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Item 5Duny of soutimaxe, 'Texas MEMORANDUM February 27, 2006 TO: Shana Yelverton, City Manager FROM: Gary Gregg, Technical Services Manager SUBJECT: Authorize the Mayor to enter into a settlement agreement with Marcus Cable Associates, L.L.C. d/b/a Charter Communications relating to the Consortium Cities audit of Charter Communications. Action Requested: Authorize the Mayor to enter into a settlement agreement with Marcus Cable Associates, L.L.C. d/b /a Charter Communications relating to the Consortium Cities audit of Charter Communications. Background Information: In 2003, several issues arose that led the City of Southlake to join a consortium of cities consisting of Fort Worth, Burleson, Benbrook, Duncanville, Hurst, Keller and North Richland Hills. The consortium of cities believed that Charter was not correctly calculating outage conditions in relation to the terms of the cable franchise agreement with the cities. Several letters were sent to Charter notifying Charter of their alleged violation of the franchise agreement. In March 2004, the City Council agreed to participate in the coalition of cities with a payment of $3.961 to fund an initial contribution toward legal and expert witness fees and other costs associated with the formal hearing process. The hearing process was designed to recover damages from Charter relating to the non- compliance with the customer service standards. Charter has proposed a settlement agreement. The agreement acknowledges the cities disagree on the methodology used to calculate abnormal operating conditions. It proposes new standards to be observed by Charter. Additionally, Charter has offered a community grant to each city. The grant proposed is based on the percentage of customers Southlake had at the time of the initial complaint. Charter is proposing $9,903.13 annually for a period of the next four years. The grant will not be deducted from current franchise fees nor passed on to their customers. The City Council will be able to determine how this grant is spent each year. Shana Yelverton, City Manager February 27, 2006 Page 2 of 2 Financial Considerations: The city will receive four yearly community grants of $9,903.13 totaling $39612.52 should the agreement be approved Citizen Input / Board Review: No citizen input or board review is required. Legal Review: Attorneys for all the named cities have reviewed and approved the agreements. Alternatives: Reject the agreement and consider continuing legal action. Supporting Documents: Supporting documents include the following item: • Settlement Agreement between Consortium Cities and Charter Cable. Stahl' Recommendation: City Council approval to authorize the Mayor to enter into a settlement agreement with Marcus Cable Associates, L.L.C. d/b /a Charter Communications relating to the Consortium Cities audit of Charter Communication. SETTLEMENT AGREEMENT This Settlement Agreement ( "Agreement ") is made and entered into as of the date set forth below by and between. Marcus Cable Associates, L.L.C. d/b /a Charter Communications ( "Charter ") and the Cities of Fort Worth, Burleson, Benbrook, Duncanville, Hurst, Keller, North Richland Hills and Southlake ( "the Consortium Cities ") relating to the Consortium Cities' audit of Charter's compliance with customer service standards regarding telephone answering time as described in the Consortium Cities' letters to Charter dated on or around April 9, 2003 ( "Audit ") pursuant to the federal Cable Act, as amended, 47 U.S.C. § 552. By this Agreement Charter and the Consortium Cities hereby settle their dispute regarding the Audit concerning the methodology used to determine "abnormal operating conditions" during which time Charter is allowed to adjust the number of calls answered under the telephone answering requirement. WHEREAS, on and around April 9, 2003, through a series of letters from individual cities, the Consortium Cities notified Charter of its alleged failure to comply with customer service requirements regarding telephone answering time; and . WHEREAS, the Consortium Cities and Charter disagree with the methodology used to determine "abnormal operating conditions" during which time Charter is allowed to adjust the number of calls answered under the telephone answering requirement; and, WHEREAS, the Consortium Cities and Charter have spent considerable time reviewing and evaluating the data related to the telephone answering requirements, and the parties desire to, conclude this review process and to settle and finally resolve their dispute regarding the Audit of the methodology used to determine "abnormal operating conditions" during which time Charter is allowed to adjust the number of calls answered under the telephone answering requirement; and WHEREAS, the Consortium Cities and Charter desire to add benefit to the citizens of the Consortium Cities who are Charter's customers; NOW THEREFORE, in