Poway Municipal Code Art. II Grant of Franchise

A. In the event that the grantor shall grant to the grantee a nonexclusive, revocable franchise to construct, operate, maintain, and reconstruct, a cable communications system within the franchise area, said franchise shall constitute both a right and an obligation to provide the services of a cable communications system as required by the provisions of this chapter and the franchise agreement.

B. The franchise agreement shall include those provisions of the grantee’s “Application for Franchise” that are finally negotiated and accepted by the grantor and grantee.

C. Any franchise granted under the terms and conditions contained herein shall be consistent with general law and/or statutory requirements, which are incorporated by this reference as if fully set forth herein.

D. In the event of conflict between the terms and conditions of the franchise and the terms and conditions on which the grantor can grant a franchise, the general law and/or statutory requirements, shall, without exception, control.

E. Any franchise granted is hereby made subject to the general ordinance provisions now in effect or hereafter made effective.

F. Nothing in the franchise shall be deemed to waive the requirements of the various codes and ordinances of the grantor regarding permits, fees to be paid or manner of construction; provided, however, that in the event of any conflict between the terms of this chapter and the franchise, the terms of the franchise shall control.

(Ord. 129 § 4.1, 1984; Ord. 298 § 1, 1989)

The grantor may grant a franchise for all or any defined portion of the City. The service area shall be the entire territory defined in the franchise agreement. The initial service area shall be that portion of the service area scheduled to receive initial service, as stated in the franchise agreement.

(Ord. 129 § 4.2, 1984; Ord. 298 § 1, 1989)

For the purpose of operating and maintaining a cable communications system in the franchise area, and subject to the provisions of PMC § 5.60.290, the grantee may erect, install, construct, repair, replace, reconstruct, and retain in, on, over, under, upon, across, and along the public streets and ways within the franchise area such wires, cables, conductors, ducts, conduits, vaults, manholes, amplifiers, appliances, pedestals, attachments, and other property and equipment as are necessary and appurtenant to the operation of the cable communications system. Prior to construction or alteration, however, the grantee shall in each case file plans with the appropriate grantor agencies and local utility companies, and receive written approval before proceeding.

(Ord. 129 § 4.3, 1984; Ord. 298 § 1, 1989)

The term of any franchise and all rights, privileges, obligations and restrictions pertaining thereto shall be as specified in the franchise agreement unless terminated sooner as hereinafter provided. The effective date of the franchise shall be the date of adoption of the resolution by the grantor approving the franchise agreement.

(Ord. 129 § 4.4, 1984; Ord. 298 § 1, 1989)

Any franchise granted shall be nonexclusive. The grantor specifically reserves the right to grant, at any time, such additional franchises for a cable communications system as it deems appropriate.

(Ord. 129 § 4.5, 1984)

Any franchise granted hereunder shall be a privilege to be held for the benefit of the public. The franchise cannot in any event be sold, transferred, leased, assigned or disposed of, including but not limited to, by forced or voluntary sale, merger, consolidation, receivership, or other means without the prior consent of the grantor, and then only under such conditions as the grantor may establish. Such consent as required by the grantor shall, however, not be unreasonably withheld.

(Ord. 129 § 6(a), 1984; Ord. 298 § 1, 1989)

A. The grantee shall promptly notify the grantor of any proposed change in, or transfer of, or acquisition by any other party of, control of the grantee. The word “control” as used in this chapter is not limited to major stockholders but includes actual working control in whatever manner exercised.

B. Every change, transfer, or acquisition of control of the grantee shall make the franchise subject to cancellation unless and until the grantor shall have consented thereto, which consent will not be unreasonably withheld.

C. For the purpose of determining whether it shall consent to such change, transfer, or acquisition of control, the grantor may inquire into the qualifications of the prospective controlling party, and the grantee shall assist the grantor in any such inquiry.

D. In seeking the grantor’s consent to any change in ownership or control, the grantee shall have the responsibility:

1. To show to the satisfaction of the grantor whether the proposed purchaser, transferee, or assignee (the “proposed transferee”), which in the case of a corporation, shall include all officers, directors, employees and all persons having a legal or equitable interest in five percent or more of its voting stock, or any of the proposed transferee’s principals:

a. Has ever been convicted or held liable for acts involving moral turpitude including, but not limited to any violation of Federal, State or local law or regulations, or is presently under an indictment, investigation or complaint charging such acts,

b. Has ever had a judgment in an action for fraud, deceit or misrepresentation entered against it, her, him, or them by any court of competent jurisdiction, or

c. Has pending any legal claim, lawsuit or administrative proceeding arising out of or involving a cable system;

2. To establish, to the satisfaction of the grantor, the financial solvency of the proposed transferee by submitting all current financial data for the proposed transferee which the grantee was required to submit in its franchise application, and such other data as the grantor may request. Financial statements shall be audited, certified and qualified by an independent certified public accountant.

