Chico Municipal Code Art. III Grant of Franchise

No person shall be allowed to occupy or use the public streets or rights-of-way of the city for the purpose of conducting a service for the periodic collection of yard debris or be allowed to operate such a system without a franchise granted in accordance with the provisions of this chapter. Provided, however, that solid waste collectors which have obtained a permit pursuant to Chapter 5.16 of this code and businesses which provide landscaping or landscape maintenance services within the city may also provide for the collection and disposal of yard debris incidental to such solid waste collection or landscape services.

(Ord. 2107 §1, Ord. 2127 §7)

A franchise shall not be awarded pursuant to this chapter except to a grantee who meets all of the following qualifications:

A. The grantee has not been convicted or held liable for acts involving moral turpitude within the previous five years and is not presently under an indictment, investigation, or complaint charging such acts;

B. The grantee has not had a judgment in an action for fraud, deceit, or misrepresentation entered against grantee by any court of competent jurisdiction within the past five years;

C. The grantee does not have pending against grantee any legal claim, lawsuit, or administrative proceeding arising out of or involving the operation of the type of service which is subject to the franchise; and

D. The grantee has the financial and technical capability to enable it to maintain and operate the services for the term of the franchise.

(Ord. 2107 §1, Ord. 2268)

Any franchise for a yard debris collection and compost program shall be awarded after the solicitation of competitive bids pursuant to the formal bidding procedures set forth chapter 3.20 of this code.

(Ord. 2107 §1, Ord. 2127 §8)

After the bids have been opened, the city clerk shall schedule a public hearing for the council to determine whether it would serve the public interest and necessity to award the franchise for which the bids have been solicited. The city clerk shall also cause a notice of that hearing to be published in at least one paper of general circulation within the city at least ten days prior to the date of that hearing. The notice shall state the purpose of the hearing and the time and date of its location. At the time and place set for the public hearing on the matter, the council shall conduct a public hearing to determine whether the franchise should be awarded. The public hearing may be continued from time to time at the discretion of the council. At the conclusion of the hearing, the council may award the franchise to the lowest responsible bidder or reject all bids.

(Ord. 2107 §1)

A. Scope of Grant. Any franchise granted under this chapter shall authorize and permit the grantee to engage in the service for which the franchise has been granted within the service area specified in the franchise.

B. Grant Both a Right and an Obligation. In the event that the city council shall grant a franchise under this chapter, the franchise shall constitute both a right and an obligation to provide the services required by the provisions of this chapter and the franchise.

(Ord. 2107 §1)

Any franchise granted pursuant to this chapter shall be exclusive.

(Ord. 2107 §1)

The term of any franchise and all rights, privileges, obligations, and restrictions pertaining thereto shall be as set forth in the grantee's franchise, but shall in no event be for a period of more than five years from the effective date of the franchise. The effective date of the franchise shall be the date written acceptance thereof by the grantee is filed with the city clerk or such other date as may be specified in such franchise.

(Ord. 2107 §1)

The city council may grant a franchise for the operation of a yard debris collection and compost program for the entire incorporated territory of the city or for any defined portion of the city.

(Ord. 2107 §1, Ord. 2127 §9)

A. Amount of Franchise Fee. The city council may fix and determine in the ordinance granting the franchise the amount of a franchise fee which shall be paid to city by grantee. Such amount may be based on a fixed fee basis or upon a gross annual receipts basis.

B. Acceptance by City. The acceptance of a franchise fee payment by the city shall not be construed as a release or as an accord and satisfaction of any claim the city may have for further or additional sums payable as a franchise fee under this chapter or for the performance of any other obligation of the grantee.

C. Failure to Make Required Payment. In the event that any franchise fee payment is not made on or before the date specified in the ordinance granting the franchise, the grantee shall pay a late fee and/or interest as set forth in the ordinance granting the franchise.

D. Payments. The manner and time for payment of the franchise fee shall be set forth in the ordinance granting the franchise.

(Ord. 2107 §1)

A. Transfer of Franchise. Any franchise granted hereunder shall be a privilege to be held for the benefit of the public. Such franchise cannot in any event be sold, transferred, leased, assigned, or disposed of by forced or voluntary sale, merger, consolidation, receivership, or other means without the prior consent of the city, and then only under such conditions as the city may establish.

B. Ownership or Control. The grantee shall promptly notify the city of any proposed change in, transfer of, or acquisition by any other party of control of the grantee. The word “control” as used herein is not limited to major partners or stockholders but includes actual working control in whatever manner exercised. A rebuttable presumption that a transfer of control has occurred shall arise upon the acquisition or transfer by any person or group of persons of twenty-five percent (25%) of the aggregate partnership interests in or voting shares of the grantee. Every change, transfer, or acquisition of control of the grantee shall make the franchise subject to cancellation unless and until the city shall have consented thereto. For the purpose of determining whether it shall consent to such change, transfer, or acquisition of control, the city may inquire into the qualifications of the prospective controlling party, and the grantee shall assist the city in any such inquiry. In seeking the city's consent to any change in ownership or control of the grantee, the grantee shall have the responsibility to establish to the satisfaction of the city that the proposed purchaser, transferee, or assignee (the “proposed transferee”) which, in the case of a partnership or corporation, shall include all partners, officers, directors, and all persons having a legal or equitable interest in five percent (5%) or more of its partnership interests or voting stock, or any of the proposed transferee’s principals, meets all of the qualifications applicable to the grantee of a franchise as set forth in section 5.14.170, herein.

C. Right of Lender to Operate System. Notwithstanding anything to the contrary contained in this chapter, any financial institution having a pledge of the franchise for the advancement of money for the construction and/or operation of the franchise service for which the franchise is granted shall have the right to notify the city that it or its designee satisfactory to the city will take control and operate the services for which the franchise was granted in the event of a grantee default in its financial obligations. Further, such financial institution shall also submit a plan for such operation that will ensure continued service and compliance with all franchise requirements during the term the financial institution exercises control over the system. The financial institution shall not exercise control over the system for a period exceeding one year unless extended by the city in its discretion and during that period of time it shall have the right to petition the city to transfer the franchise to another grantee. If, after considering the legal, financial, character, technical, and other public interest qualities of the proposed transferee, the city finds that such transfer is satisfactory, the city will approve the transfer and assign the rights and obligations of such franchise to such proposed transferee.

D. Transferee to Assume Grantee's Obligations Under Franchise. In no event shall a transfer of ownership or control be approved without the successor in interest to the grantee assuming all of the grantee's obligations under its franchise. Notwithstanding the requirements of the grantee's franchise, the city may require, as a condition of the transfer of such franchise, that the proposed transferee furnish either or both a security fund and a performance bond in such amount or amounts as the city shall designate.

E. Permitted Encumbrances. Notwithstanding the provisions of this section, the grantee may pledge, assign, hypothecate, or create a security interest in its franchise without the consent of the city in favor of any bank, financial institution, or other lender with respect to any indebtedness of the grantee to such person.

(Ord. 2107 §1)