HomeMy WebLinkAbout2011-175 Agrmt - Howell Group TELECOMMUNICATIONS CONSULTING ASSOCIATES
101 Flat Rock Gap Road
Waynesville, NC 28785
munihelp @bellsouth.net
828-627-8415(0) 828-627-85O5(F)
March 30, 2011
Lee Tuneberg,Finance Director
City of Ashland
20 East Main Street
Ashland, OR 97520
Dear Lee,
I just completed audits of Charter in Grants Pass, Jacksonville, Klamath Falls, Phoenix
and Central Point and I am beginning audits in Medford and Lincoln City. Last year I
audited Charter in Milton-Freewater, Sandy and Hood River. While I can never promise
that I will find underpayments during an audit, I am confident that we will discover some
level of discrepancies in the City of Ashland based on my past experience with Charter. I
am including in this correspondence a detailed description of my Scope of Work, a
service agreement (last page) and a list of my references. Included in my Scope of Work
are the following activities:
• Review the City's existing enabling ordinance, if one exists, and make
recommendations to enhance it to be in compliance with recent FCC and
legislative directives as well as typical municipal protections.
• Review all transfer and assignment documents.
• Review the •existing franchise agreements with Charter and make
recommendations for changes either at a renewal interval or transfer.
• I will conduct a franchise fee audit for Charter as far back as we can based on
any limiting language in either the franchise agreements or the City's code of
ordinances. I will make this determination after I have reviewed these
documents, and spoken with you. This process will commence with my
drafting a letter for you to place on your letterhead to Charter requesting
certain documents heretofore unavailable to the City. Once the fee audit is
completed, the data will be presented in spreadsheet form and will detail any "
payment discrepancies and penalties.
• Finally, I will draft all correspondence to Charter for you to cut and paste to
your letterhead. This correspondence will detail .the findings and make
demand for any restitution or submission of additional data, such as secondary
address research.
After this work is complete, I will draft a Summary Report detailing all of my findings.
This report generally is 3-7 pages and includes all spreadsheet documentation. The fee for
providing all of the above items is a 50% contingency fee basis. This places 100% of the
risk on our firm. If we find nothing, you pay nothing and if we are successful in getting a
recovery for the City, then we split it. The City will keep 100% of all future fees that we
identify during the audit. I have attached a contingency fee proposal at the end of this
letter.
I look forward to hearing from you and please call if you have any questions. I have
attached a list of my references across the country.
Sincerely,
John C. Howell
Tennessee Cities our firm works for: Jackson, Cleveland, Elizabethton,
Fayetteville, Lenoir City, Parsons, Loudon, Knoxville, Alcoa, Maryville, Clinton,
Johnson City, Bristol, Bolivar, LaVergne, Morristown, Waynesboro,Kingston,
Madisonville, Sweetwater, Church Hill,Dandridge, Rogersville, Tellico,
Collinwood, Crossville, Comersville, Watauga, Ashland City, Kingsport,
Surgoinsville, Paris, Milan, Savannah, Sparta, Mount Carmel, Manchester,
McMinnville,Pulaski, Goodlettsville, Clarksville,Newport, Tullahoma, Dover,
Decaturville, Mount Pleasant, Lebanon, Whitwell,Powells Crossroads, Kimball,
Henderson, Spencer, Cookeville, McKenzie, Martin, Crump, Monterey,Alamo,
Bluff City, Selmer, Tracy City, Pigeon Forge, South Pittsburg, Loretto,Dayton,
Jefferson City, Sevierville and Shelbyville;
North Carolina: Cities of Asheville, Laurinburg, Sylva, Spruce Pine, Scotland
Neck, Bakersville, Washington, Waynesville, Winston-Salem, Belmont, Mount
Holly, Fletcher, West Jefferson, Tryon, Marion, Wilkesboro,North Wilkesboro,
Carolina Beach, Boone, Seven Devils, Laurinburg, Beech Mountain, Sugar
Mountain, Banner Elk, Black Mountain, Hickory, Conover, Newton, Maiden,
Long View, Claremont, Catawba, Lenoir, Granite Falls, Blowing Rock, Concord,
Holly Ridge, Lincolnton, Hildebran,Montreat, Morganton, Spring Lake,
Taylorsville, Roxboro, Hendersonville, Laurel Park, Flat Rock, Mills River
Valdese and Thomasville.
Georgia: Woodstock, Peachtree City, Watkinsville, Ringgold, Grovetown, Dalton
and Athens; The Counties of Clarke, Polk, Crisp, Troup, Dougherty, Cherokee,
Whitfield, Fayette, Rabun, Habersham, Haralson, Barrow, Baldwin, Bulloch,
Coffee, Pike, Pierce, Pickens, Thomas, Lanier, Walker, Columbia, Floyd,
Jackson, Jefferson, Jenkins, Lowndes, Oconee, Sumter, Murray, Union, Dade,
Lee, Dawson and Upson. .
South Carolina: Gray Court, Greenwood, Camden, Greer, Lyman, Simpsonville,
Spartanburg, Greenville, Mauldin, Seneca, Mount Pleasant, Hartsville, Clemson
Gaffney, Pickens, Sumter, Travelers Rest,Rock Hill, Clinton and Central; The
Oregon: Sandy, Milton-Freewater, Grants Pass, Central Point and Hood River
The Howell Group, LLC. dba
Telecommunications Consulting Associates
Service Agreement
The City of Ashland, Oregon (Local Franchising Authority, City) hereby agrees to hire
Telecommunications Consulting Associates (TCA) for the purposes set forth below in the
attached letter and incorporated herein.
