Recommendations for funding support and a

PEG management contract renewal between

The City of Vallejo

and

Vallejo Community Access Television

Prepared by

Clayton J. Leander

Executive Consultant

July 2012

(DRAFT)

Recommended modifications and funding support for a renewed PEG management contract

between the City of Vallejo and Vallejo Community Access Television (VCAT)

July 2012 - Prepared by Clayton J. Leander – Executive Consultant

CONTENTS

RECOMMENDATION & EXECUTIVE SUMMARY 3

FISCAL IMPACT 3

BACKGROUND AND DISCUSSION 4

Establishing PEG in Vallejo:

Recap of Developments & City Council Actions – 1999-2012 6

Budget proposal for VCAT - Fiscal Years of 2012-2015 – Overview 7

Planning Ahead: FY 13/14 and 14/15 - 7

Capitalizing Labor Costs: Making The Most With DIVCA Funds 8

On reallocating City general funds and DIVCA to support Channels 27 & 28 9

Background on development of the City’s PEG Access contract with VCAT 10

Resolutions mandating ‘Best PEG Practices’, and contract enforcement issues 11

Discussion on Modifications to the PEG management contract 12

Records, Fiscal Audit 13

List of Recommended Modifications to the PEG Access Contract with VCAT 14

On supporting ‘PEG Core Services’ and Production Services Grant 15

VCAT and PEG Beyond Cable TV:

On Incorporating Broadband and Social Media Initiatives 17

Closing Remarks 18

Appendix

Additional Reference

Recommendations for Election Season Policies

Proposed 3-year Budget Plan for VCAT – 2012-2015

On Updating Bylaws and PEG Access Policies

ALTERNATIVE OPTIONS FOR PEG SUPPORT

Recommended modifications and funding support for a renewed PEG management contract

between the City of Vallejo and Vallejo Community Access Television (VCAT)

July 2012 - Prepared by Clayton J. Leander – Executive Consultant

RECOMMENDATION

Conduct a Study Session to review a proposal for an updated PEG management contract agreement

between the City and Vallejo Community Access Television (VCAT) along with a 3-year Budget Plan;

consider future allocations of DIVCA cable funds; adapt accounting procedures to capitalize labor costs

for Channels 27 & 28; adopt timeline for activating a new Educational Channel.

EXECUTIVE SUMMARY

Following City Council approval of the PEG operating grant and an interim contract with VCAT for the

period of December 2011 to June 2012, nonprofit media consultant and past VCAT Executive Director

Clayton John Leander met with City and station representatives, and conducted an independent review

of VCAT’s current contracts, performance, capacity, resources and funding opportunities. An audit of

activities for last year alone reveals that VCAT provided more than $1.5M worth of equipment, channel

time, and services to the Vallejo community, nonprofits, and educational institutions. However, VCAT is

now operating at reduced hours and staffing levels, falling short of recommended ‘Best PEG Practices’.

In developing a plan for sustaining operations of Channel 27 and the TV Studio at Jesse Bethel High,

recent contracts between other cities and PEG organizations adapted to California’s DIVCA legislation

were also examined. At the request of VCAT and City Staff, and in concluding this phase of duties, the

Executive Consultant has submitted recommendations to the City and VCAT to include an updated

contract and 3-year Budget, plan for future allocations of DIVCA funds, adapt accounting procedures for

capitalizing labor costs of Channels 27 & 28, and a timeline for activating a new Educational Channel.

FISCAL IMPACT

Reallocation of Core PEG Services: No fiscal impact with adoption of updated accounting procedures to

cover 50% of capitalized labor costs of Media Services Specialist job functions with IT-PEG Fund 201.

Reallocate remaining Channel 28 operation funds to support Channel 27 and the PEG TV Studio at JBHS.

VCAT will concurrently reclassify staff functions and modify accounting procedures to capitalize labor

costs to be covered with IT-PEG funds (appox. 33%). This arrangement would continue basic operations

for minimum PEG services under the City’s contract. Estimated reallocation of PEG support: $75,000

Achieve full operation, staffing levels originally approved by City: Amend or reserve FY 12-13 Measure B

allocations for VCAT to manage City-owned TV equipment, facilities and the cable channel consistent

with other CBOs contracted to manage City-owned assets. The City’s contract requires VCAT to provide

PEG to all citizens, nonprofits, and educators, also constituting a Community Service. Measure B funds

combined with support for Core PEG Services will achieve the recommended staffing levels originally

approved by the City (PEG Access Review and Plan, 1999) consistent with current ‘Best PEG Practices’.

The Budget also proposes establishing a Production Grant with Measure B funds to support projects for

Nonprofit, Educational and Public Agencies. Suggested FY 12/13 Measure B allocation: $130,000

Reserve DIVCA funds to upgrade Studio, Ch. 27; launch Educational Channel: Recent DIVCA funds have

been used to upgrade field equipment. Next upgrade of TV Studio and Channel 27 playback system

would accommodate a new Educational Channel. Estimated DIVCA allocation for 2012-2014: $169,750

Depreciate and donate surplus equipment to VCAT: No fiscal impact. Purchases of city-owned video

equipment since 2002 are fully depreciated and/or decommissioned. Donation will allow VCAT to trade,

liquidate, or rent surplus equipment for additional income.

BACKGROUND AND DISCUSSION

As part of the contingency plan to maintain VCAT operations in November 2011, City Staff presented

an interim agreement to Board representatives, as the last PEG contract lapsed in 2009. A number of

changes were introduced with statements on DIVCA funding restrictions, provisions to incentivize VCAT

to engage in fundraising efforts, and stronger measures for compliance and accountability.

On closer examination of the interim contract alongside the Lease agreement for the TV Studio with

VCUSD, and in comparison to similar contracts in other cities, revealed areas where the PEG contract

could use further refinements and modifications to better harmonize the respective agreements, insure

greater responsibility and accountability, and enable VCAT to procure independent revenue streams.

To inform current efforts, a context on how VCAT was contracted to manage PEG in Vallejo is provided:

In July 2004, City Council authorized the City Manager to negotiate a Public, Education and Government

(PEG) Access Agreement between the City of Vallejo and Vallejo Community Access Television (VCAT) to

provide PEG access services, operate Community Channel 27, and manage the TV Studio facilities and

equipment owned by the City, located at Jesse Bethel High School (JBHS) under a Lease Agreement

between the City and VCUSD in June 2004. This development followed five years of progress:

During negotiations with the cable company in February 1999, the City Manager was authorized to

appoint a PEG Access Task Force. Municipal consulting firm The Buske Group was retained to assist with

negotiations and conduct the Community Needs Assessment presented to the City in December 1999, as

prescribed by the 1984 Cable Act. In 2003 City Council approved a PEG Access Operating Plan developed

by The Buske Group, fulfilling the conditions for establishing new channels and release funding support.

The City and VCAT eventually approved a PEG Access Management Agreement in November 2004.

As per the conditions outlined in the City’s July 2004 Resolution, VCAT agreed to make changes to its

Bylaws, restructure its Board of Directors, and conduct its governance and operations consistent with

the Best Practices of PEG Access and Community Media Centers. VCAT’s first contract to manage the

City’s facilities and ongoing funding support was originally anticipated to be renewed in April 2009,

concurrent with an expected renewal of the City’s franchise agreement with Comcast Cable.

The situation changed with passage of California telecom legislation AB 2987 in 2006, also known as the

Digital Infrastructure and Video Competition Act (DIVCA), which eliminated local municipal authority

over telecom in the Public Right-of-Way; and shifted over to the California Public Utilities Commission.

Due to efforts by California representatives from the Alliance for Community Media (ACM) and the

National Association of Telecommunications Officers and Advisors (NATOA), a few provisions were

amended into DIVCA for maintaining PEG channels and reserved 1% of gross revenues for capital-related

support for PEG, and reserved 3 PEG channels. Cities could also collect 5% of Cable Franchise Fees.

In September 2009 the City adopted a DIVCA ordinance, through which $730,000 for PEG support will

have been accumulated by FY 12-13, and allows for a new Educational channel in Vallejo.

