Santa Fe Springs Municipal Code Ch. 112 Cable Television

Footnotes:

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Cross reference— Franchises, see §§ 114.001 et seq.

The City of Santa Fe Springs pursuant to applicable federal and state law, is authorized to grant one or more non-exclusive franchises to construct, operate, maintain and reconstruct cable systems within the city limits.

(Ord. 912, passed 6-8-00)

The City Council finds that the development of cable systems has the potential of having great benefit and impact upon the residents of the city. Because of the complex and rapidly changing technology associated with cable systems, the City Council further finds that the public convenience, safety and general welfare can best be served by establishing regulatory powers which should be vested in the city or such persons as the city may designate. It is the intent of this chapter and subsequent amendments to provide for and specify the means to attain the best possible cable service to the public and any franchises issued pursuant to this chapter shall be deemed to include this as an integral finding thereof. It is the further intent of this chapter to establish regulatory provisions that permit the city to regulate cable system franchises to the extent permitted by federal and state law, including but not limited to the Federal Cable Communications Policy Act of 1984, the Federal Cable Television Consumer Protection and Competition Act of 1992 and the Federal Telecommunications Act of 1996, applicable Federal Communications Commission regulations and applicable California law.

(Ord. 912, passed 6-8-00)

This chapter shall constitute the "Cable System Regulatory Ordinance" of the City of Santa Fe Springs and may be referred to as such.

(Ord. 912, passed 6-8-00)

For the purposes of this chapter, the following terms, phrases, words and their derivations shall have the meaning given herein. Words used in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. Words not defined shall be given their common and ordinary meaning.

Basic Cable Service. Any service tier which includes the retransmission of local television broadcast signals.

Cable Service. Means the following:

(1) The one-way transmission to subscribers of video programming or other programming service; and

(2) Subscriber interaction, if any, which is required for the selection or use of such video programming or other programming service.

Cable System or System. A facility consisting of a set of closed transmission paths and associated signal generation, reception, and control equipment, that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term does not include:

(1) A facility that serves to transmit television signals of one or more television broadcast stations;

(2) A facility that serves only subscribers without using any public rights-of-way;

(3) A facility of a common carrier which is subject in whole or in part to the provisions of Title II of the Federal Telecommunications Act of 1996, except that such facility shall be considered a cable system to the extent such facility is used in the transmission of video programming directly to subscribers unless the extent of such use is solely to provide interactive on-demand services; or

(4) An open video system that complies with Section 653 of the Federal Telecommunications Act of 1996; or

(5) Any facilities of any electric utility used solely for operating its electric utility system.

Channel or Cable Channel. A portion of the electromagnetic frequency spectrum which is used in a cable system which is capable of delivering a television channel as defined by the Federal Communications Commission.

Council. The City Council of the City of Santa Fe Springs.

Franchise. An initial authorization, or renewal thereof, issued by the City Council, whether such authorization is designated as a franchise, permit, license, resolution, contract, certificate, agreement, or otherwise, which authorizes the construction and operation of a cable system. Any such authorization, in whatever form granted, shall not supersede the requirement to obtain any other generally required license or permit required for the privilege of transacting business within the city as required by the other ordinances and laws of the city.

Franchise Agreement. A franchise grant ordinance or a contractual agreement, containing the specific provisions of the franchise granted, including references, specifications, requirements and other related matters.

Franchise Fee. Any fee or assessment of any kind imposed by the city on a grantee as compensation for the grantee's use of the public rights-of-way. The term Franchise Fee does not include:

(1) Any tax, fee or assessment of general applicability (including any such tax, fee, or assessment imposed on both utilities and cable operators or their services, but not including a tax, fee or assessment which is unduly discriminatory against cable operators or cable subscribers);

(2) Capital costs which are required by the franchise to be incurred by grantee for public, educational, or governmental access facilities;

(3) Requirements or charges incidental to the awarding or enforcing of the franchise, including payments for bonds, security funds, letters of credit, insurance, indemnification, penalties, or liquidated damages; or

(4) Any fee imposed under USC Title 17.

