Chapter 12.25
RIGHT-OF-WAY FRANCHISES
Sections:
12.25.030 Franchise agreement required.
12.25.040 Filing of applications.
12.25.050 Content of application.
12.25.060 Applicant representatives.
12.25.070 Consideration of applications.
12.25.080 Length of agreement.
12.25.100 Franchise agreement revocation.
12.25.120 Federal pre-emption.
12.25.010 Policy.
It is the policy of the city of Shoreline to require all entities installing or maintaining facilities in, on, above or below the public right-of-way to comply with an orderly process for obtaining a franchise agreement from the city. [Ord. 244 § 1, 2000; Ord. 83 § 1, 1996]
12.25.020 Definitions.
The following terms used in this chapter, unless otherwise indicated, shall be defined as follows:
A. “Activities” includes the installation or maintenance of any assets, structures, or facilities in the public right-of-way.
B. “Applicant” means the entity requesting the grant of a franchise agreement. The applicant shall identify itself as requested herein by providing the following information:
1. Identification of a natural person shall include:
a. Name;
b. Title, if appropriate;
c. Business address;
d. Phone number;
e. Fax number if available.
2. Identification of an entity that is not a natural person:
a. Official name (i.e., the name used to identify the entity in the records of the Washington Secretary of State, or under which the entity has been granted a federal tax identification number if it is not required to file with the Secretary of State);
b. Name and address of agent registered with the Secretary of State for the acceptance of legal service if applicable;
c. Washington State unified business identifier or, if that is not available, federal tax identification number.
C. “Demonstration” means the presentation of any of the following as evidence tending to support the satisfaction of the enumerated requirement:
1. Verifiable historical data;
2. Studies or reports based upon disclosed data sources;
3. Other forms of demonstrations specifically enumerated in this chapter.
D. “Facility” includes, but is not limited to, all structures, equipment, and assets for the operation of railroads and other routes for public conveyances, for poles, conduits, tunnels, towers and structures, pipes and wires and appurtenances thereof for transmission and distribution of electrical energy, signals and other methods of communication, for gas, steam and liquid fuels, for water, sewer and other private and publicly owned and operated systems for public service.
E. “Franchise” means a contractual agreement, under the authority of RCW 35A.47.040, between a utility and the city setting forth the terms and conditions under which the city grants the utility authority to install and maintain facilities in the public right-of-way.
F. “Grantee” means an applicant that has been granted a franchise agreement.
G. “Utility” means persons or private or municipal corporations owning or operating, or proposing to own or operate, facilities that comprise a system or systems for public service. [Ord. 244 § 1, 2000; Ord. 83 § 2, 1996]
12.25.030 Franchise agreement required.
It shall be unlawful to construct, install, maintain or operate any facility in, on, above or below the public right-of-way without a valid franchise agreement obtained pursuant to the provisions of this chapter and subsequent amendments. No one shall be permitted to perform activities in the public right-of-way without first obtaining a permit pursuant to the city of Shoreline Development Code. No one shall be granted a permit to perform any activities in, on, under, or above the public right-of-way without first obtaining and maintaining a valid franchise agreement. All permits to work in, on, under, or above the public right-of-way will be restricted to those practices specifically enumerated in the applicant’s franchise agreement except:
A. A permit to perform activities in the right-of-way other than the installation, construction or maintenance of facilities or to satisfy conditions of any land use approval related to private property adjacent to the right-of-way.
B. Entities without a valid city franchise may still be granted a right-of-way site permit pursuant to SMC Title 20. [Ord. 244 § 1, 2000; Ord. 83 § 3, 1996]
12.25.040 Filing of applications.
Applications for a franchise agreement will be considered pursuant to the procedures set forth in this chapter and amendments hereto. For good cause the city council may elect by resolution to waive any requirement set forth herein unless otherwise required by applicable law.
