HomeMy WebLinkAbout6.h. Resolution Approving Transfer of Control over FTTH Communications, LLC 4 ROSEN4JUIJT EXECUTIVE SUMMARY
CITY COUNCIL
City Council Regular Meeting: January 2, 2008
AGENDA ITEM: Resolution Approving Transfer of Control AGENDA SECTION:
over FTTH Communications, LLC Consent
PREPARED BY: Jamie Verbrugge, City Administrator AGENDA NO. t
ATTACHMENTS: Resolution APPROVED BY:
RECOMMENDED ACTION: Motion to adopt a resolution approving transfer of tntrol over
FTTH Communications, LLC, and its cable franchise and system, to Rudder C -pital
Corporation
BACKGROUND
Rudder Capital Corporation has entered into an agreement with Contractor Property Developers
Company to acquire all membership interests in N"1TH Communications, LLC and effective control over
the FTTH franchise and system.
ISSUE
Pursuant to Ordinance No. X1.23, the FTTH Cable Franchise, the City of Rosemount must consent to
the transfer of control prior to completion of the transaction. In 2006, the City formally waived its right
of first refusal to acquire the system. The application of transfer includes requested modifications to the
Franchise which have been negotiated by Rudder and the City of Rosemount, and are reflected within the
resolution and a subsequent agenda item amending the FTTH Cable Franchise Ordinance.
SUMMARY
Staff recommends a motion to adopt the resolution approving the transfer of control over FTTH
Communications to Rudder Capital Corporation.
CITY OF ROSEMOUNT, MINNESOTA
RESOLUTION
APPROVING TRANSFER OF CONTROL OVER FTTH COMMUNICATIONS, LLC,
AND ITS CABLE FRANCHISE AND SYSTEM, TO RUDDER CAPITAL
CORPORATION
WHEREAS, the City of Rosemount "City granted a cable franchise b FTTH
Communications, LLC "FTTH") pursuant to Ordinance No. X1.23 "Franchise" k and
WHEREAS, FTTH currently operates a cable communications system "System in the City
pursuant to the Franchise; and
WHEREAS, Contractor Property Developers Company, a Minnesota corporation "CPDC and
Rudder Capital Corporation, a Minnesota corporation "Rudder") have entered into an Amended
and Restated Securities Purchase Agreement dated September 30, 2006, and as subsequently
amended "Agreement
WHEREAS, CPDC currently holds 100% of all issued and outstanding membership interests in
FTTH; and
WHEREAS, pursuant to the Agreement, Rudder will acquire all membership interests in FTTH
from CPDC, and effective control over FTTH, the Franchise and Systems and
WHEREAS, pursuant to the Franchise, FTTH and Rudder cannot complete the transaction
contemplated by the Agreementwithout the City's prior consent and
WHEREAS, FTTH and Rudder filed a Federal CommunicationsCommission Form 394dated
October 31, 2007 with the City, together with certain attachments (collectively "Transfer
Application and
WHEREAS, prior to filing the Transfer Application, FTTH and Rudder requested that the City
waive its rights under the Franchise to acquire the System; and
WHEREAS, by Resolution 2006 -126, dated December 19, 2006, the City waived its right of first
refusal to purchase FTTH and/or the System arising as a result of the proposed transaction; and
WHEREAS, prior to filing the Transfer Application, the parties also advised the City thatthey
intended to seek certain modifications or amendments to the Franchise including specifically
modification of the required build -out schedule; and
WHEREAS, such requests for amendment of the Franchise are detailed in the Transfer
Application; and
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WHEREAS, the City has reviewed the TransferApplication and the request to modify the
Franchise is reflected therein and
WHEREAS, FTTH provides telephone and other telecommunications services under the
regulatory jurisdiction of the Minnesota Public Utilities Cormission "MPUC and
WHEREAS, on or about September 12, 2007, the MPUC approved the proposed transaction
with respect to services under its jurisdiction; and
WHEREAS, in review of such transactions, the MPUC and City are charged with review of the
same or similar considerations, to wit: whether the applicant has the financial, technical and
legal/managerial capacity to operate; and
WHEREAS, in reliance upon the Transfer Application and MPUC approval noted above, the
City will consent to the Franchise transfer upon the conditions set forth in this Resolution.
