A. Every operator of a cable communications system shall obtain and maintain a performance bond to ensure the faithful performance of its responsibilities under this Chapter and any franchise. The amount of the performance bonds shall be set by the City Manager or may be set in a franchise agreement in light of the nature of the work to be performed pursuant to or under the franchise, but initially shall not be less than ten percent (10%) of the estimated cost of constructing or (in the case of existing systems) upgrading the cable communications system. The bond is not in lieu of any additional construction or other bonds that may be required through any permitting process. The bond shall be in a form acceptable to the City Attorney. Bonds must be obtained prior to the effective date of any franchise, transfer or franchise renewal, unless a franchise ordinance specifically provides otherwise.
B. The City Manager may permit a cable communications system operator to eliminate or reduce the amount of the bond upon successful completion of the required construction and after the system performs as promised for one year after completion, if the City Manager determines that (i) the operator has substantially complied with its obligations under its franchise and applicable law; and (ii) the letter of credit maintained by the operator, plus any remaining amount of the bond will be adequate to ensure performance.
C. Letter of credit or cash security fund.
1. Every cable communications system operator shall establish and maintain a cash security fund or provide the City an irrevocable letter of credit in an amount specified in the franchise agreement, except as provided below. The letter of credit will remain in effect for the full term of the franchise plus an additional six (6) months thereafter.
2. The letter of credit or security fund shall secure the payment of franchise fees, secure any other performance required under this Chapter or a franchise, and secure the payment of other taxes, fees, charges or liens to the City. The letter of credit shall be in a form and with an institution acceptable to the City Treasurer and in a form acceptable to the City Attorney.
3. Neither the filing of a letter of credit or security fund with the City, nor the receipt of any damages recovered by the City thereunder, will be construed to excuse faithful performance by the grantee or limit the liability of the grantee under the terms of its franchise for damages, either to the full amount of the letter of credit or security fund, or otherwise.
4. The rights reserved to the City with respect to the letter of credit or security fund are in addition to all other rights of the City, whether reserved by applicable law or the franchise, and no action, proceeding, or exercise of a right with respect to such security fund or letter of credit will affect any other right the City may have.
5. If a grantee fails to timely perform a requirement under this Chapter or a franchise, or fails to pay a franchise fee, or any tax, fee, lien or other amount owed to the City when due, the City may withdraw from a grantee's security fund or letter of credit the amount that the grantee owes, with interest and penalties, upon ten (10) days written notice to grantee. If, in order to protect the public health, safety and welfare, the City is required to perform construction or other work to rectify grantee's failure to perform, the City may withdraw from grantee's security fund or letter of credit the amount to cover the work performed by City. The City may not be prevented from drawing upon the letter of credit or security fund even if the amount owed, or whether an amount is owed, is in dispute. If it is determined that the City improperly drew upon the letter of credit or security fund, the City shall return the funds withdrawn plus interest, if any, owed by grantee to the person providing the letter of credit.
6. The City will notify grantee immediately if it draws upon the letter of credit or security fund, and explain the act or omission which it claims justified the withdrawal. Should the City withdraw from the letter of credit or security fund, grantee will then have fourteen (14) days to restore the letter of credit or security fund to its full required amount, and must do so unless a court of competent jurisdiction rules otherwise.
7. The City may from time to time, upon reasonable notice and after affected grantees have had an opportunity to respond thereto, increase the amount of the required letter of credit or security fund to reflect increased risks to the City and to the public.
8. The cash security fund or letter of credit must be obtained prior to the effective date of any franchise, transfer, or franchise renewal, unless a franchise agreement specifically provides otherwise.
(Ord. No. 2001-014 § 2; Ord. No. 2006-009 § 22 (part))