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CC - 01-29-85 - Adjourned MeetingAPPROV Lv £bIE ° • • AD CITY 01., ROB DA'fl: MINUTES OF THE ADJOURNED MEETING ROSEMEAD CITY COUNCIL JANUARY 29, 1985 AT 8:00 P. M. The Adjourned meeting of the Rosemead City Council was called to order by Mayor Taylor at 8:10 p. m., in the Council Chambers of City Hall, 8838 E. Valley Boulevard, Rosemead, California. The Pledge to the Flag was led.by Councilman Cleveland. The Invocation was delivered by Councilman Bruesch. ROLL CALL OF OFFICERS: Present: Councilmen Bruesch, Cleveland, Tury and Mayor Taylor Absent: Councilman Imperial Mayor Taylor opened the Public Hearing and inquired if anyone in the audience would care to speak regarding the Cable Television proposals. Mayor Taylor stated that the first presentation would be by Falcon Cable Television. Craig Ehrlich, 199 South Los Robles, Pasadena, stated that it has been some years that Falcon Cable has been anxiously await- ing the processes in the City of Rosemead, and hopeful that Falcon may serve Rosemead with a Cable System. Mr. Ehrlich presented a brief overview of their proposal by video which showed a variety of things that are available on Falcon, Cable Television. Councilman Imperial entered the Council Chambers at 8:20 p.m. Craig Ehrlich then presented another tape which was more specific about the company itself and its capabilities, and the sources of the company's strengths. Mr. Ehrlich introduced some of the people present at the meeting from Falcon Communications. He introduced Tom LaFourcaide,Sr. Vice President, Alan Maglade, Director of Programming, Ernie Tarlen, General Manager of Mission Region, Frank Maldanado, Director of Engineering, Bill Mashburn, Corporate Director of Construction, Bob Levy, Director.of Govern- ment Relations, Lib Eaton, Business Manager of Mission Region, and Terry Cady, Chief Engineer of Mission Region, and stated that these are some of the people who will be working at-the Mission Region of which Rosemead would be apart. Ernie Tarlen, General Manager of Mission Region, stated that he has been in the cable industry for the past 15 years and twelve of those years he spent with Group W so he is aware of what they are capable of. He felt that one of the great things about Falcon was their capability to make decisions on a very local basis, and felt that Rosemead would benefit from the local ownership and the local response level. He added that within the Mission Region there are about 80 employees; however, there are specific employees assigned to specific cities, but there is a backup of the other employees if an emergency should arise. He stated that there were three studios to serve the immediate area, Alhambra, Temple City, and Monterey Park, and are available to the citizens of Rosemead. Alan Maglade, Director of Programming, commented that Falcon Cable is interviewing Andrew Viscovich at the Alhambra studio right now which is a public affairs show called"Out in Front'.. He added that recently he completed working on a show with Hugh Foutz, City Treasurer, which was called voices of Chappala. He.stated that this shows that Falcon is already actively doing community program- ming in this area•and with people in Rosemead, and he extended an invitation for anyone to come to Alhambra, Temple City or Monterey Park to see how the productions are produced. Adj. C/M 1-29-85 Page #1 Craig Ehrlich continued with the presentation and spoke very specifically about the proposal which they had presented to Rosemead. He stated that this'proposal.has a design system that provides 550 MHZ which equates to 79 dif'ferent.channels, and uses Fiber optics, converter boxes and are the most advanced in the industry, and parental control devices in all boxes at no charge. He stated that the cost of this system would be be- tween the cost of 3.4 and 3.8 million dollars, and up to $600,000 have been committed of capital contributions for local programming during a 10 year period, and 1.1 million for programming expenses. He projected 1.2 million for franchise fees for the City in that 10 year period. He commented on the construction schedule and the fact that Falcon has an historic agreement with Pacific Bell. This agreement allows Falcon to do their own, make ready work. He stated that in their proposal Falcon would provide free installation and basic service to all public institutions and non_profit institutions, such as schools and government offices. He added that there is a committment to the community not to show X-rated programing and that has been a corporate policy of Falcon since its inception in 1975 and still continues. He stated that there are 5 character generators proposed to the City, and also a $10,000 grant for computer soft-ware for the City's use. He stated that the track record of Falcon should be considered when making a decision and he felt that Falcon had an excellent track record and they have dedicated themselves to Southern California and specifically to the San Gabriel Valley, and invited the staff to check with the various Cities who are being served by Falcon, and welcomed any questions that the Council might have,.now or after Group W makes its presentation. Mayor Taylor stated that the next proposal would be presented by Group W Cable Television. Bill Rosendahl, Director of Corporate Affairs for Group W Cable, stated that he was pleased to be able to make this presenta- tion to the City of Rosemead, and with the hope that Group W would be fortunate enough to be granted the Franchise. He stated that this decision would.be one that would last at least 15 years, and if that company serves the