R-1502-6-97' RESOLUTION NO. 1502-6-97(R)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, AUTHORIZING THE CITY MANAGER TO
EXECUTE AN INTERLOCAL AGREEMENT TO PARTICIPATE IN A
COALITION FOR THE PURPOSE OF RATE REGULATION AND OTHER
SERVICE MATTERS CONCERNING TCI CABLE TELEVISION; AND
AUTHORIZING THE COALITION'S CITIES TO RETAIN A
CONSULTANT.
WHEREAS, TCI Cablevision ("TCI") has increased rates in the service area; and
WHEREAS, the service area cities desire to conduct a rate review; and
WHEREAS, by forming a coalition, the service area cities desire to reduce the costs of
conducting the rate review; and
WHEREAS, the City of Allen, Texas ("City") is a regulatory authority whose citizens will be
substantially affected by the rates established by TCI; and
WHEREAS, the Coalition of TCI Cable Service Area Cities ("Coalition") has been created to
coordinate the participation of cities in TCI's service area; and
WHEREAS, the City has investigated and inquired into such matters; and
WHEREAS, the City desires to participate as a member of the Coalition; and
WHEREAS, C2 Consulting Services ("Consultant") has been designated as the consultant to
perform the initial rate review services at the costs set forth in the proposal attached hereto as
Exhibit A.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ALLEN, COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The City agrees to participate with such other TCI Cable Service Area Cities in
a coalition to review rate regulations and other issues affecting such rates and services.
SECTION 2. Each Service Area City shall enter into an independent letter agreement with the
Consultant, which provides for the reduced cost for the services as a member of the Coalition.
The City Manager is authorized to execute this letter agreement with the Consultant.
' SECTION 3. The City authorized payment to the Consultant at the rate established for the City
in Exhibit A.
' SECTION 4. The City hereby authorizes the Coalition of TCI Cable Service Area Cities, of
which this City is a member, to engage consultants to conduct a rate review on behalf of the City.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, ON THIS THE 5TH DAY OF JUNE, 1997.
ATTEST:
cl/ h
dy meWrison, CMC, CITY SECRETARY
1
APPROVED:
Stephen Terrell, MAYOR
' Resolution No. 1502-6-97 Bl Page 2
[1
PROPOSAL
TO PROVIDE
ASSISTANCE IN THE
EVALUATION OF
CABLE TELEVISION SERVICE
AND EQUIPMENT RATES
DECEMBER 1996
WNSULTING SERVICES, INC.
MONSULTING
ty7^_)716-771h
201 Penames Lam 1971) 716-7116 iFaxi
Dallas, Texas 751-18
December 30, 1996
Ms Ashlev Meeler
.>dmimstrauve Intent
Tossn of Flower Mound
2121 Cross Timbers Road
Flower Mound, Texas 75035
Dear Ms. Meeler
Pursuant to your letter of December 17, 1996, C2 Consulting Services, Inc. ('-C3") is
pleased to respond to your request for proposal regarding cable television rate regulation.
' While C'_ only has been in existence since August 1996, its President, Ms. Constance
Cannadv has been assisting numerous Texas municipalities in their regulation of basic
service and equipment and installation rates since--ere-regulation" began in 1993.
Based on the information provided, it is C2's understanding that the Town of Flower
Mound and a number of other Cities wish to form a coalition in order to regulate the rates
of their respective cable operators. This can be highly beneficial from several
perspectives.
• Timely dissemination of information regarding changes in rate regulation.
recent FCC decisions and potential impacts on future rates
• Potential for a uniform approach to rate regulation (particularly in light of the
geographic area under consideration)
• A sharing of any outside costs of rate regulation
Given that the list of Cities currently interested in joining the coalition have TO as their
service provider, these benefits are further enhanced.