A. Applications shall be delivered to the city clerk, and shall be accompanied by a deposit of $5,000 or, if the application is in response to a request for proposals (RFP) issued by the city, such other amount as set forth in the RFP. The city will apply the proceeds of the deposit against the costs associated with the city’s evaluation of the pending application to the extent such is required by RCW 35.21.860. The applicant shall be liable to the city for all costs reasonably associated with the processing of its application. The city shall invoice the applicant for such costs at least on a quarterly basis. All invoiced costs must be paid in full prior to the effective date of any franchise agreement or other agreement entered into pursuant to this chapter. Nothing in this subsection will have the effect of limiting the applicant’s liability for application review costs to the amount of the deposit.
B. If required by RCW 35.21.860, the city shall prepare a statement of the amount of deposit funds applied to the costs of application review as of the date the franchise agreement is granted, or otherwise ruled on, by the Shoreline city council and refund any deposit amount in excess of costs as of that date within 60 days thereof. The refund shall be in the form of a check or other draft on city accounts and, unless otherwise requested in writing by the applicant, payable and mailed to the person or entity designated by the applicant. [Ord. 244 § 1, 2000; Ord. 83 § 4, 1996]
12.25.050 Content of application.
An application made pursuant to a RFP shall contain all the information required thereby. Where an application is not filed pursuant to an RFP, it shall contain, at a minimum, the following:
A. All applicants that are not fully owned by, or a division of, a governmental agency, whether municipal, state, or federal, shall provide the following:
1. Identification of the applicant and proposed system owner, and, if the applicant or proposed owner is not a natural person, a list of all partners or stockholders holding 10 percent or more ownership interest in a grantee and any parent corporation; provided, however, that when any parent corporation has in excess of 1,000 shareholders and its shares are publicly traded on a national stock exchange, then identification of the parent corporation and its relationship to the subsidiary, if any, shall be provided.
2. An affirmed statement of whether the applicant, or any person controlling the applicant, or any affiliate of said controlling person, including any officer of a corporation or major stockholder thereof, has voluntarily filed for relief under any provision of the bankruptcy laws of the United States (Title 11 of the United States Code), had an involuntary petition filed against it pursuant to the Bankruptcy Code, been subject of any state law insolvency proceeding such as a transfer for the benefit of creditors, had a franchise agreement revoked, or has been found guilty by any court or administrative agency in the United States of:
a. A violation of a security or antitrust law; or
b. A felony or any other crime involving moral turpitude.
If so, the application shall identify any such person and fully explain the circumstances.
3. A demonstration of the applicant’s financial ability to construct and operate the proposed system, including, at the city’s option:
a. For a sole proprietorship or partnership:
i. A detailed, complete, and audited financial statement of the applicant, duly certified as true and correct by an executive officer of the company, for the five fiscal years last preceding the date of the application hereunder (three years may be substituted if five years of data is not available); or
ii. A letter or other acceptable evidence in writing from a recognized lending institution or funding source, addressed to both the applicant and the city, setting forth the basis of a study performed by such lending institution or funding source, a statement of the criteria used to evaluate that basis, and a clear statement of its intent as a lending institution or funding source to provide whatever capital shall be required by the applicant to construct and operate the proposed system in the city; or
iii. A statement from an independent certified public accountant, certifying that the applicant has available sufficient free, net and uncommitted cash resources to construct and operate the proposed system in the city.
b. For a corporation publicly traded on a national stock exchange:
i. The most recent public annual report filed with the Securities and Exchange Commission; or
ii. For a wholly owned subsidiary, the most recent public annual report filed with the Securities and Exchange Commission of the parent corporation along with a statement of the parents responsibility for the obligations of the subsidiary.
c. For any applicant, demonstration of an ability to obtain a bond sufficient, as determined by the director, to ensure adequate performance under the terms of the franchise.
B. All applicants shall provide the following:
1. A description of the physical facility proposed, the area to be served, a description of the technical characteristics of the existing service facilities and a map in a digital format acceptable to the city of the proposed and existing service system and distribution scheme;
2. A description of how any construction will be implemented, identification of areas having above ground or below ground facilities and the proposed construction schedule;
3. A description of the proposed services to be provided over the system;
4. Information as necessary to demonstrate compliance with all relevant requirements contained in this chapter;
5. An affidavit of the applicant, or duly authorized person, certifying, in a form acceptable to the city, the truth and accuracy of the information contained in the application and acknowledging the enforceability of application commitments.