order to settle and finally resolve their dispute regarding the audit and their dispute arising out of the methodology used to determine "abnormal operating conditions" and the alleged violation of customer service standards set forth in Charter's Franchise Agreement, for the :mutual promises and covenants set forth in this Agreement, the adequacy and sufficiency of which consideration is acknowledged, consideration of the mutual covenants, conditions and obligations set forth herein, the parties agree as follows: AGREEMENT 1. Charter Community Grant Within 10 days of the final signatures being placed on this Agreement, Charter will pay the Consortium Cities the amount of $250,000, in the form of a Charter Community Grant, which shall be used exclusively for a community program as determined by the appropriate city council. For the years 2007, 2008 and 2009 Charter agrees to pay to the Consortium Cities annual Charter Community Grants of $250,000 to be used by the Consortium Cities exclusively for a community program as determined by city council, which amount shall be due and payable on each yearly anniversary of the first $250,000 payment. Charter shall make annual payments to each Consortium city in the amount of: Benbrook $ 9,353.13 Burleson $ 6,378.13 Duncanville $ 11,653.13 Fort Worth $168,678.13 Hurst $ 13,253.13 Keller $ 11,353.13 North Richland Hills $ 19,428.13 Southlake $ 9,903.13 Any Charter Community Grant payments made to the Consortium Cities by Charter shall not be deducted from any franchise fee payments made to the Consortium Cities as required by the current franchise agreement of the Consortium Cities, nor shall they be passed on to customers. Charter will be acknowledged as the donor of these charitable funds and will also be invited to participate in community programs with additional in -kind services as the opportunity may arise. For purposes of illustration and not limitation, such additional in -kind contributions may include appropriate participation from Charter's programming partners in community initiatives such as alcohol awareness or gang prevention. 2. Abnormal Operating; Conditions. Charter and the Consortium Cities acknowledge the difficulty in implementing the franchise agreement standard in allowing adjustments for "operation conditions that are not in the control of the company ". In order to clarify that standard and avoid uncertainties in the future, the parties agree to the following methodology and criteria for the remainder of their franchise term with the Consortium Cities: a. Charter will declare an outage when three calls from the same node tell them that a service interruption has occurred. Charter will also declare outages if its Nagios Systems shows a problem with five moderns in the same node. Charter will continue timely implementation of technological improvements to its system to allow it to find problems sooner and repair them as quickly as possible. b. When an outage is declared, a technician will promptly be dispatched to diagnose and fix the problem. The technician will make a determination as to the cause of the outage and report that determination to the dispatcher who in turn will immediately enter the information into Charters' outage reporting database. C. The categories that will constitute "operation conditions that are not within the control of the company" (Abnormal Operation Conditions) will be limited to the following: 1. Line Extender Fuse (AC) (caused by third party power surge) 2. Line Ext. DC Power Pack Fuse (caused by third party power surge) 3. Main Amplifier Fuse (AC) (caused by third party power surge) 4. Main Amp DC Power Pack Fuse (caused by third party power surge) 5. Splitter/DC Coupler Fuse (caused by third party power surge) 6. Power Inserter Fuse (caused by third party power surge) 7. Power Supply Fuse (caused by third party power surge) S. Power Supply Commercial Breaker (caused by third party power surge) 9. Commercial Power Outage (TXU or other power company) 10. Underground Cut Feeder (caused by third party) 11. Underground Cut Trunk (caused by third party) 12. Aerial Oversize Load Hit (caused by third party) 13. Vandalism. (caused by third party) . 14. Aerial Cut Feeder (caused by third party) 15. Aerial Cut Trunk (caused by third party) 16. Cut Fiber (caused by third party) 17. Pedestal damage (caused by third party) 18. MDU Lock Box damage (caused by third party) In addition to these types of outages, Charter will categorize the following as Abnormal Operating Conditions pursuant to the franchise agreements: 19. Severe weather conditions, 20. Civil disturbances 21. Natural disasters d. The technicians and the dispatchers will be instructed that outages must be correctly and consistently categorized. The data entry will also recite the node number from the affected area of the outage along with the outage category. e. For each outage that constitutes an Abnormal Operating Condition period, Charter will adjust the calls received during the service interruption (in one -half hour intervals) in the following manner: all calls not answered within. 