community right,it will be a one time decision so it is a.very serious decision that is to be made. He stated that there are three things to look at before making this decision. One is the proposal or the offer, in other words what does this cable company say they are going to provide for your City? The second thing you should look for is can the company afford to do what they say they are going to do, can.they construct it? The third thing to look for is the management team, the people. He in- troduced Maureen Whalen, Manager of Corporate Affairs and stated that she wrote the proposal which was submitted to Rosemead. Maureen Whalen spoke about the program services and rates which would be offered on the system once it is constructed and turned on and customers are receiving the signal. She stated that there would be 17 off airs, 12.satellite services, 9 dedicated access channels, 8 premium services, 2 automated services and 1 local origination channel, and 36 FM radio channels which will be carried on cable. She also spoke about the rate structure which is based on how much it costs to build and operate the system and depends on the customer who will ultimately have to pay for it. She stated that the proposal has proposed a standard installation charge of $19.95, $9.95 monthly basic service charge and no converter rental, $11.95 a month for premium service and $5.95 for an additional outlet, and a 157 discount for senior and disabled persons for the life of the franchise. For 90 days after the service is offered in the area, free installation will be available for the customer. There is free remote control and free guide has been listed in the bid. Mike MacDonald, District Manager, spoke about the system de- sign, and stated that he was proud that the E1 Monte Headend will be used for serving Rosemead, a 450 MHZ Cable plant will be used and is capable of activating 60 channels; however, if the need arises are capable of adding a second.cable from E1 Monte which could offer as much as 120 channels. The converters are addressable, and remote control operation is available. Adj. C/M 1-29-85 Page H2 .0 0 Tony Jones, Director of Project Management, stated that the his office is based out of Tustin, California and there are a group of highly qualified personnel along with almost 100 other people who run the construction department in Southern California. He commented that they have an excellent rapport with the utility companies. He stated that Group W does its own system design in- house and that work is not contracted out. He feels that the pro- duct is better and changes can be made in the field when necessary. He stated that there is a Contract administrator on staff and all contract administration problems are handled as they come up, and there is engineering support with what is called staging. Which means every bit of eletronics is checked out before it is.placed in the plant. An excellent way for quality control and there is no subscriber irritation because all the electronics has been tested before going in. He stated that there was warehousing in both L. A. and Orange Counties, and have over $5,000,000 in inventory that can be pulled out at any time. He added that a lot of money has already been spent by Group W to estimate the plant mileage, and added that street mileage does not correspond to plant mileage. He stated that they had come up with 93 plant miles, and he added that there is a two month advantage over the competitor since Group W had spent the time to get the strand maps put together. Pacific Telephone has informed them that if Group W should.be awarded the Franchise they,too, would be able to do their own make-ready. This would make the completion date under the 12 month schedule. The construction specification would be G095 which is the State's specifications and the utility company specifications and the local municipalities underground specifications at G028. He stated that they have a plant maintenance crew which keeps constant maintenance on the plant. Floyd Medearis, Regional Finance Manager, stated that Westing- house has a strong committment to Cable, since they purchased Tele- prompter in 1981 and since 1982, Westinghouse increased capital spending $200,000,000 a year to provide for Cable and including the acquisition price the total cable investment would be approximately $1.5 billion dollars at the end of 1985. He stated Group W has invested $14,000,000 in the E1 Monte system in 1984 and in 1985 it has been budgeted and committed an additional $1,300,000 and in Rosemead the capital to build would be $4,100,000 which would be a total of $19,500,000 invested by Group W.should they be awarded the Rosemead franchise. Jim Bequette, Coastal District Manager, stated that for 1985 he has budgeted $45,000,000 capital dollars and $7,500,000 is ear- marked for line extensions which this is considered because it is coming out of an existing system. He stated that Group W has 1400 employees in the Los Angeles area, and he has 8 studios under his. control and Rosemead can be assured of studio availability and in addition.to these studios, there are 11 vans available. He stated it.should.not take more than 3 days after an order has been placed to connect a subscriber. He stated that he would be available if there were any questions about management structure or management philosophies. Louis Anlyan, General Manager of E1 Monte System, stated that the team in El Monte includes 56 staff people, and introduced many of them who were in the audience. She stated that Group W has offered $50,000 worth of free drops, such as.public institu- tions like schools, city hall, library