(A) Prior to a franchise or franchise renewal becoming effective, the franchisee shall post with the city a cash security deposit in an amount as determined by the city. The deposit is to be used as a security fund to ensure the faithful performance of all provisions of law and the franchise agreement and compliance with all orders, permits, and directions of the city and the payment by the franchise of any fees, claims, liquidated damages, liens, or taxes due the city which arise by reason of the construction, operation, or maintenance of the system.
(B) The city shall place the security deposit in an interest bearing account. The interest will accrue to the benefit of the franchisee but may not be withdrawn during the franchise term and any renewal thereof. All interest will be added to and become a part of the original security fund during the term of the franchise and any renewal thereof.
(C) Within 30 days after notice to it that any amount has been withdrawn from the security fund, the franchisee shall pay to or deposit with the city funds sufficient to restore the security fund.
(D) If the franchisee fails to pay the city any compensation within the time fixed herein; or fails after 30-days’ notice to pay the city any fees or taxes due; or fails to pay or repay to the city within 30 days any damages, costs, or expenses which the city shall be compelled to pay by reason of any act or default of a franchisee in connection with the franchise agreement; or fails after 30-days’ notice of such failure by the city, to comply with any provisions of the franchise agreement which the city reasonably determines can be remedied by an expenditure of the security, the city may immediately withdraw the amount due with interest and any penalties from the security fund. Upon such withdrawal, the city shall notify the franchisee of the amount and date thereof. Within 30 days of the withdrawal, the franchisee shall replenish the fund in the amount of the withdrawal.
(E) The security fund deposited pursuant to this section shall become the property of the city in the event the franchise agreement is canceled by reason of the default of the franchisee. The franchisee, however, shall be entitled to the return of such security fund, or portion thereof, as remains at the expiration of the term of the franchise agreement and any renewal thereof, provided that there is then no outstanding default on the part of the franchisee. Interest earned by the investment of the security fund will accrue to the franchisee.
(F) The rights reserved to the city with respect to the security fund are in addition to all other rights of the city whether reserved by this chapter or authorized by law, and no action, proceeding, or exercise of a right with respect to the security fund shall affect any other right the city may have.
(G) The franchise agreement may contain a schedule of liquidated damages, and the city may obtain reimbursement from the security fund for any unpaid liquidated damages that may exist.
(Ord. 96-9, passed 2-26-1996)