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HomeMy WebLinkAbout1982-06-28 City Council Summary Minutes1 1 CITY COUNCIL M1NUT€S CITY of Pilo ALTO Regular Meeting and Special Study Session re CATV Monday, June 28, 1982 ITS PAGE Oral Communications 2 1 9 0 Minutes of May 3, 1982 2 1 9 1 Consent Calendar 2 1 9 1 Referral 2 1 9 2 Item #2, Proposed Amendments to the Charter of — 2 1 9 2 the City of Palo Alto - Referral to Policy and Procedures Committee Action 2 1 9 2 Item #3, Crescent Park II Underground Conversion Project Agreement for Joint Participation in Installation of Underground Facilities System Between the City of Palo Alto and Pacific Telephone and Telegraph Company Item #4, Professional Services for Alcohol Tests Item #5, Ordinance re Parking Lot E/630-5.36 Gilman (2nd Reading) Item #7, New Parking Restrictions (2nd Reading) Item #8, Charitable Solicitation Ordinance (2nd Reading) Agenda Changes, Additions and Deletions Item #9, Public Hearing: California Avenue Area, Offstreet Parking Maintenance Di strict (Continued from 6/14/82) (CMR:368:2) Item #1O, Public Hearing: University Avenue Area Offstreet Parking (Continued from 6/14/82) (CMR:368:2) 2 1 9 2 2 1 9 2 2 1 9 2 2 1 9 2 2 1 9 2 2 1 9 3 2 1 9 3 2 1 9 4 Item #10-A (Old Items #6) , Moratorium Ordinance re 2 1 9 4 Demolitions in College Terrace (2nd Reading) Item #10-8 (Old Item #1), Human ervices Plan - 2'1 9 5 Referral to Human Relations Commiss1 n ITEM Item #1O -C, Request of City Manager Bill Zaner re Consideration of Hiring Freeze Item #11, Request of Mayor Eyerly re Traffic Barriers (CMR:369:2) Item #12,. Request of Mayor Eyerly to Refer Discussion of_ Future Financial Planning to Finance and Public Works Committee Item #13, Request of Councilmembers Fazzino and Levy re Cable Television Lobbying Disc l osure and Registration Provisions • P A G E 2 1 9 6 2 1 9 8 2 1 9 9 2 1 9 9 Item #14, Cancellation of Council Meeting of July 2 2 0 3 '6, 1982 Adjournment Special Study Sessidri Regarding Cable Television Final Adjournment 2 2 0 3 2 2 04 2 2 1 9 Regular Meeting and Special Study Session re CATV Monday, June 28, 1982 City Council of the City -of •Palo Alto met on this date in the - Council Chambers at City Hall, 250 Hamilton Avenue, at 7:30 p.m. PRESENT: Bechtel, Cobb, Eyerly, Fazzino, Klein (left at 9:30 p.m.), Levy, Renzel (arrived at 7:40 p.m.), Witherspoon ABSENT: Fletcher ORAL COMMUNICATIONS f 1. Dr. Harvey Roth, 3422 Kenneth Drive, said that government was to provide the services necessary for the City to function, not to go into competition with private industry. He said that increasing fees was an additional form of taxation. 2. :Lames Hagan, an Attorney, 2 Palo Alto Square, said he repre- sented Century Stores, which was located on Middlefield Road near the intersection of Loma Verde. He said that property was scheduled to revert from commercial zoning to residential zoning in April, 1983. Century Stores would like to remain in its present location, and its customers would like to have it remain there because it provided very important services for the local neighborhoods. He said that for the past few weeks, they had been asking the customers of the store if they would be interested in having the store remain in its present loca- tion, and many of them had signed petitions for that purpose. 3. Edith Molton, 3172 Middlefield Road, spoke on behalf of 14 owners in the Monterey Townhouse, and said they depended on Century Liquors. She said many of the residents of Monterey Townhouse were older and no longer drove cars, and it was a necessity for them to have a store like Century L,quors where they can do their ,shopping. 4. Bi 1 1 O'Mara, 2512 Cowper Street, said . he thought the stores likely to be affected were stores that were all providing needed services.. He encouraged the Council to consider placing the rezoning matter on the agenda in order for citi- zens to speak further on the issue. .5. Kate Cole, 3064 Middlefield Road, said she had lived in Palo Alto for 20 plus years, and at her present . residence for si x years. She did not have an automobile, and felt that the little shopping center was an oasis of human services for those without automobiles. Mort Block, 3784 Redwood Circle, asked if the - Comprehensive. Plan was irrevocable. He suggested that the citizens measure whether the, City Council was doing _things for them or to them. 7. George Witbeck, 2411 Bryant Street,, said he had lived at his present address. for 25 years, and. had shopped at the= Century Store fore -25 years.. He commented-- that Century Store ::was .notea liquor store-eite was a store that- sold liquor, milk, bread, etc. The.store was conreni ent `fors the people,. i n his aria, and a store which was needed. He :-said he felt It `; was tree that hop.si ng ._was needed i n Palo- Alto, but, the - sma11 , can,veni ent. markets were _also' needed. He asked for the Council `s sped al consi derati.on that the -.---rezoning at -least be considered and kept .,as ,i_s. 2 1 -9 0'- 6/28/82 8. Sylvia Smith, 3737 Middlefield Road, said she had lived at her present residence for nine years. She felt that the local services in their part of town should be maintained. ;,he com- mented that Manchester Garage had already been lost, and now, the adults were being told that they had to go to downtown Palo Alto or San Antonio for basic services. She said the people wanted their local services close by. 9. Dr. Richard Ross, 1440 Hamilton Avenue, said he had lived in Palo Alto for ten years, and during that period of time he had used all of the stores at least weekly if not daily. He found the services to be critical and essential. Further, he said he watched Palo Alto go from a nice quiet, rural suburban com- munity to one which was being populated more by condominiums and high rise buildings. He felt Palo Alto was losing the value of the community which was what attracted people. Was it more essential to build more buildings, or was it essential to allow small businesses to continue to provide services in the neighborhoods where they were being used by people who lived there. 10. Dr. Frank Ingle, 814_ Richardson Court, said he supported the Century Liquor Store because they had a wine selection he would have to go to the San Antonio Mal 1 to buy, a food selec- tion to suffice in an - emergency, and were open from about 7:00 a.m. to 11:00 p.m. 11. Meg Miranda, 3146 Avalon Court, asked the Council not to remove the services that she could walk to with her son. I2. John Horan, 2563 Street, said he used and appreci ated the ser- vices provided by the Century Stores, and ` would like to see them remain. Mayor Eyerly commented schedule was set by a scheduled to begin in a by a Councilmember. that the zoning previous Council, few months unless and the amortization and the changes were the item was agendized Councilmember Fazzino indicated that he and Councilmember Levy intended to bring the rezoning issue .up on July 12 for discussions He encouraged those ci..ti tens to attend that evening. and perhaps to bring other people from the area. Mayor Eyerly said that the Ci ty of Palo Alto had entered the Corporate Cup Races -Track Team events for several years. He sai d the regional championships were held at Stanford University on June 26 and 27, and the National Championships were to be held on July 24 and 25 at Stanford. He sai d- P'alo Alto placed in six. out of ten .:events, and Vice _:Mayor Bechtel won a -bronze medal for the Women's 5000 meters for the:Masters. Her time was 26.33. He presented the ribbon to Vice Mayor Bechtel. MINUTES OF MAY_3, 1982 MOTION: Councilwewber Witherspoon moved, seconded by Klein, approval of the N1nutes of NO 3, '4982 as submitted. MOTION PASSED unaniaous!y, Fletcher, absent. CONSENT CALENDAR Mayor Eyerly removed Item #1, Human Services Pleat Referral to Human Relations Coeei:ssi ors and item -16, Moratorium Ordinance re Demolitions in Col 1 ege Terrace. at the request of cf ti z'ens. 1 1 Councilmember Witherspoon asked to be recorded as "abstaining" on Item #3, Crescent Park II Underground Conversion Project Agree- ment; Councilmember Levy asked to be recorded as voting "no," on Item #8, Charitable Solicitation Ordinance; and Councilmember Renzel and Mayor Eyerly asked to be recorded as voting "no," on Item #5, Ordinance re Parking Lot E/630.636 Gilman. MOTION: Councilmember Klein moved, seconded by Witherspoon, approval of the Consent Calendar as amended. Referral ITEM #2, PROPOSED AMENDMENTS TO THE CHARTER OF THE CITY OF PALO CF Action ITEM #3 CRESCENT PARK II UNDERGROUND CONVERSION PROJECT AGREEMENT Staff recommends that the Council authorize execution of the agreement for joint participation in the Crescent Park II Underground Conversion Project. AGREEMENT FOR JOINT PARTICIPATION IN INSTALLATION OF UNDERGROUND FACILITIES SYSTEM IM UNDERGROUND UTILITY DISTRICT N0. 23 (CRESCENT PARK II PROJECT) Pacific Telephone & Telegraph Company ITEM #4, PROFESSIONAL SERVICES FOR ALCOHOL TESTS (CMR:352:2) Staff recommends '..hat the Mayor be authorized to execute the agreement with Milton Smith, Jr., for the 1982-83 Fiscal Year, in an amount not to exceed $18,306. AGREEMENT - CLINICAL LABORATORY TECHNOLOGIST SERVICES Milton W. Smith, Jr. ITEM 15, ORDINANCE RE PARKING LOT E 630-636 GILMAN (2nd Reading) ORDINANCE 3365 entitled 'ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING SECTION 18.08.040 OF THE PALO ALTO MUNICIPAL CODE (THE ZONING MAP) TO CIANGE THE CLASSIFICATION OF PROPERTY KNOWN AS PARCEL A (PACKING LOT E) FROM PF TO CC(P) AND PARCEL B (630-636 GILMAN) FROM CC TO PF' (1st Reading 6/14/82, Passed 5-2, Renzel, Eyerly "no,' Bechtel, Fletcher absent) ITEM #7 NEW PARKING RESTRICTIONS (2nd Reading) ORDINANCE _-3367 entitled 'ORDINANCE OF THE COUNCIL OF THE CITY Or —PALO " ALTO" AMENDING SECTION 10.60.140 OF THE PALO ALTO MUNICIPAL CODE BY ADDING SUBPARAGRAi H. (gi) THERETO TO PROHIBIT PARKING BY PERMIT HOLDERS IN EACH CITY -OWNED OR LEASED PARKING LOT OR STRUCTURE IN THE UNIVERSITY AVENUE, CALIFORNIA AVENUE AND MIDTOWN BUSINESS DISTRICTS FOR MORE THAN 72 CONSECUTIVE HOURS IN THE SAME LOT .OR STRUCTURE (1st Reading 6/14/82, Passed :7-0, Bechtel. Fletcher absent) ITEM #8 CHARITABLE SOLICITATION- ORDINNANCE (2nd Reading OR©I ANCE 3368 entitled "ORDINANCE OF THE COUNCIL :'OF IRE C1lY OF. PALO ALTO AMENDING CERTAIN SECTIONS OF TITLE 4 REGARDING SOLICITING FUNDS" (1st Reading 6/14/82, Passed 5-1 Ley 'No,' Bechtel, . Fletcher absent. MOTION PASSED unanimously, Witherspoon "abstaining," on Item 13, Crescent Park II Underground Conversion Project, Rena.el and Eyerly voting "no," on Item_ #5, Ordinance re Parking Lot E/630-636 Gilman; and Levy voting "no," on Item #8, Charitable Solicitation Ordinance. AGENDA CHANGES ADDITIONS AND DELETIONS City Manager 8i11 Zaner announced that Item #1, Human Services Plan, would become Item 10-8; and Item #6, Moratorium Ordinance re Demolitions in College Terrace would become Item 10-A. Mr. Zaner said that Section 2.04.050 of the Palo Alto Municipal Code allowed the Ci ty Manager to bring items to the City Council for action even if the items were not advertised on the agenda provided that some identifiable urgency was involved. He requestedthat the Council add an item to the agenda, Considera- tion of Hiring Freeze as Item 10-C. MOTION: Counci1member Klein moved, seconded by Cobb, to add Item 10-C, Consideration of Hiring Freeze, to the agenda. NOTION PASSED unanimously, Fletcher absent. ITEM 19, PUBLIC HEARING: CALIFORNIA AVENUE AREA OFFSTREET PARKING Assistant Director of Public Works George J. Bagdon said that the estimated assessment roll had been on file with the City Clerk since June 4, 1982. Since the estimated assessment roll was filed and notices sent to the property owners, four changes were noted which would affect four properties. Three were in the California District and one was in the University Avenue District. He said the City Engineer recommended that the following changes be made in the California Avenue District: 1. Assessment No. 124-32-051 at 433 Cambridge, be corrected to reduce the parking requirement from 29 spaces to 28 spaces; 2. Assessment No. 124-28040 at 265 Cambridge, be rei dents f i ed as ko. 1221-2B-O4b and be clianged to increase the parking provided nom nee spaces to five spaces. The assessment amount would be reduced accordingly by about $330. 