However, under DIVCA, the expiration of the City’s cable franchise in April 2009 ended ‘pass-through’

operation funds for VCAT, which eventually depleted by 2011, forcing the station to reduce hours and

services, or even consider shutdown. Besides the impact on Vallejo’s community and nonprofits was a

potential loss of nearly $1M invested to date by the City into PEG Access. Fortunately, City Staff worked

with VCAT on a contingency plan with operational support and an interim contract in December 2011.

Throughout spring 2012, the VCAT organization began to reorient its efforts including plans to increase

membership, a renewed focus on fundraising, hiring out production services, and overall compliance.

VCAT invited cable consultant Sue Buske to provide additional perspectives from her past work in

Vallejo, and how PEG organizations are adapting to DIVCA. VCAT retained its former Executive Director

as a consultant to work with the City; while new board directors were recruited, and officers appointed.

On March 1st, VCAT submitted to the City a preliminary Budget and a combined Annual Plan and Report,

and was updated in May upon the completion of its 2011 Financial Report along with complete statistics

on its Membership, Production and Programming activities, valued at $1.5M worth of services for 2011.

Communications were concurrently initiated with City Council and Staff, followed by meetings with

Assistant City Manager Craig Whittom, new City Manager Dan Keen, and IT Director Gonzalo Gonzalez

who previously served as the City’s liaison to VCAT, and continues assisting with procurement for the

station. VCAT representatives also had contact with Finance Director Deborah Lauchner in complying

with the process of a financial performance review, and validating VCAT’s bank statements from its

fundraising activities to receive Matching Funds made available by the City.

Meetings and ongoing communications with City Management and Staff included a special focus on

available sources of funding for VCAT, specifically DIVCA cable fund restrictions for capital-related costs,

and Measure B funds for support. Since the TV Studio is a City-owned facility and VCAT is contracted to

equitably provide a public service to all sectors of the community (youth, seniors, nonprofits, education,

etc.), should qualify VCAT for Measure B similar to other CBOs contracted to run City-owned facilities.

Other financial matters included the contractual provisions for an annual audit; a request for a “True-Up”

reconciliation of all cable fees due to VCAT (routine for PEG contract renewals); donation of depreciated

surplus video equipment to VCAT to rent, trade or sell; and modifying the Sublease with VCUSD or the

PEG contract to allow the TV Studio to be made available for hire for outside productions. For this, VCAT

is preparing a Letter of Interest to approach VCUSD on developing a Memorandum of Understanding

outlining details. City Management also asked for a multi-year Budget Plan, which has been submitted.

There were continued discussions around DIVCA PEG support funds, expected to accrue to $2.6M-$3.2M

over the decade. One option used in some cities is to place a portion of PEG funds in an interest-bearing

or pooled account, and availing the interest to VCAT for operations. Another possibility builds on the

concept offered by the Assistant City Manager at the December 2011 City Council meeting: to consider a

portion of DIVCA fees as a source of equity, against which the City could ‘loan’ operating funds to VCAT.

On further research, a more practical option was found using DIVCA funds: by capitalizing labor costs.

This has been done for some time by PEG access and City Government TV channels in the South Bay.

Accounting procedures to capitalize labor are also used in Public Works projects and in the Film industry.

Adopting similar practices at the City of Vallejo and VCAT can possibly avail a minimum of $75,000 for

VCAT to provide basic Core PEG Services using existing resources alone. This amount would allow VCAT

to continue operations at current staffing levels, meet the minimum requirements of the City’s contract,

and keep the channel operating. Support for other operational functions will still need to be sought

from Measure B and other sources to help restore a full array of services, production and edit training

workshops, Bulletin Board services, outreach, cover insurance and audits, and development functions.

As combinations for reasonable operational support are worked out, then makes it possible to develop

and fulfill the terms of a PEG service contract. Additional funding options are explored further below.

REFERENCES, LINKS & ATTACHMENTS:

- Establishing PEG in Vallejo: Recap of Developments & City Council Actions – 1999-2012

- 3-Year Budget proposal for VCAT - Fiscal Years of 2012-2015 (draft)

- VCAT Annual Plan – March 2012 and Annual Report - May 2012 (revised)

- Capitalizing Labor Costs: Making The Most With DIVCA Funds

- RECOMMENDED MODIFICATIONS FOR A RENEWED PEG MANAGEMENT CONTRACT (draft)

- ALTERNATIVE OPTIONS FOR PEG SUPPORT (TBA)

Note: Citations of City actions, figures, budget estimates and recommendations included below are

based on best known accessible or verified information to date. Citations and figures may require

additional confirmation, and are subject to adjustment as updated information is made available for

determining a final budget and in ratifying a renewed contract. – cjl

Establishing PEG in Vallejo: Recap of Developments & City Council Actions – 1999-2012

Review of PEG Access Channels, Equipment, Facilities and Services for City of Vallejo (1999)

Prepared by The Buske Group (excerpts, with original PEG Operations Plan for the City of Vallejo):

http://bit.ly/99ValPEGCNA

Settlement Agreement between City of Vallejo and AT&T/Comcast - August 2002 (PEG excerpts)

http://bit.ly/M7LaEf

PEG Operations Plan for City of Vallejo (Adopted February 2003)

http://bit.ly/03PEGOpPlanVljo

Lease Agreement between Vallejo City Unified School District and the City of Vallejo (July 1, 2004)

http://bit.ly/LM1yUK

Vallejo City Council Agenda – July 20, 2004

Resolution authorizing City Manager to negotiate a PEG Access agreement between the City and VCAT.

http://bit.ly/MlchXy

Vallejo City Council Agenda – November 16, 2004

Resolution to execute agreement between the City of Vallejo and VCAT (for contract)

http://bit.ly/Ox2Ymo

CONTRACT: CITY OF VALLEJO AND VALLEJO COMMUNITY ACCESS TELEVISION - November 2004

http://bit.ly/M7LR0j

Vallejo City Council Agenda – September 29, 2009

Administrative Item 10A: Consideration of Resolution (adoption of DIVCA Ordinance, CPUC Section 5800)

http://bit.ly/CoVlj909divca

Vallejo City Council Agenda – November 29, 2011

http://bit.ly/OxqcbW (PDF, pg 260)

Resolution authorizing City Manager to execute Agreement with VCAT, 2) Approve Operating Grant and matching

grant 3) Approve a Capital Grant; 4) Authorize City Manager to execute a Lease Agreement with VCUSD;

5) Authorize City Manager to execute a Sub-Lease Agreement with VCAT; 6) Authorize the Mayor to sign letter of

support of H.R. 1746 (2011 Community Access Preservation Act) and any future federal legislation that allows

greater flexibility in the use of PEG fees.

VCAT Annual Plan and Annual Report (2012)

VCAT Annual Plan – March 2012

http://bit.ly/vAP0312

As required by the City’s contract, on March 1, VCAT submitted a combined Annual Plan and Report

along with a preliminary budget. However in anticipation of a contract renewal accompanied by a

portion of Measure B funds, amendments were expected to be made to the Plan and Budget.

2011 Annual Report - revised May 2012

(with verified adjustments and updates to previous figures)

http://bit.ly/vcat2011ARrv0512

Also required by the City’s contract (Section 17). From Winter to April 2012, VCAT Treasurer and

Finance Chair Clarissa Aveytia compiled and reconstructed VCAT’s financial records for 2011.

Concurrently, PEG management consultant Clayton Leander conducted a comprehensive independent

review of VCAT’s performance and its Membership, Production and Programming activities for 2011,

which revealed that VCAT provided more than $1.5M worth of equipment, channel time, and services to

the Vallejo community, nonprofits, and educational institutions. The verified information adjusts and

updates the figures previously submitted in March 2012.

Budget proposal for VCAT - Fiscal Years of 2012-2015 – Overview (draft)

http://bit.ly/vcat3yrbudplanCJLeander

This proposed Budget Plan and accompanying recommendations for funding are offered independently:

representatives from VCAT along with City Council, Finance and CMO Staff would need to review the

latest data, make adjustments and agree to a final funding arrangement to fulfill contractual obligations.

Consideration was also given to achieving minimum staffing levels originally recommended to the City

by its PEG/cable consultants to support basic full-time operations consistent with Best PEG Practices.

The estimated figures are based on City reports, cable revenues and industry-projected rate increases.

