Chapter 5.05 CABLE COMMUNICATIONS

C. Provide for the payment of fees and other valuable consideration to the city for the use of the public ways and for the privilege to construct and operate cable communications systems;

D. Provide for the development of cable communications as a means to improve communication between and among the members of the public and public institutions of the city; and to

E. Provide remedies and prescribe penalties for violation of this chapter and any franchise granted hereunder. (Ord. 2004-5 § 1, 2004).

5.05.030 Applicability.

This chapter is applicable to any application for a cable franchise filed on or after its effective date as provided in the ordinance codified in this chapter and to any such franchise granted thereafter. (Ord. 2004-5 § 1, 2004).

5.05.040 Definitions.

For the purposes of this chapter the following terms, phrases, words and their derivations shall have the meanings given herein. When not inconsistent with the context, words used in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. The word “shall” is mandatory and the word “may” is permissive. Words not defined shall be given their common and ordinary meanings.

“Access channel” means any channel set aside for public use, education use, or governmental use.

“Access user” means any person or entity entitled to make use of an access channel consistent with the intended purpose of the channel.

“Application” means a proposal seeking authority to construct and operate a cable television system within the city pursuant to this chapter. It shall include the initial proposal plus all related subsequent amendments and correspondence with the city.

“Basic service” means any service tier which includes the transmission of local television broadcast signals and access channels.

“Cable communications system” or “cable system” or “cable television system” means a facility consisting of a set of transmission paths and associated signal generation, reception, and control equipment that is designed to provide cable service which includes video programming and which is provided to multiple subscribers within a community, but such term shall not include (1) a facility or combination of facilities that serves only to retransmit the television signals of one or more television broadcast stations; (2) a facility or combination of facilities that serves only subscribers in one or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities use any public right-of-way; (3) a facility of a common carrier which is subject, in whole or in part, to the provisions of Title II of the Communications Act of 1934, as amended, except that such facility shall be considered a cable system to the extent such facility is used in the transmission of video programming directly to subscribers; or (4) any facilities of any electric utility used solely for operating its electric utility system.

“Cable service” means the one-way transmission to subscribers of video programming, or other programming services and subscriber interaction, if any, which is required for the selection of such video programming or other programming services.

“City” means the city of Toppenish, Washington.

“Connection” means the attachment of the drop to the radio or television set or other communications device of the subscriber.

“Converter” means an electronic tuning device which converts transmitted signals to a frequency which permits their reception on an ordinary television receiver.

“Council” or “city council” means the governing body of the city.

“Dedication” means those dedications and easements for public roadway and public utilities and other rights-of-way maintained for the benefit of the public and controlled by the city, and to the extent otherwise authorized by law easements which have been dedicated for compatible uses, the terms, conditions, or limitations of which are not inconsistent with the erection, construction, or maintenance of a cable television system, its structures, or equipment.

“Drop” means the cable that connects a subscriber’s premises to the nearest feeder line of the cable communications system.

“Easement” means a right to use all public rights-of-way, including public utility easements.

“FCC” means the Federal Communications Commission or any legally appointed or designated agent or successor.

“Feeder line” means the coaxial or fiber optic cable running from the trunk line to line-extenders and taps for the purpose of interconnection to individual subscribers.

“File” means the delivery, by mail or otherwise, to the appropriate office, officer or agent of the city of any document or other thing which this chapter or the franchise requires the franchisee to file with the city. The date of receipt by the city shall be considered the file date. Unless specified to the contrary, the filing shall be with the city clerk.

“Franchise” means the nonexclusive right and authority to construct, maintain, and operate a cable communications system through use of the public streets, dedications, public utility easements, other public rights-of-way, or public places in the city pursuant to a contractual agreement executed by the city and a franchisee.

“Franchisee” or “grantee” refers to an entity authorized to construct and/or operate a cable communications system within the city pursuant to this chapter, including any lawful successor, transferee or assignee of the original grantee.

“Gross revenues” means all operating revenue actually received by grantee from the cable television system derived directly or indirectly by a franchisee, its affiliates, subsidiaries, parent, or any person in which the franchisee has a financial interest in association with the provision of cable television services within the city, including, but not limited to, basic service monthly fees, premium service fees, institutional service fees, installation and reconnection fees, leased channel fees, converter rentals, studio rental, production equipment and personnel fees, advertising revenues, and copyright fees received where grantee is the copyright holder; provided, however, that this shall not include any taxes on services furnished by the franchisee payable to the state or any other governmental unit and collected by the franchisee on behalf of said government unit, or any revenues from the provision of cable television services outside the city, or any revenues from sale of capital assets or lease of property for purposes unrelated to cable television.

“Installation” means the connection of the system at the subscriber’s premises.

“Institutional services” means one- and two-way nonentertainment transmission services for businesses, public agencies and community institutions. Such services include, but are not limited to, video transmission and voice and data communications.

“Leased channel” or “leased access channel” means any channel, or part of a channel, available for commercial use on a fee basis by persons or entities other than a franchisee.