Scope of Work-Included in my Scope of Work are the following activities:
• Review the enabling ordinance, if one exists, and existing franchise
agreement(s)with Charter Communications.
• I will conduct a franchise fee audit of Charter for six (6) years, unless
prohibited by the City's franchise agreement. Once the fee audit is completed,
the data will be presented in spreadsheet form and will detail any payment
discrepancies and penalties.
• I will draft all correspondence to Charter for you to place on your letterhead.
This correspondence will detail the findings and make demand for any
restitution, including a Settlement Agreement.
• After this work is complete, I will draft a Summary Report detailing all of my
findings. I will also assist the city in reaching a settlement agreement with
Charter and track your payment.
Terms of Payment
Audit Fee: This audit Scope of Work will be billed C50% of any funds t are
recovered by the City as a result of our audit. This audit scope o meated in a
letter from John Howell, which is attached hereto and incorporated by reference.
Payment to TCA of the Percentage Compensation shall be due 20 days following City's
receipt of any monies recovered either as settlement, refund, credit, trade out, service in
kind or as an award from the franchised cable operator.
DATE
On behalf of the City of Ashland, Oregon
/ DATE March 30, 2011
John C. Howell, TCA
TCA, 101 Flat Rock Gap Road,Waynesville,NC 28785 (PHONE)828-627-8415(FAX)828-627-8505
TELECOMMUNICATIONS CONSULTING ASSOCIATES
101 Flat Rock Gap Road
Waynesville, NC 28785
munihelp @bellsouth.net
828-627-8415(0) 828-627-8505(F)
May 17, 2011
Lee Tuneberg, Finance Director
City of Ashland
20 East Main Street
Ashland, OR 97520
Dear Lee,
Recently Ashland engaged Telecommunications Consulting Associates (TCA) for the
purpose of reviewing the following documents and reports:
• All Cable television franchises, renewals, extensions and assignments
• Franchise fee payment history and documentation
• Customer Service Standards compliance
• Quarterly, semi and annual reports submitted by incumbent cable operators
• General review of cable operator(s) franchise compliance
• Conduct an audit of Charter's franchise fee payments
Findings
Ashland does not have an enabling ordinance so we confined our review to the existing
franchise agreement. Following is an overview of the City's existing franchise agreement
and the general state of franchise compliance by Charter broken down into several
categories.
Franchise Overview
The City's franchise with Charter began in 2004 and has been extended twice. I reviewed
the City's current agreement with Charter to determine their level of compliance with its
terms for the last few years. Below I have highlighted the more important sections of the
existing franchise agreement.
• Section 1 contains the definitions. The definition of gross revenues means: all
revenues of Grantee, in any way derived from the operation of the Cable
System to provide Cable Services in the Agreement Area. Gross Revenues
include, by way of illustration and not limitation, monthly fees charged
subscribers for any basic, optional, premium, per channel or per program
service, installation, disconnection, reconnection and change in service fees,
leased channel fees; late fees and administrative fees;from repairs or sales of
converters or other equipment; advertising sales revenue; revenues from
program guides; and revenue from home shopping channels. The term gross
revenue encompasses any and all revenue of any, kind, form or nature
including franchise fees passed through by Grantee to subscribers, except that
the term does not include sales taxes imposed by law on subscribers that the
Grantee is obligated to collect. With the exception of recovered bad debt,
gross revenues shall not include bad debt. Gross revenues shall not include:
I any taxes, fee or assessment of general applicability collected by the
Grantee from subscribers for pass through to a governmental agency,
including the FCC User Fee and 2, any PEG or I-Net amounts recovered from
subscribers.
O The agreement requires that Charter comply with all FCC technical and
customer service rules.
® Upon request, Charter is required to provide the City with five (5) local access
channels for public, educational or governmental use.
6 Charter is required to provide free cable service to city buildings and schools.
G Charter is required to extend service to all homes meeting a 40 homes per mile
density.
• The insurance requirements are adequate.
• Currently the City charges a 5% franchise fee.
Franchise Fees
We have conducted a franchise fee audit for Charter from January 1, 2005-December 31,
2010. The audit period of 2005-2010 revealed that Charter may have underpaid and under
accrued franchise fees in an amount of approximately $237 plus allowable interest in the
amount of$90 for a total due of$327. Section 3.7 of the agreement sets out the interest
rate at the legal interest rate on judgments in Oregon, which is 9%. The under-reported
revenue is listed below and also captured in the attached spreadsheet.
Category Revenue Omitted
Commercial Revenue $ (5)
Commercial Music $ 3642
Classified-non sales $ 654
Leased-non sales $ 196
Corp Ad Sales $ 260
Total Revenue Excluded $ 4747
Franchise Fees Due $ 237
Interest @ 12%per year $ 90
Total Franchise Fees Due $ 327
These results are included in the attached spreadsheet. I have also prepared a letter for
you to send to Charter Communications. Generally Charter takes 60-90 days to review
the City's claim before they will report back to you their findings. Please call with any
questions regarding this report.