The proposed Budget aims to maximize all allowable uses of DIVCA funds, and to leverage traditional

and alternate funding sources. It would incorporate updated accounting procedures and PEG contract

agreements recently approved in other cities. The Plan reserves a share of Measure B funds appropriate

for City-owned facilities with increased service to Nonprofit and Education, and allocates DIVCA funds

for an Educational Channel, and capitalized labor costs. The Plan also reserves forthcoming resources to

activate a new Educational Channel available for Vallejo, and opens the door for continued growth.

Planning Ahead: FY 13/14 and 14/15

While the imminent concern for VCAT is securing funds to support Core PEG Services and basic

operations for the 2012/2013 Fiscal Year, the Proposed Budget Plan considers how best to leverage

current resources to promote a more efficient, active and sustainable operation for the long-term. It

seeks to make the most of cable revenue collected by Vallejo over the decade, and empowers VCAT to

pursue other revenue sources. After stabilizing operations to normal staffing levels guided by

professional management, Year Two then focuses on launching a new Educational Channel in

cooperation with Solano College and VCUSD.

For Years Two and Three, the Plan is based on at least 60% of DIVCA fees for Public and Educational use

combined, with the City retaining 40% for its own costs, and/or held for future PEG reserves. Estimated

figures are based on previous cable revenues and industry-projected rate hikes. VCAT Board along with

City Council, Finance and CMO Staff would need to review the latest data, make adjustments and agree

to a final plan that would sustain its next contract.

Capitalizing Labor Costs: Making The Most With DIVCA Funds

June 2012 - Clayton J. Leander, Executive Consultant

As anticipated long before its passage in September 2006, California bill AB 2987, also known as the

Digital Infrastructure and Video Competition Act (DIVCA) introduced some profound changes for the

entire telecommunications landscape across the state, especially the cities/counties’ loss of regulatory

control over the Public Right-Of-Way, as well as for PEG channel operations. Cities like Vallejo had

some trade-offs: on the plus side, DIVCA helped to guarantee 1% of gross from cable television revenue,

currently pulling more than $220,000 in FY 11/12, along with at least 3 cable channels for PEG purposes.

On the downside, DIVCA funds are restricted to capital-related costs. Since DIVCA’s passage nearly 50

PEG access channels have ceased operation. Hopefully VCAT won’t become channel #51.

Fortunately a good number of PEG operations have been able to adapt and grow by way of expanding

their menu of services to nonprofits and public agencies outside of city limits, applying for grants,

launching Digital Journalism programs, incorporate Social Media, introduce Broadband access initiatives

to lessen the Digital Divide, and some successfully repositioning as Anchor Institutions. At the same

time, access organizations have also had to consider raising fees for Membership, training workshops,

and charging for use of certain equipment. Others have maintained traditional funding such as portion

of Cable Franchise Fees, or introducing updated accounting methods such as itemizing and capitalizing

labor costs. Organizations like VCAT must explore all such options.

Capital funds as equity to support VCAT

In discussions on maximizing use of DIVCA funds during a December 2011 meeting, City Council and staff

considered the concept of a “loan” of capital funds when providing emergency support to VCAT. In

doing so the City effectively acknowledged DIVCA funds as a possible source of equity against which to

avail funding to support VCAT operations.

This is not farfetched, particularly in light of recent information finding precedence whereas both PEG

Access Management organizations as well as City operations of Government cable channels have

adopted provisions and accounting procedures to capitalize 33% - 50% of costs coverable by DIVCA.

At current cable rates, the DIVCA revenue in Vallejo is expected to surpass $240,000 for 2011-2012.

Given the subscriber base (approx 35,000+) and rate increases (avg. 6% /yr), and even adjusting for the

current attrition rate over the course of the cable franchise period (through 2020), Vallejo would be

eligible to collect a projected $2.6M to $3.2M in DIVCA funding for PEG over the decade.

Understanding these figures then makes it possible to proceed with long-term planning.

Background and details Capitalizing Labor and DIVCA funds

Per California law, the use of DIVCA funds received from cable companies are understood as limited

to capital-related expenditures for PEG support purposes. On a basic level it has been regarded as

acceptable for the purchase of cameras, edit systems, studio facilities, and programming equipment for

the PEG channels.

At the same time, is it also commonly acknowledged that DIVCA funds can cover the costs of outside

vendors to install equipment and systems for PEG TV studios, city council chambers, Educational cable

channels, etc. The example is a gleaning that capital-related labor costs allocable to capital expenditures

are eligible to be covered with DIVCA funding if itemized accordingly. This can be satisfied through a

routine accounting procedure for capitalizing labor.

In the Film and TV industry, there have long been practices for capitalizing labor costs involved with the

creation and sale of films and videos, for which the American Institute of Certified Public Accountants

(AICPA) has published comprehensive accounting guidelines recognized by the Financial Accounting

Standards Board (FASB). The Cable, Software and Construction industries all routinely capitalize and

amortize labor costs; and the Governmental Accounting Standards Board (GASB) also has guidelines and

requirements for capitalizing labor costs such as for public works and construction projects, which many

governmental bodies and accounting firms would be familiar with.

Being aware of such provisions from past experience with many of these industries, examples were

sought that could be adapted to where the PEG management organization is contracted to operate and

maintain facilities owned by a Government entity. Several solutions have already been adopted by a

cluster of community stations in the South Bay and Silicon Valley where the consultant worked before

starting VCAT, all of which have been a source of continual support for fellow PEG stations.

One administrator of a city-operated government channel in the South Bay described some of their

updated practices adapted to current accounting policies for capitalizing certain costs of staff up to 50%,

as allowable under DIVCA. The guidelines for itemizing and capitalizing labor expenses are consistent to

procedures used by other departments, most notably in construction projects and public works.

Similarly, nonprofit PEG access management organizations in the area have adopted similar practices, or

preparing to do the same. The Annual Audits for another PEG station confirmed a portion of its staffing

is segregated from Operations, specifically itemizing a third of Payroll as a Capital-related expense.

During its’ start-up & build out phase, the same PEG station claimed two-thirds of its payroll as Capital

expense, also covered by DIVCA funds.

The representatives contacted are willing to speak with counterparts from the City of Vallejo.

Considering that the City has expressed interest in making the most of DIVCA funds to support PEG, it

seems clear that adapting similar practices and procedures would better support both the station

managed by VCAT, as well as for the City’s own station. This would also open an opportunity to better

plan and reallocate the funds currently earmarked for the City and VCAT channels to pool resources and

better support both, while paving the way for deployment of an Educational Channel.

With this, I would recommend Staff from the City and VCAT, along with Board reps to visit to the

operations in the South Bay, and bring back information and ideas for adapting similar measures in Vallejo.

On reallocating City general funds and DIVCA to support Channels 27 & 28

At present, one (1) FTE city staff position is employed to operate City’s Government Channel 28,

currently representing labor costs of $100,000 a year plus benefits.

In light of the new information being made available, it would be very possible for the City to capitalize

and claim the costs of this position for up to 50% under DIVCA funds by way of adopting and applying

accounting practices of itemizing certain tasks into percentages of time and duties of the position.

With that, the City could then allocate the other half of the reclaimed funds to provide support to VCAT

for the PEG Core Services that it is contracted and mandated to provide for the City.

Concurrently, VCAT should also adopt similar practices to classify, itemize and account for portions of its

own staff time and capitalize labor costs that would be eligible to be covered with DIVCA funds.

Background on development of the City’s PEG Access contract with VCAT

Unlike terrestrial broadcast radio and TV licenses issued by the Federal Communications Commission,

nonprofit organizations like VCAT cannot acquire cable channels or PEG support from cable companies;

PEG channels can only be granted to cities, counties or local and state Franchise Authorities, such as

the California Public Utilities Commission (CPUC) per DIVCA. Consequently the TV Studio at Jesse Bethel,

field production gear, and all associated equipment for operating Channels 27 are owned by the City.

Section 601 (2) of the 1984 Cable Act [47 U.S.C. § 531] does provide for establishing “… franchise

procedures and standards which encourage the growth and development of cable systems and which

assure that cable systems are responsive to the needs and interests of the local community.”