“Person” means an individual or legal entity, such as a corporation or partnership.

“Premium service” means pay television offered on a per channel or per program basis.

“Service tier” means a specific set of cable subscriber services which are made available as, and only as, a group for purchase by subscribers at separate rate for that group.

“Street” or “public way” means the surface of and the space above and below any public street, road, highway, path, sidewalk, alley, court, or easement now or hereafter held by the city for the purpose of public travel or public utilities and shall include public easements or rights-of-way.

“Subscriber” means a recipient of cable television service or other services provided over a cable television system.

“User” means a party utilizing a cable television system’s facilities for purposes of production or transmission of material or information to subscribers. (Ord. 2004-5 § 1, 2004).

Article II. Authority

5.05.100 Requirement of a franchise.

It is unlawful to construct, install, maintain or operate a cable communications system or part of a cable communications system within the city without a valid franchise obtained pursuant to the provisions of this chapter. (Ord. 2004-5 § 1, 2004).

5.05.110 General franchise characteristics.

Any franchise issued pursuant to the provisions of this chapter shall be deemed to:

A. Authorize use of the public ways for installing cables, wires, lines, and other facilities in order to operate a cable communications system, and to the extent otherwise authorized by law easements which have been dedicated for compatible uses, but shall neither expressly or impliedly be deemed to authorize the grantee to provide service to, or install cables, wires, lines, or any other equipment or facilities upon, private property without owner consent, or to utilize publicly or privately owned utility poles or conduits without a separate agreement with the owners therefor unless otherwise authorized by law;

B. Be nonexclusive, and shall neither expressly nor impliedly be deemed to preclude the issuance of subsequent franchises to operate one or more other cable communications systems within the city; and

C. Convey no property right to the franchisee or right to renewal. Renewals shall be considered in accordance with TMC 5.05.230. (Ord. 2004-5 § 1, 2004).

5.05.120 Franchise as a contract.

A franchise issued pursuant to the provisions of this chapter shall be deemed to constitute a contract between the franchisee and the city. The franchisee shall be deemed to have contractually committed itself to comply with the terms, conditions and provisions of the franchise documents, and with all lawful rules, orders, regulations, and determinations applicable to the franchise which are issued, promulgated or made pursuant to the provisions of this chapter. (Ord. 2004-5 § 1, 2004).

5.05.130 Conflicts.

A. All terms, conditions and provisions of this chapter and the application for a franchise shall be deemed to be embodied in a franchise, and conflicts in terms, conditions or provisions between these documents shall be resolved as follows:

1. The express terms of this chapter shall prevail over conflicting or inconsistent provisions of the franchise;

2. The express terms of the franchise shall prevail over conflicting or inconsistent provisions in the application, except the express terms of this chapter; and

3. The express terms of any request for proposals shall prevail over conflicting or inconsistent provisions in the application for the franchise.

B. The provisions of the franchise shall be liberally construed in order to effectuate its purpose and objectives consistent with this chapter and the public interest. In the event one or more material provisions of the franchise or this chapter are subsequently found to be unlawful, null and void or unenforceable, thus frustrating the purposes found in TMC 5.05.020, and a franchisee does not comply with such provision or provisions, the city and franchisee shall enter into negotiations to modify the franchise to permit insofar as practicable fulfillment of the purposes found in TMC 5.05.020. In the event the franchisee and the city cannot reach agreement on such modification within 45 days after such franchise provisions are found unlawful, null and void or unenforceable, the city or the franchisee shall have the right to petition the superior court of Yakima County to modify the franchise agreement. The court shall approve a single arbitrator deemed qualified by the court and such proceedings shall be pursuant to Chapter 7.04 RCW. Such modification by the court shall seek to fulfill the original intentions of the city and the franchisee with respect to the benefits conferred under the franchise by granting to the city additional benefits under the franchise in compensation for benefits found unlawful, null and void, or unenforceable so that the city retains in the aggregate the level of benefits originally conferred. The decision of the arbitrator shall be final and binding upon the city and the franchisee subject to procedures for reconsideration in Chapter 7.04 RCW. The city shall permit a franchisee a reasonable opportunity to seek or obtain the repeal, recision, reversal, amendment or other change in such law, decision, rule or regulation in order to eliminate the conflict with the franchise or this chapter; provided, however, that until the exhaustion of all appeals, franchisee shall not be relieved of any obligation under the franchise or this chapter. In the event the city, subsequent to the grant of the franchise, is granted the ability to undertake additional regulation of the franchisee, such additional regulation may be exercised by the city only after negotiations with the franchisee. In the event the franchisee and the city cannot reach agreement on such additional regulation within 45 days after the date on which the franchisee receives notification of such proposed regulation, the city or the franchisee shall have the right to petition the superior court of Yakima County to modify the franchise agreement. The court shall approve a single arbitrator deemed qualified by the court and such proceedings shall be pursuant to Chapter 7.04 RCW. Such modification by the court shall seek to fulfill the original intentions of the city and the franchisee with respect to benefits conferred under the franchise by ensuring that the imposition of additional regulation of the franchisee by the city does not increase the total obligation which the franchisee agreed to bear under the original franchise. The decision of the arbitrator shall be final and binding upon both the city and the franchisee subject to procedures for reconsideration in Chapter 7.04 RCW noted above. Franchisee’s right to negotiate with the city and petition the court under this section does not apply to regulatory activities reserved, but not exercised, by the city under this chapter.

