MUNICIPAL ENTITIES AND CABLE OR

TELECOMMUNICATION SERVICES

2008 GENERAL SESSION

STATE OF UTAH

LONG TITLE

General Description:

This bill modifies the Municipal Cable Television and Public Telecommunications Services Act, to address municipal entities.

Highlighted Provisions:

This bill:

► modifies definition provisions;

► addresses requirements for elections by the registered voters of a new member of a municipal entity;

► addresses voting requirements related to bonds;

► imposes limitations on a municipal entity adding a new member;

► limits contributions to a municipal entity; and

► makes technical and conforming changes.

Monies Appropriated in this Bill:

None

Other Special Clauses:

None

Utah Code Sections Affected:

AMENDS:

10-18-102, as enacted by Laws of Utah 2001, Chapter 83

10-18-105, as last amended by Laws of Utah 2004, Chapter 270

10-18-204, as enacted by Laws of Utah 2001, Chapter 83

10-18-302, as last amended by Laws of Utah 2005, Chapter 105

10-18-303, as enacted by Laws of Utah 2001, Chapter 83

ENACTS:

10-18-205, Utah Code Annotated 1953

10-18-206, Utah Code Annotated 1953

Be it enacted by the Legislature of the state of Utah:

Section 1. Section 10-18-102 is amended to read:

10-18-102. Definitions.

As used in this chapter:

(1) "Cable television service" means:

(a) the one-way transmission to [subscribers] a subscriber of:

(i) video programming; or

(ii) other programming service; and

(b) subscriber interaction, if any, that is required for the selection or use of:

(i) the video programming; or

(ii) other programming service.

(2) "Capital costs" means [all] the costs of providing a service that are capitalized in accordance with generally accepted accounting principles.

(3) "Cross subsidize" means to pay a cost included in the direct costs or indirect costs of providing a service that is not accounted for in the full cost of accounting of providing the service.

(4) "Direct costs" means [those expenses] an expense of a municipality that:

(a) [are] is directly attributable to providing:

(i) a cable television service; or

(ii) a public telecommunications service; and

(b) would be eliminated if the service described in Subsection (4)(a) were not provided by the municipality.

(5) "Feasibility consultant" means [an individual or entity] a person:

(a) with expertise in the processes and economics of providing:

[(a)] (i) cable television service; and

[(b)] (ii) public telecommunications service[.];

(b) who has no financial interest in the success or failure of:

(i) the provision of the following by a municipality or municipal entity that the person is studying:

(A) a cable television service; or

(B) a public telecommunications service; or

(ii) a municipal entity described in Subsection (5)(b)(i); and

(c) whose spouse, parent, child, sibling, or other person who regularly resides in the household, if any, does not have a financial interest in the success or failure of:

(i) the provision of the following by a municipality or municipal entity that the person is studying:

(A) a cable television service; or

(B) a public telecommunications service; or

(ii) a municipal entity described in Subsection (5)(c)(i).

(6) (a) "Full-cost accounting" means the accounting of [all] the costs incurred by a municipality in providing:

(i) a cable television service; or

(ii) a public telecommunications service.

(b) The costs included in a full-cost accounting include all:

(i) capital costs;

(ii) direct costs; and

(iii) indirect costs.

(7) (a) "Indirect costs" means [any costs] a cost:

(i) identified with two or more services or other functions; and

(ii) that [are] is not directly identified with a single service or function.

(b) "Indirect costs" may include a cost [factors] factor for:

(i) administration;

(ii) accounting;

(iii) personnel;

(iv) purchasing;

(v) legal support; and

(vi) other staff or departmental support.

(8) "Member" means a municipality that:

(a) is a party to an agreement with a municipal entity, including an agreement under Title 11, Chapter 13, Interlocal Cooperation Act; and

(b) under the agreement described in Subsection (8)(a), has its inhabitants receive:

(i) a cable television service; or

(ii) a public telecommunications service.

(9) "Municipal entity" means an entity created pursuant to an agreement:

(a) under Title 11, Chapter 13, Interlocal Cooperation Act; and

(b) to which a municipality is a party.

[(8)] (10) "Private provider" means a person that:

(a) provides:

(i) a cable television [services] service; or

(ii) a public telecommunications [services] service; and

(b) is a private entity.

[(9)] (11) "Public telecommunications service" means the two-way transmission of signs, signals, writing, images, sounds, messages, data, or other information of any nature by wire, radio, lightwaves, or other electromagnetic means offered to the public generally.

