The term of a franchise shall be not more than fifteen (15)
years from the date the franchise is accepted by the grantee by written
agreement with the city or from the expiration of a grantee’s
previously existing franchise, whichever is later, unless terminated
earlier in accordance with this article.
(2005 Code, sec. 13.5.19)
The council shall not hold any meeting involving the renewal,
revocation or termination of a grantee’s franchise unless the
city has:
(1) Advised
the grantee in writing of such meeting, at least sixty (60) days prior
to such meeting (unless otherwise mutually agreed to by the city and
grantee as to its time, place and purpose); and
(2) Caused
notice of such meeting to be provided in accordance with law.
(2005 Code, sec. 13.5.20)
(a) The
council shall have the authority to order a public hearing on the
provision of additional channel capacity by a grantee or on the inclusion
in a grantee’s cable system of “state of the art”
technology or upgraded facilities. Notice of such hearing shall be
provided to the grantee and the public not later than thirty (30)
days prior to such hearing.
(b) If, after such hearing, the council determines: (1) that there exists a reasonable need and demand for additional channel capacity and/or “state of the art” technology or upgraded facilities; and (2) that provision has been made or will be made for adequate rates which will not preclude a grantee from achieving a positive net present value on its investment in the city over the term of the franchise and will allow a grantee a fair rate of return on its total investment (including the investment required to provide the additional channels and/or the “state of the art” technology or upgraded facilities); and (3) that the additional channel capacity and/or “state of the art” technology or upgraded facilities will not result in economic waste for the grantee, the council may order the grantee to provide a specified number of additional channels and/or specified “state of the art” technology or upgraded facilities. In considering the economic feasibility of required cable system improvements, the city shall consider whether to extend the term of the franchise to permit the recovery of the cost of the improvements as set forth in (2) above. Any proposed extension of franchise shall be treated procedurally in accordance with the procedure for franchise renewal, as set forth in section
4.07.074.
(c) For
the purpose of measuring the level of the grantee’s system in
terms of “state of the art” technology and/or facilities
as contemplated by this section, system performance at a level equal
to that of the system (one or more) providing cable services in the
City of Arlington shall be deemed satisfactory performance hereunder.
(2005 Code, sec. 13.5.21)
A franchise may be renewed by the city upon application of a
grantee pursuant to the procedure established in this section and
in accordance with then-applicable law.
(1) During
the six-month period which begins with the thirty-sixth month before
franchise expiration, the city may on its own initiative, and shall
at the request of a grantee, commence proceedings which afford the
public appropriate notice and participation for the purpose of:
(A) Identifying the future cable-related community needs and interests;
(B) Reviewing the performance of the grantee under the franchise during
the then-current franchise term; and
(C) Hearing any interested persons during said meeting and determining
whether or not the grantee did reasonably comply with the terms and
conditions imposed by this article and the franchise.
(2)
(A) Upon completion of a proceeding under subsection (1) of this section,
the grantee seeking renewal of a franchise may, on its own initiative
or at the request of the city, submit a proposal for renewal.
(B) Any such proposal shall contain such material as the city may require,
including proposals for an upgrade of the cable system.
(C) The city may establish a date by which such proposal shall be submitted.
(3)
(A) Upon submittal by the grantee of a proposal to the city for the renewal
of a franchise, the city shall provide public notice of such proposal
and, during the 4-month period which begins on the completion of any
proceedings under subsection (1) of this section, renew the franchise,
or issue a preliminary assessment that the franchise should not be
renewed. If the city determines that the grantee has been in reasonable
compliance with the terms and conditions imposed by this article and
the franchise, the council may renew the grantee’s franchise
for a period not to exceed fifteen (15) years, under such terms and
conditions as may be mutually agreed upon [in] a new franchise agreement,
consistent with the terms of this article. The city shall have the
right to recoup from the grantee those direct expenses above normal
administration costs incurred pursuant to renewal of the franchise.
(B) If the city issues a preliminary assessment that the franchise should
not be renewed, then, at the request of the grantee or on its own
initiative, the city shall commence an administrative proceeding,
after providing public notice of such proceeding in accordance with
subsection (3)(C) of this section, to consider whether:
(i) The grantee has substantially complied with the material terms of
the existing franchise and with applicable law;
(ii)
The quality of the grantee’s cable service, including
signal quality, response to consumer complaints, and billing practices,
but without regard to the mix or quality or level of cable services
or other services provided over the cable system, has been reasonable
in light of community needs;
(iii)
The grantee has the financial, legal, and technical ability
to provide the cable services, facilities and equipment as set forth
in the grantee’s proposal; and
(iv)
The grantee’s proposal is reasonable to meet the future
cable-related community needs and interests, taking into account the
cost of meeting such needs and interests.
