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had been prepared for introduction covering this condition, if Council still desired to adopt this condition. Councilman Rosselli commented on his dis- cussions held with other cities involved in installing CATV systems, and the importance of a substantial performance bond in view of several occasions where problems had developed because of lack of stability or capacity for an installing company to perform. City Attorney advised a provision in the basic ordinance required a $10,000 bond and annual renewal of same to insure compliance with con- ditions of the franchise, which would be callable for any breach of conditions; the $200,000 performance bond being requested was to be conditioned upon completion of basic installation of franchise granted, and would result in liquidated damages to City by forfeiture if installation not completed. Councilman Henderson felt clarification due on contradictory statements concerning converter proposed for use in providing 20 channels, and also asked if a repre- sentative from the telephone company would explain limitations on educational TV. Mr. William Seebauer, Manager of the Redwood City Pacific Telephone Company, introduced Mr. H. H. Honsacker, their Company's expert on CATV installations as they effect the telephone company. Mr. Honsacker advised of the type of agreement which appli- cants for installation of CATV systems had to enter into with the tele- phone company and recited the actual clause which granted the use of the poles for installation by franchises, and the incidental purpose for occasional transmission of other television signals for education or entertainment purposes. He stated this would not allow segregated use of channels unless broadcast made to all. Councilman Bury questioned types of service of Telephone Company operation in this installation. Mr. Honsacker stated franchise holder given the option to use their poles or possibility of entering into an agree- ment for a modified tariff, and file with the FCC, but choice up to operator. Further discussion held concerning type of performance bond to be required and of proposed bond being a liquidating penalty type of bond so if company which had been granted franchise failed to perform, City could call on surety for payment to City of the full cash value of $200,000. City Manager asked that Council indicate whether this type of bond was implied in their requested condition, or if a straight bond would be preferred which could be reduced at in- tervals as construction periods completed. He also asked that Council indicate their decision concerning elimination of the preferential discount to Senior Citizens as had been recommended by Staff, as this amendment had been prepared as stated previously. Councilman Keckley moved to accept the recommendation of the Staff for: (1) setting 4% gross revenue to City from the CATV installation; (2) bond in amount of $200,000 be a penalty type bond; (3) detailed analysis of rates be made at regular five year intervals; (4) that 10% reduction in service cost to Senior Citizens be dropped (as set forth in City Manager's recommendation to Council of March 17, 1967) seconded by Councilman Rosselli. 020,67