§ 6.5-233. Fees.

(a)

Any service provider or system owner or operator that is granted a franchise or renewal of a franchise after the date this article becomes effective, shall pay to the city an amount that is equal to the fully allocated cost of administering the franchise for the year, which cost shall be based on the budgeted amount in the budget adopted by the city for that year.

(b)

Notwithstanding the requirement of subsection (a) of this section, the city may at its discretion elect to assess a franchise fee or a functional equivalent fee or payment in any amount up to the maximum amount permitted under law.

(c)

The requirements of this section shall not change the terms of payment or increase the computational formula for the payment of a franchise fee contained in a franchise agreement in existence and of effect as of the effective date of this article.

(d)

The franchise fee shall be paid on a calendar quarter basis unless otherwise stated in the franchise, and shall be deemed late if received later than forty-five (45) days after the due date of any payment.

(e)

Notwithstanding anything to the contrary in subsections (a) or (b) of this section, upon the expiration of a franchise agreement in existence as of the effective date of this article that contained a smaller franchise fee than is permitted by law, the city may increase the previously required franchise fee to the maximum permitted under law, including for or during any period of continued or temporary operating authority pending the grant of a new or renewed franchise.

(f)

If the city assesses the franchise fee as a percentage of revenue, notwithstanding the fact that certain types of service providers or system owners or operators may be required to remit an annual fee to the PSC, to the extent that the payment of such annual fee, when added to the franchise fee payable to the city, is greater than the maximum permitted by law, and to the extent required by law, but only if expressly required, the amount of the PSC's annual fee shall be permitted to be deducted from the amount that would otherwise have been permitted to be paid to the city. In the event that the service provider or system owner or operator does not pay the annual fee to the PSC out of gross revenue, but merely collects the fee from subscribers separately and apart from the rate for service and other charges, and remit the amount so collected to the PSC, then the amount remitted to the PSC shall not be permitted to be deducted from the amount that would otherwise have been permitted to have been paid to the city.

(g)

If the city assesses the franchise fee as a percentage of revenue, then if the FCC, congress or any other governmental agency with authority to establish the maximum allowable franchise fee increases the maximum permissible franchise fee beyond five (5) per cent of gross revenue, to protect against the derogation of its rights the city shall have the right and authority to increase the franchise fee to the maximum percentage or amount permissible upon ninety (90) days' notice by the city to the franchisee.

(h)

Subject to federal law, and notwithstanding anything preceding in this section, and without limitation other than as established by state or federal law, nothing shall limit the authority of the city to assess and impose a franchise fee, or its functional equivalent, on any source, portion, category or type of revenue, or to exempt any source, portion, category or type of revenue from inclusion in the computational base used to calculate the franchise fee or its functional equivalent, so long as such is done in a nondiscriminatory and competitively neutral manner with respect to competitive service providers or system owners or operators in the city, and so long as the fee does not exceed the maximum allowable under law.

(i)

If the city assesses the franchise fee as a percentage of revenue, then in the event the city eliminates subscriber revenue from the revenue base used to calculate the franchise fee, or decreases the percentage attributable to subscriber revenue, upon notice from the city of such elimination or reduction, a service provider or system owner or operator paying a franchise fee that is calculated on subscriber revenue shall reduce the amount of subscribers' or users' monthly bills to reflect the decrease, starting in the subscriber's or user's next bill.

(j)

If the city assesses the franchise fee as a percentage of revenue, then unless expressly set forth to the contrary in a franchise, a service provider or system owner or operator that is required to pay a franchise fee or its functional equivalent shall file with the city, within forty-five (45) days after the expiration of each calendar quarter, a complete and unexpurgated and unredacted income statement, together with the basis of the calculations used to determine the franchise fee, showing all computations used in the determination.

(k)

The income statement required in subsection (j) of this section shall be in the form and format used in generally accepted accounting principals (GAAP) and showing all incremental and individual types, categories and sources of revenue needed to ascertain the accuracy and completeness of the total payment, and shall reflect the following requirements.

(1)

Unless expressly permitted, the income statement shall never be a synopsis of revenue whereby different revenue sources are grouped together showing only a single number for multiple types or sources of revenue.

(2)

The income statement shall show all revenue and other valuable consideration from whatever source that is derived from, or caused to be derived from, or that is attributable to the operation of system and/or the provision of any service or use in the city, including revenue earned from subscribers and from those who are not subscribers but are users of the service or system.

(3)

The income statement shall be certified by an officer of the service provider or system owner or operator attesting to the accuracy, completeness, and veracity of the revenue figures and other information contained therein.

(l)

As an alternative to the income statement requirements of subsections (j) and (k) of this section, the system owner or operator or service provider may provide an unredacted photostatic copy of the unexpurgated revenue chart of accounts applicable to the calculation of the franchise fee taken from the ledger of any person or entity who derived revenue as the term gross revenue is defined in section 5 of this article, along with a statement of certification by an officer of the system owner or operator or the service provider attesting to the accuracy and completeness of the reported revenue as relates to the payment of the franchise fee.