(C) In any proceeding under subsection (3)(B) of this section, the grantee
shall be afforded notice and the grantee and the city, or its designee,
shall be afforded fair opportunity for full participation, including
the right to introduce evidence, including evidence related to issues
raised in the proceeding under subsection (1) of this section, to
require the production of evidence, and to question witnesses. A transcript
shall be made of any such proceeding.
(D) At the completion of a proceeding under this subsection, the council
shall grant or deny the proposal for renewal based upon the information
presented during the proceeding, and transmit a copy of such enactment
to the grantee. Such enactment shall state the reasons for the decision.
(4) Any denial of a proposal for renewal shall be based on one or more adverse findings made with respect to the factors described in subsections (i) through (iv) of subsection
(3)(B), pursuant to the record of the proceeding under subsection
(3)(B) of this section. The city may not base a denial of renewal on a failure to substantially comply with the material terms of the franchise under subsection
(3)(B)(i) or on events considered under subsection
(3)(B)(ii) unless the city has provided the grantee with notice and the opportunity to cure, or in any case in which it is documented that the city has waived its right to object, or has effectively acquiesced.
(5) Notwithstanding the provisions of subsections
(1) through
(4) of this section, a grantee may submit a proposal for the renewal of a franchise pursuant to this subsection at any time, and the city may, after affording the public adequate notice and opportunity for comment, grant or deny such proposal at any time (including after proceedings pursuant to this section have commenced). The provisions of subsections
(1) through
(4) of this section shall not apply to a decision to grant or deny a proposal under this subsection. The denial of a renewal pursuant to this subsection shall not affect action on a renewal proposal that is submitted in accordance with subsections
(1) through
(4) of this section.
(6) For
the purposes of this section, the term “franchise expiration”
means the date of the expiration of the term of a franchise as provided
under the franchise.
(7) Notwithstanding
the fact that the city may determine that the grantee has been in
reasonable compliance with the terms and conditions imposed by this
article and the franchise, it shall have the right, if provided by
the franchise, not to renew the franchise, in which event the city
shall, on the expiration date of the franchise, have the option to
either purchase the assets of the grantee’s system at its then
fair market value, or select a new grantee in the manner herein provided
and cause such new grantee to take the assets at fair market value.
(2005 Code, sec. 13.5.22)
(a) Whenever
a grantee shall willfully refuse, neglect, or fail to construct, operate
or maintain its cable system in accordance with the terms of this
article and its franchise, or to comply with the conditions of occupancy
of any public ways, or to make required extensions of service, or
willfully or knowingly to make false statements on or in connection
with its franchise application or proposal for renewal, or in any
other way substantially violate the material terms or the material
conditions of this article or its franchise, or becomes insolvent,
or unable or unwilling to pay its debts, or seeks or obtains relief
under the bankruptcy laws, then, as may otherwise be permitted by
law, the franchise may be revoked.
(b) In
addition to all other rights and powers retained by the city under
a franchise or otherwise, the city reserves the right to revoke and
terminate a franchise and all rights and privileges of the grantee
thereunder in the event of a substantial breach of its terms and conditions.
A substantial breach by a grantee shall include, but shall not be
limited to, the following:
(1) Violation of any material provision of a franchise or any material
rule, order, regulation or determination of the city made pursuant
to a franchise;
(2) Attempt to evade any material provision of a franchise or commit
or attempt to commit any fraud or deceit upon the city or the grantee’s
subscribers or customers;
(3) Failure to begin or complete system construction or system extension;
(4) Failure to provide the services promised in a franchise agreement;
(5) Failure to restore service after ninety-six (96) consecutive hours
of interrupted service, except when approval of such interruption
is obtained from the city; or
(6) Material misrepresentation of any fact in the application for or
negotiation of a franchise.
(c) The
foregoing shall not constitute a major breach if the violation occurs
but it is without fault of a grantee or occurs as a result of circumstances
beyond its control. A grantee shall not be excused by mere economic
hardship nor by misfeasance or malfeasance or omissions of its directors,
officers, or employees.
