(A) Application fee. Each application for a license to be granted under the authority of this chapter shall be accompanied by a non-refundable filing fee in the amount specified below, by certified or cashier’s check made payable to the “City of Apache Junction”:
(1) For an initial license or renewal: $2,500;
(a) An amount determined by the City to be used to offset all direct, reasonable costs incurred by the City in granting the license not defrayed from fees forthcoming from the provisions of division (A) of this section.
(2) For consent to transfer or change ownership: $2,000; and
(3) For license modifications $2,500.
(B) License fee.
(1) In consideration of the fact the public right-of-ways of the city will be used by a licensee in the operation of its cable system within the boundaries of the city and the public rights-of-way are valuable properties acquired and maintained by the city at great
expense to its taxpayers, and in consideration of the costs incurred by the city in regulating and administering each cable license, the licensee shall pay annually to the city 5% of the licensee’s gross revenue.
(2) This payment shall be computed quarterly, for the preceding quarter, as of March 31, June 30, September 30 and December 31 of each year. Each quarterly payment shall be due and payable no later than 30 days after the relevant computation date. Each payment shall be accompanied by a financial report showing in detail the gross revenues of the licensee related to that quarter.
(3) Except as provided in division (B)(8) below and subject to 47 U.S.C. § 542, the payment required pursuant to this article shall be in addition to any other tax or payment owed to the city pursuant to any other applicable ordinance or chapter of the city code, regulation or law of the county, state or federal government.
(4) A license fee not received in full by the city within 30 days of its due date shall be deemed delinquent and subject to a late fee of 2% of the amount overdue plus interest at the prime rate as reported in the Wall Street Journal.
(5) Where the licensee fee is based on gross revenues, the licensee shall file, with each license payment, a statement of the gross revenues for the period on which the fees are based. Such a licensee must file within 3 months of the end of its fiscal year a statement of gross revenues for the preceding year, which is either audited or certified as accurate by an officer of the licensee. Any payment of license fees to adjust for a shortfall in the quarterly payments for the preceding year must be made not later than the filing date for the audited annual statement of gross revenues. Adjustments for any overpayment will be credited to subsequent quarterly payments. Interest and late charges (as specified above) will not be imposed for any payment necessary as a result of the yearly adjustment if the payment to correct the shortfall does not exceed 10% of the total payments made during the preceding year. In the event the payment exceeds 10%, the licensee is liable for interest and late charges for the entire amount due.
(6) The city manager shall have the right, upon reasonable notice, to inspect or audit during normal business hours a licensee’s records showing the gross revenues and other relevant underlying data and information. Upon examination of the information, the city manager has the right to recompute any and all amounts paid under a license. Any additional amounts due the city as a result of an audit shall be paid by the licensee within 30 days following written notice to the licensee by the council, which shall include a copy of the inspection or audit report. In the event that an inspection or audit results in additional monies owed the city in excess of 5% of the total paid, the licensee shall bear the total cost of the audit, and late charges and interest on the additional amount due.
(7) No acceptance by the council of any payment shall be construed as an accord that the amount paid is in fact the correct amount nor shall such acceptance of payment be construed as a release of any claim the council may have.
(8) There shall be allowed as an offset against the license fee due under this article any amounts licensee paid to the city during the prior quarter in privilege license (sales) taxes; provided, however, that there shall be no offset to the extent that licensee made payments of privilege license (sales) taxes of any gross income (within the meaning of the privilege license [sales] tax ordinance) which is not included in gross revenues under this chapter. The license shall provide for suitable procedures and methods for audit of this offset.
(C) Performance bond and irrevocable letter of credit generally. Licensee shall obtain and maintain during the entire term of the license, and any renewal or extensions thereof, a performance bond in the amount of $100,000 to ensure the licensee’s faithful performance of its obligations under the cable law and this agreement, as well as an irrevocable letter of credit in the amount of $25,000, both being provided to the city attorney within 30 days after execution of the license agreement and prior to any construction work in the public rights-of-way.
(D) Components of performance bond. The performance bond shall provide the following:
(1) There shall be recoverable by the city jointly and severally from the principal and surety, any and all fines and penalties due to the city, and any and all damages, losses, costs and expenses suffered or incurred by the city resulting from failure of the licensee after notice and opportunity to cure to faithfully comply with:
(a) The material provisions of this agreement, the cable law and other applicable law;
(b) All orders, permits and directives of the city;
(c) Payment of fees due to the city; or
(d) Payment of any claims or liens due to the city
(2) (a) The losses, costs and expenses shall include but not be limited to attorney fees and other associated expenses.