Sincerely,
John Howell
Attachment: Audit spreadsheet
NON-DISCLOSURE AGREEMENT
THIS NON-DISCLOSURE AGREEMENT (this "Agreement") is entered into as of the
8th day of April, 2011 (the "Effective Date"), by and between the City of Ashland, Oregon, a
municipal corporation (the "City") and Falcon Cable Systems Company II, LP (FCSC II), (dba
Charter Communications) (the "Company") an indirect subsidiary of Charter Communications
Inc., on the other hand.
RECITALS
WHEREAS, the LFA desires to perform an audit with respect to the franchise fees paid
to the LFA by the Company during the period Januaryl, 2005 through December 31, 2010 (the
"Audit"); and
WHEREAS, the LFA has retained the services of the Consultants to perform the Audit on
behalf of the LFA; and
WHEREAS, the Company will be providing certain confidential and proprietary
information to the LFA and to the Consultants in connection with the Audit and the Company
desires to protect the confidential and proprietary nature of such information.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth
in this Agreement, and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:.
1. Definition of Confidential Information. For purposes of this Agreement, the
"Company's Confidential Information" means all information relating to the Company's
business, and the business of any of the Company's affiliated companies, disclosed to the LFA
and/or to the Consultants in the following forms: (a) information originally disclosed in written,
graphic, machine-readable or any other tangible medium, to the extent marked with a
"confidential," "proprietary" or similar legend or which by its nature would be expected to be
treated as confidential; and (b) information originally disclosed orally or by way of observation,
to the extent identified as confidential or proprietary at the time of such original disclosure or
which by its nature would be expected to be treated as confidential. Confidential Information
shall not include any information which becomes available in the public domain through no act
of the LFA or the Consultants. The LFA and the Consultants each acknowledge that the
Company's Confidential Information is and shall remain the exclusive property of the Company.
Nothing in this Agreement shall be construed as granting any license or other rights in or to the
Company's Confidential Information. Any issue that the LFA and/or the Consultants may have
as to the confidentiality expectations of the Company regarding particular information shall be
submitted to the Company for determination.
2. Obligations. The LFA and the Consultants each hereby agree that they will: (a)
treat the Company's Confidential Information with the same degree of confidentiality with which
it treats its own confidential or proprietary information, and, in any event, with no less than a
reasonable degree of confidentiality; (b) use the Company's Confidential Information solely for
the purposes of conducting the Audit and verifying franchise fee payments made by the
Company to the LFA; (c) refrain from copying the Company's Confidential Information, in
whole or in part, except as required solely for the Audit and, in such instances, only upon the
accurate reproduction of all proprietary legends and notices located in the originals; (d) refrain
from any effort to use any addresses provided by the Company to identify the name or telephone
number of any of the Company's subscribers or otherwise contact or approach any of the
Company's subscribers at the addresses provided or derived; (e) limit dissemination of the
Company's Confidential Information to employees of the LFA and/or the Consultant who have a
need to know the Company's Confidential Information in furtherance of the uses permitted by
this Agreement; provided, however, that any such additional person who gains access to the
Company's Confidential Information shall, prior to receiving access to the Company's
Confidential Information read this Agreement and execute the form of Certification attached
hereto as "Exhibit A;" notwithstanding, the LFA and the Consultants shall in all events be
responsible to the Company for any action or inaction of their respective employees that violate
any term or provision in this Agreement or Certification including indemnifying the Company
for any and all claims, damages or assessments that may arise from the LFA's and/or
Consultants' and/or their employees' use of the Confidential Information provided hereunder in
violations of the terms of this Agreement and/or Certification; and (f) return to the Company all
of the Company's Confidential Information received in written or other tangible media,
including all copies and records thereof, upon conclusion of the Audit.
3. Legally Required Disclosure. If the LEA and/or the Consultants, as the case may
be, is compelled to disclose any of the Company's Confidential Information pursuant to
applicable federal or state laws, rules, regulations, or court orders or subpoenas (each a
"Requirement"), the LFA and/or the Consultants, as the case may be, shall provide the Company
with prompt notice of any such Requirement and shall cooperate with the Company, at the
Company's sole expense, in seeking to obtain any protective order or other arrangement pursuant
to which the confidentiality of the Company's Confidential Information is preserved. If such an
order or arrangement is not obtained, the LFA and/or the Consultants, as the case may be, shall
disclose only that portion of the Company's Confidential Information as is required pursuant to
such Requirement. Any such required disclosure shall not, in and of itself, change the status of
the disclosed information as the Company's Confidential Information under the terms of this
Agreement.
4. Term. This Agreement shall commence as of the Effective Date and shall
continue in effect until the expiration of the maximum time period set forth in any applicable
federal or state law, rule or regulation pertaining to the period of time for which a person's or
entity's non-public information may be deemed to be confidential or proprietary and subject to
protection under an agreement to that effect.
5. No Assignment. Neither the LEA nor the Consultants may assign any of its rights
or delegate any of its obligations under this Agreement, except upon the prior written consent of
the Company, which may be withheld in the Company's sole and absolute discretion.
6. Equitable Relief. The LFA and the Consultants each acknowledge that the
Company may be irreparably injured by a breach of this Agreement by the LFA and/or the
Consultants and that the Company, in addition to any other remedies available at law or in
equity, shall be entitled to seek equitable relief, including injunctive relief and specific
performance, in the event of any breach of the provisions of this Agreement by the LFA and/or
the Consultant.
