(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.