HomeMy WebLinkAboutFin Community Media Center of Marin Support; MTCDepartment: FINANCE DEPARTMENT
Prepared by: Mark Moses, Q
Finance Director
Agenda Item No: 6. b
Agenda
meeting Date: February 18, 2014
eet
I
City Manager Approval:AIL/k
SUBJECT: PROPOSAL TO SUPPORT COMMUNITY MEDIA CENTER OF MARIN
VIA CONTRACT WITH MARIN TELECOMMUNICATIONS AGENCY
DURING PERIOD 2014-2017
RECOMMENDATION: PROVIDE DIRECTION TO CITY OF SAN RAFAEL
APPOINTEE TO THE MARIN TELECOMMUNICATIONS AGENCY
I ITIMA I'� r
BACKGROUND: In June 2008, Marin Telecommunications Agency (MTA) and the
Community Media Center of Marin (CMCM) approved a Dedicated Access Provider (DAP)
Agreement in which the MTA designated the CMCM to be a designated access provider to
establish, operate and manage a Media Center and the PEG (public, education and government)
access channels pursuant to the written avreement. During the past five years, the CMCM has
established a Media Center in downtown San Rafael. and has expanded PEG programming and
training within MTA's jurisdiction in Marin. This agreement would have expired on June 30,
2013,, however the Board approved amendments that extended the agreement through
April 30, 2014.
During this period the CMCM, a 501 (c)3, has been funded with upfront monies MTA received
from Comcast,, PEG fees MTA receives quarterly from Comcast and AT&T, and revenue
CMCM generates from memberships, training course fees, contributions/grants, fees for video
services, and investment income.
At MTA's June 2013 Board meeting, the CMCM presented its draft five-year budget projections
and five-year capital plan for the period July 2013 through June 2018. The budget reflected
deficits of approximately $200,000 per year. In addition, the capital plan estimated over
$700,,000 in capital expenditures would be necessary during this period in order to replace and
upgrade equipment at the media center and install video equipment in three locations. The capital
reserves were $9821,000 at the beginning of the five-year plan in FY 2013/14. The PEG funds and
projected CMCM revenues identified by CMCM were insufficient to meet its financial needs
during the period prior to MTA receiv I*ng I% PEG fees from Comcast,, antic ipated during the
first half of calendar year 2017.
FOR CITY CLERK ONLY
Council Meeting:
Disposition:
A
IMA --aftim
The Cable TV providers in Marin, Comcast, AT&T and Horizon,, operate under a state franchise.
This franchise requires the companies to pay MTA franchise fees equivalent to 5% of their gross
revenues. The franchise fees are paid to local jurisdictions for the cable company's use of the
public right of way for their cable facilities and are unrestricted with regard to their use by
MTA's members. The companies are also required to pay MTA PEG (public, education &
government) fees which are an additional 1% of each company's gross revenues. The PEG fees
by law are to be used for video services. MTA currently pays the Comcast and AT&T PEG fees
to the CMCM as funding for the media center and operation of the channels. From July 1, 2012
through June 30, 2013 MTA paid the CMCM $375,000 in PEG fees received from the cable
companies. Some PEG fees from Comcast and Horizon are retained by MTA to fund video
installations for the cities such as the Fairfax video installation which facilitates video recording,
cable TV broadcast and web streaming of public meetings and events. MTA currently receives
0.5%. rather than 1%, PEG fees from Comcast based on a settlement agreement.
In 2011, when Comcast converted from the local franchise agreement to the state franchise
agreement, it had not fully recovered the upfront monies it had provided MTA which MTA
provided to the CMCM to establish a media center and PEG channel operations. The Comcast
0.5% PEG fee payments to MTA will remain in effect until Comcast recovers the full upfront
monies. It is estimated that Comcast PEG fees will return to 1% by January 2017. MTA and
CMCM are referring to the period between now and January 2017 as a "bridge" period until
MTA receives I% PEG fees from Comcast which will then provide necessary CMCM funding.
The PEG channels in Marin are cable cast on Comcast channels 26 (Public), 27 (Government)
and 30 (Education), and on AT&T U -verse on Channel 99. The Public channel provides a variety
of programming submitted by the community and represents free speech. The Government
channel programming includes various government meetings, forums, and events. The
Education channel provides education related programming including programming produced by
local schools, speaker/lecture series such as Dominican University's, University of California
TV (UCTV), NASA programming and others.
ANALYSIS: A key item for consideration in the proposed MTA-CMCM Agreement is the
proposed use of franchise fees to provide additional funding to the CMCM during the bridge
period from July 2014 to June 2017, by which time Comcast PEG fees are expected to increase
to M. The bridge period may end sooner if Comcast begins paying I% fees prior to June 2017.
To date, the MTA has provided PEG fees the CMCM, which can only be used for video services.
Franchise fees have been passed on to the MTA member agencies. These ees are unrestricte
revenues for the agencies, and they have not been used to fund the CMCM.
At MTA's August 2013 meeting, the Board considered the proposal to provide franchise fee
funding to the CMCM. Since using franchise fees as funding for the CMCM is a change in
MTA's current directionand impacts its members' franchise fee revenuesthe Board agreed that
they would not fund any sums to the CMCM out of franchise fees without first checking in with
the governing boards of each member agency. The MTA Board agreed to support the CMCM in
approaching the Councils/Board of Supervisors for a discussion on bridging a $660,000'. three-
year funding gap using franchise fees, with some caveats includi*ng-.