Further, Section 611 of the Cable Act provides for cities and franchise authorities to establish

requirements for the designation of channel capacity for PEG to serve community needs and interests.

For its cable negotiations in 1999, the City commissioned a Community Needs Assessment [see link] as

required by the Cable Act, conducted by The Buske Group. The comprehensive, statistically valid study

and review demonstrated a strong interest within the Vallejo community for PEG access channels and

facilities, and operated under the management of an independent PEG organization. The second half of

the document submitted to the City in December 1999 included a PEG Access Operations Plan which

presented recommendations for equipment selections, training, programming, support for 4 FTE staff,

and a sample PEG service contract with requirements for Annual Plans, Reports, Budgets, and Audits

Fulfilling the condition for the release of the new channel and funds, in 2003 Council approved the

PEG Access Operations Plan based on ‘Best PEG Practices’ of successful organizations, which prescribed:

Appropriate and adequate numbers of staff. It is essential that staff understands that its primary function

is not to make TV shows. Rather, it is to train citizens, community groups and organizations to use the tools

of television to create programming for and about the community. Staff should create a friendly, open

environment at the PEG Access facility to encourage volunteerism and citizen participation. This includes

opening on evenings and weekends when the average citizen has free time. It also includes assisting

community producers in pre-production planning and many other areas.

A competent and experienced Executive Director. This is a very critical position which should be filled, at

least initially, by a person who has previously held a management position in a PEG Access environment.

An adequate funding base. This may include funds from the cable company, the City and other elements of

the community willing and able to support PEG Access on an ongoing basis.

Adequate and appropriate facilities and equipment. This would include the kinds of studio facilities, portable

field equipment, video editing equipment, and other packages described later in this PEG Access Operating Plan.

Clearly defined operating rules and procedures. These rules and procedures should be in written form, and

available to all PEG Access facility users. These rules should encourage involvement by the community.

Training classes that are offered frequently. These training classes should be designed to allow the

community producer to attain the skill level necessary to move into the production process with confidence.

At the same time, these classes should be short enough to keep the community producer enthusiastic and

energized. For instance, a basic portable production class might include eight hours of instruction

accomplished over a two-week period in four, two-hour sessions. It is critical that these classes be offered

frequently so a person will not have to wait months before being trained.

An outreach plan. The purpose of the plan is to bring as many and as diverse a base of people as possible to the PEG

Access facility and into training. The result: PEG Access programming that is broadly reflective of the community.

Resolutions mandating ‘Best PEG Practices’, and contract enforcement issues

The original City Council Resolutions and Staff Reports of July and November 2004 memorialized a

mandate for VCAT to adhere to “Best PEG Practices” in operating the station. The Contract, in tandem

with the original Community Needs Assessment and PEG Operations Plan, set forth minimum standards

for the scope of services to be provided along with annual reporting requirements, fiscal audits,

performance reviews, and legal obligations to guide and assure quality of service, and accountability.

In adopting the recommendations of its consultants to establish PEG access, City Council did not set out

to merely satisfy a process set forth by the Cable Act just to acquire funding, then turn over the channels.

Rather, City Council effectively set policy to assure the PEG channels made available for community use

would be responsibly managed consistent with the Best Practices of PEG Access organizations.

For its first year, VCAT started out with a three-year budget plan, established Policies, built the new

studio, launched the new cable Channel 27, and purchased field, studio and editing equipment. Per its

first Annual Plan submitted to the City for FY 2005-2006, VCAT also followed through with outreach and

promotional activities, recruited new members, held training workshops, and led its first productions.

However, according to available records, VCAT has not since produced any Annual Plans or Budgets for

planned activities and programs for the following fiscal years as required by the City’s contract; nor

submitted Annual Reports with statistics on its programming, services or annual financial statements

that would be presented each year to the City Council.

At the same time, there is no indication of the City previously enforcing compliance of its’ own

contractual requirements; nor of the City exercising its authorities to conduct either a fiscal audit or a

Performance Review of VCAT’s operations, which also allows for cable subscribers to provide input.

Without verifiable data, it is difficult to quantify how efficiently VCAT performs financially, how

effectively it operates in accordance to Best PEG Practices, or to ascertain how successful it has been in

meeting the community needs outlined in the consultants’ original reports.

When the City’s original PEG service agreement expired in March 2009, VCAT continued operating

without a new contract or even an official extension for another 2 ½ years. Meanwhile the remainder

of operational funds due per the original cable franchise continued to be passed through to VCAT.

By September 2009, the City did eventually adopt a DIVCA ordinance and filed with the CPUC to remain

eligible for Cable Franchise Fees (5% of gross cable revenue, approx. $1.2M /yr) and PEG support (1% of

gross cable revenue, approx. $220,000 /yr). While Cable Franchise Fees and Utility Users Tax remained

unrestricted, a technicality of the DIVCA law restricted the PEG fees to capital-related costs.

By 2011, the depletion of operational funds prompted VCAT to consider emergency measures including

reduction of hours and services, and to approach the City for assistance. However with other issues

surfacing over the year, such as a discovery of malfeasance (promptly reported to law enforcement),

raised fair concerns about the organization’s adherence to its’ own bylaws and governance of its policies

including fiscal controls, personnel policies, equipment use, and overall contractual compliance.

As part of the package providing assistance to VCAT, the City also introduced an interim contract with

measures designed to assure more compliance and accountability, work within parameters of DIVCA,

and promote financial independence. The new provisions have been diligently enforced by City Staff.

Yet on closer examination of the interim contract and in the process of conforming to its terms,

a number of areas have been identified for further refinement that may better assist VCAT in achieving

financial independence and assuring full compliance, while promoting Best PEG Practices:

Discussion on Modifications to the PEG management contract

Normally a PEG contract renewal can take 6-9 months to review, negotiate and ratify. Although feedback

and perspectives gathered by the consultant from City Staff and VCAT Board indicate earnest efforts

were taken to update a contract, pressures of time and the need to secure funding was made more even

difficult by a lack of PEG expertise to consider all details and costs incurred with executing a contract.

Given the City Council’s original mandate for the station to operate consistently with ‘Best PEG Practices’

as memorialized in the Resolutions for the first contract with VCAT, a partial listing of contract provisions

for possible updates and modification are included below. This list was also developed with reference to

similar new or renewed post-2007 contracts between municipalities and their respective PEG access

management organizations across the Bay Area and California, including the City of Davis, Santa Rosa,

Marin County, Humboldt County, Monterey, Ventura, and the City of San Jose.

A detailed review of VCAT’s current interim contract alongside the Lease with VCUSD for the TV Studio

revealed areas where the PEG contract would benefit from further refinements and modifications so as

to better harmonize the respective agreements, insure greater responsibility and accountability, and

enable VCAT to procure independent revenue streams. Here are a few of the many points to consider:

• ‘PEG Access’ vs. ‘Public Access’: Contracts for PEG management organizations, as with VCAT’s

original contract with the City of Vallejo, recognize that the nonprofit can and should cater to all

Public, Educational and Governmental sectors. The City also required VCAT’s Bylaws to include all of

PEG before first awarding a contract. As VCAT works with Educational partners and will increase

services to public agencies, the term ‘PEG Access’ should be restored to the original language.

• PERFORMANCE REVIEW: Section 1) M of VCAT’s original 2004 contract provided for the following:

“The City may, after one year of operation under this Agreement, contract with an entity expert in

PEG Access matters to conduct a performance review of VCAT's operations.” (emphasis added). This

provision helps to assure that a comprehensive performance review will be conducted within a

scope of ‘Best PEG Practices’, rather than an unspecified or arbitrary process inappropriate for PEG.

• NO COMMERCIAL OR PERSONAL USE: Added to Sec.3) M of the 2011 interim contract, this

provision is reasonable but could be modified and specific. While legally applicable to equipment

purchased with DIVCA funds, the TV Studio space itself could actually be made available for rental

for outside projects and commercial production companies, and produced with equipment not

purchased with DIVCA funds. VCAT is preparing to approach VCUSD on co-developing an MOU,

which can provide for this type of use as other TV Studios within Educational Institutions allow.

Modification of this item within an updated contract would be harmonized with the Lease and

Sublease agreements, and allow VCAT to develop other income.

