Modesto Municipal Code Ch. 2 Procedure for Granting Public Utility Franchises

No person shall exercise in the City any franchise right or privilege mentioned in Article XIV of the City Charter, except insofar as he or it may be entitled to do so by direct authority of the Constitution of the State or of the United States, unless he or it shall have obtained a grant therefor in accordance with the provisions of this chapter and of the applicable provisions of the Charter. Nothing in this chapter contained shall be construed to invalidate any lawful franchise heretofore granted, nor to necessitate the obtaining of a new franchise for a use for which a franchise holder shall have a valid unexpired franchise.

Nothing in this chapter shall apply to the granting of permits by the Council to any railroad for the construction of spur, lead or side tracks along or across any street, avenue or highway in the City for the purpose of connecting the facilities of any industry with the line of any railroad.

(Sec. 1, Ord. 1048-N.S.)

An applicant for any franchise shall file with the Council a verified application which shall state:

(a) The name of the applicant;

(b) The purpose and term, whether definite or indeterminate, for which the franchise is desired;

(c) The amounts or percentages, if any, applicant, if granted the franchise, will pay to the City during the life of such franchise;

(d) Any limitation as to time, place or type of services proposed by applicant; and

(e) Any other terms or conditions that applicant may desire, including surrender of existing franchises, or parts thereof, or claims to such franchises, or proposals to settle any litigation or controversies between applicant and the City.

The Council may require such other information as it deems necessary.

(Sec. 2, Ord. 1048-N.S.)

Every application for a franchise shall be accompanied by a cash deposit of not less than five hundred dollars ($500.00), or by a certified check for said amount, payable to the City, as a fund out of which to pay all expenses connected with such application. In the event that the Council deems the sum of five hundred dollars ($500.00) insufficient to pay said expenses, it may, by resolution, require the applicant to make an additional deposit in an amount sufficient to cover the estimated expenses.

The deposit of the applicant shall be retained until the acceptance of the franchise and the filing of any bond or other security required, or until the Council determines not to grant the franchise. Whereupon the remainder, if any, of the amount deposited shall be returned after the payment therefrom of all expenses incurred by the City in connection with the advertising, engineering, clerical work and awarding of such franchise.

In the event that the amount of the deposit is insufficient to pay the expenses incurred by the City in connection with the advertising, engineering, clerical work and processing of such franchise, the applicant shall be held liable for such costs as are in excess of the amount deposited, and it shall be the duty of the Director of Finance to collect the amount of such expenses which are in excess of the deposit from the applicant to whom the franchise is granted.

(Sec. 3, Ord. 1048-N.S.)

Every application made to the Council for a franchise mentioned in this chapter shall, before any action is taken thereon, be referred by the Council to the City Manager for his recommendation and report.

If, in the judgment of the City Manager, the franchise applied for should not be granted, he shall so report stating the reasons therefor; and, if, in his judgment, such franchise should be granted, he shall recommend the terms and conditions upon which the same should be granted.

(Sec. 4, Ord. 1048-N.S.)

Upon receipt of the City Manager's recommendation, the Council, if it desires to consider the granting of the franchise, shall pass a resolution declaring its intention to consider the application, stating the character of the franchise, setting forth a notice of the day, hour and place when and where any and all persons may appear before the Council and be heard thereon, and directing the City Clerk to publish said notice in the official newspaper at least once within ten (10) days after the passage of said resolution. The time fixed for such hearing shall be not less than fifteen (15) days nor more than sixty (60) days after the date of the passage of said resolution.

Such notice shall state the name of the applicant, the character of the franchise, its terms, whether definite or indeterminate, any amounts or percentages grantee shall pay to the City during the life of such franchise, any limitations as to time, place or type of service proposed, together with a general statement of the other major provisions of the proposed franchise, and that copies of the proposed franchise may be obtained at the office of the City Clerk.

The Council may, in its discretion, as a part of said notice, advertise for competitive bids for the purchase of said franchise.

