(a) Grantee is required to file an irrevocable letter of credit. Within 30 days after the effective date of a franchise, grantee shall deposit with the city an irrevocable letter of credit in the amount set forth in the franchise agreement and issued by a local federally insured commercial lending institution that has been approved by the city. The form and substance of said letter of credit shall be subject to the approval by the City Attorney. The letter of credit shall be used to assure: the faithful performance by the grantee of all provisions of the franchise agreement and the cable ordinance; compliance with all orders, permits and directions of the City Manager or any agency, commission, board, department, division or office of the city having jurisdiction over any aspect of the grantee's performance under a franchise and this article; and the payment by the grantee of any penalties, liquidated damages, claims, liens, franchise fees, taxes or other fees due to the city which arise by reason of the construction, operation or maintenance of the cable system, including cost of removal of any property of the grantee.
(b) Letter of credit may be drawn upon by the city after following specified procedure that assures due process to grantee. The letter of credit may be drawn upon by the city by presentation of a draft at sight on the lending institution, accompanied by a written certificate signed by the City Manager certifying that the grantee has failed to comply with the franchise agreement and/or this article, stating the nature of the noncompliance, and stating the amount being drawn. Examples of the nature of the noncompliance for drawing upon the letter of credit include, but are not limited to, the following:
(1) failure of the grantee to pay to the city any franchise fees, taxes, liens or other fees after ten days written notice of delinquency;
(2) failure of the grantee to pay to the city after ten days written notice, any amounts due and owing by reason of the indemnity provisions of Section 95-5;
(3) failure of the grantee to pay to the city any liquidated damages due and owing pursuant to a franchise agreement;
(4) failure to make any payment required by an agreement within the time fixed therein;
(5) failure to pay to the city within ten working days after receipt of written notice, any damages, claims, costs or expenses which the city has been compelled to pay or incur by the reason of any material act or default by the grantee;
(6) failure to comply within ten working days after receipt of written notice from the city, with any material provisions of an agreement or cable ordinance which the city reasonably determines can be remedied by an expenditure of an amount from the letter of credit or other instrument.
In the event of such noncompliance, the city may order the withdrawal of the appropriate amount of liquidated damages, penalties, fees or otherwise from the letter or other instrument for payment to the city, provided that, prior to each such withdrawal; (i) the grantee shall be afforded an opportunity to cure any of said failures within 30 days after written notice from the city that the withdrawal is to be made; or (ii) if such cure cannot be reasonably accomplished within such 30 days, then the grantee shall have a reasonable time to cure, provided that the grantee commences such cure within such 30 days and diligently pursues such cure to completion.
(c) Letter of credit shall be replenished to original amount following any draw down. Grantee shall structure the letter of credit in such a manner so that if the city at any time draws upon the letter of credit, the amount of available credit shall automatically increase to the extent necessary to replenish that portion of the available credit exhausted by the honoring of the draft. The intent of this subsection is to make available to the city at all times a letter of credit in the amount specified in the franchise agreement.
(d) The city's rights with respect to letter of credit are in addition to other rights. The rights reserved to the city with respect to the letter of credit are in addition to all other rights of the city, whether reserved by a franchise agreement or authorized by law, and no action or proceeding against a letter of credit shall affect any other right the city may have.
(Ord. No. 2801, § 3, 2-25-99)