7. Invalid Provisions. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, the remaining provisions shall remain in full force and effect. Should
any provision be held to be illegal, invalid or unenforceable as being too broad with respect to
the duration, scope or subject matter thereof, such provisions shall be automatically modified to
reflect the maximum duration, scope or subject matter allowable by law.
8. Notices. Any notices or other communications contemplated or required under
this Agreement, in order to be valid, shall be in writing and shall be given via personal delivery,
telefax or overnight courier, or via U.S. Certified Mail, Return Receipt Requested, at the
following addresses:
If to Company:
Charter Communications
Attn: Government Relations Director
222 NE Park Plaza Drive, #231
Vancouver, WA 98684
With a copy to:
Charter Communications
Attn: Government Relations Vice President
12405 Powerscourt Drive
St. Louis, MO 63131
If to LFA:
City of Ashland
Attn: Lee Turnberg, Finance Director
20 East Main Steet
Ashland, OR 97520
If to Consultant(s)'
The Howell Group, LLC d/b/a
Telecommunications Consulting Associates
Attn: John Howell
101 Flat Rock Gap Road
Waynesville,NC 28785
or at such or at such other addresses as a party may designate by notice to the other
parties. Such notices or other communications shall be deemed received when actually delivered
(where given via personal delivery, telecopier or overnight courier) or three (3) business days
after mailing (where given via U.S. Certified Mail).
9 Integration. This Agreement supersedes all previous oral and written agreements,
if any, among the parties regarding the confidentiality of information disclosed to each other.
10. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of Oregon.
11. Counterparts. This Agreement may be executed in one or more counterparts, each
of which, shall for all purposes be deemed an original and all of which, taken together, shall
collectively constitute one and the same agreement.
12. Additional limitations and requirements with respect to Company customer
information: All of Company's personally identifying customer information, including both
existing and potential Company customers, will be maintained as confidential and will not be
used for any purpose other than the Audit. Any use of such Company customer information
shall be undertaken (i) subject to the then current written customer privacy policies of Company ,
which policies are subject to change and can be found at www.charter.com under "Your Privacy
Rights," and, in all cases, (ii) in compliance with any applicable laws governing Company's
collection, maintenance, tfansmission, dissemination, use and destruction thereof, including
specifically the subscriber privacy provisions of the Cable Communications Policy Act of 1984,
as amended (47 U.S.C. § 551), and any and all other applicable laws or regulations, including,
but not limited to, the Electronic Communications Privacy Act, 18 U.S.C. § 2701 et seq., Cal.
Penal Code § 637.5, any state and/or federal security breach notification laws; and (iii) in
compliance with the Payment Card Industry Association Security Standards, to the extent LFA
and/or Consultants have access to any Company customer's payment card information. Without
limiting the foregoing, LFA and/or Consultants acknowledge (i) that it is responsible for the
security of cardholder data in its possession and (ii) that such data can only be used for assisting
in the completion of the Audit. In order to ensure protection of Company's customer
information, LFA and/or Consultants shall take all reasonable steps to ensure business continuity
in the event of a major disruption, disaster, or failure.
Notwithstanding anything to the contrary herein, to the extent disclosed under this Agreement, in
no event shall LFA and/or Consultants disclose to a third party at any time the viewing habits or
any personally identifiable information regarding any Company customers, except as required by
law or regulation.
LFA and/or Consultants shall retain all customer information only for so long as is necessary, as
reasonably determined by the Company, to complete the Audit, unless otherwise specified by a
mutual written agreement of the parties hereto. Thereafter, LFA and/or Consultants shall permanently
destroy or return Company 's customer information. Upon termination of this Agreement for any reason,
LFA and/or Consultants shall continue to treat all customer information as confidential in perpetuity.
Upon reasonable written request from Company, LFA and/or Consultants shall provide access to, and
the right to inspect, all records created by LFA or Consultants containing data relating to Company 's
customer information. Unless otherwise agreed, any such inspection shall occur only at the business
offices of LFA and/or Consultants during normal business hours and shall be conducted by Company or
a mutually acceptable third-party inspector. The costs of any such inspection shall be paid by Company.
LFA and/or Consultants shall cooperate in any regulatory investigation or in any internal investigation
by Company , and in responding to any inquiry by any Company customers, relating to Company 's
customer information. LFA and/or Consultants compliance with this requirement shall be at LFA
and/or Consultants 's expense. In the event of any such investigation or inquiry, upon written notice to
Company, Company may suspend any further transfers of data including customer information for so
long as may be necessary to obtain assurances that any additional transfers will not provide the basis for
further regulatory action or possible liabilities.
IN WITNESS WHEREOF, the parties have entered into this Agreement effective as of the date
first above written.
By: Falcon Cable Systems Company II, L.P.
By: Charter Communications VII, LLC, its
General Partner
By: Charter Communications, Inc., its
Manager By: City of Ashland, Oregon
By: By: /�O(
Name: Name: �.3n�oe,� L.06f— kj26
Title: Title: 4D Al /y SE2uicrs IKIy4m/c — ))vz.