or wherever. In addition, $100,000 has been allocated for equipment specifically for Rosemead for those who want to do their own programing. And, another $25,000 a year for additional operating money for the City of Rosemead. She stated that everyone is invited at any time to come to the E1 Monte studio. She commented that the studio has four cameras and a four camera van, and a_FM radio studio. Access workshops work year-round. She stated that every department in the local origination department works together and they are a team, and all are looking forward to serving the City of Rosemead. Adj.C/M 1-29-85 Page #3 • 0 Mayor Taylor stated that anyone who wants to direct questions to the Cable Companies may do so. Councilman Tury inquired about the no charge for the converters, and inquired if that was standard in all the Group W franchises. Jim Bequette stated that in the fourteen.franchises that he has he could not think of any that pay a separate:converter charge. Mayor Taylor inquired what the approximate cost of a converter is. Mr. Bequette stated it was $135. Mayor Taylor stated that there was a $50 deposit stated in the proposal. Ms. Anlyan stated that was optional, and in E1 Monte there have been no deposits charged. Mayor Taylor stated that there was a $30 deposit in the Falconproposal and inquired if that was optional. Craig Ehrlich of Falcon, stated that in most part they charge a deposit because they feel it is prudent to do that; however, at times there is a promotional offer that a deposit is not required. This means that the charge would not be over. $30, and it could be less. Mayor Taylor stated that he was not opposed to the sub- scriber being charged; however, he felt that the requirement should be consistent and not flexible. Bill Rosendahl stated that they are not charging in E1 Monte so they would not be charging a deposit in Rosemead. Mayor Taylor stated that he is looking strictly for uniformity within the City of Rosemead. Councilman Tury commented that the studios that Rosemead would use would be El-Monte, Sierra Madre and South Gate for a local pro- gram. Bill Rosendahl stated that.E1 Monte would make the most logical studio because of distance; however, there are a total of over $9,000,000 worth of local origination and local access in the S/W region. In other words there would be 40% access from E1 Monte, Sierra Madre and South Gate and 100% overall access. Ms. Anlyan stated that E1 Monte would really be the coordinator for Rosemead. Councilman.Bruesch commented that he was worried about tax investment credits and depreciation to reduce profitability, and if there is a change in the tax structure in the U. S. that doesn't allow so much investment tax credit or depreciation value, would that alter or effect this franchise. Both companies stated that a change in the tax structure would not affect the franchise agreement with the City as these companies do not base their financial decisions on ITC's and de- preciation. Councilman Tury inquired of each company if they received the franchise next month when would they start hooking up.' Bill Rosendahl stated that they would be happy to come in the next day and the first subscriber would be hooked up in the 35th week. Craig,Ehrlich stated that they estimate that it would take three months from the conclusion of the negotiations, and because they have a signed agreement with Pacific Bell to do their own make ready, he feels that they could start faster than anyone else. Adj. C/M 1-29-85 Page #4 Bill Rosendahl stated that their proposal stated that they could do it in 12 months and Falcon had stated 18 months. Councilman Imperial inquired if Falcon could build a Studio in Rosemead and a servicing agency here. Tom La.Fourcaid stated that he had not looked at that possi- bility and would be happy to do that; however, what..he could...guarantee would be that Falcon could fullfill every need that the City of Rosemead would have. Councilman Imperial stated that Group W had a 15% discount for seniors and handicapped in their proposal and questioned if Falcon had that type of proposal also possibly for other communities. He added that he had questions that needed answers to prior to the Council making a decision as to whom they will award a Franchise. Mayor Taylor inquired about the X-Rated policy, and inquired how-Falcon would monitor it. Mr. Ehrlich stated that he believed that neither Falcon nor Group W have X-Rated programing or even in the industry. He stated that there was some programing that is non-rated that is on certain services, but they do not edit any of the premium channels nor do any other cable operators. Mayor Taylor stated what could be done to stop an X-Rated showing. Craig Ehrlich stated there is a corporate policy that no X-Rated material will be shown over Falcon communications systems, and any of the services that they sign with have the same policy. Mr. Rosendahl stated that Group W Cable, part of Westinghouse, has its own policy of standards, and commented that there is a pay channel out there that they refuse to carry on their systems and that is Playboy Channel. He stated that if HBO has any sexual ex- plicit activity on it, you can pull the 'plug or change the channel, and you can give the subscriber a lock box. Councilman Bruesch inquired how many of the 56 employees at the E1 Monte Studio would be dedicated to work for Rosemead. Mr. Rosendahl stated that the E1 Monte personnel will take this additional responsibility; however, if additional personnel is needed to man the local access, to handle customer service and to go beyond the construction phase, people will be added as the need