Chapter 20.06
FRANCHISE
Sections:
20.06.010 Franchise requirements.
20.06.020 Franchise applications.
20.06.030 Notice of complete application and scheduling of public hearing.
20.06.040 Determination by the city.
20.06.050 Notification of council action and execution of franchise.
20.06.060 Nonexclusive franchise.
20.06.070 Term of franchise.
20.06.080 Rights granted.
20.06.090 Franchise territory.
20.06.100 Franchise fees in addition to utility taxes.
20.06.110 Nondiscrimination.
20.06.120 Amendment of franchise.
20.06.130 Renewal of franchise.
20.06.140 Determination by city for renewal of franchise.
20.06.150 Obligation to cure as a condition of renewal.
20.06.160 Reserved.
20.06.170 Other city costs.
20.06.180 Compensation for use of public ways.
20.06.190 Accounts, books and records.
20.06.010 Franchise requirements.
A franchise shall be required of any commercial utility or telecommunications operator or carrier or other person who desires to occupy public ways of the city and to provide telecommunications or commercial utility services to any person or area in the city; provided, however, that a public way agreement may be approved in accordance with the provisions of this title instead of a franchise in the following circumstances:
A. A privately owned telecommunications network or telecommunications system which is operated solely for purposes of serving itself. An example of such a network or telecommunications system includes, but is not limited to, a telecommunications network connecting two business facilities under common ownership or control, when said facilities are not offered to other business entities or persons.
B. De minimus uses of public ways made in conjunction with a wireless telecommunications facility located entirely upon publicly or privately owned property. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.020 Franchise applications.
Any person who desires a telecommunications or a commercial utility franchise pursuant to this title shall file an application with the city public works department which, in addition to the information required by ACC 20.04.020, shall include the following:
A. Whether the applicant intends to provide cable service, video dialtone service or other video programming service, and sufficient information to determine whether such service is subject to cable franchising;
B. An accurate map showing the location of any existing utility or telecommunications facilities in the city that applicant intends to use or lease so that the city can keep track of various systems using the public way(s) to prevent interference between the users;
C. A description of the services or facilities that the applicant will offer or make available to the city and other public, educational and governmental institutions, if any;
D. A description of applicant’s service, access and line extension policies;
E. The area or areas of the city the applicant desires to serve and an initial schedule for build-out to the entire franchise area;
F. The applicant’s intended means and methods of providing service and whether shared use of other utility poles or conduits is envisioned;
G. All fees, deposits or charges required pursuant to this chapter;
H. Such other and further information as permitted by federal and state law as may be requested by the city;
I. Proof of ability to meet city’s bonding requirements in ACC 12.24.050 when the applicant does not have an existing standing bond on file with the city sufficient to cover the scope of work proposed and proof of ability to meet security requirements in ACC 20.10.240 through 20.10.260;
J. A copy of an Auburn business license stamped and signed by the business license clerk, as designated by the mayor; and
K. A nonrefundable application fee in the amount of $2,500. (Ord. 5897 § 23, 2005; Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.030 Notice of complete application and scheduling of public hearing.
A. Notice of Complete Application. Within 30 calendar days after receipt of the franchise application, the city will complete review of the application to determine whether the application contains sufficient information as outlined in ACC 20.06.020 to proceed with processing. If during the 30-calendar-day review period, the city engineer determines that the application is incomplete, the city engineer will issue a letter to the applicant specifying the additional information necessary to complete the application. The applicant will be given 30 calendar days to respond. Once the additional information is received by the city, an additional 14 calendar days will be allowed to determine whether the application is complete. Once the application is determined complete, written notice will be provided. If the applicant needs additional time to respond the applicant may request up to an additional 30 calendar days. If a response is not timely received, the application will be returned to the applicant with a notice that the application is rejected due to failure to provide the required information. Any new applications will require a new application fee.