3. To establish to the satisfaction of the grantor that the financial and technical capability of the proposed transferee is such as shall enable it to maintain and operate the system for the remaining term of the franchise under the existing franchise terms:

a. Any financial institution having a pledge of the franchise or its assets for the advancement of money for the construction and/or operation of the franchise shall have the right to notify the grantor that it or its designee satisfactory to the grantor will take control and operate the cable communications system, in the event of a grantee default in its financial obligations. Further, said 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 shall not exercise control over the system for a period exceeding one year unless extended by the grantor in its discretion and during said period of time it shall have the right to petition the grantor to transfer the franchise to another grantee. If the grantor finds that such transfer after considering the legal, financial, character, technical and other public interest qualities of the applicant are satisfactory, the grantor will transfer and assign the rights and obligations of such franchise as in the public interest. The consent of the grantor to such transfer shall not be unreasonably withheld.

b. The consent or approval of the grantor to any transfer of the grantee shall not constitute a waiver or release of the rights of the grantor in and to the streets, and any transfer shall by its terms, be expressly subordinate to the terms and conditions of any franchise.

c. In the absence of extraordinary circumstances, the grantor will not approve any transfer or assignment of the franchise until the system is substantially completed.

d. In no event shall a transfer of ownership of control be approved without the successor in interest becoming a signatory to the franchise agreement and otherwise obligated thereto to the satisfaction of the grantor.

(Ord. 298 § 1, 1989; Ord. 129 § 4.6(b), 1984)

A. Nothing in any franchise agreement shall require renewal by the grantor after the term of the franchise has expired, nor shall renewal be presumed as a matter of vested interest, except to the extent specified in the Cable Communications Policy Act of 1984 (“Cable Act”).

B. The renewal term of any franchise shall not be greater than the initial term.

(Ord. 298 § 1, 1989; Ord. 129 § 4.7(a), 1984)

A. Not later than 18 nor earlier than 24 months prior to the expiration of any franchise, a grantee may submit an application for renewal of such franchise, on forms approved by the grantor, with a nonrefundable application fee established by the grantor in an amount not to exceed the reasonable cost of processing the application. The application shall set forth in detail the franchisee’s legal, character, financial and other pertinent qualifications sufficient to make a determination to renew or terminate such franchise.

B. The application when filed shall be available for public inspection at places designated by the grantor. No later than 90 days after filing, a public hearing shall be held on the application. A decision shall be made by the grantor not later than 90 days after such hearing based upon the application, the hearing, the grantee’s record of compliance with the franchise requirements, its record of satisfactory service, and the terms and conditions proposed for the franchise renewal period.

C. Based on the above criteria, the grantor may decide to renew the franchise under appropriate terms and conditions, or not to renew the franchise.

D. If the grantor’s decision is not to renew the franchise, the grantor may initiate public solicitations for applications for a new franchise. The original grantee shall not be precluded from submitting such an application.

E. In any renewal or public solicitation, the grantor may require additional services, system upgrade or any other conditions it deems feasible and appropriate in the light of the accepted and proven state-of-the-art of the cable communications industry at that time.

(Ord. 129 § 4.7(b), 1984)

A. In accepting a franchise, the grantee acknowledges that its rights thereunder are subject to the police power of the grantor to adopt and enforce general ordinances necessary to the safety and welfare of the public; and it agrees to comply with all applicable general laws and ordinances enacted by the grantor pursuant to such power.

B. Any conflict between the provisions of this chapter and any other present or future lawful exercise of the grantor’s police powers shall be resolved in favor of the latter, except that any such exercise that is not of general application in the jurisdiction or applies exclusively to any grantee or cable communications systems which contains provisions inconsistent with this chapter shall prevail only if upon such exercise, the grantor finds any emergency exists constituting a danger to health, safety, property or general welfare or such exercise is mandated by law.

(Ord. 129 § 4.8, 1984; Ord. 298 § 1, 1989)

A. A grantee of a franchise hereunder shall pay to the grantor an annual fee in an amount as designated in the franchise agreement.

B. Such payment shall be in addition to any other payments due the grantor and commence as of the effective date of the franchise.

C. In the event of a dispute, the grantor, if it so requests shall be furnished a statement, by a certified public accountant, reflecting the total amounts of gross annual revenues and all payments, deductions and computations for the period covered by the payment.