(d) Prior
to invoking revocation procedures, the city secretary shall make a
written demand that a grantee comply with any such provision, rule,
order, or determination under or pursuant to a franchise. If the violation
by a grantee continues for a period of thirty (30) days following
such written demand without written proof that corrective action has
been taken or is being actively and expeditiously pursued, the city
secretary may place the issue of termination of the franchise before
the city council. The city shall cause to be served on the grantee,
at least twenty (20) days prior to the date of such city council meeting,
a written notice of intent to request such termination and the time
and place of the meeting. Public notice shall be given of the meeting
and the issue which the city council is to consider.
(e) The
city council shall hear and consider the issue and shall hear any
person interested therein, and shall determine in its discretion whether
or not any violation by the grantee has occurred.
(f) If
the city council determines that a violation by a grantee was the
fault of the grantee and within its control, the city council may,
by resolution, declare the franchise of the grantee forfeited and
terminated, unless there is compliance within such period of not less
than sixty (60) days as the city council may fix; provided that no
opportunity for compliance need be granted upon a finding by the city
council of fraud or misrepresentation.
(g) The
issue of forfeiture and termination shall automatically be placed
upon the city council agenda at the expiration of the time set by
it for compliance. The city council then may terminate the franchise
forthwith upon finding that the grantee has failed to achieve compliance
or may further extend the period, in its discretion.
(2005 Code, sec. 13.5.23)
(a) Conditions of sale.
(1) If a renewal of a franchise held by a cable operator is denied and
the city acquires ownership of the cable system or effects a transfer
of ownership of the system to another person, any such acquisition
or transfer shall be:
(A) At fair market value, determined on the basis of the cable system
valued as a going concern but with no value allocated to the franchise
itself; or
(B) In the case of any franchise existing on the effective date of this
article, at a price determined in accordance with the franchise if
such franchise contains provisions applicable to such an acquisition
or transfer.
(2) If a franchise held by a cable operator is revoked for cause and
the city acquires ownership of the cable system or effects a transfer
of ownership of the system to another person, any such acquisition,
or transfer shall be:
(A) At an equitable price; or
(B) In the case of any franchise existing on the effective date of this
article, at a price determined in accordance with the franchise if
such franchise contains provisions applicable to such an acquisition
or transfer.
(b) Date of valuation.
The date of valuation shall be no
earlier than the day following the date of expiration or termination
and no later than the date the city makes a fair and reasonable offer
for the system or the date of transfer of ownership, whichever occurs
first.
(c) Transfer to city.
Upon exercise of the option of city
(and payment of the above sum) to purchase the CATV system and its
service of official notice of such action upon the grantee, the grantee
shall immediately transfer to the city possession and title to all
facilities and property, real and personal, of the CATV system, free
from any and all liens and encumbrances not agreed to be assumed by
the city in lieu of some portion of the purchase price set forth above;
and the grantee shall execute such warranty deeds or other instruments
of conveyance to the city as shall be necessary for this purpose.
(d) Arbitration of value and costs.
(1) In the event the city and the grantee cannot agree upon the value
of the CATV system, either may give notice of a demand to the other
for arbitration.
(2) Arbitration shall commence and proceed according to law except as
follows:
(A) The parties shall, within fifteen (15) days, each appoint one arbitrator
who is experienced and knowledgeable in the valuation of business
property customarily used in cable television operations. Arbitrators
shall each agree upon the selection of a third arbitrator, similarly
qualified, within fifteen (15) days.
(B) Within thirty (30) days after appointment of all arbitrators and
upon ten (10) days’ written notice to parties, the board of
arbitrators shall commence a hearing on the issue of valuation.
(C) The hearing shall be recorded and transcribed at the request of either
party. All hearing proceedings, debate and deliberations shall be
open to the public at such times and places as are contained in the
notice or as thereafter publicly stated in an order to adjourn, except
as otherwise authorized by the city attorney.
(D) At the close of the hearings and within thirty (30) days, the board
of arbitrators shall prepare findings and a decision agreed upon by
a majority of the board, which shall be filed with the city and served
by mail upon the grantee. Unless the parties extend by mutual agreement
the time which the board has to make a decision, the proceedings shall
become null and void and shall be started anew.
(E) The decision of the board shall be final and binding upon the parties.