3. Assessment- No. 124-32-034 at 310 California, be corrected to TeWM"--171117517M1 requirement from 45 spaces to 41 spaces, and reduce the total assessable square footage from 6,303 squarefeet to 5,625 square,feet. The assessment would be reduced accordingly by about $110. Mr. Bagdon noted that the California Parking Maintenance District was amend!d to lower the assessment rate to below six cents per square foot which was the maximum rate allowed by the resolution forming the District. The final roll would be recalculated to reflect the lower rate and. the three .changes just mentioned prior to transmittal to the County ' for inclusion in the , tax roll... The City Engineer recommended that the following change be made in the University Avenue District: 1. Assessment No. 120-26-061 at 522 Bryant, be corrected to Frawn7-117-17riT"FraTiTrrequirement from 72 to 54 spaces, and reduce the total assessible square footage :from 7,937 -square feet to 4,877 square feet. The assessment amount would be reduced accordingly by about $300. The final roll would be recalculated to reflect the change prior to transmittal to the County for : inclusion i n the ,tax ro1 l i 1 Mr. Bagdon commented that staff had spoken to Mrs. Susan Chee who spoke at the June 14, 1982 Council meeting. He said she was tele- phoned on June 21, 1982, and staff answered her questions con- cerning the purpose of the Assessment District and the reason her property was assessed. Further, staff responded to Norman and Jenny Heiwig's letter, dated June 10, 1982, concerning an increase in parking space credit from two- spaces to six spaces. He said that in a letter- dated June 24, 1982 from staff, a denial was made of that request as the additional four spaces were too short in length to be legally, considered as spaces i Mayor Eyerly declared the public hearing open. Receiving no requests to speak, he declared the public hearing closed. MOTION: Councilmember: Fazzino moved, seconded by Bechtel, approval of the resolutions. RESOLUTION 6047 entitled "A RESOLUTION CONFIRMING ENG1 ER iS RfPOR1 AND ASSESSMENT ROLL" CALIFORNIA AVENUE AREA OFFSTREET PARKING PROJECT NO. 71-63 RESOLUTION 6048 entitled 'A RESOLUTION CONFIRMING ENGE ERTs REOORT AND ASSESSMENT ROLL" CALIFORNIA AVENUE CAMBRIDGE GARAGE PROJECT N0. 65-09 RESOLUTION 6049 entitled 'A RESOLUTION CONFIRMING ENGINEER fS REPORt AND ASSESSMENT ROLL" MOTION PASSED unanimously, Fletcher absent. ITEM #10, PUBLIC HEARING: UNIVERSITY AVENUE AREA OFFSTREET rm Bill on.1nuec from ,m olars: Mayor Eyerly declared the public hearing open. Receiving no requests to speak, he declared the public hearing closed. MOTION; Counci1member Klein moved, seconded by Bechtel, approval of the resolutions. PROJECT NO,. 75-63 RESOLUTION 6050 entitled "A RESOLUTION CONFIRMING €NGINEER`S REPORT AND ASSESSMENT ROLL" UNIVERSITY AVENUE AREA CIVIC CENTER OFFSTREET PARKING PROJECT NO 66-08 RESOLUTION 4051 entitled "A. RESOLUTION CONFIRMING AND ASSESSMENT ROLL' NOTION PASSED unanimously, Fletcher absent,. ITEM 010-A OLD ITEM 16) MORATORIUM ORDINANCE RE DEMOLITIONS IN tOttta TINRAcE Vzna.r lrea,1 722.1 Nick Chorale, P. 0. Box 1929, Fremont,: -California, said that along with his brother and sister, he owned the home located at 6, J and 624 Cal i f'erhi a Avenue. He said he applied for a demol itton 'permit a while back- and was told there was a six Aonth morator'i um. He said he . lived In the home in 1934-35, and it was a multiple. zoning. It was downzoned in 1978, and this moratorium was to downzone the property again. He urged the Council not to support a moratorium -or a ' downzoni ng. 2 1 9 4 6/28/82 MOTION: Councilmember Levy moved, seconded by Cobb, approval of the ordinance. ORDINANCE 3366 entitled "ORDINANCE OF THE COUNCIL OF THE CITY OE l iLTO IMPOSING A MORATORIUM FOR SIX MONTHS ON ISSUANCE OF DEMOLITION PERMITS FOR ALL RESIDENTIAL STRUCTURES IN THE RM-3 ZONE OF COLLEGE TERRACE BETWEEN CALIFORNIA AVENUE, STANFORD AVENUE, EL CAMINO REAL AND WELLESLEY STREET" (1st •Reading 6/14/82, Passed 5-2, Eyerly, Witherspoon "no," Bechtel, Fletcher absent) NOTION PASSED by a vote of 6-2, Eyerly and Witherspoon voting "no," Fletcher absent. ITEM #I0 -B (OLD ITEM .#1), HHi SERYICES.PLAN - REFERRAL 'TO HUMAN' 't�itTTD'A'�"�'0'�I'O�T'S'�"f'D'A°' Bob Moss, 4010 Orme, said he submitted a -1 etter 'to the City Council, which is on file in the City Clerk's Office. He said he was concerned because he felt the current Plan had a number of errors and defi ci enci es which woul d make it di ffi cul t to be addressed appropriately by the Human Relations Commission (HRC) . He said that as presented, the Plan would create major probl ems for the HRC because there were areas being presented to the HRC which they were not accustomed to dealing with. Organizations and entire programs which provided services to the City of Palo Alto were not renti oned i n the Plan. He said that the result of presenting the Plan as is would be a proposal far behind what was presented to the Planning Commission during the Comprehensive Plan revisions which stretched from 1974-78. He said he sat through four years of hearings on the Comprehensive Plan and the zoning ordinance, and 3-1/2 years sitting through meetings" and di scus- si ons on the Terman proposal and Plan. He suggested that if the City was to go forward with what it currently had, they would be looking at three or four more years to get a social services plan. Councilmember Fazzi no said he appreciated Mr. Moss' concerns, and sal d he had fought for the past few years to establ i sh the HRC as the major social planning agency for the City of Palo Alto. He felt the HRC was fi nal ly in the position to do so, and he thought the Pl an would be changed and altered based on the HRC di sous- sions. Further, he hoped that the HRC would invite a _tremendous amount of public input. He said that was the history of the ,HRC. He felt that Mr. Moss was early with his concerns. He wanted the HRC to look at the plan, invite public comments, and then bring it . back to .the Council and staff for final review. Mr. Moss said he simply wanted to get out front that there were some other areas and rough spots, and urged that 'other organiza- tions be included initially, NOTION: Counci l merarber Levy moved„ seconded by Witherspoon, to refer the Haman ' Services Plan to the Human Relations Commission. Di rector of-- Soci al and ;Community Services= Carteen . Bedwel 1 sald that a plan was proposed which recommended a process -for the City to enter into to in order todevelop its priorities. She expected public meetings to be - held and for a variety of interested commu- nity groups to be involved in the City 's services whether they were directly funded by the City or used City resources such as theaters. She' was confident that Mr. Moss' concerns would be incorporated in the review of the plan by the- .HRC. Staff reco ended that the NRC take the ? product developed by the. ; City staff, review it openly, and odi fy'. it as appropriate based on public comment. 1 1 1 2.1 9,5 6/28/82 Councilmember Cobb said he felt that Bob Moss had raised some good points, and he hoped they .would be addressed, He asked if it was likely that the referral would result in study sessions, as opposed to just hearings. Further, he hoped that the kinds of groups referred to by Mr. Moss could be sent copies of the draft document so that they would know that hearings were to be held and be invited to give their comments. Ms. Bedwell said that staff had a distribution list forthe draft Plan. She expected that the service. providers, including the com- munity organizations, community contractors, and volunteer groups had been copied or would be copied. She said staff would recom- mend that the HRC take as much time, and as much community involvement as necessary to complete the product. Counci lmember Levy said he felt Mr. Moss' concerns were valid, and he agreed with his colleagues in that regard. Further, he agreed with Mrs. Bedwell that the Plan had been a long time in coming and that it should getout into .the public right now. He felt the HRC was the right body to have the hearings. He was certain that the HRC would call on all the human services providers in the area to testify and that a _ thorough job would be done before the completed plan returned to the Council. Councilmenber Fazzino felt there was a subtle presumption that not all the issues would be heard by the HRC. He said that all the HRC sessions were study sessions and he could think of no more. informal group which existed within the structure of Palo Alto than the HRC, He guaranteed that the HRC's outreach program would be far more effective than anything the Council passed on to them. He felt the HRC should be left to do their job. MOTION PASSED unanimously, Fletcher absent. ITEM #10-C R_EQUEST OF RTRTM FREEZE CITY MANAGER BILL ZANER RE CONSIDERATION OF City Manager Bill Zaner said that the Palo Alto Municipal Cade authori zed the City Council to consider and act on matters which were not listed on the agenda provided that an explanation of the urgency involved was stated in the open meeting. In his opinion, there was an urgent heed for the City Council to rescind its pre- vious decision to impose an employment freeze. He said the urgency arose from the following new facts: Mr. Zaner said that first, the new financial information, not available at the time the Council made its decision to impose the hiring freeze, was now available. Second, the continued imposi- tion of a hiring freeze might have an adverse effect on City operations, including public safety, public health and other vital services. He said that in the 1981-82 Budget, an anticipated reduction in States subventions was included of approximately $900,900. The actual reduction was somewhat less than the City's estimate --closer to $100,000, In preparing the 1982-83 Budget, staff included a further reduction of $400,000. In other words, spread out over the two year period, the City staff anticipated and programmed . for an anticipated loss of more than $1 million in State aid. He said that as this year's State budget underwent review and revision, the potential loss for Palo Alto was calcu- lated as being as -high as $1,770,000. That would have exceeded the City's self-imposed revenue estimate reductions and could have meant readjusting priorities or using some reserves. He said now it appe'r'ed that thC total reduction in state revenues for Palo Alto would be approximately $1 million rather than the outside number of $1.7 million. The net resultwas that the State had cut Palo Alto's revenue by approximately $1 million over the last: two years, and the City had removed a like amount from its anticipated revenues over the same period. The. City was therefore, able to fund the proposed budget as presented to the City Council making it unnecessary to continue the existing hiring freeze. He requested that the City .Council` rescind its previous direction to impose a hiring freeze. ,2 1 9 5 6/28/82 Mayor Eyerly asked if revenues for 1982-83 were going to be lower than anticipated --about $600,000 lower. Mr. Zaner said the State's cut would be about $400,000 --the same as anticipated. He said that the budget which was adopted by the legislature was very close i n dollar amount to_ what the Governor had originally anticipated, and on which the City staff had originally based its estimate. Mayor Eyerly clarified that the only concern then was whether the Governor would sign the budget. Mr. Zaner said that was ;correct. Councilmember Cobb said he understood that the $900,000 which was coming down from the State now represented more than the $400,000 which the City had allowed for. Mr. Zaner responded that the State subvented money back to the City —motor vehicle in -lieu fees. He said the money was collected locally and sent to the State of California, and they turned around and sent the money back. He said the State was talking about removing what amounted to all of the motor vehicle in -lieu fees. Last year, the State took about .two-thirds or three -fifths of that amount. He had guessed last year that it would be . about $900,000, but he was a little high. Now, the State was coming back to take out the balance of the motor vehicle in -lieu fees, which would be another $400,000. He said the net effect was that the. State would take about $1 million to $1.1 million total. Councilmember Cobb clarified that the numbers being reported by the press represented the total over toe two year period. MOTION: Vice Mayor Bechtel moved,' seconded by Fazzi no, to rescind the hiring freeze. Councilmember Levy said he had seen some data contained in the newspapers which indicated that some $1,000,000 had been taken from Palo Alto, and that Palo Al to was now getting zero from the State. He asked if that referred only to the motor vehicle in - lieu funds or did it refer to all funds which came to Palo Alto from the State. Mr. Zaner responded that it referred to the "bail cot" money --the net now was zero. AB -8 contained a formula in it by which cities were bailed out. He said the St ate was in effect taking back its bail out money. He said there was a point last weekend where the City was threatened with the possibility of giving the State back more than the bai 1 out. Councilmember Levy asked how much of Palo Alto's City budget fo.r next year was sti l 1 going to come from .the State. He was con- cerned for future years that to some degree the - City was at the mercy of the State, and he wanted to be sure to what extent. Mr. Zaner referred the Council to IX, which was the Revenue Chart in -the City Budget. - _lie_ said the chart indicated which revenues came from the State of -California,- and which aieee fromt other s-ources. He- said there was about. $3.7 million In_ property tax and State aid, and the ci-garette, tax was about $300,000,.; Counci l member, Cobb, said he ,did not support : the hiring freeze, and was sensi ti ve to Mr. - Zaner's_ comments that the staff would proceed with great prudence' .i n: hi ri ng..