(Ord. 129 § 4.9(a), 1984; Ord. 298 § 1, 1989)

No acceptance of any payment by the grantor shall be construed as a release or as an accord and satisfaction of any claim the grantor 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.

(Ord. 129 § 4.9(b), 1984)

In the event that any franchise payment or recomputed amount is not made on or before the dates specified in this chapter, the grantee shall pay as additional compensation:

A. An interest charge, computed from such due date, at the annual rate equal to the commercial prime interest rate in effect upon the due date.

B. A sum of money equal to five percent of the amount due in order to defray those additional expenses and costs incurred by the grantor by reason of delinquent payment.

C. An estimated quarterly payment shall be made for the first three quarters of the calendar year based upon the grantee’s operation, as of March 31st, June 30th, and September 30th. Each of these payments shall be due and payable no later than 30 days after the end of the quarter. Each payment shall be accompanied by a brief report showing the basis for the estimated payment and such other relevant facts as may be required by the grantor. The payment for the quarter ending December 31st shall be due and payable no later than 90 days after the end of the quarter. The payment shall reflect the actual payment due the grantor from the previous quarter plus an adjustment for any underpayment or overpayment made during the previous three quarters. The payment shall be accompanied by a report showing the quarterly gross revenues, the total annual revenues, the basis of the computation and such other relevant facts as may be required by the grantor.

D. Following the issuance and acceptance of the franchise, the grantee shall initiate franchise fee payments to the grantor at the minimum rate specified in the franchise agreement. These initial payments shall be credited against payments due in later years of the franchise in as much as they exceed the actual franchise payments due during any year.

(Ord. 129 § 4.9(c – e), 1984)

The grantor reserves the right to revoke any franchise granted hereunder and rescind all rights and privileges associated with the franchise in the following circumstances, each of which shall represent a default and breach under this chapter and the franchise grant:

A. If the grantee should default in the performance of any of its significant and material obligations under this chapter or under such documents, agreements and other terms and provisions entered into by and between the grantor and the grantee and not cure such default within a reasonable time after notice to grantee;

B. If the grantee should fail to provide or maintain in full force and effect, the liability and indemnification coverages or the security fund or bonds as required in this chapter;

C. If any court of competent jurisdiction, or any Federal or State regulatory body by rules, decisions or other action determines that any provision of the franchise documents, including this chapter, is invalid or unenforceable prior to the commencement of system construction;

D. If the grantee should wilfully violate any orders or rulings of any regulatory body having jurisdiction over the grantee relative to this franchise unless such orders or rulings are being contested by the grantee before an appropriate regulatory body or agency or in a court of competent jurisdiction;

E. If the grantee ceases to provide services for a significant period of time for any reason within the control of the grantee over the cable communications system. The grantee shall not be declared at fault or be subject to any sanction under any provision of this chapter in any case in which performance of any such provision is prevented for reasons beyond the grantee’s control. A default shall not be deemed to be beyond the grantee’s control if committed by a corporation or other business entity in which the grantee holds a controlling interest, whether held directly or indirectly;

F. If the grantee evades any of the provisions of this chapter or the franchise agreement or practices any fraud or deceit upon the grantor;

G. If the grantee’s construction schedule is delayed for more than 18 months later than the schedule contained in the franchise agreement and the grantor finds that the delay was not excusable;

H. If the grantee becomes insolvent, unable or unwilling to pay its debts, or is adjudged bankrupt.

(Ord. 129 § 4.10(a), 1984; Ord. 298 § 1, 1989)

A. To initiate revocation of a franchise, grantor shall make written demand that the grantee comply with any such requirement, limitation, term, conditions, rule or regulation or correct any action deemed cause for revocation. If the failure, refusal or neglect of the grantee continues for a period of 30 days following such written demand, the grantor may place its request for termination of the franchise upon a regular Council meeting agenda. The grantor shall cause to be served upon such grantee, at least 10 days prior to the date of such meeting, a written notice of this intent to request such termination, and the time and place of the meeting, notice of which shall be published at least once, 10 days before such meeting in a newspaper of general circulation within the franchise area.

B. The grantor shall hear any persons interested therein, and shall determine, in its discretion, whether or not any failure, refusal or neglect by the grantee was with just cause.

C. If such failure, refusal or neglect by the grantee was with just cause, the grantor shall direct the grantee to comply within such time and manner and upon such terms and conditions as are reasonable.

D. If the grantor determines such failure, refusal or neglect by the grantee was without just cause, then the grantor may, by resolution, declare that the franchise of such grantee shall be terminated and security fund and bonds forfeited unless there be compliance by the grantee within such period as the grantor may fix.