The following proposal provides a description of the scope of services that C2 will
provide in evaluating a FCC Form 1240/1205 that is anticipated to be tiled by TCI during
the first quarter of 1997 With the understanding that the coalition may consist of Cities
' responding favorably to your inquiries, the project costs has a been identified to
accommodate the inclusion of the vanous entities and anticipated filings. Additionaliv, a
brief description of the qualifications of C2 and its President have been included.
%Ic Heeler
December iU. 1996
pace '
C ;ready appreciates this opportunity to propose sen ices to the Town of Flower Mound
as well as to the other potential participants in a cable rate reuulauon coalition If wu
hate any questions regarding the proposed project activities. project costs or need further
mformauon about the firm and its qualifications, please Leel Circe to contact Ms
Constance Cannad} at t 972 j 726-7216
ver% truly Yours,
Ca n &w
C'_ Consulting Services, Inc
I
1
.Swvt w � C
TABLE OF CONTENTS
SECTION I. SCOPE OF SERVICES
SECTIONII. PROJECTCOST
SECTION Ili. FIRM QUALIFICATIONS AND
RELEVANT EXPERIENCE
RESUME
LJ
' SECTION I. SCOPE OFSEVICES
Project Objectives
Based on CTs eepenence in performing rate evaluations of various FCC forms and
calculations, the project objectives include the following:
• Assessment of the completeness of the frlmgs submitted to the Cities based on
required information and documentation per the FCC and Cities' regulations
• Assessment of the actions taken by the Cities during review of the 1996 tiling
of the Form 1 24011 20 5 to determine any required treatment of costs for the
1997 filing.
• Assessment of the accuracy of the operator's determination of costs for the
true -up and projected periods.
• Assessment of the operators application of various FCC instructions, tables
and formulae
• Assessment of the operator's compliance with various FCC rulings related to
the provision of basic service and installation and equipment related activities.
• Assessment of the reasonableness of any estimation or allocation
' methodologies employed by TCl to determine the costs to be recovered within
each of the Cities' franchise areas.
.At the conclusion of the project, C2 will provide each of the Cities with a written report
specific only to their respective rate filings. The report will include a description of the
project activities, findings and recommendations regarding potential City Council
actions.
Project Scope
Based on the understanding that the Cities will receive a Form 1240i1205 filing from
TCI, and in light of the project objectives identified above, C2 proposes to conduct the
following activities:
• initial review of the filings and identification of.
tb Any filing deficiencies and necessary actions
tb Potential issues based on the operator's approach to developing rates
% Compliance/non-compliance with FCC rulings
• Submission of detailed requests for information
• Analyses of responses to requests for information and submission of
' follow-up requests, as necessary
lhescrsthe
iyses
• annird afurtherrulngs sued by he FCC during the of the review
F
• Discussion with the coalition regarding prelimmary findings and
recommendations
• Submission of written report and presentation before the coalition
• Meeting with TO and coalition. if desired, to discuss the findings and
recommendations prior to submission to Councils
The above includes the activities to be performed for the members of the coalition as a
group, and does not provide for specific activities that may be required by individual
Cities subsequent to the issuance of the reports. However. during past engagements.
additional assistance has been provided which includes the following.
• Assistance to Cities' staff in preparing their respective Council documentation
• Meetings with Cities' legal representatives to discuss potential actions
• Presentation of findings and recommendations before City Councils
Since these activities may not be desired by all participating Cities, C2 has provided them
separately as a "choice" to each of the coalition members, with a segregated cost as
discussed in Section tl..
SECTION' 11. PROJECT COST
Coalition .activities
C'- estimates that the professional fees required to conduct an evaluation of a single Form
123011205 are not -to -exceed 53,000, plus out-of-pocket expenses. Given that the other
interested Cities have TCI service, evaluations of additional filings (that contain
completely different cost information) can be conducted for a cost not -to -exceed 52,000,
plus out-of-pocket expenses.