By: Consultants:
The Howell Group, LLC d/b/a
Telecommunications Consulting Associates
By:
Name: John C. Howell
Title: Owner
Exhibit "A"
To Agreement Between LFA, Charter and Consultant
INDIVIDUAL CERTIFICATION
I certify my understanding that any and all Confidential Information that is provided to
me is restricted in its use pursuant to the terms and restrictions of the Agreement executed by and
between City of Ashland, Oregon, a municipal corporation (the "Local Franchising Authoritv" or
the "LFA") and The Telecommunications Consulting Associates "Consultants", and Falcon
Cable Systems Company II, LP (FCSC II), (dba Charter Communications) (the "Company"),
relating to a franchise fee audit of the Company conducted by the LFA and the Consultants. I
further certify that I have been given a copy of and have read the Agreement and I myself agree
to be bound by it. I understand that all such Confidential Information, any copies, any notes or
other memoranda, or any other forms of information regarding or derived from the Confidential
Information, shall not be disclosed to anyone, shall be used only for the limited purpose of the
franchise fee audit being conducted by the LFA and the Consultants, and shall be returned to the
Company all in accordance with the Agreement. I further understand that I may not use any
Confidential Information subject to this Agreement for any other purpose than the franchise fee
audit or as the basis for obtaining any names, addresses or phone numbers of any of the
Company's subscribers, or otherwise for contacting any subscriber by any means, or for any
party or third-party to gain any competitive advantage over any party to the Agreement. I further
understand that if I breach this certification, I may be personally liable for any damages caused
by such breach.
By:
(Signature)
John C. Howell
(Printed Name)
DATED this 8th day of April, 2011.
TELECOMMUNICATIONS CONSULTING ASSOCIATES
101 Flat Rock Gap Road
Waynesville, NC 28785
munihelp @bellsouth.net
828-627-8415(0) 828-627-8505(F)
May 17, 2011
Lee Tuneberg, Finance Director .
City of Ashland
20 East Main Street
Ashland, OR 97520
Dear Lee,
Recently Ashland engaged Telecommunications Consulting Associates (TCA) for the
purpose of reviewing the following documents and reports:
• All Cable television franchises, renewals, extensions and assignments
• Franchise fee payment history and documentation
• Customer Service Standards compliance
• Quarterly, semi and annual reports submitted by incumbent cable operators
• General review of cable operator(s) franchise compliance
• Conduct an audit of Charter's franchise fee payments
Findings
Ashland does not have an enabling ordinance so we confined our review to the existing
franchise agreement. Following is an overview of the City's existing franchise agreement
and the general state of franchise compliance by Charter broken down info several
categories.
Franchise Overview
The City's franchise with Charter began in 2004 and has been extended twice. I reviewed
the City's current agreement with Charter to determine their level of compliance with its
terms for the last few years. Below I have highlighted the more important sections of the
existing franchise agreement.
• Section 1 contains the definitions. The definition of gross revenues means: all
revenues of Grantee, in any way derived from the operation of the Cable
System to provide Cable Services in the Agreement Area Gross Revenues
include, by way of illustration and not limitation, monthly fees charged
subscribers for any basic, optional, premium, per channel or per program
service, installation, disconnection, reconnection and change in service fees,
leased channel fees; late fees and administrative fees;from repairs or sales of
converters or other equipment; advertising sales revenue; revenues from
program guides; and revenue from home shopping channels. The term gross
revenue encompasses any and all revenue of any kind, form or nature
including franchise fees passed through by Grantee to subscribers, except that
the term does not include sales taxes imposed by law on subscribers that the
Grantee is obligated to collect. With the exception of recovered bad debt,
gross revenues shall not include bad debt. Gross revenues shall not include:
1 any taxes, fee or assessment of general applicability collected by the
Grantee from subscribers for pass through to a governmental agency,
including the FCC User Fee and 2, any PEG or I-Net amounts recovered from
subscribers.
• The agreement requires that Charter comply with all FCC technical and
customer service rules.
•. Upon request, Charter is required to provide the City with five (5) local access
channels for public, educational or governmental use.
• Charter is required to provide free cable service to city buildings and schools.
• Charter is required to extend service to all homes meeting a 40 homes per mile
density.
• The insurance requirements are adequate.
• Currently the City charges a 5% franchise fee.
Franchise Fees
We have conducted a franchise fee audit for Charter from January 1, 2005-December 31,
2010. The audit period of 2005-2010 revealed that Charter may have underpaid and under
accrued franchise fees in an amount of approximately $237 plus allowable interest in the
amount of$90 for a total due of$327. Section 3.7 of the agreement sets out the interest
rate at the legal interest rate on judgments in Oregon, which is 9%. The under-reported
revenue is listed below and also captured in the attached spreadsheet.
Category Revenue Omitted
Commercial Revenue $ (5)
Commercial Music $ 3642
Classified-non sales $ 654
Leased-non sales $ 196
Corp Ad Sales $ 260
Total Revenue Excluded $ 4747
Franchise Fees Due $ 237
Interest @ 12%per year $ 90
Total Franchise Fees Due $ 327
These results are included in the attached spreadsheet. I have also prepared a letter for
you to send to Charter Communications. Generally Charter takes 60-90 days to review
the City's claim before they will report back to you their findings. Please call with any
questions regarding this report.