- Me said_ that ev.en though he would vote to rescl rid the freeze, he wanted_ that kind_ of prudence to reerai n i n orders lie' hoped that C .ty staff wool d cgnti hue to exercise i t until the Ci ty .had a .better 'sense -,,off where At was in the long _run. Mr. Zaner agreed. He said the City was probably at the point where the relationship between the City and the State financially was drawing down to zero. He: said staff would be extremely pru- dent, not only in the hiring practices, but staff intended to institute some internal budget controls in order to tighten down and to keep the City as stable as possible. MOTION PASSED unanimously, Fletcher absent 1 1 ITEM 011 RE UEST OF MAYOR EYERLY RE TRAFFIC BARRIERS (CMR:3b9:2) Mayor Eyerly said that the California Supreme Court decided that the City of Berkeley did not have the authority to regulate traf- fic with traffic barriers and set July 1 for the situation to be rectified. He said he wanted the Council to be realistic of where it was on,: the current traffic barriers, and . i f the City was not able to preclude the removal of those, then the City would have to adopt structures which would have to be approved by CalTrans. He wanted the Council to reaffirm the commitment of past Councils to preserve those barriers and- spend the money if necessary to do so. City Attorney Diane Lee said regarding Assemblyman Rates Bi 1 1 9 AB 2873, she received a call from Assemblyman Sher's office to advise: 1) that there would be amendments to that bill maki ne it an urgency measure, and 2) that there would be hearings before the Senate Transportation Committee on the legislation She under- stood that Mr. Schreiber would attend the hearings for the City of Palo Alto. Vice Mayor Bechtel inquired about the barriers which were not shown on the City's map - of barriers --those barriers on Park Boulevard between Page Mill Road and East Meadow. She asked if those were to be part of the Plan. Director of Transportation Ted Noguchi responded that those bar- riers did not meet staff's interpretation of the Supreme Court decision. The barriers on Park Boulevard did meet the require- ments because they were made of concrete. Ms. Lee amplified Mr. Noguchi 's remarks and said the construction material alone was not ° the only issue, but if it was considered to be a street reconstruction or street design feature. as -some of the barriers were, then they were not within the ambit of the Supreme Court decision. She said that in practical terms, they applied mainly to the City's less permanent kinds of barriers --the ones that were not constructed of concrete. If a concrete barrier was constructed in a certai n. way it could also fall -within the Supreme Court decision, Counci-member Cobb said he assumed that with regard to the status quo policy for all existing street barriers, it was separate from the issue about _ whether to proceed with the Evergreen Park discus- sions. Mr. Noguchi said staff tried to deal with the issue of the Evergreen Park Neighborhood Association, And as stated in the report staff believed that the issue should be returned to the Policy and Procedures Committee in late fall rather than immedi- ately because of the issues currently before the: State legisla- ture. MOTION: Mayor E _erly 'moved, ' seconded by konzel, that staff pre- pare a- resolution reaffirming Council policy of pr•servati en of current traffic -control items. PASSED unanimously, Fletcher absent, 2 1 .A 8 6/28/82 MOTION: Vice Mayor Bechtel moved, seconded by Levy, to adopt the staff recommendations as follows: 1. Adopt a status. quo policy for all existing street barriers pending clarification on the various issues contained in the California Supreme Court's decision and pending the final outcomes of current. actions . (City of :Berkeley request; Cal Trans' "Emergency Regulations"; State Legislative Bill) being pursued; 2. Endorse the three suggestions contained in the letter sent to Assemblyman Byron Sher by City Manager Ni 111 am Zaner as follows:' "a. That the ideal situation would be legislation. making 1t clear that City Councils have the right to establish traffic barriers on theirown; b. To clarify the fact that cities have the right to per- manently close a street, but at the same time to do so in such a way that emergency vehicles can gain access if nec- essary. From a design point of view, it would be possible to permanently close a street --for example, make it into a cul -de-sac--but landscape it and bid l d i t i n such a fashion that fire trucks and ambulances could get through the closure in the event of an emergency. Such a design would be extremely expensive (somewhere near twenty-five to thirty thousand dollars per closure). c. Cities also need authority to temporarily close a street in anticipation of making the closure permanent. We need to be able to erect temporary barriers i n order to field test the actual operation of a street closure. One would not want to spend twenty-five or thirty thousand dollars to close a street on a permanent basis and then find that the experiment did not work and have to rip out those improvements. The temporary closures should be authorized for up to a year so that we can gain actual on -site experience and do traffic counts, destination studies, neighborhood surveys, etc.' 3. That Council direct staff to return to Council after passage of AB 2873 with a report on, the impacts on Palo Alto and a courseof recommended actions to preserve the Council's past policies regarding street barriers. MOTION PASSED unanimously, Fletcher absent. ITEM #12, REQUEST OF MAYOR EYERLY TO REFER DISCUSSION OF . FUTURE MOTION: Mayor Eyerly moved, seconded by Cobb, to refer to the Finance and Public Works Committee the Financial Planning Issue and City Manager direct: a report to be prepared en this subject. MOTION PASSED unanimously, Fletcher absent. ITEM #13 REQUEST ` OF COUNCILMEMBERS FAllINO AND LEVY RE CABLE 'Counci lmedber Fazzi no said that -regar_.ding cable television- lob b,vi ng di`scl osure and registration provisions, he and Counti l aefber Levy -want :to insure:,that the upcoming proceedings, regarding Cable TV services for Palo Alto. citizens be- conducted __i n the Most -open and professi oval Manner possible. They were concerned that the financial reward was too. great and the issue too important for the City not to establ i sh: a procedure' which required a totally open 1 obbyl ng and t1 nanci'al disclosure process. He said other cities had had problems with citizens being sold ownership in the company only to create - two, - tree or four city constituencies with a financial 1 ntetest in a particular cable company. He said recent press reports here indicated that local representatives were already being employed by various companies to promote their cause. He said they were not against that, they simply wanted that information available to the public. Councilmember Fazzi.no said that "Common Cause" proposed an ordi- nance which he and Councilmember Levy felt represented a rational approach towards the. problem. Although they were in agreement with most of the proposals, it seemed impractical, unnecessary and perhaps unconstitutional to eliminate all private contact between company representatives and Councilmembers. Councilmember Fazzino said that the Council had a proposed ordi- nance from Fairfax, Virginia, and he and Councilmember Levy evaluated the proposal and a number of concepts seemed to be of particular importance. MOTION: Councilmember Fazzino moved, seconded by Levy, that the Council endorse the following concepts re Cable Television Lobbying Disclosure and pegs strati ors, provf si ons , and that the City Attorney be directed to draft an appropriate ordinance. 1. Registration, but no fee. 2. Statement of Expenditures re Cable Lobbying. 3. Campaign contributions. 4. Discouragement of solicitations from local citizens for the purpose of influencing the aware of franchise. 5. List of stockholders with one percent or more ownership in the system. b. Corporate affiliations. 7. .Contingency agreements for future transfer of stock, cash or property related to the proposed cable system. Hollis Russo, Director of Cable Communications Cooperative of Palo Alto, 1143 Stanford Avenue, said she supported the proposal made by Councilmembers Fazzino and Levy. Regarding the limiting of contact between members of the public and the Councilmembers or staff members, as a City resident and taxpayer she felt she should have the right to contact staff members or counci lmembers at any time regarding her concerns as a resident. She provided the City Council with the Articles of Incorporation for the Cable Communi- cations Cooperative of Palo Alto and a list of their current directors and addresses. She agreed with Common Cause and Councilmembers Fazzi ne and Levy that Cable TV decisions should be made in the open. Richard Cox, Common Cause, 2715 Ramona Street. He said Common. Cause was a nationwide organization dedicated to achieving greater accessibility and accountability at all . levels of government. The installation of a cable television system requi red large expendi- tures, but had the potential for =.large rewards. He said that the Council was likely to experience more intense lobbying on this i seve than was customary on others. Common Cause _ was concerned that the -Council be prepared for the intense lobbying and that the decision -making process remain open and even handed as it hadbeen thus far. He said Palo Alto was not the first city to face the ownership and financing: decision --many ether chapters of Common Cause had, witnessed and filed reports on the process, including various : abuses. He said the most common questionable practice was known as ="rent a citizen," which referred to the practice in which a cable company provided some benefit to an influential citizen or local institution in exchange for help , in : swaying the -decision makers. For example, one company in Omaha, Nebraska proposing a $37 million system offered eight local investers a 20% share for $200. He said the projected value of the 20% share --1G years later --was $12 million. Those i nvesters had a direct financial interest in lobbying for their company's proposal since none of the profits would be available unless they were successful. He said such nonpaying stockhol ders add significantly to the cost to monthly cable subscribers. Common Cause hoped to bring that type of practice into the open by requiring the registration of lobbyists, the logging of meetings with lobbyists, and a full dis- closure of funds spent on lobbying activities. They hoped the Councilmembers would agree that a formal procedure for total open lobbying and financial disclosure was necessary. He said ulti- mately it would benefit the Council and staff members as well as future cable subscribers in Palo Alto. Common Cause agreed that a ban on contacts between City Councilmembers and Company represen- tatives outside formal proceedings was extreme, but that any such contact should be logged and that the log should be available for public inspection. They hoped the Council would find their modi- fied suggestions acceptable; Bob Moss, 4010 0rme, said he read the Fairfax, Virginia ordinance and he thought it might be overly broad. He said he interpreted one of the clauses as saying that anyone who addressed the Council