C. In the case of an application by an existing grantee for a renewed franchise agreement, a demonstration that said grantee has substantially complied with the material terms of the existing agreement and with applicable law.
D. Other information that the city, or its agents, may reasonably request of the applicant in a timely manner. [Ord. 244 § 1, 2000; Ord. 83 § 5, 1996]
12.25.060 Applicant representatives.
Any person or entity who submits an application under this chapter shall have a continuing obligation to notify the city, in writing, of the names, addresses and occupations of all persons who are authorized to represent or act on behalf of the applicant in those matters pertaining to the application. The requirement to make such disclosure shall continue until the city has approved or disapproved an applicant’s application or until an applicant withdraws its application. [Ord. 244 § 1, 2000; Ord. 83 § 6, 1996]
12.25.070 Consideration of applications.
A. The city will consider each application for a new or renewed franchise agreement where the application is found to be in substantial compliance with the requirements of this chapter and any applicable RFP. In evaluating an application, the city will consider, among other things: (1) the applicant’s past service record in the city and in other communities, (2) the nature of the proposed facilities and services, (3) the proposed area of service, (4) the proposed rates (if applicable), (5) and whether the proposal would serve the public needs and the overall interests of the city residents.
In addition, where the application is for a renewed franchise agreement, the city shall consider whether: (1) the applicant has substantially complied with the material terms of the existing franchise agreement and with applicable law, (2) the quality of the applicant’s service, response to consumer complaints, and billing practices, (3) the applicant has the financial, legal and technical ability to provide the services, facilities, and equipment as set forth in the application, and (4) the applicant’s proposal is reasonable to meet the future community needs and interests, taking into account the cost of meeting such needs and interests.
B. If the city determines that an applicant’s proposal, including the proposed service area, would serve the public interest, it may grant a franchise agreement to the applicant, subject to terms and conditions as agreed upon between the applicant and the city. No franchise agreement shall be deemed granted unless and until an agreement has been fully executed by all parties. The franchise agreement will constitute a contract, freely entered into, between the city and the grantee. Any such franchise agreement must be approved by ordinance of the city council in accordance with applicable law.
C. In the course of considering an application for a renewed franchise agreement, the city council shall adhere to all requirements of applicable state and federal law. Neither grantee nor the city shall be deemed to have waived any right it may have under federal or state law by participating in a proceeding pursuant to this subsection. [Ord. 244 § 1, 2000; Ord. 83 § 7, 1996]
12.25.080 Length of agreement.
The period of a franchise agreement shall be as specified in the specific agreement, but it shall not exceed 15 years. If a grantee seeks authority to operate in the city beyond the term of its franchise agreement, it shall file an application for a new agreement not earlier than 36 nor later than 30 months prior to the expiration of its term. [Ord. 244 § 1, 2000; Ord. 83 § 8, 1996]
12.25.090 Franchise fee.
A. All franchise agreements executed by the city shall include terms requiring a grantee to pay a fee in consideration of the privilege granted under a franchise agreement to use the public right-of-way and the privilege to construct and/or operate in the city. Said franchise fee shall provide the city with compensation equal to six percent of the gross revenues generated by the grantee within the city unless limited by state or federal law; provided, however, that this fee may be offset by any utility tax paid by grantee or in-kind facilities or services provided to the city. Any grantee that does not provide revenue-generating services within the city shall provide alternate compensation as set out in the franchise agreement.
B. In the event that any franchise payment is not received by the city on or before the applicable due date, interest shall be charged from such date at the statutory rate for judgments.
C. In the event a franchise is revoked or otherwise terminated prior to its expiration date, a grantee shall file with the city, within 90 days of the date of revocation or termination, a verified or, if available, an audited financial statement showing the gross revenues received by the grantee since the end of the previous year and shall make adjustments at that time for the franchise fees due up to the date of revocation or termination.