(F) Either party may seek judicial relief in the following circumstances:
(i)
A party fails to select an arbitrator;
(ii)
The arbitrators fail to select a third arbitrator;
(iii)
One or more arbitrator(s) is unqualified;
(iv)
Designated time limits have been exceeded;
(v)
The board has not proceeded expeditiously; or
(vi)
Based upon the record, the board abused its discretion.
(G) In the event a court of competent jurisdiction determines the board
has abused its discretion, it may order the arbitration procedure
repeated and issue findings, orders and directions, with costs of
suit to be awarded to the prevailing party.
(H) Cost of arbitration shall be borne equally unless the board finds
the offer of the city or the demand of the grantee was unreasonable,
in which case cost may be apportioned so that less or none of the
costs may be borne by one party.
(2005 Code, sec. 13.5.24)
(a) Upon
payment of the purchase price, the grantee shall immediately transfer
to the city all contracts, leases, licenses, permits and any other
assignable rights necessary to maintain continuity of service to the
public and transfer possession and title to all facilities and property,
real and personal, related to its system free from any and all liens
and encumbrances not agreed to be assumed by the city in lieu of some
portion of the purchase price. The grantee shall make it a condition
of each contract entered into by it with reference to its operations
under this article and its franchise, that the contract shall be subject
to the exercise of its option by the city and that the city shall
have the right to succeed to all privileges and obligations thereof
upon the exercise of such option, if reasonably possible under current
business practices without affecting the price.
(b) Until
such time as the grantee transfers to the city or to a new grantee
possession and title to all assets, real and personal, related to
its system, the grantee shall, as trustee for its successor in interest,
continue to operate the system under the terms and conditions of this
article and the franchise and to provide the regular subscriber service
and any and all of the services that may be provided at that time.
During such interim period, the grantee shall not sell any of the
system assets nor shall the grantee make any physical, material, administrative
or operational change that would tend to degrade the quality of service
to the subscribers, decrease income, or materially increase expenses
without the express permission, in writing, of the city or its assignee.
The city shall be permitted to seek legal and equitable relief to
enforce the provisions of this section.
(c) For
its management services during this interim period, the grantee shall
be entitled to receive as compensation the net profit, as defined
herein, generated during the period between the date the grantee received
written notice from the city of its intent to purchase the grantee’s
system or the expiration date of the franchise, whichever is earlier,
and the date of payment of the purchase price. Such management services
shall not be continued without the grantee’s consent for more
than twelve (12) months. However, if the council determines that the
grantee is responsible for any delay in transfer of ownership and
control, the grantee shall continue to operate the system without
compensation for its services until the sales agreement is executed
and ownership and control passes to the city or its assignee. In addition,
the city shall have the right to (1) forthwith cancel the grantee’s
franchise and have the system removed or (2) purchase the assets of
the grantee’s system at its depreciated value.
(2005 Code, sec. 13.5.25)
If, as a result of a dispute between a grantee and the city
and prior to a settlement of that dispute as provided for herein,
the grantee arbitrarily or capriciously discontinues all regular cable
services to its subscribers, the grantee shall forfeit its right of
notice and a hearing as provided for herein, and the council shall
declare the grantee’s franchise immediately canceled and the
city shall forthwith seek appropriate judicial injunctive relief and
shall proceed to exercise its rights and powers as provided for herein.
(2005 Code, sec. 13.5.26)
(a) A
grantee shall pay monthly to the city’s director of finance,
in consideration of the granting of a franchise to use the public
ways for the operation of a cable system, three (3) percent of its
annual gross revenues (as herein defined) or such higher rate as allowed
by law for the period of its operation under the franchise. The three
(3) percent or higher payment will be calculated for each calendar
month (“calculation month”) and will be due and payable
on the last day of the month immediately after the calculation month.
Any payment not made by the last day of the month following the calculation
month will be late.
(b) A
grantee shall file with the city, within thirty (30) days after the
end of each of the grantee’s fiscal quarters, a financial statement
reporting gross revenues earned during the current fiscal quarter
and gross revenues earned for the fiscal year to date by the grantee.
The grantee shall also file with the city an annual financial statement.
With the annual statement the grantee shall submit a statement, certified
correct by the chief financial officer of the grantee, that each financial
statement filed pursuant to this section has been prepared in accordance
with generally accepted accounting practices; that the grantee’s
total gross revenues, as herein defined, were fairly stated; and that
the franchise fees were calculated in accordance with this article.
In the event that additional franchise fees are due to the city, the
grantee will submit a check for payment of these fees on or before
the date the audited financial statements are due to be submitted
to the city.