Grantee. Any person receiving a franchise pursuant to this chapter and under the granting franchise ordinance or agreement, and its lawful successor, transferee or assignee.

Grantor or City. The City of Santa Fe Springs as represented by the Council or any delegate, acting within the scope of its jurisdiction.

Gross Annual Cable Service Revenues. The annual gross revenues received by a grantee derived from the operation of the cable system to provide cable service within the city. Ancillary revenues from the provision of cable service, including, but not necessarily limited to, local advertising, home shopping channel commissions and leased access revenues shall be included in gross annual cable service revenues, but refundable deposits, uncollected bad debt, rebates or credits, and any sales, excise or other taxes or charges collected for direct pass-through to local, state or federal government shall not be included. For the purposes of this chapter, revenues from Internet access services shall be included in gross annual cable service revenues, unless and until prohibited by applicable law. Revenues collected as franchise fees from subscribers shall be included in gross annual cable service revenues.

Gross Annual Telecommunications Service Revenues. The annual revenues received by a grantee from the operation of the cable system to provide telecommunications services, as defined in the Telecommunications Act of 1996 and which does not include cable service.

Installation. The connection of the system to subscribers' terminals, and the provision of service.

Person. An individual, partnership, association, joint stock company, trust, corporation or governmental entity.

Public, Educational or Governmental Access Facilities or Peg Access Facilities. The total of the following:

(1) Channel capacity designated for noncommercial public, educational, or governmental use; and

(2) Facilities and equipment for the use of such channel capacity.

Section. Any section, subsection or provision of this chapter.

Service Area or Franchise Area. The entire geographic area within the city as it is now constituted or may in the future be constituted, unless otherwise specified in the franchise granting ordinance or agreement.

Service Tier. A category of cable service or other services provided by a grantee and for which a separate rate is charged by the grantee.

State. The State of California.

Street or Public Rights-of-Way or Public Way. The surface, air space above the surface, and the area below any public street, road, highway, freeway, lane, path, public way, alley, court, sidewalk, boulevard, parkway, drive, bridge, tunnel, park, parkway, waterway, easement or right-of-way now or hereafter held by the city, or dedicated for use by the city, use by the general public, or use compatible with cable system operations.

Subscriber or Customer or Consumer. Any person who or which elects to subscribe to, for any purpose, a cable service provided by the grantee by means of or in connection with the cable system, and who pays the charges therefor.

Telecommunications Service. Any service defined as telecommunications service in the Federal Telecommunications Act of 1996, other than cable service, delivered over the facilities of the cable system.

Video Programming. Programming generally considered comparable to programming provided by a television broadcast station.

(Ord. 912, passed 6-8-00)

A franchise granted by the city under the provisions of this chapter shall encompass the following purposes:

(A) To engage in the business of providing cable service, and such other services as may be permitted by law, which grantee chooses to provide to subscribers within the designated service area.

(B) To erect, install, construct, repair, rebuild, reconstruct, replace, maintain, and retain, cable lines, related electronic equipment, supporting structures, appurtenances, and other property in connection with the operation of the cable system in, on, over, under, upon, along and across streets or other public places within the designated service area.

(C) To maintain and operate said franchise properties for the origination, reception, transmission, amplification, distribution and delivery of cable services, and such other services as may be permitted by law.

(D) To set forth the obligations of a grantee under the franchise.

(Ord. 912, passed 6-8-00)

It shall be unlawful for any person to construct, install or operate a cable system in the city within any public street without a properly granted franchise awarded pursuant to the provisions of this chapter.

(Ord. 912, passed 6-8-00)

Cross reference— Penalty, see § 10.97

(A) A franchise granted hereunder shall be for a term established in the franchise agreement, commencing on the grantor's adoption of an ordinance or resolution authorizing the franchise.

(B) A franchise granted hereunder may be renewed upon application by the grantee pursuant to the provisions of applicable state and federal law and of this chapter.

