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John Jermanis - 2 - December 1, 1998 The facility at 2850 Marina Boulevard is no longer used as broadcasting studios or corporate offices, but remains a "head end" for cable services to San Leandro. A small customer service department is maintained there for walk-in customers and some of TCI's building department operations are based at this site. In addition, all cable broadcasting to San Leandro customers comes via hard line through this facility (head end). A major capitol project would have to be undertaken to relocate TCI from 2850 Marina Boulevard. Therefore, staff recommends approval of TCI's lease extension. The only modification to the lease will be to update the base rent, which will be determined by the current Consumer Price Index (CPI). TCI's rent has been increased incrementally each year since 1973 according to fluctuation of the CPI. The new base rental amount is recommended to be $1846.00 per month. Approval of Merger Between TCI and AT&T AT&T Corporation and Tele-Communications, Inc. (TCI) signed a merger agreement effective June 23, 1998. Under the terms of that agreement, AT&T will become the parent company of TCI. TCI will continue to exist as a corporation and a wholly owned subsidiary of AT&T. FCC regulations and the City's Franchise Agreement with TCI both allow the City to either approve or disapprove transfer of control of TCI. The City Manager and staff met with TCI's Government Affairs Liaison to discuss the merger. From TCI's perspective, the merger provides advantages for San Leandro cable customers. The merger increases competition for local services, which could result in more competitive cable rates. AT&T has a long-standing reputation for quality customer service, which will set a new higher standard for TCI customer service. In addition, AT&T's research and development capabilities, combined with TCI's growing Internet services, promise to offer greater voice, data and multimedia options to customers via TCI's newly upgraded broadband facilities. In accordance with FCC regulations, TCI has submitted an extensive merger report to the City (also known as FCC Form 394). Staff and the City Attorney have reviewed this document. Nothing has been found to suggest the merger would be detrimental to the community or customers of San Leandro. No formal action is required by the City to approve this change of control. If no objection is voiced and no action taken by January 15, 1999, the merger will be considered approved by consent according to operation of federal law. TCI Cooperating With City Projects Staff has been getting advice and assistance from TCI on two other projects currently underway. As part of the FY 98-99 Budget, the City Council approved funds to purchase video equipment for the purpose of broadcasting community events on cable TV. Staff has been working with TCI advisors on the purchase of this equipment, including installation of a microwave 42