27.310 Performance Security.

(1) Security Provided. To secure the faithful performance of all franchise agreement obligations, compliance with all orders, permits and directions of any agency of the City having jurisdiction over its acts or defaults under a franchise, the payment by the franchisee of any claims, liens, fees, forfeitures, payments, assessments or taxes due the City under a franchise agreement or otherwise, or which arise by reason of the construction, operation, maintenance or repair of the cable system and the payment of any damages, penalties, fees and costs incurred by the City with respect to the same, including reasonable legal expenses incurred in enforcing a franchise agreement, the franchisee shall provide the City with the following security:

(a) Security Fund. On or before commencement of a franchise term the franchisee shall deposit with the City the sum of $10,000. The City shall deposit these funds in an interest bearing account (the “security fund”) payable, in whole or in part, to the City upon demand. Interest on the security fund as accrued shall become a part of the security fund.

(b) Performance Bond. On or before commencement of a franchise term, the franchisee shall post with the City a performance bond in the amount of $100,000. The form of performance bond shall be subject to approval as to content and form by the City Attorney. Among other provisions, the performance bond must provide:

1. That the City may recover on the performance bond upon the City’s certification that the franchisee is in substantial default of its franchise agreement or this chapter and the amounts recoverable under the performance bond shall be recoverable jointly and severally from the franchisee and the surety;

2. That the total amount of the performance bond shall be forfeited in favor of the City in the event the franchisee abandons the cable system at any time during the term of its franchise or any extension thereto; or the franchisee attempts to transfer or transfers the franchise without the prior express written consent of the City.

3. Any performance bond submitted hereunder shall contain the following endorsement:

This Performance Bond may not be canceled, allowed to lapse or the amount thereof reduced until at least thirty (30) days after receipt by the City of Manitowoc City Clerk, by certified mail, of a written notice from the issuer of the Performance Bond of its intent to cancel the Performance Bond, to allow it to lapse or to reduce the amount of the Performance Bond.

A letter of credit may be substituted for the performance bond upon mutual agreement of the parties.

(c) Construction Performance Bond. In the event a cable system is further upgraded, removed, relocated or otherwise undergoes any reconfiguration or other change involving work costing more than $100,000 during a franchise term, the City may require the franchisee to provide a performance bond in a form and with a company acceptable to the City to secure the faithful performance of such work, and to protect the City from any damages or expense arising out of the work, or the breach of any promise to perform it. The performance bond shall be in an amount equal to 10 percent of the estimated total cost of the work, and in a form satisfactory to the City. Any construction performance bond required hereunder shall contain the following endorsement:

This bond may not be canceled, or allowed to lapse, or the amount of the bond reduced until 30 days after receipt by each of the respective Clerks of the City of Manitowoc, by certified mail, of a written notice from the issuer of the bond of its intent to cancel the bond, to allow it to lapse, or to reduce the amount of the bond.

Failure to maintain the performance bonds required herein shall constitute a violation of this chapter.

(2) Use of Funds. If the franchisee fails to make timely payment to the City or its designee or designees of any amount due as a result of a franchise; or fails to make timely payment to the City or its designee of any liquidated damages or penalties due under a franchise agreement or applicable law; or fails to make timely payment to the City of any taxes due; or fails to compensate the City within 20 days of written notification that such compensation is due, for any damages, costs or expense the City suffers or incurs by reason of any act or omission of the franchisee in connection with a franchise agreement or applicable law or regulations, or the enforcement of the same; or fails, after 20 days’ notice, to comply with any provision of a franchise agreement or applicable law or regulations which the City reasonably determines can be remedied by an expenditure of the security; the City may withdraw the amount thereof, with interest and any penalties, and without further notice to franchisee, from the security fund and from the surety under any performance bond.

(3) Notification. Within three days of withdrawal from the security fund the City shall mail written notification of the amount, date and purpose of such withdrawal to the franchisee.

(4) Inadequate Fund Balance. If, at the time of withdrawal from the security fund by the City, the amounts available are insufficient to provide the total payment toward which the withdrawal is directed, the balance of such payment shall continue as an obligation of the franchisee to the City until paid.

(5) Replenishment. No later than 30 days after mailing of notification to the franchisee by certified mail, return receipt requested, of a withdrawal pursuant to subsection (2) of this section, the franchisee shall deliver to the City for deposit in the security fund an amount equal to the amount so withdrawn. Failure to make timely delivery of such amount to the City shall constitute a violation of this chapter.

(6) Disposition. Upon termination of a franchise under conditions other than those stipulating forfeiture of the security fund, the balance then remaining in the security fund shall be withdrawn by the City and paid to the franchisee within 90 days of such termination; provided, that there is then no outstanding default on the part of the franchisee.

(7) Failure to Provide or Maintain Security. Failure to provide or maintain the security required under this section shall constitute a violation of this chapter.

[Prior code § 27.31]