Chapter 15.40

POTABLE WATER FRANCHISES

Parts:

• 1 Definitions

• 2 General Provisions

• 3 Grant to Existing Water Companies 4 Application for Potable Water Franchise 5 Terms and Conditions

• 6 Utility Conflicts; Relocation of Facilities 7 Termination

• 8 Renewal

• A. No person shall operate as a certified solar leasing company under the municipal solar utility program of the City of San José as established herein, without having obtained a valid solar leasing permit from the City of San José. Such a permit shall authorize the conduct of solar leasing operations under the municipal solar utility program for a period of one or more years and shall be renewable.

• (Ord. 21188.)

• A. The manager shall present for council approval, rules and regulations governing the activities of the municipal solar utility, includ-

Part 1

DEFINITIONS

Sections:

• 15.40.030 Director.

• 15.40.040 Engineer.

• 15.40.050 Grantee.

• 15.40.070 Pipes and appurtenances.

• 15.40.080 Potable water.

• 15.40.090 Streets.

T15:225

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§ 15.40.010

The definitions set forth in this part shall govern the application and interpretation of this chapter.

(Ord. 24931.)

"Constitutional franchise" means such franchise or right, if any, as grantee may have because of the acceptance by grantee or its predecessor in interest of the offer contained in the provisions of Section 19 of Article XI of the Constitution of the State of California, as that section existed prior to its amendment on October 10, 1911. (Ord. 24931.)

"Director" means the director of the department of environmental services. (Ord. 24931.)

"Engineer" means the director of the public works department.

(Ord. 24931.)

"Grantee" means the person, individual, partnership, association, joint stock company, trust, corporation, governmental or other entity to whom or which a potable water franchise is granted by the council, pursuant to the provisions of this chapter, and the lawful successor or assignee thereof. (Ord. 24931.)

"Gross receipts" means any and all compensation and other consideration, in any form whatsoever, and any contributing grant or subsidy, received directly or indirectly by grantee from customers or users of a water system in payment for water service received within the city. (Ord. 24931.)

"Pipes and appurtenances" means pipes, pipelines, mains, services, traps, vents, vaults, manholes, meters, gauges, regulators, valves, conduits, appliances, attachments, appurtenances and, without limitation to the foregoing, any other property located or to be located in, upon, along, across, under or over the streets of city, used or useful in transmitting and/or distributing potable water. (Ord. 24931.)

"Potable water" means water of a quality which meets California Department of Health Services and San Francisco Bay Regional Water Quality Control Board requirements for water suitable for human consumption.

(Ord. 24931.)

"Streets" means the public streets, ways, alleys and places now or hereafter established within the city, including state highways and freeways and county roads and expressways. The word "streets" shall not be deemed to mean or include any parks, playgrounds, school property or other municipal or public property not constituting public thoroughfares.

(Ord. 24931.)

Part 2

GENERAL PROVISIONS

Sections:

• A. It is necessary for public health, safety and welfare for the city to regulate the business of

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§ 15.40.210

establishing, operating or maintaining a system for retail distribution of potable water, utilizing pipes and other appurtenances located within public streets.

• B. Pursuant to the provisions of Article XIII of the city charter, the city hereby elects to have the grant of franchises governed by this chapter and these provisions constitute the exclusive procedure for the granting of potable water franchises for the conduct of the business of establishing, operating or maintaining a system of pipes in the streets for retail distribution of potable water in the city.

• (Ord. 24931.)

It is unlawful for any person to engage in the business of establishing, operating or maintaining a system of pipes in the streets for retail distribution of potable water in the city, beyond the extent of any constitutional franchise, unless that person has first been granted a potable water franchise pursuant to the provisions of this chapter and such franchise is in full force and effect. (Ord. 24931.)

ordinance, to any person, whether that person is operating under an existing constitutional franchise or not.

(Ord. 24931.)

• A. All franchises granted to persons pursuant to this chapter shall be nonexclusive.

• B. No provision of this chapter shall be deemed to require restricting the number of franchises to one or any particular number, and no provision of this chapter shall be deemed to require the city council to grant any franchise if the council determines that the grant of any such franchise is not for the public good.