[(10) "Subscribers"] (12) "Subscriber" means a person that lawfully receives:

(a) a cable television [services] service; or

(b) a public telecommunications [services] service.

Section 2. Section 10-18-105 is amended to read:

10-18-105. Scope of chapter.

(1) Nothing in this chapter authorizes [any] a county or other political subdivision of this state to:

(a) provide:

(i) a cable television service; or

(ii) a public telecommunications service; or

(b) purchase, lease, construct, maintain, or operate a facility for the purpose of providing:

(i) a cable television service; or

(ii) a public telecommunications service.

(2) Except as provided in Subsection (3), this chapter does not apply to a municipality purchasing, leasing, constructing, or equipping [facilities] a facility:

(a) that [are] is designed to provide [services] service within the municipality; and

(b) that the municipality:

(i) uses for internal municipal government purposes; or

(ii) by written contract, leases, sells capacity in, or grants [other] another similar [rights] right to a private provider to use the [facilities] facility in connection with a private provider offering:

(A) a cable television [services] service; or

(B) a public telecommunications [services] service.

[(3) (a) As used in this Subsection (3), "municipal entity" means:]

[(i) a municipality; or]

[(ii) an entity created pursuant to an agreement:]

[(A) under Title 11, Chapter 13, Interlocal Cooperation Act; and]

[(B) to which a municipality is a party.]

[(b)] (3) (a) Notwithstanding Subsection (2), municipality or a municipal entity shall comply with Subsection (3)[(c)](b) if [the municipal entity] it purchases, leases, constructs, or equips [facilities] a facility that [the municipal entity] it by written contract leases, sells capacity in, or grants [other] another similar [rights] right to a private provider to use the [facilities] facility in connection with a private provider offering:

(i) a cable television [services] service; or

(ii) a public telecommunications [services] service.

[(c)] (b) A municipality or municipal entity described in Subsection (3)[(b)](a) shall, with respect to an action described in Subsection (3)[(b)](a), comply with the obligations imposed on a municipality pursuant to:

(i) Section 10-18-302; and

(ii) Subsections 10-18-303(3) and (4).

Section 3. Section 10-18-204 is amended to read:

10-18-204. Vote permissible -- Referendum.

(1) (a) A legislative body of a municipality by a majority vote may call an election on whether or not the municipality shall provide the proposed:

(i) cable television [services] service; or

(ii) public telecommunications [services] service.

(b) If under Subsection (1)(a) the legislative body calls an election, the election shall be held:

(i) (A) at the next municipal general election; or

(B) as provided in Subsection 20A-1-203(1), at a local special election the purpose of which is authorized by this section; and

(ii) in accordance with Title 20A, Election Code, except as provided in this section.

(i) a summary of the cable television [services] service or public telecommunications [services] service that the legislative body [of the municipality] proposes to provide to the one or more subscribers residing within the boundaries of the municipality;

(ii) the feasibility study summary under Section 10-18-203;

(iii) a statement that a full copy of the feasibility study is available for inspection and copying; and

(iv) the location in the municipality where the feasibility study may be inspected or copied.

(d) The ballot at the election shall pose the question substantially as follows: Shall the [name of the municipality] provide [cable television service or public telecommunications service] to the inhabitants of the [name of the municipality].

(e) The ballot proposition may not take effect until submitted to the electors and approved by the majority of those voting on the ballot.

(2) In accordance with Title 20A, Chapter 7, Issues Submitted to the Voters, a municipality legislative body's action to have the municipality provide cable television services or public telecommunications services is subject to local referenda.

(3) Notwithstanding the other provisions of this section, a legislative body may not call an election under this section if the legislative body is required to call an election under Section 10-18-205.

Section 4. Section 10-18-205 is enacted to read:

10-18-205. Requirements to join a municipal entity -- Referendum.

(1) Before a municipality may become a member of a municipal entity that provides a cable television service or public telecommunications service, the legislative body shall:

(a) obtain a feasibility study in accordance with Section 10-18-203;

(b) hold at least two public hearings that comply with Subsection (2); and

(c) call an election in accordance with Subsection (3) on whether or not the municipality shall become a member of the municipal entity to provide a proposed:

(i) cable television service; or

(ii) public telecommunications service.

(2) (a) For a public hearing required by Subsection (1)(b) the legislative body shall:

(i) schedule at least two public hearings that are:

(A) held after the day on which the feasibility study required by Subsection (1)(a) is submitted to the legislative body; and

(B) at least 30 calendar days apart;

(ii) notify the public of each public hearing in accordance with Subsection (2)(b); and

(iii) hold at least two public hearings.

