27.270 Franchise Fee.

(1) Finding. The City finds that public rights-of-way of the City to be used by a franchisee for the operation of a cable system are valuable public property acquired and maintained by the City at expense to the taxpayers. The City further finds that the grant of a franchise to use public rights-of-way is a valuable property right without which a franchisee would be required to invest substantial capital.

(2) Payment to the City.

(a) As compensation for use of the public rights-of-way, a franchisee shall pay the City a franchise fee in an amount up to the greater of five percent of its gross revenues, or the maximum amount permitted under State and Federal law. Every franchise agreement shall specify the percentage a franchisee is initially required to pay as a percentage of gross revenues, but if the maximum amount permitted under State and Federal law increases, the franchisee shall, simultaneously with the effective date of any change in any law or, if later, the effective date of any regulation required to implement the law at the option of the City, increase the franchise fee to the maximum allowed by that law. The franchise agreement may specify the maximum amount that the City can require the franchisee to pay as a franchise fee if Federal law does not specify a maximum amount; in such a case, subject to any limits in the franchise agreement, the City may specify the amount that it will collect by ordinance and, in that event, the franchisee shall begin paying the increased fee from the effective date of the ordinance.

(3) Not a Tax or in Lieu of Any Other Tax or Fee.

(a) Payment of the franchise fee shall not be considered in the nature of a tax.

(b) The franchise fee is in addition to all other taxes and payments that a franchisee may be required to pay under any Federal, State or local law and to any other tax, fee, or assessment imposed by utilities and cable operators for use of their services, facilities, or equipment, except to the extent that such fees, taxes, or assessments must be treated as a franchise fee under Section 642 of the Cable Act, 47 USC 522.

(4) Payments.

(a) The franchise fee and any other costs assessed by the City against a franchisee shall be paid quarterly to the City and shall commence as of the effective date of a franchise. The City shall be furnished at the time of each payment with a statement certified by the franchisee’s chief financial officer or an independent certified public accountant reflecting the total amount of monthly gross revenues for the payment period. Quarterly payments shall be made to the City no later than 45 days following the end of each calendar quarter. An annual statement of gross revenues shall be furnished to the City by an independent, certified public accountant. The franchisee shall provide an annual complete audit statement for each calendar year within 90 days from the end of that calendar year.

(b) In the event any franchise fee payment or recomputation amount is not made on or before the date specified herein, the franchisee shall pay additional compensation and interest charges computed from such due date, at a rate of one percent per month.

(5) No Accord or Satisfaction. No acceptance of any payment by the City shall be construed as a release or an accord and satisfaction of any claim the City may have for further or additional sums payable as a franchise fee under this chapter or for the performance of any other obligation of a franchisee.

(6) Audit.

(a) The City shall have the right to inspect and copy records and the rights to audit and to recompute any amounts determined to be payable under this chapter, whether the records are held by the franchisee, an affiliate, or any other entity that collects or receives funds related to the franchisee’s operation in the City, including, by way of illustration and not limitation, any entity that sells advertising on the franchisee’s behalf. The franchisee shall be responsible for providing the records to the City, regardless of which entity possesses or has control of the records. Records relating to franchisee’s gross revenues shall be maintained for at least six years. The City’s audit expenses shall be borne by the City unless the audit discloses an underpayment of $500.00 or more, in which case the costs of the audit shall be borne by the franchisee as a cost incidental to the enforcement of that franchisee’s franchise. Any additional amounts due to the City as a result of the audit shall be paid within 30 days following written notice to the franchisee by the City of the underpayment, which notice shall include a copy of the audit report.

(b) A franchisee shall maintain its fiscal and financial records and have all relevant fiscal and financial records maintained by others on its behalf in such a manner as to enable the City to determine the cost of assets of the franchisee which are used in providing services within the City and to determine gross revenues.

[Prior code § 27.27]