(Sec. 5, Ord. 1048-N.S.)

At any time not later than the hour set for the hearing, any person interested may make written protest stating objections against the granting of such franchise. Such protests must be signed by the protestant and be delivered to the City Clerk.

(Sec. 6, Ord. 1048-N.S.)

At the time set for the hearing, the Council shall proceed to hear the matter and all persons shall be given opportunity to present their arguments. The Council may adjourn said hearing from time to time.

Any franchise granted shall be by ordinance adopted in the manner prescribed by the Charter for the enactment of ordinances.

(Sec. 7, Ord. 1048-N.S.)

Any franchise granted hereunder shall not become effective until written acceptance thereof shall have been filed by the grantee thereof with the City Clerk. Such acceptance shall be filed within thirty (30) days after the ordinance granting the franchise becomes effective unless the time is extended by the Council.

(Sec. 8, Ord. 1048-N.S.)

Unless otherwise provided therein any franchise granted by the City with respect to a particular utility service shall be in lieu of all other franchises, rights, or privileges then owned by the grantee for the furnishing of that particular utility or service within the limits of the City as they now or may hereafter exist and by acceptance of any franchise hereunder the grantee shall be deemed to have waived and abandoned all other franchises, rights, and privileges then owned by the grantee for the furnishing of that particular utility or service within the limits of the City as they now or may hereafter exist. The provisions of this section shall not apply to any franchise right or privilege obtained by direct authority of the Constitution of the State or of the United States.

(Sec. 9, Ord. 1048-N.S.)

By its acceptance of any franchise, the grantee shall covenant and agree to perform and be bound by each and all of the terms and conditions imposed by the Charter, this chapter and the franchise.

(Sec. 10, Ord. 1048-N.S.)

The Council may require the grantee of any franchise to provide such bond or security as it deems the public interest requires.

(Sec. 11, Ord. 1048-N.S.)

Every franchise shall be either a fixed term not to exceed twenty (20) years, or for an indeterminate period. If for a fixed term, the franchise shall state the term for which it is granted.

(Sec. 12. Ord. 1048-N.S.)

A franchise grant may be indeterminate, that is, it may provide that it shall endure in full force and effect until the same, with the consent of the appropriate state or federal agency, shall be voluntarily surrendered or abandoned by its possessor, or until the State, or some municipal or public corporation, duly authorized by law, shall purchase by voluntary agreement or shall condemn and take, under the power of eminent domain, the property actually used and useful in the exercise of such franchise, or until the franchise shall be forfeited for non-compliance with its terms by the possessor thereof, or until it is terminated in any other manner that may be specified in the franchise grant. Every indeterminate franchise shall set forth the terms and condition under which it may be terminated.

(Sec. 13, Ord. 1048-N.S.)

No new franchise shall be granted without reserving to the City just and adequate compensation. As part of the consideration for granting of each franchise, the grantee shall agree to pay the purchase price, if any, for said franchise as set forth in the franchise and to make any franchise payments fixed by the Council, and the grantee shall also agree to perform all covenants and agreements set out in said franchise to be performed by the grantee.

The Council shall have the right to recognize that extensions of service, betterment of services, surrendering of existing franchises or parts thereof, settling litigation between the grantee and the City, or the performance by grantee of franchise obligations, may be considerations (other than the franchise payment) of benefit to the City and its inhabitants, and in determining the amount of adequate consideration for the franchise or the amount of any franchise payments to be paid by grantee, the Council shall have the right to give weight to such factors.

Where the Council has fixed a percentage of gross receipts to be paid for the exercise of grantee's franchise, and where the operations of the grantee extend beyond the territorial boundaries of the City, the Council shall have the right to allocate such percentage payments so that such grantee shall pay only for its operations, for which a franchise is required, within the City.