(Ord. 912, passed 6-8-00)

Any franchise shall be valid within all the territorial limits of the city, and within any area added to the city during the term of the franchise, unless otherwise specified in the franchise granting ordinance or agreement.

(Ord. 912, passed 6-8-00)

This chapter shall be construed in a manner consistent with all applicable federal and state laws, and shall apply to all franchises granted or renewed after the effective date of this chapter to the extent permitted by applicable law.

(Ord. 912, passed 6-8-00)

(A) Grantee shall not sell, transfer, lease, assign, sublet or dispose of, in whole or in part, either by forced or involuntary sale, or by ordinary sale, contract, consolidation or otherwise, the franchise or any of the rights or privileges therein granted, without the prior consent of the Council and then only upon such terms and conditions as may be reasonably prescribed by the Council, which consent shall not be unreasonably denied or delayed. Any attempt to sell, transfer, lease, assign or otherwise dispose of the franchise without the consent of the Council shall be a material violation of this chapter and the franchise agreement. The granting of a security interest in any grantee assets, or any mortgage or other hypothecation, shall not be considered a transfer for the purposes of this section.

(B) The requirements of division (A) shall apply to any change in control of grantee. The word "control" as used herein is not limited to major stockholders or partnership interests, but includes actual working control in whatever manner exercised. In the event that grantee is a corporation, there shall be a rebuttable presumption of a change in control where ownership or control of more than 25 percent of the voting stock of grantee is acquired by a person or group of persons acting in concert, none of whom own or control the voting stock of the grantee as of the effective date of the franchise, singularly or collectively.

(C) Transfer of the franchise from one wholly-owned subsidiary to another wholly-owned subsidiary shall not require prior consent of the grantor.

(D) Grantee shall notify grantor in writing of any foreclosure or any other judicial sale of all or a substantial part of the franchise property of the grantee or upon the termination of any lease or interest covering all or a substantial part of said franchise property. Such notification shall be considered by grantor as notice that a change in control of ownership of the franchise has taken place and the provisions under this section governing the consent of grantor to such change in control of ownership shall apply.

(E) For the purpose of determining whether it shall consent to such change, transfer, or acquisition of control, grantor may inquire into the qualifications of the prospective transferee or controlling party, and grantee shall assist grantor in such inquiry. In seeking grantor's consent to any change of ownership or control, grantee shall have the responsibility of insuring that the grantee and/or the proposed transferee complete an application in accordance with Federal Communications Commission Form 394 or equivalent. An application shall be submitted to grantor not less than 120 days prior to the proposed date of transfer. The transferee shall be required to establish that it possesses the qualifications and financial and technical capability to operate and maintain the system and comply with all franchise requirements for the remainder of the term of the franchise. If the legal, financial, and technical qualifications of the applicant are satisfactory, and if the transferor is then in full compliance with the provisions of the franchise, the grantor shall consent to the transfer of the franchise. The consent of the grantor to such transfer shall not be unreasonably denied or delayed.

(F) If any financial institution having a pledge of the grantee or its assets for the advancement of money for the construction and/or operation of the franchise shall take control of and operate the cable system, it shall notify the grantor. Further, said financial institution shall also submit a plan for such operation within 30 days of assuming such control that will insure 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 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.

(G) Upon transfer, grantee shall reimburse grantor for grantor's reasonable processing and review expenses in connection with the transfer of the franchise or of control of the franchise, including without limitation, costs of administrative review, financial, legal and technical evaluation of the proposed transferee, consultants (including technical and legal experts and all costs incurred by such experts), notice and publication costs and document preparation expenses. Any such reimbursement shall not be charged against any franchise fee due to grantor during the term of the franchise.

(Ord. 912, passed 6-8-00)

(A) Grantee shall design, construct and maintain the cable system to have the capability to pass every dwelling unit in the city, subject to any service area density and line extension requirements of the franchise agreement.