B. Scheduling of Public Hearing. When satisfied that the application is complete, the city engineer will notify the applicant in writing that the application is complete and inform the applicant of the schedule for consideration by the public works committee. The public works committee shall review the proposal to include the planned use of the public ways and recommend any modifications required prior to recommending setting the public hearing by the city council. Once satisfied as to the terms of the negotiated draft franchise agreement, the public works committee shall recommend that the city council set the date for the public hearing. The city council will schedule the hearing and the city clerk will notify the applicant in writing of the scheduled hearing. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.040 Determination by the city.
Within 180 calendar days from the time of notification that the application is complete, under ACC 20.06.030(A), the city shall issue a written determination granting or denying the application in whole or in part. Prior to granting or denying a franchise under this title, the city council shall conduct a public hearing and make a decision based upon the criteria set forth below. Pursuant to Section 253(c) of the Federal Act, public disclosure of any fees as compensation for use of public right-of-way is required, and RCW 35A.47.040 provides that the city council shall not approve any franchise hereunder until the next regularly scheduled council meeting following the public hearing. If the application is denied, in whole or in part, the written determination shall include the reason(s) for denial. The decision to grant or deny, in whole or in part, an application for a telecommunications franchise shall be based upon the following:
A. Whether the applicant has received all requisite licenses, certificates, and authorizations from the Federal Communications Commission, the Washington Utilities and Transportation Commission, and any other federal or state agency with jurisdiction over the activities proposed by the applicant;
B. The capacity of the public ways to accommodate the applicant’s proposed facilities;
C. The capacity of the public ways to accommodate additional utility and telecommunications facilities if the franchise is granted;
D. The damage or disruption, if any, of public or private facilities, improvements, service, travel or landscaping if the franchise is granted;
E. The public interest in minimizing the cost and disruption of construction within the public ways;
F. The service that applicant will provide to the community and region;
G. The effect, if any, on public health, safety and welfare if the franchise requested is granted;
H. The availability of alternate routes and/or locations for the proposed facilities;
I. Applicable federal and state utility and telecommunications laws, regulations and policies;
J. The ability to avoid, or mitigate to the city’s satisfaction, future conflicts with the operation, repair, replacement, and maintenance of city-owned and other commercial utilities;
K. The ability of the applicant to stabilize existing pavement structures prior to disturbance in a manner sufficient to ensure future deterioration is not accelerated by virtue of the installed facilities, and/or the ability and willingness of the applicant to fully mitigate such damages to the extent that they may prove unavoidable to the satisfaction of the city. Such security for the pavement’s integrity may include additional periods of warranty bonding for up to five years from date of completion of work as determined by the city engineer;
L. Demonstrated ability and commitment to meet city bonding and security requirements established in ACC 20.10.240 through 20.10.260 and Chapter 12.24 ACC; and
M. Such other factors as may demonstrate that the franchise to use the public ways will serve the community interest. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.050 Notification of council action and execution of franchise.
Upon the city council’s decision the public works director shall notify the applicant of the decision, including reason(s) for any denial, and instruct the applicant of the procedure to follow to complete execution of the agreement if approved by the city council. No franchise shall be deemed to have been granted hereunder until after the public hearing and city council approval of a written agreement setting forth the particular terms and provisions under which the franchisee has been granted the right to occupy and use public ways of the city and both the city and applicant have fully executed the franchise and the applicant has provided the security deposits and proof of insurance as required by Chapter 20.10 ACC. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.060 Nonexclusive franchise.
No franchise granted under this title shall confer any exclusive right, privilege, license or franchise to occupy or use the public ways of the city for delivery of utility or telecommunications services or any other purposes. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.070 Term of franchise.
By virtue of the uncertainties created by the Act, unless otherwise specified in an existing franchise agreement, a telecommunications franchise granted by the city pursuant to this title shall be valid for a term not to exceed five years. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.080 Rights granted.
No franchise granted under this chapter shall convey any right, title or interest in the public ways, but shall be deemed a franchise only to use and occupy the public ways for the limited purposes and term stated in the franchise. Further, no franchise shall be construed as any warranty of title. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.090 Franchise territory.
Unless otherwise provided in the franchise ordinance, a franchise granted under this chapter shall authorize the franchisee to operate in the public ways throughout the city when a permit to install the necessary facilities has been approved by the city. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.100 Franchise fees in addition to utility taxes.