The Council may likewise in the case of communication companies collecting tolls for both local and out of city business, interurban transportation companies and other companies as to which practical difficulties may arise as to the segregation between local and other tolls, fares or charges, provide for an allocation as between such local and other tolls, fares, or charges. In franchises covering operations as to which the requirement of payment of a percentage of gross receipts is not practical, the Council shall fix a basis for computing the franchise payments to be paid by grantee which will provide an equivalent sum.

(Ord. 1048-N.S., amended by Ord. 769-C.S., effective 2-23-66.)

Every franchise shall be subject to the following conditions:

(a) The grantee shall construct, install and maintain all tracks, pipes, tubes, conduits, poles, wires, instrumentalities and appurtenances in accordance and in conformity with all of the lawful ordinances, rules and regulations theretofore or thereafter adopted by said Council in the exercise of its police powers, and, as to State Highways, subject to the provisions of general laws relating to the location, construction and maintenance of such facilities therein.

(b) The grantee shall pay to the City on demand the cost of all repairs to public property made necessary by or proximately resulting from any operations of the grantee under such franchise, ordinary wear and tear excepted.

(c) The grantee shall indemnify and hold harmless the City and its officers and employees from any and all liability for damages proximately resulting from any operations under such franchise.

(d) The grantee shall permit such examination of its records by the City as the City deems material to the determination of the performance of the franchise obligations and shall make such reports as the franchise may specify.

(Sec. 15, Ord. 1048-N.S.)

In the discretion of the Council, the grantee of any franchise may be required to move or relocate any facilities installed, used and maintained under the franchise if and when made necessary by any lawful change of grade alignment or width of any public street, way, alley or place, including the construction of any bridge, tube, subway, viaduct or other highway structure, or any lawful public work of a governmental character by such municipality. The Council shall have the right to allocate the expense of such moving or relocation between the City and the grantee of a franchise, except where the exclusive jurisdiction thereover is in the Public Utilities Commission.

(Sec. 16, Ord. 1048-N.S.)

The grantee of any franchise under the terms of which the grantee is entitled to maintain rails or tracks in, along, or across any public place for the purpose of transporting passengers or freight thereover shall grade or regrade, pave or repave, construct or reconstruct all that portion of the street, highway, or public place which is between the rails as well as an area two (2) feet outside of and parallel to the rails and, if such track is located within a distance of eighteen (18) feet or less from center line to center line from any other track owned by such grantee, then also the portion of the street, highway, or public place lying between such separate tracks; and shall keep the same in good repair, flush with the street and with good crossings. Such street work shall be done with the same kind of material as is used in the remaining portion of the street, highway, or public place or such other materials as are approved by the City and in a manner satisfactory to the City; provided, however, that when, in the opinion of the City the space between the rails and tracks of the grantee and two (2) feet on each side thereof or any portion of the same is not required for purposes other than railway traffic, the same need not be constructed in like manner as the remainder of the street or public place, but shall be treated in such manner as the City may direct.

(Sec. 17, Ord. 1048-N.S.)

Upon the cessation of the use of any of the hereinafter enumerated facilities or the expiration or termination of the franchise, the grantee shall, unless requested not to do so by the City, remove all rails, ties, poles, wires, pipes, conduits, and all other appurtenances and shall reconstruct the streets and public places in good condition with the same kind of material as is used in the remaining width of each particular street or public place, or such other materials as are approved by the City; provided, however, that if the area from which the facilities are to be removed has not been required by the Council to be paved in like manner as the remainder of the street or public place, the grantee shall only be required to restore the area to the same condition that existed prior to such removal, or to a condition satisfactory to the City which does not increase the expense of such restoration to the grantee. All such work shall be done to the satisfaction of the City.

(Sec. 18, Ord. 1048-N.S.)

Every franchise shall reserve to the City the right to purchase the property of grantee either at an agreed price or a price to be determined in a manner to be prescribed in the grant, to the extent that such purchase may be authorized or permitted by law.

(Sec. 19, Ord. 1048-N.S.)

No transfer, assignment or lease of any franchise shall have any validity unless and until:

(a) The grantee shall have duly executed a good and sufficient instrument making such transfer, assignment or lease, and a duplicate original thereof shall have been filed in the office of the City Clerk.

