Charter, City in $565,000 Dispute
By Jenny Marder, Press-Telegram, Long Beach, Calif.
Feb. 22–LONG BEACH — City Auditor Gary Burroughs has concluded that Long Beach’s cable service provider owes $460,000 in fees to the city, plus a $105,000 audit fee.
A claim, filed by the city Feb. 10, alleges that Charter Communications misreported revenue and was reluctant to release certain information during the audit.
Charter officials dispute the allegation and say they were shocked by claims that they failed to cooperate.
“There are 12 to 15 findings we’ve made where (Charter) underreported the franchise fee to Long Beach,” Burroughs said, adding “Charter has been less than cooperative, and we’ve highlighted that in our claim with them.”
Craig Watson, vice president for communications for Charter’s Western division, said the company is still investigating the matter but believes that the amount owed is closer to $0.
“Over the last three years, Charter has paid the city more than $7.5 million in franchise fees,” Watson said. “We take our partnership with the city very seriously, and we would be very concerned about any underreporting of funds due to the city.”
Long Beach has a 10-year cable franchise agreement with Long Beach Acquisition Corp., the local arm of Charter Communications Inc., that will expire in May 2007. According to the agreement, Charter, which services about 72,000 customers in Long Beach, is required to pay the city a franchise fee of 5 percent of its gross revenues received, as well as quarterly grant payments.
The parties also disagree on who should shoulder the $105,000 cost of the audit.
The city’s cable ordinance stipulates that if the audit finds an underpayment of 2 percent or more, Charter is required to pick up the costs of the audit.
Watson said company officials were “shocked” at allegations that they were uncooperative with the audit.
“The request for information went above and beyond what was necessary to appropriately review and successfully come to any conclusion on the appropriateness or adequacy of our payments to the city,” Watson said, He would not provide any examples.
Burroughs said Charter refused to make certain records available.
“Charter initiated a series of time-consuming obstacles before finally allowing us partial access to its books of account in late October 2005, after intervention by the City Attorney’s Office,” the audit report states.
According to the audit, the amount owed includes $295,080 in franchise fees, an $87,766 grant payment, $58,204 in interest and $19,143 in late fees. The city also believes Charter should pay the $105,000 audit fee.
The audit covered the calendar years 2002, 2003 and 2004, but city officials contend that Charter also owes money from unaudited years.
“If you applied the same to 2001 and 2005, they owe another $217,000,” Burroughs said.
According to a letter signed by Burroughs and City Attorney Bob Shannon, Charter has 30 days to pay the city the alleged $565,193 of owed funds. If Charter does not pay that amount by March 13, the matter will be referred to the City Council.
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