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16 - PEG ChannelItem No. 16 Memorandum TO: Mayor, Mayor Pro -Tem & City Council Robert Vine, Interim City Manager FROM: Jon McFadden, Public Information Officer SUBJECT: CONSIDER AND PROVIDE DIRECTION ON ESTABLISHING A PEG CHANNEL ON OPTIMUM CABLE DATE: September 3, 2024 BACKGROUND: Before 2005, Texas cities could issue franchise agreements to wire -based cable television (CATV) systems. In 2005, Senate Bill 5 created Chapter 66 of the Texas Utilities Code (T.U.C.), providing a State Issued Cable and Video Franchise Agreement (SICFA) and ending local CATV franchises. In addition to CATV franchise information and franchise fees that are paid to municipalities, Ch. 66 addresses Public, Educational, and Government (PEG) channels provided on a CATV system. Municipal PEG channels are common nationwide and typically offer televised meetings, videos about services, emergency information and bulletin board content. After Ch. 66 took effect and existing local franchise agreements expired, Texas cities could choose to accept a 1% PEG fee or the PEG fee, if any, included in the expired local franchise agreement. Paris receives the 1% PEG fee. Use of PEG revenue is governed by 47 U.S. Code Sections 531 and 541 47 U.S. Code limits PEG fund expenditures to capital costs for the operation of a PEG channel. Operation costs, such as labor and expendable supplies, do not qualify. IRS benchmarks for capital expenditures describe expenditures for the acquisition, permanent improvement, or betterment of property, substantially extending its useful life beyond one year. Information gathered from some Texas cities operating PEG channels provides a general rule of thumb that PEG funds be used for any equipment or facilities with an expected life span of at least one year that are necessary for operating or producing content for a PEG channel. Chapter 66 requires that, upon request of a municipality, SICFA holders must provide up to 2 PEG channels to cities under 50,000 population. The city must utilize the channel for at least 8 hours daily, or the cable system can reclaim the channel for other programming. Setting a minimum usage is intended to avoid blank channels on the cable system. There is no cost for the use of a channel for PEG programming. Previous City Councils asked staff to explore how to stop the collection of the PEG fee and how to use or return collected funds if the city does not plan to operate a PEG channel. Finance Director Gene Anderson has extensively explored options but has not located any information about returning PEG funds received. As of 9/3/24, the PEG fund contains $865,231 including $35,241 fees and $22,215 interest received and in the past 12 months. STATUS OF ISSUE: The Public Information Officer job description includes management of PEG funds. Discussions have been held with Optimum to explore adding a PEG channel to the local CATV system. The plan would add a high-definition (HD) PEG channel to Optimum's basic HD channel package. The city would send programming from City Hall to Optimum's office on Lamar Avenue via fiber optic cable. The channel would be available to all Optimum subscribers other than those who may still be using older televisions that cannot show HD channels. The next step is to establish a channel use agreement with Optimum. Adding a PEG channel will improve the city's ability to share information with citizens, particularly adults 65 and up. Nationally, estimates indicate that the number of cable subscribers is decreasing by approximately 3% annually. Many subscribers are changing to streaming and on -demand television services. However, as of 2021, only 34% of adults 18 to 29 subscribed to a cable or satellite service, while 81% of adults 65+ remained cable subscribers. A PEG channel would be another tool for sharing information and could reach many people who are not internet or social media users. While the equipment purchased with PEG funds must be purchased to operate and produce content for a PEG channel, the content can also be used on social media, streaming and for on -demand online viewing. Equipment purchased for PEG can be used for other purposes when not in use for PEG programming. In addition to televising live and recorded council and select board and commission meetings, content on the channel could include: • Bulletin board type programming - events, city services information, etc. • Major Capital Improvement Project plans and progress updates • Councilmember District Updates • Departmental Updates • Emergency notifications • Educational segments about codes, safety tips, fire prevention, pets available for adoption, library updates • Local business highlights Programming produced by other government agencies like TxDOT, Texas Parks and Wildlife, Ag Extension Services, Federal agencies • Programming provided by area schools BUDGET: Other than the time of the PIO, general fund expenditures related to PEG channel operations should be minimal and limited to non -capital expenditures for expendable items like batteries for wireless microphones. RECOMMENDATION: Provide direction to the PIO to bring back a channel use agreement with Optimum for consideration, and upon approval of the agreement, proceed with establishing a city PEG channel.