NOW, THEREFORE, BE IT RESOLVED THAT the City consents to the transaction
described in the Transfer Application, subject to the following conditions:
1. FTTH and Rudder shall be bound by therepresentations and understandings
reflected in the Transfer Application;
2. The City will accept and enact certain of the Franchise amendmentsrequested by
FTTH and Rudder, and certain additional amendments to the Franchise, alias indicated in
Attachment 1 hereto;
3. Rudder shall be bound by allapplicable laws, codes and regulations and the
Franchise for the term thereof.
BE IT RESOLVED FURTHER THAT by consenting herein, the City does not waive, and
expressly reserves, consistent with applicable limitations periods,its rights regarding any and all
compliance matters involving the Franchise including the right toenforce the Franchise. Further,
the City's consent shall not affect or impact on the parties' rights and obligations concerning
renewal of the Franchise.
BE IT RESOLVED FURTHER THAT the City's consent shall continue for a period of six (6)
months during which time the transaction contemplated by the Tansfer Application must close.
Within ten (10) days of closing Rudder shall providewritten notice to the City.
BE IT RESOLVED FURTHER THAT if any of the foregoing conditions are not met or
satisfied the City's consent is void and the City shallbeen deemed to have denied the Transfer
Application.
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BE IT RESOLVED FURTHER THAT Rudder and FTTH will reimburse the City for its actual
legal fees incurred in review of the transfer, and related matters, in an amount not to exceed
$10,000.00.
BE IT RESOLVED FURTHER THAT Rudder shall accept this Resolution, effective upon
closing, as provided below.
Adopted by the City Council of the City of Rosemount this day of 2007.
Mayor
ATTEST:
City Administrator
ACCEPTANCE
This Resolution, the Franchise and all terms and conditions therein} and the amendments to the
Franchise noted, are expressly accepted and agreed to.
RUDDER CAPITAL CORPORATION
By:
Its:
STATE OF MINNESOTA
ss.
COUNTY OF
The foregoing instrument was acknowledged before me this day of 2007 by the
for
Notary Public
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ATTACHMENT 1
CITY OF ROSEMOUNT
COUNTY OF DAKOTA
STATE OF MINNESOTA
ORDINANCE NO.
AN ORDINANCE AMENDING THE FTTH CABLE FRANCHISE,
ORDINANCE NO.
THE CITY COUNCIL OF THE CITY OF ROSEMOUNT, MINNESOTA, ORDAINS as
follows:
Section 1. Rosemount Ordinance No. X1.23, Section 2, paragraph 8 is amended as follows
(deletions shown as strikeouts, additions shown in bold/underline):
Written Notice. All notices, reports, or demands required to be given in writing
under this Franchise shall be deemed to be given when delivered personally to any
officer of Grantee or City's Administrator of this Franchise or forty-eight (48)
hours after it is deposited in the United States mail in a sealed envelope, with
registered or certified mail postage prepaid thereon, addressed to the party to
whom notice is being given, s follows:
If to City: City of Rosemount
c/o City Administrator
2875 145 Street West
Rosemount, MN 55068 -4997
With copies to: Robert J. V. Vose, Esq.
470 Pit bury V114Va U.S. Bank Plaza
380 200 South 6 Street
Minneapolis, MN 55402
If to Grantee: FTTH Communications, L.L.C.
Attn: Kevin Kawell
4483 Evenne Parkwa 14745 South Roberts Trail
Rosemount, MN 55068
With copies to:
S
100 W h gton n v e S out
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Clyde C. Ahlquist, Esq.
Ahlquist Law Office
2334 Wilson Street NE
Minneapolis, MN 55418
Such addresses may be changed by either party upon notice to the other party
given as provided in this Section.
Section 2. Rosemount Ordinance No. X1.23, Section 6, paragraph 1 is amended as follows
(deletions shown as strikeouts, additions shown in bold/underline):
Public. Educational and Government Access
a. The City is hereby designated to operate, administer, promote, and manage
community programming (public, education, and government
programming) (hereinafter "PEG access in the Cable System.
b. Grantee shall dedicate five (5) channel(s), with channel defined as a six (6)
MHz spectrum allocation, for PEG access and community programming
use. All residential Subscribers who receive all or any part of the total
services offered on the System shall be eligible to receive such channels at
no additional charge. The channel(s) shall be activated upon the effective
date of this Franchise and thereafter maintained. The City may rename,
reprogram, or otherwise change the use of these channels in its sole
discretion, provided such use is non commercial and retains the general
purpose of the provision of community programming. Nothing herein shall
diminish the City's rights to secure additional channels pursuant to Minn.