(c) The city shall have the right, consistent with the provisions of sections
4.07.122 and
4.07.123, to inspect a grantee’s books and records, and the right of audit and the recomputation of any amounts determined to be payable under this article; provided that such audit shall take place within thirty-six (36) months following the close of the grantee’s fiscal year for the year of audit. Any additional amount due the city as a result of the audit shall be paid within thirty (30) days following written notice to the grantee by the city, which notice shall include a copy of the audit report. The cost of such audit shall be borne by the grantee if it is determined that the grantee’s annual payment to the city for the preceding year is increased thereby by more than five (5) percent.
(d) In
the event that any franchise payment or computed amount is not made
on or before the applicable dates heretofore specified, interest shall
be charged from such due date at the annual rate of twelve (12) percent
or at the maximum rate allowed by law.
(e) In
the event the franchise is cancelled prior to its expiration date
and the city invokes its right to purchase a grantee’s cable
system, the grantee shall file with the city, within sixty (60) days
of the date that ownership and control passes to the city or its assignee,
an audited financial statement showing the gross revenues received
by the grantee since the end of the previous fiscal quarter. The grantee
shall pay the franchise fee due at the time such statement is filed.
(f) The
acceptance by the city of any payment shall not be construed as a
release or as an accord and satisfaction of any claim the city may
have for further or additional sums payable under this article.
(g) Nothing
contained in this article shall be construed to exempt the grantee
from any tax, business license tax, levy, or assessment which is now
or which may hereafter be authorized by law.
(h) The
city reserves the right to increase both the franchise fee rate and
the revenues on which such fee is based so as to increase the franchise
payments in the event that the current federal limitations as to the
franchise fee rate and the revenues on which such fee may be levied
are eliminated or changed as a result of superseding regulations,
laws or court action. Any change in franchise fee rate or the revenues
on which such fee is based shall be accomplished by amendment to this
article and to any other ordinance provision(s) granting a franchise
hereunder, provided that such amendments shall be preceded by a public
hearing affording due process.
(i) The
city reserves the right to require the grantee to collect any consumer
or other tax of general applicability or other fee of general applicability
that may be imposed on subscribers by the city.
(2005 Code, sec. 13.5.27)
(a) Liability for damages.
A grantee shall pay all damages
and penalties which the city may legally be required to pay as a result
of granting a franchise. All damages, penalties and expenses incurred
as a result of actions brought between the grantee and the city shall
be borne by the respective parties in ordinary course, unless otherwise
provided by court order or settlement between the parties.
(b) Payment of city’s expenses.
A grantee shall pay all expenses incurred by the city in defending itself with regard to all damages and penalties mentioned in subsection
(a) of this section, including attorney fees and all out-of-pocket expenses incurred.
(c) Insurance.
Upon the granting of a franchise and at all
times during the term of the franchise, including the time for removal
of facilities or management as a trustee as provided for herein, a
grantee shall obtain, maintain, pay all premiums for and file with
the city secretary written evidence of payment of premiums and executed
duplicate copies of the following insurance:
(1) Commercial general liability: $1,000,000.00 combined single limit
per occurrence for death, bodily injury, personal injury and property
damage. This policy shall have no coverages removed by exclusions.
Coverage shall also include explosion, collapse and underground hazards;
(2) Automobile liability: $500,000.00 combined single limit per accident
for bodily injury and property damage. Coverage should be provided
as a “Code 1,” any auto;
(3) Workers’ compensation and employer’s liability: Statutory
employer’s liability policy limits of $100,000.00 for each accident,
$500,000.00 policy limit - disease.
(d) Other insurance provisions.
(1) The city shall be named as an additional insured on the commercial
general liability and automobile liability insurance policies. These
insurance policies shall contain the appropriate additional insured
endorsement signed by a person authorized by that insurer to bind
coverage on its behalf.
(2) Each insurance policy shall be endorsed to state that coverage shall
not be suspended, voided, cancelled, or reduced in coverage or in
limits except after thirty (30) days’ prior written notice has
been provided to the city.
(3) Insurance is to be placed with insurers with a Best rating of no
less than A:VII or equivalent. The company must also be duly authorized
to transact business in the state.
(4) Workers’ compensation and employer’s liability coverage:
The insurer shall agree to waive all rights of subrogation against
the city, its officials, employees and volunteers for losses arising
from the activities under a franchise.