30 seconds during Abnormal Operating Conditions will be subtracted from the total number of calls received. Stated another way, the number of calls answered in 30 seconds plus the number of calls handled by automation will be divided by the total number of calls received less the sum of the calls abandoned in under 10 seconds plus the number of calls not answered within 30 seconds during any Abnormal Operating Condition period. f. The City will continue to receive a monthly report showing all of the "Abnormal Operating Conditions" outages set out by day. That report will show the total number of calls received, the number answered within 30 seconds, the number of calls adjusted'and the adjusted answer rate for that month. g. The outage reporting database will be capable of producing reports that will be available upon request for review to support the monthly reports Charter will give to the Consortium Cities. The Consortium Cities may spot check to confirm Charter's data and computation, including review of daily call center combined total sheets and outage compilations. 3. Partial Reimbursement of Costs. Charter agrees to pay the Consortium Cities within 10 days of the date of the final execution of this Agreement the sum of $7,500 as reimbursement for certain audit costs. Any payment for partial reimbursement of costs made to the Consortium Cities by Charter shall not be deducted from any franchise fee payments made to the Consortium Cities nor will it be passed on to Charter customers. 4. Settlement Payment by Charter under this Agreement is intended for settlement purposes only and does not constitute any admission by Charter or agreement with the allegations that Charter failed to comply with customer service standards regarding telephone answering time. This settlement is intended to resolve and conclude their disputes regarding the Audit and the methodology used to determine "abnormal operating conditions" during which time Charter is exempt from meeting the telephone answering requirement. 5. Release (a) Subject to Charter making all of the payments required by the terms of this agreement, each Consortium City releases, acquits and forever discharges Charter from any financial liability it may have arising out of alleged breaches of the various franchise agreements for all quarters through June 30, 2005. (b) This agreement does not restrict possible future action by Consortium Cities regarding separate customer service standard compliance. This release also does not absolve Charter from liability for unpaid franchise fees, if any. Further, this release does not preclude any of the Consortium Cities from alleging past breaches in the context of franchise renewal discussions; the release only goes to the Consortium Cities' right to seek damages for such breaches, if any. . 6. Applicable Law This agreement should be construed and interpreted in accordance with the laws of the State of Texas. Venue shall be in Tarrant County, Texas. 7. Counterparts This Agreement may be executed in counterparts each of which shall be deemed an original and all of which together shall be deemed an original and all of which together shall be deemed one and the same document. 8. Confidentiality To the extent allowed by law, the Consortium Cities and Charter agree to maintain confidentiality and not to disclose the contents of this Settlement except as maybe required by law, including but not limited to the Public Information Act, Texas Government Code § 552, et seq., and the Consortium Cities' disclosure of this settlement and pertinent information to the Texas Attorney General or as ordered by a Court as part of a response to a Public Information. Act request or by mutual consent of the Parties. Disclosure to the Texas Attorney General or as ordered by a Court as part of a Public Information Act request shall not be deemed a violation or breach of this agreement. 9. Entire Agreement This Agreement is the entire Settlement Agreement that exists between the Consortium Cities and Charter with respect to the issues discussed above. 10. For convenience purposes, each party will sign this Agreement on separate signature pages and authorize the attachment of such signature pages to a copy of this Agreement to constitute fully executed copy of this Agreement. In witness hereof the parties have executed this Agreement on the respective dates set forth hereafter. n( arcus Cable Associates, L.L.0 d/b /a Charter Communicatio Date by Charles H. McElroy, its Senior Vice President The City of Fort Worth by its The City of Burleson Date Date by The City of Benbrook its Date by its The City of North Richland Hills Date by its The City of Duncanville by its The City of Hurst by its The City of Southlake by The City of Keller its Date Date Date Date by its