ORDINANCE 1097ORDINANCE NO.1097
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF EL SEGUNDO APPROVING: (1) THE
ACQUISITION OF THE STOCK OF GROUP W
CABLE, INC, BY A CONSORTIUM; AND (2) THE
TRANSFER OF A FRANCHISE FOR A CABLE
TELEVISION SYSTEM FROM GROUP W CABLE,
INC., TO PARAGON COMMUNICATIONS.
WHEREAS, Group W. Cable, Inc. ( "Group W"),
currently holds a cable television franchise (the
"Franchise ") in the City of E1 Segundo pursuant to City
Ordinance No. 754, as modified by Ordinance Nos. 866 and
1021;
WHEREAS, Group W was previously owned by
Westinghouse Broadcasting & Cable, Inc. ( "Westinghouse ");
WHEREAS, City Ordinance No. 754 provides that a
Franchise transfer may not occur without the prior consent
of the City upon such conditions as the City may prescribe;
WHEREAS, the City has adopted formal procedures for
approving the transfer of any cable television franchise
pursuant to Resolution No. 3391;
WHEREAS, without the prior consent of the City,
Westinghouse transferred ownership of its subsidiary, Group
W, to a consortium of cable companies consisting of Century
Communications Corporation, Inc., American Television &
Communications Corporation, Tele - Communications, Inc.,
Comcast Corporation, Inc., and Daniels & Associates, Inc.
(the "Consortium "), which resulted in the initiation of the
litigation known as City of El Segundo v. Group W Cable,
Inc., et al., and related cross - complaints, United States
District Court for the Central District of California, Case
No. CV 86 -5029 DT;
WHEREAS, Century Communications Southwest, Inc.
( "Century ") had made and then withdrawn an application
seeking City approval of a transfer of the Franchise from
Group W to Century;
WHEREAS, Paragon Communications ( "Paragon "), a
partnership wholly owned by wholly owned subsidiaries of
American Television & Communications Corporation, and
Houston Industries, Inc., has filed an application seeking
City approval of a transfer of the Franchise to Paragon from
Group W; and,
WHEREAS, in support of its transfer request,
Paragon Communications has submitted a transfer application,
which is on file in the office of the City Clerk;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF
EL SEGUNDO, CALIFORNIA, DOES ORDAIN AS FOLLOWS:
SECTION 1. The City Council of the City of E1
Segundo does hereby find, determine and declare that:
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A. Paragon will be in substantial compliance with
the existing Franchise and applicable law, and
will be able to meet the reasonable needs of
the community, including its needs regarding
signal quality, response to consumer
complaints and billing practices if it
complies with the conditions of approval
contained at Section 2 herein.
B. The Franchise will meet the present and
foreseeable future cable - related needs of the
community if Paragon agrees to the conditions
of approval contained at Section 2, herein.
C. On the basis of its transfer application,
which is on file in the office of the City
Clerk, the City Council of the City of E1
Segundo finds that Paragon has the financial,
legal and technical ability to provide the
services, facilities and equipment necessary
to comply with the provisions of this
Ordinance and the Franchise.
SECTION 2. The acquisition from Westinghouse of
all the issued and outstanding stock of Group W by the
Consortium, the sale of the Franchise from the Consortium to
Paragon, and the transfer of the Franchise from Group W to
Paragon is hereby approved subject to the following
conditions:
A. Paragon agrees to and accepts all terms and
conditions of the present City Franchise
Ordinance, which is contained in City
Ordinance No. 754, as modified by Ordinance
Nos. 866 and 1021. Paragon further agrees and
accepts that the present Franchise includes a
Franchise Fee of five percent (5%) of gross
revenue. Paragon further agrees to pay to the
City, pursuant to a letter agreement between
the City and Group W, a supplementary
franchise fee of two percent (2%) of gross
revenues in support of the public,
educational, and governmental ( "PEG ") access
programming.
B. Within eighteen (18) months of the effective
date of this Ordinance, Paragon shall complete
construction of a rebuild of the existing
cable television system (the "System "). The
rebuild shall include, at a minimum, the
following:
(1) A minimum of 54 channel capacity;
(2) Replacement of all amplifiers;
(3) Elimination of the signal feed from the
City of Santa Monica via microwave link;
(4) Provision of a signal feed from the cable
television system "headend" located in
the City of Gardena or the City of
Torrance, should Paragon acquire a
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franchise in either of those cities;
provided that regardless of whether
Paragon acquires the Gardena or Torrance
franchises, it instead may choose to
construct a stand -alone headend located
within the City of E1 Segundo.
C. Paragon will obtain prior City approval of the
plans and specifications for the rebuild of
the System. The plans and specifications
shall indicate the estimated cost of the
System rebuild. The City shall not
unreasonably withhold its approval of the
plans and specifications. The date the System
rebuild is to be completed shall be extended
one day for every day over thirty (30) days,
the City Council requires to approve the plans
and specifications.
D. Within thirty (30) days after the City
approves the plans and specifications for the
System rebuild, Paragon shall file with the
City a letter of credit in the amount of the
estimated cost of the System rebuild. The
letter of credit shall be in a form approved
by the City Attorney.
