Every franchise, permit or privilege for the construction, extension or operation of a utility requiring a franchise, shall reserve to the City certain rights and privileges, as follows:
1. The right to revoke, for noncompliance with any of the conditions of the franchise.
2. The right to purchase the property of such utility or to find a purchaser therefor in accordance with the following procedure:
a. The City may purchase any utility at any time after five (5) years from the date that such franchise becomes effective, by delivering a notice in writing of such intention to purchase, at least one (1) year prior to the date upon which the City proposes to exercise its right to purchase said utility; together with a notice in writing of the intention of said City to purchase and take over said property of such utility at the date fixed for the purchase of said utility, or to find a purchaser therefor, upon the payment by said City, or said purchaser, to said Grantee owning such property under said franchise of the fair value of the property of such utility, as hereinafter provided.
b. That in the event the City of Los Angeles shall elect to purchase said utility and shall notify said Grantee in writing of its intention to purchase and take over the property of such utility, or to find a purchaser therefor, as herein provided, said Grantee, at the period fixed in said notice for the termination of said franchise and upon payment or tender of payment by the City, or by said purchaser, to said Grantee of the purchase price of said property of such utility, as hereinafter provided, shall transfer the title to said property by good and sufficient written instrument to said City or to said purchaser, and the payment or tender of payment by said City or said purchaser, to said Grantee of the said purchase price of the property of such utility shall ipso facto, operate to transfer the title of said property to said City or to said purchaser, and the Grantee shall forthwith surrender to said City; or to said purchaser, and the City or said purchaser, may forthwith take and hold possession of the property of such utility.
c. That in the event said franchise shall expire by operation of law, said City shall have the right, at its option, declared not more than one (1) year before the expiration of the franchise term as herein fixed, which right and option is hereby reserved to said City, to purchase and take over the property of such utility, and in the event that said City shall so exercise its right under such option the said City shall pay to the said Grantee the fair value of the property of such utility as herein provided.
d. The term “fair value” as used herein shall be construed to mean the reasonable value of the property of such utility having regard to its condition of repair and its adaptability and capacity for the use for which it shall have been originally intended. The price to be paid by the City for any utility shall be on the basis of actual cost to the utility for the property taken, less depreciation accrued, as of the date of purchase, with due allowance for obsolescence, if any, and the efficiency of its units to perform the duties imposed on them; no allowance shall be made for franchise value, good will, going concern, earning power, increased cost of reproduction or increased value of right of way, or allowances for damages by reason of severance.
e. That the valuation of the property of such utility proposed to be purchased upon the termination of said franchise as herein provided, or otherwise, shall be determined by a board of three arbitrators of whom one shall be appointed by the City, one by the Grantee, and the third by the two arbitrators so appointed. Said arbitrators shall be appointed within thirty days after the declaration by the City of its option to purchase said property of such utility, or find a purchaser therefor. In case said arbitrators fail to make and file and award within the time hereinafter limited, a new Board of three arbitrators shall be appointed as hereinbefore prescribed. The Board of Arbitrators shall immediately upon the appointment of its members enter upon the discharge of its duties. Any vacancy in the Board of Arbitrators shall be filled by the party who made the original appointment to the vacant place.
f. In the event the Grantee shall fail to appoint an arbitrator within thirty days after the declaration by the City of its option to purchase the property of such utility or to find a purchaser therefor, or in the event of the death or resignation of such arbitrator so appointed and such Grantee, its successors or assigns, shall fail to appoint an arbitrator to fill such vacancy within ten (10) days thereafter, or in the event the two arbitrators appointed by the City and Grantee, as hereinbefore provided, shall fail to appoint a third arbitrator within sixty (60) days after the declaration of the City of its option to purchase the property of such utility, or to find a purchaser therefor, then upon application made either by the City or by said Grantee after five (5) days’ notice in writing to the other party, such arbitrator shall be appointed by the Presiding Judge of the Superior Court of the State of California, in and for the County of Los Angeles, and the arbitrator so appointed shall have the same powers and duties as though he had been appointed in the manner herein above prescribed.
g. The award of the arbitrators must be made and filed with the City Clerk of said City within three (3) months after their appointment, and a majority of the arbitrators who agree thereto may make such award. The amount of the valuation of the property of such utility to be paid to said Grantee, as herein provided, in lawful money of the United States, less an amount equivalent to or sufficient to offset or pay any outstanding, unsettled, unpaid or disputed debts, claims or incomplete or unsettled contracts or pending damage suits or judgments against or affecting said Grantee, or any encumbrances or defects in title which may constitute a charge or lien upon the property of such utility. The amount so deducted or reserved shall be placed by the City, if the property of such utility be purchased by the City, in a special fund in the City Treasury for the purpose of liquidating or satisfying said unpaid debts, claims, contracts, suits, judgments, encumbrances, charges or liens; and after the same have been liquidated and settled, the City or said purchaser, as the case may be, shall pay the said Grantee the balance of said amount in said fund remaining.
h. Whenever said City or said purchaser shall have paid to said Grantee, as above provided, the value of the property of such utility, less such amount to be placed in said fund, as above provided, then said Grantee shall by good and sufficient written instrument, transfer to the City, or to said purchaser, as the case may be, all of the property of such utility, together with all franchise rights, appurtenances, renewals, additions, extensions, connections and repairs thereto, including all and every part of the property constituting the property of such utility, together with all claims and rights held, owned, operated and claimed, under and by virtue of the franchise herein proposed to be granted, free and clear of all encumbrances, claims or liens, whatsoever, excepting such as have not been liquidated, as hereinbefore provided.
i. Every franchise shall provide that when purchasing the property of the Grantee, the City, if and when permitted by the provisions of the Constitution of the State of California, may assume the obligations of such Grantee for the payment of the bonds then outstanding against said property, not exceeding in aggregate par value the valuation of the property thus purchased, determined as in Section 390(d)(4) of the Charter provided, and in such case the par value of such bonds shall be deducted from the said valuation of the property, and the excess, if any, of the valuation of the property over the par value of the bonds so assumed shall be the purchase price to be paid to the Grantee by the City for said property.
SECTION HISTORY
Based on Ord. No. 58,200.
Amended by: Ord. No. 176,006, Eff. 7-12-04.