(B) After service has been established by activating trunk and/or distribution cables for any service area, grantee shall provide service to any requesting subscriber within that service area within 30 days from the date of request, provided that the grantee is able to secure all public rights-of-way necessary to extend service to such subscriber within such 30-day period on reasonable terms and conditions, and provided, further, that service to multiple dwelling units may be negotiated.

(Ord. 912, passed 6-8-00)

Any franchise granted shall be non-exclusive. The grantor specifically reserves the right to grant, at any time, such additional franchises for a cable system as it deems appropriate, subject to applicable state and federal law, provided that if the grantor grants an additional franchise on terms more favorable to the second grantee (whether by the grant of greater benefits or the imposition of lesser obligations), or if another party utilizing the public rights-of-way offers service competitive with grantee, then the initial grantee shall have the right to renegotiate its franchise to incorporate the more favorable terms and/or reduce its obligations to achieve competitively neutral and nondiscriminatory treatment.

(Ord. 912, passed 6-8-00)

(A) Grantor may grant any number of franchises subject to applicable state or federal law. Grantor may limit the number of franchises granted, based upon, but not necessarily limited to, the requirements of applicable law and specific local considerations, such as:

(1) The capacity of the public rights-of-way to accommodate multiple cables in addition to the cables, conduits and pipes of the utility systems, such as electrical power, telephone, gas and sewerage.

(2) The benefits that may accrue to cable subscribers as a result of cable system competition, such as lower rates and improved service.

(3) The disadvantages that may result from cable system competition, such as the requirement for multiple pedestals on residents' property, and the disruption arising from numerous excavations of the public rights-of-way.

(B) Developers of new residential housing with underground utilities shall provide conduit to accommodate cables for at least two cable systems and dedicate the use of such conduit to the city.

(C) Grantor may require that any new grantee be responsible for its own underground trenching and the costs associated therewith, if, in grantor's opinion, the public rights-of-way in any particular area cannot feasibly and reasonably accommodate additional cables.

(Ord. 912, passed 6-8-00)

In the case of new construction or property development where utilities are to be placed underground, the developer or property owner shall give a grantee reasonable notice of not less than 30 days prior to such construction or development, and of the particular date on which open trenching will be available for a grantee's installation of conduit, pedestals and/or vaults, and laterals to be provided at a grantee's expense. A grantee shall also provide specifications as needed for trenching. Cost of trenching and easements required to bring service to the development shall be borne by the developer or property owner.

(Ord. 912, passed 6-8-00)

Any person desiring an initial franchise for a cable system shall file an application with the city. A reasonable non-refundable application fee established by the city shall accompany the application to cover all costs associated with processing and reviewing the application, including without limitation costs of administrative review, financial, legal and technical evaluation of the applicant, consultants (including technical and legal experts and all costs incurred by such experts), notice and publication requirements with respect to the consideration of the application and document preparation expenses. In the event such costs exceed the application fee, the selected applicant(s) shall pay the difference to the city within 30 days following receipt of an itemized statement of such costs.

(Ord. 912, passed 6-8-00)

An application for an initial franchise for a cable system shall contain, where applicable:

(A) A resume of prior history of applicant, including the expertise of applicant in the cable system field;

(B) A list of the partners, general and limited, of the applicant, if a partnership, or the percentage of stock owned or controlled by each of the ten largest stockholders, if a corporation;

(C) A list of officers, directors and managing employees of applicant, together with a description of the background of each such person, and any other cable system ownership of such person;

(D) The names and addresses of any parent or subsidiary of applicant or any other business entity owning or controlling applicant in whole or in part, or owned or controlled in whole or in part by applicant;

(E) A current financial statement of applicant prepared by a Certified Public Accountant audit or otherwise prepared to be true, complete and correct to the reasonable satisfaction of the city and indicating the applicant's financial capability to construct and operate the proposed cable system;

(F) A proposed service area, and a construction and service schedule;

(G) Any reasonable additional information that the city deems applicable.

