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City of Missoula, Montana Item to be Referred to City Council Committee Committee: A & F Item: Settlement Agreement – Bresnan & City of Missoula with Mutual Release Date: January 22, 2010 Prepared by: Brentt Ramharter Initiated by: Brentt Ramharter Action Required: Accept the City Administration's recommended settlement with Bresnan Communications for certain uncollected Fees in the amount of $112,500. Recommended Motion: I move the City Council accept the recommended settlement between the City and Bresnan Communications for uncollected Fees in the amount of $112,500. Timeline: Referral to committee: January 22, 2010 Committee discussion: January 27, 2010 Deadline: Have council approve ASAP. Background and Alternatives Explored: On December 1, 2003, the city council adopted Ordinance # 3237 which granted " A NON- EXCLUSIVE FRANCHISE TO BRESNAN COMMUNICATIONS, LLC, TO CONSTRUCT, OPERATE, AND MAINTAIN A CABLE SYSTEM IN THE CITY OF MISSOULA, MONTANA SETTING FORTH CONDITIONS ACCOMPANYING THE GRANT OF THE FRANCHISE; PROVIDING FOR REGULATION AND USE OF THE SYSTEM AND THE PUBLIC RIGHTS-OF-WAY AND PRESCRIBING PENALTIES FOR THE VIOLATION OF THE PROVISIONS HEREIN". The city contracted with Moss & Barnett LLC (the legal firm used to negotiate the original franchise agreement with Bresnan) in FY 2009 to provide a desk review of Bresnan's compliance with the franchise agreement. The review determined a number of inconsistencies with the city's interpretation of how the PEG Access fees were to be assessed and collected by Bresnan. The city contracted with Moss & Barnett to review the most recent three years. The city estimated from the review that it was likely that, over the last six years, approximately $120,000 of PEG access fees were not remitted to the City. The penalty and interest on the uncollected fees was estimated to be approximately $30,000. In the interest of trying to avoid additional legal expense and additional audit time in collecting this revenue from Bresnan Communications, the City Administration and Bresnan have tentatively reached an agreement: 1. To settle with mutual release in the amount of $112,500. This settlement addresses all claims, causes of actions, liabilities, disputes and demands arising out of or in any way relating to the Fees paid by Bresnan to the City during the period from November 3, 2003, until February 28, 2010. The Amount represents full and complete satisfaction and compromise of any and all Claims. ---PAGE BREAK--- 2. The City and Bresnan have also agreed to amend the Franchise to clarify how certain fee payments will be calculated going forward. 3. The City hereby agrees that the Amount may only be used to reimburse out-of-pocket fees and costs incurred by the City in an amount not to exceed Twenty-Five Thousand Dollars and No/Cents ($25,000.00) and for capital expenditures related to public, educational and governmental (“PEG”) access in accordance with applicable federal law. 4. For the consideration set forth in this Agreement, the City does hereby release and forever discharge Bresnan, its parents, subsidiaries, officers, directors, shareholders, employees, predecessors, successors and assigns of and from any and all Claims. 5. Payment of the Amount shall render moot any and all prior written notifications from the City to Bresnan alleging violation of the Franchise. 6. The City and Bresnan shall amend the Franchise to address the calculation of certain of the Fees from and after the Accounting Period. 7. Bresnan shall be held harmless from any claims regarding the Fees from and after the Accounting Period (11-3-03 to 2-28-10) until such time as this amended language is effective. Financial Implications: This settlement agreement must be approved by the council in order to settle this claim by the city. The funds will be deposited into the cable franchise fee fund. Attachments: Settlement Agreement