02-17-09 Item 2dTo: City Commission
CITY OF SOUTH MIAMI
INTER - OFFICE MEMORANDUM
Date: February 11, 2009
U_
From: Eve A. Boutsis Re: Utility Use of ROW regarding AT &T Box
Office of the City Attorney
Copy: W. Ajibola Balogun
City Manager
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Issue: What are the regulations relating to utilities? Are cable companies considered a utility? Do
cable companies have to pay franchise fees?
Short answer: Utilities are regulated by state, which preempts local (municipal) control over all
utilities, which are to be treated uniformly. As such, the City receives a percentage payment from the
state as a revenue sharing "tax" for the use of the City's rights -of -way for all utilities. Under state
law, cable companies are considered a utility. Shortly after passage of the franchise agreement with
the existing vendor, the cable industry lobbied for and obtained a change is state law, precluding
future franchise agreements with local municipalities. To make the process uniform, cable companies
pay a fee to state, which is distributed to the various municipalities. The City has been preempted
from requiring franchises or regulating cable companies, except as provided specifically under state
law.
Analysis: . Section 337.401, Florida Statutes entitled "Use of right-of-way for utilities subject to
regulation; permit; fees: states in relevant part: local government has police power control over
public rights -of -way. However, in that control, local governments, pursuant to subsection (3)(a) of
the state law, requires non - discriminatory, uniform use of all rights of way by all utilities. Cable is a
subcomponent (subsumed in the definition of communication services, see 202.24, Florida Statutes).
As such, local government can control utilities for safety reasons, but, otherwise, have to provide
uniform access for boxes, cables, lines, etc., for all utilities. The State also created the Florida
Communications Service Tax, found at Chapter 202, relevant provisions of which are cited below, to
create a uniform system of compensation to local government for the use of their rights -of -way by
utilities. These laws created a state regulated tax and fee system for all utilities, centralizing
enforcement and regulation through the state, and distributing percentage revenues to the various
local governments. The state law precludes local government from charging additional fees, permits,
or costs, unless specifically provided under Chapter 202, Florida Statutes. Section 337.401 and
Chapter 202, Florida Statutes are cross referenced and are meant to work together. The
Communications Services Tax Simplification Law includes cable service and communication services
(as it can include video, voice, date, audio, or other information signals. See definition in 202.11,
Florida Statutes. Moreover, the definition of Communications Services, specifically includes cable
services. Section 337.401, as you will see from the provisions listed below, encompasses the powers
and authority of Chapter 202. Based upon the foregoing, the City of South Miami, like all other local
governments, must treat all utilities equally, and a cable company is now considered a utility for the
purposes of state law. The only control the City may have is a finding that the location for a utility is
a danger, which needs to be documented and supported, to require removal or relocation of utility
lines, etc.
Finally, late 2007, the State legislature, after vigorous lobbying from the cable /communications
industry, created the Consumer Choice Act of 2007, which basically took away local regulation and
local franchises from local governments. The cable industry argued that each city, each local
government placed its own local rules, franchise fee requirements, and other demands. This was
costly to the cable company and passed through to the consumer, as a local fee charge. As such, the
state created Section 610.113, Florida Statutes, requiring all cable companies to register with state
and a pass - through fee /tax would be provided to each local government, based upon a state formula
for cable revenue. Atlantic Broadband had executed its agreement with the City prior to the
enactment of the state law. Also please see attached AT &T letter, confirming AT &T's analysis of
same, basically synopsizing what I have said herein.
Below are the relevant sections of the state laws in question:
Section 337.401, Florida Statutes, Use of right-of-way for utilities subject to regulation; permit; fees:
(1) The department and local governmental entities, referred to in ss. 337.401-
337.404 as the "authority," that have jurisdiction and control of public roads or
publicly owned rail corridors are authorized to prescribe and enforce reasonable rules
or regulations with reference to the placing and maintaining along, across, or on any
road or publicly owned rail corridors under their respective jurisdictions any electric
transmission, telephone, telegraph, or other communications services lines; pole lines;
poles; railways; ditches; sewers; water, heat, or gas mains; pipelines; fences; gasoline
tanks and pumps; or other structures referred to in this section as the "utility."