(Ord. 912, passed 6-8-00)

(A) Upon receipt of any application for an initial franchise, the City Manager or a delegate shall prepare a report and make recommendations respecting such application to the Council.

(B) A public hearing shall be set prior to any initial franchise grant, at a time and date approved by the Council. Within 30 days after the close of the hearing, the Council shall make a decision based upon the evidence received at the hearing as to whether or not the franchise(s) should be granted, and, if granted, subject to what conditions. The Council may grant one or more franchises, or may decline to grant any franchise.

(Ord. 912, passed 6-8-00)

Franchise renewals shall be in accordance with applicable law. Grantor and grantee, by mutual consent, may enter into renewal negotiations at any time during the term of the franchise.

(Ord. 912, passed 6-8-00)

(A) Except as otherwise provided in the franchise agreement, grantee shall maintain the necessary facilities, equipment and personnel to comply with the following consumer protection and service standards under normal conditions of operation:

(1) Sufficient toll-free telephone line capacity during normal business hours to assure that telephone calls shall be answered by a customer service representative or an automated response unit (ARU) before the fifth ring. If the call is answered by an ARU, the initial message provided by the ARU shall include an option to connect to a customer service representative rather than using the automated features of the system. Telephone answer time by a customer service representative, including wait time, shall not exceed 30 seconds from when the connection is made, or, if an ARU is utilized, 30 seconds from the selection of the option for connecting to a customer service representative. Callers needing to be transferred shall not be required to wait more than 30 seconds before being connected to the appropriate grantee customer service representative. Under normal operating conditions, a caller shall receive a busy signal less than three percent of the time.

(2) Emergency toll free telephone line capacity on a 24-hour basis, including weekends and holidays. After normal business hours, the telephone calls may be answered by a service or an automated response system, including an answering machine. Calls received after normal business hours must be responded to by a trained company representative on the next business day.

(3) A conveniently located local business and service and/or payment office open during normal business hours at least eight hours daily, and at least four hours weekly on evenings or weekends, and adequately staffed to accept subscriber payments and respond to service requests and complaints.

(4) An emergency system maintenance and repair staff, capable of responding to and repairing major system malfunction on a 24-hour per day basis.

(5) An installation staff, capable of installing service to any subscriber requiring a standard installation within seven days after receipt of a request, in all areas where trunk and feeder cable have been activated. "Standard installations" shall be those that are located up to 125 feet from the existing distribution system, unless otherwise defined in any franchise agreement.

(6) Grantee shall schedule, within a specified four hour time period during normal business hours, all appointments with subscribers for installation of service, service calls and other activities at the subscriber location, unless a subscriber desires a larger appointment time frame. Grantee may schedule installation and service calls outside of normal business hours for the express convenience of the customer. Grantee shall not cancel an appointment with a customer after the close of business on the business day prior to the scheduled appointment. If a grantee representative is running late for an appointment with a customer and will not be able to keep the appointment as scheduled, the customer shall be contacted and the appointment rescheduled, as necessary, at a time which is convenient for the customer.

(B) The standards of divisions (A)(1) and (A)(2) above shall be met not less than 90 percent of the time measured on a quarterly basis. The standards of divisions (A)(4)-(A)(6) above shall be met not less than 95 percent of the time as measured on a quarterly basis.

(C) Grantee shall not be required to acquire equipment or perform surveys to measure compliance with the telephone answering standards above unless a historical record of complaints indicates a clear failure to comply.

(Ord. 912, passed 6-8-00)

(A) Grantee shall render efficient service, make repairs promptly, and interrupt service only for good cause and for the shortest time possible. Scheduled interruptions, insofar as possible, shall be preceded by notice and shall occur during a period of minimum use of the cable system, preferably between midnight and 6:00 a.m.

(B) The grantee shall maintain a repair force of technicians normally capable of responding to subscriber requests for service within the following time frames:

(1) For a system outage: within two hours, including weekends, of receiving subscriber calls or requests for service which by number identify a system outage of sound or picture of one or more channels, affecting at least ten percent of the subscribers of the system.