• C. All potable water franchises shall be subject to the terms and conditions specified in the city charter, in this chapter, as well as any terms or conditions specified in the ordinance granting the franchise.

• D. In granting any potable water franchise, the city council may prescribe such other terms and conditions, not in conflict with the city charter or this chapter, as are determined by the city council to be in the public interest.

• (Ord. 24931.)

Part 3

The exemption of such rights as exist with regard to those pipes and appurtenances subject to a franchise granted by the state of California under the provisions of Section 19 of Article XI of the Constitution of the State of California, as that section existed prior to its amendment on October 10, 1911, is to be narrowly construed. (Ord. 24931.)

The council may, at its discretion, grant a nonexclusive franchise to engage in the business of establishing, operating or maintaining a system for retail distribution of potable water in the city, beyond the extent of any constitutional franchise, by

GRANT TO EXISTING WATER COMPANIES

Section:

• A. It is hereby determined that San José Water Company, Great Oaks Water Company and San José Municipal Water System are existing retail distributors of potable water through pipes in the public streets as of June 1, 1995.

• B. A potable water franchise is hereby granted to San José Water Company and Great Oaks Company.

T15:227

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§ 15.40.210

• C. Applicable fees and charges set forth in this chapter shall be due and owing on and after the date of acceptance of the potable water franchise granted pursuant to this part.

• D. The potable water franchises issued pursuant to this part shall be deemed to have been accepted, subject to the terms and conditions set forth in this chapter, on the effective date of the ordinance first enacting this chapter, by the continued transmission or distribution of water through pipes and appurtenances laid in the public streets on or after October 11, 1911.

• E. The franchises granted by this part shall be in effect until July 1, 2015.

• (Ord. 24931.)

Part 4

APPLICATION FOR POTABLE WATER FRANCHISE

Sections:

15.40.320 Public hearing.

• 15.40.330 Criteria for granting franchise.

15.40.340 Requirements for effectiveness.

15.40.350 Term of franchise.

• A. An application for a potable water franchise by any person other than San José Water Company, Great Oaks Water Company, in the business of establishing, operating or maintaining a system for retail distribution of potable water in the city after July 1, 1995, shall be submitted in writing to the director.

• B. Each application for the grant of a potable water franchise pursuant to this part shall be on a form provided by the director and shall contain the following information:

  1. The name and address of the applicant; a. If the applicant is a partnership, the name and address of each partner shall be set forth in the application.

     • b. If the applicant is a corporation, the application shall state the names and addresses of the corporation's directors, main offices, major stockholders and associates, and the names and addresses of the parent and subsidiary companies.

  2. A statement and description of the potable water system proposed to be constructed, installed, maintained or operated by the applicant; the proposed location of such system and its various components; the manner in which applicant proposes to construct, install, maintain and operate the same; and, particularly, the extent and manner in which existing or future pipes or other facilities of other public utilities will be used for such system;

  3. A description, in detail, of the public streets, public places and proposed public streets within which applicant proposes or seeks authority to construct, install or maintain any potable water system equipment or facilities; a detailed description of the equipment or facilities proposed to be constructed, installed or maintained therein; and the proposed specific location thereof;

  4. A map specifically showing and delineating the proposed service area or areas within which applicant proposes to provide people of the city with potable water services and for which a franchise is requested; and

  5. Such additional information as may be reasonably requested by the director.

• C. The application shall be signed by the person applying for the potable water franchise or, in the case of a partnership, corporation or other entity, by a person authorized to bind the partnership or corporation.

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§ 15.40.340

• D. The application shall be accompanied by the potable water franchise application fee as set forth in the schedule of fees established by resolution of the city council.

• (Ord. 24931.)

• A. Upon receiving an application for the grant of a potable water franchise under the provisions of this part, the director shall forward a copy to the city clerk.

• B. Upon receipt of the copy of the application, the city clerk, subject to the rules of the city council as to the hour and place of public hearings which shall be conducted by it, shall set a date for a public hearing by the city council on the application for the potable water franchise.