E. Should Paragon fail to complete the System
rebuild within the time period set forth
herein, the City shall have the right to
impose liquidated damages. The City's right
to impose liquidated damages and withdraw them
from the letter of credit shall be governed by
Exhibit A, attached hereto, the terms of which
Paragon shall agree to as a condition of this
Ordinance. Should Paragon fail to complete
construction of the System rebuild within one
(1) year after the completion date established
pursuant to this Ordinance, the City shall
have the right to withdraw all funds remaining
in the letter of credit to the extent
necessary to complete the System rebuild.
F. The City Council shall extend the time for the
completion of the System rebuild for
additional periods of time in the event it
finds in the reasonable exercise of its
discretion, that Paragon, acting in good
faith, experiences delays by reason of
circumstances beyond its control, such as:
acts of God, acts of the public enemy, fires,
floods, epidemics, quarantine restrictions,
strikes, lockouts, freight embargoes or
unusually severe weather. Any requests for
extensions of the completion date for the
System rebuild must be requested from the City
Manager in writing within fourteen (14) days
after the cause for such delay first occurs.
Such request must specify the exact reason for
the delay and the total number of extension
days requested. Paragon shall provide written
substantiation supporting such a request.
Within thirty (30) days of receipt of
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Paragon's request for an extension, the City
Council shall respond to Paragon's request.
G. Paragon shall comply with the performance,
maintenance and construction standards and
specifications agreed to by the City and
Paragon. These standards and specifications
shall be in substantially the form of Exhibits
B, C and D, attached hereto. These standards
and specifications shall become effective upon
completion of the System rebuild.
H. Paragon shall provide a toll -free telephone
service enabling subscribers to call in
complaints and requests for repairs at any
time, day or night, seven days a week. All
complaints shall be acknowledged within the
next business day. The toll -free telephone
number shall be listed in the telephone
directories serving the City. Paragon shall
advise all new subscribers of this complaint
process.
I. Paragon shall provide basic service to all
City and E1 Segundo Unified School District
facilities at no charge.
J. Paragon shall provide a minimum of two (2)
channels for public, educational and
governmental ( "PEG ") programming and one (1)
channel for local origination programming.
K. Paragon shall provide the technical capability
for the origination of live and videotaped
programming from City Hall and the El Segundo
High School Studio.
L. Within six months after the effective date of
this Ordinance, Paragon will meet the
following conditions:
(1) Paragon shall render efficient service,
making repairs promptly and interrupting
service only for good cause and for the
shortest time possible. Planned inter-
ruptions, insofar as possible, shall be
preceded by notice given to subscribers
twenty -four (24) hours in advance and
shall occur during periods of minimum use
of the System.
(2) Paragon shall maintain records listing
the date of customer complaints,
identifying the subscriber and describing
the nature of the complaint, and
indicating when and what action was taken
by Paragon in response thereto. A
separate record shall identify System
outages. These records shall be kept on
file at Paragon's local office for a
period of two (2) years and shall be
available for inspection during regular
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business hours, without further notice or
demand, by the City Manager or his
designee.
Paragon will use its best efforts to meet
these conditions sooner than six months.
M. Paragon shall conduct, at least every eighteen
(18) months, a customer satisfaction survey of
its subscribers in the City of E1 Segundo.
N. Paragon and the City shall, within twelve (12)
months after the effective date of this
Ordinance, negotiate and enter into a new
Franchise. The terms and conditions of the
new Franchise shall be reasonably and mutually
agreed upon by Paragon and the City, based
upon good faith negotiations. Paragon
understands that the City intends to use the
terms contained in Exhibit E, attached,
hereto, as a basis for negotiating the terms
of the new Franchise.
O. In addition to any other payments due under
the Franchise, Paragon shall pay the City One -
Hundred- Fifty- Thousand Dollars ($150,000.00).
This payment is due concurrently with Paragon
submitting its acceptance of this Ordinance,
pursuant to Section 3, herein.
P. Paragon shall use its best efforts to obtain
releases and dismissals with prejudice from
all parties to the action and related cross -
complaints and counter - claims in the lawsuit
entitled City of E1 Segundo v. Group W. For
each party for whom Paragon cannot obtain such
releases and dismissals with prejudice, it
shall provide the City with an agreement to
indemnify and defend the City in any actions
arising out of the above - entitled case. The
agreement shall be in the form of Exhibit F,
attached hereto. Exhibit F shall be executed
concurrently with filing the acceptance
described in Section 3, herein.
Q. Paragon shall execute the agreement for
reimbursement of administrative expenses in
connection with a new Franchise, which is
contained in Exhibit G, attached hereto.
Exhibit G shall be executed concurrently with
filing the acceptance described in Section 3
herein.
SECTION 3. Paragon shall, within thirty (30) days
after passage of this Ordinance, file in the office of the
City Clerk, a written acceptance of this Ordinance, executed
by Paragon in a form approved by the City Attorney.
Paragon, by executing and filing the acceptance, guarantees
performance of all obligations hereunder. The performance
by Paragon of all the duties and obligations of this
Ordinance and the Franchise shall be guaranteed by American
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Television and Communications Corporation, and Houston
Industries, Inc. This guarantee shall be submitted
concurrently with the acceptance, and shall be in a form
approved by the City Attorney.
PASSED AND APPROVED
1987.
CITY CLERK
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