Final arguments have been filed in a second legal battle between Glendale and
, which is alleging that the city is illegally using company-owned fiber optic strands and laundering access fees for purposes that violate state law.
In closing arguments, filed in briefs with the court last week, Charter contends that it never agreed to allow the city to use the fiber optics at no charge, even after its local franchise obligation to provide them for free ended.
A transfer agreement was reached following a dispute between the city and — at the time — Marcus Cable Associates because of a change in corporate control of its parent entity to Vulcan Cable Inc., which did business as Charter Communications, according to court documents.
Charter has been serving the city through a state franchise since 2008. Prior to that, Charter had a local franchise agreement with Glendale dating back to 1995.
The switch to a state franchise is the sticking point in the case. The company points to the Digital Infrastructure and Video Competition Act of 2006, which states that a local franchise cannot require a state franchise holder to “provide and support … institutional networks.”
The city counters that the federal act does not require it to “give back” assets that were “dedicated” to it prior to the law taking effect.
Charter is seeking a commercial monthly rate of $100,000 from the city retroactive to February 2008, the month after the company claims its obligation to provide free fibers expired, according to court documents.
Regarding the alleged misuse of fees, court documents state Charter has been paying a franchise fee to the city that equals 5% of the company's gross revenues generated from the operation of its cable system in Glendale since January 2008.
It's also been paying an additional 2% from the same revenues in access fees, according to court documents.
Charter's attorney, Richard Patch, said the fees, — which are supposed to be used for capital costs related to cable access facilities — are “laundered” through the Glendale Financing Authority. The fees are given back to the city as a lease payment for office space for the authority and are then spent on operating costs, Patch said.
The city claims that cable access facilities are more than just buildings, they also encompass equipment and channel capacity, according to the city's closing brief.
Los Angeles County Superior Court Judge Donna Fields Goldstein is reviewing the briefs and will hand down a ruling.