(2) For an isolated outage: within 24 hours, including weekends, of receiving requests for service identifying an isolated outage of sound or picture for one or more channels that affects three or more subscribers. On weekends, an outage affecting fewer than three subscribers shall result in a service call no later than the following Monday morning.

(3) For inferior signal quality: within 48 hours, excluding Sundays and holidays, of receiving a request for service identifying a problem concerning picture or sound quality.

(C) Grantee shall be deemed to have responded to a request for service under the provisions of this section when a technician begins work on the problem, and continues work until the problem is resolved satisfactorily.

(D) Grantee shall not charge for the repair or replacement of defective or malfunctioning equipment provided by grantee to subscribers, unless the defect was caused by the subscriber.

(E) Unless excused, grantee shall determine the nature of the problem within 48 hours of beginning work and resolve all cable system related problems within five business days unless technically infeasible.

(Ord. 912, passed 6-8-00)

(A) Subscriber bills shall be clear, concise and understandable. Bills shall be fully itemized, with itemizations including, but not limited to, basic and premium service charges and equipment charges. Bills shall also clearly delineate all activity during the billing period, including optional charges, rebates and credits.

(B) In case of a billing dispute, the grantee shall respond to a written complaint from a subscriber within 30 days.

(C) Upon request by a subscriber, grantee shall provide credits or refunds to any subscriber whose service has been interrupted for four or more hours. All credits for service shall be issued no later than the customer's next billing cycle following the determination that a credit is warranted. For subscribers terminating service, refunds shall be issued promptly, but no later than 30 days after the return of any grantee-supplied equipment.

(D) Grantee shall provide written information on each of the following areas at the time of the installation of service, at least annually to all subscribers, and at any time upon request:

(1) Products and services offered; and

(2) Prices and options for programming services and conditions of subscription to programming and other services; and

(3) Installation and service maintenance policies; and

(4) Instructions on how to use the cable service; and

(5) Channel positions of programming carried on the system; and

(6) Billing and complaint procedures, including the address and telephone number of the grantor office designated for dealing with cable-related issues.

(E) Subscribers shall be notified of any changes in rates, programming services or channel positions as soon as possible using reasonable written means. Notice must be given to subscribers a minimum of 30 days in advance of such changes if the change is within the control of the grantee. In addition, grantee shall notify subscribers 30 days in advance of any significant changes in the information required in division (D) above.

(Ord. 912, passed 6-8-00)

(A) Upon 30 days' notice, grantee shall establish its compliance with any or all of the standards required above. Grantee shall provide sufficient documentation to permit grantor to verify the compliance.

(B) A substantial, repeated and verifiable pattern of non-compliance with the consumer protection standards of §§ 112.050 through 112.052 above, after grantee's receipt of due notice and an opportunity to cure, may be deemed a material breach of the franchise agreement.

(Ord. 912, passed 6-8-00)

(A) Grantee shall establish written procedures for receiving, acting upon and resolving subscriber complaints without intervention by the grantor. The written procedures shall prescribe the manner in which a subscriber may submit a complaint either orally or in writing specifying the subscriber's grounds for dissatisfaction. Grantee shall file a copy of these procedures with grantor. Said procedures shall include a requirement that grantee respond to any written complaint from a subscriber within 30 days of receipt.

(B) Grantor shall have the right to review grantee's response to subscriber complaints in order to determine grantee's compliance with the Franchise fequirements, subject to the subscriber's right to privacy.

(C) It shall be the right of all subscribers to continue receiving service insofar as their financial and other obligations to the grantee are honored. In the event that the grantee elects to rebuild, modify, or sell the system, or the grantor gives notice of intent to terminate or not to renew the franchise, the grantee shall act so as to ensure that all subscribers receive service so long as the franchise remains in force.