The second part states: “VCAT shall undertake all reasonable measures to ensure that the

Equipment and facilities provided pursuant to this agreement will not be used for commercial or

personal purposes.”

This provision, which is also reasonable and legally consistent with DIVCA-purchased equipment, can

be better enforced by updating VCAT’s Equipment Checkout and Programming procedures, and

adhering to the Policies set forth by the VCAT Board.

For example, VCAT Policies specify that Member-Producers must be fully trained and certified on

the equipment used, and required to submit a Project Proposal for review and approval before any

equipment is checked out. Producers are also expected to turn in Programs for playback on

Channel 27 within a reasonable amount of time. The comprehensive review of VCAT’s activities and

procedures indicate these procedures should be more closely monitored and enforced.

In spring 2011, the ‘Facil’ centralized database system was reinstalled for tracking Membership,

Training, Certification, Projects, Equipment, and Program activities. The ‘Facil’ software is now

accessible on all computers in the facility, and can generate auditable monthly and annual reports.

• RECORDS. FISCAL AUDIT: VCAT is overdue for an audit. As mentioned, VCAT had not since its first

year submitted an Annual Plan, Budget or Reports; nor has the City exercised its authorities

enforcing these requirements or conducted an Audit as provided under the original contract.

Presently, both entities are now following through on compliance issues, which are having a

stabilizing effect on the organization.

VCAT’s current contract includes a provision for a full fiscal audit prepared by an independent CPA.

Certainly the City should have reasonable assurances that its funds and assets are properly managed

and accounted for. As the aforementioned Performance Review could do for PEG Operations, the

VCAT organization would also benefit going through the exercise of cooperating with a CPA to

review its books, financial policies, and procedures.

However, the costs for complying were apparently not covered nor fully known when the new

language was inserted into the interim contract agreement. Given the relatively small size of

VCAT’s organization, budget and financial activity, continuing this contractual requirement as

written may be somewhat excessive, and costly to fully comply with.

In 2004, the California Nonprofit Integrity Act became law. It was crafted shortly after introduction

of the federal Sarbanes-Oxley legislation designed to increase transparency and accountability, and

reduce abuse in governance and fiscal management. The federal Act requires nonprofits expending

more than $500,000 of federal funds to conduct independent audits, while California’s audit

requirement applies nonprofits with revenues more than $2 million.

Currently, VCAT’s revenues are less than $100,000 a year, considerably below the threshold of both

the California State and Federal requirements for independent audits of nonprofit organizations.

Further, the costs of independent audits have also risen due to another state law sponsored by the

California Board of Accountancy in 2010, now requiring CPA firms to undergo Peer Review.

This brings the baseline costs for a CPA to conduct a thorough independent audit on an organization

like VCAT to $10,000-$12,000 minimum; or nearly 1/3rd of the funds granted by the City to support

operations. This would be considered rather burdensome for most nonprofits.

As also discussed between the Executive Consultant and City Management, the timeframe for

conducting an audit was already rather short from the signing of the final contract to meet a May

deadline. The process of forming an Audit Committee, seeking out CPAs, soliciting bids, reviewing

and approving a CPA, then proceeding with the audit, usually requires several months to complete.

Even so, it was understood and agreed that a CPA would be sought, with August or September

offered as the earliest possible period for a complete audit. The Executive Consultant did submit to

the VCAT Board recommendations of four different CPAs who work with PEG access organizations,

and understand issues involving DIVCA and Capitalizing Labor costs.

However, there was also an expectation that Measure B support funds were originally to be made

available by mid-June, from which VCAT could then cover the costs of an independent audit, but has

been pushed back. As a result, the VCAT organization has been unable to proceed with an audit.

One possibility for satisfying this requirement would be for the City to invoke its authorities under

Section 18 C of the interim agreement, and contract its own fiscal audit of VCAT’s financial records.

Looking ahead, a new contract with can follow similar agreements between other cities and PEGs,

and simply drop this requirement, or at least modify the specification to having an independent CPA

conduct a Review, which would be considerably less costly than a full audit. Either way, sufficient

funds need to be allocated that VCAT can truly comply with all terms of its contract, including audits.

List of Recommended Modifications to the PEG Access Contract with VCAT

As previously mentioned, a full PEG contract renewal process could take 6-9 months to complete.

Considering that the City and VCAT did hold talks from September through December last year to craft

the interim agreement, with meetings resuming through Spring 2012 for an updated agreement with the

modifications offered in this report, together represents a significant amount of work already completed to date.

What remains are refinements, and consideration of adequate funding that would make it possible to

fulfill and comply with all the terms of the PEG contract, and support the original amount of staffing that

VCAT can operate consistent with the Best Practices used at other successful PEG organizations.

Typically a three-month extension for a PEG contract would be sufficient to complete a renewal,

provided that both parties commit to a regular meeting schedule to work out various the provisions.

If more time is needed for outstanding issues, Council can approve another three-month extension.

However, as discussed in previous communiqués, extending the current interim contract for a full year

will not serve to promote VCAT’s growth to its full potential and independence.

It must be kept in mind these recommended refinements are presented independently, and should not be

considered complete or final, but compared with similar agreements. It is up to both the City and VCAT

to further discuss and refine per negotiations and based on available funding; to be mutually ratified.

Goals and objectives for PEG contract amendments / modifications:

- Study sessions with Ad-Hoc Committee or full City Council

- 3 month extension pending final ratification by both parties

- Staff report: should use verified audited statistics for 2011

- Study recent/post-DIVCA PEG contracts for Davis, Ventura, Marin, Santa Rosa, San Jose

- Seek 3-year contract, combined with a 3-year budget

- Assumes adequate funding: 3-year budget as guide (subject to adjustment per actuals)

- Recitals of Staff Report should mention & acknowledge key PEG developments (1999, 2004, etc)

- Activation of Educational Channel

- Assure mutual compliance / enforcement by both City and VCAT

- Annual Reports to the City Council (routine practice at most cites)

- Update VCAT Bylaws: framework to expand countywide, multiple cities ex-officio seats, etc

- Require VCAT to publish and update Policies & Reporting Requirements

- Include donation of surplus video equipment (allows VCAT to reuse free of DIVCA restrictions)

Recommended modifications/amendments to contract language and provisions:

- Replace references of ‘Public Access’ w/ PEG-Public, Education and Government (2004 contract)

(as other PEG management organizations, VCAT can serve all P.E.& G locally and in Solano Co.)

- Reaffirm ‘Best PEG Practices’ (per original City Resolutions, Operations Plan, Needs Assessment)

- Definition of PEG Core Services; delineate from other operational functions and production

- Outline / memorialize funding support for PEG Core Services

- Outline / memorialize funding support for other operational and production functions

- Production Service Grant: Projects for nonprofits, public agencies with Measure B allocation

- Provisions for Production Services to the City (city events, public information, special projects)

- Exempt TV Studio at JBHS from ‘non-commercial’ restrictions (allows VCAT to expand services)

- Contract VCAT to provide Closed Captioning (consistent with current laws & FCC regulations)

- Additional Media Services (optional)

- Funding from other sources

- Performance Review: re-specify PEG expert to conduct review (re-insert from 2004 contract)

- Annual Audit: change to Review (consistent with CA 2004 Nonprofit Integrity Act)

- Update clauses for ‘Termination of Agreement, Transfer of Assets’ (malfeasance, etc)

- Update clauses for ‘Assignment and Subletting’

- Reference to LOI / MOUs with VCUSD, Solano College (include in Addendum)

On supporting ‘PEG Core Services’ and Production Services Grant

Changes in telecom law and cable funding (DIVCA) presented a challenge to PEG Access organizations

to make the most of its available resources. This has entailed updating accounting practices, making

operations more efficient, and reclassifying job descriptions. This has also necessitated revisiting how

best to meet basic contractual obligations while increasing the quantity and quality of programming,

respectively discussed here as PEG Core Services and Production Services. The 3-year Budget Plan

proposes to use existing resources to support these separate functions appropriately.

PEG Core Services

The original Community Needs Assessment, PEG Operations Plan, and the 2004 & 2011 PEG contracts all

clearly establish that the TV equipment and resources are owned by the City. In this way, Channel 27

and the TV Studio at JBHS are categorically similar to the Vallejo Marina, GVRD, Senior Center, and other

City-owned properties for which nongovernmental entities are contracted by the City to operate.