(b) The total amount of the performance bond shall be forfeited in favor of the city in the event the licensee abandons the system at any time during the term of the license or extension period.
(3) The performance bond shall be issued by a surety licensed to do business in the State of Arizona and with an A+9 or better rating for financial conditions and financial performance in Best’s Key Rating Guide, Property/Casualty Edition, and shall be in a form approved by the city with the following endorsement:
“This bond may not be canceled or allowed to lapse, until 60 days after receipt by the city by certified mail, return receipt requested, of a written notice from the issuer of the bond of intent to cancel or not renew.”
(4) At such time as 95% of planned construction in the city is complete, as specified in license agreement, the council may, at licensee’s request, reduce or eliminate the performance bond requirement.
(5) The rights reserved by the Council with respect to the bonds required are in addition to all other rights and remedies the Council may have under this chapter, the license agreement or any other law.
(E) Irrevocable letter of credit. Licensee shall provide an irrevocable letter of credit in the amount of $25,000 from a financial institution licensed to do business in the State of Arizona to secure its performance of all its obligations under this agreement and the cable law.
(1) (a) The form and content of the letter shall be approved by the city attorney and contain the following endorsements:
“This letter of credit may not be canceled or allowed to lapse until 30 days after receipt by the city manager, by certified mail, return receipt requested, of a written notice from the issuer of the letter of credit of its intent to cancel or not to renew.”
(b) In the event the letter of credit is insufficient to pay the city for any compensation, damages, penalties, costs or expenses owed it pursuant to this chapter or the license agreement, the licensee’s performance bond may be drawn upon by the city manager for any amount due the city over and above the amount of the letter of credit.
(2) The rights reserved to the city manager with respect to the letter of credit are in addition to all other rights it may have under this chapter, the license agreement and any other law.
(3) Failure to maintain the letter of credit as required shall constitute a violation of the provisions of this chapter.
(4) The city may withdraw an appropriate amount from such funds including interest and penalties as applied against the letter of credit amount if in compliance with division (H) below.
(5) Within 15 days after the city gives notice that an amount has been withdrawn from the letter of credit amount, the licensee must deposit a sum of money equal to the amount withdrawn. If licensee fails to deposit such amount, the entire letter of credit amount remaining shall be forfeited. In addition, the failure may be grounds to revoke the license or take any other enforcement action.
(F) Liquidated damages. Because licensee’s failure to comply with the provisions of the license and this agreement will result in injury to the city, and because it will be difficult to estimate the extent of such injury, the licensee agrees to pay to the city liquidated damages for the following violations of the license which represent both parties’ best estimate of the damages resulting from the specified violation. To maintain that estimate, the parties agree that liquidated damage amounts shall be increased each year in accordance with the CPI:
(1) Failure to provide government and economic development channels and failure to make PEG capacity available; failure to construct required links to PEG facilities; $1,000 per day for each day the violation continues, in addition to any monetary payment under this agreement or the cable law.
(2) Failure to submit required plans indicating expected dates of installation of various parts of the system, and failure to supply information, reports or filings lawfully required under the license agreement or applicable law or by the city: $400 per day for each day the violation continues.
(3) Failure, unless such failure is beyond the licensee’s control, of the EAS to perform in the event of a public emergency or vital information situation: $250 per occurrence.
(4) Failure to test, analyze and report on the performance of the system following a request from the city manager to do so, and failure to pay for consultant fees pursuant to this license agreement: $200 per day for each day the violation continues.
(5) For a violation of customer service standards: $200 per violation.
(6) Failure to render required payment for reimbursement of any license expenses, or liquidated damages or failure to pay any required taxes to city: $100 per day, in addition to any monetary payment due under this agreement or the cable law.
(7) Failure to file, obtain or maintain any required performance bond or letter of credit amount: $100 per day.
(8) Failure to restore damaged property: $50 per day, in addition to the cost of the restoration as required elsewhere herein.
(9) For violation of technical standards established by the FCC: $50 per day.
(10) For failure to comply with reasonable order of the city manager: $50 per day.
(11) Failure to properly install facilities (e.g. conduit at less than minimum depths, lines laying on top of ground, fences, and walls): $50 per day.