arises. Louise Anlyan stated that there would be a completely new office in Rosemead for customer service, and there will be another sales team. Councilman Imperial questioned if that meant a new studio. Ms. Anlyan stated that it included only a customer service office, and a construction office. Councilman Bruesch inquired about the cost of the second cable and if it would add to the consumers cost. Mr. Rosendahl.stated that 40-47 channels can be filled from one satellite; however, if there is as time goes by, more channels of programing that come about and economically viable for them as a business, there is a system designed in E1 Monte to increase the channel capacity. His answer was that the 60 channels are more than enough. Mr. Medearis stated that if additional channels and they are there is an additional charge. the x number of subscribers want additional pay programing then Councilman Bruesch inquired of.both.companies what their posi tion.would be as-far-as support of.cornmunity access groups. Adi.C/M 1-29-85 Page #5 0 Alan Maglade stated that there is a very successful Cable Advisory Board in Norwalk who specifically develop'plans for programing and Falcon has worked closely with them. Councilman Bruesch inquired if this Advisory Board was also a sounding board for consumer complaints. Mr. Maglade stated that they have taken that role at times. Ms. Anlyan stated that her.example is E1 Monte, and she com- mented that the City Council is the Cable Access Corporation, and they have appointed people as their advisors. Group W staff works with the Advisory Board and also attends the Cable action corpora- tion meetings. Their main function is to spend the money that has been allotted, and in the City of Rosemead it would be the $25,000. per year that they would be allotting, and they would determine the policies, but they do not deal with customer complaints, only the programing portion of it, how the money is used and the equip- ment is used which has been allotted to Rosemead. She stated that she was the sounding board for customer complaints and that she meets with the City Manager and City staff. Councilman Tury inquired about the estimate that Falcon proposed is considerably less than Group W and inquired if it would be a problem if their estimate was wrong. Mr. Ehrlich stated that a letter was submitted on January 22, 1985 at the request of City staff regarding the specific ques- tion of.93 miles that Group W had submitted and the 75 that Falcon submitted, and which stated=if_it is-:.actually 90.,miles the cost would then be 3.5 million dollars. Councilman Tury requested that Group W submit some documen- tation of their history and having no charge for the converter. Mr. Rosendahl stated that would be done. Councilman Imperial stated that he had not received an answer to his questions so he would like a memorandum from them. be. Councilman Bruesch inquired what the expected profit would Robert Kress, City Attorney, stated that he felt that infor- mation is available in the two proposals. Mayor Taylor inquired about the rate increase each year. Mr. Ehrlich stated that he did not feel that rates could be raised continually and expect people to buy the product, and he did not feel that there would be rate increases every year or every two years. Mr. Rosendahl stated that it is sensitive to the market place and it is discretionary money that people have, and he stated that Group W would like as many subscribers as they can, and he feels with reasonable rates the volume can be increased. Robert Kress, City Attorney, stated that whichever company is selected they would be tied to a rate freeze until the whole system is built because there should not be some people paying one rate and others paying another. The other point he made was that they are not in complete control of the rates-as the cost to them for programing fluctuates and this would mean increases in cost to them. Mayor Taylor commented that the statement was made that the regional office of Group W is in Encino, and he inquired where the service or repair yard would be. Mr. Rosendahl stated that there was a-complete service department in E1 Monte. Mayor Taylor inquired where Falcon's service department would be. Adj.C/M 1-29-85 Page #6 Mr. Ehrlich stated that Falcon had a service department in Alhambra, Temple City and a very large construction depart- ment in El Monte. Mayor Taylor stated that Falcon had a very good break-out as far as training and the workshop sessions as far as community people who would be interested in using it. He felt that there wasn't much regarding that in the Group W proposal. He requested that information from Group W, such as when the programs.would be presented and how often they would be available to whomever wished to use it. Councilman Bruesch inquired why one proposal states 16 and the other 17 over air channels. Mr. Ehrlich stated that Falcon did not carry KVCR which is a PBS station from Riverside, and it is his understanding that is not a must-carry. Group W is entitled to carry that, but it is not a must-carry. Councilman Bruesch inquired if the proposals in front of the FCC come to pass where low powered UHF channels are allowed, will you be required to carry all that come on.even if they are low range. Mr. Ehrlich stated that if the FCC tells us to do something I am sure both companies will do it. Mayor Taylor thanked Group W & Falcon for the presentations and there will be more information forthcoming, and the Public Hearing will be continued to the next regular meeting of the City Council on February 12, 1985 at 8:00 p. m. Respectfully submitted: Cit 'Clerk Adj.C/M 1-29-85 Page H7