VCAT, an Independent Contractor (Sec. 15 of City contract), is responsible for managing these resources

consistent with ‘Best PEG Practices’ to provide the following (Sec. 3 of contract):

A) OPERATE PUBLIC ACCESS CABLE CHANNEL; B) EQUIPMENT / MAINTENANCE OF EQUIPMENT;

C) OPERATE A COMMUNITY MEDIA CENTER; D) PROVIDE EQUAL ACCESS; E) DEVELOP OPERATING

POLICIES AND PROCEDURES; F) COMPLIANCE WITH LAWS, RULES, AND REGULATIONS; G) TRAINING,

H) PLAYBACK / CABLECAST.

These essential functions comprise the minimum contractual requirements VCAT is expected to meet.

Since Cities own the facilities and sets the terms for providing these essential PEG Core Services, the

primary responsibility for availing resources to perform basic services are usually incumbent on Cities.

The 3-year Budget Plan calls for supporting PEG Core Services by pooling a portion of existing funds used

for operations of Channel 28, and combined with DIVCA funds by capitalizing a portion of labor costs

(detailed under the earlier section Capitalizing Labor Costs, using updated accounting procedures). This

arrangement could provide $75,000 for VCAT to continue basic PEG Core Services at current levels.

However, this amount would only maintain current staffing and hours without restoring full evening and

weekend hours, and would not increase training, nor provide for management or support staff.

Alternately, the City could elect to support PEG Core Services either by designating a percentage of

‘Pass-Thru’ from Cable Franchise Fees ($1.3M yr for Vallejo) as many cities do for PEG operations,

and/or combined with a portion of Measure B funds, rather than drawing from the General Fund.

Production Services Grant

Basic station operations should be classified and accounted separately from Production activities. In the

PEG Operations Plan adopted by the City Council in 2003, The Buske Group firm offered the following:

“It is essential that staff understands that its primary function is not to make TV shows. Rather, it

is to train citizens, community groups and organizations to use the tools of television to create

programming for and about the community.”

Yet, successful PEG stations do leverage their professional-grade facilities to offer Production services,

which Vallejo would be well-served to study and adopt from, especially for nonprofit, educational and

public agencies. Given the significant investment to upgrade equipment to professional standards, a

renewed contract for should be accompanied by plans to increase the quantity and quality of Programs.

To help initiate high-quality Production services, the Budget Plan proposes a Production Services Grant:

The Production Services Grant is not a new concept in PEG Access. Recognizing that nearly all nonprofit

organizations and public agencies have continual media needs, a number of stations around California

and the country have developed production grant programs for subsidizing professional media services

including for public health, educational, community outreach and public information campaigns.

Examples include CCTV in Contra Costa County, CAPS TV in Ventura County, CTV in Santa Cruz County,

DOM in Denver, CAN TV in Chicago, and other organizations.

The Budget Plan proposes establishing the Production Service Grant program with Measure B funding

within a criteria appropriate for community and nonprofit services. The Grant can be administered

either through VCAT’s Measure B allocation, or directly administered via a panel appointed by the City.

This program would subsidize Nonprofit, Educational and Public Agencies with quality production

services. The completed projects can be shown on either or both Vallejo Channels 27 and 28, as well as

other PEG and Broadcast media outlets throughout Solano County and the Bay Area, and syndicated via

internet, mobile devices and Social Media platforms.

In the first year, up to $25,000 of the Measure B allocation would support the program in FY 12/13. The

Grant would be open to nonprofit organizations, educational institutions and public agencies serving

Vallejo to submit Project Proposals and a request for funds, which can be matched in several ways.

Project Proposals would be reviewed and approved by a panel under published guidelines. Several

Certified and Professional Producers are then recommended, and would work with clients to plan and

complete advanced projects using the latest professional-grade equipment purchased by the City.

Supported projects could range from PSAs, community forums, voter education, multilingual programs

and emergency preparedness; to health awareness, economic development, senior safety programs,

student-produced journalism, and other projects.

The Production Service Grant program addresses several issues. Whereas Core PEG Services and basic

operations do not provide staffing for most non-VCAT production functions, the Production Service

Grant would specifically support production-related activities. The Grant promotes a rise in quality and

quantity of productions on Channel 27, and set new standards for advanced VCAT Training and

Certification. The Program would also open a path for VCAT to develop additional income streams

through paid production services, hiring out its’ Studio facilities, renting equipment for nonchannel use,

and production consulting.

Further, high-quality equipment, facilities and crew at VCAT would be dedicated and reserved

specifically for supporting the Production Service Grant program, so as to avoid any problems with

scheduling overlaps or availability of equipment with general Public Access use. Implementing this type

of program would also necessitate dedicated management to coordinate and track multiple projects,

account for funds and resources, and designated with due authorities to deal with independent

producers and crew, assure completion and quality control, and produce monthly and annual reports.

The Production Service Grant program would require development of criteria and standards for quality

of product and qualifications of certified and independent film and video producers. It would be

designed to promote and utilize VCAT’s professional-level facilities and services. If planned intently, the

program could serve as an incubator for VCAT to expand its offerings for certain types of commercial

projects, as well as rental and production services, while developing self-supporting revenue streams

separately from DIVCA-purchased equipment.

VCAT and PEG Beyond Cable TV: On Incorporating Broadband and Social Media Initiatives

A subtext to the Recommendations and Budget Plan concerns the need for PEG Access organizations

to evolve their business models and expand reach beyond traditional Cable TV, so as to better serve

Community Needs and the Public Interest. This is further underscored by recent comprehensive studies.

Last February TBG president Sue Buske offered additional perspectives to VCAT on how PEG Access

organizations are adapting under DIVCA, and opportunities for expanding services, partnering with

Nonprofit, Education and Business sectors, and incorporating Broadband and Social Media tools.

VCAT neighbor Davis Media Access was recently mentioned in article for the Columbia Journalism Review

(“Building a multi-platform media for - and by - the public”) along with Access Humboldt and

41-year old Grand Rapids Community Media Center (now led by Laurie Cirivello, past Executive Director

of the Santa Rosa Community Media Center, and advisor to VCAT’s original board and staff).

Also released in June was a paper by the New America Foundation (“Public Media Policy, Spectrum Policy, and

Rethinking Public Interest Obligations for the 21st Century”) which has been studying PEG and Social Media

very closely. The Federal Communications Commission through their Future of Media initiative also

published a paper in conjunction with the Knight Foundation which included an examination of the state of

PEG Access (“Information Needs of Communities: The Changing Media Landscape in a Broadband Age”).

With PEG Media Centers evolving into Technology Centers and Anchor Institutions serving regional

communities, reveals a path for VCAT’s to also update its business model, rebrand and expand beyond

traditional ‘Access TV’, while repositioning itself for continued growth and viability.

Recommendations for Election Season Policies

(section currently under development)

On Updating Bylaws and PEG Access Policies

(section currently under development)

ALTERNATIVE OPTIONS FOR PEG SUPPORT

(section currently under development)

Closing Remarks

With submission of these Recommendations, I would like to note that these provisions are researched,

developed and offered independently: neither the City nor VCAT have yet agreed to what continued

funding should look like. Hopefully these recommendations will promote the necessary discussions.

As the City’s new Ad-Hoc Committee proceeds with further assessing VCAT’s status and begins planning

for the next phase of PEG Access in Vallejo and Solano County, Council members, City staff, and VCAT

representatives are encouraged to take field trips to three or more of the neighboring PEG centers: the

Community Media Center of the North Bay in Santa Rosa, Davis Media Access, Access Sacramento, the

Community Media Center of Marin County, Berkeley Community Media (BETV), KCRT in Richmond, the

Bay Area Video Coalition in San Francisco, the Mid-Peninsula Community Media Center (Palo Alto),

Pacifica Community Television (Pacifica), KSAR/KEDU at West Valley College (Saratoga), KMVT in

Mountain View, CreaTV in San Jose, CivicCenter Television at City of San Jose, and CMAP in Gilroy. If

longer day trips permit, it would be very worthwhile to visit Access Monterey Peninsula (AMP), and

Access Humboldt in Eureka, which hosts an excellent Broadband network integrated with its’ PEG.