(3) (a) Because of the unique circumstances applicable to providers of
communications services, including, but not limited to, the circumstances described in
paragraph (e) and the fact that federal and state law require the nondiscriminatory
treatment of providers of telecommunications services, and because of the desire to
promote competition among providers of communications services, it is the intent of
the Legislature that municipalities and counties treat providers of communications
services in a nondiscriminatory and competitively neutral manner when imposing rules
or regulations governing the placement or maintenance of communications facilities in
the public roads or rights -of -way. Rules or regulations imposed by a municipality or
county relating to providers of communications services placing or maintaining
communications facilities in its roads or rights -of -way must be generally applicable to
all providers of communications services and, notwithstanding any other law, maynot
require a provider of communications services to apply for or enter into an individual
license, franchise, or other agreement with the municipality or county as a condition
of placing or maintaining communications facilities in its roads or rights -of -way. In
addition to other reasonable rules or regulations that a municipality or county may
adopt relating to the placement or maintenance of communications facilities in its
roads or rights -of -way under this subsection, a municipality or county may require a
provider of communications services that places or seeks to place facilities in its roads
or rights -of -way to register with the municipality or county and to provide the name
of the registrant; the name, address, and telephone number of a contact person for the
registrant; the number of the registrant's current certificate of authorization issued by
the Florida Public Service Commission, the Federal Communications Commission, or
the Department of State; and proof of insurance or self-insuring status adequate to
defend and cover claims.
(b) Registration described in paragraph (a) does not establish a right to place or
maintain, or priority for the placement or maintenance of, a communications facility in
roads or rights -of -way of a municipality or county. Each municipality and county
retains the authority to regulate and manage municipal and county roads or rights -of-
way in exercising its police power. Any rules or regulations adopted by a municipality
or county which govern the occupation of its roads or rights -of -way by providers of
communications services must be related to the placement or maintenance of facilities
in such roads or rights -of -way, must be reasonable and nondiscriminatory, and may
include only those matters necessary to manage the roads or rights -of -way of the
municipality or county.
(e) The authority of municipalities and counties to require franchise fees from
providers of communications services, with respect to the provision of
communications services, is specifically preempted by the state because of unique
circumstances applicable to providers of communications services when compared to
other utilities occupying municipal or county roads or rights -of -way. Providers of
communications services may provide similar services in a manner that requires the
placement of facilities in municipal or county roads or rights -of -way or in a manner
that does not require the placement of facilities in such roads or rights -of -way.
Although similar communications services may be provided by different means, the
state desires to treat providers of communications services in a nondiscriminatory
manner and to have the taxes, franchise fees, and other fees paid by providers of
communications services be competitively neutral. Municipalities and counties retain
all existing authority, if any; to collect franchise fees from users or occupants of
municipal or county roads or rights -of -way other than providers of communications
services, and the provisions of this subsection shall have no effect upon this authority.
The provisions of this subsection do not restrict the authority, if any, of municipalities
or counties or other governmental entities to receive reasonable rental fees based on
fair market value for the use of public lands and buildings on property outside the
public roads or rights -of -way for the placement of communications antennas and
towers.
(f) Except as expressly allowed or authorized by general law and except for
the rights -of -way permit fees subject to paragraph (c), a municipality or county may
not levy on a provider of communications services a tax, fee, or other charge or
imposition for operating as a provider of communications services within the
jurisdiction of the municipality or county which is in any way related to using its roads
or rights -of -way. A municipality or county may not require or solicit in -kind
compensation, except as otherwise provided in s. 202.24(2)(c)8. or s. 610.109.
Nothing in this paragraph shall impair any ordinance or agreement in effect on May
22, 1998, or any voluntary agreement entered into subsequent to that date, which
provides for or allows in -kind compensation by a telecommunications company.
(g) A municipality or county may not use its authority over the placement of
facilities in its roads and rights -of way as a basis for asserting or exercising regulatory
control over a provider of communications services regarding matters within the
exclusive jurisdiction of the Florida Public Service Commission or the Federal
Communications Commission, including, but not limited to, the operations, systems,
qualifications, services, service quality, service territory, and prices of a provider of
communications services.
(h) A provider of communications services that has obtained permission to
occupy the roads or rights -of -way of an incorporated municipality pursuant to s.
362.01 or that is otherwise lawfully occupying the roads or rights -of -way of a
municipality shall not be required to obtain consent to continue such lawful
occupation of those roads or rights -of -way; however, nothing in this paragraph shall
be interpreted to limit the power of a municipality to adopt or enforce reasonable rules
or regulations as provided in this section.
(i) Except as expressly provided in this section, this section does not modify
the authority of municipalities and counties to levy the tax authorized in chapter 202
or the duties of providers of communications services under ss. 337.402- 337.404.
This section does not apply to building permits, pole attachments, or private roads,
private easements, and private rights -of -way.
§ 202.24. Limitations on local taxes and fees imposed on dealers of communications
services
(1) The authority of a public body to require taxes, fees, charges, or other
impositions from dealers of communications services for occupying its roads and
rights -of -way is specifically preempted by the state because ofunique circumstances
applicable to communications services dealers. Communications services may be
provided by certain dealers of communications services in a manner that requires the
use of public roads or rights -of -way while similar communications services may be
provided by other dealers of communications services in a manner that does not
require the use of public roads or rights -of -way. Although similar communications
services may be provided by different means, the state seeks to treat dealers of
communications services in a nondiscriminatory and competitively neutral manner.