(b) A legislative body shall publish for each public hearing a notice:

(i) once each week for two consecutive weeks in a newspaper published in the municipality or in a newspaper of general circulation within the municipality;

(ii) with the first publication being not less than 14 days before the public hearing;

(iii) on the Utah Public Notice Website created under Section 63F-1-701 no less than 14 days before the public hearing; and

(iv) that informs the public that at the public hearing an opportunity to speak will be given to both opponents and supporters of the municipality becoming a member of the municipal entity.

(c) A municipality seeking to become a member of a municipal entity shall comply with the public hearing requirements of this section instead of the public hearing requirements of Section 10-18-203

(3) (a) After the day on which the legislative body calls an election under Subsection (1)(c), the election shall be held:

(i) at the sooner of the next:

(A) regular general election; or

(B) municipal general election; and

(ii) in accordance with Title 20A, Election Code, except as provided in this section.

(b) The notice of the election shall include with any other information required by law:

(i) a summary of the cable television service or public telecommunications service that the legislative body proposes to provided by a facility of the municipal entity to a subscriber residing within the boundaries of the municipality;

(ii) a feasibility study summary meeting the requirements of Section 10-18-203;

(iii) a statement that a full copy of the feasibility study is available for inspection and copying; and

(iv) a location in the municipality where the feasibility study may be inspected or copied.

(c) The ballot proposition at the election shall pose the question substantially as follows: Shall [name of the municipality] become a member of [name of the municipal entity] to provide [specify the cable television service or public telecommunications service] to the inhabitants of [name of the municipality].

(d) The ballot proposition may not take effect until submitted to the electors and approved by the majority of those voting on the ballot.

(e) An election is not required under this section if an election is required under Section 10-18-302 to issue a bond.

(4) In accordance with Title 20A, Chapter 7, Issues Submitted to the Voters, a legislative body's action to call an election as to whether a municipality should become a member of a municipal entity to provide a cable television service or public telecommunications service is subject to local referenda.

Section 5. Section 10-18-206 is enacted to read:

10-18-206. Limitations on membership in a municipal entity.

(1) For purposes of this section, "new member" means a municipality that is not a member of a municipal entity on May 5, 2008.

(2) (a) Except when a municipal entity is first created, a municipal entity may not add a new member to the municipal entity until after:

(i) the state auditor issues an audit report finding that:

(A) the municipal entity has had a positive net operating income for at least one year; and

(B) is a going concern as determined by generally accepted cost accounting practices; and

(ii) the new member complies with the requirements of this chapter to be added as a member of the municipal entity.

(3) The state auditor shall conduct an audit required by Subsection (2) within 180 days of the day on which a municipal entity requests an audit for purposes of this section.

(4) A municipal entity shall pay the costs of the state auditor conducting an audit required by Subsection (2).

Section 6. Section 10-18-302 is amended to read:

10-18-302. Bonding authority.

(1) In accordance with Title 11, Chapter 14, Local Government Bonding Act, the legislative body of a municipality may by resolution determine to issue one or more revenue bonds or general obligation bonds to finance the capital costs for [facilities] a facility necessary to provide to one or more subscribers:

(a) a cable television service; or

(b) a public telecommunications service.

(2) The resolution described in Subsection (1) shall:

(a) describe the purpose for which the indebtedness is to be created; and

(b) specify the dollar amount of the one or more bonds proposed to be issued.

(3) (a) A revenue bond issued under this section shall be secured and paid for:

(i) from the revenues generated by the municipality from providing:

(A) one or more cable television services with respect to the one or more revenue bonds issued to finance [facilities] a facility for the municipality's cable television services; and

(B) one or more public telecommunications services with respect to revenue bonds issued to finance [facilities] a facility for the municipality's public telecommunications services; and

(ii) notwithstanding Subsection (3)(b) and Subsection 10-18-303(3)(a), from revenues generated under Title 59, Chapter 12, Sales and Use Tax Act, if:

(A) notwithstanding Subsection 11-14-201(3) and except as provided in Subsections (4) and (5), the revenue bond is approved by the registered voters in an election held:

(I) except as provided in Subsection (3)(a)(ii)(A)(II), pursuant to the provisions of Title 11, Chapter 14, Local Government Bonding Act, that govern bond elections; and

(II) notwithstanding Subsection 11-14-203(2), at a regular general election;

(B) the revenues described in this Subsection (3)(a)(ii) are pledged as security for the revenue bond; and

(C) the municipality or municipalities annually appropriate the revenues described in this Subsection (3)(a)(ii) to secure and pay the revenue bond issued under this section.

