Exh 8EAGENDA ITEM #81;
STrPTEMBER 12, 2UU5
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Proposed Federal Legislation that would preempt cities from
franchising companies using public right-of--way for providing
video services, including cable TV
SUBMITTED BY: Jim Hanson, City Mana ei
' " DATE: September 6, 2005
BACKGROUND: A Bill has been submitted for consideration at the United States Senate
entitled the "Broadband Investment and Consumer Choice Act". The
legislation would immediately eliminate all existing local franchise
agreements for companies providing video services. It would also a
substantially impact the revenue received by Atlantic Beach. While cities
would be allowed to receive compensation for use of the right-of--way in
an amount up to 5% of gross receipts the current limit) they would be
limited to what could be justified as being "reasonable" management fees
for the use of the right-of--way. Under current legislation for this or any
other franchise, cities are not required to calculate actual costs in the
management of the right-of=way. Currently the City of Atlantic Beach
' receives over $550,000 a year from the consolidated communications tax,
.. which includes revenues not only from the cable TV company, but also
from Bellsouth and other telecommunication carriers. When Atlantic
Beach last received a franchise fee directly from the cable company, it was
in 2001 for $65,225.
The Florda League of Cities in August adopted a resolution opposing any
federal legislation that preempts cities from requiring local franchise
agreements. Leibowitz and Associates, past cable attorneys representing
both Atlantic Beach and Jacksonville, has sent out a proposed resolution
for cities and counties to adopt opposing the new federal legislation.
BUDGET: Atlantic Beach has not prepared any estimate of the actual cost for
management of the right-of-tivay so it is impossible to estimate how much
of the existing revenues from cable TV would be eliminated if this act
were adopted. However, an estimate of the management cost would
probably be relatively small compared to the present 5% franchise fee.
RECOMMENDATION: The Mayor and Commission should determine whether it is appropriate to
prepare a resolution opposing the federal legislation.
ATTACHMENTS: 1) Memo from Leibowitz and Associates dated August 17, 2005
AGRNDA ITEM #8E
SEPTE&IBER 12, 2005
2) Resolution from Florida League of Cities considered at the annual
convention in Orlando in August
3) Article from Governmental Finance Officers of America (GFOA)
newsletter dated August 12, 2005
p~ nP 1 of 1
AGENDA ITEM #SE
SEPTEIVIBER 12, 2005
Hanson, Jim
From: Ila L. Feld [IFeld@broadlaw.com]
Sent: Thursday, August 18, 2005 12:14 PM
Subject: Federal Legislation
Attachments: Resolution.doc
LEIBOWITZ & ASSOCIATES, P.A.
' ' JOSEPH A. BELISLE SUITE 1450
530-1322
ILA L. FELD SUNTRUST INTERNATIONAL CENTER
530-9417
THOMAS H. WILLIAMS ONE SOUTHEAST THIRD AVENUE
Firm~broadlaw.com
MATTHEW L. LEIBOWITZ ~ M1AItifI, FLORIDA 33131-1715
' ELENI C. PANTARIDIS
MEMORANDUM
To: All Clients and Interested Parties
Date: August 17, 2005
Re: Federal Legislation
TELEPHONE (305)
TELECOPIER (305)
E-MAIL
As you may be aware, a bill entitled the "Broadband Investment and Consumer Choice Act (S.
1504) has been introduced by Senators John Ensign and John McCain. As detailed in the attached
Resolution, passage of the bill into law would have a significant adverse impact on local governments.
We would urge you to oppose the bill and recommend that your governing body adopt a
resolution, such as that attached hereto.
Please do not hesitate to contact Ila Feld, Eleni Pantaridis or Matt Leibowitz for more
information at 305-530-1322, by email at either IFeldna,broadlaw com or EPantaridis(cr)broadlaw com, or
by mail at One SE 3rd Avenue, Suite 1450, Miami, Florida, 33177. For more information about the Law
Firm of Leibowitz & Associates, visit our website at www.fltelecomlaw com.
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DESIGNATED RECIPIENTS NAMED ABOVE. THIS MESSAGE MAY BEAN ATTORNEY-CLIENT COMMUNICATION AND AS SUCH IS
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DISCARD THE ORIGINAL MESSAGE. THANK YOU
8/18/2005
AGENDA ITEM #8E
SEPTEMBER 12, 2005
RESOLUTION NO.