• C. The city clerk shall cause the nature of the application and of the time and place of hearing on the application to be published at least once in a newspaper of general circulation in the city at least five days prior to the date set for the hearing.

• D. At the hearing on the application for the grant of a potable water franchise, the city council shall give all persons desiring to be heard a reasonable opportunity to present evidence or otherwise be heard in favor of or in opposition to the granting of the franchise to the applicant.

• E. At such hearing, the council may demand from the applicant such additional information as the council may deem relevant and necessary.

• (Ord. 24931.)

• A. Upon conclusion of the hearing on the application for a potable water franchise, or within a reasonable time thereafter, the council shall render its decision on the application.

• B. The council may refuse to grant the requested franchise or the council may, by ordinance, grant the franchise to the applicant as it deems to be in the public good.

• C. Any grant of a potable water franchise by the council may be subject to such terms, conditions, rules, regulations, restrictions and limitations as the council deems advisable to protect the citizens, to preserve the rights and interests of the city in its streets and public places, or to otherwise protect the interests of the city and its people.

• D. In making its decision, the council may consider whether the applicant is qualified to engage in supplying inhabitants of the city with potable water; the applicant's compliance with laws and regulations governing the supply and distribution of potable water; income to the city; experience and financial responsibility of the applicant; and any other consideration that the council determines will safeguard the interests of the city and its people.

• E. The potable water franchise granted to an applicant need not be identical to franchises granted to other applicants and need not contain the same terms and conditions, rights or privileges as requested by the applicant.

• F. Other than as set forth in Part 3 of this chapter, no potable water franchise shall be granted except by ordinance and no potable water franchise shall become effective unless and until the requirements set forth in Section 15.40.340 have been satisfied.

• (Ord. 24931.)

• A. Any potable water franchise granted pursuant to this part shall be deemed accepted if the grantee takes any action for which a potable water franchise is required; and

• B. Within twenty days from the effective date of the ordinance granting a potable water franchise pursuant to this part, or within such extended period of time as the city council in its discretion may authorize, the grantee has filed with the city clerk the following documents, if such is required by the ordinance granting the franchise:

  1. A faithful performance bond.

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§ 15.40.340

2. Evidence of compliance with the insurance requirements.

The term of any potable water franchise granted or renewed under the provisions of this part shall be for a term of twenty years unless otherwise specified in the ordinance granting the franchise.

(Ord. 24931.)

• A. Any potable water franchise granted pursuant to this part is a privilege to be held in trust by the original grantee. No such franchise shall be sold, leased, transferred, assigned, or otherwise disposed of, either in whole or in part, whether by forced sale, merger, consolidation, bankruptcy, reorganization under bankruptcy laws or otherwise, without the prior consent of the city council expressed by resolution.

• B. Consent shall not be denied if the successor or assignee has never had a potable water franchise terminated by the city and if the transferee or assignee can provide adequate assurances of quality of service and financial responsibility.

• C. Any such consent of the city council shall be subject to such terms and conditions to assure financial responsibility as may be prescribed by the council.

• (Ord. 24931.)

Part 5

TERMS AND CONDITIONS

Sections:

15.40.420 City inspection authority.

15.40.430 Annual public utilities commission report.

15.40.440 Rights reserved to city.

15.40.450 Compliance with laws.

• A. Each grantee shall pay a franchise fee to the city.

• B. The franchise fee shall be the greater of the following amounts:

  1. Two percent of the gross annual receipts arising from the use, operation, or possession of the potable water franchise; or

  2. One percent of the gross annual receipts of the grantee derived from the sale of potable water within the city limits.

• C. Franchise fees shall be payable on a monthly basis, and shall be due and payable within thirty days after the end of each calendar month.

• D. The required franchise fee shall be paid to the director of finance.

• E. Each payment shall be accompanied by a written statement, verified by the grantee making the payment, or a duly authorized representative of the person, showing the calculation of the franchise fee payable in such form and detail as the director of finance may require and such other information as the director of finance may determine is material to a determination of the amount due.