Stat. 238.084, which is expressly incorporated herein by reference. The
City shall provide ninety (90) days prior written notice to Grantee of City's
intent to activate access channels and shall allow Grantee reasonable time
to vacate said channel(s).
c. The VHF spectrum must be used for the PEG access channel(s) required in
this Section. Grantee shall designate the channel locations of any other
access channel(s) but may not move or otherwise change the channel
number or location of any PEG access or community program channel
without the written approval of the City.
d e Grantee will cable cast all video
tamed -PEG access •rogramming provided produced by the City or City's
designee. Within one year of the Effective Date of this Franchise, the
Grantee will provide live video feed from City Hall. In addition, on or
before October 1, 2008, Grantee will begin cable casting ISD 196
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Channel 10 and will provide or obtain a live video feed or connection
from Apple Valley City Hall and cable cast PEG access programming
produced by the Apple Valley, Farmington Rosemount Cable
Commission including Rosemount/Dakota County Channel 12 and
Apple Valley/Farmington Channel 16. On or before January 1, 2009,
Grantee shall present a plan and timetable for obtaining and cable
casting Regional Channel 6 and, to the extent commercial feasible and
permitted by the content owner(s), Public Access Channel 12.
Grantee shall be responsible for the cost of obtaining the foregoing
program feeds or connections, and the cost of any equipment
necessary to cable cast such programming.
Any PEG programming originated from FTTH facilities will be provided to all
public buildings
Section 3. Rosemount Ordinance No. X1.23, Section 8, paragraph 1 is deleted in its entirety.
Section 4. Rosemount Ordinance No. X1.23, Section 8, paragraph 2 is amended as follows
(deletions shown as strikeouts, additions shown in bold /underline):
Letter of Credit.
a. At the time of acceptance of this Franchise, Grantee shall deliver to the
City an irrevocable and unconditional Letter of Credit, in form and
substance acceptable to the City, from a National or State bank approved
by the City, in the amount of T1 Sixty Thousand Dollars ($1 60,000.00).
b. The Letter of Credit shall provide that funds will be paid to the City, upon
written demand of the City, and in an amount solely determined by the City
in payment for penalties charged pursuant to this section, in payment for
any monies owed by Grantee pursuant to its obligations under this
Franchise, or in payment for any damage incurred as a result of any acts or
omissions by Grantee pursuant to this Franchise.
c. In addition to recovery of any monies owed by Grantee to the City or
damages to the City as a result of any acts or omissions by Grantee
pursuant to the Franchise, the City, in its sole discretion, may charge to and
collect from the Letter of Credit the following penalties:
i. For failure to complete system upgrade —as construction and
extension in accordance with the schedule provided herein,
unless the City approves the delay, the penalty shall be Two
Hundred Dollars ($200.00) per day for each day, or part thereof,
such failure occurs or continues.
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ii. For failure to provide data, documents, reports or information
required herein or for failure to cooperate with the City during an
application process or system review or as otherwise provided
herein, the penalty shall be Fifty Dollars ($50.00) per day for each
day, or part thereof, such failure occurs or continues.
iii. For failure to comply with construction, operation or customer
service, or maintenance and technical standards, including the
customer service requirements herein, the penalty shall be One
Hundred Dollars ($100.00) per day for each day, or part thereof,
such failure occurs or continues.
iv. For failure to provide the services Grantee has proposed, including,
but not limited to, the implementation and the utilization of the
PEG access channels and the maintenance and/or replacement of
the PEG access equipment and other facilities, the penalty shall be
One Hundred Dollars ($100.00) per day for each day, or part
thereof, such failure occurs or continues.
v. For violation of any other provision of this Franchise or applicable
federal, state, or local law or regulation, the penalty shall be Fifty
Dollars ($50.00) per day for each day, or part thereof, such
violation continues.
d. Each violation of any provision of this Franchise shall be considered a
separate violation for which a separate penalty can be imposed.
e. Whenever the City finds that Grantee has violated one or more terms,
conditions or provisions of this Franchise, a written notice shall be given to
Grantee informing it of such violation. At any time after thirty (30) days
following receipt of notice, provided Grantee remains in violation of one or
more terms, conditions or provisions of this Franchise, in the sole opinion
of the City, the City may draw from the Letter of Credit all penalties or
monies due the City from the date of the local receipt of notice. The City
may grant additional time beyond the initial thirty (30) days in the event the
City determines such additional time is necessary to cure the alleged
violation.
f. Grantee may, within fifteen (15) days of receipt of such notice, notify the
City in writing that there is a dispute as to whether a violation or failure has
in fact occurred. Such written notice by Grantee to the City shall specify
with particularity the matters disputed by Grantee. All penalties shall
continue to accrue and the City may draw from the Letter of Credit at the
end of the thirty (30) day cure period notwithstanding Grantee's dispute
regarding the violation.
