liable, as well as Prime - this gives the town an extra layer of protection in case of default . Section 5. 1-8(b) of the franchise agreement states that the town can attach any reasonable conditions it wants - he believes this to be a reasonable condition. Mr. Ottinger felt this may void the agreement with Prime. Mr. Winfield Kelly, of Prime Cable said this language is similar to what has been through the labyrinth of every jurisdiction aside from Leesburg until now - they are stepping into the responsibility they have as Prime Limited Partnership with an equity contribution of around $50,00Q000They have looked very carefully at the town and any improvements or work that needs to be done, as well as improvements they are going to make when they take over the system. Storer is requiring in the resolution that they reach a point in time when they are no longer liable for the system. Prime has gone through the process to be sure that when they made the statement, as set out in this resolution, that it will accept every liability - it did that after careful scrutiny and due diligence here in town to be sure they are not making a mistake. They will then, at the time of settle- ment, resolve any consideration with Storer in terms of dollars and cents. They would then step forward and be responsible for the length of the term of the fran- chise for any and all component parts of it. They are doing this virtually in every jurisdiction. Mayor Sevila still did not agree. Mr. Minor said there are performance guarantees - there are remedies the town has if Storer or anyone else doesn' t perform. We could simply readvertise that fran- chise, or you could require a performance bond for a year or two or whatever. Basi- cally, you are dealing with the liabilities that you have (will Prime extend :cable MINUTES OF MAY 1, 1985 SPECIAL MEETING. into the new annexation areas - will they extend it to the newly developed sub- 395 divisions - will they keep the system in good repair - will they restore dis- turbed areas, will they furnish the channels indicated and that are a part of the franchise? You have a $2,000,000 system in the ground. Mayor Sevila urged Council to consider the wisdom of keeping Storer on as a known entity on the contingent liability sheet - at least until Prime is in place and functioning under the terms of the franchise. The town will have had the ad- ditional assurance, in accepting a complete stranger, that it is accepting in its place a firm that we have dealt with for four years and that it is a substantial national corporation. Mr. Kelly said if it is deleted, there will be an open ended liability on the Storer books for 11 years - this is difficult for them. The town has to do what it deems appropriate to protect its residents and the cable system. They feel the guarantees are here. He asked them to consider either amending the language or leave it in so they can get on with their closing. They could provide a per- formance bond for a couple of years. Discussion continued, with a decision being reached to approve a bond in the amount of $100,000 for five years. A new paragraph to be added at the end of the proposed resolution would read as follows: SECTION VII. Prime Cable of Maryland Limited Partnership shall furnish a cor- porate surety bond in the penal sum of $100,000 to the Town of Leesburg in a form approved by the Town Attorney to guarantee the performance of Prime Cable Wof Maryland Limited Partnership with all of the terms of the aforementioned CO franchise agreement dated October 14, 1980, which said bond shall be in force Q for a period of five years from the effective date of transfer. The resolution, as amended above, was unanimously adopted: Aye: Councilmembers Curry, Hill, Kelley, Tolbert , Williams and Mayor Sevila. Nay: None. On motion of Mr. Kelly, duly seconded, the meeting was adjourned. Mayor 9 Clerk of the ounci