Revenue derived directly or indirectly from sources within the city shall be subject to applicable utility taxes as of the time of commencement of such operations. Franchise fees shall be in addition to any utility tax, but shall be collectible only to the extent as then allowed by law, and in no event may the combined utility tax and franchise fee exceed six percent of gross revenue. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.110 Nondiscrimination.
A franchisee which purports to serve the general public shall make its utility or telecommunications services available to any customer within its franchise area who shall request such service, without discrimination as to the terms, conditions, rates or charges for the franchisee’s services; provided, however, that nothing in this title shall prohibit a franchisee from making any reasonable classifications among differently situated customers. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.120 Amendment of franchise.
Except as otherwise provided within an existing franchise ordinance, a new franchise application shall be required of any commercial utility or telecommunications carrier or operator that desires to extend its franchise territory or to locate its utility or telecommunications facilities in public ways of the city which are not included in a franchise previously granted under this title. If a franchisee is required by the city to locate or relocate its facilities in public ways not included in a previously granted franchise, the city shall grant a franchise amendment without further application. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.130 Renewal of franchise.
A franchisee that desires to renew its franchise under this chapter for an additional five-year term shall, not more than 240 days nor less than 180 days before expiration of the franchise in effect, file an application, which is determined as complete in accordance with ACC 20.06.030, with the city for a renewal of its franchise which shall include the following:
A. The information required pursuant to ACC 20.06.020;
B. Any information required pursuant to the franchise agreement between the city and the franchisee;
C. All deposits or charges required pursuant to this chapter;
D. A nonrefundable application fee in the amount of $500.00. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.140 Determination by city for renewal of franchise.
The process specified in ACC 20.06.030 for determining and notifying of completeness of application shall be used for renewals. Within 120 calendar days after receiving a complete application for renewal, following the procedures in ACC 20.06.030, the city council shall grant or deny the renewal application in whole or in part. If the renewal application is denied, the written determination shall include the reason(s) for denial. Prior to granting or denying renewal of a franchise under this chapter, in whole or in part, the city council shall conduct a public hearing and make a decision based upon the criteria set forth below in addition to all criteria in ACC 20.06.040.
A. The continuing capacity of the public ways to accommodate the applicant’s existing facilities.
B. The applicant’s compliance with the requirements of this title and the franchise agreement.
C. Applicable federal, state and local utility and telecommunications laws, rules and policies.
D. Such other factors as may demonstrate that the continued franchise to use the public ways will serve the community interest. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.150 Obligation to cure as a condition of renewal.
No franchise shall be renewed until any ongoing violations or defaults in the franchisee’s performance of the franchise agreement, or of the requirements of this title, have been cured, or a plan detailing the corrective action to be taken by the franchisee has been approved in writing by the city. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.160 Reserved.
(Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.170 Other city costs.
All franchisees shall, within 30 days after written demand, reimburse the city for all direct and indirect costs and expenses incurred by the city in connection with any modification, amendment, renewal or transfer of the franchise or any franchise agreement. In addition, all franchisees shall, within 30 days after written demand, reimburse the city for any and all costs the city reasonably incurs in response to any emergency involving the franchisee’s utility or telecommunications facilities. Finally, all franchisees shall, within 30 days after written demand, reimburse the city for the franchisee’s proportionate share of all actual, identified expenses incurred by the city in planning, constructing, installing, repairing or altering any city facility as a result of the presence in the public way of the franchisee’s utility or telecommunications facilities. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.180 Compensation for use of public ways.
A. The city finds that the public ways to be used by commercial utilities and carriers and operators in the operation of telecommunications systems within the boundaries of the franchise are valuable public properties, acquired and maintained by the city at great expense to its taxpayers, and that the grant of use of said public ways is a valuable property right, without which grantees and franchisees would be required to invest substantial capital in public way costs and acquisitions; therefore, grantees and franchisees shall pay the city as a general compensation for the use of the public way during each year of the term of a franchise a franchise fee as determined by city council, not to exceed six percent of gross revenues for each quarter of each calendar year. Franchisees shall pay the franchise fee mandated by this chapter but the city acknowledges and understands that such amount (and any other fees, assessments, or taxes imposed on franchisees not described in ACC 20.06.180(E)) shall appear as a line item on the bill sent to, and shall be collected from, the subscribers; provided further, that the compensation required from any telecommunications operator or carrier engaged in the “telephone business,” as defined in RCW 82.04.065 shall be consistent with RCW 35.21.860.
