Chapter 13.01 — PUBLIC FRANCHISES

Sections:

• 13.01.010 Purpose and intent.
• 13.01.020 Definitions.
• 13.01.030 Authority; application.
• 13.01.040 Applicable laws.
• 13.01.050 Franchisee-initiated franchise; general procedure.
• 13.01.060 City-initiated franchise; general procedure.
• 13.01.070 Resolution of intention to grant franchise; notice and public hearing.
• 13.01.080 Findings for exclusivity.
• 13.01.090 Franchise conditions, restrictions and regulations; non-discrimination.
• 13.01.100 Waiver of procedures by city council.
• 13.01.110 Transferability.
• 13.01.120 Insurance and indemnification.
• 13.01.130 Term.
• 13.01.140 Eminent domain; valuation of franchise in the event of acquisition by the city.
• 13.01.150 Posting of security.
• 13.01.160 Acceptance.
• 13.01.170 Removal and abandonment of franchises in public rights-of-way.
• 13.01.180 Changes required by public improvements.
• 13.01.190 Revocation.

It is the purpose and intent of the city council in enacting this chapter to protect the public's welfare in the city's capacity as caretaker of the public rights-of-way and/or provider of public utility services. This chapter is further intended to establish nondiscriminatory procedures for the granting of franchises to use and occupy the public rights-of-way and/or provide public utilities and services. The requirement for franchise agreements shall enhance the safety and ongoing maintenance of the city's rights-of-way and the quality of public services while ensuring a uniform procedure that provides equal treatment for members of the public. The city has the authority to manage public property through its police power and other statutory and constitutional powers granted to municipalities. The authority and procedures contained herein are intended to preserve the city's responsibility to control and protect the public from unsatisfactory public service providers and to maintain the city's ability to demand a fair rate of compensation in exchange for the grant of franchise rights and use of public rights-of-way, while establishing procedures to treat franchise applicants fairly in the interest of due process. (Ord. 2009-08-1401 § 1(part), 2009)

The following terms used in this chapter, unless the context clearly indicates otherwise, shall have the respective meanings set forth in this section. A. "City manager" shall mean the city's city manager or his or her designee. B. "Commercial" means a non-public, for profit, entity or use. C. "Exclusive franchise" means a franchise for a term of years which grants privileges available to one and only one franchisee within the city's boundaries to provide services as described in a franchise agreement for the duration of the

franchise. D. "Franchise" means and includes any authorization granted hereunder in terms of franchise, privilege, or otherwise to furnish the city or its inhabitants with transportation, communication, terminal facilities, water, light, heat, electricity, gas, power, oil pipelines, refuse services, refrigeration, storage or any other public utility or service, or using the public streets, ways, alleys and rights-of-ways, or for the operation of plants, works or equipment for the furnishing thereof, or traversing any portion of the city for the transmitting or conveying of any such services elsewhere. Any such authorization shall not mean or include any license or permit required for the privilege of transacting and carrying on a business within the city generally as required by other ordinances and laws of this city. E. "Franchise agreement" means an agreement entered into by the city at its option with the franchisee which sets forth the terms and conditions of the grant of franchise. F. "Franchisee" means the person, firm, or corporation granted a franchise by the city council under this chapter, and the lawful successor, transferee, or assignee of such entity. G. "Nonexclusive franchise" means a franchise which grants privileges available to multiple simultaneous franchisees within the city's boundaries to provide the services described in the franchise agreement. H. "Right-of-way" means any public highway, public street, public way, or public place in the city, either owned by the city or dedicated to the public for public purposes. (Ord. 2009-08-1401 § 1(part), 2009)

A. The city council pursuant to its charter, Sections 916 through 919, adopted by the voters in November 2000 (the "charter"), shall have the authority, without obligation, in conjunction with any applicable State or Federal law provisions, to grant a franchise, whether exclusive or nonexclusive, to a third-party service provider (whether currently operating under an existing franchise or not) for furnishing of the city or its inhabitants with transportation, communication, terminal facilities, water, light, heat, electricity, gas, power, oil pipelines, refuse services, refrigeration, storage or any other public utility or service, or using the public streets, ways, alleys and rights-of-ways, or for the operation of plants, works or equipment for the furnishing thereof, or traversing any portion of the city for the transmitting or conveying of any such services elsewhere. Any such grant of franchise shall be effective as approved by the city council and subject to the terms and conditions of the charter, this chapter and any franchise agreement executed between the city and the franchisee. Further, the city shall have the authority to require reasonable compensation as determined by the city council in the form of a franchise fee for the privilege granted by any franchise in accordance with this chapter. B. The grant of a franchise shall, where appropriate, concomitantly act as a grant of license or easement to the franchisee in, on, over and across public rights-of-way to the extent such access is necessary and integral to the services or utilities to be provided by franchisee pursuant to its franchise agreement. C. This chapter shall not apply to temporary or long-term encroachments which are governed under the provisions of Title 12 of this Municipal Code. D. This chapter shall not apply to cable television providers (which are governed by Chapter 13.12 of this Municipal Code) or telephone companies. E. No franchise requirement of the city shall apply to the city, nor any subdivision, department or division thereof. F. That the city has imposed sufficient mechanisms in the franchise agreement to recover all costs in connection with the administration of the agreement and has imposed sufficient fees to recover for the benefit of the community a reasonable charge for the benefit received by the franchise for the use of the rights granted thereunder. (Ord. 2009-08-1401 § 1(part), 2009)

