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8.A. - Page 3 The Finance Department has analyzed the PEG fees being paid by cable operators under former franchise agreements, which in some cases were a set cash amount to be paid over time. Staff determined that the appropriate fee is 1 % of gross revenues and accordingly, the proposed Ordinance provides that all state franchise holders shall pay PEG fees in the amount of 1% of gross revenues. This requirement is consistent with DIVCA, which requires that all video service providers, including the incumbent, shall pay the same PEG fee. 3) DIVCA preserves local authority to regulate the time, place and manner of facilities and equipment that are placed in the rights -of -way by state franchise holders, but requires that this authority be exercised consistent with how the local authority regulates the use of the rights -of -way by telecommunications providers. The ordinance provides that state franchise holders must comply with the same right - of -way permitting requirements the City imposes on other users of the right -of -way, including telecommunications providers. The ordinance also provides for a 60 -day limit for the City to issue or deny an encroachment permit, and imposes a clear mechanism for appealing permit denials to the Council, as required under DIVCA. 4) DIVCA preserves the authority of local governments to enforce state and federal customer service requirements and directs that local governments adopt a schedule of penalties for violations of such customer service standards. However, the amount of penalties a local authority may impose is greatly restricted by DIVCA and half of any amount collected must be turned over to the state. The ordinance, implements a schedule of penalties for violations of customer service standards. The penalties, which are required to be authorized by local ordinance or resolution, are the maximum allowed under DIVCA. ALTERNATIVES 1. The City Council could choose not to take any action and allow the City to continue to operate without a DIVCA - compliant ordinance. 2. The City Council could direct staff to make other changes to the proposed ordinance. FISCAL IMPACT Overall, the City will see a modest increase in PEG receipts as a result of this change and all PEG funds will continue to fund equipment and facilities used by the City for its PEG programming. This number may also increase to the extent that cable operators providing service to new customers who were not previously subscribers. The City will also avoid the costs of potential legal challenges over the financial and other obligations of current and future cable operators. ENVIRONMENTAL REVIEW This ordinance is not a "project" within the meaning of the California Environmental Quality Act. (Public Resource Code § 21065; Guidelines § 15378)