' A RESOLUTION OF THE CITY/COUNTY COUNCIL/COMMISSION OF THE
CITYJCOUNTY OF ,EXPRESSING OPPOSITION TO
SENATE BILL 1504 KNOWN AS THE "BROADBAND INVESTMENT AND
CONSUMER CHOICE ACT" (S. 1504), URGING CONGRESSIONAL
" REPRESENTATIVES TO REFRAIN FROM ANY FORM OF SUPPORT OR CO-
SPONSORSHIP OF S. 1504 AND TO VOTE IN OPPOSITION TO S. '1504, AND
DIRECTING THAT THIS RESOLUTION BE FORWARDED TO THE (Insert
State Name Here) CONGRESSIONAL DELEGATION, OTHER MEMBERS OF
CONGRESS AS DEEMED APPROPRIATE, AND THE PRESIDENT OF THE
UNITED STATES; AND PROVIDING AN EFFECTIVE. DATE.
. WHEREAS, on August 2, 2005, Senators John Ensign and John McCain
introduced the Broadband Investment and Consumer Choice Act of 2005 {S.
1504); and
WHEREAS, the City/County CouncillCommission of the ,
opposes the passage of S. 1504 because:
• The bill would preempt all local authority over the provision of cable and
" " video services within the community, including the ability of the local
government to provide appropriate oversight to entities conducting
business within their jurisdiction and in the local public rights-of-way;
• The City/County's negotiated contract with its cable operator would be
abrogated under the terms of the bill;
• The bill would substitute a new compensation methodology lowering the
existing franchise fee and replacing it with a fee, or in the State of Florida,
' the cable component of the Communications Services Tax, which must be
justified as being "reasonable" in the eyes of the user, limited to
management costs (which denies the rights of the property owner to
obtain fair and reasonable compensation for the use of public property for
• private gain), and not in excess of 5%;
" • These requirements and restrictions would result in the creation of a
. subsidy to the cable and telecommunications industries; at the expense of
the CitylCounty's taxpayers;
. The bill would substantially reduce the amount of capacity which may be
required by local governments to meet their public, educational and
government ("PEG") access needs, while stripping the City/County of the
• ability to obtain capital support for the use of PEG capacity -part of the
bargain contained within the City/County's negotiated franchise agreement
" -with the result that the community's cable-related needs and interests
would not be met;
AGENDA ITEM #8E
SEPTEMBER 12, 200
• The bill would deprive local citizens of the ability to address local issues
locally, by removing to the state all customer service issues, and further by
denying consumers any form of recourse for any actions of a
communications provider;
• The bill would eliminate any build-out requirements for any video service
provider, thereby allowing providers to discriminate based on the wealth of
the local neighborhoods they choose to serve;
• The bill would preempt any state or local law that is not generally
applicable to all businesses, thereby potentially preempting any law
applicable to only certain classes of businesses, such as utilities and
rights-of-way users (such as requiring undergrounding of facilities and
ensuring electric code compliance);
• The bill would prohibit the City/County from imposing any fee for issuance
of rights-of--way construction permits yet would require the City/County to
act on requests for permits in a timely manner as determined by the FCC,
thereby insinuating inappropriate federal government involvement in the
basic day-to-day management of local rights-of-way;
• The bill would prohibit municipalities and their utilities from providing
communications services without giving a right of first refusal to private
industry, and would then grant industry unfettered access to ail municipal
facilities and financing in the event private industry chooses to provide
services;
• The bill would deprive the City/County of the authority to establish and
. maintain government owned and operated networks, known as
institutional networks, that may be utilized by first responders and other
government officials in the day-to-day management of the City/County's
business;
• The bill would permit broadened preemption of local zoning decisions
relating to the placement of cell towers, depriving the City/County of the
authority to ensure that such towers are safely and appropriately located
in areas to provide the greatest degree of services without unnecessarily
posing a hazard to the public health, safety and welfare; and
• The bill would eliminate the protection the City/County currently has
against liability for damages and attorneys fees in lawsuits brought by
communication service providers against local governments, a type of
litigation that the bill would seem to invite service providers to bring.