(2) (a) Except as provided in paragraph (c), each public body is prohibited from:
1. Levying on or collecting from dealers or purchasers ofcommunications services
any tax, charge, fee, or other imposition on or with respect to the provision or
purchase of communications services.
2. Requiring any dealer of communications services to enter into or extend the
term of a franchise or other agreement that requires the payment of a tax, charge, fee,
or other imposition.
3. Adopting or enforcing any provision of any ordinance or agreement to the
extent that such provision obligates a dealer of communications services to charge,
collect, or pay to the public body a tax, charge, fee, or other imposition.
Municipalities and counties may not negotiate those terms and conditions related to
franchise fees or the definition of gross revenues or other definitions or methodologies
related to the payment or assessment of franchise fees on providers of cable or video
services.
(b) For purposes of this subsection, a tax, charge, fee, or other imposition includes
any amount or in -kind payment of property or services which is required by ordinance
or agreement to be paid or furnished to a public body by or through a dealer of
communications services in its capacity as a dealer of communications services,
regardless of whether such amount or in -kind payment of property or services is:
1. Designated as a sales tax, excise tax, subscriber charge, franchise fee, user fee,
privilege fee, occupancy fee, rental fee, license fee, pole fee, tower fee, .base- station
fee, or other tax or fee;
2. Measured by the amounts charged or received for services, regardless of
whether such amount is permitted or required to be separately stated on the
customer's bill, by the type or amount of equipment or facilities deployed, or by other
means; or
3. Intended as compensation for the use of public roads or rights -of -way, for the
right to conduct business, or for other purposes.
(c) This subsection does not apply to:
1. Local communications services taxes levied under this chapter.
2. Ad valorem taxes levied pursuant to chapter 200.
3. Business taxes levied under chapter 205.
4. "911" service charges levied under chapter 365.
5. Amounts charged for the rental or other use of property owned by a public
body which is not in the public rights -of -way to a dealer of communications services
for any purpose, including, but not limited to, the placement or attachment of
equipment used in the provision of communications services.
6. Permit fees of general applicability which are not related to placing or
maintaining facilities in or on public roads or rights -of -way.
7. Permit fees related to placing or maintaining facilities in or on public roads or
rights -of -way pursuant to s. 337.401.
§ 202.105. Legislative findings and intent
(1) It is declared to be a specific legislative finding that the creation of this chapter
fulfills important state interests by reforming the tax laws to provide a fair, efficient,
and uniform method for taxing communications services sold in this state. This
chapter is essential to the continued economic vitality of this increasingly important
industry because it restructures state and local taxes and fees to account for the
impact of federal legislation, industry deregulation, and the convergence of service
offerings that is now taking place among providers. This chapter promotes the
increased competition that accompanies deregulation by embracing a competitively
neutral tax policy that will free consumers to choose a provider based on tax- neutral
considerations. This chapter further spurs new competition by simplifying an
extremely complicated state and local tax and fee system. Simplification will lower the
cost of collecting taxes and fees, increase service availability, and place downward
pressure on price. Newfound administrative efficiency is demonstrated by a reduction
in the number of returns that a provider must file each month. By restructuring
separate taxes and fees into a revenue - neutral communications services tax centrally
administered by the department, this chapter will ensure that the growth of the
industry is unimpaired by excessive governmental regulation. The tax imposed
pursuant to this chapter is a replacement for taxes and fees previously imposed and is
not a new tax. The taxes imposed and administered pursuant to this chapter are of
general application and are imposed in a uniform, consistent, and nondiscriminatory
manner.
§ 202.11. Definitions
As used in this chapter:
(1) "Cable service" means the transmission of video, audio, or other programming
service to purchasers, and the purchaser interaction, if any, required for the selection
or use of any such programming service, regardless of whether the programming is
transmitted over facilities owned or operated by the cable service provider or over
facilities owned or operated by one or more other dealers of communications services.
The term includes point -to -point and point -to- multipoint distribution services by
which programming is transmitted or broadcast by microwave or other equipment
directly to the purchaser's premises, but does not include direct -to -home satellite
service. The term includes basic, extended, premium, pay - per -view, digital, and music
services.
(2) "Communications services" means the transmission, conveyance, or routing of
voice, data, audio, video, or any other information or signals, including cable services,
to a point, or between or among points, by or through any electronic, radio, satellite,
cable, optical, microwave, or other medium or method now in existence or hereafter
devised, regardless of the protocol used for such transmission or conveyance. The
term includes such transmission, conveyance, or routing in which computer
processing applications are used to act on the form, code, or protocol of the content
for purposes of transmission, conveyance, or routing without regard to whether such
service is referred to as voice - over - Internet - protocol services or is classified by the
Federal Communications Commission as enhanced or value - added.