(b) An ordinance of the City consenting to such transfer, assignment or lease shall have been duly adopted and become effective.

(c) The transferee, assignee, lessee or vendee shall duly execute and file in the office of the City Clerk a good and sufficient instrument accepting such transfer, assignment or lease, assuming all the obligations of the grantee under the franchise.

(d) The transferee, assignee, lessee, or vendee shall duly execute and file in the office of the City Clerk of the City a good and sufficient instrument surrendering to the City all franchises, rights and privileges, which the transferee, assignee, lessee, or vendee would have been required to surrender under the provisions thereof, if such transferee, assignee, lessee, or vendee had been the original grantee thereof.

Provided, however, that the terms of the foregoing clauses (a), (b), (c) and (d) of this section shall not apply to any mortgage or deed of trust made in good faith by the grantee, or by any person under a transfer, assignment or lease made in full accordance with the provisions of this section; but the terms of said clauses (a), (c) and (d) shall apply and the terms of said clause (b) shall not apply to any buyer at a sale under any mortgage or deed of trust.

(Sec. 20, Ord. 1048-N.S.)

If any person shall exercise a right or privilege for which he or it is required by the Charter to obtain a franchise without having first obtained such franchise from the City, the City may establish by ordinance the reasonable amount or percentage that such person shall pay to the City for the exercise of such right or privilege within the City for which a franchise is required, and if such person shall thereafter fail to pay to the City on demand such amount or percentage which has been so established by ordinance, the City shall have the right to enforce the payment thereof from such person. If the grantee of any franchise shall fail or refuse to comply with any of the provisions or conditions set out in this or any franchise ordinance enacted by the Council, the City may declare a forfeiture, and/or may sue such person for damages for such noncompliance, and/or may exercise any other rights or remedies provided by law.

As a separate and alternate remedy, if the grantee of any franchise shall fail or refuse to comply with any of the provisions, conditions, obligations or duties set out in this or any franchise ordinance enacted by the Council, the City may notify said grantee in writing to perform said obligations or duties. In the event that the grantee shall fail to comply with said notice within thirty (30) days, the City may, at its option, proceed to perform the obligations or duties itself. All costs incurred by the City thereby shall become a charge against the grantee of the franchise. If the grantee fails or refuses to pay the amount of such costs within thirty (30) days from the date that such costs are submitted to said grantee in writing, the City may proceed to collect such costs by an action at law.

(Sec. 21, Ord. 1048-N.S.)

When the Council shall find that an emergency exists and that public convenience and necessity require it, and that by reason of such emergency the operation or performance of a utility service should be permitted before the securing of a franchise under this chapter is possible, the Council, by resolution, may grant to any applicant for a franchise under the ordinance a special permit to operate in the City.

No such special permit shall be granted for a period in excess of six (6) months; provided, however, that the Council may, by resolution, extend the term of such a special permit for such periods not to exceed six (6) months each as the public convenience and necessity may require.

Such special permit shall only be granted to an applicant for a franchise under this chapter, and after the filing of the application for a franchise as in this chapter provided.

An application for a special permit shall be filed in writing with the Council setting forth such information as will permit action thereon.

All such special permits shall be granted under the express condition that if a franchise is not granted and accepted, all work done under such special permit shall be removed immediately at applicant's expense and the streets or alleys or other public places affected by such work shall be placed in as good condition as before such work was done, all to the satisfaction of the City.

The Council may require, as a condition to the granting of such special permits, that a bond of a kind and in an amount determined by it shall be furnished by applicant conditioned upon the faithful performance of the terms and conditions of the permit and further conditioned that applicant shall prosecute diligently to completion all work thereunder including removal work as hereinbefore provided.

Applications for permits under this section shall be referred to the City Manager for recommendation and report in the manner provided in Section 11-2.04 hereof.

(Sec. 22, Ord. 1048-N.S.)