Sincerely,
John Howell
Attachment: Audit spreadsheet
M
April 7, 2011 C, ff T V OF
ASHLAND
Marian Jackson, Director of Government Relations
Charter Communications
222 NE Park Plaza Drive, # 231
Vancouver, WA 98684
Delivered Via US Mail and/or Email Fax (360-258-5097:
Email: Marian.Jackson @chartercom.com)
Dear Ms. Jackson;
Recently the City hired a consultant to assist us with an evaluation of Charter's
performance under our franchise agreement. The franchise agreement is silent
on the number of years that the City can audit franchise fee payments, therefore
the Oregon statute of limitations on contracts, which is six (6) years shall prevail.
Pursuant to Sections 3.6 and 7.1.1 of the cable television franchise agreement
between the City and Charter Communications, the City hereby requests that
Charter immediately forward to the City the following information.
Please note that one report is a detail report and the other is a summary report of
the same information. Please provide these two reports in an electronic format to
our consultant, Mr. John Howell at Telecommunications Consulting Associates.
His email is munihelp(a)bellsouth.net.
• The City requests that Charter submit the FTA Summary reports for
72-month period of January 1, 2005-December 31, 2010. These
months represent the most recent months available to audit. These
reports should specifically list the source of all revenues broken down
by category. We request that the report separately list revenue for at
least the following items: basic, expanded basic, premium TV, pay per
view, installation, late fees, equipment rental, advertising, home
shopping and franchise fees. This initial request is for the period from
January 1, 2005-December 31, 2010 by month, and annually.
Attached to this letter is a sample form we request that you use to
provide this information to the Citv.
• The City also requests that Charter provide the following report to the
City: Franchise Validation by FTA Report in its entirety, and not
merely in summary format as requested separately above, for period
code 200501-201012
• Additionally, the City requests that Charter provide the City with the
current number of households passed by cable television and the
PURCHASING Tex:541-488-5354
City of Ashland Fax:641-488-5320
90 N.Mountain TTY:541-552-1234
Ashland,Oregon 97520
www.ashland.or.us -
�y roox rusocunsumer cnm.m .
current number of customers subscribing to at least the basic level of
service. We need the subscribing household number broken down into
three categories. 1) Number of individual accounts. 2) Number of bulk
Effective Billing Units (EBU). 3) Total number of EBUs, which should
be the total of 1 and 2.
I understand that Mr. Howell has signed several NDA forms with Charter in the
past but if you need him to execute another one, please send it directly to him at
his email address above. Our staff and our consultant stand ready to assist
Charter as we work through this matter. Should you have any questions, please
do not hesitate to call me.
Sincerely,
Lee Tuneberg, Finance Director
Cc: John C. Howell
Attachment: Sample Spreadsheet
Rw tD¢V1VM]I:SY JOPM
Summary of Revenues
Subject to Franchise Fee
Vendor Code:00165017
FCC 0):
33101 GSM Frequenry:U9adedy
0922180 My city,USA ease Period: 12
Source FTA Code(s):IcII
2(e1@ 2N1W IN Mies .1. A]10] ]W1M' ]%1% x%110 2U111 =112 Told
B4SOfA&ESEAVI� 1AM6x 1,pM.H I,ON.N 1.OSAM 7,00110 1,4]956 9165] 95416 %119 91AM 9%.IS 11,0x1%
INIWFf/LfEdd 10).51 12b 0115 1%.01 %.% ]15.10 ]3233 ]0]59 ]5931 b6.55 ]%.)f ;6]Alfi
INVT TIONGVRI£9 56A1 p.Op 111.12 JIJ6 19.% ]530 ]650 ]e5p .N) ]ISp ]Sx 1516$
F}PNCED S�ISICSVe 1.nfl99 1.)1].69 I,R1.10 1,]M56 1]56]9 1,36951 1,]11.15 1,85x.65 1,0]31 1,XLQ ;05631
PAYSEAVILE 2M]E 251.91 x1931 21111 2641] ]p!N 2959$
PNY PFRVIFN xR.i) 106.35 10ll1 66.]6 51.39 61.9] A.n ]i.]I ]).51 S9.IB SLID 669.9
GUI6Ef£/FNUF 15.00 11,41 x635 2500 2500 L16 1].>9 SApO 341! b.p0 ]1,50 2]0.%
.EMSM REV 3x]93 b266 x16.)1 H539 3360E 2b.95 267. iM 95 ba61 iA% 23347 x,511.99
.HOWSH1PPM M4 ]15.19 ]29- RS]2 Ixt.i6 II9A6 369.1] 361.90 169.]9 8179 x]5.]! 3]]11 ]0552
IpAEdHCWWGgEY 209 x6]1 xl.]] ]x]i ]0.95 1959 1456 1).56 19.39 31.33 1416 x]115
INSW ERNCFd 9659 n233 1M.p6 18.11 11Ld $15.33 ]0653 ]05.19 8131 M1A] ]L B8 ;00.13
IN51[ENRtlNG 9An 90.11 O]S1 ]p1.H x09.90 31136 191.12 1921]1 197.17 191.8 11610 1,915.91
o1I PEVFMh 1.Sfi 9.16 1412 655 116 5.N 429 ]51 ]51 1.19 5A1 62A
WIAF9£MIEMPL ]%1i "551 ypp 1H.0 ]nlx 85.99 20.H ]0221 90,42 8955 )941] 1511" e
RIIX£SSWn SF&9 333 7151 NS! 35.10 9fA 039 55.% "1 19,41 61.15 91.13 940
B6a CeaT 9923'1 Ip.26) %.63 194% d .b aMI 4191 0151 .1 "W N.NA%
REVENUE {56200 I,u616 IAnm 1,99;10 I,pfiu 4M.0 I,Snn A%L)6 Ansn I,uufi Sav95 519Jd.9fi
PFEGLgAATFO zsslp 31661 m5r xu% Sun m% ]>.09 b6n ]AAI 8159 259695
FEE m.lp 21cex
-WI 2uw x030 zua ai% v5.0a a6n }A31 x9150 59695
Fee Factor: 5%
PURCHASING Tel:541-488-5354
City of Ashland Fax:541-488-5320
90 N.Mountain TTY:541-552-1234
Ashland,Oregon 97520
www.ashland.or.us -
t i
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (the "Settlement Agreement") is made
this day Cable _, 2011, by and among the City of Ashland, Oregon (the
"City") and Falcon Cable y/stems Company II, L.P., locally known as Charter
Communications ("Charter") (collectively referred to herein as "the Parties").