AGENDA ITEM #8E
SEPTEMBER 12, 2005
WHEREAS, for these reasons, the CitylCounty Council/Commission finds
that it should appose S. 1504 and urges the Congressional Delegation
and other members of Congress to oppose S. 1504; and
WHEREAS, the CitylCounty Council/Commission finds that this
Resolution should be forwarded to the Congressional Delegation,
other members of Congress as~deemed appropriate, and to the President of the
United States.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY/COUNTY
COUNC{LICOMMISSION OF THE CITY/COUNTY OF ,
THAT:
Section I. For the reasons stated above, the CitylCounty
Council/Commission of the CitylCounty of ,declares its
` ~ opposition to S. 1504 and urges the Congressional Delegation and all
other members of Congress to oppose S. 1504.
Section II. The CitylCounty CouncillCommission hereby directs that this
Resolution be forwarded immediately to the Congressional Delegation,
other members of Congress as deemed appropriate, and to the President of the
United States.
Section III. This Resolution shall become effective immediately upon its
passage.
SIGNED this the day of , 2005.
,MAYOR
ATTEST:
CITYICOUNTY SECRETARY
APPROVED AS TO FORM:
CITY/COUNTY ATTORNEY
AGENDA ITEM #8E
SEPTEMBER 12, 2005
2005-09
A RESOLUTION OF THE FLORIDA LEAGUE OF CITIES, INC.
URGING CONGRESS TO ENSURE MUNICIPAL AUTHORITY TO
REQUIRE LOCAL FRANCHISES FOR THE PROVISION OF VIDEO
' ' SERVICES WITHIN THEIR JURISDICTION.
WHEREAS, current law requires cable television operators to obtain a local
' franchise agreement from a city before they offer video services to its citizens; and
WHEREAS, the obligation to obtain a local franchise to provide video services
' ' stems both from inherent local government authority over the use of rights-of--way and
from the federal 1992 Cable Act, Title VI; and
WHEREAS, the two' largest telephone companies, SBC and Verizon, have
announced their intent to offer video services; and
WHEREAS, these companies are seeking federal legislation, potentially as part of
the rewrite of the federal Communications Act, that would restnicture the local
franchising process and instead create a national video franchise allowing telephone
companies to offer video programming in cities without obtaining a local franchise
agreement; and
WHEREAS, cities should leave the authority to negotiate and enforce local
franchise agreements to obtain needed services, including institutional networks and the
provision of Public, Educational and Government (PEG) access channels, which cities
can use to provide messages and important information to their citizens; and
WHEREAS, telephone companies should not be treated differently from cable
operators that provide video services; and
WHEREAS, H.R. 3146 has been filed by U.S. Representatives Marsha Blackburn
(Tennessee) and Albert W}mn (Maryland) and S. 1349 by U.S. Senators Gordon Smith
` (Oregon) and Jay Rockefeller (West Virginia) that would create a national cablelvideo
,franchise, thus bypassing the local franchising process.
NOW, THEREFORE, BE IT RESOLVED BY THE FLORIDA LEAGUE OF
CITIES, INC.:
Section 1. That the Florida League of Cities, Inc. opposes federal legislation that
creates a national video franchising process preempting cities from requiring a local
franchise agreement from telephone companies that provide video services in their cities.
AGENDA ITEM #8i;
SEPTEMBER 12, 2005
Section 2. That the Florida League of Cites, Inc. urges members of Florida's
Congressional Delegation to oppose this legislation and protect cities' local franchising
authority over video services.
Section 3. That a copy of this resolution be provided to the Florida Congressional
Delegation, and the National League of Cities.
PASSED AND ADOPTED by the Florida League of Cities, Inc., in conference
assembled at the League's 79th Annual Conference, at the World Center Marriott Resort,
Orlando, Florida, this 20th Day of August 2005.
Clay Ford, President
` Florida League of Cities, Inc.
Mayor Pro Tem, City of Gulf Breeze
ATTEST:
Michael Sittig, Executive Director
Florida League of Cities, Inc.
Submitted by: FLC Staff
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September '~3~1.6 WashingtAn GF~q, ~rtntil
3ea#tte, WA contact Wwint.wfoa.org. ~ ~ .~ ,
September'i~'1~; Illlr<ols.CFf~tA. Rnriu~t,~ ..