• F. No statement filed under this section shall be conclusive as to the matters set forth in such statement, nor shall the filing of such statement preclude the city from collecting by appropriate action the sum that is actually due and payable.

• G. The payment of franchise fees to the city pursuant to this chapter shall be in addition to any utility user's tax paid or collected by grantee, or license fee or business tax prescribed by the city for the same period.

• H. In the event grantee fails to make the payments of this franchise fee on or before the dates due as hereinabove provided, in addition

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§ 15.40.450

to all other remedies available to the city, the grantee shall pay both of the following additional amounts:

1. A penalty in the amount of ten percent of the amount due.

2. A sum of money equal to one percent of the amount due per month as interest and for loss of use of the money due.

(Ord. 24931.)

• A. The grantee shall at all times maintain accurate and complete accounts of all potable water deliveries in the city and of all revenues and income arising out of its operations under the potable water franchise granted pursuant to this chapter.

• B. Grantee's books, accounts and records shall be open to inspection, examination and audit by the director of finance, or any other authorized officers, employees and agents of the city. The records shall be made available during normal working hours, upon reasonable notice.

• C. All books, accounts, and other records relating to the statement required by this chapter shall be kept within the city. In the event that it becomes necessary for any representative designated by city to make such examination at any place other than within the city, all increased costs and expenses to city necessary or incident to such examination resulting from such books and records not being available within the city shall be paid to city by grantee on demand.

• (Ord. 24931.)

Grantee shall file three copies of its annual report to the California Public Utilities Commission, or its successor in authority, with the city clerk, as soon as practicable after the original of the report has been filed with commission. (Ord. 24931.)

• A. There is hereby reserved to the city every right and power, and the exercise thereof, which is reserved or authorized by any provision of any lawful ordinance or resolution of the city, whether enacted before or after the effective date of this chapter.

• B. Neither the granting of any potable water franchise nor any provision of any franchise shall constitute a waiver of or a bar to the exercise of any governmental right or power of the city.

• C. The grantee shall have no recourse whatsoever against the city, its officers, employees or agents, for any loss, cost, expense or damage arising out of any provision or requirement of this chapter or of any franchise issued under this chapter or because of the enforcement of this chapter.

• D. There is hereby expressly reserved to the city the power and authority to amend any section of this Code so as to require additional or greater standards on the part of the grantee and the power and authority to increase the franchise fees to be paid by the grantee pursuant to this chapter.

• (Ord. 24931.)

All work undertaken or performed and all pipes and appurtenances constructed, maintained and used, pursuant to the provisions of the grant of a potable water franchise, including but not limited to the practices of grantee in its installation and removal of grantee's facilities in the streets of city, shall be done, undertaken, performed and accomplished in accordance and compliance with all applicable ordinances, rules and regulations of city now or as hereafter adopted or prescribed, and with applicable laws, rules, regulations and orders of the state of California, the public utilities commission of the state of California and of any other governmental authority having jurisdiction, and, also, so

T15:231

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§ 15.40.450

as to cause the least possible hindrance to the use of the streets for the purpose of travel or any other public purpose. (Ord. 24931.)

• A. By accepting any potable water franchise grant hereunder, the grantee shall have agreed to defend, indemnify, save and hold harmless, the city, and all officers and employees of city, for, against and from all damages, judgments, decrees, costs and expenditures or loss which city, or any such officers or employees, may suffer, or which may be recovered from or be obtainable against city, or such officers or employees, for, or by reason of, or growing out of, or resulting from the exercise by grantee of any or all of the rights or privileges granted by this potable water franchise, or by reason of, or growing out of or resulting from any act or acts of grantee or its servants or agents in exercising the franchise herein granted, or by reason of, or growing out of or resulting from the failure of the grantee to comply with the provisions of said franchise or to do anything required of it by the franchise.

• B. In the event that any person, firm or private or public corporation makes claim against city for any damages for or against or from which the grantee hereinabove is obligated to indemnify city or save and hold city harmless, city shall give the grantee written notice of such claim within thirty days from and after the date city receives the claim.