C. A franchise will be construed under the laws of the state. (Ord. 2004-5 § 1, 2004).

5.05.140 Subject authority.

A franchisee shall, at all times during the life of a franchise, be subject to all lawful exercise of the police power by the city and to such lawful regulations as the city shall hereafter enact; provided, however, that such regulations by ordinance or otherwise shall be reasonable and not in conflict with any rights herein granted, nor in conflict with the applicable laws or regulations of the state or of the United States or their respective regulatory bodies having jurisdiction. The construction, operation and maintenance of the system shall also be in full compliance with all other applicable rules and regulations now in effect or hereafter adopted by the United States, the state of Washington, or any agency of the governments. (Ord. 2004-5 § 1, 2004).

5.05.150 Franchise validity.

A grantee shall agree, by the acceptance of a franchise, to accept the validity of the lawful terms and conditions of this chapter and the franchise in their entirety and that it will not, at any time, proceed against the city in any claim or proceeding challenging any term or provision of this chapter or the franchise as unreasonable or arbitrary or argue that the city did not have the authority to impose such lawful term or condition. (Ord. 2004-5 § 1, 2004).

Article III. Franchise Applications

5.05.200 Filing of applications.

Applications for a cable television franchise will be considered pursuant to the following procedures:

A. An application may be filed at any time or pursuant to a request for proposals (RFP) issued by the city;

B. The city may request additional information from an applicant for a franchise at any time. Such information shall be provided to the city expeditiously;

C. All applicants to be acceptable for filing must be accompanied by a filing fee of $5,000. The city shall apply all filing fees received against all costs associated with its evaluation of any pending application(s) pursuant to TMC 5.05.230. In the event that total costs are less than total filing fees, the city shall refund a portion of the filing fee on a pro rata basis to each applicant, except that where the application is for a renewed franchise and no other applicant is considered concurrently, the filing fee shall be refundable. (Ord. 2004-5 § 1, 2004).

5.05.210 Content of applications.

To be acceptable for filing, an application must conform to any applicable RFP and all the information specified therein. Where an application is not filed pursuant to an RFP, it shall contain, at minimum, the following information:

A. Identification of the ownership of the applicant, if not a natural person, including the names and addresses of all persons with one percent or more ownership interest and the ultimate controlling natural persons and identification of all officers and directors and other primary business affiliation of each;

B. An indication of whether the applicant, or an entity controlling the applicant, including any officer of a corporation or major stockholder thereof, has been adjudged bankrupt, has had a cable franchise revoked, or been found guilty by any court or administrative agency in the United States of: (1) a violation of a security or antitrust law; or (2) a felony or any other crime involving moral turpitude. Identify any such person or entity and fully explain the circumstances;

C. A demonstration of the applicant’s technical, legal and financial ability to construct and operate the proposed cable facility;

D. A description of the physical facility proposed, including channel capacity (one-way and two-way, if any), the area to be served, a summary of technical characteristics, and headend and access facilities;

E. A description of how any construction will be implemented, identification of areas having above-ground or below-ground cable facilities, the proposed construction schedule, and a description (where appropriate) of how service will be converted from any existing facility to a new facility;

F. A description of the services to be provided over the system, including identification of television signals (both broadcast and nonbroadcast) to be carried and all nontelevision services to be provided initially. Where service will be offered by tiers, identify the signals and/or services to be included on each tier;

G. The proposed rates to be charged, including rates for each service tier, as appropriate, and charges for installation, converters, and other services. The furnishing of this information shall not authorize the city to regulate such rates except to the extent otherwise authorized herein;

H. Information as reasonably necessary to demonstrate compliance with all relevant requirements contained in this chapter;

I. A demonstration of how the proposal is reasonable to meet the future cable-related community needs and interests. In particular, the application should describe how the proposal will satisfy the needs as analyzed in any recent community needs assessment commissioned by the city;

J. A demonstration that the proposal is designed to be consistent with all federal and state requirements;

K. In the event the city reasonably determines the demonstration made under subsection C of this section is not sufficient to evaluate adequately an applicant’s financial ability, pro forma financial projections for each year of the franchise term. The projections shall include a statement of income, balance sheet, statement of sources and uses of funds, and schedule of capital additions. All significant assumptions shall be explained in notes or supporting schedules that accompany the projections;

L. A complete list of all cable communications systems managed in whole or in part by the applicant, or a principal thereof;

M. An affidavit of the applicant or duly authorized officer thereof 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;

N. In the case of an application by an existing franchisee for a renewed franchise, a demonstration that said franchisee has substantially complied with the material terms of the existing franchise and with the applicable law;

O. Other relevant information that the city, or its agents, may reasonably request of the applicant. (Ord. 2004-5 § 1, 2004).