(m)

The provision of the information required under subsections (j) and (k) or subsection (l) of this section shall be made simultaneously with the payment of the franchise fee.

(n)

If the payment of the franchise fee is made after the deadline set forth in subsection (d) of this section, the system owner or operator or service provider may be required to pay the city interest for the entire amount owed for any period of time beyond the deadline set forth in subsection (c) of this section. The interest shall be the prime rate as listed in the wall street journal as of the end of the calendar quarter for which the payment is due, plus two (2) per cent, unless state law establishes a maximum permissible interest rate, in which case the interest rate shall be the maximum interest allowable under state law, given the facts and circumstances.

(o)

In the event that the franchise fee payment is not made in full by the due date set forth in subsection (d) of this section, and payment in full is not made within thirty (30) days after notice thereof by the city, including all interest due, then in addition to the provisions of subsection (n) of this section the service provider or system owner or operator may also be declared in default of the franchise and subject to all fines, penalties and sanctions permitted under law.

(p)

Should the total amount owed remain unpaid for sixty (60) days after the date of the notification of nonpayment or late payment, then the franchise may be revoked, terminated, or canceled as noted elsewhere in this article and in accordance with rights of due process.

(q)

The city council shall have the right from time to time to examine, audit and analyze the financial records of a service provider or system owner or operator, including any subsidiary, affiliate or parent that derives revenue as gross revenue is defined in section 6.5-155 of this article or to require delivery to the city true, complete and unredacted copies of such records. In the alternative, the city council may require the delivery to the city of photostatic copies of the revenue chart of accounts of any subsidiary, affiliate or parent that derives revenue as gross revenue is defined in section 5 of this for the period being reviewed. If such audit, examination or analysis discovers an underpayment of the franchise fee or its functional equivalent of greater than one (1) per cent of the actual amount owed, then the service provider or system owner or operator shall reimburse the city for the cost of the audit, examination or analysis. It is specifically understood that the right of audit, examination and analysis, and the recomputation of any and all amounts paid, shall always be accorded the city.

(r)

If an audit or other investigation discovers that the full amount of the franchise fee has not been paid for a period exceeding six (6) months from the original due date, notwithstanding subsection (n) of this section, then the city council may demand recovery of all of the fully allocated costs incurred that are associated with and necessitated by the act of underpayment or nonpayment, including all reasonable attorney's fees and expert's fees.

(s)

If the city assesses the franchise fee as a percentage of revenue, all reports due and pertaining to the remittance of the franchise fee shall be certified by an officer of the service provider or system owner or operator, or its parent, and will be provided in the form, format and detail applicable to reports pursuant to subsections (j) and (k) or subsection (l) of this section. A service provider or system owner or operator shall maintain records used in the preparation of said reports for the duration of the franchise, to be produced and delivered in their totality upon request by the city council.

(t)

No acceptance of any payment shall be construed as a release, accord, or satisfaction of any claim that the city may have for further or additional sums payable under the provisions this article or any franchise, or for any other performance or obligations of a service provider or system owner or operator hereunder.

(u)

Pursuant to the provisions of this article, payments of franchise fees made to the city by a service provider or system owner or operator, or remittances of amounts collected, shall be considered in addition to, and exclusive of, any and all taxes, business licenses or fees, or other fees levies or assessments.

(v)

A franchise fee required of a cable operator shall not include any items excluded by section 622(g)(2)(d) of the Cable Act (codified at 47 USC 542(g)(2)(d)).

(w)

Nothing in this section shall limit the authority of the city to require the payment of a fee or other assessment of any kind, by any third party person or entity who provides service over or using a system in the city for which charges are assessed to subscribers or users, but which charges are not received by a service provider or system owner or operator who has been granted a franchise. For purposes of illustration this shall include situations where a provider of a particular service using a system directly bills a subscriber or user, or when the service provider or system owner or operator acts as collection agent for a third party provider of a particular service when the third party service provider directly bills subscribers or users, or where a third party person leases capacity for commercial purposes and receives revenue directly or through a third party.

(x)

For any twelve (12) month period, the franchise fees paid by any third party person who provides service as described in subsection (w) of this section, shall not exceed five (5) per cent of such person's gross revenue derived in such period from the provision of service in the city, or the maximum permitted by law or rule at any time.

(y)

Notwithstanding anything in this section, in the event a service provider or system owner or operator does not pay the franchise fee out of gross revenue, but instead chooses to pass the franchise fee through to subscriber or users, incrementally and in addition to the amount owed for service, so that the effect is that the franchise fee is not paid out of gross revenue, and is merely collected and remitted by the service provider or system owner or operator, then in such an instance the service provider or system owner or operator shall not be permitted to deduct the franchise fee from what is owed for property taxes, or any other taxes or money due the city if otherwise permitted.

(Ord. No. A-177, § 83, 3-13-2000)