to lobby or to speak in favor of a franchise, or in favor of some aspect of cable television, would be required to disclose inter- ests. He said his family owned stock in Westinghouse Corporation, a 1 arge cable television operator, and he asked if that meant that if he spoke before the Council, he would`have to disclose his own ershi p in stock. Regarding contacting individual Councilmembers, he asked if the intent of the ordinance was to extend that to any- one calling any Counci l member or staff member whether he be a paid or unpaid representative of a potential franchise or just someone who happened to own some stock in a potential company. Counci lmember Levy commented that so far he was aware of nothing improper that had taken place in Palo Alto. He said the purpose of the ordinance was to forestall any possibilities. He said he did not wish to limit individual contacts between the public and the Ci ty Council, or between representatives of companies or the industry and the Council. He found those contacts to be useful. However, he wanted to know when someone approached him if they were being paid to do so, or if they were a significant stock- holder. Regarding campaign contributions, he thought the ordi- nance would be improved if language were contained saying that no contribution to a candidate could be made within the final thirty days prior to an election, and that all reports of contributions must be reported within fifteen gays of having been made. If that happened, the situation would not occur wherein, in the final few weeks of an election, substantial improprieties could occur because they would not have to be reported until after the elec- tion. He hoped the Council would completely endorse the concept of open disclosure of lobbying as a warning to everyone that any improper approach to the Council would not, be tolerated. Counci lmember Klein thought the ordinance was premature. He said it seemed. bottomed on the idea that there would be.. bidding for a franchise, and the Council was yet to make that decision. He said he world be wi i 1 i ngeto continue the matter until the Council, k new whi ch way it would go with regard to municipal ownership. He said the proposed ordinance bothered him because it ` seemed bottomed on the idea that cable television was an issue different than any other one the Council faced, and that people who would be dealing . with cable television as an issue were to be less trusted than anyone else, and sorhehog. the Council itself was to be less trusted on this issue thae on others. 'He realized there were a lot of dollars at stake in Cable TV, but there were lots of_. dollars at stake in many of the zoning decisions faced by Council. He did not see , any reason for singling out this particular industry and this particular decision for unnecessary 2 2 0 1 6/28/82 1 1 1 bureaucracy. The proposed ordinance had four major parts to it. One, it contained some negative language about citizen/share- holders and what had to be disclosed. He said that might be appropriate, but he submitted that it was generally part of the ordinance the Council would adopt if 1t decided to have the pri- vate franchise competition. At that point, it would be stated in the ordinance just what information the. Council wanted the bidders to disclose, and he thought it would be appropriate for them to have to disclose all their shareholders. Regarding Councilmembers having to disclose campaign Contributions, an adequate ,law was already on the .books . in Palo :Alto. Regarding open meetings, that was the law of the State of California. He felt that expenditure reports and registration of lobbyists were the only new items. He would either oppose the motion or continue it until it was known whether Palo Alto would have municipal ownership or private ,owner- ship of cable television. Counci lmember Witherspoon said she would oppose the motion. She said that in her six .years as a Counci lmember, they had made Many decisions which involved a great deal of money. Whenever she was in doubt when a citizen started lobbying her for one reason or another, she was perfectly capable of asking about their special interest. She did not think the City needed 'the extra burden. The City of Palo Alto was. a sophistocated town and quite able to determine why and how they were being lobbied and by whom. SUBSTITUTE MOTION TO CONTINUE: Vice Mayor Bechtel moved, seconded by Klein, to continue the item until after a decision is made regarding private or muni ci pe1 ownership of Cable Televi- sion. Vice Mayor Bechtel said she felt it was premature to adopt the ordinance because the City Council must make the decision first about municipal ownership. She knew of no one that had been improperly lobbied by anyone. Counci lmember Fazzino said he was incredulous. He thought his proposed ordinance would sail through with no problem. He said they were talking about a general policy of the City .rega,rdl ess of. what the City Council did with respect to a public or private system. He did not think it was premature and when talking about adopting a good government policy, he felt the policy should be adopted right now. He felt the proposed ordinance responded directly to the onerous nature of many bidding processes which', had occurred : i n other cities. He said th a so far he had been pleased with the behavior of those companies who had talked generally about the issues of cable television, and he wanted to establish a climate where people could debate the merits of the issue and not be suspect about some of the issues which occurred in other com- munities. He said there was a difference in terms of this issue and the money involved and the tactics used, and he thought the Council was kidding itself if it did not respond differently on this issue than on others. Counci lmember Renzel said she would oppose the substitute motion and would support `the main notion if the substitute failed. She said the Council would be making decisions on cable television on an - or,goi ng basis, and in the meantime, the Councilmembers were recei vi ng tons of: aterfdl; _ and hearing from a lot of '`people.: She thought that in this particular area, the "rent a citizen" type` of, techniques which were used in other communities were also being used in Palo Alto. Councilmembers were accustomed to hearing from their friends and neighbors in the =public, and listened: to them according to how . they knew thew, and she felt it was i*port ant for the Councilmembers to know whether people viJre being paid :‘o talk, to them... She did not think a Counci lmember was -likely to ask that of someone who often' talked to them ` about a variety of ':Counti l matters, and it was: important for the Councilmembers to know who was being paid `s locally to act on behalf, of cable companies. She would support the main motion. Councilmember Levy said he thougnt Councilmember Renzel had clearly stated why it was important to begin the action now and take the action now. He said every decision made .by the City Council from now on would affect whether the City would have pri- vate ownership, public ownership, or various combinations of them. The Council was beginning to be lobbied now because every decision was important.. He felt there was rio point in postponing the action. SUBSTITUTE MOTION TO CONTINUE FAILED by . a vote of 3-S, Bechtel, Witherspoon and Klein voting "aye," Fletcher absent. Councilmember Witherspoon asked if the City Attorney had any con- cerns.regarding the constitutionality of the proposed ordinance, and regarding some of the disclosures, City Attorney Diane Lee said she had concerns she intended to look into _ before returni ng to . the Council with an ordinance. She assured the Council that any ordinance she prepared would meet constitutional . muster. She said she would look very closely at the lobbying provisions of the Political Reform Act which were upheld as being constitutional. She did not feel constrained to limit herself to this particular ordinance because she felt there may be some problems with it. Mayor Eyerly said he would support the main motion because he would 1 i Ke , to see the City Attorney's comments.. regarding the motion. Councilmember Renzel commented that she supported Councilmember Levy's suggestion that campaign contr:lbutions be limited to within the last thirty days so that people were aware of who they were, and that rather than forbidding Council contact, that there be a log or some means to keep track. Ms. Lee said that the limitation on. campaign contributions was spoken to by the United States Supreme Court with a great deal cf concern. She said she would reread those decisions because .she was troubled by the proposal, and wanted the flexibility of not bringing anything back with constitutional problems, but which addressed and accomplished most of the Council s desires. Councilmember Cobb said he hoped that in creating such an ordi- nance that the goals would be accomplished without making it overly bureaucratic. He said he was burned by the State of California Fair Political Practices Commission because he forgot to file his statement and filed it a few days late. It would cost. him a few dollars and he had nothing to cl aim. He hoped that would be kept in mind and the ordinance would be kept as simple and unbureaucrati c as possible. Vice Mayor Bechtel said she was hearing hesitations by a few Councllmembers about the ordinance. She was concerned about the amount of work :being asked of the City "Attorney's Office, and i f , in fact, the Council had such strong hesitations, she thought they should think Seriously" about not voting .for the ordinance at this, time. MOTION PASSED by a vete of voting 'no, Fletcher abseot.: ITEM /14 CANCELLATION OF ,COUNCIL MEETING OF JULY 6 182 MOTIBMr: Mayor Eyerir moved, seconded by ..Renee1, to cancel the C1ty Council Outing of Joly 6, 1982. MOTION PASSED Onenionmsly, :Fletcher_ absent. A 1QURNT Council adjourned to vision at 9:30 .p.p. 5-3, Bechtel , Wltherepoon, lei a special study session regarding cable tel a-. 2 2 Q 3 6/28/82 1 SPECIAL STUDY SESSION REGARDING CABLE. TELEVISION Mayor Eyerly announced that Councilmember, Klein would not attend the special study session. Having had some representation in cable television previously, he did not desire to participate in the initial decision as to whether the system would be municipal, cooperative, or private. Assistant to the City Manager Charles McNeely introduced the consultants as follows 1. Mr. F. Paul Monaco, Hammett & Edison, Inc. The firm was engaged in providing engineering services to the broadcasting industry since 1952, and their activities included projects in AM and FM radio/television microwave. Mr. Monaco had a Masters Degree in electrical engineering from Stanford University, and had been associated with Hammett & Edison since 1969. Mr. Monaco had provided services to numerable cable television clients and his current projects i nisl uded services for the Bay Area cities of Mountain View, Los Gatos, Milpitas, Burlingame and Palo Alto. 2. Ms. Lora J. Stovall, Partner, Bartle Wells Associates. 