It would also be instructive for the contract renewal process to study the contracts, audits and annual

reports of CreaTV in San Jose, Davis Media Access, and CAPS TV in Ventura County, as well as to speak

with the CPAs who handle the audits for each of these organizations.

Lastly, the Ad-Hoc Committee may consider retaining the services of The Buske Group to be on hand to

advise on updated contract provisions, conduct a full Performance Audit of VCAT’s services, clarify use

of DIVCA funds, and/or assist with requesting and planning operations for a new Educational Channel in

conjunction with Solano College, possibly with their new facilities in Vallejo.

As I express my hope for Vallejo to maintain a station it worked long and hard to launch, I will oblige to

offer additional perspectives and be available as a resource to the Ad Hoc committee for any study

sessions or meetings aimed at achieving a ‘win-win’ scenario for all concerned, and ultimately benefit

the Vallejo community.

Respectfully Submitted,

Clayton John Leander

Executive Consultant

Appendices - ATTACHED

Vallejo Community Access Television

Three-Year Budget Proposal

FY 2012-2015

Clayton J. Leander

Executive Consultant

July 2012

DRAFT

July 2012

On the Three-Year Budget Proposal for VCAT (Fiscal Years 2013-2015)

- Clayton J. Leander, Executive Consultant

OVERVIEW

In February this year, I was invited to come to Vallejo and meet with the Board of Vallejo Community

Access Television to discuss its status, challenges and any opportunities that the organization could

endure through its’ difficulties. California’s DIVCA legislation, which I’d already identified as a threat to

VCAT shortly after launching Channel 27 in 2006, has since affected the closure of nearly 50 PEG Access

stations across the state. Despite what VCAT could offer from limited resources. I agreed to return as

an Executive Consultant and see what can be done to prevent VCAT from becoming ’Station 51’.

Upon being retained and authorized to work with the City of Vallejo, I initiated communications and

meetings with City officials and VCAT representatives. Having maintained an office at City Hall in 2005

during the planning of the startup of VCAT, I availed my institutional memory as well as perspectives

from other communities, PEG organizations, and public broadcast outlets towards re-establishing

protocols, and focused on achieving a more sustainable long-term arrangement. I’ve studied available

documentation including Vallejo’s last CAFR, Annual Budget and Financial statements; Leases and Contracts

with VCAT, VCUSD, and the cable companies (now filed with the CPUC). I’ve also sought the latest data

from neighboring PEG stations and cities for how they’ve adjusted and adapted to DIVCA.

As a result of these efforts, I am pleased to present a 3-year Budget Plan based on available information

along with the comprehensive review I conducted evaluating VCAT’s performance, operations, and

growth capacity. The Plan aims to maximize all allowable uses of DIVCA funds, and to leverage traditional

and alternate funding sources. It would incorporate updated accounting procedures and PEG contract

agreements recently approved in other cities. The Plan also reserves forthcoming resources to activate

a third new Educational Channel available for Vallejo, and opens the door for continued growth.

The estimated figures are based on City reports, cable revenues and industry-projected rate increases.

The Plan reserves a share of Measure B funds appropriate for City-owned facilities with increased service

to Nonprofit and Education, and allocates DIVCA funds for an Educational Channel, and capitalized labor

costs. Consideration was given to achieving minimum staffing levels originally recommended to the City

by its PEG/cable consultants to support basic full-time operations consistent with Best PEG Practices.

Through assessing its’ activities, I discovered that in 2011 alone VCAT provided more than $1.5M worth

of equipment, services and channel time to the Vallejo community. Even so, VCAT is not quite achieving

the levels of performance as other PEG stations with similar sized operations and population; but still

extraordinary considering the station is operating at reduced hours and staffing with no manager, on a

total budget less than the City’s salary for an Administrative Assistant. That the station has been able to

survive on so little is a testament to the great dedication of the board, staff, volunteers and producers.

The current arrangement, however, does not make for prudent management of the investments made

by the City and community; nor can the VCAT organization afford to continue doing business as usual.

However, if both VCAT and the City could agree to modifications in the current contracts, mutually adopt

updated accounting procedures, and proactively plan resources more effectively, VCAT would be enabled

to secure additional income streams and sustain growth, while better serving Educators and Nonprofits.

A subtext to the Budget Plan also concerns a need for PEG Access organizations to update their business

models, and incorporating Broadband and Social Media tools to further serve Community Needs and

Interests. With PEG Media Centers transforming into Technology Centers and Anchor Institutions

serving regional communities, reveals a path for VCAT to also update its business model, rebrand and

expand beyond traditional ‘Access TV’, while repositioning itself for continued viability in the 21st century.

This proposed Budget Plan and accompanying recommendations for funding are offered independently:

representatives from VCAT along with City Council, Finance and CMO Staff would need to review the

latest data, make adjustments and agree to a final funding arrangement to fulfill contractual obligations.

I’ve also prepared a comprehensive review on leveraging PEG Resources and Cable Funds under DIVCA

as a companion to the proposed Budget Plan, which provides further details on funding options, such as

capitalizing labor costs, and ongoing support for Core PEG Services from other aspects of operations.

Hopefully the recommendations submitted here will promote the necessary discussions.

It bears reminding that in addition to the recent allocation of Operating Funds, the City and the Vallejo

community have since 2002 invested nearly $1M into PEG, while the local cable spectrum is valued at

minimum $3M per channel. Ultimately it is the City, and not VCAT, which owns the station and channel.

On its part, and in addition to managing and providing $1.5M worth of equipment and services to the

community, VCAT has initiated its own fundraising efforts, and anticipates offering production services.

Educational representatives from Solano College and VCUSD have also demonstrated their commitment

to maintaining the operation as well. Clearly there is significant institutional and community-wide

support for building on these investments and keeping VCAT and the station going. The remaining task is

to then agree on a final plan for allocating these resources in tandem with an updated PEG Contract.

As I express my hope for Vallejo to maintain one of the very stations I helped to launch, I shall oblige to

offer additional perspectives and be available as a resource to the City for any meetings or study sessions

aimed at achieving a ‘win-win’ scenario for all concerned, and ultimately benefit the Vallejo community.

Respectfully Submitted,

Clayton John Leander

Executive Consultant

Proposed Three-Year Budget Plan for VCAT: Fiscal Years 2012-2015

- Clayton J. Leander, Executive Consultant – June 2012

The proposed 3 year Budget Plan for VCAT beginning FY 12/13 utilizes Measure B funds supplemented

with a share of DIVCA cable funds for equipment, as well as adopting accounting practices for capitalizing

labor costs, which would easily cover 1/3rd of VCAT’s minimum staffing needs.

The Budget Plan also proposes ongoing support for basic Core PEG Services either by reinvesting a small

percentage of a ‘Pass-thru’ portion of Cable Franchise Fees similar to how other cities fund PEG; or,

offsetting current City funds for City Channel 28 operations by also capitalizing labor costs with DIVCA.

This could cover up to 50% of the City’s own PEG-related staffing costs, and allow for the remaining portion

from Channel 28 staff costs be reallocated to support basic operations Channel 27 and the TV Studio.

The Budget further plans and reserves a portion of DIVCA funds for launch of the Educational Channel,

currently anticipated for FY 2013-2014, with efforts led by VCAT’s representatives from Solano College

and VCUSD, and would eventually include Touro University and CSU Maritime Academy.

Lastly, after reclassifying and separating Core PEG Services, operational support and capital needs from

Production activities, the Budget Plan establishes a Production Service Grant program from a portion of

the Measure B allocation. The Production Service Grant assists Nonprofit, Educational and Public Agency

applicants in originating high-quality content to support their own Public Information, educational, and

community outreach needs, using the latest professional-grade equipment purchased by the City.

This initiative will also help increase the quality and quantity of content on Channel 27.

Details of these proposed Budget allocations are explored in more detail separately.

Current and Possible Sources of Funding

The City’s proposed Annual Budget for the FY 2012-2013 [PDF link] presented in May identifies a few

possible sources of funds that would support Channel 27 and the TV Studio, as well as City Channel 28:

Page I-01 of the City Budget (pg 150 of PDF) lists under ‘Revenues’ $258,500 for a line item titled

“Miscellaneous – VCAT/Cable Program”. This is a likely projection of DIVCA with a 7% rate hike.