A franchisee shall be subject to all provisions of the franchise agreement and all applicable municipal, State, and Federal laws and regulations as well as the regulations of any other public agency having jurisdiction over territory located within the city. In the event of any conflict between municipal regulations and state and federal laws, then state and federal law shall prevail, unless such matters are a local affair and governed by the charter. The grant of a franchise shall not relieve the franchisee of any obligation under this code to obtain any building or construction permits, right-of-way permits, public works permits, excavation permits, use permits, or any other specific authorization that may be required for the proposed project. Unless the franchise agreement adopted by the city council provides otherwise, a franchise does not grant a right to construct or install physical improvements at specified locations, until such time as said locations shall be determined and approved pursuant to applicable planning or engineering processes and permits. (Ord. 2009-08-1401 § 1(part), 2009)

A franchise, whether exclusive or nonexclusive, shall be considered and granted according to the following general

procedures: A. An applicant seeking a grant of franchise, or a transfer of a franchise (if such transfer is permitted under the terms of the applicable franchise agreement) may submit a proposal seeking such grant of franchise by submitting the following to the city:

1. A written "request and application for franchise" to the city manager in a form prescribed by the city manager; and
2. A proposal identifying: a. The requested use of the public right-of-way or the proposed public services or utilities to be provided; b. Any proposed physical improvements associated with the proposed franchise, if any; c. The scope of proposed operations or services and whether the franchise requested is exclusive or nonexclusive; d. The amount and method of compensation in the form of franchise fees proposed to be paid to the city; and e. The initial term of the proposed franchise and any renewal, if applicable; and
3. All applicable application processing fees required by ordinance or resolution of the city council; and
4. Any other information required by the city manager. B. The city manager shall, in his sole and absolute discretion, reject any applications for a franchise where the proposed franchise is unlawful, infeasible or otherwise contrary to the city's best interests and the public health, safety or welfare of city citizens. If the city manager determines that a proposed franchise arrangement is lawful, feasible and in furtherance of the city's interests and the public health, safety, and welfare, the city manager may, subject to any required approvals by the city council, commence negotiations in the interest of the city for a draft franchise agreement between the applicant and the city. (Ord. 2009-08-1401 § 1(part), 2009)

The city may initiate the process of granting a franchise for a specified public service or public utility by: A. Issuing a notice inviting bids and proceeding with a request for proposal ("RFP") process to award the franchise to the lowest responsible proposer pursuant to Chapter 3.20 of this Municipal Code; B. Issuing a notice inviting qualified entities to submit qualifications ("RFQ") and permitting evaluation of qualifications and developing competing proposals by qualified entities and awarding to the best qualified; or C. If the public service or public utility is already being provided by an existing franchisee, the city manager may, subject to any required approvals by the city council, initiate negotiations with such existing franchisee for its continued provision of said public services or utilities if the existing franchisee's services have historically been performed in a lawful, professional and workmanlike manner to the full satisfaction of the city. (Ord. 2009-08-1401 § 1(part), 2009)

A. Before granting any franchise, the city council shall pass a resolution declaring its intention to grant the franchise, stating the name of the proposed franchisee, the character of the franchise and the terms and conditions upon which it is proposed to be granted. Such resolution shall fix and set forth the day, hour and place when and where any persons having any interest therein or any objection to the granting thereof may appear before the city council and be heard thereon. The city council shall direct the city clerk to publish said resolution at least once, within fifteen days of the passage thereof, in a newspaper of general circulation in the city. Said notice shall be published at least ten days prior to the date of hearing for the grant of franchise and approval of the franchise agreement. B. At the time set for the hearing for the grant of franchise, the city council shall proceed to hear and pass upon all protests and its decision thereon shall be final and conclusive. Thereafter, the city council may, by ordinance, grant the franchise on the terms and conditions specified in the resolution of intention to grant the same and/or the terms of the franchise agreement (subject to the right of referendum of the people) or it may deny the same. If the city council determines that changes should be made in the terms and conditions upon which the franchise is proposed to be granted, it may order further negotiations between the city and franchisee and an amended franchise agreement shall be subject to a new resolution of intention and like proceedings thereon. C. No resolution granting a franchise for any purpose shall be passed by the city council on the day of its introduction, nor within five days thereafter, nor at any time other than a regular or adjourned regular meeting. (Ord. 2009-08-1401 § 1(part), 2009)

