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DIVCA Staff Report 2 March 1, 2010 including collection of franchise fee, PEG issuance, and enforcement of customer service standards. Adoption of the ordinance preserves the City's ability, to the extent permitted by DIVCA, to collect PEG fees and enforce customer service standards. As provided by the DIVCA, the ordinance confirms the requirement under state law that any state franchise holder operating within San Leandro pay to the City a state franchise fee of 5% of gross revenues received from activities within the local franchise areas. Both AT&T and Comcast currently pay the quarterly 5% franchise fee to the City. Additionally, the ordinance provides that each state franchise holder shall pay to the City a PEG fee equal to one percent (1%) of the gross revenues received from the franchise area. Those revenues must be used by the City for PEG purposes consistent with federal law (which includes costs associated with purchase, installation, repair, and maintenance of facilities and equipment). These funds must be used to support PEG infrastructure-related costs and cannot be used for personnel costs or other General Fund purposes. AT&T currently pays the 1% PEG fees (approximately $2,300 each quarter). With the adoption of the DIVCA ordinance, it is estimated that Comcast would pay approximately $30,000 per quarter (3,000,000 x .O1) for PEG fees. The customer service standards that the City is allowed to enforce are limited to those set forth in state and federal law. Those standards address issues such as installation, disconnection, service and repair obligations; billing procedures; rate increases; complaint and bill dispute resolution procedures; and subscriber privacy protections. Local jurisdictions are precluded from imposing standards in other areas or from increasing performance levels in the standards specified. The City's customer service staff contact is the City's Community Relations Representative. Fiscal Impact It is estimated that approximately $30,000 per quarter ($120,000 annually) from Comcast for PEG infrastructure-related services will be paid to the City. Approximately $2,300 ($9,200 annually). is already being paid by AT&T. A separate PEG fund has been set up by the Finance Department to account for the incoming fees from all state franchise holders operating within the City. CONCLUSION Staff recommends City Council approval of the proposed ordinance which would amend the City's Municipal Code to add a new chapter to implement the DIVCA requirements, thereby providing an additional 1 % of the video-related franchise gross revenue to support PEG infrastructure. This ordinance would be applicable to all video service providers within San Leandro,