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Aa~~~~tt~ttr. rI ~nferen~~: ' . ~ ,~ _ ~.
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local and state governments that e
fleet credit cards to purchase fuel.
The fix in the SAFETEA-LU sta
that governmental entities m con-
tinue to use fleet credit c s to pur-
chase fuel and the cr t card compa-
nies may remit a collect reimburse-
s nt for the f excise tax. Without
this x, g ernments would have had
to ap for the excise tax reimburse-
m thei selves, causing costly
dministrati problems for local and
state governme sand the IRS. ^
President Bush S ns Energy
Bill: Local Governor is Hail
Deletion of MTBE Pro 'ion
On August 8, President Bush sign
The Energy Policy Act of 2005, a
comprehensive $14.5 billion piece of
legislation that Congress has been
working on for more than four yea .
The bill contains many provisi s of
interest to GFOA and other cal and
state government orga '~ ations. Most
importantly, the bil oes not contain
a provision pro ling MTBE manu-
facturers fr legal action brought by
cities a towns where the gasoline
add' ' e has contaminated the drink-
irtig water supply. MTBE (methyl ter-
tiary butyl ether) is a gasoline addi-
tive that has been known to leak
ough underground storage tanks
an ipelines and contaminate surface
and gr nd water supplies. Originally,
the House f Representatives passed
the Energy with substantial pro-
tective measures or MTBE producers
by forcing all claim • into federal
court, placing a cap on a amount
cities and water utilities c ild collect
from MTBE producers, and eem -
ing states' ability to ban MTB he
Senate would not agree tot ,se pr
visions, and unlike pre ' us years, the
MTBE protection vision was
dropped, allows b the Act to pass in
both chamb s. It is estimated that the
costs to cal governments and water
utili ' .s associated with extracting
BE out of drinking water sources
ld exceed $85 billion.
The Act . so establishes a new tax-
creditbon rogram for renewable
energy project lean renewable
energy bonds (C .Bs). The CREB
program allows non rofit utilities
such as electric co-ops, ublic power
systems, and municipal u ' sties to
issue $800 million of taxabl ax-
AGENDA ITEM #8E
SEPTEMBER 12, 2005
credit bonds between December 3l,
2005, and December 31, 2007. ^/
U.S. Supreme Co {Upholds
Governmental se of
Eminent Do ain
The U.S upreme Court reaffirmed
the r'b t of a city to take private land
private development if it will ful-
fill a "public purpose:' In the case of
Kelo v. City of New London,
Co~mecticut, the Supreme Court ruled
in favor of the City of New London,
embracing the city's argument that its
roposed redevelopment plan by pri-
. eparties qualifies as a "public use"
wit ' the meaning of the Takings
Clause.
In response to he Supreme Court's
decision, both th House and the
Senate have introdu • d bi-parti.••
federal legislation to c tail e use of
cities' eminent domain er when
federal funds are inv ve~i.
In the Hou ,Rep. James
Sensen ginner (R-Wis.) has intro-
du H.R. 3135, the Private Property
fights Act of 2005, which would pre-
vent states and local governments
from using federal funds in any way
to exercise eminent domain for eco-
nomic purposes.
Se for John Cornyn (R-Tex.) has
intro ed similar legislation in the
Senate, t Protection of Homes,
Small Busin •ses and Private
Property Act o~005, S. 1313. ^
Telecommunications
Legislation Would Undermine
Local Authority
In late July, Senator John Ensign (R-
Nev.) introduced his telecommunica-
tions rewrite legislation, the
Broadband Investment and Consumer
www.gfoa.org
AGENDA ITE1V1 #8E
_ ~ _ ~___ __ SEPTEMBER 12, 2005
Choice Act (S. 1504), which would
eliminate local franchise authority as
well as interfere with local govern-
ments' ability to manage the public
rights-of--way and ensure that com-
munications services are available to
all citizens.
More specifically, the legislation
would immediately eliminate all
existing local franchise agreements.
The bill's provisions would apply to
all providers of video service, both
existing cable companies and new
entrants. The legislation retains the
current 5 percent gross revenue cap
on franchise fees; however, it limits
these fees to the cost of managing the
rights-of way (rather than allowing a
rental payment for use of the rights-
of-way) and provides many excep-
tions to what are considered gross
revenue costs. The legislation also
makes the Federal Communications
Commission the arbitrator of disputes
over franchise fees; thereby requiring
local governments to incur consider-
able travel costs associated with
resolving franchise disputes.