• C. In the event that any person, firm or private or public corporation makes claim against any officer or employee of the city for any damages for or against or from which grantee hereinabove is obligated to indemnify the officer or employee or save and hold the officer or employee harmless, city or the employee shall give grantee written notice of the claim within thirty days from and after the date the officer or employee receives the claim.

• D. In the event city suffers any damage or loss for or against or from which grantee hereinabove agrees to indemnify city or save and hold city harmless, city shall give grantee written notice of such damage or loss within thirty days from and after the expiration of a reasonable time, after incurring such damage or loss, within which it could determine whether the damage or loss was covered by the above indemnification and save and hold harmless provisions. In the event any officer or employee of city suffers any damage or loss for or against or from which grantee hereinabove agrees to indemnify said officer or employee or save and hold the officer or employee harmless, city or the employee shall give grantee written notice of such damage or loss within thirty days from and after the expiration of a reasonable time, after incurring such damage or loss, within which it could determine whether the damage or loss was covered by the above indemnification and save and hold harmless provisions.

• (Ord. 24931.)

• A. Any grantee of a potable water franchise granted hereunder shall pay to the city, on demand, the cost of all repairs to city property made necessary by any of the operations of grantee under the potable water franchise.

• B. The grantee of a potable water franchise granted hereunder may be permitted to make repairs to streets, sidewalks, curbs and gutters itself, at its own cost, in accordance with city ordinances, rules, regulations and specifications, if the repairs can be without undue inconvenience of the city or its residents.

• (Ord. 24931.)

Part 6

UTILITY CONFLICTS; RELOCATION OF FACILITIES

Sections:

T15:232

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§ 15.40.540

Any potable water franchise granted, and all rights and privileges granted thereunder, are and shall be subordinate to the right of city, and of the general public, to use and occupy any street or streets for any municipal or public uses or purposes. (Ord. 24931.)

In addition to all other rights reserved to the city under this chapter, the following shall apply:

• A. City reserves the right for itself to lay, construct, erect, install, use, operate, repair, replace, remove, relocate, regrade or maintain below surface or above surface improvements of any type or description in, upon, along, across, under or over the streets of the city. City further reserves the right to relocate, remove, vacate or replace the streets themselves.

• B. If the exercise of these reserved rights conflicts with any pipes or appurtenances of a grantee constructed, maintained or used pursuant to the provisions of a franchise granted hereunder, whether previously constructed, maintained and used or not, or if a street or any part thereof is vacated and no easement is reserved to permit grantee to retain its facilities therein, grantee shall begin the work of physical field construction, of changing the location of all conflicting facilities or equipment without cost or expense to city, within a reasonable time after written notice from the city or its authorized representatives.

  • C. The work by grantee of removing its facilities from any street or part thereof required by this section shall be prosecuted with due diligence to completion.

• D. In the event the grantee fails to commence such work within such reasonable time after service of notice upon grantee, or fails to prosecute the work with due diligence to completion, the city may, if it should wish to so do, without limitation with respect to any other rights or remedies which it may have under the circumstances, cause the work required in the notice to be done and performed by city or its agents or contractors, and the grantee, in such event, shall pay the city the costs thereof within ten days after delivery to grantee of an itemized bill therefor. The cost of doing such work shall be considered to be the actual costs plus ten percent thereof for overhead.

• (Ord. 24931.)

A grantee shall have no recourse whatever against city or any of its officers, employees or agents on account of such loss, injury or damage sustained by a grantee incurred or suffered by reason of the doing of any public work by the city, if the work was done without gross negligence on the part of city or of its officers, employees or agents. (Ord. 24931.)

The enumeration of specific rights reserved to city in this chapter shall not be taken as exclusive, or as limiting the general reservations herein or as limiting rights accorded to the city by law. (Ord. 24931.)

Part 7

TERMINATION

Section:

T15:233

SAN JOSÉ CODE

§ 15.40.610

• A. The city council shall have the right to terminate any potable water franchise granted pursuant to this chapter, if the council finds, after a public hearing, following not less than fourteen days written notice to the grantee, that:

  1. The grantee has failed to comply with, or to do anything required of the grantee by applicable provisions of the city charter, provisions of this chapter, or provisions of the ordinance granting the franchise.