It is necessary to note that the Form 1230/1205 filings may be identical for a particular
system that includes a number of participating Cities. For purposes of this cost proposal
thoseFCC Fo t �1n't 10i Fling that a identical ,iii be [rented as one filing and not
separate for each of the Cities bein , re r . Only in the event that the cost data
d ers wit i i mgs, is it considered an additional filing for purposes of CTs
not -to -exceed project cost.
Activities of "Choice" for Individual Members
' The not -to -exceed project cost does not include the activities that have been identified
separately as being a matter of "choice." These activities are proposed to be conducted
based on actual hours spent at the hourly billing rate of Ms. Cannady of S135/hour, plus
out-of-pocket expenses.
Billing Practices
C2 bills its clients monthly based on actual hours worked, plus out-of-pocket expenses.
In the event that the actual hours spent in conducting the total coalition activities are less
than those used in the development of the not -to -exceed proposed costs, the coalition will
be billed only for the actual hours. However, if the actual hours exceed the estimate, the
coalition will only be billed up to the not -to -exceed cost, plus out-of-pocket expenses.
I'rvrund. �',Ak fr/, unan Nnm NcerAuan,r
11rer.
' SECTION IIL FIRM QUALIFICATIONS AND RELEN'ANT EXPERIENCE
Business Organization
ration which began
ucting
on
August Consulting 11996, Founded by is
President. Constance T. Cannadv. C2 was organized sfor
the purpose of providing high quality consulting services to local and state governmental
entities located m the Southwest. As C2 is in its infancy, the firm's qualifications are
attributable to its President, Ms. Cannady and her thirteen Tears of consulting in bo[h the
public and private sectors. Much of Ms. Cannady's consulting experience has focused
on the regulation and franchising of utilitv services. regulated by either locor
oreamzauons. Thisexperience is clearly demonstrated io Ms. Cannady's re ume.te
Due to its organization and the general focus of the consulting services to be provided.
as
Coman oCertification 2 Filedfwned business and received Certificat onCertification by the North Centcon Noviember 15, 1996, No.gency as a.
WFSD8073N1197,
'
Business Address
C2 is located at the following address:
C? Consulting Services, Inc.
7801 Pencross Lane
Dallas. Texas 75248
(972)726-7216
(972) 726-7216 (Fax)
Firm Engagements
Since its organization in August, the firm has been conducting engagements for the City
of Garland Texas, the City of Marshall, Texas, the Gulf Coast Coalition of Cities and the
Oklahoma Corporation Commission. For the City arrand. C2 change the isa sswidec in [gate
he
evaluation of Lone Star Gas Company's application to
rate. For the City of Marshall, C2 is assisting in the determination of cable television
rates as well as a review of the cable franchisee's compliance with the City franchise
agreement. With respect to the Gulf Coast Coalition n the
m
of Cities, C2 Comuni Choice" proposal
' assessment of Texas -New Mexico Power Company
before the Public Utility Commission of Texas. The Oklahoma Corporation Commission
engagement involves the development of a rate case processing manual to be used by the
Public Utility Division.
•...... . r .,hi, Ivlruuu...Aoe H, e..1..mil
H
Engagements Specific to Cable Television Rate Regulation
While employed as a Manager at Reed -Stowe & Co . Inc. Ms. Cannady conducted
numerous evaluations of cattle rate filings, the majortry of which dealt with systems
operated by TCI. Below is a brief outline of the engagements conducted by Ms. Cannady
since the --re-regulation" of cable television rates in 1993.
Texas Cities for whom evaluations of the 1996 Form 1240: 1205 rates were
performed:
Citv of Alvin
City of Bedford
City of EI Lago
City of Farmers Branch
City of Flower Mound
City of Friendswood
City of Grapevine (Paragon)
City of Harlingen
City of La Marque
Ciry of League City
City of Marshall (Falcon)
City of Mesquite
City of Nassau Bay
City of Seabrook
City of Taylor Lake Village
City of Texas City
City of.Webster
' Many issues arose during the evaluation of the TCI filings for equipment and
installation rates. Based on recommendations made at the conclusion of the
analyses, many of the above municipalities established rates that were later
appealed by TO to the FCC. Recent FCC decisions have been rendered on a
number of these appeals, and the FCC has found in favor of the actions taken by
the Cities with respect to almost all issues raised.
