One of the most underreported problems with local government in Arizona is how cities use their almost unfettered permitting, licensing and land use approval powers to exact goodies from businesses and private citizens.

Most of the time the person asking for city approval plays along, and it’s difficult to blame them. If your business or project is dependent on council or staff approval (or future approvals), you have little choice but to meet their demands.

That is what makes it very surprising/refreshing when businesses decide to fight back. That is what happened with SB 1140, which significantly rolled back the video service provider (VSP) franchise licensing scheme deployed by cities throughout the state.

The original purpose of VSP franchise licenses was to make sure companies such as Cox Communications and CenturyLink were meeting certain standards when expanding or improving their video service.  For example, VSPs must access public rights of ways in order to cut into streets to lay cables and serve customers, and the VSP license is designed to make sure it is done properly.

Unfortunately, many cities discovered how much fun it was to demand “sweeteners” in exchange for these licenses.  Some of the demands included free cable boxes for city employees, requirements that certain channels or cable packages be provided, that roadway improvements and beautification be performed that had no connection to the installation of cable lines, and even that these companies provide sponsorships for local community events.

One particularly egregious example well documented in the public testimony of the bill, was in Yuma City.  The major cable provider in Yuma City, Charter Common, took over the license franchise of Time Warner after they acquired the company.  The City of Yuma required in this agreement that Charter Common provide the city with both internet and intranet services for free, as a condition of their license.  This was particularly baffling considering internet has nothing to do with video and cable service.  Despite the questionable legality of this arrangement, businesses find themselves between a rock and a hard place as to how hard they will push back.

Luckily, SB 1140 ended the VSP extortion racket by making the process of granting a franchise license to a VSP non-negotiable.  Instead, cities will be allowed to require all the same assurances such as posting bonds and insurance to ensure proper repair of streets, but they will not be able to use their coercive regulatory power to hold licenses hostage for free stuff.

It is almost absurd that legislation was needed to end a practice that would be illegal if attempted in the private sector. Yet that is the double standard that exists in Arizona and must be confronted at every turn.