3. Mr. Reed V. Schmidt, Consulting Economist. Mr. Monaco said that the cable system's design was a conceptual system design which was the basis for the financial feasibility study, but at the same time, the specifications and general design provided a good system to serve the City. He said that the elements in the system may be altered and there could be future design changes as time goes on, but the basic system was a good state of the arts system and comparable to those being built in other cities now. The process began with a collection of informa- tion on potential uses. Personnel in the City., Palo Alto Unified School District, and Stanford University were - interviewed, and questionnaires were sent to about forty of the institutions in the area who might have institutional `uses for the system in the future. The services that the system might carry in the future were defined, and the main component of that was the off air and s atel l i te< recepti on of entertainment programming. He said that as time goes on, one could expect considerable other developments in services to both consumers, homeowners and institutional users. h system configuration was defined that would permit the present services to be carried as well as to have a lot of flexibility for future increases because the cable business was going through a lot of changes and there were a lot of services being added.. Then, the cost of the system was developed, and then the - report which was submitted to the City. Mr. Monaco said that a detailed design phase would be next in terms of actually mapping the entire City and going through engineering studies to determine where the . satellite terminals should be , placed etc., and then preparation of the bid specifica- tions, the bidding process t' selection of bidders, ' etc. He showed a basic block diagram of the cable system which had an hourglass shape, the . point, being that there were signals collected , from a variety of different sources, . the basic entertainment signals coming from off air reception and from satellite reception. He said there were about twenty or thirty signals available by satellite. Mr. Monaco said that the studio and access services which permit the local production of , programs and playback of tapes and movies were available in the library. The control and monitoring equipment for services such as security services, Shopping at home,;: or '`whatever other sorts of specialized data type services -would exist. He said those pieces.. of equipment all existed in either a central facility or a head end. The ; signals from all those were piped into one central point and, from that point spre d throughout z 2,_Q.4 60.8/82 the city to serve the people and the institutions. _, He said there were two main networks that would serve the City --the residential network and the institutional network. The residential network would be a: pair of cables carrying approximately 54 television channel s outward on each of the two cabl es for a total of 108 channels. He said each of the two, cables would also have return capabilities so that a variety of signals could come back in from the network for purposes such as security services, etc The institutional network would provide the same sorts of services, but probably would have different things carried on it. He said the same total capacity would be available, but more would be used for data and video surveillance or teleconferencing. Council member Levy asked if this system was essentially the same_ as the one in Mountain View. Mr. Monaco said it was essentially the sage Counci 1member Levy asked if this system was the most advanced kind of system currently being installed." Mr. Monaco said yes. He said they tried to design one that was the equivalent of the best being provided. Counci1member Levy asked how normal it_ was to connect to adjacent :ommuni ti es. Mr. Monaco said it es something that was being talked about a lot in new systems being built, but was not a normal occurrence for the older systems. Counci 1member Witherspoon said she was concerned about how long it woul d be before the actual engineering part of the system would be obsolete. Mr. Monaco said it was hard to estimate. He said the most common question concerned fiber optics. He said fiber optics were used in some current cable systems typically for wiring a hjghri se building or something where the duct space was minimal. All esti mates seemed to be that it would be . quite some years before a totally fiber optic cable system would become common. He said a cable plant typically had a 15 -year life, and at the end of that time, :the system was often reconstructed. Counci lmember Renzel asked, how long it would take for the whole City to be wired. Mr. Monaco . responded that from the time a decision was made to go, there was about a year of preparations and possibly another one and one-half years until the completion of all construction, and about two to two and one-hal f years before ' m al 1 wi ri ng was complete. Council member Renzel asked if that " assumed the system was munici- pal . Mr, Monaco said yes. _ He said the franchising process would pr:pb. ably take about .one to one and one-half years from the da},e a f rancbi se was actually let. _, The franchi sing ; process would requi re going through the entire '-request for proposal (RFP) process. Couacl lmember Renzel asked what factors a private company would take into account if the City akade no sped fi Kati- ons on wiring the c uni tY.+ ! r' haco sal .that..-typi cal ly! a pri vats %company %oul.dti=pro+si se _to. complete the wiring In about -_1-1/2 years; from the _time of their franchise: - award. He t d that 1 f a pri vets coipady' roceeded with due :di l i_gence- . the wi:ring coal d_ be completed in ithat ;amount;- of time. If:there rare, ;any reasons- why the franthi sae- wished to /Void compl eti on of the system, it sight never yet" done. 1 Mr. McNeely clarified that the engineering portion of completing a system was about th.e same whether it was a municipal system or a franchise. The difference was in the franchising process itself --the six or eight months it would take to go through the RFP process would have tobe tacked on. Counci lmember Renzel said that if the C'Ity went to a private franchise, the franchise was issued, and then the franchise failed. to wire the City, how could the City ensure that the wiring would be completed. Mr, McNeely responded that under normal situations the City would have the franchise agreement itself, and if the. company failed to comply with i t , there would be remedies spelled out in the agree- ment to allow the City to take whatever action was necessary. Counci l member Cobb said that a certain amount of time was needed for the system to capitalize itself, and looking across the tech- nology horizon, he asked Mr. Monaco if he had any engineering con- cerns that technology might catch up so fast that the system would be unable to pay for itself or would become obsolete in a techni- cal sense. Mr. Monaco said the system design had a lot of flexibility in order to be expanded over a period of time. The initial design of the 108 channels wae:. considerably more than the amount of material to be carried, which allowed for a lot of flexibility particularly in many of the data services. He said new . data services would arise, but did not take up a lot of channel .space and hundreds of those kinds of things could probably be accommodated on the system without too much trouble. Counci lmember Cobb said he had read that satellite technology may supplant a lot of what was now known as "Cable TV" and specs fi- ca1 ly if the major entertainment kinds of uses were to ego on satel i:i to rather than cable, then what would remal n .for cable might not be enough to Make it a profitable venture. He asked Mr. Monaco if he saw any danger of that happening. Mr. Monaco responded that it Would be several years before any of - the direct broadcast satellites were put up, and when they were put up, the total number of channels available might not be very hi gh< Its direct competition to cable etas bei rig debated by the. entire cable industry. He said there would be fairly high costs associated with the direct broadcast :satellites l,n that'a consumer would be-. rented a decoder device at a substantial price .:per: month. It , was :.anyone `s guess as to how much competition it would be. He said those areas with. sof 1d cable systems would .not utilize direct broadcast directly to the hoaxes and some of the channel s - which c ame down from the satellites could be carried ,On the -cab i e system. The intention was to use those systems ,pr1 e►ar1 ly, in areas that could not have cable because of extremely low densities. Counci lmember Cobb ` sal d that the other consultant's report con- t ai ned an estimated cast Of -what a `system would cost ° to i_ mpl"ement , and `he 'asked #r. MonaCo 11' he had rein waned those: numbers and -If he was comfor•tabl a with them. 1r. Monaco sal d , he provided the basi c cost esti.Mates which here -rased-- as ,the construction- costs- for. the syste..; by :.the` fi nand al consul terr.t. s Councllmember.` Cobg easel that the City had had' at '1e st 'on'e criti- cel revs a from a pr#rate fi ray. whu suggested `that-:th'e_``overa1 l cost of ;.the .systest: was off. by sole. $2 0111100 - which -104$ , about > a 2a percent different:) art >, mucb of .which- was- i r� construct) on costs.. He asked FMrt::Monaca i f he had' ink comment, on the Y1.a .owe.: cri ti due. Mr. Monaco responded that they reviewed all the. comments made by-' Viacom. Jle said there were some interpretations made by Viacom which were incorrect, some statements were wrong,• and. Viacom was_ right on a coupe of points. He said the cost estimates depended upon what assumptions were made as to what services would. be car- ried, etc.,- but in general , after reviewing, all the criticism, nothing needed to be charged significantly from what was pro- posed. Mayor Eyeriy said that the installation recommendation ,was for two cables rather than three, and he asked for comments regarding putting in the third cable if the City decided to go municipal and saw the need for it. He said the report stated that there was a possible preclusion on the use of some of the City's telephone poles due to overloading. A survey had not yet been made, but if that was the case, undergrounding would have to occur, and he was interested in the cost, percentage wise, of installing the third cable. Mr. Monaco said that in order to put any cables on the poles at all, a portion of the poles in the City might have to be changed. He said the fundamental cable system would be the dual cable system which would be installed throughout the City initially in accordance with the staff report. He said his report proposed a three cable system where the third cable would go throughout the trunk portion of the system. The trunk portion of the system was something like 20-25 percent of the total --the main arterials of the traffic system. He said only that trunk portion would have the third cable, and feeders for that third cable would be extended only to the institutional users who required it. If the installation of the third cable was put off to a later date, he recommended that the physical cable itself be actually installed and lashed in at the time the main construction was done down any given street so that it would have to be done later. He estimated that the $8.8 million system, which included the basic system plus the first option, would cost less than one percent additional over that figure to install all the cables for the items in the second option. The second option included the interconnection to adja- cent cities, the institutional network itself, and the third cabl e throughout the City. He said that to put in just the physical cable itself for those, and the lashing in at the same time, would not make a significant increase 1 n the cost of the system. He felt it would be a sensible two-step approach without having' a lot of reconstruction. Councilmember Fazzino said he was concerned about the staff recom- mendation to held off on- the implementation of the institutional cable. ;He asked about the additional costs or engineering prob-. -lems -if the City did not put in the cables for the institutional system initially. Mr._' Monaco said it was a lot more expensive to put- i r . the cables later. Mayor Eyeriy said that the capital i. provements which went in' appeared to have a resale -value i f the ti ty decided to go -Muni cl - pail , and. then decided to draw . back because of an inability to= market properly. He understood - that, the life of the cables, was about 20 yearSee ?le asked,, for .comments regards ng recapture -.