(A) This section, and any franchise fee provision in a franchise agreement, shall not apply during such time as state law prohibits the city from collecting franchise fees or similar compensation. During the period state law prohibits the city from collecting franchise fees, a franchisee shall pay the tax required by state law to the state. If the city is legally entitled to charge franchise fees or similar fees, a franchisee will pay the highest fee legally authorized.
(B) A franchisee, as compensation for the privilege granted under a franchise for use of the public rights-of-way to construct and operate a cable system, shall pay to the city a franchise fee:
(1) In an amount up to a maximum of either 5% of the franchisee's gross revenues during the term of its franchise; or
(2) In the event the Cable Act or other applicable law is amended to permit the city to assess a fee of a greater amount or on a broader revenue basis than that specified in division (1) above, the franchisee agrees to pay to the city the new amount after a public hearing in which the public and the franchisee are given an opportunity to comment on the impact of the higher fee.
(C) To the extent that an OVS is used to provide cable service, an operator of an OVS shall pay the city a fee in lieu of a franchise fee. This fee will be based on the Gross Revenues derived from the operation of the open video system to provide cable services. To prevent evasion of franchise fees, any revenues from activities performed by an affiliate that could have been performed by the franchisee of the OVS, including but not limited to selling advertisements and selling services to subscribers, will be treated as revenues of the operator. The amount of the fee shall be equal to the percentage rate of the franchise fee imposed on franchisees of cable systems pursuant to this section.
(D) (1) A franchisee shall pay fees due to the city on a calendar-year, quarterly basis. Payment for each quarter shall be made to the city not later than 30 calendar days after the end of each calendar quarter.
(2) A franchisee shall file with the city, on a quarterly basis with the payment of the franchise fee, a financial statement setting forth the computation of gross revenues used to calculate the fee for the preceding quarter and a detailed explanation of the method of computation.
(3) The statement shall be certified by a certified public accountant or the franchisee's chief financial or other duly authorized officer. The franchisee will bear the cost of the preparation of the financial statements.
(4) Subject to applicable law, no acceptance by the city of any fee or payment shall be construed as an accord that the amount paid is in fact the correct amount, nor shall the acceptance of payment be construed as a release of any claim the city may have for additional sums payable.
(5) The franchise fee or other fee payment is not a payment in lieu of any other tax, fee, or assessment, except as specifically provided in this section. By way of example and not limitation, the city does not waive and may still require permit fees and business taxes that may be established from time to time by the city. Nothing in this section shall alter the effect of any election the city has made with respect to permit fees and taxes pursuant to state law.
(6) Within 90 calendar days following the end of the calendar year, a franchisee shall submit a statement, attested to by a certified public accountant or chief financial officer, setting forth the gross revenues of the cable or OVS for the previous calendar year and describing what revenues were included and what revenues, if any, derived from the operation of the system, were excluded in the fee calculation, and any adjustments made to gross revenues.
(E) Unless prohibited by applicable law, the city may, from time to time, but not more frequently than annually, upon reasonable notice, inspect and audit any and all books and records of a franchisee relevant to the determination of gross revenues and the computation of franchise fees due, and may recompute any amounts determined to be payable under the franchise, subject to the applicable statute of limitations. The cost of the audit will be borne by the franchisee if, as a result of the audit, the city determines that the franchisee has underpaid the franchise fees owed in an amount equal to or exceeding 3% of the franchise fees actually paid. A franchisee shall make all books and records necessary to perform the audit readily available to the auditors in the city, for inspection and copying or, in the alternative, the franchisee shall pay all costs necessary for the city to perform the audit at a location outside of the city.
(F) In the event that a franchise fee or other payment required by this section is not received by the city on or before the due date set forth herein, or is underpaid, the franchisee will pay a late charge of $5,000 per 30 day period that the fee is not paid in full, or the maximum amount allowed under state law. Any interest and/or late charges paid by the franchisee is intended to be a charge incidental to the enforcing of a franchise within the meaning of Section 622 (g)(2)(D) of the Cable Act, 47 USC 542(g)(2)(D), and may not be deducted from the fee imposed by this subchapter or any franchise agreement.
(G) When a franchise terminates for any reason, the franchisee shall file with the city, within 90 calendar days of the date on which its operations in the city cease, a financial statement, certified by a certified public accountant or the franchisee's chief financial officer, showing the gross revenues received by the franchisee since the end of the previous fiscal year. Adjustments will be made at that time for franchise fees due to the date that the franchisee's operations ceased.
(H) The payment of a fee pursuant to this section on cable service provided over a cable or open video system does not excuse an operator from any requirements that may exist to pay fees or other payments on services other than cable services provided over the facilities. As an example and not as a limitation of the foregoing, a cable operator that pays a franchise fee on revenues derived from the provision of cable services must pay the fees imposed upon providers of communications services to the extent that it provides such services.
(Ord. 1406, passed 5-15-02; Am. Ord. 1576, passed 4-18-07)