RECITALS
WHEREAS, Charter operates a cable system in the City of Ashland, Oregon and
pays franchise fees pursuant to a franchise agreement between the parties (the
"Franchise");
WHEREAS, the City conducted an audit of the franchise fee payments made by
- -- - —- -- - -- -
Charter for the period from 7anuary l-2x05 to December 31-2010(the"Audit�erio�c")—----
and concluded that Charter underpaid franchise fees for the Audit Period.
WHEREAS, Charter agrees to submit payment to the City in the amount of three
hundred twenty seven dollars ($327.00), to forever settle past claims on franchise fees
due the City for the Audit Period;
WHEREAS, the City and Charter now desire to conclude, settle, release and
discharge once and forever, all rights, claims, causes of actions, liabilities, disputes and
demands relating to the City's past claims on franchise fees due the City;
WHEREAS; the .-Parties finer expressly agree that terms• related to -this -
Settlement shall not be used by either Party as precedent on a going-forward basis in
connection with any future dispute between the Parties related to franchise fees;
NOW THEREFORE, in consideration of the foregoing, and in consideration of
the mutual promises and obligations hereinafter set forth, and for good and valuable
mutual consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties to this Settlement Agreement hereto agree as follows:
AGREEMENT
1. SETTLEMENT AMOUNT
The City and Charter have agreed that Charter shall submit payment to the City in
the amount of three hundred twenty seven dollars ($327.00) in full settlement of past
claims on franchise fees for the Audit Period. Charter agrees to pay this amount to the
City within forty-five (45) days after receipt of the executed Settlement Agreement from
the City. It is expressly understood and agreed that the Settlement Amount represents
full and complete satisfaction and compromise of any and all claims, actions, causes of
action, controversies, demands, damages, debts, agreements, obligations, liabilities, .
interest, liens, expenses, costs, attorney's fees and demands of any kind or nature, known
or unknown, arising out of or in any way related to the City's past claims on franchise
fees due the City during the Audit Period. It is understood and agreed by the City and
Charter that nothing herein shall be deemed to be an admission of liability by Charter
with respect to the matter of. this Settlement Agreement. Furthermore, the failure of
Charter to dispute some or all of the findings of this franchise fee audit shall not be taken
or held to be a waiver of Charter's right to dispute any or all of the findings of franchise
fee audits subsequent to the Audit Period. Additionally, notwithstanding any other
provision of this Settlement Agreement, the Parties hereby acknowledge and agree that
any franchise fee payment made pursuant to the Franchise may be recovered by Charter
from subscribers in accordance with applicable law and that such funds may be included
as line items on subscriber bills consistent with FCC regulations at Charter's discretion.
2. RELEASE OF CLAIMS
For the consideration set forth in this Settlement Agreement, the City does hereby
release and forever discharge Charter, and its parents, subsidiaries, related affiliates and
their respective officers, directors, shareholders, owners, partners, employees, agents,
contractors, representatives, predecessors, successors, assigns, insurers and attorneys, and
t
each of them, from any and all claims, demands, actions, causes of action, liabilities,
obligations, losses, accounts, debts, damages, judgments, costs, interest, expenses,
attorney's fees and demands of any kind or nature, known or unknown, arising out of or
in any way related to the City's past claims on franchise fees due the City during the
Audit Period. Furthermore, the City expressly agrees that this settlement, and/or the
events leading up to it, including the dispute with respect to the payment of franchise fees
during the Audit Period, may not be used in any way in any subsequent judicial or '
administrative proceeding against Charter other than to enforce the terms of this
Settlement Agreement.
3. VOLUNTARY AGREEMENT
This Settlement Agreement is freely and voluntarily given by each party, without
any duress or coercion, and after each party has consulted with its counsel. Each party
has carefully and completely read all of the terms and provisions of this Settlement
Agreement.
4. AUTHORITY AND BINDING EFFECT
City and Charter represent and warrant to the other that each has the legal right,
power and authority to enter into this Settlement Agreement and to perform its
obligations hereunder. This Settlement Agreement will inure to the benefit of and be
binding upon the parties and their respective successors and assigns. The parties for
themselves and their respective successors and assigns agree to join in or execute any
instruments and to do any other act or thing necessary or proper to carry into effect this or
any part of this Settlement Agreement.