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i. The City shall hear Grantee' s dispute at the next regularly
scheduled meeting or within sixty (60) days, whichever period is
longer.
ii. Upon determination by the City that no violation has taken place,
the City shall rescind the notice of violation and refund to Grantee,
without interest, all monies drawn from the Letter of Credit by
reason of the alleged violation.
g. If said Letter of Credit or any subsequent Letter of Credit delivered
pursuant thereto expires prior to five (5) months after the expiration of the
term of this Franchise, it shall be renewed or replaced during the term of
this Franchise to provide that it will not expire earlier than five (5) months
after the expiration of this Franchise. The renewed or replaced Letter of
Credit shall be of the same form and amount and with a bank authorized
herein.
h. If the City draws upon the Letter of Credit or any subsequent Letter of
Credit delivered pursuant hereto, in whole or in part, Grantee shall replace
the same within ten (10) days and shall deliver to the City a like proof of
replacement of the Letter of Credit for the full amount required herein as a
substitution of the previous Letter of Credit.
If any Letter of Credit is not so replaced, the City may draw on said Letter
of Credit for the whole amount thereof and use the proceeds as the City
determines in its sole discretion. The failure to promptly replace any
Letter of Credit may also, at the option of the City, be deemed a default by
Grantee under this Franchise. The drawing on the Letter of Credit by the
City, and use of the money so obtained for payment or performance of the
obligations, duties and responsibilitiesof Grantee which are in default, shall
not be a waiver or release of such default.
j. The collection by the City of any damages, monies or penalties from the Letter
of Credit shall not be deemed an exclusive remedy and shall not affect any
other right or remedy available to the City, nor shall any act, or failure to act,
by the City pursuant to the Letter of Credit, be deemed a waiver of any right of
the City pursuant to this Franchise or otherwise.
Section 5. Rosemount Ordinance No. X1.23, Exhibit B is amended as follows (deletions
shown as strikeouts, additions shown in bold /underline):
EXHIBIT B
Attached Exhibit C is a map showing the location of Grantee's system as currently
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constructed, along with a schedule for completion of construction of the Grantee's
initial service areas. Grantee shall extend its system and offer service to all homes or
dwelling units in Areas 1 and L 2 and 3, and those portions of Area 4 meeting the
density requirement in the Franchise, all as depicted on the attached map. in Exhibit
C.
The City and Grantee acknowledge that the Grantee has applied for necessary
governmental permits, licenses, certificates, and authorizations in order to construct a
system serving the City and that such system construction is underway as of the date of
the granting of this franchise. Grantee shall continue to apply for permits associated with
work in specific portions of the right -of -way as construction proceeds.
Energized trunk cable must be extended substantially throughout Area 1 depicted on the
Exhibit C, and all
associated system construction must be completed by December 31, 2008; energized
trunk cable must be extended substantially throughout Area 2, and all associated
system construction must be completed by December 31, 2009; energized trunk
cable must be extended substantially throughout Area 3, and all associated system
construction must be completed December 31, 2010; energized trunk cable must be
extended substantially throughout those portions of Area 4 meeting the densitv
requirements in this Franchise, and all associated system construction must be
completed by December 31, 2011. Construction based on this build -out schedule
will proceed at a reasonable rate of not less than 50 plant miles per year. Persons
along the route of the energized cable will must have individual drops as desired during
the same period of time.
ee
Upon completion of system construction in Grantee's initial service areas, Grantee will
extend its system and services in accordance with Section 2.7 of the Franchise. The
requirements herein may be waived by the City upon occurrence of unforeseen events or
acts of God. The City may only agree to such modifications by amendment to this
Franchise.
Section 6. Rosemount Ordinance No. X1.23, Exhibit C is deleted and replaced with the
following:
(Insert new service area /phase magi
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Section 7. This Ordinance shall be in effectfollowing its passage and publication.
ADOPTED this day of 2007, by the City Council of the City of
Rosemount.
CITY OF ROSEMOUNT
William H. Droste, Mayor
ATTEST:
City Clerk
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