The City of Santa Monica and Charter Communications have resolved an overpayment of State Cable Franchise Fees.

Since 2006, cable television franchises have been granted and administered by the California Public Utilities Commission. The City currently has two franchisees, Charter Communications (Spectrum) and Frontier Communications, and state law allows the City to charge a franchise fee of up to 5% of gross receipts to be assessed on each franchisee.

In 2008, Council passed a resolution reducing the franchise fee to 3% so that it would be consistent with the fee rate prior to transfer of franchise responsibility to the State. However, a report prepared by Assistant City Treasurer David Carr said. “The City recently discovered that Charter Communications was overpaying the City at the 5% rate since the fourth quarter of 2016…”

The overpayment coincided with the merger of Charter with Time Warner Cable, the franchise holder at that time, and the amount of the overpayment is estimated to be $1,676,604.96, according to the report. “Prior to that time, the correct 3% rate had been collected.”

Since the discovery of the overcharges, The City and Charter have agreed on a methodology to refund the overpayment to Charter, and have Charter refund any pass-through overcharges to its customers, Carr said in the report. Repayment will be funded as a credit against franchise fees due until the complete amount is repaid, and since Charter made these overpayments over a period of approximately three years, the repayment period would be similar.

Charter has also confirmed that it will provide refunds to customers in Santa Monica who were overcharged.

Brennon@smdp.com