B. Annual Franchise Fee Adjustments. The initial annual franchise fee percentage shall be four and one-half percent of gross revenues unless and until it is further adjusted by city council. Any such adjustment shall occur at least 60 days before any subsequent annual anniversary date. Any adjustment shall become effective on the subsequent annual anniversary date.
C. Quarterly Payment. Franchisees shall forward by check wire transfer an amount equal to this quarterly payment by the fifteenth day of the second calendar month immediately following the close of the calendar quarter for which the payment is calculated.
D. Late Payment. In the event any quarterly payment is made after noon on the date 10 days after the date due, franchisees shall pay a late payment penalty of the greater of:
1. Twenty-five dollars; or
2. Simple interest at a 12 percent annual percentage rate on the total amount past due.
E. Fees and Compensation Not a Tax. The fees, charges and fines provided for in this title and any compensation charged and paid for the franchisee’s use of the city’s public ways, whether “fiduciary or in kind,” are separate from, and additional to, any and all federal, state, local and city taxes as may be levied, imposed or due from a commercial utility, telecommunications carrier, operator, or provider, its customers or subscribers or on account of the lease, sale, delivery or transmission of utility or telecommunications services.
F. Ruling of Unenforceability. The compensation required from any commercial utility, telecommunications carrier, operator, or provider shall be as provided by law. In the event any franchise fee shall be held unenforceable by a court of law which has jurisdiction over the city, franchisees shall pay the equivalent amount paid in franchise fees as a city utility tax which, shall be applied retroactively to time periods during which the franchise fee was determined to be unenforceable.
G. Quarterly Report. In order to properly determine the gross revenues received by franchisees, the franchisee shall on the same date that each quarterly payment is made, file with the director of finance a sworn copy of a report, in a form acceptable to the city, in sufficient detail to itemize revenues from each of the revenue categories. The city may, if it sees fit and at its own expense, have the books and records of franchisees examined by a representative of said city to ascertain the correctness of the reports agreed to be filed herein. Neither the acceptance of any payment nor any subsequent review shall be deemed an agreement by the city that the correct payment was paid, absent a fully authorized written release by the city on any such payments or on such reports. Any necessary prorations shall be made in the first and last year of each term of the franchise. Any city request for access to books and records shall be allowed by the franchisee at reasonable times and for reasonable purposes. Such information shall be held in strict confidence by the city as allowed by law and used only for the purpose stated herein.
H. Recalculation at End of Compensation Year. At the end of each calendar year, franchisees shall recalculate the total general compensation actually due. If additional amounts are due the city by franchisee, said amounts shall be paid by the fifteenth day of February following the calendar year during which such amounts were originally due. If amounts are found to be due the franchisees by the city, said amounts shall be credited by the fifteenth day of February during which such amounts were originally due. Any necessary prorations will be made.
I. Taxes are Not to Be a Credit. The compensation paid under this franchise shall be exclusive of and in addition to all special assessments and taxes of whatever nature which are applicable to all other persons or entities doing business within the city, including, but not limited to, ad valorem tax, sales tax, corporate or business occupation taxes or other taxes or fees imposed or levied by any governmental entity.
J. Utility Tax Liability – Franchise Fees. Revenues derived directly or indirectly from sources within the city shall be subject to applicable utility taxes as of the time of commencement of such operations. Franchise fees shall be in addition to any utility tax, but shall be collectible only to the extent as then allowed by law, and in no event may the combined utility tax and franchise fee exceed six percent of gross revenues in accordance with RCW 35.21.870. Franchise fees, if applicable, shall be levied on a nondiscriminatory basis.