D. Nothing in this chapter shall limit the city’s authority to tax a grantee, or to collect any fee or charge permitted by law, and no immunity from any such obligations shall attach to a grantee by virtue of this chapter. [Ord. 244 § 1, 2000; Ord. 221 § 1, 1999; Ord. 83 § 9, 1996]
12.25.100 Franchise agreement revocation.
A. In addition to all other rights and powers retained by the city under this chapter and any franchise agreement issued pursuant thereto, the city council reserves the right to revoke and terminate a franchise agreement and all rights and privileges of a grantee in the event of a substantial violation or breach of its terms and conditions. A substantial violation or breach by a grantee shall include, but shall not be limited to, the following:
1. An uncured violation of any material provision of this chapter or an uncured breach of any material provision of a franchise agreement or other agreement issued thereunder, or any material rule, order or regulation of the city made pursuant to its power to protect the public health, safety and welfare;
2. An intentional evasion or knowing attempt to evade any material provision of a franchise agreement or practice of any fraud or deceit upon the system customers or upon the city;
3. Failure to begin or substantially complete any system construction or system extension as set forth in a franchise agreement;
4. Failure to provide the services promised in the application or specified in a franchise agreement, or a reasonable substitute therefor;
5. Failure to restore service after 10 consecutive days of interrupted service, except when approval of such interruption is obtained from the city;
6. Misrepresentation of material fact in the application for, or during negotiations relating to, a franchise agreement;
7. A continuous and willful pattern of grossly inadequate service and failure to respond to legitimate customer complaints;
8. An uncured failure to pay franchise agreement fees as required by the franchise agreement.
B. None of the foregoing shall constitute a substantial violation or breach if a violation or breach occurs which is without fault of a grantee or occurs as a result of circumstances beyond a grantee’s reasonable control. A grantee shall not be excused by economic hardship nor by nonfeasance or malfeasance of its directors, officers, agents or employees; provided, however, that damage to equipment causing service interruption shall be deemed to be the result of circumstances beyond a grantee’s control if it is caused by any negligent act or unintended omission of its employees (assuming proper training) or agents (assuming reasonable diligence in their selection), or sabotage or vandalism or malicious mischief by its employees or agents. A grantee shall bear the burden of proof in establishing the existence of such conditions.
C. Except in the case of termination pursuant to subsection (A)(5) of this section, prior to any termination or revocation, the city shall provide a grantee with detailed written notice of any substantial violation or material breach upon which it proposes to take action. A grantee shall have a period of 60 days following such written notice to cure the alleged violation or breach, demonstrate to the city’s satisfaction that a violation or breach does not exist, or submit a plan satisfactory to the city to correct the violation or breach. If at the end of said 60-day period the city reasonably believes that a substantial violation or material breach is continuing and a grantee is not taking satisfactory corrective action, the city may declare a grantee in default, which declaration must be in writing. Within 20 days after receipt of a written declaration of default from the city, a grantee may request, in writing, a hearing before a “hearing examiner” as described in Chapter 2.15 SMC. The hearing examiner shall conduct a full public proceeding in accordance with applicable procedures. The hearing examiner’s decision may be appealed to any court of competent jurisdiction.
The city may, in its discretion, provide an additional opportunity for a grantee to remedy any violation or breach and come into compliance with this chapter so as to avoid the termination or revocation. [Ord. 244 § 1, 2000; Ord. 83 § 11, 1996. Formerly 12.25.110]
12.25.110 Enforcement.
Any violation of any provision, or failure to comply with any of the requirements of this chapter, shall be a civil violation subjecting the offender to a civil penalty of up to $100.00 for each of the first five days that a violation exists and up to $500.00 for each subsequent day that a violation exists. Notice and order and hearing procedures, other than civil penalties, shall correspond to those established for the enforcement of Development Code violations under SMC Title 20. Payment of any such monetary penalty shall not relieve any person of the duty to correct the violation as set forth in the applicable notice and order. Any violation existing for a period greater than 30 days may be remedied by the city at the violator’s expense. [Ord. 244 § 1, 2000; Ord. 83 § 12, 1996. Formerly 12.25.120]
12.25.120 Federal pre-emption.
Nothing in this chapter shall authorize the city to impose burdens or apply standards on the applicant beyond those permitted by federal law. [Ord. 244 § 1, 2000; Ord. 83 § 14, 1996. Formerly 12.25.140]