2. With the exception of the Cities of Bedford, Harlingen, and the Town of Flower
Mound, analyses were conducted of the FCC Forth 393, FCC Form 1200/1205
and quarterly FCC Form 1210 for each of the Cities identified under Item I.
3. Ms. Cannady conducted a review of the TO costof-service filing, FCC Form
1220, for the City of Dallas in 1995. This was the basis for the City's
establishment of the first regulated basic service rate and equipment and
installation charges since the enactment of the 1992 Cable Act.
4. Ms. Cannady assisted the City of Rockwall in its review of Mission Cable's small
cable operator rates under the FCC Form 1235.
5. As required, Ms. Cannady has assisted legal counsel in preparing responses to the
FCC concerning appeals by the operator of the local franchise authority's
decisions.
IL
Engagements Related to Regulation of Public Utility Services
In addition to cable television services, Ms. Cannady has conducted cost of service and
rate desiLm studies regarding electric, gas and telephone services before the following
state and federal agencies:
Alabama Public Service Commission
Arizona Corporation Commission
Colorado Public Utilities Commission
New Mexico Public Service Commission
Oklahoma Corporation Commission
Public Utility Commission of Texas
Railroad Commission of Texas
Bonneville Power Administration
In addition, Ms. Cannady has performed numerous cost of service and rate design studies
for municipalities with original jurisdiction concerning gas, water, and wastewater
operations. She has provided expert testimony regarding rate base issues and appropriate
fuel costs before the Public Utility Commission of Texas with respect to Texas Utilities
Electric Company's and Houston Lighting and Power Company's respective operations.
Professional References:
Mr. Ron Cox
City Manager
City of Friendswood
910 South Friendswood Drive
Friendswood, Texas 77546
(281)996-3250
Ms. Eugenia Cano
City Attorney
City of Alvin
216 West Sealy Street
Alvin, Texas 77511
(281)388-1267
Mr. Richard Escalante
City Manager
' City of Farmers Branch
One Citv Hall Plaza
Farmers Branch, Texas 75234
(972)919-2516
Mr. Bob Miller
Attomev
Gardere & Wynne L.L.P.
1601 Elm Street, Suite 3000
Dallas. Texas 75201
(214)999-4219
Mr. J. C. Hughes
Assistant City Manager
City of Marshall
PO Box 698
Marshall, Texas 75671
(903)935-4419
Mr. Ted Barron
City Manager
City of Mesquite
1515 North Galloway
Mesquite, Texas 75149
(972)'_88-7711
�^(lxunl4xy 4n'urs Lx.
fw/ru.uJ. i 1dJe lYl.nnun Hme N.yn6rtwn
Mr. Robert A. Rima
Attotnev
Law Oftice of Robert A Rima
1005 Congress Avenue, Suite 1010
Austin, Teras 78701
(51'_)478-2700
Ms. Cheryl Wilson
Attornev
Olson & Olson
3385 Three Allen Cerner
333 Clav Street
Houston. Texas 77002
(713)759-0696
Mr. Jack E. Stowe, Jr.
President
Reed -Stowe & Co., Inc.
1651 N. Collins Boulevard Suite 115
Richardson, Texas 75080
(972)680-1880
77
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' THE STATE OF TEXAS )
r
L✓
_ ) COALITION PARTICIPATION AGREEMENT
FOR TCI CABLE SERVICE AREA CITIES
COUNTY OF DENTON )
This Agreement is made and entered into on this the day of
1997, by, between and among the signatory cities (hereinafter collectively
"CITIES") to create the COALITION FOR TCI CABLE SERVICE AREA CITIES. This
Agreement is authorized by the Texas Interlocal Cooperation Act, Texas Government Code,
Chapter 791, and other authorities.