(b) Except as provided in Subsection (3)(a)(ii), a municipality may not pay the origination, financing, or other carrying costs associated with the one or more revenue bonds issued under this section from the general funds or other enterprise funds of the municipality.

[(4) (a) As used in this Subsection (4), "municipal entity" means an entity created pursuant to an agreement:]

[(i) under Title 11, Chapter 13, Interlocal Cooperation Act; and]

[(ii) to which a municipality is a party.]

[(b)] (4) (a) The requirements of Subsection (3)(a)(ii)(A) do not apply to a municipality or municipal entity that issues a revenue [bonds] bond, or to a municipality that is a member of a municipal entity that issues a revenue [bonds] bond, if:

(i) on or before March 2, 2004, the municipality that [is issuing] issues the revenue [bonds] bond or that is a member of a municipal entity that [is issuing] issues the revenue [bonds has published] bond publishes the first notice described in Subsection (4)[(b)](a)(iii);

(ii) on or before April 15, 2004, the municipality that [is issuing] issues the revenue [bonds] bond or that is a member of a municipal entity that [is issuing] issues the revenue [bonds] bond makes the decision to pledge the revenues described in Subsection (3)(a)(ii) as security for the revenue [bonds] bond described in this Subsection (4)[(b)](a)(ii);

(iii) the municipality that [is issuing] issues the revenue [bonds] bond or the municipality that is a member of the municipal entity that [is issuing] issues the revenue [bonds has] bond:

(A) [held] holds a public hearing for which public notice [was] is given by publication of the notice in a newspaper published in the municipality or in a newspaper of general circulation within the municipality for two consecutive weeks, with the first publication being not less than 14 days before the public hearing; and

(B) the notice identifies:

(I) that the notice is given pursuant to Title 11, Chapter 14, Local Government Bonding Act;

(II) the purpose for the [bonds] revenue bond to be issued;

(III) the maximum amount of the revenues described in Subsection (3)(a)(ii) that will be pledged in any fiscal year;

(IV) the maximum number of years that the pledge will be in effect; and

(V) the time, place, and location for the public hearing;

(iv) the municipal entity that issues the revenue [bonds] bond:

(A) adopts a final financing plan; and

(B) in accordance with Title 63, Chapter 2, Government Records Access and Management Act, makes available to the public at the time the municipal entity adopts the final financing plan:

(I) the final financing plan; and

(II) all contracts entered into by the municipal entity, except as protected by Title 63, Chapter 2, Government Records Access and Management Act;

(v) [any] a municipality that is a member of a municipal entity described in Subsection (4)[(b)](a)(iv):

(A) not less than 30 calendar days after the municipal entity complies with Subsection (4)[(b)](a)(iv)(B), holds a final public hearing;

(B) provides notice, at the time the municipality schedules the final public hearing, to any person who has provided to the municipality a written request for notice; and

(vi) except with respect to a municipality that issued [bonds] a bond prior to March 1, 2004, not more than 50% of the average annual debt service of all revenue bonds described in this section to provide service throughout the municipality or municipal entity may be paid from the revenues described in Subsection (3)(a)(ii).

(5) On or after July 1, 2007 but on or before May 4, 2008, the requirements of Subsection (3)(a)(ii)(A) do not apply to a municipality that issues a revenue [bonds] bond on or after July 1, 2007 but on or before May 4, 2008, if:

(a) the municipality that [is issuing] issues the revenue [bonds has] bond:

(i) [held] holds a public hearing for which public notice [was] is given by publication of the notice in a newspaper published in the municipality or in a newspaper of general circulation within the municipality for two consecutive weeks, with the first publication being not less than 14 days before the public hearing; and

(ii) the notice identifies:

(A) that the notice is given pursuant to Title 11, Chapter 14, Local Government Bonding Act;

(B) the purpose for the bonds to be issued;

(D) the maximum number of years that the pledge will be in effect; and

(E) the time, place, and location for the public hearing; and

(b) except with respect to a municipality that issued [bonds] a bond prior to March 1, 2004, not more than 50% of the average annual debt service of all revenue bonds described in this section to provide service throughout the municipality or municipal entity may be paid from the revenues described in Subsection (3)(a)(ii).

(6) A municipality that issues [bonds] a bond pursuant to this section may not make or grant any undue or unreasonable preference or advantage to itself or to [any] a private provider of:

(a) a cable television [services] service; or

(b) a public telecommunications [services] service.

Section 7. Section 10-18-303 is amended to read:

10-18-303. General operating limitations.