(5) Certificates of insurance and endorsements reflecting coverage shall
be forwarded to the city secretary at the city hall.
(e) Indemnification of city.
A grantee shall, at its sole
cost and expense, fully indemnify, defend and hold harmless the city,
its officers, boards, commissions and employees against any and all
claims, suits, actions, liability and judgments for damages (including
but not limited to expenses for reasonable legal fees and disbursements
and liabilities assumed by the city in connection therewith):
(1) To persons or property in any way arising out of or through the acts
or omissions of the grantee, its servants, agents or employees, or
to which a grantee’s negligence shall in any way contribute;
(2) Arising out of any claim for invasion of the right of privacy, for
defamation of any person, firm or corporation, or the violation or
infringement of any copyright, trademark, trade name, service mark
or patent, or of any other right of any person, firm or corporation
(excluding claims arising out of or relating to city programming);
and
(3) Arising out of the grantee’s failure to comply with the provisions
of any federal, state, or local statute, ordinance or regulation applicable
to the grantee in its business hereunder.
(f) Indemnification conditions.
The foregoing indemnity is conditioned upon the following: The city shall give a grantee prompt notice of the making of any claim or the commencement of any action, suit or other proceeding covered by the provisions of this section; the city shall cooperate in the defense or settlement of any action; the city shall take all reasonable action to reduce or mitigate damages; and the grantee shall have the right to settle. Nothing herein shall be deemed to prevent the city from cooperating with a grantee and participating in the defense of any litigation by its own counsel at its sole cost and expense. No recovery by the city of any sum by reason of the letter of credit required in section
4.07.081 hereof shall be any limitation upon the liability of the grantee to the city under the terms of this section, except that any sum so received by the city shall be deducted from any recovery which the city might have against a grantee under the terms of this section.
(g) Performance and payment bonds.
(1) Within thirty (30) days after the award or renewal of a franchise,
a grantee shall file with the city secretary performance and payment
bonds in favor of the city in an amount to be fixed in the franchise
agreement. The corporate surety on each bond will be authorized to
do business in Texas and acceptable to the city attorney. Bonds shall
be maintained throughout any construction and any reconstruction period
and until such time as determined by the city council.
(2) In the event a grantee fails to comply with any law, ordinance or regulation governing a franchise, or fails to perform in accordance with the grantee’s proposal, there shall be recoverable, jointly and severally, from the principal and surety of the bond, any damages or loss suffered by the city as a result, including the full amount of any compensation, indemnification, or cost of removal or abandonment of any property of a grantee, plus a reasonable allowance for attorney fees and costs, up to the full amount of the bond. This section shall be an additional remedy for any and all violations described in section
4.07.081 hereof pertaining to letters of credit.
(3) The city may, upon completion of construction or reconstruction of
the cable system as approved by the city council, waive or reduce
the requirement of a grantee to maintain bonds. However, the city
may require a performance and payment bond to be posted by a grantee
for any construction subsequent to the completion of the initial service
areas, in a reasonable amount and upon such terms as are determined
by the city council.
(4) The bond shall contain the following endorsement: “This bond
may not be cancelled by the surety nor the intention not to renew
be stated by the surety until thirty (30) days after receipt by the
City Attorney, by registered mail, of a written notice of such intent
to cancel or not to renew.”
(2005 Code, sec. 13.5.28)
(a) Within
thirty (30) days after the award or renewal of a franchise, a grantee
shall deposit with the city an irrevocable letter of credit in a form
satisfactory to the city and the city attorney. The amount of the
letter of credit shall be fixed in the franchise agreement. It shall
be issued by a federally insured commercial lending institution with
a credit rating of BAA or BBB+ or higher. The federally insured commercial
institution on which the letter of credit is to be drawn shall be
acceptable to the city. The letter of credit shall be used:
(1) To insure the grantee’s compliance with the terms and conditions
of this article and its franchise; and
(2) To insure the grantee’s payment of any liabilities arising
out of the construction, operation or maintenance of the cable system,
including the cost of removal or abandonment of any property of a
grantee.
(b) The
letter of credit shall contain the following endorsement: “At
least sixty (60) days’ prior written notice shall be given to
the city by the financial institution of any such intention to cancel,
replace, fail to renew, or materially alter this letter of credit.
Such notice shall be given by certified mail to the City Secretary.”