K. Rights of City. Payment of money under any franchise shall not in any way limit or inhibit any of the privileges or rights of the city, except insofar as city’s privileges or rights are expressly limited or inhibited by the terms of a franchise.
L. Annual Report. Franchisees shall file annually with the director of finance no later than 90 days after the end of franchisee’s fiscal year, an unaudited statement of revenues (for that fiscal year just ended) attributable to the operations of the franchisee’s telecommunications system, within the city pursuant to the franchise agreement. The statement shall present a detailed breakdown of gross revenues and uncollectible accounts for the year. The city may, if it sees fit, have such report audited by an independent certified public accountant of its choosing. If the audit reveals an underpayment error in payment by franchisees of more than five percent, then franchisees shall pay for the costs of the audit. If the audit reveals an error in payment of five percent or less, the city shall pay the costs of the audit. The report will summarize those accounts reconciled to be within the franchise area by the city’s quarterly review.
M. Circumventing Payments. Any transaction(s) which have the effect of circumventing payment of the required franchise fees and/or evasion of payment of franchise fees or any payments due the city under a franchise by noncollection or nonreporting of gross revenues, bartering, or any other means which evade the actual collection of revenues for business pursued by franchisees are prohibited.
N. Best Rates. As allowed by applicable law, part of the compensation to the city for the grant of any telecommunications franchise, the city shall be entitled to obtain subscriptions, at the city’s discretion, to the communications service at franchisee’s lowest comparable rate applicable to any government body or municipality of the state of Washington. In addition, city shall be entitled to franchisee’s lowest comparable rate applicable to any governmental body or municipality of the state of Washington for purchase and/or lease, should the city determine to purchase and/or lease, equipment or modems applicable to government bodies or municipalities in the state of Washington for purposes of accessing the communications service. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)
20.06.190 Accounts, books and records.
The franchisee shall keep the city fully informed as to accounting methods and procedures in connection with the recording and reporting by the franchisee of all revenues and uncollectibles.
A. City to Be Informed. Franchisees shall keep the city fully informed as to all matters in connection with or which may affect the construction, reconstruction, removal, maintenance, operation and repair of franchisee’s system located in public way(s), franchisee’s accounting methods and procedures in connection therewith, and the recording and reporting by franchisees of all revenues and uncollectibles. Franchisees shall comply with the city’s determination regarding forms for reports, the time for reports, the frequency with which any reports are to be made, and whether reports are to be made under oath. The city acknowledges that a franchisee may be a reporting company under the Securities Exchange Act of 1934 and that shares of its stock are publicly traded. As such, a franchisee may be precluded from disclosing certain sensitive, nonpublic information by virtue of rules and regulations promulgated under such act or otherwise.
B. Accounts. The franchisee shall keep complete and accurate books of account and records of its business and operations subject to this franchise chapter in accordance with generally accepted accounting principles or in accordance with accounting rules prescribed by applicable federal or state regulatory agencies. The city may require the keeping of additional records or accounts which are reasonably necessary for purposes of identifying, accounting for, and reporting gross revenues and uncollectibles. All subscribers who report a service address in the city of Auburn shall be subject to taxes and fees under this franchise. When required by the city, the franchisee shall make available a complete list of all service addresses within the city of Auburn. This list shall be available for review by the city at a local franchisee’s business office. The list will be provided on a computer disc in ASCII format sorted by zip code. It is understood this data is only needed for Auburn to perform an audit to ascertain that the correct subscribers are subjected to Auburn taxes and fees. As the city annexes new areas, those zip codes, if any, will be added.
C. Access to Records. The franchisee shall provide the city with access at reasonable times and for reasonable purposes, to examine, audit, review and/or obtain copies of the papers, books, accounts, documents, maps, plans and other records of the franchisee pertaining to this franchise chapter. The franchisee shall fully cooperate in making available its records and otherwise assisting in these activities. Such information shall be held in strict confidence by the city, as allowed by law, and used only for the purpose stated herein.
D. Inquiries to Franchisee. The city may, at any time, make inquiries pertaining to the franchisee’s operation of its utility or telecommunications system within the franchise area. The franchisee shall respond to such inquiries on a timely basis. (Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998.)