(24) "Video service" has the same meaning as that provided in s. 610.103.
§ 610.113. Nondiscrimination by municipality or county
(1) A municipality or county shall allow a certificate holder to install, construct, and
maintain a network within a public right -of -way and shall provide a certificate holder
with comparable, nondiscriminatory, and competitively neutral access to the public
right -of -way in accordance with the provisions ofs. 337.401. All use ofa public right -
of -way by a certificate holder is nonexclusive.
(2) A municipality or county may not discriminate against a certificate holder
regarding:
(a) The authorization or placement of a network in a public right -of -way;
(b) Access to a building or other property; or
(c) Utility pole attachment terms and conditions.
. , vow Sharon tt. Liebman
��✓` 5enipr AttOfnrley
Legot Deportment
February 9, 2009
Eve A. Boutsis ;
Office of the City Attorney
City of South Miami
Nagin Gallop Figueredo, P.A.
18001 Old Cutler Road, Suite 556
Palmetto Bay, FL 33157
AT &T Florida T: 305.347.5570
150 West Flagler Street F: 305.375.0209
Suite 1910 sharon.liebman @att.com
Miami, Fl 33130
Re: City of South Miami — Inquiries to AT &T Florida
Dear Ms. Boutsis:
This letter responds to the inquiries in your February 6, 2009 e-mail to
Kathy Reed of BellSouth Telecommunications, Inc. d /b /a AT &T Florida regarding
the communications cabinet AT &T Florida recently installed in City right -of -way
generally located at S.W. 40"' Street and 62nd Court ( "Cabinet "). AT &T Florida
secured a permit (permit no. 08- 10000046 dated 7/29/08) from the City for the
installation. Your e-mail inquires about how this equipment relates to 334.401
and 202.24, Fla. Stat. and the company's rationale for support of same, and
about how this relates to cable services (we believe you intended to refer to
337.401 versus 334.407, Fla. Stat., and the information below assumes same).
AT &T Florida placed the cabinet in connection with its current project to
upgrade its network to provide, in addition to existing services, new and
enhanced services to customers in the City, including enhanced broadband
service and video service (as mentioned in Steve Massie of AT &T Florida's
January 26, 2009 letter to Mr. Olivo at the City). AT &T Florida has begun
providing 'its Internet Protocol (IP) -based next- generation video service to
customers in the City of South Miami, as reflected in the October 29, 2008 letter
from Ray Flores of AT &T Florida to Maria Menendez, the City Clerk.
The Florida. Legislature recently enacted the Consumer Choice Act of
2007, which provides that a municipality shall allow the holder of a statewide
cable and video franchise to construct a network in public right -of -way in
accordance with the provisions of Section 337.401. Section 610.113, Fla. Stat.
AT &T Florida is the holder of such a franchise, and the Cabinet is part of such a
network.
Section 337.401, Fla. Stat. governs a city's regulation of communications
services providers placing or maintaining communications facilities in city rights -
of -way. The Florida Legislature made changes to this statute in 2001 as part of
wvti w 01 wo us then
the then -new Florida Communications Services Tax ( "CST") structure in Chapter
202, Fla. Stat. The law created a new structure for taxes and fees imposed by
states and local governments upon communications services providers ( "CSPs")
like AT&T Florida. The state law provides that the authority of a public body,
including a town, to require taxes, fees and other 'impositions from CSPs is
preempted by the state. See Section 202.24, Fla. Stat. Section 202.24 restricts
public bodies from charging dealers any tax, charge or other imposition with
respect to the provision or purchase of communications services, including
amounts intended as compensation for "use" of rights -of -way. Tinder the CST
structure, generally, CSPs now pay the CST to the Florida Department of
Revenue ("DOR ") (after collecting the taxes from customers), and the DOR
distributes an allocation of the CST to cities per formulas in the law.
The CST legislation salso included changes in Section 337.401 regarding
right- of-way permit fees. Generally, per Section 337.401, cities and counties
cannot charge to CSPs fees for right -of -way permits unless the cities make
election with the DOR to do so (as outlined in the law and with the ramifications
to the CST outlined in the law).
AT&T Florida looks forward to bringing new service and choice to
consumers in South Miami. With regard to the Cabinet, I understand that AT &T
Florida representatives will continue to work with City Public Works Department
representatives to seek to resolve issues raised by the City.
If you have any questions, please let me know.
Sincere I ,
Sharon Liebman
Cc: Kathy Reed
Ray Flores
2