5.05.220 Applicant representatives.

Any person who files an application with the city for a cable television franchise shall forthwith, at all times, disclose to the city, in writing, 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 shall have rejected an applicant’s application or until an applicant withdraws its application. (Ord. 2004-5 § 1, 2004).

5.05.230 Consideration of applications.

A. The city will consider each application for a franchise where the application is found to be acceptable for filing and in substantial compliance with the requirements of this chapter and any applicable RFP. In evaluating an application, the city will consider, among other things, consistent with applicable law, the applicant’s past service record in other communities, the nature of the proposed facilities and broad categories of services, and whether the proposal would adequately serve the public needs and the overall interests of the citizens of the city. Where the application is for a renewed franchise, the city shall consider whether: (1) the cable operator has substantially complied with the material terms of the existing franchise and with applicable law; (2) the quality of the cable operator’s service, including signal quality, response to consumer complaints, and billing practices (but without regard to the mix, quality, or level of cable services or other services provided over the system), has been reasonable in light of community needs; (3) the cable operator has the financial, legal and technical ability to provide the services, facilities, and equipment as set forth in the operator’s proposal; and (4) the cable operator’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.

B. Where the city determines that an applicant’s proposal, including the proposed service area, would serve the public interest, it may grant a franchise to the applicant. The franchise agreement will constitute a contract, freely entered into, between the city and the grantee. The franchise agreement shall incorporate by reference the relevant provisions of this chapter. Any such franchise must be approved by ordinance of the city council.

C. In the course of considering an application for a renewed franchise, the council shall hold a public hearing, following at least 14 days’ prior notice, in which the public shall be offered an opportunity to speak and in which the franchisee shall be offered an opportunity to offer evidence and question witnesses. A transcript or recording shall be made of such hearing. Based on the record of such hearing and the application (including any negotiations relative thereto), the council shall determine whether to grant a renewed franchise and shall issue a written opinion stating the reasons for its decision.

D. A franchise granted pursuant to this chapter shall not take effect until the applicant pays a grant fee not in excess of $5,000 to the city. The grant fee shall be equal to the city’s direct costs in the franchising process less the application filing fees received. The city shall provide to the grantee a statement summarizing such costs prior to the execution of the franchise. (Ord. 2004-5 § 1, 2004).

5.05.240 Acceptance.

A franchise and its terms and conditions shall be accepted by a grantee by written instrument, in a form acceptable to the city attorney, and filed with the city within 30 days after the granting of the franchise by the city. In its acceptance, the grantee shall declare that it has carefully read the terms and conditions of this chapter and the franchise and agrees to abide by same. In accepting a franchise, a grantee shall indicate that it has relied upon its own investigation of all relevant facts, that it was not induced to accept the franchise, and that it accepts all reasonable risks related to the interpretation of the franchise. (Ord. 2004-5 § 1, 2004).

Article IV. Franchise Conditions

5.05.300 Franchise term.

The term of a franchise shall be as specified in the franchise agreement, but it shall not exceed 15 years. If a franchisee seeks authority to operate a cable system in the city beyond the term of its franchise, it shall file an application for a new or renewed franchise not later than 30 months prior to the expiration of its franchise. (Ord. 2004-5 § 1, 2004).

5.05.310 Franchise fee.

A. A franchisee, in consideration of the privilege granted under a franchise for the use of public ways and the privilege to construct and operate a cable television system, shall pay to the city a fee as specified in the franchise agreement, but it shall not exceed five percent of a franchisee’s annual gross revenues during the period of its operation under the franchise.

B. A franchisee shall file with the city, on or before 30 days after the end of each month, a financial statement showing the gross revenues received by the franchisee during that month. A franchise shall pay the monthly portion of the franchise fee to the city on or before the time such financial statement is due to be filed. In the event the city so requests, a franchisee shall also file, no later than March 31st of each year, the franchisee’s financial statements relating to revenue for the preceding year, audited by the franchisee’s chief financial officer and/or treasurer. Subsequent to receiving such financial statements, the city in its sole discretion may require the franchisee to submit a financial statement audited by an independent public accountant, certified in the state. The franchisee shall bear the cost of such audit. Any franchise fee payment in adjustment for any shortfall of the total monthly payments for the year shall be made at that time. Adjustments for any overpayment shall be by credit to subsequent monthly payments.

C. The city shall have the right, consistent with the provisions of TMC 5.05.410 and 5.05.420, to inspect a franchisee’s revenue records, to audit any and all relevant records, and to recompute any amounts determined to be payable under the franchise and this chapter.

D. In the event that any franchise payment is not received by the city on or before the applicable dates, interest shall be charged from such due date at an annual interest rate then chargeable for unpaid federal income taxes (26 U.S.C. Section 6621). In addition to the foregoing, the franchisee shall pay a later charge of five percent of the amount of such payment. Interest and late charges will not be chargeable to the franchisee for additional payment required under the yearly adjustment; provided, that such payment does not exceed 10 percent of the total monthly payments made during the year. In the event such additional payment exceeds 10 percent, the franchisee shall be liable for interest and late charges for that amount.