The city may grant exclusive franchises, unless prohibited by State or Federal Law, after public hearing pursuant to Section 13.01.070 where on a four/fifths vote of the city council, the council finds good cause therefore based on the following findings: A. That the qualifications, experience and financial standing of the franchisee make franchisee uniquely qualified to provide the franchised services; B. That the city has engaged in a reasonable process to determine franchisee's qualification and the qualifications of other potential franchisees. C. That the nature of the franchised services, of the needed investment and the requirements of the franchise agreement are such that the community will best be served by a single franchisee rather than by providing competitive services. D. That the franchise agreement with the conditions required in Section 13.01.090 will fully protect the interests of the public. E. That there are adequate provisions in the franchise agreement to permit updating the agreement during the whole term of the agreement for changes in service needs, changes in law, advances in technology, changes in the market place, and other factors. (Ord. 2009-08-1401 § 1(part), 2009)

A. Franchisee shall be subject to all other conditions, restrictions, and specifications outlined in the franchise agreement negotiated between city and franchisee as adopted and approved by resolution of the city council. B. The franchise agreement shall contain conditions related to the lawful performance of the service; protecting the health and safety of the public; assuming compliance with environmental laws; preventing conflict with other users; providing for insurance, security and indemnification of the city, compliance with Proposition 218 with regards to fees, taxes and assessments; providing for city review of transfers; review, inspection and monitoring of performance and providing rights of enforcement including administrative procedures and fines where appropriate and as otherwise provided herein. C. Further, city reserves the power to adopt and enforce additional requirements and regulations as are necessary and convenient in the exercise of its jurisdiction under this chapter and may determine any question of fact which may arise during the existence of any franchise granted hereunder. D. Franchisee shall be required to perform all business and activities undertaken pursuant to a franchise agreement in a manner that does not discriminate, harass, or allow harassment on the basis of race, color, creed, religion, sex, marital status, national origin, ancestry, age, physical disability (including HIV and AIDS), mental disability, medical condition (including pregnancy and cancer), family care leave, age, gender identification, political affiliation or sexual orientation, and franchisee will comply with all laws, rules and regulations relating thereto. (Ord. 2009-08-1401 § 1(part), 2009)

The city council may waive any procedural requirement imposed under this chapter when the city council determines that it is impossible, impractical or not feasible to comply with the procedural requirements and the public health, safety or welfare would be jeopardized by requiring full compliance. (Ord. 2009-08-1401 § 1(part), 2009)

A franchisee shall not assign or otherwise transfer a franchise granted by the city council pursuant to this chapter without the express prior written consent of the city council. The determination shall include a review of whether the proposed transferee has the financial ability, technical expertise and experience to carry out the obligations of the franchisee. The review for approval shall also include a determination that the franchisee is not in breach of the franchise agreement. (Ord. 2009-08-1401 § 1(part), 2009)

Franchisee shall agree to indemnify, defend and hold harmless the city pursuant to a specific indemnity provision in its franchise agreement, and shall provide appropriate insurance, from a responsible institution, as required by the city's risk manager, and subject to periodic updating to stay current with the market conditions. (Ord. 2009-08-1401 § 1(part), 2009)

Every franchise shall state the term for which it is granted, which shall not exceed fifteen years, unless otherwise required by State or Federal law. Franchises can be granted for longer periods if the city council makes specific findings in the ordinance or resolution granting the franchise that the longer term is needed to amortize the franchisee's investment or for other reason which promotes the public health, safety or welfare. (Ord. 2009-08-1401 § 1(part), 2009)

No grant of franchise grant shall in any way, or to any extent, impair or affect the right of the city to acquire the property of the franchisee either by purchase or through the exercise of the right of eminent domain. In the event the city should acquire the physical assets of a system or property held pursuant to a franchise or any portion thereof through voluntary acquisition or through the use of its power of eminent domain, the city shall pay for the fair market value of the facilities and property acquired, and the franchise agreement shall be deemed automatically terminated, but the city shall not pay any additional amount for the value of the franchise itself. (Ord. 2009-08-1401 § 1(part), 2009)