— No MTA decision will be valid unless 75% of the franchise dollars vote in favor;
— CMCM will explore reducing its reserves even further during the bridge period.-
- CMCM and MTA will each explore loan possibilities.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
The CMCM presented to the City Council in study session on October 7, 2013. The Council
desired to consider this request in conjunction with the mid -year FY13/ 14 budget review. The
budget review took place at the February 3 Council meeting and therefore the item is being
brought before the Council for consideration. The MTA board is planning to consider its
agreement with CMCM and the proposal to use franchise fees at its meeting in March 2014. It is
important that the City Council consider the funding needs of the CMCM, and provide input
and/or direction ahead of that meeting to its designee to the MTA Board {Councilmember
McCullough).
FISCAL IMPACT: If approved, MTA members would share up to $660,000 based on each
member's percent of total franchise fees. San Rafael's percent share is approximately 26.13%,
resulting in an estimated maximum contribution of $172,443 over three years with this allocation
approach. This contribution would reduce the City's related franchise fee revenues by
approximately six percent.
RECOMMENDATION: Staff recommends that City Council provide direction, by motion,, to
the City's appointee to the MTA Board to support the CMCM proposal with any conditions that
the City Council believes are appropriate.
Options include (but are not limited tol
(1) Approve the request up to the full amount; or
(2) Support funding the amount requested, with the condition that CMCM will commit to using
more of its reserves than proposed and thereby reduce the amount it needs during the bridge
period; or
(3) Support a reduced funding amount that would ensure the continuation of the CMCM's
governirnental programming, leaving CMCM to raise those amounts necessary to support its
public and educational programming during the bridge period; or
EMMMIZIM
ATTACHMENTS
Summary of Key Information Regarding Community Center of Marin's Request
Member Payments Associated with MTA $660,000 payment to CMCM
CMCM Five Year Budget Projections
W:"I'Management Services- WorkFile'\Finance- WorkFile\Council Material'\Staff Repors \2014\CMMC-v1.doc
Summary of Key Information Regarding Community Media Center of Marin's
Request for MTA Franchise Fee Funding during 2013-2017 "Bridge" Period
; 11 11 111 1 111 11111111�111 ippi 11�' 1=1111111111111 � III #
161 r-41111111111 � �� � 0 1 1,, mw!ra ;%
Horizon Cable. They provide Franchise and PEG fee revenues to IVITA.
1. Franchise Fees
- Providers pay Franchise Fees (5% of Gross Revenues) to MTA for use of the public
right of way. Providers collect these fees from CATV subscribers.
- MTA pays members their share of franchise fees based on provider revenue reports.
- Franchise fees are unrestricted revenues for the Town/City/County.
- San Rafael's FY 2012-2013 franchise fee revenues were $1 7031 000, and estimated
to be approximately $990,000 in FY 2013-2014.
2. Public, Education & Government (PEG) Fees
- AT&T, Comcast in unincorporated Novato, and Horizon franchises pay PEG fees to
MTA (1 % of Gross Revenues).
- Comcast - MTA Franchise pays PEG fees to MTA (.5% of Gross Revenues until
approximately January 2017, and 1% thereafter).
- PEG fees restricted to use for video services/PEG.
- MTA pays PEG fees to CMCM for Media Center and PEG channel operation.
MTA - Community redia Center of Marin (CIVICIVI) Agreement
1. MTA contracts with the CMCM to manage and operate the Media Center and the 3 PEG
channels which are broadcast on Comcast channels 26/27/30 and AT&T channel 99.
2. MTA provided the CMCM $3 million in upfront monies received from Comcast to build
and operate a media center and PEG channels. Quarterly PEG fees received from the
video service providers are also provided to the CMCM.
3. Initial 5 year MTA-CMCM Agreement with Amendments expires April 30, 2014. New
Agreement is being negotiated. CMCM funding is a key item in the negotiations.
I rIIqll1I1r:q4101T-1=* -111•11•11 1,11,11111 1 r 1;11111111;�- 1111 111 T 0 "n
receives 1 %•
PEG fees from Comcast. I
1. Current CMCM funding - PEG fees from MTA, membership/course fees, fees for
services, donations/g rants, investment income, use of reserve funds.
2. CMCM's 5 year 2013-2018 budget projections include:
- Capital expenditures of $715,000 given equipment is reaching end of service lives.
- Annual operating deficits assuming no use of current reserves for operating expense.
To date reserves have been used to fund annual budget deficits.
- Retains $500,000 as minimum reserves level. Reserves July 2013 were $982,000.
- Requests franchise fee funding from MTA during 2013-2018 five year budget period.
3. MTA's proposal considers providing CMCM up to $660,000 from franchise fees during a
"bridge" period until Comcast pays 1 % PEG fees and spread over the years 2014-2017.
This will reduce franchise fee revenues to MTA members.
4. San Rafael's estimated total share of $660,000 spread over 2014-2017 is-
- San Rafael's 26.13% share of total franchise fees method - $1721443.
- Hybrid calculation method - $153,703 (Option not likely due to lack of MTA support).
San Rafael's MTA-CMCM Funding 1 Pager -020914 2/10/2014
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