(c) The
letter of credit may be drawn upon by the city by presentation of
a draft at sight on the lending institution, accompanied by a written
certificate signed by the city secretary certifying that a grantee
has failed to comply with this article, its franchise or any other
order, permit or direction of the city relating to this article or
the franchise, stating the specific reasons therefor, and stating
the basis for the amount being drawn. Examples of a basis for drawing
upon the letter of credit include, but are not limited to, the failure
of a grantee to pay to the city:
(1) Any fees and/or taxes or other payment after ten (10) working days’
written notice of delinquency;
(2) Within ten (10) working days after written notice, any amounts due and owing to the city by reason of the indemnity provisions of section
4.07.080;
(3) Any liquidated damages due and owing to the city pursuant to section
4.07.082;
(4) Within ten (10) working days, any amounts due pursuant to section
4.07.074(3)(A).
(d) A
grantee shall agree in the franchise agreement to structure the letter
of credit so that, if the city draws upon the letter and reduces the
amount of available credit to a sum below seventy-five percent (75%)
of its original amount, the grantee shall, within five (5) calendar
days thereafter, replenish the letter of credit to not less than seventy-five
percent (75%) of its original amount and will be replenished to the
full original within sixty (60) days from the date the city draws
against the letter of credit.
(e) The
letter of credit shall become the property of the city in the event
that the franchise is cancelled by reason of default of the grantee.
The letter of credit shall be retained by the city and returned to
the grantee at the expiration of the franchise provided there is no
outstanding default, unpaid franchise fees, ad valorem taxes or debts
to the city on the part of the grantee or the grantee’s creditors.
(f) The
rights reserved to the city with respect to the letter of credit are
in addition to all other rights of the city, whether reserved by this
article or the franchise agreement or are otherwise authorized by
law. No action, proceeding or right with respect to the letter of
credit shall affect any other right the city has or may have.
(2005 Code, sec. 13.5.29)
(a) Notwithstanding any other remedy provided for in this article or the franchise, or otherwise available under law, the city shall have the power to recover monetary amounts from a grantee under certain conditions, such monetary amounts being in the nature of liquidated damages, provided the city first complies with the notice requirements of subsection
(c) herein.
(b) Franchise
agreements shall include provisions for liquidated damages to be paid
by a grantee, in amounts set forth in the franchise agreement, for
the following reasons:
(1) Failure to complete system construction or reconstruction, unless
the council specifically approves the delay by resolution.
(2) Failure to provide, upon written request, data, documents, reports,
or information.
(3) Failure to test, analyze and report on the performance of the cable system pursuant to section
4.07.155.
(4) Failure to provide in a continuing manner the types of services set
forth in the franchise agreement and required by this article unless
the council specifically approves, by resolution, a delay or change
or the grantee has obtained modification of its obligation.
(5) For any other action or non-action by a grantee, stated in the franchise
agreement.
(c) If the city secretary, following forty-five (45) days’ written notice to a grantee to cure any problem that might result in liquidated damages, concludes that a grantee is in fact liable for liquidated damages pursuant to this section, he shall issue to the grantee by registered or certified mail a notice of intention to assess liquidated damages. The notice of intention to assess shall set forth the basis of the assessment and shall inform the grantee that liquidated damages will be assessed from the date of the notice of intention to assess unless the assessment notice is appealed for hearing before the council and the council rules (i) that the violation has been corrected, or (ii) that an extension of time or other relief should be granted. A grantee desiring a hearing before the council shall send a written notice of appeal by registered or certified mail to the city secretary within ten (10) days of the date of the notice of intention to assess liquidated damages. The hearing on the grantee’s appeal shall be held within thirty (30) days of the date of the notice of intention to assess liquidated damages. After the hearing, if the council sustains in whole or in part the city secretary’s assessment of liquidated damages, the city may at any time thereafter draw upon the letter of credit required by section
4.07.081. Unless the council indicates to the contrary, the liquidated damages shall be assessed beginning on the date of the notice of intention to assess and continuing thereafter until such time as the violation ceases, as determined by the city secretary in his sole discretion.
(2005 Code, sec. 13.5.30)
(a) A
franchise granted under this article shall be a privilege to be held
in personal trust by the grantee. It shall not be assigned, transferred,
sold or disposed of, in whole or in part, by voluntary sale, merger,
consolidation or otherwise or by forced or involuntary sale, without
prior consent of the council expressed by ordinance, and then only
on such conditions as may therein be prescribed. The city is hereby
empowered to take legal or equitable action to set aside, annul, revoke
or cancel a franchise or the transfer of a franchise, if such transfer
is not made according to the procedures set forth in this article,
or is not in the best interest of the city or the public.
