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COMMISSION LETTERHEAD <br /> August , 2019 <br /> Patrick Haggerty <br /> Senior Regional Director <br /> Charter <br /> 16900 Cedar Avenue South <br /> Rosemount, MN 55068 <br /> E-mail: Patrick.Haggerty(a,charter.com <br /> Re: Lake Minnetonka Communications Commission (LMCC); <br /> FCC 621 Order <br /> Dear Mr. Haggerty: <br /> As you know, the FCC recently adopted an order(the"621 Order") addressing the manner in <br /> which cable franchise fees are calculated. Although the 621 Order is not yet effective, we want <br /> to be sure there is no misunderstanding about the impact of the 621 Order on our relationship. <br /> The 621 Order provides that certain in-kind contributions made pursuant to a franchise are <br /> included in franchise fees subject to the statutory cap. The 621 Order indicates that the fair <br /> market value of such contributions can be included in the cable operator's franchise fee payment <br /> calculation. That is, the value of such contribution can be deducted or offset from the actual <br /> franchise fee amount paid to the franchising authority. <br /> Charter's franchise, however, requires payment of franchise fee calculated as 5% of the <br /> company's "gross revenues," as defined. The franchise does not include a right to offset or <br /> deduct the value of in-kind contributions. Accordingly, the franchise would need to be modified <br /> to accommodate deductions from future franchise fee calculations and payments. <br /> If Charter wishes to modify the franchise to provide for the deduction of the value of any <br /> particular in-kind contributions from franchise fees, the company must do so in compliance with <br /> the 621 Order. Specifically, paragraph 62 of the 621 Order states: <br /> The franchise fee rulings we adopt in this Order are prospective.245 Thus, cable operators <br /> may count only ongoing and future in-kind contributions toward the five percent <br /> franchise fee cap after the Order is effective. ... To the extent a franchise agreement that <br /> is currently in place conflicts with this Order, we encourage the parties to negotiate <br /> franchise modifications within a reasonable time.247 If a franchising authority refuses to <br /> modify any provision of a franchise agreement that is inconsistent with this Order, that <br /> provision is subject to preemption under section 636(c). <br /> Thus, a modification to the franchise to allow the value of in-kind contributions to be deducted <br /> from future franchise fee calculations and payments would need to be negotiated. To do so, <br />