--of i nits al investments on resale of instal 1 ations, etc. Mr. Monaco : said he thought the best comparison was with selling a cable system. He said -cable systems typically sold for on the order of $1,500 per subscriber. Generally, operators were trading back and forth with system all the time. He said ft was concef v-. abl a that the City - caul d find an operator, that would be willing to buy the system for that kind of a -sfi gore. - 2 .2 0 7 6/28/82 Councllmember Fazzi no said he thought that one of the initial recommendations had to do with the loaati on of central faci 1 iti es and main di stri buts on in the El Camino/Page Mill area. He said that proposal was lined out in the staff report. Mr. McNeely sai d that staff recommended del eti ng the reception egui pment for recei vi ng the Monterey/Sall nas channel s, whi ch was why that portion was deleted. Lora J. Stovall, Partner, Bartle Wells Associates, said that the Bartle Wells' report that looked at the financial aspect of the muni ci pal ownershi p of cabl e tel evi si on addressed three areas : 1) Was the muni ci pal ownershi p fi nanci ally feasi bl e; 2) What were the risks involved; and 3) How could the City fi nance the municipal ownershi p? Ms. Stovall sai d that muni ci pal ownershi p was fi nanci ally feasi bl e under a certain set of assumptions. The first area of assumptions was capital expenses. She said Bartle Wells took the system that Mr. Monaco described- -the minimum system plus the group one of options-- and those had a total cost in his engineering estimate of $8.8 million. Bartle Wells spread that over a two-year time span for construction and added an inflation factor to come up with a construction cost estimate at the time of construction of approxi- mately $10.5 ,7 i 1 l i on. Those numbers were the cost estimates for a conceptual system --not a specific design and not a bid price, and were numbers that would be refined as the design process went on. She said the operating expenses and the annual costs of running the system were developed with input from Hammett & Edison as they related to the engineering aspects, with input from Bartle Wells and their subcontractors in the areas of economics and experience with cable operati ons and with muni ci pal fi nance, and with the input of the City staff based on the operating experience of other City departments and utilities. She said there were seven categories of expenses, and the numbers were in 1981 dollars: 1. Service, operation and maintenance. The largest portion of that expense was in wages and sal ari es for service and operating personnel, followed by the maintenance costs-- material s cost for the mai ntenance; , -. Admini strat.ion, General .and Customer Service. The largest portion of that expense was i n wages and sal ari es of an adds ti anal eight employees; 3. Payments to suppliers was an expense which was what was paid for using the information being broadcast; 4. Copyright fee was the fee paid to the FCC; 5. indirect Administration was a =reimbursement to the City for - the costs incurred in managing and operating the system; 6. Capital Reserves was ' a provision efor the accummul ati on of funds for the replacement and addition to the system, and 7. Debt service which was the repayment ofe the borrowing to consteutt the system. Ms. Stovall said the total operating budget, in 1981 dollars, was about $4..2 million. She said that in the area of subscriber saturation and market penetration, basically -,,the information was taken from the mar- keting study which was commissioned by the . City. The Marketing study concluded , that about 41 percent Hof= Palo_ Alto's households would subscribe to the cable -system. 2 2.0 8 . 6/28/82 A chart was shown which showed how the types of services were distributed, and the premium service assumptions which were used i n the financing plan. She said it was assumed that three classes of services would be offered. 1. _ A lifeline service, or public service channels, would probably have 'a .three (3) percent subscri pti on; 2. The cable connection and the abi 1 i ty to purchase the premi um services, would probably have a ninety (90) percent subscri oti on; and 3. The interactive service, which is a two way communication that would available under the. system design. She said other assumptions Were the number of premium services that customers were likely etc-_ subscribe to. in areas of good off air recepti on like Pal oe Al to, the people were likely to subscribe to cable i n order to get the premi um services. Counci lmember Levy asked who developed the assumptions, Ms. Stovall said the assumptions were developed by Bartle Wells Associates' subcontractors in conjunction with input from Bartle Wells and Hammett & Edison , Inc. Councilmember Witherspoon asked how the debt service would be amortized. Ms. Stovall responded that it was 15 years. Vice Mayor Bechtel asked if anything was done to verify the saturation estimates given in the previous marketing study which was done in 1980, since the saturation was key. Mr. Monaco responded that saturation estimates were obtained from a lot of different sources. He took the average of all the saturations of the systems in the :,Bay Area and got a number of about 40%, which was a. conservative approach in his opi:ni orr, because a new system could be expected, with the satellite ser- vices, to do better than some of the existing systems. He said they also looked at the saturations for other cities in other areas to get as much different information as possible. They used the figure contained in the previous marketing study because it fell right in the low end of the numbers they had come up with anyway, and was a convenient and conservative number to use. Vice Mayor Bechtel asked if those systems with poor reception and a much higher saturation than average were excluded when the averages were being done. Mir. Monaco said that was not done specifically, but on the other hand, he did not exclude some systems with very low percentages because they had very poor service and very few services available and only 20 to 25 percent saturations. Councilmember Levy asked about the variability of the penetration estimates. He asked if there was a difference in penetration in communities with higher incomes or higher education levels or other demographic characteristics. Mr. Monaco said he could not give, a quote from examined numbers, but i t was his impression that people in higher income areas tended to _.watch television less if anything. Mr. McNeely said that about a month ago, .Dr. Mouth ` from Michigan State, commented that Palo Alto -'was an "upscale" community and that penetration in this area could be expected upwards Of sixty percent. He said that in terms of researching the penetration issue , generally in the urban areas `currently, penetration was i 1 somewhere around fifty (50) percent. In San Bruno, the municipal system was somewhere in the magnitude of sixty (S0) percent. He said that all of his information indicated that penetration in Palo Alto would be much higher than the 40% estimated in the con- sultants report. Mr. Monaco commented that one of the criticisms made by Viacom in their report was that the saturation number was too low, and that they had estimated numbers like 47 or 48 percent. He said that all of the companies that bid for the Mountain View system varied from 45 to 55 percent of their expected saturation for those systems. Councilmember Levy said that the latest data he had seen indicated that nationwide penetration was just about 50%. He asked about the risk to Palo Alto of failure. Mr. Monaco said that from systems he had seen, the risk was pretty low. A cable system in this area had to do a pretty poor job for the service to fall down to those kinds of numbers. He said he had found systems that had poor service where a lot of people had dropped the service because the actual quality of the delivery of channels was poor, and then that service might drop to figures like 30 or 35 percent, but in most systems, the figures were well above that. Mayor Eyeriy asked if the 40 percent penetration assumed that 40 percent of the market would be using the basic tier plus premium option number 2. Ms. Stovall said that a certain amount of dollars were developed on an assumption of a curve of services that people would take and how much revenue that would generate in total , the average of which came out to the basic ,service and two pay services per sub- scriber. Councilmember Cobb asked if a sensitivity analysis was done on penetration as it related to net profit or net loss. He was interested in how it projected over the years. Ms. Stovall said the only variation in the numbers from year to year was the inflation allowance. Councilmember Cobb said that regarding the Viacom estimate that the figures cited for Palo Alto's penetration were too low, they. also said that the rates were too high. Ms. Stovall clarified that the rates were . not suggested rates, but rather order of magnitude numbers, and were comparable to other rates in the area. She said they were also comparable to the. rates that were used in the market study. Palo Alto's market study was based on a basic service at $ 7 to $9.50 a year in 1980, and they used the 1981 figure of $9.50. She said it was based on a pay service at $8.50 and they used $9.50 a year later. Councilmember Fazzi no said a lot of people claimed that the 2.03 pay basic ratio was too high given their experience. He said he realized the revenue projections were based heavily on that ratio, and he .asked for an explanation of the assumptions 'used in developing the formula. Mr. Monaco said they examined a pay basic ratio. He clarified average number of pay services the Viacom comments, .; he said information and determined that a new cable system in a decent services would find that they that. variety of industry sources on the that the pay basic ratio was the taken by 'a basic customer. After they carefully re-examined the 2.03 was not an unusual number_ for area. An older system adding pay could not support a number like,. Councilmember Fazzino felt they were talking about a hefty starting rate. He understood that a lot of companies would go into cities and start with a much lower rate and because of that people were willing to put out more for HBO, but if they were paying $9.50 basic to start, someone might be less inclined to add a service or two. He asked how that entered into the projec- tions. Mr. Monaco said they did not take promotional services into account. He said most of those kinds of things were lost leaders and those rates were only maintained for about a year or two. Councilmember Fazzino said there was an assumption that because the rate was low people would jump in and take one or two basic services. He questioned that assumption given the high rate that would be charged for the City's system. Mr. Monaco said he thought the sorts of numbers being quoted by Councilmember Fazzino were not typical of a lot of systems that had been built. He said most systems started off with fairly reasonable numbers and typically charged $8-$10 for the pay services, and still had substantial pay to basic ratios. Councilmember Renzel asked what caused a pay to basic ratio to soften over time. She asked if that was allowed for in the pro- jections. Mr. Monaco said it usually softened because people took services initially to try them out and did not necessarily hang onto them. He said not very much data had been published on how much it went down. Mr. McNeely said that in terms of Palo Alto's rate, he did not think it was high. He felt that the rate that was used for the study was comparable to those systems which were currently in existence and the new systems coming up. He pointed out that in terms of the percentage ratio, the newer systems and the systems that had been in existence for some time expanded and included more pay service and the pay to basic ratio increased. Ms. Stoval 1 said there were two basic approaches the City could use to finance muni ci pl a ownership: 1) Revenue Bonds, and 2) Lease Financing. She said both were supported by system revenues. They differed in the legal nature of the lien and the security for the bonds. She said that revenue bonds had only one source of payment --pledged current revenues. As a' consequence, they demanded a coverage pledge in their construction. The pledge said that the City would collect rates and charges such that gross revenues less operation and maintenance expense would exceed bond service Ley a certain factor. In order .to use revenue bond financing, the revenues must be a dependable and predictable source of revenues, or must be. greatly in excess of the City's debt service requirement. Ms Stovall said that the lease financing was commonly used in California and was also called a leased . revenue bond. A separate agency would issue the debt, build the project, lease the com- pleted project to the City, and the . City would make = annual or semi -:Annual payments dependent upon how the lease was written, which would equal the debt service. She = said that under lease financing, the City's obligation was to make lease payments from any of its unrestricted revenue. A lease bond was a broader obli- gation in terms of its source of payment and lease payments were not a debt of the City, they were subject to an annual appropr#.a- t1 on.` Lease financing was a stronger security and, therefore, had a lower interest : rate for a project such as.., cable television. 