With regard to the ability of munici-
palities to offer broadband services,
the legislation requires the local gov-
ernment to develop a detailed
description of its project, and permit
private entities to also bid for the
provision of such services.
GFOA will be working with its local
government partners at the National
League of Cities and the National
Association of Counties to continue
to express our strong opposition to
this legislation. ^
New Guidance Issued by the
Center for Medicare and
Medicaid Services (CMS)
Notice of Creditable Coverage
All group health plans that provide
pr : cription drug coverage must send
a "N 'ce of Creditable Coverage" to
their M icare-eligible active
employees, etirees, and dependents
stating whethc. their drug coverag ~ is
creditable relati~ ~ to the subsid'~ ed
prescription drug c verage t twill
be available through t
Nledicare Part D proor• starting
January 1, 2006. A overvi of the
creditable cover be regulato Ruid-
ance, includi a dates of complia e,
is availabl on the GFOA's Web sits
L`rrr uyer Irrfurntatiort on the
tree Drug Srrbsirly
The 28 percent retiree drug subsidy
is one of the options employers can
receive under the Medicare
Modernization Act to continue pro-
viding prescription drug coverage to
t 'r Medicare-eligible retirees at a
lows, • cost. CMS offers online guid-
ance o- titeps employers must take ii
order to rc, eive the retiree drug s -
sidy, which i ay be found on e
GFOA's Web si . In addit' ~, CMS
offers an online c pr ensive
resource center for ~ informational
and operational eds f plan spon-
sors to beco participant in the
retiree dry subsidy program t
http://r .cros.hhs.gov. ^
IRS Issues Proposed
Regulations Relating to
Retirement Benefit Limits
Under IRC § 4y 5
At the end of May, the IRS issued
proposed regulations (REG-130241-
0.1} ralutinb to limits uii defined bzn-
fit (DB) and defined contribution
( retirement plans under Irate •
Reve ~e Code (IRC) § 415. M y of
these li 'ts apply to gover ental
plans. The oposed re ations con-
solidate status c ges and IRS
guidance issued 'ice the regulations
were last up ed i 981 and, in
some ca.• , substantia modify the
prior gulations. The pro sed regu-
l~ ns would generally beco e
;for plan years beginning on
January 1, 2007.
A copy of the regulation and an
analysis of the regulation may be
found on the GFOA's Web site. ^
Senate Finance Committee
Approves NESTEG
Legislation
In late July, the Senate Financ
Committee passed pension gislation
'ntroduced by chair Sen• or Charles
lssley (R-Iowa) a ranking
min ity member ax Baucus (D-
Mont.). This 1 dislation replaces their
earlier leg' ation, the National
Emplo ° S• ings and Trust Equity
Gua ntee (N TEG) Act (S. 219).
ough the new ESTEG legisla-
tion affects largely t private sector,
it includes provisions i ortant to
the public sector, includin • clarify-
ing the ability of public emp ees to
purchase service credit in their ~ ate
or local defined benefit plan; perrr ' -
ting after-tax contributions to be
made to all tax favored retirement
vehicles, and allowing after-tax
rollovers between such arrangements;
providing relief from minimum
required distribution regulatio ;and
allowing early distribution malty
elief for public safety icers. It is
ui /ear when the fi Senate might
cons' er the le >' ation. ^
Emp e~nt Opportunities
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utgs in tke Newsletter ar $ISO per positivrr/inser-
tion for active GFOA rnent •rs; ,$?50 per
positivrt/insertion for associat members; and $500
for nonruernbers. All ads must be repaid. Order
forms to pJnce nn ud are required d can be
downloaded front CFOA's Web site. ease scud
ads paid by check rand credit cord to G • A, Dept.
77-3076, Chicago, !L 60678-3076. To cost ~ ~ that
your nd is received, please fax a copy of all c
n:atcrials ro 312/977-1506. Deadlines for ads n l
ull other uutterials are flee first and t/tirxl Friduy o
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lines care at least seven drays u(ter publication is
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be posted to GFOA's Web site (wwtvg/oa,vrg).
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• _..