(D) In the event of a change of control of grantee, or in the event a new operator acquires the system, the original grantee shall cooperate with the grantor, new grantee or operator in maintaining continuity of service to all subscribers. During such period, grantee shall be entitled to the revenues for any period during which it operates the system.

(Ord. 912, passed 6-8-00)

(A) In the event grantee fails to operate the system for seven consecutive days without prior approval or subsequent excuse of the grantor, the grantor may, at its sole option, operate the system or designate an operator until such time as grantee restores service under conditions acceptable to the grantor or a permanent operator is selected. If the grantor should fulfill this obligation for the grantee, then during such period as the grantor fulfills such obligation, the grantor shall be entitled to collect all revenues from the system, and the grantee shall indemnify the grantor against any damages grantor may suffer as a result of such failure.

(B) All officers, agents or employees of grantee or its contractors or subcontractors who, in the normal course of work come into contact with members of the public or who require entry onto subscribers' premises shall carry a photo-identification card. Grantee shall account for all identification cards at all times. Every service vehicle of the grantee or its major subcontractors shall be clearly identified as working for grantee.

(C) Additional service standards and standards governing consumer protection and response by grantee to subscriber complaints not otherwise provided for in this chapter may be established in the franchise agreement or by separate ordinance, and grantee shall comply with such standards in the operations of the cable system.

(Ord. 912, passed 6-8-00)

(A) Following the issuance and acceptance of the franchise, the grantee shall pay to the grantor a franchise fee in the amount and at the times set forth in the franchise agreement. If the grantor has the authority to require compensation from the grantee for the use of the rights-of-way to provide telecommunications service, the grantee shall pay an in-lieu-of-franchise-fee payment as determined by grantor in accordance with by applicable law.

(B) The grantor, on an annual basis, shall be furnished a statement within 60 days of the close of the calendar year, either audited and certified by an independent Certified Public Accountant or certified by an officer of the grantee, reflecting the total amounts of gross receipts and all payments, deductions and computations for the period covered by the payment. Upon 30 days' prior written notice, grantor shall have the right to conduct an independent audit of grantee's records to determine whether grantee has paid the franchise fee required.

If such audit indicates a franchise fee underpayment of two percent or more, the grantee shall assume all reasonable costs of such audit. No audit shall be conducted for any period prior to the date at which the applicable statute of limitations comes into effect.

(C) Except as otherwise provided by law, 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 or an in-lieu fee under this chapter or for the performance of any other obligation of the grantee.

(D) In the event that any franchise and/or in-lieu fee payment or recomputed amount is not made on or before the dates specified in the franchise agreement, grantee shall pay as additional compensation:

(1) An interest charge, computed from such due date, at an annual rate equal to the prime lending rate of any national bank selected by grantor, plus one percent during the period for which payment was due provided, that the grantor has notified the grantee that grantee's payment is untimely, within 30 days of the applicable due date; and

(2) If, after notification is provided in accordance with subdivision (1) above, the payment is late by 45 days or more, 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.

(E) Franchise fee payments shall be made in accordance with the schedule indicated in the franchise agreement.

(Ord. 912, passed 6-8-00)

(A) Grantor may require grantee to provide a security fund, in an amount and form established in the franchise agreement. The amount of the security fund shall be established based on the extent of the grantee's obligations under the terms of the franchise.

(B) The security fund shall be available to grantor to satisfy all claims, liens and/or taxes due grantor from grantee which arise by reason of construction, operation, or maintenance of the system, and to satisfy any actual or liquidated damages arising out of a franchise breach, subject to the procedures and amounts designated in the franchise agreement.

(C) If the security fund is drawn upon by grantor in accordance with the procedures established in this chapter and the franchise agreement, grantee shall cause the security fund to be replenished to the original amount no later than 30 days after each withdrawal by grantor. Failure to replenish the security fund as required under this section shall be deemed a material breach of the franchise.

(D) Grantee shall retain all rights to litigate any of the actions taken by grantor in drawing upon the security fund.

(Ord. 912, passed 6-8-00)