‘Expenditures’ lists $215,000 for the item “IT-PEG City/Vallejo Community Access Television (VCAT)

Program”, with a general summary description published on pg I-07 (pg 156 of PDF) ;

Page J-32 of the City Budget (pg 200 of PDF) allocates a salary of $100,654 for the position of the

Media Services Specialist, which covers operations of City Channel 28 ;

While not specifically itemized, there is a reference on Pg ii of the Budget (pg 12 of PDF) under

‘Franchise Taxes’, which would be ‘Cable Franchise Fees’, distinct from Utility Users Tax (7.3%). As

DIVCA is 1% of gross cable revenue, Cable Franchise Fees at 5% amount to nearly $1.3M for 12/13 ;

Similar to other CBOs contracted to manage City-owned facilities, VCAT should qualify for some

portion of Measure B funds. After adjustments to the City’s Budget, at least $3.2M is to be shared

nonprofits by way of a Participatory Budgeting process. $130,000 of Measure B funds combined

with support for Core PEG Services and capitalizing labor covered with DIVCA would help VCAT

achieve the minimum staffing levels (4 FTE) originally recommended by the city’s cable consultant.

Based on these figures, a 3-year Budget Plan for VCAT is presented below along with a financial summary,

2011 statistics, and the value of services managed by VCAT; followed by a resource allocation plan:

VCAT Annual Operating Budget – 3 Year Budget Plan FY 2012-2015 – proposed

VCAT Annual Operating Budget - 3 Year Budget - proprosed [ CJ Leander - June 2012 ]

Fiscal Years ending 6/30/ : / 2012 / 2013 / 2014 / 2015

FUNDING SOURCE

City of Vallejo Core PEG Services Basic station admin, channel operation; supplement w/DIVCA

Operating Grant [Dec11-Jun.12] 25,000$

Matching Grant [Dec11-Jun.12] 5,000$

Core PEG Service Support - FY 2012-2015 Pass-through Cable Fees (3.5%) or Gen.Fund - begin FY 12/13)

50,325$ 52,840$ 55,480$

Subtotal - Core PEG Service support 30,000$ 50,325$ 52,840$ 55,480$

Measure B Support (begin FY 12/13)

Operations and Services - Staff & Support 105,000$ 114,300$ 116,200$

EDTV support (matched fund - 2014+) 5,750$ 8,150$

Production Service Program (begin FY 12/13)

Professional Media Services for Nonprofit, Education, Public Agencies25,000$ 32,750$ 35,500$

Subtotal - Measure B support 130,000$ 152,800$ 159,850$

PEG / Cable Support DIVCA PEG Support - Pass-thru - via City of Vallejo

(P&E portion of 1% Gross Cable TV Revenue: Comcast + AT&T)

Capital Equipment /Facilities (Studio, Ch27,EDTV) 143,300$ 74,095$ 92,325$ 95,175$

Capitalized labor costs (Meas.B ops + Core Svcs) 51,275$ 59,025$ 59,510$

EDTV Channel support (pending activation - ETA: 2014) 11,500$ 16,300$

Capitalized labor FY 11/12 (reimburse) 6,700$

Subtotal - DIVCA support 150,000$ 125,370$ 162,850$ 170,985$

VCAT Revenue

Banking (Money Market, etc) 2,952$ 3,349$ 4,219$ 4,794$

VCAT Membership Revenues (Individual, Family, Organizational & Business memberships) 1,200$ 1,800$ 1,900$ 2,150$

Production Services (Services for hire incl. for Nonprofit, Gov, Edu & Public Agencies, etc)

1,000$ 1,200$ 2,200$ 3,500$

Equipment/Facility Rentals(Production Hires, Nonmembers, Extra-Channel Shoots, Production

Companies & Independent Producers / Filmmakers) 900$ 3,000$ 3,600$ 4,400$

Fundraiser & Development Income

(Includes: Grants, Special Events, Ursula Aw ards, eWaste, Supermarket

Shares, Telethons, Donations, etc.)

VCAT Fundraisers & Development income 5,750$ 11,610$ 12,990$ 14,246$

VCAT Revenue - Subtotals 11,802$ 20,959$ 24,909$ 29,090$

TOTALS Total Income / Revenue 180,750$ 276,329$ 340,559$ 359,925$

(per industry practice & fair market rates)

Volunteer Management Services - Facility/ Production 34,711$ 46,615$ 61,400$ 76,750$

Video / Production Training Workshops 20,400$ 33,850$ 36,219$ 38,754$

Studio / Equipment / Edit Reservations 217,850$ 272,300$ 340,375$ 425,400$

Cablecast Time - Channel 27; + EDTV in 2014 420,000$ 546,000$ 1,157,520$ 1,238,500$

Bulletin Board messaging - nonprofit service Ch27 825,000$ 1,072,500$ 2,295,000$ 2,455,800$

Subtotal 1,517,961$ 1,971,265$ 3,890,514$ 4,235,204$

Education Channel / Program contributions:

Facility/Office Space & In-Kind Contributions 19,200$ 19,650$ 20,100$ 20,750$

Grants & Student Support -$ 2,500$ 7,800$ 10,250$

Matching Funds - EDTV Channel operations -$ -$ 5,750$ 8,150$

Subtotal 19,200$ 22,150$ 33,650$ 39,150$

ADDITIONAL SUPPORT - VCAT & EDUCATIONAL INSTITUTIONS

(COMBINED FUNDING, SERVICES, FACILITY, SPACE, IN-KIND RESOURCES)

Value of VCAT Managed Resources & Services:

(VCUSD, Solano College, SCOE, Touro, CSU, etc.- TBD):

VCAT – 2011 Financial Statement - summary

ASSETS

Current Assets

Checking/Savings

Certificate of Deposit 6,425.29

General Checking 12,222.73

Money Market 2,952.08

Ursula Awards 28,864.50

Total Checking/Savings

50,464.60

Total Current Assets

50,464.60

TOTAL ASSETS

$ 50,464.60

Liabilities

Current Liabilities

Credit Cards

Bank of the West -300.00

Total Credit Cards -300.00

Total Current Liabilities -300.00

Total Liabilities -300.00

Equity

Opening Balance Equity 63,794.79

Unrestricted Net Assets -1,910.77

Net Income -11,119.42

Total Equity 50,764.60

TOTAL LIABILITIES & EQUITY $ 50,464.60

2011 VCAT Membership, Production, and Programming Activities

Community Participation Community Programs Produced

VCAT open to the public 203 days Total number of training classes 39 Total number of class participants 85

Total number of VCAT produced programs 276 Total number of submitted programs 81 Total hours of cablecast programming 689

Community Producers Equipment Usage

Community Producers who have produced at least one program 47

Total community producers certified to use VCAT facilities 244

2011 Volunteer Hours &

Community Productions Services 1,593 hrs

Field equipment check outs 228

Edit station sessions 103

Studio production sessions 203

Value of VCAT Managed Resources & Services to Vallejo Community (Training, TV studio, volunteer production services, field production, editing, cable channel use)

Media Service Provided

Quantity Unit Value Total Community Value

Video/Production Training Workshops

136

$ 150

per workshop

$ 20,400

Studio Productions

203 Studio Productions

(605 hrs)

$ 85 per hr $ 51,470

Editing

524 hrs $ 55 per hr $ 28,820

Field Equipment Usage 228

camera package checkouts

$ 55 -$ 165 per day Market rates for various

camera packages

$ 137,560

Cablecast programming - Ch.27 (apprx 2,100 hrs of possible 8,760 hrs)

2,100 hrs $ 200 hr $ 420,000

Bulletin Board messaging (apprx 6,600 hrs of possible 8,760 hrs)

6,600 hrs $ 125 hr $ 825,000

2011 Volunteer Hours /

Community Service Productions

1,593 hours

$ 21.79 per hr (per IRS guidelines &

Corporation for National and Community Service)

$ 34,711

Total Community Value: $ 1,517,961

2012 – Clay Leander – Executive Consultant