5. ENTIRE AGREEMENT
This Settlement Agreement sets forth the entire agreement between the City and
Charter relating to the subject matter of this Settlement Agreement.
6. GOVERNING LAW
This Settlement Agreement, and any controversies arising hereunder, shall be
interpreted and adjudicated in accordance with applicable federal law and the laws of the
State of Oregon, whose courts shall have exclusive jurisdiction thereof.
IN WITNESS WHEREOF, the parties have 'executed this Settlement Agreement as
their free and voluntary acts and deeds, effective as of the date first above written.
City of Ashland, Oregon Falcon Community Cable II, L.P, d/b/a
Charter Communications
By: Charter Communications VII, LLC its
General Manager
By: Charter Communications Inc., its Manager
By: X16( y:
PrintedName:�.L. T Printed Name: FRANKANTONOVICH
VP,/GM
Sworn before me in the City of State of O/L , this l0 day of
2011. /
My Commission Ex fires: q/lp 00 `'/
. OFFICIAL SEAL Notary Public
BARBARA M. CHRISTENSEN
NOTARY PUBLIC-0REOON
COMMISSION NO.444684
MY COMMISSION EXPIRES SEPT. 16.2013
Sworn before me in the City of State of this _ day of
2011.
My Commission Expires:
Notary Public
A � D FORM
rr.
S9ni�3o/I f
Date 7—.—
Pagel / 1
�� CITY OF CITY RECORDER
ASHLAND DATE.i PO NUMBER
,I 20 E MAIN 97 7/20/2011 10317
ASHLAND, OR 97520
(541)488-5300
VENDOR: 016232 SHIP To: Ashland Finance Deartment
HOWELL GROUP, LLC (541)488-5300
101 FLAT ROCK GAP ROAD 20 E MAIN STREET
WAYMESVILLE, NC 28785 ASHLAND, OR 97520
FOB Point: Req.No.:
Terms: Net Dept.:
Req.Del.Date: Contact: Lee Tuneberq
Special Inst: confirming? No
Descri t(on "" � .' �'I Unit Price Ext.,Price (1 `
Forensic Audit of Charter's Franchise 163.50
Agreement with the City of Ashland
Settlement Agreement w/Charter-$327.00
50% due to auditor-$163.50
SUBTOTAL 163.50
BILL TO:Account Payable TAX 0.00
20 EAST MAIN ST FREIGHT 0.00
541-552-2028 TOTAL 163.50
ASHLAND, OR 97520
' ..Account Number'i :---,.Projecf Number,-; Amount. Account Number V,Project Number,� ,• _?.;,Amount_'
E 710.03.09.00.60410 163.50
'09L .
Authori dSignature VENDORCOPY
FORM #3 i CITY OF
A request fora Purchase Order ASHLAND
REQUISITION Date of request:
Required date for delivery:
Vendor Name cc t'c�c .t�„G'is�"` ¢s�>Pc°"-,Q
Address,City,State,Zip
Contact Name&Telephone Number l %7 L%c/1 ;z t3 '7 8 g
Fax Number
SOLICITATION PROCESS
❑ Exempt from Competitive Bidding ❑ Emergency
❑ Written Findings(Form attached) . ❑ Invitation to Bid (Copies on file) ❑ Written findings attached
❑ Quote or Proposal attached Date approved by Council: ❑ Quote or Proposal attached
❑ Small Procurement Cooperative Procurement
Less than$5.000 ❑ Request for Proposal (Copies on file) ❑ State of Oregon
Note:Total contract amount,including any Date approved by Council: Contract#
amendments may not exceed$6,000 ❑ State of Washington
Intermediate Procurement ❑ Sole Source Contract#
GOODS&SERVICES ❑ Written Findings(Form attached) ❑ Other government agency contract
$5.000 to$100,000 ❑ Quote or Proposal attached Agency
❑ (3)Written quotes attached Contract#
PERSONAL SERVICES ❑ Special Procurement ❑ Intergovernmental Agreement
5 00 to 75 000 ❑ Written Findings(Form attached) Agency
Less than$35,000,by direct appointment ❑ Quote or Proposal attached Contract#
❑ 3 Written proposals attached Date approved by Council: Date approved by Council:
Description of SERVICES v Cr �J Total Cost
�it ICE lLr S rG✓�ctu tin L t�L CGt�CL 9� !� $ .o ict!� s �B f/cocY'cc..
Q.y ce.
Item # Quantity Unit Description of MATERIALS UnipPrice Total Cost
0 _ -
TOTAL COST
❑ Per attached QUOTE $
a o'zBD'00'0
oo.g-
Project Number______-___ Account Number___-__•__-__-______ Account Number___-__-__-__-______
Account Number - - • -______ Account Number___-__-__- __
'Expenditure must be charged to the appropriate account numbers for the financials to reflect the actual expenditures accurately. Attach extra pages if needed.
By signing this requisition form,I certify that the information provided above meets the City's public contracting requirements,and the documentation can be provided
upon request. �/
Employee Signature: Department Head Signature: AV 5-=- •
Additional signatures(if applicable):
Funds appropriated for current fiscal year. �J NO yJ
Finance Director Date
Comments: Al, O u f- h F- P / "ie . .. , R Lam E4 Sd
G:FinanceTroceduretAPTormsTorm#3-Requisition.doc Updated on:4/4/2011