(12) For failure to remedy any other violation of this chapter or violation of the license agreement: $50 per day.
(G) Remedies. If the licensee violates any provision of law or of this license agreement, the city may have one or more of the following actions:
(1) Impose liquidated damages provided herein;
(2) Reduce the duration of the license period on any basis the city determines is reasonable and affords licensee reasonable due process;
(3) Require licensee to pay its subscribers or classes of subscribers in an amount and on a basis the city determines is necessary to cure the breach or default, or equitably compensates for the violation; or
(4) Seek legal or equitable relief from a court of competent jurisdiction.
(H) Procedure for correcting license violations.
(1) Notice of violation. Should the city determine that licensee has violated one or more terms, conditions or provisions of this license agreement, a written notice shall be given to licensee informing it of an alleged violation (a “violation notice”). The city manager shall set forth in such violation notice at a minimum, the following:
(a) Amount to be assessed;
(b) Factual basis for such assessment; and
(c) Specific license provision alleged to have been violated.
1. Licensee shall have 14 days from the date the violation notice is given to inform the city manager in writing of the action licensee will take to correct the violation (a “correction notice”) and to begin corrective action, or to dispute that a violation has occurred (a “notice of dispute”).
2. If corrective action is undertaken, it shall be completed within 30 days of the date the violation notice is given, unless licensee’s correction notice shows that the corrective action cannot be completed within 30 days with the exercise of all due speed or diligence, in which case licensee shall have a reasonable extension of time in which to complete the corrective action.
3. Any notice of dispute shall specify the matter disputed by licensee and shall stay the running of any performance or corrective deadlines pertaining to the matter in dispute, and shall stay any other action the city may be permitted to take under this license agreement or applicable law.
(2) Appeals.
(a) In the event that licensee contests the city manager’s assessment of liquidated damages, or fails to respond to the above-mentioned notices, within 14 days the city manager shall convene an administrative hearing.
(b) Licensee may pay the fine, proceed with this hearing or waive its rights to this administrative hearing and proceed directly to the public hearing before the council.
1. There shall be an administrative hearing conducted by the city manager, and licensee shall be afforded procedural due process, including an opportunity to be heard and to present evidence. Within 14 days after the conclusion of such administrative hearing, the city manager shall issue a determination. In that determination the city manager may:
a. Find that licensee is not in violation of this chapter or the license agreement;
b. Find that the licensee is in violation of this chapter or the license agreement, but that violation was with just cause and waive any penalty that might otherwise be imposed;
c. Find that licensee is in violation of this chapter or of the license agreement, assess liquidated damages, take corrective action and foreclose on all or any appropriate part of the letter of credit or performance bond provided for in this chapter; or
d. Find that licensee is in material violation of this chapter and the license agreement and recommend the council declare the licensee in violation and recommend termination of the license agreement to the council, provided the council may consider such action only after a public hearing as set forth below.
2. If a public hearing before the council is requested by licensee or is held otherwise, it shall be de novo and it shall convene within 30 days of the request thereof. Licensee shall be afforded full due procedural process, including without limitation, an opportunity to be heard, to present evidence and to cross-examine witnesses. The council’s decision, which shall include findings of fact and conclusions, shall be made not later than 30 days after the conclusion of the hearing. In that decision, the council may:
a. Find that licensee is not in violation of this chapter or the license agreement;
b. Find that licensee is in violation of this chapter or the license agreement, but that violation was with just cause and waive any penalty that might otherwise be imposed;
c. Find that licensee is in violation of this chapter or of the license agreement, assess liquidated damages, take corrective action and foreclose on all or any appropriate part of the letter of credit and/or performance bond provided for elsewhere in this chapter; or
d. Find that licensee is in material violation of this chapter and the license agreement and declare the licensee in violation and revoke the license agreement.
(3) Licensee’s options.
(a) If after the hearing the disputed claim is upheld by the council, licensee shall have 30 days from the date of the mailing of the decision to remedy the violation or failure, unless corrective action cannot be completed within 30 days with the exercise of all due speed and diligence, in which case licensee shall have a reasonable extension of time in which to complete corrective action.
(b) Alternatively, licensee retains its right to seek review of the disputed matter under applicable law. The submission of a matter to mediation or to a court of competent jurisdiction shall stay the running of the above-described correction period.
(Ord. 1413, passed 2-3-2015)