E. In the event a franchise is revoked or otherwise terminated prior to its expiration date, the franchisee shall file with city, within 90 days of the date of revocation or termination, an audited financial statement showing the gross revenues received by the franchisee 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.

F. Nothing in this chapter shall limit the city’s lawful authority to tax a franchisee. (Ord. 2004-5 § 1, 2004).

5.05.320 Insurance, bonds, indemnity.

A. Upon the granting of a franchise and following simultaneously with the filing of the acceptance of the 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, the franchisee shall obtain, pay all premiums for, and deliver to the city written evidence of payment of premiums for and the originals of the following:

1. A general comprehensive public liability policy or policies indemnifying, defending and saving harmless the city, its officers, boards, commissions, agents or employees from any and all claims by any person whatsoever (including the costs, defenses, attorney fees and interest arising therefrom) on account of injury to or death of a person or persons occasioned by the operations of the franchisee under the franchise herein granted, or alleged to have been so caused or occurred, with a minimum liability of $1,000,000 per personal injury or death of any one person and $3,000,000 for personal injury or death of any two or more persons in any one occurrence. The policy shall be endorsed adding coverage against all claims for personal injury liability offenses. The city and franchisee shall agree on specific terms and conditions of such policy or policies at the time of entering into a franchise agreement. The city may, on an annual basis, review the policy and reasonably require that the minimum amount of insurance coverage be increased to reflect the rate of inflation or other pertinent factors;

2. A property damage insurance policy or policies indemnifying, defending, and saving harmless the city, its officers, boards, commissions, agents and employees from and against all claims by any person whatsoever (including the costs, defenses, attorney fees and interest arising therefrom) for property damage occasioned by the acts or omissions of the franchisee in its operation under the franchise herein granted, or alleged to have been so caused or occurred, with a minimum liability of $500,000 for property damage to the property of any one person and $1,000,000 for property damage to the property of two or more persons in any one occurrence. The city may, on an annual basis, review the policy and reasonably require that the minimum amount of insurance coverage be increased to reflect the rate of inflation or other pertinent factors;

3. If so required in the franchise, and at the city’s discretion, a performance bond or bonds in favor of the city with good and sufficient surety approved by the city in the sum set forth in the franchise agreement, conditioned upon the faithful performance and discharge of the obligations imposed by this chapter and the franchise awarded hereunder from the date thereof. The amount of the bond may be reduced as any construction that is required is completed, consistent with the franchise agreement.

B. All bonds and insurance policies called for herein shall be in a form satisfactory to the city attorney. The city may at any time, if it deems itself insecure, reasonably require a franchisee to provide additional sureties to any and all bonds or to replace existing bonds with new bonds with good and sufficient surety approved by the city. No bond or insurance policy shall be cancelable during its term unless it has been replaced.

C. A franchisee shall, at its sole cost and expense, indemnify and hold harmless the city, its officials, boards, commissions, agents and employees against any and all claims, suits, causes of action, proceedings, and judgments for damage arising out of the operation of the cable television system under the franchise. These damages shall include, but not be limited to, penalties arising out of copyright infringements and damages arising out of any failure by a franchisee to secure consents from the owners, authorized distributors or licensees of programs to be delivered by the franchisee’s television system, whether or not any act or omission complained of is authorized, allowed, or prohibited by the franchise. Indemnified expenses shall include, but not be limited to, all out-of-pocket expenses, such as costs and attorney fees, and shall also include the reasonable value of any services rendered by the city attorney or his or her assistants or any employees of the city.

D. No franchisee shall permit any policy or bond to expire unless fully replaced and a franchisee, not less than 30 days prior to its expiration of replacement, shall deliver to the city a substitute renewal or replacement policy or bond in conformance with the provisions of this chapter. (Ord. 2004-5 § 1, 2004).

5.05.330 Letter of credit.

A. The city may at its discretion require, at the time of awarding a franchise, that a franchisee obtain a letter of credit. When and if the city should so require, the franchisee shall deposit with the city a letter of credit from a financial institution approved by the city in the amount set by the city, but not to exceed $50,000. The letter of credit may not be revoked or terminated during the term of the franchise except with written approval of the city. The form and content of such letter of credit shall be approved by the city attorney. The letter of credit shall be used to ensure the faithful performance by the franchisee of all provisions of the franchise and this chapter, compliance with all orders, permits, and directions of any agency, commission, board, department, division, or office of the city having jurisdiction over its acts or defaults under the license, and the payment by the franchisee of any claims, liens and taxes due the city or other municipalities which arise by reason of the construction, operation, or maintenance of the system.

B. The letter of credit shall be maintained by the franchisee at $50,000 or such lesser amount as the city shall determine and as set forth in the franchise during the entire term of the franchise, as the city may require, even if funds are drawn against it pursuant to this chapter.

C. The letter of credit shall contain the following endorsement:

It is hereby understood and agreed that this letter of credit 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 certified mail, of a written notice of such intention to cancel or not to renew.