E. The decision of the grantor shall be in writing the reasons stated therefor set forth with findings supported by evidence within the record of proceedings.

(Ord. 129 § 4.10(b), 1984; Ord. 298 § 1, 1989)

In the event a franchise expires, is revoked, or otherwise terminated, the grantor may order the removal of the system facilities from the franchise area within a reasonable period of time as determined by the grantor or may allow the underground system facilities to be abandoned in place or require the original grantee to maintain and operate its network until a subsequent grantee is selected and a subsequent or modified cable system becomes operational.

(Ord. 129 § 4.11(a), 1984)

A. In removing its plant, structures and equipment, the grantee shall refill, at its own expense, any excavation that shall be made by it and shall leave all public ways and places in as good condition as that prevailing prior to the grantee’s removal of its equipment and appliances without affecting the electrical or telephone cable wires, or attachments.

B. The grantor shall inspect and approve the condition of the public ways and public places; and cables, wires, attachments and poles after removal.

C. The liability, indemnity and insurance, and the security fund and bonds provided for therein shall continue in full force and effect during the period of removal and until full compliance by the grantee with the terms and conditions of this chapter.

(Ord. 129 § 4.11(b), 1984; Ord. 298 § 1, 1989)

A. In the event of a failure by the grantee to complete any work required by PMC §§ 5.60.095 and/or 5.60.100, or any other work required by the grantor by law or ordinance within the time as may be established and to the satisfaction of the grantor, and after seven days notice, the grantor may cause such work to be done and the grantee shall reimburse the grantor the cost thereof within 30 days after receipt of an itemized list of such costs or the grantor may recover such costs through the security fund or bonds provided by the grantee. The grantor shall be permitted to seek legal and equitable relief to enforce the provisions of this chapter.

(Ord. 129 § 4.11(c), 1984; Ord. 298 § 1, 1989)

A. Upon either the expiration or revocation of a franchise, the grantor may extend the term of such franchise and may require the grantee to continue to operate the cable communications system for a defined period of time not to exceed 24 months from the date of such expiration or revocation.

B. The grantee shall, as trustee for its successor in interest, continue to operate the cable communications system under the terms and conditions of this chapter and the franchise agreement and to provide the regular subscriber service and any and all of the services that may be provided at that time.

C. The grantor shall be permitted to seek legal and equitable relief to enforce the provisions of this chapter.

(Ord. 129 § 4.11(d), 1984; Ord. 298 § 1, 1989)

The termination and forfeiture of any franchise shall in no way affect any of the rights of the grantor under the franchise or any provision of law.

(Ord. 129 § 4.11(e), 1984)

A. Any franchise granted pursuant hereto shall, at the option of the grantor, cease and terminate 120 days after the appointment of a receiver or receivers or trustee or trustees to take over and conduct the business of the grantee whether in a receivership, reorganization, bankruptcy or other action or proceeding unless such receivership or trusteeship shall have been vacated prior to the expiration of said 120 days, or unless:

1. Such receivers or trustees shall have, within 120 days after their election or appointment, fully complied with all the terms and provisions of this chapter and the franchise granted pursuant hereto, and the receivers or trustees within the 120 days shall have remedied all defaults under the franchise; and

2. Such receivers or trustees shall, within the 120 days, execute an agreement duly approved by the court having jurisdiction in the premises, whereby such receivers or trustees assume and agree to be bound by each and every term, provision and limitation of the franchise agreement.

B. In the case of a foreclosure or other judicial sale of the plant, property and equipment of the grantee, or any part thereof, the grantor may serve notice of termination upon the grantee and the successful bidder at such sale, in which event the franchise and all rights and privileges of the grantee hereunder shall cease and terminate 30 days after service of such notice, unless:

1. The grantor shall have approved the transfer of the franchise, as and in the manner provided in this chapter; and

2. Such successful bidder shall have covenanted and agreed with the grantor to assume and be bound by all the terms and conditions of the franchise agreement.

(Ord. 129 § 4.12, 1984; Ord. 298 § 1, 1989)

No cable communications system shall be allowed to occupy or use the streets in the City or be allowed to operate without a franchise in accordance with the provisions of this chapter.

(Ord. 129 § 4.13, 1984; Ord. 298 § 1, 1989)

The grantor may establish appropriate requirements for new franchises or franchise renewals, and may modify these requirements from time to time to reflect changing conditions and state-of-the-art in the cable television industry. Such requirements shall not be retroactive to franchises then in effect.

(Ord. 129 § 4.14, 1984)