(b) Any
sale, transfer or assignment shall be made by a bill of sale or similar
document, an executed copy of which shall be filed in the office of
the city secretary within thirty (30) days after any such sale, transfer
or assignment. The council shall not withhold its consent unreasonably;
provided, however, that the proposed assignee agrees to comply with
all provisions of this article and the franchise and such additional
conditions as the council may prescribe, and that the assignee is
able to provide proof of financial responsibility, in the form of
an audited financial statement prepared by an independent certified
public accountant or a certified public accounting firm, for its most
recently completed fiscal year, legal qualifications and technical
capability satisfactory to the council.
(c) No
such consent shall be required for a transfer in trust, mortgage or
other instrument of hypothecation, in whole or in part, to secure
an indebtedness, except when such hypothecation shall exceed seventy-five
(75) percent of the fair market value (as defined herein) of the property
used by a grantee in the operation of its cable system. Prior consent
of the council, expressed by resolution, shall be required for such
transfer, and such consent shall not be withheld unreasonably.
(d) A
rebuttable presumption that a transfer of control has occurred shall
arise upon the acquisition or accumulation by any person or group
of persons of ten percent (10%) of the voting shares of a grantee
if such person or group of persons does not already own ten percent
(10%) of the voting shares of the grantee. Every change, transfer,
or acquisition of control of the grantee shall make the franchise
subject to cancellation unless and until the city shall have consented
thereto, which consent will not be unreasonably withheld.
(e) The
grantee shall promptly notify the city secretary of any actual or
proposed change in, or transfer of, or acquisition by any other party
of control of the grantee. Every change, transfer, or acquisition
of control of the grantee shall make the franchise subject to cancellation
unless and until the city council shall have consented thereto. For
the purpose of determining whether it shall consent to such change,
transfer, or acquisition of control, the city council may inquire
into the qualifications of the prospective controlling party, and
the grantee shall assist the city council in any such inquiry. If
the city council does not schedule a hearing on the matter within
sixty (60) days after notice of the change or proposed change and
the filing of a petition requesting its consent, it shall be deemed
to have consented. In the event that the city council adopts an ordinance
denying its consent and such change, transfer or acquisition of control
has been effected, the city council may cancel the franchise unless
control of the grantee is restored to its status prior to the change,
or to a status acceptable to the city council.
(f) The
consent of the council to any sale, transfer, lease, trust, mortgage
or other instrument of hypothecation shall not constitute a waiver
or release of any of the rights of the city under this article or
any franchise.
(g) In
the absence of extraordinary circumstances, the city will not approve
any transfer or assignment of a franchise prior to substantial completion
of construction or reconstruction of a franchised system.
(h) In
no event shall a transfer of ownership or control be approved without
the successor in interest becoming a signatory to a franchise agreement.
(i) Nothing
herein shall require approval for a grantee’s assigning the
franchise to or selling its stock to wholly owned subsidiaries or
to affiliates under the same ultimate control and ownership as existed
prior to the assignment.
(2005 Code, sec. 13.5.31)
Upon the foreclosure or other judicial sale of all or a substantial part of the system or upon the termination of any lease covering all or a substantial part of the system, a grantee shall notify the city of such fact, and such notification shall be treated as a notification that a change in control of a grantee has taken place, and the provisions of section
4.07.083 of this article, governing the consent of the city to such change in control of the grantee, shall apply.
(2005 Code, sec. 13.5.32)
The city shall have the right to cancel a franchise thirty (30)
days after the appointment of a receiver, or trustee, to take over
and conduct the business of the grantee, whether in receivership,
reorganization, bankruptcy, or other action or proceeding, unless
such receivership or trusteeship shall have been vacated prior to
the expiration of said thirty (30) days, or unless:
(1) Within
one hundred and twenty (120) days, or a mutually agreed date after
his election or appointment, such receiver or trustee shall have fully
complied with all the provisions of this article and remedied all
defaults thereunder; and
(2) Such
receiver or trustee, within said one hundred and twenty (120) days
or a mutually agreed date, shall have executed an agreement, consented
to by the council and duly approved by the court having jurisdiction
in the premises, whereby such receiver or trustee assumes and agrees
to be bound by each and every provision of this article and the franchise
granted to an original grantee.
(2005 Code, sec. 13.5.33)