(A) Franchise fee. As compensation for the benefits and privileges granted under this franchise and in consideration of permission to use the city's right-of-way, grantee shall continue to pay as a franchise fee to the city throughout the duration of and consistent with this franchise an amount equal to 5% of grantee's gross revenues.
(B) Payments. Grantee's franchise fee payments to the city shall be computed quarterly for the preceding calendar quarter ending March 31, June 30, September 30, and December 31. Each quarterly payment shall be due and payable no later than 45 days after said dates.
(C) Acceptance of payment and recomputation. No acceptance of any payment shall be construed as an accord by the city that the amount paid is, in fact, the correct amount, nor shall any acceptance of payments be construed as a release of any claim the city may have for further or additional sums payable or for the performance of any other obligation of grantee.
(D) Quarterly franchise fee reports. Each payment shall be accompanied by a written report to the city, or concurrently sent under separate cover, verified by an authorized representative of grantee, containing an accurate statement in summarized form, as well as in detail, of grantee's gross revenues and the computation of the payment amount. Such reports shall detail all gross revenues by product or service of the cable system, an example of which is set forth on Exhibit A attached to Ord. 2019-009.
(E) Annual franchise fee reports. Grantee shall within 60 days after the end of each year furnish to the city a statement stating the total amount of gross revenues for the year and all payments, deductions and computations for the period.
(F) Audits. On an annual basis, upon 30 days' prior written notice, the city, including the city's auditor or his or her authorized representative, shall have the right to conduct an independent audit/review of grantee's records reasonably related to the administration or enforcement of this franchise. Pursuant to § 13-5-3-1, as part of the franchise fee audit/review the city shall specifically have the right to review data related to the allocation of revenue to cable services in the event grantee offers cable services bundled with non-cable services. For purposes of this section:
(1) RELEVANT DATA shall include, at a minimum, grantee's records, produced and maintained in the ordinary course of business, including revenue codes, showing the subscriber counts per package and the revenue allocation per package for each package that was available for city subscribers during the audit period and grantee's billing reports, financial reports, general ledgers, and sample subscriber bills used by grantee to determine gross revenues for the franchise area that would allow the city to recompute the gross revenue determination.
(2) In addition, the relevant data shall include grantee's reconciliation of revenue accounts with the franchise fees paid in the audit year. Such reconciliations shall include monthly reconciliations of franchise fees owed with revenue accounts or ledgers; quarterly reconciliations of payments with revenue accounts, ledgers and annual reconciliations of franchise fees paid with financial statements.
(3) If the audit/review shows that franchise fee payments have been underpaid by 5% or more (or such other contract underpayment threshold as set forth in a generally applicable and enforceable regulation or policy of the city related to audits), grantee shall pay the total cost of the audit/review, such cost not to exceed $5,000 for each year of the audit period. The city's right to audit/review and grantee's obligation to retain records related to this subsection shall expire three years after each franchise fee payment has been made to the city.
(G) Late payments. In the event any payment due quarterly is not received within 45 days from the end of the calendar quarter, grantee shall pay interest on the amount due (at the prime rate as listed in the Wall Street Journal on the date the payment was due), compounded daily, calculated from the date the payment was originally due until the date the city receives the payment.
(H) Underpayments. if a net franchise fee underpayment is discovered as the result of an audit, grantee shall pay interest at the rate of 8% per annum, compounded quarterly, calculated from the date each portion of the underpayment was originally due until the date grantee remits the underpayment to the city.
(I) Alternative compensation. In the event the obligation of grantee to compensate the city through franchise fee payments is lawfully suspended or eliminated, in whole or part, then grantee shall pay to the city compensation equivalent to the compensation paid to the city by other similarly situated users of the city's right-of-way for grantee's use of the city's right-of-way, provided that in no event shall such payments exceed the equivalent of 5% of grantee's gross revenues (subject to the other provisions contained in this franchise), to the extent consistent with applicable law.
(J) Maximum legal compensation. The parties acknowledge that at present applicable federal law limits the city to collection of a maximum permissible franchise fee of 5% of gross revenues. In the event that at any time during the duration of this franchise, the city is authorized to collect an amount in excess of 5% of gross revenues, then this franchise may be amended unilaterally by the city to provide that such excess amount shall be added to the franchise fee payments to be paid by grantee to the city hereunder, provided that grantee has received at least 90 days' prior written notice from the city of such amendment, so long as all cable operators in the city are paying the same franchise fee amount.
(K) Tax liability. The franchise fees shall be in addition to any and all taxes or other levies or assessments, including the PEG fee required under § 13-5-3-9, which are now or hereafter required to be paid by businesses in general by any law of the city, the state or the United States including, without limitation, sales, use and other taxes, business license fees or other payments. Payment of the franchise fees under this franchise shall not exempt grantee from the payment of any other license fee, permit fee, tax or charge on the business, occupation, property or income of grantee that may be lawfully imposed by the city. Any other license fees, taxes or charges shall be of general applicability in nature and shall not be levied against grantee solely because of its status as a cable operator, or against subscribers solely because of their status as such.
(L) Financial records. Grantee agrees to meet with a representative of the city upon request to review grantee's methodology of recordkeeping, financial reporting, the computing of franchise fee obligations and other procedures, the understanding of which the city deems necessary for reviewing reports and records.
(M) Payment on termination. If this franchise terminates for any reason, grantee shall file with the city within 90 calendar days of the date of the termination, a financial statement signed by a representative of grantee showing the gross revenues received by grantee since the end of the previous fiscal year. The city reserves the right to satisfy any remaining financial obligations of grantee to the city by utilizing the funds available in the letter of credit or other security provided by grantee.