(a) As compensation
for the benefits and privileges granted under this franchise and in
consideration of permission to use the City’s rights-of-way,
grantee shall pay as a franchise fee to the City, throughout the duration
of this franchise, an amount equal to two and one-half percent of
grantee’s annual gross revenues. Accrual of such franchise fee
shall commence as of the effective date of this franchise.
(b) The
City recognizes that, in the future, grantee may allocate revenue
between cable services (which are subject to the franchise fee) and
noncable services (which are not subject to the franchise fee but
may be subject to other fees and/or taxes), when these two types of
service are bundled together in a discounted package offered to subscribers.
Due to the ambiguities that currently exist both in the business and
regulatory environment on this issue, the City and the grantee hereby
reserve all rights, claims, defenses and remedies regarding the City’s
authority to impose and/or enforce requirements related to the revenue
allocation methodology to be used when cable services and noncable
services are offered to subscribers in a discounted package, for the
purpose of calculating franchise fee payments.
Further, in the event that the City believes that grantee has
unlawfully, unfairly, or in violation of this franchise allocated
revenue between cable services and noncable services for the purpose
of calculating franchise fee payments, the City and the grantee shall
meet upon advance notice from the City to discuss the allocation methodology.
If the City and the grantee cannot agree on the matter within a reasonable
period of time, the City and grantee shall submit the matter to a
mutually agreeable third party for mediation. The cost of the mediation
shall be shared equally between the City and the grantee. If the mediation
is unsuccessful or if the City and the grantee are unable to mutually
agree on a mediator, then either the City or the grantee can bring
the matter to a court of competent jurisdiction, or pursue any other
remedies available to them in this franchise or by law.
In accordance with the Cable Act, the 12-month period applicable
under the franchise for the computation of the franchise fee shall
be a calendar year. The franchise fee payment shall be payable quarterly.
Each payment shall be due and payable no later than 60 days after
the end of the preceding calendar quarter.
No acceptance of any payment shall be construed as an accord
by the City that the amount paid is, in fact, the correct amount,
nor shall any acceptance of payments be construed as a release of
any claim the City may have for further or additional sums payable
or for the performance of any other obligation of grantee.
Grantee shall, with each franchise fee payment, furnish to the
City a statement stating the total amount of gross revenues for the
year and all payments, deductions and computations for the period.
Such statement shall be signed by the general manager or a financial
officer or controller of grantee, stating that it accurately reflects
the gross revenues of the grantee prior to submission to the City.
Upon 30 days’ prior written notice, the City, including
the City’s Auditor or his/her authorized representative, shall
have the right, no more often than once annually, to conduct an independent
audit of grantee’s records reasonably related to the administration
or enforcement of this franchise, in accordance with GAAP. If the
audit shows that franchise fee payments have been underpaid by five
percent or more, grantee shall pay the total cost of the audit, such
cost not to exceed $2,000. The City’s right to audit and the
grantee’s obligation to retain records related to a franchise
fee audit shall expire three years after each franchise fee payment
has been made to the City.
In the event any payment due annually is not received within
60 days from the end of the calendar year, grantee shall pay interest
on the amount due (at the prime rate as listed in the Wall Street
Journal on the date the payment was due compounded annually), calculated
from the date the payment was originally due until the date the City
receives the payment.
If a net franchise fee underpayment is discovered as the result
of an audit, grantee shall pay interest at the rate of eight percent
per annum, compounded annually, calculated from the date each portion
of the underpayment was originally due until the date grantee remits
the underpayment to the City.
In the event the obligation of grantee to compensate the City
through franchise fee payments is lawfully suspended or eliminated,
in whole or part, then grantee shall pay to the City compensation
equivalent to the compensation paid to the City by other similarly
situated users of the City’s rights-of-way for grantee’s
use of the City’s rights-of-way; provided, that in no event
shall such payments exceed the equivalent of five percent of grantee’s
gross revenues (subject to the other provisions contained in this
franchise).
(a) Once
during each calendar year of the franchise term, the City Council,
upon giving 30 days’ notice to the grantee of its intention
so to do, may review and change by ordinance the franchise fee and
any other consideration that the City is entitled to receive pursuant
to this franchise agreement or applicable law (including PEG access
support); provided, however, the City Council may only change the
consideration and franchise fee to be received by the City under the
terms of this franchise agreement to the equivalent of the consideration
and franchise fee paid by grantee to any franchising authority or
local jurisdiction in which the grantee supplies cable services under
franchise; and provided, that the maximum franchise fee (excluding
other consideration such as PEG support) may not exceed that lawfully
allowed.
(b) The
grantee shall report to the City within 60 days of the execution of
a subsequent franchise or of any change of franchise in another municipality(ies)
under which a city receives greater consideration than is provided
herein from the grantee to the City hereunder. The grantee’s
report under this subsection shall include, at a minimum, the name
of the jurisdiction where the change occurred or the subsequent franchise
was granted, the nature of the change or of the provision in the subsequent
franchise, the effective date of the change or subsequent franchise,
and a copy of the relevant franchise agreement or other document containing
the change or provision.
(c) For
purposes of this Section 3.9, “consideration” means the
payments and/or financial support of any kind and equipment, technical
advice and assistance necessary or required for the access channel
and any other benefit (whether or not denominated as a franchise fee)
which is of similar significant financial benefit to a city or town
in which the grantee supplies cable services under franchise.
No term or condition in this franchise shall in any way modify
or affect grantee’s obligation to pay franchise fees. Although
the total sum of franchise fee payments and additional commitments
set forth elsewhere in this franchise may total more than five percent
of grantee’s gross revenues in any 12-month period, grantee
agrees that the additional commitments herein are not franchise fees
as defined under any federal law in effect, as of the effective date
of this franchise, nor are they to be offset or credited against any
franchise fee payments due to the City, nor do they represent an increase
in franchise fees to be passed through to subscribers pursuant to
any federal law.
Subject to applicable law, the franchise fees shall be in addition
to any and all taxes or other levies or assessments which are now
or hereafter required to be paid by businesses in general by any law
of the City, the State or the United States including, without limitation,
sales, use and other taxes, business license fees or other payments.
Payment of the franchise fees under this franchise shall not exempt
grantee from the payment of any other license fee, permit fee, tax
or charge on the business, occupation, property or income of grantee
that may be lawfully imposed by the City. Any other license fees,
taxes or charges shall be of general applicability in nature and shall
not be levied against grantee solely because of its status as a cable
operator, or against subscribers, solely because of their status as
such.
Grantee agrees to meet with a representative of the City upon
request to review grantee’s methodology of record-keeping, the
computing of franchise fee obligations and other procedures, the understanding
of which the City deems necessary for reviewing reports and records.
If this franchise terminates for any reason, the grantee shall
file with the City within 90 calendar days of the date of the termination,
a revenue statement in accordance with Section 3.4, showing the gross
revenues received by the grantee since the end of the previous fiscal
year. At the time grantee submits its revenue statement to the City,
grantee shall also submit a statement of the amounts owed and payment
therefor. Acceptance of payment by City shall not operate as a waiver
of any disputed amounts claimed owed.