  2. Any provision of this chapter becomes or is declared to be invalid and the council thereafter expressly finds that such provision constitutes a material consideration to the grant or continuation of such franchise.

• B. Any franchise granted pursuant to this chapter may be immediately suspended whenever the grantee:

  1. Fails to keep in full force and effect any bonds or insurance required by the ordinance granting the franchise; or

  2. Fails to keep in full force and effect any applicable licenses or permits required by federal, state or local law.

• C. Termination or suspension of any potable water franchise granted pursuant to this chapter shall not terminate or suspend the accrual of fees due or other obligations of grantee hereunder, so long as the facilities for which the potable water franchise remain in city streets.

• (Ord. 24931.)

Part 8

RENEWAL

Sections:

• A. Any application for a potable water franchise renewal shall be submitted, in writing, to the director at least three months before the franchise expires.

• B. Each application for the renewal of a potable water franchise shall be on a form provided by the director and shall contain such information as may be reasonably requested by the director.

• C. The application shall be signed by the person applying for the potable water franchise or, in the case of a partnership or corporation, by a person authorized to bind the partnership or corporation.

• D. The application shall be accompanied by the potable water franchise renewal fee as set forth in the schedule of fees established by resolution of the city council.

• (Ord. 24931.)

• A. Upon receiving an application for the renewal of a potable water franchise under the provisions of this part, the director shall forward a copy to the city clerk.

• B. Upon receipt of the copy of the application, the city clerk, subject to the rules of the city council as to the hour and place of public hearings which shall be conducted by it, shall set a date for a public hearing by the city council on the application for renewal of the potable water franchise.

• C. The city clerk shall cause the nature of the application and of the time and place of hearing on the application to be published at least once in a newspaper of general circulation in the city at least five days prior to the date set for the hearing.

• D. At the hearing on the application for the renewal of a potable water franchise, the city council shall give all persons desiring to be heard a reasonable opportunity to present ev-

T15:234

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§ 15.50.100

idence or otherwise be heard in favor of or in opposition to the renewal of the franchise to the applicant.

• E. At such hearing, the council may demand from the applicant such additional information as the council may deem relevant and necessary.

• (Ord. 24931.)

• 5 Conditions

• 6 Denial, Amendment or Revocation 7 Exception

Part 1

GENERAL PROVISIONS

Section:

• A. Upon conclusion of the hearing on the application for the renewal of a potable water franchise, or within a reasonable time thereafter, the council shall render its decision on the application.

• B. The council may refuse to grant the requested franchise only if the council finds that the renewal is inimical to the public good.

• C. Any renewal of a potable water franchise by the council may be subject to such terms, conditions, rules, regulations, restrictions and limitations as the council deems advisable to protect the citizens, including but not limited to adjustment of the franchise fee, to preserve the rights and interests of the city in its streets and public places, or to protect the interests of the city and its people.

• D. The potable water franchise renewed pursuant to this part shall be deemed to have been accepted, subject to the terms and conditions set forth in the ordinance renewing the franchise, on the effective date of the ordinance, by the continued transmission or distribution of water through pipes and appurtenances subject to the prior franchise.

• A. No provider of gas, water, telephone, electricity or telecommunications services to inhabitants of the city through a franchise or other legal authority shall install or construct any structures on any city right-of-way or excavate any city right-of-way except pursuant to a major or minor excavation/encroachment permit issued pursuant to this chapter. "Telecommunications services" means, but is not limited to, the transmission of voice, data, video or other information by wire, radio, light and other electronic or electromagnetic systems.

• B. Nothing contained in this Chapter 15.50 shall authorize the installation or maintenance of pay telephones in the public right-of-way.

• C. The procedures of this chapter shall supersede any conflicting provisions contained elsewhere in the municipal code.

• (Ord. 25099.)

Part 2

DEFINITIONS

• (Ord. 24931.)

Sections: