(A) (1) Prior to a franchise becoming effective and on each anniversary date thereafter during the franchise term including the date of termination, the franchisee shall post with the Village Clerk sufficient funds to service as a cash security deposit to be used as a security fund to ensure the franchisee’s faithful performance of and compliance with all provisions of this code, the franchise agreement and other applicable law, compliance with all orders, permits and directions of the village, and the payment by the franchise of any claims, liens, fees or taxes due the village which arise by reason of the construction, operation or maintenance of the system.
(2) The amount of the security fund on deposit shall be equal to 3% of the franchisee’s projected annual gross revenues for the upcoming year, or in the instance of the final deposit, 3% of the actual gross revenues for the preceding year.
(B) (1) In lieu of a cash security fund, a franchisee may file and maintain with the Village Clerk an irrevocable letter of credit with a surety acceptable to the village in the amount specified in the preceding paragraph to serve the same purposes as set forth therein. The letter of credit shall remain
in effect for the full term of the franchise plus an additional six months thereafter or longer if there is any outstanding obligation or default on the part of the franchisee, as determined by the Village Board.
(2) The franchisee and its surety shall be jointly and severally liable under the terms of the letter of credit for the franchisee’s failure to ensure its faithful performance of and compliance with all provisions of this code, the franchise agreement and other applicable law and compliance with all orders, permits and directions of the village, and the payment by the franchisee of any claims, liens, fees or taxes due the village which arise by reason of the construction, operation or maintenance of the system. The letter of credit shall provide for, 30 days’ prior written notice to the village, any intention on the part of the franchisee to cancel, fail to renew or otherwise materially alter its terms. Neither the filing of a letter of credit with the village, nor the receipt of any damages recovered by the village thereunder, shall be construed to excuse unfaithful performance by the franchisee or limit the liability of the franchisee under the terms of its franchise for damages, either to the full amount of the letter of credit or otherwise.
(C) The rights reserved to the village with respect to the security fund are in addition to all other rights of the village, whether reserved by this code or authorized by other law or a franchise agreement, and no action, proceeding or exercise of a right with respect to the security fund or letter of credit will affect any other right the village may have.
(D) The following procedures shall apply to drawing on the security fund and letter of credit.
(1) If the franchisee fails to make timely payment to the village of any amount due as a result of a franchise, fails to make timely payment to the village of any amounts due under a franchise agreement or applicable law, fails to make timely payment to the village of any taxes due, or fails to compensate the village within ten days of written notification that such compensation is due for any damages, costs or expenses the village suffers or incurs by reason of any act or omission of the franchisee in connection with its franchise agreement or the enforcement of its franchise agreement, the village may withdraw the amount thereof, with interest and any penalties, from the security fund or from funds available under the letter of credit.
(2) Within three days of a withdrawal from the security fund or under the letter of credit, the village shall mail, by certified mail, return receipt requested, written notification of the amount, date and purpose of the withdrawal to the franchisee.
(3) If at the time of a withdrawal from the security fund and under the letter of credit by the village, the amounts available are insufficient to provide the total payment towards which the withdrawal is directed, the balance of the payment shall continue as the obligation of the franchisee to the village until it is paid.
(4) No later than 30 days after mailing of notification to the franchisee by certified mail, return receipt requested, of a withdrawal under the security fund or letter of credit, the franchisee shall deliver to the village for deposit in the security fund an amount equal to the amount so withdrawn or shall restore the letter of credit. Failure to make timely delivery of the amount to the village or to restore the letter of credit shall constitute a material violation of the franchise.
(5) Upon termination of the franchise under conditions other than those stipulating forfeiture of the security fund, the balance then remaining in the security fund shall be withdrawn by the village and paid to the franchisee within six months of the termination, provided that there is then no outstanding obligation or default on the part of the franchisee.
(6) In addition to or in lieu of a security fund or letter of credit, a franchise may require the guarantees as the village deems to be in the public interest.
(`92 Code, § 8-1-107) (Ord. 96-19, passed 10-2-96)