D. At the city’s option, it may draw against the letter of credit for any unpaid liquidated damages, franchise fees or other amounts owing to it under the franchise which are 30 days or more past due. The city shall notify the franchisee in writing at least 10 days in advance of drawing upon the letter of credit. (Ord. 2004-5 § 1, 2004).

5.05.340 Liquidated damages.

A. Because a franchisee’s failure to comply with the provisions of this chapter and its franchise will result in damage to the city and because it will be impractical to determine the actual amount of such damages, the city and any franchisee shall agree upon and specify in the franchise certain amounts which represent both parties’ best estimate of the damages.

B. The city attorney shall calculate the amount of any such damages and mail notice thereof to the franchisee. Such a notice may provide for damages sustained prior to the notice and subsequent thereto pending compliance by the franchisee.

C. The liquidated damages provided in a franchise shall be the exclusive monetary remedy for the named breaches. Neither the right to liquidated damages nor the payment of liquidated damages shall bar or otherwise limit the right of the city in a proper case to: (1) obtain judicial enforcement of the franchisee’s obligations by means of specific performance, injunctive relief, mandate or other remedies at law or in equity; (2) consider any violation as grounds for forfeiture and termination of the franchise pursuant to this chapter; and (3) consider any violation as grounds for nonrenewal or nonextension of the franchise or issuance of a new franchise. In any action, either for liquidated damages or to enforce obligations under franchise, the prevailing party shall be entitled to reasonable attorneys’ fees and costs. (Ord. 2004-5 § 1, 2004).

5.05.350 Forfeiture and termination.

A. In addition to all other rights and powers retained by the city under this chapter and any franchise issued pursuant thereto, the council reserves the right to forfeit and terminate the franchise and all rights and privileges of the franchisee in the event of a substantial breach of its terms and conditions. A substantial breach by the franchisee shall include, but shall not be limited to, the following:

1. An incurred violation of any material provision of this chapter or franchise issued thereunder, or any material rule, order, regulation, or determination of the city made pursuant thereto;

2. An attempt to evade any material provision of the franchise or practice of any fraud or deceit upon the cable television system customers and subscribers or upon the city;

3. Failure to begin or substantially complete any system construction or system extension as set forth in the franchise;

4. Failure to provide the broad category of services promised in the application or specified in the franchise, 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. Material misrepresentation of fact in the application for, or during negotiation relating to, the franchise; or

7. Failure to provide surety and indemnity as required by the franchise or this chapter.

B. None of the foregoing shall constitute a major breach if a violation occurs which is without fault of the franchisee or occurs as a result of circumstances beyond the franchisee’s control. The franchisee shall not be excused by mere 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 the franchisee’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. The franchisee shall bear the burden of proof in establishing the existence of such conditions.

C. The city may make a written demand by certified mail that the franchisee complies with any such provision, rule, order, or determination under or pursuant to the franchise. If the violation by the franchisee continues for a period of 30 days following such written demand without written proof that the corrective action has been taken or is being actively and expeditiously pursued, the city council may consider terminating the franchise; provided, however, a written notice thereof shall be given to the franchisee at least 30 days in advance and the franchisee must be given an opportunity to appear before the council in a public hearing to present its arguments.

D. Should the council determine, following the public hearing, that the violation by the franchisee was the fault of the franchisee and within the franchisee’s control, the council may, by ordinance, declare that the franchise be forfeited and terminated; provided, however, the council may, in its discretion, provide an opportunity for the franchisee to remedy the violation and come into compliance with the franchise and this chapter so as to avoid the termination. (Ord. 2004-5 § 1, 2004).

5.05.360 Foreclosure.

Upon the foreclosure or other judicial sale of all or a substantial part of the cable communications system facilities, or upon the termination of any lease covering all or a substantial part of the cable communications system, or upon the occasion of additional events which effectively cause termination of the system’s operation, the franchisee shall notify the city of such fact, and such notification or the occurrence of such terminating events shall be treated as a notification that a change in control of the franchisee has taken place, and the provisions of this chapter governing the consent of the city to such change in control of the franchisee shall apply. (Ord. 2004-5 § 1, 2004).

5.05.370 Receivership.

The city shall have the right to cancel a franchise 120 days after the appointment of a receiver, or trustee, to take over and conduct the business of the franchisee, 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 120 days, or unless:

A. Within 120 days after the election or appointment, such receiver or trustee shall have fully complied with all of the provisions of this chapter and remedied any defaults thereunder; and

B. Within the 120 days, such receiver or trustee shall have executed an agreement, duly approved by the court having jurisdiction, whereby such receiver or trustee assumes and agrees to be bound by each and every provision of this chapter and the franchise granted to the franchisee. (Ord. 2004-5 § 1, 2004).

5.05.380 Purchase of cable system by city.

A. At the normal expiration of a franchise term (preceded by at least six months’ notice), the city shall have the right to purchase the franchised cable system.