2 2 1 1 6/28/82 Ms. Stovall said that the basis of the financing -plan was that the Cable TV system be self-supporting. The source of the payment of the debt service was intended to be cable revenues, but there was a difference between the two types of bonds in the legal pledge -- the obligation on the City, and the security of the bonds. She said there was some discussion in the staff report abort nonprofit corporation versus certificates of participation. They were vir- tually the same things. She said there were some minor technical differences in the way they were issued, but there was no differ- ence in the security. Councilmember Fazzino said he was concerned about the lack of specific information with respect to pulling off the financing part of the program. He attributed that to the fact that financing was a difficult subject when dealing with this kind of issue. He said he was concerned about the possibility of moving ahead and about the: risk to City assets in the general fund itself if the City moved ahead with either proposal. He also asked what kinds of interest rates they were talking about in the present day market. Ms. Stovall said she thought the City would have difficulty selling a straight revenue bond for a new cable television system because in her opinion the cable television system did not have the type of a revenue stream required of a revenue bond. It was not a dependable source of revenue, as was required by a revenue bond, because it lacked the guarantee that when rates were raised, more money would be generated, which was why the lease financing was recommended. She said lease financing was commonly used in California —both through the nonprofit corporation, the Joint Powers Authority, and through the Certificate of Participation. At the time the Bartle Wells report was written, there had been three or four issues of certificates and a good number had been issued in the last six months. She said the advantage of the lease financing was the difference in security that it was an annual obligation rather than a debt, but an obligation on the unrestricted revenues of the City, which created an exposure to call on other City revenues. Bartle Wel l s felt that the revenue projections and the penetration of projections they used were con- servative and that there were many sources for additional reve- nues. They tried to design a financing plan that reduced the downside risk of there being any draw on other City revenues. She said the legal claim that was possible through the lease financing would strengthen the City's position and ability to borrow for the project. Regarding interest rates, she said Bartle Wells used a 10-12 percent range in their report. Counci lmember Fazzino, asked how much could be raised through the Certificates of . Participation based upon prior examples in California. Ms. Stovall responded that most certificates were marketed in $5,000 denominations. Counci lmember Fazzino asked why the staff recommended $500 denomi- nations. Mr. McNeely said the staff recommended that - the certificates be made in denominations of $500 because i.f people in Palo Alto wanted to buy part of the _ systet, they would be able to do so. Ms. Stovall said their experience with selling other bonds for Palo Alto was that a. good number of the bonds in the customary $5,000 denominations were placed within . the City. Counci ltnember. Fazzino asked Ms. StoVall if in her. -opinion' op.inion the $5,000 ° level would make it difficult to bring about the necessary revenue. 2 2 1 2 6/28/82 Ms. Stovall said the denominations were not significant. The bonds were sold by marketing one time either by negotiation or by competitive bid to an underwriter. She said if the City was talking about a $10.5 million project cost by the time the addi- tional financing costs were added, it would be about $13 million worth of bonds. The City would receive all the money and the underwriter would market the bonds i n the denominations set forth. She felt that if the City Council was going to look at small denomination bonds, they should talk with underwriters in advance to see how they could measure the kind of demand there would be locally because if they were marketing outside of the City of Palo Alto, the underwriter probably would not want to deal with them because they would be a nuisance factor. Councilmember Witherspoon said she assumed that neither of the bond revenues would require a public vote. Ms. Stoval i said neither of them required a vote. A revenue bond could be done under the City Charter, and the lease financing nonprofit corporation would require an ordinance. Councilmember Witherspoon asked how either case would affect the City's bond rating,. espec1 al ly under the revenue bonds the City would pledge. She asked if, i t would affect the City's ability to go into the bond market with some other financial project it might contemplate. Ms. Stovall said it would add another obligation to the City's annual expenditure requirements. She said it was a fairly small obligation in terms of the City's annual budget and would not have much of an effect on the City's bond rating. A bond rating went with a particular issue or bond so whatever was sold on the issue would be rated and would have a rating based upon its security. Councilmember Witherspoon said she understood that, but if the City had to subsequently issue another set of bonds for some other municipal purpose, it could affect that bond rating. Ms. Stovall said the City had adequate bonding capacity to handle this issue and its other foreseeable needs. Councilmember Witherspoon said that when Bartle Wells was deciding among the City's options about how to fund the .:program, since the City could not write off the interest the way a private profit corporation could, did they ever consider: working out a way that the City could somehow finance the > operation by transferring those abilities to another party. Ms. Stovall said they did a lot of research under the Safe Harbor Leasing Act to see what advantages were given to municipal finance, and it was decided that there really was not an advantage to it. Councilmember Witherspoon said that if the City used either one of the suggestions for financing and got into a situation where the City decided to sell the system, would the City be precluded from selling the system if the City's revenues ware pledged to the bonds. Ms. Stovall said the City would not be precluded. from sale. She said the C qty would probably have to use the proceeds of the sale to call the bonds. Vice Mayor Bechtel asked whether the financial projections expected_\subscriber penetration of 40% within the first year or so. Frog all the materials she read, she understood that private cable operators expected to have substantial operating losses on a syste0 for the first five to six years. Yet, the City's consul- tants designed a system, that An order., to pay off the bonds and keep the City from going" bankrupt, would not have losses.' 1 1 Vice Mayor Bechtel asked if the proposed system was realistic or if the City was going to have to keep drawing from its General Fund in order to pay the debt. Ms. Stovall said that regarding the penetration level, it would be reached over three years which was basically the construction period. She said rates were created in order to make the system break even from the beginning. The test was whether those rates were unreasonable in the light of other rates charged in the area, and the consultant felt that the numbers were realistic. Mr. Monaco said that regarding the saturation figure, in earlier cable systems It was typical for the saturation to grow slowly over a five or ten year period. The experience with the new systems with the wide variety of services was that the system was marketed as it was being built and the saturation was there almost immediately. He said it took about a year to build the system, and about a year to reach the saturation, but the saturation did not increase a lot after the initial period. Just about everyone that was going to subscribe would do so within the first year or so. Vice Mayor Bechtel clarified that the key was marketing. Mr. Monaco said yes. Tne marketing was very important --the cable operators all marketed their services. Ms. Stovall said that in Table 7, some losses were shown in the first year and a compensating gain was shown in the second year. She said that in both of the years, there was no debt service expense because the nature of lease borrowing required that the interest be capitalized duri ng the construction period, but it also significantly reduced the expenses duri ng that period. Councilmember Levy asked if the bonding included a reserve in case the projections were not met after the second year. Ms. Stovall said that the bonding included one year's debt service or approximately ten percent of the issue as an allowance. She said there were also a couple of reserve or "soft expenses" in the expense projection that protected the City. She said there was 1250,000 for a contribution to capital reserve which the City would not want to dip into year after year, but could draw into occasionally. The other was an indirect administration cost which was a reimbursement for other City costs which was based on ten percent of the operating and general expenses. She said those were costs that the City had, but distribution of those costs were to the cable system. Councilmember Levy said there was else an interest income based on the reserve building up., Ms. Stovall said there was an interest income credited against the annual debt service payment. Councilmember Levy said that regarding the $250,000 per year capital expenses and reserves, the bond issue would be for 15 years, so that at the end of year 15, the City's revenues would jump by $1,600,000, and in addition, the City had the $250,000 reserve. He asked what kinds of expenses the City could look to down the . line in terms of renovating the system and keeping it from running down, and would the $250,000 per year be enough to maintain a $10 million system, or would the City have to have another bond issue in year 15. 2 2 1 4 6/28/82 Mr. Monaco said that the normal replacement of parts, etc. was included in the amounts for the maintenance of the system. In terms of a reconstruction of the system, he did not believe so. Mr. McNeely said that no major reconstruction would be required in year 15. The money the City was putting in --$250,000 reserve —was used to modify the system as the City went along. Councilmember Levy asked .if there would be a need for another bond issue down the line for a capital input related to keeping the system operative. Mr. Monaco said that at some point in . the future --perhaps in fifteen to twenty years --the city would conclude that the system was basically obsolete and some money would have to be borrowed to do some reconstruction. Caunci lmember Levy clarified that a 15 -year timeframe was more than sufficient to pay for the bonds and still have a good operating system at the end of . 15 years. Mr. Monaco said yes. Counci lmember Levy asked how one paid for converters. Did the subscriber pay for the converters or did the owner of the system pay for the converters. Mr. Monaco said that the converters in this system were assumed to be a capital expense --they were included in the fundamental cost of building the system and there was no extra fee to the subscriber for those. Ms. Stovall said that one of the potential additional sources of revenue was the possibility of a rental charge for the converters. rjr. Monaco said there would probably be a deposit required. Counci1member Leery asked if the converters were state of the art converters. Mr. Monaco said ` they would be state of the . art converters. He said the plan was for addressable converters assuming that the first option was used and the $8.8 million system was built. Counc#lmember Levy wanted some assurances that the numbers given to the Council were real i stic. He cl ari fi ed that the key numbers were 40 percent penetration based on .the average Bay Area penetra- tion figures, two times pay to basic service based on the average new systems currently starting up, and a $9.95 initial year's basic fee and $28 . average household fee. Those figures were rela- ted to the average being charged in .the Bay Area adjusted for inflation. He said that :rased on rates, the consultant's were a little conservative, and on everything el se, they were realistic. Counci lmember Cobb said he was concerned about the $2 million difference of opinion. He sat d it, had been suggested that the City's system was not sufficiently staffed, and in particular, it was not sufficiently staffed for local access programming. Mr. McNeely said in terms of public.: access, staf ► recommended that the Council allocate some perdentage to public access. The task force felt it would be difficult to determine what the need in Palo Alto would be for public access.