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Memorandum <br />July 24, 1981 <br />Page 3 <br /> <br />Mr. Beems points out that in his opinion the above formula <br /> <br />could arrive at a zero purchase price. <br /> <br />It should be pointed out that the language of the Pre- <br /> <br />liminary Franchise Ordinande is provided for the purpose of pro- <br /> <br />viding the cable companies with a general idea of the type of <br /> <br />regulatory scheme which the cities envision for their cable <br /> <br />television system. No doubt, some of those sections which do <br /> <br />not directly effect the proposals of the cable companies will <br /> <br />be modified in the drafting of the final ordinance with the <br /> <br />successful cable company. Mr. Beems proposes a 'purchase price <br /> <br />related to the aggregate of the replacement value of the tangible <br /> <br />assets of the_System. This language would not be acceptable to <br /> <br />the Commission in that it could arrive at a price of the System <br />which would even exceed the fair market value of the units in <br /> <br />place at the time'~ It is anticipated that in the case of forfeiture, <br /> <br />revocation or termination, while it is not anticipated that the price <br />of the System would be zero, the cities would be able to purchase <br />the System for less than market value. However, in the case of <br /> <br />the normal expiration date of the franchise term, it is expected <br />that the language~of the franchise ordinance will be'changed to <br />provide for the purchase of the System for some price which would <br /> <br />relate more closely to fair market value of the units-in-place, <br /> <br />while not cons~.dering good will or the value of the System as a <br /> <br /> .. . <br /> <br /> · . ' ,. ' .,.. .~.-i.£~-.,, - ~-..?:'; :-'. i-.: _ · ' <br /> I~1' DUNKLEY AND RENNET'r ' ' <br /> <br /> LAW OFFICES - - <br /> <br /> <br />