A municipality that provides a cable television service or a public telecommunications service under this chapter is subject to the operating limitations of this section.

(1) A municipality that provides a cable television service shall comply with:

(a) the Cable Communications Policy Act of 1984, 47 U.S.C. 521, et seq.; and

(b) the regulations issued by the Federal Communications Commission under the Cable Communications Policy Act of 1984, 47 U.S.C. 521, et seq.

(2) A municipality that provides a public telecommunications service shall comply with:

(a) the Telecommunications Act of 1996, Pub. L. 104-104;

(b) the regulations issued by the Federal Communications Commission under the Telecommunications Act of 1996, Pub. L. 104-104;

(i) the interconnection of an essential [facilities] facility; and

(ii) the purchase and sale of an essential [services] service; and

(d) the rules made by the Public Service Commission of Utah under Section 54-8b-2.2.

(3) (a) A municipality may not cross subsidize [its] a cable television [services] service or [its] a public telecommunications [services] service that it provides with:

[(a)] (i) tax dollars;

[(b)] (ii) income from [other] another municipal or utility [services] service;

[(c)] (iii) below-market rate [loans] loan from the municipality; or

[(d) any] (iv) other means.

(b) In addition to complying with Subsection (3)(a), a municipality may not provide a municipal entity any of the following:

(i) an in-kind contribution of a good or service; or

(ii) monies, except for monies that are:

(A) pledged in accordance with Section 10-18-302; or

(B) regular membership fees.

(4) (a) A municipality may not make or grant [any] an undue or unreasonable preference or advantage to itself or to [any] a private provider of:

(i) a cable television [services] service; or

(ii) a public telecommunications [services] service.

(b) A municipality shall apply without discrimination as to itself and to any private provider the municipality's ordinances, rules, and policies, including those relating to:

(i) obligation to serve;

(ii) access to public rights of way;

(iii) permitting;

(iv) performance bonding;

(v) reporting; and

(vi) quality of service.

(c) Subsections (4)(a) and (b) do not supersede the exception for a rural telephone company in Section 251 of the Telecommunications Act of 1996, Pub. L. 104-104.

(5) In calculating the rates charged by a municipality for a cable television service or a public telecommunications service, the municipality:

(a) shall include within its rates an amount equal to all taxes, fees, and other assessments that would be applicable to a similarly situated private provider of the same services, including:

(i) federal, state, and local taxes;

(ii) franchise fees;

(iii) permit fees;

(iv) pole attachment fees; and

(v) fees similar to those described in Subsections (5)(a)(i) through (iv); and

(b) may not price any cable television service or public telecommunications service at a level that is less than the sum of:

(i) the actual direct costs of providing the service;

(ii) the actual indirect costs of providing the service; and

(iii) the amount determined under Subsection (5)(a).

(6) (a) A municipality that provides a cable television [services] service or a public telecommunications [services] service shall establish and maintain a comprehensive price list of all cable television services or public telecommunications services offered by the municipality.

(b) The price list required by Subsection (6)(a) shall:

(i) include [all] the terms and conditions relating to the municipality providing each cable television service or public telecommunications service offered by the municipality;

(ii) be published in a newspaper having general circulation in the municipality; and

(iii) be available for inspection:

(A) at a designated office of the municipality; and

(B) during normal business hours.

(c) At least five days before the [date a change to] day on which change to a municipality's price list [becomes effective] takes effect, the municipality shall:

(i) notify the following of the change:

(A) all subscribers to the [services] service for which the price list is being changed; and

(B) any other [persons] person requesting notification of [any changes] a change to the municipality's price list; and

(ii) publish notice in a newspaper of general circulation in the municipality.

(d) If there is no newspaper of general circulation in the municipality, the municipality shall publish the notice required by this Subsection (6) in a newspaper of general circulation that is nearest the municipality.

(e) A municipality may not offer a cable television service or a public telecommunications service except in accordance with the prices, terms, and conditions set forth in the municipality's price list.

(7) A municipality may not offer to provide or provide a cable television [services] service or a public telecommunications [services] service to a subscriber that does not reside within the geographic boundaries of the municipality.

(8) (a) A municipality shall keep accurate books and records of the municipality's:

(i) cable television services; and

(ii) public telecommunications services.

(b) The books and records required to be kept under Subsection (8)(a) are subject to legislative audit to verify the municipality's compliance with the requirements of this chapter including:

(i) pricing;

(ii) recordkeeping; and

(iii) antidiscrimination.

(9) A municipality may not receive distributions from the Universal Public Telecommunications Service Support Fund established in Section 54-8b-15.