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4 <br />A <br />OP.AidGE COUNTY <br />BOARD OF -- ,-2,1 <br />_ Acticn Agenda <br />t-M <br />ACTI -ON AGEN -a ITEM ABSTRACT <br />?Meeting Date: May 19 1 <br />S--BJ ECT: SETTLEMENT OF DISPUTE WITH PRIME INCOME PARTNERS - FRANCHISE TAX <br />DB ��RTM�iENT' T County Attorney - -- <br />P---- - ---- -- i-- ^_YES-------- <br />--- - -- <br />- __..___ -_- ___.�_______-- <br />- - ---- <br />11;FORMATION CONTACT: <br />Geoffrey Gledhill, <br />A - -AC M�ENT(S). <br />County Attorney <br />Settlement Agreement <br />and Release <br />TELEPHONE ng4BER- <br />732 -2196 <br />of Claims <br />Hillsborough <br />- 732 -6181 <br />Acceptance by Warner <br />Cable <br />Chapel Hill <br />-- 963 -4501 <br />Communications, Inc. <br />of Carolina <br />Mebane <br />-- 227 -2031 <br />Cable Franchise for <br />Oragne County <br />Durham <br />- 603 -7331 <br />PURPOSE: To receive a report from the County Attorney regarding the <br />settlement of a dispute between Orange County and Prime Cable Income <br />Partners, L.P., over the payment of Orange County cable television privilege <br />taxes. <br />BACKGROUND: From April 1, 1988 'through December 31, 1991 Orange County <br />received approximately $150,000 in fees from Prime Cable Income Partners, <br />L.P. for the privilege of operating ,a cable television system in the <br />unincorporated areas of Orange County. The.fees were calculated by Prime on <br />the basis of 3% of the Carolina Cable gross receipts for its Orange County <br />operations. The County's Cable Television Ordinance was amended in 1987 to <br />require the payment of a 5% fee effective with Prime's fiscal year beginning <br />after the amendment. Had privilege fees been paid at the rate of 5 %, the <br />County would have received approximately $100,000 more money. Prime's <br />position is that it does not owe the increase in fees. Orange County's <br />position is otherwise. Prime contends that the fees it must pay are dictated <br />by its franchise or more exactly by the. fact that the fees were 3% at the <br />time of the franchise it now owns was granted to Village Cable and that they <br />cannot be increased without Prime's consent. Orange County's view is that <br />the privilege fees -are- assessed by the County.through its Cable Television <br />System Ordinance and are not a part of the franchise agreement between the <br />County and the franchised cable company. Federal law capped the fees at 3% <br />at the time of the original franchise. and permitted them to increase to 5% <br />thereafter. The County's Cable Television Ordinance was amended in 1987 <br />consistent with the federal authorization. <br />During an executive session held, by the Board of County Commissioners <br />at its meeting on March 24, 1992, the Board authorized the County Attorney <br />to negotiate with Prime and to accept an offer to settle the franchise fee <br />dispute generally consistent with the settlement agreement that is an <br />enclosure with this agenda abstract. This has been accomplished. Prime has <br />paid Orange County $50,000 in full settlement of the disputed fees for the <br />years 1988, 1989, 1990 and 1991. 'Warner Cable Communications, Inc., on <br />behalf of Cablevision of Durham, Inc., in its acceptance of the transfer of <br />the franchise approved by the Board on March 24, 1992 has. acknowledged its <br />responsibility to pay Orange County franchise fees at the rate of 5% per year <br />effective January 1, 1992. The fees will be calculated on the basis of gross <br />