- He said staff opined . that it would be a valuable service that people would desire,- but it: was difficult to pinpoint ,exact dollar amounts or staffing. He thought it would be better `'i f that decision were made by Couiici 1 in the community. Staff recommended that certain dollars -of the gross revenue system be allocated to publ i c access. He said . that in additions staff allocated something . less. than $250,000 for capital costs for equipment for public access and local origina- tion, and an engineer who would control the technical aspects of the system. He felt that the question of staffing missed the point in terms of public access, and the community was in a better position to determine what that would be. Based on that, the Council could allocate dollars. Counci lmember Cobb said he was concerned about the impact of that on the system to reach break even and pass through. He suspected there would be a lot of pressure in Palo Alto to have more, rather than less, public access and attendant facilities, and he was concerned whether the City could maintain the kinds of revenue projections and break even points implied by the report and meet the community's need. Mr. ,McNeely said he felt there were .sufficient dollars to meet the community's needs based upon the current revenue projections. Councilmember Cobb said he was struck by the question of mar- keting, both in terms of the private sector critique . and in terms of his own reading. The kind of marketing involved competition with a lot of other potential entertainment sources and it struck him as being substantially different than anything staff had ever addressed itself to before. He asked how staff proposed to do that marketing. Mr. McNeely said that three full-time sales marketing people were allocated. Mr. Monaco said he found the $2 million difference in Vi acom's report. He said they looked through it piece by piece and there were questions of various assumptions. Drops and Converters con- tained over a $ l million difference, and comments were • made in Vi acom's report about the cost of converters. He said he tabula- ted some recent information from manufacturers regarding the costs. of the kinds of converters being proposed and came up with an average number that was within $5 of the numbers he had used for both an ordinary converter and an addressable converter. He said he felt his number was well supported. Vi acom had a number for mileage underestimate so he ;did another go around in terms of miles of streets and electrical plant, and was happy with his num- ber there too. He said the number for the basic system itself was almost .identical to Hammett & Edi son's. Counci lmember Cobb said he was concerned that the `\difference was large enough that the Council needed to be very sure about what it was doing. Given the risk aspects of the financing which were discussed, the City :Council had some obligation in terms of capital costs ` i n particular to be on _ the conservative side. He felt the City should be more conservative than realistic in the interest of protecting the City's revenues. Mayor Eyerly said he presumed the_ bonding included utilities in terms of revenues, and he did not believe that the City had many bonds outstanding :currently as far as a percentage against the City's total bonding capacity. He asked how many bonds the City had outstanding, and how much room. it had for future projects... Ms. Stovall said the City of . Palo Alto had a low amount of debt outstanding at present. She said the City had probably sold fewer. than $5 million worth of bonds in the last" 12 years. It had a lot of bonding capacity for necessary projects, and this project would not in any way absorb the City's capacity and leave i t unable to finance future projects for utilities or general purposes as long as it -could show the revenue stream for repayment. Councilmeatber Witherspoon asked how prone the system was to earthquake damage. She was concerned about the revenue stream being interrupted doe: to serious damage or disaster. Mr. Monaco_ said he could not recall a situation where that ha ever affected a cable system. He said the systems were damaged constantly, people knocked down poles and they had to be put back up, but it was difficult to totally damage the system since it was strung out over such a large area. Generally, crews worked hard to put the system back together again. The chances of the system actually being destroyed and having to be thrown away were insignificant in his opinion. Ms. Stovall added that in lease financing, the insurance provi- sions required by the underwriters and the bonding generally included rental interruption insurance to cover about one year's loss of the use of the project. Councilmember Levy said that the City's golf course bonds were rated A-1, and he asked how these bonds were rated. Ms. Stovall said they would be the same security exactly as the golf course bonds which were a lease bond designed to be self-supporting. Councilmember Levy asked if they would be rated the same as the golf course bonds. Ms. Stovall said she expected so. Councilmember Levy asked how much more bonding could the City do before its rating dropped from A-1 to A. Ms. Stovall said that Bartle Wells had sold three bond issues for Palo Alto since 1959, and they had not totaled $5 million. She said there was little debt outstanding and a very significant revenue flow. Most of the City's borrowing requirements were likely to be in the Utility area in which the City had a high revenue flow, a low amount of debt, and a capacity, as long as the projects were necessary, to service whatever debts were issued. Councilmember Levy said if someone was going out to buy an existing system 1 n the private marketplace, the going cost was $1,500 per subscriber. Mr., Monaco said yes, but it varied depending upon what kind of system one was buying, how many channels, etc. Councilmember Levy clarified that Mr. Monaco's expectation was that the City would have no trouble selling its system at $1,500 per subscriber during year three or four. Mr. Monaco said yes. Councilmember Levy said he was concerned because his numbers indi- cated that if the City only had 30 percent penetration at that point, or 6,900 subscribers, and the City wanted to sell it at $1,500 per subscriber, the City would net about $10 --or about the cost of construction. At that point, the City would call,, in its bonds Mr. Zaner said staff had anticipated that they would try to hold the July 19 agenda short -in order to continue with discussion of CA T V Councilmember Levy said July 19 _was three weeks away. He was concerned that the timetable seemed very slow, and while he was sensitive to everyone's wish not to have a lot of meetings to attend, he hoped the Council could meet earlier. NOTION: Councilmember Fezzino moved, seconded by Eyerly, to_. adjourn the study session to July 12. 2 ' 1 7 6/28/82 1 1 Vice Mayor Bechtel was concerned that the Council not schedule the CATV study session for a time when they already had a full agenda. Tonight's agenda was expected to be short, and the study session did not commence until 9:40 p.m. She did not want to think about making major decisions at 11:30 p.m. or later. Whatever night was scheduled, she felt it should be early. Mayor Eyeriy withdrew his second. MOTION FAILED FOR LACK OF A SECOND. Mayor. Eyerly asked that staff reschedule the next study session. Bernice D{Giovanni, 632 Chimalis, member of the Cable Communica- tions Cooperative, said that when they made their presentation, the Council asked who they were and if they had some examples of successful coops in other areas. She said they had a video tape from the Western. Wisconsin Cable Cooperative which ran about 1/2 hour. She saiu _ that the members of the Cable Communications Coop- erative included one attorney, one PHD, three masters degree holders, and all nine members held Bachelor's Degrees. She said the fields were in urban planning, sociology, two in mass communi- cations, one in data processing (who also had .an industrial engineering degree) , an attorney, an electrical engineer, a chemist, - and a teacher and coop community activist. In addition to their Board members, they had active members of the coop. She said the Cable Communications Cooperative had met since February, 1980, in a total of 32 meetings, doing the same thing the City was doing. They educated themselves and had held study sessions with. their members and the advisory board members on technology, systems design, hardware and software, financing, and issues of privacy. She hoped the City would avail itself of the Coopera- tive's expertise. James 0i nkey, 3380 Cork Oak Way, said that he was concerned that Stanford was not included in the discussions. He said that instead of being the Palo Al to Cable TV, they should be talking about the Palo Alto Communications organization. He said the people in the Western Wisconsin Communications Cooperative had done things entirely different than what was proposed in Palo Alto. They had a rural situation, and while one would think that construction costs were astronomical, they had gotten around it nicely. He said the key point was that they set up a communica- tions cooperative that in almost no way was a commercial or a pay venture. While there was nothing wrong with commercial money, he felt that communications should be the forefront of anything that came out of the Palo Alto/Stanford area. Thomas O. Passel], 3825 Louis Road, said he was the Chairman, about 10 years ago, of the City's Committee •-.can Cable TV. He . sai d they went through about 70 meetings of three hours each on the subject, and recommended that the City own the cable system, but that the running of it be farmed out to an outside organization.. He felt that was still a good plan for the City of Palo Alto. It would give the City the revenues it sought and would separate the operation of a communications system from the City operations. He said he was now on the Coop Board, `out spoke tonight as - an indi- vidual citizen. He hoped that if the City Council decided to have a municipal system that .it would leave open the optionof partici- pation by a coop or some organization like that : for the day to day operation of the system. Counci lmember Fazzi no said he had a souring feeling about the way the matter was proceeding. He agreed ,with Counci l member Levy that the Council .was moving slowly, and he was frustrated because the Council had had a number of studysessions, and did not seem to be getting anywhere. He felt staff needed to work with the Mayor to develop a proposed series of meetings, and the Council needed to decide how to develop the questions and the process issues that needed to be resolved by the Council as to how to approach the 2-2 -1 .8 6/28/$2 entire issue rather than simply remaining in a study mode. He felt that July 6 was too soon and there would not be enough chance to give public notice. He felt that some ground rules should be developed before the Council went floating on without any sense of direction. Mayor_ Eyerly said he had hoped that the Council would be able to complete the study session tonight. He said the Council > still had a piece of this meeting to discuss before they could tackle where to go from here. He intended for the Council_ to leave this greeting with some plan as to how to proceed, but they were not through with the reports. Taylor Barcroft, 260 Ventura Avenue, said it was his opinion that the proposed design was not state of the art, and that the design was extremely conservative. It did not represent the latest pro- posals which had been made by private franchisers such as the proposal in Sacramento to offer a large variety of basic ser- vices --HBO and a computer terminal to everyone for. $18.50 per month. He felt the prices were too high and that there should be universal service on the order of 30-40 channels for every home arid to get a converter in every home, in the first place, so that the system could be properly marketed. He did not think mnch con- sideration was given as to how to properly market the system to an extremely upper class, highly intelligent community who did not care that much about entertainment, but was more interested in what cable would give them in terms of information services. FINAL ADJOURNMENT Final adjournment was at 11:30 p.m, ATTEST: Ci - C3 erxf APPROVED: ayor 2 2 i 9 6/28/82,.