(A) Within 30 days after the effective date of a franchise awarded hereunder, a grantee shall deposit into a bank account, established by the grantor, and maintain on deposit through the term of this franchise the sum specified in a franchise agreement, as security for the faithful performance by it of all the provisions of a franchise awarded hereunder, and compliance with all orders, permits, and directions of any agency of the grantor having jurisdiction over its acts or defaults under this chapter and the payment by a grantee of any claims, liens, and taxes due the grantor which arise by reason of the construction, operation, or maintenance of the system. The security fund may be assessed by the grantor for purposes including, but not limited to, the following:
(1) Failure of a grantee to pay the grantor sums due under the terms of a franchise awarded hereunder;
(2) Reimbursement of costs borne by the grantor to correct franchise violations not corrected by a grantee, after due notice; and/or
(3) Monetary remedies or penalties assessed against a grantee due to default or violation of franchise requirements.
(B) At the grantor’s sole option, some portion of the security fund may be provided in the acceptable form of an irrevocable letter of credit, in lieu of a cash deposit.
(C) Within 30 days after notice to it that any amount has been withdrawn by the grantor from the security fund pursuant to division (A) above, a grantee shall deposit a sum of money sufficient to restore such security fund to the original amount.
(D) If a grantee fails to pay to the grantor any franchise fee or taxes due and unpaid, or fails to pay to the grantor, any damages, costs, or expenses which the grantor shall be compelled to pay by reason of any act or default of a grantee in connection with this franchise, or fails after 30 days’ notice of such failure by the grantor, to comply with any provision of a franchise awarded hereunder which the grantor reasonably determines can be remedied by an expenditure of the security, the grantor may immediately withdraw the amount thereof, with interest and any penalties, from the security fund. Upon such withdrawal, the grantor shall notify a grantee of the amount and date thereof.
(E) The security fund deposited pursuant to this section shall become the property of the grantor in the event that a franchise awarded hereunder is revoked for cause by reason of the default of a grantee in accordance with the procedures of this section. A grantee, however, shall be entitled to the return of such security fund, or portion thereof, as remains on deposit at the expiration of the term of a franchise awarded hereunder, provided that there is then no outstanding default on the part of a grantee.
(F) The rights reserved to the grantor with respect to the security fund are in addition to all other rights of the grantor whether reserved by this contract or authorized by law, and no action, proceeding, or exercise of a right with respect to such security fund shall affect any other right the grantor may have.
(2011 Code, § 14.16.030) Penalty, see § 114.999