(a) Granting of Franchises. The City may grant franchises for fixed terms, permits or privileges (Franchises) for the construction and operation of plants or works necessary or convenient for furnishing the City and its inhabitants with transportation, communication, terminal facilities, water, light, heat, power, refrigeration, storage, or any other public utility or service (Public Utility Service). The Council may prescribe the terms and conditions of the grant, and shall prescribe by ordinance the procedure for making these grants, subject to the limitations provided in the Charter and applicable law.
(b) Award of Franchise. Before granting any Franchise, the Council shall advertise its intention to grant the Franchise and shall award the Franchise to the highest responsible and responsive bidder after competitive bidding, in accordance with the procedures prescribed by ordinance governing the granting of Franchises.
(c) Term of Franchises. No Franchise for the construction and operation of plants or works necessary or convenient for the furnishing of the City and its inhabitants with Public Utility Service shall be made for a period exceeding 21 years, except Franchises for the construction and operation of subways, elevated railways and grade separated railways, which shall be granted for a period not exceeding 40 years for the original Franchise. No grant for the extension of facilities of an existing utility operating under a Franchise granted by the City or county shall be made for a period beyond the expiration date of the Franchise under which the utility, or the portion of the utility with which the extension is to be connected, is operated.
The City may, by ordinance, five years or less prior to the expiration of any Franchise, grant to the holder of the Franchise a new Franchise to replace the expiring Franchise. The term of the replacement Franchise shall not exceed ten years from the date of expiration of the Franchise it replaces, except that any replacement cable television Franchise may be granted for a period not to exceed 15 years. Each replacement Franchise shall comply with the ordinances governing the granting of Franchises in force at the time the replacement Franchise is granted, and shall carry all the conditions required in the original Franchise.
(d) Terms and Conditions of Franchises.
(1) Power to Order Extensions of Facilities. Every Franchise shall provide that the board designated by ordinance to have such authority shall have the power to order extensions of the facilities authorized in the Franchise, after a hearing as provided by ordinance.
(2) Right to Purchase. Except as otherwise provided in the Charter, every Franchise shall reserve to the City the right to purchase the property of the Public Utility Service, or find a purchaser therefor, upon one year’s written notice, either at an agreed price or a price to be determined in a manner prescribed in the grant.
(3) Price for Purchase. In fixing in any Franchise the price to be paid by the City for any utility, no allowance shall be made for Franchise value, good will, going concern, earning power, increased cost of reproduction, severance damage or increased value of right of way.
(4) Assumption of Bonds. Every Franchise shall provide that when purchasing the property of the grantee, the City, if and when permitted by the California Constitution, may assume the obligations of the grantee for the payment of the bonds then outstanding against the property, not exceeding in aggregate par value the valuation of the property purchased, as determined in accordance with this section. In this case, the par value of the bonds shall be deducted from the valuation of the property, and the excess, if any, of the valuation of the property over the par value of the bonds assumed shall be the net purchase price to be paid to the grantee.
(5) Consolidated or Annexed Territory. Every Franchise shall provide that in case of consolidation with or annexation to the City of any territory not now included in the City, any Franchise to operate the Public Utility Service or any part thereof, held or claimed by the holder of the Franchise in or for any portion of territory consolidated or annexed to the City shall automatically be surrendered to the City, and the rights and obligations of the Franchise shall automatically extend to the additional territory.
(e) Resettlement Franchises. A resettlement Franchise may be granted to a public utility operating in the City under more than one Franchise issued for different periods, and for different expiration dates for different parts of its system, which resettlement Franchise shall be in lieu of all other Franchises held by the grantee within the City.
(f) Applicability. Nothing in this section shall apply to the granting of Franchises by the Departments of Harbor and Airports.