B. In the event the city decides not to grant a new or renewed franchise to a franchisee, the city shall have the right to purchase the system at its fair market value on the basis of the cable system valued as a going-concern. “Going-concern value” shall mean benefits that attach to the business, including, but not limited to, system cash flow, existing and potential goodwill, and existing arrangements with programmers and suppliers, except no value shall be assigned to the franchise itself. The fair market value shall be reduced by the amount of any lien, encumbrance or financial obligation which the city will assume.

C. In the event the city revokes, forfeits or terminates the franchise for cause, it shall have the right to purchase the cable system for an equitable price. An equitable price takes into account, among other things, the nature of the franchisee’s breach or malfeasance and the resulting harm to the community; it is not based on fair market value or going-concern value.

D. Upon exercise of the option to purchase and the payment of the purchase price by the city and its service of official notice of such action upon the franchisee, the franchisee shall immediately transfer to the city possession and title to all facilities and property, real and personal, of the cable television system, free from any and all liens and encumbrances not agreed to be assumed by the city, and the franchisee shall execute such warranty deeds or other instruments of conveyance to the city as shall be necessary for this purpose. (Ord. 2004-5 § 1, 2004).

5.05.390 Removal of cable communications system.

At the denial of renewal upon the expiration of the term for which a franchise issued hereunder is granted, or upon its termination as provided herein, the franchisee shall forthwith, upon notice by the city, remove at its own expense all designated portions of the cable communications system from all streets and public ways within the city, and shall restore the streets and public ways to their former condition (reasonable wear and tear and damage due to causes which the franchisee demonstrates is beyond its control excepted); provided, however, the franchisee shall have the right to sell its physical plant to a subsequent franchisee, subject to city approval, in which case said plant need not be removed. If upon written request the franchisee fails to remove its facilities within 120 days, the city may perform the work at the franchisee’s expense. (Ord. 2004-5 § 1, 2004).

5.05.395 Transfer of ownership or control.

A. Because the grant of a franchise is based on the unique qualifications, attributes, and commitments of the franchisee to serve the public interest, a franchise issued pursuant to this chapter shall not be sold, assigned, transferred, leased, or disposed of, either in whole or in part, either by involuntary sale or by voluntary sale, merger, consolidation, or otherwise hypothecated in any person or entity, or the controlling interest in any corporation holding a franchise hereunder be changed without the prior consent of the city council, and then only under such conditions as may be required by the city council. The consent of the city council shall not be unreasonably withheld. Such a transfer of control is not limited to major interest holders but includes actual working or de facto control by minor interest holders in whatever manner exercised. Every change, transfer, or acquisition of control of the franchisee shall make the franchise subject to cancellation unless and until the city shall have consented.

B. The franchisee shall promptly notify the city of any proposed change in controls of the franchisee. A formal application for approval of a proposed transfer of control shall be filed within 30 days of such notification. The application shall include, among other things, a copy of any and all documents relating to the sale or transfer and any filings relating to the sale or transfer by any party to the transaction at any state or federal agency including, but not limited to, the FCC, the Department of Justice, the Federal Trade Commission, and the Securities and Exchange Commission. An original and three copies of the text of the application shall be filed and additional copies as the city may request. Nothing herein shall require the disclosure of the sales price of such transaction. Within 10 days after the notification required above, the city and the parties to the proposed transfer shall enter into discussions with respect to the nature of the documents required above. The city shall exercise its reasonable judgment in requiring the parties to a proposed transfer to provide the city with sufficient information to assure itself that the transfer complies with all provisions of this chapter.

C. The proposed purchaser, transferee, or assignee must show financial responsibility as determined by the city and must agree to comply with all provisions of the franchise, including any provisions which the city may amend or add prior to approval of the transfer through negotiations with such purchaser, transferee or assignee.

D. For the purpose of determining whether it shall consent to such change, transfer, or acquisition of control, the city may inquire into all relevant qualifications of the prospective controlling party, and the franchisee shall assist the city in any such inquiry. The city may reasonably require any conditions which it deems necessary at the time or review to ensure that the cable communications system will satisfy the public interest of the city and its citizens for the balance of the term of the franchise.

E. TMC 5.05.240 shall apply to any transfer as if the transferee were an applicant for a new franchise. (Ord. 2004-5 § 1, 2004).

Article V. Subscriber Fees and Records

5.05.400 Subscriber fees and rates.

A. The initial fees to be charged to subscribers for all services, including installation fees and other one-time charges, shall be specified in any franchise agreement issued pursuant hereto. Such specification shall not permit the city to regulate such rates except as provided by subsection B of this section.

B. Those fees and charges subject to regulation by the city pursuant to state and federal law shall not be increased without prior approval of the city. The city reserves the right to regulate rates for any service pursuant to changes in federal or state law which would authorize such regulation. The city reserves the right to establish procedures for any lawful regulation of rates.