WITNESSETH:
WHEREAS, the nature of cable regulation is undergoing substantial change as a result of recent
state and federal legislation; and
WHEREAS, there is a need for cities to cooperate to assure the public interest is protected and
cable television rates are just and reasonable;
WHEREAS, it is necessary and desirable to retain the services of a consultant to provide the
service of Federal Communications Commission ("FCC") Form Review;
WHEREAS, the cities in the service area of TCI Cable have worked together collectively to
create this Coalition to participate in the rate review process to assure that the cable
rates charged were just and reasonable; and
WHEREAS, such participation in the Coalition assures a reduced cost of rate review and
provides a unified group to assert the public's right and interest in quality service.
NOW, THEREFORE, in consideration of the premises, agreement, covenants and
promises set forth herein, it is agreed as follows:
1
1 I.
Coalition for TCI Cable Service Area Cities
The CITIES hereby form the Coalition. Each member city shall, by action of its
governing body, approve its membership in the Coalition and designate its representative to
receive notices and participate in and vote at Coalition meetings. The Coalition shall be composed
of all cities committed to the payment of rate review services to be performed by an independent
Consultant, as hereinafter affirmed by the signature of the authorized representative. The current
rate agreed upon is attached hereto as Exhibit A and incorporated herein by reference as if fully
set forth herein. Cities that wish to participate in the Coalition, but not in rate review, may
become active members; however, such cities may not participate in votes affecting rate review.
2.
Binding Obligation
By signing this Agreement, each signatory city agrees to be bound by this Agreement and
to any other signatory city that is or becomes a member of the Coalition.
1 3.
Annual Meeting
Members of the Coalition shall meet annually to assess the need to retain a consultant for
cable rate review and shall, by majority vote of those representatives present, select a consultant.
Only member cities that have committed to participate in rate review may have a vote.
4.
Consultant
For the 1997 calendar year, the consulting firm of C2 Consulting Services was duly
selected to assist the Coalition in the regulation of cable television rates. At the option of the
member city, the City may, at an additional price to be agreed upon independently with the
Consultant, retain the services of the Consultant for other purposes such as franchise compliance.
This is an independent agreement outside the purview of the Coalition.
5.
' Payment for Performance of Governmental Functions
and Services Made from Current Revenues
' By entering into this Agreement, CITIES, individually, affirms that it is paying for the
performance of governmental functions or services from current revenues available. The
payments made under this Agreement fairly and adequately compensate the consultant for the
services or functions performed under the contract.
6.
Legal Construction
In case any one or more of the terms, provisions, phrases or clauses contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall be construed as if such invalid, illegal or
unenforceable portion had never been contained herein.
7.
Entire Agreement
This contract embodies the complete Agreement of the parties hereto superseding all oral
' or written previous and contemporary agreements between the parties relating to matters herein
and, except as otherwise provided herein, cannot be modified without written agreement of the
parties.
8.
No Other Obligations
By entering into this Agreement, the parties do not create any obligations, express or
implied, other than those set forth herein, and this Agreement shall not create any rights in parties
not signatories hereto.
9.
Immunity
It is expressly understood and agreed that in the execution of this Agreement, neither
CITIES nor the Coalition waives, nor shall be deemed to waive, any immunity or defense that
' would otherwise be available to each against claims arising in the exercise of governmental
powers and functions.
10.
Authority
The undersigned officers and/or agents are properly authorized to execute this
Agreement on behalf of the parties hereto, and each hereby certifies to the other that any
necessary resolutions extending such authority have been duly passed and are now in full force
and effect.
11.
Multiple Counterparts
This document may be executed in multiple counterparts and each shall be considered
to be an original and have the full force and effect of any other original.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below.
' City
By:
Signature
Typed/Printed Name
Typed/Printed Title
Date: