ORDER-2019-109 : Acceptance of MGL Chapter 44 Section 53 F 3/4, establishment of a PEG Access and Cable Related Special Fund #2922.

Transcript (~22 min @ 1:36:47)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 1:36:43 Speaker 6: We'll make that recommendation to the full board. Thank you. Thank you. And I think we're going to hear from you in just a minute again. We have a million papers here.

▶ 1:36:51 Kate Lipper-Garabedian: Our next order on our agenda is order number 2019-109, acceptance of Mass General Law, Chapter 44, Section 53F and 3 quarters, establishment of a PEG access and cable related special fund number 2922.

▶ 1:37:13 Speaker 6: nine two two we're under suspension of rules so if you'd like to tell us a little bit about this

▶ 1:37:17 Speaker 4: that'd be great sure uh if i make the chair i did said correspondence dated june 3rd 2019 relative to acceptance of the peg access fund that we're now going to give it the fund number 2922 and in essence this change is all about is that as we enter this new fiscal year we are required to establish this fund which is now going to be called the cable television public educational and governmental access special revenue fund and again effective fiscal 2020 July 1st of 2019 we're required to reserve cap cable franchise fees and any other cable related revenues for appropriation to support the peg access services the Department of Revenue has provided guidance and its issuance of IGR informational guideline release number 16-102 which I believe you may have in your material and again it simply

▶ 1:38:30 Speaker 4: provides guidance and an understanding of how in fact this needs to be set up and how the revenues and expenses are required to flow through the city currently has an agreement with both Verizon and Comcast an establishment of this fund does not impact either agreement it does impact how we account for the revenues and expenditures and it puts a requirement on the community to appropriate the funds by approval of the board each year. Currently MMTV receives these funds directly from the carriers and the city receives its share directly from them. This change would require that all distributions come into the new special revenue fund now this is not a revolving fund this is not an enterprise fund this is a special revenue fund by law which has been established for this particular purpose and right now the agreement stipulates that approximately five percent is provided each year the majority four point two point point five percent um receipts um to the mmtv and the other 75.75 to the actual city of melrose so all this does is create a new accounting mechanism that takes effect quite promptly so that as revenues come in which they do right now each quarter they'll be deposited into the fund and prior to any use of of these revenues will require an act by the board of aldermen and just to add very

▶ 1:40:16 Speaker 8: briefly to that what currently happens is that the cable providers who have these franchise agreements with the city they make these they make these contributions these distributions directly to four and a quarter goes directly to mmtv from verizon and from comcast and 0.75 goes directly to the city which is then deposited into an account to the benefit of the school department and the and the technology and the audio visual needs of the school department so essentially what the result here is is for essentially giving the board the ability on an annual or even a more frequent basis to approve appropriations out of this special revenue fund

▶ 1:41:03 Speaker 4: for those end users and to add to that through the chair um this may mean appropriation can be made every quarter or you know twice a year um depending on the the needs and etc but um again it would require an actual order of the board each and every time period motion to

▶ 1:41:26 Kate Lipper-Garabedian: recommend for passage second the motion recommend for passage made by alderman mortimer and second by Alderman Tramontozzi. Before we get to that, City Auditor, were you reading from a memorandum?

▶ 1:41:38 Speaker 4: I'm not sure if it's part of our public record. No, just some notes I had made relative to, but the information that is available to you, which was on the original correspondence to me, it does give you the same citations. Right. And I did enter the same section of the

▶ 1:42:05 Robert A. Boisselle: informational guideline release pardon me so it is there okay yes no was this in the record

▶ 1:42:10 Kate Lipper-Garabedian: besides just this one line i i do see in the public i believe well i'm not logged into the public view um so forgive me but i do see in my view both um an attachment to the relevant section of mass journal law as well as a fairly brief memorandum maybe two paragraphs uh from mr della

▶ 1:42:34 Robert A. Boisselle: russo you see both of those now let me get this straight verizon right now there's a franchise fee on the bill that we get that money is going oh sorry i'm i'm so sorry please continue okay

▶ 1:42:51 Robert A. Boisselle: that money goes directly to the school and to MMTV on a yearly basis no through the chair on

▶ 1:42:58 Speaker 4: a quarterly basis right they will get a report and again as mr. van Kampen alluded MMTV money sent directly to them and the city of morrow's gets a check from them from the front from the

▶ 1:43:17 Speaker 4: From both providers, and then we provide the school department with the revenues. Okay. From there.

▶ 1:43:23 Robert A. Boisselle: Now, the Board of Aldermen will have extra money now that we're talking about? There's 0.75, I'm sort of confused here in the point in the past that there was money associated to MMTV and to the school committee for purchasing of equipment and everything else. now the board of aldermen will be doing the allocation the board of all the men rather than

▶ 1:43:48 Speaker 4: and again through the chair rather than the um providers cable providers sending the money directly to mmtv they will send their money directly to the city of melrose the uses and the purposes for which that money is for hasn't changed but it's going to now require and probably Probably for good purposes of transparency, that money has to go through the city. At that point, an appropriation request will be made, and it's really not that more complicated.

▶ 1:44:22 Robert A. Boisselle: But you mentioned the use of buying white boards and other types of technology. That's not with the aspects of the cable network.

▶ 1:44:35 Speaker 8: this is for the peg access component of the of the franchise fees we're receiving to support public educational and governmental access in both the school department and in the community through MMTV these funds which are currently being paid directly to MMTV and to the city of Melrose for the benefit of the schools now are being it's required going through a special revenue fund to give this board greater control over the disbursement of those funds we're here as an administration to represent to you that the four and a quarter percent and the 0.75 should continue to go to the penny to mmtv and to the school department and nowhere else okay nothing

▶ 1:45:19 Speaker 4: changes there the agreement hasn't changed okay thank you thank you thank you madam chair um

▶ 1:45:23 Michael P. Zwirko: Interestingly enough, I know a little too much about this stuff. I studied the 1996 Telecommunications Deregulation Act back in college, and then when that trickled down into Massachusetts, the then DTE further deregulated the cable market. And what that did was that allowed communities to actually invite competition, which I was glad when I moved to Meadows in 2006, we had competition. We have two providers, which is great, not only from a PEG fee access standpoint, but also for consumers if you only have one game in town generally you're not going to get great services or responses from those providers so I was very pleased in 2006 that I learned of this this actually is really all that's happening is the vehicle the mechanism in which the funds are going flowing rather from the cable company we now go to the city so it's it's actually I'm surprised it hasn't existed before I will state that you referenced what was it an IR 16 and

▶ 1:46:29 Speaker 4: that informational guideline release IGR that is not actually attached to this

▶ 1:46:32 Michael P. Zwirko: order and I would request that it be attached to the order what is attached to the order is it's sufficient but I think that that would help and kind of clarification as to how a municipality is able to set up this account I'll also note to not only the public but also this board that earlier in this calendar year actually I think it was December of 2018 we filed a resolution to the FCC with respect to peg access grants because these are currently being debated right now at the FCC they actually could end so these funds these funding mechanisms could potentially end and that would decimate which is why this board thank you unanimously supported the resolution being sent to the FCC in opposition to that proposal the point seven five that of the five percent that is funded to the the AV Club we have all seen I think they won two awards this year we've seen the facilities in the new Learning Commons which are really state-of-the-art these and again because we have two providers we're able to get more funding so I think that the city of Melrose has kind of been ahead of the curve other municipalities in Melrose have not if you are a municipality that has one provider believe you me that company that holds a monopoly fights very very hard to prevent competition from coming into their municipality and that doesn't happen here in Melrose my questions about this and I am supportive of it and I appreciate you bringing it before us have to do with I wonder what

▶ 1:48:14 Michael P. Zwirko: MMTV thinks so you know do we know do we have an opinion from MMTV I know that their structure they are a non-profit they do have a board that is their governance structure you know if I'm a non-profit and I have four point two five percent whatever that figure is coming to me quarterly and now it's going to come to me annually and also remove you know I would have concerns

▶ 1:48:40 Speaker 8: about that so we've met we've met with yes we met with Mary Beth McAteer my goal is and Pat Doyle made them aware of this this mandate that the city is under we met with them to ensure that the timing of payments from the city which means the appropriation vote of this board didn't disrupt their cash flow operation so they could continue to do their business and pay their staff and meet their expenses so we have met with them and i think the auditor's office is worked out or is working out the timing of disbursements to mmtv so that it doesn't uh dramatically drastically affect them the school department's less of an issue because they're um they can run deficit spending until the end of the fiscal year and we can just essentially fill that account we've never done that before correct correct but they can they could essentially well they could overspend the

▶ 1:49:34 Speaker 4: line item and we could just backfill it and in this particular case here with this fund um you'll see they talk about anticipated receipts only the actual receipt can ever be appropriated so we can't if you assume you're going to get in 200 000 you can't make a request an appropriation of 200 000 if you only have 100 in there it has to be only what is in the fund and not in anticipation of which is which is um important to know you know another um

▶ 1:50:04 Michael P. Zwirko: the creation of this this um special fund you know it begs it begs to question whether or not

▶ 1:50:14 Michael P. Zwirko: the city needs a cable commission um certainly to be an advisory board on contracts and contracts negotiations other municipalities have them um you know query how long cable is actually even going to be around right and maybe uh it morphs into some type of information technology who knows but um it may benefit the city to have a cable commission um but that has nothing to do with the order before us i'm more thinking out loud so i uh i'm i'm happy to know that mmtv uh doesn't have an opposition here i i still i wonder how it's going to affect their governance structure if at all it certainly would put i would feel a little bit more oversight of their governance under us now the board of aldermen seeing as where the appropriating authority certainly could leverage them i further speak out loud um those are all the questions i had on this item um appreciate you bringing before us it's interesting um and it's actually uh it's it's a movement that

▶ 1:51:19 Monica C. Medeiros: i i support yeah thank you thank you alderman Medeiros uh thank you i thought i heard you say Mr. De La Rosa that you sent something down on June 3rd and it seemed to have more detail than

▶ 1:51:30 Speaker 4: than what we have in the packet but no I'm through the chair I just said that uh we just dated the memorandum June 3rd um but the section of the law is actually um here we go again 53 f and three quarters so we go from 53 53 e 53 f and three quarters I mean it's interesting for sure

▶ 1:51:58 Monica C. Medeiros: Certainly. And I know that you mentioned that this is a requirement. And what had been included, the reference to the law, seems to say that the municipality that accepts this section may establish in the Treasury a separate revenue account to be known as the PEG access and cable-related fund and so on. but it says may rather than shall so i i know you said this is a requirement um

▶ 1:52:22 Monica C. Medeiros: who is requiring this of us and

▶ 1:52:29 Speaker 4: and when does that start again it starts july first department of revenue is requiring us to do this i've spoken with the idea department of revenue representative as well as um dick Sullivan outside auditor on both on this item and that's it is required for July 1st okay and so

▶ 1:52:48 Speaker 5: that's uh is that in this in this memo that you that are the augments well well I can it's right

▶ 1:52:51 Speaker 4: here here's the idea if you'd like you can just make a copy but it's pretty straightforward um

▶ 1:53:03 Speaker 4: and in fact here's a notice of acceptance that the city has to comply with if in fact the board proves this that we have to submit very timely hopefully before july for us to demonstrate that we did act on it so required to do that um if you look at the igr all the medeiros yes we don't we

▶ 1:53:20 Speaker 8: don't have that which we can make part of the order but under guidelines transition to special revenue fund it says as part of the certification general fund free cash the director of accounts will close any reservations of cable franchise fees or other cable related funds that appear on a city or town balance sheet on or after june 30th 2016 unless one of two things happen either we create this special revenue fund that it coins with the statute or we um i believe create an

▶ 1:53:49 Speaker 4: enterprise fund right which is certainly not no i'm not going to do no and how much money are we

▶ 1:54:00 Speaker 4: talking about for calendar year 18 it was amounted to over 215 000 from verizon for mmtv

▶ 1:54:11 Speaker 4: and over 38 000 for the city um again in calendar year 2018 the distribution amounted to just under 330 000 for mmtv from comcast and over 58 000 for the city so in total again calendar year basis over 545 000 um from mmtv um and calendar 218 and over 96 000 um for the city and combine them both so it's a significant revenue um and again uh now it will all be subject to approval by the board of alderman providing this order passes for any expenditures going forward

▶ 1:54:56 Monica C. Medeiros: and for fy19 that we're we're in if where would we see where we would we have seen that would we see that on the cherry sheet or would we see that like coming into the city in any of our budget documents or anything from last year would would the board of aldermen or the public have been

▶ 1:55:17 Speaker 4: able to see that money well if on the mmtv portion with the money sent um directly to them then you wouldn't but on the other side of the table you'll see a school fund that would be set up for to take those revenues in that they receive for this effort so you correctly find on the school side

▶ 1:55:35 Monica C. Medeiros: on the school side you might see it listed as an account okay thank you you're welcome thank you

▶ 1:55:42 Michael P. Zwirko: thank you madam chair sorry uh one question i forgot yeah what's the derivation of the 4.25 to 0.75 breakdown why that why that ratio and and

▶ 1:56:00 Speaker 8: would that ratio be um uh could that ratio be changed by agreement um so we had negotiated yeah we had negotiated the the verizon contract the franchise agreement has been in place since before my time it's a 15-year contract it expires in 2021. um so the the split would have been negotiated at that time i presume the reason for that was because the needs of the public educational of the public government access television station were proportionally larger than the needs of the school department's i hate to say audio visual because that's probably not the right term but the school department's audio visual technology needs at the same time so what happened in i believe it was 2011 or 12 11 we renegotiated the contract with comcast and essentially made the split identical to the verizon contract when we negotiated the comcast agreement in 2011 we also realized a substantial investment by comcast in allowing the city to upgrade to a fiber optic network which meant we were able to decommission the inet these are all terms that are way above my pay grade i just remember it for some strange reason right now um and we were able essentially to make an investment that the city desperately needed to give us the sort of fiber technology that the former i.t director saw as the way of the future

▶ 1:57:28 Michael P. Zwirko: so so the ratio the split rather is by agreement correct and you you stated that the every payment is by agreement obviously and you stated that the verizon contract expires in 2021 they both expire

▶ 1:57:39 Speaker 8: um i believe at this roughly the same time it's roughly the same time okay all the questions

▶ 1:57:46 Michael P. Zwirko: with that thanks again for the second time madam chair sure we do have a motion on the floor to

▶ 1:57:50 Speaker 6: recommend this for passage and duly seconded can we also amend the do we need can we i'd like to

▶ 1:58:02 Kate Lipper-Garabedian: add the um documents that have been referenced second okay so we have a motion to add to the order that these particular documents we've heard about tonight checking it all in favor of that aye opposed and now the order is before you as amended all in favor I motion to