In granting any franchise, the city council shall determine the amount of financial security, if any, which shall be posted to secure franchisee's obligations under the franchise. The financial security shall be such amount as will cover the cost of franchisee fulfilling its obligations hereunder, and may be utilized if franchisee fails to perform as required hereunder or fails to reimburse the city in the event city has to remedy any breaches by franchisee. The security may be a bond, letter of credit, cash deposit, deed of trust or other form approved by the city attorney. The security shall be drawn on a responsible institution and, if drawn upon, shall be promptly replenished in an amount to be determined by the city manager. (Ord. 2009-08-1401 § 1(part), 2009)

Unless otherwise provided in the franchise agreement, after the granting of the franchise by the city council, the franchisee shall have sixty days to file all certificates of insurance, post all bonds, comply with all other conditions set by the city council and file franchisee's certificate of acceptance. The execution of the certificate of acceptance and filing of the same with the city clerk shall be franchisee's acknowledgment that all conditions of the franchise are acceptable and shall constitute a waiver of all claims by franchisee, and thereafter franchisee shall be estopped from challenging such approval or the terms thereof. In the event franchisee fails to timely file such acceptance, the franchise and the city council's approval thereof shall be null and void. (Ord. 2009-08-1401 § 1(part), 2009)

A. Unless otherwise provided in the franchise agreement, if the use of a franchise relating to the occupation of a public right-of-way is discontinued for any reason for a period of twelve consecutive months, or in the event such franchise has been installed into the public right-of-way without complying with the requirements of the franchise agreement or this chapter, or the franchise has been terminated, canceled or has expired, the franchisee shall within thirty days upon being given written notice from the city's public works director, provide a removal plan to the public works director describing the method and procedure to cause the removal from the public right-of-way all such property and equipment of such franchise unless the public works director gives written permission allowing in-place abandonment of equipment and facilities. Within thirty days of the removal plan approval, franchisee shall commence removal in accordance with the plan. B. In lieu of abandonment in place, the franchisee may pay a fee for the maintenance of inactive facilities. In such case franchisee remains liable for proper maintenance of the facilities in accordance with the franchise agreement. Inactive facility fees may be kept by the city in a fund to be utilized to assist franchisees in removing facilities in the future as a part of the public or private public right of way improvement projects. C. After removal of any equipment or facilities from the public right-of-way, the franchisee shall promptly restore the right- of-way to a condition satisfactory to the city's public works director. D. Failure of the franchisee to submit a removal plan, as provided in division A. of this Section 13.01.170 within thirty days, or failure to complete removal in accordance with such plan, shall result in the city making a determination as to whether to cause the removal or leave the property or equipment abandoned in-place. Any removal or legal costs or fees incurred by city pursuant to this Section shall be repaid by franchisee. E. The removal or abandonment of any property or equipment shall not release the franchisee from any warranty and indemnity provisions in the franchise or the franchise agreement, including but not limited to any hazardous waste indemnity, which shall survive the termination of the franchise agreement unless otherwise provided therein.

(Ord. 2009-08-1401 § 1(part), 2009)

The franchisee shall from time to time protect, support, dislocate, temporarily or permanently, as may be required, remove or relocate, without expense to the city or any other governmental entity, any facilities or utilities installed, used, and maintained under the franchise in a public right-of-way, if and when made necessary by any lawful change of grade, alignment, or width of any public street including the construction of any subway or viaduct, by the city or any other governmental entity or made necessary by any other public improvement or alteration in, under, on, upon or about the public right-of-way, whether such public improvement or alteration is at the instance of the city or another governmental or propriety function, or made necessary by traffic conditions, public safety, street vacation or any other public project or purpose of the city or any other governmental entity. (Ord. 2009-08-1401 § 1(part), 2009)

Except as otherwise provided in a franchise agreement, the city council reserves the right to revoke any franchise granted pursuant to this chapter, and all rights and privileges pertaining thereto, in the event that the franchisee violates any material provision of the franchise agreement, this chapter, or any other material provision of this code or other law subject to enforcement by the city. Upon suspicion of such a violation, the city manager shall provide written notice to the franchisee with a time for curing the violation. Failure to cure within the specified time shall result in a hearing before the city manager. If the city manager believes a violation is occurring and not cured in a timely fashion, he may schedule a hearing before the city council to consider revocation of the franchise and notify franchisee thereof by certified and regular first class mail at least thirty days prior to said hearing. Franchisee may present evidence rebutting the violation or evidence showing an effort to correct the violation and mitigate its effects. Following the hearing, the city council may revoke the franchise, continue the franchise, or continue the franchise subject to additional conditions, at its discretion. The right to revoke any franchise granted pursuant to this chapter is in addition to, and not in lieu of, any other remedies available to the city. (Ord. 2009-08-1401 § 1(part), 2009)