C. The city will follow the FCC rate regulations in its regulation of the basic service rates and charges of any cable television system operating in the city, notwithstanding any different or inconsistent provisions in the franchise. In connection with such regulation, the city will ensure a reasonable opportunity for consideration of the views of interested parties. The city manager, or his or her designee, is authorized to execute on behalf of the city and file with the FCC such certification forms or other instruments as are now or may hereafter be required by the FCC rate regulations in order to enable the city to regulate basic service rates and charges. (Ord. 2004-5 § 1, 2004).

5.05.410 Reports.

To facilitate timely and effective enforcement of this chapter and any cable television franchises and to develop a record for purposes of determining whether to renew any cable television franchises, the city requires reports as specified in this section.

A. Annual Report. No later than March 31st of each year, the franchise shall file a written report with the city, which shall include:

1. A summary of the previous calendar year’s activities in development of this system, including but not limited to services begun or dropped, number of year-end subscribers, homes passed, and miles of cable distribution plants in service (including different classes if applicable);

2. If so required by the city, and in the event the city reasonably believes such information is necessary, an audited financial statement, including a statement of income, a balance sheet, and a statement of sources and applications of funds. The statement shall include notes that specify all significant accounting policies and practices upon which it is based (including, but not limited to, depreciation rates and methodology, overhead and intrasystem cost allocation methods, and basis for interest expense). A summary shall be provided comparing the current year with previous years since the beginning of the franchise. The statement shall contain a summary of franchise fee payments and any adjustment thereto as specified in TMC 5.05.310;

3. A status report of any construction by component category;

4. If so required by the city, and in the event the city reasonably believes such information is necessary, the most recent projected income statement, balance sheet, statement of sources and applications of funds, and statements of any construction for the next two years. All significant assumptions upon which projections are made shall be noted. If any of these statements have not been prepared for other purposes, franchisee shall so state in lieu of filing such statements;

5. If so required by the city, and in the event the city reasonably believes such information is necessary, a reconciliation between previously projected estimates and actual results;

6. A summary of complaints, identifying the number and nature of complaints and their disposition;

7. If the franchisee is a corporation, a list of officers and members of the board and the officers and board members of any parent corporation;

8. A list of all partners or stockholders holding one percent or more ownership interest in the franchisee 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 a list of the 20 largest stockholders of the voting stock of such corporation shall be disclosed;

9. A copy of all the franchisee’s written rules and regulations applicable to subscribers and users of the cable system, noting any changes made during the previous year.

B. The city may specify the form and details of all reports, with franchisee given an opportunity to comment in advance upon such forms and details. The city may change the filing dates for reports upon reasonable request of the franchisee. (Ord. 2004-5 § 1, 2004).

5.05.420 Records.

Upon reasonable notice to the franchisee and for the purpose of confirming performance hereunder, the city will have the right to inspect at a location within the city all records and a complete set of books relating to the cable operations at any time during normal business hours. Access to such records will not be denied because of claimed proprietary information. To the extent permitted by law, such information shall be kept confidential by the city. (Ord. 2004-5 § 1, 2004).

5.05.430 Filings.

The franchisee shall mail or deliver a copy of all filings it makes with state and federal agencies to the city clerk. The copies shall be mailed or delivered on the date of filing. (Ord. 2004-5 § 1, 2004).

Article VI. System Standards

5.05.500 System technical standards.

The cable communications system to be installed by a franchisee shall comply in all respects with the technical performance requirements set forth in the application, Part 76 of the FCC’s Rules and Regulations, and the franchise agreement. If the FCC should delete the requirements, the city reserves the right to amend the franchise or this chapter to incorporate comparable technical standards. At minimum, the cable television system shall be designed to provide picture quality of TASO grade 2 or better and superior reliability. (Ord. 2004-5 § 1, 2004).

5.05.510 Access and local programming.

A. The city believes that local programming can play a distinctive, valuable, and essential role as part of a cable television system. A successful community programming operation requires the cooperation and support of a franchisee, the city, and the public over an extended period of time. Applications for a franchise shall include discussion for the provision of public, education, and local government access channels, including facilities, equipment and support services sufficient to meet community needs. Applicants are encouraged to include proposals for local origination programming by the franchisee. All local programming equipment, facilities, and support services, whether supplied directly by a franchisee or through grant funds provided by the grantee, shall be available to all users in the community. All proposals shall conform to the following minimum requirements:

1. The franchisee shall have no control over the content of access programs. The city may require a franchisee or a nonprofit corporation or other entity selected to manage the access program to establish reasonable rules for the use of access channels consistent with the requirements of this chapter, the franchise, and the intended purpose of such channels. Such rules shall be subject to review and approval by the city;

2. Any public access channel shall be made available to any member of the public on a nondiscriminatory basis at no charge for channel use. Use of personnel or equipment for production of public access programming shall be made available consistent with the goal of affording users a low-cost means of television access and the requirements of the franchise;

3. Any education access channel shall be made available free of charge for the transmission of local educational programming;

4. Any local government access channels shall be made available free of charge for the transmission of government-related programming.

B. The city shall promulgate rules under which channel capacity dedicated to access may be used by the franchisee when it is not being used for access purposes. (Ord. 2004-5 § 1, 2004).